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Implementation Risks

The key risk to the implementation program is failure to gain commitment, acceptance and adequate resources from:

  • Corporate management level
  • Key Business units
  • Staff.

Most asset managers and staff have been managing their assets in a responsible manner.

However, to get advanced asset management practices formally accepted as providing the competitive edge to a service organization requires the full commitment of all staff throughout the organization.

Not gaining this support would mean:

  • Advanced Asset Management Program not being implemented
  • Improved productivity, effectiveness and efficiency benefits not fully realized.

The possible causes of lack of support and the controls available include:

Causes Controls
Lack of appreciation of advanced asset management by staff, management and corporate executives Develop a project charter to set out the objectives, resources, funding and commitment for signature by senior manager (sponsor) of project, who can be the champion for moving issues through senior management
Conduct awareness raising, workshops
Conduct specialist training programs
Corporate objectives not filtered down to workforce level Ensure appropriate communication within organization
Resistance of staff to change past practices

Change the culture of the organization
Ensure appropriate communication of benefits to the organization and staff
Ensure senior management backing

Inadequate resourcing
Inadequate skills in asset management
Allocate adequate resources
Provide adequate training program
Indifference to program because not receiving feedback on program progress Provide appropriate review and project assessment audits and report back to staff audit results

Asset management program accorded low priority status by management
No clear AM roles

 

Ensure quality of business case - full economic/financial evaluation satisfying business selection criteria
Make AM responsibilities clear

 

 

Benefits Not Fully Realized

The justification for the asset management program lies with the economic returns that it offers.

The estimation of the benefits involves predicting the future improvement in productivity, effectiveness and efficiency of the facilities and systems. This is a long-term forecast and it involves elements of uncertainty and risk.

Failure to fully realize the benefits may result in:

  • Loss in confidence among staff in the asset management program
  • Asset management program wrongly prioritized
  • Viability of business operations may be affected.

The possible causes and the controls available are:

 

Causes Controls
Incomplete or inaccurate database.

Complete data collection/valuation of major assets.
Stage data capture.

Not knowing the existing system capabilities, processes, data/information. Complete status assessment on existing efficiency/effectiveness.
Setting unrealistic improvement target. Adopt best appropriate practice and achievable timeframes/resources.
Unrealistic assumptions, parameters used in business case.

Complete sensitivity analysis
Pilot schemes to assess benefits achieved at early stages.

Inappropriate/inconsistent measurement of benefits. Ensure consistent identifications and measurement of benefits.
Benefits take too long to be realized. Prioritize implementation program based on early return on investment.
Delay in implementation/programs not adequately resourced.

Ensure adequate resourcing available
Put in place project management team.

 

Costs Escalate Beyond Original Estimates

The total costs of the asset improvement program include:

  • The capital costs for data collection, and for hardware and software
  • Setting up advanced asset management processes
  • Training staff on benefits and details of advanced asset management  
  • Ongoing operating costs for continuous data update and maintenance, enhancement to systems and the refinement of asset management processes.

There is always a possibility of costs escalating beyond the original estimates. The possible impacts of any cost escalation include:

  • Program being terminated
  • Delayed completion of program
  • Lower levels of sophistication included in the final program
  • Deferred realization of full asset management benefits.

The possible causes and the controls available are:

 

Causes Controls
Inaccurate cost assumptions and estimates in initial business case.

Actual costs to be verified through initial pilot programs
Estimate costs using  current contract rates and detailed estimates
Ensure rates include all overhead costs

Cost items not fully accounted for Put in place project cost control process
Delay in implementation Establish project asset management team
Cashflow over-run Restrict program to fit appropriate benefits/costs return

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