Leaders in Asset Management "How to" Select & Implement Property Standards NPMA NES 2010 Lyle...

Leaders in Asset Management

"How to" Select & Implement Property

Standards

NPMA NES 2010

Lyle Hestermann, CPPM CF MIAM

Director, Standards Development and Utilization


Selecting VCSs is easy!


Concepts For This Session Are:

1.What VCSs are there?2.Integrating Standards Into Your Procedures.

3.Standards And Self Assessment4.Using The Equipment Control Matrix

5.Taking Full Advantage Of The LDD Standard6.Using the LRP Standard (previously the

Admin Control Std)7.Connecting The Dots – Using The Standards

together


Published StandardsE2131 Standard Practice for Assessing Loss, Damage, or Destruction of

Property E2132 Standard Practice for Physical Inventory of Durable, Moveable

Property E2135 Standard Terminology for Property and Asset Management E2279 Standard Practice for Establishing the Guiding Principles of Property

Management E2306 Standard Practice for Utilization and Disposal of Personal Property E2378 Standard Practice for the Recognition of Impaired or Retired

Personal Property E2379 Standard Practice for Property Management for Career Development

and Training E2452 Standard Practice for Equipment Management Process Maturity

(EMPM) Model E2453 Standard Practice for Determining the Life-Cycle Cost of Ownership

of Personal Property


Published Standards

E2495 Standard Practice for Prioritizing Asset Resources in Acquisition, Utilization, and Disposition

E2497 Standard Practice for Calculation of Equipment Movement Velocity (EMV)

E2499 Standard Practice for Classification of Equipment Physical Location Information

E2604 Standard Practice for Data Characteristics of Equipment Records E2605 Standard Practice for Receiving Property E2606 Standard Practice for Receipt Notification as a Result of Tangible

Property Movement E2607 Standard Practice for Cannibalization/Reclamation of Serviceable

Equipment Components to Support Demand Requirements E2608 Standard Practice for Equipment Control Matrix (ECM)


Published Standards

E2631 Standard Practice for Physical Placement of an Entity-Controlled Supplemental Identification Label

E2671 Standard Practice for Defining Movements, Shipments, and Transfers of Tangible Property

E2672 Standard Practice for Identification and Categorization of Tooling E2674 Standard Practice for Assessment of Impact of Mobile Data Storage

Device (MDSD) Loss E2675 Standard Practice for Property Management System Outcomes E2676 Standard Practice for Tangible Property Mobility Index (MI) E2715 Standard Practice for Moveable Property Storage E2811 Standard Practice for Management of Low Risk Property (LRP)E2812 Standard Practice for Uniform Data Management in Asset

Management Records Systems


Draft Standards

WK27486 New Practice for Property Management Database Asset Catalogs (Technical Contact: Brandon Kriner) Ballot E53 (11-02) Item 002;

WK29521 New Classification for Property Types (Technical Contact: Eric Fassett)

WK32431 New Practice for for Sales of Personal Property (Technical Contact: Robert Holcombe)


Entity/Corporate/Company/Site/Whatever – start with the basics

i. Guiding Principles, E2279ii. Terminology, E2135

(Property Management and Compliance)

Integrating standards into your procedures.


Entity/Corporate/Company – the basics

E 2132, Standard Practice for Physical Inventory of Durable Moveable Property

(Physical Inventories)




E 2132, Standard Practice for Addressing and Reporting Loss, Damage or Destruction of Tangible Property

(Property; Control of Loss, Damage or Destruction (LDD))




E2605, Standard Practice for Receiving Property

(????)



Standards and Self

Assessment


Standards and Self Assessment

E 2452 – 05e1Standard Practice for

Equipment Management Process Maturity (EMPM)

Model



The standard recognizes five maturity levels:

1.0 Basic Processes are generally ad hoc and chaotic; success primarly depends on heroics

2.0 Managed Projects of the organization ensure requirements are managed and processes are planned, performed, measured, and controlled

3.0 Defined Processes are understood at the organizational level; standard organizational processes, standards, tools, and methods exist that are tailored for use on the projects

4.0 Quantitative and Predictive

Sub processes are selected that significantly contribute to overall process performance and they are controlled using quantitative techniques; quantitative objectives for quality and process performance are established; special causes of variation are detected and corrected as appropriate

5.0 Optimizing The organization focuses on continually improving process performance through both incremental and technological improvements



Can Property Do Their Job In A Vacuum?

