INFRASTRUCTURE ASSET MANAGEMENT IN THE GCC

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1 INFRASTRUCTURE ASSET MANAGEMENT IN THE GCC On the Road to Strategic Asset Sustainability PERSPECTIVES FROM LEADING ASSET OWNERS A Whitepaper by Government and Enterprise Asset Management Congress

2 OVERVIEW OF THE whitepaper ISO defines asset management as the coordinated activity of an organisation to realise value from assets. According to SIMPLE, the Sustainable Infrastructure Management Learning Environment assets in many communities are increasingly stressed from over-use, under-funding, and aging. Asset management is a series of techniques that have developed over the years to ensure that an organisation s assets are managed in such a way that the value derived from them can be maximised in the face of the challenges facing industry and governments. In the GCC region these challenges include the need for infrastructure growth, increased pressure on costs, and workforces that are comfortable with the existing way of doing things. There is widespread recognition that implementing asset management techniques can help organisations make better decisions where they have to invest in new assets, maintain aging assets, provide quality services at reasonable prices to their customers, and fulfil societal and environmental obligations. With slower than expected growth in major projects throughout the Middle East, mainly due to regional instabilities and depressed oil prices, there is pressure on governments to plan and coordinate their infrastructures carefully to make the most of available funds. Regional organisations are recognising that they need to ensure their investments deliver performance over the long-term. It is against this background that this snapshot report, created with the assistance and guidance of Government and Enterprise Asset Management Congress speakers, aims to reveal insights into the principal asset management issues facing governments and enterprises today. The concept of sustainable asset management is relatively new in the region and this report is part of an ongoing process to educate stakeholders about the challenges. Our contributors have shared their main concerns and information about their individual progress. Informa Middle East conducted this qualitative study with leading infrastructure organisations, to gain some insight into how they see asset management, and how they are going about embedding it in their organisations. Key challenges to implementing sustainable AM capabilities There is widespread agreement amongst AM professionals that, when it comes to sustainable AM, resistance to change is likely to be one of the biggest hurdles to overcome, combined with ignorance about the potential benefits of asset management. A key challenge is changing culture from being reactive response-oriented to one of long term planning. Peter Chambers, Dublin Airport Dubai Aluminium s Tariq Alzarouni mentioned that there are people who are unaware of the basic principles of asset management, which leads to a possible lack of confidence in the capabilities of an asset management system. Clearly, educating the workforce on the advantages of implementing asset management is an important task, as is ensuring that the organisation has top-level support for the initiative. Another important challenge AM professionals highlighted is that of data integrity. Abu Dhabi Ports Company s Waleed Al Tamimi mentioned the issue of consistency of data entry into the asset management software. Ross Dentten of the UK s Crossrail also highlighted the issue of data, stating that organisations need to ensure that data resides in a common data environment where only one single source of truth is kept for each data item. Other considerations identified are the cost of introducing asset management, the relatively long time it takes to see the results of the system s introduction, the challenge of introducing asset management in an organisation which covers a large geographical area, and embedding asset management as a business-wide discipline. We need to raise awareness of the importance of asset management within all the leaders in the organisation and its stakeholders. Faiza Alzadjali, Ministry of Health OMAN It is human nature to have a tendency to resist change. Page 2 Informa Middle East

3 Critical strategic capabilities to achieve sustainability AM professionals have diverse views on what strategic capabilities asset managers need to achieve sustainability. Many of the capabilities identified fall into three main categories: people, awareness, and systems. People A majority of AM professionals emphasised the importance of people and the way they are managed. Dubai Aluminium s Alzarouni suggested that the key strategic capabilities for asset managers are all based on people and working relationships in the organisation. For DEWA s Al Mehairi, people issues were at the forefront in two of the three factors he mentioned. In the Middle East, the key success factors are team harmony and establishing good relationships with all stakeholders. Involving other departments in a decisionmaking process with respect to assets status and sharing success in achieving optimum assets returns are also key Awareness Waleed Al Tamimi of Abu Dhabi Ports Company highlighted the importance of understanding what asset management is and having the right systems as a critical capability: Knowledge, process/procedures and a proper tool to implement these processes. Fast decision-making through qualifying and empowering employees, and the ability to unify both employees and leaders to be aligned with Asset Management principles Matar Al Mehairi, DEWA Faiza Alzadjali of Oman s Ministry of Health echoed this idea, highlighting the need to share knowledge and information, suggesting that sustainability could be achieved by forming an organisation of Middle East AM professionals and creating discussion forums to consider issues relating to the challenges, and sharing successes and experiences. Alzadjali also suggested that social media channels could be used to build awareness and to promote idea sharing. Peter Chambers of Dublin Airport suggested it is important for people involved to understand what sustainability really is. Systems The ability to combine technical, management and business expertise is seen as a critical factor by DEWA s Matar Al Mehairi and, as already mentioned, Abu Dhabi Ports Company consider it essential to have the proper processes and procedures in place. Understanding cultures within your organisation and knowing how to influence behaviours by changing motivational inputs is key Peter Chambers, Dublin Airport Ross Dentten of Crossrail emphasised the need for a system that will keep your common [asset information management] data environment flexible so that it is future-proofed. Other Critical Capabilities Other critical strategic capabilities identified by AM professionals include the need to apply Triple Bottom Line accounting to asset management an accounting framework that considers the three groups of performance measures based on social, environmental and financial performance and the capacity to align short-term issues with long-term planning. Aligning AM strategy to business strategy The majority of AM professionals agree that AM and business strategies must be aligned, and they are taking positive steps to monitor and increase the level of alignment. That said there is evidence that AM is still a relatively new concept in some sectors and that, currently, it is not well-aligned with business strategy. With regards to external and market factors, many AM professionals consider that so long as corporate and business strategies are responsive to external factors, the effect of any changes will flow down to the asset management strategy. In contrast to many GCC organisations which are still working on alignment, information received from European organisations (including Dublin Airport and Crossrail) suggest that this alignment is well entrenched in their organisations. Page 3 Informa Middle East

