This chapter presents Guidelines on asset management to help officials assess the adequacy of proposed asset management arrangements for infrastructure proposals. The 10-step checklist provides detailed guidance to help officials define the scope of asset management activities, confirm the information requirements, define performance, determine appropriate methods, establish a budget and manage risks. The Guidelines also provide officials with advice on the leadership, internal structures and capabilities needed for effective asset management within public organisations. This chapter presents each step of the checklist in detail and gives examples of their use. It also provides examples of further tools and resources that can support asset management.
Efficient and Sustainable Infrastructure in Egypt
Abstract
Asset management pertains to the functioning of infrastructure during its operational life, which includes all stages and activities after construction. Key considerations during the operational life of infrastructure include maintenance, renewals, upgrades, ongoing levels of service, contract management and governance arrangements for overseeing the ongoing management of assets and networks.
These guidelines are designed to support the assessment of feasibility studies, as required by item 9 of the Evaluation Criteria for Investment Projects. In particular, the Asset management plan checklist (4.2) can be used to support MPEDIC officials when assessing whether line ministries have adequate asset management arrangements in place across the lifecycle. This will help give MPEDIC the assurance that the systems are in place to ensure that investment commitments are well-placed to perform as expected over the entire lifecycle. More details on each of the items in the Asset management plan checklist (4.2) are included in the guidance below.
The guidelines also provide step-by-step instructions and general guidance to help infrastructure entities develop the internal structures, capabilities, processes and tools for asset management. While this aspect cannot be measured as part of MPEDIC’s assessment of feasibility, it is an important part of ensuring that infrastructure entities are strongly positioned to deliver robust asset management practices that endure over time.
Many countries have adopted holistic and systemic approaches to asset management to optimise their existing infrastructure assets and improving their resilience. In the current global context of constrained finance, ageing facilities and rising demand for infrastructure and services, countries are looking for strategies to maximise returns on infrastructure investments. A life-cycle approach to infrastructure investment can help with this by taking account of the potential costs of operation and maintenance from the very inception of the project.
As well as helping to maintain value for money across the asset lifecycle, effective asset management and maintenance ensures that assets can withstand external shocks. Enhanced monitoring or modifying operational routines can also reduce the risk of failure and help governments understand and better manage risks. Over the lifetime of infrastructure assets, the benefits of resilient investments are generally considered higher than the cost of inaction, making it important that countries invest in the strategies, policies, processes, tools and capabilities needed for sound asset management (OECD, 2021[1]).
These guidelines step users through all the stages needed for developing a robust and enduring asset management framework within an organisation. The structure reflects that asset management is not an isolated exercise, but needs to be integrated with many other business activities within an organisation, and requires the involvement of individuals with various roles across the organisation. In addition, strong asset management begins with organisations creating an internal culture where asset maintenance is valued and prioritised. For this reason, the guidelines start by focusing on the internal strategies that infrastructure entities must develop (see Organisational competencies), followed by more technical, detailed approaches (see Asset management planning (4.4).
Figure 4.1 shows an example of a systematic approach to asset management that incorporates the strategic and technical elements.
Source: Authors
Quality asset management begins with having robust asset management strategies, policies and organisational capabilities that value and prioritise asset management practices. Without this, it is unlikely that the necessary investment in guidelines, tools and capabilities needed for high-quality asset management will be delivered. For this reason, it is important that infrastructure entities incorporate asset management into the core purpose, governance and operations of their organisation, which is described in the following section.
4.3.1. Organisational culture
Robust, enduring asset management begins with having buy-in from the most senior levels of an organisation. If senior leaders do not demonstrate commitment to asset management, it is unlikely that mid-level officials will also prioritise asset management.
For this reason, it is important that organisations create a culture of good asset management, whereby asset management is regarded as a vital consideration in the planning, costing, delivery and operations of infrastructure. It is important that senior leaders demonstrate this commitment in their behaviours and actions, for which they can start by setting KPIs for their staff that relate to the operational management and maintenance of assets.
Creating a culture of good asset management relies on an organisation having in place systems that enable good communication and the sharing of information between staff, so that staff can understand the importance of asset management practices, share information on best practices and understand their roles in executing corporate guidance and direction on asset management, such as those described in the following sections: Asset management policy, Objectives and monitoring.
4.3.2. Asset management policy
So that asset managers can have a clear understanding of what good asset management looks like within their organisation, every organisation should have an asset management policy. The asset management policy should set out the organisation’s key principles and values for asset management. It is important to note that the policy should be high-level, and not prescribe specific steps in the asset management process. Instead, the policy document should set out the broad principles that asset managers should adopt to guide their asset management practices, and in turn inform their asset management plans (see Asset management planning).
To ensure there is support for the asset management policies and objectives, it is important that these are signed-off by the chief executive (or equivalent) and, where appropriate, the relevant board chair. It is also important that the policies and objectives are clearly understood by senior management across the organisation, so that asset management activities can be prioritised within the broader context of an organisation’s decision-making processes (see Box 4.1 for examples).
Below are two examples of best-practice policies that drive asset management decisions within two leading infrastructure organisations – the United States Federal Transit Administration and the International Union of Railways.
United States Federal Transit Administration
Policy-Driven. Transport Asset Management (TAM) should capture and respond to policy objectives and provide meaningful information about how changes in the transportation system support these objectives. A TAM policy can set boundaries, clarify intent, and communicate the scope of a TAM programme including types of assets that will be managed and what work activities to emphasise.
Performance-Based. TAM should have concrete objectives that are translated into system performance measures used for both day-to-day operation and longer-term strategic management. The use of performance data to support the management of assets enables agencies to select and deliver projects that achieve its objectives. Transparent processes allow for accountability to both internal and external stakeholders.
Risk-Based. Risk management plays a role in resource allocation, project selection, long-term planning and other essential parts of the TAM process. As such, an organisation’s approach to risk management and the outcomes resulting from a risk assessment have important implications for TAM. An agency must establish a risk management approach and integrate risk management in TAM planning and decision making.
Strategically Aligned with Agency Priorities. TAM measures should be aligned with agency priorities and goals to ensure that investments made to extend asset service life provide the maximum impact to achieve long-term goals. Connecting performance measures to higher level strategic goals also supports an agency’s ability to communicate to customers and stakeholders how technical measures relate to system performance.
Transparent. TAM planning and results should be monitored and reported for both impact and effectiveness. Feedback on actual performance should influence agency goals and objectives, as well as future resource allocation and project decisions. Transparency and agency accountability are key in ensuring the long-term support of project partners, customers and stakeholders.
Information-Driven/Evidence-Based. Strategic decisions with respect to agency goals and TAM objectives should be evaluated using credible and current data. Decision support tools such as management systems should be applied to help in accessing, analysing and tracking data, and must be an integral part of business and decision processes. Data requirements for performance measures should be realistic and feasible
Option Oriented. By taking a structured and repeatable approach to TAM decision-making, an organisation improves its own resilience and ensures that it will continue to succeed even as new challenges arise and personnel changes over time.
Continuously Improved. TAM processes should provide managers with sufficient information to understand problems and suggest solutions. The agency should be committed to regular, ongoing processes of monitoring and reporting results to identify and implement improvements to system performance or further the effectiveness of TAM.
International Union of Railways
Value: the creation, acquisition, maintenance, refurbishment and general retention of infrastructure assets should only be undertaken to deliver value to the organisation and its stakeholders. Asset management objectives and activities should be fully aligned with the organisational objects to define and assure the derivation of value from the assets.
Alignment: organisational and asset management objectives should be fully aligned with asset management plans and asset interventions on the ground to derive value and deliver organisational objectives. These should be established via risk-based and information-driven technical and financial decisions, co-ordinated and continually improved by the asset management system.
Leadership: due consideration of the people factors which influence the realisation of values and organisational objectives from the assets. This includes leadership and commitment from the very top of the organisation, culture, roles and responsibilities, competence, appropriate empowerment and authority, communication, co-ordination of functions and awareness of the organisational objectives and Asset Management System throughout the organisation.
Assurance: the effective governance of the organisation to assure the assets will deliver the intended value and organisational objectives. This includes the optimal management of resources within relevant constraints, establishing effective and efficient people, processes and systems to achieve the necessary capability, and continual monitoring and improvement.
