Performance & Utilization
This topic has a brief overview and covers:
Assets have to be effectively utilized to provide the maximum return.
If considerable investment is required for an asset that will only be used 10% of the time, then very high standing charges will need to be met, and the asset will tie up considerable capital resources.
In some cases the community will be quite prepared to pay the additional cost of providing for "under utilized" assets, e.g. water, electricity and flood control system, in order to adequately cater for peak demand or emergency cases. This will result in more than adequate level of service during the normal operating condition.
In other situations there may not be an increase in the level of service offered to customers by the retention of under-utilized assets. Examples include an office building that is only partially occupied due to the downsizing of staff numbers, or a depot site that is three times bigger than the current store yard requirements of the organization.
Under-utilization of an asset can be considered as a capacity failure. Unlike normal capacity failure (i.e. the demand for the asset exceeds its capacity) this failure is a lack of demand for the service the asset provides. In this case the demand for the asset does not reach a cost effective level of utilization.
For prioritizing works, inputs are required that clearly indicate the need for assets (functions being undertaken), and the utilization being made of the assets. This will enable predictive modeling to be carried out on the ability of assets to meet future demands.
Demand for services can be seasonal or it may fluctuate during the day, for example a regional library. The peak demand may only occur 10% of the time and in this case, instead of having an asset base capable of providing peak demand services, it may be possible and more cost effective to introduce operational changes by operating the asset or the asset system to provide the service in a different way.
To have proper operational control, policies should be in place including demand management, which allow modeling of the actual demand against the available capacity under any circumstances and provide a clear picture of the risk of failure.
For an asset that has a capacity failure, it may be possible to re-route, load share or operate the asset in an alternative mode to provide the additional capacity required. In addition to capacity and level of service considerations, other issues to consider include the quality of service, and the expectation of the customers (environmental issues, etc).
Determining when and how the increased demand will be met is a critical part in the development of the overall strategy for the asset. This aspect can often be linked to an automatic telemetry system such as SCADA that may provide the utilization inputs required.
Operational procedures will impact on:
- The cost of operating the assets
- The performance of assets
- The levels of service achieved
- The maintenance plans developed for assets
- The condition of the asset at any point in its life
- The capacity limitations of assets
- The ability to optimize operations and maintenance
- The risk exposure of the organization.
Therefore it is important to have clearly defined instructions for operation of assets, usually manuals covering:
- Asset description
- Start up procedures
- Normal operation modes and settings
- Operational monitoring
- Maintenance requirements
- Emergency shutdown procedures
- Operational shutdown procedures
- Failure management plans.
The information contained in operations manuals can be electronically stored with maintenance systems or held in a separate subset of the asset register. In either case, linkage to specialist asset management systems, such as optimized decision making, allows refinement of efficiency and cost-effectiveness for infrastructure asset performance.
Operations manuals need to take account of the service delivery objectives. The operation of assets should therefore be according to the manual unless deviation is warranted as part of an optimizing process. The manual can be revisited during the life of an asset as part of the refinement process.
The quality of failure management plans will have significant influence on the risk levels sustained by an authority.
Based on the service objectives of the asset and the need to optimize life cycle costs, asset managers need to be able to set the most appropriate maintenance plan for these assets and their components.
Using the strategy and target cost frameworks, the maintenance analyst should develop a maintenance plan based on the following:
The asset manager will develop a plan that includes an appropriate blend of:
- Planned and unplanned activity
- Capital and maintenance (recurrent) costs including the servicing and cleaning costs.
The unplanned activities will have a criticality or priority rating and all asset services will have an appropriate response time.
In a competitive environment involving sales and production, forecasting future demand and being able to cater for the future increase in demand are crucial to the survival of an organization.
Though the demand for community services such as parks and drainage are to a certain extent inelastic, the increasing pressure organizations to operate like business enterprises requires them to predict the future demand for their services and to meet these demands through strategic planning processes.
Failure to meet the increased demand will inevitably reduce the level of service that is expected by the customers. On the other hand, building new works to augment the existing services must be economically justified.
There are several ways an asset can fail to provide its required level of service or reach the end of its effective life. These failure modes are:
Lack of Capacity
- The growth in demand has or will outstrip the asset's ability to provide the service required. Augmentation will be required.
