1. Advanced Asset Management at OSCD Doug Stewart Orange County Sanitation District May 5, 2005

2. This Presentation  History  AMSC  Interim work efforts  Current program  Lessons learned  Future directions  History  AMSC  Interim work efforts  Current program  Lessons learned  Future directions

3. Brief History  Asset Management strategic plan  Consultant led approach  Peer review process  Staff led approach  Consultant advisor role  Asset Management strategic plan  Consultant led approach  Peer review process  Staff led approach  Consultant advisor role

4. AMSC  Cross disciplinary team  17 members – 2 EMT  Provides oversight and direction for program  Cross disciplinary team  17 members – 2 EMT  Provides oversight and direction for program

5. Core Management Questions 1. What do I own? 2. Where is it located? 3. What condition is it in? 4. How is it likely to fail? 5. What is the consequence of that failure? 6. How does that consequence of failure affect my level of service (LOS)? 7. How do I choose to manage a change in LOS? 1. What do I own? 2. Where is it located? 3. What condition is it in? 4. How is it likely to fail? 5. What is the consequence of that failure? 6. How does that consequence of failure affect my level of service (LOS)? 7. How do I choose to manage a change in LOS?

6. Core Management Questions (cont’d) 8. What is the resulting short and long term cash flow?  What is my sustainable LOS?  What are my long term rates? 9. Am I doing it at minimum cost?  What and how much O&M should my staff be doing?  What investment in capital should I be making? 10. Who is owns and is responsible for the asset? 8. What is the resulting short and long term cash flow?  What is my sustainable LOS?  What are my long term rates? 9. Am I doing it at minimum cost?  What and how much O&M should my staff be doing?  What investment in capital should I be making? 10. Who is owns and is responsible for the asset?

7. Understand what To do first Understand what To do first To provide staff with basic SOW for initial projects To provide staff with basic SOW for initial projects To know what the bottom line is. What can be cut To know what the bottom line is. What can be cut OCSD AMIP Program 2004-5 CIP 2005 Improvement Projects AMIPAMIP Implementation Plan AMIP To set Future Funding needs at higher CLR To set Future Funding needs at higher CLR Complete Initial AMP Complete AMP Understand how much to cut Understand how much to cut Understand what to do first Understand what to do first Achieves much of the ultimate Asset Management Program Achieves much of the ultimate Asset Management Program To provide better Understanding of Maintenance & reliability To provide better Understanding of Maintenance & reliability RCMMaintenanceImprovementProgramMaintenanceImprovementProgram

8. Some Results  CIP Review (2003-4)  Test case on two projects, then 15 projects  Full review of 111 CIP projects  Saved $25.4 M in project costs and interest – deferred $6.8 m in low risk projects  CIP Review (2004-5)  Full CIP Review of 128 projects  Saved $ 6.1 m in project costs and interest  What did I not say?  CIP Review (2003-4)  Test case on two projects, then 15 projects  Full review of 111 CIP projects  Saved $25.4 M in project costs and interest – deferred $6.8 m in low risk projects  CIP Review (2004-5)  Full CIP Review of 128 projects  Saved $ 6.1 m in project costs and interest  What did I not say?

9. The Asset Management Plan  Structure (Management Questions)  Results  Rate study  Asset management strategies  Strategies for managing assets  Collections Risk Model  Sustainability  Intergenerational Equity  Structure (Management Questions)  Results  Rate study  Asset management strategies  Strategies for managing assets  Collections Risk Model  Sustainability  Intergenerational Equity

10. 2020 Cash Flow Total = $2.8 Billion $ Millions Fiscal Year

12. Implementation Challenges  Few strong outside drivers  Culture of technical silos  Plate is already full  Needs strong advocate at top of organization (stay the course)  This is not taught in school (in the U.S.)  Few strong outside drivers  Culture of technical silos  Plate is already full  Needs strong advocate at top of organization (stay the course)  This is not taught in school (in the U.S.)

13. Lessons Learned What We Did Well  Training is vital – 24 hours delivered  Bring wide diversity of work groups into process  AMSC - Collaborative approach – building commitment What We Would Do Differently Today  Include Board members in early education (WIIFM)  Focus on benefits and how AM will help them  Catch 22 – Benchmarking  Build basis of business case on Agency data – earlier, if possible  Training is vital – 24 hours delivered  Bring wide diversity of work groups into process  AMSC - Collaborative approach – building commitment What We Would Do Differently Today  Include Board members in early education (WIIFM)  Focus on benefits and how AM will help them  Catch 22 – Benchmarking  Build basis of business case on Agency data – earlier, if possible

14. Lessons Learned What We Would Do Differently Today (cont’d)  Structure implementation concurrent with plan development – as you learn – start implementing – build basis for culture change  It is not as complicated as we made it out. It is just making better business decisions.  Structure implementation concurrent with plan development – as you learn – start implementing – build basis for culture change  It is not as complicated as we made it out. It is just making better business decisions.

15. Questions? Orange County Sanitation District www.ocsd.com Doug Stewart Asset Management Coordinator (714) 593-7320 dstewart@ocsd.com Doug Stewart Asset Management Coordinator (714) 593-7320 dstewart@ocsd.com