guest editorial

Mohammad Shahidehpour

a delicate balance
the business and science of asset management

Asset management could offer more

comprehensive purchasing decisions,
operating schemes, and maintenance
scheduling for improving the return on
capital investment.
The first article on asset management is written by me and Roberto
Ferrero. Our article, Time Management for Assets, states that comprehensive strategies for the acquisition,
operation, and maintenance of assets in
a competitive environment use ample
and intelligent chronological information on the status of physical assets.

ARTVILLE, LLC

IT HAS BEEN MY UTMOST

pleasure to serve as the guest editor for
this special issue of IEEE Power &
Energy Magazine on asset management. The advent of competition in
wholesale electricity has forced power
companies to focus their investments
on maintaining the competitive position
of their assets, while trying to squeeze
more performance out of their aging
equipment with less expenditure.
Asset management is now an
important phrase and issue in the once
quiet, monopolistic electricity world.

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IEEE power & energy magazine

1540-7977/05/$20.002005 IEEE

The strategies that make up power system asset management may include
selecting more appropriate equipment,
upgrading poorly performing equipment, or changing maintenance and
operating practices. Experience shows
that the coordination of time scales for
asset management plays a critical role
in strategic decisions. Asset management based on possible time scales is
categorized as follows: real-time asset
management (online outage management); short-term (day ahead and
weekly) asset management, which
encompasses risk-constrained asset
valuation; midterm (monthly and seasonal) asset management for optimal
maintenance scheduling of equipment
and optimal allocation of resources
(for example, fuel, emission, and
hydro); and long-term (yearly and
beyond) asset management, which
encompasses facility planning and
acquisition. The article says that the
four time-based asset management
issues are quite interrelated. Proper
long-term or midterm asset management could provide a wider range of
options for managing risks in shortterm and real-time asset management.
In addition, power system asset management strategies over shorter time
periods could yield useful signals,
enabling asset management over a
longer time span (mid- and long-term)
to be more efficient and practical. In
essence, a global analysis of asset
management options could provide
additional opportunities for seeking
optimal, practical, and feasible management states in various time scales.
may/june 2005

Richard Brown and Bruce

Humphreys article, Asset Management for Transmission and Distribution, maintains that asset management
is the art of balancing performance,
cost, and risk. Achieving this balance
requires support from three pillars of
competency: management, engineering, and information. Initiatives can
stem from any of these pillars, but they
must always consider and coordinate
with the other two. Achieving this balance also requires the alignment of corporate goals, management decisions,
and technical decisions. It requires a
corporate culture, business processes,
and information systems capable of
making rigorous and consistent spending decisions based on asset-level data.
The result is a multiyear investment
plan, maximizing shareholder value
while meeting all performance, cost,
and risk constraints. Instead of a hierarchical organization where decisions
and budgets follow the chain of command into functional silos, asset management is a single process that links
asset owners, asset managers, and asset
service providers, allowing all spending decisions to be aligned with corporate objectives supported by asset data.
This article states that asset management is capable of addressing the most
pressing issues facing the transmission
and distribution businesses, including
aging infrastructure, reliability, asset
utilization, planning, automation,
maintenance, project selection, and risk
management. Each issue is daunting
when considered in isolation. More
daunting is the thought that true asset
management will optimize decisions
across all of these issues simultaneously. Asset management can be truly revolutionary, but only when it is based on
three functions, a single process, supporting systems, and a robust skill set
of management, engineering, and
information.
The following article by Colin
Palombo, Eight Steps to Optimize
Your Strategic Assets, describes an
eight-step process to implement port-

may/june 2005

folio management for a single power

station during its operational, revenuegenerating life-cycle phase. These
steps can then be applied to extend
portfolio management to fleets of
strategic power assets and to other
phases in the plant or transmission
asset life cycle.
Palombo states that portfolio management techniques can make a dramatic impact on
the value you
generate from the
generating assets
under your control. Plants may
obtain up to a
20% increase in
return on capital
employed and
substantial
improvements in
softer benefits,
such as improved
collaboration, faster decision making,
and reduced administrative effort.
However, the success of this new
approach, and the value you can obtain
for your own plant, will depend heavily on strong leadership and a well
thought-out, systematic approach to
implementation. If implemented successfully, portfolio management will
help plant operators increase shortterm earnings and position the plant
for superior economic returns over the
longer term. Portfolio management
also provides other nonfinancial
rewards, including better collaboration
across multiple departments and organizational layers, faster management
processes based on real-time information, and a lower administrative workload by using an automated portfolio
management system.
One Asset, One View, the article
by Yakout Mansour, Larry Haffner,
Vidya Vankayala, and Ebrahim Vaahedi of British Columbia Transmission
Company (BCTC), discusses the
implementation of integrated asset
management at BCTC. The players in
asset management are associated with

the following capability/maturity levels: asset operation, asset monitoring,

asset management, and asset optimization. The article describes the details
of business-assessment, impact-study,
and asset-management strategies as
part of the BCTC project. The asset
management project execution
includes business process modeling
and technology and people threads, all
running concurrently.
Also
described are the
business modeling, technical
architecture,
change management, and implem e n t a t i o n
highlights.
Asset management at BCTC
addresses process,
technical, and
people dimensions and represents a
major IT project in the utility industry.
A bus-based architecture leveraging a
mature technical architectural pattern is
presented, and management issues
involving impact assessment, training,
and documentation are discussed. The
article shares BCTCs experience with
the implementation of the proposed
integrated asset management strategy.
The expected benefits of the project
include improved reliability and
reduced failure rates, increased service
provider effectiveness, improved regulatory submissions (i.e., planning
integrity, reduced total cost of ownership, and extended asset life), minimized inventory, the development of a
long-range asset management plan and
accurate cash flow, and improved performance measures, processes, and
structure that help meet governance
requirements to manage the BC Hydro
assets. The conclusion asserts that integrated asset management is expected to
enhance the capabilities of BCTC as
the proposed solution matures in functionality and more users adapt to its
p&e
strategies.

Portfolio management
techniques can make
a dramatic impact on
the value you
generate from the
generating assets
under your control.

IEEE power & energy magazine

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