DISTRIBUTION ASSET MANAGEMENT

“FROM ASSET FOCUSED TO ASSET CENTRIC”

Contents
Introduction
Assets and asset management defined
The How to transition from focusing on assets
to being asset centric?
How does Eskom Distribution measure up?
What we want to achieve - the end state
Filling the gaps
Who is going to do it?
What is it going to cost?
Appendices
 Distribution Asset Management Storybook V.01

DISTRIBUTION ASSET MANAGEMENT

“FROM ASSET FOCUSED TO ASSET CENTRIC”
INTRODUCTION
The Eskom Distribution business at its core is
an asset-based organization. These assets are what
enables the Distribution business to service
its customers and allows the transport of
electricity to the end-customers. While the
business is focusing on making its assets work in
order to deliver its services, the need for a more
conscious and deliberate strategy of asset
management for the Eskom Distribution business should be seen against the context of the
recent “back to basics” approach introduced into the business. Asset management is “the
basic business” of Eskom Distribution and while currently the business is doing asset
management it is happening as a result of historical business as usual, rather than current
business happening as a result of conscious management and operations of its assets. This
is the core difference between being “asset focused” rather than “asset centric”.

ASSETS AND ASSET MANAGEMENT DEFINED

Before we can manage something we need to know what it is that we need

to manage. Once we know what we manage we can determine how to
manage it.
In the Eskom Distribution context assets are defined as:
- physical, immovable plant, equipment or infrastructure that forms
part of Eskom Distribution’s high voltage (HV)1, medium voltage
(MV)2 and low voltage (LV)3 networks, and that has a direct impact
on the life cycle of the power network.
Assets need to be managed through a structured or formal asset
management approach. In the Eskom Distribution context it can be
formalized as:
- a formal approach through which Eskom Distribution manages its
physical assets and associated performance, risks and expenditures
over the life cycle for the purpose of the achieving Eskom
Distribution’s vision and business objectives.
Such a formal asset management approach provides Eskom Distribution a sound basis for:
- continuous business improvement, an umbrella to bring existing good practices
together and filling the remaining gaps
- improving performance over total asset life
- balancing performance, risk and expenditures
Major benefits of achieving the change from unconscious to conscious asset management
are improved:
- risk management,
- network availability,
- reliability,
- quality of supply,
- financial decision making,

1
High voltage (HV) are nominal voltage levels > 33 kV ≤ 132 kV – also referred to as sub-transmission
2
Medium voltage (MV) are nominal voltage levels > 1 kV and less than ≤ 33kV
3
Low voltage (LV) are nominal voltage levels ≤ 1 kV

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 Distribution Asset Management Storybook V.01

- better tariffs due to efficiencies,

leading to lower cost of electricity and in turn resulting in improved customer satisfaction. A
secondary benefit is that if a standardized approach is applied the business also gains the
ability to benchmark against similar utilities.

THE HOW TO TRANSITION FROM FOCUSING ON ASSETS TO BEING ASSET CENTRIC ?

In recent times the most international utilities appear to be

recognizing that the British Standards Institution’s (BSI) Publicly
Available Specification (PAS 55)4 for optimized management of
physical assets provides a well thought through and tested approach
to apply as a guideline. PAS 55 provides for clear definitions and a 28-
point requirements specification for establishing and verifying an
integrated, optimized and whole-life management system for all types
of physical assets. PAS 55 is proving to be an essential, objective
definition of what is required to demonstrate competence, establish
improvement priorities and make better, clearer connections between
strategic organizational plans and the actual day-to-day work and
asset realities.
What are the benefits of following the PAS 55 approach?
- significant bottom-line cost and performance/service improvements
- provides clear evidence of sustainable good governance
- not just a paper exercise but PAS 55 specifically requires evidence of alignment
between good intentions and real, on-the-ground delivery
- valuable mechanism to ensure that the principles of whole life cycle planning, risk
management, cost/benefit, customer focus and sustainability etc. are actually
delivered within the day-to-day activities of capital project implementation,
operations, maintenance etc.

HOW DOES ESKOM DISTRIBUTION MEASURE UP?

