Department of Higher Education and Training

UNIVERSITY MACRO-INFRASTRUCTURE FRAMEWORK (MIF)Infrastructure Management Guidelines for Universities

Annexure 4: Guideline on asset management systems forinfrastructure

1 Introduction

There is a growing international recognition of the importance of managing andcaring for existing infrastructure, and the need to consider the full service lifeimplications of infrastructure provision. The key objective of asset management forinfrastructure is “to meet a desired level of service in the most cost effective mannerfor present and future stakeholders.” To do this it is necessary for the assetmanagement process and outputs to become an integral part of the organisation’sinfrastructure planning, budgeting and delivery processes.

Asset management is not simply a matter of maintaining existing assets. It is astrategic approach to infrastructure provision that provides direction on decisionmaking throughout the infrastructure planning, delivery, operation and disposalprocesses. It follows a risk based approach in all asset management decisions inorder to achieve a balance between cost, risk and performance.

The International Infrastructure Management Manual (2011) describes the keyelements of asset management for infrastructure as:

providing a defined level of service and monitoring performance;

managing the impact of growth through demand management andinfrastructure investment;

taking a service life approach to developing cost effective managementstrategies for the long term that meet the desired level of service;

identifying, assessing and appropriately controlling risks; and

having a long term financial plan which identifies required expenditure andhow it will be funded.

The benefits arising from effective asset management for infrastructure include:

greater long term sustainability and effective risk management;

improved infrastructure delivery efficiency and effectiveness;

better financial and performance reporting and accountability;

2 Fundamentals of asset management

2.1 General

SANS ISO 55000, Asset management – Overview, principles and terminology,provides an overview of asset management, its principles and terminology for alltypes of assets and types and sizes of organisations. Asset management, accordingto SANS ISO 55000 is based on a set of the following fundamentals:

assets exist to provide value to the organisation;

Infrastructure assets aretypified by the followingcharacteristics:

assets are non-current(they have a life greaterthan 1 year)

assets are tangible assets are immovable

Asset management iscentral to providing therequired infrastructure in acost-effective, efficient andtransparent manner

Key asset managementfunctions include: safeguarding assets; maintaining assets; establishing and

maintaining amanagement, accountingand information systemthat accounts for theassets of theorganisation;

asset valuation; establishing and

maintaining systems ofinternal controls overassets; establishing andmaintaining assetregisters;

clarifying responsibilitiesand accountabilities forthe asset managementprocess

The principles of assetmanagement systems, areapplicable to allorganisations

ISO 55000 defines anasset managementsystem as a managementsystem whose function itis to establish the assetmanagement policy andobjectives, as well asprocesses andorganisationalarrangements inclusive ofstructure, roles andresponsibilities to achieveasset management

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assets management translates the organisational objectives into technicaland financial decisions, plans and activities;

leadership and workplace culture are determinants of realisation of value;

asset management gives assurance that assets will fulfil their requiredpurpose.

An asset management system is used by an organisation to direct, co-ordinate andcontrol assets. The relationship between key asset management terms is shown inFigure 1.

Figure 1: Relationships between key terms (SANS ISO 55000)

The relationship between key elements of a generic asset management system areindicated in Figure 2. The fundamentals of asset management in an infrastructurecontext are described in 2.2 to 2.4.

2.2 Lifecycle (service life) approach

Asset management for infrastructure considers the entire lifecycle (service life) ofthe asset and the associated costs, from the identification of a need through to thefinal decommissioning of the asset. Operating and maintenance costs are oftenconsiderably higher than initial capital costs, and these need to be taken intoconsideration to ensure that the most cost effective solution is identified (see Figure3).

Asset service life information informs strategic planning, financial planning andcontrol, service delivery, operations and maintenance, which is why assetmanagement strategy needs to be integrated into all the processes associated withservice delivery.