4.3.3. Current and future competencies
Part of building strong asset management capabilities and skills includes seeking and developing skills that will maintain and improve an organisation’s asset management practices. Organisations can achieve this by identifying the skills they will need now and in the future, noting that technologies are changing, and in some cases replacing, traditional asset management skills. At the same time, new developments in asset management are creating the need for new skills in asset management that may not have been relevant historically. For example, with automation increasingly making certain routine tasks obsolete, organisations may need fewer people who complete routine tasks and instead need more people to interpret and communicate the results. In addition, as processes become more complex, new skills are needed to monitor and carry out checks and balances (Federal Transit Administration (United States), 2022[2])
However, not all skills needed for asset management are necessarily technical, and often involve more general skills, such as people management. It is important that organisations can recruit people who have a mixture of technical and general skills.
Box 4.2 shows the necessary capabilities and skills identified by the United States Federal Transit Administration for current and future asset management.
With this in mind, organisations have options to either hire new staff with the necessary financial, engineering, asset management, economics or project management skills, or provide existing staff to be further trained in the relevant disciplines. It is also important that responsible staff understand what is expected of them in terms of asset management duties, and that there are opportunities to identify the performance of staff in asset management. This could include staff who are excelling in asset management, who can then be identified for sharing lessons and upskilling others. Equally, it is important that shortcomings in staff capability are rectified. For this reason, it is important that organisations put in place staff performance plans, which set out clear objectives and performance measures that are specific, measurable, achievable, realistic and timebound (SMART) (see Section 3.3.2). The objectives in the staff performance plan should cascade from the objectives and monitoring arrangements identified in Objectives and monitoring 4.3.7 below. The performance of all staff against these objectives should be discussed with them individually at regular intervals, such as every 6 or 12 months.
Successful transport asset management (TAM) relies on a number of key competencies:
Leadership: ability to establish a vision and motivate others to work towards achieving that vision.
Management: ability to make sure that the multiple activities in a TAM programme are planned, co-ordinated, aligned and tracked.
Engineering: ability to understand the fundamentals of transportation asset and system design, construction, maintenance and operation.
Environmental: ability to analyse and develop prediction models to measure how environmental changes may impact highway infrastructure
Financial planning: ability to understand financial planning basics and an awareness of funding sources and financial tools
Planning: ability to understand a DOT planning process and the constraints of that process
Strategic planning: ability to understand strategic planning and how TAM fits into an agency’s business activities
Problem solving: ability to work through inevitable conflicts and issues that arise in the process of working across agency silos
Relationship building: ability to get different units in an organisation to collaborate
Analytical capabilities: ability to design and apply appropriate methodologies to gain key insights from available information
Computer know-how: ability to work with a variety of software and comfortably navigate common operating systems
Data know-how: ability to understand data structures, assemble and manipulate data in a variety of formats, and assess data quality
Communications: ability to keep communication in forefront of everything that’s done, aiming to make others understand what the TAM programme is trying to do. This is important when convincing individuals of change, or helping stakeholders understand TAM’s long-term deliverables.
Positive Attitude: in large-scale organisational change, taking a positive attitude is crucial to having people accept the change that will help strengthen the programme, and convincing them that the solutions are the right ones.
4.3.4. Asset management committee
Best-practice infrastructure governance at all lifecycle stages promotes having a single point of accountability for the success of a project, often termed a project executive, project sponsor or senior responsible owner (SRO). The SRO should be at an appropriately senior level in the organisation. For major infrastructure projects this should generally be a Tier 2 manager who reports directly to the Chief Executive and has the authority to make decisions (New Zealand Infrastructure Commission, Te Waihanga, 2019[4]). In many organisations, this role may be represented by a senior official within the organisation, such as a Director of Engineering, Finance, Maintenance or Operations (International Union of Railways Asset Management Working Group, 2016[3])
However, given asset management of a network often requires maintenance across multiple asset categories (e.g. track, rolling stock, ancillary assets, etc.), it is recommended to have multiple board or executive level sponsors that can ensure asset maintenance is firmly embedded across the entire portfolio of assets that comprise the operations of a network.
A common approach for many organisations is to establish an Asset Management Committee (AMC), which is attended by top management to oversee and direct all aspects of asset management within an organisation (International Union of Railways Asset Management Working Group, 2016[3]). An important role of the AMC is to review the organisation’s overall systems and structures for asset management, which should be done at regular intervals, for example annually. As part of this review, the AMC would identify gaps in the implementation of procedures and practices described in the following steps, identify causes where performance is not being met, identify remedial actions and make recommendations for improving the overall asset management system. In this regard, the AMC would be drawing asset management expertise and practices from across the organisation to advise senior management on current practices and improvements for the future.
4.3.5. Scope of activities
Impacts on asset management can be far-reaching. Some activities that impact asset management may be outside the sphere of influence of your organisation; similarly, some of your organisation’s activities may be outside the scope of its asset management system, but may still impact your organisation’s asset management objectives. For example, some infrastructure classes are subject to economic regulation, which may require certain asset management standards to be met.
For this reason, it is important that these interfaces are defined and managed. To do this, the AMC should consider:
How the organisation’s asset management objectives can support its broader organisational objectives e.g. if the organisation is subject to economic regulation, what steps must be taken within asset management to ensure the organisation is meeting its regulatory requirements?
The functions, processes and activities needed to meet the organisational objectives e.g. to meet economic regulatory requirements through asset management, it may be necessary to invest in relevant skills, such as assessing regulatory asset bases, weighted average cost of capital, regulated pricing, etc.
The assets required to deliver the necessary services e.g. the quality of the asset stock and its ability to meet regulatory requirements over its lifecycle.
Other considerations for scope could include: geographic considerations (e.g. seismic, topography), environmental factors (e.g. rainfall, flooding, climate change impacts, etc.) or other legal and regulatory requirements. User expectations and government expectations regarding the performance of infrastructure are important considerations. The necessary stakeholders can be identified by undertaking a stakeholder mapping and analysis exercise (see Figure 3.2).
When defining the scope of an organisation’s asset management practices, the United States recommends considering the following questions:
Which assets?
Which actions of decisions?
Which business processes, including methods and forms of delivery?
Which asset management capabilities?
4.3.6. Roles and responsibilities
Establishing roles and responsibilities for asset management begins with selecting the most suitable organisational model that can deliver the asset management strategy. The choice of organisational model should align with and support agency policies and priorities. For example, organisations focused on activities related to economic development, increasing funding, or sustainability may choose to house asset management in planning. A greater focus on safety and rebuilding infrastructure may lead to locating asset management in engineering. Agencies that prioritise preservation and operations may choose maintenance and operations as the base for the asset management function. Table 4.2 shows a diagram used by the United States Federal Transit Administration to help determine the best location within an organisation for asset management functions.
Source: (Federal Transit Administration (United States), 2022[4])
Another important consideration when choosing the organisational model is deciding on the degree to which asset management responsibilities are centralised versus decentralised. Under highly centralised models, influence is concentrated at a single point, which has advantages, but results in less distributed ownership across an organisation. A second option could be a more distributed model, where the central office plays a strong function in investment decisions, but there is no single designated asset management unit because roles and responsibilities are distributed across multiple central office units. Under this model, the central office could play a co-ordinating role but investment decisions are primarily made by field offices. This approach fosters strong ownership and decision-making that is close to the customer but requires clear guidance and standards from the central office to avoid inconsistencies across offices. This approach can also ensure that a nationwide view of asset information can be created and takes advantage of opportunities to gain efficiencies through the standardisation of tools and processes. Field units may take on varying levels of ownership for asset management with respect to data collection, condition and performance monitoring, and work prioritisation. The advantage of this model is the stronger link between asset management policies, goals, and objectives and work that is implemented. The disadvantage is the lack of consistent application of asset management across the organisation, creating the risk that asset management decisions do not closely align with the AMP.
Establishing clearly defined roles and responsibilities for asset management ensures that there are appropriate checks in place and that responsibilities are delegated to those who are best placed to manage them. Having a system of accountability through the hierarchy of an organisation also ensures that resources can be deployed to maintenance activities when needed, and asset maintenance decisions are embedded within an organisation’s wider strategic objectives and plans.
A useful tool for establishing roles and responsibilities of asset management is the Responsible, Accountable, Support, Consulted, Informed (RASCI) Framework (see Table 4.3). As well as internal stakeholders, the RASCI Framework considers and roles and responsibilities of external stakeholders, such as other infrastructure providers, sub-national governments, citizens and technical specialists.
Source: (OECD, 2023[9])
4.3.7. Objectives and monitoring
This section focuses on how organisations can set their objectives and monitor the performance and condition of assets at an organisational level. This differs from monitoring the performance and condition at the asset level, which is discussed in Asset performance.
As well as monitoring at the asset level, it is also important that organisations have a clear, agreed set of objectives and monitoring arrangements at the organisational level, so they can put in place the necessary tools, resourcing, guidance and capabilities for asset-level management. An organisation’s objectives and monitoring arrangements are directed by the AMP as discussed in Asset management policy above. The AMP should consider the objectives sought at the network and asset levels and be SMART so that performance against the objectives can be measures at later stages.
For infrastructure networks and assets, objectives can be based on performance (outcomes-based), compliance (compliance-based) or on a network or asset’s structural integrity (input-based). Compliance-based objectives may be compulsory because they refer to legal or regulatory requirements that the organisation must meet, in part, through its asset management. Outcomes-based objectives measure the quality of services that infrastructure is providing from the user’s perspective, whereas input-based objectives measure the state and condition of assets and networks. In general, outcomes-based objectives are preferable because they provide insights about the quality of services for users, which helps decision-makers understand whether infrastructure is contributing to the public policy goals it is built to deliver (see Section 3.3.2). Input-based objectives provide decision-makers with information on the state and condition of assets, which might indicate how an asset or network should perform when in a certain state or condition, but does not provide information directly on the level of service its providing. Table 4.4 shows examples of the three categories of asset management objectives described above.
Source: Author
While an AMP will likely contain a mixture of objectives from all three categories, all AMPs must have at least three outcomes-based objectives.
As noted above, it is important that AMP objectives can be monitored and reviewed at regular intervals. This ensures organisations can understand whether an asset or network is performing as intended, or whether changes to its asset management need to be made, such as additional resourcing. While the compliance-based objectives will be assessed based on binary (yes/no) responses, outcomes- and input-based objectives will require KPIs that, as well as the objectives, are also SMART.
Examples of outcome-based KPIs include:
Reduce commute times on a particular route by 20% by 2030
Reduce the frequency of power outages to no more than 10 per year from 2025
Lift the customer satisfaction rate from a 55% ‘’good” rating to a 65% “good” rating by 2028.
Examples of input-based KPIs include:
Reduce the number of maintenance callouts by 20% by 2028
Ensure all new infrastructure requiring structural steel use an internationally recognised standard for structural steel
Ensure all maintenance activities are delivered within existing annual operational expenditure appropriations as set in the national budget.
Each objective should have 2-3 KPIs. When possible, organisations should use leading measures rather than lagging measures (described below).
Leading and lagging measures
A leading measure uses changes in performance to provide insights into potential changes that might influence a future decision one way or another. For example, knowledge that a ramp meter has exceeded the manufacturer’s suggested service life might drive a decision to replace that meter. Similarly, increases in equipment downtime might indicate risks due to an aging fleet are growing or that planned operational activities will not be performed as planned.
A lagging measure looks back on the results of past investment strategies after the decisions have been made. Because a lagging measure is recorded after the fact, there is a delay, or lag, in the organisation’s ability to adjust its practices and improve performance. Bridge and pavement condition measures are examples of lagging measures because the reported conditions reflect the impact of decisions made several years in the past. Lagging measures are commonly used to evaluate a programme’s effectiveness or to verify that actual investments achieved projected results.
As noted in Objectives and monitoring, it is important that the objectives and monitoring arrangements are reflected in staff performance agreements.
4.3.8. Compliance and corrective action
The most common form of non-compliance in asset management will generally stem from outages and defects within networks or assets. However, there are other forms of non-compliances that organisations need to be able to identify and respond to, such as non-compliance with legislation, technical standards or corporate objectives. Often the most effective method of managing non-compliance is by ensuring the irregularity does not happen in the first place, which is achieved through preventative action (see Asset management).
Also to minimise the likelihood of future irregularities, organisations should be committed to a culture of continual improvement in asset management. This means an attitude of continual improvement should be embedded in all asset management processes and adopted by asset management professionals. This requires asset management professionals to actively seek and acquire knowledge about new asset management technologies, processes and methodologies, with a view to incorporating these into the organisation’s asset management system. A culture of continual improvement in asset management should be led by senior management, who can take opportunities when communicating with staff to promote the importance of continual improvement. In addition, the AMC should be the primary forum where opportunities for continual improvement in asset management are discussed and adopted (or recommended to senior management, if necessary). However, as operational asset managers will also see opportunities for continual improvement in the day-to-day activities, it is vital that they are encouraged and given the forum to present new innovations and methods to their teams and the AMC.
A recommended method for identifying opportunities for continual improvement is a gap assessment, which can be conducted either internally or by a third-party. Its results can help organisations identify changes in their business processes or asset management practices. Figure 4.2 shows a best-practice approach to applying a gaps assessment.
Source: (Federal Transit Administration (United States), 2022[4])
Once the policies, roles, responsibilities, scope, objectives and monitoring arrangements at the organisational level are established through the asset management strategy, organisations are well-positioned to undertake technical exercises related to asset management planning. AMP, for the purposes of this guidance, refers to the activities required to manage networks or assets, which includes the gathering of information, reporting, financial planning, risk management, communication management and monitoring. These matters are explored in detail below.
4.4.1. Scope of assets
In preparing an AMP, the organisation must decide which asset classes to include and the level of detail in which the assets are described. For example, for highways, critical assets could include pavements and bridges, while other assets could include, but are not limited to, drainage assets such as culverts; traffic and safety assets such as signs, signals, and lighting; maintenance facilities; and Intelligent Transportation System (ITS) devices (Federal Transit Administration (United States), 2022[2]). An AMP should provide a listing, typically in summary form, of the assets the agency has identified for inclusion. The AMP should meet the information requirements described in Information requirements (4.4.2).
4.4.2. Information requirements
It is important that organisations have a good base of information related to their networks and assets, including information about their actual and intended performance, condition, costs, risks and interdependencies with other assets and networks. Having a robust basis of financial and non-financial information supports evidence-based decision-making, which can aide decision-makers to operate infrastructure more efficiently while continuing to deliver an agreed level of service.
While having a base of information is critical, it is equally important that the data and information is then used to inform asset management decisions at the strategic and operational levels. This requires senior management, the AMC and others involved in asset management decision-making to be viewing and receiving regular updates based on the information collected and ensuring that the data and information is used as evidence to support strategic and operational asset management decisions.
Box 4.3 describes the common types of information that asset managers must gather to have a robust set of information about assets and networks that can be used to make evidence-based decisions. It is important to note that while the level of information gathered under each of these categories may vary depending on the size, complexity and context of an asset, there should at least be some level of information gathered on each of the categories listed in Box 4.3. This information is commonly collected in an asset information management system, which are typically digital platforms that can be edited and viewed by various stakeholders involved in the management of an asset or network. Information management systems can include the following:
Asset inventory (asset register, containing critical information about assets e.g. age, renewal dates, materials used, etc.);
Asset condition, performance, and utilisation tracking;
Performance prediction;
Treatment selection;
Work planning and tracking support (US Department of Transportation Federal Highway Administration, American Association of State Highway Transportation Officials, 2013[5]).
To ensure that asset information systems are kept up-to-date, it is important that organisations appoint an “owner” of the asset data and the upkeep of the platform hosting the data (see Table 4.3 for RASCI Framework).
Another aspect of information management that can help integrate asset management across an organisation is to develop a common set of asset management reporting processes. AMPs require information about the needs of different assets, which must be communicated with a common set of definitions and combined with funding information. Practitioners must be aware of the funding and cost assumptions used in every tool before they can report numbers in the AMP. For instance, a pavement management system might only include costs for the pavement work, whereas other planning tools might incorporate guardrail costs and other costs related to the work. Different tools might also use different assumptions for inflation. To bring all this information together in an AMP, organisations need to make sure their reporting and assumptions are consistent. Many organisations are successfully mapping different types of assets and making this information available on a geographic information system (GIS) portal. Typically, these portals have different layers for each asset. (Federal Transit Administration (United States), 2022[2]).
Common information types needed for a robust basis on financial and non-financial information across a portfolio of infrastructure includes:
Basic asset information (asset type, location, age, materials, features, capacity, drawings, photographs, etc.)
Historical information (dates for construction, renewals, upgrades, inspections, with a detailed breakdown of activities for each)
Interdependencies or connections with other assets/networks
Performance information (see information on outcomes-based KPIs in Objectives and monitoring)
Performance probabilities (e.g. probabilities of failure in certain conditions)
Asset condition (see information on input-based KPIs in Objectives and monitoring)
Geospatial information
Financial information
Historical asset management treatment costs
Procurement information, including bid documentation
Unit prices for each asset management activity (i.e. unit cost database)
Consequences of failure
Constraints upon asset maintenance (e.g. constraints imposed due to location, use of materials, etc.)
Business priorities (as set out in Asset management policy)
Regulatory requirements
Shutdown or outage management systems
Demand management systems (demand forecast of assets for the future)
Condition monitoring systems (stress sensors).
