Implementation Risks
The key risk to the implementation program is failure to gain commitment, acceptance and adequate resources from:
- Corporate level
- Business units
- Staff.
Most asset managers and staff have been managing their assets in a responsible manner.
However, to get advanced asset management practices formally accepted as providing the competitive edge to a service organization requires the full commitment of all staff throughout the organization.
Not gaining this support would mean:
- Asset management program not being implemented
- Improved productivity, effectiveness and efficiency benefits not fully realized.
The possible causes of lack of support and the controls available include:
Causes | Controls |
Lack of appreciation of advanced asset management by staff, management and the executive | Conduct awareness raising, workshops Conduct specialist training programs |
Corporate objectives not filtered down to workface level | Ensure appropriate communication within organization |
Resistance of staff to change past practice | Change the culture of organization Ensure appropriate communication of benefits to the organization and staff Ensure senior management backing |
Inadequate resourcing Inadequate skills in asset management | Allocate adequate resources Provide adequate training program |
Indifference to program because not receiving feedback in program progress | Provide appropriate review and project assessment audits |
Asset management program accorded low priority status by management No clear AM roles | Ensure quality of business case - full economic/financial evaluation satisfying business selection criteria Make AM responsibilities clear |
Benefits Not Fully Realized
The justification for the asset management program lies with the economic returns that it offers.
The estimation of the benefits involves predicting the future improvement in productivity, effectiveness and efficiency of the facilities and systems. This is a long-term forecast and it involves elements of uncertainty and risk.
Failure to fully realize the benefits may result in:
- Loss in confidence among staff in the asset management program
- Asset management program wrongly prioritized
- Viability of business operations may be affected.
The possible causes and the controls available are:
Causes | Controls |
Incomplete or inaccurate database. | Complete data collection/valuation of major assets. Stage data capture. |
Not knowing the existing system capabilities, processes, data/information. | Complete status assessment on existing efficiency/effectiveness. |
Setting unrealistic improvement target. | Adopt best appropriate practice and achievable timeframes/resources. |
Unrealistic assumptions, parameters used in business case. | Complete sensitivity analysis Pilot schemes to assess benefits achieved at early stages. |
Inappropriate/inconsistent measurement of benefits. | Ensure consistent identifications and measurement of benefits. |
Benefits take too long to be realized. | Prioritize implementation program based on early return on investment. |
Delay in implementation/programs not adequately resourced. | Ensure adequate resourcing available Put in place project management team. |
Costs Escalate Beyond Original Estimates
The total costs of the asset improvement program include:
- The capital costs for data collection, and the hardware and software
- Setting up asset management processes
- Training staff
- Ongoing operating costs for continuous data update and maintenance, enhancement to systems and the refinement of asset management processes.
There is always a possibility of costs escalating beyond the original estimates. The possible impacts of any cost escalation include:
- Program being terminated
- Delayed completion of program
- Lower levels of sophistication in the program
- Deferred realization of full benefits.
The possible causes and the controls available are:
Causes | Controls |
Inaccurate cost assumptions and estimates in business case. | Actual costs to be verified through initial pilot programs Estimate cost through current contract rates and detailed estimates Ensure rates include all overheads |
Cost items not fully accounted for | Put in place project cost control process |
Delay in implementation | Establish project management team |
Cashflow over-run | Restrict program to suit appropriate benefits/costs return |