The Journey towards Asset Management24 July 2014
Strategic alignment Shared vision Strategic partnerships Balanced scorecard
BIMS
ISO 55000
The Destination
Definition “A set of coordinated activities that an organisation uses to realise value from
assets in the delivery of its outcomes or objectives. Realisation of value requires the achievement of a balance of costs, risks and benefits over different time scales.” (Draft ISO 55000 - Asset Management)
Drivers behind rising Asset Management awareness The rising profile of whole of life costs e.g. PPPs
Statutory obligations – obligations for government bodies to have an asset management plan
The rising cost and scarcity of money
Risk management
Value for money principals
PAS55/ ISO55000
Industry benchmarks e.g. TEFMA
Asset Management Benefits Optimised financial performance
Managed risk
Improved services and outputs
Corporate / social responsibility
Demonstrated compliance
Enhanced reputation
Improved organisational stability
Regressive
Reactive
Planned
Proactive
Don’t fix it
Fix it after it breaks
Fix it before it breaks
Don’t just fix it, improve it
• Minimise Defects• Improve Precision• Redesign• Value Focus• Reliability Centred
Maintenance• 3-5 Year Fixed
Price Contracts
• Asset Management Plans
• Capital Works Handover Processes
• Forward Works Plans• Cmms • Predict/Plan• Condition Monitoring• Critical Spares• Centralised Control• Kpis• Fixed Prices &
Schedule Of Rates Contracts
Efficiency
Excellence
Cap
abili
ty
• BIMs• ISO 55000• Strategic Alignment• Shared Vision• Balanced Scorecard• Strategic Partnerships• Asset Management Excellence Audit
Sample.Pdf• XXXX Audit Report July 2014.Pdf
• Respond To Unusual Energy Consumption
• Tri- Certification• Compliance• Run To Fail• Approved Lists• Schedule Of Rates
Contracts
The Asset Management Excellence Journey
The Other End of The Spectrum
The Other End of The Spectrum
The Other End of The Spectrum
The Other End of The Spectrum
The Other End of The Spectrum
EFFECTIVE LIFE
REPLACE
PROGRESSIVE (ACCRUED)COST OF FACILITY
CASH FLOWOF ASSETS
CREATE MAINTAIN DISPOSALREFURBISH
0 100%
VALU
E / C
OST
S( R
EAL
TER
MS
)
Comparison of gas fired heating versus electric heating for student accommodation on ‘brown field site’
Gas Item ElectricCapital cost of construction
Capital cost of life cycle works
Maintenance costs
Impact of utilities costs over time
Robustness
- Relatively High
- Medium
- Relatively Low
Funding Challenges for Planned Maintenance and Lifecycle Replacement Works The consequences of under-spending is unlikely to be immediately apparent to the
customer.
Non-core business requirements are valued less highly than core business needs.
If the assets appear to be performing within the parameters that the customer expects of them, it can be difficult for these customers to perceive a need for major expenditure.
Assets that are performing inefficiently, either due to inadequate maintenance or from having been retained in service beyond their economic life, often deteriorate gradually.
Common approaches to Lifecycle Estimating
Fixed % of value per annum
Squeaky wheel
What did we spend last year?
Advantages
Predictable budgets
Transparent calculation methodology
Fully auditable
Consistent approach
Disadvantages
Availability of funds = Backlog maintenance issues =
Reliability of assets + Responsive repair costs +
Unscheduled service interruptions +
VALUE FOR MONEY!!!Incidences of premature asset failure =
Does not reflect reality =
No direct link between estimated lifecycle costs and actual performance of assets.
Estimated lifecycle costs assume external factors do not impact lifecycle.
Disadvantages
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Typical 25-year Life Cycle Cost Model
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 250
500000
1000000
1500000
2000000
2500000
3000000
3500000
4000000
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000Typical Lifecycle Cost Model - 25 Year
Annual Lifecycle
Cumulative
Year
$(m) $(m)
Cost of Service
QualityCondition
Optimal Life Cycle Costs
EXCELLENT
POOR TIME
ORIGINAL DECAY OPTIMALCONDITION
BAND
OPTIMAL RENEWALSTRATEGY
Asset Condition Survey Methodology
Case Study One
Supported State Housing Department > 500 properties supported living units
Located throughout Victoria
Lifecycle & maintenance funding = $7,000 p.a. / property
Substantial back log maintenance issues
Establishing business case for asset replacement was challenging
Typical Life Cycle Cost Model- 60 Years
$- $- $- $- $-$7
,613
.98
$6,0
77.3
7$- $-
$3,2
57.1
7$-
$8,5
30.0
8$-
$7,6
94.2
5$4
6,96
3.86
$-$7
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.98
$6,6
86.9
2$-
$70,
559.
61$6
,077
.37
$-$7
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.98
$916
.10
$767
.72
$- $-$1
5,30
8.22
$-$1
31,8
91.3
4$- $- $-
$7,6
13.9
8$9
2,18
9.22
$916
.10
$- $1,6
93.5
0$-
$96,
869.
83$-
$7,6
94.2
5$- $-
$54,
577.
83$- $- $9
16.1
0$6
,077
.37
$145
,834
.64
$7,6
13.9
8$- $- $- $- $1
12.3
2$- $- $-
$82,
626.
