How to Write a TAMP
This topic has a brief overview and covers the following elements of a TAMP:
“Plan for the future, but Act today” is a sound philosophy upon which to develop a Total Asset Management Plan.
The best opportunity to minimize life-cycle costs is during the planning and acquisition phases of the asset life cycle. However, even if there are no new assets being planned, existing assets need to be renewed or replaced. The question then becomes “when and how” will the assets be renewed.
The following processes and procedures outline how to develop a Total Asset Management Plan upon which to operate and manage infrastructure systems to achieve:
- Least long-term customer costs
- Acceptable service standards/ levels of service.
Who prepares the TAMP?
Whether written by internal staff or external consultants will depend on skill and time available. The maximum benefit of a TAMP is achieved with preparation of the plan “in-house” utilizing external specialists to lead or support the internal authors. The approach is justified, considering the organization knowledge held inside the organization on:
- Customer’s requirements
- Systems performance
- Business priorities.
General Overview
This section covers:
- Purpose & Objectives of TAMP
- Coprorate Objectives
The Overview should be concise and written in a style suitable for public, new staff & elected members. The remaining sections in the TAMP may be more of a technical information style, if that is appropriate for the organization. The easy reading of the Overview will ensure clarity and understanding on the part of the senior executives and the public during review and implementation.
Business Overview
This section covers:
- Customer Profile
- Business Summary
- Schemes Profile
- Issues Facing the Organization.
It includes:
- Maps, schematics, statistics for clarity and to give the reader an appreciation of scope and importance of the asset portfolio because much of it is invisible
- Customer profile
- Summary of overall business statistics
- Key business issues and strategies.
Service Standards
This section covers:
- Existing Service Standards
- Regulatory
- Customer Related.
The objective of the asset management plan is to identify and match the service standards being provided to the customer’s expectations.
This section includes:
- Measuring service performance
- Setting Standards of Service, which are sufficient, relevant and measurable
- Communicating with customers on service levels and service costs.
Why have Service Standards?
Before any organization sets targets for the level of service for the general public they need to know the current level of service which can realistically be provided by their existing assets and have the ability to predict their ability to sustain that (or future) levels of services.
The condition of the assets affects the performance capabilities. These have to be taken into account when setting the level of service. Organizations can then strive to improve on the original targets using advanced asset management techniques that allow them to minimize the failure rates and optimize the operations associated with these services.
Explicit levels of services need to be defined in a commercialized environment in order to:
- Inform customers of the proposed type and level of service to be offered.
- Develop business strategies to deliver the required level of service.
- Measure performance against these explicit standards.
- Enable customers to assess the suitability, cost and benefit of the services offered.
Thus, organizations need to set acceptable standards of service, such as:
- Failure rates
- Reliability performance
- Capacity & quality of service.
Service Level Criteria
Levels of Service are seen from two perspectives – The Asset Owner/ Manager’s and the Customer’s.
The Asset Owner/ Manager requires measurable service standards which related to asset and whole of system performance whereas the Customer wants to see service standards at their end and be assured of overall community well being.
Current Levels of Service
Before any organization sets targets for the level of serviceto the general public (i.e. known to their customers) they need to know what their current level of service is. In many cases there is insufficient data to set a realistic service targets. Other issues affecting these targets include:
- Changing Customer expectations – “The Customers” are constantly changing (i.e. aging, becoming adults, migrating in and away, have increasing awareness of their rights, expect value for money, etc).
- Changing Customer behavior
- Changing Service Demand
- Changing Regulatory Environment – increasing environmental compliance, fiscal regulation, public health issues, etc.
- Increasing Shareholder/ Stakeholder dividend expectation
- Resource availability – staff, skills, funding, access to service delivery
- Increasing competition in the services industry
- Aging or outdated infrastructure.
Predicting trends over the next 10 years in all these areas will influence the target levels of service to be adopted. While data is being collected and confidence gained on what the level of sustainable service should be, initial targets should be set “as low as politically possible” to provide opportunity for demonstrated service improvement over time. The following graph illustrates how best to set initial service level targets:
Gaps between current and desired levels of service need to be balanced against availability of funding over the economic life of the assets.
