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Asset Management after the ISO

Some challenges for Asset Managers in the post ISO 55000 world

Asset Management after the ISO

• Assets, Asset Management and Value

• Stakeholders

• Leadership

• Information

• Some Questions…..

Presentation copyright Lloyd’s Register 2014

All Photographs copyright C T Knowles 2014

Asset Management after the ISO

Chris Knowles • Chartered Engineer and Fellow of the

Institution of Engineering and Technology

• 30 years Asset Management experience in

Transport and Utilities - in major projects, asset stewardship and strategic management

positions

• Global VP Asset Management Consulting,

Lloyd’s Register

• Board Member of Lloyd’s Register

Verification Ltd

• Chairman of the Examinations Board of the Institute of Asset Management

Assets and Asset Management

• Asset - item, thing or entity that has potential or actual

value to an organization

• Asset Management - coordinated activity of an

organization to realise value from assets

What is “Value”

• An Art Deco Platinum ring set with

Diamonds – about 0.8 carat in total

• Value depends on your view point and

context

• Insurance Value £4,500?

• Sales Value £4,000?

• Future rental value £??

• Style value – to be seen wearing it?

• Sentimental value – priceless?

Ring image courtesy of Boggitt and Bond

A New Standard in Asset Management

Stakeholders – ISO 55001 Clause 4.2

4.2 Understanding the needs and expectations of stakeholders

The organization shall determine:

• the stakeholders that are relevant to the asset management system;

• the requirements and expectations of these stakeholders

with respect to asset management;

• the criteria for asset management decision making;

• the stakeholder requirements for recording financial and

non-financial information relevant to asset management, and for reporting on it both internally and externally.

Consumers Politicians

Company

Business Plan Customers

Government

Competitors

Suppliers

CORPORATE

VISION

Neighbours Regulators

Employees

Emergency

Services

Investors

Pressure Groups Universities

(Research)

Stakeholders

Sustainable Asset Management

• Understanding the Whole Life Cost is important in

Asset Management but it is more than that……

• Whole Life Asset Management requires an

understanding of the output performance of the

asset system

• It also needs an understanding of risk – what we are

prepared to accept will affect the redundancy we

build in, the material choice, the construction

methods and the way we maintain and operate it

Alignment of Incentives Short term incentives can lead to short term thinking - which can mitigate against this “whole life approach”

How easy is it for a CEO to incur extra cost now on the basis that whole life costs will come down after his term in office ends or beyond the current Regulatory Review period?

Asset Life and Lifecycle stages

Build Modify Enhance

Operate & Maintain

Asset Performance and Life Reviews

Asset Investment Planning

Modify

Enhance

Disposal Business Need & Strategy

Operate &

Maintain

Asset Performance and Life Reviews

Acquire Disposal Business Need &

Strategy

Modify Enhance

Operate & Maintain

Asset Performance and Life Reviews

Acquire De - Commission

Business Need & Strategy

Design & Build

Operate

&

Maintain

Disposal

Life

of A

sset d

ime

nsio

n

Asset Owner / Controller dimension

• Good asset management considers the risks at every stage – and the effect

actions will have on the current and later lifecycle stages

CAUSES

Poor design, ineffective maintenance, incorrect

operation, inadequate materials, incorrect tools,

poor diagnostics

EFFECTS Increased cost, loss of

asset, loss of reputation,

shorter asset service life, legal claims, loss of

human life, cessation of

business

EVENT Unintended emission

Critical system failure Poorer asset condition

What can we do here to reduce the chance of the event happening?

What can we design into the asset or management system to reduce the impact should the event occur?

What can we do put in place to respond to the event – to reduce the losses incurred?

How do we continue to meet objectives?

What are we

prepared to pay?

Risk

Leadership and Commitment ISO 55001 clause 5.1

5.1 Leadership and commitment (selected items shown only)

Top management shall demonstrate leadership and commitment

with respect to the asset management system by:

...........

— ensuring the integration of the asset management system

requirements into the organization’s business processes;

— directing and supporting persons to contribute to the effectiveness of the asset management system;

— promoting cross-functional collaboration within the organization;

— supporting other relevant management roles to demonstrate their leadership as it applies to their areas of responsibility;

……..

Strategic Direction needs Leadership

Company

Business Plan Leadership

Clarity

of purpose and

strategic direction

Consistency

ensuring effective

planning and activity

Commitment

to deliver the BP

objectives and support

the team in doing so

Communication

frequent, regular

and two way

+ =

Delivery of the right

things!

Leadership is the art of getting someone else

to do something you want done because he

wants to do it.

Dwight D Eisenhower

Change

where it is required, delivered effectively

A tale about Change

Information Requirements ISO 55001 clause 7.5

7.5 Information requirements (selected items only shown)

The organization shall determine its information requirements to support its

assets, asset management, asset management system and the achievement of its

organizational objectives. In doing this:…..

d) the organization shall determine the requirements for alignment of financial

and non-financial terminology relevant to asset management throughout the

organization;

e) the organization shall ensure that there is consistency and traceability between the financial and technical data and other relevant non-financial data,

to the extent required to meet its legal and regulatory requirements while considering its stakeholders’ requirements and organizational objectives.

Asset Information

Financial Data

Management accounts

P&L and Balance sheet

Fixed asset registers

Asset valuations

Budgets

Cash Flow forecasts

Insurance

Technical Data

Manpower

Spares requirements

Asset registers

Budgets

Major project

programmes

Asset condition

Asset fitness for use

The Information items listed are examples – and not exhaustive

The organisation the organization shall ensure that there is consistency and traceability between the financial and technical data and other relevant non-financial data, to the extent required to meet its legal and regulatory requirements while considering its stakeholders’ requirements and organizational objectives. ISO 55001

Benefits - example from Asia

• Through the rigorous application of risk based asset management aligned with PAS 55, a major mass transit railway has reported

• 30% performance increase

• 12% cost reduction

• 7% improvement in safety

• In delivering this, key priorities included

• satisfying customer expectations

• hitting the target EBITDA

• renewals – hence avoiding service impacts

• making sure funds for the next 5 years of the plan were in place

The perception of

“value for money”

erodes – the levels

achieved today will be

perceived as low value

in 5 years – you have

to keep moving

A few questions to consider……

• How well do you understand and respond to stakeholder requirements?

• How strong is the connection between your asset management activities and the achievement of company goals?

• What level of risk is appropriate for your business?

• How do you identifying the critical assets and processes that need priority?

• What information do you have to help you make decisions – and how appropriate is it in terms of accuracy, availability and relevance?

• How integrated is your knowledge of assets for engineering purposes with your asset knowledge used for financial reporting?

• How do you bring about change where it is needed – and keep everyone “on the train” as you take the journey?

What is your

biggest risk?

How do you

know the

controls are

effective?

How are you

managing it?

Asset Management after the ISO

• Assets, Asset Management and Value

• Stakeholders

• Leadership

• Information

• Some Questions…..

Lloyd’s Register and variants of it are trading names of Lloyd’s Register Group Limited, its subsidiaries and affiliates.

Copyright © Lloyd’s Register [Entity]. 2013. A member of the Lloyd’s Register group.

Chris Knowles BEng (Hons) CDipAF CEng FIET MIAM

Global VP Asset Management Consulting T +44 (0) 7733 018 723 E chris.knowles@lr.org Lloyd’s Register 71 Fenchurch Street, London EC3M 4BS

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