Risk in an asset's lifecycle - By John Hunter*
Risk and asset management commences during an asset's pre acquisition lifecycle phase, that is the concept, design, procure, construct, commissioning and handover activities, rather than when an asset is handed over.
Early risk identification can improve an asset's functionality and reduce future operating and maintenance costs. After pre acquisition, many future risks and costs are locked in.
The activities are shown in the graph. A summary of risks in these activities are:
- Concept – A non asset solution may be more suitable and beneficial in terms of cost, maintenance, service delivery and risk to deliver the required service
- Design – A well designed fit for purpose asset may prevent an expensive retrofit to correct defects after an asset is handed over and operational
- Procure – It is important to avoid risks such as dealing with disreputable manufacturers, poor quality assurance practices, lack of spare parts with long lead times
- Construct – This may include confirming the constructor's financial stability, such as the bankruptcy of a builder has the capacity to derail projects and to add future costs
- Commissioning and handover – It is important to identify and rectify commissioning issues.
Asset functionality may become locked in during pre acquisition, sometimes being irreversible and ultimately affecting an asset's:
- capability – to provide the required services
- capacity – to facilitate ramp up in capacity
- efficiency – to provide efficient service delivery, performance and output
- quality – to minimise work health and safety issues with back up support from the constructor
- reliability – to provide consistency under the planned maintenance schedule.
The costs to rectify potential performance and functionality issues of an asset in its pre acquisition phase could also be plotted – in most cases this could be an upward sloping line in the graph (with costs on the Y axis).
Depending upon the asset, the gradient of the cost line would increase as irreversible processes are applied and in most cases, the gradient will reduce after an asset's handover and acceptance.
If the asset is damaged during the operational phase, the gradient of the cost line would rise again.
*John Hunter is the Asset Policy and Governance Coordinator at the City of Brisbane.