Esri, the global leader in geographic information system (GIS) software, builds the most powerful mapping and spatial analytics technology available.


Run-to-Failure versus Gold-Plated Asset Management

Posted to Esri

image credit: Used with permission.

Connect with Esri

Fill out this form to receive more information from Esri.

What's the best strategy for managing utility assets? Run-to-failure, gold-plating, a mixture of the two, or maybe something in between? That decision centers around each utility's goals, its system, and its assets. Grid modernization objectives are also demanding more from utility networks and requiring new ways to fine-tune decisions regarding asset management.


A product of the Great Depression, my father embodied the saying "Use it up, wear it out, make it last, or do without." A skilled mechanic in the 1980s, one summer he purchased a replacement for the noisy water pump in the family car. Rather than simply installing it right away, he carried it in the trunk for an entire year to ensure that he extracted every last bit of life from the old one. He would replace it when it failed.

When would it fail? We had absolutely no idea. According to Murphy's Law, it would break down at the worst possible time. A full year of the unknown was enough for me—that noisy water pump was way overdue. I changed it for my father so that my mother would not be inconvenienced for hours on the side of the highway when it finally went out.

My father would have fit right in at many utilities. He employed the popular run-to-failure philosophy. Replace an asset when it fails—get the most out of it. Delay the expenditure as long as possible. On good days, this only disappoints customers with an unexpected outage and by disrupting scheduled work. On bad days, the costs are pushed to the maximum when a crew is called in on holiday overtime to replace equipment in the rain. The storeroom does not have enough information to plan effectively. Their motto? "Be ready for whatever happens." As a result, excessive inventory ties up precious space and capital.


Continuing with the simple car analogy, how long will a car battery last? Normally, that sinking feeling hits when, after three to six years, the car will not start.

Here's an asset management question: When should a senior citizen grandmother replace her car's battery? A breakdown would be very problematic for her, as she does not carry jumper cables. Her tolerance for preventable misfortune on a freezing night is nearly zero. Based simply on battery life and driver age, granny should be getting a new battery every three years like clockwork. Is that gold-plating? Yes—but with good reason. Her battery is a critical asset.

A utility can have good reasons to over-maintain, or “gold-plate”, equally critical assets. Critical assets can be defined in different ways. They may serve critical customers or large numbers of customers, support large revenue, or have low redundancy. For example, the decision to upgrade vital feeder switches in an industrial complex could prove a worthy application of a gold-plating philosophy.

Managing Utility Assets

How long will an underground distribution cable last before it causes a protracted outage that is publicized on Facebook? Cable life-span depends on many factors beyond age. Utilities could examine detailed data including soil conditions, water table, structure condition, insulation material, splices, loading, and prior faults.

Utility assets are spatial. Enterprise asset management (EAM) systems handle the asset life cycle brilliantly. However, they are blind to the spatial relationship of assets between each other, outside influences, or customer impact.

Adding spatial information and analysis helps fine-tune asset management decisions.


Is it best to carry a spare water pump around in the trunk waiting for it to fail? Is it best to build the future grid by replacing utility assets on an unplanned basis? The 1980s are behind us—utilities can now further optimize asset management decisions with better data and modern analytics.

ArcGIS excels at bringing all kinds of data together for evaluation based on asset locations and specific impacts. ArcGIS includes embedded analytics and machine learning tools that deliver impressive predictions for normal and contingency scenarios. It allows people to quickly share asset information across the enterprise using apps they enjoy.

For more information on how ArcGIS helps utilities use data to fine-tune asset management, visit Utilities Asset Management.

Pat  Hohl's picture

Thank Pat for the Post!

Energy Central contributors share their experience and insights for the benefit of other Members (like you). Please show them your appreciation by leaving a comment, 'liking' this post, or following this Member.


Doug Houseman's picture
Doug Houseman on Aug 28, 2019 12:44 pm GMT

ESRI is a good choice for linear assets, like distribution or transmission. 

A  phrase that I don't see is "risk based asset management" - a distribution transformer that feeds a premise with back up generation is less critical than a transformer that feeds a critical care facility. 

ESRI can help determine the number of customers out, the critically of the outage and show the aging assets, likely remaining life in technicolor on the map. Including bringing in the thermal issues that exist right now on the grid - if the analytics and sensors exist. 

Pragmatic risk based asset management is the current dream of the industry, getting there is going to take work, and people are going to have to share lessons learned. As the grid gets more dynamic and we use assets differently, current asset analytics will have to be verified as still useful.  AEP Dolan Labs in the 1980s did much of the basic research we rely on, it may be time to think about how we verify the analytics again in the near future with EV, PV, DR, Storage, and other changes to the grid. 

Pat  Hohl's picture
Pat Hohl on Aug 28, 2019 3:23 pm GMT

Great point Doug - a key insight is that utilities are spread along a spectrum of asset management maturity. Better data and analytics can help any utility move up the spectrum by improving their decision making and tuning their own process.

Gary Hilberg's picture
Gary Hilberg on Aug 28, 2019 1:20 pm GMT

While serving in the nuclear Navy we had a low tolerance for equipment failure.  There was a very pro-active predictive maintenance organization which did great work but when we were asked how close to failure we were based on the analysis we had very little data because we never ran the equipment to failure.  So all the vibration, oil analysis, sound, etc.. informed us of degredation, the actual point of failure was unknown.  I agree with the comment on risk based evaluation, but for those low risk items - running to failure has some value in knowing the exact signs of that failure. 

Pat  Hohl's picture
Pat Hohl on Aug 28, 2019 3:20 pm GMT

Very true Gary - thanks for challenging the way we approach this as an industry.

Get Published - Build a Following

The Energy Central Power Industry Network is based on one core idea - power industry professionals helping each other and advancing the industry by sharing and learning from each other.

If you have an experience or insight to share or have learned something from a conference or seminar, your peers and colleagues on Energy Central want to hear about it. It's also easy to share a link to an article you've liked or an industry resource that you think would be helpful.

                 Learn more about posting on Energy Central »