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					                                                           AMC Quick Scan & Business Case (cost/benefit analysis)
 The knowledge and project network for
 enhancing Asset Management Control                                                                                                                                                          Ref.: AMC Base Book, Stavenuiter, 2002, www.amc-rf.com (ISBN: 90-9015938-X)

I Introduction
 For this case asset management control (AMC) is defined as an approach to manage the sequential logistic processes, i.e.: specify, design, produce, maintain and dispose over the life time of an asset, with the aim of ensuring that a capital asset (e.g.: a ship, an
 offshore platform, an aircraft, etc.) meets the operational needs of the customer/user in the most cost-effective way. This case therefore focuses in particular on the cost-effectiveness of a capital asset as a technical system capable of meeting operational
 requirements.

 The indicated 'AMC added value percentage' is based on the impediments found during previous studies [Stavenuiter, 2002] namely:
 - the operational needs of the customer/user are either insufficiently defined, or subject to permanent changes, possibly due to changing operational requirements;
 - logistic results are not clearly related to the operational needs and therefore difficult to measure;
 - there is a lack of asset management information to control the logistics processes.

 This business case covers: technical, economical and organizational/social aspects with regard to the logistic processes involved. When the complexity of technical systems is increasing , which is visible in the multitude of different installations (system elements)
 tracking and tracing changes and their effect on the system performances can be improved by an integrated management support system. This leads to the following research question:
 'How to achieve Cost Effective Management Control of Capital Assets?'

 The Business Case spreadsheet algorithms are kept as simple as possible and are based on the Net Present Value (NPV) principles. This means that (it is assumed that) all costs and revenues are related to their value in present (e.g.
 10.000 euro in the past could have a present value of 12.000 and 10.000 euro in future could have a present value of 8.000 euro, depending on the inflation rate).
 As mentioned already, this business case is focusing on the cost/benefit issues related to AMC in particularly.
 It starts with an initial cost calculation (section IIIb) for setting up the AMC organization, containing the LCM-team , the Asset Management/Logistics Program and the ICT facilities (ref. p. 67).
 An analysis to determine the benefits and profits, directly related to AMC, is the next step. This is based on general improvement factors, determined by Stavenuiter (ref. p. 60).
 A ‘% Added Value’ is introduced to quantify the benefits or profits per main life cycle phase (ref. p. 58) per improvement factor (see section IIIc). It is assumed that implementing an ACM organization should contribute a minimum of 1%
 added value to accountable Life Cycle Management.

II Quick Scan
 To set up the Business Case within time and budget, and to obtain useful results, a selection had to be made considering the following aspects:
 - the asset (ship or ship's subsystem) and related logistic actors;
 - the life cycle phases;
 - the logistic actors involved.
 A briefly overview and relevant information should be available of the system and logistic actors (ref. p. 143). In fact, these aspects require a careful and time
 consuming analysis. For a first impression of the costs and benefits of AMC a Quick Scan and an indicative Life Cycle Cost (LCC) estimation will be sufficient
 according to the following lifecycle (ref. p. 58). This gives insight in the AMC potential.
      LCC Estimation (NPV Cost Indication)                             Euro                   %                               Remarks                                      The AMC improvement benefits can be achieved on every phase by
 1. specify system functionality                                                       0          0%                                                                       balancing the Logistics Process Cycle to get in control (ref. p. 307).
 2. acquire system functionality                                                       0          0%
 3. achieve cost-effectiveness                                                         0          0%
 4. justify phase-out                                                                  0          0%
               Overall LCC (Total Cost of Ownership)                                   0          0%
            AMC Quick Scan Questions
 For the AMC Quick Scan only 7 essential questions, derived from literature (ref. p.
 60), are needed to define a ground for AMC. Is there:                                      Mark       Marking scale: 5 (excelent) to 1 (very poor)

 1. a view on realistic objectives?                                                                    Score indication:
 2. a reliable set of cost and performance figures?                                                    Based on research results (ref. p. 54) it is noticed that
 3. knowledge about the effects of control measures?                                                   the average total score in business is around 15 to 20.
                                                                                                       which means that the AMC benefit, as defined by 10
 4. knowledge about the environmental/operational influences on the system?                            Improvement Factors (ref. p. 61) could be going up to 30-
 5. knowledge about the actual state of the system?                                                    40%.
                                                                                                       Total scoring table:
 6. a view on the future lifecycle periods?
                                                                                                         7 - 15: > 30% improvement by implementing AMC
 7. sufficient data-processing capacity to process the required information?                           15 - 20: > 20% improvement by implementing AMC                      Entities involved in AMC (ref. p. 67).
                                                                           Total Score:       0        20 - 30: > 10% improvement by implementing AMC.