Asset Management Configuration ManagementFunctional Organization Program ControlProcurement IT Asset ManagementLogistics CalibrationContracts Tooling ManagementImport/Export Property ManagementSenior Management Equipment ManagementReceiving Fixed Asset AccountingWarehouse Risk ManagementQuality Program ManagementFinance Human ResourcesMaterial Management



Process Management

OperationsEMPM Lifecycle Maturity Level

1.0 Acquisition 3.8 3.5 3.72.0 Use 2.9 3.1 3.03.0 Disposition 2.6 3.0 2.8

EMPM Maturity Levels

3.1 3.2 3.2



0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Summer2005

Fall 2005

Winter 2005 Spring 2006

Acquisition Criteria

Use Criteria

Disposition Criteria

EMPM Level


Using The Equipment Control Matrix

1. Scope 1.1 This practice describes equipment control classes (ECCs),

equipment control levels (ECLs), and their relationships.1.2 This practice is intended to be applicable and appropriate for

all equipment-holding entities.1.3 This practice covers property categorized as equipment.

Equipment as defined in Terminology E 2135 is nonexpendable, tangible moveable property needed for the performance of a task or useful in effecting an obligation.

1.4 This practice can be applied to an individual item of equipment, to groupings of equipment, or to all or a subset of an entity’s equipment.

1.5 In accordance with the provisions of Practice E 2279, this practice clarifies and enables effective and efficient control and tracking of equipment.



5.1.1 The ECCs are based on the consequences of the loss of control of the equipment. There are five classifications, or groupings, which define the ECCs.



5.1.1.1 Equipment Control Class 1—Consequence of loss of control is a societal safety/security impact, which is characterized by negative societal safety or security impact.

5.1.1.2 Equipment Control Class 2—Consequence of loss of control is a personal safety/security impact, which is characterized by negative personal safety or security impact that does not rise to the level of a societal safety or security impact.

5.1.1.3 Equipment Control Class 3—Consequence of loss of control is an operational impact, which is characterized by negative operational impact that does not rise to the level of a personal or societal safety or security impact.



5.1.1.4 Equipment Control Class 4—Consequence of loss of control is a compliance impact, which is characterized by negative compliance with applicable laws regulations or other relevant internal or external guidance that does not rise to the level of an operational impact.

5.1.1.5 Equipment Control Class 5—Consequence of loss of control is not discernible, which is characterized by having no visible or recognizable impact on the organization.



5.2 Equipment Control Levels (ECLs):5.2.1 The five levels of control of equipment are based on

differentiated tracking specifications.5.2.1.1 Equipment Control Level A.—Continuous, which

provides real time tracking and control with either human or electronic monitoring and surveillance at all times.

5.2.1.2 Equipment Control Level B.—Continuous while mobile, which provides real time tracking and control with either human or electronic monitoring and surveillance at any time the equipment is not stationary in a secure, fixed location.



5.2.1.3 Equipment Control Level C.—Event tracking, which provides the level of control characterized by manual or electronic recording of movement, accountability, or stewardship changes.

5.2.1.4 Equipment Control Level D.—Containment, which provides the level of control characterized by process or electronic methods of assuring equipment items are contained within a designated area.

5.2.1.5 Equipment Control Level E.—No tracking and no protection are required at this level.



Equipment Control LevelS

Equipment Control ClassA. Continuous

B. Continuous While Mobile

C. Event Tracking D. Containment E. No Tracking

1. Societal Safety/Security Impact

2. Personal Safety/Security Impact

3. Operational Impact

4. Compliance Impact

5. No Discernible Impact

S = Standard Control and TrackingI = Increased Control and TrackingD = Decreased Control and TrackingNR = Not Recommended







1. Societal Safety/Security Impact S

2. Personal Safety/Security Impact












2. Personal Safety/Security Impact S













3. Operational Impact S













4. Compliance Impact S












4. Compliance Impact S

5. No Discernible Impact S



Taking Full Advantage Of The LDD Standard



Acceptable loss ratios, per E2131:• ECC1 is 0 %.• ECC2 is 0.5 % (dollar value or quantity).• ECC3 is 1 % (dollar value or quantity).• ECC4 is entity establish IAW law,

regulation or contractual guidance, otherwise 3%


Taking Full Advantage Of The LDD Standard- In Your LDD Report

14. Loss ratio in relation to program:

Currently, this program has over 4,000 line items of equipment accountable at an acquisition cost of $15.9 million. The loss of this item and the items represented on three other loss letters represent a less than 0.5% loss ratio as determined by line items, and a less than 0.3% loss ratio as determined by acquisition value, well within DoD guidelines and ASTM E53 2131-09, Standard Practice for Addressing and Reporting Loss, Damage or Destruction of Property.



Perspective!


E2811-11 Standard Practice for Management of

Low Risk Property (LRP)


Using The LRP Standard

1. Scope1.1 This practice covers the assessment of risk

and management of low risk property (LRP).1.2 This practice is directed at tangible LRP.1.3 This practice does not promote mismanagement or

dereliction of duty to protect property, nor protecting property unreasonably – to the extent that usefulness is impaired. This practice recognizes the constraints of materiality and costs versus benefits in the control and management of property.



3.1.2 life cycle processes (LCP)—the various management and control stages of property from its acquisition through disposition; these processes include but are not limited to acquisition, receiving, identification, records, movement, maintenance, storage, physical inventory, loss, damage, and destruction reporting and disposition.



