Asset Management Insights. Celso de Azevedo

so as to optimize the extraction of value in end-of-life phase

       Acknowledgments

      The field of advising good practices is deeply indebted to the innovations that have sprung from reflections around the problems to which existing solutions were so far unsuited. Obviously, Asset Management is no exception. In all logic, I would like to thank the life cycle of assets in the first place, and the attached necessity to think in a systematic manner in order to improve our performances. Without it, Asset Management would probably not exist.

      Similarly, I must thank the contradictions that we are immerged in daily. Without them, there would be no need to seek out new equilibriums to base our steps and our decisions on. We would like to be able to tread these new itineraries with certitude. Yet these do not really exist. I therefore thank my work in Asset Management for making me aware of these uncertainties, and for the humility it has taught me: it is a necessary quality for any human and scientific progress.

      Taken alone, these factors were not sufficient to incite me to write this book. The industrial field and its infrastructures, with its pressing demands and inevitable urgency, challenge our ideas, our outlook,and our behavior in order to comply with the expectations of results, or at least their necessity.

      At the core of all these elements are the people closest to me. I am fully aware of the extraordinary effort it was to consent to help me with this task, and I am grateful for it.

      To Edmea Adell, my partner throughout this journey of learning, implementing, and passing on the teachings of Asset Management. I owe her infinite thanks for the quality of her advice, her persistent support of my work, and her unfailing dedication to the promotion of Asset Management in France and around the world.

      To the teams of Assetsman, longstanding colleagues, and excellent professionals in France and in Brazil, with whom I share a task that requires high levels of knowledge, rigor, and dedication. Handling the tools of Asset Management for our clients is the focal point of our daily lives and of our work in common.

      To Benjamin Carde and Emile Poivet, whose work on language has made this book fluid enough to satisfy the expectations of any type of reader.

      Finally, a special inscription for my sons, Gabriel and Julien, who have grown to become dedicated professionals in their own fields, and who have already assimilated the difference between “looking after assets daily” and “the Asset Management in the long run.”

       Asset Management Insights

       Phases, Practices, and Values

       PART I

THE PROJECT PHASE OF INDUSTRIAL ASSETS

      Unlike Industrial Maintenance, Asset Management is by no means limited to the proper conversation about assets throughout their operational lives. Indeed, when we state that the finality of our discipline is to accompany and optimize the extraction of value across the totality of the assets’ life cycles, we imply that the prerogatives of the Asset Manager cover fields of temporality and management more diffuse and more spread out than those devolved to the maintenance operator.

      Thus, the preoperational phase is primordial in the context of an optimal management of assets, because it allows for the implementation of fundamental principles in terms of objectives’ alignment and risk monetization. Furthermore, a set of recently developed techniques and processes allows us to evaluate with an appreciable precision the impact of the decisions taken by consulting offices in the very first phases of the design and conception of industrial assets.

       CHAPTER 1

Demystifying the Project Phase

1.1 The Rise of a Praxis

      In the classical industrial scheme, the preoperational process essentially depends on two factors in its effort to acquire or design an asset. On the one hand, it depends on the efficiency of the tasked design office; on the other hand, the budgetary constraints imposed by the industrial leadership of the office. It should be noted that this approach is inherently dangerous, not least because it implies short-term savings, which will indubitably have a negative impact on the reliability and the efficiency of assets throughout their life cycles—and which could well result in a heavy and undesirable financial expense later on. Furthermore, the compartmentalized approach of the industrial organization chart, which opposes engineers and financiers, strikes us today as inefficient and anachronistic, whatever we’d like to think of the issue. Indeed, the alignment of objectives, which allows for the maximum extraction of value, cannot occur in a context of separation of powers within an organization.

      Research on the means by which one can improve the preoperational life of assets was not born from Asset Management: indeed, as early as the end of the Second World War, engineer Lawrence Delos Miles had begun to reflect on the most adequate methods of design while working for General Electric, and he consequently came up with an approach nowadays known as value analysis. This innovative process prefigures, albeit at an embryonic level, the approach championed by Asset Managers in the sense that it connects the notion of economic potential to a fundamental pragmatism that aims to limit costs in a rational manner.

      It is worth remembering that in 1973, the first crash of the oil market brought about a meteoric rise of production costs at the organizational scale. Savings became the primary and central constraint in the engineering sphere— designers were thus requested to take into account stricter and stricter budgetary constraints, which allowed for value analysis, in the form of design-to-cost, to take a durable foothold in the industrial culture of conception. It would be unwise on our part to make a value judgement on this trend, seeing as it was above all a response to a new economic context where budgets were appearing as the primordial criteria of reflections on conception. Therefore, design-to-cost was tied to the issue of competitiveness, or even of economic survival.

      Nonetheless, it is clear that if we consider it from the perspective of an Asset Manager, design-to-cost is inherently a flawed model. Hence, it does not take into account life cycle costing or value extraction. Indeed, this approach of design takes its base solely on CAPEX, and therefore on short-term investments, without generating any reflection on OPEX (the costs tied with the operational phase) or on the life cycle. We could therefore postulate that despite its innovative touch, design-to-cost is diametrically opposed to the practices and rationales inherent to the logics of Asset Management.

      This argument is in fact tied to a very contemporary problem, in the sense that the rationale of savings (which has derived from the budgetary constraints of the 1970s) has consistently influenced corporate culture to this day.

      Thus, organizations have not been able to break free from a certain approach that places the limitation of costs as a finality in itself, a fact that can largely be attributed to a lack of sensitization on behalf of management experts—in this case, of Asset Management experts. Yet, we know that the rationalization of costs depends primarily on an analysis of the predicted reliability of the assets and on an appraised anticipation of the risks tied to these assets—a problem that design-to-cost inherently neglects. It is therefore up to the professionals and experts of Asset Management to democratize a new techno-economic culture and to shine a light on the limitations of an anachronistic model.

      All too often, industrial and infrastructural managers base their decisionmaking on the sacrosanct financial indicators derived from