Asset Management Fundamentals - Assignment Example

Name of Student Professor’s Name Course Title Date Asset Management Fundamentals Question 2: Discuss the whole of life approach to asset management as it applies to an asset with which you have been involved. Compare and quantify the scale of typical lifecycle costs associated with this asset. Answer2 Whole of life approach may be defines as follows: “Whole-of-life approach is defined as planning maintenance based on the total estimated cost that will be incurred over the anticipated useful life of the facility or asset, covering the initial creation, ongoing operation and management, as well as the final disposition at the end of its life” (Ellmore 2011) It is very common for infrastructure assets to be in a operate-maintain phase of their life cycle with no probability of closure, decommission and demolition. However, at times the infrastructure needs to be upgraded and improvements need to be made, for this the whole life costing is required. Transfield Services manages a multitude of infrastructure such as It provides services to the water, railway, maritime, telecommunications, public transport, roads, transmission and distribution and road industry. However this question shall only deal with one of the infrastructure i.e. railways. Keeping this in mind Transfield Services uses a whole of life approach for the asset management of railways . the approach is discussed below: According to Burns (1999) a s infrastructures like railways have a indefinite life span the strategy they follow is based on analysis of the long term view i.e. over the time period. From the time which it came into being till the date of the analysis. . Apart from this Transfield Services should maintain the client service and asset performance according to legislative and stakeholders requirements. Transfield Service’s management has to use longer term view as it is very important for railways. this is due to the fact that railways have long service lives and may also be old and require urgent maintenance. Thus, the strategy they adopt for the whole of life approach needs to be based on long term variations as the service level may need to be change according to demand of factors like climate ,legislative changes and if the extreme is considered, then the change in the use and kind of railways (Adjo & Sue p34). Inorder to carry out a risk assessment while using the whole of life approach Transfield Services ensures and will have to continue to ensure that the critical assets related to railways are identified and treated accordingly. Apart from this Transfield Services takes under consideration time based, risk based and condition based intervention for the maintenance for their railways. Risk assessment of the asset in question is important for Transfield Services, as the safety regulation in the country in which the company is operating requires that asset management and whole life approach to be carried out using sound risk approaches to safety decisions (Sullivan & Steven p474). Thus, while analyzing the whole of life approach of an asset the company must keep in mind that strategy they will use is according to the safety regulations Transfield Services stores the information about the condition of the railways and data by a method which supports asset management. the data and information is stored in registers as well as in documents on the computer system. Back up document of the data and information is also stored in usbs and drives on other systems as well (Fulme p30). The storing of information indeed is the most important part of the whole life approach as with out it the asset’s lifecycle can not be calculated or assumed. The whole life approach of Transfield Services also consists of appointing responsibilities to different people related to the railway management projects. These employees are in charge of the entire asset management of railways from it’s construction to refurbishing. apart from this the responsibilities regarding the risk analysis of the railways is also something important for Transfield Services. Transfield Service should keep in mind that the strategy to be adopted for the whole of life approach should be treated as a strategy which views the asset in question i.e. railways as a system and not try to implement sub strategies. apart from this after implementing the whole of life approach strategy Transfield Services should review it every two to three years (Cagle p20). Transfield Services should and does realize the fact that in order to effectively use the whole of life approach it must not only give importance to one project but work towards continuous improvement of the railways. The typical costs of the whole life cycle is shown below: The planning must include all phases and costs. Transfield Services include all costs including those after the construction. As they know if they do not consider this it may have a negative effect on the technical solutions as well as the long term viability of their railway projects. Typical costs of the life cycle can help the organization to predict exactly after how long they will need to replace the infrastructure and what the costing will be (Ogard, p55). Basically typical cost analysis can evaluate the costing of the entire life cycle of the infrastructure. In this case scenario the infrastructure would railway projects by Transfield Services. The main function of typical life cycle costing is to find out about how much the maintenance and operation will cost as well as to estimate business financial costs. Thus, Transfield Services finds it appropriate to make sure that the lifecycle phases