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Integrating Performance Standards into an Asset Management System

Leveraging ISO 55000 in the Oil and Gas Industry By Mike Poland, CMRP, CRL

The discipline of physical asset management is currently undergoing substantial change. Nowhere is this change evolving faster than in the oil and gas industry. Two significant developments within this industry are converging to create shifts in how companies view and manage their physical assets. The first of these developments is predictably value and safety-related. Companies are challenged to create, implement and maintain robust reliability and maintenance-based performance standards critical to detecting and preventing catastrophic equipment failures. The second development is the newly released ISO 55000 Asset Management System Standard. This standard defines the minimally accepted criteria for establishing a management system for asset management.

Both the performance standards and the ISO 55000 Asset Management standard share the common objectives of achieving value from assets and optimizing cost, risk and performance across the lifecycle of the asset. This presents an excellent opportunity to improve the quality and overall impact that performance standards have on the business through the integration with the ISO 55000 standard and the leveraging of the asset management capabilities that are foundational to an ISO 55000 compliant asset management system.

The ISO specifies that organizations develop an asset management policy linked to its strategic plan. The asset management policy is supported by an asset management strategy. This strategy typically identifies an implementation framework where defined capabilities result in establishing key asset management objectives. These SMART objectives are necessary to achieve select aspects of the organization’s strategic plan (reference Figure I). Establishing oil and gas performance standards represent such an objective. The performance standards, moreover, comprise much of what can be considered as an asset management plan (reference Appendix A for a performance standard example).

Figure 1 – Asset Management System Key Elements

 

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The direct link to the ISO 55000 standard can be located in section 6.2.2 of the 55001 requirements document. This section, Planning to Achieve Asset Management Objectives, identifies 11 key criteria that an organization shall determine and document when developing a plan to achieve their asset management objectives and, in this particular example, their performance standards. The following presents an overview of the 11 key criteria, with implementation tips and recommendations on the use of various tools and techniques:

1) The method and criteria for decision making and prioritizing of the activities and resources to achieve its asset management plan(s) and asset management objectives a. Here it is important to understand that this standard is value and risk-based. Therefore

we must consider a risk-based asset implementation model as below in Figure 2:

Figure 2 – Risk Based Asset Management Implementation Model

b. In the Classify phase, the value stream and hierarchical structure of the business is identified and mapped. Since asset management plans are created for individual assets, asset type, asset class, asset system and/or asset portfolio, it is necessary that the hierarchical structure defines how assets will be grouped. The hierarchy (see ISO 14224:2006) must take into account all asset relationships, including parent-child, linear and matrix. This will provide a scalable approach to implementing asset management plans.

c. In the Analyze phase, the assets are prioritized based on the potential risks to production, health, safety, environmental and reputation. This methodology is called criticality analysis and yields the assets, prioritization for executing activities and applying resources.

 

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2) The processes and methods to be employed in managing its assets over their life cycles a. Asset management plans should be fed back into the design and operation of the asset

management system. This is accomplished by the use of a risk-based asset management model combined with business processes to define standard work. Business processes for managing assets through their life cycle provide the organization with a visual map of the process steps that occur, decision points, and interfaces with other processes and systems.

b. Figure 3 shows the asset life cycle and some of the relevant processes for each phase:

Business Case Life Cycle Cost Analysis, Cost Benefit Analysis

Concept & Design Feasibility Study, Functional Design and Technical Specification Development Procure & Construct Procurement Specification, Front End Loaded Project Management Commission Precision Installation, Baseline Testing, Commission Plans, Acceptance and Validation Operate and Maintain Work Management, Material Management, and Loss Elimination Replace, Decommission, Dispose Accretion of Liability, Front End Loading Project Plan

Figure 3 – Processes Within the Asset Life Cycle

3) What will be done

a. This is the application of the business processes that define the requirements to manage the assets throughout the life cycle.

b. Examples of these requirements are preventive maintenance tasks, predictive maintenance routes, external inspections, internal audits and the management of change process.

c. Each of these requirements will have criteria established that will generate data in the form of current state as compared to the criteria which will result in asset management information that defines deficiencies and departures from specifications.

d. This asset management information model is depicted in Figure 4.

