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Asset Management Program:How Your PWS Can Make Effective Use of a Regulatory Obligation
December 2017
TMACOG Water Supply Committee
Agenda
Asset Management from a National Perspective
Robert Stevenson, Principal - Arcadis
Asset Management Rules Overview
Susan Schell - Ohio EPA
Asset Management Program
Preparation/Implementation
Cheryl Green, P.E. - Hull & Associates
4
Typical Drivers in the US are Evolving…
Capital
Budgets
• “Wish list”
• Unaffordable
Capital Budgets
State/Federal
Requirements
• NPDES permits
and consent
decrees
• SRF loans
Bond
Rating
• Rating agencies
starting to look
for it
Technology
Issues
• Incomplete data
sets
• Poor hierarchies
• Lack of value
$
5
Asset Management Trend for the US
• US EPA mandating asset management plans
through administrative orders
• Several states are promoting asset management
requirements
• Permits
• SRF funding
• Principal forgiveness
• Grants
6
AWWA Survey of Asset Management Requirements for State Revolving Funds and Other Programs
Water Resources Reform and Develop Act (WRRDA) of 2014
• Requires Fiscal Sustainability Plans (FSPs) for Clean Water
SRF Loan Recipients
FSP Requirements Asset Management
• Inventory of critical assets
• Evaluation of condition and performance of assets
• Plan for maintaining, repairing, or replacing assets
• Plan for funding these activities
• Certification of consideration and implementation of
energy and water conservations
7
AWWA Asset Management Committee Survey
• Understand different ways that States are promoting asset management
• Understand how to better support utilities in their efforts to improve asset
management
• Present AWWA and Asset Management Committee members as resources for States
Clean
WaterDrinking
Water
8
Life-Cycle Costing / Repair vs. Replace
Other States Proposed Asset Management Plan Requirements
New Jersey (Required for Drinking and Clean Water)
Asset Inventory and Condition Assessment
Level of Service / Key Performance Indicators
Identify Critical Assets / Criticality and Vulnerability
Financial Planning / Long-Term Funding
9
Other States Proposed Asset Management Plan Requirements
Municipal Sewage System Asset
Management (MSSAM) GuideNY
Stormwater, Asset
Management, and Wastewater
(SAW) ProgramMI
FLAMP Required to Receive State
Revolving Funding
10
Ohio EPA Asset Management Plan Requirements (Senate Bill 2)
An Inventory and Evaluation of all
Assets
Operation and Maintenance
Programs
An Emergency Preparedness and
Contingency Planning Program
Criteria and Timelines for Infrastructure
Rehabilitation and Replacement
Approved Capacity Projections and Capital Improvement Planning
A Long-Term Funding Strategy to Support Asset
Management Plan
Implementation
Public Water System Plan
Deadline is October 2018
Asset Management ProgramRule Overview from Ohio EPA
Susan K. SchellEnvironmental ManagerOhio EPA Division of Drinking and Ground Waters
SB2 Asset Management Provisions
• Components:
– Inventory and evaluation of all assets
– Operation and maintenance programs
– Emergency preparedness and contingency planning program
– Criteria and timelines for infrastructure rehabilitation and replacement
– Approved capacity projections and capital improvement planning
– Long-term funding strategy to support asset management program implementation
Draft Asset Management Rules
• We have drafted rules to address the managerial, technical and financial capability of all water systems
• We will follow our typical rulemaking process, including early stakeholder outreach and public comment
• Written asset management programs required by October 1, 2018 for all water systems
• Submission of the written asset management program will only be upon the Director’s request.
Managerial Capability
• Documentation of ownership
• Documentation of a certified operator
• Brief non-technical description of the water system
Managerial Capability
• Operating plan
• Written procedures
• Inventory of external contacts
• Internal contracting and purchasing procedures (routine and emergency)
Technical Capability
• Map – use the lead map they already have and build on it!
• Inventory of assets
• Evaluation of assets
• Level of service goals
• Metrics
Technical Capability
• Operation and maintenance programs
• Approved capacity projections
• Criteria and timeline for rehabilitation and replacement
• Capital improvement plan
Financial Capability
• Systems need to have an operating budget ratio greater than 1.0
• Operating budget ratio is defined as the revenues received divided by the cost of operation of the water system
• Current water rate ordinance and triennial water rate evaluation
• Documentation of all customers billed per metered water usage
Pulling It All Together
• Most systems have a lot of this information, they just need to write it down and gather it in one place
• Systems can do a lot of this without outside help, saving them money and helping them understand their system better
• An asset management program is more than just a tracking system
• They don’t have to have a software system to track everything, but it helps for more complex systems
What Can Asset Management Do for a Water System?
