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AAPA FINANCE COMMITTEE WEBINAR:STRATEGIC ASSET MANAGEMENT2pm-3:30pm (EDT), MAY 21, 2015
AGENDA
Opening remarks: Jeff Strader, CFO, Port Freeport, and Chairman, AAPA Finance Committee—5m
Overview of strategic asset management —Erik Stromberg, Stromberg Associates—15m
Port Perspectives: Drivers, status, lessons learned and future plans at selected ports—50m
Port Metro Vancouver—10m
Port of Portland Oregon—10m
Port of San Diego—10m
Port Alliance of Seattle/Tacoma—10m
Port of Houston—10m
General Discussion/Q&A—15m
Next steps—Continuing SAM education through a six-webinar series in 2015 –5m
Jeff Strader, CFO, Port Freeport TexasChairman, AAPA Finance Committee
Welcome and Introduction
Strategic Asset Management—An OverviewErik Stromberg, Stromberg Associates
Definitions
PAS 55: “Systematic and coordinated activities and practices through which an organization optimally and sustainably manages its assets and asset systems, their associated performance, risks and expenditures over their lifecycles for the purposes of achieving its organizational strategic plan.”
ISO 55000: “…coordinated activity of an organization to realize value from assets.”
ISO 55000: “Asset management policy is the link that connects strategic and business goals to the physical asset portfolio.”
SAM Overview—StrombergWhy is SAM an emerging management imperative?
Aging Infrastructure
Operating costs—too high and too often hidden
Deferred maintenance--substantial but uncertain scope, cost and impact
“Preventative maintenance” program = “run-to-failure”
Inadequate Capital Resources:
Scarce public capital,
Cautious private capital, and
Inadequate internal resources
SAM Overview—StrombergWhy is SAM an emerging management imperative?
Business processes
Asset data: Deficient, especially life-cycle position/variable definitions/not transparent
Information systems do not support investment decisions
Uncertain level-of-service requirements
Capital planning—ad hoc prioritization does not comprehensively address strategic risks across the organization
Leaseholder responsibilities: Poorly defined/not specified/not monitored
Human resources: Retiring ‘Boomers’ -- loss of institutional knowledge
SAM Overview—StrombergCurrent state of asset management
Unpleasant surprises—facility failures
Inconsistent decision processes
Suboptimal allocation of scarce capital
Higher than necessary repair and maintenance costs; longer down times
Lack of confidence by Commission/shareholders/senior management
Damaged reputation among customers/critical stakeholders
Due diligence challenges – “what is the value of this facility?”
Lower employee morale (fixing same thing over and …)
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Maturity Pyramid
SAM Overview—StrombergSteps to SAM Program Development
Define SAM goals; develop policy; establish SAM plan aligned with corporate goals
Data/Information systems review; gap analysis; refine asset registry/hierarchies;
Define required asset levels of service/performance measures
Assess current and life-cycle asset condition/performance
Investment prioritization:
Apply risk analysis to prioritize asset investment/reinvestment options
Apply budget constraints to identify affordable, mission-critical investments
Review results; assess progression toward sustainable, embedded strategic asset management practices; refine SAM policy and protocols; establish training programs
SAM Overview-StrombergLessons learned
Develop an asset management plan (road map) defining:
clear, measureable goals,
timelines, critical paths, success criteria,
budget and annual review process
Senior leadership engaged at beginning and throughout
Demonstrate value--find and deliver early and ongoing successes
Keep all departments engaged — understand resistance and its root causes--don’t ignore it
Asset management will neither get cheaper nor easier over time. Negative consequences of NOT getting started will ONLY get worse.
Port Metro VancouverGary Tosh, Infrastructure Asset Management Coordinator
Current Standing
Asset inventory: ~750 assets in 15 asset classes
High level, baseline condition assessments on all assets
Detailed condition assessments: prioritized and scheduled for next 5
years
Created GIS standards for future detailed inspections
Integrate future and past inspections results spatially
Interdepartmental asset information flows are being fine tuned
Purchase, construction, upgrade, repair, divestment, demolition
Focussing current AM plan on business critical assets
Port Metro VancouverGary Tosh, Mo Mofrad
Drivers
“What will our annual capital maintenance expenditures be for the
next 10 years?”
“What are our priorities for capital repairs and why?”
“What are the risks if we defer these repairs?”
A shift from being reactive to proactive
Port Metro VancouverGary Tosh, Mo Mofrad
Long Term Goals
“The goal of PMV’s Asset Management program is to develop an
integrated decision support framework with modeling capabilities
for short, medium, and long range forecasting to optimize the
creation, use, and replacement of infrastructure assets. This should
be completed at the lowest possible lifecycle cost while meeting
the required level of service at an acceptable risk.”