Functionality
- The asset no longer meets the needs or standards required for its continued use and ownership.
Under Utilization (Cost Failure)
- This case really relates to excessive/untenable costs being charged for the asset as standing charges or utilization costs rise above what the customers are prepared to pay, so the asset needs rationalization or disposal.
Inefficiency
- Due to technological change the asset could be replaced effectively by an updated asset that would pay for itself with savings generated.
Obsolescence
- Due to a lack of spare parts etc. the asset can no longer be maintained to provide the service required.
Level of Service (falls below acceptable levels)
- The necessary reliable performance cannot be achieved without excessive maintenance or renewal costs. In some cases a new asset may be required.
Structural Integrity (Condition)
- The age of the asset is such that it reaches the end of its effective life and mortality failure occurs or the risks associated with its probable failure are unacceptable.
No Longer Required
- The organization's objectives, strategies, needs or core activities no longer require the asset and it can be disposed of.
Operational Errors
- Human judgment or operational errors can often result in the early failure of an asset, eg. not following optimal maintenance practice on plant and equipment or wrong operational procedures.
Natural and Accidental Events
- Failures can be caused by events beyond the control of management. e.g. storms, floods, winds, earthquakes, lightning strikes. In other cases the failures may be caused by accidents such as car or vehicle crashes, trees falling over etc.
Economics (Cost of Service)
- The asset may fail to meet objectives because it is too expensive to maintain or to operate. An alternative asset or replacement could provide adequate improvement on investment to justify renewal.
After predicting the failure mode of an asset, it is necessary to assess the options to rectify the situation, including:
- Utilization/Capacity
- Operate the asset differently
- Maintain the asset differently
- Management Options
- Operation training
- Demand management
- Failure management plans
- Renewal
- Rehabilitate
- Replace (before or after failure)
- New Work
- Create new asset
- Augment existing asset
- Asset Rationalization
- Asset disposal
- Transfer ownership
- Lease/hire arrangement
- Do Nothing.
The most appropriate option will be the one that has the lowest life cycle cost for the asset and provides the highest level of service acceptable by the customers.
In advanced asset management, decisions have to be made as to whether the asset has to be maintained, renewed, augmented, replaced or disposed of at different stages during the life of an asset.
Different types of works will derive different levels of service or benefits to the organization. Replacement will bring back full performance, whereas some renewal options may not quite restore full performance, but will provide a level of service suitable to rate payers or customers.
The effectiveness of the different options in terms of time frame also differ. A replacement works will be "effective" until the asset expires its effective life, whereas a rehabilitation work will require the asset to be rehabilitated again within a shorter time frame.
It is therefore important that in assessing the relative merits of the various options the following should be considered:
- The capital cost required for each option
- The timing when that capital investment will be required
- The benefits that will be derived from each treatment option
- The effectiveness (time frame) of the different treatment options.
Benefits that can be derived from community infrastructure works are tangible and intangible. It is fairly simple to estimate the former, such as reduced operations and maintenance costs, increased revenue collection from increased capacity. However, including intangible benefits such as asset life extension, improved level of services and risk cost reduction are no less important, and should be quantified as far as possible.
A present value cost benefit analysis for each option should be measured against the organization's targeted figure to determine works programs or select the option. This is an optimized decision making process, which involves:
- Formulating the problem
- Identifying the effects (costs and benefits)
- Interpreting the results
- Carrying out sensitivity analysis to test the variables and uncertainties.
The objective of optimized decision-making is to ensure that the organization achieves the best return from the multitude of options.
By using this structured approach other failures such as water quality, the level of service of a park, painted surfaces etc. can also be assessed in terms of the business risks, or consequences of not doing the work, from a customer or stake holder’s perspective.
In most cases the budgets prepared for the optimal management of assets will exceed the current ability of customers and organizations/businesses to pay.
In the current competitive business environment with reducing capital and increasing demand for budget justification, there is a pressure on management to be able to rank projects or works in the order of maximum return on investment.
Although optimized decision-making may indicate the most opportune investment for an organization, the cash investments required may not be available. Therefore it is also necessary to consider the immediate cash flow and the ability to meet this "optimal" investment program.