Assetportfolio

Assetmanagement

system

Assetmanagement

Managing theorganisation

Assets that are within thescope of the assetmanagement system

Coordinated activity of anorganisation to realise value fromassets

Set of interrelated or interactingelements to establish assetmanagement policy, assetmanagement objectives andprocesses to achieve thoseobjectives

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Figure 2: Relationship between key elements of an asset managementsystem (SANS ISO 55000)

Figure 3: Illustrative life cycle costs of an asset

The development of an organisational infrastructure development plan requiresclear answers to a number of questions before any meaningful decisions can bemade, many of which can be provided by an asset management system, including:

What assets currently exist and where are they?

What are the existing assets worth?

What is their condition and expected remaining useful life?

What is the expected or required level of service?

Stakeholder and organisational context

Organisational plans andorganisational objectives

Asset managementpolicy

Strategic asset management plan(SAMP)

Asset management objectives

Asset management plans

Implementation of assetmanagement plans

Asset portfolio

Performance evaluation and improvements

Plans for developingasset management

system +relevant support

Asset managementsystem + supporting

elements

Asset management system

costs

0% Effective life 100%

create maintain maintainrefurbish dispose andreplace

Cash flow of assets

Cumulative costsover asset life

SANS ISO 55000 definitions:

asset – item, thing or entitythat has potential or actualvalue to an organisation

asset portfolio – assets thatare within the scope of theasset management system

asset management –coordinated activity of anorganisation to realise valuefrom assets

asset management plan –documented information thatspecifies the activities,resources and timescalesrequired for an individualasset, or a grouping ofassets, to achieve theorganisation’s assetmanagement objectives. (Theinfrastructure assetmanagement plan in the MIFis in effect an assetmanagement plan)

objective – result to beachieved

strategic assetmanagement plan –documented information thatspecifies how organisationalobjectives are to beconverted into assetmanagement objectives, theapproach for developingasset management plans,and the role of the assetmanagement system insupporting achievements ofthe asset managementobjectives.

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How can that level of service be achieved?

What will that level of service cost and when or how can it be funded?

How can financial sustainability of the level of service be ensured?

How will delivery and operation of that level of service be managed andmonitored?

Can existing assets be repurposed to meet required levels of service?

What additional assets are required?

The answers from these questions provide the information needed to ensure thatlimited resources are utilised in the most cost effective manner. These includedetermining levels of service that are acceptable while being sustainable, andstriking a balance between providing new capital infrastructure while ensuring thatexisting infrastructure is kept fit for purpose.

The long term horizons associated with asset management, together with riskassessments to identify critical infrastructure, allow organisations to understand thefuture impact, both physical and financial of decisions taken in the provision andoperation of infrastructure. This limits the risk of unexpected or unplannedconsequences and gives the organisation greater confidence that its limitedresources are being correctly utilised.

Asset management is therefore not limited to issues relating to the recording,operating and maintaining of the existing infrastructure asset base. It also providescritical input into early planning decisions by ensuring that full service lifeimplications become part of the evaluation process for every option or project underconsideration.

2.3 Basic activities

The basic asset management for infrastructure activities include:

describing the infrastructure assets in both financial and physical terms,including asset location, condition and expected useful life;

defining the service level or performance required, thus setting standards fornew infrastructure and rehabilitation of existing infrastructure;

describing the service life plan for a period of at least 10 years (see SANSISO 15686-1, Service Life Planning - Part 1: General principles andframework, and BS 8210, Guide to facilities maintenance management);

applying a risk management approach in order to inform choices and optimiseuse of limited resources;

optimising decision making on life-cycle treatments using economicevaluation and modelling tools; and

developing financial projections (capital and operating) for a period of at least10 years.

Figure 4 indicates the basic activities in the overall process. The gathering of dataon existing infrastructure is key to understanding the status quo, and is a criticalrequirement for informed decision making

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2.4 Progressive approach to asset management

Asset management according to SANS ISO 55002, Asset management-Management systems -- Guidelines for the application of ISO 55001, can beimplemented at a level appropriate to the organisation’s needs and resources at thetime, but can also be incrementally improved from a minimum to an advanced level.Figure 5 illustrates the progressive steps that can be taken in this regard.

