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Reaching for a world of customer focused asset management, whole life value and Totex

Osborne’s commitment to infrastructure is welcome but the world is changing. For infrastructure professionals just being “the builders” is no longer enough, says Antony Oliver.

Antony Oliver, Editor, Infrastructure Intelligence

“We are the builders”. The Chancellor certainly makes a rallying cry. 

While we can argue about the details it is unquestionable that George Osborne’ Autumn statement last week continued his support for infrastructure as the key to economic growth across the UK.

Yet it is increasingly clear that as the infrastructure sector delivers its long awaited multi billion pound programme of work to upgrade the rail, roads, water and power networks, it must start to become a great deal more than just the builders. 

"While it is welcome to see government maintaining capital expenditure in an attempt to “mend the roof while the sun shines”, clients are not always properly motivated to ensure that this investment reaps long term operational savings across the asset lifecycle."

Customer focussed asset management, whole life value and Totex driven investment is now becoming the clear mantra.

We heard it time and again from speakers at last week’s Highways UK conference and exhibition as they described the challenge facing the new Highways England body as it embraced the challenge of its five year investment programme, from Transport for London and local authorities wrestling with reducing Opex and from consultants and contractors keen to get “paid for the value they bring” to their clients.

We see it across the water and energy sectors as owners for alliances spanning multiple control periods to drive long term operational value from assets.

Then there was the Bowe report on Network Rail’s performance. Amongst the report’s many conclusions and recommendations it specifically referred to this need for greater focus on the end user.

“In planning how schemes are delivered and in focusing future investment there should be more consideration of passenger and operator priorities, with regard to both passenger and freight needs,” it said. “Network Rail should be challenged to prioritise consistently users’ needs when delivering enhancement works.”

Of course the challenge for public sector clients remains the accounting division between operational and capital spending. While there are very good reasons for having this differentiation it is clear that it can be counterproductive to a Totex focussed world.

"The world is changing. For infrastructure professionals just being the builder is no longer enough."

So while it is welcome to see government maintaining capital expenditure in an attempt to “mend the roof while the sun shines”, clients are not always properly motivated to ensure that this investment reaps long term operational savings across the asset lifecycle.

Yet as pressure on operational spend continues to grow and the UK’s infrastructure matures, this approach must change.

As this government rightly observes, decent infrastructure is vital to improving our standards of living, enabling business and to growing our economy. That means first constructing the assets in the most efficient and cost effective way.

But then crucially, it means maintaining and operating those assets to the maximum benefit and affordability for customers and users. 

The world is changing. For infrastructure professionals just being the builder is no longer enough.  

If you would like to contact Antony Oliver about this, or any other story, please email antony.oliver@infrastructure-intelligence.com.

Comments

A year and a half ago "radical" ideas to slim down expenditure, strip back use of un-necessary plant or reuse assets fell foul of the funding model and would repeatedly be rejected for non-compliance with the clients' standards. They wanted the innovation but would accept innovative designs. Now the world has suddenly changed and everyone's "sweating" assets as though its some-kind of novel approach. In 5 years time when the funding model changes again and these "sweated" assets are exhausted there will be a rush for replacement. I'm completely in favour of driving maximum value but this just feels like swings and roundabouts.