Public asset management framework for local governments : opportunities and challenges for public asset managers

The aim of the study is to identify the opportunities and challenges a local government public asset manager is most likely to deal with when adopting the appropriate Public Asset Management Framework especially in developing countries. In order to achieve its aim, this study employs a Case Study in Indonesia for collecting all data i.e. interviews, document analysis and observations at South Sulawesi Province, Indonesia. The study concludes that there are significant opportunities and challenges that local governments in developing countries, especially Indonesia, might be required to manage if apply public asset management framework appropriately. The opportunities are more effective and efficient local government, accountable and auditable local government organization, increase local government portfolio, reflect up to date information for decision makers in local government, and improve the quality of public services. On the other hand, there are also challenges. Those challenges are local governments has no clear legal and institutional framework to support the asset management application, non-profit principle of public assets, cross jurisdictions and applications in public asset management, the complexity of public organization objectives, and data availability required for managing public property. The study only covers the condition of developing countries where Indonesia as an example, which could not represent exactly the whole local governments’ condition in the world. Further study to develop an asset management system applicable for all local governments in developing countries is urgently needed. Findings from this study will provide useful input for the policy maker, scholars and asset management practitioners to develop an asset management framework for more efficient and effective local governments.

Capabilities for strategic infrastructure asset management

Infrastructure organisations are operating in an increasingly challenging business environment as a result of globalisation, privatisation and deregulation. Under such circumstances, asset managers need to manage their infrastructure assets effectively in order to contribute to the overall performance of their organisation. In an external business environment that is constantly changing, extant literature on strategic management advocates a resourced--�]based view (RBV) approach that focuses on factors internal to the organisation such as resources and capabilities to sustain organisation performance. The aim of this study is to explore the core capabilities needed in the management of infrastructure assets. Using a multiple case study research strategy focusing on transport infrastructure, this research firstly examines the goals of infrastructure asset management and their alignment with broader corporate goals of an infrastructure organisation. It then examines the strategic infrastructure asset management processes that are needed to achieve these goals. The core capabilities that can support the strategic infrastructure asset management processes are then identified. This research produced a number of findings. First, it provided empirical evidence that asset management goals are being pursued with the aim of supporting the broader business goals of infrastructure organisations. Second, through synthesising the key asset management processes deemed necessary to achieve the asset management goals, a strategic infrastructure asset management model is proposed. Third, it identified five core capabilities namely stakeholder connectivity, cross-functional, relational, technology absorptive and integrated information management capability as central to executing the strategic infrastructure asset management processes well. These findings culminate in the development of a capability model to improve the performance of infrastructure assets.

Strategic infrastructure asset management : a conceptual framework to identify capabilities

Purpose – The purpose of this paper is to develop a conceptual framework that can be used to identify capabilities needed in the management of infrastructure assets. Design/methodology/approach – This paper utilises a qualitative approach to analyse secondary data in order to develop a conceptual framework that identifies capabilities for strategic infrastructure asset management. Findings – In an external business environment that is undergoing rapid change, it is more appropriate to focus on factors internal to the organisation such as resources and capabilities as a basis to develop competitive advantage. However, there is currently very little understanding of the internal capabilities that are appropriate for infrastructure asset management. Therefore, a conceptual framework is needful to guide infrastructure organisations in the identification of capabilities. Research limitations/implications – This is a conceptual paper and future empirical research should be conducted to validate the propositions made in the paper. Practical implications – The paper clearly argues the need for infrastructure organisations to adopt a systematic approach to identifying the capabilities needed in the management of strategic infrastructure assets. The discussion on the impact of essential capabilities is useful in providing the impetus for managers who operate in a deregulated infrastructure business landscape to review their existing strategies. Originality/value – The paper provides a new perspective on how asset managers can create value for their organisations by investing in the relevant capabilities.

