Risk-Based Asset Replacement Policy for an Electrical Infrastructure

Abstract

With the increased demands regarding the reliability, availability, safety and affordability of key public infrastructures, it becomes increasingly challenging for asset owners and managers to achieve a proper balance amongst performance, risk and cost. As a response, operators of critical infrastructures need sound solutions to maximize the value of their assets, meanwhile realizing their business values and objectives. This requires well-defined decision-making processes with an adequate risk management concept embedded.

This is particularly true for managing ageing infrastructures. Considering the large amount of assets, this requires a balance between managing reliability/availability, budgets and resources. A traditional replacement approach often involves fixed replacement criteria, which are normally being defined for each specific equipment type. The main drawback of this approach is that no account is made for the differences in stress history or in the impact and thereby the risk of failure: within a specific asset class, critical assets follow the same criteria as non-critical assets, leading to (too) high replacement volumes and (too) early replacements.

In this paper, a risk-based replacement process is presented for prioritization, replacement planning and portfolio management, staying away from fixed replacement criteria. Although the risk-based approach itself is well described in literature, it remains a challenge for asset managers to deal with the large amount of assets. This is here solved by using a two-step approach. First, by using predefined triggers, the assets with a potential risk are identified. Rather than simply replacing these assets, these assets (and only these assets) are subjected to a risk assessment by estimating the probability and impact, using the organization’s risk matrix. Next, the optimum solution for mitigating the risk is defined. This may consist of replacement, but it may just as well be refurbishment, intensification of maintenance, or even accepting the risk.

A replacement decision is only one of the types of decisions to be made by an asset manager based on a common asset management policy and a unified approach towards decision making. This paper presents a real-life case study at a large electrical infrastructure operator, and discusses the opportunities and risks encountered in implementing such a policy revision.