What Constitutes an Asset?
While it might seem straightforward, it can be complicated to answer the question, what constitutes an asset? An asset is defined as something that has potential or actual value to an organization. The system must decide how granular to go with the definition of an asset. Should a unit (a collection of parts into a whole) be the asset or should the individual components each be assets?
Examples of How to Define an Asset
- Entire pump is the asset
- Pump is an asset, motor is an asset, controls are an asset
- Entire structure including plants is an asset
- Each plant is an asset (or each type of plant is an asset), underdrain is an asset, walls are an asset, soil is an asset
- Entire stream is an asset
- Stream is divided into one mile segments, each mile is an asset
- Stream is divided into segments within GIS system, each segment is an asset
Each system must decide the definition of an asset and how best to classify them. The system does not want to include everything in the asset inventory as that would include too many insignificant items and would be extremely difficult to manage. Alternatively, the system does not want to oversimplify because it will not have sufficient cost and maintenance data to efficiently manage the system. It is possible to revise the definition of an asset over time, but the best option is to thoroughly consider the question at the beginning so that revision is not necessary.
While the best-case scenario is to have all assets in the inventory, that goal is almost never achieved. Every system will have assets that are missing or incorrectly identified in the inventory. Assets are oftentimes buried, located on private property or owned by others which makes them difficult to identify. Additionally, records can be incomplete, or inaccurate or historical knowledge may be limited due to staff turnover or retirements. In the latter case, the knowledge of the asset may leave along with the employee. Understanding that a perfect inventory is not possible, the system should strive to create the best inventory possible, given the resources (personnel and financial) available and capabilities of the system. The inventory can be improved over time.
When identifying what to include (and what not to include) in the inventory, the system should carefully consider what criteria to apply to decide whether something is an asset or not. If necessary, based on experience with the asset inventory, this selection approach can be modified over time if needed.
Below is a list of criteria that can be used to define what is and what is not included in the asset inventory. A system may use as many of these criteria as desired.
A system might decide that any asset with a value less than a specific dollar amount (perhaps $500 for a small system, $3,000 to $5,000 for a medium system and $5,000 to $10,000 for a large system) will not be included in the inventory. These items can be managed as “supplies” or maintenance management items. The dollar value should be selected by the system to ensure neither too few nor too many assets are included in the inventory.
Work Order or Maintenance
It is recommended that any asset that can have a work order written on it be included in the inventory. If the item would just be replaced, without a work order, it is more than likely a supply or maintenance managed item, not an asset. Items that are maintained by others also fit this definition and should be included.
Segments of Assets (very large assets)
Very large assets need to be divided into smaller segments to better manage them. A forest, a stream, wastewater collection piping, or water distribution piping are all examples of assets that may need to be segmented. The system must decide how best to segment the asset into smaller pieces. Some potential options are by GPS coordinates, by valve to valve or manhole to manhole, by physical landmarks, or by set lengths.
A system might decide to exclude items that have very short useful lives. Because the vast majority of assets are very long lived in water, wastewater, and stormwater, those with very short lives (say 2 years or less) may not be worth managing as an asset and thus should be excluded. Each system can decide what time frame constitutes a “short lived asset.”
Numerous Assets in a Category
If the system has lots of assets of a single type, such as meters, valves, hydrants, manholes, trees or inlets, these assets can add up collectively to a considerable amount of money even if each of these assets individually does not amount to the threshold dollar level set by the system to define an asset. In this case, these assets should be included in the inventory.
Impacts System's Ability to Meet Level of Service
A system should include all assets that impact its ability to meet the Level of Service. Some of these assets may not be owned by the system. Those assets may not be managed in the same ways as owned assets, but the system needs to have an awareness of those assets and the ability to influence decisions made about those assets. A system may want to review the strategic plan, the source water protection plan, the stormwater BMP plan, or other guiding documents for the system to help identify these assets.
Assets may be included in the inventory even if they do not meet the threshold dollar value of an asset if they are highly critical to the system and their failure would cause a major disruption to the system. In these cases, it is important to have careful management of the item to ensure sustainable operation.
If a system plans to continue using an existing software, this could cause limitations as to what can be included. The system should review the capabilities of the existing software and ensure that the number of assets is not limited, and that the software is compatible with newer software.
A resource is being developed for green assets to assist systems with becoming more familiar with the asset categories, how they work, ease of construction compared one to another, types of maintenance required, maintenance intensity compared one to another, design considerations, benefits and costs. This resource can be used by systems to help define asset categories for green assets.
Green Asset Resource Database
This green infrastructure database serves as an introduction for those looking to learn more about green and natural assets that are used in water, wastewater, and stormwater systems. It will give users a basic understanding of the design, construction, O&M, costs, and benefits associated with each of these assets. It also provides some relative comparisons between the different infrastructure types related to construction and maintenance. If there are any assets you think should be added, please contact Hayley Hajic.