Challenges of the 21st Century

America?s economic growth in the last few decades was possible because of the historical investment in the planning and the construction of our water and wastewater systems. Today?s generation, however, is now faced with the responsibility of managing the remaining life of these assets and selecting the appropriate maintenance, monitoring, rehabilitation, renewal and replacement strategies for these vital underground networks.

This momentous task of addressing the aging infrastructure dilemma requires overcoming many challenges
especially during this extended economic crisis. Affordability is at the heart of the challenge. In seeking innovative ways to manage these challenges, utility managers are becoming asset-centric in their decision-making process. The asset-centric approach directly addresses the affordability issues by understanding the importance and size of the infrastructure, leveraging GIS and CMMS software and applying asset management practices.?? ?

Understanding the Size of the Issue

Most of our nation?s water and wastewater systems are underground and had been hidden out of the public view, in many cases for over a century. This reality has not helped the situation or supported the admonition from water industry professionals and the Environmental Protection Agency (EPA) to start managing the increasing risks of water loss and pipe failure. The United States installed a large number of pipes in three main time periods based on population growth in the 1800s, 1900 to 1945, and post 1945.

Due to a number of reasons including age, materials, inadequate design, capacity changes, poor installation, damage, corrosive soil and flow contents, these three eras of pipe are starting to fail now and will continue to do so over the next couple of decades. Cities across the nation are starting to experience the effects of water service loss and sewer overflow events. The potential hot spots include areas that have experienced high growth. As an example, county populations over 50,000 had a significant amount of underground infrastructure in the 1960s, but now the pipes are 50 years old and experiencing significant problems.

Today, the number of assets in the national network is overwhelming. There are approximately 155,000 public drinking water systems in the nation. Only 52,000 community water systems and another 21,400 non-community water systems are the main providers for the majority of Americans. There is a tremendous amount of costs associated with the renewal and replacement of our water and wastewater systems.

Underground transmission and distribution systems (pipes) make up the majority (57 percent) of the replacement costs. Community water systems include over 1.8 million miles of network pipes. The nationwide system of wastewater infrastructure includes 16,000 publicly owned wastewater treatment plants, 100,000 major pumping stations, 600,000 miles of sanitary sewers, and 200,000 miles of storm sewers. Although there is not an actual inventory of the total amount of sewer pipe associated with wastewater collection systems in the United States, the American Society of Civil Engineers (ASCE) has developed an estimate of 21 ft of sewer pipe per capita.

Communities must realize the increasing costs to replace their infrastructure and embrace proper maintenance and condition monitoring that will reduce the overall costs instead of ignoring the problem and running the assets to failure.

Replacing the Crisis Management Approach with the Asset-Centric Approach

Many utility managers are striving to increase operational and capital planning efficiencies through investing in their core processes and systems but face governing board obstacles. Eighty-five percent of U.S. water systems are owned or controlled by municipalities. These elected officials with little experience with long-term planning have initial reactions to defer projects and needed maintenance because of their involvement of general fund budget woes and single-year appropriations.

If a major water main breaks creating a large sink hole, the media reports the incident and the elected officials demand a response from the utility manager. This type of crisis management costs the utility politically and monetarily. In fact, the replacement costs have just increased three-fold as the additional costs of the emergency mobilization of work crews and property damage are included. As city councils are educated on asset-centric business practices, they begin to comprehend that the water and wastewater utilities are the most capital intensive industries and in order to attain cost savings, operational efficiencies and lower future risks a return to properly maintaining our assets and extending an asset?s useful life in a cost-effective manner is required.

One of the best and most simple strategies requires leveraging the full power of GIS. About 90 percent of U.S. water and wastewater utilities use a geographic information system (GIS). Every utility is actually on an asset-centric path using GIS for mapping, then tapping into the power and functionality of the geo-database, next expanding with additional GIS applications and finally achieving an enterprise-wide operation. When the investment in GIS is the focus and the whole enterprise is the vision, the full power of GIS tools and functionality can be employed for long-term cost savings.

A dynamic and growing trend is when the GIS geo-database becomes the asset inventory or registry as the starting point for an asset management program. This GIS-centric strategy combines the critical computer maintenance management system (CMMS) with the GIS geo-database for a comprehensive customer request, asset inventory and work management system. An asset registry (geo-database) combined with a CMMS creates the foundation for an enterprise asset management system (EAMS) as promoted by the EPA. This simple and powerful combination captures asset data, work history and condition assessments necessary to produce cost-effective, conditioned-based and predictive maintenance programs.

Many public works departments expand these efficiencies from the water and wastewater enterprises into streets, traffic, highways, signs, parks, recreation equipment, airports, marinas, fleet, electric networks and other municipal functions. Not only has this produced a considerable return on investment and improved financial decision-making through applying financial metrics to planned and unplanned maintenance activities, but also tracking and reporting regulatory requirements, tests, inspections, customer requests, project costs and performance. This GIS-centric strategy has been very successful in tracking and reporting strict compliance issues as found in California and expediting federal funding after disasters like Hurricane Katrina.

