Tom DeLaura, P.E.

Eramosa International

David Vago, P.E.

Midwest Asset Management Consultants

1/30/2014 1

Michigan Water Environment Association

Developing An Asset Management Plan Seminar

January 22, 2014

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Manage the entire life of assets, and receive the best return on investments.

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An integrated optimization process of “managing infrastructure assets to minimize the total cost of owning and operating them, while continuously delivering the service levels customers desire, at acceptable levels of risk.”

Managing Public Infrastructure Assets, 2001

NACWA (AMSA), AMWA, WEF, AWWA

“Asset Management” Defined

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• Ongoing Operations and Maintenance

• Focus on performance/requirements/compliance

• Life-cycle cost management

• Focus on money

• Reliability management

• Focus on design and engineering

• Accounting management

• Focus on fiscal responsibility to customer

What is Asset Management??

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Measure what counts

Measure what you can control

“When you can measure what you are speaking about, and

express it in numbers, you know something about it; but when

you cannot measure it, when you cannot express it in numbers,

your knowledge is of a meager and unsatisfactory kind.”

Lord Kelvin

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Role of Performance Management

The business process of monitoring

organizational performance

against pre-established targets.

“You can’t manage what you don’t measure.”

(These metrics will be the basis for establishing risk and criticality)

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Resources

Accountability

Tools

Training

Execution

Vision

Mission

Goals

Role of Performance Management

Strategic Plan

Implementation

Plan

Performance Measures

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Resources

Accountability

Tools

Training

Execution

Vision

Mission

Goals

Performance Measures

Role of Performance Management

Strategic Plan

Implementation

Plan

Communication

Corrective Action

Plan – Do – Check - Act

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Some say “SMART”

Objective

Balanced

Defined Target Level of Performance

Linked to the Utility’s Strategy

Supported by Leadership

Use Industry Standards where Available

Sustainable

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Those which monitor performance

against pre-established

targets or industry standards.

Know where you are going - know how you are doing, so you know if you are getting there!

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• 4 step program for improving performance

and increasing customer satisfaction

• Created key “performance indicators” and

benchmarked them (22 in 5 categories)

• Debate over the “correct” number and type

of indicators continues today

• Data gathering continues, while other

approaches have arisen

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“Water Sector Utility Management Strategy” - created in March 2007, by seven “Collaborating Organizations” • Water Environment Federation (WEF) • National Association of Clean Water Agencies (NACWA) • United States Environmental Protection Agency (EPA) • Association of Metropolitan Water Agencies (AMWA) • American Public Works Association (APWA) • American Water Works Association (AWWA) • National Association of Water Companies (NAWC)

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Product Quality

Customer Satisfaction

Employee and Leadership Development

Operational Optimization

Financial Viability

Infrastructure Stability

Operational Resiliency

Community Sustainability

Water Resource Adequacy

Stakeholder Understanding and Support

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www.epa.gov/waterinfrastructure/pdfs/ www.waterEUM.org

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Organizational Best Practices Index

Employee Health & Safety Severity

Rate

Training Hours per Employee

Customer Account Ratios

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Strategic Planning

Long-term Financial Planning

Risk Management Planning

Cohesiveness in Measures

Optimized Asset Management

Performance Measurement

Customer Involvement

Continuous Improvement

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Customer Complaints

Disruption of Service

Residential Cost of Water/Sewer Service

Customer Service Costs per Account

Billing Accuracy

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Debt Ratio

System Renewal/Replacement Rate

Return on Assets

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Sewer Overflow Rate

Collection System Integrity

Wastewater Treatment Effectiveness Rate

Operation & Maintenance Cost

Planned Maintenance Ratio

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GM or City

Manager

Dept. and Division Management

Managers and Supervisors

Every Employee

Mission/Goals

Organization

Process

Person

Roll Up and

Expand Down

Link the strategic goals to every Employee

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Balanced Scorecard Goals &

Measures

Customer Perspective

How do we look to customers?

Financial Perspective

How do we look to stakeholders?

Internal Business

Perspective What must we

do to excel?

Innovation & Learning Perspective

Can we continue to improve and

create value?

Source: The Balanced Scorecard Kaplan & Norton

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• Provide historic objective performance data

• Set expected levels of performance

• Provide insight into problem areas

• Provide information for decision making

• Provide incentives to high performers

• Translate strategy into operational terms

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20 Triple Doubles/Year

1.7 ERA

.885 Save Percentage

8 Minute Mile

98 Bowling Average

52 Times Hit by Pitch

5 Stanley Cups

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200 vacancies

25 breaks / year

45% preventive/reactive maintenance ratio

$45.30 Single Family Monthly Sewer Rate

Avg. 98 days to hire

2.5% turnover rate

1% R&R rate

A+ bond rating

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90% response in less than 45 minutes

7 days emergency storage capacity

Avg. 45 seconds/customer call

$805 / O&M Cost per MG Water Processed

$25/year/customer on public education

$350/MG treated water cost

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419 Customer Accounts per Employee

33.6 H&S Severity Rate

0.31 MGD Delivered per Employee

36.1 Customer Complaints per 1000 Customers

1.12 Unplanned Disruptions of Service

0.32 Debt Ratio

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Performance Management?

Activity Jan Feb March April Total

Valves Actuated 14 22 15 6 57

Hydrants Repaired 2 0 2 3 2

Hydrants Painted 0 0 14 56 70

Miles of Sewer Cleaned 4 7 2 6 19

Tanks Inspected 3 2 0 1 1

Fleet Vehicles Washed 2 0 13 17 25

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Performance Management

The process of monitoring organizational

performance against pre-established targets.

Time

Gap in Performance to Plan

Valve Actuation Program

% Actuated per Year

100%

0%

Jan Dec

Strategy – Maintain our Infrastructure

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‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08

Lost & Unaccounted For Water

Regulatory Guideline

Best Practice

Industry Standard

Utility Target

How are we doing??

2

4

6

8

10

(%)

Performance Management - The process of monitoring organizational performance against pre-established targets.

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• What are we doing? - Output

• How long does it take? - Time

• How much does it cost? - Cost

• How well are we doing it? - Quality

Did we achieve our Goal? - Outcome

Vacancy Identified

Approval To Fill

Post Job Opening

Qualify Candidates

Select Candidates

Negotiate Terms

Start Date

Utility Hiring Process

“Not everything that can be counted counts, and not everything that counts can be counted.” A. Einstein

So – What do we measure?? - All of these??? - How do we pick???

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Help Understand your Situation

Decide What is Important

Goals to Improve Performance

Use “Tools” and “Dashboards”

Collaborate, Track, Trend, and Act

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Provide Asset Visibility Compare performance, costs, reliability

Assign Total Costs of Ownership Labor and materials charged to the correct assets

Long-Term CIP Planning and Programming R&R&R based on actual condition and performance

Eliminate Fiscal Surprises Budgets and plans built on facts and strategies

Questions?

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David Vago, P.E.

Midwest Asset Management Consultants

dvago07@comcast.net – (313) 570-2496

Tom DeLaura, P.E.

Eramosa International

tom.delaura@eramosa.com – (313) 610-3559

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