content
Macro View: The asset as a project...................................................................... 2
Design, Operate, Maintain ..................................................................................... 3
Major Stoppages ..................................................................................................... 5
Micro View: Day to Day Maintenance..................................................................... 5
Conclusion............................................................................................................... 7
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How To Use Projects to Master Asset Management
By Ulf Stern, Co-Founder, IFS AB
Jeffrey Kessler, EAM Implementation Manager, IFS North America
In this whitepaper, we will discuss how project-based software solutions are essential
for asset-intensive industries, and explore the specific ways that project, maintenance
and financial functionality must be integrated in an enterprise software tool in order
to control the many variables that management in these industries needs to manage.
You want to be able to manage the future—not only the past. We will address how
this information can be leveraged in the company on a macro level for strategic
decision-making in the board room as well as on a micro level to facilitate technical
activities in the maintenance department.
The enlightened manager of an asset-intensive industry knows that his or her
role, at its core, consists of maximizing the amount of value gleaned from a capital
asset. Whether that asset is a nuclear power plant, hydroelectric dam, distributed
network, pulp and paper plant, chemical process manufacturing plant, coal-fired
power plant or some other type of heavy industrial complex, it is the responsibility
of management to ensure that between plant start-up and retirement that maximum
value is realized and that cost is minimized.
So on a macro level, management of this capital asset can be seen as one large
project, and the technology used to operate and administer such an industry must
allow for full asset lifecycle management (ALM). However, during that lifecycle,
there are numerous other projects that feed into this master schema. From a complex
task like a seasonal shut down for maintenance and refit to a small task like the rebuild
of a single pump, everything that happens to this asset must be managed and
accounted for in an enterprise asset management (EAM) tool, and that EAM tool
must tie into the general ledger of the enterprise and with the overarching ALM
technology used to administer the asset.
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How To Use Projects to Master Asset Management
Maximizing the return on a corporate investment in capital assets requires a manager
to pay attention to a number of dynamics, including:
•
and maintenance are also necessary costs and must be intelligently managed to Time. Production is the source of the return on a capital investment in anyResources. A manager of an asset-intensive industry must make the best use ofCash. Even when an asset is delivering a positive return in the intermediate term,Risk. Poor access to asset information across organizational boundaries, and a
If you think of the lifecycle of an asset as one long project—a project that might last
for as long as 20 or more years—it becomes apparent that the project starts with the
engineering and construction processes. The project then comes to include the cost
to maintain, operate and refit, and culminates with a well-informed decision to
decommission and replace the asset. In the absence of fully functional, flexible and
integrated EAM and ALM systems, managing the lifecycle of the asset from cradle
to grave is a challenge.
Even though asset management technology has made enormous leaps in recent
years, in some ways it may have been easier to manage major assets 30 years ago than
it is today. This is because years ago, industries tended to have their own in-house
engineering departments that designed major refits as well as new construction.
Today, this work is outsourced, which makes it challenging to keep all of the information
necessary for ALM in one place and in a format that supports executive
decision-making.
Even if lump sum information on the cost of initial construction can be tracked
and entered into an EAM tool, specific granular analysis that can aid in decision
How To Use Projects to Master Asset Management
3making will be absent. Particularly in the case of a more complex asset, specific
production lines, process lines or pieces of equipment may need to be tracked as
separate assets in order to support replacement and decommissioning decisions.
Therefore, it is critical that at the very least, asset owners obtain detailed structured
data during the design and construction phases and at the conclusion of a capital
project—structured data that that can form the basis of a detailed asset management
system. Records of how the asset was designed and how it was built can then be
augmented with information as to how it was operated and maintained. This in turn
allows for true cradle-to-grave ALM that supports very granular executive decisionmaking.
As maintenance costs increase on a specific part of an asset, this comprehensive
view of information allows an executive to make an informed decision of
when to replace a specific asset, or whether to order a refit to extend the life of the
asset.
