The LGAM Guide to Asset Management Version 1.4 by Wayne EddyLGAMWayne Eddy.

The LGAM Guide toAsset Management

Version 1.4

by Wayne Eddy

Overview

I believe that for Asset Management to really step up and deliver on its promises, it needs to be combined with a few other ideas including; openness, and the wisdom of crowds.

In this presentation I will endeavor to summarise the basic concepts of asset management, the reasons for asset management, and explain how and why I believe concepts like openness and the wisdom of crowds can help make Asset Management an even more valuable tool for Local Governments.

What is Asset Management?Asset Management is the combination of management, financial, economic, engineering and other practices applied to physical assets with the objective of providing the required level of service in the most cost effective manner. It includes the management of the whole life cycle of physical and infrastructure assets.

Reasons for Asset Management?There two main broad reasons for asset management ;

• To fulfil legislative, regulatory, audit and reporting requirements,

• To ensure assets are managed in the most cost effective & ratepayer acceptable way possible.

In an ideal world the “What we must do” circle would lie wholly within the “What we should do circle”, that may or may not be the case, but in any event we need to tackle the red area first.

More Reasons for Asset Management

Other more detailed positive Reasons for Asset Management, include:• to minimise the life-cycle cost of an asset, by considering all costs including; acquisition, maintenance,

operational and disposal costs.• the ability to communicate effectively with the public about balancing levels of services, risk, and funding

and thus inform subsequent policy trade-offs and decisions. And support those conversations with real data and analysis, not only anecdotal stories.

• to make sure that the service levels provided are sustainable over time.

The consequences of not doing AM?

• An audit qualification

• Being “named and shamed” by a government department

• Increased likelihood of wasting resources on inefficient asset related practices

• Not being able to provide accurate information about the quantity and value of Council assets for mandatory reporting requirements such as the Victoria Grants Commission Return

Sometimes the consequences of not doing something, are more compelling than the benefits of doing something, the possible consequences of not doing Asset Management include:

Where to start?The first step in an organisation’s Asset Management journey is usually to compile an Asset Register, but it is also important to develop an Asset Management Framework - a set of documents, systems and processes that address the organisation’s asset management responsibilities. Typically an AM Framework will consist of the following documents:

Asset Management Framework

Policies & StrategiesAn Asset Management Policy is a high level document that describes how an organisation intends to approach asset management within an organisation.

An Asset Management Strategy is a strategy for the implementation and documentation of asset management practices, plans , processes & procedures within an organisation.

What is an Asset Management Plan?

An Asset Management Plan (AMP) is a plan developed for the management of one or more infrastructure asset classes with a view to operating, maintaining and renewing the assets within the class in the most cost effective manner possible, whilst providing a specific level of service.

What is an Asset Class? An asset class is a grouping of assets of a similar nature and use. It is typical to draft a separate Asset Management Plan for each class.

Different Councils adopt different classes structure, but the break up below is fairly typical.

• Land• Buildings & Structures• Plant & Equipment• Water• Sewerage• Roads• Drainage• Intangibles• WIP• Cultural

What should be in an AMP?In some Australian states – Queensland for example – there are Minimum Requirements for Asset Management Plans. In other states what needs to be in a plan is less well defined. The IIMM pictured to the right also makes recommendations about what should be in an AMP.

Some items typically found in an AMP include:.

• 1. Scope• 2. Links to Related Plans, Policies and Strategies• 3. Reasons for Asset Ownership • 4. A Physical Classification & Description of Assets• 5. Asset Management Practices• 6. Service Levels • 7. Asset Valuations & Lifecycle Costing • 8. A Forecast of Future Demand & Technological Changes• 9. Expenditure Forecasts & Cash Flows• 10. AM Targets, Measures & Monitoring

Service LevelsOne of the key concepts of asset management is that assets exist to provide a service. This makes the setting of services levels a very important part of any Asset Management Plan.

A service level can be defined as the service quality for a given activity. Levels of Service are often documented as a commitment to carryout a given action or actions within a specified time frame in response to an event or asset condition data.

Service levels may relate to:

• Reliability of Service• Quality of Service• Quantity of Service• Safety/Risk/Security

Typically a higher level of service will come at a higher cost.

