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The Essence of

Asset Managemen
Managementt
Hey, you know what?
We have First World
Infrastructure, but
we also have a great
Third World life, lah !

A Guide
KC Leong

Published by

United Nations Development Programme (UNDP) Kuala Lumpur


In association with

Eastern Regional Organisation for Planning and Housing (EAROPH) and


Asia Pacific Institute For Good Asset Management (APIGAM)

The Essence of Asset Management


A Guide

K C Leong

Published by

United Nations Development Programme (UNDP) Kuala Lumpur


In association with

Eastern Regional Organisation for Planning & Housing (EAROPH)


And

Asia Pacific Institute for Good Asset Management (APIGAM)

The Essence of Asset Management A Guide


Published by UNDP-TUGI Kuala Lumpur
In association with
Eastern Regional Organisation for Planning and Housing (EAROPH), and
Asia Pacific Institute for Good Asset Management (APIGAM)

KC Leong, 2004. All rights reserved


EAROPH-APIGAM
Level 4 Block K
Ministry of Housing & Local Government
Pusat Bandar Damansara
50644 Kuala Lumpur
Tel: 60-3-2092-5217
Fax: 60-3-2092-4217
Email: kcleong@earoph.net

Perpustakaan Negara Malaysia Cataloguing-in-Publication Data


The Essence of Asset Management A Guide
by KC Leong
ISBN 983-40995-2-5

Page layout and cover designs


KC Leong
Cartoons
Supplied by TUGI
Printer
Far East Digital Prints Sdn Bhd, Kuala Lumpur

II

CONTENTS
Foreword

Introduction by EAROPH President and Chairman of APIGAM

XII

Preface

XIII

Review The Panel

XVI

Dr Penny Burns, Dr Graeme Frecker, Dr Gill Kay, Datuk Dr Dzulkarnain, Ms Ami Sudjiman,
Mr Ashay Prabhu, Mr Eric Cole, Dr Nurul Amin and Dr Vilas Nitivattananon

Chapter 1

Chapter 2

Chapter 3

The Basics about Assets

1.

Some Myths about Assets

2.

What are assets and infrastructure?

3.

No Physical Assets, No Services

4.

Can physical assets be liabilities?

5.

Asset Life Span and Life Cycle

6.

Multiple Life Cycles of Assets

7.

Asset Deterioration Characteristics

10

8.

The Quality of Life depends on Assets

12

9.

Asset FailuresChain Reactions

13

10.

We need Asset Management

15

Asset Management Principles

17

1.

What is Asset Management (AM)?

18

2.

The Fundamentals of Asset Management

19

3.

Other Factors concerning AM

24

4.

Ultimate Outcomes of Asset Management

25

5.

Whats in it for the Community?

26

The Living World

29

1.

Natures Living World

30

2.

Cities as Living Systems

31

3.

Systems Thinking and Systemic Asset Management (SAM)

33

III

Chapter 4

Chapter 5

IV

Systemic Asset Management

37

1.

Systemic Urban Management Process

38

2.

The Complete SAM Process

40

3.

Step-Power Process for Complete SAM

41

4.

Step-Power 1 Asset Objectives

44

5.

Step-Power 2 Asset Knowledge: The Asset Register

45

6.

Step-Power 2 Asset Knowledge: Asset Valuation

48

7.

Step-Power 2 Asset Knowledge: Life Cycle Costing

49

8.

Step-Power 2 Asset Knowledge: Asset Pricing

53

9.

Step-Power 2 Asset Knowledge: Learning from the Past

54

10.

Step-Power 3 Asset Skills: Four-Phase Life Cycle AM

55

11.

Step-Power 3 Other Skills for Lifecycle AM

60

12.

Step-Power 4 Asset Tools: ICT Hardware and Software

62

13.

Step-Power 4 Asset Tools: ICT Networked Intelligence

63

14.

Step-Power 4 Asset Tools: Checklist

64

15.

Step-Power 4 Asset Tools: Sensitivity Tests

65

16.

Step-Power 5 Asset Decision-Making: Network Analysis

70

17.

Step-Power 5 Asset Decision-Making: Simulation Games

72

Asset Maintenance

77

1.

What, why, when of Maintenance

78

2.

Timely maintenance

80

3.

Factors affecting asset maintenance

83

4.

Types of asset maintenance

86

5.

Planned versus unplanned maintenance

89

6.

Technology, research and training

90

Chapter 6

Chapter 7

Chapter 8

Chapter 9

Chapter 10

Good Urban Governance and SAM

95

1.

Capacity building under TUGI

96

2.

UNs Millennium Development Goals and SAM

99

City Revitalisation and SAM

103

1.

Managing cities cycles of change

104

2.

Managing with SAM Step-Power

107

3.

Municipal ties and collaboration

111

4.

Continual inner-city revitalisation

113

Poverty Reduction and SAM

115

1.

Reliable public services for the poor

116

2.

AM to address the Brown Agenda

117

3.

Improving community health

118

4.

Better funding strategies

120

5.

AM knowledge empowerment

121

Converting Wastes to Assets

123

1.

Introduction

124

2.

Solar Aquatics Septage System

125

3.

Land Filter Recycling Sewage Effluent

126

4.

Onsite Greenbelt Effluent Disposal System

127

5.

Sawdust Compost Toilet System

128

6.

Solid Waste to Compost Earning for the Poor

130

7.

Rotomilling for sealing rural roads

131

SAM for Road Management


1.

The Victorian Government approach

133
134

Chapter 11

Chapter 12

SAM for Home Asset Management


1.

Essentials of a quality house

146

2.

Life cycles of home buildings

147

3.

Home AM for maximising asset values

148

4.

Home free from health-risks

156

A Maintenance Culture
1.

Chapter 13

VI

The investigation of AM failures

Legislative Framework for AM


1.

Chapter 15

A Caring Society and Maintenance Culture

Forensic Asset Management


1.

Chapter 14

145

Australian and New Zealand models

AM in the Asia Pacific Region

163
164

169
170

173
174

181

1.

Introduction

182

2.

Australia and New Zealand

183

3.

China

186

4.

Fiji

187

5.

India

188

6.

Indonesia

192

7.

Japan

194

8.

Korea

195

9.

Malaysia

197

10.

Philippines

199

11.

Thailand

202

Chapter 16

Chapter 17

Promoting AMEAROPH-APIGAM

205

1.

A brief history of EAROPH

206

2.

APIGAMs founding

208

3.

Vision, Mission and Programmes

210

4.

APIGAMs funding

211

5.

What is APIGAM to Countries in Asia?

212

6.

How will APIGAM benefit Asia?

213

Whats Your Next Move?

215

1.

Asset Management is for EVERYONE

216

2.

Where do we go from here?

217

18

Abbreviations and acronyms

218

19

Glossary

220

20

References

236

VII

LIST OF FIGURES

VIII

1.

Normal life span of a physical asset and its deterioration rate

11

2.

Asset Failure ChainReactions within a single asset system

13

3.

Asset Failure ChainReactions within multiple asset systems

14

4.

An Integrated Asset Management Process for Sustainability

25

5.

Natural ecosystems

30

6.

Shift from Objects to RelationshipsSystems Thinking

34

7.

Whole-of-life from conception to end-of-functional life of an Asset

39

8.

Complete Systemic Asset Management Solution for Success

40

9.

SAM Step-power Process

42

10.

Two Samples of e-Asset Register

47

11.

Projected whole-of-life Cost Profile of a Public Toilet Block

51

12.

Long-Term Roadwork Maintenance Costs Profiling

52

13.

Lifecycle Asset Management Process

55

14.

Example of part of a simulation game for solving optimization


problems and decision-making support

74

15.

Effects of Timely Maintenance and Repair

81

16.

Types of Maintenance

86

17.

Cost relationship between planned and unplanned maintenance


systems

89

18.

City Revitalisation through the SAM Step-power Process

107

19.

The SAM Step-power Process in action for Urban Renewal


Sustainable Results

110

20.

Solar aquatics septage treatment system

125

21.

Waste water renovation and conservation cycle

126

22.

The Onsite Greenbelt Disposal system for plant support from septic tank
effluent

127

23.

Cross-section of Sawdust Toilet Humanure Receptacle

129

24.

The continuous cycle of aerobic compost making

129

25.

Functional Time Life of a Home Building

147

26.

Economic Time Life of a Home Building

147

LIST OF TABLES
1.

Footpath maintenance service levels

11

2.

Suggested ways of revitalising city centres

13

3.

VicRoads Response Code and Road Risk Action Response

14

4.

VicRoads Hazard Inspection Type and Frequency

25

5.

VicRoads Hazard Response

30

6.

Example of Proactive Maintenance Schedule for Home Assets

34

7.

Common Household Moulds and Their Effects

39

8.

Some examples of hazards in home assets

40

LIST OF CASE STUDIES


1.

Water Burned the Forest Down

69

2.

Legionnaires disease: The case of the Melbourne Aquarium

119

3.

Solar aquatics septage treatment system

125

4.

Pennsylvania State Universitys Study on Recycling Sewage


Effluent through Land Filter for Reuse by Forests

126

5.

The Onsite Greenbelt Disposal system for recycling septic


tank waste water effluent for plant growth while preventing
groundwater contamination

127

6.

The Joseph Jenkins Wonder Sawdust Toilet Compost System


for Turning Waste into Organic Fertiliser

128

7.

Waste Concerns Solid Waste Recycling Community Schemes for the


production of compost for farmers are providing positive employment to
the poor in Bangladesh

130

8.

Rotomillings for Sealing Rural Roads

131

IX

ESSENCE

FOREWORD

ASSET MANAGEMENT

sset management means different things to


different people. To the layperson, asset
management tends to connote financial
asset management, that is, how to manage the fixed
and liquid assets that she/he might own, and how to
invest between the different assets. By contrast, in
development, sustainable asset management deals
with the linkages between investment and
sustainable development. This area chiefly focuses
on creating investment policies, including private
sector activities, guidelines and advocacy for
sustainable investment.
The Essence of Asset Management deals with a
topic that is close to the heart of every citizen:
managing public assets in an optimal manner. What
constitutes public assets? In addition to monuments
and heritage buildings, public assets include roads,
public transport systems, garbage collection, water
and sanitation systems, recreational areas, forests
and green areas in densely populated areas, power
supply, public housing, schools and hospitals, that is
the vast network of infrastructure that supports,
sustains and underpins cities. These are
predominantly managed by local and central
governments and constitute a major investment
over many generations. Municipalities manage the
worlds largest portfolio of public assets on behalf of
their citizens. The point of intervention for the care
and maintenance of public assets is at the local
government level. Good public asset management
creates better performance delivery by local
governments for their constituents.

Local government service delivery is the litmus test


of a governments responsiveness to its people. It is
in this area that governments often fail in terms of
the quality of water delivery, collapse of bridges or
flattening of hills for high-rise buildings. It is
essential to recognise that public service is
delivered through the physical assets under the care
of local governments. When the assets are
combined with funding and human resources, they
deliver a community service. However, when the
service delivery is not as expected it is because an
asset fails to perform the service at all. Then such
an asset becomes a liability to the stakeholders and
should be disposed of or brought up to the mark by
renewal or improvement. Poorly designed or poorly
maintained assets can pose a danger to human life,
as in the case of the Carley Building tragedy in
Kowloon.
The key reason that local governments fail in their
service delivery is that they lack the knowledge and
the systems to manage and maintain these assets.
Currently, all local governments have asset
portfolios but sometimes local government
departments have little information about their
assets, their condition or what maintenance is
needed to keep them functioning well. Without this
information, local governments are not able to plan
for maintenance or renewal which can place the
sustainability of community services at risk. When
maintenance is long overdue, or when assets
expire, the safety and security of the community
may be threatened.

ESSENCE

Though asset management is a science which is


only 15 years old, there is increasingly more interest
in it. At present, there is only a handful of national
governments that are pursuing asset management
policies: Australia, New Zealand, the US, Canada
and the UK. In the Asia Pacific region, asset
management is relatively unknown but interest is
already stirring. Over the past 20 years, countries in
the Asia Pacific have invested a great deal in
infrastructure. However, there is a dearth of
knowledge and expertise on how to maintain and
manage these public assets and this tends to result
in fast deterioration of assets.
There is a pressing need for training and capacity
building for local governments in public asset
management. This is one of the reasons that the
Malaysian Ministry of Housing and Local
Government as well as the East Asian Regional
Organisation on Planning and Housing (EAROPH)
approached UNDP-TUGI to initiate the first steps.
The former Deputy Prime Minister of Malaysia (who
is the present Prime Minister), Datuk Seri Abdullah
Ahmad Badawi opened the first national conference
on Asset Management in September 2003 and

commented on the need for the nation to pursue a


maintenance culture with regard to public assets.
Asset management is based on, and reinforces, the
principles of good urban governance. It establishes
a system that ensures accountability and
transparency, it helps local authorities take care of
infrastructure that delivers services to their citizens
more effectively and efficiently, and it helps create a
community of citizens who have a stake in the
assets of their country.
Asset management is directly linked with the
Millennium Development Goals (MDGs) of poverty
and
environmental
sustainability.
Asset
management helps communities, especially the
urban poor, recognise and leverage the different
assets they possess. Asset management also
achieves, indirectly, significant improvement in the
lives of slum dwellers.
It is hoped that the ideas of asset management
presented in this book will spread far and wide and
germinate new good practices in the area of
managing public assets.

Richard Leete
Resident Representative
United Nations Development Programme
for Malaysia, Singapore & Brunei Darussalam
1 September 2004

XI

ASSET MANAGEMENT

As asset management is gradually adopted, urban


management becomes increasingly efficient and
effective, thereby achieving Urban Sustainability. In
attaining such a situation, a local authority or city
government is entitled to be proud of their
achievements through the performance-oriented
Good Urban Governance. Citizens should also be
proud of the urban administration and authority
when they continuously enjoy a high quality of life.

ESSENCE

INTRODUCTION
By EAROPH President and APIGAM Chairman

ASSET MANAGEMENT

he new Millennium proves another turning point in the


history of EAROPH since its inauguration in Tokyo 44 years
ago in 1960. One of the objectives of EAROPH is to bring
technocrats in both the public and private sectors in the
EAROPH Region together to meet, to discourse and to enrich
each other with latest experiences and knowledge to strengthen
the human settlements in each member country. For that, many
have mocked wittily that EAROPH is another one of those C to
C international organisations, meaning they only meet from
conference to conference and do nothing else. However, since
the year 2000, EAROPH has been actively promoting Good
Asset Management in the Region and with its Asset
Management Resource Group EAROPH has been able to
conduct specific seminars and workshops in many countries
around the EAROPH Region.
EAROPH is fortunate that many of its life members are also AM
experts. As a result, the Resource Group was able to work
closely with other international organisations, especially UNDPTUGI, CITYNET, IULA, ESCAP, UNEP, and some governments
to support the implementation of Good Urban Governance.
In this respect, EAROPH would like specifically to put on record
their appreciation of UNDP in Kuala Lumpur for their staunch
support and assistance, as without their initiative and
encouragement, EAROPH would not have been able to
establish the Asia Pacific Institute for Good Asset Management
(APIGAM). EAROPH is equally appreciative of UNDP for
commissioning EAROPH Honorary President Mr KC Leong
under a Special Service Agreement to promote AM in the Asian
region, to establish APIGAM and to author this book The
Essence of Asset Management: A Guide. In this regard,
EAROPH would like specially to thank Ms Maxine Olson, Dato
Anwar Fazal, Ms Erna Witoela, Mr Anis Yusal Yusoff and Ms Sri
Husnaini Sofjan at UNDP.

XII

The author of this book Mr KC Leong is one of EAROPHs most


senior executives who has been and still actively serving
EAROPH since 32 years ago in Seoul when he was appointed
to serve in the Executive Committee. KC has been promoting
AM in EAROPH for the last eight years. Today as CEO of
APIGAM, he is leading an active group of international AM
experts to provide technical support and technology transfer
through APIGAMs unique Systemic Asset Management (SAM)
Programmes, not only in Malaysia, but also in many developing
countries in Asia. Being an active Forensic Asset Management
consultant himself, and with his vast experience and wide
knowledge in sustainable human settlement planning and
management, he is the right person for UNDP to single out to
author this very first comprehensive Guide in Asset
Management for both the community asset users and the asset
providers and decision-makers in public office. The book
contains a wealth of AM information and knowledge which is
specifically designed to benefit both the layperson and the AM
professional. This is a book that every EAROPH member would
like to get and keep as an essential guide to Good Asset
Management.
Through APIGAM and its closely allied international
organisations, the spectrum of AM knowledge in this book will
reach many local governments and communities, especially the
poor, across the EAROPH Region. In this regard, EAROPH and
APIGAM are inviting member countries to identify their national
writers to translate the book into their own languages to benefit
their own people.
I wish all readers happy reading and trust that you will enjoy it as
much as I did.
Datuk Peter Chin
EAROPH President 2002-2004
Chairman, APIGAM
Minister of Plantation Industries and Commodities Malaysia
31 August 2004

ESSENCE

n making the decision to write this book, I realised from


the outset that it was and is an ambitious project. There
are several reasons why I came to this conclusion.
First of all there has not been a book on asset management
written for the general public asset/service users.
Secondly, neither has there been any asset management
book written for decision-makers and officers in public
officebe they mayors or elected/appointed local
councillorsin such a way as to benefit both the community
and leaders in public office. I believe that sharing
knowledge within a single book will help to enforce
transparency and accountability, as well as foster
partnerships in urban management for good governance.
Thirdly, nearly all asset management books have been
targeting asset providers, especially the asset engineers
and asset managers; such books tend to go straight to the
technical issues with scant mention of the community, if
they ever get mentioned at all, even though they invariably
are the ultimate end-users of the assets.
Fourthly, although there have been books focusing on
holistic asset management or strategic management
involving some form of relationship building between one
asset system and another, or between assets and the endusers, they rarely discuss the principles and philosophy of
systems thinking and how such a process has impacted the
development of systemic asset management.
This book attempts to cover all these and more, leading to
the development of a maintenance culture and hopefully to
the ultimate asset management culture, by which we can
strive to acquire and sustain a life-style which will meet our
needs, no matter what our economic or social status.
All public assets are community investments, and whether a
nations citizens are the leaders or the governed, they all

have equal rights to the enjoyment of the assets and the


services that they provide. But they also have equal
responsibilities for the well-being of assets as soon as these
are created. By the same token, they must be informed
about the conditions of their assets and they all must be
given the basic asset management knowledge so that the
community and the leaders in public office may work in
partnership through a participatory process by which they all
can be effective stakeholders.
Thus, this book provides a doorway into the art, science and
technology of asset management, not only for the first
timers, but also for the officers and decision-makers at
every level in public office, as well as asset management
professionals.
As a Guide for the use of all asset users and providers, the
author has made an effort to design the page setup with
graphic presentations to ensure it is user friendly and
permits easy extraction of any topic of asset management
for discussion. In addition, great care has been taken to
give an insight into the principles, philosophy, methodology
and processes of systemic asset management in simple
clear language, illustrated generously with a wide range of
applications.
In a nutshell, this is a first book to offer all-inclusive,
wide-spectrum
coverage
of
systemic
asset
management for public asset users and providers.
Perhaps, as suggested by Eric Cole, my next publication
will be a toolkit making it even easier to use, especially for
those who are working on Community AM.
This book is designed to fire you up, to get you to take care
of your own home assets to benefit your family, to take care
of your neighbourhood assets to build a strong and healthy
community, and to take care of your city to achieve urban
sustainability for a vibrant civil society. After reading the
book you must reach out to work with AM organisations,
such as EAROPH-APIGAM and be ready to support your
local authority.

XIII

ASSET MANAGEMENT

PREFACE

ESSENCE

Dont forget asset management is a systemic process to


ensure assets are optimised to provide reliable public
service delivery. This process and the outcome of good
asset management embrace the essential elements that
coincide with the seven norms of UNDP-TUGI Programs
Inclusive Urban Governance.
The seven Norms are: 1) sustainability; 2) subsidiarity; 3)
equity; 4) efficiency; 5) transparency and accountability; 6)
civic engagement and citizenship; and 7) security. (Details
of this are discussed in Chapter 6.) It was for this reason
that asset management has been accepted by UNDP-TUGI
as a vital tool for achieving Good Urban Governance.

ASSET MANAGEMENT

ACKNOWLEDGEMENTS
In reference to good urban governance, I owe profound
gratitude to UNDP Kuala Lumpur for their keen interest in
asset management and their ardent support for EAROPH in
establishing APIGAM to provide AM services to the Asia
Pacific region. It was this support that finally led to the
writing of this book.
In thanking UNDP, I would particularly like to single out
Dato Anwar Fazal, Senior Regional Advisor of UNDP Kuala
Lumpur. Without his foresight, encouragement, wisdom,
guidance and never ending nudging, I would not have had
the courage nor the strength to take up the challenges he
threw at me. Secondly I must thank Ms Maxine Olson, the
Resident Representative of UNDP in 2003, for her final
approval in allowing me to enter into a Special Service
Agreement with UNDP to carry out all the AM assignments.
A third friend I must mention is Ms Sri Husnaini Sofjan,
Programme Manager. While she always expected effective
outcomes, she was also helpful in solving problems. And,
most importantly, without her being a great pathfinder,
APIGAM would not have been able to bring APIGAMs SAM
programmes to India and provide technical support and
technology transfer services. A big thank you to you, Sri.
Finally, Ms Sivananthi Thanenthiran, thank you for working
so hard with me till the endhelping me to deal with the

XIV

printer, using your keen eyes to edit this book and taking
care of all the little details to make sure it is finally
published.
I was first inspired to get involved in AM by Ivars Satins of
Melbourne way back in January 1997. Thank you for giving
me volumes of AM documents as well as introducing me to
AM celebrities in Melbourne.
One such celebrity is Dr Penny Burns of Adelaide who has
worked to bring AM to EAROPH and Malaysia since late
1997. She became a life member of EAROPH and assisted
me in forming EAROPHs AM Resource Group. What a
mentor you have been to me! Without your encouragement
and support I would not have focused my professional
practice on Forensic Asset Management since we started
working together on AM.
Through Pennys introduction, Ms Ami Sudjiman of
Canberra and Mr Ashay Prabhu of Melbourne became part
of the Resource Group. Their AM knowledge is certainly
matched by their enthusiasm and energy. They both helped
EAROPH and me to build up APIGAM and today they are
serving as its Directors. Whether it is giving lectures or
conducting AM workshops in many of the countries in the
EAROPH region, they are always there to do them with me.
Thank you for your personal support during these few
months in drawing my attention to many AM resources that I
needed to research for the book. Thank you Ashay, for also
supplying me with some of the graphics and latest technical
information on AM in Australia and New Zealand.
Without the Ministry of Housing and Local Government
Malaysia, there would not have been a strong EAROPH and
neither could APIGAM have been formed. In this regard, I
would like to thank Hon. Minister Datuk Sri ONG Kah Ting
and his senior executivestoo many to name them here.
I would also like to thank Hon. Datuk Peter Chin, who was
at the time Deputy Minister of Housing and Local
Government. As President of EAROPH and Chairman of

ESSENCE

In EAROPH the most important person, of course, is the


Secretary General, in the person of Ms Khairiah Talha. She
is so enthusiastic and energetic! Not only does she work
like a 29 year old, she also acts and looks like an eternal
29. Her diligence is equalled by her ultra smart way of doing
things. Khairiah, without your personal assistance APIGAM
would not have come this far and this book would not have
been written. A big thank you!
Thank you Mr Ong Hong-Fong for your patience in editing
this book. We will never forget you for taking care of
EAROPHs and APIGAMs accounts.
Thank you Dr Dickson Lukose for all your IT help in setting
up the computer systems for APIGAM and the software we
need for our AM technical service.
I must also thank INTAN of Kuala Lumpur, in particular Mr
Shukri Ibrahim for allowing me and my colleagues in
APIGAM to conduct AM workshops in your Institute.
How can I forget CITYNET of Yokohoma, especially Ms
Bernadia Irawati Tjandradewi, for allowing me to promote
AM in your International Seminar at Muntinlupa City,
Philippines and later at your international training
programme held in Kuala Lumpur. My sincere thanks.
Through UNDP, we have established a close working
relationship with the Administrative Staff College of India
(ASCI) in Hyderabad, India. Now ASCI is an anchor
organisation of APIGAM for bringing APIGAMs SAM
Programmes to India. In particular I would like to thank Prof
V. Srinivas Chary for the assistance and support in enabling
me and APIGAM to conduct AM seminars and workshops in
Hyderabad and the opportunities to work with many local
organisations, local authorities and agencies there.

In Hyderabad, we cannot forget the Hyderabad Municipal


Water Supply and Sewerage Board (HMWSSB) and in
particular its former Managing Director Mr MG Gopal. Thank
you for enabling APIGAM to complete its first phase work to
strengthen the water delivery systems management under a
proposed Tripartite Agreement entered between HMWSSB,
ASCI and EAROPH-APIGAM. Now that the national
election is over and HMWSSB has been restructured with a
new Chairman (who is the new Chief Minister of Andhra
Pradesh) and a new MD, the partners should be ready to
commence the 2nd phase under the Agreement.
To members of the Panel of Reviewers, Dr Penny Burns, Dr
Graeme Frecker, Dr Gill Kay, Dato Dr Dzulkarnain, Ms Ami
Sudjiman, Mr Ashay Prabhu, Dr Eric Cole, Dr Vilas
Nitivattanon and Dr Nurul Amin, my deep gratitude for your
succinct and illuminating comments in your Reviews.
Readers will appreciate your interesting comments. And, to
Mr Richard Leete, new Resident Representative at UNDP,
my profound thanks to you for the inspiring Foreword.
I must thank the many individuals and organisations that
have supported us and provided me information on AM.
On a personal note, I would like to thank my wife Coralie
Leong, whose main job in life seems to teach me how to
write proper English (I call it a dyslexic language, because
of what you see is not what you say or write!) Being a
dyslexia expert, she got the job. On a serious note, thank
you for your wonderful patience and support, not forgetting
your great editing, sitting up many nights to complete your
admirable task, and your tolerance of the mess I made to
our home with books and papers everywhere.
Finally, any inadvertent errors in the book could only be
mine and mine alone.
KC Leong
EAROPH Honorary President
Head, APIGAM
30 August 2004

XV

ASSET MANAGEMENT

APIGAM, his great foresight, leadership and enthusiasm


made it so much easier for me to take up UNDPs challenge
to bring AM to Asia. Whenever we need to visit other
countries to promote AM, we can always count on his
support and personal commitment in leading a working
delegation. Well done Datuk, and my heartfelt thanks.

ESSENCE
REVIEW THE PANEL
Dr Penny Burns, PhD (Adelaide); M.Ec (ANU); BA (Adelaide); LCC
Editor Strategic Asset Management
Chair, Virtual Asset Management Community Association
Convenor, Asset Management Resource Website at www.amqi.com
Managing Director, AMQ International
Chair, Advisory Panel, University of South Australia, Post Graduate
Program, Facilities and Asset Management

ASSET MANAGEMENT

s Chairman of the Virtual Asset Management Community, a nonprofit worldwide networking organization in asset management, I
welcome the release of this Essence of Asset Management: a
Guide by the UN Development Programme.
Members of the community, who contribute to the development of
what has been recognised as the best source of asset management
reference material on the web, will appreciate the new insights that
this volume brings. Whilst many of our members are from developed
countries and are well versed in asset management, we also have an
increasing number from developing parts of Asia, and many who,
regardless of their location, are approaching asset management for
the first time.
This excellent volume fills a need not previously recognisedthe
need to engage the general layman in understanding the benefits and
requirements of good asset management. Other books on the
subject to date have been highly technical and addressed to service
suppliers, mostly engineers. By the use of simple language and
setting the asset management story within the wider context of good
urban governance, the author engages his audience from the start.
All of the basic asset management concepts are developed and laid
open to the inquiring mind. Of particular importance is the
development of the relationship between asset management and
systems thinking. The author well explains and illustrates the nature
of interacting systems and how a breakdown in one system, for
example, poor design and maintenance of drains, can impact another
such as the road system, leading to worsening public transport
system and general reduction in the quality of life.
The section on the relationship of asset management to the UNs
Millenium goals is particularly useful. I can see these ideas being of
value to consultants and contractors from developed countries who
are required to assist in capability building in developing countries by
the United Nations, the World Bank and other aid organizations; it will
help them to see the relationship of what is done at a technical level
in the West to social and cultural issues in the East. They may even
start to think about these relationships in their own countries as well.
This book will inspire and motivate people to action. I would like to
see this volume provide guidance, by way of references, web links,
associations and resource persons, so that this inspiration and
motivation is not lost but becomes the first step on the path to better
asset management and urban governance.

XVI

Dr Graeme B. Frecker, AM JP
BCE PhD LGE Hon.MIMEA FIEAust. FAICD Dip. FAIM
A distinguished civil engineer and academic, former President of the
Australian Local Government Association and a representative to
various international planning and management organisations.
Dr. Frecker reflects on asset management through his extensive
experience as a director of public corporations such as the Australian
Road Research Board and as a City Mayor and community leader.

ll leaders in public office are responsible to ensure that their


communities have access to adequate food and clean water,
sanitation, housing, transport and communication services. Such
services need reliable systems of public infrastructure. Public funds
are always limited, so politicians must ensure that money is used
wisely by spending on assets where the need is greatest, in
constructing infrastructure that provides essential but not luxurious
services, and by procuring sufficient funds to operate and maintain
assets in good working order. Though politicians need not necessarily
understand technical detail, they are responsible to determine and
continually monitor standards for their project managers.
Community leaders will find K.C. Leongs study an excellent guide to
the essential steps in good asset management. The Guide reminds
that we ought approach our public infrastructure in the same way that
we construct a private house. The structure should be the right size
and have the fittings appropriate to the occupiers lifestyle, and be
used and maintained so that it will bring benefit for as long as it is
needed. These principles are set out simply and clearly in the Guide,
with descriptions of a wide variety of situations that illustrate the
practical application of these principles. Most importantly, in its
methodical and complete presentation, the Guide reflects a vital
characteristic of its subject: system and order.
K.C. Leongs work notes that asset management has already been
developed to different levels of refinement within the EAROPH
communities. Therein lies the golden opportunity for many and varied
applications of these principles for the benefit of people and nations
across the Asia Pacific Region. The presentation of the Guide as a
series of short summaries allows readers to review the elements of
asset management that are of most relevance to them. Question and
Answer segments will help readers to focus on the issues where they
need the most advice. Chapter 15 in particular is essential reading for
consultants who may be working with community leaders in the
Region.
For the generalist and those new to public infrastructure management,
the Guide offers direct entre to a stimulating field. Specialists and
practitioners will greatly appreciate its integrated approach. Yet its
most important value will be to leaders who must give direction to the
providers of public infrastructure and in whose hands the futures of
our communities lie.

ESSENCE
REVIEW THE PANEL
Dr Gillian Kay DBA, SEMBA, AFAIM

Dato Dr Zulkarnain bin Hj Awang

Manager, Organisational Development


City of Kingston, Victoria, Australia

Secretary General, Ministry of Federal Territories Malaysia

o achieve a reasonable quality of life people need access to an


appropriate, affordable and reliable standard of service whether
it is clean water, health, education, security or reliable transport.
The Essence of Asset Management cleverly untangles the
complexity of managing public assets by firstly focusing on
establishing what the service needs of a community are. Working
with the community to clearly understand their needs is an
important first step before decisions are made about construction of
infrastructure.
This guide offers the average person the ability to comprehend a
subject that has often been complicated by technical language.
Most of us already know timely maintenance saves money in the
long term. K.C. Leong expands this simple principle to enable
readers to apply it to more complex public assets.

For me the key to the success of this Guide is the recognition of


community stakeholders and bringing them into the participative
decision-making process. K.C Leongs reference to the UNDPs
The Toolkit on Tools to Support Participatory Urban Decision
Making is important companion reading to this guide and will serve
community leaders and those interested in revitalising their
community well.
Achieving local solutions based on community consensus is
fundamental to well-managed infrastructure. The issues remain the
same no matter in what part of the world the community is located.

his is a very exciting book which the Government of Malaysia


truly needs. Our previous Prime Minister and the present Prime
Minister often lamented about the sad state of the physical condition
of many of our infrastructures. Malaysians are true to the spirit of
Malaysia Boleh, meaning Malaysians can do almost anything, and it
is in this spirit that Malaysians have built world class infrastructure.
However, the aspects of the maintenance of our assets remain a
challenge. Thus, this Guide is an excellent and comprehensive read
for all in government and the private sector as well as home owners
and community groups to help them understand and learn about
asset management.
It is a book which is easy to read and comprehensible, with enough
graphics and illustrations to further facilitate the understanding of the
subject. The contents of the book are invaluable for it touches on
many aspects of Asset Management, from the home assets to the
largest infrastructures.
Our present Prime Minister, Dato Seri Abdullah Ahmad Badawi, has
often called for the need of optimum service delivery by all levels of
government to the people. Asset Management is one key element
that is more often than not missing in this link in the understanding of
service delivery for the community. Our Government is also striving
towards the achievement of this basic tenet of Vision 2020. I did not
know before reading this book that Asset Management can be
applied towards achieving this vision.
This book is a must read for all Malaysians, especially those in local
government and the community, for it is through Asset Management
that we can link the many objectives of Local Agenda 21 as well as
helping all members of the community to make decisions in a
systemic and transparent manner. This will reinforce Good Urban
Governance, which this government fully supports and wants to
propagate as an intrinsic part of the government system and
practices.
I would also encourage trainers in public service to use this book as a
reference guide, for it is invaluable in understanding basic
management principles and philosophies for our development
assets. I believe that Asset Management will also help in achieving
the call by our Prime Minister for Malaysia to continue to grow and
develop according to the objectives of Cemerlang, Gemilang,
Terbilang or Excellent, Resplendent , and Accountable.

XVII

ASSET MANAGEMENT

ESSENCE
REVIEW THE PANEL
Ms. Ami Sudjiman ARAIA, MESA

Mr. Ashay Prabhu MIE(Aust), CP Eng, NPER

Director (Technical), EAROPH-APIGAM


Chairperson, ACT Branch, Facility Management Association of
Australia
Principal Consultant, Strategic Facility Services Pty Ltd

Director (Training), EAROPH-APIGAM


Chairman, ACEAM Pty Ltd, Principal AM Consultant and Trainer

ASSET MANAGEMENT

he Essence of Asset Management A Guide, presents


insightful, practical and comprehensive perspectives on asset
management. This is a substantial resource which celebrates the
importance of managing and maintaining assets to provide ongoing,
quality service to communities where people live. KC Leong writes
with energy, knowledge and passion, covering an extensive asset
spectrum, from the environmentally sound sawdust compost toilet
system through to the diverse applications of systemic asset
management (SAM) to improve peoples homes, revitalize cities and
measurably reduce poverty.
The book consists of seventeen chapters and the structure enables
readers to focus on areas of particular interest. The concepts of
public asset management are presented with logic and clarity. The
book further identifies direct linkages between good asset
management and good urban governance. Through the writing, the
author emphasizes the importance of improved record-keeping, clear
systems and methodical approaches in managing public assets,
which in turn improve transparency and accountability within
organizations and governments responsible for the assets.
A further function of this substantial work is the identification and
clarification of the process in creating, operating, managing,
maintaining and disposing of public assets. The book offers a range
of information, presented at different levels of technical and financial
depth, to suit our roles and interests in the management of public
assets. It also shows us where we can find out more about learning
and applying asset management in our respective organizations and
national contexts.
This book should be disseminated widely through the United Nations
Development Programme (UNDP); the Eastern Regional
Organisation for Planning and Housing (EAROPH); and the Asia
Pacific Institute for Good Asset Management (APIGAM).
I congratulate KC Leong on writing a comprehensive and highly
useful guide. I unreservedly recommend this book to improve
understanding of the essence of asset management.

wish to heartily congratulate KC Leong and the UNDP for producing


this easy to digest and informative Guide on Asset Management. For
years, the general community has lacked understanding of the basic
concept of Asset Management. This has prevented them from
providing structured and valuable input as to where their local
municipality must focus its efforts and services. Many people
responsible for managing assets have also not been able to
experience the big picture of how the entire process from planning,
acquisition, maintenance and disposal is implemented. The focus has
been on managing assets and the service delivery aspect is often lost.
Maintenance has been neglected as its effects are not visible in the
short-term. This Guide provides the missing links to show why asset
preservation is critical to service delivery and how assets are a means
to an end and not an end to themselves.

As Directors of APIGAM, we constantly face situations where complex


organisational cultures, paradigms and myths of asset management
have to be reorganised into simple, logical frameworks. The concept of
life cycle costing, whilst understood in theory, is not put into practice.
This book is an excellent reference Guide for those facing the
whole-of-life asset management challenge.
The Step-Power program presented is one of the best frameworks for
establishing asset management within governments, NGOs or
individual business units. Based on my experience in AM training in the
Asia Pacific, I can recommend that senior executives use this program
to implement asset management practice. The book deals with the real
issuesproviding services to the community, reducing long-term costs
of these services, community objectives of asset management,
planning to reduce dependencies on new assets and the need to
introduce accrual accounting for better financial management. In these
respects the book covers recent developments in major Asia Pacific
regions.
The Guide is an inspiration to those who are passionate about
providing better services to citizens through well maintained
infrastructure. The inspiration has come from UNDPs philosophies of
good urban governance. What better way to really implement
pragmatic governance than through the application of asset
management techniques?
I recommend this Guide for anyone who wishes to undertake asset
management work in Asia. The coverage of advanced AM concepts
within the Asian context is another superb example of thinking globally
and acting locally.

XVIII

ESSENCE
REVIEW THE PANEL
Programme Coordinator, AfricaAsia EcoPartnership Programme,
UNDP a Programme in partnership with eleven municipalities
across Africa and Asia.
Experience over 15 yrs in civil, water and environment sectors.
Worked extensively in Asia, Africa and the Caribbean.

hapter arrangements have a natural logical sequence. Presentation


also makes good and easy reading. I have to admit that I am a
skeptic and allergic to the clustering of information in a single publication.
My natural preference would have been to have had this in the form of a
tool kitpreferably in three or four small volumes, Vol 1 focusing on
basics and principles, Vol 2 focusing on Practical tools and Scenarios for
use, Vol.3 Case studies, resources and legislature, Vol 4 Future options
etc. Chapter 4 is technical, basically providing a set of tools and it could
be useful as a technical manual on its own.
Despite this premise, the text is a good one. For the practitioner this will
be a useful tool, and excellent reference material. Good governance and
effective management of a countrys assets are very closely related.
Thats why this text is so important. Refreshing and good starter for good
AM appetite.
The UNDP has several business practice areas, and the author has tried
to establish a link with some of these, notably the MDGS, Good
governance, Poverty Reduction etc. Whilst the connection with asset
management is not immediately apparent, it is appropriate to say, that in
almost every thing these days, management of our assets, whether
physical or otherwise, is a major concernconcern to project planners,
development workers, policy makers, financing institutions and the like. In
these days of dwindling resources and an inclination to strengthen
alliances with the private sector, the need for asset control and
management is all too apparent. The text brings out examples of systemic
asset management from a variety of sectors and also introduces a couple
of approaches used by specific countries. Whilst we agree that these
approaches are not by themselves, panacea for successful asset
management, they provide an insight into issues and areas that need to
be considered.
Asset management in the Asia and Pacific has met with a lot of obstacles
and concerns, thereby giving rise to new challenges and opportunities. An
array of activities by EAROPH is provided and a potential to develop these
partnerships further is also mentioned. Good governance begins with
good asset management. The converse can be also true, i.e. good asset
management may ultimately yield good governance. These two
statements may seem hypothetical to some, but for the practitioner and
programme manager they are not. Thats why UNDP will continue its
support for the development of themes of this nature and others that
provide cutting edges to development work.

Dr Nurul Amin
Dr Vilas Nitivattanon
Dr. Amin and Dr. Nitivattananon are Professor and Assistant Professor
respectively in the Urban Environmental Management (UEM) Field of Study,
School of Environment, Resources and Development at Asian Institute of
Technology (AIT) in Thailand. As Project Director and Project Applications
Coordinator respectively, both are key management team members of the
on-going CIDA-AIT Partnership on Southeast Asia Urban Environmental
Management Applications (SEA-UEMA) Project. The UEM Field of Study
together with the Project seek to build up UEM pool of professionals and
capacity for research, implementation and sharing of sound urban
environmental management policies and practices in the region.

n developing countries, asset management (AM) has been


widely known and used in the private sector particularly in real
estate and infrastructure management. This Guide goes beyond
that in the sense that AMs links with concepts related to quality of
life are also addressed. Key players including government, private
sectors and communities in urban infrastructure and services are
therefore expected to benefit from this Guide.
It is not only a volume on fundamentals of AM, but also a valuable
guide to improved management of urban infrastructure for those
who work directly with communities.
Inclusion of systems thinking and lifecycle for AM has potentially
made it more applicable for the infrastructure management in the
region. This Guide should be an appropriate reference material in
a number of related courses in Urban Environmental Management
(UEM) and other related Fields of Study at Asian Institute of
Technology (AIT) in Bangkok, Thailand. In particular, it will be
referred to and used in the courses, ED79.15 Urban Economics
and Finance and ED79.12Management of Urban Housing,
Infrastructure and Services.
The Guide will also potentially be utilized for training programs of
Sub-sectors Networks and Professional Support Programs of the
Southeast Asia Urban Environmental Management Applications
(SEA-UEMA) Project. The authors participation in the Projects
First Network Meeting, held in Bangkok on 21-22 June 2004 to
establish three Sub-sector Networks on Water and Sanitation,
Solid Waste Management, and Air Pollution in Southeast Asian
Cities, has already created a good link for the potential use of the
Guide by members of the Networks.

I would simply describe the text as a refreshing stimulant for


benchmarking, provision of services and project management. I would
therefore encourage that further comments on thematic foci, technical and
non-technical issues and others be directed to the author.

XIX

ASSET MANAGEMENT

Mr Eric J Chukwuemeca Cole

XX

The Essence of Asset Management


A Guide

KC Leong

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ASSET MANAGEMENT

ESSENCE

ESSENCE

A book is a garden carried in the pocket.


ASSET MANAGEMENT

Chinese proverb
Steven Howard 2003

By three methods we may learn wisdom:


First, by reflection, which is noblest;
Second, by imitation, which is easiest; and
Third, by experience, which is the bitterest.
Confucius
Steven Howard 2003

Most people give in to their baser instincts, thinking


more of short-term pleasures and gains than the kind of
sustained self-restraint required in order to practice what
is good and reject what is bad.
Tun Dr. Mahathir Mohamad
Former Malaysian Prime Minister
Steven Howard 2003

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

The Basics about Assets

ASSET MANAGEMENT

CHAPTER 1
1. Some Myths about Assets
2. What are Assets and Infrastructure?
3. No Physical Assets, No Services
4. Can Physical Assets be Liabilities?
5. Asset Life Span and Life Cycle
6. Multiple Life Cycles of Assets
7. Asset Deterioration Characteristics
8. The Quality of Life depends on Assets
9. Asset FailuresChain Reactions
10. We need Asset Management

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

The Basics about Assets

Section 1

ASSET MANAGEMENT

Some Myths about Assets


Assets last forever,
why bother?

Yes and no. Roads, railways, canals do


appear to last a long timethey seem
to be there for generations. Some
assets, such as buses, public toilets,
bus shelters, public telephone booths,
public drains, pavements, do often look
bad and many appear to need urgent
repairs. However, they are public
investments, and they are there to
provide safe and reliable services. It is
everyones duty to see that they last as
long as originally intended and
designed to be.

Asset care is the


sole responsibility
of the government.
Citizens pay taxes,
why should they be
bothered!

Thats a misconception. In order to


enjoy safe and reliable services from
assets, both the government and
citizens must play their roles. People
generally throw rubbish around and
pollute the environment. They do
misuse assetslook at the way
valuable water is being wasted, trucks
are overloaded damaging roads and
bridges and endangering lives, cars are
parked on pavements meant for
pedestrians. Citizens must also take
responsibility.

The more assets


the better, after all
the people are
entitled to use them
and having a lot of
assets makes us
feel good!

Well, it is better only if our city can


afford to maintain them properly so that
we can get the best services out of
them. Unfortunately, we tend to build
too many assets without considering the
resources we need to care for them.
The more assets the city has, the more
staff and revenue the city authority must
have in order to operate and maintain
them. Very often, assets are procured
without medium and long-term
budgeting to cover the costs of
operation and maintenance. The
consequences can be serious.
Sometimes it is better to find alternative
solutions to provide additional services
without having to acquire new assets,
as it is far more economical and makes
things easier for the city authority.

Should every
citizen demand
asset care
responsibility?

They should, even when they are


working in the public sector. Through
citizen demand, the asset providers are
alerted to maintaining standards,
appropriate technology, works based on
results and with enhancement of the
peoples quality of life in mind.

Do we need
knowledge and
training in order to
take
responsibility?

Yes, we do and we need to learn from


professionals. There are so many
assets and many are huge and complex
in nature. Some assets come in
systems. We need to know their
objectives, how assets can last as long
as they should, how they will provide
reliable services at the least cost to the
community.

Is there a science
or technology for
asset
responsibility?

There is. Its known as Asset


Management. It is developed from
many professional disciplines.

The poor dont


need many public
assets! (What a
misconception!)

The poorer the community the more


they need public assets for services. If
the buses are broken down, or their
roads have collapsed due to frequent
flooding, the poor will suffer most as
they have no other means of getting out
to earn their livelihood.

We can start from this BOOK!


Happy reading.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

The Basics about Assets

Section 2

What are Assets and Infrastructure?


What is Infrastructure?

An asset is an item of
value. Not only is it
something worth having;
it goes beyond pure
possession, giving a
service to mankind.

In accounting terms,
physical assets under the
category of non-current
assets are defined as
those items of significant
value that:

serving a country, city or


area, as transportation and
communication systems,
power plants, and schools
by Websters dictionary.

In our modern way of life,


we cannot do all the things
we like to do without them.
xare procured by an
Life would be very hard, if
Some assets have an
organization following
we didnt have themjust
expected short life or are
past transactions;
imagine if we didnt have
readily convertible into
cashusually within one
xpossess service potential roads, power, potable
water, telephones,
year, such as investments
or future economic
hospitals, etc. In fact, we
or inventory of stock on
benefits; and
are so used to them that
hand. These are known as xare controlled by the
we have been taking their
current assets.
organization that owns
existence for granted.
and operate it.
Non-current assets may
Many people would like to
be either physical
This definition applies to
see more infrastructure in
assets (such as land or
physical assets such as
place without realising the
buildings) or intangible
land, buildings,
complexities of creation. It
assets (such as computer infrastructure, plant and
is obvious that the more
software or intellectual
equipment, cultural
infrastructure we have, the
property).
collections, and natural
more services we will get
resources.
thus making life easier,
This book deals with
more comfortable,
those non-current assets Thus Infrastructure is
which are physical
physical assets which are healthier and more
enjoyable.
assets.
defined as fundamental
facilities and systems

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

We have become
dependent on them to earn
a comfortable living, to
educate our children, to
conduct and expand our
businesses.

ASSET MANAGEMENT

What are Assets?

We need them in order to


travel to far away cities
efficiently and costeffectively.
We need them to help us
gather information from
around the world promptly.
We need them to make
our cities and towns
sustainable. We need
them to link our
communities to work in
harmony for nation
building. We need them to
reach out to expand our
economy.
Infrastructure comprises
valuable assets that enrich
modern civilizations.

ESSENCE
Chapter

The Basics about Assets

Section 3

No physical assets, no services


G

ASSET MANAGEMENT

overnments at
ll the above public
x Sanitation services to
various levels provide
services require
the rural communities.
x Solid waste: Dump
various public services to
physical assets to be
sites, waste disposal
x
Waste
water
treatment
the people. For example:
appropriately set up to
plants, garbage trucks,
services in urban areas. meet service criteria and
truck depots must be
x Transport services in
x Solid waste collection objectives.
established before
the form of bus services,
services including waste
services can be
It is important to recognize
train services, ferry
recycling and disposal
provided.
the fact that public
services, shipping
systems.
services do not just appear x Education: We have to
services, airport
x Healthcare services in by themselves. For
services.
build schools, colleges,
the form of hospital
example:
and university campuses
x Communication
services, clinic services,
in order to provide the
services in the form of
public health protection
x Water: There must be a
educational services.
postal service, telephone
services and medical
water source, reservoir,
and fax services, internet
x Knowledge
research services.
treatment plant and
services, mobile phone
information: There must
delivery
system
in
order
services, radio and T.V. x Education services in
be library buildings and
to
provide
the
water
the form of primary,
services.
broadcasting facilities
supply.
secondary and higher
before the city can
x Energy supply services
education, special
x Bus: We need roads,
provide its citizens with
in the form of electricity
learning aid services for
bridges, culverts, signs,
opportunities to learn
supply and gas supply
those suffering various
buses, bus depot and
from books and
services.
type of learning
maintenance workshops
multimedia programmes
disabilities and adult
in order to have the bus
through radio and T.V.
x Water supply services
education
services.
service.
services.
for domestic
consumption and
irrigation in rural
communities.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

The Basics about Assets

Section 4

Can physical assets be liabilities?


I
An Infrastructure Investment leading to
Value Added Services
= Good Return On Investment
= An Urban ASSET

An Infrastructure Investment leading to


No Services / Poor Services
= No or Poor Return On Investment
= An Urban LIABILITY

Physical or infrastructure
assets will deteriorate over
time due to wear and tear. tramway services, all
represent huge capital
investment. They must
These assets are
therefore be created based
government investments
constructed from public
only on clear objectives of
funds on behalf of the
service needs and
people. The main purpose service requirements.
for such investments is to
If an infrastructure asset is
use these infrastructure
created to satisfy only the
assets to provide public
personal whims of some
services which are
policy makers, or it does
essential for the
not fulfill the functional
enhancement of the
needs of the government
citizens quality of life.
and/or the people, then it
is wasteful expenditure.
All infrastructure, be they
highways or footpaths,
hospitals or local clinics, a If infrastructure is based
on ill conceived ideas or
city hall or a local
community hall, mass rail- designs, or so poorly
constructed and fitted out
transit services or inner
city monorail services or

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

out the maintenance and


repair works.
Once signs of deterioration
begin to appear, the
infrastructure becomes a
liability. This is so
because:

ASSET MANAGEMENT

ndeed, any physical


asset can be a liability,
unless we take good care
of itnot half heartedly but
with appropriate
knowledge and skills. We
are professionally
responsible for them.

x It is no longer able to
function as a service
provider and public users
have to resort to
alternatives.

that it fails to fulfill the


desired requirements of
public service delivery,
then it is a bad investment. x It could pose risks to
public health and
Even when infrastructure
safetyin fact such a
is set up according to
building or bridge or
sound objectives and is
highway could collapse.
able to provide all the
x Without regular and
services as originally
proper maintenance it
intended, it may not be
would cost more to
properly maintained but
repair, and many
allowed to deteriorate. This
component parts might
often happens when
need to be replaced.
insufficient funds have
been allocated to carry out x It might have to be
regular maintenance and
demolished and be
timely repairs, or the
replaced with a new one,
agency in charge of the
thus incurring higher
infrastructure has
capital outlay.
inadequate knowledge and
skills in properly carrying

ESSENCE
Chapter

The Basics about Assets

Section 5

Asset Life Span and Life Cycle


N

life cycle will be either


prolonged or renewed to
perform the functions.
However, the time may
come when the bridge can
no longer carry the much
increased volume of traffic,
or the design-load of the
In the cases of cars,
bridge can no longer carry
houses and public
buildings, we of course will the vehicular load of
renew their life cycles. For increasingly bigger and
Asset Life Cycle
example, we never discard heavier trucks. Then the
When an asset has
bridge can no longer
public roads and
deteriorated to such an
perform its functions. In
highways. Many of them
extent that it has to be
disposed of, it is said that have been there for a long such a situation, the bridge
the asset has reached the time, going through many is said to have reached the
end of its Functional Life
life cycles.
Most assets are made up end of its Life Span.
Cycle.
However, many assets can
of a series of sub-assets.
be refurbished or renewed Apart from the physical life
For example, a house is
cycle, each infrastructure
to start functioning for an
constructed of many
Economic Life Cycle
When an asset, such as a
has a functional life cycle
building components, such extended life span; thus
as the building frame, wall the life span of an asset is as well as an economic life district hospital is so old
and dilapidated that it is
cycle, both of which must
often called an Asset Life
systems, windows, roof
too expensive to repair
be considered differently.
Cycle.
systems, etc. These
and refurbish, then this
components are subinvestment has come to
The life span of a fax
assets. Each of these will
Functional Life Cycle
the end of its Economic
An asset is created to
machine, a copying
last for a different period.
Life Span. It will have to be
Generally, an asset usually machine, a computer or a serve functional
replaced with a new asset.
requirements. For
household appliance is
outlasts its sub-assets.
example, a bridge is for
short. Very often when
these break down, it is too carrying the traffic and its

ASSET MANAGEMENT

o physical assets can


last forever. Some
assets, by their inherent
nature, last a long time
while others will
deteriorate faster and
eventually will cease to
function properly or
economically. For
example, a reinforced
concrete bridge will last
longer than a timber
bridge, if both are
designed for the same
traffic volume and usage.

Asset Life Span


Every asset has a life
span. If it is maintained
proactively, it can last for
the maximum possible life
span. Some buildings can
last many hundreds of
years, but others no more
than 20 or 50 years.

expensive to repair them


and they are discarded.
We simply buy a new one
and we dont bother to
renew the assets physical
life cycle.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

The Basics about Assets

Section 6

ome consumer
products have a single
life span. Most noticeable
are the current mobile
phones. It is hard to see
any owner bothering to
repair such gadgets when
they break down. They are
not made for upgrading
either. As new
communication services
are provided, many of the
older models of mobile
phones cease to be
functional for the new
service, and the owners
are forced to discard them
and buy the latest models.
However, in a matter of a
few years, the same
predicament would recur
prompting further
replacement.
Such is the sad world of
high consumerism we are
living in, brainwashing us
into accepting single life
span assets.
The strange thing is,
people seem happy to

span assets.
accept it. The only
explanation one can think
of is that we are like
children playing with toys
hen it comes to
which are designed and
public physical
manufactured as single life assets, we expect them to
span assets.
last as long as possible
and have multiple life
Educational toys, and
spans or life cycles. We
perhaps the teddy bears
need good assets that will
and cute dolls for bedtime provide uninterrupted
company, are the
public service. Thus, we
exceptions. Hence these
need to recycle and
are made for longer life
revitalize all infrastructure
cycles with mums patient assets, so that the citizens
care and simple
who are the tax payers,
maintenance. Often these can enjoy reliable services
are still being treasured
at optimum level of
long into the childrens
performance at all times.
adult life. And, sometimes
they get passed down to
The well-being of a town or
the grandchildren. These
a city depends on
are the exceptions in this
continuing and unfailing
day and age of the fast life. public services from the
urban assets.
However, when it comes to
infrastructure, it is obvious For a city to be
that, for sheer economic
sustainable, we need:
reasons and necessity of
x reliable electricity supply;
continual reliable public
services, we simply cannot x safe and uninterrupted
afford to have single life
water supply;

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

x hospitals and clinics that


can provide an
acceptable standard of
health care;
x roads and footpaths free
from potholes and other
hazards;

ASSET MANAGEMENT

Multiple Life Cycles of Assets


S
W

x public transport services


that are safe and
reliable;
x public toilets that are
clean, user friendly and
hygienic at all times;
x Solid waste collection
service that is regular
and efficient and waste
disposal that is
sustainable;
x and so on.
We can do that only if we
have urban assets with
multiple life cycles.

ESSENCE
Chapter

The Basics about Assets

Section 7

Asset Deterioration Characteristics X

ASSET MANAGEMENT

For instance, the tyres on the


bicycle wheel will become
bald. The paint work or
chrome surface of the bicycle
will crack and peel. The
varnish on the casing of the
wall clock can also slowly
deteriorate due to dust,
temperature, humidity and
pollutants in the atmosphere.
In the case of an ordinary
motor car, it can break down
Even when an asset is not
very quickly after only a few
used, its condition can still
months of use; unless we
deteriorate, since
atmospheric conditions can add water, change the oil,
cause material to deteriorate, clean the filters, top up the
battery water, pump up the
though this may take place
tyres and clean the car body
slowly.
externally as well as
internally, etc.
Some assets take a long
time to show signs of
deterioration or break down, Deterioration
characteristics
such as a bicycle (except
occasional tyre punctures), a
gas cooking range or a large All physical assets show
some common
wall-hung pendulum clock.
This is so because they have characteristics of
deterioration during their life
few and simple mechanical
span.
moving parts; but, they still
will deteriorate, depending
on how they are used and
Figure 1 on the next page
cared for.
shows the way an asset will
ithin each life cycle of
an asset, its physical
condition will deteriorate.
When the assets operation
is abnormal or under
strenuous conditions, wear
and tear will become more
severe and the time to
break down will happen in a
shorter span of time.

10

deteriorate across its


physical life span, if it does
not have proper
maintenance and repair.
When the asset is new, it is
working at its maximum
functionality of 100.
During the 1st 1/3 of its life, it
will only have a rate of
deterioration which is often
not noticeable.

asset will finally break down


completely. Notice the curve
is diving steeply from the
functionality mark of 70
towards 0 within the same
space of time.
Although the three situations
are diagrammatically
presented, it is not far from
reality.

However, regular
maintenance and repairs will
During the 2nd 1/3 of its life, it prolong an assets maximum
possible functional life span,
begins to show some signs
of wear and tear, it no longer though it will not be as good
as when it was new. Unless
looks new. If it has moving
parts such as a motor, it will appropriate proactive
maintenance is provided, the
run less smoothly and the
whole process of rapid
whole operation becomes
deterioration will be repeated
noisier. Although it is still
with similar characteristics.
operating, the rate of
deterioration is accelerating.
The curve is moving from the
functionality mark of 95 to 70
in the same space of time.
During the next and last 1/3
of its life span, if nothing is
being done in the form of
proper maintenance, this

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

The Basics about Assets

Section 7

Asset Deterioration Characteristics Y


x By the time there
are signs of
deterioration, it is
too late.

Max. Function

100

Signs of deterioration
Fast deterioration start showing in this
zone. Passing halfway
they become noticeable

90

x Even when repair


has been done,
residual damages
have set in.

80

x Maintenance and
asset performance
assessment must
start early in an
assets life span.

60

x When planning and


budgeting for a new
asset, adequate
consideration must
be given to
operation and
maintenance.

Slow deterioration

70
Very fast deterioration

Once in this zone


asset starts
malfunctioning

50
40
30
20

st

1 1/3

nd

1/3

rd

3 1/3

Beginning
x Remember, no

functioning
asset, no service
delivery.

ASSET MANAGEMENT

The Bottom Line

Lowest
Function or
Total Failure

Ending

LIFE SPAN OF ASSET


If it has zero maintenance
Figure 1 Normal life span of a physical asset and its deterioration rate

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

11

ESSENCE
Chapter

The Basics about Assets

Section 8

The Quality of Life depends on Assets

ASSET MANAGEMENT

from the public


n any form of human
settlements, from a rural infrastructure assets.
settlement, a village, a
town to a big city, or even
a mega-city, they all have
one thing in commonthat
is the presence of
infrastructure assets with
which the inhabitants
interact while working,
learning, making products,
communicating, operating
commerce and industries,
indulging in recreation or
simply enjoying a healthy
living.

Assets such as houses


and essential services are
fundamental to the wellbeing of families. They are
also fundamental to the
establishment of
interrelationships between
people to form a network
of communities, from
which a society evolves.

Villages may also have a


general store selling
everything the villagers
need and it may double up
as a bus depot, a petrol
kiosk or a post cum
telephone office.

How well we maintain a


healthy and vibrant society
depends on the quality of
the services that we get

12

ven in villages there


are basic
infrastructure assets in the
form of roads which may
be unsealed, and bridges
which may be constructed
of timber. These enable
the villagers to go to other
villages or to the town to
sell their produce or
handicrafts.
Villages have simple
buildings for schooling, for
community worship or
health care services.

