International case studies in asset management

International Case Studies in Asset Management Copyright © ICE Publishing, all rights reserved Copyright © ICE Publishing, all rights reserved International Case Studies in Asset Management Edited by Chris Lloyd Copyright © ICE Publishing, all rights reserved Published by ICE Publishing, 40 Marsh Wall, London E14 9TP Full details of ICE Publishing sales representatives and distributors can be found at: www.icevirtuallibrary.com/info/printbooksales Also available from ICE Publishing Asset Management C Lloyd ISBN 978-0-7277-3653-6 People and Organizational Management in Construction, Second edition S Naoum ISBN 978-0-7277-4151-6 Art and Practice of Managing Projects A Hamilton ISBN 978-0-7277-3456-3 www.icevirtuallibrary.com A catalogue record for this book is available from the British Library ISBN 978-0-7277-5739-5 # Thomas Telford Limited 2012 ICE Publishing is a division of Thomas Telford Ltd, a wholly-owned subsidiary of the Institution of Civil Engineers (ICE) All rights, including translation, reserved Except as permitted by the Copyright, Designs and Patents Act 1988, no part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying or otherwise, without the prior written permission of the Publisher, ICE Publishing, 40 Marsh Wall, London E14 9TP This book is published on the understanding that the author is solely responsible for the statements made and opinions expressed in it, that no endorsement or criticism is implied and that its publication does not necessarily imply that such statements and/or opinions are or reflect the views or opinions of the publishers Whilst every effort has been made to ensure that the statements made and the opinions expressed in this publication provide a safe and accurate guide, no liability or responsibility can be accepted in this respect by the author or publishers Whilst every reasonable effort has been undertaken by the author and the publisher to acknowledge copyright on material reproduced, if there has been an oversight please contact the publisher and we will endeavour to correct this upon a reprint Associate Commissioning Editor: Victoria Thompson Production Editor: Imran Mirza Market Development Executive: Catherine de Gatacre Typeset by Academic ỵ Technical, Bristol Printed and bound by CPI Group (UK) Ltd, Croydon CR0 4YY Copyright © ICE Publishing, all rights reserved Contents 01 Preface List of contributors ix xi Introduction Section 1: Introducing asset management Case study: Wessex Water 1.1 Background and context 1.2 How asset management evolved at Wessex Water 1.3 Strategic direction shaped by relationships with stakeholders 1.4 Conclusions Discussion questions References 9 11 18 19 20 20 Case study: Dublin Airport Authority 2.1 Background 2.2 Restructuring around asset management 2.3 Approach Box 2.1 Extracts from the DAA asset management terms of reference document 2.4 Outcomes and conclusions Discussion questions Reference 29 37 38 38 03 Case study: Arts Victoria 3.1 Background and context 3.2 The requirements 3.3 The situation 3.4 What was done – functional spaces 3.5 What was done – service levels 3.6 Conclusions Discussion questions Reference 39 39 40 41 42 43 45 47 48 04 Case study: South West Water 4.1 Background and context 4.2 Effective planning 4.3 Investment optimisation 4.4 Conclusions Discussion questions References 49 49 52 53 55 56 56 05 Case study: City of Calgary 5.1 Background and context 5.2 Introduction of asset management 5.3 Performance measures 59 59 59 64 02 21 21 22 24 v Copyright © ICE Publishing, all rights reserved 5.4 Conclusions Discussion questions References 65 65 65 Case study: Scottish Water 6.1 Background and context 6.2 Multiple strategies within a defined framework 6.3 A structured hierarchy for strategies and plans 6.4 Conclusions Discussion questions References 68 77 78 78 Section 2: Becoming an asset management organisation 81 07 Case study: Grand Port Maritime du Havre 7.1 Background and context 7.2 Requirements 7.3 Development process 7.4 Prediction of performance over time 7.5 Prediction of future maintenance requirements 7.6 Prioritising maintenance interventions 7.7 Outcomes and conclusions Discussion questions References 83 83 83 84 94 96 96 98 98 98 08 Case study: Network Rail 8.1 Background and context 8.2 Laying the foundations 8.3 Establishing asset management processes 8.4 Conclusions Discussion questions References 99 99 101 102 105 106 106 09 Case study: ScottishPower Generation 9.1 Background and context 9.2 The Operational Transformation Programme 9.3 Stage 1: create a vision and strategy 9.4 Stage 2: establish leadership 9.5 Staff awareness and communications 9.6 Conclusions Discussion questions References 109 109 110 111 116 117 117 119 119 10 Case study: City of Cambridge 10.1 Background and context 121 121 06 vi Copyright © ICE Publishing, all rights reserved 67 67 67 10.2 10.3 10.4 10.5 10.6 Information and knowledge management Business process improvement Technology adoption The capital planning process Conclusions Discussion questions Reference 122 123 125 126 127 129 129 11 Case study: London Underground 11.1 Background and context 11.2 Asset management and the PPP contracts 11.3 Integrating asset management 11.4 Conclusions Discussion questions References 131 131 132 134 138 139 139 12 Case study: RailCorp 12.1 Background and context 12.2 Conclusions Discussion questions References 141 141 144 144 144 Section 3: Value and performance improvement 145 13 Case study: SP AusNet 13.1 Background and context 13.2 Impact of PAS 55 13.3 Conclusions Discussion questions References 147 147 149 152 154 154 14 Case study: City of Hamilton 14.1 Background and context 14.2 The analysis 14.3 Generational differences 14.4 Intergenerational fairness 14.5 Putting a price on fairness 14.6 Uneven asset bubbles that move through time 14.7 Social policy – whose responsibility is it? 14.8 Level of service for long-term care facilities 14.9 Important Related Initiatives 14.10 Conclusions Discussion questions References 155 155 156 157 157 158 159 160 161 162 163 163 163 15 Case study: Rio Tinto 15.1 Background and context 