Five Golden Rules for Increasing Asset Productivity 1994

Abstract: By 1991, AM was taking off in the UK, illustrated by the British Rail Network South East’s success.

1. Any asset not sponsored by a business must be scrapped!

Every single asset should be pinned down to a single business owner, then to a single owner within the business. Common assets "held centrally" are a recipe for waste. Application of this principle has reduced the locomotive fleet by 17% and wagons by 25%, saving

2. If in doubt, cut the asset base down

The trick is to live mean at periods of peak demand. Only two-thirds of the train assets and half the infrastructure and station capacity are needed off-peak. NSE has been able to handle a 20% increase in commuting while reducing the number of coaches, yet still reducing overcrowding.

Timetables are rewritten at least twice a year to match changing demand patterns, and no trains are scheduled for maintenance or cleaning in the peak. A 5% reduction in assets is worth A$26m per annum to NSE in reduced depreciation.

3. Sweat those Assets!

Fenwick Street station is a lean asset with only four platforms serving a daily throughput equal to that of Gatwick Airport. It commands significant station trading potential, and new shops, pubs, and buffets now yield a second, growing profit. Situated in the heart of the city, in an ultra-expensive area of land, the sale of the airspace above the station has been exploited to the utmost. Two rival office developments were built above the station, yielding even more profit for the shops underneath. In another case, falling traffic led to the closure of a station, the route being redirected, and the station being made way for office development. It is now earning 30 times as much as before.

4. Asset Synergy or Lateral Thinking

Encourage lateral thinking between groups of assets: two plus two equals a profitable five! A good example lies in fill-in electrification schemes such as South Hampshire, where a pocket of old diesel trains operated in a largely electrified network. The traction function's problem was to make a financial case for new diesel trains, but the solution came from the infrastructure group, with a proposal to electrify the route instead, at the same capital cost as the diesel trains. The operations function then demonstrated that they could "sweat" the surrounding electric fleets, avoiding the purchase of any new electric trains.

5. Think Smart!

Low-cost ingenuity can save millions of dollars on new assets. One division with a major

communications problem but no hope of getting the A$11 m capital investment from NSE,

determined to solve its problem and finally hit on a short-term solution of pocket "pagers" for all staff. For set-up costs of A$30,000 and running costs of just A$33,000 per annum, the Control office can bleep every member of staff, whether on trains, at stations, or trackside, and send a 40-word, consistent message detailing a cancellation, an emergency service, or the day’s business results.

*From a Keynote address by CEW Green to the Conference on Railway Engineering, Adelaide, Sep 1991, published in the very first issue of the Asset Management Quarterly, March 1994

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