Worldwide, Most Utilities have Created Asset Management Organizations over the past 5 to 10 years with the goal of better investing in building and maintaining these assets. So, why haven't we seen dramatic improvements in performance? Many in our industry lay the blame on their predecessors, citing the lack of investment in the grid by previous generations; others indicate that the age of the assets is to blame. Isn't this akin to a doctor suggesting there is nothing wrong with his medical skills that a healthier crop of patients wouldn't fix?

I would offer that we are missing two key components: leadership and accountability. We need our planners, engineers, asset managers and executives to set aside personal or self-seeking preferences and instead focus on making healthy investments to meet business goals.

Asset management is a philosophy and process that has seen wide acceptance in our industry. At its heart is the simple concept of making the best financial investments to achieve business objectives. Properly executed asset management has the power to drive the performance of our utilities to levels not previously attainable.

The widespread adoption of asset management in the United Kingdom, post privatization, was a major driver in the step change obtained in financial and operational performance. Certainly, there was the newly introduced profit motive that facilitated the changes; however, without asset management strategies, it is unlikely that the reductions in operational costs would have been matched by improvements in operational performance and reliability.

We need to recognize that we are accountable for the health of the system, in total, not just the component parts. We need to take the same view of the system as we expect our physicians to take when addressing our health.

DO WHAT'S BEST FOR THE PATIENT

We need our asset management tools to help us focus the limited resources available to maintain the health of the enterprise, but this can be very difficult within the existing utility culture. Utilities today are too often structured to create project advocates rather than patient advocates. Planners and engineers become die-hard advocates for their projects. This is understandable, as they put a great deal of work into taking their projects from the conceptual stage to the implementation stage. We can't afford to let individual projects cause us to lose our focus on the overall goals of the business.

Next, there are advocates for those who do the work. If there is insufficient work to keep all available resources busy, this set of advocates will seek to redo the plan. People advocates push for a realignment of the work to ensure there is sufficient work in each geographic area. While making such compromises for the sake of the workforce can be good, they tend to detract from the goal of doing the best for the patient.

Finally, there is the budget. In a culture that measures an individual's value by how many people or dollars he or she controls, it is easy to see why people would want to protect their budgets. In many companies, the annual budget dance is one in which everyone from the planning and project engineers to the senior executives identifies their set of desired investments. What is missing, in most cases, is a process that allows the utility to look at all of the investment options in a rational and dispassionate manner. Instead, everyone becomes, for any of the reasons cited above, advocates for our own sets of investments. Everyone thinks they know for certain that their set of investments represents the best-possible spending scenario, even when they have not fully reviewed the content of the other contributions to the plan.

This is akin to us focusing on high-tech knee replacements for a patient without realizing that the patient has emphysema and a heart condition. The knees are great, and undoubtedly will work very well, but are they really the most valuable intervention for that patient? What is really needed is someone who is an advocate for the patient and can pull together the specialists to determine the best combination of actions to restore the patient to the best health achievable.

In most utilities today, the CEO is the only individual clearly accountable for achieving all the business outcomes. We need to create balanced score cards and reward systems that incent people to look after the overall patient. We must all be willing to step back and make decisions in the best interests of the entire organization. We need executives who are willing to put the interests of the enterprise — our patient — first. If they do, team members will follow.

There is nothing we can't address with sound asset management strategies if we would all think like CEOs and put the health of our patients first.

---

Stewart Ramsay is involved in developing and implementing utility asset management strategies and tactics. He was the global practice leader with UMS Group, then an asset management executive at AEP and PG&E. smramsay@astound.net