introductions - american public works association · data inventory core aam program process tools...

1

1

Advanced Asset Management & Strategic Planning -

Making it Work for the Small Agency

Duncan RoseVP / Service Group Manager USA, Mgt Consulting & Asset ManagementGHD LLC180 S. Cherry Street, Suite DMonticello, Florida 32344Office: 850 997-5333Cell: 850 [email protected]

Kim PresnellCity ManagerDeFuniak SpringsPost Office Box 685DeFuniak Springs, Fl 32435Office: [email protected]

ManagementEngineeringEnvironment

2

IntroductionsKim Presnell –• City Manager, City of DeFuniak Springs, Florida • Former Director of Utility and Public Works for the City

of Chattahoochee, Florida. • Eighteen years municipal government experience. • BS University of Alabama, with a dept study in Public

Administration and development of a Senior Project focused on Advanced Asset Management and Strategic Planning.

Duncan Rose• Vice President, Management Consulting - USA, GHD LLC;• Former city/county manager; • Co-author of WEF’s Managing the Water/Wastewater

Utility; • 30 plus years state & local government management; • Adjunct Faculty, Florida State University, Askew School of

Public Policy and Administration; • BA, MSP, MAPA.

3

USEPA Workshopsepa.gov/owm/featinfo

International Infrastructure Management Manual

2

4

Context of Advanced Asset Management• US utilities and public works departments face major

challenges to renew an aging infrastructure while simultaneously addressing growth and security needs.

• New revenues – federal or local – will be increasingly difficult to come by.

• A large part of meeting the challenge must come from better techniques for managing our assets.

• New concepts, new techniques and new technologies have been aggressively deployed in our private sector and in other countries.

• These techniques - this emerging paradigm - can change the way we manage our utilities. But how to proceed?

5

Bottom Line: Emergent PW Profile• Increasing demand – water and wastewater, roads,

stormwater management, facilities, fleet• Diminishing available resources • Leveling of “production efficiencies,” increasing costs• Increasing requirements, output restrictions • Aging infrastructure

Result: Increasingly expensive treatment options• Aging stakeholder base – more and more on fixed income• Diminishing technical labor pool running larger and more

sophisticated plants, equipment, and facilities• Outflow of knowledge with retiring labor base• Increasing resistance to rate and tax increases

Result: Increasingly complex management environment

6

The Consequences of Asset Failures Can Be Severe

3

7

All Assets Deteriorate and Eventually Fail…

Sediment build-up increasingly restricts flow

. . . How to minimize the total life-cycle cost of managing the failure process?

Cleaning & relining adds 50 years life

8

AAM Focuses on Three Fundamental Management Decisions:

• What are my work crews doing and where are they doing it?

• What CIP projects should be done and when?• When to repair, when to renew and when to

replace?

These decisions typically account for at least 80% of a Utility’s annual expenditures!

9

“What is Asset Management?”

What is AM?

DefinitionPrinciples

“Meta” FrameworkBest Practices

Why doAM?

BenefitsOutcomes

PayoffVision

What “deliverables”

do I get?

TAMPAMP

Validated CIPOptimized Maint Program

Replacement PlanFunding Strategy

How to do it?

Core Processes& Techniques

Toolkit

How do Imove

forward?

6 Core Approaches

4

10

Building the “AM MetaBox”

• Definition• Life cycle• Four “conceptual

framework” views of Asset Management

• Charter Principles• An Asset

Management Plan

11

Advanced Asset Management (“AAM”) is a management paradigm and a body of management practicesthat is applied to the entire portfolio of infrastructure and humanassets at all levels of the organizationthat seeks to minimize the total cost of acquiring, operating, maintaining and renewing the assets within an environment of limited resourceswhile continuously delivering the service levels customers desire and regulators requireat an acceptable level of business risk to the organizationIn a cultural environment that encourages maximum development and satisfaction of our human assets.

“Meta” View 1: Our Definition of AAM

12

“Meta” View 2: Lifecycle AM Functional ElementsAUDIT &REVIEW

DISPOSE

REPLACE

RENEW/ REHABILITATE

MONITORCONDITION &

PERFORMANCE

PLANNINGSTRATEGIES

CREATION orACQUIRE

ACCOUNTING &ECONOMICS

OPERATE

MAINTAIN

ASSESS RISKS &

INVESTMENTS

LEVEL OF SERVICE

DEMANDANALYSIS

COST OF SERVICE

5

13

“Meta” Views 3 – 6: Four Different Views of “Asset Management”

• The “Quality Elements” View• The “Management Framework” View• The “5 Core Management Questions”

View• The “Core Processes and Practices” View

14

“Meta” View 3: The “Quality Elements”View

15

“Meta” View 4: The “Management Framework” Perspective

6

16

“Meta” View 5: The “5 Core Questions” View

5. Given the above, what is my best long-term funding strategy?

4. What are my best “minimum life-cycle-cost” CIP and O&M strategies?• What alternative management options exist?• Which are most feasible for my organization?

3. Given my system, which assets are critical to sustained performance?How does it fail? How can it fail? What is the likelihood of failure? What does it cost to repair?What are the consequences of failure?

2. What is my required sustained Level Of Service?• What is the demand for my services by my stakeholders?• What do regulators require?• What is my actual performance?

