Asset and Infrastructure Management for Airports—Primer and Guidebook (2012)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

P A R T 1 Asset and Infrastructure Management for Airports— Primer

5 Asset and Infrastructure Management for Airports—Primer 5 Why Asset Management for Airports? 5 What Can Asset Management Do for You? 6 Primer Overview 7 Introduction to Asset Management 10 Asset Management Policy 11 Asset Management Objectives, Strategies, and Plans 12 Asset Management Enablers 15 Implementation of Asset Management Plans 15 Performance Assessment and Improvement 16 Management Review 17 Putting It All Together: Implementing an Asset Management Framework 18 Concluding Observations 19 References and Bibliography 20 Glossary 24 Appendix A: Other Sectors and Asset Management p r i m e r C O N T e N T S

5 Port Authority of New York and New Jersey, “To provide the consistently high levels of ser- vice that the region requires, the Port Authority spends nearly $1 billion annually to main- tain the region’s ports and airports bi-state bridges, tunnels, and rail facilities in a state of good repair. . . .” “. . . using system- atic asset manage- ment to ensure cost-effective use of capital resources, replacing aging facilities based upon economic lifecycle analysis to avoid failures of operational facilities while minimizing unnecessary main- tenance costs . . .” Asset and Infrastructure Management for Airports—Primer Why Asset Management for Airports? Evidence from other industries shows that an asset management way of doing business allows us to do more with less and to • Make better investment decisions, • Align managers, decisionmakers, and workers to a common purpose to seek solutions and make decisions that result in the best economic, service level, and risk exposure outcomes, • Improve flexibility to respond to changes in the regulatory and commercial environment. The following significant benefits have been achieved: • A 13.5 percent increase in pavement life (Hudson et al., 2001) and • Pavement levels of service maintained with a 30 percent cut in budget (Falls et al., 1994). What Can Asset Management Do for You? CEO and Board—Better understanding of future needs to service customers competitively. Budget and Finance—Reduce unforeseen post-budget capital needs; provide 10-year and beyond forecast of capital, operations, and maintenance needs; allow establishment of price paths to address changing infrastructure investment needs. Planning Manager—Incorporation of planning requirements for infrastructure and assets in airport asset management plans. Engineering Manager—Greater lead time on project work load, processes for continuous improvement in design and construction standards, improved engineering records, data and knowledge management. Operations Manager—Support for, and focus on, achieving operating efficiency and effectiveness, and service level outcomes. Maintenance Manager—Increased support for improved maintenance processes and practices. Environmental Manager—Awareness of the environmental consequences of infrastructure failures and ability to pre-plan mitigations. Information Technology Manager—Greater awareness and understanding of the specific system functionalities needed to support the business.

6 Asset and Infrastructure Management for Airports Primer Overview A confluence of changes in the aviation industry is driving U.S. airports to look to a range of strategies to maintain safety and customer service levels in the future. These changes include restriction on the availability of funding from federal, state, and local government for capital and other projects, the reduction in fuel tax income for general aviation airports due to growth in low-cost airlines, and the forecast increase in passengers and air cargo over the next decade. This primer results from the investigation of the holistic integration of asset management processes, practices, and tools across the airport organization (public and private), as a means to improve the return on investment in airport assets and infrastructure, in terms of financial sustainability, risk exposure, and levels of service to customers and stakeholders. The research findings, which include the review of standards and approaches, form the basis for the recommended approaches in this primer and the associated Asset and Infrastructure Man- agement for Airports Guidebook. Additionally, best practices from sectors outside of aviation were identified. Refer to Appendix A for best practice information for other infrastructure sectors including electricity, water, rail, and gas. Primer Objectives This primer outlines what asset management is and its relevance to airport executives. It sum- marizes what the airport executive needs to know and do to achieve ongoing value realization from investment in infrastructure management improvements within an airport organization, including • Systems requirements; • Governance and organization; • Roles, skills, and competency requirements; • Change leadership roles; • Identification of value-adding improvement opportunities; and • Benefits from the adoption of comprehensive asset management principles. The distinction between the primer and the guidebook is best described as follows: • The primer outlines the “what” and the “why” of asset management and is directed at execu- tive staff. • The guidebook summarizes the “how” and is directed at implementers. Intended Audience Holistic approaches to asset management include the strategic, tactical, and operational functions of an airport. As such, the intended audience for this primer includes executives responsible for • Strategic planning and master planning, • Finance and capital planning, • Airport planning, • Asset management, • Risk mitigation, • Operations and maintenance, and • Information technology. • (Note: Airlines Advisory Board—Airlines approve Capital Funding/Projects—MII—Majority— In Interest) Julieanne Alroe, CEO of Brisbane Airport, Australia, “One of the great- est benefits of asset management has been the ability to provide informa- tion to the Board on infrastructure capa- bilities and future needs—this type of knowledge is invalu- able and is essential for making the best, justified investment decisions.”

