Ross and Grant continue to talk about the importance of communication in infrastructure asset management, particularly, dealing with political leaders.
Coming back to the subject communication, I think the thing with the political decision-makers, and I have had conversations with colleagues in the US, and Australia and in Africa – one of the comments that I got a few years ago from somebody.
They showed me the asset plan that they’ve been doing. I looked through what they had put out there, and so as far as I could work it out, they’d padded it up by about 30 percent.
And so I said to them, these were all technical people, that I’ve read this, and I read it on a plane going to the US. It seems to me that you’ve, you have got a lot of extra dollars in there that I can’t see where they’re coming from and why they’re there.
And they said to me, look our governance is really really weak. They can’t even make a proper decision and anytime we put a budget up, they knock 30 percent off it.
So what we do is we pad our budgets out by 30 percent and then they knock that out. And I thought, well therein lies… and that’s a survival mechanism for a governance issue.
That’s an interesting point, you could say it is a negotiation approach. Really isn’t it more like negotiating your pay and your wages?
You go on high and hope to get what you want. But I’m not sure if that does a lot for that trust relationship between the advisers as technical people that we are, and the decision-makers.
It doesn’t. And the issue, of course, is that the people, even though the board, in this case, was – the governance arrangements created a weak governance structure, was one of those types of ones in the US.
They were in the position where they were having to guess every time a budget went up.
They would know that it had been padded so they were guessing. They would have to guess whether it was 20 percent or 50 percent too much in there.
And that’s not really what you’re wanting decision-makers to have to do.
One of the lessons we’ve learned is to be as honest as possible about this stuff.
And it takes time because often there’s a lot of distrust between management and governance or whatever and maybe, you’ll be in that sort of situation.
With that communication Ross, I think ensuring that people know what you don’t know because you won’t always know all the answers.
And where you have gotten a scenario ahead of you that’s quite difficult to ascertain and really nail down on what does the future looks like, when you then take that and apply it to your asset management decision-making.
Then you actually need to communicate to people quite clearly, well this is what we expect and we based it around this set of assumptions.
And really with any forecasting or projection-type work and certainly with asset management, the outcome typically is a plan and some budgets to achieve that.
And we need to understand and communicate on what basis we’ve actually done that projection work.