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A capital asset

The PAS 55 specifica- GORDON J MELVIN, JOHN BENDERS Many of ABBs clients are
involved in asset-intensive industries like mining, energy, public
tion and enterprise infrastructure and transportation. A holistic, efficient and whole-
life approach to the management of physical assets is vital to be
asset management able to manage costs and risk and align operations with business
strategy. In addition, asset and maintenance managers are
increasingly required to report on performance against key
indicators such as asset utilization, risk and return on assets.
These metrics are critical in understanding the overall health of
an asset-intensive organization and they rely on current and
accurate asset information. Known as PAS 55, the publically
available specification (PAS): 55-1:2008 asset management
standard is rapidly being accepted worldwide as good-practice
guidance for optimizing asset management systems and pro
cesses and reducing risks to people, the environment and the
business. Ventyx Ellipse is a fully integrated enterprise asset
management solution that is aligned with PAS 55.

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The PAS 55 asset
management speci-
fication is rapidly
being accepted
worldwide as good
practice for opti-
mizing asset man-
agement systems.

T
he consequences of an out-of- assets there was no industry standard ment, establish improvement priorities
date or inaccurate asset regis- to drive harmonization. Now, with the and make clearer connections between
ter can be catastrophic. Con- advent of the PAS 55 specification, all
strategic organizational plans and the
sider the real-life example of an that changes. day-to-day realities of asset and work
air breaker failure in a substation: If these management. PAS 55 is expected to
failures are not recorded in the asset reg- PAS 55 develop into ISO standards (ISO 55000,
ister, there is no way to track and main- Industry experts at the UK-based Insti- ISO 55001 and ISO 55002) this year.
tain the breakers to prevent future occur- tute of Asset Management, in collabora-
rences. When a company that suffered a tion with the British Standards Institute This introduction to PAS 55 and some
fatality due to a breaker failure addressed (BSI), developed PAS 55 as a guide to key aspects of asset management also
this issue, it discovered more than 10,000 optimizing asset management efficiency. describes how the Ventyx Ellipse enter-
unregistered air breakers. This unfortu- First published in 2004 and revised in prise asset management (EAM) solution
nate case involves just one asset type in 2008, PAS 55 provides clear definitions has been developed specifically to align
one business area; across asset intensive and a requirements specification for with PAS 55 and to support a PAS-
industries almost every company has a establishing and verifying a comprehen- 55-compliant asset management lifecycle
significant register of assets that have to sive, optimized management system for approach for asset-intensive businesses.
be tracked, evaluated, risk estimated, all types of physical assets throughout
costed, audited and so on. Not surpris- their life cycle 1. Similar in approach to Challenges and opportunities
ingly, in the past, each company had its the ISO 9000 series specifications, PAS To manage cost and risk and align opera-
own idea as to how best to manage their 55 is non-prescriptive and outcome- tions with business strategy, organiza-
based; it describes what to do, not how tions must be able to answer fundamen-
Title picture to do it. tal questions about their assets, such as:
The PAS 55 specification brings harmonization What assets do we have and what
to enterprise asset management in a wide range Now internationally recognized, PAS 55 condition are they in? What function
of industries, including the mining operation shown
is proving to be an essential, objective do they perform and does this
here. How do the enterprise asset management
products offered by Ventyx, an ABB company, definition of what is required to demon- function contribute value?
align with the specification? strate competence in asset manage- Do we have appropriate capacity?

A capital asset 2 9
Ellipse will become 1 PAS 55 overview

a PAS-55-compli- Typical priorities & concerns

ant application
as soon as com
Organizational Strategic Goals Corporate/
organization
management

pliance can be PAS 55 Asset

c ertified. Capital investment optimization


and sustainability planning
Manage asset portfolio
Management
System

Sustained performance, Manage asset systems


cost & risk optimization

Optimize Manage
life-cycle assets
activities Create/ Renew/
Utilize Maintain
acquire dispose

Courtesy of the Institute of Asset Management

While this may seem basic, obstacles


A reliable and com- can emerge if the list is not comprehen-
sive:
prehensive asset Inadequate record-keeping. Many

register is central mining companies, for example, lack


adequately detailed records of their
to all asset man- electrical and ventilation systems,
despite having thousands of meters
agement activities. of them in the field.
Age. Organizations responsible for
Are some assets redundant, underuti- public infrastructure often have assets
lized, unprofitable or burdensomely dating back as far as 70 years long
expensive? before computerized asset tracking.
This can mean searching potentially
Are the risks of our assets causing out-of-date and inaccurate paper
harm to people or the environment records, if they exist.
sufficiently low Disconnected silos of information.
Can we accurately evaluate the per- Transportation companies may
formance, risk reduction, compliance operate multiple networks due to
and sustainability benefits of proposed geography, type of operation, or
asset work or investments and, through merger and acquisition. Often
likewise, the impact of delaying or not these employ different systems and
performing the proposed actions? processes, so getting a single view of
Can we confidently address these assets, their condition, and how they
lines of inquiry and provide answers are being maintained can be difficult.
to stakeholders with a clear audit trail
and reliable data? The PAS 55 specification helps ensure
assets are accurately and comprehen-
PAS 55 can help address these ques- sively recorded in the asset registry.
tions. Automating the underlying foundation of
this process calls for an EAM system with
What assets does the company have? built-in business processes that accom-
A reliable and comprehensive asset reg- modate the PAS 55 framework.
ister is central to all asset management
activities. It should provide information Risk of an asset-related disaster
on asset location, condition, failure risk, Determining the level of risk associated
depreciation and replacement 2. with an asset-related failure is of the ut-

