According to the study, a large majority of organisations deliver less than 50% of the value of expected results from change management programs with the majority accepting the dilution of value and mediocre performance. It is arguable that these numbers could be extrapolated further across organisations and be representative of most organisations ability to deliver value from their asset portfolio. The study goes on to suggest that most executives understand the basics of change management, think hard about the right strategic programs, and choose skilled teams to deliver desired outcomes yet results and levels of service continue to wane, and objectives are often not achieved.

The research suggests decision making stakeholders have blind spots that undermine the process and required behaviours for successful change as they fail to understand inherent risk management. These concepts are akin to Concordia Asset Management’s view of the challenges faced by businesses, governments, and organisations the world over.

So, what is in the name Concordia?

In Latin, the essence of Concordia means to coordinate. It conveys the notion of mutual agreement and unity. The definition underpins optimal Asset Management as per the ISO 55000:2014 standard.

Value is delivered when strategy and execution align. It is through the coordination of commercial and technical decisions, backed by effective and considered leadership, that effective decisions are made towards achieving long term sustained delivery of value.

We define value delivery as the balance of pursuing benefits, at an optimal level of cost so that risk is managed effectively over the short and long term. The core objective being to deliver sustained and increasing value over the lifetime of anorganisation andits asset portfolio.

These notions and values are at the centre of every successful and winning team. In business this is essential. In asset management it underpins the very definition.

Why is asset management applicable to all organisations?

All organisations derive value from a physical asset portfolio and hence asset management (as represented in the ISO 5500X suit of standards) is applicable.

In the case of large manufacturers, miners, oil and gas and other industrial and infrastructure organisations, it is straightforward: large assets are at the core of operations and operational risk! However, even as we move through education, health and hospitality industries, to name a few, property and facility assets are still at the core of delivering the fundamental services that these organisations derive their value from. Further, looking to investment and financial institutions, while they primarily derive value from financial instruments, trading, derivatives, and other intangibles, at some point in the chain there is a link to physical asset portfolios.

Asset portfolios are therefore at the core of delivering value for all organisations. Hence, asset management is applicable to all organsiations. It assists with risk management, capital improvement, due diligence and the improvement in the management of critical assets, not to mention improved levels of service.

A broader view of asset management: it’s not just the assets!

The definition of Asset Management in the global Asset Management standard, ISO 55000, is:

‘The coordinated activity of an organisation to realise value from assets’

There are fundamental activities that need to be delivered to enable physical asset portfolios to deliver value, irrespective of the industry. Below are some examples:

Asset creation

During the project development stage in the early stages of the asset lifecycle, assets need to be created and installed. At this initial stage, assets should be established with operational readiness so they are set up to operate with the requirements to achieve the desired and targeted service levels and reliability. This ensures they achieve the outcomes and objectives for the intended return on investment when the project was initiated.

Operational readiness

Operational readiness means that the assets are established with the necessary maintenance programs, reliability activities and spares requirements to ensure that the potential failure causes are accounted for and mitigated against to avoid unacceptable levels of downtime.

Operations and maintenance programs need to be established so that operational efficiency is considered, and waste is kept to a minimum. This means that operations and maintenance personnel need to have the required skills and training necessary to ensure assets are operated effectively.

Securing reliability

Maintenance personnel need to also be trained and have access to resources, including personnel, spare parts, and financial resources, at the required levels to achieve the reliability and availability required to deliver the objectives and service levels intended from the assets.

To achieve optimum outcomes from these aforementioned activities requires considerable coordination and collaboration. It is often the case that there are significant improvement opportunities across these fundamental activities once an asset is operational. The task of optimising and coordinating these fundamental activities is further complicated by the drive to adopt new technologies and tactics with the expectation that they will be silver bullet solutions. It is most often quite the opposite.

Moving away from the asset centric and technical, the need for coordination in asset management is broader. It is an often-overlooked requirement

Organisations own assets to deliver value and to do this the output of the assets requires:

• Customers
• Sales & Marketing
• IT Support
• Finance
• Human Resource Management

These activities and personnel all compete for limited resources within an organisation which equally compete against the need for resources to support the functioning of assets so that value can be delivered.

We believe organisations fall short on achieving their objectives and the value intended from their assets because the optimal balance of resource allocation over competing needs pertaining the technical, commercial and strategic are not coordinated.

Furthermore, to achieve effective decision making across the varied pillars of an organisation requires effective and positive leadership – leadership that is unbiased, while at the same time values the input of all stakeholders; coordinating the commercial and technical for better outcomes.

What is meant by coordination?

Organisations require finance and people to perform the activities that go toward delivering value. The coordination of these activities requires prioritisation, prioritisation that will deliver more value and free up resources in the future to enable continuous improvement. Continuous improvement has the same effect of compounding interest or compounding benefits over time. It provides the hockey stick effect.

Concordia Asset Management’s view of the world is that while many strive to coordinate and achieve the best results for their organisations, it is seldom the case that true coordination is achieved. Not enough time or consideration is given to the nuanced challenges at each level within an organisation and across varying functions. The result is that decisions are made without full transparency and visibility of problems, which in most cases introduces risk that often is hidden until it eventuates.

In many instances, significant risk emanates from the core of where value originates from: the physical assets themselves. From experience, the destruction of value related to assets comes from the following areas:

• Suboptimal asset creation
  Time and budget pressures, suboptimal stakeholder needs analysis and project scoping can eventuate in asset creation projects being rushed. Corners are often cut, commissioning plans are not comprehensively undertaken in a rush to get the asset into service. Furthermore, in the pursuit of minimising capital investment, asset management activities such as the development of maintenance plans, training of staff and employees and establishing systems for robust operations are all under invested in.
• Unreasonable asset productivity targets
  Most often, these assets have been invested in on the assumption that they will meet stretch targets and objectives, be it productivity, profitability, service availability or customer usage. The pressure to deliver these targets with assets and systems that are not optimal places pressure on the assets to perform which in turn reduces their availability for necessary maintenance. With employees not receiving adequate training, bad habits are often introduced which leads to defects in asset operations posing reliability issues.
• Asset reliability spiral
  Reliability issues combined with the pursuit of increasing objectives puts further pressure on the time available to maintain assets. Maintenance is rushed as a result and hence defects are introduced, leading to further reliability issues and pressure on operations and maintenance.
• Increasing pressure on other organisational functions and competition for resources
  This then places pressure back on the rest of the organisation and other functions such as sales, marketing and finance which then strive for further improvements in output. This places more pressure on assets to deliver outputs and value towards the objectives, resulting in further pressure on assets and an exacerbation of the already fragile asset system.
• The allure and mirage of new technologies
• To place the system under more pressure, new techniques and technologies are introduced with the hope of being an anecdote to a fragile system. The introduction of new technologies into a fragile system can often further impede the challenges by introducing increased technology requirements on a stretched system which further draw away resources from the fundamentals that have still not been remedied since the inception of the assets.

In order to harmonise organisations and catalyse effective working methods, the above issues need be addressed from the outset and throughout the lifecycle of an asset. There are many competing moving parts combined with additional, often complicated stakeholder management requirements. Improved coordination and unity of business requirements as a whole, across all activities and functions, addresses this challenge. It requires coordination from the technical grassroots and asset facing level, through the commercial aspects of business while all being supported with positive and supportive leadership.

We equip businesses with the insights and tools to achieve this coordination – it’s also our difference in the asset management field where siloed solution delivery is common practice.

Contact us to learn more.