1. What is the current state of my assets?• What do I own?• Where is it? • What condition is it in?• What is its remaining useful life?• What is its economic value?

Core Questions


4. What are my best “minimum life-cycle-cost” CIP and O&M strategies?• What alternative management options exist?• Which are most feasible for my organization?




Core Questions

17

“Meta” View 6: The “Core Processes and Practices” View

18

“Meta” View 7:Charter

Principles

7

19

The Total Asset

Management Plan

20

“Meta” View 8:The Enterprise

Asset Management

Plan

ExecutiveDocument

PurposeLevels of ServiceGrowth DemandLifecycycle PlanningFinancial ForecastsImprovement PlanSignificant Negative EffectsIssues

IntroductionSection - 2

Corporate OverviewOwnership Goals &ObjectivesActivity Business OverviewAsset Management PlanningProcessAMP Development Model

Improvement PlanSection - 9

Current StatusImprovement ProgrammePerformance MeasuresMonitoring & Review

Financial AnalysisSection - 7

Key AssumptionsConfidence LevelsFinancial StatementsFinancial ProjectionsValuation ForecastsFunding Strategies

Processes & PracticesSection - 8

Current ProcessesAsset StrategiesAsset Data & SystemsTarget ProcessesTarget Data & SystemsGap Analysis

Growth & DemandSection - 4

Key Demand DriversPopulation GrowthTraffic GrowthRegional DevelopmentStrategyDemand ManagementGrowth related Cap Ex

Levels of ServiceSection - 3

Customer ExpectationsStrategic & Corporate GoalsLTCCP Outcomes (QBL)Current Service StandardsTarget Level of ServicesService Options & CostsPerformance CriteriaLOS related Cap Ex

AMP References &Acknowledgements

Section - 10

Reports and References

RiskSection - 6

Risk FrameworkLikelyhoodConsequence

Lifecycle ManagementSection - 5

MAINTENANCE PLANKey AssumptionAsset ActivitiesOpex CriteriaOpex PlanSummary of the networkIssues

RENEWAL PLANKey AssumptionsAsset Renewal ActivitesRenewal CriteriaRenewal Plan

NEW WORKS PLANKey AssumptionCapex Evaluation ProcessNew Works Plan

21

Example: Organizational AM Strategies

Strategy without action is merely a dream!

8

22

Inside the AM Metabox

Condition Assessm

ent

Business Risk E

xposure

Level 3Level 2Level 1

23

Perf

orman

ce

Time

Initial “Design” Capability

Minimal Performance Level“Inherent” Deterioration Curve

“Managed” Deterioration Curve

ManagementZone

The yin-yang of asset failure

“Failure is defined as the inability of any asset to do what its users want it to do.”

John Moubray

Key to Sustainable Performance –Understanding How Our Assets Fail

24

Per

form

ance

Time

P1 Vibration

X P2 OilX

P3 Audible NoiseX

F FailureX

P4 Tactical HeatX

PX

“P to F”IntervalMonitoring

“Failure Mode” Analysis, Condition-based Monitoring,Predictive Maintenance &

“Reliability Centered Maintenance”

Findings:• Only a moderate

relationship between preventivemaintenance and failure

• 30 to 70% of equipment maintenance is misdirected!

AM is all about

“managing the potential to fail”

Key to Sustainable Performance –Understanding How Our Assets Fail

9

25

Core AAM Program Process Tools

InventoryAssets

AssessCondition

DetermineResidual

Life

DetermineReplacement

$ & Date

Set TargetLOS

AssignBRE Rating(Criticality)

DetermineAppropriateMaintenance

DetermineAppropriate

CIP

FundYour Strategy Build the AMP

Confidence LevelRating;

Strategic Validation;ORDM

FMECA;Business Risk Exp;Delphi Technique

Expected Life Tables;

Decay Curves

Valuation;Life Cycle Costing

Root Cause; RCM;PdM;

ORDMRenewal Annuity

Condition Assessment,

RatingMethodologies

System Layout;Data Hierarchy;Data Standards;Data Inventory

Demand Analysis;Balanced Scorecard;Performance Metrics

Asset Mgt Plan, Polices & Strategy,

Annual Budget

26

Storyline

Basic Tools 1:USEPA Training

Workshops

27

Basic Tools 2: Maryland Center For Environmental Training

10

28

Basic Tools 3: WERF’s AMPLE - Asset Management Program Learning Environment

29





Decay Curves



ORDM

Asset Mgt Plan, Polices & Strategy;

Annual Budget;Renewal Annuity



InventoryAssets

AssessCondition

DetermineResidual

Life


$ & Date

Set TargetLOS




CIP

FundYour Strategy


Build the AMP


Annual Budget

Condition Assess Protocol,

RatingMethodologies

30

FACILITIES

PARENT ASSET

ASSET

CHILD ASSET

FACILITIES

PARENT ASSET

ASSET

CHILD ASSET

FACILITY

ASSET

CHILD ASSET

CHILD ASSET

PARENT ASSET

ASSET

CHILD ASSET

CHILD ASSET

PARENT ASSET

FACILITY

ASSET

CHILD ASSET

CHILD ASSET

ASSET

CHILD ASSET

CHILD ASSET

PARENT ASSETPARENT ASSET

ASSET

CHILD ASSET

CHILD ASSET

ASSET

CHILD ASSET

CHILD ASSET

PARENT ASSETPARENT ASSET

The Asset Hierarchy

An agency’s data standards are the backbone of its management capabilities

11

31

The Data Standard:The Major Components of Asset Data

Asset ID:• Physical Attributes

• Geo-reference

• O&M Manuals

• Drawings/Photos

• Life Cycle Costs

Primary Cost Unit Minor code Number of Units $/Unit Allocated CostDirect Labor

Direct Pay 2.5 hours $42.00 $105.00 Overhead .5 hours $6.00 $3.00 Benefit Burden 1 $8.20 $8.20 FICA, etc 1 $2.20 $2.20

