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SALVO: Strategic Assets Lifecycle Value Optimisation

The SALVO Project

SALVO Project descriptor

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SALVO: Strategic Assets Lifecycle Value Optimisation

Table of Contents
1

Executive Summary ............................................................................................................. 3

The SALVO Project, Processes & Tools ................................................................................ 5

2.1

Multi Industry Collaboration to Find/Develop Best Practices ..................................... 5

2.2

The Challenges We Face .............................................................................................. 5

2.3

Scope and Objectives .................................................................................................. 6

2.4

Systematic Decision-making Approach ....................................................................... 6

2.5

The SALVO Process Steps ............................................................................................ 7

SALVO innovations ............................................................................................................ 10


3.1

Generic process for segmenting asset problems and clarifying priorities ................ 10

3.2

Stimulating lateral thinking to identify potential solutions....................................... 10

3.3

New Technology, New Maths & Knowledge Capture ............................................... 11

3.4

Integrate-ability ......................................................................................................... 11

Risk-based Maintenance and Life Cycle Decisions ............................................................ 12

Tangible and Intangible Benefits ....................................................................................... 13

5.1

Obsolescence management and optimal replacement timing ................................. 13

5.2

Maintenance to extend asset life .............................................................................. 13

5.3

Optimal blend of monitoring, maintenance and whole life strategies ..................... 14

5.4

Intangible Benefits..................................................................................................... 14

SALVO Video ...................................................................................................................... 15

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SALVO: Strategic Assets Lifecycle Value Optimisation

1 EXECUTIVE SUMMARY
SALVO was a 4-year cross-sector R&D programme which has combined the best of existing
methods with highly innovative solutions for targeting, evaluating and optimising
interventions in lifecycle value optimisation of aging assets.
It has generated new processes, decision-support software, a range of field-proven case
studies (several already implemented, with major benefits quantified) and extensive guidance
to enable a broad variety of personnel to make better decisions about what is worth doing,
when and why.
Since completion, the SALVO Process has been recognised as the leading methodology for
disciplined, cost/risk optimised decision-making in asset management. The techniques were
recognised in the 2013 IET Innovation Awards the worldwide competition for creative
advances in business and technology. The SALVO Process was not just a finalist but was
runner up for the top prize.
Why does SALVO offer such important innovation?

Originality

SALVO has broken a lot of new ground in the modelling of compound


strategies to find the optimal mix of interventions, intervention timing and
asset life cycles. It uses very advanced reliability engineering and financial
maths to evaluate, instantly, the business impact of multiple risks (including
those which are inter-linked or influencing each other) and the effects of one
intervention type (e.g. maintenance) upon the urgency or value of others
(e.g. asset replacement). Uniquely it also does this within a set of generic
business processes that apply to any asset type and industry sector, and even
when available data in poor or incomplete.

Whole Life
Asset
Management

Whole life cycle asset management is at the core of SALVO (Strategic Assets:
Lifecycle Value Optimisation). The methods force rigorous consideration of
the asset life cycle in procurement decisions, operations & maintenance
decisions and end-of-asset-life decisions. Furthermore, the SALVO decisionsupport methods evaluate what is the optimal life in the first place: for new
assets in procurement and design comparison decisions, and for existing,
aging assets in life extension, renewal or decommissioning decisions. Proven
applications of SALVO have resolved end-of-asset-life decisions such as
renewal timing or obsolescence management options. SASOL, for example,
achieved an average 9 years asset life extension for obsolete instrument
and control systems, saving tens of millions of dollars.

Impact on Risk

Risks are incorporated comprehensively in the techniques, from the initial


risk-based targeting of improvement opportunities, to the identification of
appropriate risk controls, quantification of their optimal degree of
application, and calculation of the residual risks associated with the
management strategies. In all the cases implemented, full and transparent
risk management has been part of the process, including achievement of
management acceptance for the resulting impact.

