Economic Evaluation

The above economic evaluations are used and described in the International Infrastructure Management Manual (International Edition 2006). The manual also describe the use of Benefit Cost Analysis (BCA) and Multi-criteria Analysis (MCA) to support Optimised Decision Making.

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Information System

Asset Management Information System

Asset Management Information System is defined as the use of information and communication technology, which include data acquisition and processing, software, and hardware that are necessary to provide an essential support system for an effective asset management in an organization.

The use of electronic based system has become more apparent in a big and widespread organization, which need real-time, online and future information for optimized decision-making. The need to have an electronic based information system will depend on the following factors:

1. The cost of development
2. The cost of acquisition and maintenance
3. The expertise needed
4. The benefits that will be derived from the information system

The information system will be a non-physical asset except for the hardware and have to be managed in line with asset management principles. However, in the United Kingdom’s asset management requirements as in PAS 55-1, the information system is a pre-requisite to an effective asset management as defined below:

4.3.1 Asset Management Information System

The organization shall establish and maintain (an) asset management information system(s). The system(s) shall be designed and maintained to provide an adequate support and information to the organization in meeting all of the requirements set out in clause 4 of this specification. It shall include provision to support the development and implementation/achievement of the asset policy, strategy, risk identification, assessment and control, objectives, targets, plans. It shall also support all of the requirements related to the implementation and operation, checking and corrective actions and the management review.

The information shall be accessible to all relevant employees and other relevant third parties including contractors as appropriate.

Where separate asset management information systems exist, the organization shall ensure that the information provided by these systems is consistent.

However, the requirements do not specify specifically an “electronic-based system” or a computerized system, but the current technology is on using a computerized system that will enable online and real-time information.

To have an excellent information system, the ingredients are as follow, that is:

1. Be able to perform basic functionalities in asset management and fit for purpose
2. Be able to interface with existing and future systems
3. Having excellent data management
4. Having basic or advance analytical tools
5. Must be enterprise wide

System Functionality

The information system must be able to, as a minimum, to have the functionalities listed in the diagram below:

The organization must also develop an asset identification system to allow a unique identity to each individual asset in the organization. Without an asset registry, there will be no asset management, as we do not know what asset to manage. This is the first function of an information system that needs to be fulfilled before proceeding on to other systems as in the diagram above.

A simple audit will suffice to determine the current position of the organization in the asset management information system maturity model. From this model, a strategic framework on asset management information system will be developed in conjunction with the strategic framework on asset management of the organization.

System Interfacing

The information system must be able to interface with the existing manual or computerized system that is in existence in the organization. During the development phase, decision has to be made to either upgrade or interface with the existing system. This is crucial and the decision has to be made using asset management principles.

It is also worthwhile to look in newer technologies such as Geographical Information System (GIS), Global Positioning System (GPS), real-time condition monitoring system or even Remote Identification System using radio frequency identification device (RFID) and incorporate these technologies in the information system.

The organization has also to look at interfacing of field data from third parties or proprietary equipments/software especially on condition assessment equipments, off site or field measuring equipments, mobile field scanners, hand-held inputting device and so forth.

An information system without interfacing capabilities will be not be an effective system.

Data Management

The integrity of data must be ensured at all stages of collection and inputting of data. Introduction of a specific process in data collection and input will ensure the following, that is:

1. Correct data is collected and inputted
2. The data has economic value to the system and organization
3. Accurate data at all times.

The integrity of data is important and the organization must ensure at all times the data integrity is maintained at all stages of the data recognition, collection and inputting into the system. The best information system will fail if the data collected has no value and inaccurate, as the information system will give false reports and hence, false information. By having a specific process to handle data, the information system is ensured to have the level of data accuracy as desired.

The organization will also have to make a decision on the level of details that the organization needs, as every data is specific to each organization. Nevertheless, external factors also will determine the extent and depth of the details needed. The external factors are:

1. Legal compliance
2. Clients requirements
3. Government requirements

The above requirement can be done through an in-depth study of the external factors and the impact it has on the information system. Beside this, it is equally important to undertake a study on the user requirement before proceeding to the next phase of development of the proposed information system. These two (2) studies have to be done simultaneously in order to have the highest impact on the proposed information system

Analytical Tools

An information system without any analytical generated reports will only be a data reporting system and not an information system. Having this in mind, amongst the basic analytical tools to be incorporated in the information system are as follows:

1. Benefit-cost analysis
2. Life cycle costs
3. Net present value
4. Current and Future Trends
5. Graphical presentations
6. Modeling tools based on mathematical expressions

The more advanced analytical tools, amongst others are as follows:

1. Condition monitoring
2. Economic models
3. Decay models
4. Predictive models

By having all the analytical, data can be turned into useful information and key performance indicators can be monitored effectively. Hence, the performance of the organization can be displayed as a graphical and meaningful dashboard to be at every level of the organization.

Enterprise Wide

Lastly, the information must be at enterprise wide and be able to be accessed by all levels of staff involved in asset management. The level of use will have a bearing to the effectiveness of the information system, as the competency on the information system would differ at every level of the organization. In a learning organization, the level of use is not a problem for the organization, as the competency, role and responsibility are clearly specified and documented.

Conclusion

Information system is crucial in providing information for, as follows:

1. decision making
2. performance management
3. continual improvement
4. corrective and preventive actions
5. management review
6. knowledge management

The use of asset management principles is necessary in developing and procuring the asset management information system as the asset management information system is a non-physical asset (which include physical asset such as hardware) that has a service potential to the organization.

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Four Ethical Issues of the Information Age

Today in western societies more people are employed collecting, handling and distributing information than in any other occupation. Millions of computers inhabit the earth and many millions of miles of optical fiber, wire and air waves link people, their computers and the vast array of information handling devices together. Our society is truly an information society, our time an information age. The question before us now is whether the kind of society being created is the one we want. It is a question that should especially concern those of us in the MIS community for we are in the forefront of creating this new society.

