Business Management, Track 1

Are You Ready for Asset Management?

Ramesh Gulati, aka Reliability SHERPA

@ ReliabilityX
 Agenda
Are You Ready for Asset Management?

• Introduction
• Safety Moment
• What’s Asset Management (AM)?
• Terms and Definitions
• Asset Lifecycle
• 10 Rights of AM
• Asset Management Standards
• Preparing to Implement AM process
• Benefits and Lessons Learned
• Conclusion
 Safety Moment

Achieving Excellence with Reliability Sherpa 4

Ramesh Gulati, the Reliability SHERPA

Receiving “Lifetime Achievement Award”

at The Reliability Conference, Seattle, WA
/USA 8th May 2019

Receiving “AEDC
Lifetime Achievement
& Fellow award” from Front cover of Uptime Magazine
June-July ‘19 issue
Maj. Gen. Wiedemer
25th August 2020 at Front cover of – Predictiva21
Arnold Lakeside Club, October 2021 (Latin America)
AEDC TN/USA
Ramesh Gulati …aka Reliability SHERPA
• 50 plus … years in industry
• Maintenance & Reliability and Operations Management
• Asset Management – Life Cycle Management
• Process Improvement – Design/Development
• Change Management – Creating culture of reliability, sustainability & safety
• Certified Professional – CMRP, CMRT, CRL, CRE, CAMA
• ReliabilityX
• Jacobs’ Asset Management Group, Tullahoma, TN (1983-2021)
• AEDC/ATA-Jacobs – Arnold Engineering Development Complex, TN (1983-2016)
• Asset Management & Reliability Planning, Manager
• Reliability/Maintenance/Industrial Engineering Manager
• 30-plus years
• Before AEDC (1964-1983)
• Carrier A/C (TN)
• True Temper Corp. (Ohio)
• Bethlehem Steel, Burke Steel (NY)
• Heavy Engineering Corp./Foundry Forge Plant
• Heavily involved with Industry/Societies
• AMP and IMC/Reliability Web
• SMRP – Society for Maintenance & Reliability Professionals
• Reliability & Maintenance Center (RMC)/UT Knoxville
• IIE/ASQ/NASA – OMFIT/USAF – reliability council
• Member US TAG – PC 251/ISO 55000 Asset Management
• Member US TAG – PC 56/Dependability
• Awards – Misc.
- Recipient of “ AEDC Fellow - Lifetime Achievement Award “ at ALC/AEDC-TN, 25th Aug. 2020
• Recipient of “Lifetime Achievement Award “ at 2019 The Reliability Conference, Seattle
• “2014 CMRP of the Year”
• Winner of 1st Prize – GOLD book Award at RGVA@ MARTS (Maintenance Technology) 2011
• Best Paper Award at Reliability 2.0 (2013)
• US Patent holder Asset Management Professional - Change Agent - Reliability Sherpa - Author & Student of Rev 8/31/20
 Importance of Assets and Organization

• What / why assets

• Organization expectations
Organization Existence

• Mission
• Vision
• Core Values

Stakeholders/Stockholders
Organization’s Expectations

Assets play a key

role in delighting
the customers

Delighted Customer

Product/Services delivered on time

at affordable/reasonable cost
Asset Management ?

• What is Asset Management?

• Is it related to financial management?
• If you goggle now or would have 20 years, 10 years ago …. You would
find….
• 20 years ago …. You would have hit several million hit and 99%
were related to financial assets
• 10 years ago …. You would have hit several million hit and 80%
were related to financial assets
• Today …. You may hit 1.6 B although still majority related to
financial but lot more about equipment/machinery, IT systems,
CMMS/EAM etc..

• Is it a glorified maintenance program? No

RG (Intro to AM) April 21
10
 Asset Management … introduction

• Asset management: Is a systematic approach to

the governance and realization of value from the
assets.
• Asset management refers to the coordinated series of activities
that monitor and maintain things of value —the physical assets.
This involves balancing risk, cost, opportunities, and
performance to fully and effectively realize the value of an asset
over its entire lifespan.
• Worldwide, companies in the industry had about
* $79 trillion of assets under management as of
2017, according to Boston Consulting Group
(BCG).
* The $ varies a lot $ 79-1500 T

Google search.. 1,060,000,000 results

©Jacobs 2020 11
Asset

• Asset:
• An item – equipment, component, building, etc.
• Something that has value to the organization – present or
future. (ISO 55000)
• An item with a potential value that an organization owns
and has a use for, to create value (income), and has the
responsibility to take care
Types of Assets