165 165 vii Copyright © ICE Publishing, all rights reserved 15.2 15.3 15.4 15.5 15.6 15.7 15.8 Aims and scope of the AMPDP Strategy for programme development Identification of learning partners and responsibilities Programme design Managing engagement across the business Measuring performance Conclusions Discussion questions 166 167 167 168 170 170 173 174 16 Case study: Euroports 16.1 Background 16.2 Introducing asset management planning 16.3 AMP2 changes and improvements 16.4 AMP2 report template 16.5 Conclusions Discussion questions Reference 175 175 175 177 179 183 185 185 17 Case study: KPMG 17.1 Background and context 17.2 Quality of financial–technical asset data 17.3 Initial harmonisation of technical data and accounting data 17.4 Accounting purchase price excluding added values and client interventions 17.5 Conclusions Discussion questions Reference 187 187 189 18 viii Copyright © ICE Publishing, all rights reserved 190 190 199 200 200 Section 4: Observations – Investment, risk and returns 201 Observations – Investment, risk and returns 18.1 Introducing asset management 18.2 Becoming an asset management organisation 18.3 Value and performance 18.4 Conclusions References 203 204 206 208 210 212 Index 213 Preface This book is the result of another Two years ago, when I was working on Asset Management: Whole Life Management of Physical Assets, which Thomas Telford published in 2010, it quickly became obvious that the follow up would need to be a book of case studies Where the earlier book sought to reposition asset management as a powerful new logic for building value and generating better returns from asset-intensive businesses, this one looks at how a variety of organisations operating in different sectors have embraced asset management thinking and best practices, how this has affected them and what has been learned from this These case studies will serve as a historical record of how asset management has matured in conception and practice since it first emerged in the 1980s They offer insights into how asset management is being used to prioritise capital investment, increase operational efficiency, manage risk, and change how organisations position themselves in the market and account for their actions to customers, investors, banks, regulators and others The book is written for investors seeking insights into the management and performance of major infrastructure businesses; the directors and managers of organisations new to the opportunities presented by asset management, in the early stages of adopting it or looking to refresh their approach; and people studying for asset management qualifications or taking short courses and their teachers Each of these audiences will find something of value in the case studies – approaches to reflect on, problems to solve, concrete examples, practical solutions and new ideas The number of potential case studies that did not make it into this book is enough to fill another Some emerged too late, others were not completed and a few could not be published for commercial reasons or because they were too obviously promotional There is a thin line to tread between publishing what organisations want to read about themselves and publishing what the asset management audience wants to read about, one that I hope I have managed to tread successfully In years to come, I would not be surprised if it became more difficult to put case studies into the public domain as the connections between asset management and competitiveness become more explicit ix Copyright © ICE Publishing, all rights reserved My acknowledgements go to Hugh Harford of CAS, whose support and suggestions have been invaluable; to my colleagues at CAS who thrived during my absences; and to all those who contributed ideas, documents and/or drafts for the case studies – the list of contributors reads like a who’s who of asset management Finally, because I moved house while working on this book, its publication will be a lasting testament to the talents, energy and forbearance of my wife Chris Lloyd Director, CAS x Copyright © ICE Publishing, all rights reserved Observations – Investment, risk and returns limited value’ In his view, this feedback showed the business was not yet capable of rising to the challenge, so he postponed further development of the process and switched the emphasis onto developing the ability of directors and senior managers to see the value in it and make use of its outcomes He set out his position as follows: Our shareholders want to understand how the business is prioritising and targeting capex and making cost/risk/benefit decisions The asset management process has started to give us a much better understanding of the relationships between capacity, demand, maintenance management and improvement planning No other process does this Asset management is about systematic, continuous improvement right across the business Before we introduced it, we were just repeating the same practices, year in year out, with only minor process improvements Our strategic plans are driven by financial outcomes – asset management will help us ensure that our financial targets are based on commercial, technical and operational realities so that they are achievable Securing the necessary capex requirements is going to be a continual battle between the board and our investors – we need to justify that capex is needed in terms of the value it brings to the whole business Asset management provides a robust approach to doing this and identifying the associated risks We will use the asset management plans and evidence that they are being delivered to demonstrate good management to our banks and investors – showing them we understand our business in depth and know how to grow its margins In the past, our costs have tended to increase in line with our revenues, resulting in margins remaining steady at best – this does not reflect well on us When a majority of senior people in an organisation come to understand asset management, conventional wisdom quickly dissipates, for example, at Dublin Airport Authority (Case 2), where there had been a belief that the manufacturers