See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/350021990

Asset Management Application Guide for ISO 55001

Technical Report · March 2015

CITATIONS READS

0 5,139

2 authors, including:

Carlos Parra
Universidad de Sevilla
194 PUBLICATIONS   546 CITATIONS   

SEE PROFILE

Some of the authors of this publication are also working on these related projects:

Optimización de la Gestión del Mantenimiento y Análisis crítico de Indicadores de Benchmarking bajo el enfoque integral de la Gestión de Activos (ISO 55000). View
project

All content following this page was uploaded by Carlos Parra on 12 March 2021.

The user has requested enhancement of the downloaded file.

Asset Management
Application Guide
for ISO 55001
International Copper Association (ICA)
Latin America
Av. Vitacura 2909, Oficina 303
Las Condes, Santiago
Chile
www.copperalliance.org

COPYRIGHT
© 2015 International Copper Association
NOTE OF CLARIFICATION
The document was originally created in Brazil, written in
Portuguese and translated into English.
Although this document has been prepared with due care, the ICA
and any other participating institution are not responsible for the
information and analysis herein presented, which shall be credited
directly to their authors.

This study does not restrain and nor does it exempts consultation
and full reading of the standard ISO 55000/1/2 of the ISO -
International Organization for Standardization and the British
specification PAS-55 (Publicly Available Specification number 55)
of the British Standards Institution [1].

Citations and references to the ISO 55000/1/2 and case studies

were authorized by their respective organizations and their
representatives in Brazil were the original texts were written.
Original Text in Portuguese Prepared by:
Marisa Zampolli

Revised and Supervised by:

DATASHEET
Glycon Garcia Jr.

Contributors (authors of practical examples and annexes) in the order they appear in the document:
Alexandre Felix do Nascimento Ítalo
Claudio Caiani Spanó – Reliasoft Brasil
Rafael Schmitz Venturini de Barros – AES Tietê
Gilberto Martins Junior – Elektro Eletricidade e Serviços S.A.
Henrique Eduardo Pinto Diniz – CEMIG
Valéria Simões de Marco – Eletrobrás Eletronuclear S.A.
Paulo Marcio Nepomuceno de Sousa – CEMIG
Pedro Monteiro de Castro Souza – CEMIG
Henderson Saldonas da Silva
João Esmeraldo da Silva, Dr. - Fundação Gorceix - Departamento de Pesquisa e Educação Continuada
Jefferson Januário Mendes, Msc. - Instituto Federal Minas Gerais – Departamento de Engenharia de Produção
Ruben Antonio Llobell Solé, Dr. - Fundação Gorceix - Departamento de Pesquisa e Educação Continuada
CONTENTS

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Let’s talk a little about Standards: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Step 1: Plan the company asset management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

A. The Context of the Organization {4} . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
a. Understanding the organization and its context {4.1}. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
b. Understanding the needs and expectations of stakeholders {4.2}. . . . . . . . . . . . . . . . . . . . . . . . 17
c. Determining the scope of the asset management system {4.3}. . . . . . . . . . . . . . . . . . . . . . . . . . 17
d. Determining the Asset Management System {4.4}. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
B. Leadership {5} . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
a. Policy {5.2}. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
b. Organizational roles, responsibilities and authorities {5.3} . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
c. Criteria and definition of the asset portfolio to the management system -
Determination of the scope {4.3}. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
• Critical Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
• Criteria for defining critical assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
d. Asset management system {4.4}. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Step 2: Execute the asset management objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

A. SAMP – Strategic Asset Management Plan {6.2.2}. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
a. The Asset Management Plans {6.2.2}. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
B. Support {7}. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
a. Resources {7.1}. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
b. Competence {7.2}. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
c. Awareness {7.3}. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
d. Communication {7.4} . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
e. Information Requirements {7.5}. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
f. Documented Information {7.6}. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
g. Control of documented information {7.6.3}. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
C. Operation: Project and Acquisition of Critical Assets {8} . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Practical example: Asset’s Acquisition by a Logistics Company [A]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
a. Analysis for introduction of new technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Practical example: Introduction of new technologies in the oil and gas industry [B]. . . . . . . . . . . . . . . . . . 31
Step 3: Risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
A. Methodologies applied to risk management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
B. Actions to address risks and opportunities for the asset management system {6.1}. . . . . . . . . . . . . . . 36
C. Management of Change {8.2} . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
D. Outsourcing {8.3}. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Step 4 Monitoring the operation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

A. Performance evaluation {9}. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
B. Definition of indicators {9.1}. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
a. Performance indicators or KPI´s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
b. Cost Indicators. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
c. Risk indicators or KRI´s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
C. Internal audit {9.2}. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Step 5: Analyze the asset management system. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

A. Economic & Life Cycle Assessment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
B. Calculation of the economic life of an asset and LCC analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Practical example: High Performance Compressor [C]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Step 6: Decisions making and seek of continuous improvement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

A. Analysis for technological modernization based on power efficiency. . . . . . . . .. . . . . . . . . . . . . . . . . . . . 53
Practical example: Electric Motors [D]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Annexes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
1 – Case study AES Tietê – Preparing the SAMP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
2 – Case Study: Elektro - Asset Management Plan for the purchase of transformers . . . . . . . . . . . . . . . . . 65
3 – Case study: CEMIG – Application of Asset Management in Risk Assessment
of Connection Failures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
4 – Case Study: Eletronuclear Management Plans for Critical Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
5 – Case Study: CEMIG - Application of Asset Management in Call Center. . . . . . . . . . . . . . . . . . . . . . . . . . 72
6 – Case Study: Strategic Asset Acquisition Based on Risk Management. . . . . . . . . . .. . . . . . . . . . . . . . . . . . 79
7 – Case Study: Economic-financial results of asset management applications reliability
engineering in the implementation of capital projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8 – Case Study: Implementation of the SAMP in a Mining Enterprise. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

Acknowledgement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

Asset management is a cultural change in companies’
strategic planning that adds to the traditional vision
on products and clients the vision of assets and of the
value they are able to generate to the business.
For companies that are willing to seek international
performance standards within competitive markets,
asset management brings, from the context of the
organization, a new proposal to realize the strategic
objectives. This is accomplished by integrating all areas
of the organization, so that each one recognizes its
role and responsibilities in achieving value through the
organization assets.
The asset management practice implies an initial
reflection on the company’s positioning in the market,
on its long-term objectives, and on the expectations and
needs of stakeholders and how all these interact with
the company’s business.
We use to say that asset management marks the
beginning of a new era in business administration,
something to be practiced by those seeking business
excellence. Asset management is not limited to the
management of assets, but transcends the barrier of
operational limits to influence the business strategies.
Practicing asset management according to the rules
implies in following an international standard to obtain
value through the use of assets in order to obtain the
balance of performance, cost and risks.
The ISO 5500X standards, issued in 2014, bring to
organizations the challenge of quantifying their
efficiency in terms of risk. The balance between cost,
performance and risks can only be achieved through
asset management practices.
The ISO 5500X standards go beyond the universe of
the PAS-55 BSI published by the British Standards
Institution, which until then was the only reference to
physical asset’s management practices.
The management system approach to asset management
in the context of the ISO 55001 provides the necessary
requirements for the company’s management to favor
the asset management results, not only for the physical
assets, but all those that add value to the organization.
In asset-intensive companies, whose business is based
on the operation of large physical assets, the standards
bring an innovation to the life of assets, no longer
limited to the period between acquisition and disposal,
but understood from the asset specification to the
liabilities remaining after decommissioning.
10
Executive Summary
The management of physical assets results in a clear
policy of renewing assets that must be replaced not only
when they are irreparably damaged, but also when:
a) Operating and/or maintenance costs over the
remaining life of the asset exceeds the replacement
cost;
b) There is an imminent risk failure of the asset;
c) The impact of a likely failure exceeds the
replacement cost;;
d) A probable failure may compromise the reliability
and security of the system and of people;
e) The assets have become obsolete and inefficient
to operate and maintain the business;
f) Gains by replacing imply improvement of
indicators of people safety, of the environment and
of the company performance.
Decision making for anticipated replacement of assets
should be based on accurate information on their
conditions, ensuring through analysis and diagnosis
the best return on invested capital, improved operating
performance, and lower risks to the organization.
To achieve the strategic objectives, the plans for assets
maintenance, reform and renewal shall be part of the
annual budget so that the necessary resources are
appropriate in operating and investment budgets,
ensuring that the long-term planning is modeled to
contribute to business strengthening.
The adoption of these practices by companies brings
results in short, medium and long-term. These results
are seen in improvement of technical, economic and
financial performance; reduction of risks and liabilities;
provision of transparency, security and traceability of
investments; besides favoring investment funding and
distribution over time.
The International Copper Association, through this
publication, contributes to companies, especially in the
power sector, to visualize how the successful practice of
asset management can leverage businesses efficiently
and sustainably over time.
 Introduction

This document is not intended to prescribe approaches, methods or mandatory tools, but seeks to clarify
what is proposed in the current standards by giving examples, adopted practices and tools used by
companies, not only the energy sector but also other of industries and other service sectors.

The proposal is to draw a path or a trail that enables the basic vision for a company to deploy an asset
management system through stages or the described “steps” based on the PDCA (Plan, Do, Check, & Act)
cycle that is the foundation of the management system. Thus, the six steps proposed enable the structuring
of the management system for asset management of any asset-intensive company. The proposed steps are
in line with the standards and stages of the PDCA cycle.

Figure 1: PDCA Cycle and Asset Management

11
 Let’s talk a little about Standards:

The series of of international standards is the result of work carried out under the ISO TC 251 international committee.
The series of standards consists of 3 separate standards: ISO 55000, ISO 55001 & ISO 55002.

The standard ISO 55001 gives the requirements of a management system for asset management, which from now
on will be referred to only as asset management system. This standard is related to the ISO 55000 standard, which
introduces terminology and with the ISO 55002 standard that provides guidance on how to interpret the ISO 55001
standard within a specific environment or for certain types of assets.

Figure 2: Standards and content

55000 55001 55002

Overview, principles Requirements Guidelines for
and terminology of management application of the
systems 55001

• Leadership • Policy • Planning

• Resources • Operation • Evaluation
• Monitoring • Critical Analysis • Continuous Improvement

12
The series of standards provides the definitions of what shall be done, but does not tell “how to do.” This is why the
search for practical examples is a constant among companies intending the adoption of the standards and further
certification.

In this document we will use the symbols “{}” to reference the number of the corresponding item in the ISO
55000/1/2 standards.
The standards are also structured according to the PDCA cycle (plan, develop or execute, verify and take action to
improve).

In this document, we will also follow the structure of the standards, through structured steps according to the PDCA.
The steps described in following are a basic proposal for a company of any size to adapt itself to what is required by
the Standards and to get value through asset management.
Step 1 refers to system planning corresponding to the P phase of the PDCA cycle. The steps 2 and 3 relate to the
system development as the D phase of the PDCA cycle. Steps 4 and 5 represent the verification stage of the PDCA
cycle and step 6 refers to Actions to improve the system as the stage of the PDCA cycle.

Figure 3: Proposed steps

Step 1
Planning

Step 6
Make a decision Step 2
and seek Execution
improvement

Step 5 Step 3
Analyze Manage Risks

Step 4
Monitoring

13
 STEP 1
PLAN THE COMPANY ASSET MANAGEMENT
 In the first step, the whole planning for implementation of the asset management system will be addressed, including
the required knowledge and needed tools.
For the planning to be successful, it will be necessary to deepen some basic definitions mentioned in the ISO 55000
standards:

• Assets {3.2.1}
According to the standards, an asset is an item, something or an entity that has actual or potential value for an
organization. This value can be tangible or intangible, financial or non-financial, and includes consideration of risk
and liabilities. It can be positive or negative, at different stages of the asset life.
Physical assets usually refer to equipment, inventory and properties owned by the organization. Physical assets are
the opposite of intangible assets that are non-physical assets, and are such as contracts, brands, digital assets, use
rights, licenses, intellectual property rights, reputation or agreements.
A grouping of assets referred to as an assets system may also be considered as an asset.

• Asset Management {3.3.1}

According to the standard, asset management is the coordinated activity of an organization to realize value from
assets, what involves a balancing of costs, risks and performance.

• Asset management system {3.4.3}

The function of a management system for asset management is to establish the asset management policy and the
asset management objectives. The asset management system is a subset of asset management.

Figure 4: Relations between key terms in asset management

Managing the
Organization Coordinated activity of an
organization to realize
Asset value from assets
Management

Asset
Management System Set of interrelated or
interacting elements to
establish asset management,
policy, asset management,
objectives and processes to
achieve those obectives
Asset Portfolio

Assets that are within

the scope of the asset
management system

The four principles of Asset Management described in the standard are:

1 2 3 4
Assets exist to Asset Management The leadership and the Asset management
provide value to the transforms the strategic workplace culture are provides assurance that
organization and to intent into tasks, determinants to the the assets will meet and
stakeholders; decisions, technical and perceived value; perform their function.
financial activities;

15
 Before start-up, the company normally establishes the scope of the asset management system and its breadth
within the organization.

A team is designated to execute the process in the organization performing specific roles. In the classic management
form, there is a leader (with full autonomy to conduct the process and communicate with the top management) and
a team that is usually divided into three distinct roles: the asset owners (who define the corporate objectives through
financial, technical and risk criteria), the asset managers (who apply the defined specifications of a project or asset
planning) and the service providers (who execute the project and provide the results or information).

The initial preparation requires from the leader and from the team a deepening into the company’s business. The
standards consider that the asset management system must address six aspects of an organization: the internal
and external environment, their planning processes, support processes, operational processes, the performance
evaluation processes and ultimately the continuous improvement processes.

A A. The Context of the Organization {4}

a. Understanding the organization and its context {4.1}

At this stage, some questions need to be answered: What creates value for the company? What is the focus of its
business? What is expected as a result?
All external and internal issues that affect both the realization of organizational objectives and the asset management
system shall be identified.

In the ISO 55002 is listed types of issues to be evaluated. At this stage, it is needed to determine if the asset
management system is aligned and consistent with the organizational and strategic objectives, knowing in detail the
organization’s strategic plan in the short, medium and long term.

