Definitions, Concepts and Scope of Engineering Asset Management

Definitions of asset management tend to be broad in scope, covering a wide variety of areas including general management, operations and production arenas and, financial and human capital aspects. While the broader conceptualisation allows a multifaceted investigation of physical assets, the arenas constitute a multiplicity of spheres of activity. We define engineering asset management in this paper as the total management of physical, as opposed to financial, assets. However, engineering assets have a financial dimension that reflects their economic value and the management of this value is an important part of overall engineering asset management. We also define more specifically what we mean by an “engineering asset” and what the management of such an asset entails. Our approach takes as its starting point the conceptualisation of asset management that posits it as an interdisciplinary field of endeavour and we include notions from commerce and business as well as engineering. The framework is also broad, emphasising the life-cycle of the asset. The paper provides a basis for analysing the general problem of physical asset management, relating engineering capability to economic cost and value in a highly integrated way.

It is widely acknowledged that effective asset management requires an interdisciplinary approach, in which synergies should exist between traditional disciplines such as: accounting, engineering, finance, humanities, logistics, and information systems technologies. Asset management is also an important, yet complex business practice. Business process modelling is proposed as an approach to manage the complexity of asset management through the modelling of asset management processes. A sound foundation for the systematic application and analysis of business process modelling in asset management is, however, yet to be developed. Fundamentally, a business process consists of activities (termed functions), events/states, and control flow logic. As both events/states and control flow logic are somewhat dependent on the functions themselves, it is a logical step to first identify the functions within a process. This research addresses the current gap in knowledge by developing a method to identify functions common to various industry types (termed core functions). This lays the foundation to extract such functions, so as to identify both commonalities and variation points in asset management processes. This method describes the use of a manual text mining and a taxonomy approach. An example is presented.

Organisations owning and managing infrastructure assets are constantly striving to obtain the greatest life time value. This led to the development of the concept of asset management to provide a systematic approach to manage infrastructure assets. However, asset management as a discipline is still relatively new and as such lack well grounded theories. There is an urgent need to document the processes involved in the management of infrastructure assets. Through case studies, this paper aims to first, review the goals of infrastructure asset management and investigate the extent to which they reflect a business resource approach to infrastructure asset management. Second, the paper will identify the core processes of infrastructure asset management. These observed processes are then synthesised into a strategic infrastructure asset management framework to serve as a benchmark for practising manager looking to create value within their organisations.

Regulation by output (albeit with an associated investment level assumption related to a price-cap) rather than input is one of the ways in which the Water Services Regulation Authority (Ofwat), the economic regulator of the water industry in England and Wales, incentivises companies to deliver effective asset management. The paper discusses how such arms-length regulation operates, and sets down output indicators for such a regime. The paper draws on experience of some fifteen years of operation and annual monitoring of trends in serviceability indicators, which are the foundation upon which the regulator judges the appropriate financing for capital maintenance at periodic reviews. It describes the UK water industry’s risk based approach to the capital maintenance planning common framework (CMPCF) jointly developed by companies and regulators in 2002, and Ofwat’s approach to its assessment of company business plans submitted for periodic reviews of prices in 2004 (PR04) and 2009 (PR09). The paper highlights issues arising from PR04, development of its asset management assessment (AMA), and setting formal numeric serviceability outputs at PR09. Together, the reviews in PR04 and PR09 allowed overall increases in capital maintenance expenditure of nearly 50 %. Ofwat recognises the need for such expenditure increases to maintain the flow of services to customers and to consolidate the benefits from previous improvement programmes. However, it is questionable whether we are now approaching a sustainable level of capital maintenance for the future.

This paper describes a case study illustration of a technique that can be used to optimize capital expenditure budget decisions for engineering assets under multivariate objectives and uncertain costs. We define measures of capability increase relative to mission types and measures for risk, return and pseudo-correlation on potential maintenance upgrades, allowing portfolio optimization techniques from finance to be applied to asset management decisions. The results provide a risk-reward ratio for investment allocation decisions that is optimal. The work is aimed at capability management for naval platforms, but the technique has broader applicability in the field of asset management and multi-criteria decision making.

In the recent years, outsourcing maintenance services has become a part of strategies for cost and risk management. Outsourcing reduces upfront investments in infrastructure, expertise and specialised maintenance facilities. However, decisions on this need to take into account the total cost of ownership rather than the usual practice of procurement cost. The primary objective of this paper is to develop models for prediction of total cost of ownership and estimation of contract price for outsourcing maintenance services of rail infrastructure. A total cost of ownership model is developed considering procurement, maintenance, inspection and risks associated with the operation of a rail network.

