Director, Portfolio Value Leadership
It’s impossible to visit an operating plant these days without hearing senior people asking:
• How can we do a better job of keeping up with what this aging asset needs?
• How can we get more value out of all the money and effort we spend on brownfield work?
• How can we get better at handling surprises and priority changes?
• How can we improve productivity among our staff, vendors and contractors?
Conventional thinking holds that because we are talking about picking and executing projects, improvement ought to come from better project evaluation and management. Yet, despite a decades-long focus on project management skills, systems, and discipline, work seems to take longer and cost more. And the backlog of unmet asset needs is growing.
It’s time to reframe the problem. It’s time to change the game.
The four universal concerns bulleted above are asset-level and portfolio-level issues, and they won’t be solved by project-level thinking.
Imagine an airplane, flying towards rising terrain. The wings are beginning to ice up and flying conditions are becoming more difficult. There is growing doubt in the cockpit about whether they'll have enough altitude to clear the mountains they are heading for. Trouble ahead.
Aging process facilities are the airplane. The rising terrain is profiled in business plans: aging equipment, workforce demographics, changing regulations and societal expectations, aggressive competitors, demanding customers, fickle shareholders, new technologies, uncertain regional infrastructure, and so forth.
Any operating asset is wearing itself out and sliding into obsolescence. The Maintenance function and Sustaining Capital keep things aloft. Then, to help the asset clear the rising terrain of regulatory changes, market pressures, and shareholder expectations, Improvement Capital is required. But it competes with Sustaining Capital for limited resources.
To clear looming mountains, pilots concern themselves with their rate of climb. To clear impending business challenges, we portfolio managers should concern ourselves with getting more asset improvements, sooner, for less.
When our guiding purpose is to improve the asset, we can start to view projects as the How, not the Why. We can remind ourselves that a project turns into an asset improvement only when it has been designed, built, and handed over to Operations.
And since the facility is crying for hundreds of improvements, we can’t just manage individual projects. We need to find ways to finish more per year, i.e., to increase the rate of asset improvement so that the plant and equipment can keep up with the growing demands from the business plan. And we need to be more productive with scarce resources while handling inevitable surprises, without losing sight of the main goal.
Where will we start? For portfolio governance, this diamond sparks a conversation about where stewardship time is spent today vs where leadership ought to focus to create more business value. From there, we can dig into the details of what’s getting in the way and how to improve what’s most important.
In under 12 months, we have helped our clients make measurable and valuable increases in the Rate of Asset Improvement. We help busy leaders get better at Picking, Completing, and Governing their brownfield portfolios so that aging assets get more of what they need, when they need it, despite limited resources.
If this sounds like something your aging asset could use, let’s connect. And to learn how you can get more "bang for your buck," read Part Two of this series. Access all parts of the Asset Improvement Series.
For more information, contact Stuart Elliot.
Director, Portfolio Value Leadership