A framework for strategic infrastructure asset management

The concept of asset management is not a new but an evolving idea that has been attracting attention of many organisations operating and/or owning some kind of infrastructure assets. The term asset management have been used widely with fundamental differences in interpretation and usage. Regardless of the context of the usage of the term, asset management implies the process of optimising return by scrutinising performance and making key strategic decisions throughout all phases of an assets lifecycle (Sarfi and Tao, 2004). Hence, asset management is a philosophy and discipline through which organisations are enabled to more effectively deploy their resources to provide higher levels of customer service and reliability while balancing financial objectives. In Australia, asset management made its way into the public works in 1993 when the Australian Accounting Standard Board issued the Australian Accounting Standard 27 – AAS27. Standard AAS27 required government agencies to capitalise and depreciate assets rather than expense them against earnings. This development has indirectly forced organisations managing infrastructure assets to consider the useful life and cost effectiveness of asset investments. The Australian State Treasuries and the Australian National Audit Office was the first organisation to formalise the concepts and principles of asset management in Australia in which they defined asset management as “ a systematic, structured process covering the whole life of an asset”(Australian National Audit Office, 1996). This initiative led other Government bodies and industry sectors to develop, refine and apply the concept of asset management in the management of their respective infrastructure assets. Hence, it can be argued that the concept of asset management has emerged as a separate and recognised field of management during the late 1990s. In comparison to other disciplines such as construction, facilities, maintenance, project management, economics, finance, to name a few, asset management is a relatively new discipline and is clearly a contemporary topic. The primary contributors to the literature in asset management are largely government organisations and industry practitioners. These contributions take the form of guidelines and reports on the best practice of asset management. More recently, some of these best practices have been made to become a standard such as the PAS 55 (IAM, 2004, IAM, 2008b) in UK. As such, current literature in this field tends to lack well-grounded theories. To-date, while receiving relatively more interest and attention from empirical researchers, the advancement of this field, particularly in terms of the volume of academic and theoretical development is at best moderate. A plausible reason for the lack of advancement is that many researchers and practitioners are still unaware of, or unimpressed by, the contribution that asset management can make to the performance of infrastructure asset. This paper seeks to explore the practices of organisations that manage infrastructure assets to develop a framework of strategic infrastructure asset management processes. It will begin by examining the development of asset management. This is followed by the discussion on the method to be adopted for this paper. Next, is the discussion of the result form case studies. It first describes the goals of infrastructure asset management and how they can support the broader business goals. Following this, a set of core processes that can support the achievement of business goals are provided. These core processes are synthesised based on the practices of asset managers in the case study organisations.

Infrastructure asset management: The challenges and approaches

Infrastructure organisations such as airport, seaport, rail and road are operating in an increasingly challenging business environment as a result of globalisation, privatisation and deregulation. These organisations must ensure that their main resource i.e. their infrastructure assets are well managed in order to support their business operations. Brisbane Airport is used as a case study to understand the challenges faced in the management of infrastructure assets as well as the approaches used to overcome them. The findings can be useful in helping asset managers to identify the resources they should seek to manipulate in order to make improvement to their activities and contribute to the overall performance of their organisation.

A flexible asset maintenance decision-making process model

Optimal Asset Maintenance decisions are imperative for efficient asset management. Decision Support Systems are often used to help asset managers make maintenance decisions, but high quality decision support must be based on sound decision-making principles. For long-lived assets, a successful Asset Maintenance decision-making process must effectively handle multiple time scales. For example, high-level strategic plans are normally made for periods of years, while daily operational decisions may need to be made within a space of mere minutes. When making strategic decisions, one usually has the luxury of time to explore alternatives, whereas routine operational decisions must often be made with no time for contemplation. In this paper, we present an innovative, flexible decision-making process model which distinguishes meta-level decision making, i.e., deciding how to make decisions, from the information gathering and analysis steps required to make the decisions themselves. The new model can accommodate various decision types. Three industrial case studies are given to demonstrate its applicability.

State asset management reform in Indonesia : a wicked problem

Efficient state asset management is crucial for government departments that rely on the operations of their state assets in order to fulfil their public functions, which include public service provision and others. These assets may be expensive, extensive and or, complex, and can have a major impact on the ability of governments to perform its function over extended periods. Various governments around the world have increasingly recognised the importance of an efficient state asset management laws, policies, and practices; exemplified by the surge in state asset management reform. This phenomenon is evident in Indonesia, in particular through the establishment of the Directorate General of State Assets in 2006, who was appointed as the ultimate state asset manager (of Republic of Indonesia) and the proprietor of state asset management reform. The Directorate General of State Assets too has pledged its adherence to good governance principles within its state asset management laws and policies reform. However the degree that good governance principles are conceptualised is unknown, resulting in questions of how and to what extent is good governance principles evident within Indonesia's reformed state asset management laws and policies. This study seeks to understand the level of which good governance principles are conceptualised and understood within reformed state asset management policies in Indonesia (as a case study), and identify the variables that play a role in the implementation of said reform. Although good governance improvements has been a central tenet in Indonesian government agenda, and state asset management reform has propelled in priority due to found neglect and unfavourable audit results; there is ambiguity in regards to the extent that good governance is conceptualised within the reform, how and whether this relationship is understood by state asset managers (i.e government officials), and what (and how) other variables play a supporting and/or impeding role in the reform. Using empirical data involving a sample of four Indonesian regional governments and 70 interviews; discrepancy in which good governance principles are conceptualised, the level it is conceptualised, at which stage of state asset management practice it is conceptualised, and the level it is understood by state asset managers (i.e government officials) was found. Human resource capacity and capability, the notion of 'needing more time', low legality, infancy of reform, and dysfunctional sense of stewardship are identified as specific impeding variables to state asset management reform; whilst decentralisation and regional autonomy regime, political history, and culture play a consistent undercurrent key role in good governance related reforms within Indonesia. This study offers insights to Indonesian policy makers interested in ensuring the conceptualisation and full implementation of good governance in all areas of governing, particularly within state asset management practices. Most importantly, this study identifies an asymmetry in good governance understanding, perspective, and assumptions between policy maker (i.e high level government officials) and policy implementers (i.e low level government officials); to be taken into account for future policy evolvements and/or writing. As such, this study suggests the need for a modified perspective and approach to good governance conceptualisation and implementation strategies, one that acknowledges and incorporates a nation's unique characteristics and no longer denies the double-edged sword of simplified assumptions of governance.

