1. Asset Management in Action: Use of a Triple Bottom Line Approach to Prioritize Capital Improvement Needs Richard Cuthbert R. W. Beck, Inc.

2. Asset Management (AM) Programs  Disciplined business approach to minimize life cycle costs for infrastructure assets  Includes consideration of both capital and operating costs  Recognizes level of service standards of utility  Attempts to address least cost and risk mitigation factors in asset replacement funding

3. Issues in Asset Management Planning  How to best compare immediate capital costs with long-term operating costs?  What perspective to use in measuring costs (utility, customers, society)?  How to best prioritize capital needs within limited resources?

4. Triple Bottom Line (TBL) Approach to AM  A broader economic evaluation of AM  Financial  Social  Environmental  Process includes both quantitative and qualitative elements  Key Assumption: There are multiple options to address service needs.

5. TBL in action Recognize Service Level Needs Initial Engineering Evaluations Selection of Lowest “Cost” Selection Final Design and Evaluation Construction/ Implementation Ongoing Evaluations

6. TBL Process is Critical to its Success  Need for a disciplined evaluation approach  Clear identification of alternative options  Recognition of various perspectives in analysis  Minimize risk and criticality factors  Commitment from senior management for review process

7. Local Area Capital Cost Alternative Perspectives Considered Rate PayersUtilitySociety XX XX X X XX XX XX O & M Costs Social Costs Environmental Cost Environmental Benefit Social Benefit Net Present Value $2-$25$20$8

8. TBL Example 1: Water Main Replacements  Evaluation of two older water mains needing replacement with similar needs and costs  One main serves area with large hospitals  One main serves low density residential neighborhood  TBL includes social criticality of mains:  Hospital main = early replacement  Residential main = can allow to run to failure

9. TBL Example 2: Water Pump Replacements  A water pump providing adequate pressure in residential neighborhood needs replacement  “Standard Approach”: $2 million cost  “Alternative Approach”: Several smaller pumps  TBL result: $1.5 million in savings

10. Examples of Social and Environmental Effects  Health Factors  Noise and Odor  Air Quality  Safety  Traffic Congestion  Aesthetics  Habitat Protection  Visibility

11. Summary  TBL is a new approach to asset management decision making  Involves consideration of broader perspectives in asset management-financial, social, environmental  Requires consideration of alternative approaches to meeting service level standards  Can lead to significant cost savings for utilities, both in immediate capital costs and long-term operating costs