1. Mayors Water Council The United States Conference of Mayors
Infrastructure Asset Management: Beyond the Techniques, Tools and Technologies
Mayors Water Council The United States Conference of Mayors
May 1, 2015
Thank you Mayor Ballard
Going to talk a bit about AM – Where it’s been but more importantly current best practices

2. Managing infrastructure assets is nothing new
8th and 9th Century - Rome’s abandoned aqueducts were rehabilitated and reused
14th Century – Constitution of Siena, Italy required maintenance the City’s fountains and other public works
Of course, managing infrastructure assets really isn’t new
More than 1,000 years ago, Rome’s aqueducts were rehabilitated and reused
And, toward the end of the Middle Ages, the constitution of Siena, Italy required maintenance of the city’s fountains and other public infrastructure

3. In past however, management of infrastructure assets has been limited to:
Individual and isolated focus
Stand-alone actions
Unverified information and decentralized management of data
Un-integrated tools
Ad-hoc meetings
Decisions based on perception rather than fact
The problem however, is that until recently, management of assets has been been siloed in different organizations
There has been stand-alone actions and decisions
Information has been decentralized, and un-integrated
And decisions based on perception rather than fact.
Back in the 1980s and 90s, I was director of OCU in Orlando, Florida – When we put together our Capital and operating budgets it was always a big fight among my managers; There was no rigorous process for prioritization
I assume the bottom picture must be what the Romans were up against when they decided to invest in rehab of the aqueducts rather than expand the coliseum.

4. Evolution of modern Asset Management
Restructuring of water sector in Australia and the UK
Comprehensive International Guidance
Comprehensive U.S. Guidance
Today, we talk about Modern Asset Management
Began in the 1980s and 1990s with the restructuring of the water sector in Australia and New Zealand and the UK.
Comprehensive guidance for AM was published by public works associations of Australia and NZ in late 1990s
US guidance was first published in 2002, and enhanced in 2007.
The most recent UK guidance, PAS 55 was published in 2012
But probably most importantly, the first INTERNATIONAL STANDARD for AM (ISO 55000) was issued by the International Standards Organization in January of last year.
Certification in ISO is likely to become the gold standard for AM for utilities and other sectors over the next several years
The Risk-Based Approach
UK Asset Management Specification (PAS 55)
New International Standard for Asset Management
(ISO 55000)

5. Asset Management has also become more strategic over the last several years
1st Generation AM Asset Information
2nd Generation AM Asset Strategies
3rd Generation AM Total Integration
What do we have?
Where is it?
What condition is it in?
How does it perform?
Maintenance Management
Optimization
Risk-based
System controls
Failure mode analysis
RCM
Coordinated strategy
Service standards
IT integration
Financial analysis
Organizational alignment
In the past 15 years, AM has become more strategic
Back in the 1990’s and early 2000s, AM was focused on collecting asset information and data and putting it into computerized maintenance management systems (CMMS)
In the last 10 years, AM transitioned to focus on the risk of asset failure and making capital investments to mitigate the risks and optimizing operations and maintenance activities
Now, AM is not just about infrastructure assets.
Successful and sustainable asset management has been found to require active leadership, organizational alignment, and coordination throughout all disciplines;
AM cannot be successful in an organization the maintains silos
Collecting asset data
Entering data into Computerized Maintenance Management Systems (CMMS)
Focus on the risk of asset failure for infrastructure investment decisions
Optimize maintenance by eliminating non-value activities
Asset management is not just about assets
Successful and sustainable asset management requires leadership, organizational alignment, and coordination

6. Asset Management has also become more strategic over the last several years
1st Generation AM Asset Information
2nd Generation AM Asset Strategies
3rd Generation AM Total Integration
What do we have?
Where is it?
What condition is it in?
How does it perform?
Maintenance Management
Optimization
Risk-based
System controls
Failure mode analysis
RCM
Coordinated strategy
Service standards
IT integration
Financial analysis
Organizational alignment
In fact, the Institute of AM, the international association for all things AM recognizes that:
Asset Management tools and technologies may be helpful, but the engagement of the workforce, the clarity of leadership, and the collaboration between different departments and functions are the real differentiators of a leading asset management organization.”
“Asset Management tools and technologies may be helpful, but the engagement of the workforce, the clarity of leadership, and the collaboration between different departments and functions are the real differentiators of a leading asset management organization.”
The Institute of Asset Management

