12 Ways to Look at How Long an Asset is Useful

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?”

 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.

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.

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

 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.