10 We have been here before Let me take you on a brief tour of the last 30 years
11 Mid 1980s – Mid 1990sWe 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 2000sHaving 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 2000sWe projected renewal requirements on a status quo basis
18 Mid 1990s – Mid 2000sWe focussed our attention on risk and reliability
19 Mid 1990s – Mid 2000sWe 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 communityAsset 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 regulationThere is more data but with it has come the demand for more justificationData quality is now as important as data quantity used to beThen 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 valuationsAuditors 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 beData gathering andConsistent measurement
27 Renewal, Risk, Reliability Technical measurement issues now largely dealt with, interest moves to the strategic issuesRenewal is no longer axiomatic, it has to be justifiedWe 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 beGetting 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 essentialWe once thought just measuring renewal costs was sufficient – it no longer is.
31 Circumstances Change Adopting earlier solutions is dangerous Benchmarking used to be about being ‘as good as’ – that is no longer sufficientWhat used to work will not necessarily work nowMore 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 resultsWe need to know more than how our assets work – we need to know what is driving demand for themThere 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 KeepingChange is ongoing, records have to serve the needs of future changeGreater regulation means greater need for detail and relevant degrees of accuracyWith 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
35 Where do we find the story of Asset Management? Universities teach principles and current practice.But few, if any, teach the history of AMIf 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 difficultIt is easier to understand if we first start with something simple and move upAsset Management was simple once, about 30 years ago, so start thereUnderstand 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 atThink about the AM developments that have taken place in your organisationContact me to join a history discussion group
39 Even better www.amqi.com Subscribe to “Strategic Asset Management” and follow the developments of asset management as they happen