Assess Existing Assets
This section covers:
- Physical Details
- Condition/Remaining Life
- Performance
- Capacity ( Current / Ultimate).
Assets make up the systems that deliver the services to customers at agreed level of service. Planning for asset creation, rationalization, maintenance and operational activities cannot proceed until the asset owner knows exactly what they own. This section sets out how to manage the physical, functional, financial and regulatory compliance of the individual assets as part of the system as a whole.
Asset Register
The physical asset register is an essential source and depository of information for the Asset Manager. In referring to an asset we could be equally discussing a whole building or a single piece of equipment. The user of the system will decide on the level at which they identify items as unique assets. In general, it is recommended that the principal to be followed is to identify assets at the level of “maintenance manageable items”.
The asset register should provide a hierarchical (or connectivity) approach to identifying assets. This means that for any item identified in the register there is some link to its parent and child assets.
Physical Asset Data
Knowledge of the key physical attributes of the asset is needed including:
- Location
- Relationship (connectivity)
- Physical attributes
- Construction/manufacturing details etc.
- Capacity/ Expected Life.
Asset Condition
Asset condition deteriorates at different points over the life cycle and its rate of deterioration is also affected by the environment in which it operates and the way in which it has been maintained or operated.
Most assets do not decay uniformly (in a straight line) as implied by the straight-line rate of depreciation. Knowing the conditions of assets over the life of an asset it is possible to postulate, typical decay curves for assets operating under similar environment and enable asset owners to more realistically predict the future requirements performance and liability of the assets.
Asset Performance
Asset performance relates to the levels or standards of service (i.e. condition / reliability issues), which are, in turn, dependent on the:
- Quality of the asset
- Operations and maintenance regime adopted
- Degree of system redundancy (back up).
Performance directly affects service costs and should not exceed nominal requirements. Conventional performance indicators as measured by the condition (appearance), functionality, number of failures, etc., do not adequately tell the full picture as regards to the condition of the assets.
Service Failure
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 and 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) - Due to possibly a number of factors 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 organizations 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, e.g. 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.
The asset manager needs focus on system critical assets and assess:
- The various ways in which an asset may fail
- When each failure may occur
- What treatment options can be applied to overcome that failure.
This section covers Service Demands, including Growth Trends.
Factors affecting growth
Service demand may be influenced by a number of trends, as follows:
- Social – inner city & urban growth or decline, increased working hours, people per household, nature and location of public facilities and recreational spaces
- Economic – tourism growth/ decline, changes in commercial practices
- Technologic – changes from labor intensive to electronic labor
- Customer Behavior – increasing awareness of environmental effects of consumption.
The influence of these trends on service demand may not be obvious and detailed studies or research into other government or municipality experiences may assist.
Service demand can be influenced by service providers through introducing non-asset solutions to address increasing service demand.
Risk Assessment
Influences on service demand from such variables as government policy, technological advances, environmental awareness and consumer preferences cannot be predicted with certainty. Therefore, any demand prediction needs to be qualified with a clear statement of applied assumptions. Assumptions based on historical trends and likely futures, should be varied to assess the sensitivity of demands to these assumptions.
If a range of growth or decline patterns emerges, the greater rate should be considered for planning purposes. This allows for postponement of strategies (and associated expenditure) should growth/ decline be less than predicted.
This section covers:
- Growth / Augmentation
- Renewal / Reliability
- New Levels of Service
- Business Efficiency.
Service Life Planning
After predicting the failure mode of an asset, it is necessary to assess the options available to rectify the situation. There are various strategies and options available to asset owners. These include:
- 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 objective of deciding on the most appropriate option is to determine the one with the lowest life cycle cost for the asset and provides the highest level of service acceptable by the customers.
Identify the life extension achievable for the first and subsequent failure modes and the business costs and risks of service failure with the costs of asset replacement to determine an appropriate asset service life.
