Our post today responds to a comment by Ben Lawson  that the “Fit for the Future” program is leading councils to equate depreciation and renewal spending regardless of the age or need of their assets.

This issue came to the attention of one of our State Auditors-General who dismissed it, saying ‘I agree that a ratio of renewal: depreciation is too simplistic and that there are real risks to be managed, but ‘it is only an indicator’ ‘  He also suggested that since ‘bureaucrats avoid things that are too complex’, it was necessary for indicators to be as simple as possible.

It is not difficult to see how dangerous this approach is when you consider that an aircraft instrument panel is simply a set of indicators. But without many hours of flying instruction (and thus an understanding of what lies behind each of the indicators) would you expect to be able to correctly interpret the information provided by these indicators – and keep the plane from crashing?

Perhaps we can make it easier for you as the pilot if  we simplify the indicators!   What if were to just keep the altimeter, for example, or the speedometer?  Perhaps just the fuel gauge? Maybe we could do without the compass, or the airspeed indicator, or the directional gyro?   And is the turn indicator really necessary?  What about the vertical speed indicator?

Well, you don’t have to be a trained pilot to figure out that actually you DO need all the instruments on the panel – ALL the indicators, and enough understanding to be able to correctly interpret them in any particular circumstance.    Moreover, this is just for a simple two seater Cessna, not even a Boeing 707, and just for just one aircraft – not a fleet of aircraft.

Now consider that even a fleet of aircraft would present far less decision points than the far greater variety of assets and asset questions facing the average council. Can the task of managing an ever changing and wide range of public sector assets with all their attendant services and disparate user groups, possibly be managed by a few simple indicators?

Worse, can they be managed by a few rules that are applied blindly without understanding?

Ignoring a problem doesn’t solve it!

You might think the answer to be self evident: surely we would all wish to see the best outcomes!  However, when it comes to government spending on infrastructure and public assets, this may not be the case. For state government public authorities, capital expenditures are often seen as a means of increasing the state’s GDP (gross domestic product), or a means of keeping up ‘a pipeline of investment projects’.  When this is the case, departments that do not spend all their capital budgets are not regarded  as ‘economical’, instead they are considered grossly inefficient.

When I was a policy manager in one of the state public works departments, budget meetings were only concerned with how fast money was being spent, not how effectively.  Taking the time to find more efficient ways to produce any given outcome, and so to spend capital money more efficiently, was actively discouraged: it slowed things down and the department did not spend ʻenoughʼ.

Much of the problem is that there is no easy way for politicians to demonstrate performance – only dollars of spending.   I doubt that this happens for any organisation with a quantifiable ʻbottom lineʼ (utilities, mining, manufacturing, etc) –  but maybe they have other problems?

Even for local governments, which are generally very short of capital money overall, and where one would think the ideal solution would be to get the ʻmost bang for the buckʼ, taking the time to look for ways to achieve ‘more for less’, is rarely well regarded as the economies achieved are often difficult to demonstrate, while the extra time taken will often feature in negative media reporting.  In addition, local governments frequently depend on capital grants from state and federal resources with short decision and expenditure deadlines imposed in order to secure a fillip to the economy (i.e. to spend money fast).

This problem has bedevilled me for over 30 years.  Is there a solution?

Many of us watched in horror as the flames raced up the 24 stories of the Grenfell Tower in London, as firemen desperately tried to find and save individuals in the dense smoke, and where the death toll is now 79 (and may still be rising).  Much has been written about this already, and with the inquiries now launched, more will be written.  We will, hopefully, find out the details of this particular infrastructure failure.  In the meantime there are two areas to consider.

