ASSET MANAGEMENT 1, a comprehensive view on Asset Management Strategy Philip Wester NUON Asset Management

ASSET MANAGEMENT 2, contents 1. establish the asset management “concept”  describe shallowly the different areas that should be covered by designing an asset management process 2. the way NUON implemented the asset management process

ASSET MANAGEMENT 3, what is an ASSET

ASSET MANAGEMENT 4, ASSET: anything capable of creating value to stakeholders Assets classification Physical systems, components, drawings, buildings, properties, technologies, software, service, etc. Human labour, skills, knowledge, etc. Intellectual data, SLA’s/contracts, information, documentation, patents, copyrights, designs, etc. Financial money, costs, sales, profits, credits etc. Intangible public image, safety, goodwill, communication

ASSET MANAGEMENT 5, what is ASSET MANAGEMENT

ASSET MANAGEMENT 6, ASSET MANAGEMENT: management of the process to create value through the assets concerned  HRM: management of the asset “people”  ICT: management of the asset “information”  AM utility: management of “infrastructures”  CM: capital management: “finance management”  CRM: management of customers relation and companies image

ASSET MANAGEMENT 7, Utilities’ asset management definition Asset management responsibilities involve the key decision making for the network business to maximize long term profits, while delivering high service levels to the sutomers with acceptable and manageable risks

ASSET MANAGEMENT 8, energy traders assets control operation manage maintain functionality suppliers employees customers regulator/legislators generators external organisations public owner(s) system operator Positioning of Asset Management in power utilities business

ASSET MANAGEMENT 9, Operation Accountabilities strategic operational Management Accountabilities Maintaining Network Functionality Accountabilities level of outsourcing Asset Management Accountabilities Strategies, policies, standards Planning Realisation Vision, Goals - Strategic Asset Management (incl. Reinvestment Strategy) - Risk Management - Safety Management - Cost & Revenue Management - Information/comm. strategy - Operation Management - Operation Instructions - Outage/emergency Management - Contract Management - Maintenance Strategy - Maintenance Management - Condition Assessment - Work Safety Management - Spare Part Management

ASSET MANAGEMENT 10, which items should be covered in implementing an asset management approach?

ASSET MANAGEMENT 11, strategy organisation process information o structure o accountabilities o skills & competencies o outsourcing o architecture o management information o decision support o stakeholders values o risk management

ASSET MANAGEMENT 12, strategy organisation process information how to develop a strategy that takes into account added values of all stakeholders?

ASSET MANAGEMENT 13, strategy: stakeholders value stakeholdervalue ownerprofit customerprice, reliability traderavailability employeereward, safety governmentregulations societyenvironmental load, image investment maintenance “toolbox” risk strategies asset managers core business: “find an optimal balance between stakeholders values”

ASSET MANAGEMENT 14, expected reliability expected continuity ist/soll energy not supplied power quality satisfy cash flow and profitablity demand cash flow capexopex budget forecast order ist/soll damage to society environment consequence priority mode: contribution to “ist/soll gap” project 1 project 2 project 3 project x establishing priorities

ASSET MANAGEMENT 15, strategy organisation process information o structure o accountabilities o skills & competencies o outsourcing o architecture o management information o decision support o stakeholders values o risk management

ASSET MANAGEMENT 16, strategy organisation process information how to organize in such a way that adding the different values is stimulated?

ASSET MANAGEMENT 17, Asset Management Service Provider Asset owner creates value by:  Identifying the needs of stakeholders/business environment  Setting business values and risk levels with needs Asset manager creates values by:  Assessing asset specific risks against values set by owner  Contracting providers with best price/quality performance Service provider creates value by:  Keeping costs to a minimum for the specified level of work Organization >> adding value Asset Ownership

ASSET MANAGEMENT 18, continuous improvement cycle work administration cycle scheduling resource estimating data collection reporting control work execution operating, build & maintenance plan performance data evaluation scenarios, alternatives decisions process & project design problem/opportunity identification decision/designprocess control Asset Management AM organisation directed at adding value

ASSET MANAGEMENT 19, Essential competency: necessary for taking full responsibility Protective competency: risk of outsourcing is too high for organization Parasitic competency: wasting organizational resources Spillover competency: market chances creating extra turn over low Risk high low Effectiveness high Maintenance Outsourcing Guidelines, Cigré Brochure 201 Outsourcing: risk of competence loss? Distinctive competency: most important capability reason for existence

ASSET MANAGEMENT 20, strategy organisation process information o structure o accountabilities o skills & competencies o outsourcing o architecture o management information o decision support o stakeholders values o risk management

ASSET MANAGEMENT 21, strategy organisation process information what is in essence a risk management process?

