1. Utility Asset Management for Small Systems
104 South Congress Street
Winnsboro, SC 29180

2. Asset Management Is A business practice
A process for better decision making
A tool for communicating needs
A plan for future investments
A way to move from reactive to predictive maintenance practices

3. Balancing Asset Management Is
The official definition of AM involves 3 main components:
Total Cost of Ownership – determining the lowest life cycle cost of an asset (from planning / design, bidding / construction, related supplies, operations / maintenance, repairs / rehabilitation, decommissioning / disposal)
Acceptable Level of Service – which relates to what your assets provide to your customers and what they expect
Acceptable Level of Risk - What would happen if I don’t do anything, what could go wrong and how bad could it be? remembering that not all assets are created equally, some are more critical to the system and your citizens than others – a waterline in front of a hospital is more critical than one in a residential neighborhood. People living in that neighborhood may disagree, but the fact is that the hospital line represents a greater risk to the community as a whole.
The most commonly cited definition is a system of balancing capital and operational costs in such a way as to provide the highest sustainable level of service a utility can provide for the longest period of time… planning ahead for future investments based on appropriate and relevant information and operating / maintaining existing investment in a responsible manner.

4. Asset Management is …
Cost
Balancing
Risk
Service

5. Asset Management is … MAKING GOOD DECISIONS EARLY LATE OPTIMUM
Asset management is making good decisions. You have to perform certain activities at certain times to keep infrastructure in good condition. Knowing when to perform these activities is an important part of responsible ownership.
Every day utility managers make timely decisions about the public assets they are entrusted with. They know that replacing an asset too early is a waste of money. That means you haven’t squeezed the full life out of it. Replacing an asset too late can be disastrous and much more expensive than replacing it on time. The trick is finding the optimum time to do what needs to be done.
Asset Management is an approach to making decisions like these in an objective, justifiable, defensible way. Asset management will take time, but over time some systems have realized savings of up to 20% by just recognizing that preventative or predictive maintenance is much cheaper than reactive or emergency repairs.
OPTIMUM
SOLUTION

6. Asset Management is … A system to define the lowest cost options
for providing the
highest level of service
over the
longest period of time.
The most commonly cited definition is a system of balancing capital and operational costs in such a way as to provide the highest sustainable level of service a utility can provide for the longest period of time… planning ahead for future investments based on appropriate and relevant information and operating / maintaining existing investment in a responsible manner.

7. Doing the right thing at the right time for the right reasons.
Asset Management is …
Doing the right thing at the right time for the right reasons.
More efficient data management
Better resource allocation, reduced O&M costs
Reduced risk, service disruptions and collateral costs
More accurate financial planning
Protection of reserve funds for future renewal and replacement
More effective communication, both internal and external
Clear, consistent decision criteria for more confident management

8. Asset Management is … More than planning for big projects.
It’s knowing you are focusing limited resources on the right projects.

9. INFRASTRUCTURE ASSET MANAGEMENT FOR SMALL SYSTEMS Key Concepts:
The 5 Questions

10. Five Cores of Asset Management
Current
State of Asset
Level of Service
Long-Term Funding Plan
Asset Management
Minimum Life Cycle Cost
Critical Assets

11. What are the core elements of asset management practice?
1. WHAT IS THE CURRENT STATE OF YOUR ASSETS? Asset Inventory, Organize, Prioritize Into Asset Hierarchy 2. WHAT IS YOUR REQUIRED SUSTAINABLE LEVEL OF SERVICE? Establish LOS, Policies & Performance Measures 3. WHICH ASSETS ARE CRITICAL TO SUSTAINED PERFORMANCE? Determine Asset Criticality, Conduct Asset Risk Assessments 4. WHAT ARE YOUR MINIMUM LIFE CYCLE COST STRATEGIES? O&M Procedures, Replacement / Repair / Rehabilitation Schedules 5. WHAT IS YOUR BEST LONG-TERM FUNDING STRATEGY? Long-term Funding Plan, Communication Plan, Policy Statements

