Implementation and monitoring of effective of asset management strategies

John Hardwick

Executive Manager – Maintenance and Replacement Planning

3

Agenda

1. Ausgrid Overview

2. What does the board want/need from Asset Management?

3. How do we answer these questions?

4. Asset Management Maturity Model

5. Closing

About Ausgrid

• Operating for over 100 years

• Operating area of 22,275 km sq

• Supplied more than 32,000 GWh of electricity in 2008/09

• 1.6 million network customers

• Over 1.4 million retail customers

• 5,649 full time employees

• Lost time injury frequency rate 3.6

• Total revenue A$3.3bn

• Total assets A$35.9bn

• EBIT A$596m

About Ausgrid

Ausgrid’s Network Area

Ausgrid Assets Include

• More than 550 large transformers

• Approximately 8000km high voltage underground cable

• More than 13,500km high voltage overhead cable

• Approximately 1,500 high voltage circuit breakers

• Many 1,000s of lower voltage assets…

• Over $35.2 billion worth of assets

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What does the Board need from Asset Management?

1. What is the value of assets owned by the business?

2. Will the current levels of investment result in sustainable delivery of outputs?

3. Will the current level of investment result in required asset condition?

4. What are the long term impacts of varying CAPEX or OPEX budgets by ±10%?

5. What are the top 10 risks associated with assets and what is their financial value for probability of occurring?

How do we answer these questions?

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1. What is the value of assets owned by the business?

Need to know the following information on the assets:

– Composition of your asset base

– Age profiles

– Replacement costs

– Depreciation factors

– Network considerations

In Ausgrid, we perform ODRC analysis:(Optimised, Depreciated Replacement Cost analysis)

– Establish the replacement cost of assets with a modern equivalent

– Depreciate this cost to reflect remaining effective life of current assets

– Optimise this replacement cost for over-design, over-capacity etc

– Determine a value for the total asset base

10

1. What is the value of assets owned by the business?(Cont’d)

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2. Will the current levels of investment result in sustainable delivery of outputs?

Need to know the following information:

– Utilisation of assets

– Condition of assets

– Impact of investment on pricing/profit/compliance

– Impact of investment level on staffing requirements

– Impact of investment level on system reliability

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2. Will the current levels of investment result in sustainable delivery of outputs? (Cont’d)

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3. Will the current level of investment result in required asset condition?

Need information on:

– Maintenance requirements methodology

– Repair/Replace analysis

– Spares requirements methodology

– Condition of assets – ‘health index’

– Projections on required investment to meet needs

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Is your current investment gathering;

– Asset Information

– Costs of:o Maintenanceo Breakdownso Corrective actions

– Are these costs increasing or decreasing

– What is the health of my assets

– What are my future costs expected to be

3. Will the current level of investment result in required asset condition?

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3. Will the current level of investment result in required asset condition? (Cont’d)

In Ausgrid the information is captured by;

a) Maintenance requirements methodology

b) Repair/Replace analysis

c) Spares requirements methodology

d) Condition of assets – ‘health index’

e) Projections on required investment to meet needs

Basic Asset Life Cycle

Plan AcquireOperate

& Maintain

Dispose

How do I use this information?What sort of information do you have?

Maintenance Sheets

Failure Data

Maintenance History

Current Maintenance

Standards

Asset Register

Operating Environment

Operating ConstraintsHow do I make maintenance better?

What are FMECA and RCM?

Failure Modes, Effects & Criticality Analysis is a structured process for:– Identification of equipment/system functions– Identification of functional failures– Identification of failure modes– Identification of the effects of failure– Assessing criticality of the failure

Reliability Centred Maintenance is an analysis process centred on achieving inherent levels of equipment safety and reliability at minimum cost, using FMECA data as an input

From this, maintenance tasks can be selected and packaged into a Technical Maintenance Plan

FMECA / RCM Outcomes

So we can influence your repairs and renewals

But what else can we do with the information?

What other areas can I start to influence?

Replacement Strategy– Is it maintainable anymore?– Should I repair? Should I replace?

Spares Strategy– What should I keep? How many

should I keep?

Design Standards– How can I enhance the design of my

system?– How can I make my system more

reliable?

Procurement Strategy– How can I buy better assets?

System Planning– How can I improve the configuration

of my system?

a) Using FMECA/RCM to drive investment

Routine Maintenance Planning

FMECA and RCMFunction

Failure

Cause

Corrective Task Probabilistic Frequency

Preventive Task Policy Frequency

Repair / Renew Planning

Asset Renewals Planned Frequency

Defect reportand work mgt

Maintenance analysis

Task analysis

Repair/Renew tools and plans

Assets

Asset ManagementStrategy

Asset Register•Works Orders

b) Repair/Replace Analysis

• Ausgrid developed a repair/replace decision making tool

• This model incorporates technical issues, risk costs & economics

• Firstly developed exclusively for transformers, but later developed into a generic model

• Assists in the determination of the lowest future cost of ownership of either repairing existing asset, or replacing the asset with a new one

• “Repair / Replace Decision Making Practices” presented at ICOMS 2007 – Gary Winsor / Steve Buncombe

c) Spares requirements methodology

• Outlines the framework for the acquisition, storage & maintenance of spare equipment within Ausgrid

• Helps ensure the availability, security & integrity of the electrical network, thus assisting in minimising the duration of customer outages

• Includes:

– Failure recovery strategies

– Methods for determining spares levels

– Identification of relevant interfaces within the organisation

• “Developing & Implementing a Spares Strategy” at ICOMS 2007 presented by Alexandra Dean

d) Condition of assets – ‘health index’

Condition Management Strategy

Intervention requiredPoor

Fair

Good

At end of lifeBad

Routine maintenance

New condition

10

0

Note: This is not a liner scale

Circuit Breaker Health Index Profiles

0

100

200

300

400

500

600

700

800

900

(0-1) (1-2) (2-3) (3-4) (4-5) (5-6) (6-7) (7-8) (8-9) (9-10) (10+) NoResult

Num

ber o

f Ass

ets

Category

Year 10 Health Index Profile

Zone Distribution

0

100

200

300

400

500

600

700

800

900

1,000

(0-1) (1-2) (2-3) (3-4) (4-5) (5-6) (6-7) (7-8) (8-9) (9-10) (10+) NoResult

Num

ber o

f Ass

ets

Category

Year 0 Health Index Profile

Zone Distribution

• CB assets HI view at 2011 • No replacement work completed • CB assets aged 10yrs,HI view at 2021

d) Condition of assets – ‘health index’ (Cont’d)

Circuit Breaker Replacement Programme

0

500

1,000

1,500

2,000

2,500

(0-1) (1-2) (2-3) (3-4) (4-5) (5-6) (6-7) (7-8) (8-9) (9-10) (10+) NoResult

Num

ber o

f Ass

ets

Category

Year 10 Planned Intervention HI Profile

Zone Distribution

d) Condition of assets – ‘health index’ (Cont’d)

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e) Projections on required investment to meet needs

What are the long term impacts of varying the CAPEX

or OPEX budgets by ±10%?

– Asset failure rates

– System & asset reliability

– Emergency spares requirements

– The types of OPEX (e.g. breakdown, corrective)

– Output pricing

– Resourcing levels

What is this all about?

The tools and techniques we use translate and interpret the information being gathered in the maintenance and operation areas

It is important to express this information in terms that your audience cares about.– What are their drivers? – What can you do for them?

For Senior Management, this generally boils down to:

Risk

Expenditure

Asset Capability

Regulatory & Social Requirements

Design Standards

Operating Strategy

Maintenance Strategy

Capital Replacement

Growth

Least Life Cycle Cost

Cost of Capital

Depreciation Costs

Operating Costs

Maintenance Costs

Administration Costs

Disposal Costs

Ris

k C

osts

Asset Management

Asset Strategy

Ass

et M

anag

er

This is what Asset Management is all about

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What are the top ten risks and their value?

Now having done all this analysis and modelling you should be in great position to answer the question of what are the top 10 risks and be able to articulate:

1. What they are and why

2. The probability of the occurring

3. The cost of them occurring

4. The impacts on your outputs

5. The impacts on spares and

availability

6. The impact on OPEX and CAPEX

7. The impact on your brand

8. The impact on your stakeholders

and shareholders

9. Any safety implications

10.Any environmental implications

Asset Management Maturity

Justify Your Investments

Optioneering

Informed Decisions

Models

Analysis

Information

Systems

Data

Asset

Mat

urity

Technical

Financial

32

Maintenance Tasks

What have been the outcomes

410087428551

437858

402973413687 431755 423620

84%

92.5%92.2% 98.8%

98.8%98.8% 98.5%

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Task

s

Years

Total Ausgrid Maintenance Inspection Tasks

Agreed Completed

410087428551

437858

402973413687 431755 423620

84%

92.5%92.2% 98.8%

98.8%98.8% 98.5%

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Task

s

Years

Total Ausgrid Maintenance Inspection Tasks

Agreed Completed

33

What have been the outcomes

Zone and Subtransmission Substations

0

2

4

6

8

10

12

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Year

Num

ber o

f Maj

or F

ailu

res

Zone and Subtransmission Substations

0

2

4

6

8

10

12

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Year

Num

ber o

f Maj

or F

ailu

res

The reduction of major failures at zone and sub-transmission substation attributed to; • Maintenance • Replacement• Area Plans

Major Asset Failures in Zone or Sub-transmission Substations

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Pole Failures - All System Voltages

0

10

20

30

40

50

60

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Year

Numb

er of

Fail

ures

Pole Failures - All System Voltages

0

10

20

30

40

50

60

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Year

Numb

er of

Fail

ures

What have been the outcomesAs with substations the improvements were due to;• Changes to

maintenance standards

• Doing the maintenance

• Pole replacement

Asset Failures – Poles (All System Voltages)

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What have been the outcomes

Short Rural Feeder SAIFI Performance

00.5

11.5

22.5

33.5

44.5

5

2003

/0420

04/05

2005

/0620

06/07

2007

/0820

08/09

2009

/1020

10/11

SAIF

I

OverallNormalisedLinear (Overall)Linear (Normalised)

Short Rural Feeder SAIFI Performance

00.5

11.5

22.5

33.5

44.5

5

2003

/0420

04/05

2005

/0620

06/07

2007

/0820

08/09

2009

/1020

10/11

SAIF

I

OverallNormalisedLinear (Overall)Linear (Normalised)

Declining outages on short rural feeders, which account for 45%of the Ausgrid overhead network

Short Rural Feeder SAIFI Performance by Financial Year

In Closing

• Maintenance and asset data is extremely valuable information for predicting the future

• This information can be used for technical and economic decision making

• You can influence the rest of the business

• The board can make better informed decisions

• The Journey will continue

Thank you

Questions