a life in asset management dr penny burns editor, amq international’s “strategic asset...
TRANSCRIPT
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A Life in Asset Management
Dr Penny BurnsEditor, AMQ International’s
“Strategic Asset Management”
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Today more is being asked of asset managers than ever before
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To succeed, you need to be – and to be seen to be – a professional
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Professionals are respected, rewarded, listened to – they make a difference
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To be a professional you must demonstrate a knowledge of what has been done before – why, and whether it will work today
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Knowing AM History is the KEY to Professionalism – join me in discovering it
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We have been here before
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It is never exactly the same
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Therefore we must ADAPT rather than ADOPT
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We have been here before
Let me take you on a brief tour of the last 30 years
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We were ignorant but we knew it. We sought to establish the facts. We asked: what did we have? what condition was it in? what was it worth?
Mid 1980s – Mid 1990s
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Having recorded our assets we thought we knew all the answers and set about telling others: we focussed on renewal forecasts and demands for ‘backlog’ maintenance
Mid 1990s – Mid 2000s
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Mid 2000s - ?
The increasing complexity of asset management issues is making us aware that we don’t have all the answers – we don’t even have all the questions!
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Mid 1980s – Mid1990s
The major concern was VALUATION and DEPRECIATION – driven by the need to put assets in the balance sheet
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Mid 1980s – Mid1990s Calculating depreciated
values required co-operation between engineers and accountants
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Mid 1980s – Mid1990s
AIS – Both engineers and accountants wanted to establish asset information systems – but for different reasons
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Mid 1990s – Mid 2000s
We projected renewal requirements on a status quo basis
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Mid 1990s – Mid 2000s
We focussed our attention on risk and reliability
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Mid 1990s – Mid 2000s
We were mostly asset centric
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Mid 2000s - ?
Many more players in the field – not only engineers and accountants but economists, lawyers, urban planners, environmental scientists, regulators and the community
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Mid 2000s - ?
With the new players come new directions: a service focus, productivity, financial and environmental sustainability…
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Mid 2000s - ?
The major challenge is affordability – are the benefits of assets worth what we have to give up to get them?
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The issues we dealt with in the 1980s, the 1990s, the 2000s are still with us –
but they are not exactly the same
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Recording, Valuing, Depreciating Assets
• When there were no rules, decisions were taken to advance AM. (accrual accounting, replacement cost, modern equivalent assets, and in NZ, condition based depreciation)
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• Now there are established standards and more regulation
• There is more data but with it has come the demand for more justification
• Data quality is now as important as data quantity used to be
Recording, Valuing Depreciating Assets
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Renewal, Risk, Reliability
The issues used to be• Data gathering and• Consistent measurement
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Renewal, Risk, Reliability
• Technical measurement issues now largely dealt with, interest moves to the strategic issues
• Renewal is no longer axiomatic, it has to be justified
• We have more data but not necessarily more knowledge, interest is therefore moving to data analysis – getting meaning from data – statistics is becoming critical for asset managers
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Sustainability, Productivity and Affordability
Issue used to be • Getting persuasive measurements
of ‘backlog’ and renewal to support financial bids. The question of whether this was affordable hardly ever arose
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Sustainability, Productivity and Affordability
• With better data the current unsustainable position is more evident – and we are expected to do something about it!
• Productivity improvement was once a talking point, but is now essential
• We once thought just measuring renewal costs was sufficient – it no longer is.
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We have to ADAPT not merely ADOPT
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Circumstances ChangeAdopting earlier solutions is dangerous
• Benchmarking used to be about being ‘as good as’ – that is no longer sufficient
• What used to work will not necessarily work now
• More is now expected of us and previous solutions will, in many cases, be no longer ‘good enough’
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Changing Circumstances require Adaption rather than Adoption
• We need to know more than what has been done in the past – we need to know why, under what circumstances and with what results
• We need to know more than how our assets work – we need to know what is driving demand for them
• There are now more players in the field – we need to know not only engineering requirements of assets but those of the other players
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Record Keeping
• Change is ongoing, records have to serve the needs of future change
• Greater regulation means greater need for detail and relevant degrees of accuracy
• With more players in the game, records need to be able to be expressed in ways which are meaningful for regulators, other professionals and, increasingly, the community
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AM is becoming professional – are you?
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• Universities teach principles and current practice.
• But few, if any, teach the history of AM• If we only know the present, we are but
tradesmen, to be a professional means understanding the development of asset management so that we can change as circumstances change
Where do we find the story of Asset Management?
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AM is becoming more complex
• Complexity is difficult• It is easier to understand if we first start with
something simple and move up• Asset Management was simple once, about 30
years ago, so start there • Understand the issues at the beginning and
why they needed to change
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Protect Yourself
• Those who do not know the past try to reinvent it!
• “The further back you look, the further forward you can see” Churchill.
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An invitation
• Join me and many others in exploring our common past
• Read the ‘how I got started in AM’ stories from other Asset Managers and add your own at www.amqi.com
• Think about the AM developments that have taken place in your organisation
• Contact me to join a history discussion group
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Even better
Subscribe to “Strategic Asset Management” and follow the developments of asset management as they happen
www.amqi.com
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THANK YOU!
To find out more
www.amqi.com