4 Importance of asset management planning AM professionals in major utilities and industrial organisations agree that asset management planning is vital because of the high value of their assets. There is a need to consider both operating and capital expenditures (Opex and Capex) before procuring a new asset and increasingly operating costs are becoming a major factor in any procurement decision. In some countries there is a trend towards total expenditure (Totex), an approach which does not treat Opex and Capex separately, but this remains an unfamiliar concept in the Middle East. Peter Chambers of Ireland s Dublin Airport commented, We have considered Totex. We can achieve this at present on an asset-by-asset basis but it requires a lot of manual working. Whilst Totex is on the table, and is regarded as having the potential to bring about business benefits, there needs to be more education about what it is, what it involves, and how to do it. That said, regional companies state that they are deriving value from considering both Opex and Capex at the design and pre-procurement stages. Lifecycle Costs When it comes to asset management planning, lifecycle costs (that is the total cost of an asset throughout its life including costs for planning, design, construction, acquisition, operation, maintenance, rehabilitation and disposal) are an important consideration. At Dublin Airport, according to Peter Chambers, whole lifecycle cost analysis is undertaken at the design stages. Other organisations use their companies finance systems to calculate lifecycle costs, which, once validated, have the potential to provide valuable information. We measure actual asset performance against the original design and advise management on a certain preventive action (i.e. PMs, PdMs, etc.). We establish and maintain condition monitoring for critical assets and carry out root cause analyses on critical assets failure. We then follow up with original equipment manufacturers (OEMs) on any potential asset optimisation or upgrade as well as optimise system efficiency via energy savings initiatives Using a risk-based strategy to manage assets Risk management and its relationship to AM is important. More sophisticated organisations are further along the road to considering risk in their AM framework, and both Dublin Airport and Crossrail consider such an approach vital. Abu Dhabi Ports Company and Dubai Aluminium are not currently implementing a risk-based strategy, although both suggest that they plan to do so. Both DEWA and National Grid are in the process of implementing such a strategy, while for the Omani Ministry of Health it is still an idea that is being considered. We have a multi layered risk management system. This works from top-down corporate risks to bottom-up risk tools such as HAZOP, RCA, RCM, Reliability Engineering, etc. Our investment planning is prioritized using risk. All are aligned using common scoring metrics through our Risk Governance process and this strategy is a foundation block of asset management and has been very successful. Peter Chambers, Dublin Airport Page 4 Informa Middle East