Asset Portfolio Planning
In addition to planning new infrastructure and system augmentation, decisions need to be made as to whether existing assets are to be maintained, renewed, augmented, replaced or disposed of at different stages during their life. This information is then collated to look at capital funding requirements for each system of assets considering the:
- Capital cost required for each program option
- Timing when that capital investment will be required
- Benefits that will be derived from each treatment option
- Effectiveness (time frame) of the options.
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 a 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.
This section covers:
- Growth
- New Assets Level of Service
- Age of Portfolio.
Cost Minimization
The purpose of maintenance is about asset care so as to prolong the life of the asset and improve reliability. However, operation and maintenance activities are the largest consumer of recurrent expenditure for typical infrastructure service organizations.
The primary objective in deriving the least life cycle cost for the asset is to minimize operations and maintenance cost through an optimal blend of planned and unplanned maintenance and by operating the asset cost effectively.
Routine and Emergency Procedures
It is necessary to have ready reference to the routine and emergency operations and maintenance procedures necessary to keep assets running and well maintained to minimize life cycle costs (particularly mechanical, electrical and telemetry). Procedures should set out optimum and minimum operating limits of all active assets to guide performance improvement strategies.
These procedures may also be a compliance requirement for regulatory bodies (i.e. environmental compliance, Quality Systems certification).
Operations, Maintenance and Renewal Planning
To properly care for assets, we must identify what works need to be undertaken and plan a program of works that will appropriately meet these needs to deliver the required level of service. To monitor work actually undertaken against planned programs and target expenditure level is also of prime importance.
The prerequisites for operations and maintenance management comprise:
- Maintenance Practice
- Objectives
- Regime/plan
- Economic viability
- Job/Works Management
- Tasks
- Efficiency
- Effectiveness
- Legislative Requirements.
- Staff training.
Financial Management
This section covers:
- Predict Future Expenditure
- Capital
- Operations
- Maintenance
- Administration
- Predict Future Income
- Rates
- Charges
- Other Sources
- Total.
Expenditure Optimization
Once the overall acquisition, operation and maintenance and disposal strategy is known for each asset and the subcomponents of the asset, the managers need to then optimize the maintenance and operations to suit the strategy and capital investments.
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.
The following issues need to be addressed during the budget rationalization process:
- Identify works which give the organization the greatest benefit from a known works/renewal budget
- Rank the works in order of merit by cash flow required.
Budget rationalization process may result in less than optimal solution as a result of measures adopted to:
- Maintain longer and defer capital investments
- Carry a greater risk exposure
- Reduce the number of assets (rationalize portfolio)
- Rehabilitate and not replace
- Reduce the level of service (e.g. reliability/response times etc.).
In the final analysis, the expenditure prioritization program should be based on sound risk management practices, which should consider the consequences of failure and the ultimate risk cost to the organization.
Financial Modeling and Outlook
A Financial Plan or Outlook for the next 10 years should be included and provide the following:
- Financial Statement
- Cash flow forecast (opening balance plus yearly movements)
- Expenditure in each service area for each of routing new works, operations & maintenance, renewal
- Discussion of trends in financial projections.
- Funding Strategy
- Sources of income for each Expenditure Type
- Discussion on peak funding requirements and strategies for attenuation
- Valuation Data for each system projected for each year
- Replacement Value
- Written Down Value
- Annual Depreciation
- Commentary on Assumptions in Forecasts.
The “Commentary” is essential to indicate the level of confidence the financial planning embodies. Additional versions of the financial plan may be made, adjusting these assumptions to test the sensitivity of the Plan.
This section covers:
- Identify the most Appropriate Risk
- Monitor the Changing Probability of Failure.
Managing Service Standards
For some infrastructure and other assets their level or standard of service will diminish with age or with use. This will generally be associated with an increased probability of failure and depending on the criticality of the asset to the business asset managers must understand this rise in business risk exposure and take it into account when assessing the most appropriate maintenance and capital renewal programs.
The assets criticality is directly related to the costs of the consequences of its failure in both:
- Direct costs to the business (repairs etc.), and
- Indirect costs to the customers affected by the asset failure and other intangible costs such as environmental impact etc.
Asset owners and managers need to monitor the changing probability of failure and the result in business risk exposure and identify the most appropriate risk together with the other aspects of asset costing.