Up to date information
Some types of asset information change regularly while other information changes infrequently. As a result, it is important to classify each type of data and establish procedures to ensure the inventory is updated as information changes. An organisation should establish business processes to ensure any changes to the asset register are reflected in relevant databases. For example, each time an upgrade, renewal or maintenance activity takes place, the asset register should be updated with the latest information on the activity that took place, materials used, the completion data and the other assets replaced as part of the project. Establishing these processes and holding individuals responsible for updating this information are important for the ongoing success of a performance-based management approach.
Data and information about assets must also be updated on a regular cycle. In some cases, data collection cycles are mandated by regulations, but where there are no requirements in place for condition reporting, the update frequency should be determined based on the resources available, how the asset is managed and the data analysis cycle. Different update frequencies may be established for different types of assets or depend on the asset management approach (explored further in Asset management (Federal Transit Administration (United States), 2022[2]).
Collecting the right information and data and keeping asset registers up to date is also important for ensuring that organisations have the information they need to inform future asset management decisions. Further discussions with examples of this are explored in Identifying maintenance funding needs.
Cost information
Including the cost of maintenance and rehabilitation activities, preferably in a computerised maintenance system, provides a historical record of how treatment costs have changed over time. The information from the management system, as well as bid documents, can be used to establish unit costs for each type of work activity possibly recommended by the system.
Unit prices for each work activity should also be collected and updated over time, with records of historical unit prices also kept. For many assets, improving their condition is only one part of the total cost of a project. There are many other costs to incorporate into the unit price when estimating the cost of a treatment recommendation. If these costs are ignored, the cost of a project will be underestimated, and an organisation may programme more work than can be constructed over a given timeframe.
In response, some organisations inflate treatment costs by a factor of 30 to 40 percent to ensure the costs associated with project design and the improvement of ancillary assets are considered in the unit cost for a given treatment. The inflated cost (e.g. 40%) is stored in the management system as the unit cost for estimating treatment costs. Different unit costs may also be established to reflect different costs in different geographic areas or other variables. These differences improve the accuracy of asset budgeting activities by reflecting the realities agencies face due to work activities in highly congested areas, differences in the availability of contractors and the scarcity of materials in certain areas.
In addition to being used to estimate budget needs, unit price information can also be used to compare the effectiveness of one treatment over another, or one asset management approach over another. Cost information has also been used to demonstrate the benefits to using proactive maintenance across a transportation network rather than reactive maintenance (see Box 4.9 for more information) (Federal Transit Administration (United States), 2022[2]).
4.4.3. Asset performance
The AMP should describe how the organisation’s assets are expected to perform in the future. The horizon of the predictions should be commensurate with the horizon in the investment plan, which is typically at least four years, but may be up to 20 years. This section of the AMP should show what conditions are predicted given expected funding, as well as any gaps between predicted performance and the organisation’s goals for its assets. This section may include results for multiple funding scenarios, particularly if there is uncertainty concerning future funding, or if including results for multiple scenarios helps document the process used to prioritise funding. For instance, the AMP might show predicted asset conditions over time given the current funding level, predicted future funding, and scenarios with more or less funding than the predicted level.
Establishing a desired level of performance is typically a collaborative process that considers existing conditions, available funding, expected demands on the system, policy goals and guidance, and stakeholder priorities. The desired level of performance is typically established once baseline data is available, so performance trends can be evaluated. The desired level of performance may be adjusted over time to reflect changes in organisational performance, changes in asset condition, capacity, safety, resiliency and other factors (Federal Transit Administration (United States), 2022[2]).
To understand how assets should be performing, it is vital that organisations put in place performance targets, of which there are three types of service expectations used to manage asset performance:
1. Performance target – the level of performance beyond which additional performance gains are not desired or worth the additional cost. When performance is measured based on condition, the desired performance may describe the desired state of good repair. There may be an expected specific time frame to achieve the desired performance target (see Table 4.4. Asset management plan objectives – compliance-based, outcomes-based and input-based examples for different types of performance measures).
2. Current Performance – an intermediate level of performance achieved by the organisation and is usually reported relative to the desired target
3. Minimum acceptable performance – the lowest level of performance allowed for the asset or asset class to still function as designed.
Measuring performance and condition
Once the desired performance levels are understood, organisations need to establish methods for measuring the performance of networks and assets over time. There are several approaches for assessing asset conditions, each of which is influenced by the type of asset and the resources available to support the process. Typically, an assessment of asset condition involves a method of evaluating the presence of deficiencies and deterioration at the time of inspection. The results are used to assign a rating that reflects a current level of service, which then determines the need for maintenance, rehabilitation or replacement now or in the future. Asset condition ratings may also be used to establish rates of deterioration, allowing an agency to forecast future conditions for planning purposes.
A common example includes applying a condition index based on the type, amount and severity of distress present in the asset, which could be on a 0 to 100 scale, with 100 representing excellence. Other common indices include scores of between 1 – 10, A – F or by description: “excellent, very good, good, fair, poor”. Ratings could be applied to the overall performance or condition of an asset, or be applied to individual components e.g. deck, superstructure, substructure or culvert. Asset performance can also be reported in terms of a health index, such as the Remaining Service Life (RSL) to indicate the amount of serviceable life left in the asset. Alternatively, some organisations have developed a Maintenance Health Index or overall level of service grade to represent the performance of the entire maintenance division rather than report the grades of each category of assets separately (Federal Transit Administration (United States), 2022[2]).
These ratings need to be underpinned by clear, consistent criteria so they are consistent and avoid ambiguity. Box 4.4 and Box 8.5 show how Austria and Switzerland have developed sub-criteria that enables them to provide a score on the overall state of their transport networks.
ÖBB-Infrastruktur AG, the Austrian national rail service, assesses and reports on the overall asset performance of the rail network, which then forms the basis for the planning of re-investments and maintenance.
The overall scores are underpinned by sub-ratings that systematically and consistently assess the state of assets across the network. This approach ensures that the overall score is credible, evidence-based and is set consistently each year. The sub-ratings each have different weightings that are applied at the beginning of the annual review. The criteria includes the following:
Functionality
Track position of the superstructure
Number of slow speed sections due to superstructure or structural engineering
Malfunctions in control and safety systems, telematics, electrical engineering
Safety and quality
Number of plant-related safety-relevant events (accidents, etc.)
Conformity with requirements and laws (grandfathering, temporary grandfathering, etc.)
Conformity with internal guidelines (compliance with maintenance guidelines)
Punctuality
Number of journeys that arrived 5 minutes 30 seconds after scheduled arrival
Condition and substance
Remaining service life compared to the intended useful life
Inspection grade.
The final scores then correspond to agreed timeframes for the replacement and renewal of assets, which helps to secure future maintenance funding commitments. For assets or networks with a system behaviour score of 3.25 or lower, it is assumed they will need to be replaced within the next 6 years.
Source: (OBB-Infra, 2021[7])
Switzerland’s Federal Roads Office (FEDRO) uses a similar methodology to the example in Box 4.4. When assessing the quality of road pavements, FEDRO applies the following criteria and weightings:
Surface damage (10%)
Longitudinal flatness (30%)
Transverse flatness (30%)
Anti-slip quality (30%)
FEDRO assesses the state of operating and safety equipment against the following criteria:
Physical condition (mechanical and electrical condition)
Aggregate operating status
Documentation and safety reporting (safety report in accordance with the law; low voltage electrical installations)
Efficiency (Availability of spare parts; malfunction coefficient; availability of technical support; remaining operating time)
This assessment results across different asset classes (e.g. pavements, tunnels, structures) provides an overall score across the entire network as follows:
1 (No damage or minimal damage)
2 (Insignificant damage with no impact on safety. This damage requires increased monitoring)
3 (Moderate damage with no impact on safety. Such damage requires increased surveillance)
4 (Significant damage with no impact on structural or road safety. Action required in the medium term.)
5 (Urgent measures are required, such as replacing a pavement joint, replacing individual elements, installing temporary supports or introducing a weight limit.)
FEDRO then calculates an average condition rating for the entire network by adding the replacement value of each asset class as a weighting. This is important because replacement costs will vary across asset classes, and greater priority may need to be given to assets that have higher replacement values.
Finally, the condition score and replacement value are combined to provide an overview of the current state of an asset class and its level of priority (example shown in Figure 4.3). For details on how Switzerland uses this information to inform future maintenance funding estimates, refer to Box 4.7.
Note: FEDRO calculates the replacement value as being the amount that would have to be spent today to build an equivalent new asset and which complies with the current requirements. It does not correspond to the construction value of the asset when it was built.