Figure 5: Overview and interrelations of the asset management system

Organization Management System

Organizational objectives Organizational plan

Requirements of Asset Management Asset management

stakeholders System scope and strategy

16
b. Understanding the needs and expectations of stakeholders {4.2}
First of all, it is recommended to identify stakeholders, including internal and external stakeholders of the organization.
After identification of the parties, their expectations and intrinsic requirements are related to the asset management
system. It is important to consider how they interact with the system, and their goals.

The requirements of stakeholders are also considered for registration and documentation of financial and non-
financial information relevant to asset management. At this time, the criteria for decision-making are determined,
as well as the roles and responsibilities of each member of the asset management team.

c. Determining the scope of the asset management system {4.3}

Within the scope of the asset management system are the limits and reach of the system, which shall be documented.
Some sort of list of assets shall exist, which will be handled by the asset management system, and these assets will
form the considered portfolio. The unlisted assets will remain out of the scope and will not be treated by the system.
The application requires full involvement, comprising the resources and interactions of the whole organization related
with asset management in its broadest sense. In addition to covering internal processes and functions, including
interfacing with external suppliers, outsourced services, regulators and national and international considerations,
the scope includes geographical locations and organizational involvement periods. Probably, the scope of the asset
management system will be a written document with various relevant subsections and will certainly be the object of
definition by internal and external audits of the asset management system.

d. Determining the Asset Management System {4.4}

A system is a set of processes. Every process used in asset management must be defined and specified. Thus, a
description of how the asset management system is established, applied, maintained and improved is required.
At this stage, a critical analysis of existing processes against the requirements of the standards is carried out. This
analysis will determine which areas need to be developed to support the asset management system.

Every process used in asset management must be defined and specified. An alternative is to draw a flow graph of
each process, with all of its interactions, considering in practice procedures on how to do correctly each phase and
step of each process.

Figure 6: Processes of an asset management system

Asset Management
Policy
Asset Management
System

Strategic Assets
Stakeholders needs Organizational plan Asset Management
Management Plan
and expectation and objectives Plan
(SAMP)

17
 B Leadership {5}

Leadership and organizational culture are key factors in obtaining value.

The top management has the natural leaders of asset management of an organization, who are responsible for
quality and safety, and who will be responsible for asset management. The top management sets the business vision
and strategy, aligns the organization and provides the necessary resources for the objectives’ achievement. The top
management places people in leadership roles, guiding and supporting them.
The leadership influences how the organization performs its role and creates the organizational culture. In this
respect, the influence occurs by example and attitudes.

Figure 7: Leadership process in asset management

Definition of the executive sponsor

Identification of the leading team

Forming work groups for deployment

Scope definition

Preparation of the strategic plan

Preparation of management plans

Allocation of resources

18
a. Policy {5.2}

The asset management policy is a short statement that sets out the principles by which the organization
intends to apply asset management to achieve its organizational objectives. The standard recommends that the
asset management policy is a formal statement of support from top management, which thus demonstrates its
commitment to asset management.

The process of elaboration of the asset management policy is complex it must involve the company vision and
mission, as well as a strategic analysis of its situation in the market.
In general, there are some rules that the policy must meet:

• It shall be derived from and compatible
with the organizational strategic plan, i.e.,
define the high strategic value of assets and
how they fit into the mission and goals of the
organization;
• Be adequate to the nature and scale of the
organization assets and operations;
• Clearly express the principles to be applied,
such as the organization’s approach to the
health and safety of its employees, the
environment and sustainable development;
• Include a commitment to continual
improvement of asset management and the
asset management performance;

• Be coherent with other organizational • Be documented, put into practice and

policies; maintained;

• Be consistent with the overall risk • Be communicated to all stakeholders,

management of the organization, i.e., guide including contracted service providers. There is
how decisions should be taken; a requirement that these shall be informed of
their obligations related to the organization’s
• Provide a framework that allows the strategy, asset management policy;
objectives and asset management plans to be
produced and implemented; • Be reviewed periodically to ensure that it
remains relevant and consistent with the
• Be commited to comply with the law, organization and with the strategic plan.
regulations and standards applicable to the
organization;
The policy may not be presented in an exclusive document; it may be contained within other organizational
policies, or the organization management documents.

19
 b. Organizational roles, responsibilities and authorities {5.3}

A team is assigned to lead the process within the organization by performing specific
roles. Each role and responsibilities should be agreed and disclosed with everyone
involved, ensuring the transparency of the process and the authority of each one.

Figure 8 Assignments and expected results of the asset management team

Assignments of the Asset Management Team

Define Manage
Define Prioritize Know the
strategies internal and Set up
operational investments assets and their
(lines external services
policy life cycle
of action) suppliers

Expected Results

Optimization of Greater value for the

Maximizing returns on
performance and cost Satisfaction of customers
investments company and for
involved in the assets’ and shareholders
with assets stakeholders
life cycle

c. Criteria and definition of the asset portfolio to the management system - Determination of the scope {4.3}

When defining the scope of the asset management system, the portfolio or group of assets that are within
the scope shall also be defined.
These assets are typically classified by the risks and costs associated with them as critical and non-critical
assets:

CRITICAL ASSETS
Starting from the premise that asset is what creates value for the organization we can consider critical the ones that
generate the greater value within the established scope.

We can also say that for an asset can be considered critical or not depends on the importance of this element and
by the consequences of its absence or failure. In some situations the same type of asset can be critical and in others
not, depending on the application and the backup conditions in case of a failure.
The conclusion that an asset is critical, or non-critical, seems pretty simple and easy to understand when you know
the context of the organization and its scope.

In short, it can be said that the characteristic of an asset being critical or not is directly proportional to the role this
plays in the company’s business. Therefore, we can have assets that in certain companies are considered critical and
in others are non-critical.
Classifying the assets as critical and non-critical is an important task for asset management, as critical assets will
necessarily be monitored in more detail.
Assets grouped into critical and non-critical shall, in a general manner, be reviewed, monitored, and have their
performance evaluated, individually and in groups.
Each asset in the system has a specific function and often can be considered non-redundant.

Example:
In the particular case of power companies, critical assets for each segment would be:

20
 At first glance, the critical assets to maintain power generation would be the generators
and turbines, but these are not the only responsible for creating value to the core business
of a power generation company: there are also transformers, conductor cables, protective
equipment, control and supervision and the source of generation, as water sources for
hydroelectric generation.
GENERATION
If in a generating unit, there is an incident involving lightning and the simple lightning rod
does not function properly or the grounding system does not protect the equipment; the
loss for the company will be large, as if there is no water available in dams and springs; the
company’s business will be fully committed.

Power transmission through lines and towers has as critical assets not only the conductors,
but also the substations, the protection system, the control and supervision plus the
towers, switchgear systems and transformers.
TRANSMISSION
Similarly to what happens with generation companies, if a disconnect switch does not
operate at the right time; the failure can disable a line and the consequences for the
company can be many.

Distributors are responsible for making the generated and transmitted power reach the
end users. The main assets of the distribution business are: transformers, cables, protection
systems, control and supervision, meters and maneuvering systems.
DISTRIBUTION
In this case, the failure of a power transformer in the substation can be as disastrous as a
failure of a circuit breaker or an insulator; this will depend on the role of each component
in the power distribution activity, and on the load being fed.

CRITERIA FOR DEFINING CRITICAL ASSETS

The criteria for defining critical assets depend on the company’s business and organizational strategic plan. In
general, some are used by all companies:

A Value generated by the

asset in the business
B Non-earned profits by
the failure or absence

C Risks involved in
losing the asset
D Maintenance and
replacement costs

d. Asset management system {4.4}

One of the requirements of the ISO 55001 standard is that the company shall establish, implement, maintain and
continuously improve the asset management system, including all the processes required to support the system and
its interactions. In this way, the whole planning will be structured within a document called SAMP - Strategic Asset
Management Plan. Further details on the SAMP preparation will be provided in Step 2 - Execution

21
 STEP 2
EXECUTE THE ASSET MANAGEMENT OBJECTIVES
In a company, the asset management shall be driven by objectives aligned to the strategic planning and considered
in the planning stage.
The asset management objectives must be clear and consistent, as indicated by the letters of the word “SMART”:

S “Specific”

M “Measurable”

A “Achievable”

R “Realistic”

T “Time-based”

The asset management objectives are specified and derived as a part of the SAMP (Strategic Asset Management Plan)
to be deployed in the management plans of assets, which by their turn are aligned to, and derived from the scope.
Typical issues, amongst others, that are addressed by objectives include the following:

A IN ASSET MANAGEMENT:

— total cost of ownership;

— net present value;
— return on capital employed;
— performance vs. planning;
— certification of the asset management system, or assessment of the asset management maturity (by benchmarking);
— customer satisfaction scores;
— survey results for society or for reputation;
— environmental impact, e.g. carbon costs;
— level of service;

B FOR GROUPS OF ASSETS:

— return on investment (or return on invested capital, or return on asset);

C FOR ASSET SYSTEMS:

— asset system availability;

— asset system performance (e.g.: uptime, efficiency);
— unit cost of product or service;

D FOR ASSETS:

— reliability (mean time/distance between failures);

— asset condition, performance, or health score;
— life cycle costs;
— life expectancy;
— assets’ power performance.

23
 The company shall establish, document and maintain a management plan (or several ones) to achieve the strategy,
or asset management line of action, according to the established scope, to achieve the goals through the following
activities throughout the assets’ life cycle:

a) Acquisition, creation or renewal; c) Maintenance;

b) Usage; d) Discard / or alienation.

Notes:
• Creation, acquisition or improvement includes conception,
specification, project, modification, procurement,
construction and commissioning.

•Maintenance also includes inspection, condition

monitoring, functional testing, repair, renovation and/or
extension of assets useful life. Replacement of individual
assets can also be regarded as maintenance of the asset
systems.

• The asset management plan can be developed for individual

assets, for groups of assets, for isolated systems or for the
global management system. However, it is essential that the
plans are linked and coherent with the management strategy
and aimed to reach the preset objectives (directives).

The development of the asset management plan and the life

cycle activities should include an analysis of the actions’
impact on each stage of the life cycle and the needs before
the next stages of the life cycle.

A SAMP – Strategic Asset Management Plan {6.2.2}

The SAMP should present in a documental form the relationship between the organizational objectives and the asset
management objectives, and should define what is required to achieve such objectives.
It is important that this alignment be communicated to stakeholders to ensure that all levels understand why asset
activities and asset management activities are implemented.

Some key questions before drawing up a SAMP are:

• What is the current situation of the company?

• Where it is intended to be in the considered time period?
• What are the objectives and associated risks?
• How to achieve them ?
• How long is the time to get there?
• What are the targets?
• How are they measures?

24
The SAMP shall address for the assets portfolio:

A STRATEGY

• The required service level (reliability, safety, regulatory requirements, environmental acceptance, etc.)
• Strategic plan horizon/schedule
• Financial information / expected return of investments
• Roles and responsibilities
• Risk management
• Integration with other management systems

B LIFE CYCLE

• Specification/Project
• Purchasing
• Operation
• Maintenance
• Renewal/Replacement
• Expansion
• Introduction of New Technologies
• Disposal

C INDICATORS

• Description
• Measurement Range
• Targets

a. Asset Management Plans {6.2.2}

The asset management plan(s) shall be the SAMP unfolding for each asset or each group of assets within the asset
management system portfolio.

The development of the asset management plan shall include an analysis of the actions’ impact on each stage of the
life cycle and the needs before the next stages of the life cycle.
A special plan for emergencies or contingencies shall be developed for critical assets, in order to foresee solutions
for catastrophic or large impact events.

The contingency plan shall provide planned answers to possible failures in critical assets resulting from independent
or coincidental events, as well as being capable of fast asset replacement by a backup in case of a failure, or the
system operation blocking, as the case may be.

For transmission lines, as an example, the plan must provide for such failures not affecting the whole system,
by carrying out operational risk’s prediction and analysis, taking into account that undesirable events can have
consequential effects due to a variety of causes:

• The environment: lightning, winds, birds, trees;

• Human actions: accidents, vandalism;
• Malfunction of other equipment: explosions, protection failures.

25
 The emergency or contingency plan shall ensure that all critical assets can be replaced safely, with small impact to
the system and in the shortest time possible, so that power supply is promptly reinstated.

The emergency plan shall provide for actions in a crisis, and for major accidents, storms, disasters, operations’ center
failure, evacuation plans, including communications continuity planning and foreseeing other emergencies.
For some special assets, it will need to develop an individual contingency plan.

In case of the practical implementation of the plan, this shall be reported and evaluated so that the emergency plan
is improved and increasingly comprehensive.

Figure 9 – Structure of the asset management plan(s)

The Plan Description Activities, tasks,

Scope and data of responsible Life cycle
Directives considered persons and strategies
assets priorities

Continual
Financial Evaluation Improvement
forecasts Practices Actions

B Support {7}

For the asset management system to function properly, its inputs must be provided. These comprise processes,
infrastructure, funding, knowledge, skills, information management, services and the cultural environment for the
system and assets reach the performance required by the organization.

a. Resources {7.1}

All resources needed to ensure the SAMP and the asset management plans shall be identified. This requirement of
the ISO 55001 standard aims to support the asset life cycle and lead the organization to recognize that commitments
are needed from all organization’s areas, throughout the asset life cycle, in order to ensure the asset performance
wanted by the organization. It is necessary to identify and direct all resources either financial, human, security, tools,
equipment and mainly investment for assets’ replacement, renovation, or acquisition.

When performing asset management plans, a RGA - Resourcing Gap Analysis - can be simultaneously performed
to identify the resource gaps that exist between the actual capacity of the organization and the resources needed
to accomplish the management plans. Where restrictions are found, the organization should prioritize actions and
resources.

26
b. Competence {7.2}

The personnel appointed to perform asset management related to roles, authorities, functions and services should
be competent to perform their functions. This shall include external suppliers, service providers and hired labor. It
is necessary that the organization verify if these persons have values, attitudes, knowledge, talent and experience
consistent as expected for asset management. Proof of competency is a requirement.