In this paper, Statistical Activity Cost Analysis (SACA) is used to identify the interaction of mutually dependent physical and financial aspects of a fixed asset-like system configuration. The novelty of the approach is, having established a rational description of the uncertainty inherent in both domains, the analysis of their interaction. Little research to date has investigated the duality of engineering and accounting aspects, in a statistical setting. Our approach is conceptual rather than empirical. We use an illustrative 4-component model, a) to explain the concept of SACA by means of a software demonstration tool, b) to relate financial issues of cost to engineering asset capacity to perform specified tasks, and c) to demonstrate how to produce quantified measures of return and risk, both of which are relevant in areas of life-cycle analysis, budgeting and planning decision-making.

Capacity management of a plant in capital-intensive industries is a challenging task: volatile markets, aging and deteriorating equipment and a competitive environment raise challenges for capacity management. Essentially, capacity management is decision-making under uncertainty at the plant-level. Risk-informed, dynamic, capacity management is a prerequisite for achieving optimal capacity in a production plant. One way to deal with uncertainty is the active management of real options. Investment portfolios consisting of real options provide opportunistic value in capacity investment decision-making. A framework for the specification, evaluation and exercising of real options is presented for capacity managers. The analysis is based on a decision cycle which is temporally divided into two market outlook periods. The first market outlook period represents the current, emerging market situation for which real options, planned in the previous decision cycle, may be exercised, thus optimising production capacity according to current demand. The second period represents an uncertain production environment for which real options can be planned, based on demand & supply forecasts. The decision cycles repeat, each entailing planning, evaluation and exercising of real options included in the investment portfolio. The framework supports the computation of the probability distribution of profits coupled with alternative investment portfolios. The paper introduces a straightforward way of adopting options theory in the context of real options in capacity management.

Engineering asset management processes rely heavily on input of data and also produce a large amount of data. Many asset management organisations need to manage their data for a long period of time (e.g. Water supply pipelines data will be kept for more than 100 years in utility companies). Due to the inability to access original data requirements and system design documentation, it is difficult for these organisations to redesign their asset management systems which often results in ongoing data quality problems. Our nation-wide data quality survey of 2500 Australian engineering management organisations and a pilot study have revealed that many of the data quality problems emanate from inconsistent applications of business rules that govern the behaviour of data (e.g. data management, data flow, system interactions and so on) within asset management information systems. Thus, this research will investigate the problems of business rule-based data and information integration from disparate sources in various forms found in asset management systems (e.g. Databases, Excel spreadsheets, etc.). This research aims at developing innovative methods to automatically discover undocumented business rules from disparate data sources and to use business rules for automated data integration in order to deliver quality asset data sets.

Radio frequency identification (RFID) is a powerful data capturing technology that allows for electronic identification and tracking of the products, cases, or pallets that the RFID tags are attached to. As a result, the main thrust for businesses in adopting this technology has been on logistics and warehouse management. However, with the continuous development and emergent innovative use of technology, RFID is now being used for much more than just electronic identification of items. Particularly, for engineering asset management, RFID has the potential of taking workforce mobility to a higher level and allows for remote condition monitoring, failure follow up notifications, and embedding health history with the asset for its lifetime. RFID technology, therefore, has the potential of enabling a variety of applications spanning asset lifecycle. This paper presents the results of an evaluation study undertaken for the Cooperative Research Centre of Engineering Asset Management to explore the efficiency of RFID technology for Asset Management. The value profile of RFID technology in three areas were investigated. Firstly in remote condition and operating environment monitoring of asset operations. Secondly in defence supply chain management, where inventory consists of a variety of items; in order to alleviate capacity constraints where the flow of materials in the reverse direction is high, and the supply and demands factors are not as stable as compared to some other chains. In this case, the geographic end points of the supply chain are unstable and generally not static. The third area is automated configuration management, where constituent components of large configurations can be identified automatically. This paper, thus, is significant across a variety of disciplines and professional areas such as, asset design, maintenance, logistics, and asset health management. This paper reports the results of three prototype projects carried out in controlled environments and provides an assessment of potential allowances and limitation of RFID technologies examined in this research.