There are different approaches used when measuring performance expectations, which vary in sophistication. Box 4.6 shows a combination of input-based and outcomes-based performance measures used in the United States’ Washington State Government to track whether assets and networks are performing at an acceptable level.
When seeking to establish the connection between investment and performance of transport assets, the Washington State Department of Transportation (WSDOT) sets level of service (LOS) standards for state highways and ferry routes of statewide significance. Regional transportation planning organisations and WSDOT jointly develop and establish LOS standards for regionally significant state highways and ferry routes. LOS is based on peak-hour except where noted and used by planners to determine the effectiveness of a roadway network.
LOS assigns a rank (A - F) to road sections based on traffic flow and corresponding safe driving conditions. LOS are categorised as follows:
A = Free flow
B = Reasonably free flow
C = Stable flow
D = Approaching unstable flow
E = Unstable flow
E Mitigated = Congestion should be mitigated (such as transit) when p.m. peak hour LOS falls below LOS "E"
F = Forced or breakdown flow
For measuring the performance of assets across a wide range of assets or roadway attributes such as litter, vegetation height, drainage or functionality, WSDOT has also developed its Maintenance Accountability Process to establish the relationship between maintenance level of effort and the resulting level of service.
The process rates conditions and services in seven areas using a common letter-grade system.
Roadway Maintenance & Operations.
Drainage Maintenance & Slope Repair.
Roadside and Vegetation Management.
Bridge & Urban Tunnel Maintenance and Operations.
Snow & Ice Control Operations.
Traffic Control Maintenance & Operations.
Rest Area Operations.
Each group of services or conditions includes several performance measures, which are translated to grades of “A” (highest performance), “B”, “C” (adequate performance), “D” or “F” (unacceptable performance). Applying the grades allows for a consistent means of rating performance across services and geographic regions. Grades can also be represented in photographs of facilities that meet the criteria for each condition state to support communications with stakeholder groups. The grades are outcome-based measures that allow the agency to predict the expected level of service that can be achieved based on anticipated budget and work planning decisions. By tracking maintenance expenditures and LOS results annually, WSDOT is able to adjust its maintenance priorities and budgets to address system needs and stakeholder wants.
Another approach to defining and measuring performance expectations involves adopting a mixture of compliance-, outcomes- and input-based KPIs to define and understand an asset or network’s overall performance expectation. In many countries, this has involved extensive engagement with citizens and other stakeholders to define their expectations for the performance of infrastructure. Table 4.5 shows an example of this process in practice.
4.4.4. Asset management methods
There can be major differences in how assets deteriorate (physically or in performance), the available treatment options to address deterioration, and different levels of consequence in terms of operational performance that arise. An appropriate approach to managing and monitoring assets will depend on the nature of the asset and the level of risk involved. Different asset management approaches require different levels of organisational capability and capacity, and may have different data needs and processes. Table 4.6summarises and analyses different asset management approaches.
While predictive maintenance is the preferred approach to asset management (OECD, 2021[1]), as noted above, it does require significant capability, analytical sophistication and data collection at levels that many developing countries will not be able to obtain. Where this is the case, the OECD recommends striving towards gradually introducing condition-based maintenance, with a view to build towards predictive maintenance over time.
Lifecycle approach to asset management
As described in Table 4.6condition-based asset management represents a method of managing assets across their full lifecycle. Taking a lifecycle approach to asset management is important because most infrastructure assets have long service lives, lasting years or decades. Making decisions based on short-term performance without an understanding of the long-term cost effectiveness usually leads to higher future costs. In fact, adopting life cycle management can often achieve desired performance levels at lower life cycle costs than traditional strategies.
Lifecycle asset management requires analysing the impact of various sequences of treatments on the future performance and costs of an asset class or subclass. By comparing the costs and benefits of long-term sequences of treatments, organisations can develop life-cycle strategies which provide the best practical long-term performance at lowest practical long-term costs. The implementation of life cycle strategies also enables an agency to better address its stewardship responsibilities and improve the alignment between agency investments and priorities (Federal Transit Administration (United States), 2022[2]).
4.4.5. Priority activities
All organisations face the challenge of prioritising scarce resources. This equally applies to asset management, making it important that organisations have a structured approach to prioritising the level of investment and sequencing of asset management activities so they can execute asset management efficiently and prioritise the highest asset management needs.
Deciding on the appropriate asset management approach and level of asset management is a strategic decision that should consider several factors:
1. Organisational Strategic Goals. The decision of which assets to prioritise should be driven by the organisation’s strategic goals. A desire to focus on one aspect of the transportation system over another to meet a larger objective can present a good reason for prioritising some assets over others.
2. Asset Value. A common consideration for selecting assets to include is the financial value. Monetising value provides a consistent way of comparing asset classes. In general, assets that are the most expensive to replace or cause the greatest financial concern for an organisation fall into the highest priority. Strategic management of these assets means strategic investments over the life cycle of the asset, which will prevent or delay the need for significant additional investment, help avoid premature failure and allow time to plan for appropriate replacement.
3. Data Availability. The availability of data does not inherently determine whether an asset management activity should be treated with high priority. However, deciding which assets to focus on based on existing data collection and management practices will often support the achievement of “quick wins.” Prioritising assets based on their data availability can form the basis for more advanced asset management decision making, which may identify the need for new skills and training. This can provide important insights to guide long-term planning at minimal initial expense/time.
4. Risk of Failure. Often, it can be necessary to include assets if the probability and consequence of failure is significant. Asset Criticality and Network Reliability Decisions to formally manage certain assets can be based on their importance to the service provided, such as operations, or the importance of the travel paths under consideration. Defining criticality is context specific, since user experience is based on the services provided to people, not the condition of specific assets.
5. Stakeholder Influence. In general, the scope of asset management should be agreed to in co-ordination with leadership and influenced by stakeholders (see for more details on identifying stakeholders) (Federal Transit Administration (United States), 2022[2]).
At the operational level, many leading countries apply a Reliability Centered Maintenance (RCM) approach to identify the most appropriate asset management method. Looking at an asset or asset class from an RCM perspective helps to select a management approach based on safety, operational and economic criteria. RCM is commonly applied to complicated assets that may require a range of management approaches for different components of the asset.
Figure 4.4 shows the RCM model in practice, focusing on the key aspects to help asset managers choose the appropriate asset management model.
Austroads, an association of public sector transport authorities from Australia and New Zealand, has developed an RCM Strategy and Framework for Management of Intelligent Transport System Assets, which demonstrates in detail how the RCM model can be applied to all asset classes. The model is depicted in Figure 4.5, with additional description below.
Source: (Espada and Inglis, 2016[10])
The process begins with identifying the operating context of the equipment or system, which determines the scope of the maintenance programme:
Step 1: Functions records what the asset does and its target performance level in its present operating context, enabling an organisation to document the specifics of the asset’s responsibilities and what level the function must be performed at.
Step 2: Functional Failures documents the ways in which the assets can fail to fulfil their functions, through the malfunction of one or more components. A functional failure can be classified as either evident (obvious without inspection e.g. noise) or hidden (not evident under normal operational conditions (e.g. faulty air bags in cars).
Step 3: Failure Modes defines the different types of failures that could occur by asking the following questions:
Has the failure mode happened before?
If the failure mode has not happened, is it a real possibility?
Is the failure mode unlikely to occur but the consequences are severe?
Is the failure mode currently managed via proactive maintenance?
Step 4: Failure Effects details what happens if nothing was done to predict or prevent a failure mode identified in Step 3. The analysis of failure effects should consider the following:
description of the failure process
physical evidence or signs that a failure has occurred
how the failure poses a threat to safety or the environment
how the failure affects operation or road network efficiency
operational limitations/restrictions as a result of the failure mode
secondary damage
cost and time to repair the failure.
Step 5: Failure Consequences starts to identify suitable asset management approaches by determining each failure mode’s safety, environmental, operational and non-operational impacts. Safety and environmental consequences are treated as high-priority and are therefore likely to cause more stringent preventative measures to be put in place, while failure modes with minimal effects may be managed with little maintenance requirements. The RCM process classifies these consequences into four groups, which can be used to identify the most appropriate asset treatments for addressing potential failures:
Hidden failure consequences: Hidden failures have no direct impact, but they expose the organisation to potentially multiple failures with serious, often catastrophic, consequences.
Safety and environmental consequences: A failure has safety consequences if it can lead to injury or death. It has environmental consequences if it could lead to a breach of any corporate, regional, national or international environmental standard.
Operational consequences: A failure has operational consequences if it affects network operations.
