Driving efficiency1 April 2003
Marcel Van Velthoven explains how the global water power and dams industry can learn from water utilities' experience of strategic asset management systems
AS IN the global water power business, development in the water supply industry is being driven by regulatory change and privatisation, set against the backdrop of an ageing infrastructure.
Industry analysts estimate that the cost of operating and maintaining equipment in capital asset-intensive companies, such as water and power utilities, eats up almost 50% of revenue. What is more, the planning of service levels and production targets depends on predictions regarding the continued functionality of the asset (ie core infrastructure such as pipes, filtrations systems, water treatment equipment and reservoirs). An unexpected breakdown will seriously affect revenues, and the longer it takes to fix - especially if replacement parts need to be ordered - the bigger the dent in profitability.
Water utilities in the UK spend £3B (US$4.7B) every year to maintain the water network and are beginning to focus on improving efficiency. Outsourcing maintenance and procurement does keep costs down, but companies must have effective management and reporting systems to oversee contractors. Strategic asset management (SAM) is being used to help businesses streamline operational costs.
SAM helps water companies optimise the life-cycle value of business-critical physical assets, from installation, to maintenance and repair, right through to replacement and disposal. SAM systems collect all the information that can be related to a particular physical asset, including engineering data, detailed design calculations, construction requirements, maintenance and operating instructions, environmental limits and failure analysis. They provide historical data capture to help formulate planning strategies and predict future problems.
In many water companies, essential operational data is still input manually and held at several disparate systems across the enterprise. The lack of centralised information makes it difficult for maintenance managers to use information such as records of maintenance schedules, orders, planning and forecasting schedules, interruptions in supply and condition monitoring data. An asset management system ties all this information into a central document management system, so all appropriate personnel have ready access to up-to-date information on a given physical asset. The systems identify maintenance and repair operations, estimate the work needed and dispatch messages to the relevant maintenance expert. The technology can extend to field workers who can read maintenance data via hand-held devices.
Asset management has helped water companies address operational issues - for example, the move towards a more safety conscious culture. SAM solutions can house best-practice documents on topics from labour, spare parts and materials management to health, safety and environmental regulation documents, which are flagged up when necessary when maintenance operations are due.
Risk management is a key area of concern for water companies. If a business has limited visibility of its assets and their performance, then its estimation of potential risks to its infrastructure is likely to be hazy at best. The most advanced SAM tools provide 'what-if' decision-making solutions, so companies can test potential risk scenarios, determine their impact and take precautionary measures.
A further area of concern for water companies is managing contractors or suppliers. SAM systems can help by improving the visibility of the supply chain, for better planning of inventory stocks and procurement. They also set performance indicators for suppliers, so the organisation can get fast accurate data on suppliers' prices, terms, order accuracy and delivery history. The relationship between company and contractor is helped by automating project planning, scheduling engineers' time, planning material replenishment and then reporting the amount of work performed, materials used and for how long.
E-procurement linked to the SAM system capitalises on the speed of online communications, making it easier to procure components. Procurement systems designed to support specialist markets such as the water industry have superior functionality - including sophisticated vendor catalogues, detailed search and real-time pricing and parts availability information - and can allow companies to ensure that only approved suppliers can be used.
Integrated asset management and e-procurement technologies are also helping water companies improve contractor procurement procedures. Water companies use the technology to give suppliers access to the demand engine for the procurement of maintenance and repair items, ensuring that, in addition to precise procurement of complex parts, inventory is streamlined. E-business functionality also ensures that the notorious area of contractor billing is monitored, allowing companies to view orders and verify costs.