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Business Impact

SALVO methods have been applied and implemented in a range of industrial


cases, with very significant quantified business benefits. Examples range
from the optimal renewal programme for aging assets (attributed benefits of
up to 60% in capital avoidance and deferments) to the optimised track
grinding strategy for London Underground (estimated corresponding impact
2-4 million/year) and maintenance or renewal strategies for filter screens,
sewage pumping and other asset management plans in Scottish Water
(specific case examples yielding net benefits of c.700k/year).
Over 40 studies have been undertaken so far, and both tangible and
intangible benefits are clearly acknowledged by relevant stakeholders.

Implementation

The SALVO methods have been so obviously practical and beneficial that core
sponsors have already implemented them in a number of areas and are
extending these implementations into core ongoing business processes.
Scottish Water, for example, is now building all their AM Masterplans using
the SALVO process. Following successful implementation within some
business units and disciplines, SASOL Synfuels now mandates that all capital
investment and asset renewal decisions must go through the SALVO process.
And London Underground has just extended the existing SALVO Project
involvement by a further 5 years to support the ongoing rollout programme.

Integration

One of the core objectives of SALVO was to integrate processes, people and
technology better and it does so very effectively (see feedback from typical
participants in this document). Furthermore it acts as a catalyst for breaking
down functional silos giving people a language, template (decision
storyboards) and mechanism to seek common ground i.e. the optimal
compromise or best value decision. At the technology level, also, integration
has been a successful outcome, by ensuring that the right data is obtained
and used at the front end, and that decisions are then converted into actions
and fed into work management systems, budgeting processes, resource
forecasting and the organisations risk management system.

Asset
Knowledge

SALVO introduces methods for tacit knowledge elicitation, and innovative


processes to harness asset expertise in a structured and quantified form. The
decision-support software has also proven to be an excellent method of
collating such knowledge - including the recording, in an auditable way, of
the reasons why a particular strategy is/is not appropriate, the consequences
of non-performance or intervention delay and a range of other useful
information. The scenario exploration and what if? methods also reveal
new insights into the business drivers that most affect critical decisions.

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2 THE SALVO PROJECT, PROCESSES & TOOLS


2.1

MULTI INDUSTRY COLLABORATION TO FIND/DEVELOP BEST PRACTICES

The project aimed to pool ideas from a wide range of sources and to deliver solutions that
were applicable to any industry sector or asset types. The project therefore involved a range
of sponsors, industrial and technology partners:
The Core Sponsors were The Woodhouse Partnership Ltd (project managers), National Grid,
London Underground, SASOL and Scottish Water, supported by DSTL and University of
Cambridge for technical and modelling developments. The core sponsors provided both
expertise and financial resources, and comprised the project Steering Committee.
A number of other industrial partners are also involved at the working group levels, providing
peer review, field trials, case studies etc. These include Scottish Power Energy Networks,
Halcrow, Centrica, Water Corporation of Australia, Forbo Flooring and Sodexo.
A number of technology specialists were also invited to participate, to ensure that SALVO
deliverables can be integrated in common EAM, business data and work management system
environments.

2.2

THE CHALLENGES WE FACE

Most organisations are facing major challenges in determining what interventions, and when,
are really worthwhile in the management of aging assets. The rate of technology change
(obsolescence risk), infrastructure age profiles, changing functional demands, new legislation,
financial constraints and competency concerns are all combining to create a perfect storm
for critical asset management decision-makers. In the UK, over 200 Billion needs to be
spent in the next 5-10 years to recover or renew basic infrastructure. In the USA, the figure is
over $1 trillion and the same story is encountered in many countries around the world.
There are many solutions, methodologies and tools already available to assist organisations
in making these decisions but none really provides the business case for what to do, and
when. Organisations currently range from those putting all their eggs in the technology, big
data and portfolio modelling basket at one extreme, to those struggling to establish even
basic planning disciplines at the other. And there is a lot of confusion and mixed messages in
between.

