- PAS 55, a specification from the British Standards Institute and the International Asset Management Committee, was developed in response to demands from industry and regulators for a standard in asset management to enable asset-intensive businesses to ensure an organization’s asset management policies, strategies, actions and governance support the mission and objectives of the corporation in better serving stakeholders.
- PAS 55 addresses the lifecycle management of the organization’s mission-critical assets.
- PAS 55 places requirements on an organization that can be directly impacted and facilitated by the IT system used
For asset-intensive industries such as energy and utilities, mining, process manufacturing, and oil and gas, where the mission of the enterprise directly depends on asset performance, optimized management of asset infrastructure is a core business discipline affecting all business stakeholders. Customers want to see asset performance maximized so they can count on reliable deliveries and predictable cost. Regulators and employees want to ensure these assets are being designed and operated in accordance with environmental and safety requirements. And shareholders want to make certain that assets are operated and maintained in a manner consistent with producing the highest rate of return from their capital investments. In these industries, asset lifecycle management (ALM) is a core business support function, affecting all stakeholders in the enterprise value chain.
But while standards like ISO 9001 have been in existence for years, allowing corporations to document their quality processes, no specific standards have previously existed to enable asset-intensive businesses to ensure an organization’s asset management policies, strategies, actions and governance support the mission and objectives of the corporation in better serving stakeholders. Publically Available Specification 55 (PAS 55), a specification from the British Standards Institute and the International Asset Management Committee, was developed in response to demands from industry and regulators for such a standard in asset management.[pullquote]
PAS 55 has immediate and significant implications for executives in heavy industry. The implications of improved asset performance impact all areas of business operations and financial performance, such as the ability to mitigate conditions leading to events like the BP’s disaster in the Gulf of Mexico or the Union Carbide tragedy in India, by insuring that good asset management protocols have been adopted and followed. Investors, regulators and other stakeholders are increasingly looking for PAS 55 compliance as a measure of good management practice that will at once prevent these mishaps and offer proof of due diligence, limiting liability in the event of an industrial accident.
But independent of these types of external pressure, executive management in asset-intensive industries recognize PAS 55 as a tool to help them make good on their fiduciary responsibilities in accomplishing corporate strategic plans. By setting sound asset management policy that is consistent with corporate strategic goals and turning that policy into actionable activities, management can communicate these decisions to all parties involved in the asset value chain orchestrating the actions of these stakeholders to the desired mutual end.
The adoption of PAS 55 in June 2010 by the International Standards Organization (ISO), as a basis for an emerging global ISO standard in asset management, is an excellent indication of the momentum of the PAS 55 movement and for the anticipated benefits corporations can anticipate. The experience of major corporations that have been early adopters is extremely positive with business cases that indicate significant operational improvements.
PAS 55 and enterprise asset management software
PAS 55 is intended to address the overall lifecycle management of assets — in particular, assets that are mission-critical to the purpose of the organization. Although the overall goal is to provide the structure and processes needed to harmonize organizational goals with your asset management behavior, PAS 55 does have implications for the information technology (IT) systems that are used to support the specification’s adoption and in proof of compliance. Section 4.4.6 provides guidance regarding these requirements.
In this section, the PAS states that an IT system shall address all phases of the asset lifecycle, including the upfront processes of planning and engineering the asset, its construction, ongoing maintenance and operation and its eventual retirement or decommissioning (Figure 1).
Figure 1. PAS 55 dictates that an IT system shall address all phases of the asset lifecycle.
One of the most important aspects is the requirement that the IT systems used must support an accurate and consistent view of all asset information — one version of the truth — ensuring policies, plans and actions are based on an accurate understanding of the history and current status of your asset infrastructure — very hard to manage in disparate applications across a corporation. In fact, it is equally difficult to accomplish this with an EAM software package that does not address the requirement to support the initial engineering, construction and project management phases of the asset’s lifecycle. Engineering, construction and project management functionality is not traditionally included in most EAM solutions on the market today.
And finally, the IT system must make available information to all stakeholders, whether internal or external to the organization, including contractors, that is commensurate with their roles and accountabilities as it relates to corporate asset management plans. This requirement is critical in disseminating required and consistent asset information and plans, as well as in collecting data that shows that they indeed follow your established asset management protocols.
Why adopt PAS 55?
Asset management affects the overall financial performance of an enterprise, its impact on the environment, the safety of its employees, the pricing for its products and services, and the ability of the organization to provide critical products and services to the community at large. So, on a fundamental level, the best reason to adopt PAS 55 is to provide the good management practices to bring about these considerations.
As PAS 55 becomes an ISO standard, regulators will pay special attention to the degree to which corporations are compliant. For example, according to documentation from the National Association of Regulatory Utility Commissioners (NARUC), that body is already assuming that PAS 55 will indeed become an ISO standard and is a regular topic of discussion at NARUC meetings.
