Gary Ruck is a registered Professional Engineer and Project Management Professional in Ontario. He has over 35 years of experience in asset management and is a recognized expert in that field. He is currently the Director of Global Business Development at Deighton Associates Ltd.
Summary
This is Part II of a seven-part blog series on the dTIMS Agency Roadmap. Please refer to the introductory blog “Part I - An Agency Roadmap – Do I Need One of Those?” for the basis of this series.
In this installment, we will look at the six questions you should ask yourself to help gauge your agency’s asset management maturity (AMM) level and to help identify your future focus areas.
Introduction
In the previous installment of this series, the purpose was to determine your agency’s AMM, what information you might need to establish that, and how you could increase it. There are six fundamental questions in most roadmaps that help you evaluate your agency’s asset management (AM) practices. There are always variations to these questions, but the fundamental approach is the same – to look at your AM practices from different perspectives and evaluate how your agency stacks up against industry-recognized best (asset) management practices, identify your existing gaps, and then determine the implementation activities necessary to bridge or close these gaps. This blog will explore those questions.
The 6 Questions
So, what are these questions? Let’s look at each one individually. The first three deal with your current inventory of assets, and the last three deal with how to maintain and fund these assets into the future.
Question 1: What do you have and where is it?
This question is a foundational one in asset management. Its purpose is to bring focus to exactly what assets your agency owns and is responsible for. It is impossible to do proper asset management if you don’t have a full inventory of all your assets. This inventory includes basic data about the asset but also, ideally, is linearly referenced to some base network, and preferably supported by GIS. Otherwise, you will end up with disparate data sets that cannot relate to one another, making it difficult to share data and results, and monitor performance.
For some agencies, the list of asset types that you are ultimately responsible for can be substantial. If this is the case for you, then you will need to prioritize which assets come first because it is unrealistic to work on all of them simultaneously. The prioritization can be based on asset value (more on this in the next question), risk, budget needs, or even an asset steward who is showing initiative.
Finally, for each asset type, you will want to decide on what asset components are important to collect. You don’t necessarily need an exhaustive list of items for every asset, but you will need to consider the AM objectives for each asset, how much data you currently have, do you have the right data, how will you acquire the data that you need, and how often should you collect it?
Question 2: What is it worth?
Once you know what you have and where it is, you will want to consider the importance of each asset type to help focus your AM efforts on the most important ones. This ranking can be in many forms, but two of the more commonly used ones are asset value and criticality. We will explore asset criticality in greater detail in the following question, but first, let’s discuss asset value.
Asset value is the concept of determining the monetary worth of each individual asset and its asset class. An asset class is the entire collection of similar assets. As with everything else, there is not just one way to do this, but depending on the asset type, the overall quantity of individual assets, and the data quality associated with your asset inventory, you can implement either a bottom-up or top-down approach.
A bottom-up approach determines the value of each individual asset at its current stage of life (e.g., year of service). A simple way to do this is to determine the asset’s replacement cost if new and then take a percentage of that based on its current condition and the amount of time the asset is anticipated to remain in service (i.e., service life). Then, you can sum up each asset’s value to determine the overall asset value for that asset class.
A top-down approach determines the overall asset value directly for the asset class without looking at each individual asset. You could sum up all the assets along with an asset value, and this total is the overall asset value for that asset type. A simple approach could be to use an average unit cost per asset and then apply that to the total number of assets.
Other questions to consider when considering an asset’s value include: what is your agency’s current investment level for the asset, and how fast are the assets being consumed? Calculating your asset replacement value can provide you with an indication if there is a potential issue. Similar to getting your blood pressure checked when you visit the doctor for a check-up! For example, if your current investment levels cannot maintain, repair, or replace your assets at their current rate of consumption, then your asset backlog will continue to increase.
Question 3: What is its condition and expected remaining service life?
This question focuses on asset condition while bringing in a level of service life angle. Condition is often a quantitative, engineering measure of the current state of the asset, but on its own, it might not tell you the whole picture. A condition value of 40 out of 100 on an asset that is heavily used on a major component of your network versus the same condition value on a rarely used asset in a remote location is very different. The concepts of remaining service life (RSL) and criticality are used to help clarify the picture. In the example above, the first asset has a much lower RSL and higher criticality rating than the second asset and hence, should be considered earlier in your AM plan.
