Making Asset Management Work for You.ppt

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Making Asset Management Work for You.ppt

  1. 1. Making Asset Management Work for You Dianne B. Mills D. Michael Rotunno, P.E. Stanley V. Plante, P.E. November 2002
  2. 2. Asset Management, CMOM, and GASB 34 Are All Intended to Focus on Long Term Utility Management Asset Management Minimize the life cycle cost of an asset or group of assets CMOM Properly maintain assets to maximize use of designed/intended capacity GASB 34 Reflect the “full cost” of providing a government service and show that ratepayers are getting what they paid for
  3. 3. Who Is Governmental Accounting Standards Board (GASB)? <ul><li>Non-governmental agency </li></ul><ul><ul><li>Issues financial guidelines for all governmental agencies </li></ul></ul><ul><li>GASB 34 </li></ul><ul><ul><li>Statement issued by GASB which redefines financial reporting for public agencies </li></ul></ul><ul><ul><li>Not a law, though non-compliance may affect acceptance of financial statements and ability to obtain grants and/or loans from state/federal agencies </li></ul></ul>
  4. 4. What Does GASB 34 Require? <ul><li>Redefines how municipalities present financial position </li></ul><ul><li>Governmental units should report capital assets, by one of these methods </li></ul><ul><ul><li>Depreciated value of capital and infrastructure assets of all government property </li></ul></ul><ul><ul><li>Adopt “modified approach,” which involves asset management </li></ul></ul>
  5. 5. GASB 34 Modified Approach <ul><li>Asset management plan or process </li></ul><ul><li>Inventory and assess current asset condition </li></ul><ul><li>Estimate funds needed to maintain at a condition level set and disclosed by the government agency </li></ul><ul><li>Assess condition of assets at least every 3 years </li></ul><ul><li>Report whether assets are being preserved at or above the condition level set </li></ul>
  6. 6. GASB 34 Timetable for Compliance Revenue Phase Category Implement in FY after $100 Million + 1 June 15, 2001 > $100 Million and < $100 Million < 10 Million 3 June 15, 2003 $100 Million + 1 June 15, 2005 > $10 Million and < $100 Million < $10 Million 3 Exempt 2 June 15, 2002 For historical assets acquired, received after June 15, 1980 2 June 15, 2006
  7. 7. What is Asset Management? Asset Management is a process for providing the public with a cost-effective level of service through the creation, acquisition, maintenance, operation, rehabilitation and disposal of assets for existing and future customers
  8. 8. Why is Asset Management Important Now? <ul><li>Regulatory drivers require a longer term view and better knowledge of conditions of your systems </li></ul><ul><li>More meaningful financial reporting </li></ul><ul><li>Aging infrastructure system </li></ul><ul><li>Pressure of privatization and competition </li></ul><ul><li>Evolving Management Knowledge </li></ul>
  9. 9. Utilities Are Often Forced to Take Short-term View <ul><li>Significant effort in creating new assets, but not properly maintaining existing assets </li></ul><ul><li>Maintenance deferred because: </li></ul><ul><ul><li>Pressure to keep rates low </li></ul></ul><ul><ul><li>Other increased costs of doing business </li></ul></ul><ul><ul><li>Competing priorities / other projects </li></ul></ul><ul><li>Maintenance problems often are “invisible” to decision makers until something bad happens </li></ul>
  10. 10. Asset Management Makes Good Business Sense <ul><li>Clearly documented strategy for managing utility assets from design to disposal at end of useful life </li></ul><ul><li>Repeatable and verifiable methods and measurement of asset condition </li></ul><ul><li>Minimize life-cycle costs </li></ul><ul><li>Clearly calculated levels of asset service, reliability and long term funding requirements </li></ul><ul><li>Creates long-term capital funding program </li></ul>
  11. 11. <ul><li>Accurate and concise asset information to support strategic decision-making </li></ul><ul><li>Provides reliable needs assessment for federal assistance </li></ul><ul><li>Provides fact based analysis to document funding needs </li></ul><ul><ul><li>System managers and other stakeholders </li></ul></ul><ul><ul><li>Government officials </li></ul></ul><ul><ul><li>Grant agencies </li></ul></ul>Asset Management Makes Good Business Sense (continued)
  12. 12. Asset Management Common Misconceptions <ul><li>It is a computer system </li></ul><ul><li>It is an accounting system </li></ul><ul><li>It is required by EPA or federal government </li></ul><ul><li>It is an automated process </li></ul><ul><li>It is mandated to comply with GASB 34 </li></ul>