Figure 4: Key activities in the overall asset management for infrastructureprocess

Figure 5 Step by step improvements

Goals andobjectives Levels of serviceSetting

direction

Asset inventory Conditionassessment

Existinginfrastructure

Valuation Performanceassessment

Future demand andperformance Gap assessment

Needsanalysis

Identify options Preferred projects

Prioritisation andfunding strategies Risk managementProgramme

development

Projectprocurement

Effectivenessreviews

Programmedelivery

Continuous

Improvements

Adopt assetstrategy

Consultstakeholders

Develop long termfunding plan

Assess options to extend lifeDevelop cash flows required

Complete condition assessmentDetermine residual life and maintenance

Record assets in register – attributes, replacement value etc.

Determine desired levels of service

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3 Key processes in asset management for infrastructure

3.1 Introduction

An organisational asset management system for infrastructure, which has directlinkages to planning and budgeting and the SCM system for infrastructureprocurement and delivery management, comprises a number of activities which canbe grouped together into 6 basic sets of activities or components, namely:

asset register;

asset management policy and levels of service;

condition assessment;

service life planning;

critical infrastructure needs; and

delivery process inputs

There is a vast amount of information available that provides step by step guidanceon asset management processes, starting from very simple minimum levels of assetmanagement through to highly advanced levels as outlined in Table 1. Thisdocument merely provides a description of each of these components and indicateshow they relate to each other.

Table 1: Sources of information on asset management

Source Overview

IIMM International Infrastructure Management Manual.2011 (Updated 2015)

This is the leading international work on asset management, and isavailable through Institute of Organisational Engineering of SouthernAfrica (IMESA). It is a key reference source and aligns with SANSISO 55001 requirements.

National Treasury Local Government Capital AssetManagement Guideline 2008

A document with strong emphasis on administration and accountingaspects of asset management, but not particularly focussed oninfrastructure. The use of the Depreciated Replacement Cost methodof valuation, whilst mentioned in the document, is not accorded theimportance it holds today

AMPLE: Asset Management Program LearningEnvironment. http://ample.imesa.org.za/

A web based tool suite developed by GHD’s Global AssetManagement Group that is freely accessible through IMESA. It issimple to navigate and provides information for different levels ofusers from novice to advanced.

SANS ISO 55000 Asset management-Overview,principles and terminologySANS ISO 55001 Asset management - Managementsystems - RequirementsSANS ISO 55002 Asset management-Managementsystems- Guidelines for the application of ISO 55001

International Standards for Asset Management published in 2014. Itis a high level document spelling out what is required, but withoutproviding detail on how. The “how” can be found in the IIMM orthrough the use of AMPLE

CIDMS Cities Infrastructure Delivery and ManagementSystem. Modules 1 to 8 and 12. Published 2015 & 2016

The CIDMS provides detailed guidelines for managing the higherorder complexities of asset management.

National Treasury Accounting Guideline GRAP 17Property, Plant & Equipment Jan 2014

A detailed explanation on how to account for assets which updatesand enhances the guidance given in the 2008 Local GovernmentCapital Asset Management Guideline. Although infrastructure isincluded the document is intended to cover all capital assets.

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3.2 Asset register

One of the major starting points for asset management is the identification of allexisting assets. This can be developed incrementally, based on the level of accuracyneeded versus affordability, and can precede finalisation of an asset managementpolicy. An initial high level asset register need not be resource intensive, and canproduce quick results. Data collection can be needs driven, with an emphasis oncritical infrastructure i.e. the 80/20 principle.

International experience in infrastructure management suggests that detailed datais not a prerequisite for changing attitudes of decision makers and impactingstrategic planning. Over time, asset information can be expanded to a level that isappropriate to, and sustainable by the organisation.

As a minimum the asset register should incorporate simple cost modelling,recognise the different risk profiles of the assets, provide a minimum level of detailnecessary to make informed decisions, and cater for GRAP requirements.