7. Today, Asset Management focuses on integrated processes and tools to facilitate better decisions
Minimizing lifecycle costs
Establishing service levels
Evaluating, understanding and managing risk
Fact-based decision-making for maintenance, rehabilitation and replacement
Optimization of operations and maintenance
Involving collaboration among staff and multi-disciplinary activities
Consistency across the enterprise
Asset Management
An integrated set of processes to minimize the lifecycle costs of infrastructure assets, at an acceptable level of risk, while continuously delivering established levels of service
So, AM now focuses on integrated processes and tools to facilitate better decisions.
Key principles of AM include:
Minimizing lifecycle costs
Establishing service levels
Evaluating, understanding and managing risk
Fact-based decision-making for maintenance, rehabilitation and replacement
Optimization of operations and maintenance
Involving collaboration among staff and multi-disciplinary activities
Consistency across the enterprise

8. 4/16/2017
Implementing Asset Management provides benefits to both internal and external stakeholders
Benefits
Informed and defensible asset investment decisions
Better managed risk
Improved asset reliability
Improved efficiency and effectiveness
Improved service delivery
Improved customer satisfaction
Improved regulatory compliance
Improved bond rating
Possible higher priority ranking for SRF
Improved internal coordination and communication
Some of the benefits of modern AM include:

9. Improved ability to explain and defend investments is ranked the highest benefit among utilities
Top Five Benefits From Asset Management Approach
Improved Ability to Explain and Defend Budgets/Investments to Governing Bodies
88%
79%
76%
Better Focus on Priorities
70%
73%
60%
Better Understanding of Risks/Consequences of Alternative Investment Decisions
65%
54%
34%
In a survey of 451 North American water sector utilities done by CH2M and McGraw Hill in 2013,
The top five benefits cited were:
Improved Ability to Explain and Defend Budgets/Investments to Governing Bodies
Better Focus on Priorities
Better Understanding of Risks/Consequences of Alternative Investment Decisions
Non-Cost Savings Business Benefits
Increased Ability to Balance Between Capital and Operating Expenditures
Non-Cost Savings Business Benefits
63%
51%
34%
Increased Ability to Balance Between Capital and Operating Expenditures
52%
High Involvement
Medium Involvement
Low Involvement
451 responding utilities
46%
36%

10. Techniques, tools, and technology are all important elements of modern Asset Management
Modern Asset Management incorporates techniques and business processes such as:
Preventive maintenance optimization
Failure modes and effect analysis
Multi-attribute utility analysis (MUA)
Business case evaluations
Assessment of asset condition and performance is made more effective by tools such as:
Thermography
Ultrasound (ultrasonography)
Machine-to-Machine (M2M) wireless monitoring and control
Electromagnetic testing
Technology makes managing assets more efficient
Computerized maintenance management systems (CMMS)
Geographic information systems (GIS)
Mobile devices and other hardware
Modeling and other software
All this is not to say that techniques, tools and technology are not important…. They are
Enhanced business processes are key to improved management of infrastructure assets
New tools make the assessment of asset condition and performance more effective
AND, Technology, such as CMMS, GIS, mobile devices, modeling and other software makes managing assets much more efficient

11. Best practice for Asset Management is as much about the organization as it is about the infrastructure assets
The new international Asset Management standard emphasizes
Organizational understanding
Needs and expectations of stakeholders
Leadership and commitment
Organizational roles, responsibilities and authorities
Resources
Competence
Awareness
Communication
Managing change
10 of the 24 requirements of the Asset Management standard address the above people-focused elements
But Best Practice AM is as much about people and the organization as it is about the infrastructure assets.
In fact ISO 55000, emphasizes:
Organizational understanding
Needs and expectations of stakeholders
Leadership and commitment
Organizational roles, responsibilities and authorities
Resources
Competence
Awareness
Communication
Managing change
And 10 of the 24 requirements for AM certification are people-focused

12. Successful and sustainable Asset Management requires staff to adopt to a new way of doing business
Integrated approach to assessing issues and making decisions
Consistent use of methodologies
Collaboration across functions
Acceptance and adoption of new processes and practices
Willingness to acquire new skills
Proactive communication
Changes in the way employees relate to each other and their work
Successful and sustainable Asset Management requires staff to adopt to a new way of doing business
Changes in the way employees must work include:
Integrated approach to assessing issues and making decisions
Consistent use of methodologies
Collaboration across functions
Acceptance and adoption of new processes and practices
Willingness to acquire new skills
Proactive communication

