A Different point of View; Aligning your Maintenance Scorecard for Maximum Impact

March 20, 2008
The Maintenance Scorecard has now been implemented and adopted by companies from Europe, the USA, the Middle East and Asia. It is a succesful technique for driving real value from the physical asset base from the top to the bottom of any organization.   This article addresses some of the frequently asked questions regarding implementation of The Maintenance Scorecard (MSC...
The Maintenance Scorecard has now been implemented and adopted by companies from Europe, the USA, the Middle East and Asia. It is a succesful technique for driving real value from the physical asset base from the top to the bottom of any organization.  This article addresses some of the frequently asked questions regarding implementation of The Maintenance Scorecard (MSC) as a tool for developing, implementing and monitoring strategy. In particular, it will focus on the need for a balanced point of view when creating measurement systems, and discusses various methods that the author has observed while implementing the MSC globally. Introduction Maintainers are used to change, after all that has happened in the past 15 years who wouldn’t be? But few could have foreseen the incredible surge of attention that physical asset management has started to attract over the last 5 years in particular. Events such as the swift adoption of PAS55 by a range of global infrastructure companies, the Energy Act of 2005 in the USA, and the recent resignation of Lord Brown of BP following the Alaska Pipeline and Houston refinery incidents, all point to one undeniable fact. Physical asset management is now a very serious business! So much so that today we are seeing the convergence between physical asset management and financial asset management in many areas of human endeavor.
  • Financial regulators in the United Kingdom are placing an increasing focus on the rigor that is put into their plans for capital spending, a multi-billion dollar area of activity for each 5 year period.
  • Private equity firms the world over are acquiring infrastructure companies such as Thames water in the UK, BAA – the airport owner in the UK, Alta Link in Canada and practically everywhere else where there is an opportunity. Interestingly, these companies are not being stripped of their assets. Rather, they are being re-structured to maximize the income from those assets over the long term.
  • Many European governments now use their infrastructure assets, and the contracts for their management, as a means of financing public spending in these areas. A modern and innovative spin on asset management.
  • Many large estate owners now use comprehensive asset management contracts designed to shift risk of asset failure away from themselves and onto those providing the service. Another unique feature of modern asset management.
In response to this many companies find themselves wrestling with how to extract maximum economic value from their assets while ensuring their continued environmental integrity and safe operation. This is no small feat given the scale and complexity of modern asset management, and the limited funds available to it. It is a challenge that has caused problems for even the most expert of asset-intensive companies. Without an organizational compass many find themselves implementing one initiative after another. Many of these initiatives by themselves are sound and will provide some of the benefits sought, however often they are in conflict with each other and sometimes they are actively counter productive. The Maintenance Scorecard (MSC) provides such a compass to for the development, implementation and monitoring of strategy in a unified and consistent manner, ensuring that all of the company’s resources are focused on the corporate goals. One of the first questions to arise when learning about the MSC process regards the creation of perspectives. What are they? Why are they necessary? And which perspectives are recommended? All valid questions and can be difficult to gain agreement on. A balanced point of view In the past we were always stereotyped as being a center where cost needed to be controlled. Often maintainers were involved in decision making only when things were already going wrong, and when there were costs to be reduced. As such we were viewed from two very simple perspectives by senior management, that of failure reduction and cost control, and normally in a reactive manner only. Today, if we were to run our asset management departments with only these two over riding priorities we would definitely be limiting the potential of our assets, and potentially be managing things in an almost unethical manner. So this is the essence of the perspectives. They provide a framework for viewing the asset base, and modern asset managers need more than one or two simplistic views of how their assets are performing. Even today many efforts at building a scorecard end up focusing on only the one or two area related to direct performance measurement. Normally some form of measurement of uptime, and some form of measurement of direct cost spending. Forgetting the focus on value for money, as opposed to reduced spending, and often leaving safety indicators to the tock standard incident frequency indicators safety departments have been using for decades. CEO’s of many asset-intensive companies today realize this. Recent events such as the Baker report into the Houston BP Refinery explosion, the fall out from the Hatfield and Potters Bar train crashes and rafts of new legislation globally have ensured that every senior asset manager takes a more rounded view of how assets perform. If you look back over all of the requests for additional information from senior management, they generally fall into one of the following four categories: (In no particular order)
  1. How much are they producing?
  2. How much is it costing me?