 

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Figure 4 – Asset Management Information Model

4) What resources will be required a. The human capital required to execute the business processes, along with other

corporate allocations and overhead expenses such as contract labor, make up the required resources.

b. Part of the consideration of the asset management plan is the asset-based budget that is prepared to support the annual increments of resources.

c. The documentation of organizational charts, contracting agreements and budgets address the majority of these requirements.

5) Who will be responsible a. Clearly defined roles and responsibilities for resources that support the asset

management plan along with RACI charts for business processes identify those responsible for the asset management plan. RACI is an acronym for who is responsible, accountable, who to communicate with and who to inform.

 

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6) When it will be completed a. Planning and scheduling the activities required in the asset management plan are two of

the more difficult components of the asset management system. Planning and scheduling consider the requirement, resources condition, measurement data, and production window required to execute the activities, along with the targeted date and duration.

b. Outside the Operate and Maintain phase of the life cycle, a front-end loaded project plan will dictate when items will be completed. Within the Operate and Maintain phase, a majority of requirements will be planned and scheduled much like the process depicted in Figure 5.

Figure 5 – Work Management Workflow Example

7) How the results will be evaluated a. There are several results that must be evaluated to understand the effectiveness of the

asset management system and plans i) Asset Performance: The purpose of the asset is to meet a function within the value

stream to create value for the organization. This function must be documented to provide this level of evaluation (1) There is a design rate at which it can meet its function. This information is

necessary to calculate overall equipment effectiveness and asset utilization. (2) There is the mean time between each failure: MTBF = Operating time (hours) ÷

Number of Failures. This information is necessary to evaluate the reliability of the asset and how effective it is at mitigating failure modes within the system.

 

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(3) There is mean time to repair: MTTR is the average time needed to restore an asset to its full operational capabilities after a failure. This information is necessary to understand the maintainability of the asset and how effective the planning and scheduling activities are within the system.

ii) Failure Analysis: Within the work management business processes, the use of failure coding for asset types provides relevant data within work order history to evaluate planned activities and their effectiveness. It also identifies failure modes that have no current mitigation within the system.

iii) Financial Analysis: Asset-based budgets and asset-based accounting yield the information necessary to use budget variations to identify losses and issues impacting bottom line performance. There is also the analysis of the work order cost for each asset. This is only beneficial if all the costs are captured in work order history – particularly labor, material and lost market opportunity or production cost.

8) The appropriate time horizons for the asset management plans a. A time horizon, also known as a planning horizon, is a fixed point of time in the future

when certain processes will be evaluated or assumed to end. b. In an asset management and risk management system, it is necessary to assign such a

fixed horizon time so that alternatives can be evaluated for performance over the same period of time.

c. Time horizons are dependent on the industry, processes and assets. Items that impact time horizons are patent expirations, end-of-life determinations, budget cycles and break even points on capital investments. Common time horizons should be identified in the strategic asset management plan to ensure consistency across the enterprise.

d. Life Cycle Cost Analysis is an example of where uniform time horizons must be identified.

 

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9) The financial and non-financial implications of the asset management plans a. Financial implications are the costs and lost market opportunity related to the execution

of the asset management plans. A roll-up of the annualized, programmed investment for implementing these plans provides the basis for an asset-based budget, depicted in Figure 6. Budget variations can then be tracked and analyzed for improvement opportunities.

b. Non-financial implications are mostly from the time and resources required to execute the plan. This is necessary for level-loading the tasks in the asset management plan with the resources and time allocations such as in Figure 7.

Figure 6 – Roll-up of Asset-Based Budget

Figure 7 – Resource Plan

10) The review period for the asset management plans a. This review period defines how often the asset management plans will be updated

based on the monitoring, measurement, analysis and evaluation defined within the system.

