OPTIMAL MANAGEMENT OF PHYSICAL ASSETS PAS 55 COMPLIANCE

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2 OPTIMAL MANAGEMENT OF PHYSICAL ASSETS PAS 55 COMPLIANCE Michael Blalock Global Industry Director - Energy & Utility IFS

3 GREAT NEWS! FOR IFS ASSET MANAGEMENT CUSTOMERS THE GREAT NEWS... YOUR DECISION TO IMPLEMENT IFS HAS GIVEN YOU A BIG HEAD START IN IMPLEMENTING THE EMERGING GLOBAL ISO STANDARD FOR ORGANIZATIONAL EXCELLENCE IN ASSET MANAGEMENT THE CHALLENGE AHEAD... IMPLEMENTING CHANGES TO RATIONALIZE YOUR ASSET MANAGEMENT POLICY, STRATEGIES, AND PRACTICES TO TAKE ADVANTAGE OF THESE NEW CAPABILITIES 3

4 DISCLAIMER IFS does not provide management consulting in the area of organizational readiness for PAS 55 adoption or for organizational compliance with the BSI PAS 55 specification. In these areas, IFS works closely with consulting partner, Conscious Asset Management, of Toronto, Canada. Conscious Assets is an international management consulting firm, founded by James Reyes-Picknell, author of the maintenance book, Uptime Strategies for Excellence in Maintenance Management, and past director of PricewaterhouseCoopers Global Excellence Centre for Maintenance. In light of its potential implications to our Asset Management clients... from a regulatory over sight perspective and in stakeholder inquiries... and based on its potential positive impact to management practices and governance, this presentation is made to raise the general awareness of the PAS 55 specification, its ISO adoption, and the positive impact of IFS Applications use in contributing to adoption and proof of compliance. 4

5 PAS 55 BACKGROUND PUBLICALLY AVAILABLE SPECIFICATION 55 IS A SPECIFICATION FOR THE OPTIMIZED MANAGEMENT OF PHYSICAL ASSETS: Authored by and property of the British Standards Institute (with contributions from the IAM) in 2004 (Last Revised 2008) Responds to demands of Industry and Regulators for an organizational STANDARD FOR ASSET MANAGEMENT Targets Heavy Industry, like Energy, Utilities, and Oil & Gas 5

6 PAS 55 WHY SHOULD YOU CARE? YOUR STAKEHOLDERS DO! 6 Working Item Proposal approved June ISO is writing a new standard, ISO 55000, based on PAS 55. Gaining Momentum with Regulators, Investors, and other Stakeholders Will be used as a measure of management prudence in management of asset intensive businesses Will gain inertia as Good Governance and Management Practices in asset management Strong Benefits cited by Early Adopters in Business Performance

7 ASSET MANAGEMENT DEFINITION THE SYSTEMATIC AND COORDINATED PRACTICES THROUGH WHICH AN ORGANIZATION OPTIMALLY AND SUSTAINABLY MANAGES ITS ASSETS AND ASSET SYSTEMS, THEIR ASSOCIATED PERFORMANCE, RISKS AND EXPENDITURES OVER THEIR LIFE CYCLES FOR THE PURPOSES OF ACHIEVING ITS ORGANIZATIONAL STRATEGIC PLAN 7

8 ASSET MANAGEMENT SYSTEM DEFINITION FOR PURPOSES OF PAS 55 AN ASSET MANAGEMENT SYSTEM IS THE SET OF COLLECTIVE GOVERNANCE, ASSET MANAGEMENT POLICY, STRATEGIES, OBJECTIVES, AND PLANS THAT DIRECT THE LIFECYCLE ACTIVITIES TO BE APPLIED ACROSS THE PORTFOLIO OF ASSETS IN ACCORDANCE WITH THEIR CRITICALITIES, CONDITION, PERFORMANCE AND CHOSEN RISK PROFILES TO ACHIEVE THE ORGANIZATIONAL STRATEGIC PLAN. 8