12. Asset Management Process
What is the current state of my assets?
2. What is required LOS?
Inventory
Assets
Assess
Condition
Determine
Remaining
Life
Determine
Replacement
Cost & Date
Set Target
LOS
These questions are associated with a 10-step process that align with the 5 questions.
What is the current state of my assets?
What do I own?
Where is it?
What condition is it in?
How long will it last?
What is its economic value?
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?
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?
What are the best “life-cycle-cost” CIP and O&M strategies?
Given the above, what is the best long-term funding strategy?
Assign
Rating
(Criticality)
Determine
Appropriate
Maintenance
Determine
Appropriate
CIP
Develop
Funding
Strategy
Build or
Refine
the AMP
3. What is greatest risk?
4. What is the best O&M and CIP strategy?
5. What is the best long-term funding strategy?

13. What defines an Asset:
All equipment, buildings, land, people, pipe, valves, tanks, pumps, wells, hydrants, treatment facilities, and other components that are needed to deliver safe and clean water are typical assets.
Considerations for defining assets:
Would you write a work order for the asset
Financial
Criticality
A combination of the above values can be used in deciding how far to drill down to determine an asset.
Assets are essentially all the equipment, buildings, land, people, and other components needed to deliver safe and clean water.
Assets are generally large pieces of complicated equipment or infrastructure that can be very expensive. They usually last a fairly long time so utilities really want to keep them in good shape. We all know that some of the infrastructure in this country is aging and failing at an alarming rate. And the reality is we don’t even know where it all is! It’s important to remember not only the large pieces of equipment that we see above ground, but also all the equipment that it located underground. And it’s important to take note these assets are essential to protecting public health as well as for economic development.
A utility is made up of several assets and some bigger assets have several components. So, you may ask where do I start in building my inventory? How far must I drill down?
The asset inventory’s lowest level is the maintenance managed item. Think “work order.” At what level is an asset maintained? Do you create a work order for the asset or the component? What level are decisions made to repair, refurbish, or replace? The answers to these questions determine the lowest level of your utility’s asset inventory.

14. Current State of Asset Inventory
What do I own?
Where is it?
What condition is it in?
What is its remaining useful life? How long will it last?
When does it need attention?
How much will that cost to replace?
ways to approach generating an asset inventory.
GPS physical location of each asset and apply applicable attributes.
Begin first listing your utility’s critical assets. Also as, existing crews respond to work orders they can build the asset inventory by collecting information on assets such as the age, condition, location, etc.
Prospective Asset Inventory. As you are acquiring new assets into your utility immediately add the assets into the asset inventory. This can be done in the handover process from the engineers to the utility. A system could include a requirement to receive the asset information in a form that is easy to include in their inventory as a part of their contract.
Documentation will be provided to assist with Useful Life and Condition

15. Level of Service Defines how you will operate the utility
Set Goals
Customer Demand
Regulations
Physical capabilities of assets
Knowing the utility’s required “sustainable” level of service will help implement an asset management plan and communicate to stakeholders what is being done. The required sustainable level of service is the set of features that describe the utility’s short‐ and long‐term performance standards as well as the customer’s expectations. Quality, quantity, reliability, and environmental standards are elements that can define level of service and associated system performance goals. Information about customer demand, data from utility commissions or boards, and information from other stakeholders can be used to develop the statement.
Begin with a review of existing LOS.
Does the utility have a mission statement?
Have you established core principles or goals?
Do you have baseline measurements of performance?
How do you know if you are accomplishing your objectives?
What is the demand for my services by my stakeholders?
What do regulators require?
What is my actual performance? 

16. Level of Service Example
LOS PRIORITIZATION TABLE
PRIORITY
WEIGHT 1
Health & Safety
20% 2
Regulatory Compliance 3
Financial / Economic Impact
10% 4
Community Disruption
15% 5
Service Delivery 6
Response Time
Knowing the utility’s required “sustainable” level of service will help implement an asset management plan and communicate to stakeholders what is being done. The required sustainable level of service is the set of features that describe the utility’s short‐ and long‐term performance standards as well as the customer’s expectations. Quality, quantity, reliability, and environmental standards are elements that can define level of service and associated system performance goals. Information about customer demand, data from utility commissions or boards, and information from other stakeholders can be used to develop the statement.
Questions to ask in determining Level of Service:
‐What do the regulators require?
‐What are the utility’s performance goals
 ‐What level of service do the utility’s stakeholders and customers demand or expect? Another way to ask this is what is the best way to meet the needs of the customers?
‐What are the physical capabilities of the utility’s assets? Or would your community be satisfied with receiving their drinking water from a pipe like the one in the photo shown?

