setting service levels- a simple task or a major challenge in asset management? kevin young hunter...
TRANSCRIPT
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Setting Service Levels-A simple task or a major challenge in
Asset Management?
Kevin YoungHunter Water Corp.11 April 2002
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Asset Management - A Definition
Different approaches to meeting or determining service levels - Kevin Young
Asset capability / whole of life costing - Peter Buckland
Meeting agreed customer service levels while minimising whole of life costs
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Setting Service Levels
A number of categories Environment
Health
Customers
Requires alignment of service levels with Business Plan / Corporate Planning
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Setting Service Levels
Range of approaches world wide Fixed mandatory levels under an
operating contract / licence
Continuous improvement to higher service levels
Maintaining condition of assets (a proxy approach)
Determined in consultation with customers
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Hierarchy of Service Indicators in an Operating Licence Framework
Vehicle
Penalty
Data
Performance Indicators
Operating Licence
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Service Levels under an Operating Licence
Determined based on historic performance
A minimum safety net of customer protection
Water Supply - Discontinuity
88
90
92
94
96
98
100
1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00
% P
rops
With
out S
uppl
y >
5 H
ours
C
umul
ativ
ely
Per
Ann
um
Result Licence
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Continuous Improvement to Higher Service Levels
By benchmarking
By “league tables” - comparison by embarrassment
Needs good information of cost / service level trade-off
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Setting service levels and trade-offs
Ser
vice
Lev
el(E
ffec
tiven
ess)
High
Avg
Low
Low(High Costs)
High(Low Costs)
Avg
Productivity Level(Efficiency)
Expected Tradeoff
• L
• G
BestPerformers
K•
•
•
• A H
EI•
•
•
•
•
•
•
B
F
J
MD
C
Inefficient:High Cost/Unit of Service
Poor Performers:High Cost/Low Service
Service LevelPotentially Inadequate
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Setting of Service Levels - Link to Replace/Repair Decision
PE
R U
NIT
CO
ST
TO
CO
MM
UN
ITY
INCREASEDFAILURES
REDUCEDFAILURES
LEVEL OF SERVICE
RISK(INTERNAL & EXTERNAL)
ie repair costs/ social costs
HIGH ASSET LIFE LOW
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Life Cycle Costs
Must include community costs water continuity direct costs social disruption costs traffic property damage environmental costs
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Setting of Service Levels - Link to Replace/Repair Decision
PE
R U
NIT
CO
ST
TO
CO
MM
UN
ITY
INCREASEDFAILURES
REDUCEDFAILURES
LEVEL OF SERVICE
RISK(INTERNAL & EXTERNAL)
ie repair costs/ social costsPLANNED (I
NTERNAL)
HIGH ASSET LIFE LOW
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Setting of Service Levels - Link to Replace/Repair Decision
PE
R U
NIT
CO
ST
TO
CO
MM
UN
ITY
TOTAL
INCREASEDFAILURES
REDUCEDFAILURES
LEVEL OF SERVICE
INCREASING COST-DECREASING SERVICE
INCREASING COST-INCREASING SERVICE
AB
A=MIN. COST
B=MAX. SERVICE PER UNIT COST- “ BEST VALUE FOR MONEY”
RISK(INTERNAL & EXTERNAL)
ie repair costs/ social costsPLANNED (I
NTERNAL)
HIGH ASSET LIFE LOW
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Setting of Service Levels - Link to Replace/Repair Decision
PE
R U
NIT
CO
ST
TO
CO
MM
UN
ITY
TOTAL
INCREASEDFAILURES
REDUCEDFAILURES
LEVEL OF SERVICE
INCREASING COST-DECREASING SERVICE
INCREASING COST-INCREASING SERVICE
RISK(INTERNAL & EXTERNAL)
ie repair costs/ social costsPLANNED (I
NTERNAL)
HIGH ASSET LIFE LOW
CU
STO
ME
R D
EM
AN
D
CC= APPROPRIATE
CUSTOMER SERVICE LEVEL AND COST
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Total Costs (NPV)
User Costs (NPV)Minimum Total LCC
Agency Costs (Max Network NRM)
Agency Costs (Average NRM)
Network Roughness (NRM)
Life Cycle Cost vs Network NRM
Ann
ual A
genc
y C
ost (
$ M
ill i
ons )
Tot
al L
ife
Cyc
le C
ost (
NP
V)
($ M
illi
ons)
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Conclusions
The setting of service levels requires
An understanding of customers’ requirements and the cost trade-offs
Knowledge of asset degradation and repair/replace trade-offs
Assessment of full community costs
Pricing to be based on full costs of asset replacement and servicing
Good asset management to lead regulatory debate
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Cumulative Reduction in Operating Cost per Property
-0.45
-0.4
-0.35
-0.3
-0.25
-0.2
-0.15
-0.1
-0.05
0
0.05
1990/91 1992/93 1994/95 1996/97 1998/99 2000/2001
Hunter Water Corp
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