For water supply and


sanitation, the local
authority may provide a
community well and a
community toilet and
ablution block. These
assets may be basic, but

they provide the local


community with an
acceptable quality of life.
In the towns and cities, the
local authorities will
provide more physical
assets which are bigger in
size and more
sophisticated in design
and construction in order
to satisfy the needs of the
urban residents, workers in
both the public and private
sectors, merchants,
manufacturers,
professionals, military
personnel and public
officers.
Our quality of life depends
on optimal public service
delivery, which in turns
depends on the optimal
quality of the infrastructure
assets.
In short, our quality of
life depends on our
physical assets.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

The Basics about Assets

Section 9

Asset FailuresChain-Reactions X
Figure 2 Asset Failure ChainReactions within a single asset system
Rainwater catchment, aquifers, streams and rivers volume management

Water Treatment
Management

Chemical storage & feeding, mixing


basin, sludge settling basin, filtration &
treated water storage

Water Delivery
System

Secondary water delivery piping


system, high service pumping to
elevated reservoir, distribution loop
or grid distribution piping system
and service connections

Cost Recovery
Management

Quality of Life of
Consumers

Cost recovery is a vital source


of finance to support the
proper operation and management of the entire water
supply system

Without adequate quality


water supply, urban communities suffer

Raw water
storage &
pumping

Any management failures will


prevent supply meeting demand

ASSET MANAGEMENT

Water Source
Management

Any management failures will


prevent supply meeting demand

Any of the systems


assets here can fail.
Leakages can reduce
supply. Many
developing countries
suffer severe water
theft, increasing Non
Revenue Water
(NRW) & reducing
cost recovery.

In some developing countries,


cost recovery is so poor that
water supply is only turned on
for a few hours every second
day, encouraging more theft
for the black market

Any management failures will prevent supply


meeting demand

Water supply cant


meet demand and
consumers have to
pay more while the
water agency does not
get sufficient cost
recovery to improve its
service.

The POOR are affected most, they cant afford alternatives,


& their livelihood and health depend on the service.

Social costs start here!

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

13

ESSENCE
Chapter

The Basics about Assets

Section 9

Asset FailuresChain-Reactions Y

ASSET MANAGEMENT

Figure 3 Asset Failure ChainReactions within multiple asset systems MULTIPLE ASSET SYSTEMS
Environmental
Management

Fails to stop indiscriminate


logging, earth cutting & prevent
soil erosion.

Soil and debris runoff


to streams and drains.

Drain
System

Drains not designed to take soil


erosion from development.

Soil and debris blocks


drains, causing flooding.

Road
System

Roads develop cracks and/or


surface deterioration due to poor
design & underspecification, bad
construction, lack of regular
maintenance, timely investigation
and repairs. Conditions worsen due
to frequent flooding due to
drainage system failure.

Roads develop
potholes,
ripples and
foundation
failures
causing road
to subside.

Roads in such a
condition will slow
down traffic, cause
accidents and damage
vehicles.

Bus Transport
System

Buses are old, subject to heavy


usage, lack regular and pro-active
maintenance and timely repairs.
There are frequent breakdowns,
resulting in unreliable bus services.

Poor roads
slow traffic and
damage buses.

Flooding stops the bus


transport service altogether.

Quality of Life of
commuters

The community relying on the bus


service are badly affected.

The POOR are affected most, they cant afford alternatives, & their livelihoods depend on the service.

Social costs start here!

14

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

The Basics about Assets

We Need Asset Management


O
M
ur populous planet is
a complex world and
we are becoming
increasingly urbanised. In
the current information
age, with wireless internet
and supersonic air travel,
we are becoming more
and more interconnected.

In order to satisfy modern


mans needs, nations all
over the world are creating
more and more
infrastructure assets. To
be able to create so many
of them to provide the
needed service delivery is
one thingthat we seem
to do well, but to take care
of them is something that
we seem to habitually
neglect.
Strangely enough, we
always seem to find the
finance for the creation of
new physical assets, even
if they are mega-sized.
Yet, we often find
ourselves short of funds to
maintain these highly

expensive investments.

We can build the worlds


tallest buildings, most
modern airports and
container ocean ports, but
we dont have the
knowledge and skills to
maintain them in order to
optimise the asset
conditions for optimal
service delivery.

We seem to confuse
emergency repairs with
proper maintenance. In
reality, such actions are
similar to a fire-fighting
servicethe asset may
be saved but the damage
has already been done.
The assets performance is
no longer the same and
with further use, it will
deteriorate furtherand
more rapidly.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

any infrastructure are


systems involving
complex sets of subassets, such as water
supply systems, electricity
systems, and
communication systems. If
one sub-asset fails, it will
create a chain-reaction in
the functioning of the
whole system. For
example, the bursting of a
main water pipe from the
treatment plant and
pumping station to the
distribution reservoir will
interrupt the final water
supply to a community.
(See also Figure 2 on
page 13.)

Sometimes, the failure of


one sub-asset of a system
can also affect the asset
performance (or service
delivery) of another asset
system. For example,
using the case of water
supply again, if the water
pressure or supply is
inadequate in a certain
urban area due to failure of

its sub-assets, the fire


brigade, however well
equipped they may be, will
not be able to supply a fire
fighting service in that
area. (See also Figure 3
on page 14.)
In a city there are so many
physical assets that need
to be taken care of
proactively and with
professionalism as well as
adequate financial support.
In a nutshell, we need a
science and technology of
ASSET MANAGEMENT in
order to ensure all our
valuable assets will
continue to provide reliable
public services.

15

ASSET MANAGEMENT

Section 10

ESSENCE

ASSET MANAGEMENT

A journey of a thousand miles must begin with a single


step.
Chinese proverb
Steven Howard 2003

The reverse side also has a reverse side.


Japanese proverb
Steven Howard 2003

Monotony is the law of nature.


Look at the monotonous manner in which the sun rises.
The monotony of necessary occupations is exhilarating
and life giving.
Mahatma Gandhi
Steven Howard 2003

16

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

Asset Management Principles

ASSET MANAGEMENT

CHAPTER 2
1. What is Asset Management (AM) ?
2. The Fundamentals of Asset Management
3. Other Factors concerning Asset
Management
4. Ultimate Outcomes of Asset Management
5. Whats in it for the Community?

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

17

ESSENCE
Chapter

Asset Management Principles

Section 1

What is Asset Management (AM)?

ASSET MANAGEMENT

hile Asset
Maintenance is a
vital process for
maintaining an asset in
good working condition, it
is only a part of Asset
Management.

depend on how well we


can balance the social,
economic and
environmental factors in
order to achieve urban
sustainability.

x Does the authority


extend the functional and
economic lifecycles of all
their infrastructure
assets to the maximum
at the least cost to the
community?
In this respect, we must
x Does the authority
To support the complexity consider:
establish medium and
of the human settlements x What levels of service
long-term financial
we have today, from small
does the community
forecasting for their
towns to mega-cities, we
want to satisfy the social
service delivery needs
need sophisticated
needs?
through their asset
infrastructure asset
optimisation plans?
x What would the social,
systems and service
economic and
x Does the authority relate
delivery systems to
environmental costs and
asset expenditure to
support our modern urban
benefits to the
social outcomes?
systems and the peoples
community be?
x Does the authority
way of life.
x What sustainable levels
practise risks
of service can the city
management to minimise
There is always the cost
authority provide?
service failures resulting
element to be considered x Does the city authority or
from asset performance
when it comes to the
failures?
agency know exactly
creation and maintenance
what assets they own
x Does the authority have
of physical assets and the
and what is their
accountability checks in
levels of service that the
condition?
order to get to the root
community can afford.
problems of asset/
x Can the authority provide
service failures?
a new service through
Thus the well-being of a
The above list is by no
lifecycle renewal of
city and society in relation
means exhaustive, but it
existing assets to
to the service delivery of
does give an idea of the
conserve resources?
its physical assets will also
magnitude of urban issues

18

that authorities have to


deal with in order to
ensure the sustainability of
an urban system that will
enhance the communitys
quality of life.
So what is Asset
Management?
It is a process of guiding
the acquisition, use and
disposal of assets, to
make the most of their
service delivery potential
and manage the related
risks and costs over the
full life of the assets.

Asset Management is a
process of guiding the
acquisition, use and
disposal of assets, to make
the most of their service
delivery potential and
manage the related risks
and costs over the full life
of the assets.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

Asset Management Principles

Section 2

FUNDAMENTAL
PRINCIPLES OF ASSET
MANAGEMENT
If an organisation is to
adopt Asset Management,
it is essential to embrace
the fundamental principles.
1. Who owns what and
who is responsible
and accountable
An organisation must
know what assets it owns;
what assets they use are
owned by others; who has
the custodianship; who is
responsible for the assets
operation and maintenance
and management.
Unless these are known,
there is no basis to start
planning and budgeting for
maintenance and overall
management.
Even within the agency
which is responsible for the
operation of the assets,
there must be a designated
department responsible for
the assets management.
This department must be

the specific Asset Objectives


of each and every asset
which is to provide the public
services.
If the objectives of an
2. Know your Assets
Asset have become
There must be a full and obsolete, then new
accurate inventory and
objectives must be defined
maintenance knowledge
and the modified Asset to
about all assetsdate of
fulfil the requirements of the
birth, location, building
new objectives.
contract documents, records
4. Service Criteria
of regular maintenance,
Assets are never
breakdowns and repairs,
created for their own sake.
replacements, upgrading,
refurbishments and details of Even a monument, a city
disaster crises and remedies. street sculpture, a townsquare clock tower or a
All data of assets must
be recorded in a centralised fountain is created by a
Asset Register. Only with the public entity to perform a
social functionto
availability of accurate data
commemorate an important
of assets can Asset
social event, to provide an
Management begin.
urban or community identity,
3. Asset Objectives
to provide visual pleasure as
What is the asset for?
an urban attraction or to
Different physical assets are perform a function of time
acquired through outright
monitoring with the bells
purchase or leasing or are
tolling the hourswhich is a
built to specific plans and
service to the community.
designs. No two assets will
Complex assets perform
have the same objectives.
larger and more involved
An organisation must know
accountable for the assets
continuing reliable
performance in terms of
service delivery.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

services, for example, roads


and rail service
transportation, buses, trams
and trains service the
commuters, etc.
All public services have
their distinctive Service
Objectives, which must be
clearly defined. The Service
Objectives should then be
converted to form the
Service Criteria of the Asset.
If Service Objectives
have been changed, then
the related Service Criteria of
the Asset must be duly
changed and the Asset
Objective must also be
correspondingly modified.
Under these circumstances,
the property contents of the
Asset must then be
renovated, upgraded,
refurbished or redeveloped
to suit the new Asset
Objectives.

19

ASSET MANAGEMENT

The Fundamentals of AM X

ESSENCE
Chapter

Asset Management Principles

Section 2

The Fundamentals of AM Y

ASSET MANAGEMENT

5.

Asset Conditions
and Performance
The condition and
performance of an asset
are never static. Over time,
these decline as the asset
ages. The speed and
severity of the decline will
depend on the intensity of
use and how well the asset
is cared for by proactive
maintenance across the
whole life span.
To ensure that a
standard level of asset
condition and performance
is achieved in order to fulfil
the service delivery
requirements, precise
information on the
condition and performance
of every asset must be
available at all times.
Asset condition and
performance audits or
assessments must be
carried out at prescribed
intervals. These are vital
tasks and must be carried
out diligently and
professionally.
The format and the

20

processes of an
assessment of an assets
condition and performance
are different and must be
drawn up differentlyboth
have to be comprehensive
and as scientific as
possible, i.e., not arbitrary.
All data and results
derived from an
assessment must be
recorded in the
organisations centralised
Asset Register. Reports
and follow-up analysis
must be carried out as a
basis for decision-making.
6. User Expectations
Assets are there for all
to use. How they are being
used will depend on the
service each provides. For
example:
x Roads are for the use of
commuters in both the
public and private
sectors. They include car
drivers and passengers,
public transport service
providers, their drivers
and passengers, foreign

tourists using the roads,


and military personnel
and armed forces using
the roads.
x Hospitals are for the use
of public health officers,
medical and nursing
staff, patients coming
from all strata of society.
x And many other assets
used by various
segments of society.
An organisation, be it a
government agency, a
water supply authority or a
shopping mall operator in
the private sector, may be
the owner, the custodian
and/or the operator of an
asset that provides a
service. It is the users
expectations of a certain
level of service and the
relation to the costs to the
community that is relevant.
The entity must know:
x The level of service the
community wants and
are willing to pay for;
x The communitys
acceptance of asset
trade-offs in exchange

for other social benefits;


x Level of costs which are
within the communitys
economic capacity;
x Kinds of assets that are
vital to the well-being of
a community, without
which it cannot
economically survive, let
alone grow.
All such data on the
user/community
expectations must be
collected and recorded in
the Asset Register for
analysis and subsequent
decision-making by the
policy makers.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

Asset Management Principles

Section 2

The Fundamentals of AM p
identifies the Asset
Stakeholders as follows:
x Local community/users
x Local councillor
x Financial agency
x Consultants
x Building contractor
x Suppliers
x Asset manager
x Tourist association
x Public health authority
x Transport operators
x Local hotel group
x Local shops/restaurants

Assets are for enhancing


the peoples quality of life,
they must therefore be
consulted in all aspects of
managing these assets.
The entity responsible for
the creation and continuing In order to ensure that an
asset will provide the
well-being of the asset
reliable
must involve the stakeholders from the beginning.
But who are they?
For example, a resort
village decides to build a
Public Toilet Block to
benefit the community with
better hygiene and to
attract tourists to keep
visiting this resort area that
the community is proud of.
The local authority thus

and quality service it was


planned and designed for,
the stakeholders should
also be involved in the life
cycle management of the
asset. Assets need to be
optimized, hence
stakeholders must be
involved in the whole
process.
Not all stakeholders
have to be consulted at all
times. Consultants,
suppliers and other
agencies, for example, may
be recalled only when their
expertise is relevant and
necessary.

ASSET MANAGEMENT

principle, those who are


concerned directly or will be
impacted by the asset to be
created in the Asset
Management process must
be involved in the planning
for a new asset. In short,
they are the Asset
Stakeholders.

Graphic by Beattie

7. Asset Stakeholders
The creation and
management of assets is
part of Good Governance.
Such a framework ensures
assets are there for the
ultimate enhancement of
the citizens quality of life.
The whole process of
planning, acquisition,
development, operation
and maintenance, and
finally renewal or disposal
cannot be the responsibility
of a single entity. The
community must be
involved in the Asset
Management process, as it
is to serve them that the
assets are created in the
first place.
Furthermore, many
parties must work together
to establish an asset that
satisfies the Asset
Objectives. This may
involve other departments
or agencies, consultants,
contractors and other
organisations in the private
sector.
As a fundamental

Source: Urban Links No 35, October 2001

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

21

ESSENCE
Chapter

Asset Management Principles

Section 2

ASSET MANAGEMENT

The Fundamentals of AM q
8. Asset Life Cycles
Physical assets are
expensive investments.
Once set up and put into
service, they must provide
the intended quality
service for as long as
possible.
To achieve this, the
asset must be
appropriately cared for
with regular maintenance
and timely repairs, year in
and year out. However,
sub-assets or components
can wear out or break
down and they must be
replaced. Sometimes, the
whole asset system has to
be refurbished, upgraded
or renewed, until it is no
longer economical to
maintain it and it has to be
replaced by
redevelopment; or
disposed of when the
asset is no longer needed
to provide any service.
An asset therefore has
a life span. Since this can
be lengthened as far as
possible to its original

22

maximum and rejuvenated


to provide the service, this
life span has become a life
cycle. With proper
maintenance and
management, an asset
can have many life cycles
before its life comes to an
end; i.e., when the asset is
demolished, sold off or
redeveloped to serve other
objectives.
Ensuring an assets
sustainability involves
whole-of-life management,
hence, we refer to the
process of Asset Life
Cycle Management.
As a major part of
Asset Management is
related to Asset Cost
Management, the Asset
Life Cycle Management
must also include the
following financial
management processes:
x Asset Life Cycle Cost
Management
x Asset Life Cycle
Budgeting
x Asset Life Cycle Cost
Recoveries

In planning for
acquisition or development
of a new physical asset, it
is common to see
organisations include the
initial capital cost in their
financial planning and
totally ignore future costs
of maintenance, repair and
refurbishment.
When the asset is
acquired or constructed,
realistic funding for
maintenance, repair, subasset or component
replacements and
refurbishment in their
medium and long-term
budgeting have not been
allowed for.
Even when there is an
annual budget for
maintenance, this is not
checked by the much
desired Accrual
Accounting System, and
very often the
maintenance budget is
spent on something else.
Asset deterioration is
often gradual and the
effect of poor asset

maintenance often does


not show up until it is too
late.
Those who value their
assets and the services
they deliver to the
community and customers,
will adopt the process of
Asset Management to
correct such inefficient
practices.

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ESSENCE
Chapter

Asset Management Principles

Section 2

9. Asset Management
Objectives
The main objective of
AM is to enable an
organisation to meet service
delivery objectives efficiently
and effectively. Effective AM
must cover the following:
x Ensuring the service
potential is fully realised;
x Ensuring assets are used
appropriately and are
maintained proactively
over many lifecycles;
x Ensuring greater value for
money on the assets
through economic
evaluation options with
lifecycle costing,
appropriate systemic
asset management
techniques and
involvement of
stakeholders ;
x Reducing demand for
unnecessary new assets,
saving public or
shareholder funds through
demand management
techniques and use of
alternatives such as non-

asset delivery options;


x Making agencies
accountable for the asset
meeting objectives and
requiring them to pay for
the acquisition and
holding of the assets, thus
discouraging them from
unnecessary acquisition
of new assets;
x Ensuring the process of
AM is results oriented and
that the agencies must
take full responsibility and
accountability.

The planning process


must be extended to cover
the entire lifecycles of
assets so that service
deliveries are optimised for
optimal performance to
meet user and community
expectations.

11. Economic and


financial appraisals
Asset costs and
benefits must be appraised
from the initial planning
stage right through the
functional lifecycle of the
asset.
10. Planning
Assets well-being is
To achieve the asset
intrinsically tied to finance
objectives of service
delivery, agencies must use and cost recoveries. Sound
comprehensive planning. It budgeting and pricing
must be integrated with the analysis, planning and
organisations corporate and formulating are therefore
paramount to the realistic
business plans, and be
achievement of ultimate
supported by risk
asset service deliveries.
assessments.
Whether it is asset
As conditions and
service needs can change, acquisition, operation or
maintenance, the
planning must be flexible
enough to meet changes in importance of finance and
cost recovery in relation to
a systemic way.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

service deliveries and user


and community satisfaction
cannot be over-emphasized.
12. Asset Management is
a living process
AM is not a static
process, neither can it be
framed up in a standard
model.
To be realistic in facing
all sorts of resource
constraints, agencies must
embark on the AM process
to support service deliveries.
They must start from simple
assessment management
and proceed to Systemic
Asset Management,
improving slowly as they
progress.
A simple asset
management process is
better than none, and until
we have learned the basics
we cant progress to full
systemic mangement.

23

ASSET MANAGEMENT

The Fundamentals of AM r

ESSENCE
Chapter

Asset Management Principles

Section 3

Other Factors concerning AM

ASSET MANAGEMENT

Accrual Accounting and


Financial Management

management system, the


organisation is able to establish
the true cost of owning and
operating assets at any one
time.

Good Asset Management


needs the support of an
effective and realistic accounting
In addition, good financial
concept.
accounting must also be
It is common in the developing
supported with accurate
countries of Asia to adopt the
information on the assets
traditional accounting system
performance, in respect of the
based on cash and commitment functionality and utilisation of the
in actual payment. Such an
assets. Only by integrating the
accounting practice does not
two sets of information systems
possess all the information
will the organisation be in full
needed for asset management control of their assets, their
purposes.
current and future asset
performance and the resultant
In Australia and New Zealand,
services delivery and plan their
where asset management is
financial commitments
part of their system of good
accordingly. Otherwise, all the
governance, accrual accounting hype about enhancing the
is used in concert with improved citizens quality of life with
financial management
optimised services delivery from
information systemsi.e. they
public assets remains pure
give timely and comprehensive rhetoric.
information on the management
of assets.
Department of Treasury and
Finance
These approaches necessitate
well maintained and complete
In Australia and New Zealand,
and accurate asset registers,
the State Department of
coupled with regular
Treasury and Finance plays a
revaluations and assessment of lead role in asset management,
asset holdings. With such an
as they have to approve the
integrated information
budgets and provide the funds.

24

Thus, they set the policy of


financial management and
accounting system for asset
management by the
organisations who hold and
operate the assets.
Under the financial policy, an
asset must be recognised in the
financial statements of an
organisation if it meets all of the
following criteria:

x It has a service potential for


the organisation.

enable the organisation to


account for the cost of an asset
over its useful life.
In their financial reporting,
organisations must include
statements of an annual
depreciation review, and where
appropriate make value
adjustments to reflect the most
recent assessments of the
assets useful life.
Non-Asset Solutions to
Service Delivery

x The organisation has the

capacity to control the service Not all services delivery requires


the creation of new assets.
potential.
Many existing assets can
x The service potential will be provide additional services
used.
delivery by simple modification
x The organisation has control or upgrading. This is an
important alternative strategy to
over the service provision
be considered first before
proven by an event.
x The asset cost or value can deciding to create new assets.
be accurately measured.
New assets need additional
x The estimated value is above resources, training and
the organisations recognition responsibilities in asset
maintenance and management.
threshold.
They will increase tax burdens
An organisation is required to
on the community, thus it is
make financial recognition of the prudent to consider all
decline in service potential over alternatives first before planning
the life of an asset through the
new assets.
method of depreciation. This will

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

Asset Management Principles

Section 4

Ultimate Outcomes of AM


Community
Life Enhancement

SUMMARY

Service Delivery

Operation &
Maintenance
whole-of-life
Asset Management
Process

Acquisition

ASSET MANAGEMENT

Service
Strategy

SAM Process

Once the process deals with external


factors, such as the relationships between
an asset and sub-assets, between the
asset and other assets, and between the
asset and the community as well as the
social, economic and environmental needs,
we are getting into the holistic process of
Systemic Asset Management.

Service
Delivery

Agencys

The purpose of this Section is to lay the


framework and fundamentals for setting out
an integrated asset management process
for sustainability as shown in Figure 4.

Asset
or
Non-Asset
Strategy

Planning
StepPower Process

Government
Policy

This is the process that will enable an


organisation to achieve urban
sustainability, which will be discussed in
Section 4.

Financial
Management
Proceed to
SAM Process

Agency
Corporate
Plan
Customer
Service

Environmental
Needs

Social
Needs

Economic
Needs

(Community)
(Political)

Figure 4 An Integrated Asset Management Process for Sustainability


THE ESSENCE OF ASSET MANAGEMENTA GUIDE

25

ESSENCE
Chapter

Asset Management Principles

Section 5

Whats in it for the Community ?n

ASSET MANAGEMENT

his is a question commonly asked. Of all the objectives, the


most essential is that asset management ultimately benefits
the community. However, to achieve this fundamental objective,
the community must know the AM process. They need to know the
what, why, where, when, how and how much with regard to the
service delivery from the assets, and how they are being
maintained.
Asset management is a process in which the community can
become active stakeholders so that they can play a constructive
role working in partnership with the local council and agencies.
Consider the management of footpaths. The community does not
really know what is to be done when they see the footpaths are
T AB L E 1 :

posing danger to the pedestrian. However, if the local council is


following good AM practice and produces the Footpath
Maintenance Service Levels Chart as presented in Table 1 below,
the community, in their participation as stakeholders, will be able to
know all there is to know about the rectification works. They will be
able to monitor the work performance of the council workers, and
thereafter assess the outcomes. If a public complaint is necessary,
the community will be in the position of making factual comments
and pointing out the faults correctly. As council is often working
under pressure, such positive stakeholder contributions will be well
appreciated by the authority. It is a win-win situation that builds
community harmony for sustainable urban management.

F O O T P AT H M AI N T E N AN C E S E R V I C E L E V E L S

SERVICE LEVEL

REASONS FOR

LEVEL OF

ACTIVITY

ACTIVITY

INTERVENTION

QUALITY

Inspection Regime

Follow Road management Bill - Identifying


Work Needs for maintenace program

N/A

Concrete Lip Grinding


(Grind Lip to Level)

Where observed lip is < Permanently


Observed lip considered 5mm and < 20mm in
Executed
N/A
dangerous
height variation
Repair

N/A

Considered dangerous Make Safe


to ped's or vehicles
Temporarily

Concrete Bay Replacement (replace 1 whole


bay and/or adjacent bays Lip raised, cracked, broif needed)
ken, or all of the above

26

Lip > 20mm, raised bay


is > 20mm, cracks >
5mm in width or bay is
cracked or broken for
20% its area
Considered dangerous
to pedestrians

QUANTITY

N/A

N/A

Permanently
Executed
N/A
Repair
Make Safe
Temporarily N/A

RESPONSIVENESS

Resource

Pedestrian Volume
HIGH
MED
LOW

Level
Men No.

3 mths

12 mths

10 work 20 work 60 work


days
days
days

24 Hrs

6 mths

24 Hrs

24 Hrs

10 work 20 work 60 work


days
days
days
24 Hrs

24 Hrs

24 Hrs

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Chapter

Asset Management Principles

Section 5

Whats in it for the Community ?o

Asphalt Patch (Saw cut


and replace section)

Brick Pavers - Relevelling

Gravel Repair

Pothole, broken surface,


tree root damage, lifting,
depression or severe
cracking

Pavers are out of alignment, broken, raised, or


missing

Pothole or depression

Footpath Maintenance Service Levels (Cont'd)


Raised or depressed
area is > 20mm, cracks
> 5mm in width or seg- Permanently
ment is cracked or bro- Executed
N/A
ken for 20% its area
Repair

10 work 20 work 60 work


days
days
days

Considered dangerous
to ped's or vehicles

24 Hrs

Make Safe
Temporarily

N/A

24 Hrs

10 work
days
N/A

N/A

Considered dangerous
to ped's or vehicles

24 Hrs

N/A

N/A

N/A

N/A

60 work
days

N/A

Localised faliures up to
a max. of 10 sqm; a
Permanently
potential hazard for
Executed
N/A
pedestrians
Repair

24 Hrs

Raised paver is >


20mm, depressed area Permanently
> 20mm, paver broken Executed
N/A
or missing
Repair
Make Safe
Temporarily

ASSET MANAGEMENT

Table 1:

Pedestrian Volume Classifications


HIGH

In areas of main shopping precincts, aged care centres, senior citizen centres, schools, hospitals, libraries, main community facilities, transport hubs, shared use paths in Parklands and carparks in shopping centres

MEDIUM

In areas along main roads, local roads, all paths in Parklands, other than shared use paths and all carparks other than
those in shopping centres

LOW

In areas along minor streets, including cul-de-sacs

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

27

ESSENCE

ASSET MANAGEMENT

He who learns without thinking is lost;


He who thinks without studying is in danger.
Confucius
Steven Howard 2003

Human beings are gifted with enormous and inventive


brains. Our curiosity and capacity for abstraction have
served us very well. We have an ability to recognize
patterns and regularities in nature, enabling us to
develop worldviews in which everything is interlinked.
We learn through observation and trial and error,
gradually accumulating knowledge that enables us to
anticipate the future.
David Suzuki 1992

Monotony is the law of nature.


Look at the monotonous manner in which the sun rises.
The monotony of necessary occupations is exhilarating
and life giving.
Mahatma Gandhi
Steven Howard 2003

28

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

The Living World

ASSET MANAGEMENT

CHAPTER 3
1. Natures Living World
2. Cities as Living Systems
3. Systems Thinking and Systemic Asset
Management (SAM)

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

29

ESSENCE
Chapter

The Living World

Section 1

Natures Living World

ASSET MANAGEMENT

he world is a finite
space, with organisms
living as interrelated and
interdependent members
of ecological communities.
Together they form
complex ecosystems.

CONSUMPTION

Herbivores

In natures living world, these


natural ecosystems form a
web of life. Todays scientists
visualize this web of life as a
set of living systems networks
adapting to natures forces to
sustain a balanced and
harmonious living world.
According to scientist William
R. Eblen, natural ecosystems
are made up of abiotic factors
(air, water, rocks, energy) and
biotic factors (plants, animals,
and microorganisms) evolved
on the Earth over some three
billion years. The Earths
biosphere, including the
atmosphere (air),
hydrosphere (water), and
lithosphere (land), constitutes
a feedback or cybernetic
system that reflects what
Ren Dubos referred to as a
co-evolutionary process
between living things and

30

Carnivores

Decomposers

RECYCLING

PRODUCTION

Minerals
Figure 5

Green Plants

Energy (Sun)

Air, Water

Natural ecosystem
Source: William and Ruth Eblen, Experiencing the Total Environment. N.Y.:
Scholastic Book Services, 1977, in Ruth A. Eblen and William R. Eblen, Eds,
The Encyclopedia of the Environment, Houghton Mifflin Co., N.Y., 1994.

their physical and chemical


environments. The largest
ecosystem (the universe or
total environment) is made up
of many smaller ecosystems
interlocked through cycles of
energy and chemical

elements.

water, carbon, oxygen,


nitrogen, phosphorus, sulfur,
The flow of energy and matter and other cycles that are
through ecosystems,
essential to the functioning of
therefore,
the biosphere. (William R.
is regulated by the complex
Eblen, 1994)
interactions of the energy,

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

The Living World

Section 2

Cities as Living Systems X


s urban settlements,
cities cover a wide
range of sizes, conditions
and circumstances. Some
have grown to become
sprawling megacities;
others remain small; some
of medium-size remain
compact; still others are
declining in population
suffering unstable
conditions and barely
surviving. Irrespective of
size, cities can be healthy
and/or wealthy or
unhealthy and/or poor,
depending on the
dynamics of their living
systems.
Cities are made up of
urban cores and suburban
areas co-relating as a web
of urban communities,
usually distinct from rural
communities. As legislative
control becomes less
restrictive, more and more
rural land is converted to
urban land. In many fast
growing cities, this
expansion has created

urban sprawl, putting


enormous strain on the
urban infrastructure.
However, if the urban core,
including the inner suburbs
becomes over congested,
this puts extreme demands
on urban services, which
fail can if working beyond
the existing infrastructures
capacity.
Unless cities can adjust
themselves quickly
through proper urban
management, the humanmade urban environment
will become unsustainable
and citizens quality of life
will drop rapidly, even
dangerously.
Its the cityscapes and
physical assets of
infrastructure and buildings
that define a city. These
features of identity are
nothing more than urban
objects, in the sense that
they do not portray the

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

Cities cannot selfgenerate, self-regulate and


self-dispose of their
wastes in a human-made
environment supported by
urban systems of assets.
The cities can only do so
through the deliberate
intervention of the human
communities they serve
with proactive
maintenance, recycling
and revitalisation. This in a
nutshell is the process of
Systemic Asset
Management for
managing the cities living
systems.

to a certain degree, it also


involves the ecological
communities.

sustainable development
of a city.

A city has systems


organisation of ecological
communities as well as
symptoms of health and
sickness as in natures
living world. In fact, the
human communities of a
city are the extended
ecological communities,
since humans too are
organisms of the living
world.

A citys sustainability in
development concerns
both its present and future
social, economic and
environmental well-being
as a result of
interrelationships,
interdependencies and
interactions amongst the
human communities; and,

In other words, urban


assets are more than just
aesthetics; they are noted
for the essential services
they provide, in order to
enable communities to
network as dynamic living
systems to support social
and economic
performance.

ASSET MANAGEMENT

Thus, a city is intrinsically


a part of a web of living
systems formed by
communities.

31

ESSENCE
Chapter

The Living World

Section 2

Cities as Living Systems Y


ike a colony of
organisms, a city as a
web of life does not exist in
isolation. Together with
other cities, more and
bigger webs are formed. In
todays globalising world,
global webs of life are
there; though some
network more closely than
others. Whether big or
small, national, regional or
global, these webs of life
interact, interrelate and are
interdependent just like the
ecological communities in
the natural world.

KC Leong

ASSET MANAGEMENT

32

As human communities
evolve from simple
settlements to towns and
cities, they create their
own living spaces with
their own physical
assetsinfrastructure,
buildings and supporting
facilities. In order to
maintain these physical
assets in a living world,
humans must maintain the
cities in the form of living
systems networks.

can enable cities to attain


an acceptable quality of
life and standards of
balance and sustainability
within which the
communities can network
as continuing dynamic
living systems.

Natures habitat has


abiotic elements in the
form of rivers, mountains,
rocks and energy from the
sun, and biotic elements in
the form of forests, plants,
animals, microorganisms
However, the primary
concern is not about these and other assets. These
work together as
urban assets per se, but
interrelated systems to
about how these assets

provide the essential


functions for the
generation of nutrients,
conversion of carbon
dioxide to oxygen,
channelling aquifers to
provide irrigation, and so
on for the purpose of
sustaining the living
systems.
The main difference
between the two kinds of
assets are that urban
assets are human-made
while natures assets are
organic structures evolving
from the living systems.

A city as a web of lifeIstanbul

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ESSENCE
Chapter

The Living World

Section 3

Systems Thinking and SAM X


tian von Ehrenfels had the
same concept in his study
of the organic form, Gestalt, as distinct from
formwhich denotes inanimate form. Ehrenfels
introduced Gestalt as an
He points out that even
with quantum theory, sub- irreducible perceptual pattern from which Gestalt
atomic particles are not
psychology arose. It was
mere matter but
Ehrenfels who characterinterconnections among
ised a gestalt by asserting
things hence physicists
working on quantum phys- that the whole is more
The evolution of systems
than the sum of its parts
ics will never end up with
thinking has brought three
which has since become
any thing but deal with
important concepts to our
the key maxim of system
interconnections. In emunderstanding of the living
thinkers.
phasizing the points, he
world. These have proquotes what Werner
foundly influenced the reHeisenberga founder of In systems thinking, two
cent emergence of Systhe quantum theoryhad new concepts
temic Asset Management.
put it eloquently that, The community and networkare introduced by
1. Shifting from Object world thus appears as a
ecologists. Capra explains
complicated tissue of
to Network
that by viewing an ecologievents, in which connecCapra points out that the
cal community as organtions of different kinds alessential properties of an
ternate or overlap or com- isms integrated into a funcorganism, or living system,
tional whole by their intrinbine and thereby deterare properties of the
sic interrelationships,
mine the texture of the
whole, which none of the
ecologists are able to shift
whole.
parts have. They arise
focus from organisms to
from the interactions and
According to Capra, Chris- community and back and
cientists of today are
moving away from the
Cartesian approach of
physics to the life sciences. They are increasingly dealing with form instead of matter, wholes
instead of parts, and systems thinking rather than
mechanistic, reductionist
or atomistic thinking.
(Fritjof Capra, 1997.)

relationships among the


parts and the nature of
the whole is always different from the mere sum of
its parts.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

this kind of concept can


continue to be applied to
different systems levels.
Capra observes that
Today we know that most
organisms are not only
members of ecological
communities but are also
complex ecosystems
themselves, containing a
host of smaller organisms
that have considerable
autonomy and yet are integrated harmoniously into
the functioning of the
whole. So there are three
kinds of living systems
organisms, parts of organisms, and communities of organismsall of
which are integrated
wholes whose essential
properties arise from the
interactions and interdependence of their parts.
Capra concludes that the
web of life consists of networks within networks
In nature there is no

33

ASSET MANAGEMENT

ESSENCE
Chapter

The Living World

Section 3

ASSET MANAGEMENT

Systems Thinking and SAM Y

A
Figure 6

Shift from Object to RelationshipsSystems Thinking


Source: Fritjof Capra, The Web of Life: A New Scientific Understanding of Living Systems
Anchor Books, Random House, New York, 1997, p. 38

objects appear to be interacting with each other, the


relationships are secondary. In Fig. 4-B, on the
other hand, the objects
themselves are networks
of relationships, while by
With the two diagrams
shown above, Capra illus- interacting together, they
trates in Fig. 4-A that, with form larger networks. This
is so because in systems
the mechanistic view, the
living systems are a collec- thinking the relationships
tion of objects. Though the are primary, while the
above or below, and
there are no hierarchies.
There are only networks
nesting within other networks.

34

boundaries of the discernible patterns (objects) are


secondary. Capra then
points out the startling
revelation that In the new
systems thinking, the
metaphor of knowledge as
a building is being replaced by that of the network. In a nutshell, Capra
has prompted us to look
beyond the traditional

mechanistic ways of thinking within fundamental


laws, fundamental principles, basic building
blocks, which have been
the ways of Western scientists and philosophers
since Ren Descartes
time.
Capra clarifies that When
this approach is applied to

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

The Living World

Section 3

science as a whole, it implies that physics can no


longer be seen as the
most fundamental level of
science. Since there are
no foundations in the network, the phenomena described by physics are not
any more fundamental
than those described by,
say, biology or psychology.
They belong to different
systems levels, but none
of those levels is any more
fundamental than the others.

Under the Cartesian paradigm scientific descriptions


are taken as objective
ignoring the human observer and the process of
knowing. In the new systems thinking, epistemology, which concerns the
understanding of the process of knowing, must form
part of the descriptions.

3. Systems Thinking is
always Process
Thinking
While all the systems concepts as discussed so far
have shaped the systems
thinking, which may be
called contextual thinking,
Capra also draws our attention to another strand
emerging during the latter
part of this century, and
this is process thinking.

tain themselves in a state


of dynamic balance with
their variables fluctuating
between tolerance limits.
Capra concludes that,
systems thinking is always process thinking.

This concept forms the


third fundamental principle
of Systemic Asset Management in that the continuing optimization of an
Werner Heisenberg, as
infrastructure asset must
quoted by Capra, says
involve a holistic process
that, What we observe is
In systems science every
of maintaining the assets
not nature itself, but nature
structure is seen as the
state of dynamic balance
exposed to our method of
manifestation of underlying
with all the variable forces.
questioning.
This concept of network
processes. This basically
forms the fundamental
Systems thinking has thus stems from Alfred North
principle of Systemic Asset
Whiteheads work on procshifted from objective to
Management in that all
epistemic science involv- ess-oriented philosophy
infrastructure assets and
during the 1920s, and
ing the method of quesbetween assets and the
physiologist Walter Cantioning and this has becommunity are interrelated
non who around the same
come an integral part of
and interdependent.
time took up Claude Berscientific theories.
nards principle of the con2. Shifting from Objective This concept forms the
stancy of an organisms
to Epistemic
second fundamental princi- internal environment and
developed his concept of
This also leads to another ple of Systemic Asset
homeostasisthe self
Management in that the
discovery put forward by
regulatory mechanism that
process of knowing must
Capra.
allows organisms to mainbe through Stakeholders.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

35

ASSET MANAGEMENT

Systems Thinking and SAM p

ESSENCE

/

ASSET MANAGEMENT

The pedestrian remains the largest single obstacle to free


traffic movement.
Los Angeles planning report
David Engwicht1992

Clay is molded to make a vessel, but the utility of the


vessel lies in the space where there is nothing.
Thus, taking advantage of what is, we recognize the
utility of what is not.
Lao Tze
Steven Howard 2003

Monotony is the law of nature.


Look at the monotonous manner in which the sun rises.
The monotony of necessary occupations is exhilarating
and life giving.
Mahatma Gandhi
Steven Howard 2003

36

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

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Chapter

Systemic Asset Management

ASSET MANAGEMENT

CHAPTER 4
1. Systemic Urban Management Process
2. The Complete SAM Process
3. Step-Power Process for Complete SAM
4. Step-Power 1 Asset Objectives
5. Step-Power 2 Asset Knowledge: The Asset Register
6. Step-Power 2 Asset Knowledge: Asset Valuation
7. Step-Power 2 Asset Knowledge: Life Cycle Costing
8. Step-Power 2 Asset Knowledge: Asset Pricing
9. Step-Power 2 Asset Knowledge: Learning from the Past
10. Step-Power 3 Asset Skills: Four-Phase Life Cycle AM
11. Step-Power 3 Other Skills for Lifecycle AM
12. Step-Power 4 Asset Tools: ICT Hardware and Software
13. Step-Power 4 Asset Tools: ICT Networked Intelligence
14. Step-Power 4 Asset Tools: Checklist
15. Step-Power 4 Asset Tools: Sensitivity Tests
16. Step-Power 5 Asset Decision-Making: Network Analysis
17. Step-Power 5 Asset Decision-Making: Simulation Games

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

37

ESSENCE
Chapter

Systemic Asset Management

Section 1

Systemic Urban Management Process X

ASSET MANAGEMENT

forest or a river, it can perform


its function with vitality or it can
age and be transformed.

asset systems serving the


human communities in a web of
life. Each city will also interact
Systemic Asset Management is In the ecological systems, these with other cities within a nation,
across the nations, and
a holistic process of managing organismic systems can
globally; they form a global web
assets and the interregulate themselves to optimise of life.
relationships between them and their functions or be replaced
between the assets and the
naturally. However, in the case
community. This process
of the urban systems of assets, As a web of life, a city cannot
occurs within a framework for
they can do so only through the reach holistic sustainability, i.e.,
socially, economically and
asset life cycle optimisation in
deliberate intervention of the
environmentally, unless all the
order to ensure the resultant
human communities they
systems of assets within the
services will continue to
servewith proactive
system-chain are by
enhance the communitys
maintenance, recycling and
themselves working and
quality of life, while maintaining revitalisation.
networking optimally and
urban sustainability.
relating to the human
The Systemic Framework An urban asset, be it a road, a communities effectively.
bridge, a sewage treatment
The development of systems
plant, a hospital, a school, a
This concept has, in the last two
science has had a profound
factory, a shopping mall or a
decades, led to the steady
influence on the new
home, is there to perform a
emergence of the science and
understanding of organismic
function for a human
systems. This has prompted
communitynone of these are technology of Asset
many of us involved in urban
there in isolation. Although each Management to carry out the
lifecycle management of urban
planning and management to
asset, as in the case of an
assets in a holistic way. Under
treat cities as dynamic living
organism, is itself a system,
the principle of homeostasis,
systems.
each is interrelated and
holistic Asset Management has
interdependent with another
The cities are living habitats
also been developed to induce
asset system.
with the support systems of
the development of selfphysical assetsinfrastructure,
regulating systems processes
These asset systems not only
buildings and supporting
for maintaining growth and
facilities. Each of these systems interact with each other but also dynamic balance in dealing with
with the humans they serve.
has a definite functional life
all the variables.
span. Just like a plant, a tree, a Thus, the city is a system of

What is Systemic Asset


Management?

38

The Beginning and End of an


Asset LifeAsset Life Cycle
The life cycle of an urban asset
has four Phases, starting from
conception to the end of its
functional life, as shown in
Figure 7.
Phase 1 for Planning, is the
gestation period during which
the idea of establishing an
asset desired by the community
is formed. The well-being of a
healthy asset depends on
critical planning at this stage by
a large team of stakeholders
and multi-disciplined
professionals. We will go
deeper into this in the later part
of this Section.
Phase 2 for Acquisition is the
birth and infant care period of
an asset, either by acquiring a
ready-made asset or by
developing it through the
process of design and
construction. This phase may
involve architects, engineers
and contractors.
Phase 3 for Operation and
Maintenance is the full age
adult life of an asset, serving

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Chapter

Systemic Asset Management

Section 1

Systemic Urban Management Process Y

Phase 4 for Renewal or Disposal is the end


of an assets functional or service life. The
organisation must carefully decide whether to
dispose of the asset or get it ready for a
renewal of life to provide another lifecycle of
service. Depending on circumstances, the
asset function may be changed, especially
when the asset is transferred and used by
another organisation of the government.
Each city has a complex network of asset
systems to serve the populace. Asset
systems and the communities have a very
close relationship and are interdependent on
each other for mutual benefits. Not only can
one not do without the other; both systems
have a duty and responsibility to care for
each otheras both have the intrinsic right
for a useful life with each others direct
support.

Gestation

1.
Planning
End / New

Birth

4. Revitalisation / Disposal

2.

ASSET MANAGEMENT

the community while regulating itself to


maintain its expected level of healthy service
performance. Maintenance is a crucial stage
and often neglected by owners and
operators. Maintenance works are
superficially carried out and confused with
domestic cleaning. As a result, staff involved
are not properly trained and the whole work
is not managed by maintenance
professionals. We will discuss Asset
Maintenance in details in Chapter 5.

Acquisition

3.
Operation &
Adult Life

Figure 7

Whole-of-life from Conception to Endof-Functional-Life of an Asset

network of ecological communities. They are the


complex urban ecosystems.
In order to maintain a healthy city as part of an
ecosystem, we need to know more than just asset
life cycles. We need to look at a bigger picture of
urban sustainability that embraces asset life cycle
management. We need to examine the entire
holistic process of Systemic Asset Management.
We will now move on to the bulk of this Section to
look at this bigger process. This is the key part, so
get yourself a hot drink, sit back, and read on.

In a healthy living city, citizens, natures


organisms and urban assets form the

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

Systemic Asset
Management is a holistic
process of managing
assets and the interrelationships between the
assets and between the
assets and the community.
This occurs within a
framework for asset life
cycle optimisation in order
to ensure the resultant
services will continue to
provide enhancement of
the communitys quality of
life while maintaining urban
sustainability.

39

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Chapter

Systemic Asset Management

Section 2

The Complete SAM Process


Objective

ASSET MANAGEMENT

n asset management, an organisation such as


a state government, a city administration or a
municipality has to deal with all kinds of asset
management. It may have to bring electricity to
certain rural areas, provide groundwater facilities
management to enable farmers to dig wells for
irrigation during drought, extend new roads,
extend or replace certain bridges to meet traffic
conditions, provide community toilets with a
greenbelt septic tank effluent disposal system to
prevent groundwater contamination, expand a
local clinic or build new ones, extend or build a
new school, and many more.
In order to maintain urban sustainability to
balance social, economic and environmental
forces, the organisation must have a complete
Systemic Asset Management Process framework
to follow. Within asset portfolios, each asset
management assigned project requires different
degrees of asset management involvement.
Whatever the variable processes, the principles
within the Complete SAM Process framework
remain unchanged.
Within the Complete Systemic Asset
Management Process framework, there are five
essential steps involved: 1) Asset Objective; 2)
Asset Knowledge; 3) Asset Management Skills;
4) Asset Management Tools; and 5) System Plan
for Enabling Decision-Making .
My friend Ashay Prabhu and his wife Ujwala have
a lot of experience in asset management works
and they have an illuminating way of illustrating a
situation a person is in if he is not able to
complete all the five steps in a systemic asset

40

SUCCESS
-

Knowledge

Skills

Tools

Systemic Plan

Knowledge

Skills

Tools

Systemic Plan

Confusion
.

Skills

Tools

Systemic Plan

False Picture
.

Tools

Systemic Plan

/ Anxiety

Systemic Plan

/ Frustration

Objective

Objective

Knowledge

Objective

Knowledge

Skills

Objective

Knowledge

Skills

Tools

/ False Start

Figure 8 Complete Systemic Asset Management Solution for Success


management project. Figure 8 is their graphic illustration. Ashay enlightens
us that if one does not have an Objective yet moves on regardless, he will
end up in confusion. Without Knowledge about the assets, he will end up
having a false picture. Without Skills in AM he will end up with anxiety.
Without Tools to make analysis he will end up in frustration. Finally, without
a Systemic Plan, he will not be able to assist the client/top management
executives to make decisions in Systemic Asset Management.
From my own experience, I can fully appreciate the kind of feelings so
succinctly portrayed by Ashay and Ujwala. The bottom line in SAM works is
therefore determination, commitment and dedication in involving all the five
key steps in achieving the Complete Systemic Asset Management
Process.
For this reason, I have developed the SAM Step-Power Process to ensure
achievement of the Complete SAM Process, the details of which are
discussed in the Sections that follows.

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Chapter

Systemic Asset Management

Section 3

machine): An electric motor


powers this drill. 4. to drive or
Step-Power is a result of the
push by applying power: She
interaction of two phenomena
powered the car expertly up
represented by the words:
the winding mountain road.
step and power.
Again, the word power is not
limited to any direction until a
Step, as defined by
particular force is applied.
Websters dictionary, is,
among others, a movement
When the two words are
made by lifting the foot and
combined to form Step-power
setting it down again in a new
a new phenomenon arises
position, accompanied by a
which can be described as
shifting of the weight of the
follows:
body in the direction of the
new position. The word can x The motor does not move
also mean a support for the
by itself unless a deliberate
foot in ascending or
force is applied.
descending: a step of a
x The motion is not rapid, but
ladder, a stair of 14 steps.
moves one step at a time
Thus, the direction of motion
with deliberation.
can be forward or backward,
or, stepping up or stepping
x The step-like motion
down.
represents a persons
Power, again according to
ability to act by applying a
Websters is, 1. ability to do
force with the objective of
or act; capability of doing or
accomplishing one set of
accomplishing something. 2.
goals as each step is
energy, force, or momentum.
reached.
3. (of a fuel, engine, or any
x Each step in the motion
sources able to do work) to
represents a position that
supply force to operate (a
contains a set of goals.
What is Step-Power?

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

x When the person is


satisfied with his
accomplishment at the
position of the first step, he
will prepare the next set of
goals and be ready to
move on to the next step.

x Again, if it is satisfactory to
his expectation, he will go
through the same process
of moving to the next step.

x However, if it is not to his


satisfaction, he will move
back one step to reappraise the situation and
make revised preparation
before moving to the next
step again.

phenomenal process in
which time, space and the
human mind fuse into a
sequential step-by-step
progression of objectives
and goals, pausing at each
step to gather further data
and instructions while
recharging the system with
appropriate hardware and
software to move on to the
next step, until reaching the
final step to realise the
ultimate objectives that
were initially set.

From the description given


above, it is not unlike the
processing power and motion
of a computing CPU
crunching in slow motion. It is
x He will continue until
a powerful process designed
arriving at the last step in
for control and result-focused,
the same process, but may which is exactly the process
step back down if he fails to of Systemic Asset
make satisfactory
Management. Hence, I name
accomplishment. When the it the SAM Step-Power
final goals at the last step
Process.
are met, then the whole
mission is considered
completed.
The SAM Step-Power
Process
x Thus Step-Power is a

41

ASSET MANAGEMENT

Step-Power Process for Complete SAM n

ESSENCE
Chapter

Systemic Asset Management

Section 3

Step-Power Process for Complete SAM Y

ASSET MANAGEMENT

In systemic asset management, the


process for any project generally entails
five sets of goals in order to complete
and achieve the final objectives:
1. Changing community needs for the
communitys sake.
2. Assets involved must focus on the
change demanded.
3. Professionalism in change
management.

THE ENABLING
PROCESS

THE SAM STEP-POWER PROCESS

Decision
making

Strategic urban
managt plan

Sustainability
& innovation

THE GOALS

Ensuring continual
quality-of-life enhancement

Ensuring ecological
balance

SAM
Tools

Technical & technological


resources

Professionalism in
Change management

SAM
Skills

4. Ensuring ecological balance.


5. Ensuring continual quality-of-life
enhancement.
These are set out as goals on the right
column of Figure 9.
In order to achieve all the five goals, we
need an enabling process for each of
the goals, and this is set up in the left
column of Figure 9.
Thus, to satisfy Goal No. 1 on
community needs, we must look into
the framework of Good Urban
Governance within which to set up a
management process.
With respect to Goal No. 2 on ensuring
assets that we have to work with or
procure resulting from Goal No. 1, we
must look into areas of responsibility

42

Responsibility
& control

Good urban
governance

Assets focus
in change

Asset
Knowledge

Asset
Objectives

Changing community needs


for community sake

Figure 9 SAM Step-power Process

and control within which to set up a management process.


With respect to Goal No. 3 on the integrity of change management resulting
from Goals 1 and 2, we must get the appropriate technical and
technological resources within which to set up a management process that
can ensure the highest professionalism.
With respect to Goal No. 4 on ensuring ecological balance resulting from
Goals 1, 2 and 3, we must check against the sustainability demands of

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Chapter

Systemic Asset Management

Section 3

Step-Power Process for Complete SAM p

Step 2: In relation to Goal 2


and Enabling Process 2, we

2. After the initial Step 1,


each subsequent

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ascending step is not a


static position. If the
goals at that position are
not satisfactorily
achieved, one descends
to the previous step to
revise the process
before re-ascend the
step again.

ASSET MANAGEMENT

establish the management


social, economic and
environmental factors within process on Asset
which to set up an innovative Knowledge.
management process.
Step 3: In relation to Goal 3
With respect to the last Goal, and Enabling Process 3, we
establish the management
No. 5, on establishing a
Strategic Urban
process on Asset Skills.
Management Plan resulting
Step 4: In relation to Goal 4
from Goals 1, 2, 3 and 4, we
and Enabling Process 4, we
must look into a decisionestablish the management
making process stemming
process on Asset Tools.
from the combined enabling
processes responding to the Step 5: In relation to Goal 5
four preceding Goals.
and Enabling Process 5, we
establish the Systemic
Stemming from the five
Strategic Urban
Goals and the five
Management Plan to
responding Enabling
achieve the Asset Objectives
Processes, a SAM Stepin Goal 1.
power Process of Five Steps
is thus established, which is The SAM Step-Power
shown in the centre column Process, as shown by its
of Figure 9.
graphic presentation in
Figure 9 clearly reveals its
Step 1: In relation to Goal 1
characteristics:
and Enabling Process 1, we
establish the management
1. The process must move
process on Asset
forward one step at a
Objectives.
time.

3. Each step is governed


by a corresponding Goal
and supported by a
corresponding Enabling
Process.
4. Each higher step is
closely related to all the
preceding steps below.
5. Only when all the five
Steps, the Goals and the
Enabling Processes are
systematically working
closely together will then
be a SAM Step-Power
formed for sustainability.
In the Sections that follow in
this Chapter, we shall
discuss how each StepPower Step is applied in
asset management.

43

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Chapter

4
Section 4

Systemic Asset Management


STEP-POWER 1

Asset Objectives

ASSET MANAGEMENT

sset objectives and


service needs are
interrelated. If the needs are
no longer there, out go the
asset objectives. When that
happens, the asset must be
disposed of, since a disused
or abandoned asset is a
liability. In some cases,
abandoned assets can pose
safety and health risks to the
community. However, it
drains valuable resources to
maintain unused assets for a
long period, which most
organisations can ill afford.

The fundamental objectives for


assets are their service
potentials. Existing assets in the
form of natural resources, land,
infrastructure, buildings, plant
and equipment, and cultural and
heritage properties must have
their individual asset objectives.
Even for assets within the same
class, their respective objectives
may vary to suit service needs.
For example, in rural areas,
local roads asset objectives are
different from those of a trunk
road. The former is for light and

44

slow traffic and low volume,


while the latter is for heavier and
higher speed traffic and higher
volume. Again these are very
much different from suburban
roads and express ways in the
urban areas.
While all the service needs in
the above examples are
different, each will also have
different relationships with local
social, economic and
environmental conditions.
Consequently, their respective
asset objectives must be
thoroughly investigated and
established by taking all
surrounding factors into
consideration.
Another situation worth paying
attention to is the fact that social,
economic and environmental
conditions are never static. They
are constantly changing, hence
there can be no standard sets of
asset objectives for similar
assets. Unfortunately, many
agencies continue to make such
fundamental mistakes in using
standard asset objectives for
asset procurements.

In developing countries, there is


a tendency to pay little or no
attention to asset objectives.
When it comes to provision of
community services from
assets, the same modus
operandi applies, only it is often
worse.

amount of subsequent
management work will yield
good assets for quality services.

It is an accepted cardinal rule


that no two communities have
similar geographical, social,
economic and environmental
conditions. At different times, the
For example, after many
same community may have
requests made by the
different needs. There are times
community, a local authority
when a community would prefer
finally provides a community hall a semi-open community hall to
constructed from a standard
suit the local climate and their
building plan pulled out from a
way of life. Spending more
drawer full of standard designs. money to construct a fully
The resultant frustrations
enclosed hall may not serve the
suffered by the community were communitys service objectives
only to be expected, because
at all.
the hall was never designed to
suit their specific needs. Had
Thus defining the asset
asset objectives been properly
objectives is the very crucial
investigated and established,
Step-1 to begin asset
the community would have a
management. In the SAM Stephall that could perform all the
Power, this is the critical Step-1.
functions required by the
Without them being resolved
community. For that, the
through thorough investigation
building would not have cost the and consultation with
local authority more. Instead it
stakeholders and the
ended in a sad situation of no
community, there is no asset
winners but losers all round.
management to start, let alone
Systemic Asset Management.
Asset objectives are the starting
point of good asset
management. Without them, no

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Chapter

4
Section 5

Systemic Asset Management


STEP-POWER 2

he fundamental reason for


creating infrastructure
assets is to use them to
provide services. Therefore an
organisation must from the
beginning have all the relevant
information about the asset
they own and/or control.

During the functional life of an


asset, there may be serious
service breakdown crises
requiring drastic action to
rectify the situation.

All these operation and


maintenance activities have
direct financial implications and
They must begin by recording they must be accurately
recorded, and include
inventory of each asset,
containing basic data such as: investigative reports, and the
final solutions implemented.
date of birth, full contract
This will ensure that
documents of procurement,
and full details of sub-assets, management decisions can
be based on regular and
including their respective
accurate reports.
locations, sizes, etc. (in the
case of road networks,
pavement networks, roadside From time to time, condition
drain networks, stormwater
assessment and performance
networks, etc.)
assessment have to be
appropriately made and
recorded for analysis and
Once the assets are under
reporting.
operation and delivering
services, accurate information
on regular maintenance and
In addition, economic valuation
repairs, replacement of
of assets has to be carried out
components and sub-assets
and reported. This is important
and asset refurbishments
as it will enable asset
must be kept in records.
managers to prepare annual
as well as short and long-term

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

budgeting for maintenance, for retrieval efficiently and


effectively.
review and for making
decisions.
Thus, a database system
commonly known as an Asset
Only with accurate and up-toRegister must be established
date data can reporting be
and professionally maintained.
useful to the top management
of an organisation. Such data For an Asset Register to
supports sound decisions with effectively support decisionmaking by the management, it
respect to service delivery
must:
capacity, further asset
acquisition, maintenance
strategies and asset renewal x be fit-for-purpose built;
or disposal. And, only with
x contain inventories of
such accurate reporting can
assets basic details, such
the management be certain it
as dates of birth, design
is complying with statutory
and construction contract
financial reporting to the
documentary details,
financial authority.
including details of
consultants, contractors,
Asset Register
specialist contractors,
suppliers, trade warranties
All agencies charged with the
and contact persons;
responsibility of operating
infrastructure assets to provide
x contain details of individuals
services may be inundated
or organisational units
with a huge amount of asset
accountable for the assets
information and assessment
under their respective
data. Asset information
control and management;
systems must be set up to
conduct information and data
collection, recording and

45

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Asset Knowledge: The Asset Register n

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Chapter

4
Section 5

Systemic Asset Management


STEP-POWER 2

ASSET MANAGEMENT

Asset Knowledge: Asset Register Y


x be comprehensively built to x carry details of regular
maintenance, repairs,
cover all assets and subreplacements and
assets under the control of
refurbishments including
the entity in an organisation;
emergency defects makingx be able to distinguish assets
good actions;
under different
x measure the intensity of
classifications and subasset use in relation to the
classification for absolute
asset objectives;
clarity and treat all
information and data
x continuously and regularly
according to their classes.
track asset conditions;
Thus, assets that have a
very long life and complex
x continuously and regularly
maintenance requirements,
tract asset performance
such as infrastructure and
relating to service delivery
large public building
objectives;
complexes, such as
museums, national theatres x Continuously and regularly
track user/community levels
and concert halls, national
of satisfaction;
libraries, parliament house ,
military, naval and air force x set strict procedures for
bases, etc., will have asset
information and data
registers that are
collection, collation,
appropriately structured and
recording, control and audit
different those of other
trailing to ensure information
assets.
and data integrity;
x regularly and timely capture
details of all transactions
involving the assets;

46

x record in good time all


details of costs of operation
and maintenance including

standard asset register


software to set up Registers
unless the software has been
x carry the financial
competently modified to suit or
information needed for
has been specifically designed
statutory reporting;
for that organisation. Often a
simple fit-for-purpose spreadFor optimum Asset
sheet or database is sufficient
Management, the asset
information system and quality for establishing an efficient
Asset Register.
must be appraised against
best practice.
Registers using computer
It is desirable to use computer systems are called e-Asset
Registers to distinguish them
systems to establish asset
from the manual registers.
registers as they have the
advantages of accuracy and
Some examples of e-Asset
speed in recording, ease in
checking for incorrect entries, Registers are shown on the
speed in information retrieval, next page.
less resource hungry, instant
reminder of regular
maintenance schedules, and
related data can be digitally set
relational for network analysis
and reporting. With computer
systems support, an
organisation will have good
overall systems control of their
asset data and their assets.
cleaning, energy costs and
related expenditure.

