holistic asset management – it’s not an isolated function
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Holistic Asset Management – It’s Not an Isolated Function. 2004 Urban Water Council US. Conference of Mayors. What is “Asset Management”. To the Accounting and Finance staff – AM means: Ensuring that assets are booked on the organization’s books when placed in service - PowerPoint PPT PresentationTRANSCRIPT
October 22, 2004
Holistic Asset Holistic Asset Management – Management –
It’s Not an Isolated It’s Not an Isolated FunctionFunction
2004 Urban Water Council
US. Conference of Mayors
What is “Asset What is “Asset Management”Management”
To the Accounting and Finance staff – AM means:To the Accounting and Finance staff – AM means: Ensuring that assets are booked on the Ensuring that assets are booked on the
organization’s books when placed in serviceorganization’s books when placed in service
Assets are properly depreciated and removed Assets are properly depreciated and removed from the books when retiredfrom the books when retired
Prudent maintenance practices minimize the Prudent maintenance practices minimize the necessary capital and operating expendituresnecessary capital and operating expenditures
Both capital and operating expenses are Both capital and operating expenses are financed prudently to minimize the resulting financed prudently to minimize the resulting rate and customer impact.rate and customer impact.
What is “Asset What is “Asset Management”Management”
To the O&M staff, AM consists of:To the O&M staff, AM consists of:Providing appropriate maintenance Providing appropriate maintenance support to ensure continued reliable support to ensure continued reliable operation of assetsoperation of assets
Minimizing responses to emergency Minimizing responses to emergency calls when assets failcalls when assets fail
What is “Asset What is “Asset Management”Management”
To the IT Engineers, AM To the IT Engineers, AM concerns tracking and concerns tracking and monitoring the asset monitoring the asset maintenance and maintenance and replacement activities.replacement activities.
To the Engineering To the Engineering Department, AM centers around Department, AM centers around the planning for and designing the planning for and designing of the replacement and major of the replacement and major rehabilitation of system assets.rehabilitation of system assets.
What is “Asset What is “Asset Management”Management”
To Utility Management Staff and Customers and To Utility Management Staff and Customers and Constituents, AM means:Constituents, AM means:
Reliable services at the lowest possible costsReliable services at the lowest possible costs Prompt re-establishment of services after an Prompt re-establishment of services after an
emergency situationemergency situation Redundant capability in the event of system Redundant capability in the event of system
failuresfailures Environmental protectionEnvironmental protection Public health and safetyPublic health and safety Excellent customer serviceExcellent customer service LOWEST POSSIBLE COSTSLOWEST POSSIBLE COSTS
What is “Asset What is “Asset Management”Management”
A way to think about an organization’s A way to think about an organization’s management and the stewardship of its assetsmanagement and the stewardship of its assets
Understanding what your assets are and Understanding what your assets are and prioritizing maintenance and management prioritizing maintenance and management activitiesactivities
Managing the life-cycle cost (both capital and Managing the life-cycle cost (both capital and O&M), use and reliability of utility’s assetsO&M), use and reliability of utility’s assets
Tailoring each organization’s needs using a Tailoring each organization’s needs using a systematic, proactive, scalable approachsystematic, proactive, scalable approach
As opposed to a reactive As opposed to a reactive focus on:focus on:
ProblemsProblems PoliticsPolitics TechnologyTechnology CostsCosts Budget ConstraintsBudget Constraints
Asset Management - a thoughtful process of self-evaluation, the development of strategy, objectives and an action plan and a phased implementation plan that coordinates the
knowledge and functions of the entire organization.
Goals of Asset Goals of Asset ManagementManagement
Reduce RiskReduce Risk Increase Asset Life & Minimize Asset Life Cycle Increase Asset Life & Minimize Asset Life Cycle
CostsCosts Optimize Maintenance and Capital Improvement Optimize Maintenance and Capital Improvement
ProgramsPrograms Reliably Plan Expenditures (Few Surprises!)Reliably Plan Expenditures (Few Surprises!) Maximize Organization’s Knowledge of its AssetsMaximize Organization’s Knowledge of its Assets Understand Financial Implications of Expenditures Understand Financial Implications of Expenditures
(Scarce (Scarce resources assigned to proper investments!)resources assigned to proper investments!)