are properly designed and managed with care , as t is an important part of the entire life-cycle. Keeping this in mind Transfield Service . Has evaluated the typical cost for the railroad projects. Question 3 In relation to the process for asset management planning, outline the framework of such process considered most appropriate taking into account your organization’s environment, and how that would be best achieved over time. Use literature on asset management or examples with which you are acquired. Financing Answer 3 Thus, according to Transfield services environment the below mentioned processes of infrastructure asset management are the most appropriate ones. This is due to the fact that the organization believes in implementing the best practices during the infrastructure asset management , Transfield services is extremely organized and so the below mentioned processes will help to further improve their performance The process as per Transfield Service‘s environment would be maintaining a systematic record of individual assets (an inventory). In order to accomplish this the company will have to keep a data base record of each and every individual assets long with it’s acquisition cost, original service life, remaining useful life, physical condition, repair and maintenance consistency (Cagle p16). This will help the company to manage the assets in a better and organized manner. They may also be able to set lifecycle for the infrastructures. 2) Developing a defined program for sustaining the aggregate body of assets through planned maintenance, repair, and replacement. This part of the process is already implemented by Transfield Services. They already provide maintenance, repair, and replacement to their clients. Thus, this is what makes them so efferent in managing their assets. They know that if they sustain the assets then only can they be successful (Adjo& Sue p29). 3) Transfield Service will have to Implement and manage information systems in support of the above mentioned systems. This will help them to organize the selected system and help manage their assets in an orderly manner. The best possible system for their organization would be the Geographic Information Systems. This will not only support but also help in managing all the above processes causing less issue to arise. The above mentioned processes will be interrelated and interdependent aspects that usually cross organizational boundaries including finance, engineering, and operations The above mentioned can be achieved by the following:  They will have to Maximize system performance.  Improve to their client satisfaction method.  They will have to try to m the minimize life-cycle costs.  Their service will have to meet public expectations by managing the assets in a proper manner  They will have to deign an informed, cost-effective program in order to manage the existing assets Key activities Needs analysis Firstly Transfield Services will have to carefully evaluate the requirement for service and infrastructure provision as well as analyze all the options for fulfilling the requirements or needs of the service (Fulme p31). The options can be based on both non-asset and asset and demand management strategies. Economic appraisal After Transfield Services carries out a need analysis, next it will have to do an economic analysis. They will have to calculate the and evaluate the total costs and benefits of the different solutions which they have identified during their need analysis. they will most probably have to use Value management (Ogard, p56). Along with both need and economic analysis if they consider government policy objectives, then they will be able to develop recommendations which may help them to fulfill the requirements of good infrastructure asset management while managing use of scare resources. Planning Transfield Services will have to design plans using the information they have found out in their analysis phase i.e. need and economic analysis. This is an essential tool for attaining good infrastructure asset management. Transfield Service’s asset management plans, decision and activities will have to in complete accordance to the Government’s polices and law, as well as company and business plans. Transfield Services will also have to carry out Risk assessments in the planning phase of infrastructure asset management. During the entire planning phase Transfield Services will continue to evaluate the requires of the services they offer (Sullivan & Steven p474). . Budgeting Transfield Services will also have to set a budget for the management of the asset. Management Assets need s ample financial support in their entire lives and capital expenses for their acquisition or construction and frequent expenses for their constant maintenance and operation (Cagle p21). Transfield Services will also have to evaluate the disposal value of the asset i.e., the expenditure of when the service ends. The organization will have to make sure that the expenditure requirements are being managed by trustworthy funding sources. Pricing Transfield Services will have to evaluate and set a price for the utilization of an asset. They will have to base on the exact cost it will take in creating, operating, maintaining and finally disposing of the asset, furthermore must be according to Transfield Services service objectives. The true cost consists of the rate of return, the costs of operating and maintenance along with a depreciation allowance. The pricing is of the most important part as the price a has to be a reasonable one yet it has to fulfill the cost of the material and other resources which the organization shall be using (Fulme p32). Acquisition and Disposal Transfield Services will also have to make careful Decisions while performing in-depth evaluation and economic assessment. They will have to acquire their assets through creating them as they provide service which require this, however I their case they can also purchase the assets where they are requited only to re-do an already completed project. They will also have to consider the options of disposal it is also a part of the as part of the acquisition strategy. In their case scenario they must be able to sale or rent out their assets so that they can meet their expenditures while generating profit as well. Recording, Valuation And Reporting The above mentioned phases may help Transfield Services in informed decision-making. Transfield Services are completely responsible for the physical as well as financial performance of the assets. Transfield Services should record details about the Information about the performance and condition of an asset apart from this they should also give a written assessment as this all is an important part when an asset is be modified, refurbished, utilized for another purpose or disposed . Transfield Services will have to keep record of the maintenance of an asset register which will give and in-depth assessment of the assets and thus the company will be able to decide how to use them. Management In Use Transfield Services will have to protect their service delivery potential as it is the first priority while managing the entire asset utilization and maintenance phases. Transfield Services put extra effort in maintenance as realize the fact good maintenance of an asset will increase its life cycle and validity as well. Transfield Services will perform Post-acquisition reviews and evaluations so that they can find out if the desired result is being achieved or not (Burns, p790). The Key Elements Of The Plan Can Be Summarized As Follows: Fulfilling all requirements of levels of service. Fulfilling and analyzing all future demands Lifecycle management – the management of assets to provide improved services Financial summary – the budget of funds , financial position and financial requirement Implementing Asset management practices Monitoring- the monitoring of asset management practices At times even implementation of an improved plan Question 4: With respect to a particular infrastructure service, identify and discuss the factors relevant to the organization and the services provided that may impact on the demand for a change in the level of service or new service(s). Answer4 The factors which effect the demand of change are as follows: Consumer preferences and expectations Economic factors Environmental awareness Quality of material being used Change in technology . Consumer Preferences and Expectations The demand of customers to improve the service level may depend on the customer’s preferences and experiences. If the client prefers something better then what Transfield Services has to offer then in that case the organization will have to improve it’s level of service to satisfy the customer. This also may be pointed out in an earlier question that They provide best-practice systems and processes. The company has technically efficient staff that provides their customers with operational solutions along with maintenance and assistance in maintaining capital works services internationally (Burns, p600). Demand by customer for improved asset management may also force the organization to improve it’s asset management practices. Some is with customer expectations Transfield Services will have to fulfill the expectations of the customers. if a customer expects Transfield Services to give to top class asset management then they will have to fulfill it. When a client selects an organization to manage it’s infrastructure project it usually expects it to use top class material plus also give them appropriate advice from the financial point of view as well as the practical planning involved in such projects (Adjo & Sue p24). In order to meet the demand of change Transfield Services will have to fulfill and meet the expectation of the clients. Economic Factors Economic factors may also have an effect on the demand of change. Transfield Services will have to have full control of this factor as the rate of change has to be a positive one when it comes to infrastructure asset management. If they are not economically sound they will not be able to provide their services in an efficient manner thus resulting in a negative change. At all service levels, fiscal constraints dictate adequacy, quality, and magnitude of the infrastructure to be provided (Heller p23). Keeping this in mind Transfield Services will have to have high funds for it’s projects designing as well as maintenance phases. The economic analysis of asset management is an important approach that may be implemented for any kind of infrastructure. Whether it is just a small railway or a huge railway or any other infrastructure , it does not matter if the infrastructure is meant for large city or small town. Economic analysis of asset management helps in giving shape to a long-term plan which will maintain the systems and the services offered by the particular organization. Economic analysis of asset management as per this organization where a multitude infrastructure is being managed needs be based on long term economic analysis, especially in the sector of transportation. Keeping economic analysis in mind Transfield Services can also are adopt cross-sector asset management programs in which the infrastructure investments are organized systematically and holistically according to the