Asset Management: Middle East Style

C. Teske
Abstract Past, Present and Future is the theme for growth on the Arabian
Peninsular in the Middle East. As new, modern cities, airports, shipping ports,
international airports and railways are built in, around and out from the old resi-
dential and commercial trade centres, management of both old assets and modern
structures and infrastructure systems brings together both old and new thinking to
asset management.
Keywords Asset management

Middle East
1 Background
In the past (1030 years ago), Middle East countries had small infrastructure asset
bases comprising basic roads, small domestic airports, no public rail services and
low rise, low density residential and commercial precincts delivered by local
municipal governments. Local expertise and unskilled local and sub-continent
labourers provided basic maintenance at levels of service acceptable to the local
residents and the government at that time. Asset renewal planning was uncommon
and assets were typically run to failure and then replaced.
The years 20002008 were a boom time for urban and infrastructure devel-
opment in the Middle East. The last 10 years has seen an explosion of tall, iconic
buildings and structures, international airports, six star and seven star hotels,
residential-marina developments, 8-lane freeways, commuter rail systems and
fully integrated port-industrial precincts across many of the oil rich nations. New
C. Teske (&)
Assets and Facilities Management, GHD Pty Ltd., 201 Charlotte Street,
Brisbane, QLD 4000, Australia
J. Mathew et al. (eds.), Engineering Asset Management and
Infrastructure Sustainability, DOI: 10.1007/978-0-85729-493-7_71,
Springer-Verlag London Limited 2011
919
developments, such as the integrated residential marina precinct at Palm Jumeira
in Dubai and the Yas Island grand prix and marina precinct in Abu Dhabi in the
UAE are promoted and sold world-wide to investors as the worlds best in terms of
prestige, standards of service and lifestyle.
The period through late 2008 and 2009, during the most recent world economic
downturn, was a period where private development slowed dramatically. However,
government spending on new infrastructure remained steady, or increased, and
provided the opportunity to catch up on infrastructure renewal following the
previous period of dramatic urban growth. During this period asset management
gained new focus.
In the present, asset management is changing and receiving increased focus as
the UAE, Oman and other Middle East governments strive for international rec-
ognition for their contribution to the world economy and a willingness to be
measured against international benchmarks of best practice in business, industry
and asset management.
In the Abu Dhabi, UAE, the Emirate Government created new government
owned entities to plan, develop and manage new water, power, transport and
building infrastructure to support growth. Services previously provided by local
municipalities for no charge, are now managed by government owned companies
operating on modern, commercial business models deriving income from user-
pays tariff structures. At the same time, the governments have given greater
emphasis on industry regulation. Water, power, environment and nancial regu-
lators have been established to ensure these new businesses provide dened levels
of service and demonstrate value for money.
These new asset managers are now faced with a range of new challenges in
sustaining high levels of service on regulated income streams, without excessive
service disruption from either breakdown maintenance or service augmentations.
This paper examines the past, present and future challenges for asset man-
agement in the Middle East based on the authors experiences and observations in
delivering asset management consultancy services in the United Arab Emirates
and Oman over the 3 year period from early 2007 to early 2010.
2 Strategic Development: United Arab Emirates
The United Arab Emirates (UAE) is a commonwealth of separate states com-
prising the Emirates of Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al-Quwain and
Ras Al-Khaimah (bordering the Arabian Gulf) and Fujairah (bordering the Indian
Ocean). The individual Emirates tend to have individual development strategies.
For example, the Emirate of Dubai derives its revenue from tourism, real estate
sales and nancial services marketed worldwide through innovative, large con-
struction projects and sports events. The Emirate of Abu Dhabi derives most of its
revenue from oil based industry, construction and nancial services.
920 C. Teske
In the Emirate of Dubai, large scale real estate development projects have con-
structed of some of the tallest skyscrapers and largest buildings in the world such as
the Emirates Towers, the Burj Khalifa, the Palm Islands and the worlds second
tallest, most expensive hotel, the Burj Al Arab. Development of a new metro rail
transport system is underway to service the citys new business and residential
developments and the new Al Maktoum International Airport. The Al Maktoum
International Airport is due to begin operations in 2010 and is planned to be the
worlds largest passenger and cargo hub with a design capacity of over 12 million
tonnes of cargo and in excess of 120 million passengers per year utilising ve runways
with capability to handle all new generation aircraft, including the A380 superjumbo.
