Infrastructure Asset Management:Beyond the Techniques, Tools and Technologies

Mayors Water CouncilThe United States Conference of Mayors

May 1, 2015

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Managing infrastructure assets is nothing new

8th and 9th Century - Rome’s abandoned aqueducts were rehabilitated and reused

14th Century – Constitution of Siena, Italy required maintenance the City’s fountains and other public works

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In past however, management of infrastructure assets has been limited to:

• Individual and isolated focus

• Stand-alone actions

• Unverified information and decentralized management of data

• Un-integrated tools

• Ad-hoc meetings

• Decisions based on perception rather than fact

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Evolution of modern Asset Management

UK Asset Management Specification (PAS 55)

New International Standard for Asset Management

(ISO 55000)

The Risk-Based Approach

Comprehensive International Guidance

Comprehensive U.S.Guidance

Restructuring of water sector in Australia and the UK

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Asset Management has also become more strategic over the last several years

• Collecting asset data

• Entering data into Computerized Maintenance Management Systems (CMMS)

• Focus on the risk of asset failure for infrastructure investment decisions

• Optimize maintenance by eliminating non-value activities

• Asset management is not just

about assets

• Successful and sustainable

asset management requires

leadership, organizational

alignment, and coordination

1st Generation AMAsset Information

What do we have?

Where is it?

What condition is it in?

How does it perform?

Maintenance Management

2nd Generation AMAsset Strategies

3rd Generation AMTotal Integration

Optimization

Risk-based

System controls

Failure mode analysis

RCM

Coordinated strategy

Service standards

IT integration

Financial analysis

Organizational alignment

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“Asset Management tools and technologies may be helpful, but the engagement of the workforce, the clarity of leadership, and the collaboration between different departments and functions are the real differentiators of a leading asset management organization.”

The Institute of Asset Management

Asset Management has also become more strategic over the last several years

1st Generation AMAsset Information

What do we have?

Where is it?

What condition is it in?

How does it perform?

Maintenance Management

2nd Generation AMAsset Strategies

3rd Generation AMTotal Integration

Optimization

Risk-based

System controls

Failure mode analysis

RCM

Coordinated strategy

Service standards

IT integration

Financial analysis

Organizational alignment

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Today, Asset Management focuses on integrated processes and tools to facilitate better decisions

• Minimizing lifecycle costs

• Establishing service levels

• Evaluating, understanding and managing risk

• Fact-based decision-making for maintenance, rehabilitation and replacement

• Optimization of operations and maintenance

• Involving collaboration among staff and multi-disciplinary activities

• Consistency across the enterprise

Asset Management

An integrated set of processes to minimize the lifecycle costs of

infrastructure assets, at an acceptable level of risk, while continuously delivering established

levels of service

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Implementing Asset Management provides benefits to both internal and external stakeholders

• Informed and defensible asset investment decisions

• Better managed risk

• Improved asset reliability

• Improved efficiency and effectiveness

• Improved service delivery

• Improved customer satisfaction

• Improved regulatory compliance

• Improved bond rating

• Possible higher priority ranking for SRF

• Improved internal coordination and communication

Benefits

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Improved ability to explain and defend investments is ranked the highest benefit among utilities

Top Five Benefits From Asset Management Approach

451 responding utilities

88%

79%76%

70%

73%60%

65%54%

34%

63%51%

34%

52%46%

36%

Improved Ability to Explain and DefendBudgets/Investments to Governing Bodies

Better Focus on Priorities

Better Understanding of Risks/Consequences ofAlternative Investment Decisions

Non-Cost Savings Business Benefits

Increased Ability to BalanceBetween Capital and Operating Expenditures

High InvolvementMedium InvolvementLow Involvement

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Techniques, tools, and technology are all important elements of modern Asset Management• Modern Asset Management incorporates techniques and

business processes such as:

– Preventive maintenance optimization

– Failure modes and effect analysis

– Multi-attribute utility analysis (MUA)

– Business case evaluations

• Assessment of asset condition and performance is made more effective by tools such as:

– Thermography

– Ultrasound (ultrasonography)

– Machine-to-Machine (M2M) wireless monitoring and control

– Electromagnetic testing

• Technology makes managing assets more efficient

– Computerized maintenance management systems (CMMS)

– Geographic information systems (GIS)

– Mobile devices and other hardware

– Modeling and other software

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Best practice for Asset Management is as much about the organization as it is about the infrastructure assets

• The new international Asset Management standard emphasizes– Organizational understanding

– Needs and expectations of stakeholders

– Leadership and commitment

– Organizational roles, responsibilities and authorities

– Resources

– Competence

– Awareness

– Communication

– Managing change

• 10 of the 24 requirements of the Asset Management standard address the above people-focused elements

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Successful and sustainable Asset Management requires staff to adopt to a new way of doing business

• Integrated approach to assessing issues and making decisions

• Consistent use of methodologies

• Collaboration across functions

• Acceptance and adoption of new processes and practices

• Willingness to acquire new skills

• Proactive communication

• Changes in the way employees relate to each other and their work

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Changes in work processes and staff capability must be carefully planned and implemented

Most transformational programs fail to be fully operationalized

Source: McKinsey Quarterly Transformation Executive Survey, 2008, Next Generation PMO KIP Team

Other obstacles

Inadequate resources or budget

Management behavior does not support change

Employee resistance to change

30 70

% of efforts failing to achieve target impact

Change program failure rate Reasons for failure

39

33

14

14

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Change mechanisms must be customized to meet the utility’s goals and challenges

• Begin with an assessment of the organization’s readiness for change

• Identify the possible barriers/opportunities that will impact the transition

• Use a change readiness survey to align program implementation to staff change capabilities and to leverage stakeholder implementation support

• Identify change sponsors who will be instrumental to helping colleagues interpret and navigate through the new rules of business.

