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CHAPTER 2 LITERATURE REVIEW
This chapter provides comprehensive background knowledge of decision making in IAM and reveals the application status of optimisation techniques in decision making in IAM with the intention of guiding this research and future studies in this regard. This chapter reviews and discusses related literature in order to:
Summarise the concepts of IAM and its decision making process;
Outline the commonly used decision making methods;
Review existing optimisation techniques and their applications in decision making in IAM; and
Survey the main decision making outcomes analysed with optimisation in terms of objectives and constraints.
Concepts of Infrastructure Asset Management and Decision Making
Infrastructure Asset Management
As a terminology, IAM may sound new; but, according to Sharma (2010), it has a history of around three hundred years and has been employed by U.S. utilities for a long time. It does not have a unified definition. Organisations describe IAM in different words. For example, New Zealand Asset Management Support (NAMS) defines IAM as “the systematic and coordinated activities and practices of an organisation to optimally and sustainably deliver on its objectives through the cost-effective life-cycle management of assets” (NAMS, 2011). The Federal Highway Administration (FHWA), according to Sinha and Eslambolchi (2006), defines IAM as a business process that “incorporates the economic assessment of trade-offs among alternative investment options and uses this information to help make cost-effective investment decisions”.
Even IAM is differently defined; it is widely admitted that IAM works on long-lived capital assets that are operated as a network and maintained at a particular level of service in order to deliver essential service to whole communities such as the road network of a city (NAMS, 1998; Sinha and Eslambolchi, 2006). The level of service is an important criterion in IAM, which measures the service quality for a particular activity (i.e. transporting) or service area (i.e. water delivery) against which service performance may be measured (NAMS, 1998). It is a set of standards used to describe the status of an infrastructure asset network in consultation with agencies and users (van Hofwegen, 1999). IAM is supposed to efficiently manage infrastructure assets so that the infrastructure assets are able to provide an acceptable level of service (Sinha and Eslambolchi, 2006; Uddin et al., 2013).
It is also widely acknowledged that IAM is very important and described as a “contributor to profits” rather than “a necessary evil” by Sherwin (2000). Many reasons contribute to its importance (Mostert, 2008; NAMS, 2011; Uddin et al., 2013), including:
Infrastructure assets delivering essential services to the public are important for users, agencies and owners (Haarmeyer, 2011). Users require the services delivered by the assets; owners want to create profit from the assets, and agencies need to increase the return on the asset investment. IAM deals with all the parties and makes sure their goals and requirements are achieved.
IAM enhances the understanding of infrastructure assets. During the IAM process, the infrastructure assets are examined and their future behaviour is estimated, which clarifies the performance of the infrastructure assets.
IAM manages the risk of failure. Many infrastructure assets, such as water pipelines, play a critical role in daily lives. Once they fail, heavy losses are incurred on the economy, society, environment and culture (Mostert, 2008). IAM keeps the risk of failures at a low level, thus improves the safety and reliability of the assets (Hall et al., 2006).
IAM improves the sustainability of infrastructure assets. It attempts to better utilise the available resources (i.e. budget), improve the delivered services and reduce the impact of infrastructure assets on other aspects such as the environment, so that infrastructure assets are more sustainable.
IAM increases the financial efficiency of infrastructure assets. It produces benefits by reducing the expenses of resources, extending the servicing life of infrastructure assets and delivering improved service (Berardi et al., 2008). With appropriate management decisions, large benefits could be generated and the infrastructure assets can be more cost-efficient.
IAM improves users’ satisfaction. It is able to improve the level of service with limited resources so that the delivered service has better quality, stability and reliability. This also improves the community environment.
Despite its great importance, the situation of IAM will remain one of the challenges for future generations (Marlow et al., 2010). The main reasons include:
Lack of investment: This is one of the biggest challenges of IAM. Infrastructure assets are highly capital intensive, from installation to maintenance and finally to replacement. However, adequate investment is not always made (Marlow et al., 2010). Moreover, owing to economic growth, infrastructure assets are getting more expensive, which enlarges the gap between required and available investment.
Complex business environment: Because of the economic recession, investments become conservative and government budgets become more constrained (Haarmeyer, 2011). To increase the financial support, private investors are allowed in some cities (Too and Too, 2010). Yet private and local investors have different goals and requirements of IAM, which makes IAM more complex.
Growing demand: Owing to the growing population, more services are required to satisfy all users. Moreover, because of the improvement in living standards, users want better services. Hence, IAM needs to improve the infrastructure assets so that their service is enhanced in both quantity and quality. A survey (Haarmeyer, 2011) estimates that hundreds of billions of dollars are needed for managing and constructing public infrastructure assets to meet the growing and stricter demands in the next twenty years.