During 2006 a PAS 55 assessment was completed for Eskom Distribution and the following
recommendations resulted from the assessment:
- Endorsement of ‘asset management’
as a model and philosophy across
Eskom Distribution. Includes Asset
PAS
55
Management objectives and KPIs for all
- Culture and communications: clear
accountabilities, appropriate

-
empowerment
Put in place asset management policy 4.1.0 General Requi
and strategy
- Asset management plan – includes
resource planning
4.2.0 AM Policy and
- Use of Decision Support Tools to
support whole life costing 4.2.1 Asset Managem
- Risk management of assets. Put in place an appropriate asset based risk register
- Training, education and ‘knowledge management’
4.2.2
The assessment determined that there was room for improvement in how Eskom
Asset Managem
4.3.0 AM Information
Distribution was doing asset management compared to international best practice (the blue
shaded area in the radial chart above illustrates how Eskom distribution measured relative
to the ideal of having the whole circle filled).

4
See http://pas55.net/
4.3.1 AM Information
4.3.2 Risk Identifica
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 Distribution Asset Management Storybook V.01

Eskom Distribution already possesses the majority of the tools and processes
needed to achieve an asset centric state; we need to focus on making them work!

Flowing from this assessment and recommendations the current Distribution Asset
Management initiative follows international best practice and has been fully aligned to PAS
55 requirements.

The summary provides context for the development of the current Distribution Asset
Management initiative:
ph1 Phase 1 - PAS 55 assessment completed and informed project direction

ph2
Phase 2 - Asset management policy and strategy developed
- Business and Information Management initiatives mapped
- Asset management framework developed
- Specific issues, recommendations, projects and end state developed for
each life cycle stage
Thispae

Current phase - Implementation

- Eskom Distribution to refocus to be asset centric and aligned to PAS 55
- Prioritised implementation plan aligned to life cycle stages and supporting
pillars
- Risk and Information management requirements determined
- Implementation structure and business resource secondments
- Project governance structures

WHAT WE WANT TO ACHIEVE - THE END STATE

A comprehensive analysis was conducted from which an asset management policy and
strategy were developed as well as an asset management framework to guide the design
and implementation phase of the Eskom Distribution asset management initiative.

We want the Eskom Distribution business to be consciously asset centric.

In order to achieve this outcome the following actions need to happen:

a) Appointment of national Aasset Management Manager (Owner?)owner
b) Clearly identify the regional Aasset managerOwner(s)
c) Clearly mobilize and ring fence asset care centre(s)
d) Clearly identify a separate national asset operatorClearly clarify and allocate the
roles of Operator and Asset Care with the region.

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 Distribution Asset Management Storybook V.01

The following structural adjustments need to be effected in the business to support best
practice Asset Management:
a) Re-link or strengthen the relationship with IARC into Eskom Distribution
b) Create Re-link ownership of business Engineering related information management
(IM) capacity within Asset Managementto Eskom Distribution business.
c) Re-link national Engineering under the Asset Management Manager (Performance
and Value Chains)

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 Distribution Asset Management Storybook V.01

The following diagram encapsulates the envisaged end-state form an organisational design
point of view:

DxBusiness
MDDistribution Performance

DxHR

AssetManagement Divisional Customer

(Owner) Services Regional GM x 6

Distribution
Finance

Engineering
DistributionIM
Divisional Operations Divisional Engineering IARC
Information Systems

Core AM Functions AM Enabling Functions

- Engineering IS – Asset Information forms the basis of asset management

- IARC – Centre to establish Standards
- Divisional Operations – Co-ordinate Asset Operations Nationally
- Divisional Engineering – Co-ordinate Asset Engineering Nationally
- Divisional Customer Service – Create Balance between Asset Management and
Customer Requirements

