Asset management

The Brief Guide on Asset Performance Management

Asset Performance Management (APM) is an approach that manages the information from various sources of data on physical assets throughout the organization. The management of information includes retrieval of data from different sources, integrating the data, applying analytics, and deriving visuals sufficient to facilitate asset management decision making. Successful deployment of APM requires consideration of data points that affect asset health or performance in every possible way. This will include people, processes, methods, to collect data and built an APM instance adapted to the challenges of the organization.  Asset age, failure records, reliability models, maintainability and availability figures, safety records are the type of information to be collected or created during the deployment process.

While the term APM was exclusively used first by Meridium (later acquired by IBM), it has now gained widespread significance as the electric utility industry becomes more cognizant of growing big data management challenges. APM provides a foundational framework for effective data utilization and enables an alignment of assets’ performance with the core business objectives over their life cycle.

Key Elements of APM Strategy:

Despite the widespread popularity of the term APM within the electric utility sector, it is still dominantly misunderstood as just the deployment of software that tracks asset health index. While the software does play a crucial role in APM deployment, it is not the only factor. Successful organizations maximize value from APM implementation by considering other factors beyond asset conditions such as consequences of asset failure, material solutions, inventory, operation and maintenance data, human factors, environment, and other technical, organizational and financial information.

1.    Enterprise-wide Data Management Capability

Enterprise-wide data management means managing the data from all aspects of the utility’s business in a coherent manner. Often the data is segmented in silos such as personal workstations, paper records, isolated cloud servers such as Supervisory Control and Data Acquisition (SCADA), and Outage Management Systems (OMS), customer relationship tools, financial tools, and inventory management. Such data is often restricted and no one team at any given time has access to all the silos of data.

This effect makes it difficult to understand the influence of each aspect of the business on the performance of an individual asset. The deployment of the enterprise-wide data lake or single database can integrate all streams of data points and enable comparison and analysis of each data point in line with the utility’s business objectives.

2.    Understanding Regulatory Context

The regulatory environment is evolving to facilitate utilities to transition to the internet of things (IoT), digital twins, machine learning, and artificial intelligence-based performance management. Utilities are expected to substantiate their rate-filing applications through transparent data collection processes that limit human intervention.

Previously, utilities were able to get away with increasing rates to their customers just by incorporating age-based asset replacement plans. Now, with an increasing focus and awareness of asset optimizations and APM on the part of regulatory agencies, utilities are pushed more than ever to undergo digital transformation to create and sustain their asset management plans.

3.    Transition to Risk-based Decision Making

An effective APM strategy enables the creation of a risk-based asset investment plan. A risk-based plan is a plan that looks into the impact of losing the performance of the asset. Generally, asset failure risk  is the combination of two components: the probability of failure of assets and the consequences of failure for the organization that operates and maintains the asset portfolio and the external stakeholders like clients or service users. Some risk assessment methods have more complex formulations that consider other parameters such as failure detectability. The deployment of APM provides an estimation of the full life-cycle view of the asset and facilitates the implementation of risk-based asset investment planning. This is done by balancing the capital cost of replacement assets with the incremental operating and maintenance cost of the asset over its life cycle.  Through the deployment of APM, the utility can also understand the impact of asset performance on business objectives which is a foundational piece to realize all possible types of uncertainties an asset can generally be exposed to under a utility environment.

4.    People and Culture

People and culture represent one of the most important aspects of successful asset management plans. No matter how much sophisticated digital technology is deployed, if the people are not ready to accept change, you won’t be able to maximize the benefit of  the APM. As a result utilities, despite the deployment of asset management tools often remain unable to realize full benefits. This is due to the lack of asset management knowledge and awareness on the part of the leadership team. This lack of awareness results in shaky trust in the accuracy of decision-making from APM tools. One of the best approaches to the successful implementation of APM is to provide training through both top-down as well as bottom-up approaches. The top management should be trained on the importance of evolving asset management requirements. While the frontline power workers should be trained and given a complete picture as to why a specific data point for a given asset needs to be collected and what impact it can have on the business objectives. A successful APM implementation needs  the existence of a line of sight (LOS) from a strategic level to the individual assets, and it has to be regularly communicated and explained to the stakeholders involved in the APM implementation: Of course, we all need to give meaning to our daily activities at work and understand what bigger challenges they serve.

Conclusion:

Asset Performance Management implementation is a complex task in the rate-regulated electric utility environment. This is primarily due to the versatility of aspects the performance of the asset can be impacted. The successful deployment of APM requires careful consideration of not only the technical aspects of asset performance but also the evolving regulatory context and most importantly the maturity of the culture of asset management and continuous improvement within the company.

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