Port Metro VancouverGary Tosh, Mo Mofrad
Measuring Success
Short & Medium Term
Integrated data from in-house GIS, MS SQL server database, corporate documentation database
Finalised in-house asset information flows regarding the purchase, construction, upgrading, repair, divestment and demolition
A completed AM plan for business critical concrete structures
Long term
When the AM team has identified the optimal capital maintenance points for PMV assets
Able to quantify the risks associated with expected capital maintenance funding scenarios
Port Metro VancouverGary Tosh, Mo Mofrad
Organizing The Effort
People
Project Engineer, AM Coordinator, GIS Integration Specialist
Relevant dept. representatives
Executive backing
Policy
AM cannot be optional
Plan
GIS as a central data repository
The life cycle of an asset and those around it is inherently spatial
Port Metro VancouverGary Tosh, Mo Mofrad
Lessons Learned
Create an AM Policy
AM cannot be optional
AM is long-term and buy-in from all levels is needed
Prioritize assets
Start with business critical assets
Learn from those and proceed to less critical assets
Identify critical data
You will never have all the ideal data
Identify and connect with resources
No need to reinvent the wheel
Port of Portland
Strategic Asset Management
Art Spillman
Sr. Mgr. Facilities, Assets, and Infrastructure
What can go wrong?
• “Over collecting” data
• Taking on everything at once
• Tracking assets at the wrong level
• Not including the right stakeholders
• Believing that software will define your asset
management program
Our approach
• Secure management support
• Keep it simple
• Prioritize asset data collection
• Align with existing CMMS
• Ensure the right stakeholder involvement
• Data collection - Maintain flexibility for future data migration
• Inform the Capital Improvement Program
• Strategic Asset Disposal (SAD)
Asset Management Planning (AMP) team
• Multiple cross-departmental teams
• Arranged by disciplines
• Purpose –
Provide up-to-date system consensus
based condition data on a continual
basis.
Provide asset renewal recommendations.
• Why the AMP teams work
Spreadsheet of Dreams
“Knowledge is power only if man knows what facts not to bother with."
-- Robert Lynd,
Irish writer
• Data collection focused on assets at the end of life
• “Why When” and Consequence of Delay
• Tracking/Planning condition assessments
• Initiate capital projects
• Tracking “Future Assets”
• Future data collection
San Diego Unified Port DistrictCid Tesoro, Major Maintenance Program Manager
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Installation ProfileConsumption Profile
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Year Asset Name Action Type Action Cost Risk Score
2014 Metal pipe LIN-HAS-78 Replace $340,000 25
2014 Metal pipe LIN-HAS-92 Replace $176,000 25
2014 Metal pipe LIN-HAS-114 Replace $49,000 20
2014 Pump #2 Oak St. PS Rehab $20,000 20
2014 GenSet Vine Rd. PS Replace $80,000 15
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Ports of Seattle and TacomaDavid Amble, Seaport Asset Manager, POSRick Unruh (tentative), Project Manager, POT
Port of Seattle/Tacoma – Northwest Seaport AllianceDavid Amble
Tacoma initiated a pilot program for building assets – presented in 2013 at TRB
Seattle (Seaport Division) began looking at the issue in 2010, and initiated a
yards, docks, and building asset program in 2013 Seattle Airport Division (operationally focused) has it’s own AM program, focusing on runways
and terminals.
Seattle and Tacoma currently establishing an alliance to manage container
terminals in Puget Sound.
Staff remain origin-port employees, but are seconded to the Alliance
A multi-tier approach –
Identifying assets from a top down/bottom up approach.
Documenting asset conditions at the location and system level
Reviewing best practices and tools useful for managing assets
Port of Seattle/Tacoma – Northwest Seaport AllianceDavid Amble
A port’s terminal management model influences how asset
management is accomplished:
Terminal management model (landlord port versus direct operations)
Lease agreement terms for each terminal
Issues: The program is not a “third-rail” of capital development and
financial management; it is an accounting tool to drive decision
making.
Need to have a champion to drive the successful
development/deployment of an AM program
Port of Houston Authority Journey to SAMTom Heidt, CFO
Q&A
Next StepsErik Stromberg
Ongoing seminar topic—Engineering, Finance, MTMT
Asset management resources—see AAPA website
Asset management network
Proposed six-webinar series on SAM (June-December, 2015) covering:
Setting SAM goals, governance, establishing a plan
Assessing current state---data, information systems, business processes
Determining fit-for–purpose, level-of-service requirements
Cost-effective condition assessments, degradation modeling and life cycle condition forecasting
Risk assessment strategies and investment prioritization models
Continuous improvement strategies, annual review and training