The Emirate of Abu Dhabi occupies 86% of the land area of the UAE, has most
of the countrys oil and gas reserves, the seat of the UAE president, the federal
parliament and houses most of the foreign embassies and consulates. Abu Dhabi
city was originally planned in the 1970s for an estimated maximum population of
600,000. Currently, Abu Dhabi City is home to 1.4 million residents, and the
government expects this to grow to 3.1 million by 2030 together with 2.7 million
visitors per annum. The Urban Planning Council of Abu Dhabi has a number of
urban planning documents including the Abu Dhabi 2030: Urban Structure
Framework Plan (abbreviated: Abu Dhabi Plan 2030). This planning framework
focuses on the capital city of Abu Dhabi by setting guidelines, regulating public
and private partnerships, which will allow the citys Urban Planning Council to
coordinate and oversee developments across all sectors.
The majority of the population growth across the Middle East is, and will be, a
white collar workforce servicing the new corporate and legislative hubs currently
being developed.
3 Strategic Development: Oman
In the Sultanate of Oman, new shipping ports integrated with heavy industrial
cities have been developed to provide both Oman and those countries on the
Arabian Peninsular fronting the Arabian and Persian Gulfs, direct and safe ship-
ping access to the Indian Ocean. One such port, located at Sohar, 220 km north-
west of the Oman capital of Muscat, has been developed and is managed by Sohar
Industrial Port Company, a 50/50 joint venture between the Government of Oman
and the Port of Rotterdam.
In Omans capital city, Muscat, construction is under way of a new sewerage
system incorporating seven new major treatment plants with advanced treatment
processes to support biosolid and efuent reuse. The new system is being designed,
built and will be operated under private contract. This new infrastructure replaces
some 24 small package sewage treatment plants servicing a string of suburbs
(previously shing villages) separated by rocky headlands along the coast. These
small schemes are supplemented with thousands of pump trucks per day pumping
out sewage holding tanks built at newer residential, commercial and industrial areas
Asset Management: Middle East Style 921
not connected to the old package plants. The project began in 2003 when Muscats
population was 630,000 and is expected to serve 90% of the Muscat population by
2017. Muscats population is expected to reach 1 million persons by 2025.
4 Asset Management Issues in the Midst of Growth
Integrating these high rates of urban growth with older underlying infrastructure
presents signicant challenges to urban planners, asset owners and the general
community on the Arab Peninsular.
Visible infrastructure, such as the iconic buildings, international airports, 8-lane
freeways and integrated port-industrial precincts are achieving high standards of
service by replacing older infrastructure built in the 1960 and 1970s in older city
precincts such as Abu Dhabi Island city and Dubais old city.
Invisible infrastructure assets such as power, water, sewerage and stormwater
have received less attention. Many urban renewal projects comprising 30 story
(and higher) apartment buildings and ofce blocks currently rely on the capacity
and security of old service infrastructure designed to service the four and six story
buildings that previously occupied these sites. Examples of this type of redevel-
opment commonly have occurred in the Abu Dhabi Central Business District on
Abu Dhabi Island where four and six storey residential buildings constructed in the
1970s have been demolished for construction of 12 storey residential/retail
buildings in the 1980s, which have since been demolished for construction of 20
storey retail/commercial/residential buildings in the 1990s. The Abu Dhabi Urban
Planning Council is now allowing construction of 30 storey and higher buildings in
some precincts of the city.
Failure of existing infrastructure to service this growth has materialised as
power interruptions, sewage overows, failed stormwater networks, trafc jams
and insufcient parking in city precincts.
Most of the current and planned urban growth is on newly developed lands or
man-made islands supported by new transport, water, sewage, electrical, commu-
nication infrastructure networks. Publicprivate partnership is a preferred develop-
ment project delivery and management model for signicant new developments in
these Middle East countries. The private partners are predominantly companies with
bases in western developed nations with advanced asset management experience.
5 Asset Management Planning
Asset management plans will become more common as a framework for whole of
life strategic infrastructure planning. While the International Infrastructure
Management Manual [1] is considered an international best practice guide to
asset management, the British Standards Institutions (BSI) PAS 55 [2] is seen as
922 C. Teske
the international standard for compliance (in the absence of any other standard).