1.  Technical issues and organisation (this is probably our first departure point).

“Sprinklers would have saved lives. Fire stops that should have protected the internal means of escape may have been faulty or missing. The gas supply lines are under suspicion. The Grenfell Action Group had presciently warned of a lack of fire safety instructions. 999 operators fatally stuck to the official advice that people should stay in their homes, which makes sense when the building regulations are doing their job of containing fires within a single flat, but not when the whole building is engulfed. Compartmentalised thinking – the inability of any one agency to see the whole picture – played a role. It’s likely, as often in major disasters, that it was the cumulative and multiplying effect of several factors that made it so terrible.”  Guardian columnist, Rowan Moore

cf. Post on The Titanic and Apollo 7 on June 13

2.  Social Attitudes  

“I have sat in council meetings where comments from leading majority councillors have shown a total lack of empathy or even respect for those not born to a world where basic human comforts and a good education are givens. I have heard – and noted – comments stating that social tenants should simply move away if they don’t like what they’ve been “given”. As if social housing was not a public good but some kind of privilege to which they are not really entitled. Alongside this has been a slow but deterministic programme of privatising and monetising public assets such as schools, libraries and community and public space.”  Local Councillor, Emma Dent Coad, writing in The Guardian

cf Post on Gentrification in Infrastructure and Progress June 16.

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When he asked me what I did, I replied I looked at ways in which we could, as a community, make sounder infrastructure decisions.

‘Then, what are you are doing about gentrification?’

It wasn’t an idle question.  He was poor, with infrequent, casual and poorly paid employment. His partner earned the minimum wage. They had moved many times as the affordable accommodation they found was ‘upgraded’ and they could no longer afford it.

Gentrification is happening all over the world.  We call it progress.  But is it?   How much of what we call progress is actually only making the world better for the well-off?  And by this, I mean us!   In a world of increasing inequality, this kind of ‘progress’ could actually be considered to be regress from the perspective of overall community wellbeing.

Is it not time to reconsider what we mean by progress, and, indeed, to rethink the entire purpose of infrastructure?

Thoughts?

This story was originally told by the Young Asset Managers Group at the 2013 ICOMS (now AM-Peak).

What can we take away from it?

Consider the Titanic. There was poor equipment management – only one pair of binoculars and even that was not with the look out, no safety training for the staff (some of the lifeboats were launched with only a fraction of the passengers they could have held.) Safety regulation then was largely non-existent. Lifeboats were not really considered necessary (the ship was unsinkable) and they occupied space and interfered with the view of the passengers. There was also little operational training either as this would have slowed down the departure date.

The Titanic was a commercial venture and, although it was the latest and most modern of ships, nevertheless the company had been operating ships for years, so there was a certain amount of complacency. Was this the cause of failure : complacency and costs before people?

The Apollo 7 was also a new venture, but it was a public project. The goal was not simply to get off the launch pad but to take a man into space – and bring him back safely! A year earlier Apollo 1 had suffered a cabin fire during a launch pad test which killed all three crew members. The subsequent inquiry discovered a great number of design and construction flaws – and these problems were corrected, Apollo 7 launched successfully in October 1968. Attention to safety paid off! Pre flight safety checks and operational training won the day. Apollo 7 was not complacent, not commercial and put safety first.

And there the story could have ended, were it not for Challenger.

Less than 20 years later, in January 1986, the Challenger broke apart 73 seconds into its flight killing all 7 of its crew. The cause, as we all know now, was the O-ringseal which became brittle in low temperatures and disintegrated. The O-rings, as well as many other critical components, had no test data to support any expectation of a successful launch in low temperature conditions. NASA managers had known the design contained a potentially catastrophic flaw in the O-rings since 1977 but failed to address it properly and they disregarded warnings from their engineers about the dangers of launching posed by the low temperatures that morning. There were internal financial pressures to get the launch happening, and they had launched successfully many times before.

So complacency and commerciality can affect us all! Being a publicly funded and operated venture is no protection!

Comment?

The future – or our past!

As everyone now knows, the US President has withdrawn the USA from the Paris Climate Accord. Although he claims to be saving US jobs, the strong likelihood is that it will lose US jobs as the renewal energy industry at the moment is the fastest growing industry in the USA. With President Trump’s decision, Germany is expected to take the lead in wind energy and China in solar.