In order to effectively make the big, macro decisions, corporate management
needs visibility to the micro-level details of how much it is costing them to maintain
the asset in real time. They also need to be able to see detailed projections of
maintenance and operational costs into the future, and be in a position to understand
the relationship between asset value and productivity, operational throughput,
maintenance cost and the cost of total or partial asset replacement. To a certain
extent, many enterprise-wide software systems including enterprise resources
planning (ERP) might offer some of this type of information, with the exception of
maintenance activities, which are often managed on a completely separate system.
This separate silo for maintenance activity not only hides vital asset information
from corporate management, but can lead to a situation where maintenance is seen
as lacking in strategic importance, devaluing the very activities that can prolong the
life and increase the productivity of the asset.
But granular asset information kept in a powerful EAM application can have
implications well beyond the board room, where executives are making decisions on
a corporate basis. But it is certainly true that in order to be effective, corporate
executives need access to ALM technology and information that allows them to
treat the entire asset lifecycle as one long project.
Design, Operate, Maintain
Comprehensive asset management and EAM tools also provide vital information to
managers involved in the day-to-day operation of a plant. For these constituencies
as well it is important that technology encompass information on the entire lifecycle
of the asset, including design and construction. Put yourself in the shoes of the
Director of Facilities of a major industrial plant that has just been started up for the
first time. As pressures and temperatures start to come up to specification and product
begins flowing, a head pressure problem develops in a critical compressor unit.
Maintenance is dispatched to the site but quickly finds that it lacks the information
to diagnose the problem.
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How To Use Projects to Master Asset Management
The necessary data, it turns out, is not yet available in the asset management system,
but instead is part of an as-built document sitting in a file drawer. Because of this
informational gap, the plant experiences unplanned downtime, and total throughput
suffers, affecting the quarterly bottom line. Even if data on the asset had been entered
in the EAM package already and the unplanned stoppage diverted, efficiencies are
lost unless the facility engineering information is visible to maintenance and operations
professionals even before construction starts. As specifications for a new facility or
a facility expansion are decided upon, the project owner can begin ordering replacement
parts and other supplies that will be necessary to maintain the new asset. If
certain production machinery will be decommissioned or replaced, the maintenance
department can de-prioritize preventive maintenance and divert attention to other
areas of the plant.
The line between the construction of an asset and the operation and maintenance
of the asset is an imaginary one, as the information on the asset still needs to be used
immediately after construction and fabrication are completed. Lacking systems that
can bridge the engineering and manufacturing operations world, the necessary result
is unplanned down-time.
Or what about the director of maintenance who finds that a new production line
suffers from unplanned stoppages caused by the same design features as the line it
replaced? Data contained in years of maintenance records could have revealed that
design changes that are necessary, the system engineers did not have access to as-maintained
or as-operated data that would help them improve the design. Unless asset
data can flow from the asset owner to the designer freely, an outsourced engineering
firm might not know that maintenance engineers had upsized several pumps on the
line they are replacing—a change not included in the as-built (or as-maintained)
information on the pre-existing line. Without a powerful and flexible EAM system,
it may also be difficult to get information to design engineers on areas where the
existing asset design could be improved upon. If certain maintenance tasks took
longer because of a lack of adequate service access, that should be apparent from
maintenance records if they can be accessed and communicated in a usable format
for the design engineers.
Like ALM; Design, Operate, Maintain (DOM) is a way of thinking about an
asset as a project as well; ensuring that good and complete information flows between
all of the parties who have hands-on, daily involvement with asset data. Information
on new facilities must be made to populate an EAM application right from the start
of operation to facilitate optimal performance and reliability. And at the end of the
lifecycle, an EAM application must be able to harness the decades of user experience
and use to facilitate continuing improvement in facility design, allowing an even
greater return on the enterprise's next capital investment.
5
Preventing unplanned stoppages is one goal of implementing an EAM software
product, because the functionality of these programs can allow facilities managers to
engage in predictive and preventive maintenance. In many production environments,
downtime is planned periodically to allow maintenance and a refit of substantial
portions of a facility.