  13. 13. The Asset Management Process <ul><li>Customer Expectations </li></ul><ul><li>Level of Service </li></ul><ul><li>Cost </li></ul><ul><li>Legislative Requirements </li></ul><ul><li>Financial </li></ul><ul><li>Environmental </li></ul>Strategic Planning Tactical Planning Operational Planning Implement Asset Management Solutions Strategic Planning Process Service Level Review Process Asset Management Process <ul><li>Consider Asset Solutions </li></ul><ul><li>Maintain/renew/upgrade/ </li></ul><ul><li>dispose of existing assets </li></ul><ul><li>Create new assets </li></ul><ul><li>Consider Non-Asset Solutions </li></ul><ul><li>Failure management </li></ul><ul><li>Insurance </li></ul><ul><li>Demand management </li></ul>
  14. 14. The Asset Management Team Cross Functional Key Players Job Goal All stakeholders should be represented Planning, engineering, O&M, finance, and IT Formulate implementation plan Thorough, consistent program across the agency
  15. 15. Implementation Plan <ul><li>Lay out objectives, levels of detail, “to-do” lists for the overall program </li></ul><ul><li>Assign responsibilities to each group of the team </li></ul><ul><li>Assess current data resources </li></ul><ul><li>Establish a plan to oversee implementation </li></ul><ul><li>Entire system doesn’t have to be done simultaneously </li></ul><ul><ul><li>Consider phased approach of most critical systems first </li></ul></ul>
  16. 16. Objectives of the Asset Management Process <ul><li>What are your assets, where are they, what condition are they in </li></ul><ul><li>More planned less unplanned maintenance </li></ul><ul><li>Have and maintain a rational long-term plan for replacement and refurbishment </li></ul><ul><li>Demonstrate a technical and financial commitment to long-term integrity and improvement of your infrastructure </li></ul>
  17. 17. Define Difference Between O&M, Maintenance and R&R <ul><li>Operating costs </li></ul><ul><ul><li>Operating facilities, e.g., energy costs, consumables, operations related labor, etc. </li></ul></ul><ul><ul><li>No effect on asset except to operate asset </li></ul></ul><ul><li>Maintenance costs </li></ul><ul><ul><li>Ongoing day-to-day work required to keep assets operating at required service levels </li></ul></ul><ul><ul><li>Non-capitalized maintenance work orders including inspections, service, repairs, etc. </li></ul></ul>
  18. 18. Asset Rehabilitation & Replacement <ul><li>When should an asset be rehabilitated or replaced based on its remaining useful life cost analysis </li></ul><ul><li>Initially use manufacturers recommendations </li></ul><ul><li>Update to reflect condition assessments and maintenance history </li></ul><ul><li>Asset history is used to update entire asset management process </li></ul>
  19. 20. The Asset Management Process One of the core requirements of a sound asset management system is to identify and track assets throughout their lifecycles Study and Report Fund Implementation Plan Design and Build Retire Maintain Operate Inventory and Other Asset Data
  20. 21. Basic Steps to Asset Management <ul><li>Inventory assets and rate condition </li></ul><ul><li>Group and classify assets </li></ul><ul><li>Establish asset criticality and level of service standards </li></ul><ul><li>Track costs to asset level </li></ul><ul><li>Assign maintenance schedules to assets </li></ul><ul><li>Perform condition monitoring </li></ul><ul><li>Analyze data to optimize reliability and costs </li></ul>
  21. 22. Inventory Assets and Rate Condition <ul><li>Develop a complete inventory of assets and assess conditions </li></ul><ul><li>Condition assessments should be made by qualified staff based on established standards </li></ul><ul><li>Develop criteria for what will have an individual asset number </li></ul>
  22. 23. Inventory Assets and Rate Condition <ul><li>Inventory requires record searches, field data acquisition and software to store and organize collected data </li></ul><ul><li>Condition assessment must be on-going, and could be incorporated into regular maintenance </li></ul>
  23. 24. Group and Classify Assets <ul><li>An asset inventory is a database of assets organized such that it’s understandable, maintainable and quantifiable </li></ul><ul><li>Don’t build too many layers </li></ul><ul><li>Keep asset levels to understood naming standards </li></ul><ul><li>If available use GIS database standards for spatial assets and infrastructure </li></ul><ul><li>Use numbering systems to identify location and classification by type, but be easy to understand </li></ul>
  24. 25. Group and Classify Assets <ul><li>Group and classify assets into hierarchies </li></ul><ul><ul><li>Process (plant) assets </li></ul></ul><ul><ul><ul><li>Subsystems of pipes, controls, instruments </li></ul></ul></ul><ul><ul><li>Infrastructure assets </li></ul></ul><ul><ul><ul><li>Pipelines, wells, pumping stations </li></ul></ul></ul><ul><ul><li>Building assets </li></ul></ul><ul><ul><ul><li>Aggregation of components </li></ul></ul></ul><ul><ul><li>Site assets </li></ul></ul><ul><ul><ul><li>Parking lots, fences </li></ul></ul></ul>
