Aneurin Hughes, Cardno, asked me this question at AM Peak last week.
It got me thinking and I realised that I never had an expectation, or long term vision, and I still haven’t. If it was hard to see the future back then, it certainly hasn’t got any easier now.
And yet, without any formal long-term planning, we have made incredible strides. Which is what makes looking back to where we started so fascinating.
I had certain things I believed in – that we needed to know WHAT we were doing, WHY we were doing it, and how much it was COSTING us – for these were necessary to make sensible decisions. These were basic so I was surprised to find so little attention to them when it came to infrastructure.
Today these same questions still apply – but now we are able to tackle them in far greater depth and complexity. And I think that ability (and the desire to apply it) is what has changed the most over the last almost four decades. Once we thought of WHAT in simplistic physical and immediate terms, now it embraces the impact we have having on the environment and on society now and into the future. The WHY question which used to be ‘what’s in it for us’ where the ‘us’ was the supply organisation, now looks further and is forcing us to have a greater understanding of the role of infrastructure beyond its mere ‘job creation’ aspects, to consider the myriad ways in which infrastructure interacts with the way we ‘live, work and play’.
The question of COSTS is perhaps the most controversial one we are dealing with today. Initially we knew almost nothing and a lot of the early development of AM focused on understanding this better. At first we just looked to the financial cost to the supply organisation and ignored those external costs that fell on users, or on the community – both now and future. These are now, at least, being discussed, but we still have some way to go before we make the necessary institutional changes that will enable the issues being discussed to be implemented. In the meantime, so many incentives remain counter-productive.
So my answer to Aneurin was, of course, ‘No’, because I had no theoretical long term vision. Instead my approach to AM was more pragmatic, more incremental, I just tackled the next problem that I could see.
QUESTION: Do you have a vision? If so, what are the next steps on the way to achieving your vision?
We have uploaded Chapter Two of ‘Asset Management as a Quest’ today.
It is now almost 40 years since Asset Management started. To celebrate, Talking Infrastructure is producing a history of the development of our discipline, now a recognised industry and moreover one for which there is excess demand.
‘Asset Management as a Quest’ is the first in this four volume series and it covers the period from 1984 to 1993. While future volumes, each covering one decade, will call on the ideas, experience and stories from many leading practioners, the first volume is told by Dr Penny Burns, and it is the story through her eyes.
Part One, consisting of 4 chapters, was first published in July 2021. It is now revised and we will be presenting the whole volume, all 20 chapters, one chapter at a time each fortnight. You can find the first chapter, ‘How Asset Management Began’ here.
Information on how you can be part of Volumes 2-4 coming shortly – so, if you have not yet joined Talking Infrastructure (it’s free!) do so, and you will be the first to be advised.
The tag line for Talking Infrastructure is ‘generating better questions’. Ruth’s brilliant last post reminded me that I had never defined a ‘better’ question. So let’s do that.
Very briefly, a ‘better’ question is one where the answer creates new information, or in the words of Michael Port (Heroic Pubic Speaking) it’s a question that Google can’t answer!
More than that, it generates new capability, allowing us to do new things, or old things in a better way.
Are these ‘better’ questions?
The first volume of our story of Asset Management, ‘Asset Management as a Quest’ consists of a search for the answers to the following series of questions. (You can read Part One of this volume – and our search for answers to the first two of these questions – here)
1: How much does it cost South Australians to get their water services?
2: What is the likely cost and timing of renewing water assets?
3: What is the cost and timing of renewal for all state infrastructure: Public Housing, Hospitals, Schools and Colleges, Highways,Transit, Power and Water?
4: What can be done to contain costs?
5: How do we instill an AM mindset?
6: How do we spread the word about asset management and its benefits?
7: What are the consequences if AM is not understood?
8: Are our tools and data up to the challenges we now face?
9: How do we advance the narrative but also keep it focused?
10: How did NSW move the story forward and what can we learn from its actions?
Q: Are these ‘better’ questions? Why or why not?
Q: What other questions were being considered in this early perid of our history (1984-1993)?
And, if you would like to know more about question asking, here are two great books
‘Questions are the Answer’ by Hal Gregersen, and
‘Curious’ by Ian Lewis (recommended by Lou Cripps after reading Ruth’s post)
Today is the 5th Anniversary of Talking Infrastructure. It was created in July 2016 to consider the new world we are now in – and the new questions this world and its challenges requires.
It is now massively evident that whereas a focus on competition to secure the success of individuals and individual companies has generated much that we enjoy today, it has also generated serious problems, of which climate change and social inequity are just the most visible.
Infrastructure – problem or solution?
While we may be reluctant to admit it – infrastructure has been a large part of the problem! Every infrastructure does considerable environmental damage. And not every infrastructure generates commensurate community benefit. A few months ago, I said’ Goodbye to our Talking Infrastructure Guy’,– and explained what was wrong with our current attitudes to infrastructure. Today he is formally replaced as our icon.
