Analysis of Asset Management Techniques for FMG Ltd. - Report

This report provides an in-depth analysis of asset management techniques applied to FMG Ltd., focusing on the Christmas Creek mine. The investigation identifies key loss areas including downtime of heavy machinery (Liebherr, Terex, Sandvik, Komatsu), loss in power generation due to inefficient equipment usage, operational unavailability, and disruptions in service. The report explores various approaches to asset management, including inventory management, the importance of asset and asset information systems, and the evaluation of risks associated with mining operations. It highlights the need for effective maintenance strategies, training, and implementation of asset management standards (like ISO55000) to improve equipment performance, reduce costs, and enhance the overall efficiency of the mining operations. The report emphasizes the role of the task force in optimizing asset performance throughout the remaining life cycle of the assets.

Asset Management Techniques

Table of Contents
OPTION A.......................................................................................................................................3
INTRODUCTION...........................................................................................................................3
Investigation to identify asset performance improvement.....................................................3
Approaches to asset management...........................................................................................5
REFERENCES..............................................................................................................................14

OPTION A
INTRODUCTION
Asset management is the process of systematic monitoring, deploying, operating,
maintaining, upgrading and disposing of asset cost effectively. The term is frequently used by
those organisations who manages investments on behalf of other companies (Kim, An and Choi,
2017). The combination of managing, engineering, economic, financial and other practices is
known as infrastructure asset management. In the following assignment, the new task force is
formed which are obliged with the duty to drive asset performance improvement of FMG Ltd.
The responsibility of task force is to optimise asset performance for the remaining life cycle of
the asset by reviewing current operations, maintenance and asset management strategies. The
aim of report is to identify and provide improvement action plan to convert major loss areas into
opportunities.
The asset management functions of the organisation is to provide resources and
equipments to Christmas Creek mine. The investigation will be made on various losses such as
downtime, loss in generation of power, etc. and work history analysis will be made in order to
identify plan versus unplanned maintenance cost. Risk, assets and asset information system,
equipments replacement, reliability, availability and maintainability approaches of asset
management will be evaluated in order to improve the asset performance of the organisation.
Investigation to identify asset performance improvement
Identification of key loss areas of physical asset:
1. Downtime: The downtime means that particular equipments fail to perform its functions
due to improper maintenance and service. FMG ltd. Have surface and mining equipments
range from Liebheer excavators, Terex excavators and Sandvik drills, cat dumpers,
Komatsu dumpers and ancillary equipments from dozers, water carts, graders. From the
investigation it was found that the downtime period of Liebheer and Terex excavators for
a major overhaul can range from 7-8 days. From further investigation it was identified
that the downtime period of Sandvik drills for a major overhaul can ranged for 2 days.
This lead to major loss to Christmas Creek as it leads to temporary cessation of work and
mining process. The management of FMG also faces losses related with repairs and other
maintenance cost. Moreover, it also damages the overall reputation and goodwill of the
organisation (Abdul-Rahman, 2014). With help of effective maintenance techniques, the

