Whether asset management should be centralised or decentralised has been asked since the beginning of Asset Management (AM) as a structured activity. Many organisations have cycled through these structures, some several times. We have seen both models succeed and struggle. Before considering which organizational structure is best, we can learn from what has worked in the past.
The common primary success factors are a good asset management team leader with top management (ISO, 2014) support and commitment over the long term. Without both of these in place, fragmentation into silo’s of finance, maintenance, construction, compliance and knowledge management is the most common result. Often these silos are in adversarial competition for resources with short term horizon of less than 5 years.
The key focus of the ISO 55000 series and IIMM is the role of the AM Leader and the interaction with “top management”. Leadership is not the same as management although they are complementary and often overlap. (IIMM, 2015). A secondary, but essential success factor is at least 2 people who are proficient and have experience in asset management. (Wallsgrove, 2020)
With these success factors in place, that is, top management commitment, a good AM leader, and at least 2 people with AM knowledge and understanding, a centralised structure has a lower likelihood of fragmentation into the AM silos mentioned above.
Good communication skills are the essential attributes of a leader to communicate throughout the organization how the organizational objectives are to be converted into asset management objectives (ISO 55000 2014, 3.3.2). This manages the primary risk of fragmentation of asset management into competing silos with fragmented or inadequate skills.
Both international source documents, ISO 55000 series and IIMM are consistent in defining the roles and responsibilities of asset management in an asset intensive organization as much more than maintenance management.
References
IIMM, I. I. (2015). IIMM International Infrastructure Management Manual.Sydney: IPWEA.
ISO. (2014). ISO55000.Geneva: ISO.
Wallsgrove, R. and Cripps, L. (2020). Building an Asset Management Team .Amazon .
AMQ International’s ‘Strategic Asset Management’, ed: Dr PennyBurns, Issues 270, 298, 371
Footnotes
1. SAM 270 looks at different structures, all of which were adopted successively by an Australian Rail Company when they discovered the problems with the one they were currently using. The whole issue looks at organisational structure.
2. SAM 298 pp 3-5 ‘Four models of AM organisation within councils’
3. SAM 321 ‘A Perfect AM Organisation?’ pp 1-3
4. Roorda (JRA) was the Asset Management Consultant for BART from 2012 – 2015 and established a successful asset management programme for BART (Bay Area Rapid Transit) with John McCormick and Frank Ruffa. AM Council News and Asset Management Implementation and Integration Frank Ruffa
Jeff, absolutely – it so much depends on the person leading it. That’s worrying, because there still aren’t too many people to take on this leadership – and very few organisations think about leadership when they hire. What can we do to build up such AM leaders? x
Jeff, you make some good points. However, organizational culture will play a significant role in success or failure. If the culture is one of divide and rule the silos will be reinforced and AM success will be problematical. If the culture is one of inclusiveness and working towards common goals the leadership roles you suggest will have a far greater chance of delivering outstanding asset management.
There are perhaps 2 issues here first where does asset management sit in the organization and secondly about leadership.
I am assuming centralized means bridging across the whole organization and decentralized as being within one of the silos of Finance, Maintenance etc. By decentralizing asset management into a one silo department it becomes focused on the primary outcome of that department, for example producing realistic long-term financial plans but unworkable operational plans. My experience, having been in two different departments is the attitude to what is recorded and worked or if an asset is under $5000 it is not worth recording even though it is subject to maintenance and replacement. My argument here is that Asset Management does not easily slot into the current organizational structures and is a ping pong ball (or hot potato) in managerial empire building.
This segues into the next issue of leadership. Leadership is a function of management, (the four functions being: Plan, Lead, Organize and Control) and without leadership you have administrators not managers. In the Asset Management context, leadership has to demonstrate a whole of organization approach, an overview of Asset Management, where it fits into the long term and operational planning and that the function needs a degree of autonomy from the departmental performance reporting as it doesn’t always fit. Asset Management supports an organization with critical information to be used by all managers in their planning and therefore needs to be across and available to the whole organization.
Thank you for articulating this so well. This is exactly how I see things too. We need to be the non-execs (litmus test) of the planning and delivery world, challenging behaviours and making sure processes are sound and benefit everyone. If AM is given regulatory performance immunity to do their job “properly”, then everyone in the company will benefit. They essentially should have nothing to gain or lose from doing their job, they just create step change in quality and effectiveness. That is their reward.
I would argue that it isn’t a digital decision – the things are largely the same and can be run centrally with an obvious advantage (consistency, assurance and efficiency) should be centralised and the things that suit ‘devolution’ (those requiring local adaptations and ownership) are best decentralised. (in reality you often need an exception/shortcut for each side!) The advantage in this is also an organisation that naturally gives empowerment in a logical way. I’ve been involved in building a new national water utility over the last 5+ years (Ireland) and we had a mix of national, central control for things such as standards and specifications (known as Tech Hubs) and then 14 local ‘stewardship groups’ – all with the same ToR but one which describes what they need to do, but giving them local latitude where needed.