Saturday, May 17, 2014

Thoughts on Collection System Asset Management


The term “asset management” is much in vogue as a management philosophy in the context of public infrastructure.  This increased focused on the development of a structured and systematic asset management program stems from a desire to balance the tensions of fiscal constraints with the demands of increasing collection system complexities in a world where “doing more with less” becomes an unpleasant reality. Most utility operations are currently implementing some portion of an asset management program; they just don’t call it asset management.
Asset management is a management philosophy about decision making, planning, and control over the acquisition, use, safeguarding and disposal of collection system assets.  The goal is to maximize their service delivery potential and benefits, and to minimize their related risks and costs over their entire life.  Management is continuously focused on improving the method of aligning service priorities with collection system investment and maintenance decision making while implementing a strategic funding strategy.  In many respects, a collection system asset management program is the linchpin that combines operations and maintenance with capital planning and programming.  The benefits of a formalized asset management program are real and tangible; better communication, better coordination, better cooperation, better decision making, better performance management, and better use of public funds. 

The increased focus on asset management is supported by the changing landscape of most collection system utility operations.  These changes include aging infrastructure that needs more intensive repair and replacement; continuing regulatory challenges, including the need to often balance priorities among multiple compliance endpoints; workforce challenges, including aging workforce and difficulties in recruiting and retaining qualified collection systems staff; uncertainty about future federal and state funding; and completing local priorities that can place collection system priorities near the bottom and the dwindling resource base in many communities.
Addressing the 7 ½ Questions of Asset Management

Any asset management program needs to have the capabilities to address what we call the 7 ½ Questions of Asset Management.  The questions include:

1.    What do we own and where is it?

2.    What condition is it in?

3.    What is its remaining service life?

4.    What are these assets worth?

5.    What do we spend and what should we spend/invest?

6.    What is the gap?

7.    How do we get sustainable infrastructure?

7 ½.  How resilient is our infrastructure?
The benefits of knowing the answer to these questions assists collection system operations and management with the avoidance of premature asset failure; risk management associated with asset failures, and mitigation of the consequence of the failure; and accurate prediction of future expenditure requirements through understanding remaining service collection system asset life and capital investment needs.  Any asset management system needs to effectively address a variety of decision making inputs, outputs, governance, business systems, people, processes, data, tools, and partners in the context of the collection system.

The first three questions are driven by a “Bottom-Up” approach to asset management.  Field operations are the primary source and facilitators of location, condition, and expected life questions.  The remaining questions are “Top-Down” driven by engineering, financial, and managerial decision making.  The seventh question is associated with fully developed and developing national sustainability concerns.  The last question is a partial question reflecting our developing concerns regarding how fast infrastructure, especially collections systems and wastewater treatment plants, will be able to recover operationally from disasters and extreme weather events.

The Bottom-Up Approach

The Bottom-Up approach provides a focus on collecting the right information, for the right reasons, at the right time, with the goal of helping utility managers make the right or correct decision during the life-cycle of an asset.  A key step in this process is the development of a reliable and accessible collection system inventory registry.  The ability to maintain, repair, renew, and replace collection system assets starts with accurate information.  Consideration should be given to asset data that includes unique asset identification, material, year installed, anticipated useful life, replacement cost, and relative condition.  Much of this data may currently exist in legacy systems maintained by the utility.  The goal should be to validate the existing information, supplement it with continuous day-to-day data collection, and finally to align the combined information with the utility’s operations and planning initiatives.

What condition is it in?  This question should be addressed in terms of the three types of condition assessments: physical, demand, and functional.  The physical condition reflects the physical state of the collection system, which may or may not affect its performance.  Demand condition assessments examine collection system asset capacity over the long-term.  Assets must be utilized effectively in order to provide the maximum return on funds invested and to deliver the required levels of service.  Functional assessments deal with the suitability or fitness of the asset.  Methodologies to determine which collection system components require inspection and to establish frequency of inspection should be given priority.