Ageing problem: This is a widespread issue in IAM (Marlow et al., 2010). Fenner and Ainger (2014) point out in many cities infrastructure assets were built a long time ago and are reaching or even exceeding their designed servicing life. For example, in New Zealand a vast amount of roads were constructed during the 1940s to 1970s and are reaching the end of their service life (NAMS, 2011). In the next few years, a significant amount of roads may fail to provide required level of service without proper management.
Many considerations: Infrastructure assets have a wide range of interventions and affect a variety of factors and aspects (Lim et al., 2010; Jaffe, 2011). IAM is required to consider all possible interventions and related outcomes in order to make appropriate management decisions. This process can be difficult, especially when intangible outcomes are analysed.
Lack of skilled managers and tools: A study reveals many organisations still manage their infrastructure assets based on asset managers’ experience, yet the most asset managers do not have sufficient knowledge of IAM (Vanier and Rahman, 2004). Hence, the quality of IAM is limited. The lack of skilled managers and management tools increases the subjectivity and reduces the reliability of IAM.
Decision Making in Infrastructure Asset Management
Decision making is an essential part of IAM. It clarifies the goals and requirements of IAM, generates alternative strategies and makes management decisions for an infrastructure asset network. A management strategy indicates the types of interventions that are designed to be implemented to a segment of an infrastructure asset network during an analysis period. A management decision is a set of strategies selected for all segments of a network. When selecting different strategies, the outcomes of the management decisions are different. Decision making is required to select appropriate strategies so that the outcomes of the selected strategies satisfy the goals and requirements of IAM.
Decision Making in Organisations
IAM decision making is described in different ways. The International Infrastructure Management Manual (IIMM) suggests decision making is based on understanding and defining the goals and requirements of IAM and covers accountability, sustainability, risk management, service management and financial efficiency (NAMS, 2011). The United States Environmental Protection Agency (U.S. EPA) states decision making is to maximise the benefits based on the estimation of infrastructure asset deterioration, available funds and risk management (Sinha and Eslambolchi, 2006). The Maine Department of Transportation (MaineDOT) in the U.S. points out decision making should be a customer-focused process and considers safety, infrastructure condition and level of service (MaineDOT, 2012). The Water Infrastructure Network (WIN) in the U.S. recommends long-term, sustainable and reliable decision making that deals with the partnerships between governments and private sectors at different levels and considers a wide range of factors (Water Infrastructure Network, 2011).
Importance and Challenges of Decision Making
Even decision making has different descriptions; its importance in IAM is widely admitted. The main reasons are below (Sinha and Eslambolchi, 2006; Marlow et al., 2009; NAMS, 2011):
Decision making decides the outcomes of IAM. Decision making decides the implemented interventions and their implementation time by selecting strategies. After decision making, all the interventions are decided. Accordingly the outcomes, such as benefits and costs, which are calculated based on the interventions are also determined.
Decision making helps in achieving the goals and requirements of IAM. Decision making attempts to select the appropriate strategies from alternative ones so that the outcomes of the selected strategies meet the requirements and achieve the goals of IAM.
The risk is an important consideration in decision making. IAM is based on the predicted information; hence, the risk of failures exists and may cause heavy losses (Berardi et al., 2008). Decision making can control the risk by reducing the exposure of the risk events and/or consequence, therefore improving the asset reliability (Lindhe et al., 2011; Sitzenfrei et al., 2011).
Decision making helps to tackle the challenges of IAM. A variety of challenges of IAM is mentioned in Section 2.1.1. Decision making needs to generate and select appropriate strategies under these challenges and therefore supports IAM.
In summary, decision making is an essential part of IAM. Complex in its nature, decision making not only handles the challenges of IAM but also has its own difficulties:
Data are scarce (McDonald and Zhao, 2001; Vanier, 2004; Elliott et al., 2006). Decision making is a result of analysing data. Accurate data are critical and can be difficult to obtain. Firstly, the utilisation of the infrastructure assets may disturb the data collection and increase data noise. Secondly, some infrastructure assets are concealed, such as underground pipelines; hence their data collection is difficult. Finally, some cities began to collect data only decades ago; it is not sufficient for analysis.
Decision making deals with a wide range of outcomes. Infrastructure assets are the basis of everyday lives, of which management impacts economic, environmental, social and cultural aspects (Maunsell Limited, 2004). The outcomes originating from these aspects are often related, yet their relationships may be unclear or filled with uncertainties.
Decision making needs to clarify these outcomes and their relationships.
Decision making may analyse a large number of segments and strategies. IAM focuses on an infrastructure asset network that may be divided into thousands of segments. Accordingly a large number of strategies are likely to be generated for all the segments. Decision making is required to analyse alternative strategies and select strategies in a reasonable time.
Decision making plans the future. Strategies are to guide future interventions and their implementation is filled with uncertainties. Decision making should take the uncertainties into account and make practical decisions.
Various decision making methods are developed to assist decision making but none of them offers a panacea (Haarmeyer, 2011). Each method has its own characteristics. The selection of a proper method can be difficult without sufficient knowledge of the applicable methods.
