How to Create a Capital Improvement Plan

To create the capital improvement plan, use data from the asset inventory, including useful life estimates, replacement cost, and condition, to help determine what year each asset will need to be replaced and how much the replacement will cost (see Table 6). The replacement year can be adjusted with data from asset performance, including failures, O&MOperations and Maintenance expenses, and risk if any asset needs to be replaced sooner or can be kept in service longer.

Table 3: Data Needed for a Capital Improvement Plan

If the asset inventory is not fully developed it is possible to create a simple CIPCapital Improvement Plan with a bit more data gathering. The following steps walk through developing a simple CIPCapital Improvement Plan:

1.  Create a list of all the asset classes in your system (not individual assets). Some potential asset classes are listed below.

Table 4: Example Asset Classes

2. Break down the major categories into subcategories as much as possible. 

Table 5: Example Asset Subcategories

3. For each minor subcategory: Assess expected useful life and how much useful life remains.

a. Useful life remaining does not have to be a specific number. The assessment can look at which third of the life the asset is in.

Table 6: Useful Life Assessment for Minor Asset Subcategories

4. Look at each asset category and fill in the year needed for replacement, the cost per asset, and the number of assets in the category. 

Table 7: Add dates and costs

5. Add up costs & assets for each year of the CIPCapital Improvement Plan.

Table 8: Add up costs

When determining which assets will need to be replaced, consider all you know about the asset such as:

• Condition
• Level of Service
• Reliability
• History
• Maintenance (Type and Quality)