Asset Management – Next

Stop: Your Industry

Earl Hill
Loma Consulting
February 20, 2018
What AM is
• “Equipment” Asset Management
• Not business or financial asset management
• Definition from ISO5500x
Effective control and governance of assets by organizations is essential to realize value through
managing risk and opportunity, in order to achieve the desired balance of cost, risk and performance.

The fundamentals of asset management and the supporting asset management system introduced in
this International Standard, when integrated into the broader governance and risk framework of an
organization, can contribute tangible benefits and leverage opportunities.

Asset management translates the organization’s objectives into asset-related decisions, plans and
activities, using a risk based approach.
How an AM Program is Organized
• Best practices for ensuring assets do what you want
• “Computers do what you tell them, not what you want”
• Originally developed for asset-intensive industries – e.g. utilities, road ways
• List of original companies in the UK
• Developed PAS55 – British Standard
• Later evolved into ISO55000 (principles), 55001 (plans), 55002 (implementation details)
• ISO5500x
• Grouped into seven key areas – with detailed requirements for each
• Meant to be generic – not specific to any industry
• Tells what should be in your program, not how to “do AM”
ISO5500x – Seven Key Areas
• Context of the Organization – discover organization drivers, identify external and
internal requirements and constraints that can impact how the company can achieve
its goals
• Leadership – write policies and create objectives, vision and values; decide on
responsibilities, accountabilities, strategies; find out how to resolve disagreements
• Planning – draft a plan to implement AM objectives, called the strategic asset
management plan (SAMP); line up asset operating plans with SAMP objectives
• Support – figure out how parts of the organization can collaborate to achieve AM
goals; this covers information on how to operate and evaluate the AM system
ISO5500x – Seven Key Areas
• Operations – direct, put in place, and control of the asset management system
• Performance Evaluation – evaluate how well assets perform compared to
objectives, using information from planning and other areas. Are the objectives
met? If not, why not?
• Improvement – find opportunities to improve by performance monitoring of the
AM system (i.e. is the overall system working – are you getting the performance
you want?) plus tracking the performance of the assets themselves

• 72 “Shall” statements – these contain the requirements for a sound AM program

What You Need
• Asset Policy
• Strategic Asset Management Plans
• Asset Management Plans

• Answers to 72 Shall Statements

• Shall Statement: “The organization shall decide on and provide the resources needed
to establish, implement, maintain, and continually improve the asset management
system” (Statement 7.1)
• Response: “Manage the supply chain for effective delivery of work on the
infrastructure and to control of costs” (UIC)
• Evidence: “Conduct an assessment of resources required to establish and sustain the
Asset Management System as a whole”
Three Key Takeaways
• Alignment
• Management objectives need a “clear line of sight” to worker activities
• Transparency – goals have to be clearly stated and communicated
• Risk basis for actions
• Managers have always done this – just not well or with a justifiable basis
• There is a risk to doing anything or nothing
• Emphasis on Life-Cycle Costs
• The future is uncertain, but a good plan will take changes into account
• “Anti-fragility” concepts
Goal Alignment - Transparency
• Leaders should align corporate objectives with operating and
organizational plans, asset management policies, objectives and the
strategic asset management plan
• Align:
• financial and non-financial terminology
• Data needs and terminology
• Vertical alignment between levels; horizontal alignment between functions
• Goals and means of the organization should be transparent to all
 Minimize
V
a
l
Environmental
Impact Alignment
u
e Sustainability
s