Non-operational consequences: Evident failures that fall into this category affect neither safety nor operation, so they involve only the direct cost of repair.
Step 6: Proactive Maintenance helps identify whether proactive maintenance, or condition-based maintenance as defined in Table 4.6, are the most appropriate treatment options for addressing failure modes, or whether other options should instead be considered. Step 6 specifies that condition-based maintenance tasks are technically appropriate when:
inspections can yield reliable physical evidence of impending failure
monitoring the signs of impending failure at the required frequency is not cost-prohibitive
once signs of impending failure have been detected, there is sufficient time to manage the failure.
scheduled restoration/replacement tasks, also used as part of condition-based maintenance, are technically appropriate where:
due to the age of the asset, the probability of failure increases significantly or increases to an unacceptable level
restoration tasks would reset the resistance to failure of the asset back to an acceptable level.
If the asset management task meets none of the considerations described in Step 6, Step 7: Other Options recommends other options, such as:
unscheduled maintenance to cover random failure modes that show no trend in degrading the useful lifespan
equipment redesign: make any one-off changes to the built-in capability of a system. This includes modifications to the hardware and one-off changes to procedures
failure-finding tasks: check hidden functions periodically to determine whether they have failed, as opposed to condition-based tasks which entail checking if something is failing
modifications to operating procedures: change the current practice of operations to potentially encourage greater efficiency or to increase the useful life of the system
updates to technical publications: keep the maintenance practices up to date and record any historical findings of changes in failure modes or consequences
no scheduled maintenance: make no effort to anticipate or prevent failure modes; failures are simply allowed to occur and are then repaired. This default is also called run-to-failure (Espada and Inglis, 2016[10]).
4.4.6. Maintenance budgeting
As discussed in the Infrastructure operations and maintenance section, line ministries in Egypt face difficulties obtaining the maintenance funding they need, resulting in a general under-funding of maintenance. This section provides guidance for line ministries to help them obtain the maintenance funding they need.
As noted elsewhere in this guidance, many infrastructure organisations across various countries face the challenge of delivering infrastructure with scarce resources. Organisations often lack the funding, staff, or other resources needed to achieve all of their goals and objectives, and must make hard decisions about how to divide resources while considering competing needs.
This makes it important that countries strive to achieve maximum benefits through their investments while being efficient with public resources, ultimately achieving the best value for money on behalf of citizens. This is a critical consideration during the project selection and appraisal phase of infrastructure, which is explored in depth in Guidelines: Project Selection. In particular, prioritising projects that present their best value for money across all lifecycle phases, including operations and maintenance, is essential to achieving value for money. In addition, given the operations and maintenance phase is long-term, it presents significant financial implications, which must be addressed if an asset is to achieve its desired level of service. During this phase, organisations face risks that they may not be able to obtain the funding they need, or events may occur, such as unexpected inflation, that may make it difficult to obtain the sustained funding they need to uphold maintenance. For this reason, it is important that organisations have the tools to anticipate the long-term maintenance funding that will be needed to meet the agreed level of service, which they can use to demonstrate to decision-makers where there are funding shortfalls and how these can be rectified. Two key tools that organisations can apply to uphold value for money and continue funding maintenance over the long-term include:
identify the maintenance funding needs
integrate asset management and long-term financial planning
These matters are explored in more detail immediately below.
Identifying maintenance funding needs
It is important that organisations have an analytical, evidence-based approach to identifying their maintenance funding needs. This can be used to inform their own internal asset management practices and exercises, such as reallocating resources to prolong the life of existing assets. An analytical, evidence-based approach to identifying maintenance funding needs can be used to apply for additional funding from third-party sources, such as ministries of finance or donors.
Figure 4.6 depicts a best-practice process for allocating resources to particular asset management activities. Importantly, this approach can help identify any funding shortfalls: at the completion of steps 4,5 and 6, if the performance predicted under step 6 cannot meet the targets set under step 3, then this has identified a shortfall in performance expectations and the available funding, otherwise known as a funding shortfall. Undertaking these steps requires having a robust unit cost database, which gathers current and historical information about costs associated with asset management. Box 4.7 provides an example of a simple method for calculating maintenance funding needs over the long-term.
Switzerland’s FEDRO currently estimates that long-term maintenance costs should correspond to around 0.9% of the actual replacement value each year. Due to a revision of replacement values in 2021 and 2022, FEDRO decreased this value from 1.2%.
Actual maintenance spending may, in some years, be higher or lower than the above percentage, depending on the need to act at the time in question and the feasibility of the intervention. However, the need for maintenance should be covered on average over several years.
FEDRO estimates service lives for the following asset classes:
Pavements: 15 to 25 years
Engineering structures: 75 to 90 years
Tunnels: 50 to 100 years
Operating and safety equipment: 10 to 30 years
Multiplying the proportion of maintenance to the replacement value by the number of expected serviceable years enables FEDRO to estimate the maintenance budget that will be needed across the lifecycle of an asset.
More information on how FEDRO assesses the state of its assets is available at Box 4.5.
Share of total infrastructure spending allocated to operation and maintenance
In OECD countries, road maintenance accounts for about 30% of total road infrastructure expenditure over the full lifecycle, with the remainder allocated to new builds and major upgrades. In rail specifically, routine and major maintenance typically ranges from 20–35% of total annual rail spending (International Transport Forum, 2018[11]). In non-OECD countries, this share varies significantly. In many African countries, under-maintenance of infrastructure poses a pressing problem because the underfunding of operation and maintenance of infrastructure assets leads to faster asset value depreciation (World Bank and Agence Française de Développement, 2010[12]).
Formula to calculate the adequate maintenance fees
The following formula can be used to calculate the adequate share of total expenditures to be spend on maintenance:
Operations & maintenance (O&M) cost = Investment × f(t)
Where:
Investment = total capital cost
f(t) = function for maintenance needs over time, e.g. f(t) = 0.01 + 0.001 × t (1% in year 1, increasing by 0.1% per year)
Example:
Investment: EGP 5 billion
Year 10: f(10) = 0.01 + 0.001 × 10 = 0.02 → O&M = EGP 100 million
A real-life example from Norway of the expected operating and maintenance costs for new high-voltage power lines is presented in the table below.
Note: These percentages refer only to regular operating and maintenance costs and do not include major reinvestments such as transformer replacements or large-scale upgrades.
Source: (NVE digital veileder, 2024[13])
Uncertainty analysis
Uncertainty analysis is the process of identifying, quantifying, and understanding the impact of unknowns or variability in a calculation, which shows how much confidence one can have in the estimates. An example below from the Norwegian company, Vianova, which created a methodology for O&M cost calculations estimates uncertainty in the following way for a motorway in a mild climate.
Estimate accuracy: ±25% (less climate variability = lower uncertainty)
Scenarios:
Low: 3.25 million EUR
Medium: 4.34 million EUR
High: 5.42 million EUR
While these models can provide a useful starting point, countries’ individual attributes, such as climate and weather patterns, the number of users and traffic density can lead to differences in maintenance requirements. To calculate the actual needs for operation and maintenance funding, more thorough analysis of the individual cases are essential.
Integrate asset management and long-term financial planning
As maintenance is a long-term commitment, it is important that countries identify and plan their maintenance needs many years, often decades, in advance. Taking a long-term approach can forewarn ministries of finance and other third-party funding sources of upcoming funding liabilities, reducing the likelihood of unexpected funding requests and ultimately increasing the chances of organisations obtaining the maintenance funds they need (OECD, 2021[1]).
Full integration of asset management and funding plans requires the following:
1. Clear articulation of asset management policies and goals (see Asset management policy)
2. Specific Asset Targets (see Objectives and monitoring)
3. Supporting Data and Information (see Information requirements)
4. Analysis Tools (see Asset management)
5. Project Selection Linkages, recognising that project-selection criteria favour projects that execute the asset management strategies or achieve the asset condition targets (see Guidelines: project selection).
6. Long-Term Perspective—To the extent possible, the agencies focus upon not only short-term asset-condition objectives but also long-term ones. This longer focus encourages preservation and not only worst-first priorities (Federal Highway Administration, 2015[15]).
Figure 4.7 shows a best-practice approach to integrating asset management and financial management. It reflects that asset management decisions should be guided by a long-term vision and goals for infrastructure and an asset management plan that covers a medium-term period (e.g. 10 years). The asset management plan should be supported by shorter-term financial plans (i.e. strategic transport investment plan (STIP)/transport investment plans (TIP) committed to by the responsible organisations and a central funding body, such as a ministry of finance. While the time periods for each of the planning instruments depicted in Figure 4.7 will vary by country, it broadly reflects the hierarchy of planning instruments and the timeframes that should be applied.