MaterialsVehicle 1.5 hours $47.15 $70.73 Pipe 160 feet 8” PVC $1.20/foot $ 192.00

• Knowledge & Strategy

32

The “Maintenance Managed Item” (MMI)• "Maintenance Managed Item"

or "MMI" refers to the lowest level of an asset's physical structure that is to be recognized within an asset register where the registry is structured as a nested hierarchy of physical assets.

• Typically, an MMI is set at that level of the hierarchy at which an asset is individually maintained or at which management decisions to repair, refurbish or replace are made.

Or?

33

Chattahoochee’s Efforts

12

34


RatingMethodologies





Decay Curves



ORDM





InventoryAssets

AssessCondition

DetermineResidual

Life


$ & Date

Set TargetLOS




CIP

FundYour Strategy


Build the AMP


Annual Budget

Current State of the Practice:CONDITION ASSESSMENT PROGRAMS

(CAP’s) CAP 1 - A simple scoring system e.g.

good,fair,poor or 1-3 ,1-5 or 1-10

CAP 2 - A matrix scoring system withmultiple distress factors and weightings to derive a score

CAP 3 - Use of sophisticated techniquesto determine the resident life to intervention or end of physical life

36

Levels 1 & 2: AWWA’s “Plant Manager”

13

37

Emergent “National” Standards - Pipes

National Association of Sewer Service Companies (NASSCO)Water Research Centre (WRc), Manual of Defect Classification

“PACP” - Pipe Assessment Certification Program

38

Relating Condition to Performance

Condition Assessment – Performance Measures

MAINTENANCECATEGORY

MAINTENANCEELEMENT

PERFORMANCEMEASURE LEVELS OF SERVICE

Pavement Structure

Pavement Structure

International Roughness Index

Roads reconstructed in past 5 years

IRI < 181

Roads not reconstructed in past 5 years

Percentage of pavement in good condition must remain the same or increasePercentage of pavement in poor condition must remainthe same or decrease

Pavement Condition Index

Roads reconstructed in past 5 years

PCI > 80

Roads not reconstructed in past 5 years

Percentage of pavement in good condition must remain the same or increasePercentage of pavement in poor condition must remain the same or decrease

Friction number (skid numbers)

Skid number > 40

Distress Modes Rating 1-5 Weighting* Score

Corrosion 3 3 9

Vibration 1 1 1

Leakage 2 1 2

Heat 4 2 8

Performance 2 3 6

Noise 1 1 1

Condition Rating 27

Example: Condition Assessment Protocol 2

14

40

Example: Condition Assessment Protocol

41

Determining “Remaining Useful Life”

• Level 1– Effective Life Table

• Level 2– Effective Life Table + Modification Factors

• Level 3– Direct observation Tables

• Level 4– Condition/decay curve-Based Tables

42

The “Table of Effective Lives” Approach

• Sources:– Manufacturers– Industry Associations– GASB– Colleagues– Consultant Engineers– Research

• Professional associations• Universities

– International community

Effective Lives (Years)Class Asset Type Effective Lives

1 Civil 752 Pressure Pipework 603 Sewers 1004 Pumps 405 Valves 306 Motors 357 Electrical 308 Controls 259 Building Assets 3010 Land 300

15

“Average Effective

Life”Tables

Impacts that increase

life

Impacts that reduce

life

Actual Effective Physical Life

Design Life

Amending Standard Effective Lives

Level 2 - 3Standard Effective Life Variation Factor Matrix

FACTORSIMPACT RATING FACTORS

1 2 3 4 51 DESIGN STANDARDS2 CONSTRUCTION QUAL.3 MATERIAL QUALITY4 OPERATIONAL HISTORY5 MAINTENANCE HISTORY6 OPERATING ENVIRONM.7 EXTERNAL STRESSES

+10% + 5% 0% - 5% -10%+10% + 5% 0% - 5% -10%+10% + 5% 0% - 5% -10%+10% + 5% 0% - 5% -10%+10% + 5% 0% - 5% -10%+10% + 5% 0% - 5% -10%+10% + 5% 0% - 5% -10%

45

Example: “Direct Observation” Table

16

46

Data Collection Strategies

Attributes

Assets

Few

All

All

C

B

A

Few

D

Critical

Critical

47





Decay Curves



ORDM





InventoryAssets

AssessCondition

DetermineResidual

Life


$ & Date

Set TargetLOS




CIP

FundYour Strategy


Build the AMP


Annual Budget


RatingMethodologies

48

Two Accounting Views

• Financial accounting– GAAP driven– Financial statement reporting - external– “fairly present the result of operations on financial

condition” test– “Audit trail” paradigm

• Managerial accounting– Not GAAP driven, rather,“business case” driven –

decision focused– Management analysis reporting – internal– “Cost” focused

Original Cost

Replacement Cost

17

Condition-Based Depreciation

0% 50% 100%

% Effective Life Consumed

Value

20%

Renewal cost = (% Effective Life Consumed)N * Replacement CostCB Depreciated Cost = (Life to date/estimated useful life)N * Original Cost

