Monday 28 October 2019

Considerations of Value in Asset Management

 ISO 55001:2014 defines asset management as the coordinated activity of an organization to realize value from assets, and ISO 55000:2014 states the value (which can be tangible or intangible, financial or non-financial) will be determined by the organization and its stakeholders, in accordance with the organizational objectives, so the standard considers that the value is subjective and is determined by the organization and its stakeholders, and it is not limited to a specific type of value.

 But as the value is subjective it specification could vary, even within the own organization. Look the following examples from ISO 55002:2018 Asset Management - Management systems - Guidelines for the application of ISO 55001 - Annex A (informative) Consideration of "value" in asset management:
  • Potential investors or lenders, finance managers, accountants, and valuers can be focussed on the organization's carrying value, risk exposure and return on investment.
  • Some stakeholders can be focussed on the value of the assets and related financial representation of asset deterioration for taxation purposes.
  • Shareholders can be focussed on the return on their investment, value determination and value generation.
  • Customers can be focussed on the price-quality relationship of the product or service.
  • Public service providers can be focussed on the value perceived by the community and its relationship with the cost.
  • Regulators can be focussed on legal and regulatory compliance.

 As the value does not focus on the asset itself, but on the value that the asset can provide to the organization to determine as best as possible the value of the asset consider how the asset management objectives align with the organizational objectives, the use of a life cycle management approach, and the establishment of decision-making processes.

 It is important to insist on the value derived from assets can change over the life cycle of the asset, so during the investment or acquisition phase assets are only incurring costs to the organization, but they have potential value that can be generated once in operation; some assets can have a time delay before the generation of value and as higher the delay is higher the value; during the operation and maintenance phases, circumstances can lead private organizations to price outputs at a price point that ignore the original acquisition cost; and during disposal phase, the functional obsolescence due to changes in technology, changes in organizational objectives, or changes in customer preferences can mean that the value of the asset decrease dramatically.

 To support the concept of value some standards are available, like IEC 60300-3-3:2017 Dependability management - Part 3.3: Application guide - Life cycle costing, that establishes a general introduction to the concept of life cycle costing and covers all applications. the life cycle includes the phases of concept or definition, design or development, manufacturing, installation, operation, maintenance, and disposal.

 Related to risk and opportunities the ISO 31000:2018 Risk management - Guidelines, that provides a framework and a process for managing risk, The standard helps organizations increase the likelihood of achieving objectives, improve the identification of opportunities and threats, and effectively allocate and use resources for risk treatment based in a risk assessment process.

 Finally, related to the performance of assets the standard ISO 14224:2016 Petroleum, petrochemical and natural gas - Collection and exchange of reliability and maintenance data for equipment - Annex E Key performance indicators (KPIs) and benchmarking provides a methodology to create KPIs and benchmarking aligned to the objectives organization.

 To create an Asset Management System that balances these three parameters to define value for organization and stakeholders and change it during the life cycle of the asset to adapt the real conditions is a challenge to overcome in order to establish a good decision-making process.

Monday 14 October 2019

Organizational Structure for TPM Organizations

 TPM (Total Productive Maintenance) is a methodology based on improving equipment and improving people, to reach the second condition is mandatory to build an organizational structure to facilitate the autonomy of workers and their alignment with the organization's mission, vision, and values.

 In this way, the company Spotify classifies the teams in four quadrants based on their level of autonomy and alignment with the organizational goals, reach the high-high quadrant allows the achievement of goals in a more creative and efficient way by exploiting the potential of all the people involved in the project.

From Spotify.

 This approach is based on the Douglas McGregor Theory X and Theory Y, in which Theory X suppose that:
·   The average human being has an inherent dislike of work and will avoid it if he can.
·   Most people must be coerced, controlled, directed, and threatened with punishment to get them to put forth adequate effort toward the achievement of organizational objectives.
·  The average human being prefers to be directed, wishes to avoid responsibility has relatively little ambition, and wants security above all.
 As can be seen, these conditions of the Theory X could be assimilated to the Spotify quadrants with low autonomy or low alignment.
 On the other hand, Theory Y proposes the integration of individual and organizational based in:
·   The expenditure of physical and mental effort in work is as natural as play or rest, and the average human being does not inherently dislike work.
·   Man will exercise self-direction and self-control in the service of objectives to which he is committed.
·  The satisfaction of ego and self-actualization needs can be direct products of efforts directed toward organizational objectives.
·   The average human being learns, under proper conditions, not only to accept but to seek responsibility.
·   The capacity to exercise a relatively high degree of imagination, ingenuity, and creativity in the solution of organizational problems widely, not narrowly, distributed in the population.
·   Under the conditions of modern industrial life, the intellectual potentialities of the average human being are only partially utilized. 
 In the same line, Frederick Laloux in his book Reinventing Organizations proposes an evolution of the organizational structure of companies from impulsive organizations, based on the division of labor and command authority, to Teal organizations based on self-management, wholeness, and evolutionary purpose.
 According to this author, evolutionary or Teal organizations are based on these basic assumptions:
·   Trust, 
·   Information and decision-making, 
·   Responsibility and accountability, 
·   Equal worth, 
·   Safe and caring workplace, 
·   Overcoming separation, 
·   Learning, 
·   Relationships and conflict, 
·   Collective purpose,
·   Individual purpose,
·   Planning the future, 
·   Profit.
 A way to obtain this evolution is by exploiting the principles of Visual Management, so all the workers involved in the process hold real-time information needs to make decisions based on their individual and collective goals, and the responsibility to report in a transparent manner its performance with the target to improve benefits.
 By a Visual Management Dashboard workers report their own results and performance, the level of goals fulfillment, the work planning including the days-off planning, needs for qualifications, etc.

 Example of Visual Management Dashboard, from Michel Greif - The Visual Factory.

 These boards could be complemented with Kanban dashboards specifics for every project, these boards show openly and transparently the flow of work in real-time, show the process weakness, support to manage flow, make policies explicit and identify improvement opportunities.
  Congruent with these tools, we find the Spotify organizational structure, a floating and changing structure, based on individuals, with the following elements:
·   Squads, a small team to be 6 to 12 persons that work together towards a long-term mission.
·   Tribes, a group of several squads to be 40 to 100 persons, focused on a process, with a leader. 
·   Chapters, a horizontal structure formed based on competency areas.
·   Guilds, a non-formal structure or community of interests where the people across the whole company gather and share knowledge of a specific area.
 These structures are changing, even the role of the leader can change in every project, this system provides autonomy to involved persons and allows them to participate and focus on their own areas of interest, the areas where it can add the most value.
 As a summary, we could consider that TPM is the self-actualizing management, once the first stages of the Maslow's hierarchy of needs are fulfilled, they are physiological needs, safety needs, belonging needs, and esteem needs; because it considers the following key principles:
·   Work is a type of psychological therapy for satisfying our desire for self-actualization.
·  People and works are in a cyclic relationship; people grow and develop through their work, bringing prosperity to their companies and that prosperity leads to further individual development.
·   When people find a purpose in though their work, they become ever more passionate about it. 
 For an organization, to startup this type of organizational structure improves the velocity and simplifies processes, eliminates dependencies, makes easy troubleshooting, minimizes the hierarchy control and changes to self-control, promotes quality and transparency, and create a positive work climate.