Development in Asset Management:

Standardisation and Beyond

Alex Thomson MSc CEng MIET MIAM

STO Excellence Conference

Barcelona
May 2010
Agenda

What is Asset Management?

History
How did we get to where we are now?
Introduction to The Institute of Asset Management
Asset Management Standards
Publicly Available Specification (PAS) 55
Challenges in Asset Management
The future of Asset Management standards
What is Asset Management?

Financial service managers:

Portfolio management of cash, shares, bonds & futures

Main board directors:

Mergers/acquisitions of whole companies and their assets

Maintenance staff:
A smarter name for maintenance that adds credibility

Software vendors:
Asset information databases and work management aids

IT managers:
Bar-code labelling of hardware and keeping track of it

Complex production system, plant & infrastructure managers:

Optimising the whole life mix of asset design,
usage, maintenance & disposal
 The Asset Management Objective
Optimising cost/risk/benefit
Business impact (k/yr)

TOTAL
3500 TRUE IMPACT
3000 OPTIMUM
2500 (best combination) FAILURE
2000 RISKS
1500
EQUAL impact Minimum
1000 but not optimal
Minimum risk Maintenance PREVENTIVE
500
COSTS
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Maintenance Interval (months)

Obstacles to Asset Management

Separate budgets and performance indicators

Customer Design/ Production/ Materials/

Service Engineering Operations Maintenance Purchasing

Some Service Level Agreements & negotiated relations

Origins: North Sea oil industry

N.Sea oil started 1975

Political aim for self-sufficiency by 1980
Typical exploration & production costs $15/barrel
Market value average $35/barrel

But then
Price crash 1986 (to $9/barrel)
Piper Alpha disaster (167 killed)
Lord Cullen report on self-regulation
Diminishing reserves, marginal fields
Globalisation of marketplace

Something had to change

Emerging joined-up view of Asset Management

1980-90s:
Recognition that separate management of functional activities (e.g.
design, operation, supply chain, maintenance, customer service) has been
causing missed opportunities, performance losses & extra costs.

Action to develop a more joined-up approach:

Oil & Gas
Public Utilities
Transport
Manufacturing & Process sector

2004-present:
Independent professional Institute of Asset Management (IAM)
Published Standards (BSI PAS 55, ISO16553),
Regulatory requirements for PAS 55 compliance (Ofgem)
International guidelines published (IIMM)
Sector specific guidelines emerging (RICS, CIRIA)
Asset Management: joining up the silos

Asset Management
philosophy & framework
Where to
& Why

Maintenance
Operations
Investment

The Who
& How

Common enablers
(asset register, life cycle costing, risk mgmt, work mgmt system)
 Asset Management processes

Capital Investment,
Design & Projects Operating & Materials
Maintenance
Strategies RESOURCE
CHANGE ADMIN
Mgmt

$$
$$
$

Labour

Resource PLANNING
EVALUATION & Work DEFINITION
of Solutions

Problem/Oppty Inspection
INVESTIGATION CONTINUOUS & CBM Work programme
IMPROVEMENT SCHEDULING
cycle
WORK
ADMIN
Data Collection
Problem/Oppty Preventive, Detective
IDENTIFICATION & Corrective WORK
External
reporting
9
Key findings of what is needed:

Whole asset life planning & optimisation

Multi-disciplined teams & decision-making
Shared & used asset information & work mgmt IT
Active, quantified risk management
Lost opportunities & continuous improvement focus
Real empowerment: operators/technicians actively engaged
in continuous improvement processes
Managers behave as vision-sharers & protectors/ enablers
(instead of controllers/instructors)
Introduction to:
The Institute of Asset Management
Origins 1994 (70s); wholly restructured 2004
The (not-for-profit) IAM exists to:-
Advance for the public benefit the science and practice of asset management,
Promote and recognise high standards of practice and professional competence
Generate widespread awareness and understanding of the discipline.
Unusual because we welcome:-
Individual Members
Corporate Members
Acquisition, operation and care of physical assets.
Source of good practice & cross-industry thinking.
Alliancing and collaborating world-wide
IAM has now around 300 member organisations in UK, Europe,
Scandinavia, Middle & Far East
Finance / accountants as well as engineers!
Some Key Activities
Professional Membership
Engage with your profession / Networking
Magazine and Website
Demonstrable competence (Formal Qualifications being developed)
Continuing Professional Development
Learned Society
Body of Knowledge & Research
Excellent value and quality Events (Seminars etc)
Projects
Standards
Sector Specific Guidelines
Corporate Members ( esp Patrons)
Ensure industry input and relevance
IAM AM Competence Framework
IAM PAS55 Assessment Methodology
IAM Competence Framework
Develop, publish and maintain competence requirements
for people working in asset management.
Provide guidance support to users of the competence
requirements.
Facilitate accreditation of individual competence against
these requirements in ways that are valued and
comparable across industry sectors.
Facilitate the provision of asset management training
and education programmes based on these
requirements.
Facilitate the development of nationally and
internationally recognised accreditation options for
people working in asset management.
www.theiam.org
IAM Competence Framework Structure

7 Roles
27 Competence Units
5 Profiles
Business Leader
Head of AM
AM Planner
AM Team Member
AM New Entrant
110 Generic Knowledge &
Understanding
Requirements
Parts 1 & 2
www.theiam.org
IAM PAS 55 Assessment
Methodology

121 Questions
27 Clauses
Interview environment
Skills required
5 maturity levels
Graphical output
Identifies gaps
 IAMs Maturity Scale

Optimising
Learning Applying Embedding & Integrating Innovating
Innocence

Awareness Development Competence e

Excellence

Maturity Level 0 Maturity Level 1 Maturity Level 2 Maturity Level 3 Maturity Level 4
The elements The organisation has All elements of PAS Using processes and
The organisation has
required by PAS 55 a good understanding 55 are in place and approaches that go
a basic understanding
are not in place. of PAS 55. are being applied and beyond the
of the requirements of
The organisation is in It has decided how are integrated. requirements of PAS
PAS 55. It is in the
the process of the elements of PAS Only minor 55. Pushing the
process of deciding
developing an 55 will be applied and inconsistencies in boundaries of asset
how the elements of
understanding of work is progressing application may exist management
PAS 55 will be applied
PAS 55 on implementation development to
andhas started to
develop new concepts
apply them
and ideas
Interview Input Screen
Graphical Output
Previous Activities

3 key Projects to fruition

Launch of IAM Toolkit (London / Sydney)
New website and branding
Member database integrated
6 Issues of ASSETS magazine
Evening Meetings locally
IAM Body of Knowledge Project - started
International relationships & growth
The Plan

Body of Knowledge Project ramp up and engage

widely
Beyond PAS55 workstreams scoping in hand
Further develop ISO proposal
ENDORSED assessor and trainer schemes
Organisation & Systems
Increased office resource / full-time CEO
Phase 2 IT
Strengthen and refresh Committees
Publicly Available Specification (PAS) 55
Standard for:
Optimised management of physical infrastructure assets

2004: first published AM Standard Revised 2008

Part 1: 21-point requirements specification 50 participating organisations
Part 2: Guidelines Much more international & multi-secto
26 participating organisations
Over 1300 comments, suggestions &
2006: Ofgem stated all UK gas & electr. to refinements incorporated
be PAS 55 certified by April 2008
2006: IAM started development of standard Restructured, clearer & better
Assessment Methodology illustrated

21
 PAS 55 Update Project 2007- 08

Who was involved?

50 organisations
15 industries
10 countries
Improvement areas include:
1. Clarity of policy, strategy, whole life plans
2. Different levels of asset management
3. Asset health & valuation guidance
4. More on life cycles & sustainability
(functional, economic, environmental, resourcing)
PAS 55 Part 1 & 2
Optimised management of physical infrastructure assets

Part 1 (PAS55-1)
Specification
Part 2 (PAS55-2)
Guidelines for the
application of PAS 55-1
Aligned (with business plan)
Inclusive (cross functional)
Whole life managed
Optimized
Risk based
Data supported
Continuous improvement
Pragmatic
Why a Publicly Available Specification
It is a quick way of responding to a need for a
standard.
BS or ISO:
Many years
Multiple iterations
Much rigour
PAS:
Quick
Several iterations
Less rigour
A requirement to review and refine
A work in progress
Familiarity!
PAS 55 is based on the standard BS &
ISO format.
Those familiar with ISO 9001 will
recognise its layout and form of wording.
It has similar requirements in terms of:
Plan
Do
Review (Check)
Improve (Act)
 Structure of PAS 55:2008

