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Strengthening Communities Workshop from Policy To Practice 11 – 13 April, 2007 Hotel Explorer, Yellowknife. Municipal Infrastructure Asset Management. Saidur Rahman, Ph.D. Senior Capital Planning Officer. Society, Economy and Environment. Municipal Infrastructure. Consumption.

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Municipal infrastructure asset management

Strengthening Communities Workshopfrom Policy To Practice11 – 13 April, 2007Hotel Explorer, Yellowknife

Municipal Infrastructure Asset Management

Saidur Rahman, Ph.D.

Senior Capital Planning Officer


Act locally and think globally

Society, Economy and Environment

Municipal Infrastructure

Consumption

Built Environment

Reduced Life

Roads, Bridges, Buildings, Transits, Fleets, Water, Sanitary, Drainage, Energy, Communications, Parks and Public Facilities

Services

Waste

Act Locally and Think Globally


Presentation outline

Presentation Outline

  • Understanding of infrastructure and asset management

  • Why we need to care about?

  • Benefits

  • Asset management plan development

  • What is going on around?

  • Where we are now?

  • What to do next?


Municipal infrastructure

Municipal Infrastructure

  • The Canadian Oxford Dictionary: “infrastructure” as “the basic structural foundation of a society or enterprise; roads, bridges, sewers, etc. regarded as a country's economic foundation”

  • City of Edmonton: “all the physical assets developed and used by the City to support the community’s social and economic activities”

  • Community infrastructure


Municipal infrastructure1

Municipal Infrastructure

  • Classifications

    • Linear and non-linear

    • Surface and sub-surface

    • Tax supported, self-financing and quasi-commercial or blended (CWF – New Tools for New Times, 2006)

  • Community public infrastructure (CPI)

    • Stationary and movable

    • Office buildings, fire hall, storage facilities, arena, recreation centres, water and sewage facilities and solid waste disposal etc.


Asset classifications

Asset Classifications


Why municipal infrastructure

Why Municipal Infrastructure?

  • Livable and healthy place

  • Safety

  • Economic prosperity

  • Quality of life

  • In Canada, municipal infrastructure worth $1.1 trillion, approximately 20% of total built asset of $5.5 trillion (NRC)

  • Municipal assets are economic backbone and extremely high-value assets that cannot be allowed to deteriorate or misuse


Municipal infrastructure issues

Population growth

Population Growth of Canada

[Source: The Sustainability Report]

Year

Population

(millions)

1981

24.82

1996

29.67

2006

32.74

2026

36.20

2050

42.31

Municipal Infrastructure Issues

  • Infrastructure demand – $90 billion (Infrastructure Canada)


Municipal infrastructure issues1

(CSCE 2003)

Municipal Infrastructure Issues

  • Municipalities are spending $12 - $15 billion/year on maintenance and rehab (FCM)

  • Huge backlog

  • Current funding level will deficit $1 trillion in 60 years (CSCE 2003)


Municipal infrastructure issues2

(CSCE 2003)

Municipal Infrastructure Issues

  • Aging of infrastructure

  • 28% of Canada’s infrastructure is over 80 years old, and only 41% is under 40 years old(CSCE 2003)


Municipal infrastructure issues3

McGill Survey 2003 (Mirza and Haider)

Municipal Infrastructure Issues

  • 79% useful service life of infrastructure has been used (CSCE 2003)

  • Condition degradation


Municipal infrastructure issues4

Municipal Infrastructure Issues

  • Infrastructure gap $50 to $125 billion, 6-10 times of current annual infrastructure budget

  • Deferred maintenance for ‘Big Sixes’ $564 million (2003 CWF)

  • First Nations will cost $475 - $560 million (2003 CAN$) to address risks for water and wastewater assets

  • Estimated cost for upgrading Canadian sewer infrastructure is $11.8 billion (2003)


Miip survey results

MIIP Survey Results

  • NRC-MIIP survey (2004) results:

    • Total 67 municipalities of over 5000 peoples

    • Questionnaire based on “Six Whats”

    • 70% spending less than 2% on maintenance

    • 28% do not have system to record asset value

    • Assets were rated as 2.9 or “good” to “fair” from range of 1 to 7 ratings

    • 50% of the assets were at least 30 years old, in 10 years 75% will be +30 years old

    • Represents 32% of Canadian population


Infrastructure at stake

Infrastructure at Stake

  • Water main breaks: Avg. 700 breaks per day in Canada and USA ($3,000 per repair)