Shifting from asset dominant to service centric delivery systems: engaging users and communities

Research and practice has observed a shift toward service-oriented approaches that depend on input from users and community as co-producers of services. Yet, in delivering public infrastructure the focus is still on assets rather than services. The contribution of external stakeholders in the co-production of public services is still limited. Using the Policy Delphi with a panel of experts, we found that although practitioners understand the need for asset management to follow the service approach, guidelines and policies still lack that service-centric perspective. Findings revealed a range of obstacles to effective service delivery, related to the sub-optimal involvement of stakeholders’, asymmetric levels of power, the lack of accountability, transparency and availability of government, and the lack of genuine consultations between government and stakeholder groups. The paper concludes by offering directions and strategies for asset managers and policymakers to support and reconnect disengaged government-citizen relations for optimal service delivery outcomes in asset management.

Making optimal and justifiable asset maintenance decisions

Maintenance decisions for large-scale asset systems are often beyond an asset manager's capacity to handle. The presence of a number of possibly conflicting decision criteria, the large number of possible maintenance policies, and the reality of budget constraints often produce complex problems, where the underlying trade-offs are not apparent to the asset manager. This paper presents the decision support tool "JOB" (Justification and Optimisation of Budgets), which has been designed to help asset managers of large systems assess, select, interpret and optimise the effects of their maintenance policies in the presence of limited budgets. This decision support capability is realized through an efficient, scalable backtracking- based algorithm for the optimisation of maintenance policies, while enabling the user to view a number of solutions near this optimum and explore tradeoffs with other decision criteria. To assist the asset manager in selecting between various policies, JOB also provides the capability of Multiple Criteria Decision Making. In this paper, the JOB tool is presented and its applicability for the maintenance of a complex power plant system.

A decision support framework for prioritization of engineering asset management activities under uncertainty

Engineers and asset managers must often make decisions on how to best allocate limited resources amongst different interrelated activities, including repair, renewal, inspection, and procurement of new assets. The presence of project interdependencies and the lack of sufficient information on the true value of an activity often produce complex problems and leave the decision maker guessing about the quality and robustness of their decision. In this paper, a decision support framework for uncertain interrelated activities is presented. The framework employs a methodology for multi-criteria ranking in the presence of uncertainty, detailing the effect that uncertain valuations may have on the priority of a particular activity. The framework employs employing semi-quantitative risk measures that can be tailored to an organisation and enable a transparent and simple-to-use uncertainty specification by the decision maker. The framework is then demonstrated on a real world project set from a major Australian utility provider.

Managing Information Risks in asset management - Experiences from an in-depth case study in the utility industry

Information is one of the most important resources in our globalized economy. The value of information often exceeds the value of physical assets. Information quality has, in many ways, an impact on asset management organisations and asset managers struggle to understand and to quantify it, which is a prerequisite for effective information quality improvement. Over the past few years, we have developed an innovative management concept that addresses these new asset management challenges: a process for Total Information Risk Management (TIRM), which has been already tested in a number of asset management industries. The TIRM process enables to manage information quality more effectively in asset management organisations as it focuses specifically on the risks that are imposed by information quality. In this paper, we show how we have applied the TIRM process in an in-depth study at a medium-sized European utility provider, the Manx Electricity Authority (MEA), at the Isle of Man.