Tangible Intangible
Equipment Trademarks
Machinery Franchises
Buildings Copyrights
Fleet/Vehicles Licenses
Infrastructure Goodwill
Software Patents
Land Brands
Cash
Maintenance

• Maintenance:
• Fix it when breaks (which is really repair)
• To keep asset in operating condition

Maintenance (new way)

✓ Maintenance = Capacity Assurance
To ensure asset performs its functions when needed
 Maintainability
“Is the measure of the ability of an item to be retained in or restored to a specified
condition when maintenance is performed by personnel having specified skill levels,
using prescribed procedures and resources at each level of maintenance & repair.”

Maintainability is usually expressed in hours MTTR (Mean Time To Repair) or MTD

(Mean Time Down).
MIL-STD-721C

In simple terms, maintainability usually refers to those features

of equipment or a system that contribute to its ease of
maintenance and repair.

Maintainability is a design attribute and is measured by MTTR

 Reliability
• Standard definition MIL-STD-721C:
“Is the probability that an item will perform the intended function for a specific
interval under stated conditions.”
• From ISO 14224 −
“Ability of an item to perform a required function under given conditions
for a given time interval”
• Simply stated… RELIABILITY is something
• Dependable, does it what it supposed to do ( function)
• Minimum or NO failures
• It is a design attribute
• Measured by MTBF (Mean Time Between Failures)
Availability

“Is a measure of the degree to which an item is in an operable and committable state at
the start of the mission when the mission is called for at an unknown (Random) time.”
MIL-STD-721C

In simple terms, it may be stated as the probability that

the asset will be in operating condition when needed.

Uptime MTBF
Availability = OR
Uptime + Downtime MTBF + MTTR
Asset Management (AM) and key terms ….ISO 55000

Managing the
Organization Coordinated activity of an
Coo
organization to realize
value from assets

Asset
Management Set of interrelated or
Interacting elements to
establish asset management
policy, asset management
Asset objectives and processes to
Management achieve those objectives

System
Assets that are within the
scope of the asset
Asset management system
Portfolio

An asset is an item, thing, or entity

that has potential or actual value to
an organization. Asset can be
tangible or intangible, financial or non-
Assets financial.

RG (Intro to AM) 04/30/21

Our focus in the past….

FOCUS area
Asset Installed

O&M
- Value delivery
After
Installation
Asset Lifecycle focus….. Asset Management (AM)
Managing Assets
Asset
Management Asset Installed
O&M
Before After
Installation Installation - Value
delivery

Design, procure, Operate &

build, and install Maintain

Design & Build Sustain

RELIABILITY RELIABILITY
Asset Management Phases / Elements

New way – 10 Rights / Elements*

Old – Traditional Phases
1.Planning & Specify
1. Planning 2.Design
2. Acquisition 3.Source / Procure
3. Operate 4.Build/Fabricate
4. Maintain 5.Install/Commission
5. Dispose
6.Operate
7.Maintain / Sustain
Usually, operates in Silos 8.Improve/Modify
9.Dispose/Decommission
10. Manage… all of the above
Work as a TEAM
* Based on “10 Rights of Asset Management” by Ramesh Gulati and Terrence O’Hanlon
10 Rights of Asset Management
The typical Life Cycle Cost of a Physical Asset

60-80 %
20-40 % 5-10 %

23
LIFE-CYCLE COST – Commitment & Expenditures
The Cost of early effort is relatively low but, the Life Cycle Cost Committed is HIGH.

100%

Funds
Committed
O&M cost is
estimated to
80% be 70 – 80% of
total LCC
LCC Cost
Reduction
60%
% of LCC

Opportunity

40%
Funds
Expended

20%

0%

Concept Design Build/ Install/ Operate/Maintain

Planning Development Fabricate/ Commission Dispose
Procure

Acquisition Operations & Disposal

-20% End of Asset
Start of Asset
Life
Asset Life Cycle Span Life
RG (Intro to AM) April 21

What and Why Asset Management Standard

• What is Asset Management
• Asset management coordinates the financial, operational,
maintenance, risk, and other asset-related activities of an
organization to realize more value from its assets. This
international standard suite focuses on managing physical and
intangible assets.
• Why Asset Management Standard
Assets are fundamental to all organizations. Managing them in a
controlled manner optimizes cost and risk, allowing timely and
fact-based decision-making. It delivers value in meeting the
organization’s objectives. It cultivates a sense of discipline in the
process to get repeatable results.

