UK: Defensive Strategies for Legislation and Regulations in Asset Management

Last Updated: 9 March 2005
Article by Daryl Mather

This article is based on the book, The maintenance Scorecard: Creating Strategic Advantages". (ISBN: 0831131810) Published by Industrial press and available from Daryl Mather is an international specialist in the areas of asset management and reliability who currently assists corporations to achieve strategic advantages in the management of their physical asset base.

Situation Appraisal

In the United Kingdom five rail executives are currently accused of manslaughter in ongoing proceedings arising from a train derailment in 2000 which killed four people and left 102 people injured. The Hatfield train disaster, as it has become known, has reignited efforts in that country for legislation to make it easier to prosecute negligent employers with heavy fines or imprisonment in cases of deaths or injury at work. Such legislation was unveiled in November of 2004 and would introduce the crime of corporate manslaughter.

This is the culmination of an ongoing public debate within that country since the 1980’s, however, it is also part of a wider global trend towards greater accountability. This has included changes in the laws of Australia, the United States, Brazil and Canada. Of particular importance was the passage of bill C-45 into applicable law in Canada during 2004. This bill was created in relation to the Westray mine disaster where 26 miners were killed in Nova Scotia in 1992. The Act provides significant penalties in the event of a conviction. This includes imprisonment to a maximum of 25 years for individuals and fines of up to CDN $100,000.00 for corporations. It is important to note that these penalties would be in addition to any existing penalties provided by provincial occupational health and safety legislation or other regulatory statutes.

Perhaps the strongest and most recent example of this lies in the recent publication of the report titled "Final Report on the August 14, 2003 Blackout in the United States and Canada- Causes and Recommendations" published in April of 2004. This report was a joint US – Canada investigative effort which was completed over an 8 month period.

The very first recommendation of this report, which is also alluded to in the covering letter, reads as follows-

Make reliability standards mandatory and enforceable with penalties for non-compliance.

Although this last example is still merely a recommendation, it shows the overwhelming trend throughout the world towards greater accountability for people responsible with the management of physical assets. It also highlights the unique responsibilities that asset managers have in managing the corporate exposure to risk.

In the case of the Hatfield Train Disaster the people currently charged include Regional Directors, asset managers, a civil engineer and a track engineer. As this trend continues it appears obvious that corporations will increasingly be questioned regarding events relating to safety, environmental and reliability issues. It also appears likely that it will be individuals, as well as corporations, who will be called to account.

The Impact within Asset Management

This has far reaching throughout within the managerial discipline of asset management, including ensuring that those people taking any decisions regarding the management of physical assets understand the full consequences of decisions taken within this area.

However, the immediate reaction to these growing issues is to look at the safety systems and procedures that are in place, with the intention being to ensure that a climate exists where all practical efforts are taken so that the work is completed safely. Yet there is another aspect of the asset managers role which often goes overlooked, that of determining exactly what work actually needs to be carried out.

Determining the make up of the maintenance regimes that are carried out on a piece of equipment, system or plant, remains an often neglected areas of asset management, or worse, it is done through the application of out of date thinking and concepts.

This area has evolved greatly over the past twenty five years. Concepts that were previously thought of as common sense, such as age based failure or generic maintenance levels, are now understood to be either only partially correct or absolutely wrong. (Depending on the situation) While it is often said that "something is better than nothing", within the area of asset management this is often not the case. Applying maintenance strategies in a manner that is not logically robust, or is aligned with outdated thinking is not only wrong economically, but often can have potentially dangerous consequences.

Building defendable maintenance activities that will support the corporations strategic objectives is one of the key areas where asset managers are able to not only add economic value, but also contribute to the management of corporate risk. This is a process that requires a completely new understanding of the way that physical assets need to be managed and includes;

  • a quantified (where possible) understanding of what it the asset base is required to do in all aspects of reliability, (economic performance, safety performance, compliance with regulatory guidelines, etc),
  • an understanding of whether or not the existing assets are able to do what is required of them,
  • the generation of the management strategies to ensure that they continue doing what is required of them.

By developing the asset management strategies in this manner, corporations find themselves with a number of direct results among which are;

  • documented decisions, along with their justifications and the logic used to determine each of them,
  • an understanding of the level of risk that they are willing to accept and the corresponding levels of maintenance,
  • and lastly, and most importantly, a far more reliable asset base in terms of performance, cost effectiveness and the management of corporate exposure to risk.


As asset managers enter a new era of corporate and individual accountability, merely focussing on "doing the job right", (existing safety procedures and processes) will no longer suffice. There is a pressing need for corporations to also look at the larger issues of "doing the right job" in order to increase the overall reliability of the physical asset base. This means ensuring that;

  • all decisions taken regarding the formulation of asset strategy are taken according to modern internationally accepted standards and thinking
  • the people taking such decisions are qualified and experienced enough to understand the consequences of such decisions, and
  • all decisions taken are documented, including the level of risk that has been accepted, and are able to be defended if the need should arise.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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