FILLING THE GAPS

The following provides a high level view of the current status of the initiative:
- Approval for the Eskom Distribution Asset Management Policy and Strategy – Pending
approval
- Prioritised implementation plan developed – Pending approval of prioritization
o The implementation plan is currently envisaged to span 4 years.
Approximately 85 existing initiatives/projects are aligned to the asset
management framework. Additional specific projects were identified for the
various life cycle stages (Plan, Design, Acquire, Commission, Operate &
Maintain, Retire) as well as for some of the supporting pillars (asset
information, asset risk and human resources).
- Implementation mobilisation Members
ThysMöller
1 Paul Mare

o A structure has been Project Management Office

(PMO)
Rhulani Matshidza
SydneyMakaleng
DesGovender

established to oversee the

Leadby Luke Walker PrinceMoyo
TitoZwane

implementation 2 4 5
3
Integrated Business Eskom Operational Asset Risk
o Permanent Eskom AM Lifecycle
Management
Planning
(Investment,Finance,
Management
(Process, Standards,
Management
(Business&
(Plan→ Retire) HR, Resource Procedure, Policy, Operational Risk)
secondments will form basis Development, Material) Quality)

of the implementation team 6

Change and Stake-
7 8
Measurement,
9
Asset Information AM Business
holder Verification&
o The structure will ensure Management
Management
Support
Integration

that current and future

business and information
initiatives are aligned with
asset management goals and principles

Improved integration within the Eskom group will be pursued with Transmission, Generation
and PDD initiatives.

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 Distribution Asset Management Storybook V.01

WHO IS GOING TO DO IT ?

The following team has been identified to fill the implementation structure:

Part
Stream Name M/F WBAC
Full
Programme Manager F Luke Walker M C
AM Life Cycle F Archie Jaykaran M I
Dumisani Guma
Integrated Business Planning F Dumza M B
Mazingata
Operational Aspects F Mdu Nzimande M B
Asset Risk Management F Pravind Orrie M I
Change Management P Angelique Kemp F C
Asset Information F Refilwe Chilwane F B
Measurement, Verification and
Support F André Bekker M W
AM Business Integration F Shabnum Behari F I

Position job descriptions for the above roles have been compiled and are in the process of
being finalized and approved.

WHAT IS IT GOING TO COST ?

The following costing has been compiled for the period April 2010 to March 2011. The
project contingencies item is for potential immediate non-existing but identified asset
management projects that need to be executed as part of short-term implementation
horizon. Existing projects (for example for projects like the PSS data project) or any other
project need to be aligned and integrated with the Distribution Asset management
implementation plan.

Item Total Cost [R]

Eskom Seconded
Resources 11,928,000
External Resources 7,009,648
Project Contingencies 2,982,000
General T&S 568,129

Total 22,487,777

Notes
1) Eskom team responsibilities summarised in accompanying presentation
2) External resources team roles summarised in accompanying presentation. External support 3 resources from
Vendor A and 3 resources from Vendor B
3) 50% contingency as a percentage of Eskom Team cost included to cater for AM specific projects i.e. Data, Asset
Register, etc

4) General S&T included at 3% of Eskom and External Resource cost

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 Distribution Asset Management Storybook V.01

**** END OF DOCUMENT ****

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 Distribution Asset Management Storybook V.01

APPENDICES
Submission and approvals history
Submission Committee Date Decision
W

PAS55 Assessment Research Sept 2006 Approved

h
y

March
AM Policy AM Working Group Approved
2008
AM Working Group Feb 2009 Approved
AM Strategy WBC Feb 2009 Endorsed
DEXCO Feb 2009 Endorsed
Review of AM initiatives AM Working Group Feb 2009 Approved
nD
ig

AM Framework AM Working Group Feb 2009 Approved

s
e

AM Risk Management (Methodology, Improvement opportunities,

AM Working Group Feb 2009 Approved
Decision Support)

AM Information Management (User Requirements, Information

AM Working Group Feb 2009 Approved
Initiatives, Decision support
AM Policy DEXCO April 2010 Pending
AM Strategy DEXCO April 2010 Pending

AM Implementation Structure DEXCO April 2010 Pending

Business Secondments DEXCO April 2010 Pending

nIm
p
le

AM Implementation
t

Implementation plan April 2010 Pending

Structure
Desired End State – Asset Owner, Manager, Asset Care, IARC, IM DEXCO April 2010 Pending

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