Scenari finanziari e portafogli ottimi: modelli di previsione e strategie per l'asset allocation tattica

Le scelte di asset allocation costituiscono un problema ricorrente per ogni investitore. Quest’ultimo è continuamente impegnato a combinare diverse asset class per giungere ad un investimento coerente con le proprie preferenze. L’esigenza di supportare gli asset manager nello svolgimento delle proprie mansioni ha alimentato nel tempo una vasta letteratura che ha proposto numerose strategie e modelli di portfolio construction. Questa tesi tenta di fornire una rassegna di alcuni modelli innovativi di previsione e di alcune strategie nell’ambito dell’asset allocation tattica, per poi valutarne i risvolti pratici. In primis verificheremo la sussistenza di eventuali relazioni tra la dinamica di alcune variabili macroeconomiche ed i mercati finanziari. Lo scopo è quello di individuare un modello econometrico capace di orientare le strategie dei gestori nella costruzione dei propri portafogli di investimento. L’analisi prende in considerazione il mercato americano, durante un periodo caratterizzato da rapide trasformazioni economiche e da un’elevata volatilità dei prezzi azionari. In secondo luogo verrà esaminata la validità delle strategie di trading momentum e contrarian nei mercati futures, in particolare quelli dell’Eurozona, che ben si prestano all’implementazione delle stesse, grazie all’assenza di vincoli sulle operazioni di shorting ed ai ridotti costi di transazione. Dall’indagine emerge che entrambe le anomalie si presentano con carattere di stabilità. I rendimenti anomali permangono anche qualora vengano utilizzati i tradizionali modelli di asset pricing, quali il CAPM, il modello di Fama e French e quello di Carhart. Infine, utilizzando l’approccio EGARCH-M, verranno formulate previsioni sulla volatilità dei rendimenti dei titoli appartenenti al Dow Jones. Quest’ultime saranno poi utilizzate come input per determinare le views da inserire nel modello di Black e Litterman. I risultati ottenuti, evidenziano, per diversi valori dello scalare tau, extra rendimenti medi del new combined vector superiori al vettore degli extra rendimenti di equilibrio di mercato, seppur con livelli più elevati di rischio.

Towards an Understanding of Lodging Asset Management and its Components

Lodging asset management has emerged as one of the most important areas of strategic hotel management. Increasingly, lodging companies are soliciting the services of asset management firms or developing internal asset management competencies. This article synthesizes and discusses the essential components of dynamic lodging asset management. The article provides a detail background on asset management and its importance and explains the role of lodging asset managers and their working relationships with ownership and operators. The article also discusses the competencies and skills of asset managers.

EduBuilding: material selection from life cycle costing sensitivity

Life Cycle Cost Analysis provides a form of synopsis of the initial and consequential costs of building related decisions. These cost figures may be implemented to justify higher investments, for example, in the quality or flexibility of building solutions through a long term cost reduction. The emerging discipline of asset mnagement is a promising approach to this problem, because it can do things that techniques such as balanced scorecards and total quantity cannot. Decisions must be made about operating and maintaining infrastructure assets. An injudicious sensitivity of life cycle costing is that the longer something lasts, the less it costs over time. A life cycle cost analysis will be used as an economic evaluation tool and collaborate with various numbers of analyses. LCCA quantifies incurring costs commonly overlooked (by property and asset managers and designs) as replacement and maintenance costs. The purpose of this research is to examine the Life Cycle Cost Analysis on building floor materials. By implementing the life cycle cost analysis, the true cost of each material will be computed projecting 60 years as the building service life and 5.4% as the inflation rate percentage to classify and appreciate the different among the materials. The analysis results showed the high impact in selecting the floor materials according to the potential of service life cycle cost next.

Research project for managing skid resistance is on the road

In December 2006, the Engineering and Technology Group of Queensland’s Department of Main Roads entered into a three-year skid resistance management research project with QUT Faculty of Built Environment and Engineering researchers and the QUT-based CRC for Integrated Engineering Asset Management (CIEAM). CIEAM undertakes a broad range of asset management research in the areas of defence, utilities, transportation and industrial processes. “The research project is an important activity of Main Roads’ Skid Resistance Management Plan published in June 2006.” said Main Roads project leader Mr Justin Weligamage. “The intended project output is a decision-support model for use by Road Asset Managers throughout a road network. The research objective is to enable road asset managers to better manage the surfacing condition of the road asset with specific focus on skid resistance,” said QUT project leader Professor Arun Kumar. The research project will review existing skid resistance investigatory levels, develop a risk-based method to establish skid resistance investigatory levels and improve the decision support methodology in order to minimise crashes. The new risk-based approach will be used to identify locations on the Queensland state-controlled road network that may have inadequate skid resistance. Once a high risk site is identified, the appropriate remedial action will be decided on. This approach will allow road asset managers to target optimal remedial actions, reducing the incidence and severity of crashes where inadequate skid resistance is a contributing cause.