Asset Management Can Improve Your Bottom Line - A Case Study

Asset intensive industries, such as utilities, are realizing the importance of proper asset management as they find themselves under increasing pressure to deliver value to both customers and shareholders, whilst satisfying the demands of regulators.
Published: Wed 05 Feb 2014

Asset management is the ability to harness the full value from an asset from the time you acquire it to the time that you dispose of it. This is how asset management is viewed by Alan Tait, Managing Director of Pragma in South Africa in his presentation, A Model for Electricity Distribution Infrastructure Asset Management, at the African Utility Week 2013.

Mr Tait discusses a case study in South Africa where proper asset management proved to be of great value to Ekurhuleni Metropolitan Municipality in Johannesburg, South Africa.

The National Energy Regulator of South Africa (NERSA) initiated an independent technical audit and the following problems were unearthed at the Municipality:

  • If the level of maintenance and refurbishment was not improved and the personnel skill level was not enhanced, an acceptable level of service would have been impossible to deliver.
  • The technical asset management and operation was deemed to be lagging

  • Investment in the maintenance and refurbishment of the networks (mostly in the older sections of the medium and low voltage networks) was lacking and had to be improved

  • In many areas, there was an absence of technical support systems and a lack of common operational and maintenance procedures

  • Modern methods of network asset control and maintenance management was poor or absent

  • Skills shortages were described as exacerbated by unrealistic human resource policies.

Centralised Asset Care Centre

The Municipality was referred to the Centralised Asset Care Centre which manages assets in terms of a maintenance plan, policy, strategy, and maintenance tactics in compliance with various national and international standards. Compliance to these is monitored on a regular basis.

Their functions include:

  • Management of the Computerised Maintenance Management System (CMMS)
  • Management of a multi-year refurbishment plan

  • Identification of when maintenance and refurbishment bids are required

  • Updates asset register and financial values

  • Monitors and reports on maintenance functions and network interruption statistics

After a full assessment was carried out, 81,476 assets were loaded and comprised of high and medium voltage assets. Their total replacement value was ZAR 26 billion, with a depreciated value of ZAR 13 billion.

Standardised Maintenance Programme

Once the assessment had been carried out, a standardised maintenance management programme was established and comprised of the following:

Time based inspections on:

  • Primary and secondary substations

  • Substations, Kiosks and Batteries

  • High and medium voltage overhead lines

  • Substation intrusive maintenance

  • Infrared scanning

  • Transformer oil sampling

  • Cable sheath testing

Usage Based:

Transformer Tap Changer Refurbishment – On 30 000 operations

Condition Based:

Transformer Oil Sampling results are captured and follow-up work triggered if pre-set values are exceeded

Work Orders:

Approximately 11 500 work orders are created and printed monthly.

History of all the work done is captured in the system.

Faulty Bulk Metering Units:

Monitor On-Line Metering System and create follow-up work orders for faulty meters in order to enhance revenue management.

Power Quality Instrumentation:

Monitor Online Power Quality System and create follow-up work orders for faulty instruments.

Vehicle management:

502 Energy Department vehicles are loaded in the CMMS

Issue Certificate of Fitness and License Renewal work orders

Standardised Asset Refurbishment Plan:

Due to the ageing of municipal assets, it was discovered that refurbishment was essential. As a result, a 3% maintenance ring fencing tariff was allocated to refurbishment.

To keep maintenance up to date, a multi-year plan is developed and updated annually. Through the use of Forced Interruption statistics, local knowledge and inspection results are used to identify refurbishment projects.

Since the 2005/2006 Financial Year more than R900 million was utilised on asset refurbishment.

Ongoing initiatives were put into place to ensure a focused improvement of assets and these include:

  • Asset Register Verification and Updating.
  • Frequent Asset Inspections.

  • Completion of Follow-up Work.

  • Intrusive Maintenance.

  • Infrastructure Refurbishment.

  • Overhead line and underground cable maintenance and refurbishment.

  • Load all medium voltage cables on the computerised maintenance management system

  • Load all protection panels with relays and setting values

By following these strategies, a number of achievements were gained:

Achievements

  • Maintenance tactics are standardised across the entire Ekurhuleni area.

  • Bids have been put into place to cover all the municipality asset requirements

  • Work planning and control is standardised .

  • The backlog in follow-up work was identified and dramatically reduced.

  • Intrusive maintenance is done on a regular basis.

  • Revenue is enhanced by minimising repair time on faulty meters

  • Infrastructure Refurbishment targets real value-adding issues.

  • Down time losses have been reduced

  • Reduction in average hours to restore faults

  • Improvement in forced supply loss interruption index

Proper asset management can save a company a great deal of money and time. Says Nico Mabaso, Executive Manager-Business Developer at Pragma, “With our assistance, service delivery will improve due to proper asset care and management of assets, saving up to 75% in the breakdown of assets. Preventative asset maintenance is much more effective than reactive asset management, which of course will lead to more funds being available for other services within the public sector.”

The case study clearly shows that through proper asset management in utility companies, challenges can be overcome and business performance optimized throughout all departments.