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Asset Management accelerated to support budget request

by Lisa Meiman

 

What is Asset Management?

According to the Institute of Asset Management, “The discipline of Asset Management is emerging as a mainstream expectation for competent organizations.” Asset Management is currently defined as “the coordinated activities of an organization to realize value from assets.” An asset is defined as “something that has potential or actual value to an organization.”

Chief Operating Officer Tony Montoya explained further, “Although the standard definitions are very broad, for Western, Asset Management should be thought of as a coordinated process whereby we optimally and sustainably manage assets, their associated performance, risks and expenditures over their life cycle for the purpose of achieving our mission and strategic objectives. Specifically, Western is focusing its attention on the transmission and related facilities and major equipment that we use to directly serve our customers. We commonly refer to this activity within Western as our Asset Management program or just AM, even though it is actually a broad process on which nearly every Western employee works.”

Put simply: Asset management is using assets in a way that maximizes their value to the organization while taking into account risk, costs, safety, efficiency and performance.

 

Maturation of Western’s Asset Management program, now pushed by two initiatives, has been accelerated to better meet our obligations to customers, the Department of Energy, Congress and the public. In particular, Western is focusing on integrating many of the elements of our current Asset Management program using the Institute of Asset Management principles and industry best practices. This will result in a program that is data driven, risk informed and well-coordinated with external customers and internally across Western. The output from this effort will be used with customers and to help justify funding needs in the Fiscal Year 2016 budget request due next summer.

This acceleration comes on the heels of the DOE’s approval to extend the deadline for the Access to Capital initiative until the FY 2016 budget request so Western can conduct additional outreach with customers and refine Western’s funding needs using asset condition and maintenance data already available in Maximo.

“I cannot express enough the importance of this activity. AM is critical to our credibility and to moving forward with our customers to ensure Western has the funds to keep the lights on reliably and safely,” said Administrator Mark Gabriel.

According to the recent external strategic roadmapping survey, about 45 percent of Western’s customers have formal AM programs in place, meaning that customers will not be surprised at this development, and, as demonstrated in Access to Capital meetings, the type of information an AM program provides is something customers have come to expect when discussing funding needs, both ours and their own.

In addition to asset data and analysis by next summer Western also needs to develop an asset management plan that will bring Western’s AM program to a comprehensive, centralized and mature program that follows industry best practices including the industry-accepted guide, Asset Management Institute Publically Available Specification-55.

The ongoing Asset Management Program Improvement Project, or AMPIP, will still follow its original project plan, but additional work will be done to integrate AMPIP activities with an enhanced Westernwide construction planning and budget formulation process and tie these activities together using the Asset Management Institute framework. The integrated results will then be used to develop a capital investment plan that will start to identify Western’s short- and long-term investment needs. Customers will continue to be actively involved at the regional level and in renewed outreach for Access to Capital in preparation for the FY 2016 budget request.

AMPIP tests metrics, methodology

The AMPIP team, under the leadership of Project Manager Don Roberts, has been hard at work formalizing and standardizing how Western can rank its assets based on risk, which includes collecting and analyzing asset data across the agency—focusing in particular on documenting existing asset condition—determining probability of failure for each asset class and developing a process and metrics for evaluating each asset’s consequences of failure.

Thanks to nearly a decade of data collection through reliability-centered maintenance activities and the Maximo database, Western already has considerable asset data available to it. Unfortunately, not all data is consistent or complete across regions or across assets, and the data previously had no metrics or methodology to determine what it meant. This makes it difficult to create sensible and justifiable life cycle plans for those assets. AMPIP’s goal is to eliminate that gap by bringing together several functions across Western, including Power Operations, System Planning, Maintenance, Power Marketing, Information Technology and others, to determine how to calculate asset condition and risk in terms of asset performance, reliability, service, safety and life cycle costs.

