And I think, Heather, one of the questions that I know you get quite often and we certainly get as well in New Zealand – we’ve been we’re 18, we’re close to 20 years down the track of asset management being mandated by law.
But the question you have is, “What’s the return on investment on asset management?”
And it’s a really valid question from anybody in a senior engineering or management role. This LA incident is one of the answers to that question.
They’re going to spend, let’s say, at three to four million dollars replacing that pipeline and also all the wash-up ahead of that emergency break that had reputational damage.
I mean it was on my evening news here in New Zealand – it was so spectacular.
And so right around the world, the city of LA, everybody knows about old pipes that are breaking.
You’ve got this issue that the council or the board of governors who are looking after that system. You know they’re wondering about the advice they’re getting from their team now as to whether they can trust it. So there are all those organizational issues that flow on from this pipe break.
But to me, I’d much rather be spending the extra couple of million dollars that’s going to get washed away with this break. That would have gone a long way down the track to a pretty good asset management program.
Get all those numbers out on the table so that everybody can have a look at them. Get the risk set on the table and then have the discussion about what’s a pretty good program to deal with those risks. And you know we think your network’s going to end up in terms of replacement cycles.
And then secondly, you brought the information to have a pretty good argument or discussion with your governance and also with your community. “Hey, this is what we actually need to spend on a system to keep it going and in a way that it isn’t going to fall to bits on us.”
And yeah, that’s the guts of it, isn’t it? So it’s a better way to do business than fixing breaks like that one, that’s for sure.
And now you can always tell your bosses, your decision-makers, you know, whoever’s in charge of whether you get to do asset management or not. You can say we don’t want to be LA. This is not where we want to be.
We want to be in a planned, proactive mode which is much, much cheaper. And this very graphic example is one made the show. It is more expensive to wait until a very catastrophic event like this occurs, you know, as opposed to fixing it ahead of time.
Yeah. I mean, I think at a minimum we think that the industry figures are generally at least three times the planned replacement cost. And in worst-case scenarios, it can get up with ten times the planned replacement cost.
That’s a lot of money there that you’re just wasting. The flip side of it is in the ROI question. If you do your asset management well, you don’t see these things and then everybody goes, “Why are we spending the money?”
And so from an engineering and asset management point, I say well it is much better to do this well. Not waste the money but you need to be able to tell that story as well to your decision-makers.
NOTE: The transcription here could be located at 13:20 – 16:35 of the “Ask the Expert Asset Management Webinar” recording.