Ausgrid’s Consolidated Asset CBA Model Project


1. Summary of the project, product, framework

During 2021-22, Ausgrid undertook a significant project to develop, advance and implement our asset decision-making models and framework. We did this to inform our asset replacement and defect rectification activities for the purpose of targeting opportunities in relation to:

  • Establishing a prudent bottom-up, planned replacement and defect rectification portfolio.
  • Providing granularity to the prioritisation of asset investments.
  • Consistency across the business in the application of this priority.
  • Creating visibility of the risk, cost and performance drivers for the work, and
  • Creating transparency of what informed the priority as well as the benefits and residual outcomes once successfully completed.

2. Description of project or framework addressing the assessment criteria

The advanced modelling techniques used to inform the volume, timing and prioritisation of ‘actual’ work Ausgrid undertakes applies advanced statistical techniques that are industry leading across Australian peers. These techniques analyse enormous volumes of network asset and performance data including data related to asset failures, network outages, fires, safety and environmental incidents and the costs to prevent and manage these failures. This also includes granular consequence metrics associated with the unique context of individual assets (e.g. simulated fire spread consequences). An extract, transform and load process is used to transform the input data from a range of corporate systems into a centralised, consistent and structured format and assigns them to an individual asset to enable the above.

As part of the implementation of this decision making framework, a high level of up-front effort was undertaken in data cleansing, reasonableness testing of the relevant inputs and processes to enable the ultimate outcomes of the decision-making process to predominantly utilise Ausgrid’s asset failure, incident and expenditure performance data (i.e. lived experience). This high level of effort has allowed the decision-making framework to predominantly utilise Ausgrid’s network asset performance data rather than prequalified generalised industry data. Recent independent validation has recognised this approach as one of the most sophisticated in industry, as many other distributors attempting to use similar modelling have relied on judgement from their subject matter experts (SME) and any available industry data. While reasonable, sole reliance on other industry data may not be seen as reflective of Ausgrid’s network environment and SME input may be considered as driving conservative outcomes.

A considerable up-front effort was also placed on defining the key types of events (i.e. hazardous events) that impact the ability to maintain service levels (e.g. a safe and reliable network). The Ausgrid project team identified 34 hazardous events and mapped out the sequence from an initial root cause to the resultant realised consequence.  As an example, the sequence of events for the hazardous event ‘contact with live fallen wires’ is shown in the figure below.

Defining and mapping out the various consequence outcomes and establishing front line processes to capture the associated incidents (i.e. ‘lived experience’) against the asset(s) that this related to provides line of sight and an evidence base for any changes in this performance. For example, if an escalation in ‘contact with live fallen wires’ safety incidents could be observed (e.g. reduction in safety performance), this would ultimately change the baseline risk profile and the associated work priority for certain assets that could contribute to this performance. In other words, there is an evidence base for what ultimate risk(s) are targeted that could prevent or mitigate these events from being realised and how this work is prioritised accordingly with all the other drivers. In addition, the resulting outcomes can also be used as a decision support tool for SME’s and asset managers in establishing prudent and appropriate longer term asset strategies.

Approximately 3.5 million individual assets are processed under this framework and decision-making process representing approximately 84% coverage of Ausgrid’s proposed 5 year/$1.2 billion replacement portfolio of investments. In addition, approximately 90,000 (72%) of the total 125,000 outstanding defects are being prioritised through this framework as of March 2023, with the majority of those not being prioritised due to data anomalies such as missing failure modes.

Through the current implementation and associated change management of this decision-making framework the business stakeholders involved in the front-line delivery of these corrective actions (planned asset replacement and defect rectification) are being up-skilled in the process of identification, analysis and quantitative evaluation of risk, which is consistent with good practice risk management. The project is promoting the establishment of balancing risk, cost and performance to the day-to-day work Ausgrid performs in the operation and maintenance of its electricity network. This balance is not only being achieved for a specific pole, crossarm, transformer or the millions of assets and hundreds of thousands of jobs we undertake on the network on these assets but engrained in the business as a whole in our activities to underpin the Asset Management principle of an output focus.

The implementation of this framework is bringing somewhat foreign concepts of risk, cost and performance to frontline decision making. The two figures below illustrate an example of a rusted pin insulator on an 11,000 volt line and an explanation of the information available to an Ausgrid planner for preparing to scope and schedule the work associated with rectifying that defect. The associated risk(s) by consequence category, as well as detailed information driving those risks, are provided along with the types of investments and associated costs and benefit-cost outcomes that may eventuate. This enables consistency across the business in the application of these priorities, visibility to those planning the work of what is driving this priority and transparency of what informed the priority associated with the work as well as the benefits and residual outcomes once successfully completed from a KPI perspective. The framework not only establishes a more accurate and granular representation of where the risk(s) are and how they should be prioritised but also promotes those delivering the work with the ability to prioritise where they can achieve the best ‘bang for buck’ risk buy-down outcomes, rather than being solely widget focused.

3. Opinion as to specific contribution made by the nominated individual/team/organisation

There are many benefits and contributing factors for the organisation benefits realised from this piece of work. These include:

  • Establishing a prudent bottom-up, data driven, evidence based planned replacement and defect rectification portfolio. The maturity and achievements from the cost benefit analysis output from this framework provide customers (through our Customer Panels) and Regulators with confidence that our investment is prudent and balances the priorities of customers with the cost to customers. This is evidenced by the recent feedback from our Customer Panel in their independent report to Ausgrid on our recent regulatory proposal.
  • Providing granularity to the prioritisation of the investments (i.e. work) within this portfolio. This is achieved through advanced modelling techniques that model and evaluate risk at the individual asset level. This improves the accuracy and efficiency of failure predictions, asset risks and enhances the ability to demonstrate prudence of investment when overlayed with the work required to mitigate that risk at a granular level.
  • Consistency across the business in the application of this priority. As part of this project Ausgrid established a Customer Value Framework (Value Framework) to provide a consistent basis to monetise consequences across all quantitative risk assessments and coupled with the advanced modelling techniques enables a consistent basis for establishing baseline asset risk profiles. By making this information available to Ausgrid planners results in a consistent basis for evaluating the activities required to mitigate against this risk in a consistent manner.
  • Creating visibility of the risk, cost and performance drivers for the work by promoting these metrics in works planning tools, and
  • Creating transparency of what informed the priority associated with the work as well as the benefits and residual outcomes once successfully completed. This changes behaviours by promoting those activities that are the most prudent to undertake in prioritised order.

4. General comments

The Ausgrid project (Asset CB A-Team) includes the following individual members in alphabetical order

Andrew ScottGreg Ross
Brad SmithJames Moody
Carl GanMark Ragusa
Chris KlafasMerrilyn Ellis
Chris ScanlonSarah Colebourn
Dean StarkeyXi Chen

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