So welcome our new icon – the Australian platypus – symbolic of the collaboration we so badly need. The platypus was originally regarded as a joke, for it was considered an impossibility, being so many different animals all in one. And this version of the platypus reflecting our aboriginal culture is particularly appropriate. The Australian aboriginals are the oldest civilisation in the world sustaining the land for over 50,000 years. That’s resilience! And they have done it by a focus on community, rather than self, and a veneration for the land that supports us.
If we want a future that will support our children and theirs, we need to embed these iconic qualities of community, resilience, and sustainability in all of our decisions – and especially in our long term infrastructure decisions – from new and renewal to ongoing maintenance and even to eventual withdrawal.
What questions do we now need to ask ourselves in order to secure this future?
Hint: They are not the questions that we started with in asset management and which I discuss in volume 1 of our series, The Story of Asset Management. Consider the ten questions I pursued in the first 10 years (1984-1993) which you can find here Or, to see the questions in context, see “Asset Management as a Quest – contents”.
After you read these questions, consider to what extent we have already solved (or at least know the solution to). Then ask yourself what the questions for the next ten years should be.
I hope you have been enjoying Ruth’s platypus posts on our blog as much as I have – and reflecting on the interesting and critical question she has been exploring, namely, what does it mean to be an asset manager?
This is not a simple question to answer. Which is why it needs thinking about. I have been doing much thinking about it over the past few months as I have worked on the first volume of Talking Infrastructure’s 4 volume narrative, ‘The Story of Asset Management’.
Each of the four volumes covers one decade, starting in 1984, to be finished by the end of 2023. Each volume has its own theme:
Asset Management as a Quest. 1984-1993
Asset Management as an Opportunity. 1994-2003
Asset Management as a Discipline. 2004-2013
Asset Management as a Business (and beyond?) 2014-2023
As Ruth has shown in her recent posts, Asset Management needs a team.
Our story of asset management is the story of how those teams developed, how they came together over key ideas, how they fought with each other and supported each other – and became the very special kind of multi-disciplinary, multi-national tribe we are all part of today.
Every infrastructure project causes damage – to society, to the environment. We know this. A new road means loss of green space. It disrupts existing commerce and communities. Steel and cement are toxic to the environment. We accept this damage as a necessary cost of achieving a larger community good.
For too long, we have accepted this ‘larger community good’ to be the short term jobs that are created. But as shown in the last two posts, not only is this jobs gain illusory, it causes its own damaging distortions in the economy. Construction workers might gain, but other workers lose.
So if we are to support a new infrastructure project it must be because of the greater, ongoing benefits that the infrastructure will provide – after it has been constructed. For evidence based decision making, this is where we must seek our evidence.
How do we do this? What sort of evidence should we seek?
When a government runs a ‘balanced budget’ its spending (and the jobs that this spending creates) is compensated for by its taxing (and the jobs that this taxing destroys). It follows that the justification for infrastructure can never be the jobs it creates for it doesn’t create any – it simply shifts jobs from one part of the economy to another.
The job losses are not easily measured but they are real. As asset managers we see it all the time, when, following an infrastructure spending splurge, governments try to claw back the money spent by reducing funds for operations and maintenance. So that not only is there not only no net increase in funding and jobs but we are now left with distortions in the economy – more assets to maintain but smaller budgets with which to do it.
We can see this level of distortion when it happens in our own organisations. But impacts extend beyond those organisations that benefit from the infrastructure spending, to those many companies, associations, individuals that now experience higher taxes or lower government spending in their areas or lower demand because spending has been shifted elsewhere. This is difficult to see and where logic must apply.
How can we be sure that spending money on a new infrastructure project trumps spending the same amount of money on hospital staff or teachers, out-of-work youth, or any one of a number of other spending opportunities?
For the distortions to be worth it to the community, we must be pretty sure of the ongoing value of the infrastructure to the community – see Jeff Roorda’s comments to the previous post.
How often do you see arguments such as that spending, say, $100m will create Y,000 jobs? Rarely do we even question the logic, let alone the arithmetic. But we should do both. For if inserting $100m into the economy creates jobs – and it does! – then it must be equally true that extracting $100m reduces jobs. It follows that if the Government is running a balanced budget, then money into the economy through government expenditure is equal to money taken out of the economy through taxes to finance this and there is no net increase in jobs. The situation is worse if the Government is aiming at a budget surplus, for then more jobs are lost than are created.
The jobs created are nicely gathered together and visible for the project at hand, they are even amplified by media exposure, but what you don’t see are the jobs that are lost, for these are spread across the economy.
