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A New Perspective for Asset Lifecycle Management & Interoperability
A New Perspective for Asset Lifecycle Management & Interoperability
Sid SnitkinVice-President
ARC Advisory [email protected]
Fabricators
ConstructionContractors
Maint Service Providers
Shareholders
Repair Shops
OEMs
Engr & EPCs
Consumables
Financial Regulators
EH&S Regulators
Product Supply Chain
Design Maintain
Operate
Improve
OEMs & Parts Distributors
2© ARC Advisory Group
Established in 198680 EmployeesGlobal: US, UK, Germany, Japan, China, IndiaFocused on Manufacturing and Supply Chain
Sample of Manufacturing Company Members
About ARC Advisory GroupAbout ARC Advisory Group
3© ARC Advisory Group
Why are Improvements in ALM & Interoperability Important?
Why does the Traditional perspective on these topics limit improvement?
What would be a better model for ALM?
What is Interoperability and ALM Interoperability?
What do we need to do to achieve it?
Agenda Agenda
4© ARC Advisory Group
The Challenge/Opportunity Poor ALM & Interoperability are Costly! The Challenge/Opportunity Poor ALM & Interoperability are Costly!
A 2004 NIST study estimated the annual losses due to the lack of information interoperability within the North American Capital Projects Industry to be $15.8B (4.2% of installed asset cost). Almost $10B of this is owner/operator losses in the Operate and Maintain Lifecycle Stages (2.7% of installed asset cost = 2.7% ROA penalty).
A less formal survey I conducted sets annual losses due to poor information Interoperability between O/O Engineering and O/M groups to be 3% of Plant Revenues.
Maintenance studies consistently find “wrench time” to be 25-30%, due to poor access to information, waiting for parts, poor coordination with operations, etc. activities.
EH&S Compliance today demands:• Complete, Accurate information for all assets • Proper Operating and Safety procedures• Complete histories of how assets have been operated • Much more than money is at Risk!
5© ARC Advisory Group
Why are we in this situation? The Traditional Model for Asset Lifecycle Management Why are we in this situation? The Traditional Model for Asset Lifecycle Management
Operate/Maintain
Capital Costs (CAPEX) Net Income
ROA
÷
OPEXRevenues
EPC O/O
6© ARC Advisory Group
Why are we in this situation? What’s Wrong with the Traditional ALM Model Why are we in this situation? What’s Wrong with the Traditional ALM Model
Operate/Maintain
1. One-shot , Linear steps vs. cyclic, repeating activities2. Ignores Interdependencies that create a lot of the
problems3. Encourages isolated, one-off decisions vs. coordinated,
global investments. 4. More focus on Project (3-5 years) than O&M (30-50
years) 5. Business process, not Lifecycle Management Analysis
7© ARC Advisory Group
Timely, Right Information
Maximum Availability
Optimal Utilization
X
X
Design
MaintainOperate
A New Perspective Performance Recognizing Dependencies A New Perspective Performance Recognizing Dependencies
X
Optimal Execution
Build
ALM Performance
• Product Range• Throughput• Quality• Product Unit Cost• EH&S Capability
• Product Mix• Prod Planning• Prime %• Material Cost• Labor Cost• EH&S
• Maint Strategy Mgmt• Maint Planning• Maint Efficiency• MRO Material Mgmt• Labor Cost• EH&S
• Financial • Profit, Ratios (ROA)
• Functional• Process EH&S• Personal EH&S• Customer Satisfaction• Cost, Quality, Delivery
• Financial • Cost• Cash Flow
• Functional• Personal EH&S• Work Quality• Schedule
• Design Accuracy• Release Mgmt• C/N Mgmt• Equip Selection• Material Specs
• Const Planning• Material Mgmt• Site Mgmt• Labor Efficiency• EH&S
Timely, Right Information
The Right Capability
Project Performance
Asset Performance
Optimizing Project and/or Asset Performance Requires Collaboration & Teamwork !
