Jeffrey Sanford 2/28/2013 Joseph Zalla Jeffrey Sanford February 1, 2013

Asset Management and Condition Assessment Best Practices

Asset Management Definition Effective Asset Management is: An integrated set of processes to minimize the life-cycle costs of owning, operating and maintaining assets, at an acceptable level of risk, while continuously delivering established levels of service

Managing Public Infrastructure Assets to Minimize Costs and Maximize Performance AMSA, AMWA, AWWA, WEF 2002

Implementing Asset Management – A Practical Guide AMWA, NACWA, WEF 2007

Balancing Act…….

RISK

Service Levels Low

Costs

Minimize the life-cycle costs of assets Continuously deliver established levels of

service At an acceptable level of risk

Risk is quantified by the classic equation.

Risk = (consequence x likelihood)

How severe are the consequences of asset failure?

How likely is it for the asset to fail?

Understanding the risk of asset failure provides…

The basis prioritizing capital investments for R&R

The basis for optimizing O&M

The basis for investing in condition assessments

A uniform and rigorous manner that results in defensible decisions

Risk Based Approach Quantified by using the classic risk equation

Risk = (consequence x likelihood)

How severe are the consequences of asset failure?

How likely is it for the asset to fail?

• H, S implications • Financial impact • Regulatory compliance • Public confidence • Service delivery

Levels of Service

• Condition • Reliability • O&M Protocols • Performance

Consequence by Level of Service Category Rio Rancho

LOS Category Wt. Negligible = 1 Low = 4 Moderate = 7 Severe = 10

Safety of public and employees 30% No injuries or adverse health

effects No lost-time injuries or

medical attention required Lost-time injury or

medical attention required Loss of life or widespread

outbreak of illness

Financial impact 15% Can be repaired within Utility budget (<$2,500)

Can be repaired between $2500 and $9,999

Can be repaired between $10,000 to $29,000.

Greater than $30,000. Sealed bids and City

Council approval required

Public confidence 10%

No social or economic impact on the community. No reactive

media coverage. Any media coverage is a result of proactive announcements by Utility. No

complaints.

Minor disruption (e.g., traffic, dust, noise,water pressure). No adverse media coverage. Some

complaints.

Substantial but short-term disruption. Adverse media

coverage due to public impact. Localized media

coverage.

Long-term impact. Area-wide disruption. Regional

media coverage.

Regulatory compliance 25% No State or local permit

violations . No SSO's Possible technical violation Probable enforcement

action, but fines or surcharge unlikely

Enforcement action with fines or surcharge

Service Delivery 20% No impact

Minor impact to process or out of service less than 24 hours. No SSO's or loss of

service

Major impact to process, out of service <24 hours. Potential SSO or loss of

service

Major impact to process, out of service >24 hours, outside services required,

SSO' or loss of service

Rio Rancho Consequence of Failure Matrix

Likelihood by Category Rio Rancho Likelihood Category Wt Negligible = 1 Unlikely = 3 Possible = 5 Likely = 7 Very Likely = 10

Physical Condition 80%

Very good. Condition Grade 1. New or nearly

new. Only normal maintenance required.

Good. Condition Grade 2. Minor wear.

Fair. Condition Grade 3. Major wear impacting level

of service.

Poor. Condition Grade 4. Unable to meet level of

service life. Failure imminent.

Very poor. Grade 5. Requires complete

rehabilitation or replacement. Failed.

O&M Protocols (i.e., PMs, SOPs, JSAs)l 5%

Complete, up-to-date, written, easily accessible

and is being used.

Complete, written, up-to-date, being used but not

easily accessible. Parially developed Written, but out-date and not

used. No written protocols.

Reliability 15% No corrective work order events within 12 months

<2 corrective work order events within 12 months

2-5 corrective work order events within 12 months

6-8 corrective work order events within 12 months

>8 corrective work order events within 12 months

Rio Rancho Likelihood Matrix

9

Use consequence and likelihood scoring matrices to quantify risk of asset failure

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Weight-> 0.15 0.15 0.20 0.25 0.25 0.45 0.30 0.05 0.20

