In my last article, I discussed the three kinds of asset performance metrics. Using this knowledge, the next step is to establish your own asset performance management process. While the scale and scope of your process depends on the size of your organization, the basic seven steps should be the same:
- Examine the purpose of your organization through its goals and objectives.
- Establish one or more performance metrics to address each goal or objective.
- Set targets for each performance metric to drive the desired performance.
- Develop the options for corrective action when a performance metric is trending unfavorably.
- Monitor all performance metrics through comprehensive reporting to all stakeholders.
- Take the actions needed (using the options developed above) to correct performance.
- Periodically refine performance metrics and targets as the organization grows and goals shift.
While these steps are a time-tested model for measuring any kind of performance, there are several important nuances when applying it to managing asset performance.
First, establishing and monitoring metrics for asset performance is relatively simple, but selecting the best metrics for asset management and asset management system performance can be elusive. For example, Overall Equipment Effectiveness (OEE) serves as a great roll-up of asset performance; however, there’s no one unifying metric for measuring the effectiveness of the asset management processes. Employing the Balanced Scorecard methodology is essential for establishing a set of metrics that represents how well your asset management processes are performing.
Briefly, the Balanced Scorecard methodology creates a set of metrics that cover performance from four different perspectives:
- Financial: how shareholders receive value
- Customer: what your customers experience and perceive
- Internal business: what you need to execute to succeed in creating value
- Learning and growth: how you can create continual improvement
Applying this approach to measuring asset management performance ensures all of these perspectives are represented. (For more on this topic, see “The Balanced Scorecard – Measures that Drive Performance” by Kaplan and Norton.)
Returning to the performance management process, you should focus your planning on the most common break-down point: step 4 (developing options for corrective action). Any effective metric must be actionable, which means that you can take action to correct an unfavorable result. Otherwise, it’s a “number on the wall” to which no one will pay any attention. By defining the possible corrective actions ahead of establishing a metric, you ensure that it is actionable; if you can’t develop corrective actions for a metric, then the metric itself needs to be re-defined. In addition, having pre-developed corrective actions allows for action to be taken much faster and more effectively.
Finally, an important precursor before establishing an effective asset performance management process is to have good, reliable data on which you can base the asset metrics. You must have a solid asset registry with consistently reliable data available for demographic data like asset type and nameplate information. An easily accessible repository for work order history and operational performance data is also required for metrics like availability, OEE, and asset health/condition. In order to make sure you have this available, you should conduct a data assessment to investigate the completeness and consistency of your asset data. While the pursuit of good data quality is never-ending, understanding your strengths and weaknesses in this area can help to avoid inaccurate analysis and incorrect conclusions when you have an asset performance management process established.
Brian Kaiser is an ISO 55000 subject matter expert at Life Cycle Engineering (LCE) with more than 10 years’ professional experience in the electric utility industry. You can reach Brian at [email protected].