of equipment knew best how to maintain it In organisations where asset management takes root, the assumption no longer holds that the best way of controlling operations is through a top-down structure that is generally cautious of devolving responsibilities Asset management tends to generate a new and more open structure founded on participation in all its aspects, as in the case of the Grand Port Maritime du Havre (Case 17) and the City of Hamilton (Case 14) Asset management is a catalyst for innovation It solves the particular problems of planning, organising and decision-making in the context of uncertain futures Because everything is managed more tightly, brought together better and the relationships 207 Copyright © ICE Publishing, all rights reserved International Case Studies in Asset Management between functions, systems and people are given more attention, asset management can change the way you business and the reputation your business enjoys It is clear from the case studies that PAS 55 has had a big influence since it was first published in 2004, and that the impending publication of ISO 55001 can be expected to raise the profile and extend the reach of asset management still further But it is clear too that international standards are a baseline that companies will only utilise or go beyond where the business case justifies the effort If an organisation does not require it then it is not fit for purpose Like all external standards, PAS 55 and ISO 55001 can be invaluable in creating initial momentum, getting people interested and giving senior management confidence that they are setting out on the right path But they can also stop people thinking for themselves, foster a compliance-led approach and become dislocated from the strategy of the business The danger here is that a PAS 55-compliant asset management system will be produced that achieves certification but bears no relation to what is actually happening in the business Indeed, a good number of the case studies feature organisations that have made use of the PAS 55 requirements but have not sought PAS 55 certification because they did not see the benefit and have pushed on instead for a capability maturity-based approach Certainly, it is better to use PAS 55 to leverage an asset management strategy than to treat it as the strategy itself The clarity and international consensus on the scope and definition of asset management and its components that emerged in late 2011 from the Institute of Asset Management (IAM) and the Global Forum on Maintenance and Asset Management (GFMAM) are an important new addition to the picture In particular, the IAM conceptual model (Figure 18.1) and its competence framework have provided the foundations for the progress made by a number of the organisations featured here By providing working definitions of the main components of asset management, the most recent IAM publication, Asset Management – An Anatomy (IAM, 2011), should help companies around the world to communicate and integrate asset management in a consistent way and thus lay the foundations for comparing performance, developing capabilities and creating new careers and qualifications 18.3 Value and performance Alignment of technical, operational and financial data as described by KPMG in Case 17 is, of course, a complex task – especially where multiple acquisitions have made technical data difficult to substantiate and their relationship to financial data opaque But it must be a strategic objective where a company wishes, or is under pressure, to substantiate its value, margins or returns Although the potential benefits of asset management are well understood because they are motivating infrastructure companies worldwide to adopt asset management, not 208 Copyright © ICE Publishing, all rights reserved Observations – Investment, risk and returns Figure 18.1 The IAM conceptual model for asset management Courtesy of the Institution of Asset Management Legislation Customers Commercial environment Investors Scope of asset management Organisational strategic plan Asset management strategy and planning Acquire Operate Lifecycle delivery Organisation and people enablers Asset management decision-making Dispose Maintain Risk and review Asset knowledge enablers many organisations have reached the point where they are able to measure the full impact on investment, risk and returns Dashboard reporting techniques, such as the one used by ScottishPower Generation in Case 9, tend to zoom in on specific aspects of this challenge There is, however, good awareness in the case studies of the value of asset management that has been brought about through benchmarking, professional body networks and public reporting What this tells us is that efficiency plays a key role in unlocking savings and avoiding costs and buying time for the effects of capital expenditure (capex) prioritisation, maintenance improvement, refinancing and the like to pay back Here, efficiency has two meanings, namely g the external efficiency that concerns the way a company manages stakeholder interests, government and regulatory requirements, customers and suppliers more effectively 209 Copyright © ICE Publishing, all rights reserved International Case Studies in Asset Management g the internal efficiency that is concerned with the inter-relationships between the individual parts of the organisation, its departments, activities and management systems In general, companies can influence their external efficiency, depending on whether or not they operate under regulation, but they can control their internal efficiency, although it is clear that in some industries (Case 13: SP AusNet) regulators are looking to have more say on this The cost–benefits equation of asset management versus conventional management of assets can be worked out in terms of the impact on productivity or the ratio of the measure of output to the measure of one or more of the inputs used to produce the output However, it is early days where criteria for judging efficiency gains from asset management are concerned For example, although the framework and principles published by the GFMAM