Where there is the need for an integrated planning and funding framework, as depicted in Figure 4.7 it is important that all plans use consistent assumptions to the fullest extent possible, such as:
Revenue projections. Ideally, a single office or group should take responsibility for projecting future revenues and incorporating an organisation’s best estimates of revenue sources, demographic trends and other factors.
Inflation assumptions. To predict how much it will cost to perform work in real terms, it is necessary to apply an appropriate inflation assumption. Predicting future inflation is challenging and results of the budget estimates may be highly sensitive to the assumed inflation rate. Thus, it is important for an organisation to make a consistent set of assumptions concerning inflation in its different financial plans. Often, the same unit responsible for revenue projections also predicts future inflation.
An additional challenge when integrating asset management and financial planning is accommodating the varying scopes and requirements for different planning instruments. Such instances that organisations should be aware of include:
Changing financial circumstances. An organisation’s financial situation may change within the planning period. A financial plan captures an agency’s best estimates at a given point in time, but it is not uncommon that the financial assumptions for a given plan to differ when revisited for another plan at a later time.
Different planning horizons. Planning instruments across different sectors and levels of government often have different planning horizons. The length of the planning horizon can impact how numbers are presented in a plan and how they are communicated and can make it difficult to sequence vertical or horizontal plans, given they may have different start and end dates and be subject to different time periods (Federal Transit Administration (United States), 2022[2]).
Note: STIP: strategic transport investment plan; TIP: transport investment plan; TAMP: transport asset management plan; LRTP: long-range transportation plan
Box 4.9 shows best-practice examples of how two state-level transport departments in the United States used historical data and information over a 20-year period to establish their maintenance needs and identify a funding shortfall. This ensures the state-level transport departments could establish routine, predictable, multi-year asset management funding plans.
Using historical data to inform future asset management funding needs (Florida Department of Transportation (FDOT))
FDOT has been able to meet its basic roadway maintenance condition targets since 1994 in part due to taking a multi-decade view to asset management planning. FDOT has measured its pavement conditions since 1973 by district but since 1985 data collection became a centralised statewide effort. The agency’s 2014 performance report tracked pavement conditions back to 2003, and noted steady, long-term improvement. In 2003, 80 percent of pavements met target, while 93 percent did in 2014. It predicted that its pavements would remain well above the minimum target threshold of 80 percent of pavement lane miles meeting target.
FDOT was able to do this by tracking its planning, capital and operational expenditures back to 1983. The long-term perspective allows budgeters, planners and programmers to understand the magnitude of investment needed to sustain today’s asset conditions into the future. In addition, the summary of past FDOT expenditures is matched by a forecast of planned programme expenditures for the next 10 years, with additional detail provided in a five-year Programme and Resource Plan.
As an additional benefit, FDOT found that once they were certain of how much was needed to sustain asset conditions, they had more confidence in deciding how much to commit for other projects.
Forecasting maintenance funding needs to identify a shortfall (Minnesota Department of Transportation (MnDOT))
The Minnesota Department of Transportation (MnDOT) used its 20-year investment and financial plans to establish its long-term maintenance needs, which identified a gap between targets and revenues.
The Minnesota State Highway Investment Plan 2014-2033 forecasted future revenues and contrasted those against the inflation-adjusted need to sustain assets and meet other investment needs. It noted that the asset condition targets generally can be met in the first decade of the planning period, but inflation and stagnant revenues in the second decade would result in lowering condition targets and reducing investment.
Soon after, the Metropolitan Council for the Minneapolis St. Paul metropolitan area adopted its 2040 Transportation Policy Plan, which reflected the findings in MnDOT’s financial plan. The Metropolitan Council’s Transportation Policy Plan also concluded that transport revenues would be insufficient and that the majority of expected highway funds would need to be dedicated to maintenance and repair of the existing system, with minimal amounts available for enhancing the network.
As a result, the Minnesota legislature considered additional transportation revenues, in part but not wholly, based upon the asset management financial plan, including a proposal for a USD 11 billion transportation funding package, which included improvements to 2220 miles (3573 kilometres) of pavement and repairing or replacing 330 bridges, more investment in Safe Routes to Schools and increases in transit spending. While the funding package was not approved by the legislature, it reflects the valuable role that long-term investment and financial planning can provide in establishing the evidence base for asset management maintenance funding.
Asset values and depreciation
Depreciation is an expression of the consumption of the economic value of the asset though use. The value, capacity, or capability of the asset that is lost through its use is restored though periodic replacement or reconstruction. By funding depreciation and using these funds to replace the asset component at the end of its life, it is possible to match the costs of use and replacement, thus sharing these costs equitably between current and future customers.
Additionally, in a network that has been built and maintained over a long period, there is, in effect, a continuous requirement to replace asset components that have reached the ends of their useful lives. Comparing the cost of these renewals with the assessment of the value of the capacity lost through use (annual depreciation) can provide a useful indication of the sustainability of the management of the whole network.
Best-practice accounting standards internally require infrastructure organisations to report their financial performance annually, including their asset valuation. Future liabilities of the agency for the deterioration of its assets over time and through use must be understood, reported on, and provided for in financial statements (US Department of Transportation Federal Highway Administration, American Association of State Highway Transportation Officials, 2013[5]).
4.4.7. Risk management
All organisations require robust risk management frameworks that ensure risks across all stages of the investment lifecycle, including asset maintenance and operations, are adequately identified, assessed, controlled, monitored and communicated to critical decision-makers and stakeholders. The risk management framework needs to be adopted by all organisations involved in infrastructure asset management, with the support of several supporting tools described below.
All-hazards approach
When planning infrastructure, countries need to consider the widest possible range of potential risks, including natural hazards, cyber threats, terrorism and pandemics. Taking an all-hazards approach is important because the hazards facing infrastructure constantly evolve. In response, organisations need to be agile and flexible in the face of new, emerging threats, ensuring they do not become too preoccupied with particular threats and risk being caught out by new ones. An all-hazards approach also helps organisations stay focused on the level of disruption posed to infrastructure by risks rather than being fixated on any specific risks (OECD, 2024[16]).
Severity and likelihood of risks
An important part of risk management includes being able to pre-empt risk. Organisations can do this by assessing risks according to their likelihood and severity. An assessment of risk should ask the following questions:
What is the likelihood the risk will occur? Depending on the risk, this likelihood may be defined or measured qualitatively or quantitatively and expressed mathematically or descriptively.
If the risk occurs, how severe will the consequences be? Similarly, the severity of the risk can be expressed qualitatively or quantitatively.
How do existing control measures affect the likelihood and the severity of the risk?
These questions can be answered using internal knowledge and experience, external resources such as audit reports, or by consulting qualified and experienced outside experts. In determining both likelihood and severity, assessments should account for existing risk management measures and distinguish between inherent and net risk. These are defined as follows:
Inherent risk is the level of risk before the application of any risk management activities or control measures to reduce its likelihood or severity
Net risk is the level of risk following the application of any existing control measures or actions
Residual risk is the level of remaining risk following the application of new control measures or actions that may be under consideration.
Distinguishing between inherent, net and residual risk allows for an appropriate assessment of risk on an ongoing basis, as well as an evaluation of the appropriateness and value of control measures (see Figure 4.8).
Source: (OECD, 2020[17])
The risk matrix shown in Figure 4.9 can be used to assess the criticality of risks at all stages of the infrastructure lifecycle, including maintenance and operations. The likelihood (L) and the severity (S) estimate a risk’s criticality (C) as the following formular depicts: (C = L x S). For example, if the likelihood is 4 and the severity is 3, then the overall criticality is (4 x 3) = 12. A risk’s criticality rating can then be plotted on a risk matrix tool, which helps to compare between risks and track their criticality over time. Risk matrices should be regularly reviewed and updated to reflect the impact of the risk control and mitigation measures put in place.
The impact of risks can vary at different stages of the lifecycle, which means a risk assessment should be applied to each lifecycle stage.
Source: (OECD, 2020[17])
Box 4.10 shows a best-practice approach from the United Kingdom for assessing the severity and likelihood of risks posed to infrastructure.
The Department of Environment, Food and Rural Affairs identifies eight factors to consider when accounting for the impacts on infrastructure of events induced by climate change:
Hazard: the potential for loss of life, injury or other health impacts, damage and loss to property, infrastructure, livelihoods, service provision, ecosystems and environmental resources.
Exposure: people, ecosystems, services, resources that could be adversely affected.
Vulnerability: the propensity or predisposition to be adversely affected.
