As part of the implementation process, organizations prepare an asset registry, a comprehensive list of all their assets and equipment. But for all their value, and registries are critical to asset management, they’re not without some limitations.  

Any list, even one where you’ve ordered the items by priority and criticality, remains a generally flat, two-dimensional map of your operations. For a more complete three-dimensional model, you need to build an asset hierarchy, complete with child assets.

But before you can add them to your database, you need to know what they are. 

What are child assets? 

Using the broadest definition, a child asset is any asset that is attached or closely associated with another asset, which is its parent asset. More specifically, it is a maintainable, repairable, or replaceable part or component inside a larger asset. You need the child assets to be functioning for the parent asset to be up and running. 

How does a child asset fit into an asset hierarchy? 

It can be easier to understand child assets by examining how they fit into asset hierarchies, which are nearly the same as company org charts. 

Your asset registry is like a list of all the people at a company, and contains all their important data such as name, date of birth, education, and work experience. But if you want to know how the company operates, including who does what and who depends on whom to get their work done, you need to look at the org chart. It’s the same with an asset hierarchy. If you want to understand how everything fits together, you need to look at the relationships. 

Child assets are nearer the bottom of the hierarchy because they’re part of larger assets. If they were people, they’d be employees in various departments, usually somewhere in or below middle management. 

What are examples of child assets? 

There are likely some right now on your desk, including the power cables and monitor for your computer. They’re not strictly a part of the computer, but the computer can’t work without them. Another example is a pump inside an engine. You can have identical child assets inside one parent, too. For example, a series of identical motors inside a larger press. Or multiple identical fans inside an air extractor. 

What are the benefits of having child assets? 

The question is a bit misleading, because it makes it sound like you have the option of having them or not. You don’t. Modern assets and equipment are complex combinations of interconnected components and parts. In fact, you could argue that even the seemingly simplest tools have child assets. An old-fashioned hand drill needs its bit set. 

So, the question of value relates specifically to developing a system where you have them properly associated with their parent assets, giving you a truly in-depth understanding of your operations. And once you know where your child assets are in the overall picture, you can better pick maintenance strategies and track maintenance metrics, KPIs, and costs. 

For example, if you know that it’s not the overall pump that’s failing but one of the child asset motors, you can set up inspections and tasks specifically for the motors, focusing the team’s time and attention where they’re needed. You can also adjust inventory levels to match usage rates. And, instead of thinking it’s the pump that’s costing you so much in parts and labor, you know it’s the motor, which helps when deciding on vendors and deciding to repair or replace. 

The critical light bulb theory 

Light bulbs are a classic example of when you should use run-to-failure maintenance. They’re cheap to carry in inventory, hard to maintain and repair but easy to replace, and they have a low criticality. When a light bulb burns out, things don’t come to a screaming stop. 

But is that true for all light bulbs? 

Generally, yes. But not always. Some light bulbs are fairly critical. It depends on where they sit in the hierarchy. Consider the different light bulbs in a car. Modern cars have multiple interior lights, and we can say each one is a child asset under “Interior lighting.” When one burns out, no one might even noticed. But what about the light bulbs that are child assets under “Exterior lighting”? The police consider these lights so critical to safely operating a vehicle that they pull you over as soon as they see one is out. In terms of safe operation and compliance, they are critical. 

What this critical light bulb theory shows is that it’s best to think about components and parts in relation to where they sit in the hierarchy, helping you better plan stock levels and prioritize work orders. 

How does an EAM help you set up parent and child assets? 

Trying to establish, maintain, and efficiently work with a paper- or spreadsheet-based asset hierarchy wastes time, energy, and leads to a lot of bad data and maintenance mistakes. Unless the maintenance department is willing to dedicate their time to walls’ worth of perfectly positioned sticky notes, it’s just not feasible. 

At the core of modern enterprise asset management solutions is a central database where you keep everything safe, secure, but also accessible. Using the intuitive built-in features, you can set up your hierarchy and keep it up to date. The software does all the remembering for you. 

Next steps 

To find out how EAM software can support your goals, schedule a demo of ManagerPlus Lightning today.  

CEO summary 

Your asset registry is a comprehensive list of all the assets and equipment the maintenance department is responsible for keeping up and running. Although it is critical to the department’s success, it delivers a flat map of the maintenance territory. For a three-dimensional model, you need to create an asset hierarchy which includes all the relationships between the assets. One way to think about this hierarchy is that it’s basically like the org chart at a company. Although a list of employees can tell you a lot, the org chart shows you how everything works together. Child assets are components and parts that larger parent assets require to stay online. For example, the power cable on a desktop or a fuel pump inside an engine. Once you know the relationships between your assets, it is easier to decide on maintenance strategies and track costs. Also, you have a clearer picture of each component’s relative criticality. Modern EAM software makes building, maintaining, and leveraging these hierarchies possible. Paper- and spreadsheet-based systems are too time-consuming and labor-intensive while being prone to costly errors. 

About the author

Jonathan Davis

Jonathan has been covering asset management, maintenance software, and SaaS solutions since joining Hippo CMMS. Prior to that, he wrote for textbooks and video games.
Share this post


The Crucial Role of an Enterprise Asset Management (EAM) System
What is Asset Useful Life?
What are Visual Inspections?

Subscribe to the ManagerPlus blog

Stay up-to-date with ManagerPlus’ news, tips, and product updates by subscribing to our weekly email notifications.