EVALUATION OF NEAR-TRANSPORTATION PRIVATE SECTOR ASSET MANAGEMENT PRACTICES

1. 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

2. Outline • Research Team • Objectives • History • Approach • Case Studies • Findings

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

4. 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.

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

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

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

8. Railroad industry Wisconsin Central Union Pacific TTX Airline Industry Midwest Express United Airlines Information Services Division Energy Sector Xcel Energy Great Lakes Transmission Company Case Studies

9. Examples Union Pacific Xcel Energy Summary Comparison Key messages Findings

10. 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

11. 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

12. 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.

13. Example – Union Pacific - continued • Barriers to Asset Management lay in changing the organizational culture and mindset to the new form of accountability.

14. 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 Service Providers Asset Owner Asset Manager

15. 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.”

16. Asset Repository Data Providers Decision Making Tools AMR Load Analysis GIS Predictive Passport (Work Mgmt) Design Statistical Analysis Modeling Reliability Failure Mode Analysis Capital Asset Valuation Outage Mgmt Maintenance Fault Analysis SCADA Modeling

17. Example – Excel Energy - continued • Barriers to asset management include adjusting to the major cultural shift adopted by the organization and other operational barriers.

18. Summary

19. Comparison

20. 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

21. 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.

22. 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.

23. 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.

24. 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.