Asset Management in Public and Private Sectors

Most of my firm’s clients are in the private sector but occasionally we do some public sector work. We usually notice a number of distinct differences in practices and in what motivates those practices. It would be nice to say that one can learn a lot from the other, but in truth, both can learn a lot from each other.

I thought it might be useful to compare and contrast the two sectors (based on personal observations) and then propose an idea for learning from each other.

Conclusion:

Neither sector has it all right nor all wrong. Both have strengths, some in common, and there is plenty of opportunity for each to learn from the other.

In both sectors the people who manage assets tend to be dedicated, well-educated and well informed. They all work within constraints – market-driven and politically motivated. In the public sector, policy and practices ensure some degree of consistency regardless of who is managing any given activity. Managers in the public sector tend to be capable and strategic in their outlook, but they won’t always have a strong technical background. In the private sector there is less reliance on policy and documented practices so individuals have a great deal of influence, resulting in a wide array of observed practices. Managers tend to be strong technical types with a more tactical perspective on what they are managing, sometimes even missing the more strategic needs of their organizations.

Market forces drive company strategy and decision making in the private sector and can lead to rapid change. Assets are tools to be utilized, built and disposed of, as needed. There is a heavy reliance on public infrastructure and it tends to be taken for granted. The influence of markets in the public sector is more muted – in fact if anything decisions lag markets considerably. There is however a keen awareness of the dependence that the entire economy has on the infrastructure they manage.

How can we share?

Presently we have organizations in which these two sectors tend to congregate to share ideas. In Canada, the private sector has the Asset Management Association of Canada (PEMAC). The public sector has Canadian Association of Asset Managers (CNAM). There are other groups as well – the Institute of Asset Management (IAM) being one that bridges both sectors – it is UK based but expanding globally. In the US we have the Society of Maintenance and Reliability Professionals (SMRP) which is largely private sector in focus (like Canada’s PEMAC). And there are other organizations focused on transportation assets, buildings, facilities, property management, etc.

There is no singular “asset management” community that we can all feel a part of. Given the differences between the two sectors and potential learning, this is a void that probably needs to be filled, but it isn’t widely recognized yet.

Each of the existing organizations tends to have a well-defined focus within their sector. Some have a strong emphasis on education and certification, others on certification alone, some on pushing the state of the art forward, some on encouraging proven best practices, some on information sharing, some on networking, etc. While there is a need for all of this there appears to be only a few that view Asset Management as a professional endeavor for people from a broad range of backgrounds. The IAM is one, the American Asset Leadership Network (ALN) and the Australian Asset Management Council (AMC) have that broad focus. The IAM is still largely UK centric with a handful of national chapters elsewhere. ALN is US-focused and primarily in the public sector at the federal level. AMC is a reincarnation of the old MESA (Maintenance Engineering Society of Australia) and has broad membership and recognition.

Unfortunately for North America with its great distances, a national chapter of anything (e.g. IAM) is almost doomed from the outset unless it relies solely on technology for sharing. SMRP and PEMAC do well in the USA and Canada with their more localized chapter structures. Perhaps that is a model we can use to share information. In fact, if those organizations would shift towards an asset management focus and de-emphasize maintenance and reliability then perhaps they could serve the asset management community. Presently, however, they do not. The Australian AMC model is one I would encourage us to follow.