*

*
ASSET MANAGEMENT PROCESS - Introduction
 Asset management Process is a systematic process
of acquiring, developing, operating, maintaining,
upgrading, and disposing of assets in the most cost-
effective manner.

 An Asset Management Process is critical for

companies to achieve excellence in maximizing
value of the assets and opportunities.

 An Asset Management Process is :

1. Business focused
2. Covers complete life cycle of an asset.
3. It involves structured decision making.
 Introduction …. Cont:
 If Asset Management Process is implemented
uniformly and followed consistently in any
industry, it will lead to

1. Maximize the asset value

2. Acquire the right opportunities
3. Offers Benchmarking performance
4. Timely disposition of its assets.
 Introduction …. Cont:
 Managing Effectively and Efficiently of an
asset requires:

1. A broad understanding of the asset and

external & internal environment.
2. Making a number of decisions
3. Interaction among people both inside and
outside an industry with expertise in a variety
of disciplines.
4. Integration among the disciplines.
 In Asset Management Process a number of key
decisions are taken.
 The project is divided over several stages.
 These stages are separated by so-called gates/
the decision points for whether or not to proceed
to the next stage and the following review takes
place.
 A review of the previous work done leading up to the
next decision.
 Approval of the key deliverables.
 Assessment of the plans for the next phase
 Funding and resource approval for the next phase.
 Each key decision is then taken based on
“Certain Criteria”
 A “stage-gate” process is also referred to as “phase-
gate” process or “waterfall process”.

 It is a project management technique in which a

project (e.g., new product development, software
development, process improvement, business
change) is divided into distinct stages or phases,
separated by decision points (known as gates).

 At each gate, a decision is made whether to continue

the process or not. continuation is decided by
(typically) a manager, steering committee, or
governance board.
 The decision is made on forecasts and information
available at the time, including the business case,
risk analysis, and availability of necessary resources
(e.g., money, people with correct competencies).
 Screening is the process of
deciding which projects
Decision Gate / require an EIA whereas,
Scoping considers what
Check Point/ information should be
included in an EIA.

In Scoping, the main goal is to evaluate the asset & its

products and its corresponding market (recognize the
strengths and weaknesses of the product and what it is
going to offer to the potential consumer).
 *
Each Key Decision is made based on the
following factors/ Criteria:
1. Strategic Fit
2. Economic Fit
3. Work Quality
4. Technology
5. Reality Check
6. Financial Considerations
7. Risks
 *
* Strategic Fit
* Does the opportunity meet the goals of the
current business strategy?
* Is it the best opportunity to fund?
* Are the risks and uncertainties known and
can they be managed?

* Economic Fit
* Does the opportunity meet minimum
economic hurdles?
* Is it the best opportunity to fund?
 *
* Work Quality
* Has adequate level of work been done to
support the proposed recommendation?
* Was it reviewed by the peers and subject
matter experts?
* Have the issues raised in the peer review
been adequately addressed?
* Technology
* Is the required technology available to ensure
success of the project?
* Reality Check
* Are the cost, schedule, operability forecasts
“realistic” as compared to similar
developments in the region or for comparable
analogues?
 *
* Financial Considerations
* What are the NPV, IRR, PI, NCF, and capital
requirements for the project?

* Risks
* What are the technical risks (Chance of finding
commercially viable assets, uncertainties related
to production profiles, operating costs, capital
expenditures and downtime)?
* What are the commercial risks (uncertainties in
product prices, exchange rates, inflation
assumptions, tariff revenues, ownership & fiscal
regime)?
* What are the schedule risks (time to first
commitment and first production)?
*Quality Assurance
*What is Quality?
 Quality is meeting the requirement,
expectation, and needs of the customer that
needs to be being free from defects and
lacks.
*What is Assurance ?
 Assurance is provided by organization
management by giving a positive declaration
on a product.
 It gives a security that the product will work
without any malfunctions as per the
expectations or requests.
 * Quality Assurance (Cont…)
 Thus, Quality assurance simply means that
how a company ensures that

 No error or omissions have taken place in the

technical and commercial work
&
 All relevant aspects for building and operation for
the asset were considered and included in the asset
design and checked for its performance.