9 SO WHAT IS PAS 55? It s a set of organizational governance, policy, strategies, practices and directives to achieve ORGANIZATIONAL EXCELLENCE in ASSET MANAGEMENT much as ISO 9001 deals with an organization s Quality Assurance policies and practices. It s not an I.T. Standard... It s not an I.T. System... It s not a How To Best Practices Cookbook... 9

10 PAS 55 PUBLICALLY AVAILABLE SPECIFICATION 55 Seeks to address What to Do? not How to Do It? and targets the Strategic Issue of rationalizing the corporation s strategic vision and goals with the corporation s asset management actions: 10 Policy Strategies Objectives Plans Management of Change Asset Management System Documentation

11 PAS 55 ORCHESTRA ANALOGY GREAT MUSICIANS AREN T ENOUGH If Your Company has implemented Best Practices, each Department is like a Virtuoso that can play with beautiful results. Putting them together, each in its own uncoordinated silo, is like the sound of an orchestra getting warmed up for a symphony... The results far less than optimal. PAS 55 provides that coordinated ASSET MANAGEMENT SYSTEM with the synergy of a single piece of music with the Conductor 11

12 SCOPE OF PAS 55 & INTERFACES (FIGURE FROM PAS 55-1:2008, BSI, SEPT 2008) Information support is critical to the sharing of knowledge across these interfaces. It must be consistent and focused on the company s strategic direction Otherwise you get operating silos.

13 AM SYSTEM STRUCTURE FIGURE FROM PAS 55-1:2008, BSI, SEPT 2008

14 7 KEY AREAS TO PAS 55 ATTAINMENT FIGURE FROM PAS 55-1:2008, BSI, SEPT 2008

15 CRITICAL AREAS FOR ATTAINMENT 4.1 GENERAL REQUIREMENTS - Have an AM defined system! This shows your approach to managing assets throughout their life cycle. It will generally consider: Enablers and Constraints Inputs you utilize Outputs you deliver Processes you will utilize, manage, outsource 15

16 CRITICAL AREAS FOR ATTAINMENT 4.2 AM POLICY AM Policy flows from the organization s strategic direction. It supports the company s interests and states what the AM system will do. It includes elements like: Statements of the values / behaviors Risk tolerance Safety Environmental & Regulatory compliance Continuous improvement Policy can be thought of as a strategic corporate intent that is to be met through AM. It will be implemented through an AM strategy. Policy is a top level document endorsed by top management (CXO level). 16

17 CRITICAL AREAS FOR ATTAINMENT 4.3 STRATEGY Defines what the corporation s assets do and the performance levels they are to attain while meeting the needs of stakeholders. At a high level, strategy defines the major activities / paths you will follow to deliver the policy requirements. Strategic initiatives have objectives to be achieved. Plans are put in place to achieve those objectives taking into consideration : Legal Regulatory Financial Stakeholder and other requirements Plans are developed for major aspects of your AM system like design process, risk management, availability of spares, reliability sustainment, contingencies for emergencies or major events that can be reasonably anticipated. 17

18 CRITICAL AREAS FOR ATTAINMENT 4.4 ENABLERS AND CONTROLS The details of HOW you implement the plans: Organizational structure Who is responsible for what and levels of authority, Management of Outsourced Activities (including info sharing and retention of knowledge) Consultation with stakeholders (internal and external) Documentation across the entire organization, How information management system is used Definitions of risks and how they will be managed Change Management Legal and other requirements 18

19 CRITICAL AREAS FOR ATTAINMENT 4.5 IMPLEMENTATION Is all about taking action. You ve planned your work, Now you work your plan: It s about doing and monitoring results Applying enablers and controls to get the plans into place and use them throughout the life cycle of the asset. Collecting records/data that enable monitoring of performance and demonstration compliance 19

20 CRITICAL AREAS FOR ATTAINMENT 4.6 PERFORMANCE ASSESSMENT AND IMPROVEMENT Prove you are doing what you said you would do. Information was collected during implementation of plans (4.5). Now apply performance monitoring and measurement against standards and objectives. What gets measured get s done and improved. Targets that are set through activities like benchmarking. The targets, measurements, and the gaps are communicated to those who need to know. You deal with failures and non-conformances Evaluate compliance with regulations, legal and other requirements collecting evidence that you do comply and keep records of those evaluations / evidence. Audit results are reported to top management. Improvement actions are tracked as they are implemented. 20