Condition Based Value (Say, N = 3)Condition Based Value (Say, N = 4)

Condition Based Value (N < 1)

~Straight Line (N = 1)

Major passive assets, N = 4Architectural passive assets, N = 3Mech/elec & other dynamic assets, N = 2

50

Determining Replacement Cost

• Level 1– Original cost x General Cost Index (eg, CPI)

• Level 2– Original cost x Sector-based Cost Indices (eg, ENR,

Means CCI)– “Greenfields to Brownfields” conversion costs

• Level 3– “Modern Equivalent Engineered Replacement Asset”

(MEERA)– Detailed site-based cost analysis

51

Which Valuation Technique?

Financial Accounting• Used for GASB reporting

purposes• Choice of:

– Historic depreciation– Modified or

“preservation” approach

Managerial Accounting• For renewal and

replacement analysis• For long-term funding

strategies including rate setting

• Choice of:– Condition-based

renewal– Depreciated

replacement

18

52





Decay Curves



ORDM





InventoryAssets

AssessCondition

DetermineResidual

Life


$ & Date

Set TargetLOS




CIP

FundYour Strategy


Build the AMP


Annual Budget


RatingMethodologies

53

Example: Demand ProjectionFigure H

Proposed ExpansionsBig Creek, Johns Creek, Cauley Creek Drainage Basins

CIP Business Plan

0

10

20

30

40

50

60

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Year

Max

imum

Mon

thly

Was

tew

ater

Flo

w, M

GD

Capacity 36.0 MGD

Capacity 39.8 MGD

Cauley Creek Expansion to 5.0 MGD Diversion to Cobb Chattahoochee Tunnel - 3.8 MGD Johns Creek Expansion to 15 MGD

Existing Treatment Capacity 33.5 MGD

Expanded Capacity 47.8 MGD

54

Example:Demand Analysis

19

55

Example: LOS

Statement

ENVIRONMENTAL

Key Performance Indicators 2005 Target Level of Service

1. OCSD will comply with effluent quality standards. a. Compliance with all Ocean Discharge Permit Limits, % 100% b. Concentration of Emerging Chemical Constituents of Concern,

Plant No. 1 Secondary Effluent NDMA < 150 ppt 1,4 Dioxane <2ppb

c. Effluent total coliform bacteria after initial dilution, mpn <1,000 d. Source Control permitee compliance with permit conditions, percent

>90%

2. OCSD will manage flows reliably. a. Frequency of use of emergency 1-mile outfall 0 per year during dry

weather < once per 3 years in peak wet weather

b. Sanitary sewer spills per 100 miles < 2.1 c. Contain sanitary sewer spills within 5 hours 100%

3. OCSD’s effluent will be recycled. a. Treated effluent reclaimed, % (flow) 4% (10 mgd)

4. OCSD will implement a sustainable biosolids management program.

a. National Biosolids Program Certification for Environmental Management System

Maintain

b. Percent of biosolids beneficial reuse Class "B"

Class "A/EQ"

100% 40% 60%

5. OCSD will improve the regional watershed. a. Dry weather urban runoff collected and treated 4 mgd b. Rainfall induced inflow and infiltration, wet weather peak factor <2.2 c. Stormwater management, % of treatment process area runoff

treated on-site 100%

d. Per capital wastewater flow rate, gallons per person per day <105 6. OCSD will protect the air environment.

a. Odor complaints: Reclamation Plant No. 1 Treatment Plant No. 2 Collection System

5 4

b. Air emissions health risk to: Community, cancer risk per 1 million Employees

<25 <25

c. Air mass emissions permit compliance, % 100%

SOCIAL


1. OCSD will be a good neighbor and will be responsive to its customers. a. Off site Biosolids nuisance complaints 0 b. Odor complaint response Treatment Plants within 1 hour

Collection System within 1 working day

100% 100%

c. Restore collection service to customer within 8 hours 100% d. Respond to public complaints or inquiries regarding construction

projects within 1 working day >90%

e. Respond to collection system spills within 1 hour 100% f. New connection permits processed within one working day >90% g. Dig Alert response within 48 hours 100%

2. OCSD will provide public access to OCSD information. a. Public Records Act requests within 10 working days 100% b. Post Board/Committee Agenda Packages 72 hours prior to

meeting 100%

c. Post studies and reports on OCSD website within 1 week of receive/file.

100%

3. OCSD will take care of its people. a. Training hours per employee 45 b. Employee Injury Incident Rate <3.75

ECONOMIC


1. OCSD will exercise sound financial management. a. New borrowing Not more than

annual Capital Improvement Program requirements

b. COP coverage ratio Between 1.25 and 2.0

c. COP service Principal and Interest < than O&M expenses

d. Annual SFR user fee increase not more than 15% e. Annual user fees Sufficient to cover all

O&M requirements f. Annual increase in collection, treatment, and disposal costs per

million gallons < 10%

g. Annual variance from adopted reserve policy <5%

56

Pump Station LOS Requirements Security,Sewer Spills, Odor, Noise,

Safety, Appearance

Controls

Electrics

Wet & Dry Wells

InletScreen

Pumps2 No.