4.2 Asset management policy

4.7 Management review

Plan 4.3 Asset management strategy,

objectives & plans
Act 4.3.1 Asset management strategy
4.3.2 Asset management objectives
4.3.3 Asset management plans
4.6 Performance assessment & PAS 55:2008 4.3.4 Contingency planning
improvement Management
4.6.1 Performance & condition monitoring
Do
4.6.2 Investigation of asset-related failures,
incidents & nonconformities
System
4.6.3 Evaluation of compliance
4.6.4 Audit
Structure 4.4 Asset management enablers &
controls
4.6.5 Improvement actions
4.1 General requirements 4.4.1 Structure, authority & responsibilities
4.6.6 Records
4.4.2 Outsourcing of asset management activities
4.4.3 Training, awareness & competence
4.4.4 Consultation, participation & communication
4.4.5 Asset management system documentation
4.4.6 Information management
Check 4.4.7 Risk management
4.4.8 Legal & other requirements
4.4.9 Management of change

4.5 Implementation of asset management plans

4.5.1 Life cycle activities
4.5.2 Tools, facilities & equipment
 What BSI PAS 55 is, and is not
PAS 55 is a 27-piece jigsaw of requirements necessary to
display AM competence.
Requirements are for good, rather than best practice in
each area.
Defines what is to required not how to do it
It is the coverage, appropriateness & connectivity that are
important
Excellence in one area does not compensate for gaps in
others
The requirements are for effective & appropriate processes:
evidence for what is being done & why.
How it is being done is up to the organisation & may vary
widely
PAS 55 is independent of industry sector, asset
type/distribution & asset ownership structure.
PAS 55 Underlying Ethos

It does not matter what, or where the

assets are;
what matters is the clear organisational
objectives & good, sustainable alignment of
asset investment, utilisation & care
(maintenance) to those goals.
PAS 55 definition of AM

The systematic and coordinated activities and

practices through which an organization optimally
& sustainably manages its physical assets, and
their associated performance, risks and
expenditures over their lifecycle for the purpose
of achieving its organizational strategic plan
Asset Management

IS:
"the optimum way of managing assets to achieve a
desired and sustainable outcome".
IS NOT:
just maintenance re-branded
PAS 55: Internationally recognised

The only standard for asset management available

internationally.
It is increasingly being used by organisations to
assess their AM systems
Now in use in:
UK
Sweden
Venezuela
Hong Kong
Russia
Australia
South Africa
Ireland
The Netherlands
Managing the levels in an integrated,
optimized way

Typical priorities & concerns

Corporate/
Organizational Strategic Goals Organization
Management
PAS 55 Asset
Capital investment optimization Management
and sustainability planning Manage Asset Portfolio
System

Sustained
System performance,
performance, Manage Asset Systems
cost & risk optimization

Optimize Manage
life cycle Create Assets Renew
activities Utilize Maintain
/Acquire /Dispose
 Organization alignment: vital line of sight

= Corporate or Organisation Strategic Plan

Business Plan

AM Policy (common principles & what must be achieved)

AM Strategy (How policy will be delivered; whole portfolio)

AM Objectives (Specific asset/system contributions)

e.g. Asset Reference

or Whole Life Plans
AM Plans (who does what, when & where)

e.g. Investment/construction
programs, operating & Existing Assets New Assets
maintenance plans,
purchasing & contracting
Maintenance Life Cycle
policies etc. strategy & mgmt Evaluation
Life-extension & Project planning
refurbishment & management
Modification Construction &
or Disposal commissioning
Optimized management of assets
and their life cycles

Diverse asset needs & opportunities

1. Individual intervention (types, criticalities, condition, performance)
optimization
Is is worth doing and,
if so, when?
3. Activity program
Construct/acquire optimization
e.g. outage strategy &
capital invest. programs,
Utilize

