Do you understand where your asset risks are, and their potential consequence?
Asset Prioritization is used to provide a structured approach to determining the relative organizational risks and failure consequences associated with assets. This provides a means for the organization to focus on critical risks to the business.
Risks are categorized by the nature of the risk that the organization needs to manage. Risk categories can include:
- HSE (Health & Safety, and Environmental);
- Operational (reduced output volume and revenue, poor output quality, poor customer service);
- Financial (severe equipment damage, penalties);
- Legal / Regulatory; and
- Reputation / Community Relations.
Risks are ranked by the relevant categories that are critical to the organization based upon a risk scale for each category that uses both probability and severity of a risk event for the assets being analyzed.
The asset prioritization analysis examines at the parent/child asset hierarchy and determines the asset level the analysis should be performed at to capture the relevant information related to potential failure probability and consequences.
To be effective, asset prioritization analysis needs to be conducted as a facilitated process with those who know the assets best through their involvement in operating and maintaining the assets, and other stakeholders with knowledge on potential failures and their consequences.
The asset prioritization analysis is performed on the assets to determine the level of risk related to the individual categories and assigns a risk rating number for each category based upon its score on the relevant risk scale. The documented asset priority values can then be used to focus efforts on where and what the business needs to invest in the effective management of their assets.
Asset priority can be used to drive:
- Level of investment in developing maintenance tactics e.g. RCM (Reliability Centered Maintenance) analysis, predictive and preventive maintenance applied without detailed analysis, OEM (Original Equipment Manufacturer) recommendations followed by RCA (Root Cause Analysis) as required to address failures not addressed by OEM recommendation, or Run to Failure and fix it when it fails;
- Level of investment in spare parts and material to support individual assets i.e. varying MRO stores service level as determined by asset criticality e.g. highest criticality 99% service level, lower criticality 95%; and
- Level of investment in developing operating procedures and tactics i.e. SOPs (Standard Operating Procedures) for normal operation, start-up, scheduled shutdown, emergency shutdown, etc.
The Roadmap and How to Get There
- Determine if Asset Prioritization would be an effective approach to focus upon the critical asset and business issues – Determine if the organization understands what assets are critical to its business and manages those risks effectively.
- Determine organizational readiness – Ensure there will be active senior leadership support for the program, review success factors for past initiatives, and whether the organization can effectively implement the results and effectively execute the tactics.
- Select the pilot area, develop a business case and project plan, and execute the Asset Priority analysis – Identify a viable pilot where there is likely a high benefit to the organization and high likelihood for success. Quantify potential benefits and expected costs into a business case.
- Review analysis – Review the findings to ensure they are rational and reasonable.
- Use Asset Prioritization analysis to drive organizational focus – For Asset Prioritization to provide the greatest value, it needs to drive organizational focus in managing asset operational and maintenance decisions.
What system or method are you using to focus your efforts on what is important to manage well?
This article is authored by Leonard G Middleton for original publication and distribution as part of the Asset Management Solutions newsletters. The newsletters are distributed to a number of practitioners, including international practitioners who often have limited information available to them locally.
This is intended to be an overview of the subject written in common language with the minimal required finance and accounting jargon for asset management, maintenance, and reliability practitioners to understand how their efforts contribute to the performance of the organization. It is intended to help them communicate that message within the organization and for the maximum benefit for the organization and its stakeholders.
The author and copyright owner grants Conscious Asset permission to include this article in their Blog.
Leonard G. Middleton is an experienced professional with many years of broad professional experience, in Canada, the US, and internationally, He has worked in a number of different roles related to maintenance, reliability, and asset management, program and project management, contracts management, outsourcing, and engineering, in industry and in his consulting roles.
His experience in asset-intensive industries has reinforced his perspective on the importance of the physical assets on the operational cost structure and with that the need to get the assets appropriate to the organizational objectives through projects, and then operating and maintaining them effectively.
Leonard has an undergraduate engineering degree (B.A.Sc.), a graduate business degree (MBA), and holds professional designations in engineering (P.Eng.), project management (PMP), and in Maintenance, Reliability, and Asset Management (CMRP, MMP, CAMA), and is an RCM Practitioner.
Leonard is a long-time member of PEMAC, having served on the national Board of Directors for multiple terms. He is an instructor in both the MMP and AMP programs and is a subject matter expert responsible for the content of two MMP modules