ForcedMainPipes

& ValvesInlet Sewer

Superstructure

Land & Imprv.

Different LOS for Each Asset

Pump StationLOS

AdequacyDependability/ReliabilityEfficiency

External LOSSSOs: “No preventable”3 Odor complaints p.yr.35 decibels @ boundaryOS&H complianceNPDES/ CMOM compliance

57

System Performance Requirements

Sewer Spills, Odor, Noise, Safety, Water Quality

ReliabilityAvailabilityPerformance

System Performance – Internal Levels of Service

External LOSTargets NPDES Permit

BOD 10 mg/lSS 15 mg/l TN 2 mg/lP 1 mg/l

NetworkCollectionSystems

TrunkSewer

Systems

TreatmentPlant

DisposalSystem Final Discharge

Different LOS for Each of these

20

58





Decay Curves



ORDM



Condition Assessment

RatingMethodologies



InventoryAssets

AssessCondition

DetermineResidual

Life


$ & Date

Set TargetLOS




CIP

FundYour Strategy


Build the AMP


Annual Budget

59

The Concept of “Failure Mode”:The Four Core “Failure Modes”

MAJOR FAILURE MODES

PERFORMANCE /LEVEL OF SERVICE

(OUTPUT)

Discharge Quality

Air / NoiseComplaint

Number Of Spills

Safety OSHA

Internal Levels of Service

Complaint Response

Odor Complaints

Risk BRE

Current &

Future

External Regulation

AVAILIBILITY(DEMAND,CAPACITY,QUANTITY)

Utilization Knowledge

SCADALoad History

COST(PERFORMS OKAY

BUT COSTS TOO MUCH)

Investing in Efficiencies

MORTALITYRELIABILITY

(END OFPHYSICAL LIFE)

AgeDesign Specifications

OperationsUtilization

MaintenanceManufacturing

InstallationOperating Environment

60

Ris

k/Li

kelih

ood

Consequence

High

LowHigh

A

B

C

• What is the likelihood of failure ? (risk)• What is the cost of failure? (consequence)

Determining “Significant” Failures: The Risk – Consequence Trade-off

D

21

61

Failure Risk/Consequence Drives Work Program

Ris

k/Li

kelih

ood

ConsequenceLow

High

High

A “Good”

B “Poor”

C “Good”

D “Fair”Worst First?

62

Failure Risk/Consequence Drives Work Program

Ris

k/Li

kelih

ood

ConsequenceLow

High

ImmediateWork

AggressiveMonitoring Program

Sample Monitoring



High

A

B

C

D

The Risk ( Criticality ) Metric

CurrentRiskCost

Business Risk

Exposure(BRE)

CostsOf

Failure

Costs of the

Consequence FailureImpacts

ProbabilityOf

Failure

Related toCondition,Reliability

&Redundancy

= X

22

64

BRE* 1 - Simple Approach

PoF / Likelihood

CoF / Consequence of Failure Low High

3

1 2 3

3

2 4

6 9

6

1 2 3

2

1

High

* Business Risk Exposure

Level 1 - Simple

ASSET No. PROBAB. CONSEQ. RISK RATING

1 .60 4 2.42 .70 2 1.43 .40 5 2.04 .68 10 6.8 *5 .95 7 6.7 *6 .10 10 1.0

* THESE REQUIRE FURTHER INVESTIGATION

Risk Rating = Probability X Consequence

Level 2 – IntermediateMultiple Elements

ENHANCED FMECA ANALYSIS TECHNIQUES

ELEMENT RATING WEIGHTING MAX. SCORE

Safety

Environment

Functionality

1 - 5

1 - 5

1 - 5

Cost 1 - 5

10

6

5

8

50

30

25

40

145

23

67

Example: Risk/Consequence Table

68





Decay Curves



ORDM




RatingMethodologies



InventoryAssets

AssessCondition

DetermineResidual

Life


$ & Date

Set TargetLOS




CIP

FundYour Strategy


Build the AMP


Annual Budget

69

Infrastructure Assets — Strategic Planning

24

70

• Renewal:– Repair – normal periodic maintenance, minor in nature,

anticipated in the normal operation of the asset; no enhancement of capabilities

– Refurbish/Rehabilitation– replacement of a component part or parts or equivalent intervention sufficient to return the asset to level of performance above minimum acceptable level; may include minor enhancement of capabilities; typically funded out of capital budgets

– Replace• Without enhancement – substitution of an entire asset with a new or

equivalent asset without enhancement of capabilities• With enhancement - substitution of an entire asset with a new or

equivalent asset with enhanced capabilities

• Non-Asset Solutions

Definitions

71

Bringing It All Together: The “Repair/Refurbish/Replace” Decision

1. “Fix when broke” (“Run-to-failure”)2. End of prescriptive life

1. “12 years old”2. “3,000 run-time hours”3. 35,000 miles

3. “Seat-of-pants rule of thumb”1. “3 breaks per mile” or “in 24 months”2. “Poor” condition (and “worst first”)3. FCI > 6% (Facility condition index – O&M as a % of

replacement cost)

4. Optimized (Renewal) Decision Making - O(R)DM

72

What is “ODM” (Optimal Decision Making)?

