Reliability success 4th generation (2)

© Reliability Success Pty Ltd, 2010. All rights reserved© Reliability Success Pty Ltd, 2010. All rights reserved

The 4th Generation of Asset Management

An overview of leading practices in modern asset management

© Reliability Success Pty Ltd, 2010. All rights reserved

What is strategy?

Strategy is means of taking converting a vision into reality.

What resources, tools, capacities, skills and other requirements are they to carry this out

Vision or goals

How we are going to make that vision or goal a reality


What is strategy?


• For example:• In the context of RCM a strategy is the management plan for a specific failure

mode. (E.g. A detective maintenance task on Oil-filled circuit breakers)• The corporate vision will revolve around either reduced cost, improved

performance or reduced risk• The strategy is what we are going to do to achieve that vision (Task type and

frequency)• And the tactics are how we are going to achieve that vision:

• What task, with what resources, having which skills, with which spares, with which tools, using what procedure etcetera, etcetera…


What is strategy?


• For example:• In the context of strategic asset planning it could mean something like “We will

implement comprehensive risk profiling for each critical asset group”• The corporate vision or requirement could be regarding a response to the

passage of C-45, or potentially for capital planning purposes…• The strategy is the decision of what we are going to do (What end goal and

initiative possibly)• The tactics here are then the skills, people, timeframe allowed, meeting times

and rooms, the initiative that has been chosen, and other relevant resources required to make this vision a reality.


Asset Intensive versus Scheduled Manufacture

AccountsReceivable

AccountsPayable

Gen Ledger

Costing

Production Based PurchasingSales

Production

Ware-house

PurchaseOrders

InboundLogistics

OutboundLogistics

SalesOrders

DemandForecasting

ProductionPlanning

ProductionOrders

ShopFloor Raw

Materials

PayrollAccountsPayable

Asset Intensive

PurchasingHuman Resources

Work-shop

PurchaseOrders

InboundLogistics

PersonnelAvailability

Skills &Training

Maintenance

WorkOrders

MaintenanceSchedule

MaintenancePlan

Ware-house Maintenance

Materials

Improvement focussed on…• JIT• MRP• Supply chain

and logistics

Improvement focussed on…• Just in case• Asset resource

Planning• JIC supply chain

techniques


The changing world of asset management…

• Over the past 15 years the managerial discipline of asset management has undergone a dramatic transformation; this has been due to three fundamental reasons…

An institutional shift in the expectations of asset management

Advancement in understanding

A quantum leap in the technology available (Session 2)


Expectations…

The early 21st century has witnessed an institutional shift in the way that asset managers manage their physical asset base…

Standardisation…

1999SAE JA1011The RCM Standard

2006 – Letter MD212 - OFWAT recognise common framework in UK water

2005 – OFGEM recommends voluntary comparison against PAS55

2006 - Office of the PPP Arbiter (OPPPA) using PAS55 as key input for AM Framework (UK)

2005 - United States of the Energy Policy Act - USA, makes compliance by electric utilities and other companies with reliability standard mandatory and enforceable under federal law

Pre 2000…

20012000 2002 2003 2004 2005 2006

• Increased demands by regulators for high confidence decisions

• Need for defensible budgeting within institutions and public sector

• Growing need for benchmarking tools

• Increased demands by regulators for high confidence decisions

• Need for defensible budgeting within institutions and public sector

• Growing need for benchmarking tools

2004 – Formal launch of PAS55


Expectations…

The early 21st century has witnessed an institutional shift in the way that asset managers manage their physical asset base…

2004 - Bill C-45 becomes applicable law in Canada. Up to CND$100,000 and 25 years imprisonment.

2006 – Buncefield disaster in the UK, investigation ongoing…

Safety…

Pre 2000…

20012000 2002 2003 2004 2005 2006

2004 - 2006 Unsuccessful trial of executives, contractors and engineers regarding Potters Bar rail crash in the UK

2006 – Sweeping changes recommended to American Petroleum Institute after Chemical Safety Board Investigation into BP Houston accident.

In the future questions will continue to be asked, but they will increasingly be asked of individuals rather than companies…

In the future questions will continue to be asked, but they will increasingly be asked of individuals rather than companies…


Expectations…

Easy benefits have been removed from asset management during the 1980’s and the 1990’s…

Profitability… Direct maintenance costs

Impacts of traditional methods of cost reduction

…driving unit costs of maintenance down

Increasing performance from each $ spent on asset maintenance…



Fix it when it breaks

Reactive

1800’s

• Regular maintenance routines

• Time based maintenance

• Mainframe computers

• Beginning of automation

Preventive

1930’s

• RCM• Expert

judgement• Predictive

maintenance• Online

condition monitoring

• Enterprise systems

• Modern technologies

Proactive

1970’s

Moubrays’ 3rd generation of maintenance…

Resulting in…

• Improved performance…

• Lower direct costs / greater value for money…

• Baseline maintenance regimes…

• Expert judgement in place of quantified analysis..

