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Leaders in Asset Management
"How to" Select & Implement Property
Standards
NPMA NES 2010
Lyle Hestermann, CPPM CF MIAM
Director, Standards Development and Utilization
Leaders in Asset Management
Selecting VCSs is easy!
Leaders in Asset Management
Concepts For This Session Are:
1.What VCSs are there?2.Integrating Standards Into Your Procedures.
3.Standards And Self Assessment4.Using The Equipment Control Matrix
5.Taking Full Advantage Of The LDD Standard6.Using the LRP Standard (previously the
Admin Control Std)7.Connecting The Dots – Using The Standards
together
Leaders in Asset Management
Published StandardsE2131 Standard Practice for Assessing Loss, Damage, or Destruction of
Property E2132 Standard Practice for Physical Inventory of Durable, Moveable
Property E2135 Standard Terminology for Property and Asset Management E2279 Standard Practice for Establishing the Guiding Principles of Property
Management E2306 Standard Practice for Utilization and Disposal of Personal Property E2378 Standard Practice for the Recognition of Impaired or Retired
Personal Property E2379 Standard Practice for Property Management for Career Development
and Training E2452 Standard Practice for Equipment Management Process Maturity
(EMPM) Model E2453 Standard Practice for Determining the Life-Cycle Cost of Ownership
of Personal Property
Leaders in Asset Management
Published Standards
E2495 Standard Practice for Prioritizing Asset Resources in Acquisition, Utilization, and Disposition
E2497 Standard Practice for Calculation of Equipment Movement Velocity (EMV)
E2499 Standard Practice for Classification of Equipment Physical Location Information
E2604 Standard Practice for Data Characteristics of Equipment Records E2605 Standard Practice for Receiving Property E2606 Standard Practice for Receipt Notification as a Result of Tangible
Property Movement E2607 Standard Practice for Cannibalization/Reclamation of Serviceable
Equipment Components to Support Demand Requirements E2608 Standard Practice for Equipment Control Matrix (ECM)
Leaders in Asset Management
Published Standards
E2631 Standard Practice for Physical Placement of an Entity-Controlled Supplemental Identification Label
E2671 Standard Practice for Defining Movements, Shipments, and Transfers of Tangible Property
E2672 Standard Practice for Identification and Categorization of Tooling E2674 Standard Practice for Assessment of Impact of Mobile Data Storage
Device (MDSD) Loss E2675 Standard Practice for Property Management System Outcomes E2676 Standard Practice for Tangible Property Mobility Index (MI) E2715 Standard Practice for Moveable Property Storage E2811 Standard Practice for Management of Low Risk Property (LRP)E2812 Standard Practice for Uniform Data Management in Asset
Management Records Systems
Leaders in Asset Management
Draft Standards
WK27486 New Practice for Property Management Database Asset Catalogs (Technical Contact: Brandon Kriner) Ballot E53 (11-02) Item 002;
WK29521 New Classification for Property Types (Technical Contact: Eric Fassett)
WK32431 New Practice for for Sales of Personal Property (Technical Contact: Robert Holcombe)
Leaders in Asset Management
Leaders in Asset Management
Entity/Corporate/Company/Site/Whatever – start with the basics
i. Guiding Principles, E2279ii. Terminology, E2135
(Property Management and Compliance)
Integrating standards into your procedures.
Leaders in Asset Management
Entity/Corporate/Company – the basics
E 2132, Standard Practice for Physical Inventory of Durable Moveable Property
(Physical Inventories)
Integrating standards into your procedures.
Leaders in Asset Management
Entity/Corporate/Company – the basics
E 2132, Standard Practice for Addressing and Reporting Loss, Damage or Destruction of Tangible Property
(Property; Control of Loss, Damage or Destruction (LDD))
Integrating standards into your procedures.
Leaders in Asset Management
Entity/Corporate/Company – the basics
E2605, Standard Practice for Receiving Property
(????)
