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Role of a Sound Asset Management System in Life Cycle Program Management

FEATURED PAPER

By Bob Prieto

Princeton, New Jersey, USA
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In my most recent book, “Application of Life Cycle Analysis in the Capital Assets Industry1, I highlight that life cycle program management is an area of growing focus and importance across all industries. This life cycle focus must not only be “cradle to grave” but also holistic, addressing each of the Triple Bottom Lines. This paper looks at one aspect of this life cycle based program management approach and reflects experience as a provider of a comprehensive range of asset management services to a broad cross section of industries. This experience base includes a growing focus on infrastructure asset management driven by our role in planning, designing, building, financing, operating and maintaining road and rail systems delivered under a Public Private Partnership model. Under PPP’s we assume many of the life cycle roles and responsibilities traditionally solely within the purview of the public sector.

While our asset management experience is much more extensive in various federal government and industrial facilities, we are seeing a convergence across all the markets we serve towards this more holistic, life cycle approach to capital asset portfolio design, initial delivery and the balance of a cradle to grave life cycle. Importantly, we see this perspective encompassing all three of the bottom lines comprising the Triple Bottom Line we associate with sustainability. The introduction of this broadened perspective is starting to shift life cycle considerations from a good business practice to a significant business imperative.

Let me mention one other dimension that is increasingly coming into play and that is totally reliant on strong asset management practices. This is a system performance dimension that manifests itself as business continuity in the private sector but is more closely akin to resilience in public, and for that matter, privately owned infrastructure.

This paper focuses on five questions:

  • What is asset management?
  • What are the characteristics of a sound asset management system?
  • What impediments or obstacles exist with respect to achieving its strategic intent?
  • What are the tactical challenges that exist?
  • How do we define and achieve success?

What is asset management?

The classical definition of asset management is the management of fixed capital assets to minimize the total cost of owning and operating them, while providing the desired level of service at an acceptable level of risk. Typically risk is calculated as a cost and often not managed separately.

I will suggest that increasingly this definition will prove inadequate or at the very least incomplete. We are seeing a shift towards what I would call “life cycle analysis” where:

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About the Author

bob prietoflag-usaBob Prieto

Senior Vice President

Fluor

Princeton, NJ, USA

Bob Prieto is a senior vice president of Fluor, one of the largest, publicly traded engineering and construction companies in the world. He is responsible for strategy for the firm’s Industrial & Infrastructure group which focuses on the development and delivery of large, complex projects worldwide. The group encompasses three major business lines including Infrastructure, with an emphasis on Public Private Partnerships; Mining; and Industrial Services. Bob consults with owners of large engineering & construction capital construction programs across all market sectors in the development of programmatic delivery strategies encompassing planning, engineering, procurement, construction and financing. He is author of “Strategic Program Management”, “The Giga Factor: Program Management in the Engineering and Construction Industry” and “Application of Life Cycle Analysis in the Capital Assets Industry” published by the Construction Management Association of America (CMAA) and “Topics in Strategic Program Management” as well as over 450 other papers and presentations.

Bob is a member of the ASCE Industry Leaders Council, National Academy of Construction and a Fellow of the Construction Management Association of America. Bob served until 2006 as one of three U.S. presidential appointees to the Asia Pacific Economic Cooperation (APEC) Business Advisory Council (ABAC), working with U.S. and Asia-Pacific business leaders to shape the framework for trade and economic growth and had previously served as both as Chairman of the Engineering and Construction Governors of the World Economic Forum and co-chair of the infrastructure task force formed after September 11th by the New York City Chamber of Commerce.  Previously, he served as Chairman at Parsons Brinckerhoff (PB), one of the world’s leading engineering companies.  Bob Prieto can be contacted at [email protected].