Perspectiveson Asset Management

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Perspectiveson Asset Management

  1. 1. Perspectives on Maintenance and Asset Management in industry<br />Do Company Boards understand the risks?<br />Do insurers compensate the Company Boards for taking risks?<br />Are current underwriting practices supporting mediocrity? <br />Is there a better way? <br />
  2. 2. About me – Steve Turner<br />In 1977Joined RAAF at 17... Bachelor of Engineering (Aero) RMIT<br />Worked in maintenance and reliability with the RAAF including an exchange officer post with the UK Ministry of Defence on a reliability think tank post.<br />Left RAAF in1989 <br />3 Years with GMH purchasing department running production improvement programs with its suppliers<br />Graduated with MBA from Monash in 1993 (part time studies)<br />3 years with Price Waterhouse (now PWC) as a senior consultant<br />
  3. 3. About me – Steve Turner<br />Started OMCS International in 1996<br />Grown to be a highly respected consulting business in the area of asset management.<br />Works in all sectors where physical assets generate the revenue. Most of our business is in <br />Oil and Gas, <br />Chemicals and <br /> Mining.<br />Have been working with the power industry in Europe – focus on Nuclear Power stations.<br />
  4. 4. The agenda<br />Lessons learnt<br />The ESSO Longford Disaster<br />The BP Texas Disaster<br />The sad response by industry<br />Maintenance strategy explained<br />What we typically find wrong<br />Summary <br />Discussion<br />
  5. 5. The Longford Disaster - 1998<br />
  6. 6. The Longford Disaster<br />On 25 September 1998, at the Longford Gas Plant in Victoria, Australia, a gas absorber burst, releasing a large cloud of hydrocarbon vapours. <br />Seconds later, it exploded. <br />Two staff were killed and 4 million people were deprived of gas for about two weeks<br />
  7. 7. A few graphic snaps<br />
  8. 8. A few graphic snaps – GP09 Heat Exchanger<br />
  9. 9. Some of the findings – Royal commission and Hopkins<br />What would normally be considered abnormal was normalized - Hopkins<br />Vital shut down and control mechanisms had not been working for 10 days– Other indicators were not seen as critical<br />Engineering staff had been cut or moved to the city<br />This led to lack of control of decision making on site<br />The plant personnel were driven by production targets<br />It was common practice to run the operation in the “red zone”.<br />
  10. 10. John Boshier - Chief Executive OfficerInstitution of Engineers, Australia<br />It has been 3 years since the Esso Longford gas plant exploded in September 1998. <br />This passage of time has allowed Australia’s major hazard facilities to review the disaster and implement changes to ensure that such a tragedy does not re-occur.<br />Unfortunately, according to the author of this report, the industry and the engineering profession have not learnt as much as they might have from the tragedy. <br />Far more could be done to apply the lessons from Longford at facilities around Australia.<br />
  11. 11. Reference to the report<br />http://www.engineersaustralia.org.au/shadomx/apps/fms/fmsdownload.cfm?file_uuid=199C7EF9-9642-91DD-6B9D-9E1CAEB72F31&siteName=ieaust<br />
  12. 12. The BP Texas City Disaster - 2006<br />
  13. 13. BP Texas City Refinery Explosion March 2005<br />John Mogford<br />BP - Senior Group Vice President, Safety & Operations<br />Paper delivered at Center for Chemical Process Safety, <br />2nd Global Congress on Process Safety, Orlando, Florida<br />24 April 2006<br />
  14. 14. Reference to the Report<br />www.bp.com/genericarticle.do?categoryId=98&contentId=7017238<br />
  15. 15. BP Texas City Refinery Explosion<br />It’s not an easy story to tell. BP doesn’t come out of it well. <br />And it’s a complicated tale involving many factors that go well beyond the process of operating a refinery safely – <br />BP’s empowerment ethos, <br />the behaviour of individuals in leadership and <br />the clarity of our standards to name a few. ....<br />
