Criticality

 

Not all assets are equally important to a utility’s systems. Some assets are highly critical to achieving a system’s Level of Service goals and others are much less so. Criticality is the measure of risk associated with an asset. Projects and preventative maintenance activities should be prioritized based on criticality analysis to use limited financial and personnel resources efficiently. To determine where to allocate resources, it is important to determine which assets are the most likely to fail and which assets have the most detrimental consequences if a failure occurs. 

Determining the critical nature of assets is specific to your utility. Some assets or types of assets may be critical at one utility and not another or even similar assets but in different locations in the same utility system. Utility staff must examine the assets in their inventory carefully to determine which assets are critical and why. 

To determine which assets are critical, two questions are important: 

1. How likely is the asset to fail (probability of failure)? 
2. What are the consequences if it does fail(consequence of failure)? 

Assets can have several modes of failure up to and including breakdown, and there are many variables impacting the likelihood an asset will fail. Evaluating all of the variables can provide an overall assessment of the asset’s probability of failure and can be represented with a numerical rating scale (e.g., 1 to 5 or 1 to 10) ranging from a very low probability of failure to a very high probability of failure.  

After the likelihood of failure of each asset is determined, it is important to identify the consequence of failure. Determining consequence of failure includes considering several tangible and intangible variables and can also be expressed numerically using a similar rating scale as probability of failure (e.g., 1 to 5 or 1 to 10). 

In assessing risks and consequences of failure, the lower number represents lower risk and minimal consequence, and a higher number indicates greater risk and substantial consequence.  A zero probability is not used because no asset has zero risk. There is always at least a small chance the asset could fail. 

Not all assets are equally important

Hover over each asset. Ask yourself? 

Does your utility or community have this asset? 

How likely is it that this asset will fail in the next few years? 

What will happen if that asset does fail? 

Multiplying probability of failure and consequence of failure ratings together provides the overall criticality score (risk score) for a given asset. Higher scores indicate greater risk. Calculating criticality scores gives a structured approach for comparing risk across asset types. Quantifying risk for each asset type provides an informed prioritization process that not only identifies the highest risk assets but also allows for the comparison of risk reduction options. The criticality of any given asset will change over time, and it is important to identify ways to  reduce risk. Utility staff should ask themselves, “How can I reduce risk in assets across the utility?”  

Once a criticality score has been assigned to each asset, utility staff should evaluate the data and create a prioritization framework and a risk response plan. The severity of risk can also be visualized in a matrix. This is a useful tool for communicating asset risk to board members or community members who may not understand what a particular criticality score means. Knowing which assets are more critical to the operation and at higher risk of failure can aid in determining how to spend funds, where to deploy personnel resources, how to manage an individual asset or collection of assets over time, and can inform capital improvement planning decisions.