Читать книгу Asset Management Insights - Celso de Azevedo - Страница 12
ОглавлениеDemystifying the Project Phase
In the classical industrial scheme, the preoperational process essentially depends on two factors in its effort to acquire or design an asset. On the one hand, it depends on the efficiency of the tasked design office; on the other hand, the budgetary constraints imposed by the industrial leadership of the office. It should be noted that this approach is inherently dangerous, not least because it implies short-term savings, which will indubitably have a negative impact on the reliability and the efficiency of assets throughout their life cycles—and which could well result in a heavy and undesirable financial expense later on. Furthermore, the compartmentalized approach of the industrial organization chart, which opposes engineers and financiers, strikes us today as inefficient and anachronistic, whatever we’d like to think of the issue. Indeed, the alignment of objectives, which allows for the maximum extraction of value, cannot occur in a context of separation of powers within an organization.
Research on the means by which one can improve the preoperational life of assets was not born from Asset Management: indeed, as early as the end of the Second World War, engineer Lawrence Delos Miles had begun to reflect on the most adequate methods of design while working for General Electric, and he consequently came up with an approach nowadays known as value analysis. This innovative process prefigures, albeit at an embryonic level, the approach championed by Asset Managers in the sense that it connects the notion of economic potential to a fundamental pragmatism that aims to limit costs in a rational manner.
It is worth remembering that in 1973, the first crash of the oil market brought about a meteoric rise of production costs at the organizational scale. Savings became the primary and central constraint in the engineering sphere— designers were thus requested to take into account stricter and stricter budgetary constraints, which allowed for value analysis, in the form of design-to-cost, to take a durable foothold in the industrial culture of conception. It would be unwise on our part to make a value judgement on this trend, seeing as it was above all a response to a new economic context where budgets were appearing as the primordial criteria of reflections on conception. Therefore, design-to-cost was tied to the issue of competitiveness, or even of economic survival.
Nonetheless, it is clear that if we consider it from the perspective of an Asset Manager, design-to-cost is inherently a flawed model. Hence, it does not take into account life cycle costing or value extraction. Indeed, this approach of design takes its base solely on CAPEX, and therefore on short-term investments, without generating any reflection on OPEX (the costs tied with the operational phase) or on the life cycle. We could therefore postulate that despite its innovative touch, design-to-cost is diametrically opposed to the practices and rationales inherent to the logics of Asset Management.
This argument is in fact tied to a very contemporary problem, in the sense that the rationale of savings (which has derived from the budgetary constraints of the 1970s) has consistently influenced corporate culture to this day.
Thus, organizations have not been able to break free from a certain approach that places the limitation of costs as a finality in itself, a fact that can largely be attributed to a lack of sensitization on behalf of management experts—in this case, of Asset Management experts. Yet, we know that the rationalization of costs depends primarily on an analysis of the predicted reliability of the assets and on an appraised anticipation of the risks tied to these assets—a problem that design-to-cost inherently neglects. It is therefore up to the professionals and experts of Asset Management to democratize a new techno-economic culture and to shine a light on the limitations of an anachronistic model.
All too often, industrial and infrastructural managers base their decisionmaking on the sacrosanct financial indicators derived from the theories promoted in major business schools worldwide, while feigning to ignore that a capital-intensive installation will always be faced with crucial equipment reaching its end-of-life and whose renewal is therefore vital to the proper function of business. If they are seldom viewed as a priority according to these indicators, it is, however, clear that these end-of-life assets will have to be replaced, regardless of their ROI (Return on Investment) or of their IPR (Internal Profitability Rate), and despite the organization’s cash flow situation. In fact, they will have to be replaced even at the cost of postponing other, more profitable investment options.
We can’t overstate the fact that in the Asset Management perspective, the value of an asset is to be extracted over the course of its life cycle. This is because the reliability of equipment (as opposed to purely economic indicators) is not recycled according to fiscal years (or capitalization periods) but according to the “biological” life cycle of machines, which cannot be reproduced1 to fit the comparison of NPV calculations when the economic frames of concurring projects differ.
A few lines earlier, we deplored the lack of an “appraised anticipation of risks” in the context of design-to-cost. One should always be careful to demonstrate a methodical conceptual rigorousness when dealing with such a vast topic. It would be misguided to assert that risks are not taken into account in a serious engineering or industrial system. It is quite the contrary, as they have always been at the core of the theoretical priorities of design managers; however, risk monetization, which refers to its appraised quantification, is a phenomenon that has only emerged with the rise of Asset Management in the 1990s.
