Global challenges in asset management
by Peter Richardson, Broadspectrum’s Chief Executive for Transport
Peter joined Broadspectrum in 2016 and is a Chartered Civil Engineer with more than 30 years’ experience in developing and leading successful transport infrastructure businesses worldwide. Peter is currently responsible for Broad spectrums Transport portfolio which includes the operation and maintenance of road and rail assets across Australia and New Zealand including M2/Lane Cove Tunnel, Logan and Brisbane Gateway Motorways, Eastlink Motorway, Sydney Airport Rail Line, Brisbane Airport Rail Link Lane and the operation of Light City Buses in Adelaide.
Peter has been part of the Ferrovial Group for 8 years, including four years in the UK running Amey plc’s roads maintenance operations and four years as Territory Director for Amey Consulting in Australia. Key contracts include key strategic asset management and stewardship contracts for RMS in Sydney South Zone, South Coast Zone for DTMR Queensland and the design of M4 Smart Motorway in Sydney.
Peters experience spans a wide range of transport activities in asset management, design, construction, maintenance and operations. Significant overseas projects have included involvement in the Transport for London, Underground PPP and operations, the maintenance and upgrade of Network Rail’s Northern Infrastructure region, and Sheffield Streets Ahead a $4bn PPP rehabilitation and upgrade Sheffields road Network.
Peter enjoys close links with other Ferrovial companies and is currently working with Netflow (a Cintra/Plenary company) on proposals for the Melbourne Outer Suburban Roads PPP
Whenever I think about the challenges in asset management that we face at a global level, the first think that pops up in my mind is the safety of everyone who interacts with the assets. This is a large group of people, from the construction workers, to the users, to the people who provide maintenance – and in every case, safety is paramount.
This thought takes special importance considering some eye-opening statistics: In the US, over a 45-year career, a construction worker has a 75 per cent likelihood of experiencing a disabling injury and a 1-in-200 chance of being fatally injured on the job; while in China, the relative number of fatalities at work is around two thirds greater than the in US.
And that’s just the workers.
Around 1,000 everyday users, passengers and commuters around the world are injured on trains each year in incidents that are, at least in some part, attributable to asset condition. This number pales compared to that of roads, though, where 1.25 million people lose their lives each year worldwide.
As asset managers, we can’t control people’s actions; but we can do our best to make our assets safe, and to help educate those who use them to be safer. This approach is widely taken in Europe, where the roads in the UK and Sweden are considered very safe, with fatalities’ statistics of below three people in 100,000. I think that just one road-related fatality is one too many, and even though 50 per cent of asset operating expenditure (OPEX) is related to safety, there is still much more that can be done.
On this regards, strong leadership is critical to the success of any safety initiative.
A quick example of this: Kings Cross is an inner-city locality of Sydney, New South Wales, Australia. It’s party-central at night, and it can become a little wild. To increase safety, the local government established legislation that required 1:30 a.m. lockouts and 3:00 a.m. last drinks at bars.
Needless to say, there was a huge uproar from the night-goers and establishment owners against the controversial law. However, the government stood its ground, and the statistics supported the decision: Assaults in Kings Cross were reduced by 50 per cent, meaning that over 600 people went back home with a great memory of the nightlife in inner-Sydney – if they didn’t party too hard, that is.
The law was controversial, but the resolve demonstrated by the government to improve safety in the face of significant backlash is commendable.
It is up to us to think what this level of commitment might look like in our industry. Maybe it’s complete closure of roads to protect road users and workers during maintenance activities; maybe it’s the evaluation of safety over price in your procurement processes; or maybe it’s the introduction of new technologies to protect people throughout the asset lifecycle.
Which takes me to the second challenge in asset management: the use of technology.
We all can relate to the pace that technological change is occurring. Our eclectic team of economists, data scientists, mathematicians and engineers are helping our clients improve the reliability of services by pushing the boundaries of real time, asset condition assessment and failure prediction.
Technology also encompasses material innovation. The examples are what could have been considered science fiction only ten years ago: self-repairing concrete and asphalt, the introduction of modular roads made from recycled plastic bottles, the fusing of materials and electronics to generate renewable energy from ‘solar roads’. This trend is common across all industries, and shows no signs of slowing down.