Asset and Infrastructure Management for Airports—Primer 7 The Asset Management Challenge Infrastructure asset management has been evolving steadily as an approach to managing the whole-of-life-costs and performance of infrastructure for the last 20 years. During this period, water, wastewater, gas, electricity, municipal, and road transportation asset owners began to recognize that infrastructure built during the post-World War II boom would be due for renewal in the near future, and would significantly increase the renewal rates that customers and rate payers were accustomed to funding. They recognized a shift from construc- tion to a renewal and rehabilitation focus for infrastructure investment, coupled with a need to operate more cost-effectively, and to consider long-term financial sustainability, and inter- generational equity in investment decisions. This shift required new skills and competencies to integrate financial and technical strategic planning 20 years ago, to holistic approaches that are heavily driven toward realizing organizational strategic objectives today. Airports and Asset Management Today There have been sweeping changes in the ownership and management of airports over the past decade. A move to private ownership and regulatory monitoring of price and service levels has resulted in reorganization and a focus on the optimization of the management of physical assets at airports in the United Kingdom, Australia, and New Zealand. In the United States, airports have continued to be predominantly publicly owned during this period, with funding support from the federal government in the form of Airport Improvement Program (AIP) grants under FAA reauthorization acts, and Passenger Facility Charges (PFCs). The forecast continued growth in passenger and cargo traffic indicates a continued long- term need for capacity expansion. Compounding this with the ongoing need to meet standards and manage aging infrastructure, there is an ongoing challenge for airport executives to secure funding and ensure financial and service-level sustainability in the long term. This challenge is leading airports to focus on • How to do more with less and • How to focus the business on customers and the cost-effective delivery of services. Document Structure and Content Overview After the primer’s introduction, the primer is structured in the following two major sections: From Asset Management Policy through Implementation of Asset Management Plans out- lines the current standards and resources for asset management, the concept of a holistic strategy and objective-driven asset decision making, and the necessary process and activity linkages into existing strategic business planning processes and governance required to make it work. These sections outline the key enablers that the airport executives need to provide. From Performance Assessment and Improvement through Putting It All Together deals with implementation needs and the concepts of continuous improvement, as part of a Plan–Do– Check–Act (PDCA) approach. Introduction to Asset Management Standards and Resources for Asset Management Currently, there is no single standard in the United States to guide infrastructure businesses in the implementation and application of asset management.

8 Asset and Infrastructure Management for Airports There is an internationally recognized documented approach for infrastructure asset manage- ment called Publicly Available Specification (PAS) 55 2008. At the time of this writing, PAS 55 is being used as the basis for the development of an ISO standard, supported by the American National Standards Institute (ANSI), and the International Infrastructure Management Manual (IIMM), 7th edition (2011). The ISO Project Committee 251 Asset Management (ISO PC251) has developed three ISO draft documents to date. The full process to a final ISO asset management standard is expected to take up to 2 years. The three ISO draft documents are • ISO 55000 Asset Management—Overview, Principles, and Terminology; • ISO 55001 Asset Management—Management System Requirements; and • ISO 55002 Asset Management—Application Guidelines. Several primers and guidelines have been written for U.S. transportation agencies based on the IIMM, including the AASHTO Transportation Asset Management Guide, and the FHWA Asset Management Primer. Fundamentals of Asset Management Since the PAS 55 specification is forming the basis of an ISO standard for asset management, the PAS 55 definition for asset management is used for this primer. The definition states that asset management is defined as follows: Systematic and coordinated activities and practices through which an organization optimally and sus- tainably manages its assets and asset systems, their associated performance, risks and expenditures over their lifecycles for the purposes of achieving its organizational strategic plan. An organizational strategic plan is defined as Overall long-term plan for the organization that is derived from, and embodies, its vision, mission, values, business policies, stakeholder requirements, objectives and the management of its risks. Figure 1 illustrates the integration of processes and systems for undertaking holistic asset management. The figure shows the relationship between the organizational strategic plan and the development of asset management policy and asset management strategies, objectives, and plans for realizing the organizational strategic plan. The structure illustrated in Figure 1 is com- monly known as the asset management framework. Note that asset management strategies are the approaches to operations, maintenance, and the timing and type of capital investments required to achieve the level of service, cost and risk exposure inferred by the organizational strategic plan. Airport executives have a crucial role in providing the asset management enablers and controls required to achieve a functioning asset management framework. Typical responsibilities are to • Establish and maintain an organization structure that facilitates asset management pro- cesses, with clear direction and leadership; • Ensure staff awareness, competency, commitment, and cross-functional consultation; and • Enable the retention of information and knowledge of asset condition, performance, risks and costs, and the interrelationships between the organization’s asset management policy and the organization’s strategic plan. Benefits PAS 55 identifies principal benefits of asset management as • Enhanced customer satisfaction from improved performance and control of product or service; • Delivery to the required standards; • Improved health, safety, and environmental performance;

Asset and Infrastructure Management for Airports—Primer 9 • Optimized return on investment and/or growth; • Long-term planning, confidence, and performance sustainability; • The ability to demonstrate best value for money within a constrained funding regime; • Evidence, in the form of controlled and systematic processes, to demonstrate legal, regulatory, and statutory compliance; • Improved risk management and corporate governance and a clear audit trail for the appropri- ateness of decisions taken and their associated risks; • Improved corporate reputation, the benefits of which may include enhanced shareholder value, improved marketability of product/service, greater staff satisfaction, and more efficient and effective procurement from the supply chain; and • The ability to demonstrate that sustainable development is actively considered within the management of the assets over their lifecycles. Asset Management Development Continuum—Looking into the Future Over the past 20 years, there have been significant changes in the strategies adopted by utilities, manufacturers, and process industries to plan, design, construct, run, monitor, renew, and dis- pose of assets, for the purposes of efficient and effective delivery of quality, sustainable services to customers. Table 1 summarizes this evolution. Refer to Appendix A for best practice information for other infrastructure sectors including electricity, water, rail, and gas. Figure 1. Holistic integration of processes and systems for asset management. Source: PAS 55.