However, avoid using

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Section 5

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STEP-POWER 2

ASSET MANAGEMENT

Asset Knowledge: Asset Register p

Figure 10 Two Samples of e-Asset Register files


Courtesy of George Town Council, Australia

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

47

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Chapter

4
Section 6

Systemic Asset Management


STEP-POWER 2

Asset Knowledge: Asset Valuation 

ASSET MANAGEMENT

ASSET VALUATION
Asset Valuation must be
regularly carried out as part
of effective Asset
Management. Valuation
results are generally used to:
x establish the needed
information for internal
control, resource allocation
and performance
assessment of assets;
x establish the fundamental
basis for asset acquisition;
x determine risk exposure
and insurance coverage;
and
x meet statutory financial
report requirements.

Valuation methods and


procedures must be
appropriately established to
suit the valuation purpose
and the nature of the asset
involved.
CORE AND NON-CORE
ASSETS
Core assets are central to
the obligations of
Government. Non-core
assets are not.
A core asset is generally
valued at the cost of
replacing the service
potential remaining in the
asset. When a viable market
exists, a core asset shall be
valued at its current market

price. If a market does not


exist, it is then valued at its
recorded replacement cost.

x an aesthetic or social
value; and

In the case of a non-core


asset, it is valued at its net
realisable value, which is the
current market net value
excluding all costs of
disposing or redeploying the
asset.

In the current market-related


value, the aesthetic or social
component is usually not
reflected in part or in full. It is
in this respect that local
culture and social conditions
must be taken into
consideration while referring
to the Treasury and
Department of Finance for
consultation. It is therefore
vital for entities to provide
narrative information to
support financial statements
on heritage assets.

HERITAGE AND
CULTURAL ASSETS
It is often difficult to establish
true valuation of assets that
are held for heritage or
conservation purposes.

x a market-related value.

These assets have two


essential values:

Old Istanbuls silhouetteimages of the cultural assets of a rich heritage

48

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

4
Section 7

Systemic Asset Management


STEP-POWER 2

for asset management, I shall


devote the next few pages in
Full costs and depreciation
this Section to discuss the
subject in greater depth under
As all man-made physical
the specific heading of Asset
assets deteriorate with time
and use. This is recognised as Life Cycle Costing.
a progressive loss of service
Asset costs
potential hence it is recorded
as a cost, even though it may Three types of asset costs
not immediately incur cash
must be measured:
x set operation budgets and
expenditure.
thresholds for management
x Direct coststhose directly
Use-benefit from the asset is
control;
attributable to an asset, such
x evaluate capital investments accounted for in a period by a
as depreciation, utility costs,
depreciation expense, and this
for new assets;
maintenance charges,
x Monitor asset performance; is reflected in the full costing of
statutory charges/taxes,
services, in addition to other
and
domestic cleaning and
operation costs in the asset
x form a basis to set asset
financing costs.
pricinguser charges to be use.
x Indirect coststhose
made.
Life cycle costs
attributable only to the total
asset base, or to a specific
Life
cycle
costing
establishes
COSTING SYSTEMS
group of assets, or to the
the full costs of managing and
asset indirectly. However
operating an asset over its life.
Asset costs should be
indirect costs should always
considered in tandem with the It includes:
be allocated to individual
costing of sub-assets and
x Capital costs;
assets. Capital charge may
components of service
x Ongoing or recurring costs;
be allocated in proportion to
delivery. All costing should be
x Salvage and disposal costs.
the value of the asset, or
activity-based and realistic.
rental costs may be allocated
Various systems of costing are As life cycle costing is one of
according to the floor space
the most important processes
essential to sound asset
ssets are created for use,
and costs do not arise just
from their creation but also in
their useknown as the
operation costs. Thus it is vital
for an entity to have sound
knowledge of asset costs.
Information from the
knowledge is used to:

management:

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

occupied. Other indirect


costs are insurance costs,
regional management
service charges, and other
expenses associated with
the asset groups.
x Overhead costsThese are
related to the assets but are
not identified with a specific
asset or asset portfolio. In the
case of regional
management, it may be
appropriate to apportion the
overhead costs of that region
but not those of the head
office.
In developing the most suitable
costing systems, organisations
must consult the Treasury and
the Department of Finance.

49

ASSET MANAGEMENT

Asset Knowledge: Life Cycle Costing n

ESSENCE
Chapter

4
Section 7

Systemic Asset Management


STEP-POWER 2

Asset Knowledge: Life Cycle Costing Y

ASSET MANAGEMENT

ASSET LIFE CYCLE


COSTING
Life cycle costing is used in
asset management to
establish the full costs of
controlling and operating an
asset over its full functional
life.
There are three main costs
to be established in the life
cycle management process:

management, financing,
operation and maintenance
(such costs as water and
energy, and other incidental
expenditure), and
refurbishment.
3. Salvage and disposal
costs

These costs form the


residual value of the asset
after offsetting against its
sale value thus ending the
1. Capital Costs
functional and economic life
These costs include the initial of the asset.
costs of a acquiring an asset,
From the three component
either by way of a)
costs above, depreciation
purchasing an existing asset
value can be computed by
which must then also include
taking into account the
enhancement costs, or b)
assets capital cost, the
constructing or
expected life span, and the
commissioning.
residual value.
2. Ongoing costs which
are also known as the
recurrent costs
These include all costs
incurred in holding and
operating the asset over the
full span of its functional life.
They include costs of

50

1 to end of life
x Maintenance costs with
details of component costs
from year 1 to end of life
x Profiles of repairs and
component replacements
and refurbishments over
life
x Final disposal costs or
renewal costs
These profiles are vital to
asset management since
against these the
organisation can prepare
alternatives for owning and
developing similar new
assets.

Based on past records of


such profiles, the
organisation can make cost
projections for on-going
assets, and they can also get
Life cycle costing enables an smart by improving operation
and maintenance, thus
organisation to see a
detailed whole-of-life picture reducing their costs against
of an asset at a glance, such the projected costs.
as:
On-going costs over life are
many times more than the
x Capital costs
capital cost of an asset.
x Operation costs from year

This is a reality that is often


overlooked and neglected in
many developing countries.
Consequently, while money
is available for investing in
new assets, funds are scarce
for operation and
maintenance over the lives of
existing on-going assets.
This practice causes decline
in service quality, and faster
asset deterioration, resulting
in higher operation and
maintenance costs than
projected.
Let us look at the effects of
cost profiling.
A municipality in Malaysia is
planning to invest in many
blocks of public toilets.
Figure 11 shows a projected
whole-of-life cost profile of a
toilet block prepared by the
agency in charge. From the
projected profile, the assets
whole-of-life cost estimates
are as follows:

x Asset function life is 40


years

x Capital costs total

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

4
Section 7

Systemic Asset Management


STEP-POWER 2

Asset Knowledge: Life Cycle Costing p

From the above life cycle


cost profile projection, the
organisation realises the
following facts for their asset
management plan:

x The single whole-of-life


investment value for a
toilet block is RM1.037
mil.
x The full asset life cost is
more than 17 times the
initial capital investment
costs.
x As the organisation
intends to construct 10
blocks, they will have to
commit themselves for

Li f e C y c l e C ost i ng - P u bl i c To i l e t Fa c i l i t y
M on t h- Ye a r B u i l t & C o m m i ssi on e d : J a nu a r y 2 0 0 3
B u i l di ng C o st :R M 6 0 , 0 0 0 . S e r v i c e Li f e : 4 0 Ye a r s

Asset Renewal after 40


years
90000

ASSET MANAGEMENT

RM60,000 (US$1 is
equiv. to RM3.80)
x Total full life cost comes to
RM1.037 mil. over 40
years
x Average life cycle cost per
year is RM25,925
x With depreciation added,
yearly cost is RM27,425.
x Average total life cycle
cost per month is
RM2,300

Annual Upkeep/House
Keeping

80000

Refurbishment 5-yearly
Capital cost

70000

Painting 4-yearly

60000

Signage Repair

50000

Floor/Wall Repair 5-yearly


M/E Repair 5-yearly

40000

Annual Building Repair

30000

Plumbing/Fittings Repair 5yearly

20000

Cleaning
10000

Ye a r s

Figure 11 Projected Whole-of-life Cost Profile of a Toilet Block

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

51

ESSENCE
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Systemic Asset Management


STEP-POWER 2

ASSET MANAGEMENT

Asset Knowledge: Life Cycle Costing q


RM10.37 million over the
next 40 years, RM259,250
for each year, and
RM22,000 for each month.
x If the organisation does not
operate and maintain each
toilet block properly, it will
not have a functional life of
40 years.
x If this were to happen, the
negligence would show
clearly in the profile chart
the Department of Finance
would want to know why,
and the community would
also want to know why.
x From the profile chart and
the asset register, both the
Department of Finance
and the community would
know who within the
organisation were
accountable, as user
complaints would start to
surface and would become
louder if the asset were
allowed to deteriorate
rapidly.
x If maintenance, including
repairs, replacements and
refurbishments were not

52

carried out in a timely


manner, again the profile
would show it. But if this
were allowed to happen,
the maintenance cost
would be higher and the
profile chart would show
cost bars rising steeply.
x If the block is properly
maintained, at the end of
the estimated asset life of
40 years the organisation
would only need to spend
RM80,000 to build a new
toilet block under a
renewal programme.
Contrarily if this were not
the case, it would have to
spend more, and in less
than 40 years.

costing is absolutely
essential for the task. With
good data collection in eAsset Registers that also
keep all financial analyses,
an organisation can
establish future
infrastructure costs
profiling quickly and
efficiently.
Figure 12 shows two longterm roadwork
maintenance costs
profiling for the States of
South Australia and
Victoria, as presented by
Chris Champion, Chief
Executive of the Institute of
Public Works Engineering

Australia (IPWEA).
(Champion, 2004)
In summary, life cycle
costing must be learned
and the knowledge put into
practice in good asset
management. It is one of
the most important parts of
Step 2 in the SAM StepPower Process.
There is a vast pool of life
cycle costing knowledge
awaiting us. Go for it, for
professional enrichment.

From the above example,


it is quite easy to see the
power and advantages of
life cycle costing.
For large scale asset
management, such as
state-wide long-term costs
profiling for infrastructure
development, planning and Figure 12 Long-Term Roadwork Maintenance Costs Profiling
Source: Christ Champion, Asset Management: The Australian Journey and
strategy setting, life cycle
Learnings, CEO, Institute of Public Works Engineering Australia
<cchampion@ipwea.org.au>

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ESSENCE
Chapter

4
Section 8

Systemic Asset Management


STEP-POWER 2

Asset Knowledge: Asset Pricing

x A government agency
can compare or
benchmark service
delivery in the private

Cost plus
In this model, a fixed or a
percentage amount is
added to the full cost of
asset service use.
Pricing with target-profit
In this model a fixed
amount of targeted profit,
or a fixed return of cash
amount on assets, is
added to the full cost of
asset service use.
Standard cost

This pricing is based on


the actual full cost but
without the overhead costs
or costs that an external
supplier would not incur.
The pricing is usually first
set against a benchmarked
price which is based on
expected efficient
performance and then the
pricing is adjusted
accordingly. In this way,
Actual full cost
any overheads or costs
This model is based on full due to poor performance
cost recovery without
by the assets operators
profit.
are not passed on to

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

users. This model is


generally used for
interdepartmental charge
for the asset service use.
Marginal cost
This pricing is a partial
charge on the total cost of
the asset service. It usually
excludes any indirect costs
in the pricing. Although this
model is often used for
internal services, it does
have the tendency of
encouraging overconsumption thus
increasing unrecovered
costs.
No cost
This model is used to
satisfy agreed community
obligations when services
have to be provided free of
charge.
Pricing policies and
practices must be under
regular close review to
reflect government
policies.

53

ASSET MANAGEMENT

sector.
In establishing asset
pricing, the organisation
fully understand the
x The level of charges or must
total cost structure of the
pricing can either
asset and the service it
encourage or suppress
supports. This is important
demand for the assets
when it comes to crossservice.
subsidisation of services,
especially with respect to
x Realistic pricing can
helping the poor
encourage the
organizations search for community.
more efficient solutions
PRICING MODELS
to the form of service
delivery.
Market price
x An organisation can
Not all government assets
recover at least some if
or services have a market
not all asset costs for the
price. Where it is
service delivery
applicable, the pricing
depending on the pricing
must cover the full user
policy.
costs including capital
costs. This model has to
x An organisation can
conform to existing
compare costs and
pricing of other sources government statutory
policy.
of delivery.
There are a number of
beneficial objectives in
charging for asset use:

ESSENCE
Chapter

4
Section 9

Systemic Asset Management


STEP-POWER 2

Asset Knowledge: Learning from the Past

ASSET MANAGEMENT

and final disposal or renewal.? medium and long-term needs


in managing their assets to
Again, without past records of
ensure continuous reliable
asset information and data,
services that the poor
they cannot set asset
communitys livelihoods
performance standards, asset
depend on?
criteria to guide methods of
Without the past, how could
asset acquisition in terms of
any organisations make
leasing, or design and
progress? How could they
construction for new assets,
set asset service performance even claim that what they are
doing is innovative?
standards and criteria for
implementation, and a host of
Thus, Step 2 in the SAM Stepmanagement issues that need
Power Process pertaining to
fast, accurate and wise
asset knowledge is of
decisions.
fundamental importance.
Without satisfying all the goals
Without referring to the past,
set for this Step, there will be
how could any agency or
municipality know how best to detrimental impacts on the
effort to achieve the final goals
service the communitys
of the SAM Process.
This kind of information is vital, needs? How could they be
to say the least, when it comes certain that the new assets are
not created for their own sake?
to planning for new assets of
How would they know if the
similar classes, types, usage
on-going assets are getting
and costs. Without the past,
worse than before and are
how could the top
creating enormous hardships
management of an
organisation or agency make for the community?
sound decisions in asset
And, without the past, how
planning, procurement,
could they budget for the
operation and maintenance

countries do have some form


of asset management
process, but they seldom have
comprehensive and accurate
How true with regard to asset records of their assets in the
management, for without the form of asset registers, but
Asset Register, even when it is they should.
manually prepared and the ink
of the records start to fade, it is With asset registers, an
organisation or a local
still better than relying on the
authority can learn about the
memory of the staffeven if
the staff is still there to enable past asset performance of an
the management to probe into asset, difficulties encountered
with regard to the assets
their tired brains.
design, materials, and
Unfortunately such a practice construction techniques, its
is still flourishing in many
operation and maintenance,
developing countries.
deterioration in relation to the
use, and the life cycle costs
Does organisation learn
incurred.
from the past in asset
A Chinese proverb says that:
The palest ink is better than
the best memory.

management?
No. Making use of past
experience is the exception
rather than the rule. When we
refer to the past we really
mean the written information
and data that have been
carefully kept in the records.
Many agencies and local
authorities in developing

54

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

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Chapter

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STEP-POWER 3

Asset Skills: Four-Phase Lifecycle A M X


1.

Criteria

Criteria

Planning

SOCIAL

4. Revitalisation / Disposal

2.

ECONOMIC

ASSET MANAGEMENT

POLITICAL
Acquisition

ENVIRONMENTAL

3.
Operation &
Maintenance

Criteria
Figure 13

Criteria

Lifecycle Asset Management Process

he concept of life cycle asset management implies a


whole-of-life holistic process. Chapter 4 discusses how
an asset is created and ended in four phases. In this
Chapter, we look at how this process works for Step 2 of the
SAM Step-Power Process.
All organisations should adopt the life cycle approach in their
asset management. In following the life cycle process, they
must go through all the four phases as indicated in Figure 11.
The management processes of these four phases have
close interrelationships with the stakeholders and the
surrounding social, political, economic and environmental
factors. In the overall management process, the organisation
officers should not limit themselves to any particular single
phase as this will only limit the effects and objectives of asset

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

management. Asset managers within a unit of an


organisation should be made responsible for the life of the
assets and be held accountable for their life cycle
management.
The main objective of AM is to enable the organisation to
provide service delivery from their assets. As financial
management is vital to the realisation of this objective, it must
also adopt the life cycle approach, hence life cycle asset
management includes the fairly elaborate life cycle costing
process.
In the following Sections, we shall discuss each of the four
phases of life cycle asset management.

55

ESSENCE
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STEP-POWER 3

Asset Skills: Four-Phase Lifecycle A M Y

ASSET MANAGEMENT

PHASE 1: PLANNING

demand. This may


involve a scrutiny as to
whether or not the
services needed can be
combined with another
service, or to resolve
the situation which is
causing the need
unnecessarily, or
whether the solution
could be a non-asset
option.

Sometimes this is also


called the Asset Planning
and Budgeting Phase.
Being the first phase, it is
fundamental to the
effective management of
an organisations
business, such as that of a
local council, a local
government, a local
agency or a public utility
In the case of non-asset
entity.
options, an organisation
In this phase an entity
can consider:
shall develop is public
service delivery strategy
x Redesigning the service
based on community
thus reducing the need
needs. It shall:
for a new asset;

consider the criteria for


asset performance for
those services that need
asset supports.

Here, the organisation


shall assess the situation
to decide whether to use
an existing asset or to
construct a new asset on
land to be acquired. If the
decision is the former, then
it is an asset renewal
process involving the
refurbishment of an
existing building. If it is the
latter, then it will involve
the whole process of town
planning, architecture and
engineering and other
x Define the scope,
x Combining the service in related professional
disciplines.
standard and level of
another service by
services to be provided;
expanding such an
At this stage, it is equally
existing service; or
important to consider how
x Define the resources
the new asset is going to
and methods of service x Outsourcing the new
be operated and how
delivery as well
service to a private
maintenance can be
requirements for the
contractor.
carried out effectively at
use of assets; and
Once the service need is
the least cost. Such
determined and a service considerations will
x Consider whether it is
strategy is formed, the
necessary for
influence the planning,
containing the services organisation can then
design and budgeting. So

56

often we see asset failures


because they are too
difficult and costly to
maintain and the result is
poor service delivery.
All these will involve
different kinds of capital
funding and budgeting
processes in the Planning
Phase. And, once an
organisation decides to
acquire new assets, it will
have to define the asset
strategy for the whole
lifecycle of the asset.
Planning for ultimate asset
services delivery has to be
strategically presented in
order to obtain funding.

Planning

Acquisition

Disposal

Operation
& Maintenance

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Chapter

4
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Systemic Asset Management


STEP-POWER 3

asset criteria and service


delivery criteria set, which
In this phase, an
include operation and
organisation shall proceed
maintenance criteria and
to acquire assets following
strategies.
certain sound practices,
developing these practices
Construction contracts
if it does not already have
them. In the process, the
There are various forms of
organisation shall:
contracts and choosing the
right one will depend on
x Consider land matters,
the nature of the works
both improved and
involved and the outcomes
unimproved depending
the organisation plans to
on the circumstances;
achieve.
PHASE 2: ACQUISITION

x Consider design criteria


with the consultants with
respect to building and
related works; and
x Consider design criteria
for sub-assets, including
capital equipment.
In this phase the
organisation must also be
in control, through the
consultants, during the
design and construction
processes to ensure their
outcomes will satisfy the

Often the conventional


standard form of
construction contracts is illsuited for the works, as the
outcomes of the contract
works are not defined.
Under such
circumstances, it is
fundamentally important to
prepare a specific
Performance Construction
Contract specifying
precisely the outcomes of
all works to be expected
from the contractor. The
contractor awarded the

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

contract must complete


each part of the works so
as to satisfy performance
tests. There must also be
warranties of performance
for those works for which
the contractor has
tendered and shall be paid
for. Such a procurement
process is vital to success
in getting investment
return.
Construction of assets
Construction works must
follow acceptable
standards of construction
management procedures
and processes.
It is far too common to
take delivery from the
contractor of completed
works laden with both
patent and latent defects.
Assets containing such
defects will not be able to
even commence their
functional lifecycle with
optimal service delivery
performance. This means

that right from the start the


asset will be burdened with
inherent construction
rectification costs. If this
situation is not recognised
and put right, it will cause
asset deterioration earlier
and faster, thus incurring
maintenance costs earlier
in the assets economic
lifecycle.
All these factors must be
considered and watched
for at this procurement
phase, supported by a
sound risk-management
plan to ensure positive
outcomes for better
assets.

Planning

Acquisition

Disposal

Operation
& Maintenance

57

ASSET MANAGEMENT

Asset Skills: Four-Phase Lifecycle A M p

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Systemic Asset Management


STEP-POWER 3

Asset Skills: Four-Phase Lifecycle A M q

ASSET MANAGEMENT

PHASE 3: OPERATION
AND MAINTENANCE

describe an assets:

public users.

Utilisation:
Asset
utilisation is a measure of
x utilization,
how intensively an asset
has been used in providing
x functionality, and
the public service set for
x financial performance.
that asset. It tells the
Physical Condition: It organisation whether the
usage intensity has
is important to know the
passed the limit of the
physical condition of an
asset as it tells us whether assets working capacity.
The measurements also
the asset may be used
tell whether the value of
safely and effectively for
the service provided by an
the provision of a public
service. In order to ensure asset is more or less than
the value of the assets
an asset complies with
current value; or the
health and safety
values are matching. If the
standards, it has to be
measurement shows an
properly maintained and
regularly checked to see if asset is underutilised, it is
important to find out the
the asset condition is
reasons why. Quite often
acceptable. Often the
the underutilization is not
organisation has to
caused by the asset
forecast the future
condition itself but by other
condition of the asset so
factors. For example,
that they can plan ahead
people do not want to use
and
avoid
costly
repairs
or
Asset Performance: This
an underpass because it is
even disastrous events
is a general term used in
filthy, or the lighting is
that will endanger the
Asset Management to
In this phase an
organisation has to ensure
that it is in full control of
the assets, in respect to
reliable knowledge about
the assets, including
information about the
assets working conditions,
full records of their proper
maintenance and other upto-date details. In other
words, organisations must
conduct regular
assessments of asset
performance for all the
assets under their control.
The results of these
assessments must be
analysed and reported to
the management in order
that they can decide on the
appropriate actions. But
what exactly is asset
performance?

58

x Physical condition,

poor, or the floors are


always wet and slippery,
while the underpass is well
constructed.
It is important for an
organisation to ensure that
assets are utilised fully for
delivery of those public
services for which the
assets are intended;
otherwise the costs of
holding the assets may
exceed the services that
they provide.
Public organisations
should review the
utilisation of each asset
annually.

Planning

Acquisition

Disposal

Operation
& Maintenance

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

Systemic Asset Management

Section 10

STEP-POWER 3

PHASE 4: RENEWAL OR
DISPOSAL
When the lifecycle of an
asset comes to its end, the
asset may be renewed to
start a new lifecycle or be
disposed of.
However, as assets are
public investments,
decisions must be made
through proper examination
and sound economic
appraisal.

In principle, they must be


taken within an integrated
planning framework
encompassing service
delivery needs, corporate
objectives, budgetary and
other financial constraints and
government policies with
regard to resource allocation.
Asset disposal may generate
a need for replacement by
another form of asset in order
to support the continuity of
reliable public service to the
citizens.

Infant

Old Age

AgeingThe Cycle of the Generations


Source: Modified graphics adopted from Man and Society,
The Rigby Joy of Knowledge Library1977

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

Thus disposal decisions must


be carefully considered within
the systems of lifecycle asset
management.

full idling costs, including


security costs, for
consideration by the decisionmaking management.

The organisation must avoid


leaving public assets idle. Nonusage of an asset often results
in it being left in a serious state
of neglect. This in turn will
hasten the ageing process of
the asset.

Similarly, in the case of


renewal, the same
department must also
prepare full preliminary
planning studies on renewal
options to be considered by
the decision-makers.

Non-usage of an asset also


means loss of cost recovery
opportunity, hence the
organisation must consider
various forms of disposal
strategies, such as renting out,
sale , or sale and lease-back.

Once a decision for renewal


is made, the organisation
must start the Phase-1
Planning straight away to
commence a new lifecycle for
the existing asset.

The department responsible


for managing the assets must
have a clear policy for renewal
or disposal of assets. It must
assess the situation
professionally and promptly
and report to the management
for a decision so as to
minimise asset idling.
While an asset is being idled,
the asset management
department must also prepare

Planning

Acquisition

Disposal

Operation
& Maintenance

59

ASSET MANAGEMENT

Asset Skills: Four-Phase Lifecycle A M r

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Other Skills for Lifecycle A M n

ASSET MANAGEMENT

FUNCTIONALITY
The functionality of an
asset is a measure of the
effectiveness of the asset
in providing the public
service. During the
operation phase, the
functional quality of the
assets will decline. This
can be caused by the
assets age, lack of
maintenance, damages to
the assets due to fire, flood
or accidents, or that the
nature of public services
be provided by these
assets has changed in
some way, or there may
be other external
circumstances. In order to
enable the organisation to
review at least annually,
they must monitor the
functionality of assets
regularly in order to
determine:

xThe characteristics of the


assets functions as set
out in the original assets
performance criteria at
the Planning Phase and
how these fit in with the
current public services
being provided from
these assets.

cash flows, including


capital expenditure.

From the assessments,


the organisation will then
determine the current and
projected economic return
of the assets. All assets
are public investments,
hence it is vital for the
public organisation to have
The review will permit
timely changes to be made such financial knowledge
of the assets under their
to improve both public
control and management.
service delivery and the
functional quality of the
ASSET MAINTENANCE
assets.
All assets will deteriorate
FINANCIAL
in their working conditions.
PERFORMANCE
For detailed explanations,
The financial performance please refer the Section 3.
of an asset is a measure of Asset maintenance,
however, is a major
the economic viability of
process to be involved
the public service being
provided by the asset. This systematically in asset
management. For all major
must involve the
public assets, in the form
monitoring and
assessment of the assets: of infrastructures, buildings
and their components and
xThe outcomes of the
x
Operating
expenses;
supporting facilities,
public services in relation
and
maintenance involves
to the roles of the
complex processes and
respective assets; and
x Current and projected

60

public organisations must


establish maintenance
strategies and plans.
MAINTENANCE
STRATEGY
A maintenance strategy is
a comprehensive plan
derived from carefully
considering all relevant
factors. As a strategy it
must firstly:

xDefine the asset in terms


of its objectives and
functions;

xDefine an assets
performance in terms of
provision of public
service;

xEstablish the level to


which the asset is to be
maintained;

xEstablish the systems


and procedures to be
used in the planning and
management of the
maintenance work for
the asset;

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Other Skills for Lifecycle A M Y


maintenance and under
each type define the
reasons for its use;

xSet out a specification

maintenance and
maintenance priorities for
all the assets under their
control and management.
MAINTENANCE PLAN

and procedure for


resourcing and
maintenance
implementation;

When an organisation has


a maintenance strategy,
they will then have the
framework and criteria to
xSpecify requirements for develop annual
maintenance plans. They
maintenance of asset
components and support can also formulate
schedules to have all the
facilities, such as
maintenance tasks carried
mechanical plants and
out. The plans are vital as
equipment including
they set the basis for
spare parts; and
maintenance work
xPrepare projected costs management and
monitoring. The plan
for routine and
preventive maintenance should also include details
as well as cost forecasts of resources for
maintenance, sources of
for major component
funding for both capital
replacements for the
medium-term of 5 years and recurrent costs over
the period and matters
and long-term of 10
related to maintenance
years.
contracts and suppliers.
With a strategy properly
set, the organisation can
then decide on the level of

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

GOALS FOR
MAINTENANCE
OUTCOME
ASSESSMENT
Asset maintenance is
always costly and time
consuming and can also
be skilled-labour intensive,
hence it must be
effectively planned and
carried out under proper
management. Thus it is
essential to set goals and
bases on which to assess
the effectiveness of asset
maintenance as follows:
Long-term improvement in
lifecycle costs reduction;
x Maintaining effective
asset performance with
sustainable results of
reliable services
delivery;

health standards, thus


obtaining and preserving
public confidence.
Such assessments are
commonly carried out
using acceptable formats
of performance indicators.
For example, in the case
of public water supply
systems, the International
Water Association (IWA)
and the Asian
Development Bank have
well-tested performance
indicator kits used by utility
organisations in many
countries around the
world, especially in the
Asia and Pacific regions.
Using these formats, an
organisation can develop
their own performance
indicators to suit local
conditions.

x Increasing the assets


service life as long as
practicable;
x Maintaining high-quality
services with safety and

61

ASSET MANAGEMENT

xSet out the types of

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Asset Tools: ICT Hardware and Software

ASSET MANAGEMENT

Today, with the availability


of computer hardware and
software and application
programs, these can be
set up at reasonable cost
to create a complex
database to establish the
e-Asset Registers. In the
long run, computer
technology can save
valuable manpower and
other essential resources
to set up such Registers.
They can be managed at
Thus, even when manually reasonable cost and serve
recorded Asset Registers as effective tools for
decision-making.
have been established,
they are never up to date.
There are now base
Instead, it is common to
see water boards in many software programs for
Asian developing countries establishing fit-for-purpose
Integrated and systemic
simulation programs,
having piles and piles of
asset management is the
paper records overflowing optimisation programs and
only way for public
decision support systems
agencies to manage these in many of their offices.
programs that can be used
When it comes to data
asset systems. These
for integrated and systemic
retrieval for analysis, it is
management systems
asset management.
always a near impossible
even for a single
metropolitan asset system task to perform and ends
up with inaccurate analysis In addition, with the
for water supply and
sewerage management and therefore poor
available of Supervisor
decision-making.
can be time demanding
Control Automated Data
and resource demanding.
Acquisition (SCADA),
any infrastructure
systems such as
water supply and waste
water disposal systems,
energy supply systems,
and road network systems
are huge, involving a
myriad of sub-asset
systems and components
spread out over great
distances. Infrastructure
and building complexes in
modern cities are getting
increasingly bigger and
more sophisticated. Their
service delivery systems
are equally complex,
involving mega-sized
networking.

62

As an example, take the


setting up and operating of
a set of Asset Registers for
a water management
system. It would be a
daunting task to collect
and record all details of a
large network and subnetworks of a water
delivery system and many
other associated assets
and sub-assets and
supporting components.

which is a computer-based
system, control and
monitoring can be carried
out on large networks of
systems component
operations.
However, before an
agency in a developing
country should get too
involved with these
advanced tools, it is vital
for them to have a, firstly,
clear understanding of
their organisations
integrated asset
management framework,
and secondly, to have
acquired the full
knowledge and skills in
systemic asset
management through
technical support and
technology transfer
services from an external
Institution of Systemic
Asset Management.
This will avoid rubbish in,
rubbish out!

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sset management of
infrastructure systems
involves huge amounts of
information of various
group types scattered over
large areas. Usually, there
are three main groups of
information needed:
x Physical attributes of
the network elements
x Economic information
of the infrastructure
system
x Spatial information
about the location of
physical and economic
data of assets

management) are kept in


separate records or
separate computer
database files. Spatial
information is usually
stored in topographic
maps scattered in various
departments depending on
the nature of the assets
and sub-assets involved.

In most cases, data in


these recording systems
are seldom up-to-date and
worst of all, the three main
groups of data are not
relational. Thus when it
comes to data analysis for
network planning, it is time
In traditional manual asset- consuming and difficult to
recording systems, the
get reliable resultsby the
physical attributes of the
time the results are out,
network elements (such as the situation on the ground
sizes, dates of birth,
at various locations has
suppliers, etc.) are hand
changed, and the
recorded in data books or economic conditions have
in simple computer
also changed.
inventory database files.
Economic information
Today, we have the
(such as consumer data,
geographic information
customers demands, and system (GIS) to help with
other data for economic
these mammoth, complex

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

management work are


located in the project
country, while the
supporting data analysts
and problem solving
number-crunching
technical supporting
members are stationed in
the service providers
offices in a developed
country. Through the
global digital information
communication network
When it comes to asset
system, the service
management partnering
provider teams and the
projects in developing
receiving partner teams
countries, involving the
can work together
accelerated processes of
efficiently and effectively
technology transfer and
technical support services, within a short project time.
information communication
As information and
technology (ICT) network
communication network
intelligence has become
intelligence systems are
essential. Due to
becoming more advanced
constraints of time,
and affordable, such
manpower and economic
resources, it is impossible technology should be
carefully exploited for
to set up a complete
asset management in
technical team at the
developing countries.
project site in the
developing country.
Usually, only members of
field work and project
tasks. As succinctly
described by Larry W.
Mays (2002), GIS allows
us not only to link
geographic or spatial data
with other alphanumeric
data, but also to update in
a simple way the included
area, through an
appropriate graphical
interface.

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Asset Tools: Check List

ASSET MANAGEMENT

n order for asset


management to be
effective it has to be
systemic. However, such
an approach requires
consistency, dedication
and determination with
serious attention to details.
Of course there are many
who claim that the process
of Systemic Asset
Management is nothing
more than a farce. After
all, those who can afford to
own or operate assets
have always taken care of
their assets. Well, there is
often more to it than the
impression given by such
a brushing-aside
statement. On closely
probing their practices, it
would not be a surprise to
find the so called taking
care of the assets rather
unsystematic with halfhearted efforts and seldom
any signs of being
systemic.
Thus, Step 4 of the SAM

64

Step-Power starts with


asset management
checklist which is to satisfy
the question:
Does your organisation
follow the principles of
Systemic Asset
Management?
Here are some of the
common questions for
checklist:
Is the process service
focused?

xIs it within a strategic


framework based on
service objectives, user
needs, needs analysis,
service criteria and
predicted service
delivery outcomes?
xAre all performance
outcomes monitored,
assessed and reported?
Is the process systemic?

xHave non-asset
alternatives been

thoroughly assessed
xIs asset performance
before adopting the
status regularly
asset-based approach to
reviewed?
service delivery?
xIs the process integrated Is the process supported
by responsibility and
with the organisations
accountability checking?
corporate and business
plans and strategies?
xAre all executives and
xAre these plans and
officers in the
strategies linked to life
management governed
cycle management and
by specific AM
costing processes?
performance agreements
entered into with the
xIs risk management part
organisation?
of the process?
xDoes the organisation
xAre costs monitored
follow AM rules on
against budgets and
responsibility and
reported at regular
accountability on asset
intervals?
ownership and control
How informed is the
and are these reflected
decision-making process?
in the performance
agreements with their
xIs capital expenditure
executives and officers?
based on thorough
Checklists should be
economic appraisals
governed by the 4-phase prepared in the form of
score sheets in order to
life cycle AM process?
gauge the level of AM
xAre assessments and
analyses based on data compliance under each
from a properly managed issue.
asset register?

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s a SAM process has to


be systemic and focused
on outcomes, it has to be
tested against, firstly, how
effective is the network
connectivity, and secondly,
how well it is integrated with
needs and constraints set by
both the internal and external
forces.
Infrastructure systems are
made up of a closely related
web of sub-asset systems.
For instance, in the case of
water supply, there are subsystems concerning raw
water supply, water treatment,
trunk main networks to reach
various distribution high points
to get ready for gravitation
distribution networks, then the
local network for consumer
distribution and finally the
water connections.
Each of these sub-systems
can have asset performance
problems that must be put
right and thereafter maintain
an acceptable levels of
outcome performance.

There are also the consumer


service demands and
management systems tied to
the economic management
systems.
As a total web system, the
organisation needs to know
the performance situations at
every nodal point and the
conditions resulting from their
interrelationships in various
combinations.
It is in these relationships that
the sensitivity tests must be
carried out and reported on a
regular basis.

the physical conditions of the


asset components in each
sub-asset systems, high
energy consumption cost is a
result of a higher use of
electric pumping than was set
in the original systems
planning. But electricity supply
and therefore charges are
under the control of a different
organisation. Unless this
matter of costs is resolved, it
will have a serious effect on
water supply cost.

Can the water authority


sustain the continual cost
increase or pass it on to the
consumers; or does the
With respect to the above, the electricity board have to share
the burden despite their own
tests must be analysed to
economic problems?
check how well these
resultant relationships stack
All foreseeable situations,
up to the internal resource
such as the electricity cost
constraints.
issue, must be identified, and
must go through the sensitivity
But then there are also the
external resource constraints. test processes and be
reported to the top
For instance, in the case of
water supply, because of local management.
geographical conditions, asset
systems design features and As the organisation goes

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

through the processes of


systems management, they
will need to look at the current
social, economic and
environmental as well as
political situations and identify
as far as possible all the
foreseeable problems,
especially the possible crises
likely to arise. Conflict issues
and risk-sensitivity tests must
be reflected in the reports to
top management.
Depending on the
circumstances, all systems
infrastructures have multiple
objectives which are usually in
conflict. Services demands
often come into conflict with
resource conservation and
supply objectives, just to cite
an example. Thus, it is vital at
this stage to carry out
scenario analyses on various
possible conflicts as well as
risks that can arise. These are
complex engineering systems
analyses to be carried out by
professionals.

65

ASSET MANAGEMENT

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Asset Tools: Sensitivity Tests Y


GETTTING THE BASIS FOR state legislature. These
bodies can then operate
DECISION-MAKING
outside the normal
government structure with
Local Capacity Vs
regard to organising
Regional
finance, constructing,
operating and managing
Local councils value the
the revenue-producing
freedom of being
public enterprises.
autonomous in local
management. But financial
and human resources are State Policy and Local
becoming increasingly big Initiative
constraints, while public
services are also finding it As a country becomes
more developed, it is more
difficult to satisfy social
likely for local councils to
and environmental
have less initiative but to
objectives, so more and
follow the state plan of
more of them are turning
to regional approaches for infrastructure services
management. For
infrastructure asset
example, with solid waste
management. This is
management, all councils
particularly true with
may be required to follow
respect to solid waste
an integrated program
management, ground
involving a combination of
water management,
waste reduction, waste
irrigation, etc.
reuse, recycling,
composting, incineration,
Integrated local councils
may establish independent energy recovery and
corporate agencies with a environmentally sensitive
landfilling. Thus, it is
charter authorised by the

66

important to have a full


understanding of these
requirements. In such
cases, legislation may
contain provisions for
appropriate grants or
funding to support these
component activities under
the integrated and
systemic approach.

Technical analysis

In major infrastructure
services, this heavily
involves engineering
practice whereby project
engineers shall come up
with a variety of technical
decisions. While the major
development policy may
be decided by the policy
makers, many engineering
In less developed
problems are relying on
countries, these activities
the hierarchy of project
are ad hoc if they do get
engineers carry out
introduced. As these are
technical analysis to solve
far from systemic, they are
correctly. The major
often lacking in legislative
technical framework
framework and therefore
analysis supporting
the much needed financial
various development
support. Their component
options must however be
activities may be less, but
submitted to the next level
they too need good asset
for final decision-making.
management to ensure
proper services delivery.
Economic analysis
While the community
expects the best
engineering designs, they
At this stage of the SAM
also expect nothing less
Step-Power processes
analyses are usually of the than the most economical
system. Hence, at this
following categories:
Types of Analysis

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Cost indexing
Construction costs change
from time to time; in large
countries, the national and
local changes are different.
Cost data must therefore
be checked against some
index. There are two
indices: a) that covering
heavy construction, such
as concrete, earth moving,
etc.; b) that covering
building fabric
construction. In more
developed countries,
indices are published
annually (in developed
countries, such as the
U.S., it is weekly, and they

also publish infrastructure


asset construction cost
indices).
Benefit/Cost Analysis
The main purpose is to
justify projects. If the ratio
of total benefit/total cost is
more than 1.0, the project
is considered viable; and
the highest ratio will
receive the highest
acceptance.
Risk Analysis
As man-made assets will
interfere with the
ecosystem which in turn
may cause harm to human
health, such issues will
cause complications to the
benefit/cost analysis. Thus
it is usually followed by
performing a risk analysis
which involves: a) risk
assessment, and b) risk
management.
Risk assessment involves
a data collection study and

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

country. As more and


more countries began to
establish comprehensive
environmental legislation,
environmental impact
Risk management
assessment (EIA) became
concerns the process of
part of a development
determining what to do,
planning process,
while using the risk
especially those projects
analysis as a tool.
involving all aspects of
The results of risk analysis land use.
under each development
Basically, the process
proposal option is then
concerns the
presented at the next
determination of whether a
Step-Power process for
project falls within the
decision-making.
legislation and if it is likely
to cause environmental
Environmental Impacts
problems, an EIA is
Assessment (EIA) Vs
undertaken leading to
Environmental Effects
preparation of an
Assessment (EEA)
environmental impact
statement (EIS). This
Ever since the National
typically consists of three
Environmental Policy Act
parts: an inventory, an
(NEPA) in the U.S. came
assessment, and an
into force on January 1,
evaluation.
1970, the environmental
impact of a project has
On October 1, 1991, the
been considered in
tandem with technical and Resource Management
economic problems in that Act 1991 (RM Act 1991)
the analysis of related
hazards to human health
and the environment.

67

ASSET MANAGEMENT

stage, the decision-makers


expect to have
recommendations of
various alternatives of
engineering solutions
backed by the best
economic analysis. Two
techniques used for this
purpose are usually the
annual cost and present
worth analysis.

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and the Crown Minerals
Act 1991 became the
governing legislation for
nearly all resource use in
New Zealand. Together,
they formed an integrated
regime for the
management of the
countrys land, air and
water. (Milne, C D A,
1996).

adopt New Zealands


distinction and hence the
process of EEA, rather
than the previously better
known EIA.

Land, as defined in the


RM Act 1991, includes the
surface of water in any
river or lake but does not
include their beds. A land
use consent is required
only for activities that
A key element in the RM
contravene a rule in a
Act 1991 is avoiding,
district or regional plan.
remedying and mitigating
any adverse effects on the Any land use is permitted
unless prohibited by a plan
environment. Here it
required that the effects of or rule. The beds of lakes
an activity, not its impacts, and rivers are an
be assessed. It establishes exception, activities are
allowed unless expressly
the doctrine that impacts
are usually associated with prohibited by a rule in a
the actual negative impact regional plan or a consent.
of an activity, whereas the
concept of effects, as
The issuing of resource
defined in RM Act 1991, is consents under the RM
much broader in scope,
Act 1991 is a
and not all effects are
comprehensive and
impacts.
interestingly well laid out
process, encompassing
Since then, many countries many well-defined sub-

68

processes. It is highly
recommended that those
are involved in asset
management look at the
process in the said Act.

community will invariably


ask many questions
pertaining to health risks,
in addition to other social
risks.

Many developing countries


in the Asia Pacific region
have inadequate and
fragmented legislative
framework to deal with
environmental protection,
which leads to poor human
health protection.

In this information day and


age, NGOs, CBOs and
community action groups
are well informed of the
consequences of
environmental effects of
poor infrastructure
development decisions,
thus it is politically and
socially right to consider
development projects
based on sound process of
EEA study.

Even though a developing


country may not have a
comprehensive legislative
framework, it is still
essential for the asset
management team in an
organisation to carry out
an EEA study on each
development option and
advise the top
management accordingly.
Only with this is it possible
to carry out the decisionmaking process
meaningfully with the
stakeholders. The

In a Nutshell
Step 4 of SAM Step-Power
process is the stage where
all the professionals
involved shall defined the
social, political, economic
and environmental factors
that will affect the
outcomes of all
development proposal

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options. In particular, these
shall include factors under
the four categories:
x Factors of certainty.
x Factors of risk.
x Factors of uncertainty.
x Factors of conflict.
Unless Step 4 of SAM
Step-Power process is
thoroughly carried out, it
cannot proceed to Step 5.
Step 4 carries the eyes
and ears of the
organisation. If it has poor
eye-sight and is hard of
hearing, the top
management of the
organisation, even with all
the brilliant brains of
stakeholders, will not be
able to make sound
judgments.
If the organisation at this
stage were to seek
community participation in
decision making, it will be
nothing more than the
blind leading the blind
scenario.

ASSET MANAGEMENT

staggering 25,000 lives everyday.


25,000 people like you and I are
dying from consuming water
riddled with human and industrial
waste.
Contaminants such as HCH,
DDT, lead, radioactive waste,
dieldrin, aldrin, arsenic, raw
effluent, hepatitis, typhoid and
cholera. The list is as long as it is
nauseating.

his is north Kazakhistan, just a


short distance from China and
Mongolia. This withered, pathetic
collection of sticks was once a
luxurious, thriving fir forest.
Now it has been burned beyond
repair. Despite that, you wont see
glowing embers or lazy columns of
smoke rising, because fire was not
the instrument of this vulgar
destruction.
It was rain. Acid rain.

cutting a holocaustic swathe of


environmental ruin wherever it falls
(the soil for example, will take 400
years to cleanse itself). The
substantial runoff flows directly into
lakes and rivers of the region.

It may seem hopeless, indeed


some situations are out of our
hands.

Critically, even air pollution affects


our drinking water.

We urge you to do everything in


your power to conserve clean
water.

This sickening occurrence regularly


befalls 12 major locations across
the north of our continent [Asia],
totalling a land mass area greater
than that of Malaysia, Thailand and
Singapore combined.

Water tumbling from the heavens


corrupted with sulphur dioxide.
Sulphur dioxide is the by-product of Acidification isnt solely the problem
coal combustion and metal smelting of north Asia, however. In the south
west of China, for instance, it has
industries.
already reached menacing levels.
It is a nasty cycle.
Distressingly, acid rain is just one of
Industry spews pollutants into the
dozens of contributors to Asias dire
air. Moisture traps the pollutants.
water pollution predicament.
The moisture, when heavy, returns
A predicament now claiming a
to earth laden with chemicals,

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

Fortunately there is something


we can do to help. Its called
conserving.

Heaven knows, if we take good


care of water, it will return the
favour.
TREAT WATER WITH
RESPECT.
Source: Lubis, A R, compiler
(1998), Water Watch
A Community Action
Guide, Asia-Pacific
Peoples Environmental
Network (APPEN),
Asia-Pacific 2000
Initiative of UNDP

69

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Asset Decision-Making: Network Analysis n

ASSET MANAGEMENT

f all the processes under


Step 1 to Step 4 have
been properly carried out
with diligence and care,
Step 5 will be fun to carry
out. This is so because
this is the stage where the
stakeholders and
community representatives
can participate positively
with the top executives of
the organisation on the
process of decisionmaking. It is at this stage
the community can really
appreciate how well
systemic asset
management has been
carried out to achieve the
expected outcomes, and
how the communitys
quality of life is to be
enhanced through such a
democratic process.
To achieve this, Step 5 of
SAM Step-Power Process
has to be carried out in a
strictly professional
mannerthere is no room
for personal egos here.

70

At this stage and under the


good governance
framework, the decisionmakers will be going
through all the checklists
and test reports on an
asset management project
with the stakeholders
including the community
representatives.

test results. With a series


of results derived, the
decision maker will then
consider the merits of each
probability.
In the process, they will
make reference to the
asset objectives, user/
community needs, ,
service criteria and the
intended service delivery
outcomes and view the
probability result and the
financial implications.

the e-Asset Register for


verification.
The main purpose of this
network optimisation
analytical process is
zeroing in on an area to
see some of the most
probable scenarios.

They can go on trying


different combination of
variables until they are
satisfied that they have
enough to make a
reasonable shortlist of
Senior management
probable results they are
If the project involves a
officers in Step 4 are to
confident withi.e. that
large asset system with a
make suggestions and
web of sub-asset systems, are objectively, technically,
recommendations with a
they will then try assigning financially and servicerange of relevant
delivery-wise viable and
a variation of weighting
alternatives. The final
will also satisfy all the
with respect to resource
decision is to be carried
out in the process of Step allocation for various sub- social, economic, political
systems. As each probable and environmental
5 of the Step-Power.
constraints they are
result comes up on the
Senior technical managers screen they will discuss its currently facing.
merits in relation to the
may be required to carry
With large and complex
out a series of optimisation desired outcomes.
infrastructure projects, it is
network analyses on
best to use purpose built
If necessary they may
various combinations of
recheck certain data from computer software to
the checklist results and
With so many factors and
issues at hand, how do
they decide?

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STEP-POWER 5

Asset Decision-Making: Network Analysis Y

According to Mohammad
Karamouz (Karamouz, M,
et al., 2003), the concept
of DSSs now developed is
the result of two
intersecting trends. The
first is the belief that
existing information
systems, despite their
success in automation of
operating tasks in

or ASP (Java) can be used


to define interfaces and
develop a decision support
system with all elements of
water resources including:
The second is continuous supply, demand,
improvement in computing institutions, knowledge
base, and conflict
hardware and software
assessment. It consists of
that has make it possible
to develop databanks and six modules, namely:
complex heuristics to
x Database management
churn out meaningful
scenario outcomes. Many x Streamflow modelling
flexible frameworks for
and forecasting
these systems, such as
x Demand management
the spatial decision
(modelling)
support system (SDSS),
adaptive decision support
x Operating models
system (ADSS), and
intelligent decision support x Draught management
system (IDSS) are now
x Real-time operation.
available.
organisational setups,
have failed to assist
decision-makers with
many higher level tasks.

ASSET MANAGEMENT

perform the optimisation


tasks which will save time
and resources. This whole
process is a the decision
support system (DSS) and
it is a powerful tool in
applying a systems
approach in real-world
asset resources planning
and management. While
early management
information systems relied
mainly on database, DSS
combines dedicated
software and hardware
recently developed by
systems engineers and it
yields better decisions.

In the case of DSS


framework for sustainable
water resources planning
and management, M.
Karamouz suggests that
Access or Oracle DBMS,
Visual Basic, HTML, and/

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Asset Decision-Making: Simulation Games n


positive or negative results to support his preconceived
decisions; or

Leadership in SAM

ASSET MANAGEMENT

The decision-making in an organisation is of prime


importance in asset management, because it is the final and
conclusive point of all management processes.
Decision-making is basically about choice-making and it is
imperative that the leader of an organisation is able to ensure
all the choices are first and foremost made available by the
professionals working in the system.
It demands the highest quality of leadership from the chief
executive officer (CEO) of an organisation, who may be the
head of an agency, the president of a local council or
municipality, a city mayor or a chief minister of a state
government.
Leadership is often misunderstood as a self-focused type of
modus operandi, and anyone else in the organisation is an
insignificant, inferior subordinate who is put there to serve the
almighty leader. Such an attitude is entirely wrong. If such an
approach were to be put into systemic asset management, it
would be counter-productive as it would go against all the
principles of systems thinking and management and it would
not be able to achieve the objectives of Good Urban
Governance.
Although such a person is empowered with the highest
authority, he is only entrusted with the responsibility and duty
of systems management and therefore must manage within a
community mandate for which the governing system is set up.
Thus as CEO, this leader must make decisions based on
acceptable principles and procedures of good urban
governance. Such decisions should never be based on:

x

72

Pre-conceived notions or personal egosto do that


would be like a CEO influencing the subordinates to
prepare a feasibility study or investigative report with

x

His own personal agendathat would be considered


corruption; or

x

His own judgment regardless of what others have to say


during stakeholders meetings or public consultation
sessions, which are nothing more than mock showsthat
would be blatant dictatorship practice.

Multi-layer leaderships
In asset management, ranging from small single asset
development or management matters to highly complex
infrastructure systems, a series and hierarchy of decision
making is involved and not just at the CEO level.
Decision-making therefore is not a single layer process, but a
multi-layered one. A good CEO therefore must know and be
in control of how decisions have been made at each layer
until it finally comes to his turn to make the last and final
decision. Even at this highest level, a wise CEO will never
plunge in and make that final decision until all the
stakeholders including the community representatives have
been involved in the decision-making process.
He must see to it that at each level, the team leaders,
including the CEO, within that levels hierarchy are exercising
quality leadership. Basically, to ensure that systemic
approach is being practised by the entire organisation, the
CEO must develop leadership first, only then to be followed
by a management process; and not the other way round.
Sharing decision-making has been mistakenly viewed by
many as a sign of weakness, and the CEO is often accused
of being non-decisive, ruling by too much consensus without
any idea of what should be done, and lacking in control and

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Asset Decision-Making: Simulation Games Y


This is far from the truth in asset management.
As asset management is a process, and systemic asset
management is a systemic process, a CEO by himself alone
will not be able to see from every angle in looking at all the
myriad issues at hand. In addition, each stakeholder has their
own respective area of constraints, objectives and criteria in
relation to the asset objectives and the desired outcomes of
the project under consideration. Thus considerations by each
stakeholder including the representatives from the community
concerned are vital and in return these stakeholders and
community reps must also see how the CEO will evolve a set
of decisions and/or options before arriving at a final set of
decisions. Only then can an organisation declare that they are
following the process of participatory decision-making under
the principles of good urban governance.
Thus, a CEO must ensure that:

xthe organisation has a team of leaders manning each level


of the AM process;

xeach level leader has his own sub-hierarchy of leaders to


perform all their respective duties and responsibilities;

xall the leaders at all levels have effective quality leadership;


xeach leader must be able to promote quality leadership
among all supporting leaders; and

xall leaders going up the pyramid know the asset objectives,


asset criteria, service delivery objectives, service criteria
and how their work performance will impact the desired
project outcomes.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

Step-Power Process for Consistency in Multi-level


Leadership
To achieve consistency, the CEO has to ensure that the SAM
Step-Power Process has been followed at each level to
perform its respective tasks and arrive at a decision or a set
of performance decisions before the process steps up to the
next level, until it reaches the last and highest level. Only in
this way will the CEO be sure that there is consistency and
quality control in the projects objectives, criteria and
outcomes before the hierarchy of decision-making reaches
his own level.
Although in this section the optimisation network analysis
process has been introduced to support the final decisionmaking process, with so many data, analytical results and
local and external social, political, economic and
environmental forces to deal with, it is indeed a daunting task
for decision-making at the highest level. Besides, the CEO,
though supported by senior management executives, and the
stakeholders seldom have the luxury of time to labour over
the process, and they must have the knowledge, skills and
tools to carry out their tasks efficiently and effectively within a
reasonable time.
Optimisation and Simulation Computer Programs
In infrastructure asset management, the final stage of
decision-making is usually a kind of final optimisation problem
solving. It can range from simple to complex decision-making
processes. This is where simulation computer programs are
designed and used to facilitate efficient and effective decision
making. Figure 14 shows a part of a road improvement
priority decision-making simulation game with regard to an
urban setting within a set of social, political, economic and
environmental constraints.

73

ASSET MANAGEMENT

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Asset Decision-Making: Simulation Games Y


With this game, decision-makers will be involved in
role playing with, as in this example, a mayor, a
chief road engineer, an NGO activist, a finance
controller, various community representatives, and
other stakeholders. As each player exerts a
demand and they collectively carry out an action
based on a decision, an outcome will result. At the
end of the game, they will collectively see whether
their process of making decision strategies was
workable or not. They can repeat with many fresh
games until they reach the final decision that they
are willing to agree is the best win-win solution
under the circumstances.
The use of simulations in the urban planning field
started in the USA in the 1960s (Martin Wynn
1985). In the 1980s many international
organisations, such as the OECD in Paris and the
Social Science Research Council (SSRC), London
funded simulation games research and
development. The UNESCOs Division of Human
Settlements and Socio-cultural Environments also
gave support to gaming activities such as those
carried out by Wynn (Martin Wynn 1985). In those
days, games were played mainly on gaming
boards which are not sufficiently user friendly for
general use except for those in the game
development field. Nowadays, simulation games
are carried out by computer aided programs.
Because of their easy use, they are gaining
popularity.
Complex infrastructure systems asset
management involves highly sophisticated
simulation computer programs and techniques.

Edge of Slum
Heritage
Fort

Mayors House

Public Housing
Old City
Precinct
Lake

Industrial Area

Figure 14 Example of part of a simple simulation game for solving


optimization problems and decision-making support
Using hydrosystems management as an example to solve optimisation
problems, there are known techniques used as described by Larry W
Mays (2002). Just to name a few:
Mathematical Programming This includes linear and nonlinear
programming approaches as interfacing simulation computer programs
with nonlinear programming codes. Many AM management executives
have used this successfully in groundwater management systems.
Popular models recommended by AM engineers are LINDO, GRG2,
GINO, GAMS, MINOS and others.
Differential Dynamic Programming

74

This is a stagewise, nonlinear

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All simulation games need experts to create them to suit the
organisation and trained senior technical executives to
operate them. The decision-makers need to familiar
themselves in the use of the game, especially with respect to
manipulating the demand variables pertaining to a project.
Organisations should start with simple game models before
trying advanced models. If properly designed, these games
are usually user friendly.

reasons of political and personal agenda would invariably


appear in the simulation modelling as something out of sync.
Accountability, transparency, integrity and professionalism in
the decision-making process will most likely appear as the
keys to decision-making.

ASSET MANAGEMENT

programming procedure recommended by AM engineers for


use in hydrosystems problems that are based on discretetime optimal control, such as multi-reservoir operation.

Such is the power of SAM Step-Power Process in urban


management for sustainability.

A simulation game system should be flexible to allow


adaptation by users with various levels of experimental
knowledgei.e. from experience. Professionals in Step-4 can
now come forward to demonstrate how algorithms, heuristics,
optimisation, and simulation models in the DSS should be
utilised and test the impact of various policies under the
social, political, economic and environmental elements of
sustainability, based on the four different decision-making
platforms developed in Step-4:
x Decisions under certainty
x Decisions under risk
x Decisions under uncertainty
x Decisions under conflict
It is at this stage that the decision-makers of the top
management will exploit appropriate techniques to identify the
most effective methodologies for continuous feedback and
interactive stakeholder participation in the process. Full
community consultation can then be effectively carried out.
Any deliberately negative inputs by any stakeholders for

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

Source: Lubis, A R, compiler (1998), Water WatchA Community


Action Guide, Asia-Pacific Peoples Environmental Network
(APPEN), Asia-Pacific 2000 Initiative of UNDP

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ASSET MANAGEMENT

Structural failures are not just accidents, nor acts of


God. They are the results of human error originating
from oversight, carelessness, ignorance or greed.
With the advance of design sophistication and
construction methodology came the proliferation of
structural failures.
Early savings in design and construction costs often
boomerang as later and larger costs of repair and
litigation.
The vulnerable structures of the late 20th century will
provide bread and butter to the forensic engineers of the
21st century.
Robert T. Ratay
Robert T. Ratay (2000), Forensic Structural Engineering Hanbook,
New York, McGraw-Hill

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Asset Maintenance

ASSET MANAGEMENT

CHAPTER 5
1. What, Why, When of Maintenance
2. Timely Maintenance
3. Factors affecting Asset Maintenance
4. Types of Asset Maintenance
5. Planned versus Unplanned Maintenance
6. Technology, Research and Training

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What, Why, When of Maintenance n

ASSET MANAGEMENT

What is Asset Maintenance?


As mentioned in the previous
chapters, all assets, whether
they are part of infrastructure
systemssuch as roads,
water supply systems or
electricity systems, or
buildingssuch as hospitals,
schools, law courts, post
offices, and other public
buildings, are subject to wear
and tear over time and their
condition will deteriorate.

replacement works, and a


proper management system
to plan, coordinate, monitor,
supervise, maintenance
outcomes checking, as well
as financial management to
support the physical works.

deteriorate, resulting in poor


service delivery. If this were to
be neglected continuously,
the whole service would fail
and the asset might have to
be abandoned, thus incurring
total loss of the investment.

But assets are more than just


a public investment. They are
The main purpose of assets is there to perform services,
to deliver services. Acquiring without which the citizens will
suffer inconvenience or even
assets either by purchasing
hardships. In certain
existing assets or
constructing new ones is only situations, the neglected
assets can also pose safety
Asset maintenance is the
the initial investment of a
and health risks.
process by which these
service delivery process.
assets are maintained so that Across the span of an assets
their condition remains at a
life, the total investment will
Cost of Maintaining Asset
level that allows them to
be many times more than the Stock
continue providing the service initial investment. In the case
for which they were designed. of the public toilet block as
In modern societies, efficient
described in Section 7 of
public services are a must.
Chapter 4 Step-Power 2,
The processes involved in
Therefore asset maintenance
Asset Knowledge: Life Cycle must be constantlyly carried
maintaining an asset will
Costing, the total life cycle
include works such as
out, as part of good urban
cost is 17 times the initial
cleaning, inspections,
governance.
capital cost.
touching up, servicing,
charging-up, repairs,
During the mid-1980s, Britain
changing of component parts, The reason for the high cycle was spending 10 billion per
and others. With large assets cost is due to expenditure
annum on the maintenance of
involving a lot of sub-assets,
incurred in maintaining the
public buildings alone. During
maintenance can be complex, asset in optimal condition to
the same period, 50 per cent
requiring skilled manpower,
provide services. Without
of UKs construction labour
huge supply of parts for
maintenance the asset will
force was engaged on

78

Why Asset Maintenance?

building maintenance work.