3.1.3 low risk property (LRP)—assets that are monitored and controlled at the discretion of asset managers and typically consist of low risk expendables or durable equipment and tooling based on established and disclosed criteria. (Refer to 4.2 for more information.)



4.1 LRP should be administratively controlled and managed to a lesser degree or with a more efficient technique than higher risk property.


4.2 The type and scope of control and management should be commensurate with the level of risk. The entity shall determine the level of risk using the following criteria:

4.2.1 Scarcity,4.2.2 Technological obsolescence,4.2.3 Lead time,4.2.4 Standardization,4.2.5 Criticality,4.2.6 Sensitivity,4.2.7 Dollar value,4.2.8 Environmentally regulated,4.2.9 National security/threat,4.2.10 Schedule constraints,4.2.11 Vulnerability,4.2.12 Societal or personal safety, and4.2.13 Contractual agreements.NOTE 1—The listing in 4.2.1-4.2.13 is not all inclusive and may besupplemented by the entity.


• Do you control highly sensitive/hazardous/dangerous products the same way you do your office supplies?

• Do you have procedures, based on VCSs or other widely accepted data, that allows you to determine which life cycle processes you use for low risk property?



• Risk avoidance is more costly than risk management.

• It may be - will be - more efficient to apply common sense and use less control for LRP.



Connecting The Dots – Using The Standards Together

How many Property Professionals does it take

to manage how much stuff?


49

The Old Way

ENTITY LINE ITEMS ACQ COST FTE

Alpha Equipment 22K $150M 3

Bravo Stuff Suppliers 3K $25M 3

Charlie’s Thingies 1M $20B 200


50

Better

ENTITYLINE

ITEMS ACQ COST FTE EMV*

Alpha Equipment 22K $ 150M 3 1.03

Bravo Stuff 3K $ 25M 3 1.7

Charlie’s Thingies 1M $ 20B 200 1.24

*ASTM E2497-06*ASTM E2497-06


51

And Better …

ENTITYLINE

ITEMSACQ COST FTE EMV

EMPM*

Alpha Equipment 22K $150M 3 1.03 3.2

Bravo Stuff Suppliers 3K $25M 3 1.7 2.8

Charlie's Thingies 1M $20B 200 1.24 3.3

* ASTM E2452-05e1* ASTM E2452-05e1


52

And Better ….

* ASTM E2131-09* ASTM E2131-09

ENTITYLINE

ITEMS ACQ COST FTE EMVEMP

MLDD*

Low/High

Alpha Equipment 22K $150M 3 1.03 3.2 0.004/.00

Bravo Stuff Suppliers 3K $25M 3 1.7 2.8 2.4/.01

Charlie's Thingies 1M $20B 200 1.24 3.3 0.09/.001


53

And Better ….

* ASTM E2132-01 (2007)* ASTM E2132-01 (2007)

ENTITY

LINE ITEM

SACQ COST FTE EMV

EMPM

LDDLow/High

PHYS INV *

Alpha Equip. 22K

$150M 3 1.03 3.2

0.004 /.00

Triennial / 99.4%


2.4/.01

Annual / 97.2%


0.09 /.001

Annual / 99.2%


54

Hmmmmm

* ASTM E2608-08* ASTM E2608-08

ENTITY LIACQ

$ECM

*

ECC

1ECC

2ECC

3ECC

4ECC

5

LI LI LI LI LI

Alpha

22K

$150

M 23% 27% 32% 18% 0%

Bravo 3K

$25M 2% 33% 33% 27% 5%

Charlie 1M $20B 10% 20% 50% 15% 5%


55

Now What Do You Think?

* ASTM E2132-07* ASTM E2132-07

ENTITY

LINE ITEM

SACQ COST FTE EMV

EMPM

LDD*High/Low PHYS INV *

Alpha Equip. 22K

$150M 3 1.03 3.2

0.004 /.00

Triennial / 99.4%


2.4/.01

Annual / 97.2%


0.09 /.001

Annual / 99.2%


56

What About The People?

* ASTM E2379-04* ASTM E2379-04

CERTIFICATION *CERTIFICATION *ENTITY LI ACQ $ FTE

None CPPS CPPA CPPM

Alpha 22K $150M 3 3

Bravo 3K $25M 3 2 1

Charlie 1M $20B 200 65 50 50 35


57

Make More Sense?

* ASTM E2132-01(2007)* ASTM E2132-01(2007)

ENTITY

LINE ITEM

SACQ COST FTE EMV

EMPM

LDD*High/Low PHYS INV *

Alpha Equip. 22K

$150M 3 1.03 3.2

0.004 /.00

Triennial / 99.4%

Bravo Stuff Suppliers 3K $25M 3 1.7 2.8 2.4/.01

Annual / 97.2%


0.09 /.001

Annual / 99.2%

Leaders in Asset Management "How to" Select & Implement Property Standards NPMA NES 2010 Lyle...

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