2. Enabling O&M Best Practices:
2.2 Build capabilities
To implement O&M best practice, governments first need to build the right capabilities. These are of three broad types:
- Asset management planning on the country-wide institutional level
- Data, benchmarks and tools on the agency-specific institutional level
- Training and talent development on the individual level
This section offers detailed recommendations for developing each of the three capabilities.
Introduce asset management planning
To introduce sound asset management planning, governments need to embed O&M into national infrastructure plans, reform the principles of infrastructure accounting and adopt a common asset management framework across the various agencies.
Embed O&M into national infrastructure plans.
- Make O&M a priority in the national infrastructure policy. Develop policies to foster and enable the efficient management of existing infrastructure, in addition to the conventional focus on policies for new asset construction, as in Switzerland.
- For each infrastructure sector, commission occasional reports on network condition and performance, and aggregate and consolidate agency-level maintenance plans into a nationwide plan. While no clear process for identifying maintenance and rehabilitation needs exists in many countries, this reporting and planning will produce an integrated perspective across regions and operators – a crucial resource, given how fragmented the management responsibilities tend to be across regions and municipalities, as well as across agencies, state-owned enterprises and private operators (refer also to the discussion of public agency cooperation in chapter 2.3). On the basis of this assessment of current condition and future demand, draw up long-term maintenance plans and forward-looking O&M budgets.
- Develop a truly integrated national infrastructure plan. Integrate maintenance and rehabilitation projects into the national infrastructure programme/plans, alongside greenfield projects, and prioritize all projects according to the highest cost-benefit ratio based on economic, environmental and social factors. This will counter the common temptation to over-favour high-profile greenfield projects, and discourage a pure “fix it first” policy.
- Ensure the durability and continuity of these O&M plans across government cycles, either by legislating standards or by assigning the planning to quasi-independent, technocrat-led agencies.
Reform the principles of public infrastructure accounting.
- One key requisite for robust O&M budgets and plans is an appropriate system of public accounting. Under the traditional, single-entry cameralistic systems of fiscal accounting, which concentrate simply on cash inflows and outflows, decision-makers have little incentive to maintain the existing asset base: after all, maintenance appears to involve cash outflows but no inflows, as the increase in value of the asset stock is not recorded. In contrast, a proper, modern accrual-based double-entry system of accounting can rebalance the incentives. Assets can now be recorded on the balance sheet, with their value being depreciated and regularly reassessed. For instance, a road’s value depreciates with each additional pothole, and that information can be used to improve decisions and report to stakeholders to reveal the maintenance backlog, helping to justify maintenance spending. The US introduced the Governmental Accounting Standards Board Statement 34 in 1999 to help local and state governments profile their infrastructure in a proper way; and, many countries now aim to abide by accrual-based International Public Sector Accounting Standards, which are based on the private-sector International Financial Reporting Standards (IFRS).180
Adopt a common asset management framework.
- Develop a country-wide, standardized asset management framework for adoption by the different agencies to guide managers and workers in executing their O&M tasks. Such a framework should cover all aspects of a sound asset management system, ranging from asset management policy and strategy to enablers and controls, and to performance assessments and management reviews. For each agency, these system capabilities need to be developed in a customized approach based on their respective human resource, knowledge management and organizational learning challenges and opportunities.
- Structure the asset management framework in keeping with international standards, such as the British Standards Institution’s (BSI) Publicly Available Specification (PAS 55) and International Standards Organisation 55000 (ISO 55000) (Figure 31). The PAS 55, published by the BSI under the supervision of the Institute of Asset Management, provides a 28-point requirements checklist of good practices in physical asset management. Its guidance is widely applicable, for instance to gas, electricity and water utilities, and to road, air and rail transport. It also provides a toolkit for self-assessment. In fact, PAS 55/ISO 55000 certification was ranked second among the top 10 investment priorities for asset management practitioners in 2013.181
Figure 31: Example of an Asset Management Framework
Note: BSI = British Standards Institution; PAS = Publicly Available Specification; AM = Asset Management
Source: PAS 55-1: Asset Management in The Institute of Asset Management:, 2008.
Apply data, benchmarks and tools
The main O&M-relevant capabilities that each individual government agency needs to develop are those for collecting relevant data and benchmarks, acquiring the appropriate IT systems and other tools, and using them in conjunction as a way to improve decision-making.
Traditionally, the O&M of infrastructure assets has been subjected to insufficient scrutiny and measurement. Operators often have only a very sketchy overview of a facility and its equipment. The history of an asset’s construction and repairs is often lost, and information on the current asset condition is frequently not available. Operators also tend to have too little data on the asset’s usage and performance levels, and hence on its cost effectiveness. Even when they have abundant data, they may struggle to use it because of its varied relevance and inconsistency.
