Doing Asset Management A private sector case study - Stuart Gibson Transfield Services (Australia) Pty Limited 2009
What is Asset Management? The life cycle management of physical assets to achieve the stated outputs of the enterprise It is not just: Creating a long term plan; or Lifecycle costing analysis. It is: A systematic approach to managing an asset during its life; To get the result the owner wants from it. 2
Life cycle management But most of the cost is incurred during Operation High Ability to reduce Life Cycle Cost is greatest during Design Actual costs (Opex + Capex) Cost surprise Expected cumulative costs Expected asset performance Actual performance Low Performance surprise Ability to influence cost Decide & Design Construct Operate & Maintain Modify Operate & Maintain Dispose Asset life cycle 3
Outputs an owner might want Increase throughput Increase quality Reduce need for capital Reduce risk Reduce environmental impact Reduce operating expenditure 4
Exxon Mobil Altona refinery ISC Performance MAINTENANCE COST PLANT AVAILABILITY $.00 Availability 99.00% 98.00% $.00 97.00% $30.00 96.00% 95.00% $25.00 94.00% $20.00 93.00% 92.00% $15.00 Cost $10.00 91.00%.00% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year Key outcomes: Dramatic reduction in serious injuries from a rate of 26 per million man months worked in 1994 to zero by 2003 60% reduction in annual maintenance costs (from USD$29 million in 1996 to USD $12.6 million in 2003) Increase in availability from 93% in 1996 to 98.3% by 2003 5
Verve Energy - Collie Power Station Improvements June 2005 Present 330 MW 3 MW Availability 97.7% 99.4% Capacity Factor 79.09% 86.91% 43 Days 101 Days - 5% p.a. each year Generating Capacity (Actual Output: Full Capacity) Mean Time Between Failure Cost Reductions 6
Australian Rail Track Corporation SA Performance MAINTENANCE COST TRACK WITHOUT RESTRICTION 100.00% $25.000 Functionality 99.00% $22.000 98.00% 97.00% $19.000 96.00% $16.000 95.00% 94.00% $13.000 93.00% $10.000 Cost 92.00% 91.00% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year Key outcomes include: More than 50% reduction in track maintenance costs (from $23,000 per km to $10,000 per km) A more functional rail network (the percentage of track under speed restrictions due to track conditions has been reduced from 5% to 0.3%) 7
A Case Study Transfield Services (Australia) Pty Limited 2009
Some necessary background Case study organisation is a large scale mineral processing facility: Remote site, large service town, no FIFO; Public company, subject to quarterly reporting; Production costs per unit output are upper quartile; Total maintenance costs per unit output are around the median for their industry; 9
2006 - Management starts doing stupid things Total Cost of Maintenance ($M) 120 100 71.3 73.6.1 76.4 1Q04 2Q04 3Q04 4Q04 71.3 74.2.9 76.6 1Q05 2Q05 3Q05 4Q05 60 20 0 10% across the board 99.8 budget reductions 91.1 69.9 10%.1 forced staff reduction No training No air travel No consultants 1Q06 2Q06 3Q06 4Q06 10
What was really happening with operations? Throughput (ktonnes/day) Daily Production Data 0 200 0 1/06 2/06 3/06 4/06 5/06 6/06 7/06 8/06 9/06 10/06 11/06 12/06 1/07 Total daily ore throughput Average Throughput Capacity 11
What was happening with maintenance? Increasing backlog Condition monitoring tasks sacrificed to emergency repair If you could fix it quick you were a hero 12
What was happening with parts and contractors? Spares inventory grew Use of contractors for emergency repairs grew Little control of costs 13
What was happening with new projects? Feasibility and design was rushed. Limited use of external experts. Complex work done in-house by willing amateurs. Commissioning and hand over done poorly. Making the project actually work became a maintenance team problem No Post-implementation review mistakes repeated 14
A focus on reducing cost may produce a cost surprise Cost surprise High Actual costs (Opex + Capex) Expected cumulative costs Low Decide & Design Construct Operate & Maintain Modify Operate & Maintain Dispose Asset life cycle 15