Until then, the acknowledgement of risk, dictated by a minimal or nonexistent corporate and preoperational alignment, was not a qualitative indication—and was bound to remain, therefore, both limited and imprecise. This was not the result of bad will on the part of the designers, but rather of a lack of technical means, especially in terms of calculation—a strong hindrance to an efficient strategic program. Indeed, U.S. Military Standard 1629A (the FMECA standard that defines risk analysis and the criticality of engineering systems) was only published in 1967. As it happens, every notion impacting on design and the ponderation of values (including risk) made its way into the scientific discourse around the same era and slowly grew in precision and clarity. The place of risk within the process of analyzing the value of an asset in its preoperational phase was therefore very different at the time than today; it was perceived as a “ponderation criteria” but its monetary translation was very marginal in design offices.
In order to give more substance to this outline of a reflection on risk, one needs to be equipped with a technical arsenal that allows for a quantitative assessment of risk itself. This was the main input of life cycle costing, or LCC, a method developed by NASA and MIT researchers for the benefit of the U.S. military in the late 1970s. It should be noted that the great economic reforms pushed by Margaret Thatcher and Ronald Reagan are very much tied to these initiatives. For the first time, the entire life cycles of assets were taken into account from the earliest stages of the preoperational phase. However, the transition between these two opposite poles (design-to-cost and life cycle costing) was not a simple one, and it would take many years for a rigorous economic translation of technical risks to see the day.
This historical perspective on the evolution of the way value has been perceived is very telling. It shows that the notion of quantified anticipation of an asset’s value as well as reflections on the most appropriate means by which to extract its optimal value are very recent fields of thought that have yet to become regarded as utmost priorities within design and engineering offices.
1.2 Designing: A “Distinct” Activity
Throughout my career, I’ve been given the opportunity to observe the various phases of the assets’ life cycles in numerous contexts, and from distinct perspectives inherent to the specific affectations I’d been given. It must be noted that the preoperational phase of industrial assets is all too often regarded as an activity “within itself” in the industrial process. Thus, it is broadly believed that it is “distinct” from other phases, which implies that it has its own “end,” in the same way that the processes tied to this phase of design or procurement themselves have a beginning, an evolution, and an end. Intuitively, this can appear as a reasonable belief. However, it is in fact a valid indication as to the gap that yet prevails between the traditional industrial culture and the perspective offered by Asset Management culture. Indeed, regarding the preoperational process as a “distinct” phase marks a clear opposition to the very notion of an asset’s global life cycle.
Ever since prehistoric times, the social man has striven to better his production of tools, then of machines—in short, of assets. But up to the Industrial Revolution, and, to some extent, even in our modern times, assets that were to be operated have been regarded as ends within themselves, thus neglecting the optimization of value whose realization they would permit. Reflections of life cycles have not been useful up to now, because the notion had not been proven to embody a true necessity. Historically, designers have been allowed to create in total freedom from external constraints, since what was expected from them was to design a tool responding to a precise need, and whose function was immediate.
Until the introduction of CAPEX/OPEX trade-offs (which establish a relation between procurement investments and maintenance costs in the production phase), costs had been somewhat absent from this historical scheme. Since the task that had been set consisted solely of responding to a functional imperative, it seemed unnecessary to take into account risks of degradation and aging of the assets and machines. Thus, I’ve been invited a countless number of times to take part in broadly chance-based projections of operational and maintenance costs, sometimes as early on as in the context of a call for tender where all too often the practice, even today, is to appear as the concurrent able to display the smallest “ignorance coefficient” in regard to the operational costs of the life cycle. We can take pride in having participated, throughout the last three decades, in the implementation of a culture which takes operational reliability and life cycle costing much more seriously; however, this culture has yet to impose itself as a true industrial standard.
To this day, one can deplore a lack of anticipation regarding the life cycles of different assets. Even in the case of organizations that have begun to open up to an Asset Management line of thought, the profile of professionals sought after for this type of mission is radically distinct from that expected for other missions. This can induce a lack of coordination, and therefore of alignment, in corporate perspectives. Once more, we can observe that organizational segmentation is harmful to the optimal efficiency of decisions tied to the assets. The reality is therefore that of a complex mix of needs: that of the implementation of a more “long-term focused” vision, of a transformation of traditional leadership, and of a more holistic management for the different segments of the assets’ life cycles.
Let us stop to consider the role attributed to design offices in the organizational chart organigram: these offices are responsible for the assets’ conception, design, and specification. Thus, they are exclusively made up of engineers, trained and habilitated to consider the asset in terms of its sizing and functionality, but not specifically in terms of its life cycle.
By no means do we intend to minimize the usefulness of the engineers’ work, which is more often than not very well executed and remains entirely necessary; our intention is rather to bring forth a redefinition of the value that this engineering work generates. It is obvious that engineers produce a certain value, were it only of a commercial nature. But in order for us to be able to talk about “value” in the sense of “value extraction,” inherent to the best practices of Asset Management, the designer-engineers themselves should be taught and trained on the fundamental concepts of Asset Management; once more, the absence of a proper coordination of the different segments that make up the traditional organization is an obstacle to the optimal realization of value from the assets.
