Asset Management in the Arab Region and its Role in Improved Performance and Utility Efficiency Lina Sheqem Cowater International

Arab Utilities and Asset Management Perception limited to financial and/or IT related Fairly new discipline--little understanding of size of impact of good AMM practices on operational efficiency Limited regulatory requirements are a disincentive to the adoption of good AMM practices If available, AMM functions are piecemeal and/or non-complementary Similarly, organizational units work more as silos and minimum integration in terms of functions and data. O&M costs are mostly aggregated and cannot be linked to specific assets General maintenance trend is “fix when broken”.

Understand and Define Requirements Develop Asset Lifecycle Strategies The Asset Management Process* Understand and Define Requirements Develop Asset Lifecycle Strategies AMM Enablers AMM Teams Financial/Funding Strategies Develop AMM Policy/Strategy AMM Plans Capital Works Strategies Define Levels of Service Information Systems/Tools Forecast Future Demand Lifecycle Decision Making Techniques Maintenance Strategies and Plans Develop the Asset Register AMM Service Delivery Assess Asset Conditions Operational Strategies and Plans Quality Management Identify Critical Asset and Business Risks * Source: International Infrastructure Management Manual, 2012

One or two people assigned AMM Enablers – AMM Teams One or two people assigned Cross departmental committee assigned; staff training for assigned staff; management considered AMM functions and structure All staff have related assigned roles and supporting training; management develops policy/strategy AMM capacity developed and monitored; AMM structure in place; cost-benefit analysis carried out

AMM Enablers – AMM Teams How to go about it Define AMM capability requirements Define AMM teams and structures Establish capability with a change management plan

AMM Enablers – AMM Plans AMM plans with basic info on assets; LOS; associated 5-10 yr financial forecasts and investment plans As previous plus critical assets info; condition and performance description; future demand forecast; AMM processes; 3 yr AMM improvement plan As previous plus analysis of asset conditions and performance trends; customer engagement in defining LOS; risk based decision making As previous plus risk management programs; LOS cost/benefit analyses; largely complete improvement program with ongoing maintenance of AMM practice

AMM Enablers – AMM Plans How to go about it Take the executive decision to develop a “first cut” AMM plan even if with gaps Gradually fill gaps and refine plan Alternatively examine good practices and work accordingly

AMM Enablers – Information Systems/Tools Asset register with core attributes; asset reports manually generated for plan Asset register reports for facility to component; planned maintenance and complaint tracking; manual reports for valuation and forecasting Automated reports and analysis—operational, maintenance, asset conditions, performance Integrated financial, assets, CS, operational systems; AMM functions enables

AMM Enablers – Information Systems/Tools How to go about it Define related business processes and system requirements Evaluation of available software AMM system implementation Ongoing management and review

Contracts for external service provision AMM Enablers – O&M/Service Delivery Roles assigned Contracts for external service provision Internal service level agreements; contracts with best delivery approaches; competitive tendering Service delivery mechanisms analyzed; risks, benefits, costs of outsourcing considered

AMM Enablers – O&M/Service Delivery How to go about it Define core services Identify delivery options Evaluate and select optimal delivery option Procure and implement option

AMM Enablers – Quality Management Simple documentation for critical activities Previous plus quality policy and QM system All processes documented per QM system ISO 9001 Certification

AMM Enablers – Quality Management How to go about it Business process mapping and documentation Documentation of processes in manual to enable effective planning and operations

Informal expression of policy statements AMM Requirements – Policy/Strategy Informal expression of policy statements Defined policy statements linked to corporate goals; high level action plans AMM policy and strategy adopted; delineated action plans per functional group AMM policy and strategy fully integrated into business procedures; reviewed and updated

AMM Requirements – Policy/Strategy How to go about it First cut with simple corporate expectations from AMM planning Refine and upgrade gradually going to another level of detail each iteration

Basic LOS and association of assets to corporate objectives AMM Requirements – Levels of Service Basic LOS and association of assets to corporate objectives Defined customer groups and requirements with associated LOS and performance measures; performance monitoring reports Customer groups needs analyzed; LOS alternatives costs analyzed; customers consulted LOS consultation strategy implemented; key to decision making and planning

AMM Requirements – Levels of Service How to go about it Developing LOS—customers; regulation; strategic; etc Developing performance measures and setting targets Consulting with customers Monitoring and reporting on performance

As previous plus risk assessment of the different scenarios AMM Requirements – Future Demand Forecast Experienced staff predictions based on known trends and future growth patterns Formal forecasts based on pop growth/historic trends; risk associated with demand considered Forecasts based on mathematical analysis of past trends and primary demand factors; different scenarios developed As previous plus risk assessment of the different scenarios

AMM Requirements – Future Demand Forecast How to go about it Monitoring current demand Identify demand drivers Develop demand forecasts Model demand scenarios

