Asset Management

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Covaris White Paper - Asset Management ver 1-0.doc 1
Asset Management Implementation
Covaris Pty Ltd
PO Box 3456
Bankstown Square NSW 2200
Summary: This paper presents various
methodologies and issues associated with a total
asset management process that embraces the use of
capital and maintenance expenditure to ensure assets
meet the full spectrum of operational requirements,
including safety, performance and return on
investment. Pervading the entire process is a risk
management process that is a function of the
condition of the asset base and the responsiveness to
identified needs.
Output from the asset management plan described in
the paper includes distribution of costs across
systems and areas, efficiency of the expenditure
(including reactive versus proactive maintenance
plus anecdotal notes on known problems), and
effectiveness of the expenditure – management of
the reliability and capability of the systems, where
capability represents ability of an asset to provide its
intended function with expected levels of flexibility,
efficiency and quality.
1.0 INTRODUCTION
The Asset Management Plan for an organisation
links the business requirements of the asset base
with various necessary business functions associated
with the management of risk and cost. These include
capital management, a register of risk issues, long
range maintenance strategy and budget
management.
A facility should be analysed wherever possible
(pending data, time and access for interview
constraints) for the following:
1. Top cost areas (i.e. opportunities for savings
subject to further detailed analysis in these
areas)
2. Work types and possible work efficiency
3. Reliability data in the form of defect trends
4. Responsiveness to backlog and rectification of
defects
5. Risk management – as indicated by integrity
considerations and responsiveness of
maintenance providers
6. Budget analysis
7. Anecdotal notes of relevance regarding asset
management of the facility
Essentially the Asset Management Plan is the means
by which we identify the intended future
performance of the equipment base as well as the
engineering means by which we will achieve this
performance, [4]. The Asset Management Plan is
more than maintenance engineering, although
maintenance is a very important component. The
Plan is an agreement between operations,
Production engineering, principal engineering and
maintenance providers and covers:
1. Equipment operational requirements –
opportunities for improvement, limitations to
be addressed, operational considerations such
as access for maintenance
2. Risk management – issues to be addressed,
priorities for work to be done
3. Sustainment Plan – solution strategy to
achieve operational goals, improve the state
of the equipment base
4. Capital plan – stay-in-business capital
projects, prioritisation of projects, impact
analysis of budget reduction
5. Maintenance plan – major maintenance or
Non-routine work, prioritisation of projects,
impact analysis of budget reduction, routine
maintenance budgeting
6. Equipment analysis – maintenance and
equipment condition improvement
opportunities, investigations
7. Performance analysis – backlog analysis,
work efficiency and maintenance strategy
analysis, budget analysis
This paper considers aspects of a strategic asset
management approach, the exploration of
maintenance improvement and concepts in effective
measurement of maintenance work performance.
2.0 ASSET MANAGEMENT PLAN
The simple framework of the Asset Management
Plan is shown in Figure 1. The Framework
describes all of the elements that make up the Plan.
An element is a business process or set of tasks that
a group of people are expected to undertake as part
of their normal duties.
SPECIFICATIONS
REGISTER
Requirements
Performance
Capability
Priority
Mission Profile
CONCERNS REGISTER
Operator issues
Non-compliance to
Design
Technology Options
Changes to Mission
Profile
ISSUES REGISTER
INVESTIGATIONS
REGISTER
SOLUTIONS
REGISTER
SOLUTIONS
SCHEDULE
SUSTAINMENT PLAN
MAINTENANCE
ENGINEERING CAPITAL PLAN PLAN
PLAN
OPERATIONAL
PERFORMANCE
EQUIPMENT
CONDITION
MISSION
PLANNING
Figure 1 Asset management framework
The Asset Management Plan is a system of
documents, databases and other types of information
that are organised in a planned manner to assist
various organisations make decisions about the care
of assets associated with the facility. The tangibles
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of the Asset Management Plan are physical
documents and systems that make up the individual
elements within the framework. In this case, they
are the outward signs of a business process, which is
comprised of many business rules. The business
rules are defined in policy and then enforced
through the information system, work procedures
and the responsibilities listed in position
descriptions.
The Specifications Register is a Register of both
library (or source) information on the design
performance requirements of the specific items
within the asset base, updated with consequent
operational experience, and new operational
requirements.
A Concerns Register is a means by which nonvalidated
concerns and nominated problems with the
assets may be collated, ready for technical
validation. Concerns must be initially checked for
the following before they may be registered in the
Sustainment Plan as valid Issues:
• They are technically credible – a true
issue does exist and can be analysed as to
size of potential impact
• The concern is not a duplicate of a
registered issue and nor can it be chunked
with other related concerns to form a
single, significant issue
The Sustainment Plan is a business process by
which all of the issues concerning the effective use,
condition and support of the assets are logged.