Integrating standards into your procedures.
Leaders in Asset Management
Leaders in Asset Management
Standards and Self
Assessment
Leaders in Asset Management
Standards and Self Assessment
E 2452 – 05e1Standard Practice for
Equipment Management Process Maturity (EMPM)
Model
Leaders in Asset Management
Standards and Self Assessment
The standard recognizes five maturity levels:
1.0 Basic Processes are generally ad hoc and chaotic; success primarly depends on heroics
2.0 Managed Projects of the organization ensure requirements are managed and processes are planned, performed, measured, and controlled
3.0 Defined Processes are understood at the organizational level; standard organizational processes, standards, tools, and methods exist that are tailored for use on the projects
4.0 Quantitative and Predictive
Sub processes are selected that significantly contribute to overall process performance and they are controlled using quantitative techniques; quantitative objectives for quality and process performance are established; special causes of variation are detected and corrected as appropriate
5.0 Optimizing The organization focuses on continually improving process performance through both incremental and technological improvements
Leaders in Asset Management
Standards and Self Assessment
Can Property Do Their Job In A Vacuum?
Asset Management Configuration ManagementFunctional Organization Program ControlProcurement IT Asset ManagementLogistics CalibrationContracts Tooling ManagementImport/Export Property ManagementSenior Management Equipment ManagementReceiving Fixed Asset AccountingWarehouse Risk ManagementQuality Program ManagementFinance Human ResourcesMaterial Management
Leaders in Asset Management
Standards and Self Assessment
Process Management
OperationsEMPM Lifecycle Maturity Level
1.0 Acquisition 3.8 3.5 3.72.0 Use 2.9 3.1 3.03.0 Disposition 2.6 3.0 2.8
EMPM Maturity Levels
3.1 3.2 3.2
Leaders in Asset Management
Standards and Self Assessment
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Summer2005
Fall 2005
Winter 2005 Spring 2006
Acquisition Criteria
Use Criteria
Disposition Criteria
EMPM Level
Leaders in Asset Management
Leaders in Asset Management
Using The Equipment Control Matrix
1. Scope 1.1 This practice describes equipment control classes (ECCs),
equipment control levels (ECLs), and their relationships.1.2 This practice is intended to be applicable and appropriate for
all equipment-holding entities.1.3 This practice covers property categorized as equipment.
Equipment as defined in Terminology E 2135 is nonexpendable, tangible moveable property needed for the performance of a task or useful in effecting an obligation.
1.4 This practice can be applied to an individual item of equipment, to groupings of equipment, or to all or a subset of an entity’s equipment.
1.5 In accordance with the provisions of Practice E 2279, this practice clarifies and enables effective and efficient control and tracking of equipment.
Leaders in Asset Management
Using The Equipment Control Matrix
5.1.1 The ECCs are based on the consequences of the loss of control of the equipment. There are five classifications, or groupings, which define the ECCs.
Leaders in Asset Management
Using The Equipment Control Matrix
5.1.1.1 Equipment Control Class 1—Consequence of loss of control is a societal safety/security impact, which is characterized by negative societal safety or security impact.
5.1.1.2 Equipment Control Class 2—Consequence of loss of control is a personal safety/security impact, which is characterized by negative personal safety or security impact that does not rise to the level of a societal safety or security impact.
5.1.1.3 Equipment Control Class 3—Consequence of loss of control is an operational impact, which is characterized by negative operational impact that does not rise to the level of a personal or societal safety or security impact.
Leaders in Asset Management
Using The Equipment Control Matrix
5.1.1.4 Equipment Control Class 4—Consequence of loss of control is a compliance impact, which is characterized by negative compliance with applicable laws regulations or other relevant internal or external guidance that does not rise to the level of an operational impact.
5.1.1.5 Equipment Control Class 5—Consequence of loss of control is not discernible, which is characterized by having no visible or recognizable impact on the organization.