recently (GFMAM, 2011) demonstrate the impressive international consensus now reached between the leading professional bodies concerned with asset management, they fall short of linking inputs with outputs or, more importantly, showing how asset management can help investors improve their returns Lack of alignment between strategy and plans means lack of alignment between capacities and demand, maintenance investment decisions and asset knowledge, funds allocation, capex priorities, etc It affects everything, especially external and internal efficiency Develop an asset management strategy and it becomes clear quite quickly that an asset management policy will be needed that sets out principles and procedures for governing the application of the strategy Develop asset management plans before you have a strategy, and nothing lines up in the boardroom Develop strategy too far ahead of plans, and no one will know what is expected in the workplace It all has to come together And the people at the top need to mean the same thing when they say asset management even if some are thinking strategically, some are being tactical and others might be thinking of their next career move 18.4 Conclusions A typical investment analyst’s report on an infrastructure business will concern itself with EBITDA (earnings before interest, taxes, depreciation and amortisation) levels, net income, growth prospects, sensitivity to price, operating performance, the certainty of capex programmes, the ratio of EBITDA to capex, current and future capacity, the likelihood of returns to shareholders and balance sheet headroom These are the routine concerns of investment funds, shareholders looking to maximise the value of or dispose of investments, companies on the acquisitions trail, banks, insurers and reinsurers, regulators, credit agencies, traders and employees with options But often these reports take little or no account of the criticality, condition, costs or risks of the physical assets on which the cashflows, earnings and value of these businesses rely 210 Copyright © ICE Publishing, all rights reserved Observations – Investment, risk and returns Whereas, traditionally, investors may have regarded this as a management issue, recent trends such as pension funds buying directly into unlisted infrastructure businesses are bringing investors face to face with these issues Countries around the world are injecting funds into infrastructure to support future growth, create jobs and stimulate economic growth in the short term A recent study (Urban Land Institute and Ernst and Young, 2011) predicts that the cost of meeting global infrastructure requirements over the next 25 years could reach US$50 trillion The report cites the examples of Canada, where US$16 billion of stimulus funding is being used to deal with ageing urban infrastructure; China, which is investing over US$1 trillion over years in a 10 000 mile high-speed rail network, a nationwide toll highway system, state-of-the-art airports and sea ports; India, which is doubling its infrastructure spend to US$1 trillion; Brazil, where a US$900 billion infrastructure plan is being launched, including a high-speed rail line, new power plants, hydroelectric dams and port construction; and the UK, where US$326 billion has been allocated to its year national plan Not surprisingly, asset management is creating a great deal of interest in all of these countries, not least because of its potential to reassure new investors The pressing need for investment in infrastructure has led to an increase in private sector financing for infrastructure projects from pension funds and others attracted by the prospects of long-term growth and potentially low correlations between investments (Inderst, 2009) Investments range from transport networks, energy generators to water companies and hospitals, and the means of financing including debt, equity, private, listed, direct and indirect This is exposing investors to safety and environmental risk, regulatory and political challenges Understandably, investors are seeking benchmarks and models for comparing the performance of different businesses (Weber and Alfen, 2010) Understanding the priorities of investors and the directors who serve them is essential to good asset management The ability of the business or project to ‘generate sufficient cash flows to cover not only the investment and operating costs but also the interest and principal payments (debt service) under the planned financing structure’ is central to these and also ‘the generation of an appropriate return on their equity employed and/or a suitably high level of current income (yield)’ (Weber and Alfen, 2010) Everyone who holds or aspires to a senior asset management role ought to know, for example, how capex affects EBITDA and how operating expenditure affects cashflow, and be able to explain why At the same time, most investors would struggle to explain the cost side of the business or how margins are created and protected, although, as mentioned, that is changing, as some become involved directly in the management of infrastructure companies 211 Copyright © ICE Publishing, all rights reserved International Case Studies in Asset Management Asset management is about making sure that capital spending and the ways an organisation manages its assets are in harmony with its corporate objectives Good asset management practices provide the evidence that third parties look for to assure themselves a business is being well run Infrastructure businesses may well spend 80–90% of their monies on managing and operating their assets It follows that company valuations or corporate strategies that are ill-informed by technical, operating and service level realities are unlikely to be realised, just as business practices that are ill informed by corporate strategy and value generation are likely to put the brake on growth and performance But it is not hard to think of businesses whose directors not understand the sources of, or interactions between, the costs, risks and performance of the infrastructure, plant, vehicles and equipment that their success depends on