Wireless sensor networks are increasingly employed in a range of applications. Condition Monitoring in particular can benefit from the introduction of distributed wireless sensing solutions, operating with a high degree of autonomy. Wireless condition monitoring can extend the toolset available to the lifecycle management of engineering assets, offering ease of installation, flexibility, portability and accessibility. A significant hurdle for the adoption of wireless condition monitoring solutions in industry is related to the extent that such solutions can operate over long time periods, while providing adequate monitoring. At the application level of sensor nodes, recent programmable wireless modules are able to host intelligent services exhibiting some form of smart behavior that enables them to recognize events that deserve further attention. Thus, engineering assets equipped with embedded novelty detection capabilities exhibit some level of self-awareness, much needed to support enhanced and sustainable operation. Investing in sensor logic and its software implementations upgrades wireless modules to small model building agents capable of providing strategic advantages over static sensing infrastructures. The configurability and the programmable nature of recent maintenance management techniques and their decision support algorithms can now be ported to software agents hosted on tiny devices right in the operating environment of each asset. In this paper we review current enabling technologies, with respect to implementing ubiquitous maintenance solutions, and we study the design requirements for developing Novelty Detection techniques, as intelligent middleware components embedded on a single sensor module. On the basis of the identified design requirements, a conceptual architecture for the development of wireless sensor – embedded intelligence is outlined.

Contemporary engineering organizations are increasingly becoming reliant on advanced computing technology and information systems to ensure the effective management of their engineering assets. Ensuring the reliability, maintenance and management of assets is dependent on the integration and interoperability of their information systems. A plethora of standards have emerged to assist the horizontal and vertical integration of such systems. Within the asset management field several leading bodies and consortia are focusing on standards development. MIMOSA and ISO are two of the leading standardisation bodies that are active in the development of such standards. Although a number of ‘open’ standards have been developed such standards are not being taken up as rapidly as expected due mainly to the significant investment required in adoption and inertia to change. This not only has implications for interoperability as assets become more complex and difficult to maintain, but also the storage and retrieval of quality data over its lifecycle. This paper provides an overview of information standards relevant to the integration of asset management systems, discusses the directions of the development of these standards and comments on the implications of these advances.

Asset management should be a key vehicle for delivering sustainability goals of a business. However, for this to be the case, the link between sustainability outcomes and asset management inputs/outputs needs to be translated into terms that are meaningful to asset managers. In practice, however, asset managers often cannot see how their decisions link into sustainability objectives. Operationalising sustainability within asset management thus represents a significant challenge, even within the water sector where business activities are explicitly linked to ‘triple bottom line’ outcomes. To help meet this challenge, research has been undertaken into the role sustainability principles should play in asset management. As part of this research, a series of interviews have been undertaken with water sector professionals in Australia. The interviews aimed to collate opinion on the role sustainability concepts currently play in asset management, the role sustainability should play in the future, what the key barriers are, and where there is a need for research to help bridge the gaps. This paper outlines the conceptual relationship between asset management and sustainability principles, presents a synthesis of the results from these interviews, and indicates subsequent research efforts undertaken to help embed sustainability principles within the asset management business function.

Despite the importance of building and infrastructure maintenance and its role in cost control, savings in materials and lifetime enlarging of equipment and facilities, maintenance in service organizations is often still regarded as a disturbing factor only. Since the resources dedicated to the maintenance and operation of school building infrastructure come mainly from the state budget, during tight financial times the maintenance and operation budgets are frequently among the first cuts. Public school infrastructures often resent themselves from this philosophy, presenting in some cases precocious degradation, generally as the result of the priority on allocating funds to items that directly affect education. It is important to focus on areas such as maintenance, building systems, safety improvements and technology, leading managers to improve maintenance performance of these organizations, if possible anticipating in time problems and opportunities. In this scenario, maintenance audits provide a framework for organizations to systematically review, analyse and recommend improvements in performance.

This paper refers to a study that has been under development concerning asset management of Portuguese Educational Facilities, namely infrastructure and fixed equipment. This study comprises different approaches for Educational Facilities with different levels of education and this paper refers to some of the specificities that governed the audit performed in a University as well as to the methodology followed for Portuguese Secondary schools.

This paper also presents some results of that study, specifically the ones concerning Secondary Schools. It identifies some areas needing improvements, as well as the suggestions made to improve maintenance management, regarding management decision making, human resources, information systems and strategies employed in maintenance management, among others.