Most Middle Eastern countries are looking to obtaining certication to the PAS 55
standard until the International Standards Organisation (ISO) either adopts, or
releases their ISO international standard for Asset Management.
The author consulted to a number of government-owned water and sewerage
service providers in both Abu Dhabi and Oman in the years 20072009. The
following outlines some of the asset management issues and solutions these ser-
vice providers had to deal with.
6 Implementation of Asset Management Frameworks
The following gure outlines the typical progress being made in government and
semi-government entities in developing infrastructure asset management against a
best practice approach such as that in the International Infrastructure Man-
agement Manual [1] (refer to Fig. 1).
7 Asset Inventory (Asset Registers)
Typically, in the Middle East, asset data is recorded in nancial Fixed Asset
Registers, physical infrastructure asset registers and maintenance management
systems as they are constructed. This asset registration method tends to capture
the lump sum items created during construction (e.g. civil structures, process units,
complete electrical and mechanical plant). Financial valuations and revaluations
are then performed on the constructed cost or indexed to current values using
quantity surveyor consultants. Essentially the level of asset data is capture at
construction handover at the process unit or parent asset level.
Because of the high growth in the Middle East, new assets have usually been
constructed in green eld locations or completely replace demolished or aban-
doned older facilities. To date, there has been little need to consider these lump sum
items as comprising a range of child assets of varying types and service lives.
Inventory of
Assets
Assess
Condition
Fund the
Strategy
Determine
Residual
Life
Determine
Replacement
Cost & Date
Set Target
Levels of
Service
Determine
Appropriate
Capital
Investment
Determine
Appropriate
Maintenance
Assign
Business Risk
Ratings
(Criticality)
Build the Asset
Management
Plan
Refine/
Confirm Asset
Data
Fig. 1 Steps to implementing asset management planning
Asset Management: Middle East Style 923
As facilities age and are augmented and made more complex, asset and
maintenance managers demand asset registers and maintenance management
systems provide greater detail down to child asset and even asset component
level. Population and validation of infrastructure asset registers is now becoming a
common add on in consultancies engaged to perform asset valuations, condition
assessments, maintenance management planning and optimisation of operations.
Public utility companies are following western management philosophies and are
moving toward outsourced operation and maintenance contracts. It is becoming
accepted that the asset owners need asset inventories/registers in house devel-
oped to the same level as their operations and maintenance contractors are
maintaining off-site in order to track asset costs and service performance on
aging infrastructure managed under these contracts.
8 Asset Insurance
For the purposes of insuring assets, Middle East government entities typically insure
the replacement cost of their asset portfolios plus a percentage ranging up to 25%for
planning, design and administration for demolition and replacement of damaged
assets. While this is appropriate for eet and public buildings, this approach is not
appropriate for service infrastructure, such as water and sewerage assets.
As an example, consider the sewerage infrastructure for the Emirate of Abu
Dhabi. Older style sewage pump station facilities are typically walled and locked.
Larger pumping facilities and sewage treatment plant are walled and guarded sites
incorporating accommodation, kitchens and mosque/prayer facilities for staff living
on site (24 h a day). Even remote facilities are fully manned as SCADA systems are
an expensive option compared to having a cheap labour force on site. Therefore,
there was insufcient risk to warrant insuring roads, fences, site lighting and most
buildings at pumping stations and treatment plants. Damage to gravity sewers poses
little risk and owners have remedy for prosecution, the penalties for which can be
severe in Middle Eastern countries, for wilful or accidental damage by others.
The insured assets tend to be backup power systems, computerised process
control, electronic, electrical and mechanical equipment and pressure sewers. As a
consequence, in 1988, only 45% of the total replacement value of the Abu Dhabi
sewage portfolio needed insuring and (allowing for 25% on costs for reconstruc-
tion) the insured value was calculated at 70% of the book replacement value.
9 Asset Condition and Service Lives
Because of the high growth in the Middle East, newassets that replace demolished or
abandoned older facilities require higher levels of service and performance in
operation and maintenance than the previous assets. Asset condition and the length
924 C. Teske
of asset service lives are strongly inuenced by maintenance practices. In the Middle
East, maintenance is generally undertaken by unskilled labour, supervised by skilled
supervisors, because of the readily available workforce and the low cost of labour.
