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OPE$T - Strategic - Cost Management (SCM) Model

Supplier: IHS Australia

OPE$T is a powerful and innovative software system to aid asset managers and strategic cost planners in their quest to drive down and continuously optimise the whole-life-cycle performance of assets.

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OPE$T provides a comprehensive, dynamic whole-life-cycle model of all cost drivers associated with an asset, allowing changes to its operation to be assessed by analysing their respective cost benefits. Its power comes from the integration of all costs into a single environment, drawing together all functional budgets and activities.

In today's energy and utility industries, with aging assets, tight operating margins and controlled pricing structures, it is critical to be able to model in detail the future behavior of these assets.

Through the operating and capital investment phases of an asset, this unique tool now makes it possible to:

  • Forecast operating expenditure (OPEX) to aid investment decisions;
  • Facilitate business decisions by simulating their impact on cost;
  • Challenge current assumptions;
  • Allow analysis of capital expenditure (CAPEX) and OPEX interaction;
  • Produce a live cost-benefit analysis model;
  • Seek and measure improvements generated by change;
  • Provide an auditable approach to the analysis of operating costs;
  • Assist with budgeting and benchmarking.

OPE$T employs several key elements, namely:

Whole-life-cycle cost: A cost philosophy to look at the impact of any decision across the whole life cycle of the asset.
Activity-based costing: The methodology for the allocation of all costs at the level of activity on an asset.
Asset-based analysis: The process of associating all cost directly to the asset and not to a functional discipline.

These elements have been encapsulated into a single process within OPE$T - Asset Business Planning (ABP). This allows the user to capture costs (CAPEX/OPEX) and where needed production /consumption of a product.

Asset business planning (ABP)

The creation of a dynamic model of the asset against which it is possible to analyse the effect of change. ABP provides a dynamic and proactive tool to search for improvements to the economic performance of an asset, through operating cost reduction or increased production revenues. Without a business plan, it is very difficult to quantify and analyse the strategic impact of any decision.

Activity-based costing

OPE$T uses activity-based costing, which provides significant advantages:

  • Cost can be seen at the lowest or highest level of the system;
  • Analyses directly the impact of an activity on one or more assets;
  • Allows generic cost allocation to assets;
  • Simplifies the structure of the model.

Data assimilation

Some of the greatest problems facing an asset manager implementing an ABP are concerned with data. OPE$T provides important advantages in this area, notably:

  • Easing the data collection process;
  • Aiding reuse through generic activity databases;
  • Allowing easy access and comparison of historical and current information;
  • Linking to corporate databases.

Generic applications
OPE$T can be used to analyse:

  • Down-manning and other operational studies;
  • Maintenance strategy changes;
  • Capital investments, e.g. CAPEX/OPEX tradeoffs;
  • Facility enhancements.

Consultancy services
In conjunction with the methodology and software tools described, IHS has developed a service which is offered for the implementation of ABP studies and dynamic modeling. This frequently includes:

  • Assembling and integrating costs into a coherent structure for each asset;
  • Maintaining live asset models;
  • Aiding in the analysis and interpretation of results;
  • Providing the capability for economic analysis of any changes.

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