In order to allow for major refits and larger maintenance projects, power plants,
power transmission and distribution utilities and other primary process industries
plan periodic plant outages when backup capacity is available.
Consider for a moment the situation faced by the chief executive and maintenance
director at a coal-fired power plant that has one stop per year for major overhauls.
There is a pressing need to meet the project timeline because each day of downtime is
worth millions of dollars, and there is a significant degree of project complexity as
outside contractors are hired, equipment is rented and perhaps additional maintenance
shifts are added. Robust project management functionality that is integrated on a
very granular level with a powerful EAM application can help manage the resources
necessary to complete the required tasks in the time allotted. While the ability to
manage to meet the deadline is one strong argument for integrated project and EAM
functionality, even greater benefit can be realized if project and EAM functionality
are tied into an overarching ALM system and the general ledger. The ability to look
at a plant shutdown from an ALM and financial perspective can help determine if it
makes sense to bring in additional outside resources in order to shorten the amount
of down-time. To what extent will the outside cost of hiring contractors and equipment
increase total return on the asset in the intermediate to longer term? The use of
outside contractors for maintenance activities has increased worldwide specifically
because of this thought process. Fully integrated project, maintenance, ALM and
finance functionality can allow more informed decisions on how to reduce down
time, and can therefore be a real competitive advantage for the asset-intensive industry.
Many asset-intensive companies do not have in place the proper tools to efficiently
optimize the activities associated with a plant shut down, and certainly do not have
the right tools to proactively reduce planned downtime. Companies that get the right
tools in place and leverage them to their full extent will have lower overhead and
greater productivity, while their competitors fumble to keep up.
Major StoppagesMicro View: Day to Day Maintenance
In a large-scale project environment like an asset-intensive industry, an effort to
track the cost of operating and maintaining the asset is dependent on effective cost
tracking on thousands of smaller projects. On this micro level, integrated project,
finance and EAM functionality is critical. When working in a properly-integrated
enterprise application it is much easier to structure a maintenance project to collect
all of the cost, including procurement, manufacturing-related activities that are
completed with shop orders and work orders that are used to collect technicians'
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How To Use Projects to Master Asset Management
time. Integrated functionality will also allow analysis of project cost by different
breakdown structures, and each activity can be assigned to a different funding line.
Moreover, because a number of different departmental and functional activities
can be tracked against a single project or in the aggregate, it becomes much easier to
identify the periodicity of failures in specific pieces of equipment. This can be
invaluable information as a maintenance director communicates with senior
management during the capital budgeting process. Thorough information on what a
specific piece of capital equipment costs to operate can inform a refit or replace
decision. But these decisions are much harder to make when the true cost of maintenance
is lost to inefficiencies in administrative systems.
Specifically, what are these inefficiencies that can hamstring your asset management
efforts? Consider the challenge faced by maintenance teams engaged in a more
complex maintenance project, like replacing a boiler system, without integrated
EAM, projects and work order capability. This project likely involves internal staff
time, contractors, inventory parts and materials purchased specifically for the project.
If this team is using a standalone project management system, they will at the very
least have to retrain their maintenance technicians to use projects to capture materials
and time rather than using the work orders normally used by technicians for other
work. Even if you were to engage in this retraining initiative, project cost reporting
capabilities may suffer and senior management still won't have a clear idea of the
project cost. Furthermore, forcing maintenance technicians to abandon their familiar
work orders in favor of project management software can result in lost or poor
quality asset data. Work orders allow the technician to report how and why they
did things at a given time. This information can be used to track the frequency and
cause of equipment failure—crucial data that might be lost if work orders are
abandoned on larger maintenance projects.
Another advantage of integration between work orders and project functionality
is that engineering can still use a projects application to track their work, report
time and buy materials like they are used to and maintenance staff can still use
work orders like they are used to, reporting work, time and expenditures, and it all
ends up on the same project line item for later analysis.
