AWR Asset Management

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Asset Management

October–December 2010 volume 20, number 4 risk assessment renewal prioritization condition assessment customer willingness to p

Drinking Water Research Advancing the Science of Water®


2/36OCTOBER– DECEMBER 2010 S DRINKING WATER RESEARCH

Drinking Water Research Advancing the Science of Water®

GASB 34—Not a Significant Driver for AssetManagement at U.S. Water UtilitiesFrank Blaha, Foundation senior projectmanager & Peter Gaewski, Tata & Howard Inc.29

Key Asset Data for Water Sector Utilities Jeff Oxenford, Oxenford Consulting, LLC33

DEPARTMENTS

Foundation Contacts22

Case Studies and Value of Research

Understanding Utility Performance inAsset Management: the Strategic AssetManagement Gap Analysis Tool9

Seattle Public Utilities—An AssetManagement Partnership with Australiaand New Zealand10

Risk Management at United Utilities15

Using the Benefit-Cost Analysis Tool21

WaterOne Applies Foundation Researchto Prioritize Pipe Replacements23

Developing a Main ReplacementPrioritization Tool25

Infrastructure Decision Making:Expanding Performance Criteria32

FEATURES

The Benefits From Collaborative ResearchSteve Whipp, United Utilities2

Asset Management: Different Definitions But ConsistentObjectivesMaureen Hodgins, Foundation project manager4

Asset Management in North America

Maureen Hodgins, Foundation project manager6

SIMPLE: Sustainable Infrastructure Management Program Learning Environment8

Customer Preferences and Willingness to Pay as an AssetManagement Consideration Jennifer Thacher, Megan Marsee, Heidi Pitts, Jason Hansen, Janie Chermak, & Bruce Thomson, University of New Mexico11

Tool for Risk Management of Water Utility Assets

Linda Reekie, Foundation project manager13

Integration of Failure Costs and Risk Management Conceptsinto Pipe Renewal DecisionsFrank Blaha, Foundation senior project manager & Neil Grigg,Colorado State University16

Condition Assessment of Water Main AppurtenancesDavid R. Marlow & David J. Beale, CSIRO Land and Water18

Development of a Practical Tool to Assist in Decisions onRehabilitation or Replacement of Cast Iron PipesDavid R. Marlow & David J. Beale, CSIRO Land and Water22

Main BreaksFrank Blaha & Jian Zhang, Foundation project managers27

Drinking Water Research Statement of Ownership, Management, and Circulation

Owned by the Water Research Foundation, 6666 West Quincy Avenue, Denver, CO 80235.

Publisher: Water Research Foundation; Editor: Cheri Dougherty; Bondholders: None; Circulation: Average number of copies distributed per month for 12-month period (July 2009 – June 2010) – 2,566 as follows

paid and/or requested mail subscribers – 2,446; free distribution – 120. Tis statement has been filed on PS form 3526 with the USPS on 9/23/10 and is published herein in accord with USPS regulation 39 USC 3685


3/36DRINKING WATER RESEARCH S OCTOBER– DECEMBER 2010

VIEWPOINT

The Water Research Foundation is a member-supported, international, nonprofit organization that sponsors research to enable water utilities, public health agencies, and other professionalsto provide safe and affordable drinking water to consumers.

Editor: [email protected]; Contributing editor: Adam Lang; Art director: Cheri Dougherty

Drinking Water Research (ISSN 1055-9140) is published quarterly for $40 a year in North America ($50 elsewhere) by the Water Research Foundation,6666 W. Quincy Ave., Denver, CO 80235-3098, elephone: +1 303.347.6100, Periodicals postage paid at Denver, Colo.

Postmaster: Send address changes to Water Research Foundation, 6666 W. Quincy Ave., Denver, CO 80235-3098

Te Water Research Foundation provides contracts for studies of problems in the water supply industry. Te Foundation assumes no responsibility for the content of the research studies reported or for the opin-ions or statements of fact expressed by contributors in this publication. Te mention of tradenames or commercial products does not represent or imply the Foundation’s approval or endorsement. Drinking WaterResearch is published for general information purposes only.

Copyright © 2009 Water Research Foundation. ALL RIGHS RESERVED. Published in the U.S.A. Printed on recycled paper.No part of this publication may be copied, reproduced or otherwise utilized without permission.

Helping Utilities Manage Their Assets

For most water and wastewater utilities, the basic mission is to provide high-qualityservice at an affordable cost; however, costs tend to rise as infrastructure ages. NorthAmerican water and wastewater utilities are funded, for the most part, by user fees inthe form of rates and charges. With rare exceptions, these rates and charges do notrecover the full, true cost of asset ownership.

As a result, drivers such as aging infrastructure, growth, shifting population patternsand water usage, and changing regulatory requirements place increasing importanceon implementing the most cost-effective means of infrastructure and system ownershipand operations. Increasingly, the set of practices and tools applied to these problems ischaracterized as “asset management.”

The Water Research Foundation has been conducting research on drinking water assets since we were formed over 40 yearsago. Recognizing the global nature of the issue of asset management, the Foundation’s research has been characterized bycollaboration and partnership. We have worked with a number of groups both nationally and internationally on this issue,including the Water Environment Research Foundation, National Research Council of Canada, United Kingdom Water IndustryResearch, Global Water Research Coalition, Water Services Association of Australia, and others.

The Foundation, seeing a need to do an updated review of asset management as it relates to drinking water infrastructure,commissioned the Asset Management Research Needs Roadmap in 2006. To develop this Roadmap, we convened andorganized an asset management experts workshop of around 50 participants representing water and wastewater utilities,non-governmental research organizations, international experts, professional consultants, academics, and regulators.