• Enable employees to actively participate in program development and implementation

Decrease staff resistance

Prevent dips in performance

Preclude negative regulatory or customer attention

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Measure the seven traits of change readiness to identify capabilities of staff and identify champions

Target Range

ChangeReadiness

Resourcefulness

Optimism

Adventurousness

Passion/Drive

Adaptability

Confidence

Tolerance forAmbiguity

Jones Smith Hill Green10

12

14

16

18

20

22

24

26

28

Resourcefulness

Optimism

Adventurousness

Passion/Drive

Adaptability

Confidence

Tolerance for Ambiguity

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Knowing an organization’s culture can suggest the most effective ways to bring about positive changes

Flexibility & Discretion

Stability & Control

Inte

rnal

Foc

us

& I

nteg

ratio

n

External F

ocus & D

ifferentiatio

n

Culture has been shown to impact:

• Effectiveness & efficiency of work

• Morale & engagement

• Physical & emotional health

• Success of programs

• Customer satisfaction

• Return on investment

The Competing Values Framework

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Changes needed for successful and sustainable Asset Management are more easily facilitated in some cultures

Change Initiatives may emphasize customer engagement and clear dashboards that track results to performance

Change initiatives may emphasize continuous improvement opportunities and individual recognition for contributing to the whole

Change initiatives may leverage visible leadership and management mentoring

Change initiatives may leverage collaborative efforts and grassroots communications

Typical organizational culture profile of a municipal public utility

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A structured approach will provide staff with the impetus and means to adopt change

“…I see others conducting themselves

differently and getting rewarded for it…”

“…I have the skills to act in the manner that

is required of me…”

“…I know specifically what is being asked of me in my daily work…”

“…I understand and believe what the organization is trying to do and it makes sense to me on a personal level…”

“…I am provided with the proper incentives to make the change…”

Reinforcement &Recognition

Awareness &Conviction

Desire &Encouragement

Knowledge

Ability

“I will change the way I work

if I have…”

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Most importantly, achieving success depends on moving the staff away from traditional approaches

Capital cost

Renew assets based ontheir poor condition

Maintenance preserves assets

Most equipment is morelikely to fail as it gets older

Designed to build

Collecting data

Best practices from the water industry

Asset-centric

Lifecycle cost

Renew assets based ontheir high risk of failure

Maintenance preserves asset function

Most failures are not related toequipment age

Designed to operate and maintain

Collecting data which leads tomeaningful decision-making

Best practices from all industries

Customer-centric

INOUT

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Consider the lifecycle of assets to identify opportunities for reducing costs

• Involve operations and maintenance staff

• Ensure compliance with design, specs and codes

• Manage warranties

• Optimize planned maintenance

• Focus on failure modes

• Monitor, report and adjust

• Evaluate alternatives

• Perform business case evaluation

• Ensure risk is sufficiently reduced at lowest

lifecycle cost

• Sell

• Reuse

• Recycle

• Apply uniform prioritization criteria

• Involve operations & maintenance

• Perform value engineering

• Consider alternate project delivery

• Standardize equipment

• Capture asset dataAcquire/Install/Construct

Commission

Operate &Maintain

Rehabilitate

Decommission/Salvage

Plan/Design

TheAsset

Lifecycle

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Run to Failure

PreventiveMaintenan

ce

PredictiveMaintena

nce

Reliability-centered

Maintenance

Optimize maintenance activities to increased asset reliability

Maintenance Level = f (consequence of failure)

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Manage assets to keep the risk of failure at an acceptable level

• Understand the consequences of asset failure

• Forecast the likelihood of asset failure

• Consider multiple options for mitigating risk:

– Rehabilitation and replacement

– Enhanced maintenance

– Improved response and recovery

– Demand management

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For success: Take the time to create the right strategies and choose the right people for the key roles

Goals to enacting this approach

Asset Management Champions

Strategies Role

• Create shared AM vision and understanding across the utility

• Increase staff willingness to participate in AM

• Ensure staff are able to enact their role within AM

• Provide recognition for desired AM behaviors

• Change Readiness Assessment

• Tactical & Message Development

• Information dissemination• Visible Leadership• Mentoring• Feedback

Key Sponsor Role and Activities

Thank You

Alan B. Ispass, PE, BCEE

901 New York Avenue, NW

Washington, DC 20001

202-513-2426

alan.ispass@ch2m.com