But apart from these external pressures, there is ample internal motivation that should cause senior management to seriously consider adopting the standard. Asset-intensive industries can benefit organizationally by adopting the management practices mandated in PAS 55, so enlightened self-interest, rather than stakeholder pressure, could be another driver for standards adoption. Intrinsic benefits of adopting PAS 55 include several items.
Well-documented roles and security. PAS 55 requires compliance with well-defined and rigorous implementation of roles and authorities including a structured approach to overall information stewardship by the organization.
Effective service management. The standard outlines the requirements for information management practices that enable integration of service management capabilities, providing access to information for external contractors relevant to support their activities and accountabilities in asset management. These requirements, in turn, provide a means to manage and document information shared with third-party contractors and to track the activities of those third-party contractors, showing they are following established asset management protocols.
Knowledge transfer. You can have the best asset management plan in the world, but if you can’t put it into operation by sharing it with all parties in the value chain of the organization associated with the assets, the organization cannot act in a coordinated way .
Document management. PAS 55 requires supporting document management capabilities that are an integrated part of the asset management plans and actions that you take.
Information stewardship. The PAS 55 specification is explicit in its requirements here. It states that, whether one or multiple systems are used to track asset information, only one version of asset data must be maintained — one version of the truth available to all application views and all stakeholders (Figure 2).
Figure 2. PAS 55 states that, whether one or multiple systems are used to track asset information, only one version of asset data must be maintained.
Lifecycle management. PAS 55 requires support of the entire asset lifecycle, including the upfront initial planning, engineering design, construction and commissioning phases, key to having information available for operations and maintenance and later in performance assessment.
Performance assessment and improvement. It should go without saying that a systematic approach of collecting transactional information, summarizing it and looking back at it for performance trends, directions and issues is beneficial to executive management. Without this, management decisions would be based on best guesses only.
What to look for in EAM software?
PAS 55 is a specification that deals with the requirements for business policy, practice and governance, rather than a how-to book for implementation of maintenance best practices. In dealing with the role of IT, PAS 55 is agnostic on which systems are to be used or selected to facilitate compliance. But PAS 55 does place specific requirements on any EAM software that may be used by corporations.
Total asset lifecycle support. This criteria is one of the most significant of requirements for an enterprise software environment, effectively ruling out use of computerized maintenance management systems (CMMS) or EAM systems that do not incorporate the engineering and construction phases of the asset lifecycle. CMMS or simple work management systems focus on one phase of an asset’s lifecycle — the operational phase involving maintenance and repair. So, by definition, these tools, used alone, cannot comply with the specification due to the lack of support for preliminary planning, design engineering, construction and commissioning of assets.
Collaboration support. Stakeholder collaboration is also a critical requirement. PAS 55 and optimized asset management, in general, require close collaboration, not just among internal parties, but with entities that are a part of the asset-management value chain — external engineering design firms, contractors, equipment suppliers and others involved in designing, constructing and commissioning the asset. Collaboration is also critical in operations in outsourced maintenance work, refits, lifecycle extensions and other projects. CMMS or work management systems alone do not offer this lifecycle view and therefore are not sufficient to support PAS 55 compliance. This new standard will likely drive more and more asset-intensive companies to implement fully functional EAM with strong asset lifecycle capabilities including plant engineering.
Systematic framework to information stewardship. While PAS 55 does not directly mandate that a particular set of IT products be implemented, it does set goals for IT governance and control that are best met by an enterprise application capable of encompassing the entire asset lifecycle and making information available to all stakeholders. A central, unified repository best supports this approach enabling compliance with the requirements for data and information stewardship and control while making achievement of the goal of one version of the truth across the organization a reality.
In summary, let me reiterate two major points that asset intensive executives should consider.
First, PAS 55 compliance, even before it becomes an ISO standard, is a smart move that can improve bottom-line performance and customer satisfaction. Stakeholders are already showing interest in the specification as an indicator of management prudence and effective asset management. Regulators are not far behind them in this regard. Moreover, the practices mandated by PAS 55 constitute good business policy, practices and procedures. Compliance should be viewed by senior management as a tool for ongoing organizational improvement with early adopters realizing significant benefits.
Secondly, PAS 55 places requirements on an organization that can be directly impacted and facilitated by the IT system used. Its mandates for one version of the truth are more easily attained through an enterprise-application approach to IT, while the need to support the entire asset lifecycle is not handled by many application offerings in the marketplace.
The correct choice of IT system provides the systematic enterprise framework for collection of transactional information critical for compliance and for effective communication of corporate policies, procedures, plans and actions concerning asset infrastructure. Corporate executives intent on PAS 55 compliance should carefully consider the breadth and depth of these requirements to make certain that the enterprise applications they select and implement truly support these ends.
Michael Blalock is global industry director – energy and utilities at IFS. Email him at [email protected].