Asset management starts and ends with risk management.  The root cause of  all wasted costs, repeat costs, overspending and underspending can be traced back to the lack of insight into the risk profile.   

When  40-60% of life cycle costs are attributed to unnecessary or unplanned failures does it make sense to understand where these failures come. 

In the context of long-term structural maintenance planning , where the goal  is to establish an efficient and effective platform to manage cost and structural aging, does logic suggest that to achieve these goals will you need to address  this major cost variable.LTMP clearly explained failure risk

Identifying potential risk and creating a risk management plan is not only a good management  and business practice,  it directly reduce unexpected and costly surprises and enables efficiency and effective resource allocation and asset management.

What is a risk from a structural perspective.

Risk is any unforeseen/unexpected/unplanned failure/event or consequence , other than the defined Level of service expectations, throughout the life of a structural item.

Statistically unplanned failures contributes 40 to 60% of actual costs.

By having an informed view of the risk profile of  structural item’s,  can these risks be managed to minimize/negate the potential impact of a occurance.

This is why risk management needs to be an integral part of a long-term asset management plan

Risk management is a five-step process.

  1. Establish the Scope risk framework
    1. Financial: Condition related – Unplanned failures & marginal cost levels above 3% FCI
    2. Structural: (defects/ reduced functionality/capacity/ reduced life expectancy.
    3. Health & safety (structural / condition / environmental
  2. Identify risks.
    1. What is the risks (RCA – Root cause analysis)
    2. Controls in place
  3. Asses risks
    1. Likelihood – determine the likely probability and frequency.
    2. Consequences – determine the result of a occurance That could be a loss, injury, disadvantage or gain.
    3. Risk significance – determine priority/ importance for levels of potential risks.
  4. Treat risks
    1. how risks are to be treated : Establish the adequacy of existing risk management strategies & controls Options are to Reduce likelihood and/or consequences; or to transfer/accept/avoid risks
  5. Implement a Risk management action plan
    1. Strategy , and the w’s (what, when how, who, how) needs to be developed
      • High risks and Avoidance strategies is usually owned by snr management
      • Moderate risk and transfer strategies is owned by operational management
      • Low risk and acceptance strategies is incorporated into standard operation processes.
  6. Ongoing monitoring and review.
    1. Having a dashboard with the key KPI will ensure timeous and diligent monitoring.
    2. The key KPI’s are:
      • Life adjustment factor – Margin life expectancy is reduced
      • FCI – facility condition index – % cost/current replacement cost
      • BRE – Business risk exposure index – Risk significance rate
      • Failure Confidence rate – Failure probability %



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