How Asset Management is not just more of the same, but a change of mindset
The longer I work in Asset Management, the more obvious it is that it’s all about systems.
We talk about the need for an Asset Management System, following ISO 55000 in 2014 (another milestone that had a big birthday in 2024, along with the creation of AM itself by Penny Burns in 1984).
But there is a bigger problem. Asset Management has to change the existing system, only the existing system isn’t as visible as ISO 55000. It’s not a management system, in ISO language, at all. And, following the work of Donella Meadows in Thinking in Systems and others, we understand that existing systems resist. That is, you can’t just tinker with an entrenched system, or it will bounce back as soon as you stop actively pushing it.
Because any system is perfectly designed to deliver the outcomes it delivers. It all works to succeed in its own terms, however dysfunctional those outcomes look from the outside.
Even before systems thinking, Thomas Kuhn put his finger on it. He talked about revolutions in science, where a new idea overturns the previous consensus. What made him understand this was a ‘paradigm shift’, a change of system, was a key observation: afterwards, some earlier ideas don’t make sense in the new paradigm, but clearly made perfect sense before. And you could get at the old paradigm by working with the ideas that don’t now apparently make sense.
Look for the weird. What would you have to believe for them to look obvious within that system of thought?
Unfortunately, we teach children that what happened before was silly and not worth understanding. Because Galileo was Right (and everyone else Wrong). Newton was a giant on Galileo’s shoulders. And then of course Newton wasn’t quite so Right when Einstein came along, but still useful, nevertheless.
We do not bring children up to see systems.
The example of something that was previously obvious that fascinated me when I attempted to study it was how, pre-modern science, a vacuum made no sense. To simplify wildly, a vacuum didn’t make sense when everything in the world was connected through touch. Newton was thinking about God, not scientific evidence, when he postulated that gravity could act at a distance without touching anything; and it actually took centuries for scientists, let alone the rest of us, to accept that light could travel across a vacuum. (A great book title about the history of thought on vacuums: Much Ado About Nothing.)
Look for the weird, if you want to understand another system of thinking. It doesn’t look at all weird to those within the system, and it gives you a big clue as to the system itself.
There is one really weird outcome of the present system in infrastructure that many have tried and failed to shift. Why, oh why, is it so hard to get capital projects to deliver simple as-built data? We can say it’s because the people in those projects don’t care – but that doesn’t explain how come we can’t even bribe them to do it, for example through significant retention of the last payment in a construction contract. As not stupid people, why it is so impossible to get them to see how important as-built data is?
I know I have tried: asking classes how we expect (other) people to operate and maintain the assets without basic data about what assets they are meant to manage. Is it so much to ask that we have, at least, a complete and accurate inventory of those assets before we start to operate and maintain them?
There is a capital team I know that I’d have to invent if they didn’t already exist. To write a sit-com or horror novel about. I think the first time we suspected the full weirdness was a hand-scrawled note from its manager to the AM team demanding what evidence we have that asset data is useful.
And he didn’t mean why did we think the basic nameplate data would make any difference to operations and maintenance, because he wasn’t thinking about operations and maintenance at all.
You could, I suppose, argue that they’ve always had to do without data in the past – except that would be a very strange argument in the 21st century. What I suspect he really meant was, how could as-built data be important enough to weigh against what really matters, which is building shiny new stuff? Enough to waste precious project resources on (even when these are included in the budget)?
His team, I can report, have reliably gone on to claim all sorts of other weird things since. But they collectively aren’t stupid, and those things all make perfect sense to them. And you have to put ‘weird’ in context: they are only saying what thousands of other engineers believe. It’s clear to them that it is Asset Managers who are the weirdos.
It can take you quite a long way to ask about people’s self-interest. That project people don’t want to think about as-built data because it’s all work and no benefit to them. But I now think this is to miss the point that we’re talking about a system, not individuals. They don’t mind work – but it has to make sense to them; and they live in a system where some things we take for granted actually seem meaningless to them.
Yes, they don’t care about maintenance, but that’s not only because they’ve never done it, or believe maintenance people are lower status, or simply lack basic empathetic ability to put themselves in the shoes of a maintainer.
They inhabit a system that tells them asset creation is the whole point.
Who are the heroes in their stories? It’s someone like Isambard Kingdom Brunel. Someone who, thanks to the lobbying of Jeremy Clarkson (him of Top Gear), was voted the second best British person of all time, after Winston Churchill, in a BBC poll. (Really!) Brunel built bridges, tunnels, a railway, a steamship that never worked. He’s an engineering hero, even if everything didn’t work.
To an engineer, engineers are the heroes of the Industrial Revolution, the Modern World.
This is true even when they build terrible things.
When I first began to realise the current set-up is pretty stupid about maintenance, I was also becoming aware of the resurgence in conventional economics: that wealth is generated by investment in things. I was brought up with just enough socialism to believe that, actually, people get rich by exploiting other people, that is paying them less for their labour than the value of what their labour produces. But lots of people don’t see that when they view the world. They see it’s the technology that’s important. Build a better machine, and you can get more from less people, but everyone will end up happier.