10 Asset and Infrastructure Management for Airports Asset Management Policy Purpose of an Asset Management Policy Asset management policy sets the framework for the management of airport infrastructure and assets. Each policy statement is endorsed and upheld by all executive staff. The statements are intended to guide the airport organization by specifying the minimum set of considerations and actions to be undertaken by staff in the execution of asset management analysis and decision making and the development of asset strategies as illustrated in Figure 2. PAS 55 describes the asset management policy as defining the mandated requirements, overall intentions/principles, and framework for the control of asset management. Table 1. Evolution of asset management practices. Figure 2. EPA’s 5 core questions in a 10-step approach to developing asset management plans. Develop Asset Registry Assess Performance, Failure Modes Determine Residual Life Set Target Levels of Service (LOS) Determine Business Risk (“Criticality”) Optimize O&M Investment Build AM Plan 2. What is my required level of service? 3. Which assets are critical to sustained performance? 4. What are my best O&M and CIP investment strategies? 5. What is my best long-term funding strategy? 1. What is the current state of my assets? Optimize Capital Investment Determine Life Cycle & Replacement Costs Determine Funding Strategy

Asset and Infrastructure Management for Airports—Primer 11 Asset Management Policy Contents The International Infrastructure Management Manual (IIMM) and ACRP 01-16 research sug- gest that the typical content of an asset management policy includes the following: • Organizational context and importance of asset management, • Overall vision and goals of the organization and supporting asset management vision and goals such as – Sustainable management of infrastructure with respect to economic, social, and environ- mental impacts, – Commitment to capturing and maintaining quality asset data and information, and – Optimization of asset management decisions to achieve sustainable desired cost, service level, and risk outcomes, • Executive and key position roles and responsibilities, and • Audit and review procedures. Asset Management Objectives, Strategies, and Plans Asset Management Objectives and Airport Master Plans The Airport Master Plan or strategic plan outlines the 5- to 20-year plan for airport develop- ment and investment required to meet forecast demand, and strategic goals. The outputs of this process are inputs to the process for determining the objectives for asset management in terms of meeting strategic objectives and customer and stakeholder needs. According to PAS 55 Part 1 (BSI 2008), asset management objectives should be • Specific and measurable outcomes or achievements required of the asset system(s) in order to implement the asset management policy and asset management strategy that are needed to meet the objectives of the airport master or strategic plan, • Detailed and measurable levels of performance or condition required of assets, and • Specific and measurable outcomes or achievements required of the asset management frame- work or system. An example of a link between airport master plan implementation and asset management objectives is the decision to defer capital investment in terminal expansion to accommodate increased operating demand accomplished instead by operational changes that decrease aircraft turnaround and processing times for arrivals. This may require • Use of process improvement techniques such as LEAN 6 Sigma (a quality management and statistical analysis approach to eliminate defects and reduce the variability in business pro- cesses) to improve the capacity of terminals both for passenger throughput, and aircraft turn- around and • Review of maintenance strategies for jet bridges to ensure that operational downtimes are limited, to meet arrival processing and aircraft turnaround time targets. Asset Management Plans, Content, and Development Airport asset management plans describe the activities and investments in infrastructure and assets required to achieve and maintain service outcome standards in the short and long term according to the airport’s master or strategic plan for servicing customers, the community, and other stakeholders. More importantly, the plan process facilitates a transparent and systematic evaluation of the trade-offs among feasible management options in terms of levels of service, investment/intervention costs, and risk.

12 Asset and Infrastructure Management for Airports For example, an integrated plan to manage major runway rehabilitation or upgrade would form a part of a 10-year asset management plan. The business case for the optimal timing of renewal would be justified such that minimal disruption to services and income generation is achieved, and that the risk exposure associated with continued use is managed. The 5-question, 10-step approach to developing an asset management plan (U.S. EPA) shown in Figure 2 describes the essential steps involved. Asset management plans typically include variants of the following content: • Overview of the facility/system or network of assets included in the plan, • Levels of service—current performance and targets, • Strategies and investments to close performance gaps, • Risk assessment and mitigations, • Renewal plan, • Demand and growth forecasts, • Capital plan (new assets), • Ten-year infrastructure investment plan, • Ten-year funding plan, • Business improvement plan (improve efficiency and effectiveness of business processes and data and information), • Challenges for implementing the plan and actions for addressing the challenges, and • Human resource requirements to implement the plan. Asset management’s five governance questions are as follows: 1. Do you know what the required service function is for each asset you own, how that service requirement is changing over the life of the asset, and how each asset is performing in that context? 2. Do you know what assets you have, what condition they are in, and whether they are enabling you to perform efficiently and effectively in the context of the current strategic business drivers? 3. Are you actively managing risk in order to prioritize and optimize investments in your assets and infrastructure, and to identify the relative importance from a business/financial perspec- tive of your assets? 4. Do you have documented operations, maintenance, and capital investment plans that reflect what you know about your assets? 5. Are you balancing the business risk associated with your assets with long-term funding and management improvement strategies to sustain your current business model? Asset Management Enablers Organization Function, Leadership, and Change Management Improvements in asset management often require a change in organization structure and roles and responsibilities of staff to instill the required level of focus on asset management processes, procedures, and decision making. To achieve the best results, airport executives must be prepared to • Review how the airport is currently managing infrastructure to identify poor perform- ing areas relative to appropriate practices, and develop improvement programs that will deliver the greatest value to the airport financially, and to the customers in terms of level of service;

