Celine Hyer, co-author of the ASCE Infrastructure Report Card, discusses AAM's potential for raising water and wastewater's grades.
Traditional limitation:
Focused on physical infrastructure
Advanced enabler:
Focused on total assets, including people
Focused on physical infrastructure
Focused on total assets, including people
Traditional approaches focus on the pipes, plants and equipment. This narrow view leaves opportunities to maximize resources or create cost savings unexplored.
Advanced asset management prioritizes investments beyond treatment and conveyance infrastructure, to include people, skills and safety. The expanded view leads to a better understanding of how to apply strengths to prioritized risks before infrastructure fails instead of after.
Historical data, departmental silos and industry standard
Traditional approaches fail to capture and share data effectively. Or, they rely too heavily on historical data and industry standards. Disparate datasets on utility assets are housed across multiple platforms and databases. And for most utilities, the differing standards that departments apply to asset identification, valuation and lifecycle planning make collaboration difficult.
Advanced asset management emphasizes openness and integration, bringing together data from multiple sources to optimize asset operations, maintenance and investment decisions. Real-time data streams paired with advanced analytics can detect deviations that suggest deteriorating performance or condition, run what-if scenarios, and recommend the ideal time to repair or replace an asset.
Real-time data collection, analysis and learning
CAPEX prioritization
Many utilities rely on asset rehabilitation and replacement decisions made in the context of multi-year capital planning initiatives that prioritize upfront capital expenditure (CAPEX) considerations.
But ignoring the operational expenditure (OPEX) costs associated with operating and maintaining an asset over its full lifecycle means overlooking as much as 75-85% of expenses for large-scale assets. Advanced asset management balances CAPEX and OPEX to optimize total expenditure (TOTEX).
TOTEX optimization
Rethinking CAPEX prioritization: 4 reasons for change
Average age of U.S. water pipe infrastructure by region
U.S. water and wastewater infrastructure is deteriorating faster than utilities can rehabilitate or replace it. The estimated average age of U.S. water pipes is 45 years, and their advanced age might play a role in the 27% rise in North American water main breaks between 2012 and 2018.
1. Assets don't get better with age
Maintenance costs reached an all-time high of $50.2 billion above capital in 2017. Utilities are increasingly forced to operate in a more reactive mode, exacerbating affordability challenges.
2. Maintenance costs are at an all-time high
Investments in physical infrastructure renewal and replacement often take a replace-in-kind approach to sizing and capacity needs while population, wet weather intensity and water usage trends continue to shift. Conservation efforts mean indoor water consumption is forecasted to decrease from recent highs of 80 to 120 gallons per capita per day (GPCD) to less than 40 GCPD.
3. Usage-based revenue models are unsustainable
Environmental shocks (e.g., droughts, wildfires, extreme weather events) strain utilities’ assets and make it more difficult to deliver on Level of Service commitments. The 2010s saw an average of 12 billion-dollar disasters each year, up from only 3 per year in the 1980s. Ongoing stressors like aging assets only increase the strain of each shock.
4. The sharp rise in costly resilience shocks
How advanced asset management drives down costs
Advanced asset management combines CAPEX and OPEX and considers the total expenditure – the TOTEX – to optimize costs and maximize the value of an asset over its full operating life.
TOTEX optimization requires a shift in maintenance philosophy from reactive or preventive maintenance modes to predictive or prescriptive approaches that prioritize real-time asset condition.
Operations and maintenance costs, 1956-2016
Source: U.S. Congressional Budget Office
Source: American Water Works Association, Bluefield Research
Source: American Water Works Association
U.S. population rising, water consumption dropping
Hindsight
Insight
Foresight
Decision making power
Descriptive
What has happened historically?
Diagnostic
Why did it happen?
Predictive
What will happen next?
Prescriptive
What should we do?
Digital asset investment planning and risk analysis tools have allowed utilities to reduce annual CAPEX by as much as 20%. Using a median estimate of 11.3% in CAPEX avoidance, these platforms could help utilities to save a total of $27.5 billion in CAPEX between 2019 and 2030.
Early adopters of advanced asset management practices have seen savings of as much as 30% of annual maintenance, chemicals and labor costs, and as much as 50% of annual energy and contract services costs. Using these figures, advanced asset management could save U.S. utilities a total of $34.9 billion from by 2030.
