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End of Asset Life Reinvestment Decision Support Tool (INFR2R11AT)
Citation:
Rose, D., S. Iyer, AND J. North. End of Asset Life Reinvestment Decision Support Tool (INFR2R11AT). Water Environment Research Foundation, Alexandria, VA, 2016.
Impact/Purpose:
Impact/Purpose: Reinvestment in America’s deteriorating legacy infrastructure poses substantial financial challenges to most utilities across the country. Potable water and wastewater infrastructure systems constitute a substantial investment for most communities. This Tool poses a logic flow diagram that guides the reinvestment decision process. The decision flow diagram around which the Tool is organized depicts the interaction of the three end-of-life determinants in determining the effective life of the asset. This Tool then, assists the asset manager to: •Distinguish among and determine for an asset, the end of: •Service Level/capacity life •Physical life •Economic life; •Distinguish between the “how many failures, when?” and the “which will fail, when?” questions of capital investment; •Determine “management strategy groups” within asset classes; •Set up and apply “survivor analysis” to establish “tolerable risk zones” for management strategy groups; •Determine the “risk cost” of an asset; •Use Life Cycle Cost, Equivalent Annuitized Cost and/or Marginal Long-Term Cost techniques to identify when to transition from maintenance strategies to capital strategies; and •Apply the above to effective investment decision making. This Tool is an advanced Tool. It is important to note that the decision flow diagram (and consequently, the Tool itself) presumes that a functioning asset management program already exists within the utility (that is, that fundamental asset management business processes such as condition/performance assessment, risk assessment and scoring, and the generation of routine asset management plans and strategies are institutionalized.
Description:
This “End of Asset Life” Reinvestment Decision-Support Tool is intended as a step by step guide for the asset management practitioner who faces the challenge of developing an investment strategy that represents the best integration of maintenance, operations, and capital investment. The goal of this integration is to deliver sustained system performance at an acceptable level of service, at the lowest total cost of ownership, and at a level of risk the community is willing to afford.The Tool is composed of two major elements – a “navigation bar” on the left of the screen and a “content” section on the right. Left clicking with the mouse on a navigation element activates content relevant to that element.The decision process of when to reinvest in the capital base, that is, when the end of effective asset life has been reached, is broken down into eighteen tasks in this Tool. These tasks are summarized into four “Steps” on the “navigation bar”; the tasks associated with a given Step are highlighted in green in the process diagram on the right. Each of the eighteen tasks is depicted in procedural order in the work process (logic) diagram. This process diagram is the same used in USEPA’s Fundamentals of Asset Management Training class material (see “Additional Links and Reference Materials” for more information). Decision points are shown as diamonds and action tasks are depicted as boxes (see graphic below). Each box is numbered for ease of reference. As further assistance to the practitioner, a documented application where the Tool was applied on a limited basis to an existing large utility is available for review by left clicking the Case Study Application element on the navigation bar.Unfortunately, no tool can reduce such a complex decision to a simple, mindless mechanic. The Tool can facilitate a proper and rigorous decision process, but each analysis will require careful and systematic application - and the application of good common sense at every step. [NOTE: The decision support tool and the two case study reports are distributed in one Zip File. Directions: (1) go to www.werf.org; (see url link below) (2) click the “sign in” link; (3) sign in/register; (4) return to www.werf.org; (5) click the “Knowledge Areas” tab; (6) click “Search our research”; (7) in the “project number” box, enter INFR2R11; (8) Click “Submit” (9) Enter ordering data; (10) A zip file will be made available for downloading.]
