Businesses are increasingly being called on to demonstrate their environmental, social and governance (ESG) credentials, and public-sector organisations are no different.
Nowhere is this more pronounced than in asset management, where decision-makers need to strategically balance available funds against sustainable service delivery and asset performance. They must consider how assets are used and the quality and methodology used to determine whether to maintain, repair, replace or retire them. And, they must also account for the environmental impacts of those decisions.
Doing this against the backdrop of tighter budgets, and increasing scrutiny and regulatory requirements, has created a significant challenge for asset practitioners. In an ideal world with unlimited budgets, investment decisions would be simple. However, the more likely scenario is that asset practitioners are working with constrained resources that require them to think creatively and innovatively as well as strategically.
Many public-sector organisations find themselves in the position where they have to defer maintenance on essential assets as a result of reducing costs or unavailable funding. However, as we all know, this can create a knock-on effect where assets need to be replaced sooner or can start causing health and safety issues. This means that asset renewal backlogs are increasing, putting even more pressure on already-stretched resources.
With increased budgets out of the question, the onus is on asset practitioners to make smarter, better-informed decisions to fund allocation to boost sustainability as well as contribute to ESG goals.
Many public-sector organisations find themselves in the position where they have to defer maintenance on essential assets as a result of reducing costs or unavailable funding.
When assets reach the ‘failure zone’, the costs to maintain and repair those assets start to skyrocket. It’s essential to avoid letting assets reach that point; however, it can be very difficult to determine the point at which the cost of maintaining an asset outweighs the benefits of doing so.
This decision is based on a number of key factors, including location, construction materials, utilisation, physical condition, maintenance and performance history and service delivery.
It’s also essential to account for the rate of decline for that asset, which may be constant, rapid or even accelerating. Pinpointing the failure zone and stepping in before the asset reaches it can save the organisation significantly and doesn’t require any additional expenditure.
Current infrastructure spending is about half the rate required to meet average annual demand to 2030. It’s clear that public-sector organisations need to address this gap or risk significant asset failure in the next decade.
Public-sector organisations can use strategic asset management to accurately forecast the health of the entire network
The key to overcoming these challenges and managing the asset lifecycle more cost-effectively is to leverage data for decision-making.
The Internet of Things (IoT) is contributing to an explosion of data regarding assets, and public-sector organisations tend to have access to additional data. However, capturing, storing and managing this data effectively can be challenging; it requires a central asset register that includes analytics capabilities to deliver timely and actionable insights.
Public-sector organisations can use strategic asset management to accurately forecast the health of the entire network and monitor the effects of maintenance and treatments by applying service-based lifecycle degradation profiles at every level, including components.
Importantly, public-sector organisations need to leverage prediction capabilities to conduct what-if scenario modelling. This enables asset practitioners to look to the future and understand the impacts of different choices by creating a variety of scenarios.
A strategic asset management framework also helps public-sector organisations manage the maintenance schedule for each asset across its entire lifecycle.
This can help pinpoint the potential failure zone for each asset and optimum intervention level. Doing so can help optimise funding allocations and more accurately determine when assets need to be replaced.
A strategic asset management framework also helps public-sector organisations manage the maintenance schedule for each asset across its entire lifecycle. By conducting proactive asset maintenance at the right time, public-sector organisations can reduce the risk of failure and lower the costs of maintenance.
Making effective, data-driven decisions starts with establishing a policy framework, identifying the assets and collecting as much information necessary to support asset practitioners with this process.
Organisations can then shift to managing their assets proactively and planning for future needs, including potentially adding new assets. Through scenario modelling and predictive analysis, organisations can start to prioritise funding allocation based on long-term requirements as well as short-term needs.
In turn, this empowers future decision-making and lets asset practitioners see decades into the future for a more organisationally and environmentally sustainable approach.
It’s no exaggeration to say that this approach has saved public-sector organisations tens if not hundreds of millions of dollars and helped them secure similar amounts in future funding to manage assets and delivery sustainable services for their communities.
Nicola Daaboul is the director of client services, APAC, for Assetic
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