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ACKNOWLEDGEMENTS

Integrated Strategic Asset Management for Experts (ISAM for Xperts) is based on the
Australian Asset Management Collaborative Groups (AAMCoG) Guide to Integrated Strategic
Asset Management (ISAM).
ISAM for Xperts provides a holistic approach to the delivery of infrastructure and engineering
assets and helps to improve performance through integrated strategic asset management
practices. It is designed for asset managers, asset management practitioners, policymakers,
and those who would like to learn more about strategic asset management practices. Finally,
ISAM for Xperts provides practical action plans and real case examples related to strategic
asset management components, helping decision-makers to make informed decisions.
ISAM for Xperts was developed through close collaboration with industry partners whose
contribution and feedback are greatly appreciated. We especially would like to acknowledge
feedback from:
APV Valuers and Asset Management
Australian Asset Management Collaborative Group (AAMCoG)
Australian Procurement and Construction Council (APCC)
Brisbane City Council (BCC)
Infrastructure Sustainability Council of Australia (ISCA)
Institute of Public Works Engineering Australia (IPWEA)
Gympie Regional Council

MWH Global
ISAM for Xperts has been produced as a result of practice needs identified within the
membership of the Cooperative Research Centre for Infrastructure and Engineering Asset
Management (CIEAM) and was developed with their support and assistance. CIEAM (Asset
Institute since June 2013) is dedicated to improving the efficiency and sustainability of
infrastructure and engineering asset management, and the profitability of Australian industry.

2 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


PROJECT TEAM
PROF KERRY BROWN, SOUTHERN CROSS UNIVERSITY
PROF ROBYN KEAST, SOUTHERN CROSS UNIVERSITY
DR ANNA WIEWIORA, SOUTHERN CROSS UNIVERSITY
DR MARTIN LAUE, SOUTHERN CROSS UNIVERSITY
DR MUHAMMAD NATEQUE MAHMOOD, SOUTHERN CROSS UNIVERSITY

AAMCOG MEMBERS

PUBLISHED
BRISBANE, AUSTRALIA 2013

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 3


CONTENTS

ACKNOWLEDGEMENTS .............................................................................................................. 2

1 INTRODUCTION ..................................................................................................................... 8
1.1 STRUCTURE OF ISAM FOR XPERTS .......................................................................... 10

2 ENVIRONMENTAL FACTORS ............................................................................................. 13


2.1 SUSTAINABILITY MANAGEMENT ................................................................................ 14
2.1.1 IN THE SEARCH FOR BALANCE ..................................................................... 15
2.1.2 SUSTAINABILITY MANAGEMENT PRINCIPLES AND STRATEGIES ............ 18
2.1.3 ASSET MANAGEMENT FOR SUSTAINABILITY OUTCOMES........................ 21
2.1.4 ASSET SUSTAINABILITY PERFORMANCE EVALUATION ............................ 22
2.1.5 SUSTAINABILITY MANAGEMENT ACTION PLAN .......................................... 24
2.1.6 CASE STUDY .................................................................................................... 26
2.2 RISK MANAGEMENT ..................................................................................................... 26
2.2.1 RISK CATEGORIES .......................................................................................... 27
2.2.2 RISK MANAGEMENT PROCESS ..................................................................... 30
2.2.3 RISK MANAGEMENT ACTION PLAN ............................................................... 33

3 COMMUNITY AND USERS NEEDS AND EXPECTATIONS .............................................. 34


3.2 PURPOSE ...................................................................................................................... 35
3.3 STAKEHOLDERS IN ASSET MANAGEMENT .............................................................. 35
3.4 DEMAND MANAGEMENT UNDERSTANDING COMMUNITY AND
USERS NEEDS AND EXPECTATIONS ........................................................................ 38
3.5 DEMAND MANAGEMENT ACTION PLAN .................................................................... 39
3.6 COMMUNITY AND USERS ENGAGEMENT ................................................................ 40
3.7 ACTION PLAN FOR ENGAGEMENT STRATEGIES..................................................... 42
3.8 CASE STUDIES.............................................................................................................. 46

4 WHOLE-OF-GOVERNMENT POLICY FRAMEWORK ........................................................ 48


4.1 WHOLE-OF-GOVERNMENT POLICY ........................................................................... 51
4.2 CASE STUDY ................................................................................................................. 52

5 ORGANISATIONAL STRATEGIC MANAGEMENT ............................................................. 53


5.1 COMPONENTS OF ORGANISATIONAL STRATEGIC MANAGEMENT ...................... 54
5.1.1 CORPORATE GOVERNANCE.......................................................................... 54
5.1.2 CORPORATE POLICY ...................................................................................... 56
5.1.3 CORPORATE OBJECTIVES ............................................................................. 58
5.1.4 CORPORATE STRATEGY ................................................................................ 58
5.2 CORPORATE AND/OR ASSET MANAGEMENT POLICY ASSESSMENT AND
DEVELOPMENT ............................................................................................................. 59
5.3 CASE STUDY ................................................................................................................. 60

4 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


6 SERVICE DELIVERY STRATEGIC PLANNING .................................................................. 61
6.1 PURPOSE ...................................................................................................................... 62
6.2 SERVICE DELIVERY PLANNING ................................................................................. 63
6.2.1 ASSET MANAGEMENT POLICY...................................................................... 64
6.2.2 ASSET MANAGEMENT OBJECTIVES ............................................................ 64
6.2.3 ASSET MANAGEMENT STRATEGY ............................................................... 64
6.3 SERVICE DELIVERY OPTIONS ................................................................................... 66
6.4 ACHIEVING HIGH VALUE SERVICE DELIVERY OUTCOMES ................................... 68
6.5 ACHIEVING SUSTAINABILITY OUTCOMES IN SERVICE DELIVERY ....................... 70
6.6 CASE STUDY ................................................................................................................ 71
6.7 FURTHER INFORMATION ............................................................................................ 72

7 SERVICE DELIVERY OPERATIONAL AND TACTICAL PLANNING.................................. 73


7.1 PURPOSE ...................................................................................................................... 74
7.2 ASSET MANAGEMENT PLANS .................................................................................... 74
7.2.1 ACQUISITION PLAN ......................................................................................... 75
7.2.2 ENVIRONEMNTAL MANAGEMENT PLAN ...................................................... 77
7.2.3 OPERATIONS PLAN ........................................................................................ 78
7.2.4 MAINTENANCE PLAN ...................................................................................... 80
7.2.5 DISPOSAL PLAN .............................................................................................. 83

8 SERVICE DELIVERY ........................................................................................................... 85


8.1 PURPOSE ...................................................................................................................... 86
8.2 WHAT DOES SERVICE DELIVERY IN ASSET MANAGEMENT MEANS? ................. 86
8.3 ACHIEVING OPTIMAL SERVICE DELIVERY OUTCOMES ......................................... 87
8.4 ASSET MANAGEMENT LIFE-CYCLE ACIVITIES ........................................................ 91
8.4.1 ACTIVITIES IN THE ASSET ACQUISITION STAGE ....................................... 91
8.4.2 ACTIVITIES IN THE OPERATIONAL STAGE .................................................. 91
8.4.3 ACTIVITIES IN THE MAINTENANCE STAGE ................................................. 92
8.4.4 ACTIVITIES IN THE DISPOSAL STAGE .......................................................... 92

9 EVALUATION ....................................................................................................................... 93
9.1 ASSET PERFORMANCE MEASUREMENT ................................................................. 94
9.1.1 KEY PERFORMANCE INDICATORS ............................................................... 97
9.2 DEPRECIATION ............................................................................................................ 98
9.3 MANAGEMENT REPORTING ....................................................................................... 99
9.3.1 PROGRESS REPORTS .................................................................................... 99
9.3.2 BENEFIT REPORTS ......................................................................................... 99
9.3.3 FINANCIAL REPORTING ............................................................................... 100
9.4 REVIEW ....................................................................................................................... 100
9.4.1 A POST IMPLEMENTATION REVIEW (PIR) ................................................. 101
9.4.2 A POST COMPLETION REVIEW (PCR) ........................................................ 101
9.5 AUDIT ........................................................................................................................... 102

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 5


10 KNOWLEDGE MANAGEMENT .......................................................................................... 103
10.1 PURPOSE .................................................................................................................... 104
10.2 DATA, INFORMATION AND KNOWLEDGE ................................................................ 105
10.3 ASSET DATA MANAGEMENT..................................................................................... 106
10.4 INFORMATION MANAGEMENT .................................................................................. 108
10.5 ASSET REGISTER ....................................................................................................... 110
10.5.1 ASSET REGISTER MAINTENANCE .............................................................. 111
10.5.2 THESAURUS ................................................................................................... 111
10.6 RELATIONAL KNOWLEDGE MANAGEMENT ............................................................ 111
10.7 BARRIERS TO KNOWLEDGE MANAGEMENT .......................................................... 113
10.8 KNOWLEDGE MANAGEMENT ACTION PLAN .......................................................... 114
10.9 CASE STUDY ............................................................................................................... 117

11 ORGANISATIONAL MANAGEMENT ................................................................................. 118


11.1 PURPOSE .................................................................................................................... 119
11.2 LEADERSHIP ............................................................................................................... 119
11.3 CHANGE MANAGEMENT ............................................................................................ 121
11.4 ORGANISATIONAL COMPETENCIES AND SKILLS .................................................. 124
11.5 ASSET MANAGEMENT CULTURE ............................................................................. 125
11.6 CASE STUDY ............................................................................................................... 128

12 RESOURCES ..................................................................................................................... 129


12.1 STRATEGIC ANALYSIS ............................................................................................... 130
12.1.1 PEST ANALYSIS AND SWOT ANALYSIS ...................................................... 130
12.1.2 GAP ANALYSIS ............................................................................................... 131
12.2 ACCOUNTING TECHNIQUES ..................................................................................... 131
12.2.1 LIFE-CYCLE COST ANALYSIS....................................................................... 131
12.2.2 VALUE MANAGEMENT .................................................................................. 132
12.2.3 COST/BENEFIT ANALYSIS ............................................................................ 133

13 GLOSSARY ........................................................................................................................ 134

14 FURTHER INFORMATION ................................................................................................. 141

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LIST OF FIGURES

FIGURE 1.1: INTEGRATED STRATEGIC ASSET MANAGEMENT FRAMEWORK ................... 9


FIGURE 2.1: FACTORS IMPACTING SUSTAINABILITY .......................................................... 15
FIGURE 3.1: ASSET MANAGEMENT PUBLIC SERVICE DELIVERY STAKEHOLDERS.
ADOPTED AND MODIFIED FROM CLELAND AND IRELAND (2006) ..................................... 36
FIGURE 4.1: WHOLE-OF-GOVERNMENT MODEL FOR ASSET MANAGEMENT.................. 50
FIGURE 6.1: SERVICE DELIVERY STRATEGIC PLANNING................................................... 63
FIGURE 7.1: ASSET ACQUISITION PLAN FORMULATION PROCESS .................................. 76
FIGURE 7.2: OPERATIONS PLAN FORMULATION PROCESS .............................................. 79
FIGURE 7.3: MAINTENANCE PLAN FORMULATION PROCESS ............................................ 82
FIGURE 7.4: DISPOSAL PLAN FORMULATION PROCESS .................................................... 84
FIGURE 8.1: OPTIMAL SERVICE DELIVERY OUTCOMES BASED ON BUSINESS AND
PUBLIC GOOD VALUES ........................................................................................................... 90
FIGURE 10.1: DATA MANAGEMENT MATURITY MODEL..................................................... 108
FIGURE 11.1: ENGINEERING ASSET CULTURES AND ENGINEERING
ASSET PRIORITIES ................................................................................................................. 126
FIGURE 12.1: PEST ANALYSIS AND SWOT ANALYSIS ....................................................... 130

LIST OF TABLES

TABLE 2.1: HOW TO ENSURE MORE EFFECTIVE SUSTAINABLE DEVELOPMENT


(PRINCIPLES, OBJECTIVES AND STRATEGIES) ................................................................... 19
TABLE 2.2: HOW TO ACHIEVE MORE SUSTAINABLE ASSET
MANAGEMENT STRATEGIES .................................................................................................. 21
TABLE 2.3: COVERAGE OF INFRASTRUCTURE LIFE-CYCLE
PHASE BY SUSTAINABILITY RATING SCHEMES. ................................................................. 23
TABLE 2.4: STEPS TO ACHIEVE SUSTAINABLE ASSET MANAGEMENT ............................ 25
TABLE 2.5: QUALITATIVE RISK ANALYSIS MATRIX .............................................................. 31
TABLE 2.6: RISK MANAGEMENT ACTION PLAN .................................................................... 33
TABLE 3.1: UNDERSTANDING COMMUNITY AND USERS NEEDS
AND EXPECTATIONS ACTION PLAN....................................................................................... 39
TABLE 3.2: HOW TO ACHIEVE IMPROVED STAKEHOLDER ENGAGEMENT ...................... 44
TABLE 6.1: PROCUREMENT METHODS ................................................................................. 67
TABLE 7.1: MAINTENANCE ACTIVITIES .................................................................................. 81
TABLE 8.1: SERVICE DELIVERY IN ASSET MANAGEMENT OBSTACLES AND
STRATEGIES ............................................................................................................................. 88
TABLE 10.1: ASSET MANAGEMENT DATA TYPES .............................................................. 107
TABLE 10.2: INTEGRATED INFORMATION TECHNOLOGY SYSTEMS .............................. 109
TABLE 10.3: STEPS FOR THE DEVELOPMENT OF ASSET REGISTER ............................. 110
TABLE 10.4: BARRIERS AND STRATEGIES TO KNOWLEDGE MANAGEMENT ................ 113
TABLE 10.5: HOW TO ACHIEVE IMPROVED KNOWLEDGE MANAGEMENT PRACTICES 114
TABLE 10.6: STEPS TO ACHIEVE UPDATED AND DYNAMIC KNOWLEDGE
STORAGE AND SHARING PLATFORM .................................................................................. 116
TABLE 11.1: STEPS IN THE CHANGE MANAGEMENT PROCESS ...................................... 122
TABLE 11.2: SKILLS DEVELOPMENT .................................................................................... 124

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 7


1 INTRODUCTION
ISAM for Xperts represents research on best practice in asset management and
operationalisation of asset management processes to offer a clear action plan in achieving
desirable outcomes. It brings together economics, engineering, information technology,
sustainability and human elements to form a holistic approach to the delivery of built assets,
recognising the contribution of all these elements to a greater whole as well as their
interrelationships and interdependencies.
This document supports and provides background material on the AAMCoG Guide to Integrated
Strategic Asset Management (ISAM Guide) offering additional information on a range of topics
covered in the ISAM Guide. It is therefore anticipated that this document will be read in
conjunction with the ISAM Guide. Furthermore, together with the Asset Management Capability
Maturity Model (AMMCaM), this document provides a benchmark and audit tool towards which
organisations can aim in their strategic asset management improvement plans.
The supporting information provided in this document follows the Integrated Strategic Asset
Management Framework (Figure 1.1), which reflects the processes and interrelations of
Integrated Strategic Asset Management. Each component of the framework is cumulative and
interdependent, and is required for maximum service delivery outcomes. Yet the document is
designed in a way that each component can be examined separately. Although the framework
focuses on the public sector it is equally applicable to any organisation or sector.

DO YOU HAVE ALL THE NECESSARY PROCESSES IN PLACE TO ENSURE


OPTIMAL AND SUSTAINABLE ASSET MANAGEMENT OUTCOMES?
HAVE YOU CONSIDERED ALL THE STAKEHOLDERS AND THEIR INFLUENCE
DURING THE WHOLE OF THE ASSET LIFE-CYCLE?
IS YOUR ASSET DATA AND KNOWLEDGE SUFFICIENTLY CAPTURED AND
SHARED ACROSS PROJECTS?
ARE YOUR ENGINEERING, TECHNICAL AND MANAGEMENT STAFF WORKING
TOGETHER TO UTILISE THEIR FULL POTENTIAL?
HAVE YOU IDENTIFIED, ANALYSED AND RESPONDED TO ALL THE RISKS?

8 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


Environmental Factors Community Needs and Expectations

Whole of Government Policy Framework

Organisational Strategic Management

Service Delivery Planning

Strategic Planning

Organisational Management
Asset Management Policy
Knowledge Management

Asset Management Objectives

Asset Management Strategy

Tactical and Operational Planning

Asset Management Plans

Acquisition Operations Maintenance Disposal


Plan Plan Plan Plan

Service Delivery

Evaluation

FIGURE 1.1: INTEGRATED STRATEGIC ASSET MANAGEMENT FRAMEWORK

ISAM for Xperts is designed for asset managers, asset management practitioners and
policymakers, but it does more than just help to improve the performance of assets, it helps
decision-makers to learn about asset management practices and brings accountability to all
levels of the business. Those who would like to get more insight about strategic asset
management practices can also benefit from this document.
ISAM for Xperts is structured in a way to provide comprehensive understanding of integrated
asset management components, and to offer practical guidance on how to achieve better asset
management outcomes.
Added benefits of ISAM for Xperts include:
Detailed explanation of integrated asset management components.
Best practices from the latest research based on CIEAMs outcomes, existing asset
management guidelines and other related fields of management.

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 9


Practical action plans to guide those responsible for delivery and management of
assets.
Real case examples.
Online application intended to afford convenient and efficient use for asset managers.

ISAM for Xperts covers contemporary issues that have only recently entered the realm of asset
management, including sustainability outcomes, knowledge management, integrated strategic
view of asset life-cycle, the role of users and communities in understanding service needs and
their participation in service delivery decision-making. ISAM for Xperts highlights the need to
minimise risk, achieve value-for-money, and promote sustainability articulating key strategies to
assist in this undertaking. In recent years built environment practitioners throughout the world
have acknowledged the need for and the benefits of including sustainability as a critical
consideration in the design, delivery and operation of building projects. The increasing scrutiny
from the wider community is now demanding a shift towards the delivery and operation of
engineering assets and infrastructure that meets and maintains the sustainability priorities of the
community. Hence, assessing and incorporating sustainable concepts into the planning, design,
delivery and management of engineering asserts and infrastructure is becoming a critical
component for practitioners. Accordingly, ISAM for Xperts provides an integrated and
contemporary outline to assist those responsible for delivering and managing built assets to
meet users and community service needs in a sustainable way.

ISAM for Xperts follows a number of principles including:


Assets exist to support service delivery. Therefore non-asset solutions should also be
considered.

Asset management should be consistent with whole-of-government policy frameworks


and take into account whole-of-life costing, future service demands and balance
between capital expenditure and maintenance requirements and customer affordability.
Asset management should be integrated with strategic planning and budget delivery.
Asset management decisions should holistically consider sustainability outcomes
including environmental, social, economic and governance.

Governance arrangements should clearly establish responsibility for functional


performance of assets as well as accountability for the asset and service delivery.

1.1 STRUCTURE OF ISAM FOR XPERTS


Relevant components of the framework are discussed in separate sections. Each section starts
by providing a general understanding of the given component followed by practical steps to
improve asset management practices. Case studies presented at the end of each section
illustrate real examples offering contextual insights.
Section 2 focuses on the external and internal context for asset management focusing on
sustainability outcomes and risk management. Section 2.1 provides a definition of sustainability,
its main objectives and potential to improve the competitive advantage of businesses. It
discusses ecological, economic and socio-cultural factors impacting sustainability, concentrating
on the principles and strategies to sustain ecological processes, human communities and
economies. Finally, it offers tools for asset management sustainability performance evaluation
and proposes an action plan to achieve sustainability outcomes without adding cost. The

10 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


section concludes with a case study providing a real life example of the effective application of
sustainability practice. Section 2.2 provides an overview of the risk environment for asset
management, and outlines a wide range of risk categories. It provides a detailed risk
management process that includes steps and actions to be taken to ensure effective risk
identification, analysis and mitigation outcomes. This is followed by the risk management action
plan that provides a quick snap shot summarising the steps to be taken and questions to
consider during the risk management process.
Section 3 Community and users needs and expectations starts with the discussion
around a range of stakeholder groups and their roles and offers classification of internal and
external stakeholders involved in asset management service delivery. Our definition of
community includes the general public, asset users, local communities, environmentalists,
industry participants, private and public bodies under the umbrella of internal and external
stakeholders. In particular, Section 3 focuses on key external stakeholders in asset
management community groups and users to provide a framework for understanding their
needs and expectations (commonly referred to as demand management). It offers a range of
engagement strategies to improve participation in asset management decision-making.
Section 4 examines a Whole-of-Government Policy Framework and highlights that
government agencies and organisations should manage assets consistent with the whole-of-
government model that uses government resources to make service delivery decisions. It
outlines three-level approach to whole-of-government policy that allows utilising the capacity of
government resources including skills and experience. The section concludes with a case study
example from Queensland Governments whole-of-government Information and Communication
Technology (ICT) initiative introduced to achieve integrated service delivery and greater citizen
engagement.

Section 5 Organisational Strategic Management provides an understanding of


organisational and asset management strategic framework structure. It outlines mechanisms of
Organisational Strategic Management including corporate and asset management governance,
policy components, objectives and strategy. It provides an example of corporate policy from a
leading asset-driven Australian company and outlines the process of the development of
business and asset management strategies using a Policy Delphi approach, illustrated in a case
study.

Section 6 Service Delivery Strategic Planning aims to provide a better understanding of


the components in strategic planning (Asset Management Policy, Objectives, Strategy and
Plans) and assists practitioners in making strategic decisions on service delivery. It points out to
the procurement methods most commonly used in infrastructure asset management, and
provides approaches to achieve improved value of service delivery outcomes, offering
directions to include sustainability outcomes in that process. The section concludes with a case
study on the application of the Policy Delphi approach for the development of asset
management policy.
Section 7 Service Delivery Operational and Tactical Planning provides insights into asset
management planning. It lists out the components and activities, and outlines the formulation
processes of asset management plans: Acquisition, Operation, Maintenance and Disposal
Plans.
Section 8 Service Delivery is closely linked to the previous section on tactical and
operational asset management planning. Service delivery is portrayed as a strategy that an
organisation adopts to deliver its business objectives using organisational resources including
finance, people, information technology as well as building or infrastructure assets to achieve
sustainability outcomes and public good. The section starts with a discussion surrounding
three important dimensions of service delivery: intangibility, simultaneous delivery and

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 11


stakeholders participation. It highlights the existence of two distinct perspectives on service
delivery in asset management managerial (strategic) and technical. Considering the service
centric view, a list of obstacles to effective service delivery and strategies to overcome them is
provided. Finally, it lists out key activities for the stages of the asset management life-cycle, in
which completion assists in the delivery of the service according to the plan.
Section 9 Evaluation starts by providing information on asset performance measures and
indicators. It also covers aspects related to reporting and reviewing.

Section 10 Knowledge Management begins by listing benefits related to effective


knowledge management practices for asset management. This is followed by a discussion
focused on the need to differentiate between data, information and knowledge for asset
management. Later, a discussion on two equally important approaches to effective knowledge
management for asset management codification and personalisation is provided, followed
by the insights on asset management data types and the development and maintenance of
asset information repositories. Subsequently, a list of barriers to knowledge management and
counter strategies available to negate their effect is offered. In the end, a range of suggestions
are provided to improve sharing, integration and creation of asset-related knowledge through
the application of codification and personalisation approaches.

Section 11 Organisational Management is divided into four subsections focusing on the


components of organisational management. It begins with a leadership component, where it
discusses leadership styles and provides some insight into the development of leadership skills.
This is followed by the subsection on change management that guides through the nine steps to
effective change management based on CIEAMs latest research. A subsection on
organisational competencies and skills outlines three primary skill domains relevant to asset
managers and ways to acquire these skills. The section ends by bringing attention to the
importance of organisational culture in the context of asset management. It focuses on the
latest research that uncovered three cultural profiles that exist in the asset culture and point to
attitudinal- and value-based cultural elements found to have a positive contribution to the
management of engineering asset intensive organisations. It concludes with a case study
illustrating the application of an assessment framework to diagnose culture in the asset-driven
organisation.

12 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


2 ENVIRONMENTAL FACTORS

SECTION OUTLINE
Sustainability management
In the search for balance
Sustainability Management Principles and Strategies Environmental Factors

Asset Management for Sustainability Outcomes


Asset Sustainability Performance Evaluation
Sustainability Outcomes Action Plan

Risk management
Risk categories
Risk management process
Risk management action plan

OBJECTIVES
Discuss ecological, economic and socio-cultural
factors impacting sustainability
Outline sustainability principles and strategies
Discuss asset management for sustainability
outcomes
Suggest tools for asset management sustainability
performance evaluation
Propose action plan to achieve sustainable asset
management outcomes
Classify different types of risk
Outline risk management process
Propose action plan to minimise potential negative
impacts

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 13


2.1 SUSTAINABILITY MANAGEMENT
There is an increased concern surrounding the need to include sustainability matters into asset
management practices. Sustainability is concerned with not just environmental aspects, but also
with economic and societal/community aspects as well, referred to as the triple bottom line. 1 It
has been argued that companies focusing only on financial performance are likely to increase
risk costs in the environmental and social justice areas, which ultimately cause the financial
condition of the firm to deteriorate. Therefore, the three aspects of triple bottom line financial
performance of the company, its impact on the environment both positive and negative, and the
impact of company activities on society need to be considered and need to be in balance.2
Accordingly, introducing sustainability into asset management practices is likely to create
enduring value for multiple stakeholders and ultimately improve organisational performance.3
For instance, more efficient energy systems will not only save operating costs, but also reduce
risks associated with greenhouse gas emissions. Similarly, incorporating hybrid or gas efficient
vehicles into transportation systems is likely to result in fuel savings and reduction of
greenhouse gas emissions.4
Sustainability has become a subject of significant discussion propelled into both public and
private consciousness though a growing awareness of the impacts of events such as
unprecedented drought, severe storms and cyclones, bushfires and the impacts of global
warming on industry and the wider community.

Throughout the years the definition of sustainability has been refined and expanded to better
inform policymakers, industry and the community. The concept of triple bottom line
management and reporting involving social, economic and environmental dimensions is now
well established as a guiding principle in both private and public sector governance.
There is a greater need than ever that organisations apply sound sustainable management
practices to reduce the ecological footprint; the human demand on the Earths ecosystems. The
environment affects assets, their functions and their safety. Climate change now needs to be
considered in asset management risk identification and planning.
This section provides a range of practical information, in particular it:

discusses ecological, economic and socio-cultural factors impacting sustainability


outlines sustainability principles and strategies
discusses asset management for sustainability outcomes
suggests tools for asset management sustainability performance evaluation
proposes an action plan to achieve sustainable asset management outcomes.

1
Stapledon, T. (2004). Offices as Tools for Organisational Sustainability, PhD Thesis, The University of Sydney,
Sydney.
2 Anderson, D. (2006). The Critical Importance of Sustainability Risk Management. Risk Management.53(4) p 66-68.
3 Epstein, M. (2008). Making Sustainability Work. Best Practices in Managing Corporate Social, Environmental, and
Economic impacts. San Francisco: Berrett-Koehler Publishers
4 Anderson, D. (2006). The Critical Importance of Sustainability Risk Management. Risk Management.53(4) p 66-68.

14 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


2.1.1 IN THE SEARCH FOR BALANCE
SUSTAINABILITY IS THE ABILITY TO MAINTAIN AN IMPROVING QUALITY OF LIFE FOR ALL PEOPLE, BOTH
NOW AND INTO THE FUTURE, WHILST ENSURING THE CONTINUED AVAILABILITY OF THE NATURAL
RESOURCES AND ECOSYSTEM SERVICES ESSENTIAL TO SUPPORTING LIFE ON EARTH.

Adjunct Professor David Hood, Science and Engineering Faculty


5
QUT National President (2012), Engineers Australia

Sustainability management is the ability to meet present needs without limiting the ability of
future generations to meet their own needs. 6 This definition, provided in the Report of the World
Commission on Environment and Development7, has been adopted by the Australian
Procurement and Construction Council (APCC).8
The core concept of sustainability management is that there is triple the impact in the nexus
between ecological, socio-cultural and economic benefits. Sustainable management is
concerned with the interdependency between these factors (Figure 2.1).

Ecologicalsustainabilityis
impactedprimarilyby
manufacturingprocesses,
consumeruseanddisposal
methods,andpollutionofthelocal
environment.

Economicsustainability
Socioculturalsustainability
factorsincludethemethods
issuesincludesocialjustice,
ofprojectfunding,the
diversity,equitableaccessto
accrualoflongtermdebtby
services,economicstability,
theassetownersand
heritage,connectivity,helth
operators,andthe
andwellness,security,
continuedfundingof
cohesivenessandcultural
services(directfundingor
issues.
userpay).

FIGURE 2.1: FACTORS IMPACTING SUSTAINABILITY

Due to the increased appreciation of environmental matters in recent decades, strategic goals
of government and private organisations have shifted across the triple bottom line of ecological,
socio-cultural and economic factors, from being focussed purely on growth and economic
aspects to measured improvements in community wellbeing.9 Infrastructure sustainability is
about balancing triple bottom line trade-offs. 10

5
Definition of sustainability provided by Adjunct Professor David Hood, Science and Engineering Faculty, QUT and
National President (2012), Engineers Australia
6
United Nations. 1987."Report of the World Commission on Environment and Development." General Assembly
Resolution 42/187, 11 December 1987. Retrieved: 2007-04-12
7
United Nations. 1987."Report of the World Commission on Environment and Development." General Assembly
Resolution 42/187, 11 December 1987. Retrieved: 2007-04-12
8
Australian Procurement and Construction Council (2007) Australian and New Zealand Government Framework for
Sustainable Procurement
9
Gladwin, T.N., Kennelly J.J. and Krause T.S. (1995) Shifting Paradigms for Sustainable Development: Implications for
Management Theory and Research. The Academy of Management Review, 20(4) p.874-907
10
Stapledon, T. (2012). Why Infrastructure Sustainability is Good for your Business. CIEAM: Brisbane

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 15


According to the latest CIEAM report, Why Infrastructure Sustainability is Good for your
Business,11 one of the main reasons for the limited application of sustainability practices into
asset management is the difficulty to link the dollar outcomes of many sustainability initiatives
with their business objectives. Nevertheless, as the report declares, there are at least six
sources of business value for applying sustainable principles for asset intensive organisations:
12,13,14

1. Positive effects on company image, reputation and brand strength.


2. Positive effects on employee engagement motivation, retention and recruitment

3. Cost efficiency and savings.


4. New revenue sources, increased revenue from existing sources and improved
market share.

5. Risk reduction and management.


6. Confirmation of firms social licence to operate.
Other important reasons and benefits of applying sustainability practice to asset management
include: employment, local purchasing, reduce demand for electricity through improved
efficiency and green energy solutions, indigenous employment and development, equity to
access public assets, lower greenhouse emissions, less waste, and enhanced biodiversity.15

Research has long since found that organisations that operate in harmony with sustainability
cannot grow indefinitely, but they can develop indefinitely.16 As the market demands more
sustainable approaches, organisations are likely to achieve competitive advantage if they
operate under the triple bottom line principles. Accordingly, restricting the objectives of any
business to only financial goals limits the triple bottom line potential of environmental, social and
economic sustainability.
Sustainability has now become a strategic issue for businesses. Already sustainability
management principles have had a significant influence on government, policy development
and strategies. So, it is imperative that public and private asset owners take sustainability
issues into consideration when developing policies and strategies.17
According to the NSW Treasury,18 sustainability management has four main objectives:

1. Minimise the risk of environmental damage arising from incomplete knowledge.


2. Ensure ecological sustainability and environmental protection.
3. Ensure socio-cultural sustainability whilst recognising the needs of all.
4. Ensure economic sustainability whilst maintaining high and stable levels of economic
growth and employment.


Although these four objectives constitute a good start to address sustainability issues they need
to be further developed towards more proactive goals, as in their current form they do not

11
Stapledon, T. (2012). Why Infrastructure Sustainability is Good for your Business. CIEAM: Brisbane
12
Stapledon, T. (2012). Why Infrastructure Sustainability is Good for your Business. CIEAM: Brisbane
13
Bakan, J. and Burke, T (2005). Corporate Social Responsibility. The Ecologist. Vol 35, No. 2, pp. 28-32
14
Weber, M. (2008). The business case for corporate social responsibility: A company level measurement approach for
CRS. European Management Journal. No 26, pp. 247-261
15
Stapledon, T. (2012). Why Infrastructure Sustainability is Good for your Business. CIEAM: Brisbane
16
Gladwin, T.N., Kennelly J.J. and Krause T.S. (1995) Shifting Paradigms for Sustainable Development: Implications for
Management Theory and Research. The Academy of Management Review, 20(4) p.874-907
17
Australian Procurement and Construction Council (2001): Asset Management 2001
18
New South Wales Treasury (2004): Sustainable Development Guideline

16 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


represent the full potential of sustainability outcomes. In relation to the first objective it is much
more than incomplete knowledge that leads to environmental damage; the environmental
damage often arises from the lack of consideration of natural ecosystems. For that reason we
should not only minimise the impact on the environment but, to be truly sustainable, we should
be aiming beyond the zero waste target.19 To achieve this it is necessary to increase the
immune system and healing abilities of assets and accommodate existing development and
population levels. More sustainable approaches in asset design and during construction phases
are a good starting point for introducing the change. In addition, these approaches are often
more cost effective than traditional solutions. For instance, constructing green (more
sustainable) buildings, as compared to conventional commercial office buildings, are more cost
effective due to synergies created by integrated design.20 Commercial green buildings, based on
the 60L Australian Conservation Foundation (ACF) headquarters building in Melbourne, are
shown to use only 30% of the average energy consumption and only 20% of the average water
consumption, and are proved to be healthy and productive workplaces.21 Redesigning
development by increasing asset longevity and reusing existing assets to accommodate for
various service delivery needs is one way to shift toward sustainable asset management.
With regard to the third objective, sustainability has the capability to not only recognise the
needs of different social groups, but also actively build and conserve existing communities,
while respecting indigenous culture. Providing opportunities for active participation of more
disadvantaged communities in asset management decision-making is also a concern of
sustainable management.

In relation to the fourth objective we need to shift our perception from the fulfilment of economic
needs to the long-term wellbeing of the entire stakeholder group. The fulfilment of economic
needs brings short-term satisfaction and creates an environment for ever-growing needs
supporting only the economic growth and leading to extensive use of non-renewable resources.
Wellbeing, seen as a fulfilment of spiritual needs such as happiness, strong relationships and
family bonds, brings long-term satisfaction and mental strength.22 Although shifting priorities
from economic to spiritual welfare can be challenging, it is likely to produce long-term benefits,
not only for the natural environment but also for socio-cultural advantage.
Accordingly, an alternative to the four objectives (above) might be:

Minimise the risk of environmental damage arising from lack of consideration by


building awareness and taking preventive actions to grow the ecosystem.
Ensure ecological sustainability and environmental enhancement.
Ensure socio-cultural sustainability whilst recognising the needs of all and actively
engaging communities to participate in decision-making.
Ensure wellbeing and economic sustainability whilst maintaining high and stable levels.
of economic security and employment.

It is considered that all four objectives must be met if one objective is achieved to the
detriment of another then long-term sustainability will not be met. However, it may be adequate
to accept the short-term loss of benefit in order to achieve benefits over the longer term. In this

19
Birkeland, J (2008). Positive Development: From Vicious Circles to Virtuous Cycles Through Built Environment
Design Earthscan: London
20
Birkeland, J (2008). Positive Development: From Vicious Circles to Virtuous Cycles Through Built Environment
Design Earthscan: London
21
Australian Conservation Foundation. (2011). 60L green buildings. Australian Environmental Management. Vol. 1, p.
76-79
22
Harris, R. (2008). The Happiness Trap. Shambhala Publication Inc.: Boston

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 17


instance the context of a situation needs to be carefully considered.23 For example shutting
down an industry that is polluting the environment could have significant social and economic
consequences for a small town where the industry is the major employer. In this instance
adopting a strategy that counters one of the sustainability objectives in the short term could be
sustainable over the longer term. Furthermore, due to the decreasing number of natural
resources on our planet and the present state of our technology and social systems, some limits
on human activity are necessary. Accordingly, it is expected that the development of technology
and social systems is based on responsible use of resources and the focus on investment,
technology and technical development is entirely sustainable.