And what good to anyone is a corporate strategy, a business plan or a balance sheet that does not accurately reflect the value or liabilities of the asset base? REFERENCES BSI (2008) PAS 55:2008 The specification for the optimised management of physical assets Parts and British Standards Institution, London GFMAM (2011) The Asset Management Landscape Global Forum on Maintenance and Asset Management, Zurich http://gfmam.org/files/ISBN9780987179913_ LANDSCAPE.pdf (accessed 10/02/2012) IAM (2011) Asset Management – An Anatomy Institute of Asset Management, Bristol Inderst G (2009) Pension Fund Investment in Infrastructure OECD Working Papers on Insurance and Private Pensions, No 32 OECD, Paris Lloyd C and Johnson C (2010) Becoming an Asset Management Organisation Assets Magazine, August 2010, Institute of Asset Management www.theiam.org The Sunday Times (2010) Investors must behave like owners and look to the longer term The Sunday Times, 26 Sept Urban Land Institute and Ernst and Young (2011) Infrastructure 2011: A Strategic Priority Urban Land Institute, Washington, DC http://www.uli.org/ResearchAnd Publications/PolicyPracticePriorityAreas/Infrastructure//media/Documents/ Research AndPublications/Reports/Infrastructure/Infrastructure2011.ashx Weber B and Alfen HW (2010) Infrastructure as an Asset Class: Investment strategies, project finance and PPP Wiley Finance, London 212 Copyright © ICE Publishing, all rights reserved International Case Studies in Asset Management ISBN 978-0-7277-5739-5 ICE Publishing: All rights reserved http://dx.doi.org/10.1680/icsiam.57395.213 Index AECOM, 50 aged assets, rehabilitation of see South West Water Ahead of the Wave: A National Guide to Sustainable Municipal Infrastructure (InfraGuide), 121 AIM-UWA Business School Executive Education, 167, 170, 171 Air Navigation and Transport (Amendment) Act 1988, 25 AM Centre (asset management centre, Rio Tinto), 165, 166, 167, 168, 170, 171, 172, 173 AMA (asset management assessment), 10 AMC (asset management committee, SP AusNet), 152 AMCL, 103, 149 AMD (asset management and development, Dublin Airport Authority), 22, 24, 28, 32, 34 AMD (asset management directorate, Wessex Water), 11 AMD (asset management division, Cambridge, Canada), 121–122, 123, 126, 127 AMP (asset management plan, Calgary), 60, 61, 64 AMP (asset management plan, Euroports including AMP1, AMP2 and AMP3), 175, 176, 177, 178–183, 184 AMP (asset management plan, South West Water), 49, 50, 51 AMPAP (asset management planning and performance assessment process), 10 AMPDP (asset management development programme), 165–174 AMT (asset management tool, KPMG), 189, 197 Antin Infrastructure Partners, 175 Arcus European Infrastructure Fund, 175 Arts Victoria, 3, 39–48, 204 functional spaces, 42–43 requirements, 40–41 service levels, 43–45 situation, 41–42 six-step assessment process of service oriented asset management, illustration, 46 Arts Victoria Act 1972, 39 Asia, 167 asset care manager, role of, 30–31, 33 asset health review, 29, 30, 36, 37 asset investment decision environment (aiDE), 53, 54, 55 Asset Management – An Anatomy (IAM), 208 Asset Management Landscape (GFMAM), 210 Asset Management Council, 142 asset manager, role of, 29, 31, 33 Australia see Arts Victoria; RailCorp; Rio Tinto; SP Ausnet Australian Energy Regulator, 149 Australian Institute of Management Western Australia, 167 awareness, 112, 113, 114, 116, 117, 204, 209 Baker Report, 110 Bartlett, N, 174 basic risk monitoring and management, 74 see also risk Belgium, 175 see also KPMG Berardi et al., 49 best practice reviews see Network Rail BP US Refineries Independent Safety Review Panel, 110 Brazil, 211 213 Copyright © ICE Publishing, all rights reserved Index Brookfield Infrastructure Group, 175 bubbles, uneven, 159–160 bucketing, 127 Buncefield fire, 113 business as usual, 11, 50, 51, 112 business process improvement, 123–125 CAFD (cash available for distribution), 184, 185 Calgary, 3, 59–65 introduction of asset management, 59–64 customer levels of service subcriteria, table, 62 example of output from CLOS tool, illustration, 63 performance measures, 64–65 example target performance measures for playgrounds, table, 64 CAM (corporate asset management), 60, 61 Cambridge, Canada, 3, 121–129, 204 business process improvement, 123–125 capital planning process, 126–127 illustration, 126 information and knowledge management, 122–123 Canada, 170, 211 see also Calgary; Cambridge; Hamilton Canadian Public Sector Accounting Board, 59–60, 124 Capex, 51, 175, 177, 179, 183, 184, 207, 209, 210, 211 capital planning process, 126–127 CAS, 176 CCTV, 49, 51, 52, 53, 54, 128 China, 175, 211 climate change, 12 CLOS rating, 61, 63, 64 CMMS (computerised maintenance system), 25, 27, 37, 38 CMPCF (capital maintenance planning common framework), 10, 11 Commission for Aviation Regulation, 21 commitment, 11–12, 49, 103, 104, 114, 117, 119, 136, 142, 147, 150, 204, 205 communities, minimising disruption to, 13 compliance, 24, 29, 60, 69, 102, 111, 151, 178, 179, 208 Arts Victoria, 40, 41, 42, 45 Wessex Water, 13, 15, 16, 18, 19 214 Copyright © ICE Publishing, all rights reserved Comprehensive Spending Review, (UK), 134 condition, 5, 9, 12, 13, 15, 16, 19, 22, 25, 27, 29, 30, 33, 37, 40, 41, 42, 43, 49, 53, 54, 62, 64, 71, 73, 86, 94, 100, 102, 103, 114, 117, 123, 124, 126, 127, 128, 129, 133, 151, 172, 180, 181, 210 continuous improvement and organisational change see SP Ausnet Cork Airport, 21, 22, 26 costs, 1, 4, 5, 203, 204, 205, 206, 209, 210, 212 Arts Victoria, 41–42, 43 Cambridge, Canada, 122, 124, 127 Dublin Airport Authority, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 37 Euroports, 178, 179, 181, 182 Grand Port Maritime du Havre, 83, 84, 87, 89, 96, 97, 98 Hamilton, 156, 158, 159, 160, 161, 162 London Underground, 133–134, 138 Network Rail, 103, 104, 105, 106 RailCorp, 149 Rio Tinto, 169, 170 Scottish power, 110, 111, 118 Scottish Water, 67, 69, 70, 71, 72, 75, 76 South West Water, 50, 51, 52, 53, 54, 56 Wessex Water, 9, 11, 16, 18, 19, 20 criticality, 5, 9, 25, 26, 35, 37, 55, 71, 73, 75, 83, 87, 127, 138, 178, 179, 180, 181, 210 culture change, 5, 112, 147, 155, 166, 