Reviewing the TAMP
This topic has a brief overview and covers:
While organizations deliver service and earn income, their assets are a major cost driver. Effective asset management is therefore a critical success factor.
Total Asset Management Plans (TAMP) provide a rational framework for documentation of the approach to the management of these assets and enable the production of the most probable projection of the income required to enable the satisfactory operation of these assets/systems in accordance with defined service delivery standards over a suitable planning period.
The production of TAMP is required by many authorities before consideration for funding approval or tariff pricing is given.
In attempting to produce these TAMP asset owners and managers are attempting to decide on best practice applications for their asset groups. In many cases these practices are being tied to world's best practice, however not every asset or business requires world's best practice asset management.
In order to determine the order of quality that would be desirable for an asset management plan covering the issues listed above, therefore set an "appropriate quality level" for the organization in each of these areas.
This recommended approach is shown below:
The key purpose for developing an asset management plan, is to provide future predictive information to the business on the capital and operational or recurrent expenditures required to enable the business to deliver the levels of service required by their customers, over an appropriate planning period.
The quality or confidence level of an asset management plan is directly portional to the quality of the asset management inputs that have been used to develop the plan.
The key outputs of an asset management plan should be the ability to predict both the performance of the infrastructure assets, in terms of level of service and the predicted costs associated with these different scenarios.
The typical approach is to review both the:
- TAMP (if available) to determine its confidence level.
- The AM inputs to the plan.
A review approach using risk based quality assessment methodologies is shown below:
Gap Analysis
By using gap analysis techniques, the gap between the current and appropriate quality levels can be rated against the criticality of that very issue to the business as a whole and this then enables us to identify the key improvements that are required for the existing plans, in both the short and long terms.
To give an idea of their relationship to other similar organizations or asset owners, it is necessary to indicate where it believes the top 10% of such organizations rate at the present time. This information can be used to benchmark the quality of asset management plans and its implementation.
Because the process is quality based it is repeatable and this process then can be used to monitor their improvements in future years.
Benchmarking
These scores can then be used to benchmark the AM inputs and TAMP quality against other businesses.
Confidence Levels
The key to developing appropriate asset management plans is the need to identify the quality required to match the business' value chain by determining the necessary quality of the plans (best appropriate practice levels) or confidence level.
This then allows us to determine the necessary improvement programs and tasks. This approach allows us to show those activities that will provide the greatest benefits to our clients business.
A process for reviewing and assessing asset management plans is to be used to help with a confidence level on the plans produced.
The methodology for completing this includes a risk based quality assessment that looks at the 15 key quality elements:
- Understanding the existing standards of service
- The knowledge retained on assets
- Understanding the current demands on assets
- Understanding the future demands and levels of service that are likely to be required
- Predicting the ways in which the assets will fail to meet the future demands or levels of service
- Assessing the accuracy of the timing of these failures
- Assessing the consequence of failure and its impact on the business
- The quality of the proposed maintenance program
- The appropriateness of the operational and maintenance budgets
- The appropriateness of the renewal or life extension options
- The accuracy of the future capital costs
- The appropriateness of the capital evaluation process
- The way in which the plan is linked to customer expectations and the best value option is adopted
- The ability to modify the plan to meet these expectations
- The way in which the asset management plan links to the business goals.
These 15 elements are further broken down into a total of 70 sub elements.
The next process is to assess the effectiveness of the process that has been undertaken in each of these quality elements by assessing the activity against the best appropriate practice guidelines.
In each of the quality elements, we assess the quality of the data that was used in the process.
Both the process and the quality of data is assessed in the terms of percentage of best appropriate practice and the average of the two ratings is then developed as the quality rating of each of the 15 elements as listed above.
This process is shown below:
To establish the overall confidence level, then multiplies the element ratings by the benefit or the importance of this element to the business and to the confidence level of the ultimate asset management plan.
Each element has a benefit weighting totaling to 100% representing the ultimate benefits of each element to the organization. By assessing this across all quality elements, a confidence level for the current asset management plan can be developed.
An example of the overall confidence level and the associated calculations is shown below:
From this information, the organization can identify the:
- Areas needing improvement
- Relative areas of budget accuracy.
By understanding the overall confidence level and the contributions that each element makes in terms of weighted benefit, we can then link the process, improvements and data quality together with the necessary information systems identified through the asset management review process, to identify the most appropriate improvement strategy for the organization concerned.
An asset management plan does not stand alone, but forms an integral part of the organization's future business plan as shown below:
As shown in the above diagram, the asset management plan is essential when we link it through to our regulatory and customer service obligations. The plan would also be used in looking at our future human resource requirements, as the plan should indicate clearly the capital expenditure and operational expenditure that will be required in the future and the causes of that expenditure, for example: reduced response times in terms of asset repair.
The next step in the process is for the business itself to determine the accuracy or confidence level of the asset management plans that they require for their business activity.
