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Effective Asset Management

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Part Two in a Series

By Michelle Segrest – Reporting for Empowering Pumps

In an informative session during the 2015 SMRP Conference in Cincinnati, Ohio (Oct. 13-15), Emerson’s Bruce Hawkins, CMRP, discussed the importance of the ISO 55001 Standard and how to make sure your company has the information needed to establish effective asset management best practices.

In general, ISO 55001:2014 specifies requirements for an asset management system within the context of the organization and can be applied to all types of assets and by all types and sizes of organizations.

Hawkins recommended asking some serious questions about asset management:

  • Do you know what assets your organization owns and where they are?
  • Do you know which assets are critical to your organization?
  • Do you know the life cycle cost of each asset?
  • Do you know the current condition of your asset?
  • Do you know the value (market, book, replacement) of each asset?
  • Which is the truth – the property accounting register of the CMMS? Have they been reconciled?

There are many information needs to consider when establishing the best asset management, according to Hawkins.

“If you are in the engineering, design construction phase, you need info about specs, design capacities, commissioning spares requirements, installation requirements for reliability and maintainability, technical information and maintenance requirements,” he said.

In the commissioning phase consider CMMS/EAM data (location, classification, manufacturer data, bill of material, regulatory classification, criticality ranking). Also, pay attention to critical financial information and warranty considerations.

In the operational phase, considerations include operating information (standard operating procedures), maintenance requirements, actual performance, service level requirements, condition, history of maintenance, failures and repairs, replacement value, future maintenance requirements, environmental remediation requirements, residual market value, and disposition.

The next step, according to Hawkins, is to examine the value proposition risk. Companies must maintain the ability to manage the assets to avoid regulatory incidents. An accurate valuation of assets to support property accounting audits must also be made.

This helps maintain business continuity where the asset capacity and condition are known so unintended downtime is minimized. At this stage there is a reduced chance of operator-induced failures, and the ability to understand and manage demand and to identify opportunities for improvement are established.

The value proposition is then set for internal and external stakeholders:

Internal stakeholders:

  • Enhanced workforce productivity
  • Efficiency in planning
  • Ability to standardize across the fleet
  • Ability to leverage information
  • Improved confidence of the sales organization
  • Fact-based management decision making
  • Ability to optimize the portfolio’s value

External stakeholders

  • Information is available for regulatory agencies and government
  • Enhanced shareholder value
  • Reduced probability of incidents that could harm the local community
  • Accurate valuation for due diligence
  • Insurance costs – ability to understand the probability and magnitude of loss

Effective asset management is then enhanced with informed decision making reliability for asset related decisions with a reduced dependence on tribal knowledge. More data-based decisions can be made with performance measurement and continuous improvement is the result.

The ISO 55001 Standard requires the development and maintenance of asset information. “While there is flexibility in the standards requirements, best practices dictate that we have a solid foundation of asset data to produce this information,” Hawkins said. “The right information has significant value to the organization. This information is most effectively produced and managed if effective standards are in place.”

Performance & Condition Monitoring Requirements

Asset information systems can range from straightforward paper-based systems to sophisticated electronic solutions. It is for an organization to decide which types of systems best meet its needs for particular applications.

In a corresponding session on the asset management track at SMRP 2015, Stephen Cooper, CMRP, with JEA and Gary Baysinger, CMRP, with Gainesville Regional Utilities explored this topic more in depth.

The panel experts explained that operational definitions are extremely important in collecting data. Without them the data is suspect. When you change the definition, the data changes. And when you do not have a written definition, the different opinions of those collecting data result in muddled data.

This is an important ingredient in understanding and applying the condition monitoring requirements outlined in PAS-55 and ISO55000. In this session, the speakers broke down many of the details.

PAS 55 requires that the organization establishes, implements and maintains process(es) and/or procedure(s) to monitor and measure the performance of the asset management system and the performance and/or condition of assets and/or asset systems.

The process(es) and/or procedure(s) shall provide for the consideration of:

  • Reactive monitoring
  • Proactive monitoring
  • Leading performance indicators
  • Lagging performance indicators
  • Both qualitative and quantitative measures,
  • Monitoring the overall effectiveness and efficiency of the asset management system;
  • Recording of monitoring and measurement data and results
  • Consideration of the costs of monitoring, the risks of failure or nonconformity, and potential deterioration mechanisms and deterioration rates.