For example, a skilled person in the business area shall be able to demonstrate clear competence in specific asset
management tasks (such as asset conditions evaluation) and comprehend the relationship between what they do
and the activities performed by other persons in asset management (for example, how its asset conditions evaluation
activity affects the determination of the remaining useful life of the asset).

c. Awareness {7.3}
More than having knowledge and being aware, awareness means to have the exact view of the impacts and
opportunities that the asset management system brings to the organization.

It could be said that it is to take the perspective of the “business owner” and know the risks, opportunities and
services’ quality expected from the organization.

To assess the level of people awareness, one can make interviews on aspects that cover the comprehension of
the asset management policy, such as to effectively contribute to the asset management success, and how the
interviewed see their contribution to the achievement of the organization’s asset management goals, or what else
can be done to achieve a positive differential.

In addition to the asset management policy, the ISO 55002 standards recommend that awareness rate the following
aspects:

A why asset management is important to the organization;

B the implications of changes in the organization operation (e.g. if the organization makes changes to its
operational processes or performance objectives the persons accountable for the asset management system should
be aware of any resulting impacts);

C your contribution to the effectiveness of the asset management system, including the benefits of the improved
performance of the asset management system;

D the consequences of asset management related risk (actual or potential) with its work activities, their behavior,
and the asset management benefits of improved personal performance;

E your roles and responsibilities, as well as the importance of their contribution in meeting the requirements of
the asset management policy and of the asset management system;

F the form that the organization is meeting its objectives.

d. Communication {7.4}

It is necessary to have a strategy with plans and communications media to convey the right information to the right
people, inside and outside of the organization, at the right time.

All communication requirements related to relevant assets, asset management and the asset management system
should be identified and addressed, including the transfer and exchange of knowledge and intelligence for planning,
execution, improvement and monitoring of the resulting performance.

27
 e. Information Requirements {7.5}
Information that must be identified and addressed is those referring to relevant assets, asset management and the
asset management system. The type of information to be saved and for how long depends on its purpose. The ISO
55002 standard lists common information and requirements to asset management and to the asset-management
system.

The form of information collecting, retention, management, terminology consistency and traceability must be
reported, ensuring the quality of information flow.

f. Documented Information {7.6}

Some information needs to be documented and maintained in accordance with the Standard requirements. In
general, this is the information requiring control, basically comprising all means, all asset management system
processes and all records evidencing the requirements’ fulfillment.

Main information to be documented:

Policy SAMP
Asset Management Plan(s) Auditing
Objectives Critical Analysis by top management

g. Control of documented information {7.6.3}

The documents selected for use in the organization are considered controlled documents and become a part of
its document management system. They need to be identified, approved, made available when needed, stored and
preserved, have their changes controlled, be filed using archiving practices and have their disposal specified.

C Operation: Project and Acquisition of Critical Assets {8}

The steps preceding the acquisition of an asset are extremely important because they affect directly the assets’ life
cycle. It is used to say that the specification precedes the life start, but totally influences performance over the life
cycle.

Therefore, the specification for assets’ acquisition shall be reviewed periodically based on assets’ operational
performance information and on the need of a technological upgrade, seeking assets that have the lowest TCO (Total
Cost of Ownership), even if their initial purchase value is higher, and taking into account new indicators such as the
power efficiency level.

The specification shall consider the company norms and standards, which also should be revised to include new
technology’s guidelines and adequacy of assets whose performance no longer meets the company’s strategies.
The routine of norms, standards and specifications reviewing must be aligned between the asset management and
engineering areas, both integrated with strategic planning.

The specification for equipment procurement should be led by the asset management pillars: Performance, Cost and
Risk.

28
 COST RISK PERFORMANCE

Practice shows that adopting only the initial cost as a purchase criterion, in most cases, is not the best alternative,
because other aspects need to be considered ever since the specification phase, these are:

a) The equipment normal operation conditions

b) Life cycle costs
c) Risks associated with the equipment failure
d) Power efficiency
e) Overload capability in adverse situations

These are only a few examples, as many other aspects should be considered, depending on the business of the
company.

Practical example: Asset’s Acquisition by a Logistics Company [A]

(Author: Alexandre Félix do Nascimento Ítalo)

A Brazilian company of the logistics sector, expert in road transport, had a management system being deployed.
This system helped everyday tasks’ performance, but was restricted to maintenance areas. As the company was
substituting and expanding its fleet (consisting of cars and light urban transport vehicles), this significantly penalized
the initial stages of the life cycle that depended on joint efforts from various sectors to be successful. The main
problems faced were:

• Significant vendor delays in the planned schedule of order’s delivery

• Quality failures in delivered products and early death, with assets definitely immobilized with less than 10%
of expected life
• Technical specification problems that compromised operation
• Lack of materials to perform maintenance
• Dissatisfaction and lack of involvement of some areas.

These and other failures caused external customers dissatisfaction and difficulties to expand its transport capacity.
A process of assets (fleet vehicles) acquisition was devised and implemented with steps, deadlines and well-defined
responsibilities, where maintenance was no longer the work center, but one participant of a multidisciplinary group
built with representatives of Strategic Planning, Commercial, Suppliers, Purchasing, Engineering, MCP, Maintenance
Execution and external customers. The main gains obtained were:

29
 • EAP’s (Project Analytical Structure) creation according to the acquired asset that served as the basis
for existing and future projects.
• Alignment of acquisition’s schedule to customer needs.
• Analysis of suppliers’ process capabilities and creation of technical evaluations.
• Development of a trust relationship with the Purchasing sector and a partnership in suppliers’ evaluation,
with direct impact on the future procurement processes.
• Training of operation and maintenance teams, delivery of critical materials, and management of new
assets’ configuration and commissioning before their final delivery to the unit responsible for their
routine management.
• Technical specifications in line with the client’s needs and with the best feasible technology for the
business.

Bringing the operational areas closer is one of the most difficult points to overcome and requires constant action:
They tend not to meet medium-term activities and to worry only after the final delivery of the product, with failure
complaints caused by their own lack of involvement. To achieve the correct performance of this and of other areas, it
was essential do develop stakeholders’ management and implement a communication plan. Results appeared when
asset management became everyone’s responsibility. [20]

a. Analysis for introduction of new technologies

Introduction of new technologies shall also be analyzed from the asset management point of view.New technologies
impact on the system could jeopardize the expected outcome of the asset management system, so an impact analysis
should be held for short, medium and long term before acquisition and usage.

Figure 10 – New Technologies Evaluation

New Equipment
Training needs New Technology Higher productivity?
New Tools New Process Better quality?
Changes in processes Safer?
New Accessories Fewer failures?
Users Resistance More competitive?

30
Practical example: Introduction of new technologies in the oil and gas industry [B]
(Author: Alexandre Félix do Nascimento Ítalo)

Company “B” with operations in the oil and gas sector began to renew its fleet of ships built by a department and
operated by another department of the same company. There were many unscheduled stoppages for maintenance,
including stops of the newest ships, which generated heavy fines and risk of operating contracts’ cancellation.

It was decided to develop an asset management model to reduce the occurrence of unscheduled downtime, met the
legal requirements, the clients’ internal HSE (Health, Safety and Environment) programs and optimized vessels’ life
cycle.

A RGA - Resourcing Gap Analysis was carried out in the company. The main deviations found were linked to the
lack of a structured process of assets’ acquisition and installation in Operations, which received the ships designed,
manufactured and delivered by the Construction Division. The current process allowed the new asset to start operation,
but with a high failure rate, no maintenance planning, no spares in stock, and without technical documentation.

An asset management system based on the ISO 55000 was developed, aligned with the TPM (Total Productive
Management) pillars and the best practices of Project Management, where the disciplines Time Management,
Communication Management and Risk Management were fundamental to achieve the expected result.

An “EAP” (Project Analytic Structure) model was prepared and a schedule was drawn for each vessel, divided into 3
phases.

Mapping of the hierarchical structure of the ship and organization of the technical

PHASE 1 collection. Definition of maintenance plans, drawing up lists of spare parts using
reliability tools for the first trip and for the first 2 years of operation.

PHASE 2 Configuration management, preparation of strategic contracts for materials and

services and inventory planning.

PHASE 3 Crew training, quality audits, control of Maintenance Indicators and warehouse and
on board stocks’ management.

The results were, in the first year of operation:

• Savings over R$ 2 million in spare parts, comparing the manufacturer indications with the one prepared by the
technical group;
• Improved assessment of the company in the Maintenance category under the company main client risk and
safety program;
• Preparation of all maintenance plans for critical assets;
• Increased adherence to maintenance planning;
• Structuring of the Engineering and Maintenance Planning area and definition of the roles and responsibilities
of all involved areas;
• Creation of a multiannual asset management program for the implementation of the remaining tasks required
for managing the entire life cycle of the company assets.

For the asset management to be effective, an ongoing risk assessment

is needed, eliminating the ones that can be eliminated and controlling
others to ensure the desired performance at a reasonable cost. [20]

31
 STEP 3
RISK MANAGEMENT
Risk management is an important factor in a proactive asset management. The overall objective is to understand the
cause, the effect and the occurrence likelihood of adverse events, to manage such risks optimally, by reducing them
to an acceptable and controlled level.

Risks may be defined as “future uncertainty”. It has two basic components: the frequency and its severity or
consequences. For example, each transformer has an end-of-life, so that the gravity of the event is known. The risk is
not to know when this will occur - or the frequency of failures. Some companies often use the event frequency and
severity product in the analysis process. Despite the frequency and severity information being subjective, qualitative
or quantitative, risk analysis is always an important tool to develop a decision framework.

Risk management is an integral part of every asset management process. Therefore, there is a specific need to have
processes to identify and monitor risks, not only in view of the current law, but also as a practice that makes it
possible to optimize and prioritize actions based on cost, risk and performance.

A Methodologies applied to risk management

There are several ways to manage risks [1] and their adoption depends on each organization.
The following are some of these forms:

Figure 11 – Risk management methodology

Techniques:
Classification Classify critical assets and list the risks of each one SR (risk series),
of assets Define the scope and limits of individual risk assessments SE (series of
events), etc.

Techniques:
Identification Create a spreadsheet of potential events and their causes
SWOT,
of risks  Include the associated risks, the probable failures and their consequences
HAZOP,
PESTLE, etc.

Control Identify existing controls Techniques:

Measures Create controls for each risk, activity and planned asset RCM, RBI,
IPF.

Estimate the probability and consequence of each event or potential risk

Risk
assuming that the control measures were taken
Levels Consider the effectiveness of the measures and the probability of each Analysis using:
one failure
• FMEA
• FMECA
Determine whether the control measures are sufficient to keep risks under
• RCA
Tolerance control within the tolerance required by the organization and by legislation • FTA
Levels Indicate as severe the risks that do not have control measures
or exceed the tolerance limits

33
 Another manner is to use the risk matrix:

For every potential risk, the probability

of failure must be analyzed and its
respective consequence (type, extension
and severity). Figure 12: Risk matrix [6]

For example, one may have two risks with

a high failure probability, the first with a
low severity result (low repair cost without
injury to persons and without damage
to the environment, and the second
risk with critical severity consequences
(severe damage with the unit stoppage,
probability of injury to persons and
damage to the environment)). This
particular risk, may need further testing
and stricter control measures culminating
in proactive maintenance, early renewal
or replacement of the assets before its
end of life.

Risk indicators should be established and

applied to assets for a “risk matrix” to be
created, easing analysis and decision-
making.

There are several risk matrix models, but

all result in a graduation of risks allowing
to take the necessary mitigating measures
for their elimination or reduction. It is
suggested below, as an example, the use
of a model [6] with 5 rows and 4 columns,
resulting in five different levels of risk:

A risk matrix can be divided into three colors (green, yellow and red) indicating low, medium and high-risk and can
also be divided into four regions or quadrants as in the SWOT (Strengths, Weaknesses, Opportunities and Threats)
analysis, indicating the outer quadrant as the most critical risk (more severe and more often) and the other two
quadrants that need mitigating actions because of high frequency or high severity, both cells are proposed for
deciding on actuation forms for frequency and severity of risks.

By the proposed analysis [6], it is noticed that in the risk management matrix, the horizontal axis (severity or
seriousness) that only the figure represented by “Y” is considered because at this point there is no need to differentiate,
if the effect of a failure mode occurs on people’s safety, on the assets, or on the environment, but only to assess the
severity of the involved risk. It is enough to considered Y = 1 when the probability of damage to the environment,
health or safety, is non-existent or insignificant, and greater than 1 when there is a significant probability.

After analysis and tabulation of the risks of each asset, these risks are mapped in the matrix. The next table summarizes
the results that may be obtained in the matrix with condition and recommended actions [6]. It is observed that the
deadlines are given as examples and can be changed according to the guidelines of each company.

34
 Table 1: Risk Classification, conditions and recommended actions

RISK DEGREE CATEGORY CONDITION ACTIONS

Check if there is any strategy or

Not maintenance task to prevent failure
CRITICAL or reduce risk to degree III. Otherwise,
acceptable it shall be mitigated with projects/
actions within 6 months.

Check if there is any strategy or

maintenance task to prevent failure
SERIOUS Undesirable or reduce risk to degree III Otherwise,
it shall be mitigated with projects/
actions within 12 months.

Acceptable Check for strategy or maintenance task

MODERATE
with controls to avoid failure. Otherwise, procedures
or controls should be created.

Some of the necessary measures

SMALLER Acceptable are signs and warnings. Check if
with warnings any strategy or maintenance task
to prevent failure is economically
feasible.

NEGLIGIBLE Acceptable No mitigation is required

If the risk degree is I, II or III, it is considered that the failure mode analyzed has implications on the environment,
health and safety and should be subjected to further questionings, such as reliability-centered maintenance. In this
case, maintenance strategies or proactive actions that meet the predefined criteria must be defined, or changes in
the design specification shall be made.

Knowing the variables Y (severity degree), F (frequency) and (R) risk degree, one can list the recommended actions
for each case.
Risk management should be an ongoing process searching for defects, failures or near misses, in order to prevent
them and control the effects.

