Application of Theory of Constraints - Eliminating Silo-Effects Without Disturbing Silos

Waterloo Asset Management System Implementation: Application of Theory of Constraints - Eliminating Silo-Effects without Disturbing Silos

12th National Conference on Transportation Asset Management Session: Making Asset Management Decisions

Milos Posavljak, PhD Cndt., P.Eng Susan L. Tighe, PhD, P.Eng Cassandra Pacey, CPA, CGA July 17, 2018

City of Waterloo and University of Waterloo How long does it take to go from San Diego to Waterloo? Presentation Overview

Goals Application of theory of constraints AM interpretation of Product-Process matrix Operationalizing Asset Management Planning Framework Documental Asset Management Framework Elevating Request for Proposal (RFP) constraint Elevating performance measure development constraint Elevating “asset management system” understanding constraint Elevating corporate wide information flow constraint Results / Conclusions Goals

Provide details on City of Waterloo effort in: Developing and implementing comprehensive asset management system, and associated processes Advance industry understanding of extreme orgo-technical complexities associated with infrastructure asset management processes

Introduce novel approach to taking asset management planning from strategy to practice Application of Theory of Constraints Goal  generate future (quantified) asset-performance graph(s) in a timely manner at any point within organizational information flow

1 Identify system’s constraint(s) 2 Decide how to exploit the system’s constraint(s). 3 Subordinate everything else to the above decision(s). 4 Elevate the system’s constraint(s). 5 Warning! If in the previous steps a constraint has been broken, go back to step 1, but do not allow inertia to cause a system’s constraint. (Goldratt, 2004) Application of Theory of Constraints Goal  generate future (quantified) asset-performance graph(s) in a timely manner at any point within organizational information flow 1 Identify system’s constraint(s): obstructed view of existing raw information limited corporate data-driven performance measure development mistakenly equating term “system” to software

limited access to corporate wide information flow Application of Theory of Constraints Goal  generate future (quantified) asset-performance graph(s) in a timely manner at any point within organizational information flow 1 Identify system’s constraint(s): obstructed view of existing raw information limited corporate data-driven performance measure development mistakenly equating term “system” to software

limited access to corporate wide information flow

effects of organizational siloing Application of Theory of Constraints Goal  generate future (quantified) asset-performance graph(s) in a timely manner at any point within organizational information flow 2 Decide how to exploit the system’s constraint(s):

apply lessons from manufacturing industry

provide visuals of asset management processes within public sector managing agencies (remove, fits in above point)

expose development of technical system part to same quantity and variety of information as professional Application of Theory of Constraints Goal  generate future (quantified) asset-performance graph(s) in a timely manner at any point within organizational information flow 2 Decide how to exploit the system’s constraint(s):

apply reliability theory to corporate information

explain why asset management systems are professional- centric rather than software-centric

tap into silos via “corporate conscience" Application of Theory of Constraints

assume our “soft” informational products are equivalent to manufactured

assume our information supply-chain is equivalent to manufacturing supply-chain of raw materials

assume our information products are equivalent to manufactured assembly of parts Application of Theory of Constraints

Goal  generate future (quantified) asset-performance graph(s) in a timely manner at any point within organizational information flow 1 Identify system’s constraint(s) 2 Decide how to exploit the system’s constraint(s) apply lessons from manufacturing industry assume our “soft” informational products are equivalent to manufactured goods  map public infrastructure managing agency onto Product-Process Matrix assume our information supply-chain is equivalent to manufacturing supply-chain of raw materials  provide visual of horizontal information flow through organization assume our information products are equivalent to manufactured assembly of parts  provide visual of documental relationships 3 Subordinate everything else to the above decision(s): minimize abstractness of project effort increase awareness of project’s very high complexity provide conceptual foundation of agency’s location within sample space of organization types 4 Elevate the system’s constraint(s): obstructed view of existing raw information mistakenly equating term “system” to software limited access to corporate wide information flow Application of Theory of Constraints

Goal  generate future (quantified) asset-performance graph(s) in a timely manner at any point within organizational information flow 1 Identify system’s constraint(s) 2 Decide how to exploit the system’s constraint(s): expose development of technical system part to same quantity and variety of information as professionals are exposed to Application of Theory of Constraints

Goal  generate future (quantified) asset-performance graph(s) in a timely manner at any point within organizational information flow 1 Identify system’s constraint(s) 2 Decide how to exploit the system’s constraint(s) expose development of technical system part to same quantity and variety of information as professionals are exposed to 3 Subordinate everything else to the above decision(s):

perform preliminary analysis of all information during Request for Proposal preparation provide all information as part of Request of Proposal advertisement

4 Elevate the system’s constraint(s):

obstructed view of existing raw information Application of Theory of Constraints

we are managing assets to next treatment rather than failure analyze engineering, financial, and administrative information to derive: frequency of treatment average cost of treatment average rate of asset deterioration Application of Theory of Constraints

Goal  generate future (quantified) asset-performance graph(s) in a timely manner at any point within organizational information flow 1 Identify system’s constraint(s) 2 Decide how to exploit the system’s constraint(s) apply reliability theory to corporate information we are managing assets to next treatment rather than failure analyze engineering, financial, and administrative information to derive: frequency of treatment average cost of treatment average rate of asset deterioration 3 Subordinate everything else to the above decision(s): request corporate wide information access perform analysis at most granular possible level of asset inventory do not wait to have a “complete” inventory 4 Elevate the system’s constraint(s): obstructed view of existing raw information limited corporate data-driven performance measure development Application of Theory of Constraints