17. Critical Assets Which assets are critical to sustained performance
Criticality (Public health, safety concern, legal)
Redundancy importance
How can various assets fail?
How likely is each asset to fail?
How important are they to the service level?
Is there a redundancy or bypass alternative?
What are the consequences if they do fail?
Impact on service goals
Impact on system and community
How much will it cost to fix if they fail?
How much will it cost to replace?

18. Minimum Life Cycle Cost
What are my bests “minimum life-cycle-cost” capital improvement plan and my best operations and maintenance strategies?
Feasible strategies for your operation
Alternative Strategies
It’s important to recognize that operations and maintenance (O&M), personnel, and the capital budget account for an roughly estimated 85 percent of a typical system’s expenses. Asset management enables a system to determine the lowest cost options for providing the highest level of service over time.
Utilities want to optimize their work O&M crews are doing, where they are doing it, and why. An asset management program helps a utility make risk‐based decisions by choosing the right project, at the right time, for the right reason.

19. Minimum Life Cycle Cost
Additional questions to ask yourself when tacking this question include:
‐What alternative management strategies exist? Run to failure may be a very real option for some utilities. Is it necessarily the best option, all of the time?
‐What strategies are the most feasible for my organization?

20. Long Term Funding What are the funding needs Day to Day Expense
(O&M)Capital Expenditures
Where will the money come from:
O&M – Rates, fees, penalties, impact fees, taxes, community general fund dollars
Capital Projects – Community and/or Outside Funding (Grants, Loans, Bonds, Bank Loans
Given what you’ve learned about your assets, their conditions, priorities, how will you pay for it?
What is the best long-term funding strategy? Borrow? Raise rates? Let it fall apart and become someone else’s problem?
Review rates annually. When was the last rate increase? Consider how you would build community support for increased rates. Example: Hold public sessions
Determine if your current budget covers the full ost of your operation. Operation cost to include all cost, energy bill, salaries, maintenace cost, reserve, debt

21. REMEMBER THE FIVE QUESTIONS?
1. WHAT IS THE CURRENT STATE OF YOUR ASSETS?
Asset Inventory, Organize, Prioritize Into Asset Hierarchy
2. WHAT IS YOUR REQUIRED SUSTAINABLE LEVEL OF SERVICE?
Establish LOS, Policies & Performance Measures
3. WHICH ASSETS ARE CRITICAL TO SUSTAINED PERFORMANCE?
Determine Asset Criticality, Conduct Asset Risk Assessments
4. WHAT ARE YOUR MINIMUM LIFE CYCLE COST STRATEGIES?
O&M Procedures, Replacement / Repair / Rehabilitation Schedules
5. WHAT IS YOUR BEST LONG-TERM FUNDING STRATEGY?
Long-term Funding Plan, Communication Plan, Policy Statements
Here are the 5 questions you should be able to answer through your asset management program.
If organized knowledge does not exist for our assets, we can’t possibly make the case that they are being properly managed. Knowing what you have, where it is, what condition it is in, and it’s value and having this knowledge organized is a threshold expectation of responsible stewardship.
Levels of service are the performance measure of the system, what your customers expect of your system. Things like water pressure, response time for repairs, regulatory compliance. Establishing levels of service is important to measure performance and gauge improvement. Having some understanding as to how much longer the critical asset will be able to meet service requirements is a mature conscientious prerequisite to success.
All assets can and do fail. Demonstrating by plans and actions that the provider has the ability to effectively manage the failures that will inevitably occur represents strategic and tactical planning integral to satisfactory performance and the sustainable delivery of the services.
Determining feasible alternatives and options and using optimal renewal decision-making as well as moving systematically to Reliability Centered and Condition-Based Maintenance, incorporates strategic CIP validation and business planning. The process of balancing CIP needs and O&M requirements.
Determining a sustainable renewal funding level and effectively “telling the funding story,” includes a focus on the “Whole of Business” perspective and advanced asset management principles for rate setting and budgeting. “What we don’t know limits the case for higher rates/federal help.” (Sweeney)

