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Matching Inputs and Outputs

Developing the initial asset management plan (AMP) is the first and most significant step any organization will take down the path to advanced asset management. Depending on the resources and the data available these initial plans will vary considerably in quality and will have Confidence Level Ratings between 40% and 55%.

Moving to advanced asset management requires an effective transition process. Keeping in mind that scarce resources should go to those areas that will give the greatest benefit, we need to think about some of the basic principles for effectively implementing asset management.

What should we be focusing on as the managers of infrastructure portfolios today? What are our key roles and responsibilities? They are:

  • The need to justify our long-term asset management plans, strategies and funding models for our successors and ourselves.
  • As we cannot predict the future precisely, we should develop pessimistic and optimistic estimates of future costs.
  • Our plans should stretch over a 40 or 50 year horizon, looking at the demands for service and the supply or asset management strategy options throughout that period.
  • By doing this, we will have really addressed the key issues of inter-generational equity and sustainable service delivery.

Our second highest priority should be to spend our committed funds cost-effectively.

For most organizations, this will apply to the funds allocated for capital, operations and maintenance. We need to validate our capital budgets and our operations and maintenance allocations with a confidence level rating that allows us to meet our AM objectives most cost effectively.

This work should cover the current budget year and should look forward 5 to 10 years, using the gateway or hurdle approach in SIMPLE -CIP validation.

We should use the CLR rating process to identify the strengths and weakness in our current decision-making and investment validation.

Our next priority should be to develop the details of future capital works programs beyond the 5 - 10 year period to a 15 - 20 year planning horizon.

This should also be done for operations and maintenance.

The main reason for taking these works through the hurdle process out to this planning horizon is to prepare a detailed plan for the analysis and data collection that will be needed to justify or validate these projects and programs at the time that they are likely to be required.

It is not our task to complete the analysis for this extended time-frame, as that is likely to fall to our successors. However, it is our job to provide them an outline and to ensure that the data required for their validation work is being progressed during our term of office.

The final key task for today's managers is to identify the significant future business risks that the organization faces. The two main risk areas are:

  • The failure of assets to meet existing levels of service
  • The future costs of expected levels of service, especially where the population and demand for services is reducing or at the best, static.

All these outputs are shown in the following figure:

It is the responsibility of today's management teams to address these issues in their asset management plans and to do enough analysis to understand the implications for the organization in triple bottom line terms:

  • Economic implications
  • Environment implications
  • Social implications.

If management teams can say that they have completed all these tasks, then they will have fulfilled their key roles and responsibilities.

Of course, we may only have sufficient funds to develop a basic asset management plan with a low confidence rating. Even these plans may be a significant step forward over what most organizations currently have in place.

The confidence level rating process allows us to:

  • Report the weaknesses of these plans to our elected members and policy makers
  • Argue for the funds necessary to improve the asset management plan to provide greater transparency and confidence in the reporting of future asset liabilities
  • Increase staff awareness through ongoing training and development of technical staff in the management of the assets for which they are responsible.

If we prove the benefits using real assets, the elected members can see a direct example of how advanced asset management can help them meet their own obligation to deliver the required level of service at the lowest sustainable life-cycle cost.

It is important to understand the benefits of advanced asset management and undertake awareness raising and training programs so that all staff understand how benefits will be derived and can be quantified. This aspect is dealt with more fully in SIMPLE Benefits.

Case Study

A large metropolitan agency let a contract for the digitization of its entire sewer collection system, collecting all physical attributes including the measurement of invert levels to an accuracy of 5mm.

This work took five years and cost the agency some $24m and all they were able to produce at the end of this investment was an accurate asset register of asset types and ages.

It was noted, however, that the ages of 30% of the assets were estimated because no records existed.

This data may ultimately be valuable, however the organization has not learnt very much from this massive investment which, if prioritized and staged effectively, could have provided much more worthwhile and useful information to manage their facilities today than it did.

We should drive our asset management improvement program using the strengths and weaknesses identified through the CLR process for the period in which the decisions are required.

In other words, we don't have to complete detailed risk assessments on assets that will not require a renewal decision for another 20 years. But we must do improved decision analysis for those assets on which we are making investment decisions today or in the near future.

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