Introduction: The Operations and Maintenance (O&M) Imperative :
The O&M Challenges
The O&M reality is a sobering one
Many issues with existing infrastructure illustrate the lack of O&M best practice.
The following statistics indicate the extent of the problem:
Congestion and unproductive use of capacity
- Despite the slowdown of shipping activity in the aftermath of the global financial crisis, about 5-10% of the global vessel fleet was kept idle by port congestion in 2009-2012.16
- In the US, airport congestion and delays cost its economy US$ 22 billion in 2012,17 and unless matters improve, 20 US airports will find that traffic exceeds capacity by 2015.18 At China’s largest airports, in Beijing and Shanghai, three-quarters of all flights are delayed, with each minute of delay costing airlines wasted fuel, passenger compensations and interruptions to luggage handling.19
- In the developing world, 45 million cubic metres of water are lost daily because of leakage, enough to provide for the needs of 200 million people.20
Poor quality for users
- A large-scale power outage in India left approximately 700 million people without electricity in July 2012.21 The north-eastern US experiences on average 214 minutes of power outage per year, compared to just six minutes in Japan.22
- More than 20% of the 54,700 US tap water systems supplying 49 million people are regularly in violation of the Safe Drinking Water Act.23
- One-third of US highways and one-quarter of major urban roads are considered to be in poor or mediocre condition, and are increasingly subject to failure.24 Furthermore, 25% of bridges are structurally deficient or functionally obsolete.25 Overall, ageing and unreliable infrastructure will lead to job cutbacks and declining business productivity, costing the average US family an estimated US$ 3,000 in disposable household income annually through 2020.26
- Barges on the US inland waterways system, where more than half of the locks are over 50 years old, are regularly held up for hours each day by service interruptions that delay goods from getting to market.27
- If an additional US$ 12 billion had been spent on road repairs across Africa during the 1990s, the US$ 45 billion spent on reconstruction could have been pre-empted.28 And, the cost of keeping the US transportation system in a state of good repair is just one-third of the cost of replacing it.29
- More than US$ 250 million30 was spent to rehabilitate the Longfellow Bridge in Boston (US); had regular maintenance been performed on it, the total historical cost would have been only about US$ 81 million.31
- Crane productivity at many ports is only half of the over 40 moves per hour that world-class ports can achieve, suggesting that a large number of ports are operating at seriously inefficient levels.
Environmental and social externalities
- More than 25 million metric tons of CO2 are produced in US traffic jams each year,32 corresponding to the CO2 emitted from electricity used by 3.4 million homes per year, or the annual greenhouse gas emissions of 5.2 million cars.33
- Every year, traffic accidents kill more than 1.2 million people around the world and injure up to 50 million.34 In India alone, about 15,000 people die each year crossing rail tracks.35
- Unsafe drinking water is one of the main causes of the 1.5 million diarrhoea-related deaths of children in developing countries each year.36
These O&M issues affect both developing and developed countries, although the type of problem does vary (Box 1).
Box 1: O&M – A Global Issue Affecting Different Countries or Regions in Different Ways
Infrastructure O&M is a perennial challenge in both developed and developing countries. In developed countries, the large and ageing infrastructure stock creates greater pressure to pursue O&M. However, even in developing countries, with their great need to build new infrastructure assets, O&M is still an important issue. In Africa, where infrastructure needs amount to US$ 93 billion per year, one-third of that total is for maintenance.37 And in South Asia, the proportions are, or should be, 45% for new investments and 55% for O&M (jointly accounting for about 7% of GDP).38
While the main concern in developed countries is optimizing legacy assets to cater for rising user demand without running up huge bills, an additional factor exists: the public desire for a greener, safer, more reliable and more efficient infrastructure operation. The O&M priorities for developed countries thus include the following:
- Introducing new technologies into existing infrastructure systems
- Making smart capacity extensions, or making better use of existing capacity to avoid congestion
- Pursuing environmental sustainability and making existing infrastructure more resilient
- Ensuring optimal maintenance of ageing assets, and developing optimal replacement and upgrade strategies for functionally obsolete or structurally deficient assets
- Overcoming stakeholder opposition to newly introduced or increased user charges
- Reforming legacy agencies, and making processes more efficient
For developing countries, by contrast, the main concern is often just to fulfil basic O&M requirements and service standards. As a country’s infrastructure network expands, so does its O&M workload. In China, for example, the road network increased from 1.7 million km in 2001 to 4.1 million in 2011;39 such increases are set to continue, and the maintenance costs and thus the funding requirements will go up accordingly. If O&M is neglected, China will stumble in its efforts to catch up with the efficiency and capacity of developed countries; today, transporting freight by road is still half as fast and twice as expensive in China as in the developed world. The O&M policy priorities for many developing countries are the following:
- Overcoming the preference for and focus on new asset construction as opposed to O&M
- Introducing O&M deliberations (including resilience strategies) based on life cycle analysis into greenfield projects from the outset
- Enhancing O&M funding: combating charge evasion (due to corruption and insufficient metering/billing) and the use of excessive and untargeted subsidies
- Addressing local capabilities gaps; for example, fly-in, fly-out infrastructure construction can leave a shortage of O&M skills, as with some of the facilities built in Africa and fragile states
- Setting up institutional, legal and regulatory frameworks to support long-term O&M
O&M underperforms for a variety of reasons
There are three broad causes of the shortage of high-quality and sustainable O&M (Figure 7).
Insufficient funding. Overall public funding for infrastructure is inadequate, and the amount of available funds for O&M specifically is even worse. The O&M shortfall is partly due to politicians’ built-in bias in favour of greenfield projects, which have vote-catching potential. By contrast, O&M projects have low political visibility, and long-term maintenance requirements do not make a good fit with the short political cycle. So it is hardly a surprise that decision-makers generally do not participate in ribbon-cutting ceremonies for a maintenance project. In addition, the public budgeting processes, where O&M and capital expenditure (capex) budgets are typically separated and where budgets are set annually, do not match well with the multiyear requirements of O&M programmes. In addition, O&M costs cannot always be easily recovered from user charges: the requisite price increases tend to provoke stakeholder opposition, and in developing countries, they are often subject to payment evasion.
Weak capabilities. O&M decision-making is often hampered by poor asset management processes and frameworks, and substandard systems, tools and data. Without abundant and accurate data on the asset’s condition and performance, and without reliable benchmarks and best practices for guidance, O&M managers are bound to struggle. Even when best practices are known, they might be insufficiently exploited because of understaffed or underskilled engineering and management departments, as O&M has a less-appealing image for professionals than construction. And even though a great opportunity exists to reskill staff using the learning curve derived from stable O&M tasks, that opportunity often gets neglected.
Inadequate governance. The institutions governing infrastructure assets are often weak and bureaucratic, which hinders professional and independent O&M. Because of the absence of private-sector involvement and competition, little pressure to reduce costs or to optimize the existing facilities exists, and inefficiency can flourish.