25
1
0
R
o
Asset Management Vision
f

• Assets are available when needed

– Assets are reliable and safe to operate
• Assets are maintained cost-effectively
• Assets are designed or acquired with built-in Reliability,
Availability, Maintainability, Safety-Sustainability, and
Operability (RAMS2O)
– Maintenance needs are minimized or eliminated
• Personnel who are operating, maintaining, designing,
procuring, or supporting assets in any form are trained and
aware of current M&R best practices
• Continuous improvement is a way of life to minimize or reduce
the Total cost of ownership(TCO)

Assets = Components / devices / equipment / systems etc..

26
RG

Standards

• Have you heard about

• Quality Management System (QMS) standard – ISO 9000
• Environmental Management standard – ISO14000
• Etc..
• Do you know how many organizations/companies in the world
are ISO 9001 certified?
• Over one million
• Why do the – organizations get certified?
• ISO 9001 certification has emerged as a universal Quality Management
System (QMS) which can be implemented in any industry, sector, or
country. to ensure that management systems are working to a certain,
high-standards and to ensure that their processes/systems are
producing quality products.
27
What are we trying to achieve by the use of
standards?
• Improved Business Performance through:
• Understanding customers ( stakeholders) and Levels of Service
• Ensuring Consistency in Capital Planning
• Ensuring Capacity to deliver
• System Integration
• Improved O&M Efficiency
• Integration between planning and operations
• Benchmarking performance
• Risk Management
• Better understanding of Corporate risks, (incl Planning, Preparedness, response & recovery)

• Governance Framework:
• Linking organizational objectives to capacity
• Measuring organizational performance
• Sustainability of the Business outcomes
• Condition (and performance)
• Asset knowledge
• Standard creates discipline in processes

Standardize and Integrate Processes to Meet Organization’s Objectives

Asset Management Related Standards

• BSI’s PAS 55 Asset Management (Replaced by ISO 55000)

• ISO’s – Management & Leadership Standards
• ISO 9000x Quality Management
• ISO 14000 Environment Management
• ISO 26000 Social Responsibility
• ISO 27001 Information Security
• ISO 31000 Risk Management
• ISI 45000 OHSAS – Safety and Health
• ISO 50001 Energy Management
• ISO 55000x Asset Management

29
RG (Intro to AM) April 21

AM - ISO 55000 series of Standards

• ISO 55000 (2014): Asset management - Overview, Principles

and Terminology (Under revision)
• ISO 55001 (2014): Asset Management - Management
System – Requirements (Under revision)
• ISO 55002 (2018): Asset Management- Management
Systems –Guidelines for the Application of
ISO 55001
• ISO 55010 (2019): Asset Management – Guidelines on the Alignment
of Financial and non-financial Functions in Asset
management
• ISO 55011: Guidance on the development of government asset
management policy (Under development)

30
Asset Management System at AEDC/ATA-JACOBS : 2004-2016
Core Process Interaction – Interfaces
ISO Certified
Test Ops Conditioned Air
Needs

Test Project
Test
process
Facility Req’mt Test Data Test (ISO9001 modified)
Mgmt &
Operations Customer
Execution
Access Coordination
Hardware Status Industry & Govt Gov’t
Software Program
Req’mt
Customers Client

Customer Technology Program

Relations Management 1-n list

Req’mt Req’mt
Ext ernal Customer Need
Specs
Design Manufacturing
Req’mt Hardware
Access Software Ext ernal
need
Customer
Asset Need
Scheduling Investment Planning
Access
need
Management Facility
Need
Access Skill
need Need
Investment Project
Resource Provisioning Skill Management 1-n list
need

Information Services Logistics Performance Management Stewardship

Key: Production Process Infrastructure Process Support Process Customer

FY 2004
RG (Intro to AM) April 21

Why ISO 55001 Important ?

• Compliance with the ISO 55001 standard can support

organizations that are striving for a culture of proactive,
continual improvement, and can drive an
organization's effectiveness and efficiency in the realization
of increased value from its assets. It reflects the latest thinking
and best practices in asset management.
• Developing and implementing an asset management framework
based on the ISO 55001 standard demonstrates to internal and
external stakeholders (e.g. regulators, customers, insurers) that
the organization manages its performance, risks, and costs in a
very effective and efficient manner.