22. Where to Begin? Building your team Deciding where to start first
Develop an asset management plan
Implementing an asset management plan
Now that you have a understanding of five core question framework Your next question is most likely, how do I get started?
Getting started first begins with building a dedicated team of personnel and stakeholders.
Second, decide where to start first. What sources of data are available to begin your inventory, financial records, etc?
Next, with your data gathered create an asset management plan.
Last, a plan is no use unless it is put to use.
Let’s discuss more ways to get started.

23. Identify a Dedicated Team
Identify the appropriate personnel and outside stakeholders
Asset knowledge
Ability to apply best appropriate practices at the utility
Vision of financial measures leading to system sustainability
Clarify roles, responsibilities, accountabilities, and decision
making authority 35
Successful asset management requires a dedicated team. Key team members include:
Utility operators and engineers (including upper management) These team members have:
‐Knowledge of the current state of water infrastructure assets.
‐Ability to describe the costs and benefits of changes to infrastructure assets.
‐Experience with the current capital improvement plan and the operations and maintenance strategy.
Local and elected officials (e.g., mayor, council, town manager) These team members have:
‐Authority to commit resources.
‐Knowledge of the political landscape.
‐Ability to create new financing mechanisms and restructure ineffective institutions.
Accounting. These team members have:
‐Ability to help estimate the replacement cost of assets.
‐Knowledge of the existing financing strategy, potential financial resources and challenges, and the need for rate changes.
Information Technology. These team members have:
‐Ability to determine the most practical way to collect, store, and present the information needed to make strategic decisions.
Treasurer. These team members have:
‐Ability to implement new financing mechanisms (e.g., bonds, loans, and other debt instruments) and create dedicated reserve accounts
Don’t forget other stakeholders such as:
‐Other infrastructure managers and utilities (e.g., roads, sewers, and electric)
‐Conservation and environmental groups
‐Neighboring water districts
‐Community members
Once your team is assembled clarify roles, responsibilities, accountabilities and decision making authority.

24. Gather Data As-built drawings, electronically or hardcopy
Design drawings/Shop Drawing/Schematics
Manufacturers’ manuals
Bid documents
Staff—current and previous
Photos and videos
Asset Appraisal Reports from Insurance Adjusters

25. Develop Asset Management Plan
Best available current information
Existing levels of service
Existing management strategies and opportunities for improvement
Cash flow projection – five to ten years
Establish financial and performance benchmarks
An asset management plan should be developed based on the best current information that is readily available. The more information the utility has, the better the plan can be.
What is the utility’s cash flow projection for the next five to ten years? Knowing how much money will be coming in and going out will help with managing assets.
It’s very important for the plan to establish financial and performance benchmarks – lack of goals equals lack of growth (both financial and capacity).
An asset management plan should be reviewed at least once a year, noting any relevant changes. Throughout the year, systems should keep a running list of items to consider or include in the annual update.

26. Transitioning to an Asset Management Plan
Transition from building and operating to managing assets
Extending asset life
Optimizing maintenance and renewal
Developing accurate long-term funding stra
Sustain long-term performance!
Organizational and cultural change
Centered on team
Public knowledge and acceptance
Will not work overnight
Start up may increase budget
tegies
A paradigm shift will occur for the utility has you transition from building and operating to managing assets.  
Asset life will be extended, maintenance and renewal optimized, long‐term funding strategies. All leading to sustaining long‐term performance.
Asset management results in an organizational and cultural change that is centered on team.
Asset management is not an overnight process and sometimes requires and increase budget during start up.