different infrastructure areas (Adjo & Sue p20). Environmental Awareness According to Burns (1999) Even environment is an important factor when it comes to the demand of change. Transfeild Services will have to be completely aware of the environment in which they will undergo their projects the environment awareness will also help them to maintain a corporate governance as they will work according to the needs of the environment. As mentioned before their designs of the project are based on international management systems standard ISO 9001. They ensure that the construction of the projects are delivered keeping in mind safety, schedule and cost targets. Environmental awareness also means that Transfield Services must also make sure that the exposure conditions of the railways are considered. Keeping in mind that environmental loads are different for every project as every project has a different site. Each components used will have a different performance level according to the materials used in their production (Sullivan & Steven p460). As different components used in the project may perform differently for every site. Thus, Transfield Services must list down the environmental exposure classifications for each component keeping in mind the aggressive agents which play an important role and they must also look into the factors of concentrations, for instance which component may perform badly in which environment. This is what makes it an organization which prefers sustainability as at present the company may considered as one which has sustainable practices. As it provides their customers with the most cost effective and risk reducing consultation as well as designs projects which may be beneficial on long term basis. Quality of Material Being Used They will also have to consider the quality of the material they are using in their projects s this is an important factor when it comes to demand of change. They must be strong and durable to withstand any type of rough use and hazard. if they do use durable material in their projects not only will their clients demand for change lessen but Transfield Services will also gain a favorable reputation in the industry. Thus, withstanding the demand of change and meeting all requirements before the client demands a change in the quality of services (Ogard etal p58). The material used in their projects will have to be such with can withstand the environmental conditions of the project site as well as meet the normal strands and regulations of railway projects. Even the element of safety may play an import role here as strong material will make their infrastructure safer to use. In this manner Transfield Services can withstand the demand of change Change in Technology Transfield Services will have to upgrade it’s technology at a rapid speed. As the demand for change of the service level is greatly affected by this. clients of the infrastructure industry usually require companies to use the latest technology in their projects. If they do not update the technology they use then the demand for change will increase and their service level may be considered quite low. “Technological change affects the nature of demand for infrastructure: can induce or create demand for new kinds of infrastructure or substitutions,” (Heller p23) The change in technology as discussed above are only limited solutions to many of the elements which are required to improve the technology in such a scenario. nevertheless, if Transfield Services thinks in positive manner, and believes that the quickly changing field of information technologies may give a good opportunity and a means for generating better and more business. Nothing can happen on its own when it come to technological development , the fact may be considered that; all the members of the project team will have to work together in order to design, put into practice, analyze and use the modern technologies, innovative techniques and information technologies professionally. Transfield Services will have to fulfill the demands for new services by managing existing assets upgrading and providing assets to meet the demand of change in level of services. The demand management practices will consist of non asset solutions which will ensure the reduction of risk and management of failure as well. Each service will have to upgrade and improve it’s services according to the customer and legal requirements. Work cited Adjo Amekudzi and Sue McNeil. infrastructure Reporting and Asset Management. Best Practices and Opportunities. Infrastructure Systems Committee of the Transportation and Development Institute of ASCE. 2008 :p18 Burns, P. “Managing Infrastructure for the Next Generation,” Automation in Construction, Elsevier, 1999: 8, 689-703. Cagle, R. F. Infrastructure Asset Management: An Emerging Direction. AACE International Transactions, 2003 p15-26 Ellmore Rae Vicky . “Why is whole-of-life asset management not working? “ . 2011: p1 . March 13 2012. < http://www.fmmagazine.com.au/property-watch/why-is-whole-of-life-asset-management-not-working> Fulmer, Jeffrey . "What in the world is infrastructure?". PEI Infrastructure Investor . 2009: 30–32. Heller S Peter , Do demographic factors influence investment in infrastructure? . SAIS Washington DC. 2008:p23 March 13 2012. < http://www.cgdev.org/doc/events/12.15.08/Heller_Presentation_Demography_and_infrastructure.pdf> Ogard, E., Pagano, A.M., and McNeil, S. “A Model for Linking Asset Management to Strategic Planning,” 83rd Annual TRB Meeting, Washington, DC. 2004 p54-60 Sullivan, arthur; Steven M. Sheffrin . Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. 2003: pp.460- 474. Read More