Creating long term sustainable value in urban infrastructure Mark Brown, Amey December 2013

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Creating long term sustainable value in urban infrastructure

Mark Brown, AmeyDecember 2013

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Presentation content

• Introductions

• What is Asset Management?

• Case Studies

• Whither Asset Management?

• Conclusions

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What is Asset Management:The goal

To help create better places

to live, work and travel

“ deriving value from assets in a structured and predictable way to meet the objectives of their owner”

Introductions Asset Management Risk Transfer Ideas & Suggestions

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Typical breadth of assets provides a unique understanding of entire city landscapes


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To align with the globally recognised Standard for Asset Management


Strategy &

Planning

Decision

Making

Lifecycle Management

Knowledge

Organisation & People

Risk & Review

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Some of the questions that need answering..

Which roads/bridges, If any, should bereplaced?

What reactive maintenance can beexpected?

What level ofMaintenance/inspection shouldbe planned?

What risk is thebusiness exposed toas a result of the plans?

How can riskbe managed andmitigated?

Assets Policies,Strategies &Plans

What contingencyplans should bein place?

What operationalchanges can be made to extend life ?

What are thesymptoms of imminent failure?

What is the cost? What is the effecton the longer term?


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Business as usual…….

You want how much?!!!

Just as well we doubled the estimate!!!

FINANCE ENGINEERING???


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The Amey Approach - Filling the gap


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Filling the gap


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..and joining things up


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Making the links

THE ASSET MANAGEMENT APPROACHIntroductions Asset Management Risk Transfer Ideas &

Suggestions

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Where is asset management appliedin the built environment?


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Key building blocks of asset management

Process

Data

Maximo

Outputs: Reporting

Decision Making& Behaviours

Achieving

EAMS - systems

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LEADERSHIP/MANAGEMENT REQUIRED TO SUPPORT CULTURE CHANGE

1. Asset Management

- Process Productivity - EAMS systems

Capabilities

2. ManagementAwarenessOwnership

Accountability Responsibility

3. Staff - Mindsets

- Capabilities - Behaviours

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‘Basic - Competent Asset Management’

- Support to asset maintenance, based on knowledge of asset numbers, location, condition, etc

EG:

Controlled asset register Work plans and work execution managed within

asset data systems Basic planning and compliance reporting

‘

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Advanced Asset Management’

– whole-life value goal, through predictive modelling, risk management and optimised decision making techniques using detailed data on asset asset condition, performance and cost.

EG: Integrated Materials Stores Management Optimised planning and scheduling Predictive Maintenance – Condition Monitoring Equipment based maintenance Activity Based Costing Standard Costing Productivity Analysis Cost per Asset Advanced Reporting and Analysis

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Case Study 1 – London Underground‘Tube Lines’

• 50% of London Metro• 500 million passengers a year.• 340km of track,• 101 stations; 251 trains• 2,395 buildings & structures • 93 lifts and 227 escalators• Decades of under-investment • £800m investment – 50% by private sector• 30 year contract split into four 7½ year Periods


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Reporting framework and productivity management

Site Staff to Directors/Executive

Crosses functional/asset boundaries (Assurance/Projects Operations/LU, etc: can get same reports)

No excuses for not knowing

Staff see who is receiving report so enforces good practice against defined processes.

Back up by Report Tracking – total visibility

ProductivityManagement

Performance/AssetManagement

Assurance/Compliance/

Exception

Operational/WorkManagement/

MaterialsManagement

ActuateReports

E -Spreadsheet GIS ReportsKPI Manager

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Reporting structure – driving decision-making

• Ownership

• Accountability

• Monitoring

• Continuous improvement

• Single source of ‘truth’

Work Bank Management: Size and Composition & New and Completed

Operations Pre ExecutiveHSE/Assurance

- Period view- Weekly view- Senior Managers present at PreExecutive Meeting

Senior Management

- Period view- Weekly view- Asset specific

Asset Managers/Maintenance Managers

- Weekly view- Asset/Line/Maintainer specific

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Case Study – ‘Tube Lines’ Outcomes


• Reliability +66%

• Operations spend -15% since 2008

• Introduced single world class asset management system

• Optimising Capex v Opex WLC costs -£26m

• Increased productivity

• Improved our worker safety.