Asset and Infrastructure Management for Airports—Primer 13 • Support a vision for asset management and provide the leadership required to get the best results out of an asset management improvement plan or initiative; • Assign an executive staff member as the champion for the asset management implementation program, which is a IIMM [NAMS Steering Group, 2006] recommendation; furthermore, a cross-functional asset management steering committee of executive staff and relevant support staff can be used to integrate asset management decision making across silos; and • Appoint or assign the equivalent of asset owners, service providers, and asset managers, and provide the necessary systems and change management support to implement supportive processes and procedures. The asset owner, service provider, and asset manager roles are defined as follows: • Asset owner—short- and long-term corporate governance, sets investment objectives; • Asset manager—determines what needs to be done to achieve investment objectives; and • Asset service provider—delivers services to meet the objectives (design, construct, operate, maintain, renew/decommission). Asset Management Information and Decision Support Systems The quality of asset management decision making is dependent on the quality of the data and information captured and maintained for all infrastructure across the airport. The ongoing maintenance of a complete inventory of assets owned by the airport is a fundamental first step to improving asset management practices. Asset performance information (both cost and techni- cal) needs to be associated with the asset inventory. Analysis and indexing tools also are required to use the data and information for decision making and planning, design and operations, and maintenance. At a minimum, key systems include • Enterprise Resource Planning (ERP), • Maintenance management, • Geographic Information Systems (GIS), • Renewal analysis tools, and • Capital project evaluation and prioritization tools. The airport executive needs to support investment in • Change management and training for the implementation of new systems, or improved use of existing systems to support the preferred asset management processes and procedures for the airport; and • Establishing the tools and management structure to ensure data and information manage- ment happens—document management, engineering records management, training, and quality assurance and control over asset data records. Staff Competencies and Training Implementation of an asset management framework usually requires increased scrutiny of investments to consider economic, social, and environmental impacts, and risk reduction and levels of service assessment. This indicates that additional skill sets may be required by airport management, including • Engineering economics and investment modeling, • Reliability analysis and risk assessment, and • Maintenance management. Figure 3 illustrates the roles and competency units for an asset management organization as defined by the Institute of Asset Management Competencies Framework.

R o l e 6 R i s k M a n a g e m e n t & P e r f o r m a n c e I m p r o v e m e n t R o l e 7 A s s e t K n o w l e d g e M a n a g e m e n t R o l e 1 P o l i c y D e v e l o p m e n t Role 2 Strategy Development Role 5 Asset Management Capabilit y Development R o l e 3 A s s e t M a n a g e m e n t P l a n n i n g Role 4 Implement Asset Management Plan s Unit 5.1: Develop and deploy AM people and teams Unit 5.2: Develop and deploy supplier s Unit 5.3: Develop and manage organizational change Unit 5.4: Shape the AM Culture Unit 6.1: Access and Manage Risk Unit 6.2: Assure the quality of AM processes Unit 6.3: Monitor and review progress and performance Unit 6.4: Review and audit compliance with legal, regulatory, ethical and social requirements Unit 6.5: Learn from Incident s Un it 7.1: De fin e as set inform ation st andards Unit 7.2: Specify, select and integrate AM information Systems Unit 7.3: Make appropriate AM Data available for decision makin g Unit 4. 1: C ontrol Operations Unit 4.2: Maintain As sets Unit 4.3: Optimize and rationalize asset s Unit 4.4: Renew or dispose of asset s Unit 2.1: Analyze St rategic Requirement s Unit 2.2: Forecast and analyze future requirements and demands Unit 2.3: Develop the AM Strate gy Un it 3.5: De ve lop and communicate AM Plan(s) Unit 3.1: Appraise investment options Unit 3.2: Apply whole life costing principle s Unit 3.3: Create and acquire asset s Unit 3.4: Plan for contingencies Unit 1.2: Develop the AM Policy Unit 1.1: Analyze Policy requirement s Unit 2.4: Plan the implementation of AM Strategy Figure 3. Roles and competencies for an Asset Management Organization.

Asset and Infrastructure Management for Airports—Primer 15 Implementation of Asset Management Plans Lifecycle Processes Asset management plans outline the short- and long-term investments and strategies needed to meet service levels and achieve the objectives of the airport master plan or strategic plan. The asset management plan is not intended to be a shelf document. It is intended to be implemented and audited, with flexibility to be able to address changes in the commercial environment or airport priorities, to ensure that the plan is being followed so that the intended outcomes are achieved. The airport executive must be prepared to review existing capabilities and capacity in order to implement the asset management plan. Review of the following enabling processes is often required, and plans for improvement or change identified and put into action: • Asset planning and delivery; – Project initiation and planning, – Project delivery, – Asset commissioning and hand over, and – Continual auditing or monitoring of airport commercial environment shifts, • Operations and maintenance; and • Renewal and decommissioning. Identification and Management of Resources An asset management plan may recommend an increase in capital projects, in planning activities, and changes to maintenance strategy, or that a significant number of assets require decommissioning. There are often human resources, outsourcing, or systems-related needs for implementing an asset management plan. Asset management plans should include an estimate of the additional resources that may be required for implementation. The airport executive must be prepared to evaluate the need for improvement in systems or the addition of staff, or outsourcing of activities required to implement asset management plans. In turn, the asset management planning processes need to be sufficiently robust so that estimates of both additional resources and the benefits of the asset management plan in terms of cost, levels of service, and risk can be adequately relied upon to justify its implementation. Managing Hurdles and Impediments to Implementation Hurdles and impediments can be external to the airport—such as regulatory or economic concerns, or they can be internal to the airport—such as airport policy, airline service changes, or procedure-related issues (e.g., procurement rules or contracting terms). Identification of the issues, possible actions, and responsibilities for resolving or managing the hurdles and impediments typically lies with the executive team. Performance Assessment and Improvement Monitoring and Management Performance to Achieve Objectives The monitoring and management of performance relies on the existence of a performance management framework that links performance goals, through appropriate performance mea- sures, to activities to monitor and improve performance where monitoring indicates a need.