Goals of Asset Goals of Asset Management:Management:
Reduce RiskReduce Risk Increase Asset Life & Minimized Asset Life Cycle Increase Asset Life & Minimized Asset Life Cycle
CostsCosts Optimize Maintenance and Capital Improvement Optimize Maintenance and Capital Improvement
ProgramsPrograms Reliably Plan Expenditures (Few Surprises!)Reliably Plan Expenditures (Few Surprises!) Maximize Organization’s Knowledge of its AssetsMaximize Organization’s Knowledge of its Assets Understand Financial Implications of Expenditures Understand Financial Implications of Expenditures
(Scarce (Scarce resources assigned to proper investments!)resources assigned to proper investments!)
Managers want and need to understand the consequences
of making and not making difficult decisions
Managers want and need to understand the consequences
of making and not making difficult decisions
Asset Management on Asset Management on Two LevelsTwo Levels
The “Big Picture” – The “Big Picture” – Five Major Asset Five Major Asset
CategoriesCategorieso Knowledge BaseKnowledge Baseo Information TechnologyInformation Technologyo PeoplePeopleo InfrastructureInfrastructureo CustomersCustomers
Financial ResourcesFinancial Resources
Asset Management on Asset Management on Two LevelsTwo Levels
The Detailed Look – The Detailed Look – Optimal O&M of Optimal O&M of
individual assets, such individual assets, such as:as:
o PumpsPumpso EquipmentEquipmento PlantsPlantso Buried InfrastructureBuried Infrastructureo HardwareHardwareo Etc ...Etc ...
What to do ? (What tasks?)
When to do it ? (What intervals and when to start?)
Where to do it ? (Which Assets?)
At the Detailed Level, the important questions are:
Let’s simplify Let’s simplify this…..this…..
Time
Asset
Performance
Asset Management Asset Management StrategiesStrategies
Overhaul
User Defined Failure
Asset wears over time
Extended useful life through overhauls / maintenance
Avg O&M Costs over time
O&M Costs
Required Performance
User Defined Lower Limit
Initial Useful Life
Goal #3 is to determine when it pays to replace rather than overhaul /
maintain (for reducing cost and/or risk)
Goal #2 is to predict failure and plan overhaul / maintenance in
advance of asset failure
$$
Goal #1 is to extend the interval between overhauls
to as long as practical
Proactive Maintenance(PM / PdM)
Predictive Maintenance & Performance Monitoring
Asset Replacement Strategy
Balancing the costs associated with risk (emergency maintenance, loss of production, equipment damage, customer dissatisfaction, regulatory fines, etc.) against asset care costs.
Focus on Critical Assets first!
Asset Management Asset Management StrategiesStrategies
Knowledge
Base
CustomersCustomers
FinancialMeasurement,
Analysis & Planning
FinancialMeasurement,
Analysis & Planning
Critical Asset
Categories
Critical Asset
Categories
People
Infrastructure
InformationTechnologyInformationTechnology
ServicesServices
PricingPricing
FinancialResourcesFinancial
Resources
ServiceServiceCycleCycle
ServiceServiceCycleCycle
FinancialFinancialCycleCycle
FinancialFinancialCycleCycle
DataData
Financial InformationFinancial
Information
Initial assessment of the assets’ conditions and criticality as well as the estimated, associated costs to address the proper management of those assets.
Initial assessment of the assets’ conditions and criticality as well as the estimated, associated costs to address the proper management of those assets.
A systematic, step-by-step approach, directs energy and resources to the prioritized tasks that add significant value and precision to the asset management process.
A systematic, step-by-step approach, directs energy and resources to the prioritized tasks that add significant value and precision to the asset management process.
BuriedInfrastructure
BuriedInfrastructure
Using an efficient, Using an efficient, scalable approach ...scalable approach ...
Plant & PumpStation AssetsPlant & PumpStation Assets Financial
Impact Analysis
Financial Impact
Analysis
Step 1Step 1Provides basicProvides basic
planning, budgetingplanning, budgeting& forecasting& forecasting
Step 2Step 2Refines prioritiesRefines prioritiesbased on specificbased on specific
data and criticality analysisdata and criticality analysis
Additional Steps are defined based on the results of your utility’s specific
circumstances.
