A general applicable Process Improvement Approachwww.amc-rf.com 10 October 2005

FunctionFunctionBased InnovationBased Innovation

&&Continuous Process Continuous Process

ImprovementImprovement

Asset Management Control Asset Management Control Introduction WorkshopIntroduction Workshop

1 Day Workshop Program1 Day Workshop Program

• AMC Introduction (9.00 hr)AMC Introduction (9.00 hr)• Asset Management Context AnalysisAsset Management Context Analysis• AMC Quick ScanAMC Quick Scan• LunchLunch• AMC Improvement AssessmentAMC Improvement Assessment• AMC Business CaseAMC Business Case• Workshop Evaluation (17.00 hr)Workshop Evaluation (17.00 hr)

Asset Logistics Process CycleAsset Logistics Process Cycle

The Workshop Starting PointsThe Workshop Starting Points

AMC Process Definition MatrixAMC Process Definition Matrix

AMC DOMAIN (ASSET RELATED)

RE

ALI

ZE

CONTROL

PLA

N

AR

RA

NG

E

MA

NA

GE

PERFORMORGANIZESPECIFY

PR

OC

ES

S E

LE

ME

NT

S

PROCESS PHASES

SERVICE LEVELAGREEMENT

CONTRACTMANAGEMENT

RESOURCEMANAGEMENT

CONTROLPLAN

LCM SYSTEMPLAN

SYSTEM COST-EFFECTIVENESS

TEAMWORK

ACTORDEFINITION

MODEL

LIFECYCLEMANAGEMENT

TEAM

TEAMMANAGEMENT

ORGANIZATIONALPLAN

ACTIVITYPLAN

MANAGEMENTCONTROL

SYSTEMINFORMATION

PORTAL

TEAMBUILDING

LIFECYCLEMANAGEMENT

MODEL

Determination of: Assets and Actors involvedDetermination of: Assets and Actors involved

Business Process Function Model Business Process Function Model

Principles & DefinitionsPrinciples & Definitions

BUSINESS PROCESS DOMAIN

RE

AL

IZE

Function AreaActor Chain

CONTROL

PLA

NA

RR

AN

GE

MA

NA

GE

PERFORMORGANIZESPECIFY

PR

OC

ES

S E

LEM

EN

TS

PROCESS PHASES

A ‘day to day’ Management ModelA ‘day to day’ Management Model

OPERATIONAL ENVIRONMENT

TECHNICAL SYSTEM

LOGISTICS PROCESS

Need Functionality

Asset Management Focus

REQUIREMENTS ACCOUNTS

DIRECTIVES CONTROLS

PRODUCTS & SERVICES

DIAGNOSES(feedback)

Key to Symbols:

ACTOR ENTITY

EXTERNAL COMMUNICATION

INTERNAL COMMUNICATION

ASSET MANAGEMENT FOCUS

UtilizationAuthority

Mainten.Authority

PurchaseAuthorityDesign

Authority

The Context Analysis Framework

The context of systems thinkingThe context of systems thinking

Cost-Effectiveness

View on Performances

View onCost

Asset/SystemStructure

Logistics ProcessStructure

Methods & TechniquesActors

serviceability

applicability

attitude

skills

mindset

knowledge

Asset Management Control

Context Analysis ReportsContext Analysis Reports

• System Specifications (technical & logistical)System Specifications (technical & logistical)• Organizational Aspects (men & means) Organizational Aspects (men & means) • Process Performance (quality & quantity)Process Performance (quality & quantity)• Management Control (relevant & reliable) Management Control (relevant & reliable)

AMC Quick ScanAMC Quick Scan(3 Questions per Function Area)(3 Questions per Function Area)

AMC DOMAIN (ASSET RELATED)

RE

AL

IZE

CONTROL

PLA

N

AR

RA

NG

E

MA

NA

GE

PERFORMORGANIZESPECIFY

PR

OC

ES

S E

LEM

EN

TS

PROCESS PHASES

SERVICE LEVELAGREEMENT

CONTRACTMANAGEMENT

RESOURCEMANAGEMENT

CONTROLPLAN

LCM SYSTEMPLAN

SYSTEM COST-EFFECTIVENESS

TEAMWORK

ACTORDEFINITION

MODEL

LIFECYCLEMANAGEMENT

TEAM

TEAMMANAGEMENT

ORGANIZATIONALPLAN

ACTIVITYPLAN

MANAGEMENTCONTROL

SYSTEMINFORMATION

PORTAL

TEAMBUILDING

LIFECYCLEMANAGEMENT

MODEL

A possible result with 4 A possible result with 4 red red areas to improve!areas to improve!

The Team Based AMC ModelThe Team Based AMC ModelOPERATIONAL SYSTEM

TECHNICAL SYSTEM

LOGISTICS SUPPORT SYSTEM

LCM-systems

Need Functionality

LCM-team

REQUIREMENTS ACCOUNTS

DIRECTIVES CONTROLS

PRODUCTS & SERVICES

DIAGNOSES(feedback)

Key Elements:

ASSET MANAGEMENT PROGRAM

ENGINEERS & MANAGERS

ANALYSIS & CONTROL TOOLS

COMPUTER APPLICATIONS

WIDE AREA NETWORK

The Business Case Framework

AMC Improvement FactorsAMC Improvement Factors

1.  well-specified objectives 2.  transparent (technical) system breakdown structure3.  transparent (logistics) process structure 4.  system effectiveness measures 5.  (life cycle) cost measures6.  key performance indicators7.  system knowledge8.  logistic knowledge9.  management control knowledge10.information & communication technology

The Business Case Baseline

Total Life Cycle Cost 4.000.000.000 euro

IV Calculations (based on Net Present Value principles)

IVa Cost of Asset Management ControlTotal Life Cycle Period 45 year

AMC years in operation 30 yearIntitial (Project) Cost 7.050.000 euro

Total Yearly Cost 21.675.000 euroTotal Cost (AMC) 28.725.000 euro

IVb Added Value of Asset Management ControlAdded Value on Specify System Functionality 0 euroAdded Value on Acquire System Functionality 0 euro

Added Value on Achieve Cost-Effectiveness 200.000.000 euroAdded Value on Justify Phase-Out 10.000.000 euro

Total Profit on AMC 210.000.000 euro

IVc Figures of Merit on AMC

Total Return On Investment (ROI) 181.275.000 euro Total Profit - Total CostTotal ROI Average Yearly 4.028.333 euro (Total Profit - Total Cost) / Total Life Cycle Period

Pay Back Period (approximately) 1,8 year Initial Cost/ROI Average YearlyOverall Profitability 7 factor Total Profit / Total Cost

The RNLN Air Defense Frigates The RNLN Air Defense Frigates Business Case Business Case (for (for example)example)

The baseline for an AMC Realization Project

EvaluationEvaluation

Asset Management Control eliminates Asset Management Control eliminates Performance Killers & Cost DriversPerformance Killers & Cost Drivers

by getting Systems in Controlby getting Systems in Control