168, 172, 174, 184, 205 dashboard reporting techniques, 209 decision making, 4, 53, 54, 55, 69, 72–73, 78, 84, 86, 87, 94, 98, 104, 112, 122, 123, 133, 134, 136, 143, 148, 161, 166, 170, 173, 178, 179, 184, 207 structured decision making for the medium and long term see Scottish Water delivery roles, 134, 137, 153, 165, 166, 167, 169, 170, 172, 173, 179, 180 Deming, WE, 148 design lead, role of, 29–30, 31, 33 Developing a High-level Asset Management Function Strategy for RailCorp (Burns and Wallsgrove), 142 DOMS (distribution networks operational and maintenance strategies), 13 drainage area plans (DAPS), 50 Dublin Airport, 21, 22, 26 Index Dublin Airport Authority (DAA), 3, 21–38, 207 approach to restructuring, 24–37 asset data and information cycle, illustration, 27 asset lifecycle management, illustration, 26 balanced scorecard asset health review, illustration, 36 extracts from DAA asset management terms of reference document, box, 29–32 four key roles in asset management, illustration, 33 risk, resilience and assurance, illustration, 34 risk management hierarchy, illustration, 35 outcomes, 37–38 restructuring around asset management, 22–24 benchmarking data, table, 23 see also Cork Airport; Dublin Airport; Shannon Airport EAM (enterprise asset management) system, 142 EBITDA, 177, 183, 184, 185, 210, 211 Edwards, R, 101 Electricity Safety Management Scheme, 147 embedding, 3, 5, 18, 34, 45, 77, 83, 96, 102, 111, 112, 113, 114, 116, 148, 172, 174, 179, 184 Energy Networks Australia (ENA), 149 Energy Safe Victoria (ESV), 149, 152 environmental issues, 18, 19, 25, 32, 35, 43, 52–53, 61, 62, 69–70, 109, 110, 111, 117, 126, 151, 178, 187 see also climate change; pesticides Ernst and Young, 211 ESRI, 60, 122, 125 EU Water Framework Directive, 18 Eureka, 16 Europe, 167, 175 European Foundation for Management Development Excellence in Practice Awards, 173 Euroports, 3, 175–185 AMP2 changes and improvements, 178–179 AMP2 report template, 179–183 age versus criticality (sample), illustration, 180 age versus condition (sample), illustration, 181 condition versus criticality (sample), illustration, 181 Euroports risk matrix, illustration, 182 Capex and EBITDA, table, 183 Euroports terminal network 2011, illustration, 176 evidence, 3, 4, 38, 45, 102, 134, 138, 144, 179, 183, 204, 207, 212 expenditure (capital and operating), reduction of see Grand Port Maritime du Havre failure, 4, 51, 52, 54, 56, 89, 93, 113, 117, 133–134, 178 probability of failure, 86, 88 type of failure, 86, 88 FMECA (failure mode, effect and criticality approach), 26 fairness intergenerational, 3, 157–158, 163 options, 161, 162 putting a price on, 158–159 financial and technical data alignment see KPMG Finland, 175 FMECA, 74 France see Grand Port Maritime du Havre Galileo, Gas Safety Case, 147 Gatwick Airport, 23 generally accepted accounting principles (GAAPs), 198, 199 GIS (geographic information system), 52, 55, 60, 64, 122, 124, 125, 127 global competence and learning see Rio Tinto Global Forum on Maintenance and Asset Management (GFMAM), 208, 210 Grand Port Maritime du Havre (GPMH), 3, 83–98, 207 development process, 84–94 definition of maintenance actions, 87, 89 elaboration of the maintenance plan, 89, 94 215 Copyright © ICE Publishing, all rights reserved Index Grand Port Maritime du Havre (GPMH) (continued ) example classification of hazard probability of failure, type of failure and uncertainty, illustration, 88 example of an acceptable risk boundary for security and availability, illustration, 90 frequency (HI-hazard index), 85–87, 88, 91 functional analysis of a steel sheet pile seawall, illustration, 86 functional domains of the port infrastructure system, illustration, 85 preliminary analysis, 84 ranking of actions based on risk indexes, illustration, 93 ranking of maintenance actions, 89, 93 requirements analysis, 84–85 risk (RI-risk index), 89, 91, 92 risk index over time for one projected scenario, illustration, 94 risk mapping for availability requirement, illustration, 91 scale of repair and reconstruction costs, table, 89 severity (SI-severity index), 87, 89, 90, 91 prediction of future maintenance requirements, 96 simulation capabilities and predictions of SIMEO Ports reduce visual inspections, illustration, 96 prediction of performance over time, 94–95 example of availability risk grid before and after interventions for a given year, illustration, 95 prioritising maintenance interventions, 96–97 histogram of certain and probable maintenance costs, illustration, 97 requirements, 83–84 Governance for Railway Investment Projects (GRIP), 102 Guardian, 49 Gulf of Mexico oil spill, 113 Halfawy et al., 53 Hamilton, 3, 155–164, 207 analysis, 156–157 216 Copyright © ICE Publishing, all rights reserved financial assumptions, 156–157 population assumptions, 157 technical assumptions, 156 generational differences, 157 2010 populations by generation, table, 157 fairness, intergenerational, 157–158, 163 fairness, options, illustrations, 161, 162 fairness, putting a price on, 158–159 cost increase by generation, illustration, 159 initiatives, related, 162–163 levels of service for long-term care facilities, 161–162, 163 annual cost per capita, illustration, 162 number of long-term beds, illustration, 161 social policy, responsibility for, 160 uneven asset bubbles, 159–160 remaining useful life-by number of facilities, illustration, 160 Hatfield, 101 HAZOP, 74 Helm and Rajah, 50 High Level Output Specification (HLOS), 104–105 Hong Kong railway (MTR), 144 House of Commons Committee of Public Accounts, 100 human services planning initiative (HSPI), 162 Iberdrola Group, 109, 118 IBM, 125 Inderst, G, 211 India, 211 InfoNet, 53 information management, 3, 4, 14, 15, 16, 19, 25, 27, 29, 30, 31, 37, 41, 60, 117, 118, 122–123, 138, 142, 178, 183 see also GIS; IT; knowledge Institute of Asset Management (IAM), 208 IAM conceptual model for asset management, illustration, 209 Institute of Management, 72 Infracos, asset management objectives, 133, 134 innovation, 3, 16, 18, 40, 43, 44, 78, 109, 150, 165, 171, 173, 174, 207–208 Institute of Asset Management Competences Framework, 16, 135 Index Institution of