US Government Efficiency Solution: Promote Whole-Benefit Analysis in Investment Decision Making
This article emphasizes the need to return to a first principle.
Asset management is not about assets — it is about managing the value generated from and through assets.
Organizations acquire assets to serve a purpose: to generate benefits. Total benefits minus the cost equates the value generated by an organization. Whole-benefit analysis for asset investment decision making evaluates asset performance in terms of the value it can generate for the organization. Asset management is about coordinating the activities that make this happen.
Assets generate value by providing a place or means to work, enabling access to networks, or delivering productive capability and capacity. Assets are inputs that help produce outputs—products and services—that lead to outcomes, otherwise known as the sum of benefits realized. A portion of this value can be attributed to the assets that support its generation. This relationship forms the basis for whole-benefit analysis. Whole-benefit analysis, in the context of asset management, evaluates the impact an asset related policy, strategy, plan, or action will have on value generation.
US Federal policy requires use of whole benefit analysis in investment decision making. Policies supporting this are OMB Circulars A-11, A-94, and A-123. Real property, facilities, and built infrastructure are assets that are acquired and used by the US Government for a purpose—to generate benefits… OMB Circular A-94 lays out the framework for evaluating investments in real property, facilities, and built infrastructure.
The core idea is straightforward: for an investment to make sense, the benefits must outweigh the costs over time. This is typically assessed using discounted Net Present Value (NPV). An NPV analysis accounts for the time value of money by discounting future benefits and costs to their present value.
BUT DOES THIS REALLY WORK...?
THE ANSWER IS NO IN TERMS OF WHOLE-BENEFIT ANALYSIS...
You can find out more about this problem and how to fix it by reading the rest of the article with a free subscription to the AMP Newsletter found at https://amp4outcomes.substack.com/
领英推荐
This article describes how whole-benefit analysis works, how the US Government fails to incorporate whole benefit analysis in investment decision making, how to overcomes current practices that do not apply whole-benefit analysis, and how to implement whole benefit analysis at an organization.
In-depth background for the points made this article is available at:
Written to Jack Dempsey | February 11, 2025
AMP Newsletter #109
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3 周One friendly amendment to this excellent article: "Organizations acquire assets to serve a purpose: to generate benefits for stakeholders/interested parties." Whatever an organization does, it does for, to and with someone. Asking who these someones may be and what their perspectives may be is the key underlying the genius of ISO 55001 4.2. requirement that organizations understand the needs and expectations of stakeholders.
President at Kahua
3 周The key to being able to put your organization in a position to do this analysis is by collecting the asset documents and attributes throughout the lifecycle. You can't start the process in Maintenance. It must start in design and construction. So much can be learned from all the rich data collected up front.