11) Actions to address risks and opportunities associated with managing the assets, taking into account how these risks and opportunities can change with time, by establishing processes for identification of risks and opportunities; assessment of risks and opportunities; determining the significance of assets in achieving asset management objectives; implementation of the appropriate treatment; and monitoring of risks and opportunities. a. The fundamental guidance here is to have a risk management system in place using the

guidance of ISO 31000:2009 i) Risk is the effect of uncertainty on the ability of an organization to meet its objectives. ii) Risk management is the range of activities that an organization intentionally

undertakes to understand and reduce these effects. iii) Effective risk management requires executing these activates efficiently and in a way

that demonstrably improves the ability of the organization to meet its objectives in a repeatable fashion.

 

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b. ISO 31000:2009 is: i) An international standard that provides principles and guidelines for effective risk

management ii) Not specific to any industry of sector iii) Able to be applied to any kind of risk iv) Able to be applied to any kind of organization v) Intended to be tailored to meet the needs of the organization vi) Provides the principles and guidelines for managing any form of risk in a systematic,

transparent, and credible manner and with any scope and context. c. Figure 8 is an example of the process flow of this system. The numbers in parentheses

are the applicable sections in the ISO standard.

Figure 8 – Risk Management System

d. Once an organization has mapped their value stream, they can then determine the risks to that value stream. A corporate risk matrix is then developed to identify how the organization assigns quantitative and qualitative risk for evaluating and selecting mitigation and controls. This risk matrix is then used to help define categories and criteria for asset criticality analysis, defining the parameters used to determine risk priority numbers for accomplishing failure modes and effects analysis (see IEC 60912), and establish the baseline for performing a process hazard analysis as part of implementing a process safety management plan (see OSHA 1910.119).

 

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Figure 9 – Corporate Risk Matrix

With the components of the asset management system more clearly defined, let’s take a closer look at the asset management plan. Recall from Figure 1 that the asset management system bridges the gap between the strategic plan and the asset management plan that includes the specific technical requirements. It also documents information that specifies the activities, resources and timescales required for an individual asset, or a grouping of assets, to achieve the organization’s asset management objectives. Finally, it should be fed back into the design and operation of the asset management system.

The best example of an asset management plan is one that already meets all of the above requirements. Take the National Offshore Petroleum Safety and Environmental Management Authority’s (NOPSEMA) Offshore Petroleum and Greenhouse Gas Storage (Safety) Regulations 2009. A portion of this regulation specifies that operators of offshore drilling and the production process are to conduct risk assessments that include both formal safety assessment and other occupational health and safety risks. These assessments should identify the evidence to be provided in the safety case that identifies how risks are reduced to a level that is as low as reasonably practicable (ALARP) and include the following:

• Hazard Identification • Supporting Safety Studies • Risk Assessment • ALARP • Performance Standards and Control Measures

Performance standards and control measures are the asset management plans for the systems defined by the asset management system dictated in the regulation. An example of the performance standards and control measures are found in Appendix A.

 

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Appendix A – (A-1)

Mobile Offshore Drilling Unit – Semi Performance Standard (PS)

Fire and Gas Detection Systems

 

DESCRIPTION Detection Systems (Attachment 1)

 

DESIGN FUNCTION To detect and alarm for hazardous levels/quantities of smoke, heat, flame, toxic gas (H2S), and combustible gases

 

DESIGN SPECS

Rig

(Attachment 2):

• ABS MODU Code 2001 • IMO MODU Code 1989

 

System

• ABS MODU Code 2001: 4-3-2/19.3 references 4-4-1/23.1 (Attachment 3) Specific performance criteria: combustible gas detectors are to alarm

between 25-60% of the lower explosive limit (LEL) • IMO MODU Code 1989: 9.7, 9.8 (Attachment 4)

 

REGULATORY DRIVEN MAINTENANCE REQUIREMENTS

Republic of Liberia, Marine Notice FIR-001, Rev. 06/12, Maintenance and Inspection of Fire-Protection Systems and Appliances (Attachment 5)

Summary of key provisions applicable to this system:

• 1.1: Arrangements are required to ensure safety not diminished if system under repair

