Municipal Infrastructure Asset Management

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Strengthening Communities Workshop from Policy To Practice 11 – 13 April, 2007 Hotel Explorer, Yellowknife. Municipal Infrastructure Asset Management. Saidur Rahman, Ph.D. Senior Capital Planning Officer. Society, Economy and Environment. Municipal Infrastructure. Consumption. - PowerPoint PPT Presentation

Transcript of Municipal Infrastructure Asset Management

  • *Strengthening Communities Workshopfrom Policy To Practice

    11 13 April, 2007Hotel Explorer, YellowknifeMunicipal Infrastructure Asset Management Saidur Rahman, Ph.D.Senior Capital Planning Officer

  • *Act Locally and Think Globally

  • *Presentation OutlineUnderstanding of infrastructure and asset management Why we need to care about? BenefitsAsset management plan developmentWhat is going on around? Where we are now? What to do next?

  • *Municipal InfrastructureThe Canadian Oxford Dictionary: infrastructure as the basic structural foundation of a society or enterprise; roads, bridges, sewers, etc. regarded as a country's economic foundationCity of Edmonton: all the physical assets developed and used by the City to support the communitys social and economic activitiesCommunity infrastructure

  • *ClassificationsLinear and non-linearSurface and sub-surfaceTax supported, self-financing and quasi-commercial or blended (CWF New Tools for New Times, 2006)Community public infrastructure (CPI)Stationary and movableOffice buildings, fire hall, storage facilities, arena, recreation centres, water and sewage facilities and solid waste disposal etc. Municipal Infrastructure

  • *Asset Classifications

  • *Why Municipal Infrastructure?Livable and healthy placeSafetyEconomic prosperityQuality of lifeIn Canada, municipal infrastructure worth $1.1 trillion, approximately 20% of total built asset of $5.5 trillion (NRC)Municipal assets are economic backbone and extremely high-value assets that cannot be allowed to deteriorate or misuse

  • *Municipal Infrastructure IssuesPopulation growth Infrastructure demand $90 billion (Infrastructure Canada)

  • *Municipal Infrastructure IssuesMunicipalities are spending $12 - $15 billion/year on maintenance and rehab (FCM) Huge backlogCurrent funding level will deficit $1 trillion in 60 years (CSCE 2003)

  • *Municipal Infrastructure IssuesAging of infrastructure28% of Canadas infrastructure is over 80 years old, and only 41% is under 40 years old (CSCE 2003)

  • *Municipal Infrastructure Issues79% useful service life of infrastructure has been used (CSCE 2003)Condition degradation

  • *Municipal Infrastructure IssuesInfrastructure gap $50 to $125 billion, 6-10 times of current annual infrastructure budgetDeferred maintenance for Big Sixes $564 million (2003 CWF)First Nations will cost $475 - $560 million (2003 CAN$) to address risks for water and wastewater assetsEstimated cost for upgrading Canadian sewer infrastructure is $11.8 billion (2003)

  • *MIIP Survey ResultsNRC-MIIP survey (2004) results:Total 67 municipalities of over 5000 peoplesQuestionnaire based on Six Whats70% spending less than 2% on maintenance28% do not have system to record asset valueAssets were rated as 2.9 or good to fair from range of 1 to 7 ratings50% of the assets were at least 30 years old, in 10 years 75% will be +30 years oldRepresents 32% of Canadian population

  • *Infrastructure at StakeWater main breaks: Avg. 700 breaks per day in Canada and USA ($3,000 per repair)Walkerton tragedy: E. coli 0157:H7 outbreak in Walkerton. Cost $64 millionPeterborough flood in 2004: Damage cost $20 to $40 million. Compensation $500/ household and $2500/ small businessBasement flooding: 30,000 to 40,000 events /year, average cost $3,000 - $5,000 /events (CMHC 2004)

  • *We Actually NeedAccountabilityCustomer (demand and service)Staff (Fiscal responsibility, health and safety)Environment (regulatory compliance)Risk ManagementMinimize health and safety tragedies/incidents Reduce liability claimsAsset SustainabilityLonger term (cradle to grave)Reserve funding