Working in privately-owned water companies from the early 1990s, I could see they were plugged into the capital system. A commercial English water company would be rewarded in its share price for capital investment in technology, and punished for having too many workers. The ideal was to invest in technology because it would allow you to get rid of workers. It didn’t really matter if the technology cost more dollars than you saved in your wage bill: it was a Good Thing anyway. Think ‘productivity’.
Of course, that suited technology companies, but they did not create the system; they simply exploited it. Watching the big management consultancies push big dumb IT products on the water companies, I could see it was money for old rope; I was not plugged into the system sufficiently to feel the excitement.
Instead I started my journey into AM by realising the maintenance workers were considerably more useful than the big dumb IT products, and at the same time I was getting attracted to a turn of the millennium ideology that we needed to maintain what we had rather than keep building more new stuff. (The idea of the ‘coming century of maintenance’, an idea I think I first met in David Holmgren, and permaculture.)
I wrote above that we don’t teach children to think in systems, but there is one exception, guaranteed to get the average American upset. Quite a lot of people for the past hundred years have learnt that Capitalism is a system because they learn about Marxism as a system.
I could not say I have ever ‘been a Marxist’, but I did read up on it as a system (and I don’t mean primarily as a political belief). Marxism argues in systems, and the possibility you can overthrow one system by another. Marx was not completely right, and I don’t think he foresaw Lenin, Stalin, Mao; but he was not completely wrong about systems, either. The way he thought capitalism would undermine itself turned out to be hopelessly optimistic, however. I now fear capitalism will go down when it brings the rest of the world with it.
Of course there are plenty of weird things about capitalism as a system. The most obvious is the moral value it gives to people who own lots of things, and use those things to exploit other people.
It’s obvious to me that an ER/ A&E nurse is, generally, a more admirable kind of human being than a billionaire who is just earning yet more billions. But it’s the billionaires who not only prop up the existing system – who know who to bribe – but, somehow, are believed to justify its existence as well.
So we live in a bigger system that says things power the world. Perhaps we should not be surprised that engineers see themselves as key, making the things, making the things that make other things. The notion that a thing generally needs some labour to keep it working doesn’t figure in this. (And wouldn’t it be great to have robots do this anyway?)
So, when a client I work with asks, how come the project engineers don’t see that the whole point of building something is for it operate – in other words, that construction projects exist to create something to be operated to deliver products and services – he literally doesn’t make sense to the project people. Operations are only the labourers, and maintainers even lower than that (because the system doesn’t acknowledge that things wear out).
The thing is the only valuable part of the system!
And then that’s built into the very way we calculate, we value, dollars.
The economic regulation of privatised infrastructure generally makes an absolute distinction between capital and operating dollars – one good, the other not. The private infrastructure companies only get a return on their capital expenditure. They essentially get punished for opex, because that comes straight out of their profit.
And it gets worse. The companies that invest in infrastructure companies are not engineers: they make money on owning companies. Their real profit comes from a combination of dividends and resale value, and I suppose resale value is justified on the dividends. (Here the infrastructure company is the ‘thing’.)
Hence the really weird feature of the current structure of the English water industry, where several companies are at risk of bankruptcy because they have paid out so much in dividends, for which they have borrowed too much money. They don’t even care about resale value, because they have already milked the profits.
“What do you mean, why aren’t we managing the water? What kind of business model would that be?“
So they tip raw sewage into the rivers and bathing beaches, because they have calculated the fines are much less than the cost of not tipping it; and say they cannot afford to improve anything without more of the customers’ money, because they paid all the profit out to themselves. So much for the argument that we needed their capital….
Yes, this is a failure of regulation. But you know those billionaires? They are not keen on regulation, and they know how to make it worth governments’ while to weaken it. I mean, that is the system.
And the impact on those of us who care about managing infrastructure is that we get into endless, fruitless discussion about considering the total cost of ownership, not just upfront, capital costs.
I had an engineer cling by his fingernails in a recent class to argue that ‘cost’ and ‘ownership’ didn’t mean what I thought they did. That I was unsympathetic to the point of view of Finance, whatever or whoever that was meant to be. Because capital is the only important dollar.
(NB Net Present Value is the tool of the devil, anyway – or at least a lousy way to think about spending for the future in a world of rampaging climate catastrophe.)
But it’s just a trick of the language to blame everything on capitalism.
I feel there is a system, a framework, a paradigm – a more or less coherent set of beliefs that make up a worldview – behind conventional engineering.
We do not need necessarily to take on capitalism to ask what it would take to flip a switch, make an equivalent of a paradigm shift, in the worldview of infrastructure engineering. (Engineers are not scientists, so I am not going to make too much here of Kuhn’s research, except to observe, that like scientists, engineers are a community bound by common textbooks; engineers are educated, not born, and their education itself could do with a Kuhn-equivalent to unpack.)
Bear in mind the weird, again. It is not just the lack of ‘as-built’ data that gives us a problem.
If we praise and reward investment in asset creation and punish on-going costs, one logical response would be for projects to consider how to minimise operations and maintenance in design.