MILLS 1 7 10 4 10 6.7 1 1 1 7 2 1.6 94 11.0 23ELSWORTH 1 1 4 1 1 1.6 65 1 4 7 4 3.5 8 5.6 68HEACOCK 1 7 7 1 10 5.4 4 1 1 7 2 2.1 88 11.1 22CACTUS & NASON 4 1 4 1 7 3.6 28 1 1 7 4 2.6 37 9.3 37NASON & DRACAEA 4 1 4 1 4 2.8 41 1 1 7 4 2.7 34 7.4 53FREDERICK/ SUNNYMEAD 7 7 1 1 1 2.8 39 2 1 7 4 3.1 28 8.6 45MORENO 2 4 7 7 1 7 5.1 7 2 1 7 4 3.1 27 15.5 5PERRIS & FIR 4 7 7 4 4 5.1 7 1 4 7 4 3.4 18 17.0 4HEMLOCK 7 4 4 1 7 4.5 14 1 1 7 4 2.5 59 11.0 24ELDER 4 7 4 1 4 3.7 19 1 1 7 4 2.6 39 9.6 32MEDLEY 1 1 1 1 1 1.0 68 1 1 7 4 2.4 73 2.4 94PIGEON PASS ROAD 4 1 1 1 1 1.5 66 1 1 7 4 2.5 65 3.6 84VILLAGE ROAD 1 1 1 1 1 1.0 68 1 4 7 4 3.3 20 3.3 87PERRIS / IRONWOOD 10 7 7 1 4 5.2 5 1 10 7 4 5.3 1 27.5 1HIDDEN SPRINGS 1 1 1 1 1 1.0 68 1 4 7 4 3.4 16 3.4 86STEEPLECHASE / IRONWOOD 4 7 4 1 4 3.7 19 1 1 7 4 2.5 54 9.2 39STEEPLECHASE / KALMIA 4 7 1 1 4 3.1 34 1 4 7 4 3.4 13 10.6 28SUNNYMEAD PKWY 1 1 1 1 1 1.0 68 1 1 7 4 2.4 71 2.4 93PERRIS & KALMIA BOOSTER 1 1 4 1 4 2.4 48 1 1 7 4 2.4 70 5.7 64COVEY 1 1 1 1 4 1.8 58 1 1 7 4 2.4 76 4.3 81REDLANDS / COTTONWOOD 1 1 7 1 4 3.0 36 1 1 7 4 2.6 38 7.7 49

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CONSEQUENCE LIKELIHOOD

ASSET

Use risk levels to prioritize detailed assessments

Re-score likelihood of failure based on updated field information

Recalculate risk

Based on risk assessment, identify areas with unacceptable levels of risk

Relative Risk Score of Level 3 Assets

Acceptable / Unacceptable Risk Level

Benefits from detailed condition assessment

• Identifies specific deficiencies in equipment assessed

• Identifies specific maintenance steps that may be taken to increase asset life and reduce likelihood of failure

• Provides data for the prioritization process

• Repeatable process that can be continued

• Repeated assessments of an asset will build a decay curve

Condition Assessment is a step-by-step process

• Gather asset data for the high risk assets identified

• Develop assessment criteria

• Upload data into the Asset Condition Evaluation System (ACES) tool

• Field condition assessment by experienced maintenance personnel

• Utilize data in prioritization process

Asset data gathering

• Assets and their characteristics are captured

• Typically, data is obtained from CMMS/GIS

• Once obtained, data is aligned to hierarchy and asset categories previously developed

Development of asset condition criteria • “Ask” and “answer” predefined questions that relate to the asset

condition • Questions are grouped by asset type • Answers for each “question” (criteria) are scored from 1 to 5

Upload data to the SQL database • Pre-populated with risk analysis • Condition data gathered is entered into ACES

On-site condition assessment

Condition assessment data will then be used to: • Identify specific deficiencies

in equipment assessed

• Develop condition summary

• Provide data for the prioritization process

• Produce multiple reporting options

Rio Rancho Water Utility Optimized Asset Management Decision Process

Summary Data

Booster Station, 164, 7%

Lift Station, 199, 9%

Reservoir, 16, 1%

Well, 231, 10%

WWTP, 825, 37%

ATF, 809, 36%

System Asset Count

Booster Station, $1,604,223 , 3%

Lift Station, $2,728,647 , 6%

Reservoir, $8,914,639 , 20%

Well, $5,529,642 , 12%

WWTP, $13,349,150 , 30%

ATF, $12,883,032 , 29%

System Asset Value

All Asset Trigger Score Range

Replacement Schedules and Costs

Water Production

Wastewater Treatment Total

Capital Plan $ 70,000 $ 63,000 $133,000

Repairs and Maintenance $ 11,600 $ 14,200 $ 25,800

TOTAL $ 81,600 $ 77,200 $158,800

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Production Repair and Replacement Schedule Based on Equipment Lifespan

Production Production CM

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Wastewater Repair and Replacement Schedule Based on Equipment Lifespan

Wastewater Wasterwater CM

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Combined CM and Replacement Schedule Based on Equipment Lifespan

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Simulated Time (Years)

Statistical 5 year NPV Plot versus Typical Lifespan Model

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Statistical 5 year Pay Back Plot versus Typical Lifespan Model

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Simulated Time (Years)

Optimized versus 5 year NPV Model

With 5-year payback rule Optimized Replacement Policy

Questions???