Overview of Infrastructure Asset Management A View from Both Sides of the Atlantic Ocean

Europe and the United Kingdom (UK) are at the forefront of Asset Management for water utilities. This is primarily due to the fact of privatization of water utilities in the UK. The UK is currently in the third generation of the Asset Management procedures and has well defined methods for identifying and managing assets. In the United Kingdom (UK), large scale Asset Management has been practiced for approximately 20 years when computer modeling and pipe inspection techniques allowed the current performance and impact of potential improvements to water or sewerage networks to be evaluated for whole systems.

As the industry understanding of the asset base has grown in the UK, so has the variety and application of risk based techniques to aid investment decisions on rehabilitation and replacement decisions. Asset Management and associated risk based techniques are now considered to be standard business practice for utility infrastructure owners and engineers and are well entrenched in the utility infrastructure culture. In the UK, Asset Management practices have contributed to significant savings in capital expenditure through the efficient identification of far more selective work programs, and moreover, have resulted in a savings in operational cost, a consequence of which staff levels have dropped by some 25% over a decade.

Several asset management techniques employing risk elements are within the toolkit of most UK water companies and which help to inform decision support for investment prioritization of critical or vulnerable water supply assets such as trunk mains, protection against raw water contamination, dam safety, environmental protection, capital maintenance and plant reliability and selection.

In the United States (US), it is a different story. There are a number of forms that Asset Management takes in the US including SSES Programs, Infiltration / Reduction Programs, Capital Improvement Programs and CMOM, flow monitoring, SCADA Systems, etc., but very few public utility infrastructure owners have a true Asset Management Program in place. Furthermore, Risk Assessment as used in the UK is now only beginning to be understood and used in the US. The Risk Assessment in the US is done in terms of Criticality of the system components and the effects it will have on the users and public in general should the component of the system go off line. In the US, Risk Assessment is generally not used for investment decisions when it comes to Capital Improvement Programs, but is beginning to be used in the Operations and Maintenance of the systems. This paper will review Asset Management practices in the United States and in the UK, and compares the two sets of practices. The review will also identify key business and technical practices, how Asset Management is perceived by the owners on both sides of the Atlantic Ocean, and will identify lessons learned from the UK for the North American utility infrastructure owners and engineers.

The United States Environmental Protection Agency (USEPA) defines asset management as “managing infrastructure capital assets to minimize the total cost of owning and operating them while delivering service levels customer’s desire.” It is successfully practiced in urban centers and large regional sewer collection systems to improve operational, environmental, and financial performance. Many of the large organizations base asset management planning on sophisticated information systems and extensive personnel resources, but a simple form of asset management can also be used by smaller collection systems owners with existing staff and resources.

Despite this statement, owners of many of these collection systems operate in crisis mode versus planning mode. These organizations cannot or will not change their methods of operations due to internal pressures or because of lack of resources. Water and wastewater utilities, like most organizations, are commonly organized into functional departments that tend to become organizationally isolated and become focused on achieving their individual departments objectives.iii That is, engineers-engineer the systems; operations- operate the systems; and accountants collect money and pay bills to responsibly manage the cash flow associated the system. Each of these departments is attempting to assure the survival of the individual departments and is competing for limited resources. There is no common goal within the overall organization to provide custom oriented services in a cost effective business like manner while providing the required services at what would be known in the private industries as competitive rates. This method of operation leads to a cycle of trying to maintain the rapidly decaying infrastructure while competing with the interest (organizationally internal and external) for capital improvements and expansion of the sewer system with limited funds and resources. It is the breaking of this cycle in the U.S. that is required in order to proceed with successful asset management programs.

In the United Kingdom (UK), asset management practices have become standard methods of operations for water and sewer utilities (water utilities). This is primarily due to the fact that many of the water utilities in the southern portions of the UK and were sold to private companies in the late 1980’s. These private companies own and operate the water and sewer infrastructure and are responsible for operating the utilities in a businesslike manner while maintaining profit. To prevent overcharging of user rates to the customers and to assure customers that the private utility owners of the water and sewer systems operated in a fair and business like manner, the UK government’s Office of Water Services (OFWAT) established stringent requirements as to how these private water utilities operated financially. With approximately 15 years of operating in this manner, the practice has become widely accepted and standardized. These standardized methods include benchmarking of cost and expenditures to operate the water systems Operations Expenditures (OPEX) and to improve and expand the water systems Capital Improvement Expenditures (CAPEX). The methods include constant 5 year cycles of reviewing expenditures, planning for capital improvements based on service and cost forecasting, assessing deficiencies in the existing system, assessing risk and consequential damages due to failure of system components, and implementing capital improvements while maintaining the existing system in a cost effective that minimizes impact on user rates.

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