  • *So the Challenges are...Infrastructure demand and population growthAging of infrastructure and condition deteriorationInfrastructure deficitService level improvementLack of integrated systems/tools and consistent approachInadequate fundingOrganizational restructuring

  • *How These Challenges Can be AddressedIdentify maintenance, rehab and renewal needsIncrease systems capacity and extend service lifeStewardship of the environmentDefine levels of service (LOS)Ensure financial sustainabilityImplement Asset Management Plan (based on Six Whats)

  • *Need for ChangeAsset management needs some reorganization of public agencies functionTraditional design-build- operate-maintain approach is simply inadequate in the face of current dilemmaAdoption of asset management principles and tools (IT tools and financial regulations)

  • *Evolution of Asset ManagementIn early 1900s design and durability issues, versatile structures After World War II, reliability issues and maintenance for mechanical and electrical equipmentsIn 1960s green movements, LCC and LCM In 1970s and 1980s PMS, CMMS and WO In 1990s IT tools, CMMS, CMMS to AMS, GIS and GPS 2000 ~ Integrated systems

  • *What do You Think?Clerks/municipal employees - data recording and reporting using General Accepted Accounting Principles (GAAP)Directors of finance strategic financial planUtility directors/supervisors - maintain the utilities and manage work order systems IT directors software, hardware, integrated systems and database management

  • *What is Asset Management?What is your definition?NRC, FHWA and IIAM (Australia)Asset Management is a systematic process of planning, operating, maintaining, upgrading and replacing assets cost effectively with minimum risk and at the expected levels of service over the assets life cycle

  • *Asset Management Benefits Reduce cost Extend lifeTwo fold benefits:

  • *Asset Management BenefitsBalance between cost, risk and LOS Levels of Service is a compromise between existing and expected service levelsAnother benefit is to increase the levels of service

  • *Simple Questions?Simple questions butIs there anything wrong?What is wrong?What should we do? How do we fix it?What will the benefits be?How much will it cost and how do we pay for it?How can we be more proactive?

  • *Who is Doing What?Australian InitiativesInstitute of Public Works Engineering Australia (IPWEA)IIAM ManualAsset Management Quarterly International (AMQI)Commonwealth Industrial and Scientific Research Organization (CSIRO)

  • *Who is Doing What?In USAAmerican Public Works Association (APWA) AMSA Managing for Public Infrastructure AssetsAWWA Publications and reportsFederal Facilities Council (FFC) - Investments in Federal FacilitiesFHWA Asset Management Office: Primer on Asset management, LCCA, GASB and Case StudiesTransportation Asset Management ManualSoftware: LCCA, BMS and PMS etc.National Association of College and University Business Officers (NACUBO) Facility Condition Index (FCI) Others: WIN, WERF and TRB

  • *Who is Doing What?In CanadaNational Guide (IC, FCM, NRC) Canada wide network of $25.7 million budgetOver 56 best practices in 7 target areasInfrastructure Canada Knowledge - Building, Outreach and Awareness (KOA) programInfrastructure Canada ProgramCanada Strategic Infrastructure FundMunicipal Infrastructure Investment Planning (MIIP) NRC10 municipalities consortiumEvaluating tools and techniques for investment planning

  • *Who is Doing What?Transportation Association of Canada (TAC)Primer on Highway Asset Management (1999)Bridge Management Guidelines (2004)Canadian Institute of Charted Accountants (CICA)Accounting and Reporting for Physical Assets by Governments (1990)Accounting for Infrastructure in the Public Sector (2003)Canada Mortgage and Housing Corporation (CMHC)Study reports on financial planning, alternative financing and municipal infrastructure Public Sector Accounting Board (PSAB)

  • *Who is Doing What?Municipal Infrastructure Data Standards (MIDS) Municipal Performance Measurement Program (MPMP)Ontario Municipal CAOs Benchmarking Initiative (OMBI) National Water and Wastewater Benchmarking InitiativeMunicipal Infrastructure Management Systems (MIMS)Acts and Legislation (Federal, Provincial and Territorial)

  • *What Can Be Included?What are the absolute requirements?How do an existing system fit into?How does Asset Management assist in monitoring of condition and performance?How should an Asset Management system be implemented?How Asset Management is compatible with business approach to managing infrastructure assets?

