Asset Management Models - A Decade On

User: mikelevery
Date: 24-01-2013 4:14 pm
Views: 2957
Rating: 7    Rate [

Since the turn of the millennium, asset management has grown in popularity, particularly through the introduction of BSI:PAS55 through the Institute of Asset Management.  The hierarchical model of asset owner:asset manager:asset operator:service provider was very much the flavour of the month at that time.  However, as organisations tried to align themselves to this model, they found themselves placing maintenance in the service provider role.  It didn't take long to realise that this form of model was unsustainable.  

In the water industry, what has developed since is a range of different asset management models, all of which still fail to recognise the importance of maintenance in influencing capital investment.  The water industry regulator, Ofwat, has applied its own financial model for the current asset management period 2010-2015, which unwittingly has forced companies to reduce maintenenace expenditure.  The outcome has been a rapid deterioration in pollution incident performance leading to Ofwat in 2012 to state "We are concerned that there may be a link between the performance of companies in this area and how well they are maintaining and managing their assets".

How will this situation be resolved?  The article not only examines financial solutions, but also questions the long term validity of the current privatisation model for the water industry and other utility sectors.