Water Journal : Water Journal September 2011
asset management water SEPTEMBER 2011 103 and environment (HS&E). Needless to say, each may be a department in its own right, and this is often the case. There is a vertical management hierarchy within each department. This hierarchy is necessary for coordination of all functional activities, management of information and, above all, to provide interface with other departments in the organisation. The better the coordination and interface management, the more efficient is the use of the organisation's resources. However, associated with this organisational structure are a number of inherent issues, the main ones being: • Poor communication and information sharing; • Conflicting objectives; • Silo mentality in decision making; and • Inadequate interface management, hence inefficient resource utilisation. When each department has its own agenda, it is difficult to find a balance and get everyone pulling in the same direction, a task left to the managing director to deal with. These problems are evident in practice and probably the most exemplary one is when it comes to tender assessment -- namely, a tenderer with the lowest cost is typically awarded the contract. This clearly demonstrates a lack of integrated decision making, as only capital costs are considered. However, the practice teaches us that the lowest priced tender is not necessarily the least expensive overall, as throughout the life cycle of an asset it is the O&M costs that count. This is true for a simple reason -- O&M costs are incurred over a long period, over several decades, depending on the type of asset. Another example that is probably not uncommon is when the decision is made to defer maintenance in order to save money, without giving due consideration to the impacts this has on the useful life of an asset, which is obviously shortened. The ultimate result of a decision like that is twofold: an accelerated need for major repairs and incurring capital costs for asset replacement earlier than originally planned. In order to ensure the lowest costs or best value for money, we have to take into account the costs associated with each of the phases of Asset Management, and not only of the asset acquisition (ie, design and construction). That is, we have to consider the life cycle cost. However, this is difficult to ensure if one department makes a decision on the capital expenditure and the other (or even two) are in charge of the O&M expenditure. Asset Management-Oriented Organisations Fully embracing Asset Management principles demands integrated decision making and requires life cycle costing, so let us examine how this may be accomplished. If we think of sewage catchments, each catchment area comprises assets to collect (sewer network) and convey sewage (pumping stations and pipelines) and treat it at sewage treatment plants. All these are different types of assets but are clearly defined by their catchment areas. Therefore, responsibility for managing all assets in a particular catchment area should rest with one person only, eg, the asset manager. In order to ensure integrated decision making and long-term benefits, the asset manager needs to be responsible for all expenditure associated with the assets under her/his management. Therefore, the asset manager needs to be responsible for both capital and operating expenditure. Figure 3 shows the organisational structure centred on the principles of Asset Management. There is no departmentalisation, as every asset manager is in charge of all the business associated with the assets she/he manages. Each asset manager clearly serves different customers, and may deal with different external service providers, eg suppliers, consultants, contractors, etc. Each is supported by the organisation's internal services providers, eg HR, HS&E, Legal, etc. The management or leadership team is there to ensure the asset managers get the needed support, to align the organisation's business with the objectives of governing bodies and to represent the organisation when dealing with other stakeholders. Developing this model requires a different mindset from the one prevalent today in that it requires long-term thinking; but that is not necessarily in the hands of water utilities alone. It needs to be recognised that, frequently, government regulatory or governing agencies themselves are, due to their focus on short-term benefits, an obstacle to long-term planning by water utilities. Conclusion Adopting the Asset Management- centred model requires full commitment to, and embracing an essential ingredient of, Asset Management -- integrated decision making. This approach removes defocusing issues associated with functionally structured organisations, and empowers asset managers for both capital and operating budgets. It should, therefore, result in enhancing water utilities' performance. Ultimately, it should ensure benefits to communities and society as a whole on a long-term basis. The Author Dr Zoran Slavnic, PhD, MBT, MEng, BEng, FIEAust (email: firstname.lastname@example.org), has 30 years' experience in the water industry and currently works as Senior Advisor for Ashghal, Public Works Authority, Doha, Qatar. He is a member of the Committee for National Wastewater Strategy. SUPPORT SERVICES (HR, QA, HS&E, IT, Legal, etc) MANAGEMENT OR LEADERSHIP TEAM A S S E T M A N A G E R C U S T O M E R S A S S E T M A N A G E R S E R VIC E P R O VID E R S C U S T O M E R S S E R VIC E P R O VID E R S A S S E T M A N A G E R C U S T O M E R S S E R VIC E P R O VID E R S Figure 3: An Asset Management-centred organisation.
Water Journal November 2011
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