The Outcomes from Instituting an Asset Investment Plan
Asset Investment Planning enables your asset-intensive organization to determine which asset investments will enable you to best meet your service level objectives with the right level of expenditure while minimizing the risk of asset failure. An API can also help you determine the best time to invest in order to smooth your capital expenditures over time.
Modern AIP solutions simplify the process of developing asset investment plans by allowing you to leverage the data that is already in your asset registry in your enterprise asset management (EAM) to tell you what assets your organization has, your work management system that manages maintenance operations, and your asset performance management (APM) system that monitors asset condition reliability.
You use that data to quantify four key inputs: Asset condition, asset criticality, business risk, and level of service. Asset condition allows you to visualize deterioration over the asset’s lifetime and establish where intervention is necessary. Asset criticality determines the impact the failure of an individual asset will have on your organization’s ability to realize your business objectives. Business risk determines the consequences of asset failure. Level of service required enables your organization to operationalize your organization’s policies, strategies and objectives, tie those to KPIs and then link that to level of service requirements.
Once you define and quantify these inputs in the AIP solution, the outputs are reports which will provide visibility into the consequences of taking one action or another so you can come up with a list of projects.
For example, consider a transit agency that has buses and trains that it uses to deliver service 24x7x365. The asset investment plan will tell the company how much it will need to invest to achieve that level of service (LOS) goal.
Your organization can also create scenarios that show how you’ll need to invest to meet LOS goals over time. For example, your organization may need to spend $1billion next year, $200 billion in three years, and $100 billion in five years. Having this information enables your organization to adjust your expenditure patterns to smooth out annual budgets to make them more consistent.
You can also take data from your EAM, push it into a central repository such as a Data Lake, and then perform optimization (“what if”) analyses to compare different scenarios and outcomes to determine the best outcome in the face of various constraints.
For example, say you’re a water utility company and your analysis determines that over the next 10 years, you’re going to have to replace all your water pipes in a particular region at a cost of $1Billion. You explain that this capital expenditure is necessary to your CFO, and she says she can only give you $500 Million. Now you have to prioritize your expenditures. AIP planning will help you do that by looking at what will happen in 5,10,15 years if you don’t spend money on X part of the project, and then compare that to what happens if you invest in Y or Z. Optimization will allow you to balance various investments against their impact on service levels to determine what spending you should prioritize.
Infor EAM can take you on the first step to building your AIP strategy by enabling you to store all the necessary data, track the key metrics, as well as create advanced reporting that holistically determines which assets to invest in, and how much to invest over the short and long term to reduce risks and meet service level objectives. It can also connect to any asset analytics tools.
For more information, read the white paper, “Four key considerations for adopting an asset investment planning strategy.”
Read articles from previous weeks about AIP:
- Asset management
- Equipment Dealers Rental & Service
- Facilities Management
- Federal Government
- Food & Beverage
- High Tech & Electronics
- Industrial Machinery & Equipment
- Industrial Manufacturing
- Life Sciences
- Logistics & 3PL
- Oil and Gas/Energy
- Public Sector
- Infor EAM