(Seeley, 2003.)
As assets are ageing,
replacement costs shoot up.
While some countries,
especially developing nations,
tend to increase the number
of assets at a phenomenal
speed because of rapid
urbanisation, they do not
envisage the horrific
replacement costs of these
assets in years to come. The
building stock of UK recorded
a replacement value of about
250 billion in 1987 (Seeley
2003).
Unsustainable Practice of
Building and Replacing
Assets
At a recent 2004 International
Local Government Asset
Management Conference
held in Melbourne, it was
reported that Canada has an
urban civil infrastructure stock
value of about C$1.6 trillion
which provides the basis for a
high standard of living.
Because of decades of
neglect, this is now at risk.
The cycle of build and replace

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Section 1

continues to dominate
budgets, especially at
municipal level. Municipal
infrastructure debt has
increased from C$20 billion in
1985 to an estimated C$57
billion in 2002. Schepers
warns that if the trend
continues, in another 25
years, that debt could exceed
C$110 billion. Since municipal
infrastructure represents only
70 per cent of the total
national stock, this
predicament is indeed mind
boggling. Currently,
Canadian municipalities are
spending C$12-$15 billion per
annum on infrastructure and
out of this investment, 80% is
aimed at system repair,
renewal and operation. The
situation is grim59% of the
infrastructure is more than 50
years old while 30% is more
than 80 years old. In the face
of such a financial situation,
Canada is beginning to
realise the dire need to adopt
more sustainable practices in
asset management.
(Schepers, N, 2004.)
In the Asia Pacific region,
many countries continue to

follow the same way of buildand-replace. The Canadian


experience should serve as a
timely lesson for them to
change their current mindset
and adopt the approach of
prudent asset management,
involving regular asset
maintenance, thus keeping
the functional life span of
assets as close to the
designed life span as
possible.
Being the pioneers in taking
on this approach in the last
two decades, Australia and
New Zealand are now the
leading countries in asset
management. With their
continuing efforts in improving
their asset management
practices, they are achieving
significant national savings in
infrastructure development
costs while maintaining asset
performance for optimal
services delivery to satisfy
user needs.
As Asian countries continue
with their asset building
boom, now is the right time to
adopt asset management
practices with regular and

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

proper asset maintenance.


When to maintain?
Maintenance is the most
basic kind of caring work for
an asset. If it is carried out
regularly, the tasks are often
relatively simple and
inexpensive.
Every asset has a designed
life. Although no amount of
maintenance can significantly
lengthen this designed life
span, without maintenance
this life span will definitely be
shortened.
As mentioned earlier, assets
are valuable investments and
we must maintain their
designed functional and
economic life for as long as
possible. We must not wait
until they break down or are
so badly deteriorated that we
have to discard them or
replace them.

they are also absolutely


wasteful and highly
interruptive to our daily life, as
we await replacements. As
costs of assets procurement
are increasingly expensive,
the habits of build and replace
without proper maintenance
are now considered
irresponsible negligence. In
this fragile world of limited
resources, we simply cannot
support such bad habits. We
must maintain assets
designed life span, we must
revitalise our valuable assets
and we must recycle them
with appropriate renewal
processes.
But, we can only do this
through timely maintenance.
The moment we take
possession of assets, regular
maintenance must begin.

Traditional habits of build and


replace for assets can no
longer be tolerated. Such
habits not only put a heavy
load on our financial capacity,

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ASSET MANAGEMENT

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Timely Maintenance n

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against rusting.

maintenance will keep the car these urban assets.


safe, reliable and looking
Effects of Timely
Every time we go to the petrol good, thus optimising its
Maintenance
market
value.
A
car
is
an
To prevent asset breakdown
station to fill up, we must top
investment.
and causing work disruptions, up the car engines cooling
Assets are subject to normal
maintenance of assets has to system in order to prevent the However, regular
wear and tear even if they are
be carried out regularly. How engine from overheating,
maintenance also includes
in good condition. If they are
regular is considered regular check and pump up tyres and carrying out repair works and in poor working condition due
enough will depend on the
check and fill up engine oil.
component replacement, as
to lack of proper
type of assets and the way
soon as they appear to be
maintenance, the wear and
they are being used. Most
When we send the car for
necessary. Hence, we need
tear will have punishing
assets are usually made up of service, the workshop cleans to change light bulbs, air
effects, causing deterioration
a system of sub-assets in the the air filters, check the
filters, brake pads,
and hastening operation
form of components. Each
engine cooling system, the
windscreen wipers, clutch
breakdown. These are the
requires a different
air-conditioning system and
pad, tyres, etc. For some
characteristics of asset
maintenance schedule.
changes the engine oil as
components, these
performance which are
Whatever the regularities
well.
replacements must be done
related to asset maintenance.
involved, they all must be
without delay; otherwise there
carried out in a timely fashion. We should also check the
Figure 15 shows such
may be serious damage to
characteristics and the
brakes; and to service them
the automobile system.
resultant effects of timely
Take the family motor car. We from time to time. We must
maintenance or neglect.
need to regularly clean the
also service the clutch system When we apply this to the
urban
assets
such
as
buses,
body to remove the dirt and
and the gear box system, all
From the top performing
trains, hospitals, schools,
grime to protect the cars
in accordance with the car
condition of 100% down to
museums, sports stadiums,
body work. We should do it at maintenance manual.
about 85-80%, this level is
water and electricity supply
least twice a week. In cities
known as the Good Level of
systems including the
where people live along tram We must, once or twice a
distribution networks of pipes Asset Condition, represented
lines and have to park along
year, clean the seats and the
by the fine dotted line in
and cables, etc., the same
such streets, they need to
internal lining to maintain the
Figure 15.
wash their cars daily to get rid fabric condition, as sun light, principles and processes of
proper
maintenance
and
of the iron dust from the tram heat, pollutants in the
As the condition drops down
rails to minimise body rusting. atmosphere and normal wear repair works apply; if we
to about 70%, it is beginning
desire to optimise the public
They also need to wax their
to show signs of deterioration
and tear can cause fabric
service delivery systems of
car once a month to fight
and its level of performance is
deterioration. Proper
What is Timely
Maintenance?

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Timely Maintenance Y
Maximum level of functional condition when asset is new or after refurbishment or renewal

ASSET MANAGEMENT

Arrows showing Deterioration

Good Level
Just tolerable
Intolerable

REPAIR 1

REPAIR 2

REPAIR 1

REPAIR 2

Zero Functional Level

Renewed Life Begins

New Life
Begins

Life Span with fast deterioration


THE NON-SMART WAY
Infrequent maintenance and repairs letting
functional level dropping too low

Life Span with low deterioration


THE SMART WAY
Frequent maintenance and repairs
keeping functional level always above
the Good Level

Figure 15 Effects of Timely Maintenance and Repair

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Timely Maintenance p
considered as the Just
cointhe Non-Smart Way
Tolerable Level of Asset
or the Smart Way
Condition, represented by the
Figure 15 also presents two
medium dotted line.
contrasting situations with
When the condition drops
regard to asset maintenance.
further down to about 55%,
The left section of the graph
the asset will encounter
represents the Non-Smart
frequent breakdowns and
Way
of asset maintenance
even when it is still working, it
causing fast deterioration in
is working poorly and
an assets life span. The right
ineffectivelyconsuming
abnormal amounts of fuel and section represents the Smart
Way where timely
energy while producing very
maintenance has brought
poor output. This level of
about slower deterioration in
performance is considered
the Intolerable Level of Asset asset conditions within the life
Condition, represented by the span of the same asset.
heavy dotted line in Figure
The Non-Smart Way
15.
In this situation, asset
Dropping below this level, the conditions are allowed to drop
functional capacity of this
because of no or improper
asset is as good as gone as it maintenance. When the
breaks down far too often and conditions have dropped too
consumes too many
low, major repair and/or
resources while producing a
replacement is then carried
negligible output. The asset
out. After repair-1 is carried
performance is no longer
out, asset conditions can only
considered economically and be restored to just above the
operationally viable. Its
Good Level line.
functional life as well as its
economic life has come to an In the case of repair-2,
damage has already begun
end.
and asset conditions can only
Two sides of the same
be restored to just above the

82

Just Tolerable line.

designed asset functional life


span of the asset is
Old habits die hard. People
maintained. This investment
continue to neglect
is yielding good returns and
maintenance and the asset
the community is able to
conditions are allowed to drop enjoy good and uninterrupted
so low that they can no longer service delivery from this
be restored to the tolerable
asset.
level of performance. The
asset has to be disposed of,
In a nutshell
resulting in total loss of
investment and severe
Timely maintenance and
interruption to service delivery repair works maintain asset
once provided by the asset.
life span. At the same time it
is the only way that we can
The Smart Way
optimise the performance
conditions of our asset at the
In the smart-way,
maintenance work is regularly least cost with minimum
interruption to service
carried out based on a
maintenance schedule set for delivery.
the whole asset system. As
Only with timely maintenance
soon as there are any signs
will the community be able to
of deterioration or
get the expected services that
malfunctioning, timely repairs they have paid for.
and or replacement of asset
components are carried out.
Notice that in this situation,
asset conditions are never
allowed to drop below the
Good Level. Each time repair
work is carried out, the
conditions are restored to way
above 90%. The total costs of
repairs are low and the

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r Ivor H. Seeley, Emeritus


Professor of the
Nottingham Trent University,
UK, rightly declares that
maintenance of buildings
starts the day the builder
leaves the site. The eminent
building maintenance guru
further advises that building
design, materials,
workmanship, function, use
and their interrelationships will
determine the amount of
maintenance required during
the lifetime of the building.
(Seeley, 2003.)

material manufacturers and


builders continue to ignore
such important factors.
Without their consideration
and professional input, not
only will the assets so created
be so much harder to
maintain, but maintenance
budgets seldom form a part of
the financial consideration of
the investment at the time of
construction, hence
inadequate funds are set aside
for maintenance.

could have been avoided at


the early stages of asset
lifecycle management.

According to Seeley, one-third


of maintenance work on
buildings investigated in UK
could have been avoided if
sufficient care had been taken
at the design stage and during
construction. The design
faults resulted either from
failure to appreciate how
various constructional details
would perform in use, or
But in Systemic Asset
because certain parts of the
Management, asset
building that failed through
The same is true for
maintenance is one of its
normal wear and tear could
infrastructure system assets.
essential parts. (See Systemic not be replaced without
Asset Management, Stepextensive repairs to adjacent
Power 3 in Chapter 4.)
parts. He also cited
Good asset maintenance
comments by the Building
begins at the design phase
Research Establishment that
In many countries and
of an asset lifecycle
the frequent failure by
communities there is an
designers to make use of
attitude
problem.
So
much
so
For all assets, the importance
that many assets are not only authoritative design guides
of having maintenance
considerations forming part of difficult to maintain, but come such as British Standards and
Codes of Practice, and of the
the asset planning, design and with design and construction
tendency to adopt a careless
faults.
The
result
is,
of
course,
construction phases in asset
attitude to detail
lifecycle management cannot that more sophisticated
design. (Seeley, 2003.)
methods and skills in
be overemphasised.
maintenance
are
required
for
Unfortunately, most
repair works incurring higher
Sadly, these comments are
developers, planners,
maintenance costs and
also applicable to
architects, engineers, asset
wasting timebut, all this
infrastructure assets resulting
component designers, asset

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

in, for example, water pipe


leaks, pumping stations pump
performance monitoring meter
failures, poor water quality in
town supply, sewerage
systems failure causing
groundwater contamination,
hospital service breakdown,
etc., just to name a few.
Coming back to building
design: if only technical
maintenance know-how were
to be incorporated at the
planning and design stage,
many building maintenance
problems related to
weathertightness, durability,
noise reduction, resistance to
heat loss or heat gain and
others could have been
avoided.
Another factor is that after the
project is completed and
handed over, hardly any
architect, engineer, builder
ever bothers to revisit the
asset created by them, hence
they are unable to learn from
their past experience and will
repeat the same performance
again, much to the detriment
of asset performance and
service delivery.

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Factors affecting Asset Maintenance Y


the brick structures are built,
water soluble salt is brought
one of the most frustrating
to the surface of masonry
post-construction problems in
by evaporation of either
cleaning works would be
construction water or rain
The skills and technology
eliminated. In developed
water that has penetrated
involved in asset
countries, most builders and
the wall.
maintenance are very
bricklayers are professionally x Green stains: caused by
different from those involved
qualified to over come such
presence of vanadium salts
in the construction of new
problems and able to hand
due to acidity in the brick.
assets.
over a brick building free from
Green stains are often
stains. Even in such a
caused by wrongful use of
For instance, the technical
muriatic acid or
knowledge and skills required situation, there are times
when
brick
building
defects
compounds containing
for constructing a new faircause serious problems,
muriatic acid.
faced brick building are
much
to
the
frustration
and
x
Brown stains: caused by
entirely different from those
presence of soluble
for maintaining and rectifying embarrassment of both the
builder and the building
manganese or iron oxides
brickwork defects of such a
owner.
due to wrongful use of
building.
muriatic acid or compound
containing muriatic acid.
In developing countries,
Case-1 Brick Stains
bricklayers are not
x White scum: this insoluble
professionally trained and
scum is generally caused
Due to carelessness of the
buildings with inherent
by faulty cleaningfailure
builder, including failure to
defects are simply handed
to adequately saturate wall
follow correct construction
over to the owner who will
before cleaning and failure
standards and trade practices
face immense problems in
to flush wall after applying
during the construction
asset management.
cleaning compound.
process, various kinds of brick
x
Mud stains: caused by
stains will appear as the
allowing bricks to be
Fair-faced
brick
walls,
if
not
building is going through a
unloaded on to muddy
handled properly ,can end up
curing process.
ground where mud
with all sorts of stains
becomes integrated with
appearing over time, some of
If all bricklayers could
the brick body. Due to their
which are described below:
exercise skill and care in
attraction to each other,
keeping brickwork clean as
x White efflorescence: a

ASSET MANAGEMENT

Good asset maintenance


needs professionalism

84

these kinds of stains are


the most difficult of all to
remove.
(Levy, S M, 2001.)
All the above stains require
different chemicals and
processes to remove them. In
the case of black mould
stains caused by atmospheric
pollution, this may require
high pressure water jet or
combined with chemical
cleaning. Unless the
maintenance personnel are
properly trained, they will do a
bad job and may even cause
further damage to the
brickwork.
Case-2 Painted Surface
Defects
Painting defects may appear
the same but depending on
the types of surfaces and
structures and the
surrounding conditions, the
causes of defects may be
different, requiring different
methods and processes of
maintenance works to be
carried out.
Described below are four

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caused by presence of
moisture; poor surface
preparation by failing to
remove chalk residue;
using primer on new
substrate which is hard,
glossy or contaminated; or
application of latex paint
below minimum application
temperature.

applied over a partially


dried bead of caulk, the
paint dries, first forming a
film. As the caulk continues
to dry, it separates from the
underside of the paint film.
Ultimately, the paint film
cracks.
Conditions affecting the
drying time for caulks are
air, surface or caulk
temperatures below 40F
(4.5C), high humidity, and
joints in excess of 1/2" in
width or depth.

x Problems of alligatoring
and wrinkling:
Allegatoring and cracking is
caused by excessive
buildup of paint. Eventually,
multiple cracking of the
paint film occurs as
seasonal temperature
variations inhibit expansion x Problems of peeling: is
caused by poor surface
and contraction of the paint
preparation. The name
film and the substrate.
refers to the removal of
When new paint is applied
strips or sheets of paint due
to such a surface with
to loss of adhesion. This
improper removal and
In maintenance work all the
could be caused by:
surface preparation, this will
above problems again require
XPainting over a coating
invariably accelerate flaking
different solutions to rectify
containing wax;
of the total film down to the
them. Unless the
XAn excess buildup of
substrate.
moisture within the wood; maintenance personnel
Wrinkling is caused by
involved are properly trained
XPainting over an old,
applying paint in excess of
and qualified, they will only
smooth coating; or
the recommended wet film
XPainting over heavy chalk make matters worse.
thickness and by applying
surfaces;
paint containing strong
Case-3 Collateral Damage
XPainting over surfaces
solvents to already dry
in Maintenance Works
which are contaminated
paint films. These solvents
with oil, grease, various
cause the underlying paint
forms of pollution such as Without proper training in
film to dissolve and expand
dust, dirt and mildew; or maintenance work planning,
forming wrinkles under the
XApplying latex paint
coordination and execution,
newly applied paint. The
below its recommended
workers carrying out
result is a wrinkle finish.
application temperature. maintenance and repair work
x Problems of blistering-cum- x Problems of cracking over on one sub-asset often cause
peeling: This is usually
collateral damage to adjoining
caulk: When paint is

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

sub-assets. How often we


hear of complaints that the
newly laid road has been
damaged by utility board
workers doing some
underground repairs!

ASSET MANAGEMENT

types of painting defects


resulting from various causes:

These are just simple


maintenance works and
problems that cannot be put
in the hands of ordinary
construction workers, let
alone lay persons. Likewise,
maintenance management
also requires trained
professionals to handle such
tasks.
In the case of infrastructure
systems such as water supply
and electricity supply where
thousands of subsystems are
involved, maintenance works
are even more complex
requiring proper training and
qualifications.
Developing countries need
asset maintenance training
before asset management
can make a start. In the long
run they will be able to enjoy
better service delivery from
their valuable assets.

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Types of Asset Maintenance n

ASSET MANAGEMENT

The Concept
The concept of asset maintenance is founded on the premise
that all assets whether buildings or infrastructure systems
need maintenance throughout their asset lifecycles. Even
simple assets such as equipment and fittings need
maintenance. There are no assets that are maintenance-free,
although a well-designed asset, incorporating careful
considerations of lifecycle asset maintenance at the design
stage, will definitely do well in reducing subsequent
maintenance work.

and calculated life span of assets as against built-in or


unpredictable obsolescence. (Seeley, 2003)
As BS 3811 deals with more than just buildings; it embraces
all physical assets. Therefore it is only prudent for me to use it
to delineate various aspects of asset maintenance in
accordance with its framework and definitions.
BS 3811 subdivides maintenance into planned and
unplanned maintenance, from which various types of
maintenance arise.

Definition of Maintenance

Maintenance

BS 3811 define maintenance as: The combination of all


technical and associated administrative actions intended to
retain an item in, or restore it to, a state in which it can
perform its required function. (British Standards Institution.
BS 3811: 1984 Glossary of maintenance management terms
in terotechnology.)
Seeley explains that the term terotechnology was used in BS
3811 to embrace the life cycle requirements of physical
assets. It is a combination of management, financial
engineering, and other practices applied to physical assets in
pursuit of economic life cycle costs. It is concerned with the
specification and design for reliability and ease of
maintenance of plant, machinery, equipment, buildings and
structures with their installation, commissioning, maintenance,
modification and replacement, and with feedback of
information on design, performance and costs. It is a
technology that takes into account the marketing and
observance of design-maintenance-cost practice of all assets,
the conservation of resources and the promotion of controlled

Planned
Maintenance

Unplanned
Maintenance

Preventive
Maintenance

Scheduled
Maintenance

Corrective
(including
emergency
maintenance

Condition-based
Maintenance

Corrective
(including
emergency
maintenance

Figure 16 Types of Maintenance


Source: BS 3811 (1984) in Seeley (2003)

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Using BS 3811 as a guide, the
various types of asset
maintenance are defined as
follows:
1. Planned asset
maintenance: The
maintenance tasks for an
asset based on a
maintenance plan and
carried out with
forethought, control and
the use of records to a
predetermined plan.
2. Unplanned asset
maintenance: Ad hoc
maintenance carried out to
no predetermined plan.

and creating unexpectedly


high expenditures and
resultant loss of income.
These tasks include
inspections, cleaning,
servicing, and replacement
of general consumables.
4. Corrective asset
maintenance: The tasks of
maintenance carried out to
correct or rectify the poor
condition of the asset as a
result of wear and tear, or
after a failure has occurred,
and restoring it to a state in
which it can perform its
required function.

must be immediately
carried out to restore
service or to prevent
serious repercussive
damage to occur.
Emergency maintenance is
often referred to as
breakdown maintenance or
repair jobs. It is also
nicknamed fire-fighting
maintenance, because of
the fact that though the
asset is repaired to function
again, residual damage
has already set-in with the
assets functional life being
prematurely shortened. In
view of this and based on
the above definitions, such
tasks are not maintenance
in the strict sense.

In the first situation as


defined, corrective
maintenance is carried out
as minor problems are
noted during inspections as 5. Condition-based asset
part of preventive
maintenance: This a type
maintenance tasks, which
of preventive maintenance
are carried out before
initiated as a result of
major failures occur, as
knowledge of the condition
distinguished from
of an asset from routine or
emergency maintenance,
continuous monitoring the
which is the second
asset condition and
situation.
performance.

3. Preventive / proactive
asset maintenance: The
tasks of maintenance
carried out at pre-set
intervals, which are
normally corresponding to
prescribed asset criteria.
These are designed to
avoid unexpected failures,
which often occur at
5. Emergency asset
6. Scheduled asset
inconvenient times,
maintenance:
maintenance: This is
causing service interruption
Maintenance actions which
another type of preventive

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

maintenance carried out


according to a pre-set timeinterval, a number of
operations, or area or
distance.
Other definitions of tasks
which are related to asset
maintenance
1. Routine or day-to-day
maintenance: It is largely
of the preventive type,
such as checking roof
gutters and removing
leaves and other debris
that cause blockage,
checking and clearing
drains and sumps, and
servicing mechanical and
electrical installations in
buildings; checking surface
corrugation formation and
causes; checking crack
formations of various types
and their causes, checking
surface bleeding, fretting,
delamination and edge
breaking and their causes
in road maintenance
management; etc.
2. Regular inspections and
cleaning: These tasks are
often conducted together

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as a process for monitoring
the rate of deterioration of
assets. Inspectors/cleaners
shall routinely record the
results of their keen
observations.

and armed with all sorts of


tools, sophisticated
communication equipment,
latest PDA for note and
photographic recording of
any sub-asset defects or
consumer problems, in
addition to his/her usual
rubbish-bin-trolley.

be carried out to increase


the assets designed
capacity in order to
maintain safety standards.

about by inappropriate
design, incorrect
installation and/or the use
of inappropriate or faulty
materials.

ASSET MANAGEMENT

Similarly, urban renewal


may be necessary in order 5. Work-to-demise assets:
Early warning signs of
to convert a warehouse
When an assets functional
major problems of asset
precinct to an inner-city
life enters its twilight time,
deterioration are often
residential precinct in order
or because of other new
discovered during
to revitalise the vibrancy of
assets have taken over the
3.
Overhauls,
inspections and cleaning,
this part of the city core,
main function of this asset,
Refurbishments and
and their timely reports will
instead of leaving it to
which is then relegated to
Renewals:
These
tasks
give the management the
decay thus increasing
involve major repairs and
only minor use and
opportunity of carrying out
social costs.
modifications
to
parts
of
the
pending asset
appropriate actions to
assets
and
are
normally
replacement, such an
prevent asset failures.
4. Avoidable maintenance:
required at the mid-life
asset will receive only
Maintenance work has also
Developing countries in
stage for the purpose of
minimum maintenance to
been termed by scholars
this region pay little
renewing the ageing asset
maintain public safety. In
as predictable and
attention to the roles of
to a reasonable condition
view of the scarcity of
avoidable. Avoidable
cleaners and they are
and often to suit more
funding for maintenance,
maintenance is carried out
relegated to the lowest
intensified service delivery
managers must be aware
to maintain the expected
paid job in an organisation.
requirements. For
of work requirements and
quality of performance by
Its indeed an opportunity
example, refurbishing
avoid spending money
means of regular
lost because of pure
shopping centres and
unnecessarily on the workmaintenance or by major
ignorance of asset
hotels is done to maintain
to-demise assets. In large
repairs or overhauls or
maintenance within
customer satisfaction.
asset systems, such
refurbishments when the
Systemic Asset
scrutiny in management is
When a road network or a
asset is facing mid-life
Management principles.
vitally important.
bridge is subject to
deterioration and
Visit any shopping centre
increased traffic volume
functioning problems.
in Australia and one will
and the axle-load limits of
Avoidable maintenance is
notice the cleaner, while
carriers have increased,
also required to rectify
picking up rubbish, is
asset renewal will have to
asset failures brought
donned in a smart uniform

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Planned Vs Unplanned Maintenance 


eveloping countries in the Asia Pacific region do not
adopt the system of planned asset maintenance. Even
when some organisations in these countries do follow a plan,
they are often fragmented, unsystematic and rarely systemic.
Their main arguments are based on the false premises that
planned inspections and maintenance are too costly, and the
ends do not justify the means.
Unfortunately, they are not alone in having such
misconceptions, as even in developed countries many
organisations also hold the same views. They prefer to follow
the old habit of build and replace and only carry out
emergency repairs or maintenance when the needs really
arise. Under such circumstances, they are forever working
under the strain of under-funding for emergency maintenance
works, with little possibility of preventive or proactive
maintenance.
As costs of emergency maintenance works are mounting,
coupled with a high incidence of service delivery failures and
accidents incurring high social costs, loss of economic
opportunity and public liability claims, many in developed
countries are now forced to change their mindset. More and
more are now seriously taking up the practice of planned
asset maintenance leading to total asset management.

breakdowns, hence less loss of economic opportunity


throughout the functional life span of the asset that provide
the service delivery.
With planned maintenance, although the planned inspections
increase the overhead costs, the overall lifecycle
maintenance costs are always less than with an unplanned
maintenance system.
Cost relationship between planned and unplanned
systems
The actual cost relationship between planned and unplanned
maintenance systems is succinctly presented by the
Chartered Institute of Building, UK, as can be seen in Figure
17. It shows that although planned inspection presents an
additional cost for maintenance, the final cost of maintenance
is much lower than in the unplanned system. Additionally, the
resultant costs of defective design and construction can be
mitigated by the planned system as they can be discovered
and rectified to avoid further damage, which is not the case
with the unplanned system.

The Myth
The notion that planned maintenance costs more than
unplanned maintenance is a myth based on facts that have
been misconstrued.
A maintenance system that is based on planned inspections
and maintenance will undoubtedly incur higher overhead
costs than one that is unplanned. However, time and time
again experience shows that good pre-planning leads to
much lower maintenance expenditure in the long run. In
addition, it also leads to lower incidence of service

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

Figure 17 Cost relationship between planned and


unplanned maintenance systems
Source: Chartered Institute of Building, (1985),
Managing Building Maintenance, in Seeley (2003)

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Technology, Research and Trainingn

ASSET MANAGEMENT

he technology required for


proper asset maintenance
is enormously complex and
wide in scope, caring for a
variety of fabric systems and
building structures, and with
infrastructure systems such as
water supply ranging from pipe
network systems to dams. In
each case, all the factors that
impact the need and choice of
maintenance work must be
considered.
Furthermore, even under the
same building trade, say
concrete or steel works, each
asset as erected on a
particular location is unique
and has its own inherent
defects and deterioration
caused by local climatic and
environmental conditions.

must not only have the


knowledge of building defects
inspection and rectification, but
must also understand
environmental protection in
buildings.
As new building techniques
and innovations continue to
appear, building defects
multiply while little is known
about their potential defects
and remedial action that will
conform to safety and health
standards.

When it comes to inspecting


and carrying out maintenance
works for large and tall
building structuressuch as
an Olympic sized indoor
stadium, or a very tall
skyscraper or a high dam wall,
there are many methods and
In each case, a purpose made processes that could be
solution to the maintenance
chosen. However, one wrong
problem is required.
choice could mean incurring
unnecessarily high costs, or
A slow leaking roof or a small result in ineffective outcomes,
waterproofing member crack
thus being a waste of money
causing unnoticeable fungus
and time. The wrong choice
buildup in a busy office
might even pose a risk of
building or a hospital ward can serious injuries to the
cause serious health problems inspectors and maintenance
to the unaware occupants.
crews and/or the building
The maintenance personnel
occupants/users.

90

Effective maintenance
needs direct support of
research institutions
The technologies involved in
maintenance planning,
execution of inspections and
monitoring, maintenance work
execution, maintenance
management and financial
management are not simple
and certainly different from the
technologies associated with
the procurement of new
assets.
Because of this complexity,
more and more developed
countries are setting up their
own research units for asset
maintenance.

significance of maintenance
and the actual performance of
materials and components
under varying conditions.
The British government also
established a dialogue
between research and
development workers on the
one hand and architects,
engineers, surveyors,
maintenance personnel and
contractors on the other, to
ensure that the outcomes of
research are relevant to
effective maintenance
practice.

Owing to growing concern


over the huge annual
expenditure on correcting
construction faults in public
In Britain during the 1950s and housing, the BRE, jointly with
1960s, according to Seeley,
the National Building Agency,
research in this field was
mounted a 3-year investigative
mainly concerned with
research on a number of
properties of materials and few housing schemes under
of the results were actually
construction. The 1982 report
implemented. After the
revealed that:
establishment of the Building
Research Establishment
x Over one-half of defects
(BRE), the government began
concerned the external
to conduct research on the
envelope, consisting of 20%
relationship between design
in walls, 20% in roofs, and
and maintenance, execution of
13% in windows and doors.
maintenance, economic
x One-quarter of all faults

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were infringements of the


Building Regulations.
x Out of the total number of
faults, 50% were attributed
to design and specifications,
41% to site conditions, and
8% to materials.
Two major causes of concern
were faults contributing to poor
building durability requiring a
high degree of maintenance,
and to structural stability. The
other concerns were poor
weather tightness and rising
damp, poor thermal insulation,
poor ventilation, heating and
poor condensation prevention.
Again according to Seeley, in
1986, the BRE started to
provide advice on methods of
inspection, maintenance and
renovation of the steel-framed
buildings of housing estates.
Following that, organisations
such as the Building
Conservation Trust, Building
Maintenance Information, the
Building Services Research
and Information Association,
the Construction Industry
Research and Information
Association, the National
House-Building Council, the

Ancient Monuments Society,


the Historic Buildings Council,
the Society for the Protection
of Ancient Buildings, the Civic
Trust and the Scottish Local
Authorities Special Housing
Group joined BRE in providing
maintenance advice. (Seeley,
2003)
Today, many organisations in
UK are giving sound advice on
asset maintenance. On road
maintenance alone, advice
can be obtained from:
x Department of Transport
x Highway Agency
x Technical Advisors Group
x SCOTS
x WATO
x County Surveyors Society
x Transport for London
x Scottish Executive
x Northern Ireland Roads
Service
x Welsh Assembly.
In Asia, many research
organisations have been
established to support the
construction industry, notably
those in Japan, Korea, Hong
Kong, as well as Australia,
can give advice on asset

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

maintenance, not only for


buildings but also for heavy
components of infrastructure
systems.

institutions to provide
appropriate education and
training for asset
management.

Education and Training for


Asset Maintenance

Many developing countries


also need to provide training to
the communities to enable
them to maintain community
assets with appropriate
technology at affordable cost.
They cannot import this
technology from the developed
nations as what is being used
there is totally ill-suited to the
conditions of poor
communities in Asia.

These are urgently needed in


Asia. With rapid urbanisation
across the vast region, urban

infrastructure and building


asset stocks are increasing at
lightning speed in many
countries. These assets need
to get proper maintenance
fast, and the longer people
procrastinate the higher the
costs of maintenance and
replacement they will have to
face.
As these same countries have
become more and more
industrialised, pollution levels
have also increased, causing
immense damage to many of
these valuable assets. Many
countries in the region also
have great treasures in
historical buildings and many
are severely damaged by
pollutions.
The region needs dedicated

In this respect, the efforts of


Housing and Urban
Development Corporation
(HUDCO) of India has
succeeded in establishing 600
Building Centres throughout all
States in India. The Centres
propagate information, train
local artisans in
manufacturing, construction
and maintenance of
community assets with
appropriate and cost effective
construction technology
(CECT). Through pilot projects
in Hyderabad, Bhubaneswar
and Ranchi, HUDCO aims to

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Technology, Research and Trainingp


develop the process of
Community Asset
Management (CAM).
HUDCOs main research is
focused on building capacity
for poor communities to
manage their physical assets.
With experience gained, they
are now testing the CAM
schemes in the three States of
Orissa, Andhra Pradesh and
Jharkhand.

only have many countries in


the region a wide diversity of
races, cultures, languages and
religions, but most noticeable
is the dichotomy of the rich
and the poor in the developing
countries.
While it took the West at least
a hundred years to build their
modern cities, Asians across
the region build their super
cities in just a decade or two.
The irony is that these same
cities are also inundated with
slums; and they are also
surrounded with poor rural
settlements.

the waste water flow and the


so called footpaths, no
Western technology can be
imported to solve such
problems. Yet any casual
observers will not fail to notice
these slums are surrounded
by modern highrise buildings.

Although urban economic


growth continues to expand in
such cities, the communities
have their unique pains to
Following Indias May 2004
bear, serving to harden their
national election, it should be
endurance and resilience. As
interesting to see HUDCOs
a result, these developing
progress, especially when the
countries have many
rural poor has given a strong
admirable community support
mandate to the newly formed
groups to help them to cope
Government. I think the time is In terms of asset maintenance, with the local conditions.
right to strengthen Indias
vis--vis asset management,
urban and rural management
the existence of dual
With the support of regional
with proper Systemic Asset
economies in the Asia Pacific and international
Management, even though
regions developing countries organisations, such as UNDP,
asset management process
poses serious problems. They UNCHS, HIC, CITYNET,
has been practised in India
have to deal with the problems ESCAP, ACHR, AWAS, ICLEI,
since 1997, albeit in an ad hoc of the Brown Agenda as much IETC, LIFE, TRISHNET, just
and fragmented manner.
as the Green Agenda. In
to name a few, the rich and
megacities such as Mumbai
poor live on, and carry on
for example, where the solid
nation-building in their own
A region of extreme
wastes are piled up among the remarkable ways.
contrasts
shelters of mammoth slums,
Asia and the Pacific Area is a where storm water drainage
region of extreme contrast. Not cannot be distinguished from

92

External technical support


The region has been,
nevertheless, blessed with
enormous external support
from international
organisations such as the
Department for International
Development (DFID) of UK,
Canadian International
Development Agency (CIDA),
the Asian Development Bank
(ADB), the International
Development Research
Centre (IDRC) of Canada, with
its regional office in Singapore,
the Australian Overseas Aid
Program (AusAid), especially
the Australian Centre for
International Agricultural
Research (ACIAR).
In particular, the contributions
from DFID in research
programmes focusing on Asia
has been significant, covering
the sectors of water and
sanitation, urbanisation,
transport, energy, information
and communications
technology, and geoscience.

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Section 6

Technology, Research and Trainingq

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

It is to deal with such realities


that Asia must set up its own
Centre of Asset Maintenance
and Management.
Only with such a Centre will
Asians be able to dispel the
stigma that they have first
world infrastructure, but third
world mentality with regard to
caring for assets. Though this
remark was made by the
Malaysian Prime Minister
about his own citizens
indifferent attitude towards
asset maintenance, since then
many have agreed the remark
is applicable to Asians in
general.
In 2003, the Asia Pacific
Institute for Good Asset
Management (APIGAM) was
formed by EAROPH with the
support of UNDP and other
international and local
organisations, as well as the
government of Malaysia. Its
main objective is to assist
countries in this region to
adopt the principles and
practice of asset management.
(See Chapter17 for details.)

93

ASSET MANAGEMENT

of the poor communities.

village communities in Lao


PDR are keen to absorb the
One of the greatest obstacles knowledge to improve their
to developing local innovations water and sanitation
For better logistics, more
conditions, the western trained
effective use of resources and for asset management in the
foreign and local experts are
region
is
Asias
diversity
of
greater positive outcomes,
unable to find the correct
languages.
Here,
I
would
like
Asia needs its own Asset
translation of the technological
to
quote
my
late
friend
Haruo
Maintenance and
concepts in the Laotian
Nagamine:
Japanese
Management Centre for
language, let alone the local
planners,
however,
are
not
knowledge, research,
dialects. Delegates from the
trained
to
use
this
experience
development assistance and
other 7 developing countries
effectively
in
the
Third
World
training centre.
also voiced similar problems
contexts. Useful expertise
with languages. At the
certainly, but we have not
It needs such a Centre to
concluding session of the
mastered a meaningful
consolidate all the international language to express it with, do Meeting, this issue formed part
and regional efforts and
of its resolution for the region.
not know how to translate it
convert them to solve uniquely into the kind of language
Asian problems under local
understandable to Third World Coming back to Nagamine, I
social, economic and
counterparts who earnestly
would like to refer to his
environmental conditions.
await to learn. (Nagamine
staunch belief and practice
2000.)
which shaped his unique
It needs to develop dual
teaching method at the
technologies to meet the
Graduate School of Nagoya
At the 1st Urban
unique challenges posed by
University based on what he
Environmental Management
the dual economies in the
called the field-oriented
(UEM) Sub-Sector Networks
regions developing countries. Meeting organised by CIDAinductive training model. He
It must harness a myriad
said that students in
AIT held at AIT, Bangkok, on
sophisticated technologies
developing countries must be
21-22 June 2004, Thomas
pouring in from the developed Meadley in his presentation on educated on third-world
nations for better maintenance Water and Sanitation and
realities from the grass roots
of Asias world class assets,
subsequent dialogue session and not from the classroom
while developing its own
also brought up the obstacle of with a textbook of international
innovations in taking care of
standard.
languages. He said while the
those equally valuable assets
Asia needs its own Centre
for Asset Maintenance and
Management

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ASSET MANAGEMENT

[Voltaires] Candide realized at the end of his


tumultuous life that the quest for happiness eventually
leads to tending ones own garden; similarly each nation
will probably discover that the best way to solve its
problems is to stick to its own affairs. But while global
thinking is no substitute for local action, perpetuating
national sovereignty in its present form would be suicidal
because global interdependence will be of increasing
importance in many crucial aspects of human life and of
the physical environment. As we enter the global phase
of human evolution, it becomes obvious that we all have
two countries, our own and Planet Earth.
Ren J. Dubos
The American Scholar, The Despairing Optimist,
in Ruth Eblen (1994), Laws of Thermodynamics,
In Ruth A Eblen and William R Eblen (1994), The Encyclopedia of the Environment,
New York, The Ren Dubos Center for Human Environments, Inc.

94

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CHAPTER 6
1. Capacity Building under TUGI
2. UNs Millennium Development Goals

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Section 1

Capacity Building under TUGI n

ASSET MANAGEMENT

ver since the 1996


Habitat II in Istanbul
brought tremendous benefits
to many municipalities
throughout the world
(through international
support and collaboration,
capacity building),
municipalities in the Asia
Pacific region are now able
to enjoy greater power and
autonomy, with their area of
jurisdiction more
meaningfully defined.

age, much more than basic


improvement, as mentioned,
is needed in order to attain
holistic urban sustainability.

In other words, the


municipalities may have
some knowledge of
managing the infrastructure,
buildings and facilities for
their own sake but they have
no knowledge of ensuring
that these assets are able to
optimise public service
delivery and performance,
which is the fundamental
purpose of acquiring these
assets in the first place.

To ensure that the


municipalities are continuing
capacity building practices,
aid agencies have
incorporated into the aid
programmes the imperative
implementation of capacity
buildingfor the purpose of
ensuring municipalities longUnfortunately, most of the
term ability to sustain the
technical programme of aid current scope of capacity
In this region, under the
building does not include
projects.
impetus of The Urban
imparting the essential
Governance Initiative (TUGI)
knowledge of
set up by UNDP, many
CURRENT CAPACITY
interrelationships between
municipalities have seen
BUILDING LIMITATIONS
assets, and between assets
basic improvements in
and effective service delivery
staffing, urban administration In spite of these efforts,
and management, technical capacity building so far only and the community they
serve within the lifecycles of
support and fiscal support.
deals with the very basic
assets.
knowledge of managing
However, in order to
urban assetsas these are
maintain a municipalitys
being builtand rarely does Another limitation of current
capacity building
dynamic balance in dealing it link the assets
with an ever-increasing
performance to the outcome programmes is the rather
narrow emphasis on its
wealth of assets, which will
of public service delivery
strengthening of adequate
decline in their service
performance.
technical resources. Such
delivery performance as they

96

programmes are mainly


designed to facilitate
municipal operations
involving the acquisition of
equipment such as
computers, machinery and
other hardware, and the
training of operators.
Even when the so-called
technology of appropriate
management systems is
being included in the
capacity building
programme, they are mainly
designed for the operation
and maintenance of
equipment and hardware.
Occasionally one may
encounter some form of
systems approach to
managing an urban system,
such as a bus service
system or a water supply
system being included in the
capacity building
programme, but they are
usually designed with a focus
on the management of
machinery, plant and
equipment per se, but not on
the holistic process

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Section 1

partnering with the


economic and
private sector.
environmental needs
through consultation with
5. Transparency and
stakeholders, using tools
accountabilityto be
such as city
upheld in all processes
development strategies.
of urban administration,
development,
2. Subsidiarityallocation
implementation and
of service provision
It is therefore time now to
management with the
responsibility is to be
introduce a new form of
direct support of
based on the principle of
comprehensive capacity
stakeholders.
subsidiarity, ie closest to
building in order to cope with
efficient and costthe complexity of living urban
6. Civic engagement and
effective services
systems.
citizenshipcitizens
delivery; empowering
are both the object and
cities and municipalities
the means of
CAPACITY BUILDING
to take on the
sustainable human
UNDER TUGI-UNDP
responsibility of
development, thus all
providing services.
citizens, including the
Under this Program, there
poor and the weak, must
are seven so called Norms 3. Equityall citizens to
be encouraged and
have access to decisionwithin each of which
empowered to engage
making processes and
Objectives and Operational
in the decision-making
equity access to all
Principles are defined. Based
processes in urban
needs for a basic quality
on these, municipalities and
governance.
of
life.
communities are to practise
and champion Inclusive
7. Securityis a right of all
4. Efficiencyin public
Urban Governance. The
citizens and their living
services delivery and
seven Norms are:
environment.
local economic
management of the
interrelationships of these
assets and sub-assets with
service performance and
community benefits within
the total lifecycles of the
assets.

1. Sustainabilityurban
developments must be
balanced against social,

development with sound


and cost-effective
As a follow up to this
processes involving
campaign, UNDP issued a

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

149 page document, known


as The ToolKit on Tools to
Support Participatory Urban
Decision-Making as the first
of a series of Toolkits
designed to support the
urban governance
campaign.
The Toolkit is set out in four
Phases, namely:
1. Preparatory and
Stakeholder Mobilisation:

x Mobilising stakeholders;
x Issue and city profiling;
and
x Identifying key issues.
2. Issue Prioritisation and
Stakeholder Commitment

x Elaborating issues;
x Building collaboration and
forging consensus; and

x Formalising commitment
on ways forward.
3. Strategy Formulation and
Implementation

x Formulating priority

97

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Capacity Building under TUGI Y

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Capacity Building under TUGI p


strategies;
x Negotiating and agreeing
action plans;
x Designing and
implementing
demonstration projects;
and
x Integrating projects and
plans into strategic
approaches.
4. Follow-up and
Consolidation covering:

GUG NEEDS SAM

There is no doubt that both


the Norms of Good Urban
Governance and the Toolkit
are essential for achieving
good governance. Although
these do emphasise the
importance of service
delivery, none of the
documental details or
suggested capacity building
processes contain anything
about achieving optimal
x Implementing action plans; services delivery.
x Monitoring and evaluation;
x up-scaling and replication; However, service delivery is
not an end in itself. Service
x and institutionalisation.
delivery is an outcome
A framework is then provided process arising out of an
assets performance. The
by the Toolkit, outlining the
end of the service delivery
activities for achieving the
desired outcomes under the process is the enhancement
of the citizens quality of life.
four Phases. And, finally,
various tools are suggested
To ensure optimal services
for tying the process goals
delivery to benefit the
back to the eight Norms of
citizens, it is obvious that all
Good Urban Governance
infrastructure assets under
(GUG).
the control of the cities and
the municipalities must be
taken care of throughout the

98

assets life cyclesright from


planning, acquisition,
operation and maintenance
to renewal or disposal.
This is the obvious missing
link in the TUGI Program
and it is this authors firm
belief, based on experience,
that the technology of
Strategic and Systemic
Asset Management (SAM)
can close this link.

Pipeline carrying safe water!!


Source: Change Management Forum, September 2003
ASCI, Hyderabad, India

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Section 2

UNs Millennium Development Goals n


x Target 4: Eliminate
gender disparity in

x Target 11: By 2020 to


have achieved a

The Millennium
primary and secondary
significant improvement
education, preferably by
in the lives of at least 100
Development Goals (MDGs)
2005, and to all levels of
million slum dwellers.
have 8 Goals and 18
education no later than
Targets. Out of these, 5
2015.
XGoal 8: Develop a global
Goals and 10 Targets, as
partnership for
reproduced below, should
XGoal 4: Reduce child
development
have direct involvement of
mortality
Strategic and Systemic
x Target 12: Develop
Asset Management for
x Target 5: Reduce by two
further an open, rulepositive outcomes: (For full
thirds, between 1990
based, predictable, nonand 2015, the under-five
details of the MDB, see List
discriminatory trading
mortality rate.
of References.)
and financial system.
XGoal 1: Eradicate extreme
poverty and hunger

x Target 1: Halve, between


1990 and 2015, the
proportion of people
whose income is less
than one dollar a day.

x Target 2: Halve, between


1990 and 2015, the
proportion of people who
suffer from hunger.

XGoal 3: Promote gender


equality and empower
women

XGoal 7: Ensure
environmental sustainability

x Target 9: Integrate the


principles of sustainable
development into country
policies and
programmes and
reverse the loss of
environmental
resources.

x Target 10: Halve by


2015 the proportion of
people without
sustainable access to
safe drinking water.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

technologies, especially
information and
communications.

SAMS DIRECTION
SUPPORT FOR THE MDG

Goal 1 with Targets 1 and 2


call for reduction of extreme
poverty and hunger. It is here
that the poor need basic
infrastructural support more
than any other segments of
the community, as they have
no alternative supports to
earn a basic livelihood. The
Includes a commitment
poor need roads, water and
to good governance,
sanitation services, ground
development, and
poverty reductionboth artesian water for irrigation,
nationally and
accessibility to land and
internationally.
basic shelter. These are
physical assets that require
x Target 16: In cooperation Systemic Asset
with developing
Management to plan,
countries, develop and
implement strategies for develop, operate and
manage, and renew for
decent and productive
appropriate and sustainable
work for youth.
services delivery, while
x Target 18: In cooperation maintaining continuing
with the private sector,
optimal services at the least
make available the
lifecycle costs with full
benefits of new
participation of stakeholders.

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ASSET MANAGEMENT

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UNs Millennium Development Goals Y


Goal 3 with Target 4 calls for
increase in girls pursuing all
levels of education,
increased female literacy,
increased numbers of
women to work in the nonagricultural sector, and
increase in the seats held by
women in national
parliaments.
In Asset Management,
women in developed
countries play a crucial role
in providing their fair share of
expert service. Many public
services do require womens
instinctive knowledge and
experience, in addition to
their innate love for detail in
exercising management
skills.
As Asset Management is
new to most parts of the Asia
and Pacific region, they are
in great need for Asset
Management training to build
up their human resources in
this specialised field. Even
with the rural communities,
more women should be
trained in Asset

100

authorities and the


community must deal with
the Brown Agenda
localised pollution. Urban
management is no less
Goal 4 with Target 5 calls for
complex here, and Systemic
reduction of infant mortality.
Asset Management
Apart from the essential
processes are essential here
medical supports, the
to improve asset
community also needs safe
performance to ensure a
water and sanitation, safe
healthy environment to
public transport systems,
combat infant mortality.
safe environment and
essential general knowledge Goal 7 with Targets 9, 10
of home hygiene. The poorer and 11 calls for integrating
national policy and
the community, the more
implementation programmes
they need to care for
in order to ensure
themselves in their simple
development sustainability,
home environment against
local diseases. All these are especially with respect to
community access to water
usually attributed to poor or
sources, safe drinking water
inadequate public services
emanating from inadequate supply, improved sanitation
provision of essential public services and to secure land
tenure.
infrastructure assets and
aggravated by poor
While such efforts can easily
maintenance.
be achieved by policy
The rich deal with the Green makers in concert with the
Agenda that extends to the community, when it comes to
problems of ozone depletion actually getting the much
needed water resources,
and global warming.
However, with the poor, the and safe drinking water and
Management so that they
can help improve public
service delivery through
assets in the rural areas.

sanitation services this


entails far more complexity
as it involves technical
knowledge and skills and a
change of the management
mindset of all concerned. It is
necessary to go beyond the
normal capacity building for
the institutional framework of
Good Urban Governance.
It is in this area that Systemic
Asset Management
processes are required to
give direct support to Good
Urban Governance. With this
holistic systems technology,
appropriate infrastructure
assets can be developed
and maintained for optimal
services delivery with least
lifecycle costs.
Only through such a
systemic process can we
expect the achievement of
ecological sustainability
balancing the social,
economic and environmental
elements.

Goal 8 with Targets 12, 16

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UNs Millennium Development Goals p

All these are part of the


intrinsic values of the
Systemic Asset
Management approach to
urban development.
In order to support cities and
municipalities in developing
countries in the Asia and
Pacific region, it is best for
these urban local bodies
(ULB) to acquire Systemic
Asset Management technical
support and accelerated
technology transfer services
from an international
institution that offers
partnering project services.

MANAGEMENT IS
ESSENTIAL FOR
SUSTAINABLE GOOD
URBAN GOVERNANCE
Having considered the
framework and the structural
details of Good Urban
Governance under UNDPs
TUGI Programme, especially
with respect to capacity
building of urban local bodies
of cities municipalities and
community involvements,
and followed by looking into
the details of UNs
Millennium Development
Goals (MDGs), it is obvious
that the science and
technology of Systemic
Asset Management (SAM) is
essential for sustainable
Good Urban Governance.

ASSET MANAGEMENT

and 18 calls for a


commitment to good
governance, development,
poverty reduction,
developing strategies for
productive work for youth
and involving the private
sector for its contributions in
new technologies, vis--vis
information and
communications.

Water...can overcome poverty Global Water


Source: Change Management Forum, September 2003
ASCI, Hyderabad, India

SYSTEMIC ASSET

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The world is changing minute by minute.


A company alone is not allowed to enjoy stability.
It it puts too much emphasis on being stable, it wont be
able to keep up with the times and will go bankrupt.
Koji Kobayashi
Chairman Ementus, NEC Corp.
Steven Howard 2003

Trend is not destiny.


Lewis Mumford
Peter Marshall 1995

What does a company have to do to ensure it does not


degenerateand eventually die? It just has to take up
new challenges regardless of the difficulties, to have the
free spirit of an entrepreneur. Its people should even be a
little impulsive, but should not make the same mistakes
twice. If people did that, the company safe would soon
be empty.
Seiichi Takikawa
Chairman and CEO, Canon Sales Co.
Steven Howard 2003

102

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City Revitalisation and SAM

ASSET MANAGEMENT

CHAPTER 7
1. Managing Cities Cycles of Change
2. Managing with SAM Step-Power
3. Municipal Ties and Collaboration
4. Continual Inner-City Revitalisation

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Section 1

Managing a Citys Cycles of Change n

ASSET MANAGEMENT

o far, all the previous


sections only concern
themselves with references
to either assets in general or
within a single type of
infrastructure portfolio. What
about the scale of a human
settlement, such as a town or
a city which is not controlled
and managed by a single
organisation, but multiple
organisations overseen by
an urban local body (ULB)?
FORCES OF URBAN
CHANGE
A city is a complex living
system providing all types of
public services from a huge
network of infrastructure
assets for the support of a
whole human settlement.
A living city is constantly
subjected to forces of
change from within its
systems assets and their
sub-systems and from
external conditionssocial,
political, economic and
environmental. It is a

104

dynamic system that needs


to be constantly evaluated,
modified, upgraded,
renewed and revitalised in
order to achieve holistic
ecological sustainability.

to continuously maintain and


revitalise our cities and
municipalities.

x Benchmarking.
x Best practice.
x Effective leadership with

QUALITY DEMANDS
INTRINSIC TO SAM

holistic systemic support.


x Ecological sustainability for
total living urban systems.

Since a city is a web of life,


any changes made to any
part of the urban system and
sub-systems affect the other
systems. Therefore, changes
cannot be made in an adhoc manner nor be based on
the traditional reductionist
approach. In other words, the
effects of changes are not
confined to the assets
themselves. A whole
systemic process involving
the interrelationships
between assets, the
community and the overall
ecological sustainability
social, political, economic
and environmental factors
is needed.

Under the structure of


Systemic Asset
Management for a city, the
following quality demands
are intrinsic:

x Forming an integral part of

In short, we need to involve


the systemic processes of
Good Asset Management in
deliberately planned efforts

Good Urban Governance.

Each of these forms the subsystems of Systemic Asset


x Systems capacity building. Management, from which
stems the Strategic Asset
x Accountability.
Management to deal with
x Transparency.
specific urban issues.
x Community involvement
as vital stakeholdersthe As these intrinsic SAM
values also tie in with the
concept of inclusiveness.
norms of the framework of
x Eradication of
Good Urban Governance,
marginalisation of the
SAM therefore becomes
informal sector in dual
essential urban management
economies.
tools and processes for
x Poverty alleviation through ULBs in municipal
systemic enhancement of management in concert with
quality of life for all citizens. the community as part of the
x Close partnering between stakeholders.
municipalities to achieve a
strong and healthy web of
life.

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City Revitalisation and A M

Section 1

WHY REVITALISATION?
As mentioned earlier, a city
as a living system is under
constant changes from the
pressure of variable political,
social, economic and
environmental forces. Failing
to keep pace with the
changes will result in a
decline in civic services,
which may have a
deleterious effect on the
citizens daily life.
However well planned the
city may have been, it only
conforms to the initial criteria
for planning and
management objectives, and
these can become obsolete
or even irrelevant over time.
Changes due to external
forces are inevitable but they
can cause serious disruption
to the urban living system.
Negligence in rectifying the
situation will result in heavy
social costs. In the worst
scenario, people are forced

counter the changes. With


proactive revitalisation to
meet changes, a city can
continue to maintain its
dynamic sustainability at the
Reactive measures taken by least cost in the long term.
the city authorities are not
For instance, if a city is
the answer as such ad-hoc
efforts are costly and do not developing serious urban
sprawl, creating enormous
address the real cause or
infrastructure per capita cost,
problems brought about by
then, as an option, it may
changes in conditions.
strengthen its inner city
development to check the
The performance of a citys
assets and related services sprawl. It may also revitalise
the citys brownfield and
delivery need constant
monitoring and assessment. greyfield developments for
new use to maintain more
Assets are interrelated and
balanced urban growth.
interdependent with other
assets and the community,
as well as with the social,
ECOLOGICAL CITY
economic and environmental ASSET REVITALISATION
conditions. Therefore
PROCESS
assessment must be carried
out through systemic
A city or a municipality is a
processes.
living system supported by
systems of vital organs and
Only through such a systems tissues in the form of system
assets. These urban assets
process under Good Asset
form a network comprising
Management can a city be
sub-networks of sub-assets
constantly revitalised to
to move out of the
neighbourhood or even out
of the city, thus suffering
social and economic losses.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

and they are interrelated not


only within themselves but
also with dynamic social and
economic forces of the
human community and the
environmental forces of the
ecological communities. But
assets age and cannot
regulate and regenerate
themselvesunlike natures
living system. When the
assets age, service delivery
functions decline, unless
they are being properly
maintained and revitalised.
Additionally, assets can also
become obsolete since
environmental conditions
social, economic and
environmentalare
constantly changing. In
natures living system, the
organs can regulate and alter
themselves to adapt to
changing conditions. In the
case of the urban living
systems, the city or the
municipality must
deliberately revitalise their
systems assets with

105

ASSET MANAGEMENT

Managing a Citys Cycles of Change Y

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Managing a Citys Cycles of Change p


appropriate changes in order creatively and dynamically
only if the city has
to meet the changing
comprehensive and dynamic
environmental forces.
asset registers to record and
monitor all the assets
Through human
properties, the conditions of
interventions in the form of
assets, their current and
Total Asset Lifecycle
Systemic Management, we future values, and their
can revitalise our assets and potential service capabilities
as well as acceptable
extend their lifecycles while
systems management
optimising service delivery
processes.
and performance.
There are times when a city
or a municipality can get into
the doldrums with poor social
and economic growth,
causing citizens to become
so dissatisfied that many
even move out to other
cities. Under such
circumstances, the ULB
must look at all the portfolios
of the systems assets and
carry out analytical
assessments to determine
what, how, where and when
to revitalise the living urban
system.
However, we can do this
kind of revitalisation

106

Based on the data and


information of the social,
economic and environmental
changes, the ULB can carry
out analytical studies to
establish new services
objectives and criteria and
derive solution probabilities.
Using scenario simulation
techniques, the decisionmakers and the
stakeholders, especially the
community representatives,
will be able to visualise the
most appropriate solution for
urban revitalisation, which is
within the citys constraints
and maximised working
capacity. From this

democratic process, an
urban renewal programme
can then be formulated for
implementation.
In a nutshell, the city
administration needs
Systemic Asset
Management to manage the
asset lifecycles of urban
living systems, which must
be continuously revitalised to
maintain service to the
community.

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THE SAM STEP-POWER


PROCESS FOR URBAN
REVITALISATION
Step-power is the
combined systems power
that moves a car. It is the
combination of the gear
system, the body and
wheels, the fuel and the
engine that moves the car.
But what puts the car into
motion is the drivers
engaging the gear. Power
alone does not move the
car, it needs the
component elements to act
in sequential steps in order
to activate the process of
movement. In Systemic
Asset Management terms,
this is called the Steppower Process.

Step-1: Revitalisation
Objectives

x

Minimisation of
community and social
costs.

objectives of certain urban


assets so defined have been
approved within the
framework of Good Urban
Governance, the city can firm
up the renewal development
criteria and then get ready to
move up onto the next step.

Before a city can start a


x Ensuring that revitalising
revitalisation programme, it
must know the communitys
conditions are socially
specific needs, in terms of
and economically
what, where, when, and why.
sustainable.
Whether it is about
Step-2: Asset Knowledge
x Functionality: Will the
transforming unused open
land into a community area for
renewal plan developed
At this stage, the city
a handicraft market and a
be fit-for-purpose and
administration starts to go
public plaza, or converting a
use.
seriously into the details of the
disused warehouse precinct
existing assets. If there is an
into an inner city housing cum Once the revitalisation
specialty shopping and
restaurants area, or
THE ENABLING
THE GOALS
THE CHANGES
PROCESS
exploiting the existing
building structures of local
Decision
Enhancement of
Strategic urban
Renewal Plan
architecture to attract
making
quality-of life
tourists, the city
management must involve
SAM
Sustainability
Ecological
the community.
Tools

In formulating the objectives


of revitalisation, the city
As explained in Chapter 4, management must define
clearly the community
the ecological process of
establishing a sustainable benefits. To ensure the
project outcomes are based
urban change must also
on real needs, the city
follow this SAM Step-power administration must go
process. The five Steps of through a scrutinising
the process is described as mechanism with regard to
follows:
considerations, such as:

& innovation

balance in change

Technical
resources

Responsibility
& control

Good urban
governance

SAM
Skills

Asset
Knowledge

Revitalisation
Objectives

Professionalism in
Change management

Assets focus
in the change

Changing needs
of the community

Figure 18 City Revitalisation through the SAM Step-power Process

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Managing with SAM Step-Power Y

ASSET MANAGEMENT

Asset Register, it will be quite


easy for the project team to
retrieve all the information
and data they need to know,
in particular, details of:

xasset properties;
xasset features;
xasset conditions and
performance;

xhistory of maintenance,
repairs and refurbishments
carried out; and

project team shall include


information on:

xtheir asset objectives;


xtheir services delivery
outcomes;

xlevels of user/community
satisfactions;

xCommunity complaints, if
any; and

xLessons learned.

