Asset managers have long strived to receive the right data that tell them when their assets need proper maintenance. With the increasing number of data that is now possible to be processed with industry 4.0 technology, it is a real possibility to use this data to improve capital planning decisions. While advanced analytics is a tool used by infrastructure players, they seem to be lagging compared to other sectors such as finance, retail and automotive. Applying advanced analytics approaches in the right manner has the potential to generate deeper insights and value on infrastructure life cycles, maintenance versus replacement decisions and asset-longevity trends. This blog will describe the role of advanced analytics in improving infrastructure capital planning.
Why Even Consider Advanced Analytics?
Asset managers already understand the importance of maintenance. Without proper maintenance, they face the risk of dealing with random breakdowns and spending enormous amounts of money on repairs. While maintenance significantly reduces the cost of replacement, asset owners must make a continual decision on whether they should spend money to maintain, replace or purchase a new asset.
Sometimes replacement is inevitable due to new regulatory, operational and mission factors. In situations where such conditions do not require asset managers to purchase new assets, at the end of two spectrums, the debate lies between when one should continue to invest in maintaining or replacing the asset. Many asset managers tend not to consider this question much, particularly because they lack advanced analytical capabilities.
Asset managers may end up wasting resources by replacing assets too early, failing to understand their comprehensive lifecycle. They would usually replace it by relying on benchmark rather than asset-specific data. In other words, say an asset manager purchased multiple machines of the same kind together. Although each of these assets was purchased on the same day and perhaps would have been manufactured on the same date, the life cycles of each are vastly different. Hence, if maintenance was to be carried out based on the general understanding that it needed to undergo upgrades or maintenance every six months, an asset manager may send it for maintenance before its intended time. As a result, the asset would be over-maintained, leading to budgetary sinkholes. This can drastically impact a company, especially where replacement would have been much more cost-effective than continually spending finances on an asset that has undergone over-maintenance.
Benefits of Incorporating Analytics into Capital Planning
Experts from KPMG have for many years strived to provide awareness of the importance of advanced analytics in improving infrastructure capital investments. They note that even in global surveys conducted in 2019, 83 per cent of engineering and construction executives wanted their organisations to be data-driven. However, 52 per cent of them did not perform data analytics across all projects, while 32 per cent used basic analytics and 14 per cent used advanced analytics. It is important to note that advanced analytics, due to its futuristic predicts is the most appropriate form of analytics that can help in making smart capital investments. Here are a few reasons why:
Create Accurate Financial Budgets
At the heart of making a decision between maintaining an asset and replacing it is whether an asset manager, in the first place, has the financial means to do so. An asset manager that integrates advanced predictive analytics into their operations can create reliable budgets that look as far as ten years ahead. Using the asset’s life cycle data, the changing prices of a volatile economy and other risk factors, advanced data analytics provides a budget that considers the purchase, manufacture, installation, and maintenance price and incorporates a bit extra, leaving space for emergencies.
Understand the Life Cycle of Each Asset
As previously stated, the life cycles of assets are unique from one another. Trying to understand these minute differences manually is difficult. With the number of assets in the company, it would be next to impossible to keep track of the right maintenance schedule for each material. An advanced data analytical solution comes with a system that gives asset managers all the information required via one digital screen. Hence, receive individual insights on each asset while being able to study how smart infrastructure capital planning projects can be executed through the automated reports generated.
Strengthen the Life Cycle of Assets
Every time an anomaly is left for repair for an extended period, the issue starts to become worse. The more this happens, the more an asset manager risks an asset’s life cycle. While advanced analytics can eliminate situations where assets reduce their life cycle, it can also lengthen it. This is done by informing the asset manager of an impending risk in advance, giving one ample time to address it without risking further damage. In addition to advanced analytics ability to understand the right time assets need routine maintenance, it significantly strengthens asset-centric organisations’ life cycles by fixing sudden anomalies before they get worse.
