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

Creating long term sustainable value in urban infrastructure Mark Brown, Amey December 2013. Presentation content. Introductions What is Asset Management? Case Studies Whither Asset Management? Conclusions . What is Asset Management: The goal.

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

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

  2. Presentation content • Introductions • What is Asset Management? • Case Studies • Whither Asset Management? • Conclusions

  3. 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

  4. Typical breadth of assets provides a unique understanding of entire city landscapes Introductions Asset Management Risk Transfer Ideas & Suggestions

  5. To align with the globally recognised Standard for Asset Management Strategy & Planning Risk & Review Decision Making Organisation & People Knowledge Lifecycle Management Introductions Asset Management Risk Transfer Ideas & Suggestions

  6. Some of the questions that need answering.. What risk is the business exposed to as a result of the plans? What contingency plans should be in place? Which roads/bridges, If any, should be replaced? How can risk be managed and mitigated? Assets Policies, Strategies & Plans What reactive maintenance can be expected? What level of Maintenance/ inspection should be planned? What are the symptoms of imminent failure? What operational changes can be made to extend life ? What is the cost? What is the effect on the longer term? Introductions Asset Management Risk Transfer Ideas & Suggestions

  7. Business as usual……. You want how much?!!! Just as well we doubled the estimate!!! ENGINEERING ??? FINANCE Introductions Asset Management Risk Transfer Ideas & Suggestions

  8. The Amey Approach - Filling the gap Introductions Asset Management Risk Transfer Ideas & Suggestions

  9. Filling the gap Introductions Asset Management Risk Transfer Ideas & Suggestions

  10. ..and joining things up Introductions Asset Management Risk Transfer Ideas & Suggestions

  11. Making the links THE ASSET MANAGEMENT APPROACH Introductions Asset Management Risk Transfer Ideas & Suggestions

  12. Where is asset management appliedin the built environment? Introductions Asset Management Risk Transfer Ideas & Suggestions

  13. Key building blocks of asset management EAMS - systems

  14. Leadership/MANAGEMENT required to support culture change

  15. ‘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 • ‘

  16. 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

  17. 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 Introductions Asset Management Risk Transfer Ideas & Suggestions

  18. 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

  19. Reporting structure – driving decision-making • Ownership • Accountability • Monitoring • Continuous improvement • Single source of ‘truth’

  20. 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. Introductions Asset Management Risk Transfer Ideas & Suggestions

  21. Tube Lines comparative performance with rest of Underground • to date Introductions Asset Management Risk Transfer Ideas & Suggestions

  22. Service Contract Management Contract Lease Contract Responsibility Concession BOT Divestiture Public & Private Asset Ownership Public Public Public Public 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 A few Examples of Risk Transfer Models Introductions Asset Management Risk Transfer Ideas & Suggestions

  23. Case study 2: Birmingham Highways • 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 Introductions Asset Management Risk Transfer Ideas & Suggestions

  24. What Does the project Cover HighwayTrees Illuminated Bollard Road Sign Winter Maintenance TrafficSignals Footway PedestrianGuardRailing Gully Carriageway StreetName Plate StreetLighting RoadMarkings Introductions Asset Management Risk Transfer Ideas & Suggestions

  25. 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 - 25 • Surveys 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 year Introductions Asset Management Risk Transfer Ideas & Suggestions

  26. What is the Project delivering? • 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 Introductions Asset Management Risk Transfer Ideas & Suggestions

  27. 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 Introductions Asset Management Risk Transfer Ideas & Suggestions

  28. 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?

  29. 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

  30. 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

  31. THANK YOU Mark Brown Amey mark.brown2@amey.co.uk

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