The workshop came up with 12 high-priority projects and 23 other ideas. The Foundation has since funded eight projectsworth $1,675,000 towards the high-priority ideas. Seven other projects relating to asset management have also been funded

in the last few years.

Much has been accomplished in researching infrastructure asset management topics, and considerable work remains to bedone. Because infrastructure asset management involves several aspects of utility operations, our research program addressesall components of those operations, most of which are highlighted for you in this issue of Drinking Water Research.

Sincerely,

Roy L. Wolfe, PhD

Chair, Board of Trustees

Robert C. Renner, PE, DEE

Executive Director


4/36OCTOBER– DECEMBER 2010 S DRINKING WATER RESEARCH2

COLLABORATION

he Water Research Foundation (WaterRF)has been active for the last 20 years inlooking at issues relating to infrastructure.he USEPA (2005) estimated that $276.8billion needs to be invested in drinking

water infrastructure improvements tocomply with drinking water regulations

and to ensure the provision of safe water.he Foundation has responded by fundingasset management (AM) projects andcollaborating with international researchorganizations to leverage funds. Researchprograms have been prioritized based onsubscriber support to address the need toensure that we have the systems to sustainour society. his article will touch on thecollaborations with research organizationson asset management projects.

Over recent years there has been a generalrecognition amongst the researchers

working in the water sector of thestrengths of programs being undertakenin different countries. In the mid 2000s,research organizations developedresearch roadmaps for AM projects(such as the WaterRF Asset ManagementResearch Needs Roadmap order #91216/project #4002) and were actively seeking to

work collaboratively. For the Foundation,

there has been much to give and muchto benefit from the collaborations withresearch organizations, specifically the

Water Environment Research Foundation(WERF) and the Global Water Research(GWRC) and its member constituentsespecially WaterRF, UK Water IndustryResearch (UKWIR), WERF, and WaterServices Association of Australia (WSAA).

he Foundation and WERF havecollaborated on many topics, includingasset management. In 2009, through acompetitive process, they were awarded$10 million over four years by the U.S.Environmental Protection Agency throughits “Sustainable Water Infrastructure

Initiative” to develop and test newtechnologies to cost-effectively manageaging infrastructure. As a result, theFoundation funded four projects in thefirst year, including work on directand indirect costs of pipe failures(project #4332). his success was aided bypast collaborations with WERF, especiallyon the Sustainable InfrastructureManagement Planning and Learning

Environment (SIMPLE) Website and theStrategic Asset Management Gap Analysisool (both part of order/project #4013).

here has truly been internationalcollaboration facilitated through theGWRC. WaterRF contributed directlyto GWRC’s international AM researchprogram with funding, technical advisors,and taking the lead on one project. Four

AM projects were funded by GWRC onrisk management, benefit cost analyses,

AM case studies, and key asset data. One

project developed a benefit cost analysistool (order #91260/project #4127) to helpin prioritizing and in decision making.

Another project assembled AM case studiesfrom utilities around the world to provideguidance for those just starting out (order/project #4111). Another project developeda risk management tool (order #91246/project #4126). he final project, scheduled

The Benefits From Collaborative

ResearchSteve Whipp, United Utilities and Chair of Infrastructure Research Advisory Committee

http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4002http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4002http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4002http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4002http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4002http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4002http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4002http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4332http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4332http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4332http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4013http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4013http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4013http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4013http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4013http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4013http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4013http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4013http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4013http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4013http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4127http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4127http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4127http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4111http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4111http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4111http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4111http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4126http://www.advancesinwaterresearch.org/drinkingwaterresearch/20101012/TrackLink.action?pageName=2&exitLink=http%3A%2F%2Fwww.waterrf.org%2FPages%2FProjects.aspx%3FPID%3D4126http://www.a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COLLABORATION

to be completed in 2011, will focus onunderstanding the data needed to enable

asset management (project #4187). heseorganizations have also partnered on aproposal to advance condition assessment,

which is being led by WSAA.

A key area where good progress has beenmade and outputs delivered lies in thearea of risk management. Risk lies at theheart of decision making and knowing theprobability and consequence of failureof any asset is crucial. he Foundationhas developed a strong understanding

of the causes and mechanisms of failureof assets, especially pipes, and has beenable to provide advice. he Foundationcollaborated with international researchorganizations and drew together experiencefrom leading researchers and practitionersto enable a framework for decisionmaking (order #91246/project #4126). he Foundation is also collaborating with UKWIR to build a powerful WaterRFdatabase of pipe main failures using astandardized data protocol (project #4195).

he collation of information from nationaland international databases will quicklyenable a good understanding of pipe

failures, with higher levels of confidencethan what a single utility would be able

to achieve.

hese collaborative efforts representabout $1 million of Foundation fundingand $1.5 million from the other researchorganizations. he work of WaterRF, andits collaborative efforts, has provided keyoutputs that enable U.S. water utilities todetermine their investment needs and tobuild plans to ensure that investment istargeted to where it is needed.

Water Research Foundation Asset Management Projects

• Asset Management Research Needs Roadmap (order #91216/project #4002)

• Risk Management Tool (order #91246/project #4126)

• Benefit Cost Analysis Tool (order #91260/project #4127)

• SIMPLE: Sustainable Infrastructure Management Program Learning Environment and Strategic AssetManagement Gap Analysis Tool (order/project #4013)

• Case Studies of Best Practice and Innovation in Asset Management (order/project #4111)

• “Key Asset Data for Water Sector Utilities” (project #4187)

• “U.S. Beta Testing of the UKWIR National Mains Failures Database” (project #4195)

• “Integration of Cost of Failure With Asset Risk Management” (project #4332)

Reference: USEPA

(U.S. Environmental

Protection Agency).