Notably, Egyptian seaports have not often been seen applying or using any formal comprehensive environmental or quality management system to date. Therefore, a project was initiated in one of the major commercial seaports in Egypt, with the intention of developing a suitable methodology to enhance environmental sustainability through a comprehensive quality management process. In this novel method, the well-known European Foundation for Quality Management (EFQM, which represents TQM), and what is called Port Environmental Review System (PERS) – an Environmental Management System (EMS) – were integrated together to develop an integrated methodology for managing environmental sustainability. This covered a number of aspects which are important to resolve current challenges and problems in Egyptian seaports in environmental management terms.

Infrastructure networks are vital to the national economy. Their Asset Management (AM) should result in long-term economic efficiency and optimal service levels. For AM to live up to the expectations of infrastructure sector, it has to meet four key challenges: 1) alignment of strategy and operations with stakeholder values and objectives; 2) balancing of reliability, service-level, safety, and financial considerations; 3) ensuring optimal packaging and timing of works, and adequate competition; and 4) promoting market development. Through educated decision-making, asset managers can actively develop their networks and use their limited budgets in a way that long-term goals and short-term budgets are met. In order to assist asset managers, a simplified Project Portfolio Selection Method (PPSM) is developed. The method applies the analytical hierarchy process (AHP) and real option ideology. PPSM aims at assisting infrastructure managers in optimising the life cycle profiles of their assets through selection of an optimal maintenance, repair and rehabilitation project portfolio. The developed method fills the void between strategic and operative decision-making methods facilitating management of multiple investments at the local network management level. Through the systematic, easy-to-apply project selection method, the asset manager can easily determine the optimal project portfolio and demonstrate the grounds to others.

In the Netherlands, the safety of the gas distribution system is a hot issue. The public perception is that the safety of the system is decreasing, whilst the industry thinks that it is business as usual and that neither the number of incidents nor the consequences of incidents are larger than they used to be. Which of the claims is true? To this question there is no objective answer. First of all, no accessible database exists that contains records of all relevant incidents. Secondly, there is no agreed upon method to combine all those incidents into a simple, easy to understand indicator of safety. In this paper first the theoretical framework for such an indicator is explored. Combining this framework with actual incident data will result in a quantitative model. The paper ends with a review of the implementation of the safety indicator in the Netherlands and a short outlook for improvements.

The essence of managing engineered physical assets that form our built environment is to provide benefits to satisfy the continuum of constraints imposed by rapidly changing business strategy, economy, ergonomics, operational and technical integrity, and regulatory compliance. Innovative approaches to enhance and sustain the profile of values required from these assets demands a shift in thinking styles, cognitive and mental processing modes, and the attitudes of engineering professionals if they are to be effective in asset management occupations. This paper describes the results of a 2005 survey of 190 practicing engineers to ascertain what thinking styles should determine behavioural preferences for managers of engineered physical assets. The study confirms other results from cognitive theory and psychology, highlighting the top ten thinking styles as ranked by survey respondents. The paper provides a strategic view of engineering asset management (EAM) within the context of innovation, with particular focus on behavioural alignment towards the modern era of innovation, knowledge and learning economy.

The modern engineering asset manager is required to develop, operate and maintain engineering assets economically and in a socially responsible and sustainable manner. Key issues confronting the asset manager of today include taking a strategic life cycle approach to asset management, meeting stakeholder requirements and minimising risks. To achieve this, it is necessary to understand asset life cycle issues including economic analysis and sustainability, be aware of social impacts, understand technological risks and work at the cutting edge of technology. While undergraduate engineering programs can meet this need to some extent, postgraduate education is often the best approach for learning the principles of strategic life cycle asset management. This paper discusses one such example of postgraduate engineering education, the Master of Engineering, offered by the Faculty of Engineering and Surveying at the University of Southern Queensland. Topics discussed include the rationale for this type of study program, how it addresses the needs of life cycle asset management including risk and innovation management, its approach to learning, and its role in developing strategic asset management leaders. The future role of programs of this type in developing leading asset management professionals is also discussed.

Physical plant assets are tending to remain in service for beyond their design lifetime. Arguably, a greater professional input is needed into the maintenance and reliability engineering of these assets, yet few universities, if any, offer such content in undergraduate engineering degrees. Accordingly, postgraduate programs have been developed. Those offered by off campus learning are more likely to meet the needs of engineers, many of whom work remote from the possibility of regular attendance on a campus. In over 25 years since their inception, hundreds of engineers and other technical professionals have completed the Monash University programs. These have continued to evolve, and take appropriate advantage of advances in learning technology. This paper describes the development and lessons learnt during the Monash experience.