Leaders in Asset Management
Using The Equipment Control Matrix
5.2 Equipment Control Levels (ECLs):5.2.1 The five levels of control of equipment are based on
differentiated tracking specifications.5.2.1.1 Equipment Control Level A.—Continuous, which
provides real time tracking and control with either human or electronic monitoring and surveillance at all times.
5.2.1.2 Equipment Control Level B.—Continuous while mobile, which provides real time tracking and control with either human or electronic monitoring and surveillance at any time the equipment is not stationary in a secure, fixed location.
Leaders in Asset Management
Using The Equipment Control Matrix
5.2.1.3 Equipment Control Level C.—Event tracking, which provides the level of control characterized by manual or electronic recording of movement, accountability, or stewardship changes.
5.2.1.4 Equipment Control Level D.—Containment, which provides the level of control characterized by process or electronic methods of assuring equipment items are contained within a designated area.
5.2.1.5 Equipment Control Level E.—No tracking and no protection are required at this level.
Leaders in Asset Management
Using The Equipment Control Matrix
Equipment Control LevelS
Equipment Control ClassA. Continuous
B. Continuous While Mobile
C. Event Tracking D. Containment E. No Tracking
1. Societal Safety/Security Impact
2. Personal Safety/Security Impact
3. Operational Impact
4. Compliance Impact
5. No Discernible Impact
S = Standard Control and TrackingI = Increased Control and TrackingD = Decreased Control and TrackingNR = Not Recommended
Leaders in Asset Management
Using The Equipment Control Matrix
Equipment Control LevelS
Equipment Control ClassA. Continuous
B. Continuous While Mobile
C. Event Tracking D. Containment E. No Tracking
1. Societal Safety/Security Impact S
2. Personal Safety/Security Impact
3. Operational Impact
4. Compliance Impact
5. No Discernible Impact
S = Standard Control and TrackingI = Increased Control and TrackingD = Decreased Control and TrackingNR = Not Recommended
Leaders in Asset Management
Using The Equipment Control Matrix
Equipment Control LevelS
Equipment Control ClassA. Continuous
B. Continuous While Mobile
C. Event Tracking D. Containment E. No Tracking
1. Societal Safety/Security Impact S
2. Personal Safety/Security Impact S
3. Operational Impact
4. Compliance Impact
5. No Discernible Impact
S = Standard Control and TrackingI = Increased Control and TrackingD = Decreased Control and TrackingNR = Not Recommended
Leaders in Asset Management
Using The Equipment Control Matrix
Equipment Control LevelS
Equipment Control ClassA. Continuous
B. Continuous While Mobile
C. Event Tracking D. Containment E. No Tracking
1. Societal Safety/Security Impact S
2. Personal Safety/Security Impact S
3. Operational Impact S
4. Compliance Impact
5. No Discernible Impact
S = Standard Control and TrackingI = Increased Control and TrackingD = Decreased Control and TrackingNR = Not Recommended
Leaders in Asset Management
Using The Equipment Control Matrix
Equipment Control LevelS
Equipment Control ClassA. Continuous
B. Continuous While Mobile
C. Event Tracking D. Containment E. No Tracking
1. Societal Safety/Security Impact S
2. Personal Safety/Security Impact S
3. Operational Impact S
4. Compliance Impact S
5. No Discernible Impact
S = Standard Control and TrackingI = Increased Control and TrackingD = Decreased Control and TrackingNR = Not Recommended
Leaders in Asset Management
Using The Equipment Control Matrix
Equipment Control LevelS
Equipment Control ClassA. Continuous
B. Continuous While Mobile
C. Event Tracking D. Containment E. No Tracking
1. Societal Safety/Security Impact S
2. Personal Safety/Security Impact S
3. Operational Impact S
4. Compliance Impact S
5. No Discernible Impact S
S = Standard Control and TrackingI = Increased Control and TrackingD = Decreased Control and TrackingNR = Not Recommended
Leaders in Asset Management
Leaders in Asset Management
Taking Full Advantage Of The LDD Standard
Leaders in Asset Management
Taking Full Advantage Of The LDD Standard
Acceptable loss ratios, per E2131:• ECC1 is 0 %.• ECC2 is 0.5 % (dollar value or quantity).• ECC3 is 1 % (dollar value or quantity).• ECC4 is entity establish IAW law,
regulation or contractual guidance, otherwise 3%
Leaders in Asset Management
Taking Full Advantage Of The LDD Standard- In Your LDD Report
14. Loss ratio in relation to program:
Currently, this program has over 4,000 line items of equipment accountable at an acquisition cost of $15.9 million. The loss of this item and the items represented on three other loss letters represent a less than 0.5% loss ratio as determined by line items, and a less than 0.3% loss ratio as determined by acquisition value, well within DoD guidelines and ASTM E53 2131-09, Standard Practice for Addressing and Reporting Loss, Damage or Destruction of Property.
