A New Perspective for Asset Lifecycle Management & Interoperability Construction Contractors
Product Supply Chain
Shareholders
Financial Regulators
Operate
Fabricators
EH&S Regulators
OEMs
Engr & EPCs
Design
Maintain
Improve Consumables
Repair Shops OEMs & Parts Distributors
Sid Snitkin
Maint Service Providers
Vice-President ARC Advisory Group srsnitkin@arcweb.com
About ARC Advisory Group Established in 1986 80 Employees Global: US, UK, Germany, Japan,
China, India
Focused on Manufacturing and Supply
Chain
Sample of Manufacturing Company Members 2
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Agenda Why are Improvements in ALM & Interoperability
Important?
Why does the Traditional perspective on these topics
limit improvement?
What would be a better model for ALM? What is Interoperability and ALM Interoperability? What do we need to do to achieve it?
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The Challenge/Opportunity
Poor ALM & Interoperability are Costly! A 2004 NIST study estimated the annual losses due to the
lack of information interoperability within the North American Capital Projects Industry to be $15.8B (4.2% of installed asset cost). Almost $10B of this is owner/operator losses in the Operate and Maintain Lifecycle Stages (2.7% of installed asset cost = 2.7% ROA penalty).
A less formal survey I conducted sets annual losses due to
poor information Interoperability between O/O Engineering and O/M groups to be 3% of Plant Revenues.
Maintenance studies consistently find “wrench time” to be 25-
30%, due to poor access to information, waiting for parts, poor coordination with operations, etc. activities.
EH&S Compliance today demands:
• • • •
Complete, Accurate information for all assets Proper Operating and Safety procedures Complete histories of how assets have been operated Much more than money is at Risk! 4
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Why are we in this situation?
The Traditional Model for Asset Lifecycle Management O/O
EPC
Operate/Maintain
Revenues
OPEX
÷ Net Income
Capital Costs (CAPEX)
ROA 5
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Why are we in this situation?
What’s Wrong with the Traditional ALM Model Operate/Maintain
1. One-shot , Linear steps vs. cyclic, repeating activities 2. Ignores Interdependencies that create a lot of the problems 3. Encourages isolated, one-off decisions vs. coordinated, global investments. 4. More focus on Project (3-5 years) than O&M (30-50 years) 5. Business process, not Lifecycle Management Analysis 6
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A New Perspective
Performance Recognizing Dependencies • • • • •
Design Accuracy Release Mgmt C/N Mgmt Equip Selection Material Specs
• • • • •
Design Timely, Right Information
The Right Capability • • • • •
Product Range Throughput Quality Product Unit Cost EH&S Capability
• Financial • Cost • Cash Flow • Functional • Personal EH&S • Work Quality • Schedule
Const Planning Material Mgmt Site Mgmt Labor Efficiency EH&S
Build Optimal Execution
X
X • • • • • •
Project Performance
Operate
Maintain
Optimal Utilization
Maximum Availability
Product Mix Prod Planning Prime % Material Cost Labor Cost EH&S
X • • • • • •
Maint Strategy Mgmt Maint Planning Maint Efficiency MRO Material Mgmt Labor Cost EH&S
ALM Performance Asset Performance • Financial • Profit, Ratios (ROA) • Functional • Process EH&S • Personal EH&S • Customer Satisfaction • Cost, Quality, Delivery
Optimizing Project and/or Asset Performance Requires Collaboration & Teamwork !
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A New Perspective
Information Flow Recognizing Cyclic Behavior ALM Information Timely, Right Information
Build
Project Info
Design Calcs Models Drawings Equip BOMs Vendor Info etc.
How was it Bought & Built?
What should it be & why? What is it?