16 Asset and Infrastructure Management for Airports In terms of customer service levels and asset response, executive management is concerned with the controllable aspects of a small set of key performance indicators (KPIs) such as • Percentage of delayed flights due to the efficiency of airport configuration and layout. • Connecting times related to the organization of the airport and efficiency of airport opera- tions such as airport-operated baggage handling systems and automated people movers. • Baggage delivery (timeliness and lost bags) due to the efficiency of airport-operated baggage handling. Combining these with business KPIs, and lower-level KPIs associated with facility manage- ment (e.g., cleanliness of restrooms), there are a range of performance issues to manage from an asset management viewpoint that directly impact maintenance tactics (what maintenance is performed and how often) and renewal and new capital investment decisions. A performance management framework that maintains its relevancy through regular strategic reviews by executive management provides the link between stakeholder needs and the airport’s ability to realize them through asset management responses. Managing Risk Business risks are risks to the organization. Asset risks are risks posed by the asset, mostly through its failure, or inability, to continue to provide the function required of it. Identification and management of business risks that impact the airport financially, such as regulatory change or route changes made by airlines, and asset risk associated with physical mor- tality or stranding of investments, form a part of an asset management framework. A SWOT (strengths, weaknesses, opportunities, threats) analysis used during the strategic planning activity identifies business risks that are then incorporated into the asset management strategy and planning processes. For example, a SWOT activity undertaken during the master planning process will identify the level of uncertainty in master planning alternatives for airport development, and form a basis for identify- ing trigger conditions and actions to manage changes (e.g., in demand or stakeholder support). Asset risks should be identified and monitored to ensure that investments are made to reduce risk (change in design, change in operations and/or maintenance strategies). The key role for executives in managing risk is to ensure that a risk analysis and management process is in place, and that the appropriate procedures are in place to enable flexibility in plan- ning and delivery of services. Management Review Strategic Priority Review and Adjustments Changes in strategic direction or priorities usually impact infrastructure services, with an associated short-term and long-term cost and service-level implication. Therefore, the asset management plan requires an ongoing review, usually as part of the business planning process, to ensure that the long- and short-term impact of changing priorities and the associated asset response is well understood. This requires integrated planning and decision making between airport planners, finance and budget, asset management, and operations and maintenance staff. Some airports have airline representation or standing committees providing input.

Asset and Infrastructure Management for Airports—Primer 17 Putting It All Together: Implementing an Asset Management Framework Asset Management Maturity Assessment The IIMM and PAS 55 both recommend the evaluation of the current approach to asset man- agement used by an organization as a first step in evaluating where an organization can improve asset management and deliver value for the investment. The industry refers to this evaluation as both a maturity assessment (used in PAS 55) or gap analysis (used by the Water Environment Research Federation). A maturity/gap assessment should evaluate the level of asset management practice and inte- gration of process and practices across the airport in terms of the following areas: • Organization, • People, • Information systems, • Commercial tactics, • Lifecycle processes and practices, • Asset management plans, and • Overall. Figure 4 shows an example of output from a gap assessment. Note that for the airport, the areas for improvement include the availability, completeness, and accuracy of asset data and knowledge, the function of the organization itself, and better use of asset management planning. A maturity assessment is a powerful communication and continuous improvement tool. Implementation Roadmaps: Delivering Value The maturity/gap assessment forms the basis for the development of an asset management improvement plan or roadmap. Important aspects to consider in the development of an improve- ment plan are • The role of the assets and their configuration in the achievement of airport performance goals; • The human aspect of processes, and which processes have the greatest impact on the improve- ment of airport performance; and • The level of practice beyond which the airport will receive little value (e.g., the use of a spread- sheet versus the use of an integrated maintenance management system for a small airport). Figure 4. Gap analysis for large hub airport in the United States. Series 1 = Your assessment Series 2 = Top 10 percent of airports in the United States Series 3 = Best appropriate practice

18 Asset and Infrastructure Management for Airports An understanding of these aspects allows improvement plan tasks to be prioritized in a way that results in a positive return on the investment in terms of cost, risk, or service levels. Managing Change Improvements in management processes always involve change, whether that change is at the operational level only through the implementation of a new system, or a more sweeping organizational change. The role of airport executive staff in implementing change requires the following: • Chief operating officer (COO), or above, level of leadership; • Use of a governance structure, such as an implementation steering committee, of executive staff; • Regular progress reporting to the COO, other executives, and involved staff; • Training and change management activities; and • Celebration of improvement outcomes. Concluding Observations Evidence shows that holistic asset management, or a systems approach to management and decision making, can deliver significant benefits. These benefits are not always reflected in lower costs or improved service levels—there are a number less tangible benefits, as follows: • Alignment of purpose, • Enhanced flexibility, and • Better control over budgets and performance. Tips for new adopters include the following: • Be clear about what the airport is endeavoring to achieve, • Undertake a maturity assessment, • Establish a leadership and a governance structure early, • Regularly review progress and performance, • Since information systems support processes, understand your process and procedure require- ments and drive the configuration of systems to support them, rather than the reverse, • Do not underestimate the role of change management, and • Have key staff review the guidebook of this ACRP and hold an open meeting to identify prob- lem areas for implementation. Consultation and visits to similar airports that have successfully adopted asset management plans, even if for selected assets (i.e., a new terminal or concourse) can be extremely helpful. There are several sources of information sharing among airports and these types of contacts can be reassuring to a newly formed airport asset management team. Airport management may be new to this evolving asset management business but challenge and innovation is synonymous with aviation.

