Asset investment planning

Best practices according to Copperleaf

A large part of the energy infrastructure in Europe and North-America is in need of significant re-investments. Many plants are close to their projected end-of-life. The investments however have to satisfy the demands of multiple stakeholders and have to incorporate high environmental and safety standards. To cope adequately with such large capital expenditures, energy companies must execute effective asset investment planning.

According the Canadian consultancy group Copperleaf Technologies, bringing engineering and financing together is one of the prerequisites for optimizing the allocation of resources.

Copperleaf sees eight best practices for asset investment planning:

1. Long-term planning
   From a strategic perspective, assets require longer term (> 5 years) planning in order to maximize their value and optimize the expenditures
2. Understanding asset and market conditions
   Asset production capability should be drawn against market conditions (demanded volumes, time of day, particular region, etc.)
3. Considering corporate goals and constraints
   Assets should be considered in the context of the overall strategic direction of the company and its goals and constraints. What is the effect of changing the constraints on performance and risk?
4. Understanding the value proposition of the asset
   For an optimal allocation of resources, life-cycle needs of the asset should be drawn against the overall value proposition of the asset.
5. Using rigor and discipline in prioritization and decision-making processes
   Investments should be prioritized over multiple years, within constraints and tolerances.
6. Using practices that drive governance and transparency
   Risks and opportunities should be clearly defined to facilitate an open and transparent decision-making process.
7. Enabling enterprise-wide communication
   Investment planning calls for an effective, bi-directional communication between corporate finance and operating groups (engineers, asset managers, etc.).
8. Using asset investment planning technologies
   A high degree of data management and analysis can be supported by software packages like ERP (Enterprise Resource Planning), EAM (Enterprise Asset Management), and AIP (Asset Investment Planning).