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Three Dimensions of Measuring Asset Management Performance

Oct. 26, 2021
Establishing your performance measurement process with all three types of asset management performance metrics plays an important role in monitoring risks to the business.

Every person and organization has some familiarity with performance metrics and reporting, yet how to take that experience and apply it to asset management is not straightforward. Looking at industry best practices and the guidance of ISO 55000 will help you recognize that there are three dimensions to comprehensively measuring how well your organization is managing its assets:

  • Asset performance
  • Asset management performance
  • Asset management system performance

In the first category, measuring asset performance is intended to answer the question: Are the assets meeting their purpose(s), currently and in the near future? In all cases, the purpose of an asset should be directly tied to stakeholder requirements. Traditional examples of asset performance metrics are throughput, quality, and availability, oftentimes combined into the overall equipment effectiveness (OEE) metric. Other asset performance metrics could be number and scale of environmental violations, regulatory violations, and asset-caused safety events. While these are all lagging indicators, trending them over time will allow you to predict future performance and intervene before performance slips below expectations.

Asset management performance is a bit harder to define: measuring and monitoring how well the organization has made decisions and executed on asset design, operation, maintenance, and re-investment. The most common metric employed for this type of performance measurement is asset condition or asset health. An asset condition or asset health metric is an algorithm that combines multiple inputs from asset inspections, maintenance, and operations into a risk-based judgment of how the current state of the asset compares to its like-new condition. You can apply this metric on a per-asset basis for high-criticality assets, and on a system- or asset type-level for common assets.

Another important aspect of asset management performance is asset capability, or how well an asset is designed and configured to meet expectations. Asset capability can be analyzed as a go/no-go or as a percentage of ability to meet requirements, depending on the redundancy built into the system.

By nature, most asset management performance metrics will be leading indicators of asset performance. Healthy assets that have been well-designed and mindfully operated and maintained should meet your asset performance needs. Assets that are being operated outside their design specifications or have not been maintained properly present a risk (or reality) of not performing and meeting stakeholder expectations.

The final type of performance management is asset management system performance: measuring and monitoring how well the asset management processes are being executed according to plan and thereby how well you are meeting the asset management objectives. Traditional process performance metrics (e.g. utilization, process compliance, backlog) can assess the process execution piece, but performance against each asset management objective needs to be measured as well. Properly-defined objectives that meet the SMART (specific, measurable, achievable, realistic, and time-bound) guidelines make the metric development much easier, as the objectives are defined to be measurable and have a time frame or deadline established.

After defining metrics for the three categories above, you should document a few key characteristics for each metric:

  • Formula: the data inputs and calculation to perform
  • Owner: who gathers the data and calculates the metric
  • Frequency: how often to monitor and report
  • Format: how to report and visualize
  • Audience: who needs to review

Establishing your performance measurement process with all three types of asset management performance metrics will lend a comprehensive view of performance to top leadership and play an important role in monitoring risks to the business.

Read Part 2, Establishing Your Asset Performance Management Process

Brian Kaiser is an ISO 55000 subject matter expert at Life Cycle Engineering (LCE) with more than 10 years’ professional experience in the electric utility industry. You can reach Brian at [email protected].

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