The GIS-centric strategy when applied to asset management provides a reduced level of frustration and complexity from redundant database costs and difficulties with integrating systems. The work history alone offers a low-cost wealth of data that provides insight on when and where to apply renewal and replacement techniques. A GIS-centric strategy also allows for land planning activities such as permitting, licensing, general and specific plan updates, and hydraulic model development. Additional asset management analysis can be performed through a simple spreadsheet download from the CMMS to more sophisticated and advanced analytical tools requiring interfaces and integration protocols. Capital plan projection tools should not be aged-based only, but take into consideration the condition of the asset. Asset management analytical tools should avoid short cuts such as applying original cost depreciation curves; it may work for accountants, but managing and financing assets requires knowing the replacement costs and a likely decay curve.

Understanding the Costs of Replacement

Under the 1996 amendments to the Safe Drinking Water Act, EPA is required to conduct an infrastructure needs assessment every four years. These estimates will only increase each year. In 2001, the Water Infrastructure Network (WIN), a consortium of industry, municipal and non-profit associations, estimated up to $1 trillion over a 20-year period was needed for water and wastewater systems, when both capital investment needs and the cost of financing were considered. In the last 10 years, the required investments have not been made. In 2009, ASCE gave America?s drinking water infrastructure a D-minus.

In 2001, the American Water Works Association (AWWA) studied the replacement costs for 20 large utilities across the nation. Over the next 20 years, utilities will experience a significant increase in renewal and replacement costs, which in turn will add additional pressure to increase rates significantly. The test for rate approving authorities will be whether they will allow a slow, gradual annual increase or face a serious rate shock scenario to play catch-up to prevent impending failures or fund expensive repairs after the fact. As the graph suggests, one-time fixes will not work. A sustainable, long-term strategy to effectively manage our assets is required. This strategy in all of its various forms is generally called asset management.? ?

Asset Management Is a Local Responsibility

Utilities need know the location and condition of their assets. GIS is the best place for gathering data for all kinds of assets to be shared system-wide. Utilities need to have a proven CMMS that leverages GIS capabilities in order to achieve an optimized level of maintenance efficiencies ? the optimum solution being GIS-centric. Many times utilities may not know all of the historical investments they have made in their underground infrastructure. However, the public still maintains the expectation that the utility or municipality understands the potential risks of system failure and has a cost-effective replacement plan.

Rate-payers do not assume the price they are paying for their water service is for an interruptible supply. As the initial cost of a capital replacement plan is calculated, alternative green/sustainability projects and trenchless technology methods need to be explored. Specific installation, renewal and rehabilitation techniques like microtunneling, sliplining, static pipe bursting and horizontal directional drilling (HDD) help reduce traditional open-trench repair and replacement costs especially in urbanized or environmentally sensitive areas.

Predictive maintenance, work history analysis, condition assessment, and renewal and replacement programs need to be established as part of the operating and maintenance and capital budget processes as a means to set performance benchmarks to extend the life of the existing assets. Typically, municipalities spend a majority of the time discussing the ?operational? budgets while not separating operating costs from maintenance costs. Very little time is spent understanding the capital budgets and infrastructure needs. The budget focus needs to shift to a long-term, asset-centric approach in order to address the aging infrastructure issue.

A robust CMMS is the key component of developing a maintenance budget strategy that can demonstrate the importance of properly funding a preventative and predictive conditioned-based maintenance program. Providing critical maintenance budget data shows how a utility extends the life of its assets and therefore how it controls costs. This also helps managers to protect their budgets from arbitrary cuts even during an economic crisis. Traditionally, managers have not had the documented support to back up the statements, ?If you cut this now, you will pay more later.? Transparency in utility management practices, if developed in the right way, can support the cost efficiencies of asset management practices being produced behind the scenes and contained within the CMMS.

Meeting the Challenge

This era of sustainability deliberation and economic downturn is not for the weak of heart. Confident and bold new leaders need to press forward in the wake of declining public trust, political double-talk and bureaucratic red tape. Rates will need to increase, and if affordability is truly a core concern then there must be a change from the crisis management approach of waiting for the next sink hole and fixing it to a predictive methodology to avoid even higher rate increases. To make this change, the municipal and public education of the aging infrastructure issue and the required remedies and solutions need to be systematically and consistently brought to their attention.

The asset-centric approach with full deployment of enterprise-wide GIS functionality will help policy-makers begin to connect the dots between water and wastewater operations with energy, land use and ecosystem planning.? This holistic, GIS-centric view of managing water resources will not only address the individual parts of aging infrastructure, but also the complexities of other 21st century water challenges like climate change, water quality and ecosystem degradation and population growth. As water industry professionals, we have the accountability and stewardship to address the issues of this century while balancing both cost and risk.?

Gregory M. Baird is Managing Director/CFO of AWI Consulting LLC. He served as the chief financial officer of Colorado?s third largest utility and finance officer of California?s 17th largest city.

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