There are many unique challenges we face in this age of information. They stem from the nature of information itself. Information is the means through which the minds expands and increases its capacity to achieve its goals, often as the result of an input from another mind. Thus, information forms the intellectual capital from which human beings craft their lives and secure dignity.

However, the building of intellectual capital is vulnerable in many ways. For example, people's intellectual capital is impaired whenever they lose their personal information without being compensated for it, when they are precluded access to information which is of value to them, when they have revealed information they hold intimate, or when they find out that the information upon which their living depends is in error. The social contract among people in the information age must deal with these threats to human dignity. The ethical issues involved are many and varied, however, it is helpful to focus on just four. These may be summarized by means of an acronym -- PAPA.

Privacy: What information about one's self or one's associations must a person reveal to others, under what conditions and with what safeguards? What things can people keep to themselves and not be forced to reveal to others?

Accuracy: Who is responsible for the authenticity, fidelity and accuracy of information? Similarly, who is to be held accountable for errors in information and how is the injured party to be made whole?

Property: Who owns information? What are the just and fair prices for its exchange? Who owns the channels, especially the airways, through which information is transmitted? How should access to this scarce resource be allocated?

Accessibility: What information does a person or an organization have a right or a privilege to obtain, under what conditions and with what safeguards?

The Effect of Color in Web Page Design

Introduction

Web pages are communication tool between a web producer and a web user. Asstrangers get together for the first time and share their first impressions, the web producerand the reader share their impressions and communicate through a web. In the same waythat we think it is important to choose an appropriate color and design for an importantevent, it is crucial to choose appropriate color schemes to convey images and messageson your web page.

Color is a central part of our lives. People look at and react to different colors,tints, and shades thousands time every day. People rely on colors to convey meanings formany things. Color has both emotional and psychological impacts. Colors can captureour attention and cause us to react based on our own experiences and beliefs. Webdesignersmust be very familiar with effects of colors.

This paper includes the basic rules of color theory and the functions of color.Subtopics expand the discussion of the effects of colors on mood, color symbolism,readability, legibility, consistency and accessibility. Examples of effective andineffective usage of color will be discussed.

Significance of the topic

By examining the basic rules of color theory and effects of colors, a web designercan develop more appealing and effective web pages which are more likely to sendimages and messages of the site to users directly and effectively. Comparing effectiveand ineffective examples of web sites will help us develop professional eyes and skills forproducing the most effective web site.

Basic Rules of Color Theory

(1) The primary colors are red, yellow, and blue. All other hues are derived from
these colors.
(2) The secondary colors are orange, violet, and green.
(3) The intermediate or tertiary colors are between the primary and secondary colors:
red-orange, yellow-orange, yellow-green, blue-green, blue-violet, and red-violet.
(4) The warm colors are ranging from red-violet to yellow. Orange is considered the
extreme of warm. Warm colors are vibrant and active.
(5) The cool colors ranges from violet to green-yellow. Blue is considered the
extreme of cool. Cool colors are relaxed and subdued. Creative color selection
starts with a few basic color schemes.
(6) Analogous colors are any three consecutive color segments on the color wheel.
For example, Blue, blue-violet, and violet are analogous colors. Analogous
colors produce a palette that blends well and conveys a feeling of harmony.
(7) Complementary colors use two hues that are directly opposite. This color
selection is very powerful and provides high contrast, but it sometimes can be
quite jarring and hard to view over long periods of time.
(8) Split complementary colors consist of one hue and the two segments adjacent to
its complement. This color scheme is vivid and not too overpowering. For
example, the green, red-violet, and red-orange segments are split complementary
colors.
(9) Monochromatic colors use all the hues of one color segment. A monochromatic
color scheme conveys harmony through gradual tone changes in the single-hue
segment.
(10) Triadic colors use three colors that are an equal distance from each other.
These can include the primary, secondary, and intermediate colors. This color
scheme gives a sense of balance between the colors. For example, the blue-violet,
red-orange, and yellow-green segments make triadic colors.

Functions of Colors

Effects of Color on Mood
Color can control or affect the look and feel of the web site. Adding a few colors
can make a boring site exciting, a good site ugly, or can evoke emotional responses.
Therefore, designers should have colors to enhance their sites by creating good visual and
emotional effects. Colors should help the reader/user to enjoy the web-experience.
Here are some examples about how color influences mood:

Pink: soothes, acquiesces; promotes affability and affection.
Yellow: expands, cheers; increases energy.
White: purifies, energizes, unifies; in combination, enlivens all other colors.
Black: disciplines, authorizes, strengthens; encourages independence.
Orange: cheers, commands; stimulates appetites, conversation, and charity.
Red: empowers, stimulates, dramatizes, competes; symbolizes passion.
Green: balances, normalizes, refreshes; encourages emotional growth.
Purple: comforts, spiritualizes; creates mystery and draws out intuition.
Blue: relaxes, refreshes, cools; produces tranquil feelings and peaceful moods.

Management Information System

Overview
At the start, in businesses and other organizations, internal reporting was made manually and only periodically, as a by-product of the accounting system and with some additional statistics, and gave limited and delayed information on management performances.

In their infancy, business computers were used for the practical business of computing the payroll and keeping track of accounts payable and accounts receivable. As applications were developed that provided managers with information about sales, inventories, and other data that would help in managing the enterprise, the term "MIS" arose to describe these kinds of applications. Today, the term is used broadly in a number of contexts and includes (but is not limited to): decision support systems, resource and people management applications, project management and database retrieval application.

