Advanced Asset Management – Key Principles

In assessing the ORDM strategy for individual assets it is always important to understand the part it plays in the overall life cycle asset management process.

Advanced life cycle asset management processes need to include the following functional activities:

• Knowledge of existing assets, i.e. physical details
• Knowledge of existing levels of service capable of being offered by the assets
• Knowledge of performance of assets (reliability etc.)
• Knowledge of physical condition of the asset
• Knowledge of current utilization and ultimate capacity
• Ability to predict future demand and levels of service required from customers for capacity (quantity), quality, reliability and other customer expectations (environmental response times etc.)
• Ability to predict failure mode (or effective life) of the assets with respect to:
  • Efficiency and new technology (reduced operating costs)
  • Capacity of system
  • Obsolescence (cannot be maintained)
  • End of physical life (mortality)
  • Lack of utilization (non-core asset)
  • Level of service (reliability, demands, expectations)
  • Cost of service (renewal, maintenance and business risk exposure)
• Ability to analyze alternative treatment options to overcome failures. Analysis should be based on a true cost/benefit economic evaluation (risks to and needs of the organization), and should consider the following options, either to:
  • Do nothing (must be included in all assessments)
  • Create new asset*
  • Augment existing assets*
  • Operate assets differently*
  • Maintain assets differently assets*
  • Rehabilitate existing assets*
  • Replace existing assets*
  • Dispose of existing assets
  • Manage demand/levels of service changes, etc.

  Note: * Denotes multiple options could be available and should be considered as part of the optimized renewal decision making procedure.

• Ability to accurately estimate the economic benefits of all asset management activities in terms of:
  • Maintenance costs
  • Operating costs
  • Improved production or reduced losses
  • Extended life
  • Reduced business risk.
• Optimizing operations, maintenance and renewal activities continuously to meet the changing business and technological environments
• Being able to assess the various options based on the cost/benefit implications to the organization (including risk) in the process known as Optimized Renewal Decision Making (ORDM)
• Develop an appropriate Total Asset Management Plan or System Management Plan to include all the above activities
• Rank investment opportunities for all works and recurrent activities based on their return (cost/benefit) to the organization, irrespective of the service program
• Rationalizing works and recurrent expenditures to suit the available budget for the current planning (or budget) period based on the best return on investment, with the benefits being judged on customer values
• Maintaining this model as a dynamic process to continuously develop and revise strategic planning objectives for each asset to suit business objectives
• Developing maintenance, operations and renewal plans to suit the objectives for each asset and the works program
• Review and revise asset management plans at suitable intervals.

The other key principles applicable to Advanced Asset Management are:

• Every asset needs to be considered as an individual asset. Like assets are not alike, they are only similar
• Assets don't often fail as a whole, usually only components fail and so there is a need to be able to viably rectify component failures
• The principles and concepts of asset management apply to all infrastructure assets, namely Mechanical, Electrical, Civil (passive), even to trees and grass. Only the techniques and activities are different.

A Mission Statement with respect to the organization's infrastructure assets could be:

"To plan, create, acquire, maintain, operate, rehabilitate, replace and/or dispose of the organization's infrastructure assets in the most cost effective manner whilst providing an acceptable level of service for present and future generations."

Role of ORDM in Total Asset Management Plans

Optimized Renewal Decision Making techniques can be used to assist in decisions relating to:

• Components
• Assets
• Facilities
• Systems.

The key to developing good System Plans is to ensure that we have appropriate strategies for individual assets or their components.

If we know the best answer for all components then we know the best answer for the assets. If we know the answer for all assets then we know the correct answer for the facility. If we know the answers for each facility then we know the correct plan for the asset system as a whole.

Success lies in the aggregation of component or asset strategies up to facility strategies and then system strategies.

It is only when we have the right answers for the individual components that we can develop the best life extension strategy for the asset or facility.

This is shown below:

By knowing the optimal renewal treatment and the timing of that work, we can plot the optimized future cash flow for the life extension of the individual components, the sum of which represents the cash flow for the asset or facility as a whole:

Armed with this information, we can look at appropriate strategies for the system or the organization as a whole and develop the corporate plan.

This may result in the facility being renewed (replaced) or even disposed of as part of the bigger corporate strategy.

This information can then be fed back to individual facility plans where the ORDM analysis for individual assets can be reviewed knowing that the facility need only reach a 35 year life cycle or timeframe.

The new ORDM can then be included in the current TAMP together with the renewal decision and cash flows etc.

This information "feed up" or "feed forward" and strategy "feedback" process works at all levels in an organization: