Criticality: A Key Idea in Asset Management

By Trilogics Technologies, Inc.

The idea of criticality is fundamental to Asset Management. To
practice even a base level of Asset Management, an organization must define which of its assets are critical, and focus its maintenance efforts on those assets. Criticality prioritizes which assets are important to monitor and maintain, therefore identifying critical assets and building an asset plan (see October newsletter) for them is the first step in designing an effective maintenance program that is based on the condition of assets.

ARTICLE | Nov 30, 2005

By Trilogics Technologies, Inc.
 

The idea of criticality is fundamental to Asset Management. To practice even a base level of Asset Management, an organization must define which of its assets are critical, and focus its maintenance efforts on those assets. Criticality prioritizes which assets are important to monitor and maintain, therefore identifying critical assets and building an asset plan (see October newsletter) for them is the first step in designing an effective maintenance program that is based on the condition of assets.

Assigning criticality enables your organization to begin implementing the practice of Asset Management by providing a formal means to prioritize work activities and investments and to implement performance reporting. Definition: Asset criticality is the relative risk of a high cost arising from failure of that asset. So criticality is the relative risk of an asset from a cost perspective, calculated in order to understand which assets deserve attention and money to prevent failure. To understand this definition of asset criticality, we need to understand its parts: (1) failure mode, (2) cost, (3) risk, and (4) relative importance. 

1. Modes of asset failure. Understanding the failure mode of an asset is critical to maintenance, strategic decision making and a better understanding of risk exposure.

• The critical failure modes for each asset need to be determined so that maintenance, capital expenditure, and conditioning monitoring can be planned. The many different modes of failure complicate this planning, e.g. guard rails may fail because of deterioration, or accidents, or may be destroyed during road renewal. 

• Failure modes, effects, and criticality analysis (FMECA) is a common approach used to determine the maintenance or renewal required for any asset. The approach is used to determine the primary failure modes, consequences of failure, and the probability of failure, and then design the maintenance programs to prevent them.

• It is important to note that not all failures are physical failures. The range of failure modes includes structural, capacity/utilization, required level of service, obsolescence, cost or economic impact, and operator error. Each of these failure modes has distinctive attributes that require evaluation to understand the effect on the asset and service provision. 

2. The cost of failure, when an infrastructure asset fails, has three components.

• Cost of replacement. The all-inclusive price for replacing or renewing the asset, including design, purchase, installation, etc.

• Cost from loss of service. During the time to replace an important asset which has failed, what is the cost to the local economy or to the public from loss of water, or stopped traffic, or loss of power? This "cost of down time" may differ between reactive maintenance for a surprise failure versus those that can be reasonably predicted and planned for.

• Cost from legal liability. This includes being sued because of safety negligence that led to injury, and fines for environmental impacts such as silt washing into a salmon stream. 

3. Risk of asset failure. If there is sufficient risk of high dollar costs (replacement, service loss, liability) or other costs (environmental, social) related to an asset, then this risk should be managed by monitoring and maintenance of that asset, and all records of the applicable inspection, event, or action recorded. 

Definition: Risk equals Cost of Failure times Probability of Failure.

• Every asset progresses from new, to worn, to failure, and this can be described by a deterioration curve (a simulation model, really) that describes declining asset condition over time. This progression is often characterized by a condition index. These may be built from several quantitative engineering measurements or simply qualitative observations, and are used to indicate theremaining service life before an asset fails. Condition ratings, where states are qualitative (e.g. good, fair, poor) or only two states are recognized (e.g. functioning versus needs replacement) are less useful for predictive modeling and assigning criticality.

• Risk of asset failure, which can be tied to a deterioration curve, depends upon four things:

a) designed life. E.g. pavement surfaces on bridge decks are designed to last longer than pavement on roads.

b) maintenance program. The value of maintenance is to extend asset life. Different preventative maintenance or renewal treatments are appropriate to improve the condition as the asset ages and wears.

c) operations. Change in level of use, or a change in type of use, affects the asset life. E.g. increased heavy truck traffic will change the expected service life of a roadway.

d) external factors. Environmental conditions and forces outside of the operating design, i.e. a leak in a water main that may impact the bedding of a sewer pipe, affecting its structural integrity. 

4. Relative importance. Criticality answers this question, for which assets is it most important to avoid failure? Obviously, the assets with the biggest cost of failure from replacement, service loss, liability. Assets with greatest priority for maintenance dollars should be those with a high criticality rating. 

• Appropriate investments in assessment and maintenance will reflect the criticality of the asset and therefore be economically justified in terms of benefits gained (costs avoided). 

• Assets with a high criticality index should be maintained based on risk management principles. Assets that are not critical may be best managed by leaving them to fail and then replacing them on a reactive basis (e.g., shed roofs, boat launch ramps, some culverts). To summarize, assets can be ranked by their criticality, i.e. their calculated or relative risk cost, and funds for inspections and maintenance applied according to that priority. This approach can generate significant savings over the asset lifecycle, ties in with a comprehensive risk management program, and provides a basis for optimizing future asset investments.
Real-world risk-based Asset Management is complicated because of: uncertainty in every estimate; interactions between assets – failure in one may cause failure in others (this is the network criticality of an asset);optimizing investments amongst a portfolio of asset maintenance options; schedules for proactive replacement to avoid failures, to accommodate new capital works, or to improve service levels; and projections of future operations and use (new subdivisions, more trucks – and more uncertainty). All of these complicated choices have to be balanced with the need to maintain service levels (traffic flow, for example, or safety ratings) and balanced within short-term and long-range budgets.

Minimizing asset life-cycle cost while meeting mandated services levels is the essence of the enterprise-wide discipline of Asset Management. Because criticality controls the cost side of Asset Management, it is a critical concept.

 

For more information, contact Scott Akenhead and Jussi Jaakkola for Trilogics Inc. at 604.484.7188 ext. 29 or email scott.akenhead@trilogics.net  / jussi.jaakkola@trilogics.net.  

 

 

 

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