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2.3

SCOPE AND OBJECTIVES

The scope of the SALVO project was to provide a clear line of sight between business
priorities and the practical options, so the right things to do are selected, and the right
amount or timing of the interventions are identified and proven, with hard numbers for
cost/risk/performance and asset life cycle value impact. The objectives were also that the
resulting methods must be a) understandable and applicable by front line decision-makers in
real time and b) able to cope with any realistic mix of data, uncertainties, risks, competing
business drivers and asset knowledge sources.
In line with guidance from the BSI PAS 55:2008 standard for optimized management of
physical assets, and the ISO 55001 requirements to resolve the trade-offs between costs, risks
and performance, SALVO addressed the three main levels of granularity required for
improving life cycle decision-making:

Figure 1. PAS 55 requirements for decision optimisation

2.4

SYSTEMATIC DECISION-MAKING APPROACH

The SALVO team built an end-to-end process for decision-making in six fundamental steps,
comprising a top-down targeting of the key decisions to be made and interventions to be
evaluated/optimised, and a bottom-up justification, optimal timing and total programme
coordination of the solutions. The steps are illustrated in the SALVO Smiley (Figure 2) and
full process mapping of these steps was performed, supported in each step by examples and
guidance documentation, and, where appropriate, either existing best practice tools/methods
or, where no practical solutions existed, freshly designed and developed decision-support
solutions. A management summary and illustrations of these processes will be published in a
SALVO guidebook later this year.
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Figure 2. SALVO Smiley

The individual process steps, their use of existing technology or methods, and areas of SALVO
innovation, can be described as follows.

2.5

THE SALVO PROCESS STEPS

Step 1 recognises that an asset portfolio is often large and very diverse, and that competing
priorities will often be unclear and volatile. So asset management strategies need to be both
flexible, scalable, customisable and agile. A single strategy or a single solution is unlikely to
have universal application. Even assets of an identical type will have different criticalities
within different systems or functional locations; they may also be in different condition or
health, have different ages, accessibility for maintenance and other features, any or all of
which can influence what should be done, and when, to manage them. So, instead of a one
size fits all approach (such as a standardised maintenance programme for each asset type),
the first priority is to identify the asset groupings or sub-groupings that can and should share
a common strategy through their commonality of type and functional role, age, health etc.
This is not just risk and criticality analysis SALVO has researched and revealed over 40
potential factors that can be used to distinguish between asset needs; sorting out both the
importance of asset management attention and the urgency of such attention. Step 1
ensures that the right problems (or improvement opportunities) are identified, with the
correct priority for investigation.
Step 2 drills down into these issues to ensure that the problems/opportunities genuinely
understood and root causes are addressed. In many current cases, short-termism and a
patch and continue habit is found to result in recurring problems and missed opportunities.

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SALVO processes identify and capture the why as well as the observed symptoms and
manifestations of the aging assets problem.
Step 3 triggers the identification of potential interventions or asset management options.
And SALVO innovation has broadened this consideration a great deal. Failure mode, effects
and criticality analysis (FMECA), reliability-centred maintenance (RCM) and risk-based
maintenance (RBI) methods, for example, only consider a small range of technical
interventions (proactive/design change, predictive, preventive and corrective maintenance
options) to control risks. SALVO has identified over 50 options that might be considered,
including a number of non-asset/technical solutions such as insurance and operator
competency or incentives. Stimulation of such lateral thinking reveals potentially high value
ideas that would not necessarily have emerged from traditional strategy development tools.
Step 4 is a big area of SALVO innovation. It provides the objective business case evaluation
and optimising the timing of the different intervention options. It involves a toolbox of
methods, since the cost/benefit appraisal of a design modification, or an operator training
course, is very different to the evaluation of optimal inspection intervals or asset replacement
timing. And, as the prior MACRO Project1 found, the level of sophistication worth applying is
dependent upon the criticality and complexity of the individual cases (see figure 3).