ASSET MANAGEMENT 22, Risk versus Reliability Management  Reliability Management (according to SAE standard JA1012) is a process to develop a set of policies that preserve the functions of the system under consideration to standards of performance that are acceptable to its user (economical, technical)  Risk Management is an RCM based approach that takes into account the event consequences for the business environment and the corporation strategy (economical, technical, societal/strategic)

ASSET MANAGEMENT 23, Risk Management in a nutshell  Risk Management is a continuously running process where risks are inventoried and prioritized based upon corporate targets, measures to control these risks are chosen and executed, evaluated and actualized.  Risk Management is as such a continuous improvement process covering the business environment as a whole execute/ actualize risk analysis inventory choice control measures evaluate control measures execute control measures

ASSET MANAGEMENT 24, basis for AM risk decisions  keyword>Sustainability: attention for balancing  Society: safety, availability, strategic consequences  Economy: costs, investments, cash flow  Technical: outages, quality of supply, condition

ASSET MANAGEMENT 25, risk directed activities consequence performance probability risk

ASSET MANAGEMENT 26, strategy organisation process information o structure o accountabilities o skills & competencies o outsourcing o architecture o management information o decision support o stakeholders values o risk management

ASSET MANAGEMENT 27, strategy organisation process information information requirements for an Asset Management decision process

ASSET MANAGEMENT 28, AM “cockpit” decision making process

ASSET MANAGEMENT 29, Financial informationAsset informationSocietal information S 3 Risk assessmentCondition assessment Reliability management System (  Dollar) Risk management Decision Safety Social System impact assessment Information strategy directed at Asset Management decision process asset level system level corporate level

ASSET MANAGEMENT 30, Information pyramid > decision

ASSET MANAGEMENT 31, generation TRANSMISSION & DISTRIBUTION consumption accoun tabilities EOS Asset operation systems (SCADA, EMS) EAM systems Enterprise Asset Management systems ERP systems Enterprise Resource Planning systems front information systems level data warehouse Economical performance Technical performance Sociological performance data analysis level management maintaining functionality operation utilities business sustainable asset management decisions asset management information requirements data integration level decision level Information requirements AM decision

ASSET MANAGEMENT 32, strategy organisation process information o structure o accountabilities o skills & competencies o outsourcing o architecture o management information o decision support o stakeholders values o risk management

ASSET MANAGEMENT 33, NUON implementation of asset management process

ASSET MANAGEMENT 34, NUON: decisions > sustainability scenario process decision evaluation matrix stakeholders preferences scenarioalternativeflexibility class safety class reliability % durability class NPV/EVA USD 1A++-99,84+X 1B-++98,7++Y 2C++99+Z 2B++96-W Decision model for choices priority CAPEX and OPEX projects includes Life Cycle Assessments based upon asset reference planning and scenario approach

ASSET MANAGEMENT 35, separation system operator, asset manager, service provider NUON “embedding” AM organisation

ASSET MANAGEMENT 36, separation asset management into 1. development/decision responsible process 2. control process (incl. auditing) internal AM organisation

ASSET MANAGEMENT 37, performance risk high low high challenge: risk strategy asset grouping according to risk/performance class technical, economical & societal basis: certified maintenance

ASSET MANAGEMENT 38, certified maintenance FMECA register expert rules measure maintain store data analyse advice ISO 9002 inspect o r inspection maint.prog norms & standards i-i- tool 1: performance bank condition data tool 2: standard, human independent cbm approach certified process

ASSET MANAGEMENT 39, i-i- at disposal for other utilities to maximize data population and improve decisions new, independent, non commercial, organization operates platform maximum performance information growing knowledge, applied analysis

ASSET MANAGEMENT 40, data management tool inspector  software application for execution of CBM

ASSET MANAGEMENT 41, HV CB velocity measurement type time analysis data storage & analysis tool i-Core  software application for analyzing masses of data

ASSET MANAGEMENT 42, strategy organisation process information o structure o accountabilities o skills & competencies o outsourcing o architecture o management information o decision support o stakeholders values o risk management summarizing theory and …

ASSET MANAGEMENT 43, strategy organisation process information o structure o accountabilities o skills & competencies o outsourcing o architecture o management information o decision support o stakeholders values o risk management … NUON practice implementation AM process