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 the home, taking wastewater away from the home, and keeping stormwater from flooding their property or their streets. They expect a Level of Service to be provided that generally includes some mix of the following: 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 complete the basic functions well. The basic functions include tasks such as:
- Operate the assets to maintain service.
- Maintain assets in good working order.
- Conduct routine and preventive maintenance.
- Fix assets that break.
- Understand which assets are critical (prioritization of work).
- Ensure adequate funding (both current and future).
- Replace assets in a way that considers life cycle (ensuring maintainability).
If system staff want to do the basics well, they need to understand what the basic functions are. Others in the organization also need to understand the basics and set goals and measurable metrics around the basics to know if they are doing them well. There needs to be enough information to prioritize activities properly and sufficient resources (money and people) to cover the basics. There is often a conflict between the time and money it takes to complete all the basic tasks of the system, as well as the additional burdens of extraordinary events and the funding available. While customers might expect a high Level of Service, they do not always understand the need to pay for it. 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 (time and money) to achieve the desired results. Such a process is needed when there are competing priorities for limited funding. Asset management provides a framework with tools and practices that can assist a system in operating, maintaining, and managing assets in a cost-effective, sustainable fashion.
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. It 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 concepts – Level of Service, Current State of the Assets, Criticality, Life Cycle Costing, and Long-Term Funding. These can be described as:
- What do you want your assets to do?
- What assets do you have?
- Which ones are critical to doing what you need?
- How are you going to operate and maintain, repair, replace, and rehabilitate your assets over the long term to manage them most cost-effectively?
- Finally, how will you pay for the operation over the long term?
There is no way for a system to achieve everything it wants to do with a severely reduced budget, but asset management techniques allow systems to achieve the maximum result within the available funding.
Level of Service defines what a system wants its assets to provide relative to the capabilities and limitations of the assets and how a system will operate and maintain the assets to meet customer expectations. Supplying an acceptable Level of Service requires an understanding of what customers want and what service level the system can provide. Systems can understand the service level their customers or community want by asking them. It is typically a finite set of things. That list usually includes a combination of reliability, quality, safety, professionalism, customer service, and perhaps a few others. When a system understands what its customers or community wants, it can set goals around these needs to ensure it provides customers with a desired Level of Service. The 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.
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 something about the assets that make up their system. If system 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. 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 is the foundational element of all asset management activities and therefore must contain enough information to support operational analysis and data-informed decision-making.
Once a system knows the Level of Service desired by the community and the assets that make up its system, it is possible to determine the Criticality of each asset. Criticality is the measure of risk associated with an asset. Staff should prioritize projects and activities based on Criticality 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. Understanding the Criticality of assets will help a system assess its overall risk and prioritize activities based on that risk.
Once the necessary Level of Service is determined and assets are inventoried and assessed for risk, it is necessary to consider the Life Cycle Cost of the assets. 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. 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.
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.
Any system has enough information to begin the asset management process and receive some benefits. 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: asset management is not a linear process. It is a continuous process with no beginning or end. The core components overlap and intersect with each other, and one portion depends on another. 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. Additionally, this process is not synonymous with a computer program. 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.
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 a system which areas have the biggest gaps in terms of Asset Management activities. These scores might provide information about where efforts should be focused. A system might wish to start with areas that are the weakest, offering a substantial improvement with a little effort, or with strong areas, 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. To access the tool click here.