Demand Management Process
The processes involved in Demand Management are:
Quantify Current and Future Service Demand
While this is a fundamental step in the demand planning process, the detailed data is also essential to establishing an effective Demand Management strategy.
It is important that needs are:
- Identified and quantified using measures appropriate for the service being provided
- Quantified in geographic and demographic terms.
In predicting demand, consideration must be given to the likely impact of changes to policies, or to policy settings.
Quantify Current and Future Service Provision Capacity
This should use the same geographic and demographic benchmarks as the service demand figures.
The role of the asset manager is fundamental. The asset manager can provide:
- Accurate estimates of the capacity of existing infrastructure
- Information on the standards of service achievable using existing and programmed infrastructure.
Quantify The Gap Between Projected Demand and Capacity
A gap analysis provides:
- A summary of capacity (excess and shortfall) compared with projected demand
- Summarized information correlating demand and capacity against demographic and geographic parameters.
Identify Strategies for Influencing Demand
There may be more than one way of managing the demand to ensure a best fit with the organization's capacity to service the need.
These strategies may include outsourcing or moving the responsibility to the private sector.
These are called non-asset solutions.
Most often demand management strategies are geared to encouraging the community to utilize alternative options. They may involve:
- Controlling access to the service
- Charging a fee
- A process of education.
For each of the options, it is necessary to identify and evaluate the full resource implications: human, physical, financial, social, and political.
When considering costs, it is necessary to consider capital, management-in-use and maintenance costs.
Perform a Risk Analysis
The risk associated with each Demand Management option must be identified, together with the likelihood, impact and consequence of each risk.
This assessment of risk would contribute in a large measure to the information from which the preferred Demand Management option would be selected.
Examples of risk factors to be considered include:
- Community reaction
- Negative impact on special groups
- Political impact
- Unpredictable shift in demand price differentiation
- Competition from other agencies or private providers
- Technological changes
- Mismatch with other resources.
Select a Demand Management Strategy
All Demand Management options should be evaluated against:
- Level of risk
- Ease of application
- Potential to achieve desired objectives
- Community acceptance
- Cost.
As part of the selection process, it is necessary to identify key performance targets and, within each, key performance indicators. This is necessary to provide:
- An agreed benchmark against which to gauge the success of the strategy
- Data from which assessments can be made (if necessary) to enhance the effectiveness of the strategy.
Also, it is important to identify and allocate roles and responsibilities to key players.
For the strategy to succeed, each part of the process must be implemented effectively.
It is therefore necessary to view the selected strategy as a dynamic process that requires ongoing management and monitoring.
Implement the Strategy
During this phase, the preferred Demand Management strategy is identified, key stakeholders are advised and the various aspects of the strategy are initiated.
Depending on the strategy, this might involve:
- A community education campaign, or a series of community meetings
- Planning for a particular type of facility
- Closing down existing facilities and opening new ones.
Whatever the actions required, they must be implemented in a coordinated manner.
The service planner will have an ongoing interest in the effectiveness of the strategy.
The asset planner will need to know that the impact on demand has been sufficient to enable the infrastructure to cope.
The asset manager will be in a position to gauge the effectiveness of the asset base and provide key information to the planners.
During implementation, the Demand Management strategy may require modifications, if the projected results fall outside an identified range.
Monitor Impact of the Strategy
It is not always possible to predict and plan accurately the impact of a Demand Management strategy.
This is because of the range and complexity of variables involved, which include political, social and economic factors.
A process for monitoring the impact of the strategy is essential.
The performance indicators should enable the strategy to be fine-tuned to achieve the projected outcomes.
For asset managers, the measures of performance include:
- The extent to which variations in the level of demand are leveled out
- The extent to which demand is controlled within the capacity of the physical asset base
- The utilization rate of physical assets
- The quality of asset information provided by asset managers (i.e. that it is accurate and timely and assists service planners in effective decision-making and resource allocation)
- The number of service briefs received by asset managers in generic terms rather than inclusive of predetermined asset solutions
- Improved utilization rates of physical asset stock compared with the agency's own historical data and service industry benchmarks.
Review the Strategy
Based upon data gathered from the monitoring process, a review of the Demand Management strategy at a global level would include:
- The level of service provided
- Asset utilization rates
- Any negative impacts of the strategy
- The unit cost of service delivery.
Routine reviews are an essential part of Demand Management, as the environment within which service needs of a community evolve and are satisfied is constantly changing.
The timing of reviews should coincide with the regular review of the Capital Investment Strategic Planning process.