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2 A comprehensive asset register is essential
especially when there are many spread-out assets. Since the introduc-
tion of PAS 55,
Ventyx has made
alignment with this
specification a
core development
priority.

Corrective versus preventive maintenance


Determining the The financial implications of corrective
versus preventive maintenance strategies
level of risk asso can be substantial:

ciated with an Cost of maintenance. A general rule of


thumb is that reactive work is two to
a sset-related fail- three times more expensive than
proactive work.
ure is of the out- Cost of part failure. The cost of

most importance. replacing a failed part is often signifi-


cantly higher than the cost of proac-
tively maintaining it.
most importance. Asset failure can mean Cost of an outage. Unplanned failure of
substantial financial costs from lost reve- an asset may lead to longer downtime
nue, personal injury, equipment damage and more lost production than a
and environmental harm. How should planned replacement shutdown would
maintenance be prioritized and scheduled have done.
to mitigate risk?
The correct application of asset mainte-
Understanding the risk and criticality of nance strategies can ensure overall costs
assets is a central theme of PAS 55 that are minimized while operational effective-
the EAM system must account for. By ap- ness is maximized. Asset management
plying the PAS 55 framework, consistency based on a PAS 55 framework assists with
of processes deployed across sites can be this. The systematic collection of quality
improved and global operations tailored data enables corrective (or reactive) main-
to ensure risk of disaster is minimized. tenance costs to be identified and com-
pared with preventive (or proactive and
Current condition of critical assets predictive) maintenance costs. This in-
When critical assets are not running, the forms decisions within maintenance pro-
company is not making money from them. grams and effectively balances the risk
And assets are often spread across a wide of asset failure against the overheads of
geographic area, making it difficult to get preventive maintenance.
an overview of their condition. To combat
this, PAS 55 delivers a comprehensive Assets repair or replace?
framework for evaluating asset condition Decisions on whether to maintain or re-
taking historical inspections, repairs and place equipment call for detailed asset
maintenance into consideration. records, including historical and compar-

A capital asset 3 1
When critical 3 The plan-do-check-act cycle for continuous improvement

assets are not Plan

running, the
company is not
making money
from them. Act
Asset
condition and Do
performance

Check

ative data as well as an EAM solution assets, while providing high service qual-
designed to support the recommended ity and continuing to protect the safety of
best practices of PAS 55. employees and the public. Environmen-
tally conscious initiatives are, likewise,
When it is properly maintained, an assets growing in importance with regulators,
life can be extended significantly in- stockholders and consumers.
creasing the return on capital invested.
The EAM system should include all the In contrast to some other standards
functionality required to manage replace- or specifications, which can sometimes
ment or refurbishment options over an be met simply by generating extensive
extended time. paperwork, PAS 55 specifically requires
evidence of alignment between good in-
PAS 55 helps define the information that tentions and the actual day-to-day activi-
is required and smart enterprise soft- ties of capital project implementation,
ware simplifies maintenance of equip- operations, and maintenance. Thus, PAS
ment using templates and processes 55 is a valuable mechanism in ensuring
specific to the precise operating condi- confidence in results and in supporting
tions faced by the miner, steelmaker, rail- good governance, long-term planning
way operator, etc. and sustainable performance.

The financial impli- The ability to demonstrate compliance with


PAS 55 not only reduces operational and
cations of correc- compliance costs and risks, it also drives
competitive advantage through improved
tive versus preven- service and greater operational proficiency.

tative maintenance Embracing the PAS 55 specification helps


strategies can be asset-intensive businesses to:
Align the asset management strategy
substantial. and approach with the overall business
strategy
PAS 55: business value Improve the integration between asset
Asset-intensive businesses are well management and financial manage-
aware of the value of best-practice asset ment processes
management for reducing costs and Maximize return on assets
risks, and for facilitating regulatory com- Maximize asset uptime
pliance. Nearly every asset-intensive Foster an organizational culture focused
opera tion is under increasing pressure on quality, safety, and continuous
to control costs and maximize return on improvement

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4 The components of the PDCA cycle can be directly applied to asset management by PAS 55

Plan.
Plan Establish the asset management strategy,
Asset management objective and plans needed to deliver results in
policy; alignment with the organizations asset
asset management
management policy and strategic plan.
strategy, objectives
and plans
Do.
Establish the enablers for implementing asset
management (eg, EAM software) and other
Do essential requirements, such as regulatory
Asset management requirements. Implement the asset management
Act
enablers and controls; plan(s).
Mangagement
implementation of
review
asset management
Check.
plans
Monitor and measure results against asset
management policy, strategy objectives,
regulatory and other requirements. Record and
report the results.
Check
Performance Act.
assessment & Take actions to make sure that asset manage-
improvement ment objectives are achieved, and to continu-
ously improve the asset management system
and asset management performance.