Operate
Maintain
Asset Info
How should it be operated & why? How has it been operated? How should it be maintained & why? How has it been maintained
Design IT Investments Impact Project & Asset Performance Design, Operate & Maintain Are Key to AIM! 8
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A New ALM Model
Understanding the Asset Lifecycle What is a Lifecycle? • Lifecycle is not in the Dictionary • Life Cycle means the stages that an entity goes through in one generation of its species continuing cycle of life Humans
Assets
Conception
Concept
Fetus
Project
Birth
Commissioning
Child
Pilot Operation
Adolescent
Ramp Up
Young Adult
Full Production
Middle Age
Peak Performance
Senior Citizen
Decline/Replace
Death
Retirement 9
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A New ALM Model
Understanding the Asset Lifecycle
The stages in the life of one generation of an asset
Cycles during the Lifetime of an Asset
Time
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A New ALM Model
Understanding Asset Lifecycle Management What is Lifecycle Management? • Multiple Definitions - extend life, cycle phasing, etc. • Product Life Cycle – Match strategy to Stage Objectives & Needs ALM Stage
Strategic Objectives
Concept
Rapid, Reliable Evaluation/Comparison of Scenarios
Project
Efficient, Timely Execution of Design, Source, Build Activities
Commissioning
Coordinated, Comprehensive Validation of Design Compliance
Pilot Operation
Mentored Training of O&M Personnel, Limited Production
Ramp Up
O&M Skill Enhancement, Planned Increase in Output
Full Production
Maximize Output/Revenue, Maintain Equipment
Peak Performance
Optimize Asset Performance via Continuous Improvement
Decline/Replace
Retain Performance, Manage Replace/Upgrade Activities
Retirement
Maximize Salvage Value, Manage Removal/Disposal 11
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A New ALM Model
Elements of a Management Strategy
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A New ALM Model
Understanding the Asset Lifecycle
Technology Information
KPIs
KPIs
People & Processes
KPIs People & Processes Technology Information
KPIs People & Processes
People & Processes
Technology
Technology
Information
Information
The stages in the life of one generation of an asset
KPIs People & Processes Technology Information
KPIs People & Processes
Technology
Technology
Information
Information KPIs
People & Processes
KPIs
People & Processes
KPIs People & Processes KPIs
People & Processes
Technology
KPIs Technology
Technology
Information
Technology KPIs
Technology KPIs
People & Information Processes
People & Information Processes
KPIs
KPIs
People & Processes
People & Processes
Technology
Technology
Information
Information
People & Processes
Information
Information
Technology
KPIs
Information
People & Processes Technology Information
KPIs
Technology
People & Processes
Information
Technology Information
Cycles during the Lifetime of an Asset
Time
KPIs People & Processes
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A New ALM Model
Elements of an ALM Strategy
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A New ALM Model
Elements of a Plant ALM Strategy
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A New ALM Model
An ALM View of the Traditional DBOM Processes
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A New ALM Model
Recognizing Some Key O&M Processes
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A New ALM Model
An ALM View of All Asset Lifecycle Processes Time
Operate Bu il d
rt po Re
Design
Maintain
Improve
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What is ALM Interoperability?
It Depends Upon Your Perspective ... Engr Handover Teamwork to O/M
O/M Info Exchange to Stds Engr
Plug & Play FEED Software Common Operate to Data Maint
Std. EPC Business Handover Processes to O/O
Models
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Interoperability is More than Integration
Interoperability
Integration
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Making ALM Processes Interoperable
Shared Goals
Consistent Processes
Compatible Tools
Complementary Data Models
Proc 1
.........
Proc N
Optimum ALM Performance requires Teamwork … ALM Interoperability Makes Teamwork “Work”! 21
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Who is on the ALM Interoperability Team? ALM Interoperability Team Charter 1. Anyone who meets one or more of the following criteria, should be on the ALM Team: • Create Information that may be used in ALM • Use Information that may be created by ALM 2. Whoever suffers the most “must” be the Team Leader … Owner/Operator must be the key Leader for ALM. 3. The Team Leader is responsible for establishing the ALM Interoperability environment and the rules as to how the game is played. 4. All Team Members are responsible for supporting the Team Leader by: • using the environment • playing according to the rules.
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The O/O’s Internal ALM Team
Operations Mgmt/Engr
Bu il d
s
& ce
Pu Pro rc jec ha t De si ng si Co En gn n M gr gm st St t ar En tup gr
r to ra pe
s k an Ri t rpli m pCoo aint s M ch Te Re
O
Process Design Engr
Project Mgmt
l ia nc t na m Fi Mg
Operate
Maint Reliability Mgmt/Engr Engr
Maintain
Materials Restore Mgmt
MRO Purchasing
Internal ALM Team Members Need “Role-based” Access to All Relevant ALM Information! 23
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The O/O’s External ALM Team Construction Contractors
Financial Regulators
Bu il d
rt po Re
Engr & EPCs
Shareholders
Operate
Fabricators
OEMs
Product Supply Chain
Design
Maintain
Improve
EH&S Regulators
Maint Service Providers
Consumables
Repair Shops OEMs & Parts Distributors
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An O/O Model for ALM Interoperability Construction Contractors
Financial Regulators
Bu il d
rt po Re
Engr & EPCs
Shareholders
Operate
Fabricators
OEMs
Product Supply Chain
Design
Maintain
Improve Consumables
Repair Shops OEMs & Parts Distributors
EH&S Regulators
Maint Service Providers
External ALM Interoperability Platform 25
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Thank You. For a free copy of a full ARC report on this topic please contact the author at srsnitkin@arcweb.com For information about ARC’s upcoming Asset Lifecycle Management Forum in Houston, please visit our web site at www.arcweb.com and look under “Events”. 26
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