Definition
An 'MIS' is a planned system of the collecting, processing, storing and disseminating data in the form of information needed to carry out the functions of management. According to Philip Kotler "A marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers."The terms MIS and information system are often confused. Information systems include systems that are not intended for decision making. The area of study called MIS is sometimes referred to, in a restrictive sense, as information technology management.

Within companies and large organizations, the department responsible for computer systems is sometimes called the MIS department. Other names for MIS include IS (Information Services) and IT (Information Technology). (Webopedia.com)

Data, Information, Knowledge
Data refers to information or facts usually collected as the result of experience, observation or experiment, or processes within a computer system, or premises. Data may consist of numbers, words, or images, particularly as measurements or observations of a set of variables. Data are often viewed as a lowest level of abstraction from which information and knowledge are derived.
Etymology
The word data (pronounced/ˈdeɪtə/, /ˈdætə/, or /ˈdɑːtə/) is the Latin plural of datum, past participle of dare, "to give", hence "something given". The past participle of "to give" has been used for millennia, in the sense of a statement accepted at fn, Data). In discussions of problems in geometry, mathematics, engineering, and so on, the terms givens and data are used interchangeably. Such usage is the origin of data as a concept in computer science: data are numbers, words, images, etc., accepted as they stand. (wikipedia.com)

1) Distinct pieces of information usually formatted in a special way. All software is divided into two general categories: data and programs. Programs are collections of instructions for manipulating data.Data can exist in a variety of forms -- as numbers or text on pieces of paper, as bits and bytes stored in electronic memory, or as facts stored in a person's mind.Strictly speaking, data is the plural of datum, a single piece of information. In practice, however, people use data as both the singular and plural form of the word.

Meaning of data, information and knowledgeThe terms information and knowledge are frequently used for overlapping concepts. The main difference is in the level of abstraction being considered. Data is the lowest level of abstraction, information is the next level, and finally, knowledge is the highest level among all three. Information as a concept bears a diversity of meanings, from everyday usage to technical settings. Generally speaking, the concept of information is closely related to notions of constraint, communication, control, data, form, instruction, knowledge, meaning, mental stimulus, pattern, perception, and representation.Beynon-Davies uses the concept of a sign to distinguish between data and information. Data information and knowledge are frequently used for overlapping concepts. The main difference is in the level of abstraction being considered. Data is the lowest level of abstraction, information is the next level, and finally, knowledge is the highest level among all three. Generally speaking, the concept of information is closely related to notions of constraint, communication, control, data, form, instruction, knowledge, meaning, mental stimulus, pattern, perception, and representation.Beynon-Davies uses the concept of a sign to distinguish between data and information. Data are symbols. Information occurs when symbols are used to refer to something.

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Four Ethical Issues of the Information Age
Refer to:http://www.misq.org/archivist/vol/no10/issue1/vol10no1mason.html

Types of Information System

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For most businesses, there are a variety of requirements for information. Senior managers need information to help with their business planning. Middle management need more detailed information to help them monitor and control business activities. Employees with operational roles need information to help them carry out their duties.

As a result, businesses tend to have several "information systems" operating at the same time. This revision note highlights the main categories of information system and provides some examples to help you distinguish between them.

The main kinds of information systems in business are described briefly below:

Executive Support System
An Executive Support System ("ESS") is designed to help senior management make strategic decisions. It gathers, analyses and summarises the key internal and external information used in the business.






Management Information Systems
A management information system ("MIS") is mainly concerned with internal sources of information. MIS usually take data from the transaction processing systems (see below) and summarise it into a series of management reports.
MIS reports tend to be used by middle management and operational supervisors.


Decision-Support Systems
Decision-support systems ("DSS") are specifically designed to help management make decisions in situations where there is uncertainty about the possible outcomes of those decisions. DSS comprise tools and techniques to help gather relevant information and analyse the options and alternatives.


Knowledge Management Systems
Knowledge Management Systems ("KMS") exist to help businesses create and share information. These are typically used in a business where employees create new knowledge and expertise - which can then be shared by other people in the organisation to create further commercial opportunities. Good examples include firms of lawyers, accountants and management consultants.


Transaction Processing Systems
As the name implies, Transaction Processing Systems ("TPS") are designed to process routine transactions efficiently and accurately. A business will have several (sometimes many) TPS; for example:
- Billing systems to send invoices to customers- Systems to calculate the weekly and monthly payroll and tax payments- Production and purchasing systems to calculate raw material requirements- Stock control systems to process all movements into, within and out of the business


Office Automation Systems
Office Automation Systems are systems that try to improve the productivity of employees who need to process data and information. Perhaps the best example is the wide range of software systems that exist to improve the productivity of employees working in an office (e.g. Microsoft Office XP) or systems that allow employees to work from home or whilst on the move.

Performance Management

Performance Management in Asset Management

Introduction to performance management

Much has been said about performance management where an organization has to measure its progress towards achieving its goals and objectives. In fact, most successful organization put much emphasis on performance management as one of the major management tools. Performance management has evolved from a mere financial reporting tool to become a major decision-making tool. Much of its success comes from the fact that organizations have become so big and widely dispersed all over the country and the board of directors needs to know the well-being of its company fast and real-time. Furthermore, performance management has become the most effective system in creating a goal-oriented culture in government agencies.

Performance management involves establishing data collection system, analytical tools, periodic or regular monitoring and reporting, communicating the performance, continual improvement programme and lastly, using suitable indicators. Even the display of the periodic monitoring and reporting mechanism, has evolve from a mere paper-based report to a more sophisticated online or real-time electronic system, which is predominantly known as dashboard. Some would say that performance management is only meant for the chairperson, board of directors or the head of an organization, but this is not the true scenario now. Performance management is a must for any dynamic and learning organization.