Clearly there is an impulse here, for ‘automation’; but consciously designing to make it as easy and cheap to operate (for example, to make it energy-efficient) and maintain (‘maintainability’) is not how design engineers generally think. They are not rewarded for it. That is, no-one set them operability and maintainability as goals, no-one asks how well they succeeded afterwards. Why not? When you try to disentangle this, you quickly get a sense that – well, it doesn’t make any sense in the investment approval and project world.
And any impulse for automation doesn’t even ask what that might mean for operating and maintenance costs. More complex assets can be more expensive to operate and maintain, for example because they break down more often. Automation is a Good Thing in itself – not consciously underpinned by any actual impact on operational costs.
If you are an Asset Management practitioner, at this point you’ll be shouting ‘whole life cost models’ or ‘total cost of ownership’ at the screen by now.
Because we, too, have our ‘paradigm’.
I describe this to students in terms of how you cannot unsee things once you’ve seen them. You cannot ‘flip back’, not like with the visual tricks of ‘duck-rabbit’ or ‘Necker cube’.
And the things I say we cannot unsee include the importance of the asset inventory, whole life costs, and long-term integrated planning. They are our fundamentals.
I could add, on the basis of where I get obvious resistance when I am teaching engineers, stakeholder engagement and alignment with organisational objectives. I find alignment hard to explain, to someone who doesn’t immediately get it, because it is obvious to me.
I do not get the quite same resistance from other disciplines.
How well have we embedded the key concepts of Asset Management so far?
- For some years I focused on how to explain how to work with alignment; I have to say I am not entirely sure I succeeded.
- Yes, there is a small group of ex-students who agree with me on the SAMP, the importance of having a strategy for Asset Management; it may be my proudest achievement.
- It was only some way in to teaching AM that I became dubious I was really convincing about the long-term integrated planning concept. Even to those in a regulatory framework centred on the AMP, and there are quite a few of those. Co-ordinated, aligned asset planning makes sense to regulators in many places – even as the organisations they regulate still don’t get it.
- At AMCL we hardly even talked about the importance of a good asset inventory, because (I now think) that simply seemed ‘too obvious’ to us.
And it’s only since COVID brought out the problem of swift replanning for changing circumstances that I have suddenly come all over heavy about the key tool of the whole life cost model. I had been teaching that it’s a nice to have, in the sense of taking the time to build life cycle cost models when you’re ready. Now I think the concept is truly fundamental, stating with how it led to Penny Burns creating Asset Management in the first place.
One evidence for one person’s ‘switch’ to Asset Management suggests another fundamental, closely allied to whole life cost modelling. My boss Richard Edwards, who is I think one of the very smartest Asset Managers I have ever met, told me it was seeing a cost-risk optimisation for optimal life that persuaded him to jump shop from engineering to AM (and setting up AMCL in 1997).
There’s another example that sings out ‘system’ for me now.
In around 2017 I taught two people on an IAM Certificate course at Tacoma Power, in Washington State, USA. A couple of things about them: neither of them were engineers, or had been through an engineering education. They are rather ferociously smart, but also unconventional.
Next thing I know, they are implementing what I taught them. Not just an Asset Management Policy, not simply a roadmap of actions, but actually building whole life cost models, using them to calculate optimal life, along with reading up on risk and quantifying asset risks in dollars (which you need for true whole life cost models). I believe their attitude was that was what I had told them it meant to do Asset Management, so they did it.
The point was, almost no-one else had ever taken me so literally.
And now I have to wonder, what did everyone else in the many thousands I have taught think Asset Management is? The answer is, often, doing something that continues where they were already going, or something they could buy (work management aka ‘enterprise asset management’ IT systems; optimisation tools for capital programmes; condition monitoring and ‘asset health indexes’).
It’s worth saying at this point that some of those people who did have engineering backgrounds might very well see a gap opening up between what they had previously done as engineers and the new world of Asset Management. That they did not want to continue as design engineers, but were looking for something bigger picture, such as thinking differently, more strategically, about how to manage specific assets classes.
But increasingly I suspect that is not enough.
The evidence? Those two non-engineers at Tacoma Power produced staggeringly better asset class strategies that are now admired widely.
They asked, they really asked, what does the data tell us about optimal life, about risk – and how does that change how we manage our assets? And it’s the fact that they simply thought that was what they should do. It all made sense to them, and they were not put off by the things that – weirdly – get in the way for so many engineers I teach. Putting dollars on different kinds of risks? – start by looking it up on the internet. (You would think many engineers had never heard of actuaries.) No cost data, in a nice neat finance database? – no drama, we can estimate it from effort.
And they also were the first Asset Managers I know to go back to the work of Donella Meadows and ask: in what ways is the current situation with managing assets a system? And what problems does that gives us, when systems thinking tells us systems are usually self-perpetuating and resistant to change?
How does that match our own experiences of our resistant and weird, engineering-dominated organisations?
Why do they not get it? What do they believe instead? That’s the clue to any hope of changing it.
This is all thanks to Todd Shepherd and Julie DeYoung, with love. But note that Penny Burns, as always, got there first with paradigms in a SAM article.