New standard reinforces need for an asset management system

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The significant drive and passion for implementation of asset management that swept Australian water utilities over a decade ago has slowly dissipated, as asset management has transformed into a focused business-as-usual function. However, parallel industries are now steering towards ISO 55000 certification, as a means to placing increased focus on their Asset Management System.

Is this an opportunity for Australian water utilities to also treat asset management as a formal business system and reinforce their Asset Management System? Should Australian water utilities support this through ISO 55000 certification?

Over a decade ago, asset management was being promoted and implemented by Australian water associations and utilities as the newest framework to reduce costs, and improve service delivery in the organisation. Management structures were overhauled, and new processes and asset information systems were implemented, resulting in improved asset performance – and thus, lower cost and better reliability for customers.

A decade later, it appears the initiative has plateaued. Although the industry players still benefit from delivering robust asset management activities, there is a reduced focus on improvement of the Asset Management System (i.e. the interaction of asset management objectives, strategies, policies and plans).

The challenges

What does this mean for a standard water utility? It means that although lower cost and excellent service levels are still being achieved, and the understanding of an organisation’s assets and its lifecycle is in check, people are forgetting to step back and look at the big picture. Some in the industry have based their understanding of asset management on: firstly, breaking up the asset life-cycle into components (as shown in Figure 1); rather than viewing it as a holistic business system, and then interpreting the asset planning function as the surrogate for asset management.

QSI 17-Water-Article-ISO Standard Promotes-fig1

Figure 1: Traditional Asset Lifecycle

Three key challenges may occur when asset management is not viewed as system:

1. Incomplete understanding of Asset Management System at the leadership level

Asset management objectives, strategies, policies and plans may be created, but their alignment to each other and the organisation’s strategic objectives – and their significance for day-to-day decision making – is quite often lost in translation. For example, how many boards and executive management teams would be taken through the basic concepts of asset management and the organisation’s Asset Management System, and their alignment to corporate initiatives during their induction? Who is responsible for delivering such an induction task? Boards and executives need to make important decisions every day, and many decisions are reliant on understanding all elements of the Asset Management System.

2. A lack of a unified approach

Viewing asset planning as a surrogate for asset management can create silos – which means each part of the life-cycle can get addressed by a different area of the organisation – and can lead to asset management decisions being prioritised based on the drivers of that particular division, rather than agreed asset management objectives. This can lead to critical asset planning activities being forfeited without regards to the impact on the constructability, operability, maintainability and renewability of the assets.

3. Little quantitative measurement of success and continuous improvement

From a cost and service level point of view, many organisations can show they are achieving a lower cost and excellent service levels, but few can categorically prove the impact asset management has on performance. Some organisations use qualitative measurement frameworks, based on the level of compliance with a series of standard processes and practices requirements for their asset lifecycle, as the measure of asset management success and continuous improvement.

Many organisations can easily turn to resourcing (i.e. outsourcing), process and systems initiatives as the tangible reasons for their cost and service level improvement, but find it hard to quantify the impact their Asset Management System has had on this improvement. This in turn limits the ability to develop a performance baseline for their Asset Management System, and provide a clear direction on the improvements required to ensure the system continues to create value for the organisation.

A possible solution

In early 2014, the ISO 55000 series for Asset Management was released. This series incorporates the main elements of the internationally recognised asset management standard, PAS 55, and has a structure aligned to the other well established ISO standards such as ISO 9001 Quality Management and ISO 14001 Environmental Management. According to the ISO 55000 series, the Asset Management System (AMS) is defined as the application of a business management system to asset management.
The key elements of an Asset Management System are depicted in Figure 2 below.

QSI 17-Water-Article-ISO Standard Promotes-fig2

Source: AS ISO 55000:2014, Standards Australia

There are two additional critical elements not shown in the figure:

  • Leadership and commitment – requiring the executive team, or group of people who direct and control the organisation, to ensure that the asset management objectives are appropriate, and that the Asset Management System is implemented and supported, integrated with other business processes including risk, communicated, promoted and continually improved, and achieves its intended outcomes; and
  • Roles, responsibilities and authorities – which are required to be assigned and communicated for all the key components of the Asset Management System.

These elements of ISO 55000 can serve to rectify the aforementioned challenges as follows:

1. Incomplete understanding of Asset Management System at the leadership level

Addressed through the need for an organisation to provide evidence of assigned leadership and commitment to the Asset Management System, which must be supported by clear roles and responsibilities to lead, promote, communicate, review and continuously improve the system. This evidence may translate to the formal appointment of an Asset Manager or Asset Management Focus Group to undertake this important leadership and communication role, which is then supported by staff with clear roles to maintain and improve the system.

2. A lack of a unified approach

Addressed through the checks and balances imposed on organisations to provide evidence that all the elements of the Asset Management System are reviewed and endorsed by management, and that all impacted management subscribe to a common set of asset management objectives. This evidence may translate to recorded minutes from board, executive management and Asset Management Focus Group meetings that elements of the Asset Management System have been reviewed, are understood and subsequently endorsed.

3. Little quantitative measurement of success and continuous improvement

Addressed through the need for an organisation to show evidence of developed processes to ensure systematic measurement, monitoring, analysis and evaluation of the organisation’s Asset Management System on a regular basis. This may translate to strong alignment between the organisation’s quantitative asset performance metrics and their asset management objectives.

The path forward

Frameworks developed by the International Organisation for Standardisation (ISO) are regularly adopted by Australian water utilities. Many water utilities are currently certified for ISO9001, ISO14001 and the Australian/New Zealand standards AS/NZ4801 and AS/NZ4360. Such certifications provide government, owners, regulators, staff and customers confidence in the water corporation’s capability to provide safe, clean, reliable and efficient water and wastewater services.

In Australia, some energy and water utilities have already been certified to the ISO 55000 standard. TransGrid received their certification in December 2014 and Downer was certified for their Yarra Park Recycled Water Treatment Facility for the Melbourne Cricket Ground in August 2015. Internationally, the water utility Scottish Water received their certification in January 2014.

Achieving certification in ISO 55000 can require a significant time and resource commitment from the organisation. Additionally, the certification process is not yet completely formalised in Australia, and certification requirements in the water industry vary from state to state. For example:

  • Victoria: The Statement of Obligations for all water corporations prescribes the development of plans, systems and processes to manage its assets, ‘having regard to’ the ISO 55000 series, but there is no mention of compliance.
  • New South Wales: Sydney Water must be certified for ISO 55000 by June 2019. Hunter Water is required to have a compliant system by June 2017, but there is no mention of certification. Additionally, Water NSW currently does not require ISO 55000 compliance.
  • Western Australia: The Water Services Act 2012 requires an Asset Management System based on a preferred model involving several key asset management processes, but there is no mention of compliance with ISO 55000.

Depending on what state you operate in, water utilities face several options: seek full certification; take a more considered approach, and initially understand how they align to the standard before committing to full certification; or do nothing. To this end, Marchment Hill Consulting (MHC) has recently developed an ISO 55001 Review Framework that is specific to water utilities and is a low-cost method for quickly assessing an organisation’s alignment with ISO 5500, identifying their gaps, and prioritising gap closure initiatives.

Should Australian water utilities recognise asset management as a formal business system and reinforce their Asset Management System? No doubt in MHC’s mind, yes. Should Australian water utilities support this through ISO 55000 certification? Unless there is a mandatory requirement for compliance to this standard, MHC recommend first assessing their alignment to ISO 55000, and then determining their path forward for increased alignment or full certification.

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