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Stream C_Bill Emery
- 1. Regulating for excellence inasset management Bill Emery IAM Annual Confernence 2017 June 2017 - Manchester emeryw@btinternet.com
- 2. I plan tocover briefly four aspects • my journey so far … • excellence in asset management? • my take on progress so far focusing on the sectors I have been involved with - water, rail, energy • some of the challenges ahead that practitioners will need to handle, and • some thoughts about the future Regulating for excellence in asset management
- 3. Over 40 yearsin the business as engineer and regulator • early years in capital works, capital programmes, corporate planning in a water authority in lead up to privatisation … • Ofwat years (1990-2005) - three periodic reviews (1994, 1999, 2004 ) … AMPs, comparative competition, efficiency benchmarking, serviceability rules ok, certifiers (technical auditors) & common framework for capital maintenance… • ORR years (2005-2011) - 2008 periodic review, promoting excellence in asset management … … • NED years (post 2011) - European perspective (CERRE), energy and markets (Utility Regulator / Ireland) … … My journey so far …
- 4. • “... arolling integrated systematic approach to the planning, management and running of the monopoly businesses with the objective of ensuring the effective, economic and financially viable long term provision of appropriate quality services to customers and the community” • OFWAT – AMP2 manual – September 1992 • Systematic and coordinated activities and practices through which an organization optimally and sustainably manages its assets and asset systems, their associated performance, risks and expenditures over their life cycles for the purpose of achieving its organizational strategic plan • Institute of Asset Management website 2012 What is asset management?
- 5. • In ORRwe used the AMCL excellence model … • Six maturity states .. • innocent, aware, developing and competent - the journey towards and achieving compliance with ISO 55001 / PAS 55… • effective - asset management activities are fully effective and are being integrated throughout the business … • excellence - asset management activities are fully integrated and are being continuously improved to deliver optimal whole life value • Continuous benchmarking against world best practice … • Comprehensive decision analytics and optimisation … • Auditable and audited … • Owned by organisations board & senior management … • Transparency and trust built with stakeholders … Asset management excellence?
- 6. A successful utilitywill deliver … • high levels of service to its customers • high levels of compliance with all its obligations and requirements • ever improving levels of efficiency • ever improving value for money for its customers • all evidenced by continuous and in-depth benchmarking and earn fair returns for its owners … Excellence in asset management is the key enabler for long term sustainable success in a network utility… A good regulator must incentivise all its utilities to be successful … Successful network utilities?
- 7. • AM techniquesand capabilities have all been developed and proven somewhere in the UK, Europe and elsewhere … • (e.g. risk based maintenance, remote condition monitoring, IT fieldworking, asset knowledge management, cost base analysis, whole life costing, procurement innovation, engineering innovation, value engineering, decision analytics and optimisation support tools) • There has been progress on getting the concepts of asset management embedded in utility/network enterprises … • Most UK network utilities are now competent … Progress – on the upside
- 8. A bit onthe sidelines these days but … • Water - good start with common framework 15 years ago but kick-on patchy with some stars, no consistent drive from sector’s regulators … • Rail - initial buy-in by Network Rail with potential to leap frog peers, has the kick-on happened? • Energy - good progress on risk based approaches (driven by regulators) - still a long way to go to AME… • Highways - a laggard? A personal perspective sector by sector…
- 9. • so thelandscape is uneven, most network utilities have advanced in some areas but not others... • frustration that in many areas progress has only come after consistent regulatory pressure and this patchy … • lack of buy-in to importance of AME at highest levels both in utilities and regulators Why? • because its hard … it takes time and money • insufficient incentives … both upside and downside • no burning platforms … – on the downside
- 10. 1. Changing demandfrom customers 2. Technology not standing still 3. Finding the right solutions to climate change 4. The need to significantly improve efficiency 5. Possibly a further decade of austerity 6. Funding and paying for all the potential investment… 7. Building trust - takes a long time to establish but then is easily lost Some of the challenges ahead ...
- 11. • Capture thewidest possible view of asset management and don’t let it become a technical second/third tier in your organisation and/or narrowly focused on capital maintenance expenditure... It must be at the heart of your business as an infrastructure enterprise! • Don’t be satisfied with PAS 55 / ISO 55001 compliance - excellence (and all the value this brings) is considerably above this pass mark. Raise your sights and those of your organisation… • Capture continuously the high quality information / data you need to inform your understanding and support your analysis / decision making … Some thoughts and suggestions
- 12. • Audit /certification is not an optional extra but should be a vital part of your processes to challenge your prejudices and build confidence with all your stakeholders & regulators … • Rolling benchmarking of your performance / processes against the best in sector and wider - then act promptly on it to address the gaps as well as pushing the boundaries of current best practice where this delivers more for you ... • Continue to make the case for systems investment in top decision analytics to inform and aid reaching compelling and sustainable solutions given the many constraints Some thoughts and suggestions …
- 13. • Be realistic- you will need to be realistic in coming up with least regrets solutions using all your knowledge, skills, systems etc to expose the downside of these solutions both in terms of extra cost, less resilience, higher risk both for today’s and future generations. In the end you need to come up with the least worst interventions if money is short or willingness to pay not there…. Some thoughts and suggestions … …
- 14. • Get assetmanagement firmly into your board room … – up your game, engage with decision-makers (Boards, owners and funders), regulators / government … • talk their language, translate your work into terms they use and understand .. • use what you have to produce compelling analyses to support top decisions and use integrated decision analytics tools to enable you to respond very quickly to new scenarios / sensitivities • Don’t forget your customers and their representatives … Some thoughts and suggestions ... … …
- 15. • Strengthen theincentives on the utilities to move rapidly on their journeys towards asset management excellence … • trigger assessments of the gap • establish the road map to excellence - set intermediate goals (and provide some funding if needed) • be clear on the potential pay-offs … • praise and grumble (and enforce if needed) • build trust … • Ultimately, those enterprises that demonstrate excellence will produce compelling plans that can be endorsed. You will save your detailed scrutiny for the laggards… And for your regulators
- 16. • Progress couldhave been better but we are where we are and the foundations have been laid ... • Now you need to kick-on to achieve and then maintain excellence • The challenges ahead are not insurmountable ... • You must succeed for all our sakes! To conclude
- 17. The future forsuccessful infrastructure enterprises is excellence in asset management