Integrating Asset Based Risk Assessments for Continuous ... · • Asset management influences a...

Integrating Asset Based Risk Assessments for Continuous ImprovementOctober 25, 2012

Michael Wright, BAppSc | GHD – Asset ManagerEndorsed PAS-55 Assessor

Canadian Society of Value Analysis

Agenda

• Asset Management Overview

• An Asset Management Program

• Asset Management Framework

• AM Plan Overview

• Value Engineering and Asset Management

• Integrating Risk Assessments

• Closing


Asset Management Overview

• Many governments do a good job managing their assets

• Asset Management presents an opportunity to do better– Enables well informed decisions and balanced trade-offs – Represents a strategic approach to managing infrastructure assets– A long-term view of infrastructure performance and cost; considers

options in a holistic, proactive, and informed way

Pressure on the government to make appropriate decision regarding infrastructure assets to deliver high quality serviceswhile keeping rates, taxes & user fees low


Agenda







• Closing


An Asset Management Program

Communications Planning / Leading Change / Organizational Support / Integration / Program Management


An Asset Management Program

Typical Asset Management ProgramMonth 1 Month 2 Month 3 Month4 Month 5 Month 61 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Vision, Situation Analysis & Roadmap

AM Policy & Framework

Asset Management Plan

Performance Mgmt Framework & Processes


Agenda







• Closing


Asset Management Framework

Purpose of an Asset Management Framework• Facilitates the sustained implementation of an Asset Management

philosophy

• Combines key business management concepts that, when implemented, collectively facilitate the effective delivery of services

• Asset management influences a number of business processes including planning, service delivery, performance monitoring, and continuous improvement.

• A wide variety of practices are a practical necessity in supporting the business of infrastructure services


Asset Management Framework


Agenda







• Closing


Why do we need an Asset Management Plan?

To ensure that staff are doing the right work,at the right time, for the right price,for the right reasons

maintainrehabilitate

next month?next year?

now?

20152018

2023

2031

inventoryengineering

labour

permittingtender

design

construction

obsolete

critical assetsextreme risk

capacityfailure

regulations

dispose

AM Plan Overview


What will the Asset Management Plan tell us? • Asset inventory and condition – by service and function

• Risk of an asset related failure – by service and function

• Strategies for maximizing asset reliability and extending useful life

• Costs of current maintenance programs and future growth strategies

AM Plan Overview


Define Target Levels of Service (LOS) & Demand

Describe Systems,

Facilities, AssetsIdentify Lifecycle Activities & Costs

Identify Failure Modes

Assess Asset Performance

& Residual Life

Determine Business Risk

(Criticality)Identify & Analyze Lifecycle Options

Rationalize Strategic Plans

Determine Funding Strategy

Build the AM Plan

Demand AnalysisBalanced ScorecardPerformance Metrics

System LayoutData Hierarchy

Standards Inventory

ValuationLifecycle Costing

CapacityPhysical Mortality

Financial Efficiency Level of Service

Condition Assessment Protocols

Rating Methodolgies

Failure Mode & Effects Analysis (FEMA)

Business Risk Exposure

Root Cause AnalysisReliability Centred Mtce

Optimized Decision-Making

Customer SatisfactionBudgetary Constraints

Renewal Annuity Analysis

AM Plan ContentsPolicies & Strategies

1. What is the Required LOS? 2. What is the Current State of My Assets?

3. Which Assets are Critical?

4. What is the Optimal O&M & CIP Strategy? 5. What is the Best Funding Strategy?

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AM Plan Overview



Describe Systems,




& Residual Life





Build the AM Plan



Standards Inventory





Rating Methodologies











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AM Plan Overview


• Communication tool for council & other stakeholders

• What are the goals of asset ownership?

• What functions & LOS do we need from our assets?

• What assets do we own?• What are their characteristics

& lifecycle costs?• How might they fail?• How are they performing?• How important are they to

service delivery?• What are the asset plans:

creation, renewal & mtce?

• Where should we focus asset decision-making and data & systems improvements?

• What level of long range funding is needed to sustain the assets / service delivery?

