Breaking Down the Basics: A Lesson in Asset Reliability

John Q. Todd, Total Resource Management, Inc. (TRM)

Before you go marching down to your reliability engineers and ask questions like, “What are the top 10 worst performing assets in our production line?”, it’s important to know the actual difference between an asset and reliability. These two terms are used often in our field, and many times we aren’t even sure what we’re talking about. You may feel like you know what these terms mean on their own. But do you truly know what they mean when pressed together?
This article is going to walk you through how these two very important elements of our daily lives as maintenance & reliability professionals come together to either benefit or damage your business. Further, we will discuss how to view these terms and form a strategy for success.

What Is An Asset?

First things first: what do we mean when we say something is an “asset?” Take a look around you and identify things that are:

  • Costly to acquire and to make operational
  • Critical to the operation of the business. If it is not functioning, the business suffers significantly.
  • A focus of maintenance activities, whether corrective, preventive, or even predictive

A key element to help define what an asset is to your business is identifying those pieces of equipment that are valuable and worth caring about. The initial acquisition cost of the item may be an obvious parameter but not always. Rather, inexpensive equipment can be critical to the operation yet perhaps costly to maintain.

As part of your overall asset management strategy, you need to define what is an asset to your business:

  • Are the costs to maintain (corrective, preventive, calibration, inspections, etc.) significant percentages of the budget? Are these costs fixed, or are they variables that need to be managed?
  • Is there a difference between how accounting, maintenance, and operations look at what is an asset?
  • Is the equipment public-facing? Is there risk that while the equipment is functioning just fine, the public can develop a “problem,” with it?
  • Does the equipment add risk to the business, and how is the increased risk managed/mitigated?

There is no hard and fast rule that defines an asset. On a basic level it is those pieces of equipment that cost money to acquire, maintain, and dispose of. Your goal is to get as much return on investment as possible during the lifecycle of the asset.

An asset could be a room in a building. An asset could be a chain saw that gets issued out of inventory, returned for servicing, and put back on the shelf awaiting the next fire mission. An asset could be a field service truck that requires preventive maintenance such as oil changes, of which you farm out to the local garage via contract.

The bottom line to what an asset is just that: assets are the physical things that either enhance or detract from the bottom line of the company. By keeping them operational or by disposing of or replacing them at the right moment, the business benefits. These are considered your assets.

The Difference Between Assets and Reliability

The term reliability is a well-defined and understood term. An easy definition is the percentage of “trouble-free” time you have with a piece of equipment. If a piece of equipment has been operating for 10,000 hours and has only been down for 1000 of those, then we can state that it is 90% reliable.
It’s the definition of that “down” time that is important. Being “down” for preventive maintenance would not go into those 1000 hours. Being down due to defined failures would.
Another way to look at reliability is the probability that the equipment will survive long enough to perform its function(s). At any point in time, what is the chance that the device will be in-service?
No matter how you mathematically arrive at the reliability of a piece of equipment, there are two important considerations:
  1. Is the percentage of reliability acceptable?
  2. Is doing anything to increase it cost-prohibitive?
If a pump is deemed to be 95% reliable, does it matter? What does that mean to the business? Does that 5% loss of service translate into millions of dollars in lost production or fines? Don’t panic if the calculated reliability of a device is less than perfect — they all will be.
Kind of a side topic is that of redundancy. If you have two pumps, both with 95% reliability, but the system only needs to use one at a time, then your system has very high reliability due to redundancy. In this case 95% reliability per pump is very good.
Let’s stop a moment and go back to the mathematical aspect of this. To do math, you need data for your formulas. If you want to even come close to establishing a reliability number that has any degree of confidence, then you will need to be collecting data that supports your calculations. How are you collecting downtime, in your context? 
Given there will always be variation in data captured in the field, how are you accounting for this? Nothing worse than coming up with a 95% reliability result for a pump when you only have two downtime events recorded, when you know there were more.
It’s all about the data, folks. And there are many software tools to help not only capture good data but to also visualize and gain insights from raw data in the field.
It has been stated that incremental changes — fractions of a percentage point of reliability increases — are very expensive to achieve. This remains true. Making it a goal to increase equipment reliability sounds good on paper, but it will cost you.
One of the best ways to increase equipment reliability is to acquire new equipment. That can be an expensive endeavor, but it might be less costly in the long-term than trying to eke out another percentage point of reliability from the 30-year-old pump.

What Is an Asset?

"An asset could be a room in a building. An asset could be a chain saw that gets issued out of inventory, returned for servicing, and put back on the shelf awaiting the next fire mission. An asset could be a field service truck that requires preventive maintenance such as oil changes, of which you farm out to the local garage via contract. The bottom line to what an asset is just that: assets are the physical things that either enhance or detract from the bottom line of the company."

Back to “Asset Reliability”

Let’s put these two terms back together and see what that phrase means to us now.

Assets, those things we care about, cost money to own, may not be perfect and will likely fail at some rate that we may or may not have control over.

Gee, that’s a fun thought.

We all have that “old reliable” thing that we go to when the chips are down. Ever wondered what makes that rusty old thing such a big help to us in bad times? Well, a few aspects come to mind:

  • Simplicity
  • Understanding of its use and limits
  • How it was put away the last time it was used

There was a time when starting an engine was just a series of manual turns and twists of the controls. Now, all it takes is a push of a single button and letting the computers do all the work.

Is the equipment itself simpler? Perhaps not, but what it takes to operate is, and that lends itself to sustained high reliability.

One caution when it comes to evaluating the reliability of a piece of equipment is attributing its failures to it itself or the supporting equipment around it. Is a failed fuel pump charged against the generator or the fuel system? One can argue either way.

How about the environment the equipment is in? How is a particularly harsh environment considered when analyzing reliability? Maybe there is something you can do about the environment that could have big impact?

The overall reliability of an asset, as you can see, is a function of many things. Certainly, reliability is built into a device, but the environment it is operating in, how it is being operated, and how it is being looked after have dramatic impact on the result.

Maybe for some equipment, you don’t care about reliability. You use it up and replace it with new or refurbished. This is a perfectly valid approach if the context is right and the business benefits.

Maybe the equipment is so critical to the production of your product that there is nothing you won’t do or spend to keep it operational. Maybe you are operating the equipment outside of its intended envelope and you need to figure out a better solution to keep things going.

Thinking Strategically

A strategy puts you in a position for success. Plans are formed to support the strategy. You want to be in a position where you can put your finger on what specifically you are doing and to what, for defined reasons or goals. A documented approach — typically called a Strategic Asset Management Plan (SAMP), goes a long way in making sure everyone is aware of what is going on and their respective roles.
This approach should contain the measures you will use to determine if an asset is performing as you need it to. Different classes of equipment will have different measures, but the point is that they are in writing.
You can take advantage of the ISO 55001 standard to develop your SAMP. While you might not ever need or want to achieve ISO registration, this standard is a solid framework to use for your approach to asset management, and ultimately, better reliability.
In your SAMP, you outline what is an asset in your context, the approaches you are taking to manage them, and the metrics you expect to use to make decisions with. This very clear picture of where you are and where you are going will certainly have an impact on asset reliability over time.


So, a simple two-word phrase has lots to think about, eh? It is always good to stop a moment and ponder the words and phrases we toss around without much thought. These words really do have meaning, and with a better understanding of what that is to each industry professional, we can refocus our efforts in the right direction.
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About the Author

John is currently a Senior Business Consultant with Total Resource Management (TRM) and has nearly 30 years of business and technical experience in Project ...