Not all assets are created equal: some are far more critical to an organisation than others, so it’s important to identify those assets that have a high consequence of failure. Here’s how to identify and report on critical assets – and there are some significant benefits in doing so.
A critical asset is where there are severe consequences should that asset fail. Whereas most organisations focus on the impact on continued business operations, it does depend very much on the industry. Other undesirable situations that can be the result of the failure of a critical asset may include:
Combinations of consequences are also possible, for example, a critical asset failing may have operational, financial, and health and safety impacts.
To get an understanding of critical assets within different organisations and sectors, let’s look at some examples:
Understanding an organisation’s critical assets, and identifying those with the highest consequence of failure, is a key function of the role of an Asset Manager. This involves considering how an asset might fail, as well as identifying the consequences of failure, including how to mitigate the impact of failure, if possible.
An Asset Manager needs to take a pragmatic approach in identifying critical assets. It’s a matter of considering the purpose of an asset or a building and evaluating its overall importance within the organisation. This is likely to involve examining the associated Levels of Service related to that asset or asset class. Hyperlink to:
Evaluating the importance of an asset is likely to involve assigning a criticality rating to that asset or asset class.
Criticality is scored on a scale, and the scale varies from organisation to organisation. SPM Assets software typically ranks criticality on a scale of 1 to 5.
When ranking criticality, an Asset Manager should consider the impact of the failure of that asset, regardless of condition, in the context of impact on operations, health and safety, and other outcomes.
For example, local government facilities such as libraries may be rated as high importance, whereas community halls may be of lower importance. In this case, we are considering criticality at the entire building level relative to each other in terms of their function across a portfolio.
Once critical assets have been identified, it’s important to have regular inspections with clear and timely reporting, so that issues are escalated as necessary. This involves developing planned preventative maintenance schedules against the critical assets that have been identified.
Talk to your service provider about support for your organisation’s critical assets: do they have a good inventory of spares available at short notice - or will spares be coming from overseas with accompanying long lead times? Make sure your contracts with suppliers adequately address your critical asset needs in terms of responsiveness and appropriate care.
Some organisations use the concept of redundancy. For example, if chilled water supply for air conditioning is critical to the organisation, they may have a surplus chiller capacity available that allows for a unit to be taken offline for maintenance or if it should unexpectedly fail. However, if all the chillers are the same age, that in itself presents some risk – especially if spares become unavailable. So in this instance, it could be worth cycling a phased replacement program over a number of years, so that the operational risk of multiple assets failing is minimised.
Because of their high-risk status, critical assets tend to be inspected and reported on more frequently as a matter of course. This is often through maintenance contracts, so there are more eyes on the assets operationally.
So it will very much depend on what the asset is, the service it provides and how it is being managed and looked after, as to how often it is reported on. ISO 55000 doesn’t specify any reporting frequency; rather, it’s very much driven by the organisation’s business needs. Organisational factors that may influence the frequency include the industry/sector; the level of asset management maturity within the organisation; data availability and confidence; and executive/Board requirements.
The government sector will have reporting frequencies set for them; for example, in New Zealand, the Ministry of Health has specifications for District Health Boards.
SPM Assets core software module has three standard criticality measures for assets:
When assessing the overall critically of an asset you are likely to weight these measures, for example, healthy and safety might make up 50% of the overall asset criticality measure.
Some industry-standard criticality measures are already provided in SPM Assets software by default. So the Asset Manager isn’t starting with a blank template; there’s criticality data already there to help make their job easier.
It’s then up to the Asset Manager to confirm the asset criticality settings are appropriate for their organisation. If the AM wishes, they can specifically identify the critical assets by assigning a user-defined field in the software for this purpose.
Reporting on critical assets has a number of benefits:
“We use SPM’s criticality settings at asset level to help define a risk rating against each project within a programme of work.
Our priority is focused on high-risk items, aligned with the NAMs and ISO 31000 risk management approaches. This methodology has been welcomed by management as we can justify, and they can see, we are allocating resources in the right places.
This clarity has allowed us to exclude low risk ‘noise’ from the key infrastructural projects that may have been otherwise overlooked.” - Lindsay Fleming, Asset Manager, University of Canterbury
Do you need help identifying and reporting on your critical assets? Talk to us today.
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