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Infrastructure Asset Management Report

FROM INSPIRATION TO
PRACTICAL APPLICATION

Achieving Holistic Asset Management

Supported by

16th- 18th March 2015, London


TABLE OF CONTENTS
Introduction 3
Executive Summary 4
What are the top priorities in asset management? 5
Improving data management and data quality 6
Which investments will asset owners be making in the next 12 7
months to help improve data management and data quality?

What is preventing these investments? 7


Prioritising and planning asset investment 8
Which investments will asset owners be making in the next 12 9
months to help prioritise and plan asset investments?

What is preventing these investments? 9

Building a coordinated asset management strategy at corporate level 10


Which investments will asset owners be making in the next 12 11
months to help building a coordinated asset management
strategy at corporate level?

What is preventing these investments? 11


Improving risk assessment and management 12
Which investments will asset owners be making in the next 12 13
months to help improve risk assessment and management?

What is preventing these investments? 13


Implementing new regulations and standards 14
Which investments will asset owners be making in the next 12 15
months to help implement new regulations and standards?

What is preventing the investment? 15


Closing Summary 16
Introduction
Infrastructure asset management is fast becoming a strategic topic discussed more
and more at board level.
Given the OFWAT pricing review and embedding ISO 55000, a time sensitive window
will exist in Q1 2015 when Directors of Asset Management will be determining where
the next efficiencies are going to come from to deliver growth that will impact how
they do business for the next 5 years.
Some companies spend four to five months of the year on regulatory disclosures,
unveiling what they did last year and what their plans are for the forthcoming year, leaving
them with just seven or eight months to get everything else on their agenda done!
To better understand the key trends impacting the infrastructure asset management
industry, we surveyed our global network of infrastructure asset management leaders
from organisations to find out their key priorities for the next 12 months, and more
specifically, what strategies they are implementing and where they will be investing to
overcome their challenges.

Themes that crop up throughout this report include:

• The need to secure senior executive buy in for new investment


• Lack of knowledge of detailed asset planning techniques
• The necessity of gathering and analysing more data
• Regulatory pressures across sectors

Over 500 professionals from asset owning and supporting organisations completed
the survey, providing insight into the current challenges being faced by the evolving
professional discipline. It is the breadth of organisations in both operations and scale
that allow us to draw meaningful conclusions from the results.
It can be the case that asset management is viewed as capital spending, but is
that really true? At the very least, if capital expenditure is deferred or changed by
operational expenditure and techniques that directly affects investment decisions.
This survey explores the approaches organisations are taking to investment where
capital funding is not necessarily available, or even the most efficient or effective
route to delivering value.

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Executive Summary
This report reviews the current state of infrastructure asset management with special focus on some
of the perceived challenges and top priorities for the year ahead. It also touches upon various critical
elements in asset management and provides insights on the benefits, drivers, ROI and challenges to
the deployment of a robust asset management strategy at corporate level.

Who took part in this survey?

Role
A Director/ Head of Asset Management/ Operations/ Engineering 18.0%
A Manager, Engineer, Project Manager 37.6%
An Industry Consultant and / or Analyst 27.8%
A Solution Provider 16.6%

Job function
Asset Management 43.8% Technology 2.0%
Asset Strategy & Performance 18.7% Investment Projects 3.0%
Operations 7.0% Risk Management 2.0%
Maintenance 9.5% Data Management 2.0%
Engineering 6.0% Other 6.0%

Sector*
Water Utilities 24.7% Manufacturing 2.0%
Gas Utilities 7.0% Automotive 0.7%
Electricity 21.7% Nuclear 2.7%
Oil and Gas 13.7% Wind Power 3.3%
Roads 14.4% Hydro Power 2.0%
Rail 9.4% Public Sector (Councils) 14.7%
Airports 4.3% Other 16.7%
Ports 2.7%

Region
Western/Northern Europe 54.8% South America 1.7%
Eastern Europe 2.4% Australasia and Asia Pacific 16.3%
Middle East 2.7% Africa 4.8%
North America 13.6% Other 3.7%

Employees
0 – 100 9.1%
100 – 1,000 30.4%
1,000 – 5,000 32.4%
5,000 – 10,000 12.2%
10,000+ 15.9%

*Respondents could select more than one answer option.