I’ve been lucky enough to work in the creation of smart or connected infrastructure using the so famous Internet of Things (IoT), and see the benefits first-hand. At Broadspectrum, I have seen savings in OPEX costs of more than 20 per cent through the introduction of technology enabling optimised, risk based maintenance.
This introduction of more technology into the asset life cycle takes us to the third challenge in asset management: a new skilled workforce.
The skills we require to deliver effective asset management today are very different to what they were five years ago, and will be different again in five years’ time. This talent needs to be developed, and the closest experience of seeing this happening comes from ross pollinating sectors: take a modeller from the banking industry, pair them with a track engineer, and after six months or so we start to see the magic happening and experience a step change in our capability.
The necessity to re-skill and adapt people to meet business needs is very real. I don’t think we will see mass unemployment, even though many of the current jobs are increasingly being done by machines, but we are already experiencing the shift of skills and the creation of new types of jobs.
These new positions can work with the IoT, to read and analyse Big Data, to forecast trends and reduce risks, ensuring the optimal functionality of the asset.
This takes us to the fourth challenge in asset management: ensuring the security of the smart services we provide.
Three Control Centres in Western Ukraine distribute power to the Ivano-Frankivsk region and, digitally speaking, they are considered as were very well protected. Despite this, in December 2015, hackers successfully disabled the national power grid from a remote location.
The attack disabled the control centres’ phone lines, the uninterruptable power supplies at the control centres, and replaced the firmware of the industrial IoT devices used to control the distribution infrastructure across 16 substations effectively destroying every connected device and preventing them from being used again. On their way out, the attackers released a piece of malware called KillDisk, destroying the hard drives of all the control centres’ computers and preventing them from coordinating a response.
The power was restored manually in less than six hours. The teams had to visit each of the 16 substations and manually re-enable equipment. Despite all their preparation and digital security, the attack was so effective that the control centres have still not fully recovered.
One thing about ‘smart’ assets is that the people in charge of them and the processes to ensure business continuity must also be ‘smarter’.
Technological attacks are not the only ones that affect the integrity of smart assets. There’s also global factors such as climate change. In my own experience, weather is becoming more unpredictable and storms more severe. In Australia, projections show that there may be a 60 per cent increase in severe storm intensity by 2030 and a 140 per cent increase by 2070.
Here is where ‘smart’ goes beyond big data and goes into design. Acknowledging the increased probability of floods, the Government of Queensland, Australia, has implemented new ferry terminals with features that usher in resilience and longevity even in the face of natural disasters, allowing the terminals to be returned to operation shortly after significant flood events. The project has won the Sir William-Hudson Award, the highest accolade for a project from Engineers Australia.
How do we go about all these changes and innovations? Well, it takes a bit of money, which is a resource that is becoming more scarce that fresh water. This takes me to the last global challenge to asset management: historical under-investment.
Australia is one of the few developed countries still investing heavily in new assets. In other latitudes, the ability to fund new assets has long since passed. Capital expenditure (CAPEX) and OPEX budgets have been cut in hard times, and the easiest solution was a reduction in the required level of service, leading to maintenance and renewal backlogs.
High profile incidents such as the failure of I-35W in Minneapolis, Minnesota in 2007 are very public demonstrations of how poor asset management decisions can lead to catastrophe. The American Society of Civil Engineers, which gives America’s infrastructure a grade of D-plus, has identified they would need to spend $3.6 trillion by 2020 to bring it up to scratch.
How do we surmount these challenges?
I’ve mentioned that strong leadership to make sometimes difficult but right decisions is necessary. This also means that regulations and standards, far from being challenges themselves, are key solutions to these global challenges – we need to ensure that they adapt successfully to a changing asset base, play a central role improving safety, manage climate change, provide required funding to deliver services, and evaluate the value of technology to society so it is not blindly implemented with the risk of repeating events such as those in Ukraine.
Clients expect more for less, due to re-organisation processes or because the industry demands it. It is our job to deliver, with innovation, new technology, new processes, better ways to do things and, above all, safely.
Most of these challenges are a result of the progress we are making as a global civilisation and, as such, these challenges are not insurmountable. I’m sure many of you are already actively engaged in developing solutions. Personally, I’m excited about how the asset management community is both driving and embracing change. I’m also grateful to be engaged in several innovative projects that will push current boundaries, introduce step-changes in how we do things, and contribute learnings to the wider asset management community.