• Novice
  • Aware
  • Competent

Strategic Planning

The strategic planning process involves the assessment of the bottom-up flow of data against demands and external influences (global economics, etc.).

Strategic planning includes:



Failure Mode Prediction

"Failure Mode Prediction" is the process used to predict the way in which individual assets or their components will fail to meet the key elements of service delivery.

Failure modes include:

  • Capacity failure
  • Reliability or levels of service failure
  • Mortality or physical asset failure
  • Cost of service failure (i.e. where the cost of service is likely to exceed the economic return necessary to justify retention of the asset, or the customer's willingness to pay).

Best appropriate practice includes:

Using the trend analysis from the Demand Management Section to identify the mode of service failure or multiple failures that will impact on the overall network system or system components.

This trending will indicate the most likely time of failure and whether the likely failure is interdependent on other conditions - for example, a range of probability with at least two scenarios, "least probable" and "most probable."

The modes of failure will include assets without a failure history and an analysis of excessive cost of service as a failure mode.

Risk Assessment

How the organization assesses the risks associated with alternative strategies and how the organization fits risk into its overall strategic planning.

Optimized Renewal Decision Making (ORDM)

ORDM is a set of interrelated decision making processes used to determine optimized renewal / replacement or life extension programs. The processes review asset and non-asset solutions, including operations, maintenance and capital expenditure alternatives. The aim is to identify the least cost life-cycle strategy for a given asset, group of assets or system.

Best appropriate practice includes:

A detailed process to identify the most appropriate renewal option to extend the life of existing assets taking into account:

  • Current and residual business risk exposure
  • Impact on customers
  • Direct costs such as rehabilitation and maintenance costs.

All life extension options are assessed against a "do nothing" option.

The evaluation and its associated data are adequately recorded against the system concerned.

Life Cycle Analysis and Costing

The processes used to assess the long term life cycle costs in relation to new investments. It also looks at individual asset strategies and the way in which they are aggregated to develop whole of portfolio strategies, based on least cost to the business in line with customer demands. It also applies to ORDM when the final conclusion is that "replacement" is the most viable option.

Best appropriate practice includes:

The adoption of life cycle cost modeling techniques for any new asset options. This is the same as the ORDM life extension approach, except that in ORDM we are dealing with an existing asset.

The organization has a policy to adopt lowest life cycle cost options for all new work and will not adopt capital expenditure programs without the associated recurrent expenditure budget.

Improvement/Efficiency Programs

The processes used to identify cost reduction opportunities or improvements in levels of service. The way in which these are used through a continuous improvement process in operational and capital expenditure areas.

Best appropriate practice includes:

A process to regularly review operating costs using "activity based costing" and/or other methods to find savings.

Performance monitoring criteria for key issues such as efficiency or other physical performance criteria, are used to identify where intervention is warranted.

The organization takes part in regular benchmarking exercises with other similar organizations and uses this data to find savings.

The maintenance management system is used to identify all assets for which planned and unplanned maintenance exceeds a certain percentage of replacement value and/or annual cost. The organization reviews these critical assets.

The Total Asset Management Plan

The output of a strategic planning process is an asset management plan. This element assesses the processes by which the organization puts such a plan into production.

Best appropriate practice includes:

The asset management plans are produced as much as possible by the staff of the organization to ensure total ownership of the finished product.

The content and format of the plans comply with the outlines as shown in the international infrastructure management manual.

The finished plans are:

  • Independently reviewed by an external reviewer
  • Made the subject of a public consultation process between key stakeholders and customer groups.

The plans present evidence of best value and show the trade offs and connections between levels of service and cost of service.

Customer Review / Consultation

How the organization:

  • Presents its long term strategic planning information to its customer and stakeholder groups
  • Incorporates the feedback from customers into its long term strategic planning.

Best appropriate practice includes:

A formal customer consultation process that includes:

  • Informed customer groups
  • Public complaints tracking and analysis process
  • Specialist committees
  • Special interest groups
  • Structured customer consultation committees as part of a long term dialog or consultation process.

An information strategy that includes:

  • Information newsletters
  • Special information sessions
  • Web site access and information
  • Annual report showing asset management programs and future quality improvements.

Customer surveys that include:

  • Overall satisfaction surveys
  • Specialist individual asset surveys (e.g.: Park).

The organization has a process that enables the community or customers to assess different service levels at sustainable costs and to choose/identify "trade offs'.

Business Goal Linkages

The way in which the organization is able to link its business goals with actual asset action plans in terms of maintenance or Capital Investment Planning (for example, meeting environmental objectives and goals in planning to operate, maintain, and renew our asset systems).

Best appropriate practice includes:

The key business drivers are clearly identified and regularly reviewed.

These key result areas are rated using key performance indicators.

The asset management plans and associated capital and recurrent expenditure programs are clearly linked to these key result areas, so that benefits / costs can be seen.

Budget Rationalization Process

The process of rationalizing the ideal total asset management plan to suit the available resources, business drivers or budget constraints. This element reviews how the organization ensures the greatest improvements/benefits are gained from the available budget.

Best appropriate practice includes:

The organization can link its budgets to its key result areas.

The organization can consistently rationalize its existing capital and recurrent expenditures in a way that derives the best benefit for the expenditure or investment being considered.

The organization monitors its financial performance against annual budget projections and can vary its capital and recurrent expenditures to ensure a satisfactory overall performance.


Case Studies Australia

Improved Strategic Planning Extends Life Cycle

A combination of improved demand analysis, demand management and increased asset utilization resulted in a new power station at Port Augusta being deferred for 20 years and saved annual interest costs alone of $32m.

Load growth was revised downwards due to:

  • Lower economic growth
  • The introduction of demand management initiatives to influence consumption.

Existing plant capacity was modified, increasing capacity and significantly improving availability.

An interconnection transmission system between South Australia and Victoria helped significantly with peak load requirements on an opportunity basis, and meant that no new peak capacity would be required for at least 10 years. This link also significantly improved the system’s reliability in all but peak demand times.

Does this Asset Contribute to your Corporate Direction?

The sheltered workshop was in financial difficulties and an external advisor was appointed.

Looking through the accounts she observed that a major part of the costs was for transporting disabled clients to the workshop and home again – yet the avowed aim of the workshop was to allow their disabled clients to better manage in the wider world!

They arranged for the transport authority to place a bus-stop nearby and trained their clients to use public transport. This allowed them to dispense with their mini-bus fleet, with a considerable saving in maintenance and operating costs – and they were in the black again.

All it took was to align their costs and activities with their business aims.

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