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What are the top priorities in asset management?
Building a coordinated asset management strategy at corporate level is imperative and one of
the priorities that received the highest responses from both asset owners and solution providers.
Although from the result shown, data management and data quality improvement appear to be the
number one priority for organisations in 2015.
In contrast solution providers surveyed believe that their customers’ top priorities are (a) to build a
coordinated asset management strategy at corporate level and (b) prioritising and planning asset
investment.

WHAT DO ASSET OWNERS WHAT DO SOLUTION PROVIDERS


IDENTIFY AS THEIR TOP THINK THEIR CLIENTS TOP
PRIORITY? PRIORITIES ARE?

28.6% Improving data management and data 29.6% Building a coordinated asset
quality management strategy at corporate level

26.6% Prioritising and planning asset 28.2% Prioritising and planning asset
investment investment

24.9% Building a coordinated asset 21.1% Improving data management and data
management strategy at corporate level quality

15.0% Improving risk assessment and 14.6% Improving risk assessment and
management management

5.0% Implementing new regulations and 6.6% Implementing new regulations and
standards standards

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Improving data management and data
quality

End Users
28.6% Why is this a priority?
This is one area where there seems to be a divergence of views most likely
due to the lack of maturity of the topic. It is important to highlight that the
majority (47.4%) of asset owners and the minority (25.6%) of vendors that
picked data management and data quality as the top priority believe that
current data management tools are not able to support business decisions.
On the contrary the majority of the vendors believe that current systems are
Vendors
21.1% not producing the type and quality of data required.

48.7%
47.4%

38.5%

25.6% 25.6%

14.1%

“Current systems are “Not enough money “Current data


not producing the has been allocated management tools are
type and quality of to data management not able to support
data required” historically” business decisions”

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Which investments will they be making in
the next 12 months to help improve data
management and data quality?*

Data Gathering / Acquisition 50.7%


Data Quality 44.0%
Data Cleansing 38.7%
Asset Integrity/ Conditions Assessment Tools 36.0%
Computerised Maintenance Management Systems 29.3%
Condition Monitoring/ Condition Assessment 26.7%
Information Management Solutions and Services 26.7%
Data Analytics Solutions 26.7%
Mobile Asset Management 26.7%
Performance Measurement and Metrics 26.7%
Risk Management/ Assessment 26.7%
GIS 25.3%
Business Process Management 24.0%
Data Modelling 24.0%
Lifecycle Modelling / Costing 24.0%
Advisory/ Consulting 22.7%
Asset Investment Planning 22.7%
Business Intelligence & BI Reporting 22.7%
Change Management 21.3%

What is preventing these investments?


Although most of the organisations surveyed have already implemented or are currently
implementing a new data strategy, company culture and resources are still common inhibitors
to implementation. A key challenge faced is to identify the primary need and then select the
right provider to partner with. In addition to this, solution providers stated that there is still lack
of understanding of the importance of quality data in developing long-term asset management
strategies and consequently not enough resources are allocated for investment.

*Respondents could select more than one answer option.

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Prioritising and planning asset
investment

End Users
26.6% Why is this a priority?
Prioritising and planning asset investment has been selected by 26.6% of asset
owners and 28.2% of solution providers. Both agree that this is the second
biggest priority in asset management.
In response to this it is interesting that ‘asset investment planning’ comes
second to risk in the investment priorities on the next page. Implication is that
Vendors this view is often being driven by a risk mitigation strategy.
28.2%

58.2%

50.9%

26.9% 26.4%
22.6%

14.9%

” To secure future “We require a long “We need an investment


engagement and term investment tool that can be applied
project approval plan” to different asset
from C level” models”

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Which investments will they be making in
the next 12 months to help prioritise and
plan asset investment?*

Risk Management/ Assessment 45.3%


Asset Investment Planning 43.8%
Condition Monitoring/ Condition Assessment 42.2%
Asset Integrity/ Conditions Assessment Tools 39.1%
Capital Investment / Financial Planning 39.1%
Data Gathering / Acquisition 32.8%
Lifecycle Modelling / Costing 28.1%
Data Cleansing 21.9%
Data Quality 21.9%
Data Modelling 20.3%
Performance Measurement and Metrics 18.8%
Decision Support Tools and Technology 18.8%

What is preventing these investments?