The city administration shall


keep one set of the report in
the Asset Register
In addition, the project team
Department, and other sets
will also gather information on for the project team. They are
Systems Performance of the now ready to move up onto
Assets, especially with
the next step.
respect to the existing project
assets interrelationships with Step-3: SAM Skills
other urban assets, if any,
and with the community.
From this step onwards, the

xasset use.

However, if the city does not


have an Asset Register on
the project assets, then the
project team shall proceed to
carry out a baseline survey to
gather all the asset data
described above.

project team will have to use


the skills in Systemic Asset
Management. The kind of
skills to be used will depend
on the nature of the urban
renewal project involved.

Generally, this will entail


In compiling a comprehensive converting the Revitalisation
report on the existing assets
Objectives and Renewal
for the city administration, the Development Criteria into a

108

Development Proposal Study,


complete with planning/
design options. Each of these
options shall be supported by
detailed economic analysis as
well as social and
environmental impact
analysis.
Stakeholders consultations
must be carried out here in
order to arrive at a series of
Urban Renewal Development
Options.

submission of the analytical


proposals, city management
is now ready to move up to
the next step of the SAM
Step-power Process.

Step-4: SAM Tools


SAM Checklist

At this stage, the senior


management shall first and
foremost carry out a
verification process on the
economic viability and urban
The cost analysis must
development sustainability
include in each option
based on a SAM checklist.
proposal the Operation and
The purpose is to ensure the
Maintenance Objectives,
development option proposals
Processes and Strategies
are based on Good Asset
supported by a life cycle costs Management principles, such
projection.
as:
Although each proposal
Service focus
submission may include a
public investment financial
x Are the assets in each of
viability statement and a
the renewal development
urban sustainability statement
proposal within a strategic
with supporting reasons, they
framework driven by the
shall only be indicative at this
suggested program and
stage of development study.
service delivery needs and
Final decisions on each
strategies sufficiently
option proposal shall only be
realistic?
reached by the city
x Check the service capacity
management at Step-5. On

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Managing with SAM Step-Power p


budget estimates?

political, economic and


environmental. At the end of
SAM Sustainability
each section, there is a subSensitivity Tests
heading for high sensitivity
x Check how realistic are the
specific to the development. It
projected service
Following this, the senior
is the responsibility of the
outcomes under each
management then proceeds to senior management to include
option proposal.
carry out a series of SAM
specific questions pertaining
x Check how achievable are sensitivity tests to ensure
to the peculiar nature of the
the program proposals for urban sustainabilitysocial,
development.
service delivery potential,
political, economic and
outcomes and continuing
environmental.
For examples, if the renewal
service delivery needs and
development is for inner city
economic viability.
Each of these tests will reveal housing with a local
future problems that may
commercial core area,
An integrated approach
diminish or even deplete the
questions related to the quality
expected
outcomes;
in
such
a
of life for senior citizens,
x Are assets as proposed in
case
the
development
would
disabled persons, families with
the urban renewal project
not be viable. On the other
young infants, job
integrated with the city
hand,
early
discovery
of
opportunities for all including
administrations corporate
potential risks will enable the
senior citizens, the gender
and business plans?
senior management to fix
issue and young working
x In the economic analysis, potential problems and avoid mothers, drug trafficking,
have asset strategies been unnecessary financial loss.
quality open space and parks,
sufficiently and clearly
Such a positive risk
ease of non-motor-vehicular
linked to a budgetary
management procedure is
and pedestrian movement,
process that integrates
essential to ensuring
etc. should be added to the
capital and recurrent
sustainability of the
sensitivity tests.
resource allocation?
development.
x In the economic analysis,
The senior management then
The SAM sensitivity test is
prepares a report with
have all costs, liabilities
recommendations of
and risks been sufficiently made up of lists of questions
modifications/improvements to
and clearly incorporated in grouped under the headings
the option proposals and
forward asset planning and of four sections: social,

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

submit the documents to the


top management level. The
city now is ready to move up
to the next and final step of
the SAM Step-Power Process.

Step-5: Strategic Urban


Renewal Plan
At this stage, the top
management shall review
reports received from Steps 3
and 4.
Following that, the senior and
top managements shall jointly
carry out a probability analysis
on all the option proposals in
order to reveal the level of
development feasibility in
direct relation to the
Revitalisation Objectives and
Expected Outcomes.
All the stakeholders,
especially community
representatives, are invited to
attend a review of these
analyses.
The senior management then
carries out computer aided
simulation games based on
the above analyses involving
the stakeholders and the top

109

ASSET MANAGEMENT

needs and verify if the


proposals are matching
these needs.

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ASSET MANAGEMENT

Managing with SAM Step-Power q


management executives as
key players of the games.

Summary

Using the game results, the


top management, together
with the stakeholders shall
make decisions jointly, and
firm up a Strategic Urban
Renewal Plan.

The whole process of an


urban revitalisation
development project through
the SAM Step-Power
Process is summarised in
Figure 19.

The top management may


put on a public display of
the final urban renewal
development plan, together
with all the analytical
results. Public consultation
should involve the top
management of the city, the
stakeholders of the project
and representatives of the
community involved and
seek public consent jointly.
This completes the SAM
Step-Power Process. The
final Strategic Urban
Renewal Plan shall then
become the basic
documents for
implementation, operation
and maintenance and life
cycle management ,until
the end of the
developments life cycle.

THE ACTIONS

THE SAM STEP-POWER PROCESS

Decision
making

Participatory decision making through joint


probability analysis & simulation games

Sustainability
& innovation

Conduct verification with SAM checklist


and sustainability sensitivity tests

Technical
resources

Establish development proposals from


Objectives, backed by full analysis

Responsibility
& control

Obtain information & data from


Asset Register or Baseline Survey

Good urban
governance

Determine Renewal Objectives


and Criteria with Stakeholders

Strategic urban
Renewal Plan

SAM
Tools

SAM
Skills

Asset
Knowledge

Revitalisation
Objectives

THE GOALS
Sustaining desirable
Quality of life

Ensure ecological
balance

Professionalism in
Change management

Assets focus
to change

Changing community needs


for communitys sake

Figure 19 The SAM Step-power Process in action for Urban Renewal Sustainable Results

110

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isolation. Just to quote a few


examples, management of
groundwater and waterways,
In the living world, there are no
drainage systems, pollution,
strict boundaries to separate
job development, community
communities and their
movement, public health
habitats, except in the case of
quality and diseases control,
the land mass and the water
etc., can never be effective by
body. Even with this exception,
working within the confines of
the two bodies are interrelated
artificial boundaries.
to support the total living
environment.
Because of the complexity of
cross-boundary involvements
In the case of human
and the lack of knowledge of
settlements, human
interrelationships and intercommunities are also closely
dependency between crossinterrelated, even though they
boundary natural and physical
may seem to be strictly
assets, municipalities tend to
confined within national
stick to the confinement of their
boundaries. Unfortunately, for
own area, often citing lack of
reasons of practicality,
resources.
manageability and control,
even within a nation, there
By absorbing the knowledge
must be subdivision into
of Systemic Asset
states, cities, municipalities
Management, municipalities
and village council areas.
can confidently reach out to
work with neighbours to take
However, in terms of total
advantage of the maxim
sustainability, it can be
Two are often better than one.
counter-productive or even
self-destructive for cities and
In fact, once municipalities are
municipalities to work in
operating on the systemic
TWO ARE OFTEN BETTER
THAN ONE

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

processes of Asset
Management, they can then
have a common
comprehensive and dynamic
management framework and
systems to enhance their
municipal capacity through
close collaboration with
neighbours.

infrastructure, to realise a
nations Vision (e.g.
Malaysias Vision 2020);
x Achieving sound
governance with
measurable outputs as
revealed in public assets
service delivery
performance.

Municipalities can start


collaboration by jointly working
on a programme to establish a
cross-boundary maintenance
culture for mutual benefit, such
as:

Collaboration benefits

x Establishing first class


infrastructure assets;

x Maximising asset lifecycles


with better economic returns
on investments;
x Improving efficiency in
carrying out community
service obligations;
x Achieving collective
community satisfaction;
x Fulfilling sustainable
development objectives;
x Linking public systems
assets, especially

If municipalities can work


together in collaboration, they
stand to gain significant
benefits, some of which are
cited below:

x Gaining faster technology

x

x

transfer on Asset
Management technology at
less cost;
Advancing in skill
application of Systemic
Asset Management at a
faster pace through sharing
of experiences and staff
exchange programme;
Developing best practice in
Asset Management in a
more conducive

111

ASSET MANAGEMENT

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Municipal Ties and Collaboration Y


benchmarking:
environment;
x More likely to see clear
x Providing opportunities for x A collaborative approach
objectives;
maximising funding,
x Easier to define outcomes
will allow comparison of
especially in infrastructure
and processes;
apples with apples;
and environmental
x
More efficient to have two
x It enables transferring
projects;
working together on the
improvements from a
x Achieving better
same problems;
single entity to a group of
infrastructure based on
municipalities;
x More likely to have the
regional rather than local
potential to improve;
x
It
enables
good
systems
needs;
management
processes
of
x
More likely to convince
x Having better opportunities
complex nature to be
municipal officials to want
for gaining consistency
shared and exploited by
to improve;
between standards and
collaborating municipalities; x More likely to see need for
cultures of maintenance;
x It enables a municipality to
change and revitalisation
x Achieving significant
recognise a bad systems
and achieve sustainability
current and future savings
management process and
for the change.
in resources for collective
to replace it with a better
proactive asset
Fund-Portfolio Pooling
one as a result of the
maintenance programmes;
collaboration.
Each Municipality finds its
x Making available a choice
niche and learns other
of strategies in collective
Better opportunities for
Municipalities niches in a
Asset Management
Continuous Improvement
Pool. Here are some
planning.
A collaborative working
examples for pooling:
environment provides better
Better environment for
x Footpath and drain
opportunities for continuous
Benchmarking
maintenance
improvement in the systemic
processes
of
Asset
x
Road maintenance and
With strong collaboration
Management
for
the
partners,
repair
between municipalities there is
because
it
is:
a better environment for
x Facility cleaning
x Less likely to be ad-hoc;

112

x Hospital sanitisation
x Public toilet operation and
maintenance

x Project management
x Budgeting and accounting
x
x
x
x
x
x
x
x

systems
Sharing software platform
Sharing asset register
system
Sharing asset survey and
condition assessment
Sharing innovative
processes for special
maintenance
Sharing best practice for
emergency maintenance
response
Sharing of world class
maintenance techniques
Sharing framework for
Asset Management
Manual
Pooling Trainers for Asset
Management Training and
sharing of skills.

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City Revitalisation and A M

Section 4

ince ancient times, it is within a city that the


greatest concentration of social, political and
economic activities are found. The dictum: Judge a
civilization by its cities (Will Hutton, 2000) causes no
surprise. No part of a city may be left in neglect,
allowed to decay to a state of dereliction. If that

happens, real estate values drop and urban crime


increases. More seriously, poor asset conditions have
bad psychological impacts and cause ill health, thus
increasing urban poverty. But it need not be if we
maintain continuing inner city revival in ways suggested
in Table 2 below. Start now with a SAM process.

REVITALISE & REDESIGN


OBSOLETE INFRASTRUCTURE

RECYCLE OLD BUILDINGS

FREE-UP LAND USE

Organise design
competitions for restoring, adapting,
converting and
re-using older inner
neighbourhoods and streets

Create local master or action plans


with residents
for renewal of decayed neighbourhoods
and estates

Preserve and extend


coherent street pattern
create small manageable
open areas as part of
street pattern

Support innovative design,


new ideas for remaking places

De-zone and mix uses

Encourage urban pioneers


with strong incentives
for restoration
urban home steading; urban self-build

Encourage new ideas about


street activity to enhance
attraction of inner neighbourhoods
(e.g. home zones, tree planting)

Develop new uses for old buildings

Create bus links,


cycle lanes, pedestrian routes to
link up decaying inner neighbourhoods

Support social entrepreneurs with


community chest of small grants
for innovation

Protect and restore local landmarks


parks, libraries, churches re-use for new
activities

Plant trees, create small


green spaces

Re-engage community
activists, support voluntary activity,
neighbourhood wardens

Provide incentives for


using small infill sites

Maximise infill sites for innovative and


blended new buildings

Give incentives for re-use


rather than demolition

Remove blight, clean up land,


enforce the sequential approach

Enforce nuisance orders on


empty properties and land

Table 2 Suggested ways of revitalising city centres


Source: Richard Rogers and Anne Power, Cities for a Small Country, Faber and Faber, London, 2000

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Continual Inner-City Revitalisation

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ASSET MANAGEMENT

what about the poor themselves? History tells us that


the most successful cures for poverty come from within.
Foreign aid can help, but like windfall wealth, can also
hurt. It can discourage effort and plant a crippling sense
of incapacity. As the African saying has it, The hand
that receives is always under the one that gives. No,
what counts is work, thrift, honesty, patience, tenacity.
To people haunted by misery and hunger, that may add
up to selfish indifference. But at bottom, no
empowerment is so effective as self-empowerment.
David Landes
David Landes (1998), The Wealth and Poverty of Nations,
London, Abcus

114

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Poverty Reduction and SAM

ASSET MANAGEMENT

CHAPTER 8
1. Reliable Public Services for the Poor
2. AM to Address the Brown Agenda
3. Improving Community Health
4. Better Funding Strategies
5. AM Knowledge Empowerment

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Section 1

Poverty Reduction and A M


In support of UNs Millennium Development Goals Nos. 1, 2, 7 and 8

Reliable Public Services for the Poor

ASSET MANAGEMENT

have enjoyed better and more Not only is the original debt far
from being paid off, the
reliable public services.
amount is compounding. The
Municipalities and Urban Local community suffers the
consequences and becomes
Bodies in developing
even poorer.
countries are often provided
with financial assistance from
Thus, the poor need good and
In most developing countries, donor agencies to put the
much needed infrastructure in reliable assets to provide
the poor condition of public
optimal public services and
place.
assets is often the result of
Good Asset Management is
lack of asset management
knowledgenot just a lack of Unfortunately, in most cases, vital for poverty reduction.
skills in asset maintenance. If the infrastructure is
there is no maintenance
implemented without
What do the poor need?
culture, public assets, whether transferring the essential
They need:
infrastructure or buildings, or
knowledge to operate and
x Land tenure.
Poor public services are often sub-assets in the form of
maintain the infrastructure
x Basic shelters.
caused by the poor condition facilities, plant and equipment, system with proper asset
x Roads to reach out.
of public assets. All assets will are mostly over-worked to the management. Within a short
point of failure. In such a
deteriorate over time and
time, they face maintenance
x Affordable but reliable transunless proactive maintenance situation the demand for
problems that they are not
port systems.
maintenance or emergency
is being carried out under
capable of dealing with, and
x Safe drinking water and sanirepair is at much higher cost
good asset management
soon the assets fail to provide
tation.
than the municipality can really the service intended.
processes, frequent
x
Knowing where to dig a well to
afford.
breakdown of services will
irrigate the farm.
recur and no amount of
Before long, the assets are
x
Public health services.
emergency repair works can
Had such assets been
completely run down with
prolong the life span of assets . properly cared for with
x Schools.
frequent breakdowns and
proactive maintenance, the
replacement needshence
x Organic fertiliser.
With assets ageing fast, asset overall lifecycle maintenance more loans are called for just
x Opportunity to sell produce.
costs would have been much to keep the public service
operation and maintenance
x Simple financing system.
less, while the poor would
costs also increase steeply.
going.
hen the poor are
denied access to public
services, such as affordable
transportation, education,
health services, clean water
and sanitation services, etc.,
they suffer immensely in every
respect, as they do not have
the financial means to seek
alternatives. When the quality
of public service declines, it
puts severe strain on their
meagre earning capacity, and
very often it will also endanger
their health.

116

This often causes increase in


the pricing of services, adding
to greater hardships for the
poor who are already in dire
straits with their meagre
incomes.

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Chapter

8
Section 2

Poverty Reduction and A M


In support of UNs Millennium Development Goal No. 4

he rich in developed
countries pollute both
globally and locally but they
usually have the resources to
mitigate some of the local
impacts of pollution. Their main
concerns are therefore the
Green Agenda of
deforestation, global warming,
resource depletion and
biodiversity.

At the core of the Brown


Agenda are the dirty air and
water in cities, which can make
people sick in a few hours, and
which, together with issues on
the Green Agenda, pose
severe cross-generational
risks. The short-term urgency
of this agenda adds to the
moral urgency of reducing
poverty and developing the
worlds poorest communities.

lack of clean
habits and the
maintenance
culture of a
caring
society.

With the
Source: Cities & Citizens The AP2000 Experience Inter Press
Service, Asia-Pacific
systemic
provide programmes to train
processes of Good Asset
the trainers.
Management, public
awareness campaigns can be
carried out to inculcate
The poor in developing
By addressing the Brown
Fundamentally, local Brown
common practices of
countries, on the other hand,
Agenda, the poor will maintain
pollution is caused by the
cleanliness and maintenance themselves in good health,
mostly pollute only locally and
people of a settlement, be it in
culture for a civil society, while which is a very basic necessity
they often do not have the
the urban core, the urban
providing technology transfer in order for them to pursue a
knowledge nor the resources
fringe or in a rural settlement.
to municipal officers with
to minimise the local impacts
livelihood. Disease and
Such pollution is most severe
regard to public cleanliness
of their pollution. Their main
sickness make the poor
in the public areas, less so in
and public space
concerns are therefore the
poorer. They need basic
the semi-public areas and
management.
Brown Agenda which
infrastructure and services and
seldom found in the private
focuses on impacts such as:
they also need a clean living
spaces. It is the direct result of
rubbish strewn everywhere,
environment.
Asset
Management
lack of knowledge and civicchoked drains, polluted
institutions,
community
mindednessin short, it is an
waterways, untreated sewage
organisations and the urban
The poor get only limited basic
attitude problem caused not
and poor water quality.
local
bodies
can
jointly
develop
services from assets. They
only by the people in the
community
asset
need them to be optimised
community but also those
The Brown Agenda has thus responsible for governance. In management kits for such
more than do the better-offs
purposes. They can also
deleterious effects on the poor this respect, Brown pollution
citizens.
conduct
workshops
to
train
AM
communities in developing
can also be found in the rich
champions to work with NGOs They need Good Asset
countries. The World Bank
communities of many
and CBOs. AM institutions can Management .
warns most forcefully that:
developing countries due to

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AM to address the Brown Agenda

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In support of UNs Millennium Development Goals Nos. 4 and 8

Improving Community Health n

ASSET MANAGEMENT

name only some:


As in the case of Brown
Agenda previously discussed,
Good Asset Management can x Rabies a virus from rabid
dogs.
systemically help the local
authority and community to
x Salmonella a bacterial
correct the situation. When it
infection from raw chicken
comes to properly maintaining
and eggs transmitted
water supply and sanitation,
through contact or human
public toilets and community
faeces due to poor hygiene
facilities, work places and
practice.
homes, for examples, they
x Botulism a bacterial
need the knowledge of life
infection caused by eating
cycle management and the
cooked food left in an
In most developing countries, involvement of stakeholders.
oxygen-free environment for
maintenance of such assets is
too long and eating it without
In order to improve community
often neglected due to
reheating.
health, obviously they need
ignorance and lack of civicx E. coli a bacterial infection
aneffective public health
mindedness; and if
from eating infected red
service. The local authority
maintenance or cleaning are
meat and milk or by contact
and the community must be
carried out they are poorly
with infected human stool
well informed about hygiene,
executed without
often due to neglect of handcommon diseases and
understanding the real
washing routine.
objectives of the tasks. Often, infections and how poor
x Campylobacter a
superficially domestic cleaning services from neglected
bacterial infection from
assets with improper and/or
is mistaken as asset
eating undercooked
inadequate maintenance can
maintenance. Little do they
chicken, which may cause
increase the risks of infections.
understand the objectives of
infectious diarrhea,
assets, services and
appendicitis, and an acute
maintenance, let alone their
The community must be given
inflammatory nerve disease
interrelationships and interinformation about causes of
called Guillain-Barr
dependencies.
infections, such as, just to
syndrome, which causes
hether the assets are
public eating-places,
public toilets, community
facilities, markets, food stalls or
facilities in private homes,
certain standards of
cleanliness and hygiene must
be kept to minimise health
risks. The poorer the
community, the higher the
risks to which they are more
likely to be exposed.

118

neurological damage and


temporary paralysis.
x Filthy flies that can transmit
oocysts, E. coli, Salmonella
and Shigellosis.
There are also animal carriers
such as mice and rats.
Protozoa are carried by
mosquitoes causing malaria.
Stagnant water may breed a
waterborne parasite called
Crytos, which when mature
becomes an oocyst that
releases sporozoites causing
explosive watery diarrhoea.
The community should also be
informed about workplace
environment, and how, if air
quality is neglected, people
can become infected with
ailments such as legionnaires
disease or tuberculosis.
The community must also
know that infants and elderly
persons are most vulnerable
to infections such as those
described above. In situations
of poverty and malnutrition,
such infections can prove

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

8
Section 3

Poverty Reduction and A M


In support of UNs Millennium Development Goals Nos. 4 and 8

Improving Community Health Y


From such information, the
local authority supported by
stakeholders, especially by
local community
representatives, can then
establish service delivery
objectives and criteria for
public assets in order to
ensure that acceptable
standards of public health are
maintained.
By combining construction
technology the local authority
can proceed to establish the
maintenance objectives and
criteria in order to optimise
asset performance from
various public assets, such as
public toilets, wet markets,
waterways, public parks and
open spaces, streets and
drains, pavements and roads,
refuse collection areas, bus
depots and stands, and
others, for the intended
services delivery as expected
by the citizens, especially the

poor community.
In the case of private homes,
Good Asset Management can
provide the home owners with
knowledge about common
building defects and how to
carry out proactive building
maintenance to prolong the
lifecycles of their valuable
family homes, which represent
their real life savings. (Refer to
Chapter 11 for more details.)
It is important to note that poor
standards of public health can
increase poverty! It is equally
essential to know that poor
assets resulting in
unsatisfactory public services
delivery will aggravate health
problems among the poor.
Again, the poor have only
limited basic services from
public assets. They need
them optimised more than
others.
They need Good Asset
Management for good health.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

Legionnaires disease:
The case of Melbourne Aquarium in 2000
Tuesday, February 3, 2004 THE AGE
Hilda Hilton sobbed with relief yesterday after hearing that she and 143
others exposed to legionnaires disease at the Melbourne Aquarium
four years ago had won their fight for compensation.
The civil trial was due to start in the Supreme Court yesterday but Justice Bill Gillard was told that the defendants had decided in principles
to admit liability in favour of the victims.
Mrs Hilton said that she was upset over the death of the former lead
plaintiff in the action, Phyllis Paterson, 70, in 2001...
Solicitor Steve Walsh, who represented the plaintiffs, said that the settlement would be worth millions of dollars, but the compensation process
had not been finalized.
Mrs Hilton claimed that she was in intensive care for three weeks after
being infected with legionnaires disease. She had visited the aquarium
in April 2000 with nine family members, many on holiday from England...
Defendants in the case included a builder, architect, engineer, contractors and insurers...
The damages action was brought in May 2000, after two people died
and more than 60 were affected...
Maurice Blackburn Cashman said in a prepared statement yesterday
that the outbreak affected more than 170 people, and four died directly
from the disease.
Another 12 class action members had since died from conditions allegedly related to the disease. Their estates were included in the claim.
The firm said the outbreak was sourced to the aquariums water cooling
towers. It said the aquariums air-conditioning system was changed
after the incident.
All victims of the outbreak had visited or were near the aquarium between April 11 and 27, 2000.

119

ASSET MANAGEMENT

fatalincreasing infant
mortality in the poor
community.

ESSENCE
Chapter

8
Section 4

Poverty Reduction and A M


In support of UNs Millennium Development Goals Nos. 7 and 8

Better Funding Strategies

ASSET MANAGEMENT

As money is scarce, proper


cost plans and forecasts are
necessary to justify any
public expenditure on
infrastructure. Otherwise,
such requisition will naturally
be turned down causing
more hardship to the
communitythe poor again
They must have AM policy to will become poorer.
In such situations, it is all the manage their valuable
Good Asset Management is
assets and to prevent the
more imperative for the
vital to the reduction of
assets being worked to
authorities to use the
poverty since it prolongs the
systemic processes of Good failure before seeking
lifecycles of public assets, by
Asset Management in short, emergency funding to
resuscitate the failed assets. prolonging asset
medium and long-term
ublic assets servicing
the poor community
often suffer from a lower
level of funding due to limited
financial resources available
to the municipalities. Another
crucial reason is due to weak
documentation in support of
funding applications.

lifecycle budget planning to


support asset performance
outcomes strategies. They
must know how to include
detailed and factual data to
support service needs of the
poor and the consequences
of not satisfying the needs.

performance for service


delivery reliability. A
municipality working in
partnership with the
stakeholders and community
according to the principles of
Good Asset Management
will stand a better chance of
getting funding for public
services from assets.
In a nutshell, authorities need
Good Asset Management for
obtaining funding and reducing
poverty.

Children
, dont a
sk them
stop. Ju
to
st like f
u
nding, y
never ge
ou
t it. We
cross th
street.
e
With me
,
its alwa
safe !
ys

Source: Cartoon fromCities & Citizens


The AP2000 Experience Inter Press
Service, Asia-Pacific.
Callout text by the author.

120

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

8
Section 5

Poverty Reduction and A M


In support of UNs Millennium Development Goals Nos. 3, 7 and 8

AM Knowledge Empowerment
nclusiveness is a vital
element of Good
Governance. But it is feasible
only when partners from the
community have the
knowledge and skills to
participate effectively in
decision-making. If they dont,
the objective of Inclusiveness
causes frustration, disillusion
and disappointmentmistrust
between partners may be the
result.

assets can affect the quality of Women in the community


this environment.
should be encouraged to work
with the municipality in Asset
Both the municipality and the Management partnering
projects. In a poor community,
community need knowledge
the women are more likely to
and skills in Good Asset
have more time available as
Management. With such
empowerment, public officers well as more likely to have
greater interest in supporting
and citizens will be able to
Inclusiveness pertaining to
function as effective
Asset Management.
stakeholders to build
sustainable townships and
cities.

In any effective decisionmaking for asset


management, the municipality
needs to have asset
management objectives, asset
data, management tools,
management skills, and
decision-making process
integrity (see SAM Step-power
Process in Chapter 4) in order
to achieve constructive,
tangible and practical results.

They should work closely with


local and international
institutions of Asset
Management for training
support, and involve in AM
technology transfer projects
pertaining to various kinds of
infrastructure asset
management.

Australia and New Zealand


where the science and
technology of AM started
An inclusive policy should
some twenty years ago, have
include women. They not only many women AM Asset
are an important part of the
Management practitioners.
community, they have certain And many of them are working
specific knowledge about the closely with this author on
physical environment and how various AM projects.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

Additionally, once having


acquired the AM knowledge,
women will have a direct
impact on improving the home
environment.
The poor need Asset
Management, and the bottom
line for them and the local
authority is AM knowledge
empowerment.

Source: TUGI

121

ASSET MANAGEMENT

ESSENCE

ASSET MANAGEMENT

The most valuable achievement of the international


conferences was probably to reveal that the best and
commonly the only possible way to deal with global
problems is not through a global approach but through
the search for techniques best suited to the natural,
social, and economic conditions peculiar to each locality.
Out planet is so diverse, from all points of view, that its
problem can be tacked effectively only by dealing with
them at the regional level, in their unique physical,
climatic, and cultural contexts.
Ren J. Dubos
1981, Celebrations of Life, in Ruth Eblen (1994), Laws of Thermodynamics,
In Ruth A Eblen and William R Eblen (1994), The Encyclopedia of the Environment,
New York, The Ren Dubos Center for Human Environments, Inc.

122

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

Converting Wastes to Assets

ASSET MANAGEMENT

CHAPTER 9
1. Introduction
2. Solar Aquatics Septage System
3. Land Filter Recycling Sewage Effluent
4. Onsite Greenbelt Effluent Disposal
System
5. Sawdust Toilet Compost System
6. Solid Waste to Compost Earning for the
Poor
7. Rotomillings for Sealing Rural Roads

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

123

ESSENCE
Chapter

9
Section 1

Convert Wastes to Assets


BEST PRACTICE FOR SAM

Introduction

ASSET MANAGEMENT

ith knowledge, skills,


and technology
many types of wastes can
be converted to assets.
There is a wide variety of
wastes, directly produced
by humans, such as
domestic and industrial
wastes; while others are
resources neglected by
humans, such as precious
rain water run-offs and
discarded recyclable
materials.

ecological community are


nutrients to another within
the ecosystems. Thus, in
human world, we must
learn to adapt this process
in order to reduce wastes.
If not attended to, these
wastes could harm the
entire living system.

In this Section, some


examples of recycling
processes from various
case studies are
reproduced here to
stimulate our thinking
processes.

The success of recycling


processessome are
simple while others are
Because of legislative
complex and technology
rigidity and general
intensivewill depend on
indifference to the total
ecological living process, it political will, the
communitys total support
is extreme difficult to
establish and maintain any and active participation,
Cities are a part of the
and the involvement of
recycling process. In
living world ecology, and,
relevant experts in the
addition, because of the
in combination with
projects involved.
technical complexity and
natures living world,
together form the complex the conservative mindset
of many people, the much The examples shown in
ecosystems. The Cities
needed recycling process this Section can be easily
living systems process
incorporated with Systemic
is often bogged down by
must therefore be
all sorts of social, political Asset Management for
integrated with natures
and economical obstacles. successful implementation.
living process (see
Natures Living World and It is for these reasons that This is because SAM has
the right systems approach
Cities as Living System in we need the science and
and processes to adapt
technology of Systemic
Section 3.)
best practices to suit local
Asset Management to
In natures living systems, advocate, to establish and cultural, political, social,
economic and
to maintain the recycling
wastes or decomposition
environmental conditions
processes.
products from one

124

for sustainable human


settlement management.
Remember, in the
ecosystem, there are no
such things as wastes.
They are all essential
assets of micro-lifecycles
to form the bigger network
of lifecycles. Only through
neglect, indifference,
ignorance and
irresponsibility do wastes
appear and destroy our
ecosystem.

Remember, in the
ecosystem, there are no
such things as wastes.
They are all essential
assets of micro-lifecycles
to form the bigger
network of lifecycles.
Only through neglect,
indifference, ignorance
and irresponsibility do
wastes appear and
destroy our ecosystem.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

9
Section 2

Convert Wastes to Assets


BEST PRACTICE FOR SAM

Solar Aquatics Septage System


B

iologists understand that marshes


have a very high capacity for recycling
wastes. Marshland aquatic plants absorb
nitrates and phosphates from the wastes.
A variety of wetland and solar aquatic
systems were developed in 1980s and
1990s for commercial applications. As a
result, many wetland treatment systems
now serve cities and towns in the USA.
Solar aquatics systems have been
installed to process between 75,000 and
113,000 litres per day of domestic and
industrial waste. In Canada, smaller
systems have been installed in many
urban centres.
In cold climates, solar aquatics systems
are contained in greenhouses. In warm
sunny regions these can operate in the
open.
Conventional wastewater treatment
installations release large quantities of
excess nutrients and toxic chemicals into
the environment, while creating millions of
tones of sludge each year, much of which
is loaded with heavy metals.
Aquatic systems suspend solids by
aeration. Using solar energy, bacteria,
plants and animals in the systems biochemically change or remove
contaminants from sewage. It takes only

10 days to process; waste water circulates


through a series of transparent plastic
tanks or silos, each of which functions as
an active ecosystem. With sunlight,
bacteria and algae digest organic matter
suspending in the liquid, and in the process
ammonia is transform to nitrite, then to
nitrate. Water plants and algae consume
the nitrates, while the zooplankton and
snails feed on the algae. Following that,
engineered marshes with plants absorb
heavy metals and other toxic chemicals.
Fish in the silos in turn feed on nitrateeating phytoplankton, and water hyacinth
consume other heavy metals. However
lead and cadmium stored in plants must
be disposed of with regular checking.
Finally, safe and sludge-free water flow s
out of the polishing marshes, thus
completing a holistic and functioning
ecological system.
Solar aquatics systems require much less
land than marshland treatment. The
operation cost is about 2/3 the cost of
conventional treatment.
Water discharged from solar aquatics
systems is used for hydroponic vegetable,
plant and flower farming .
Source:

Michael Hough, Cities and Natural Process,


Routledge, London, 1995

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

Figure 20

Solar aquatics septage


treatment system

At a typical SAS septage treatment plant, effluent is


discharged into a headworks (1) consisting of a receiving
station and degritter. From there it flows by gravity into inground tanks (2) where the effluent is blended to compensate for variations in loads and is preconditioned.
Following equalization and preconditioning, effluent is
pumped to a clarifier (3). From here sludge is pumped to
the sludge stabilization tank (4) where it is aerobically
stabilized. It then flows to the reed bed (5) for passive
composting. Underflow from the reed bed is recycled by
pumping it back into the equalization tank (2) for further
treatment.
Liquid from the clarifier enters a series of solar silos
(6) that contain the plants and animals involved in the
clean-up operation. After moving through the silos by
gravity flow, the liquid enters a second clarifier (7). Solids
from this clarifier are recycled back to the equalization
tank (2), where they re-enter the system, reseeding
microbes as they travel.
Next, the liquid moves through a gravel-filled denitrifying marsh (8) planted with grasses and is then
sterilized with ultraviolet light (9) before being discharged
(10). Depending on total suspended solids limits, a sand
filter may also be required as this point in the system for
final polishing before purified water is discharged.
Source: Ecological Engineering Associates, Marion, MA, USA, in
Michael Hough, Cities and Natural Process, Routledge,
London, 1995

125

ASSET MANAGEMENT

Solar Aquatics Septage Treatment System for Converting


Harmful Effluent from Sewage Waste to Nutrient Rich
Water for Hydroponics Vegetable, Plant and Flower Growers

ESSENCE
Chapter

9
Section 3

Convert Wastes to Assets


BEST PRACTICE FOR SAM

Land Filter Recycling Sewage Effluent


Pennsylvania State Universitys Study on Recycling Sewage
Effluent through Land Filter for Reuse by Forests

ASSET MANAGEMENT

rof. Michael Hough in the Faculty of Environmental Studies at


York University, Ontario, Canada, wrote that water pollution
issues are best served when they become part of an integrated design
strategy that combines biology and technology, social and economic
concerns. Primary treatment of sewage is a mechanical process of
separating used water from wastes that have been added to itwhich
is sludge, the total organic and waste-water materials generated by
residential and commercial establishments. The contents of the sludge
are removed by screening, sedimentation, chemical precipitation or
bacterial digestion. In the raw condition, it is very high in moisture and
biologically unstable.
When this effluent is subjected to secondary treatment it is
anaerobically digested and produces methane gas and carbon
dioxide. The digested material has a high degree of biological stability,
and is rich in phosphates, nitrates, potassium and trace elements.
Tertiary treatment aims to remove 95% of all remaining substances
and chemicals, leaving the water in a drinkable form which is then
ready to be returned to the natural system.
Pennsylvania State University studies show that the application of
secondary treated domestic waste water at 5 cm per week during the
growing season provides the equivalent of 232 kg of nitrogen, 245 kg
of phosphate and 254 kg of potash per hectarewhich is equal to
applying 2.2 tones per hectare of a 10-10-11 commercial fertilizer. The
Penn project shows that over a 10-year period the 5 cm per week
waste water application resulted in annual yield increases ranging
from 8%-346% for corn grain, 85%-191% for red clover and 79%139% for alfalfa. The result of this application will depend on soil types
and conditions, and crop types.
Trace metals from industrial wastes, however, can affect aquifers
detrimentally and such application process must be dealt with
specifically.
Penn research has also demonstrated the value of forest land as

126

Figure 21

Waste water renovation and conservation cycle

Land application of waste water, after secondary treatment, is an advanced


treatment method. This living filter approach considers effluent and nutrients
as resources rather than as a product for treatment and disposal. Treatment
is provided by natural biological and chemical processes as the water moves
through the living filter provided soil, plants, micro-organisms and related
ecosystems. The renovated water then percolates to recharge the groundwater reservoir.
Source: William E. Soper, Surface Application of Sewage Effluent and Sludge,
Madison, Wisc. USA, 1979, in Michael Hough, Cities and Natural
Process, Routledge, London, 1995

living filters, that have application in rural or other


situations where land and appropriate soils are
available. Sewage effluent after advanced treatment
can recharge groundwater significantly. The
research shows that in 10 years, groundwater was
raised by 4.3 m despite 9 million litres a day being
pumped by the university from wells that also had to
supply the rest of the town.
Since the early 1960s, waste water has been
used in irrigation for mixed hardwood and red pine
forests with increased growth and yield results.
Source:

Michael Hough, Cities and Natural Process, Routledge, London, 1995

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

9
Section 4

Convert Wastes to Assets


BEST PRACTICE FOR SAM

Onsite Greenbelt Effluent Disposal System


The Onsite Greenbelt Disposal system for recycling
septic tank waste water effluent for plant growth while
preventing groundwater contamination

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ASSET MANAGEMENT

loyd Smith of The Ocean Protection Trust in Mullumbimby,


NSW, Australia writes that Dr Winneberger of University of
California discovered the cause of septic tank failure in 1960s. In
Fig 22-A Commonly held incorrect conception of direction
his simple laboratory research, he discovered that if waste water is
of effluent flow
allowed to remain in contact with the soil, ferrous sulphide will form
from sulphur combining with iron which plugs the porosity of the soil
and the perforated soil-pipes, unless oxygen is present, thus
causing septic tank failure in disposing waste water safely and
caused contamination to groundwater. Hence the rise of the Onsite
Greenbelt Disposal (OGD) system, an innovative improvement
design of the humble septic tank system to stop contamination
while providing nutrients for plant growth.
Lloyd Smith explains that with a conventional septic tanks
Fig 22-B Effluent will move upwards correct version
perforated sub-soil pipes (and also effluent soak-well tank) it is
incorrectly assumed that the waste water will percolate downwards.
As it comes into contact with the soil for a period, ferrous sulphide
will form and plug porosity of the soil. (Fig. 13-A)
When OGD design modifies the septic tank effluent disposal
system by using seepage trench, waste water will move upwards.
Part of the water will evaporate from the soil surface into the
atmosphere, while another part will transpire through the
surrounding plants, flowers and vegetables into the air, forming a
complete recycling process. Through the transpiration process,
plants get the rich nutrients from the waste water which, hence, has
become an asset. (Fig. 13-B)
For best disposal design, the square trench system
surrounding the septic tank has proven most effective. (Fig. 13-C)
(It is highly recommended that readers seek more information Fig 22-C Greenbelt trench surrounding the septic tank
on the design and construction of this innovative system.)
Figure 22 Onsite Greenbelt Disposal system for plant
Source: Lloyd Smith, The New Greenbelt Handbook, Ocean Protection Trust, Mullumbimby, NSW,
Australia, 1993.
support from septic tank effluent

127

ESSENCE
Chapter

9
Section 5

Convert Wastes to Assets


BEST PRACTICE FOR SAM

Sawdust Toilet Compost System n


The Joseph Jenkins Wonder Sawdust Toilet Compost
System for Turning Waste into Organic Fertiliser

ASSET MANAGEMENT

he sawdust toilet is a simple low-tech compost system. The


toilet requires no water or electricity, hence it is highly
economical. As the toilet does not give out odours, it can be located
inside the house, but near an external door for moving the toilet
bucket.
After finish toileting, the stool must be covered over with clean
organic material such as sawdust or peat moss. The cover material
will absorb urine and prevents odours and fly nuisance. When the
toilet is not in use, keeping the toilet seat lid closed gives a better
aesthetic appearance.
When the contents in the toilet bucket are emptied into the
compost chamber outside, the deposit must be immediately
covered with a layer of clean, bulky, organic material such as straw
or weeds. The covering material and the manure will trap air and
start the thermophilc composting process, thus eliminating odours.
After emptying the bucket, scrub wash it with rainwater and
soap brush (preferably biodegradable soap) using a long handle.
The soiled water is poured on the compost pile. Dust the inside of
the bucket with clean sawdust, and replace it in the toilet area. The
toilet is now ready for use.

he simple sawdust toilet is made up of a five-gallon bucket


(from the local donut shop) set on the floor, a timber bench
with a hinged plywood top to support the standard toilet seat
with hinged lid. After each use, cover the stool with sawdust or
peat moss. Close the toilet seat lid. Its as simple as any modern
toilet. (See Fig. __ on the next page for construction details.)
When the bucket is full, lift the bench top up, bring the bucket
outdoors and empty the contents into a compost chamber for
thermophilic composting. A family of four can fill a sawdust toilet
in 3 or 4 days. The sawdust cover eliminates odour and flies
while balancing the nitrogen of the humanure with carbon,
thereby facilitating thermophilic composting.

DOs and DONTs of a Thermophilic Toilet Composting System


DOCollect urine in the toilet. Urine
provides essential moisture and nitrogen.
DOHave supply of cover material for the
toilet to eliminate odour, absorb excess
moisture and urine, and balance the C/N
ratio. E.g., rotting sawdust, peat moss.
DOOccasionally rake exposed outer
surfaces of the compost pile on to the top of
the pile.

128

DOAdd a mix of organic material to the


compost pile, including organic garbage.
DOKeep top of compost pile somewhat
flat. This allows rain to be absorbed, and
added organic material to stay on top.
DOUse a compost thermometer. If the
temperature of compost does not seem
adequate, use finished compost for berries,
fruit trees instead of crops.

DONTSeparate urine from feces.


DONTTurn the pile if it is being continuously added to.
DONTCover fresh compost deposits with
lime or wood ashes. Put lime and wood
ashes directly on soil. Cover compost with
clean organic materials that will benefit the
composting process, such as stated at left.
DONTDeposit urine/feces/sawdust into a
compost bin without cover Materials and
other organic refuse and expect it to

thermophilically compost. The layering of a


wider mix of materials traps air and provides
nutrients that stimulate thermophilic activity.
DONTWorry if compost does not reach
an extremely high temperature quickly.
Temperatures above 110F indicate thermophilic activity, which may peak periodically in
a continuous compost pile when sufficient
organic mass has accumulated. Temperatures above 104F may be sufficient to kill
pathogens.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

ESSENCE
Chapter

9
Section 5

Convert Wastes to Assets


BEST PRACTICE FOR SAM

Set 6 posts into the ground.


Use hardwood resistant to rot
only and do not use pressure
treated lumber. Post should be
about 5 feet (1.5m) apart, about
40 inches (1m) out of the ground,
and buried about 2 ft. (0.6m)
Enclose posts to form 2 chambers each have a floor area
measuring 5 ft. by 5 ft. and 40
inches high. Recycled timber
planks for the walling without
painting is ideal for the purpose.

Figure 23 Cross-section of Sawdust


Toilet Humanure Receptacle

Vital Statistics of Josept Jenkins


Sawdust Toilet

xEvery 100 pounds of human body

NOTE: A chamber for only one or two people


may need to have smaller floor area.

weight will fill +/- 3 gals. In the toilet


bucket per week.

xThis will use 3 gals. Of semi-dry, deciduous, rotting sawdust per week as
cover material in the toilet bucket.

xEvery 100 pounds of human body


weight will require about 20 cu. ft. of
sawdust cover material per year.
Leave sawdust exposed to the elements
to get rotted sawdust which is ideal for
composting. Raw sawdust may take 15
years to decompose. However, when
rotted sawdust is blended with nitrogen
rich human feces and urine, it will decompose rapidly.
Source: Joseph C. Jenkins, The Humanure
Handbook, Jenkins Publishing, PA,
USA, 1994.

Fill one side to full


(about a year), let it sit
and age while the other
side is filled. When
filling the chamber,
layer the compost with
weeds, hay, straw or
similar coarse material.

Fill second side. Notice


that first side has
shrunk considerably.
When second side is
nearly full, empty first
side onto planting field.

Begin filling first side again,


as second side shrinks and
ages. When side one is full,
empty side two and start
over. Dont turn the compost
pile, otherwise thermophilic
activity will stop, and low
temperature will not destroy
pathogens.

Figure 24 The continuous cycle of aerobic compost making

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Sawdust Toilet Compost System Y

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BEST PRACTICE FOR SAM

Solid Waste to Compost Earning for the Poor

ASSET MANAGEMENT

Waste Concerns Solid Waste Recycling Community Schemes for the production of compost for farmers are
providing positive employment to the poor in Bangladesh
(Waste Concerns projects on capacity for bio-energy and bio-fuel production from solid wastes are now on-going)
it has created income-generating activities for the slums poor
community.
Organic wastes were put in the Green Barrels supplied. After
four months of composting, the slum dwellers harvest the compost
and deliver to the compost collection depot which pays for the
product. In turn, the depot will sell the compost to the farming
community at a price much lower than commercial fertilizers.
Community Based Urban Solid Waste Management in
Dhaka
This is a much larger project for higher volume of compost
production including blended compost to suit crops. In addition, the
project is also involved in an urban total waste management
programme starting from baseline survey to collect data, to
x Barrel Type Composting for Slums in Dhaka (1998-2000)
capacity building, research and training, marketing and job
x Community Based Urban Solid Waste Management in Dhaka
opportunity creation, especially for women.
(1998-2003)
Specially designed waste collection tricycles are provided by
x Demonstration of Enriched Compost under the Tangail
Waste Concern for community staff to make house-to-house
Infrastructure Development Project, as part of ecological villages collection. The composting process involves separating and
development in Tangail funded by GTZ (2002-2003)
sorting into organic and inorganic wastes piling of organic waste
turning of pile watering of pile temperature and moisture
x Capacity Development for Clean Development Mechanism in
monitoring and control recording data and quality control
Bangladesh (2002-2003)
maturing of compost screening of compost. Through a formal
One of its ongoing projects is the Pilot Schemes on Solid
marketing process, compost is sold to the agriculture industry.
Waste Management and Composting in Bangladesh, due to be
Benefits: Cleaner and healthier urban areas only 15% of
completed in 2005.
inorganic wastes go to landfill site saving landfill land by 75%
Barrel Type Composting for Slums in Dhaka
reducing municipal waste management cost at US$11,760 per
Waste Concern, with support from UNDPs LIFE programme ton creating 16,000 new jobs for Dhaka Citys poor, and 90,000
has introduced a pilot barrel type composting project in two slums nation wide.
of Dhaka City. Specially designed barrels were supplied by Waste Source: A.H.Md. Maqsood Sinha, Community Based Urban Solid Waste Management in
Dhaka: A Decentralized Approach of Waste Concern, a paper presented at the First
Concern to slum dwellers for composting. This service was
UEM Sub-Sector Networks Meeting, at AIT Bangkok, organized by CIDA-AIT, 21-22
designed to reduce waste disposal at source but at the same time
June 2004.

t the First Urban Environmental Management (UEM) SubSector Networks Meeting held at Asian Institute of Technology
(AIT) in Bangkok on 21-22 June 2004 under a Canadian
International Development Agency (CIDA)-AIT Partnership
Programme for the Southeast Asia region, delegates were awed
by the success storey of Waste Concern, as it was being
presented by its Executive Director A. H. Md. Maqsood Sinha.
Waste Concern is a national research based NGO in
Bangladesh, established in 1995. Its main objective is to promote
the idea of converting waste into resources. Since then, the
organisation has won many international awards.
Its completed projects are:

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BEST PRACTICE FOR SAM

Rotomillings for Sealing Rural Roads 


Chris Hodder of Wellington City Council wrote in his report that
New Zealand has a high percentage of unsealed rural roads
which require a large amount of time and money to maintain
each year. Normal process for maintaining these roads is to
remetal and regrade them every 12 months or on a more regular
basis if the rural road is subject to high traffic volumes or adverse
weather conditions, especially during winter.
As maintenance costs of rural roads are substantial,
engineers in the Council decide to use recycled materials called
Rotomillings to seal the rural roads. Rotomillings are a waste
product created when the asphalt or chip is removed from
bituminous roads using a rotating drum with steel teeth that grind
the road surface, hence the name.
It is common practice for this waste material to be disposed
of at the landfill sites. There are no extra costs involved in
creating the Rotomillings as the road controlling authority is
already paying the contractor to Rotomill the road, as part of the
pre-sealing preparation work. As the contractor would normally
transport the millings to the landfill, and be paid for the disposal,
it would be reasonable to expect that the millings be returned to
the road controlling authoritys storage yard for free.
Initial trials using Rotomillings to seal rural roads have been
generally successful. However, as the new surface is not rolled it
segregates easily and is not waterproof. When water gets into
the sub-base, problems arise, such as pumping and
depressions on the road surface.
In subsequent trials, these problems do not occur. The
works involve laying the Rotomillings and treating the surface
with kerosene, then rolling the road surface with steel drum
roller. Kerosine was sprayed on the surface at 0.2 litres per
square metre.

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The kerosene softens the bitumen in the Rotomillings,


breaking down the binder. Kerosine evaporates reasonably
quickly leaving only a small residual amount in the road surface.
The bitumen then rehardens and creates a semi-waterproof
surface.
If new metal were used this would have cost NZ$18/m3;
however, the cost of the Rotomillings is free. Kerosine treatment
cost comes to NZ$1/m2. This represents a direct saving of 80 cts
per m2. As the contractor does not have to bear the cost of
disposing Rotomillings to the landfill, he saves NZ$20/m3.
The Council concludes that Rotomillings provides a more
cost effective and longer lasting surface than standard
basecourse when used on low traffic unsealed rural roads.
Rotomillings laid have lasted through a very wet winter of 4
months and is still requiring no maintenance as it is entering
summer months. It is not expected that further maintenance will
be required for at least another 8 months. As the trial road has
been formed to create the worst possible case scenario, it is
expected that after a 12 month period the road will require
reshaping and rerolling. If the road had been formed with proper
water tables and crossfall, then it is expected that it would not
require any maintenance for at least 2 years. The Council
recommends that a first coat chip sealing should be done to the
road 12 months after Rotomillings have been laid.
Source:

Chris Hodder, Wellington City Council, PO Box 2199, Welling, NZ/

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Recycling removed asphalt or chip seal waste material called Rotomillings


from urban bituminous or state bituminous highways for sealing rural roads
Wellington City Council, New Zealands first experience in 1996

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Put away the book, the description, the tradition,


the authority and take the journey of self-discovery.
Krishnamurti
Steven Howard 2003

A cultured person is fond of learning and


is not ashamed to ask question of those beneath him.
Confucius (Analects)
Steven Howard 2003

A bird does not sing because it has an answer;


it sings because it has a song.
Chinese proverb
Steven Howard 2003

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CHAPTER 10
1. Approach of the Victorian Government

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ince the end of World War II, road network building has
been recognised as one of the key infrastructures for
national development in the Asia Pacific region.
Notwithstanding this fact, road management has not been
an integrated effort. Agencies tend to focus on road network
development programmes with insignificant attention to
management of existing roads, culverts and bridges.

experience.

For many developing countries in Asia and the Pacific region,


this situation continues to be the norm. To make matters
worse, road-side drainage systems and pavement
development are not integrated with road development.
Consequently, roads are subject to slow water run-off causing
unnecessary damage to the road surface. In low lying areas,
flooding often occurs causing serious damage to road
foundation.

x Good Governance; and

In developing countries, road development continues to be a


unilateral action undertaken by the road authority with little
attention to user needs. They ignore the existence of
stakeholders and certainly have very little contact with the
community, let alone any consultation with them.
They do not have any known process of measuring road
performance in relation to the users and community either,
even those whose livelihood depends on having quality road
networks. Without measurements, there of course will not be
any meaningful road management.
Although there is still some incidence of poor road
management in Australia, on the whole many municipalities
have come a long way in achieving good road asset
management. I will now cite the Victorian local governments
holistic approach to good road asset management.
Understanding of their management framework will enable
many developing countries to take advantage of their valuable

134

Victorias Road Asset Management Model for all


Assets
The Victoria Governments governance framework is based
on three key overarching core functions, namely:
x Customer service delivery;

x Asset management.
Within this framework, asset management is the key process
by which external stakeholders can and will assess and judge
the competitive performance of local government.
In order to ensure the municipal councils will be able to
demonstrate an acceptable level of proficiency and duty of
care in relation to their asset management practices, the
Municipal Association of Victoria (MAV) launched the STEP
Asset Management Improvement Program in late 2002. This
Program is to provide Councils in Victoria with a whole of
organisation perspective and a Framework by which to imbed
continuous improvement into their asset management
practices, and to produce acceptable sector-wide outcomes
over the period 2002/3 to 2004/5.
Under the Road Management Bill, the road asset
management is earmarked to be evolved into a model for
deployment across all other assetsas road assets form the
biggest asset category in the State Government.
In 2004, VicRoads completed the Road Management Plan
and issued it to the Councils. It is a comprehensive and
systemic asset management plan and used as a model, it will
establish consistency and standards in asset management by
Councils across the State. Although the plan is specifically

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detailed for road asset management, the principles are easily


transferable to any other asset category. Based on these
principles, asset management plans for other assets will be
established and coupled with a training and skilling regime as
part of a strategy to ensure sustainable capacity within each
Councils organisation, to deliver the wider asset
management plan outcomes.

x The main aims of the road asset management system are


to ensure that the agency (VicRoads) meets its statutory
responsibilities and provides best value to the community
from the funding made available for maintenance.

The VicRoads Road Asset Management Plan

Fundamental Inputs

Fundamentals

x Government policies;

x All declared freeways and arterial roads across the State


must be managed in accordance with this Plan.

x Relevant legislation;

VicRoads Five Phases of Systemic Road Asset


Management

x Government objectives for road maintenance, in terms of


Key Result Areas (KRA) and Key Performance Indicators
x The VicRoads Register of Public Roads provides details of
(KPI); and
each of the roads (such as: the location, type, quantity and
condition of important road assets) under VicRoads
x The Government budget for the maintenance of road
responsibility, the applicable standards, the date of any
assets.
road or section of road is included, or excluded from the
Register, and any other matters required to be included by The Five Phases
the Road Management Act 2004.
Phase 1 Developing Standards and Guidelines, covers
x Schedule A (Road Asset Management System) of the Plan developing asset management strategies and establishing
maintenance standards and asset performance targets for
sets out the policies and procedures for achieving road
managing physical assets together with those aspects of the
maintenance standards.
operation and use of the road network that affect asset
x Schedule B (Road Maintenance Standards) stipulates the
condition. It also covers preparing guidelines for development
road inspection frequencies and condition standards for
of the maintenance program.
various traffic conditions.
Phase 2 Developing the Maintenance Program, covers
x Road assets are defined to include roads, bridges,
using the results of annual asset condition surveys, together
roadsides, signs, delineation, traffic control equipment, etc. with maintenance standards and asset performance targets,
to identify gaps in asset performance and identifying the
x Road asset management includes the management of both
options for managing those gaps. This may involve routine
physical assets and the aspects of the use and operation of
maintenance, periodic maintenance, rehabilitation and/or
those assets that affect asset condition.
modifying the operation/use of assets. It also covers the

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methods used to develop priorities and select treatments for
inclusion in the road asset maintenance program, taking into
account current asset strategies and the likely available
maintenance budget.

1. Definitions

Phase 3 Implementing the Maintenance Program,


covers developing specifications and contract administration
arrangements for effectively and efficiently delivering the
maintenance program. It also includes receiving and acting on
customer feedback, preparing accident reports and ensuring
accurate records are kept of all works carried out.

Road Maintenance Category The nominated road


maintenance category for each road is determined according
to an assessment of risk, taking into account factors such as
road classification, road type and volume and type of traffic.
The Category is designated by a number from 1 to 6.

Phase 4 Auditing, covers auditing of completed works to


ensure that the works program has been delivered, as
intended. It also covers the procedures for collecting and
storing information regarding road asset condition and use.
Phase 5 Reviewing, covers reviewing asset performance
following delivery of the maintenance program, together with
periodic reviews of asset strategies to ensure that the
maintenance program has delivered the expected benefits to
road users and stakeholders. This phase also involves taking
account of any external factors that are likely to influence the
next asset management program cycle.

Hazard For the purposes of maintenance standards, a


hazard is a defect as listed in Table 5.

Hazard Inspection Frequency This is the period between


scheduled inspections of the road to identify hazards. The
nominated time is not precise. A 10% margin is allowable.
Response Code Thisis a code, designated by a letter from
A to F, which indicates the control mechanism and
response time for responding to a particular hazard on a
particular road.
Response Time This is the time within which to respond to
a hazard and is based on consideration of the hazard type
and severity. Response time is measured from the time the
hazard is noticed by, or notified to, VicRoads. The nominated
time is not precise. A 10% margin is allowable.

Consistency in Systemic Asset Management across the


whole State
One of the most important contributions arising out of
VicRoads Road Asset Management Plan Model is the
establishment of consistency in measuring and reporting of
asset conditions and asset performances. As the size and
complexity of road networks across the state are of mammoth
scale, consistency is the cardinal prerequisite to systemic
asset management, especially with regard to road
maintenance standards. Cited below are some of the
VicRoads Plans standards to be followed by the Councils.

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In road asset management, before we
can deal with defects, it is vital to know

the name and definition of each defect.


Unless the management and maintenance people across the nation have
such a standard, they cant communi-

cate, and they cant manage.


Here are 4 examples taken from BP
Bitumen Australia.

Description

Possible causes

Remedy

Description

Possible causes

Remedy

Description

Possible causes

Remedy

Description

Possible causes

Remedy

ASSET MANAGEMENT

Road Defects

Source: BP Bitumen Australia

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2. Response Code and Road Risk Action Response
Table 3 : VicRoads Response Code and Road Risk Action Response

ASSET MANAGEMENT

Response
Code

Control Mechanism

Response Time

Inspect and rectify if possible, or provide


Appropriate warning # =>

Within 4 hours of
Inspection or notification.

Inspect and rectify if possible, or provide


Appropriate warning # =>

Within 24 hours of
Inspection or notification.

Inspect and rectify if possible, or provide


Appropriate warning # =>

Within one week of


Inspection or notification.

Inspect and rectify if possible, or provide


Appropriate warning # =>

Within one month of


Inspection or notification.

Inspect and rectify if possible, or provide


Appropriate warning # =>

Within three months of


Inspection or notification.

Inspect and rectify if possible, or provide


Appropriate warning # =>

Within six months of


Inspection or notification.

Where it is not possible to rectify within the time shown in the above Table, because of the nature of the repair
required, level of resources required or workload, VicRoads requires that appropriate warning of the hazard is to be
provided until the repair work is completed.
Appropriate warning may include the following:
x Provision of warning signs,
x Traffic control action,
x Diverting traffic around the site,
x Installation of a temporary speed limit,
x Lane closure,
x Closure of the road to use by certain vehicle (e.g. a load limit), or
x Road closure.