 Before addressing these issues, some

questions are necessary to be
answered…….. NEXT SLIDE
 *Quality Assurance Issues

 How was the work accomplished

between the major decisions?

 Who makes the decisions?

 Are there any conflicts between people

making decisions?
* Work Accomplishment between Major
Decisions
 For Developing an asset, different expertise
/skills are required and thus, to carry out
the work an asset team is formed with core
members and ad-hoc members.

 Core members comprise of the dominant

functions (Production / Quality / Finance/
Marketing etc.)

 Ad-hoc members include all other functions

whose expertise is needed on a part time
basis.
* Work Accomplishment between Major Decisions
 Ad hoc members are engaged by business
organization / Government to address a
specific situation, circumstance, or problem,
and not usually intended to address other or
ongoing issues. It can be thought of as a “as
needed”.
 Eg. Sometimes if any unforeseen
circumstances arise, such as changes in a
country’s tax laws, then promptly companies
may put together an ad hoc group to
determine how best to respond to the change
in circumstances ”
* Work Accomplishment between Major
Decisions (Cont…….)
In the asset team/ MDT, a Team Leader is
selected with following responsibilities:
* Staffing the team with appropriate skills
* Developing work plans
* Setting goals, objectives, and performance
metrics Such teams are called

* Coordinating the work

asset teams or MDT and
the team leader is called

* Motivating the team

Asset Leader / Asset
Manager.

* Ensuring Discipline integration

* Ensuring that the deliverables are completed
for each phase.
* Work Accomplishment between Major Decisions
(Cont…….)
What are the roles of the team members (MDT)?
* Complete the work for the discipline they represent on
the team.
* Ensure quality standards
* Identify risks and uncertainties
* Provide written reports.
* Make recommendations to carry out additional studies
to minimize risks & uncertainties.
* Understand the value drivers and provide solutions
aligned with the asset objectives.
* Communicate results to the team members.
* Take ownership of the results and strive for teams
success rather than individual success.
 * Who Makes the Decisions?
 Decisions are made by a Decision Board with
representatives from the Business Unit,
Function and Management.
Decision Board’s Roles:
*Provide Guidance to the MDT
*Ensure that Company’s “Value Assurance
Guidelines” are satisfied.

 Decision board members have an important

role in the organization structure.
 In selecting Decision Board members, a Co.
should ensure that the Board members have
sufficient authority for taking the decisions .
*Quality Assurance Reviews

 The “Quality Assurance” during the

asset life-cycle is managed and
monitored by the Decision Board
Members through “formal” and
“informal” reviews.
Formal Review :
 "Formality" identifies the degree to which an
activity is governed by agreed (written) rules.
 It is a structured meeting led by an appointed
chairman.
 Meeting minutes are prepared & distributed.

 Informal Review :
 Typically fewer people participate in the
informal reviews.
 It is not a structured meeting and not led by an
appointed chairman.
 Meeting minutes are not prepared & distributed.
 Informal Review is also sometimes known as
Peer Reviews.
 The Peer Reviews process consists of
requesting the assistance of peers to review an
aspect of a project and to provide documented
feedback to the asset team as apart of the
Quality Assurance Process.
 The success of the process depends largely on
the following factors:
 Assembling peers with significant diverse
experience and knowledge.
 Providing information ahead of time
 Openness during the review
 Commitment to follow – up on the recommendations
Performance Measurement
 Performance measurement is a fundamental principle of
management because it identifies performance gaps
between current and desired performance.
 It also provides the progress towards closing the gaps.
 If Performance measures are designed and used
properly, it mainly provides:
1. Measurement against internal goals.
2. A way to reveal problem areas.
3. A way to track, evaluate, and develop opportunities for
Cost Reduction, Acceleration of Work Schedule, & An
enhancement of Overall Work Process.
4. A way to develop a rewards and recognition system that
is linked to these performance measures.
5. Use the performance measures to continually
benchmark performance against competitors.