2005. Drinking Water

Infrastructure Needs

Survey and Assessment

Third Report to

Congress. EPA 816-R-

05-001. Washington,

DC: Office of Water,

Office of Ground

Water and Drinking

Water, Drinking Water

Protection Division.

http://water.epa.

gov/infrastructure/

drinkingwater/dwns/

needssurvey.cfm

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ASSET MANAGEMENT DEFINED

During the Water Research Foundation2006 asset management research needs

workshop, the participants discussed thedifferent definitions for asset management(Kirmeyer and Harp 2007) including:

• United Utilities North West, Warrington,

UK defines it this way: “AssetManagement: Managing assets effectivelyto ensure serviceability to customers.”

• Te American Association of StateHighway and ransportation Official(AASHO) definition: “ransportation

Asset Management is a strategicand systematic process of operating,maintaining, upgrading and expandingphysical assets effectively throughouttheir life cycle. It focuses on businessand engineering practices for resourceallocation and utilization, with theobjective of better decision making basedupon quality information and well definedobjectives.” As approved by the AASHOSubcommittee on Asset Management.

• Electric Power Research Institute(EPRI) defines asset management as:

“A structured, integrated series ofprocesses aligned with business goals and

values and designed to minimize the lifecycle costs and maximize the life cyclebenefits of infrastructure asset ownership

while providing required performancelevels and sustaining the system forward.”

• American Water Works Association(AWWA) defines asset management as:

“Asset Management is a systematic processto obtain the maximum value fromphysical assets. he operational definitionis stated in terms of the componentsof values—the costs and benefits of

ownership: managing assets to minimizethe total costs of owning and operatingthem while delivering the level of servicethat customers desire.”

A search of some key asset managementreferences include the following definitions

• Te combination of management, financialeconomic, engineering and other practicesapplied to physical assets with theobjective of providing the required level ofservice in the most cost-effective manner.(INGENIUM and IPWEA 2006)

• A management paradigm and a body ofmanagement practices that is appliedto the entire portfolio of infrastructureassets at all levels of the organization,

which seeks to minimize the total cost ofacquiring, operating, maintaining andrenewing the organization’s assets withinan environment of limited resources whilecontinuously delivering the service levelscustomers desire and regulators require atan acceptable level of business risk to theorganization. (WERF and WaterRF 2009)

• An integrated set of processes to minimizelife cycle costs of infrastructure assets,at an acceptable level of risk, whilecontinuously delivering established levelsof service. (AMSA et al. 2002)

While the definitions may differ, Grahamet al. (2008) point out the consistentobjectives for asset management:

• Asset management seeks to “managecosts” of constructing and operating capitalfacilities over their “full life cycles” (Hughes2006, USGAO 2004, AMSA et al. 2002).

Asset Management: Different

Definitions But Consistent ObjectivesMaureen Hodgins, Water Research Foundation project manager

adapted from Asset

Management

Research Needs

Roadmap

order #91216/

project#4002

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ASSET MANAGEMENT DEFINED

• Asset management seeks a systematic,rational, and comprehensive basis to

“establish priorities” among alternativeexpenditures (both capital and non-capital) (USDO 1999, AMSA et al. 2002).

• Asset management addresses “tradeoffsbetween risk and reliability” (Hughes 2006).

• Asset management “improves predictionof financial needs” in upcoming yearsallowing improved management ofrate-setting and improved relationshipsbetween utility managers, governingbodies, and the public (AMSA et al. 2002).

• Asset management supports “integrationof desired outcomes” in terms of businessgoals, customer service criteria, engineeringconsiderations, and operational factors(USDO 1999, AMSA et al. 2002).

References

AMSA (Association of Metropolitan Sewerage Agencies), American Water Works Association (AWWA), Association ofMetropolitan Water Agencies (AMWA), and Water Environment Federation (WEF). 2002. Managing Public Infrastructure

Assets to Minimize Cost and Maximize Performance. Alexandria, VA: AMSA.

INGENIUM (Association of Local Government Engineering NZ Inc) and IPWEA (Institute of Public Works Engineering ofAustralia) (Version 3). 2006. International Infrastructure Management Manual . Wellington, New Zealand: NAMS Group.

Graham, A., G. Kirmeyer, E. Wessels, E. Tenny, D. Harp, S. McKinney, C. Saill, B. Templin, D. Hughes, and J. Fortin,2008. Asset Management Research Needs Roadmap, order #91216/project #4002. Denver, CO: Awwa ResearchFoundation.

Hughes, D., ed. 2006. Water Infrastructure at a Turning Point: The Road to Sustainable Asset Management . Denver,CO: AWWA.

Kirmeyer, G. and D. Harp. 2007. “Asset Management Practices and Needs in North American Water and Wastewater

Industries—AwwaRF Project 4002.” Presented at the American Water Works Association’s Annual Conference &Exposition (ACE). Toronto, Ontario, Canada, June 24, 2007.

WERF (Water Environment Research Foundation) and WaterRF (Water Research Foundation). 2009. SIMPLE: Waterand Wastewater Sustainable Infrastructure Management Program Learning Environment , order/project #4013.http://simple.werf.org/home. Accessed Oct 26, 2010.

USDOT (U.S. Department of Transportation) Federal Highway Administration (FHA) Office of Asset Management. 1999.

Asset Management Primer . Washington, D.C.: USDOT FHA OAM.

USGAO (United States General Accounting Office). 2004. Water Infrastructure: Comprehensive Asset Management HasPotential to Help Utilities Better Identify Needs and Plan Future Investments . Report GAO-04-461. Washington, D.C: USGAO.

