Asset and maintenance managers are increasingly required to report on performance against Key Performance Indicators (KPIs) such as asset utilization, risk and return on assets (ROA). These metrics are critical to understanding the overall health of an asset-intensive organization, and rely on a current and accurate view of all underlying asset information.
These KPIs can be more simply stated as five questions you need to answer about your assets:
- Do you know what assets you have?
- What is your risk of an asset-related disaster?
- Do you know the current condition of your critical assets?
- What are the costs of corrective versus preventative maintenance?
- Should you repair assets or replace them?
Many of these questions are difficult to answer without an appropriate framework to collect the necessary data - and this is where PAS 55 can help. The Publically Available Specification 55-1:2008 Asset Management standard, known as PAS 55, was developed by the British Institute of Asset Management, in collaboration with the British Standards Institute. It is a holistic framework for asset management that delivers the information which enables a business with significant investment in assets to make optimal decisions - both strategic and in its day-to-day operations.
A principal reason for the success of PAS 55 is that its adoption and sponsorship by the highest levels of an organization enable the business to reduce capital investment and operational costs while enhancing production uptime. This in turn supports the asset maintenance team in meeting its responsibilities - even when these apparently conflict with other imperatives.
The PAS 55 approach is applicable to a wide range of asset-dependent industries including mining, energy and transportation. Using real-world examples from these sectors, this article discusses how you can use PAS 55 as a framework for ensuring that the necessary information is collected to answer these key questions, and in turn, drive better decisions at all levels of the business.
1. Do you know what assets you have?
A reliable and comprehensive asset register is central to all asset management activities, and should provide information on:
- All assets including where they are located
- Asset condition and any risks posed if they fail
- Accounting for asset depreciation and replacement
While this may seem basic, obstacles can emerge if the data you're collecting isn't complete or comprehensive. For example:
- Inadequate record-keeping. Many mining companies, for example, lack adequately detailed records of their electrical and ventilation systems, despite having thousands of meters in the field. Systems may be installed by operating staff without being correctly recorded, so ongoing inspection and maintenance cycles are not carried out - resulting in excessive failures.
- Age. Organizations responsible for public infrastructure often have assets dating back as far as 70 years - long before computerized asset tracking was an option. This can mean searching potentially out-of-date and inaccurate paper records.
- Disconnected "silos" of information. Transportation companies may operate multiple networks across their operations - due to geography, type of operation, or through merger and acquisition. Often there are different systems and processes across these networks so getting a single view of assets, their condition, and how they are being maintained can be difficult.
The consequences of an out-of-date and inaccurate asset register can be catastrophic. Consider the failure of an air breaker in a substation: if these failures are not recorded in the asset register, there is no way of tracking and maintaining them to prevent future occurrences. When a company that suffered a fatality addressed this challenge, it discovered more than 10,000 air breakers which needed to be registered.
The PAS 55 specification helps ensure assets are accurately and comprehensively recorded in your asset registry. Automating the underlying foundation for this process calls for an enterprise asset management (EAM) system with inbuilt business processes that accommodate the PAS 55 framework.
Entering this critical information into the system for the first time can also be challenging. Using a mobility solution tightly integrated with your EAM system - one that is designed to fully enable asset management for maintenance workers while they're in the field - can help this to be rapidly addressed. Field workers are able to collect data where the asset is located and perform a first inspection to provide the basis for ongoing maintenance. Using ruggedized mobile devices, these individuals can access entire asset histories and parts diagrams, and track and record all inspections, maintenance and repairs - delivering the full set of data recommended by PAS 55.
In an example from the energy distribution industry, an EAM that enables association of power poles with their feeder provides for registering assets in a way that is meaningful. By adopting and using PAS 55, you have taken the first step in establishing where all your assets are. Then, by maintaining these assets correctly, the risk of them failing is greatly reduced - which, in turn, maximizes your business performance.
2. What is your risk of an asset-related disaster?
Determining the level of risk of an asset-related failure is of utmost importance. Asset failure can mean substantial financial costs from lost revenue, personal injury, equipment damage and environmental harm.
In most asset-intensive industries, asset failure can result in significant outages, brand damage, regulatory fines, and customer inconvenience. For example:
- A mineral or effluent processing facility failure has the potential for massive environmental damage.
- An unmaintained power pole can cause a forest fire.
- A malfunctioning signal box could lead to a railway disaster.
- An under-maintained engine could result in a ferry or bus accident.
These risks are as unacceptable as they are preventable - but if there is a maintenance backlog, how do you know which assets should be maintained first to mitigate risk and avoid catastrophe?
A central theme of PAS 55 is understanding the risk and criticality of your assets. To this end, your enterprise asset management system must account for risk and criticality using categories that define correct job priorities. Each category should be weighted - for example, safety might be rated higher than cost. Every critical asset is then given a rank and score, which allows maintenance managers to pick priorities and set timeframes.
By applying the PAS 55 framework, you can improve consistency of processes deployed across sites and global operations to ensure risk of disaster is minimized.
3. Do you know the current condition of your critical assets?
Overall performance in asset-intensive industries is based on the performance of critical assets...and when they're not running, your company is not making money. Examples are draglines for mining companies, generators and transmission lines for utilities, and rail lines for railways. These assets are often spread across a wide geographic area, overseen by a field-based workforce, and subject to physical and environmental stress.