Performance is measured at every level and unit, which is the cascading approach in performance measurement. This is because that in every level and unit, the unit’s performance will reflect back on the overall performance of the organization and the unit must be aligned to the organization’s objective(s). Their performance indicator is not the key performance indicator of the organization, but their indicator merely shows the unit’s contribution to the overall performance of the organization. It shows their commitment and involvement in realizing the organization’s objective(s).

Nevertheless, the top-to-bottom cascading nature of indicator(s) in an organization is an important fundamental element in performance management. Rightfully, the lowest of the personnel must know the key performance indicator of the organization because their involvement is important to the success of the organizational performance management and for the organization to be able to see the actual big picture of its performance.

Performance management is not only meant for an organization but it is also meant for products and services rendered. It also focus on the effectiveness of the organization’s delivery system and aligning the whole organization towards achieving its goals and objectives. This is done by having a performance management plan (which incorporates the processes, systems and communication plan) and suitable key performance indicators.

The benefits of using performance management are as follows:

1. A systematic measurement system for the organization
2. True understanding of the organizational behavior
3. Enabling a continual improvement program
4. Allow benchmarking against other related organization or industry players
5. Creating a performance based culture in the organization

What are indicators?

There are three (3) types of indicators, which commonly known as:

1. Key Performance Indicator
   A measurement for the performance and progress of achieving the organizational business goals and this is the main performance indicator for the organization
2. Performance Indicator
   Measurements for activities or initiatives that are complementing the critical activities of the organization
3. Result Indicator
   Measurements of output from processes

Performance Management Process

In balanced scorecard concept, vision and objective are important input to measures. Hence, there are four (4) perspectives that need to be considered when putting up measures. The four (4) perspectives are as follows:

1. Financial
2. Learning and growth
3. Business processes
4. Customer

When identifying the key performance indicators, organization must reflect the above perspective(s) besides fulfilling the SMART requirements, otherwise the indicators are either results or performance indicators. The two (2) indicators will however demonstrate the overall picture of the organization, but not its performance.
(SMART: S= specific, M= measurable, A= attainable, R= realistic, T= time-bound or timely)

In establishing the key performance indicator, the top-down is more commonly used rather than bottom-up process. An illustration of this approach is shown below.

Typically, the performance management process specifically for asset management is as follows:

It is a simple process to implement, but the fundamental of this process is that key performance indicator directly relates to the objective(s) of the organization.

Preferably, various management tools should be used to identify the key performance indicators. The tools, amongst others are as follows:

1. Benchmarking
2. Scenario analysis
3. Brainstorming
4. SWOT analysis
5. PESTLE analysis
6. Gap analysis

Using Key Performance Indicators in Asset Management

In asset management, service level is an important aspect of measurement, which measures the ability of the asset to provide service. Amongst the key performance indicators in asset management are:

1. Facility condition
2. Deferred maintenance
3. Customer satisfaction
4. Sustainability
5. Whole life cycle
6. Maintenance norms or operating and maintenance cost
7. Reliability
8. Response time

A few key performance indicators above can be used, but a word of advice, it is far better for the organization to establish its own key performance indicators. The involvement of the whole organization in establishing and implementing a performance management system is ultimate goal of any organization. This is due to the fact that the whole workforce of the organization will be aligned to the same objective(s).

Resources:

1. Department of Public Works, Queensland Australia
2. The Balance Scorecard Institute

Topics of interest

(Please follow the links to read the topics)

Asset Management Tools

1. System Thinking in Asset Management
2. Risk Management
3. Whole Life Cycle Costing

Asset Management Fundamentals:

1. Asset registry
2. Roles and responsibility
3. Asset objectives
4. Service criteria
5. Asset condition and performance
6. Asset life cycle
7. User expectations
8. Asset stakeholders
9. Asset management objectives
10. Asset planning

System Thinking in Asset Management

What is a system?

The late Austrian Biologist Ludwig von Bertalanffy wrote “A system is an entity which maintains its existence through the mutual interaction of its parts”.

Therefore, a system is an interconnected items or dynamic activities performing as a single unit or entity whereas system thinking is simply the art of organizing the interactions between the interconnected and interdependent activities or items. In the case of a building, every item in the building contributes to a proper functioning and the building is a system. As such, every item is interconnected and interdependent of each other.

We have to look at building as system rather than as a rigid object. The item in a building is a subsystem of the building system and that building is a sub-system of a complex of buildings, and that building complex is a sub-system of a commercial hub, and so forth. If any of the sub-system failed, it will create a chain reaction to the sub-system and the system as a whole.

Furthermore, the earth is a system by itself and therefore we must look at system. To do that, we must possess system thinking. Fritjof Capra said that "the property of network is its nonlinearity as it goes in all directions. It may travel along a cyclical path and becomes a feedback loop".

The important concept of system thinking is that system thinking looks at multiple perspectives and emphasizing on the behavior as a whole not the parts, focusing on goals and performance not the output.

In asset management, we have to look at the asset as a whole and also, as a system. Every major activity in an asset life cycle is a system and it becomes a sub-system to the asset. We look at all angles, crossing disciplines and knowledge and we look beyond the fundamentals. Furthermore, community is a living system and assets are a sub-system to the living system.

As such, system thinking is fundamental and important ingredient to an excellent asset management.

How do we use system thinking approach in asset management?

1. Firstly, we must look at the asset as a system or maybe a sub-system to a bigger system
2. Then, develop a pattern of behavior for the asset, which is basically the asset life cycle (never use a single perspective of the asset, look at multiple perspective crossing boundaries and discipline)
3. Develop a model behavior of the asset
4. Simulate the behavior of the model
5. Develop an alternative approach
6. Simulate the alternative approach
7. Develop feedback loop

By simulating, we are asking questions about its behavior as a whole and we are looking beyond the fundamentals, and that is the beauty of system thinking.