  3. Am I getting good quality output on a consistent basis?
  4. Are we hurting anybody or damaging the environment in the process?
If we analyze these questions we can see that they provide the basis for all areas where physical asset management can provide a substantial impact on the companies responsible for managing them. Often attempts to define perspectives go off the rails because people are focused on how we manage the assets, rather than the impact they create for us. For example; a common misconception is to try to generate indicators in perspectives that align to functions within the company. Maintenance, operations and reliability are common groupings when this is done. There are many issues with this approach. As always we need to be conscious of the behaviors we are driving. In this scenario we have a clear cut case of pitting existing silos of activity against one another, when what we need is the realization that all areas of activity contribute to asset performance. Another frequent approach is to use break the perspectives down into the different resources required to achieve success. A focus on human resources, equipment performance, systems, knowledge and other areas is often included. Like the approach above there is one classic flaw in this, all of these perspectives cut across all areas where physical asset management can have an impact. So any measurement in one area can often be used in another area, confusing the scorecard and watering down its ultimate message. So what is the ultimate message of the Maintenance Scorecard? Basically the message is to manage the performance of the assets in a balanced fashion, so that our goals can be weighted in each of the areas where assets have an impact, in other words, to provide the company with an organizational compass for managing their physical assets. Recommended Perspectives of a Maintenance Scorecard We have already seen how the Executive branch of many companies sees their physical asset base. We can begin to classify these into perspective as below:
  1. How much are they producing? (Productivity (1))
  2. How much is it costing me? (Cost-Effectiveness (2))
  3. Am I getting good quality output on a consistent basis? (Quality (3))
  4. Are we hurting anybody or damaging the environment in the process? (Safety (4) and Environmental Integrity (5))
These four ways to view the asset base provide a pretty comprehensive picture of overall performance. However, there is still one point of view missing, and it is an area that is often forgotten or dramatically overdone. The perspective is that of Learning (6), and it measures how well we are developing our corporate information to power future improvements. Of all areas of managerial activity, asset management is possibly the most reliant on information to sustain good performance over the medium and long term. In modern asset management we suffer at both ends with regard to managing information. On one hand companies either collect far too much data on their assets, often wasting a lot of effort and time in doing so, or they collect next to nothing. (And what is collected is limited in its ability to help) Much has been written on data in asset management, the fact that it is vital for high confidence decisions and of the complexities of obtaining it. But what is not often written about is that successful asset managers will actually reduce failure data, not increase it, making this area even more difficult. On the other hand maintenance departments all over the world are leaking knowledge at a dramatic rate. Much of the experienced workers we have relied on for decades are retiring, in fact many were cut during the cost cutting that went on during the eighties and nineties, and many young people are opting for other careers other than those of engineering and asset maintenance. So the learning perspective covers a wide range of areas, but it all revolves around the management of information. (Data + Knowledge) For example; quality and integrity of data, effectiveness of training, and codification of knowledge into usable data all represent areas that we need to focus on in order to ensure that our successes are not short lived. So in summary, a maintenance Scorecard that provides a company with a balanced view of how its assets are performing will need to cover the following 6 areas of performance.
  • Productivity – How well are our asset performing? How well is our workforce performing? Is there any hidden productivity that we can unlock in any place?
  • Cost-Effectiveness – Are we getting the best value for each dollar spent on the maintenance effort? If not how can we lever even further value out of it? Note: This is not the same as low cost which is not a concept supported by the author. Low cost has a tendency to become high cost in the mid term, either directly or indirectly.
  • Quality – Are we delivering the level of quality required in terms of production? Are we delivering the level of quality required in terms of asset maintenance performance?
  • Safety and the Environment – Instead of the reactive measures of number of incidents, how can we proactively measure our exposure to risk of asset failure in these areas?
  • Learning – How well are we managing the information (data + knowledge) we are learning from today’s activities, in order to fuel tomorrow’s improvements?

If you have previously considered a more thorough and sophisticated method for developing, implementing and monitoring strategy in your physical asset base then I hope that this article has provided you with something useful or at least something to ponder.

If you are still developing long lists of unconnected indicators, which bear only a passing resemblance to any objectives that your organization currently has, then I hope it has opened up additional areas where you may be able to continue to improve the performance of your physical asset base.

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