In water and sewerage services, maintenance at pumping stations and smaller
treatment facilities comprises mostly of oiling and greasing, cleaning, recording
process data and irregular repair work under direction. Condition assessment has
often revealed severe pump-motor misalignments, broken mimic panels and
switchboard interlocks, inoperative pump controllers, damaged power cabling,
patch grouted concrete tank cracks, etc. Simple maintenance, such as realignment
of pumps to motors after servicing, is common leading to operation stresses and
shorter asset lives.
It is common to have a labour force with basic skills residing in onsite caravans
at facilities located in the cities, as well as at remote facilities located kilometres
from the nearest town with engineers or skilled technicians visiting the facilities
for complex works as required. At one water pumping station, it was found that the
operators had manipulated the duty-standby pump sequencing to maintain exactly
the same number of pump hours on each of four pump sets (operation required two
dutytwo standby). There was a clear need for increased level of skill in on-site
operators to improve the reliability and lives of pumping equipment.
Typically, civil assets lives in the Middle East approach those of the western
world, due to the robust, simple designs preferred in the Middle East. Mechanical
assets lives tend to be 2535 years and electrical assets typically last 2030 years
depending on the complexity of equipment and the typical skill of the operators
and maintainers and the inuence of the extreme climate.
Modern electro-mechanical equipment now is computer-controlled by SCADA
systems or relies increasingly on computerised process controllers. Electronic
assets typically reach the end of their service lives in 58 years (either due to the
extreme climate or due to obsolescence in being able to obtain spare parts).
10 Determining Residual Asset Lives and Renewal Planning
Because of the tendency for the Middle East to explore innovative design, build
iconic structures using owing architectural shapes, assessing residual asset lives
requires a thorough understanding of the operating and maintenance regimes likely
to be employed by asset owners. Cleaning, painting and general maintenance is
undertaken well by an ample, cheap labour force. However, maintenance of
infrastructure and assets out of the public eye is undertaken on breakdown
maintenance approach.
Interestingly, maintaining common assets is undertaken differently to the
western world. For example, larger electrical motors in sewage pump stations tend
to achieve 30 years service because they are rewound three times during their
operating livesat 15 years, 10 years later, 5 years after that, and then run to
failure. The third rewinding is a prompt to reorder the replacement motor. Had a
Asset Management: Middle East Style 925
cheap labour force and ample funding reserves not been available, pump motors
would last \20 years in service.
11 Setting Levels of Service
The UAE boasts having some of the largest, most dramatic projects in the world
both completed and in progress. As a consequence, acceptable levels of service
have little room for negotiation. The challenge will be to sustain the presentation
and prestige that sold these facilities to the world without disruption to public
access to and use of these facilities. Maintenance of these assets in as new
condition will be paramount.
Levels of service for assets out of the public eye are often the opposite. Assets,
depending on their time in service, can be at varying levels of condition down to
imminent failure. Setting levels of service for these types of assets has not been a
priority to date.
12 Business Risk and Criticality Assessment
Risk and criticality assessments in the Middle East generally are reliably per-
formed using assessment criteria and impacts such as: technical, nancial, social,
environmental and regulatory impacts. However, in the culture of the Middle East,
impacts on image of the company and country gain additional weightings in
criticality analyses. For example, a sewerage overow onto the streets near an
international hotel or into the waters along one of the sand beaches populated by
tourists would be a signicant embarrassment to the relevant government and may
lead to prosecution of the Chief Executive Ofcer of the responsible sewerage
company. So these events are to be avoided at all cost.
Business risk evaluation is a product of the
Cost of asset failure (cost of repair, indirect impacts and loss of service);
Probability of failure in any 1 year;
Redundancy factormeasured as the available redundancy available in
sustaining the service.
A preliminary criticality assessment of sewerage infrastructure in 1988 iden-
tied that pressure mains located in high density residential/commercial precincts
presented the highest criticality scores due to the consequences of a high pressure
sewage spill in these locations. Because the a long history of unreliable power
supplies, many sewage pumping and treatment facilities are designed and con-
structed to operate on installed diesel powered standby generators. So, criticality
scores for pumping and treatment process units are moderate. However, the crit-
icality scores for the backup generators and their electrical control systems was
926 C. Teske
high due to standard operating procedures of testing backup systems under low
load and only for 2030 min. It was recommended the facility power backup
systems be run under full load for a minimum of 4 h at least yearly.