2.1.2 SUSTAINABILITY MANAGEMENT PRINCIPLES AND STRATEGIES


Human activities and current paradigms are depleting our natural resources. The NSW Treasury
proposed four primary sustainability development principles and associated strategies that help
to sustain ecological processes and human communities and economies24:
precautionary principle
conservation of bio-diversity and ecological integrity

intra- and inter-generational equity


internalisation of ecological and social impact costs.
Table 2.1 outlines the principles, objectives and strategies of sustainable development based on
the Sustainable Development Guideline25 with some modifications (underlined).

23
New South Wales Treasury (2004): Sustainable Development Guideline
24
New South Wales Treasury (2004): Sustainable Development Guideline
25
New South Wales Treasury (2004): Sustainable Development Guideline

18 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


TABLE 2.1: HOW TO ENSURE MORE EFFECTIVE SUSTAINABLE DEVELOPMENT (PRINCIPLES, OBJECTIVES AND STRATEGIES)

PRINCIPLES OBJECTIVES STRATEGIES


PRECAUTIONARY PRINCIPLE Minimise the risk of It is recommended that organisations undertake environmental
Where there is a threat of serious or environmental damage arising and social impact assessments and economic appraisals in
from incomplete knowledge order to identify any potential impacts on ecological, socio-
irreversible environmental damage, lack of full
or complete knowledge should not be used as cultural and economical sustainability. Once identified,
a reason for postponing mitigating measures. organisations should develop and implement strategies that do
not harm the environment and ecosystems.
CONSERVATION OF BIO-DIVERSITY AND To achieve ecological Organisations should endeavour to conserve the bio-diversity
ECOLOGICAL INTEGRITY Sustainability and maintain the and ecological integrity by ensuring ecological protection of
mechanisms by which natural ecosystems, flora and fauna; improving the quality of air, water
The concept of bio-diversity covers species,
processes operate. and soil; and minimising and avoiding waste and hazardous
habitat and genetic diversity. Lost diversity materials, and where possible enhance biodiversity.
means loss of genetic information, lost ability
for species to adapt, lost opportunities for
cultural advances derived from nature, loss of
cultural value and leads to instability in all
ecosystems. Conserving bio-diversity and
protecting eco-systems will help to ensure that
natural processes and therefore human
economies can be sustained.
INTRA- AND INTER-GENERATIONAL To achieve socio-cultural Strategies for achieving socio/cultural sustainability both now
EQUITY sustainability by maintaining and in the future include:
acceptable and equitable A commitment to social justice
The present generation should ensure that the
levels of community well-
health, diversity and productivity of economic, being. Equity: ensuring equity in the distribution of resources
ecological and social environments are Rights: recognising individual rights
maintained or enhanced for the benefit of
Access: providing fairer access to economic resources
current and future generations. Inequity in the
and services
distribution of resources results in increased
environmental degradation through lack of Participation: providing opportunities for those who will
social coordination and un-managed resource be affected to participate in decision-making

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 19


PRINCIPLES OBJECTIVES STRATEGIES
use. Committing to intra- and inter- Ensuring equitable distribution of the costs and benefits
generational equity will help maintain high of sustainable development
levels of community well-being and ensure
Conserving aesthetic and cultural diversity, and
efficient use of resources. Community well-
heritage, in both society and the built environment
being includes economic health, quality of life,
and the networks, norms and trust that Conserving community resources and where possible
facilitate coordination and cooperation for adding social value to local communities
mutual benefit within the community. Respect for indigenous culture

INTERNALISATION OF ECOLOGICAL AND To achieve long-term Strategies for achieving economic sustainability include:
SOCIAL IMPACT COSTS economic stability A commitment to improvement not just growth
The economic stability of a community that is Internalisation of social and environmental impact costs
simply ignoring social issues and using up its
Conservation of resources e.g. energy, water, soil,
natural resources is unsustainable. The cost of
materials
social and environmental impacts should
therefore be considered in decision-making Use of renewable or recycled resources and recycling
and built into or internalised in the costs of Efficient use of non-renewable resources
goods and services. By internalising the costs Support of alternative technologies
of environmental and social impacts, a more Polluter pays
accurate picture of economic and social health
Full-cycle costing for goods and services, including the
can be obtained and measures taken to
use of natural resources and assets and the disposal of
ensure sustainability. Internalisation of
ecological and social impact costs also wastes
contributes to Sustainable Development Cost effective pursuit of environmental goals, via use of
through improved valuation of community and incentive structures including market mechanisms.
natural assets.
(Adopted from New South Wales Treasury (2004): Sustainable Development Guideline)

20 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


2.1.3 ASSET MANAGEMENT FOR SUSTAINABILITY OUTCOMES
Organisations that promote sustainable asset management consider a range of factors and
strategies when acquiring assets. Table 2.2 outlines sustainable asset management factors and
strategies that are based on the Australian and New Zealand Government Framework for
Sustainable Procurement.26
TABLE 2.2: HOW TO ACHIEVE MORE SUSTAINABLE ASSET MANAGEMENT STRATEGIES

Consider Proposed Strategies

How to manage demand and avoid Adopt and implement strategies to


unnecessary consumption. avoid unnecessary consumption and
manage demand.
How to minimise the environmental
impact of goods and services, not just Support businesses and industry
during acquisition, but throughout the groups that demonstrate innovation in
entire life-cycle of the asset. sustainability.
How to achieve socially responsible Support suppliers who are socially
supply practices. responsible and adopt ethical
practices.
How to achieve value for money over
the whole-of-life of the asset, rather Select products and services which
than just initial acquisition cost. have lower environmental impacts
across their life-cycle compared with
How to add social and natural capital
competing products and services.
rather than just minimise impacts.
Examine alternatives that may add
value at little or no additional cost.

There has been a range of cutting edge approaches to sustainable buildings construction,
operation and maintenance. Despite the constantly changing definition of sustainable building,
there are a number of commonly held opinions in relation to how green buildings should be
designed and operated in order to reduce their overall impact on human health and the natural
environment. In particular, sustainable buildings should be designed and operated to:27,28
efficiently use energy, water and any other resources
protect occupant health
improve employee productivity
reduce waste and pollution as well as environmental degradation
increase the use of re-used, recycled materials.

26
Australian Procurement and Construction Council (2007) Australian and New Zealand Government Framework for
Sustainable Procurement
27
Australasian Procurement and Construction Council (2010): National Framework for Sustainable Government Office
Buildings
28
Australian Conservation Foundation. (2011). 60L green buildings. Australian Environmental Management. Vol. 1, p.
76-79

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 21


The APCC recommends the following principles to guide jurisdictions to develop sustainable
building strategies, policies, guidance material, training and tools:29

reduce the impact of office buildings on the natural environment


respond to the adaptation challenges associated with climate change
improve the cost effectiveness and efficiency in the use of office buildings
enhance the health, wellbeing and productivity for occupants
demonstrate leadership in the procurement and management of government office
accommodation
identify opportunities for Strategic Asset Management to contribute to community
sustainability.

Sustainable designs of buildings, such as offices, will not only ensure better environment
protection but also promote employees wellbeing and productivity.
Including power generation within the building design (through the use of solar heating, photo
voltax, Trigeneration with gas, and similar approaches, can result in significant cost drawing
over the life of the building and substantially reduce greenhouse gas emissions.
For further information about the national framework for sustainable buildings, please refer to
the Australasian Procurement and Construction Council (2010): National Framework for
Sustainable Government Office Buildings.
For further information about sustainable procurement for offices, please refer to
http://www.apcc.gov.au for the following APCC documents:
Assessing a Supplier's Sustainability Credentials
Sustainable Procurement Product Guide Office Furniture

Sustainable Procurement Product Guide Business Machines


Sustainable Procurement Product Guide Print Services
Sustainable Procurement Product Guide Cleaning Services
Sustainable Procurement Product Guide ICT Products

2.1.4 ASSET SUSTAINABILITY PERFORMANCE EVALUATION


Various organisations are at different stages of incorporating sustainability into their business
activities. Sustainability performance evaluation of organisational assets allows organisations to
recognise their sustainability efforts and compare with current benchmark. Among a number of
performance rating schemes, Civil Engineering Environmental Quality Assessment and Award
Scheme (CEEQUAL), launched in the UK in 2003, was the first environmental rating scheme
with a primary focus on civil infrastructure to enter the market.30 Currently there are six major
infrastructure-based sustainability rating schemes: 1) INVEST, 2) Greenroads, 3) GreenLITES,
4) CEEQUAL, 5) ISCA IS and 6) EnvISIon. INVEST and ISCA IS are Australian sustainability
assessment schemes, while Greenroads, GreenLITES and EnvISIon are American-based and
CEEQUAL is British, but also offers an international version for use outside of the United

29
Australasian Procurement and Construction Council (2010): National Framework for Sustainable Government Office
Buildings
30
Shaw, G., Kenny, J., Kumar, A. & Hood, D. (2012). Sustainable Infrastructure Operations: A Review of Assessment
Schemes and Decision Support. 25th ARRB Conference Shaping the future: Linking policy, research and outcomes,
Perth, Australia 2012

22 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


Kingdom and Ireland.31 Comparison between these six schemes (as shown in Table 2.3)
revealed that only one of the schemes ISCA IS has the ability to measure and assess the
operational phase of an infrastructure assets life, proving to be the most up-to-date and most
comprehensive solution to evaluate asset sustainability performance.
TABLE 2.3: COVERAGE OF INFRASTRUCTURE LIFE-CYCLE PHASE BY SUSTAINABILITY
RATING SCHEMES.

Infrastructure Life-cycle Phase

Schemes Design Construct Operate Deconstruct /


Decommission
INVEST Yes Yes No No
Greenroads Yes Yes No No
GreenLITES Yes Yes No No
CEEQUAL Yes Yes No No
ISCA IS Yes Yes Yes Planned
EnvISIon Yes Planned Planned No
Adopted from Shaw et al. (2012)

Based on this comparison, to evaluate the sustainability performance of assets and projects, it
is recommended to use the Infrastructure Sustainability (IS) rating scheme, developed with the
collaboration with CIEAM and other industry partners.
The IS rating scheme has been developed by the Infrastructure Sustainability Council of
Australia (ISCA) and was launched in early 2012. A number of assessors have been trained to
rate the IS performance and a number of projects are currently being rated. The rating tool
measures the sustainability performance of a range of infrastructure projects including:
roads, rail bridges and tunnels
ports, wharves and marinas
airports
distribution grids (pipes, poles, wires)
telecommunications infrastructure

water and waste water supply and infrastructure.

The IS rating scheme provides independently certified sustainability ratings, a formal


assessment process, certification and education program. Please refer to the ISCA website for
further details: http://www.isca.org.au/.
Upon receiving the outcomes from the IS rating, organisations can develop an action plan to
address the aspects highlighted in the assessment tool.

31
Shaw, G., Kenny, J., Kumar, A. & Hood, D. (2012). Sustainable Infrastructure Operations: A Review of Assessment
Schemes and Decision Support. 25th ARRB Conference Shaping the future: Linking policy, research and outcomes,
Perth, Australia 2012

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 23


2.1.5 SUSTAINABILITY MANAGEMENT ACTION PLAN
Commitment to sustainability when managing assets is vital for every organisation. Sustainable
asset management has cost saving benefits through better resource management, avoidance of
environmental litigation costs, and minimised clean-up costs.32
A range of practical and cost-effective solutions can be used by organisations to target
sustainability outcomes:

Consider alternative approaches to asset management, for instance:


increase asset longevity
reuse existing assets to accommodate for various service delivery needs.
Invest in solar power by producing their own electricity with solar power
organisations can be self-sufficient and eliminate the rising cost of electricity.
Businesses can take advantage of recent cost reductions and benefit from the
government stimulus programs.33
Include sustainability principles in the organisation and asset management policy, goals
and objectives development.
Evaluate project performance based on sustainability indicators such those given in the
Infrastructure Sustainability rating system (IS).
When selecting suppliers, choose those that are committed to sustainability and can
demonstrate sustainable procurement policies.
Reduce the carbon footprint of buildings through:
Use of passive solar heating, cooling and natural ventilation thermostatically
controlled air-conditioning technology that uses fresh air as a source of heating and
cooling.34
Use energy efficient plant, rainwater collection systems, reusable cartridges and
environmentally friendly cleaning products.
Encourage employees to recycle plastic, paper and glass and provide recycling bins.
Increase awareness, especially among key staff members, and provide educational
training on environmental enhancement and sustainability outcomes.

When managing an asset it is necessary to move towards positive ecological, socio-cultural and
economic outcomes. Based on the recent research on environmental management a number of
steps are provided to assist asset managers in ensuring sustainable asset management.

32
New South Wales Treasury (2004): Sustainable Development Guideline
33
Australian Environmental Management (2011) Solar Power Securing your Energy Future. Vol 1 p. 16
34
Australian Environmental Management (2011) Solar Power Securing your Energy Future. Vol 1 p. 41

24 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


TABLE 2.4: STEPS TO ACHIEVE SUSTAINABLE ASSET MANAGEMENT

STEP 1: Identify asset-related factors impacting sustainability (positive and negative)

What impact does the asset have on the ecological sustainability during any stage of its
life-cycle (acquisition, operation, maintenance or disposal)?
Examples of possible ecological impacts: gas emissions, gaseous, liquid and solid
wastes, pollution.
What impact does the asset have on the socio-cultural sustainability during any stage of
its life-cycle (acquisition, operation, maintenance or disposal)?
Examples of possible socio-cultural impacts: equitable access to services, diversity,
economic stability, heritage, aesthetic and cultural issues and transportation.
What impact does the asset have on the economic sustainability during any stage of its
life-cycle (acquisition, operation, maintenance or disposal)?
Example of possible economic impacts: long-term debt, other issues that could affect an
assets economic viability.
STEP 2: Record these impacts in the register

Develop a spreadsheet outlining:


o Type of an impact
o Action Plan*
o Estimated Cost
o Estimated Benefit (over 5 years)
o Person Responsible
o Monitoring
STEP 3: Develop ACTION PLAN* to overcome the negative impacts

Are there any alternative solutions that can be applied to move assets impact from negative
towards positive outcomes on ecological, socio-cultural or economical sustainability factors?

Consider alternative solutions if possible and/or applicable:


o Utilise ecological ways for the asset disposal
o Use ecological technologies and materials
o Reuse parts of the ready-to-be-disposed asset
o Improve asset maintenance to ensure longer lifespan of the asset
o Ensure ongoing habitat protection
o Minimise the use of chemicals for landscape control
o Provide appropriate levels of safety and security.
For more examples please refer to: Appendix D Example Sustainable Development
considerations for Buildings and Appendix E Example Sustainable Development
considerations for small products of the New South Wales Treasury (2004): Sustainable
Development Guideline.
Assess risk of asset failure or deterioration to minimise or avoid negative impacts of
ecological damage (for more information please see the Risk Management section).
Keep up-to-date with current sustainability issues.
Respond to the challenges associated with climate change.

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 25


2.1.6 CASE STUDY

CASE STUDY
Completed in 1915, The Wharf on Sydney Harbour is home to The Sydney Theatre Company
(STC). STC has implemented a strategy to green The Wharf. Two main projects have been
undertaken: installation of a rooftop solar photovoltaic (PV) array and a rainwater harvesting
storage and reticulation system designed to capture rain from the roof area of The Wharf.

The building roof area, which is equivalent to half of a football stadium in size, proved to be an
ideal place to collect water for storage in a large suspended pipe that runs 500 meters
underneath the pier. The total water expected to be saved annually across The Wharf is 11.3
million litres, supplying 100% of STCs non-potable water requirements and bringing substantial
financial benefits.

The solar PV array, developed by University of New South Wales School of Photovoltaic and
Renewable Energy Engineering, produces approximately 12% more power than conventional
crystalline silicon solar panels without increasing production cost.

STC Sustainability Manager, Paul OByrne, says that the rainwater system and massive rooftop
solar array have shown that all buildings even heritage ones can be made more
sustainable.

Adopted from: Greening a wharf. (2011). Sustainability and Infrastructure. Issue 1, November
2011. pp. 40-41

2.2 RISK MANAGEMENT


The aim of risk management is to achieve more reliable planning, greater financial certainty,
improved decision-making, and management outcomes. Risk can occur during every stage of
the asset management life-cycle and come from within and outside of the organisation. Losing
valuable employees with specific knowledge about the asset or a failure of equipment
measuring asset corrosion are examples of internal risks, whereas events that cannot be
directly controlled by the organisation such as environmental contamination or a change to a
legislation that affects decisions on asset planning or design and delays the asset acquisition
process are examples of external risks.
In 2011 the Victorian Auditor Generals Office revealed that about $1.6 billion, or 60% of the
total value of public assets, were not supported by a sound asset management plan, with audit
uncovering significant deficiencies in risk management, asset management policies, strategies
and plans covering all their major classes of assets.35,36

It is argued therefore that the way forward is to adopt scientifically supported continuous
improvement processes in asset management including effective management of risk
performed throughout the complete life-cycle of operational assets. This will allow asset

35
Victorian Auditor Generals Office (2011). Business Planning for Major Capital Works and Recurrent Services in Local
Government. 12:4
36
McGeoch, M., Brown, K., & Brunetto, Y. (2012). Current Issues in Complex Physical Engineering Assets: An Analysis
of Major Capital Works, Major Road Projects and Prison Accommodation. Third International Engineering Systems
Symposium CESUN 2012, Delft University of Technology, 18-20 June 2012

26 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


managers to achieve maximum equipment reliability, operating availability and asset utilisation,
sustainability outcomes and to remove operating risk.37

Risk management should be applied to all governmental (Government and Agency) and
organisational (Strategic Management and Asset Management) levels. It provides planners and
managers with a structured way of identifying and analysing potential risks, and assists in
devising and implementing appropriate strategies to help mitigate risks, considering their likely
impact. Strategies can include risk prevention, risk transfer, impact mitigation or risk
acceptance. A range of strategies can be used within a single project for a number of
anticipated individual risks.
Increasingly risk management addresses not just negative, but also positive impacts and
opportunities for the business. Risk management is closely related to sustainability that goes
beyond the financial risk aspects and compliance activities typically related to time, cost and
quality of delivering infrastructure projects. Applying sustainability principles expands
boundaries of risk management into other domains and potential risks related to managing
talents, greening, social acceptance risk and corporate social responsibility. 38 Based on that,
sustainability management could be used as a way to mitigate risks related to sustainability
issues including environmental and community issues, such as water management or pollution
management. Incorporating sustainability into risk management helps to identify emerging
issues and develop better services and products, thus improves stakeholders satisfaction and a
companys reputation39 as well as providing more informed decisions on an array of risks.

This section outlines matters related to risk management including risk categories, risk
management process and action plan to minimise potential negative impacts.

2.2.1 RISK CATEGORIES


Risks arise as a result of two main areas: (1) a limited, or lack of knowledge, experience or
information and uncertainty (particularly about the future); or (2) as a result of relationship
changes between the parties involved in an undertaking.40 Below are broad categories of
potential risks that may affect asset management activities:41

INVESTMENT/PLANNING RISK
Investment/planning risk relates specifically to the investment proposal planning in particular
the quality of the planning. Such risks associated with poor planning can include overlooking
critical issues, incorrectly estimating potential costs or benefits, and misunderstanding
community needs, and/or project services being unable to meet community needs. For example
an investment or planning risk would be: using population catchment predictions as a basis for
the construction of a childcare centre; the service may be underutilised if the actual population
trends differ from the prediction resulting in reduced income.

DESIGN RISK
This type of risk is associated with the project complexity, in particular whether proven
technology will be used and how realistic the estimated period for completion is.

37
Foord A.G. and Gulland G. (2006) Can technology eliminate human error? Trans IChemE, Part B, Process Safety and
Environmental Protection, 84(B3), 171-173
38
Stapledon, T. (2012). Why Infrastructure Sustainability is Good for your Business. CIEAM: Brisbane
39
AON (2007). Sustainability Beyond Enterprise Risk Management. Industry Update.
40
New South Wales Treasury (2004): Risk Management Guideline
41
New South Wales Treasury (2004): Risk Management Guideline

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 27


EXTERNAL APPROVAL RISK
External Approval risks relate to obtaining approval for the proposal to proceed. Depending on
the proposal these can include planning approval, public consultation, and state and federal
environmental and heritage approvals. Approval issues can result in project over-runs as a
result of delays in obtaining approvals (such as delays caused by an aggrieved party launching
an appeal), extra costs related to appeal processes, as well as approvals not being granted.

DEMAND/MARKET RISK
Demand/market risks are associated with the impact of demand levels on a proposed projects
success, for example whether there is sufficient demand or that the proposed fees and charges
are appropriate and will not negatively impact the projects success. An example of
demand/market risk is the failure of a community centre to meet demand expectations because
the community is not willing to pay for the centres services. This could have been caused by
the project relying on an unrepresentative survey sample during the preliminary research stage.

COMPLETION/CONSTRUCTION RISK
The risks associated with the proposed projects completion are referred to as
completion/construction risk and include issues such as specifications not being met, specified
timeframes not being met or the project being over-budget. For example failing to account for
seasonal weather patterns over the construction period is a completion/construction risk that
could result in a delayed completion date leading to increased costs and loss of income.

MANAGEMENT/OPERATIONS RISK
Management risk is associated with how management ensures that the expected outcomes are
delivered in relation to an investment. Management risk increases where a management team
has little or no experience in managing similar projects. Operations risks relate to operational
problems, which can arise as a result of poor project planning and management such as
industrial relations issues, community unrest, equipment failure and staff availability. For an
example management/operations risk can arise when an inexperienced project manager fails to
recognise subcontractor cash flow problems and timeline lags as warning signs on a project.

ENVIRONMENTAL RISK
The impact the proposed project has on the environment is referred to as environmental risk.
For example if the potential effects of construction are not considered in relation to natural
habitats, such as the fouling of streams, risks can arise such as the halting of work while
remedial measures are undertaken or an injunction being taken out against the
contractor/project owner.

SOCIETAL RISK
Every project will impact somehow on the local or wider community either immediately or in the
longer term, during the whole life of the asset. Overlooked, it can have damaging consequences
on social security and safety. Not considering societal risks may have significant negative
impact on a companys social licence to operate and will eventually damage its reputation and
brand image.

PRIVATE SECTOR RISK


Private sector risk is present where private sector organisations are used to deliver
contracted/required outcomes. To ensure the private sector organisation will deliver on
contracted/required outcomes it is essential to consider the organisations track record, financial
standing and management competence before entering into any contractual arrangements or
agreements. A private sector risk for example would be entering into a contract without

28 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


checking the private contractors financial situation and as a result having to bear the total costs
of a project should the contractor become bankrupt.

INTERNAL ORGANISATIONAL RISKS


There are also risk categories related to organisational asset management. It is suggested that
there are at least five categories of internal organisational risks potentially contributing to failure
and cost increases in asset management:42
1) Lack of knowledge of existing organisational resources Many organisations
are often unaware of their assets and resources. Developing and maintaining an
asset register is a key to address this problem. The Asset Register should contain a
list of all organisational assets and their conditions; the list needs to be frequently
verified and updated. (Refer to Section 10 Knowledge Management for further
details).
2) Over or under maintenance assets Significant cost is associated with both
over and under maintained assets. March recommends using industry benchmarks
for maintenance spending as a loose indicator of maintenance cost.43 Furthermore,
March suggests three steps to determine the optimum maintenance requirements
of the assets:44 a) the use of rigorous methodologies (i.e. Reliability Centred
Maintenance (RCM)); b) allocation of financial and human resources required to
implement the maintenance plan; and c) introduce a training plan to ensure
personnel are skilled enough to implement the tasks (see Section 11.4
Organisational competencies and skills for further details on asset management
training).
3) Improper operation This internal risk is related to users lack of understanding
of the inherent design capabilities of organisational assets.
4) Improper risk management process This is associated with failure in
assessment, identification, management and control of potential risks. To avoid this
problem, it is recommended to follow the risk management process outlined in
Section 2.2.2.
5) Sub-optimised asset management systems Lack of coherent and intelligible
Enterprise Asset Management (EAM) systems necessary to ensure holistic
management of all areas. Introducing new or upgrading existing systems is
recommended to provide an integrated approach to optimising the life-cycle of
assets through all the stages from planning and acquiring all the way to disposal
(refer to Section 10 Knowledge Management for further details).

42
March, C. (2010). The Five Biggest Risks to Effective Asset Management. Rx Today e-Newsletter (November
edition). http://www.lce.com/The_Five_Biggest_Risks_to_Effective_Asset_Management_367-item.html
43
March, C. (2010). The Five Biggest Risks to Effective Asset Management. Rx Today e-Newsletter (November
edition). http://www.lce.com/The_Five_Biggest_Risks_to_Effective_Asset_Management_367-item.html
44
March, C. (2010). The Five Biggest Risks to Effective Asset Management. Rx Today e-Newsletter (November
edition). http://www.lce.com/The_Five_Biggest_Risks_to_Effective_Asset_Management_367-item.html

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 29


2.2.2 RISK MANAGEMENT PROCESS
Risk management, at the asset life-cycle level, helps to achieve more reliable and positive
outcomes in relation to:
time management
asset cost and quality
sustainability outcomes
functional and service delivery requirements
procurement options (in particular ensuring the best option is chosen).
Below are the number of steps in the risk management process, developed with the reference
to the New South Wales (NSW) Treasurys Risk Management Guideline 45 and International
Infrastructure Management Manual (IIMM):46

1. PROPOSAL FAMILIARISATION
Define proposal/project scope and objectives.
Identify the environmental and societal factors associated with the assets location and
its outputs.
Identify criteria for assessing the proposal or project.
Define the key elements and issues.
This step is important in defining the scope of the risk process, which often depends on the type
and nature of the service/assets provided. Organisations providing essential services to the
community, such as water or electricity supply, typically have the severe consequence of
service/asset failure and thus allocate the risk management process as a core business driver.
Other organisations, with lower consequence of service/asset failure, may have different
approaches and mitigation strategies to risk management.

2. RISK IDENTIFICATION
Identify all potential risks that may occur during each stage of the asset life-cycle
process.
Capture and classify all risks into a risk register.
Commonly risks are identified through a workshop process during brainstorming sessions. In
this step it is advisable to engage people with a range of expertise and diverse knowledge and
background including planners, designers, financial experts, engineers and maintenance
representatives, community and user groups, and so on. This will assist in providing a broader
array of thoughts and ideas.

In the case of large projects, which require several stages and risk identification sessions, a risk
grouping framework will provide a better structure and identify the most suitable key participants
for a given session. Participants should also be well informed about the scope of the risk
process, nature and objectives of the project/proposal, and risk management policy. This will
help to maximise the capture of risks within the allocated time frame. Once risks are identified
they are generally recorded in a risk register.

45
New South Wales Treasury (2004): Risk Management Guideline
46
International Infrastructure Management Manual (IIMM). International Edition. (2011). (Version 4.0). Wellington, NZ:
National Asset Management Support Group (NAMS Ltd.).

30 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


3. RISK ANALYSIS
Risk analysis forms a part of the risk management cycle, in particular it considers what might
possibly go wrong as compared with expectations. The risk analysis process includes the
following stages:

Identify all risks that might impact on the proposal or project.


Assess the potential likelihood and consequences of each risk (see Table 2.5).
Screen risks to discard the minor risks having low impacts and low likelihood of
occurrence.
Identify moderate, high and extreme risks that require management attention.
TABLE 2.5: QUALITATIVE RISK ANALYSIS MATRIX47

Consequences
Likelihood
Insignificant Minor Moderate Major Severe
Almost certain MODERATE HIGH HIGH EXTREME EXTREME

Likely MODERATE MODERATE HIGH HIGH EXTREME

Possible LOW MODERATE MODERATE HIGH EXTREME

Unlikely LOW MODERATE MODERATE MODERATE HIGH

Rare LOW LOW MODERATE MODERATE HIGH


Source: Department of the Prime Minister and Cabinet (2010): Qualitative risk analysis.
www.dpmc.gov.au.

During the risk analysis process it is important for organisations to be able to define what is an
acceptable and what is unacceptable risk against organisational values. This will often
depend on the type of organisation, their strategy, and services provided. For example, quality
performance failure may be an extreme event for a power plant, but it can be acceptable for
organisations or projects where delivering an asset on time, and not its quality as such, was a
priority.

Identifying critical assets, which are the most important for delivering the required service, and
probability of their failure should be assessed in more detail in the risk analysis process.

Furthermore, incorporating sustainability practices into risk analysis process helps to identify
emerging issues and consequences related to social, environmental and economic factors, and
develop better responses. For instance, social consequences can include but are not limited to:
injuries, loss of life, loss of liability, service disruption, and negative publicity. Environmental
consequences could include: pollution, water contamination, material damage and damage to
flora and fauna.

47 Department of the Prime Minister and Cabinet (2010): Qualitative risk analysis. www.dpmc.gov.au.

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 31


4. RISK RESPONSE PLANNING
Identify the feasible responses to moderateextreme risks from a range of the risk mitigation
options, including: 48
Risk Assumption: accept the potential risk and continue operating, maintenance or
disposal of the asset or to implement controls to lower the risk to an acceptable level.
Risk Avoidance: eliminate the cause and/or consequence of the risk.
Risk Limitation: implement control measures that minimise the adverse impact of a
threat (e.g., use of supporting, preventive, detective controls).
Risk Planning: develop a risk mitigation plan that prioritises, implements, and
maintains controls.
Risk Transference: transfer the risk by using other options to compensate for the loss,
such as purchasing insurance.
Develop risk action schedules for high and extreme risks.

Develop management measures for moderate risks.


Consider resources required to implement the response.
Sustainability practices, outlined in the previous section (Section 2.1), can assist to mitigate
risks related to social, environmental and economic consequences.

5. REPORTING
For major undertakings prepare a Risk Management Plan.
For other projects, compile and collate risk action schedules and measures.

6. RISK MONITRING AND REVIEW


Monitor the implementation.
Periodically review risks and evaluate the need for additional risk management.
The aim of risk monitoring and review is to ensure risk levels remain acceptable and chosen
responses remain appropriate and relevant. At this stage appropriate communication between
top management and resources chosen to implement risk response are required.

48
Stoneburner G., Goguen A. and Feringa A. (2002). Risk Management Guide for information Technology Systems,
National Institute of Standard Technology Special Publication

32 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


2.2.3 RISK MANAGEMENT ACTION PLAN
Based on the risk categories and the risk management process outlined above, when assessing
potential risks related to asset management activities it is recommended to follow the steps
provided below taking into account timeframes, actions to be undertaken and responsibilities:
TABLE 2.6: RISK MANAGEMENT ACTION PLAN

STEPS TO UNDERTAKE QUESTIONS TO ASK

STEP 1: Define the scope of the What are the asset management activities you are going to
asset management activities and undertake?
key issues
What are their aims and objectives?
Who is involved in performing these activities both
internally and externally?
STEP 2: Identify potential risks What can happen?
that may impact asset
When, where, why, and how it might occur?
management activities
Who and what might be involved?
Who will be affected?
Which are the critical assets and what is the probability of
their failure?
STEP 3: Categorise the risk What type of risk is it?
During which stage of the asset life-cycle is the risk likely to
occur: asset acquisition, operation, maintenance or
disposal?
STEP 4: Assess the potential How likely is the risk to occur?
likelihood and consequences of
How severe will the consequences be if the risk occurs?
each risk
STEP 5: Identify moderate, high Use Table 2.5 to guide you through the risk assessment
and extreme risks process.
STEP 6: Mitigate the risk to Develop an action plan to respond to major risks.
reduce the probability and
Decide on the risk mitigation options.
consequence of the risk
How can sustainability practices assist to mitigate risks?
Step 7: Monitor risk Was the risk management process implemented
implementation and review risk appropriately?
management process
Is there a need for additional risk management?
When next should the risk management process be
performed?

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 33


3 COMMUNITY AND USERS NEEDS AND
EXPECTATIONS

SECTION OUTLINE

3.1 Stakeholders in asset management


Community Needs & Expectations
Demand Management Understanding users
and communities needs and expectations

Demand Management Action Plan


Community and Users engagement
Action Plan for Community Engagement
Strategies

SECTION OBJECTIVES

Offer classification of internal and external


stakeholders in asset management
Discuss responsibilities of different stakeholders
and their roles
Outline principles of demand management
Provide a framework for understanding
community and users needs and expectations
Recommend a range of engagement strategies to
improve participation in asset management
decision-making

34 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


3.2 PURPOSE
In recent years the infrastructure industry has observed a shift toward a more individualised
approach to service delivery from the previous one size fits all approach.49 Ryan noted that,
related to this, there is a shift in values toward a greater emphasis on self-interest and personal
opportunities.50
Governments are now challenged to account for a range of demands from a number of
stakeholder groups, such as local communities or users, who are no longer automatically
accepting government solutions but want to actively participate in decision-making and are
willing to question government decisions. 51 Furthermore, governments and organisations have
now recognised the importance of stakeholders input and engagement, and the potential
impact on long-term profitability.52
In asset management, the stakeholders are the external and internal to the project individuals
and groups who have an interest in the project or activities, or will be affected by its outputs
the service. Understanding and interpreting the expectations of stakeholders is therefore a key
to effective asset management and service delivery.
The term stakeholders is broad and often confused; in different fields it represents different
groups or individuals. To bring some clarity and provide better understanding this section offers:

classification of internal and external stakeholders in asset management and their roles

principles of demand management


a framework for understanding community and users needs and expectations
a range of engagement strategies to improve participation in asset management
decision-making.

3.3 STAKEHOLDERS IN ASSET MANAGEMENT


In delivery of public infrastructure, apart from government agencies and contractors,
stakeholders may also include parties external to government, such as asset users, the broader
community and general public, different representative interest groups, levels of involvement
and power, and sets of responsibilities. 53
Classification of stakeholders in the asset-based service delivery process, presented in this
document, divides stakeholders into internal and external to suit the asset management
settings54 and is presented in Figure 3.1.

49
Keast, R. (2003). Integrated public services: the role of networked arrangements. PhD thesis, Queensland University
of Technology
50
Ryan, Neal (2001). Reconstructing Citizens as Consumers: Implications for New Modes of Governance. Australian
journal of public administration, 60 (3), 104-109.
51
Keast, R. (2003). Integrated public services: the role of networked arrangements. PhD thesis, Queensland University
of Technology
52Epstein, M. (2008). Making Sustainability Work. Best Practices in Managing Corporate Social, Environmental, and
Economic impacts. San Francisco: Berrett-Koehler Publishers
53
Wiewiora, A., Brown, K., Keast, R., and McGeoch, M., (2013). Shifting from Asset Dominant to Service Centric
Delivery Systems: Engaging Users and Communities. IRSPM Conference, Prague (Forthcoming)
54
Wiewiora, A., Brown, K., Keast, R., and McGeoch, M., (2013). Shifting from Asset Dominant to Service Centric
Delivery Systems: Engaging Users and Communities. IRSPM Conference, Prague (Forthcoming)

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 35


FIGURE 3.1: ASSET MANAGEMENT PUBLIC SERVICE DELIVERY STAKEHOLDERS.
ADOPTED AND MODIFIED FROM CLELAND AND IRELAND (2006) 55

Internal stakeholders are those that have a contractual or legal obligation to the delivery of the
service.56 These primary stakeholders have the authority and responsibility to use resources to
support project objectives57 and represent core members of the project network directly involved
in decision-making.58 Thus, internal stakeholders have direct strategic and operational roles
through participating in the planning, design, maintenance and disposal of assets as well as
direct responsibility for delivering services. External stakeholders are those who may have no
formal contractual relationship to the project, but can have a strong interest in project progress
and outcomes.59
The degree of stakeholders engagement, their level of power to influence the project and the
ways stakeholders are impacted by the project outcomes may vary. 60 For instance, large

55
Cleland, David I., & Ireland, Lewis R. (2006). Project management: Strategic design and implementation (5th ed.).
New York: McGraw-Hill.
56
Cleland, David I., & Ireland, Lewis R. (2006). Project management: Strategic design and implementation (5th ed.).
New York: McGraw-Hill.
57
Cleland, David I., & Ireland, Lewis R. (2006). Project management: Strategic design and implementation (5th ed.).
New York: McGraw-Hill.
58
Beach, S., Keast, R., & Pickernell, D. (2012). Unpacking the Connections between Network and Stakeholder
Management and their Application to Road Infrastructure Networks in Queensland. Public Management Review, 14(5),
609-629.
59
Cleland, David I., & Ireland, Lewis R. (2006). Project management: Strategic design and implementation (5th ed.).
New York: McGraw-Hill.
60
Wiewiora, A., Brown, K., Keast, R., and McGeoch, M., (2013). Shifting from Asset Dominant to Service Centric
Delivery Systems: Engaging Users and Communities. IRSPM Conference, Prague (Forthcoming)

36 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


infrastructure projects (i.e. constructing a highway) may stretch across many local government
areas, communities, and neighbourhoods and involve environmental and other groups, whereas
smaller projects, such as upgrading a park in a residential area, are likely to be more localised.
Thus, project scale and size may influence the degree and scope of stakeholder engagement
activities required.
Furthermore, different stakeholders may be impacted by the project or influence the project in
different ways and degrees. They can have more or less power to participate in decision-
making. Those that represent core members of the project network normally have a strong
influence on the project outcomes, others might have limited power and be relegated to the
decision-making peripheries.61
In addition, some stakeholders can be more, other less directly impacted by the project. For
instance, in the case of tunnel upgrade project the neighbouring community may be affected by
vibration, noise and initial traffic issues, whereas renting agencies leasing properties in the area
may be less impacted and have reduced interest in a project.62
Finally, some stakeholders might benefit or can be disadvantaged by the project outcomes.63
For instance, in the case of transport services that involve building a highway, the general public
will benefit from the project by reduced traffic and improved road conditions but the local
residents will suffer the consequences of a deteriorated environment, noise and potential loss of
land value. Consequently, citizens cannot be managed as a uniform stakeholder group and
should be divided into subgroups based on their involvement, needs, expectations and power to
influence the project.
The effectiveness of asset management and service delivery outcomes is therefore closely
linked to and dependent on understanding needs and expectations of external stakeholders.
This is because external stakeholders such as community groups and users can provide
valuable knowledge about the service and the need for a service, thus contribute to better
informed decisions. In contrary, poorly informed decisions can result in a substantial cost to an
organisation and can include rework, extra time spent dealing with improving the service, and
compensation for poor service.64 Building knowledge-based relationships between government,
contractors and other stakeholders therefore improves service delivery.65

EXTERNAL STAKEHOLDERS CANNOT BE MANAGED AS A UNIFORM GROUP AND SHOULD


BE DIVIDED INTO SUBGROUPS BASED ON THEIR INVOLVEMENT, NEEDS, EXPECTATIONS
AND POWER TO INFLUENCE THE PROJECT.