13. Most transformational programs fail to be fully operationalized
Changes in work processes and staff capability must be carefully planned and implemented
Most transformational programs fail to be fully operationalized
Change program failure rate
Reasons for failure 30 70
% of efforts failing to achieve target impact
Other obstacles 14
Inadequate resources or budget 14
Management behavior does not support change 33
But changes in work processes and staff capability must be carefully planned and implemented
As you might expect and maybe experienced, Most organization transformation progress fail…… in fact 70% have been found to achieve their original goals, mostly due to
Employee Resistance to change and
Not enough support from management
Employee resistance to change 39
Source: McKinsey Quarterly Transformation Executive Survey, 2008, Next Generation PMO KIP Team

14. Change mechanisms must be customized to meet the utility’s goals and challenges
Decrease staff resistance
Prevent dips in performance
Preclude negative regulatory or customer attention
Begin with an assessment of the organization’s readiness for change
Identify the possible barriers/opportunities that will impact the transition
Use a change readiness survey to align program implementation to staff change capabilities and to leverage stakeholder implementation support
Identify change sponsors who will be instrumental to helping colleagues interpret and navigate through the new rules of business.
Enable employees to actively participate in program development and implementation
So organizational change must be customized to meet the utility's goals and challenges to:
Decrease staff resistance - both management and staff
Prevent dips in performance during the change
And mitigate negative attention from regulatory agencies or customers
Good way to start is to assess the organization’s readiness to change
Identify barriers and opportunities
Identify staff members who are most amenable to change to help their colleagues move forward

15. Tolerance for Ambiguity
Measure the seven traits of change readiness to identify capabilities of staff and identify champions
Target Range
Passion/Drive 28
Adventurousness
Adaptability 26
Change
Readiness 24
Optimism
Confidence 22
Tolerance for Ambiguity 20
Resourcefulness 18
We’ve seen success with the use of a change readiness assessment using the seven traits of change readiness
And have identified staff with the capabilities to successfully navigate change and identify change champions and guides for other employees 16
Resourcefulness
Optimism
Adventurousness
Passion/Drive
Adaptability
Confidence
Tolerance for Ambiguity 14 12 10
Jones
Smith
Hill
Green

16. Knowing an organization’s culture can suggest the most effective ways to bring about positive changes
Flexibility & Discretion
Culture has been shown to impact:
Effectiveness & efficiency of work
Morale & engagement
Physical & emotional health
Success of programs
Customer satisfaction
Return on investment
Internal Focus & Integration
External Focus & Differentiation
Knowing and understanding an organization’s culture can help find the most effective ways to bring about change
Organizational culture has been shown to impact everything from effectiveness and efficiency of work to employee moral and engagement to customer satisfaction and ROI.
We have used the competing values framework to assess a utility’s organizational culture.
The competing values framework was developed out of the Ross School of Business at the Univ of Michigan
It identifies four pure culture types: Clan (family like culture); Adhocracy (dynamic and risk taking culture), Market (a competitive culture), and Hierarchy ( a formal and structured culture).
Stability & Control
The Competing Values Framework

17. 4/16/2017
Changes needed for successful and sustainable Asset Management are more easily facilitated in some cultures
Change initiatives may leverage collaborative efforts and grassroots communications
Change initiatives may emphasize continuous improvement opportunities and individual recognition for contributing to the whole
Typical organizational culture profile of a municipal public utility
Changes needed for successful and sustainable Asset Management are more easily facilitated in some cultures
Since we have found most public utilities have a dominant Hierarchy culture (like you would expect in a government environment), followed by a strong clan culture, the approach to change is most likely to be successful if:
Leadership is visible and managers are actively engaged and serve as mentors to staff in the new ways of doing business
And while simultaneously working on grassroots communications among staff to take advantage of the relatively strong clan culture
Change Initiatives may emphasize customer engagement and clear dashboards that track results to performance
Change initiatives may leverage visible leadership and management mentoring