  • Walkerton tragedy: E. coli 0157:H7 outbreak in Walkerton. Cost $64 million

  • Peterborough flood in 2004: Damage cost $20 to $40 million. Compensation $500/ household and $2500/ small business

  • Basement flooding: 30,000 to 40,000 events /year, average cost $3,000 - $5,000 /events (CMHC 2004)


We actually need

We Actually Need

  • Accountability

    • Customer (demand and service)

    • Staff (Fiscal responsibility, health and safety)

    • Environment (regulatory compliance)

  • Risk Management

    • Minimize health and safety tragedies/incidents

    • Reduce liability claims

  • Asset Sustainability

    • Longer term (cradle to grave)

    • Reserve funding


So the challenges are

So the Challenges are...

  • Infrastructure demand and population growth

  • Aging of infrastructure and condition deterioration

  • Infrastructure deficit

  • Service level improvement

  • Lack of integrated systems/tools and consistent approach

  • Inadequate funding

  • Organizational restructuring


How these challenges can be addressed

How These Challenges Can be Addressed

  • Identify maintenance, rehab and renewal needs

  • Increase system’s capacity and extend service life

  • Stewardship of the environment

  • Define levels of service (LOS)

  • Ensure financial sustainability

  • ImplementAsset Management Plan (based on ‘Six Whats’)


Need for change

Need for Change

  • Asset management needs some reorganization of public agencies function

  • Traditional design-build- operate-maintain approach is simply inadequate in the face of current dilemma

  • Adoption of asset management principles and tools (IT tools and financial regulations)


Evolution of asset management

Evolution of Asset Management

  • In early 1900’s design and durability issues, versatile structures

  • After World War II, reliability issues and maintenance for mechanical and electrical equipments

  • In 1960’s green movements, LCC and LCM

  • In 1970’s and 1980’s PMS, CMMS and WO

  • In 1990’s IT tools, CMMS, CMMS to AMS, GIS and GPS

  • 2000 ~ Integrated systems


What do you think

What do You Think?

  • Clerks/municipal employees - data recording and reporting using General Accepted Accounting Principles (GAAP)

  • Directors of finance – strategic financial plan

  • Utility directors/supervisors - maintain the utilities and manage work order systems

  • IT directors – software, hardware, integrated systems and database management


What is asset management

What is Asset Management?

  • What is your definition?

  • NRC, FHWA and IIAM (Australia)

  • “Asset Management is a systematic process of planning, operating, maintaining, upgrading and replacing assets cost effectively with minimum risk and at the expected levels of service over the assets life cycle”


Asset management benefits

(Life cycle)

Asset Management Benefits

Two fold benefits:

  • Reduce cost

  • Extend life


Asset management benefits1

Levels of Service

(LOS)

Risk

Cost

Asset Management Benefits

Another benefit is to increase the levels of service

Levels of Service is a compromise between existing and expected service levels

Balance between cost, risk and LOS


Simple questions

Simple Questions?

  • Simple questions but…

    • Is there anything wrong?

    • What is wrong?

    • What should we do? How do we fix it?

    • What will the benefits be?

    • How much will it cost and how do we pay for it?

    • How can we be more proactive?


Who is doing what

Who is Doing What?

  • Australian Initiatives

    • Institute of Public Works Engineering Australia (IPWEA)

      • IIAM Manual

    • Asset Management Quarterly International (AMQI)

    • Commonwealth Industrial and Scientific Research Organization (CSIRO)


Who is doing what1

Who is Doing What?

  • In USA

    • American Public Works Association (APWA)

    • AMSA – Managing for Public Infrastructure Assets

    • AWWA – Publications and reports

    • Federal Facilities Council (FFC) - Investments in Federal Facilities

    • FHWA

      • Asset Management Office: Primer on Asset management, LCCA, GASB and Case Studies

      • Transportation Asset Management Manual

      • Software: LCCA, BMS and PMS etc.

    • National Association of College and University Business Officers (NACUBO) – Facility Condition Index (FCI)

    • Others: WIN, WERF and TRB


Who is doing what2

Who is Doing What?