P
o
Minimize
l Greenhouse Gas
i
c
Emissions
e
s Minimize Scrap

T
a Monitor SF6
s
k Breaker Pressure
s and Leakage

Use Biodegradable
Gaskets
Risk
• Questions of risk
• The alarm is in – should I take the equipment out of service and end the production run?
• The PM is due – can I defer it?
• The asset has failed repeatedly – should we replace it or try to fix it again?
• I have two alternatives – which should I choose?
• Risk measures probability and consequences; each option needs to be addressed
by these metrics
• Create a risk register – assess the risks associated with each failure of an asset or activity
• Qualitative or quantitative
• Managers have used risk forever – but not necessarily in a formal manner
• Need to escalate risk if risk can not be addressed at level where raised
• Need to document risks
• Monitor high impact low probability (HILP) events
Risk Management
• What challenges are faced?
• Known problems
• Unknown problems
• Known problems
• Assets will fail – how to manage?
• Assume so low no action needed by mitigation / contingency
• Redundancy
• Enhanced management – on-line monitoring, alarms, more frequent PM – safe life limits
• Practices may fail – need to monitor overall performance to detect
• Unknown problems
• Ready for anything
• Operator training – worse case scenarios
• Make the system anti-fragile: fail safe
• Is it really unknown? Or did we decide to just ignore the problem?
• Need to balance risks and costs
11
Life Cycle Costs
• Consider capital and O&M costs in decision making
• We live in a low bid world – but for some assets capital is small part of cost
• Motors – initial cost is 20% of life cycle costs (biggest cost is electricity)
• Need to consider interest rates, failure rates, PM effectiveness,
outliers/black swans
• What will you do when the CFO attacks?
Life Cycle Costing –
Which is Better? Which Asset Do You
Have?
The Bow Wave Can you manage this?

• Similar assets bought at the same time may fail at the same time
• Problem is high number of failures and high cost – hard to budget,
significant outage time
• Based on Weibull values
for eta (life) and beta (steepness
of the curve)

CIGRE TB176
 Creating ISO 5500x
Performance
Leadership Leadership
Improvement

Planning Planning

Performance
Operations Support Leadership Operations Support
Improvement

Planning
Industry C
Industry A

Operations Support
Performance
Leadership
Improvement Performance
Improvement Leadership

Planning
Planning

Operations Support
Operations Support

Industry B Industry D
 Upgrading Industry A Elements
Performance
Leadership
Improvement

Planning No Elements
Need
Enhancement
Many Elements

Operations
Need
Enhancement Support
Generic to Industry Specific AM Guidance
• UIC Railway Application Guide
• WSA301-2015 ISO55001 Implementation Guide
• Australian water industry
• CEDR Implementation Guide
• Roads in Europe
• AASHTO Transportation Asset Management Guide
• Roads (US)
• CIGRE TB541, 597– Electric Transmission
• Lots of others – more in the making

• Will not match your industry –

but could help resolve what your company should do
Other Sources
• Institute of Asset Management – lots of material available to SMRP
membership through coordination agreement
• Provides Asset Management Assessor certification
• Global Forum on Maintenance and Asset Management (GFMAM) –
• Template for Assessment Opportunities
• Template for Case Studies
• Also associated with SMRP
GFMAM Organizations

• Asset Management Council (AM Council), Australia

• Associação Brasileira de Manutenção e Gestão de Ativos (ABRAMAN), Brazil
• European Federation of National Maintenance Societies (EFNMS), Europe
• French Institute of Asset Management and Infrastructures (IFRAMI), France
• Gulf Society of Maintenance and Reliability (GSMR), Arabian Gulf Region
• Japan Institute of Plant Maintenance (JIPM), Japan
• Plant Engineering and Maintenance Association of Canada (PEMAC), Canada
• The Society for Maintenance and Reliability Professionals (SMRP), USA
• The Southern African Asset Management Association (SAAMA), South Africa
What to Do?
10 Rights of Asset Management
• Specification • Operations
• Design • Maintenance
• Sourcing • Improvement
• Fabrication • Salvage
• Installation • Management

Link to Root Cause Analysis – High Level Latent Causes

Look for the Gaps!
Asset Management
Right Work Done Work Done Right
Post-Maintenance Testing Work Identification
Condition Monitoring Planning and Scheduling
Reliability Centered Maintenance
Coordination with Operations
Root Cause Analysis
Work Procedures
Preventive Maintenance
Spares and Spare Parts Stocking
Vendor Recommendations
Quality Control
Industry Lessons Learned
Training / Qualifications