The following sections cover: (1) focus on key external stakeholders in asset management that
are community groups and users, (2) provide a framework for understanding their needs and
expectations (commonly referred to demand management), and (3) offer a range of
engagement strategies to improve participation in asset management decision-making. The
framework and strategies can be also translated to other than community and users groups.

61
Beach, S., Keast, R., & Pickernell, D. (2012). Unpacking the Connections between Network and Stakeholder
Management and their Application to Road Infrastructure Networks in Queensland. Public Management Review, 14(5),
609-629.
62
Wiewiora, A., Brown, K., Keast, R., and McGeoch, M., (2013). Shifting from Asset Dominant to Service Centric
Delivery Systems: Engaging Users and Communities. IRSPM Conference, Prague (Forthcoming)
63
Olander, S., & Landin, A. (2008). A comparative study of factors affecting the external stakeholder management
process. Construction Management and Economics, 26(6), 553-561.
64
Wiewiora, A., Brown, K., Keast, R., and McGeoch, M., (2013). Shifting from Asset Dominant to Service Centric
Delivery Systems: Engaging Users and Communities. IRSPM Conference, Prague (Forthcoming)
65
Dawson, R., & Horenkamp, M. (2007). Service delivery innovation, Creating Client Value and Enhancing Profitability.
In SAP thought Leadership SAP for Professional Services: SAP America Inc.

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 37


3.4 DEMAND MANAGEMENT UNDERSTANDING
COMMUNITY AND USERS NEEDS AND EXPECTATIONS
In the context of public sector, asset management demand refers to community, users, and
government needs and expectations. It also encompasses the ambitions and aspirations of
other sectional groups including social organisations, general public, media, and various
institutions. As the driving force for supply these needs and expectations, and sectional groups
aspirations and ambitions, are all key inputs into the asset management process.66

Nevertheless, in the case of public asset management service delivery, demand often outstrips
supply normally as a result of limited financial resources. Often it is impossible to meet all the
expectations; at other times users, communities and public demands are conflicting. Hardly
ever are there sufficient resources to provide everything that is required. In other cases,
services or assets may be initially unwanted and people tend to reject them or criticise decisions
to introduce them. However, it may also happen that, after some time, these assets prove to be
desirable and required. Thus, some decisions that initially appear unpopular may prove
beneficial over time. 67 Furthermore, in regional areas government may decide to develop assets
for reasons other than those related to the service that is being provided. The service then
becomes a solution to regional problems such as economic development or employment. This
means that assets can be created around these problematic areas to attract potential
investors, create employment opportunities and promote regional growth. Consequently,
effective service delivery is not about giving communities and users what they want, but about
providing leadership and recognising what can be done while informing communities and users
about existing resources and making shared decisions of what can be achieved.68 As a result,
managing demand is critical to ensure priorities are appropriately identified and met so as to
ensure maximum benefit and achieve the satisfaction and level of service. In addition, the
problem with insufficient engagement of community in asset management decision making
appear to be even more pronounced in Asian countries, and remarks have been raised stating
that communities have lost faith with government agencies with regard to understanding
community needs pertaining to assets and services delivery. 69

Recognising demands for service and distinguishing actual community needs from wants is a
key for effective asset management service delivery outcomes. The process of Preparation,
Analysis, Planning and Implementation, being key steps of a strategic management process,
are also key phases of demand management, and help asset managers to identify community
and users needs and expectations. The Preparation phase focuses on understanding
community and users and establishing the true costs of service, forming the basis for the next
two phases: Analysis and Planning. These phases focus on identifying demand and preparing a
demand management response. Implementation is the final stage, during which the demand
management implementation, measurement and evaluation procedures are documented in a
plan.

66
New South Wales Treasury (2004): Demand Management Guideline
67
Wiewiora, A., Brown, K., Keast, R., and McGeoch, M., (2013). Shifting from Asset Dominant to Service Centric
Delivery Systems: Engaging Users and Communities. IRSPM Conference, Prague
68
Wiewiora, A., Brown, K., Keast, R., and McGeoch, M., (2013). Shifting from Asset Dominant to Service Centric
Delivery Systems: Engaging Users and Communities. IRSPM Conference, Prague
69
Remark made my KC Leong Honorary President of Asia Pacific Institute of Good Asset Management Asia Pacific
branch of Eastern Regional Organisation for Planning and Human Settlements (EAROPHAPIGAM)

38 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


3.5 DEMAND MANAGEMENT ACTION PLAN
There are a number of elements to consider during the demand management process. Steps
provided below are designed to help asset managers to identify and evaluate current demand
more accurately and to bring awareness of the differences between community and users real
needs as distinguished from demands for services and assets. These steps were developed in
accordance with the NSW Treasurys Demand Management Guidelines 70 and modified to suit
the asset management context.
TABLE 3.1: UNDERSTANDING COMMUNITY AND USERS NEEDS AND EXPECTATIONS
ACTION PLAN
STEP 1: The knowledge of community and users needs, motivations and
Understand expectations helps to determine the demand for service and to
your distinguish needs from wants.
stakeholders To better understand your stakeholders consider their:
attitudes
response to service charges
effect on expenditure
response to incentives
STEP 2: Recognise community and users:
Identify demand needs (e.g. education, transport, water), as distinguished from
wants (e.g. schools, railways, dams)
demand for services (health care), as distinguished from
demand for assets (hospital)
spatial and temporal demand patterns
demand depth and strength
You may obtain the data through demographic analysis of the market.
STEP 3: The true costs of providing services and associated asset operation
Establish: include:
the full range of costs to the agency
True costs
any costs that fall on other agencies or sections of the
Direct costs community.
Establish:
Indirect Financial cost: the value of net cash flows that result from the
costs implementation of a project (e.g. cost of interests, improvements
of asset, maintenance of asset, recruitment of staff,
administrative cost)
Economic cost: derived from analysing all the costs and
benefits:
determine whether the project benefits exceed its costs
determine which option to achieve an objective has the
highest net benefit, or which option is the most cost
effective.
STEP 4: Identify and follow appropriate strategies:
Develop Education Offer workshops and sessions to community and
response users, use media to bring the awareness of the financial, social
and environmental costs and benefits of the service. For
Develop
example awareness of sun protection, and consequences of
strategies into
smoking and alcohol consumption may lead to fewer demand for
actions
hospitals
Evaluate Pricing when users are charged the true cost of the service
options consumption will reflect the true value to the user
Use Technological Innovations to improve efficiency and
Select preferred effectiveness of engaging with communities and users
options Management Procedures Review existing procurement
methods, management systems and administrative procedure.
Consider other solutions i.e. non-asset solutions, leasing, hiring
or asset sharing

70
New South Wales Treasury (2004): Demand Management Guideline

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 39


STEP 5: Document the process from STEP 1 TO STEP 4
Implement and Inform communities and users of the initiative/project
evaluate Evaluate the effects of the selected initiatives on demand, costs
and revenue
Monitor the impact of the initiative/project on communities and
users
Review and evaluate the initiative/project

3.6 COMMUNITY AND USERS ENGAGEMENT


In managing public infrastructure it is important to consider the wider community, but also
specific users of assets. In asset management there is a large number of stakeholders, such as
government agents, contractors, community, users and general public, representing different
interest groups, levels of involvement and power, and sets of responsibilities. Often involvement
of some stakeholders groups remains superficial, with citizens-government consultations
habitually relegated to providing information rather than undertaking genuine consultation. 71
Furthermore, competing interests of key stakeholders and limited opportunity of some groups to
voice their needs and participate in decision-making makes it hard to manage stakeholders
expectations and create problems related to maintaining open communication between
opposing parties. In a consequence, service providers may deliver a service that communities
and users do not want and at an expense they are not prepared to pay. This in turn may lead to
additional cost spent on rework or delivery of unwanted or inadequate services.

Therefore, community and users engagement should occur throughout the asset life-cycle
because these groups can provide valuable input or knowledge during each phase of the life-
cycle. For instance, such engagement is critical in the planning stage and can assist to: identify
specific service needs, identify users and community expectations, recognise the context within
which the service is going to operate, and assist in selecting the strategy to provide the service.
During the disposal stage, closely developed relationships with communities may bring a better
perspective and awareness of the best way to dispose of the asset, and assist in decision-
making whether to sell, destroy or reuse the asset for a different purpose. 72 In general, closely
engaged communities and users will be more likely to accept the service and provide valuable
comments that could improve service delivery to better fit its purpose.
Stakeholder engagement, related to the socio-cultural aspect of sustainable asset management
is often hard to achieve due to a range of obstacles caused by: 73

competing interests of key stakeholders (government, contractors, community groups


and users)
asymmetrical levels of power to influence decisions
a lack of genuine dialogue between government and stakeholder groups
limited opportunity of some stakeholder groups to voice their needs
fragmented and dissimilar levels of participation

siloed decision-making across asset life-cycle.

71
Wiewiora, A., Brown, K., Keast, R., and McGeoch, M., (2013). Shifting from Asset Dominant to Service Centric
Delivery Systems: Engaging Users and Communities. IRSPM Conference, Prague
72
Wiewiora, A., Brown, K., Keast, R., and McGeoch, M., (2013). Shifting from Asset Dominant to Service Centric
Delivery Systems: Engaging Users and Communities. IRSPM Conference, Prague
73
Wiewiora, A., Brown, K., Keast, R., and McGeoch, M., (2013). Shifting from Asset Dominant to Service Centric
Delivery Systems: Engaging Users and Communities. IRSPM Conference, Prague

40 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


Identified obstacles impede the creation of trusting relationships and restrict open
communication between opposing parties. This is why understanding communities and users
needs and expectations, having the ability to manage various stakeholder groups, and selecting
the best strategies to engage them into the asset service delivery process are key issues in
effective asset management service delivery.
Until now communities and users played a passive role in asset management service delivery,
and decisions made by government in cooperation with contractors were delivered to the
general public through newsletters and websites who were only informed on the outcomes.
Recent research revealed that simply informing the community about asset management plans
is insufficient. 74 Communities want to feel involved and actively participate in the decision-
making process. The community will then be less likely to disapprove and complain about the
project and more inclined to use the asset. Furthermore, community involvement is likely to
provide valuable comments that could improve asset management service delivery to better fit
its purpose. Therefore, providing more proactive engagement with communities, based on
collaboration, may be more suitable for asset management service delivery projects.
Keast emphasised on the need to shift the way government engages with communities and
other stakeholders and proposed more horizontal linkages: cooperation, coordination and
collaboration (3Cs):75
Cooperation focuses primarily on sharing information and expertise where participants
remain independent from each other and their contribution to the relationship is low.
Cooperation is suitable in an environment of low risk and the emphasis is on reaching
agreement to adjust specific actions rather than making changes.
Coordination is based on a greater interdependence between parties who need to work
together to meet a set goal. Coordination requires a higher level of contribution and
commitment as well as stronger relationships between participants.
Collaboration is characterised by strong and highly interdependent relationships. It
requires a high level of trust and extensive dialogue between participants. Collaboration
is suitable for a high-risk, high-stakes environment that can produce significantly
different results than anticipated.76,77,78.

Open communication, interpersonal relations build on trust and a common mission allows
building 3C relationships.79
The challenge for practitioners is to match the type of joint working relationship with the
identified purpose or required outcome. Keast and colleagues state that types of relationships
should be engineered according to best purpose.80 Similarly, the International Association for
Public Participation (IAP2) has developed a spectrum of engagement with stakeholders that is
based on the purpose of involvement and the level of impact required.81 Accordingly, as

74
Wiewiora, A., Brown, K., Keast, R., and McGeoch, M., (2013). Shifting from Asset Dominant to Service Centric
Delivery Systems: Engaging Users and Communities. IRSPM Conference, Prague
75
Keast, R. (2003). Integrated public services: the role of networked arrangements. PhD thesis, Queensland University
of Technology
76
Australian Research Alliance for Children and Youth. (2009). What is collaboration? Fact Sheet 1
77
Keast, R., Brown, K., and Mandell, M. (2007). Getting The Right Mix: Unpacking Integration Meanings and Strategies.
International public management journal, 10 (1), 9-33.
78
Keast, R. (2003). Integrated public services: the role of networked arrangements. PhD thesis, Queensland University
of Technology
79
Keast, R., Brown, K., and Mandell, M. (2007). Getting The Right Mix: Unpacking Integration Meanings and Strategies.
International public management journal, 10 (1), 9-33.
80
Keast, R., Brown, K., and Mandell, M. (2007). Getting The Right Mix: Unpacking Integration Meanings and Strategies.
International public management journal, 10 (1), 9-33.
81
The International Association for Public Participation (IAP2). A Model for Engagement.
http://www.dse.vic.gov.au/effective-engagement/developing-an-engagement-plan/a-model-for-engagement

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 41


engagement moves through the spectrum from inform, consult, involve, collaborate to empower
there is a corresponding increase in expectation for stakeholders participation and impact on
the project.
For instance, in informing stakeholders there is no expectation of receiving feedback, thus an
expected low-level of stakeholders impact on the project. At the other end of the spectrum,
empowering stakeholders to make decisions implies an increase in expectations and therefore
an increased level of their impact.

3.7 ACTION PLAN FOR ENGAGEMENT STRATEGIES


Infrastructure Projects and Service Delivery: Three Step Process for Stakeholder
Analysis

The management of stakeholders can make or break infrastructure projects. 82 For example,
inadequate stakeholder engagement during the proposed duplication of the Pacific Motorway in
Queensland, Australia, in the 1990s had extremely damaging political consequences and the
project was abandoned (see Section 3.7 case study). However, effective stakeholder
engagement of the Port of Brisbane Motorway Project resulted in substantial time and cost
savings. The application of the three step process of (1) Stakeholder identification, (2)
Stakeholder prioritisation, and (3) Stakeholder engagement, proposed by Beach, Keast, and
Pickernell83 helps to understand the connections between different stakeholders and their
networks, identify and prioritise project stakeholders and develop effective methods of engaging
with them.

Step 1: Stakeholder identification

A stakeholder is an organisation, group or individual who may affect or be affected by


infrastructure. Identify who may be in these two groups and summarise them using the table
below.

Category of stakeholder Stakeholder

Government

Community

Business

Environmental

Other stakeholder group

82
Beach, S., Keast, R., & Pickernell, D. (2012). Unpacking the Connections between Network Management and
Stakeholder Management and their Application to Road Infrastructure Networks in Queensland Public Management
Review, 14(5), 609-629.
83
Beach, S., Keast, R., & Pickernell, D. (2012). Unpacking the Connections between Network Management and
Stakeholder Management and their Application to Road Infrastructure Networks in Queensland Public Management
Review, 14(5), 609-629.

42 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


Step 2. Stakeholder prioritisation

Slot the stakeholders you have identified into different priority categories using the table below.

Adapted from Mendelow (1991)84

Step 3 Engage with Stakeholders

Based on the quadrant into which stakeholders were placed in Step 2, follow the suggested
engagement approach:
A=Maintainclosecontact,B=KeepSatisfied,C=KeepInformedandD=MinimalEffort

Having agreed upon stakeholders legitimacy level and involvement in managing the asset, it is
recommended to use engagement strategies to improve participation in service delivery
decision-making. However, first it is imperative to first determine what is the purpose of the
engagement: share knowledge, inform, acquire insights and so on. Among a range of
strategies we adopted those proposed by the South Australian Department for Families and
Communities85 and the IAP2 framework.86 IAP2 is an international association that seeks to

84
Mendelow, A. 1991 Proceedings of the second international conference on information systems, Cambridge, MA.
85
South Australian Department for Families and Communities (2009): Engaging South Australians A guide to
community engagement levels and techniques
86
The International Association for Public Participation (IAP2). A Model for Engagement.
http://www.dse.vic.gov.au/effective-engagement/developing-an-engagement-plan/a-model-for-engagement

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 43


promote and improve the practice of public participation and the IAP2 framework is addressed
to the general public. Provided in Table 3.2 engagement strategies were modified to better
address the asset management context. These strategies provide a comprehensive five-level
engagement approach and are suitable for diverse types of infrastructure-based projects and
initiatives (see Table 3.2). Careful assessment of the purpose of engagement and appropriate
strategies outlined in Table 3.2 will assist in achieving optimal stakeholder engagement.

TABLE 3.2: HOW TO ACHIEVE IMPROVED STAKEHOLDER ENGAGEMENT

1. Inform
Goal To provide balanced and objective information to assist the community and
users to understand issues, alternatives and/or solutions.
How to Provide timely, relevant, up-to-date information in an appropriate format
and language.
Example Fact sheets, Websites, Video, Radio, Newsletters.
techniques
2. Consult
Goal To obtain feedback and ideas on rationale, alternatives and/or proposals to
inform decision-making.
How to Inform, listen and acknowledge community and users views and provide
feedback on how their input influenced the decision.
Example Surveys, Public meetings, Focus groups, Web-based consultation,
techniques Roundtables, Forums, public comments.
3. Involve
------- INCREASED IMPACT ----

Goal To invite community and users involvement to help identify issues and
views.
How to Work with the community and users to identify and ensure their concerns
and aspirations are understood and considered in the decision-making
process. Provide feedback on how their input influenced the decision.
Example Workshops, Community visioning, Open forums, Use Modelling and
techniques Visualisation.
4.
Collaborate
Goal To partner and work closely with the community and users on each aspect
of decision-making.
To develop common understanding of all aspects of issues, work out
alternatives and identify preferred solutions.
How to Obtain direct advice and innovation from community and users to formulate
solutions.
Incorporate this advice and recommendations into decisions to the
maximum extent possible.
Example Community advisory committees, Participatory decision-making, Peaks
techniques Forum.
5. Empower
Goal To provide opportunities and resources for communities and users to be
part of solutions by obtaining local talents and skills and acknowledging
their capacity to be strategic decision-makers.
How to Facilitate and provide support to communities and users to make strategic
decisions about service delivery and asset management, participate in
implementation and change management.
Example Delegated decisions, Organise open days, User led action groups, User
techniques led conference.

44 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


It is also recommended to ensure a suitable environment for increased participation of
stakeholders. This can be achieved through following steps:

CREATING AN ENVIRONMENT TO IMPROVE BETTER PARTICIPATION OF COMMUNITY AND USERS IN ASSET


MANAGEMENT DECISION-MAKING:

Ensure early involvement of communities and users into decision-making.


Ensure proactive management of expectations through providing a leadership that
realistically assesses resources and educates about the service options.
Build strong and trusting relationships with external stakeholders.
Provide education better informed communities and users will be more likely to
understand and accept delivery decisions.
Provide an environment where community groups and users feel they have a voice;
creating opportunities to obtain valuable input from them.
Coordinate the service around users through the concept of wrapped around services.

Create better understanding about the service through modelling and visualisation.
Use modelling and visualisation to engage users in the design stage and increase
access to valuable knowledge from the users perspective.

Adopted from: Wiewiora, A., Brown, K., Keast, R., and McGeoch, M., (2013). Shifting from Asset Dominant to Service
Centric Delivery Systems: Engaging Users and Communities. IRSPM Conference, Prague (Forthcoming)

COMMUNITY AND USERS NEEDS AND EXPECTATIONS CHECK LIST*

Determine what is the purpose of the engagement (e.g. Is there a decision to be made?
An opportunity to be explored? A problem to be solved?) Regardless of the purpose,
community engagement is always necessary.
Identify stakeholders and decision-makers, and clarify their expectations.
Determine what objectives will need to be achieved.
Determine the level(s) of engagement based on the expectations of the decision-makers
and stakeholders and the objectives to be achieved.
Select engagement strategies most suitable to achieving the set objectives and levels of
engagement.
Collate and analyse data from engagement activities.
Provide feedback to communities and users (on engagement activities and their input)
and to decision-makers (on community and users input to inform the decision-making
process).
Determine and document the final outcome.
Inform communities and users of the final decision and the process used to make the
decision.
Celebrate the outcomes; plan the transition and handover to complete the life-cycle of the
engagement.
Evaluate the process and identify opportunities for continuous improvement.
87
* Adopted and modified from South Australian Department for Families and Communities

87
South Australian Department for Families and Communities (2009): Engaging South Australians A guide to
community engagement levels and techniques

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 45


3.8 CASE STUDIES

CASE STUDY:

Politics and Complicated Communication on the Pacific Motorway

The Pacific Motorway involved the upgrade of 43 kilometres of the highway between Brisbane
and the Gold Coast to a primarily eight-lane motorway. This section of highway is recognised as
one of the busiest in Australia and at the time of construction was the largest road project
undertaken by the then Queensland Department of Main Roads (DMR). The motorways history
was politically challenging. An earlier iteration proposed a separate road through a koala
habitat. Nicknamed the koala road it gained notoriety and was subsequently scrapped after
affected voters reacted by voting out four Labor Members of Parliament as part of a state-wide
swing which reduced the Labor Party Governments majority from 19 seats to 1. This majority
was effectively wiped out through a bi-election.

On coming to government and keen to not share the same fate as their predecessors, the
Coalitions Borbidge Government was quick to react, approving the Cabinet submission for the
Pacific Motorway on 15 April 1996. Attached to this approval was a request that the road be
completed within their first term of office. This request was unreasonable according to DMR;
however, they undertook to have the road completed by September 2000. The scene was thus
set a politically sensitive, large infrastructure project to be delivered in a short-time frame.

Apart from a nervous government, DMR needed to effectively manage three other major
stakeholder groups being: (1) road users, in that traffic needed to be kept flowing as the new
road was being constructed over the old one; (2) a disenfranchised public stemming from the
koala road debacle; and (3) the numerous businesses along the existing highway that would
be adversely affected during and following construction.

To maintain their ongoing commitments to these various interested parties DMR appointed an
external communications group to work closely with the project office. The groups main
responsibilities included staffing the enquiry line, coordinating meetings with the various
stakeholders, drafting media releases and monitoring and coordinating responses to
stakeholder concerns through weekly communication and noise meetings with the project office.
The last of these responsibilities included assisting in responding to ministerial complaints.

The interests of the various stakeholders were addressed on a continuous basis through
community meetings, newsletters and individual responses. New issues earmarked for
discussion by the communications group were raised through weekly meetings with DMR and
solutions proposed. The combination of the communications expertise of the contractor and
technical expertise of DMR was considered beneficial in the handling of the various and
competing interests. It could be argued, however, that the amount of community consultation
led to very few significant changes being made to the project. The dilemma for government was
how to combine devolved managerial responsibility such as that found in the Pimpama Project
Office with the necessity of delivering impartial outcomes to all individuals.

Case Study provided by Dr Jennifer Waterhouse representing findings of a larger study on service delivery in public
sector also reported in Waterhouse, J., Brown, K. and Flynn, C. (2001) "The Pacific Motorway: A Case Study Examining
Public Sector Management Dilemmas", The Journal of Contemporary Issues in Business and Government, 7(1): 21-28

46 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


CASE STUDY:

Engaging Stakeholders in Road Service Delivery

In 2002, Main Roads built on the long-standing relationship with a key stakeholder, local
government, by establishing the Roads Alliance, a partnership with the Local Government
Association of Queensland and local government authorities across Queensland. This joint
commitment by state and local government was driven by the need to act collectively to achieve
state-wide improvement in planning, resource-use and capability, and deliver outcomes
required by stakeholders (Doyle & Addison 2006 ). To achieve this objective the Queensland
Government transferred control of funding priorities to 18 regionally-based Regional Road
Group (RRG) governance networks.

In a recent study of three RRG governance networks (Beach, 2013), a number of findings were
made about how networks prioritise and engage with their stakeholders:
The networks adopted an inner and outer stakeholder structure and focused their
attention on internal stakeholders. There was minimal contact with external
stakeholders
Power and legitimacy were important factors in determining stakeholder priority
Stakeholder engagement tended to be limited to routine network meetings attended by
internal stakeholders
Maintaining access to funds by following the operating rules set down by the Roads
Alliance was a key issue in determining who counted as a stakeholder and how they
were engaged.
Key Lessons
While providers may be able to get away with undertaking internally focused
stakeholder engagement in undertaking small, localised road projects it is unlikely that
external stakeholders would tolerate such exclusion in major and more high profile road
projects.
The challenge for road service providers is to move beyond a taken-for-granted focus
on technical excellence and incorporate external stakeholder viewpoints into road
planning and construction decisions.
Beach, S. (2013) Stakeholder Engagement by Governance Networks: A study of stakeholder engagement by road
delivery networks in Queensland. Unpublished Thesis, Brisbane, Queensland University of Technology: 377.
Doyle, N. and M. Addison (2006). Civic engagement: Taking a more participatory approach to road system management
The Main Roads Experience, Queensland. Main Roads. Brisbane, QLD: 1-27.

Case Study provided by Sandra Beach representing findings of a larger study on stakeholder engagement in
infrastructure project, also reported in: Beach, S. (2013) Stakeholder Engagement by Governance Networks: A study of
stakeholder engagement by road delivery networks in Queensland. Unpublished Thesis, Brisbane, Queensland
University of Technology: 377.

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 47


4 WHOLE-OF-GOVERNMENT POLICY
FRAMEWORK

SECTION OUTLINE

Whole-of-government model

Whole-of-government policy
Whole-of-Government Policy Framework
Case Study

SECTION OBJECTIVES

Provide understanding of the whole-


of-government concept, model,
framework and policy
Demonstrate real example of the
benefits for applying the whole-of-
government approach

48 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


A whole-of-government approach assumes government as a consolidated entity that delivers
outcomes expected by the government and the community. A whole-of-government approach
focuses on the development of organisational capabilities including culture, relationships and
support. 88 Whole-of-government activities may span any or all levels of government and involve
stakeholders outside the government to enhance level of integration, and involve public-private
partnerships. 89
Introduced in 1997, whole-of-government (or joined-up government) aims to find a better
approach to the "wicked" issues straddling the boundaries of public sector organisations and
policy areas. 90 Whole-of-government initiatives are therefore introduced to make better use of
scarce resources, to create synergies by bringing together different stakeholders in a particular
policy area, such as asset management, and to offer citizens seamless rather than fragmented
access to services. 91
In the asset management space, the Whole-of-Government Model overarches the corporate
policy statements and provides overall direction for engineering asset management. It
coordinates engineering asset management so it does not happen in isolation from the national
and state legislations, policies and plans. As a result, the Whole-of-Government Model ensures
a better integration of assets and service delivery between agencies.
According to the Australian Government Department of Finance and Deregulations92 whole-of-
government arrangements are established to:
give effect to government policy decisions
improve consistency and control
provide cost effective and efficient service delivery.

Whole-of-government arrangements refer to all agencies, are generally initiated by government


and are often mandatory. For instance a whole-of-government arrangement is used by the NSW
Government in the Office Accommodation Strategic Plan.93 The framework presented in Figure
4.2 has been developed based on the office accommodation reform program undertaken by the
NSW Government.94

88
Briggs, L. (2005). Policy and whole of government working. In A Passion for Policy Essays in Public Sector
Reform
89
Christensen, T. (2007). The Whole-of-Government Approach to Public Sector Reform. Public administration review
67(6), p. 1059-1066.
90
Richards, D. and Smith M. (2006). The Tension of Political Control and Administrative Autonomy: From NPM to a
Reconstituted Westminster Model. In Autonomy and Control: Coping with Agencies in the Modern State, edited by Tom
Christensen and Per Laegreid, 181-202. Cheltenham, UK: Edward Elgar.
91
Pollitt, Ch. (2003). Joined-up Government: A Survey. Political Studies Review 1: 34-49.
92
Australian Government Department of Finance and Deregulations http://www.finance.gov.au/procurement/wog-
procurement/wog.html
93
NSW Government Asset Management Committee (2003). Total Asset Management Manual. From the website:
http://www.gamc.nsw.gov.au/tam/default.asp?PageID=73
94
NSW Government Asset Management Committee (2003). Office accommodation strategy. In Total Asset
Management Manual. From the website: http://www.gamc.nsw.gov.au/tam/default.asp?PageID=73

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 49


Government level goals and directions Community needs and expectations
GOVERNMENT LEVEL

Legislation
Government
policies and

(Amendments to) Asset


AGENCY LEVEL

Management Strategy

Agency Corporate Plan Agency Service Delivery Strategy


ASSET MANAGEMENT LEVEL

Acquisition Plan

Operations Plan

Maintenance Plan

Disposal Plan

Service Delivery

FIGURE 4.1: WHOLE-OF-GOVERNMENT MODEL FOR ASSET MANAGEMENT

50 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


4.1 WHOLE-OF-GOVERNMENT POLICY
Whole-of-government policy utilises the capacity to think across all the agencies that support
government drawing on government resources including skills and experience. The emphasis is
on delivering services collaboratively within the public service and beyond by bringing the
advantage of leveraging agencies resources95. In view of that, looking from the asset
management perspective, a whole-of-government approach integrates agencies and provides
asset capabilities improving service delivery.

Agencies can bring particular skills and understanding to policy development. According to
Biggs,96 drawing on these skills and expertise can significantly improve the quality of policy
making. This can be achieved through three-level approach:
OPERATIONAL LEVEL
Prepare detailed assessment of service delivery needs and assets required to support
successful service delivery.
Prepare detailed plans of assets that need to be acquired, require maintenance or
disposal.
AGENCY LEVEL

Review the operational plans.


Prepare strategic asset management plan.
Submit the asset management strategy plan to an upper-level government body (e.g.
Treasury).97
UPPER GOVERNMENT LEVEL
Evaluate asset needs and service delivery requirements.
Make appropriate decisions.

95
Briggs, L. (2005). Policy and whole of government working. In A Passion for Policy Essays in Public Sector
Reform
96
Briggs, L. (2005). Policy and whole of government working. In A Passion for Policy Essays in Public Sector
Reform
97
NSW Government Asset Management Committee (2003). Total Asset Management Manual. From the website:
http://www.gamc.nsw.gov.au/tam/default.asp?PageID=73

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 51


4.2 CASE STUDY

CASE STUDY:

ICT for improved service delivery

The Queensland Government, in keeping with international trends, decided to adopt a number
of major whole-of-government ICT initiatives to achieve integrated service delivery and greater
citizen engagement in the development and delivery of services. At that time, Queensland
Government has been facing a lack of over-arching public sector reform that underpinned the
initiative at a whole-of-government level caused by:
lack of readiness by departments to make the required cultural shift from silo-based
service delivery to integrated/cross-agency service delivery
ineffective change management strategies to support the required shift in public service
culture and agency relationship building
fear of the unknown; a new area of government activity with uncertainty about
outcomes.

In response to this, in 2002 government agencies agreed to established a shared operational


entity, Smart Services Queensland (SSQ), to manage service provision on their behalf through
a fee-for-service structure.

SSQ focused on the provision of generic services. At this time, SSQs responsibilities included
the management and provision of services through the www.qld.gov.au whole-of-government
website, the Integrated Contact Centre, and selected government agency customer service
centres. The following year SSQ was also given responsibility for the Queensland Government
Agent Program (QGAP).98

The Queensland Government has realised emerging needs related to the complex policy
problems that require collaboration across organisational boundaries and cut across portfolios
that have traditionally been compartmentalised. Furthermore, increasing expectations of citizens
who also want responsive, integrated services rather than deal with multiple providers also had
to be addressed.

In response to these needs, e-government initiatives have been improved to enable more
effective inter-organisational linkages and consolidation of government systems to better deliver
services to citizens.

E-government as a whole is delivered via one-stop shops or single government web portals,
rather than department-specific portals. It enables streamlining and integrating services across
organisational boundaries and organising e-government services holistically in a straightforward
and transparent way with, for example, one door entry to the public sector.

While the Queensland Government continues to modernise ICT infrastructure, it is also working
to leverage the infrastructure within the public sector in order to better share information,
internally and externally, and to deliver integrated services. Despite some existing difficulties
related to the long standing culture of departments operating separately and with a silo
mentality, e-government is a step toward the whole-of-government initiative of more connected,
integrated and user-focused ICT.

Adopted from: Public Service Commission. Discussion Paper Innovations in ICT for Improving Service
Delivery: e-Government. www.psc.qld.gov.au/.../ict-and-sd-paper-for-feb-board-4-feb.doc

98
QGAP is a network of 78 one-stop government service shops located in rural and remote communities across the
state. Each QGAP office provides a face to face contact point for customers and offers the same level of service and
accessibility that is available in more densely populated areas.

52 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


5 ORGANISATIONAL STRATEGIC
MANAGEMENT

SECTION OUTLINE

Components of Organisational
Strategic Management
(governance, policy, objectives
Organisational Strategic Management
and strategy)
Corporate and/or Asset
Management Policy Assessment
and Development
Case study

SECTION OBJECTIVES
To provide understanding of
organisational and asset management
strategic framework structure

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 53


Organisational Strategic Management involves an understanding of governance, corporate
policy, objectives and strategy. Asset Management Strategic Planning (which is discussed in
detail in the following sections) should be aligned with and stem from the Organisational
Strategic Management objectives to ensure smooth and effective management of a companys
assets and service delivery.

ORGANISATIONAL STRATEGIC MANAGEMENT HELPS TO DETERMINE HOW THE


DELIVERY OF ASSETS AND THEIR SERVICES SHOULD OCCUR AND WHAT IS
REQUIRED.

5.1 COMPONENTS OF ORGANISATIONAL STRATEGIC


MANAGEMENT

5.1.1 CORPORATE GOVERNANCE


Governance involves the laws, policies, and procedures that ensure organisations run in the
interest of owners and resources are allocated, managed, and redeployed to maximize
productivity and value.99 Governance helps to determine:

the correct management processes, organisational structures and incentives are


employed to ensure managerial attitudes and behaviours align with key stakeholder
interests100

the appropriate reporting and disclosures that ensure transparency and accountability.101
Corporate governance provides a framework by which organisations are directed and managed.
It encompasses how an organisations objectives are set and realised, how risk is monitored
and measured, and how its performance is optimised. Good corporate governance encourages
organisations to create value through innovation, entrepreneurism, development and
exploration; provides accountability; and ensures there are control systems in place appropriate
to the level of risk.

