We are on the brink of an exciting new phase in Asset Management – in fact the Third Asset Management Revolution!
To understand what this is. why it’s important, and where we are going, it pays to understand the first two revolutions, AMR1 (‘where we were’) and AMR2 (‘where we are’). The 3rd AM revolution, AMR3, will take us to where we need to be to meet the demands of the new world we are now moving into – the world of the internet of things.
Asset management was first introduced in the late 1980s, early 1990s. Up until this time, the word was ‘maintenance’ and it focussed on individual asset functionality. ‘Asset Management’ introduced the notion of combining engineering, financial and planning decisions with respect to assets – for the purpose of better services or corporate outcomes. It was centred on the asset portfolio.
Curiously, it all started with concern that we were not spending enough on maintenance!
As early as the 1970s, there was awareness of the problems of under-maintaining infrastructure in the USA. For example, there were the well-documented infrastructure maintenance problems of New York in the mid 1970s where, you may remember, stories started to emerge of pieces of the Manhattan Bridge rusting and falling into the water and potholes in New York’s cement roads being covered over with metal plates, causing havoc for the city’s bus service. In 1988 “The Decaying American Campus”, described in detail the infrastructure decay problems being experienced by tertiary education institutions.
Eventually this culminated in a major federal study of infrastructure requirements in the USA, “Fragile Foundations”. The sheer monetary size of the problem caused a stir in government and professional circles, but it did not lead to action, because it wasn’t ‘action oriented’. The only recommendation to come out of the report was to ‘spend more money’. But Governments then – as now – did not want to spend the many billions, now trillions, of dollars, the report suggested.
… so how did we get from that situation to where we are now? First we had to think ‘management’ rather than ‘funding’. To read more go here
Interesting times ahead. And thank goodness for that – I personally love being involved in a profession that continues to morph and evolve.
Checkout the Transpower website – https://www.transpower.co.nz/sites/default/files/publications. As the operator of the national electricity grid in New Zealand they have released a research white paper on Monday – Te Mauri Hiko – Energy Futures. The paper looks at the way the energy sector is transforming and what this may mean for the electricity sector. The operative word here is may, acknowledging that there is a lot of uncertainty, and scenario planning is needed. Good work Transpower
As an AM consultant, the recent mantra of most of the clients I interact with is to ‘achieve industry best standards in reliability and availability(usually 95%+) of critical equipment/assets at optimum cost (read as cheaply as possible) by leveraging on innovation and best practices’. In other words, they want to achieve the most efficient use of their assets by getting the maximum output out of them with the minimum input possible. Noble ideals.
Whilst we can celebrate the emphasis on critical assets as a paradigm shift from the pre strategic asset management era mind set of ‘all assets must be maintained’, it still stops short of asking the questions:
What do i or my organisation want to achieve with our assets?
What assets are really critical towards the achievement of our objectives?
Do we need 95% reliability or availability of these assets to achieve our objectives?
In other words, do i need so much efficiency to be effective? How far do I need to push my assets to get the outputs I desire i.e. my objectives? Going further is the ‘optimum cost’ i put into efficiency buying me the effectiveness i require to achieve my objectives or am I focusing on buying efficiency instead of effectiveness? Is it in fact ‘optimum’.
Whilst, the ISO55001 standard emphasis on linking asset management objectives to organisational objectives provides a good starting point for the shift in focus from efficiency to effectiveness, are questions like those above what we need answered to drive our thinking towards the 3rd asset management revolution of effectiveness as against just efficiency? I hope provide further thoughts on these questions in future posts but to you guys out there, are this questions relevant?(to be continued)