downtime can be reduced to 25%. It was analysed that the remaining life cycle by
reviewing current operations of these excavators, can be increase by implementing
appropriate asset management strategies. Various asset management strategies can be
implemented such time based preventive maintenance, providing proper training to
labours, implementing ISO55000 asset management standards (Vakalfotis, Ballantine and
Wall, 2013). These strategies will not only assist in smooth functioning of assets, but also
aid in reducing the overall downtime period. Thus, it will lead to increase in performance
of assets.
2. Loss in generation of power: The investigation made in order to analyse the losses in
generation of power which were made by mining equipments and machineries of
Christmas Creek. These equipments were taken on lease by FMG ltd. By analysing the
equipments it was found that many machines which work on electricity, consumed more
energy and producing fewer outputs. This results in high electricity bills and other losses.
Due to inefficient maintenance and lack of servicing, these equipments results in
consumption of more energy and generates loss to both the organisation (Tom,
Jayakumar and Sijo, 2013). Further it was analysed that the equipments were used more
than the time prescribed by the organisation, that reduced the life cycle of equipments.
Organisation needs to focus on providing maintenance and services of these equipments
to increase their life cycle eradicate the loss of heavy electricity bills. By using efficient
strategies of asset management, the organisation can improve the performance of
equipments and machineries (Strang, 2015). It is the responsibility of The Christmas
Creek company, to not to utilise machineries for longer hours and provide training to
labours so that they can handle the equipments properly. This will lead to reduction in
loss of generation of power, maintenance cost and will provide effective and desired
results.
3. Unavailability for the operations: According to the investigation done by the task force,
it was identified that the Christmas Creek faced huge losses due to frequent failures in
functioning of equipments. Operation team of FMG was unable to provide day to day
maintenance services to the Christmas Creek, as a result company faces losses due to
frequent failures and breakdowns of machineries. Operations involves day to day
maintenance activities with the objectives of ensuring that the assets are safe to operate,

reliable and performing to appropriate standards (Bhatt, Manadhata and Zomlot, 2014).
Equipments such as Komatsu dumpers and ancillary equipments frequently breakdowns
while performing mining activities. It was further analysed that the products require
immediate maintainance to increase their life cycle. Safety compliance, shutdown,
incident management, project management and consistent record keeping are some of the
functions of operations which are meant to be done by maintenance team. The task force
found that these equipments were consuming high quantity of fuel which result in huge
loss to the company. It is the responsibility of FMG to provide assistance and operation
functions to improve the performance of assets provided to The Christmas Creek.
Moreover, by implementing effective asset management strategies organisation can
reduce its overall maintenance cost and can provide effective services.
4. Loss of services disruption: The investigation done by the task force identifies that The
Christmas Creek faces several losses due to irregularities and disruption of services
provided by FMG ltd. The machineries and equipments provided to the customer
organisation required frequent maintenance and FMG ltd fails to provide those services.
This leads to loss of service disruption which faced by the customer organisation. Further
it was analysed that the life cycle of some equipments can be increased by providing
proper and effective services to them (Lee and et.al. 2014). The loss of disruption of
services faced by both the organisation simultaneously. The operation and performance
evaluation team was unable to provide timely services which leads to heavy losses.
Though these losses can be eliminated by establishing effective service methods and
implementing asset management strategies. These strategies include time based
preventative maintenance and continuous improvement of organisation. Continual
improvement of an organisation includes curative and corrective actions to address
performance issues of assets and follow preventative steps to mitigate further failure
which lead to breakdowns and productions drop.
Approaches to asset management
Inventory
Management of asset basically requires effective involvement of inventory in it.
Inventories are often used under every firm for making profits regarding their sale by effectively

considering their management system basically under iron & ore companies (Daly, Pilarski and
Klein, 2016). However, HMG considers inventory as its current assets which can be planned in
selling it at short reasonable period. Further, inventory system has been emerged under cited
company to adjust the movement of inventory that may acknowledge inventory turnover ratio of
asset management under business organization. Inventory assets must be kept under effective
record so that it can be timely tracked in understanding its usefulness and value under business
activities.
Several reasons have been determined in tracking those assets to monitor sales of
products and services or to calculate their cost of goods sold. Asset management also benefits in
calculating accuracy or maintenance of inventory stock by eliminating every excess stock that
can affect performance of asset management under business organization (Kim, An & Choi,
2017). Such management system beneficent managers in recommending that maintenance of
every equipment is necessary to intent every purposes regarding management of inventory within
HMG firm.
It is determined that managing of inventory benefits in maintaining balance among
costumer demands and requirements. By minimizing costs it can easily compete with
opportunities of businesses and supply chains of inventory management. It has been focused that
transit of inventory items acquire possible visibility that could adversely impact under inventory
shipments. Numerous challenges has emerged regarding management of inventory such as -
Managing variability :- understanding demands, supply and movements of goods companies are
required to take specific actions that are relevant with frequent changes under priorities.
Inventory costs are majorly increased due to uncertain transportation undertaken by companies in
raising their stock to meet people demands (Ogbo & Ukpere, 2014).
Breaking down information :- effective supply of chains that are controlled by partners,
consumers or suppliers enhances overall efficiency of asset management and therefore reduces
cost of inventory.
Providing complete inventory pictures :- management of inventories are crucial to be acquired
which can ensure high efficiency and services relevant with costumers as well as enterprises. By
initiating complete inventory picture cited firm can easily recognize priorities to resolve issues
prevailing regarding inventory management.