Adaptive capacity: the ability to adjust to a risk event.
Sensitivity: the degree to which a system is affected, either adversely or beneficially, either through direct or indirect effects.
Timing: attention should be paid to activities that have long-term time horizons, lifetimes or implications. This may also include decision lead times.
Tipping points (and thresholds): the critical points where the climate changes from one stable state to another stable state. These can involve biophysical, engineering, performance or policy thresholds (or tipping points), above which much larger impacts occur.
Irreversibility: given uncertainty of many risks, decisions that would be difficult or expensive to revise in future should receive additional scrutiny.
Risk register
The risks identified through the process described above then need to be recorded, tracked and reported on over time, which requires organisations to have a risk register in place. A risk register is one of the most common tools for tracking and managing risks. They provide a framework for capturing critical information about each risk, its importance to the organisation, mitigation plans and tracking and managing responsibilities. A risk register is typically generated as a spreadsheet, though other formats can be used. An example of a comprehensive risk register, which includes assignments for risk mitigation strategies, is presented in Table 4.8. Over time, columns may be added to indicate when the risk information was last updated, what further action is required and whether adequate progress is being made towards the mitigation strategy.
A risk register should be reviewed at least quarterly to evaluate whether the risk register or the risk management plan for any of the performance areas needs to be updated. Periodic changes to the risk profile may be obtained through executive staff meetings meant to evaluate progress regularly, or ongoing reports tracking risk mitigation efforts and results (Federal Transit Administration (United States), 2022[2]).
Note: excerpt from Tillamook County Public Works Road Asset Management Plan 2009
Interdependencies between assets and networks
While many of the more obvious risks will be at the asset level, organisations also need to consider their part in identifying and managing risks at the system level. Because infrastructure works as a system, the failure of one asset can impact the performance of another asset. For example, an electricity outage can also impact the operations of wastewater treatment plants, pumping stations or intelligent transport systems, which all rely on electricity to function.
Planning for system risk requires organisations to map the interdependencies (physical, digital, geographic, logical) between assets and networks. An important starting point for this is for all organisations involved in infrastructure to establish information-sharing platforms, so they can establish a comprehensive and shared understanding of risks and vulnerabilities. Types of information that should be shared include an asset or network’s ability to perform during a risk event in particular locations, their expected life in the face of growing threats, arrangements for reinstatement of infrastructure in the event of outages and anything else that may affect operations of other infrastructure providers. Sharing such information helps organisations understand their own vulnerabilities, their dependencies on other infrastructures, and how disruptions to their services could affect other infrastructures or even their own. The information-sharing platform could involve regular meetings between infrastructure organisation officials involved with asset maintenance, with online platforms that record the information categories described above, so organisations have easy access to risk information.
These platforms must be secure and confidential with clear rules of access to allow a trusted sharing of sensitive information. It is also important for countries to note that the types of information that need to be shared could vary depending on the lifecycle stage. As one key challenge to voluntary information sharing, parties can be concerned their information may be publicly disclosed. Operators may have reservations about sharing sensitive information about their vulnerabilities, their critical dependencies and any disruptive incidents outside of safe circles as it could lead to liability, affect competitiveness in the market or reputational damage (OECD, 2024[16]).
4.4.8. Stakeholder planning
Communicating the asset management plan to the right stakeholders can serve as a powerful tool to facilitate its smooth and swift adoption. Communicating the future vision and benefits can help build awareness and buy-in and sharing information about milestones and accomplishments can help sustain or regain momentum.
To make sure the right people are receiving the right information, it is key to develop and categorise a complete list of internal and external stakeholders who will be impacted by the AMP and its resulting changes. This requires asset managers to identify, group and prioritise stakeholders based on the level of interest and ability to influence the AMP (for a method of identifying and prioritising stakeholders, see Figure 3.2). When considering the potential impact of stakeholders on delivering an AMP, consider who needs to receive different types of information and who best to deliver that information to support its objectives.
In asset management, common types of stakeholder groups include infrastructure asset owners, line ministries, governorates, local governments, contractors, regulators, investors, political representatives, among others. The public can also be stakeholders who influence which assets to include, especially when high-profile incidents potentially attributed to the state of good repair occur.
Once the stakeholders are identified and grouped, asset managers can identify the key concerns held by those stakeholders, existing and new engagement methods and key messages that the organisation would like to express to those stakeholders (see Table 3.2 for a suitable method). This exercise could potentially be applied to stakeholders identified in all quadrants shown in Figure 3.2 but additional focus should be given to stakeholders that are deemed “top priority” or need to be “handled with care”.
When developing the communications plan, organisations should consider what it intends stakeholders to understand, think or do in response. Key messages should promote awareness, desire and reinforcement of the AMP and be timely and frequent enough to keep stakeholders well informed about milestones and key dates of impact, and not so frequent that they lose value. Depending on the duration of the AMP and the number of associated changes, communication needs often shift over the course of its execution. Organisations should determine the most effective types of communication and delivery channels as they progress through change. Including a stakeholder feedback loop into the communications strategy is one way to accomplish this. Organisations can use surveys, polls, focus groups or meetings to gather information and gauge opposition and support. This crucial feedback serves as guidance for subsequent content and can lead to changes in the communications strategy (Federal Transit Administration (United States), 2022[2]).
4.4.9. Use of technologies
Infrastructure management technologies are used in many countries around the world to make more-informed, targeted decisions about asset maintenance, ultimately prolonging the life of existing assets and deferring new capital investments or upgrades. Admittedly, technologies of this type are mostly applied in advanced countries; many other countries would face a significant investment in cost and upskilling to adopt technologies of this type. So while implementing infrastructure management technologies may be unrealistic for many developing countries, it is possible to begin the journey towards adopting these technologies by understanding the types, their common uses and to understand the foundational steps required for their adoption.
Technological progress and big data have increased the opportunities for better managing the demand on assets, which helps reduce the maintenance burden and prolong the life of assets. Internet of Things (IoT) and Artificial Intelligence-based cloud computing have allowed the digitalisation of assets, systems, and processes applicable to infrastructure. An increasing number of examples are showing how ICT-based innovations can strengthen infrastructure resilience:
Distributing capacity in the energy sector: Smart meters and improvements in battery storage, hold the potential to increase domestic users’ contribution to grid reliability. In the Netherlands, the Eneco Crowdnett is aggregating home batteries to provide a “virtual power station” and research is showing that the batteries of electric vehicles can be aggregated in a similar manner.
Improving using real-time data: traffic management systems in Stockholm or Barcelona evaluate current traffic situation and predict future congestion. Based on the demand level the Urban Lab Dynamic Traffic Forecasting in Barcelona increases and decreases the number of green lights and available parking spaces.
Managing demand in the water sector: Smart meters collect and transmit real time residential and industrial water usage data to reduce water loss, undertake demand forecasting and optimise network operations. Evidence has shown a decrease of water consumption after the installation of metering technologies.
Using automated technologies for maintenance and monitoring: for example, drones represent a cost-effective alternative to time consuming and high-risk tasks typically performed by humans. 3D printing can ensure rapid and cost-effective formulation of parts with on-site 3D printing estimated to reduce manufacturing time of spare parts by up to 95 percent
The use of sensors: allows continuous monitoring and reporting of remote assets (OECD, 2021[1]).
New, more advanced technologies such as remote sensing, big data, Internet of Things, cloud technologies and machine learning are transforming how infrastructure is operated and maintained. Infrastructure technology, or InfraTech, can integrate material, machine and digital technologies across the infrastructure life cycle – from development to delivery and operations. InfraTech also improves resilience by enabling faster and more targeted responses to disruptive shocks or shifts in supply and demand. For example, a digital twin of an infrastructure asset or network can be continuously updated with big data from multiple sources. This, in turn, enables improved testing of what-if scenarios, analysis of the interdependency of multiple systems, and simulation of risks and vulnerabilities.
However, there are several technical and bureaucratic considerations when integrating digital technologies into the infrastructure life cycle. Many actors and jurisdictions are involved in planning and delivering infrastructure, but their approaches may not be in sync. Also a lack of national standards and approaches hampers broader take-up of digital technologies, interoperability and benefits at scale. In addition, some innovative solutions rely on new technologies that are still relatively un-tested or un-proven. Uncertainty about technologies may reduce the willingness of some actors to invest in their use. At a deeper level, new technologies for monitoring, delivering and predicting infrastructure maintenance require fundamental changes in regulatory, audit and decision-making processes. This implies the continued shift of public sector decision-making processes towards a greater focus on outcomes, being more open to external stakeholders and to working in real time on the basis of data and analysis (OECD, 2024[16]).
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