Is ‘Best Practice’ a Roadblock to Improving Asset Management?
Asset Dynamics’ Andrew Gatland muses on whether a belief in the existence of asset management ‘best practices’ has contributed to New Zealand’s infrastructure deficit.
Introduction
For organisations managing significant public infrastructure, asset management is a critical strategic capability that ensures the safety of people, the protection of property, and the delivery of cost-effective and reliable services to customers. To consistently achieve these outcomes, organisations must adopt structured and integrated management systems, underpinned by evidence-based processes and methods of working. These systems must be supported by competent individuals and continuously improved as the organisation evolves and learns.
These systems, processes, and methods of working are often referred to as the organisation’s asset management practices. In this context, this article explores the use (and potential misuse) of the term ‘best practice’ by asset-intensive New Zealand organisations and the implications for how we approach asset management improvement.
Before proceeding, some definitions are required. The Oxford English Dictionary defines practice as “the actual application or use of an idea, belief, or method, as opposed to theories relating to it.” ‘Best practice’ may, therefore, be understood as “the actual application or use of an idea, belief, or method, currently believed to be the best.”
When is ‘best practice’ not best practice?
Public infrastructure organisations are generally required to publish asset management strategies, plans, and other information to keep stakeholders informed of upcoming activities and enable external scrutiny of asset management performance. In these documents, a common statement is that the organisation has implemented, or is in the process of implementing, ‘best practice asset management’—a very significant claim.
The notion that your critical service providers have implemented ‘best practice’ is undoubtedly appealing for a consumer and may well help foster confidence among the organisation’s stakeholders. However, there are two important reasons why this confidence may not be justified.
The first is the fact that authoritative sources of these ‘best practices’ are seldom referenced, or if they are, it is often unclear exactly which ‘best practices’ have been adopted and to what extent. It is also rare to find examples where independent verification has been sought. This makes it impossible to determine whether the claim can be substantiated.
The second reason relates to actual performance and asset management outcomes. It should not come as a surprise to anyone that the state of New Zealand’s infrastructure is not where it needs to be to optimally support a modern and growing economy. It is difficult to reconcile the notion that our organisations have adopted ‘best practice’ asset management with the reality that our infrastructure performance is stagnating.
In addition to this general observation, there are now at least three examples of organisations that have claimed to be delivering ‘best practice’ asset management, only for clear and high-profile symptoms of poor practice to emerge a few years later. The only conclusions to be drawn are that the ‘best practices’ were either not adopted by the organisation as claimed, or that even so-called ‘best practices’ were ineffective in enabling the asset management objectives to be met.
Does ‘best practice’ asset management even exist?
The human resources management literature establishes a dichotomy between what are referred to as the ‘best practice’ and ‘best fit’ approaches. Advocates of the ‘best practice’ approach argue that there are certain HR practices that will support the competitive stance of an organisation, irrespective of context, including size, location, organisational culture, business model, etc.
In contrast, the ‘best fit’ approach holds that the appropriateness of a particular practice depends on the specific organisation’s strategy, internal structures and capabilities, and external environment.
There is support for a ‘best fit’ approach in the asset management domain. For example, the Institute of Asset Management’s (IAM) Asset Management Maturity Scale and Guidance describes the highest maturity grade, ‘Excellence’, as “a dynamic and context-sensitive state”. Additionally, organisations that report verifiable higher levels of asset management maturity tend to focus on delivering improvements based on self-identified gaps between where they are and where they need to be to consistently meet the expectations of their stakeholders.
There are undoubtedly certain requirements for asset management that are broadly, if not universally, applicable. For example, an organisation must know what assets it owns and the risks and opportunities related to those assets; it must have a plan to manage those risks and opportunities in alignment with the organisational strategy; and it must carry out work on the assets safely and to appropriate quality standards.
Returning to our definition of ‘practice’, however, these requirements are not actual applications or ‘how’ something should be done (practices), but rather general statements of ‘what’ should be done (management theories).
What about ISO 55001?
Recently updated in 2024, the ISO 55000 series of standards deal with asset management. The core standards cover concepts and terminology (ISO 55000), requirements for an asset management system (ISO 55001), and guidelines for implementing an asset management system (ISO 55002).
The ISO 55001 standard, against which an organisation may become certified, specifies the requirements that an asset management system (which encompasses policy, objectives, and processes to achieve those objectives) must meet. The standard is however silent on ‘practices’ or ‘how’ asset management should be done (a fact which in itself may be commentary on the existence of context independent ‘best practices’).
Meeting the requirements of ISO 55001 requires an organisation to consolidate its existing practices into a coherent process framework, identify and close gaps, and put in place methods to ensure organisational learning will result in ongoing improvement to the processes. In this way an organisation will meet the fundamental requirements for asset management by developing and refining practices that are appropriate for its own context.
Conclusion
All infrastructure and other asset-intensive organisations should be striving to become better asset managers tomorrow than they are today. This requires asset management fundamentals and requirements such as those set out in the ISO 55000 standards to be understood and translated into effective asset management practices within each organisation. Knowledge transfer between organisations and across industries by sharing practices that work should be encouraged, as even though the practices may not be directly transferrable, simply exposing people to different ways of thinking and doing things is valuable.
Use of the term ‘best practice’ is problematic for the reasons discussed earlier, but perhaps the biggest issue is the fact that if an organisation’s senior people truly believe it has achieved ‘best practice’ (in whatever sense that is meant), then the motivation for further improvement will be dampened. As it is for individuals, the learning process itself expands the universe of opportunities for further learning and improvement and therefore what ‘best practice’ might look like. In our experience organisations that are comparatively mature tend to describe their progress as a dynamic process or journey and see excellence as a moving target.
My final suggestion on ‘best practice’? Foster within your organisation a culture supportive of learning paired with an insatiable hunger for evidence-based improvement, and leave ‘best practice’ for others to use to describe you.