A specification for successful asset management
Ofwat wants evidence that water companies are implementing asset management best practice. Chris Roxburgh, Black & Veatch's director of asset management, outlines ways to make the grade
In England and Wales it is also important that water companies can show Ofwat that these policies, strategies and procedures are embedded and adhered to throughout the business.
Increasingly, Ofwat wants evidence that asset investment proposals are part of longer-term plans such as the 25-year Strategic Direction Statement. Hence it is looking for confirmation that regulatory submissions both reflect and encourage an approach to monitoring, recording, and managing asset condition and performance that is part of day-to-day business operations.
UK Water Industry Research developed the Asset Management Planning Assessment Process (AMPAP) prior to PR09. Ofwat has adopted elements of AMPAP through its Asset Management Assessment (AMA), using them to score water companies' approaches at PR09.
One of the criteria measured in the AMA was the extent to which the approaches used for the Price Review were embedded as 'business as usual.' Looking forward, Ofwat letter PR09/32 states the following areas require improvement:
- Appropriate statistical techniques as the foundation for asset planning
- Common understanding of risk and application across asset groups
- Understanding of the spatial and temporal variability of the consequences of failure alongside operational responses
- Applying and understanding optimisation toolkits and frameworks within asset planning to target the most optimum platform
PAS 55 was developed by the Institute of Asset Management (IAM) with the aim of creating a recognised benchmark for best practice in physical asset and infrastructure management. To ensure the specification's suitability for supporting water companies' goals, Black & Veatch's (B&V) asset management consultants assessed how the requirements of AMPAP map onto PAS 55. They found a strong correlation between the two, although AMPAP is more heavily focussed on the analytical approaches promoted by the Capital Maintenance Planning Common Framework.
The alignment is so close that some of the clients B&V has supported to improve AMPAP scores have achieved external certification with PAS 55 with relatively little extra work. The requirements of PAS 55 provide a sound basis for implementing sustainable business change due to the broad scope of the specification compared with similar standards and methods. Because it is aligned with the principles of an ISO standard, the specification also contains key strategies for internal auditing and continuous improvement that are essential for driving organisational change.
The benefits of managing assets in line with PAS 55 include improved customer satisfaction from strengthened performance and control of service delivery. As an IAM Endorsed Assessor for PAS 55, B& V has helped several water companies develop approaches to asset management that are in line with the specification or, where the utility has deemed it of benefit, achieve certification to PAS 55.
Water companies are not a homogenous group so each business requires differentiation. B&V assisted Dŵr Cymru Welsh Water with PAS 55's general requirements and interpreted sections of the Asset Management Process. The work also enabled Welsh Water to demonstrate the required outsourcing links by integrating B&V's ISO9001 system with the utility's Contractor Procurement Process. Other activities included helping groups developing new working processes for the Asset Strategy Department and its function within the asset management system; addressing risk identification and investment prioritisation.
Work to support South East Water's (SEW) successful external certification with the specification, by developing an Asset Management Strategy and Policy to support the objectives of SEW's 25-year Strategic Direction Statement, illustrates what can be required to attain third-party recognition that effective asset-management policies are functioning throughout a business.
Based on the Strategy and Policy, tools hosted on SEW's intranet were developed to enable effective management of all of SEW's asset related activities. The tools, including technical standards for assets and documentation detailing asset-management roles and responsibilities, were then integrated to create a business-wide asset-management system.
The work also ensured existing SEW documentation was suitable for the new system, and helped develop additional policies required to meet the specification. Also key was helping develop a communications plan that demonstrated clearly the ways in which different roles within the business contribute to the efficient management of SEW's assets.
Opportunities for delivering further efficiencies are decreasing as water companies continue to become smarter. While innovation and regulatory evolution will play a part in reducing costs further, an integrated approach to asset management will highlight the areas in which efficiencies - in this AMP and at the next price review - can be derived.