Chemical Engineers, 109 integrating asset management, 134–138 interest, 204, 205 international financial reporting standards (IFRS), 188, 198, 199 inquiry, 204, 205 investment optimisation, South West Water, 53–55 IQEMC criteria, 74, 77 Ireland see Dublin Airport Authority Irish Aviation Authority (IAA), 21 ISO 9001, 14 ISO 14001, 118 ISO 55000, 154 ISO 55001, 5, 138, 139, 208 ISO 31000, 74, 152 IT, 16, 35, 55, 119, 125–126, 142, 167, 187, 217 see also CMMS; ESRI; GIS; InfoNet; Maximo; Microsoft; OnPoint; Oracle; SIMEO Port; Sunflower Systems; WAM Italy, 175 Kaizen, 148 Kennedy, J, 141, 142 Kennedy and Boldeman, 144 knowledge, 3, 4, 9, 16, 19, 41, 60, 71, 76, 86, 114, 102, 103, 106, 122–123, 125, 129, 132, 143, 177, 204, 209, 210 see also information management Knowledge Transfer Partnership scheme, 76 KPIs, 25, 113, 118 KPMG, 3, 187–200 accounting purchasing price excluding added values and client interventions, 190–199 added value and client interventions, 192, 197–198 calculating the accounting purchase price for the technical investment history, illustration, 194 comparison of initial and optimised technical data, illustration, 193 comparison of technical and financial data, illustration, 191 financial-technical reporting, 198–199 hypothetical example of completed disposal, illustration, 195 optimised technical data with accounting purchase prices and accounting data with an optimised technical investment history, illustration, 196 initial harmonisation of technical data and accounting data, 190 multidisciplinary collaboration, illustration, 188 quality of financial-technical asset data, 189–190 Ladbrooke Grove, 101 leadership, 3, 10, 16, 37, 67, 68, 101, 111, 112, 113, 114, 116–117, 118, 137, 142, 144, 165, 167, 173 Lean Six Sigma, 143 Lego brick development, 76–77 lifecycle management, 4, 22, 25, 26, 27, 35, 41–42, 43, 69, 70, 71, 74, 75, 78, 103, 114, 119, 123, 155, 158, 166, 169, 176, 179, 182, 187 see also reverse lifecycle management line of sight, 14, 32, 67, 105, 114, 135, 138, 150, 153, 180, 184 Lloyds Register, 13–14, 136 London Passenger Transport Board, 131 London Underground, 3, 131–139, 143, 204, 205, 206 forecast growth in passenger journeys, illustration, 132 integrating asset management, 134–138 asset management framework, illustration, 135 development areas, illustration, 136 organised to manage assets, illustration, 137 outcomes, 138–139 PPP contracts and asset management, 132–134 Lux see Euroports Macassa Lodge, 155 Madrid Stock Exchange, 109 Maintenance Engineering Society of Australia, 142 maturity scales, 72 Maximo Enterprise Asset Management System, 125, 125 Maxwell, S, 141, 142, 144 217 Copyright © ICE Publishing, all rights reserved Index Metronet, 132, 133, 134, 138 Mexico, 118 Microsoft Excel, 53 missions, 3, 42, 46, 150, 151 modelling, 3, 4, 13, 29, 41–42, 50, 51, 52, 54, 55, 56, 70, 72–78, 86, 98, 111, 112, 151, 208 see also SIMEO Port Monteith Brown Planning Consultants, 162 Murray and Gee, 72 National Audit Office (NAO), 134 Network Licence, 100–101, 102, 103 Network Rail, 3, 99–107, 216 establishing asset management processes, 102–105 Industry Initial Plan, 104 laying the foundations, 101–102 Reporter, role of the, 102–103, 104, 105 New South Wales see RailCorp non-government organisations (NGOs) see Arts Victoria Office of Rail Regulation (ORR), 100, 101–102, 104, 105 Ofgem, 148 Ofwat, 9, 11, 18, 49, 50, 52, 68 OHSAS 18001, 118 OnPoint, 122 Ontario Ministry of Health and Long-Term Care, 155 Oracle, 60 Oxand, 83, 86, 96, 98 Parks Asset Reporting and Information System (PARIS), 60, 64 Parks Business Unit see Calgary PAS 55 (Publicly Available Specification on asset management), 1, 5, 11, 13–16, 24, 61, 67, 69, 70, 71, 74, 109, 110, 114, 118, 119, 135–136, 138, 139, 147, 148, 149, 176, 184, 204, 205, 208 impact of PAS 55, 149–152, 153–154 perception of asset management, 206–207 performance, 5, 16, 22, 24, 25, 34, 37, 64–65, 85, 94–95, 101, 105–106, 111, 112, 114, 116, 117, 118, 138, 150, 151, 152, 165, 167, 169, 203, 204, 206, 208–210, 212 external efficiency, meaning, 210 internal efficiency, meaning, 210 218 Copyright © ICE Publishing, all rights reserved Public Performance Measure, 101 see also AMPAP; AMPDP; Euroports; KPIs pesticides, 19 PESTLE analysis, 70, 74 Piper Alpha disaster, 113 planning, 210, 212 Calgary, 60, 61 Cambridge, Canada, 122, 123, 126–127 Euroports, 177, 179 Grand Port Maritime du Havre, 89, 94, 98 Hamilton, 162–163 London Underground, 134–138 Network Rail, 103, 104, 105, 106 Rio Tinto, 166, 169 Scottish Water, 68–77 South West Water, 52–53, 54 SP AusNet, 150, 151, 152, 154 Playbook, the (Hamilton), 162 PPP contracts and asset management, 132–134, 138, 139 profit, 22, 24, 39, 87, 91, 161 project manager, role of, 31–32, 33 process safety, 3, 109–119 Programme Management Office (PMO), 152, 153 property, plant and equipment (PPE), 188–190, 198, 199 PS 3150, 59–60, 124 Rail Infrastructure Corporation (Australia), 142 RailCorp, 3, 141–144 Railtrack plc, 99 return on investment (ROI), 35, 192 Rio Tinto, 3, 165–174, 204 aims and scope of AMPDP, 166–167 asset management core competencies, illustration, 166 identification of learning partners and responsibilities, 167–168 managing engagement across the business, 170 stakeholders in the Rio Tinto AMPDP, illustration, 171 measuring performance, 170–173 stakeholders involved in the programme, table, 171 programme design, 168–170 Index role of learning project in AMPDP learning journey, illustration, 169 strategy for programme development, 167 risk, 3, 4, 203, 205, 206, 209, 210–211, 212 Dublin Airport Authority, 25, 26, 27, 29, 32, 33, 34, 35, 37, 38 Euroports, 176, 178, 179, 180–182, 183, 184 Grand Port Maritime du Havre, 83–98 heat map report, illustration, 14 London Underground, 133, 136 Network Rail, 103, 106 Rio Tinto, 168, 169, 170, 173 Scottish Power, 109, 114, 117, 118 Scottish Water, 69, 70, 71, 72–78 South West Water, 50, 51, 52, 53, 54, 55 SP AusNet, 151, 152, 153, 154 Wessex Water, 10, 13, 14, 18 safety, 165, 190, 191, 199 see also process safety; risk Sayano–Shushenskaya hydroelectric power station, 113 Scott, K., 49 Scottish Power, 3, 109–119, 205, 209 