Presentation is loading. Please wait.

Presentation is loading. Please wait.

Asset Management Planning Objectives, Issues & Processes December 1998.

Similar presentations

Presentation on theme: "Asset Management Planning Objectives, Issues & Processes December 1998."— Presentation transcript:

1 Asset Management Planning Objectives, Issues & Processes December 1998

2 This presentation is confidential to the intended recipient and may not be divulged to any other parties without the explicit written permission of Utility Consultants.

3 This presentation is for promotional purposes only. Utility Consultants accepts no liability for any action or inaction arising from its’ use.

4 This presentation is copyright, and may not be reproduced in whole or in part without explicit written authority from Utility Consultants Ltd.

5 Key themes Definitions. Structured nature of planning work on assets. Separation of asset management from service provision. Defining performance requirements. The contracting relationship.

6 What is AMP ? AMP is a structured method of ensuring that all of an organisations assets receive correct maintenance. AMP is a “life cycle” methodology that matches the maintenance performed on an asset to its required performance level with a view to minimising costs.

7 What is AMP ? AMP is “the stitch in time that saves nine”. Good AMP assists in deferring replacement.

8 Case study - PNCC The Palmerston North City Council have found that bitumen roads can be repaired every 12 to 15 years at a cost of about $3/m 2. If left to breakup, the road would require total replacement at a cost of about $30/m 2. (Source - Asset Management Consultation document 1997/98)

9 What will it achieve ? Consistent maintenance on all assets. Reduced mismatch of maintenance effort due to structured planning. Reduced costs as economies of scale can be sought. Structured long-term budgeting. Better cashflow forecasting.

10 What will it achieve ? Better alignment to capital works planning. Improved credibility with external agencies. Allows separation of asset management from “doing the work”. Assures shareholders that their future earnings are being looked after.

11 Activity separation Key facet of good AMP is activity separation - ownership, management and service provision. A structured AMP allows clear separation of managing the assets from actually performing the maintenance.

12 Key processes Building the asset register Gathering base-line condition data on all the assets. Developing the rules and policies that will drive maintenance work. Apply the rules and policies to the asset register to build a work list. Estimate the costs for each job.

13 Key processes Compile an overall budget for each financial period of the AMP’s horizon. Obtain approval to spend the money in each period. Define what asset information the contractor is to feed back as part of their contract.

14 Key processes Package up the work list with suitable commercial conditions. Tender out the work and award the contract to the successful tenderer. Ensure that quality standards are adhered to whilst the work is performed. Obtain all specified information from the contractor.

15 Key processes Use the information fed back from the contractor to modify the asset register, and the rules and policies as required. Review the contractors suitability for future work by way of performance ratings. Begin the cycle again.

16 Key processes Independently audit the AMP every year to ensure that planned work has been done, thus preserving the owners future earnings.

17 Points to note Gathering base line data is expensive, so all required information must be defined at the start, not part way through the data gathering. Rules and policies defining maintenance work must be based on clear cost-benefit principals.

18 Points to note Ensuring the quality of contractors work is a key responsibility of the asset manager. Feeding back accurate and timely information on asset condition and work performed must be treated as an integral part of the contractors’ work, and not merely as an add-on - “no info, no pay !!!”.

19 Points to note Contracting out can be used to drive real cost efficiencies, but must be done honestly ie. no second-tier bargaining with the lowest tenderer to drive their costs down further. Asset manager has at least some responsibility for maintaining a competitive tendering environment.

20 Building the asset register Based around a comprehensive list of all assets and their key components. Deciding on level of detail is a matter of judgment eg. a 5 kVA distribution transformer could be regarded as a single asset, but an 11.5 MVA supply transformer clearly should not be. Defines performance level required for each asset.

21 Building the asset register Deciding what software to use is a big issue - will an Excel spreadsheet or Access database be sufficient, or should a full GIS be adopted ? Full GIS is very expensive - requires specialist software such as CableCAD or SmallWorld, as well extensive hardware upgrades (usually a minimum of a Pentium).

22 Building the asset register Full GIS offers significant additional functionality based on geographical connectivity of assets. Key decision to be made - is the additional functionality required ?

