Asset performance management
How understanding risk allows for more effective and efficient reliability program targeting.

Imagine a typical process plant. Whether it is bottling, dairy, vegetable process and packaging or meat products, it is common to experience a lack of redundancy due to design issues or increased production rates without an increase in capacity. Much of the plant is running close to the line, staff hires have been frozen, budgets have been cut again and capital purchases are deferred for yet another year. With everything and everyone under pressure, it is common to turn to reliability programs for optimization of asset performance. 

However, when reliability-based decisions are made in the hopes of operational efficiency without understanding or accounting for risk, time and resources may be wasted with little improvement to show for it. Instead, shift priority to risk-based decisions, which will yield better reliability-based decisions.

There is a big difference between risk-based and reliability-based decisions. A risk-based decision is one that selects a course of action to address an area of risk: some realistic and likely event (based on asset condition, proximity, poor design, high failure rate, etc.) that at that time poses an unacceptable risk to the business or a risk to the required service level of a system or asset. It is important to note that not every asset or system that flounders poses an equal risk to an operation—only the ones that significantly affect the objectives of the organization. 

Reliability-based decisions do have their place, and importantly so, but they must be made at the right time and with the right focus first identified through risk evaluation. There is often a direct causal relationship between an asset performance issue and a product quality or production capacity/delay result. Risk-based decisions are strategic, focusing on a direct link to the business objectives, while reliability-based decisions are tactical and involve assessing options on how to address the overall expected reliability of an asset.

With everything and everyone under pressure, shift priority to risk-based decisions.
With everything and everyone under pressure, shift priority to risk-based decisions.

Making risk-based decisions in an operation is a lot like accident triage. The order of accident triage is the order of greatest risk to life: breathing, blood and bones. Without air, all the rest of the efforts to save a life are wasted. Once the greatest risk is dealt with, the medics move to the next level. Similarly, in effectively managing process operations, users need to start with the highest risks. Risk-based decisions focus resources on the most important areas first—those that put the level of service or business at risk. It is the air needed to stay alive. When that has been addressed, users can move on to the next level. Reliability-based decisions are akin to determining which procedure is best used to address a risk under the circumstances.

There are several factors that influence risk-based decisions: How important to the overarching organizational objectives is the asset or system? If system performance drops or falters sufficiently, what is the impact to the overall mission or facility objectives? This is commonly referred to as a criticality rating of systems. The higher the criticality rating, the more the system potentially affects the overall facility mission or objectives. It should be noted that criticality is not just production related, but can include environmental, safety, regulatory, commercial issues and more. Beyond assets, criticality and risk ratings can and should be applied to other organizational structures, including things like internal business processes and external service providers. The key question is this: What and who can impact the business?

When criticality is merged with the likelihood of the impact occurring, users derive a risk to the business. At this point, there is a clear understanding of which systems and assets pose a risk to the operation but not how reliable they are. Not all assets and systems pose an equal risk and should not be treated with equal focus for reliability. Risk-based decisions are rooted in a far more strategic focus. If changing the overall objectives or values of an organization or altering the design of part of the plant, the risk profile of that operation will change, as will the area of focus for reliability. 

This is the idea of “first things first.” It is strategically important to know what areas of an operation must never fail unexpectedly—the critical areas that can become high risk if likelihood of failure increases. These critical areas are where several options for tactical reliability initiatives and actions should be evaluated first for their effectiveness and cost efficiency. Areas of lesser criticality, and somewhat lesser risk, would next receive appropriate attention. Risk-based decisions prioritize the focus and assign the best use of limited resources. Reliability decisions are then part of managing specific assets in the most economical way to manage the facility’s overall risk profile.

Workers de-seeding cherries in factory
Workers de-seeding cherries in factory

The financial implications of looking at reliability before risk are potentially significant. Focusing initially on reliability-based decisions can result in spreading resources across all assets to elevate the reliability of everything to levels simply not warranted by some assets. More importantly, it will direct resources away from assets that are most critical and should be the priority for funding and risk-mitigation strategies. It is vital to remember that just because an asset is broken or struggling does not make it critical or a risk to an operation. 

The goal of a results-oriented asset management program, as described in International Organization for Standardization (ISO) 55000, is to achieve the maximum benefit or value from an asset. Money and resources should first be spent on addressing the biggest risks to the business. This can be through some form of capital project, refurbishment, redesign, staging backup systems, better predictive and preventive maintenance and other forms of risk mitigation, all with the goal of making the most critical assets reliable to the point that the optimal reliability benefit is reached for the least overall spend. 

Once these areas have been addressed, any resources remaining are applied to the next level of risk-to-business critical systems and assets. This aligns with the “first things first” prioritization and directs money and resources to the most important areas of an operation. The savings potential can be large depending on the local context, the size of the backlog of failures/failing assets, the condition of the asset portfolio and the discipline to apply the tactical reliability measures on the critical assets and risky areas.

For decisions that apply the best use of constrained resources against increasing need, it is imperative that organizations begin to better understand the concepts and principles behind a results-oriented asset management program—one that sets priorities through risk-based decisions and then addresses questions of reliability.