In the previous post, Ross discussed the “Elements of Strategy in Asset Management” that includes:
- Big picture conversations
- What is the story you are trying to tell?
- What are the key issues?
Ross continues to talk more about strategy in asset management in this post.
What is the impact of decisions? What happens if you do nothing?
The next question is what is the impact of the decisions? And in particular, what happens if you do nothing?
Because ‘do nothing’ is still a decision, ‘do nothing’ has some knock-on consequences.
So, for argument sake, if you had a small town in the middle of nowhere and it had one bridge. There are only a hundred people living in that town.
And the bridge is very old and it’s going to cost 20 or 30 million dollars to replace the bridge, oh, I’m not making a decision, it’s too hard.
Sooner or later that bridge falls down. That’s the result of that. It might take another 10 or 30 years. That’s the result of do nothing. And then what happens to the town?
And so it’s better to actually foresee those and go, well now, have we not got an alternate route in for that? Can we put a ford in? Can we, what can we do?
Or do we, in fact, encourage everybody to leave that town because the value of the property is lesser than the cost of the bridge. So think outside the square.
That happens with flood drainage. Often it would be cheaper to create a basin or detention pond by buying two or three houses and getting them out of the flooding area than it is to do alternative solutions.
So then acquire the properties. Those people get to move somewhere else, remove the houses, and create a detention area at the top of the catchment, and that’s the solution.
But unless you do the bigger longer term, what’s happening to our planning, you won’t come to those sorts of answers.
So the impact of decisions, and to do nothing is still a decision. And you need to know what the ‘do nothing’ scenario is as well as the options going forward.
What are the different forecasts?
And one of the different forecasts, so everything, for infrastructure asset management planning, everything is a forecast. It’s all crystal ball stuff.
It’s all, based on the information that I’ve got now, based on the data I’ve got now, based on the set of assumptions, this is what’s likely to happen. But it’s all in the future. The future can change very quickly.
A major disaster, be it natural or like Japan, you know with the Fukushima reactor meltdown that they had. The whole area around that reactor 20 or 30 or 50 kilometers is now evacuated. Nobody lives there, same with Chernobyl.
So things can change in a day if you have a big disaster. All the planning that you did up until that point no longer applies.
So it’s only a projection based on a set of assumptions to produce a probable cause of action.
But you have to remember that you’ve got to test those assumptions and events can change stuff quite quickly, particularly in some civil engineering assets, particularly natural or manmade disasters if you like.
Elements of Strategy in Asset Management
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