high reliability organisation, illustration, 110 Operational Transformation Programme (OTP), 109, 110–111, 118 OTP business case drivers, illustration, 111 staff awareness and communications, 117 stage (vision and strategy) of seven-stage model, 111, 113–116 integrated asset management and process safety approach, illustration, 115 process safety dashboard, illustration, 116 stage (establish leadership) of seven-stage model, 116–117 Scottish Water, 3, 67–79 multiple strategies within a defined framework, 67–68 structured hierarchy for strategies and plans, 68–77 analytical processes, 72–73 asset management objectives, 71 asset management strategy, 69 asset plans, 71–72 asset strategy framework, illustration, 68 basic risk monitoring and management, 74 data analysis spiral, illustration, 73 pan-Scotland strategies and geographic strategies, 69–71 pan-Scotland strategy example of aspirations, goals, intents and actions, illustration, 70 statistical analysis, 76–77 structured approach to asset risk modelling, illustration, 76 systematic assessment, 75–76 typical risk methodology health assessment, illustration, 74 use of maturity scales in stakeholder engagement, 72 service levels, Euroports, 190, 191 service levels of long-term care facilities, Hamilton, 159, 161–162, 163 service levels on public amenities see Calgary service orientated asset management framework see Arts Victoria serviceability, 9, 12, 25, 27, 29, 37, 50, 122, 129 sewer condition classification, 53 sewer location model (SLM), 50, 51, 52, 56 sewer rehabilitation planning optimisation process, 54 sewerage economic assessment model (SEAM), 50, 51, 52, 55, 56 sewerage risk management (SRM), 52 Shannon Airport, 21, 22, 26 SIMEO Port, 83, 84, 94, 96, 98 Singapore Power, 147 SMART asset management, 182, 185 social policy, 160 SotI report, 155, 157, 162, 163 South West Water, 3, 49–57 effective planning, 52–53 investment optimisation, 53–55 sewer rehabilitation planning optimisation process, illustration, 54 typical output from aide, illustration, 55 SEAM process flow-’business as usual’, 51 Southall, 101 SP Ausnet, 3, 147–154, 204, 210 impact of PAS 55, 149–152, 153–154 risk management framework, illustration, 153 SP AusNet asset management process, illustration, 151 219 Copyright © ICE Publishing, all rights reserved Index Spain, 109, 118, 175 SPI Electricity and Gas Australia Holding Pty Ltd, 147 sponsors, role of 137, 153 standards of service, 13 State Airport Act 2004, 25 STEM (strengthen, transform, extend and modernise), 152 Strategic Asset Lifecycle Value Optimisation Project (SALVO), 75 strategies, 3, 206, 207, 210, 212 Euroports, 177, 182, 183, 184 Hamilton, 157 London Underground, 134–138 Network Rail, 103, 105 RailCorp, 142, 144 Rio Tinto, 167, 168 Scottish Power, 111–116 Scottish Water, 67–77, 78 SP AusNet, 150, 151, 152, 154 Wessex Water, 12–13, 18–19 for service strategy see Arts Victoria statistical analysis, 76–77 structuring, restructuring at Dublin Airport Authority, 22–38 restructuring at Network Rail, 104 structure, authority and responsibilities, SP AusNet, 149 structured approach at Scottish Power, 112 structured hierarchy for strategies and plans, Scottish Water, 68–77, 78 structuring development programme at Rio Tinto, 168, 170 subject matter expert group (SME), 61–64 sustainability, 4, 18, 19, 25, 32, 43, 104, 112, 113, 121, 150, 158 systematic assessment, 75–76 tailoring management approach to needs and capabilities, tangible capital asset (TCA), 60, 124 technical and financial data alignment see KPMG technology adoption, 125–126 TED, 87, 90, 91, 95 Temasek Holdings, 147 Texas City refinery, 109, 110 TMS Programme Board, 136, 137 220 Copyright © ICE Publishing, all rights reserved total quality management, 148, 153, 154 transparency see Euroports Transport for London (TfL), 131, 133, 134 Transportation and Public Works Department (TWP), Canada, 121 Tube Lines, 132, 134 TXU Energy, 147 UK, 211 see also London Underground; Network Rail; Scottish Power; Scottish Water; South West Water; Wessex Water UK Health and Safety Commission, 100 UK Health and Safety Executive, 109, 113 UK Water Statistics User Group, 72 UKWIR, 9, 10, 16, 68 uncertainty, 86–87, 88, 97 University of Edinburgh, 76 University of Strathclyde, 76 University of Western Australia Business School, 167 urban creep, 12 Urban Land Institute, 211 USA, 167, 170 USA Occupational Safety and Health Authority, 113 value, 1, 2, 4, 5, 203, 204, 206, 207, 208–210 KPMG, 190, 192, 194, 197–198 Victoria see SP AusNet Voltaire, 203 WAM (work and asset management), 60, 64 Ward and Savic´, 49, 54 Ward et al., 55 Water Act 1989, 49 Water – Delivering the Vision (Wessex Water), 18 Water – The Way Ahead (Wessex Water), 12 Water Research Council, 16 Weber and Alfen, 211 Wentworth Lodge, 155 Wessex Water, 3, 9–20, 205 capital investment since privatisation, illustration, 10 evolution of asset management, 11–17 asset management framework, illustration, 15 certification to BSI PAS 55, 13–16 Index creation of an asset management function, 11–12 heat map report, 14 integrated work and asset management systems, illustration, 17 long term strategic vision, 12–13 new work and asset management systems, 16–17 organisational structure, illustration, 12 risk-based prioritisation, 13, 14 strategic direction shaped by relationships with stakeholders, 18–19 comparison of capital-intensive and sustainable solutions, table, 19 West, G, 173 Wirahadikusumah et al., 53 Woodhouse J, 55 YTL Corporation, 221 Copyright © ICE Publishing, all rights reserved ... Publishing, all rights reserved International Case Studies in Asset Management end of each case study, the interconnections between the components of asset management, as illustrated in the case studies, ... reserved International Case Studies in Asset Management environmental and cost benefits can be achieved by adopting a sustainable approach that uses asset management principles, and it is working with... systems, and in the quality and sharing of information and data 13 Copyright © ICE Publishing, all rights reserved International Case Studies in Asset Management Figure 1.3 Example of a risk management