Time, funds and intense regulatory burden are some of the factors stopping the asset directors
surveyed from prioritising and planning asset investment.
Asset investment planning is a challenging task for asset owners as it requires the pulling together
of information from multiple sources, creating the linkage between all assets and considering this in
the context of risk and organisational funding strategies. A complex task!
From the vendors’ point of view, there is a lack of knowledge of detailed asset planning techniques.
Organisations need an investment project template for all capital and operating investments, a
system that has the capability to create an investment project for an asset or a family of assets.

*Respondents could select more than one answer option.

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Building a coordinated asset
management strategy at corporate level

End Users
24.9% Why is this a priority?
Remarkably there is no agreement within the asset management community
as to why it is a priority to build a coordinated asset management strategy at
corporate level. The majority (46.2%) stated that silos between departments
still exist and this is the main hurdle preventing them from achieving the
implementation of asset management at corporate level. Instead 43.1% of
asset owners agreed with the majority of solution providers surveyed that the
Vendors
benefits of implementing a robust asset management strategy at corporate
29.6%
level are still not well understood across the organisation. On the contrary
only a few of the experts surveyed require more engagement and project
approval from C level.

46.8% 46.2%
43.1%

37.1%

16.1%

10.8%

“I require “I need to influence our “Silos exist between


engagement and corporate culture – too departments in
project approval early to understand the organisation”
from C level” benefits”

0
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Which investments will asset owners
be making in the next 12 months to help
building a coordinated asset management
strategy at corporate level?*

PAS55 / ISO 55000 Certification 40.9%


Computerised Maintenance Management Systems 39.4%
Lifecycle Modelling / Costing 36.4%
Risk Management/ Assessment 34.8%
Advisory/ Consulting 34.8%
Asset Integrity/ Conditions Assessment Tools 34.8%
Change Management (Systems, People, Culture) 31.8%
Performance Measurement and Metrics 30.3%
Business Process Management 30.3%
Condition Monitoring/ Condition Assessment 28.8%
Data / Information Management Solutions and Services 25.8%
Data Gathering / Acquisition 24.2%
Data Modelling (structuring etc…) 22.7%

What is preventing these investments?


At the top of the surveyed directors’ reasons preventing them from investing in these solutions are
cost, time constrains and lack of top management engagement. Not surprisingly vendors believe
that organisations are still facing a cultural barrier. The C suite is still distracted by competition,
changing regulatory drivers and conflicting political pressures. Asset Managers requires business
cases to be demonstrating the value and the optimum totex investment decisions.

*Respondents could select more than one answer option.

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Improving risk assessment and
management

End Users
15.0% Why is this a priority?
Interestingly both asset owners and solution providers ranked this as the forth
priority when considering investments for the coming year. Uniformly they
believe that improving risk assessment and management is a requirement due
to the lack of a comprehensive and coherent view of risks across the whole
portfolio.
Vendors
14.6%
76.9%

55.6%

27.8%

16.7% 15.4%

7.7%

“We need to find a “We feel we do not ”Organisations and


solution that can be have a comprehensive/ stakeholders have
applied to different coherent view of risks different risk appetites”
asset models” across the portfolio”

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Which investments will they be making in
the next 12 months to help improve risk
assessment and management?*

Risk Management/ Assessment 63.9%


Advisory/ Consulting 44.4%
Lifecycle Modelling / Costing 33.3%
Asset Integrity/ Conditions Assessment Tools 30.6%
Change Management 30.6%
Condition Monitoring/ Condition Assessment 27.8%
Business Process Management 25.0%
Data Gathering / Acquisition 22.2%
Data Analytics solutions 22.2%
Data/ Information Management Solutions and Services 19.4%
Data Quality 19.4%
Decision Support Tools and Technology 19.4%

What is preventing these investments?


Asset management being a long term strategy and approach, it is extremely hard to quantify the
benefits accrued through avoidance of incidents so systems need to evolve to incorporate ‘Low
Probability High Impact’ events. Therefore the main reason preventing them from investing is the
uncertainty about the pay-off. There are challenges surrounding the commitment of management
and stakeholders to making investments to improve risk management.
Internal manpower can be an issue as there are either not enough people or there is lack of people
with the correct skills to focus on the issues and find the correct solutions.
Of course funds constrains and management engagement also feature as part of the challenges that
prevent the investment in improving risk assessment.

