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Talking Infrastructure has been discussing why organisations do not make better use of longer-term Asset Management Plans (the AMP).
One challenge we have identified is that the decision makers – in the C suite, council, board – are not promoted for their ability to make tough decisions, but for their skills at keeping people happy.
I have nothing against informed compromise: after all, good practice Asset Management depends on trade-offs. On balancing performance, cost and risk, short term and longer term, different kinds of service against each other.
But do many senior decision makers feel that facts may hamper their room for negotiation?
The ‘fact’ we’ve discussed is not pulled out of big data, but the reality that assets wear out, or otherwise have time-limited lives.
Penny Burns’ original lifecycle model was focused on estimates ( from SME and local experience) of when we ought to replace assets. You might argue about the exact date, of course, and there’s room for investigation of optimal costs. But in practice executives don’t generally deny that things need replacing – if they think about it.
What I feel happens is the people who make the budgets try not to think about it, because that’s largely in the future. There are enough immediate problems!
Our experiences suggest executives understand there will be future costs, and risks, if this is put before them. A good graph of risk against expenditure, or a summary of replacement peaks and troughs for the next twenty five years.
One challenge is whether there is anyone to continue to put this in front of them. And in front of the next CEO or CFO or council members, when they come in not thinking at all about the fact the physical assets will need action, sooner rather than later, and someone has to think ahead about the money and resources to carry them out.
Because thinking about it might force hard choices – like to increase budget or lower standard of service.
What are you experiences with promoting the longer-term, lifecycle understanding of physical assets?Does regulation and audits on AMPs help?
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