                                                                                                              067466ea-fb01-4794-bf06-6bc0792c3d69.xls                                                                                                                   1
   III Spreadsheet
                                                    Asset:
                                                   Author:
                                             Version/Date:
IIIa   Starting Points
       cost reductions and/or performance improvements
                AMC Improvement Factors (ref. p. 61)                  Determined by the System Manager/AMC expert:
       1.    well-specified objectives                                Based on the operational requirements, system plan and ILS plans
       2.    transparent (technical) system breakdown                 Based on the operational requirements and (conceptual) design
       structure
       3.    transparent (logistics) process structure                Based on the existing organization and contractors available
       4.    system effectiveness measures                            Based on the AMC base book (ref. p. 121) and expert opinion
       5.    (life cycle) cost measures                               Based on the AMC base book (ref. p. 119) and expert opinion
       6.    key performance indicators                               Based on the AMC base book (ref. p. 136) and expert opinion
       7.    system knowledge                                         Based on the AMC base book (ref. p. 339) and expert opinion
       8.    logistic knowledge                                       Based on the AMC base book (ref. p. 343) and expert opinion
       9.    management control knowledge                             Based on the AMC base book (ref. p. 337) and expert opinion
       10. information & communication technology                     Based on the AMC base book (ref. p. 303) and expert opinion

                               LCM-System/asset related data:

                                                                                                                                                                                       Illustration of the Asset involved within the Logistic Process Cycle

  IIIb AMC Cost Indication (Net Present Value)

       Initial (AMC project budget)

       Get Organized (ref. Structering Module p. 68, 145):                                                   Justification (short explanation)
       - defining the system model (ref. p. 68, 145)                                            0   euro     x man-year work: preparation, deliberation, workshops, detemination and modeling
       - realization of the LCM-team (ref. p. 73, 150)                                          0   euro     x man-year work: preparation, deliberation and workshops
       - realization of the ICT facilities (ref. p. 74, 151)                                    0   euro     x man-year work and y euro installed base
                                                           Subtotal                             0   euro

       Get Oriented (ref. Analysis Module p. 77, 151)                                                        Justification (short explanation)
       Spec. System Functionality Analysis (ref. p. 309)                                        0   euro     x man-year work: preparation, deliberation, determination and reporting
       Acquire Syst. Funct. Analysis (ref. p. 315)                                              0   euro     x man-year work: preparation, deliberation, determination and reporting
       Achieve Cost Effectiveness Analysis (ref. p. 318)                                        0   euro     x man-year work: preparation, deliberation, determination and reporting
       Justify Phase-out Analysis (ref. p. 322)                                                 0   euro     x man-year work: preparation, deliberation, determination and reporting
                                                      Subtotal                                  0   euro

       Get Practiced (ref. Training Module p. 79, 155)                                                       Justification (short explanation)
       Task Analysis /Competence Assessment                                                     0 euro       x man-year work: preparation, deliberation, determination and reporting
       Training Program:
       - orientation/seminars                                                                   0   euro     x man-year work: preparation (x man-year), deliberation, participating (y men, z days)
       - workshops (ref. Group Sessions p. 377)                                                 0   euro     x man-year work: preparation (y man-year), deliberation, participating (z men, w days)
       - course modules (ref. p. 85)                                                            0   euro     x man-year work: preparation (y man-year), purchasing (u x v euro), deliberation, participating (w men, z year average)
                                                     Subtotal                                   0   euro

       Get Real (ref. Program Module p. 85, 157)
       Data Acquisition (ref. p. 157):                                                                       Justification (short explanation)
       - dertermining the Year Periods (ref. p. 87)                                             0   euro     x man-year work: preparation, deliberation, determination and reporting
       - determ. the Installation Performances (ref. p. 94)                                     0   euro     x man-year work: preparation, deliberation, determination and reporting
       - determ. the Logistic Processes (ref. p. 112)                                           0   euro     x man-year work: preparation, deliberation, determination and reporting
                                                       Subtotal                                 0   euro




