Introduction to Asset Management for Small Water Systems

1. Introduction to Asset Management Glenn Barnes Environmental Finance Center The University of North Carolina 919-962-2789 glennbarnes@sog.unc.edu http://www.efcnetwork.org

2. Smart Management for Small Water Systems Smart Management for Small Water Systems*under a Cooperative Agreement with the US EPA • The EFCN will provide training and technical assistance to small public water systems in all fifty states and five territories to help local water systems achieve and maintain compliance with the Safe Drinking Water Act. • Workshops and trainings will be provided in these areas: • Asset Management • Water Loss Reduction • Water System Collaboration • Fiscal Planning and Rate Setting • Energy Management • Funding Coordination, and • Managerial and Financial Leadership

3. Public Water Systems Serving Less than 3,300

4. Exhibit 2.41: Need per Residential Connection by System Size Source: 2007 DWINSA and 2006 CWSS Infrastructure Needs for Community Water Systems

5. Community Water Systems with Health-Based Violations During FY2011 Source: SDWIS FY11Q3 frozen tables

6. Quick Introductions • Name? • Organization? • Responsibility? • Details on your water system—who you serve, infrastructure, etc.

8. What Will? Working Harder Won’t Help

9. Working Smarter

10. Workingsmarternot harder is the essence of Effective Management / Asset Management

11. It Answers the Burning Question……

12. What if I want this much money……

13. And I Absolutely Need this much money….

14. But all I get is this much money……

15. What do I do?

16. Asset Management Helps You Have the Most Impact in Your System By Spending Your Limited Dollars in the Best Way Possible

17. Inadequate Revenues

18. Aging Infrastructure

19. No Economy of Scale

20. Early Failure of Assets/ Lack of Maintenance Program

21. Expensive Compliance

22. What you want to do…. Replace all the assets New tank, new pipe, new pump, new filter

23. $5 Million Elected Officials/ Decision-Makers Say No

24. Second Choice: $3 M New Tank, New Filter, New Pump Replace Some of the Assets Elected Officials/ Decision-Makers Still Say No

25. Now What? Repair and Rehabilitate

26. Analyze Pipe Replace only select pipes too bad for rehab Marginal & Better Stays in Place; Repair wherever possible Rehab Where Possible

27. Analyze Filter Look for root cause of problem; check media; Look for rehab options

28. Analyze Tank Check structural integrity; Look for rehab options: Can you sand blast? Repaint? Recoat interior? Clean sediment

29. Analyze Pump Replace pump impeller, keep pump

30. Rehab Option: $1 M Reduced Risk almost as low as new assets for 1/5 the cost Rehab Assets

31. What does this type of analysis take?

32. Nothing more than following a systematic approach for managing the assets (Often called the 5 core components of asset management)

33. Five Core Components of AM Current State of the Assets Level of Service Criticality Life Cycle Costing Long-Term Funding

34. Five Core Components of AM Current State of the Assets Level of Service Criticality Life Cycle Costing Long-Term Funding

35. What Do I Own?

36. Where are my assets? _

37. What is the condition of my assets?

38. What is the remaining life of my assets? 100 Years 1 Year 10 Years 15 Years 20 Years

39. Replacement Current Value Historical Value What is the value of my assets?

40. What is the energy use of my assets? Electricity 50 KW 10 Hp 150 Hours Run Time Solar Powered

41. Five Core Components of AM Current State of the Assets Level of Service Criticality Life Cycle Costing Long-Term Funding

42. Level of Service Involve Customers Measurable Goals: Internal and External Track Progress Towards Meeting Goals Involve Staff Key question: What would my customers want?

43. Five Core Components of AM Current State of the Assets Level of Service Criticality Life Cycle Costing Long-Term Funding

44. Components of Criticality What is the probability or likelihood that a given asset will fail? How do my assets fail? What’s the condition of my assets? What is the consequence if the asset does fail? What is the cost of the repair? Are there legal consequences, environmental consequences, social consequences? Are there redundant assets?

45. MEDIUM RISK MEDIUM RISK Critical Assets – Risk Analysis Consequence of Failure Which category of assets do I care the most about? The least? Probability of Failure

46. Five Core Components of AM Current State of the Assets Level of Service Criticality Life Cycle Costing Long-Term Funding

47. Life Cycle Costing: Operation and Maintenance • Maintenance activities extend the life of assets • Lots of maintenance that can be done, but • Maintenance takes Time and Resources • So…. How do you decide what to do? Concept of Risk • High Risk Assets: Do what you can to prevent failure and reduce risk of asset • Low Risk Assets: Do only what’s absolutely necessary

48. Not possible to know the optimal time to replace every asset So… need to use the concept of risk In Theory, There is an exact right to replace an asset X X Condition X Optimal Replacement Point X X Time Life Cycle Costing: Replacement of Assets X = Repair

49. High risk : replace assets early, before failure Low risk assets: run to failure and replace afterwards X X X X Replacement Point Replacement Point Condition Condition X X X X X X Time Time Life Cycle Costing & Risk

50. Five Core Components of AM Current State of the Assets Level of Service Criticality Life Cycle Costing Long-Term Funding