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Strategic Asset Management
The quest for utility excellence
28th August, 2024
This book is about how leading utilities across the world can, and are, driving greater levels of performance from their utility assets. It draws from my own experience of running utilities, but it also contains practical content provided by utility executives from a range of different utilities who cumulatively provide services to 300 million customers and manage more than £750 billion of utility assets. A recurring theme throughout is the relationship between diverse issues such as regulation, organisational design, team working and asset management tools. To undertake this the book draws upon numerous case studies, surveys and reviews of how utility companies are addressing many common issues and opportunities.
Recognising that many readers may be more interested in specific topics, I have made extensive use of figures, introductions and conclusions. In this manner it is possible to quickly overview the whole book and home in on those areas of particular interest.
The three chapters that follow the introduction review the history of utilities, their nature and scale, and different regulatory regimes often adopted. These chapters will be of particular interest to people new to the utility sector such as graduates, regulators and non-executive directors.
In the remaining three quarters of the book, the concept of the asset management capability model and its six factors are developed and used to illustrate the critical importance those six factors play in delivering excellent utility performance.
Chapter 12 provides a brief summary for the time-starved reader.
Chapter summary
This book has 12 chapters. A brief summary of each chapter is included below:
1 Introduction
A summary of the scope of the book, guidance for the reader and a summary of the range of utility companies who have contributed content or case studies.
2 The History of Utilities
A brief review of the origins of utilities, with a focus on the impact of more recent economic, political and engineering trends. The history of utilities can be important as that which has passed inevitably leaves its imprint in matters such as asset data accuracy and workforce cultures.
3 Utility Regulation
The different regulatory approaches and styles adopted by economic and quality regulators in different parts of the world with a focus on UK regulation and the tools used to drive utility efficiency. This is important as regulators continually learn from each other and flex the regulatory nature of different jurisdictions.
4 The Scale of Modern Utilities
Some readers may not appreciate the nature, scale and complexities of modern utilities, so this chapter explores these issues and investigates the characteristics of different utility sectors and the relative significance of operational, replacement and utility extension.
5 Asset Management Capability
Investing in modern asset management systems can provide substantial value, however, there are different ways to do this. Centralised systems require excellent information systems, offering high performance and compliance but they can be expensive to establish. Distributed systems are quick to implement and responsive during crises but pose supervision challenges and the risk of local leaders capturing value. Organisations often use a combination of these approaches and adapt them to meet regulatory demands. This chapter introduces the asset management capability model, consisting of six factors. The following six chapters discuss each factor, with three determining the comprehensiveness required and three describing implementation strategies. Efficient asset management involves considering the significance of these factors across the organisation and for different asset groups.
6 The Business Climate in which Utilities Operate
“Business climate” is a term used in the book to describe the rigour of regulation and the nature of competition within the sector. An organisation operating in a demanding business climate can expect to swiftly suffer regulatory penalties or competitive losses when it fails to operate efficiently and effectively. The chapter concludes with an analysis of the factors which are indicators of an increasingly challenging business climate.
7 Utility Complexity
An explanation, and comparative benchmarking, of the complexity of modern utilities operating in different regions. The chapter concludes by exploring how the interaction between climate and complexity can create greater need (and difficulty) for the implementation of improved asset management capability. This type of analysis can be helpful when choosing asset management strategies which accommodate the characteristics of different national regulatory regimes, utility types and specific asset class.
8 Corporate Goals
The significance of the choice of different goals a utility may select based on their appetite for efficiency, effectiveness and the impact these issues may have on customer service. These choices are implicitly or purposefully made by senior management.
9 Asset Management Tools and Systems
A large chapter which defines the architecture of the tools used by utilities to create their asset management system. Successive sections review hints and tips utility executives may draw upon as they look for ways to enhance asset management capability.
10 Organisation and Organisational Design
A review of the key activities which utilities must undertake, and a review of the most common organisational approaches used by utility executives to form different organisational structures from these functional groups.
11 Teams and Team Working
This chapter explores the different types of ‘teams’ and ‘tribes’ that can exist in organisations and the factors within utilities which can aggravate or soothe interdepartmental relationships in modern utilities.
12 Conclusions
Finally, the links between the chapters throughout the book are explored with a focus on the asset management capability model, and data and information flows.
