HEADING GOES HERECALIBRI BOLD,

UPPERCASE, 32pt

PRESENTER: Name Goes HereTitle: Organisation/Country

20 November 2012

SUB-HEADING GOES HERECALIBRI BOLD, UPPERCASE, 20pt

“Enterprise Asset Management for the Public Sector”

Ernst Swanepoel – 10 April 2014

What is thepurpose of Asset

Management?

TOPICS• Accountability for Asset Management• Physical asset management: Strategic Business

Process Model• Asset Management “Best Practices”• Business and Asset Life Cycles• Life Cycle Asset Management Costs• Best Practices:

– Asset Management– Maintenance Management

• Who is accountable for the condition of the asset?

• What is our core service to our customers?

Accountability for Asset Management

• Treasury systems’ requirements

–“The effectiveness and appropriateness of systems and procedures used to manage state assets is vital”

–“Great emphasis should be placed on ensuring better accounting practices and procedures, to ensure that state assets are managed and utilized in the most effective way to achieve the required results as defined for each entity within the Public Sector”

a) Accountability & PFMA

• Treasury’s systems requirements“Good asset management is critical in any business environment and more so in the public sector as they are vital to providing a foundation for economic activity”

• PFMA Section 38–places the responsibility on the accounting officer for financial and risk management of the entity as well as the effective and efficient use of the resources thereof. The section further specifically tasks the accounting officer with the management, including the safeguarding and maintenance of assets and the management of liabilities.

b) Accountability & PFMA

• Asset and work–enterprise-wide visibility and lifecycle management for your physical assets to decrease costs, increase asset availability and minimize downtime.

• Material and Procurement–Leverages your corporate buying power by centralizing purchasing for multiple locations and helps you manage and optimize spare parts inventory while minimizing carrying costs and providing inventory visibility across your entire organisation

c) Accountability & PFMA

• Safety and Compliance

–Helps you comply with all regulatory issues in your industry while reducing non compliance penalties and improving asset utilisation and uptime.

• Design Engineering

–Utility engineers can create accurate plans for new construction, including necessary equipment and budgets in a fraction of the time

d) Accountability & PFMA

• Adhere to all applicable legislation

• Implement and maintain a compliance management system for each construction and maintenance project

• Compliance with the requirements of the OHSACT and its Regulations

–Attract personal liability, penalty and criminal record

e) OHS Act & PFMA

Until July 2003• Liability for health and safety vested with the asset owner,

and ………• Section 37 (2) agreement implemented to ensure that

contractors accept joint responsibility– which is project managed

f) OHS Act & PFMA

1

1Identify Infrastructure

(What do we have?)

3Supporting Systems

(Do we have rightinformation?)

3

4Record Keeping

(Do we have the rightdocumentation?)

42

2Resourcing & Skills(Who is responsibleand accountable?)

5Aligned Reporting

(Does our reporting make business sense?)

5

6Business Architecture(Consolidate on Logistics

For Life Cycle Management)

6

8System Architecture(Consolidate Systems, Strategies & Interfaces)

8

7PPSG Formulation

(Policies, People, ProcessesStandards & Guidelines)

7

9Critical Systems & Processes(Head Office, Regional Support

Structures and Compliance)

9

10Different Asset Condition(Differentiation, PrioritisationStrategizing and Reporting)

10

11Reliability & Modeling

(Service Delivery StructuresLife Cycle Assessment)

11

12Financial Optimisation

(Service Delivery StructuresEnhanced to Estate Management)

12

ConfigurationDesign

Maintenance& Workflow

MasterPlanning

IMS, BPRIntegration

Asset LifeOptimisation

2 3 44

5

6

5

6788

9

Asset ConditionModelling

10 1111 12

Complete Organisational EAM

EAS-14/03-11

Business Process Model

CONSIDER NON-ASSET SOLUTIONS

• Failure Management• Insurance• Demand Management

CONSIDER NON-ASSET SOLUTIONS

• Failure Management• Insurance• Demand Management

CUSTOMER EXPECTATIONS• Level of Service• Cost

LEGISLATIVEREQUIREMENTS• Financial• Environmental

CUSTOMER EXPECTATIONS• Level of Service• Cost

LEGISLATIVEREQUIREMENTS• Financial• Environmental

STRATEGIC PLANNING PROCESSSTRATEGIC PLANNING PROCESS

SERVICE LEVEL REVIEW PROCESSSERVICE LEVEL REVIEW PROCESS

ASSET MANAGEMENT PROCESSASSET MANAGEMENT PROCESS

CONSIDER ASSET SOLUTIONS

• Maintain/ renew/ upgrade/ dispose of existing assets

• Create new assets

CONSIDER ASSET SOLUTIONS

• Maintain/ renew/ upgrade/ dispose of existing assets

• Create new assets

IMPLEMENT ASSET MANAGEMENT SOLUTION

IMPLEMENT ASSET MANAGEMENT SOLUTION

Strategic Planning

Tactical Planning

Operational Planning

Reference: The Total Asset Management Process InternationalInfrastructure Management Manual, 2006-2012