99
M G Alles, S M Datar, J. H. Friedland (2005): Governance-linked D&O Coverage: Leveraging the Audit Committee to
Manage Governance Risk, International Journal of Disclosure and Governance, vol. 2, pp. 114-129, June 2005. In:
Mardiasmo D, Tywoniak S, Brown K, Burgess K (2008): Asset Management and Governance An Analysis of Fleet
Management Process Issues in an Asset-intensive Organization. In: International Conference on Infrastructure
Systems: Building Networks for a Brighter Future, 1012 November, Rotterdam, Netherlands
100
M C Jensen, W H Meckling: Theory of the Firm: Managerial Behaviour, Agency Costs, and Ownership Structure,
Journal of Financial Economics, vol. 3, pp. 305-360, 1976. In: Mardiasmo D, Tywoniak S, Brown K, Burgess K (2008):
Asset Management and Governance An Analysis of Fleet Management Process Issues in an Asset-intensive
Organization. In: International Conference on Infrastructure Systems: Building Networks for a Brighter Future, 1012
November, Rotterdam, Netherlands
101
C Dunis, J Miao: Volatility filters for asset management: An application to managed futures, Journal of Asset
Management, vol. 7, p. 179, Sep 2006. In: Mardiasmo D, Tywoniak S, Brown K, Burgess K (2008): Asset Management
and Governance An Analysis of Fleet Management Process Issues in an Asset-intensive Organization. In:
International Conference on Infrastructure Systems: Building Networks for a Brighter Future, 1012 November,
Rotterdam, Netherlands

54 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


The Australian Stock Exchange Corporate Governance Council102 recognises 10 principles
fundamental to any corporate governance structure each principle is considered to be of
equal importance:
Principle 1 Establish management and board roles.
Principle 2 Ensure the board has a balance of skills and experience as well as an
appropriate level of independence in line with the nature and extent of the
organisations operation.
Principle 3 All those who influence the organisations strategy and financial performance
must possess integrity and employ ethical decision-making.
Principle 4 Systems and processes must be in place to safeguard the integrity of company
reporting when presenting the organisations financial and non-financial position.
Principle 5 Material matters must be provided in a timely and balanced manner.
Principle 6 Shareholder rights must be clearly recognised and upheld.
Principle 7 Effective oversight and internal controls must be employed to manage the
uncertainty and risk inherent in business decisions.
Principle 8 Formal mechanisms should be employed to encourage enhanced board and
management performance in keeping abreast of modern business risks and
aspects of corporate governance.
Principle 9 Reward systems are necessary to attract the level of skill required to meet
shareholder expectations in regards to organisational performance.
Principle 10 The interests of all stakeholders need to be considered in light of the diverse
impact of business decisions and company actions.

ASSET GOVERNANCE
A subset of corporate governance, asset governance details the policies and processes needed
to acquire, utilise, maintain and account for an organisations assets.103 As such, asset
governance can be considered to be an asset management approach that encompasses asset
ownership and the management of distributed systems in a competitive and deregulated
market.104/105/106/107/108
Asset governance stems from the organisations overarching corporate governance principles;
as a result it defines the management context in which engineering asset management is
implemented.109

102
Australian Stock Exchange (ASX) Corporate Governance Council (2003): Principles of Good Corporate Governance
and Best Practice Recommendations
103
Cornish N, Morton K (2001): Asset Governance A Radically New Way to Manage Distribution Networks in a
Competitive and Deregulated Market. In: 16th International Conference and Exhibition on Electricity Distribution (CIRED
2001), Amsterdam, Netherlands, 2001
104
Bhner R (2000): Governance Costs, Determinants, and Size of Corporate Headquarters, Schmalenbach Business
Review: ZFBF, vol. 52, p. 160, Apr 2000
105
Considine M, Lewis J M (2003): Bureaucracy, network, or enterprise? Comparing models of governance in Australia,
Britain, the Netherlands, and New Zealand, Public Administration Review, vol. 63, p. 131, Mar/Apr 2003
106
Gomez P Y (2004): La gouvernance de l'entreprise, Revue Franaise de Gestion, vol. 30, p. 249, Jan/Feb 2004
107
Narracott M, Bristow A (2001): Corporate governance in Australia, International Financial Law Review, p. 35, 2001
108
Schmidt S L, Brauer M (2006): Strategic Governance: how to assess board effectiveness in guiding strategy
execution, Corporate Governance: An International Review, vol. 14, pp. 13-22, 2006
109
Mardiasmo D, Tywoniak S, Brown K, Burgess K (2008): Asset Management and Governance An Analysis of Fleet
Management Process Issues in an Asset-intensive Organization. In: International Conference on Infrastructure
Systems: Building Networks for a Brighter Future, 1012 November, Rotterdam, Netherlands

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 55


Asset governance advocates transparent and accountable asset management policies. It
outlines aims to define principles to manage assets effectively in distributed networks, a context
where the development, stewardship and operation of assets may be open to competition110.
Central to good asset governance is the clear definition and differentiation of roles and
responsibilities, particularly those of the asset owner, asset governor and service providers111.
As such, asset governance provides a structure to manage the separation of powers in asset
management that typifies network management112, and facilitates effective asset management in
a distributed system. Regulatory compliance, supply business satisfaction, risk-based, data
supported, continuous improvement, sustainability, pragmatism, and income maximisation and
generation are all key asset governance principles.

5.1.2 CORPORATE POLICY


To constitute the fundamental purpose of an organisation, its intentions and ideals for a future
direction, is it necessary to develop and state a Vision, a Mission and organisational Values
(summarised in the Corporate Policy). These factors are needed within an organisation to have
a common goal, in which the employees can believe, and to which they can work towards.
These factors are also needed to inform the public about the organisations goals and
intentions.

VISION AND VISION STATEMENT


The Vision encapsulates an organisations future direction and business constitution and
describes an ideal to strive for. It acts as a guide for what the organisation is striving to achieve
and become. A strategic Vision focuses on the organisations future.113

The Vision is formalised and documented in the Vision Statement. Many organisations today
develop a Vision Statement that answers the question What do we want to become? 114

MISSION AND MISSION STATEMENT


Whereas the focus of the Corporate Vision is on the future direction, the organisations Mission
tends to focus on the present, answering What is our business and what are we trying to
accomplish on behalf of our customers?115 It comprises the organisations reason for existence,
its fundamental purpose and includes its character and values. 116
The Mission is formalised and documented in the Mission Statement. The Mission Statement
encompasses the organisations activities and current business constitution,117 answering What
is our business?118

110
Kitchen H (2006): A State of Disrepair: How to Fix the Financing of Municipal Infrastructure in Canada, Commentary
C.D. Howe Institute, p. 0_1, Dec 2006
111
Cornish N, Morton K (2001): Asset Governance A Radically New Way to Manage Distribution Networks in a
Competitive and Deregulated Market. In: 16th International Conference and Exhibition on Electricity Distribution (CIRED
2001), Amsterdam, Netherlands, 2001
112
Moore J F (1993): Predators and Prey: A New Ecology of Competition, Harvard Business Review, vol. 71, pp. 75-83,
1993
113
Thompson A A, Strickland A J (1999): Strategic Management: concepts and cases, 11. Edition, McGraw-Hill
114
David F R (2009): Strategic Management: concepts and cases, 12. Edition, Pearson Education
115
Thompson A A, Strickland A J (1999): Strategic Management: concepts and cases, 11. Edition, McGraw-Hill
116
Viljoen J, Dann S (2000): Strategic Management: planning and implementing successful corporate strategies, 3.
Edition, Pearson Education Australia
117
Thompson A A, Strickland A J (1999): Strategic Management: concepts and cases, 11. Edition, McGraw-Hill
118
David F R (2009): Strategic Management: concepts and cases, 12. Edition, Pearson Education

56 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


VALUES
Underpinning business activities are an organisations values guidelines that regulate the
behaviour of staff and management as they endeavour to achieve the organisations Vision.119
Clearly defined organisational values can help to engage employees in pursuit of the
organisational goals.120 Research indicates that value-led companies grow faster in revenue,
have an increased job creation rate and better performance than companies that do not have
explicit values.121 From the human dimension perspective, organisations with clearly defined
values attract people who hold similar values and are most suitable and committed to the
organisation. 122
MISSION, VISION AND VALUES STATEMENTS ARE OF LITTLE USE UNLESS AGREED
AND SIGNED OFF BY THE CHAIRMAN, BOARD AND CEO OF ANY ORGANISATION.
Below is an example of the Vision Statement, Mission Statement and corporate values from
ASC, an asset-driven company that designs, manufactures and delivers the fleet of six Collins
Class submarines for the Royal Australian Navy's (RAN).123

ASC VISION STATEMENT


TO BE THE LEADING DESIGNER, BUILDER AND MAINTAINER OF NAVAL
SHIPS AND SUBMARINES IN AUSTRALIA

ASC MISSION STATEMENT


OUR MISSION IS TO SAFELY BUILD AND MAINTAIN AUSTRALIA'S
FRONTLINE NAVAL SHIPS AND SUBMARINES TO WORLD CLASS
PERFORMANCE AND QUALITY STANDARDS
ASC CORPORATE VALUES

SERVICE
We take time to understand our customer's business and needs.
We ensure that all interactions add value to our customer relationships.
We are customer service-oriented.

SAFETY
We ensure our own safety and the safety of others.
We are committed to the safe operability of the vessels we support.

LEADERSHIP
We champion high performance, potential and talent.
We look for opportunities to assist each other.
We empower our people.
We are visible in our management.
We celebrate our successes.

119
Viljoen J, Dann S (2000): Strategic Management: planning and implementing successful corporate strategies, 3.
Edition, Pearson Education Australia
120 Sullivan, W., Sullivan, R., Buffton, B. (2002). Aligning individual and organisational values to support change. Journal

of Change Management 2(3), 247-254


121 Kotter, J.P. and Heskett, J.L. (1992). Corporate Culture and Performance. The Free Press: New York
122
Sullivan, W., Sullivan, R., Buffton, B. (2002). Aligning individual and organisational values to support change. Journal
of Change Management 2(3), 247-254
123
ASC. Company Profile. http://www.asc.com.au/aspx/about_us_overview.aspx

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 57


INTEGRITY
We honour our commitments.
We are open, honest and trustworthy.
We share unity and abide by team decisions.

RESULTS
We are relentless in our pursuit of excellence.
We are exemplary in all we do.
We do not accept complacency.
We take responsibility for our own performance.
We act with urgency and pace.

INNOVATION
We sponsor ideas for improvement.
We constructively challenge for a better way.
We embrace and lead change.
We seek feedback.

5.1.3 CORPORATE OBJECTIVES


Corporate Objectives are developed by organisations in order to articulate what the organisation
hopes to achieve in the future. They act as a guide for all organisational activities and projects
in order to ensure the organisations long-term success and viability, and must be flexible in
order to respond to the internal and external environment.
Corporate Objectives are a culmination of a range of strategic analyses and are derived from:
the organisations mission, capabilities and resources; PEST and SWOT analyses; community
demands; government objectives; and desired outcomes. Once derived it is important to define
the desired outcomes as clearly as possible.124

5.1.4 CORPORATE STRATEGY


According to Viljoen, 125 Corporate Strategy refers to the management of the entire organisation
and concern how the Mission is activated to achieve the Corporate Objectives. In particular,
Corporate Strategy encapsulates how an organisations activities align with its mission and
values to ensure its long-term prosperity.
Strategies are future-focused, requiring top management decisions and organisational
resources. Strategies affect the long-term prosperity of an organisation and are multi-functional
and multi-divisional, and must take into account the internal and external environment. Given
their impact, choosing appropriate strategies is critical and all options should be carefully
identified and considered before a preferred option is chosen. 126/127

124
Viljoen J, Dann S (2000): Strategic Management: planning and implementing successful corporate strategies, 3.
Edition, Pearson Education Australia
125
Viljoen J, Dann S (2000): Strategic Management: planning and implementing successful corporate strategies, 3.
Edition, Pearson Education Australia
126
Viljoen J, Dann S (2000): Strategic Management: planning and implementing successful corporate strategies, 3.
Edition, Pearson Education Australia
127
David F R (2009): Strategic Management: concepts and cases, 12. Edition, Pearson Education

58 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


Risk management should be applied in order to ensure that corporate objectives are met, risk
consequences do not adversely impact any stakeholders and the best strategic planning
strategies are chosen. 128
Corporate objectives and strategies must include the organisations commitment to
sustainability.

5.2 CORPORATE AND/OR ASSET MANAGEMENT POLICY


ASSESSMENT AND DEVELOPMENT
One way to evaluate and improve corporate or asset management policy is to conduct a Policy
Delphi. A Policy Delphi is a process which seeks to generate the strongest possible opposing
views on the potential resolutions of a major policy issue. During the Policy Delphi session a
group of experts do not seek a consensus, but rather present their opinion and supporting
evidence. Accordingly, applying this method allows correlating different views to a specific
policy area and provides opportunity to react to and assess differing viewpoints. This then help
the decision-maker in making optimum choices on the policy adjustment.129
The objectives of the Policy Delphi are to:

ensure that all possible options have been put on the table for consideration
estimate the impact and consequences of any particular option
to examine and estimate the acceptability of all particular individual options.
If your organisation seeks to re-evaluate or change corporate or asset management policy,
CIEAM and AAMCoG members can help you to employ a Policy Delphi, which will facilitate the
design and development of organisational policy to meet asset management needs. By probing
your key internal stakeholders opinion and avoiding silo thinking, the policy will aim to represent
shared desires and most significant issues surrounding asset management.
For more information about conducting a Policy Delphi please contact: enquiries@cieam.com

128
New South Wales Treasury (2004): Risk Management Guideline
129
Turoff, M. (2002) "The Policy Delphi from: http://is.njit.edu/pubs/delphibook/ch3b1.pdf. Updated version of Turoff, M.
"The Design of a Policy Delphi," Technological Forecasting and Social Change 2, No. 2 (1970).

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 59


5.3 CASE STUDY

CASE STUDY

Development of business and asset management strategies for Tenaga


Nasional Berhad Policy Delphi approach

Tenaga Nasional Berhad (TNB) is Malaysia's power utility company headquartered in Kuala
Lumpur. In 2012, TNB formulated a business strategy that is currently documented in Gemilang
2015. TNB's Generation Division was in the process of reviewing the business strategy and
sought the Policy Delphi process to ensure efficient and effective outcomes from their review.

The general managers at the Divisional and Site levels engaged in a two-round Policy Delphi
session to develop the business and asset management plans, including asset management
strategies, objectives and plan development for initiatives, which are common across all sites:
coal fired plants
combined cycle power plants
hydro plants.

The outcomes from this Policy Delphi workshop included:


group-derived business and asset management strategies for the Generation Division
high level Key Performance Indicators (KPIs) and respective strategic initiatives
identified
detailed business and asset management plans documented which support the
strategies.

Each of these outcomes were documented for reference after the conclusion of the workshop
and then utilised by TNB as the basis for subsequent budget development.

Findings from the case study provided by Mary McGeoch as a part of a larger research on asset
management policies and strategies, also reported in: McGeoch, M. (2013). The use of Policy Delphi in the
development and review of business and asset management strategies. Tenaga Nasional Berhad in Kuala
Lumpa, Malaysia

60 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


6 SERVICE DELIVERY STRATEGIC
PLANNING

SECTION OUTLINE

Service Delivery Strategy


Service Delivery Planning
Asset Management Policy
Asset Management Objectives
Asset Management Strategy
Achieving High value Service Delivery
Outcomes Service Delivery Planning

Sustainability Management in Service Asset Management Policy

Delivery
Asset Management Objectives

Asset Management Strategy

SECTION OBJECTIVES
Define Service Delivery Strategic Planning including
asset management policy, objectives and strategy

Provide a link between Service Delivery Strategic


Planning and other components of the ISAM
framework

Outline and discuss Service Delivery strategies

Provide insight as to how to achieve sustainability


management and high value outcomes in Service
Delivery
6.1 PURPOSE
During recent years there has been a tendency to shift from the narrow focus on creating assets
to offering a service that better meets users and communities needs and expectations
including the impact of the asset on the environment and society. This has led to establishment
of a relatively new concept for government and other infrastructure providers that considers
assets as the delivery mechanisms to fulfil service needs. 130
A service-oriented approach is said to lead to greater alignment of service outcomes with the
needs and expectations of users achieved by a holistic approach that consider not only the
commissioning of new assets, but reconfiguring already existing assets and the involvement of
a broader range of external stakeholders into decision-making, in consequence providing better
overall environmental, social and economic outcomes. 131/132/133

Today, with rapidly changing and growing demands, the expectation of service is continually
changing and constantly increasing, making it difficult to determine the needs for the service
and life-cycle of the asset, thus complicating asset management. Service delivery therefore
needs to be carefully planned and account for uncertainty related to potential evolution of the
nature of the service that could affect investment in the asset.
Different environments in which assets operate have different spans of asset and service life-
cycles, which adds to the complexity of asset management endeavours. Although the life of the
asset and the nature of the service are reasonably aligned, there are many assets that have a
long life-cycle and some of them are even in perpetuity, like for example water sources. Others,
for example telecommunication services, have a very short life service because the technology
changes rapidly. Therefore, those that invest in telecommunication infrastructures have to move
very rapidly through their service delivery model and service delivery costing.
Understanding the environment in which service operates and structuring effective planning are
critical steps to achieve asset-based service delivery outcomes aligned with organisational
objectives and stakeholders needs and expectations.
This section provides insights related to the service delivery strategic planning focusing on:
offering a better understanding of the components in strategic service delivery planning:
Asset Management Policy, Objectives, Strategy and Plans
listing service delivery options
providing steps to achieve high value of service delivery outcomes

achieving sustainability outcomes in service delivery


assisting asset management practitioners in making strategic decisions on service
delivery.

DEFINITION: SERVICE DELIVERY STRATEGIC PLANNING IS AN ACTION PLAN


TO SATISFY USERS AND COMMUNITY NEEDS AND OBTAIN VALUE FOR MONEY
WHEN DELIVERING SERVICES.

130
Wiewiora, A., Brown, K., Keast, R., and McGeoch, M., (2013). Shifting from Asset Dominant to Service Centric
Delivery Systems: Engaging Users and Communities. IRSPM Conference, Prague (Forthcoming)
131
Wiewiora, A., Brown, K., Keast, R., and McGeoch, M., (2013). Shifting from Asset Dominant to Service Centric
Delivery Systems: Engaging Users and Communities. IRSPM Conference, Prague (Forthcoming)
132
Osborne, S.P. (2006). The new public governance? Public Management Review, 8(3), 377-387.
133 Lusch, R.F., Vargo, S.L., & Tanniru, M. (2010). Service, value networks and learning. Journal of the Academy of
Marketing Science, 38(1), 19-31.

62 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


6.2 SERVICE DELIVERY PLANNING
Service delivery strategic planning defines the need to obtain assets and services, describes
the process of obtaining those assets to meet stakeholders needs and expectations, and
schedules the timeframe for the service delivery. Activities that need to be carried out in the
planning stage include the need to:134,135
determine the need for service and assets required to meet the service (see
Sections 3.3. Demand management and 3.4. Demand Management Action Plan)
evaluate performance of existing assets in terms of their capacity to support service
delivery
identify the context within which the service is going to operate
determine the environmental and social impacts of the delivery and operation
of the asset
establish which assets require refurbishment to bring them up to the required
standard
decide what resources (infrastructure and people) are required to deliver the service
based on the chosen strategy
develop an asset strategy, comprising an asset acquisition (including procurement
method), operation, maintenance and disposal plan.
Service Delivery Strategic Planning is achieved through asset management policy, objectives
and strategy, and aligned with Organisational Strategic Management Planning (see Figure 6.1).

FIGURE 6.1: SERVICE DELIVERY STRATEGIC PLANNING

134
Tasmania Department of Treasury and Finance (2004): Developing Strategic Asset Management Plans
135
Wiewiora, A., Brown, K., Keast, R., and McGeoch, M., (2013). Shifting from Asset Dominant to Service Centric
Delivery Systems: Engaging Users and Communities. IRSPM Conference, Prague (Forthcoming)

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 63


6.2.1 ASSET MANAGEMENT POLICY
An Asset Management Policy is the translation of the Corporate Strategy for the process area of
asset management; as such it is based on the Corporate Policy and Corporate Objectives.
An Asset Management Policy is the overall basis of all asset management decisions and
activities and, like the Corporate Policy, it includes a Vision Statement, a Mission Statement,
and Principles for the area of Asset Management.

According to International Infrastructure Management Manual a good Asset Management Policy


should: 136
reflect corporate strategic goals
be clearly written in simple, concise language
be accepted and available to staff
meet current legislative regulations, laws and best practices.
The Asset Management Policy should be reviewed regularly to account for the changing
business environment and societal concerns. 137

6.2.2 ASSET MANAGEMENT OBJECTIVES


Asset Management Objectives are indicators for the implementation of the Asset Management
Policy and the achievement of the Asset Management Strategy. They derive from the
Government Objectives and Corporate Objectives and, on a functional level, they can relate to
the required performance or condition of an asset.

6.2.3 ASSET MANAGEMENT STRATEGY


The Asset Management Strategy follows specifications of the Asset Management Policy and
sets out activities which help to achieve the Asset Management Objectives. In doing so the
Asset Management Strategy converts Asset Management Objectives to Strategic Plans long-
term action plans for the assets and asset systems. In essence it also supports the Corporate
Strategy and the achievement of the Corporate Objectives.
According to the NSW Treasury138 the Asset Management Strategy identifies any requirements
needed (gaps) to support services and outlines the organisations response to these by
identifying appropriate acquisitions (planned capital investment), maintenance and disposal
(such as replacement and/or upgrading). The Asset Management Strategy fulfils the following
purposes:
develop an asset portfolio to support service delivery
set asset management priorities
undertake a gap analysis to identify differences between the existing and required
assets
identify asset-related risks which may potentially affect service delivery
set asset performance levels needed to achieve efficient service performance
detail environmental and social impact of the delivery and operation of the asset

136
International Infrastructure Management Manual (IIMM). International Edition. (2011). (Version 4.0). Wellington, NZ:
National Asset Management Support Group (NAMS Ltd.).
137
International Infrastructure Management Manual (IIMM). International Edition. (2011). (Version 4.0). Wellington, NZ:
National Asset Management Support Group (NAMS Ltd.).
138
New South Wales Treasury (2006): Asset Strategic Planning

64 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


provide the basis for the more detailed Asset Management Plans (acquisition plan,
operations plan, maintenance plan, and disposal plan).
The Asset Management Strategy therefore translates Asset Objectives to provide more
measurable directions set for a specific time in order to evaluate the organisations asset
management performance. Asset Management Strategy Plans should follow the SMART
structure:
Specific clear and unambiguous, define what is to be achieved
Measurable to track the progress and ensure that the objective can be accomplished
Attainable realistic and possible to achieve objectives
Relevant chosen to fulfil asset management directions
Time-oriented including a specified period of time to achieve the objective

In the past, Asset Management Strategic Plans were set to have at least a three-year
projection.139 Recently, organisations and governments have realised that Asset Management
Plans need to be extended due to the long life-cycle of assets and long-term implications; thus it
is recommended that Asset Management Strategic Plans are set to five years and beyond.
There is no single correct way to structure Strategic Plans and it often depends on needs,
preferences and the scale of asset and service provided.

It is important to consider the scope of the Strategic Planning. Often the plans are based on the
service provided, covering a wider activity that the assets are to support, not just the physical
management of the assets themselves.140 Thus, at the strategic level planning should match the
prospective demand for assets with those assets currently available. The following questions,
proposed by the NSW Government Asset Management Committee, should be considered:
Can service delivery be made less asset-dependent?

Are existing assets fully used in service delivery?


Are existing assets appropriately located for effective service delivery?
Is the capacity of existing assets sufficient to provide the required services?
Are assets suitable for the effective delivery of the services they are intended to
support?
International Infrastructure Management Manual recommends liaising with financial
representative to ensure that the Strategic Plans can be easily incorporated into financial
budgeting and strategic planning processes.141 It is now important to also consider the impact of
asset management upon the natural environment and society.

139
Tasmania Department of Treasury and Finance (2004): Developing Strategic Asset Management Plans
140
International Infrastructure Management Manual (IIMM). International Edition. (2011). (Version 4.0). Wellington, NZ:
National Asset Management Support Group (NAMS Ltd.). p. 4/20
141
International Infrastructure Management Manual (IIMM). International Edition. (2011). (Version 4.0). Wellington, NZ:
National Asset Management Support Group (NAMS Ltd.). p. 4/20

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 65


HOW TO DEVELOP AN ASSET MANAGEMENT STRATEGY:

The PEST Analysis and SWOT Analysis (see the Resources section of this
document for more information) can be used as a basis for analysing internal and
external Asset Management factors.

When establishing the Asset Management Strategy, brainstorming sessions or


focus groups should be arranged with key actors engaged in asset management
strategic planning including board members, asset management experts,
maintenance, engineering and financial representatives. During the session, long-
term asset management strategic plans and key directions should be discussed
and agreed.

6.3 SERVICE DELIVERY OPTIONS


There is a range of different service delivery options and normally the choice depends on and
should be aligned with Corporate Strategic Management and Asset Management Strategic
Plans. Biggs discusses two main service delivery options in-sourcing and outsourcing:142
In-sourcing (known as in-house) is the provision of services by using resources within
the host organisation.
Outsourcing (contracting out) is the process by which a user employs a separate
organisation (the supplier), under a contract to perform a function143. It is normally a
short-term contract between the government and a private organisation for the provision
of a specific service, for which the private organisation is more specialised than the
government.

A recent move from single suppliers to joint venture arrangements means that strategic
sourcing is becoming a more complex undertaking. Therefore, understanding the potential
benefits and risks associated with in-sourcing and outsourcing is necessary to make the best
possible decision on service delivery procurement methods. To make a decision whether to in-
source or outsource organisations need to consider size, culture, assets, number of staff,
economic trends, and the amount of risk.144

Table 6.1 outlines some of the main procurement methods applicable in asset
management.145,146,147,148 Among those listed and focused on procuring new assets, it is
important to first consider whether existing assets have the capacity to support the service and
can be used instead of acquiring new builds.149 This more holistic way of delivering services

142
Biggs, J. (2001). Effective Service Delivery Strategies: An Australian Perspective. Presented at Ideaction 2001.
Facility Management Association of Australia
143
Barrett P. (1995) Facilities Management towards best practice. Blackwell Science Ltd
144
Biggs, J. (2001). Effective Service Delivery Strategies: An Australian Perspective. Presented at Ideaction 2001.
Facility Management Association of Australia
145
Queensland Department of Environment and Resource Management (2011) Guidelines for Implementing Total
Management Planning Asset Procurement Implementation Guide from http://www.derm.qld.gov.au/water/regulation/
146
Walker, D. and Hampson, K. (2003). Procurement Strategies: A Relationship-based Approach. Carlton South,
Victoria, Australia: Blackwell Science
147
Project Alliancing. NSW Government Procurement website http://www.nswprocurement.com.au/Government-
Procurement-Frameworks/Construction/Framework/Project-Alliancing.aspx
148
Duffield, C., and Raisbeck, P., Xu, M. (2008). Benchmarking Study, Phase II. Report on the performance of PPP
projects in Australia when compared with a representative sample of traditionally procured infrastructure projects.
National PPP Forum 2008. Australia: University of Melbourne.
149
Wiewiora, A., Brown, K., Keast, R., and McGeoch, M., (2013). Shifting from Asset Dominant to Service Centric
Delivery Systems: Engaging Users and Communities. IRSPM Conference, Prague (Forthcoming)

66 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


enables more efficient delivery through the reconfiguration of already existing assets or
adaptation of non-asset approaches, thus providing more cost-effective solutions.
TABLE 6.1: PROCUREMENT METHODS

PROCUREMENT PROCESS APPLICABILITY


METHODS

Fixed price contracting Separation of design Projects with a reasonably


and construction detailed concept
responsibilities
Design is/needs to be
Design is normally developed and where there
completed before the is little scope for post-
tendering starts tender work
Can be undertaken When looking to select the
by in-house teams or lowest fixed price
by outsourcing

Design and construct Single organisation Cost effective solutions


(D&C) is responsible for
Projects where the
design and
combined expertise of both
construction
design and construction
professionals are required

Total package options: Single organisation Projects over $5m


Build, transfer, is responsible for
Where operational costs
operate (BTO) design, construction
are a significant proportion
and operation of a
Build own of the total life-cycle costs
facility (normally 20
operate transfer 25 years) Where an agency wishes
(BOOT) to maintain ownership of its
facilities
Build own
operate (BOO)

Public-private Partnership Contracting Large, costly projects


(PPP) arrangement in
Where an agency wishes
which a private party
to transfer the long-term
takes responsibility
maintenance or operation
for financing and
of a facility to a private
long-term
party
maintenance or
operation of a facility Long-term service
outcomes

Alliance Several companies Complex and high-risk


work together to infrastructure projects,
deliver the project where risks are
unpredictable and are best
managed collectively

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 67


Appropriate choice of procurement method has the advantage of delivering assets at the lowest
lifecycle cost and within required specifications.150 There is a consensus that although there
may be an optimal procurement method that is in some sense better than all others for an
individual project.151

Total package, PPP and alliance options have greater potential to deliver sustainability
outcomes over whole-of-life cycle of the asset because the owner/operator is involved from the
beginning and during design and delivery of the asset. According to the Australian National
Audit Office the more complex the contracted service, the more likely the collaborative approach
such as alliancing or partnering will work out best.152
These collaborative approaches encourage better integration, coordination and communication
between participants who often have divergent goals and objectives. For instance, PPPs have
been used extensively to procure roads, prisons and hospital projects because this method is
considered to provide better value for money, better time performance and an innovative
outcome for government.153 Although difficult to achieve in practice it is important that
relationships between parties engaged in the delivery process are transparent, open and
managed right from the beginning.

6.4 ACHIEVING HIGH VALUE SERVICE DELIVERY OUTCOMES


Achieving high value service delivery outcomes brings a range of benefits for organisations
including:154
increased users loyalty

increased speed to market


improved sustainability performance
improved resource utilisation
increase users acceptance
lower compliance risk.
In order to achieve high value service delivery outcomes it is important to partner up with other
services providers. By blending internal and external resources organisations can meet a
variety of users needs in a rapid and effective manner; thus, gain a distinct advantage.155
Nevertheless, the current challenge of delivering services is to achieve consistency and
transparency across organisational departments or projects taking into account organisational
capability including skills, expertise and knowledge.
A solution to this challenge can be a strategic service delivery approach, which is repeatable,
efficient and transferable throughout the organisation. This can be achieved through using
templates, defined methodologies, work plans, and how-to guides that are consistent across

150
Queensland Department of Environment and Resource Management (2011) Guidelines for Implementing Total
Management Planning Asset Procurement Implementation Guide from http://www.derm.qld.gov.au/water/regulation/
151
Love. P. E. D., Skitmore, M. and Earl, G. (1998). Selecting a suitable procurement method for a building project.
Construction Management and Economics,16 (2), 221-233.
152
Australian National Audit Office, Contract Management: Better Practice Guide. 2001, Australian National Audit Office:
Canberra.
153
Allen Consulting Group (2007). Performance of PPPs and Traditional Procurement. Report to Infrastructure
Partnerships Australia. Retrieved from www.allenconsult.com.
154
Dawson, R. (2007). Service delivery innovation, Creating Client Value and Enhancing Profitability. In SAP Thought
Leadership SAP for Professional Services from
http://www.rossdawsonblog.com/SAP_Service_Delivery_Innovation_White_Paper.pdf
155
Dawson, R. (2007). Service delivery innovation, Creating Client Value and Enhancing Profitability. In SAP Thought
Leadership SAP for Professional Services from
http://www.rossdawsonblog.com/SAP_Service_Delivery_Innovation_White_Paper.pdf

68 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


organisations. This will also facilitate intra- and inter-planning, collaboration and knowledge
sharing.
Furthermore, implementation of integrated technology and design solutions that allow seamless
integration of all stakeholders, including contractors and subcontractors, into the service
delivery processes is recommended.156 This approach facilitates creating a single real-time view
of all external resources, and can deliver better sustainability outcomes.
Finally, building knowledge-based relationships based on collaboration and knowledge sharing
between key stakeholders in the service delivery process will improve service delivery outcomes
and enhance capabilities and knowledge base.157 This type of relationship needs to be based
on mutual trust and willingness to disclose information while being open to new ideas. Service
users in such a knowledge-based relationship are less affected by price because they value the
role that open communication, collaborative teams and complementary expertise play in
creating value.158

HOW TO ACHIEVE HIGH VALUE SERVICE DELIVERY OUTCOMES:


1. Partner up with other service providers to bring together resources and
expertise, and to gain distinct advantage.
2. Implement integrated information technology solutions as well as promote
relational knowledge sharing to enable greater exchange of skills and
expertise.
3. Agree on a Service Delivery approach that is transparent, repeatable, and
transferable throughout the organisation

4. Design templates, defined methodologies, work packages, and how-to guides


consistent across organisation (departments and projects)
5. Maintain positive relationships based on trust and willingness to share
knowledge with all stakeholders

156
Dawson, R. (2007). Service delivery innovation, Creating Client Value and Enhancing Profitability. In SAP Thought
Leadership SAP for Professional Services from
http://www.rossdawsonblog.com/SAP_Service_Delivery_Innovation_White_Paper.pdf
157
Dawson, R. (2007). Service delivery innovation, Creating Client Value and Enhancing Profitability. In SAP Thought
Leadership SAP for Professional Services from
http://www.rossdawsonblog.com/SAP_Service_Delivery_Innovation_White_Paper.pdf
158
Dawson, R. (2007). Service delivery innovation, Creating Client Value and Enhancing Profitability. In SAP Thought
Leadership SAP for Professional Services from
http://www.rossdawsonblog.com/SAP_Service_Delivery_Innovation_White_Paper.pdf

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 69


6.5 ACHIEVING SUSTAINABILITY OUTCOMES IN SERVICE
DELIVERY
ONLY A HEALTHY ENVIRONMENT CAN DELIVER NUTRITIOUS FOOD, CLEAN
WATER, UNPOLLUTED AIR, SAFE AND SUSTAINABLE EMPLOYMENT AND THE
FANTASTIC DIVERSITY OF LIFE WE SHARE THIS PLANET WITH.
Don Henry, Executive Director (Australian Conservation Foundation)

To achieve sustainability outcomes in asset management service delivery means incorporating


sustainability objectives into service delivery planning, and being accountable for maintaining
and using the already existing assets to provide a foundation for economic security while taking
into consideration environment and societal wellbeing. This can be achieved through the
following actions:*
Rethink and redesign energy supply system supporting the use of your assets to
reduce greenhouse gas emission.
Improve energy efficiency, whenever possible determine when and how you can cut
water and energy waste.
Establish sustainability objectives and incorporate them into service delivery
planning.
Adopt assets to the impact of climate change such as heat stress through conscious
activities to reduce greenhouse gas emissions and increased scientific knowledge
and technical expertise to assess potential consequences of such impact
When designing assets take into consideration wellbeing of local communities.
Consider ecosystem, and protection of fauna and flora around your assets.
Reduce waste and increase resource efficiency throughout all the stages of asset
life-cycle.
Make informative decisions in the planning and design of the asset, and long-term
impact of the asset on the environment, use recycled and harm-free materials as
much as possible.
Consider approaches other than constructing new assets, such as non-asset
solutions and the use of other assets within the existing asset portfolio.
Ensure that service delivery needs address the social, environmental and economic
aspects.
Promote a lifecycle approach to asset management. During acquisition decision-
making consider and evaluate operating and maintenance requirements and
eventual replacement or retirement of assets.
Support an integrated approach to asset management and service delivery across
all assets. When making service delivery decisions, examine the total asset base to
optimise investment outcomes.
Apply monitoring and reporting measures for greater transparency. This will help to
achieve increased accountability for asset investment.
* Some of the actions have been developed based on documentation developed by the
Victorian Department of Treasury and Finance.159/160

159
Victorian Department of Treasury and Finance. (2000). Sustaining our assets: government asset management policy
statement. Published by the Department of Treasury and Finance ISBN 0731114213. Website:
www.vic.gov.au/treasury/treasury.html

70 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


HOW TO INCLUDE SUSTAINABILITY PRINCIPLES IN SERVICE DELIVERY:
1. Develop detailed sustainability objectives and strategies*.

2. Define service delivery outcomes considering sustainability objectives and strategies.

3. Forecast future demands and their impact on service delivery outcomes e.g. changes
in the environmental regulations, increased community demand for environmentally
friendly practices and the effects of environmental degradation such as the
greenhouse effect and the hole in the ozone layer.
4. Determine whether the current service performance measures up against the
sustainability objectives identified in Step 1. Develop strategies to match
performance with Sustainable Development objectives.
5. Ensure that sustainability performance is included in the service delivery strategy
option.

