Recognizing All of Your Operational Assets

By Sid Snitkin

Category:
Industry Trends

Operating assets are more than the physical equipment one sees during a plant tour. There is a lot behind the physical façade that is vital to generating good returns. And, development of these “hidden assets” must be synchronized with the physical façade throughout design, build and commissioning to rapidly achieve operational readiness. Based upon our research, the figure below provides a much better model of an asset investment.

Physical Assets

Physical assets represent the inanimate things that people can see and touch in their operations. They can generally be segregated into two groups, primary and supporting, according to their role. And the classification for a specific physical asset can vary across different industries. Primary physical assets are the central elements required for the production process. Supporting physical assets are those that enable and keep the process and the primary physical assets operating.

Given the wide range of physical assets that are used in manufacturing, one also needs to recognize that the processes involved in designing, acquiring, installing, assembling, using and maintaining physical assets vary significantly across industries. In some industries, like refining and metals, Design is a long, complex process because the process equipment and its supporting structures are custom-designed. In a hospital or airport, Design focuses only on the building and its layout, as most of the equipment is commercially provided and standard products are used to a great extent.

Human Assets ARC Model for Operating Assets

Humans are critical to asset performance, regardless of the investments a company makes in automation. Most facilities have some critical, manual operations and many require humans for tasks that cannot be automated, like directing workflow, inspecting complex products and repairing equipment.

Organizations do not “own” their employees, but they do make extensive investments in their training. Loss of this investment, when people leave or retire, shows up as a cost to the organization in deteriorating asset performance. And, improving an employee’s capabilities should likewise be considered an investment whose returns show up as better performance. Clearly, organizations need to manage these “human asset” investments and recognize this in the complete asset’s lifecycle.

There are two groups of human assets and each presents its own set of management challenges:

  • Asset-centric human assets are directly associated with a particular asset investment. They are acquired as part of the asset lifecycle and their role is eliminated when the asset is eventually retired. The primary management challenge in this case is to synchronize their acquisition and training with the acquisition and startup of the associated physical assets. This is true whether the asset investment is a new, Greenfield facility or an upgrade of an existing facility with new equipment.
  • Program-centric human assets are those that support centralized, recurring asset management activities within the organization (e.g. Project Management, Project or Process Engineering, Maintenance Center of Excellence, etc.). The management challenge in this case is to ensure that the people have and follow proper procedures and that there is a program for continuous improvement of their performance.

Management of human assets in asset lifecycle management is not the same as general human resource management. General human resource management is focused on issues like equitable salary administration, benefits, etc. Human asset management in our case is focused on using human assets to optimize the company’s investments in physical assets.

Virtual Assets

Virtual assets represent the information that is used in the creation, use and care of an organization’s physical assets as well as the IT solutions needed to collect, store, manage and distribute this information.

We use the term Virtual Assets (in place of the simpler term Asset Information) as a way of acknowledging the vital role that this information plays in asset management and to connote the fact that organizations should view their asset information as a valuable resource, deserving of appropriate care and management. For many people, the Virtual Asset is their only interaction with the physical assets and they need it to understand how they operate, to diagnose problems and to improve physical asset performance. To support these needs, the virtual asset has to be comprehensive, accurate and flexible in the way that people can access and use the information. And it is important to note that this need pervades all lifecycle stages and all asset management programs.

The Virtual Asset must contain all of the information that any stakeholder would need to answer any reasonable question about the asset or its performance. For example, consider the needs of someone investigating an incident. They cannot change the fact that the incident occurred, but they would like to demonstrate to regulators that the organization did everything that they believed was appropriate. This would mean showing design information and calculations demonstrating that the company had selected the right equipment for the process, operating, maintenance and safety procedures that were appropriate for the chosen equipment and operating, maintenance and inspection histories to show that that these procedures had been followed. Other stakeholders would have other “reasonable questions” in support of the plant’s upgrade, use and care, or for building another similar facility.

The figure below shows some examples of the kinds of information that should be included in the virtual asset. It is segregated into 6 different categories that we find to be useful:

Functional

What the asset is designed to do and any associated limitations or constraints

Design 

The characteristics of the specific asset design that was implemented to accomplish the functional requirements.

ARC Model for Virtual Assets

Procedural

How to install, assemble, test, use and care for the asset in a safe proper manner and the results of any tests or validations of these procedures and the asset

Commercial

The costs and schedules for building and operating the facility and any agreements or warranties the organization has for their assets

Status

The current status of the asset. This would include the status of the project during the Design & Build activities, current performance and equipment & inventory status & plans

Historical

Records of all activities project, operating and maintenance activities related to the assets throughout its lifecycle.

As the figure shows, we also group the information according to whether the data is reference information, which requires complete management of change, or activity records, which are transactions of events and actions that occurred and therefore do not require change management. Virtual assets are one of the most valuable things that an asset-intensive organization owns, yet it is the least appreciated “thing” in most asset management programs. Studies, like the NIST report, investigated how well organizations are managing their virtual assets and they consistently show that poor management is prevalent and that this costs owner-operators a staggering amount of money each year in lost asset availability and poor productivity.

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