Asset Management as Anthropology

Yin-yang platypus, from platypus.clothing

“The worst misunderstandings sometimes happen between different teams within the supposedly same ethnic group, particularly if they [come] from different locations or had different professional training (say, IT workers mingling with engineers)” – Gillian Tett

I have long been fascinated by differences in approach between engineers and Asset Management professionals – how AM is not just another variety of engineering. And, for that matter, why Operations managers don’t think like AMps, or how IT teams look at the world. For instance: what is it that motivates people in IT teams? (Not, I think, the pleasures of making users happy.)

In my own life, I seem to have sharply favoured working with maintenance, or ex-maintenance people, rather than Engineers with Capital E.  Because they were very different experiences.

It is not that there have not been engineers who are massively important to me, such as my brother, or my parents’ best friend Ed – but then again, they never acted like typical engineers, and were not very polite about such ‘grey men’ (Ed’s phrase) themselves. That engineering does have its own cultural norms, some quite odd, has been a question for me for many decades.

So my eye was caught by the review of a book by Financial Times editor Gillian Tett, Anthro-Vision: How Anthropology Can Explain Business and Life.  About trained anthropologists such as Tett who have found themselves working in businesses, such as Google or GM, or what they would advise governments on dealing with COVID-19.

She describes how anthropology is about both investigating what’s strange, other, exotic, and about the tools to see our own culture/s, to understand what is weird (or even WEIRD) about it. The book has plenty of interesting examples – about Kit Kats in Japan become an indispensable good luck charm for school exams, about dealing with Ebola or ‘CDOs’, as well as more effective advertising and work practices.

But it particularly made me think of how to understand the oddities of current engineering – why is so often tends towards the short term, to silos and uncoordinated stupidity, even resistance to data. Surely none of those attitudes are ‘logical’ – so what is really going on?  I take it as given that, like IT, there is a coherent motivation, a vision of what it means to be a good engineer.  So how come… that doesn’t play nice with Asset Management, so often?

And then again… what is the culture of Asset Management, developing before our eyes?

Because I also take it that if you don’t try to understand the water you swim in, you also don’t really understand what you are doing – how it might need to change or evolve – and why it gets up the nose of others who don’t share your basic values.

There is always culture, always weird to someone outside it, and managing infrastructure involves several different ones. So we must have anthropology in our Asset Management toolkits, too!

Next: Ethnographic approaches we might use in practice?

Value-Less Feelgood?

Hakuna Matata Platypus, from platypus.clothing

When I managed a small subsidiary company in the 1990s, I read a book by ex ICI chair John Harvey Jones on values. He said – and I am paraphrasing wildly – that any useful organisational value must have an opposite which would work in other circumstances, otherwise it’s so much mom-and-apple-pie stuff you can’t disagree with, but which does not motivate or drive very much, either.

When my team tried articulating our collective values, we all agreed on loyalty – which the marketing men said was not an appropriate marketing slogan, so I knew we were on to something. What could be (in other contexts) a useful opposite? Impartiality, for example. Loyalty was something we felt, and it also turned out to be something our clients could feel (and appreciate). Someone else could contribute impartiality.

As we face a puzzling current widespread refusal of North American infrastructure agencies to set clear SMART targets, we have wondered aloud if it’s because they don’t want anything they could fail at.  I begin to wonder if it’s worse than this, a lack of clear purpose or value at all.

I think I have just spotted the worst yet: a transportation agency that’s adopted ‘We Make People’s Lives Better’.   Their top leadership are very proud of it, since who doesn’t want to Make People’s Lives Better? The detail of what counts as better, which people, how we will do this – and what we do if one lot of people want something that would adversely affect another group of people? Well, don’t be negative, we can work that all out later. (And don’t even bring up all the critiques of naïve utilitarianism.)

Do we want a bus company to ‘make our lives better’, or do we just want them to concentrate on running an efficient and comfortable bus service?

For the moment, we asset managers can play the game of what, if anything, would not fit under this rhetoric. How could it even in theory rule out a bad option?

Yeah, it was a high-priced consultancy that facilitated this, but why does this even feel right to the executive, apart from being a meaningless feelgood statement?

