The coronavirus crisis is forcing businesses to look at risk and their approaches to risk management differently. Amid rapid change and deep uncertainty, business-critical decisions have to be made in the coming weeks and months that will have long-lasting effects. Strategic asset management has a critical part to play in steering the right course.
In addition to the immediate, short term impacts of COVID-19 that organisations are dealing with, there will be long-lasting effects. Some asset owners, particularly in transportation, are facing major revenue impacts. Others have logistics challenges, such as undertaking physical works while adhering to social distancing requirements. Others again can see opportunities but are unsure how to realise them – for example carrying out repairs, capital maintenance or improvements while the use of assets is low. Still more are looking at how to transition their operations to a possible ‘new normal’, delivering new services alongside former ones, or striking a different balance.
Challenges at a glance
Among the challenges arising from the coronavirus crisis, asset owners are having to contend with:
- Reduced revenue: at time of writing, urgent efforts are being made to rebalance books by cutting expenditure in line with reduced revenues. Many operators are running minimum ‘skeleton’ services and mothballing assets.
- Disrupted demand: changes in customer behaviours and use/demand patterns are most obvious in transport, education, health and retail, but no sector is unaffected. All are having to adjust their operating regimes and watch the effects on the performance of assets and/or personnel.
- Disrupted plans of work: from routine activities to long-planned interventions and major investments, organisations are looking to replan and reprioritise, but often with limited tools to assist them.
- Loss of personnel: staff are on paid leave under government-backed business support measures, such as furlough in the UK, and redundancies are expected.
- New work practices: ongoing project delivery and O&M activities are being adjusted to allow social distancing.
- Supply chain resilience: supply chains are already stressed – deliveries of components, materials and equipment have been disrupted, workers and key personnel are unavailable. It is likely that some suppliers and contractors will become insolvent.
Asset management techniques help develop the right strategy in the context of these drivers. “Strong asset management makes the tsunami of decisions easier. But for many the challenges of the next six months will be daunting. To make urgent choices quickly requires asset management, engineering, risk management and digital expertise,” says Mott MacDonald’s global lead for asset management, Sean Horkan.
What’s the right decision at the right time?
“When any plan is put into a crisis situation it’s bound to change, but that’s no reason for not having a plan,” adds Sean.
Alongside negative impacts COVID-19 is bringing some surprising opportunities. Organisations must respond to both, to deliver predictable outputs and desirable outcomes. Sean advises organisations to draw up scenarios, defining what ‘success’ will look like at three, six and 18 month horizons. The scenarios and plans for achieving success need to be reviewed continuously.
To aid decision-making in the face of change and deep uncertainty we have developed a tool called FUTURES, with the University of the West of England. It is designed to help organisations set a vision, plan and prioritise and can be used to set a short-term course of action as well as for long-term wayfinding.
1. Gearing up: Engage the right stakeholders and establish your objectives and needs. Stakeholders should include key information-holders, recognising that much knowledge about assets is ‘tacit’ – held by people.
2. Preferred futures: Define the outcomes you want to achieve at three, six and 18-months horizons, weighing service quality, safety, investment and revenue considerations alongside longer-term social, environmental, economic and technological goals, to produce a vision and high-level strategy that can guide you forward.
3. Opening out: Test the vision and high-level strategy against all plausible scenarios to assess risk. Consider demand, revenue, supply chain, staffing – and the effects of unexpected events like extreme flooding or summer heat, for example. This may involve tough investment, operational and staffing decisions, and negotiation with investors, lenders, insurers and regulators.
4. Options: Develop strong, realistic, forward-looking options for managing risks and realising the vision.
5. Closing down: With your stakeholders, examine how options would perform under different conditions – a second round of risk assessment – to develop a high level of confidence that selected options will deliver the desired outcomes.
6. Review: Monitor performance and review strategy in light of changing conditions. Assess progress towards your three, six and 18 month objectives. Re-run selected stages 1-5 if necessary.
Smart insights: Christchurch and Auckland wastewater overflow management
After New Zealand’s devastating Christchurch earthquake in 2011, our smart infrastructure platform, Moata, helped to identify pipe breakages. Data analysis enabled faults to be located and the severity of damage assessed. Repairs could be accurately prioritised, making best use of resources.
We’d deployed Moata to help Christchurch City Council tackle a growing sewer overflow problem, resulting from urban growth and ageing infrastructure. The council wanted to see how its sewerage system was performing in real time to improve efficiency and reduce overflow incidents.
Moata enables data to be collected from sensors at critical points of the water or wastewater network. Real-time asset performance data is combined with historic information on flow rates, water levels and pressures, hydraulic models and live meteorological data.
Moata scrubs, analyses and cross-references the data, creating an accurate visualisation of performance. Asset managers are automatically notified of performance anomalies. Moata also enables automated responses such as pipe closures or redirection for pre-defined incident scenarios.
More than a dozen authorities use Moata to monitor their water and wastewater assets, optimising performance and providing a better and cheaper service to end users. Moata also aids asset recovery in the event of major incidents.
Auckland Council is using Moata to power a public application called Safeswim. Swimming off Auckland’s beaches is one of the big attractions of living there. But after heavy rain, sewage from the combined sewerage and stormwater network sometimes overflows.
Improving infrastructure to prevent pollution is a long-term goal, but the city required a more immediate fix: people needed to know when and where the water was safe.
Safeswim tells you just that. Information from monitors installed at 10 key points across the wastewater network, combined with real-time tidal, river hydraulics and meteorological data, is fed into Moata, which analyses the inputs to predict when and where sewer overflows will occur, and which of more than 80 beaches across the area will be affected.
Auckland Council shares up-to-the-minute bulletins and maps with the public via the Safeswim app. It has not only enabled beachgoers to make informed decisions about where to swim; it has strengthened trust and opened dialogue between the council and citizens about where infrastructure improvements should be carried out and how much they will cost.
Targeted interventions: Network Rail earthworks policy development, condition assessment and prioritisation
Network Rail is responsible for around 200,000 embankments and cuttings across the UK. Most of these earthworks were constructed more than 150 years ago before the development of modern geotechnical engineering practices. During periods of extreme weather, and in the face of long-term climate change, they can be at risk of damage and failure.
We helped Network Rail to develop an integrated set of policies, procedures, standards and tools to plan for earthworks maintenance and renewal. It enables asset performance to be measured, relative to investment.
We developed, validated and implemented statistically derived hazard identification algorithms. We also conducted ground-breaking research and development into stability and resilience assessment and measurement, created evidence-based degradation profiles for earthworks, and developed tools to aid decision-making, including a whole-life cost model.
Our work enables Network Rail to invest more precisely in its earthworks assets to reduce both the likelihood and effects of failures, keeping trains and passengers safe.
Since its implementation, the number of potentially high consequence failures has declined, and there has been a 75% decrease in derailments attributable to earthworks.