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ASSET MANAGMENT STATUS

Are utilities using asset management (AM)programs in North America? If so, whatare they doing, and where have they seenroom for improvement? here are fourresources that address these questionsthrough case studies, surveys, andbenchmarking efforts:

• An extensive international processbenchmarking effort, called the

Aquamark Framework, was conductedin 2008 by Water Services Associationof Australia (WSAA). his effort lookedat 600 measures, with the majority ofparticipants from Australia and NewZealand, and a few from the United Statesand Canada. (WSAA 2009)

• he Strategic Asset Management Gap Analysis ool (SAM GAP ool) was fundedby the Water Environment ResearchFoundation (WERF) and WaterRF and

developed by GHD. his 37-utilitybenchmarking effort in North Americafrom 2008 includes roughly 160 self-assessment questions. (Graf 2010).

• Fifteen case studies were conductedby Kirmeyer and Harp (2007) andpresented at the AWWA AnnualConference and Exposition.

• A 330-city survey was carried out by theU.S. Conference of Mayors (Anderson 2007).

Combined, these resources reveal a cleartrend of North American utilities using

AM for drinking water pipes. Utilities haveinventoried and assessed the condition ofthe drinking water pipes and plan to furtherdevelop their AM practices.

Benchmarking Studies

Generalized results of the 2008 WSAAbenchmarking study describe North

American participants as having “developing”

or “established” levels of AM practice (scoresof 40–55%), which is comparable to thosefrom the Middle East and Asia. In contrast,

Australian and New Zealand participantshad scores of 60–80% and are describedas having a mature level of AM practice.North America’s lowest performance

was in “Corporate Policy and BusinessPlanning” and “Business Support Systems,”

and its highest performance was in “Asset Acquisition” and “Asset Replacement andRehabilitation.” (WSAA 2009)

Although Graf ’s (2010) report on the 37North American utilities that used the moreabbreviated benchmarking (SAM GAP) didnot identify general level of practice or thestrengths and weaknesses of practice, itdid list six areas with the largest variabilityin performance by the participants. Listedbelow, these areas represent the biggestopportunities for improvements or learningfrom the higher performing participants:

1. Accounting and costing

2. Strategic asset planning and assetmanagement plans

3. Business risk management

4. Maintenance

5. Secondary data and knowledge

6. Organization and people

Ongoing research (WERF’s project,Benchmarking and Case Studies, SAM1R06)

will analyze these areas and determine theleading practices. (Graf 2010)

Survey and Case Study Results

he majority of the 330 cities surveyed bythe U.S. Conference of Mayors in 2007 havesome sort of asset management program,but they vary in degree of implementation.

Asset Management in North AmericaMaureen Hodgins, Water Research Foundation project manager




Only 40% have a formal program, 30%have a partial program, and 18% lack a

program but plan on using one in thefuture. Kirmeyer and Harp’s 15 case studiesrevealed that only six utilities had a clearlydefined AM goal.

he majority of cities surveyed by the U.S.Conferences of Mayors have an inventoryof their drinking water pipes: 72% have afull inventory, 20% have a partial inventory,and 7% have not done an inventory. Inaddition, a majority of cities have assessedthe condition of their drinking water pipes:

46% have fully assessed condition, 46% havea partial assessment, and 7% have not donean assessment. he leading causes cited forpipe deterioration were general wear andtear (63%) and corrosion (36%).

In their 15 case studies, Kirmeyer andHarp (2007) found that conditionassessment of water mains is usuallyaccomplished by inferred condition basedupon indirect measures, such as routineinspections by operating staff, valve

exercising, hydrant flow testing, waterquality monitoring, and cathodic protectiontesting, as well as main break history andleak detection. Direct measures ofcondition were not used very often.

he U.S. Conference of Mayors surveyfound that “water main breaks continue

to be a major concern with 45% of citiesexperiencing more than 50 breaks annually;43% of city drinking water pipe systemrepair and replacement cycles exceed 50

years, 65% of city sewer pipe system repairand replacement cycles exceed 200 years.”

Cost Savings and Improvements

he U.S. Conference of Mayors surveyfound that 22% to 38% of cities are alreadyachieving capital and operating cost savingsfrom implementation of asset managementprograms, but 50% to 60% expect to achievesavings in the future. Kirmeyer and Harp(2007) found that although there waslittle hard data available to determinecost savings, some utilities had seenimprovements, such as decreased breaksand leaks, as well as reduced preventativemaintenance after introducing a valveexercising program.

What can your utility do?

he results of the case studies, survey, andbenchmarking studies reinforce each otherindicating that North American utilitiesare developing AM practices and realizingbenefits. Headway has already been

References

Anderson, R., 2007. National City Water Survey 2007: The Status of Asset Management Programs in Public Water andSewer Infrastructure in America’s Major Cities. Washington, DC: The United States Conference of Mayors http://www.

usmayors.org/pressreleases/documents/watersurvey_report_0907.pdf.

Kirmeyer, G. and D. Harp. 2007. “Asset Management Practices and Needs in North American Water and WastewaterIndustries—AwwaRF Project 4002.” Presented at the American Water Works Association’s Annual Conference &Exposition (ACE). Toronto, Ontario, Canada, June 24, 2007.

Graf, W. 2010. Assessing Utility Practices with the Strategic Asset Management Gap Analysis Tool. Alexandria, VA:WERF. http://www.waterrf.org/ProjectsReports/ReportLibrary/4013.pdf.

WSAA (Water Services Association of Australia). 2009. WSAA Report Card 2008-2009: Performance of the AustralianUrban Water Industry and Projections for the Future. http://www.wsaa.asn.au/Publications/Documents/WSAA ReportCard 2008-09.pdf.