Without the right hard data for analytics, benchmarking, modelling and impact evaluation, operators are hampered in their decision-making and setting of stretch targets. Governments and operators should ideally know the state of each asset, piece of equipment and component, and how each of them performs, both over time and relative to others. That will involve a structured approach to capturing, sifting and aggregating the relevant information in a comprehensive IT system. The better the monitoring and measuring, the sharper the O&M decisions will be, and the greater their eventual impact.
Collect comprehensive O&M data.
- Assess and understand the data requirements that are necessary to optimize O&M. A prioritized list of the key data requirements will assure that costly data collection is focused on the areas where most value can be created.
- Set up an asset register and collect data on the asset’s history, the current condition, O&M measures, performance, usage and context.
- To supplement that effort, put adequate systems, processes and resources in place for regularly updating the data. Early data repositories may lack the comprehensiveness needed for full life cycle analysis, but the models should improve as more data becomes available over time.
- Exploit the big data opportunity (Box 7), which will complement the traditional structured database and data management systems.
Box 7: The Big Data Opportunity
Today’s world produces a vast amount of digital data. The volume is currently increasing by 2.5 billion gigabytes every day. The proliferation of low-cost sensor technology has opened a treasure trove of new information sources, including transactions, social media, radio frequency identification sensors, cameras and GPS, which can be harnessed by infrastructure operators.182
New opportunities arise not just from the soaring volume of data, but also from the data’s increasing variety (which can now be mined even from unstructured data sources) and velocity (i.e. the speed at which data is collected, processed and used for decision-making and automatic system responses). With this mass of data and rapid advances in processing power, storage density and connection speed, big data applications are becoming increasingly economical. They present a major opportunity for improving productivity and efficiency in infrastructure. Operators will find it easier than ever to improve market research, enhance O&M decision-making and boost customer relationships and satisfaction.
One obvious benefit is that of making infrastructure operations more efficient. They might, for instance, leverage big data to improve intelligent transportation systems and enable dynamic peak pricing, and in that way avoid having to invest in expensive new capacity. The Stockholm road authorities, for instance, collect real-time traffic data from a variety of sources, including vehicle GPS, radar sensors, congestion charging and weather reports, and process it via algorithms to advise motorists on optimal travel routes.183
To take full advantage of big data, infrastructure operators need to define open and interoperable interfaces and industry standards to enable data interchange. They can publish data through application programming interfaces and thereby enable entrepreneurs to unlock the value of the data; connect to other data; and develop new user solutions. New York City’s “Midtown in Motion” congestion management system provides such an interface for app developers. Despite this openness, operators need to be cautious and manage data responsibly in the public interest to earn the trust of stakeholders on data privacy and cybersecurity.184
In addition, the infrastructure industry needs to embrace new forms of multistakeholder collaboration. In the Netherlands, for example, the Amsterdam Smart City project has 70 partners from business, government, academia and the local population working together to identify, test and eventually scale up different smart city initiatives, such as car sharing, home energy management and electricity-powered ships.185
Infrastructure operators should benchmark themselves against other operators to identify potential ways of improving the system. Comparisons are seldom straightforward, of course, and no two situations are identical. To ensure meaningful results, the analysts have to delicately choose which data to analyse, decide on the best level of granularity for the KPIs, and take into account contextual factors such as demand, location and the asset’s age. And, they need to use a consistent and standardized methodology when collecting data. One challenge they face is that infrastructure data is seldom available publicly; the rules on record-keeping and on disclosing data vary from country to country. A global infrastructure benchmarking initiative, as suggested by the Multilateral Development Banks (MDB) Working Group on Infrastructure and supported by the latest Business 20 (B20), would be beneficial in this regard.
