Asset Management Overview
Water, wastewater, and stormwater systems are customer service businesses. They exist because their customers want them to provide a service: bringing water to their homes, taking wastewater away from their homes, and keeping stormwater from flooding their property or streets. They expect a Level of Service to be provided that generally includes a combination of reliability, safety, quality, customer service, environmental protection, public health protection, and affordability.
To meet these customer expectations, a water, stormwater, or wastewater system needs to conduct foundational operations and functions well. These can include, but are not limited to:
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- Operate the assets to provide reliable service.
- Maintain assets in good working order.
- Conduct routine and preventive maintenance.
- Fix assets that break.
- Understand which assets are critical.
- Ensure adequate funding, both current and future.
- Replace assets in a way that considers life cycle to ensure stability
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To do the basics well, utility staff and other staff need to understand what the required functions are to ensure that they can set goals and measurable metrics. There needs to be enough information to prioritize activities properly and sufficient resources, such as money and people, to cover operations that ensure safe, reliable drinking water is reaching the community and wastewater is effectively being removed from the community, cleaned, and properly returned to the environment.
There is often an imbalance between the time and resources it takes to complete all the basic tasks of operating the system and the funding available, while also preparing for the additional personnel and financial burdens of extraordinary events. While customers might expect a high Level of Service, they do not always understand the need to pay for it; therefore, rate increases and infrastructure investments are often not considered until necessary. Water is generally undervalued, and in turn, systems might be underfunded.
System staff must make decisions regarding the trade-off between funds and activities. Asset management is a strategic approach designed to help people decide how and where to spend their limited resources to achieve the desired results. Such a process is needed when there are competing priorities for limited funding.
Asset management is a business process designed to use data of all types to make better, more informed, and cost-efficient decisions about what to do and how to do it. In simple terms, it provides a means of determining the best way to spend your limited dollars to achieve the maximum impact. Asset management can relate to any situation and any type of infrastructure, but in this framework, we will focus on asset management as it applies to water, stormwater, and wastewater infrastructure.
The process involves Five Core Components:
Level of Service – What do you want your assets to do?
Level of Service defines what a system wants its assets to provide relative to their capabilities and limitations and how a system will operate and maintain the assets to meet customer expectations.
Systems can understand the service level their customers want by asking them. It is typically a finite set of things. That list usually includes a combination of reliability, quality, safety, professionalism, and customer service. When a system understands what its customers want and compares those requests with the system’s capacities, it can set goals around these needs to ensure it provides customers with the desired Level of Service. Goals are a way to prioritize needs, communicate with stakeholders about progress, demonstrate an ongoing commitment to the community vision, encourage accountability, and suggest course corrections that can help ensure continued progress toward the system’s overall mission.
Current State of the Assets – What assets do you have, where are they, and what is their condition?
Defining the Current State of the Assets is the foundational element upon which all other asset management activities are built. For a system to meet its Level of Service goals, staff need to know about the assets that make up their system. If staff do not understand what assets they have, where they are, what condition they are in, how long they will last, and what it costs to replace them, it becomes difficult to reliably provide service and meet the Level of Service their customers want. Asset attributes will need to be stored in an asset inventory that is easily accessible and updated. The attributes can be many different things, including name, asset ID, location, condition, useful life remaining, replacement cost, material, size, manufacturer, serial number, etc. This component of asset management provides the foundation for operating a utility; therefore, the inventory must contain enough information to support operational analysis and data-informed decision-making.
Criticality – Which assets are critical to the system and the community?
Criticality is the measure of risk associated with an asset. Staff can prioritize projects and activities based on Criticality metrics to use limited financial and personnel resources efficiently. To determine where to allocate resources, system staff must determine the likelihood a given asset will fail and the potential consequences if it does. Knowing the community’s expectations that inform your Level of Service goals is helpful for identifying important assets and the consequences of their failure; however, it is not essential to understanding the risks and consequences of asset failure. Understanding the Criticality of assets will help a system assess its overall risk and prioritize activities based on that risk.
Life Cycle Costing – How are you going to operate and maintain, repair, replace, and rehabilitate your assets over the long term to manage them most cost-effectively?
Life Cycle Costing is the process of compiling all costs an asset will incur over its lifespan, from the earliest phases of planning, through design and construction, operation, maintenance, repair, rehabilitation, and eventual replacement. At each stage of the asset’s life, there are potential interventions that can be done. System staff need to identify and understand the many ways they can intervene in each stage of the asset’s life. The goal is to undertake the most cost-efficient interventions during each phase. Life Cycle Costing is an important concept in asset management because it allows the system to emphasize long-range planning to optimize the limited funds available and reduce loss of service. An organization that does not pay attention to Life Cycle Costing can only optimize the immediate purchase cost and cannot fully understand the potential for increased service costs of the asset later in its useful life.
Long-Term Funding – How will you pay for the operation over the long term?
To maintain the desired Level of Service for the lowest Life Cycle Cost, a system must have a sustainable funding strategy. Everything costs money, and even the most cost-efficient system must have a sustainable source of funding for the long term. There are financial needs for day-to-day operations as well as repair and replacement. Incremental investment in gray or green infrastructure is also necessary to ensure its reliability and sustainability. The goal of asset management is to ensure the funding is spent as efficiently as possible.
Funding sources include both customer user charges and potentially outside public (local, state, or federal) or private (foundations, businesses) funds. Systems often need to be creative when looking at various funding options. Sharing the system’s goals and understanding the risk of not moving forward with capital projects can help clearly communicate to stakeholders the purpose and need for funding.
It is unlikely that a system can achieve everything it wants to do when working with a severely reduced budget, but asset management techniques allow systems to achieve the maximum result within available funding.
Getting Started
Every system has enough information to begin the asset management process. There is no community too small or too lacking in initial data. The more data collected and the more robust the program, the more the community can benefit, but even a little bit of asset management action results in benefits.
It is important to keep in mind that asset management is not a linear process. It is a continuous process with no beginning or end. The core components overlap, intersect, and rely on each other. System staff can start with whichever core component they feel most comfortable with, or whichever core component is the most vital to their system at that time.
Asset Management planning is not synonymous with a computer program. Free or paid computer applications and programs can be extremely helpful with data collection, management, and analysis, but they are no substitute for the thinking that goes into making better decisions with the asset management process. The best of both worlds is the combination of the thought process with robust technology that holds the data necessary to make good decisions.
Your knowledge and skills are the most valuable to asset management planning.
“Intelligence is not information alone but also judgment, the manner in which information is collected and used.”
Caral Sagan
The Asset Management IQ Test helps a system establish a baseline for its Asset Management practices and can be used to track progress. The tool consists of 30 questions broken up into six sections. Comparing the scores of each of the six sections will show which areas have the biggest gaps in Asset Management activities. These scores can provide information about where effort should be focused. If your system is new to Asset Management planning, consider starting with areas that are the weakest which can offer substantial and quick measures of improvement with a little effort. If your system has started Asset Management planning, consider starting with areas in which your utility excels, which would offer a chance to start in a familiar area. As a system progresses, the Asset Management IQ can be repeated, and the scores compared to previous scores.