19 References and Bibliography “2010–2015 Capital Needs Survey Report.” ACI North America. ACI, 22 Feb 2011. Web. 1 June 2011. <www.aci-na.org/ static/entransit/2010-11_Capital_Needs_Survey_Report.pdf>. BSI, “PAS 55-2:2008, Asset Management. Guidelines for the Application of PAS 55-1.” British Standards Institute, 2008. Print. BSI, “PAS 55-1:2008, Asset Management. Specification for the Optimized Management of Physical Assets.” British Standards Institute, 2008. Print. Falls, Lynne Cowe, S. Khalil, W. R. Hudson, and P. Hass. “Long-Term Cost-Benefit Analysis of Pavement Man- agement System Implementation.” Third International Conference on Managing Pavements (1994). Print. Hudson, W. Ronald, S. W. Hudson, W. Visser, and V. Anderson. “Measureable benefits obtained from pavement management.” Fifth International Conference on Managing Pavement. (2001). Print. Moore, Stanton. “Airport Performance Measurement.” Web. http://catsr.ite.gmu.edu/IntroATC/Airport PerformanceMeasurement.pdf Mucha, Michael. “A Performance Management Framework.” http://www.gfoaconsulting.org/downloads/ GFR-Oct09-PMFramework.pdf NAMS Steering Group. “International Infrastructure Management Manual.” National Asset Management Steering Committee NZ Version 3 (2006): Print. http://www.airportsites.net/masterplans/bkl-mp-update/index.htm

20 Glossary AASHTO Transportation Asset Management Guide—analyzed the DOT business processes and strategic approach to managing transportation infrastructure assets. Airport Improvement Program (AIP)—provides grants to public agencies and, in some cases, to private owners and entities for the planning and development of public-use airports that are included in the National Plan of Integrated Airport Systems (NPIAS). Airport Asset Management Plans—describe the activities and investments in infrastructure and assets required to achieve and maintain service outcome standards in the short and long term, according to the airport’s master plan or strategic plan for servicing customers, the com- munity, and other stakeholders. Airport Master Plan—provides a road map for efficiently meeting aviation demand through the foreseeable future while preserving the flexibility necessary to respond to changing industry conditions. The following are general goals and objectives addressed by the plan: • To provide a framework for long-range planning, • To graphically present preferred airport development concepts, • To define the purpose and need for development projects, • To comply with all applicable FAA requirements, • To enable the airport to achieve its mission, • To assure compatible land-use development, • To support the financial health of one of a city’s most powerful economic engines, and • To identify facility requirements for all airport users. The master plan process provides a blueprint for the future. The future plan recommenda- tions are contingent upon further environmental studies and must be financially feasible (www. airportsites.net). American National Standards Institute—oversees guidelines and standards that affect the mar- ketplace and the means in which business is carried out Asset—an item that holds value within the setting it is used. Asset Management (AM) as defined by NAMS—A systematic approach to the procurement, maintenance, operation, rehabilitation, and disposal of one or more assets. AM integrates the utilization of assets and their performance with the business requirements of asset owners or users. AM is all about the continuous alignment of asset performance to meet service delivery outputs to deliver the desired outcomes. AM also is defined as a management paradigm and a body of management practices that is applied to the entire portfolio of infrastructure assets at all levels of the organization that seeks to minimize the total cost of acquiring, operating, maintaining, and renewing the orga- nization’s assets within an environment of limited resources while continuously delivering the service levels customers desire and regulators require at an acceptable level of business risk to the organization.

Glossary 21 Asset Management (AM) as defined by PAS 55—systematic and coordinated activities and prac- tices through which an organization optimally and sustainably manages its assets and asset systems, their associated performance, risks, and expenditures over their lifecycles for the purposes of achieving its organizational strategic plan. Asset Management Framework—system of processes, procedures, practices, support systems, organizational roles and responsibilities, and policies used to enable sound management deci- sions for the optimal management of physical assets. Asset Management Information System (AMIS)—computer-based software system for col- lecting and analyzing data, and extracting meaningful information on the performance of existing assets and their operating costs to aid in asset management decision making. AMIS is often also referred to as an enterprise asset management system or EAMS. Asset Management Plan (AMP)—document that identifies the short- and long-term service delivery requirements of the portfolio of assets belonging to an organization. It provides a framework for managing an asset, or group of assets, from within the asset portfolio. Asset Management Policy—sets the framework for the management of airport infrastructure and assets. Most policies include the following: • Organizational context and importance of asset management, • Overall vision and goals of the organization and supporting asset management vision and goals, • Executive and key position roles and responsibilities, and • Audit and review procedures. Asset Management Strategy—a high-level, long-term action plan for the assets and/or asset sys- tems, that asset portfolios or the asset management system. A preferred strategy outlining the minimum acceptable asset performance criteria needed to support service delivery including resource levels for human, fiscal, and IT for the required functionality. Asset Performance—measurement of the achievement of pre-determined outputs arising from the existence and operation of assets using a range of performance targets that measure the individual and collective contribution an asset makes toward service delivery and/or business outputs. Asset Strategic Planning—process of developing management strategies that will contribute to the best utilization of assets in the delivery of services to the community in line with corporate plans and service delivery strategies, and that will ensure ongoing compatibility between the composition of an asset portfolio and the changing environment within which it operates. Business Improvement Plan—review and documentation of current business processes carried out in an organization. Specific recommendations are then documented as future actions for the organization. Business Plans—Annual department or business unit operating plans that specify the outputs to be provided, and their input resource costs for a defined period of time. Capital Investment Strategic Plan (CISP)—strategic planning process for capital investment in physical assets through the acquisition of new physical assets and the material improvement of existing physical assets. Capital Project Evaluation and Prioritization Tool—methodology used in determining the timing of when a capital project should be requested and how much funding is available to complete the needed work. Change Management—aids in the evolution, composition, and policy management of the orga- nization. Economic Life—period from the acquisition of the asset to the time when the asset, while physi- cally able to provide a service, ceases to be the lowest cost alternative to satisfy a particular need. The economic life is at the maximum equal to the physical life but obsolescence will often ensure that the economic life is less than the physical life.