Thus, HMG has adopted velocity techniques to ensure consumer satisfaction, effective
utilization of inventory, formulation of strategies relevant with inventory analysis, minimizing
wastes and obsolescence and lowering operational costs (Parra & et. al., 2016).
Asset and asset information system.
Assets are the most crucial economic resource which can generate several benefits in
future for HMG company. All assets are complied under balance sheet that is drafted under
business organization (Rajaram & et.al. 2014). Cash, inventory, expenses, properties, equipment
are some assets which are acquired under business organizations. These can be either tangible or
intangible.
Assets can even present liquidity of cash and further convert them into short term
investments. Assets can be either for long term or for short term. However, investors buys assets
of companies by understanding its durability and value which can benefit them in generating
economic growth (Abdul-Rahman, 2014). Collection of numerous assets is termed as portfolio or
allocation of assets. Some common assets included are – bonds, stocks, commodities, metals,
real estate, foreign currencies and many more.
On the other hand asset management information system is a strategic management
system of assets that are avail;able within HMG company. However, it contains relevant and
accurate information's or records which can easily manage available assets. Similarly, it
evaluates valuation and costing of job activities that support performance of assets (Calixto,
2016). Further, it effectively inspects and monitor risks that are occurred due to its maintenance.
It has been effectively notified that asset management is entirely managed with effective
implementation of asset information system.
Planning and investing of assets throughout its production process is effectively
determined by developing asset information management. Effective documentation and
examining of collected asset can be availed through adoption of -
Document management system :- this version fully support handling of data under entire flow of
work. It also gathers every documents that work according to search engines (Hastings, 2015).
Document management :-b it benefits in managing every data or documents that are required or
assessed within asset information system. Selection and implementation of correct data is
necessary to be processed with proper accuracy and management of available assets.
Risk -

To be successful in the business market it is important for an industry to identify the risks
or Hazards and bring it to a tolerable level. In mining process due to its informal activities and
the nature of its operations, complexity, and its procedure involves some amount of hazards. It is
required to identify the risk analysis for events that could be undesirable and can lead to hazard
mechanism (Pastorok, BFerson and Ginzburg, 2016). Various techniques of risk assessment
always help in contributing greatly in the improvement of the safety of complicated operations
and equipments. Many techniques are there as simple in qualitative methods to advanced
qualitative methods which help in identifying and analysing hazards. In iron ore mine the high
risk activities are recorded and are related to face stability and the person blasting the shots.
Mining being a hazardous area of operations has many safety risk for the miners.
For the companies like FMG where they practice iron ore mining goes with operations
that has considerably safety risks related to miners. Unsafe conditions and practices always leads
to a number of accidents and that affects the lives of humans and causes severe injuries, property
is also damaged, interruption in product etc. Risk assessment is always a systematic technique to
identify and analyse the hazards occurring due to the activities and establishing a risk level for
every hazard. The hazards in iron ore mining industry cannot be completely diminished so there
is a need to define and estimate the level of risk (Yeboah, Young, and Burke, 2016). Due to the
existing risk and hazards of mining operations and difficulty of mining machinery and
equipments related to the operations, it is not possible to be naturally safe. However, how well
the machinery and operations are designed there will always be conditions for serious accidents.
It is the principle responsibility of the particular mine to make sure about the safety of the mines
and the manner to which it should be operated by the management with prior safety. It is globally
accepted within the organisation that various techniques of risk assessment contribute effectively
for the improvement of the safety of complex activities and equipments. In most of the industries
it is a legislative requirement of the risk assessment to be taken for the equipments, machinery
and activities that are hazardous in the operations, maintaining, supervision and management in
the industry.
Need for risk assessment -
Risk assessment helps the mines operating company to identify all the level of risk such
as high, medium and low. Risk assessment helps in prioritising risks and take out informations
for the harm that could arise and the type or severity of harm by taking the hazard into

