AWWA Articles

New report evaluates government asset management policies

States and provinces in the U.S., Canada and Australia are increasingly regulating asset management (AM) practices in hopes of increasing water systems’ cost effectiveness and service reliability.

To demonstrate how a variety of these policies have advanced AM practices in the water sector, the Asset Management Committee (AMC) of the American Water Works Key data to inform government asset management policiesAssociation (AWWA) has released a new report, Key Data to Inform Government Asset Management Policies.

The report details the policies of governing bodies in New Hampshire, New Jersey and Michigan that encourage and regulate specific AM practices. The report also describes the AM approaches and successes in New South Wales, Australia, and Ontario, Canada.

Each scenario describes the policies implemented by the local government regulatory agency and the data they collected on AM effectiveness. The report also summarizes interviews with utilities and regional AWWA AM committee chairs about how the policies have impacted their AM practices.

“Implementing AM is a continuous process that can start with small and achievable steps that address a utility’s greatest opportunities to improve business practices,” said Kevin Campanella, Utility Planning Leader with Burgess and Niple, the contractor that produced the report. “It involves utilities changing their decision-making processes to incorporate additional data that was not traditionally considered.”

The 2019 report builds on a 2015 AWWA report, Establishing the Level of Progress in Utility Management Survey Results, which found a wide variation in utilities’ AM understanding and adoption. Afterward, the AMC developed reports, training, educational resources and an online resource page to help utilities better optimize AM practices.

There are clear benefits from proactive, data-informed and cost-effective management of infrastructure assets. “AM is to water as Moneyball is to baseball,” said Campanella (pictured right). Kevin Campanella“Those that take the greatest advantage of the growing volume of available data for decision making will be the most likely to succeed.”

He added that AM policies vary widely, “in some cases applying only to assets associated with projects that receive state revolving fund loans and in other cases where AM requirements span an entire municipality’s asset base, including water, wastewater, transportation and more.”

“In addition, some states and provinces have provided literally hundreds of millions of dollars in funding to support AM program development and the implementation of projects in AM plans, while others have provided little to no additional funding,” Campanella added.

According to the 2019 report, utilities with advanced AM programs “have documented reductions in costs… while maintaining or improving service levels and reliability.” The report includes these specific case study findings:

•    Hunter Water Corp., New South Wales, Australia, achieved a nearly 40 percent reduction in operating costs, lowered capital expenditure by $185 million (USD equivalent) and improved service levels
•    Seattle Public Utilities reported capital improvements plan (CIP) cost avoidance of about $60 million and 3-6 percent reductions in operating costs annually after four years of implementation
•    City of Columbus, Ohio, Department of Public Utilities reported a CIP cost avoidance of about $75 million 

Given that AWWA estimated that more than $1 trillion in buried asset investment would be required in the U.S. between 2012 and 2037, these kinds of savings are crucial.

“While utilities typically capture through rates a substantial amount to fund reinvestment, that level of need creates a significant burden,” said Kurt Vause (pictured right), chair of the AMC Kurt VauseCommittee. “For the past several years, the top issues concerning the water sector have included renewal and replacement for infrastructure and financing for capital improvements.”

As the report states, “Many communities will be hard-pressed to fund their portion of the $1 trillion investment need in buried infrastructure, a fact that water sector practitioners (including governing bodies) have come to refer to as the ‘funding gap’. Some governing bodies have come to realize that using AM principles and practices as the footing for making water asset related investment decisions is a cost-effective way for utilities and the communities they serve.”

The report also includes recommendations for policy makers to consider in future efforts to advance asset management practices through legislation or regulation.