The ISO standards shift emphasis of asset management from minimising cost to realising value. This requires clearer determination of the value realised from assets and how to make value-based asset management decisions.
The Centre for Smart Infrastructure and Construction (CSIC), has developed an innovative structured approach to specifically help asset owners and operators to make better-informed decisions.
An asset generates stakeholder value when it functions at or above an intended performance level; for example a bridge delivers value when it allows vehicles to pass through at the designed traffic and load capacity, and this determines the required maintenance interventions.
Performance is only one determinant of value. Risks posed by the asset to its stakeholders and costs incurred in maintaining the value should also be considered while ensuring asset performance. Hence CSIC defines the value of asset management activities (maintenance interventions in this case) as the sum of increase in performance levels, reduction in risks and reduction in costs.
Take London Underground. The organisation carries approximately 1.2 billion passengers per year and its contribution to the national economy significantly depends on the delivery of that capacity. With parts of the tunnel network now more than 150 years old, maintenance is essential to realise value from the infrastructure. Now apply CSIC’s structured approach to maintenance decisions and upkeep of tunnels. The first step is to confirm the range of stakeholders (taxpayers, regular users, tourists, insurers) in addition to Transport for London (TfL). The next step is to identify key value drivers for these stakeholders covering the spectrum of performance (service reliability, visual appearance), risks (passenger safety, structural integrity), and costs (repair costs, inspection costs), and to identify clear metrics to measure these value drivers (lost customer hours, mean time between failures, accident rates). All the metrics can be converted to equivalent monetary figures.
One issue with ageing tunnels is water seepage through minor cracks and joints. The risk of major structural failure has to be considered but is actually a relatively insignificant risk. Applying CSIC’s methodology, which considers all the value drivers, it became clear that water seepage could affect the value of the tunnel through various means including corrosion of rails and damaging signalling systems, disrupting the service and affecting passenger safety. Seepage on a platform affects aesthetics, potentially damaging London’s brand image. This approach led to the determination of the best repair option and timing considering the location of seepage and its systemic consequences on value, rather than the traditional approach of the least cost option.
Taking a value perspective in asset management has other benefits. Inspection engineers at London Underground can now consider different ways an observed seepage could affect value instead of inspecting purely from a structural integrity and safety point of view. This could form a fundamental part of inspection reports.
Value-based thinking also removes the ‘do-what-is-absolutely-necessary’ mindset, promoting innovative thinking to improve value rather than simply minimise cost. It allows the organisation to systematically identify risks and build a sound business case for investment and expenditure.
This is particularly relevant, even crucial, to infrastructure, where value is generated for many years after the initial investment. Applying CSIC’s method to value-based asset management positively shifts emphasis from managing the cost of assets to managing the value generated by assets.
This article was written by Dr Ajith Parlikad for Infrastructure Intelligence's magazine.
To see the article in Infrastructure Intelligence click here
Dr Ajith Parlikad is a Co-investigator at CSIC at the University of Cambridge.