consideration. It combines assessment of probability and severity which produces the risk
assessment and further it is used as an aid in the decision making process of these activities. Due
to this the owners of the mines and operating company is able to implement improvements for
the safety (Daly, Axilbund and Klein, 2016). To make the area or the property a better work
place and safer different types of approaches and tools have to be used for the safety. The work
which assessment provides in relation to safer work enforcement includes :
5. It identifies the scale and nature of the objects which are dangerous.
6. It provides an account of the classification for safe operation of the activities, for
controlling of serious accidents and emergency procedures at the workplace.
7. Identifies the type, relative likelihood and causes of accidents that are likely to occur.
8. It makes sure that operating company is able to identify the different hazards and provide
appropriate controls.
Different types of accidents in mines -
Mining is a hazardous activity which consist of many risks such as, environmental, health related
and safety risk to mining operators or miners. Unsafe conditions are the causes which lead to
many accidents causing injuries to lives of miners, damaging the property and production loss.
Here are some different hazards in surface and underground mines, precautions to overcome
them -
 Explosives -
Poorly structures shots may result in misfires in early ignition and rock flying.
Safety can be implemented by planning and structuring the round of shots that ensures holes are
drilled correctly, direction is taken care of, the weight of explosion for better fragmentation.
Blast designed, fire and charge around the explosives must be taken care by well trained person.
 Roof and sides fall
The work around roof and sides must be kept secure.
Support should be set up as per the rules.
Unauthorised area must be properly fenced.
Under unsupported roofs there should be none worker allowed.
Safety props should be used.
Temporary support should be made available before roof clearing.
 Pillar collapsing in mines.

Depillaring should be maintained in adequate size.
 Airblasts
Area should be maintained and extensive un-collapsed roof should not be allowed.
Massive roof rocks and with strong seams should be kept open.
Shelters must be provided at suitable sites.
Different steps of risk assessment procedure -
1. Identifying the hazards – The main purpose to identify the hazards is to identify and
develop a number of hazards in the mining area that are more likely to expose people to
injuries if not effectively controlled (Rahman, Hasan and Heyland, 2016). By identifying
them workers are easily informed about the hazards and be prepared before to protect
themselves fro the actual hazards.
2. Risk Assessment -
It is the process which is used to analyse the likelihood that people exposed to injuries at the
workplace are identified and implemented with the control measures. Risk occurs when a person
is exposed with the hazard. This measure is of the probability and potential of severe harm.
3. Risk Control -
It is the process used in identification, developing, implementing and reviewing the measures to
eliminating the cause of injury at the workplace.
4. Implementation of risk controls -
The hazards assessed must be deal in order to priory in any of these control measures.
Elimination of hazard
Substitute something safer
Designed control measures to be used
Administrative measures and controls as safe work policies
5. Monitor and Review -
Identification of hazards, assessment of risk and controlling are the processes involved.
Therefore, regularly reviewing the effectiveness of the hazard and controlling measures. Making
sure of the hazard and risk assessment when changing the machinery, tools and equipments in
the work place.
Logistic Support

