Slides from 'The Journey Towards Asset Management Excellence' held 24th July 2014. It can be difficult to know which asset management approach will help you obtain the maximum value from your assets, while also helping you to keep costs down. In this free webinar Donald MacDonald will discuss the pros and cons of each approach, as well as examine how these can help you achieve excellence in asset management. Key Topics: * The various alternative approaches to asset management available to the FM practitioner. * The advantages and the disadvantages of each of these approaches. * The roles that these various approaches play in achieving excellence in asset management. About Donald: As Head of Consultancy at Programmed Facility Management, Donald is responsible for Programmed Facility Management's Consultancy team's service provision throughout Australia. Donald has interests in the development of the FM profession in Australia. He has presented, lectured and had several articles published on topics such as life cycle budgeting, best practice maintenance provision and facilities management in general. www.programmed.com.au

1. The Journey towards Asset Management
24 July 2014

2.  Strategic alignment
 Shared vision
 Strategic partnerships
 Balanced scorecard
 BIMS
 ISO 55000
The Destination

3. Definition
 “A set of coordinated activities that an organisation uses to realise value from
assets in the delivery of its outcomes or objectives. Realisation of value requires
the achievement of a balance of costs, risks and benefits over different time
scales.”
(Draft ISO 55000 - Asset Management)

4. Drivers behind rising Asset Management
awareness
 The rising profile of whole of life costs e.g. PPPs
 Statutory obligations – obligations for government bodies to have an asset
management plan
 The rising cost and scarcity of money
 Risk management
 Value for money principals
 PAS55/ ISO55000
 Industry benchmarks e.g. TEFMA

5. Asset Management Benefits
 Optimised financial performance
 Managed risk
 Improved services and outputs
 Corporate / social responsibility
 Demonstrated compliance
 Enhanced reputation
 Improved organisational stability

6. Regressive
Reactive
Planned
Proactive
Don’t fix it
Fix it after it
breaks
Fix it before it
breaks
Don’t just fix it,
improve it
• Minimise Defects
• Improve Precision
• Redesign
• Value Focus
• Reliability Centred
Maintenance
• 3-5 Year Fixed
Price Contracts
• Asset Management
Plans
• Capital Works
Handover Processes
• Forward Works Plans
• Cmms
• Predict/Plan
• Condition Monitoring
• Critical Spares
• Centralised Control
• Kpis
• Fixed Prices &
Schedule Of Rates
Contracts
Efficiency
Excellence
Capability
• BIMs
• ISO 55000
• Strategic Alignment
• Shared Vision
• Balanced Scorecard
• Strategic Partnerships
• Asset Management Excellence Audit
Sample.Pdf
• XXXX Audit Report July 2014.Pdf
• Respond To
Unusual Energy
Consumption
• Tri- Certification
• Compliance
• Run To Fail
• Approved Lists
• Schedule Of Rates
Contracts
The Asset Management Excellence Journey

7. The Other End of The Spectrum

8. The Other End of The Spectrum

9. The Other End of The Spectrum

10. The Other End of The Spectrum

11. The Other End of The Spectrum

12. EFFECTIVE LIFE
REPLACE
PROGRESSIVE (ACCRUED)
COST OF FACILITY
CASH FLOW
OF ASSETS
CREATE MAINTAIN DISPOSALREFURBISH
0 100%
VALUE/COSTS
(REALTERMS)

13. Comparison of gas fired heating versus electric
heating for student accommodation on ‘brown
field site’
Gas Item Electric
Capital cost of construction
Capital cost of life cycle works
Maintenance costs
Impact of utilities costs over time
Robustness
- Relatively High
- Medium
- Relatively Low

14. Funding Challenges for Planned Maintenance
and Lifecycle Replacement Works
 The consequences of under-spending is unlikely to be immediately apparent to the
customer.
 Non-core business requirements are valued less highly than core business needs.
 If the assets appear to be performing within the parameters that the customer expects
of them, it can be difficult for these customers to perceive a need for major
expenditure.
 Assets that are performing inefficiently, either due to inadequate maintenance or from
having been retained in service beyond their economic life, often deteriorate
gradually.