8© ARC Advisory Group
A New Perspective Information Flow Recognizing Cyclic Behavior A New Perspective Information Flow Recognizing Cyclic Behavior
Timely, Right Information
Maintain
Operate
Build How was it Bought & Built?
What should it be & why? What is it?
How should it be operated & why? How has it been
operated?
How should it be maintained & why?
How has it been maintained
Design
Calcs Models
Drawings Equip BOMs Vendor Info
etc.
ALM Information
Design IT Investments Impact Project & Asset Performance Design, Operate & Maintain Are Key to AIM!
Asset Info
Project Info
9© ARC Advisory Group
A New ALM Model Understanding the Asset Lifecycle A New ALM Model Understanding the Asset Lifecycle
What is a Lifecycle?• Lifecycle is not in the Dictionary• Life Cycle means the stages that an entity goes through in
one generation of its species continuing cycle of life
Humans Assets
Conception Concept
Fetus Project
Birth Commissioning
Child Pilot Operation
Adolescent Ramp Up
Young Adult Full Production
Middle Age Peak Performance
Senior Citizen Decline/Replace
Death Retirement
10© ARC Advisory Group
A New ALM Model Understanding the Asset Lifecycle A New ALM Model Understanding the Asset Lifecycle
Time
The stages in the life of one generation of
an asset
Cycl
es
du
rin
g t
he L
ifeti
me o
f an
Ass
et
11© ARC Advisory Group
A New ALM Model Understanding Asset Lifecycle Management A New ALM Model Understanding Asset Lifecycle Management
What is Lifecycle Management?• Multiple Definitions - extend life, cycle phasing, etc.• Product Life Cycle – Match strategy to Stage Objectives &
Needs
ALM Stage Strategic Objectives
Concept Rapid, Reliable Evaluation/Comparison of Scenarios
Project Efficient, Timely Execution of Design, Source, Build Activities
Commissioning Coordinated, Comprehensive Validation of Design Compliance
Pilot Operation Mentored Training of O&M Personnel, Limited Production
Ramp Up O&M Skill Enhancement, Planned Increase in Output
Full Production Maximize Output/Revenue, Maintain Equipment
Peak Performance Optimize Asset Performance via Continuous Improvement
Decline/Replace Retain Performance, Manage Replace/Upgrade Activities
Retirement Maximize Salvage Value, Manage Removal/Disposal
12© ARC Advisory Group
A New ALM Model Elements of a Management Strategy A New ALM Model Elements of a Management Strategy
13© ARC Advisory Group
A New ALM Model Understanding the Asset Lifecycle A New ALM Model Understanding the Asset Lifecycle
Time
The stages in the life of one generation of
an asset
Cycl
es
du
rin
g t
he L
ifeti
me o
f an
Ass
et
KPIs
People & Processes
Technology
InformationKPIs
People & Processes
Technology
Information
KPIs
People & Processes
Technology
Information
KPIs
People & Processes
Technology
Information
KPIs
People & Processes
Technology
Information
KPIs
People & Processes
Technology
Information
KPIs
People & Processes
Technology
Information
KPIs
People & Processes
Technology
Information
KPIs
People & Processes
Technology
Information
KPIs
People & Processes
Technology
Information
KPIs
People & Processes
Technology
Information
KPIs
People & Processes
Technology
Information
KPIs
People & Processes
Technology
Information
KPIs
People & Processes
Technology
Information
KPIs
People & Processes
Technology
Information
KPIs
People & Processes
Technology
Information
KPIs
People & Processes
Technology
Information
KPIs
People & Processes
Technology
Information
14© ARC Advisory Group
A New ALM Model Elements of an ALM Strategy A New ALM Model Elements of an ALM Strategy
15© ARC Advisory Group
A New ALM Model Elements of a Plant ALM Strategy A New ALM Model Elements of a Plant ALM Strategy
16© ARC Advisory Group
A New ALM Model An ALM View of the Traditional DBOM Processes A New ALM Model An ALM View of the Traditional DBOM Processes
17© ARC Advisory Group
A New ALM Model Recognizing Some Key O&M Processes A New ALM Model Recognizing Some Key O&M Processes
18© ARC Advisory Group
A New ALM Model An ALM View of All Asset Lifecycle Processes A New ALM Model An ALM View of All Asset Lifecycle Processes
Time
DesignDesign MaintainMaintain
OperateOperate
ImproveImprove
Bui
ldBui
ld
Report
Report
19© ARC Advisory Group
Info Exchange
StdsCommon
Data Models
Plug & Play
Software Std. Business Processes
Teamwork
FEED
Operate to Maint
EPC Handover
to O/O
Engr Handover
to O/M
O/M to
Engr
What is ALM Interoperability? It Depends Upon Your Perspective ... What is ALM Interoperability? It Depends Upon Your Perspective ...