EAS-14/03-12

Asset Management “Best Practices”

Requirements of Property Users

As defined by Business Planning Strategy

Current property user requirements

are delivered?

Possible future property user

requirements known

Demands on the future property base

Current property base

Property Management

strategies to close the Gaps

CurrentGap

FutureGap

Future Demand

PropertyGap

User Needs

PropertyResponse

Dem

and

Supply

EAS-14/03-13

Property Management “Best Practices”

Business Mission

PRASA CRESStrategy

DivisionalObjectives

ProjectPortfolios

ExecutableProgrammes

Projects

CONCEPT

FEASIBILITY

PLAN

NING

IMPLEMENT

HANDOVER

MAI

NTAI

N

IDEA

DEVELOP

Projects

Business Life Cycle

a. Project Life CycleSCM Cycle

Business and Asset Life Cycles

EAS-14/03-14

Issue TR

BriefingSession

Alig

n Q

& A

’s

EvaluateTechnicalFinancialScreening

Approve/Reject

App

oint

SP

PN & BudgetRequirements

Close Tender

Start(Originate from

AMU - PMO)

(Business CaseURS)

(Briefing)

(Note theExistence of PPSG)

(PM Governance)

(Asset Management Unit)

(AMU Leadership)

(AMU and StrategicPMO)

b)SCM CYCLE (Generic)

Legend:• AMU = Asset Management Unit• PMO (Organisational Programme Management Office)• PPSG = Policies, Procedures, Standards & Guidelines EAS-14/03-15

EAS-14/03-16

Co

nd

itio

n

Rou

tine

wor

k on

ly

Mai

ntai

n

Mai

nta

in

Rehabilitate

Rou

tine

wor

k on

ly

100%

SP

SL

A C

riti

cal T

hre

sho

ld

EOL1

Cost effort – Time Frame

XEOL2

Replacement Condition

“Serviceability” Threshold

Ro

uti

ne

wo

rk o

nly

Mai

nta

in &

C

risi

s R

epai

rEOL3

X XEOL4

X

Rehabilitate(“partial” upgrade)

Rehabilitate(“Major” upgrade)

c)Maintenance Cycle (Generic)

EAS-14/03-17

Co

nd

itio

n

Rou

tine

wor

k on

ly

Mai

ntai

n

Cri

sis

Man

agem

ent

Rehabilitate

Rou

tine

wor

k on

ly

100%

SP

SL

A C

riti

cal T

hre

sho

ld

EOL1

Cost effort – Time Frame

XEOL2

Replacement Condition

“Serviceability” Threshold

Ro

uti

ne

wo

rk o

nly

Mai

nta

in &

C

risi

s R

epai

rEOL3

X XEOL4

X

Rehabilitate(“partial” upgrade)

Rehabilitate(“Major” upgrade)

c)Maintenance Cycle (Generic)

1. General Requirements

(ISO 5500x)Master IntegratedAsset Management

Programme)

2. Asset Management Policy (PPSG)

3. Asset Management Strategy

4. Asset Management Enablersand Project Performance

5. Asset Management Plans(Implementation)

6. Performance Assessment and improvement

7. Management Review

PLAN

DO

CHECK

ACT

u Asset Investment Policyu Maintenance Management Policyu Programme Prioritisation Policy

u Master (Investment) PlansØ Technology PlansØ Asset types and Life CyclesØ Programme Management PPSG

u Maintenance (Strategic & Operational)Ø Routine Maintenance Ø Fault Management Ø Replacement Management

u Programme Upgrade Cycles

u Project Governance and Structuresu Configuration and documentationu Management of Changeu Training, awareness & competence u Contingenciesu Management Production Systems

Ø Integrated Asset Management Ø GIS and SpatialØ Drawing Offices

u Information Managementu Risk and Legal

u Life Cycle Planningu Maintenance Policyu Tools, Facilities & Equipmentu PMO and Project Support

u Condition Monitoring (ON LINE)u RCM (Reliability Centered)u Audits (DYNAMIC)u Compliance Evaluationsu Differentiationu New technologies (Impacts)u PMO streamlining (Technology)

u Organisational Alignmentu Business Plan Impact & Updatesu Values, Policies, etc.