• 1.2.4: Log and records of testing, inspection, maintenance, non-conformities and targeted completion dates

• 1.4.2.6: Monthly – verification that fixed firefighting system alarm devices are in place and do not appear damaged

• 1.6.2: Annual – fire detection systems tested for proper operation • 1.6.3: Annual – fire dampers are tested for remote operation

 

   

 

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Appendix A – (A-2)

Mobile Offshore Drilling Unit – Semi Performance Standard (PS)

Fire and Gas Detection Systems

 

PLANNED AND REGULAR RIG AND EQUIPMENT

INSPECTION

(Attachment 6)

 

PREVENTATIVE MAINTENANCE INSTRUCTIONS

• Gas Detection System Electrical – 3M • Fire Detection Manual Call Station – 2M • Portable Gas Detection Monitoring - 2M

Summary (Attachment 7)

 

MEASURABLE RIG SPECIFIC PERFORMANCE CRITERIA FOR CRITICAL

OPERATING PARAMETERS (COPS)

• H2S, CH4, and O2 detectors: zero-calibration, span calibration, function test to measure and record time from application of test gas to alarm, including under battery power – see Attachment 7 for details.

• Smoke, heat, flame (IR) detectors: function test, confirm detection system automatically generates general alarm within 120 seconds when in automatic mode.

• Portable H2S gas detector alarm levels are 5-10 ppm per EU regulations.  

RESOURCE REQUIREMENTS AND

SKILLS

Expertise in installation, operation and maintenance of fixed H2S gas detection system on mobile offshore drilling units.

(Attachment 8)

   

 

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Appendix A – (A-3)

Mobile Offshore Drilling Unit – Semi Performance Standard (PS)

Fire and Gas Detection Systems

 

 

CORPORATE AND RIG SPECIFIC DOCUMENTS

• Safety Policy Manual – Rig Inspections • Safety Policy Manual – Confined Space Entry • Authorized Gas Tester Competency Checklist • Offshore Training Matrix

 

MAE OR CCE FOR WHICH THIS EQUIPMENT PROVIDES RISK

REDUCTION MEASURE FUNCTION

(NOTE: MAE = MAJOR ACCIDENT EVENT, CCE = CAUSAL OR CONSEQUENTIAL EVENT)

From Risk Assessment:

• Hydrocarbons in the Formation o Fixed MODU Hydrocarbon Gas Detection System/Shaker Area

and Mud Pit Hydrocarbon Gas Detection System o Fixed Fire Detection System o MODU Ventilation Shutdown

• Flammable Substances//Large Scale Fires o Atmosphere Testing Before and During Operation o Galley, Laundry Room, Engine Room, Emer. Gen Room, Shaker

Area, Mud Pit Fire Detection o Fixed Fire Detection System

• Hydrogen Sulphide Gas (H2S)//Toxic Gas Release o Fixed MODU H2S Gas Detection System

• Atmosphere in Enclosed Spaces // Personnel Exposed to Unsafe Atmosphere

o Atmosphere Testing Before and During Operation  

AVAILABILITY

&

RELIABILITY

These factors with Human Factors are combined into Risk Reduction Measure Effectiveness rankings, as shown in the risk assessment

 

SURVIVABILITY

(NOTE: INCLUDES ASSESSMENT OF DEPENDENCY AND REDUNDANCY)

Survivability is assessed under the Emergency System Survivability Analysis (ESSA) via evaluation of vulnerability, fail-safeness, redundancy, and dependency.

       

 

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Mike Poland, CMRP, CRL, serves as the Vice President of Asset Management Services for the Reliability Consulting Group and Vice President of Engineering Support Services for the Federal Solutions Group at Life Cycle Engineering (LCE). Mike is also a facilitator with the Life Cycle Institute where he uses high impact learning techniques to teach courses including Risk-Based Asset Management and Predictive Maintenance Technologies. In addition to being a Certified Maintenance and Reliability Professional (CMRP) and a Certified Reliability Leader (CRL), Mike is certified in Prosci’s Change Management methodology. You can reach Mike at mpoland@LCE.com.