18. “I will change the way I work if I have…”
4/16/2017
A structured approach will provide staff with the impetus and means to adopt change
“…I understand and believe what the organization is trying to do and it makes sense to me on a personal level…”
“…I see others conducting themselves differently and getting rewarded for it…”
Reinforcement & Recognition
Awareness & Conviction
“I will change the way I work if I have…”
Desire & Encouragement
Ability
“…I have the skills to act in the manner that is required of me…”
In addition, the approach to organizational change must be structured.
We use the ADKAR model which is the acronym for: Awareness, Desire, Knowledge, Ability and Reinforcement
First making employees aware of the need to change
Second instilling the desire to change
Followed by giving them the Knowledge and Ability to change through training and mentoring
And then maintaining the positive change through reinforcement and recognition
“…I am provided with the proper incentives to make the change…”
Knowledge
“…I know specifically what is being asked of me in my daily work…”

19. 4/16/2017
Most importantly, achieving success depends on moving the staff away from traditional approaches
OUT IN
Capital cost
Renew assets based on their poor condition
Maintenance preserves assets
Most equipment is more likely to fail as it gets older
Designed to build
Collecting data
Best practices from the water industry
Asset-centric
Lifecycle cost
Renew assets based on their high risk of failure
Maintenance preserves asset function
Most failures are not related to equipment age
Designed to operate and maintain
Collecting data which leads to meaningful decision-making
Best practices from all industries
Customer-centric
So what changes need to be made to make AM successful
The utility staff needs to move away from traditional approaches. For example,
No longer focus on capital cost, but instead always consider lifecycle costs
Don’t invest in rehabbing or replacing assets because they look bad. Invest in asset renewal because of their high risk of failure
Design projects not only to build, but to operate and maintain.
And realize that the organization must move away from being asset-centric and move to customer-centric thinking; Assets wouldn’t exist if they weren’t needed to serve the customers

20. 4/16/2017
Consider the lifecycle of assets to identify opportunities for reducing costs
Consider alternate project delivery
Standardize equipment
Capture asset data
Apply uniform prioritization criteria
Involve operations & maintenance
Perform value engineering
Acquire/Install/ Construct
Plan/Design
Sell
Reuse
Recycle
Involve operations and maintenance staff
Ensure compliance with design, specs and codes
Manage warranties
The
Asset Lifecycle
Decommission/ Salvage
Commission
Let me wrap up with a few specific examples
There are numerous opportunities for cost savings when you consider the entire asset lifecycle, from planning and design, through construction and commissioning, to Operations and Maintenance, and on to rehabilitation and decommissioning
Rehabilitate
Operate & Maintain
Evaluate alternatives
Perform business case evaluation
Ensure risk is sufficiently reduced at lowest lifecycle cost
Optimize planned maintenance
Focus on failure modes
Monitor, report and adjust

21. Optimize maintenance activities to increased asset reliability
4/16/2017
Optimize maintenance activities to increased asset reliability
Maintenance Level = f (consequence of failure)
Run to Failure
Preventive Maintenance
Predictive Maintenance
Reliability-centered Maintenance
Optimize maintenance to perform the right level of maintenance based on the consequences associated with an asset failure,
And eliminate non-value added activities that do not really address failure modes.
by understanding consequences of asset failure and implementing appropriate maintenance processes to reduce likelihood of asset failure

22. Manage assets to keep the risk of failure at an acceptable level
4/16/2017
Manage assets to keep the risk of failure at an acceptable level
Understand the consequences of asset failure
Forecast the likelihood of asset failure
Consider multiple options for mitigating risk:
Rehabilitation and replacement
Enhanced maintenance
Improved response and recovery
Demand management
And, manage assets to maintain the risk of asset faiure at an acceptable level for your utility and your City.
For assets with a high risk of failure, don’t just think a multi-million dollar capital project is needed’
O&M enhancements, improved response and recovery or demand management may very well mitigate the risk to acceptable levels at a lifecycle cost substantially lower than a capital project.
by understanding consequences of asset failure and implementing appropriate maintenance processes to reduce likelihood of asset failure

23. For success: Take the time to create the right strategies and choose the right people for the key roles
Strategies
Role
Asset Management Champions
Create shared AM vision and understanding across the utility
Increase staff willingness to participate in AM
Ensure staff are able to enact their role within AM
Provide recognition for desired AM behaviors
Change Readiness Assessment
Tactical & Message Development
Information dissemination
Visible Leadership
Mentoring
Feedback
Finally, for successful and sustainable Asset Management, take the time to create the right strategies and choose the right people for the key roles
Goals to enacting this approach
Key Sponsor Role and Activities

24. Thank You
Alan B. Ispass, PE, BCEE New York Avenue, NW Washington, DC
Thank you