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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.
AAMCOG MEMBERS
PUBLISHED
BRISBANE, AUSTRALIA 2013
ACKNOWLEDGEMENTS .............................................................................................................. 2
1 INTRODUCTION ..................................................................................................................... 8
1.1 STRUCTURE OF ISAM FOR XPERTS .......................................................................... 10
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
LIST OF TABLES
Strategic Planning
Organisational Management
Asset Management Policy
Knowledge Management
Service Delivery
Evaluation
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.
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.
SECTION OUTLINE
Sustainability management
In the search for balance
Sustainability Management Principles and Strategies Environmental Factors
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
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:
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.
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).
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
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:
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
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:
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
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
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)
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
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
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
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
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
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
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
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?
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
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
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.
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
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.
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
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.).
Consequences
Likelihood
Insignificant Minor Moderate Major Severe
Almost certain MODERATE HIGH HIGH EXTREME EXTREME
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.
5. REPORTING
For major undertakings prepare a Risk Management Plan.
For other projects, compile and collate risk action schedules and measures.
48
Stoneburner G., Goguen A. and Feringa A. (2002). Risk Management Guide for information Technology Systems,
National Institute of Standard Technology Special Publication
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?
SECTION OUTLINE
SECTION OBJECTIVES
classification of internal and external stakeholders in asset management and their roles
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)
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)
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.
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)
70
New South Wales Treasury (2004): Demand Management Guideline
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
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
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
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.
Government
Community
Business
Environmental
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.
Slot the stakeholders you have identified into different priority categories using the table below.
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
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.
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)
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
CASE STUDY:
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
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.
SECTION OUTLINE
Whole-of-government model
Whole-of-government policy
Whole-of-Government Policy Framework
Case Study
SECTION OBJECTIVES
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
Legislation
Government
policies and
Management Strategy
Acquisition Plan
Operations Plan
Maintenance Plan
Disposal Plan
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
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
CASE STUDY:
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.
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.
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
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
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
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
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
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
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.
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
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).
CASE STUDY
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.
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
SECTION OUTLINE
Delivery
Asset Management Objectives
SECTION OBJECTIVES
Define Service Delivery Strategic Planning including
asset management policy, objectives and strategy
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
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.
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)
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
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?
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
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.
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)
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.
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
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
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
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.
CASE STUDY
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
SECTION OUTLINE
SECTION OBJECTIVES
Offer insight on Asset Management
Planning
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.
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.
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.
Timeframes and the key decision points throughout the acquisition plan.
Capital outflows amounts and timing.
Anticipated life-cycle costs
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
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
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.
TOOLS AND
TECHNIQUES
Value management
Cost-benefit analysis
Risk analysis
Statutory and planning
issues
Environmental Impact
Statement (EIS)
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
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
OPERATION PLAN:
Asset performance measures
Physical security and safeguarding
Depreciation
Finance costs
Operating costs (for example energy and cleaning costs)
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
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
Management
Information Systems
Benchmarking
KPI
Risk analysis
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
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
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.
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
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
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.
If an asset is no longer needed for a specified purpose there are a number of disposal options:
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
Asset Register
Expert knowledge
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
SECTION OUTLINE
SECTION OBJECTIVES
Improve the understanding and provide insights
to what does service delivery in asset
management mean
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).
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
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
High
Social, environmental and community economic outcomes
DESIRED ZONE
GOVERNMENT ZONE OPTIMAL SERVICE
DELIVERY
Public Good Value
Low
Low High
Business Value
Cost savings, reputation, risk management etc.
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.
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?
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.
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.
Evaluation
contribute separately and jointly to meet asset management and corporate objectives
link operations to strategic goals
ensure a customer focus
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:
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
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.
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.
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:
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
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
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
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
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
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?
ECONOMIC REVIEW
The economic review evaluates whether the project met its economic or service predictions
(critical to the development of predictive tools).
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.
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
Efficiency The re-use and transfer of knowledge related to users and community
needs and insights enhance the productivity of knowledge workers.
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.
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
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
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.
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.
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
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
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:
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
249
http://www.naa.gov.au
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
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
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
ORGANISATIONAL CULTURE
LEADERSHIP ENGAGEMENT
OWNERSHIP
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.
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.
SECTION OUTLINE
Purpose
Leadership
Change Management
Organisational Competencies and Skills
Asset Management Culture
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
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.
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
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:
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
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
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
292 Burnes, B. (1996) No such thing as . . . a one best way to manage organizational change, Management Decision,
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
296
http://www.businessdictionary.com/definition/gap-analysis.html
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.
Asset Availability/Reliability
Asset Asset
Utilisation Safety
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
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.
CASE STUDY:
Competing values within asset management organisations in Australia
The current organisational environment within asset management organisations was examined
using the organisational culture assessment index (OCAI) developed by Cameron and Quinn
(1999).
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.
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.
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
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
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
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Edition, Pearson Education Australia
319
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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
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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
324
Australian Government Civil Aviation Safety Authority (2007): Cost Benefit Analysis Procedures Manual
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