Dia
gnos
e R
esul
tsD
iagn
ose
Res
ults
O&M Plan/Procedures
O&M Plan/Procedures
O&M Risk AssessmentO&M Risk
Assessment
IT Master PlanIT Master Plan
OD/OE PlanOD/OE Plan
Stakeholder ConsensusStakeholder Consensus
IM Fitness EvaluationIM Fitness Evaluation
Staff TrainingStaff Training
Public EducationCampaign
Public EducationCampaign
CIP Master PlanCIP Master PlanPrioritize CIPPrioritize CIP
Criticality Assessment
Criticality Assessment
Review Asset InventoryReview Asset Inventory
Imp
rove
d C
ust
om
er
Sati
sfacti
on
Imp
rove
d C
ust
om
er
Sati
sfacti
on
Reduce RiskReduce RiskReduce
Probability of Failure
Reduce Impact of Failure Monitor
Maintain Overhaul Replace
Predict & Plan Re-Design
Reduce Asset Care Reduce Asset Care InvestmentInvestmentDo It Smarter Do It Better
Eliminate low value tasks Focus on high impact failure
modes Predict rather than prevent
(intrusive) Prevent rather than let fail
(non-critical assets can be run to failure if it makes sense)
Plan, Plan, & Plan Better tools /
technology Train personnel Document
Procedures Integrate all staff
functions
Asset Management Asset Management Approach is Not Approach is Not
“Business as Usual”“Business as Usual”It will require It will require
changes in:changes in: PhilosophyPhilosophy ProceduresProcedures Staff rolesStaff roles Staff skillsStaff skills Others?Others?
Think Differently ...Think Differently ...
Annual Planning ProcessAnnual Planning Process ==
Last Year’s Budget plus Last Year’s Budget plus inflation ...inflation ...
(if that!)(if that!)
What are the right systems, What are the right systems, staff and maintenance staff and maintenance
activities to manage the activities to manage the organization from an asset organization from an asset management perspective?management perspective?
Systematically Approach Systematically Approach Asset ManagementAsset Management
Evaluate the strengths and weaknesses Evaluate the strengths and weaknesses of your organization’s systemsof your organization’s systems CMMS, GIS, Financial Management CMMS, GIS, Financial Management
Systems, etc.Systems, etc. Define what your goals areDefine what your goals are
What does your organization want to What does your organization want to achieve with Asset Management?achieve with Asset Management?
Prioritize your action plan and Prioritize your action plan and implementation programimplementation program
Staff Willingness To Embrace Staff Willingness To Embrace Change Is Necessary To Change Is Necessary To Improving EffectivenessImproving Effectiveness
Barriers to Change:
- Insufficient Technology
- Lack of Skill-Based Training
- Organizational Inertia
- Union/Civil Service
- Past Disappointments
Existing Norms,
Practices &Procedures
Acceptance of New
Approaches& Methods
Acceptance of New
Approaches& Methods
Getting Staff Buy-In Will Getting Staff Buy-In Will Promote Implementation Promote Implementation
SuccessSuccess
General awarenessGeneral awareness
CommunicationCommunication
FeedbackFeedback
Follow upFollow up
The GoalsThe Goals Extension of Assets’ Extension of Assets’
LivesLives
Optimal Maintenance Optimal Maintenance ProgramProgram
Optimal CIP Optimal CIP
Reliable, Planned Reliable, Planned ExpendituresExpenditures
Maximize Maximize Organization’s Organization’s Knowledge of its AssetsKnowledge of its Assets
Full Knowledge of Full Knowledge of Financial Impact of Financial Impact of ExpendituresExpenditures
Risk ReductionRisk Reduction
The StepsThe Steps Update Asset InventoryUpdate Asset Inventory
Extract “Knowledge Extract “Knowledge Management” from Management” from StaffStaff
Criticality AssessmentCriticality Assessment
Condition Assessment Condition Assessment
Maintenance Maintenance EvaluationEvaluation
Asset Replacement Asset Replacement EvaluationEvaluation
Financial PlanningFinancial Planning
Staff Training & Staff Training & System IntegrationSystem Integration
Public EducationPublic Education
Adopt “Best Fit” Program to Adopt “Best Fit” Program to Support Your Needs and Support Your Needs and
Priorities…Priorities…
Adopt “Best Fit” Program to Adopt “Best Fit” Program to Support Your Needs and Support Your Needs and
Priorities…Priorities…
Additional Refinement Tools and Processes
AM Program
Refine & Calibrate Staff Activities
Sustainable Assets
PreciseCIP
Minimized Cost
OrganizationalAlignment
High Quality Customer Service
Maximized Performance
Knowledge, Confidence, Precision
The Results ...The Results ...