Total Productive Management

Regulatory Requirements
 Move to Asset Management >>>>>>>
Add
Hidden Alarms
Failure Change
Finding Duty
Tasks Cycle
R Modify
On- Assets to
C
Condition Enhance
M Tasks Improve CBM
Scheduled Environment
L
Restoration Upgrade
O Tasks Assets
G
Change
I Scheduled
Design -
C Discard
Ruggedize
Tasks
Increase
Design Training
Changes Change
Maintenance
Practice
Specification
• Specification – identifying what you want, and making it
known to vendors
• Tight, well written specification key to getting best product –
especially in the age of low bid
• Vendors are like computers – they do what you tell them, not
what you want
• What this should include:
• Purpose
• Standards to Meet
• Testing, Training, whether maintenance needs are included
• Delivery Schedule
• Reliability Goals - defect rates, MTTR performance, failure rates
• Warranties
 Design

• Design – how want you want

becomes what you get
• Leading cause of infant mortality
• Flaws in design may appear in later Operations – e.g.
Challenger O-rings, Boeing 787 Batteries
• Less margin that previous designs – more outright
mistakes or adjustments
• “Teenage” Mortality
• Modifications to design for client customization, FOAK
design
• Lasts past infant mortality – and warranty
Design (2) – Best Practices “Maintenance can
only preserve
• Consider system and component design
• Standardization
reliability built into
• Minimize Total Cost of Ownership the asset”
• Cradle to Grave stewardship Ramesh Gulati
• House of Quality – Voice of the Customer
• Failure Modes and Effects Analysis
• Prevent failures, based on their severity by examining failure modes and effects
• Similar to classic FMEA – at start of design process
• Reliability, Availability, Maintainability
• Redundancy, minimal special tools, reliable components, access for repairs, condition
monitoring/diagnostics
• Maintenance avoidance – chronic problems trigger high life cycle costs
• Manufacturing and Assembly
• Minimize number of parts, COTS, ease of fabrication
Sourcing - Fabrication
• Sourcing – who you buy from (could be assets or
services)
• Outsourcing versus insourcing
• Judge based on cost, past performance, support
• Competitive bidding
• Fabrication – how they make the design into
what you get:
• Another source of infant mortality
• Deepwater Horizon Blowout Preventer Failure
• Shop practices
• Good parts – cheap, counterfeit
• Proper welding, seals, avoiding contamination
• Good construction techniques

Cody Elvin
Fabrication (2)
• Quality control and quality assurance
• Proof testing at the factory
• Baseline testing information
• Proper assembly / packaging / shipment
• Proper documentation – installation, operation, maintenance
instructions
• Inspection of work in progress, factory condition
Installation
• Installation issues
• Soft foot
• Misalignment
• Imbalance
• Looseness – bolts, electrical connections
• Grouting / foundations / flooring
• Improper lubrication
• Electrical, cooling/heating, air supply
• Software testing – can you check everything?
• Startup and Acceptance Testing needed
 Infant Mortality
Infant Mortality
12