23 Defining the performance levels Different assets or components will have differing performance levels eg. a main 33 kV line may have a reliability requirement of 99.95% whereas a remote 11 kV line may have a reliability requirement of 99.65%. It may be necessary to define performance levels for individual components eg. oil in a transformer.

24 Defining the performance levels Two issues to consider when defining performance criteria are…. How critical is the asset to production ? What are the consequences of failure ?

25 Gathering the base line data Likely to be an expensive (labor intensive) process. Critical that all information requirements (all database fields) are defined before starting, as repeating proves very expensive. Critical that information is gathered in a consistent format.

26 Defining rules and policies Maintenance on each asset will be defined by the rules and policies, and will differ for each asset eg. an urban 11 kV OCB will have different rules and policies than an 11 kV rural recloser. Usual to define policies and rules around “drivers” such as capacity, reliability, safety, environmental, statutory etc.

27 Defining rules and policies This provides a clearer picture of why maintenance is being done eg. adjacent OCB’s in an 11 kV board may be maintained for different reasons - one may have bigger contacts fitted to provide greater capacity, whilst the other one may have new contacts fitted to improve reliability.

28 Defining rules and policies Important that safety, environmental and statutory drivers are also assessed carefully. Idea of “cheaper to pay the fine” rather than spend money on safety and environmental issues is no longer acceptable to society or the Courts.

29 Defining rules and policies Key issues in defining rules & policies are…. OEM specifications & updates. Current industry practice. Statutory & environmental requirements. Commercial direction. Customer expectations. Community expectations. Asset condition & aging.

30 Defining rules and policies Being able to quickly demonstrate “we are spending $xyz on supply reliability” can appease community stakeholders eg. one of the English distribution companies recently announced “we are spending £250,000 per day on improving supply reliability” - a very impressive statement at face value.

31 Defining rules and policies The combination of defining both performance levels and rules & policies will usually lead to adoption of a particular maintenance strategy for that asset eg. an asset that has a high performance requirement combined with a policy of replacement every 5 years would suggest a time-based maintenance strategy.

32 Defining rules and policies Other examples of policies & rules are… 11 kV insulators are to be replaced during re- poling or re-arming (opportunity based strategy). 11 kV VCB’s are to be overhauled after 1,000 operations, 15 heavy faults or every 18 months (combination strategy). 33 / 11 kV transformers are to have the oil DGA’ed every 12 months (condition based).

33 Building the work list The application of relevant policies & rules to each asset or component will result in a work scope and timing for maintenance on that asset eg. insulators on 11 kV line XYZ…. Scope - replace. Timing - when line is re-poled or re- armed.

34 Building the work list Repeating this process will result in a work list that will define the scope and timing of all maintenance for the chosen horizon of the plan. This will include inspections, tests, calibrations, adjustments, overhauls and replacement.

35 Building the work list Rules & policies must be applied flexibly and sensibly - there is no point in rigidly applying a rule that will require an additional cost or outage shortly after a major outage eg. 11 kV lightning arresters should be replaced during a re- pole even though a time-based plan would mark them for replacement in another 2 years.

36 Costing the work list Accurate costs must be applied to all aspects of the work. Include indirect costs such as preparing contract spec’s and conditions, tendering costs, inspection costs etc - these may be then allocated to an overhead. Develop a complete budget for the entire AMP horizon.

37 Approving the expenditure Board or Chief Executive may grant “approval in principle” to include in the company financial plan. May require large maintenance projects to be individually approved by the Chief Executive or Board. Approval of this level signifies importance of good asset management.

38 Defining info. to be fed back Bare minimum information to be fed back is…. Scope of work performed. Condition of asset before work was performed. Any departures from required procedures. Any shortfall in restored condition.

39 Defining info. to be fed back Contractor must regard feeding back information as an important part of the overall maintenance activity. Information must be in the prescribed format to reduce double handling and minimise possibility of incorrect interpretation. Contractor must correct any erroneous information at their own expense.

40 Defining info. to be fed back May put the contractor to considerable expenses eg. Pentium laptops to input field data - the principal will eventually pay for such overheads.