For risk without control measures existent or proposals, the failure probability study should be conducted more
thoroughly. Here the analysis shall include technical, economic and strategic aspects.

The costs of repairs or corrective maintenance can reach more than 35% of the costs of a
company, which further motivates the risk management and minimizing failures actions [2].

In the event of a failure stemmed from a high-risk potential, direct and indirect costs will be involved, including some
intangible aspects that are not always considered.

Another important consideration in asset and risk management is compliance with legal requirements and regulations
for the company operation, that under no circumstances may be unattended due to exposure to risks.

35
 B Actions to address risks and opportunities for the
asset management system {6.1}
The objectives of using risk management in asset management are:

- Give assurance that the asset management system can achieve its Intended outcomes;
- Prevent, or reduce, undesirable events and effects
- Determine new opportunities
- Achieve continual improvement.

It shall be taken into account that risks and opportunities change over time, so it is important that this assessment
be made periodically and promote the necessary changes to achieve the objectives.

C Management of Change {8.2}

Internal or external changes affecting assets can impact on the organization capacity to achieve its asset management
objectives. It is important that these changes are assessed, and mitigating actions are taken before the change
occurs. A critical analysis must be made of the consequences of both the planned changes, as well as the unplanned.
The main changes that require this analysis are:

36
• changes in organizational structures, roles or responsibilities;
• asset management policy, objectives or plans;
• process(es) or procedure(s) for asset management activities;
• new assets, asset systems or technology (including obsolescence);
• factors external to the organization (including new legal and regulatory requirements);
• supply chain constraints;
• demands for products and services, contractors or suppliers;
• demand on resources, including competing demands.

D Outsourcing {8.3}

Outsourcing is a common method for an organization that prefers to perform certain asset management activities
not by itself, but by an external or internal service provider. When these activities influence the achievement of the
asset management objectives, it is advised that these should be part of the asset management system, and should
be documented.

The organization should formalize (with a contract) the level and quality of outsourced services.
An important care to be taken is to not to lose control over the objectives of outsourced services and the results to
be achieved.

For the asset management system to be adequately controlled, it needs a monitoring able to early identification of
any deviation that can impact performance and the expected results.

37
 STEP 4
MONITORING THE OPERATION
After acquisition, the commissioning stage starts after the manager or contractor have completed the implementation
or acquisition of the project, and the asset or system is ready for use.
From this moment onward, monitoring of the asset performance must be conducted and recorded, enabling the
future analysis of the life-cycle.

Commissioning marks the beginning of the operation, which can occur in various ways. In a power substation,
the final test of the installation should be performed and documented through an as-build of the plant. At the
same time, the operation and maintenance personnel must be trained on the operational requirements of the new
plant. The initial phase ends when the new asset is put into commercial operation, and preventive and corrective
maintenance guidelines are established and known by the station teams.

Monitoring should take place throughout the asset lifetime to enable decision-making.
The monitoring comprises the following steps:

Monitoring steps:

• Checking and comparison with standards • Observation of deviation from objectives

• Identification of problems • Review of partial results
• Communication for targets’ change

A Performance evaluation {9}

The expected results by asset management will only be achieved if there are a systematic measurement, monitoring,
analysis and evaluation of assets.
The methods for monitoring, measurement, analysis and assessments depend on each organization and should
review the necessary items for decision-making on assets.
Usually, indicators are adopted for evaluation. These indicators should be established in the asset management plans.

Performance and risks indicators are determined with the following assumptions:

Figure 13 Premises for indicator’s definition

Aligned with the strategic objectives of the company

INDICATORS

Balanced and measurable

Deployed to all levels of the organization

39
 The system shall be assessed through the evolution of indicators in time in relation to:

Figure 14: Indicator´s classification according to asset management fundamentals.

PERFORMANCE COST RISK

B Definition of indicators {9.1}

a. Performance indicators or KPI´s

Examples used in utility companies:

• Regulated Indicators (DEC, FEC, DIC, FIC etc.)

• MTBF – Mean time between failures
• Availability (hours without interruption)
• Failure rate / critical equipment
• Fault severity
• Mean time between repairs
• Maintainability
• Frequency of failures or repairs
• Technical losses / MWh installed or Total loss / km network
• Reliability
• Hours dedicated to asset management / team hours available

b. Cost Indicators
Examples of cost indicators used in utility companies:

• Total cost of maintenance/ total asset value

• Actual cost (sum of amortized repair costs (average acquisition cost - average depreciation X (1- average
age of asset) )
• Operating Cost / MWh sold
• Maintenance Costs** / Estimated costs of assets’ replacement
• Maintenance Cost / Operating Cost
• Cost of operation / Asset’s base value
• Capex value provided / Performed capex value

**Maintenance cost includes labor, contractors, support, overhead, training, spare parts, materials and systems,
excludes depreciation costs and downtime because of maintenance.

40
c. Risk indicators or KRI´s

• Exposure Degree / number of failures

• Probability of failure / maintenance costs
• Investment in training / costs of accidents and incidents
• Estimated costs of the company exposure / investments in maintenance and operation
• Rate of return per maintenance project
• Number of warnings from the regulator / MWh sold
• Cost fines / investments in maintenance

Measurement is There are no The evolution Caution: the most

always necessary ready-made formulas, expresses the result important thing is not
it is needed to be the value, but
aligned to the strategic the interpretation
objectives of the
company

C Internal audit {9.2}

Internal audits are effective tools to ensure that the asset management system conforms to its own requirements.
Usually, such audits take place at planned intervals, are able to early point out deviations, and identify opportunities
for improvement.

Internal audits should be seen as a self-evaluation process that encourages participants to seek opportunities for
improvement. The active participation, understanding and support of the organization’s members are important for
the top management to make a critical analysis of the entire asset management system.

41
 STEP 5
ANALYZE THE ASSET MANAGEMENT SYSTEM
 A Economic & Life Cycle Assessment

Managing the lifecycle of critical assets is an essential component in asset management and requires the application
of technical and economic criteria for decision-making.

All equipment has a life cycle that consists of stages ranging from conception to disposal, or recycling:

Figure 15 Economic analysis and the life cycle

Life cycle analysis besides providing a deeper knowledge of the assets behavior helps companies to define the right
time for disposal and how this disposal should be made in order to minimize the associated environmental impacts.

The life cycle is understood as the time of the asset existence within the company from design and specification to
disposal for recycling or scrap.

During the life cycle events caused by incidents, accidents or failures accelerate the asset
useful life end, reducing its life expectancy, or the asset remaining operational life under
the required conditions.

43
 Adequate monitoring of the asset operation enables the management team to estimate the remaining life depending
on the severity of the events throughout the life cycle and determine the exact point for the asset replacement
before an irreversible failure could happen.
For the company to get the best yield and the best performance of an asset, it is necessary to make its life cycle
management.
The management of an asset life cycle shall comprise:

• A continual monitoring system;

• The evaluation and registration of incidents, accidents and failures;
• Specific maintenance strategies;
• Analysis of the life cycle cost;
• Management of risks, reliability and its failure probability.

As an example, considering a transformer with dummy data, and assuming a supervisory and monitoring system
installed in the feeder, we will have over the years the record of events and operating information.

The evaluation of failures occurred with this type of asset and its causes showed the following results (fictitious):

Figure 16: Example of failures assessment

6% need
11% internal further
49% material 34 % assembly
residue examination

44
With the information of material failures detailed by component, the reliability analysis can be made [11]:

A B C
Failure Distribution: Weibull, b= 1.4, h = 1000
COMPONENT A Repair Distribution: Weibull, b= 1.4, h = 100

Failure Distribution: Weibull, b= 2.0, h = 5000

COMPONENT B Repair Distribution: Exponential, MTTR = 12

Failure Distribution: Exponential, MTTR = 10,000

COMPONENT C Repair Distribution: Normal, m=8, s= 0.00001

The following can be calculated:

• Average availability
• Total operating time
• Time spent with maintenance
• Expected number of failures over the lifetime
• Average time till the first system failure
• Reliability
• Maintainability
• Life expectancy

The analysis of these parameters should feedback

maintenance strategies, renewal and replacement
of the transformer.

At this point, the economic analysis and the risk

analysis should be aggregated to the life cycle
analysis to prepare data for decision-making [14].
The various decision scenarios can be tabulated
with the following information (fictitious data):

45
 Table 2: Example of scenario analysis

Current Operating
hidden costs Expected
Cost of estimate of Cost of a Risk Equivalent
Scenery Until life After
action remaining new fault profile Annual Cost
life replacement taking-action

SI R$ 0 10 R$ 1.000 5 R$ 105,50 R$ 600 10

RP R$ 500 15 R$ 500 2,5 R$ 80,50 R$ 400 25
RE R$ 1.000 15 R$ 450 2,5 R$ 80,50 R$ 300 25
SU R$ 1.500 15 R$ 450 1,5 R$ 80,50 R$ 100 30

Where:
SI = Without intervention
RP= Partial reform
RE= Renewal (complete reform)
SU= Replacing with a new one

The definition of the chosen scenario is based on the better performance at lower cost and longer life expectancy.
Cheaper solutions may not be the most durable and give the best performance, therefore, the need to overview
different scenarios.

Most companies do not take into account in their decisions the hidden costs that can be defined as costs that are
not normally apparent, but that are important for the asset operation.
Some of these costs are exemplified below and are established according to each company particularities:

• Transport costs for maintenance and repair of assets;

• Cost of emergency workers to meet the occurrence and put the asset into operation;
• Cost of the management team to analyze the failure and propose a solution;
• Non-quality cost;
• Probable cost of an accident involving persons;
• Probable cost of damage to the environment;
• Rework costs in the event of a repeated failure;
• Cost of customer dissatisfaction with the power supply interruption;
• Fines, fees and penalties for an asset failure;
• Cost of using an equipment of low power efficient (which increases losses and brings non-measurable
losses by the company). For example: induction motors, distribution transformers, etc.

The analysis of Life Cycle Costs (LCC) considers all operating and maintenance costs, beyond
the initial investment for acquisition of an asset. Other major costs are the hidden costs, taxes
and administration costs in return for subsidies received, added values and residual values.

The initial investment is only part of the total costs involved in an asset and its
long-term use. The investment that seem high at the time of purchase can be
paid in the long run through lower operating and maintenance costs.

46
The analysis of the LCC (Life Cycle Costs) [14] can be made by the following steps:

Figure 17: Steps for the LCC (Life Cycle Cost) or cost analysis during the life cycle

1 Identification of the alternatives of the analysis

2 Preparation of cost unfoldment tree

FEEDBACK
Data and information collection

4 Development of cost profiles per period

5 Development of Pareto charts for the

alternative levelingfor the the first stage

6 Cost analysis, their reasons and impacts

7 Selection of the best alternative

The complete analysis can be better understood through the example of an asset of a mining sector company: the
press filter [14].

The press filter is an equipment used in the mining process to perform the separation of the processed ore, and the
water added to the process to carry it through pipes.

In this case, we will consider four options for analysis (Maintenance of current condition, Change or replacement,
Re-powering and Overhaul) of the life cycle with a 10-year horizon.
The Pareto graphs were performed for each of the alternatives [14]:

a) Maintenance of the current condition (no interventions)

Costs Costs up to 10 years % up to 10 years Accumulated

Purchasing 0,0 0% 0%
Component A 6.403.920,20 23,97% 23,97%
Component B ... ... ...
Total 26.721.669,80

47
 b) Change or replacement with new equipment

Costs Costs up to 10 years % up to 10 years Accumulated

Purchasing 7.944.762,00 33,13% 33,13%

Component A 3.842.352,10 16,02% 49,16%
Component B ... ... ...
Total 23.977.763,90

c) Re-powering of existing equipment

Costs Costs up to 10 years % up to 10 years Accumulated

Purchasing 2.383.428,60 9,02% 9,02%

Component A 5.891.606,60 22,30% 31,33%
Component B ... ... ...
Total 23.417.480,40

d) Equipment overhaul

Costs Costs up to 10 years % up to 10 years Accumulated

Purchasing 3.575.142,90 12,94% 12,94%

Component A 5.763.528,20 20,86% 33,81%
Component B ... ... ...
Total 27.624.645,80

2 3 4
Situation 2 (change): Situation 3 (repowering): Situation 4 (overhaul):
Acquisition in January, availability Acquisition in January, availability Acquisition in January, availability
provided by the manufacturer provided by the manufacturer provided by the manufacturer
of 98% and loss reduction in of 96% and loss reduction in of 97% and loss reduction in
maintenance by 95%. maintenance by 92%. maintenance by 90%.

48
Then, we consider the following historical company data:

• Ratio of American Dollar / Real.

• Annual inflation rate.
• Environmental costs and production loss costs = the same values were adopted for the 4 options, so as to cause
the analysis to focus exclusive on maintenance costs.
• Analysis limit = 10 years.
• Hours per year = 8080 hours.
• Maintenance intervals, parts list and needed man-hours. The maintenance plan adopted by the company is based
on the manufacturer’s manual.

For each option the NPV (net present value) is calculated and the IRR (internal rate of return), and the best result in
this example was obtained with alternative 3.

B Calculation of the economic life of an asset

and LCC analysis
The analysis of costs over the life of assets depends on the data collected during all phases of the cycle by continuously
monitoring of the asset.

Practical example: High Performance Compressor [C]

Author: Claudio Caiani Spanó

Consider a compressor that has been operating for 10 months in severe conditions (dust, temperature and humidity
well above average), and so had numerous fails.

?
From this scenario, how to determine the
optimal compressor replacement time based
on the best cost-performance relation?

To solve this problem we suggest an analysis by reliability engineering methods, in particular using the statistics
curves of Weibull.

From the compressor basic information, the hierarchy of components can be defined, enabling the creation of a
functional tree. This makes it possible to define the appropriate maintenance activities for each component, as well
as the cost analysis by failure event.

Through a FTA simulation, maintenance costs are obtained over the life cycle of the compressor, whose service life
is estimated at 20 years.