Asset Management ChecklistSometimes questions are as important as answers. Below is a checklist of questions an organisation can ask of itself to see how well it is going with asset management. When all the answers are yes, “Assetopia” isn’t far away. • Do we have a good Asset Management Strategy?• Do we have useful Asset Management Plans?• Have we documented our asset management practices?• Do we know the location of each of our assets, with enough detail to unambiguously identify them?• Do we have a list of all the legislation impacting on the management of assets in Victoria?• Have we documented all of our asset management related outputs?• Have we documented what we would like our asset management systems to be able to do?• Are we confident that the data stored in our asset register is correct?• Are we confident that all of the assets we are responsible for have been entered into our asset management system?• Have the responsibilities for assets & asset management related tasks within our organisation been clearly defined?• Have the asset management terms used within our organisation been clearly defined?• Are developers aware of the information we would like them to provide when they hand assets over to Council?• Do we have a fair and transparent Capital Works Evaluation Framework in place?• Are we keeping up-to-date with the latest asset management related; technologies, theories and practices?• Do we have a system for improving our asset management practices?• Are we making the best possible use of everyone's knowledge?• Are we maximising value for effort by minimising duplication of effort?• Is it easy to find the information we need to answer questions and make good decisions?• Do we know the current condition of our assets?• Are we confident with the methodology used to determine the condition of our assets?

• Do we know how fast our assets are deteriorating?

Is Asset Management succeeding?After being involved in Local Government Asset Management for about 17 years, I have come to the conclusion that, in a lot of cases, in a lot of organisations, the attempted implementation of Asset Management practices has actually resulted in very few tangible benefits.

The stated aim of asset management is to provide the required level of service in the most cost effective manner, but ....

Can we as an industry put our hands on our hearts and say that AM has helped us deliver the required level of service in the “most” cost effective manner?

Perhaps the benefits are there ticking away in the background, and the assets constructed today will last a lot longer than those constructed in the past, or ratepayers are happier, or councils have changed over to new better maintenance practices or are making better decisions about which assets to construct, but I not totally convinced that this is the case.

Where are the success stories? If in fact Asset Management has enabled us to deliver the required level of service in the “most” cost effective manner, where is the evidence?

Perhaps the success stories are out there, but nobody is talking about them, or perhaps the AM community needs to look at other success stories for inspiration.

I believe that we should be looking more widely for success stories that can be adapted to the local government AM arena, and I think the success story that we can take the most from is Wikipedia.

I recently asked in a couple of different forums for Asset Management success stories. Only a couple of people were able to give examples of AM successes, and they were all related to expectation management. Nobody was able to give me a local government example of how AM has resulted in better funding, or in the discovery of new or more effective maintenance and construction practices.

WikipediaIn less than a decade Wikipedia has become a household word, and the go to place for anyone seeking knowledge. After 244 years of publishing encyclopaedias, Encyclopaedia Britanica recently announced that the 2010 hardcopy edition will be its last ever.

And how did Wikipedia turn the encyclopaedia world upside down in ten years?

I believe it is the combination of three things; openness, technology, and the wisdom of crowds, and they are the three things that I believe need to be applied to asset management to allow it realise its full potential.

The EquationSo, in summary my magic equation for enabling Asset Management to kick some more goals is:

A + W + O + T = SuccessA = Asset Management W = Wisdom of CrowdsO = OpennessT = Technology

What is a wiki?Before talking about the wisdom of crowds, and the value of openness, it might be worthwhile discussing the technology behind Wikipedia, which is known as a wiki.

A Wiki is simply a page or collection of web pages designed to enable anyone who accesses it to contribute or modify content. It is a simple idea, but a very powerful tool.

The wiki behind Wikipedia is MediaWiki, but there are numerous other wikis including; Wikidot, Confluence, Sharepoint, PBWorks, Wikispaces.

What’s so good about wikis?Wikis are a great tool for managing and disseminating information;• They can be edited by many people simultaneously,• the most up-to-date version of a page is always available,• in most cases; videos, slideshows and interactive maps can be embedded in a

page, not just text and images,• hyperlinks to related pages allow users to find the information without having

to know a specific term,• they are easily searchable,• some wikis (e.g. MediaWiki) can read and display content stored in databases,• they have excellent versioning tools that record the history of every page,

insuring that information is never lost,• they provide a means of linking and adding context to all of an organisations

other AM tools,• They harness the wisdom of the crowd.

