12 Ways to Look at How Long an Asset is Useful

Management teams often try to answer different questions despite using what they believe is a common term related to asset life. There are many ways to express asset life.

Understanding how long an asset will remain useful is one of the most fundamental questions in facility, infrastructure, and asset management. Yet it’s also one of the most misunderstood because different disciplines approach the concept from different angles. “Useful life” is a collection of perspectives shaped by engineering, finance, and operations. Getting clear on those perspectives is the first step toward making better decisions.

The Big Three

Before we discuss the twelve ways to express asset life, let’s define the three foundational concepts that underpin many of those terms.

Mean life is a statistical term used by reliability engineers. It attempts to answer, “Based on a large population, when will the average asset or system fail?”

Useful life is an accounting term. It attempts to answer, “At what point does the asset no longer make sense to keep?”

Service life is an operations term that frames the actual asset or system life. It attempts to answer the question, “How long will this pump, pipe, vehicle, or control system actually last in service?”

Three Ways to Look at Asset Life

 So, each term reflects a different way of thinking about asset longevity. Which is best depends on situational context. The real-world issue for most management teams is that we are trying to answer a different question. More on that later.

12 Ways to Express Asset Useful Life

There are at least 12 commonly used terms for asset useful life across engineering, finance, and operations.

1. Mean Life (MTTF/MTBF) — statistical average time to failure

2. Rated Life — manufacturer’s estimate under ideal conditions

3. Design Life - how long engineers intend for it to last

4. Expected Life - life predicted under local conditions

5. Useful Life - economical or financial worthwhile period

6. Service Life (Actual Life) - how long we can make it last in its operating context

7. Remaining Useful Life (RUL) - forecast of how much longer it will be useful

8. Remaining Service Life (RSL) - forecast until the end of physical service

9. Economic Life (Functional Life) - the time that minimizes the total cost of ownership. (Obsolescence is a form)

10. Technical Life - maximum time before physical degradation makes operation impossible

11. Financial Depreciation Life - life defined by tax or accounting rules (e.g., straight-line depreciation schedules)

12. Warranty Life - period of guaranteed performance or replacement by the manufacturer

    
    

Context Matters

One of the best examples from my practice is estimating “remaining useful life” to forecast future renewal and replacement (R&R) needs.

In practice, "useful life" (accounting) and "remaining useful life" (engineering/asset management) sound alike but differ conceptually, causing confusion.

RUL is a condition‑based estimate of how long the asset can continue to perform its intended function. It’s based on degradation, inspections, performance, and failure modes. RUL is used for maintenance, risk management, and operational planning, but has nothing to do with accounting or depreciation schedules.

It’s Critical to Communicate Effectively

It’s important to know the question before you provide an answer. In the real-world, members of management teams are often trying to answer different questions despite using what they believe is a common term (“useful life” in this case).

That’s where the first F in the FINESSE Fishbone Diagram® comes in. The Frame establishes the boundary conditions and the key definitions. As with useful life, there is a causal relationship between getting the frame correct and achieving effective results.

“A problem well framed is a problem half solved” – George Box.

How to Communicate Asset Life

Useful Life Requires Systems Thinking

Determining useful life is ultimately a systems-thinking exercise. No single definition or metric can stand on its own without context, and no forecast is meaningful unless everyone involved answers the same question. We reduce confusion and improve outcomes when we take the time to align terminology, assumptions, and decision needs.

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Need help getting started? JD Solomon Inc. provides practical solutions to align asset useful life and strengthen your asset management program.

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 JD Solomon's work connects technical disciplines with human understanding to help people make better decisions and build stronger systems. Learn more at www.jdsolomonsolutions.com and www.communicatingwithfinesse.com.

Environmental Risk & Uncertainty: The Precautionary Principle

Apply the Precautionary Principle if the risks are uncertain but potentially serious: protect first, prove later.

The Precautionary Principle was born out of the risk and uncertainty associated with humans and the natural environment. Most financial wonks, corporate risk managers, and engineers working in physical processes have likely never heard of it. The idea behind the Precautionary Principle is that we should act to prevent harm before it occurs. Laws and regulations should anticipate harm and prevent it from happening. It is consistent with the adage “better safe than sorry”. It has much intuitive appeal when uncertainty is high, especially if you are on the receiving end of the potential negative impact.

The Trouble with the Precautionary Principle

However, there is trouble one layer below the intuitive thought. The Precautionary Principle dictates that indication of harm, rather than proof of harm, should be the trigger for action. This essentially shifts the burden of proof from humans and the environment to those entities that produce, import, or use the substance in question. It requires that those who seek to introduce chemicals into our environment, or risk, must first demonstrate that what they propose to do has been tested and no evidence of harm has been shown.

To Wait or Not To Wait?

If this sounds somewhat like the testing of new pharmaceuticals, it is. And this is the tough part. We feel protected by new medications being introduced only after there is a limited risk that they will harm us. However, many people become ill or die as we wait to reduce uncertainty.

Example: PFAS

In the environmental sector, per- and polyfluoroalkyl substances (PFAS), which have been chemically produced by man since the 1940s, have the potential to improve our quality of life. They are found in many products ranging from stain-repellent fabrics, water-repellent clothing, nonstick cooking pans, polishes, waxes, paints, and cleaning products. In commercial sectors and industrial sectors, PFAS compounds are used in fire-fighting foams, electronics manufacturing, chrome plating, and other production processes.

