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Application of Asset Application of Asset ManagementManagement
Principles During Asset Creation Principles During Asset Creation and Designand Design
Presented By Pervaiz Anwar
at:
CWEA, San Francisco Bay SectionAsset Management Seminar
September 17, 2003
What is Asset Management?What is Asset Management?
“Asset management is a structured approach to delivering desired service levels at lowest life cycle costs”
A simple definition!
Life Cycle of an AssetLife Cycle of an Asset
Plan / CreatePlan / Create
AcquireAcquire
MaintainMaintain
RefurbishRefurbish
ReplaceReplace
My Focus
Ken’s Focus
Representation will Focus on Representation will Focus on Two Key TopicsTwo Key Topics
Business Case Evaluation: A powerful process for validation Capital Investments
Incorporating Asset Management into design
Business Case Evaluation:Business Case Evaluation:A Powerful Process for A Powerful Process for
Validating Capital Validating Capital InvestmentsInvestments
What is Business Case What is Business Case Evaluation (BCE)?Evaluation (BCE)?
BCE is a rigorous analytical process for validating capital investments
For optimum value it is initiated at the early planning stages — but it must “live” as the project proceeds
It repeatedly revisits the drivers for a project
It validates the need for a solution in terms of customer value
It seeks the lowest life cycle cost solution consistent with risk
And most important… It involves owner's cross-functional staff
BCE Focuses on the Following BCE Focuses on the Following QuestionsQuestions
What is the objective of the project?
Does the project do more than required to satisfy the desired function?
Does it cost more than it is worth in terms of benefits?
Are there other ways of doing it?
What are impacts and benefits to customer?
BCE ExampleBCE Example
Existing interceptor was surcharging in heavy rains, causing upstream spills
Client planned a new 36” relief interceptor with pump station midway
30% design completed, RFP for final design was about to be issued
Capital cost was $13.8 million
Running costs averaged $167K/year (2003 dollars)
Total PV of ownership costs (50 years) was $17.5 million
The BCE Team Goes to Work…The BCE Team Goes to Work…
Client established a BCE Team from Engineering and Field O&M
The team defined 15 alternative approaches!
Several were “fatal flawed” out but seven remained
Timing, capital costs, O&M costs, and refurbishment costs were estimated for each of the seven
BCE ResultsBCE Results
Team determined need to eliminate existing surcharging was valid
Four new alternatives were cheaper than the planned approach
Project concept changed from pipe and pump station to simple gravity pipe
Required lowering the receiving interceptor by several feet
BCE Benefits are Substantial!BCE Benefits are Substantial!
Capital cost was $3 million lower
Total 50-year ownership cost was $7.5 million lower – a 40% savings
Project risk profile was improved
Project could be in place a year sooner!
Asset Ownership: Some Asset Ownership: Some Valuable lessonsValuable lessons
Asset ownership costs are forever
O&M costs are bigger than generally perceived
On-going capital refurbishment costs are often ignored
The point being…Total costs of Asset ownership are difficult to identify and usually underestimated
BCE is a Powerful Process for BCE is a Powerful Process for Validating Capital InvestmentsValidating Capital Investments Once initiated projects tend to take a life of their own
– BCE repeatedly refocuses on basic drivers
It engages utility staff responsible for asset ownership and O&M
It is much more rigorous in establishing true costs of asset ownership than typical economic analysis
It is a process — not a singular event (e.g. VE) – a project can be modified, deferred, or killed at any phase
Incorporating Asset Incorporating Asset Management Principals in Management Principals in
DesignsDesigns
AgendaAgenda
1. Asset Management context
2. Steps to take during design
3. Current applications
Initiating Asset Management Concepts Initiating Asset Management Concepts During Design Process has Multiple During Design Process has Multiple BenefitsBenefits
Builds asset framework that can be continued during construction and on into operations
Develops performance indicators at the outset
Provides basis for consistent tracking of asset improvements over time
Helps successfully implement process control and maintenance management systems
Understanding Asset Life Understanding Asset Life Cycle Helps Optimize Cycle Helps Optimize Ownership CostsOwnership Costs
Asset Management Concepts Asset Management Concepts Extend From Design Through Extend From Design Through OperationsOperations
Key Asset Management Steps Key Asset Management Steps During DesignDuring Design
1. Develop asset hierarchy
2. Establish performance measures
3. Define interfaces during process design
4. Coordinate O&M elements with the design
Develop Asset Hierarchy Structure Develop Asset Hierarchy Structure to Link Information for Key to Link Information for Key StakeholdersStakeholders Inventory
new andexisting assetsassociated withthe designproject
Organize allassets into a structured hierarchy
Develop a common asset identification structure
Start establishing an asset plan for each asset class and component
Require bid and final pay documents to establish costs at the same level of asset detail
Process
Establish Performance Measures to Establish Performance Measures to Track Assets Against Stated Track Assets Against Stated ObjectivesObjectives Identify units
and measures of information needed to analyze future asset performance
Define condition assessment parameters
Define data-recording requirements and reporting needs
Future Replacement Decisions Future Replacement Decisions
Can Be Made More EfficientlyCan Be Made More Efficiently
Defining Interfaces During Design Defining Interfaces During Design Process Helps Measure Asset Process Helps Measure Asset Performance Over its LifecyclePerformance Over its Lifecycle Process control
system should accommodate asset management objectives and P&IDs should be consistent
Equipment data sheets should follow asset hierarchies and incorporate performance data
Lay out information systems and databases to be compatible with hierarchies and equipment numbering
Coordinating O&M Elements with Coordinating O&M Elements with Design Results in Significant Cost Design Results in Significant Cost SavingsSavings Link draft O&M
manuals with asset management concepts
Asset management framework should guide maintenance management system development
O&M documents should incorporate performance measures developed during design
Where Are These Asset Where Are These Asset Management Concepts Being Management Concepts Being Applied?Applied?
Location
Orange County Water District, CA
King County, WA
City of Hayword, CA
Gwinnett County, GA
Project
Large new reclamation plant
Large new wastewater treatment plant
Expansion of mid-size wastewater treatment plant
Program management for multiple water and wastewater projects
SummarySummary
1. Asset management concepts can be incorporated through some simple yet important enhancements to the traditional design process
2. This approach can save time and money by not having to recreate data bases and systems
3. The asset management approach can be beneficial for projects of all types and sizes
Questions and DiscussionQuestions and Discussion