So how can wikis help?I believe wikis can help Councils to:

1. Share their ideas and knowledge with other councils2. Organise their organisation specific knowledge

LGAM Knowledge BaseI passionately believe that Councils need to share their knowledge and ideas to get the most out of them, and I have set up wiki called the Local Government & Municipal Knowledge Base to encourage and help them to do so. The site now has 4000+ pages of information and 500 site members.

Organising Internal InformationWikis are a great tool for capturing and organising internal Council knowledge. When I worked for Bundaberg Regional Council I set up and championed a MediaWiki based Asset Information system, and I am currently working on a Sharepoint version for Whittlesea City Council. If you are looking for a recommendation, I would have to say that MediaWiki is the superior product.

I also set up a web-based Asset Management Plan development wiki which I understand some NSW Councils are looking at as a model.

The image to the left is a screen shot of the front page of the BRC wiki. Clicking on the image will open up a browser window with a bit more information on how the wiki was used. In summary it ended up being a sort of encyclopaedia of Bundaberg Regional Council assets and asset management practices. I believe that the ultimate internal use for a wiki at a Council would be an encyclopaedic knowledge base of all Council activities. Just as Wikipedia has become the go to place for general knowledge, the Council wiki should become the go to place for all Council specific knowledge.

The wisdom of the crowdThe phenomena that makes wikis work is the wisdom of the crowd.

The wisdom of the crowd is the process of taking into account the collective opinion of a group of individuals rather than a single expert to answer a question. A large group's aggregated answers to questions involving quantity estimation, general world knowledge, and spatial reasoning has generally been found to be as good as, and often better than, the answer given by any of the individuals within the group.

Asset Management is a complex endeavour, and a few individuals working in isolation can’t really hope to nail it, but there are probably thousands of people working in the field of asset management in Australia alone, and working together with the assistance of 21st Century technology we should be able to get things happening

The global brain?Take the wisdom of the crowd to its logical conclusion and you get the global brain.Wikipedia defines the Global Brain is a metaphor for the worldwide intelligent network formed by people together with the information and communication technologies that connect them into an "organic" whole.Basically there are 7 billion people out there, and more and more of them are connecting to the internet every year. We need to try and make use of that vast mass of grey matter if we can.

How do we access the global brain?• Google+• LinkedIn• Internet Forums

OpennessThe other reason I gave for Wikipedia’s success is openness.

Ideas can be shared with a limited group, wikis can be closed, and knowledge can be locked away behind copyright and pay walls. But ideas and knowledge are most powerful when shared freely and openly.

If everyone is given access to an idea, the idea can be built on and improved. If it is locked away out of sight it is next to useless.

I want to talk about three things in relation to openness

• Creative Commons Licencing• Government 2.0• Google+

Creative Commons LicencingCreative Commons (CC) is a non-profit organization devoted to expanding the range of creative works available for others to build upon legally and to share.

Creative Commons have created a number of different licences, but they all typically allow anyone to freely reuse and modify a work, providing the derived work is similarly licenced.

This is a simple, but very clever strategy for encouraging collaboration.

If used, it effectively eliminates one of my pet hates – consultants selling & reselling information developed by one Council, to multiple other Councils for a profit.

Government 2.0Government 2.0 is a term describing the philosophy of making government more open, collaborative and cooperative and more supportive of open consultation, open data and knowledge sharing, and the tools; social networks, wikis, blogs, rss feeds, etc. that make this possible.

The Us Now video (above) does a great job of summarising Government 2.0, and its benefits.

Google+Everyone has heard of Facebook. It is a place for sharing information about; what you ate for diner, and pictures of cats, and stories about how fantastic and beautiful your children are, and Justin Bieber, and Paris Hilton,etc. It could also be a fantastic place for sharing ideas, and knowledge, if it wasn’t so lame and closed.

There is a fantastic place for sharing ideas, and knowledge and it’s called Google+. It is Google’s attempt at a social network for grown ups who need more than a sentence or two to express their ideas.