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made with implementing AM programs,inventorying pipes, and assessing pipe

condition. he 2008 WSAA benchmarking,2008 SAM GAP benchmarking, and thecase studies point out the same areas forimprovement. Utilities should continueto develop and formalize their AMprograms. Improvements in accountingand costing, such as asset valuation, anddata, such as asset performance, providesupporting information to enable life cyclecosting or optimized decision making forstrategic planning. Utility managers shouldunderstand and apply the concepts of risk

management to their business decisions.Maintenance of distribution system assetscould be improved, from reactive or run-

to-failure approaches to ones that maybe capable of cost-effectively extending

life. Activities that bridge or integratedepartments should be encouragedbecause it will help utility staff to make

AM decisions.

If you are not sure of your utility’s level ofpractice or where to focus improvements,

you can self-assess your utility with the SAMGAP tool. It can be accessed at any timefrom the Foundation Website. A customizedassessment report will be produced andhighlight areas for improvement.

Editor’s note:

See the article on the

next page for more

about the SAM GAP

report and how to

access the tool.

The Water Research Foundation, in collaborationwith the Water Environment Research Foundation(WERF), has expanded the Web-based knowledgemanagement system originally built forwastewater utilities (called SIMPLE: SustainableInfrastructure Management Program Learning Environment ) to include information for drinkingwater utilities. The updated Website is calledSIMPLE version 1.1. This work was performedthrough Foundation project/order #4013.

SIMPLE version 1.1 is designed to (1) providea comprehensive understanding of assetmanagement at strategic and operational levels,(2) promote information exchange amongasset management practitioners, and (3) helpimplement asset management programs atwater and wastewater utilities. It is an assetmanagement guidance manual with a chatroom, a question and answer section, and someinteractive tools/downloadable worksheets.Three tools were added in 2008–2009: theStrategic Asset Management Gap Analysis Tool

(SAM GAP), Benefit Cost Analysis Tool (BCA),and Risk Management Tool. SAM GAP is anonline questionnaire and benchmarking tool thatwill help users identify areas for improvement intheir asset management programs. The BenefitCost Analysis Tool and the Risk Management Tooare Microsoft Excel worksheets and guidanceinformation for engineers and asset managers.WERF is adding additional tools.

SIMPLE: Sustainable Infrastructure ManagementProgram Learning Environment

How to Access SIMPLE

The SIMPLE Website is hosted by WERFand is available to Foundation subscribers.To access SIMPLE, log in to the FoundationWebsite at www.WaterRF.org, search forproject #4013, click on “SIMPLE Website”under Subscriber Report Options, thenscroll down and click on “Go to theSIMPLE Website.”

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CASE STUDIES AND VALUE OF RESEARCH

Understanding Utility Performance in Asset Management:the Strategic Asset Management Gap Analysis Tool

Jeff Leighton, Portland Water Bureau

The Strategic Asset Management Gap Analysis (SAM GAP) tool (order/project #4013), accessible through theSIMPLE: Sustainable Infrastructure Management Program Learning Environment Website can be used to assessthe technical maturity of a utility’s performance on asset management.

SAM GAP asks for responses to about 150 questions. The premise behind the tool is that the scores of level and extentof practice to these questions reasonably define the utility’s overall progression in asset management. Scores are on a 0to 5 scale, from innocence, to awareness, to low, modest, substantial, and world class practice.

The Portland Water Bureau (Bureau) first used the SAM GAP tool at the beginning of its formal asset managementprogram and later on to measure improvements. The Bureau has seen some areas where substantial improvement hasoccurred (organizational and asset management plans), but overall, the Bureau’s low practice level has improved to a

modest practice level.

The benchmarking is organized into seven areas, and this article will highlight five; organizational issues, assetmanagement plans, information system, data and knowledge, and certain processes and practices.

The Bureau has made a dramatic improvement in its organizational approach since it started asset management. TheSAM Gap tool suggests that the organizational aspects that really matter are a steering committee of top executiveswho consider asset management issues, a single coordinator of asset management activities, and that the organizationcreate and follow a vision. The Bureau has done all those things, in part because the SAM GAP results guided theorganization.

Does the Bureau estimate the effective lives of its assets, or forecast future renewal liabilities? That is another set ofquestions from the SAM GAP tool. The Bureau has put in place an asset forecasting model that estimates future majorrepair and replacement of all of its water system assets.

To many, asset management is about helping the utility to manage risk. The SAM GAP tool defines risk management interms of whether there is a process for quantifying the likelihood and consequence of failure of asset. The Bureau hascreated a methodology for risk ranking based on a matrix using a1 to 5 scale for likelihood and consequence of failure. It has a riskservice level that defines mitigation requirements and time limitsfor compliance. For example, assets with a high risk of failurerating must be tested or inspected annually, repaired within 12months, or renewed or replaced within 5 years.

The Bureau does not possess world class practices in all areas of

asset management; for example, in its work management andmaintenance efforts. It is still a “work-in-progress” for certaindata and information system tasks, but it has an idea of where itis headed.

The SAM GAP tool is a valuable resource to help the Bureauunderstand its current performance in asset management andwhere it can make improvements.

How to Access the SAMGAP Tool and Report

Log in to the Water Research FoundationWebsite at www.WaterRF.org, search

for project #4013. Both the tool and thereport are available under SubscriberReport Options. To access the tool, go tothe SIMPLE Website and select SAM-GAP.The SAM GAP Report explains how to useSAM GAP tool and discusses benchmarkingresults from 37 utilities.

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Seattle Public Utilities—An Asset Management Partnershipwith Australia and New Zealand

Terry Martin, Seattle Public Utilities

In early 2002, Seattle Public Utilities (SPU) began to learn of the impressive asset management (AM)-related resultsachieved by many utilities located within the water and wastewater industry in Australia and New Zealand. At thattime, key SPU staff proactively sought to form a relationship with one particular utility, Hunter Water, as well as theentire Australian water industry on a broader level. This relationship has evolved over time and has consisted of threedistinct phases, all of which have served to strengthen SPU’s AM foundation.

