1. How Do You Eat an
Elephant? – Gaining
Ground on Your Aging
Utility Infrastructure
Southwest Ohio Water Environment Association
June 4, 2015
2. • State of Public Assets
• Current Challenges and Risks
• Overview of Asset Management
• Simple Steps to Get You Out of the Gate
• Group Discussion
• Takeaways and Q&A
Agenda
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10. What Does All This Mean?
• O&M demands are rising due to conditions
• Capital dollars are harder to find /valued less
• Revenues declining
• Dollars are stretched for Public Utilities
• Competing with General Fund interests
• Perpetual scrutiny for funding requests
• Demanding Data Driven Decisions
• Need for Reinvestment
• But hesitancy for Rate Increases
11. What’s at Stake?
• Dramatic Effect on Economic Competitiveness
• We’re nothing without a solid foundation.
• Infrastructure is Connective Tissue of our Nation
• Freight ports, airports, bridges, roads, rail and transit,
water and sewer systems, communications
• Smart Policies and Investments
• Enhance national prosperity
• Bolster health and vitality of our communities
• Provide job and career opportunities into the future
15. • Regulatory requirements
• Aging infrastructure and
renewal requirements
• Growth / increasing demand
• Political / public influences and
pressures
• Requirements to justify
infrastructure investments
• Retiring workforce / “brain drain”
• Drive to accomplish more with
less
Common Drivers for Asset Management
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16. AM Reference Documents
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International Infrastructure
Management Manual
WERF/WRF Condition
Assessment GuidelinesISO 55000
18. Asset Management is a structured program to deliver
defined service levels at an acceptable risk at the
least life-cycle cost of asset ownership.
What is Asset Management?
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Spend the right amount of money,
On the right things,
At the right time.
19. Know where your assets are
• Mapping / GIS
Manage Maintenance
• PM / CMMS
Understand the condition of assets
• CCTV / Vibration / CMMS
Evaluate LOS & Risk
• COF / LOF
Understand cost of ownership
• O&M costs
• R&R cost
• Funding options and planning
What is Asset Management?
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20. Asset Management Program
Components
• Do we have management support and direction, adequate resources and staff buy-in to
develop and sustain the AM program?
Program Direction &
Resources
• What are the expectations of our stakeholders (public, regulators)?Level of Service
• What do we own and where is it?
• What condition is it in? How is it likely to fail?
Asset Knowledge
• When should it be rehabbed & replaced and how much will it cost?
• When and where will we need new assets and how much will it cost?
Asset Planning
• What is most likely to fail and has the highest consequence if it fails?Critical Assets
• How do we operate and maintain it to deliver service levels at the lowest life cycle cost?O&M Strategy
• How should we spend capital resources to deliver service levels at the lowest life cycle
cost?CIP Strategy
• How do we provide funding to deliver service levels at the lowest life cycle cost?
Long-term Funding
Strategy
Monitor&Measure
ITSystems&Tools
21. Common AM Terms
• Expected Useful Life (EUL)
• Availability and Reliability
• Life Cycle Costs
• Risk
• Likelihood of Failure (LOF)
• Consequence of Failure (COF)
• Redundancy
• Maintenance Strategy
• Corrective
• Preventive
• Predictive
• Replacement Strategy
• Run to Failure
• Time Based
• Condition Based Replacement
Asset Management Terms
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Time
Limit of Acceptable Performance
Failure State
PerformanceLevel
Asset Performance with Time
A
B
C
23. Overall Life Cycle Costs
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Asset Life Cycle Cost Profile
Acquisition
Maintenance
Disposal
Life of Assets (Years)
$ Refurbishment Refurbishment
Replacement
Life Cycle Cost is the total lifetime cost to procure, install, operate,
maintain and dispose of an asset needed to maintain the intended
function, or total cost of asset ownership.
24. Risk-Based Approach enables Prioritization
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Strategy:
Plan for asset renewal
and/or risk mitigation
Criteria -
• Age
• Material
• History
• Depth
• Size
• Location
Low
Likelihood
of Asset
Failure
Consequences of Asset Failure
High
LOW
RISK
ZONE
MEDIUM
RISK
ZONE
HIGH RISK ZONE
26. Rehabilitation, Repair, Replacement Strategy
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Run To Failure Vs. Time Based
Consequences of Failure
Economic
Based
Strategy
Operate to
Failure
Strategy
Time
Based
StrategyLikelihoodofFailure
Condition
Monitoring
Based
Strategy
31. Asset Management Program
Components
• Do we have management support and direction, adequate resources and staff buy-in to
develop and sustain the AM program?
Program Direction &
Resources
• What are the expectations of our stakeholders (public, regulators)?Level of Service
• What do we own and where is it?
• What condition is it in? How is it likely to fail?
Asset Knowledge
• When should it be rehabbed & replaced and how much will it cost?
• When and where will we need new assets and how much will it cost?
Asset Planning
• What is most likely to fail and has the highest consequence if it fails?Critical Assets
• How do we operate and maintain it to deliver service levels at the lowest life cycle cost?O&M Strategy
• How should we spend capital resources to deliver service levels at the lowest life cycle
cost?CIP Strategy
• How do we provide funding to deliver service levels at the lowest life cycle cost?
Long-term Funding
Strategy
Monitor&Measure
ITSystems&Tools
32. What Services do you
Provide?
Who uses your
services?
What is important to
your Customers?
Needs? Expectations?
What are the measures that
define good service?
What do you do to
provide your service?
What kind of information
about your activities do you
need to run your business?
What are the activity
metrics for good
performance?
Customer Level of Service
Key Performance Indicators
Your Customers Alignment Customer/Utility
Your Activities
Level of Service Analysis Yields Key Performance
Indicators
33. Assess the Current State of Affairs
The Asset Management Program
Evaluation (AMPE) Process
34. • Tools, not the program
• Optimize an AM Program
GIS and Computerized Maintenance
Management System (CMMS)
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Easy Access to
Data
35. “The pipes were so old they had to break some time.”
Predicting Failures – Condition Assessment
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36. • “If it ain’t broke, don’t fix it”
• But you have to maintain some things
Proactive Maintenance Program
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38. Literal: Continuous improvement document
• Describes how assets are managed
• What is the current state of my assets?
• What is my required level of service?
• Which assets are critical to sustained performance?
• What are my best O&M and CIP investment strategies?
• What is my best long-term funding strategy?
Functional: The collection of business processes that
are used to manage assets on a daily and long-term
basis
Development of an Strategic Asset
Management Plan
From Aquamark
39. The Develop a Funding Analysis Tool
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Input Information Output
R&R costs
by year
Useful lives
Asset
inventory
Years in
service
Replacement costs
Refurbishment needs
Annual contributions
Earnings rate Inflation rate
Fund
Balances
RP Tool
41. • Subject Is TOO important to ignore!
• Asset Management is your friend (regardless of
your employment classification)!
• Use reference docs and existing programs while
developing (plagiarism = flattery)!
• The hardest part is getting started!
Takeaways
42. • Customize it…according to your system, demands,
resources, availability!
• Involve and engage “figure heads” throughout the
process (so you can leverage)!
• It’s time to sharpen those pencils and determine
the best use of your limited budget!
Takeaways (2)
