News | SPM Assets

How to manage your property asset portfolio in times of instability.

Written by SPM Assets | Jul 27, 2023 1:08:04 AM

Escalating material prices and labour costs; rising energy prices; interest rate hikes; high inflation; multiple adverse weather events; political uncertainty; increased lawlessness – 2023 is a challenging one for Asset Managers. Thoughts on how to best manage your property portfolio, from a New Zealand perspective, even in these turbulent times.

As we navigate through 2023, New Zealand finds itself grappling with a multitude of challenges that are causing instability across various spheres. The economic landscape is characterised by rising energy prices; escalating materials and labour costs; interest rate hikes; and high inflation. The resulting increase in poverty is leading to more lawlessness – and in an environment where there is already a degree of political uncertainty, for this will be an election year.

Simultaneously, New Zealand is experiencing the repercussions of multiple adverse whether events, which are further straining infrastructure and resources.

All of these factors have a significant impact on Asset Management Planning. SPM Assets recently interviewed Rob Ashley, Asset Planning Manager at Wellington City Council, for a case study and to gain his insights on how he uses SPM Assets’ solutions to manage his $16 billion property portfolio during times of instability.

What you need to plan for the future in times of instability – an evidence based approach

1. Up-to-date asset condition data

In order to plan for the future, you need detailed evidence on the condition of your current asset portfolio. Or as Rob says, “Not having data is like boxing in the dark”.

2. Lifecycle data

Asset condition data is not the only data you need; you also need to overlay the lifecycle data of each component. This is contained within the SPM Assets ‘component reference’ information. By combining the data you will then know, for example, when air conditioning units will need to be replaced, or how much life remains in roofing or switchboards, and so on.

The lifecycle planning process allows an Asset Manager to analyse and report on an asset portfolio in a way that makes sense and is easy to communicate with other stakeholders. Making it far easier to forecast and budget into the future – even during times of instability.

“If you’ve got evidence-based data, that really allows you to forecast with some certainty what the future requirements are for the portfolio,” says Rob. “Otherwise, all you’re doing is looking at how much you spent the year before, adding CPI, and crossing your fingers hoping that you’re going to have enough in the tin.”

3. Up-to-date unit rates

In asset management planning, the unit rate refers to the gross replacement or renewal cost of a component in current day values. This encompasses all the costs associated with removing the current asset; purchasing and installing the replacement; and properly disposing of the old asset. Read: How inflation impacts on unit rates in property asset management.

Rob says: “The SPM software is invaluable in this environment of instability. We just have to run the component index upgrade, to make sure we’re bringing in the latest indices.”

4. Review your Levels of Service with ever-changing budgets

In these challenging times, it may be necessary to review your organisation’s Levels of Service standards. Where projects may need to be delayed because budgets change, it’s the Asset Manager's role to report on the impact of these delays on achieving the standards, Read more: What are Levels of Service, and why are they important?

“We’re heading into an environment of austerity,” says Rob. “In times of extreme constraint, excellence in asset management is one of the best things that you can have because you can forecast with great certainty in terms of what it’s going to take to maintain the level of service that you desire to provide.”

5. Building resilience – and the balance between reactive and planned maintenance

This may be an appropriate time to review the balance between planned and reactive maintenance. This is particularly relevant if your portfolio is (or has already been impacted by) adverse weather events – planning for buildings to be more resilient. If we are more planned, then the repairs needed through adverse events can be designed with resilience in mind. While this is more expensive in the short-term, it is more sustainable long-term.

It may also be appropriate to review the balance between planned and reactive maintenance if your organisation is increasingly affected by wilful damage, theft, vandalism, or other lawlessness. Read: Reactive and planned maintenance – getting the balance right.

Summary

The current climate of instability is undoubtedly making Asset Management Planning more challenging than ever. Fortunately, the SPM Assets solutions can help you navigate through the chaos and deliver more sustainable building portfolios for current and future stakeholders to thrive.

Next step

Contact us if you need help with adjusting your lifecycle planning and Asset Management techniques to suit the current environment of instability.