32
ISO 55000x AM Standard Structure

• ISO 55000: Overview, Principles and

Terminology
➢A marketing document (why)

• ISO 55001: Requirements

➢The “shall” statements (what)

• ISO 55002: Guidelines

➢Explanations and examples (how)

33
 Key elements of an Asset Management System

Organization Objectives

AM Policy

Continual improvement
AM Objectives AM System
Development
Asset
Management
Planning
Asset Management
Capabilities
Asset Life
Activities

Planning &
Assets
Execution
Source: IAM/ISO 55000 34
ISO 55001 Management Standards
Format – Clauses (sections)
1) Scope
2) Normative references
3) Terms and definitions
4) Context of the organization
5) Leadership
6) Planning
7) Support
8) Operation
9) Performance Evaluation
10) Improvement

35
Scope of 55001 – seven key clauses

Leadership (Cl 5) Planning (Cl 6)

• Setting the Corporate/Strategic goals
• Leadership and Commitment to AM
• Plans and objectives that convert strategic outcomes to
• AM Policy (intent)
business and tactical action at all levels
• Responsibilities/authorities assigned & communicated
• Identifies and addresses risk
• Alignment w corporate and strategic goals
• Communication and engagement

Operations (Cl 8)
• Control the process to deliver targeted outcomes across all functions (Service delivery, Maintenance, Capital delivery)
• Consider how outsources activities are controlled and integrated.

Support (Cl 7) Performance (Cl 9) Improvement (Cl 10)

• Provide resources (skills, IT, $) • Monitoring, measurement, • Suitability, adequacy and
• Maintain or capability (competence) analysis and evaluation effectiveness of AMS
©Jacobs 2020

Key component of AM Process

• Policy

• SAMP: Strategic Asset Management Plan

• Asset management Objectives

• Improvement Plan – Defects elimination/process

37
RG (Intro to AM) April 21

Asset Management Policy

a key document may include the following:
1) Purpose of the policy
2) Background, Context, and Scope
3) Vision
4) Service Delivery Objectives
5) Asset Management Goals may include:
a) Identify all assets and documents in CMMS with co. Hierarchy guidelines
b) Assign each asset with a criticality ranking based on Co. criteria
c) Each asset will have an Optimized PM plan in CMMS
I. FMEA/RCM based utilizing CBM technology
d) Asset Health will be reviewed on a regular basis and improvement projects developed
e) Develop an annual O&M (integrated) – AMP and SAMP.
I. What we will do in Ops, PM major /min, major repairs (plant/ utilities, capital etc… In the current year
II. What are major PMs, capital projects, and Ops needs in the next 2-5 years
f) All work will be planned and scheduled as appropriate to improve cost-effectiveness
I. All work will be documented in CMMS
g) For asset improvements – Capital projects Needs/requirements
I. RAMS2O
II. MTBF, MTTR, Spares,
III. Ops needs
h) All new or modified assets will be designed or procured with RAMS2O
I. Energy, environmental, safe – ergonomic
II. Best value procurement – LCC analysis
i) Employees will be trained on a continuing basis for best practices, encouraged to participate in professional societies/industry
seminars, etc.
j) Continuous Improvement plan

38
RG (Intro to AM) April 21

Is ISO 55000 AM for me – my organization?

• All asset-intensive organizations, public or private, with either tangible or
intangible assets, can benefit from the use of ISO 55001. In particular,
organizations aiming to improve the value of their assets, or organizations
managing assets owned by a client, can leverage an asset management
system that complies with International Standards. Examples of such
organizations include:
• Infrastructure and industrial sectors (energy - production, transmission, and
distribution, water and wastewater services, telecommunications, railways, urban
transit...)
• Infrastructure-oriented "public services" (airports, hospitals, roads…)
• All economic sectors where products or services are regulated by government agencies
• Capital-intensive industries and high-value-added companies (mining, petrochemical,
manufacturing…)
• Real estate sector (residential, commercial, cultural...)
• Service organizations (software, consulting, professional services…)

39
 Establishing an AM process and
Implementing Std.
• Establish an implementation team
• Maintenance, operations, engineering, design, material, property etc.
• Develop an implementation roadmap
• Find the gap – where you are vs where you need to be to meet the
standard’s requirements
• Plan - how are you going to fill the gap?
• Use the SIPOC tool to identify inputs/outputs to AM process.
• Chart / map the process
• Use SWOT to identify areas to focus
• Develop policy, procedures, work instructions, guidelines/standard templates
• Use ISO 55001 standard as a guide for structure
• Ensure good communication/awareness
• Select a “registrar or Assessment Firm” who can help in the process to get
certified.
 Fact: Standards Mean Business
To industry, government and the bottom line
• The U.S Department of Commerce estimates that standards and
conformity assessment impact 80% of global commodity trade.

