Asset Management and the search for value

It's #TechnicalTuesday and Andrew McArthur, our Director of Management Consulting, is discussing the challenges of asset management and how best to handle a dynamic external environment.

I learnt about the value of good asset management long before I really knew what it meant.

I have always loved sailing and being on the sea. On one trip in 2002, in heavy weather and in tricky navigational waters, we had steering gear failure on a brand-new boat that our crew of 5 were delivering to its new owner. We were in a tight spot. There are few situations where you are so keenly (and abruptly) aware of asset management, even if those are not the first two words that spring to mind at the time.

I learnt a lot about asset management on that trip. I learnt that just because something is new, it doesn’t mean that it is fit for purpose; I learnt that with three buckets on-board and only one steering column, some assets are more critical than others; I learnt that even if a maintenance log says a maintenance check has been completed, it doesn’t mean it was effective; but more importantly, I learnt the value of asset management and the true meaning of finite resources – what we had on board was all we had and we had to manage it effectively. Asset management was everything!

I’m sure you can draw parallels from this situation within your own organisations. How often have you been happily delivering against your plan only for it to be derailed by the failure of a critical component at the most inopportune time?

Asset management is synonymous with value.

The thing about value is that it can mean different things to different people. It is very much aligned to an organisation’s objectives, the nature and purpose of that organisation and the needs and expectations of its stakeholders. But it is one of the central tenets of good asset management.

Indeed, ISO 55000 defines asset management as:

“the coordinated activity of an organisation to realise value from assets”.

This would suggest that we should be using asset management as the means to effectively control and govern assets such that, in delivering against objectives, the optimum balance of cost, risk and performance is pursued at any given time. And so, the potential for value creation can be linked to the asset management maturity of an organisation. The more mature your asset management capabilities, the more likely you are to generate value. As the Global Forum for Maintenance and Asset Management (GFMAM) put it:

“Value is the satisfaction of stakeholders’ needs in relation to the costs incurred and in consideration of the associated risks”.

The idea, of course, is that you are looking to manage your assets to deliver value that either reduces cost, reduces risk or improves performance (or a combination of all three). The optimum would of course be – no cost, no risk and peak sustainable performance. But finding that optimal balance is not easy and is likely to require trade-offs. For example, when performance is good, the focus is likely to be on cost; unless careful, reducing costs can increase the risk of accident or incident and if that should happen then the predominance of business appetite may turn to reducing risk; once the incident has been dealt with, and customer satisfaction is low, the business appetite may return once again to focus on performance. And round and round we go.

But in balancing the ‘optimum’ for every asset at every stage of its lifecycle, how do we know if an overall optimum balance has been achieved? The truth is that we may never know, but it is the pursuit of this balance, however changing or distant it may seem, that is the holy grail.

The strength of the asset management approach is to acknowledge this juggling act and build a continuous feedback loop to adjust the way assets are managed across their lifecycle so that a reasonable approximation of ‘optimum’ is achieved at any given time. Only then can you begin to deliver Mayfair service on Old Kent Road budgets.

Learning to balance

There are many examples of organisations learning to balance. Not all are obvious, but others make it easy for us. The flagship Crossrail programme is one such organisation and they are openly sharing their knowledge, experience and insight. Guidance documents and templates that were used successfully on the Crossrail programme are provided to be ‘pinched with pride’ (https://learninglegacy.crossrail.co.uk/).

What this demonstrates is that in the digital age, where data and information can be accessed and communicated easily, there is huge untapped benefit in carefully considered sharing. With the internet of things and the industrial internet of things, with BIM and the Crossrail Learning Legacy, the means for sharing is here and it may be prudent to embrace this or risk being left behind.

In an environment of dynamic forces, much like a boat at sea, continually learning lessons is a tried and tested way to find that reasonable approximation of optimum value. Building a continuous feedback loop, and learning from others, is therefore essential – learn, grow and change together.

Final thoughts

Consider the Weeble and the popular 1970’s catchphrase:

“Weebles wobble, but they don’t fall down”

The beauty of the Weeble is in the design. It is built to withstand a dynamic environment and external forces trying to knock it off balance; no matter how hard you try, back it will spring.

And the way you manage your assets should be the same. Despite many methodologies to the contrary, asset management needn’t be complicated. You need to build your asset management maturity so that your people, systems, processes and procedures act to maintain balance in a dynamic environment.

Climate change, industrial change, regulatory change, technological change…the list goes on. Strong feedback loops will allow you to respond to change in a timely fashion and you will continue to realise value and meet your objectives. This is the now and it will ensure your future.

• Find your inner Weeble, or risk not learning.
• Harness the power of data and information sharing, or risk being left behind.
• Move from a linear model of make-use-dispose to one of circularity, or risk extinction.

And on that cheery note I encourage you all to share your thoughts and ideas and enjoy your day.