These issues are driven by three sources:
• Feed input from changing operational
requirements for the assets as recorded in
the Concerns Register – these would
include shortfalls in operational
performance, changing mission
requirements and perceived technological
opportunities for improvement
• Continuous improvement feedback from
reports on Equipment Condition or
Maintenance Effectiveness – these would
cover reliability and downtime,
deteriorating asset condition, risk
associated with excessive backlog of work
and deficiencies introduced by excessive
rework
• Issues contained in a Issues Register,
which is a business element related to and
within the Sustainment Plan, and refers to
a formalised process of identifying risk
issues, recording them and allocating them
a specific risk score
The expenditure on the asset base is divided into
three broad areas:
• Engineering Support – a mix of routine
support activities such as documentation
and drawing updates, and non-routine or
one-off investigations and analyses
• Capital Plan – the allocation of capital
projects to improve the capability of the
asset base – the Asset Management Plan
may except special large projects that are
treated as major configuration changes in
its day-to-day administration and
concentrate on minor capital changes and
smaller projects
• Maintenance Plan – the combined budget
formed from the addition of non-routine
or ad hoc maintenance activities with the
routine maintenance program established
in the Facility Planned Master
Maintenance Plan (PMMP)
The outcomes of the expenditure associated with the
three cost areas may be measured by two classes of
reports:
• Equipment Condition – the assessment of
work types (preventative versus
corrective, etc), condition assessment
reports and reliability analyses
• Maintenance Effectiveness – the
assessment of the degree to which the
work conducted by maintenance support
is effective and well planned, reducing the
risk associated with the assets’ capability
to support mission requirements
Cost optimisation is expected to be undertaken
within the administration of the three expenditure
areas nominated above, using the systems and
internal reporting processes described as part of the
Asset Management Plan.
3.0 FUNCTIONAL SPECIFICATION OF
THE ASSETS
The purpose of the Specification Register is
essentially to document the operational
requirements of the asset base in terms of
performance and capability, conscious of the need to
meet operational durability and performance targets.
The basis of the operational requirements is the asdesign
specification for all of the systems that make
up the facility, but clearly there is a need to cope
with changes over time.
The suggestion of improvements in operational
capability of assets by respecifying their
requirements operates outside the continuous
improvement loop whereby issues are generated in
the Sustainment Plan due to deficiencies in
reliability or emergent risk associated with less than
optimum maintenance effectiveness. Hence this
element is a place concerned with improvement of
the assets rather than maintaining them to a known
baseline.
The Specification Register describes what the assets
are meant to do, which is a major driver in the
strategy concerned with how they should be cared
for and improved. Key items that are covered
include:
• Criticality for the business outcomes
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• Mission capability limitation – risk that
the mission or required operation will be
prematurely aborted
• Mission effectiveness and robustness
impact – risk that even though the mission
can be undertaken, the effectiveness of the
facility is reduced
• Risk of operation – incurred risk to
facility operations, people or the
environment
• Cost impact – likely reduction in value
from expenditure or risk of high cost
(budgeted or unbudgeted)
• Long term considerations for the system
• Integrity
• People and environment
• Technology opportunities
4.0 STREAMLINING CONCERNS AND
ISSUES MANAGEMENT PROCESS
The purpose of the Sustainment Plan is to manage
technical solutions to improve the state of the
equipment base and to address issues raised from a
number of areas, including the Specification
Register, risk management systems, technical
analyses and so forth. The Sustainment Plan is the
starting point where the engineering and
management groups decide what engineering
support, capital and maintenance tasks are necessary
to achieve objectives for the relevant systems and
equipment.
The content of the Sustainment Plan includes:
1. Equipment identification – not only does this
cover CMMS registered assets but also
infrastructure (eg piping, cables) which comes
under each system
2. Issues of concern associated with the
equipment – this includes uptake from internal
audits, surveys of plant, defects notification,
docking reports, and the impact of
comprehensive programs such as corrosion
management.
3. Current major projects associated with the
equipment
4. Priorities of identified issues
5. Recommendations of likely issues to proceed
to investigation, capital or maintenance work
with estimated budget guidance
6. Timing of expenditure – to be approved by
senior management
The process by which the Sustainment Plan operates
is shown in Figure 2. The steps are essentially:
1. Concerns may be raised by any competent
person who may be uninformed as to any
current work in hand which is relevant to the
matter
2. A concern is evaluated by an approved person
and either archived as being either of little
significance or addressed by other work, or
upgraded to an issue registered in the
Sustainment Plan, which warrants further
investigation and ultimately work to be funded
3. An issue may also be raised in response to the
content of an approved or regulatory form
which is submitted and advises of a deficiency
to be addressed
4. Once an issue is registered either a solution or
number of related solutions may be specified.
Alternatively before proceeding to a solution,
it may be necessary to raise an investigation
which may or may not be funded. The
investigation is then expected to raise
solution(s) to address the underlying issue. It
should be noted that neither investigations nor
solutions exist without an underlying
registered issue.