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3. Hazard Inspection Type and Frequency
Table 4 : VicRoads Hazard Inspection Type and Frequency
Hazard Inspection Frequency by Road Maintenance Category
1

Day-Time

Daily

Twice per
week

Weekly

Every 2nd
week

Monthly

Twice per
year

Night-Time

6 monthly

6 monthly

6 monthly

Yearly

Yearly

Yearly

ASSET MANAGEMENT

Inspection
Type

4. Hazard Response for each Road Category

Table 5 : VicRoads Hazard Response


A: PAVEMENTS
Description of Hazard

Response Code by Road Maintenance Category


1

A1: Obstructions and Substances in Traffic Lane


Materials fallen from vehicles, dead animals,
wet clay and other slippery substances,
hazardous materials, accumulation of dirt or
granular materials on the traffic lane of sealed
roads

Ponding of water >300mm deep, fallen trees,


oil spills, stray livestock

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Table 5 : VicRoads Hazard Response (Contd)

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A: PAVEMENTS (Contd)
Description of Hazard

Response Code by Road Maintenance Category


1

A2: Pavement or Surface Defects


Potholes in traffic lane of a sealed pavement
greater than 300mm in diameter and greater
than 100mm deep or in the traffic lane of a
unsealed pavement greater than 500mm
diameter and 150mm deep

Installation of warning signs or treatment at


sites where measurement and/or assessment
in accordance with the skid resistance policy
indicates a slippery surface

Deformations greater than 100mm under a 3m


straight edge
Edge drops onto unsealed shoulder greater
than 100mm

(na)

A3: Drainage
Damaged or missing drainage pit lids,
surrounds, grates, in pedestrian areas or
traffic lanes

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Table 5: VicRoads Hazard Response (Contd)
B: ROADSIDE
Response Code by Road Maintenance Category
1

ASSET MANAGEMENT

Description of Hazard

B1: Vegetation Trees, Shrubs and Grassed Areas


Tree limbs or trees that have been classified
as in danger of falling

Trees, shrubs or grasses that have grown to


restrict designed sight distance to
intersections or restrict viewing of safety signs

Vegetation intruding within an envelope over


roadways from the back of shoulder and/or
kerb and a minimum of 4.5m height clearance
over pavement and the trafficable portion of
shoulders

Vegetation which presents a physical hazard


to the public over pedestrian/bicycle paths,
intruding into a clearance envelope between
the edges of path and a minimum of 2.5m
height clearance over path

B2: Roadside Furniture Safety Signs


Safety signs missing, illegible or damaged
making them substantially ineffective

B2: Roadside Furniture Guideposts


Missing or damaged at a critical location
making them substantially ineffective

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Table 5 : VicRoads Hazard Response (Contd)

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B: ROADSIDE (Contd)
Description of Hazard

Response Code by Road Maintenance Category


1

B2: Roadside Furniture Safety Barriers and Fencing


Missing or damaged at a critical
location making them substantially
ineffective

B2: Roadside Furniture Islands, Footpaths and Bicycle/Shared Paths


Defective pedestrian areas with a step
greater than 50mm

(NA)

B2: Roadside Furniture Pavement Markings


Missing, illegible or confusing at a
critical location

C: STRUCTURE
Description of Hazard

Damage affecting structural


performance

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Response Code by Road Maintenance Category


1

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D: TRAFFIC SIGNALS AND ON-ROAD ELECTRICAL ASSETS
Description of Hazard

Traffic signal inoperable or confusing

Response Code by Road Maintenance Category


1

(NA)







A critical location is a location where the road alignment and/or pavement width and/or geometry are identified
by additional markings or furniture to guide the travelling public (cars, trucks, motor cycles and pedestrians).

A safety sign is a road sign that provides the driver with advice on the safe use of the road.

Source: VicRoads Road Management Plan 2004

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Table 5 : VicRoads Hazard Response (Contd)

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Good judgments come from experience.


Experience comes from bad judgments.
Mark Twain

In any case the issue of [maintenance] is much more than


one of care and repair. Successful cities are, in obscure ways
that are hard to define, organisms with collective memories,
a shaping influence, a civilizingor uncivilizingimpact.
For these subconscious but powerful forces to be creative, it
seems that they must suggest continuity, inherited
experience, the glory and wonder of having withstood the
ravages of destroying time. But poor maintenance is
precisely time left to do its destruction. The profoundest
significance of the Polish peoples decision to rebuild, stone
for stone, the historic center of Warsaw after its total
destruction in war was its statement, in visual terms, of the
Polish nations unconquerable continuity. So was the loving
restoration of beleaguered Leningrad. Even at the level of
the single house, good maintenance is more than a matter
of convenience. There is in it an element of pietas, of love
for the family hearth and for the wider life of the
community
Barbara Ward
1976, The Home of Man, The Canadian Publishers

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CHAPTER 11
1. Essentials of a Quality House
2. Life Cycles of Home Buildings
3. Home AM for Maximising Asset Values
4. Homes Free from Health-Risks

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What this metaphor tells us is that there are many similarities


between a human life and a building. The former needs
healthy parents in order to ensure a healthy conception, while
the latter needs a holistic approach to set the right criteria for
planning the building before we can be sure of getting a good
design for this asset. During gestation, good maternity care
ensures the birth of a healthy child, just as during construction
a proper construction process involving the expert attention of
all parties concerned ensures a well built building to perform
all the intended functions. During its lifetime a human body
The same applies to our homes and the neighbourhood
needs good food, regular exercise and regular and proper
environment. Since the quality of life we enjoy depends on
health care in order to ensure a healthy life. A building also
ones own home environment, it is essential that we ensure
these physical assets are well managed and maintained so as needs proper and proactive maintenance and management in
order to ensure it can provide optimal service delivery.
to optimise their function at all times. The key difference is
that in the case of the homes and neighbourhoods, the
Dr Lawrence Whalley, Professor of Mental Health at the
homeowners and residents must manage them themselves,
University of Aberdeen tells us that:
though interventions by some local authority will help.
ll infrastructure and buildingsbe they public or private
such as roads, bridges, water supply works, hospitals,
schools, refuse centres, or shopping centresare important
and valuable assets of a society. They are important because
they are the basic facilities from which we get the services to
enhance our quality of life. They are also valuable because
they are our essential economic and social investments and
their value can drop if we fail to manage them properly.

A building is like a human life. Let me quote what Matthys


Levy and Mario Salvadori have expressed so beautifully in the
Introduction to their book, Why Buildings Fall DownHow
Structures Fail:
A building is conceived when designed, born when built, alive while
standing, dead from old age or an expected accident. It breathes
through the mouth of its windows and the lungs of its airconditioning system. It circulates fluids through the veins and
arteries of its pipes and sends messages to all parts of its body
through the nervous system of its electric wires. A building reacts to
changes in its outer or inner conditions through its brain of
feedback systems, is protected by the skin of its faade, supported
by the skeleton of its columns, beams, and slabs, and rests on the
feet of its foundations. Like most human bodies, most buildings
have full lives, and then they die. (M. Levy and M. Salvadori 2002)

146

There is a popular misconception that success in the fight against


disease has simply replaced premature infant death or adult
disease with untreatable disorders of late life. The truth is quite
different. Improved health in pregnancy, childhood and adult life
leads to a healthy old age. (Lawrence Whalley, 2002)

What Dr Whalley says is also applicable to a building. It is


now recognised that the improved science and technology of
systemic asset management in planning, acquisition and
maintenance stages of a building lead to a sustainable asset
lifecycle at the least lifecycle cost.

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Life Cycles of Home Buildings


After refurbishment

It is not uncommon to see a homes functional life being shortened


drastically due to consistent neglect that causes physical dilapidation in
the building components and thus the depletion of the property
valuein severe cases, it will put an end to the buildings economic
life.
To resuscitate the building at this late stage when things have broken
down is like calling the fire brigade ineven though the courageous
fire fighters might save some part of the valuable assets, destruction
from fire, smoke, heat and water will cause significant damage.
Similarly, when our home assets have broken down, although
emergency repairs could resuscitate operation of the building and its
components, residual and collateral damages would also have set in.
All in all, it could cost the owner enormous expense, plus the loss of
use of the home building during a period of restoration. However, it
need not be so if the owner has been maintaining the building properly
and prudently.
Thus, a home and its components, facilities and fittings have a life
span, which will be lengthened or shortened depending on how these
are being maintained and managed. This life span is called a Lifecycle
and a building can have many lifecycles. In Fig. 1, the owner of this
building has carried out two major maintenance works before a major
refurbishment is carried out during its lifecycle; and after that the owner
feels that the building is no longer serving his new needs and the
building is disposed of.
Whenever we acquire a building, the cost is not limited to the initial
capital investment . There are a lot more costs

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Fig. 25

ASSET MANAGEMENT

ll homes and their equipment, fittings and fixtures will deteriorate


through wear and tear over time. They will age badly or
gracefully in relation to their service performance. With pro-active
maintenance and timely repairs the buildings and fittings will provide
good services to the resident families, and the buildings and fittings will
age gracefully; without such care, they will age badly.
Functional Time Life of a Building

Fig. 26 Economic Time Life of a Building


involved over time when we own the building: there are interest on
financing (unless it is an outright purchase), insurance and local council
rates to be paid; there are also daily operation costs, periodic
maintenance and repair costs; every few years we also have
repainting and major replacement of fittings and equipment costs; and
after a period of 8 or 10 years we also have major refurbishment costs
as many of the components, fittings and equipment have
outperformed their useful lives. The Total Cost of all these expenses is
known as the Lifecycle Cost.
There is rarely such a thing as a free home unless you have rich
parents who would not want you to pay for anything while you live with
them. Even when your rich father gives you a home absolutely free,
you still have to pay for the costs of operation and maintenance
throughout its life, otherwise its value will drop. Fig. 26 shows the
lifetime costs of the building of Fig. 25. See how costs go up and down
due to operation and maintenance costs incurred. By adding up all the
costs of expenditure we get the Lifecycle Cost of the building which is

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ASSET MANAGEMENT

he primary function of a home regardless of the quality of


design, construction and finishing is to provide the
intended services for continuing a sustainable quality of life
for the owners family. However, unless proper and regular
maintenance of the building including its fittings and
equipment is carried out through systemic asset
management, everything will deteriorate fast over time. If that
happens our quality of life will be affected; in fact, the
occupants will be at risk with respect to building safety and
health hazards.
There are two aspects of building maintenance of our homes:
a.

b.

The first is to maintain the functional and economical


performance of the building and to render it safe for use
at all times. Every house has its set functional and
economical values. Proper proactive maintenance,
though it will not increase these values nor the assets life
span, it will help to maintain the pre-set original values
and life span. The set functional value is the level of
comfort and services we can get out of the building asset
and the set economic value is the market value of the
asset. Unless the asset is properly maintained, these
values will drop, and will drop faster as time goes by.
The second is to maintain the building and its
components, facilities, equipment and fittings in such as
a way to ensure an acceptable standard of hygieneis
maintained at all times to minimise health risks to the
occupants.

In this Section, we shall discuss the first aspect with regard to


how we can maximise the home assets values through the
process of good asset management (Leong, KC 2003).

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1.

Avoid Taking Possession of Building Defects

There are two main ways of acquiring a new home as an


owner. The first is to acquire a piece of land and employ an
architect and other consultants to design and then employ a
building contractor to build the new home. This of course is
the ideal situation where the owner can conceive the building
planning and design with the help of professionals. If the
owner has the knowledge of asset management, he/she can
then go through the four phases of asset management with
the architect and consultants and other stakeholders
commencing with phase 1 as described in earlier chapters.
The other way of home acquisition is to buy a ready-made
home from a home developer at the residential location that
you like. In this category the owner of course will not have the
opportunity of playing any part in the conception and
construction of the building. For whatever the design motives
are, the bottom line of course is to satisfy the developers
investment interest first, with the building design and choice of
building materials, fittings and construction methods to suit,
again, the developers pre-conception first. The owner as a
purchaser can only fit their desires with availability in the
market.
In either way, when the owner takes possession of the new
home, operation and maintenance of the home building
begins. Whether the possession is taken through a building
contract or a sale and purchase agreement, it is imperative to
avoid taking any new buildings with inherent patent or latent
defects. As far as possible, it is vital to identify these defects
during the defects liability period and demand them to be
professionally rectified. Making good defects are totally

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different from building maintenance works. The former is the


proof membrane in the base of the brick walls. If the
responsibility of the builder/developer and only the latter is the
adjoining building is on higher ground, then the dampness
responsibility of the owner. If you are fortunate enough to
in the Party Wall is likely to be caused by failure of the
have a project architect and consultants overseeing the
vertical waterproof membrane joining the horizontal
construction of the building, get them to certify the building is
membranes. Get experts to investigate and to deal with the
free from patent defects. Should any latent defects appear at
builder/developer with respect to proper remedial works.
a later date, refer the matter to them for their handling as part
of their professional responsibilities. If you are a purchaser,
x Water Leaking through Bathroom R.C. Floor Slabs
get an architect or a building consultant to inspect the building
Generally, this is likely to be caused by failure of the floor
and give you a professional certification. Should there be any
slabs waterproofing. However, if the leakage is around any
defects, have them made good by the developer in
plumbing pipe coming through the slab, then the leakage is
accordance with the terms and conditions of the sale and
probably caused by faulty construction of the pipe
purchase agreement.
embedded in the concrete. Get experts to investigate and to
deal with the builder/developer with respect to proper
However, when taking possession of your new home, you still
remedial works.
need to know how and what to look at in order to identify
those defects. Following are some examples that are most
x Water Leaking through R.C. Roof Slabs Generally, this
common in developing countries in the Asian region and are
is caused by failure of the waterproof membrane. Get
cited here purely as a simple guide:
experts to investigate and to deal with the builder/developer
with respect to proper remedial works.
x Dampness on Reinforced Concrete (RC) Ground Slabs
If these are suspended RC Slabs forming a continuous
x Tiled-Roof Leakage Generally with an adequately
structure with the Ground Beams, the cause of dampness is
pitched roof to suit the type of tiles used, leakage will only
most likely due to failure of the water barrier membrane
happen in a freak rainstorm. However, if the roof is
under the slabs. If the slabs are non-suspended and
insufficiently pitched, or the tiles are insufficiently lapped, or
constructed directly on the ground and the dampness is
some of the tiles have cracked, rainwater will percolate
found around the edges of the slabs, then it is likely to be
through the tiles. Because of the nature of a pitched roof,
caused by water barrier membrane failure due to settlement
leaks that appear on the ceiling do not usually indicate
of the slabs, especially over filled ground and not cut
exactly where the water is coming from. The steeper the
ground. Get experts to investigate and to deal with the
slope the harder it is to find.
builder/developer with respect to proper remedial works.
x Dampness on Ground Floor Brick Walls and Brick Party
Walls If the surrounding ground is lower than the ground
floor slabs, this is probably caused by failure of the damp-

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

Since a roof does get hot during in the day, enormous heat
will build up and be transferred into the building interior. It is
therefore common to have the roof insulated with a layer of
heavy-duty aluminium foil beneath the roofing tiles. If

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properly installed, this water-resistant foil will normally
x Hairline Cracks on Plaster Walls These are usually
perform an additional function in shedding any small
caused by surface material shrinkage and can be rectified
amount of water that happens to come through the roofing
easily. These should not be confused with structural cracks
tiles and carry it down to the gutter or outside at the roof
which would cause unnecessary alarm. If the Defects
eaves. Unfortunately, due to carelessness of workmen, this
Liability Period in the S&P has expired, get wall repair
foil could easily be punctured in various areas and leakages
trades people to rectify the cracks.
will then come through these holes. Roof repair workers
can also damage this foil every time they do the tile repair
x Structural Cracks on RC Columns, Beams, and/or
work, again due to lack of care. Workers doing repair works
Floor/Roof Slabs These kinds of cracks usually have
or installing equipment in the roof space can also damage
certain structural characteristics in their appearance which
the foilthey are likely to puncture the foil in order to lift
will assist an engineering expert in the investigation. This is
some roof tiles up for the purpose of letting natural light and
a latent defect hence should be handled carefully and
air into the roof space to make their work easier.
expeditiously. Get engineering experts to investigate and
assist in dealing with the developer/architect/engineer with
If the tiled-roof abuts a brick wall where the tiles are not laid
respect to proper remedial works, especially when the
so as to butt against the wall, or the metal flashing over the
Defects Liability Period has expired. If your home building
tiles has not been properly installed, leakage will happen.
involves common structural system such as that of an
However, the water can appear directly underneath that
apartment block, notify the building management body
area or elsewhere.
corporate first. It is advisable to get professional help to
deal with such matters.
A pitched roof leaking problem is not easily solved and it
requires patience and time to find the source of a leak or
x Leakage of Plumbing System This should be attended
many leaks. Even with the best experts, investigation can
to as soon as possible. If you suspect wastewater leakage,
still be time consuming. If the roof space is easily
give it your urgent attention. Depending on the location,
accessible, the investigation is simple to conduct on a rainy
investigation can be complicated as well as difficult. Get
day. Otherwise it can be most frustrating when the leaks
experts to investigate and assist in dealing with the builder/
are not found. Get experts (those who really have the
developerwith respect to proper remedial works.
expertise and patience) to investigate and to deal with the
builder/developer with respect to proper remedial works.
If leakage is from the water supply system, rectification may
x Roof Gutter Leakage This is usually caused by
construction debris left in the gutter. Get experts to
investigate and to deal with the builder/developer with
respect to proper remedial works.

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involve a pressure test including opening walls or floor


slabs to locate the points of leak(s). In the case of an
apartment block, notify the building management body
corporate first.

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Fresh termite infestation can be caused by non-treated


timbers used in the housee.g., during construction, a lazy
worker might use a piece of wood left on the ground to
complete a ceiling structure or timber partition construction; or
the backing timber frame of cupboards or furniture later
purchased and installed by the owner may have been
infested. A neighbouring house or apartment infested with
termites can also attack your own home without your
knowledge.
Call in the experts to treat your house quickly to get rid of
termites and remove all infested wood, cupboards and/or
furniture quickly and thoroughly.
What I have cited above are common building defects in
developing countries in the tropics. There are likely to be
others. It is worthwhile to remember that latent defects can
take some years to show up. The cardinal rule is to resolve
them properly and thoroughly as soon as they are discovered;
otherwise these will exist in your beloved home as inherent
defects, which can be cancerous and slowly but surely
become manifest as new defects thus making maintenance
works even more difficult and costly.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

2.

Proactive Housekeeping and Home Building


Maintenance

Many Asians in general are well-known for Good Automobile


Asset Managementthe way they love and care for their cars
is really amazing. Alas, if only they would make the same
efforts in maintaining their homes they would have been able
to establish a Maintenance Culture! But, we, this author
included, should and certainly could.
For a car to operate well while retaining its socio-economic
value and performance and safety standards, it needs regular
inspection and maintenance services as well as prompt
repairs to be carried out during the cars lifecycle. The same
applies to our precious homes; only that they need more to be
done to them than does a car, as a building has far more
components involving a wide range of specialists.
Given below is a simple Schedule of Regular Maintenance to
be used as a guide. As no two buildings are the same in
terms of local geographical and climatic conditions, design,
construction, fitting-up and conditions of usage, this schedule
must be modified to suit a paritcular building and its owners
way of using it.

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x Termite Control Failures Although most buildings have


anti-termite treatment to the ground under the building
contract, you can still experience termite attack. After taking
possession of the building, it is advisable to contract a
Termite Control agent to carry out periodic termite
inspections of the whole building.

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Table 6: Example of Proactive Maintenance Schedule for Home Assets


Daily Housing Keeping / Maintenance

By Whom

Vacuum/sweep/mop dining and kitchen floors

Owner

Clean workbench tops, sink and cooking top in kitchen with detergent and warm (preferably) water dont
forget all water-taps over the sink and cooking range control knobs. Rub dry with clean cloth.

Owner

Clean toilet bowls and seats, basins and bathroom, vanity tops and toilet floors with detergent and warm
water dont forget all water-taps over the basins, cistern flush-handles and doorknobs of bathroom and
toilets. Rub dry with clean cloth.

Owner

Twice Weekly Housing Keeping / Maintenance


1

Vacuum/sweep/mop whole house

Owner

Sweep balcony floors, verandas, patios and outdoor paved floors

Owner

Brush clean wall tiles of kitchen cooking range and exhaust hood with a brush and detergent and warm water.

Owner

Weekly House Keeping / Maintenance


1

Mop all tile-floors of lounge, dining rooms, storerooms, halls and stairs with detergent and hot water and
thereafter rub dry with clean cloth.

Owner

Wipe clean all kitchen cupboard doors with detergent and warm water and rub dry with clean cloth

Owner

Brush clean bathroom wall tiles and shower screens with detergent and warm water. Rub dry with clean cloth.

Owner

Clean all mirrors, window and door glass panels with glass cleaner

Owner

Clean all door handles and stair handrails with detergent and warm water. Rub dry with clean cloth.

Owner

Clean all drain outlets of kitchen sink, basins, shower closets, bathroom floors, kitchen floor and laundry floor
with chlorine bleach solution. Mix 1 quart (2 pints or 0.95 litre) of water with 1 teaspoon of Clorox bleach
solution and pour down the drain outlets to kill germs.

Owner

Fortnightly House Keeping / Maintenance


1

Clean ceiling fan blades with detergent and warm water. Rub dry with clean cloth.

Owner

Open windows and clean the sills with detergent and warm water. If there are signs of fungus because of
dampness due to window sash being mostly closed, brush clean with Clorox bleach solution at strength of
1 /2 cups of Clorox to 1 gal. of water then rub dry with clean cloth. Wear rubber gloves for the job. Do not shut
the window until the sill has been thoroughly dried. Thereafter, open the window a few times a week.

Owner

Clean oven, microwave oven, electric kettle with warm water and detergent and rub dry with clean cloth.
Disconnect electrical connection to power point before cleaning.

Owner

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1

Launder the mattress protector on a sunny day. Leave mattress to air with windows open then vacuum it and
replace the protector over the mattress when it is thoroughly dried under the sun.

Owner

Take carpets outside to air with undersides facing sunlight. After at least 4 hours esposure, vacuum both sides
thoroughly before replacing them in the rooms.

Owner

Clean all aluminium window and doorframes with mild detergent and warm water. Rub dry with clean cloth.

Owner

Repeat above for all painted timber window and doorframes and doors.

Owner

Switch off refrigerator connection at the power point, remove all food items and clean inside and outside of
refrigerator including shelves and drawers with detergent and warm water. Take care in cleaning the rubber
door seal to remove any mildew formation. If you can see mildew, use a toothbrush to clean it with soap then
rinse and rub dry with clean cloth. If mildew continues to form despite monthly cleaning, there is a likelihood
that the refrigerator door is not closing tight. Contact fridge company to inspect and carry out maintenance
service, which may involve replacing the rubber door seal. After cleaning put back all foodstuffs and switch on
the electric connection. Put a thermometer in the fridge compartment to measure the operation temperature.
After 24 hours and the fridge temperature is above 41 degrees F (or 5 degrees C), then it is not safe. Adjust
the thermostat until the fridge is operating at just below 5 degrees C. If you cant achieve that, contact the
fridge company for maintenance service.

Owner / Fridge
Service Agent

ASSET MANAGEMENT

Monthly House Keeping / Maintenance

3-Monthly Maintenance
1

Service all air-conditioning system units to all roomscombined window units or split-systems units. Filters
should be thoroughly cleaned and if disposal type, replaced with new. Registers or air-distribution covers must
be thoroughly cleaned to prevent fungus growth. Refrigerant must be checked and topped up when necessary.
Condensing coils must be checked and cleaned with approved chemical solutions. Other components must
also be checked to ensure proper working order. Systems performance level must be measured to ensure
optimal working condition. Request contractor to prepare a checklist to show what has or has not been done at
each service. In urban areas where the pollution level is high, maintenance may have to be at 2-monthly
intervals. With good proactive maintenance, a unit can last 10 years or more, otherwise it will suffer frequent
breakdowns after 3 years of use. In buildings that use central air-conditioning systems, more complex
maintenance services have to be carried out. In these systems, large cooling towers are often not properly
maintained resulting in severe fungus growth. This can lead to outbreaks of legionnaires disease. This
central system needs to be dealt with carefully and in greater detail, which is outside the scope of this book.

Air-con Service
Contractor

Service range-hood exhaust system unit. The procedure is similar to air-conditioning unit maintenance
described above though without a compressor and the cooling system.

Range-hood
Exhaust Service
Contractor

Service exhaust-fans. Clean the fan blades and check the bearings and the wear and tear of moving parts.

Air-con Service
Contractor

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6-Monthly Maintenance

ASSET MANAGEMENT

Check water tank for sediment built-up. If water quality is poor, consider installing water filter system
(preferably auto backwash without electrical connection typeinsist on a 10-year guarantee on maintenance
free without any manual backwashing.

Plumbing Contractor
Water Filtration
System Supplier
Contractor

Yearly Maintenance
1

Check building structure condition for building settlement, structural cracks, condition of tanalised or
untreated structural timber members.

Building
professionals.

Check external conditions, especially earth slope and external drains. Ensure drains are not broken, or
weeds growing through the drains, or are choked with rubbish, or overgrown with fungus, and that there are
no signs of earth settlement below drain. Make good all defects.

Building
professionals.

Check external concrete paving slabs for cracks, ponding, settlement, flaking, change in surface texture,
weeds growing through. Investigate and make good all defects.
3-Yearly Maintenance

Building
professionals.

Electrical contractor

Check electrical wiring system and lightning conductor system. Check functioning of circuit breakers. Check
signs of overloading and check condition of wiring. Check switches and socket-outlet connections. Check
cable and conduit casing for signs of damage by rodents. Check lightning conductor rod resistance. In
homes, wiring is usually concealed in walls; if cable failure is suspected, the wall must be broken open for
inspection and replacement.
Bear in mind that wiring and circuits normally last only 30 years and should be renewed. For new buildings,
the owner must insist on getting the detailed wiring and location diagrams from the architect / engineer or the
developer.

Check the plumbing system. This is one of the most costly maintenance items as plumbing system
components do not last long. In some areas, water can corrode piping faster than in other areas. Galvanised
steel pipes laid in the ground can suffer premature failures from anaerobic bacterial attack unless properly
protected with reinforced bitumen coating. If copper from hot water in copper pipes gets deposited in
galvanised steel tank or pipes, it can dissolve the zinc in the galvanizing thus corroding the steel tank or
pipes. Cast-iron pipes corrode easily and need proper maintenance. Ball-valves in cisterns and water tanks
can fail easily due to a number of causes and must be checked and maintained or replaced. Leaking pipes
and fittings not only cause a nuisance but will also damage other building components.

Plumbing contractor

The above descriptions are only some examples. Home maintenance is very complex and it is beyond the
scope of this book to go beyond a general outline. Owner should get a full maintenance list on the entire
plumbing and sanitary systems to monitor checking and maintenance works being carried out.

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Check septic tank system. Check effluent level in septic tank and the septic system functioning. Check vent.
Check functioning of leaching field to ensure effluent is absorbed by the ground and not accumulating at the
surface due to blockage. By the time you see a film forming on top of a puddle at the leaching field and you can
smell the odour, you can be sure the leaching system piping is blocked. In a severe situation it may be
necessary to re-lay the system. Obtain a check list from the project engineer for monitoring of maintenance As
this can pose a health hazard, immediate attention should be given. Again this is a complex maintenance work.
Obtain a check list from the project engineer for monitoring of maintenance work to be carried out.

Plumbing
contractor

Check water tank. If it is a steel tank, check for corrosion and rectify. Check ball-valve.

Plumbing
contractor

In typhoon / earthquake zone, check structural strength and structural joints which should have been designed
for the purpose

Building
professionals

And Project
Engineer or
Architect

ASSET MANAGEMENT

5-Yearly
1

Check external concrete wall conditionscracks (hair-cracks or structural cracks), concrete spalling, flaking,
change in texture, etc. Investigate and make good.

Building
professionals.

Repainting, including touch up of plastering, etc.

Painting
contractor

Electrical wiring and installations deteriorate as a result of ageing of the insulation sheathing material and
cumulative mechanical damage, hence the whole system should be tested in accordance with local or
international Wiring Regulations at least every 5 years.

Electrical
contractor

Check on the structural system for latent defects especially if the local statutory limitation is 6 years.

Building
professionals

If the local statutory system is 6 years, the first 5-yearly check after building completion is especially important.
Source:

Leong, KC (2003), Maintenance Culture Begins at Every Citizens Home, presented at EAROPH-APIGAM Asset Management
Workshop held at ASCI, Hyderabad on 2-3 December 2003 and at Mumbai Municipal Corporation of Great Mumbai, India on 7-8
December 2003.

From the above it may appear that home building


maintenance can be complex. However, with patience
any layperson can learn to understand this framework
of routine works. A house is far more valuable than a
motorcar, so if we can understand the importance of

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maintaining a car, surely we can understand we must


do our utmost in setting aside time and money to
maintain our precious home.

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Regular proactive building maintenance and good house


keeping are two different work processes. However by
carrying out both work processes together systematically, we
can prolong the lifecycle of our building and its supporting
facilities and minimise expenditure on major repairs.
More importantly, efficient and effective maintenance and
good house-keeping will also minimise health risks. We must
remember the home is also the natural habitat of germs,
which are lurking in the bathrooms, toilets, kitchen, laundry
and even the bedrooms to infect us, and sometimes make us
very sick. Infants and elderly people are often severely
affected. Any dampness caused by building defects or poor
maintenance provides the ideal conditions for these germs to
multiply at greater speed. Thus, we must be aware of the fact
that our bathrooms and kitchen can spread infections making
the family very sick. For the sake of our family, it is important
for us to gain the knowledge of carrying out proper and timely
cleaning in the bathrooms, toilets and kitchen, and even the
laundry. Obtain information and knowledge by attending
workshops on asset management.
Let me draw your attention to some basic information about
the risk of infection in the poorly maintained kitchens and
bathrooms of our homes, and then how fungi found in other
parts of the home can harm the residents (Leong, KC 2003).
Germs and the Kitchen and Bathrooms
Our bodies are full of microbes and most of the time we live
happily together with themin fact, there are some we cant
live without, such as those that help us to digest food. Our
bodies have their own immune systems to prevent many of
these microbes from harming us; however, there are times
when germs simply overwhelm our defence systems thus

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making us very illeven killing us. The fearsome fact is that


germs can reproduce at great speed, creating many
generations in a space of just few hours.
Germs is just a common term for microbes living in our
bodiesthey are living on our skin, in our stomach, our
mouths, and in our vital organs no matter how clean we are.
We can classify germs as bacteria, viruses, archaea,
protozoa, fungi and prions and under each group some can
really harm us badly in their own specific ways.
According to bacteriologists and pathologists, there are half a
million to a million species of bacteria, and about 5,000 types
of viruses have been identified by them. But so far, scientists
have managed to study only a small fraction of these bacteria.
Bacteria may be classified as gram-positive or gramnegative, the former being those that are visible under an
electron or phase contrast microscope after having been
stained by a substance, while the latter are not so visible. Let
us look deeper at what pathologists can tell us about some of
these harmful germs that readily infect humans.
x Campylobacter of several species is a gram-negative
genus of bacteria that can cause infectious diarrhea,
appendicitis, and an acute inflammatory nerve disease
called Guillain-Barr syndrome, which causes (usually
temporary) paralysis. In U.S.A, it is estimated that 2.4
million people get infected with campylobacter every year.
Poultry is a significant source and food handlers can
transmit the infection. People who eat raw or undercooked
chicken can transmit infection through stools if good
hygiene is not practised.

x Escherichia coli, commonly called E. coli, a gram-negative


bacterium consisting of hundreds of different serotypes is

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x Protozoa cause malaria and many other diseases. These
protozoa reproduce and infect others in a variety of ways.
x Cryptosporidium, commonly called Crypto, is a common
waterborne parasite that is usually harmless to humans.
However, when the parasite flourishes under the right
conditions, some of them are converted to a form called
Oocystneither a bacterium nor a virus but a unicellular
parasite. When ingested by animals and humans, it can
release sporozoites that will attach themselves to the
surface of the intestines and then generate new cycles of
infection that cause abdominal cramping and explosive
watery diarrhea.
x Prion diseases cause extremely horrifying symptoms such
as loss of motor control, paralysis, dementia, emaciation,
and death.
x Salmonellosis is caused by a group of bacteria and the
common serotypes are called Salmonella enteriditis and
Salmonella typhimurium. These can be transmitted by raw
or undercooked chicken and raw or undercooked eggs but
more usually by contact with feces of people or animals
especially food handlers who dont wash their hands
thoroughly after having used the toilet. Food handlers in
public kitchens are the greatest human carriers. In the
U.S.A. alone, there were more than 10,600 cases of
illnesses caused by bacteria confirmed by the Centers for
Disease Control (CDC) in 1999 and more than 4,500 of
these (or over 42%) were cases of Salmonella infection.
Public officers believe there are probably about 30,000 or
more such infections a year that have not been reported.
The symptoms are diarrhea, abdominal cramps, and
sometimes a slight fever. However, salmonella poisoning
kills about 500 Americans a year, which is about the same

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as the number of people killed in car accidents over the


Thanksgiving weekend, as revealed by the famous author,
Nicholas Bakalar.
x Norwalk-like virus, commonly called NLV, refers to a
group of viruses closely related to each other. The first
infection is often through eating raw oysters and thereafter
it is usually transmitted through the fecal-oral route of
dirty hands and fingers. Nicholas Bakalar again warns us
that, the only source of this virus is the feces of an infected
person.
(Nicholas Bakalar, 2003)
There are many more, but for the purpose of this introductory
book, the examples cited here should suffice to give a clear
picture about harmful germs lurking in our home.
What have all these harmful germs got to do with
kitchens and bathrooms?
A frequently asked question, indeed. The truth is, though it is
so blatantly ignored by most, kitchens, bathrooms and toilets
are one of the major sources of infection transmission.
According to Nicholas Bakalar, about a third of the weight of
human feces is made up of bacterial debris. He further
explains that there are 100 billion bacteria of 75 different
kinds excreted by every healthy person every time he/she
goes to the toilet. Among these are many pathogens causing
disease-producing agents such as viruses or bacteria. The
unhealthier the person the more dangerous is the excrement.
Since the toilets are the transit points for receiving and
discharging the human excrement to the sewerage treatment
plants, they can become the source of infections unless they
are designed, constructed, operated, maintained and
managed properly in strictly accordance with acceptable
health standards.

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responsible for most cases of travellers diarrhea.

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Infections can be transmitted from the toilets by people using
the facilities. If the toilets are well planned, carefully designed,
regularly and proactively maintained and cleaned under good
asset management, infections can still be transmitted by the
users who ignore good toilet hygiene practicei.e., they dont
use the toilet properly, but in a filthy manner and most
commonly, they dont wash their hands properly or at all, after
having used the toilet. We must remember that these
microbes will stick to the skins of their hands and fingers as
well as under their finger nails and will pass on to any thing
they touchthe cistern-flush handle, toilet bowl seat, door
handle of the W.C., the faucet over the wash basin and the
door handles of the main doors. If the person happens to
have Salmonella enteriditis, everything touched would be
contaminated. After that, a host of others using the toilets, by
touching any of those things, will catch the infection and pass
it on. Just imagine someone in the family infected with
Salmonella enteriditis uses the toilet without practising good
toilet hygiene. Mum then uses the same toilet and neglects to
wash her hands properly and gets back to the kitchen to
continue her food preparation. She will then pass the infection
to the whole family.
It pays to be careful, as anyone can infect himself from his
own stools. As pinworms (small nematode worms, Enterobius
vermicularis) infesting the intestine will migrate to the rectum;
young children often get them re-circulated by innocently
touching their mouths.
But people tend to neglect hygiene even in the developed
countriesthey simply dont wash their hands often enough.
According to Nicholas Bakalar, in a survey conducted in
September 2000, the American Society for Microbiology
found that of 7,836 people observed in 5 American cities
(Chicago, Atlanta, New York, New Orleans and San

158

Francisco), only about two-thirds of them washed their hands


after using a public toilet. They also found that New Yorkers
were the least interested in hand washing, with only 49% of
them bothering to do so.
What happens when the toilets are badly designed, poorly
constructed and negligently operated and maintained with
hardly any attention to good house keeping and
maintenance?
The toilets are poorly ventilated with very few air-exchange
cycles per hour. The toilet bowls and urinals are not cleaned
properly and regularly and scummy stains around the inner
side of the rim have become a permanent featureimagine,
some dangerous germs are not visible even under an electron
microscope. When the rising stink assails your nostrils, you
can imagine what a sizeable build-up of dangerous microbes
is lurking right under your nose.
Some toilets have faulty cistern handles and will not flush.
The toilet seats are full of urine commonly due to user
irresponsibility. It is rare to see a clothes-hook in a W.C. while
the floor appears to be permanently wet, urine drops are
clearly visiblea W.C. (Water Closet) has become a B.C.
(Bacteria Closet); alas, our clothing has also become an
infection transmitter!
Due to the toilet floor being constantly wet, one can often
notice fungi growth on many parts of the floors in various
colours, giving out bad odour indicating growth is flourishing.
In any case, the problems with fungi are not just the
unpleasant odour; under certain conditions they produce
mycotoxinsorganic compounds that can poison animals and
humans and these are so illusive that scientists are still
having difficulty to know whether they actually are present.

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Homes free from Health-Risks q


But when these toxins get into our mouths or our lungs, they
can cause some unpleasant symptoms.

Damp wallpaper and carpet, and windowsills can cause fungi


to grow and in some cases occupants can become very sick
from the fungi. It is for this reason that air-conditioners must
have proper and regular maintenance to prevent fungus
growth in the system or condensation water leaking into the
home interiors. In fact, any dampness problems in any part of
the house should be rectified.

Infections can also manifest themselves in the kitchen in a


different way. Salmonella enteriditis commonly found in
chicken meat and eggs are the usual culprits. Imagine after
cutting raw chicken meat on a cutting board, salad vegetables
are then cut on the same board? The salads being eaten raw
may make that family very sick. The correct practice is to
thoroughly scrub the board with liquid detergent and warm
water and leave it to dry, after it has been used to cut chicken
or other meats. It is best avoid using wooden cutting boards
and use alternatives, such as the non-absorbent synthetic
board as it can be cleaned more easily.

Since it is beyond the scope of this book to go into detail, I will


just present a chart here to show how fungi in the form of
house moulds can cause serious health problems as general
warning to maintain our building and protect our family.

Table 7: Common Household Moulds and Their Effects


Mould species
Alternaria alternata
Aspergillus versicolour

Aspergillus fumigatus
Cladosporium herbarum
Penicillium Chrysogenum
Penicillium expansum
Stachybotrys chartarium
Source:

Where found
Moist windowsills, walls
Damp wood, wallpaper
glue
House dust, potting soil
Moist windowsills, wood
Damp wallpaper, behind
paint
Damp wallpaper
Wet Carpeting, gypsum
board

What it produces
Allergens
Mycotoxins

Health effects from inhalation


Asthma, allergy
Unknown

Volatile organic
compounds (VOCs)
Allergens
Allergens
Mycotoxins

Pneumonitis
Asthma, allergy
Unknown

Mycotoxins
Mycotoxins

Possible kidney toxicity


Dermatitis, mucosal irritation,
immuno-suppression

S.V. McNeel and R.A. Kreutzer, 2003.

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Fungi and Moulds in Damp Areas of the Homes

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6.4

wider damage we are doing. It is unfortunately true that


the environmental sickness has already spread to our
homes, creating the modern phenomenon of the sick
building syndrome. Our homes are so much a part of the
planetary sickness and we should really be saying: well
body, well home, well earth. (David Pearson, 1992.)

Sick Building Syndrome (Leong, KC, 2003)

Health wise, the home can really be a dangerous place


especially for those who continue to neglect the home
environment. Perhaps it is time for us to take heed of
warnings from a well-known environmental architect and
planner in inner city housing and new communities in Britain
and the U.S., a founder member of the Institute of Building
Biology, England, David Pearson. In his best seller, The
Natural House Book, he tells us that:
At present we are making the planetary systems ill and,
as a result, becoming ill ourselves. What we must do is
reverse this trendheal ourselves and, in the process,
heal the planet. Unless we find ways to make ourselves
better, we may never be in a situation to remedy the

Two most common causes of a sick building syndrome are


the effects of a sealed house and a leaky house. The
former is depriving us of adequate fresh air circulation in our
homes living environment and the latter is causing fungus
growth that will cause harmful diseases attacking occupants
in our home, or emitting toxic gases, vapour or radon, which
are also extremely harmful. Let me also quote some
examples of common hazards in a home and the remedies
we can take in our maintenance.

Table 8: Some examples of hazards in home assets


Source

Hazards

Remedies

Paraffin or kerosene and bottled


gas room heaters which are still
being used in developing
countries
Gas ranges and water heaters

Emission of carbon monoxide,


nitrogen dioxide, carbon dioxide,
sulphur dioxide. Condensation

Do not use. If unavoidable use as a temporary measure


and make sure the room is well ventilated.

Wood stoves and fireplaces;


coal fires and furnaces

Emission of carbon monoxide,


nitrogen dioxide, carbon dioxide,
sulphur dioxide. Gas leak from pilot
light.
Produces harmful combustion
byproducts; vapour from spillage.
Emission of carbon monoxide,
smoke, benzopyrene.

Electrical appliances

Low-level electromagnetic radiation.

Make sure room is well ventilated and avoid using in closed


rooms. Change to sealed combustion chamber water
heaters. Change to pilotless gas appliances. Burners must
be serviced regularly.
Boiler house must be well ventilated and must be sealed
from the house.
Regular maintenance a must; have flues and chimneys
swept and checked. Chimney cracks must be sealed.
Install air supply direct to fireplace to maintain air quality in
the room.
Keep electrical appliances away from sleeping areas.

Oil furnace for heating

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Refrigerators

CFCs released from coolant system.

Use only CFC-free models and dispose of old refrigerators.

Water supply piping

Lead and other heavy metals from


pipes.
Airborne microorganisms, fungi,
bacteria, moulds.
May contain formaldehyde and high
level of radon

Remove lead pipes and those with lead-soldered joints.


Have water tested, if unsure.
Maintain comfortable indoor humidity level; ventilate to the
outside. Maintain air-conditioner regularly and properly.
Use natural gypsum plasterboard or lime plaster.

Minute mineral fibres; blue and


brown asbestos is more dangerous
than while.

Asbestos is now banned in many countries but is still found


in older houses in some countries.

Formaldehyde

Banned in the US. If found, seek specialist advice.

Lindane, pentachlorophenol (PCP),


tributyl tin oxide (TBTO)
Volatile organic compounds (VOCs).
Toxic vapours and odours during
drying: paint removers are most
toxic. Added fungicides and
insecticides. Metals
Polyurethane: serious fire hazard

Avoid these toxic insecticides and fungicides. Use only


safe preservatives approved by an international authority.
Avoid petrochemical paints.

Air-conditioning system and


ventilation
Plaster, cement, and
plasterboard made from
phosphogypsum
Asbestos, insulation, and fireproofing materials around
pipes, boilers, and tanks; roof
and floor tiles and boards
Urea-formaldehyde foam
insulation (UFFI) for cavity walls
Timber treatments
Paints, varnishes, stains, stainremovers

Foam filling in chairs,


mattresses, cushions and
pillows
Vinyl plastics in floor and wall
tiles, electrical equipment,
imitation wood panelling,
wallpapers
Cleaners for ovens and carpets,
polishes, bleaches,
disinfectants, detergents, air
fresheners, personal hygiene
products

ASSET MANAGEMENT

Homes free from Health-Risks s

Banned in UK and other countries. Use safe alternatives,


such as natural fibres.

Formaldehyde and other toxic


vapours. Vinyl chloride.

Use natural alternatives.

Formaldehyde. Phenols, vinyl


chloride, aldehydes, benzene,
toluene, ketones, ammonia, chlorine,
lye. All are highly irritant and toxic if
swallowed. Aerosol sprays with
CFCs.

Avoid and use natural alternatives and home remedies.


Read the product label before purchasing. If you must use
them, exercise extreme care: wear gloves and protect skin
from splashes, and keep area well ventilated to outside.
Avoid children coming into contact with these products.

Source: Compiled by KC Leong from David Pearson, The Natural House Book, Angus & Robertson, Australia, 1992.

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We cannot defeat something by nothing. Once it was


said: If you wish for peace, prepare for war. Now the
aphorism is reversed: If you wish to avoid war, you
must work for peace. We have at least reached the
point of talking together about the great common task of
humanitypreserving our living environment, feeding the
hungry, giving shelter to all our fellow creatures, treating
with greater care and fraternal sharing the fundamental
resourcesof water, of mineral, of energy, upon which
our common life depends. This dialogue could be the
signal of a new but growing loyalty, not to our old
divisive nationalisms but to shared tasks and common
membership in the City of Man.
Barbara Ward
1976, The Home of Man, The Canadian Publishers

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CHAPTER 12
1. A Caring Society and Maintenance
Culture

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A Caring Society needs a Maintenance Culture


(Leong, KC 2003)
All public assets, whether they are infrastructure or
buildings or public spaces, and whether they are
operated by the public or private sectors, can harm
people using them. Damaged roads, pavements and
bridges can cause injuries. Sometimes accidents could
be fatal. If water mains spring a leak, soil, filth and
bacterial contamination can get into the water supply
system. In government and private office buildings,
factories, museums, libraries, hospitals, and schools, if
these assets do not provide air quality of acceptable
standards, they can pose health hazards to the people
working there or using these buildings. If facilities for
fire preventions and fire fighting including fire-escapes
are not properly taken care of to maintain their optimal
conditions, these assets will pose unnecessary risks to
the lives of people using them.
As discussed in the previous chapter, even our
precious home environment can harm us, unless the
home buildings are being properly maintained to
acceptable health and safety standards. But, how often
do we overlook these matterswe simply take things
for granted and never bother to check, often until it is
too late.

but commercial buildings such as offices, retail stores,


or factories, as employees we should also help optimise
these assets with good maintenance and asset
managementnot only to increase profitability in
businesses but also to ensure we have a healthy
environment in which to work.
Our homes are probably the biggest investment we
have ever made and our families well-being depends
on an optimal home environment that is safe and
healthy. It is therefore only prudent for us to spend time,
efforts and financial resources in taking good care of
our homes through sound and proactive maintenance.
Once we begin to understand and appreciate the
significance and benefits of a well-maintained home
assets environment it will have an impact on other
members of our families, our neighbours, our friends
and our colleagues at work. When that happens it will
be easy for us to promote healthy work places and
public buildings.

A city is a place of anonymity, often lacking human


coherence and a system of relationship in caring for
each other. Under the systems of urban living,
capitalism and commercialism, market competition and
the desire for high yield in profit-making, all tend to
make citizens who try to excel in making a living
rather than excelling in making a life. Democracy too
In the economic perspective, public buildings and
tends to make us try to improve our status and freedom
community areas are public investments from
in attaining power at the expense of others. It is for this
taxpayers funds, thus it is also our duty to help prolong
reason that Peter F. Drucker complains that a city does
the lifecycle of these public assets. In the case of our
not have an urban community of its own hence making
places of works, even if they are not government offices
it anarchic, and he advises that we must try to develop

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that complex whole which includes knowledge,
belief, art, morals, custom, and any other capabilities
and habits acquired by man as a member of
society. (Frank Spencer, 1994.)

It is for the same reasons that leaders of Malaysia have


been promoting the establishment of a Caring Society Frank Spencer also commented that prior to Taylor, the
term culture in its original Latin usage was used to
to meet the challenges arising from continuing rapid
describe the process of cultivation or nurture. This
economic growth and urbanisation.
means that, in the case of Asset Maintenance, if all
As he was stepping into the role of Prime Minister of
members of a society will acquire and practise it, it is
Malaysia, Datuk Seri Abdullah Ahmad Badawi
like a custom. The habit of maintaining our assets is
reminded the nation of the stigma that the country has:
being cultivated and nurtured into the culture of the
first world infrastructure, but third world mentality, with
society.
respect to its asset maintenance. He was most
In previous chapters we discussed how a building has a
concerned with the fact that while the nation is
lifecycle process from conception to its revitalisation or
continuing to be blessed with an enormous amount of
new assets, there is an attitude problem, where not only final disposal. We have also discussed how a city is a
living entity, which is part of an ecosystem. Taking all
are assets not cared for, they are actually abused.
these together means that the Maintenance Culture
Whether it is a coherent urban community or a caring
within a society is also a Cultural Ecosystem because
society, the bottom line is the need for a Maintenance
of the close interactions between assets and
Culture to take care of all our private and public urban
maintenance, and maintenance and human society,
assets in order to ensure the continuing enhancement
finally leading to optimal service delivery to enhance the
of the quality of our urban life.
quality of life in a society. Let me explain.
What is a culture?
Scholars, scientists and philosophers at The Ren
Dubos Center for Human Environments, Inc. have been
Over 130 years ago in a book, Primitive Culture:
studying Duboss Five Es of Environmental
Researches into the Development of Mythology,
Management: Ecology, Economics, Energetics,
Philosophy, Religion, Language, Art, and Custom,
Esthetics, and Ethics. The Centers President William
published in 1871, the great British anthropologist,
Edward B. Taylor gave his definition as follows, and this R. Eblen explains Cultural Ecosystem eloquently as
follows:
is still considered valid today:

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such relationships, as human beings need a community


to care for each other. (Frances Hesselbein, et al, ed.,
The Community of the Future, 1998.)

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A Caring Society & Maintenance Culture p


The well-being of our home environment and the
ecosystems of the living city rely on the optimal
performance of these assets and it is vitally important
that we maintain them well. In reality, it is a prerequisite
of urban ecological sustainability that we inculcate a
Maintenance Culture. To do that we need an
institutional framework to provide the essential
knowledge about urban assets and maintenance and to
pave the way for all members of our society to
voluntarily make the choice in adopting the practice of
asset maintenance. The Asia Pacific Institute for Good
Asset Management (APIGAM) was thus formed with
The phrase deliberate social choices expressed by
the support of EAROPH, the Malaysian Government,
Eblen is worthy of our attention here in regard to the
UNDP-TUGI and many other international organisations
evolution of a culture in the ecosystem. Thus, it is
to do just that for countries in Asia and the Pacific
important for us humans to recognise the importance of
Region. From APIGAMs recent working experience in
Asset Maintenance so that we will consciously and
the promotion of asset maintenance and good asset
deliberately adopt it as a social choice. This will allow
management in a number of countries in the Region,
us to humanize our urban assets in their interplay with
the positive responses we get are good indications that
the human community; and these cultural ecosystems,
with local support a Maintenance Culture can and will
in turn, will influence the evolution of our urban society
evolve.
to develop an innate Maintenance Culture. This then
In Asset Maintenance and Maintenance Culture,
will lead to the beginning of a new era of Asset
Management Culture. In the Asia Pacific Region, Japan however, we must remember these dicta:
to a great extent has succeeded in doing this; there is
x Urban assets are part of the urban living ecology; just
no reason why the rest of the Region could not be
like human bodies, they need proper and regular
doing the same.
care.
The Dicta of Maintenance Culture
x With any physical assets, by the time we see signs of
In the built environment of cities, all physical assets
deterioration, the damage has already set in.
whether infrastructure or buildingsare closely
x Humans need a healthy home environment; they also
interrelated and interdependent with the community.
need healthy living cities that offer optimal services.
Cultural ecosystems, made up of abiotic, biotic, and
cultural factors, evolved when humans were added to
natural ecosystems. Not all changes are due to the
influence of random natural events; rather, some are
side effects of human activities, and now many are
the result of deliberate social choices. The reciprocal
interplay between natural and cultural components in
cultural ecosystems is illustrated by people
humanizing their environments and in turn the
humanized environments influencing the evolution of
human societies. (William R. Eblen, 1994.)

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x To most of us, our house is our biggest investment
and it is vital that we take good care of it.

x A healthy city needs healthy cultural ecosystems.


x A healthy society needs a Maintenance Culture.
x Maintenance Culture must start in our own homes,
then our neighbourhoods, and our cities.

Ideal Planning
Dustbins should be far away
from houses. Industries should
far from health clinics. House
surroundings should be clean.
Sewage lines should be made
in the proper manner. The
playground should be larger.
By Kishor Mestri, age 13, Mumbai,
India
Source:
The Habitat of the Chile, We Live
Here Too!, PLAN International
We live here too! was
underwritten by Childreach, the
United States member of PLAN
International and by PLAN
International Australia with funding
from the Australian Agency for
International Development.

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x Our home environment is the fundamental


environment for our well-being.

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Structural failures are not just accidents, nor acts of


God. They are the results of human error originating
from oversight, carelessness, ignorance or greed.
Robert T. Ratay
Structural Engineering educator and consultant
1.1.2000

Faith is the bird that feels the light and sings


when the dawn is still dark
Sir Rabindranath Tagore Thakur
Steven Howard 2003

In matters of conscience,
the law of majority has no place.
Mohandas Karamchand Gandhi
Steven Howard 2003

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Forensic Asset Management

ASSET MANAGEMENT

CHAPTER 13
1. The investigation of AM failures

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solutions to the problems. They
must be able to use results of
full and detailed investigation
This is the process by which
and make application to
FAM Consultants investigate
questions of law, especially in
the failure of an asset, an asset arbitration or court proceedings
system or their entire asset
as expert witnesses, or in
management system, which
public discussions or debates.
includes procurement
(planning, design, tendering
Failures can happen
process, construction contract
A city is supported by a whole
administration and
spectrum of infrastructure and
supervision), operation and
building assets. Some are
maintenance, and disposal.
standalone assets such as a
Depending on the nature of
single building or plant to
failures in the asset
management system, (such as perform a specific function,
while others are large and
those caused by construction
design, construction execution, complex asset systems. Each
of these asset systems
poor construction contract
administration, or bad planning, comprises many sub-systems,
which in turn are made up of
operation, maintenance and
many different stand-alone
decision making in the asset
management system), forensic assets all linked together to
function as a service producer
asset management could
cum service delivery system
involve forensic engineers,
(such as water supply system,
forensic architects, and/or
power supply system, etc.)
forensic environmental
engineers.
Whatever the size and
FAM Consultants must be
complexity, an asset can fail.
versed with ethical professional When that happens, it will
practice and are generally
cause asset performance
knowledgeable with the dispute breakdown which then leads to
resolution processes, and
service delivery breakdown.
where required find the

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What is Forensic Asset


Management (FAM)

170

Asset failures can range from


simple asset component
breakdowns to a whole subsystem breakdown.
In the former this can be as
simple as a blown electric fuse,
which only involves a simple
job of replacing the fuse. If a
cable in the auto-sliding door
gear has broken, it only
requires a simple task of refixing the auto mechanism with
a new cable.
In contrast, the breakdown of a
sub-system can involve a
whole electricity re-lay substations system failure or in the
case of water pressure drop in
a water supply system, it can
be due to asset failure in the
water treatment plant, or in the
water balancing reservoir
system, or somewhere in one
of the pipe network systems.
Such failures will require
investigation and reporting
followed by repair works to be
carried out.

kinds of failures, no remedy


works will follow but intensive
investigation and
documentation will have to be
carried out to find the cause or
causes of failures.
Many asset failures are
catastrophic, causing serious
loss of life. The ensuing
lawsuits can be complex,
involving substantive
investigations and evidence
packaging.
There are also many asset
construction project failures
whereby the construction works
are held up and the parties to
the construction contract and
the consultants end up in
lengthy lawsuits. When these
happen, again substantial
amounts of investigative and
documentation works have to
be carried out to support the
litigation processes.

All these investigation works


are known as forensic works.
With construction works, they
There are also asset failures
may be called forensic
involving the collapse of a high- structural engineering, or
rise building or a major bridge
forensic hydrological
across a big river. With these
engineering, or forensic

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The Investigation of AM Failures Y 



mistakes that may cause asset
failures.

However, judging from my own


experience, I find that through
forensic asset management
works one can learn from the
inside out. In other words, by
going into the failures and
tracing backwards to piece
together the failed process of
management, the careful
Asset management is a
investigation will enable the
combination of multi-disciplined investigator to learn what has
professional works. Today, as
really gone wrong, thus
asset management is
learning what should not have
becoming more advanced,
been done.
investigation of asset
management failures is a
In forensic works involving
sector of professional works
assets, whether working as a
that has come into its own.
team or as an individual
investigator, one has to bring in
professional knowledge and
Learning from someone
skills in planning, design, asset
elses failures
cost planning, construction,
project management and
The normal way of getting the
administration, asset operation
knowledge and skills of asset
and maintenance, construction,
management is learning from
health and safety standards
theories and practices. As an
and statutes, contract laws and
asset management
knowledge of other relevant
professional, one would hope
disciplines. In addition, they
to carry out the works to the
best of his/her ability and hope must also bring into the forensic
arena the practical knowledge
to avoid making serious
and experience, inclusive of

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past experiences of success


and disappointments.

prudent to include training in


the process of forensic asset
management.

Since asset management is all


about processes and being
systemic, the more one gets
involved in forensic
investigations and reporting,
the more one gets to know the
reality of these processes. No
amount of classroom lecture
attendances and workshop
participation can provide the
same degree of learning
outcomes from forensics.

Asset management
practitioners in developed
countries are made up of
economists, scientists,
planners, architects, engineers,
quantity surveyors, land
surveyors, ICT programmers
and analysts, anthropologists,
social psychologists, and any
professionals who have an
interest in improving the quality
of human settlements and
When one has submit evidence improving the citizens quality of
life through sustainable asset
affidavits and then appear in
performance.
court as an expert witness, to
face cross-examination by the
opposing counsel supported by These same professionals are
other expert witnesses, that to readily available in many
may mind is the ultimate test of developing countries in this
ones life-long learning. Such a region. With political will and
test, again to my own
under the impetus of UNDPs
experience, is far more
campaign of Good Urban
challenging than any academic Governance and the UNs
tests I have ever taken.
Millennium Development
Programme, it would not be
Thus, as developing countries difficult to train them to be asset
management practitioners as
in the Asia and Pacific region
well as forensic asset
are beginning to adopt the
management consultants.
knowledge and skills of asset
management, it would be

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building contract works.


However, when failures occur
within the whole system of
asset management of an
organisation , encompassing all
or some of the above forensic
works but failure can also be
attributed to the whole process
of management, then it
becomes forensic asset
management.

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A fractious nation, like a broken rice-bowl,


will not be able to feed its people.
Goh Chok Tong
Former Singapore Prime Minister
Steven Howard 2003

Peace proposals unaccompanied by a sworn covenant


indicate a plot.
Sun Tzu
Steven Howard 2003

The blind person never fears ghosts.


Burmese Proverb
Steven Howard 2003

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CHAPTER 14
1. Australian and New Zealand Models

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ASSET MANAGEMENT

ustralia and New


Zealand are the
leading countries in the
development and practice
of asset management.
They began with policy
development leading
towards consolidating a
legislative framework to
support asset
management.

hospital, schools, and


highways, when
recommendations on the
adoption of accrual
accounting and balance
sheets in local government
financial reports were
made.

issued, requiring all


infrastructure assets
reported. These must
include a statement of
local governments
financial position
pertaining to asset
management and
depreciation accounting
must be included in asset
operation statements.

Resource Management
Act 1991.

This act combined with the


Crown Minerals Act 1991
formed the legislative
framework for the
management of New
Zealands land, air and
water, except fisheries
In 1991, a draft of
management. The 2
Australian Accounting
combined acts repealed
Standards known as the
By 1999, local government over 60 previous acts and
AAS27 was presented,
Evolution of asset
with the main objectives of reports were found to be in amended more than 150
management policies
bringing assets to account, compliance with the asset others.
and guidelines
changing cash accounting management policies set.
to an accrual accounting
The key feature of the
In Australia, according to
system and streamlining
Resource Management
the Institute of Public
The Resource
the content of local
Act is the focus placed on
Works Engineering
Management Act 1991
government financial
the effects of activities
Australia (IPWEA),
rather than upon the
although there were efforts reports.
In New Zealand the
activities themselves.
to institutionalise
momentum of putting
Under its ruling, an
infrastructure management In 1993, a national asset
asset management in
application for consent to
management committee
during the 1970s, not
place was around the
was set up.
much headway was
same time as in Australia. mine or to dam a river is
dealt with through the
gained until 1986-87 when
According to my
same process as an
the South Australian
observations, one of the
Finally, in 1994, the
application for a
Accounts Committee was National Asset
most influential elements
subdivision of an industrial
presenting a series of
Management Manual was in pushing asset
reports on the replacement published.
management development land. Environmental
effects from these
of assets with respect to
in New Zealand is the
activities are assessed
housing, transport,
enforcement of the
By 1995, AAS27 was

174

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under the same principles The strong focus on


and the concept of user or effects and environmental
protection within the Acts
polluter pays applies.
basically set the approach
Impacts of any kind on the to asset management.
Thus as this was
environment fall within
developed, the approach
the meaning of effect,
and anything that could be became more and more
customer-focused.
affected by an activity is
included in the
In 1996, the New Zealand
environment:
Infrastructure Asset
(a) Ecosystems and their Manual was published.
constituent parts,
including people and
Australia / New Zealand
communities; and
collaboration
(b) All natural and
physical resources;
and
(c) Amenity values; and
(d) The social, economic,
aesthetic, and cultural
conditions which affect
the matters stated in
(a) to (c) or which are
affected by those
matters.

