The Importance of the Big Picture

 

The only way to get perspective is to stand back and see the big picture, to see individual problems in context, and our own problems in relation to others, as well as  to history. Two states that chose to see the infrastructure challenges of their councils in such a context were Victoria and South Australia and they have led Australia in asset management activity and improvement.

Victoria

In 1997 the State department responsible for local government was faced with a problem. Three years earlier, rates had been cut by 20% and rate capping introduced. Many councils were petitioning to have the cap lifted to cope with growth and, especially, to renew ageing infrastructure. State Government officers were in a dilemma. Whilst they could recognise the need for renewal, they suspected some councils were ‘gaming’ the system – using the excuse of renewal to avoid reducing costs. They decided to go out to tender for a simple model that could tell them which councils really needed an increase, and if so, how much. Three of the largest consulting companies in Australia at the time said that they could produce such a model, but the State chose to go with a smaller concern that pointed out that the information needed for such a model to work – namely a knowledge of the age, economic life distribution, and estimated replacement cost of council asset portfolios – was simply not available. They proposed to fill this gap. Councils also needed this information to manage their assets more effectively. The result was the report Facing the Renewal Challenge (1998, published 2000) which led and underpinned council asset management activities and State Government monitoring for over ten years.

South Australia 

In the meantime, a group of large councils in South Australia who were trying to benchmark were frustrated by the lack of uniformity of data systems for asset information, accounting, valuation and condition assessment among the group. They chose to do a separate study under a common set of standards along the lines of the Victorian study and to widen their study to include all councils, small and large, urban and rural, and isolated. This study differed from the Victorian in two major ways – first, participation was voluntary (but, with a bit of persuasion, all took part!) and second, it used online information collection.  With the information on the web, it then became possible for councils to do ‘what if’ analysis.  (‘What if we extended the life of this set of assets, or increased the service levels of that set?’)  The resulting report was ‘A Wealth of Opportunities’.   The design and computer modelling undertaken then led to the development of IPWEA’s famous NAMS Plus asset management training, which is now a world wide program.

What do we mean by ‘infrastructure’?

Last week in Perth,  Neville Binning, WA Chapter Chair for Talking Infrastructure, and I hosted seven casual small group discussions, in which we discussed a number of infrastructure issues, the first being ‘what is the purpose of infrastructure?’ (More on this later.)

Hein Aucamp (to the right of Theodore the poodle) took part in the seventh of these sessions.  Also present was Jaqueline Blenkinship, Adeyemo John Falade, Ashley McKinnon and, unfortunately obscured from view, Jacek Narozny.  Curiously, Hein was the first to raise the question – what do we mean by infrastructure?   Being a gentleman, he didn’t leave us guessing, but provided the following answer.

Hein Aucamp:   “I used an idea from Alex Marshall’s “How Cities Work” to suggest an answer. I also realised that the answer allows us to identify whether something truly is infrastructure, or whether it merely looks like infrastructure.

This is the answer I suggested:

• Infrastructure enables transactions in the broadest sense by providing common facilities that we would not be able to afford individually.

• A transaction is where we exchange some resources for a result of greater value; infrastructure provides the framework that we don’t own to allow us to use what we do own to gain something we want.

• Infrastructure in this sense would include internet communications and even the currency in circulation in a country.

If we describe the purpose of infrastructure precisely, and we define true infrastructure as whatever serves the purpose of infrastructure, then we can know whether something actually deserves the name of infrastructure, or whether it is only apparent infrastructure created for a lesser purpose.

To adapt the words on Penny’s slide in the last post: Infrastructure… is not even infrastructure until it improves the world.”

Hein Aucamp is Director, WA Integrated Asset Management.  You can reach him at hein.aucamp@waiam.com.au

OK, over to you – agree/disagree?   Something to add?

For Science, read Infrastructure!

Infrastructure – damned by the language we use

We ‘invest’ in capital, but maintenance and operations are a ‘cost’.

We consider Investment to be ‘good’, so we try to increase it.

We consider Costs to be ‘bad’ so we try to reduce them.

The result is that we end up with infrastructure that we under-maintain and where operations are compromised by insufficient training and funding.

Because of the language we use! 

Solutions?

Budgets: Can you deliver on your promises?

In the last post Jim Kennedy, Asset Management Council, looked at what it took to construct a ‘defensible budget’.  He argued that stakeholders (customers, community, government, employees) are everything but he wondered whether organisations really understood what they were promising. In other words were they really clear about the consequences of their decisions and promises made?

Capability to deliver

For example, had they turned these promises into the capability to deliver (technology, plans, people, facilities, information systems, logistics, support systems).

This has two aspects: there is an ‘enabling or inherent capability’ and an ‘organisational design, or organisational capability’. In other words, the equipment may be able to deliver, but has the organisation the right people in place?

Studies have shown that where someone was sent in to fix a problem who did not know what needed to be done, was not familiar with the asset or problem, or was not fully competent to do it, the level of competence was only 50% . This led to the job needing to be done 5 (!) times more often than if a competent knowledgeable person had done the job initially with 100% competence.

But what is the organisational implication of this?   To ensure that you have the right level of competence ready when needed, you have to have highly competent (and thus well rewarded) people under-occupied so as to be available when needed. As we cut back on training because it is expensive, and aim to have everyone fully engaged all the time in order to ‘achieve efficiencies’ – what is the real cost?   If  we cannot demonstrate the benefits of organisational capability in a ‘defensible budget’,  costs will increase and quality decline.