Decision Making Process
The process of decision making in IAM means to make an appropriate management decision for an IAM project. Generally, it has four steps: clarifying a decision making problem, generating alternative strategies, measuring strategy outcomes and selecting strategies (Maunsell Limited, 2004; NAMS, 2011).
Clarifying a decision making problem: Decision making attempts to help to achieve the goals and requirements of IAM. Hence in the first step, these goals and requirements should be clearly defined and presented with the proper decision making criteria.
Generating alternative strategies: Strategies are generated by implementing different interventions at different points of time. Decision making needs to generate the alternative strategies that have the potential to result in good outcomes and achieve the goals and requirements of IAM. Normally a large number of strategies are generated to ensure all the potential strategies are covered.
Measuring strategy outcomes: The outcomes determine the priority of strategies. They should be carefully measured. Because IAM is related to many factors; a wide range of outcomes should be measured, including yearly outcomes (i.e. yearly maintenance cost) and overall outcomes (i.e. overall cost). Often these outcomes have different terms and cannot be simply combined, especially intangible and indirect outcomes (Robert, 2010).
Selecting strategies: After measuring the outcomes of each strategy, some strategies are selected to achieve the goals and requirements of IAM. However, the selection of strategies is not always easy because of the difficulties of decision making (see Section 2.1.2.2). Thus, decision making methods are developed to evaluate strategies and suggest the selections of strategies, therefore improving decision making process.
Summary
This section introduces IAM and its decision making process. IAM attempts to efficiently manage an infrastructure asset network, which is important and challenging. Decision making, as an essential and necessary part of IAM, determines management decisions by generating and selecting appropriate management strategies. It determines management outcomes and helps in achieving the goals and requirements of IAM. However, decision making is a complex process and has many difficulties.
1 INTRODUCTION
1.1 Background
1.2 Problem Statement
1.3 Research Objectives
1.4 Scope
1.5 Structure of the Thesis
2 LITERATURE REVIEW
2.1 Concepts of Infrastructure Asset Management and Decision Making
2.2 Outline of Common Decision Making Methods
2.3 Review of the Applications of Optimisation in Decision Making in Infrastructure Asset Management
2.4 Survey of Decision Making Outcomes in Terms of Objectives and Constraints When Applying Optimisation
2.5 Summary
3 METHODOLOGY
3.1 Stage 1: Study of Optimisation Techniques
3.2 Stage 2: Development of a Robust Multi-Objective Optimisation Technique
3.3 Stage 3: Communication of Optimisation Result
4 FUNDAMENTAL PRINCIPLES WHEN APPLYING MULTI-OBJECTIVE OPTIMISATION IN DECISION MAKING IN INFRASTRUCTURE ASSET MANAGEMENT
4.1 Some Concepts of Multi-Objective Optimisation
4.2 Strengths and Significance of Multi-Objective Optimisation in Decision Making in Infrastructure Asset Management
4.3 Process of Applying Multi-Objective Optimisation in Decision Making in Infrastructure Asset Management
4.4 Summary and Discussion
5 INVESTIGATION AND TESTS OF EXISTING MULTI-OBJECTIVE OPTIMISATION TECHNIQUES
5.1 Examination of Applied Multi-Objective Optimisation Techniques
5.2 Introduction of New Multi-Objective Optimisation Techniques
5.3 Preparation of Databases and Computer Techniques
5.4 Establishment of a Measurement Framework to Evaluate the Effectiveness and Efficiency of Multi-Objective Optimisation Techniques
5.5 Experimental Tests of the Multi-Objective Optimisation Techniques Based on Practical Decision Making
5.6 Assessment of the Listed Multi-Objective Optimisation Techniques Based on Practical Decision Making in Infrastructure Asset Management
5.7 Refinement of Multi-Objective Optimisation Techniques in the Context of Decision Making in Infrastructure Asset Management
6 DEVELOPMENT AND APPLICATION OF AN OPTIMISATION TECHNIQUE
6.1 Proposed Multi-Objective Optimisation Technique
6.2 Discussion of the Algorithm
6.3 Comparison of the Dynamic Epsilon Constraint Method with Other Existing Techniques
6.4 Tests of the Ability of Multi-Objective Optimisation to Solve Specific Infrastructure Asset Management Questions
6.5 Assessment of the Dynamic Epsilon Constraint Method
6.6 Summary and Discussion
7 COMMUNICATION OF OPTIMISATION RESULTS
7.1 Significance of the Communication of Optimisation Results
7.2 Discussion of Solution Representation
7.3 Development of a Communication Tool
7.4 Summary
8 CONCLUSION AND FUTURE RESEARCH
8.1 Conclusions
8.2 Lessons Learnt from This Research
8.3 Recommendations on Multi-Objective Optimisation in Decision Making in Infrastructure Asset Management
8.4 Further Work
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