• Mandate for service delivery• Key stakeholders

• Goals of organization• Needs of key stakeholders• Service delivery performance

• Asset hierarchy & inventory• Asset lifecycles & costs• Failure modes (how might

our assets fail)• Asset performance• Risk framework• Consequences of asset

failure

• AM Plan assumptions• Confidence in AM Plan inputs

& processes• Gap assessments

• Historical budgets• Programmed expenditures

• Purpose of the AM Plan• Summary of findings

AM Plan Overview


Agenda







• Closing


Value Engineering and Asset Management

Analyse Functions

Understand the project from a

functional perspective

What are the functions & how are they related

Create Options

Generate a quantity of ideas on other ways to

perform functions

How else may the functions be

performed

Evaluate Options

Reduce the quantity of ideas

to those with greatest potential

to improve the project

Of the identified ideas, which are worth spending time to develop

Develop Solutions

Further analyze, short list & develop the

identified ideas

What additional value does each

idea provide? Are ideas mutually

exclusive?

Present Results

Present value alternatives to stakeholders &

decision makers

How does implementation

of ideas improve the current

state?

Gather Information

Understand the current state &

constraints

What is going on in the tactical &

operational contexts?


Analyse Functions




Create Options


perform functions


performed

Evaluate Options





Develop Solutions


identified ideas



exclusive?

Present Results


decision makers



state?

Gather Information


constraints





How do we get there?

Inventories

ConditionAssessments

MaintenanceManagementSystems

Capital Projects and many more…

MaintenancePrograms



Analyse Functions




Create Options


perform functions


performed

Evaluate Options





Develop Solutions


identified ideas



exclusive?

Present Results


decision makers



state?

Gather Information


constraints






Describe Systems,




& Residual Life





Build the AM Plan



Standards Inventory
















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Step 1 - Define Target Levels of Service & Demand




Describe Systems,




& Residual Life





Build the AM Plan



Standards Inventory
















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Step 2 - Describe Systems, Facilities and Assets • Define asset hierarchy

• Engage decision makers for meaningful outcomes

Division

Department 1Service or

Client

…

…

…

Department 2Service or

Client

Service Costing

Facility Costing

Depreciation CostingRenewal Prediction

Asset Type

Facility

Assets

Child AssetsMaintenanceMaterials Costs

Future ExpansionComponent Costing

Parent Assets

{{

BOTTOM DRIVEN


Service Type


Step 2 - Describe Systems, Facilities and Assets

Validate Data - Asset Portfolio Summaryby Client (or other aggregation)



Step 2 - Describe Systems, Facilities and Assets

Data for AM Plan

Install Year

Service Life

Replacement Value

Condition

Consequence of Failure

…Data Gap!



Agenda







• Closing



Describe Systems,




& Residual Life





Build the AM Plan



Standards Inventory
















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Integrating Risk Assessments


- Develop an outline of applicable failure modes for assets within the portfolio- Risk and asset consumption will be described by the applicable failure modes

Customer Need Failure ModeAvailable Services of sufficient capacity are convenient

and accessible to the entire communityUtilization Demand exceeds the capacity of the

existing asset or network of assets (or vice versa in some cases)

Reliable Services are predictable and continuous Physical Mortality

Structural condition of the asset is such that it has reached the end of its effective life

Cost Effective

Services are provided at the lowest possible cost for both current and future customers, for a required level of service, and are affordable

Financial Efficiency

The cost of the asset exceeds the economic return necessary to justify retention of the asset

Safe

Suitable

Sustainable

Services are delivered such that they minimize health, safety and security risksServices are suitable for the intended function (fit for purpose)Services preserve and protect the natural and heritage environment

Level of Service

The asset no longer meets higher regulatory or other requirements

Step 4 - Identify Failure Modes




Describe Systems,




& Residual Life





Build the AM Plan



Standards Inventory
















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Step 6 – Determine Business Risks• Infrastructure Risk Management



Step 6 – Determine Business Risks

- Risk Maps; aggregates asset replacement costs (based on the PoF and CoF of the failure mode)

Utilization; Physical Mortality; Financial Efficiency; or Level of Service



Step 6 – Determine Business Risks- Consequence of Failure; for each failure mode



Total Asset Replacement Valuewith PoF = P3 and CoF = C4

Creating An Asset Management Plan


(or other aggregation)Public Works $200,000 $500,000 $1,000,000 $3,000,000Public Housing $20,000Social Services……

Step 6 – Determine Business Risks

- By Department, Client• Directly related to the functional design of the asset hierarchy• Provides decision makers with an understanding of the trade-off between

levels of service, risk and cost

Creating An Asset Management Plan


Agenda







• Closing


Closing

Asset Management is an integrated set of processes that minimize the lifecycle costs of owning, operating, and maintaining assets, at an acceptable level of risk, while continuously delivering established levels of service.

RISK

Service Levels

LowCosts


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