6. Ensure that sustainability evaluations are included in the service delivery strategy
document.
*For further details please refer to the best practice example from the NSW Total Asset Management Manual,
Section on Sustainable Development that outlines the principles, objectives and strategies of sustainable
development.

6.6 CASE STUDY

CASE STUDY

Development of an asset management policy for Allconnex Water


Policy Delphi approach

Allconnex Water comprising water businesses from Redland, Gold Coast and Logan city
councils became the water and wastewater business on 1 July 2010.

In 2012, Allconnex Water required assistance to develop a supported program of research into
Strategic Asset Management through the re-development of the Asset Management Guideline
to Allconnex requirements and Asset Management Policy Development. The process required
Southern Cross University (SCU) to develop an Asset Management Tool that was tailored to
acknowledge and incorporate Allconnex specific legislative, policy and other supporting
documents to guide the strategic implementation of Asset Management Strategy.

Researchers from SCU designed and developed a workshop to undertake two rounds of Policy
Delphi with experts from the fields of asset management, policy and management in order to
determine the scope of policy requirements and devise a concrete description of Asset
Management of Allconnex with links to Allconnex documents and the organisational framework.

The process was successfully completed after one month and resulted in asset management
policy aligned with the organisational objectives and directions.

Findings from a case study provided by Mary McGeoch, also reported in: Brown, K., & McGeoch, M.
(2012). Supported program of research into Strategic Asset Management using Policy Delphi process.
Allconnex Water, Queensland.

160
Victoria Department of Sustainability and Environment. (2006). Our Environment, Our Future Sustainability Action
Statement. Victorian Government Department of Sustainability and Environment. Melbourne. Australia

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 71


6.7 FURTHER INFORMATION
If your organisation is seeking to re-evaluate or change your asset management policy, CIEAM
(the Asset Institute after 2013) and AAMCoG members can help you to employ a Policy Delphi
approach, which will facilitate the design and development of organisational policy to meet asset
management needs. For more information please refer to the previous section: Organisational
Strategic Management, subsection: Corporate and/or Asset Management Policy Assessment
and contact: enquiries@cieam.com

72 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


7 SERVICE DELIVERY OPERATIONAL AND
TACTICAL PLANNING

SECTION OUTLINE

Asset Management Plan


Acquisition Plan
Operations Plan
Maintenance Plan
Disposal Plan

SECTION OBJECTIVES
Offer insight on Asset Management
Planning

Explain Asset Management Plans including Tactical and Operational Planning

Acquisition, Operations, Maintenance and


Asset Management Plans
Disposal Plans Acquisition Operations Maintenance Disposal Plan
Plan Plan Plan

Outline processes and Asset Management


Plan formulation
7.1 PURPOSE
Service Delivery Operational and Tactical Planning comprises acquisition, operations,
maintenance and disposal plans. These plans underpin the asset management strategy by
detailing how the organisation will effectively and efficiently manage its assets across the full
life-cycle to achieve service objectives. This section provides insight on the four asset
management plans: acquisition, operations, maintenance and disposal plans, and outlines
processes of their formulation.

DEFINITION
SERVICE DELIVERY OPERATIONAL AND TACTICAL PLANNING CONSISTS OF AN
ACQUISITION PLAN, OPERATIONS PLAN, MAINTENANCE PLAN AND DISPOSAL
PLAN, WHICH AIM TO IMPLEMENT THE ASSET MANAGEMENT STRATEGY.

7.2 ASSET MANAGEMENT PLANS


Asset Management Plans specify how assets have to be managed to fulfil the Asset
Management Strategy and to achieve the Asset Management Objectives. In order to do so,
Asset Management Plans set out a framework for an organisation to allocate appropriate
resources and make strategic decisions to support service delivery through the whole asset
management life-cycle. Asset Management Plans include:
1. Acquisition plan: detailing the assets to be acquired or replaced in the planning
period, and establishing acquisition funding sources and costs.
2. Environmental management plan (EMP): defining how environmental and societal
impacts will be identified and managed.

3. Operations plan: defining the use of existing assets, including for example access,
security, accountability and performance monitoring.
4. Maintenance plan: detailing which assets are to be maintained, the level of
maintenance and their delivery.
5. Disposal plan: identifying assets to be disposed during the planning period, the
expected proceeds on disposal and their application.
Often organisations introduce a separate risk management plan outlining the risk management
strategies and actions that will be undertaken. Accordingly, the risk management plan can be
either separate from other plans or incorporated into acquisition, operation, maintenance and
disposal plans. (A detailed risk management approach for asset management is discussed in
Section 2. Environmental Factors, Subsection 2.1. Risk Management).
Overall, Asset Management Plans should contain information about temporal factors, resources
which are needed to fulfil the specific plan, and responsibilities for the described activities. The
next section outlines the formulation of Asset Management Plans.

74 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


7.2.1 ACQUISITION PLAN
An Acquisition Plan is the primary document outlining the acquisition of all major assets. It also
links program delivery needs to the required assets.
The Asset Management Strategy facilitates asset acquisition decisions, while business plans
are used to consider various alternatives such as non-asset solutions and the use of other
assets within the existing asset portfolio. There are a number of ways to acquire assets:

purchasing
construction
development
finance lease.
For significant acquisitions (those that are complex and/or involve significant cost) detailed
plans are prepared. Based on the Australian National Audit Office161 an Acquisition Plan
comprises the following.

ACQUISITION PLAN INCLUDES:


A statement of need and acquisition rationale.

Staff roles and responsibilities required to manage the acquisition.


Required acquisition activities such as contract management and other technical,
legislative and management considerations.

Timeframes and the key decision points throughout the acquisition plan.
Capital outflows amounts and timing.
Anticipated life-cycle costs

A range of analyses should be undertaken to support the planned acquisition:162


value management
cost-benefit analysis
risk analysis

statutory and planning issues, including environmental impact analysis, social impact
analysis, and wellbeing impact analysis.
In addition to the detailed acquisition plans, a summary acquisition plan is used to disclose the
aggregate acquisitions including those not significant enough to warrant detailed plans.
A number of factors need to be determined as part of the acquisition process, including:
design and technical specifications

anticipated useful life


asset life-cycle costs
asset performance indicators
required maintenance levels.

161
Australian National Audit Office (2010): Better Practice Guide on the Strategic and Operational Management of
Assets by Public Sector Entities Delivering agreed outcomes through an efficient and optimal asset base
162
Tasmania Department of Treasury and Finance (2004): Developing Strategic Asset Management Plans

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 75


TO ACHIEVE SUSTAINABILITY AND LONG-TERM SERVICE DELIVERY OUTCOMES,
DURING THE DESIGN PROCESS ENSURE DURABILITY, MAINTAINABILITY, RELIABILITY,
SAFETY, DECONSTRUCTION, AND QUALITY OF THE ASSET.

The information gathered is then fed directly into the operations and maintenance plans. There
are other regulatory processes that may need to be complied with for larger, significant
acquisitions such as Gateway reviews, which complement the acquisition process. Figure 7.1
outlines the formulation process of an asset Acquisition Plan.

INPUT WAYS TO ACQUIRE OUTPUT


ASSET

Service delivery needs Summary acquisition
Purchasing plan OR
Corporate objectives
Construction
Detail acquisition plan
Financial and budgetary Development for significant
constraints
Finance lease acquisitions

TOOLS AND
TECHNIQUES

Value management
Cost-benefit analysis
Risk analysis
Statutory and planning
issues
Environmental Impact
Statement (EIS)

FIGURE 7.1: ASSET ACQUISITION PLAN FORMULATION PROCESS

76 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


7.2.2 ENVIRONEMNTAL MANAGEMENT PLAN
An Environmental Management Plan (EMP) ensures that all necessary measures are identified
and implemented to guarantee sustainable asset construction, operation and maintenance,
taking into account environment protection and society. EMP further ensures that asset
management is implemented in accordance with environmental legislation.
EMP provides the answers to the critical questions:163

What are the likely environmental issues for your site?


What likely harm can these issues cause to the surrounding environment?
How will you manage these issues to minimise harm to the environment?
The project owner/proponent typically delegates the responsibility to develop EMP to a
contractor, asset manager, project manager or designated person.
EMP is generally approved before commencing construction and operation. It is not a static
document and should be frequently revised and, if necessary, amended to ensure sustainability
outcomes and continuous improvement of the project. Typically review should be undertaken
when there is a change of the project scope, following significant environmental incidents, when
there is a need to improve performance and at the completion of environmental audits.
Usually two types of EMPs are prepared: Construction EMP (CEMP) and Operation EMP
(OEMP). CEMP ensures appropriate sustainability practices are followed during the
construction process, and OEMP during the operation process.
According to Department of Infrastructure, Planning and Natural Resources EMP is structured
around five components:164

BACKGROUND
Users internal and external stakeholders. Approved by consent authority
Introduction
Project Description
EMP context and objectives
Environmental Policy

ENVIRONMENTAL MANAGEMENT
Users project owner and supervisory staff. Approved by consent authority
Environmental Management Structure and Responsibility
Approval and Licencing Requirements
Reporting
Environmental Training
Emergency Contacts and Response

163
Landcom. What is an environmental management plan (EMP)? Landcom
www.landcom.com/downloads/file/forpartners/EMPBrochureR1.pdf
164
Department of Infrastructure, Planning and Natural Resources. (2004). Guideline for the preparation of
Environmental Management Plans. Department of Infrastructure, Planning and Natural Resources. Sydney, Australia.
ISBN: 0734754663

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 77


IMPLEMENTATION
Users project owner and supervisory construction, construction and site staff,
community groups, operation staff. Approved by consent authority
Risk Assessment
Environmental Management Activities and Controls
Environmental Management Maps
Environmental Schedules

MONITOR AND REVIEW


Users project owner and supervisory staff. Approved by consent authority
Environmental Monitoring
Environmental Auditing
Corrective Actions
EMP Review

For further details on each section please refer to Department of Infrastructure, Planning and
Natural Resources. (2004). Guideline for the preparation of Environmental Management Plans.
Department of Infrastructure, Planning and Natural Resources. Sydney, Australia. ISBN:
0734754663

7.2.3 OPERATIONS PLAN


The operational aspects of an asset based on its life-cycle are detailed in the Operations Plan.
The Operations Plan outlines the program and asset manager roles and responsibilities, and
assigns responsibility for asset performance and life-cycle cost accounting. Based on Australian
National Audit Office165 and Tasmania Department of Treasury and Finance documents166 the
Operations Plan includes:

OPERATION PLAN:
Asset performance measures
Physical security and safeguarding

Depreciation
Finance costs
Operating costs (for example energy and cleaning costs)

Specialist staff costs required to operate an asset


Operational training costs
Major disposal costs (for example demolition or restoration)

Management Information Systems (MIS) assist in generating timely and reliable information
(e.g. life-cycle costs at the individual, group or program level) necessary for accountability and
performance reporting. In addition, asset condition audits and monitoring asset performance

165
Australian National Audit Office (2010): Better Practice Guide on the Strategic and Operational Management of
Assets by Public Sector Entities Delivering agreed outcomes through an efficient and optimal asset base
166
Tasmania Department of Treasury and Finance (2004): Developing Strategic Asset Management Plans

78 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


indicators also help to optimise an organisations asset base and make consistent and reliable
asset decisions.167

Opportunities to reduce costs and increase efficiency may be identified by assessing KPIs and
benchmarking. Benchmarking and KPIs are employed to measure whether assets are being
operated effectively and efficiently, for example, an appropriate benchmark could be the cost
per square meter for utilities, cleaning, and security costs. In addition, appropriate strategies to
use building management systems can ensure the efficient use of light and heating.168 Figure
7.2 outlines the Operations Plan formulation process:169,170,171

INPUT ACTIVITIES OUTPUT

Summary or detailed Purchasing


acquisition plan Operations plan
Estimate:
Operational costs
Staff costs
Training costs
Depreciation OUTCOME
Maintenance cost
Achievement of
Disposal cost
operational objectives at
least cost
Provision of cost-
effective services
Compliance with
TOOLS AND statutory requirements
TECHNIQUES Sustainability outcomes

Management
Information Systems
Benchmarking
KPI
Risk analysis

FIGURE 7.2: OPERATIONS PLAN FORMULATION PROCESS

167
Australian National Audit Office (2010): Better Practice Guide on the Strategic and Operational Management of
Assets by Public Sector Entities Delivering agreed outcomes through an efficient and optimal asset base
168
Australian National Audit Office (2010): Better Practice Guide on the Strategic and Operational Management of
Assets by Public Sector Entities Delivering agreed outcomes through an efficient and optimal asset base
169
Tasmania Department of Treasury and Finance (2004): Developing Strategic Asset Management Plans
170
Australian National Audit Office (2010): Better Practice Guide on the Strategic and Operational Management of
Assets by Public Sector Entities Delivering agreed outcomes through an efficient and optimal asset base
171
Queensland Government. Guidelines for Implementing Total Management Planning. Asset Management. Operations
Management Implementation Guide from http://www.derm.qld.gov.au/water

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 79


7.2.4 MAINTENANCE PLAN
Research shows that poor maintenance can result in a loss of functionality, a shorter than
anticipated useful life, reduced utilisation or even result in a threat to human safety or a breach
in legislative requirements. As such, asset maintenance is a critical function in the overall life-
cycle of an asset.172 Maintenance has a dual purpose:
Refurbishment restoring an asset to a required benchmark enabling its useful life.
Enhancement increasing an assets service potential.
Maintenance planning is key particularly for major maintenance activities requiring critical
assets to be taken off-line. In this case long-term planning is essential.173 Once an agency has
identified which assets need to be regularly maintained by assessing the condition of existing
assets the agency needs to develop a maintenance plan.174 A maintenance plan has three main
objectives:175

define maintenance standards


describe how the work is to be carried out
forecast the necessary maintenance expenditure for the planning period.
According to the Tasmanian Department of Treasury and Finance, effective asset maintenance
outcomes include: 176
a long-term reduction in life-cycle costs

better asset performance and service


the optimisation of asset life
improved public perception of the assets service and safety standards.

In addition, maintenance planning needs to consider the environmental impacts of all materials
and consumables used in the maintenance of the asset, e.g.: avoid using toxic materials.
Maintenance involves a range of activities and can be broken down into planned and unplanned
operations and recurrent maintenance, and major and minor capital works. The Australian
National Audit Office outlines the following maintenance activities and core concepts.177

172
Australian National Audit Office (2010): Better Practice Guide on the Strategic and Operational Management of
Assets by Public Sector Entities Delivering agreed outcomes through an efficient and optimal asset base
173
Australian National Audit Office (2010): Better Practice Guide on the Strategic and Operational Management of
Assets by Public Sector Entities Delivering agreed outcomes through an efficient and optimal asset base
174
Tasmania Department of Treasury and Finance (2004): Developing Strategic Asset Management Plans
175
Department of Treasury and Finance, (1995): The Asset Management Series, Part 2 Policies and Practices from:
http://www.dtf.vic.gov.au/CA25713E0002EF43/pages/asset-management---planning-and-reporting-asset-management-
policy
176
Tasmania Department of Treasury and Finance (2004): Developing Strategic Asset Management Plans
177
Australian National Audit Office (2010): Better Practice Guide on the Strategic and Operational Management of
Assets by Public Sector Entities Delivering agreed outcomes through an efficient and optimal asset base

80 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


TABLE 7.1: MAINTENANCE ACTIVITIES

OPERATIONAL AND RECURRENT MAINTENANCE PLANNED MAINTENANCE

Preventative maintenance: regular periodic servicing and maintenance.


Cyclic maintenance: planned life-cycle activities such as repainting every ten years or
replacing carpets every seven years.
Deferred or backlog maintenance: maintaining records of deferred maintenance to allow
re-establishment of the required level of maintenance.
Breakdown/corrective maintenance: predicted maintenance of potentially suspect
components that are budgeted for, such as component failures before the end of the
specified design life.
Repair maintenance: unplanned maintenance activities that are budgeted for, such as
replacement of broken lamps.

OPERATIONAL AND RECURRENT MAINTENANCE UNPLANNED MAINTENANCE

Unplanned maintenance: asset breakdown or failure due unexpected or unpredicted


events such as subsidence, bushfire, floods, tempest.

MAJOR CAPITAL WORKS

Regular planned capital works such as new building works, refurbishments, IT upgrades,
where the intended purpose of the works is to enhance the performance of an existing
asset then the amounts are capitalised, for instance to increase functionality or increase
useful life.

MINOR CAPITAL WORKS

These can be planned or unplanned capital works that are typically minor in value and
complexity, and tend not to enhance an assets capability; an example of a minor capital
work is the replacement of an office door.

Generally, operational and recurrent maintenance costs are expensed when incurred; however,
in cases where regular, major inspections must be performed as a condition of using a
particular asset (e.g. the regular, planned inspection of aircraft) the cost incurred is
capitalised.178
Capital works include: rehabilitation/renewal and new asset/upgrade. There is argument that
rehabilitation/renewal are a part of the non-discretionary expenditure in order to maintain the
required Levels of Service for the asset and are linked to sustainability outcomes whereas new
and upgrade capital provides additional service levels never previously available.

An Annual Maintenance Plan should be formulated once the maintenance strategy for an asset
has been developed. The annual maintenance plan details the tasks required each year, and
should include a statement of resource requirements. An Asset Register can be used to capture
maintenance data and history to assist in planning. This data can also be used to develop the
annual maintenance plan.179

178
Australian National Audit Office (2010): Better Practice Guide on the Strategic and Operational Management of
Assets by Public Sector Entities Delivering agreed outcomes through an efficient and optimal asset base
179
Tasmania Department of Treasury and Finance (2004): Developing Strategic Asset Management Plans

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 81


According to the Australian National Audit Office, agencies should develop detailed
Maintenance Plans for each significant maintenance activity, defining: 180

MAINTENANCE PLANS INCLUDE:


The level and frequency of maintenance activities (determined via asset
performance indicators and asset condition audits)
Meeting sustainability objectives
Asset condition
Maintenance roles and responsibilities
Maintenance deliverables and timetables
Any deferred maintenance and the anticipated impact.
Contract management considerations
Asset technical specifications.
Performance and monitoring mechanisms

Figure 7.3 outlines the process of Maintenance Plan formulation:181,182

INPUT ACTIVITIES OUTPUT

Summary or detailed Planned/unplanned Annual Maintenance


acquisition plan maintenance Plan
Maintenance strategy Major/minor capital works Statement of resource
Specify the type of requirements
maintenance
Define the level and frequency
of maintenance activities
Specify roles and OUTCOME
responsibilities \
Calculate the cost Reduction in life-cycle
costs
Identify maintenance
deliverables and timetables Better asset
performance and
Consider contracting methods service
(i.e. lump sum contracts,
design and construct contracts) Optimisation of asset
life
Conduct performance and
monitoring Improved public
perception of the
assets service and
safety standards

TOOLS AND TECHNIQUES

Asset Register
FIGURE 7.3: Historical Data
MAINTENANCE PLAN Experts knowledge
FORMULATION PROCESS

180
Australian National Audit Office (2010): Better Practice Guide on the Strategic and Operational Management of
Assets by Public Sector Entities Delivering agreed outcomes through an efficient and optimal asset base
181
Tasmania Department of Treasury and Finance (2004): Developing Strategic Asset Management Plans
182
Department of Treasury and Finance, (1995): The Asset Management Series, Part 2 Policies and Practices from:
http://www.dtf.vic.gov.au/CA25713E0002EF43/pages/asset-management---planning-and-reporting-asset-management-
policy

82 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


7.2.5 DISPOSAL PLAN
The Disposal Plan leads into the planning process for new or replacement assets and is a
useful management tool in assessing why assets may not have performed as intended. As such
it should become an integrated part of the Asset Management Strategy. A number of reasons
for disposing an asset can be identified including:
end of useful life

surplus to requirements
under-utilised
not fit-for-purpose
unserviceable
the need for the service provided by the asset has disappeared
does not meet legislative requirements.

DISPOSAL PLAN INCLUDES:


Rationale for disposal.

The proper costing and evaluation of disposal alternatives including recycling.


Engagement of experts to assist in professional valuation and disposal.
Due diligence reviews to ensure there is sufficient transparency and accountability for asset
disposals including compliance with legislative requirements.

If an asset is no longer needed for a specified purpose there are a number of disposal options:

sale by public auction or tender


trade-in
transfer assets to another entity or reallocate an asset to another program area within
the entity
deconstruct and recycle of components
write-off, demolish or dispose in an environmentally responsible manner

lease surplus capacity.


The Australian National Audit Office identifies a number of considerations when planning
significant asset disposal: 183

Disposal action should be undertaken within a whole-of-government context to ensure that


major assets marked for disposal are not required by other sectors of government. Revenues
arising from asset sales may either be returned to Government or used to fund future asset
acquisitions, depending on the nature of the disposal.

183
Australian National Audit Office (2010): Better Practice Guide on the Strategic and Operational Management of
Assets by Public Sector Entities Delivering agreed outcomes through an efficient and optimal asset base

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 83


While disposal is the final stage in the Strategic Asset Management process, as previously
noted, the Disposal Plan can result in the planning for new or replacement assets to support
continuing service delivery.184 Figure 7.4 outlines the process Disposal Plan formulation:

INPUT ACTIVITIES OUTPUT

Identify those assets that no


Asset Management
longer meet the service delivery Disposal Plan
Strategy
needs Environmental care
Ensure these assets are not
required by other sectors of
government
Consider asset disposal options
(i.e. sale, trade-in, destruct)
Engage experts to assist in
valuation and disposal
Obtain required approvals

TOOLS AND TECHNIQUES

Asset Register
Expert knowledge

FIGURE 7.4: DISPOSAL PLAN FORMULATION PROCESS

In addition to the above components, Asset Management Plans should also contain a long-term
financial or funding plan. The funding plan should take into consideration all available options
for funding capital such as private sector funding and recurrent asset costs such as carbon
taxes.
The following elements must be addressed by the funding plan:
assets total life-cycle costs
asset acquisition and maintenance funding sources including annual cash flow
requirements
the proposed application of any funds retained from the sale of assets
the potential costs incurred as a result of asset disposal.185

184
Tasmania Department of Treasury and Finance (2004): Developing Strategic Asset Management Plans
185
Tasmania Department of Treasury and Finance (2004): Developing Strategic Asset Management Plans

84 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


8 SERVICE DELIVERY

SECTION OUTLINE

What does service delivery in asset


management means?
Achieving optimal service delivery
outcomes
Asset management life-cycle activities

SECTION OBJECTIVES
Improve the understanding and provide insights
to what does service delivery in asset
management mean

Discuss the benefits of a service-centric


approach

Offer strategies to improve service delivery


outcomes

Provide a framework of business practises to


achieve optimal long-term service delivery Service Delivery
outcomes

Outline activities for the stages of the asset


management life-cycle

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 85


8.1 PURPOSE
The purpose of introducing a new or existing asset is to fulfil the actual demand for a service.
Therefore, asset providers need to ensure that an asset (whether new or existing) does in fact
deliver the required service and fulfil clients needs and expectations.
It is important to note that the scope and understanding of the Service Delivery concept differ
among asset management practitioners. Those actors, representing management and strategic
level often perceive asset as a means to deliver services (service delivery-centric view),
whereas technicians and engineers typically view service delivery as a way to deliver the asset
(asset-centric view). This section and the entire document recognise this distinction. ISAM for
Xperts refers to Service Delivery Strategy as the strategy that an organisation adopts to deliver
its business objectives using organisational resources including finance, people, information
technology as well as building/infrastructure assets to achieve sustainability outcomes and
public good.
The aim of this section is to:
improve the understanding and provide insights to what does service delivery in asset
management mean
discuss the benefits of a service-centric approach
offer strategies to improve service delivery outcomes
provide a framework of business practises to achieve optimal long-term service delivery
outcomes
outline activities for the stages of the asset management life-cycle.

8.2 WHAT DOES SERVICE DELIVERY IN ASSET MANAGEMENT


MEANS?
Service delivery is a transaction aimed at meeting the needs and expectations of users186 and
the asset is a means that facilitates delivery of the service. Kendall distinguishes three important
dimensions of service delivery:187

Intangibility: Although a service is provided in support of an asset, the service itself is


intangible and needs to be experienced.
Simultaneous delivery: A service does not exist before it is delivered. Therefore
providers have to ensure that the asset does in fact deliver the required service. A
service cannot be stored for future use, unlike a physical asset that can be stored and
reused for future service requirements.
Stakeholders participation: Stakeholders are present and often participate in their
own service and can facilitate or impede service delivery. Stakeholders develop
expectations of the service; if the expectations are not met during service delivery the
stakeholder is likely to judge the service as poor and feel dissatisfied.
Poor service delivery outcomes can result in substantial cost to an organisation and can include
rework, extra time spent dealing with improving the service, compensation for poor service and
so on. Accordingly, satisfactory service needs to be provided to ensure that service quality

186
Smith, S. (1998). How to Create a Plan to Deliver Great Customer Service. In R. Zemke and J.A. Woods (eds) Best
Practices in Customer Service. New York: AMACOM
187
Kendall, S.D. (2006). Customer Service Delivery from the Customers Perspective. In L. Fogli (ed) Customer Service
Delivery Research and Practice. San Francisco: John Wiley & Sons, Inc.
86 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS
outcomes are located at least in the zone of tolerance,188 which is the gap between desired
service and adequate service. Once the service falls below the zone of tolerance,
disappointment occurs.
From the strategic asset management perspective, both asset management and service
delivery are interconnected.189 During a Delphi Session, conducted as a part of research
investigating asset management service delivery, all participants jointly agreed that asset
management is not entirely about the asset per se, it is primarily about delivering services. The
physical assets (roads, hospitals, schools or water sewerage) are used as a process to deliver
services to the users and community (health, transport or education). From a user point of view,
an asset helps to meet users' expectations of the service. It should be delivered on its purpose
and to an acceptable level. Asset management is therefore effective when the asset is meeting
service levels and requirements. Nevertheless, although a service is often asset dependent,
there may be multiple ways to deliver services. For instance the asset that needs to deliver
health services can be a hospital, but it also could be a medical centre or home care. There is
normally an expectation for services to be reasonably cost effective and equitable.
Typically organisations aim to achieve the highest service level with minimum cost.190 Thus,
effective service delivery is a balance between meeting customers needs and expectations and
ensuring service quality at affordable prices, as well as meeting shareholder demands for
suitable returns on the capital they invested.191
Furthermore, service delivery is closely linked to, and is dependent on, outcomes from other
ISAM components including Community and Users Needs and Expectations, Service Delivery
Strategic Planning and Section and Service Delivery Tactical and Operational Planning. For
instance, analysis of customers needs and expectations is crucial in achieving desirable service
delivery outcomes (see Section 3 Community and Users Needs and Expectations). Appropriate
planning will ensure that an asset does in fact deliver a required service (see Section 6 Service
Delivery Strategic Planning and Section 7 Service Delivery Tactical and Operational Planning).

8.3 ACHIEVING OPTIMAL SERVICE DELIVERY OUTCOMES


For optimal service delivery it is necessary to establish clear assignment of responsibility and
accountability for each asset and its related operations. This includes the identification of
assets, the capture of information and the assessment of performance against the agreed level
of service.192

Obstacles to optimal service delivery are often related to the human dimension.193 For example,
different levels of power and influence represented by different stakeholders involved in service
delivery, are key obstacles to effective service delivery outcomes. It was revealed that the
power comes not only from government, but also industry, whose collective interest can be
highly influential. Consequently, often it happens that governments deliver a service that
consumers do not want at the expense they are not prepared to pay. Furthermore, recent

188
Zeithaml, V.A., Parasuraman, A., and Berry, L.L. (1993). The Nature and Determinants of Customer Expectations of
Service. Journal of the Academy of Marketing Science. 21. 1-12.
189
Wiewiora, A., Brown, K., Keast, R., and McGeoch, M., (2013). Shifting from Asset Dominant to Service Centric
Delivery Systems: Engaging Users and Communities. IRSPM Conference, Prague
190
Government of Western Australia Department of Local Government. Asset Management Managing Service
Delivery, www.integrateplanning.dlg.wa.gov.au
191
Schneider, J., Gaul, J., Neumann, C., Hografer, J., Wellbow, W., Schwan, M., Schnettler, A., (2006). Asset
management techniques. International journal of electrical power & energy systems, 28 (9), p. 643.
192
Brown, K., Laue, M. Tafur, J., Mahmood M.N., Scherrer, P. and Keast, R. (2012). An Integrated Approach to
Strategic Asset Management. Submitted for Third International Engineering Systems Symposium, CESUN 2012, Delft
University of Technology, 18-20 June 2012
193
Wiewiora, A., Brown, K., Keast, R., and McGeoch, M., (2013). Shifting from Asset Dominant to Service Centric
Delivery Systems: Engaging Users and Communities. IRSPM Conference, Prague

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 87


research found that during the planning stage consultations with the community take the
informative form and are conducted mostly to notify consumers about the decision rather than
being based on collaboration. Generally, a lack of communication between different
stakeholders was highlighted as a common obstacle to effective service delivery outcomes.
Different stakeholders being involved in different stages of the service delivery process were
suggested to cause this problem. Table 8.1 provides a summary listing benefits and obstacles
to effective service delivery and strategies to overcome them. 194
TABLE 8.1: SERVICE DELIVERY IN ASSET MANAGEMENT OBSTACLES AND
STRATEGIES

Benefits of a service-centric Obstacles to effective service Strategies to improve service


approach delivery delivery outcomes
Allows for users needs Competing interests of Ensure early
to be more accurately key stakeholders involvement of citizens
identified (government, in decision-making
contractors, community through providing
Leads to greater
groups, and users) improved
alignment of service
communication
outcomes with needs Asymmetrical levels of
strategies that allow
and expectations, thus power to influence
genuine dialogue rather
more efficient and decisions
than one-directional
economic results
A lack of genuine transfer of information
Provides a holistic way dialogue between
Ensure proactive
to achieve service government and
management of
delivery through stakeholder groups
expectations by
reconfiguring existing
Lack of accountability, providing leadership that
assets or adaptation of
transparency and realistically assesses
non-asset approaches
availability of resources and educates
Allows for increased government the community about the
access to valuable best options
Limited opportunity of
knowledge provided by
some stakeholder In some cases the
users, the community
groups to voice their community cannot
and public
needs envisage the future,
Provides more cost- limiting their involvement
Fragmented and
effective solutions by in co-production; in
dissimilar levels of
considering other non- these circumstances
participation
asset solutions and leadership and a top-
delivering services Siloed decision-making down approach are
through informed across the asset life- needed to achieve
decisions of what is cycle future-oriented public
actually needed Potential misalignment interest
Potential to reduce costs of human capability with Build strong and trusting
caused by rework or the assets function relationships with the
delivery of unwanted or community
unused services
Educate community
better informed
communities will be

194
Wiewiora, A., Brown, K., Keast, R., and McGeoch, M., (2013). Shifting from Asset Dominant to Service Centric
Delivery Systems: Engaging Users and Communities. IRSPM Conference, Prague
88 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS
Benefits of a service-centric Obstacles to effective service Strategies to improve service
approach delivery delivery outcomes
more likely to
understand and accept
delivery decisions
Provide an environment
where community
groups feel they have a
voice creating
opportunities to obtain
valuable input from them
Facilitate better access
to services through the
coordination of the
service around users
and the concept of
wrapped around
services
Create better
understanding about the
service through
modelling and
visualisation
Use modelling and
visualisation to engage
users in the design
stage and increase
access to valuable
knowledge from the
users perspective

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 89


It is imperative for asset and service providers to achieve long-term outcomes in asset
management. It is therefore important to understand the key ingredients to this process.
Recent research showed that optimal long-term service delivery outcomes can be achieved
when businesses focus not only on adding business value and increasing profit, but also
through ensuring public good.195 The matrix, outlined in Figure 8.1, represents business
practices leading to long-term service delivery outcomes achieved through the consideration of
business and public good values. The matrix is dynamic and business practices might
progress from one quadrant to the other. Optimal long-term service delivery will be achieved
when organisations concentrate not only on improving business value, but also investing its
efforts in generating public good value (right top quadrant). Initiatives on the top left quadrant,
although socially or environmentally beneficial, impose costs on businesses and are more likely
one-off or short-lived, typically undertaken by government for public benefit. Initiatives on the
bottom right corner are those that represent the majority of organisations, who are primarily
focused on generating profit and increasing business value while overlooking long-term
implications or public value.
The most optimal quadrant is the one on the top right corner, where public or private businesses
can achieve shared value. Outcomes of shared value include economic benefits (i.e.
employment opportunities, local purchasing, savings in energy consumption), social benefits
(i.e. indigenous employment and development, equity to access assets), and environmental
benefits (i.e. reduced greenhouse gas emission, use of renewable resources, enhanced
biodiversity). These benefits have additional impact on image, reputation and brand strength.

High
Social, environmental and community economic outcomes

DESIRED ZONE
GOVERNMENT ZONE OPTIMAL SERVICE
DELIVERY
Public Good Value

NO GO ZONE CURRENT ZONE

Low
Low High
Business Value
Cost savings, reputation, risk management etc.

FIGURE 8.1: OPTIMAL SERVICE DELIVERY OUTCOMES BASED ON BUSINESS AND


PUBLIC GOOD VALUES
For more details on actions plans and strategies to achieve optimal service delivery outcomes
please refer to Section 2.1.2 Sustainability Management Principles and Strategies, 2.1.3 Asset
Management for Sustainability Outcomes, and 2.1.4 Sustainability Management Action Plans as
well as Section 6.5 Achieving Sustainability Outcomes in Service Delivery.

195
Stapledon, T. (2012). Why Infrastructure Sustainability is Good for your Business. CIEAM: Brisbane
90 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS
8.4 ASSET MANAGEMENT LIFE-CYCLE ACIVITIES
Asset management life-cycle activities generally comprise the acquisition, operation,
maintenance, and disposal of assets. The purpose of this section is to bring attention to the key
activities necessary to be undertaken in the each phase of asset life-cycle. Completion of these
activities is essential to ensure that the service has been delivered in the way it was planned
and to achieve optimum service delivery outcomes.

8.4.1 ACTIVITIES IN THE ASSET ACQUISITION STAGE


There is a range of service delivery activities in the asset acquisition stage. In order to achieve
optimum outcomes in that stage, asset managers need to confirm whether required asset
acquisition activities outlined in the Acquisition Plan were met on time, within budget and to the
right quality. Based on that, asset managers need to monitor and ensure the following:
Have the designated staff been following their responsibilities required to manage the
asset acquisition?
Have the timeframes related to the delivery of individual tasks, and based on the asset
acquisition plan, been met?
Have any of the key decision points made in the acquisition plan changed? If yes, what
were the consequences?
Have the capital outflow amounts and timing established during the acquisition plan
been met?
Have there been any changes to anticipated life-cycle costs?

Have all the activities listed in the acquisition plan been met?
Have identified risks been managed?
Have there been any new risks identified in the acquisition stage?

8.4.2 ACTIVITIES IN THE OPERATIONAL STAGE


To achieve optimum outcomes in the operational stage, asset managers need to ensure
whether required operational activities, outlined in the Operations Plan, were met. Based on
that, asset managers need to monitor:
all costs such as energy and cleaning costs
physical assets security and safeguarding
cost and performance of specialist staff required to operate an asset
any changes to maintenance and disposal costs.

Application of Benchmarking and KPIs, outlined in detail in the next section (Evaluation), may
assist in monitoring whether assets are being operated effectively and efficiently.

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 91


8.4.3 ACTIVITIES IN THE MAINTENANCE STAGE
Effective service delivery in the asset maintenance stage is critical to ensure better service and
asset performance as well as the optimisation of asset life. Accordingly, asset managers need
to control whether the maintenance activities and requirements stated in the asset Maintenance
Plan were met, as well as determine and later monitor any unplanned maintenance activities.
Based on that, asset managers need to ensure the following:
Is there any need for refurbishment or enhancement of the asset?
Are the maintenance standards, outlined in the Maintenance Plan, followed?
Is the asset (or parts of the asset) maintained with the frequency required in the
Maintenance Plan and standards?
Have the designated staff been following their responsibilities required to manage the
asset maintenance?
Have the timeframes of maintenance deliverables been met?
Are the maintenance activities carried out within the planned cost?
Have there been any new risks identified in the maintenance stage?