41
$-
$20,000.00
$40,000.00
$60,000.00
$80,000.00
$100,000.00
$120,000.00
$140,000.00
$160,000.00
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59Years
Dol
lars
$ (A
UD
)
Annual spend in $ (AUD)
Supported State Housing Department (cont’d)
Typical lifecycle profile for all properties identified
Point at which assets were ‘technically dilapidated’ identified
Lifecycle & maintenance funding increased to $24,000 p.a./ property
Business case for asset replacement established
Supported State Housing Department (cont’d)
Case Study Two
Country Base Hospital Decision taken to consolidate services at two hospitals
Management of hospital to be transferred between two state health departments
Initial period - 5 years
Lifecycle liability of infrastructure & biomedical assets to be agreed at the point of transfer
Basis of joint funding for lifecycle liability to be agreed
Lifecycle liability of infrastructure and biomedical assets for next five years was established
All assets scheduled for replacement were risk ranked
Both parties agreed sum for lifecycle replacement works for extreme and high risk assets
Tool provided a robust, transparent and equitable basis for mutually agreeing funding levels
Country Base Hospital (cont’d)
The Asset Management Process
BIMS
The risk profile varies from organisation to organisation…
Low Accuracy of Asset Lists High
Risk ranking of assetsLow High
Reliability Centered MaintenanceLow High
ISO: 55000 alignmentLow High
Benchmarking/ Trend AnalysisLow High
Whole of life cost managementLow High
Reliability
Strategic AlignmentLow High
- Outside Toilet
- Core business equipment
Tailoring Asset Management to Your Business Needs
Strategic Asset Management
• Formulate Business Plan for Board Sign Off• Commercial Planning and Outcomes• Determine Stakeholder Needs and Engagement• Analyse and Benchmark Assets• Undertake Due Diligence
• Value Engineering• Service Level Agreement Design• Re-procurement of Service• Shape Economies of Scale• Supplier Development Plan
• Manage Operations• Audit and Reporting• Measure and Improvement Program• Customer Satisfaction Evaluation
Operational
Tactical
Strategic
Key to an effective asset list A standardised approach to naming conventions
Standardised naming conventions applied to all assets
Naming convention typically follow published naming principles e.g. BCIS
QA controlled master list of assets
A ‘single source of truth’
Standardised approach to asset list inclusions e.g. > $1,000 in value and/ or requiring planned maintenance interventions
Assets <$1,000 in value are typically bundled e.g. RCD’s, fire equipment etc.
Include replacement value and date of installation
Sub- divide entire portfolio into logical and appropriate areasAsset Hierarchy Development (BL 23-04-14).xlsx
CMMS
The Asset Management Process
CMMS Features
Reliability Centred Maintenance (RCM)
Reliability Centred Maintenance Identify major asset with unusual failure patterns (e.g. desalination pump)
Sub- divide asset into composite assets (e.g. impellers, electric motor, etc.)
Identify nature and consequences of composite asset failures
Undertake a root cause analysis of each failure
Identify remedial works required (e.g. repairs and modifications)
Undertake a Cost Benefit Analysis re: remedial works required and implement as appropriate
Budget for and implement a planned maintenance regime to mitigate issues going forward
Identify training needs and implement
Identify documentation needs and implement
Root Cause Analysis
Site 1 Site 2 Site 3 Site 4 Site 50
500
1000
1500
2000
2500
3000
3500
Mean Time Between Failure - Pumps - Site Comparison
Average
Location
MTBF(hr)
0 2 4 6 8 10 11 14 16 18 21 19 23 25 27 29More
0
500
1000
1500
2000
2500
3000
3500
4000
4500
Annual No of Failures by Pump - Frequency Analysis
Annual Failures
No of Pumps(8284)
Root Cause Analysis
5 10 15 20 25 300%
5%
10%
15%
20%
25%
30%
35%
Pump - Residual Life Analysis
Years in Service
% of Pump Popula-tion
Design Life
Root Cause Analysis
Pump Failure - Root Cause Breakdown
Lack of Lubrication
Operator Error
Dilapidated
Blocked
Wear and tear
Corrosion
Utility supply
Vandalism
Revise Planned Maintenance – Increase Lubrication Frequency
Training Program to Educate Site Operators
Review Capital Expenditure Program and Undertake Lifecycle Analysis
Root Cause Analysis
ISO 55000 - Background A new International Standard released in early 2014
Based on PAS 55
Consultation with > 30 countries including Australia
Government clients are mandating this Standard e.g. QLD Health & Federal Government
Incentivises a risk based, standardised and consistent approach to asset management
ISO 55000 - Features and Benefits Asset management policy encourages strategic alignment with core business
Risk based approach
By focusing on critical assets, expenditure is prioritised
Introduces best practice
Facilitates a proactive approach to asset management
Facilitates effective benchmarking
Supports probity and transparency
Begin with the end in mind Future proof by design
Source locally where possible
Ensure key components, systems and sub- systems are backed by guarantees and warrantees
Maximise local skills and materials
Avoid locating plant on roof
Construct plant rooms before plant has been installed
Consider maintenance access to high level architectural features e.g. glazed atriums.
Ensure metering supports future flexible usage of spaces
Always ensure service access to plant
“Black Start” test entire facility prior to handover
Make receipt of O&M manuals a ‘condition precedent’ of practical completion
Questions