                                                                                                                     067466ea-fb01-4794-bf06-6bc0792c3d69.xls                                                                                                 2
   Get Across (ref. Representation Module p. 105, 163)
   Constructing the LCM Model (ref. AMICO p. 391):                                          Justification (short explanation)
   - setting up the Function Diagram (ref. p. 164)                               0   euro   x man-year work: preparation, deliberation, workshops, detemination and modeling
   - setting up the Installation Diagrams (ref. p. 166)                          0   euro   x man-year work: preparation, deliberation, workshops, detemination and modeling
   - setting up the Activity Diagrams (ref. p. 166)                              0   euro   x man-year work: preparation, deliberation, workshops, detemination and modeling
                                                    Subtotal                     0   euro

   Get Grip (ref. Control Module p. 131, 169)
   Issues for successful implementation (ref. p. 132):                                      Justification (short explanation)
   - achieving and verifying actual data                                         0   euro   x man-year work: preparation, deliberation, determination and reporting
   - exposing and promoting the LCM-model                                        0   euro   x man-year work: preparation, deliberation and workshops
   - using AMICO reports (System Portal Info)                                    0   euro   x man-year work: preparation, deliberation and workshops
   - using 'what-if' analysis (System Portal Info)                               0   euro   x man-year work: preparation, deliberation, determination and reporting
   - organizing LCM-meetings                                                     0   euro   x man-year work: preparation, deliberation and reporting (feed back)
                                                   Subtotal                      0   euro

                             Initial (project budget) Total                      0 euro

   Yearly Average (AMC oper. costs)
                                                                                            Justification (short explanation)                                      % of the initial costs
   Stay Practiced (ref. Training Module p. 79, 155)                              0   euro   maintaining knowledge and skills                                       25
   Be Real (ref. Program Module p. 85, 157)                                      0   euro   maintaining the actual program                                         25
   Keep Across (ref. Repr. Module p. 105, 163)                                   0   euro   maintaining the LCM models                                             10
   Hold Grip (ref. Control Module p. 131, 169)                                   0   euro   maintaining the work processes and contacts                            25

                                     Total Yearly Average                        0 euro

IIIc AMC Benefit/Profit Indication

       AMC objectives over the lifecycle (ref. p. 58)           Period (years)                         Improvement Factors (ref. p. 61)                  % Added                     Justification (short explanation)                Prime Actor
                                                                                                                                                          Value

 1. Specify System Functionality
                                                                                             1. well-specified objectives                                   0      none AMC contribution to accountable Life Cycle Management   fleet owner
                                                                          start:     finish: 2. transparent (technical) system breakdown structure          0      none AMC contribution to accountable Life Cycle Management   design authority
                                                                          1990         1995 3. transparent (logistics) process structure                    0      none AMC contribution to accountable Life Cycle Management   process manager
                          Duration Lifecycle Phase Period:                    5 year         4. system effectiveness measures                               0      none AMC contribution to accountable Life Cycle Management   system manager
                                                                                             5. (life cycle) cost measures                                  0      none AMC contribution to accountable Life Cycle Management   system manager
                      Cost Indication (Net Present Value):                    0 euro         6. key performance indicators                                  0      none AMC contribution to accountable Life Cycle Management   system manager
                                                                                             7. system knowledge                                            0      none AMC contribution to accountable Life Cycle Management   system manager
            No. Actors Involved (indicative, ref. p. 73, 150)                50 entity       8. logistic knowledge                                          0      none AMC contribution to accountable Life Cycle Management   process manager
                                                                                             9. management control knowledge                                0      none AMC contribution to accountable Life Cycle Management   process manager
                                                                                             10. information & communication technology                     0      none AMC contribution to accountable Life Cycle Management   information manager
                                                                                                                      Total percentage to be realized:      0
 2. Acquire System Functionality
                                                                                             1. well-specified objectives                                   0      none AMC contribution to accountable Life Cycle Management   fleet owner
                                                                          start:     finish: 2. transparent (technical) system breakdown structure          0      none AMC contribution to accountable Life Cycle Management   design authority
                                                                          1995         2005 3. transparent (logistics) process structure                    0      none AMC contribution to accountable Life Cycle Management   process manager
                          Duration Lifecycle Phase Period:                   10 year         4. system effectiveness measures                               0      none AMC contribution to accountable Life Cycle Management   system manager
                                                                                             5. (life cycle) cost measures                                  0      none AMC contribution to accountable Life Cycle Management   system manager
                      Cost Indication (Net Present Value):                    0 euro         6. key performance indicators                                  0      none AMC contribution to accountable Life Cycle Management   system manager
                                                                                             7. system knowledge                                            0      none AMC contribution to accountable Life Cycle Management   system manager
            No. Actors Involved (indicative, ref. p. 73, 150)              300 entity        8. logistic knowledge                                          0      none AMC contribution to accountable Life Cycle Management   process manager
                                                                                             9. management control knowledge                                0      none AMC contribution to accountable Life Cycle Management   process manager
                                                                                             10. information & communication technology                     0      none AMC contribution to accountable Life Cycle Management   information manager
                                                                                                                      Total percentage to be realized:      0




