Asset Management: Problem or Solution?

The Scene

It was twenty years ago and I was in the office of a regional council CEO.  I led with an open question “How important do you think that AM is?”  He was a nice fellow, he didn’t want to hurt my feelings but clearly he was not enthusiastic about the subject.   “I guess it is valuable, but we aren’t going to do it!”  “OK”  I said, curious, “Why not?”  “Well, look it’s this way, if that section of Carter’s road gets washed out in the next flood, that is where I am going to have to put my money, not into some future renewal fund!”  “Entirely right”, I replied. “That will be your first priority. Can asset management do anything to help avoid that flooding problem?  Can it, at a minimum, reduce your overall asset maintenance expenses to free up the funds you need?”  It was clear that he had not seen asset management in this light, that is as a solution. He had equated AM with a renewal forecast, a problem.  And too many still do that – CEOs and Asset Managers both!    

The Story

There was the Asset Manager who presented his renewal forecast to the board and told them that they would have to double their asset expenditures.  The board sacked him.  And they were right to do so!  That fellow was not doing his job.  He was simply stating the problem and expecting others to take action so that he would not have to.

The Point

A future renewal forecast is not the end point of an Asset Manager’s task – it is the beginning.  It states the problem, as accurately as can be done. But it is still only the problem. Now a solution has to be found.  The task of the asset manager is to find that solution. Not to be like a certain US President who expects to be praised for doing nothing to solve the problem whilst making it worse. Indeed by not immediately taking action to find a solution that Asset Manager was making the renewal problem worse.

The Future?

Asset managers often ask how they can sell asset management to the board or senior executives.  The answer is obvious (although not necessarily easy): it is to tell them how AM can solve their problems.  The first step is to find out what their (not your) problems are. What do their customers, their clients, their regulators want of them?  Most often when I ask asset managers what are their organisation’s key issues, they answer in terms of their own issues instead.  At asset management conferences I hear people claim they want to make their organisation an outstanding asset management organisation.  That is OK but it is not why your organisation is in business! 

Lou Cripps, co-author with Ruth Wallsgrove of ‘Building an Asset Management Team’  ( highly recommended and available from the Talking Infrastructure website) summed it up this way. 

“For too long we have been looking down and inwards. Now we need to look up and out”.

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