To account for this, PAS 55 delivers a comprehensive framework for evaluating asset condition - taking historical inspections, repairs and maintenance into consideration.
While SCADA (supervisory control and data acquisition) and other automated condition monitoring systems are helpful, structured collection of key information on asset conditions calls for regular inspections. An EAM system with integrated mobility capabilities can support end-to-end inspections, driving key data right back into the asset records. Ideally, your EAM system will automatically generate recommended follow-up actions - reducing unnecessary paperwork which can be easily lost or difficult to interpret, and thus never, or inaccurately, entered into your central asset management system.
One of the key challenges in evaluating asset condition is the ability to drill down to the necessary level of detail. For instance, it is not often that an energy transformer fails in entirety, but an individual part may fail. While many ERP systems can only look at assets as a unit, one of the key differentiators in an effective EAM is that it makes use of an asset hierarchy. This allows you to look at maintenance strategies at the individual component level and roll that back up. In our example, an energy distributor can look at a transformer on at the individual parts level, identify the fault and make the appropriate repair.
PAS 55 provides a framework for looking at repairs in a consistent and auditable manner. To support this, your EAM system should allow for maintaining items using equipment templates, so that the same types or models of equipment can be maintained consistently. Then, when an asset maintenance strategy changes, all associated equipment repair plans are automatically updated.
4. What are the costs of corrective versus preventative maintenance?
The financial implications of corrective versus preventative maintenance strategies can be substantial:
- Cost of maintenance. A general rule of thumb is that reactive work is two to three times more expensive than proactive work so that the right balance between preventative and breakdown work must struck.
- Cost of part failure. The cost of replacing a failed part is more often significantly higher than the cost to proactively maintain it. Consider the example of a rail operator which routinely inspects and adjusts or replaces worn turnouts, compared to the significant damage of a train derailment.
- Cost of an outage. Unplanned failure of an asset means that downtime may be longer and production more greatly affected. An example is a dragline used in an open cut mine to remove overburden from a seam at the rate of 2,000 bank cubic meters per hour. While the cost of maintaining the dragline can be high, the cost of the lost revenue that mounts for each hour of delayed production can easily be in the hundreds of thousands of dollars.
Unfortunately, maintenance costs can be a barrier to ensuring the best long-term maintenance strategy - but the right application of asset maintenance strategies can ensure overall costs are minimized while operational effectiveness is maximized.
Asset management based on a PAS 55 framework accounts for this. The systematic collection of quality data enables you to identify corrective (or reactive) maintenance costs and compare them with preventative (or proactive and predictive) maintenance costs. This informs decisions within maintenance programs and effectively balances the risk of asset failure against the overheads of preventative maintenance.
It also supports the maintenance department in determining, and getting support for, the appropriate strategy. For example PAS 55 provides a structure of ensuring that C-level managers are involved and accountable for the maintenance strategy. This avoids the frequent problem that production output might win over asset condition, by considering the risk to the business - both in terms of production and the potential wider impact to the company and its stakeholders.
5. Should you repair assets or replace them?
Decisions on whether to maintain or replace equipment call for detailed asset records, including historical and comparative data - as well as an EAM solution designed to support the recommended best practices of PAS 55.
Throughout the maintenance portion of the asset lifecycle, significant opportunities exist for cost savings as well as dramatically longer service life for assets by setting in place strategic asset management policies. For example, mining equipment operated in a steep pit - such as a typical copper mine versus a flat-area mine operation such as bauxite - or equipment used in a dusty desert versus exposure to salt corrosion close to an ocean. PAS 55 helps define necessary information about equipment conditions, their location and operating conditions - and smart enterprise software simplifies maintenance of equipment using templates and processes specific to the precise operating conditions a miner is facing.
When considering maintain or replace options, you need to judge the estimated replacement value at the date of assessment. One method of calculating this is dividing maintenance cost by the replacement value. Say your industry benchmark is 8 percent, for example. If the cost is rising, this should trigger you to look for a replacement. Your asset management systems should include all the functionality required to manage replacement or refurbishment options over multiple years.
There is another dimension to this question: if you have decided to maintain/repair, should you perform it in-house or outsource? For example, an engine overhauled by your own experienced engineers may require less maintenance than an engine overhauled by a dealer who is employing mechanics ‘off the streets'. On the other hand, investment in specialist vendor engineers may pay off in a lower mean time between failures. Again, careful records kept according to PAS 55 guidelines - and decision support systems containing compliant business rules - will help you make the most effective decision.
When properly maintained, asset life can be extended - significantly increasing the return on capital invested. Your EAM system should include all the functionality required to manage replacement or refurbishment options over multiple years.
PAS 55 and ISO 55000
Since its initial release in 2004 (and subsequent revision in 2008), PAS 55 has been rapidly adopted by asset-intensive organizations around the world - and is expected to become even more widespread when it develops into ISO 55000. Timing is uncertain but it is expected to be late 2013.
Gordon Melvin is principal EAM solutions architect at Ventyx, an ABB Company. Previously, Gordon was VP mining solutions at Mincom and global director, mining at Mincom US.