  • In Canada

    • National Guide (IC, FCM, NRC)<www.ifraguide.gc.ca>

      • Canada wide network of $25.7 million budget

      • Over 56 best practices in 7 target areas

    • Infrastructure Canada

      • Knowledge - Building, Outreach and Awareness (KOA) program

      • Infrastructure Canada Program

      • Canada Strategic Infrastructure Fund

    • Municipal Infrastructure Investment Planning (MIIP) – NRC

      • 10 municipalities consortium

      • Evaluating tools and techniques for investment planning


Who is doing what3

Who is Doing What?

  • Transportation Association of Canada (TAC)

    • Primer on Highway Asset Management (1999)

    • Bridge Management Guidelines (2004)

  • Canadian Institute of Charted Accountants (CICA)

    • Accounting and Reporting for Physical Assets by Governments (1990)

    • Accounting for Infrastructure in the Public Sector (2003)

  • Canada Mortgage and Housing Corporation (CMHC)

    • Study reports on financial planning, alternative financing and municipal infrastructure

  • Public Sector Accounting Board (PSAB)


Who is doing what4

Who is Doing What?

  • Municipal Infrastructure Data Standards (MIDS)

  • Municipal Performance Measurement Program (MPMP)

  • Ontario Municipal CAO’s Benchmarking Initiative (OMBI)

  • National Water and Wastewater Benchmarking Initiative

  • Municipal Infrastructure Management Systems (MIMS)

  • Acts and Legislation (Federal, Provincial and Territorial)


What can be included

What Can Be Included?

  • What are the absolute requirements?

  • How do an existing system fit into?

  • How does Asset Management assist in monitoring of condition and performance?

  • How should an Asset Management system be implemented?

  • How Asset Management is compatible with business approach to managing infrastructure assets?


Asset management plan

Step 6

Step 1 to 3 – Data oriented

Step 4 to 5 – Methodology and policy issues

Step 6 – Decision-making

Step 5

Decision-making

Step 4

Calculations

Models

Protocols

Step 3

Step 2

Step 1

Asset knowledge

Asset Management Plan


Revisit the six whats

Asset knowledge

Calculations

Models

Protocols

Decision-making

Revisit the ‘Six Whats’

  • What do you own?

  • What is it worth?

  • What is the condition?

  • What is the deferred maintenance?

  • What is the remaining service life?

  • What do you fix first?


Revisit the six whats1

Revisit the ‘Six Whats’

  • What do you own?

    • Asset inventory

    • Database

      • Paper based

      • Electronic(relational database and spreadsheets)

      • Integration with GIS and CMMS

  • What is it worth?

    • Asset valuation

      • Book value, historical value, depreciated value, PV

      • Current Replacement Value (CRV)

      • Cost modeling (direct and indirect costs, PSAB, FCA)

    • Life cycle cost/Whole life cost


Revisit the six whats2

Revisit the ‘Six Whats’

  • What is the condition?

    • Condition assessment

      • Condition grading systems (subjective evaluation, distress based matrices and hybrid systems)

    • Structural and functional (defects, breaks, hydraulics, blockages etc.)

    • Protocols (IT tools)

      • PMS, BMS, WRc, NAAPI or homegrown

    • Prediction modeling (Markov, survival functions, NN)

  • What is the deferred maintenance?

    • Facility Condition Index (FCI)

    • Maintenance backlog and economic inflation/deflation


Revisit the six whats3

Revisit the ‘Six Whats’

  • What is the remaining service life?

    • Service life modeling

      • Analytical and probabilistic methods

      • Costs for alternative maintenance, repair and renewal

  • What do you fix first?

    • Prioritization

      • Methods: AHP, B/C, weighted factor methods, PAN, MOO and expert knowledge

      • Ranking: Asset by asset or group of assets

      • Costs for alternative maintenance, repair and renewal

    • Decision-making

      • Combination of all and political agenda


Asset management framework

Asset Management Framework

  • Planning (proactive and reactive)

  • Implementation (generally life cycle approach)

    • Acquisition/construction

    • Operation

    • Maintenance

    • Repair and rehab

    • decommissioning

  • Evaluating

  • Improving/Developing


Asset management framework1

TOP DOWN

System Knowledge

BOTTOM UP

Asset / Component Data

Asset Management Framework

PROGRAM LEVEL:High-level decision-making. Synonymous to “Top-Down Approach”

MIXTURE OF BOTH

PROJECT LEVEL:Detailed assessment on an asset-by-asset basis. Synonymous to “Bottom-Up Approach”


Some specific issues

Some Specific Issues…

  • What are the service standards for WTP?