  16. 16. BP Texas City Refinery Explosion<br />This was a preventable incident, as I will explain. <br />It should be seen as a process failure, a cultural failure and a management failure. <br />Our investigations have revealed significant deficiencies in the work and safety culture at Texas City. <br />The question, of course, is why these deficiencies developed – and why weren’t they sufficiently identified and addressed before the explosion. <br />
  17. 17. What I have learnt recently<br />We have been in touch with BP Texas City and have had long phone conversations.<br />I am told, they have spent $18 M USD in the last few years on consultants writing maintenance procedures and maintenance programs.<br />They seem to have gone overboard since they simply don’t have the staff to complete the work.<br />The real problem is they seem to have swung the pendulum too far the other way.<br />
  18. 18. My impressions based on decades of consulting<br />
  19. 19. My impressions of asset management in hazardous facilities...<br />The process of asset management in hazardous plants is appalling in almost every case.<br />This low level is considered satisfactory.<br />The leaders of business do not understand the implications.<br />There is a fundamental lack of knowledge about the subject:<br />The aviation industry figured it out in the seventies but few organisations outside of aviation are anywhere close to where they should be.<br />
  20. 20. What I observe<br />The problems found by the Longford Royal Commissions are endemic in industry and there is not much motivation to change. <br />The concepts of maintenance analysis are not difficult to apply yet most organisations are in complete disarray.<br />Maintenance engineers have not had much impact:<br />In the past, they have not articulated their needs well, and have not been good at getting improvements happening.<br />Many are still in that situation.<br />
  21. 21. What I suspect<br />I suspect Company Boards don’t want to listen because they: <br />See maintenance as an uncontrollable drain on cash which, in the past, no one has been able to manage properly,<br />Feel that improvements in the area of reliability and maintenance may provide high returns, but prefer to take shorter term cost reduction strategies.<br />Base decisions on bad experiences; they don’t have confidence in reliability improvement programs.<br />
  22. 22. Some evidence showing how poor things are in general<br />
  23. 23. Analysis of a vendor supplied maintenance program<br />
  24. 24. Analysis of PM program for Reciprocating Compressors at a Refinery<br />
  25. 25. Turbine and mainline pump in Saudi – Before and after<br />labour hours per year<br />
  26. 26. A deep water drilling company maintenance program before and after<br />
  27. 27. The problem<br />The fundamentals of asset integrity and reliability relate directly to the preventive and predictive maintenance programs deployed by asset managers.<br />In over a decade of providing review programs in all industries, the common thread is that almost all companies <br />have gaps in their programs <br />while at the same time the over-service in others.<br />The result is that few companies have control over the condition of their assets.<br />
  28. 28. 28<br />How organisations get into trouble - the vicious cycle of reactive maintenanceTM.<br />
  29. 29. The Birth of industrial Plant.. a Common Scenario <br />Maintenance not involved in the design.<br />Poor maintainability.<br />Lack of condition monitoring considerations:<br />Inspection facilities.<br />Sample points.<br />Gauges and alarms.<br />Inadequate maintenance facilities.<br />Design not functionally capable.<br />etc<br />FMECA is not seen by maintenance.<br />
  30. 30. The Birth of industrial Plant.. cont<br />The project runs over budget and the design capability is reduced. <br />There is little margin between what the plant can achieve and what is expected of it.<br />The maintenance tradesmen arrive too late for adequate training and preparation. <br />Commissioning is done in a rush and often not fully completed.<br />
