Infrastructure Asset Management

Infrastructure asset management (IAM) is a systematic and strategic approach to managing public infrastructure assets, such as roads, tunnels, bridges, and utility grids. It also includes managing assets like railways, sewer lines, telecommunication networks, and water supply systems throughout their lifetime. Infrastructure asset management firms undertake the holistic process of IAM, from planning and designing to disposal or decommissioning.

Governments of various countries rely on prominent IAM companies to build, operate, and maintain their national infrastructure systems. This is done through Public-Private Partnerships (PPP) and other concession agreements to promote sustainable growth and economic development. These collaborative business models require a forward approach to anticipating future needs and planning resource requirements, strategies, and finances in the right direction.

Let us now have a look at how an infrastructure asset management system works: 

1. Planning and Budgeting: The first step in the IAM process is to determine the need for an asset or its replacement and thereby develop an outline of the plan and budget constraints for the respective asset. 
2. Designing and Procurement: The next step is to figure out a precise design for the project and arrange the required financial and material resources for actualizing the plan.
3. Construction or Acquisition: Then, the IAM firms (together with the government's support) engage in constructing the infrastructure asset or acquiring it as planned. They even perform asset trials and testing to check whether it meets the desired standards or requirements.
4. Operations and Monitoring: After the successful installation of the asset, it is brought into work to provide the desired services to the public. The responsible IAM company also frequently examines the asset for performance efficiency over its lifetime.
5. Improvements, Maintenance, and Upgradation: The firm takes care of the asset's preventive maintenance (regular overhauling) and reactive maintenance (repairs on breakdown) to keep it in good working condition.
6. Replacements or Renewals: Although these are long-term assets, they need to be renewed or replaced once they reach the end of their lifespan.
7. Review and Audit: The firm periodically audits the IAM process throughout the asset's lifecycle to identify loopholes or areas for improvement.

Some of its relevant examples are as follows:

Example #1

Suppose ABC Corp. is a waste collection and management firm. It undertakes an infrastructure asset management project to keep the city clean, recycle waste, and use it for energy generation at plants. Now, in this case, the waste collection vehicles, recycling plants, and waste management systems are all infrastructure assets. The company is responsible for operating, maintaining, and renewing these assets over their lifecycle.

Example #2

The global infrastructure asset management industry experienced substantial growth in 2023, reaching USD 37.65 billion. It is forecasted to expand to approximately USD 86.31 billion by 2033, with a compound annual growth rate (CAGR) of 8.70% between 2024 and 2033. Indeed, North America has emerged as the IAM market leader in 2023, contributing 33% of the market share, driven by significant investments in upgrading aging infrastructure, particularly in the United States and Canada.

Moreover, the transportation segment held the largest market share of 32% in 2023, with a primary focus on managing assets such as roads, bridges, railways, and airports. Meanwhile, the energy infrastructure segment is projected to experience significant growth at a remarkable CAGR of 11.4% between 2024 and 2033, driven by the integration of smart technologies to optimize energy asset performance. Nevertheless, services play a crucial role in the market landscape, with operational asset management covering over 40% of the market share in 2023.

Meanwhile, the service segment, in terms of components, accounted for a significant share of 66% in 2023, covering a wide range of professional offerings to support the implementation and operation of asset management systems. Additionally, the U.S. infrastructure asset management market was valued at USD 8.70 billion in 2023 and is anticipated to attain USD 19.94 billion by 2033, hence, with an expected CAGR growth of 8.70% from 2024 to 2033.

Successful IAM strategies have resulted in the best practices within the industry, including:

1. Using proper geolocation systems for gauging the accurate condition and position of the infrastructure assets.
2. Take a proactive approach to planning through robust monitoring and risk assessment methods, addressing problems before they occur.
3. Gathering real-time asset information about the asset's performance through the Internet of Things (IoT) and Artificial Intelligence (AI) can help in proper strategic implementation.
4. Conducting periodic analyses and inspections can avoid sudden asset failure or breakdown.

IAM is the key to the sustainable growth of a nation since it brings together the government, public, and private sectors to achieve shared objectives: 

• Sustainable Development: The IAM process aims to achieve consistent growth in the economy, public services system, and nation over the years.
• Better Control: The IAM companies exercise greater control over the public infrastructure assets and systems, ensuring their proper care and upkeep throughout their lifecycle.
• Increases Asset's Life: When the IAM firms efficiently manage the infrastructure assets and take proper preventive and reactive maintenance measures, these assets offer services for an extended period.
• Mitigates Asset Failure Risk: Such practices aim at infrastructure risk management; by making sure that these assets are kept in the best working condition, the IAM firms reduce the chances of sudden asset failure.

IAM is a capital-intensive process since these assets have a long lifecycle and require thorough upkeeping and maintenance. However, firms encounter various issues in the current political and economic setup, as discussed below: 

• Insufficient Funds: Infrastructure asset management firms often struggle with arranging the funds required to control and maintain such assets.
• Complexities of PPP Models: The PPP and other concession models are complicated in terms of procurement, negotiation, agreement, and implementation. 
• Asset Information System Loopholes: The IAM system works in integration with the asset information software, which is prone to technical problems and inefficiencies. 
• Political Agenda Hinders IAM Investments: Sometimes, the government delays investments in infrastructure assets since they don't provide any political benefit.