So, moving on to the realities of infrastructure management. And in this section, we took the middle section, I want to talk about levels of service. We could talk about growth and risk but we’re not really going to cover growth and a bit of lifecycle management.
I want to start with this set of slides here. I prepared these slides a year ago before the International Federation of Municipal Engineers and a joint conference with IPWEA. The international conference was held in Rotorua, New Zealand.
This set of slides and the talk around it won the best paper for infrastructure management, which is very nice. And I had a lot of feedback from colleagues across Australia and New Zealand that they hit the mark.
Now the assumption with this slide is that you’ve already got an asset inventory or asset register that’s in reasonable shape. And so what I wanted to demonstrate, the talk last year was about the fact that we sometimes try to make infrastructure management far to complicated.
And so we’ve got levels of service, future demand and risk on the left-hand side flowing into your life cycle management which is operations, maintenance, renewals, new capital, disposal and optimization of assets through their lifecycle.
That then flows onto your financials, operations and maintenance, renewals, capital and maybe depreciation lines and expenditure. And then revenue, fees, charges, tariffs, loans, grants, funding, bonds in your revenue line.
And what happens is when you look at that, the first thing you’ll find out is that you have gaps between your desired or required levels of service and what you are delivering.
Your future demand might be changing and creating a gap, more capital needed or a reconfiguration of your assets. And there’ll be a gap often with your risks as well.
And so then you have another level of analysis and you say what does that do? Do we need to buy some more assets? Do we need to change the way we’re managing them? Or do we need different assets?
Then you get to run your financials, and often you find out that hey we can’t actually afford what all of these are indicating.
So then your choice is to re-examine your risks or re-examine your future demands, re-examine your levels of service.
Run that through your lifecycle management again and say hey, does that drop our expenditure or alternatively, you’ve got to find some more revenue.
And that’s a quite an iterative process and the farther out you take your asset management the more uncertainty you have in there. But also you might have a real hump of expenditure coming up; predicted to come up maybe in 20 or 30 years’ time.
So I wanted to unpack service levels and risks and particularly in this slide, if we looked at growth and we looked at lifecycle asset management, it wouldn’t be one hour. It will be several hours. And I wanted to look at it with some alternative ways of looking at levels of service and also some risks, mainly to stimulate your thinking by looking at it at a different way.
Demand would be a whole keynote on its own. Lifecycle management, and optimization, the conference I was at, this was getting covered by other very high caliber speakers.