Full Life Cycle Asset Management ISO 55000

u PRASA Business Visionu Macro-economic Impactu H/L Transformation Plan

v ISO 9000 Compliantv IIMM supportedv BCI compliantv RSR Compliant

EAS-14/03-18

IMPLEMENT THE AMPINFORMATION FLOWSv Information flowsv Information Management

SERVICE DELIVERY ISSUESv Defining core servicesv Contract types/ delivery

mechanismsv Contract issues

THE AM PLANPREPARE AM PLANv Purpose (ST, MT)v Steps in preparing AM planv Plan structurev Key Stakeholders

DEVELOP LIFE CYCLE STRATEGIES

v Develop strategies for each stage of asset life

AMP REVIEW & AUDITCyclic audit of:v AM Performancev Technical content of AMPv Compliance with legal requirementsv Internal/ external audits

ASSET MANAGEMENT IMPROVEMENT PLAN

v Condition Assessmentsv AM status reviews v The improvement programv Pilot studies

SERVICELEVEL

REVIEW

Reference: Flow chart for developing and using Asset Management Plans (AMP)International Infrastructure Management Manual – version 1

CORPORATE AM DIRECTIONv Corporate need definedv Obtain organisational commitmentv Adopt corporate AM goals and

objectivesv Define AM roles and responsibilitiesv Involve key stakeholders

THE AM TEAMv Oversee AM implementationv Co-ordinate AM activitiesv Internal Audit (Configuration Audits)

LEGISLATIVEREQUIREMENTS

CUSTOMER/STAKEHOLDER EXPECTATIONS

EAS-14/03-19

PREVENTATIVE MAINTENANCE

Enterprise Asset Management

(EAM)

ContinuousImprovement

TotalProductive

Maintenance

FinancialOptimisation

PredictiveMaintenance

OperationsInvolvement

ReliabilityEngineering

Work Flow &Documentation

System

CMMS (ComputerisedMaintenanceManagement

System)

Technical andInterpersonal

Training

Stores andProcurement

Configuration Management

Asset Condition Management

EAM: Best Practices Model

Our Challenge

Asset OptimisationAchieved

EAS-14/03-20

Revenue GeneratorsProject Life Cycle

Product Life Cycle

AssetCreation

AssetDesign

AssetConfiguration

Delivery

Warrantee Period

Routine Maintenance

Preventive Maintenance

Front Line Maintenance

First Line Maintenance

Profitable FacilitiesManagement

Post Warrantee

Routine Maintenance

Preventive Maintenance

First Line Maintenance

2 nd Line Maintenance

Front Line Maintenance

Repairs & Refurbishment

High Cost FacilitiesManagement EAS-14/03-21

Life Cycle Asset Management Costs

Life Cycle Cost Schematic

Asset DesignLife Labour rates Disposal Process

Costs

ScrapCosts

TOTALCAPITALCOSTS

DISPOSALAMOUNT

Throughput(e.g. commercial)

Availability MTTR MTBF

Composite Yield(Maintenance)

Asset Management Costs

Availability MTTR MTBFFacilities Management

OperatingCosts

Investment CapitalCost

Facil

ities

Man

agem

ent

“Dea

th Tr

ap”

Investments

Operations

S“Calculator”

Project Life Cycle

Product Life Cycle

Life Cycle Asset Management Costs

EAS-14/03-22

FUNDS

EQUIPMENT & MATERIAL PEOPLE

FACILITIES&

INFORMATION

RELIABILITY MAINTAINABILITY

No OFFAILURES/

ANNUM

DETERIORATION

SKILLS BENEFITS

Unavailability &Environmental

Safety & QualityEffects, etc.