In many cases asset failure is not significant and planned redundancy will result in only minor interruptions to the asset service delivery however in some cases failure would be so critical that it can not be considered. Assessing and managing this rise in business risk exposure will be a key activity for asset managers.
This section covers:
- Environmental Compliance
- Environmental Policy
- Regulatory.
Managing Environmental Compliance
Even if environmental discharges are minimal during normal operations, a number of environmental impacts can be ‘generated’ and need to be minimized. Potential risks include:
- Non-compliance with regulatory requirements
- Air/water/soil contamination and excessive noise by normal activities
- Contamination of surface waters or ground waters
- Inadequate community education, awareness and consultation leading to unnecessary concerns and complaints
- Public health risks during breakdowns
- Customer complaints.
Environmental Management Policy
An environmental management policy should be developed with senior management and public involvement ensuring commitment to prevent pollution, and to comply with relevant legislations and regulations. The environmental policy needs to and cover:
- EPA compliance requirements
- All relevant issues, corporate priorities and relevant policies
- Compliance of all environmentally relevant activities with relevant legislations and regulations
- Existence of strategic/ rational approaches to environmental issues including:
- Appropriate contingency plans developed
- Appropriate staff training and awareness programs regularly undertaken
- Appropriate environmental review/review programs periodically conducted.
Benefits of Implementing Environmental Management
The outcomes from implementing an effective environmental management strategy include:
- Compliance with regulatory authorities’ requirements
- Minimization of greenhouse gas emissions
- Minimization of environmental degradation and risks
- Minimization of habitat destruction, air/water/soil contamination
- Protection of the natural environment
- Achievement of corporate environmental objectives at least cost
- Minimization of environmental impacts from construction activities and operational and maintenance practices.
This section covers:
- Selection of Asset Management System
- Data Management Capabilities.
The existence of quality computer-based management system may not deliver user-friendly, accurate and timely information. Selection of asset management systems should consider:
- Office and field staff need to understand and accept the need for data capture, analysis and reporting
- Staff should be actively involved in selecting information requirements
- Operational and project objectives and information requirements should be defined
- Existing information systems should be analyzed for their strengths and weaknesses when considering replacement systems or additional functionality from the same supplier. Refinement of existing systems may be the most cost-effective “upgrade”
- Service requirements should be clearly specified, including a listing of the organization’s data management capabilities and function.
Formulating Strategic Elements
This section covers:
- Key Management Strategies
- Service Delivery Strategy.
Formulation of management strategies for each strategic issue should be based on a consideration of:
- SWOT analysis
- Feasible options
- Likely benefits/ cost of each
- Any defined relevant policy
- External constraints/imperatives.
Formulation of strategies should include the definition of realistic performance targets, consistent with achieving the adopted objectives and with the adopted planning horizon. Performance target may be in terms of completion dates and/or adopted key performance indicators (KPIs).
The whole basis of the TAMP needs to be reviewed and updated in line with inevitable changes in the external and internal environments.
Review Cycle
Developing a Total Asset Management Plan is a significant commitment and for it to remain relevant and useful to the organization and a means to operating smarter, a yearly review and 5 yearly review of the component and related plans should be provided for.
Performance Targets
Targets in planning, operations, maintenance, cash flow, customer satisfaction, and service level compliance should be developed as a means to measure the ‘success’ of implementing the total asset management plan.
Improvement Plan
Strategies including 3-5 year Action Plans should be addressed in the various sections within the TAMP, but key business strategies related to movement towards improved Asset Management should be part of the improvement plan.
Monitoring and Review Process
Individuals should be nominated to monitor and report performance against targets set in the TAMP and coordinate the review of the TAMP within the review cycle. Typical duties of the ‘coordinator’ would include:
During TAMP preparation:
- Coordinate information collection and collation
- Arrange staff interviews, workshops, etc
- Manage routine project administration
- Act as primary contact for the TAMP.
During TAMP implementation and maintenance:
- Keep the TAMP up to date
- Disseminate to staff information generated through implementing the TAMP
- Coordinate the review and updating of action plans.