Reading material:

1. http://www.systems-thinking.org/index.htm
2. http://www.fritjofcapra.net/index.html
3. http://www.thinking.net/
4. http://www.systemdynamics.org

Risk Management

Asset Risk Management

Risk can be defined as the combination of the probability of an event and its consequences (ISO/IEC Guide 73) and the possible effect can be either negative or positive. Nevertheless, risk management is focused on the management of the prevention and mitigation of the risks. Gone are the years when flipping a coin will give you a decision, now risks are identified at an very early stage. Hence, risk management is just a state being prepared for the worst, which we are always on top of it.

To manage an asset, there a number of risks involved that need to be assessed, such as:

1. External risk
2. Internal risk

A simple asset risk management model is shown below:

Risk Identification

External risk comes from external factors such financial risk, strategic risk, operational risk and hazard risk. Internally, the risks are nearer to the organization such as information systems, work force, internal financial control and so forth. The risk must be identified all activities and processes of an asset life cycle. There is risk in human behaviour such as unexpected behaviour and misinterpretation of instruction, which can categorized in any of the external and internal risk.

A simple template or even a questionnaire such as the figure below will assist in identifying all risks.

Risk Analysis

Once the organization has identified all risks that will be encountered, the risks are rated according to the probability of occurrence, criticality, impact and importance. All risks must rated to determine its mitigation priority, and it is done systematically by first looking at its probable effect to the asset. For example, unexpected human behaviour will cause rapid deterioration to the asset due to, such as, uncontrollable anger towards the asset. Another example would be that changes in customer would make the asset obsolete in shorter period, which new asset need to be planned and this mean capital expenditure.

A sample template is shown below:

Risk Evaluation

Risk evaluation involves processes to establish the costs, compliance to legal requirements or even environmental factors. This is done after risk analysis, which involve primarily rating the risk. There are a few factors that need to be considered in proposing a treatment such as the cost of mitigation, the effectiveness of treatment and compliance to existing legal environment.

Furthermore, risk evaluation involves decision-making on the risk and the impact of the risk to the organization and the asset concern whether to accept the risk without treatment or with the proposed treatment. Once the decision to treat the risks is accepted, the next step would be to treat the risk.

Risk Mitigation and Treatment

Risk mitigation and treatment is the process to reduce or even nullify a risk using the appropriate or proposed method. The process needs to be constantly monitored and communicate back to the stakeholders on the treatment effectiveness.

Risk Review

Risk review is a process of monitoring of the risk mitigation/treatment and emergence of new risks. Risk review also will highlight the effectiveness of the treatment, any issues in implementation of the mitigation measures and so forth. These reviews will be the basis of effective risk mitigation and treatment whilst acting as a knowledge database.

Risk Reporting

The risk management team shall generate and distribute periodic reports to stakeholders on implementation of the risk management program. The stakeholders need to know that the risk is effectively treated and the actual cost the organization has to bear.

Risk Management Plan

At the end of the day, the organization will have a risk management plan comprising of the above topic. The plan shall contain amongst others the structure for risk management, risk management policy, role and responsibility, monitoring frequency and so forth.

Publication

1. The Institute of Risk Management
2. Australian Standard 4360 Risk management portal

Whole Life Cycle Costing

Whole life cycle costing

Whole life cycle cost is the total costs of the asset throughout its life cycle from its acquisition until disposal, amongst others includes:

1. Capital costs
2. Operating costs
3. Maintenance costs
4. Risk exposure costs
5. Rehabilitation costs
6. Administrative costs
7. Depreciation and disposal costs
8. Insurance and tax costs (if relevant)

Whole life cycle cost is important in order to determine the actual cost that will be incurred in the future, the benefits that will be derived, the cost of operation and maintenance, the capital expenditure needed and so forth. Previously, we would be satisfied if we only know the capital cost as it is the easiest to do, but it is not the true cost of the asset.

Cost of the assets relates to the design and shape of the asset, the equipment employed, the type of material used, type of operation and maintenance deployed and so forth. Before making justifiable and the right decison, an organization needs to know all costs, which become future liabilities. These liabilities would cut into the profit margin and the organization will be non-profitable for the asset it holds. This scenario is not a good business case if the organization needs to venture and explore new business areas.

Nevertheless, if an organization acquires the predicted costs of actually having the asset, then a predicted cast flow is known throughout the asset life span, which can span more than 25 years. A good business decision is ensured and the decision to acquire the asset is well justified.

Capital cost

Capital costs, amongst others, include:

1. Design and supervision cost
2. Cost of acquiring or purchasing land
3. Interest and funding cost
4. Construction or installation cost inclusive of all electrical
   and mechanical facilities, incidental equipments and others
5. Cost of permits, levies and approval from local authorities
6. Project management costs
7. Consultation cost

Operating cost

Operating costs are cost incurred when operating or using the building, amongst others, include:

1. Telecommunication bills or usage
2. Electricity bills or usage
3. Gas, Water and sewerage bills or charges
4. Chilled water bills or usage
5. Tenancy fees or charges
6. Local authority or central government taxes or duties relating to the
   property
7. Insurance and tax costs (if relevant)

Maintenance cost

Maintenance costs are costs incurred to ensure that the building functions as designed and costs to upkeep the building, such as:

1. Custodial and up keeping
2. Routine maintenance
3. Unplanned or breakdown maintenance
4. Planned or scheduled maintenance
5. Security services
6. Unplanned or planned inspection and assessment costs
7. Special arrangements

Risk exposure cost

1. Increase in insurance, mortgage or interest rates
2. Mitigation costs

Rehabilitation costs

1. Installing new technologies within its functional life
2. Major maintenance works to meet new customers’ demands

Administrative costs

1. Management cost
2. Direct and indirect costs relating to the management of the
   asset and et cetera

Depreciation and disposal costs

1. Renewal cost inclusive any design, demolishing, and et cetera
2. Disposal costs
3. Replacement cost
4. Depreciation cost

