Asset Management – Quo Vadis (Where are we going?)

1. Asset Management – Quo Vadis (Where are we going?) Neil Blom 18 September 2009

2. Agenda • We have come a long way, but it is new • Where are we today? • Why do we keep on doing it over? • WA 18 months ago • Can we make AM sustainable? • Competency at al levels • Hearts and minds of employees • Learn from Safety • Recent experience • Conclusion • Questions

3. We have come a long way, but it is new • When I started my career Asset Management was a term used by the Financial people. • In Petrochem we started focussing on reliability and in those days focussed on maintenance. • We soon realised that we need to address the whole asset chain: design to retirement. • The understanding migrated from the airliner industry to nuclear and petrochem and to other industries like mining. It is no longer a foreign concept

4. We are we today? • The field of Asset Management is well defined and studied. • Many large organisations have got dedicated AM teams. • Several global organisations established to guide AM. • Some universities offer a degree and/or masters in AM. • Libraries full of literature on the subject. • Consultants are driving AM improvement programs and claiming big successes. • Preparing to move from PAS 55 to ISO for AM! But we struggle with Sustainability

6. Why do we keep on doing it over? • AM initiatives are managed as projects: Key Asset Management concept must become a part of the way we lead and manage organisations. • A thorough understanding of the key drivers, processes and systems at all levels. • “What you measure is what gets managed” – from the Board room to the shopfloor. • The Planned domain is unstable. • Trap: When moving from the Reactive to Planned domain poor practices are normally locked in. • Need to challenge all tactics: task and frequency, before entering into the CMMS. Run Defect Elimination in parallel. Very important that work be continuously reduced - DE

7. Why do we keep on doing it over? (Cont.) • We don’t capture the harts and minds of people involved. AM excellence requires: • A disciplined approach to doing work (Doing the right work, in the right way, every time). • Challenging and removing failures and non-conformances. • Commitment from all involved – hard work. Doing it right for 95% of the time is not good enough!

8. Asset Management is more than maintenance

9. Western Australia 18 months ago • Can you remember?: • Could not get enough skilled people quick enough. • Got people from various countries and with variable competencies. • Forecasted numbers of up to 30 000 technical skills shortage? • Competency screening was relaxed to employ people. • FIFO people were doing “plane hopping”. • People were squeezed through training facilities. Practical training was cut out to shorten cycle time. • Too many apprentices and graduates coming in for effective mentoring. Was the economic downturn long enough to get ahead?

10. Near future in Western Australia • Iron Ore will double in the next 5 years! • Oil and Gas is pumping billions into plants. • Still short of training facilities. • Automation and robotics: • Autonomous trucks, trains. • Remote controlled dozers, drills. • Remote Operating Centres These will require more and advanced resources

11. Can we make AM sustainable?

12. We need to ensure understanding and competence at all levels This is where we spent most of the time and effort V Strategic IV Operational Levels of work III II This is where we need to go Tactical I Effective Asset Management requires a solid foundation

13. According to Harris Interactive Research (2006): Only 37% of employees had a clear understanding of what the organization was trying to achieve Only 20% were enthusiastic about organizational goals Only 20% saw a clear connection between their tasks and organizational goals Only15% felt the organization enabled them to achieve their goals Only 15% felt they were in a high trust environment Only 10% felt their organization held people accountable Only 13% felt there was a high-trust, highly cooperative working relationships with other groups or departments Win the hearts and minds employees We need to get the buy-in of the asset practitioners

14. We need to work on both ends We need the push from the top Successful Asset Management We need the pull from the business We must address all aspects of AM!

15. We can learn from Safety In the mid 90’s we tackles the safety culture in Mining: What did we learn from that?: • Moved accountability from HSEC to EVERYBODY. • We develop standard systems, process and procedures. • We focussed on Behaviour Based training and competencies. • We developed lead and lag indicators and KPI’s at every level. • We spend time in the field to demonstrate to people the behaviour and standards we are willing to accept. • Safety became a core value in “the way we worked”. Can we do the same with Asset Management?

16. We need to agree the fundamentals • There are no shortcuts, it is hard work. • We need to agree that: • Work (Shut) Management is the foundation? • Work order for every job? • Complete history (Time, work done, material used, etc.) • Clean hydrocarbons are important? • Condition based maintenance is important? • Challenging failures are important? • Data driven decision making is important? • If so, how do we include this in the competency training for people in AM? • We need to start driving alignment. We are good at the “What” and not the “How”

17. Pre Gate, At Gate and Post Gate • Large companies have identified the lack of the required AM competences as a major issue and are spending $$$’s to address this effectively (Post Gate). • This is reactive, expensive and frustrating. Training is not core business. • Large number of contractor employees are not exposed to this training - major issue. Training and competencies must be done Pre Gate • This is the least expensive option. • Consistent and standard, available to all. Will allow companies to focus on core business

18. Recent experience Example: Mobile maintainer competencies on two sites Heavy mobile fitters and low voltage electricians were evaluated on site. Tested four competencies: • Ability to describe the major components of a haul truck and explain their functions. • Quality of frequent services. • Quality of work with replacing large components. • Effective fault finding. • 15% to 20% of the maintainers were competent in all. • Effective fault finding was the biggest issue. The OEM immediately put actions in place to address

19. Recent experience (Cont.) Material Handling – Fixed plant • Focussed on doing the basics right. • 52 Pulley bearings in alarm to none. • Screen exciter failures: 6 weekly to more than annually. Reduced OPEX consistently with 30% over two years. Mobile equipment – old fleet (>60 000 h’s/truck) • Focused on basics • Moved all the 500 H service tasks to daily refuelling. • Model for TPM, CBM and good communication. Excellent results with Simplicity

20. Conclusion • We all realise that it has got a major impact on the bottom line. • Getting AM right delivers significant share holder value. • AM is up to 45% of the Opex budget, up to 50% of the people employed and a significant % of the replacement capital spend. • It affects people from the shopfloor to the CEO, from the projects people, commercial, the stores, operations, maintenance and HSE. • It is about doing more with what you have got – increased uptime and reduced cost – profit “for free”. Getting AM right is important to all businesses.

21. Questions