2007-100 day Transformation in 2 streams 1. Reduce total cost of maintenance by 20% in the first 100 days; and 2. Create a plan to save a further 5% from total maintenance costs each following year. With no negative effect on asset Increased reliability 16
Quick wins improvement activities Basic Care & Precision Work Volume Reduction Productivity Improvement Defect Elimination Gibson EST 2009 17
We had to reduce work volume to find time Basic Care & Precision Work Volume Reduction Productivity Improvement Defect Elimination Gibson EST 2009 18
Half of Maintenance tasks needed to change Planned Maintenance Effectiveness New Conditionbased Task 11% New Standards 8% Operator Task 4% Unchanged 45% Increase Frequency 2% Delete 15% Reduce Frequency 15% Removing useless tasks allows more time to be spent on important tasks Gibson EST 2009 19
Quick wins improvement activities Basic Care & Precision Work Volume Reduction Productivity Improvement Defect Elimination Gibson EST 2009 20
Cause of rework Foreign object damage Action causing damage Foreign object damage Improper servicing Other Improper part installation Incomplete job Improper workorder closeout Improper diagnosis Actioncausing causing Action damage damage Quality control sheet not completed Improper diagnosis Incomplete job Other Improper part installation % by number Improper servicing % by value Eliminating needless maintenance errors reduces future workload Gibson EST 2009 21
Eliminate re-work and early failures Better standards Asset-specific training Right specialist tools New basic care Standard Procedures Lubricated Clean Dry Tight Aligned Cool Gibson EST 2009 22
Quick wins improvement activities Basic Care & Precision Work Volume Reduction Productivity Improvement Defect Elimination Gibson EST 2009 23
Workers spent most of their time waiting Before After Tool time 19% Waiting for Subcontractors 11% Waiting for Equipment 5% Waiting for Subcontractors 7% Waiting for Parts Safety 2% 1% Waiting for Staff Meetings Permit 1% 13% Waiting for Equipment 14% Travel 18% Waiting for Parts 17% Waiting for Permit 19% Travel 9% Tool time 57% Staff Meetings 6% Safety 1% Eliminating wasted time improves productivity Gibson EST 2009 24
Too much overtime Before After Overtime/Callback Overtime/Callback Normal Time/Shift Normal Time/Shift Overtime and calls back reduced from 30% to 4% Gibson EST 2009 25
Visual workplace Visual Workplace 5. Visual Guarantees 4. Visual Controls Put technical or procedural standards in a visual format and Performance against targets install these as close as possible to the point of use e.g. shadow boards 3. Visual Metrics 2. Visual Standards 1. Visual Order Gwendolyn D. Galsworth, Visual Workplace Visual Thinking Gibson EST 2009 26
Spares and contractors Spares optimisation Eliminate frequent stock-outs Obsolete stock tagged for review Subcontractor review Supplier concentration Best price evaluation Specification improvement Joint process improvement Gibson EST 2009 27
Quick wins improvement activities Basic Care & Precision Work Volume Reduction Productivity Improvement Defect Elimination Gibson EST 2009 28
Broad-based defect elimination Number of Site Employees Core Employees Core Staff From little things big things grow if we can solve more small problems we can prevent major events We need to involve everyone in solving the large number of small problems Day Labourers Less Complex Problems Reliability Engineers Ability to resolve problems More Complex Problems Ability to resolve problems # of Problems Dirty, Spill, oil levels low Seal failures, Bolts loose, Drive Belts slack Bearing Failures, Calibration drift Production Bottlenecking, Energy losses Problems Engineers have their time filled solving complex problems People Subcontractors Process Induced structural fatigue Less Complex Problems Problem type More Complex Problems 29
Get rid of the cause 5 Whys for trades Root Cause Analysis for planners and supervisors Better ways Suggestion box Visual problem solving Gibson EST 2009 30