“Risk is the mathematical product of probability of failure multiplied by the consequence of failure,” said Roberts. “Probability of failure is determined by looking at the asset’s health index, or HI, which includes current condition, maintenance over time, age, design, outage history and other factors that maintenance tracks regularly, and then applying a failure curve based on historical data of that asset class. Consequence of failure criteria, for Western, will look at the economic and customer service impacts of an asset’s failure and turn that into a quantifiable number.”

Using probability and consequence of failure, the risk results can be input into a risk register, which will document all the information about that asset, such as risk ranking, health index and consequences of failure, and also identify a need or recommendation to take any action on that asset. To meet all the new data needs and analytics, Maximo is undergoing significant changes. This effort is being led by the Maximo 7 project manager Don Nord. The AMPIP team expects to start testing various elements of the new Maximo features later this summer.

AMPIP is approaching a key milestone, which Roberts expects will be achieved by the end of this month, “We have determined the variables for our risk equations, obtained enough asset data from our subteams and conducted reasonably accurate tests of HI and consequence of failure calculations. We expect to have this methodology approved by the functional councils and senior executive team by mid-August.” The team is already moving on to the next stage of the project, which includes training regional staff members, applying the methodology to the initial set of priority assets—transmission line segments, power transformers and breakers from the regional five- and 10-year capital plans—developing a plan to sustain the program and sharing the new asset management methodology with customers. AMPIP expects to have all the initial assets fully analyzed by spring 2014 and transition from the project to a Western program by the end of 2014, which is a little later than the original project plan but still a major accomplishment.

When Western fully implements a long-term sustainability plan, program staff will be able to provide near real-time asset condition and annual capital investment recommendations for senior management, customers and other stakeholders using industry policies, procedures and best practices.

Chief Financial Officer Linda Kimberling also shared her excitement about the project, “AM will become the objective foundation upon which sustainable funding needs and capital budgets can be articulated and justified in discussions with customers, DOE, the Office of Management and Budget and Congress.”

New AM program integrates fully

While Roberts and the AMPIP primarily work on individual assets, a refinement of the AM program at Western, led by Chief Operating Officer Tony Montoya, will integrate AM activities across regional offices and vertically from Western’s strategic plan down to individual system and functional performance. “AMPIP will provide senior managers, mid-level managers and functional councils a considerable amount of new information we haven’t had before,” said Montoya. “We need to define a procedure and process for using that data and integrating it with other products and practices at Western, all of which will help define and prioritize needs across the agency and develop a long-term, forward looking AM and capital budget plan.”

Specifically, Montoya is referencing integrating AMPIP results with budgeting. From a financial perspective, Kimberling believes that “life cycle asset management is the key to minimizing our operational costs and optimizing our cash flow in a continually strained budget environment. We are less likely to incur negative budget impacts from unanticipated costs and better able to align funding sources with project prioritization.”

The outcome of this initiative will produce the AM plan needed by next summer; the plan will match, to the greatest extent possible, regional capital plans with current asset data in Maximo and provide a path forward to improve how asset data is used to create and validate five- and 10-year plans. It will also define how the AM program will work at Western at all levels and across all functions.

The first step for this initiative was to hire a consultant, HDR, in May to assess Western’s Asset Management program, including where the agency was, how its program compared to industry best practices and PAS-55 and provide recommendations for improvement. The consultant found that “Western’s AM program is an excellent start given the maturity of their AM program and the organizational opportunities already in progress to further elevate their AM program to the next maturity level overall.” Western’s program was ranked at a 2.0 maturity level out of a 4.0 scale based on Western’s efforts to incorporate PAS-55.In particular, HDR was impressed with the improvements made by AMPIP and Western’s AM program at the lowest levels. The major recommendation revolved around ensuring agency leadership was heavily involved in any AM program: “Best practices in AM include an organizationwide program directly tied to all asset owners and managers with a clear line of sight to Senior Executive Management.”

“Much work will still need to be completed to successfully implement a comprehensive asset management program here at Western,” said Gabriel. “Asset management is a journey without true destination. It is constantly changing, constantly improving; we should take advantage of what great work has been done already, recognizing that next time the data will be better.”