Figure 3. Decision-making methods need to vary with decision type & criticality

Cost, benefit, risk & sustainability evaluation with limited data


Step 4 introduces a number of existing and SALVO-developed new techniques that work in
combination: cross-disciplinary discussion/workshop facilitation, human psychology, various
tacit knowledge elicitation techniques, risk quantification tools, high-speed sophisticated
what if? calculations, scenario modelling and data sensitivity testing methods. These are
brought together within a suite of decision-specific storyboards that also capture the audit
trail. Figure 4 shows an example of this process, including the use of very uncertain data
about ongoing failure risks (min/likely/max ranges of possible mixed-risks failure patterns).

European MACRO Project EU1488

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These scenarios, intervention appraisals and business-case justified results can be
constructed by a relevant small team within just 2-3 hours from scratch.

Figure 4. Example storyboard, guiding the systematic evaluation of asset replacement decision

These capabilities incorporate some of the existing cost/risk optimisation technologies of the
APT2 software toolset and algorithms, developed in the European MACRO Project, but they
also extend them greatly into new areas of process, modelling and problem types. For
example, SALVO has developed the maths and modelling capability to evaluate 1-off asset
refurbishments in terms of the optimal degree of life extension that is worth achieving.
Similarly, the SALVO toolbox uniquely enables a direct level playing field comparison, in
asset life cycle costs, risk and value terms, between changed operating strategies, inspections
or maintenance regimes, asset replacement, design change and/or life extension
interventions. The participants in SALVO have already applied these methods to a wide range
of asset and problem types, and they have proven practical and effective, with full
transparency in the selection of the optimal strategy.
Once individual options have been evaluated, and the best value ones identified (and
optimally timed), Step 5 explores the combinations of such interventions and optimisation of
the overall, whole life cycle strategy. This includes two stages in particular, both of which
include significant innovative thinking and processes:
blending of multiple activities on the same asset (for optimal whole life value). For
example, high frequency maintenance may extend asset life, but also introduce
other damage: what is the best mix for whole life value?

Asset Performance Tools www.decisionsupporttools.com

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bundling of multiple activities across multiple assets for delivery efficiency and
shared costs, access or system downtime. For example, shutdown strategies or
remote site visits, where tasks can share downtime or logistics costs if they are
grouped into bigger work packages, even if this involves some timing and cost/risk
compromises.

The case studies in this stage have shown that optimal blending & bundling, using the
quantified cost/risk impact data of Step 4 as inputs, can yield very big benefits indeed, in
some cases doubling the interval between major shutdowns, in other cases reducing annual
downtime by 28-50%.
Finally, Step 6 assembles the total asset management programme of optimised strategies to
see the combined Capex and Opex costs, resources, performance and risk implications
(including residual, justified risks). In a cost- or resource-constrained environment, this
enables the least-valuable or least timing-critical tasks (having the least consequence of
deferment) to be identified. Step 6 ensures, and demonstrates that the best value
combination of things are funded and planned to be done at the right time. Exploring
different global scenarios, sensitivity testing, and change management in the programme is
also enabled, with easy drill-down into the component activities for changes and for reshuffling the deck of what is worth doing, and when.

3 SALVO INNOVATIONS
SALVO has created new methods in several areas of process, decision-making disciplines,
quantification and mathematical modelling. It has invested significantly in creating leadingedge decision-support tools, and has broken new ground in the quantitative evaluation of
diverse options for managing aging assets. Examples of these innovations include:

3.1

GENERIC PROCESS FOR SEGMENTING ASSET PROBLEMS AND CLARIFYING PRIORITIES

Creation of a step-wise, universally applicable discipline for segmenting a portfolio of assets


into appropriate groups that can and should be managed with a shared strategy. This process
incorporates, where appropriate, the various risk and criticality ranking techniques, age
profiles or asset health indices that are commonly used, but SALVO has developed further
refinements that target the best value improve-ability opportunities. This involves two
additional considerations to determine the urgency of attention: a) the rates of change (not
just current asset condition/health/risk profiles) and b) the scope for, and practicability of,
making improvements through intervention or investment. In some cases severely degraded
assets can be stable, and in others, major performance or aging problems can be difficult to
influence to any significant degree. SALVO ensures that scope for improvement and timingsensitivity are drivers for investigation priority.