15. Common approaches to Lifecycle Estimating
 Fixed % of value per annum
 Squeaky wheel
 What did we spend last year?

16. Advantages
 Predictable budgets
 Transparent calculation methodology
 Fully auditable
 Consistent approach

17. Disadvantages
Availability of funds = Backlog maintenance issues =
Reliability of assets + Responsive repair costs +
Unscheduled service interruptions +
VALUE FOR MONEY!!!
Incidences of premature asset failure =
Does not reflect reality =

18.  No direct link between estimated lifecycle costs and actual performance of assets.
 Estimated lifecycle costs assume external factors do not impact lifecycle.
Disadvantages

19. 6TH MARCH 2010
… the world is changing …

20. … the world is changing…

21. … the world is changing…

22. … the world is changing…

23. … the world is changing…

24. … the world is changing…

25. … the world is changing…

26. … the world is changing…

27. … the world is changing…

28. Typical 25-year Life Cycle Cost Model
0
2
4
6
8
10
12
14
16
0
0.5
1
1.5
2
2.5
3
3.5
4
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
$(m)$(m)
Year
Typical Lifecycle Cost Model - 25 Year
Annual
Lifecycle
Cumulative

29. Cost of Service
Quality
Condition
Optimal Life Cycle Costs
EXCELLENT
POOR TIME
ORIGINAL DECAY OPTIMAL
CONDITION
BAND
OPTIMAL RENEWAL
STRATEGY

30. Asset Condition Survey Methodology

32. Case Study One

33. Supported State Housing Department
 > 500 properties supported living units
 Located throughout Victoria
 Lifecycle & maintenance funding = $7,000 p.a. / property
 Substantial back log maintenance issues
 Establishing business case for asset replacement was challenging

34. Typical Life Cycle Cost Model- 60 Years
$-
$-
$-
$-
$-
$7,613.98
$6,077.37
$-
$-
$3,257.17
$-
$8,530.08
$-
$7,694.25
$46,963.86
$-
$7,613.98
$6,686.92
$-
$70,559.61
$6,077.37
$-
$7,613.98
$916.10
$767.72
$-
$-
$15,308.22
$-
$131,891.34
$-
$-
$-
$7,613.98
$92,189.22
$916.10
$-
$1,693.50
$-
$96,869.83
$-
$7,694.25
$-
$-
$54,577.83
$-
$-
$916.10
$6,077.37
$145,834.64
$7,613.98
$-
$-
$-
$-
$112.32
$-
$-
$-
$82,626.41
$-
$20,000.00
$40,000.00
$60,000.00
$80,000.00
$100,000.00
$120,000.00
$140,000.00
$160,000.00
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59
Years
Dollars$(AUD)
Annual spend in $ (AUD)
Supported State Housing Department (cont’d)

35.  Typical lifecycle profile for all properties identified
 Point at which assets were ‘technically dilapidated’ identified
 Lifecycle & maintenance funding increased to $24,000 p.a./ property
 Business case for asset replacement established
Supported State Housing Department (cont’d)

36. Case Study Two

37. Country Base Hospital
 Decision taken to consolidate services at two hospitals
 Management of hospital to be transferred between two state health departments
 Initial period - 5 years
 Lifecycle liability of infrastructure & biomedical assets to be agreed at the point of
transfer
 Basis of joint funding for lifecycle liability to be agreed

38.  Lifecycle liability of infrastructure and biomedical assets for next five years was
established
 All assets scheduled for replacement were risk ranked
 Both parties agreed sum for lifecycle replacement works for extreme and high risk
assets
 Tool provided a robust, transparent and equitable basis for mutually agreeing funding
levels
Country Base Hospital (cont’d)

39. The Asset Management Process
BIMS

40. The risk profile varies from organisation to
organisation…

41. Low Accuracy of Asset Lists High
Risk ranking of assetsLow High
Reliability Centered MaintenanceLow High
ISO: 55000 alignmentLow High
Benchmarking/ Trend AnalysisLow High
Whole of life cost managementLow High
Reliability
Strategic AlignmentLow High
- Outside Toilet
- Core business equipment
Tailoring Asset Management to Your Business Needs