20© ARC Advisory Group
Interoperability is More than IntegrationInteroperability is More than Integration
Integration
Interoperability
21© ARC Advisory Group
Making ALM Processes Interoperable Making ALM Processes Interoperable
Complementary Data Models
Compatible Tools
Consistent Processes
Shared Goals
Proc 1 ......... Proc N
Optimum ALM Performance requires Teamwork …ALM Interoperability Makes Teamwork “Work”!
22© ARC Advisory Group
Who is on the ALM Interoperability Team?Who is on the ALM Interoperability Team?
ALM Interoperability Team Charter
1. Anyone who meets one or more of the following criteria, should be on the ALM Team:• Create Information that may be used in ALM • Use Information that may be created by ALM
2. Whoever suffers the most “must” be the Team Leader … Owner/Operator must be the key Leader for ALM.
3. The Team Leader is responsible for establishing the ALM Interoperability environment and the rules as to how the game is played.
4. All Team Members are responsible for supporting the Team Leader by:
• using the environment
• playing according to the rules.
23© ARC Advisory Group
The O/O’s Internal ALM TeamThe O/O’s Internal ALM Team
DesignDesign MaintainMaintain
OperateOperate
RestoreRestore
Bui
ldBui
ld
Report
Report
Materials Mgmt
Project Mgmt
Financial
Mgm
t
MRO Purchasing
Pro
ject
Pur
chas
ing R
isk &
Compliance
Cons
tM
gmt
Operations Mgmt/Engr
Maint Mgmt/Engr
Reliability Engr
Process Engr
Des
ign
Engr
Star
tup
Engr
Operators
Maint
Techs
Internal ALM Team Members Need “Role-based” Access to All Relevant ALM Information!
24© ARC Advisory Group
The O/O’s External ALM TeamThe O/O’s External ALM Team
Fabricators
Construction Contractors
Maint Service Providers
Shareholders
Repair Shops
OEMs
Engr & EPCs
Consumables
Financial Regulators
EH&S Regulators
Product Supply Chain
DesignDesign MaintainMaintain
OperateOperate
ImproveImprove
Bui
ldBui
ld
Report
Report
OEMs & Parts Distributors
25© ARC Advisory Group
An O/O Model for ALM InteroperabilityAn O/O Model for ALM Interoperability
Fabricators
Construction Contractors
Maint Service Providers
Shareholders
Repair Shops
OEMs
Engr & EPCs
Consumables
Financial Regulators
EH&S Regulators
Product Supply Chain
DesignDesign MaintainMaintain
OperateOperate
ImproveImprove
Bui
ldBui
ld
Report
Report
OEMs & Parts Distributors
External ALM Interoperability
Platform
26© ARC Advisory Group
For a free copy of a full ARC report on this topic please contact the author at [email protected]
For information about ARC’s upcoming Asset Lifecycle Management Forum in Houston, please visit our web site
at www.arcweb.com and look under “Events”.
Thank You.Thank You.