Asset Management – How is it Achieved
By Cliff Williams
Asset Management has become a term that is appearing in ever increasing circles.
October 19, 2021
By Cliff Williams
Certainly, in the Canadian municipality forum where Governments are pushing to get more value from the money and efforts that they and the municipalities expend. Ontario has gone as far as mandating most aspects of asset management in their O.Reg. 588/17 – requiring asset management plans for their core assets initially and expanding to all of their assets.
But before we get ahead of ourselves, let’s take a look at how asset management is achieved, how it is built, how does it flow.
The driver for asset management is stakeholder requirements, and the context that the organization is operating in, they permeate through, and need to be borne in mind, in all of the subsequent steps. These requirements will be used for the organization to take what is really the first step in asset management as they establish the strategic objectives. This is where the desired organizational results are set and where we establish what value actually means to the organization.
The document that then guides the process is the asset management policy. This document states much of what has gone before, including the organizational context, needs and expectations of stakeholders the role of leadership and the approaches they should take and any decision-making guidance around those things that are key to the organization. Some organization take this even further and state the actual roles involved along with the responsibilities and authorities required to be successful in those roles.
Strategic asset management plan
Once we have the policy in place, we need to understand how we will use this guidance to actually achieve the strategic objectives and this is usually done in the strategic asset management plan or SAMP. This is the document that takes the high-level objectives and brings them more into specific goals and actions to achieve them. Coming out of the strategic asset management plan will come the focused asset management objectives, and quite often guidance on the asset management initiatives required to achieve these objectives. It’s important that the strategic asset management plan is viewed with a number of things in mind – these are generally developed along side the strategic asset management plan.
The plan should not simply look at the context today, but take into consideration the future – a demand analysis, where we look at where the organization wants to be in a set future period, which markets do they want to be in, where they want to exit, what new products or offerings are anticipated and will they need to expand or contract to meet these. For municipalities, this means understanding the required levels of service for the residents and other stakeholders, so that they need to plan for growth or change in demographics in order to provide the required assets in the required amount to maintain the value to the stakeholders in the future. Of course, there will be risk to all of this, so these need to be considered, as nothing is ever guaranteed. And at this point, we need to look at business risks; the risks to the strategic objectives.
Later we will look at the tactical risks of assets not performing their function – as this is the document that describes the ‘how’ of achieving them. If we’re successful in taking all of these things into consideration, then we can take the asset management objectives that are identified and cascade them to the next level of asset management.
Asset management plans
This is where those who live in the MRO world may see the biggest differences, but, for some, it may not be in what they actually do as maintenance tactics if they have a mature program. What will change for most is in how they approach and who is involved in the different components that make up those solid programs.
The first thing that will happen is that when designing or purchasing equipment and processes, it will be done with life cycle costing in mind, and that the maintenance group will be heavily involved at this stage. Tactical risk analysis will take place through tools like FMECA or RCM – but remember that it is the risk to the strategic objectives that prompts and focuses on what assets are the priority. There will be a formal look at the resources required, the competencies and skills required, not just for today but for the period described in the demand analysis. As decision making and risk evaluation is to be data based, many organizations will have to improve and simplify the processes around gathering this data.
The biggest change for most organizations will be the point mentioned earlier; who is involved in maintenance? Studies have shown that departments such as engineering and design, procurement, and operations play as big a part as the maintenance department in enabling the reliability of the assets, and so their ability to support strategic objectives. In asset management, this means that they get involved and are held accountable for their part of delivering the strategic objectives. To ensure that there is no confusion, they need to have goals that relate to what has typically been thought of as belonging to maintenance.
Simple changes will mean that operations will need to communicate with maintenance to ensure the decided upon tactics are possible and implemented. Procurement will work with maintenance to jointly decide what spares in what amount are held in the stores, engineering will involve maintenance as early as possible in design or modification and ensure that what they do has reliability, operability and maintainability in mind. Key to this working is the development of collaborative goals; when we look at reliability goals, we need to identify the part that all of these groups play in delivering them, measure them and hold them accountable for them.
Maintenance will now need to clearly understand the constraints that the other departments face, and adjust their approach so that all succeed. This should lead to successful management and control the effectiveness of the asset management plans in support of the strategic management goals.
Review monitor and improve
The last step is determining whether we have, in fact, been successful in implementing the various plans. There needs to be cascading goals, which start with the strategic objectives and cascading down to the measures of the performance on the shop floor level. With transparency through the process, it should allow all levels, including leadership, to evaluate, manage and improve their performance in support of the strategic goals.
Obviously, there is much more that goes into building effective asset management, but it’s clear that there is need for alignment of goals and efforts throughout the organization, both horizontal and vertical alignment, and if that exists, then everyone will see they have a part to play in asset management. MRO
Cliff Williams is author of the bestselling maintenance novel ‘People – A Reliability Success Story.’ He is a maintenance and asset management educator, and a keynote speaker at conferences around the world, who believes success is achieved through people. Currently Cliff shares his knowledge and experience as an advisor on maintenance and reliability for people and processes, and asset management with TMS asset management and is a facilitator for PEMAC’s Asset Management Program.