Talking Infrastructure is focusing this year on the AMP: the original and most fundamental tool of Asset Management. Although the term is now very widely used, it’s not necessarily doing what it should – and not everyone even has an up to date AMP of any kind.
Dr Penny Burns created what we call Asset Management when she identified the big issue facing infrastructure in Australia and proposed a way forward.
In 1984, a ‘first generation’ of post-war asset systems had not yet generally come up for replacement and refurbishment. When asked to estimate the real cost of providing water to irrigators in South Australia, Penny – an economist – immediately saw that no-one had costed the looming capital maintenance needs.
So, using the finance tool of lifecycle costing, Penny modelled what would have to be spent over the next twenty or so years, merely to maintain current level of service. And it was a far higher figure than anyone had considered.
She used her lifecycle modelling to form the basis of what she called the Asset Management Plan, or AMP – now a concept known around the world, and in many places specifically used by governments to determine infrastructure funding and pricing.
The AMP is the plan for all the assets going forward: what needs to be done, how much it will cost and what resources it will require.
Ideally – and in the original concept Penny and colleagues developed – it looks well beyond 10 years, includes non-capital maintenance as well as all capital projects, new as well as renewal, and is driven by a robust demand forecast, in other words a good understanding of service needs in the future.
It then enables infrastructure agencies and their owners & regulators to understand and plan not only for money but also resources – how many people, materials and supply chain, downtime planning.
In a world in which turning resources on and off takes time, from raising money or obtaining funding, long lead times on equipment, to realistic timescales to train up people, you need a long term plan.
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