22 Asset and Infrastructure Management for Airports Enterprise Asset Management Systems—maintenance management system that operates across the enterprise to include the management of all physical assets owned by the enterprise. Enterprise Resource Planning—a means of applying external and internal procedures to an organization to carry out means of business. Gap Analysis—a process in which an organization reviews their existing processes, practices, and procedures and compares the findings to the expected delivery of these standards. General Aviation Airports—general aviation (GA) airports are one of the two categories of civil aviation airports. GA airports cater to all flights other than military and scheduled airline and regular cargo flights, both private and commercial. GIS (Geographic Information System)—a computer package that displays a map connected to a database. The package can typically combine features, such as roads and sewers, from different maps and overlay them on the same screen. To qualify as a GIS, such systems should also be able to reference a computer database for textual information, such as notes and dimensions, regarding features displayed on the map. Hurdles and Impediments—obstacles or risk that may get in the way of the organization while implementing the principles of asset management. Infrastructure Asset Management—is a focus of physical component/attributes of an asset and finding means of preventing those assets from failing. Intergenerational Equity—ensuring that future generations are not burdened with the cost of the consumption of infrastructure by current generations. International Infrastructure Management Manual—manual produced to give an understand- ing of asset management practices. ISO (International Organization for Standards)—organization known for producing and publishing international standards for all subject areas in the world, and forming a network between both public and private sectors because it is not a government organization. Key Performance Indicator (KPI)—quantitative or qualitative indicator of the quality of service, efficiency, productivity, or cost effectiveness of an agency, program, or activity that enables a comparison to be made for management purposes of performance against a standard target or norm; may be a quantitative measure or qualitative indicator of performance. Lean 6 Sigma—a quality management and statistical analysis approach to eliminate defects and reduce variability in business processes. Level of Service—level of asset service determined by both the quality and the quantity of ser- vices provided by an asset under consideration. Maintenance Managed Item (MMI)—MMI level is that level for maintenance detail elected for the organization asset register. The MMI could be a whole building in some systems, whereas in more sophisticated systems it could be a shaft beading on an electric motor. Best appropriate practice requires that the level of detail in the asset register should allow for the recording of data down to the MMI level. MMI refers to the lowest level of an asset’s physical structure that is to be recognized within an asset register where the registry is struc- tured as a nested hierarchy of physical assets. Typically, an MMI is set at that level of the hierarchy at which an asset is individually maintained or at which management decisions to repair, renew, or replace are made. Maintenance Management—organization of maintenance activities within an agreed policy. Maintenance Strategies—tactics and tools that will be used to deliver the maintenance plan, as well as defining the maintenance roles and responsibilities. Maturity Assessment—evaluation of the degree to which an organization uses recognized best practices and the availability of information required to plan for and implement improve- ments. The ultimate value of maturity assessment can only be realized in the context of an overall process improvement and organizational change program. Operations and Maintenance—activities related to the performance of routine, preventative, predictive, scheduled, and unscheduled actions aimed at preventing asset failure or decline with the goal of increasing efficiency, reliability, and safety.

Glossary 23 Organizational Strategic Plan—overall long-term plan for the organization that is derived from and embodies its vision, mission, values, business policies, stakeholder requirements, objec- tives, and management of its risks. PAS 55 2008 (Publicly Available Specification)—standards being used as the basis for develop- ment of ISO standard, which are supported by ANSI and the IIMM. Passenger Facility Charges (PFC)—fee imposed by a facility owner, such as an airport, on those using the facility; typically added to the cost of a fare. Plan, Business Plan—similar to corporate plan, but with a limited planning horizon (usually around 12 months), it addresses in significant detail how the organization intends to achieve objectives and handle issues. Although there is a single corporate plan, it is common practice for each business or functional unit in an organization to develop its own business plan. The collective business plans then need to be reviewed by the executive management team to remove duplication of effort and eliminate planning gaps. Performance Management Framework—an ongoing, systematic approach to improving results through evidence-based decision making, continuous organizational learning, and a focus on accountability for performance; uses evidence from measurement to support planning, funding, and operations. Rehabilitation—extensive work intended to bring an asset up to a new standard or to alter it for a new use. Renewal Analysis Tool—spreadsheet or commercially available software used to analyze asset data and information to compare existing assets or facilities with assets or facilities of equiva- lent capacity or performance capacity. Renewal—Project to upgrade, refurbish, or replace existing assets with assets of equivalent capacity or performance capability. Risk Exposure—potential impact of economic, financial, or social loss or gain, physical damage or injury, or delay on the achievement of project objectives, delivery goals, or management effectiveness. Risk Management—systematic way of identifying and analyzing potential risk and devising and implementing mitigation responses appropriate to their expected impact. Risk Mitigation—recognition that, in general, it is neither financially feasible nor humanly pos- sible to eliminate all risks associated with a project or program. The concept of mitigation accepts those risks it concedes lie within the organization’s “risk appetite” framework—those identified risks where controls are already in place to monitor and manage them. The con- cept further develops detailed risk management strategies and/or plans to manage those risks beyond the parameters of its risk appetite, and by so doing, brings these risks within its risk awareness context and control parameters. Strategic Asset Management (SAM)—planned alignment of physical asset input performance with an organization’s service delivery output needs, to achieve desired outcomes. This is achieved by the systematic management of all decision making processes taken throughout the intended lifecycle of a physical asset. SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis—provides an assess- ment of an organization’s strengths, weaknesses, opportunities, and threats to provide a snap- shot of the present and a view of the future for that organization. Whole-of-Life-Costs—all costs involved in a project including capital costs (planning, construc- tion, land, and equipment) and operating costs (staffing, and the costs of maintenance and refurbishment).