Goal  generate future (quantified) asset-performance graph(s) in a timely manner at any point within organizational information flow 1 Identify system’s constraint(s) 2 Decide how to exploit the system’s constraint(s) explain why asset management systems are professional-centric rather than software-centric:

formal definitions phenomena to be mimicked or serviced by software is on extreme end of complexity

negative impact of popular culture understanding of software Application of Theory of Constraints

Goal  generate future (quantified) asset-performance graph(s) in a timely manner at any point within organizational information flow 1 Identify system’s constraint(s) 2 Decide how to exploit the system’s constraint(s) explain why asset management systems are professional- centric rather than software-centric formal definitions:

“Asset management is a systematic process of maintaining, upgrading, and operating physical assets cost-effectively. It combines engineering principles with sound business practices and economic theory, and it provides tools to facilitate a more organized logical approach to decision-making. Thus, asset management provides a framework for handling both short- and long-range planning.” (FHWA 1999) Application of Theory of Constraints

Goal  generate future (quantified) asset-performance graph(s) in a timely manner at any point within organizational information flow 1 Identify system’s constraint(s) 2 Decide how to exploit the system’s constraint(s) explain why asset management systems are professional- centric rather than software-centric formal definitions:

“Asset management is an integrated approach, involving all organization departments, to effectively manage existing and new asset to deliver services to customers. The intent is to maximize benefits, reduce risk and provide satisfactory levels of service to the community in a sustainable manner – providing an optimum balance. Good asset management practices are fundamental to achieving sustainable communities.” (Federation of Canadian Municipalities 2015) Application of Theory of Constraints

Goal  generate future (quantified) asset-performance graph(s) in a timely manner at any point within organizational information flow 1 Identify system’s constraint(s) 2 Decide how to exploit the system’s constraint(s) explain why asset management systems are professional- centric rather than software-centric:

“…every situation, no matter how complex it initially looks, is exceedingly simple…” – Eliyahu M. Goldratt, The Goal: A Process of Ongoing Improvement, 1984.

professional knowledge and skill (staff) + technology is The Asset Management System Application of Theory of Constraints

Goal  generate future (quantified) asset-performance graph(s) in a timely manner at any point within organizational information flow 1 Identify system’s constraint(s) 2 Decide how to exploit the system’s constraint(s) explain why asset management systems are professional-centric rather than software-centric phenomena to be mimicked or serviced by software is on

extreme end of complexity:

henomena complexity henomena p

human manual post post professional commu- secondary + labour secondary designation nication education education phenomena (e.g. tasks requiring ) Application of Theory of Constraints

Goal  generate future (quantified) asset-performance graph(s) in a timely manner at any point within organizational information flow 1 Identify system’s constraint(s) 2 Decide how to exploit the system’s constraint(s) explain why asset management systems are professional-centric rather than software-centric phenomena to be mimicked or serviced by software is on extreme end of complexity:

automated asset management of societal

infrastructure? No.

reporting software reporting

henomena complexity henomena

p CNC machines

human manual post post professional commu- + labour secondary secondary designation nication education education phenomena (e.g. tasks requiring ) Application of Theory of Constraints

Goal  generate future (quantified) asset-performance graph(s) in a timely manner at any point within organizational information flow 1 Identify system’s constraint(s) 2 Decide how to exploit the system’s constraint(s) explain why asset management systems are professional- centric rather than software-centric negative impact of popular culture on understanding of software’s role:

user friendliness top priority in its design it should make revolutionary improvements or fundamentally change existing “traditional” modus operandi Application of Theory of Constraints

Goal  generate future (quantified) asset-performance graph(s) in a timely manner at any point within organizational information flow 1 Identify system’s constraint(s) 2 Decide how to exploit the system’s constraint(s) explain why asset management systems are professional-centric rather than software-centric formal definitions phenomena to be mimicked or serviced by software is on extreme end of complexity negative impact of popular culture understanding of software 3 Subordinate everything else to the above decision(s):

avoid incompatible “of the shelf” systems realize torch is and will be with professional not technology realize applications / software will assist with, but not do asset management planning for us term “manual” is derived form “manual labour” and is misleading to use in asset management practice 4 Elevate the system’s constraint(s): mistakenly equating term “system” to software Application of Theory of Constraints

access to all engineering, finance, and administrative information approach subject matter experts after analyzing information as is

build on top of existing information nature, format, and flow Application of Theory of Constraints

Goal  generate future (quantified) asset-performance graph(s) in a timely manner at any point within organizational information flow 1 Identify system’s constraint(s) 2 Decide how to exploit the system’s constraint(s) tap into silos via “corporate conscience" access to all engineering, finance, and administrative information approach subject matter experts after analyzing information as is build on top of existing information nature, format, and flow 3 Subordinate everything else to the above decision(s):

request access to corporate wide information attend already scheduled meetings one-on-on meeting maximum half hour slot

4 Elevate the system’s constraint(s): obstructed view of existing raw information mistakenly equating term “system” to software limited access to corporate wide information flow Results / Conclusions

Figure 4 - Distribution of Condition of All Assets in Target Scenario

100%

90%

80%

70%

60%

50%

40%

30%

20%

Proportion Proportion Assets ofin each Condition State 10%

Year Very Poor Quality Poor Quality Fair Quality Good Quality Excellent Quality Results / Conclusions

minimal impact on existing processes new asset management processes built on top of existing approximately 0.6 % increase in staff resources necessary for continued effort

Start RFP posted Goal achieved (graphs generated) 0 6months 18 months Thank you for your time and attention. [email protected] [email protected] [email protected] [email protected]