Managing physical assets is a major cost for many organisations. This research has helped companies build optimal maintenance strategies, benefitting staff, shareholders and customers.
Managing physical assets, such as equipment and plant, is a major cost for many organisations. Within the UK’s regulated industries, for example, the practice is measured in billions of pounds.
The typical lifecycle of an asset can be as long as 40 years or more, so collecting good-quality data on its maintenance history can be challenging. If businesses are unable to estimate how effective maintenance is, then it is difficult to develop strategies for managing large and complex assets over time.
Professors Jake Ansell, Thomas Archibald and colleagues at the University of Edinburgh Business School have been researching physical asset management since 1998. Working, in the first instance, with data from Yorkshire Water Services, they developed new methods of analysis capable of producing important insights from basic maintenance records.
Their innovative approach was based on integrating a number of advanced statistical modelling techniques into a single model. For the first time, this allowed managers to assess how various factors had affected the unplanned maintenance of their physical assets, and how subsequent interventions had improved performance.
As the research progressed into a second stage, the team developed a model for assessing the optimal timeframe for planned maintenance of equipment and plant. This took into account the ‘virtual’ age of assets, as well as their real age, and the environmental and organisational factors which affect their performance.
The concept of ‘virtual’ age allows for the rejuvenating effect of maintenance, taking into account a range of interventions, from minor refurbishment to complete replacement. The model is flexible enough to allow for technological advancements in equipment, where maintenance has enhanced an asset’s functionality.
Yorkshire Water Services has used what it terms “Edinburgh curves” for different types of assets in assessing its future maintenance needs. Such assessment is vital. It was, for example, the basis of the Services’ submission to the water regulator, OFWAT, to support the company’s 2009 price review, thus securing a five-year maintenance budget of around £1.93bn for the period 2010-2015.
Over 100 Yorkshire Water Services staff participated in a Risk Management Training Programme developed out of the research. This raised awareness of the impact of technical and managerial roles on organisational effectiveness, and developed employees’ skills in implementing risk-reducing procedures. Open to staff at all levels, the programme won two national awards: a Utility of the Year Award for Training; and a Water Industry Achievement Award for People Initiative of the Year. By embedding risk management within the organisation, it is attributed with improving the company’s performance, including reducing the risk of service interruptions to customers.
Users of the second stage of the research include the Ministry of Defence and Scottish Water. The latter was by way of a Knowledge Transfer Partnership (KTP), which produced a set of mathematical models used to inform strategic asset planning, enabling Scottish Water to predict the optimal timing of asset maintenance over a 25 year period. The Partnership’s final report details “a much more robust application of new and existing risk management techniques” within Scottish Water, resulting in efficiency savings of £67.5m over three years. Endorsed by the Water Industry Commission, the models have quickly become a key element of the company’s Strategic Projections and near-term Business Plan.