3.2

STIMULATING LATERAL THINKING TO IDENTIFY POTENTIAL SOLUTIONS

In Step 3, SALVO has radically broadened the thinking about how problems can be solved and
aging assets managed. SALVO introduces 43 potential options to consider, covering over 50
variants and niche solutions. This contrasts greatly with most common analysis and decisionmaking methods (e.g. FMEA, RCM, RBI), which consider just 5-6 generic technical solutions
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(e.g. design change, predictive or preventive maintenance or inspection/condition monitoring
or run-to-failure and consequence mitigation strategies). Furthermore, each potential option
is mapped onto the appropriate evaluation method (storyboard) for its cost/benefit/risk and
sustainability analysis. SALVO uniquely helps typical (predominantly technical) personnel to
take a lateral thinking, business-focussed approach to the managing of aging assets.

3.3

NEW TECHNOLOGY, NEW MATHS & KNOWLEDGE CAPTURE

Quantitative modelling and evaluation methods are a big strength and innovation area for
SALVO: with a highly innovative mix of tacit knowledge elicitation and quantification
methods, leading edge reliability, risk and financial mathematics (including new
mathematical solutions for some decision types) and real-time exploration of options,
intervention timings, asset life cycle costs and risks and auto-searching for the optimal
strategies, all with full transparency and a clear audit trail for the contributing factors, the
effects of uncertainty in assumptions, and documentation of the reasons for results and
conclusions.
Example 1: the degree of interaction between asset management activities is a major
modelling challenge, as each activity may introduce risks, may affect the background
(random) risk exposures and/or change the degradation state and rate, thereby
influencing the need and urgency for other activities. Figure 5 shows the generic issue
which is handled by the maths within SALVO software to find cost/risk optimal whole life
strategy.

Figure 5. Modelling maintenance and life cycle interactions

Example 2: Modelling combinations of 1-off tasks (such as projects or refurbishments to


extend asset life) and cyclic activities (inspections, planned maintenance and asset
renewals). Leading edge reliability modelling and statistical methods were found not to
be capable of evaluating mixed interventions, saw-tooth patterns of degradation or risk,
and optimal life cycle economics. SALVO developed new maths to address this
requirement, while retaining the simple navigation, quantification and decision
transparency. All mathematical methods were validated by the University of Cambridge.

3.4

INTEGRATE-ABILITY

Another of the built-in features in SALVO decision-support that will be new to most
organisations: many users of EAM systems struggle to establish good motivation and usage of
asset-related data SALVO shows what and how such data should be used for. Similarly,
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strategy review activities, such as RCM or RBI analysis efforts, often fail at the final hurdle of
business case justification for the costs and resources involved; the SALVO steps ensure that
the cost/risk justifications and optimal timings are established, including the consequences of
not carrying out the activities at the right time. This provides a direct link between the
technical rationale for the activity and the business significance (benefits and alignment with
organisational objectives). SALVO processes help to deliver line-of-sight connectivity.

4 RISK-BASED MAINTENANCE AND LIFE CYCLE DECISIONS


At the heart of the SALVO process, in steps 4 & 5, lie the quantification of risks, how they
change with time, age and intervention strategies, and the business impact of optimising the
whole asset life cycle value-for-money. In this aspect, SALVO builds on the work of the
previous MACRO project research
to ensure comprehensive coverage
of business drivers and the tradeoffs that are involved (see figure 6
Shamrock
Diagram,
that
demonstrates how the outer ring of
typical business concerns can be
represented by combinations of the
inner five quantification techniques,
which can then be used, in turn, to
explore trade-off compromise and
the optimal total life cycle value).
Figure 6. Shamrock diagram of typical competing business needs

Figure 7. Some examples of compound modelling to find optimal combination.