41 Contract conditions Must be commercially fair, and allow the contractor to work with creativity, initiative and to make a fair profit. Must be legally robust enough to withstand scrutiny in court. Must be consistent so contractors can prepare tenders at minimum cost. Must treat all contractors equally.

42 Contract conditions Decide whether the principal or the contractor will carry appropriate insurance. Some principals are able to carry a higher PI / PL insurance than contractors can reasonably afford, so it allows contractors bids to be more competitive.

43 Tendering out the work Pre-qualify tenderers on key criteria such as ability to perform the work, safety and quality systems, financial history etc. Acknowledge that contractors overheads will be reflected in their prices. Match the tender submission requirements to the value of the job - don’t ask for comprehensive proposals for minor jobs.

44 Tendering out the work Consider tendering blocks of work eg. all substation overhauls for 3 years, to allow contractors to achieve some economies of scale. All tenderers must be treated equally, and advised if the playing field is not level eg. tendering line construction when one of the contractors was engaged to design the line.

45 Tendering out the work Tell the tenderers in the specification what the tender award will be based on - price, quality, previous record etc. Allow a reasonable time for bids to be prepared. Clearly state if faxed or emailed tenders are acceptable, and when the hard copy must be postmarked or received.

46 Tendering out the work Strictly enforce tender closing time - 1:00 pm means exactly 1:00 pm, not 1:15 pm (most contractors learn the first time). Late tenders should not be opened, but should be returned unopened and marked “Received Late”. Ensure that tenders are signed off by someone with authority to contractually bind the contractors company.

47 Tendering out the work Accept tenders “as opened” - don’t negotiate with individual tenderers, as this could amount to changing the stated basis of award. Ensure that tender evaluation is objective and traceable - consider using an anchored rating scale.

48 Tendering out the work Don’t include pre-qualifications in the evaluation process eg. if a pre-qual. is to have ISO 14001, don’t mark tenderers down for not having it - their bid is non- compliant and should be rejected (they shouldn’t have bid in the first place). Don’t accept non-compliant bids unless the contract conditions state that the principal reserves the right to do so.

49 Awarding the contract Usually done by a tenders committee and ratified by the Chief Executive. Once awarded, authority passes to the budget or project manager. Ensure that award of the contract is done by an individual authorised to contractually bind the principal.

50 Ensuring quality work Principals responsibility to ensure quality work. Principal must meet all agreed inspection times to allow work to proceed smoothly. Contract conditions must allow for shortfalls in quality to be corrected at the contractors expense.

51 Obtaining the required info. Ensure that all required information is obtained in the required format and to the required standard upon completion of the work. Contract conditions must allow for payment to be withheld for non-compliant information returns.

52 Using the returned info. Information returned by the contractor must be used correctly to modify rules & policies eg. Brand X OCB’s require the oil filtering more often than Brand Y OCB’s. Changes to policies & rules may have significant implications for future operational and financial performance, and should be approved at a senior level.

53 Review contractor performance Rate contractors on key areas of performance such as quality, meeting completion dates, safety procedures etc. Use this performance index as a basis for staying pre-qualified for future work. Advise poor performing contractors that loss of pre-qualification will require them to complete the pre-qual. again.

54 Annual audit of work performed Provides the asset owners with assurance that the asset manager is prudently reinvesting in the future earnings streams. Uses an independent engineer to review the work actually performed during the past year in relation to what the AMP said would be performed.

55 Annual audit of work performed Provides an independent opinion that may lead to the annual audit being qualified if planned work hasn’t been done. Departures from the AMP need to be thoroughly justified.

56 Changing the culture Like any organisational change, adopting AMP requires a thorough change management process. May require a big change in the attitude of contractors, particular in- house contractors facing separation from the parent network company.

57 Conclusions AMP requires an extensive information gathering process. AMP requires significant expenditure if the GIS route is chosen. Allows separation of asset management from service provision. Requires a structured approach to decision making.

58 Conclusions Information transfer is a critical aspect of good AMP. Honest & trustworthy relationships with contractors forms a key part of good AMP. Implementing AMP requires a careful and planned change management process.

59 For more information…. Visit Utility Consultants Web Site Email with a specific question

Download ppt "Asset Management Planning Objectives, Issues & Processes December 1998."

Similar presentations

Ads by Google