AMM Requirements – The Asset Register Basic information on a spreadsheet; incomplete; informal Information that enables asset valuation Reliable register of physical and financial attributes in IS with data analysis and reporting; systematic collection of data; focus on critical assets Information on history, type, cost, condition, performance, etc recorded at asset level; optimized data collection; covering critical and non-critical assets with minimal assumptions

AMM Requirements – The Asset Register How to go about it Identify information requirements—legislative, then valuation and replacement, then maintenance management, then risk management and lifecycle analysis Establish hierarchy, structure and numbering system Establish system for data collection and management

AMM Requirements – Asset Condition Condition assessment at asset group level to cover critical assets and regulatory requirements Risk based condition assessment program for major asset types; data for asset life assessment; data management system in place Cost/benefit based condition assessment; good data for all types of assets; data management process integrated into business processes; data validation Condition information supports risk based decision making, lifecycle decision making and financial performance reporting

AMM Requirements –Asset Condition How to go about it Determine scope of a condition assessment program—which assets Delineate suitable assessment techniques Develop appropriate practices

AMM Requirements – Critical Assets & Business Risks Critical assets understood by staff involved in maintenance/ renewal decisions Risk framework with critical assets and high risk identified with associated risk management strategies Risk analysis supports decision making; risk register updated and monitored Risk management policy; quantified risk with mitigation options evaluated; risk involved in all aspects of decision making

AMM Requirements –Critical Assets & Business Risks How to go about it Identify risk management context (policy, objectives, criteria, scope) Identify risk (categories, events, critical assets) Assess risk (consequence of failure, probability of failure, risk ranking) Manage risk (identify and evaluate treatment options, develop action plan)

AMM Lifecycle Strategies – Decision-making Techniques AMM decisions based on staff judgement and corporate priorities MCA/CBA applied to major projects/ programs MCA/CBA applied to all operational and capital asset programs; critical assumptions and estimates undergo sensitivity analysis As previous plus risk based sensitivity analysis

AMM Lifecycle Strategies – Decision-making Techniques How to go about it Establish CBA analysis—start organizational and extend to socio-economic Establish MCA Include risk based sensitivity analysis

AMM Lifecycle Strategies –Operational Strategies/Plans Operations understood by key staff; plans not documented; mainly reactive; asset utilization measured for some key assets Emergency response plan; demand management considered in major asset planning; asset utilization measured for critical asset groups and analyzed ERPs; business continuity plans developed and tested; demand management affects all decision making; asset utilization measured and analyzed for most asset groups Operational plans analyzed, tested, improved; debriefs after incidents; asset utilization measured real-time for all asset groups; operational programs optimized using CBA and risk analysis

AMM Lifecycle Strategies –Operational Strategies/Plans How to go about it Document and review business procedures Measure asset utilization--ROI Consider demand management programs based on CBA Develop contingency plans for critical asset failure Develop and test business continuity plans

AMM Lifecycle Strategies –Maintenance Strategies/Plans Asset functions aligned with org objectives; regulatory compliance; maintenance records maintained Asset criticality considered; maintenance objectives established; performance based vs. prescriptive maintenance examined Asset failure modes understood; contingency plans; preventive maintenance plans CBA optimized; MM software implemented Root cause analysis of major faults; trend analysis; optimization of reactive, preventive, predictive maintenance and renewal plans; procurement model in place

AMM Lifecycle Strategies –Maintenance Strategies/Plans How to go about it Staged development of maintenance practices Develop maintenance strategy—structure, functional requirements, data/information, prioritization of maintenance activities Identify maintenance objectives and performance measures and targets Develop more detailed maintenance plans Risk based maintenance plans Maintenance monitoring and reporting

AMM Lifecycle Strategies –Capital Investment Strategies/Plans Proposed capital projects and costs based on staff judgement and future requirements Project identified from several sources (hydraulic models, operational staff, etc); 3-yr capital project plan fully scoped and estimated As previous plus business case and options analysis for major projects for 3-5 yr period; major projects for 10-20 yrs conceptually identified with broad cost estimates Long term CIP defined using advanced decision making (e.g. predictive maintenance and risk based analyses)

AMM Lifecycle Strategies –Capital Investment Strategies/Plans How to go about it Identify potential projects Develop options for each project Evaluate options and prioritize projects Scope projects Develop renewal programs (projection of historic expenditure; broad estimates for replacing assets at end of life; predictive modeling)

AMM Lifecycle Strategies – Financial and Funding Strategies How to go about it Asset valuation (Depr. Replacement Cost, straight line depr.; replacement cost; useful life and remaining useful life; asset value) Develop long term financial forecasts and funding requirements—10 years, O&M, renewal and development costs; resulting from AMM strategies/plans; updated annually) Project future revenue/funding sources and cashflows Identify and highlight funding gaps and communicate to decision makers

QUESTIONS? lsheqem@cowater.com www.cowater.com @CowaterConnects