First, SPU, with the help of a USEPA grant, was initially given approval to move Kevin Young (of Hunter Water inNewcastle, Australia) and his family, to Seattle for eight months to help launch SPU’s AM program and establish itpermanently within the utility. Kevin was a senior-level manager at the time and has since been promoted to serveas Hunter Water’s managing director. During Kevin’s tenure in Seattle from the fall of 2002 through the springof 2003, an original AM group of five individuals was assembled, several AM-related optimization efforts were

instituted, and SPU’s AM Committee (AMC) was born. Importantly, the newly created AMC mandated that allprojects in excess $250,000 undergo an early benefit/cost analysis resulting in a formalized business case. Underthis new approach, business cases were developed and presented to SPU’s executive management team from whichapproval was required for a particular project to proceed through design and eventual construction. Creating andsustaining SPU’s AMC has reaped very high long-term rewards for SPU. The business case process has resulted in thedual benefit of winnowing away many projects of low value while also increasing the value of others, which were indue course approved by leadership.

Second, as SPU’s AM program began to mature, SPU strengthened its ties with the wider Australian utility sector.This was most evident in SPU becoming the first North American utility to join the Water Services Association ofAustralia (WSAA) during the summer of 2003 and eventually participating in WSAA’s initial benchmarking efforts in2004. Participation in this process not only helped SPU gain important professional connections with many AM-savvyAustralian utilities, but also allowed SPU to learn more about specific weak points within the utility as pinpointedby the benchmarking results. SPU has gained much from participation in WSAA benchmarking and continues to beactively involved in these annual efforts.

Third, SPU began a deeper and longer term relationship with Hunter Water based on extensive, reciprocal, andongoing employee exchanges. These exchanges, which now typically occur on an annual basis, consist of each utilitynoting a particular set of employee skills in the other utility and importing those skills for 6 to 10 months at a time. Todate under this reciprocal exchange program, SPU has helped Hunter Water by supplying two individual long-termemployee exchanges (one involving an IT manager/professional and the other involving a pump station manager/ maintenance specialist). Likewise, Hunter Water has helped SPU to a great extent by providing long-term helpinvolving AM managerial support, technical assistance, and AM-based field crew deployment support. In addition tothis arrangement, Hunter Water continues to provide on-call services, which in general consist of one or more HunterWater employees visiting Seattle each year for targeted mentoring, usually in two week-long stints. This task-specific

assistance has consisted of supervisory control and data acquisition (SCADA), reliability-centered maintenance (RCM),and “stage gates” project management concept support, as well as assistance on other AM-related topics.

As SPU’s AM journey enters its ninth year, the “Australian connection” continues to be at the forefront providingvaluable technical help as well as insight regarding the ever-evolving world of AM in the water and wastewaterindustry. Continued emphasis on customer-centric outcomes, strategic AM plans, risk management, key performanceindicator (KPI) tracking, and maintenance strategy optimization are just a few examples of areas from which SPU hasbenefited greatly from this continuing AM-centric relationship.



UNDERSTANDING CUSTOMERS

Aging infrastructure, population growth,and increasingly stringent regulations arechallenging water utilities in the UnitedStates to manage their assets to maintain

service levels. Because federal and statefunding is diminishing, most of the revenuefor needed investments will come fromcustomers through increased rates and fees.

In this context, water utilities can gainfrom integrating customer preferencesinto asset management planning. Utilitieshave typically gathered information fromtheir customers through their customerservice representatives, public meetings,focus groups, and customer satisfactionsurveys. While information from thesesources is important, it is often notrepresentative of all utility customers, nor isit quantitative in nature, making it difficultto incorporate into utility decision-making.

A complementary method of obtaininginformation about customers is by usingeconomic valuation surveys, which providea means to estimate customer willingness-to-pay, the value customers place on aproposed investment.

he quantitative input gained fromadministering economic valuation surveysto customers can be used by water utilitiesto improve investment prioritization andrate setting, and to strengthen relationships

with customers. o help water utilitiesunderstand and apply this approach, the

Water Research Foundation funded a study,“Assessing Customer Preferences and Willingness to Pay: A Handbook for Water

Utilities” (project #4085) to develop tools,including economic valuation surveys, tobetter characterize customer input to utilityinvestment priorities.

Data elicited using economic valuationsurveys can help water utilities determinerequired levels of service, improveestimates of the minimum life cycle costof assets, and create a long-term fundingstrategy, all of which are key components ofsuccessful asset management programs.

Economic valuation surveys can providequantitative input on customers’ desired

levels of service. hey ask customersto make a tradeoff between a specifiedlevel of service and associated cost. heyallow a water utility to determine whethercustomers are willing to pay for aninvestment that will increase service levels.If assets are deteriorating, they allow autility to determine if customers are willingto pay for asset rehabilitation in orderto maintain current levels of service, or,alternatively, if customers prefer decreasedlevels of service and current rates. his

information gives a utility powerful justification for its management decisions.Economic valuation surveys support thedetermination of defensible levels of servicebased upon input from customers.

Economic valuation surveys can provideimportant data to determine the life cyclecost of an asset by eliciting data on externalcosts to customers. he economic life ofan asset requires a utility to quantify the

Customer Preferences and

Willingness to Pay as an AssetManagement Consideration

Jennifer Thacher, Megan Marsee, Heidi Pitts, Jason Hansen, Janie Chermak, and Bruce Thomson,University of New Mexico

adapted from

“Assessing Customer

Preferences and

Willingness to

Pay: A Handbookfor Water Utilities”

(project #4085)

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UNDERSTANDING CUSTOMERS

costs of the asset over time. hese costsinclude the utility’s internal costs to repair

or replace the asset, plus the external costsincurred by customers when the assetperforms below expected service levels.