Typically, a whole life cycle cost curve will look lik this:

Fundamentals of asset management

To understand asset management, we must understand the fundamentals in asset management. The fundamentals are as follows:
(Please follow the links to read the topics)

1. Asset registry
2. Roles and responsibility
3. Asset objectives
4. Service criteria
5. Asset condition and performance
6. Asset life cycle
7. User expectations
8. Asset stakeholders
9. Asset management objectives
10. Asset planning

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13.0 Asset planning

13.1 An objective is not meant to be just a visionary or an eye-catching phrase, but it must be realized in order to indicate the approach and the path undertaken is the right undertaking and the right strategy. Therefore, an asset management plan must be formulated containing the policies, strategies, objectives, performance measurements (such as service levels) and all activities in the asset life cycle.

13.2 Over-planning is a mystic phrase where an organization plans towards an objective, which is impossible to achieve. Thus, planning must be flexible enough to meet changes, to be able to detect risks and changes over the asset life cycle. A comprehensive plan will achieve the desired outcome, but planning without having an inbuilt performance measurement and reporting system will always fail as the organization would not know whether it has achieved what is set for. Nevertheless, organization must not over plan.

13.3 In asset management, these plans are called Asset Management Plans, which contains the minimum items such as:

a. Purpose of the plan
b. Asset management policies, strategies and policies
c. Asset life cycle management plan
d. Future demands
e. Service levels
f. Monitoring and improvement plan
g. Operating and maintenance plan
h. Renewal, replacement and disposal plan
i. Financial Management Plan
j. Asset Management Practices

With these plans, the organization shall be able to ensure that the service delivery is optimized and efficient to meet community and stakeholders demands.

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12.0 Asset management objectives

12.1 The need of asset management objective is clearly stated in PAS 55-1 from the Institute of Asset Management, United Kingdom and the statement is shown below:

“The organization shall establish and maintain documented asset management objectives at relevant function and level within the organization. The objectives shall derived from and consistent with the asset management strategy.”

12.2 It is very clear that emphasis is on a single asset management objective throughout the organization and the organization shall disseminate or establish asset management objectives to all staff at various levels in the organization. No single unit/sections in an organization shall have an objective deviating from the main objectives. This is necessary if any asset management policies, strategies or operational tasks need effective executions.

12.3 In realizing the asset management objectives, the organization shall consider:

a. Legal, regulatory and statutory requirements
b. Technological advancements
c. Financial, operational and business requirements
d. Related risk in asset management
e. Views for appropriate stakeholders

12.4 The above requirements are important so that the objectives developed are always relevant and in the context of the organizational business environment. In this respect, every activity and data gathering will be streamlined throughout the organization resulting in a shared vision, improved and effective information and decision-making. As such, the organization shall be able to meet service delivery objectives efficiently and effectively.

12.5 As a result, the organization would be able to plan, formulate and implement strategies and, lastly measure its performance. It is also important that a communication plan be established so that the objectives can be communicated effectively to its stakeholder, customers, users, key suppliers and so forth ensuring formulating of a set of reasonable objectives and successful delivery of service.

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11.0 Asset stakeholders

11.1 Stakeholders are person, group, or organization that has direct or indirect interest in the asset. In infrastructure assets, the person, group, or organization who used the asset are basically the stakeholders of the asset and their quality of life will be determined and influenced by the asset. On the other hand, the government or the person that funds and owns the asset is the key stakeholder of the asset.

11.2 It is good practice to involve in the planning for new asset, those who are concerned directly or will be affected by the asset. Their inputs are important to successful delivery and the benefits realization of the asset. This is what we call good governance of the asset.

11.3 In this respect, the organization who manage the asset, service providers and the construction community have roles to play and hence, be responsible to achieve the asset’s objective(s). They have the responsibility to create and manage the asset. Each of the organization, service providers and the construction community has different roles and responsibility in the asset life cycle. Their actions are inter-related and have considerable effect on each other when realizing the asset. They must instill good governance in order to have an asset that fulfills its objectives.

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1o.0 User expectations

1o.1 When assets are constructed or installed, these assets are meant to be used or utilized. As such, the asset must be able to continuously provide services to the community. Subsequently, asset owners will derive benefits from the assets whilst the public or the users of the assets will enjoy a better environment and quality of life.

10.2 On the other hand, a user of the asset does not expect much from the asset used but when they relate it to quality, quantity, availability, safety and responsiveness, questions will be raised by the user when there is a drop in the level of service of the asset. Hence, the organization must act accordingly to the questions raised as it has an impact on its organization’s service delivery. Though it is impossible to have zero gripe from users, efforts must be made to minimize any discomfort to the users thus minimizing complaints from users.

10.3 To do this, organizations must take a proactive stand and constantly thrive to understand user expectations through regular interaction with users. By having regular interactions, the level of satisfaction can be determined. There are various methods to implement the assessment or survey and the most common method is by street, online or a general survey. Nevertheless, focus groups may be employed at an earlier stage before implementation to gauge the fulfillment of the asset objective.

10.4 Examples of user expectations are:

1o.5 From the above table, user’s expectations relates to the amount of money the user have contributed through statutory taxation to the government or the local authority. As such, user will expect value for money. Likewise, the organization also expects the asset to function as specified in order to realize the organization service delivery within whatever constraints or limitations the organization has. To match the two (2) expectations, the logical thing to do is by giving the asset a service level, hence satisfying both the organization and the user.