42. Strategic Asset Management
• Formulate Business Plan for Board Sign Off
• Commercial Planning and Outcomes
• Determine Stakeholder Needs and Engagement
• Analyse and Benchmark Assets
• Undertake Due Diligence
• Value Engineering
• Service Level Agreement Design
• Re-procurement of Service
• Shape Economies of Scale
• Supplier Development Plan
• Manage Operations
• Audit and Reporting
• Measure and Improvement Program
• Customer Satisfaction Evaluation
Operational
Tactical
Strategic

43. Key to an effective asset list
 A standardised approach to naming conventions
 Standardised naming conventions applied to all assets
 Naming convention typically follow published naming principles e.g. BCIS
 QA controlled master list of assets
 A ‘single source of truth’
 Standardised approach to asset list inclusions e.g. > $1,000 in value and/ or requiring
planned maintenance interventions
 Assets <$1,000 in value are typically bundled e.g. RCD’s, fire equipment etc.
 Include replacement value and date of installation
 Sub- divide entire portfolio into logical and appropriate areas
Asset Hierarchy Development (BL 23-04-14).xlsx

44. CMMS
The Asset Management Process

45. CMMS Features

46. Reliability Centred Maintenance (RCM)

47. Reliability Centred Maintenance
 Identify major asset with unusual failure patterns (e.g. desalination pump)
 Sub- divide asset into composite assets (e.g. impellers, electric motor, etc.)
 Identify nature and consequences of composite asset failures
 Undertake a root cause analysis of each failure
 Identify remedial works required (e.g. repairs and modifications)
 Undertake a Cost Benefit Analysis re: remedial works required and implement as
appropriate
 Budget for and implement a planned maintenance regime to mitigate issues going
forward
 Identify training needs and implement
 Identify documentation needs and implement

48. Root Cause Analysis
0
500
1000
1500
2000
2500
3000
3500
Site 1 Site 2 Site 3 Site 4 Site 5
MTBF
(hr)
Location
Mean Time Between Failure - Pumps - Site Comparison
Average

49. 0
500
1000
1500
2000
2500
3000
3500
4000
4500
0 1 2 3 4 5 6 7 8 9 10
No of Pumps
(8284)
Annual Failures
Annual No of Failures by Pump - Frequency Analysis
Root Cause Analysis

50. 0%
5%
10%
15%
20%
25%
30%
35%
5 10 15 20 25 30
% of Pump
Population
Years in Service
Pump - Residual Life Analysis
Design Life
Root Cause Analysis

51. Pump Failure - Root Cause Breakdown
Lack of Lubrication
Operator Error
Dilapidated
Blocked
Wear and tear
Corrosion
Utility supply
Vandalism
 Revise Planned Maintenance – Increase Lubrication Frequency
 Training Program to Educate Site Operators
 Review Capital Expenditure Program and Undertake Lifecycle Analysis
Root Cause Analysis

52. ISO 55000 - Background
 A new International Standard released in early 2014
 Based on PAS 55
 Consultation with > 30 countries including Australia
 Government clients are mandating this Standard e.g. QLD Health & Federal
Government
 Incentivises a risk based, standardised and consistent approach to asset
management

53. ISO 55000 - Features and Benefits
 Asset management policy encourages strategic alignment with core business
 Risk based approach
 By focusing on critical assets, expenditure is prioritised
 Introduces best practice
 Facilitates a proactive approach to asset management
 Facilitates effective benchmarking
 Supports probity and transparency

54. Begin with the end in mind
 Future proof by design
 Source locally where possible
 Ensure key components, systems and sub- systems are backed by guarantees and
warrantees
 Maximise local skills and materials
 Avoid locating plant on roof
 Construct plant rooms before plant has been installed
 Consider maintenance access to high level architectural features e.g. glazed atriums.
 Ensure metering supports future flexible usage of spaces
 Always ensure service access to plant
 “Black Start” test entire facility prior to handover
 Make receipt of O&M manuals a ‘condition precedent’ of practical completion

55. Questions