• Data rich and information poor…

• High resource requirement to sustain the effort…









• Probabilistic modelling

• Collaborative systems

• Knowledge capture and use

• Remote working solutions

• On-premise and on-line technology

4th generation asset managementRisk Based

2000

Fix it when it breaks

Reactive

1800’s

• Regular maintenance routines

• Time based maintenance

• Mainframe computers

Preventive

1930’s

• RCM• Expert

judgement• Predictive

maintenance• Online

condition monitoring

• Enterprise systems

• Embracing modern technologies

Proactive

1970’s

Moubrays’ 3rd generation of maintenance…


The path to high confidence decision making

Deterministic

• Time based maintenance• Manufacturers

recommendations• Low confidence decisions• High NPC

Preventive

1930’s

Proactive

• Condition based maintenance• Tied to performance and risk• Processes and procedures for

capture of data• Higher confidence• Lower NPC

Proactive

1970’s

Stochastic

• Risk based maintenance• Maximum confidence in

decision making• Lowest NPC

Risk Based

2000


The problem with data…

Acceptable: Low cost or negligible cost

Unacceptable: High cost, impacts on safety or management of the environment

Acceptable: Low cost or negligible cost

Unacceptable: High cost, impacts on safety or management of the environment

The vast majority of reliability analyses are completed with approximately 70% Knowledge and 30% data…

Most attempts at historic analysis fail due to one fundamental fact….


What is whole of life costing?

LCC = Cic + Cin + Ce + Co + Cm + Cs + Cenv + Cd

WoL asset management is also referred to as Life-cycle costing or LCC. The Hydraulic Institute’s LCC guidebook, defines the equation is as follows

ic = initial cost or purchase price (e.g., of the pump, system, pipe, auxiliary equipment)in = installation and commissioninge = energy costso= operating costs (the labor costs for normal system supervision)m = maintenance costs (e.g., parts, worker-hours)s = downtime (loss of production)env = environmental costsd = decommissioning

ic = initial cost or purchase price (e.g., of the pump, system, pipe, auxiliary equipment)in = installation and commissioninge = energy costso= operating costs (the labor costs for normal system supervision)m = maintenance costs (e.g., parts, worker-hours)s = downtime (loss of production)env = environmental costsd = decommissioning


The journey to 4th generation asset management

Deterministic

Preventive

YR1 YR2 YR3 YR4 YR5

Net Present Value

Net Present Cost

Confidence

Star

t-of

-Life

ic = initial cost or purchase price in = installation and commissioning


In-S

ervi

ce-L

ife

e = energy costso= operating costs (the labor costs for normal system supervision)m = maintenance costs (e.g., parts, worker-hours)s = downtime (loss of production)env = environmental costs

End-

of-L

ife

d = decommissioning

What’s wrong with this???



Deterministic

Preventive

YR1 YR2 YR3 YR4 YR5

Net Present Value

Net Present Cost

Confidence


What’s wrong with this???

It’s focused on low costs, not low unit costs.

There is no mention of the performance required!!



Deterministic

Preventive

YR1 YR2 YR3 YR4 YR5

Net Present Value

Net Present Cost

Confidence

Star

t-of

-Life CSOL

In-S

ervi

ce-L

ife

CISL

End-

of-L

ife

CEOL(∑ (p1+p2+p3…)

CSoL + (∑ (y1+y2+y3…)) + CEoL

Net Present Unit Cost (NPUC)

Not Lifecycle costs (LCC) …Net Present Unit Costs (NPUC)

Summarized



Deterministic

Preventive

YR1 YR2 YR3 YR4 YR5

Net Present Value

Net Present Cost

Confidence

Star

t-of

-Life CSOL

In-S

ervi

ce-L

ife

CISL

End-

of-L

ife

CEOL

Yet there are still problems with this…

(∑ (p1+p2+p3…)

CSoL + (∑ (y1+y2+y3…)) + CEoL




Deterministic

Preventive

YR1 YR2 YR3 YR4 YR5

Net Present Value

Net Present Cost

Confidence

Yet there are still problems with this…

(∑ (p1+p2+p3…)

CSoL + (∑ (y1+y2+y3…)) + CEoL


• Strategies have sketchy origins, not tied to performance and risk

• CAPEX Maintenance is generic or ad-hoc

• Corrective Maintenance forecasts are a guess. (At best!)