This “coordination” that we’ve brought up allows for an optimization of the alignment between corporate objectives (expressed by the organization’s decision makers) and the work of the engineers. It is a crucial factor in the creation of a high-value asset, and one whose importance can be observed from the very first moments of the preoperational phase. In order to achieve an optimal creation of value, the action of the engineers must be similarly aligned to that of other branches of the organizational chart. Indeed, in the notion of Line of Sight, introduced in the referential document BSI PAS 55, it is stated that it is crucial to take into account the expectations and interests of stakeholders and to ensure that these are aligned with operational actions from the earliest stages of the preoperational phase as they are the more intricately tied with the assets’ proper financial and physical health. They are, in the end, the most prevalent factor in the achievement of the required performance.
1.3 Decision-Making in the Preoperational Phase: Atony Comes at a Cost
In the overwhelming majority of organizations, we can observe that a vast number of industrial projects are bought or designed on behalf of preexisting rationales and by the means of a reproduction of anterior projects. Industrial decision makers often try to justify these practices through commercial agreements (a typical example would be that of turnkey projects) or through political and economic reasons. Organizations benefit from this approach on the short term, by making economies of scale and by radically reducing the temporal and budgetary resources mobilized for conception. However, this “recooked” approach to the design phase is in stark opposition to the inherent principles of Asset Management and to every notion brought forth by studies on life cycle costing.
Let us consider, in order to exemplify this line of thought, the case of industries that rely heavily on continuous processing (such as metallurgy, chemicals, etc.) or on massive amounts of fixed capitals (such as automobile manufacturing or large-scale infrastructures, e.g., water processing). In four out of five of these cases, the mechanical installations (for example, a line of laminators) are purchased “key in hand.” It would be disproportionate to expect from organizations that they reinvent their entire field of activities for every new project that they implement. However, the present rationale, which takes its roots on the one side in the faith placed in a certain economic illusion on the part of the decision makers and, on the other, in an analysis betrayed by a profound misunderstanding of the machines’ life cycles, is strongly problematic. This is because those who abide it remain, despite their best intentions, unaware of the changes that occur every day in the spheres of economics, finance, and technology, as well as of the needs and interests of stakeholders.
To indefinitely reconduct such projects is a symptom of a refusal to recognize that the world is in permanent mutation and that it is both responsible and proactive to try and adapt to its evolution. On the contrary, acting as though “one could bathe twice in the same river” appears as a posture of pure negligence.
The teams of engineers that operate in the design offices of these heavy industries are well aware of the necessity of associating metrics of performance to every project being developed. But those very metrics have been designed in a frame that is constrained to the task of conception, or the “project” phase. Thus, the measurement units that are used to qualify projects are unfit to assess their performance in their mature lives, and are therefore inefficient or imprecise at best.
1.4 An Opportunity for Improvement in Asset Design
Asset Management strongly supports the creative freedom of designers and conception agents since it is an undeniable vector of the rise of a new holistic perspective, which takes into account the assets’ complete life cycles. It is therefore essential to encourage the innovative work of engineers. In order to do so, a number of techniques have been developed thanks to the input of life cycle costing and trade-offs studies. Not only are these techniques now broadly available, but their efficiency has been demonstrated empirically.
Why, then, do managers not strive to more efficiently align objectives as early as the preoperational phase? Why do they not attempt to master practices such as risk monetization? Indisputably, a number of them have already begun to do so. However, they only make up a marginal portion of industries so far and, in most of these cases, the methods employed remain rudimentary. Yet the shortfalls which derive from this posture are nothing short of phenomenal. The growing democratization of the availability of applications and software relying on very powerful algorithms should contribute to the evolution of these “modes de travail,” which are still widespread.
It has never been so easy for an organization to achieve the alignment of its objectives and the monetization of its risk factor. The tools and skills required for these tasks are now universally available. The fantasy, deeply rooted within the industrial spheres and which depicts Asset Management as a field of experts estranged from economic realities, must necessarily be revoked. It is crucial that the agents of Asset Management succeed in sensitizing organizations to the added value that would come out of a proper management of their industrial assets, and to the necessity of implementing such a management.