PFAS compounds have the potential downsides, including adverse health effects. While their advantages include being resistant to heat, water, and oil, PFAS compounds do not break-down easy in nature (they are considered “persistent”) and they tend to accumulate in living humans, animals, and plants.

The list of new products and the underlying chemical compounds is growing exponentially. The downside is that testing, or regulation, cannot keep up with them individually. And in combination with one another, well, forget about it. USEPA is one good source on the thousands of contaminants of emerging concern and the associated challenges with addressing them.

More Dynamic Than Static

So “better safe than sorry” only addresses a high-level aspect of dealing with risk and uncertainty. Fine points such as “by how much” and “in what combination” are necessary considerations. So is the nemesis of all Small World, static-thinking risk managers – time, and timing. Risk and uncertainty are indeed more dynamic than static.

What Does It Mean?

What does the Precautionary Principle mean to us in a world full of both measurable risks and immeasurable uncertainties? Here are five thoughts.

The Right Thing Is Often Obvious

First, there are certain things we should do and others we should not. Doing the right thing is often obvious. Forget about too much optimization. Forget about saving your job, making money, or leaving too much sunk investment on the table. As Abraham Lincoln said, “firmness in the right, as God gives us the ability to see the right.”

Uncertainty is Dynamic

Second, it is easy to be a risk expert and a key advisor when thresholds of harm or regulatory action levels have been set. Setting the thresholds of harm and regulatory action levels is the hard part. In a Small World, expectations and objectives can be measured by compliance. In Large Worlds full of uncertainty, the expectations and objectives occur in a very dynamic environment.

“Risk-Based” Is Best for Prioritization

“Risk-based” is not all that it has promoted to be. It is an approach, best used for prioritization, with the underlying working assumption that some things are more important than others. A risk-based approach does not provide assurance that the right thing is being done. A risk-based approach simply assures that the right thing is being done for and by those making the decisions.

Context Matters

Context matters. In Small Worlds, we must take the time and make the effort to test, measure, and do quantitative analysis. In Large Worlds, there will always be complexity and uncertainty that cannot be measured, modelled, and understood. Good judgment and expertise in dynamic decision making is required.

Don’t Be Tone Deaf

Fifth, have empathy. Think less from the perspective of the numbers and the risk assessment, and more from the perspective of your family and friends having to drink the water, breath the air, or ingest the product. The Voice of the Customer, as we cite in manufacturing and quality circles, should be more than superficially getting the end user to be satisfied for some short period of time.

Applying the Precautionary Principle

When looking backwards, after the fact, and when knowledge is perfect, the Precautionary Principle may appear to be illogical or irrational. When looking forward in Large Worlds full of uncertainty, the principle has a more solid foundation. How much do you really believe the fancy models and even your own forecasts? Would you bet the lives of the people you care most about on them? The most illogical or irrational thing that we can do is not live to fight another day.

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 Much can be learned from different practice areas related to approaches for dealing with risk and uncertainty. For more on the roots of the Precautionary Principle, see Sandra Steingraber’s classic Living Downstream: An Ecologist's Personal Investigation of Cancer and the Environment.

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This article was first published by JD Solomon on LinkedIn.

Solomon, J. D. (2018, October 3). Risk and uncertainty: The precautionary principle. LinkedIn. https://www.linkedin.com/pulse/risk-uncertainty-precautionary-principle-jd-solomon

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JD Solomon writes and consults on decision-making, reliability, risk, and communication for leaders and technical professionals. His work connects technical disciplines with human understanding to help people make better decisions and build stronger systems. Learn more at www.jdsolomonsolutions.com and www.communicatingwithfinesse.com.

Solomon to Speak at NC Chamber’s Environmental Compliance Conference

The NC Chamber's Environmental Compliance Conference is on February 4, 2026, in Raleigh, NC.

JD Solomon will be a featured speaker at the NC Chamber’s annual Environmental Compliance Conference on February 4, 2026. The event will explore pressing regulatory issues, legislation, and policy decisions currently impacting the air, water, waste, and natural resource arenas.

JD will be speaking in his role as chair of the NC Environmental Management Commission.

Other speakers include USEPA Region 4 Regional Administrator Kevin J. McOmber, NC DEQ Secretary Reid Wilson, NCDEQ Air Quality Division Director Mike Abraczinskas, NCDEQ Division of Water Resources Director Richard Rogers, and others.

For more information, visit https://ncchamber.com/event/environmental-compliance-conference/

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The NC Chamber is the leading business advocacy organization in North Carolina. The Chamber works in the legislative, regulatory, and political arenas to proactively drive positive change, ensuring that North Carolina is one of the best places in the world to do business.

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JD Solomon is an engineer, planner, and environmental leader with more than 30 years of experience integrating environmental policy, infrastructure planning, and regulatory decision making. JD is in his third term as EMC chair, having served previously under Governors McCrory and Cooper (2016 - 2018) and most recently from 2023 to 2025. He was re-elected as chair in November 2025 for a two-year term.