Asset Management Manual
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3.1.4 AMP Development Steps

The proposed steps involved in developing the AMP are summarized and explained below.

Step 1: Develop asset inventory

The asset inventory or registry is a database or spreadsheet inventory of all assets within an asset group or service for which the asset management plan is being developed. At minimum, it needs to include pavement and bridge assets. Inclusion of other physical assets is recommended.

Step 2: Assess performance and failure modes (PIARC 2013)

1. Undertaking asset condition evaluation serves two purposes:

  • To identify maintenance and rehabilitation needs;
  • To monitor the health of the asset network.

To identify rehabilitation and maintenance needs, the condition evaluation must be timely (Usually annual or biannual) and detailed. Condition evaluation requires the identification of individual defects, such as transverse cracks in pavements, blocked drainage appurtenances, or roof leaks, and the evaluation of their severity and extent. Monitoring this detailed level of condition has several advantages, as follows:

  • Detailed condition information is made available for design of preventive maintenance and rehabilitation activities.
  • Types of distresses and the rate of deterioration are monitored for each asset to identify ways of improving current design and construction practices.
  • Better prediction of future needs and more accurate estimation of network condition and budget estimates are likely.

2. Assessing the condition of assets subject to regulatory-driven inspections follow specific standards for assessing condition.

Asset performance has the following three primary components:

  • Operating cost;
  • Utilization;
  • Condition.

Operating cost, utilization, and the condition of the asset should be known to estimate the timing of each of the following possible failure modes:

  • Economic failure likelihood and timing;
  • Capacity failure likelihood and timing against demand predictions;
  • Physical and functional failure likelihood and timing.

3. Evaluating economic failure: An asset has reached a point of economic failure when it is no longer competitive with asset options that are available in the marketplace for delivering the same or improved function. A business case including a lifecycle cost analysis of feasible alternatives is usually required before a change-out of the asset goes ahead.

4. Evaluating capacity failure: The asset does not have the capacity to meet its designed performance.

Step 3: Determine residual life

Residual life is determined once the likelihood and timing of the imminent failure mode is known. Residual life is the time left until failure and is particularly important for managing high-cost and high-risk (high-consequence) assets. A prediction of time to failure enables the asset manager to initiate a planning process for the renewal of the asset prior to incurring the costs and service-level impacts of failure.

Step 4: Determine lifecycle and replacement costs

Lifecycle costing (LCC) involves determining all costs of owning and operating the asset from planning through retirement or replacement.

The lifecycle cost of an asset is determined as follows:

LCC = capital cost + lifetime operating costs + lifetime maintenance costs + disposal cost − residual value

Lifecycle costs are largely locked in at the design stage, indicating that collaboration between operations, maintenance, and design staff is an essential requirement during the design of new facilities or the modification of existing facilities, as is the need for full lifecycle cost comparisons to be made for feasible alternatives.

Step 5: Determine future demand

This step provides an assessment of the potential impact of future demand on the transportation assets. 

Possible factors to consider to assist in the forecast of new demands may include:

  • Traffic growth or decline due to:
    • Population growth
    • Land use changed (e.g. urbanization)
    • Economic factors (changes in gross domestic product, increases or decreases in income, etc.)
    • Social changes (standard of living, urban or sub-urbanization, etc.)
    • Technological changes (connected and autonomous vehicles)
    • Alternative transportation (car sharing, car pooling, cycling, public transit, etc.)
    • Congestion (redistribution of traffic)
    • Political factors (transportation taxes, tolls and congestion pricing)
  • Environmental factors such as:
    • Climate change
    • Demand for infrastructure resiliency to disaster events such as flood and tsunami

Steps required to determine future demand:

  • Determine which factors drive the demand for service
  • Complete a forecast to determine demand
  • Assess risks and their impacts on the demand forecast

Typical reliability assessments of future traffic demand forecasting are:

Minimum:    Based on the experience of staff predictions with consideration of the knowledge of past demand trends and likely growth patterns.

Low:            Based on robust projection of a primary demand factor (e.g. : population growth) and extrapolation of historic trends. Assessment of risk associated with demand change broadly understood and documented.

Medium:      Based on mathematical analysis of past trends and primary demand factors.  A range of demand scenarios is developed (e.g. low, medium and high).

High:            Based on mathematical analysis of past trends and primary demand factors.  A range of demand scenarios is developed with the consideration of risk and the identification of mitigation options.

Step 6: Determine business risk (criticality)

This step identifies critical assets, which are those assets that are high cost and/or result in detrimental levels of service and significant consequences if they fail. By understanding where the greatest risks lie, it is possible to focus investment and attention where it matters most and actively mitigate against non-tolerable risks through the asset management planning process.

Risk exposure is calculated as follows:

Risk exposure = probability of failure × consequence of failure

Step 7: Optimize operations and maintenance investment

Optimization of operations and maintenance investment requires that strategies are actively considered for the purposes of meeting an asset’s service-level performance requirements. An informal survey by the committee as part of the development of this guide indicated that 6 percent of respondents undertook reactive maintenance only, and 46 percent stated that their maintenance was somewhat proactive but mostly reactive.

Step 8: Optimize capital investment

Steps 1 to 7 have provided the following information:

1. An asset register spreadsheet on which to build the asset management planning analysis;

2. Condition of each asset and likely failure mode;

3. Likely remaining life or timing of asset failure;

4. Current replacement cost of each asset;

5. Current and targeted levels of service;

6. Identification of critical assets using a risk exposure score calculation method;

7. Current and likely future operations and maintenance costs after reviewing maintenance and operations strategies to meet level of service targets.

Step 8 is to bring the data and information established in Steps 1 to 7 together to evaluate the best operation, maintenance, and capital investment strategies needed to deliver the required level of service at the best cost and level of risk exposure. This process is often referred to as optimization.

Step 9: Determine the best funding strategy

This step evaluates the available funding strategies to implement the asset management plan’s investment requirements determined in Steps 1 through 8.

Asset management staff provide the financial analysts with investment requirements represented in the funding “buckets” using the rules and policies established by the transportation agency for allocating costs to customers and other funding sources. An analysis of the impact of the charges for the proposed maintenance, operations, and capital expenditures required to meet the prescribed levels of service over the planning period should be included in the asset management plan. This information then represents the net increase (or decrease) in the cost of service associated with the plan.

Step 10: Document the asset management plan

Step 10 is the final step in the process and is concerned with the packaging of the asset management plan information into a form that communicates well with operators and executive decision makers.


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