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A Life in Asset Management

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Presentation on theme: "A Life in Asset Management"— Presentation transcript:

1 A Life in Asset Management
Dr Penny Burns Editor, AMQ International’s “Strategic Asset Management”

2 Today more is being asked of asset managers than ever before

3 To succeed, you need to be – and to be seen to be – a professional

4 Professionals are respected, rewarded, listened to – they make a difference

5 To be a professional you must demonstrate a knowledge of what has been done before – why, and whether it will work today

6 Knowing AM History is the KEY to Professionalism – join me in discovering it

7 We have been here before

8 It is never exactly the same

9 Therefore we must ADAPT rather than ADOPT

10 We have been here before
Let me take you on a brief tour of the last 30 years

11 Mid 1980s – Mid 1990s We were ignorant but we knew it. We sought to establish the facts. We asked: what did we have? what condition was it in? what was it worth?

12 Mid 1990s – Mid 2000s Having recorded our assets we thought we knew all the answers and set about telling others: we focussed on renewal forecasts and demands for ‘backlog’ maintenance

13 Mid 2000s - ? The increasing complexity of asset management issues is making us aware that we don’t have all the answers – we don’t even have all the questions!

14 Mid 1980s – Mid1990s The major concern was VALUATION and DEPRECIATION – driven by the need to put assets in the balance sheet

15 Mid 1980s – Mid1990s Calculating depreciated values required co-operation between engineers and accountants

16 Mid 1980s – Mid1990s AIS – Both engineers and accountants wanted to establish asset information systems – but for different reasons

17 Mid 1990s – Mid 2000s We projected renewal requirements on a status quo basis

18 Mid 1990s – Mid 2000s We focussed our attention on risk and reliability

19 Mid 1990s – Mid 2000s We were mostly asset centric

20 Mid 2000s - ? Many more players in the field – not only engineers and accountants but economists, lawyers, urban planners, environmental scientists, regulators and the community Asset Managers are now being held to higher standards

21 Mid 2000s - ? With the new players come new directions: a service focus, productivity, financial and environmental sustainability…

22 Mid 2000s - ? The major challenge is affordability – are the benefits of assets worth what we have to give up to get them?

23 The issues we dealt with in the 1980s, the 1990s, the 2000s are still with us – but they are not exactly the same

24 Recording, Valuing, Depreciating Assets
When there were no rules, decisions were taken to advance AM. (accrual accounting, replacement cost, modern equivalent assets, and in NZ, condition based depreciation)

25 Recording, Valuing Depreciating Assets
Now there are established standards and more regulation There is more data but with it has come the demand for more justification Data quality is now as important as data quantity used to be Then Accountants set rules to suit the needs of accounting (for what had happened) – but they were not necessarily good for AM (which must look forward) e.g. straight line depreciation, greenfields valuations Auditors need to respond to Accounting Requirements not those of AM. More justification is being asked of Asset Managers

26 Renewal, Risk, Reliability
The issues used to be Data gathering and Consistent measurement

27 Renewal, Risk, Reliability
Technical measurement issues now largely dealt with, interest moves to the strategic issues Renewal is no longer axiomatic, it has to be justified We have more data but not necessarily more knowledge, interest is therefore moving to data analysis – getting meaning from data – statistics is becoming critical for asset managers

28 Sustainability, Productivity and Affordability
Issue used to be Getting persuasive measurements of ‘backlog’ and renewal to support financial bids. The question of whether this was affordable hardly ever arose

29 Sustainability, Productivity and Affordability
With better data the current unsustainable position is more evident – and we are expected to do something about it! Productivity improvement was once a talking point, but is now essential We once thought just measuring renewal costs was sufficient – it no longer is.

30 We have to ADAPT not merely ADOPT

31 Circumstances Change Adopting earlier solutions is dangerous
Benchmarking used to be about being ‘as good as’ – that is no longer sufficient What used to work will not necessarily work now More is now expected of us and previous solutions will, in many cases, be no longer ‘good enough’

32 Changing Circumstances require Adaption rather than Adoption
We need to know more than what has been done in the past – we need to know why, under what circumstances and with what results We need to know more than how our assets work – we need to know what is driving demand for them There are now more players in the field – we need to know not only engineering requirements of assets but those of the other players

33 Record Keeping Change is ongoing, records have to serve the needs of future change Greater regulation means greater need for detail and relevant degrees of accuracy With more players in the game, records need to be able to be expressed in ways which are meaningful for regulators, other professionals and, increasingly, the community

34 AM is becoming professional – are you?

35 Where do we find the story of Asset Management?
Universities teach principles and current practice. But few, if any, teach the history of AM If we only know the present, we are but tradesmen, to be a professional means understanding the development of asset management so that we can change as circumstances change

36 AM is becoming more complex
Complexity is difficult It is easier to understand if we first start with something simple and move up Asset Management was simple once, about 30 years ago, so start there Understand the issues at the beginning and why they needed to change

37 Protect Yourself Those who do not know the past try to reinvent it!
“The further back you look, the further forward you can see” Churchill.

38 An invitation Join me and many others in exploring our common past
Read the ‘how I got started in AM’ stories from other Asset Managers and add your own at Think about the AM developments that have taken place in your organisation Contact me to join a history discussion group

39 Even better
Subscribe to “Strategic Asset Management” and follow the developments of asset management as they happen

40 THANK YOU! To find out more

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