International Perspective on the Implementation of Asset Management Tony Porter, Roading Asset Management Sector Leader, Opus International Consultants Ltd

Ground rules for my reflections  Focus  Roading Bias  My definition of “International”

Opus is Currently Providing Asset Management Services in 7 Countries

Ground rules for my reflections  My perceptions  not based on an in depth study  Gross generalisations  A range of practices exist in each country and my window is relatively limited  Consultants view may be a little jaundiced  Focus  Roading Bias  My definition of “International”  UK, US, Canada, Australia

Definition of Asset Management has evolved  There are many but I currently like:  Providing the desired level of service in the most cost effective manner for the present and future owners of the asset in an informed and transparent manner.

First, lets reflect back on the Progression of AM in NZ

Asset Management Pyramid Work Instructions Intervention Levels Asset Outcomes Service Levels Business Outcomes Physical work Vertical Intergation

Roles OperationalTactical Strategic EfficiencyEffectivenessEfficacy Physical Work Levels of Service Work Instructions Asset Outcomes Business Outcomes Intervention Levels

Definitions  efficiency - measured by a comparison of production with cost (as in energy, time, and money)  Doing things right  effectiveness: ability to produce a decided, decisive, or desired effect  Doing the right thing  efficacy: the power to produce an effect  Setting the right objectives

Asset Management Responsibilities EfficiencyEffectivenessEfficacy ImplementationManagementGovernance Physical Work Levels of Service Work Instructions Asset Outcomes Business Outcomes Intervention Levels Doing things right Doing the right thing Setting the right objectives

Asset Management Responsibilities EfficiencyEffectivenessEfficacy ImplementationManagementGovernance Physical Work Levels of Service Work Instructions Asset Outcomes Business Outcomes Intervention Levels Doing things right Doing the right thing Setting the right objectives Progression

 Overseers Work Instructions Intervention Levels Asset Outcomes Service Levels Business Outcomes Physical work  Accountant s  Engineering Managers  Organisatio ns

Drivers  Visionaries  Government Legislation  Accounting Rules  Best Practice  Financial Pressure  Resource Constraints  Outsourcing  Sustainability  Technology Number of LAs 1993 L G Amend Act Plenty e.g. FRS 3 NAMS Manual The Muldoon era Common theme e.g WBOP’s PBC New LA Act Universal Driver New Zealand

Blockages  Institutional Inertia  Silos  “its an accounting issue”  “trust me I know what I am doing”  Lack of corporate buy in  Lack of recognition of the effort required  Lack of / mismatched systems  “Ribbon cutting syndrome”

Australia  Widespread understanding of the basic principles but extent of implementation is less than I had expected  A lot of data is being collected but systems don’t seem as advanced as NZ  Lack a RIMS group !  AM is being driven by Engineers not accounting standards  “Recommendations” not “standards”  Some really notable exceptions  East Gippsland Shire

Australia - Drivers  The water industry has lead the way  Corporatisation  User pays philosophy demands transparency and definition of levels of service.  Ruling on Nonfeasance is now a really big driver  Rumours that:  Depreciation will be based on condition  Councils will have to fund depreciation are also helping the cause.

Australia Inhibitors  Asset management silos  Under resourced AM departments are often expected to do it all.  “Mushroom” syndrome  Lack of corporate buy in  No recognition of the level of effort required  Legacy Systems  Lack of political buy in  “Ribbon cutting” syndrome

UK  Widespread understanding of the basic principles but again the depth of their implementation in Roading is rather less than I had expected  Much further advanced in privatised water and electricity networks  The key driver in the UK is “Best Value” along with a move to “RAB” by 2006  Resource Accounting and Budgeting

UK Best Value  UK Govt has placed a duty of “Best Value” on LAs  Required to deliver to clear standards of Cost and Quality by the “most economic, efficient & effective means”  Publish annual BV plans & review all services every five years  Audited by “Audit Commission”

UK Best Value (cont)  Authorities must:  show they have applied the “4Cs”  Challenging why and how  Comparing their performance with others  Embracing fair competition  Consulting with stakeholders  Demonstrate continuous improvement  Hertfordshire is first to get a double A audit!

Canada  Ontario  Bill 175 (Walkerton)  Alberta  Silos limiting whole of life costing  BC  Levels of service

USA  FHWA “Office of Asset Management”  GASB 34  VDOT Data Collection  Florida  Colorado

International Drivers  Visionaries  Government Legislation  Accounting Rules  Best Practice  Financial Pressure  Resource Constraints  Outsourcing  Sustainability  Technology Florida UK, Australia USA, Australia? UK Oregon US BC, Australia US, Everywhere

International Blockages  Institutional Inertia  Silos  “its an accounting issue”  “trust me I know what I am doing”  Lack of corporate buy in  Lack of time  Lack of systems  “ribbon cutting syndrome”

New Zealand is clearly at the forefront  The NAMS IIM Manual is widely recognised as the worlds Bible:  It has or is about to be translated into:  “Australian”  “South African”  “English”  Canada/USA ?