  • *Asset Management Plan

  • *Revisit the Six WhatsWhat do you own?What is it worth?What is the condition? What is the deferred maintenance?What is the remaining service life?What do you fix first?

  • *Revisit the Six WhatsWhat do you own?Asset inventoryDatabasePaper basedElectronic (relational database and spreadsheets)Integration with GIS and CMMSWhat is it worth?Asset valuationBook value, historical value, depreciated value, PVCurrent Replacement Value (CRV)Cost modeling (direct and indirect costs, PSAB, FCA)Life cycle cost/Whole life cost

  • *Revisit the Six WhatsWhat is the condition?Condition assessmentCondition grading systems (subjective evaluation, distress based matrices and hybrid systems)Structural and functional (defects, breaks, hydraulics, blockages etc.)Protocols (IT tools)PMS, BMS, WRc, NAAPI or homegrownPrediction modeling (Markov, survival functions, NN)What is the deferred maintenance?Facility Condition Index (FCI)Maintenance backlog and economic inflation/deflation

  • *Revisit the Six WhatsWhat is the remaining service life?Service life modelingAnalytical and probabilistic methodsCosts for alternative maintenance, repair and renewalWhat do you fix first?PrioritizationMethods: AHP, B/C, weighted factor methods, PAN, MOO and expert knowledgeRanking: Asset by asset or group of assetsCosts for alternative maintenance, repair and renewalDecision-makingCombination of all and political agenda

  • *Asset Management FrameworkPlanning (proactive and reactive)Implementation (generally life cycle approach)Acquisition/constructionOperationMaintenanceRepair and rehabdecommissioningEvaluatingImproving/Developing

  • *

    Asset Management FrameworkPROGRAM LEVEL: High-level decision-making. Synonymous to Top-Down ApproachMIXTURE OF BOTHPROJECT LEVEL: Detailed assessment on an asset-by-asset basis. Synonymous to Bottom-Up Approach

  • *Some Specific IssuesWhat are the service standards for WTP?What level of details are available for pump station? O&M manual?How many water trucks you need?Show the investment for next 20 years?Show the critical asset on the map?What are the risks and how will be managed?How will you prioritize your investment?

  • *Asset Valuation and Management DriversCorporateEnhance accountability & responsibility (insurance)Satisfy emerging legislative issuesEngineering & OperationsStrategic investment decision-making for short & long termManage future growth & demandFinanceStabilize Rates / Reserves

  • *Asset Valuation Methods

    MethodsAdvantagesDisadvantagesBook Value, Historical CostsData availableSimple methodDoes not account for any changes as: price, technology and usabilityWritten down replacement costCompares replacement optionsAccurate condition/ performance data requiredCurrent replacement value (CRV)Straight forwardReflects current conditionIdentify backlogsMisleads when an old asset behaves like good condition as new assetNet salvage valueUses for available data (service life, material usages)Difficult to predict future cost and asset usageOptimized replacement costOptimized for service life and conditionReflects actual costs and benefitsImpacts for uncertainties like condition, performance and economic factors

  • *Asset Valuation Model AlgorithmDefine Component Levels & AttributesCapture Inventories (integrated system)Assess Asset ConditionAssess Asset Value & Risk LevelOptimized Replacement CostAsset Value Inventory data Condition data Replacement options Cost comparison Depreciation Performance Criticality Prob. of failureAsset Life Expectancy & Remaining Life

  • *Asset Valuation - User vs OwnerEconomicsUnit costs based on: area, length, diameter, material, capacity etc.Service life (design life, expected life, age, remaining life)Condition & performanceDepreciation factorsSalvage value

  • *Levels of ServiceImportant considerationsWhat are the services? What are the standards? What are the target levels of service?