- In benchmarking, cover all aspects of O&M in a sector-specific approach; combine qualitative and quantitative data, and also exchange ideas on cost reduction, quality upgrades and other improvements. The Community of Metros (CoMET), a consortium of 30 metro systems from around the world that is facilitated by a research centre at Imperial College London, is an interesting example. It tracks more than 30 KPIs of its members, provides quantitative benchmarks and establishes qualitative best practices in case studies. Partly on the basis of its indications, the New York City Transit Authority introduced floor markings to show commuters where to stand on platforms, and departure clocks for drivers to standardize their “dwell time”. As a result, capacity on one of New York’s busiest transit lines increased by 4.5%, with 17% considered achievable.186
- Actively seek appropriate peers, and then conscientiously conduct external benchmarking. For example, in the US, the Phoenix Water Services Department undertook a review of its O&M practices and benchmarked them against other well-run utilities, both public and private. The quality of customer service rose, while costs fell by US$ 10 million annually.187
- Benchmark data can also be provided by national governments to consolidate data from the many local and regional agencies. The US Department of Transportation operates an online database of detailed capital and O&M cost estimates for Intelligent Transportation System deployments, ranging from roadside information to toll plazas and parking management.188
- Conduct internal benchmarking as well, if possible. London Underground has introduced a benchmark report comparing the different areas of its network.189 And Royal Vopak of the Netherlands uses its terminal maturity model to assess and compare its oil and gas storage terminals throughout the world, and improve their performance.190
Implement asset management systems and tools.
Figure 32: Functionality of Asset Management Systems
Note: DoT = Department of Transport
Source: “Best of the Best: Americas Transportation Awards”. US Department of Transportation: Federal Department of Highway Administration, http://www.fhwa.dot.gov/publications/publicroads/12marapr/03.cfm, 2012.
There is no point in collecting data for data’s sake; the point is to transform data into useful information that aids and improves decision-making. For that to happen, operators need to put in place the right information management systems and mechanisms.191 They need to implement an IT-based asset management system to integrate the different datasets, plan and time interventions, trigger actions, and monitor and evaluate performance. Such an asset management system serves three purposes (see Figure 32 for examples):
- Real-time and transparent status reports. A coherent dashboard of maintenance needs should support funding calls, ease the budgeting process, build consensus across siloed departments and facilitate communication with external stakeholders.
- Ex-ante modelling. The system should help analysts to model and predict the costs and impacts of different planned O&M interventions, and thereby help to refine decision-making.
- Ex-post analytics. The system should provide evidence-based assessments of O&M interventions, which can help to optimize quality and expenditures over time.
Some considerations to bear in mind:
- The asset management system should integrate a variety of modules, including fixed-asset accounting, inventory management, condition assessment, financial forecasts, work management, quality management and regulatory compliance. Many systems also include a geographic information system (GIS) component, which can help with maintenance scheduling and staff deployment for dispersed assets. For example, Swiss Federal Railways has complemented its fixed asset database with a geographical information system, and the asset records of Rand Water, a water utility in South Africa, are all linked to GIS data.
- One key challenge for asset management systems today is to manage different standards across an infrastructure system, as over time, assets have been built according to changing norms and codes. Not only do these assets need different operating standards and maintenance routines, but also the user perception regarding those different service levels needs to be managed.
- Any asset management system will only be as good as the information it contains; hence, the need for adequate asset surveys and maintenance records, data entry protocols and interfaces to other databases, such as the accounting system. When the Massachusetts Water Resources Authority introduced a computerized maintenance management system, an initial audit concluded that the data quality needed improvements, and recommended new procedures and links to other software.
One case in point is Jordan’s As-Samra wastewater treatment plant, which uses a computerized maintenance management system and exemplifies several of the benefits. It integrates and shares information across different functions, including maintenance activities, spare-parts inventory and procurement. In addition, it makes predictive maintenance possible by monitoring the asset’s condition, sets KPIs for major equipment and compares the actual availability and condition against targets.
In addition to information management systems, operators should also develop guidance and tools for improving O&M decision-making (e.g. operations manuals and maintenance guidelines; methodological guidelines for life cycle cost analysis and demand forecasting; virtualization, simulation and modelling tools such as the road management software HDM-4). (See the case study in Box 8.)
Box 8: Case Study – Leighton Contractors, North-West Transit Way, Australia192
In the north-west of Sydney, with its rapidly growing population, commuters needed a new public transport system for rapid and reliable access to the city centre. Leighton Contractors won a 10-year concession to design, build, operate and maintain the bus-only, 21-km route with 30 bus stations. The contract specifies strict performance and maintenance standards, and the road has to be in good condition when transferred at the end of the contract.
To fulfil those requirements and manage the concession efficiently, the contractor analysed historical data (based on monitoring the roadway’s condition at one-metre intervals), identified and excluded from the analysis all irrelevant external factors, established a performance model and deterioration rates for the paving, and applied the Highway Development and Management (HDM4) system, a decision-making tool for optimal whole life-cycle management. The HDM4 tool was beneficial, as it can predict road network and paving performance, road-user effects, and can produce a schedule of optimum roadway maintenance as well as plan overall funding requirements.