49
 Table 3: Example of maintenance cost over time

OPERATING
MAINTENANCE COST
TIME (YEARS)

1 R$ 20.518,73
2 R$ 20.410,36
3 R$ 20.190,50
4 R$ 20.170,88
5 R$ 20.243,03
6 R$ 20.351,15
7 R$ 20.104,74
8 R$ 20.422,32
9 R$ 20.189,48
10 R$ 20.271,16
11 R$ 20.383,32
12 R$ 20.296,65
13 R$ 20.284,15
14 R$ 20.377,45
15 R$ 20.194,76
16 R$ 20.303,46
17 R$ 20.223,03
18 R$ 20.271,57
19 R$ 20.117,37
20 R$ 20.317,17

System Overview - Compressor

Average Availability (all events) 97%

Expected number of failures 2.570,57
Standard deviation (number of failures) 63,21
Available time (hr) 1 70.100,50
Total downtime (hr) 5.099,50
Number of failures 2.571
Total cost R$ 405.751,05

Equivalent operating cost of maintenance, considering the expected duration of the asset = 20 years

The simulation results provide data on the maintenance cost for any time, i.e. each analyzed year (LCC analysis base).
From the simulation, the related performance and cost indicators are obtained throughout the planned life cycle for
the compressor, featuring parameters to calculate the economic life of the asset.

50
 Equivalent Equivalent
Time Equivalent
Capital Property
(years) cost O&M
Figure 18: Example of LCC cost analysis Cost/year Cost /year

1 R$ 22.500,00 R$ 31.558,73 R$ 54.058,73

2 R$ 19.687,50 R$ 32.584,38 R$ 52.271,88
3 R$ 17.343,75 R$ 33.522,97 R$ 50.866,72
4 R$ 15.380,86 R$ 34.589,31 R$ 49.970,17
5 R$ 13.728,52 R$ 35.706,85 R$ 49.435,36
6 R$ 12.330,32 R$ 36.923,80 R$ 49.254,13
7 R$ 11.140,92 R$ 38.141,06 R$ 49.281,98
8 R$ 10.123,73 R$ 39.484,93 R$ 49.608,66
9 R$ 9.249,15 R$ 40.840,45 R$ 50.089,61
10 R$ 8.493,18 R$ 42.275,22 R$ 50.768,40
11 R$ 7.836,26 R$ 43.794,37 R$ 51.630,63
12 R$ 7.262,43 R$ 45.365,40 R$ 52.627,83
13 R$ 6.758,60 R$ 47.005,92 R$ 53.764,52
14 R$ 6.314,03 R$ 48.736,83 R$ 55.050,85
15 R$ 5.919,82 R$ 50.516,24 R$ 56.436,06
16 R$ 5.568,62 R$ 52.397,12 R$ 57.965,75
17 R$ 5.254,32 R$ 54.351,98 R$ 59.606,31
18 R$ 4.971,81 R$ 56.406,72 R$ 61.378,53
19 R$ 4.716,81 R$ 58.532,43 R$ 63.249,24
20 R$ 4.485,73 R$ 60.793,20 R$ 65.278,93

Therefore, it was possible to identify

the optimal time to replace the
compressor, based on the minimum
MINIMUN COST
cost of the asset ownership.

The ideal time would be the sixth year,

rather than wait for the full course of
Property cost O&M cost
20 years, representing a reduction of
Asset equivalent cost
cost of 32.53% in the lifecycle.

The analysis of the economic life calculation of an asset and LCC analysis allow to obtain multiple benefits for the
operation and maintenance activities, such as:

• Organize and direct the activities through hierarchy

• Determine and classify the components
• Understand and quantify the performance of the most critical components
• Understand the financial context and of the compressor
• Apply knowledge acquired in other optimizations:
• Determine ideal stock of spare parts
• Determine optimized preventive maintenance and inspections

Calculations and costs analysis over the life cycle, as well as performance evaluation, are essential tools to support
decision-making.

51
 STEP 6
DECISIONS MAKING AND SEARCH FOR
CONTINUOUS IMPROVEMENT
In general, the best asset management practices take place when the company chooses to keep its assets in use
for as long as they remain in a safe condition, technically efficient and economically viable. Management and
maintenance policies should support this goal, actively intervening to ensure continuous performance improvement.
The company needs a clear policy of assets’ renewing that must be replaced not only when they are irreparably
damaged, but also when:

a) The operating and/or maintenance costs over the remaining life of the asset exceeded the replacement cost;
b) There is an imminent risk of the asset failure;
c) The impact of a likely failure exceeds the replacement cost;
d) A probable failure may compromise the reliability and security of the system and people;
e) The assets have become obsolete and inefficient to operate and to maintain;
f) Replacement gains imply improvement of indicators related with people safety, the environment and the
company performance.

For decision-making to take place in the best possible way, it is necessary that the management team has accurate
information on the assets’ conditions. The basic information is:

• Monitoring the assets’ condition (operating conditions, inspection data, testing, maintenance, incident
recording and occurrences);
• Development of a diagnosis to interpret the condition monitoring data;
• Determination of failure modes, reliability and statistical analysis;
• Calculation of failure rates, remaining life and probability of failure;
• Economic analysis of capital investments and costs of assets;
• Risk analysis of critical assets.

In the asset management system, the quality of data entry has a significant impact on the output accuracy, so it is
important to have the staff commitment in keeping records up to date and organized.

Maintenance plans, revamp and renewal of assets should be part of the annual planning with asset management
having its own budget. This will allow designing the asset management, and modeling its long-term planning.

Asset managers are also responsible for determining which items should be kept as a strategic stock, mainly due
to the time that the supplier need for replacement and the importance of the component to the company system.

The timing of new technology’s introduction should also be decided by the asset management team based on
historical and market trends.

Often the asset management team is who points out the need of technological update or change in specifications,
as in the following example:

A Analysis for technological modernization based

on energy efficiency
Practical example: Electric Motors [D]
In 2010, a major porcelain industry, with 60 years of experience in the market, found among its critical assets the
existence of equipment that was acquired at different times since its founding with old technologies and without
concern for energy efficiency [16].

The factory mills, essential for the business, used standard electric motors with low efficiency and high power
consumption. When evaluating its manufacturing process and mapping the critical assets’ condition and seeking
solutions on the market, the company found that it was necessary to change the specification of the motors and
replaced them with high-efficiency ones.
This change took place in three distinct stages:

53
 1 At this initial stage, a mapping of the ball mills’ function within the process was
performed by raising the installation data, the motors’ data and detailed consumption
IDENTIFICATION OR and efficiency measurements for various operating cycles.
DIAGNOSIS:

The analysis of measurements and operating curves made it possible to conclude

2 that it was necessary to replace the conventional electric drive motors of the mills by
permanent magnet motors and a power inverter with braking device and IP65 degree
ANALYSIS OF THE of protection.
CURRENT STATE AND
These combined features allows saving energy by using an extra-high-efficiency motor,
SPECIFICATION CHANGE
and also fit the motor operating environment and provide operational flexibility with
variable speed.

3 After replacement of the motors and their driver (inverter) measurements were made
EVALUATION OF to evidence savings from replacing the standard type rotary motors by extra high
RESULTS AFTER efficiency motors (permanent magnets and frequency inverter). The results for one
EXECUTION substituted motor are shown in the following tables:

CONSUMPTION REDUCTION:
Consump-
Motor Driver Power Rotation Voltage Freq. Casing Torque tion
(kW) (rpm) (V) (Hz) (Nm) (kW)
Standard CA Direct Starting 40 1175 380 60 200L 243 26,9

Wmagnet - Frequency 60 0 a 1800 380 60 200L 239 17,7

Permanent Inverter
Magnets

ANNUAL GAINS:
No hours No Total Ton of R$/ year
Consumption No cycles/ months/
opertion/ month kWh/years CO2/year (electricity)
(kW) cycle year
26,9 8 27 12 69.724,80 17,43 15.674,14

17,7 7 27 12 40.143,60 10,04 9.024,28

The annual energy savings with one of the new engines is R$ 6,649.85. As investment for the high performance
motor implementation was R$ 15,977.21, the return on investment takes 2 years and 4 months [16].
With this solution, the company stopped issuing 7.38 tCO2 per year, equivalent to the absorbing capacity of 37
native trees.

These gains only occurred because the asset management team of the company decided to evaluate its critical
assets before their end of life, reviewing the specifications of the original design of the manufacturing plant and
researching new technologies in the market that could provide increased reliability and better competitiveness.

Risk analysis should support asset management decisions, facilitating the prioritization of investments and alignment
of management plans.
Management plans should always be reviewed and re-evaluated (planned vs. actual) for defining setting actions
within an improvement program.
All asset management actions should focus on continuous improvement of the management process to obtain the
following results:

54
 Figure 19: Continuous improvement cycle for asset management

Improve and perfect Establish goals,

the process objectives, methods
and standards
CORRECT PLAN

Measure the CHECK EXECUTE Put methods

obtained results and standards
into practice

A B C
Change of maintenance Creation of Excellence in assets’
culture into the asset permanent values performance
management culture

Periodically, the asset management system should be reviewed and audited in order to identify improvement
opportunities.

Early on, before the implementation of the asset management system, it is recommended to carry out a diagnosis
and a gap analysis to know exactly the current state, and to know where it is possible to act immediately.
Following the of PDCA (Plan, Do, Check and Act) methodology for the continuous improvement process to reach the
best results you must follow the steps below:

Figure 20: Main phases of the continuous improvement process

55
CONCLUSIONS
Asset management marks the beginning of a new era in business administration, something to be practiced by
those seeking business excellence. Asset management is not limited to the management of asset, but transcends the
barrier of operational limits to influence the business strategies.

The ISO 5500X standards, issued in 2014, brings to organizations the challenge of quantifying their efficiency in
terms of risk. The balance between cost, performance and risks can only be achieved through asset management
practices.

For companies that are willing to seek international performance standards within competitive markets, asset
management brings, from the context of the organization, a new proposal to realize the strategic objectives. This is
accomplished by integrating all areas of the organization, so that each one recognizes its role and responsibility in
achieving value through organization assets.

In the case of asset-intensive companies, whose business is based on the operation of physical assets, the rules bring
an innovation to the life of assets, no longer limited to the period between acquisition and disposal, but understood
from the asset specification to the liabilities remaining after decommissioning.

The adoption of these practices by companies brings results in short, medium and long term. These results are seen
in improvement of technical, economic and financial performance; reduction of risks and liabilities; provision of
transparency, security and traceability of investments; besides favoring investment funding and distribution over
time.

Several benefits were conquered by companies already practicing asset management and adopting the international
standards of the ISO 55000 series, mainly for asset-intensive companies such as electric utilities. Among the main
achieved benefits, we shall mention the following:

• A better Strategic
• Change in culture;
Vision of the business;

• Improved technical and

• Improved competitiveness.
financial performance;

57
 Bibliography

[0] ISO 5500x

[1] Zampolli, Marisa, “Guia básico para implantação da gestão de ativos em empresas de energia”
(Basic guide for the implementation of asset management in power companies), 2012

[2] Zampolli, Marisa et al, “Gerenciamento de Ativos no setor elétrico da América Latina Resultados
da Pesquisa: Melhores Práticas e Tendências” (Asset management in the Latin America power
sector - Research Results: Best Practices and Trends), October 2011

[3] Pereira, Felipe Ernesto Lamm, “Determinação do intervalo de manutenção programada da

proteção de linhas de transmissão considerando-se penalidades associadas à indisponibilidade”
(Determining the scheduled maintenance interval of transmission line protection considering
penalties associated with unavailability) Doctoral thesis – PUC Rio – October 2008

Bartlett, S., “Asset Management in a Deregulated Environment” on behalf of the CIGRE Joint Task
Force 23.18 and Australian Working Groups, CIGRE Biannual Meeting, Paris, 2002

[4] Cheberle, Luciano A.D.; Carvalho, Cláudio E., “Controle patrimonial georeferenciado com
padrões regulatórios de codificação e descrição das características técnicas dos ativos em serviço
no Brasil” (Georeferenced asset control with regulatory coding standards and description of the
technical characteristics of the assets in service in Brazil) submitted in the CIDEL, Argentina 2010

[5] Burle, Hélio, “Da manutenção para a gestão de ativos” (On maintenance for asset management),
submitted in the SIC- Simpósio Internacional de Confiabilidade, 17/05/2012

[6] Raposo, José Luis Oliveira, “Manutenção centrada em confiabilidade aplicada a sistemas
elétricos: uma proposta para uso de análise de risco no diagrama de decisão” (Maintenance
focused on reliability applied to electrical systems: a proposal for risk analysis used in decision
tree), Master’s dissertation - Universidade Federal da Bahia, 2005

[7] Pintelon, L., Gelders, L. and Puyvelde van, F., “Maintenance Management, Acco Leuven,
Amersfoort”, 1997
Davidson, Innocent E., “Utility Asset Management in Electrical Power Distribution Sector, School
of Electrical, Electronic and Computer Engineering, University of KwaZulu-Natal, 2005

[8] Marcorin, Wilson R., Lima, Carlos A.C., “Análise dos Custos de Manutenção e de Não-
manutenção de equipamentos produtivos” (Analysis of Maintenance Costs and Non-maintenance
of production equipment), 2004

[9] Bartley, William H. et al, “Life Cycle Management of Utility Transformer Assets” presented at
Breakthrough Asset Management for Restructured Power Industry, Salt Lake City, 2002

[10] Picanço, Alessandra, Martinez, Manuel L. B., “Desempenho de transformadores de distribuição”

(Performance of distribution transformers), Universidade Federal de Itajubá, 2008

[11] Seixas, Eduardo, “Manutenção Focada na Gestão de Ativos” (Maintenance Focused on Asset
Management), Reliasoft, submitted in the 2nd Amazonian Seminar on Maintenance, May 2012

58
[12] Pinto, Luis Henrique Terbeck, “Análise de Falhas – Tópicos de Engenharia de Confiabilidade”
(Failure Analysis - Reliability Engineering Topics) Engenharia de Manutenção Central, November
2004

[13] SAKURADA, Eduardo Yuji, “As técnicas de Análise do Modos de Falhas e seus Efeitos
e Análise da Árvore de Falhas no desenvolvimento e na avaliação de produtos” (Failure Mode
Analysis Techniques and its Effects & Analysis and Fault Tree in the development and in products’
assessment) Florianópolis: Eng. Mecânica/UFSC, (Masters dissertation), 2001