  • What level of details are available for pump station? O&M manual?

  • How many water trucks you need?

  • Show the investment for next 20 years?

  • Show the critical asset on the map?

  • What are the risks and how will be managed?

  • How will you prioritize your investment?


Asset valuation and management drivers

Asset Valuation and Management Drivers

  • Corporate

    • Enhance accountability & responsibility (insurance)

    • Satisfy emerging legislative issues

  • Engineering & Operations

    • Strategic investment decision-making for short & long term

    • Manage future growth & demand

  • Finance

    • Stabilize Rates / Reserves


Asset valuation methods

Asset Valuation Methods


Asset valuation model algorithm

Asset Valuation Model Algorithm

Define Component Levels & Attributes

Capture Inventories (integrated system)

Assess Asset Condition

  • Inventory data

  • Condition data

Asset Life Expectancy & Remaining Life

  • Performance

  • Criticality

  • Prob. of failure

Assess Asset Value & Risk Level

Optimized Replacement Cost

  • Replacement options

  • Cost comparison

  • Depreciation

Asset Value


Asset valuation user vs owner

Asset Valuation - User vs Owner

  • Economics

  • Unit costs based on: area, length, diameter, material, capacity etc.

  • Service life (design life, expected life, age, remaining life)

  • Condition & performance

  • Depreciation factors

  • Salvage value


Levels of service

Levels of Service

  • Important considerations

    • What are the services?

    • What are the standards?

    • What are the target levels of service?

  • Levels of Service is a qualitative or quantitative measure to describe how well or poorly a service is provided by the asset or network of assets based on the asset’s intended purpose within the capacity and satisfactory performance


Performance indicators

Performance Indicators

  • Performance Measured Criteria – Key Performance Indicators (KPI)

    • Asset information

    • Stakeholders

    • Condition and performance

    • Operational/maintenance

    • Service quality

    • Financial


Key factors

Key Factors

  • System performance (capacity, remaining service life, condition)

  • Serviceability Impact (disruptions in daily life)

  • Risk tolerance level (health, safety and other direct and indirect costs)

  • Long-term impact (environmental and other intangible impacts)

  • Operation and Maintenance cost (life cycle basis)


Establishing los

Understand the Asset (inventory, condition and performance)

Determine Customer Expectations (demand, growth)

Identify Required Measures for Levels of Service

Assess and Quantify Risk

Test Affordability (budget planning and forecasting)

Select KPI’s and Set Target Level of Services

Policy and Implementation

Establishing LOS

Review Organizational Objectives/Vision


Examples of performance indicators

Examples of Performance Indicators


Municipal infrastructure asset management

Risk

  • Definition: Risk is the probability that an event may adversely affect and measured by consequences and likelihood

  • Common risk assessment methodologies

    • Quantitative

    • Qualitative

  • Risk categories

    • Engineering

    • Public health and safety

    • Financial

    • Environmental


Risk assessment algorithm

Risk Assessment Algorithm


Municipal infrastructure asset management

Asset Management Model

Infrastructure Ratepayers

Quality of Service

Sustainability

Stakeholders

Asset Management

Implementation

Investment Decision-Making

Proactive Maintenance

Business Process

Planning and Design

Levels of Service (LOS)

Risk Assessment

Asset Information

Condition

Criticality

Probability of Failure

Consequence of Failure

Cost

Replacement

/Renewal

Installation/ Construction

Performance indicators

Customer Expectations

Legislative Orders

Asset Valuation

Availability of Resources

Life Cycle

Model

Repair and Rehabilitation

Operation and Maintenance

Processes and Activities


Application tools

Application Tools

Capital Asset Planning Tool


Application tools1

Application Tools

Linear Asset Prioritization Tool


Maca capital planning tool

MACA Capital Planning Tool


Maca capital planning tool1

MACA Capital Planning Tool


What next

What Next?

  • Think globally and act locally

  • Learn from failures

  • Use best practices

  • Stewardship for the infrastructure

  • Work for the sustainable community

  • New Deal a ‘WIN-WIN’ situation for the NWT communities


Questions

Society, Economy and Environment

Municipal Infrastructure

Built Environment

Consumption

Reduced Life

Roads, Bridges, Buildings, Transits, Fleets, Water, Sanitary, Drainage, Energy, Communications, Parks and Public Facilities

Services

Waste

Questions?

[email protected]

Tel: (867) 873-7944


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