Organization-Wide Physical Asset Management. Dharmen Dhaliah
looks excited, and he starts taking notes on his laptop as Darren speaks.
“The governance framework will be a key component of your physical asset management system that will ensure consistency in asset management strategies across the organization via the adoption of policies, practices, procedures, templates, and standard tools,” Darren explains. “A governance structure provides effectiveness and efficiency by constantly sharing reliable and relevant information in the asset management decision-making process through a standard approach and formal definition of asset management roles and responsibilities. The governance framework takes into account both the short-term delivery and the longer-term asset management system sustainability. The key objectives for an asset management governance framework can best be described as follows:
• To provide an organizational design that will strategize implementation of a physical asset management system
• To provide an organizational design that operationalizes integrated and comprehensive asset management practices across all functional areas
• To provide clear strategic roles and responsibilities for staff involved to enable and facilitate the transformation process as required
• To ensure consistency in asset management concepts and practices across the whole organization at the strategic, tactical, and operational levels”
“How do I get started with developing such a framework?” Jerry calmly asks. “I think this is what is missing in our organization, where I am constantly struggling to pull everyone together to dedicate time to work on the asset management program.”
“In Chapter 12 of my book, I talk about ‘ownership’ and the ‘ideal organizational structure’ to lead the implementation of and maintain a physical asset management system. It also elaborates on three different governance models and does mention the fact that a lot will have to do with the context of your organization. First of all, you will have to understand the external and internal context of your organization: What are the social, cultural, political, legal, financial, economic, and environmental factors having an impact on the strategic objectives of the organization? What are the organizational culture, values, size, complexity, policies, strategies, and capabilities driving the needs for a physical asset management system?”
Darren watches Jerry type on his laptop as he takes a swig of coffee.
“Then you will need to identify the stakeholders relevant to your organizational physical asset management system and understand their needs and expectations,” Darren says. “Make sure you consider both internal stakeholders such as the shareholders, owners, different departments, functional areas, and employees, in general, as well as external stakeholders such as customers, users, suppliers, contractors, regulatory authorities, and other agencies.”
Darren takes a pause and adds, “Mind you, the lists I mentioned to you are just examples. I would suggest you have a few sessions with your team at different levels in your organization to brainstorm and come up with a list of external and internal factors that would define your organizational context, as well as a list of applicable external and internal stakeholders with their needs and expectations.”
“This looks like quite a lot of work!” Jerry exclaims. “It will take quite some time to get this done.”
“I couldn’t agree more,” Darren continues. “I can guarantee you, though, that it will be time and effort well spent. At the end of this exercise you will get a pretty good idea of the context of your organzation, and, on top of that, you will have started engaging key stakeholders in the process. You will be able to recommend a governance structure that will fit your context. The governance model chosen will have to provide stakeholders with the necessary autonomy and flexibility to interpret, adopt, and implement physical asset management approaches and practices into their existing activities.”
Darren adjusts himself in his chair before cautioning, “Always keep in mind that the purpose of a governance model is to ensure that:
• There is an organization-wide common and standard approach to physical asset management.
• Roles and responsibilities of stakeholders are clearly defined and communicated.
In short, the governance model should embody the strategies, policies, and structures that provide the mandate for the strategic/tactical framework. This, in turn, structures the necessary procedures and practices to guide appropriate decisions and actions. Hence, you would want a governance structure that will engage key stakeholders at different levels in the organization as well as having a championing body that will endorse and support the physical asset management system.”
“Governance models can be different for different organizations based on their size, complexity, and context,” Darren adds as he reaches into his bag and pulls out a piece of paper and a pencil.
Jerry watches in silence as Darren starts drawing a few rectangles. After a few minutes Darren hands Jerry the paper (Figure 2.1).
“Here you go,” Darren says. “This is a governance model that I used in my previous job and worked pretty well. You can start playing around with it to adapt it to your organizational context.”
FIGURE 2.1 Centralized asset management governance model.
“Thank you so much, sir!” Jerry grabs the paper in delight. “This will definitely help me getting started.”
Right away Darren warns Jerry, “Mind you, Jerry, this is only an example of a governance model: a centralized corporate asset management office, and an asset management steering committee, and a decentralized asset management network team. The steering committee is responsible for giving directions and supporting the asset management initiatives, while the asset management office is responsible for developing and implementing an asset management system. The network team is responsible for rolling out and operationalizing the asset management initiatives.”
Darren leans over the table and clasps his hands as he says: “Your organization may require a completely different model that will suit your organizational context and ensure consistency and sustainability of your asset management system. It will also need to deliver expected results while maintaining a certain autonomy and flexibility for asset owners and operators to interpret and implement the asset management processes and procedures.”
Jerry looks at the sketch for a couple of minutes and then looks up with a smile. This indicates to Darren that he agrees and is on board with the concept.
“The next thing I suggest you focus on,” Darren continues,“is education and awareness.”
Jerry looks at him a little bemused.
“Yes, you heard it right,” Darren continues. “At this stage, it is of utmost importance to get to know your stakeholders and to engage them early on to set the tone for a collaborative and supportive environment across all the functional areas.”
Step 2: Develop an Asset Management Framework
“To do that, you need to reach out to the different stakeholders not empty-handed but with something to help them understand what asset management is, what you are planning to do, and where they fit in. At the end they should see how the whole process would benefit them in their day-to-day job. It is basically answering the obvious question, ‘What’s in it for me?’”
“This seems to be a reasonable thing to do—especially in my situation,” Jerry says. “I often get asked questions such as ‘What is asset management?’ or ‘Why do asset management?’ I do my best to explain, but I guess I do not do a good enough job as staff still look confused,” Jerry continues.
“Don’t be too hard on yourself,” Darren tries to encourage Jerry. “It’s not you; it’s just the way things have evolved