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John Q. Todd Sr. Business Consultant, PMP

risk - Back to Basics - Asset Risk
Having been to a particular client site many times, I never thought much about this one alarm that would go off several times each day. The crew would roll their eyes, sigh, don their PPE, and then scurry out of the room to silence the noise. No problem for me. I was just a visitor.

The last time it happened, I found myself alone in a room during lunchtime. No problem. Someone will take care of it, I thought. They must be out there somewhere, right?
After 5 minutes of screeching, I too donned my PPE and went out looking for someone… anyone. Finally after 30 minutes of looking, calling, and texting, a slightly annoyed someone appeared and silenced things.

“So, what is that alarm for?” I asked, removing my earplugs.

“Aw, that just tells us the XYZ thing shut down. We just hate the noise. Means nothing.”

This got me to thinking… was that asset at risk due to their “procedure,” or was the operation (me!) at risk due to its “failure?”

You can read volumes about risk assessment and analysis. Get certified, get a college degree, win an argument at a bar… there are all kinds of sources of expertise. Everyone has their flavor of performing these studies and hold tight to their methodology and the story it tells their organization.

No matter the bent you have, risk is all about probability and what drives that probability.

Maintenance procedures – do they add or mitigate risk?

What is the probability that your maintenance procedures (or lack thereof) are setting your assets up for failure? How would you even start evaluating this? Sure, you do things to your assets as per your established Preventive Maintenance Program (aka Probably Maintaining Properly?), but how can you quantify its effectiveness?

Imagine Pump A failing every 3 months or so. We change our seal vendor and now it has not failed in an entire year. Nice! Certainly not a 100% “fix” for future failures but by collecting before, during, and after data the decision was made to spend $1000 to save $10k over time. Your asset data was used to support these actions.

The other risk – risk of Asset failure to the organization?

What is the probability of the failure of an asset having an impact on the operation? If you have redundancy in your systems, the probability of a single asset having a significant impact is low. But, if you only have one… a single point of failure… you are tied down by its single probability of failure.

I have a design engineer friend who told a client two years ago that the probability of a device they forced him to put in the serial system would fail… in about two years. Guess what? Last month the main bearing ground itself to powder and the system is now expected to be down for 3 months… as will this stream of their business. Huh, imagine that.

Determining how critical an asset is to your organization, as well as understanding the probability of its potential failures is a great planning tool. Again, if you can switch over to a backup in 10 minutes, failure probability is not too much of a concern. Have only one and a replacement is 3 months and $1M away. Might be worth a look.

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