Transcript Assets/Planning Peter Buckland Manager Assets HUNTER WATER
Setting Service Levels A simple task or a major challenge in Asset Management?
Kevin Young Hunter Water Corp.
11 April 2002
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Asset Management - A Definition
Meeting agreed customer service levels while minimising whole of life costs Different approaches to meeting or determining service levels - Kevin Young Asset capability / whole of life costing Peter Buckland 3
Setting Service Levels
A number of categories Environment Health Customers Requires alignment of service levels with Business Plan / Corporate Planning 4
Setting Service Levels
Range of approaches world wide Fixed mandatory levels under an operating contract / licence Continuous improvement to higher service levels Maintaining condition of assets (a proxy approach) Determined in consultation with customers 5
Hierarchy of Service Indicators in an Operating Licence Framework
Vehicle Penalty Operating Licence
Performance Indicators Data 6
Service Levels under an Operating Licence
Determined based on historic performance A minimum safety net of customer protection
Water Supply - Discontinuity
100 98 96 94 92 90 88 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 Result Licence 7
Continuous Improvement to Higher Service Levels
By benchmarking By “league tables” - comparison by embarrassment Needs good information of cost / service level trade-off 8
Setting service levels and trade-offs
High Avg • I • L Inefficient: High Cost/Unit of Service • B • D • C • F K •
Best Performers
• • E • A • J H • M Poor Performers: High Cost/Low Service Low Low (High Costs) Service Level • G Potentially Inadequate Avg Productivity Level(Efficiency) High (Low Costs) 9
Setting of Service Levels - Link to Replace/Repair Decision INCREASED FAILURES HIGH LEVEL OF SERVICE ASSET LIFE REDUCED FAILURES LOW
Life Cycle Costs
Must include community costs water continuity direct costs social disruption costs traffic property damage environmental costs 11
Setting of Service Levels - Link to Replace/Repair Decision INCREASED FAILURES HIGH LEVEL OF SERVICE ASSET LIFE REDUCED FAILURES LOW
Setting of Service Levels - Link to Replace/Repair Decision INCREASING COST DECREASING SERVICE INCREASING COST INCREASING SERVICE INCREASED FAILURES HIGH A B LEVEL OF SERVICE ASSET LIFE A =MIN. COST B =MAX. SERVICE PER UNIT COST “ BEST VALUE FOR MONEY” REDUCED FAILURES LOW
Setting of Service Levels - Link to Replace/Repair Decision INCREASING COST DECREASING SERVICE INCREASING COST INCREASING SERVICE INCREASED FAILURES HIGH LEVEL OF SERVICE ASSET LIFE C C= APPROPRIATE CUSTOMER SERVICE LEVEL AND COST REDUCED FAILURES LOW
Minimum Total LCC Network Roughness (NRM)
Life Cycle Cost vs Network NRM
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Conclusions
The setting of service levels requires An understanding of customers’ requirements and the cost trade-offs Knowledge of asset degradation and repair/replace trade-offs Assessment of full community costs Pricing to be based on full costs of asset replacement and servicing Good asset management to lead regulatory debate 16
Cumulative Reduction in Operating Cost per Property
0.05
-0.05
0 -0.1
-0.15
-0.2
-0.25
-0.3
-0.35
-0.4
-0.45
1990/91 1992/93 1994/95 1996/97 1998/99 2000/2001 Hunter Water Corp Industry Trend 17