[14] Herculano, Adriano Souto, “Mensuração e avaliação dos custos no setor de manutenção
industrial de uma mineração: impacto gerencial no ciclo de vida” (Measurement and assessment
of costs in the industrial maintenance sector of a mining: managerial impact in the life cycle),
Masters dissertation, UFPB, 2009

[15] Van Duc, Nguyen, “Managing T&D Assets to enhace business performance” presentation on
6th Harmonisation Forum, Thailand, June,2012

[16] WEG catalog /Procobre, 2011

[17] Belardo, Carlos A. , Lopes, J.C.R, Souza, P.D. “Manutenção Centrada em Confiabilidade aplicada
na gestão de linhas de transmissão subterrâneas” (Reliability Centered Maintenance applied in the
management of underground transmission lines), 2009

[18] Martins, Maria A. G., “Gestão da vida útil dos transformadores” (Lifecycle management of
transformers), EDP, 2009

[19] Nascimento, Sebastião Vieira do. “Engenharia econômica: técnica de avaliação e seleção
de projetos de investimentos” (Economic engineering: technical evaluation and selection of
investment projects) Rio de Janeiro: Editora Ciência Moderna Ltda., 2010.
Nascimento, Sebastião V., “A importância da substituição de equipamentos” (The
importance of equipment replacement) article found at http://www.logisticadescomplicada.com/
a-importancia-da-substituicao-de-equipamentos/

[20] Practical examples:

[A] Practical example: Assets’ Acquisition in a Logistics Company
Author: Alexandre Félix do Nascimento Ítalo
[B] Practical example: Introduction of a new technology in an Oil and Gas Company
Author: Alexandre Félix do Nascimento Ítalo
[C] Practical example: High Performance Compressor – Reliasoft
Author: Claudio Caiani Spanó
[D] Practical example: Motores Elétricos Eficientes – WEG
Authors: WEG and PROCOBRE Brasil

[21] PAS 55 - BSI (British Standards Institution)

59
ANNEXES
 1 Case study AES Tietê – Preparing the SAMP
Author: Rafael Schmitz Venturini de Barros, CMRP, CRP – AES Tietê

In 2009, the AES Tietê started to working with the asset management concept. Lately, since 2012 the company has
been keeping an asset management system based on the PAS 55 and more recently in the ISO 55001.
The asset management system is structured in the form of a PDCA where the starting point, the “P” is the strategic
asset management plan, or SAMP (Strategic Asset Management Plan).

In item 4.1 of the ISO 55001 it is explained that the objectives of the asset management, which are stated in the
SAMP, must be aligned to and consistent with the organizational objectives. Thus, in the construction of AES Tiete
SAMP, the first step was to evaluate how the asset management system would contribute to the AES strategy in
Brazil.

The AES Brazil current strategy is called SPARK 15 and is structured in the form of a temple, as shown in Figure 1.
The temple has four pillars that are the strategic drivers with four statements, which are like guiding lines that will
help us to achieve the proposed objectives and the organization five values.

Figure 1 - Organizational Strategy of AES Brazil

“To be a leader in
the Brazilian energy
sector by providing
sustainable, safe,
reliable, affordable
power”

61
 Among the four strategic drivers, it was identified that AES Tietê asset management system would contribute to
the third strategic driver: “Efficient use of resources and disciplined execution”, which is found in the objective
“Managing assets with efficiency - Additions in the regulatory asset base and the PAS 55 and ISO 55001”.

From this point, the asset management strategy of AES Tiete was designed. It was structured using the Balanced
Scorecard methodology. The asset management strategy can be seen in Figure 2.

Figure 2 - Asset Management Strategy

Strategic Objectives – O&M 2015 to 2019

F1. Manage assets efficiently

FINANCIAL

INCREASE PRODUCTIVITY ENSURE REVENUES

F2. Optimize F3. Maximize the MRE F4. Reduce MRA
operating costs proceeds exposure
AND SOCIETY
CLIENTS

CS1. Optimize the availability of CS2. Operate in a responsible and

energy production assets sustainable way

Operating Cost Reliability (15%) Producibility (10%) Regulatory matters

(15%)
PI1. Optimize the assets
life cycle costs
INTERNAL PROCESSES
PI5. Monitor assets,
diagnose faults and act
proactively to avoid them
P16. Fulfill the
PI10. Maximize power
generation meeting the SIN
requirements
(5%)
PI15. Meet 100% of the
standards and regulations
required in the country

PI2. Promote process maintenance plan

PI11. Search Adjacencies
improvement efficiently and promote PI16. Meet the requirements
continuous improvement of operating licenses
Safety (10%)
Maintainability / PI7. Increase the mean PI17. Search to maintain the
Supportability (10%) time between maintenance PI12. Improve safety culture current physical guarantee of
of assets, in a cost- in the company employees reservoirs
PI3. Optimize times and effective way and contractors
improve the Administrative,
logistics, execution of PI8. Identify root causes
PI13. Spread the integrated Sustainability (5%)
maintenance and operation and the probability of
failure of assets to prevent
PAE/SOSem contingency plan
processes
recurrences to the entire company PI18 Sustainability of the
PI4. Reduce the average assets life cycle
intervention time of assets, PI9. Quantify and act on *PI14 Reduce safety risks of
in a cost- effective way. human reliability assets
PEOPLE AND CULTURE

Technologies (10%) Culture (10%)

People (10%)
P&C1. Manage by skills and P&C3. Maintaining the data base P&C5. Integrated vision of the business
abilities reliable to support decision-making P&C6. Keep alignment with the AES values
P&C7. Continuous APEX improvement
P&C2. Promote achievement P&C4. Intelligent operation
at work P&C8. Safe behavior
P&C9. Innovation

62
Once the asset management strategy was created, indicators were defined, which are monitored to verify the reach
of the strategic objectives and of the strategic plan that lists the extraordinary actions to be implemented in order to
make it possible the achievement of each of the objectives described in the Balanced Scorecard. The indicators’ panel
of can be seen in Figure 3 and an extract of the strategic plan is shown in Figure 4.

Figure 3 - Indicators Panel

General Index General Index

MGs TTD

Month Month Month Status Target Actual

Indicator Unit Direction Weight
Status Target Actual YTD YTD YTD

Finance
EBITDA
NFOM O&M/MW
Commercial/Availability
% MRA
Generated Power/Assured Power

Clients and Society

AF (Availability Factor)
EAF (Equivalent Availability Factor)
EFOF (Equivalent Factor of Forced Stop)
Failure Rate
NCF (Net Capacity Factor)
Locks Availability
Blackstart Recovery Time
Number of edges contracts regularized
Government Fines QUANTITY

Internal Processes
CAPEX Execution
CAPEX Adherence
OPEX Execution
Cost reduction with shares
Cost avoidance with Reforestation
Maintenance cost/locks processes
MTTR of critical equipment HOURS
Read points per scheduled route (ODR)
% of ACR - Action Plans Completion
Execution of Maintenance Plan
Systems Availability
Net Availability
Dam Safety Inspection RT QUANTITY
Diagnostic Center RT QUANTITY
Requests Attendance - Engineering QUANTITY
#OS corrective/#OS total
% Adherence to Maintenance Plans
Backlog DAYS
MTBF of critical equipment QUANTITY
#identified failures/#corrected failures
#EH occurred failures/occurred failures
#EH Identified failures/#EH occurred failures
Number of failures recurrences in UGs QUANTITY
Telephony Availability
%ISUFp – Index of Urgent and Timed Out Requests
%IRCS – Index of Requests Reprogramming and
Cancellation

63
 Figure 4 - Strategic Plan

Creation Name Description Responsible % of Conclusion Status

Date
Review of the Process of release/
standardization and review of
work fronts documentation (review Wagner de 100%
02/12/2014 Objective PI2 IOTOM12 focusing on the fronts Freitas Ciarelli Concluded
initiative 1 release by 3rds)

02/12/2014 Objective PI2

initiative 4
Provide procedures to the Asset Rafael Schmitz
Venturini de Barros
100% Concluded
Management Committee

Objective PI3 Use of the IDF for all critical

02/12/2014 initiative 1 designs equipment Willian Carlos Jorente
100% Concluded
independently of value

Objective PI6 Implement a continuous

02/12/2014 initiative 1
evaluation process of the Thiago Andre de
Oliveira Daniel
100%
Concluded
maintenance plans

Objective P&C3 Establish a standard for 100%

04/12/2014 Initiative 2 the final MPPs report
Daniel Colinques Palfi Open

Objective P&C7 Prepare a program/ process for

04/12/2014 Initiative 1
disclosure and dissemination of William Carlos Jorente 100%
Concluded
the Sigaf Forum

Objective PI3 Update the list of critical spare 80%

02/12/2014 initiative 9 parts and integrate to SAP
William Carlos Jorente Open

Objective PI17
04/12/2014 initiative 2
Implement the Process of
suppliers’ pre-qualification
William Carlos Jorente 80% Open

Objective PI14 Prepare maintenance plans for 70%

02/12/2014 initiative 2 the warehouse equipment Tiago Soave Guerta Open

Objective PI18 Adequate the root cause analysis 60%

02/12/2014 initiative 2 process to be performed Tiago Soave Guerta Open
in the Orion

The actions of the strategic plan are all linked to the objectives described in the strategy. These actions were inserted
into a specific software, which helps in demands’ control. Each one of these actions were directed to a responsible
and have a term to be executed, with the terms periodically monitored.

Finally, based on the strategic plan and the risk analysis, the AES Tiete budget was designed, as shown in Figure 5.

Figure 5 – The budget based on the asset management strategy

Cost of Portfolio - 8 Years
Full Portfolio 2015-2019 (Final Reduction)

64
The set of elements described in this paper makes up the AES Tietê SAMP. From this SAMP, the everyday actions
unfold and materialize the company’s asset management. Following this plan, it can be assured that the assets of
AES Tiete will be aligned with the strategy of the company, delivering the results expected by stakeholders.

Case Study: Elektro - Asset Management Plan for the

2 purchase of transformers
Author: Gilberto Martins Junior – Elektro Eletricidade e Serviços S.A.

MOTIVATION

Currently there are several distribution transformers items used by Elektro, with different power, voltage classes,
NBI (Basic Level of Insulation) and finishing (simple external paint or galvanized). Some items are sub-utilized and
generate operating costs that could be optimized within the acquisition process.

PROPOSAL: REDUCTION OF THE QUANTITY OF TRANSFORMER ITEMS

To define the number of items that will be reduced in the purchase process, an analysis of this asset life cycle was
carried out considering the three pillars of asset management:

RISK

EQUILIBRIUM

COST PERFORMANCE

PERFORMANCE:

Failure Rate => The long-term failure rate will be reduced since, from historical data, it is concluded that the
higher the power of the equipment, the lower the probability of failure and the definition for use of only one NBI
standard, instead of two NBIs (coastal region and non-coastal).

Market Attendance => Capacity will increase. For example, instead of replacing a transformer 30kVA by 45KVA, a
75kVA will be installed.

65
 COST
Technical Losses => In the short term there will be an increase of technical losses in percentage terms; however,
in the medium and long-term, technical losses will be smaller in percentage.

Investment => The investment amount will increase in the short-term but in the long run the investment will be
lower, i.e., the initial investment will be higher because the larger power transformer has a higher value, but the need
for new investment will have a wider spacing interval.

Stock/Purchase => The need for equipment in the inventory will be lower, moreover, it will be a gain in negotiation
power (scale gain).

Finish (External Painting) => By setting just one standard for exterior paint, instead of two paint patterns (coastal
or non-coastal), there will be the opportunity to negotiate lower prices.

RISK
Availability => Reduction of long-term risk with increasing market service capacity and reduced failure rate.

OUTCOME

The proposal weighted average increased is 14% in installed power and a 52% reduction in the quantity of
distribution transformer items, obtained a financial result 17% higher than the current model. Note that in addition
to the quantitative gains, the following qualitative gains shall been achieved:

• Documentation and standards simplification due to the reduction proposed in the previous item;
• Simplification in transformer installation process, standardizing fixing materials, protection and
measurement;
• Reduction in the number of contracts management;
• Optimization of inventory space for this material.

Case study: CEMIG – Application of Asset Management

3 in Risk Assessment of Connection Failures
Author: Henrique Eduardo Pinto Diniz

Introduction

Typically, the utilities’ sector (electricity, gas, sanitation) is conservative or risk-averse, because of the strong regulation,
the high cost of a failure, the high investment involved and the consequences, internal and external, of a wrong
choice. Conductors, connectors, circuit breakers, lightning arresters, transformers and other system equipment suffer
thermomechanical stress that eventually may lead these physical assets to failure, and compromise the performance
levels of the utility provider. In general, the most recurring problem consists of overheating in contacts and electrical
connections.

Because they have very low maintenance costs when compared to the damage they can cause if they fail, electrical
connectors are subjected to interventions whenever elevations of surface temperatures are detected, through
thermographic inspections.

66
Although they are a strong indication of problems, they cannot, just by a qualitative or comparative approach of the
temperature obtain an optimum point for an intervention on assets, and many erroneous diagnoses (false positive
or false negative) are generated by not evaluating the inherent uncertainty of thermographic inspections. In other
words, because the quantification of uncertainty is not yet a common practice in the electrical sector inspection
procedures, the results lack reliability, which translates into a very large span of the confidence interval, damaging
inferences on the state of electrical connection, since measurements in intact and faulty connectors may have
common temperature ranges.

The asset manager must make decisions where to apply resources and use its best efforts to meet conflicting
yearnings of stakeholders. I.e., we are looking for the best answers to the following questions:

• How to estimate, without shutdowns, the moment when an electrical connection will break, just from the result of
thermographic inspections (surrounded by uncertainties)?
• How to turn this estimate in an asset management strategy, addressing the technical risk and economic risk of
occurring a rupture in this connection?
• Failure to consider the metrological aspects and the merely qualitative treatment has led to taking misguided
decisions (too conservative, or ineffective)?