8.4.4 ACTIVITIES IN THE DISPOSAL STAGE


Finally, asset managers need to ensure optimal service delivery in the disposal stage
Accordingly, asset managers need to:
identify those assets that no longer meet the service delivery needs
monitor any changes to disposal costs
ensure that assets ready to be disposed are not required by other sectors of
government

consider asset disposal options (i.e. sale, trade-in, destruct), based on the disposal plan
identify and engage experts to assist in valuation and disposal
obtain required approvals.

92 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


9 EVALUATION

Evaluation

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 93


Evaluation is the measuring, reporting and reviewing of asset performance against asset
management, organisational and government objectives.196 Evaluation of asset management
performance is essential because it provides the opportunity to assess its effectiveness, identify
best practices and determine areas for improvement. The following information is provided in
relation to the Evaluation function: Asset Performance Measurement, Reporting, Review and
Audit.

9.1 ASSET PERFORMANCE MEASUREMENT


Asset performance identifies and registers all assets required to deliver the stated service and
determines how effectively and efficiently these assets support the service requirements.
In addition to ensuring that an organisations actions, objectives and strategies align, the goal
of a performance measurement system is to communicate and implement strategy197. As a
result, performance measurement systems and frameworks need to reflect efforts to measure
how activities and processes:

contribute separately and jointly to meet asset management and corporate objectives
link operations to strategic goals
ensure a customer focus

drive future activities and needs


enhance performance.198
Performance measurement should provide meaningful measures of activities, processes and
achievements as well as facilitate stakeholder feedback.199 Good performance measurements
can demonstrate results during the time of service, and are relevant, accurate, and feasible 200.
Nevertheless, different types of performance measures will apply to different types of assets.
Accordingly, a number of performance measures exist to assess asset performance:
Financial Performance: used to determine whether an asset is providing economically
viable services. For this, benchmarking can be used to assess whether an assets
operating costs are comparable to the operating costs for similar assets. Costs (such as
energy, cleaning and maintenance) are reviewed to determine whether they are
reasonable. In addition, if user charges are made, how they relate to the assets total
operating costs (e.g. the cost of capital).
Function: How well suited is the asset to the activities and functions it supports?
Utilisation: Consider how often the asset is used and whether productivity could be
increased (e.g. through extending working hours).

196
AAMCoG (2011) Guide to Integrated Strategic Asset Management, Brisbane, Australia
197
Kennerley M, Neely A (2003): Measuring Performance in Changing Business Environment. International Journal of
Operations & Production Management, 23(2), 213-229. In: Hyland P, Ferrer M, Santa R, Bretherton P (2009):
Performance measurement and feedback in a public sector program, In: Soosay C, O'Neill P, Prajogo D (Eds.):
Proceedings of the 7th ANZAM Operations, Supply Chain and Services Management Symposium, 810 June, Adelaide,
Australia
198
Cross K F, Lynch R L: (1989) The Smart Way to Define and Sustain Success. National Productivity Review, 9(1). In:
Hyland P, Ferrer M, Santa R, Bretherton P (2009): Performance measurement and feedback in a public sector program,
In: Soosay C, O'Neill P, Prajogo D (Eds.): Proceedings of the 7th ANZAM Operations, Supply Chain and Services
Management Symposium, 810 June, Adelaide, Australia
199
Hyland P, Ferrer M, Santa R, Bretherton P (2009): Performance measurement and feedback in a public sector
program, In: Soosay C, O'Neill P, Prajogo D (Eds.): Proceedings of the 7th ANZAM Operations, Supply Chain and
Services Management Symposium, 810 June, Adelaide, Australia
200
AAMCoG (2008): Public Sector Asset Performance Measurement and Reporting, Australian Asst Management
Collaborative Group (AAMCoG) and Cooperative Research Centre for Integrated Engineering Asset Management
(CIEAM)
94 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS
Physical Condition: An asset needs to be maintained in a condition that is adequate
for the purpose and complies with the relevant health and safety standards; this will
ensure safe and effective use of the asset and good performance of the asset physical
condition. Examination of the assets physical condition demonstrates whether the asset
is maintained appropriately, whether there are maintenance issues that require
attention, and considers any maintenance plans for the planning period such as major
replacements or refurbishments.

AAMCoG recognises that the public sector considers the continuous inter-relationship between
an assets capacity and utilisation, budget and actual expenditure, possible and actual
condition, and the assets replacement cost and depreciated value as criteria for integrated
performance measurement and benchmarking, where201:

Asset Costs = budget versus actual expenditure.


Asset Utilisation = capacity versus utilisation.
Asset Value = replacement cost versus depreciated value.
Asset Condition = possible condition versus actual condition.202


These factors combined provide the most appropriate asset performance measures, particularly
in a public sector service context. Asset Management Performance is driven by the concept of
service delivery for which there are two performance criteria:
Level of Service (LOS): indicates the extent or degree of service provided by an asset,
based on and related to the assets operational and physical characteristics. LOS
indicates an assets capacity per unit of demand, particularly for public infrastructure
assets.
Standard of Service (SOS): states how an asset will perform, articulated in
measurable terms and includes an appropriate minimum condition grade in line with the
impact of asset failure.

Organisations must be able to measure performance standards over time in order to verify
contractor performance. Performance measures must be developed for each asset included in
the contract. Being more prevalent in public asset-owner agencies, Asset Management
contractors should evaluate the usefulness of traditional asset condition surveys for setting
contract performance standards and to monitor contractor performance over time.203
Monitoring time-critical operational processes are often required to allow decision-makers to
focus their actions in line with the Corporate Strategy204. This reactive performance

201
AAMCoG (2008): Public Sector Asset Performance Measurement and Reporting, Australian Asst Management
Collaborative Group (AAMCoG) and Cooperative Research Centre for Integrated Engineering Asset Management
(CIEAM)
202
Australian Procurement and Construction Council (2001): Asset Management 2001
203
AAMCoG (2008): Public Sector Asset Performance Measurement and Reporting, Australian Asst Management
Collaborative Group (AAMCoG) and Cooperative Research Centre for Integrated Engineering Asset Management
(CIEAM)
204
Golfarelli M, Rizzi S, Cella J (2004): Beyond data warehousing: What's next in business intelligence? Proceedings of
7th International Workshop on Data Warehousing and OLAP (DOLAP 2004). 2004. Washington DC. In: Masayna V,
Koronios A, Gao J, Gendron M (2007): Data Quality and KPIs: A link to be Established, In: The 2nd World Congress on
Engineering Asset Management (EAM) and The 4th International Conference on Condition Monitoring Proceedings,
Harrogate, United Kingdom, 11-14 June

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 95


measurement component is often supported by a computer-based information system.
According to Masayna, Koronios, Gao and Gendron205 these systems exist to:

help monitor and control specific activities


predict future internal and external states
monitor states and behaviours relative to corporate objectives
support decision-making within required time frames
alter the organisations overall orientation and/or behaviour.
Asset managers can use the following steps, adopted from the Victorian Government and
AAMCoG206,207 to evaluate an assets financial performance, its function, utilisation, and its
physical condition:

FINANCIAL PERFORMANCE
Monitor and assess operating expenses and current and projected cash flows, including
capital expenditures.
Determine the current and projected economic return of the asset.
Use Discounted Cash Flow analysis to provide a measure of the Net Present Value and
the internal rate of return for assets.

FUNCTION
How effective is the asset in supporting service delivery?
Determine the role that the asset plays in achieving service delivery outcomes.

Determine the functional characteristics of the asset required to support the specified
activities.

SUSTAINABILITY PERFORMANCE
Are the sustainability principles considered during every stage of asset
management life-cycle to achieve sustainability outcomes?
Determine the impact current assets play on environment and societal wellbeing.

Was the impact effectively mitigated?


Was the EMP appropriately implemented and executed?
Were all necessary measures identified and implemented to guarantee sustainable
asset construction, operation, maintenance and disposal of assets, taking into account
environment protection and society?

205
Masayna V, Koronios A, Gao J, Gendron M (2007): Data Quality and KPIs: A link to be Established, In: The 2nd
World Congress on Engineering Asset Management (EAM) and The 4th International Conference on Condition
Monitoring Proceedings, Harrogate, United Kingdom, 11-14 June
206
Victorian Government (1995), Asset Management Series, Department of Treasury and Finance, Victoria
Government, Australia.
207
AAMCoG (2008): Public Sector Asset Performance Measurement and Reporting, Australian Asst Management
Collaborative Group (AAMCoG) and Cooperative Research Centre for Integrated Engineering Asset Management
(CIEAM)
96 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS
UTILISATION
How intensively is an asset being used to meet the entity's service delivery
objectives?
Consider how often the asset is used and whether productivity could be increased.
Identify which assets are under-utilised.
Determine the reasons why these assets are under-utilised (consider possible physical
constraints, technological obsolescence and management constraints).
The utilisation of each asset should be reviewed annually.

ASSET PHYSICAL CONDITION


Is the condition of the asset adequate for the purpose and comply with the
relevant health and safety standards?
Set the condition of the asset relative to its service delivery requirements.
Too high unnecessary expenditure on maintenance or refurbishment.
Too low deterioration or loss of value through under-expenditure.
Inspect the asset and compare its actual condition with that required.
Forecast the future condition of the asset.

9.1.1 KEY PERFORMANCE INDICATORS


Many asset owner organisations now adopt KPIs to measure performance, identifying what the
organisation sets out to achieve in terms of service levels and sets KPIs for those services.
Recording and analysing KPIs significantly contributes to achieving Corporate and Asset
Management Objectives. In essence, KPIs identify how well services are provided, and how
much time is taken to address and correct performance gaps between intended and actual
performance. As defined by AAMCoG, Key Performance Indicators are those critical
performance measures which ultimately determine asset serviceability and stakeholder value208
and can be:
process-based (e.g. statutory compliance)
activity-based (e.g. dollars spent)
outcome-based (e.g. goals achieved, service success).

KPIs indicators can be Leading and Lagging. Leading indicators are the proactive measures
that help to motivate the right behaviour. The important feature of leading indicators is that they
can help to improve a process. Many indicators used in organisations are lagging and rather
reactive, only reporting on the result, instead of improving the process. KPIs are particularly
useful when they link to policy concerns or outcomes. KPIs fall into a number of categories,209
such as:

Quantitative: the amount of a product or service.


Qualitative: structured perceptions or structured feedback.

208
AAMCoG (2008): Public Sector Asset Performance Measurement and Reporting, Australian Asst Management
Collaborative Group (AAMCoG) and Cooperative Research Centre for Integrated Engineering Asset Management
(CIEAM)
209
Vial D, Prior M (2003): Use of Key Performance Indicators in the Planning and Management of Public Open Space.
Proceedings of PLA Conference, Perth. In: Masayna V, Koronios A, Gao J, Gendron M (2007): Data Quality and KPIs:
A link to be Established, In: The 2nd World Congress on Engineering Asset Management (EAM) and The 4th
International Conference on Condition Monitoring Proceedings, Harrogate, United Kingdom, 11-14 June

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 97


Cost efficiency: the unit cost of achieving a specified amount of service.
Cost effectiveness: the unit cost of achieving a specified amount of service to a
designated level of quality.
Timeliness/responsiveness: the time taken to perform a service, or the number of
transactions or products within a time cycle.
Work team productivity: the output of a workforce unit or group.


Developing KPIs can be complex; however, a number of steps and considerations can be
identified:210/211

Defining KPIs (brainstorm and define KPIs, identify production process, develop a data
collection plan). In particular KPIs should:
motivate the right behaviour

be measurable
be affordable
be attainable
ensure that factors affecting the indicator must be controllable
be meaningful to all the parties.
Monitoring and analysing KPI compliance and data.

Improve components.
Refine KPIs.
For further information on how to develop KPIs suitable to your organisation please refer to
AAMCoG (2008): Public Sector Asset Performance Measurement and Reporting, Australian
Asst Management Collaborative Group (AAMCoG) and the Cooperative Research Centre for
Integrated Engineering Asset Management (CIEAM).

9.2 DEPRECIATION
Depreciation is an allocation process for matching book expenditure to revenue generation and
provides a process to determine an appropriate charge for providing a service. Depreciation is
used to recognise the cost of consuming the assets service potential over time, and provides a
way of accounting an assets cost over its useful life. Recognising depreciation charges is
necessary for asset valuation and service costing. Depreciation is also used to allocate
resources and assess asset performance. In general, depreciation is not normally funded and
does not provide cash in replacement of an asset.
There are a number of ways to calculate depreciation:
Arithmetical methods for example the straight-line or reducing balance techniques.
Other methods aim to reflect the assets actual condition or capacity as realised over
time, for example the production unit method, or condition-based depreciation.

211
Masayna V, Koronios A, Gao J, Gendron M (2007): Data Quality and KPIs: A link to be Established, In: The 2nd
World Congress on Engineering Asset Management (EAM) and The 4th International Conference on Condition
Monitoring Proceedings, Harrogate, United Kingdom, 11-14 June
98 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS
Ideally the chosen method will match the pattern of service potential yielded by the asset as
closely as possible, realistically reflecting the cost of providing the services by using the asset.
Reviewed annually, depreciation rates should be adjusted to reflect the most recent
assessments of the assets useful life as needed.212

9.3 MANAGEMENT REPORTING


Reports can be distinguished in Progress Reports and Benefit Reports.

9.3.1 PROGRESS REPORTS


Regular Progress Reports should be provided to senior agency decision-makers, Ministers and
Cabinet, covering:
important milestones, including whether delivery is proceeding on time and meeting
budget
whether project start-up was achieved in line with the endorsed costs and schedule
any serious emerging problems that are likely to affect service benefits articulated in the
business case, and for which support for potential responses may be needed (such as
additional maintenance to address unexpectedly high usage rates, or negative
variations in the performance of contractors).213

9.3.2 BENEFIT REPORTS


Benefit reports inform future decision-making, strategic asset investment planning, business
case development, and Asset Management214 and are required as part of an agencys senior
decision-makers Asset Management responsibilities. The Benefit Report should be provided at
appropriate intervals throughout a major assets life-cycle and should:

clearly state the extent to which value for money from the asset is being achieved
compared to the predicted results
highlight any lessons learned to be later incorporated into planning for similar assets, or
in business cases relating to the asset later in its life (e.g. to clarify whether an asset
should be refurbished or should be subject to disposal).
After disposal, senior decision-makers should be advised on the total value for money and
service delivery benefits gained from the investment.

212
Victoria Department of Treasury and Finance (1995): The Asset Management Series Part 2: Policies and
Practices
213
Western Australia Department of Treasury and Finance (2010): Strategic Asset Management Framework High-
Level Policy
214
Western Australia Department of Treasury and Finance (2010): Strategic Asset Management Framework High-
Level Policy

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 99


9.3.3 FINANCIAL REPORTING
Financial reporting (also referred to as close the books) is the process of reconciling,
consolidating and generating financial reports/statements periodically to meet regulatory
requirements and the information needs of internal and external stakeholders. 215/216
According to the Australian National Audit Office, 217 financial reporting activity can include:
ensuring validity and consistency in the organisations charts of accounts
completing journal entries
consolidating data from outlying business units
running trial balances
correcting errors
reconciling and analysing accounts
calculating taxes

preparing and distributing reports


supervising closing tasks and reviewing key accounts and reports.

Australian Government entities must comply with AASB Standards (Australian Accounting
Standards Board) in relation to financial reporting:
AASB 5 Non-current assets held for sale and discontinued operations

AASB13 Fair Value Measurement


AASB 102 Inventories
AASB 116 Property, Plant and Equipment

AASB136 Impairment
AASB 138 Intangible Assets218

9.4 REVIEW
As outlined by the Queensland Department of Environment and Resource Management,
Reviews allow organisations to adopt a strategic view of:219

performance in relation to service levels, operation, maintenance and renewals


future demands/flows and other factors impacting on its future service levels and
standards
whether the strategies, actions and financial projections are optimal.
There are two categories of reviews: Post Implementation Review or Post Completion Review.

215
Australian National Audit Office (2002): Benchmarking the Finance Function Follow-on Report Benchmarking
Study
216
Department for Victorian Communities (2006): Guidelines for Measuring and Reporting the condition of Road Assets
217
Australian National Audit Office (2002): Benchmarking the Finance Function Follow-on Report Benchmarking
Study
218
Australian National Audit Office (2010): Better Practice Guide on the Strategic and Operational Management of
Assets by Public Sector Entities Delivering agreed outcomes through an efficient and optimal asset base
219
Queensland Department of Environment and Resource Management (2010): Guidelines for the Review and Regular
Audit of Strategic Asset Management Plans
100 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS
9.4.1 A POST IMPLEMENTATION REVIEW (PIR)
This review assesses how well the project outcomes aligned with the actual needs the project
aimed to meet. This comprehensive feedback mechanism indicates how well the agency
communicated the project outcomes through the project brief and how well outcomes were
achieved. PIR essentially answers Did the Agency get what it needed?

9.4.2 A POST COMPLETION REVIEW (PCR)


The PCR is a method of systematically and rigorously comparing actual project performance
with the original project objectives. It aims to identify potential improvement opportunities in
relation to future project conception, design development and implementation, essentially
answering Did the Agency get what it asked for? PCR should present a feedback loop to
incorporate lessons learned into the early and the pre-acquisition phases of an asset lifecycle.
Often asset management is principally thought of commencing after the asset is handed over
and operating. However, maintenance is often the result of what has been planned. Therefore
the more focus is placed on planning, the more positive impact there is on maintenance and
operations.
As discussed below, PCRs can focus on a number of areas.

ECONOMIC REVIEW
The economic review evaluates whether the project met its economic or service predictions
(critical to the development of predictive tools).

BRIEF COMPLIANCE REVIEW


This component considers whether the completed project complied with its original brief. It also
assesses whether the completed project met end user requirements. This component is
particularly useful in explaining cause and effect relationships and helps decision-makers to
make quality decisions in the future.

PROCUREMENT/DELIVERY PROCESS REVIEW


This strand evaluates the effectiveness of the process used to deliver the project by assessing
the time and resources used, the level of variations and disputes, and whether time and cost
targets were met. It can include benchmarking against accepted norms, or against other similar
projects. This type of review focuses on project manager concerns such as cost, time, decision-
making and communication.

ASSET PERFORMANCE REVIEW


This component generally uses data collection techniques such as questionnaires, observation,
walk-throughs and interviews, and typically concentrates on user feedback in relation to project
performance. Areas include physical planning issues, durability issues, ease of use and end-
user opinions.

TECHNICAL REVIEW
Technical reviews are generally undertaken when there is a perception of consistent
deficiencies or major technical change and are normally conducted by specialist teams.
Technical reviews can cover procurement and operational issues, good and bad practice, and
engineering services.

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 101


As outlined by the NSW Treasury, Post Implementation and Post Completion reviews follow a
generic problem-solving strategy:220

define review objective and structure


undertake background research
allocate resources and determine evaluation framework
collect field data
analyse and compare data
identify major issues/findings

link findings to feedback mechanism.



Reviews are normally carried out internally by the service provider; however, external
consultants may be employed. Regardless of whether the review is carried out internally or by
an external contractor, key service provider personnel, such as field staff, must be involved in
the review process. Reviews should be seen as a precursor to regular audits.221

9.5 AUDIT
An audit is a systematic, independent and documented process for obtaining evidence and
evaluating it objectively to determine the extent to which the audit criteria, the standards and
obligations in a service provider's policies, procedures or requirements, have been fulfilled.222
Audits form part of the regulatory framework, verifying that service provider information is
accurate and reliable. Audits also provide evidence to customers and stakeholders that services
comply with regulatory requirements. In addition to benefiting the agency, audits also benefit
service providers, identifying improvement opportunities and providing incentives to achieve
compliance.
The auditing process relies on a number of key principles to ensure that relevant and
appropriate conclusions are reached. They also enable independent auditors to reach similar
conclusions in similar circumstances. These principles ensure audits provide effective and
reliable support to management policies and controls, by providing information on which an
organisation can assess and act upon to improve service performance.
The audit framework comprises five key processes:
establishing the audit scope and methodology
nominating, approving and appointing the auditor
conducting the audit
assessing and reporting on compliance
responding to the audits.223

220
New South Wales Treasury (2004): Post Implementation Review Guideline
221
Queensland Department of Environment and Resource Management (2010): Guidelines for the Review and Regular
Audit of Strategic Asset Management Plans
222
New South Wales Treasury (2004): Post Implementation Review Guideline
223
Queensland Department of Environment and Resource Management (2010): Guidelines for the Review and Regular
Audit of Strategic Asset Management Plans
102 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS
10 KNOWLEDGE MANAGEMENT

SECTION OUTLINE

Purpose
Data, Information and Knowledge
Asset Data Management
Information Management
Asset Register
Relational Knowledge Management
Barriers to Knowledge Management
Knowledge Management Action Plan
Case Study

Knowledge Management
SECTION OBJECTIVES

To provide insightful understanding of data,


information and knowledge for asset management
and approaches used
To offer valuable insights related to the development
and maintenance of asset information repositories
To outline barriers to effective knowledge
management
To provide suggestions to improve sharing,
integration and creation of asset-related knowledge
through the application of codification and
personalisation approaches

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 103


10.1 PURPOSE
Knowledge management is a systemic and organisationally specified process for acquiring,
organising, and communicating both tacit and explicit knowledge so that others can use that
knowledge to become more effective and productive. 224,225 There are a range of benefits related
to effective knowledge management practices:226
Effectiveness Better access to expertise and past learning experiences can lead to
improved decision-making.

Responsiveness An integrated knowledge of customers' preferences and needs


can improve an organisational responses.

Efficiency The re-use and transfer of knowledge related to users and community
needs and insights enhance the productivity of knowledge workers.

Flexibility Knowledge enables organisations to be more flexible and responsive to


rapid changes in the market as a result of better insights on customers and
competitors trends.

Innovation Knowledge assists in the successful designing of new products, services


and processes faster and with greater effectiveness.

Unlike the majority of existing asset management guidelines, this section goes beyond
discussing asset information management and also focuses on improving relational knowledge
management practices related to the development of tacit knowledge. Tacit knowledge refers to
personal ideas, experiences and insights, it is highly embedded and difficult to formalise, but it
constitutes a great value for the organisation, leading the organisation to achieve innovations
and continuous improvement. 227 Thus far, a relational view of knowledge management has
received insufficient attention in asset management field.

In essence, this section focuses on knowledge management practices which, if effectively


implemented, can assist in improving asset management practices on tactical, operational and
strategic levels. In particular this section:

Provides insightful understanding of data, information and knowledge for asset


management and approaches used
Offers valuable insights related to the development and maintenance of asset
information repositories
Provides suggestions to improve sharing, integration and creation of knowledge for
improved asset management decision-making

224
Alavi, M., & Leidner, D. (2001). Review: Knowledge management and knowledge management systems: Conceptual
foundations and research issues. MIS Quarterly, 25(1), 107-136.
225
Love, P., Fong, P., & Irani, Z. (2005). Management of Knowledge in Project Environments. Oxford:
Elsevier/Butterworth-Heinemann.
226
Leng & Shepherdson (2000, p. n.p.) in: James P (2005): Knowledge asset management the strategic
management and knowledge management nexus, DBA thesis, Southern Cross University, Lismore, NSW
227
Johannessen, J. A., Olaisen, J., & Olsen, B. (2001). Mismanagement of tacit knowledge: the importance of tacit
knowledge, the danger of information technology, and what to do about it. International journal of information
management, 21(1), 3-20.
104 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS
10.2 DATA, INFORMATION AND KNOWLEDGE
Knowledge is a multifaceted concept with multilayered meanings,228 it represents a fluid mix of
framed experience, values, contextual information, and expert insight that provides a framework
for evaluating and incorporating new experiences and information.229 Knowledge originates in
the minds of knowledge holders and can be transferred into documents, organisational routines,
processes, practices, and norms. It is necessary to distinguish knowledge from data and
information. In asset management these terms are sometimes used interchangeably; however,
their scopes differ significantly.
Data are a set of discrete, objective facts about events. There is no meaning in data. Data
provides no judgement or interpretation or basis of action.230 Information is a message, usually
in the form of a document or an audible or visible communication. It has a sender and a
receiver, and moves around organisations through hard and soft networks. Unlike data,
information has a meaning. Data becomes information when its creator adds meaning, for
example by contextualising, condensing, or categorising it. Once the information is used and
becomes actionable, it is transformed into knowledge.231
In asset management all three data, information and knowledge are necessary. At several
stages of the asset life-cycle, information is required on the condition of the assets. Knowing
what to measure, how to measure it, and what to do with the information becomes very
important. Often information must be maintained for many years in order to identify long-term
trends.232 There is a range of asset information systems available that allow the capture of and
access to data related to asset performance, asset location, monitoring of asset condition, as
well as to record work activities related to an asset, and forecast asset demand. These systems
provide access to different types of information captured in documents, drawings, photographs
of the asset, asset attributes (e.g. make, model, serial number, age, capacity) subjective
information about the asset (e.g. asset performance, condition, serviceability assessments) and
so on.233 The ultimate purpose for collecting data and information is to make decisions. This can
be done only by making meaning out of data and information and translating it into knowledge
that combines experience, values, information in context, and insight, thus forming a basis for
decision-making.234
Subsequent sections discuss two equally important approaches to effective knowledge
management for asset management: codification and personalisation. Codification involves the
application of data and information management systems, suited to capture, store and transfer
explicit knowledge that is easily codified and categorised. 235 These systems now cover a range
of Asset Management areas such as asset registration; process scheduling and control;
materials, maintenance, risk, reliability, and safety management; and condition monitoring. 236

228 Nonaka, I. (1994). A Dynamic Theory of Organizational Knowledge Creation. Organization Science, 5(1).
229 Davenport, T. H., & Prusak, L. (1998). Working Knowledge Harvard Business School Press.
230 Davenport, T. H., & Prusak, L. (1998). Working Knowledge Harvard Business School Press.
231 Davenport, T. H., & Prusak, L. (1998). Working Knowledge Harvard Business School Press.
232
Koronios, A., Lin, S., & Gao, J. (2005). A data quality model for asset management in engineering organisations.
Paper presented at the Conference on Information Quality, Cambridge, MA, USA.
233 The Institute of Asset Management. (2011). Asset Management an anatomy. Bristol, UK: The Institute of Asset

Management.
234 The Institute of Asset Management. (2011). Asset Management an anatomy. Bristol, UK: The Institute of Asset

Management.
235 Arif M, Egbu C, Alom O and Khalfan MM (2009) Measuring knowledge retention: a case study of a construction

consultancy in the UAE. Engineering, Construction and Architectural Management 16(1), 92-108.
236
Mathew A D, Ma L, Hargreaves D J (2008): Understanding data management in Asset Management: A survey. In
Gao J, Lee J, Ni J, Ma L, Mathew J: Proceedings World Congress for Engineering Asset Management, pages pp. 1096-
1107, Beijing, China

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 105


Personalization approaches are typically used to integrate and share tacit knowledge, which
requires multifaceted and interpersonal approaches. 237 Some examples of personalization
approaches include face-to-face interactions, team meetings and on-the-job training. Existing
technological solutions are designed to promote interpersonal interaction and collaborative
practices and have capability for more embedded, tacit knowledge sharing and integration. 238
These applications, including Web 2.0 solutions comprise social networking, blogs, virtual
communities of practice, and wikis form a network effect built from users contributions, where
users are the co-developers of the content. 239

CODIFICATION A KNOWLEDGE MANAGEMENT APPROACH THAT INVOLVES THE APPLICATION OF DATA


AND INFORMATION SYSTEMS TO CODIFY, CATEGORIZE AND TRANSFER ASSET EXPLICIT KNOWLEDGE,
INFORMATION AND DATA.

PERSONALISATION A KNOWLEDGE MANAGEMENT APPROACH USED TO SHARE AND INTEGRATE TACIT


KNOWLEDGE, CREATE NEW KNOWLEDGE, AND ASSIST IN ASSET MANAGEMENT DECISION-MAKING.
INVOLVE PERSONAL INTERACTION OR USE OF COLLABORATIVE TECHNOLOGICAL SOLUTIONS.

10.3 ASSET DATA MANAGEMENT


Asset Data Management concerns the capture, management and utilisation (data acquisition,
data analysis and information use) of asset data. The resulting translated data is essential to
improve asset reliability, safety, availability, utilisation and an increased return on investment.
Asset data is underpinned by the two aspects of its type and of its desired outcome. There are
four key types of data that organisations often acquire (Table 10.1).

237
Goh SC (2002) Managing effective knowledge transfer: An integrative framework and some practice implications.
Journal of Knowledge Management 6(1), 23-30.
238
Murphy GD and Salomone S (2013) Using social media to facilitate knowledge transfer in complex engineering
environments: a primer for educators. European Journal of Engineering Education 38(1), 70-84.
239
O'Reilly T (2007) What is Web 2.0: Design patterns and business models for the next generation of software.
Communications & strategies(March), 16-37.
106 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS
TABLE 10.1: ASSET MANAGEMENT DATA TYPES

Typically originates from Original


Equipment Manufacturer (OEM)-
Each data type can
related asset data potentially relate to a
Informed by periodic enhancements number of generic
CONFIGURATION and upgrades outcomes including:
DATA
Hazard assessments requiring Regulatory compliance:
configuration changes In many instances the
consequences of physical
Used to provide benchmark
asset failure dictate a
comparisons with condition data level of regulatory
compliance for most
Used to confirm compliance with
engineering assets.
regulatory requirements
Used to ascertain asset health Time-based Asset
CONDITION Management: Refers to
May identify the need for reactive institutionalised, reactive
DATA
(unplanned) maintenance or planned maintenance
Can be used for the trending of asset where data collected is
health only used to maintain the
current condition of the
Used to identify appropriate actions to asset.
reinstate the asset back to its ideal
state/operational state (component Condition-based Asset
focus) Management: This Asset
Management outcome
Used to identify appropriate long-term largely relates to
EVENT AND strategies to prevent future asset maintenance regimes
INCIDENT DATA failures of this type (system focus) such as Condition Based
Maintenance (CBM) that
Used to inform predictive asset health
rely on sophisticated
systems
predictive modelling to
Used to improve future design determine maintenance
enhancements schedules.

Used to accurately determine Asset Capability


Management requirements development: Refers to
the use of data to
Used for scheduling, workforce
improve the design,
planning and material management
development and
PROCESS DATA
Used to revise work instruction and manufacture of future
safety hazard documentation physical assets or
ancillary processes
Used to drive business process (maintenance routines,
improvements safety procedures).
Used to capture tacit knowledge
Source: Murphy G D, Chang A (2009): A capability maturity model for data acquisition and utilisation. In: Proceedings of
the International Conference of Maintenance Societies, 1-4 June 2009, Sydney

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 107


The degree to which equilibrium can be achieved in terms of desired data management
outcomes, asset performance and optimum levels of investment can be seen in the Data
Management Maturity Model (Figure 10.1). For further information see Murphy G D, Chang A
(2009): A capability maturity model for data acquisition and utilisation. In: Proceedings of the
International Conference of Maintenance Societies, 1-4 June 2009, Sydney. 240

FIGURE 10.1: DATA MANAGEMENT MATURITY MODEL241

10.4 INFORMATION MANAGEMENT


Asset Management information systems can be defined as a combination of processes, data,
software, and hardware, applied to provide the essential outputs for effective Asset
Management, such as, reduced risk and optimum infrastructure investment242. According to
INGENIUM,243 an Asset Management information system may provide connectivity to other
corporate information systems or databases and support a subset of engineering Asset
Management processes/functions, as identified by the International Infrastructure Management
Manual:
Asset Register Management
Asset Hierarchy Management
Asset Accounting
Asset Life-cycle Costing
Environmental Monitoring
Social Monitoring
Contract Management
Resource Management

240
Murphy G D, Chang A (2009): A capability maturity model for data acquisition and utilisation, In: Proceeding of the
International Conference of Maintenance Societies, 1-4 June 2009, Sydney
241
Murphy G D, Chang A (2009): A capability maturity model for data acquisition and utilisation, In: Proceeding of the
International Conference of Maintenance Societies, 1-4 June 2009, Sydney
242
INGENIUM (2006): International Infrastructure Management Manual, Association of Local Government Engineering
NZ Inc, Institute of Public Works Engineering Australia, New Zealand. In: Baskarada S (2009): Information Quality
Management Capability Maturity Model, Vieweg+Teubner Research
243
INGENIUM (2006): International Infrastructure Management Manual, Association of Local Government Engineering
NZ Inc, Institute of Public Works Engineering Australia, New Zealand. In: Baskarada S (2009): Information Quality
Management Capability Maturity Model, Vieweg+Teubner Research
108 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS
Inventory Control
Condition Monitoring
Performance Monitoring
Predictive Modelling
Risk Management
Optimised Decision-making

Different sorts of asset data and information can be often found in different information systems
and databases, geographical data can be found in corporate repositories, whereas maintenance
data and reports are often stored in separate technical databases. Schneider et al. calls for a
need for integrated IT systems and decision-making tools to execute the task of asset
management244. Isolated, independent systems when integrated into the Asset Management
system are likely to provide continuous data on the physical and financial asset conditions.245
Examples of such systems as identified by Cato and Mobley246 and Baskarada247 are provided in
Table 10.2.

TABLE 10.2: INTEGRATED INFORMATION TECHNOLOGY SYSTEMS

SYSTEM USE

Computer Aided Design (CAD) CAD systems are mainly used in the design stage of the
systems asset life-cycle.

Supervisory Control And Data SCADA systems are typically used to perform data
Acquisition (SCADA) systems collection and control at the supervisory level. They are
placed on top of a real-time control system to control a
process that is external to the SCADA system.

Geographic Information GIS may provide for better management and


Systems (GIS) visualisation of special asset information. It involves a
software system, which provides a means of spatially
viewing, searching, manipulating, and analysing an
electronic database.

Computerised Maintenance A CMMS provides functionality that is normally grouped


Management Systems (CMMS) into subsystems or modules (along with relevant
databases and/or files for the storage, manipulation, and
retrieval of information), which may include asset
records maintenance, asset bills of materials
maintenance, inventory control, work order
management, preventive maintenance plan
development and scheduling, human resources
management, purchasing and receiving, invoice
matching and accounts payable, reporting, and so on.

244
Schneider, J., Gaul, J., Neumann, C., Hografer, J., Wellbow, W., Schwan, M., Schnettler, A., (2006). Asset
management techniques. International journal of electrical power & energy systems, 28 (9), p. 643.
245
Amadi-Echendu J, Willett R J, Brown K A, Lee J, Mathew J, Vyas N, Yang, B-S (2007): What is Engineering Asset
Management?, In: Proceedings 2nd World Congress on Engineering Asset Management and the 4th International
Conference on Condition Monitoring, pages pp. 116-129, Harrogate, United Kingdom
246
Cato W W, Mobley R K (2002): Computer-Managed Maintenance Systems, Elsevier Inc. In: Baskarada S (2009):
Information Quality Management Capability Maturity Model, Vieweg+Teubner Research
247
Baskarada S (2009): Information Quality Management Capability Maturity Model, Vieweg+Teubner Research

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 109


10.5 ASSET REGISTER
Asset Registers house information relating to various aspects of an asset portfolio, allowing it to
be cross-referenced and retrieved as needed. Assets that have service potential and/or the
capacity to provide economic benefits through their use in service delivery should be recorded
in an Asset Register. Asset Registers come in many forms and can be electronic (e.g.
computer) or paper-based (e.g. card file). Data can relate to one or more categories including:
service delivery functions
physical properties
technical data
financial information (e.g. asset valuation and expenditure)
property title details
key operational data
maintenance data

performance records.
Asset Registers should be integrated into the agencys management information system. While
agencies have different needs a consistent approach can be adopted.
A four-staged process for the development of Asset Registers identified by the NSW Treasury248
is outlined in Table 10.3.
TABLE 10.3: STEPS FOR THE DEVELOPMENT OF ASSET REGISTER
STEP ACTIVITIES
Conduct a needs analysis Identify information needs

Identify system needs


Prioritise needs
Plan the system Review the system development options
Review data collection requirements
Choose options
Plan the asset register Choose the register model
Establish assets hierarchy
Establish information hierarchy
Implement the register Prepare action plan
Establish data management procedures
Prepare business case
Implement plan

248
New South Wales Treasury (2004): Asset Information Guideline
110 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS
10.5.1 ASSET REGISTER MAINTENANCE
Asset Registers should be updated on an ongoing basis. Asset changes are generally either
caused or identified by operational activities. The point of time of change or discovery is the
best time to identify this information and update the Asset Register. Based on the Asset
Register and on the results of the Demand Management process, a Gap Analysis can show
discrepancies between the agencys existing and required asset availability and reliability
(capacity and performance), utilisation and functionality, safety and sustainability, and value for
money.

