When done correctly, a business case evaluation can take time to complete. Therefore, it may be a good idea to use this process only for projects above a certain dollar amount. Different utilities will set different limits depending on the size of the facility. A smaller utility will probably set a lower dollar amount than a larger utility. Each utility should select a dollar amount that allows most major expenditures to go through the process, while not overly burdening the personnel.
A business case evaluation can have several possible outcomes. These outcomes include:
Because capital expenditures account for such a large portion of the overall budget of most utilities, a good capital project validation process can provide significant cost savings for even small utilities. As an example, Arenas Valley, a small utility included in this manual, was contemplating a capital project that included replacement of much of their water distribution system. This project would have cost approximately $5 million dollars. A validation process showed that the project was not needed. Instead, the utility would benefit from looped lines, isolation valves, and a limited pipe replacement project. This project was completed at a fraction of the cost of the original project and increased the level of service for the customers.
A business case evaluation form is included in Appendix D.
A business case evaluation can have several possible outcomes. These outcomes include:
- Project should go forward in current year's CIP
- Project should be delayed until a future year's CIP
- Insufficient information was presented in the business case; project should be re-submitted with additional information
- Alternatives should be investigated and the project should be re-submitted with the additional information
- A different alternative than the one selected should be chosen
- Additional O&M is recommended; the project should be delayed for some number of years
- Project should not go forward
Because capital expenditures account for such a large portion of the overall budget of most utilities, a good capital project validation process can provide significant cost savings for even small utilities. As an example, Arenas Valley, a small utility included in this manual, was contemplating a capital project that included replacement of much of their water distribution system. This project would have cost approximately $5 million dollars. A validation process showed that the project was not needed. Instead, the utility would benefit from looped lines, isolation valves, and a limited pipe replacement project. This project was completed at a fraction of the cost of the original project and increased the level of service for the customers.
A business case evaluation form is included in Appendix D.
