Sydney Trains finds the best time to renew assets with an innovative process for Life Cycle Optimisation.

By adapting SALVO to establish an innovative cost, risk and performance optimisation process, Sydney Trains have demonstrated individual decision benefits of A$20 + million NPV.
From a representative sample of 8 asset management decisions, improvement opportunities of A$20k/year to A$300k/year each can be realised
Delivers a much-improved level of consistency and sense of ownership in asset life cycle decision-making.
Formal training was followed by on-the-job facilitation of ‘live’ current cases and coaching to ensure that conceptual understanding was reinforced and consolidated by practical application
Contract Objectives

Sydney Trains (ST) has introduced new business processes and decision support tools to evaluate and justify the optimal time to replace aging and obsolete equipment. These are a significant departure from traditional data-analytical methods or conventional investment evaluation techniques. They incorporate technical, commercial and sustainability factors and enable expert knowledge to be quantified to fill gaps in hard data and forecasts. The techniques have now been applied to a range of ST asset classes, yielding multi-million $$ added value through changes in Capex and Opex requirements, risk reduction and performance improvement.

Two big initiatives have occurred recently in the development of asset management in Sydney Trains:

  • The building of an Asset Management System (ISO 55001 certification achieved 2018)
  • Consolidation of asset information and work management systems (EAM system, also rolled out in 2018)

 

These have delivered better line-of-sight alignment, strategic planning, value and efficiency in how the ST assets are managed. The remaining priority is now to ensure that effectiveness is also optimized. This is where good decision-making is vital: determining what is worth doing, and when, to deliver best value-for-money over the whole asset life cycle. ST conducted a world-wide study of best practices and technical solutions to address these questions, concluding that the SALVO1 (Strategic Assets Lifecycle Value Optimisation) methodology and DST2 toolkit from The Woodhouse Partnership Ltd (TWPL) represented the most robust, advanced and practical solutions for the business needs. They also align with the ISO 55001 requirement for a clear decision-making framework and decision criteria.

Activity Description

ST adapted SALVO to establish an innovative Life Cycle Optimisation (LCO) process, involving a ST-customised mix of

  1. business process changes (i.e. who makes what sort of decision, how)
  2. training courses (rigorous consideration of cost, risk and performance elements, along with all other decision drivers)
  3. decision support tools (DST) that enable instant ‘what if?’ calculations of optimal intervention timing and value impact.

 

The combined process has established a new way of breaking down functional silos and rapidly achieving consensus. ST has created a fundamentally new way of looking at company assets, interventions, and demonstration of value to our stakeholders. One of the distinctive features of this new approach has been how it draws together and visibly applies core asset management principles into everyday decision-making. SALVO forces us to always consider whole life cycle value (business impact). It connects good decision-making to context-specific stakeholder expectations and AM objectives. And it produces clear-cut justification (and assurance) that we are doing the right things, for the right reasons at the right times.

Implementation of such an LCO process requires new skills and a significant change in organizational culture, besides the process changes and tools/systems. It involved a successful change from established (strongly departmental) methods of working, to cross-functional, value- and team-based decision-making. From the outset, therefore, a significant investment was made in training those who should be involved in asset management decision-making. This was supplemented also by an awareness and education program for the stakeholders and sources of relevant asset and intervention expertise. The program started with SALVO/LCO introductory training for potential users/contributors/ beneficiaries. The next phase developed an integrated process map for the LCO process, showcasing its fit with existing ST business processes and systems. Detailed method training was then grouped by decision type, such as for those responsible for projects/ change evaluations, for strategic spares, for operational maintenance, inspection, and for life cycle (e.g. Refurbishment, Renewal) interventions. In all cases, the formal training was closely followed by immediate on-the-job facilitation of ‘live’ current cases and coaching to ensure that conceptual understanding was reinforced and consolidated by practical application. Throughout the program, skills and competency assurance were a priority, using a formal certification scheme (mini exams and independent case validations) to ensure that standards and consistency are maintained.

An agile project management process was used throughout, to refine the process as skills, knowledge, and confidence grew. This has resulted in a naturally evolved group of ‘super-users’ providing peer support and quality validation to those with more intermittent involvement. This has also delivered a strong sense of ‘ownership’ in the resulting solution, embedded within strategic planning and the AM management system. This includes a clear-cut ‘decision-making framework’ and requirements for AM decisions to show how costs, risks, and performance are optimized. The next phase of the transition is now in sight – namely to consolidate such decisions into the corporate resourcing and strategic budgeting processes, including the business interface with Transport for NSW, the ultimate asset owner.

Contract Project Outcomes

The LCO process is consistently revealing scope for changing and improving the mix of costs, risks and performance (compared to expert judgement or current/historical practices). From a representative sample of 8 asset management decisions, 1 case typically confirms current practice to be correct and the others show improvement opportunities of A$20k/year to A$300k/year each (through a mixture of life cycle costs avoided, risks reduced and/or performance improved). And, in a few cases, the impact is substantially greater: already we have several cases where the process has shown individual decision benefits of A$20 + million NPV.

In terms of other organizational benefits, Sydney Trains have found:

  • LCO provides a much-improved level of consistency in asset life cycle decision-making.
  • It provides a structured method for subject matter experts to actively contribute in decision-making.
  • The methodology enables complex combinations of risk, cost and performance factors to be assessed and simplifies the demonstration of their impact upon a decision.
  • It overcomes one of the biggest challenges in AM decision-making, the achievement of consensus between multiple stakeholders with different interests in, or opinions about, the case (such as failure rates or event consequences). LCO cuts through emotions, ‘vested interests’ and ‘paralysis by analysis’.
  • DST enables extremely quick turnaround to tangible outcomes (within a 2-hour workshop) for stakeholders to evaluate options, test for sensitivities and achieve consensus.
  • The tools ensure life cycle decisions are recorded in a centralized library, improving audit trails and capturing history about how a decision was made and why.

“Determining the timing for the renewal of signaling interlockings as they approach life expiry was critical for the business. These are high-value assets and we needed a robust methodology to enable us to analyze the costs and risks and identify the optimum replacement timing. The SALVO/LCO process and DST suite of tools developed by Woodhouse allowed us to undertake this assessment and provide the necessary assurance that we were looking for. The process and tools cover a wide variety of decision types, so we are using them for decision support in many areas of asset management planning.”

Steve Tijou
Asset Strategy Manager, Signals and Control Systems, Sydney Trains

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John Woodhouse

With 30 years’ experience in utilities, oil & gas, transport and other sectors, John is one of the most widely known experts in integrated asset management projects for some of the largest companies in the world.

John is a Founder and Life Fellow of the IAM; he has written 4 books, chaired the development of BSI PAS55 and represents the UK on the ISO55000 committee.

He also led the international MACRO and SALVO collaboration projects in optimised asset management decision-making.

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