Leaders in Asset Management
Taking Full Advantage Of The LDD Standard
Perspective!
Leaders in Asset Management
Leaders in Asset Management
E2811-11 Standard Practice for Management of
Low Risk Property (LRP)
Leaders in Asset Management
Using The LRP Standard
1. Scope1.1 This practice covers the assessment of risk
and management of low risk property (LRP).1.2 This practice is directed at tangible LRP.1.3 This practice does not promote mismanagement or
dereliction of duty to protect property, nor protecting property unreasonably – to the extent that usefulness is impaired. This practice recognizes the constraints of materiality and costs versus benefits in the control and management of property.
Leaders in Asset Management
Using The LRP Standard
3.1.2 life cycle processes (LCP)—the various management and control stages of property from its acquisition through disposition; these processes include but are not limited to acquisition, receiving, identification, records, movement, maintenance, storage, physical inventory, loss, damage, and destruction reporting and disposition.
Leaders in Asset Management
Using The LRP Standard
3.1.3 low risk property (LRP)—assets that are monitored and controlled at the discretion of asset managers and typically consist of low risk expendables or durable equipment and tooling based on established and disclosed criteria. (Refer to 4.2 for more information.)
Leaders in Asset Management
Using The LRP Standard
4.1 LRP should be administratively controlled and managed to a lesser degree or with a more efficient technique than higher risk property.
Leaders in Asset Management
4.2 The type and scope of control and management should be commensurate with the level of risk. The entity shall determine the level of risk using the following criteria:
4.2.1 Scarcity,4.2.2 Technological obsolescence,4.2.3 Lead time,4.2.4 Standardization,4.2.5 Criticality,4.2.6 Sensitivity,4.2.7 Dollar value,4.2.8 Environmentally regulated,4.2.9 National security/threat,4.2.10 Schedule constraints,4.2.11 Vulnerability,4.2.12 Societal or personal safety, and4.2.13 Contractual agreements.NOTE 1—The listing in 4.2.1-4.2.13 is not all inclusive and may besupplemented by the entity.
Leaders in Asset Management
• Do you control highly sensitive/hazardous/dangerous products the same way you do your office supplies?
• Do you have procedures, based on VCSs or other widely accepted data, that allows you to determine which life cycle processes you use for low risk property?
Using The LRP Standard
Leaders in Asset Management
• Risk avoidance is more costly than risk management.
• It may be - will be - more efficient to apply common sense and use less control for LRP.
Using The LRP Standard
Leaders in Asset Management
Leaders in Asset Management
Connecting The Dots – Using The Standards Together
How many Property Professionals does it take
to manage how much stuff?