ISO 55000 9.1 outlines that the organization shall determine:

  • What needs to be monitored and measured;
  • The methods for monitoring, measurement, analysis and evaluation;
  • When the monitoring and measuring shall be performed;
  • When the results from monitoring and measurement shall be analyzed and evaluated.

The organization shall evaluate and report on:

  • The asset performance;
  • The asset management performance, including financial and non-financial performance;
  • The effectiveness of the asset management system.
  • The organization shall evaluate and report on the effectiveness of the processes for managing risks and opportunities.
  • The organization shall retain appropriate documented information as evidence of the results of monitoring, measurement, analysis and evaluation.
  • The organization shall ensure that its monitoring and measurement enables it to meet the requirements of 4.2.

When considering asset methodology tools, there are five maturity levels and hundreds of considerations. The panel experts determined that these are the most important questions to ask:

PAS55- Assessment Methodology (PAM):

  • How does the organization measure the performance and condition of its assets?
  • How does the organization measure the performance of its asset management system?
  • How does the organization determine parameters for monitoring asset performance and condition, the extent of data to be recorded, and the frequency of collecting it?
  • How does the organization control the process(es) to monitor and measure the performance or condition of its assets, and the performance of the asset management system?

Self Assessment Methodology (SAM):

  • How has the organization determined what needs to be monitored and measured?
  • How has the organization determined what information generated via its monitoring and measurement processes needs to be analyzed, evaluated and reported?
  • How has the organization determined what data and information it is to analyze, evaluate and report in relation to:
    • asset performance
    • financial and non-financial asset management performance (including that which is required by stakeholders)
    • performance of the AM system?
The effectiveness of processes for managing risks and opportunities.
  • How has the organization determined how and when analysis and evaluation of performance information will be undertaken?
  • How has the organization determined the method(s) of reporting the results of performance analysis and evaluation – and when and to whom?
  • How has the organization determined what documented information it needs to retain as evidence of the results of performance analysis, evaluation and reporting?

Operational Definition

In terms of data collection, operational definitions are extremely important. Without them the data is suspect. When you do not have a written definition, the different opinions of those collecting data result in muddled data, according to Cooper and Baysinger.

An operational definition is a description of a term as it is applied to a

specific situation to facilitate the collection of meaningful and standardized data. When collecting data, it is important to define terms clearly to assure all those collecting and analyzing the data have the same understanding.

Therefore, operational definitions should be very precise and should be written to avoid possible variation in interpretations. PAS55 and ISO5500X both speak to the necessity of formulating an operational definition to validate the measurement of an asset’s condition and/or performance.

Leadership

To lead an organization to a mature asset management system, the panelists recommend that the leaders should:

  • Understand the operational definition.
  • Maintain visibility into the asset financial data.
  • Maintain a sense of immediacy and urgency regarding asset management.
  • Be willing to drill into the details and maintain the ability to globalize and glean actionable knowledge from asset health information.
  • Provide for a valid feedback mechanisms to the data collector and the asset health influencer.

PAS-55 4.4.6 states that good asset management requires meaningful, quality, timely asset and asset management information. Asset management information includes operating criteria, asset performance and condition data.

Asset management information should be capable of enabling an organization to:

  • Determine the end of economic life of assets/asset systems, e.g. the point in time when the asset related expenditure exceeds the associated income.
  • Obtain/calculate the financial and resource impact of deviating from plans that might result in a change in asset availability or performance (e.g. what is the financial impact of deferring the maintenance of a specific generator by six months).
  • Assess its overall financial performance.

Asset information should normally be assigned at the lowest component level of an asset or asset system that requires discrete replacement or maintenance actions, according to the panel experts.

Examples of information to be considered include the following:

  • The condition and duty of assets.
  • Condition and performance targets or standards.
  • Key performance indicators.

The speakers also went into great detail about technical requirements of these standards, the communication requirements and all the machines that need to be classified.

They offered practical advice on how to get started:

  • Start small and focus on largest, most critical machines.
  • Train operators.
  • Make sure maintenance technicians are informed.
  • Spend time on purchase, commissioning and overhaul specifications.
  • Match technologies to machines.
  • Publicize early successes and grow the program.
  • Encourage and implement continuous improvement.

This is Part Two in a series of blog posts highlighting informative sessions about maintenance and reliability from #SMRP2015.

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