Applicability of PAS 55 and to guide EAM system configura-


PAS 55 is most relevant to asset-inten- tion. Decisions on
sive businesses like mining, oil and gas, Asset management strategy, objec-
energy, utilities, and public infrastructure tives and plans. This enables pre- whether to main-
including roads, rail and ports. For these
organizations, asset performance is cen-
emptive defect detection.
Asset management enablers. This is
tain or replace call
tral to the business objective. the organizational structure of roles, for detailed asset
responsibilities and authorities that
Significant investment and ongoing ex- aligns with the asset management records and an
pense and risk are associated with the
acquisition, creation, utilization, mainte-
policy, strategy, etc. This is essential
because accountable people, not
EAM solution that
nance, renewal and disposal of asset policies, bring about sound asset supports PAS 55.
portfolios in such enterprises. Strong management.
regulatory accountability for the safe
management of assets and related ser- How Ventyx Ellipse supports PAS 55
vices is a further driver for the adoption Ventyx Ellipse is a fully integrated EAM
of PAS 55. solution that provides complete visibility
and management of enterprise-wide
The PAS 55 approach assets to a wide range of industries.
Optimal management of assets and re-
lated costs, risks and performance re- Ellipse has been designed from its incep-
quires a pragmatic, life-cycle approach. tion to support good asset management
One needs to determine what assets to practice. Since the introduction of PAS
build or obtain, how best to maintain and 55 in 2004, Ventyx has made alignment
use them, and how best to renew, recon- with this emerging standard a core devel-
dition or dispose of them. opment priority. Ongoing Ellipse product
development since that time has focused
The PAS 55 approach to whole-life asset on supplying a fully PAS-55-compliant
management is based on the widely used offering, with all new or redesigned func-
plan-do-check-act (PDCA) cycle for con- tionality being guided by PAS 55.
tinuous improvement 3. The components
of the PDCA cycle can be directly applied to PAS-55-compliance starts in the DNA of
asset management by PAS 55 4. Ellipse. It has not been achieved merely
Key elements that drive the asset man- by mapping feature descriptions to the
agement PDCA cycle include: wording of the specification, but by
An asset management policy to thoughtfully engineering the product
provide direction on how to manage across two major releases with PAS 55
physical assets in line with the as basic design guidance.
organizations goals and objectives

A capital asset 3 3
Nearly every asset- 5 The Ventyx Ellipse manage physical assets process parallels PAS 55.

intensive operation Ass


et m
a n a g em e n t p o l i c y

is under increasing
Cap i t a l wo rk

gy
pressure to control ra
te
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pro
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at e
wo

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As
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costs and maxi-
Plan

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Asset

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Pl an
condition and


a ssets.
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s tra t
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Ellipse is aligned with PAS 55 most fun- spread use. It represents a huge stride
damentally in its inherent focus on proac- forward in the consistent application of
tive risk assessment and comprehensive asset management techniques. Perhaps
support for corrective and preventive most importantly, PAS 55 is driving more
actions, versus the identification and
realistic and risk-sensitive asset manage-
remediation of after-the-fact performance ment decisions at boardroom levels.
failures. In particular, the Ellipse manage
physical assets process follows and Since it was first published in 2004, Ven-
embodies the PDCA process that is the tyx has been at the forefront of support-
guiding principle of PAS 55 5. ing its customers to align with PAS 55.
Ventyx has also applied PAS 55 at the
The core functional capabilities of Ellipse foundation of its EAM software design
align with PAS 55 guidance by enabling and development methodology, such
asset-intensive businesses to achieve that Ventyx Ellipse delivers comprehen-
these key PAS 55 mandates: sive compliance with and support for
Manage risk before it becomes a PAS 55 guidelines today. Ellipse makes it
problem straightforward for asset-intensive busi-
Know the condition of every asset nesses to adopt PAS 55 and achieve
Standardize the asset registry busi- commensurate benefits in cost and risk
ness process reduction.

Asset futures
PAS 55 provides a clear, internationally
recognized definition of what good prac-
tice asset management means for any
organization. It provides detailed guid-
ance and examples for demonstrating
competent governance of critical assets,
along with a checklist of good practices
in asset life-cycle planning and cost/risk
optimization, and an extensive glossary
of terms that provides a common lan-
guage for all stakeholders.
Gordon J Melvin
Developed over more than six years with John Benders
help from over 50 public and private or- Ventyx, an ABB company
ganizations in 10 countries and 15 busi- Brisbane, Australia
ness sectors, PAS 55 has earned broad, gordon.melvin@au.abb.com
enthusiastic acceptance and is in wide- john.benders@au.abb.com

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