.There is this ongoing discussion about asset management in the public sector and the private sector. The debate is about who is doing the “real” asset management stuff and where can we find the best practices. The topic is even more prominent now, especially with its global magnitude. It is being discussed in various conferences, training programs, publications and messages from consultants/vendors. Is one doing asset management and the other doing strategic asset planning? Is one better than the other?
At the end of the day in my opinion this is a futile discussion. If we look closely at both, the public and private sectors, they are both doing their part the best they can within their respective organizational context.
Rather than getting into the debate of who is doing better, we should be focusing more on how each of these sectors can share and improve their processes to achieve a more holistic asset management approach. Maybe the strategic portion is in place (top down approach), but not the tactical portion (bottom up approach) or vice versa - vertical alignment. Maybe organizations are doing the right things but in functional silos with poor collaboration – horizontal alignment.
Ultimately, what really matters most is how well the approaches/activities are aligned and coordinated. Of course there will always be areas of misalignment or weaknesses (constraints) that will need to be revisited. Of course there will always be gaps in processes, which are great opportunities for improvement.
What is the difference then, and why the ongoing debate?
In the public sector asset management planning is traditionally performed by the asset management/finance function with council endorsement. Engineering and public works take care of the asset management tactics in the form of refurbishments and routine maintenance.
In the private sector where the organizational context is different, asset management planning is usually done by senior management and endorsed by the shareholders or executive boards. Engineering and maintenance & reliability execute the asset management tactics.
So what does that mean?
Well in the private sector strategic asset planning is done at the board level and is pushed down to staff to execute the strategic direction, e.g. the board decides to expand the plant by next year in order to launch a new product. Market research and analysis have been completed, funding has already been arranged and decision has been made to stop manufacturing the old product, with all the related assets identified for disposal. All the related tactical projects need to be executed as per the approved plan and business priorities to generate maximum returns. In this case the tactical portion is very visible, while the principal-agent discussion is conducted behind closed doors. Hence we have the perception that “asset management planning” does not exist or is not carried out.
In the public sector it is actually a different approach. Council discussion and decision is public information – meaning we not only get to see more of the “asset management planning” and budgeting process, but we can also have our say and input. There are more open debates at the planning stage because of the political nature and impact of projects. Once decisions have been reached, then the actual execution is passed over to engineering/public works.
So both, the public and private sectors practice asset management based on their existing organizational context. As stated in ISO 55002, understanding the organization and its external and internal context is key in defining the scope of an organization’s asset management system, which will be used to set out the approach to enable the delivery of the organizational objectives.
With the changing landscape in asset management globally, organizations are now required to take a more holistic approach to manage their assets – both from a whole lifecycle perspective as well as enterprise-wide. So let us share and learn more from each other to make it happen.
Posted by Dharmen Dhaliah
11/12/2022 09:22:43 pm
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Dharmen Dhaliah, P.Eng, MBA, PMP, CAMA, MMP, CMRP