Let’s face it, to keep its budget under control it will either have to cut back on other expenditure or raise taxes and charges. (Think back to the last ‘stimulus’ bill, is that not what happened a year or so later? The government encouraged construction then later reduced funding affecting maintenance amongst other things.)
And as to the secondary round of expenditure – by which those receiving the first tranche of largesse are expected to go out and spend, thus creating more jobs, what about the secondary effects of the jobs that are lost?
Yes, we want to believe that we are making the world better by building infrastructure and creating jobs but are we in danger of letting wish fulfilment overcome logic?
Moreover, when we are losing jobs all over the country in order to put up a new infrastructure project, how can we be sure that we are gaining, in real community benefit terms, more than we are losing? Maybe we are not?
Sorry for long absence, I’m not dead, just been otherwise engaged. I am currently writing ‘The story of Asset Management: the first ten years’ (1984 – 1993) and as I read back through my old journals, it is easy to see why asset management has captivated me for so long and I thought some of the stories might captivate you, too. For example, try this:
1988 Scene: NSW Parliament House
In 1988 I attended a very heated debate on accrual accounting presented at the NSW Parliament House for elected members and selected others. It was memorable for a fight that almost broke out in the house. After much discussion on the pros and cons, one section of the audience was showing considerable disquiet. Eventually one of the group, a politician, stood up and angrily and loudly stated “If you reveal accrued liabilities we will be forced to do something about them”.
At this, the accounting professor on the platform, Bob Walker, replied neutrally “Accrual Accounting is simply an accounting system, it provides information, what you do with the information is up to you”. This was too much for the highly agitated politician who shouted “You’re just like Pontius Pilate, washing your hands of the whole affair”. Cheers broke out from that section of the audience.
What can we learn from this?
Now the academic was correct, if naive. It is true that accounting systems provide information that enable but do not enforce action. However awareness of information can be a propelling force to action, which the politician instinctively recognised. It is the old ‘ignorance is bliss’ argument, if no-one knows something needs to be done, then you cannot be blamed for not doing it. Once the facts are in the public domain, though, they may be far more difficult to ignore.
The information we develop as asset managers also presents imperatives to action – after all that is why we research, analyse and develop it. So we must be prepared for, and learn how to deal with, reactions like that of our angry politician and not go into the fray unaware. Yet how many times do we do precisely that?
The way in which our data or facts are presented is important, too. There may be no difference – in point of fact – between the glass that is half empty and the one that is half-full but the connotations are widely different. The truth is that facts can never ‘speak for themselves’. The language they speak and the message they give depends crucially on the way they are organised and presented. And this organisation and presentation is what politics is all about – influencing reactions. This is as true of internal, departmental politics as it is of larger scale national and international events.
We have developed a poor habit: decrying something as ‘just politics’ as if by doing so we can ignore it. But everything is politics! Better to learn how to play the game. That is, the game of presenting our information in such a way that the reaction we get is the one that we want.
Make a term, or an idea, popular and any number of people will latch onto it and attach it to their own agenda – and it doesn’t matter if their agenda is diametrically opposed to yours. In fact, it might serve them better if it is.
For example, I have seen instances of the term ‘asset management’ taken over by developers, applied to office cleaning, and, of course, to maintenance itself. The one I really objected to was the developers. Figuring that their own term had come into disrepute this particular group had decided to take ours!
We see what we want to see
Another problem with communication of ideas is that we tend to see what we want to see.
Years ago the Public Accounts Committee produced a report showing how much would need to be spent on hospital infrastructure renewal IF nothing was done by way of better maintenance, accounting and planning practices (ie without better asset management). A few days later the Minister for Health, completely ignoring the intent of the ‘if’ statement (as people are sadly inclined to do) profusely thanked the PAC Chairman since this ‘proved’ he needed a larger budget!
On another occasion, I was walking in the city when the State Treasurer dashed across a busy main road to tell me enthusiastically that it was thanks to me that the State had kept its triple A credit rating! What?! I had looked at our asset base and saw a future renewal problem that threatened to dwarf the state’s budget, however the credit agencies had looked at the dollar value of our assets – which we had made visible for the first time – and, ignoring the budgetary impact of restoring the deterioration that had already occurred and would need to be attended to, saw only billions of dollars in assets. We are all subject to this restricted vision. We see what we want to see.
All of this is by way of saying that the term I used almost 30 years ago for accounting for infrastructure has long since been hijacked, and by so many, that it is unwise to continue using it. So, I want to start again with greater neutrality.
First: let us be clear about the task – namely to develop financial metrics that drive good infrastructure management and meet the need for financial responsibility and accountability. This requires genuine dialogue between two disciplines – and a listening ear.
Let’s start with a thought experiment
There may be lots of things you like about the current way in which we account for infrastructure, but what don’t you like? Are there problems that it creates for you or your organisation?