5. Registered solutions may also be applied to
other issues registered in the asset
management plan.
Concerns
(ad hoc concerns
raised by
competent people)
Output from
regulatory forms
Issue
(registered in the
Sustainment Plan
Is the Concern
valid
Yes
Is an
Investigation
needed to
determine a
Solution
Investigation
(may be funded or
not funded)
Yes
Solution(s)
(may be multiple
solution tasks for
an issue)
No
Risk and Cost
Assessments
(criticality and cost
of the work)
Does this
solution work
apply to other
issues
Copy solution work
to other issues
Yes
Schedule the
solutions
(for either
availabilities or for
a year)
Risk Assessment
(urgency of the
issue)
Completed entry in
the Sustainment
Plan
Figure 2 Use of the Sustainment Plan
Once a solution has been costed and risk ranked,
then it is ready to be scheduled for implementation
in the future. It may be scheduled to occur within an
availability within the Useage and Upkeep Cycle
(UUC) which is loaded within the Asset
Management Plan, or may be budgeted for a
specified year.
Based on the content of the Sustainment Plan,
decisions on engineering support, capital and
maintenance work will be made, including:
• Nature of the work – what is the issue or
problem being addressed
• Whether the work is engineering, capital,
maintenance or can be conducted as part
of routine maintenance
• The likely range of costs of the work,
noting that further investigation will be
warranted to develop to the stage of say a
proposal for expenditure, which will be
entered into a capital or maintenance plan
• The initial understanding of the priority of
the work, noting that further investigation
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may increase or decrease the urgency of
the work
• Alignment of the work with existing
larger programs so that maximum
leveraging of investment and knowledge
can be achieved
• A submission to senior management that
provides them with an understanding of
the overall engineering needs of the plant,
and assists them with strategic guidance
on long range budgeting
5.0 FINANCIAL, TECHNICAL AND
RISK INFORMATION
The Capital Plan and the non-routine section of the
Maintenance Plan are treated in an identical manner,
using a risk-focused issue management and cost
estimation process for project-type work. The
Maintenance Plan is augmented by a routine
maintenance section whereby such work is treated
in a simplified, lump-sum type process.
The purpose of the Capital Plan and the
Maintenance Plan is to achieve the following:
• Register all work packages, their timing
and notional expenditure
• Provide a means by which work can be
staggered in time according to both
resource/access capabilities and budget
limitations
• Present a strategy for the care of systems,
sub-systems and major equipment that
integrates all work in a single budget
process
Best practice is that the cycle of the budget plans
contained in the Capital Plan and the Maintenance
Plan will be a rolling multi-year cycle. The system
may be established on a calendar year basis but can
be moved to a financial year basis. An annual
budget for capital work and maintenance work may
be extracted from the full cycle, zero-based budgets
contained in the Plans. A full cycle represents a
campaign of a number of years, eg 10 years for a
power station, 6 years for a ship, 4 years for a
production line and so on.
The concept of a zero-based budget is that budget
prices for all work are developed in a bottom-up
process on an equipment-by-equipment basis. There
is no concept of setting budget estimates based on
historical funding. The development of the budget
estimates are achieved as follows:
• Capital work and non-routine maintenance
work – specific work packages are
recorded in the Plans and individually
priced
• Routine maintenance work – the budgeted
cost of a procedure is compiled with the
costs of all other procedures for a given
system, according to the projected time
when that procedure is planned to
commence. This is based on the Useage
and Upkeep Cycle (UUC)
Non-routine maintenance work is defined as all
maintenance work for which a programmed work
order procedure is not available in advance, and is
not scheduled in advance according to the scheduled
PM maintenance plan. Routine maintenance work
is all maintenance work so scheduled in advance in
the scheduled PM maintenance plan and for which
individual PM procedures exist.
All work is controlled and managed by business
processes external to the Asset Management Plan,
such as corporate procedures and work management
procedures required by the various planning
departments (eg maintenance planners). Hence this
section is concerned with how the approaches and
information within the Asset Management Plan can
be used to efficiently plan, raise and manage capital
and maintenance works in compliance with these
external business processes.
6.0 CONCLUSION
The challenge for asset management is to provide a
credible statement on a strategy that will ensure the
organisation can sustain their asset base and its
business mission in a long term cost effective
manner. An imperative for this issue is the need to
reduce overall expenditure to meet gaps between the
sum of individual budget submissions from all areas
across a facility and the total organisation
maintenance and logistics budget guidance figures.
To achieve this the conduct of the asset management
plan has to be guided with feedback on the
distribution of costs across systems and areas,
efficiency of the expenditure (reactive versus
proactive maintenance plus anecdotal notes on
known problems), and effectiveness of the
expenditure. Effectiveness refers to management of
the reliability and capability of the systems, where
capability represents ability of an asset to provide its
intended function with expected levels of flexibility,
efficiency and quality.