For instance, for a large organization with a significant asset portfolio and a large customer base, asset management will represent a critical activity.
At the other end of the scale, for a small organization with a minor asset portfolio, declining growth and minimal income or profit strain, then asset management can be handled at a lower level and the confidence level required will be less than that for a more valuable portfolio.
In general, any organization that sees itself in a long-term business service provision through infrastructure services, it must be aiming at a confidence level of 90% for its asset management plans, especially in the short term.
It is suggested that organizations consider setting confidence levels appropriate to the organization and some examples of this in the municipal section are shown below:
In general, the planning period for most infrastructure service delivery, will be 20 years and although the organization will required high confidence for the immediate period, in terms of setting rates or tariffs for products, the organization can allow a lower level of confidence in the latter years of the 20 year plan.
The appropriate quality for long-term sustainable infrastructure businesses is as follows:
YEARS | CONFIDENCE LEVEL |
0-5 | 90% |
5-10 | 80% |
10-20 | 70% |
For some infrastructure businesses, it is even possible that there will be significant changes in capital expenditure outside the 20 year period and where this is likely, then the organization should set up an even longer asset management plan to identify these deviations.
Ensuring Business Unit Relativity
A key issue for most infrastructure-rich organizations is the way in which asset management plans and other budgeting processes are used to identify where the corporate organization should or should not be expending money. For many municipal businesses, the complexity and the range of services offered, from public housing to meals on wheels, to critical issues such as water supply systems, makes it one of the most complex businesses around.
It is just as complicated for individual business units to fully understand the relative merits of their investment programs such as:
- At a corporate level for the whole of business from a service program perspective
- From the perspective of balancing capital and recurrent expenditure needs.
From a business unit perspective of the group, the unit can understand the relative merit for applications within its key program items, or within the different assets which are used to deliver its services.
From a corporate perspective, the relativity of the existing asset management plans from each business unit, can be used to give a better indication of the relative merits of the budget applications being made by the individual groups.
To better understand the relative merits between capital and recurrent expenditure, the organization can also look at the confidence levels for these particular areas, including:
- Capital Expenditure:
- Growth in the way of new assets
- Augmentation to the existing systems to accommodate growth
- System renewal to sustain existing system capabilities
- System improvements to meet future levels of service obligations and regulations
- Efficiency improvements
- Maintenance Regimes
- Operations Regimes.
By understanding the relative confidence levels in each of these areas, the organization has a better understanding of its overall commitments and the areas where further evaluation may be justified.
To better understand the benefits involved for an individual business unit, the same activity can be undertaken for these units by looking at the individual elements that make up their total service provision. For example, a parks and gardens business unit may be responsible for service provisions such as:
- Sports grounds
- Botanical gardens
- Passive recreational areas
- Regional parks
- Minor parks.
The business unit can also look at the relative confidence level of their various activities as shown below:
To further assist individual business units, the emphasis can be directed at the actual assets providing the levels of service and assessments can be made in this area as shown below:
The next process is then to identify the key weaknesses or gaps in the existing plans and develops the tasks / projects necessary to improve them.
In many cases, this will include some or all of the following:
- Improved processes (effectiveness) of the work involved
- New processes (for example: risk assessments)
- Improved data — quality and quantity issues
- Better ways of producing the plans, for example: electronic versions
- Setting appropriate Key Performance Indicators (KPIs) for all stakeholders in the value chain.
In many cases, this program is used to justify the following year's activities for the various work groups. It can also be used to monitor the performance of service providers in this area.
This will involve setting appropriate performance targets for both the owners, purchasers and providers:
By adopting this approach to the review and improvement of the individual asset management plan, the corporate organization can feel more confident in setting rates and adopting overall budget strategies.
Assemble all material in relation to the draft plans.
Desktop review of the plans to assess their quality based on the above methodology. For each asset group, rate the plans in accordance with the 75 sub-elements and show a desired or appropriate level of quality that should be the target for the organizations.
Each review will also assess the compliance areas.
Visit the site of the organization and complete workshops with the relevant TAMP teams.
These workshops will include:
- Approach to reviewing TAMP
- Results of desktop assessment
- Additional data, information needed.
During these workshops, staff and teams to debate and challenge desktop assessment.
Further investigations and revise findings in the light of these discussions and further information.
Complete final assessment and report back to the review/review project team.
Using gap analysis techniques, identify an appropriate improvement for the current draft plans. These improvements can be either a simple or complex list of the actions and tasks that should be completed in the short term. However, the total gap analysis will give the organization a clear indication of the types of improvements that should be made to future plans as part of their ongoing continuous improvement program.
Corporate overview — covering the overall issues.
Independent sections covering individual business plans.
The key outputs / deliverables will include:
- Review report
- Quality assessment
- Confidence level assessment
- Improvement strategy and tasks
- Workshops to key stakeholders
- Presentations to council / executive, etc.