13 Maintenance Management Planning
In many cases a reactive maintenance philosophy is dominant. A culture change in
the local workforces towards routine servicing and preventative mechanical and
electrical maintenance is needed. All maintenance work should be conducted by
qualied, licensed personnel (i.e. licensed electrician, licensed plumber, pump
mechanic, qualied electro-mechanical commissioning technician) by either a
specialised company or on sub-contract.
As an alternative method maintenance could be carried out by mobile main-
tenance teamseach team having licensed personnel (e.g. electrician, pump
mechanic, plumber and commissioning technician). The routine maintenance team
would travel to all sites to provide standard service and maintenance, while a
second team would be attend all emergency calls and undertake planned repair
works. Both teams would be similarly equipped with all necessary tools, small
spare parts and equipment elements.
In recent years, asset owners in the Middle East are developing condence in
their achievements and are seeking to be measured against international bench-
marks. It is quite common to see requests for tender specifying systems and
solutions to be provided to international best practice. In 2008, the Australian
Water Association undertook a world wide benchmarking study on asset man-
agement practices across some water and sewerage.
Water and sewerage companies are currently moving to increased remote
monitoring and management of remote pumping stations to minimise worker error
and ignorance of maintenance requirements.
14 Capital Investment Planning
Rapid growth has meant that asset replacement (renewal) planning has been
considered unnecessary to date. Buildings are being replaced before they need
major refurbishment or are being built in green eld locations. The earliest of the
supporting infrastructure networks were built in the 1970s. While many civil
components have 2030 years of physical life remaining, while electrical and
mechanical asset components are failing regularly.
Capital works planning in the Middle East is now beginning to include asset
renewal as well as extension and duplication of utility services such as water and
sewage mains and pumping stations. Capital expenditure is increasing being used
to overcome many of the key asset failure modes, which include:
Asset Management: Middle East Style 927
Capacity failures due to increased demand or higher levels of service.
System failures due to old age of assets.
System failures due to reliability issues.
Cost failures where capital expenditure can signicantly reduce operations,
maintenance and other associated costs.
15 Capital and Maintenance Funding
Many utility services in the Middle East are charged to users and the nancial
reporting is undertaken on a commercial basis, showing rates of return and other
similar nancial indicators. Currently, services are subsidised by the government
to sustain the service, but business efciency improvements are beginning to
appear to measure the effects on these nancial indicators. Middle East countries
have a long history in commodity trading and many of the nationals in business
leaders are schooled in nancial management. So, nancial performance indicators
are well understood and used.
In Abu Dhabi, the government has set up the Regulation and Supervision
Bureau to regulate all government owned companies undertaking activities asso-
ciated with electricity, water and wastewater production, transmission, distribution
and supply. The Bureau is charged with the responsibility to ensure the operation
and development of a safe, efcient and economic service sector, while protecting
the interests of consumers as to the terms and conditions and price of supply.
Volumetric user charged for electricity, gas, water and wastewater is now estab-
lished whereas previously the government allocated budgets on an as needed basis
for development and operation of these services.
16 Asset Management in the Future
While capital funding is not constrained in the Middle Eastern countries on the
Arabian Peninsular, governments are moving towards seeking higher returns on
investment and demanding lifecycle costing analyses for strategic infrastructure
planning proposals. It is this authors opinion that the future for asset management
in the Middle East will be driven by
Clearer and more dened levels of service.
Greater nancial and infrastructure planning accountabilities through increasing
government regulation.
Increasing volumes of outsourced services.
Increasing complexities in business management and reporting systems to
address customer service and regulatory compliance.
Asset management plans will become more common as a framework for whole
of life strategic infrastructure planning. While the International Infrastructure
928 C. Teske
Management Manual is considered an international best practice guide to asset
management, the British Standards Institutions (BSI) PAS 55 is seen as the
international standard for compliance (in the absence of any other standard). Most
Middle Eastern countries are looking to obtaining certication to the PAS 55
standard until the International Standards Organisation (ISO) either adopts, or
releases their ISO international standard for Asset Management.
References
1. Association of Local Government Engineering NZ Inc. and National Asset Management
Steering Group (2006) International infrastructure management manual, New Zealand
2. British Standards Institution (2008), PAS 55-1 (2008) Asset management, Part 1: specication
for the optimised management of physical assets and Part 2: Guidelines for the application of
PAS 551, England
Asset Management: Middle East Style 929