Building A Value Framework As The Basis For Asset Management Decisions
[This post was written by Barry Quart and provided by Copperleaf.]
How do you make decisions? Well, that can be a tough question to answer. Most people will say they make decisions based on what they think will deliver the best outcome.
When a business decides how to spend its money, it generally will invest in the things that will return the greatest value to the organization. Seems obvious, but is it?
It all depends on how you define “value”? Is it reduced costs? Increased revenue or financial benefits? Better products and services? Happier customers? Reduced risk of an environmental or safety incident? The answer is YES! All of these things represent value, but they do so in very different ways.
The trick to making true “Value-based Decisions” is being able to identify all of the ways an investment delivers value, and align that value with the goals of your organization. For example, a company that wants to invest for future growth might value things differently than a company that needs to optimize performance for efficiency!
We utilize the Copperleaf Value Framework to help clients quantify all the benefits of an investment—and the probability and timing of realizing said benefits. Once the client has gained agreement on the value of those benefits, this quantification allows all the various impacts of investments to be fairly and objectively considered.
What does a value framework look like?
The appropriate value framework will vary from organization to organization because it depends on the strategic objectives of each organization. However, the value framework for a utility will typically include measures for:
- Cost of investment
- Financial benefits of the investment
- Service level impacts
- Safety, environmental and regulatory risk mitigation
We’ll be discussing this in more detail at the upcoming conference, but in the meantime, watch our video and check out the 2nd in our 3-part series chronicling the adventures of Coop (Director of Interplanetary Asset Management) and his trusty sidekick, C55!
Our cast of characters explain what a value framework is, how it’s created, and how it can help you make more informed and more objective decisions that are aligned to the priorities of your organization—or in their case, the galaxy!
If you missed the first video, where Coop discovers ISO 55000, meets the hyper-intelligent C55, and saves the galaxy from dire consequences using Asset Investment Planning & Management, you can view it here.