• Systematic search for lowest cost investment solution• Based on interaction of:

– Cost trends (Direct O&M, Indirect)– Condition trends (Decay/survivor curve)– Risk-consequence trends

• The major approach: combination of– Lowest average cost per year of residual life

• NPV• Iterative alternatives

– “Intervention” points• Maximum risk level• Minimum condition

25

73

What Do We Mean By “Alternative Treatment Options?”

Maintenance Options Refurbish Options Replacement Options

Maint Option 1

Maint Option 2

Maint Option 3

Refurb Option 1

Refurb Option 2

Refurb Option 3

Replace Option 1

Replace Option 2

Non-Asset Options

Non-Asset Option 1

74

Our “Decision Rule” – Level 2 -3Maintenance Option 1..N

Direct Costs

Indirect Costs

Total Costs

Year 1 Year 2 Year 3 … Year 7

PV Total Costs

“Search for the Alternative Treatment with the lowest average annual (present value) costs.”

Say, a 7 year solution

Refurbish Option 1..N

Direct Costs

Indirect Costs

Total Costs

Year 1 Year 2 Year 3 … Yr 20

PV Total Costs


Estimated total costs for the

effective life of the solution (capital,

operations, maintenance)

Impact on community for effective life of

the solution

Replace Option 1..N

Direct Costs

Indirect Costs

Total Costs

Year 1 Year 2 Year 3 … Yr 40

PV Total Costs


75

Asset Renewal Decision Model

0

20

40

60

80

100

120

2000 2010 2020 2030 2040 2050 2060

Year

Ris

k / C

ondi

tion

Scal

e

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

Cos

t ($)

ConPoFCoFRiskMin RiskMin ConMn$Op$Cum$

26

Importance Of The Work Order

WORKORDER

• ESTIMATEDBILL OF QUANTITIES

• ACTUAL- LABOR- PLANT- MATERIALS

• PROCEDURE FOLLOWED• FAILURE MODE NOTED• PRIMARY CAUSE OF

FAILUREMEMOS• IMPACT ON CUSTOMERS• UNPRODUCTIVE TIME• OTHER ISSUES

DATA FEEDBACK ALLOWSSIGNIFICANT ANALYSIS

TYPEP.M.U.M.

TELLS US PLANNED (PM) ORUNPLANNED (UM) MAINTENANCE COSTS

MONITORS PERFORMANCEREPORTS ON COST OVERRUNS

TELL US ACTUAL DIRECT COSTSOF ACTIVITY

TELL US THE ACTIVITY USEDNECESSARY FOR ACTIVITY ANALYSIS

USEFUL IN FAILURE MODE ANALYSIS

NECESSARY FOR CAUSAL ANALYSIS

INDIRECT COSTS ON BUSINESS IMPACT ON CUSTOMERS EFFECTS ANALYSIS

CAUSE OF COST OVERRUNS ORPOTENTIAL COST REDUCTIONS

77

The Cost of Maintenance

Rule of thumb:• Roughly speaking, planned maintenance

costs one-third less than unplanned maintenance for the same task

78

“Cost-Compression” Strategies:Asset Life-Cycle Timeline

Per

form

ance

Time

FailureOccurs

FailureReported

RepairScheduled

Parts, Manuals& ToolsLocated

RepairInitiated

ServiceRestored

VibrationX Oil

XAudible Noise

X

Tactical HeatX

Predictive MaintenanceCondition Based Strategies

2 Corrective MaintenanceReactive Based Strategies

3

Preventive MaintenanceTime and UsageBased Strategies

1

XX

27

79

Condition-Based Maintenance

Per

form

ance

Time

FailureOccurs

FailureReportedFailure

Reported

RepairScheduled

RepairScheduled



RepairInitiatedRepair

Initiated

ServiceRestoredService

RestoredVibration

X OilXAudible Noise

X

Tactical HeatX


2

VibrationX Oil

XAudible Noise

X

Tactical HeatX


2Predictive Maintenance

Condition Based Strategies

2 Corrective MaintenanceReactive Based Strategies

3Corrective Maintenance

Reactive Based Strategies

3


1

XX


1Preventive Maintenance

Time and UsageBased Strategies

1

XX

“Monitoring Interval”

“Nameplate” Data

VibrationSignature

ThermalSignature

ElectricalSignature

PerformanceSignature

Oil Residue Signature

Electro-magneticSignature

SonicSignature

+

Importance Of The Work Order

WORKORDER

ASSET DETAILS• TYPE• CATEGORY• SIZE• CONDITION• PERFORMANCE

HISTORY

ASSET LINKED COSTSALLOW SIGNIFICANT

ANALYSIS:

1. What type of sewer suffers the greatest number of blockages caused by tree roots?

2. How many failures are experienced by water mains of different ages in different ground conditions?

81

…The Asset Portfolio View

28

Best Appropriate

Process + Quality of Data Used

Confidence Level Rating

CLR =

Confidence Level Rating Metrics

2

55 %70 % 40 %

2+ =

83

Quality Assessment

No. Quality ElementProcess

EffectivenessData

Quality

Element Quality Rating

Primary Quality

Weightings

Project Confidence

Level1 Existing Standards of Service 84% 84% 84% 4% 3.42 Knowledge of Existing Assets / Portfolio 63% 56% 59% 12% 7.83 Current Demands 78% 78% 78% 8% 6.34 Future Demands / Changes in LOS 85% 85% 85% 10% 8.55 Prediction of Failure Mode 77% 77% 77% 2% 1.56 Timing of Capacity Failure 78% 78% 78% 8% 6.27 Consequence of Capacity Failure 58% 53% 55% 20% 11.08 Quality of proposed Maintenance Program 58% 53% 56% 2% 1.19 Appropriateness of O&M Costs 75% 75% 75% 2% 1.510 Appropriateness of Capital Solution Adopted 79% 79% 79% 15% 11.811 Assessment of Capital Cost Estimates 85% 85% 85% 7% 6.012 Assessment of Benefits 72% 72% 72% 5% 3.613 Appropriateness of Economic Eval. Processes 70% 70% 70% 5% 3.5

TOTALS 100% 72

84

CIP Evaluation Stages

AMP

AMP

10-Year CIP

5-Year CIP

Design ExpenditureApproved

SourcePeriod(years)

QualityRating

16-25

11-15

6-10

2-5

1

60%

70%

80%

85%

90%

29

85





Decay Curves



ORDM




RatingMethodologies



InventoryAssets

AssessCondition

DetermineResidual

Life


$ & Date

Set TargetLOS




CIP

FundYour Strategy


Build the AMP


Annual Budget

86

Optimized Renewal Projections -Collections

0

20

40

60

80

100

120

2006

2009

2012

2015

2018

2021

2024

2027

2030

2033

2036

2039

2042

2045

2048

2051

2054

2057

2060

2063

2066

2069

2072

2075

2078

2081

2084

2087

2090

2093

2096

2099

2102

2105

Year

Expe

nditu

re -

$M (C

urre

nt D

olla

rs)

Replacements - Collection SystemRehabilitation - Collection System

OCSD Expenditure – Predicted Future Renewal of the Collection System

87

Renewal Programs

VALUE$ Millions

2

4

6

8

10

2000 2005 2010 2015 2020 2025

EXISTING ASSETS

NEW WORK

TIME

Renewal CashRequirements

Average AnnualAnnuity – Existing Assets

Average Annual

Annuity –New Assets or

services (new LoS)

30

88





Decay Curves



ORDM




RatingMethodologies



InventoryAssets

AssessCondition

DetermineResidual

Life


$ & Date

Set TargetLOS




CIP

FundYour Strategy


Build the AMP


Annual Budget

89

The Nine Fundamental “Building Blocks” of AAM

1. Definition2. The asset life-cycle3. How assets fail4. Risk-consequence 5. Cost/valuation6. Asset demand7. Level of service8. Business risk9. Confidence in decision-

making

Asset Mgt Plans

Strategic Initiatives

Budgets

CIP

O&M

90

AAM Focuses on Three Fundamental Management Decisions:

• What are my work crews doing and where are they doing it?

• What CIP projects should be done and when?• When to repair, when to renew and when to

replace?

These decisions typically account for at least 80% of a Utility’s annual expenditures!

31

91

Example – AMP

Table of Contents

ExecutiveDocument

PurposeLevels of ServiceGrowth DemandLifecycycle PlanningFinancial ForecastsImprovement PlanSignificant Negative EffectsIssues

IntroductionSection - 2

Corporate OverviewOwnership Goals &ObjectivesActivity Business OverviewAsset Management PlanningProcessAMP Development Model

Improvement PlanSection - 9

Current StatusImprovement ProgrammePerformance MeasuresMonitoring & Review

Financial AnalysisSection - 7

Key AssumptionsConfidence LevelsFinancial StatementsFinancial ProjectionsValuation ForecastsFunding Strategies

Processes & PracticesSection - 8

Current ProcessesAsset StrategiesAsset Data & SystemsTarget ProcessesTarget Data & SystemsGap Analysis

Growth & DemandSection - 4

Key Demand DriversPopulation GrowthTraffic GrowthRegional DevelopmentStrategyDemand ManagementGrowth related Cap Ex

Levels of ServiceSection - 3

Customer ExpectationsStrategic & Corporate GoalsLTCCP Outcomes (QBL)Current Service StandardsTarget Level of ServicesService Options & CostsPerformance CriteriaLOS related Cap Ex

AMP References &Acknowledgements

Section - 10

Reports and References

RiskSection - 6

Risk FrameworkLikelyhoodConsequence

Lifecycle ManagementSection - 5

MAINTENANCE PLANKey AssumptionAsset ActivitiesOpex CriteriaOpex PlanSummary of the networkIssues

RENEWAL PLANKey AssumptionsAsset Renewal ActivitesRenewal CriteriaRenewal Plan

NEW WORKS PLANKey AssumptionCapex Evaluation ProcessNew Works Plan

92

Issues in Effective Deployment• Framework – Creating a common conceptual

framework (paradigm)• Structure – The Asset Management Steering

Team• Workplan – Who does what for whom by when?• Culture – Transitioning from “short-term

operations centric” to “long-term asset centric”• Politics – Winning commitment from the top

shop• Cost – Funding the first steps; making the

business case

AR 4 RCM 3 BRE 4 LCC 4 CAP 4

Agency Evolution - Different Levels of Tools for Different Stages




Increasing Degree of Analysis

AR – “Asset Register”RCM – “Reliability Centered Maintenance”BRE – “Business Risk Exposure”LCC – “Life Cycle Costing”CAP – “Condition Assessment Program”