The purpose of the first three questions is to objectively identify and evaluate what you currently have, and to consider developing a sense of urgency for each asset class.
Question 4: What is the level of service expectation, and what needs to be done and when?
The next two questions highlight areas where the benefits of an asset management software application are maximized. In this question, you are establishing what level of service your agency and your stakeholders expect from each asset class. For example, is it acceptable for 20% of the roads to be in poor condition? What about the bridges? Based on these answers, you will likely develop both a capital and a maintenance and operations plan for each asset type to prescribe what to do and when to do it to achieve the desired level of service. To create these work plans, your asset management software application will likely examine the current condition of your asset and predict how that condition will change in the future. Based on this prediction, a set of maintenance, rehabilitation, and replacement recommendations will be recommended along with a cost and a timeframe for implementation.
Question 5: How much will it cost and what is the acceptable level of risk(s)?
The work plan discussed in the previous question on its own does not provide the full picture. Much like maintaining condition is not the same as achieving a desired service level, a work plan needs to consider other factors to be a useful AM artifact. For each asset class, your agency needs to evaluate or determine its risk appetite. Risk appetite is the level of risk that an agency is willing to accept or tolerate, which can be quite low for critical assets such as bridges, but might be higher for other assets such as traffic signs. The risk appetite coupled with your agency’s budgeted asset investment level will help you develop a more structured work plan that can be used to evaluate your predicted performance against your AM objectives.
The work plan will contain a wealth of information that your agency can use to make its AM decisions, such as future capital and operating costs, and from this a short and long-term financial plan, asset renewal alternatives, and asset maintenance and rehabilitation strategies. With this information in hand, you will be able to determine if you are meeting your AM objectives, and if not where you are falling short and what strategies you will need to employ to meet your objectives. Of course, this assumes that you have explicitly documented your AM goals and objectives!
Question 6: How do you ensure long-term affordability?
Finally, with your work plan in hand and an idea of what your future financial plan looks like, you will need to determine how you can sustain this over the long term. Up to now, we have been looking at assets individually and independently of one another. But this approach may be neither sustainable nor economical, as you may simply not have enough funds to meet the needs of all your assets! You will likely need to consider reducing your performance expectations for one or more asset classes, which reduces the amount of funds you need. This increases the amount of risk exposure you must carry so you can balance your infrastructure needs against your available funds. Making these difficult trade-off type decisions highlights the need to coordinate infrastructure works to minimize future disruptions to the traveling public – your stakeholders – while providing efficiency through economies of scale. Many agencies have seen the benefits of developing corridor projects that address maintenance and capital needs in a single project.
What funding sources are available to your agency and how reliable are these going forward? Is the level of investment going to change dramatically at all in the years ahead? These are just some of the questions around the reliability of the funding sources you have at your disposal and must be answered in your financial plan. The best-laid plans will go for not if the investment level is not there to execute them.
Conclusion
These six questions or variations thereof are fundamental to your agency’s AM efforts. If your agency is serious about AM, you will need to go through these questions for each asset type and document your answers. This becomes the foundation of your asset management plan. The questions help you look at the now and the future, and allow your agency to take a proactive approach to preserve assets for future generations. And, by going through these questions, you will determine your agency’s AMM and identify future areas of improvement.
Around the world, dTIMS is used to help agencies through this process. dTIMS can be used for any asset type that your agency is responsible for. For example, the State of Vermont is using dTIMS to manage more than 20 of its critical assets. It is being used for the asset’s inventory and condition as well as the development of the short- and long-term financial plan. Contact Deighton Associates Ltd. to find out more about how we can help you along your asset management journey.
If you are responsible for asset management in your agency, pick one asset and go through these questions for that asset. At first, do not spend a lot of time on each one. Just go through the process to get a feel for the resources you may need to answer the questions. You will not and cannot do it on your own. But asset management always requires a champion to get a foothold within an agency. Be that champion!
I encourage you to reach out to anyone at Deighton to learn more about the agency roadmap and to participate in and help influence the work Deighton is doing in this area.
Please watch for future blogs that will continue this theme and go into more specifics.
Up Next: Part III - A Look at Two Roadmaps – IAM and AMBC.
Asset Management Roadmap Blog Series:
Part 1: An Agency Roadmap - Do I Need One of Those?
Part 2: The Checklist – What Questions You Can Ask to Help Build a Roadmap