Although internal costs, or the utility’s out-of-pocket expenses to repair or replace anasset are easy to determine, external coststo customers are harder to quantify.

An economic valuation survey wasconducted of the residential customers ofthe Albuquerque Bernalillo County WaterUtility Authority (ABCWUA) to inform

decision makers on a water pipe renewalinvestment project. Various service levels

were presented in the survey to represent water pipe renewal investments and theassociated service levels. Te survey askedfor residential customer preferences foroutage frequency, outage length of time,time for advance notification, and costs thatcustomers would be willing to pay to preventcertain scenarios. Tese costs represent aportion of the social costs that are input tothe total life cycle costs of assets.

Economic valuation surveys can alsobe used to help water utilities prioritizefunding between various asset investmentoptions. he survey can quantify customer

willingness-to-pay for changes in service

levels associated with different investmentscenarios for different service attributes.

For example, Yorkshire Water used datafrom an economic valuation survey toprioritize different investment scenarios.he survey was designed to quantify willingness-to-pay for changes in variousservice factors (i.e., security of watersupply, drinking water quality, inadequatemains pressure) and resulting improvedlevels of service associated with theinvestment scenarios affecting the servicefactors. he survey data was incorporated

into an economic optimization programthat facilitated evaluation of differentinvestment scenarios, and allowed for user-defined levels of risk, cost, and service.

he research report is written as a user-friendly handbook for water utilities on howto conduct their own economic valuationsurveys. he report provides the basic toolsfor water utilities to understand how todesign, implement, and analyze economic

valuation surveys. he customer survey

that was administered for the ABCWUAis presented as a detailed case study toillustrate the development of surveyquestions, administration of the survey,and interpretation of the survey results.



RISK MANAGEMENT

he second stage of identifying risksinvolves identifying business consequencesincluding consequences to customerservice, health and safety, the environment,regulatory compliance, and finances. Italso includes identifying the initiatingevent or the root cause such as pump

failure, power failure, or Cryptosporidium breakthrough. Since several consequencesaffecting several business objectives mayresult from a single initiating event, thetool allows risks to be evaluated in termsof each business consequence. he toolallows the magnitude of each businessconsequence to be assigned independently.he tool also allows a single chain of causesto be identified for each initiating event.he probability or frequency of individualconsequences is entered in the same way as

the probability of the initiating event. Fourcauses can be entered for each initiatingevent, plus a root cause, which is selectedfor a user-editable list.

ool for Risk Management of Water Utility Assets (2008, order #91246/project #4126)aims to help users identify risks andpotential mitigation options in a consistentmanner across all areas of the utility assetmanagement activity.

Risk is often defined as probability timesconsequence. he term risk is defined inthe publication as a measure of the degreeof exposure to the consequences that mightresult from events that might happen. Riskis defined in quantitative terms, includingcombinations of frequency and probabilityof the event occurring. he event might nothappen, and if it does, there may not beexposure to the full risks due to mitigations.he set of circumstances capable ofproducing the consequences is not certain

but probabilistic.

A risk management process upon which therisk management tool for water utilities isbased was adapted from the InternationalInfrastructure Management Manual (2002)and the AS/NZS 4360 2004Standard. It is a five-stepapproach as illustratedin figure 1, which wasincorporated into a Microsoft

Excel spreadsheet-based tool.

he first stage of establishingthe context ensures that therisk management processsupports the utility’s overallbusiness plan and identifiesthe business objectives,appropriate stakeholders,standards, and regulationsthat must be addressed.

Tool for Risk Management

of Water Utility AssetsLinda Reekie, Water Research Foundation project manager

Figure 1: Five Step Approach for Risk Management Process

Source: Tool for Risk Management of Water Utility Assets. ©2008 UK Water Industry Research Limited.Developed from the International Infrastructure Management Manual , 2002 and the AS/NZS 4360: 2004.

CONTINUED NEXT PAGE

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RISK MANAGEMENT

Te fourth stage of identifying the optionsincludes identifying and evaluating available

treatment options and establishing the onesthat are viable for implementation. Te toolallows treatment to be ranked in order offinancial benefits or overall risk reduction.Te tool allows users to choose theirpreferred options, rather than forcing thecalculated best option to be selected.

Te fifth stage of risk treatment is thefunding and implementation of thetreatment. reating a risk does not usuallyeliminate it, but rather reduces it to a

lower value residual risk. Te tool allowsidentification of residual risk from the initialrisk reduction provided by treatments.

Monitor, review, communicate, andconsult are identified as necessary for eachof the five stages and involves checkingthe treatments that have been delivered,evaluating tolerated risks, and reviewinglessons learned.

Te report, ool for Risk Management of

Water Utility Assets and the accompanyingCD-ROM that contains the tool are availableto Foundation subscribers as order #91246/project #4126. In 2009, the electronictool was integrated into the SIMPLE:Sustainable Infrastructure Management

Learning Environment (order/project #4013) Website under SAM-OOLS.

he research was funded by a group ofmembers of the Global Water ResearchCoalition (GWRC). he lead was UnitedKingdom Water Industry Research (UKWIR)and the other funders were the WaterEnvironment Research Foundation, the

Water Research Foundation, and WaterServices Association of Australia. MottMcDonald was commissioned to develop aframework and tool for risk management of

water utility assets.

he third stage of evaluating risksdetermines the size of the risk, preferably

in quantified terms. For each identified riskthere is a need to determine the magnitudeof the frequency of occurrence for theconsequences and the magnitude of theconsequences. his includes identifyingthe probability of the initiating eventoccurring, and the probability that it willlead to business consequences, as well asthe identification of the chain of causes,leading to a root cause. It will also identifyexisting controls in place to control the risk.he tool leads the user through a series of

steps to rank risks for treatment evaluationsand to identify treatments to eliminate rootcauses or to control risks.