21 CRITICAL AREAS FOR ATTAINMENT 4.7 MANAGEMENT REVIEWS Used as a tool to keep top management informed and engaged The entire AM System is reviewed to see that it is delivering results and to ensure it is working efficiently and being continually improved. Audit results, incident reports, etc. are all part of what is reviewed. Attention to detail applied here keeps the focus on AM keen and the AM System alive, rather than just another documented set of practices that may or may not be followed. 21

22 THE ROLE OF INFORMATION SYSTEMS IN PAS 55 ADOPTION AND COMPLIANCE

23 KEY PAS 55 REQUIREMENTS The organization shall (Section 4.4.6): Identify Asset Management information considering ALL PHASES of the ASSET LIFE CYCLE Provide INFORMATION ACCESS TO ALL employees and stakeholders, including contract services providers of information relevant to their activities or responsibility Ensure that the INFORMATION IS CONSISTENT across all information systems (one version of the truth). 23

24 PAS 55 SETS PROCEDURE GOALS FOR INFORMATION MANAGEMENT CONTROL Specification sets goals for I.T. governance & control: 24 Adequacy of information is approved by authorized personnel prior to use. Info is maintained and adequacy insured through periodic review and revision including version control. Allocation of appropriate roles, responsibilities, and authorities regarding the origin, generation, capture, maintenance, rights of access, retention, archiving & disposal of information Obsolete information is promptly removed from all points of issue and points of use Insure information is secure, is backed up, and can be recovered.

25 PAS 55 ADOPTION AND COMPLIANCE CAN BE ENABLED BY INFORMATION SYSTEMS PAS 55 specification does not specifically address the how to of system requirements to achieve goals, but selection of the right I.T. capabilities significantly enhance adoption efforts by providing a consistent, systematic, and documented framework for: Documenting & Implementing AM strategies, plans, and actions Tracking of relevant information to drive performance assessment & improvement Providing documentation and reporting Facilitating communications and other activities Tracking as designed, as decided, and as built status of assets over life cycle, supporting all stakeholders needs. 25

26 CREATION OF INFORMATION Drawings Documents Equipment information BOM Control System Info Tag & Tag structures Safety Instructions Design/Redesign Operations Decommission 26

27 7 KEY AREAS TO PAS 55 ATTAINMENT WHY IS IT SYSTEM SUPPORT IMPORTANT IN PAS 55? FIGURE FROM PAS 55-1:2008, BRITISH STANDARDS INSTITUTE, SEPT 2008

28 7 KEY AREAS TO PAS 55 ATTAINMENT 4.3 ASSET MANAGEMENT STRATEGY, OBJECTIVES & PLANS I.T. System as a repository, communications mechanism, and deployment tool for asset management plans and contingency (4.3.3 Asset Mgmt Plans and Contingency Planning). Use of Business Modeling tools to capture, document, and deploy business processes and AM plans for review and adoption (4.3.3 AM Plans & Contingency). FIGURE FROM PAS 55-1:2008, BRITISH STANDARDS INSTITUTE, SEPT 2008

29 7 KEY AREAS TO PAS 55 ATTAINMENT 4.4 ASSET MANAGEMENT ENABLERS AND CONTROLS Structured roll out of roles and security (4.4.1 Roles, Authority, and Responsibility) A tool to manage outsourced AM activities through service contract management (4.4.2 Outsourcing of AM activities) A framework for organizational skilling, training of AM processes, and knowledge management (4.4.3 Training, Awaremess and Competence) Integrated document management over the total asset life (4.4.5 Asset Management ). Collaboration support for all stakeholders & reporting as evidence of PAS 55 compliance. Communicate and train AM processes and plans to all stakeholders (4.4.4 Communication, participation, and consultation). FIGURE FROM PAS 55-1:2008, BRITISH STANDARDS INSTITUTE, SEPT 2008

