A Common Sense Approach to Asset and Project Life-cycle Management By Rob Stummer, Managing Director, IFS Australia & New Zealand, 26 Nov 2015

For companies in asset-intensive industries like oil and gas, the difference between thriving and struggling can hinge on how effectively they manage plant and equipment assets.

While asset-intensive industries can be cyclical and dependent on things like energy prices, over the long term the expanding global economy makes more investment in plant and equipment assets inevitable. According to research from PwC, global capital project and infrastructure spending will exceed US$9 trillion by 2025, up from US$4 trillion in 2012 which coincided with the peak of the Australian business investment boom.

The reality is that asset-intensive industries will continue to invest in complex plant and equipment assets to meet the needs of the global economy, especially high growth regions such as Asia Pacific. Those companies that excel at asset life-cycle management and cost-effective asset operations and maintenance will have a competitive advantage. Enterprise software capable of supporting operations and maintenance, and not just financials, is part of the foundation for success.

These new assets should hopefully be smarter and more reliable than those seen before. Many will communicate directly back to the original equipment manufacturer and a collaborative approach to looking after plant and equipment will be required.

However, that is considering just a few links in the asset life-cycle management chain, says Colin Beaney, IFS Global Industry Director. “An approach that looks at the full life-cycle is needed for all plant and equipment items. And, especially when you are spending all of that money, a primary focus has to be on the project management of the initial asset design.”

According to Beaney, who has just written a white paper on the subject, a modular, adaptable combination of Enterprise Resource Planning, Enterprise Asset Management and Project Management solutions can help meet challenges, including:

  • Effective handover of new assets from design into operations

  • Greater uptime and equipment reliability

  • Rationalisation of spare parts and leaner supply chain and procurement processes

  • Support for regulatory compliance and voluntary standards such as ISO 55000

Enterprise Resource Planning

The scope of these challenges goes well beyond tactical monitoring of plant and equipment health to larger life-cycle issues, such as accurate master data over assets and plant designs, how effectively asset-intensive companies collaborate with engineering, procurement and construction (EPC) firms, and how disciplined they are at project control.

Enterprise Resource Planning (ERP) solutions, while widely used to run companies, are often perceived as a poor fit for asset-intensive organisations because they lack a full-blown, integrated set of Enterprise Asset Management (EAM) modules and ERP vendors may lack experience serving industries such as oil and gas.

To manage the installation of major new capital assets and complex equipment, asset-intensive sectors also employ best-of-breed Project Management solutions which often lack integration to ERP. As a result, what has often occurred is a fragmented mix of software, with ERP used for financials, EAM for maintenance, and standalone tools to manage projects.

Asset Lifecycle Management

The success of asset-intensive organisations is inseparable from how well they manage assets over their entire life-cycle. It’s not just a matter of effective maintenance procedures or having good equipment monitoring, but also of having tight control over capital projects, close collaboration with EPC firms, and effective handover of asset design data into systems for procurement and maintenance.

Excellence in Asset Life-cycle Management (ALM) also spans a range of other processes, such as rationalising maintenance, repair and overhaul (MRO) suppliers, consistently measuring asset performance, and managing capital projects and human resources assigned to projects.

As important as maintenance is to asset-intensive organisations, a standalone EAM system is not going to fulfil all ALM goals. Supply chain processes, HR master data and other areas are best handled by ERP systems. Yet because of the shortcomings of most ERP solutions when it comes to asset management, a standalone EAM system is often considered the most 'critical' business system by asset-intensive organisations.

With a modular EAM/ERP solution, the organisation has a consistent asset record and hierarchy that can be tapped for everything from procurement, to projects, to HR records that track who is certified to run or maintain specific assets. And when an asset is due for a major upgrade, you want the related asset data to flow right into the project control and costing for the upgrade project.

A modular ERP solution with a full set of EAM functions allows the best of both worlds: tapping EAM’s functions for maintenance excellence alongside ERP’s effectiveness in areas such as finance, supply chain management and logistics. For instance, a standalone EAM system might be able to trigger an order for a critical piece of equipment that has failed, such as a pump, but it’s also crucial to operations that managers have visibility into exactly when that pump is going to be delivered.

EAM works best when integrated with a company’s ERP level processes. For example, while most EAM solutions are capable of triggering orders for spare parts or MRO supplies, the ERP system often holds additional data about supplier performance, or can provide visibility into logistics or global trade issues. Another issue for which a combined EAM and ERP solution is well suited is rationalising which spare parts are held, how many are held, and where, with potential for significant efficiency improvements.

Regulatory Support

Better master data for ALM and maintenance is also essential to regulatory compliance and adherence to safety standards. While EAM functionality is not a 'drop-in' means of compliance and/or meeting standards such as ISO 55000, by having one single system that takes a strategic, long-term planning view of critical plant and equipment, the company is in a better position to prove its asset management procedures are sound. A combined EAM and ERP solution supports this goal by establishing one single source of truth for asset data within the operating company, and should be capable of tracking the tasks handled by subcontractors.

In truth, compliance with most of these regulations and initiatives requires careful planning, documentation of responsibilities, governance processes and leadership. A software system is not going to make a company compliant. However, regulators and auditors are looking for established processes, and proof of how certain events or tasks are handled. For example, an EAM solution with structured failure management functionality can help an organisation prove it has solid procedures around asset failure analysis and corrective actions.

A Cohesive Single System

Perhaps the biggest software selection criterion for asset-intensive organisations is that the system be a cohesive solution that is able to bring together project management, EAM, and ERP under one integrated software suite. This allows for better asset management over the entire life-cycle and keeps maintenance, production operations and corporate processes aligned.

Organisations lacking an enterprise software foundation will be well-served by a modular solution that spans EAM, ERP and Project Management. By choosing a modular architecture, they also have the flexibility to implement only what they need in a best-of-breed manner, or gradually phase in the whole suite. Some companies might want to first establish ERP functions such as financials, project control and supply chain management, and then later deploy core EAM functions including mobile workforce management or Reliability Centered Maintenance (RCM).

Finally, the applications themselves should be intuitive and easy to navigate. This means that instead of memorising which screens to access, users should have a graphical, role-based interface that simplifies the top action items, workflows and metrics of interest. When an ERP solution can combine these ease-of-use qualities with the business-critical EAM and project control functions that asset-intensive companies absolutely need, then it becomes a highly effective applications platform.

About the Author

Rob Stummer is Managing Director, Australia and New Zealand for global enterprise applications company IFS, achieving significant growth over the last five years. He holds a Masters in Information Technology from Melbourne University and has consulted to many of the region’s Top 500 companies. See: www.ifsworld.com/au