The absence of standards for managing physical assets leaves technology suppliers with little direction on how to design appropriate products, and indus trial enterprises with no guidance for developing initiatives. This can be particularly problematic for multinational organizations.
Formal industry standards provide a framework for both economies of design and improved product and service quality. Standards facilitate interoper ability, production improvements, and scalability of asset management programs among different industries and between plants. Standards can also help improve quality of life by contributing to safety, human health, and environmental protection. Unless mandated by regulatory bodies, standards compliance is voluntary; however, it demonstrates an organization’s commitment to quality, performance, or safety.
PAS 55 is a general standard for managing physical assets. Thus, it is particularly relevant for asset-intensive enterprises. Originally launched in 2004 under the leadership of the Institute of Asset Management (IAM), it was intended for regulated infrastructure and public utilities, but has since garnered interest in a variety of non-regulated industries. It was updated in 2008 with input from 50 organizations in 10 countries, representing 15 industry sectors.
Asset management
The structure of the standard is analo gous to Deming’s Plan-Do-Check-Act (PDCA) continuous improvement cycle utilised in quality management systems. Any strategic asset management plan should reflect the overall objectives of the enterprise. Once the plan is imple mented and key performance indicators established, they should be measured and actions taken to improve perform ance. Under the guidance of the IAM, organizations such as Lloyd’s Register offer PAS 55:2008-1 assessment, training, and certification services. Many enterprises will recall similar programs when obtaining ISO 9001 certification for quality management systems. PAS 55 certification requires an enterprise to optimally manage capital investments, daily operations, maintenance, resources, risks, performance, and sustainability for all its assets.
To date, PAS 55 adoption has been largely limited to electricity and gas distributors in the UK where compli ance is mandatory, but has also expanded into the railway and water sectors in that country, as well as into other countries, including Australia, New Zealand, and China. In 2008, SP AusNet, a major electricity and gas distributor based in Melbourne, became the first company in Australia to be certified to the PAS 55 standard. MTR Corporation, a leader in mass transit rail services, attained PAS 55 certification for its Kowloon-Canton rail line in Hong Kong and is committed to adopting the PAS 55-1 specification for all future rail lines to demonstrate its commitment to achieving the highest standards in relia bility, safety, and efficiency.
Many other organizations around the world already use PAS 55 as an assess ment tool to help develop robust, sustainable asset performance manage ment plans, but have elected not to pursue certification. These include WEL Networks, the fifth largest electricity distribution company in New Zealand, which used PAS 55 guidelines to assess the effectiveness of the company’s overall asset management plan.
PAS 55: An ISO Standard?
PAS 55:2008 is a publicly available stan dard sponsored by the British Standards Institution. Although compliance with a BSI standard has credence in the UK, it does not necessarily translate interna tionally with equal significance. In August 2009, BSI filed a proposal with ISO to develop a global asset manage ment standard for physical assets. With the support of 21 ISO country members, the proposal has been successful garnering comments.
BSI will host a preliminary meeting in April to discuss the comments and to plan future activity. ISO has assigned a formal project number to the work, PC 251, with a proposed timeline of year- end 2012 for approval. Finalising indus trial approvals is typically a long and arduous process that can take many years. However, PAS 55 appears to be on a fast track as a result of the consensus it has already attained and general interest in the subject.
In these trying economic times, the stakes are too high for enterprises to ignore the benefits that an organised asset lifecycle management program can provide. ARC’s Asset Lifecycle Management (ALM) is a multi-level model that takes a broad vision of asset management encompassing the Design & Build, Operate & Maintain, and the Evaluate & Select activities of ALM.
Significantly, PAS 55 recommends what organizations should do, but not actually how to implement an ALM initiative. It does not provide detailed strategies, plans, processes, and technolo gies. Because every enterprise is unique, users will need support from third-party consultancies and software/hardware suppliers to accomplish corporate goals.
C-level executives interested in understanding ALM excellence from a broad perspective may consult with the ARC ALM team or make plans to attend ARC’s 2011 World Industry Forum in Florida, February 7-10, 2011 where ALM will be discussed in depth.
[Paula Hollywood (phollywood@arcweb.com) is Senior Analyst, ARC Advisory Group.]