10.5.2 THESAURUS
A records classification tool (thesaurus) can assist asset managers to maintain the integrity of
information on assets. The thesaurus links an agencys business activities to the records it
creates. According to the National Archives of Australia, classifying business activities can allow
agencies to:

link records relating to the same activity or purpose


be consistent in titling records
develop a systematic framework for the creation, management (including storage and
security protection) and disposal of records
enhance records retrieval
describe Australian Government online resources and services.
The Australian Governments Interactive Functions Thesaurus (AGIFT) is an example of a
records classification tool, describing the business functions carried out across Australian
federal, state and local governments. AGIFT contains 25 high-level functions and each function
has second- and third-level terms, non-preferred terms and related terms. The range of
activities covered by each preferred term and any relevant cross-references are provided by
way of a scope note.249

A well designed and detailed agency-based functional thesaurus, congruent with the AGIFT,
ensures information is available across space and time. For further information see
http://www.naa.gov.au

10.6 RELATIONAL KNOWLEDGE MANAGEMENT


Thus far, existing solutions to managing knowledge for asset management focus primarily on
codification approaches that apply databases and information systems to capture asset
information. These systems provide quality and timely data for decision-makers, contributing
primarily to management of explicit knowledge, but overlook the importance of tacit knowledge.
The lack of personalisation approaches for managing tacit knowledge means that knowledge
management for asset management is only fragmentary.
Although technology-driven asset information repositories play a central role in the capture of
asset data and information such as incident data and data on asset condition and monitoring, it
is the relational capital promoted by personalisation approaches that have a strong potential to
share and integrate tacit knowledge, underpinning the capacity to develop new ways of thinking
and creative responses necessary to improve asset management decision-making.

Personalisation approaches involve the use of collaborative technological solutions or providing


environment for personal interaction to facilitate sharing, integration and creation of knowledge.

249
http://www.naa.gov.au

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 111


Accordingly, personalisation can now be achieved through the use of sophisticated
technological solutions like Web 2.0 that provide alternatives to more static knowledge
repositories. These technologies can be used for collaboration250 and solving cognitive
problems.251 They can improve visibility and quality of knowledge252 and have a capacity to share
and integrate knowledge across a diverse range of experts, enabling large-scale creation of
distributed communities of practice, and providing a single point to raise opinions and ideas
used to improve decision-making.253 Having the ability to generate concepts and thoughts these
technologies are able to innovate and expand asset-related knowledge. One example of Web
2.0 applications is a wiki. Wikis enable users to edit the content of entries, allowing them to
freely create and organically grow web page content around a specific knowledge domain a
process sometimes referred to as dynamic authoring. Users can track the longitudinal changes
to a document creating a high degree of accountability and transparency.254 With wikis, text can
be revised with little effort; users are free to change, add or even delete content. Most wikis
have a revision-control feature that saves a history file allowing users to track all the revisions
made. Users who want to improve a wiki text have to connect new content to what already
exists. This procedure helps to reorganise and reconceptualise content and may lead to
improved problem solving and knowledge building in an organisation.255

Another approach to personalisation relates to creating an environment for personal interaction.


Research indicates that people prefer to turn to other people rather than documents for
information.256,257 This can be achieved through building social networks and creating space and
time for informal meetings, coffee breaks and workshops. Organisations can endorse the
development of social networks by promoting frequent interaction, openness, informality and
collaboration, this in turn improves trusting relationships and leads to a greater willingness to
share knowledge. Furthermore, building a collaborative environment has a potential to increase
cross-functional sharing of asset-related knowledge, including insights about asset pitfalls or
failures, without a risk of knowledge hoarding. Incorporating an integrated relational approach
into existing data and information management systems will facilitate access to both tacit and
explicit knowledge and assist in leveraging existing social and organisational relationships, thus
will fully utilise organisational capabilities including skills, expertise and knowledge leading to
effective knowledge management outcomes.

250
Alavi M, Kayworth T and Leidner D (2006) An empirical examination of the influence of organizational culture on
knowledge management practices. Journal of Management Information Systems 22(3), 191-224.
251
Kimmerle J, Cress U and Held C (2010) The interplay between individual and collective knowledge: technologies for
organisational learning and knowledge building. Knowledge management research & practice 8(1), 33-44.
252
Wiewiora, A. and Murphy, G. (In press). Unpacking lessons learned: investigating failures and considering
alternative solutions. Journal of Knowledge Management & Practice.
253
Chui M, Miller A and Roberts RP (2009) Six ways to make Web 2.0 work. The McKinsey Quarterly(February 2009),
1-7.
254
Murphy GD. (2010). Using Web 2.0 tools to facilitate knowledge transfer in complex organisational environments a
primer. Paper presented at the ICOMS Asset Management Conference: Maintenance and Beyond, Adelaide.
255
Kimmerle J, Cress U and Held C (2010) The interplay between individual and collective knowledge: technologies for
organisational learning and knowledge building. Knowledge management research & practice 8(1), 33-44.
256
Mintzberg, H. (1973). The nature of managerial work: Harper & Row.
257
Newell, S., Goussevskaia, A., Swan, J., Bresnen, M., & Obembe, A. (2008). Interdependencies in Complex Project
Ecologies: The Case of Biomedical Innovation. Long Range Planning, 41(1), 33-54.
112 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS
10.7 BARRIERS TO KNOWLEDGE MANAGEMENT
Effective management of asset knowledge can benefit all stakeholders; however, there are
barriers that exist in relation to knowledge management.258 Table 10.4 lists a range of barriers to
knowledge management and proposes a number of counter strategies available to negate their
effect.259
TABLE 10.4: BARRIERS AND STRATEGIES TO KNOWLEDGE MANAGEMENT

BARRIERS TO KNOWLEDGE STRATEGIES TO IMPROVE KNOWLEDGE


MANAGEMENT MANAGEMENT

No articulation of a compelling Education and communication


reason why knowledge should be
Facilitation and support
managed
Participation and consultation
The existence of a culture of
hoarding Trust-building and team enabling
activities
Functional segregation
Induction programs
not invented here syndrome
Job rotation
Past success
Establishing a climate of continuous
Natural conservatism
learning
Red tape and bureaucracy
A shared vision and strategy
Lack of standards and poor
Adaptive approach to
taxonomies
implementation
Different, unfamiliar systems
Incentives for knowledge sharing
Uncertainty and job insecurity
An open culture and getting rid of
Uncertainty and ambiguity red tape
Concern over personal loss Partnering and alliances
A highly competitive internal Supporting technology and
organisational climate organisational infrastructures
Reward systems that encourage Experience of knowledge
individual performance management access best
practices
Changes that will result in a
redistribution of power High quality, capable staff
Senior management commitment

Time
Source: James P (2005): Knowledge asset management the strategic management and knowledge management
nexus, DBA thesis, Southern Cross University, Lismore, NSW

258
Hackett 2001; Leonard-Barton 1998; Robbins et al. 2000; Sveiby 2001 in: James P (2005): Knowledge asset
management the strategic management and knowledge management nexus, DBA thesis, Southern Cross University,
Lismore, NSW
259
Dilnutt 2000; Robbins et al. 2000; Sveiby 2001 in: James P (2005): Knowledge asset management the strategic
management and knowledge management nexus, DBA thesis, Southern Cross University, Lismore, NSW

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 113


10.8 KNOWLEDGE MANAGEMENT ACTION PLAN
The use of both codification and personalisation approaches to knowledge management have the
potential to bring desired outcomes for improved asset management decision-making. Relying
solely on one approach may not be sufficient. Technology approaches provide access to explicit
knowledge, but overlook the importance of tacit knowledge acquisition, sharing and application.
Whereas relying only on relational approaches mean that opportunities can be lost because no one
is accounted to capture them, revisit and follow up on them.260 Table 10.5 provides a range of
practical implications for asset managers and for agencies that aim to improve knowledge
management endeavours taking into account both approaches: relational and technology. 261/ 262

TABLE 10.5: HOW TO ACHIEVE IMPROVED KNOWLEDGE MANAGEMENT PRACTICES

STRATEGIES TO PRACTICAL IMPLICATIONS


IMPROVE
KNOWLEDGE
MANAGEMENT

Establishing a Building open, knowledge-oriented asset management culture that


climate of promotes continuous learning often requires a cultural change.
continuous
To do so your organisation needs to be aware of and evaluate its
learning
dominant culture characteristics. This will uncover knowledge
An open culture sharing patterns specific for a given culture type.
and getting rid of
Application of Denison and Spreitzer, Denison263 or Cameron and
red tape
Quinn264 Frameworks may be useful in determining the dominant
culture. Based on that, an action plan can be undertaken to
introduce values promoting open, knowledge-oriented asset
management culture. (For further details please refer to the next
Section titled Organisational Management, Subsection: Asset
Management Culture)

Communication, A supportive and participative leadership style will promote


participation and knowledge sharing and creation endeavours.
consultation
Support from leaders can endorse feelings of belongingness,
enhance the collaborative climate and help staff recognise they
are not competing amongst themselves, but are part of a team
who, by sharing knowledge, will build its knowledge capabilities
and gain a competitive position in the market.

Promoting active leadership engagement could potentially


improve knowledge management endeavours by encouraging the
use of collaborative tools for knowledge sharing and ensuring
transparency of asset management norms and practices.

260Cooper, L. P. (2003). A research agenda to reduce risk in new product development through knowledge management: a
practitioner perspective. Journal of Engineering and Technology Management, 20(1), 117-140.
261 Wiewiora, A. (2012). The Role of Organisational Culture, Trust and Mechanisms in Inter-Project Knowledge Sharing.
PhD thesis, Queensland University of Technology, Brisbane, QLD, Australia
262
Wiewiora, A. and Murphy, G. (In press). Unpacking lessons learned: investigating failures and considering alternative
solutions. Journal of Knowledge Management & Practice.
263
Denison, D. R., & Spreitzer, G. M. (1991). Organizational culture and organizational development: A competing values
approach. Research in organizational change and development, 5(1), 1-21.
264
Cameron, K. S., & Quinn, R. E. (2005). Diagnosing and changing organizational culture: Based on the competing values
framework (Revised ed.). San Francisco, USA: Jossey-Bass Inc Pub.
114 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS
Trust-building and In order to enhance conditions for trust building, managers may
team enabling consider:
activities reviewing organisational norms and practices that encourage or
discourage the high frequency of interaction and collaboration
supporting and recognising knowledge sharing and creation
initiatives
endorsing and maintaining a friendly and non-competitive
atmosphere at work
creating an atmosphere for learning not blaming
ensuring the visibility of other peoples skills and competencies;
this will bring the awareness of who knows what
ensuring confidence in the measures evaluating people skills and
expertise.
High quality, Where possible, facilitate face-to-face interactions by designing
capable staff open plan offices or creating designated areas where staff can
meet and exchange valuable tips and experience
Senior Designing comprehensive induction programs and mentoring and
management training sessions will facilitate access to asset management-
commitment related knowledge

Induction programs
Education

Supporting Introduce an easily accessible, intelligible and user-friendly


technology technological solution to capture asset data, information, and
allow collective sharing and creation of knowledge
Whenever possible and applicable, incorporate an asset register
and asset data management databases into the system to ensure
greater useability, one point of reference and transparency of data
Develop a clear action plan for capturing, documenting and
reusing asset data
Catalogue asset data and information according to themes
Enhance the system by supporting technologies, such as
hyperlinks, tags, bookmarks and RSS to allow for improved
discoverability
Introduce ownership a coordinator accountable for quality
control, content maintenance, implementation, structuring links to
the content and adding value
Use the system as a tool for decision-making and knowledge
creation, encourage users to co-develop the content, but assign a
coordinator to provide control to ensure the quality of the entry
Ensure user-friendly use and interface
Encourage use of the tool and creating understanding about its
value and applicability through building appropriate culture and
leadership support

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 115


Findings from recent studies reveal that knowledge stored in databases or PDF documents is hard
to retrieve and employees are often reluctant to search through overloaded spreadsheets that
contain a large amount of historical data which is hard to deal with.265 For knowledge to be utilised
and shared there needs to be a platform to ensure greater quality and visibility of knowledge.
Based on the findings from recent studies Table 10.6 provides a platform for developing a dynamic
online knowledge storage tool for improved knowledge sharing and use. 266
TABLE 10.6: STEPS TO ACHIEVE UPDATED AND DYNAMIC KNOWLEDGE STORAGE AND
SHARING PLATFORM

CONTENT AND MAINTENANCE OF ENTRIES


require ownership require moderate
UPDATED AND DYNAMIC TOOL FOR IMPROVED KNOWLEDGE SHARING AND USE

and quality ownership,


control control and FREE ENTRIES
maintenance
Tacit and explicit
Explicit knowledge Tacit knowledge
knowledge
Static info LESSONS Space for
LEARNED collaboration and
Links to
knowledge
processes Valuable links
exchange
DESIGN
Technical
User friendly (for exampleinformation
have search capability with indexing for a more
intuitive way of finding knowledge)

Intelligible (clear, easy to use and understand)


C h i (i l d ll t f k l d d dt d

ORGANISATIONAL CULTURE

Cultural norms and


practices supporting the use
of online knowledge storage
ENVIRONMENT

LEADERSHIP ENGAGEMENT

Active support and


engagement from top
management to use online

OWNERSHIP

A person responsible for


updating and maintaining
entries (e.g. Project
Management Office

265
Wiewiora A and Murphy G (In press) Unpacking lessons learned: investigating failures and considering alternative
solutions. Journal of Knowledge Management & Practice.
266
Wiewiora A and Murphy G (In press) Unpacking lessons learned: investigating failures and considering alternative
solutions. Journal of Knowledge Management & Practice.

116 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


10.9 CASE STUDY
CASE STUDY
Evaluating knowledge management practices in asset intensive
organisations

Knowledge management practices within two anonymous asset intensive organisations referred
here as ENGAS and ROMIN were investigated. In particular, research focused on investigating
processes of capturing, sharing and disseminating project knowledge within and across project
teams of these two organisations.

ENGAS is a large project-based organization in the heavy engineering and building sector.
ROMIN delivers technology solutions to the mining industry focusing on innovation, development
and commercialisation. Both companies delivered large infrastructure projects with budgets up to
AU$ 3mil and up to 3 years of project duration.

Findings from these two cases revealed that although a range of different knowledge sharing
mechanisms were available for project team members, including relational mechanisms (face-to-
face formal and informal meetings), project management tools and processes (lessons learned
repositories, project management office), and a range of technology mechanisms (such as e-
mails, wikis, intranet, teleconferencing, software registry and shared-drives); it was apparent that
project staff primarily shared knowledge through face-to-face interaction and little use was made
of the project documentation stored in databases.

Respondents commented they have little time and motivation to search for knowledge in
databases, which were captured and stored in a way that was not conducive to sharing and
difficult to search through and leverage for future projects. Overall, it was apparent that although
both organisations have processes in place to ensure knowledge is captured throughout the
project, there were no adequate mechanisms implemented to encourage searching through
databases and past project documents for knowledge. Databases were often outdated and there
was no person assigned to and responsible for updating those documents, implementing
changes, and following up.

Instead verbal knowledge exchange was preferable. Respondents reported they prefer face-to-
face interaction because it provides instant feedback, while documenting and searching for
knowledge in databases was reported to be time consuming. Findings further indicated that
project knowledge often requires context, otherwise it cannot be easily understood and applied.
While face-to-face mechanisms allow for introducing greater amount of context into the
conversation, the non-verbal means lack this ability. It was also apparent that face-to-face is not
always possible or recommended (for instance in a case of geographically dispersed projects, or
where knowledge needs to be documented for future use or audit).

Recommendations, based on the findings from both cases, suggest creating a knowledge friendly
environment in the workplace and implementation of collaborative mechanisms, such as wiki that
have the capability to share both tacit and explicit knowledge and can improve knowledge sharing
between geographically dispersed projects and teams.
Some practical implications have been drawn to improve greater knowledge sharing and use, they
include:
introducing an easily accessible, intelligible and user-friendly knowledge storage space
introducing ownership a person accountable for cataloguing knowledge according to
themes, and following up
capturing and keeping knowledge and project lessons in one place
developing a clear action plan for capturing, documenting and sharing knowledge
throughout the project.

Case Study provided by Anna Wiewiora representing findings of a larger study on inter-project
knowledge sharing in asset intensive organisations, also reported in: Wiewiora A. (2012). The Role of
Organisational Culture, Trust and Mechanisms in Inter-Project Knowledge Sharing. (PhD Thesis),
Queensland University of Technology, Brisbane, Australia.

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 117


11 ORGANISATIONAL MANAGEMENT

SECTION OUTLINE

Purpose
Leadership
Change Management
Organisational Competencies and Skills
Asset Management Culture

Organisational Management

118 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


11.1 PURPOSE
Organisational management involves support for Strategic Asset Management through effective
leadership, communication and motivation. It may also involve shaping and auditing
organisational competencies and skills, adopting change management strategies, and
promoting an asset management culture to ensure optimal asset management outcomes.267 The
key purpose for asset management is to optimise the delivery and performance of physical
assets.268 This section guides asset managers in achieving optimised asset management
outcomes through effective organisational management.

11.2 LEADERSHIP
Leadership involves supervising activities, giving orders and motivating subordinates in a way
that meets the corporate objectives. Leadership is therefore the ability to influence others to
contribute towards the effectiveness and success of the groups of which they are members269
and to work towards the achievement of common goals.270 In the asset management sphere,
effective leadership involves motivating employees to align their individual goals with
organisational and asset management objectives.
Among a range of leadership styles, one that relates to motivation is transactional versus
transformational leadership style. Transactional leadership style is a contractual or exchange
process between leaders and subordinates. As such transactional leaders provide rewards in
exchange for followers performance.271 In such an arrangement there seems to be no concerted
effort to change followers personal values, or to develop a deep sense of trust and commitment
between leaders and subordinates.
Transformational leadership, on the other hand, focuses on transforming the values and
priorities of subordinates, whereby the leader motivates them to perform better beyond their
expectations.272 The transformational leader uses enthusiasm and energy to influence
subordinates and sets challenging expectations to achieve higher performances. As compared
to transactional leadership, a transformational leader places more emphasis on the process to
create employees involvement, places emphasis on building trust and commitment, thus having
a stronger influence on motivation than transactional leaders.273

Existing research highlights advantages of transformational over transactional leadership style


and suggests the transformational style is preferable in achieving organisational
effectiveness.274,275 Transformational leadership can be learned and it can be increased through
training. Bass recommends introducing practical training based on the Xerox strategy to modify
management style.276 In this training both subordinates and leaders complete a parallel
questionnaire about the leadership styles used by the leader. They rate employee satisfaction,
motivation, and perception on organisational effectiveness. The discrepancies between how

267
AAMCoG (2011) Guide to Integrated Strategic Asset Management, Brisbane, Australia
268
The Institute of Asset Management. (2008a). Asset Management Competency Requirements Framework. Part 1.
London: The Institute of Asset Management.
269
House, R.J., Hanges, P.J., Javidan, M., Dorfman, P.W., & Gupta, V. (2004). Culture, leadership, and organizations:
The GLOBE study of 62 societies. Thousand Oaks: Sage Publications.
270
Yukl, G. (1994). Leadership in organizations. New Jersey: Prentice Hall.
271
Bass, B.M. (1985). Leadership and performance beyond expectations. New York: Free press.
272
Yukl, G. (1994). Leadership in organizations. New Jersey: Prentice Hall.
273
Kappen, F (2010). How leadership-styles contribute to employees intrinsic and extrinsic motivation. Bachelor Thesis
Organization and Strategy. Tilburg University
274
Bass, B.M., Avolio, B.J. 1994. Improving Organizational Effectiveness through Transformational Leadership.
California: Sage Publications Inc.
275
Zellman, M. The Advantages of Transformational Leadership Style. http://smallbusiness.chron.com/advantages-
transformational-leadership-style-18809.html
276
Bass, B.M. (1985). Leadership and performance beyond expectations. New York: Free press.

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 119


leaders rate themselves and how their employees rate them are examined and later evaluated
during a discussion facilitated by a counsellor.277

Despite the ability to motivate subordinates, leaders in asset management have a range of day-
to-day activities and challenges including:
how to optimally achieve a number of often conflicting goals

meeting the needs of various communities/stakeholders


addressing sustainability and other social and environmental issues
managing risk
innovation
planning and managing the asset management processes in a way that benefits key
stakeholders

being conscious of globalisation issues


understanding the impact of technological development and how it affects society (e.g.
wealth creation and business).
Apart from those professional and methodical challenges, leaders need to possess personal
and social competences, which may include:
internal motivation
a continuous improvement ethos
superior communication skills 278
creative problem-solving skills

social judgement skills 279

HOW TO
Development of leadership skills is progressive, moving from simple knowledge structures and
straightforward technical and social skills, to more complex integrated knowledge structures that
support creative problem-solving and systems skills.280 Asset managers can advance their
leadership skills through:

1. Mentoring by experienced senior leaders.


2. Well-timed leadership training courses.
3. Job assignments that provide exposure to novel and challenging problems.

4. Hands-on experience in solving related problems.


5. Through social interactions with peers.281
The development of leadership skills will be more effective if it is supported by the organisation.

277
Bass, BM (1990). From transactional to transformational leadership: Learning to share the vision. Organizational
dynamics, 18 (3), 19-31
278
Viljoen J, Dann S (2000): Strategic Management: planning and implementing successful corporate strategies, 3.
Edition, Pearson Education Australia
279
Mumford, M. D., Marks, M. A., Connelly, M. S., Zaccaro, S. J., & Reiter-Palmon, R. (2000). Development of
leadership skills: Experience and timing. The Leadership Quarterly, 11(1), 87-114.
280
Mumford, M. D., Zaccaro, S. J., Harding, F. D., Jacobs, T. O., & Fleishman, E. A. (2000). Leadership skills for a
changing world: Solving complex social problems. The Leadership Quarterly, 11(1), 11-35.
281
Mumford, M. D., Marks, M. A., Connelly, M. S., Zaccaro, S. J., & Reiter-Palmon, R. (2000). Development of
leadership skills: Experience and timing. The Leadership Quarterly, 11(1), 87-114.
120 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS
11.3 CHANGE MANAGEMENT
Change management is the process of continually renewing an organizations direction,
structure, and capabilities to serve the ever-changing needs of external and internal
customers.282 Changes in the organisation may include change of product, its design, change of
organisational culture, structure, processes, technology and so on. Change management is a
process that aims to stop the current state or to make the necessary modifications to the current
situation or behaviour and/or introduce new behaviour. Lewin proposed that a successful
change project involves three steps: (1) unfreezing the present level, (2) moving to the new
level and (3) refreezing this new level.283 The change process has to be smooth, planned and
conducted in a systematic fashion. It has to be quick and have as minimal as possible impact on
the function of the organisation.284 This is because organisations cannot constantly change and
people need routine to be effective.285
First, the need for change needs to be identified and the decision to proceed taken, this should
then be communicated to the rest of the organisation before the change management process
commences. Existing research advocates that the best approach to change management is
through planning the change.286 Planned change management involves systematically scanning
the environment and determining ways in which an organisation must adapt or change. Planned
change involves the following stages287:
setting goals and defining the desired future state

diagnosing the present condition in relation to these goals defining the transitional
activities and commitments needed to achieve the desired future state
developing strategies and an action plan to manage the transition and reach the desired
future state.
The pace of change is increasing in the current environment and affects all organisations in all
industries.288 There are also different scales of change; Dunphy and Stace distinguished four:
fine-tuning, incremental adjustment, modular transformation, and corporate transformation.289
Fine-tuning is usually done at a departmental or divisional level of the organisation and involves
an ongoing process to match the organisations strategy, processes, people and structure.
Incremental adjustment is characterised by more distinct modifications to management
processes and organisational strategies. Modular transformation involves major changes to one
or several departments or divisions. Corporate transformation is characterised by radical
alterations in the business strategy and can include reorganisation, revision of interaction
patterns, reformed organisational mission and core values.290,291

282 Moran, J. W. and Brightman, B. K. (2001) Leading organizational change, Career Development International,6(2),

pp. 111118.
283 Lewin 1952 in Eldrod II, P. D. and Tippett, D. D. (2002) The death valley of change, Journal of Organizational

Change Management, 15(3), pp. 273291.


284 Role of Change Management in an Organization. http://www.management-hub.com/change-management.html
285
Luecke, R. (2003) Managing Change and Transition. Boston, MA: Harvard Business School Press
286
Todnem, R. (2005). Organisational change management: A critical review, Journal of Change Management, 5(4),
369-380
287
Adapted from Beckhard R (1969): Organization Development Strategies and Models. Reading, Massachusetts.
Addison-Wesley Publishing Company. In: Osborne S P, Brown K (2005): Managing Change and Innovation in Public
Service Organizations, Routledge
288 Burnes, B. (2004) Managing Change: A Strategic Approach to Organisational Dynamics, 4th edn Harlow: Prentice

Hall
289 Dunphy, D. and Stace, D. (1993) The strategic management of corporate change, Human Relations, 46(8), pp.

905918.
290 Senior, B. (2002) Organisational Change, 2nd ed. (London: Prentice Hall).
291
Todnem, R. (2005). Organisational change management: A critical review, Journal of Change Management, 5(4),
369-380

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 121


Burnes and Todnem argue that successful change is dependent not only on detailed plans and
projections, but also on the readiness and facilitating for change.292,293 Osborne and Brown294
identified six key barriers to change:
top-down or laissez-faire senior management style
unclear strategy and conflicting priorities

an ineffective senior management team


poor vertical communication
poor coordination across function, businesses or borders
inadequate down-the-line leadership skills and development.

HOW TO
To develop effective change strategies, organisations must set clear corporate objectives, adopt
appropriate communication strategies and linkages across the organisation and ensure high-
quality leadership and management. According to CIEAMs Engage Through Change Project
Report 295 there are nine critical steps to effective change management. Table 11.1 guides asset
managers through those steps.
TABLE 11.1: STEPS IN THE CHANGE MANAGEMENT PROCESS

CRITICAL STEPS PURPOSE STEPS


TO CHANGE
MANAGEMENT
1. Identify the Identify inadequacies of Review relevant legislation
problem the existing system or Review codes of practice
process Review national and international
standards
Get familiar with already established
systems (how they work in relation to
your system or process)
Refer to experienced staff
Talk to peers
2. Create the vision Staff engagement Facilitate a focus group or online
feedback to engage staff in providing
alternative ideas
For the focus group, provide the
workshop facilitator
Acknowledge contribution (i.e. inform
on the change progress and what
was decided)

292 Burnes, B. (1996) No such thing as . . . a one best way to manage organizational change, Management Decision,

34(10), pp. 1118.


293 Todnem, R. (2005). Organisational change management: A critical review, Journal of Change Management, 5(4),

369-380
294
Osborne S P, Brown K (2005): Managing Change and Innovation in Public Service Organizations, Routledge
295
CIEAM (2010) Engage Through Change Project Report
122 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS
CRITICAL STEPS PURPOSE STEPS
TO CHANGE
MANAGEMENT
3. Use change Plan the change process Conduct a gap analysis* to identify
management necessary improvements
methodologies Plan the change, identify:
Inputs required to conduct the
change
Expected outputs
Process to achieve this
Implement the plan
Monitor the change against the plan
4. Use project Ensure completion of the Follow project management
management change process on principles to ensure completion of the
methodologies budget and in time change process
following a planned and Identify each activity
systematic approach Sequence the activities
Estimate time and resource required
Develop milestones for the change
process completion
Monitor change process
5. 5. Consult and Engage specialists Consult with experts, senior
network management, line management
thought staff meetings, e-mails, face-
to-face interactions
Network with best performers,
industry leaders, organisations with
similar issues
6. Maintain the Keep stakeholders Keep stakeholders connected
interest connected and engaged through e-mails, meetings and
workshops, newsletters and booklets
7. Excite the Creative communication Promote participation within the
senses of outcomes change and ensure that all
stakeholders understand the change
process
Use different delivery media,
engaging presentations, charts,
pictures
8. Celebrate the Acknowledge Inform about the outcomes
success contribution Provide incentives, provide
opportunities to network,
Offer free lunch/coffee

9. Monitor and Review the actual Use review methods, such as


review change How successful feedback from clients/users to
was it? monitor whether the change was
successful
296
*Gap analysis is a technique that allows you to move from a current state to a desired future state. It consists of three
steps (1) stating the current situation (what is the current state?), (2) listing factors required to achieve future objectives
(what it should be?), (3) determining the gaps between the current and the desired state (what should be done?).

296
http://www.businessdictionary.com/definition/gap-analysis.html

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 123


11.4 ORGANISATIONAL COMPETENCIES AND SKILLS
Competence refers to the knowledge and skills a person possesses or is required to possess in
order to perform a work activity in an occupational category or function to the standard expected
in employment.297 Competencies can be based on knowledge and skills as well as personal
qualities such as integrity, openness and honesty that influence performance at work.298 An
organisation needs to constantly audit their current skill sets to identify gaps and the resources
required. McGeoch, Brunetto and Brown highlight the importance of asset management-related
training to ensure qualified personnel, which is clear on their role and accountable for their
performance.299
Hyland, Murphy and Salomone outlined three primary skill domains relevant to asset managers:
(1) Information Management; (2) Business Management; and (3) Engineering Management.300
Research conducted by Hyland et al. also found that Asset Managers need to have
multidisciplinary knowledge and expertise to perform their job effectively, with the most
desirable capabilities being: sectoral knowledge, communication skills, business skills (strategic
planning, project management, risk management, sustainability and budgetary skills) and
tertiary qualifications (around engineering domains). Table 11.2 suggests how to acquire some
of those necessary skills. It is important to note that active organisational support is vital to
ensure more effective skill-building outcomes.
TABLE 11.2: SKILLS DEVELOPMENT
SKILLS REQUIRED WAYS TO ACQUIRE THESE SKILLS
Engineering University courses
Strategic management
Mentoring by experienced senior leaders
Financial
Sustainability Knowledge sharing with peers
Hands-on experience
Meeting attendance and participation
Keep up-to-date with current technological and
environmental issues through newspapers, news
and bulletins)

Project management skills Internal or external project management courses


Mentoring by experienced senior leaders
Knowledge sharing with peers
Hands-on experience

Social competencies (i.e. Internal or external leadership training courses


influence, motivate,
communicate effectively) Social interactions with peers
Mentoring by experienced senior leaders
Reflection on what works good what does not

297
Engineers Australia. (2003). Australian Engineering Competency Standards: General Introduction and Stage 2
Competency Standards for Professional Engineers, Engineering Technologists, Engineering Associates. Barton, ACT.
298
Spencer, L. M., Jr., PHD, & Spencer, S., M. (1993). Competence at Work: Models for Superior Performance. New
York: John Wiley & Sons, Inc.
299
McGeoch, M., Brunetto, Y. and Brown, K. Current Issues In Strategic Asset Management, World Congress on
Engineering Asset Management (WCAEM), Cincinnati, USA
300
Hyland, P., Murphy, G., & Salomone, S. (2009). Final Report Asset Management Skills and Competencies:
Queensland University of Technology.
124 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS
11.5 ASSET MANAGEMENT CULTURE
Organisational culture is the shared ideas, customs, assumptions, expectations, traditions,
values and understandings that determine the way employees will behave.301 Schein
distinguished three fundamental levels within which organisational culture exists: observable
artefacts, values and basic underlying assumptions.302 The artefacts can include physical layout,
the dress code, the manner in which people address each other and the overall feel of the
place, to the more permanent such as archival records, products, statements and annual
reports. Values are organisational norms, ideologies, charters and philosophies. Basic
underlying assumptions are based on an organisations historical events that determine
perceptions, thought processes, feelings and behaviour.
Organisational culture has tremendous relevance for asset management. Brunetto and Xerri
highlight the importance of asset management-oriented culture stating that when an
organisation supports and recognises asset management initiatives as a way of achieving
organisational goals, the long life, efficiency and sustainability outcomes are more likely to
result.303 Building asset management-oriented organisational culture may involve training
employees to identify and communicate asset management requirements and to ensure that the
organisation rewards, recognises and motivates all levels of management to support asset
management activities.304
Nevertheless, as pointed out by Murphy, the presence of numerous sub-groups in an asset
management environment, including engineers in various disciplines (e.g. mechanical,
electrical, civil), trades people, and management staff can potentially lead to the formation of
different sub-cultures (Murphy labels this with a term tribalism)..305 Murphy later states that
although operating in a cohesive group can be advantageous, is likely to favour emotional well-
being, higher morale, social support, and can result in greater occupational competence as
fellow workers learn from each other, the presence of group cohesion may also result in inter-
group conflict or information silos, thus causing difficulties with exchange of information with
other groups. The presence of silos and the existence of many cultural profiles among
personnel engaged in asset management activities are widespread, which makes building asset
management culture a challenge. 306,307
Murphy conducted a study investigating essential elements of a best practice engineering
asset culture.308 Findings indicated that no one single cultural profile was shared by the asset
manager professionals, rather, three distinct but inter-related cultural profiles existed relating to:
safety
strategic and business focus
quality and continuous improvement.

301
Osborne S P, Brown K (2005): Managing Change and Innovation in Public Service Organizations, Routledge
302 Schein, E. H. (1990). Organizational culture. American Psychologist, 45(2), 109-119.
303
Brunetto and Xerri (2001) Ensuring the Implementation of Engineering Asset Management: Understanding
Organizational Culture, WCAEM 2011 Cincinnati, USA
304
Brunetto and Xerri (2001) Ensuring the Implementation of Engineering Asset Management: Understanding
Organizational Culture, WCAEM 2011 Cincinnati, USA
305
Murphy GD, (2010) Testing a tri-partite contingent model of engineering cultures: A pilot study, Reliability
Engineering and System Safety p1040-1049
306
Murphy, GD. (2010) Testing a tri-partite contingent model of engineering cultures : a pilot study. Reliability
Engineering & System Safety, 95(10), pp. 1040-1049.
307
Murphy GD, (2010) Testing a tri-partite contingent model of engineering cultures: A pilot study, Reliability
Engineering and System Safety p1040-1049
308
Murphy, GD. (2010) Testing a tri-partite contingent model of engineering cultures : a pilot study. Reliability
Engineering & System Safety, 95(10), pp. 1040-1049.

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 125


The main finding from this study indicates that an ideal engineering asset culture is likely to be
a hybrid of cultures incorporating a number of characteristics relating to safety, performance
and quality. Furthermore, Murphy found that different industry sectors place greater emphasis
on each of the three cultural profiles.309 For example, industries such as manufacturing and
power generation placed a greater emphasis on quality and commercial-orientation cultural
characteristics, suggesting that while commonalities across industries may exist, business
strategy and industry type may determine the degree of emphasis placed on any one of the
three cultural profiles. The study indicated that while engineering contexts may have
commonalities in their cultural requirements, contextual influences may result in a different
emphasis on critical elements depending on the nature of the organisation, strategic goals and
broader industry classification.310 Figure 11.1 plots the three profiles over the key functional
outcomes of engineering asset management, being asset safety, utilisation, cost effectiveness
and availability/reliability:

Asset Availability/Reliability

Asset Asset
Utilisation Safety

Asset Cost Effectiveness

FIGURE 11.1: ENGINEERING ASSET CULTURES AND ENGINEERING ASSET PRIORITIES

This diagram illustrates that organisations in high risk/high consequence industries (e.g. nuclear
plants, petro-chemical facilities) with a greater emphasis on asset safety will place greater value
on cultural characteristics relating to safety. Conversely, organisations with increased
commercial demands and lower risk assets (e.g. manufacturing, telecommunications) are likely
to place a greater emphasis on cultural characteristics consistent with a commercial and/or
quality focus. It was recognised, however, that priorities might shift around a core set of
cultural values universal across engineering asset contexts.
In this multicultural environment it is a challenge for an asset manager to create a cohesive
culture with shared values among staff and stakeholders involved in asset management
activities. Nevertheless there are some strategies which help to overcome the negative effects

309
Murphy, Glen D. (2010) Testing a tri-partite contingent model of engineering cultures : a pilot study. Reliability
Engineering & System Safety, 95(10), pp. 1040-1049.
310
Murphy G, Hill J (2008): Safety, reliability or performance? High performing engineering asset cultures. Paper
presented at ICOMS 2008 Asset Management Conference, Fremantle, Australia, 26-30 May. In: Murphy, G. D. (2008):
Best Practice Engineering Asset Cultures: A Pilot Study, In: Jinji, Goa and Lee, Jay and Ni, Jun and Ma, Lin and
Mathew, Joseph, Eds.: Proceedings 3rd World Congress on Engineering Asset Management and Intelligent
Maintenance Systems Conference (WCEAM-IMS 2008): Engineering Asset Management A Foundation for
Sustainable Development, pages pp. 1186-1198, Beijing, China
126 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS
of high level of cohesion proposed by Murphy: (1) breaking down the dominant tribe, (2) diluting
the influence of the tribe, and (3) leveraging the benefits of the tribe.311

Furthermore, Murphy identified 22 attitudinal- and value-based elements considered by


participants as having a positive contribution to the management of engineering asset intensive
organisations.312 Among the 22 elements, six were the most prevalent:

openness to change
contentiousness
technical skill
communication
co-operation
interpersonal skills.313


An asset intensive organisation possessing those cultural values is more likely to succeed in
asset management endeavours. Therefore, asset managers with top management support
should endorse the development of those values. Nevertheless, complex, embedded and
established over time, organisational culture means that cultural change does not occur
immediately, instead it involves a lengthy process and application of culture change strategies.