One of the key aspects of asset management for infrastructure is the use of thedepreciated replacement cost (DRC) to fairly present the asset value (see Figure 6).This is a formulaic assessment that, instead of basing depreciation on the originalcost, calculates the depreciation based on the current replacement cost, theestimated useful life and remaining useful life which ensures that the depreciationcharges keep track with escalation in the current replacement cost.

Figure 6: The concept of depreciated cost

Currentreplacement

value

Expected useful life

Remaining useful life

Depreciated ReplacementCost, based on a zero residualvalue for the sake of simplicity

Asset register – questions to be asked and steps to be followed What level of information needs to be gathered?

o Level of detail should be that considered practical for purposes ofrenewal/refurbishment

As a minimum an asset register should contain the followingo Asset identificationo Asset locationo Materials/typeo Sizeo Quantityo Year constructedo Construction cost (included all related costs and fees)o Expected useful life.

Further detail, which initially may only be known at a high level includeso Condition gradeo Capacityo Utilisationo Remaining useful lifeo Depreciated replacement costo Asset performanceo Asset criticality (risk and consequences of failure)

The Institution of MunicipalEngineering of SouthernAfrica (IMESA) hassoftware that is availablefor use by organisations toset up asset managementsystems, and offers verypractically orientatedtraining courses on AssetManagement. Extensivesupport and guidance isavailable online throughIMESA’s AssetManagement PlanLearning Environment thatcan be found athttp://ample.imesa.org.za/

Assetmanagement

system forinfrastructure

Conditionassessment

s

AssetManagement

Policy, Strategyand Levels of

Service

Asset register

Deliveryprocessinputs

Criticalinfrastructure

needs

Servicelife

planning

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GRAP 17 requires a periodic review of the useful life and an adjustment todepreciation charges where there is any significant change.

A key part of managing the asset register is ensuring that as-constructed data iscollected at project completion and is input into the asset register in a complete,accurate and consistent format.

The development of an asset register can be outsourced where organisations lackthe internal capacity or resources to carry out the work. The decision on the fields ofdata and level of detail which needs to be captured is a governance decision andshould not be outsourced. Levels of detail can be improved incrementally over time,as indicated in Table 2.

Table 2: Incremental improvement of levels of detail in the asset register overtime

Level Description

MinimumProvision of basic physical information (location, size, type) recorded in aspreadsheet or simple database, which may be based on broad assumptions andmay not be complete

CoreInformation as per the minimum requirement but including replacement cost andasset age/life (i.e. sufficient information to undertake asset valuation). Assethierarchy, asset identification and asset attribute systems in place anddocumented

IntermediateA reliable register of physical and financial attributes recorded in an informationsystem with data analysis and reporting functionality. Systematic and documenteddata collection process in place. High levels of confidence in critical asset data.

AdvancedInformation on work history, type and cost, condition, performance etc., recordedat asset component level. Systematic and fully optimised data collectionprogramme. Complete database for critical assets, minimal assumptions for non-critical assets.

3.3 Asset management policy, strategy and levels of service

In addition to identifying assets, there is a need to determine an acceptable level ofservice, so that the asset performance can be measured against a set yardstick.Criteria can relate to availability of the service, quality or condition, quantity,reliability, responsiveness, environmental acceptability and financial implications.Measures need to be identified for each criterion. Such measures are required forperformance monitoring and reporting and as a departure point for riskmanagement. Levels of service are informed by a combination of stakeholder needs,legislative requirements and internal business objectives, and need to besustainable over the service life of the asset (see Figure 7). This is a vital part of theasset management process that not only affects decisions on existing assets butinforms choices and decisions affecting the provision of new infrastructure.

Ongoing performance management (including public consultation) provides thefeedback that is needed to determine the adequacy and sustainability of proposedservice levels. Also, service levels need to be considered holistically across allsectors as even small levels of service improvement, by themselves, may seemaffordable until they are aggregated across all sectors.