5 AM Certification: PAS 55 and ISO AM professionals have mixed views about the importance of AM standards. Dublin Airport achieved its ISO 55001:2014 early in Closer to the region, DEWA is working towards accreditation, as is Abu Dhabi Ports Company, but only for Zayed Port. For this year we have plans to go for ISO for Zayed Port only, and in the future we might go for Khalifa Port and Kizad, once the strategy and the systems are implemented across the corporate side. Waleed Al Tamimi, Abu Dhabi Ports Company National Grid in Saudi Arabia is currently working towards PAS 55 certification. For many organisations other important AM issues are taking precedence at the moment. However, overall the attitude to certification is positive, with Crossrail s Ross Dentten pointing out that ISO is an excellent framework for implementing an AMS. We are not certified yet. And this would be our lowest priority until we develop and maintain an Asset Management system backed up with a proper organisation structure. AM capabilities and industry regulation The impact of industry regulation on asset management varies depending on the industry and the country. Matar Al Mehairi of the UAE s DEWA stated that the sector is highly affected by corporate and Dubai regulations. In contrast Waleed Al Saadi of National Grid in Saudi Arabia said that they are not seeing any impact at the moment. He did mention, however, that the regulator is in the process of developing country-wide regulations. Crossrail s Ross Dentten suggested that industry regulation sets standards, and stated, good standards, if followed, can reap rewards. Careful alignment of good standards to inform good practice is not always easy though. The best mix is a combination of good standards and practical, well-thought-out, local knowledge. Asset Management technology Companies are using a range of Asset Management technologies, usually based on tailored asset management systems (e.g. SAP, MAXIMO, etc.). The decision on which technology solutions to use depends on the systems currently in place in the organisations, the types of assets they are managing, and what they have set as their priorities. Those organisations which don t have a system in place, are considering introducing one, and AM professionals agree that AM systems are an important support for their decisionmaking in the context of their overall asset management strategy. We have an AIMS which is a vehicle for establishing and configuring asset information. It is essentially a Relational Object Management System which is a prerequisite for flexibility if you intend to move towards a fully integrated common data environment. In terms of improvement, it enables better, faster, more intelligent decision making for all not just one silo group of the organisation. Ross Dentten, Crossrail UK Page 5 Informa Middle East

6 Asset data acquisition and management systems The vast majority of organisations have asset data acquisition or management systems in place, and AM professionals agree that these systems are a useful aid in decision making. Both KSA s National Grid and Oman s Ministry of Health recognised the need to develop their systems further to support their asset management efforts. Dubai Aluminium uses their system to help them benchmark against important KPIs with other similar industries. For this year we have plans to go for ISO for Zayed Port only, and in the future we might go for Khalifa Port and Kizad, once the strategy and the systems are implemented across the corporate side. Historical data is stored in the system and can streamline decision-making through robust procedures. Matar Al Mehairi, DEWA 2015/16 Asset Management priorities Unsurprisingly, given the variation in progress towards introducing AM strategies, AM professionals have differing priorities, depending on how far down the AM road they have travelled. AM professionals do, however, all agree that it is essential to define and implement asset management policies and to consolidate the role of asset management in their organisations. Define and implement the policy and strategy for the asset management division to maintain all assets and implement an enterprise asset management system across all ADP Waleed Al Tamimi, Abu Dhabi Ports Company Establish and maintain our corporate Asset Management policy & objectives. Work towards establishing a consolidated asset management team and optimising infrastructure for corporate data management system To get ISO accreditation for a well-established Asset Management system and to create a launchingpad of Asset Health Centre (AHC). We also aim to activate Asset Management principles within all departments by using change management techniques and awareness Matar Al Mehairi, DEWA Build and implement the best Asset Management practices in National Grid SA and make the organisation ready for the main challenges. Waleed Al Saadi, National Grid SA Conclusion This brief snapshot of attitudes to AM and progress towards sophisticated AM strategies in the region suggests that there are varying levels of awareness, acceptance and implementation of asset management strategies and that most organisations are in the early stages of development. That said, AM professionals in regional organisations recognise the importance of asset management and are pushing forward to establish sound asset management strategies and procedures. The report highlights the need for continued awareness-raising, both within and across organisations, and the need to share information, lessons learnt and good practice. As government-owned entities strive to lower costs, deliver services, and introduce new assets in an environment which, whilst relatively stable, holds some uncertainties, it is imperative that they consider the full costs of the assets that they have and that they plan to acquire. Maintenance, spare parts and labour are all factors that can contribute to aging assets becoming prohibitively expensive. The introduction of solid, well-planned asset management strategies, which have been proven in a range of private sector companies internationally, has the potential to reduce costs and enable public sector service providers to offer more costeffective and efficient services. Page 6 Informa Middle East

7 THAnKs Informa Middle East would like to thank the Government and Enterprise Asset Management Congress speakers who contributed to this report, with special thanks to Waleed Al-Saadi, Faiza Alzadjali, Matar Al Mehairi, Peter Chambers, Ross Dentten, Ross Dentten and Waleed Al Tamimi. Government and Enterprise IN ASSOCIATION WITH: Congress Held in association with the Institute of Asset Management, GEAM 2015 is the definitive meeting for asset managers in the GCC. For the fourth consecutive year in 2015, the congress with an unrivalled agenda covering the region s major asset sectors and featuring international speakers from the world s leading asset owners. For more information visit GOLD SPONSOR EXHIBITOR REFEREnCEs SUSTAINABLE INFRASTRUCTURE MANAGEMENT PROGRAM LEARNING ENVIRONMENT E C HARRIS BUILT ASSET CONSULTANCY, MISSION POSSIBLE: SUCCESSFULLY IMPLEMENTING TOTEX Page 7 Informa Middle East