10.6 By assessing the condition and performance of the asset in conjunction with periodic and customary customer satisfaction surveys, CSS in short, the organization will be able to gauge the achieved service level of the asset and appropriate the amount of funds to asset if the achieved asset’s service level is lower than the stated service level. If gaps arise between the actual and and the intended service of the asset, measures must be taken such as renewal to ensure that the asset will continue to deliver its sevice during it functional life.

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9.0 Asset life cycle

9.1 We do sometimes just fix the asset after it breaks down because it is the easiest way to maintain assets. It might be the right strategy but it is the best option and relative easy to undertake. In doing so, the cost of maintenance might not be justified and there is no value for money. There is also high probability that the cost is more than expected and the maintenance is sometime “overdone” and repeatable. Nevertheless, without proper planning, design and construction or acquisition, the asset may cease to have value to the organization. By doing this, the asset has become a liability and a burden to the organization. With asset management, these practices are things of the past as asset management starts from the inception of the asset until the end of the asset life, which is the life cycle of an asset and giving prominence to the operation and maintenance of the asset. Asset life cycle does not start from the day it is operating or maintained, but it starts from its inception and asset life cycle is an important element in asset management. Control starts from the inception stage, making its way up to end that is the disposal. Some would say that we must design to maintain rather than design to build which is easier.

9.2 Any asset would have a typical and simplistic life cycle, that is:

a. Initiation

Initiation involves such activities as planning and designing. This is the most crucial activity for it involves monetary decision such as is the type of funding, the benefits that can be derived, cost of the asset, the operational and maintenance cost, and most of all, the value of the asset at disposal. This stage is actually a major business decision for an organization.

b. Procure or acquire

This stage will usually involve activities such as constructing the asset, installation, or even buying an asset. Construction or installation activities will also involve sub-activities such as supervision of the works including formulating and implementing procurement strategies.

c. Operate and maintain

Once we acquire or complete the construction/installation of an asset, we need to maintain and operate the asset. The life span of an asset is the longest at this stage, which is usually at the range of 90% of the life cycle period and 80% of the whole life cost of the asset. At this stage, the asset is vulnerable to the lack of maintenance resulting in a low disposal value.

d. Dispose or renew

As the asset reaches its lifespan, an organization must make a decision whether to dispose or making a complete renewal of the asset. If the asset is disposed, the organization will have to start to plan for a new asset, if the need arises.

9.3 For infrastructure assets, a more comprehensive and detailed life cycle must be developed to reflect the actual activities an stages of the asset such as buildings or roads. The figures below llustrate typical examples:

9.4 Briefly, every activity that is pre-requisite to materialize an asset (no matter what asset it is) is detail out in sequence in order to manage and control the output of each activity including measuring the outcome of each activity. In this context, the output of each activity must reflect back the asset intended objective. If the asset does not meet its objective, the asset’s specification needs reviewing, amendment or even a total revamp, to ensure the asset’s objective is met in all the activities. This is the importance of an asset life cycle. The life cycle ensures reviews and allows immediate amendments or modifications to its specification before any preceding activities to proceed.

9.5 The above statement is in line with the previously stated asset definition, that is:

a. An item/physical component/facility that have a distinct value to the organization; and/or

b. An item/physical component/facility that enable services to be provided

In order for the asset to give service well within the designated objective, we must manage and control the activities at its infancy that is during the inception phase and up to its disposal or renewal or even upgrade.

9.6 At the end of the day, whatever asset that is constructed or installed, the asset is what the organization wants in order for the organization to realize its service delivery.

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8.0 Asset condition and performance

8.1 Asset condition is the physical state of the asset at the material time of assessment whilst asset performance is the ability of the asset to provide the required level of service. We understand that every physical asset will deteriorate due to normal wear and tear or through other factors such environmental degradation and so forth. In this respect, some assets will deteriorate faster from other assets and vice versa. As such, we must assess the asset periodically in order to have a quantifiable physical condition of the asset. Furthermore, the condition of the asset relates to the degree of performance of the asset and performance of asset relate to achieving its service level. At the end of day, we will have a database of asset condition, which will allow the organization to make a strategic decision on the asset. The figure below illustrates a typical performance cycle of an asset.

8.2 There are numerous ways to assess the condition of asset and the most common method is by visual inspection. However, visual inspection will only give the apparent deterioration but not the physical attributes of the assets such as material strength and so forth. Therefore, a far better and comprehensive method of assessment need to be formulated. As such, a good assessment will give the organization an overall and accurate picture on the physical condition of its assets.

8.3 For a typical condition assessment, the methods used are:

a. Documentation and desktop review
b. Visual inspection
c. Sampling for laboratory testing
d. Analysis on the present and future rate of deterioration

8.4 It is important that the necessary documentation depicting the details of the asset and record of maintenance works must be available for a conclusive assessment. If no documentation is available, the organization must start from zero base, build up the documents especially as-built plans, and so forth. Hence, by accepting asset management, the organization will be building an excellent documentation system.

8.5 It is also equally important to have a rating or a grading condition system to identify the physical state of the assessed asset. With this rating or grading system, the organization will at anytime know the physical condition of the asset and the funds needed to maintain the assets. The combination of the physical condition and performance will be the basis to determine the actual service level of the asset at that particular time. With further analysis, the economic life span can be determined at different scenarios and the expected performance of the asset in the future.

8.6 In general, asset performance is the ability of the asset to provide the required level of service and can be measured in terms of reliability, availability, capacity and meeting customer needs.

8.7 The assessment of asset condition and performance must be a cyclic programme either yearly or frequency determined by the organization, based on condition of the asset or maintenance cost. If the resources to implement the assessment are readily available, the assessment must be on a regular interval. Without this assessment programme, a number of outputs, which are important inputs to the organization’s decision making process, will not be known amongst others such as:

a. The residual life,
b. The maintenance or renewal cost ,
c. Prediction of asset failure,
d. The rate of consumption,
e. Failure pattern and so forth

Nevertheless, due consideration must be given to short and long-term benefits to the organization when implementing an assessment programme.

