An integrated approach to program, portfolio and project delivery can dramatically reduce the life cycle costs of infrastructure assets.
As water infrastructure in Australia continues to age despite investments made over the past decade, there is growing evidence of decline and reduction in the estimated remaining life of critical infrastructure assets due to insufficient funding for the upkeep of infrastructure in some areas. This increases the risk of future unfunded liabilities.
Whole of life infrastructure solutions, programs and portfolio management are three interrelated options for addressing these challenges.
All too often, insufficient consideration is given at the outset of a program or portfolio as to the owner’s strategic objectives, the governance around the program or portfolio and the strategy for delivering them.
Programs in particular are complex undertakings and the stakeholder and supply chain management impacts are normally critical factors in determining the successful outcome of the program.
Whole of life infrastructure asset management
Many asset owners and operators are increasingly focused on life cycle solutions that optimise infrastructure outcomes and service delivery – a “cradle to grave” approach.
A whole of life infrastructure asset management framework enables asset owners and operators to achieve their business objectives for optimum cost and risk across the full asset life cycle.
This type of framework has tremendous potential to help owners address their infrastructure challenges and still have the opportunity to identify and unlock strategic reform and efficiency benefits, particularly around informing investment priorities.
The framework takes a whole of life strategic view of assets from the beginning through the application of proven process methodologies contained within the framework.
This approach has seen owners realise significant reductions in physical asset life cycle costs and simultaneous productivity increases from the improved reliability of their physical assets.
By way of example, in South Africa all municipalities manage large portfolios of infrastructure assets. One such municipality wanted to optimise service levels, risk and expenditure for all assets over the entire asset life cycle and appointed Aurecon to develop a full asset management program.
A risk-based asset renewal model was implemented to aid with long-term planning of infrastructure investments and has proven valuable in budget optimisation. It considers the social, environmental and economic risks associated with infrastructure services to prioritise capital renewal interventions.
The model was subsequently extended to cover all of the other infrastructure categories typically managed by the municipality such as storm water, water supply, sanitation, solid waste and electricity.
The benefits to asset intensive businesses in adopting a leading edge framework lies in an improved return on the considerable investment in physical assets and improvements in the safe and sustainable use of these assets.
The other clear benefit is in providing better information on, and analysis of, investment priorities and their necessity, a key challenge.
This contributes to a better understanding of risk and allows more informed decision making about investment priorities.
Integrated solutions framework
A key to achieving these outcomes is implementing them as part of a totally integrated and managed approach to program, portfolio and project delivery.
At its most basic level it provides a framework that integrates and reconciles competing demands for resources and provides a context and control framework for the investment priorities and projects within the program or portfolio.
It also often involves changes to the culture, style and character of organisations by providing a controlled environment in which there is a common approach to program or portfolio direction, management, delivery and reporting.
There are four critical goals or objectives required to establish a new management framework for improving sustainable infrastructure outcomes:
- Establishing and sustaining the right cultural environment within the owner’s team and any infrastructure programs
- Creating clear structures, boundaries and interfaces
- Measuring progress and making decisions focused on successful program delivery and outcomes
- Establishing robust data and information management systems combined with clear reporting to enable strategic investment decisions to be made
What is clear is that all program and portfolios are different, so any solution needs to be tailored to an owner’s specific requirements, unique policies, regulatory environment and the outcomes the owner is seeking.