Part 2 Developing a long term Journey Management Plan Transfield Services (Australia) Pty Limited 2009 31
Changing the way we manage assets 1. Compare what is actually happening to best practice 2. Prioritise projects to close the gaps 3. Schedule projects in a visual journey management plan 4. Manage to the plan 32
What is best practice? LIFE CYCLE PLANNING DATA INTEGRITY MANAGEMENT MAINTENANCE MANAGEMENT MODIFICATIONS MANAGEMENT LOGISTICS MANAGEMENT RELIABILITY IMPROVEMENT 33
An Integrated Asset Management System Understand Business Context Identify Work Identify Goods & Services Analyse Asset Performance Define Assets & Condition Analyse Operations LIFE CYCLE PLANNING PlanINTEGRITY Work DATA MANAGEMENT Purchase Goods & Services Analyse Criticality Schedule Work Execute Work MAINTENANCE MANAGEMENT Manage Inventory MODIFICATIONS Select Improvement MANAGEMENT Opportunities Develop Asset Strategy Issue Goods LOGISTICS Identify Root MANAGEMENT Causes Develop Asset Support Plans Record Service History Measure Performance Reverse Logistics Measure Performance Develop Improvement Program Monitor Improvement Program RELIABILITY Develop Concept Identify Asset Data Non-Conformances Feasibility Study Engineering IMPROVEMENT Execute Work Design Plan & Prioritise Asset Data Update Manage Configuration Changes Commission & Handover Lifecycle Cost Analysis Close Out Project Manage Master Data Changes Post Implementation Review Measure Data Integrity 34
An Integrated Asset Management System LIFE CYCLE PLANNING Understand Business Context MAINTENANCE MANAGEMENT Identify Work Plan Work Schedule Work Execute Work Record Service History Measure Performance LOGISTICS MANAGEMENT Identify Goods & Services Purchase Goods & Services Manage Inventory Issue Goods Reverse Logistics Measure Performance RELIABILITY IMPROVEMENT Analyse Asset Performance MODIFICATIONS MANAGEMENT Develop Concept DATA INTEGRITY MANAGEMENT Identify Asset Data Non-Conformances Define Assets & Condition Analyse Operations Select Improvement Opportunities Feasibility Study Analyse Criticality Identify Root Causes Engineering Design Plan & Prioritise Asset Data Update Execute Work Manage Configuration Changes Develop Asset Strategy Develop Asset Support Plans Develop Improvement Program Commission & Handover Monitor Improvement Program Close Out Project Manage Master Data Changes Lifecycle Cost Analysis Post Implementation Review Measure Data Integrity
Create a Joint Assessment Team 2 x Gibson EST project managers 2 x Asset Owner s Staff Transfield Services Site Staff Transfield Services people from other industries Trained together over four days Day 1 Day 2 Asset Management Introduction Best Practice Asset Management System Day 3 Day 4 Asset Management Assessment Program Consulting & Change Skills 36
Asset Management Assessment Tool Transfield Services Best Practice Asset Management Processes We use our three-dimensional assessment tool to identify and measure the asset management issues. 37
This produces a set of graphs and commentary Average total score: Lower range of Understanding Major Issues Excellence Competence Understanding Awareness Innocence Current Score 12 Month Target Overall Target Systems & Information Management Reliability Management Modifications Management Maintenance Management Logistics Management Asset Life Cycle Management Assessment Score Total Asset Management 100 95 65 60 55 50 45 30 25 20 15 10 5 Generally there are processes performed but not documented and standardised i.e. not adhered to and disciplined. High level standards exist. People generally lack training in SAP and the subject area matter in which they work. A lack of documented processes and specific position descriptions results in low understanding of process and responsibilities and accountabilities. Usage of visible measurements and KPIs for improving processes are very low. 26 33 49 31 50 36 SAP is viewed as a good system but the system is generally not used to its full potential. 38
