The Benefits of Asset Investment Planning: 2nd Annual London Roundtable RecapBy Victoria Wills
What are the quantifiable benefits of implementing better investment planning systems and processes?
This was the question recently posed to a room of leading asset management thinkers from across the UK. Copperleaf was joined by representatives from seven utilities spanning gas, water and electrical sectors, as well as two participants from a UK government agency.
Our second Annual London Roundtable kicked off with an introduction from Copperleaf CEO Judi Hess, who laid out the benefits of Asset Investment Planning & Management (AIPM) reported by our clients internationally. These benefits fall into six main areas:
- process efficiencies
- cost savings and avoidance
- enhanced investment evaluation
- enhanced portfolio evaluation
- enhanced portfolio delivery
- enhanced process outcomes
With UK regulators pushing for more consistent and quantifiable performance indicators, many utilities have focused on enhancing tooling to maximise the service levels provided by a given investment plan while minimising whole-life asset costs.
The discussion on June 30th, however, turned to the importance of producing a plan that can be executed effectively and efficiently. As Greg Dodd, Head of Asset Strategy at Northern Gas Networks (NGN) described, planning challenges go beyond the GD2 regulatory submission. NGN wants to track the execution of the plan to ensure they’re deriving the benefits they committed to as part of their regulatory filing. When NGN selected Copperleaf in June, they wanted a system that would allow them to understand the deltas between the submitted plan and completed work, and continuously adjust to ensure that the highest possible value is derived.
Having completed their implementation of Copperleaf C55 in February of this year, Anglian Water also considers improved plan delivery as one of the main benefits they’ll derive from the system. During the roundtable, Anglian Water’s Head of Strategic Investment Planning, Chris Royce, presented an example of the functionality they use to produce deliverable plans that will allow them to meet their targets. Using multi-constraint optimisation, Anglian Water can compare and contrast different investment scenarios that reduce the number of properties which do not have dual water supplies (a current regulatory Outcome Delivery Incentive commitment), while smoothing out demand on the resources required to carry out that work.
During discussions, several organisations noted that these resource constraints indeed have a larger effect on their plan than CAPEX, OPEX or TOTEX constraints. In other words, focusing solely on the financial optimisation of the plan ignores the question of whether that plan can actually be delivered.
The ensuing discussions highlighted an obvious, but oft-ignored truth: the highest-value and lowest-cost plan is worthless if it cannot be carried out effectively and efficiently. Indeed, in a ranking of the benefits of AIPM, all eight organisations ranked “portfolio delivery effectiveness” and “portfolio delivery efficiency” as two of the most important drivers for enhancing capability.
Of course, when building a business case for the adoption of better investment planning systems and processes, benefits can’t just be large; they must also be quantifiable. Interestingly, participants disagreed when ranking the benefits that were easiest to quantify. For example, while some saw increased delivery efficiency as one of the most quantifiable benefits, many ranked it at the bottom of their list. This divergence underscored the importance of fostering a strong asset management community. UK utilities and government agencies have a lot to share with each other about their decisions to improve investment planning processes and capabilities, and the ways in which they have justified those step changes.
We can’t wait to continue this discussion at events throughout the coming year! We will be hosting a London Networking Event in November and look forward to the 3rd Annual London Roundtable, penciled in for June 29th, 2018.
Would you like to become more involved in Copperleaf’s community of asset management thought leaders? If so, please get in touch.