By this time, there was


strong collaboration
between Australia and
New Zealand. In 1999, a
Joint Australia and New
Zealand Asset
Management manual was
published.
In 2000, an International
Infrastructure Management
Manual (IIMM) was
published. In 2002, the
updated IIMM included

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

New Zealands input


appeared.
Legislative framework
governing asset
management practice in
Australia
In Australia, asset
management in each State
is basically governed by
the Acts of State
Parliament, Regulations
made under Acts of State
Parliament, Direction of
Ministers authorised under
Acts or Regulations, and
policies and guidelines
issued by statutory bodies.
For example, in the case
of the State of Victoria, the
legislative framework
governing asset
management practice in
the State is set by six Acts,
namely:

x Financial Management
Act 1994 This is an
important Act as it is a

major driving force for


asset management. This
Act states the
methodology in
allocation of funds for
expenditure on goods
and services, by which
relevant Ministers are
authorised to transfer
funds allocated for one
item of recurrent
expenditure to another
for that year. Specific
objectives of the Act are
to improve financial
administration in the
public sector, to make
the public sector more
accountable and to
require public bodies to
make annual financial
reporting to the State
Parliament.
x Land Act 1958 This
Act sets the framework
for Crown land
management with
respect to its sale, lease
and use by both the
public and private
sectors.

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Management Act 1994
This Act facilitates the
Act 1978 This Act
delivery of nominated
stipulates how Crown
major public projects and
lands that have been
sets arrangements of
reserved for designated
public works
purposes are managed
management. Under
and controlled.
these arrangements,
x Building Act 1993
relevant Ministers and
This Act stipulates the
agencies are made
standards by which new
accountable for public
buildings are constructed
works portfolios they
and existing buildings
undertake.
are maintained. Safety
x
Occupational Health and
and health protection of
Safety Act 1985 This
building users are
Act stipulates the
covered by this Act
objectives and standards
which also encourages
for health and safety
cost-effective
protection and welfare of
construction. The public
persons at work; and the
sector is exempted from
legal responsibilities of
compliance with only
both employers and
some of the stipulations.
employees with regard
Under this Act, the
to safety and health
Minister for Finance is
standards of the work
empowered to stipulate
environment.
guidelines for promotion
of better building
Public administrative
standards in the public
policy for asset
sector.
management
x Project Development
Establishment of public
and Construction
administrative policy for

ASSET MANAGEMENT

x Crown Land (Reserves)

176

asset management is a
living, on-going task and
no government or public
body is expected to set up
documents which can be
considered complete.
Asset management
involves changing attitudes
and approaches in
management, setting up
new management
technologies and tools,
establishing new
relationships between
service providers and
users. The task of
introducing asset
management has to be an
evolving one. It must start
with simple policy and be
improved with more
advanced and
comprehensive policy
along the process over a
targeted period.
A wise and practical way
to start is to use the
process of budget strategy
and review it to introduce
asset management
principles and policies in

the public sector. As far as


possible, they should aim
to cover the following
areas:

xEnsure setting up
baseline survey of
existing assets owned
and/or operated by an
organisation to collect
inventories of all assets.

xEnsure setting up a
process for improving
asset and related
financial information
collection and recording
same to establish
comprehensive asset
registers.

xEnsure regular updating


of asset registers with
regular reviews.

xEnsure regular reviewing


of asset performance
and related service
delivery through the
asset registers.

xEnsure costs of capital


funds and assets use are

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included in an
organisations annual
budget report.

xEnsure all asset planning


includes full details of
costs and management
risks and provides
benchmarking with best
practices to support
outcome strategies.

xEnsure setting up a
process for improving an
organisations
management capacity
which includes interorganisational transfer of
under-performing or
under-utilised assets and
methods of disposing
such assets.
Liability in negligence
the Australian
experience

been a failure to repair or


properly maintain roads.
This was known as
immunity for
nonfeasance. But there
was no immunity for
misfeasance (ie repairing
something badly). This
distinction came up for
review in two cases:
Ghantous v Hawkesbury
City Council and Brodie v
Singleton Shire Council
(2001).

nonfeasance, and so the


immunity applied to protect
the Council. Mr Brodie
appealed to the High
Court.
In the Ghantous case, Ms
Ghantous tripped on an
uneven section of a
footpath and was injured.
She sued.

Both cased were heard


together in the High Court
framework for linking an
in May 2001. HELD: The
organisations service
distinction between
Increasingly, public
In the Brodie case, Mr
delivery objectives and
nonfeasance and
organisations
in
Australia
Brodie was injured when
targets, medium-term
misfeasance was
are
finding
public
liability
in
his 22 tonne truck fell
budget estimates and
redundant and confusing.
asset
management
through a bridge that was
asset plans for asset
If the fact are clear, then
negligence that has
built for a live load limit of
acquisition, operation
the ordinary principles of
resulted in injuries a
16 tonne. He sued and the
and maintenance, and
negligence apply. Brodie
severe burden. Until
trial judge ruled in his
disposal on a minimum
was sent back to the Court
recently, public bodies
favour and awarded
5-year period.
of Appeal to make a
have been immune from
substantial damages. the
decision on liability without
prosecution.
xEnsure setting up of a
NSW Court of Appeal
the benefit to the road
process for new asset
According to Rick Sarre of decided that the real cause authority of the immunity.
acquisition against non- the University of South
had less to do with the
And the plaintiff in
asset solutions, such as Australia (Rick Sarre
planks, than with the
Ghantous had not been
outsourcing, joint venture 2003), Crown immunity
girders. The girders were
able to establish
arrangements and other
unsafe, but they had not
existed for public
negligence, so she lost.
mechanisms.
been touched by the road
authorities if there had
authority. Thus, this was
Sarre also cited other case

xEnsure setting up of a

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Australia and New Zealand Models r


laws. However, he gave
his advice that: The
common law will protect,
even in the absence of the
immunity, those road
authorities that were doing
the right thing, but will not
protect those authorities
who were not doing the
right thing. Some States
have specific legislation
that overrides the common
law and includes immunity
(or a limited variety
thereof). But this legislation
is piecemeal, qualified and
limited in scope.
Latest development in
Australia
The Australian
Infrastructure Report Card
system was established in
2001 by the joint efforts of
20 local organisations of
major infrastructure user
groups, operators,
investors, industry groups
and other stakeholders
within the country, calling
themselves the Alliance
Partners.

178

The system enables


independent analysis of
Australias infrastructure
based on fitness for
purpose. Thirteen
categories of infrastructure
are rated from A to D as
follows:
x Electricity
x Gas
x Telecoms
x Rail
x Ports
x Irrigation
x Wastewater
x Airports
x Roads (Nat.)
x Roads (State)
x Roads (Local)
x Potable water
x Stormwater

BC
B
DB
DCB
C
CD
C
D

the introduction of systemic


asset management and the
institutional framework of
good governance, a similar
system on a lower scale
Although this is not a
legislated system of action, could be implemented in
the regions developing
it has nevertheless arisen
out of the countrys seeking countries.
of good governance. It is a
Other countries in the
costly undertaking to form
Asia and Pacific region
such a powerful lobby, and
It will be interesting to see
if it continues to perform
how the Australian cases
with high integrity and
cited above will impact
professionalism, it will
serve effectively as another other countries in the Asia
set of eyes and ears for the and Pacific region.
three layers of government However, I am not aware of
similar immunity laws to
to check and assess the
protect public authorities in
nations infrastructure
these countries.
performance.
This is an excellent system
of public private partnering
in asset management.

Without sound system


asset management being in
Based on the assessment place, such a system will
of survey outcomes, the
not be reliable and it will
Alliance submits their
only lead to mistrust
recommendation to the
between the public and
governments to ensure that private sectors.
Australias infrastructure
meets the requirements of Such a system is of course
the community and
beyond the reach of
business.
developing countries. With

Currently only occasionally


does one hear of local
authorities being sued for
negligence in asset
management. I can only
assume that it is a case of
general ignorance of
citizens rights to claim
liability for injuries suffered
as a result of public
authorities negligence,

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cards and procedures for


public petitioning and/or
public interest litigation.
In other words, it is only a
matter of time that citizens
will in the Asia and Pacific
region will become more
informed, more
knowledgeable about good
asset management within
the framework of good
urban governance, and
more aware of their legal
rights should they suffer
injuries resulting from
negligence in public asset
management.

for a long period causing


local flooding, bridge railing
broken and not repaired for
a long period, etc.)
Most developing countries
do have some form of
legislative framework to
govern management of
public assets, however,
unless these are put into
practice, they are of little
use.

Thus, it is never too late to


start the process of asset
management, without being
too ambitious. It should be
started in simple
In this region, especially in processes. With
determination, backed by
developing countries, one
political will and community
need not be an expert to
easily identify potential risk support, it can progress
steadily and surely into full
of injury from poorly
systemic asset
maintained and neglected
management to care for
assets (such as manhole
covers missing along roads valuable assets.
and pavements, paving
slabs missing, cable covers
on electric poles missing,
stormwater drains blocked
by debris and not cleared

179

ASSET MANAGEMENT

understanding of local
government and to who is
benefiting from decisions
and actions. Access to
In Chapter 6, I mentioned 9 information is fundamental
Norms of Good Urban
to this understanding and to
Governance under the
good governance. Laws
UNDP TUGI Programme.
and public policies should
Out of these, Norm No. 5
be applied in a transparent
refers to Transparency
and predictable manner.
and accountabilityto be Elected and appointed
upheld in all process of
officials and other civil
urban administration,
servant leaders need to set
development,
an example of high
implementation and
standards of professional
management with the direct and personal integrity.
support of stakeholders.
Citizen participation is a
key element in promoting
This is further elaborated
transparency and
by TUGI that the
accountability.
accountability of local
authorities to their citizens
The document then cites
is a fundamental tenet of
practical means of realizing
good governance. Similarly,
this norm, and I will quote
there should be no place
one particularly relevant
for corruption in cities.
point which suggests:
Corruption can undermine
local government credibility Creating public feedback
mechanisms such as an
and can deepen urban
poverty. Transparency and ombudsman, hotlines,
accountability are essential complaint offices and
procedures, citizen report
to stakeholder
rather than public
authorities being protect by
immunity law.

ESSENCE

Think Globally, Act Locally.


ASSET MANAGEMENT

Ren J. Dubos
1972

180

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CHAPTER 15
1. Introduction
2. Australia and New Zealand
3. China
4. Fiji
5. India
6. Indonesia
7. Japan
8. Korea
9. Malaysia
10. Philippines
11. Thailand

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Introduction

EAROPH of Asia and the Pacific Areas

nder my agreement with UNDP-TUGI I am


required to give a status report on China, Fiji,
India, Indonesia, Japan, Korea, Malaysia, Philippines
and Thailand. Ideally I would like to include other
countries such as Singapore, Lao PDR, Vietnam,
Bangladesh, Pakistan and Sri Lanka, which had been
left out.
I would at least briefly touch on Singapore in this
introductory section. Singapore is one country that
takes asset maintenance seriously. As early as in the
1980s, it was already working actively with the Working
Commission 70 of the International Council for Building
Research Studies and Documentation (CIB). On 7-9
March 1990, CIB in association with the School of

182

Building and Estate Management, National University of


Singapore held a massive International Symposium on
Property Maintenance Management and Modernisation
in Singapore. Since then, Singapore has improved its
training for construction workers and also maintenance
skills for specialised construction workers. They have
expanded their legal framework for asset maintenance,
under which independent engineers are required to
certify the safety of completed buildings and
infrastructure. They are in a position to move up to
systemic asset management, if they choose to do so.
As Australian and New Zealand are the two leading
nations in Asset Management, they are therefore
grouped together as a single report in section 2.

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Australia and New Zealand n


yThe Auckland energy
Valuation and Depreciation
crisis (the great blackout),
Guideline,
the Cave Creek crisis, the
AM Adoption:
water supply problems, and x Optimised Decision Making
x The RM Act 1991 has
Aucklands unhappiness
replaced 60 acts, amended
Guidelines,
Practised at all levels of
about its traffic and
150 others and transformed
government with enthusiasm
transport problems.
a legal mosaic into a more
x Asset Management for Real
and relatively speaking, very
integrated regime for
Peoplea Guide, and
committed.
Education and training:
managing the countrys
land, air and water
x Manual for Customer Value
Legal framework:
resources.
Both public and private
from Community Assets.
sectors have been conducting
Excellent. Principally,
asset management seminars
x The LG Amendment Act
Current AM processes:
Resource Management Act
and workshops in the last 2
1996 promotes prudent,
Under the principles of asset
1991, Local Government
decades
to
build
up
a
broad
effect and efficient financial
management, LAs are
Amendment Act (No. 3) 1996,
AM knowledge base; and in
management of local
following the processes of:
Local Government Act 2002,
recent
years
these
efforts
are
authorities and requires
and the Land Transport
being intensified at a more
LAs to prepare long-term
x Strategic thinking
Management Act 2003.
advanced level. They are
plans (>10 years) that
working closely with interest
account for loss in service
x Social impact assessment
Drivers:
potential, asset creation or and expert groups in Canada,
statement
UK, and especially Australia.
disposal with regard to
AM qualifications are now
costs/benefits for options.
x A small island country with
x Option analysis
obtainable from local postunusual natural settings,
graduate
courses
in:
Diploma
blessed with many national x The LGA 2002 has shifted
in AMStrategic; Diploma in x Risk assessment and
parks and world heritage
from output to outcomes,
management
AMTactical; and Certificate
sites, free of vicious
from prescribed roles to
in
AMOperations.
animals, microbes and
community driven roles,
x Performance target setting
diseases found in other
promoting LA accountability
and measurement
countries, and the
to communities with respect Essential AM guides and
manuals
are
now
being
multicultural population of
to social, economic,
3.5 million enjoys a high
x Consideration of partnering
environmental and cultural prepared and are due to be
published very soon:
level of education and
and alternate procurement
sustainability, and
community mindedness
methods
community empowerment.
and they love their
x NZ Infrastructure Asset
countrys breath-taking
pristine environment.

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ASSET MANAGEMENT

x Use of simple and effective


communication and
presentation techniques in
working with stakeholders
and the communities
x Involvement of effective
consultation and facilitation
x Involvement of holistic and
systemic approach to asset
management for overall
outcomes
x Involvement of financial
management and economic
analysis as part of systemic
asset management for
overall outcomes.
Obstacles to overcome:
x New Zealanders feel that
there are still people who
will not be bothered to
change their mindset.
x Some are taking up AM
without full commitment and
blame AM for the poor
outcomes.
x Many are taking up AM
without relationship building

184

for effective systemic


approach.
New Zealanders generally
feel that these transitional
problems can be overcome
with continuing AM
knowledge building and
training.

Australia
AM Adoption:
Practised at all levels of
governments with enthusiasm
and relatively speaking, very
committed.
Legal framework:
Australia has very strong and
autonomous State and
Territory Governments, hence
each has its own legal
framework within which to
carry out the adoption of AM.
They all have their own Acts
on Land, Infrastructure,
Building, Transport, etc.
(Refer to Chapter 16 for
example of the State of
Victoria.)
Drivers:
x A continental size island
country with a relatively
small population of 18
million, endowed with vast
natural resources and free
from many of the microbes
and diseases commonly
found in other parts of the

world.
The people are proud of
their quality life style and
their love of nature and
would like to keep that level
of enjoyment. However, the
diverse and harsh
geographical and climatic
conditions over the huge
landmass have caused the
people to bear the highest
infrastructure costs per
capita in the world.
In order to maintain their
quality lifestyle, the
relatively small population
is facing enormous
problems with respect to
the sustainable
management of water
supply systems, energy
systems, transport systems,
road network systems,
waste disposal systems.
etc., unless they reform and
develop their own asset
management system to
meet the great challenge.
x The 1995 Australian
Accounting Standards,
AAS27 which requires all
infrastructure assets to be
reported, statement of all

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Australia and New Zealand p


requirements,
x In South Australia they are
taking the step by step
9. Determine
approach and seriously
organisations capacity
examining the legal issue of
to provide required
nonfeasance and
resources,
Both public and private
x New Zealands release of
misfeasance with regard to
sectors
have
been
conducting
10. Review standards
its 1996 NZ Infrastructure
road public liability and
asset management seminars
having regard to
Asset Manual.
immunity.
and workshops in the last 2
organisation capacity,
decades to build up a broad
11.
Establish
monitoring
x The 1999 Joint Aust. & NZ. AM knowledge base; and in
x Victoria is implementing the
and
inspection
program,
Manual.
2003 Step Asset
recent years these efforts are
and
Management
Improvement
being intensified at a more
x 1999 IEAust Infrastructure
12. Establish complaints
Plan for road management
advanced level.
Report Card 1.
and action process and
issued by the Municipal
tracking system.
Association
of
Victoria.
The
They are working closely with
x The 2000 International
12
Steps
are:
interest
and
expert
groups
in
Infrastructure Management
Canada, UK, and especially
Manual (IIMM).
x The Queensland
1. Establish road asset
NZ. AM qualifications are now
government is
database,
x 2001 IEAust Infrastructure
obtainable from local postimplementing its
2. Establish road hierarchy
Report Card 2.
graduate courses in: Diploma
comprehensive
and
classification,
in AMStrategic; Diploma in
Government AM System
x 2000 IIMM with NZ input.
3. Establish road condition
AMTactical; and Certificate
(GAMS) through the
standards,
in AMOperations.
x 2003 IIMM UK edition.
Department of Natural
4.
Determine
current
road
Resources, not only for
x An enormous number of
Current AM processes:
condition,
local asset management
Acts, Guidelines and
use, but also for other state
5. Identify risks,
Manuals issued in various
All States are taking up AM
users or foreign
States and the 2001
6. Establish maintenance
practice seriously and
organisations on a licence
Australian Infrastructure
standards and practices,
agreement basis.
systematically.
Based
on
Report Card issued jointly
7. Establish renewal/
by 20 members of the AIRC information reaching this
upgrading program to
author at the time of writing
Alliance to rate 13
ensure network meets
some
States
progress
may
categories of infrastructure
standards,
be
described
as
follows:
(see details described in
8.
Determine resource
Chapter 16, Australian and

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ASSET MANAGEMENT

local governments financial


NZ Models 5.)
position to be reported,
which must take
Education and training:
depreciation into account.

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China
determination to pick it up
across the country. They
fast.
have been practising
preservation of these national
x From ancient times, China
treasures and they are
has experienced many
increasingly doing well, with
mammoth sized infrastructure
good local and foreign
development programmes,
technical and funding
such as: the Great Wall, canal
supports. They understand
systems, de-desertification,
Legal framework: There are as
the importance of maintaining
national road networks,
yet no legislations focusing on
assets.
national railway systems,
asset management. However,
x Given such a background and
flood control systems,
there is important legislation
irrigation, agricultural systems
the countrys centuries of
pertaining to infrastructure,
reform; and recently, they
experiencing all kinds of
construction, housing,
have built a new Shanghai
natural disasters which are
environmental management,
and Beijing in less than a
often huge in scale, China
etc., that can be upgraded and
decade, not to mention
has many good research
consolidated for firstly
hundreds of other cities and
organisations including those
introducing the AM approach for
thousands of other townships.
in many universities and
urban governance and urban
China has the power and
colleges. They are beginning
sustainability, and then
capacity to motivate a
to draw up their own
developing and implementing it.
mindset for achievement.
environmental and asset
standards. These are good
x The amount of new assets
Drivers:
ground works for developing
China has added to the
x China has a huge landmass
AM systems.
existing vast asset stock is
and long coastline with the
x Chinas scenic sites across
mind-boggling. The national
worlds largest population of
stock is still expanding with
the country, coupled with 56
1.3 billion. Its recent
lightning speed. They will
nationalities offering a rich
impressive urbanisation and
soon realise they need AM
expos of ethnic cultures and
modernisation outcomes
and need it fast to maintain an
the recent success stories in
show the government and the
acceptable level of
all aspects of urbanisation,
people understand the
performance for reliable
has attracted millions of
importance of effective
service delivery.
foreign and local tourists who
development planning and
are criss-crossing the country.
x China has an enormous
management. Once they get
The tourist industry knows it
number of historical and
to know AM, they will have
must support AM when it
heritage sites and buildings
the capacity and
AM Adoption: Although a
number of academics and
government officials have been
exposed to asset management
conferences, seminars and
workshops, there are as yet no
signs of AM adoption.

186

comes.
Obstacles:
x The diversity of languages
slow them down, hence more
efforts are needed.
x Legal framework not in
keeping with pace of
urbanisation and
modernisation.
x Local governments and
councils need resources
support. Officials and
communities lack external
linkage, relying on state and
central government leads.
x China sees itself as a
technological economy.
Nearly all 24 members of the
Poliburo are technocrats, with
many engineers. (S. Schafer,
2004) They love mammoth
sized asset constructions and
do not see the need for AM.
The future:
China is a member of EAROPH
and APIGAM will be working
with EAROPH members in
China on AM awareness. In this
respect, APIGAM is working in
collaboration with a number of
international organisations for
funding support.

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selected as one of the Pilot


Project Cities under the
In 2001, Suva, the capital city,
UNDP-TUGIs 10-month
successfully carried out a road
Asset Management
improvement program using the programme for road network
asset management process.
improvement, commencing in
Based on the outcomes of this
May 2000.
pilot project, the country now is
in the process of obtaining the
knowledge and skills training on x Objectives of Partnership
Project: To demonstrate to
asset management for all city
stakeholders that through
councils.
the principles of Good
Governance, SCC could
Suvas AM experience:
effectively manage the road
network.
Residential population: 80,000;
day time population swells to
x To provide capacity building
160,000. Villagers living outside
on Good Governance to the
the city commute to the city daily
staff and councillors of
for work, bringing produce to the
SCC.
markets and coming for
recreation. Suva has long rainy
x To involve stakeholders in
seasons and the road network
the creation and adoption of
condition was deteriorating
Asset Management Plan for
badly. In 1999, more than 3,000
maintenance and
potholes were found in key
management of road
roads. The city council, with a
network.
meagre annual budget of F$15
million was unable to improve
the road condition affecting the x To disseminate lessons
populations livelihoods, which
learnt through a series of
led to serious civil protests.
forums organised by Fiji
local governments, Pacific
local governments,
Under UNDP, UNOPS and
community groups,
Suva City Council Partnership
professional engineers, etc.
arrangements, Suva City was
AM Adoption:

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

Under the Asset Management year Strategic Road


process the following were
Management Plan. In 2002,
carried out:
SCC allocated F$ 4 million
out of its total revenue of F$
x Data collection and building 15 million for road
rehabilitation and upgrading.
up of asset registers of
asset portfolios.
Suva hosted the South Pacific
x Asset condition assessment Games in 2003 and the road
conditions were to everyones
and analysis.
satisfaction. SCC Director
Eroni Ratukalou emphasises
x Stakeholder consultation
the point that without Good
meetings to establish
Asset Management public
critical issues and to
services will not work and AM
develop maintenance
is now going to stay with Fiji.
strategies.
x Establishing maintenance
plans.
x Preparation of work plans
and carrying out
construction works on
repairs and replacements.
x Preparation of Asset
Management Reports.
x Management Reviews.
The outcome was declared a
great success. SCC adopted
the Asset Management
Report and will use it as a 10-

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India n
community co-operatively,
or be those assets made
Asset management was
available by individuals for
introduced to India since
community use, or those
around 1997. The two key
held in some form of
organisations that have
trustfor the pursuit of the
been involved in AM
communitys economic,
projects are the
social, cultural, spiritual
Administrative Staff
and psychological wellCurrent AM processes:
College of India (ASCI) in
being. This livelihood
Hyderabad, and the
The source of continuous approach under CAM is
Housing and Urban
support on AM for India
considered holistic and is
Development Corporation has been coming mainly
aimed at maintaining a
(HUDCO) in New Delhi.
from the Department For
balance between
There is support from the
International Development economic security and
national government and
(DFID), UK, under whose development, and other
some State Governments. resources support HUDCO
quality-of-life related aims.
Due to lack of clear
and ASCI have
Livelihood assets are
understanding of AM, and implemented many AM
based on DFID
lacking full commitment,
programmes.
frameworks five elements:
governments at all levels
physical, natural, human,
HUDCO:
and agencies have not
social and financial.
been able to enjoy the full Through HUDCO,
benefits as they should.
Community Asset
CAM was first tested in the
Nevertheless, citizens of
Management was
Andhra Pradesh Primary
Ludhiana have in the last
established (CAM).
Education Project
few years benefited from
Community assets are
(APPEP) in 1998-99, as
an AM project.
defined as assets that are part of the repair
in collective use by
programme of those
Legal framework:
communitiesthey may
education assets. By
There is no legislation with be owned by the
involving the community,

ASSET MANAGEMENT

AM Adoption:

188

a focus on asset
management. However,
many legislations pertain
to urban development,
housing, infrastructure and
poverty alleviation

there was a noticeable


improvement in the
effective delivery and
maintenance of services.
Based on that success,
research projects on CAM
were carried out in 3
Indian cities in 2001:
Hyderabad, Bhubaneswar
and Ranchi with local
community (especially the
poor) participation.
Through these projects,
HUDCOs 600 Building
Centres throughout all
States in the country for
community skills training in
local building construction
and maintenance
techniques were tested for
incorporation in the CAM
process. In addition, 2
CAM capacity building
Toolkitsone for policy
makers and another for
engineerswere produced
and distributed together
with a Working with
Communities Handbook.

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work with CAM, it will yield x Local and overseas


better and sustained
study tours; and
results.
x Publishes the Change
Management Times
ASCI: DFID has been
Newsletter on urban
giving significant technical
water and sanitation
support to ASCI with
issues for distribution to
regard to the adoption of
2,000 urban local bodies
In 2003, HUDCO, following asset management by
(ULBs).
state and local
a national workshop held
governments. With support In 2003, with the support
in Delhi, commenced
of DFID, ASCI launched
also coming from other
drafting Training Toolkits
for CAM, which will involve international organisations an Asset Management
and academic institutions, ManualDesign and
site demonstration and
Implementation of Asset
pilot training programmes ASCI has been carrying
Management System in
in HUDCOs 600 Building out capacity building in
Centres throughout India. many infrastructure asset Urban Local Bodies: A
management programmes, Step-by-Step Approach.
The main objective of this
especially water and
CAM is a good process
Manual is to strengthen
sanitation. With support
involving poor
communities in community from the Ministry of Urban municipal asset
Development and Poverty management by ULBs by
asset management to
providing guidelines on a
Alleviation of India, and
ensure adequate service
step-by-step methodology
delivery from the assets. It from DFID, WEDC, and
and processes including
IWE of UK, ASCI
is a powerful start. This
field work procedures. This
established the Change
author believes that if the
manual is also to be used
principles and philosophy Management Forum
by consultants involved in
(CMF), which organizes:
of the Systemic Asset
infrastructure and building
Management process
x CMF seminars for policy works for the ULBs.
could be simplified and
makers;
Following this, similar
projects were tested for
state-wide community
involvement in 3 States,
namely: Orissa, Andhra
Pradesh and Jharkhand in
2002.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

As this manual does


enable ULBs to establish a
basic asset register for
their assets on short-listed
sites, it is an excellent start
for AM. However, the
outcome of the site
analyses is a series of
verification and valuation
of assets market values.
Following that is the
process for financial
analysis and optimal
development option based
on costs/returns scenarios.
The portfolio strategy that
follows is also confined to
consideration for market
conditions and potential
revenue earning which is
the primary support for
decision-making on
municipal assets.
There is no provision for
asset condition
assessments and
monitoring, neither are
there any provisions for
asset optimizations against
all technical, social,

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India p

ASSET MANAGEMENT

economical and
environmental factors and
final processes for
decision-making to ensure
urban sustainability.
Since the launch of the
manual, municipal mayors
and commissioners are
taking a keen interest in
ensuring they have no
idling assets. They are
extremely enthusiastic in
ensuring all assets are
yielding the expected
returns to justify public
investment.

including NGOs and


universities which are
actively involved in various
aspects of improving urban
sustainabilityfrom road
network improvement to
rail management, housing
improvement to
preservation of historical
and heritage assets, just to
name a few.

It is important to note that


in the area of agricultural
research, India has many
organisations which are
working in close
collaboration with the
Notwithstanding its
Australian Centre for
incomplete process, the
International Agricultural
manual is an excellent
Research (ACIAR), which
start on AM. With proper
is a part of the Australian
expansion, perhaps as its
Overseas Aid Program
next phase of AM
(AusAid) that aims to
development, the current
assist developing countries
AM process can become a
to reduce poverty and
full Systemic Asset
achieve sustainable
Management system.
development. Under many
of their programmes of
Other organisations
collaboration, there are
India has an enormous
many research projects
number of organisations
that are presently under

190

way. These projects not


only concern managing
scarce water and nutrient
resources more efficiently,
to improve yield and
quality of grains and
legumes, diversify
production and raise farm
incomes, but also broadscale land and water
resource management
work with emphasis on
technical and policy
research on water
management.

total population, 650


million live off the land,
yet infrastructure in the
rural areas is far short of
needs.
Moreover this scarce
infrastructure is badly
maintained, adding to
the plight of the rural
communities. They need
better infrastructure, and
only with the adoption of
SAM will the
governments be able to
meet the challenge.

Once Systemic Asset


x At the May 2004 national
Management is put in
election, the new
place, these research
national government was
programmes will be of
voted in by the rural
great value to water supply
communities across the
management, particularly
country. The new
with respect to water
government was given a
sources management.
clear mandate to bring
Drivers:
infrastructure
development to the rural
x India has a huge
communities. The
population of 1 billion,
national government
which, though is only
gave its positive
slightly below that of
response in the form of a
China, has a much
Common Minimum
higher density. Out of the

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Programme as the
nations new policy
agenda, with, inter alia,
emphasis on improving
education and
employment
opportunities as well as
infrastructure
development in rural
areas.

development and
implementation across
the country.

Obstacles:

x Indias huge population


has severe poverty
problems300 million
x India has a great number
subsist on US$1 a day,
of important historical
thus causing many dire
and heritage sites and
problems.
assets that are in dire
need of effective
x Indias civil service is
preservation. The
huge and complex
governments and the
many of the old habits of
The national and the
people concerned need
the colonial era still
state governments need
Systemic Asset
linger on. It takes not
Systemic Asset
Management processes
only an enormous
Management to ensure
to help carry out the
amount of resources to
speedy, efficient and
mammoth task at the
introduce new
sustainable infrastructure
least cost.
technologies and new
asset development at the
management
x
English
is
widely
spoken
least cost.
approaches, but also
hence it is relatively easy
x Organisations such as
extra efforts to change
to introduce foreign
HUDCO, ASCI, the
their mindset.
technologies in English.
Ministry of Urban
Conducting AM
The future:
Development and
workshops is quite
Poverty Alleviation, the
straight forward. There is India also has a very large
state governments and
a large pool of young
pool of talents to be
all those ULBs who
and well educated
tapped. The country has
experienced the impact
technocrats in the
many good leaders who
of asset management
country who can assist in are well educated and
during the previous
translating AM
have great vision. Once
governments want to
knowledge to the
they get the right chief
hasten asset
communities in both the ministers to lead the
management system
urban and rural areas.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

states, the ULBs and local


agencies will take the cue
in implementing AM.
Based on this authors
personal working
experience with
Hyderabad and ASCI,
India will become a leader
in AM in the region.
Since 2003, EAROPHAPIGAM has worked
closely with ASCI. Under a
partnership arrangement
with ASCI and local
agencies, APIGAM is
carrying out AM projects to
provide fast-track
technology transfer and
technical support services.
ASCI is also acting as an
anchor organisation for
APIGAM and as a base for
the EAROPH India
Chapter.

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Indonesia n
At the same time, Central
Government also required state
and municipal governments to
prepare double ledger
accounting systems, whereby
each of them had to show
Legal framework: Government income and expenditure
policy No.22 introduced by the
budgets on one ledger, and
Gus Dur administration in 1999 prove their real performance in
led to the introduction of basic
the other ledger, showing they
AM. There are many legislations were able to keep their fiscal
which are rather fragmented.
accounts in the black through
Some of these laws could be
good management.
consolidated in order to give
more effective AM for urban
Following this the asset register
governance and development
system was introduced to record
sustainability.
all assets market values. Under
the new policy, the state and
Current AM processes:
municipal governments were
empowered to seek foreign
Policy No.22 was enforced in
1999 to give more power to the investments to support their
budgets, work programmes and
states and municipal
expenditure. It was for this
governments thus enabling
reason that in recent years there
them to develop, manage and
control their respective areas of has been a frenzy in the setting
jurisdiction. Resulting from this, up of asset registers across the
country, as they were anxious to
state and municipal
use the asset values in the
governments had to develop
their own budgets and plans for registers as collateral for
loanslocal and foreign.
their own portfolios of work,
instead of waiting for the Central In the year 2000, the municipal
Government for grants or fund
government in Padang (West
allocations before any works
Sumatra), and in Samarinda
could be done.
(East Kalimantan) succeeded in

ASSET MANAGEMENT

AM Adoption: Only a very


basic level of AM has been
introduced to Indonesia and
been adopted by some state
and municipal governments.

setting up the registers.

192

However, many other state and


municipal governments were
running into problems, one of
which stemmed from the Policy
that the register must include
details of lands and all other
properties under their respective
operation, management or
control. Unfortunately, many of
these lands and properties were
involved in ownership
disputesbetween private
parties and government, and
also between state and
municipal governments, forming
one big grey area of content
with poor documentary support.

management became part of


accounting system; thus such
work was led by the accountant
profession, with the technical
professions being sidelined.
This seems to be the only
reason why organisations such
as the Center for Local
Government Innovations, which
is an American based financial
and management consulting
agent working with GTZ in
Indonesia, were formed for
asset management.

These consultants have been


helping small local councils,
such as that in Sleman, on the
The other problem encountered north of Yogyakarta, to set up
was lack of clear methods and
asset management and train
standards of asset valuation. To the officers in setting up
make things more complicated, appropriate accounting systems
Policy No.22 was not supported and development budgeting
by clear guidelines and the
processes, and other related
statements contained therein
tasks. Under this process,
were subject to a variety of
engineers, architects and other
interpretations. Consequently,
related professionals are
the state and municipal
becoming redundant as more
governments opted to interpret and more asset manager
the Policy to suit their own
positions are taken over by
conditions and benefits and
accountants!
implement them accordingly.
There is one exception. The
It appears that as a result of the asset register set up in Jakarta
requirement of the double
Provincial Government (JPG) is
ledger accounting system, asset linked to asset management

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plans and maintenance budget,


and places minimal emphasis
on the accounting system used.

in developing infrastructure. It
has low GDP per capita.
Considering all these difficult
circumstances, it is clear they
The officers in JPG are keen to
need AM to help them
know how to properly maintain
overcome many social,
and manage public assets for
economic, technical and
service delivery. They are keen
environmental difficulties in
to find out how to maintain the
order to achieve good
functional life of assets at the
governance and sustainable
least cost. They want to know
urban development .
how to carry out lifecycle costing
x Indonesia has many cultural
instead of setting up accounting
and heritage sites and assets
systems for assets. They have
and the people who are proud
been in touch with EAROPHof their cultures are keen to
APIGAM with regard to the
acquire the knowledge and
process of Systemic Asset
skills to maintain and manage
Management and are making
their valuable assets.
arrangements with APIGAMs
x Indonesians have long
resource team concerning AM
traditions of fine
technology transfer.
craftsmanship for their arts
and crafts, their music and
JPG appears to be light years
dance. Given the opportunity,
ahead of the other state and
they can develop the art and
municipal governments with
science of AM.
regard to AM.
x Because of social, economic
Drivers:
and political diversity,
Indonesia has difficulties in
x Indonesia is a country of
establishing and maintaining
islands (some 16,000 islands
an acceptable quality of life.
at high-tide) with dense
Despite their ardent support
populations. It has huge
for UNDPs good governance
differences in geographical
initiative and UNs Millennium
conditions, ethnic groups and
Development Goals, they
languages. It has to
know they need AM to help
overcome physical problems

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

them to optimise their public


difficult to know enough about
service delivery from their
assets and their
ageing assets, otherwise any
management. The people
plans would be sheer rhetoric
must be told that good AM
without any tangible
brings transparency and
outcomes. Given the
accountability.
knowledge, they will embrace x Volatile and unstable political
AM.
systems makes it difficult to
develop AM, as it needs time
Obstacles:
to change mindsets and
accept transfer of technology.
x The diversity of languages
makes it difficult for the people x Lack of local financial support.
Every effort in AM has to rely
to get informed about AM.
on external funding. Because
The poorer the community,
of political instability, it is more
the more they have to depend
difficult, though not
on reliable public services and
impossible, to obtain external
the more they must get their
funding for AM projects.
governments to adopt AM to
ensure service delivery.
The future:
x Indonesia needs
infrastructure to improve the
EAROPH has a strong
communitys quality of life, yet membership and an active
people in general have little
national chapter in Jakarta with
knowledge about the link
good local leadership. APIGAM
between quality of life and
is now in contact with the
service delivery, and between Jakarta Provincial Government
service delivery and assets,
to mount AM workshops leading
and between assets and
to technology transfer projects
everyones duty and
through partnership
responsibility to care for their arrangements.
valuable assetsneither the
governments and the people
have such understanding.
x General lack of transparency
and accountability makes it

193

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Japan

ASSET MANAGEMENT

AM Adoption: Japan has their


own traditional way of maintaining
what they dothey have a
maintenance culture. But they are
not as systemic as AM.
Legal framework: Japan has a
good legal framework. They have
good legislation for the protection
of natural and man-made assets.
By consolidation, they can come
up with excellent AM processes.
Current AM processes:
Although there are no examples
of AM being carried out for their
infrastructure and other manmade assets, their work ethic and
pride in whatever they do often
result in high quality of technical
inputs and admirable
management technologyalmost
always striking out to reach a high
level with a combination of art and
science.
Nevertheless, Japan still
experiences asset failures and
environmental crisie. The nuclear
power stations fatal accidents is
one example.
Drivers:
x An island country with a
large population. They
embrace the Shinto faith

194

and the Zen way of


version of AM.
often when the subject of
thinkingthey love
AM was mentioned to this
Obstacles:
everything in nature and
authors Japanese friends,
proud to produce things
they often misunderstood it
x The problems with foreign
matching natures
as something to do with
languages is Japans
perfection. They respect
financial assets or stocks
greatest difficulty. AM is not
and protect their assets.
and shares.
highly publicised hence
x The country is under
very little written information
The future:
constant threat of
is available. Even UNDP
earthquakes, typhoons and
only came to accept it in
EAROPH was inaugurated in
other natural disasters.
early 2003. America, being Tokyo in 1960 and they remain
Through centuries of
the richest and most power staunch supporter of EAROPH.
countering natures
nation on earth, did not take Its national chapter, known as
destructive forces, they
AM seriously until 2001.
JASOPH, with its secretariat in
have mastered technology
Although many EAROPH
Tokyo, is active and under good
and skills in asset
members in Japan have
leadership.
construction and
been exposed to AM
maintenance through
through EAROPH
At the EAROPH Regional
relentless efforts in
conferences and seminars
Seminar held at Oshima,
research and
as early as 1997 in Manila,
Nagasaki in September 2003, AM
experimentation.
not much about AM has
was presented and won
x Japan is a economic world
been written in Japanese,
enthusiasm from local scholars,
power. They started their
except for some internal
academics, government officials
industralisation by copying
reports. Even with these,
and professionals. As EAROPHand now they are being
many AM terms have yet to
APIGAM is becoming more active
copied. They pride
be precisely translated into
in the region, there is no doubt
themselves on being
Japanese.
that EAROPH members from
innovative and they always x Japans own success in
Japan will play active roles in
reach out to the world to
urban asset development
APIGAM and bring AM as well as
find the best, in order to be
and in their own sustainable
SAM back to Japan in their own
the best themselves. Once
urban development and
language.
they realise what AM is and
governance has blinded
how it works, they will be
them to the need to
able to absorb it and come
improve their own ways of
up with their improved
asset maintenance. Very

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exposed to AM, it will adopt it


and do well with it, if they decide
to do so.
x South Koreas impressive
economic growth depends on
its infrastructure. Any failures in
the infrastructure has disastrous
consequences in this highly
Legal framework: Korea has a
connected and compact
good legal framework that has
country. They need not only
driven the country towards an
AM but SAM to manage their
advanced stage of
assets.
industrialisation in tandem with its
x Koreans are proud of their
intensive urban expansions in the
culture and the country is
forms of infrastructure, housing,
blessed with many historical
and construction developments.
and heritage sites and assets.
In recent years new legislation
They need AM to protect their
has initiated environmental
national treasures.
protection. With consolidation,
x Koreans believe in having a
new legislation can be drawn up
knowledge society and the
for the development and
country is rewarded with a large
implementation of AM.
pool of Ph.D professionals
Drivers:
actively serving this highly
motivated nation. Universities
x South Korea is highly urbanised
are have many post-graduate
with dense population. Its
study programmes and
people have been subjected to
research centres. The central
a long history of civil wars and
government is supported by
external suppression driving
many research organisations
them towards self-reliance and
the growth of research &
a strong desire and
development was at 23% per
determination to achieve
year even around 1995 (W.F.
excellence and to be a force to
Miller, 1995)and think-tank
be reckoned with. It is now
groups to help shape their
recognised as an industrialised
policies. Leading these is the
nation. When it is properly
Korea Research Institute for
AM Adoption: None in the strict
sense of AM. However, South
Korea in recent years under the
pressure of infrastructure and
building failures has become
conscious of the need for good
asset maintenance.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

Human Settlements (KRIHS),


picked it up and worked on it
which is well-funded and wellwith correct interpretations in
staffed, annually churning out
the Korean language, AM
volumes of research reports to
awareness cant be achieved.
support this dynamic nation.
x Koreans are relentlessly set in
Once AM is positively known,
pursuit of their industrialisation
researchers in these
program. In order to maintain
organisations will pick it up to
local and global networks
kick it off with their own
competitiveness, Koreans have
understanding and in their own
gone through industrial and
language.
spatial restructuring through
x Koreans have demonstrated
technological and
their organisational prowess.
organisational innovations while
They are no longer
maintaining, as far as possible,
conservative in their approach
a close industry-environment
and have become innovative
relationship, which is presented
designers as well as pace and
in Figure 27 (Sam-Oak Park,
trend settersthe recent
1997). In this respect the
success stories of Samsung,
Koreans have done well and
LG and Hyundai, just to name a
they have done so well that
few, are cases in point. They
they continue to construct more
are now key players in the
and more assets to support
global world of high-tech
their industrial expansion, which
consumer products while being
also brings about urban
able to offer reasonable prices.
expansion. In these very
focused efforts, little attention
x All said, the country needs
has been paid to AM. The
SAM to manage their huge
economists, planners,
asset stock at least cost to
engineers and entrepreneurs
ensure continuing quality
have yet to see the profits in
service delivery through the
AM. However, assets will
process of asset optimisation.
deteriorate, and with time they
Obstacles:
will realise they need AM to
manage their assets effectively
x Among these is the problem of
and at minimum cost.
language. Until one of their
scholars or researchers has

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Korea Y

ASSET MANAGEMENT

Current AM processes:
Although there are no examples of AM being
carried out for infrastructure and other manmade assets, with Koreas continuing
ambitious industrialisation programme to
compete in the local and international
markets, and their work ethics and pride, it is
my observation that Koreans are beginning
to realise the need to match their frenzied
asset procurements with asset management.

technological innovation
for efficient use of
resource

Very soon Koreans will recognise the need to


expand the Industry, Space and Environment
Network as presented in Figure 27 to include
the process of SAM.
The future:
At the EAROPH Regional Seminar held in
Oshima, Nagasaki, in September 2003,
Korean representatives were voicing their
concerns, saying that Korea must slow
down with their new asset constructions and
consolidate themselves in properly
maintaining and managing their already huge
national stock of assets.
Korea is one of the strong supporting
member countries of EAROPH and many of
Korean members have been exposed to
EAROPH-APIGAMs work on AM in
conferences, seminars and workshops.
As APIGAM is planning to include South
Korea in its regional programme for 2004,
AM will make its presence felt there soon.

196

SPATIAL
RESTRUCTURING

Figure 27 Koreas Industry, Structure and Environment


Source: Sam-Ock Park (1997), Industrial Restructuring for the Sustainable City in the Era of Globalization,
International Journal of Urban Studies, Special Issue I: Cities in the Global Economy, Vol. 1, Nov. 1, 1997,
The University of Seoul

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Malaysia n
1. Develop a strong science
ensure they remain reliable and
AM familiarization seminars
and technology base to
continue to provide quality
and workshops in Kuala
enhance industrial
service delivery.
Lumpur. All senior
competence and
executives of relevant
x
Malaysias economic growth
Legal framework: Malaysia has
competitiveness.
ministries and agencies
was
to
a
great
extent
spurred
a good legal framework for urban
2. Develop indigenous
have participated in these
by
the
countrys
Vision
2020,
development, industrialisation and
technology by increasing
events. Officials of some
under
which
it
is
aspired
to
be
a
asset construction, but nothing
the nations capability to
state governments and
fully
developed
country
by
the
specific towards good asset
adopt, adapt and improve
local councils in both East
year
2020.
But
some
of
its
maintenance, let alone asset
technology through
and West Malaysia have
assets
in
the
nations
huge
management.
research and
also been exposed to AM.
asset stock are ageing, and
development.
The country is ready for
some are showing signs of
Drivers:
3. Develop a pool of skilled
AM.
deterioration. They have no
x Malaysias strong economic
manpower capable of
x Datuk Seri Abdullah Ahmad
problems in getting resources
growth, especially since the
handling new and
Badawi, just before he took
for new asset procurements,
1990s, has brought about
emerging technologies;
office as Malaysias Prime
but few funds have been set
intensive urbanisation. The
4. Ensure that environment
Minister was briefed by
aside for proper maintenance;
Klang Valley, where Kuala
conservation and
representatives from
and neither has the population
Lumpur and the capital Putra
protection are built into
EAROPH, UNDP and IULA
been trained in asset
Jaya are situated, has enjoyed
the overall economic
(Asia Pacific) and gave his
maintenance, which has often
the greatest urban growth,
development process.
full support for the setting
been confused with real estate
causing continuing in-migration.
5. Develop a positive
up of an international
management. AM urgently
But all states in both East and
culture based on
organisation for asset
needed to take care of the
West Malaysia enjoy high
integrity, discipline and
management in Kuala
nations valuable assets.
economic growth and
diligence to equip
Lumpur.
x Under the governments policy
urbanisation expansion. Thus,
Malaysia
for
high
x
EAROPHs international
of Malaysia Incorporated, the
this little country has become a
productivity and
secretariat is situated in the
public and private sectors are
vibrant nation of only 23 million
commitment to quality.
Malaysian Ministry of
working in close collaboration
people. One of its growth
In
short,
Malaysia
is
set
to
Housing and Local
with the nations strong
drivers is the countrys strong
embrace AM in order to
Government in Kuala
leadership backing right from
investment in infrastructure
achieve the objectives.
Lumpur. In June 2003, the
the top of the government.
development across the whole
x Since 2001, EAROPHs
Asia Pacific Institute For
Entrepreneurs are aspiring to
country. This compact nation
international Asset
Good Asset Management
bring the nations growths to
depends on the reliability of
Management Resource
(APIGAM) was formed by
new heights. The main thrusts
public assets. They need AM to
Team has been conducting
EAROPH with support from
are to:

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AM Adoption: Some basic


adoptions, more in the form of
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Malaysia Y
the government of
Malaysia, UNDP and other
international organisations.
APIGAM was launched by
Minister Datuk Seri Ong
Ka-Ting of the same
Ministry at the National
Conference on
Development of a
Maintenance Culture held
in Putrajaya. Malaysia will
benefit from the objectives
and activities of APIGAM.
Malaysia is ready for AM.
Obstacles:
x Malaysians are confused
with asset maintenance,
vis--vis asset
management with real
estate management, a
service provided by real
estate agents licensed
under the Surveyors Act.
Thus, many are under the
misimpression that those
house keeping and
cleaning works carried out
by unskilled workers, and
some building repair works
and occasional painting
jobs by workers hired by
the real estate agents
constitute asset
management.

198

x Many Malaysians grew up


in households that are
taken care of by house
helps or maids, and families
are seldom involved in
asset maintenance until the
assets are broken down or
have deteriorated to an
unsightly state that they
need urgent repair or
replacement. Thus, when it
comes to public assets,
both providers of assets
and asset users do not pay
much attention to asset
care and maintenance.
They simply treat asset
management as a glorified
fuss; and they do not see
anything wrong with build
and replace.
x As asset maintenance is
associated with cleaning,
removing dirt and rubbish,
and minor repairs that can
be performed by anyone
who needs employment,
asset maintenance workers
are treated as unskilled
labourers who do enjoy any
respect in society. Since
there are no institutions of
learning providing any skills
training for asset
maintenance, let alone

asset management, the


terms asset maintenance
and asset management are
subconsciously treated by
the people with contempt.
x Asset management is also
confused with financial
security and stocks and
shares. Thus, in Malaysia,
one has to define and
emphasise physical assets
or infrastructure assets
before any discussions on
AM can commence.
The future:
Under the aspiration of Vision
2020, Malaysia is fully geared
towards dynamic growth.
According to an estimation by the
Malaysian Institute of
Management, GDP in 2020 will
grow to RM920 billion, or a little
more than US$242.1 billion (MIM,
1999). This means that the
country will have to have a strong
AM to ensure its public services
are at all times optimised to
provide reliable service delivery.

the country since independence in


1957 (MIM 1999). In the present
context, I would like to focus on
the 7th and the 9th which stated:
x The 7th challenge is the
challenge of establishing a
fully caring society and a
caring culturea social
system in which society will
come before self, in which
the welfare of the people
will revolve not around the
state or the individual but
around a strong and
resilient family system.
x The 9th challenge is the
challenge of establishing a
prosperous society, with a
economy that is full
competitive, dynamic,
robust and resilient.

In my mind, both challenges


are akin to the establishment
of a maintenance culture
leading to an asset
management culture. With
EAROPH-APIGAM being
firmly anchored in Kuala
Lumpur, especially when
APIGAM is providing AM
This brings us back to what the
services to all countries in the
former Prime Minister Dato Seri
region, as far as I am
Dr Mahathir Mohamad told the
nation of the nine central strategic concerned, AM is already in
Malaysia.
challenges that had confronted

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city. Alas, these cities


infrastructure they have,
typhoons, long rainy
AM Adoption: There are
are already congested
they need AM to ensure
none. However, many
seasons, and
and unsustainable, and
proper maintenance in
community organisations
earthquakes, and every
these new migrant
order to prolong the
are collaborating with the
now and then devastated
families can only settle
functional lives at the
government to provide
by volcanic eruptions.
themselves in the
least cost.
basic urban services to
The countrys
exploding urban slums
some poor communities,
infrastructure assets are
x The countrys road
and suffer greater
which may be termed a
constantly battered by
networks spreading
hardships in a much
sort of community asset
natural disasters.
across all the major
worse environment. The
management programmes.
Governments
at
all
islands are ageing and
country is in dire need of
levels
and
the
overused with
Legal framework: There
AM to provide better
communities in all the
inadequate
is legislation pertaining to
infrastructure to support
islands need AM to help
maintenance.
Due
to
urbanisation, infrastructure
the rural settlements at
them to maintain and
rugged
terrain
of
these
development and
least cost and improve
manage their assets
islands,
roads
are
construction. However,
the rural communities
better at least cost.
subject
to
landslide
and
there is heavy emphasis
livelihood.
flooding. Many of these x Because of poor
on urban poverty
x
The Filipinos are proud
roads are hazardous and
accessibility, inadequate
alleviation.
of their rich cultures and
dangerous, especially
infrastructure and
the country is blessed
Drivers:
since buses and trucks
constant threats and
with many historical and
are often overloaded and
battering from the natural
x Philippines is a country
heritage sites and
their mechanical
elements, rural
of islands. The major
assets. They need AM to
conditions are worsened
communities in all the
islands are mountainous
help preserve them with
by the myriad potholes
island provinces have to
and infrastructure is
greater effect and at
and the poor surface
endure hardships to
costly to develop. As
least cost.
condition. Communities
make a living. Many
most communities are
would welcome AM to
families have no choice x They also possess many
poor, they all the more
exquisitely beautiful
improve the road
but to flock around the
need reliable public
scenic spots located in
networks.
big metropolis of Manila
services from the assets.
Philippines thousands of
and Cebu, which is the
x
Philippines
is
prone
to
Thus, whatever
islands and their rugged
countrys second largest

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Philippines Y
services throughout the
mountains, attracting
country. The
many tourists, including
governments know that
many celebrities from
and the communities
around the world. But
expect that. They need
their transport systems
AM urgently.
are far from desirable.
Their major transport for x Many EAROPH
inter-island travels are
members and
the ferry boats, which
government officials
are ageing and often
including local
overloaded causing
government officials in
frequent mishaps, even
the Philippines attended
many fatal accidents
the EAROPH 1996
involving capsizing or
World Planning
fire. The country needs
Congress in Auckland,
to improve its transport
new Zealand. They had
systems, in particular
their first exposure to AM
better AM for its ferry
there. At the 64th Annual
services.
Philippines Institute of
x Philippines community
Architects (PIA) 1997
service organisations are
Annual National
doing an admirable job in
Convention under the
helping the government
theme, Tomorrows
in bringing basic services
Architecture Today held
to the communities in
in Manila on March 20efforts to reduce urban
22, 1997, as one of the
poverty. The government
keynote speaker, I
must match these NGOs
introduced the concept
efforts by improving
of AM for architects and
asset performance to
engineers (KC Leong,
provide reliable public
1997). The local

200

on asset maintenance.
architects and
Since then EAROPH
government officials at
members in the
that convention accepted
Philippines, including
the importance of AM
officials of various levels
and agreed to do two
of governments and local
things: The first was to
organisations and NGOs
assist in organising a
have been attending
regional seminar on AM,
EAROPH conferences,
and the second was to
seminars and workshops
explore how architects
on AM. The Filipino
could develop a building
professionals are keen to
maintenance manual for
adopt AM.
clients after they had
completed the building
x At the CITYNET/UNDP
projects. On 20-23
International Seminar,
November 1997 in
Inner City Revitalization
Manila, the EAROPH
and Poverty Reduction in
Philippines with support
the Asia Pacific Region:
from PIA, organised the
Challenges and
EAROPH Regional
Opportunities, held in
Seminar on Asset
Muntinlupa City on 20-21
Management. I delivered
October 2003, I was
a keynote address on
invited by CITYNET and
AM for Asia, while many
UNDP to present a
experts from Australia
paper to introduce and
and New Zealand
demonstrate how AM
discussed various
could help carry out
aspects of AM. Other
Inner City Revitalization
experts from Asian
and Poverty Reduction in
countries discussed
the Asia Pacific Region
various technical topics
(KC Leong, October

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communities,
government officials,
especially in the central
government must match
them with the same level
of diligence and
commitment. These
officers must be willing to
embrace accountability
and transparency with
public assets. The
politicians must develop
strong political will to
adopt AM and establish
Obstacles:
effective legislation to
support its
x Local governments and
development and
organisations are short
implementation.
of funds. They need to
obtain funding to attend x Political instability is
highly disruptive to AM
training workshops
process implementation.
overseas or even to
However, once they can
bring the resource
see the benefits in
people to the Philippines
having the ability to
for locally organised AM
optimise their valuable
workshops. It is not
assetsmany of which
impossible but it slows
are ageing badlyand to
the process down.
maintain their functional
x While local organisations
lives to provide reliable
and NGOs are sparing
service delivery at the
no effort to help the
2003). At the end of the
seminar, local and
foreign delegates were
keen to attend EAROPHAPIGAM AM training
workshops and adopt the
concept in their cities. In
particular, many Filipino
local governments would
like to work with
APIGAM on AM. Thus,
Philippines is ready for
AM.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

least cost, they will


accept AM.
The future:
EAROPH has a strong
national chapter in Manila.
Once they realise other
EAROPH member
countries are embracing

Yeah,
right
on !

AM, they will not want to


be left behind. The
EAROPH International
Secretariat in Kuala
Lumpur is confident that
our Filipino members will
closely with APIGAM to
bring AM to the
Philippines.

If the haves did not


create so much waste,
we wouldnt have our
recycling industry,
right?

Source: Our Cities Our HomesA to Z Guide on Human Settlements Issues, UNDP Kuala Lumpur, Asia-Pacific 2000 and
Southbound, Penang

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Thailand n
AM Adoption: There are none.
However, many community
organisations are collaborating
with the government to improve all
aspects of human settlement in
Thailand.
Legal framework: There is
legislation pertaining to
urbanisation, infrastructure
development, housing and
construction, with, however,
heavy emphasis on urban poverty
alleviation.
Drivers:

x Thailand is a unique country in

that by 2010, the population of


EMR around Bangkok will
reach 33 million. (Kaothien
1996) The region will be highly
urbanised and it needs a lot of
infrastructure to support this
huge population. Thailand is in
urgent need of AM to manage
its existing assets which are
ageing fast in order to ensure
they continue to provide vital
services, as it is almost
impossible for them to keep
building new assets.
x Based on 1991 statistics,
the BMA had 981 slum
communities while outside
in the Greater Bangkok
area, there were 423. With
a high urban population
growth rate in these areas,
the slum communities must
be much more now. As the
poor rely more on good
public services, Thailand
need AM to ensure asset
performance.

that its largest city, Bangkok,


has a population concentration
so much greater than its
second city, Chengmai, which
is located in the far north. The
Bangkok Metropolitan Region
(BMR), includes the Bangkok
Metropolitan Authority (BMA)
Area (with a population of 7
million), and five adjacent
Provinces. The BMR has a total
x The National Housing
population of 9 million.
Authority has active urban
Enclosed within a radius of
poverty alleviation
200km of Bangkok, this
programmes. The country,
extended metropolitan region
especially in the Bangkok
(EMR) has a total population of
region, has a large number
24 million people, as estimated
of active organisations,
in 1994. It is further estimated

202

NGOs and CBOs involved


governance. Given the
in such programmes to help
knowledge, they will want
the government and the
AM in Thailand.
poor communities. These
x Bangkok has many
entities will want the
institutions of higher
government to adopt AM to
learning and research, such
ensure AM performance.
as the Asian Institute of
x Bangkok is fortunate in that
Technology. In addition,
many international
Thailand also enjoys
agencies are located here,
financial and technical
such as, the Economic and
resources support such as
Social Commission for Asia
that from the Canadian
and the Pacific (ESCAP),
International Development
Asia Women and Shelter
Agency (CIDA) and Asian
Network (AWAS), Asian
Development Bank (ADB),
Coalition for Housing Rights
just to name a few. Under a
(ACHR), the Regional
CIDA-AIT partnership, the
Housing and Urban
Southeast Asia Urban
Development Programme
Environmental
Office (RHUDO) of USAID,
Management Applications
the Regional Programme
(SEA-UEMA) Project had
for Community
just launched the UEM
Development (RPCD) of
Sub-Sector Networks and
UNCHS, the Urban
Professional Support
Capacity Building Network
Programme in Bangkok on
(UCBN), and Urban
21-22 June 2004. The three
Management Programme
networks among participant
(UMP) of UNDP.
partners involve the 3 subsectors: water and
The Thai professionals,
sanitation; solid waste; and
government officials and
air pollution. I represented
the communities are
EAROPH-APIGAM in that
therefore well informed
meeting and APIGAM will
about sustainable urban
support this Programme. As
development and
the Thais will get the most

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benefit from this fairly


comprehensive
Programme, they will
become more informed
about AM. They will want
AM to support their urban
governance with reliable
service delivery and
sustainability.
Current AM process:

exercise proper coordination


(Kaothien, 1996). This is
where AM could be applied
effectively, if there were
strong political will.
Since Thailand is a member
country of EAROPH, I
strongly believe APIGAM can
provide them with AM
training.