27. Implement Asset Management Plan
Ultimately, implementing an asset management plan will help:
Address high-priority asset needs critical to a utility’s performance
Identify the costs of operating the utility
Plan for future capital and operating expenditures which will help evaluate rate structure
As asset management is implemented, it really becomes a broader way of thinking about utility management.
Ultimately, implementing an asset management plan will help:
Address high‐priority asset needs critical to a utility’s performance Identify the costs of operating the utility
Plan for future capital and operating expenditures
Once you know what it takes to run a system, you might not want to be in the business of running a system and can look to other alternatives

28. EPA’s Sustainable Water Infrastructure website has tons of helpful resources, not the least of which is CUPSS, which is based on the “5 Questions” approach to asset management. Initially developed by Steve Allbee, this is an incremental approach to developing and maintaining a functional asset management program. Before I get into CUPSS as a tool, please allow me to quickly review a few basic asset management principles because you’ll see them all in the CUPSS program when we get into it.

29. A Practical Tool for Successful Asset Management
Check Up
Program for
Small
Systems

30. Why Use CUPSS
Free, easy-to-use software specifically geared to small systems
Asset Management 101 for water and wastewater systems
Simple interface
Less jargon
Tools for data collection and entry
Written asset management plan in 7 steps
Uses EPA’s 5-Question approach
CUPSS helps you make determinations about the current state of the assets in your utility, the level of service you are aiming to uphold, which of your assets are critically important, what the minimum life cycle cost is, and helps lay out a long-term funding strategy.

31. Why Use CUPSS
CUPSS represents a way for new and existing waterworks to clearly demonstrate TMF capacity:
TECHNICAL:
MANAGERIAL:
FINANCIAL:
Gather, organize and maintain critical information and data necessary to effectively operate and sustain facilities and assets
CUPSS is designed to help small water and wastewater utilities support budget discussions with solid facts and numbers, boost the efficiency of the utility, save your staff time, and improve customer service by ensuring continual service at competitive prices.

32. Why Use CUPSS
CUPSS represents a way for new and existing waterworks to clearly demonstrate TMF capacity:
TECHNICAL:
MANAGERIAL:
FINANCIAL:
CUPSS also helps you to prepare work orders and an asset management plan. An asset management plan provides valuable information that you can use when you make management decisions about your utility. CUPSS provides a snapshot of your utility that allows someone with little knowledge to jump in and understand the state of the utility. The generated work orders can be used to help keep operation and maintenance, as well as compliance tasks, on schedule.
Develop work order system with reminders so tasks can be performed regularly and consistently to improve efficiency

33. Why Use CUPSS
CUPSS represents a way for new and existing waterworks to clearly demonstrate TMF capacity:
TECHNICAL:
MANAGERIAL:
FINANCIAL:
Make clear and justified budget decisions for timely repair, rehabilitation and/or replacement of infrastructure assets

34. Waste Inventory Data Collection Sheets from CUPSS

35. Wastewater Inventory Data Collection Sheets from CUPSS

36. Why Prioritize capital needs Apply proactive decision making
Establish / maintain levels of service goals
Reduce risks, surprises and potential catastrophes
Comply with financial reporting procedures
Implement long range planning
Better communicate needs to customers, regulators and elected officials

37. Beginning Screen in CUPSS – This is where we’ll set a database for your utility.

38. Web site www.epa.gov/cupss
CUPSS Support
User’s Guide
Workbook
Tutorials/training
User List
Web site
There is a vast amount of support and training for CUPSS Users

39. Here is the CUPSS homepage, you can:
‐Do some training
‐Create or update a schematic
‐Enter inventory
‐Enter tasks or work orders
‐Enter finances
‐Generate Check Up reports
‐Ultimately CUPSS will help a utility prepare an asset management plan

40. Points exported from CUPSS into Google Maps

41. SERCAP CAN ASSIT WITH YOUR ASSET MANAGEMENT NEEDS FOR WATER AND WASTEWATER SMALL SYSTEMS.
This presentation served to provide a broad overview of asset management, we have training classes available to give more detail to the 5 core components of asset management
104 South Congress Street
Winnsboro, SC 29180