Spare partsCost/Failure

RepairTime

Wages( + x )

CAPITAL COSTS

RESOURCE COSTS

CONSEQUENCE COSTS

TRAINING COSTS

Maintenance Services,Tools & Depots,Energy Costs

Costs of Systems& Documentation

JOB COSTS

Costs of Lost Production, Safety & Quality effects

Extra Capacity Costs,Refurbishment & Upgrade

Lost Opportunity Costs

The COST Model

TRAINING COSTS

Maintenance Services,Tools & Depots,Energy Costs

Costs of Systems& Documentation

JOB COSTS

Extra Capacity Costs,Refurbishment & Upgrade

Lost Opportunity Costs

Crisis Management

EAS-14/03-23

Life Cycle Asset Management Costs

Asset to bereplaced

Optimum Life Cycle Investment CostsT

otal

Cos

t of O

wne

rshi

p(a

ccum

ulat

ive)

(T

CO

)

30

20

10

40

50

60

70

80

90

100

%

Years30% 100%

Acquisition(Project Costs)

Operating &Maintenance

Real Time

Total CostOf OwnershipTCO (100%)

Latest Start ofReplacementAcquisition

50%X

EAS-14/03-24

Operating &Maintenance

Asset to bereplaced

Cost OverrunT

otal

Cos

t of O

wne

rshi

p(a

ccum

ulat

ive)

(T

CO

)

30

20

10

40

50

60

70

80

90

100

%

30% 100%

Acquisition(Project Costs)

(~40% to 50%)

Real Time

Operating &Maintenance

• Dramatic Increase in Total Costs

• Substantial REDUCTION of total Asset Life

• ORG forced into new acquisitions prematurely

• Major IMPACT on MTEF

EAS-14/03-25

The maintenance system DoMaintenance

Work

ActivateMaintenance

Work

DevelopMaintenance

Strategy

DetermineEquipmentImportance

DevelopMedium-term

Plan

DevelopBusiness

Plan

DevelopProduction

Plan

MaintainInfrastructure

PlanInfrastructure

MeasureWork &Improve

ImprovementAdministration

Work management cycle

MeasureInfrastructure

& Improve

Infrastructure management cycle

ProvideResources

MeasurePerformance

& Improve

Asset management cycle

DevelopPeople

MaintainOrganisation

Structure

MeasureOrganisation

HUM & improve

Organisation management cycle

Produce

MeasureSafety & Improve

Maintain SafetyAwareness

Methodology (SAM)

Do SafetyAwareness Field

Education (SAFE)

Safety management cycle

The desired asset management strategyEAS-14/03-26

DoMaintenance

Work

ActivateMaintenance

Work

DevelopMaintenance

Strategy

DetermineEquipmentImportance

DevelopMedium-term

Plan

MeasureWork &Improve

ImprovementAdministration

Work management cycle

ProvideResources

MeasurePerformance

& Improve

Asset management cycle

Produce

Crisis Management will get us stuck here …

(manual measurements)

EAS-14/03-27

MAXIMUMUTILISATION

OF RESOURCESVISION

TRAINING

LEADERSHIPAND

INVOLVEMENT

VALUEFOR

MONEY

COMMUNICATION

Maintenance VISION

Maintenance Focus: AMU

EAS-14/03-28

ORGANISATION

POLICIES

ORGANISATION SYSTEMS

ACTIVITIESDEVELOPMENT

PEOPLE

PLANNING

CONTRACTINGCONTROL

COMPUTERSYSTEM

SOLUTIONS

ASSETMANAGEMENT

SUPPORT

AUDITS

Maintenance Governance

EAS-14/03-29

Maintenance Focus: AMU

Asset Conditionbased Management

CircumstantialManagement

“Fix-it” Mentality

Planned & Predictable

“Wait until Disaster Strikes, then go out and

fix it”

“Can you plan a disaster?”

(Fix it while it breaks!!)

“Working harder,distribute maintenance

teams, fix it in a workshop”

“Working smarter, prevent the asset to fail!

- Asset Management (Evolution)

EAS-14/03-30

This is where we come from

CURRENTPREDICAMENT

TURN-AROUNDTHRUST

SUSTAINABLEGROWTH

“Fire FightingMaintenance”

PreventiveMaintenance

Ad hocMaintenance

Apply Systems

MaintenanceIntegration

ContinuousImprovement

Availability

Life CycleProfit

Business Approach

Asset ConditionMonitoring

Asset ConditionManagement

SAN 55ISO (9000+14000)

Planned & Predictable

CircumstantialManagement

Asset Conditionbased Management

“Fix-it” Mentality

- Asset Management (Evolution)

EAS-14/03-31

• The management of physical assets is the cornerstone of our Economy

• Asset Management Practitioners should take the lead in the management of assets towards maturity.

• Programme and Project Management are the most critical focus areas for the restructuring of our assets and the creation of jobs for the years to come.

CONCLUSION

THANK YOU !!!THANK YOU !!!

YOUR TIME HAS RUN OUT !!!!!YOUR TIME HAS RUN OUT !!!!!

EAS-14/03-33