*Respondents could select more than one answer option.

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Implementing new regulations and
standards

End Users
5.0% Why is this a priority?
This graph again shows that there is contrast between the responses of asset
owners and vendors. The results suggest asset owners feel constrained by
internal resource allocation, whereas consultants believe that if end users had
a better understanding they would be able to deliver more efficiently, rather
than requiring additional resources.

Vendors
6.6%

50.0%

45.5%
42.9%

36.4%

18.2%

7.1%

“Additional resources “Better understanding “Broader recognition


to support the of the regulations and of the business
projects” standards” benefits across the
organisational culture”

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Which investments will they be making
in the next 12 months to help implement
new regulations and standards?*

PAS55 / ISO 55000 Certification 41.7%


Change Management 33.3%
Data Gathering / Acquisition 33.3%
Risk Management/ Assessment 25.0%
Performance Measurement and Metrics 25.0%
Lifecycle Modelling / Costing 25.0%
Data Quality 25.0%
Data Cleansing 25.0%
Business Intelligence & BI Reporting 25.0%
Advisory/ Consulting 25.0%
Asset Documentation Services 16.7%
Asset Integrity/ Conditions Assessment Tools 16.7%
Business Process Management 16.7%
Data Modelling 16.7%
Data Analytics solutions 16.7%

What is preventing these investments?


There is mixed feeling when it comes to the reasons asset owners are struggling to implement
new standards. Some of the companies surveyed stated that they have received the resources to
tackle these problems with the expectation that it will optimise asset renewal in the long run by
prioritising work where it is most needed at the correct interval, thereby saving money and limiting
the requirements for municipal tax increases.
Others experience difficulty in finding the right partners who are able to understand the business
requirements and support them through the entire campaign.
Not surprisingly time and prioritising investment are also common issues that prevent some
organisations from the transition to new standards. However this will be first in the agenda for2015
for many companies.

*Respondents could select more than one answer option.

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Closing Summary
The results highlight Asset Management as a maturing discipline, with priorities spread across
a number of areas. While there may be individual organisations pioneering practice within the
constraints of their sector or geography there is clearly significant work being undertaken across the
whole of the AM world.
There is no doubt that experienced asset managers are beginning to realise the need to be more
‘savvy’ about what they spend on and gain from the data and information they own. This is a very
costly asset and whether or not they get value depends on understanding clearly what they want
to achieve and what decisions they need information to support and guide. It is interesting that
responses show a thirst to gather more data rather than discriminate about what data becomes
information. Perhaps the same approach needs to be taken to investment in information (and data)
that is taken to investment decisions about the operational assets?
Interestingly, although sometimes dismissed a ‘soft’ and ‘intangible’, the same causes choke off
decision making about investment as about information systems and decision making. Whose
interests are being served? So we return to the hazards of ‘silo mentality’, rather than cross
organisational consensus and communications, with the tendency to hoard information and data
and use it ‘against’ other functions and departments. So culture and leadership ought, perhaps, to
be recognised as a root cause that is still preventing asset owners make decisions that are good
holistically. To be fair, regulatory pressures are a potential distraction from long-term thinking and
management and, perhaps, the achievement of and recognition of good asset management by
regulators ought to be the target of both regulator and regulated?

Want to Learn More?

Supported by

16 -18 March 2015, London


100 Directors of Asset Management, Operations and Engineering choose the Infrastructure Asset
Management Exchange as the platform to educate themselves on the topics covered on this report.
Given that all of major players will be in attendance, the Exchange represents the preferred
platform to discuss about new application of the ISO 55000 standards, the implementation of a
comprehensive data strategy to drive growth and improve customer retention and new ways to
build a robust asset management strategy at corporate level.

How Can You Get Involved?

For more details about the Infrastructure Asset Management Exchange or to request your invitation
as a delegate, speaker or solution provider:

Request your invitation to attend online

Call us on +44 (0) 207 368 9484

Email exchangeinfo@iqpc.com

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