a comprehensive view on Asset Management Strategy

1. a comprehensive view onAsset Management Strategy Philip Wester NUON Asset Management

2. contents • establish the asset management “concept” • describe shallowly the different areas that should be covered by designing an asset management process • the way NUON implemented the asset management process

3. what is an ASSET

4. ASSET: anything capable of creating value to stakeholders

5. what is ASSET MANAGEMENT

6. ASSET MANAGEMENT: management of the process to create value through the assets concerned • HRM: management of the asset “people” • ICT: management of the asset “information” • AM utility: management of “infrastructures” • CM: capital management: “finance management” • CRM: management of customers relation and companies image

7. Utilities’ asset management definition Asset management responsibilities involve the key decision making for the network business to maximize long term profits, while delivering high service levels to the sutomers with acceptable and manageable risks

8. Positioning of Asset Management in power utilities business energy traders generators customers system operator regulator/legislators suppliers maintain functionality manage external organisations employees control operation asset management owner(s) public assets

9. Asset Management Accountabilities Maintaining Network Functionality Accountabilities Management Accountabilities - Strategic Asset Management (incl. Reinvestment Strategy) - Risk Management - Safety Management - Cost & Revenue Management - Information/comm. strategy - Maintenance Strategy - Maintenance Management - Condition Assessment - Work Safety Management - Spare Part Management Operation Accountabilities level of outsourcing Vision, Goals strategic • - Operation Management • - Operation Instructions • Outage/emergency Management • Contract Management Strategies, policies, standards Planning operational Realisation

10. which items should be covered in implementing an asset management approach?

11. strategy process organisation information • architecture • management information • decision support • structure • accountabilities • skills & competencies • outsourcing • risk management • stakeholders values

12. how to develop a strategy that takes into account added values of all stakeholders? strategy process organisation information

13. strategy: stakeholders value “toolbox” risk strategies • investment • maintenance asset managers core business: “find an optimal balance between stakeholders values”

14. establishing priorities forecast cash flow capex opex expected reliability expected continuity environment consequence budget budget ist/soll ist/soll ist/soll priority mode: contribution to “ist/soll gap” project 1 project 2 order project 3 project x satisfy cash flow and profitablity demand energy not supplied power quality damage to society

15. strategy process organisation information • architecture • management information • decision support • structure • accountabilities • skills & competencies • outsourcing • risk management • stakeholders values

16. how to organize in such a way that adding the different values is stimulated? strategy process organisation information

17. Organization >> adding value Asset Management Service Provider Asset Ownership • Asset owner creates value by: • Identifying the needs of stakeholders/business environment • Setting business values and risk levels with needs • Asset manager creates values by: • Assessing asset specificrisksagainst values set by owner • Contracting providers with best price/quality performance • Service provider creates value by: • Keeping costs to a minimum for the specified level of work

18. AM organisation directed at adding value Asset Management decision/design process control data collection problem/opportunity identification performance data reporting evaluation control work execution continuous improvement cycle work administration cycle scenarios, alternatives scheduling decisions process & project design resource estimating operating, build & maintenance plan

19. Outsourcing: risk of competence loss? Essential competency: necessary for taking full responsibility Protective competency: riskof outsourcing is too high for organization Distinctive competency: most important capability reason for existence low Risk high Spillover competency: market chances creating extra turn over Parasitic competency: wasting organizational resources low Effectiveness high Maintenance Outsourcing Guidelines, Cigré Brochure 201

20. strategy process organisation information • architecture • management information • decision support • structure • accountabilities • skills & competencies • outsourcing • risk management • stakeholders values

21. strategy process organisation information what is in essence a risk management process?

22. Risk versus Reliability Management • Reliability Management (according to SAE standard JA1012) is a process to develop a set of policies that preserve the functions of the system under consideration to standards of performance that are acceptable to its user (economical, technical) • Risk Management is an RCM based approach that takes into account the event consequences for the business environment and the corporation strategy (economical, technical, societal/strategic)

23. Risk Management in a nutshell • Risk Management is a continuously running process where risks are inventoried and prioritized based upon corporate targets, measures to control these risks are chosen and executed, evaluated and actualized. • Risk Management is as such a continuous improvement process covering the business environment as a whole evaluate control measures execute/ actualize risk analysis inventory choice control measures execute control measures

24. basis for AM risk decisions • keyword>Sustainability: attention for balancing • Society: safety, availability, strategic consequences • Economy: costs, investments, cash flow • Technical: outages, quality of supply, condition

25. risk directed activities probability risk consequence performance

26. strategy process organisation information • architecture • management information • decision support • structure • accountabilities • skills & competencies • outsourcing • risk management • stakeholders values

27. information requirements for an Asset Management decision process strategy process organisation information

28. AM “cockpit” decision making process

29. Information strategy directed at Asset Management decision process Decision corporate level Risk management system level Reliability management impact assessment Safety Social System asset level System ( Dollar) S3 Risk assessment Condition assessment Societal information Financial information Asset information

30. Information pyramid > decision

31. Information requirements AM decision decision level sustainable asset management decisions asset management information requirements data analysis level Economical performance Technical performance Sociological performance data integration level data warehouse front information systems level ERP systems Enterprise Resource Planning systems EAM systems Enterprise Asset Management systems EOS Asset operation systems (SCADA, EMS) accoun tabilities management maintaining functionality operation utilities business generation TRANSMISSION & DISTRIBUTION consumption

32. strategy process organisation information • architecture • management information • decision support • structure • accountabilities • skills & competencies • outsourcing • risk management • stakeholders values

33. NUON implementation of asset management process

34. NUON: decisions > sustainability Decision model for choices priority CAPEX and OPEX projects includes Life Cycle Assessments based upon asset reference planning and scenario approach

35. NUON “embedding” AM organisation separation system operator, asset manager, service provider

36. internal AM organisation separation asset management into 1. development/decision responsible process 2. control process (incl. auditing)

37. challenge: risk strategy asset grouping according to risk/performance class high risk basis: certified maintenance technical, economical & societal high low performance

38. certified maintenance certified process ISO 9002 expert rules analyse advice FMECA register measure maintain storedata inspection maint.prog norms & standards inspector tool 2: standard, human independent cbm approach tool 1: performance bank condition data i-

39. maximum performance information at disposal for other utilities to maximize data population and improve decisions new, independent, non commercial, organization operates platform growing knowledge, applied analysis i-

40. data management tool inspectorsoftware application for execution of CBM

41. data storage & analysis tool i-Coresoftware application for analyzing masses of data type time analysis HV CB velocity measurement

42. summarizing theory and … strategy process organisation information • architecture • management information • decision support • structure • accountabilities • skills & competencies • outsourcing • risk management • stakeholders values

43. … NUON practice implementation AM process strategy process organisation information • architecture • management information • decision support • structure • accountabilities • skills & competencies • outsourcing • risk management • stakeholders values