Repair, Rehabilitate, Replace

This element looks at:

• How the organization decides whether to repair, rehabilitate or replace an asset
• The policies it has adopted governing the repair/rehabilitate/replace decision
• How it regularly reviews those policies and derives improvement targets for coming years.

This is often referred to as "Optimal Renewal Decision Making" or "ORDM". It involves the rolling up of Strategic Planning into Total Asset Management Plans to make longer-term strategic decisions.

Asset Management Quality Manuals / Guidelines

The quality of the asset management manuals, policy documents, decision flowcharts, and definitions, etc. that help staff make policies and analyze life cycle ORDM.

Best appropriate practice includes:

Asset management quality manuals and process maps are readily available to all staff. This includes web-based knowledge management libraries and systems.

Assessment of Consequences of the Failure

How the process helps staff to fully understand the impact of an asset's failure on the organization.

If the organization delays investment in infrastructure renewal, then it can expect greater numbers of failures. This constitutes a risk-cost (or a loss) to the organization, from the consequences of these failures.

Such failures will be loss of service or system failure. They could result in litigation, environmental damage or even loss of life.

Risk management (loss reduction) will become a critical activity for all business units in these organizations.

Best appropriate practice includes:

Processes that allow staff to make good and timely decisions in emergency repair situations and to report actions taken after the event.

In the face of reduced budget, cuts in investment must often be made. To evaluate the impact of reduced investment on sustained performance, risk management impacts such as the following need to be evaluated:

• Effects of failure (the physical consequences on upstream and downstream assets as failure occurs)
• Consequences of failure (costs - direct and indirect - to the organization, customers and the community)
• Probability of failure (%).

The processes should be able to:

• Identify the works that will give the organization the greatest benefit from the budget
• Rank the works in order of merit by cash flow, payback period, benefit/cost, and risk-weighted total expected cost of failure
• Identify the progressive cost.

Assessment of Multiple Supply Options

How staff are encouraged to assess asset and non-asset solutions.

Non-asset solutions do not directly involve the physical nature of the asset in the solution. Examples include managing the demand for assets through pricing or managing risk through insurance.

Best appropriate practice includes:

Clear feedback loops that ensure that asset performance history can be used in future decision making about asset strategies.

Life Cycle Cost Assessment Process including Risk

How the organization assesses the life cycle costs of the multiple supply / treatment options, including the residual business risk exposure of each option.

All decisions for investment or resources, either recurrent or capital, should be ranked on a benefit/cost analysis, with risk reduction to the business defined as a benefit.

The investment opportunities may involve:

• Maintenance practices including condition monitoring
• Rehabilitation projects
• Replacement projects
• New capital/augmentation of existing capital for new services.

Best appropriate practice includes:

The capacity to understand the relationship between the failure mode and any others that may impact on the asset or facility in future (for example, a minimal repair strategy for an asset, since the parent asset is scheduled to be replaced in 2 years).

The use of life cycle cost models to assess the supply / treatment options.

Decisions relating to improving the asset's capacity or levels of service are fully assessed.

A key ingredient for cost effectiveness is selecting the most cost effective renewal strategy for each asset eg:

• Better preventive (planned) maintenance
• Rehabilitation just prior to failure
• Replacement after failure
• Regular rehabilitation program.

This requires a renewal decision-making process that allows investment to be made in the area of greatest return to the organization.

An asset ages at different rates throughout its life cycle. Different treatment options are available depending on the condition of the asset. Most passive assets will pass through a series of treatment/cost segments:

• Do Nothing
• Maintenance
• Renewal/Rehabilitation
• Replacement.

If insufficient capital is available, the optimized decision making process is irrelevant because the organization will be forced to adopt the lowest cash option with its accompanying deficiencies.

The cost of continuing to provide past levels of service may be prohibitive and the organization has to consider ways of reducing future costs, for example:

• Reduce the number of assets (rationalization)
• Rehabilitate in lieu of replacement
• Reduce the level of service (e.g. reliability, have more failures)
• Extend the residual life by better operations and maintenance (where proven cost effective)
• Use new technology to reduce recurrent expenditure.