Asset Management
America’s Water Infrastructure Act
Asset management will help you manage, invest in and plan for your water system’s needs over time. It will also promote innovation, efficiency and foresight for your water system, as well as help you identify critical system assets and implement sustainable infrastructure. More than anything, asset management is a framework, or mindset, for informed decision-making and planning at your utility. It is having a good reason for every dollar you spend at your water utility.
Asset management is the practice of managing infrastructure capital assets to minimize the total cost of owning and operating them, while delivering the service level customers desire. In other words, asset management is a practice that will help you understand what assets you have in your drinking water system, their location, their age, their condition, their criticality (see Asset inventory tab below) and their value.
Countless successful and sustainable waterworks across the country are implementing asset management at their utilities and reaping the financial and social benefits. Implementing and maintaining an asset management plan and updated asset inventory is something the DNR encourages and supports, which is a requirement of America's Water Infrastructure Act of 2018.
Five Core Questions for Asset Management
- What are my utility's assets and what is their current state?
- What is my utility's required sustainable level of service?
- Which assets are critical to sustained performance?
- What are my utility's best minimum life-cycle cost capital improvement plan and operations and maintenance strategies?
- What is my utility's best long-term financing strategy?
Asset management process
- Establish your asset management team (i.e. clerk, utilities director, operators, local contractor, equipment suppliers, other local decision-makers)
- Train your asset management team - see Training and resources tab below
- Decide what tool or platform you want to use to create an asset inventory (i.e. Excel, Access, Google Sheets, GIS, asset management software)
- Create an inventory of your assets - Creating a Basic Water System Asset Inventory
- Prioritize your assets by determining criticality - see Asset inventory tab below
- Develop an asset management plan and budget
- Implement asset management plan
- Review and revise your asset management plan as needed - this is an ongoing process and water system best practice
Asset inventory
What kind of information is needed in a water system asset inventory?
- What assets do you manage? And where are they?
- Condition of system components
- Age of system components
- Service and O&M history
- Useful life remaining of system components
- Value of system components
For more information on what a water system inventory should include, visit:
- Creating a Basic Water System Asset Inventory
- Page 12 of EPA’s Reference Guide for Asset Management Tools
Asset criticality
Asset criticality is based on the risk of failure of an asset and the consequences of that asset’s failure. There are a number of factors that can help determine an asset’s criticality, including age, condition, failure history, O&M history or lack thereof, cost of replacement, population impacted and time to replace.
For example, an elderly home housing 100 residents that is located on a street in town that is supplied by only one, unlooped water main. This water main has had eight failures over the past decade, is badly corroded and is due for replacement. The criticality of this water main is high for multiple reasons: 1. the water main is badly corroded; 2. the main has a history of failure; 3. the main is not looped and has no redundancy to provide water; 4. the elderly home represents an at risk population.
Keep in mind the following questions when determining asset criticality:
- How old is the asset?
- What is the asset’s condition?
- What is the asset’s failure history or how is it likely to fail?
- What are the consequences of the failure (environmental, social, etc.)?
- How much would it cost to repair or replace the asset (including cost related to collateral damage such as street repairs)?
For more on criticality, visit:
Training and resources
Free online asset management workshops and training
- EPA Asset Management page - 10 free training sessions in asset management, a criticality spreadsheet tool and a criticality exercise table
- Asset Management Utility Board Training (EFC Wichita State) - free training videos, presentations and other AM resources
- AWWA Asset Management page - offers a collection of asset management resources, guidebooks and reports
- DNR-sponsored free online trainings in utility management - asset management and financial management
- Smart Management for Small Water Systems Project - seeks to address major issues facing the nation’s smallest drinking water systems; the website has free webinars, e-learning modules and technical assistance
- EFCN Asset Management Training - recording of DNR and PSC sponsored training in November 2017
- Public Service Commission - water utility financial resiliency and water loss information
- Ohio EPA - webinars, asset inventories and budgeting
Useful asset management websites and tools
- Asset Management Planning for the Future - EPA Presentation
- EFCN: The Five Core Components Asset Management
- State of MI: Asset Management Guidance for Water Systems
- New Mexico Environmental Finance Center: Introduction to Asset Management
- American Water Works Association
- Environmental Finance Center Network: Asset Management Web page
- Michigan DEQ: Asset Management PowerPoint Training
- Market Report and Portrait of Asset Management Adoption in the U.S. and Canada
- Sustainable Infrastructure Management Program Learning Environment
- Wisconsin Rural Water Association: asset management trainings
Asset management guides
Other useful EPA asset management guides and tools
SDWLP PERF Points
Safe Drinking Water Loan Program PERF Points
FAQ
What should an asset management plan consist of?
A detailed asset inventory outlining and rating the state of your water system's assets, any planned capital improvement plans or maintenance projects, a mapping component of assets (GIS map, Google Map with layers, or other updatable map) and a budget or financial plan. Your asset management plan should allow you to fully and confidently answer the five core questions for asset management.
How can asset management save my utility money?
Asset management will help you make informed decisions regarding water system maintenance and capital improvement projects, by allowing you to prioritize critical projects and assets. It will also guide your utility in determining and adjusting community water rates. Additionally, for municipal systems submitting an asset inventory as part of their Safe Drinking Water Loan Program application, can increase the amount of principal forgiveness your water system may be eligible for.
Who should be a part of my asset management team?
This will depend on the size of your water utility. In a larger utility or community, the asset management team might include water system operators, engineers, local and elected officials, accountants, IT specialists, an asset management specialist and other relevant stakeholders. In a smaller utility, it may be just one or two people who make up the team.
If I don’t have complete records of my water system’s O&M, water pipe/main age and service history, can I still create an asset inventory?
Yes. Use the data and information about your water system that is accessible, and create the best inventory with what you have. It is ok to use your best guess when compiling an asset inventory, based on the data or information you do know. For instance, maybe you are trying to assemble an inventory of water mains in your community - you might look at what was required in local contract specifications at the time of water main installation to make your best educated guess about the water main material, and then make a note in your inventory for assets that have not been visually confirmed. The key is to implement an asset management plan with the information you have available and to stick to it, regularly updating it moving forward.
Once I have created my asset management plan, have I completed asset management for my water system?
No. Asset management is a long-term, permanent business practice by which to manage, guide and improve your water system. Asset management should not be merely a side project; it should be core to all decisions made involving your water system moving forward. Your asset inventory is something that your utility should continue to build on and improve over time. If you fully implement and commit to using and updating your plan over time, you should be able to document financial savings for your water system.