The journey to 4th generation asset management • Tying in to performance and risk

(Through application of RCM principles)

• Inclusion of corrective expectations (Through application of all maintenance tasks)

Proactive

Proactive

YR1 YR2 YR3 YR4 YR5

Net Present Value

Net Present Cost

Confidence


Defining the maintenance tasks



• Tying in to performance and risk (Through application of RCM principles)


– PTIVE – Predictive Maintenance regimes (Routine)

– PTED – Action to correct a failing component (Corrective)

Proactive

Proactive

YR1 YR2 YR3 YR4 YR5

Net Present Value

Net Present Cost

Confidence









– PRES – Preventive Restoration (Routine)

– PREP – Preventive Replacement (Routine)

Proactive

Proactive

YR1 YR2 YR3 YR4 YR5

Net Present Value

Net Present Cost

Confidence









– PREST – Preventive Restoration (Routine)


– DTIVE – Detective Maintenance regimes (Routine)

– DTED – Action to correct a failed component (Corrective)

Proactive

Proactive

YR1 YR2 YR3 YR4 YR5

Net Present Value

Net Present Cost

Confidence









– PRES – Preventive Restoration (Routine)




– RTF – Decision to allow a component to run to failure due to consequences of failure and suitability of tasks (Corrective)

Proactive

Proactive

YR1 YR2 YR3 YR4 YR5

Net Present Value

Net Present Cost

Confidence







– PREST – Preventive Restoration (Routine)




– RTF – Decision to allow a component to run to failure due to consequences of failure and suitability of tasks (Corrective)

• Sets up the processes, procedures and techniques to move to stochastic WoL management.

Proactive

Proactive

YR1 YR2 YR3 YR4 YR5

Net Present Value

Net Present Cost

Confidence


How the progression comes about…

Deterministic

Preventive

YR1 YR2 YR3 YR4 YR5

Net Present Value

Net Present Cost

Confidence

Proactive

Proactive

YR1 YR2 YR3 YR4 YR5

Net Present Value

Net Present Cost

Confidence

• Defining the functions of the assets, tying in to performance and risk

• Raising the level of understanding within the workforce

• Higher confidence capital maintenance planning

• Defining the functions of the assets, tying in to performance and risk

• Raising the level of understanding within the workforce

• Higher confidence capital maintenance planning

• Online and on demand condition monitoring• Tracking calendar and operational

information• Implementation into business

processes…

• Online and on demand condition monitoring• Tracking calendar and operational

information• Implementation into business

processes…


Why is it important to move forward…

Proactive

Proactive

YR1 YR2 YR3 YR4 YR5

Net Present Value

Net Present Cost

Confidence

Resulting in…














How to move this forward…

Stochastic

Stochastic

YR1 YR2 YR3 YR4 YR5

Net Present Value

Net Present Cost

Confidence

Proactive

Proactive

YR1 YR2 YR3 YR4 YR5

Net Present Value

Net Present Cost

Confidence

• Ensure maximum efficiency in execution through capacity resource scheduling, tying into inventory management and supply chain algorithms, lean thinking, and uses of technology…

• Semi-automation of reliability analytical information

• Sophisticated performance management systems and programs

• Ensure maximum efficiency in execution through capacity resource scheduling, tying into inventory management and supply chain algorithms, lean thinking, and uses of technology…

• Semi-automation of reliability analytical information

• Sophisticated performance management systems and programs

• Correct the data capture, failure and work coding and work flows surrounding physical data capture (Using new technologies)

• Determine the correct operational, asset condition and ongoing condition data based on reliability analyses

• Collaborative techniques and systems• Away from the planner / supervisor models…

• Correct the data capture, failure and work coding and work flows surrounding physical data capture (Using new technologies)

• Determine the correct operational, asset condition and ongoing condition data based on reliability analyses

• Collaborative techniques and systems• Away from the planner / supervisor models…


YR1 YR2 YR3 YR4 YR5YR1 YR2 YR3 YR4 YR5

YR1 YR2 YR3 YR4 YR5

YR1 YR2 YR3 YR4 YR5

Maximum value asset management

1. Define what you want the assets to do…

2. Put the routines in to do it!

3. Move from time based to condition based

4. Implement and use modern EAM / ERP systems

5. Basic planning and scheduling

6. Operational information where required

7. Basic inventory management strategies

1. Rationalise the failure coding that is used

2. Rationalise the work management systems ion place

3. Implement full capacity scheduling

4. Tie inventory management to probability of failure (Not historic only)

5. Define the minimum asset condition information requirements for modelling

6. Using outsourcing and contract management to maximise value

Reliability success 4th generation (2)

Business

asset managers

vision task type

context of strategic

reduced riskthe strategy

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