Long after that boiler is replaced, the project history contained in work order
documents will comprise valuable details for the equipment objects in your EAM
system. The details of that initial install are important to technicians engaged in
ongoing maintenance, and will provide insight on challenges encountered during
the install, why the boiler was installed in a particular way and why a piece of
equipment is running at a certain speed.
And even if project and EAM functionality is integrated and this asset data is
preserved, but these systems are not integrated with other systems company-wide
like purchasing and finance, there will be a disconnect when allocating inventory to
the project and sharing and analyzing total project and asset management cost.
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as a result double-entry is required to get information into both parallel systems. Of
course this is a drain on administrative time and creates opportunities for errors and
lost asset data. Integration eliminates this—information can be entered on the project
or the work order and it all ties back to the same project.
Conclusion
Today, most companies still operate separate project and work order software, andManaging asset intensive industries really consists of optimizing the lifecycle of an
industrial facility, and that lifecycle can be viewed as one long decades-long project.
Where better asset information is available to senior managers, they will have better
control over the project and the management of the future - not only the past. This
leads to better decisions—decisions that can comprise a competitive advantage.
However, the data necessary to make decisions about this asset lifecycle project is
comprised of data from thousands of smaller projects completed by maintenance
technicians, engineers, contractors and other parties. That is why integration of
project, EAM and other technology tools used company-wide is so crucial for the
asset-intensive company.
When planning EAM projects for your asset-intensive business, there are three
things to keep in mind that can help you get the most out of your technology and
your asset data.
• Almost every department in an asset-intensive business, from production to
human resources to purchasing to engineering to maintenance, is working
hands-on with information on the cost of operating the asset. That means that
true ALM systems need to incorporate all of these functional areas in order to
provide accurate cost and benefit information so that executives to manage for
profit.
• Pay special attention to how project functionality used in engineering and capital
projects is tied in with maintenance and EAM functionality. Strong integration
between tools used to undertake major projects and tools used to maintain the
asset will help automate the transition of asset data from capital projects into the
EAM system. It will also provide better, more consistent and reliable information
on the cost of operating the asset. Lacking this integration will result in some
cost data falling outside of the auspices of the maintenance department, which
then may be misclassified or go unreported.
• EAM software needs to be integrated tightly with financial management software,
not only to accommodate tracking of asset cost, but in order to allow for strategic
decision-making about maintenance and the asset. This tight integration allows
senior management to determine, for instance, if it makes financial sense to outsource
more work to maintenance contractors in order to shorten the duration of a
planned shutdown, and can help maintenance directors justify much-needed capital
spending as the cost to maintain specific pieces of equipment becomes apparent.
En4801-2 Production: IFS Corporate Marketing, January 2010.
yield the highest return.
EMAD HANI ISMAEEL
Ph.D. in Technologies for the Exploitation
of the Cultural Heritage .
Senior Lecturer in the Dept. of ArchitectureE-mail: emadhanee@yahoo.com
College of Engineering , University of Mosul
Mosul - Iraq .
Web Site: http://sites.google.com/site/emadhanee/
Tel : +964 (0)770 164 93 74
•
industrial facility. Production time can only be maximized by minimizing and
making the best use of down time and operating the asset to maximize equipment
efficiency.
•
the materials, tools, facility and staff at his or her disposal. Particularly careful
decisions need to be made regarding outsourcing or in-sourcing facilities management
and maintenance activities.
•
business still operates on a month-by-month, quarter-by-quarter basis. Real-time
information on what it costs to operate the asset allows an executive to manage
the present rather than adjust for the past.
•
lack of control over cost, time, resources and cash exposes the asset-intensive
company to tremendous risk. Only the right asset management technology can
help executives mitigate this risk.
Macro View: The asset as a project
Cost. Downtime represents cost, and must be used to its best advantage. InventoryHow To Use Projects to Master Asset Management
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