HOW TO
There is a range of different strategies and frameworks that can be used (i.e. Denison and
Spreitzer314 or Cameron and Quinn315). If your organisation seeks to assess or change
organisational culture CIEAM and AAMCoG members can assist in that process. For more
information about the assistance to diagnose culture in your organisation please contact:
enquiries@cieam.com

311
Murphy, Glen D. (2009) Building bridges and solving Rubiks Cubes : tribalism in engineering and technical
environments. In ICOMS Asset Management Conference, 1-4 June 2009, Masonic Centre, Sydney, New South Wales.
312
Murphy, Glen D. (2010) Testing a tri-partite contingent model of engineering cultures : a pilot study. Reliability
Engineering & System Safety, 95(10), pp. 1040-1049.
313
Murphy, G. D. (2008): Best Practice Engineering Asset Cultures: A Pilot Study, In: Jinji, Goa and Lee, Jay and Ni,
Jun and Ma, Lin and Mathew, Joseph, Eds.: Proceedings 3rd World Congress on Engineering Asset Management and
Intelligent Maintenance Systems Conference (WCEAM-IMS 2008): Engineering Asset Management A Foundation for
Sustainable Development, pages pp. 1186-1198, Beijing, China
314
Denison, D. R., & Spreitzer, G. M. (1991). Organizational culture and organizational development: A competing
values approach. Research in organizational change and development, 5(1), 1-21.
315
Cameron, K. S., & Quinn, R. E. (2005). Diagnosing and changing organizational culture: Based on the competing
values framework (Revised ed.). San Francisco, USA: Jossey-Bass Inc Pub.

INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS | 127


11.6 CASE STUDY

CASE STUDY:
Competing values within asset management organisations in Australia

Understanding the current environment in asset management organisations is imperative


because all groups are considered to evolve as cultural entities over time, that is, culture
affects the way things get done in the organisation, creating shared expectations about how
things are to be done.

The current organisational environment within asset management organisations was examined
using the organisational culture assessment index (OCAI) developed by Cameron and Quinn
(1999).

Three groups of employees within asset management organisations across Australia


participated in the study: asset managers, asset management engineers, and asset
management maintenance employees. In particular, participants were asked to consider the
culture within their employing organisation and its adaptation to change.

The results from this investigation of 255 asset managers and technical employees
(maintenance and engineers) indicated that the three groups clearly have competing values.
The managers perceive organisations as coherent and cohesive and as marked by high levels
of commitment and loyalty. They typically believe that the organisation looks after all
employees and that this is reciprocated. In asset management organisations many managers
are qualified professional engineers and this provides a link to the operating professional
engineers as the professional status is maintained despite their different managerial roles. The
professional engineers perceive themselves as the repository of professional expertise and the
source of relevant technical knowledge for the organisation. Their professional status and
values may impede open and frank discussion with technical and management staff perhaps
owing to a lack of communication and management skills as suggested in the literature.
Engineers in asset management organisations are also indirectly oriented towards the same
values as managers, primarily because of their professional link. On the other hand,
maintenance/technical employees perceive that the asset organisational culture is quite
strongly hierarchical, which suggests that open and frank discussion is not easily achieved
between engineers and maintenance groups.

Given that organisational culture plays an important role for enhancing organisational
performance, which has been strongly suggested in previous research (Cameron and Quinn,
2011) the challenge for asset management organisations resulting from this clash of
subcultures is to discover ways for engineers and maintenance/technical staff to develop
participative and collaborative work environments, where the contribution of all team members
are valued and all are committed to shared goals and outcomes.

Internal robust organisational communication is central to the successful implementation of an


organisational change initiative. However, more strategies to achieve collaborative work
environments between maintenance, management and engineering staff are yet to be
developed.

References:
Cameron, K. S., & Quinn, R. E. (1999). Diagnosing and changing organizational culture: Based on the competing
values framework. Reading, MA: Addison-Wesley.
Cameron and Quinn (2011). Cameron, K. S., & Quinn, R. E. (2011). Diagnosing and changing organizational culture:
Based on the competing values framework. San Francisco, CA: Jossey-Bass.

Case Study provided by Matt Xierri representing findings of a larger study on organisational culture in
asset intensive organisations, also reported in: Brunetto, Y., Xerri, M., & Nelson, S. (2012, 8-10 October).
Examining organizational culture within professional engineering asset management firms: the competing
values framework. 7th World Congress of Engineering Asset Management (WCEAM), Daejon, Republic of
Korea.

128 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


12 RESOURCES

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12.1 STRATEGIC ANALYSIS

12.1.1 PEST ANALYSIS AND SWOT ANALYSIS


A PEST Analysis provides a structure for public service organisations to systematically analyse
the political, economic, social and technological (PEST) changes occurring in the environment.
It provides a framework for structuring how an agency considers the changing environment.

Whereas a PEST Analysis can be used to identify and predict key environmental elements that
might need to be addressed, the Strengths-Weaknesses-Opportunities-Threats (SWOT)
Analysis can be used to evaluate an organisations strategic position in relation to its internal
and external environment (see Figure 12.1).

Organisation

Positive Negative

Internal Internal
Strengths Weaknesses

Political
Factors

Economic
Factors
External External
Opportunities Threats
Social
Factors

Technological
Factors

Organisational Environment

FIGURE 12.1: PEST ANALYSIS AND SWOT ANALYSIS

A SWOT Analysis is a widely used Strategic Management tool utilised to develop a Corporate
Strategy to achieve the Corporate Objectives.316
The organisations controllable activities that are performed especially well or poorly are
referred to as internal strengths and internal weaknesses and encompass the organisations
management, marketing, finance/accounting, production/operations, research and
development, and management information systems activities. Identifying and evaluating
organisational strengths and weaknesses is an essential Strategic Management task.
Economic, social, cultural, demographic, environmental, political, legal, governmental,
technological, and competitive trends and events that have the potential to significantly benefit
or harm an organisation are referred to as external opportunities and external threats, and are
largely beyond the organisations control.
Ideally organisations will pursue strategies that capitalise on internal strengths and eliminate
internal weaknesses as well as develop and implement strategies that maximise external
opportunities and minimise the impact of external threats.317

316
Osborne S P, Brown K (2005): Managing Change and Innovation in Public Service Organizations, Routledge
317
David F R (2009): Strategic Management: concepts and cases, 12. Edition, Pearson Education

130 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


12.1.2 GAP ANALYSIS
Gap Analysis assists public service agencies to determine whether current/planned funding and
resources are adequate to deliver the required level of services in the future. Gap Analysis
involves analysing the gap between the contribution of the organisation, as it currently operates,
and the requirements of any new objectives.318
In an Asset Management context, performing a Gap Analysis enables an organisation to
understand where it is relative to where it wants to be within a given time period. The gap is
the distance between the current and desired future state. By using Gap Analysis organisations
can compare themselves to Asset Management practices that are considered Best Appropriate
Practices practices that fit the organisations needs in the most effective and efficient way319
as compared to Worlds Best Practice, which may not be relevant due to an organisations
Corporate Objectives, geographic spread, asset profile, regulatory environment and/or urban or
rural base.

12.2 ACCOUNTING TECHNIQUES

12.2.1 LIFE-CYCLE COST ANALYSIS


Life-cycle Cost Analysis (LCCA) is essentially the structured analysis of the sum of all costs
associated with a project or asset during its life-cycle (referred to as Life-cycle Costs or LCC), in
order to evaluate the total cost of ownership of the asset. LCCA can be used to evaluate
procurement options for new assets, provide ongoing support of management decision-making
throughout an assets life-cycle, identify asset attributes which significantly influence the LCC,
benchmark assets actual cost performance, and review the procurement process for future
design/acquisition decisions.

Analysis covers the entire set of costs which occur throughout the assets useful life or, at a
minimum, the period in which the asset is owned by the entity performing the analysis. The life-
cycle for an arbitrary asset comprises many different phases but can be separated into:
Acquisition, Operations, Maintenance, and Refurbishment and/or Disposal.
LCCs arise due to all expenses related to various activities performed throughout the assets
life-cycle, including:
initial capital costs (e.g. project planning costs, acquisition and preparation of asset
costs, cost of raising funds and feasibility studies etc.)
operating costs (e.g. operations personal, materials, fuel, energy consumption etc.)

maintenance costs
risk exposure costs
renewal costs

disposal costs320
external costs (like carbon tax).

318
Viljoen J, Dann S (2000): Strategic Management: planning and implementing successful corporate strategies, 3.
Edition, Pearson Education Australia
319
GHD Pty Ltd (2007): Asset Management Review Part 2 Review of Asset Management Capability, City of
Wollongong Council
320
AAMCoG (2008): Life-cycle Cost Analysis (LCCA), Australian Asst Management Collaborative Group (AAMCoG) and
Cooperative Research Centre for Integrated Engineering Asset Management (CIEAM)

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12.2.2 VALUE MANAGEMENT
Value Management enables key stakeholders to actively participate in program and project
planning, design and decision-making and addresses technical and functional elements. The
Value Management process considers all options and solutions to asset problems.321/322
Value Management provides a structured and systematic way to determine the best way to
achieve required functions at the lowest total cost, while still balancing quality and performance
levels. Value Management subscribes to the underlying principle that there is always more than
one way to achieve project objectives and that by analysing options the most acceptable
alternative will be found.
The Value Management process adopts the view of the system as a whole to analyse functions
(e.g. the relationship or cost impact of design decisions on a project). To identify what things
actually do or must do in order to achieve the objectives Function Analysis is undertaken. This
type of analysis also helps project owners or planners to test the assumptions made in the
project/program brief. By analysing such functions, opportunities can be identified to improve
the value such as through reduced wastage, duplication and unnecessary expenditure.
Value Management assists is analysing service strategies and identifying alternate and
innovative options for meeting service needs such as identifying options that dont need
additional capital investment.

The Australian Procurement and Construction Council outlines the following steps of a Value
Study:323

STEP ACTIVITIES
Information Identification and testing of program or project rationale from the
perspective of stakeholders positions, e.g. alignment with Corporate
Objectives and/or Service Strategies.
Function analysis Identification and ranking of primary and secondary functions and
their associated cost and worth relationship.
Ideas generation Generation of value improvement options through innovation and
alternate means of achieving the required function.
Evaluation Sorting and prioritising value improvement options to identify viable
alternatives. Evaluation of options may continue beyond the Value
Management Study.
Action plan Identification of actions/strategy required to achieve Value Study
outcomes and to provide ongoing management framework for project
progression.
Analysis and Final reporting includes a description of outcomes and
reporting documentation of rationale to ensure appropriate focus is maintained
through the project development stages.

321
Australian Procurement and Construction Council (2001): Asset Management 2001
322
New South Wales Treasury (2004): Value Management Guideline
323
New South Wales Treasury (2004): Value Management Guideline

132 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


12.2.3 COST/BENEFIT ANALYSIS
Cost/Benefit Analysis is a tool used to undertake an economic evaluation of asset options to be
compared and considers program and project development and resource allocation.324/325

Cost/Benefit Analysis focuses on identifying and measuring where possible and then discounts
future costs and benefits to present values in order to calculate the net economic worth of
various project options. To achieve this it evaluates project options against a base case often
referred to as the do nothing option which can be challenging given that the measurement
of all the projected costs and benefits can sometimes prove difficult.
The Australian Governments Civil Aviation Safety Authority326 provides an example of the
Cost/Benefit Analysis process outlined below:
defining the objectives and scope of the proposal/project
clarifying the proposal/project options

identify quantitative costs


identify quantitative benefits
identify qualitative costs and benefits
discounting the future costs and benefits
calculating the decision criteria
performing sensitivity analysis and addressing issues of risk and uncertainty

identifying the preferred option


preparing the report.327

324
Australian Government Civil Aviation Safety Authority (2007): Cost Benefit Analysis Procedures Manual
325
New South Wales Treasury (2004): Value Management Guideline
326
Australian Government Civil Aviation Safety Authority (2007): Cost Benefit Analysis Procedures Manual
327
Australian Government Civil Aviation Safety Authority (2007): Cost Benefit Analysis Procedures Manual

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13 GLOSSARY
TERM DEFINITION
ACQUISITION An Acquisition Plan defines the assets to be acquired or replaced in the
PLAN planning period and establishes the sources and cost of funding
acquisitions.328
ASSET Asset governance can be defined as a subset of corporate governance
GOVERNANCE which specifies the policies and processes to acquire, utilise, maintain,
and account for the assets of the organization.329
ASSET Asset Management provides a framework for planning, organising,
MANAGEMENT leading, and controlling the acquisition, operation, maintenance, and
refurbishment/disposal of physical assets, also referred to as the life-cycle
management of physical assets.330/331/332
ASSET Asset Management Objectives describe desired results in relation to the
MANAGEMENT satisfaction of Community Demands and are indicators for the
OBJECTIVES implementation of the Asset Management Policy and the achievement of
the Asset Management Strategy.
ASSET Asset Management Plans specify how assets have to be managed to fulfil
MANAGEMENT the Asset Management Strategy to achieve the Asset Management
PLANS Objectives.
ASSET An Asset Management Policy is the translation of the Corporate Strategy
MANAGEMENT for the process area of Asset Management and helps to satisfy the
POLICY Community Demands. It is the overall basis of all Asset Management
decisions and activities and includes a Vision and a Vision Statement, a
Mission and a Mission Statement, and Principles for the area of Asset
Management.
ASSET The Asset Management Strategy outlines and guides the Agencys Asset
MANAGEMENT Management response to the Community Demands and sets out
STRATEGY activities, which helps to achieve the Asset Management Objectives. It
also identifies and addresses any gaps in service delivery through
acquisition (planned capital investment), disposal or maintenance
including replacement and/or upgrading.333
ASSET Asset Performance Measurement determines how effectively assets
PERFORMANCE support service requirements334, communicate and implement strategy335

328
Tasmania Department of Treasury and Finance (2004): Developing Strategic Asset Management Plans
329
Cornish N, Morton K (2001): Asset Governance A Radically New Way to Manage Distribution Networks in a
Competitive and Deregulated Market. In: 16th International Conference and Exhibition on Electricity Distribution (CIRED
2001), Amsterdam, Netherlands, 2001. In: Mardiasmo D, Tywoniak S, Brown K, Burgess K (2008): Asset Management
and Governance An Analysis of Fleet Management Process Issues in an Asset-intensive Organization. In:
International Conference on Infrastructure Systems: Building Networks for a Brighter Future, 1012 November,
Rotterdam, Netherlands
330
Frolov V, Megel D, Bandara W, Sun Y, Ma L (2009): Building an ontology and process architecture for engineering
Asset Management, In: Proceeding of the 4th World Congress on Engineering Asset Management, 28-30 September
2009, Marriott Athens Ledra Hotel, Athens
331
Stapleberg R F (2006): Risk Based Decision-making in Integrated Asset Management: From Development of Asset
Management Frameworks to the Development of Asset Risk Management Plan. Professional Skills Training Courses:
CIEAM Cooperative Research Centre for Integrated Engineering Asset Management
332
Gorjian N, Ma L, Yarlagadda P K, Sun Y (2009): Identifying different determinants of asset life, In: World Congress
for Engineering Asset Management, 27-30 October 2008, Beijing, China
333
New South Wales Treasury (2006): Asset Strategic Planning
334
AAMCoG (2008): Public Sector Asset Performance Measurement and Reporting, Australian Asst Management
Collaborative Group (AAMCoG) and Cooperative Research Centre for Integrated Engineering Asset Management
(CIEAM)
335
Kennerley M, Neely A (2003): Measuring Performance in Changing Business Environment. International Journal of
Operations & Production Management, 23(2), 213-229. In: Hyland P, Ferrer M, Santa R, Bretherton P (2009):
Performance measurement and feedback in a public sector program, In: Soosay C, O'Neill P, Prajogo D (Eds.):
Proceedings of the 7th ANZAM Operations, Supply Chain and Services Management Symposium, 810 June, Adelaide,
Australia

134 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


TERM DEFINITION
MEASUREMENT as well as ensuring the alignment between actions, objectives and
strategies.336
ASSET REGISTER Asset Registers house data relating to various aspects of an asset
portfolio, in a form and manner that allows data to be cross-referenced
and retrieved as needed.337
AUDIT An audit is a systematic, independent and documented process which
objectively gathers and evaluates evidence to assess whether an
organisation/service provider is meeting the audit criteria, standards and
obligations as directed by the organisations policies, procedures or
requirements.338
BEHAVIOUR Behaviour is the general term for each manifestation of life, activity or
reaction of an organism in relation to its environment.
CHANGE Change Management is the process of change from current state to a
MANAGEMENT desired future state. Planned change management involves
systematically scanning the environment to identify how an organisation
must adapt and change. Emergent change management relates to how
an organisation reacts to change thrust upon them as a result of
environment changes outside the organisations control.339
COMMUNICATION Communication can be described as an alternately exchange process of
messages between two or more communicants with the use of mediums.
The context of communication is defined through spatially, temporally,
and social attributes, which are used for the interpretation of the
messages (to get information). The social relationship between the
communicants includes current and potential actions, like perceptions and
expectations. The aimed result of the communication process is
successful understanding.340
COMMUNITY The citizens of a Community pay taxes and charges to the government
DEMANDS and expect services in return. These expectations are based on needs
and represent the Community Demands. The Community expect that
government and their agencies will provide services in relation to
defence, public order and safety, economic affairs, social protection,
housing and community amenities, education, health, environmental
protection, recreation and culture. These demanded services can require
assets, which become part of the Government Service Delivery. Asset-
related demands include matters of asset availability and reliability
(quantity and quality), function and innovation, safety and value for
money, and sustainability.
COMPETENCE Competence Management has to analyse the required competence of a
MANAGEMENT work task, the available competence of the individual employee, who
works on the task, and any gap between the two competence profiles,
which should be closed through learning. Competence encompasses the
entire knowledge and skills a person possesses or must possess in order
to perform a work task.341
CORPORATE Corporate governance is the system by which companies are directed

336
Cross K F, Lynch R L: (1989) The Smart Way to Define and Sustain Success. National Productivity Review, 9(1). In:
Hyland P, Ferrer M, Santa R, Bretherton P (2009): Performance measurement and feedback in a public sector program,
In: Soosay C, O'Neill P, Prajogo D (Eds.): Proceedings of the 7th ANZAM Operations, Supply Chain and Services
Management Symposium, 810 June, Adelaide, Australia
337
New South Wales Treasury (2004): Asset Information Guideline
338
Queensland Department of Environment and Resource Management (2010): Guidelines for the Review and Regular
Audit of Strategic Asset Management Plans
339
Osborne S P, Brown K (2005): Managing Change and Innovation in Public Service Organizations, Routledge
340
Based on Laue M (2010): Methodik zur humanorientierten Systementwicklung und Kommunikationsoptimierung,
Dissertation Technische Universitt Chemnitz, IBF
341
Based on Riedel R (2005): Heuristik zur Gestaltung ganzheitlicher Anreizsysteme aus soziotechnischer Sicht,
Dissertation Technische Universitt Chemnitz, IBF

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TERM DEFINITION
GOVERNANCE and managed. It influences how the objectives of the company are set
and achieved, how risk is monitored and assessed, and how performance
is optimised.342
CORPORATE Corporate Objectives refer to the specification, and details what the
OBJECTIVES organisation aims to achieve in the future. Objectives guide organisational
activities to ensure its long-term prosperity.343
CORPORATE The Corporate Policy summarises the developing and statement of a
POLICY vision, a mission and organisational values to constitute the fundamental
purpose and a common goal of an organisation, its intentions and their
ideal for a future direction.
CORPORATE Corporate Strategy refers to the management of the entire organisation
STRATEGY and relates to how the mission and values are translated into action in
order to achieve the Corporate Objectives.344
COST/BENEFIT Cost/Benefit Analysis allows organisations to economically evaluate asset
ANALYSIS options and address the resource allocation perspective of program and
project development.345/346
DATA Asset Data Management orientated to the capture, management and
MANAGEMENT utilisation (data acquisition, data analysis, and information use) of asset
data.347
DEMAND Demand Management is a technique that involves active intervention in
MANAGEMENT the market to influence demand for services, including assets.348
DEPRECIATION Depreciation recognises the cost of consuming the service potential of
an asset over time, and provides a means of accounting for the cost of an
asset over its useful life.349
DISPOSAL PLAN A Disposal Plan identifies assets to be disposed of in the planning
period, the expected proceeds on disposal and the application of the
proceeds.350
ENVIRONMENTAL Environmental Factors relate to the external and internal context of an
FACTORS asset organisation, including sustainability outcomes and risk
management.
EVALUATION Asset Management Evaluation can be described as the measuring,
reviewing and reporting of the Asset (Management) performance against
Asset Management Objectives, Corporate Objectives, and Government
Objectives.
FINANCIAL Financial reporting (sometimes referred to as close the books) is the
REPORTING process of reconciling, consolidating and generating financial
reports/statements on a periodic basis to meet regulatory requirements
and the information needs of internal and external stakeholders. 351/352

342
Australian Stock Exchange (ASX) Corporate Governance Council (2003): Principles of Good Corporate Governance
and Best Practice Recommendations
343
Viljoen J, Dann S (2000): Strategic Management: planning and implementing successful corporate strategies, 3.
Edition, Pearson Education Australia
344
Viljoen J, Dann S (2000): Strategic Management: planning and implementing successful corporate strategies, 3.
Edition, Pearson Education Australia
345
Australian Government Civil Aviation Safety Authority (2007): Cost Benefit Analysis Procedures Manual
346
New South Wales Treasury (2004): Value Management Guideline
347
Murphy G D, Chang A (2009): A capability maturity model for data acquisition and utilisation, In: Proceeding of the
International Conference of Maintenance Societies, 1-4 June 2009, Sydney
348
Australian Procurement and Construction Council (2001): Asset Management 2001
349
Victoria Department of Treasury and Finance (1995): The Asset Management Series Part 2: Policies and
Practices
350
Tasmania Department of Treasury and Finance (2004): Developing Strategic Asset Management Plans
351
Australian National Audit Office (2002): Benchmarking the Finance Function Follow-on Report Benchmarking
Study

136 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


TERM DEFINITION
GAP ANALYSIS A Gap Analysis involves analysing the strategic gap between the
contribution of the organisation, as it currently operates, and the
requirements imposed by the new objectives.353
GOVERNANCE Governance is defined as the laws, policies, and procedures that ensure
organizations run in the interest of owners and resources are allocated,
managed, and redeployed to maximize productivity and value.354
GOVERNMENT Government Objectives are desired results of the government in relation
OBJECTIVES to the satisfaction of Community Demands. The government set out High-
Level Objectives, which can be distinguished in social objectives and
fiscal objectives, and Service Delivery Objectives, which are the
translation of the Government High-Level Objectives into specific Service
Delivery output statements.
GOVERNMENT Based on the fundamental purpose of the government and to provide
POLICY overall direction for its jurisdictions, the government formulate a Policy
FRAMEWORK Framework, derive High-Level Objectives and Service Delivery Objectives
and create a Service Delivery Strategy and a Fiscal Strategy to satisfy
Community Demands.
GOVERNMENT The Government Strategy sets out potential actions which help to achieve
STRATEGY the Government Objectives. The Service Delivery Strategy of the
government describes how the Government Objectives will be achieved
in a general way. The Fiscal Strategy of the Government, which is part of
the Fiscal Policy of superior governmental authority, describes how
Service Delivery will be funded and manages the financial resources of
the government.
INFORMATION Information Management in the process area of Asset Management
MANAGEMENT comprises the systematic collection and analysis of asset-related data
(Data Management), the listing of this analysed data in the form of viable
information (Asset Register), and the combination of this data and
information with hardware and software (Information Systems).
Furthermore Information Management includes policies and procedures
for the connection of these factors and the interaction with people.
INFORMATION An Asset Management Information System can be defined as a
SYSTEMS combination of processes, data, software, and hardware, applied to
provide the essential outputs for effective Asset Management, such as,
reduced risk and optimum infrastructure investment.355
INNOVATION Innovation Management deals with managing processes in innovation.
MANAGEMENT Successful innovation leads to significant improvements in outcomes
efficiency, effectiveness or quality by creating new processes, products
and services.356
INTERAGENCY Interagency collaboration involves representatives from various agencies
COLLABORATION coming together to identify and work towards a common goal.357

352
Department for Victorian Communities (2006): Guidelines for Measuring and Reporting the condition of Road Assets
353
Viljoen J, Dann S (2000): Strategic Management: planning and implementing successful corporate strategies, 3.
Edition, Pearson Education Australia
354
M G Alles, S M Datar, J. H. Friedland (2005): Governance-linked D&O Coverage: Leveraging the Audit Committee to
Manage Governance Risk, International Journal of Disclosure and Governance, vol. 2, pp. 114-129, June 2005. In:
Mardiasmo D, Tywoniak S, Brown K, Burgess K (2008): Asset Management and Governance An Analysis of Fleet
Management Process Issues in an Asset-intensive Organization. In: International Conference on Infrastructure
Systems: Building Networks for a Brighter Future, 1012 November, Rotterdam, Netherlands
355
INGENIUM (2006): International Infrastructure Management Manual, Association of Local Government Engineering
NZ Inc, Institute of Public Works Engineering Australia, New Zealand. In: Baskarada S (2009): Information Quality
Management Capability Maturity Model, Vieweg+Teubner Research
356
Mulgan G, Albury D (2003): Innovation in the Public Sector. London: Cabinet Office Strategy Unit. In: Matthews M,
Lewis C, Cook G (2009): Public Sector Innovation A Review of the Literature. Report on a project carried out to
support the preparation of an ANAO (Australian National Audit Office) Better Practice Guide on public sector innovation
357
California Department of Education (2007): Handbook on Developing and Evaluating Interagency Collaboration in
Early Childhood Special Education Programs. p.168

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TERM DEFINITION
Collaboration has been defined as a process to reach goals that cannot
be achieved acting singly (or, at a minimum, cannot be reached as
efficiently). As a process collaboration is a means to an end, not an end in
itself.358
KEY Key Performance Indicators determine how well services are provided,
PERFORMANCE i.e. service delivery performance, and how much time is taken in
INDICATORS addressing and correcting performance gaps between intended and
actual performance. Key Performance Indicators are those critical
performance measures which ultimately determine assets serviceability
and stakeholder value.359
KNOWLEDGE Knowledge management is a systemic and organisationally specified
MANAGEMENT process for acquiring, organising, and communicating both tacit and
explicit knowledge so that others can use that knowledge to become
more effective and productive. 360,361
LEADERSHIP Leadership involves supervising activities, giving orders and motivating
subordinates in a way that facilitates the achievement of Corporate and
Asset Management Objectives.362
LIFE-CYCLE COST Life-cycle Cost Analysis (LCCA) can be summarised as the structured
ANALYSIS analysis of the entire set of costs which are associated with a project or
asset, in order to evaluate the total cost of ownership of the asset.363
MAINTENANCE A Maintenance Plan defines which assets are to be maintained, the level
PLAN of maintenance and the delivery of maintenance services.364
MISSION AND A Mission tends to focus on the present and encapsulates the
MISSION organisations reason for existence, its fundamental purpose, character
STATEMENT and values.365 The Mission is formalised and documented in the Mission
Statement which articulates broadly the organisations activities and
present business makeup.366
MOTIVATION Motivation is the disposition to accomplish a specific action in a concrete
situation with a specific intensity respective constancy and can be
classified as intrinsic or extrinsic.367
OPERATIONAL Operational Asset Management deals with the implementation of
ASSET Strategic Asset Management and with activities around the Asset Life-
MANAGEMENT cycle.
OPERATIONS An Operations Plan details existing asset use and can include access,
PLAN security, accountability and monitoring performance matters.368

358
Bruner C (1991): Thinking Collaboratively: Ten Questions and Answers to Help Policy Makers Improve Childrens
Services. Washington, D.C.: Education and Human Services Consortium. p.6. In: California Department of Education
(2007): Handbook on Developing and Evaluating Interagency Collaboration in Early Childhood Special Education
Programs. p.168
359
AAMCoG (2008): Public Sector Asset Performance Measurement and Reporting, Australian Asst Management
Collaborative Group (AAMCoG) and Cooperative Research Centre for Integrated Engineering Asset Management
(CIEAM)
360
Alavi, M., & Leidner, D. (2001). Review: Knowledge management and knowledge management systems: Conceptual
foundations and research issues. MIS Quarterly, 25(1), 107-136.
361
Love, P., Fong, P., & Irani, Z. (2005). Management of Knowledge in Project Environments. Oxford:
Elsevier/Butterworth-Heinemann.
362
Luffman G, Lea, E, Sanderson S, Kenny B (1996): Strategic Management An analytical introduction, 3. Edition,
Blackwell
363
AAMCoG (2008): Life-cycle Cost Analysis (LCCA), Australian Asst Management Collaborative Group (AAMCoG) and
Cooperative Research Centre for Integrated Engineering Asset Management (CIEAM)
364
Tasmania Department of Treasury and Finance (2004): Developing Strategic Asset Management Plans
365
Viljoen J, Dann S (2000): Strategic Management: planning and implementing successful corporate strategies, 3.
Edition, Pearson Education Australia
366
Thompson A A, Strickland A J (1999): Strategic Management: concepts and cases, 11. Edition, McGraw-Hill
367
Based on Staehle W. H. (1999): Management Eine verhaltenswissenschaftliche Perspektive, 8. Edition, Vahlen
368
Tasmania Department of Treasury and Finance (2004): Developing Strategic Asset Management Plans

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TERM DEFINITION
ORGANISATIONAL Organisational Culture are the shared ideas, customs, assumptions,
CULTURE expectations, traditions, values and understandings that determine the
way employees will behave.369
OUTSOURCING Outsourcing is a short-term contract between the government and a
private organisation for the provision of a specific service, for which the
private organisation is more specialised then the government.
PEST ANALYSIS A PEST Analysis is a tool to encourage the systematic analysis of the
political, economic, social and technological (PEST) changes occurring in
the environment of a public service organization to predict key elements
of the organizational environment that might need addressing.370
PRIVATE Private Provision is the provision of public services by private
PROVISION organisations.
PRIVATISATION Privatisation is the transfer of the responsibility of governmental services
to a private organisation, amongst others also the ownership of an asset.
PUBLIC-PRIVATE- Public-Private-Partnership (PPP) is a medium-or long-term contract
PARTNERSHIP between the government and a private organisation for some components
of public service or the whole public service. The government contracts
with a private organisation or a consortium for a bundled task, for
example to build an asset and to operate it. The government pays the
private organisation to deliver the asset and related services and the
private provider usually finances the project.
REVIEW Reviews enable organisations to take a strategic view of performance in
relation to service levels, operation, maintenance and renewals; future
demands/flows and other factors potentially impacting on future service
levels and standards; whether the strategies, actions and financial
projections are optimal.371
RISK Risk Management provides a structured way of identifying and analysing
MANAGEMENT potential risks, and devising and implementing responses appropriate to
their impact.372
SERVICE Service delivery is the strategy that an organisation adopts to deliver its
DELIVERY business objectives using organisational resources including finance,
people, information technology as well as building/infrastructure assets to
achieve sustainability outcomes and public good.
STAKEHOLDER Stakeholder Management is the process of interpreting the expectations
MANAGEMENT of external and internal individuals or groups, who have an interest in a
project or will be effected by its outputs and the process of interacting with
them. The objective of Stakeholder Management is the creation of a
positive relationship with different stakeholders.
STRATEGIC Strategic Asset Management concentrates on the long-term of Asset
ASSET Management to provide overall direction, but has to consider operational
MANAGEMENT matters as well. It is a multidisciplinary approach, which blends amongst
other fields, economic and engineering topics, information technology and
human issues.
STRATEGIC Strategic Management entails specifying a Corporate Policy with
MANAGEMENT components (vision, mission, and values), setting related Corporate
Objectives, and outlining a Corporate Strategy to achieve these
objectives. These helps to specify the fundamental purpose of an Agency
and to provide overall direction.

369
Osborne S P, Brown K (2005): Managing Change and Innovation in Public Service Organizations, Routledge
370
Osborne S P, Brown K (2005): Managing Change and Innovation in Public Service Organizations, Routledge
371
Queensland Department of Environment and Resource Management (2010): Guidelines for the Review and Regular
Audit of Strategic Asset Management Plans
372
New South Wales Treasury (2004): Risk Management Guideline

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TERM DEFINITION
SUSTAINABILITY Sustainability is the ability to maintain an improving quality of life for all
people, both now and into the future, whilst ensuring the continued
availability of the natural resources and ecosystem services essential to
supporting life on earth.373
SUSTAINABILITY Sustainability Management aims to meet the needs of the current
MANAGEMENT generations without compromising the ability of future generations to
meet future needs.374 It can be achieved on ecological, socio-cultural, and
economic levels.
SWOT ANALYSIS SWOT Analysis stands for Strengths-Weaknesses-Opportunities-
Threats Analysis. It is a very common technique within Strategic
Management for assessing the position of an organization in relation to its
environment.375
THESAURUS Thesaurus is a records classification tool, linking an organisations
business activities to the records it creates in order to maintain the data
integrity.376
TRADITIONAL Traditional Procurements are short-term contracts between the
PROCUREMENT government and private organisations for separate tasks, for example
with one organisation to construct an asset and with another organisation
to build this asset.
VALUE Value Management is a structured, systematic and analytical process. It
MANAGEMENT is focused on delivering required functions at the lowest total cost
consistent with the quality and performance required.377 Value
Management provides a structure for active participation of key
stakeholders in planning, designing and decision-making and addresses
the projects/programs technical and functional dimensions. The Value
Management process considers all options and solutions to asset
problems.378/379
VALUES Values in an organisational context refer to the guidelines that govern the
behaviour of people within the organisation as they strive to achieve the
Vision.380
VISION AND The Vision articulates an organisations future direction and business
VISION constitution and describes an ideal to strive for. It acts as a guide in
STATEMENT relation to what the organisation is trying to do and become. A strategic
Vision focuses on the organisations future.381 The Vision is formalised
and documented in the Vision Statement.

373
Definition of sustainability provided by Adjunct Professor David Hood, Science and Engineering Faculty, QUT and
National President (2012), Engineers Australia
374
Australian Procurement and Construction Council (2007) Australian and New Zealand Government Framework for
Sustainable Procurement
375
Osborne S P, Brown K (2005): Managing Change and Innovation in Public Service Organizations, Routledge
376
http://www.naa.gov.au
377
New South Wales Treasury (2004): Value Management Guideline
378
Australian Procurement and Construction Council (2001): Asset Management 2001
379
New South Wales Treasury (2004): Value Management Guideline
380
Viljoen J, Dann S (2000): Strategic Management: planning and implementing successful corporate strategies, 3.
Edition, Pearson Education Australia
381
Thompson A A, Strickland A J (1999): Strategic Management: concepts and cases, 11. Edition, McGraw-Hill

140 | INTEGRATED STATEGIC ASSET MANAGEMENT FOR EXPERTS


14 FURTHER INFORMATION
For more information about this publication or its contents please contact:
AAMCoG website: http://www.aamcog.com
APCC website: http://www.apcc.gov.au

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Cameron, K.S., & Quinn, R.E. (1999). Diagnosing and changing organizational culture: Based
on the competing values framework. Reading, MA: Addison-Wesley.

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