Uptime: Asset Reliability and Costs — Take a Life-Cycle Approach

Fundamental, early-design-phase decisions set the stage for life-cycle asset reliability and costs in plants. How new physical assets, i.e., equipment, systems, and facilities, are designed can be a testament to engineering prowess and/or observing the awesome, life-long performance of other assets—or neither. In many cases, though, budgetary constraints and construction/installation shortcuts can limit reliability and increase life-cycle costs. The result is high periods of unreliable operation, added maintenance, and modifications and workarounds to make the assets perform as needed.

What if the elements of life-cycle asset reliability and costs are unknown, not addressed, or ignored in initial-project conceptual definition and design? Chances are pretty good that reliability, operating and maintenance budgets, and planned asset life would all be a huge gamble. While the project could come in on schedule and under budget, is that what defines business success?

Conversely, what if there were an overall template or a management system that outlined and specified all elements important to the business, short- and long-term, over an asset’s life cycle? Chances are pretty good that the reliability, operating and maintenance costs, and planned life of the equipment, system, or facility would contribute, by any measure, to business success.

Here are five big questions to help us begin thinking about establishing a life-cycle physical-asset management system. Use them with your site’s top-management team, engineering group, and/or operations and maintenance leadership.

1. What are your physical assets supposed to do in support of the organization’s goals?
2. What physical assets put the achievement of the organization’s goals most at risk?
3. What processes are in place to assure that these physical assets perform as expected throughout their planned life cycle?
4. What processes are missing that may be preventing these physical assets from performing as expected throughout their planned life cycle?
5. What are the life-cycle physical-asset management processes that should be established to guarantee the answer to the first question (“organization’s goals”) is predictably and consistently assured?

This is exactly what the ISO 55000:2014 Asset Management Standard is asking organizations to define: an asset-management system that covers the entire life cycle of physical assets.

According to ISO 55000:2014, “An asset-management system is a set of interrelated and interacting elements of an organization, whose function is to establish the asset-management policy and asset-management objectives, and the processes, needed to achieve those objectives. An asset-management system is used by the organization to direct, coordinate and control asset-management activities.” (ISO 55000:2008, 2.4.3 & 2.5.1)

With such a system in place, a project team would be responsible for executing and held accountable each step of the way for assuring that the organization’s goals are met—even with regard to its most-at-risk physical assets.

The life-cycle reliability and costs of equipment, systems, and facilities are essentially set by decisions made during the early design phases of these assets.

Life-cycle reliability

From a reliability and cost perspective, the life cycle of a physical asset can be divided and sub-divided into numerous phases and activities. For purposes of simplicity and brevity, let’s highlight four major ones and look at elements of each that have a direct impact on cost and reliability.

Project Design Phase. Management of a new physical-asset project, be it related to equipment, systems, or facilities, requires a team of highly qualified and specialized thinkers to focus on the foundations for life-cycle reliability and costs. The project-team leadership must understand and internalize “life-cycle thinking” throughout the Project-Design phase. Remember, 95% of life-cycle costs are determined during this phase (“Uptime,” March 2016 EP).

In this phase, life-cycle reliability- and cost-critical elements required to assure the new design will perform as expected include:

• goals of the organization, i.e., financial (P&L), longevity of the assets, go/no-go criteria
• operations concept, maintenance concept, technical/automation/software concepts, personnel/staffing levels, financial targets
• management activities, i.e., project management, engineering design, construction, installation, start-up/commissioning, operations, maintenance, purchasing, logistics, spare parts, training
• engineering design, operability engineering reviews, maintainability engineering reviews, reliability engineering reviews
• documentation, i.e., detailed engineering drawings, diagrams, schematics, specifications, and calibrations.

(Note: Given the activities in the Design Phase listed above, it is essential that top-level operations and maintenance management be involved.)

Acquisition-Construction Phase. The Acquisition-construction phase involves putting the detailed design into action from procurement to building and installation to startup/commissioning. A number of the activities that influence this phase were initially defined in and influenced by the Design Phase. The Acquisition-Construction Phase is strengthened by the involvement of operations, industrial engineering, and maintenance plant-floor leadership.

In this phase, life-cycle reliability- and cost-critical elements required to assure the new design will perform as expected include:

• design engineering handoff to industrial, manufacturing, and plant engineering personnel
• construction, installation, start-up/commissioning
• identification of pre-startup maintenance requirements
• development of operations and maintenance work methods
• definitions of job skills and knowledge requirements
• production control, maintenance control systems (CMMS, EAM)
• plant engineering, maintenance, spare parts, QA/QC, material handling, training facilities
• critical spare parts, consumables, inventory levels, management systems
• documentation, i.e., detailed machine drawings, diagrams, schematics, specifications, calibrations, operations instructions, maintenance and repair instructions, troubleshooting charts, bills of materials
• initial workforce recruiting, screening, hiring, on-boarding, training.

Operation-Maintenance Phase. This is the longest asset life-cycle phase. While the Project and Construction Phases may have been successful, it is the Operation-Maintenance Phase that proves the concept over and over again. This is also the phase where the asset-management system endures.

In this phase, life-cycle reliability- and cost-critical elements required to assure the new design will perform as expected include:

• on-going workforce development, i.e., recruiting, screening, hiring, on-boarding, training standards
• maintenance and repair work processes, i.e., planned, preventive, predictive, overhaul, repair, unplanned repair standards
• spare-parts management, inventory-control standards
• data acquisition, analysis, reporting systems standards.

Decommissioning-Disposal-Restoration Phase. Think of this as an end-of-life phase that encompasses decisions and actions regarding the next steps for the assets. It can be as involved as decommissioning and disposal of hazardous materials and facilities or as simple as surplus or scrap sales. There may also be cases where the assets or sub-components and major equipment items can be reconditioned, restored, or repurposed.

Where are you now?

Life-cycle reliability, costs, and asset management are all highly interrelated and interconnected. That said, achieving your organization’s business goals in a consistent manner is dependent on an asset-management system that establishes and deploys the policy and objectives—along with the processes necessary to achieve those objectives.

Planning new projects? Great: You’re in the Project-Design or Acquisition-Construction Phases.

Already in the Operation-Maintenance Phase? Don’t worry: It’s not too late to begin your life-cycle asset management journey. Pay attention to the elements listed for this phase. In the meantime, look back at elements of the previous phases and begin fleshing them out with an effective asset-management system in mind.