With limited resources, levels of service (design criteria) need to achieve a balancebetween quality and scale. Using lower design standards may appear an attractiveway to increase the quantum of infrastructure delivered. However, this is effectivelya short term solution, is likely to lead to greater service life costs, and is unlikely tobe sustainable (see Figure 8). Similarly, adopting design standards higher thannecessary is also unlikely to be sustainable, particularly if development is grantfunded, where over time there is a risk of funding availability failing to keep up withescalation.

Assetmanagement

system forinfrastructure

Conditionassessment

s

AssetManagement

Policy. Strategyand Levels of

Service

Asset register

Deliveryprocessinputs

Criticalinfrastructure

needs

Servicelife

planning

The IMESA websitehttp://ample.imesa.org.za/contents/Generic-AM-Guidelines containsgeneric guidelines fordetermining levels ofservice

CIDMS Module 4:Stakeholder and ServicesProfiling containsextensive material onlevels of service. CIDMSModule 5: Future Demandprovides detailedguidance on forecastingfuture demand which inturn is a key input into theprocess of determininglevels of service.

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Figure 7: Process associated with the establishment of levels of services

Figure 8: Optimising design quality and total service life costs

Organisations that lack internal capacity to develop answers to all the questionsrelating to service levels may outsource some of the work. However, the finalchoices on levels of service should not be outsourced. It is a critical part ofgovernance that implications of choices are properly understood, and theresponsibility and accountability for the final choice remains with the organisation.

Stakeholderresearch

Stakeholder needs

Legal/ constructionrequirements needs

Desired levelof service

Currentlevels ofservice

Assetmanagement

strategies to closethe gap (operationand maintenance,capital works, etc.)

Service level gap

OptimumOverdesign

Underdesign

Total cost

Quality

ConstructioncostTo

tals

ervi

ce li

fe c

ost

Life cycle operating costs

Levels of Service – questions to be asked, steps to be followed What are the current levels of service per type of infrastructure? How best can we engage with stakeholders to identify their needs What performance indicators best reflect key drivers? (can be incrementally

developed) Understand and communicate trade-offs and priorities What legal and regulatory requirements inform minimum levels of service? Develop detailed proposed levels of service. Are the proposed levels of service sustainable over their life cycle? What are the factors influencing future demand (growth, change of needs,

economic, social, environmental) and how does the proposed level of serviceaccommodate these?

What is the risk exposure based on the proposed service levels?(life cycle plans)

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A key part of management of levels of service also includes performance monitoringover extended periods (3, 5 and 10 years) in order to understand the long termimpacts of choices and, where necessary, to take corrective action.

It is possible to adopt an incremental approach to the development of levels ofservice as indicated in Table 3.

Table 3: Incremental improvement of levels of service over time

Level Description

Minimum Asset contributions to organisation’s objectives understood and some basiclevels of service defined

CoreStakeholder groups defined and requirements informally understood. Levelsof service in place together with appropriate performance measures. Annualreporting against performance targets is undertaken

IntermediateStakeholder consultation takes place on significant service levels andoptions. Stakeholder group needs are formally analysed. Costs to deliveralternative key levels of service are assessed.

AdvancedStrategy for level of service consultation developed and implemented.Technical and stakeholder level of service requirements are integral todecision taking and business planning.

3.4 Condition assessment

Knowledge of the condition and remaining useful life of an asset is a key part ofunderstanding the future need for rehabilitation/replacement/disposal and informsfinancial decision making. Timeous rehabilitation/repurposing of existinginfrastructure can generally extend the useful life of an asset far more cost effectivelythan replacement (see Figure 9). It is important that the allocation of limited capitalbudgets balances the need for new infrastructure with the need to ensure thatexisting infrastructure remains operational and fully utilised.

Knowledge of the remaining useful life is an important input into the longer termbudgeting process, not only in terms of calculation of depreciation but also allowinginformed decisions to be made when planning for future financial demands. Theremaining useful life is determined not purely on the basis of age and condition, asit is also significantly influenced by obsolescence, performance or capacityconsiderations.