Leighton Contractors was then in a position to predict the performance and condition of the paving, and draw up a life cycle plan that struck a balance between capex and opex, and optimized the maintenance strategies. As a result, overall cost savings of 15% were achieved.
The company also undertook scenario analysis to evaluate different levels of service and the associated cost implications. A whole-of-life solution emerged that provides a higher level of service (the road is now 99% available) while still complying with the contracted maintenance requirements.
Conduct training and develop talent
For high-quality O&M, operators need more than institutional knowledge in the form of plans, frameworks, data and decision-making tools; they also need individuals capable of exploiting these resources. All too often, the critical deficiency in an infrastructure asset is that of local human capital. In developing countries in particular, international companies commonly construct the infrastructure and then move on, leaving behind an insufficiently qualified workforce to handle future O&M tasks. Even in developed countries, staffing can be difficult: technicians sometimes cannot keep pace with the increasing sophistication of the technology, and for skilled engineers, O&M projects have a lower status than design and build projects.
Excellence in infrastructure O&M planning and execution requires a broad set of skills. Operators need to make serious investments in training, and to formulate a consistent human resources (HR) strategy to recruit, develop and retain O&M professionals.
Organize regular and targeted training for employees.
The first training opportunity occurs during the asset’s construction. The problem is that O&M staff is not typically involved in the design and build stages, and may not even be hired until construction is completed (except for PPPs). For the Enguri dam in Georgia, the Russian contractors undertook very little knowledge transfer, so Georgia’s own O&M of the dam proved far from competent at first. To conduct training and develop talent, several measures are indicated:
- Hire and involve O&M staff early on, and arrange knowledge transfer from the external engineering and construction firms through on-the-job and off-the-job training.
- Include a training component in engineering and construction contracts, so that designers and contractors are obliged to provide local staff with continuous training and thereby create local competence, for several years after project completion.
- Reskill the O&M workforce continuously, during the later life cycle stages, as system operations and technologies evolve and staff fluctuates. The O&M phase itself can be a great learning environment, as its stability and long-term orientation can facilitate strong learning curves over the project’s life cycle. To achieve these skill upgrades, adopt as appropriate any of the agency-specific and sector-wide training approaches outlined in Figure 33.
Figure 33: Examples of Capacity-Building
Note: MoT = Ministry of Transport; ADB = Asian Development Bank
- Pursue broad capacity-building policies. For example, urge a shift in university engineering curricula; currently, they tend to emphasize the design and construction aspects of infrastructure assets, even though most infrastructure-related engineering work in the next few decades will be in facility maintenance and rehabilitation. Infrastructure O&M knowledge will be required in other domains, such as operations management and finance. Especially in developing and fragile countries, a local academic strategy for building infrastructure skills in general, and O&M skills in particular, is essential.
- Engage with IFIs and urge them to expand their involvement in on-the-job training, as provided by the EBRD for some of its transport projects in Romania. The traditional approach of many IFIs and donors, to simply bring in international experts to provide technical assistance, can have a distorting effect by demoralizing agency staff.
Actively engage in talent management and development.
When building capabilities, operators should look beyond training, and take a longer-term, strategic approach through talent management and development. They need to adopt vigorous policies in three key areas: HR planning, recruitment and retention, and people development. Details for each include the following:
- HR planning. As a result of the demographic shift in developed countries, many utilities face the prospect of a dearth of engineers and other skilled labour. In response, several operators have initiated strategic workforce planning by splitting their labour force into different skill categories, calculating the potential shortfall in each one, and developing pre-emptive measures such as new recruiting and retention strategies. The Department of Transport in Victoria, Australia, compiled a core-capabilities report identifying required skills; established a list of 146 vacancy-sensitive jobs with the current job occupants and potential successors; introduced a career planning and development tool; launched a two-year programme to advance high-potential employees into leadership positions; and increased the use of mentoring, coaching and mobility schemes.193
- Recruitment and retention. Infrastructure operators will increasingly have to draw from a limited number of engineering graduates and unfamiliar recruiting pools. In what is traditionally a bricks-and-mortar industry, they now have to recruit IT and technology specialists as well. Some operators are engaging the challenge head-on. The Hamburg Port Authority in Germany now has a dedicated chief information officer with a 60-member IT team to facilitate its transition to a smart port and realize its ambition to treble container numbers by 2025 – and all within its current, confined port area. More broadly, Chile has taken a long-term approach to increasing the appeal of public service jobs in general by sending talented recruits on university courses abroad, and by offering them competitive salaries.
- People development. Singapore’s public services lay out generalist or specialist career paths for future leaders, offer customized training and university scholarships to develop their skills, and provide attractive performance-based compensation packages.194