24 Other Sectors and Asset Management Examples of Other Sector Asset Management Application 1. U.S. Electricity Sector Drivers: Deregulation of the electricity market in the United States introduced competition in the generation businesses, which resulted in the disaggregation of vertically integrated utilities and a change to an asset management business structure for many businesses, in order to deliver cost and service-level efficiencies. • Organization Structure and Function – Separated the definition of the work required from the delivery of work. � Creation of an asset management function � Service delivery function � Service level agreements between asset management and other business units or organi- zation functional groups (e.g., IT, finance, operations) � Performance-based remuneration for executive managers in charge of functional groups, based on service level agreement signed, performance measures, targets, rewards, and penalties � Emergence of VP asset management roles in electricity distribution organizations • Lifecycle Processes and Practices – Reviews of maintenance and operations performance—cost and performance bench- marking – Capital spend reviews and justifications and prioritization based on strategic objectives, risk, revenue, service-level performance – Review of outsourcing strategies, development of more comprehensive contractor perfor- mance evaluation criteria and processes – Risk assessments, risk registers, risk mitigation plans 2. U.S. Water Sector Drivers: Long-lived civil infrastructure constructed in the post-war growth period is coming due for renewal or replacement. Federal funding for water projects is becoming more difficult to obtain, risk exposure associated with large buried infrastructure is considerable in some instances. Water businesses are being pushed toward preparing for financial self-sufficiency. This means that they need to better understand the true cost of provision of water and waste- water services so that funding strategies can be determined and negotiated with customers for a corresponding level of service, and within legislative requirements. A p p e n d i x A

Other Sectors and Asset Management 25 • Organization Structure and Function – Develop corporate asset management group to drive asset management improvements across service businesses (water and wastewater); ensure consistency in the evaluation of risks and capital priorities, as well as consistency with the corporate asset management policy – Asset owner, strategy manager, and service provider roles set up within the business with asset owner responsible for setting objectives and goals, asset strategy manager responsible for determining what needs to be done to meet the goals and objectives, and service provid- ers doing what needs to be done to meet the goals and objectives – Establishment of corporate or enterprise levels of service statements or agreements that drive the development of asset strategies • Lifecycle Processes and Practices – Compete asset registers represented in hierarchy from the network level down to mainte- nance managed items (level at which work orders are recorded) – Integration between maintenance management system, GIS, and financial systems – Maintenance strategy reviews undertaken to ensure that critical assets are managed with interventions undertaken at the optimal point in terms of repair/replace cost and risk expo- sure, and not run to failure – Asset hand-over procedures ensure that contractors/engineers provide all required asset lifecycle attribute data necessary for managing the asset from commissioning through renewal/disposal – Engineering records, standards and specifications reviewed and maintained so that assets are fully documented, an approved equipment list is in place to ensure that poor perform- ing equipment is not approved for installation, and that standards and specifications are continually updated in terms of reliability and maintainability requirements – Processes are in place to monitor asset configuration (e.g., pumps are operated within their design range, and should circumstances arise where they are required to operate outside design range, mitigations are put in place to manage any increased risk exposure, additional maintenance requirements, and any change in asset remaining life is managed through strategic planning process for renewal – Risk and service levels are managed by understanding what the organization’s tolerance is to risk—tolerable risk limits are determined quantitatively either using a score or dollar values, and any risks that exceed the tolerable limit are mitigated through the implementa- tion of controls such as redesign, redundancy, renewal, replacement with a different asset, or emergency response plans to reduce the consequence of failure 3. Rail Sector (United Kingdom/Australia) Drivers: Improvement in safety, on-time performance, and cost of service in the face of increasing demand (in many cases) and aging infrastructure. • Organization – Restructuring to include an asset management function to develop and oversee the applica- tion of asset strategies across the business. London Underground reorganized during the privatization and PPP period to include asset management function to ensure preservation of assets and performance, and seamless interfaces between London Underground and partners • Processes and Practices – Improvement programs determined using maturity assessments to identify areas of weak- ness that can be improved to gain the greatest improvement in performance – Review business processes and practices and maintenance management system function- ality to identify system improvements to enhance monitoring and maintenance decisions such as defect coding, analysis, and workflows to capture defect information

26 Asset and infrastructure Management for Airports – Use regular condition assessment techniques to identify cracks, misalignment, and other defects on rails to enhance proactive maintenance – Use decision support systems to predict future asset condition as an input to strategic renewal planning – Use integrated decision support systems, with maintenance management systems (e.g., Maximo and Optram) to enhance decision making and timeliness of work to improve performance 4. Gas Sector Drivers: Safety and pipeline integrity legislation. Safety is given the most importance as a driver for asset management while environmental issues are given the least. In regimes based on incen- tive regulation it is indicated that issues related to response to customers increase importance compared to cost-based regimes. This can be explained by the need to meet specific customer service level standards, which are set as an objective in incentive regulation regimes. • Organization – Recent research team surveys indicate that around 20 percent of gas businesses worldwide claim to have a well-developed, holistic approach to asset management – Most gas companies have a branch/group/division dedicated to asset management and have sufficient executive support to implement change where necessary • Processes and Practices – Majority of gas businesses have complete asset registers � Remote operational control is used by the majority of the companies and has consistently been the most common method of implementing maintenance and control of the gas networks; before 1995 almost 60 percent of companies had implemented this, with a prediction of 85 percent by 2010 � Not more than 60 percent of the companies will have implemented risk-based mainte- nance, gas leakage search programs, and smart metering by 2011 � Utilization of remote data access from field was very low at under 20 percent pre-1995, but was recorded as nearly 70 percent in 2007 and is predicted to increase a little more by 2011 � Renewal and replacement planning is typically undertaken on a 10-year planning hori- zon, with asset strategies applying for longer time periods