Total potential savings by 2030 = $62.4B
Source: Bluefield Research
Advanced asset management CAPEX savings forecast, 2019-2030
Source: Arcadis Gen
One of advanced asset management’s greatest strengths is a total asset focus. This helps utilities like The Metropolitan District in Hartford, CT, (MDC) evolve alongside transforming goals.
In the early 2000s, MDC’s policies prioritized replacing mains by age. With parts of the system dating back to the Civil War, the assumption was that those areas needed it most. But that wasn’t the case. “Some of the oldest pipes weren’t the worst performing or highest priority for replacement,” said Project Manager and Team Leader David Banker.
The organization partnered with Arcadis to identify a flexible, simplified tool to compile records to create asset lifespan curve projections to support replacement priorities. These abilities made it easier for executive staff to present portfolios of projects to the board and helped the teams in the trenches understand how day-to-day work fit into higher-level strategies.
With improved resource allocation, the utility raised its water main replacement program’s annual replacement target from 2 miles to 10 miles of pipe.
Maximizing resources to meet transforming goals
The Metropolitan District, Hartford, Connecticut (MDC)
DO recognize the value of your organizations human assets and capital, and involve them in asset management and investment decisions.
DO prioritize and optimize full lifecycle TOTEX costs (i.e., CAPEX + OPEX) when making asset management and investment decisions.
DO incorporate real-time asset condition and performance data into maintenance programs, and leverage predictive analytics tools (e.g. AI, ML) to inform decisions.
DO supplement your organization’s workforce with trained data scientists and analysts to help you unlock the potential of advanced, digitally enabled asset management.
DON’T base your organization’s asset management and investment on physical linear and vertical assets alone.
DON’T make asset management and investment decision on the basis of upfront CAPEX costs alone.
DON’T wait for failures, or rely on industry standard assumptions or asset age alone, to determine which assets to prioritize for maintenance or replacement.
DON’T rely on traditional utility skillsets alone to confront the challenges of 21st century water and wastewater infrastructure operations and asset management.
The advanced asset management journey
Source: Arcadis, Bluefield Research
Billion-dollar U.S. weather disasters and cumulative costs
Source: National Centers for Environmental Information, Bluefield Research
35%
32%
17%
17%
6%
22%
34%
38%
16%
20%
32%
32%
5%
17%
35%
43%
Northeast
South
Midwest
West
US $50 billion
0
20
40
60
80
1956
1960
1970
1980
1990
2000
2010
2016
Public Spending, (US$ billions)
Operations and maintenance
Capital
0
1
2
3
4
5
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Vertical assets
Linear assets
US$ Billions
Advanced asset management CAPEX savings forecast, 2019-2030
MDC Project Manager and Team Leader
David Banker
"As long as we can continue to identify valuable data, I don’t think there’s a downside to trying something new.”
Do's
Dont's
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
0
50
100
150
200
250
300
350
U.S. Population (millions)
10
20
30
40
50
Public Water Supply Volume, BGD
1980
1990
2000
2010
2020
2,500
2,000
1,500
1,000
500
0
Cost US$, Billions
Number of events
Severe storm
Tropical cyclone
Flooding
Drought
Wildfire
Winter storm
Freeze
All causes
Cumulative reported cost
Water Conveyance Lead, North America
Celine Hyer
“Make sure you think about change management as part of your overall implementation or transformation so that you can set yourself up for success.”
35%
32%
17%
17%
6%
22%
34%
38%
16%
20%
32%
32%
5%
17%
35%
43%
Northeast
South
Midwest
West
<30 years
31 - 60 years
61 - 100 years
>100 years
Average age of U.S. water pipe infrastructure by region
US $50 billion
0
20
40
60
80
1956
1960
1970
1980
1990
2000
2010
2016
Public Spending, (US$ billions)
Operations and maintenance
Capital
1950
1960
1970
1980
1990
2000
2010
2015
0
50
100
150
200
250
300
350
U.S. Population (millions)
10
20
30
40
50
Public Water Supply Volume, BGD
Billion-dollar disasters are on the rise
Source: National Centers for Environment Information, Bluefield Research
MDC Project Manager and Team Leader
David Banker
“As long as we can continue to identify valuable data, I don’t think there’s a downside to trying something new.”
Water Conveyance Lead, North America
Celine Hyer
“Make sure you think about change management as part of your overall implementation or transformation so that you can set yourself up for success.”
<30 years
31 - 60 years
61 - 100 years
>100 years