  25. 26. Group and Classify Assets <ul><li>Equipment & furnishings </li></ul><ul><ul><li>Vehicles, trailers, office equipment and furniture, storage fixtures, portable equipment </li></ul></ul><ul><ul><li>Equipment categories matched with fixed asset management component of FIS </li></ul></ul><ul><ul><li>Movable equipment individually tagged for property management purposes </li></ul></ul>
  26. 27. Group and Classify Assets <ul><li>Process (Plant) Asset – Example Hierarchy </li></ul>AWTP Facility RP Process unit Pump 1 System System (group) Pump Equipment (parent) Valve Component (child)
  27. 28. Group and Classify Assets <ul><li>Example Asset Tag </li></ul><ul><li>Facility AWTP </li></ul><ul><li>Process Unit RP </li></ul><ul><li>System / Service PS1 </li></ul><ul><li>Component ID PMP </li></ul><ul><li>Building RPS </li></ul><ul><li>Location / Area B1 </li></ul><ul><li>Sequence Number 01 </li></ul>
  28. 29. Group and Classify Assets <ul><li>There are many commercial software products that store, manage and report on asset inventories </li></ul>
  29. 30. Establish Asset Criticality <ul><li>Defined level of service </li></ul><ul><li>Determine what assets are mandatory to meet the level of service </li></ul><ul><li>Value of asset </li></ul><ul><li>Current condition assessment </li></ul><ul><li>Remaining service life </li></ul>
  30. 31. Track Costs to Asset Level <ul><li>Use equipment register to more quickly find individual asset records </li></ul><ul><li>Create work orders against the equipment register records to track costs to the asset level </li></ul><ul><li>Integrate with other business systems to pull together cost information from Payroll, Accounting, CMMS, and Inventory </li></ul>
  31. 32. Track Costs to Asset Level
  32. 33. Assign Maintenance Schedules to Assets
  33. 34. Condition Monitoring <ul><li>Helps to determine if the asset should be replaced or repaired </li></ul><ul><li>Helps determine optimal types and frequencies of preventive maintenance </li></ul><ul><li>Provides early warning of asset deterioration and prediction of equipment failure </li></ul><ul><li>Determine how each asset deteriorates or fails, what to monitor, how often to monitor, and what the key decision points for refurbishment or replacement </li></ul>
  34. 35. Condition Monitoring Alarm 1: Change Oil Alarm 2: Major Service Warning High
  35. 36. The Asset Management Process Includes Periodic Reviews <ul><li>Asset-related costs are being reduced as anticipated </li></ul><ul><li>Required service levels are being met </li></ul><ul><li>Asset-related procedures are being conducted as planned </li></ul><ul><li>Asset plans are being properly updated and improved </li></ul><ul><li>On findings from these reviews, the process and Implementation Plan will be updated </li></ul>
  36. 37. Asset Management Pays Off
  37. 38. Rules to Remember <ul><li>Establish condition standards by asset classification </li></ul><ul><li>Develop consistent evaluation criteria </li></ul><ul><li>Establish simple methods of measurement </li></ul><ul><li>Begin by inspecting the most critical assets first </li></ul><ul><li>Set reasonable frequencies to update condition rating </li></ul>
  38. 40. Tools for Asset Management: GIS <ul><li>Map/maintain/report on existing assets </li></ul><ul><li>Identify suitable alignments </li></ul><ul><li>Identify conflicts </li></ul><ul><li>Notify citizens </li></ul><ul><li>Locate complaints </li></ul><ul><li>Integrate data from other systems </li></ul>
  39. 41. GIS Tip <ul><li>Spatial accuracy isn’t all it’s cracked up to be </li></ul><ul><ul><li>Development costs increase with accuracy </li></ul></ul><ul><ul><li>Maintenance costs increase with accuracy </li></ul></ul><ul><ul><li>Integration opportunities remain about the same </li></ul></ul>
  40. 42. Tools for Asset Management: CMMS <ul><li>Asset-based tracking </li></ul><ul><li>Improve response times </li></ul><ul><li>Increase ratio of proactive to reactive maintenance </li></ul><ul><li>Integrate with purchasing, financial, other systems </li></ul>
  41. 43. CMMS Tips <ul><li>Many CMMS vendors provide an excellent solution for plant-side or street-side assets, but most systems do not handle both well </li></ul><ul><li>Beware the CMMS vendor cross-selling from a similar industry </li></ul><ul><li>Involve the end users – probably more important than any other utility information system implementation </li></ul>
  42. 44. Tools for Asset Management: SCADA <ul><li>Monitor major assets </li></ul><ul><li>Monitor system operation </li></ul><ul><li>Remotely control operations </li></ul><ul><li>Flag problems quickly </li></ul><ul><li>Send run time/other data to CMMS </li></ul>
  43. 45. SCADA Tips <ul><li>Keep it simple – implement systems operations staff can use with minimal training </li></ul><ul><li>SCADA systems are quite scalable – plan for the entire system, but don’t worry about building everything at once </li></ul><ul><li>Open systems reduce costs, create competition for training and support services, and simplify future expansions </li></ul>