More Risk Management Resources

A risk management framework for water quality assessment ispresented in the Foundation report, Application of HACCPfor Distribution System Protection (2006, order #91131/ project #2856). The Hazard Analysis and Critical Conrol Points

(HACCP) system helps utilities focus resources on key risksto improve emphasis on operation’s processes and controls.Twelve sequential steps are used to plan and implement aHACCP system. For each significant hazard identified, theutility identifies critical control points in the process whereconsequences of failure are irreversible. Critical limits areestablished for the critical control points, monitoring isestablished, and corrective action plans are developed.

A risk management methodology for capital maintenancein the water industry is presented in the Foundation report,

Applicability of Reliability Centered Maintenance in theWater Industry (2006, order #91138/project #2953). Reliability

centered maintenance (RCM) is a process used to determine themaintenance requirements of an asset in its current operatingcontext. It is a scientific and systematic approach to ensurethe right maintenance task is done at the right time and themaintenance dollars are applied in the most effective manner.In following the RCM process, the identification of the failureconsequences helps the utility identify the potential risk of assetfailure, which helps to prioritize maintenance requirements tomanage risk.

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Risk Management at United Utilities

Steve Whipp, United Utilities

United Utilities (UU) manages risks with a process called the Business Unit Risk Assessment or BURA, which allowsany member of staff to enter issues of concern. This forms a key part of UU’s corporate governance and ensures thatrisk is dealt with on a consistent basis. Any risk is defined as a product of the consequence and the probability ofits occurrence. UU uses an eight tier model where issues with financial, regulatory, service, operational, compliance,systems, people, political, and media relations consequences are entered onto a matrix. Each issue is then assigned aprobability rating and multiplying these provides a total score as shown in the figure below. All risks are maintained onUU’s Risks and Issues database (RAID).

Any risks that fall on the light blue area of the chart are required to be actively managed by an assigned owner of therisk and are formally reviewed on a monthly basis. Management of risks entails considering mitigating actions, whichare represented on RAID as actions to be monitored. Top risks are upwardly reported with the most serious risks beingconsidered in the monthly board meetings. The effectiveness of mitigation is closely monitored.

Risk assessment and quarterly scenario planning are undertaken looking at a five year horizon. New risks are added tothe RAID with the help of a BURA manager. UU has found that the BURA manager is essential to ensuring a consistentapproach and that any risk is neither under or overstated. UU also uses a standard form to provide a discipline indefining and explaining any risk. The BURA process is used for internal business governance and control and can alsobe used for external communication with regulators and with insurers.

Consequence ofoccurrence

Risk

Severe8 8 16 24 32

7 7 14 21 28

High

6 6 12 18 24

5 5 10 15 20

Medium4 4 8 12 16

3 3 6 9 12

Low2 2 4 6 8

1 1 2 3 4

1 2 3 4

Remote Unlikely LikelyVeryLikely

Probability of occurrence



FAILURE COSTS

Research to develop and improve toolsand technologies to predict the likelihoodof failure has focused on conditionassessment work, such as non-destructiveelectromagnetic inspection, whichproduces useful data to help manage thelikelihood part of the equation. Comparedto likelihood, the consequences part ofthe risk equation seems underrepresentedin pipeline risk management discussions.However, if the potential consequences of afailure are high, this also creates a high riskpipeline that would be the better focus ofactions and expenditures when compared

with other, similar pipelines in terms of size

age, or operating conditions. his can alsohelp identify possible high value mitigationactivities the utility could take to reduce risk(for instance, finding and exercising valvesnear high risk pipelines).

A new Foundation project #4332, which started in 2010, will explore the“Integration of Cost of Failure with Asset

Risk Management.” his project willdevelop additional knowledge about cost-based risk of failure and consequence issues

and provide software tools to improveintegration of the risk factors. his research

will build off other work the Foundationhas funded, such as the preparation oftools and techniques to help track costsassociated with failures (Cromwell et al.2002), will explore means to incorporateunderstanding of possible increased publichealth risk that results from pipe breaks

In North America, pipe breaks are the mostcommonly used factor in determining

when renewal of a pipeline is needed. Piperenewal is a broad term meaning any

intervention to improve the condition of apipeline, including repairs, rehabilitation, orreplacement. In a Foundation study, breakhistory was cited by 75% of respondentsas a criterion used in this determination,

which was nearly twice as much as the nextmost commonly-cited criterion of pipe age(Kirmeyer et al. 1994). Understandably, thereis focus on preventing breaks, especiallyfor large diameter and critical pipelines,because of the potential property damage

and disruptions to water system operations.For large diameter and critical pipelines,the prevention of breaks is even moreimportant, since large diameter failures canbe disruptive to water system operations as

well as to areas near the failure.

Introducing additional risk factors, suchas break location, pipe size, and materials,enables utilities to base renewal decisions oncost-based estimates of risk of failure. Riskshould take into account multiple factors, and

the commonly accepted equation for it is:Risk = Likelihood x Consequences

Given this equation, we can influence riskby changing the “likelihood” of failure orby changing the “consequences” of failure.By renewing a pipe on a timely basis, wemay reduce both the likelihood andconsequences, thus reducing overall risk tocustomers and the utility.

Integration of Failure Costs and Risk

Management Concepts into PipeRenewal DecisionsFrank Blaha, Water Research Foundation senior project manager andNeil Grigg, Colorado State University

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