Insight

Measuring best practice and performance in asset management

Apr 24, 2015

Many utilities around the world need to improve company performance while lowering costs. Performance improvement can include increasing system reliability (SAIFI, SAIDI/CAIDI), reducing lost time accidents, optimising personnel performance and increasing productivity, improving inventory turns ratios and a host of other critical processes. Optimising costs means spending critical and required capital and focusing only on projects that add the appropriate value, and reducing operating and maintenance expenditures while still focusing on sustaining system integrity.

An effective asset management business model helps turn possible contradictory objectives into complementary goals. However, asset management is still evolving as a viable business model, and some utilities who have adopted portions of its core principles are having difficulty realising significant performance improvement. This can be due to a number of factors including lack of understanding of basic asset management principles, improper application of core practices, lack of technology, or the age-old NIH factor (not-invented-here).

On the other hand, utilities who follow the core principles of asset management (fact-based decision-making integrated with risk management) are successful in balancing limited spending with company performance. While no universally accepted asset management model exists, there are individual practices that support an effective and efficient asset management business model with the ability to drive continuous performance improvement. Research by PA confirms this link.

Our research draws on a survey of utilities involved in PA’s Polaris Transmission & Distribution Benchmarking program. This program has been in place for over 20 years and benchmarks major global utilities in transmission lines, distribution lines, and substations over a wide variety of cost, reliability and operational performance metric. By asking our clients about the asset management practices in their organisations and comparing this with performance data from the Polaris benchmarking programme, we were able to establish clear and specific correlations between the implementation of best practices in asset management and improvements in company performance. 

Key findings on asset management best practices

Our research, which focused on the transmission and distribution functions of the participating utilities, showed that:

• utilities that have implemented a majority of asset management best practices have a capital and O&M spend rate 21% less than average on a per customer basis, 20% less on a per asset value basis, and 2% less on a per line mile basis.

• utilities that have implemented a majority of reliability and restoration best practices have a SAIDI 7% below average and a SAIFI 22% below average.

• utilities that have implemented a majority of safety best practices have a recordable incident rate 25% below average.

• utilities that have implemented a majority of vegetation management best practices have 55% fewer tree-related outages.

A deep dive into the data also revealed:

• Technology is a critical factor: virtually every best practice company has the technology infrastructure (hardware and software) in place that integrates with and supports the practices. For example, every top performer in reliability has integrated OMS, SCADA, GIS, CIS, etc. They also tend to use mobile data terminals and have an integrated work management process/system. However, technology just for the sake of technology does not guarantee top performance for utilities. It is the careful and planned integration of technology with business processes and activities that helps drive performance improvement. Improperly implemented technology just lets you make more mistakes faster.

• Performance management is a key component; most top performers have a comprehensive performance management system including regular dashboard reporting to measure a wide variety of metrics that support corporate goals. The old axiom ‘what gets measured gets done’ is absolutely true.

• Top performers tend to perform well across most benchmarked processes (cost, reliability, safety, materials, staffing) although there are differences between business units (transmission, distribution, substations). This tends to indicate the benefits of using a corporate balanced scorecard for performance management and an internal best practice sharing process.

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