Is it a triumph of the marketing men, or a complete dereliction of duty?

The Big Jobs Lie – Corollary 2 – Damage

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?

Previous

The Big Jobs Lie – Corollary 1

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.

And share your own suggestions

Previous posts

The big jobs lie

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?

And when we say AM culture, does it have to be a culture war?

Some days, it all feels quite hard.  We know that infrastructure Asset Management requires a change in attitudes, in culture, and that’s no fun to anyone who just wants to get on and manage assets well.  I teach AM, and always say that the tricky bit is attitudes, using co-operation and longer-term thinking as two culture shifts we need if we don’t have them.

But some days it seems more than this. Why does IT think IT assets are special, and so shouldn’t be subject to the same AM planning and prioritisation processes?  Why doesn’t engineering care about information – not just as-built, but the need for any evidence for their decision processes. (“How do we know what benefit we will get from better information?”, an engineering department wrote recently in opposition to a data improvement initiative.)  Why is Urban Planning not interested in any conversation about the current state and utilisation of the physical assets, and how did they come to despise maintenance (why does anyone despise maintenance)? Why do operations, executives think they don’t need KPIs? What do they think they are arguing for?

AM is on the side of good, evidence-based rationalism: wanting to do the right thing based on logic and facts. It is very hard for us to deal with people who are not.

Some days it feels rather like attempting to argue with an anti-vaxxer, or a Trump supporter.

Obviously, when they look at us, they don’t see champions of logic and good sense.  Maybe they see a threat – but what do they tell themselves? Answers, please….

Open for business again

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.

It doesn’t happen by accident.




And now IRL…

Building an Asset Management Team is now available as print on demand – a glossy paperback – from Amazon. All proceeds to Talking Infrastructure.

“A practical and lively guide for anyone who needs to do infrastructure Asset Management. It tackles who you need and why you need them.”

“This should be a pocketbook series” – Tina Ignat, Chicago METRA RailRoad

“It isn’t like anything I have ever read on asset management. I wish it was available when we started out on our AM journey!” – Krista Halayko, Manitoba Hydro

Is this the right question?

Hello Ruth,

We are currently working to justify the spend for improving our AM program. We would like to utilize other utility benchmarks for efficiency, productivity & other improvements from Asset Management implementation. We would use this to estimate what monetary value we can expect from improvements to operations. Thanks!

Joe.

Dear Joe,

Always glad to hear from you, and we can send you the benchmark data we have.

However… looking to long-term, integrated, whole life cost-based Asset Management for short term operational savings is maybe not the place to look for benefits, unless you can already see inefficiencies in maintenance spending. Thinking more in terms of planned, proactive maintenance rather than depending on reactive maintenance may save a lot of trouble, but it is not guaranteed to save on budget.  The benefits of being more proactive are more likely in terms of better customer service and managing risks so they do not cause you issues down the road.

Asset Management might be more realistically promoted as better customer service with the limited resources an organisation has; optimising effort so you target capital where it is really needed (and not wasted where it is not needed); better community, regulator and government trust in the capability to deliver what is required now and into the future. 

That an organisation seeks immediate operational savings can be a symptom of pre-Asset Management thinking – thinking in terms of today’s budgets rather than service, risk & the longer term.  The problem is that people may not see that poor customer performance, stakeholder mistrust and high risks actually do cost a lot of money, but they aren’t always accounted for.  (Until, suddenly, in a crisis, it’s obvious how very much they cost…)

Happy to support in any way we can – I hope this might be useful!

Warm wishes

Ruth

Benefits of good Asset Management can include higher profits and share value, lower insurance premiums, getting out of a catastrophe intact – but does it ever save on next year’s budget?

Maybe through analysing the data and realising how inefficient you are – anyone actually done this?

And – while we’re asking – did anyone ever save money on implementing a work management IT system (as opposed to making it easier to organise maintenance tasks)?

Accounting for Infrastructure – tell us your story

Photo by Suzy Hazelwood from Pexels

Popularity can be the death of a good idea

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.

The Goal

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?

What’s your story?