EVALUATION OF NEARTRANSPORTATION PRIVATE SECTOR ASSET MANAGEMENT PRACTICES

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EVALUATION OF NEAR-TRANSPORTATION PRIVATE SECTOR
ASSET MANAGEMENT PRACTICES

• U n i v e r s i t y o f I l l i n o i s
• a t C h i c a g o
• Urban Transportation Center

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Outline

• Research Team
• Objectives
• History
• Approach
• Case Studies
• Findings

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Research Team

• University of Illinois, Chicago
• Shaumik Pal
• P.S. Sriraj
• Sue McNeil
• Tioga Consulting
• Libby Ogard

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Objectives

• To document and synthesize asset management
  experiences in private industry to encourage
  public sector transportation agencies to draw on
  lessons learned by these organizations, and to
  assess critically their own approach to asset
  management.

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History

• 1996 Asset Management workshop included the
  private sector
• Documented case studies tend to be narrow
• Researchers focus on differences rather than
  similarities

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Approach

• Literature review
• Development of interview questions
• Identification of candidate case studies
• Selection of case studies
• Testing
• Interviews
• Revision
• Synthesis

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Interview Questions

• Background about the industry and firm
• Goals and objectives
• Development of plans and programs
• Data/ Information

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Case Studies

• Railroad industry
• Wisconsin Central
• Union Pacific
• TTX
• Airline Industry
• Midwest Express
• United Airlines
• Information Services Division

• Energy Sector
• Xcel Energy
• Great Lakes Transmission Company

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Findings

• Examples
• Union Pacific
• Xcel Energy
• Summary
• Comparison
• Key messages

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Example Union Pacific

• Class I railroad
• 33,000 miles of track in 23 states
• 31, 551 million in assets (2001)
• Assets
• Locomotives, rail cars, highway tractors
• Track
• Right of way

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Example Union Pacific - continued

• Performance is integrated into every level of the
  organization
• There is a link between the condition of the
  track and the customer
• Performance measures are reported weekly by
  geographic area as individual measures and an
  aggregate

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Example Union Pacific - continued

• The performance measures are correlated to a
  service delivery index and an index of customer
  satisfaction. These measures in turn are linked
  to revenue.
• Individuals focus on six key questions that link
  the individual actions to the asset management
  goals.

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Example Union Pacific - continued

• Barriers to Asset Management lay in changing the
  organizational culture and mindset to the new
  form of accountability.

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Example Excel Energy

• Electricity and natural gas delivery company
• 3.2 million electric customers and 1.6 million
  natural gas customers
• 12 states
• 6.4 billion in assets
• Gas and electricity generation, distribution, and
  transmission

Asset Owner

• Service
• Providers

Asset Manager
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Example Excel Energy - continued

• Asset management introduced in 2001 following
  successful experience with Yorkshire Electricity
• Focus separation of service providers from asset
  managers
• Key facilities are fixed or repaired the day
  before they fail.

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Example Excel Energy - continued

• Barriers to asset management include adjusting to
  the major cultural shift adopted by the
  organization and other operational barriers.

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Summary
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Comparison
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Key messages lessons learned

• Asset Management is a relatively new term for
  what many businesses feel they have been doing
  all along.
• The key differences today
• Functional integration
• More data, more powerful analytical tools, real
  time.
• Deregulation
• Customer focus

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Implementation

• Develop and maintain an accurate inventory
  including location of assets, expected life,
  condition of assets, inspection history, usage,
  and improvements. Available to virtually all in
  the organization.
• Use of advanced technology and information
  systems to support the asset management process.
  Many have visual, graphics linked to mapping
  software.
• Relate asset management to overall objective of
  the organization.
• Functional teams are often formed for critical
  projects.

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Implementation - continued

• Integrate the system objectives and departmental
  objectives using performance measures of assets.
  Where possible, link organizational performance
  to individual performance through incentives and
  rewards.
• Relate asset management to other business
  processes including the strategic planning
  process.

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Outreach

• Ensure that all levels of the organization know
  what asset management is.
• Recognize that asset management is not a static
  process.
• Use related mandates (for example, safety or
  accountability) to sell asset management.
• Stress the role of asset management in the
  efficient management and utilization of assets.
• Key to corporate economic survival and investor
  confidence.

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Outreach - continued

• Recognize the importance of information
  technology in addressing asset management and
  invest accordingly.
• Establish effective communication between the
  various stakeholders, and coordinate
  decision-making and information between the parts
  of the organization managing various asset
  classes.
• Reorganization of business units and internal
  operating units to become more responsive and
  efficient.
• Develop appropriate and on-going education and
  training covering all aspects of asset
  management.