  31. 31. After Commissioning ….<br />The project is handed over without a maintenance program<br />The tradesmen write one…<br />Little input from operations<br />No consistent method<br />No audit trail of rationale<br />Generally risk averse - over-servicing<br />Page 6<br />
  32. 32. The Infancy days…<br />Failures happen and useless tasks are added.<br />Operations has no buy in for the maintenance plan and there is a reluctance to cooperate.<br />Not all the PM Program is achieved and this becomes the culture of the organisation.<br />Temporary repairs creep in and get out of control<br />Consultants arrive and cut heads<br />
  33. 33. The Vicious Circle of Reactive MaintenanceTM<br />Backlog grows<br />PM is missed<br />Standards Drop<br />More preventable failures<br />Morale Declines<br /> Resources taken by Breakdowns<br />Head / Budget Reduction<br />Temporary Repairs<br />More repeat work<br />
  34. 34. Maintenance Philosophy Explained <br />Principles of Maintenance Analysis for Evident Failure Modes<br />
  35. 35. Almost all assets fail in some way at some time<br />The mechanisms of failure are referred to as failure modes.<br /> Maintenance personnel are interested in to characteristics regarding failure modes:<br />The pattern:<br />Wear out<br />Random<br />Infant Mortality<br /> Rate of deterioration<br />Sudden<br />Gradual <br />
  36. 36. Age<br />Studies (Nowlan and Heap) show that intrusive maintenance needs to be avoided..<br />C: Gradual 5%<br />D: Almost Random 7%<br />A: Bath Tub 4%<br />E: Random 14%<br />B: Wear Out 2%<br />Conditional Probability of Failure<br />F: Infant Mortality 68%<br />Age or Life<br />Source: United Airlines 1978<br />
  37. 37. Step 6…. RCM Task Selection Sequence<br />Hidden<br />Evident<br />Operational Loss<br />Hazard<br />Repair Only<br />Condition Monitoring<br />Condition Monitoring<br />Condition Monitoring<br />Condition Monitoring<br />Scheduled Restoration<br />Scheduled Restoration<br />Scheduled Restoration<br />Scheduled Restoration<br />Scheduled Discard<br />Scheduled Discard<br />Scheduled Discard<br />Scheduled Discard<br />Failure Finding<br />Modification<br />Modification or No PM<br />Modification or No PM<br />
  38. 38. The frequency of On-Condition tasks must be less than the P-F Interval. <br />Resistance <br />to Failure<br />P-F Interval<br />(months)<br />Potential<br />Failure<br />Functional<br /> Failure<br />Check at 1 monthly intervals<br />Age<br />Option 1..Monitor Condition (Condition Monitoring)<br />
  39. 39. Option 2…Fixed time replacement <br />Safe Life<br />The frequency of fixed time replacement must be before safe of economic life. <br />
  40. 40. Maintenance Options for Evident Failure Modes…<br />Age Related<br />Failure Pattern<br />Fixed Time Replacement only<br />Random<br />Gradual<br />Sudden<br />Rate of Deterioration<br />
  41. 41. Maintenance Options for Evident Failure Modes…<br />Condition Based Replacement only<br />Age Related<br />Failure Pattern<br />Random<br />Gradual<br />Sudden<br />Rate of Deterioration<br />
  42. 42. Maintenance Options for Evident Failure Modes…<br />Age Related<br />Failure Pattern<br />Fixed Time Replacement or<br />Condition Based Replacement<br />Random<br />Gradual<br />Sudden<br />Rate of Deterioration<br />
  43. 43. Maintenance Options for Evident Failure Modes…<br />Failure will always be a breakdown<br />Age Related<br />Failure Pattern<br />Random<br />Gradual<br />Sudden<br />Rate of Deterioration<br />
  44. 44. Maintenance Options for Evident Failure Modes…<br />Age Related<br />Failure Pattern<br />Random<br />Gradual<br />Sudden<br />Rate of Deterioration<br />
  45. 45. Start measuring plant metrics<br />Expected Failure<br />Inherent Capability Loss<br />Planned Maintenance<br />Maintenance Capability Loss<br />Unexpected Failure<br />Inherent Performance Level<br />Available Time<br />TotalTime<br />
  46. 46. A typical example ……<br />Inherent Capability<br />
  47. 47. Perspectives on Maintenance and Asset Management in industry<br />Do Company Boards understand the risks?<br />Do insurers compensate the Company Boards for taking risks?<br />Are current underwriting practices supporting mediocrity? <br />Is there a better way? <br />

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