Asset Management Program:
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1 Asset Management Program: How Your PWS Can Make Effective Use of a Regulatory Obligation TMACOG Water Supply Committee December 2017
2 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
3 Asset Management from a National Perspective Robert Stevenson, Principal Arcadis
4 Typical Drivers in the US are Evolving $ Capital Budgets State/Federal Requirements Bond Rating Technology Issues Wish list Unaffordable Capital Budgets NPDES permits and consent decrees SRF loans Rating agencies starting to look for it Incomplete data sets Poor hierarchies Lack of value 4
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 5
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 6
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 Water Drinking Water 7
8 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 Life-Cycle Costing / Repair vs. Replace Financial Planning / Long-Term Funding 8
9 Other States Proposed Asset Management Plan Requirements NY Municipal Sewage System Asset Management (MSSAM) Guide MI Stormwater, Asset Management, and Wastewater (SAW) Program FL AMP Required to Receive State Revolving Funding 9
10 Ohio EPA Asset Management Plan Requirements (Senate Bill 2) An Emergency Preparedness and Contingency Planning Program Criteria and Timelines for Infrastructure Rehabilitation and Replacement Operation and Maintenance Programs Approved Capacity Projections and Capital Improvement Planning An Inventory and Evaluation of all Assets Public Water System Plan Deadline is October 2018 A Long-Term Funding Strategy to Support Asset Management Plan Implementation 10
11 Asset Management Program Rule Overview from Ohio EPA Susan K. Schell Environmental Manager Ohio EPA Division of Drinking and Ground Waters
12 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
13 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.
14 Managerial Capability Documentation of ownership Documentation of a certified operator Brief non-technical description of the water system
15 Managerial Capability Operating plan Written procedures Inventory of external contacts Internal contracting and purchasing procedures (routine and emergency)
16 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
17 Technical Capability Operation and maintenance programs Approved capacity projections Criteria and timeline for rehabilitation and replacement Capital improvement plan
18 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
19 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
20 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
21 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 $$$
22 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
23 Funding for Asset Management Planning loans are available Terms of 5 years at 0% interest Potential for $10,000 in principal forgiveness
24 Resources Asset Management Webpage: px# asset-management Susan K. Schell Manager, Engineering & Infrastructure Section (614)
25 Asset Management Program: Preparation and Implementation Cheryl Green, P.E. Hull & Associates
26 Core Components Asset Criticality Long Term Funding Asset Management Life Cycle Costing Level of Service Asset Inventory
27 Asset Inventory: Assets of a public water system ALL components that are required to maintain level of service Complete an asset inventory Asset data and condition Asset criticality pipes hydrants and valves operators storage treatment plant source water
28 Asset Inventory: Asset map and database management Where are your assets located? Lead Map? Asset location/ condition / inventory not static Consider a GIS-based system USEPA CUPP$ for small systems
29 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
30 Level of Service (LOS) 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
31 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 By William Croyle, California Department of Water Resources - California Department of Water Resources - bc071b&oe= , Public Domain,
32 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
33 Consequence of Failure Asset Risk Matrix Out of Water Reservoir spillway Aging pump Booster pumps New plant equipment New water main valve Aging hydrants Normal operation Very Unlikely Likelihood of Failure Certain
34 Life Cycle Costs An example from the roadway maintenance department 12/8/
35 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.
36 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
37 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 Funding Sources Loans CIP Fund Grants Bonds
38 Questions 12/8/
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