8.8 Without these assessments, the organization will be back to the normal maintenance programme and doing things without having a justifiable and value for money programme that is fixing asset when it breaks down. By doing so, the asset will continue to fail and dysfunction prematurely resulting in the deterioration of asset performance and customer’s expectations as shown in the figure below.

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7.0 Service criteria

7.1 Service criteria are a set of guiding principles defining the standard of quality of service provided by an asset or assets. Amongst the generic service criteria are:

a. Quality
b. Quantity
c. Availability
d. Safety
e. Responsiveness

7.2 Even though the above generic criteria encompass all that the organization need to formulate service criteria, the other important factors to include are legislative, user, availability of funds and the organizational strategic requirements. With all these criteria and linking it to the asset’s objective, the asset’s service criteria can be developed and implemented by the organization. The figure below shows the formulation of asset criteria, asset service level and asset performance.

7.3 It is simpler to define the service criteria for a single asset compared to a network of assets such as road, buildings and so forth. This is because a road will have a multiple service in terms of the items in a road such as road signage, pavement, drainage, street lighting, road markings and so forth. It is the same for a building, which consists of air conditioning system, elevators (or lifts in some part of the world), lightings, signage, water supply system, sanitary and so forth. The building is, basically, a system of assets working in tandem to provide a service.

7.4 Each of the assets mentioned have its own service criteria and maybe, multiple level of service for each of the assets. For example, a road pavement has multiple service level, but it can be consolidated into a single service level for the road pavement. Furthermore, a level of service is the defined quality of a particular service area in which measurements of performance or compliance can be made. In this case, the road pavement provides a smooth riding quality but signage and drainage will have a different service criteria and service level.

7.5 It is important for the organization to determine the current service level of the asset in order to see whether the asset is within the service criteria set forth and to enable the gap closed between current service level and the newly defined service level. If the asset is below the service criteria and the defined service level, the asset need to be renewed, upgrade or disposed of. This method also allows the gap determination between customer expectations and the service provided.

7.6 The above figure illustrate two (2) gaps to closed and once, the two (2) gaps are closed the actual service delivery will be the same as the customer’s expectations. The closing of gaps will sometimes involve capital expenditure or it could just inform the customer the value for money for having that level of service. Nevertheless, it most cases, the organization has to disburse funds for modifications or renewal of the assets in order to elevate the current level of service towards customer’s expectation. This exercise could take years depending on the availability of funds. For a local council, the funds are limited and usage of the limited funds must be prioritized on assets which in a poor condition. This is the most important aspect of using service criteria, which can help an organization to manage its financial needs and spending.

7.7 The diagram below shows the relationship between the individual service level and ultimate service level of a network of assets:

7.8 Lastly, every asset must have a service level and sometimes, an asset consist of numerous assets acting in a system to provide a service. The determination of service level is important, as the organization will be able to demonstrate to its customer the performance of the assets to their expectations.

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5.0 Roles and responsibility

5.1 In any management system, role and responsibility is important and given due recognition as one of the leading factor of a successful management system. Hence, the key success factor is always the clarity of role and responsibility in an organization. Without this clarification, everyone in an organization will assume a role but will not assume the responsibility. In such case, we have organization full of people but none is doing tasks or activities towards the organization’s objectives.

5.2 In asset management, the organization must know:

a. What is the role and responsibility of each person or unit sections;
b. Why the role and responsibility is formulated in such a way;
c. When to execute the role and responsibility;
d. Who is the custodian of the assets;
e. Who is responsible for the operation and maintenance of the asset;
f. How to execute the role and responsibility;

5.3 Once the organization has established the roles and responsibilities in the organization, the role and responsibility must be properly documented and maintained. As mentioned earlier, the role and responsibility in an asset management system is utmost important, as it will determine the successful implementation of an asset management system.

5.4 Even though it is not a necessity to create a new unit, but an asset management team must be in place either using an existing manpower or outsourcing the expertise. The asset management team will necessitate qnd implement an asset management system in the organization with emphasis on review, coordinating and monitoring asset management activities.

5.5 At the end of the day, the organization will be accountable if the asset fails to deliver the desired or the expected service delivery.


6.0 Asset objectives

6.1 It is a norm that an asset acquisition’s proposal must be accompanied with reasons and objectives of acquisition or creation. One does not build, acquire or construct an asset without any justifiable reasons or objectives unless the organization has surplus funds, which the organization does not know what to do with it. An asset will become a liability if it ceases to function and perform its primary objective. Therefore, it is necessary that an objective(s) be attached to an asset.

6.2 Clearly, all assets must have a defined objective(s). By having an objective, the asset is created with a purpose. With this objective, service criteria for the asset can be created and the asset performance can be measured and monitored. Typical assets’ objectives are:

Fig. 6.2: Typical asset objectives

6.3 At the initiation and acquisition stage, the asset’s objectives are in general adequate and justifiable. If the users’ expectations on the service provided change during the asset operational life, then the objectives of the asset must be renewed or modified to reflect the change. Cases such as this would entail a modification, a renewal or even an upgrade of the existing asset(s). There are other factors that affect the current asset’s objective such as obsolescence, technology changes, environmental changes and lastly, legislative changes. If these factors do affect the existing asset, modifications to the existing assets must be made to ensure that the asset continue to provide the necessary service and not becoming a liability.

6.4 By having assets’ objectives, the service criteria and the service levels can be determined. With these service levels, the organization can informed the public, determine the assessment rates need to be paid by the taxpayers, the budget needed to maintain the service levels and so forth. This action creates transparency and justifiable measures to the customers and the organization as a whole.