Copperleaf

Copperleaf provides decision analytics to companies managing critical infrastructure. Our enterprise software solutions leverage operational and financial data to help our clients make investment decisions that deliver the highest business value.

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Tackling Asset Management with David Curtis and Boudewijn Neijens

Posted for Copperleaf

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There’s a lot of talk these days about the importance of smart asset management (emphasis on smart). However, while the supposed benefits of such setups sound great, actually implementing good asset management (AM) is often a daunting task—especially for big organizations with long established modes of operation. David Curtis, Technical Advisor at CEATI International and former Director of Asset Management Processes and Policies at Hydro One, and Boudewijn Neijens, Chief Marketing Officer at Copperleaf and Chair of the Canadian chapter of the Institute of Asset Management, recently sat down to explain how best to go about it.

First and foremost, David and Boudewijn are very strong proponents of ISO 55000. Although there are plenty of ways to go about AM, ISO’s guidelines are comprehensive, effective and increasingly popular among regulators and power providers (about 23 percent of electric utility companies have already adopted 55000). What’s more, ISO 55000 is compatible with ISO 9001, 14001, 31000, and 45001. So, what exactly is the point of an asset management system? As David puts it, ISO 55000 is “where to spend your last dollar to gain greatest incremental value to your organization.”

Once a utility’s leadership has bought in to pursuing an asset management plan, the first step is to deploy it. Traditionally, there are thought to be two modes of asset management: bottom-up and top-down.

Bottom-up is the most common and the easier of the two to deploy. It can take root organically or, more commonly, through the designation of an AM leader by an organization higher-up. In addition to its relative simplicity, the bottom up mode holds several important advantages. As there aren’t strict instructions coming from up top, creativity is able to flourish and the intelligence of the masses (all the organization’s employees) can take hold. However, bottom-up also poses a set of unique challenges. Without the direction of top leaders, those in charge of AM may have difficulty getting other sectors of the organization to buy-in (effective AM interorganizational communication). In the end, the AM team may get bogged down trying to get people on board, thus failing to realize all possible benefits.

The top-down mode is less common, probably because it’s harder to implement. Not only must it be initiated by a senior executive, but they have to stick with it, or else it will quickly transform into a bottom-up system. It may also require a significant culture shift and the hiring or promotion of AM talent. What’s more, a top-heavy approach can stifle creativity and, even worse, be destructive if the top leader has bad ideas. The advantages, however, should be clear. In a top-down regime, AM is pursued strategically, fitting in coherently with the organization’s mission and objectives. Moreover, all segments of the organization are likely to make relevant collaboration a priority.

Fortunately, utilities don’t have to decide between one or the other. The ideal mode is a combination of both bottom-up and top-down. Senior management sets the tone while the bottom-up side focusses on assets and activities that meet objectives set by the organization’s leaders. Of course, as mentioned previously, leaders must stay involved to ensure the effort is carried out.

There are a number of key artefacts that make up any sound AM system: Corporate vision (what do you want to be?), objectives that will make your vision a reality, policy (sets up culture and dictates how objectives will be obtained), strategy, SAMP or AMP to implement the strategy, and KPIs to monitor and evaluate your AM performance.

Like in any management system, a good decision-making system is key. And whereas in the past decisions were based primarily around risk, nowadays it’s thought wisest to evaluate value above all else. But how do you determine an asset’s true value? You need a decision-making framework that takes into account risk mitigation and its cost, how it aligns with broader strategic objectives, and if and how it affects all stakeholders. 

Of course, no decision is made in a void and there must be a robust support system in place that informs it. Typically, such a system will include all of the following: Asset data collection, work management, financial systems, asset performance management, project management, GIS, asset investment planning. These things already exist independent of a decision-making system, but the tough part is bringing them all together.

Smaller organizations are capable of getting away with tracking it all on spreadsheets, but that’s simply not an option for bigger outfits. Luckily there are tons of IT apps and services to help utilities. Boudewijn mentioned a study conducted through Copperleaf that found the average firm used over 100 such apps. In addition to employing good IT, Boudewijn suggest managing it all inside out. That’s to say, look to the analytics for insights into how to manage your assets. He also stressed that comprehensive data sets aren’t necessary to start an inside out approach. Use the data you have, and build it up incrementally.

Everything has to be backed by a system of assurance. While it may sound easy enough, Boudewijn warns that this is where most organizations fail in asset management. Part of the reason, he admits, may be because they’ve already run out of steam by this point. There are a few key questions that an assurance system should answer: Are mitigation mechanisms in place and working? Are we making decisions as we said we would? If not, are we still getting the best results? Is the AMS system being followed? If not, do we have an improvement plan in place?

There are different ways organizations can answer those questions. They can conduct internal reviews (and there are various free programs that allow this at no cost), but it may be better to hire an outside firm to perform a comprehensive audit as this will erase the possibility of any bias. In any case, it’s important to document the decision process both for internal efficiency and when regulators come knocking.

With everything covered above, utilities should strive to continually improve. It’s good business, but will also be expected by regulators and to achieve ISO recertification (they’ll keep raising the bar).

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Thank Henry for the Post!

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Copperleaf
Copperleaf provides decision analytics to companies managing critical infrastructure. Our enterprise software solutions leverage operational and financial data to help our clients make investment decisions that deliver the highest business value.

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