Affordable Readiness: Finding the Value of Assets
Making informed decisions regarding our nation’s assets requires knowing not just their condition or ensuring their compliance with standards, but understanding their true value to the mission.
BY JACK DEMPSEY, P.E., M.SAME
An essential element of an effective stewardship strategy for USACE Civil Works infrastructure is the development of an approach that maximizes the value to the nation from its existing assets, such as Pine Flat Dam near Fresno, Calif., while optimizing revitalization and recapitalization of that portfolio over the next 20 years. U.S. ARMY PHOTO BY JOHN PRETTYMAN
Asset management is, by definition, riskbased and mission-oriented. This emerging field of practice seeks to better achieve mission objectives using fewer resources—a necessary expertise in today’s constrained budgetary environment.
Whereas traditional life-cycle activities, such as planning, design, construction and facility management focus on the “what, where, when and how” of facilities, asset management is transformational. It cuts across these perspectives to focus on the “why” of facilities. This perspective is critical to ensure that all resource decision-making is mission and operationally oriented.
The organizing principle behind this is a concept known as Affordable Readiness, an approach highlighted in recent testimony by U.S. Department of Homeland Security (DHS) Chief Readiness Support Officer Jeffery Orner entitled “Saving Taxpayer Dollars: Freezing the Federal Real Estate Footprint.” Orner, who also serves as Senior Property Officer, appeared before the House Subcommittee on Economic Development, Public Buildings and Energy Management in May 2013. He emphasized the importance of this focus and DHS’ proactive development of smart strategies and methodologies to make better use of its 100-million-ft² real estate portfolio.
VALUATION AND EVALUATION
Affordable Readiness as an asset management approach considers three interrelated value propositions for resource decision-making.
- Organizational Performance. This links facilities and infrastructure to mission.
- Capital Performance. This evaluates investments based on their return on mission.
- Asset Performance. This evaluates the efficiency and effectiveness of maintenance programs.
A disciplined asset management program strategically applies these value propositions within an integrated framework that purposefully leverages traditional life-cycle management activities and highlights their contribution to achieving mission goals. When implemented effectively, missionoriented asset management changes the focus of budgeting, allocation and prioritization discussions from merely addressing narrow technical issues to important operational and performance-based outcomes.
In addition to DHS, several government agencies and private sector organizations are advancing mission-oriented asset management practices through the implementation of Affordable Readiness practices to help apply limited funding to support resources critical to their missions.
ASSET STRATEGIES IN FOCUS
The U.S. Army Corps of Engineers (USACE) Civil Works program is valued at more than $240 billion. It includes 11,750-mi of levees, harbors and inland waterways infrastructure that handles 78 percent by weight of all U.S. international trade, and produces 24 percent of our nation’s hydropower. This infrastructure is vital to our national economy and our national security. It also is aging and in need of investment yet highly underfunded commensurate to that need.
The Bureau of Land Management’s operational approach for the asset management of its roads program has helped the agency justify funding needs by prioritizing roads based on condition, conservation, access and how they benefit public recreational needs. PHOTO BY TERRY SHAPIRO
To make better use of resources, USACE is implementing an agency-wide asset management program. Its focus is founded on a systematic approach to maintenance management that integrates mission dependency and maintenance criticality using defensible performance standards linked to desired levels of asset performance. By linking mission, risk, consequences and “value to the nation” to assets and components, the program is able to focus on those critical assets that truly influence outcomes, and subsequently reduce the level of intensity on non-critical assets with a corresponding benefit in resource investment.
With the evolution of the Army National Guard from a strategic to an operational force, it must ensure its facilities can support the increased equipment and force structure requirements of its dual military and domestic mission.
A Senate Committee-directed study recommended that the Guard modernize its nearly 3,000 Readiness Centers throughout the United States and its territories. Readiness Centers provide critical training and support programs for soldiers, carry out command and control activities for both overseas and domestic missions, and are organized as forward deployed staging areas for any regional contingency when called upon by civil authorities.
