Académique Documents
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PAS 55
(Asset Management with tangible benefits)
Grahame Fogel
Pragma Acuity
Grahame.Fogel@pragmaworld.net
Introduction
By now most of us in the asset management world are aware of the content and intent of PAS 55. If
we review the technical media, conference proceedings, online forums and general conversations,
there appears to be a growing consensus that PAS 55 is an extremely useful foundation for those
wishing to manage physical assets sustainably over the entire life cycle.
Most of us are looking over our shoulders watching who is adopting the specification, who is
recommending its use, who is accruing benefits and generally gathering awareness before we take
the next step of adopting a position for our organisations.
We know it is going to be a hard sell, and if we dont show management short-term as well as longterm benefits, in this quicker, faster, stressed world slowly recovering from a recession we are not
going to get more than a peremptory hearing.
The purpose of this paper is to take full consideration of PAS 55 and attempt to frame it within a
logical argument for consideration within the business environment we find ourselves. In essence it is
a pragmatic guide for the implementation of PAS 55.
It is my argument that PAS 55 can be an ally and an enabler, perhaps rewarding the early adopters.
Conversely, for those who wait too long and dont attempt to place PAS 55 into a sensible
management framework, it may become yet another onerous consideration when the insurance
companies, licensing bodies, regulators, and senior management begin to impose it.
Note: For the purposes of this article PAS 55 refers to PAS 55 Part 1 Specification for the optimised management
of Physical assets together with PAS 55 Part 2 Guidelines for the Application of PAS 55 Part 1
3. PAS 55 addresses the key issues of risk (more specifically portfolio, system and asset risk),
whole life costing, and knowledge management together with sustainability and
accountability.
Lets look at these one by one.
1. PAS 55 places responsibility for asset management firmly in the hands of executive
management. PAS 55 places the sign-off authority for policy, strategy and
management review in the hands of what it refers to as top management (defined as an appointed
and authorised person or group of people, who direct and control an organisation at the highest level).
In addition, PAS as a point of departure requires the entire asset management system to be closely
aligned with the overall company strategy, making it strategic in intent, reinforcing the fundamental
aspects of business success, and key to the way an organisation arranges and projects itself.
2. PAS 55 is broad in reach considering the interactive nature of asset performance, where physical
assets are at the core of consideration, with the surrounding asset classes such as knowledge
skills, human assets, technology, etc in support of the performance of physical assets. By nature
this calls for a broader cross-functional approach across the organisation, dismissing the
limited reach of a limited initiative buried deep within the maintenance department.
3. PAS 55 is firm on a number of core issues which as reliability professionals we have talked about
but havent had the reach to be effective in implementing. These are the key issues of risk (more
specifically portfolio, system and asset risk), whole life costing, and knowledge management
together with sustainability and accountability. These are all firmly entrenched within PAS 55.
Risk/
Conformance
Performance
Sustainability
Performance of the assets (by definition all the asset classes: physical, human, knowledge,
capital, etc)
Risk (compliance) management (how does one create optimal performance while managing
the risk?)Sustainability of the programme over the medium and long term.
At times these drivers are contradictory and PAS 55 provides a strong and well-defined framework to
contain, balance and manage the conflicting requirements of these three pulls. Overemphasis (or
underemphasis) of any of these primary concerns leads to system imbalance in the medium to long
term.
Making sense of the apparently contradictory challenges of performance versus conformance is the
first challenge for successful implementation. This presents issues of prudence and mindfulness as
each has a different set of rationalisation and judgment which reinforces the objectives. This is
illustrated in Figure 5. Events like the BP offshore oil rig disaster and the Toyota brake failure recall
have served to illustrate the absolute need to balance the performance with conformance, and where
necessary have dynamic asset-related risk management processes which determine outcomes.
Requirement against a
standard
Preventing value from
slipping
Passive activity
Doesnt enforce
improvement
Implies at times a
minimum requirement
Mandated
Conformance
Performance
A recognised
accomplishment
Implies an advance
Exceeded a standard
Implies achievement
Very specifically cost cutting has not been recognised as a target for implementation. There is a
significant body of evidence (Moore ref 5) which clearly indicates that cost cutting has a very poor
chance of sustained improvement for a companys success. For example, in a review of 50
companies engaged in cost cutting, 43 suffered a significant downturn in earnings within three years.