32

94

Appropriate andSustainable

ProgramAsset Management

Plans Commercial

Tactics

Practices andProcesses

People andOrganization

Data and KnowledgeInformation

Systems

The Institutional View

Regulators Customers DirectStakeholders

BroaderCommunity

Agency Board ManagersSupervisors

& Staff

SkillsTransfer

50% of AAM benefits are derived here

prc21

95

Initial Training / Orientation

Four Major Stages of AAM Program Deployment

“AM University”

1. Awareness(framework)

“Delphi”;Use what we

Have;BRE/CLR

Level 1

2. SystematicApplication(Structure)

InventoryAssets

AssessCondition

DetermineResidual

Life


$ & Date

Set TargetLOS



Maintenance


CIP

FundYour Strategy

Gather 7 LoadMentoringBRE/CLR

Level 2

Competency(Content &Process)

InventoryAssets

AssessCondition

DetermineResidual

Life


$ & Date

Set TargetLOS




CIP

FundYour Strategy


Level 2


Gather & Load;Mentoring;BRE/CLR

Level 2

3. Competency(Content &Process)

Refine,“Acculturize”BRE/CLR

Level 3

4. Excellence(Sustainability)

InventoryAssets

AssessCondition

DetermineResidual

Life


$ & Date

Set TargetLOS




CIP


InventoryAssets

AssessCondition

DetermineResidual

Life


$ & Date

Set TargetLOS




CIP


InventoryAssets

AssessCondition

DetermineResidual

Life


$ & Date

Set TargetLOS




CIP


96

Fitting It All Together


4. What are my best “minimum life-cycle-cost” CIP and O&M strategies?• What alternative management options exist?• Which are most feasible?




Core Questions


4. What are my best “minimum life-cycle-cost” CIP and O&M strategies?• What alternative management options exist?• Which are most feasible?




Core Questions

Initial Training / Orientation

Four Major Stages of AAM Program Deployment

“AM University”

1. Awareness(framework)

“Delphi”;Use what we

Have;BRE/CLR

Level 1

2. SystematicApplication(Structure)

InventoryAssets

AssessCondition

DetermineResidual

Life


$ & Date

Set TargetLOS



Maintenance


CIP

FundYour Strategy


Level 2


InventoryAssets

AssessCondition

DetermineResidual

Life


$ & Date

Set TargetLOS



Maintenance


CIP

FundYour Strategy


Level 2


Gather & Load;Mentoring;BRE/CLR

Level 2

3. Competency(Content &Process)

Refine,“Acculturize”BRE/CLR

Level 3

4. Excellence(Sustainability)

InventoryAssets

AssessCondition

DetermineResidual

Life


$ & Date

Set TargetLOS



Maintenance


CIP


InventoryAssets

AssessCondition

DetermineResidual

Life


$ & Date

Set TargetLOS



Maintenance


CIP


InventoryAssets

AssessCondition

DetermineResidual

Life


$ & Date

Set TargetLOS



Maintenance


CIP


The AM “Management Framework” Model

Continuous Learning/Know

ledge Managem

ent“A

AM U

niversity”

Sustained performance @ lowest life-cycle costFailure management: capacity, performance, reliability, efficiency

“Best Appropriate AAM PracticesEnterprise Asset Management System (EAMS)

AAM Techniques & ToolsAdv

ance

dA

sset

Man

agem

ent Sustained performance @ lowest life-cycle cost

Failure management: capacity, performance, reliability, efficiency

“Best Appropriate AAM PracticesEnterprise Asset Management System (EAMS)

AAM Techniques & ToolsAdv

ance

dA

sset

Man

agem

ent

CIP O&MCIP O&MCIP O&M

Asset Mgt Plans


Annual Budgets

Asset Mgt Plans


Annual Budgets

Asset Mgt Plans


Annual Budgets





Decay Curves


Root Cause; RCM;PdM;ORDM




RatingMethodologies


InventoryAssets

AssessCondition

DetermineResidual

Life


$ & Date

Set TargetLOS




CIP

FundYour Strategy


Build the AMP


Annual Budget


prc21 Need little graphic to remind listeners that his is part of the discussion regasrding Task ACherninpr, 11/10/2004

33

97

Storyline

Basic Tools 1:USEPA Training

Workshops

98

Basic Tools 2: Maryland Center For Environmental Training

99

Basic Tools 3: WERF’s AMPLE - Asset Management Program Learning Environment

34

100

Reference AAM Web Sites

Maryland Center For Environmental Traininghttp://www.mcet.org

Other site of interest:1. www.amqi.com2. www.bcwaternews.com/assetmgt/3. www.ipwea.org.au/nams 4. www.ingenium.org.nz/nams5. www.epa.gov.org

Managing Public Infrastructure Assets To Minimize Cost and Maximize Performance

AMSA Publication - - www.amsa-cleanwater.org

The International Infrastructure Management Manualcan be purchased online from:

www.ipwea.org.au for approximately $220 US

EPA Training Session materials can be downloaded fromwww.epa.org/owm/featinfo.htm

introductions - american public works association · data inventory core aam program process tools...

Documents