The National Readiness Center Transformation Master Plan, prepared by Jacobs under the direction of the National Guard Bureau, incorporates a complex set of integrated federal and state-level requirements and presents an initial investment strategy with proposed funding amounts in a prioritized project list to correct the most critical facility shortfalls across the inventory of Readiness Centers. The plan presents asset information as a business case with a focus on quality, quantity, metrics and risk, while seeking portfolio optimization to create efficiencies. Payback and cost avoidances are factored into the Capital Investment Strategy by providing a range of funding alternatives that are holistically mission-oriented and affordable.
The Department of the Interior’s Bureau of Land Management (BLM) manages oneeighth of the country’s surface land area. BLM’s facilities are widely distributed, crucial to protecting the environment and supporting our economy. However, the agency averages just one employee for every 21,000-acres. This requires it to be very efficient, and over the years has led it to develop of one of the most attentive mission-oriented asset management programs in the federal government. For the last two decades, using a five-year cycle, BLM has systematically evaluated the relationship that each of its 61,893 real property assets has to its many missions in order to objectively resource decisions.
Los Angeles World Airports (LAWA), which includes LAX and three regional airports, is beginning a multi-billion dollar construction program that will renew parts of the airport and add 1.25-million-ft² to its existing 1.12-million-ft²—without incurring any increase in the available custodial or maintenance resources.
LAWA plans to expand its facilities without expanding its budget by incorporating best design, construction and commissioning practices, and by implementing a systematic maintenance management strategy. This strategy applies an asset prioritization process developed by Jacobs designed to enhance the reliability of assets critical to business (mission) performance with a higher reliability at a lower total operating cost. LAWA created a proactive maintenance management process based on “Net-Positive” Operations and Maintenance activities projected to lower costs more than 20 percent and significantly improve reliability. Resource decision- making is directly linked to LAWA’s objectives to provide safe, comfortable and efficient transit for the travelers and cargo.
These examples should no longer be considered outliers. Current budget austerity and global competition is forcing government agencies and all aspects of our industry to make better use of limited resources. Fortunately, evolving data management practices and supportive information technologies are generating rapid advancements in asset management.
Current budget austerity and global competition is forcing government agencies and all aspects of our industry to make better use of limited resources.
In order to make asset management programs truly mission-oriented, organizations must avoid limiting them by lifecycle phase boundary definitions. Instead, they need to stay focused on incorporating organizational performance, capital performance and asset performance. Asset management programs that retain their focus on these drivers ensure resource decision- making is integrated across all phases and is fundamentally mission-oriented and promoting Affordable Readiness.
The success of these recent asset management programs has yielded several tenets that can serve as guidance for organizations looking to initiate or advance a missionfocused asset management program.
- Success in moving to a mission-oriented program is greatly improved using a well-orchestrated strategy with a visible executive-level champion supported by real resource commitments.
- All change management efforts need a robust communication plan and must balance people, processes, IT systems and organizational capabilities tied to relevant, tangible objectives and criteria.
- It is important to establish a common lexicon of terms, definitions and standards associated with the identification, description and categorization of assets. This critical step promotes consistent reporting to internal and external stakeholders and customers; supports auditable management strategies and asset inventories; and enables resource decision-making across multiple mission sets, whole facility portfolios and across whole asset life-cycles.
- Work breakdown structures must support activity-based and asset-based costing. These structures help link financial, inventory and resource management efforts to include procurement actions, capital planning, design/construction projects and maintenance work orders.
- Understandable, consistent and repeatable methods must be used to quantify risk and to link resource decision-making to desired mission outcomes in ways that are clear and measurable.
THE WAY AHEAD
There is no single answer to defining a mission-oriented asset management program. Achieving Affordable Readiness depends on how a program fits and functions in alignment with an organization’s objectives, operational requirements, competencies and management practices.
Good resource decisions are built on risk analyses that consider mission consequence as the principal motivator as opposed to traditional methods that rely on condition or basic compliance with standards.
What is common with all successful mission-oriented asset management programs is that they concurrently apply the three interrelated value propositions (organizational performance, capital performance and asset performance) within an integrated decision-making framework. The ultimate goal: to better achieve mission objectives using fewer resources.