• Standards and conformance provide significant value to society and

government, are essential for an expanding national economy, and
vital to the global competitiveness of U.S. industry.

• All aspects of American goods and services are affected at some point
by standards. They cannot be ignored or put aside.

Source: ANSI …standards boost business

Benefits of AM Process ( use of Standard)

• A disciplined approach of doing things

• Procedures / Instructions standardized and
documented
• “ We know what we are doing and why we are doing it”
• Access to current (right) information only
• Auditing requirements ( 3rd party) ensure that we are
doing what we said we are going to do and
continuous improvements.
• “Process Council” ensures visibility and engagement
of all stakeholders
Establishing an AM process

• Establish an implementation team

• Maintenance, operations, engineering, design, material,
property etc.
• Use SIPOC tool to identify inputs/outputs to AM process.
• Chart / map the process
• Use SWOT to identify areas to focus
• Develop policy, procedures, work instructions,
guidelines/standard templates
• Use ISO 55001 standard as a guide for structure
• Ensure good communication/awareness
©Jacobs 2020
To prepare for the ISO certification … an example to
find the gap
How will we demonstrate Person Schedule to Completed
Requirement compliance? Responsible complete Date
4.1: Understanding the organization and its context
The organization shall determine external and internal issues that are
> relevant to its purpose and that affect its ability to achieve the
intended outcome of its asset management system.
Asset management objectives included in the strategic asset
> management plan (SAMP) shall be aligned to, and consistent with,
the organizational objectives.
4.2: Understanding the needs and expectations of stakeholders
The organization shall determine:
> The stakeholders that are relevant to the asset management system
The requirements and expectations of these stakeholders with
>
respect to asset management
> The criteria for asset management decision making
The stakeholder requirements for recording financial and non-
> financial information relevant to asset management and for
reporting on it both internally and externally
4.3: Determining the Scope of the asset management system
The organization shall determine the boundaries and applicability of the asset management system to establish its scope. The scope shall be aligned with the
SAMP and the asset management policy. When determining this scope, the organization shall consider:
> The external and internal issues referred to in 4.1
> The requirements referred to in 4.2
> The interaction with other management systems, if used
The organization shall define the asset portfolio covered by the scope
of the asset management system.
The scope shall be available as documented information.
4.4: Asset management system
The organization shall establish, implement, maintain and continually
improve an asset management system, including the processes
needed and their interactions, in accordance with the requirements 44
Challenges in Implementing AM Standard
• Don’t have the ‘Right” culture in place
• Workforce buy-in
• Management buy-in – support
• All speaking the same language
• Don’t have foundational Asset Management process in place
• Don’t have enough resources to do an effective job in
• Writing good specifications including technologies
• Designing for RAMS2O
• Sourcing for the best value
• Installation /commissioning phase and handing over process (new assets)
• Availability of good (quality) data
• Lack of skilled workforce
• Importance of continued training

RAMS2O = Reliability, Availability, Maintainability, Safety/Sustainability, and Operability

 Conclusion
• Organizations exist to :
• Deliver value to its customers
• Fulfill its mission
• Asset(s) play a key role in delivering value
• Producing products or providing services
• Delivering on time
• At reasonable/affordable cost
• Unreliable assets can’t deliver value
• Practices such as JIT, Lean, etc. are unsustainable w/o AM
• Application of Standards such as ISO 55001 make
processes:
• Robust, Reliable, Productive & Safe
• Streamline, and Uniformity across organization/enterprise
Standards are Best Practices …implement them to have business success
Resources / Acknowledgement

Most of the material in this presentation is derived from

• Maintenance and Reliability Best Practices, 3rd Ed. by
Ramesh Gulati

• “10 Rights of Asset Management”

by Ramesh Gulati & Terrence O’Hanlon

• US TAG / tc251 committee meetings and International

tc251 working group meetings

• ISO 55000 family of standards

Are You Ready for Asset Management?

[email protected]