Conditions assessments are a key part of determining the remaining useful life ofassets. Although criteria should ideally be linked to the expected failure pattern ofthe specific asset, generic guidelines based on degree, extent and relevance can beutilised. These can be developed incrementally as asset knowledge grows, asindicated in Table 4.

Table 4: Incremental condition assessments over time.

Level Description

MinimumCondition assessment at a high level (e.g. asset group level) that supports minimumrequirements for managing critical assets and legislative requirements (e.g. healthand safety)

CoreCondition assessment programme in place for major asset types prioritisedaccording to risk. Data management standards and processes documented.Programme for data improvement developed

IntermediateCondition assessment programme based on cost benefit analysis of options. Agood range of condition data in place for all asset types. Data managementprocesses fully integrated into business processes. Data validation process inplace

Advanced Condition information in place to a level that fully supports risk management,service life decision making and financial performance reporting

Assetmanagement

system forinfrastructure

Conditionassessment

s

AssetManagement

Policy, Strategyand Levels of

Service

Asset register

Deliveryprocessinputs

Criticalinfrastructure

needs

Servicelife

planning

Guidelines of expecteduseful lives of differenttypes of infrastructure,such as those that havebeen provided by COGTAand IMESA, assist indetermining remaininguseful lives

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Figure 9: Expected useful life with and without rehabilitation

Assets should be grouped by type (asset hierarchy), so that, where appropriate,asset specific failure modes can be identified and used to determine asset condition.Sampling/monitoring timelines need to be determined, but in a cost effective andsustainable manner, and should be linked to risk probability and impact.

Where an organisation is under resourced condition assessment and identificationof remaining useful life can be undertaken using external resources, includingidentification of mitigating/ aggravating factors, obsolescence and capacitylimitations.

Asse

tper

form

ance

Minimum acceptablefunctional condition

Operation andmaintenance

Renewal

Useful life – no rehabilitation

Asse

t per

form

ance

Minimum acceptablefunctional condition

Operation andmaintenance

Rehabilitation/repurposing

Useful life – extended with rehabilitation

Renewal

Expected useful life

Expected useful life Extended useful life

Condition assessment and remaining useful life – questions to be asked, steps tobe followed Which assets need to be inspected for condition? Generally older assets and assets

with a higher consequence of failure (critical assets or those likely to become criticalin the next 10 years) should be prioritised.

Which assets have a history of problems/failures? What conditions exist that may accelerate deterioration? (e.g. maintenance

limitations, environmental factors, etc.) What mitigating actions could be taken that would cost effectively extend the

remaining useful life? How can the asset condition best be measured? Which assets are, or are likely to become, technically or commercially obsolete? Can the obsolete assets be repurposed? Which assets have reached maximum capacity and need to be replaced/extended

to meet demand?

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3.5 Service life planning

Levels of service and future demand cannot be looked at in isolation from eachother. Future demand not only informs what budgets will be required over time, butalso gives an indication if the current levels of service are sustainable, and is a keyinput into strategic planning decisions. Where resources are limited and criticalchoices need to be made, asset management knowledge will allow informeddecisions to be made ensuring the optimal use of limited resources. This is a criticalaspect, particularly in the environment where demands are far in excess ofresources, and expectations are unrealistically high, often leading to protests.

Level of service requirements should be scheduled against the different needs(stakeholder, legislative and internal business) so that the impact of choices can bebetter understood as indicated in Figure 10.

Figure 10: Linkages between strategic, tactical and operational planning in theidentification of asset management for infrastructure solutions

The National Treasury Standard for Infrastructure Procurement and DeliveryManagement establishes the following requirements for demand management:

“The demand for infrastructure delivery shall be managed through:

a) service life plans which;1) are based on:

an assessment of current performance against desiredlevels of service or functionality; and

a needs analysis informed by factors such as policies,norms and standards, condition assessments, functionalperformance, demographic trends, current and forecastedlevels of optimisation; and

2) reflect a cost estimate for the life cycle activities comprisingacquisition, operations, maintenance, refurbishment,rehabilitation or alteration as relevant, over a minimum period offive years; and