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5 TANGIBLE AND INTANGIBLE BENEFITS


Field trials of the SALVO processes and tools have shown that they have almost universal
applicability to different asset types, industrial sectors, data and organisational maturities.
Along with the guidance documentation to be published, a series of implemented case
studies will also be made available.
These cases have revealed significant cost/risk/performance gains compared to existing
practices, such as:

5.1

OBSOLESCENCE MANAGEMENT AND OPTIMAL REPLACEMENT TIMING

Deferring the renewal of obsolete control systems for at five to nine years, yielding 25
million of net benefits in one organisation, where the approach was applied to 5
manufacturing sites in 4
countries, and a further 18
Million of attributed benefits
across SASOL Synfuels 8
business units, again a mix of
capital cost avoidance, cashflow
benefits, asset performance and
operational risk controls). One
of these case studies is attached
and a typical result is shown in
Figure 8.
Figure 8. Optimal timing for upgrade/replacement of control system

5.2

MAINTENANCE TO EXTEND ASSET LIFE

London Underground evaluated the optimal painting regime for steel bridges and other steel
structures. In just a few hours, it was possible to build the business case for the optimal
strategy, combining risk, failure-finding opportunities, the scope escalations of delayed
intervention and the asset life expectancy effects. Showing the financial payback for
appropriate intervention every 4 years (whereas the justification had not been previously
achieved in the c.10 years to date). An example study (Queens Park footbridge) is attached
in the appendix, from which Figure 9 provides illustration of one of the quantified outputs.

Figure 9. Optimal painting intervals for asset life cycle and risk impact

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Similarly, the track grinding strategies were evaluated to control noise complaints, rail life (reprofiling slows down the wear rates), crack elimination and defect risks, at the cost of the
rental of specialist equipment, and risks introduced by the activity. The optimal strategy for
different track curvatures, train tonnages etc. was developed, again in just a few hours, with
indicative net benefits of 2-4 million/year (through a combination of rail life cycle effects,
grinding equipment rental and other maintenance costs, access charges, re-work implications
and changes in failure risks).

5.3

OPTIMAL BLEND OF MONITORING, MAINTENANCE AND WHOLE LIFE STRATEGIES

A wide range of cases have involved re-mixing the inspections, maintenance and asset life
cycle. For example, the optimal cleaning strategy for screen filters in sewage treatment
works revealed 700k/year savings opportunities (see Figure 10).

Figure 10. Sewage filters: maintenance interactions and optimal strategy

5.4

INTANGIBLE BENEFITS

The SALVO process has introduced a number of important non-financial benefits:


Stakeholder engagement.
At both the participant level and the senior management,
decision acceptance levels, the SALVO process has generated very positive reactions. Even
untrained, first exposure team members have commented on the pragmatism,
understandability and value of the methods:
Didnt matter that we didnt have much data
Didnt give the answer I expected
Not surprised by the result, but couldnt prove it before
Surprised why it was the right answer
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Can easily test what-ifs and scenarios
A project that is leading the way in decision support but where the approach is
transparent enough that its easy to see what is going on
Similarly, the effectiveness of the methods in transparent business case justification is
demonstrated by the levels of acceptance of results by senior managers (both technical and
financial). In SASOL, for example, the leadership team now insist that all capital investment
and asset renewal decisions go through the SALVO process.
Monitoring and predicting non-financial outcomes. The SALVO modelling also includes
tracking of any chosen non-financial attributes, such as carbon footprint. These can be
assigned to any interventions, asset risks or other life cycle behaviours, and the results will
include predicted total exposure to these factors.

6 SALVO VIDEO
The following link will take you to a short (8 minute) video of interviews with key project
personnel.
Video link:

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