30 7 KEY AREAS TO PAS 55 ATTAINMENT 4.5 IMPLEMENTATION OF ASSET MANAGEMENT PLANS Systematic tracking of all relevant history and planned actions across asset lifecycle (4.5.1 Lifecycle Activities) FIGURE FROM PAS 55-1:2008, BRITISH STANDARDS INSTITUTE, SEPT 2008

31 7 KEY AREAS TO PAS 55 ATTAINMENT 4.6 PERFORMANCE ASSESSMENT AND IMPROVEMENT Repository for performance and condition monitoring data as a basis for improvement (4.6.1 Performance and condition monitoring) Asset history repository as a basis for investigations, analysis, and improved actions (4.6.2 Investigation of asset related failures, incidents, and non conformities & Improvement Actions) Systematic tracking of all relevant history and planned actions across asset lifecycle as proof of conformance (4.5.3 Lifecycle Activities) FIGURE FROM PAS 55-1:2008, BRITISH STANDARDS INSTITUTE, SEPT 2008

32 7 KEY AREAS TO PAS 55 ATTAINMENT 4.7 MANAGEMENT REVIEW Repository of consistent and accurate asset history, performance, improvement plans, and results. Business Intelligence and Analytics providing a framework for management assessment of effectiveness of asset management policies, strategies, objectives, and plans. FIGURE FROM PAS 55-1:2008, BRITISH STANDARDS INSTITUTE, SEPT 2008

33 DISCUSSING ESSENTIAL ELEMENTS OF ASSET RELIABILITY AND MAINTENANCE PAS55 CAN APPEAR BUREAUCRATIC, BUT... Optimized management requires a cross functional approach that can be achieved with up front work defining the How To & documenting what is already being done (in most cases) What s challenging is not doing what PAS 55 calls for, but in showing that you do it. 33

34 ENSURING A SMOOTH IMPLEMENTATION EXPERIENCE FROM EARLY ADOPTERS MOST COMPANIES ALREADY DO MOST OF THE WORK BUT CAN T DEMONSTRATE IT: Strategic intent is missing (leadership) What they do is not well documented, especially where processes cross functional boundaries Organizational silos sub-optimize results Record keeping insufficient to support proof 34

35 WHERE THE FOCUS IS NEEDED Corporate Leadership in Asset Management Policy and support for AM System Support Cross Functional Business Processes Can lead to significant cultural change management issues Documentation of Existing Processes and Practices Alignment of data collection and record keeping to demonstrate what is being done 35

36 ARE YOU READY? Self assessment IAM has published a self assessment tool Beware of interpretation of PAS 55 wording Third party assessment 1 to 2 weeks Certification Without regulatory push, this is nice to have 36

37 GATHERING AND ANALYZING ESSENTIAL ASSESSMENT DATA DOCUMENTATION: 37 Statements of policy, strategies, objectives, procedures, practices, plans Can you define your overall AM system? How do you address key life cycle asset management processes? Process maps / flowcharts RECORDS How closely do you really follow them? Document & demonstrate compliance to your processes Reports can be used if available but may need to be tailored to demonstrate process compliance Think of what your stakeholders may ask Think of how you will prove what you do to a 3 rd party

38 INFORMATION MANAGEMENT Expect much to be poorly or inaccurately documented Processes and how to s may be all over the organization and rarely shared Expect that reports don t exist to show that you follow your processes Expect that silos horde information Duplication and inaccuracy are the result Expect that data / records being collected do not support their intended processes very well 38

39 THIS DOCUMENT MAY CONTAIN STATEMENTS OF POSSIBLE FUTURE FUNCTIONALITY FOR IFS S SOFTWARE PRODUCTS AND TECHNOLOGY. SUCH STATEMENTS OF FUTURE FUNCTIONALITY ARE FOR INFORMATION PURPOSES ONLY AND SHOULD NOT BE INTERPRETED AS ANY COMMITMENT OR REPRESENTATION. IFS AND ALL IFS PRODUCT NAMES ARE TRADEMARKS OF IFS. THE NAMES OF ACTUAL COMPANIES AND PRODUCTS MENTIONED HEREIN MAY BE THE TRADEMARKS OF THEIR RESPECTIVE OWNERS IFS