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Tube Lines comparative performance with rest of Underground

to date


£0

£10,000

£20,000

£30,000

£40,000

£50,000

£60,000

Fleet costs per Car

2008/09 Actual

Average

£-

£50,000

£100,000

£150,000

£200,000

£250,000

£300,000

£350,000

Track costs per km

2008/09 Actual

Average

£-£20.00 £40.00 £60.00 £80.00

£100.00 £120.00 £140.00 £160.00 £180.00

Stations costs per m2

2008/09 Actual

Average

£-

£10,000

£20,000

£30,000

£40,000

£50,000

£60,000

£70,000

£80,000

Escalator cost per machine

2008/09 Actual

Average

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Asset Ownership Public Public Public Public Public & Private Private

Operations & Maintenance

Public & Private Shared Private Private Private Private

Capital Investment

Public Public Public Private Private Private

Commercial Risk Public Public Shared Private Private Private

Tariff Collection Public Public Private Private Public Private

Duration 1-2 years 2-5 years 8-12 years 25-30 years 20-30 years Indefinite

BOT DivestitureResponsibility Service Contract

Management Contract

Lease Contract

Concession

A few Examples of Risk Transfer Models


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Case study 2: Birmingham Highways

BIRMINGHAM

London


• Vision to be ‘world class city’ by 2026• PFI funding to deal with maintenance

backlog• £600m PFI credits from central

government• £350m investment over 5 years • Public demand – ‘something must be

done!’• The project is worth c£2.7 billion over

25 years • Largest Local Authority Highways PFI

ever awarded

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What Does the project Cover

Asset Group Quantity

Roads 2,547 km

Footways 4,923 km

Street Lighting Columns 95,107 no.

Structures and Bridges 1,093no.

Traffic Signal Installations 967 no.

Tunnels 3 no.

Pumping Stations 15 no.

Traffic Signs 13,912 no.

Gullies 117,000 no.

Trees 80,000 no.

StreetLighting

Carriageway

PedestrianGuardRailing

TrafficSignals

HighwayTrees

Winter Maintenance

Road Sign

Illuminated Bollard

Footway

Gully

StreetName Plate

RoadMarkings


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Project Overview

• ‘Capex’ in Core Investment Period (CIP) Years 1 - 5:6,500 km of carriageway and footways– over 55% treated

93,000 street lights – 50% replaced in CIP

29 structures strengthened in CIP, 3 tunnels refurbished

Upgrade UTC to UTMC standards

• ‘Opex’ in Years 1 - 25Surveys and inspections

Routine, cyclic, emergency and winter maintenance

Dealing with customers via Help Desk in Operational Control Room

Lifecycle programme to maintain network to ‘performance standards’

Replacing up to1,000 trees each yearIntroductions Asset Management Risk Transfer Ideas &

Suggestions

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• Increase in productivity of around 30% due to packaging works by type and area & eliminating peaks/troughs

• 20% efficiencies via integrated service delivery

• The transfer of risk equates to c£100 million of other savings

• Improved service delivery e.g. Road Traffic Accident response rates

What is the Project delivering?


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Birmingham Street Lighting

• PFI enables long-term investment

• LED solution

• New technology/remote monitoring – flexibility

• Improved visibility & community safety

• Reduction in energy costs of around £2m

• Approx 50% energy/carbon savings

• Delivering council’s carbon reduction targets


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Whither asset management?

There are spectacular examples of the success of asset management, adding significant whole-life value….

…..so why do relatively few organisations employ asset management to its full potential?

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Constraining the full potential of asset management

• Spend-to-save: sourcing funds to invest in long-term benefits

• Excessive focus on technology (eg: EAMS) and too little on people and outcomes

• Simplistic contracts which fail to share risk or incentivise innovation

• Credibility of the discipline: can these promised benefits really materialise?!

• Solutions and appraisal methods are ‘capex biased’: failure to comprehend whole-life value

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Conclusions

• Asset management is a holistic discipline: technology, process, people, finance…

• A key process is that of converting data into knowledge

• Asset management can operate under a variety of contract frameworks

• Finance can be key to unlocking future value: spend-to-save

• There are spectacular examples of success, adding significant value

• But, relatively few organisations employ asset management to its full potential

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THANK YOU

Mark [email protected]

Creating long term sustainable value in urban infrastructure Mark Brown, Amey December 2013

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Transcript of Creating long term sustainable value in urban infrastructure Mark Brown, Amey December 2013