The single-minded pursuit of cost cutting within the asset management environment is particularly
hazardous, where, unless there is a particularly scientific approach that is applied, there is an
inevitable significant increase in risk associated with cost cutting. Cost cutting within the assetintensive industries leads to increased failure, loss of reliability and associated cost increases. Moore
concludes in his analysis that putting the right processes in place, getting people engaged with a
sense of ownership, and creating an environment of pride and trust will result in costs coming down
as a consequence.
The basis of our approach to PAS 55 is to create an implementation methodology which yields
benefits. We conclude that operating capital assets in the optimal way will provide for minimum costs.
It has been clearly shown by Moores research that cost cutting is unsustainable and more often than
not leads to cost increases.
The core challenge now faced is how to balance the opposing forces of conformance versus
performance, or are we correct in assuming that risk management is simply a cost? Current research
(Aberdeen report 2010) suggests the opposite, where they have evidence-based conclusions which
clearly indicate that corporations that are leaders in risk management obtain higher returns than
middle of the pack, or laggards. This is illustrated in Figure 6. Of particular interest is the differential
in revenue loss between the best in class (3%) and the industry average of 12% versus the laggards
of 18%.
Figure 6 - Illustrating the benefits of good risk management (Source: Aberdeen Group Report ref 1)
The PPC group, who can be considered as progressive leaders in asset management, conclude that
the benefits of an asset management programme are accrued in the ratio of 8:5:3 where 8 is
improved risk management, 5 improved performance, and 3 reduced costs. (ref 2)
However, we cannot fail to live in the real world with all the pressures of short termism being the
dominant driver for both.
We therefore conclude that in any PAS 55 implementation there has to be a specific implementation
strategy that makes the driving out of tangible benefits the dominant consideration, followed by the
stabilising influences of conformance and sustainability. This is illustrated in Figure 7.
Figure 7 Illustrating that a performance orientation should lead the PAS 55 implementation
We should also have a supporting organisational change activity if the new protocols differ from
previous practice, and understand that the establishment is a lifestyle change and not just a seasonal
adjustment in practices.
7. Management review
6. Performance Assessment and Improvement
Plan
3. Asset management strategy,
objectives and plans
1. General requirements
Do
Check
The generality and density of PAS 55 has left many wondering where to begin and what kind of road
map to follow which will both yield compliance and performance. This can be a recipe for frustration
and loss of credibility, making the implementation appear more of a barrier than an enabler. PAS 55
has drafted the specification in such a manner that it is broad enough for individual interpretation for a
specific organisations needs, and creates the ability within this breadth to become industry specific
(for example, power generation versus urban infrastructure management). This means that provided
an organisation addresses the individual elements within the specification, it is not going to be
prescriptive how one implements, where the priorities are, or what areas an organisation needs to
emphasise for individual benefit.
Using the generality and specificity of structural requirements, we suggest 11 points for pragmatic
consideration for implementation, which deals both with the practical and structural issues of PAS 55
implementation. These are as follows:
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Strategy Management
Information Management
Execution
Asset Care Plans
Work Planning and Control
Operator Asset Care
Material Management
Support Facilities and Tools
Life Cycle Management
Project and Shutdown Management
Figure 14 Illustrating the Pragma AMIP Framework which creates a logical structure for PAS 55
implementation
Concluding Remarks
As PAS 55 gains global acceptance and forms the basis of a future ISO Standard on Asset
Management, it is going to become an integral part of managing physical asset portfolios. This paper
argues that through careful consideration of the implementation strategy and overall goals, there can
be a well-supported and beneficial implementation path towards sustainable asset management.
These considerations include the following criteria.
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Make benefit contribution the leading criteria for implementation followed by conformance
management and long-term sustainability.
Learn from others by using a proven framework, and consider accelerating down the
implementation curve by using experienced specialists.
Early adopters of PAS 55 will be better positioned to align to the ISO 55000 standard on
Asset Management when it is published in the coming years. They will also benefit from the
specification in the meantime with the resulting financial returns.
References
1.
2.
3.
4.
5.
Managing Risk in Asset Intensive Operations March 2009. Special Report Aberdeen Group
Joe Naude, PPC Group (Reliability Week SA November 2010)
PAS 55 Part 1 Specification for the optimised management of physical assets
PAS 55 Part 2 Guidelines for the Application of PAS 55 Part 1
The Perils of Cost Cutting: Ron Moore, The RM Group.
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