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Asset Management

The Capability Enhancement Program (CE) can assist a system in developing an Asset Management (AM). Contact the Capability Enhancement Program to find out more about Asset Management. A Capability Enhancement Facilitator can identify resources to guide you through the steps of asset management whether you choose to create your own basic program or use DEP's Simplified Spreadsheet for Asset Management. (Excel)

About Asset Management

Asset Management is a way to plan for repair and replacement of your system's major components by evaluating them and determining when and how much it will cost. Asset management can ultimately save a system money by planning for repairs or replacements. Knowing when your system will need to pay for major repairs or replacements can alleviate the cost of paying for "emergency" or unplanned projects.

Public assets are failing at an increasing rate and by using "Lifecycle" planning, utilities can better control their repair and replacement. By knowing what you have, how long you expect it to last, where it is in its life cycle and how to optimize its maintenance to get the best advantage from its service life, you can optimize your financial planning and control operating costs, ultimately achieving the lowest cost while providing sustainable performance. Asset management can also help a system plan financially to best set rates that will pay for a project directly, or pay down debt for a financed project.

Asset management can be implemented in a number of ways, ranging from a very simple plan that evaluates major components of a system and plans for their replacement, to a full scale automated system that can track maintenance, provide work orders and budget for operations. Regardless of the scale of the asset management program a system chooses to provide it is important to practice some type of asset management.

Creating an Asset Management Program can seem difficult to some who are not familiar with its concepts. Breaking tasks into manageable portions can help in creating a successful asset management program. The following list identifies steps that you can use to create a program. Each step builds upon the previous one to enhance the usefulness of your Asset Management Program.

Note that a simple Asset Management program may not include all steps listed below, or may simplify the steps to create a plan and build on that plan as resources allow. Remember, Capability Enhancement Program staff are available to help you through the process. 

Asset Management Steps

1. Identifiy an AM team

Put together a team of board members, managers, operators who are familiar with the system. These people will work to put together the AM program.

2. Conduct and asset inventory

Collecting information on your major assets is the first step that will allow you to build an asset management program. Therefore it is important to make sure you have the information you need before moving on to the next step. Generally, the following information will be needed for the major assets of your system:

  • Functional purpose
  • Size, capacity, or length (length applies to pipes)
  • Construction materials
  • Construction/installation date
  • Condition (will be used for the condition assessment in Step 3)
  • Manufacturer service life

3. Determine the condition and value of your assets

This step determines the remaining useful life of your asset, provides information on its current and future expected performance, and will provide a basis for you to make asset rehabilitation, renewal and replacement decisions. Generally you will:

  • Assign a condition rating to your asset
  • Determine how and when an asset will fail (failure mode)
  • Determine if your asset has the correct capacity for your current needs
  • Determine replacement costs

4. Complete a criticality assessment

A criticality assessment can determine the impact that the loss of a particular asset will have on the performance of the utility's primary functions. Meaning, how important is a particular asset to the proper operation of the system. Determining an asset's redundancy, probability of failure and criticality of failure can aid determining what facilities need repaired/replaced before others. The components of a criticality assessment are listed below, as well as a further explanation of the terminology.

  • Redundancy of the asset. For example, is if a particular pump fails does it have a backup pump? Also if a backup pump can provide half the capacity of the main pump then its redundancy is 50 percent, if there are two backup pumps with the same capacity as the main pumpits redundancy is 200 percent.
  • The Probability of Failure is a means of rating what the probability of a certain asset's failing is currently. For example, the probability of failure of the same pump discussed in the Redundancy example would be very low if it were a new pump, and higher if it were a pump that was nearing its expected life.
  • The Criticality of Failure is a means of rating how important an asset is to providing proper service to the customers. For example, the criticality of failure of the pump mentioned above would probably be low if its failure would not cause any customers to lose water, or the system could be reconfigured quickly to provide water to areas that the pump serves.

In summary, a Criticality Assessment is a means of rating the assets to determine which ones may need to be higher on a list for repair/replacement than others.

5. Evaluate Maintenance Management

Maintenance management is a method where the assets are maintained at a level that minimizes operating cost while delivering the desired service of the asset throughout its life cycle. There are two types of maintenance, Reactive and Planned. Reactive maintenance, or maintaining an asset after it breaks down, usually costs more and can result in your system not providing water of the needed quality or quantity.

Building on the first four steps of the AM process you can determine when to perform preventive maintenance or predictive maintenance. Preventive maintenance schedules can be compiled by using information from manufacturer's manuals, staff experience or historical data. Predictive maintenance involves testing or evaluating an asset to determine whether it needs maintained or when it will need maintained.

6. Determine your Renewal/Replacement Needs

In this step, you evaluate your assets and determine what the best alternative is for that specific asset's renewal or replacement. You can take into consideration the cost-effectiveness, what goals you have in mind for your system, and your financial restraints when evaluating. Here is where the AM team will look at each asset and determine, based upon all previous steps, whether it is best to rebuild, replace, or upgrade an existing asset. The team will also try to determine a price for the chosen option and when it would make sense to perform the action. Looking at various options for major assets can help a system save money in the long term by maintaining an asset at the correct time in a manner that makes sense for them. It is possible that letting an asset run to failure and replacing with a new or different type of asset is feasible, but your system will not know this unless it evaluates the situation.

7. Develop a financial plan

Managers and board members have the burden of trying to ensure their system is operated properly today and into the future. Doing this involves determining the current and future cost of operations and maintenance of their system, and setting rates that will sustain the system; All while customers are generally resistant to rate increases. An Asset Management program can provide the needed justification to customers, as well as funding agencies when rate increases are needed or financing is necessary.

Planning through asset management can also help to eliminate some of the large rate spikes system owners must make to pay for needed repairs and maintenance. Through asset management, and planning for future needs of your system you can make informed decisions on setting current rates, plan for smaller future rate increases, and determine when and how much financing will be needed to sustain your system.

Determining the finances needed for maintaining your system can also help in developing or bettering an existing Capital Improvement Plan.

Environmental Finance Center Network (EFCN)

The Environmental Finance Center Network (EFCN) is a university-based organization creating innovative solutions to the difficult how-to-pay issues of environmental protection and improvement. The EFCN works with the public and private sectors to promote sustainable environmental solutions while bolstering efforts to manage costs.

The EFCN can assist small (less than 10,000) water systems in Pennsylvania at no cost and at one-on-one level assistance with any of the topics offered. These topics include Asset Management, Energy Management, Finances and Rates, Funding Sources, Water Loss Reduction and Water System Collaboration. Assistance can be requested from the EFCN website or by contacting any Environmental Finance Center.

Visit EFCN's website for more information or click here for the special request assistance webpage on the EFCN website.