What is the remaining collection system asset life?  Another important piece of information for utility managers to have when making infrastructure maintenance and investment decisions is the remaining asset within the collection system asset portfolio.  This metric can help illustrate where and when collection system upgrades and replacements may be required.  It is important for utility managers to understand that a long remaining useful life doesn’t necessarily mean that the collection system asset is in good physical, demand, or functional condition.  On the other hand a segment of sewer pipe with a negative useful life doesn’t always mean the asset requires replacement.  The sewer pipe still may be meeting its required level of service or can continue with maintenance and/or an enhanced inspection schedule.  One of the key advantages of an asset management approach is an understanding of where an asset is in its life-cycle, allowing managers the preservation of optionality at critical “fork in the road” junctions during the asset life-cycle.

The remaining life question is a key question in which the “Bottom-Up” approach meets the “Top-Down” approach.  The utility industry continues to research, develop, and refine a variety of models and algorithms in the form of asset deterioration models and survival curves.  This “Top-Down” approach will be an important contributing factor in successfully addressing the remaining life question.  It is also important not to discount the experience, knowledge, and insightfulness of field operations staff regarding a “Bottom-Up” approach to addressing the remaining life question.  Their day-to-day experiences in condition assessments and deep understanding of failure modes should be incorporated into addressing the remaining life question.

The Multi-Model Asset Management Business Model

One of the core advantages of an asset management approach to collection system management is flexibility.  Figure 1 – Asset Management Business Model outlines the tools and applications that are available.  Depending on the goals and objectives of the individual asset management program, the utility might have some of the support applications or all of them.

As reflected in Figure1, the goal should be to develop an integrated management systems approach to collection systems asset management.  Building on existing systems can reduce the effort and expense involved in creating and maintaining an asset management system.  As previously mentioned, many organizations are currently involved in the day-to-day activities that constitute asset management.  Asset management is data intensive and new tools and processes are often necessary to collect, assemble, manage, analyze, and assess data.  The ability to combine the existing with various new tools provides quick wins in areas such as risk reduction, opportunity identification, and process improvement, and can be identified early in the implementation process.  This allows utility managers to demonstrate returns and gain stronger stakeholder support.

GIS will continue as the long-term platform and tool for asset management information systems.  Linking (GIS) mapping images to the physical asset register; linking the asset register to capital works system; and providing support for maintenance management functions are all enhanced with GIS capabilities.  It is important to remember that the functionality and degree of sophistication of the information system needs to be appropriate to the nature, size, and complexity of collection system assets, and the capacity of the municipality or utility department.  For small portfolios, a small spreadsheet could be adequate, whereas sophisticated (and relatively expensive) information systems are adopted by cities and communities with extensive collection system portfolios and the resources to manage the system.

Moving From Reactive to Proactive

A goal in addressing key management priorities within an asset management program is an understanding of the impact of failure and risk reduction.  Figure 2 – Typical Deterioration Curve clarifies the operational advantages of an evidence-based approach to asset management focused on proactive, preventative, and predictive decision making.

Identifying critical collection systems assets is often the first step in managing asset risk.  It is necessary to have some form of measurement of the consequence of failure, and therefore an indicator of the “criticality” of the assets.  Potential consequences of failure include; public and municipal employees’ health and safety; financial losses; service delivery performance; and environmental impacts.  A better understanding of risks and impacts enable the following: focusing of the level of detail and accuracy of data collection exercise; crafting of focused maintenance responses; prioritization of asset renewal; prioritization of collection system asset-level risk mitigations; and measurement of the overall risk exposure.  The asset management program should allow managers the information necessary for weighing the relative merits of various choices with potentially risky outcomes.

Collection system asset management provides managers with tools and platforms to monitor the condition and performance of assets, especially those assets designated as critical.  Addressing the “what condition is it in?” and remaining life questions throughout the life-cycle of a collection system asset allows managers to engage in actions to monitor the condition of an asset and predict the need for preventive action.

Conclusion

A collection system asset management can help in gaining an understanding of assets, their performance, the risks associated with managing assets, investment needs, and asset value as an input to decision making and organization strategic planning.  Asset management is much more a day-to-day management philosophy than the purchase of a new software platform or report.  Tools are important and they can stimulate and improve organizational knowledge and decision making.  But collection system asset management is much more about bringing new perspectives to the utility organization and new ideas on value creation from the use of assets.  The combination of legacy systems and information with new asset management practices can fully support a long-term and sustainable approach to collection system decision making.

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