It is a great platform for plugging into the global mind, and connecting with special interest groups interested in collaboration, discussion, and knowledge sharing. I currently use Google+ to connect with people interested in science and technology, but it would be equally good for connecting to people from around the world with an interest in Asset Management.

Technology

I mentioned that technology was one of the reasons for Wikipedia’s success, and I talked about the technology behind Wikipedia being the wiki, but obviously there is much more to technology than wikis, and it is technology that I believe will come to the rescue and let us build assets that will deliver a great level of service to our customers.

How can Technology help?In many areas including; computing, robotics, materials science, energy generation, new breakthroughs are happening on a regular basis, and many of these breakthroughs could have a big impact on local government and how we manage our assets. The graph below shows just how fast some areas of technology are advancing.

Asset Construction TechnologyThe reason the picture of the building opposite has 360:00:00 in the bottom left hand corner is because it was built from scratch in just 360 hours (15 days)

It is an example of rapid modular construction, one of a number of new construction techniques that are changing how buildings and other infrastructure assets are built.

To the right is a screen shot of an automatic paving machine in action - another example of how asset construction is changing.

Asset Maintenance TechnologyThe vehicle below is a new type of pothole patching machine being trialled in the USA. It is operated by a single driver/operator who can repair a pothole without leaving the cabin of the vehicle, saving time and operator safety.

Some people have questioned how long potholes patched using this sort of machine will last, and certainly the question needs to be answered, but the technology will no doubt be improved over time, and it will hopefully become a useful road maintenance option.

Other examples of new asset maintenance technology include:• Self-repairing paint

Energy TechnologyThe cost of energy will have a huge impact on how assets are designed, constructed and operated in the near future. If things continue as they are, the rising cost of energy could negatively impact on Council assets and services.

Fortunately there are some possible game changers waiting in the wings. The cost of solar power has being dropping by 7% since the late 1970s, and if this trend continues it should be cheaper than fossil fuels by the end of the decade. Thorium fission and LENR could also significantly reduce the cost and impact of energy generation in the next couple of decades.

Just recently a company by the name of Twin Creeks announced that it has developed a process for manufacturing solar panels for half of the current price.

RoboticsThe little guy on the left is what is known as a quadrotor. It might not look like what you expect a robot to look like, but it has some amazing capabilities, and will almost certainly have AM related applications. (Think condition inspections of building roofs and other inaccessible places for a start.)

Again the car on the right doesn’t look much like the robot from lost in space, but self driving vehicles will definitely have a big impact in Australia. They are starting to be used in mining industry and because they will be far safer and more skilled than human drivers they will no doubt eventually show up on the roads too.

P.S. If you want to see a robot that looks like a robot check out Big Dog and/or Asimo.

Artificial IntelligenceIn 2011 IBM created a super computer named Watson that was able to defeat the best human Jeopardy (an American Game Show) players, and they have since been working with the medical profession to develop the system to the point where it is better than the best trained doctors at diagnosing medical conditions. The price of this sort of technology will get cheaper every year, and by 2020 or not long after it should be possible to purchase a limited AI and train it up to make better Asset Management decisions than any human.

Summary

One more time just so you don’t forget here is my recipe for success

Asset ManagementWisdom of Crowds

OpennessTechnology

QuestionsIf you have any questions about this presentation, please feel free to contact me.

E-mail: [email protected] or [email protected]: http:/gplus.to/wgeWork: (03) 9217 2497Mobile: 0478 682442LinkedIn: http://au.linkedin.com/pub/wayne-eddy/10/427/915

Final Word

I don’t claim to have all of the answers about Asset Management.

That’s why I am publishing this presentation under a Creative Commons Attribution-ShareAlike 3.0 License.

I want all of you with an interest in and knowledge about asset management, to think of this presentation as a starting point. Take it, improve it, and share the improved version around.

I can’t make much of a difference by myself, but WE certainly can.

I will be listening to everyone’s suggestions about how to improve this presentation, and trying to improve it all the time.

I will be saving the most up-to-date Powerpoint, Open Office and Google Docs versions of the presentation on the LGAM Website.

http://lgam.wikidot.com/asset-management-presentation