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Improvements in equipment reliability and longevity and workforce productivity allow more revenue to trickle down to the bottom line.
Companies that operate major assets often face issues with nonproductive time (NPT) and employee retention. Managers might wonder if these issues are related, but frequently they lack the data to make that connection. They would like to raise productivity in operations to the level they are enjoying on the commercial side but are not sure where to begin.
Asset performance management (APM) is the best way to address these problems, but not in a narrow or piecemeal fashion. It is true that an APM program focused only on inspection, maintenance, and repair (IMR) functions can achieve beneficial results, particularly if it is thorough and risk-based. To deliver maximum benefit and value, however, APM should be implemented comprehensively and include all the functions – from senior management to new-hire training – that have an impact on asset operations success.
Probabilities, consequences, priorities
As APM is commonly viewed, its domain is technology. It focuses on equipment IMR and deals with scheduling, procedures, tools, software, and sometimes record-keeping and reporting. Its goal is to reduce equipment downtime by detecting problems before they result in failure. It also assists in maintaining regulatory compliance and a safe working environment. APM is deemed successful if incidents of equipment failure trend downward.
An APM program narrowly focused on equipment and technology will likely improve productivity, particularly when it uses a risk-based approach. A risk-based APM program begins with a gap analysis to pinpoint vulnerabilities and deficiencies and also to identify strengths upon which to build. Its characteristic feature is an assessment of the probability and consequences of every potential failure, conducted with the assistance of risk-based mechanical integrity software. The results are summarized in a probability/consequence matrix and are used to determine inspection and maintenance priorities. Equipment with a high probability of failure that can produce severe consequences receives diligent attention. Equipment with a low failure probability and minor consequences may simply be ignored. The result is a rationalized IMR schedule that can reduce costs by eliminating unnecessary inspections and avoiding failures. The benefits of a risk-based APM program focused only on the hard technology area can be impressive – inspection cost savings of 50% to 60% and up to a 90% reduction in risk. But equipment failure is only one factor that can degrade asset performance. Many other factors in the soft areas of people and processes also affect asset performance in significant ways. A more comprehensive approach to APM provides deeper insight into people and process issues – such as whether there is a connection between NPT and employee turnover – and delivers many more benefits.
Fully comprehensive APM comprises eight elements, of which risk management, asset knowledge management and decision support, and asset-lifecycle engineering are the technical core. Three other elements form the broader organizational context and include leadership, values, and culture; organization; and policy, strategy, and planning. Two management elements – corporate responsibility and measurement and improvement – help to direct the overall program. An APM program that includes all eight elements is a formula for excellence. But implementing even one or several of the elements delivers improvements.
A well-designed, broadly implemented APM program delivers significant value in four primary ways by:
Driving beneficial behavioral change across the organization;
Reducing both the probability of unanticipated equipment failures and the severity of the consequences;
Optimizing the costs of acquiring, inspecting, and maintaining assets, lowering capex and opex budgets; and
Providing a basis to safely extend the life of critical assets, eliminating or deferring their replacement. A sound APM program also brings collateral benefits such as a reduction in HSE incidents and their associated costs. The management of various contractors and outsourced services such as engineering can readily be included in an APM program. Since risk cannot be outsourced, firmer contractor interface management can have a direct impact on asset performance. Applying an APM perspective to procurement and global supply chains helps ensure they are safe, responsible, and sustainable. APM also provides a means to instill more rigorous accountability throughout an organization by providing a common reference for defining employee responsibilities and interrelationships among various functions.
Companies usually begin an APM program by focusing on the technical core elements. If a time-based IMR program exists, replacing it with a risk-based approach is a straightforward process. At the same time, risk management can be extended beyond IMR to include such things as job-hazard analysis, incident investigation and reporting, and emergency response. Initiatives in the area of knowledge management and decision support might include careful scrutiny of data to be collected, information system requirements, document management, and information distribution. Lifecycle engineering offers immense opportunities to control lifecycle costs by ensuring that asset design, construction, and installation are not only fit-for-purpose and comply with regulations but also are value based so that long-term return on investment is not sacrificed for quick savings. A set of best practices for asset reliability should be a constant reference for lifecycle-engineering decisions.
Since effective management depends on accurate measurement, APM should identify key performance indicators, develop appropriate measurement procedures, and establish benchmarks. Information derived from these activities can answer questions about many people and process issues, such as hiring the right people , looking for the right qualifications, providing the right training, maintaining the right parts in the spares inventory, making sure procurement understands the asset-operating conditions, improving retention through restructuring the work environment, and understanding how turnover impacts NPT.
Successful implementation of APM requires committed, consistent, and visible executive-level engagement, particularly for a comprehensive program. Clear communication of the goals, values, and benefits of an APM program is an essential component of senior management support. For APM to be successful, employees at all levels of the organization, and especially those most directly responsible for completing the work, must accept its principles and the changes it brings to established processes and procedures. Acceptance happens when employees can reply positively to the question, “What’s in it for me?” In a successful APM program, hands-on operators, mechanics, electricians, and their supervisors recognize that they have been empowered by new skills and knowledge and are thus of greater value to their employer. They know that APM benefits them as well as other stakeholders.
The final stage of acceptance occurs when APM becomes embedded in the corporate culture. Asset performance is then a key part of the context in which employees understand their duties and the processes in which they are involved. It is a reference for making decisions. The result is a workforce that performs with greater diligence, efficiency, accountability, and productivity.