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How to Communicate the Value of Asset Criticality to Senior Management


Establishing criticality enable prioritization of a whole range of maintenance and reliability activities, from work execution to failure analysis.  Are you communicating with FINESSE to senior management?
Establishing criticality enable prioritization of a whole range of activities, from work execution to failure analysis.

In today's industrial settings, management is constantly being challenged to demonstrate the cost versus benefit when requesting resources to maintain or replace its assets. Maintenance managers are challenged by senior management when deciding where to dedicate an ever-decreasing budget to keep the plant running. Similarly, reliability engineers are questioned on the tradeoffs of looking long versus looking short. These are a few thoughts on communicating the value of asset criticality to senior management.


Importance as the Basis for Asset Criticality

In each of these situations, multiple factors come into play, one of them being the consequences that arise upon asset failure. These consequences can be in the form of production loss, environmental incidents, injury to personnel, increased financial cost, and so forth. The seriousness of the consequence of failure can then be interpreted as the importance or criticality of the asset. As part of effective asset management, it is imperative to understand the relative criticality of each asset compared to the others.


Reliability Centered Maintenance as a Game Changer

In the late 1960s and early 1970s, the United States airline industry conducted a number of studies that resulted in the publication of a report titled Reliability Centered Maintenance (RCM). This report led to a dramatic change across the industry in managing industrial equipment. One of the primary changes to maintenance strategy development was considering the criticality of an asset to prioritize maintenance activities.


Is It Worth It?

The RCM process asks the question "Is it worth it?" for every potential proactive maintenance task to ensure the cost of doing a task is worth the amount of risk reduction resulting from the activity. Asset criticality is one factor in calculating risk using the formula:

Risk = Consequence of Failure x Likelihood of Failure

Applications of Asset Criticality

In day-to-day industrial plant operations, understanding the relative importance of an asset among the population of assets will assist in prioritization of:

  • Maintenance work execution - By identifying the most critical assets, organizations can prioritize their proactive maintenance and repair efforts, ensuring that the most important assets are always in good working order.

  • Proactive maintenance strategy - Asset criticality analysis can help organizations develop more effective proactive maintenance strategies.

  • Failure analysis - By focusing failure analysis on the most critical assets, organizations can reduce high-impact downtime and improve overall productivity.

  • Spare parts holdings – keeping spare parts on hand for critical assets will minimize the amount of downtime experienced if a failure should occur.

  • Condition assessment – continuously understanding the condition of critical assets will allow advanced planning of capital replacement or overhaul in advance of asset failure.

Senior Management Understands "Importance"

Senior management understands “importance.” Maintenance and reliability professionals should anticipate the follow-up question, “How do you know it’s important?” Answering these questions requires some rigor in your analysis. However, do not over-complicate the explanation. Senior management normally wants to know you have done an analysis, but they rarely want to know how you did it.


Summary

Understanding what assets are owned is the first step in effective asset management. The next step is understanding which assets are the most critical. Asset criticality then opens the door for logically and defensibly executing maintenance and reliability strategies. Keep it simple when communicating with senior management. A little FINESSE helps, too.


 

Jim Oldach is a seasoned maintenance expert, reliability centered maintenance (RCM2) practitioner, and asset management consultant. His practical maintenance and asset management experience spans multiple industries, including nuclear facilities, automotive plants, water & wastewater utilities, gas & electric utilities, and hospitals.

A graduate of the Massachusetts Maritime Academy with a B.S. in Marine Engineering, Mr. Oldach has been certified as a Certified Maintenance and Reliability Professional (CMRP), RCM2 Practitioner, U.S. Coast Guard (USCG) Second Assistant Engineer for Steam Powered Vessels of any Horsepower, and USCG Third Assistant Engineer for Diesel Powered Vessels of any Horsepower.


Jim Oldach is the co-creator of the Solomon-Oldach Asset Prioritization (SOAP) method.

 

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