• Can help raise capital to improve infrastructure
• Operation and maintenance on a frequency that makes sense to get the maximum life of the assets
• Replace assets when condition warrants it, not just because they’re old, helps prioritize projects
• Set aside reserves to replace critical infrastructure in emergencies
What Can Asset Management Do for a Water System?
• Allows a system to plan ahead for future improvements and adjust rates gradually to meet future financial needs
• Allows a system to adequately address the health, safety and welfare of their customers
• Establishes real costs of infrastructure if replacement needed, adequate insured $$$
Implementation Plan
• At the time of sanitary surveys, inspectors will initially be asking to see some basic components, such as asset inventory, maps, level of service goals, metrics, etc.
• We are developing guidance for systems, expectations will vary based on system type and complexity
• We are developing templates for very small systems
Funding for Asset Management
• Planning loans are available
• Terms of 5 years at 0% interest
• Potential for $10,000 in principal forgiveness
Resources
Asset Management Webpage:http://epa.ohio.gov/ddagw/pws.aspx#113435168-asset-management
Susan K. SchellManager, Engineering & Infrastructure
Section(614) 752-9725
Susan.Schell@epa.ohio.gov
Core Components
Asset Management
Life Cycle Costing
Long Term
Funding
Asset Inventory
Level of Service
Asset Criticality
Asset Inventory:
Assets of a public water system
ALL components that are required to maintain level of service
source water
storage
pipes operators
hydrants and valves
treatment plant
• Complete an asset inventory
• Asset data and condition
• Asset criticality
Asset Inventory:
Asset map and database management
Where are your assets
located?
Lead Map?
Asset location/
condition / inventory
not static
Consider a GIS-based
system
USEPA CUPP$ for small
systems
Level of Service (LOS)
Define the primary objectives of the Utility
Develop goals that…
Meet requirements of regulators
Meet the expectations and demands of the
customer
S.M.A.R.T. Goals
Specific
Measurable
Attainable
Realistic
Time-based
Goals
Examples of measurable LOSs
Water quality
Service capacity
Pressure
Examples of LOS goals
Reduce Cost/ million gallons produced
Accumulate $XXX in reserve fund by year 20XX
Document testing/maintenance for 95% of all assets
Examples of Metrics
Water loss < 20%
Operating ratio of 1.2 (revenue/cost to operate)
System pressure > 20 psi
Goals
Level of Service (LOS)
By William Croyle, California Department of Water Resources - California Department of Water
Resources -https://scontent.fmuc2-1.fna.fbcdn.net/v/t1.0-
9/16730609_10154430795287449_8360716524217440974_n.jpg?oh=297cdb5f045032a9da809b7919
bc071b&oe=59331622, Public Domain,
https://commons.wikimedia.org/w/index.php?curid=56253570
Asset Criticality
Not all assets are created equal
Consider which assets are critical to maintaining system performance
Two major factors to consider
Likelihood of failure
Consequence of failure
Risk = Likelihood x Consequence
Likelihood of Failure
Age/ condition of
asset
Operation and
maintenance history
Asset use
Soil characteristics
Consequence of
Failure
Public Health Impact
Social Impact
Environmental Impact
Reduction in Level of
Service
Cost of Repair /
Replacement
Asset Risk Matrix
Aging pump
Booster pumps
New plant equipment
Reservoir spillway
Aging hydrants
New water main valve
Conse
quence o
f Failure
Likelihood of Failure
Out of
Water
Normal
operation
Very
UnlikelyCertain
Life Cycle Costs
Must determine levels of acceptable risk
Number of customers served ( > 100)
Types of customers (i.e. hospital, school, industry)
Public safety
High Risk (Critical) Assets
Replace prior to end of estimated useful life.
“We are not willing to accept much risk that this
asset will fail.”
Low Risk (non-critical) Assets
Run until failure occurs, then replace.
“We can accept the risk (or certainty) that this
asset will fail.”
Long Term Funding
Develop a Capital Improvement
Plan (CIP), including…
5, 10, and 20 year projections for
major asset replacements
Detailed cost estimates for asset
replacements
Plan to establish reserve
accounts to fund replacements
Long Term Funding
Rate Analysis
Utilities need to make sure their
rates match the true life cycle
costs of their asset inventory
Rates must cover annual operating
expenses, as well as provide funds
for repairs, rehabilitations, and
replacements of assets.
Use Grants / Loans for significant
capital Improvements
CIP Fund
Loans
Grants
Bonds
Funding Sources
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