Logistic support is the process of establishing material and support strategies that
optimises functional support, leverages existing resources and guides the system engineering
process. The organisation can improve the performance of assets by developing integrated and
innovative logistic support management system (Rajaram and et.al., 2014). Logistics is defined
as a business planning framework for the management of material, service, information and
capital flows. It includes the increasingly complex information, communication and control
systems required in today's business environment. Procurement and distribution of equipment,
facilitate, spares, technical information, and trained personnel, essential to the proper operation
of a campaign, plan, or project (Ogbo and Ukpere, 2014). Logistic support assist in improvement
the performance of asset and aid in growth and development of organisation. FMG works with
forty service technicians and logistic experts that help the organisation in providing prompt
services and assist in growth and development of the organisation. Logistic support enables the
organisation to offer its services to the customer in efficient and effective methods. In mining
business delivery of spare parts, machinery equipments, cutting tools, tool holders or crawler
track component items are required for regular maintenance (Hastings, 2015). These parts are
delivers by various logistic service providers. To improve the performance of assets, frequent
maintenance checks and services are required.
These services are delivered by the organisation through several logistics services. Thus,
it implies that logistic support plays an essential role in increasing the life cycle of products and
equipments. It is very important for mining organisation to establish effective logistic support in
the organisation. It not only aid in development of and growth of company, but also leads to
increase in performance of asset (Coyle and et.al., 2016). As per the investigation, it was
identified that due effective logistic support by FMG limited the profits of the Christmas Creek
increased. Thus, it can be implied that logistic support can aid in increase the performance of
asset in the organisation. This element has a great impact on the planning, development, and
acquisition of other logistics support elements. Taken together, these items constitute a
substantial portion of the recurring cost (and therefore life-cycle cost) of a procurement (Yeung,
Chu and NG, 2015).
Logistic support assist in efficient use of energy, thus help in reducing the loss generated
by power. Moreover, it also reduces the overall downtime period so that organisation can
continue its business activities flawlessly. It helps to develop new and unique technologies that

aid in reducing manual efforts and save time of organisation. Logistic support also support in
evaluation of supply chain of organisation in effective way. The supply chain plays very
important role in determining the growth of business, and logistic support enables development
of effective supply chain. Thus, it can be understood that logistic support is very essential for the
growth and development of organisation as it provide effective services and timely delivery of
maintenance facilities to the organisations.
Equipment Replacement, Reliability, Availability And Maintainability.
Equipments of any entity are crucial elements and when it comes to the context of FMG,
the machinery are the key asset for it. As the vision of the organisation is of being the safest,
lowest cost and most profitable iron ore producer, all these goals are directly linked with the
effectiveness of equipments. It is thus, necessary for the entity to ensure the proper functioning
of them. Equipment Replacement, Reliability, Availability and Maintainability are the tools
which requires a high attention while managing assets of an organisation (Ben-Daya, Kumar &
Murthy, 2016). The overall effectiveness of a business depends highly on all these three
elements. It may be recognised by the formula of system effectiveness:
Effectiveness= availability * reliability * maintainability * capability
There are mainly two factors behind the replacement of machineries and they are
technical and cost. The technical factors that influence replacement are damage to machineries,
outdated version, in-effectiveness in meeting the present product demands, reduced safety,
polluting the environment of the industry, etc. However, sometimes the equipments gets replaced
with their advancements launched in the market which are said to be more beneficial for the
company. In contrary to this, the cost factors which rises the need of replacing the equipments
involves increased requirement of repair and maintenance, if salvage value is reached at the end
of its useful life, etc. In case if the replacement or modifications of the battered machinery is not
performed on time then it may results in major losses to the organisation. Thus, it is necessary
for the industries to check the effectiveness of the machines timely so that the need of
replacement can be understand (Calixto, 2016).
The most effective method that provides an integrated analysis of expected system
performance based on design, operations and maintenance is RAM methodology. It is a
fundamental basic of life cycle coast and asset management. This analysis helps in understanding
the system reliability, maintainability and availability. The equipment reliability may be