Strategic asset management in the water sector is developing in the broader context of such an approach being used in other sectors. KEITH HAYWARD of Water Asset Management International spoke with DARYL MATHER, an asset management consultant at AMT-SYBEX and author of a new book, about the wider picture of asset management.

Asset management is, according to Daryl Mather, an approach for asset-intensive sectors whose time has come. ‘I think we are really seeing a dramatic change in the landscape of asset management. We’ve got a lot more capability than we used to have in terms of methodology, technology, etc. Not only that, but the area itself is becoming vastly more important. We’re at point now – you see it all over the world – where the whole focus on the way capital expenditure is funded has become a lot more difficult.

There is increasing pressure on reducing operating expenditure, and we’ve got to a situation whereby a lot of the easy benefits have gone – depending on what industry you are talking about. The large savings have been made, so there’s really a need to look in other areas, to look at more sophisticated methods of developing, implementing and performing asset management.’

Alongside this Mather notes the developing area of corporate risk management. ‘I think that’s an area also where we are seeing dramatic shifts in thinking around risk, particularly the risk of safety issues.’

It in this context that Mather has authored a book, ‘The maintenance scorecard: creating strategic advantage’ which he says ‘basically talks about asset management as a whole, in terms of developing the area as one where we can get further economic value from the physical asset base and developing the area of corporate risk management.’

Mather is senior asset management consultant with AMT-SYBEX Ltd and has worked in over 20 countries and in the majority of industrial sectors, including the rail industry in Spain and the water industry in the UK. It is from such a perspective that he can see how the general pressures can be manifested in different sectors. ‘Asset management as a corporate discipline is definitely moving forward,’ he says. Some examples of drivers for this around the world include the US electricity blackouts in August 2003 driving reliability improvements in electricity in the States, pressures in the mining industry driving down capitalization, and the regulatory framework for water in the UK driving increased efficiencies in capital and operating expenditure. ‘Around the world we are seeing a massive drive towards smarter ways of doing things – more sophisticated ways of getting value from the assets,’ says Mather.

All of this means progress is being made outside of what were the traditional strongholds. ‘Geographically, until now you could really see places like South Africa and Australia being pockets of excellence, and I don’t say that merely because I’m an Australian. I think [having] industrial economies coupled with isolated environments meant people had to improvise and [this] really gave a focus to reliability and really getting the most out of things... So, up to recent times you’ve definitely seen those two countries as being relatively well developed. Now, some of what is going on in the UK is particularly impressive, and I think we are really tending towards a fourth generation thinking in asset management.

Alongside these country-based experiences, Mather identifies experiences from different sectors that form the approaches he says leading-edge companies are adopting. ‘If you look at the way that proactive risk management is managed in the rail industry, it’s quite impressive. If you look at the way that risk in general is managed in oil and gas, it is relatively impressive. I would say the airline industry and the medical industries are exceptionally good in terms of performance reliability.’ He also cites the condition monitoring practices in the electricity industry, and highlights the benefits demonstrated by the automation and data management in the manufacturing industry in the States which, he says, is ‘mainly because it is under such pressure now’.

Such are the pressures and the general awareness of possible solutions that Mather feels there are no great barriers to gaining acceptance of the need to take asset management-based approaches. The challenges lie in implementation. ‘The barriers to be quite frank are less than you would think. Knowing that more economic value is needed and better management of risk is required is no surprise at all to asset managers or asset-centric organisations. The challenge for them really, and it’s really not a welcome challenge... the challenge is obviously working out how. The barrier, the challenge, is getting people who may not be of an asset management background to understand that there are more sophisticated means of tying this all together.’

Mather’s book is obviously intended as a contribution on this front. It it he explains that, currently, most organizations are either working with or planning to work with, large-scale enterprise asset management or enterprise resource planning systems for driving inefficiencies out of their administration functions. Yet many of these systems are yet to realize the full benefits offered by such data capturing and analysing systems. When managed correctly asset data can power decisions such as how and when to extend asset life, determining the return on investment of asset acquisitions or interchanges, analysing whether risk profiles are being adequately managed, and determining which assets are not being maintained or operated in a manner that supports the minimum whole-of-life cost profiles.

The book explains that such an approach needs to be supported by asset knowledge, which is contained within the experience of the workforce, the manufacturers, and similar equipment users throughout the industry. This presents the problem of knowledge capture. This requires a comprehensive approach that must enable people to contribute their experience, understanding, judgment, and suggestions in a structured and controlled manner. If structured correctly, a knowledge gathering process could become a valuable improvement initiative in itself. Within modern asset management there are a range of initiatives that support this form of knowledge collection. Methods such as reliability-centered maintenance, whole-of-life progression management, problem elimination logic and technical change management processes are all examples of collaborative working practices.

Mather highlights areas in which there have been particularly useful developments: proactive methods of measuring risk exposure and proactive measures of implementing risk management. He also draws attention to the method in the book of achieving business control of day to day actions though performance indicators and key performance indicators.

On this basis, organisations have much experience to draw upon when taking a strategic approach to asset management. But a problem they face is in knowing just what advice to follow. Is there, then, the potential for standardisation? ‘I think without a doubt there is a need for further standardisation,’ says Mather. ‘Without doubt standardisation is a good thing – good for industry in terms of leading practice and method selection. It also reduces the likelihood of getting it wrong.’

But he does add a note of caution. ‘We are talking about a very, very big area here, so one of the dangers that we get into when we start standardising asset management as a discipline is that it can be potentially restrictive. The discipline is evolving rapidly. Not only that but the whole thing may not be suitable for everybody.’ Because of this he suggests a better approach is to standardise elements of the discipline, using standards as a means of focusing on potential minimum criteria as component methods within asset management. Here is points to the International Society of Automotive Engineers’ Standard JA1011 ‘Evaluation criteria for reliability-centred maintenance (RCM) processes’ as an example. Such an approach would, he says, give ‘flexibility while still maintaining that drive towards leading practice and the clarity of vision there’.

Daryl Mather is Senior Asset Management Consultant for AMT-SYBEX Ltd. His book, ‘The maintenance scorecard: creating strategic advantage’, (Industrial Press, ISBN 0831131810) is available at www.industrialpress.com.

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