Comment?

Budget dangers of a ‘Make Do- Can Do’ culture

We often take pride in our ability to ‘make do’ when the situation is not as we would have liked. This particularly applies to those occasions when we do not get the budget we requested. We grizzle – but we ‘make do’. But what message does this send? Jim Kennedy, speaking at an Asset Management Council Chapter Meeting in Adelaide warned of the dangers of this ‘make do – can do’ culture. When we ‘make do’ (usually by cutting corners, or deferring activity that results in larger costs later) we are telling the finance section that our budget request was overblown. When Finance subsequently provides less than requested (working on the basis that the initial request was ‘gold plated’) and the recipients subsequently ‘make do’, that does more than confirm the initial Finance suspicion, it creates a lack of trust on both sides. Budget proposals are now ‘boosted’ to allow for the inevitable cuts. Finance reduces the budget request and as it goes on, budgets lose their informational, decision-making, value.

Jim proposes that the value proposition for Asset Managers should be “How to protect your leader against political opposition” and his answer to this question is a ‘defensible budget’.

So what is a ‘defensible budget’?   Jim describes it as follows:

  • Fact and Risk Based
  • Fully traceable to the asset’s output requirements.

He reckons these two are really sufficient but could be bolstered by showing that the budget is

  • demonstrably good practice and in accord with national standards; *compliant with statutory and regulatory imperatives;
  • implemented by competent (certified) staff;
  • supported by verified technology (information decision systems);
  • transparently and verifiably costed (which builds up trust between the technicians and finance; and
  • deliverable in the agreed time frame (don’t promise what you cannot deliver).

Good stuff! – but, and here’s the rub – developing good practice, ensuring competent (certified) staff, establishing sound information decision systems, demonstrating transparency and ensuring deliverability does not happen overnight. It takes years of consistent management attention and good leadership.

Question this week: Do you know where your organisation stands on each of these facilitators of sound and defensible budgets?  Is there a program to improve it?  Comment?

Announcement: Full Talking Infrastructure Association Membership

No fees

The Board has decided that for the foreseeable future we will not charge fees for full voting membership of Talking Infrastructure.  Full membership will, instead, be by invitation to those Community members that contribute in a meaningful way to the work of the Association.

Our first invitations go to

  • Kerry McGovern, of K.McGovern & Associates, who initiated, and collaborated with Talking Infrastructure in designing, a 5 day workshop in the audit of infrastructure performance for Auditors-General in the Pacific Islands.
  • Mark Neasbey, of the Australian Centre for Value Management, who has contributed many posts for the Blog, that have been amongst the most highly read and commented on.
  • Ben Lawson of Common Thread Consulting who has been a regular reader and prolific commentator on the blog

Our congratulations to Kerry, Mark and Ben.  Your commitment to the development, information exchange and debate ideals of Talking Infrastructure are putting us where we are today.

Thank you.

Pop Up Infrastructure?

Christmas pop up market at The Rocks

Pop-ups, those temporary, transitory events and structures have lately become very trendy. Marketers love them because, as humans, we are hard wired to respond to novelty. There is also a fear of missing out if we do not take immediate advantage of what is on offer because we know there is a good chance that next time we pass by, whatever it is won’t be there. OK. If the chief characteristic of pop-ups is their transitory nature – and the chief characteristic of infrastructure is its longevity, what are we to make of a headline reading ‘Pop up Prison’?

When I saw it, my first reaction was to smile. I thought of a young and earnest journalist wanting to be up with the latest, and a harassed sub-editor, too busy to correct. After all, pop-up infrastructure is a contradiction in terms, an oxymoron. But behind the trendy term lies a more serious issue.

In New Zealand, the reference was to ‘rapid build’ which is more accurate. The cell design is one that is in use in war zones and resembles detention centres surrounded by razor wire.  The cells can be rapidly deployed. This is the attraction now for cities with overcrowded prisons.  In war zones  rapid deployment is a response to a sudden and urgent need. It is very costly but in wartime there is not the luxury of time to plan so we wear the costs.  But the same argument can hardly apply to prisons. This has grown up over many years and we have been aware of it. We just haven’t been prepared to do anything about it. Now under the cover of urgency, do we throw caution to the wind, fail to plan properly, and exacerbate our future cost problems?

It is generally recognised that around 75% of the life cycle costs of infrastructure is committed at the planning stage, when we decide where and what to build.  Total life cycle costs may also be considered inversely proportional to time spent in quality planning.

Question: Why do we – both as individuals and organisations – so frequently put off thinking about, and planning for, known future contingencies until our scope for action is drastically reduced?  And what can we do about it?

Presence – and Presents

A time for gratitude.  The Talking Infrastructure Blog started on July 29 and since then, with the help of Mark Neaseby, Gregory Punshon, Jeff Roorda and Geoff Webb (thanks guys!) we have uploaded 46 posts and attracted 80 comments.

Our thanks to all readers for their presence here and I hope that it has got you thinking more about infrastructure decision making.  And for those special readers who submit comments, let me say that I regard each and every one of them as a present and I take great delight in unwrapping them and discovering the truths they reveal.  It is a curiosity of the complex world of infrastructure decision making that we can all much appreciate the arguments of others even whilst arguing against!

And if you should choose to use the holiday break for some practical or philosophical reflection on IDM issues -know that the web is always open!

HAPPY CHRISTMAS TO ALL

AND MAY YOUR 2017 BE FULL OF DELIGHTFUL SURPRISES!