Estimation of Electric Resistance of a Contact from the Temperature

An electrical component, the resistance R, subjected to a load current i will present loss of energy due to the Joule
effect, and shall, therefore, have a temperature Ts in a particular environmental situation. This temperature can be
calculated using the first law of thermodynamics, determining the energy balance:

Ea = Eg - Edis
Where:
Ea = stored energy, Eg = energy generated by Joule losses, Edis = energy lost to the environment.
If we substitute the expressions that describe each energetic phenomenon mentioned, we shall have:

mcp ∂Ts = Ri2-hAsup [Ts-T∞ ]

∂t
Where:
h = heat transfer coefficient, h = hconv + hrad , in [W/(m2 . K)], Asup= connector surface area in [m2], Ts = surface
temperature in [K], T∞ = temperature at a long distance from the object, in [K], m = mass of the connector, in
[kg] and, cp = specific heat of the connector materials in [J/(kg . K)].

By isolating R in the equation above, we can calculate the total connector resistance (including the resistance of
the material itself and the contact resistance). Then, one particular R for the specific conditions can be used with
the same model to obtain the final temperature Ts due to the load current i.

Model to preview the mechanical strength loss

The connector materials are designed to operate at room temperature or close to it. High temperatures, above approx.
93 ºC for aluminum, lead to a number of phenomena, including the so-called annealing – a metallurgical process
where high temperatures allow the relaxation of the internal stresses created during cold working, which results
in softening and loss of metal strength – culminating in loss of tensile strength of the entire connector-conductor
assembly. The extent of this loss is a function of the material composition, its temperature and the accumulated time
it was subjected to this temperature.

67
 There are models in the literature for calculation of the remaining mechanical strength of metallic materials. Tests
conducted by Harvey demonstrated that the harmful effect of random exposure to high temperatures are cumulative,
leading to the need to know the temperatures and durations at each temperature that the conductor was submitted.
For convenience, and without a large loss of accuracy, the determination of this history can be made by dividing into
groups or increases the value of obtained temperatures, and then adding up the length of time at each temperature.
This model results in the following equations:

(-0,24 . T + 134) . t (95-T) . 0,0001/d when (-0,24 . T + 134) > 100

RS =
100 . t (95-T) . 0,0001/d

Where:
RS = remaining mechanical strength of the conductor in relation to the baseline, in [%], T = value of the
Exposure Temperature, in [oC ], t = the sum of the exposure time to temperature T in [ℎ], d = diameter of a
conductor wire in [in].

The result will be the remaining resistance percentage of the conductor-connector assembly after the application of
a specific thermal cycling.

Risk Models

Disruption of the connector-conductor assembly will have a maximum probability to occur when the residual
mechanical resistance (RMR) is smaller than the resultant forces (FR) applied on the assembly composed by the
weight force, wind drag force and electrodynamic forces (on short-circuiting occurrence).

The calculation of the weight force is simple, just by adding the weight of the conductors in each side of the
connector. The aerodynamic drag forces can be calculated by the method described in ABNT (NBR 6123), whose
equation is the following:

FA = Ca . q . l . d
Where:
Ca = Drag coefficient, q = dynamic pressure of wind, l = the sum of the conductors’ length on each side of the
connector, d = conductors diameter.

Finally, the electrodynamic forces are determined by the equation below, based on Ampere’s Law:

μ0 . l . (k √2 . I)2 . sin (120o)

Fcc=
2πs
Where:
μ0 = magnetic permeability in a vacuum, 4π x 10-7 [N/A2], s = separation distance between conductors in [m],
I = currents circulating in each conductor, in [A], l = length of the conductors, in [m], k = current asymmetry
factor.

68
As described by the Harvey’s model, the mechanical strength loss process is cumulative, thus, by determining (via
measurement or calculation) the wear at defined instants, it is possible, via exponential regression of these data, to
obtain an expression and to use it to extrapolate future loss of strength over time as a function of a θ coefficient
determined by the regression. With this, it is also possible to estimate the time it will take to achieve a certain RMR
level. To do so, isolate t of the expression, as follows:

RMR Limit

RMR = 100e-θt
Nominal
Conditions

1 RS
t= ln
Changed
θ 100

(years)

The RMR limit line should be determined as a function of the risk you wish to run, depending on the greater or lesser
distance to the point where FR = RMR. According to the performed calculations, this point is close to 3%. Therefore,
considering some safety factors to meet the assumed simplifications, one can establish the following scale of risks,
with the following associated probabilities as given in the Table below:

Classification on the Probability of Loss of the Main Function

Unlike No value is off limits, nor presents features violation trend.

Asset in good conditions
p=5%

One or more quantities present trend to violation of limits, but are below the limits.
Remote Small defects that can wait for correction in the next routine maintenance.
p=20%

One or more quantities violated limits and continue with a worsening trend.
Likely Major defects that require non-routine scheduled maintenance.
p=50%

Certain The level of violation of the quantity is critical, requiring immediate action.
Serious defects that require urgent maintenance or withdrawal of equipment
p=95% from service.

69
 Using these probabilities, associated with the
expected costs, in case of a failure and with
the costs to perform maintenance, it is possible
to assess the financial exposure EF (economic
risk) of the decision to delay maintenance.
The calculation is performed according to the
following expression.

EF = [(1-p) Cman - pCf] (1 + i) N-1

Where: Cf = costs associated with the occurrence of the fault

p = probability of loss of the main function (failure) i = discount rate per period
Cman= Cost to perform maintenance N = number of periods

In this case, it is being decided to perform the maintenance of or not, considering a time period N, accepting a failure
risk p. If it is possible to stay without maintenance, it saves Cman with a probability (1-p) – a positive value –, as this is
the probability of NOT FAILING. In case the failure occurs, the incurred in cost is Cf – therefore, negative. One should
also consider the value of money over time, through rate i.

Applied Methodology

The applied methodology makes use of the previously described models, taking steps that include the following
actions:

Perform the thermographic Determine the uncertainty

STEP inspection, also registering STEP associated with the measured
1 environmental conditions and
loading. 2 temperature, using methods such
as Monte Carlo.

Estimate the overall electrical Calculate the temperatures reached

resistance of the connector, with the
STEP associated uncertainty, and adopt
3 the extreme range value corresponding
to the worse condition.
by the connector, considering the
STEP obtained resistance and electrical
4 load data to which the component
is subject

Study the effects of temperature

on the mechanical strength of the Determine the maximum expected
STEP connector-conductor assembly,
STEP stress that components will be
5 estimating its evolution with time 6 submitted

Evaluate the economic risks of the

STEP decision to delay the intervention
7 for a specified time

70
Final Considerations

By being able to identify the moment at which the component will reach its end of life, the application of this
methodology will allow the asset manager, under a calculated and specific risk of each component, to reduce costs
and improve the performance of electrical connections and the associated equipment. He may, safely, postpone
interventions and program the most propitious moment to act, thereby capturing the benefits of predictive
maintenance and utilization of other services at the facility.

From the knowledge of how each uncertainty element affects the risk assessment, the asset manager may also
improve its forecasts periodically revisiting the models, loading loads’ information and the latest inspection reports,
as well as selecting more appropriate instruments, correcting procedures and updating training. Furthermore, the
asset manager will be able to compare the performance of connector types, locations, and operating conditions,
as well as the quality of the installation and maintenance procedures. He can also actuate, when necessary, before
the teams and suppliers inducing modifications in components design characteristics to improve measurement
conditions by thermography and the mechanical resistance presented by conductors and connectors. Finally, the
asset manager will be able to develop criteria for these components’ maintenance prioritization (anticipation or
postponement) as a function of the associated risks, thus obtaining cost reductions while maintaining satisfactory
performance.

Case Study: Eletronuclear Management Plans

4 for Critical Assets
Author: Valéria Simões de Marco - Eletrobrás Eletronuclear SA

The performance of 50 pumps and 75 motorized valves
of critical systems were monitored during the operating
cycle of the Angra 2 Nuclear Power Plant.
We considered as performance indicators the quantity of
functional failures and the total downtime of equipment
and for performance evaluation were defined targets
depending on the number of failures (<2) and allowable
downtime (≤ 5%) per operation cycle (~ 14 months) for
each system comprising this equipment.
periods of time during each cycle (mission time), the
equipment of life data were analyzed and observed that
the revisions were performed in the infant mortality
period when failures’ rates are decreasing.
It was concluded that the executions of overhauls,
besides being unnecessary, could “cause failures inserted
by maintenance” and did not allow the equipment to
leave the infant mortality period because they were
restored to the condition of “new”.

Some systems have exceeded their downtime goals, but
there were no malfunctions in any of the cycles.
The outages causes the were analyzed and concluded
that the targets were extrapolated to executions of
overhauls that were not approved in post-maintenance
tests and the required rework meant that unavailability
times were higher than predicted for the executions of
overhauls.
The historical of maintenance proved that the pumps
and valves did not present any failure trend and were
reviewed at every 4 cycles of operation only to fulfill the
established maintenance program.
As these devices were demanded to operate for short
To mitigate the outages causes it was necessary to
exclude the overhaul maintenance program, includes
pumps and motor-operated valves in the routes
of predictive monitoring processes, only practicing
intrusive intervention when a failure trend was observed
by predictive maintenance ratings.
The use of these indicators made it possible to reduce
overhauls, generating savings of €1.3 million per cycle,
without compromising the reliability and availability of
the plant. It also caused the reduction of generation
of radiologically contaminated metal parts, reducing
radiation exposure of the staff during the executions
of maintenance activities and reducing administrative
costs for the storage of radioactive waste.

71
 Case Study: CEMIG - Application of Asset
5 Management in Call Center
Authors:

Paulo Marcio Nepomuceno de Sousa – CEMIG
Pedro Monteiro de Castro Souza - CEMIG

Introduction

Considering the current tariff structure of the Distribution electric sector and the remuneration form based on the
assets, the Call Center service is commonly seen in the business as a cost center.

Under these conditions - using the figures generated by the Call Center - we intend to reach an optimized form
and greater integration with the processes of the distribution business, to support decision-making based on target
selections for the planning areas in order to balance costs versus prudent investments.

Assets Management & Call Center

For the electric sector of distribution companies in Brazil it is fair to say that, as a rule, their main business is asset
management. Inserted into this reality the Call Center positions itself as a cost center in the electric distribution
business.

At first sight, it cannot be seen a direct interface between the Call Center service and asset management. However,
in a further analysis, one realizes that commercial services are directly related to specific points:

• Management of performance associated to assets and to asset systems;

• Management of risks associated to assets and to asset systems;
• Management of expenses associated to assets and to asset systems.

In relation to assets performance, there is a correlation with the number of customers’ emergency contact and how
well are the company’s assets performing, since the greater the problems presented by the asset (open switches,
voltage oscillations, etc.) the greater the number of calls reflects the increasing number of affected customers.

In the electric sector, as established by ANEEL Resolution 414/2010, there is a regulatory risk of the Call Center direct
responsibility related to the regulatory indicators INS (Service Level Index), ICO (Busy Call Index), IAB (Abandoned
Call Index) that are directly related to the volume of call and therefore the performance of the assets as a whole.

In the same sense, there is a correlation between the performance of the assets with associated expenses, which in
the case are related to telephone costs and service structure (physical and with personnel).

The effective implementation of asset management requires a disciplined approach that allows an organization to
maximize value and reach its strategic objectives managing its assets throughout its life cycle. This includes the
proper determination of which assets to acquire or create in the first place, and how to operate them, and keep them
in their best condition, adopting optimal renewal options, and their disposal and / or restoration.

Therefore, since there is a direct relationship between the performance of the company assets with the number of
emergency contacts to the Call Center, it seems that the amount of contacts is a plausible indicator for monitoring
assets’ performance systematically helping the Asset Management process of the company main assets.

Some benefits of the optimized management of the management cycle are related to the effective participation of
the Call Center as an active part of the asset management process:

72
• Increased customer satisfaction with improved performance and product control or service delivery
according to the required standards;
• Ability to demonstrate the best purchase option within a restricted regime of funds;
• Evidence, in the form of systematic and controlled processes, to demonstrate statutory, regulatory and
legal compliance;
• Improved risk management and corporate governance and a clear auditing for the adequate decision-
making and its associated risks;
• Improved corporate reputation whose benefits include an increased value to shareholders, best market
position of product/service, greater customer satisfaction and more efficient and effective supply chain
purchasing.

An asset management system is vital for organizations that depend on the function and performance of their physical
assets to deliver services or products, and whose success is significantly influenced by its assets’ administration.
Within this scenario, one can see the Talk with Cemig (“Fale com a Cemig”) as one of the important points in
monitoring the performance and condition of assets, as highlighted in Figure 1.

Outlook of the asset management system, its relationship with the organizational strategic plan and
stakeholders’ expectations.

73
 Every contact generated at CEMIG’s CRM (Customer Relationship Management) platform is necessarily linked to a
client / Business Partner. Most of these contacts is also linked to a specific Installation or delivery point.

The contacts generated in the CRM are always classified according to their type, being divided between commercial
and emergency. Due to the focus of the study in supporting the asset management process, it is understood that
only the Emergency contacts are relevant since it is probable that they are directly related to the performance
conditions of the distribution network assets.

Through the distribution operation databases the contact is related to any facilities, to the street transformers to
which it is connected and, consequently, to the rest of the assets related to the customer, as feeder substation, etc.

Thus, from these contacts it is possible to find the following identifications for each contact:
Contact protocol Installation / Customer Transformer Feeder Substation Location / City
Region Regional / Management. Therefore, based the emergency contacts generated by phone calls incur into
expenses/costs attributed to the performance of assets in all these possible stratification, enabling the visualization
of performance from the macro (Management) to the micro (Contacts or specific customers) for each emergency
contact.

The data visualization considering this structure, linking contacts to installation, also enables geo-referencing
contacts using GIS platforms, in addition to studying contacts recurrence in specific circuits.

The contact information can be used both as a direct indication of the need for maintenance and for monitoring of
assets, as well as it can integrate the calculation formula of more sophisticated models of performance monitoring.
As a result, more robust models would be obtained that would reflect in more sophisticated practices integrated into
the asset management cycle, which directly impact on the decrease of the number of emergency contacts related
to assets that would pass through maintenance/change having a direct budgetary impact on results, as depicted in
the figure below.