Although there are no


examples of AM application in Obstacles:
Thailand, they do have some
x Language is again a
systems of asset
problem here, as confirmed
maintenance, albeit
at the recent CIDA-AIT
fragmented and often ad hoc.
UEM Sub-Sector Networks
Meeting held in Bangkok. It
However, under the urban
takes time and effort to
poverty alleviation
translate many AM terms
programme, the government
into Thai in order to convey
is now tackling the Brown
the concept to government
Agenda at the community
officials and policy makers.
level. In this regard, local
Even when working with the
organisations are partnering
communities, it is difficult
the government and the poor
for AM field staff to explain
communities to organise
the concept and
waste disposal systems and
methodology to the
constructing settlements
community representatives
land sewerage systems.
and the local workers.
Local scholars and
x
High growth rate of urban
technocrats are worried that
population and urban
the governments efforts are
congestion.
merely shifting the problems,
unless local council officials
x High water table in the

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

Bangkok area and high


development.
exploitation of groundwater.
x Governments are too reliant In fact, Bangkok can become
a spring board for APIGAM to
on local organisations,
provide AM technology
NGOs and CBOs for
transfer and technical support
assistance. It hampers
services to the Asian region,
initiative and prevents
while providing AM support to
government officers from
the Thai government and
adopting an innovative
communities.
approach.
x Government works are
highly compartmentalised;
linkages are ineffective. If
there were greater
transparency and
accountability, it would be
easier to establish a
systems approach in multidepartmental and multisectorial management. If
communities were well
informed about AM, they
would be able to influence
better management in the
public sector.

As EAROPH has members in


Thailand, the time is right to
first set up an EAROPH
National Chapter in Bangkok
and then follow up by using
the Chapter Secretariat as an
APIGAM anchor organisation
for AM services.

The future:
With so many international
organisations set up in
Bangkok, they can all be
linked up and consolidated to
provide information and
knowledge for good urban
management and sustainable

203

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Thailand Y

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ASSET MANAGEMENT

The task today, therefore, is to create urban community


something that never existed before. Instead of the
traditional communities of history, urban communities
need to be free and voluntary. But they also need to offer
the individual in the city an opportunity to achieve, to
contribute, to matter.
Peter F. Drucker

204

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ASSET MANAGEMENT

CHAPTER 16
1. A brief history of EAROPH
2. APIGAMs Founding
3. APIGAMs Vision, Mission and
Programmes
4. APIGAMs Funding
5. What is APIGAM to countries in Asia?
6. How will APIGAM benefit Asia?

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A Brief History of EAROPH n

ASSET MANAGEMENT

he 1950s were a time of reconstruction for many countries in


Europe, Africa, Asia and the Pacific Areas, in facing the
aftermath of World War II. Many nations had the daunting task of
housing millions of homeless people, while reconstructing
devastated cities and townsthey needed new planning
approaches and methodologies of a scale never experienced
before. The International Federation of Housing and Planning
(IFHP) was formed by the United Nations and given the role of
assisting governments in the critical area of Housing and Planning.
A secretariat was set up in The Hague, the Netherlands.
IFHP soon realised it was impossible for the Federation to
effectively tackle the whole world and after much deliberation
amongst its members and with the UN experts, it was decided that
the Federation had to be divided into three regional organizations
to work under the same objectives, namely: a) the first would be
the Western Region covering Europe, Africa and West Asia and
part of Central Asia; b) the second would be the Eastern Region
for Asia and the Pacific Areas; and c) the third would be the
American Region for the continents of North and South Americas.
It was further decided that the Western Region was to be covered
by IFHP, while the second and third regions were to be covered by
new regional organizations to be formed.
On February 1-7, 1954, the South East Asia Regional Conference
was held in New Delhi and which was organised jointly by IFHP,
the Government of India with support from the UN. The key
representatives present were: 1) IFHP President, Sir George
Pepler, 2) IFHP Secretary General, Dr. van der Weijde, 3) Chief,
Housing and Town Planning Section, UN, Mr Ernest Weissmann,
4) IFHP representative at the UN, Mr Charles Ascher, 5) Secretary,
Ministry of Works, Housing and Supply, India, Mr C. C. Desai, 6)
ECAFE, Bangkok, Mr V. M. Bhatt and Mr G.J. Mylne, 7) British
Council, Architect/Planner Mr Lionel Brett, and UNESCO, Mr
J.D.N. Versluys. Invited delegates present were from: 1) Burma, 2)
Ceylon, 3) Pakistan, 4) Hong Kong, 5) India, 6) Indonesia, 7) Iran,

206

8) Laos, 9) Malaya, 10) Singapore, 11) Thailand, 12) Vietnam. At


the concluding plenary session, it was resolved that an East Asia
Regional Organisation for Planning and Housing (EAROPH) was
to be established as a Regional Chapter of IFHP.
Many prominent experts from Europe and America were present
and actively participated. Almost all governments in this Eastern
Region sent their government officials involved in Planning,
Housing and Construction and they took an active part in this
landmark Conference. At this Conference, a meeting of key
representatives was held and it was unanimously agreed that the
Eastern Region comprising many countries of large populations
and many ethnic groups, old cultures, religions and rich histories
were too diverse for IFHP to tackle from far way in The Hague, an
Eastern Regional Organisation should be formed to take over and
find their own approaches and solutions for Planning and Housing.
Finally it was resolved that at the 2nd Eastern Regional Conference
to be held in Tokyo in 1960, which the Government of Japan had
offered to host and organised in association with the Secretariat of
IFHP, the new Regional Organisation would be inaugurated. A
Pro-tem Committee was also formed with Mr C. S.
Chandrasekhara, the Chief Town Planner of India to draft a
Proposed Constitution for the 1960 Meeting. (C.S.
Chandrasekhara, 1956.)
At the 2nd East Asian Regional Conference on Planning and
Housing held in conjunction with IFHPs World Housing and
Planning Congress in Tokyo in 1960, the Eastern Regional
Organisation for Planning and Housing (EAROPH), as it was
renamed, was formally inaugurated with the adoption of a
Constitution at its first. Council Meeting. The Hon. Dr Issei Iinuma,
Minister for Construction of Japan was elected President, Mr C. S.
Chandrasekhara, Chief Town Planner of India, was the Secretary
General and the Secretariat was to be set up in New Delhi. The
Government of India generously agreed to provide an annual grant
for the operation of the EAROPH Secretariat. Since EAROPH was

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A Brief History of EAROPH Y

The long Vietnam War conflict between 1954 and 1975 and the
Indonesian Confrontation regional conflict, hampered the
development of EAROPH. It only managed to hold some regional
seminars notably in New Delhi and some cities in Japan. It was not
until 1968 that the 3rd EAROPH Congress was finally held in
Canberra, Australia. At the EAROPH Council Meeting, it was
decided that biennial EAROPH Congresses would be held by
rotation in member countries. As it was almost at the end of the
1960s, delegates at the Canberra Meeting felt that the decade of
national development had been fairly ad hoc and lack systems
approach on a national scale. It was then resolved that
governments in the EAROPH Region should work together for
new strategies in Planning for the new decade of the 1970s. As the
Hon. Tan Sri Khaw Kai-Bo, Malaysias Minister for Housing and
Local Government was elected President of EAROPH, he agreed
with other Ministers present at the Canberra Meeting to hold an
EAROPH Ministerial Meeting on Housing and Planning to meet
new challenges in the coming decade of 1970s. This Ministerial
Meeting was scheduled for 1970.

officers to the Meeting in Kuala Lumpur. The Council Meeting


resolved that the 4th EAROPH Congress was to be held in Seoul,
South Korea in 1972.
According to the late Datuk Ong, the 1970 Kuala Lumpur Meeting
also addressed other issues. Members present felt that it was
becoming clear that EAROPH could play a vital role in bringing the
relationship between the people and the government closer to
understanding each other better. This relationship building was
important before a government could embark on effective
development planning as well as setting appropriate housing
policy. However, up to this juncture, EAROPH members were
mainly from the public sector, thus the Meeting felt the need to
bring professionals from the private sector in various member
countries into the EAROPH membership. Thus, from the 1972
EAROPH Congress in Seoul onwards, professionals from the
private sector joined government officers and policy-makers at all
EAROPH events.
In the 1970s, because of the preparation for Habitat I to be
held in Vancouver in 1976, and EAROPHs close working
relationship with the United Nations Center for Regional
Development, there were intensive activities in East Asia.
IFHP Secretary General, Jon Leons explored the possibility of
shifting the EAROPH Secretariat to a more central location
and in a country where foreign exchange was easier for
EAROPH. At the 1978 EAROPH Congress held in Delhi,
India, Malaysia won the position of Secretary General, and
the Secretariat was moved to Kuala Lumpur. KC Leong
became the Secretary General for the next eight years and
the Malaysian Government provided an annual grant to
support EAROPH.

Unfortunately, this Meeting was interrupted by the untimely demise


of Hon. Tan Sri Khaw Kai-Bo. Consequently, much of the
preparation works were not carried out and communication with
the EAROPH Secretary General in New Delhi had broken down.
When Datuk Ong Kee-Hui (as he was then known) took over as
the Minister of Malaysias Ministry for Housing and Local
Government, he inherited the EAROPH presidency. But it was too
late for him to stop the Ministerial Meeting in 1970; due to lack of At the 1980 EAROPH Congress held in Kuala Lumpur, IFHP
proper protocol arrangements through the foreign offices of various granted full autonomy to EAROPH, and after that, EAROPH
member countries, various Ministers did send some government was no longer a Regional Chapter of IFHP.

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ASSET MANAGEMENT

to operate as a Regional Chapter of IFHP, a grant was also given


by IFHP while it pledged its continuing support and assistance for
the development of this newly formed Regional Chapter.
Unfortunately, the Eastern Region thereafter was caught up with its
own problems of geopolitics and ideologies.

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APIGAMs Founding n
As a result of members enquiries, the September/December
1999 edition of the EAROPH Bulletin focused on the theme,
EAROPH officials were first exposed to asset management at Strategic Asset Management for Urban Sustainability. Dr
Penny Burns, a life member of EAROPH, accepted the post
the 15th EAROPH World Congress held in conjunction with
the Annual Conference of the New Zealand Planning Institute of Associate Editor to assist KC in its production.
in Auckland on 3-7 September 1996.
On 7-10 October 2002, the 18th EAROPH World Planning
Following that Congress, an EAROPH Council Member from Congress was held in Kuala Lumpur on the theme,
Innovative Technologies for Good Urban Governance. Using
the Victorian Government, Mr Ivars Satins, provided the
a series of sub-themes, EAROPH demonstrated how the
opportunities to EAROPH Honorary President and EAROPH
principles of Good Asset Management could support Good
Bulletin Co-editor, KC Leong to study asset management
Urban Governance.
policy and guideline documents in Melbourne. He also
introduced many local asset management expertsin
particular, Dr Penny Burns, of Adelaide who is well-known for GOOD URBAN GOVERNANCE WITH GOOD ASSET
her work in asset management.
MANAGEMENT SUPPORT

ASSET MANAGEMENT

EAROPHS INVOLVEMENT IN ASSET MANAGEMENT

Since then, EAROPH has been involved in promoting Asset


Management.

The Urban Governance Initiative (TUGI) is a regional


programme developed and funded by UNDP. TUGI promotes
the principles of good urban governance through institutional
On 20-23 November 1997, an EAROPH Regional Seminar on capacity building, providing policy advisory services, enabling
innovations in tools and methodologies for urban governance,
Asset Management, was held in Manila, organised by
and ensuring wide dissemination of information and
EAROPH Philippines National Chapter. Six Australian asset
collaborative networking within and between cities in Asia and
management experts presented technical papers, and 14
experts from New Zealand and other countries also presented the Pacific. The target beneficiaries of this programme are
urban stakeholderslocal authorities and
papers. It was a lively seminar and momentum for AM
institutions/organisations working on urban-related issues,
adoption by EAROPH was set.
especially city level policy makers and city administrators.
On 20-23 November 1997, the Sarawak Development
Institute (SDI) held a Conference on Asset Management, in
Miri, Sarawak, Malaysia, with technical support from KC
Leong and Dr Penny Burns. The Sarawak State Government
and local authority officials were exposed to asset
management for the first time and were impressed by the
management process of AM.

208

TUGI promotes innovations in urban governance for


sustainable development of cities in the region. In doing that,
UNDP realises that, because of limited resources, there must
be an emphasis on efficient planning, management and use
of city infrastructure and development. It realises that Good
Asset Management is a new science which works to achieve
greater value, both now and in the future, from wiser asset

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management decisions. The emphasis on value


management, asset valuation & capitalization, heritage
assets, lifecycle management of assets to maintain their
functional lives for optimum service delivery and
environmental management is a quantitative yet holistic
approach to sustainable city management. In short, UNDP
recognises that Good Asset Management is a key
Operational Principle for the efficiency of Good Urban
Governance as it pertains to efficient and effective delivery of
services.
Following the 5th Regional Consultative Meeting on Good
Urban Governance Campaign between the partner
organisations of TUGI held in Kuala Lumpur on 8 October
2003, in conjunction with the 18th EAROPH World Planning
Congress, EAROPH, supported by UNDP-TUGI, IULAASPAC and other local organisations, began working with the
the Malaysian Ministry of Housing and Local Government to
introduce and popularise the concept of Good Asset
Management at the city level. Key to this is the formation and
pioneering of the Asia Pacific Institute for Good Asset
Management (APIGAM) in Malaysia.

EAROPH. In the same spirit, Malaysians, with the support of


Australian experts, introduced Asset Management to
strengthen Urban Management in EAROPHs 1997 Manila
Regional Seminar on Asset Management. This provided the
momentum for further collaboration on Asset Management in
EAROPHs biennial congresses as well as in other activities.
Since 2001, an EAROPH Team led by KC Leong has
conducted seminars and workshop to familiarise the
Malaysian government at various levels on the principles of
Asset Management. The EAROPH Asset Management
Resource Team comprises four EAROPH Life Members:
KC Leong, Kuala Lumpur
Dr Penny Burns, Adelaide
Ms Ami Sudjiman, Canberra
Ashay Prabhu, Melbourne.
LAUNCHING APIGAM

WHY MALAYSIA?

On 6 May 2003, a delegation led by EAROPH President,


Datuk Peter Chin briefed the Malaysian Deputy Prime
Minister of Malaysia Datuk Seri Abdullah Ahmad Badawi on
the principles of Good Asset Management and the proposed
incorporation of the Foundation of APIGAM. The Deputy
Prime Minister graciously supported the proposal.

Malaysia has been commended by the international


community for its Multiculturalism, Unity in Diversity,
Dynamic National Development with Vision and Prudent
Growth with Equity. Even at the time of Habitat I in the
1970s, Prime Minister Tun Abdul Razak urged Malaysians to
take the lead in regional affairs. This prompted Malaysian
members of EAROPH to make a successful bid for the
secretariat to be brought from New Delhi to Kuala Lumpur
and the Malaysian Government became the main sponsor of

The National Conference on Developing a Maintenance


Culture organised jointly organised by the Malaysian Ministry
of Housing and Local Government, National Institute of Public
Administration of Malaysia and EAROPH was held on 22-23
September, 2003. The Deputy Prime Minister graced the
event by delivering an Opening Address. At the closing of the
Conference, the Minister for Housing and Local Government,
Dato Seri Ong Ka Ting launched APIGAM.

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APIGAMs Founding Y

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Vision, Mission & Programmes 


The Foundation of
Asia Pacific Institute for Good Asset Management
(APIGAM)

Programmes for Capacity Building in Asset Management:

ASSET MANAGEMENT

Raising Awareness
The Foundation is being incorporated in Malaysia as a
Company limited by guarantee and not having a share capital.
Vision:
Improved quality of life for all communities in the Asia Pacific
region, rich and poor, through sound urban governance
supported by understanding and application of good asset
management.
Mission:
To build capacity by increased awareness and knowledge
and the implementation of good asset management by
working with governments and communities, publications,
presentations, research and innovation, creating a knowledge
repository, training and technology transfer, technical and
technological support,
Role:
To develop and promote Malaysia as a showcase in the Asia
Pacific Region for excellence in asset management

1.
2.
3.
4.

UNDP-TUGI Leaflet on Good Asset Management


UNDP-TUGI Community Guide on Good Asset
Management
A series of Civics textbooks for schools
Public Lecture Series Working with Government
(National Policy)

Knowledge Development and Innovation

6.
7.
8.

Development of Malaysian software


Malaysian National Asset Management Manual
APIGAM Journal of Good Asset Management Research
Programs

Implementation

10. Accredited training in co-operation with a university


11. Accelerated Asset Management Implementation Program
12. Frameworks developed for implementation at all
government levels

13. Continuing Professional Development Opportunities


14. Train-the-trainer programs in asset management
Maintaining a register of specialist resources

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APIGAMs Funding 
x As an Asia Pacific Regional Institute with its
Headquarters in Kuala Lumpur, aimed at improving
governance through capacity building in asset
management, it will be eligible for international grant
funding, organised through EAROPH, the Malaysian
Government (which hosts EAROPH), UNDP-TUGI, who
are advisors, and various other partners including the
various other UN and other multilateral agencies and
other partners.
x Through membership subscriptions.

x Through fees from contracts with countries in the region


to provide advice and assistance on the development of
AM National Policy and Guidelines as well as providing
assistance in implementation.
x Through fees from Partnering Contracts entered with
infrastructure organisations in EAROPH member
countries to optimise their infrastructure service
performance under APIGAMs SAM Technical
Support and Technology Transfer Services
Programmes

x Through agency fees paid for the training of personnel


x Through earnings from production and distribution of AM
and for the establishment of asset management tools and
publications including a model series of Civics Textbooks
technology and other Asset Management technical
on AM aimed at upper primary, lower and upper
support in various sectors.
secondary schools.
x Through fees from conducting Asset Management
courses of various academic levels in association with a
University.

x Through earnings from production and distribution of the


National Asset Management Manuals to suit various
types of organisations in EAROPH member countries.

x Through fees from conducting AM training workshops in


association with Partners AM Programmes.

x Through earnings from development and distribution of


asset management software initially designed for specific
country or organisation conditions.

x Through fees from Asset Management conferences,


seminars and workshops.
x Through fees from APIGAM conferences, seminars and
field study programmes.

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

x Through fees from other AM technical support services


being provided in EAROPH member countries.

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ASSET MANAGEMENT

HOW IS APIGAM BEING FUNDED?

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ASSET MANAGEMENT

What is APIGAM to Countries in Asia?


Systemic Asset Management (SAM) "Systemic Asset
Management is a holistic process of managing assets
and the inter-relationships between the assets and
between the assets and the community within a
framework for asset life cycle optimization in order to
ensure the resultant services will continue to provide
enhancement of the communitys quality of life while
maintaining urban sustainability." Thus, SAM is about
relationship building. Until this relationship is built, it will
be difficult for us to establish effective systemic asset
management. Very often we will go off tangent and lose
the big picture. APIGAM will use its SAM Programmes
to help Asian countries to stay on track in maintaining
the big picture.
Total Asset Management Activities that have to be
managed over the lifetime of an asset acquisition,
operations, maintenance, renewal and, ultimately, safe
removal

manage waste and learn to direct resources to the best


possible uses. For poorer communities with few
assets, asset management is essential. It enables
maximum use of existing assets, avoids early
deterioration and contains costs and does not just
build and replace.
Essential to the Knowledge Economy
Asset management teaches that all decisions need to
be tested and their value verified and it provides the
tools, training and attitudes or mind-sets that achieve
this. The benefits of asset management thus extend far
beyond the management of assets themselves, to the
management of services that the assets deliver.
First World Infrastructure with a First World
Mentality

Good assets, soundly chosen, well used and well


maintained, underpin all government and public
A quality of life that is the envy of all
services. Asian countries can leverage its present
world-class infrastructure for the benefit of all of its
Asset management teaches organisations how to
people by improving maintenance, utilisation, and
consult with, and be responsive to their communities,
management practices. We can have a First World
how to choose those assets that are best suited for the
Infrastructure with a First World Mentality to maintain
services which the community requires and how to
them. With the knowledge, we can also have a First
maintain and manage them over their entire lifecycle so
World Infrastructure and still enjoy the benefits of Third
that the community gains the use of them at the least
World Lifenot only it is affordable, it is less polluting!
possible cost.
For richer communities with many assets, we must

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A focal point for asset management


APIGAM provides a focal point for the community,
providing support for National Policy, developing the
knowledge society and implementing asset
management at all levels of government. It
continuously promotes the benefits of asset
management and acts to increase community
awareness.

utilising skills and abilities from developed countries.


This has sometimes resulted in appropriate service
levels, technology and materials. But it has been hard
to sustain development once the project finishes and
the specialists leave. APIGAM is a continuing, on-theground presence creating awareness, researching
Asian needs and providing ongoing training and
technical support services as well as a continuing
professional development program. In this way, asset
management becomes part of the Asian culture.

Asset management for Asian conditions


High level of expertise and resource availability
APIGAM is an Asian Institute, directed by an Asian
Board, for research and implementation of asset
management under Asian conditions. International
specialists will be used to develop local management
teams in each country. Its function is technology
transfer within a local context.

APIGAM is able to call on the best asset management


resources available and fast track the technology
transfer. No agency is left adrift. Back-up facilities are
available at all times for training, technology, software
and technical support.

A Regional Centre of Excellence based in Kuala


Lumpur

Civics Textbooks in Asset Management for the


Young

APIGAM is unique. Nowhere in the world has asset


management been introduced so holistically and with
such support. The whole of Malaysia will be a pilot
study introducing best practice asset management to
the Asia Pacific region.

Many Asian countries practice the principles of a


caring society and place great value on its assets.
Thus these nations must be educated about its assets
and asset management. Learning must start in the
schools. APIGAM, through its large pool of asset
management specialists, is able to produce civics
textbooks in asset management for the educational
authorities in Asian countries.

Asset management for the long-term


In some parts of Asia, elements of asset management
have been introduced as a series of one-off projects

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ASSET MANAGEMENT

How will APIGAM benefit Asia?

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ASSET MANAGEMENT

When knowledge is extended, the will becomes sincere.


When the will is sincere, the mind is correct.
When the mind is correct, the self is cultivated.
When the self is cultivated, the clan is harmonious.
When the clan is harmonious, the country is well
governed.
When the country is well governed, there will be peace
through the land.
Confucius

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ASSET MANAGEMENT

CHAPTER 17
1. Asset Management is for EVERYONE
2. Where do we go from here?

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Asset Management is for EVERYONE

ASSET MANAGEMENT

t is usual for a book of this kind to have an introduction


suggesting what kind of readers are likely to be interested in
it. Since this book is written both for those who are being
exposed to Asset Management for the first time and those
who are AM practitioners, I dare not voice an opinion about
who the potential readers ought to be. It would be better to let
readers explore the book for themselves and after that decide
in what way it would be of benefit to them.
At the outset the book is written for people in both the public
and private sectors. The former group, anyone who works in
the ministries, departments, local governments, local councils
and agencies at all levels of government that are connected
to the provision of public services. Such public organisations
will include the treasury, the department of finance,
departments involved in asset procurements and asset
maintenance, as well as those responsible for service delivery
from the assets or through out-sourcing. They will include
ministers, head of departments and agencies, mayors,
councillors, senior executives and mid-level officers.
The private sector includes all users of public assets and
services. We must remember that when government officials
are off duty, they too are part of the community that uses the
assets and services. As Asset Management has evolved from
a multitude of professional disciplines to come up with the
sciences and technologies for Systemic Asset Management,
the book therefore must target professionals such as
planners, architects, engineers, economists, sociologists,
environmental scientists, etc, irrespective whether they are
locals or foreigners. In order for SAM to strengthen Good
Urban Governance and achieve the UN Millennium
Development Goals, the book must also target NGOs, CBOs
and community leaders and representatives who are to serve
as stakeholders.

is a must for everyone. Whether you are working in the public


or private sector, you have a duty and responsibility to
maintain a good living environment in your own home. If you
also own your own home, then you must take care of your
familys investment and optimise its value as a financial asset
at all times. In a nutshell, every citizen would benefit from
reading this book.
This is the era of the knowledge society. It does not matter
who you are, whether rich or poor, governing or being
governed, in a human settlement you are always surrounded
by assets. You must therefore know the assets, how best they
can serve you, and in return, how best you can help to
optimise the service the asset render to you. This book will
give you the information to start you on the path to good asset
management. Good citizens should be well-informed about
these matters.
This book will benefit all citizens who are interested and
concerned about services and quality of life.
This book will also benefit AM practitioners from developed
countries, as no one can claim having mastered all aspects of
Systemic Asset Management. Consultants in Australia, New
Zealand and other countries in the West will benefit by this
books wide coverage, especially with respect to local cultures
and conditions in Asian countries.
For international funding organisations, such as ADB, World
Bank, and others, this book will help both donors and
recipient nations to understand the need for AM support to
ensure development project sustainability and maintain
continual asset performance after the project consultants
have left.

As maintenance culture begins in everyones home, this book

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Where do we go from here?


G

ood asset management is about building relationships


between assets and assets, between assets and
communities, and between people within a community who
use the assets and services.

Introduction to Asset Management

Good asset management is also about processes and how


various sciences and technologies are applied appropriately
to form the processes.

x

Asset Management Introduction and Asset Management


Manual, Dept. of Works and Services, Sydney, Australia,
http://www.dpws.nsw.gov.au/Government+Policy/Asset+Management

x Asset Management Guidelines, Building Division,


Brisbane, Queensland, Australia,
http://www.build.pld.gov.au/sam/sam_web/frames/guidelin.htm

Websites for Asset Management Support


x The Asia Pacific Institute For Good Asset Management
(APIGAM),
http://www.apigam.net

Asset management is about connectivity as it cannot be


carried out by loners. In home asset management, all
x The Virtual Asset Management Community
members of your family must be involved. If it is about
http://www.amqi.com
community asset management, then it must involve all
residents in the neighbourhood. If we are talking about urban x Get AM News on public works from the Institute of Public
asset management, then we must involve all the stakeholders
Works Engineering Australia (IPWEA), Sydney, Australia
working closely with the local authorities.
http://www.ipwea.org.au
While you can use the book as a basic guide in asset
Asset Management Seminars and Workshops
management, you must reach out to organisations and
institutions of asset management for more detailed
x If you desire to have AM seminars and workshops in your
information. Try the websites listed below or send a email to
country or your own cities, contact EAROPH-APIGAM
them to start a link in asset management.
Secretariat. Write to them at <secretariat@earoph.net>.
If you are part of an organisation concerned with human
x If you require technical support and accelerated technology
settlement issues, good urban governance practice or
transfer services, write to APIGAM. Their resource people
community participation in urban environmental
will communicate with you.
improvements, you must contact these organisations, such as
KC Leong, CEO, APIGAM
APIGAM and others. Remember, these organisations can do
Ami Sugjiman, Director, Technical, APIGAM
well only with your support and demand for services.
Ashay Prabhu, Director, Training, APIGAM

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

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ASSET MANAGEMENT

Now that our readers are fired up they must hit the iron while
it is hot. You must start looking at public services as
outcomes of public assets; and conversely, you must also
look at public assets as the generators of good or poor public
services. In addition you must practise asset management
within your own home.

x This book, The Essence of Asset ManagementA Guide,


EAROPH-APIGAM Secretariat, <secretariat@earoph.net>

ESSENCE

ASSET MANAGEMENT

18

Abbreviations and Acronyms

ACHR

Asian Coalition for Housing Rights

ACIAR

Australian Centre for International


Agricultural Research, which is a part of CITYNET
AUSAID

ADB

Asian Development Bank

ADSS

Adaptive decision support system

AIDCOM

Asian Institute for Development


Communication and Management

AIT

Asian Institute of Technology

AM

Asset Management

AMS

Ancient Monuments Society, UK

APIGAM

Asia Pacific Institute for Good Asset


Management

AP2000

CIDA

Canadian International Development


Agency
Regional Network of Local Authorities
for the Management of Human
Settlements

CURE

Canadian Urban Research on the


Environment

DPA

Defective Premises Act 1973, UK

DSS

Decision support system

EA

Environmental Assessment/
Environment Agency

EAROPH

Asia Pacific 2000, a UNDP initiative to


support NGOs in addressing urban
environmental challenges

Eastern Regional Organisation for


Planning and Housing, which is now
being changed to Eastern Regional
Organisation for Planning and Human
Settlements

EEA

Environmental Effects Assessment

ASCI

Administrative Staff College of India

EIA

Environmental Impacts Assessment

AUSAID

Australian Overseas Air Program

EIS

Environmental Impact Statement

AWAS

Asia Women and Shelter Network

EPA

AWPNUC

Asia and West Pacific Network for


Urban Conservation

Environmental Protection Act (1990) /


Environmental Protection Agency
(USA)

BCT

Building Conservation Trust, UK

ES

Environmental Statement

BP

British Petroleum

ESCAP

The Economic and Social Commission


for Asia and the Pacific

BRE

Building Research Establishment, UK

GIS

Geographical Information System

BS

British Standard (ie a standard set by


the British Standards Institute (BSI))

GTZ

BSRIA

Building Services Research and


Information Association, UK

German Technical Cooperation, the


Gessellschaft fur Technische
Zusammenarbeit

HBC

Historic Buildings Council, UK

CBOs

Community Based Organisations

HIC

Habitat International Coalition

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Abbreviations and Acronyms

ICLEI

The International Council for Local


Environment Initiatives

IDSS

Intelligent decision support system

IHS

The Institute for Housing and Urban


Development Studies

IIMM

International Infrastructure Management


Manual

IPWEA

Institute of Public Works Engineering


Australia

IULA

International Union of Local Authorities

JASOPH

Japan Association of Planning and


Housing, a National Chapter of
EAROPH

SDSS

Spatial decision support system

SPAB

Society for the Protection of Ancient


Buildings, UK

SSRC

Social Science Research Council, UK

TRISHNET

The Network of Research and Training


Institutes in Human Settlements

UN

United Nations

UNCHS

United Nations Centre for Human


Settlements

UNCRD

United Nations Centre for Regional


Development

UNCSD

United Nations Commission on


Sustainable Development

UNEP

United Nations Environment


Programme

UNICEF

United Nations Childrens Fund

UNDP

United Nations Development


Programme

UNOPS

United Nations Office for Project


Services

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18

JICA

Japan International Cooperation Agency

KRIHS

Korean Research Institute of Human


Settlements

LIFE

The Local Initiative Facility for the Urban


Environment

LFG

Landfill gas

NBA

National Building Agency, UK

NEPA

National Environmental Policy Act, USA

UMP

Urban Management Programme

NGOs

Non Governmental Organisations

USAID

NHBC

National Housing-Building Council, UK

United States Agency for International


Development

OECD

Organization for Economic Cooperation


and Development

WACLA

World Assembly of Cities and Local


Authorities

RHUDO

The Regional Housing and Urban


Development Programme Office of
USAID

WEDC

Water Engineering Development


Centre, UK

WHO

World Health Organization

RMA

Resource Management Act (1991), New


Zealand

SAM

Systemic Asset Management

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Glossary

accrual accounting

A system of recording and reporting of financial transactions for which an


entity is responsible. It identifies and records revenues and expenses as
they occur, without regard to the date of receipt or payment of cash.

aerobic

Able to live, grow, or take place only where free oxygen is present, such as
aerobic bacteria.

air change

A quantity of fresh air equal to the volume of the room being ventilated.
The ventilation rate is the number of air changes per hour. Under the
British standards, offices need about 30 changes, laundries 10 to 20,
classrooms 6, reading rooms 2 and storerooms 1.5. Kitchens often have
high air-change rates, although if heat and smoke are withdrawn through
hoods, excessive rates can be avoided.

aquifer

An underground layer of relatively impermeable rock or soil that can yield


significant amounts of groundwater for public supply.

asbestos

A mineral crystal consisting of thin, tough fibres like textile, which can
withstand high temperatures when pure. Asbestos was much used in
building in the past for high-temperature insulation, often sprayed for the
encasement of steelwork, or as reinforcement in asbestos cement building
board, corrugated roofing, and wallboard. However since the risk to health
from breathing in asbestos fibres (and dust or any fine fibres) has been
realized, asbestos-free materials have taken their place.

Aspergillus

A genus of fungi that includes several species that cause human illness.
Subspecies include aspergillus flavus, aspergillus fumigatus, and
aspergillus versicolor. They cause infections of the lungs and bronchi,
usually in debilitated patients.

asset

In asset management, an asset is defined as an item possessing the


following characteristics;
xIt is a physical item of significant value;
xIt possesses service potential or future economic benefit;
xIt is controlled by an entity; and
xIt originates as a result of a past transaction or event
Such an asset is called a non-current physical asset.

asset acquisition

The process by which an entity assumes control of an asset.

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asset disposal

The process by which an entity relinquishes control of an asset.

asset life cycle

The life of an asset, from when a need for it is first established, through its acquisition, operation and any maintenance or upgrading, to its disposal.

asset management

It is the process of guiding the acquisition, use and disposal of assets to make
the most of their service delivery potential and manage the related risks and
costs over the full life of the assets.

asset register

A data source that records information on individual assets, usually only those
over a certain value. Information may include the assets location, condition,
utilization and ownership details, as well as the value (and depreciation) of the
asset and its major components.

asset strategy

The means by which an entity proposes to manage its assets across all
phases of their life cycle to meet service delivery needs in a most costeffective way.

avoidable maintenance

Maintenance work is also termed as predictable and avoidable. Avoidable


maintenance specifically refers to maintenance works which are required to
rectify asset failures brought about by inappropriate design, incorrect installation and/or the use of inappropriate or faulty materials.

business plan

A document of a plan that details how the strategies defined in the Corporate
Plan are to be implemented, as well as the financial implications of these action.

bacteria

Plural of bacterium. A general term for single-celled microorganisms, including


many that cause human disease. Some are capable of elevating the temperature of a pile of decomposing refuse sufficiently to destroy human pathogens.

benefit/cost

An analysis and/or comparison of the value benefits in contrast to the costs of


any particular project or action

biodegradable

Readily broken or decomposable into stable or simpler substances through


microbial action.

C/N ratio

The ratio of carbon to nitrogen in a organic material.

capital

The amount invested in an entity.

capital cost

The costs incurred by the entity in procuring additional or upgraded assets.

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Glossary

carcinogenic

Capable of causing cancer.

Cladosporium herbarum

A fungus commonly found in houses.

compost

A mixture of decomposing vegetable refuse, manure, etc;, for fertilizing and


conditioning soil.

Combined sewers

Sewers that collect both sewage and rain water runoff.

condition assessment

An assessment of the current condition of an asset including its components in


relation to its service performance, as well as the maintenance or renovation
required and associated costs.

condition-based asset
maintenance

This is a type of preventive maintenance initiated as a result of knowledge of


the condition of an asset from routine or continuous monitoring the asset
condition and performance.

control of an asset

An entity is deemed to control an asset if it:

x has the capacity to benefit from the asset in pursuing its objectives;
x is able to deny or regulate the access of others to that benefit; and
x has the ability to secure the service potential or the future economic
benefit.
core asset

An asset that is central to the obligations of Government.

core services

Those services that must continue to be provided to the community, e.g.


health care, water supply and maintenance, road maintenance, etc.

corporate plan

A document or statement setting out the strategies that the entity intends to
follow in the medium term in order to achieve the Governments policy
objectives.

corrective asset
maintenance

The tasks of maintenance carried out to correct or rectify the poor condition of
the asset damaged by wear and tear, or after a failure has occurred, and
restoring it to a state in which it can perform its required function.

cost

The money outlayed to procure the resources used for a particular purpose.

cost analysis

A study or price or expense.

costing

The process of determining the costs of operating an asset to deliver services.


Cost is a key element in pricing services.

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cost plus pricing

A method whereby the price charged is based on the full cost of providing the
product or service, plus a mark-up on the cost.

dampness

Dampness in buildings is usually first seen on walls and has many causes,
including leaking roofs or pipe joints, overflowing rainwater gutters, entry of
driving rain through cracks in walls or windows, rising damp, rain penetration
of solid walls, condensation, hygroscopic salts in brickwork, and dry rot in
timber. It is often associated with lack of ventilation and incorrectly installed
damp-proof courses, flashing, or vapour barriers.

damp-proof course (dpc)

A strip of impervious material the same width as a brickwork or blockwork wall,


or a brick damp course, to keep out moisture. A dpc at ground level, to
exclude rising damp, is laid near the bottom of the wall, at least 150mm above
ground and projecting 5mm to overlap the turnup of the ground slab dampproof membrance (dpm).

damp-proof membrance
(dpm)

A wide layer of impervious material such as mastic asphalt or a plastics sheet


underlay beneath a ground slab and up the outside of buried external walls,
similar to tanking but not made to resist water under pressure.

Defects

Defects in buildings or infrastructure construction works or components may


be due to human error, improper manufacture, the wrong choice of materials,
lack of compatibility, poor ventilation, etc. A suitable specification plus
supervision and inspection during construction are usual to prevent defects,
but many still occur. Defects in a roof, building fabric, and foundations lead
particularly to dampness and cracking in brick wall. Paintwork defects can be
due to improper surface preparation or application.

depreciation

A system of accounting used to allocate the cost of an asset (less residual


value if any) over its estimated useful life. Depreciation recognizes the gradual
exhaustion of the assets service capacity.

direct costs

Cost that can be specifically assigned and directly attributed to an asset.

dioxin

A synthetic, organic chemical of the chlorinated hydrocarbon class; very toxic.

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disposal

In asset management this term refers to the process whereby an asset is


disposed of or decommissioned.
In the case of waste, it refers to the removal and handling of waste or the
residual matter after waste has been processed and the recovery of products
or energy has been accomplished.

dispute

Disagreement between parties to a construction contract, for example


between a consultants client and the construction contractor, or between the
contractor and sub-contractor) over a contract matter. The conditions of
contract may allow disputes to be settled by arbitration, instead of litigation.

downpipe

A vertical or steep pipe which brings rainwater from roof gutters to the ground
and into a drain or soakwell.

eaves

The lowest part of a sloping roof, or the area beneath if it overhangs, although
eaves may be flush against the external wall below. Eaves may have a
horizontal fascia board, on which to fix the gutter.

ecology

The study of the relationships between living organisms and between


organisms and their environment, especially animal and plant communities,
their energy flows and their interactions with their surroundings.

ecosystem

The plants, animals and microbes that live in a defined zone (it can range from
a desert to an ocean) and the physical environment in which they live together
comprise an ecosystem.

effectiveness

The evaluation of whether resources have been deployed in the best possible
way to achieve objectives.

efficiency

The evaluation of how well the resources have been used, irrespective of the
purpose for which they have been deployed.

effluent

Any liquid which flows out of a containing space, but more particularly the
sewage or trade waste, partially or completely treated, which flows out of a
treatment plant. For example, sewage effluent is the liquid finally discharged
from a sewage treatment works.

emergency asset
maintenance

Maintenance actions which must be immediately carried out to restore service


or to prevent serious repercussive damage to occur.

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Escherichia coli

A gram-negative bacterium that is part of the normal flora of the human


intestines. Some species are pathogenic.
E. coli O 157:H7a deadly strain of the bacterium Escherichia coli.

forensic asset management This is the process by which FAM Consultants investigate the failure of an
asset, an asset system or their entire asset management system, which
includes procurement (planning, design, tendering process, construction
contract administration and supervision), operation and maintenance, and
disposal. Depending on the nature of failures in the asset management
system, such as those caused by construction design, construction execution,
bad construction contract administration, or bad planning, operation,
maintenance and decision making in the asset management system, forensic
asset management could involve forensic engineers, forensic architects, and/
or forensic environmental engineers.
FAM Consultants must be well-versed in ethical professional practice and
are generally knowledgeable about the dispute resolution processes, and
where required find the solutions to the problems. They must be able to use
results of full and detailed investigation and make application to question of
law, especially in arbitration or court proceedings as expert witnesses; or
public discussions or debates.
full cost pricing

A method whereby the price charged is based on the actual full costs of
holding and using the asset. No profit is allowed.

fungus

A member of the phylum Fungi, characterised by asexual reproduction and


lack of chlorophyll. Fungi are usually parasitic.

gram-negative

Descriptive of microorganisms that cannot be stained by the violet dye of


Grams stain.

gram-positive

Descriptive of microorganisms that can be stained by the violet dye of Grams


stain.

ground floor

The floor which is nearest ground level. A concrete ground floor can be a
ground slab or suspended slab. Timber ground floors are always suspended,
at least 300 mm above the ground, over an underfloor space.

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Glossary

ground slab
(USA slab-on-grade)

A concrete slab supported by the natural ground, unlike a suspended slab. It


can be on fill, which should not exceed 600 mm in thickness. The formation
of the ground may be shaped for slab thickenings and covered with hardcore
and sand bedding or a layer of blinding concrete. It may also need a sheet
plastic damp-proof membrane, depending on site conditions and building
use.

groundwater

The water beneath the surface of the earth that occupies the pore spaces in
soil or the fissures in rock.

Guillain-Barr syndrome

A neurological disease that involves the degeneration of the myelin coating


of the nerves. Sometimes appears after a minor febrile illness.

heavy metal

Metals such as gold, platinum, lead, mercury, cadmium, etc., having more
than five times the density of water. Some heavy metals, when unnaturally
concentrated in the environment, pose a significant health risk to humans

humanure

Human feces and urine used for agriculture purposes.

hygiene

Sanitary practices, cleanliness.

landfill

An engineered method of solid waste disposal by compaction and then enclosed by a cover made from impermeable material either on or in the land.

leachate

A highly contaminated liquid that comes out of landfills with high concentrations of organic and inorganic materials.

life cycle costing

The full cost of an asset over its life. This includes all costs associated with
acquiring, controlling, operating and disposing of the asset.

maintenance

The work needed to maintain an asset in a condition that enables it to reach


its service potential. Maintenance does not extend an assets useful life but
does prevent it from becoming shortened prematurely.

malaria

An infectious disease caused by a parasite and transmitted to humans by


mosquitoes of four different species.

methane

A gas produced through anaerobic decomposition of organic material.

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misfeasance

1. The negligent or otherwise improper performance of a lawful act. 2. (in company law) An act by an officer of a company in the nature of a breach of trust
or breach of duty, particularly relating to the companys assets. (Oxford Dictionary of Law, 1997) Compare NONFEASANCE.

mulch

Organic material such as leaves or straw spread on the ground around plants
to hold in moisture, smother weeds, and feed the soil.

mycotoxin

A poison produced by a fungus.

needs analysis

A comprehensive analysis to compare community demands, expectations and


needs with current and possible sources of service supply.

non-core assets

An asset that is not central to the obligations of Government.

nitrates

Salts or esters of nitric acid, such a potassium nitrate or sodium nitrate, both
used as fertilizers, which show up in water supplies as pollution.

non-current assets

An asset having a potential service life longer than one year.

oocyst

The encysted stage of the reproductive cycle in which the formation of sporozoites, the infectious stage of sporozoans, occurs.

opportunity cost

The income or benefit foregone by not using resources for the best other alternative.

organic

Referring to a material from an animal or vegetable source, such as refuse in


the form of manure or food scraps; also a form of agriculture which employs
fertilizers and soil conditioners that are primarily derived from animal or vegetable sources as opposed to mineral or petrochemical sources.

overhead costs

Costs that cannot be directly associated with the organisations total asset
base or with one particular asset, but which are incurred by the entity in delivering the services involved.

pathogen

A disease-causing microorganism.

Penicillium chrysogenum

A species of penicillium that produces penicillin.

Penicillium expansum

A species of penicillium that causes fruit decay and produces the carcinogenic
mycotoxin patulin.

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performance indicator

A specific qualitative or quantitative measure that allows performance


against a benchmark to be assessed.

pitched roof

The commonest roof, usually one with two slopes at more than 20 to the
horizontal, meeting at a central ridge. It may have gables or hips and the
space inside can be used as an attic or ventilated roof space, which is called
cold roof.

planned asset maintenance

The maintenance tasks for an asset based on a maintenance plan and


carried out with forethought, control and the use of records to a
predetermined plan.

preventive / proactive asset


management

The tasks of maintenance carried out at pre-set intervals, which are normally
corresponding to prescribe asset criteria. These tasks include inspections,
cleaning , servicing and replacement of general consumables.

pricing

The process of developing the rates for charging an entitys products and
services. Prices can be based on market rates, full cost or partial cost.
Products and services can also be supplied at no cost, reflecting community
service obligations.

quality of life

In Eblen, R A and Eblen, W R, eds (1994), The Encyclopedia of the


Environment, quality of life refers to (1) a general description of the nature
or conditions of the life of an individual or group, and (2) an evaluation of
those conditionsthe extent to which certain life conditions are desirable,
enjoyable, active, important, or satisfactory.
The concept of well-being refers to the second meaning of quality of life; it
concerns how an individual might evaluate the general goodness or badness
of an experience.
Objective measures of well-being typically come from government
agencies and are produced as part of the agencys regular administrative
procedure. Often the data are collected to enable the agency to carry out its
primary mission and are used as measures of well-being only secondarily.
In 1973, the Social Indicators Development Program at the OECD
assembled a list of social concerns that were common to most of its member
countries. The list identifies eight main topics: (1) Health; (2) Individual
development through learning; (3) Employment and quality of working life;
(4) Time and leisure; (5) Command over goods and services; (6) Physical
environment (house, pollution, etc.); (7) Personal safety and the
administration of justice; (8) Social opportunity and participation.
(Contd on next page.)

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recurrent costs

All costs, including the cost of finance, incurred in holding and operating the
asset.

reductionist thinking

Belief that a complex phenomenon or event can be explained by analyzing


and describing its individual parts.

revaluation

The recording of an increase in the book value of an asset, to be reflected in


the entitys financial statements.

refurbishment

Modification works carried out on an asset to restore it to acceptable condition.


Some refurbishment works do not extend the life of the asset, but are
necessary for the planned life to be achieved, ie, not shortened.

refuse

A term often used interchangeably with the phrase solid waste.

risk management

A management technique used to identify and analysis potential risks, and to


implement appropriate responses.

runoff

The water from rain or snowmelt that flows overland into lakes, rivers, and
streams.

scheduled asset
maintenance

This is another type of preventive maintenance carried out according to a preset time-interval, a set number of operations, or set area, or set distance.

sensitivity analysis

The testing of the variation in the outcome of an evaluation by altering the


values of key factors about which there may be uncertainty.

septic

Causing or resulting from putrefaction (foul-smelling decomposition).

service potential

A measure of an assets ability at any point in its life to contribute to the


delivery of a service. Service potential is also referred to as future economic
benefit.

service strategy

A plan of action for the supply of appropriate services to the community, which
is consistent with the entitys corporate goals.

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The list has been influential in guiding the development of objective


measures of well-being. Most developed countries and some developing ones,
as well as some states or provinces and some cities and towns, have issued
social indicator reports that present statistics on these and related topics.

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19

Glossary
A genus of gram-negative bacteria that causes dysentery. Includes four
groups, all of which cause infections of varying degrees of severity. These
are very closely related to E. coli.

sick building

According to the Penguin Dictionary of Building (1995), a building which


causes illness in its occupants, with symptoms like irritation in the nose,
throat, and eyes, or on the skin, as well as shortness of breath, nausea, dizziness, and fatigue, the so-called sick building syndrome (SBS). It is usually
minor and disappears after people leave the building, but it may also cause
sleeplessness. People tend to be similarly affected in numbers exceeding
normal levels of sickness. SBS is commonest in air-conditioned office buildings and has been found to particularly affect women, people with uninteresting jobs, those working in government departments, or those who have
no control over the temperature and lighting. Low rates of ventilation are often mentioned as a contributory factor (or poor air distribution and recycling
of exhaust air). Local air conditioning by fan coil unit has the worst record,
followed by central heating with induction units or fan coils, then all-air buildings with high-velocity ducts. Mechanical ventilation by an extract system
usually gives the best result, often better than natural ventilation.
Allergy to indoor air contaminants is the main factor in SBS. Allergies cannot be cured, only avoided. These contaminants can be in the form of fine
dust, fumes, fibres, odours, or conditioning filters or by cleaning. Individual
contaminants may act in a combined way.
Buildings can also become temporarily unhealthy places from a fairly obvious cause, such as micro-organisms, often carried in aerosol-size water
droplets, including everything from the common cold to legionnaires disease, as well as humidifier fever, airborne asbestos and glass-fibres, fumes
from car parks.)

ASSET MANAGEMENT

Shigella

See Box on page 119: The Melbourne Aquarium legionnaires disease in


2000 case.
sludge

The heavy sediment in a sewage or septic tank.

Salmonella

A genus of gram-negative bacteria, several of whose species, including


mostly commonly S. enteriditis and S. tymphimurium, cause intestinal illness.

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solid waste

Any REFUSE, certain SLUDGES and other discarded materials, including


solid and semi-solid materials resulting from industrial, commercial, mining,
agricultural operations and domestic activities.

sporozoite

A stage in the life cycle of sporozoan organisms. In Malaria, it is this stage that
causes illness.

Stachybotrys chartarum

A common type of household mould.

standard cost pricing

A method whereby the price charged is based on actual full cost, adjusted to
remove inefficiencies.

surface water

The water in streams, lakes, rivers, and ponds or depressions.

sustainable development

Formally it is development which meets the needs of the present generation


without compromising the ability of future generations to meet their own
needs.
The question of equity between the generations, industrialised and industrialising countries, and sectors in society is now firmly on inter-governmental agendas because, in reality, the pace and type of development for some is at the
expense of others.
There is now a growing recognition that social, environmental and economic
needs must be fully integrated if sustainability is to be achieved.

systemic asset management

Systemic Asset Management is a holistic process of managing assets and the


inter-relationships between the assets and between the assets and the community. This occurs within a framework for asset life cycle optimisation in order
to ensure the resultant services will continue to provide enhancement of the
communitys quality of life while maintaining urban sustainability.

target profit pricing

A method whereby the price charged is based on a target profit, which can be
either a specific monetary amount or another variable such as return on assets.

thermophilic

Characterised by having an affinity for high temperatures, or for being able to


generate high temperatures, such as in regard to thermophilic microorganisms.

transaction

An event or condition which is recorded in the accounting records in monetary


terms.

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Glossary

transpiration

The process by which the water absorbed by plants, usually through the
roots, is dissipated into the atmosphere.

unplanned asset
maintenance

Ad hoc maintenance carried out to no predetermined plan.

urban sustainability

A targeted urban setting through development whereby the social ,


economic and environmental demands will be satisfied in the most balanced
manner. Generally, it also includes taking preventive measures to ensure
against passing social, economic and environmental burdens from the
current developments to future generations.

user charge

A fee or charge imposed on the users of services.

valuation

The process of assigning and recording a monetary value for an assets


acquisition, as distinct from revaluation.

value management

A management technique that aims to provide all the functions needed to


deliver services at the lowest total cost, consistent with required levels of
performance and quality.

virus

An infectious parasite capable of living and reproducing only within other


cells and composed of a protein shell that usually encases a nucleic acid,
either RNA or DNA.

waste

According to the Dictionary of Environmental Science and Technology,


waste is an outcome of every production process; waste is an inescapable
consequence of a consumer society. As such, waste is a product like any
other. Waste is also a paradoxical productit demands contrary thinking.
Companies need to minimise production of waste and pay buyers to take it
away. The current definition of waste in force in the UK is the definition given
in Article 1(a) of the amended EC Framework Directive on Waste, which
states that: waste shall mean any substance or object in the categories set
out in annex 1 which the holder discards or intends or is required to discard.
There are currently 16 waste categories in annex 1 to the Directive:
1. Production or consumption residues not otherwise specified below;
2. Off-specification products;
3. Products whose date for appropriate use has expired;
4. Materials spilled, lost or having undergone other mishap, including any
material, equipment, etc. contaminated as a result of that mishap;
(Contd on next page.)

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5. Materials contaminated or soiled as a result of planned
actions (eg residues from cleaning operations, packaging
materials, containers, etc.);
6. Unusable parts (eg reject batteries, exhausted catalysts,
etc.);
7. Substances that no longer perform satisfactorily (eg contaminated solvents, exhausted tempering salts, etc.);
8. Residues of industrial processes (eg slags, still bottoms,
etc.);
9. Residues from pollution abatement processes (eg scrubber sludges, baghouse dust, spent filters, etc.);
10. Machining/finishing residues (eg lathe turnings, mill scales,
etc.);
11. Residues from raw materials extraction and processing
(eg mining operations, oil field slops, etc.);
12. Adulterated materials (eg oils contaminated with PCBs,
etc.);
13. Any materials, substances or products whose use has
been banned by law;
14. Products for which the holder has no further use (eg agricultural, household, office, commercial and shop discards,
etc.);
15. Contaminated materials, substances or products resulting
from remedial action with respect to land;
16. Any materials, substances or products which are not contained in the above categories.
Notes: In is important to know how each country defines
Waste within its legal framework. Many developing countries
have poor definition of waste, hence it is difficult for many of
these countries to stop foreign companies from generating
waste products and pollute the local environment.

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Glossary
Water discarded as waste, often polluted with human excrements or other
human pollutants, and discharged into any of various wastewater treatment
systems, if not directly into the environment.

watershed

An area or ridge of land that separates waters flowing to different rivers,


basins or seas.

whole-of-life cycle approach

Asset management across the whole life of the asset.

work-to-demise assets

When an assets functional life enters its twilight time, or because of other
new assets have taken over the main function of this asset, which is then
relegated to only minor use and pending asset replacement, such an asset
will receive only minimum maintenance to maintain public safety only. As the
end of such kinds of assets is expected, they are called work-to-demise
assets with respect to their maintenance.

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wastewater

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Afiffin, J, ed. (1994), Poverty Amidst Plenty, Population


Studies Unit, University of Malaya, Petaling Jaya, Pelanduk
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Friday, S (2003), Organization Development for Facility


Managers, American Management Association (AMACOM),
New York

Bakalar, N (2003), Where the Germs AreA Scientific


Safari, New Jersey, John Wiley & Sons

Fuchs, R J, et al. (1994), Mega-City Growth and the Future,


Tokyo, United Nations University Press

Blanchard, B S (1998), Logistics Engineering and


Management, Prentice Hall, Inc., New Jersey, Simon &
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Geddes, R, ed. (1997), Cities in Our FutureGrowth and


Form, Environmental Health and Social Equity, based on
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Bodanis, D (2003), The Secret HouseThe Extraordinary


Science of an Ordinary Day,New York, Berkley Books
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East Asia Regional Conference, IFHP, Delhi, Government
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238

THE ESSENCE OF ASSET MANAGEMENTA GUIDE

KC Leong is an architect with 42 years of


professional experience. Deeply interested in
promoting sustainable human settlements, he
has worked in World Bank slum upgrading
projects and Asian Development Bank urban
management projects in Asian countries. In his
architectural practice in Malaysia, his projects
range from an embassy building, homes, hotels
and industrial buildings to township designs. In 1970, he was
appointed Registrar of the Board of Architects Malaysia and
among other duties was responsible for the development and
enforcement of the Architects Act 1973.
As a consequence of his interest in all aspects of human
settlements, he has held executive office in the Eastern Regional
Organisation for Planning and Housing (EAROPH) since
attending the EAROPH World Planning Congress in Seoul,
Korea in 1972. At the EAROPH World Planning Congress held in
Delhi in 1978, he was elected to the office of Secretary General;
as a result the EAROPH Secretariat was moved to Kuala
Lumpur. In 1986 at the EAROPH World Planning Congress held
in Adelaide, Australia, having completed eight years service as
Secretary General, he was made an Honorary President of
EAROPH but has continued to serve, being appointed Co-editor
of the EAROPH Bulletin in 1992.
From 1986, he has been a consultant in investigations of
construction failures as well as contract disputes leading to
arbitration and litigation. He also acts as an expert witness in
arbitration and litigation cases. In 1987 he began to introduce
Asset Management (AM) to Asia, first through EAROPH
seminars and later through his own professional practice. He
uses his knowledge and experience in AM to assist architects,
engineers, contractors and developers to strengthen their project
management capacity in order to reduce construction failures
and disputes.
In 2001 he assisted EAROPH in forming an international AM
Resource Group to promote AM. In the same year he
established his practice in Forensic Asset Management to help
clients and their legal counsel. In 2003 UNDP-TUGI Kuala
Lumpur appointed him under a Special Service Agreement to
promote AM in Asian countries, to set up APIGAM and to author
this book, The Essence of Asset Management: A Guide. He is
now the Head of APIGAM, which is beginning to provide
technical support and technology transfer services in Asian
countries under APIGAMs Systemic Asset Management (SAM)
Programme.
KC Leong strongly believes that planners, architects, engineers,
economists, sociologists and other allied professionals should
venture beyond their usual narrow professional fields into wider
human settlement work and asset management, as such multidisciplinary pursuits require serious input of all these
professionals. Only with their committed involvement will urban
development and management become sustainable.
Living in Kuala Lumpur, KC Leong currently spends about a third
of each year working on AM in Asian countries and Australia.

THE FIRST BOOK TO OF FER ALL - INCLUSIVE, WIDE - SPECTRUM COVERAGE OF


SYSTEMIC ASSET MANAGEMENT FOR PUBLIC ASSET USERS AND PROVIDERS

his resource guide provides a doorway into the art, science and technology of how to maintain and manage our valuable
assets, from our own homes to public infrastructure, so that they provide reliable services to sustain an acceptable lifestyle. The book gives an insight into the principles, philosophy and methodology of systemic asset management in simple,
clear language, illustrated by relevant applications. Even laypersons have the right, as citizens, to be informed about asset
management so that they can participate as constructive stakeholders. This book gives them the information.
For the officers and decision-makers at every level in public office, as well as asset management professionals, this guide gives
the bigger picture of systemic asset management as it concerns building the relationships between complementary assets and
between assets and the community. It adheres to the doctrine that public assets, from buildings to infrastructure, are there to
provide reliable public service at the least cost to the community. Any deviation from that is unsustainable under the principles of
Good Governance. This book will be an invaluable resource for leaders and officers in local authorities and local governments,
municipal engineers, asset managers and consultants involved with urban management in the Asia and Pacific Region.

Detailed coverage of asset management topics include:


x Asset management principles
x Systemic asset management
x Asset Maintenance
x Good urban governance and
systemic asset management
x City revitalization and systemic
asset management

x Poverty reduction and asset


management
x Converting wastes to assets
x Systemic asset management for
road management
x Systemic AM for home asset
management

x A maintenance culture
x Forensic asset management
x Legislative framework for asset
management
x Asset management in the Asia
Pacific Region

The Urban Governance Initiative (TUGI) Eastern Regional Organisation for


TUGI is a regional project developed and funded by Planning and Housing (EAROPH)

Asia Pacific Institute for Good Asset


Management (APIGAM)

EAROPH is an international organisation formed for


the optimal planning, development and
management of human settlements in the Asia
Pacific region.
EAROPHs role and objectives include:
x Providing policy advisory services
x Enabling innovations on tools and methodologies x Consolidation and promotion of expertise in
human settlement sustainability
to promote improved urban governance
x
Provision of a forum for continuous collaboration
x Ensuring the dissemination of information and
between governments, the private sector and the
promoting collaborative networking on all of the
community in addressing human settlement
above, within and between cities in Asia and the
issues
Pacific.
UNGP-TUGI seeks to assist mayors and other city x Promotion of professional development for its
members
stakeholders in building the capacity of local
governments to perform their tasks effectively.
x Facilitation in establishing working groups or
UNDP-TUGI advances the five principles for livable
organisations for the purpose of providing
and sustainable cities: social justice, ecological
technical support and technology transfer
sustainability, political participation, economic
services to support sustainable good governance
productivity and cultural vibrancy.

APIGAM was established by EAROPH with


collaboration from UNDP-TUGI, IULA-ASPAC, and
other organisations, and support from the
Malaysian Government.
Its mission is to build capacity by increasing
awareness and knowledge and fostering a
maintenance culture in countries in the Asia Pacific
Region through:
x Cooperation with governments and communities

the United Nations Development Programme


(UNDP). It is an action-oriented initiative that
promotes better urban governance through:
x Institutional capacity building

The Urban Governance Initiative


United nations Development Programme
PO Box 12544, 50782 Kuala Lumpur
Malaysia
Tel: 60-3-2095-9122
Fax: 60-3-2093-2361
E-mail: tugi@undp.org
Website: www.tugi.org

Eastern Regional Organization for Planning and Housing


Level 4, Block K, Ministry of Housing & Local Government
Damansara Town Centre
50644 Kuala Lumpur
Malaysia
Tel: 60-3-2092-5217
Fax: 60-3-2092-4217

x Research and innovation to create a repository


of knowledge

x Technical support and technology transfer


services under APIGAMs unique Systemic Asset
Management (SAM) Programmes
x APIGAM seminars, workshops and training
courses
x APIGAM website newsletter and publications
EAROPH-APIGAM
Level 4, Block K, Ministry of Housing & Local Government
Damansara Town Centre
50644 Kuala Lumpur
Malaysia
Tel: 60-3-2092-5217
Fax: 60-3-2092-4217

apIGAM