New Assets

SMRP KC Conference –
10

8
>1/2 said infant
Number of Failures

Classic Bathtub
6
mortality is up!
4

New Transformers
2

0
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 59 61
Age – Months
Operations
• Operations may be outside “design basis” - bounds of normal
operation
• Operators can break equipment – to meet production goals
• Maintenance Technology 1997: 32% of failures caused by Operations
• Operators can fail to properly operate equipment – failure to preheat
furnaces, prime pumps, verify open/close valves
• Operators also experience:
• time pressures
• long hours
• insufficient resources to cover work
• Acceptance of poor practice / inadequate safety
Operations
• Operators are first line of defense
• Operators will identify and possibly correct problems – through
Operator-Driven Reliability, Total Productive Management
• Operators conduct Rounds
• Operators often understand system and failure consequences
better than others
• Operators track costs of operations
• Electricity, air, water, production inputs – needed for day to day
operations
• Operations drive or monitor key performance indicators
• Costs/output
• Availability, Reliability
Maintenance
• Maintenance keeps the plant running!
• Profit Center, not Cost Center –
• need to optimize
• Preventive maintenance
• Tasks driven to predict, prevent, detect, or mitigate failures – condition monitoring
• Tasks or frequencies can be wrong
• Corrective maintenance
• Restores equipment to like new, or like old condition
• Lack of training, procedures
• Short cuts – become accepted practice (DC-10 engine maintenance – removing
support, not just engine)
Work Flow
• Organization of work from work identification through closeout
• Spare parts management
• Control of CMMS … ERP
• Work order tracking
• Asset hierarchy
• Costs – parts, man-hours
• Record work done, as-found, as-left conditions
• Key Performance Indicators
• PM/CM ratio, backlog
• Performance measures
• Program improvements: root cause analysis, RCM, Risk-based inspections
• Move from emergency, reactive to optimal, planned maintenance
Improvements / Modification
• Proactive maintenance
• Avoid maintenance by:
• eliminating cause of failure – replace parts / equipment
• Making a cheaper / better task feasible – on-line sensors
• Reducing consequences – adding blast walls
• Balance O&M versus capital costs
• Use every maintenance action as an opportunity to improve
• Defect elimination – continuous improvement
• Management of Change
• Needs to be managed!
• Unintended consequences
• The cheese will move soon
• Can improve processes as well as assets
• Need to routinely assess status and if improvement is needed – don’t need to
be sick to get better
 Maintenance
Removed Steel
Bearing Support
For Accessibility

Weakened Support now had

lower bearing/shaft critical
frequency, just above
running speed. Fan was in
“launch” sequence!
36
Salvage
• Know when to junk – technology, financial, functional obsolescence
• Resale – with or without guarantees
• Environmental impact – leftover material, waste products
• Steps:
• Decommission
• Dismantle
• Dispose of hazardous and non-hazardous waste
• Return site to desired condition (brown, yellow or green field)
Management
• Basis for Almost All Other Causes
• 10% of failures can’t be prevented
• Risk can be reduced – but at a cost, so a balance must be reached
• Need to understand performance and costs of assets and asset
programs
• Ties to information needs – KPIs
• Data driven
• Need to make decisions - tradeoffs between each area
• We face that every day – cheaper, less rugged assets – need to achieve
balance
• Question at conference – “How many think assets are less rugged now than
before - >1/2 respondents yes”
More Management
• Right people – on the right seats on the bus
• Right processes
• Set objectives – provide resources to accomplish them – reward those
who succeed, help those who have not succeeded yet
• Communicate!
• Lead!!
Benefits
• Nothing really new – but better organization, holistic approach
• Better Return on Investment
• Optimal spending – reduced capital
• Improved justification for expenses
• Better understanding of risk
• Improved governance
• Improved reputation
• Likely to become standard in many industries – government regulated
or publicly owned
Real Benefits
• Network Rail – UK 2006 - 2014: Increased AM maturity – 51 to 66%
• Extended asset life, reduced capital spending by 20%
• Reduced O&M costs by 46%
• Improved reliability – broken rails reduced 322 to 125
• More trains in use – 10% more kilometers travelled, 3% more freight
• Safest major rails in Europe
• Better regulatory outcomes

• China Light and Power 2007 – 2017:

• Customer minutes lost reduced 90%
• Added 25% more assets, reducing prices by 12%
How to Move Forward
• Understand the progression – transparency, risks, life cycle costs
• Find the balance between costs and objectives
• Fight the good fight!

We will need leaders – who can fight the low bid when its wrong
Questions?
• Contact information: Earl Hill [email protected]

• References:
• ISO-55000, 55001, 55002
• Ramesh Gulati: 10 Rights of Asset Management
• John Mitchell: Physical Asset Management