Trends on Enterprise Asset Management Data Analytics

September 21, 2015

Advisory

kpmg.com

Agenda

Context

Case Study

KPMG – Overview of Asset Management Practice

Context

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Key business factors impacting asset management initiatives

Cost OptimizationRepair, Maintenance and Replacement costs are increasing

InvestorsLong term investors are focussed on sustainable returns.

Resilience

Availability determined by redundancy and asset life.

RegulationShift towards risk based regulation and total costs

Technology

Instrumented assets provide insight into how assets are used and ultimately managed

The Skills Gap

The skilled resource base is shrinking and changing

Valuation

Realizing valuation of poorly understood assets portfolio’s

Capacity

Asset usage is rapidly increasing with population growth but also with peak usage.

Customer Expectations

Increasingly dynamic expectations at the point of use.Aging Assets

Assets age profiles are worsening with higher usage patterns

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Data management as part of asset management

Over the last 3-7 years, companies have invested time in rigorous information and record gathering effort. It is now an appropriate time to consider leveraging the large stores of descriptive information to:

■ Enable efficient and effective management of high volume of high criticality assets

■ Enhance reliability & safety by improving the connectivity of records in EAM system

■ Provide analytics capability to support and improve reliability & integrity programs

■ Provide personnel with secure access to critical information and analysis

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Typical building blocks of an analytics initiative

Data acquisition

Infrastructuree.g. cloud

Inpu

ts

Data analytics

Interface (web, etc.)

Image

Opportunities for optimization

▪ Safety performance▪ Overall reliability▪ Cost performance – operational & financial▪ Capital planning▪ Overall risk management

DepartmentLevel

BULevelCxO Work Mgmt.

Level

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Development of analytics capability: multi-track approach is possible

Source: National Grid, IBM

7© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 400788

Operating model options for an analytics program

1 2

3 4

5

Analytics in Asset Management Decision Making: Case Study

9© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 400788

Key questions addressed; Our approach

• Is the asset replacement plan over the next 5 years well targeted?• Is the plan for the given period optimal and adequate? What is the nature of residual risk?• For the given asset replacement plan, what are the implications in relation to operations &

maintenance?

Approach

10© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 400788

• Each bubble represents a single asset. Position of each bubble is quantified in terms of its risk to failure and criticality

• Bubbles in color represent those assets that have been identified in the capital program

• Green and blue colors represent different asset groups

• The size of the bubble represents the annual spend on corrective maintenance activities (say, 2015)

Evaluate (21%)Consolidate (4%)

Focus (64%)Monitor (11%)

Criticality

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Asset Analytics - PrioritizationSnapshot of key outcome (1/3)

Scale: Normalized based on Technical as well as Commercial Factors for the overall Asset Porfolio

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11© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 400788

Asset Analytics - ConsistencySnapshot of key outcome (2/3)

Criticality Criticality

X Y

ZW

2015 2014

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• The position of each bubble is tracked across a period of time (say over months / 2-3 years) to recognize consistency (or lack thereof) in characteristics of reliability performance

• The check for consistency also allows to isolate the impact of any changes in operating condition and / or targeted major maintenance event (both preventive and corrective)

26

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Asset Analytics - VelocitySnapshot of key outcome (3/3)

Impact Impact

0-2 weeks 0-4 weeks

HighSensitivity Legend

Medium Low

A

C

B

D

• On another aspect, the position of each bubble is also tracked for risk to reliability over different periods of time starting from now (say next few weeks / months and double the same period to identify inherent characteristics in reliability performance

• The check for “velocity” in risk to reliability and profile thereof allows to assess the quality and impact of maintenance tactic and underlying work management

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13© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 400788

Operation & Maintenance Costs for Assets in Capital Replacement Program

Sample assets are illustrated to show the upward trend in their operations and maintenance costs over last six years and are now

part of capital replacement program in 2015-2020 (illustrative)

Manufacturer 1Annual

AvgCount Avail. Cost

Manufacturer 2Annual

AvgCount Avail. Cost

Manufacturer 3Annual

AvgCount Avail. Cost

Manufacturer 4Annual

AvgCount Avail. Cost

Manufacturer 5Annual

AvgCount Avail. Cost

34 96.4% $1.7M 83 94.8% $2.1M 34 94.3% $1.9M 21 96.2% $0.9M 3 85.7% $0.1M

Asset Class 1 Asset Class 2

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Residual risk management - perspectives

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KPMG Asset Analytics – Decision Making Dashboards

KPMG – Overview of Asset Management Practice

17© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 400788

Deep experience in providing range of services in relationto the topic of asset management for energy and utility companies

ISO 55000 series / API 1173 assessment / audit

ISO 55000 / API 1173 quick scan

Asset Lifecycle

Infrastructure Development Infrastructure Delivery Infrastructure Operation

CorporateObjectives

Strategy&

FinanceProcure

OptimizeProject &Program

Design Construct Commission& Handover

Operate&

MaintainDecommissioning

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Deep experience of working with key clients on asset management processes

Utilities and Energy:

Other Industries:

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Distinctive thinking on the topic of ISO 55000 standards

20© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 400788

Experience of leading forums on the emerging model of asset management in utilities in US

© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 400788

The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.

Contact us Hiran BhadraPartner, Management ConsultingLead – Enterprise Asset Managementhbhadra@kpmg.com+1 214 934 9387