Leaders in Asset Management
49
The Old Way
ENTITY LINE ITEMS ACQ COST FTE
Alpha Equipment 22K $150M 3
Bravo Stuff Suppliers 3K $25M 3
Charlie’s Thingies 1M $20B 200
Leaders in Asset Management
50
Better
ENTITYLINE
ITEMS ACQ COST FTE EMV*
Alpha Equipment 22K $ 150M 3 1.03
Bravo Stuff 3K $ 25M 3 1.7
Charlie’s Thingies 1M $ 20B 200 1.24
*ASTM E2497-06*ASTM E2497-06
Leaders in Asset Management
51
And Better …
ENTITYLINE
ITEMSACQ COST FTE EMV
EMPM*
Alpha Equipment 22K $150M 3 1.03 3.2
Bravo Stuff Suppliers 3K $25M 3 1.7 2.8
Charlie's Thingies 1M $20B 200 1.24 3.3
* ASTM E2452-05e1* ASTM E2452-05e1
Leaders in Asset Management
52
And Better ….
* ASTM E2131-09* ASTM E2131-09
ENTITYLINE
ITEMS ACQ COST FTE EMVEMP
MLDD*
Low/High
Alpha Equipment 22K $150M 3 1.03 3.2 0.004/.00
Bravo Stuff Suppliers 3K $25M 3 1.7 2.8 2.4/.01
Charlie's Thingies 1M $20B 200 1.24 3.3 0.09/.001
Leaders in Asset Management
53
And Better ….
* ASTM E2132-01 (2007)* ASTM E2132-01 (2007)
ENTITY
LINE ITEM
SACQ COST FTE EMV
EMPM
LDDLow/High
PHYS INV *
Alpha Equip. 22K
$150M 3 1.03 3.2
0.004 /.00
Triennial / 99.4%
Bravo Stuff Suppliers 3K $25M 3 1.7 2.8
2.4/.01
Annual / 97.2%
Charlie's Thingies 1M $20B 200 1.24 3.3
0.09 /.001
Annual / 99.2%
Leaders in Asset Management
54
Hmmmmm
* ASTM E2608-08* ASTM E2608-08
ENTITY LIACQ
$ECM
*
ECC
1ECC
2ECC
3ECC
4ECC
5
LI LI LI LI LI
Alpha
22K
$150
M 23% 27% 32% 18% 0%
Bravo 3K
$25M 2% 33% 33% 27% 5%
Charlie 1M $20B 10% 20% 50% 15% 5%
Leaders in Asset Management
55
Now What Do You Think?
* ASTM E2132-07* ASTM E2132-07
ENTITY
LINE ITEM
SACQ COST FTE EMV
EMPM
LDD*High/Low PHYS INV *
Alpha Equip. 22K
$150M 3 1.03 3.2
0.004 /.00
Triennial / 99.4%
Bravo Stuff Suppliers 3K $25M 3 1.7 2.8
2.4/.01
Annual / 97.2%
Charlie's Thingies 1M $20B 200 1.24 3.3
0.09 /.001
Annual / 99.2%
Leaders in Asset Management
56
What About The People?
* ASTM E2379-04* ASTM E2379-04
CERTIFICATION *CERTIFICATION *ENTITY LI ACQ $ FTE
None CPPS CPPA CPPM
Alpha 22K $150M 3 3
Bravo 3K $25M 3 2 1
Charlie 1M $20B 200 65 50 50 35
Leaders in Asset Management
57
Make More Sense?
* ASTM E2132-01(2007)* ASTM E2132-01(2007)
ENTITY
LINE ITEM
SACQ COST FTE EMV
EMPM
LDD*High/Low PHYS INV *
Alpha Equip. 22K
$150M 3 1.03 3.2
0.004 /.00
Triennial / 99.4%
Bravo Stuff Suppliers 3K $25M 3 1.7 2.8 2.4/.01
Annual / 97.2%
Charlie's Thingies 1M $20B 200 1.24 3.3
0.09 /.001
Annual / 99.2%
Leaders in Asset Management
Leaders in Asset Management
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