Capability Maturity Model Permanent Dissatisfaction Build-in reliability Make it better Get control 39
Journey Management Plan Planned and prioritised opportunities Current Status Future Status Journey Management Plan Average total score: 26 Upper ran ge of Awareness 29 C om pe t e nc e U nde r s ta nd ing Aw a r e ne s s C urr e nt S c or e 1 2 M on th T a rge t O v e ra ll Ta rg e t 25 22 3 3 8 0 9 0 In n o c e n c e 18 Sc ore C u rr e n t S c o r e 1 2 M o n th T a rg e t O v e ra ll T a r g e t 42 30 45 In n o c e n c e Cu r re n t S co re U nde r s ta nd ing Aw a re ne s s 60 51 C urr e nt S c or e 1 2 M o nth Ta rg e t O v e ra ll Ta r ge t 18 56 Reliability Manag ement Sys tems & Info rm ation Manag ement 26 33 49 31 50 36 Aw a re ne s s Innoc e nc e Cur re nt S co re Sco re Asse s sm en t Inn oc e nc e 17 C urr e nt S c or e 1 2 M o nth Ta rg e t O v e ra ll Ta r ge t 56 Me as ure me nt M ea sure me nt 38 65 17 65 56 5 0 4 5 4 0 3 5 3 0 2 5 2 0 1 5 1 0 5 U nde r s ta nd ing Aw a re ne s s 38 18 50 1 00 9 5 9 0 8 5 8 0 7 5 7 0 6 5 6 0 5 5 Ex c e lle nc e C om p e te nc e 38 Proc e ss Sys tem s Me as urem e nt People Sco re Proce ss Ass es sm en t Mod ificatio ns Manag ement 38 65 As s es sm e nt Sc o re Relia bility Ma nage me nt Sys tem s & Inform ation Ma nage me nt Ma inte nanc e Ma nage me nt Modific a tio ns Ma nage me nt Ass e tlife Cyc le Ma nage me nt 26 R elia bil ity M a nage m ent Curre nt Sc ore Excellence Sy s te ms & Inform a tion M a nage m ent In noc ence 10 0 95 65 60 55 50 45 30 25 20 15 10 5 M a inte na nce M a nage m ent Unders ta nding Awa renes s M odific a tions M a nage m ent Compete nc e Logistic s Ma nage me nt Ass es sm en t Sco re Ex ce l e nc e 10 5 A ss e t Life C yc le M a nage m ent Total Asset Managem en t Total Asset Management 50 45 30 25 20 15 Logis tics M a nage m ent Cu rrent Scor e 12 Month Target Overall Targ et Maint enance Manag ement Innocen ce Asset Lif e Cycle Manag ement 65 60 55 Un derstand ing Awaren ess Log istics Manag ement Assessment Scor e 100 95 Co mpetence 51 In fo r m at io n M an ag e m en t In fo rm at ion M ana ge me nt Excellence 60 1 0 5 Inn oc e nc e 56 Sc ore As se ssm en t C om p e te nc e 100 95 65 60 55 50 45 30 25 20 15 10 5 Com pe te nc e Und er s ta nding 42 55 1 00 9 5 9 0 8 5 8 0 7 5 7 0 6 5 6 0 5 5 5 0 4 5 4 0 3 5 3 0 2 5 2 0 1 5 Ex c e lle nc e Average total score: 37 Lower range of Und erstanding Ex c e lle nc e 18 Proc es s Sy ste ms M ea su re me n t Pe o ple Sc ore Pro c es s As se ss men t Aw a re n e s s Tot al As se t Management 45 Mo d if ica ti on s M an ag e m en t M od ific ati on s M ana ge me nt 100 95 65 60 55 50 45 30 25 20 15 10 5 Co m p e te n c e Un d er s ta n d in g Mea s ure me n t Aw a re n e s s 30 Pr oc es s As se ss me nt M ea sure me nt U n d e r s ta n d in g Averag e total score: 46 Upper ran ge of Understan ding Ex c e lle n c e 18 R el iab il ity M an a ge m en t 1 00 9 5 9 0 8 5 8 0 7 5 7 0 6 5 6 0 5 5 5 0 4 5 4 0 3 5 3 0 2 5 2 0 1 5 1 0 5 Ex c e lle n c e C o m p e te n c e Cur re nt Sc or e Sy ste ms Pe ople Proce s s Ass e ssm en t Sco re Aw a re ne s s Innoc e nc e Me as ure me nt Sco re C urr e nt S c or e 1 2 M o nth T a rg e t O v e ra ll Ta rg e t 18 Sys te ms Inn oc e nc e R e liab ility Ma nag em en t 100 95 65 60 55 50 45 30 25 20 15 10 5 Com p et en ce Und er s ta nding People Aw a r e ne s s 33 Average total score: 32 Lower range of Understanding Ex c e lle nc e Sy s tem s 10 5 Cur rent Scor e 38 Pe o ple 30 25 20 15 U nde r s ta nd ing M ea sure me nt Aw areness Proce ss Ass es sm en t M easurement C om p e te nc e 60 55 50 45 Innocence 22 M ain t en an c e M a na g em e nt 65 Comp et ence Under standing 100 95 65 60 55 50 45 30 25 20 15 10 5 Ex c e lle nc e 100 95 Excellence Sy ste ms 34 38 Syst ems 36 People 31 43 1 0 5 C urr e nt S c or e 1 2 M o nth Ta rg e t O v e ra ll Ta r ge t 43 Ma int ena nce Ma nag em ent 49 Pe ople Sc ore As se ssm en t Aw a re ne s s Inn oc e nc e 34 Average total score: 33 Lower range of Understanding 33 Proc es s Me a sure m ent Pe ople C om p e