  44. 46. Tools for Asset Management: Models <ul><li>What-if? planning </li></ul><ul><li>What-if? operations (including asset criticality) </li></ul><ul><li>Capacity maintenance (CMOM) </li></ul><ul><li>Long-range (strategic) planning support </li></ul>
  45. 47. Model Tips <ul><li>Ease of use ranges significantly from package to package – know your application needs and staff availability </li></ul><ul><li>It’s usually easy to move data from GIS to models – the reverse may not be </li></ul>
  46. 48. More Asset Management System Components <ul><li>Customer Information (CIS) </li></ul><ul><li>Document Management </li></ul><ul><li>Purchasing/Financial Systems </li></ul><ul><li>Inventory Management </li></ul><ul><li>On-line O&M Manuals </li></ul><ul><li>Strategic Planning </li></ul><ul><li>Change Management </li></ul>
  47. 49. Additional Opportunities <ul><li>Doing all of this work to collect and manage information on assets can result in huge side-benefits – with a small additional investment organizations can: </li></ul><ul><ul><li>Provide point-and-click information retrieval on individual assets </li></ul></ul><ul><ul><li>Link record drawings and other relevant documents directly to assets or other map features </li></ul></ul><ul><ul><li>Share these capabilities throughout the organization </li></ul></ul>
  48. 50. Integration Tips – GIS <ul><li>Most users, regardless of their role in the organization, understand geography – GIS provides an intuitive interface to retrieve asset information </li></ul>
  49. 51. Integration Tips – GIS <ul><li>When it comes to integration, GIS need not be limited to street-side features </li></ul>
  50. 52. Integration Tips - Web <ul><li>Use the web to deliver asset information through maps – can reduce costs and increase user base </li></ul><ul><ul><li>Typically lower training costs </li></ul></ul><ul><ul><li>Typically lower licensing costs </li></ul></ul><ul><ul><li>Move GIS from a back-room techie function to a tool for the masses </li></ul></ul>
  51. 53. Integration Tips - Centralization <ul><li>Manage spatial data and applications centrally – eliminate duplicate map and data maintenance functions </li></ul><ul><li>Manage departmental applications locally – it may be trivial to link to existing systems, don’t replace systems that work </li></ul>
  52. 54. CMMS Models SCADA CIS, FIS Management Operations Finance Planning Engineering Integration Tips – Data Filtering IT Centralized Spatial Data and Web Applications
  53. 55. Adapted from International Infrastructure Management Manual , Institute of Public Works Engineering, Australia Asset Aging Analysis Sheds Light on Annual O&M, R&R Projections
  54. 56. Use of Historical Maintenance Cost and Predictions From Asset Management Reports Yields Defensible Budgets
  55. 57. The Importance of Change Management <ul><li>It’s not enough to just dump new processes and systems on an organization – changes to asset management practices require organizational development and/or change management </li></ul>IT Projects Fear Details? Support? Confusion
  56. 58. Results Technology and People + = New Technical Systems “ Old” People Systems Results + = New Technical Systems New People Systems
  57. 59. <ul><li>Balance technology on people and processes </li></ul>Technology and People People Process Technology People Process Technology
  58. 60. Summary <ul><li>Asset management is a strategic process, not just a technical solution </li></ul><ul><li>An asset management program is an on-going way of doing business, not a one-time project </li></ul><ul><li>Creation of an asset management program requires input from different competencies from within your organization </li></ul><ul><li>Integration of data from key business units is critical to creating an asset management strategy and program </li></ul>
  59. 61. Summary <ul><li>The asset management process can be supported by and supply data to many information systems </li></ul><ul><li>The steps required to develop an asset management process can result in a database that can be leveraged throughout the organization </li></ul><ul><li>Change management is critical to successful asset management processes </li></ul>
  60. 62. Uses for a Mature Asset Management Process <ul><li>Project maintenance trends into the future </li></ul><ul><li>Develop annual funding profiles for asset maintenance, repair, rehabilitation, and replacement </li></ul><ul><li>Identify assets projected for disposal to trigger requests for planning support and replacement funding </li></ul>
  61. 63. Asset Management Benefits <ul><li>We know our infrastructure’s condition in detail and can better manage it </li></ul><ul><li>Unexpected failures are minimized </li></ul><ul><li>Renewal and replacement actions are taken at the right time – not too soon and not too late </li></ul><ul><li>Life-cycle approach means we always get most out of assets for our money </li></ul>

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