8 KPIs for Oil & Gas Asset Management

Dec, 2023

Key Performance Indicators (KPIs) are crucial in business management as they serve as measurable benchmarks that align with organizational objectives. KPIs are essential for Oil & Gas companies to assess performance, track progress, and make informed decisions. By setting Asset Management KPIs, maintenance-heavy organizations can quantify critical aspects of their asset management efforts and understand how well the goals are being met.

KPIs can help in numerous ways than just quantifying results. They offer a snapshot of performance effectiveness, facilitate early identification of areas that require improvement, and guide strategic planning. KPIs also enhance communication between multiple stakeholders within the organization and ensure coherency in prioritization of issues and zeroing down on actions. Tracking asset management KPIs empowers Oil & Gas companies to stay agile, responsive, and competitive in dynamic markets, fostering a culture of continuous improvement and helping organizations achieve sustainable success.

The KPIs will vary in significance and priorities depending on an organization’s journey toward operational excellence. This article summarizes some of the most industry-agreed-upon KPIs for Oil & Gas asset management and how Hofincons Group Specialists can assist in achieving the best-in-class results.

1. Asset Utilization Rate:

The success of any asset management program is how well each asset is being utilized and is free of downtimes during its lifecycle. Tracking and monitoring asset utilization rates can provide high-level insights into the effectiveness of asset management efforts and areas to focus on.
Hofincons Group Specialists can help clients replace aging machinery, which lowers production costs and minimizes unplanned downtime, allowing for higher run speeds. We also provide in-depth training programs that can help address losses that negatively impact your asset utilization ratio.

2. Mean Time Between Failures (MTBF):

If an asset fails repeatedly, these frequent failures indicate gaps in its asset and maintenance management strategy and effectiveness. Ideally, the asset should not fail between two laps of preventive maintenance. MTBF is calculated by dividing the total operating time of the asset by the total number of failures. Maximizing MTBF not only aids throughput but also drastically brings down maintenance and spare costs.

Hofincons Group can assist clients in increasing their MTBFs by:

  • Improving preventive maintenance processes,
  • Enhancing maintenance planning using a CMMS, and
  • Moving from reactive to proactive maintenance.

3. Mean Time to Repair (MTTR):

Mean time to repair can provide meaningful insights into the agility of the asset management efforts. MTTR is calculated by dividing total downtime by the number of failures. In other words, it tells the normalized downtime duration. A high MTTR can be a result of multiple issues. Some examples include, but are not limited to, a lack of required spares, an overburdened maintenance team, and a lack of standard procedures.

Our specialists can help you improve your MTTR by:

  • Analyzing the causes of frequent failures and fixing them.
  • Reviewing the repair procedures for your critically damaged equipment and improving them.
  • Maximizing the availability of production-critical equipment.

4. Overall Equipment Effectiveness (OEE):

Overall equipment effectiveness is a metric that measures the effectiveness of equipment utilization, performance, and quality. A decrease in the OEE can indicate either low availability, low performance, or poor quality of the output of the equipment. It is important to monitor the OEE regularly, with inputs and reviews from multiple stakeholders with cross-functional expertise.
Hofincons Group can help clients find ways to improve the overall effectiveness of their equipment by addressing the issues of quality, availability, and performance.

5. Asset Health Index:

With progress in IoT, a large amount of data is now available to continuously monitor asset and maintenance health. This data includes various parameters such as vibration analysis, temperature, pressure, and any other sensor data relevant to the specific equipment.
Hofincons Group specialists can assist in monitoring the asset health index, which is essential for improving asset management effectiveness for critical equipment such as turbines, compressors, and heat exchangers. The health index is calculated using factors such as age, manufacturer, and overload time of the equipment. The Asset Health index is measured on a scale of 0 to 100, where 100 indicates a new condition, and 0 reflects a concerning condition.

6. Compliance Rate:

All assets have a set of compliances and standards that must be met. The compliance rate depicts the percentage of total assets that meet these regulatory and safety compliances. During our consulting and services assignments, we have observed that our clients are often interested in improving their compliance.

One of the first steps is to raise awareness and provide training on compliance. Engaging a compliance specialist to outline practical tips on establishing a robust compliance training program is also an effective way to increase the compliance rate.

7. Inventory Turnover:

When an asset is maintained and operated correctly, it will only require a certain amount of spares or inventory. Over-maintenance can considerably shoot up the inventory turnover rate. Inventory turnover measures the number of times inventory is replaced or consumed within a specific period.

Analyzing inventory turnover can unlock valuable insights and focusing on some of the inventory strategies below can yield immediate financial benefits:

  • Accurate forecasting
  • Automation
  • Selling old stock periodically
  • Efficient restocking
  • Smart pricing and negotiations
  • Preordering

8. Return on Assets (ROA):

The ultimate purpose of all the assets is to convert inventory into sellable goods, i.e., income. Return on assets is the ratio of net income to the total value of assets. Poor asset management can negatively impact an equipment’s life cycle and will lead to early replacement.
Our experience shows that tracking RoA is very helpful in identifying whether you are overspending on your assets vis-a-vis total income from those assets. Asset costs can be kept to a minimum by continuously monitoring the expenses, possibly monthly.
Excessive inventory raises costs without producing more income, so best-in-class methods should be adopted to manage inventory levels.

Summary

This list of KPIs is not exhaustive. However, the KPIs covered in this article provide a comprehensive view of the effectiveness of asset management services in the Oil & Gas industry, covering aspects such as maintenance, reliability, compliance, efficiency, and financial performance.

It’s important to tailor and prioritize the KPIs to specific organizational goals and industry nuances; this is where Hofincons Group’s experience comes into play. Bring us on board, long-term or short-term, and we will help you align your operations to enhance your plant performance around these KPIs.


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