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THE NEW MAINTENACE INITATIVE
Asset Management: Emerging As A Maintenance Global Trend
By Alan Wilson
The role of the Maintenance Engineer in today's utilities is changing. Asset Management is becoming more of a global trend as international maintenance engineers become part of an ever-increasing asset management group. Canada's large transmission utilities have all moved in this direction and this trend is becoming more prevalent in the US. In order for Asset Management to gain predominance, America's engineers need to know what asset management is with evidence that incorporating these types of practices will enhance their company's performance.
Asset Management has to do with improving the processes of the inner-workings of a power utility. One way to measure the worth of a company is by its hardware's asset value and for a utility, this is made up of its power equipment.
The business approach to asset management is finding a way to maximize the net return on investment. In order to achieve this, utilities must re-organize their processes and procedures. Traditional utilities are often described as silo companies, in that they are organized in teams by job function. Responsibility for assets is shared between many departments - finance, system planners, apparatus specialists, construction and maintenance engineering. This type of organization in a company doesn't allow the positions to have the complete focus and responsibility needed to optimize the investment.
o Companies that have incorporated Asset Management practices often quote their reasons for change as:
o Construction departments often have performance targets associated with "buying for less". This means concentrating on the lowest initial cost, which can lead to higher operating costs, higher maintenance and possibly shorter equipment lives.
o System planners don't readily share their plans to extend or replace part of the network. There is also the determination of critical points. This can lead to unnecessary work and focus work on the wrong assets.
o Maintenance departments don't usually prioritize by system criticality and attempt to maintain to best practice. They don't usually report faults and defects outside their departments. Systems such as reliability centered maintenance, condition based maintenance and work planning programs may now exist, but not be fully implemented. Their role is to help the maintenance manager achieve more with less budget and manpower.
The response to these issues is to create a single team of engineers, allowing those with business skills centralization to aid in making all key asset decisions. The operative word here is "decisions" - the process usually separates the decision makers from those who work on assets, otherwise known as the "service providers", and this category includes the maintenance team, construction and specialist engineering. These groups may even be outsourced to separate companies. This practice is not widespread; for example in New Zealand it is considered to be highly effective. In many countries, the rise in asset management has come from introduction of regulators who drive performance improvement and cost reduction.
An example of a utility with asset management experience, first introduced in 1990, is UK's National Grid. National Grid UK is part of the National Grid Group, which owns and operates electricity, gas and telecommunications infrastructure internationally and operates the electricity transmission system in England and Wales. Their system interconnects 67 generating stations (capacity 65GW) with regional electricity companies, and has boundary interconnections to France and Scotland. As a natural monopoly, National Grid UK has a high public profile, and is expected to deliver operational performance to the highest standards while reducing costs, managing safety and the environment. When there is a three-way trade off to be managed continuously - performance, cost and risk - often there will be some time delay before actions take effect.
Initially, the National Grid went through a period of adjustment and consolidation, but once the regulatory model started to kick in and the new business drivers became real, a radical chance was required. The business reorganized around a small "power network business" and a number of service providers. The power network business was the "asset owner", and internal trading was introduced to manage the delivery of services. It was widely anticipated that the service providers would be sold off to become independent companies. A new "Asset Management" group was formed with responsibility for making policy decisions and directing the activities of the service providers through a series of "service level agreements." They were able to call on the technical expertise of the company - now a service provider - for supplying, drawing up technical policy and carrying out research and development. Asset Management was responsible for maintenance policy and approving all field work delivered via the Power Services Division. They also had responsibility for managing the replacement of assets, strategic spares and liaisons with the system operator for access to the system.
Introducing Asset Management is not a one-time event. While the success rate is high once the reorganization is complete, several companies have needed to try several reorganizations to meet their needs. This has sometimes been followed by one of the periodic regulatory reviews or changes in electricity trading rules. This has been the case for the UK National Grid Company. In other companies, it has been when the culture change has been too much, too quickly.
For one company, Hydro One, new technology has provided opportunities for change. In 1998 Hydro One, the transmission and distribution company formed after the split of Ontario Hydro, introduced Asset Management systems. The major change was the move from decentralization to a single centralized function supported by service providers but within the same holding company. Improved communications and use of information technology has allowed better management by being able to collect all relevant information about assets. Having established the need for a focus, that focus needs to be on the expenditure on capital and operations.
The 2001 Cheney report contained many powerful messages for the US power industry. But our problems are not unique. The equipment in many generating, transmission and distribution networks worldwide faces a growing system demand from an aging infrastructure with little new investment. Low rates of return coupled with a tight regulation of operating costs are being highlighted. Cases may be derived from the increasing cost of maintenance, obsolete technology, inadequate rating or simply when the end of technical life has been reached and an in-service failure may occur.
The Asset Management team must turn all technical arguments into either a financial return on investment, an assessment of the strategic implications to the system and company image following loss or multiple loss in supply caused by failures of equipment clearly past their useful life. Similarly, utilities can adopt a range of strategies to determine the most effective utilization of the maintenance budget. Some will use several different ones for each type of equipment. The strategies may range from corrective, time based, condition based and risk based. The end point is whether the targets that have been set are being met. These targets may come from within the company, but more likely will come from outside agencies, regulators and reliability councils, such as the perceived stakeholders.
Although each business can be successful in its own right and there are different challenges facing each, the group should proactively seek to transfer best practice to extract the maximum business benefit and promote safe and environmentally sound policies.
Asset Management is recognized as being essential for good stewardship of utility assets, and this group of engineers is actively undertaking initiatives to reflect this in the structure of its transmission business in the UK and to align best practice across the group.
Alan Wilson is with Doble Engineering. ET
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