In the previous article, we discussed the role of predictive analytics in asset investment planning, focusing on the bottom-up approach. Keep reading to learn about the top-down approach.
What is Asset Investment Planning?
The main reason utilities are implementing the Asset Investment Planning Solution (AIP) is to have better control over costs and mitigate the risks to ensure high-value returns. It provides powerful capabilities and enhanced intelligence to assist in planning and managing asset investments and optimizing the benefits, costs, and risks of high-value assets.
The AIP solution should be used by everyone who manages strategic assets, focuses on creating and managing investment strategies, optimizing asset allocation, and achieving financial goals.
The bottom-up approach in Asset Investment Planning
The previous article explained the bottom-up approach to Asset Investment Planning (AIP). This approach focuses on the current condition of assets, including factors such as asset health, Probability of Failure (PoF), Consequence of Failure (CoF), and other data taken from the Asset Performance Management (APM) system. Based on this information, we can effectively plan maintenance activities. With the support of the AIP system, we can also create different scenarios and simulations to determine the optimal course of action, whether to repair, refurbish, or replace an asset. These decisions consider all relevant asset specifications, such as its location, planned outages, spare parts availability, and whether the necessary human resources and tools are on hand.
The top-down approach in Asset Investment Planning
The top-down approach, on the other hand, asks a bit of different questions. We need to answer strategic questions that shape the direction of the entire asset investment strategy. Instead of focusing on individual assets and their condition, we need to consider wider factors that influence long-term planning and ask questions such as:
- What is the general condition of our grid?
- How the grid will develop in the next 10 or 20 years?
- Which technologies are developing, and what are the alternatives?
- What is happening in the local and global energy markets?
- What are the current prices and forecasts for critical components and materials?
- What regulations and legislation must we comply with as we plan our investments?
Strategic Objectives
Organizational objectives typically drive the top-down approach. The objectives such as focusing on achieving net-zero emissions, expanding renewable energy generation, improving grid resilience, or renewing and modernizing outdated infrastructure, usually form the basis for planning next steps and forming future strategy.
For example, if a utility wants to focus on building up grid resilience, it might want to prioritize investments in grid automation and asset fault detection before it happens. This is not because assets fail, but because such upgrades enhance system availability and help with faster recovery from disruptions caused by extreme weather, cyber-attacks, or any other. Strategic investments help reduce downtime and save resources, aligning with long-term grid reliability goals.
Portfolio optimization and scenario planning
The effective AIP tool allows users to develop and compare multiple investment portfolio scenarios. These scenarios will help utilities balance competing priorities such as cost, risk reduction, and grid reliability…
Leadership is responsible for deciding on the resource allocation and timing of investments, but to do that, they need accurate simulations and scenarios to compare different strategies, such as what happens if we invest more in automation than traditional updates, how would a delay in funding affect grid reliability, and which scenario provides the best ROI while maintaining compliance…
Respond to Growing Trends
Technical innovations also play a crucial role in the decision when and where to invest. Utilities must stay agile and leave open options for redirecting resources toward innovations that will reduce long-term costs and increase flexibility.
Integration of both approaches
Asset Investment Planning will work best if both approaches are combined. Strategic goals must be proven by real-world asset data such as maintenance history, condition monitoring, and failure prediction. Both approaches will give utilities a powerful insight and framework to prioritize investment, navigate complexity, and create a robust, forward-looking infrastructure plan.
Conclusion
To take out the most of AIP, utilities should leverage both approaches. While the bottom-up method ensures decisions are grounded in real asset data, the top-down perspective aligns with long-term strategy and market situation. When combined, these approaches provide the data-driven basis for maximizing asset value, managing risk, and building a strong, future-ready grid.