Maintain/modify

Replace/dispose

2. Asset life cycle optimizations

What is best mix of investment, utilization, maintenance, lifespan & risk?
a) Component/equipment level (life cycles)
b) Systems levels (sustainability)
Good AM practice

Is about:
People knowledge, skills, competency,
attitude.
Organisational culture.
Business processes which help deliver "the
optimum way of managing assets to achieve a
desired and sustainable outcome".
Systems to support and enable.
It is not about:
Technology.
The latest tools and techniques.
Challenges in Asset Management

Common problems
Lack of top management commitment
Short term objectives V long term goals
Conflicting objectives
Silo management
Lack of knowledge of:
What asset management is
Still considered a new name for maintenance?
Top management perception
Integrated approach
The benefits
What PAS 55 is
How it can help in delivering benefits of good practice AM
Poorly implemented cultural change programmes
How to effectively change the way people do things
Top management requirements

Need to understand what

AM is
Be committed to providing
resource and funds
Long term
Sustainable
Fundamental Business
Process
Ensure organisation
complies
Asset Management knowledge
Lack of linkage between organisation Business Plans
and AM strategy and objectives
Failure to grasp that to be successful AM needs:
The right business processes
Competent, knowledgeable people
Cultural change
A pragmatic approach
Too much focus too soon on computer systems
these are enablers
Failure to recognise that this is not a quick fix
Lack of an integrated approach
Projects
Getting Life Cycle & risk consideration into all projects
Operations & Maintenance
Reviewing strategies systematically while fire-fighting
Contractors & Suppliers
Performance measurement, motivation and rewarding
Data & IT
Aligning data collection to subsequent usage
HR competency & attitude
Cross-functional team working (vs functional silos)
Motivation, ownership & leadership
Understanding & education
Addressing the culture change
Workforce needs understanding of what needs to
be done, how best to do it and why it is needed
Engineering/technical staff need business, risk
and people/communication skills
New leadership & management styles to support
and develop existing staff better
Blended learning methods
e-learning
Workplace assignments
Roleplay exercises
Traditional classroom teaching (& accreditation)
Mentoring
The difficult bits.

Soft Issues (hearts & minds)

Personal risk
Changing behaviours
Interfaces & conflicting objectives
Decisions with poor information
What data to collect & how to use
Uncertainty & risk
The vital lubricants

PEOPLE
Understanding & education
Motivation
Resilience
Leadership
Collaboration & communication
DATA/INFORMATION
Availability
Quality
Timeliness
Appropriateness
Some good news!
Other systems can integrate/merge
Health and safety
Environmental
Quality management
Previous initiatives need not be discarded
RCM, RCA, TPM etc all can form part of an
AM System
PAS 55 does not require duplication of effort
or systems
A starting point!
Good practice in AM starts
with:
Understanding the benefits that AM
can bring to a business.
A belief that those benefits are
PAS 55-1
worthwhile.
Clear leadership making it the
way we do things.
Understanding good practice in AM
is not a quick fix.
Wanting more than a badge on
the wall!
How can PAS 55 help?
Provides structure
Single thread MD/CEO to Operator/Maintainer
Integrated & aligned
Defines what is good practice
Requires communication, participation and
consultation
Allows a staged approach
Business units, process units etc
Focuses on Total Business Impact
Requires proper consideration of the value of performance, risk,
costs etc.
Calls for optimisation and continual improvement
Summary:
Good practice Asset Management
Good practice AM is about aligning the
management of the assets with the strategic
company objectives
It follows that it is not a marginal activity it
is fundamental to the way the business
operates.
It will not work as a project tested out in the
R&D department or in isolation in the planning
department
Uses the existing tools and techniques
available
AM works when it involves the whole business
Asset Management the future

Regulatory requirement?
To show competence in Asset Management
Sustainable operations will be key
Short termism contributed to recent global financial crisis
Cost/risk optimisation
Across all life cycle phases
Sustainability
Loss of key skills
System required to address the issue
Complex assets and systems of assets
Decisions will be more complex
Systems and tools required to ensure robust decisions are made
Developing international recognition of AM importance
But there is a lack of knowledge of what AM actually is
Standards assist Asset Managers
PAS 55..?
Questions?

Thank you for listening!

Do ask Questions

www.theIAM.org