te nc e U nde r s ta nd ing Cur re nt Sc or e 18 1 00 9 5 9 0 8 5 8 0 7 5 7 0 6 5 6 0 5 5 5 0 4 5 4 0 3 5 3 0 2 5 2 0 1 5 Ex c e lle nc e 20 15 10 5 Innoc e nc e 26 L o gi st ic s M a na g em e n t Sy ste m s Ass e ss me nt Sco re Proc es s Reliab ility Man age men t Sy stem s & Inf or mat ion Man age men t Mo difi catio ns Man age men t Main ten an ce Man age men t Asset Lif e Cycle Man age men t Aw a re ne s s 25 20 15 10 5 Cu rrent Score 3 3 8 0 9 0 50 45 30 25 As sess m ent Sc ore Innocence 18 Lo gi stic s M ana ge men t 65 60 55 Process Awaren ess Lo gist ics Man age men t Asse ssment Sco re Un derstand in g Sco re C urr e nt S c or e 1 2 M o nth T a rg e t O v e ra ll Ta rg e t Sys te ms Inn oc e nc e 33 100 95 Com p et en ce Und er s ta nding Sy ste ms 10 5 Ex c e lle nc e Pe ople 30 25 20 15 Average total score: 34 - Lower range of Understanding 100 95 65 60 55 50 45 30 People U nde r s ta nd ing Aw a r e ne s s Me as urem e nt Aw areness Proce ss Ass es sm en t Measur ement People Systems Ass ess m ent Score Process C om p e te nc e 50 45 Innocence 100 95 65 60 55 50 45 30 25 20 15 10 5 Ex c e lle nc e 65 60 55 Cur rent Scor e Total Asset Management Co mpetence 29 55 M ain t en an c e M a na g em e nt Ma int ena nce Ma nag em ent Excellence 17 10 5 Inno c e nc e 100 95 Comp et ence Under standing 34 50 100 95 65 60 55 50 45 30 25 20 15 Ex c e lle nc e Average total score: 33 Lower range of Understanding Excellence M ea sure me nt 17 Sy ste ms 34 Sys tem s 10 5 People 30 25 20 15 Cur re nt Sc or e Pe ople Me a sure me nt Sys te ms 50 45 Aw a re ne s s Innoc e nc e Sc ore People Ass es sm en t Sco re Proce s s Com p et en ce Und er s ta nding Proc es s As se ssm en t A s se t L if e C yc le P lan n in g A sse t L ife C ycle P lan nin g 25 100 95 65 60 55 Ex c e lle nc e 33 49 31 50 36 100 95 Competence 26 33 49 31 50 45 30 25 20 15 Innocence 10 5 Current Score 12 MonthTarget OverallTarget 36 65 60 55 Understanding Awareness Even tb as ed va ria bi li ty (rel ia bi li ty) Syste mati c va ria bi li ty fo r a si x pro ces s Cur rent S co re 12 Month Targ et As sess ment Sc ore In for matio n Man agem ent Systems Measur ement Process People As sess ment Sc ore Systems People Measurement Excelle nce 65 60 55 50 45 Competence Under st anding 30 25 20 15 10 5 Aw areness Innocence 33 18 Cur rent Score 12Mont h Target M easur ement Innocence Lo gis tics Man ag eme nt 100 100 95 Systems Aw areness People Und er standing Process Com petence Process As sess ment Sc ore Ma int ena nc e M ana ge me nt Excellence 38 65 38 65 17 65 56 100 95 65 60 55 Excellence Competence 50 45 30 25 20 15 10 5 Understanding Awareness Innocence 34 43 22 38 Current Score 12M onth Tar get 95 65 60 55 50 45 30 25 20 15 10 5 Transfield Services ( Australia) Pty Limited 2007 Vision Year One Project Summaries Measures of success
The results 20% reduction in total cost of maintenance in 6 months: 5% annualised reduction Plant throughput increased 11.3% Our involvement 120 100 60 20 0 0 4 0 4 0 4 0 4 0 5 0 5 0 5 0 5 0 6 0 6 0 6 0 6 0 7 07 0 7 0 7 0 8 0 8 0 8 0 8 Q 1 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Transfield Services 41
What did we learn? Transfield Services (Australia) Pty Limited 2009
Doing asset management Having an asset management plan To get good asset management you need to change culture It is not easy it takes a disciplined approach It needs to be driven from the top 43
Levers of change Technology Process People Metrics 44
We start with people Technology Process People Metrics 45
Overcoming behavioural elasticity Know what a good job looks like Know the context of the job Clearly defined individual goals Measure progress Display measures 46
People levers Management philosophy 1. Nobody gets it right. 2. It s your responsibility. 3. If you keep doing the same thing you will get the same results. 4. Do something now. 5. Mistakes are good they give us the opportunity to learn something. 6. Never make the same mistake twice. 47
Questions? Transfield Services (Australia) Pty Limited 2009 48