In the current national and global economic uncertainty, and Covid-19 response, business leaders are faced with key decisions – what production facilities to shut in? Which manufacturing site can be re-tooled to convert production to a new product? How to forecast production demand and financial resiliency in the face of so much uncertainty? How to decide when to replace large critical assets while understanding the production impact, costs, and risks?
What improvements does your business need?
These same questions and many more have confronted leaders in other asset intensive businesses around the world. A decade ago, there was a collective realization that many organizations had the same challenges and opportunities for improvement – namely to drive business values from their assets. It was spurred along further as many previously public utilities transitioned into the private sector realm. Government and regulatory agencies wanted assurance that these assets were being well managed and that service levels for the public were being maintained. The ISO5500x series of Asset Management standards were born. Business benefits explicitly expected and stated in ISO55000 include:
Improved financial performance: improving the return on investments and reducing costs, while preserving asset value and without sacrificing the short or long-term realization of organizational objectives;
Informed asset investment decisions: enabling the organization to improve its decision making and effectively balance costs, risks, opportunities and performance;
Managed risk: reducing financial losses, improving health and safety, goodwill and reputation, minimizing environmental and social impact, and can result in reduced liabilities such as insurance premiums, fines and penalties;
Improved services and outputs: assuring the performance of assets can lead to improved services or products that consistently meet or exceed the expectations of customers and stakeholders;
Demonstrated social responsibility: improving the organization’s ability to, for example, reduce emissions, conserve resources and adapt to climate change, enables it to demonstrate socially responsible and ethical business practices and stewardship;
Demonstrated compliance: transparently conforming with legal, statutory and regulatory requirements, as well as adhering to asset management standards, policies and processes, can enable demonstration of compliance;
Enhanced reputation: through improved customer satisfaction, stakeholder awareness and confidence;
Improved organizational sustainability: effectively managing short and long-term effects, expenditures and performance, can improve the sustainability of operations and the organization;
Improved efficiency and effectiveness: reviewing and improving processes, procedures and asset performance can improve efficiency and effectiveness, and the achievement of organizational objectives.
These asset management benefits have a line of sight to the current business environment and a solid understanding of financial constraints, risk and uncertainty. By its very nature, asset management has a broader focus on value creation at all levels in the organization and the integration between functions and departments – it is more than managing assets.
What are the expectations of your business stakeholders? How can asset management support the realization of value while balancing financial, environmental, and social costs, risk, quality of service and performance related to assets? How can these asset management benefits advance your business objectives?
A changing landscape
The asset management landscape, in Canada and globally, is rapidly changing which presents both challenges and opportunities. Challenges include stakeholder expectations and competitive pressures to provide more performance services at a lower cost, and an acceptable risk. Many businesses struggle to elicit the most value from their assets given limited financial and human resources. This presents a significant opportunity for progressive businesses to adopt leading asset management practices by striking the right balance of structure and discipline with flexibility and innovation to consistently achieve improved strategic results.
The amount of value at stake to be won or lost with how well assets are managed can be incredibly high and material to a business’ success.
Uptake for asset management has been swifter in the UK and Australia where the stakeholders of asset-owning organizations such as government, regulatory agencies and non-government organizations are setting increasingly higher expectations for care and governance of assets particularly in municipal, infrastructure and utility sectors.
Demand domestically for improved asset management approaches is beginning to grow. According to the Canada’s Long-Term Plan for Infrastructure, “Canada needs a long-term approach to investing in infrastructure to improve the quality, accessibility and sustainability of services that Canadians use every day… Asset management is a structured way to maintain and improve infrastructure while also collecting data about its use and condition.” To support this aim the Government of Canada has provided funding to the Federation of Canadian Municipalities for its Municipal Asset Management Program. This program is helping Canadian Municipalities to proactively manage their physical assets.
Uptake is considerably slower in asset-intensive industrial sectors among publicly traded and private companies despite arguably more financial value and opportunities at stake.
Developing a new organizational culture and new way of thinking
Change is not going to come by simply saying “Make It So”. Resources (time capital, leadership) and organizational focus will need to be invested to make the needed changes and improvements.
While the concepts, practices and processes that support good asset management are present in many businesses, it is the integration between functions and departments and a holistic approach that drives value. Ensuring that staff are competent in Asset Management with a combination of formal education, applied skills and growing experience provides confidence in their ability to lead your organization and deliver value for your stakeholders.
PEMAC Asset Management Association of Canada has partnered with post-secondary institutions across the country to deliver comprehensive education leading to two Canadian certifications in Asset Management. They are:
Certified asset management professionals (CAMP) have the education and applied skills to establish an asset management framework and system for their organizations. These professionals typically work in Asset Management departments or in key functional roles such as Production Operations, Engineering, Strategic Planning, Supply Management, Information Systems or Finance to make holistic and integrated recommendations and decisions on behalf of their organizations. They are frequently located in centralized head offices with a span of influence over multiple production areas.
Maintenance management professionals (MMP) have the education and applied skills to establish and sustain Asset Management for a production operation facility – whether this is a food production plant, a water treatment plant, a manufacturing plant, an oil refinery, or a municipal recreation center and housing authority. Typically coupled with backgrounds in Engineering or Skilled Trades, these individuals and their teams have the skills and experience to make decisions for the assets under their span of control.
Additionally, PEMAC has an important role in setting high standards to advance asset management principles and practices for organizations within Canada. To this extent, PEMAC is actively engaged with our partners in the World Partners in Asset Management (WPiAM) to develop and promote an exciting new globally recognized professional credential scheme for asset management in the second half of 2020. From the WPiAM October 21, 2019 news release:
“The Global Credentials Scheme will provide a laddered career path in asset management for individuals who are looking to advance their skills and improve their ability to contribute to the success of the organizations they serve. This competency-based scheme will allow organizations to ensure that the individuals they hire anywhere in the world have the knowledge, skills and experience to apply asset management principles in various contexts.”
Susan Lubell is the President of Plant Engineering and Maintenance Association of Canada (PEMAC), www.pemac.org