Stakeholderexpectationso Level of

serviceo Cost

Legislativerequirementso Financialo Environmental

Strategic planningprocess

Service levelreview process

Assetmanagement

process

Strategicplanning

Tacticalplanning

Operationalplanning

Consider assetsolutions

o Maintain / renew /upgrade / dispose ofexisting assets

o Create new assets

Consider non-assetsolutions

o Failure managemento Insuranceo Demand

managements

Implement asset management solutions

Assetmanagement

system forinfrastructure

Conditionassessment

s

AssetManagement

Policy, Strategyand Levels of

Service

Asset register

Deliveryprocessinputs

Criticalinfrastructure

needs

Servicelife

planning

BS 8210 states thatmaintenance plans shouldbe devised to ensure thatthe service life of facilityassets matches or, wheredesirable, exceeds theirdesign life.

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b) long term infrastructure plans which, as a minimum, summarise theservice life plans and provide a credible forecast of current and netdemand for infrastructure or requirements for functionality over a periodof not less than ten years.

Consideration shall, where appropriate, be given to:

a) alternative means of satisfying needs which do not requireinfrastructure to implement or reduce the demand for infrastructure;and

b) the disposal of infrastructure that is surplus to requirements.“

3.6 Critical infrastructure needs

Critical and important assets can be identified by considering the consequences offailure in terms of public and employees health and safety, additional costs ofdeferring repair, impact on services (and image of the organisation), and effect onthe environment. This can be done using a typical risk evaluation matrix based onprobability and impact of occurrence. Typically in the order of 5% of assets wouldbe expected to be critical and 15 % to be important on the 80/20 principle.

Risks are defined as events which may cause failure to achieve objectives, oftendescribed in terms of triple bottom line objectives of social, environmental andeconomic goals. Objectives may be set by the organisation (political and technical)or may be mandated by legislation e.g. environmental legislation.

The risk based approach requires the assessment of the likelihood of a risk occurring(statistical probability) and the impact of that risk should it occur (e.g. direct costs,impact on service delivery, impact on public safety / health, impact on theenvironment and public interest). The product of these two factors will determine thelikely risk exposure and will inform the level of priority i.e. risk exposure = probabilityof occurrence x impact of occurrence (see Figure 11).

Figure 11: Linkages between probability, consequences and response in therisk based approach

Consequence1Insignificant

2Minor

3Moderate

4Major

5Catastrophic

Prob

abili

ty

A Rare L L L M M

B Unlikely L L M M S

C Moderate L M M S H

D Likely M M S H H

E Almost certain M S H H H

Legend

Risk exposure Response

L LOW Generally dealt with by routine procedures

M MODERATE Mitigating action to be investigated and implemented if cost effective

S SIGNIFICANT Options to be identified and mitigating actions to be programmed

H HIGH Immediate action required to reduce risk

Assetmanagement

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Servicelife

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Risk mitigation (reduction treatments) can include any or all of the following:

capital works, maintenance, operational documentation, training;

impact reduction through emergency response plans;

acceptance of some risk and consequential costs;

insurance against consequential costs; and

review of levels of service

Assessment of criticality helps focus resources on strategic issues while the assetmanagement system is being set up, and is a key part of identifying and prioritisingneeds that feed into the planning and budgeting process. This is also key toachieving a balance between providing new infrastructure and ensuring that existingcritical and important infrastructure is adequately maintained and where requiredrehabilitated.

The determination of which assets are critical is typically made by carrying out a riskassessment. This can also be undertaken incrementally as indicated in Table 5.

Table 5: Incremental identification of critical needs

Level Description

Minimum Critical assets are understood by staff involved in maintenance / rehabilitationdecisions.

