In Part Two of this blog, I outlined why establishing the combination of a consistent, standard equipment classification and a location hierarchy structure is an important fundamental step in laying a strong and dependable informational foundational. A solid and systematic data structure will improve data clarity and visibility to help your organization to better understand your problems, make better decisions, and take effective action, as well as instill confidence in your ability to use that data to answer the questions you need to drive performance improvements. In this post, let’s take a look at a third critical foundational element.
Establishing Asset and System Criticality
Performing a criticality assessment allows you to establish the criticality of systems and the individual process locations and pieces of equipment that make up those systems by defining the consequences (severity) and probability (frequency) of the failure events that may occur. Using this technique, you can determine which process locations, pieces of equipment, and systems pose the highest risk in your facility and prioritize your asset performance improvement efforts (manpower, time, resources, money, technology, etc.) accordingly. This is a qualitative process that can be easy to implement and understand once the definitions for consequences and frequency have been defined.
While there can be nuances and variations in quantifying risk, it is generally defined as the consequence (severity) multiplied by the probability (likelihood or frequency) of a particular negative event. Consequence is defined as the direct, undesirable result of a failure event, often measured with respect to health/safety impact, environmental damage, operational effect or direct cost to the business. Below is an example range of consequence values and descriptions with respect to Health and Safety:
1 (Very Low) - None to minor first-aid
10 (Low) - Lost time injury
100 (Medium) - Hospitalization and/or temporary disability
500 (High) - Permanent disability and possible litigation
1000 (Very High) - Fatality, litigation, and business jeopardy
On the other hand, probability is defined as the frequency or likelihood of a failure event occurring over a specified period of time. Below is an example range of probability values and descriptions with respect to Health and Safety:
0.05 (Improbable) – Unlikely to occur, but possible
0.1 (Remote) - Likely to occur much less than mission time
0.3 (Possible) - Likely to occur less frequent than mission time
1 (Probable) - Likely to occur the same as mission time
5 (Frequent) - Likely to occur more frequent than mission time
Once these values have been established by your organization, they can be utilized in the form of a Risk Matrix that can be used to assess risk rankings for each risk category and calculate an overall risk rank value for an asset, functional location or system. Below is an example Risk Matrix that could be implemented for such purposes:
So, why is establishing criticality important and how can I use it to improve performance? Criticality rankings are a very effective first step in helping to determine how you will maintain, operate, inspect, monitor, analyze and apply overall resources dedicated to ensuring an asset or system does not fail. Having asset criticality information integrated as a part of the overall asset management process can have a major impact on risk reduction and help focus resources for the greatest performance impact. It also enables you to prioritize work management and overall performance improvement initiatives and provide a risk basis for strategy development and management.
For example, more rigorous strategy development methods may be employed for high critical systems and assets to ensure the proper strategies are defined to mitigate asset failures. You might conduct RCM or RBI analyses to develop effective maintenance and inspection strategies for highly critical assets or systems as opposed to at the other extreme, employ a “run to failure” strategy for assets or systems with a low criticality ranking that pose very little risk or impact if they fail. Expanding on this concept, you might also decide to conduct more frequent inspections, perform more operator rounds, invest and install monitoring technologies, perform more preventive or predictive maintenance tasks, etc. on high criticality equipment or systems versus low criticality. Leveraging criticality rankings to drive and prioritize strategies, actions and resources is essential to establishing an effective and efficient asset performance management program.
The advantages of having criticality established for your assets and systems can provide you with a powerful strategic edge in the ongoing quandary of balancing cost and risk, and can pay significant dividends by enabling organizations to make intelligent decisions regarding the allocation of resources to mitigate the most risk. Stay tuned for the fourth and final post in this series coming soon…