Today, we are capable of drawing out and quantifying the entire set of economic consequences resulting from a good or a bad CAPEX. Why should we not do so? We are also able, when choosing or designing an asset, to anticipate the technical and economic consequences in both qualitative and quantitative forms (through previsions tied with OPEX and risk). Once more, why should we not do so? By what logic can a design office manager consider that it would be wiser to refrain from implicating an Asset Manager? In this regard, the stellar rise of the Building Information Modelization (or BIM)—an approach very similar to Asset Management practices, and which has quickly been adopted in the sphere of construction—is exemplary. Industries cannot allow themselves to pass on such opportunities any longer; they must, consequently, equip themselves with means of value anticipation. The future will undoubtedly confirm my intuition that Asset Management will be the spirit (and BIM, the skeleton) of the infrastructures of tomorrow.
Through these examples, we have attempted to show that organizations must become aware of the importance of a rational management of their assets from the earliest stages of their life cycles. We will now draft out a few of the methods, inherent to Asset Management, which allow industries to establish an optimization of the creation of value in the preoperational phase.
At the core of this notion are the ideas of Asset Breakdown and Asset Register. The former can be defined as a tree-structured model, which presents the functional and material components of the asset that is to be acquired or produced; the latter is an accounting method, which consists of taking an exhaustive inventory of an organization’s assets fleet. Therefore, it is clear that a thorough practice of the Asset Breakdown allows for a better definition of the parameters and the contents of an organization’s Asset Register.
Today, the Asset Register has become a sine qua non requirement for an operational asset system to be in compliance with the current standards; how practical, for contemporary industrials, that equipment is now systematically delivered with its Asset Register (which entails the complete listing of an organization’s assets categorized in at least three sub-classes: Asset Portfolios, Asset Systems, and Individual Assets). One should keep in mind that it has not always been so, much to the detriment of operators. Additionally, the massive democratization of ERPs—these tentacular informatic programs that link every organizational function—has also introduced new protocols of intra-tree structure relationships between assets, often comprised of nine levels (familial hierarchy between the assets of the Asset Register). In some alternative cases, ERP editors have imposed the use of the standardized protocol defined by the ISO 27000 (Security of Information Systems), which also presents the data imputable to the assets on different hierarchic levels. We should therefore rejoice over the growing influence of Asset Management inputs on the very structure of the industrial world, since in this case we’ve truly witnessed, throughout the last few years, a process of clarification and standardization of Asset Register practices, to the extent that they can now be regarded as truly reliable.
This first phase of an asset’s life cycle, which covers its breakdown and its inclusion in the Asset Register, is much simpler nowadays than it had been in the past. Thus, considering how useful it can prove to be in the long run, it is now unjustifiable for an industrial manager to accept that this phase be neglected. Indeed, this process constitutes a stellar opportunity to effectively connect the preoperational phase with the remainder of the assets’ life cycles.
If an industry succeeds in making it so that tomorrow its Asset Register is more proactive and more effective in taking into account the entirety of the assets’ life cycles, then this industry will be ripe for establishing what is known as a one-to-one correspondence between the Asset Register and the Asset Costing. This step is a crucial one in the path towards implementing a strategic alignment, which, in turn, may give way to techno-economic alignment.2 Indeed, ISO 55001 requirements clearly demonstrate that operators have much to gain by having one-to-one correspondences between physical assets and their attached economic and accounting existences. In a truly functional and optimal alignment system, one must be able to identify physical codes that clearly correspond to the equivalent accounting codes. If this is the case, one can speak of a “paired” system.
Over time, the engineers who make up design offices have been able to develop very exhaustive approaches to the preoperational phase, in order to address every important question raised throughout the design, specification, and procurement stages. More recently, in parallel to the development of reliability anticipation techniques and to the emergence of systems that allow for a modelized simulation of technical and operational performance, the engineering world has witnessed the rise of FEED (Front-End Engineering Design) approaches (see Figure 1.1).
The FEED approach relies on a modelized simulation that primarily takes the form of Reliability Block Diagrams (RBD). Thus, Asset Management generates models that will allow engineers to visualize very early on in the process of architectural and technological arbitrages whether the assigned objectives, in terms of productivity and operational availability, are optimal. Nowadays, one can draft out scenarios of economic consequences—and not only of technical consequences—from these different simulations and project options. The qualitative input obtained from this type of approach is furthermore immense.
Obviously, even if one relies on such modellings, a number of uncertainties remain; however, we now have the tools to scan these scenarios and assess their levels of sturdiness (in mathematical terms). Thus, one can evaluate these scenarios both qualitatively and quantitatively (through the analyses of “best,” “worst,” and “basic” cases) in order to determine in an informed manner the ideal course of action.
These new methods endow us with a true choice panel in the sense that one can now elect to reproduce a design or to innovate completely, or even to freely reimagine the solutions that engineering may procure. One can only hope that these solutions will aim towards more value extraction in the long term rather than stopping at the oft-imaginary or self-imposed constraints that until now, impeded the horizons of potential scenarios.
FIGURE 1.1 FEED Process—Front End Engineering and Design