Core Risk framework developed. Critical assets and high risks identified. Documentedrisk management strategy for critical assets

Intermediate Systematic risk analysis informs key decisions. Risk registered regularlymonitored/reported. Risk managed consistently across the organisation

AdvancedFormal risk management policy in place. Risk is quantified, mitigation optionsevaluated and is integrated into all aspects of decision making. Risk managementis data driven

With limited resources, identification of critical assets can be outsourced, usingexperience to make an initial determination of which assets are critical.

Once identified, prioritisation of any new capital or rehabilitation work needed toensure critical assets remain operational becomes a governance issue stronglyinformed by the level of risk. Identified critical work then needs to be fed into theplanning and budgeting process to be prioritised together with any proposed newcapital work. Prioritisation between critical work and new work can likewise beundertaken using a risk based approach.

Identification of critical assets – questions to be asked, steps to be followed What are the asset associated risks to achieving the organisation’s objectives,

particularly with respect to providing sustainable services at agreed levels ofservice?

What requirements does legislation place on the organisation? (Health and Safety,Environmental etc.)

What might happen, where, and what is the likelihood? (Probability) What would the effect be, and who would be affected? (Social impact, reputational

damage etc.) What would be the cost of the consequences? (Financial impact) What level of risk is the organisation willing or able to accept? What mitigating actions could be taken to reduce the risk? (High risk assets)

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3.7 Delivery process inputs

There needs to be alignment with those that design and construct infrastructure withthose that subsequently occupy, use and manage it. Accordingly there need to beopen channels of communications between the different role players (see Figure 8).

Operation and maintenance support plans need to support the development of newinfrastructure to ensure that the necessary organisational structure to operate andmaintain such infrastructure is put in place.

The choice of data fields and level of detail in the asset register inform whatinformation needs to be captured on projects which are delivered. This informationneeds to be communicated to those involved in the delivery of projects so that therequired information is available throughout the project and can be easily finalisedwhen projects are handed over to those responsible for their operation andmaintenance. This will ensure that the asset register can be updated at that time

4 Linkages to the other processes of infrastructuredelivery

The components of the asset management system for infrastructure are highlyinteractive and have many dependencies. The key output that links into the planningand budgeting process is the identification of projects flowing out of the criticalinfrastructure needs

Other outputs from the asset management process that provide inputs into theplanning and budgeting process include:

identification of stakeholder needs coupled to a sustainable level of serviceresponding to these needs, which enables the status quo (backlogs) andpotential future demands to be determined and which assists with the settingof norms and standards for new infrastructure;

knowledge of the existing infrastructure capacity (surplus) which facilitatesfuture growth planning and identifies possible “low hanging fruit” developmentopportunities;

knowledge of the state of the existing asset base which informs theprioritisation process, with particular importance being given to critical assets,where failure is likely to have significant negative consequences; and

knowledge of service life costs which allows modelling of longer term budgetrequirements, thus providing input into project feasibility (and affordability)studies

There are several linkages between the asset management system and the SCMsystem for infrastructure procurement and delivery management. These relate to

service life plans, that provide cost estimates and timelines for life cycleactivities, inform project prefeasibility or preparation and briefing (Stage 3)and project feasibility or concept and viability (Stage 4) outputs; and

knowledge of existing asset performance and associated risks inform choicesmade during project feasibility or concept and viability (Stage 4) and designdevelopment (Stage 5), ensuring continual improvement by avoiding anyshortcomings identified in similar infrastructure.

The SIPDM requires that the concept report developed during stage 4, wherenecessary “contains an operations and maintenance support plan which establishes

Assetmanagement

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Conditionassessment

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AssetManagement

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the organisational structure required for the operation and maintenance of the worksresulting from the package or series of packages over its service life, and the office,stores, furniture, equipment, Information and Communications Technology (ICT),engineering infrastructure and staff training requirement”.

It is critical that asset information is captured and included on the asset register assoon as the asset is handed over and available for use (Stage 8 – Handover). Thisis good practice, as it ensures that the asset register is updated at a point in timewhere all the asset information is complete and readily available. There is thereforea need to incorporate the asset management data collection into the infrastructuredelivery process to ensure all costs are captured and recorded on an ongoing basis.