                                                                                                   067466ea-fb01-4794-bf06-6bc0792c3d69.xls                                                                                                      3
 3. Achieve Cost-Effectiveness
                                                                                             1. well-specified objectives                                1    minimum contribution to accountable Life Cycle Management   fleet owner
                                                                          start:     finish: 2. transparent (technical) system breakdown structure       1    minimum contribution to accountable Life Cycle Management   design authority
                                                                          2005         2030 3. transparent (logistics) process structure                 1    minimum contribution to accountable Life Cycle Management   process manager
                         Duration Lifecycle Phase Period:                    25 year         4. system effectiveness measures                            1    minimum contribution to accountable Life Cycle Management   system manager
                                                                                             5. (life cycle) cost measures                               1    minimum contribution to accountable Life Cycle Management   system manager
      Average Maintenance Cost Yearly (NPV Indication):                       0 euro         6. key performance indicators                               1    minimum contribution to accountable Life Cycle Management   system manager
                                                                                             7. system knowledge                                         1    minimum contribution to accountable Life Cycle Management   system manager
           No. Actors Involved (indicative, ref. p. 73, 150)               200 entity        8. logistic knowledge                                       1    minimum contribution to accountable Life Cycle Management   process manager
                                                                                             9. management control knowledge                             1    minimum contribution to accountable Life Cycle Management   process manager
             Total Maintenance Cost Indication (NPV):                         0 euro         10. information & communication technology                  1    minimum contribution to accountable Life Cycle Management   information manager
                                                                                                                      Total percentage to be realized:   10
 4. Justify Phase-out
                                                                                             1. well-specified objectives                                1    minimum contribution to accountable Life Cycle Management   fleet owner
                                                                          start:     finish: 2. transparent (technical) system breakdown structure       1    minimum contribution to accountable Life Cycle Management   design authority
                                                                          2030         2035 3. transparent (logistics) process structure                 1    minimum contribution to accountable Life Cycle Management   process manager
                         Duration Lifecycle Phase Period:                     5 year         4. system effectiveness measures                            1    minimum contribution to accountable Life Cycle Management   system manager
                                                                                             5. (life cycle) cost measures                               1    minimum contribution to accountable Life Cycle Management   system manager
                     Cost Indication (Net Present Value):                     0 euro         6. key performance indicators                               1    minimum contribution to accountable Life Cycle Management   system manager
                                                                                             7. system knowledge                                         1    minimum contribution to accountable Life Cycle Management   system manager
           No. Actors Involved (indicative, ref. p. 73, 150)                 20 entity       8. logistic knowledge                                       1    minimum contribution to accountable Life Cycle Management   process manager
                                                                                             9. management control knowledge                             1    minimum contribution to accountable Life Cycle Management   process manager
                                                                                             10. information & communication technology                  1    minimum contribution to accountable Life Cycle Management   information manager
                                                                                                                      Total percentage to be realized:   10
                                    Total Life Cycle Cost                     0 euro




 IV Calculations (based on Net Present Value principles)

IVa Cost of Asset Management Control
                                    Total Life Cycle Period                 45   year
                                   AMC years in operation                   30   year
                                      Intitial (Project) Cost                0   euro
                                          Total Yearly Cost                  0   euro
                                        Total Cost (AMC)                     0   euro

IVb Added Value of Asset Management Control
           Added Value on Specify System Functionality                       0   euro
           Added Value on Acquire System Functionality                       0   euro
            Added Value on Achieve Cost-Effectiveness                        0   euro
                     Added Value on Justify Phase-Out                        0   euro
                                 Total Profit on AMC                         0   euro

IVc Figures of Merit on AMC

                      Total Return On Investment (ROI)                       0 euro        Total Profit - Total Cost
                              Total ROI Average Yearly                       0 euro        (Total Profit - Total Cost) / Total Life Cycle Period

                      Pay Back Period (approximately)           #DIV/0!        year        Initial Cost/ROI Average Yearly
                                  Overall Profitability                      0 factor      Total Profit / Total Cost




                                                                                                   067466ea-fb01-4794-bf06-6bc0792c3d69.xls                                                                                                4

				
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