Australia is now making key decisions for its own energy future. Will we permit the Government to continue to back the old technology, coal, or force it to support the new renewables?  The next big gains are to be made with renewal energy battery storage and the encouragement and the development opportunities we provide now could be decisive. Companies now developing in this area in Australia could have a real chance at world leadership. Or they could miss out to more innovative governments (e.g. California which is taking an opposite stance to the federal decision, and being very active about it.)  Infrastructure decisions have recently been discussed in terms of immediate construction jobs. but they have a longer term importance that goes far beyond mere, and relatively temporary, construction jobs.  The techniques we develop now could have major export capabilities to the entire world.

The USA withdrawing from the Paris Climate Accord suits those who gain from oil and fossil fuel exploitation more generally – oil producers in Russia and Saudi Arabia – and coal producers in the USA and Australia.  An interesting question for Australia is who has the political strength in this country – the coal lobby or those promoting renewable energy?  This is not an idle question.  For a long time, Australia has been content to follow America’s lead. Will it this time?

Emanuel Macron, newly elected President of France, recently addressed the USA and the world – in fluent English! – arguing that France, and Europe, will continue the fight to control carbon emissions – ‘to make this planet great again’

Will Australia?

To conclude our current discussion of “If you can’t measure it, you can’t manage it” to its end point, let’s consider the consequences of taking this too literally- “I measure, therefore I manage”

There is an industry now for collecting data, massaging it, producing charts or spreadsheets – for others to use.  So how much time is spent finding out whether the data is actually used and appreciated?  Is there a process for following through the decisions made on the basis of that information to see how the data could be improved?

What can we do to improve our management?

Deming was, of course, a great believer in the value of metrics and statistical analysis, but even he realised that there was more to management than metrics and stated that one of the seven deadly diseases of management is running a company on visible figures alone.

A great example of the dangers of so doing can be drawn from the electricity company that decided to withdraw from service its most recent (and thus most efficient) coal fired plant only two thirds into its life and to build a new power plant using a new and untested coal source – because their model told them to!  Questioning revealed that neither the modeller nor anyone else knew what was causing the model to generate its results.

Many a works system is designed to determine when works should be carried out. Inevitably this is based on the designer’s best knowledge and judgement at the time. But what if circumstances change?  What alerts us to the fact that there IS a change? Do we know enough to make adjustments? Are we critically analysing the output of the system or do we take the system outputs for granted?

Question:  Do you have examples of where measurement has led us astray?

In our May 20 Blog Post we challenged the uncritical acceptance of the notion that “If you can’t measure, you can’t manage”   But measures can be deceptive, when they are chosen without understanding as we saw in the May 24 Blog Post.  With Government and Senior Management focussed on the notion of managing by measurement, more measurements are being demanded all the time – in all areas, not just infrastructure. In order to survive, operatives seek to comply by measuring what is easiest, rather than, measuring what is important.

Some things are easier to measure than others – quantity, for example, is easier to measure than quality. Inputs are easier to measure than outputs. Outputs are easier to measure than outcomes.         Products are easier to measure than services.

The aim of all management is to secure desirable outcomes but it is easy to get diverted into measuring what it is easy to measure rather than what it is important to measure,

For example,  many councils have hours of videos of storm water infrastructure – unanalysed!  Lots of measures – but no management- worthy information.

The condition of road seal is easier to measure than the condition of the underlying road pavement, the first is visible whereas the latter is not. Some years ago a state transport authority adopted a policy that they called ‘a stitch in time’, quite a catchy title for maintenance. Under this policy they required agencies to reseal every ten years and to reconstruct the road pavement every 100 years. Easy to measure! 

But it resulted in reseals being carried out over decidedly unsound road pavements because the time for road pavements was not up. It will not come as a surprise that the reseals did not last, much money was wasted and the overall condition of roads deteriorated until the policy was changed.

Question:  Is there an answer to this problem?  What is your experience?