    Levels of Service is a qualitative or quantitative measure to describe how well or poorly a service is provided by the asset or network of assets based on the assets intended purpose within the capacity and satisfactory performance

  • *Performance IndicatorsPerformance Measured Criteria Key Performance Indicators (KPI)Asset informationStakeholdersCondition and performanceOperational/maintenanceService qualityFinancial

  • *Key FactorsSystem performance (capacity, remaining service life, condition)Serviceability Impact (disruptions in daily life)Risk tolerance level (health, safety and other direct and indirect costs)Long-term impact (environmental and other intangible impacts)Operation and Maintenance cost (life cycle basis)

  • *Establishing LOSReview Organizational Objectives/Vision

  • *Examples of Performance Indicators

    Measured Indicators (WATER)Target LevelsPer capita consumption --- M3 paSystem loss

  • *RiskDefinition: Risk is the probability that an event may adversely affect and measured by consequences and likelihoodCommon risk assessment methodologiesQuantitativeQualitativeRisk categoriesEngineeringPublic health and safetyFinancialEnvironmental

  • *Risk Assessment Algorithm

  • *Asset Management Model

  • *Application ToolsCapital Asset Planning Tool

  • *Application ToolsLinear Asset Prioritization Tool

  • *MACA Capital Planning Tool

  • *MACA Capital Planning Tool

  • *What Next?Think globally and act locallyLearn from failuresUse best practicesStewardship for the infrastructureWork for the sustainable communityNew Deal a WIN-WIN situation for the NWT communities

  • [email protected]: (867) 873-7944Questions?

    ****LinearLinear assets are continuous in nature connected with each other by their inter-relationship as individual or in networks.Examples: Roads, bridges, pipelines (water, sewer, storm, gas), rail tracks and airport runways Non-linearA non-Linear asset typically occupies a finite space and can be identified by its location (co-ordinates) or grouped as part of a component and its sub-components. Examples: Mobile (Buses, cars, trucks or any transports vehicles) and Fixed (buildings, plants, pump stations, equipment, and facility)

    Tax supported: is generally supported by property taxation as parks, public facilities and urban road networks.Self-financing: are commercial, marketable or enterprise infrastructure provided by user pay basis. Some water utilities are provided commercialized user pay system.quasi-commercial or blended: are mixed of the two using both taxation and user pay system as public transit and recreation facilities.

    ********Infrastructure gap $50 to $125 billion, which is 6-10 times of all current annual infrastructure budgetDeferred maintenance for Big Sixes $564 million (2003 CWF)First Nations only will cost $475-560 million (2003 CAN$), to address the high and medium risks for water and wastewater assetsEstimated cost for upgrading Canadian sewer infrastructure only is $11.8 billion (2003)

    **Water main breaks: Average 700 breaks per day in Canada and USA. Since January 2000, to today 1,352,018 breaks reported costs $4,056,056,685 to repair (approximately $3,000 per repair)Walkerton tragedy: E. coli 0157:H7 outbreak in Walkerton, Ontario, in May 2000, where seven died and over thousands suffered from contaminated drinking water. Each household in the town of 5,000 spent $4,000 on average as a result of the contamination. Estimated cost for the tragedy approximately $64 million. Peterborough flood in 2004, estimated damage cost was $20 million to $40 million. Compensation provided $500 per household and $2500 per small business. Basement flooding 30,000 to 40,000 events per year costs average $3,000 - $5,000 per events (CMHC 2004)******Institute of Public Works Engineering Australia (IPWEA)International Infrastructure Management ManualAAS 27 Financial Reporting by Local GovernmentAsset Management Quarterly International (AMQI)Newsletter on Strategic Asset ManagementCommonwealth Industrial and Scientific Research Organization (CSIRO)Water and wastewater systems**American Public Works Association (APWA) conferences on public infrastructureAMSA Managing for Public Infrastructure AssetsAWWA Publications and reportsFederal Facilities Council (FFC) - Investments in Federal Facilities: Asset Management Strategies for the 21st CenturyFHWA Asset Management Office: Primers on Asset management, LCCA, GASBTransportation Asset Management ManualSoftware: LCCA, BMS, PMSNational Association of College and University Business Officers (NACUBO) Managing the Facilities Portfolio, Facility Condition Index (FCI) Others: WIN, WERF, TRB

    ****Ranking: Asset by asset or group of assets (age, condition and risk)

    **PROGRAM LEVEL: High-level (generalized) decision-making / assessment based on performance of groups of assets and aimed at forecasting needs on a system-wide basis. Synonymous to Top-Down Approach. MIXTURE OF BOTHPROJECT LEVEL: Detailed assessment on an asset-by-asset basis used to prioritize one project over another. Synonymous to Bottom-Up Approach.******