Q: Rhys, will you explain what the International Standards Organization (ISO) is doing in terms of developing an Asset Management Standard?
A: Following the success of two versions of BSi PAS 55 in 2004 and 2008, I started working with British Standards Institution (BSi) to engage with ISO with a view to developing a formal International Standard in Asset Management to build upon the work already captured in PAS55. In August 2010, ISO authorized the formation of a Project Committee (ISO/PC251) to develop a set of three International Standards in Asset Management. The three standards are:
Three International Standards in Asset Management
ISO 55000 Asset management - Overview, principles, and terminology
ISO 55001 Asset management - Management systems - Requirements
ISO 55002 Asset management - Management systems - Guidelines on the application of ISO 55001
In forming ISO/PC251 we have engaged with many countries through their national standards bodies and currently have an active international participation in the process. The current participation is strong, with 24 countries registered as participants and a further 12 as observers (who get to see and comment on drafts but do not vote). The complex and inclusive nature of asset management also means that we get to engage with another 12 or so international standards committees whose activities interface with asset management. These numbers are growing all of the time.
Q: What is the current status of this activity?
A: ISO has fairly standard programs for the development of international standards, and we follow the default three-year program. This sounds very relaxed, but in practice ISO/PC251 will actually only get its hands on the real technical content for about half of that time. The rest is taken up with translation, international review, and balloting, as well as formatting for publication.
The three-year program takes us through a number of stages shown in the diagram. We are currently in the middle of the preparatory stage and have recently circulated the second set of working drafts around the committee members, with a view to having detailed comments returned in time for our next meeting in Arlington, VA in October this year.
Our plans are to enter the committee stage shortly after our Arlington meeting. Currently we are running on schedule, and as this continues we expect publication of our three standards in the first quarter of 2014
Q: The British Standards Institution's PAS55 Asset Management Specification has received a great deal of attention recently. Will the upcoming ISO standard build upon this work?
A: Definitely. The Institute of Asset Management was a key driver in the development of PAS 55, and it remains so in the ongoing development of the ISO5500x series of standards. Its aims are to grow the discipline of asset management and capture good practice wherever it can be found. With this in mind, the key aim of ISO/PC251 is to build on the consensus already gained with PAS 55 and develop it further into the ISO5500x series of standards.
We see no point in just taking PAS 55 and putting it into a new cover, though. As the chairman of ISO/PC251, I can confirm that we have very enthusiastic and vigorous debate about many of the points. Following our first meeting in Melbourne early in 2011, we were already seeing an evolution in the structure and content of the document. This is being driven by the inclusion of people, industries, and countries who were not previously involved in the development of PAS 55. For me this is exciting and refreshing.
Q: Why should organizations be interested in an International Asset Management Standard?
A: The original intent of PAS 55 was to develop a common language for asset management. This common language will enable people from different functions within an organization, such as accountants, engineers, senior management, and technicians, to talk to each other about the fundamental issues we all face regarding how we invest in the assets we manage. Moreover, it is intended as a common language to enable companies to talk to each other whether they are in the same industry or not, as well as across national boundaries.
In developing this common language over a period of almost 10 years, so far PAS 55 has captured a significant amount of good practice from a wide variety of industries and from around the world. Whilst PAS 55:2008 had input from around 49 organizations representing 15 industries in 10 different countries, the ISO/PC251 committee has 24 countries and many hundreds of organizations providing input to grow this common language around asset management good practice. It is difficult to conceive of any organization not wanting to learn from this collective experience.
In terms of cross-sector learning, I regularly witness and facilitate organizations from completely different industries exchanging techniques, approaches, and practices related to asset management using PAS 55 as a starting point. This can only be good for all asset managers.
Q: We think that industry regulators and possibly risk insurers will take a keen interest in an International Standard for Asset Management. Do you agree with that assessment? Why or why not?
A: This is a no brainer, a definite yes. Within a year of PAS 55 being published back in 2004, we had interest from industry regulators in the UK seeking to use a risk-based management system approach like PAS 55 to demonstrate to consumers that private companies with stewardship responsibilities for critical infrastructure like power grids, gas pipelines, and railways are being looked after appropriately and for the long term.
I am now aware of regulators in the Netherlands, Canada, and Asia who all encourage the use of PAS 55. There are, however, parts of the world where a specification published in the UK is seen as not being appropriate for their geography, and I have had feedback from several countries where an ISO International Standard would be much more readily accepted. I genuinely believe that uptake of the ISO5500x series of standards will result in an explosion of enthusiasm for risk-based approaches to asset management in a selection of new territories. It could become a case of get engaged or get left behind!
Regarding risk insurers, I am aware of at least one power generation company who has used its PAS 55 certified status to reduce its insurance premium costs. The risk-based approach flows into the new ISO International Standards for Asset Management and should prove a useful tool for organizations to demonstrate to their insurers that they understand their risks and have them under control.
Q: Are there any actions organizations can take now to prepare for an International Standard for Asset Management?
A: Definitely. There is no need to wait until 2014 to get started. You should start to look at the benefits of adopting such an approach. There are more and more documented benefits cases from organizations that have reduced costs, improved performance, and used PAS 55 to align activities and break down silos in their operations. The work in ISO/PC251 is definitely evolving, but, you should remember that change is likely to be evolutionary, not revolutionary.
Whilst we evolve the way we describe the discipline and improve some areas of it, I can assure your readers that I see significant consensus around the intent of the developing international standards at my PC251 meetings. In my role as Director of Smart Asset Management Solutions, I am advising clients in a variety of industries about improving their processes. I still very much advise that they should start with PAS 55, as it will not prove to be wasted effort when the ISO5500x document come along.
For those more mature asset management organizations, they can still engage in the development of the ISO work. There is a US Technical Advisory Group (TAG), as well as similar committees in Canada and other countries around the world. Anybody interested in engaging and starting to network with other asset management enthusiasts should contact me for more information about how to get involved locally.
Q: Looking 10-20 years ahead, what do you predict for the future of asset management?
A: That is a really interesting question. I guess as a starting point, I would expect to see much greater uptake of the ISO5500x series of standards than there currently is for PAS 55. If you ask me what I see evolving in some of the best practice organizations with whom I work now, I think we could comfortably say there will be significant advances in some of the following areas:
- Greater alignment between engineering systems and accounting systems. Currently there is still a big divide between them in many organizations.
- A better grasp and understanding of enterprise risk management approaches in making asset management investment decisions.
- More confident use of risk-based inspection and maintenance regimes linked strongly into an understanding of the corporate risk profile.
- Greater use of real-time and near-real-time remote condition monitoring.
- Greater use of more complex deterioration models to aid planning.
I am sure there are more, but when you look at that short list, a key thing to note is that best practice asset managers are much more closely tied into the business end of their organizations. We need to be driving the business and not just looking after assets.
If you are interested in contributing to the new asset management standard working group, please email Terrence O'Hanlon at email@example.com.