PART 4 – Should You Bother To Change?
The last three blog entries describe this new trio of standards: ISO 55000, ISO 55001 and ISO 55002, all aimed at standardizing a framework for (Physical) Asset Management (AM).
Physical Asset Management is a whole life cycle approach to managing the assets we depend upon in modern life for just about everything. Our electricity, water, gas and telecommunications all come to us via some form of physical asset. We use physical assets to travel on, in, over and through other physical infrastructure assets. We live, work, entertain, heal, learn, teach, govern and play in physical infrastructure assets. We manufacture in physical plants. We service our physical assets using other physical assets.
Physical assets are integral with modern life and have been ever since man invented his first tools. It makes sense to take care of them and to do so in an efficient and cost effective manner. After all the time and money we save from taking care of our assets can be spent in other pursuits.
Over time the complexity of those assets has grown and with it the level of knowledge and skill needed to take care of them. Maintainers often lament the inattention to maintenance concerns shown by designers of physical systems. Designers, often highly specialized, lack the experience of a maintainer but know how to design if the requirements are well stated and clear. Throughout their useful “life” assets will require repair, upkeep and eventual replacement.
What is the best maintenance program? What is the ideal age at which to replace the assets? What should we replace them with? How can we best utilize new technologies? What risks are created when the asset fails? What can we do to identify, manage and mitigate those risks? These challenges and questions we must answer or pay a high price for our ignorance.
Good Asset Management gives us a framework to answer those questions and deal with those challenges. That’s not to say that Asset Management is new. It is not, but it has not always answered all our questions and met these challenges as effectively as it might.
When systems fail unexpectedly or take inordinate long times to repair, when the costs of keeping a system functional are much higher than we anticipated, when we can’t get the performance we expect, we are seeing signs of Asset Management that has fallen short.
Good Asset Management enables us to:
• Spend capital money wisely, ensuring the maximum return on investment or value for the money in the long term,
• Achieve anticipated production levels consistently,
• Achieve desired service levels consistently,
• Manage and mitigate risks to production, service levels, costs, revenues, health, safety, environment, security and public image,
• Do all of the above at a safe minimum cost,
• Replace assets at a point in time that ensures the minimum life cycle cost to the organization,
• Ensure that all the needed information to sustain our systems is up to date, available where and when needed and to those who need it.
If we were doing this consistently today we would see fewer disasters such as the train derailment, fatalities and environmental harm done in Lac Megantic, the losses and damage done when the Deepwater Horizon suffered its explosion in the Gulf of Mexico and the collapse of bridges such as I35W in St. Paul / Minneapolis.
The best examples of good Asset Management today (outside of military applications) are probably found in the airline industry and nuclear power generation. Even there, we make mistakes and suffer consequences from natural and man-made disasters, but far fewer than we might otherwise. The airline industry today crashes planes at a rate that is roughly 1 / 120th the rate it was 40 to 50 years ago.
Utilities (gas, electric, water, telecoms) have long provided reliable service over long periods of time, generally suffering outages only during natural disasters. The traditional approach, well known to reliability engineers, is to build in redundancy. If one fails, the other takes over. In nuclear power we even see multiple levels of redundancy because of the serious consequences of some failures. While successful, that approach is also expensive. It means doubling up (or more) on assets that cost a great deal of money. That spending is becoming unsustainable and utilities are being forced to consider alternatives. They are being squeezed between the rates they can charge and the amounts they can spend. Where regulated, those pressures are immense.
Good Asset Management, and ISO 55000 / 1 / 2 won’t solve the problems for us, but they do provide a framework which enables us to make the best possible choices and deal, as best we can, with those challenges. It is an enabler. It requires us to consider factors we might otherwise or traditionally ignored. It makes us think a bit more. It forces us out of the, “we’ve always done it this way,” mindset.
Businesses focus on the products they produce, the services they deliver. Likewise, governments and other bodies focus on whatever they deliver. Making sure we choose the best option when we are considering a new system, making sure we design the most cost effective maintenance program, making sure we have a plan for refurbishment and replacement, etc., are not top of mind in most organizations. Even organizations that make extensive use of physical assets (e.g.: a mine, an electric utility) tend to focus their attention on what they do, not what they do it with.
Physical assets are often taken for granted and the more reliable they get, the more that tends to happen. The more complex they get, the more there is that can go wrong. We make better use of materials through very sophisticated engineering – leaving less room for error. Managing assets today is more complex than it was 10, 20, 50, 100 or more years ago. Yet in many organizations, the management of those assets is still carried out as it was years ago. Managers responsible for those assets learned their business years ago.
The new international standards will challenge their thinking and drive a search for new solutions to problems that some organizations may not even be aware they have (until it is too late). ISO 55000 / 55001 and 55002 will stir this pot, challenge the status quo and lead to a whole new regime of asset care. Is it going to be expensive? How can we afford it?
Good asset management is all about doing the right things the right way. If that is different from what is being done today, it will save money and likely effort. In the long term there should be no doubt that good AM, applied as the standards say, to the extent appropriate for your organization, will result in less spending and more output from those assets.
In the short term however, there is a probably a hurdle to cross, but it may not be as significant as you might think. Most organizations managing physical assets already have a good deal of the practices as described in the ISOs in place. They may not be used consistently, not documented, records showing compliance may not exist… but the basic practices, in many cases are already there.
The effort to align with ISO 55000 need not be onerous nor without benefits. Imagine a company with several plants, each doing its own engineering and maintenance their own ways. By becoming consistent they can now share resources, share knowledge and experience. The most effective processes among the plants can be chosen for all to use (assuming it is appropriate to all of them). There is a multiplier effect – you are using the creativity and knowledge of more people to solve a common challenge.
In working with multi-site organizations, I’ve consistently seen the benefits of collaboration and teamwork. It doesn’t usually result in cookie cutter solutions either. Rather, basic processes and methods are the same with local variations to account for local differences. Instead of burdening each site with a project, they share the workload – a real help in today’s lean economy.
Information is going to be one challenge in most organizations. They have it all over the place today and it is not always accessible nor up to date when needed. Good Asset Management would require that information to be brought up to date and made accessible to those who need it on an as needed basis. Maintenance could actually identify the correct parts for fixing equipment! Engineering could rely on drawings of the plant to be accurate representations of what is installed and operating!
Getting that information “cleaned up” is a bit of effort. Companies are often swimming in data that they cannot hope to use without some sort of “data mining” project. The very term, “data mining”, implies that there is a lot of waste to be sifted through. Why? The lack of fore-thought that created that is symptomatic of the lack of good asset management practices.
Good Asset Management promises to do a lot of good. There will be some short term pain in aligning to the standards and getting thinking aligned with those good practices, but the payoffs will be substantial. Long term gains are almost certain. Short term gains, if the transition is handled well, can easily pay for the cost of transition. In many cases, the transition need not be as painful as you might expect. Existing practices and processes have served companies well for years. They don’t need to change overnight nor do they necessarily need to change. Choose the best of what you have, standardize it, document it and then follow it. What’s to be lost?
Only inefficiency and ineffectiveness.