Study of emergency
contacts

Decreased number Selection of assets for

of calls/expense maintenance/replacement

Optimization
of investments

Application
Using the telephone calls recorded in the month of September 2013 as a base, of Talk to Cemig calls, the emergency
contacts were selected because of their direct relationship to system performance, totaling 326,680 contacts. Of
these 302,562 (93%) had positive identification of the installation and through it they could be associated with the
Company assets.

Costs for attending were estimated at the average phone costs and structure, for both service via Voice Response
Unit and by attendants, as given in Table 1.

74
 Table 1 - Cost of emergencies contacts

COST OF CONTACT

URA R$ 2,20

PA R$ 3,34

Starting with this basis of referenced contacts by the INstallation it is possible to analyze the performance of the
assets and the costs associated with various possible stratifications.

The analysis example below takes to the study of the largest offender in the month of September, to the point of
being even possible to suggest specific interventions to field teams.

Initially, Figure 3 display is a larger number of contacts in the Distribution Region of Contagem, representing
approximately 7% of the costs related to telephone calls.

Figure 3

Region Number of Contacts Cost %Cost %Accumulated

Grand Total

Focusing in this region specifically it is possible to detail the specifics Locations of higher volume of calls places as
highlighted in Figure 4.

75
 Figure 4 - Breakdown of Locations/Greater caller Cities in the region of Contagem

Location Number of Contacts Cost

Another display is presented in Figure 5, regardless of the region, is the volume and cost of calls per feeder, already
leading to a vision more directly connected with distribution assets, therefore having a direct possibility of integration
to asset management practices.

Figure 5 – Example of cost per feeder

Number of Contacts Costs

Feeder Substation
%Costs % Accumulated

Grand Total

Following the information in depth, it is possible to enter the details of the contacts per feeder. In September, the
RBSU47 feeder in NEVES 1 substation was the biggest offender with the highest number of registered contacts and
increased cost associated with it.

76
Figure 6 shows a contact recurrence table for each of the transformers composing the circuit connected to the
feeder in question:

Figure 6 – Recurrence of contacts to feeder RBSU47

Number

Wednesday

Wednesday

Wednesday

Wednesday
Monday

Thursday

Monday

Thursday

Monday

Thursday

Monday

Thursday

Monday
Saturday

Saturday

Saturday

Saturday
Number

Sunday

Sunday

Sunday

Sunday

Sunday
Tuesday

Tuesday

Tuesday

Tuesday
Friday

Friday

Friday

Friday
Emergency Contacts Generators of Days
of
with
Contacts
Contacts
Feeder Transformer ID

In the table, inside of each cell is shows the number of emergency contacts made for each of the days detailed in
columns.
For each of these transformers it is possible to carry out a detailed study of the specific reasons for emergency
contacts, enabling superficially targeting of actions for maintenance crews. Figure 7 below details the contacts for
transformer 27065-1-37:

Figure 7 - Breakdown of contacts for Transformer 27065-1-37

Contact Type Reason for Contact Channel theNo. of
Contact
Start
Time
Initial
Date
Denomination TRANSFORMER FEEDER

77
 From this list of contacts one can see specifically what is the most specific reason for the contact, which is the
protocol number (references the contact in the service system), the time of occurrences, the installation that
generated the contact, etc.

Thus, it is possible to study in depth the details of each occurrence through the contact log:

Figure 8 – A specific contact

Eventually, the contacts can bring details that direct the

decisions taking in order to optimize the investments in
assets.

Conclusion

In the current stage the call center does not yet fall
within the asset management panorama.
However, the study shows a high possibility of
integrating data from telephone service to the asset
management optimization cycle.

The monitoring of assets through the reflexes of their

performance by emergency contacts is a possible
reality that reinforces the importance of the Call Center
in the distribution business, reflecting the optimization
of decision-making aimed at a reduction of costs and
risks, better availability, reliability, sustainable quality
and maximum asset utilization.

78
 Case Study: Strategic Asset Acquisition Based on Risk
6 Management
Author: Henderson Saldonas da Silva
Assets that shall be immobilized as strategic spare always follow many accounting definitions and rules that change
within the company. The use of Risk Analysis as a technical procedure is a good tool. Through a matrix of acceptance
and risk treatments, a fair prioritization can be created.

Figure 1 - Example of a Matrix and risk acceptance

MATRIX OF RISK ACCEPTANCE AND TREATMENT

OF NO
CATASTROPHIC CRITICAL MODERATE LOW
CONSEQUENCE SIGNIFICANCE
5 4 3 2 1
Environmental Environmental accident Environmental accident Environmental
accident whose whose effects are whose effects are accident whose
THE effects are irreversible reversible in the reversible in the short effects are reversible
and/ or cause damage long-term and without term and affect the in the short term
ENVIRONMENT damage to the
to the surrounding neighboring surround- and restricted to
community surrounding community ing areas the area

Financial impact Financial impact Financial impact

XR$ financial impact XR$ financial impact
between XR$ and YR$ between XR$ and YR$ between XR$ and YR$
for loss of average for loss of average
for loss of average for loss of average for loss of average
contribution margin contribution margin
contribution margin contribution margin contribution margin
OPERATIONAL and/or the function and/ or the function
and/or the function and/or the function and/ or the function
restoration cost, or with restoration cost or with
restoration cost, or with restoration cost, or with restoration cost, or with
extraordinary expenses extraordinary expenses
extraordinary expenses extraordinary expenses extraordinary expenses

PROBABILITY TREATMENT / ACCEPTANCE / LIABILITY

ALMOST
5 GR1 GR1 GR2 GR2 GR3
CERTAIN

LIKELY 4 GR1 GR2 GR2 GR3 GR4

POSSIBLE 3 GR2 GR2 GR3 GR3 GR4

UNLIKE 2 GR2 GR3 GR3 GR4 GR5

RARE 1 GR3 GR4 GR4 GR5 GR5

RISK DEGREE DECISION RESPONSIBILITIES

GR1 UNACCEPTABLE DIRECTOR

GR2 UNDESIRABLE AREA MANAGER

ACCEPTABLE WITH
GR3 DECISION PROCESS MANAGER
ACCEPTABLE WITH
GR4 REVIEW PROCESS MANAGER

GR5 ABSORB

79
 As we have the potential loss raised by risk analysis (according to the ISO 31000 standard) and the cost of their
treatment (mitigation actions and risk control).
This correlation puts face-to-face the acquisition cost-benefit to the risks that exist in the industrial process.
It is through this perspective that we will reconcile the strategic planning with the processes risks.
The figure below gives an example of a list with this viewpoint prepared by a company of the steel sector.

Figure 2 - List of risk-based spare parts.

Total Initial risk GR0 Potential Potential

Area Spare Parts Description degree Register Loss Loss/Cost
estimated cost
Utilities Booster Rotor of GAF 70.000,00 GR2 R2009 23.400.000,00 334.29
Spare rolls of FAF and GCO 75.000,00 R1214 21.811.600,00 290.82
Utilities GR2
gasometers

Melt shop Converter reducer secondary gear 1.200.000,00 GR2 R1997 297.360.000,00 247.80
Rolling mill Reducer nº 2 of the IDromo roller 200.000,00 GR2 R2001 31.294.027,00 156.47
output
Blast Furnace Hot air expansion joint of AF2 62.500,00 GR2 R1385 8.793.747,00 140.70

Wire Rod Cardan Shaft H1 630 52.174,00 GR2 R2012 6.500.000,00 124.58
Melt shop Support - converter spring plate 85.000,00 GR2 R1648 8.977.920,00 105.62
Back-Up Transformer 85.67
Blast Furnace 60.000,00 GR2 R1750 5.140.458,00
4,16HVM40V – 1200 KVA
LTQ Back-Up Roll Balance Cylinder 212.828,00 GR2 R2004 10.431.342,47 85.62
Complete

Reduction Hot air expansion joint of AF2 62.500,00 GR2 R1365 5.140.458,00 82.25

Suporte Stator TRT-02 Bushings Set 100.000,00 GR2 R1684 8.171.131,00 81,71
Industrial

With this strategy, decision making by top management is based on a tool that can direct decisions with a low
uncertainty margin and as a consequence the approach to reality is quite good, and considering probabilities, with
a maximum deviation of 5%.

Another benefit is implicit refers to operating insurance companies. This analysis always directs to the recommendations
of these companies. Therefore, it is achieved a stable warranted InRisk value, with lower insurance rates compared
to the market standard.

As with every tool, a point to keep in mind is about the maturity of managers to deal with the responsibilities
inherent to risk management. A good risk analysis is required for the spares classification really represent the reality.

Case Study: Economic-financial results of asset

7 management applications reliability engineering
in the implementation of capital projects
João Esmeraldo da Silva, Dr. (1) Jefferson Januário Mendes, Msc. (3)
Claudio Caiani Spagnó, Eng. (2) Ruben Antonio Llobell Solé, Dr. (4)

(1) Fundação Gorceix - Department of Research and Continued Education, Researcher.

(2) ReliaSoft Brasil, Executive Director.
(3) Instituto Federal Minas Gerais – Department of Production Engineering, Professor / Researcher.
(4) Fundação Gorceix - Department of Research and Continued Education, Researcher uisador.

80
This work presents a case study on the excellent
economic and financial results with the application
of reliability engineering tools in a large Brazilian
company of the steel sector.
This large company already had four units in
operation and was in conceptualization phase of the
fifth plant, which was similar to the existing ones.
It is noteworthy that analysis were performed for
all plant assets throughout all project development
stages (FEL 1: business analysis, FEL2: selection
of alternatives, FEL 3: Execution planning and
operation).
To develop the concept of the fifth production unit
a reliability engineering package was used which
included Reliability Centered Maintenance (RCM) in
conjunction with Life Data Analysis.
The package was used to calculate the reliability
and maintainability of the system and to optimize
maintenance plans. In addition, mathematical
calculations were made and statistical analysis to
dimension spare items.
Then RAM (Reliability, Availability and
Maintainability) analysis was made with Monte
Carlo simulation to calculate reliability, availability
and plant productivity.
After the project delivery, with all the results in the
load format for Maximum System (Computerized
Maintenance Management System - CMMS),
monitoring the production operation was carried
out for nine months, and compared with operating
historical data from other four similar plants.
Noteworthy are the obtained results:

The amount of maintenance plans was

reduced from 5,000 plans scheduled a year
to 800 plans;

The maintenance cost dropped from U$ 41

million per year to U$ 30 million;

The cost of spare items fell from U$ 21

million per year to U$ 9 million;

With the RAM modeling, it was possible to

perform various “What If” analyzes during
those nine months;

Because of all this mathematical and
statistical study the risk, which in most
companies is invisible, could be demonstrated
and it was possible to reduce by U$ 5 million
the value of the plant’s insurance premium;

The Return on Investment of this project was

3633.33%.

81
 Conclusions
This case study demonstrates that the application of reliability engineering tools in the different phases of capital
projects, promotes the achievement of the following gains:

Optimization of human, physical and

financial resources;

Reduction in maintenance costs;

Reduction of fixed capital tied to

inventory and spare parts;

By quantifying the risk of the

enterprise with technical and
statistical points of view the cost
of the insurance premium can be
reduced;

Increased ROI.

Really, reliability engineering tools assist and support the strategic decision-making and / or the management, based
on clear and measurable quantitative criteria for different scenarios over the project life cycle.

In short, from the asset management point of view, capital investment should be focused on the business life cycle
and the generation of value for the owners and key stakeholders.

Case Study: Implementation of the SAMP

8 in a Mining Enterprise
Author: Alexandre Félix do Nascimento Ítalo

A miner is suffering a major devaluation of its flagship product in recent years without a short-term recovery trend.
Among its strategic objectives is to increase productivity of assets and reduce the cost and consumption of materials
and services.

The first attempt to implement asset management in one of the units presented the following problems:

Local view of strategy Low involvement And lack of work

of managers and guidance to
operational staff organizational objectives.

82
An asset management model was developed for the whole company,
according to the ISO 55000 series. The SAMP was prepared, focusing
on operations in Brazil and an AMP (Asset Management Plan)
for the pilot unit. The SAMP, among other things, described the
context and objectives of the organization, the general guidelines
of deployment, the critical assets involved, macro implementation
schedule, audit methods, continuous improvement and the details
of the processes that must be deployed along the useful life of the
asset.

In the AMP, the challenges and pilot unit’s objectives were covered,
the gap analysis and risk, the responsibility matrix, the locality
deployment strategy and goals related to the success of the asset
management.

Among the lessons learned is worth mentioning:

• Aligning the stakeholders’ expectations allowed to identify

the company’s needs for asset management

• The analysis of the gaps and risks of the unit made it

possible to view the losses of the unit and the risks involved
with the asset and with the management model. This allowed
prioritizing works and defining changes in the organizational
structure to achieve the results.

• To identify the KPIs and map out the goals was a difficult
step, but showed to the board the potential gains from asset
management and left everyone involved with clear objectives

• To understand the organizational culture and how the various

existing programs could contribute to the implementation
of asset management in the company avoided the creation
of redundancies, reduced the need for resources, and the
resistance to change.

The big challenge is the participation of top-level managers in

asset management assignments due to emergencies work that
contributes to make it difficult for these managers to devote time
to strategic issues.

To conquer real participation of all managers, not just from

maintenance but also from all areas involved in asset management
(Operations, Procurement, HR, etc.) is essential for the work
progress.

After the corrections made in a few months the results began to

emerge, such as increased physical availability and reducing the
average price of fast-moving materials. Expansion into other units
will start in the second half of 2015.

83
 ACKNOWLEDGEMENT

We appreciate the support of professionals from the

following companies, which contributed directly or
indirectly to the realization of this publication:

AES Tietê
Elektro
AES Eletropaulo
CTEEP
CEMIG
Eletrobrás – Eletronuclear
Fundação Gorceix
Reliasoft do Brasil
Instituto Federal de Minas Gerais
Procobre Brasil

84
View publication stats