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Money Matters -- Moving a Mountain with Comprehensive Asset Management Planning (PDF)

  • Author(s): Baird, Gregory M.
  • Publications: Journal - American Water Works Association
  • Issue Date: November 2011
  • Volume / Number: 103, Number 11
  • Page(s): 24-27
  • DOI:
  • Product Number: JAW_0074807
Full Text: pdf

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Infrastructure asset management should be focused on managing assets in such a way that the investment for each asset can be optimized, thereby producing a reduction in capital budgets and operating expenditures, an efficient and cost-effective maintenance program based on risk, and an overall reduction in the cost of capital. Many utilities are following a path that only shifts the mountain of replacement costs out into the future, which may not offer any real savings but only a chance to buy time during an economic downturn or rate implementation process. This issue evolves, in part, when engineering drives the capital agenda and the needs of operations and maintenance are overlooked. This article discusses how a comprehensive asset management approach with applied best practices will not only shift the mountain to an accurate location (timing), but will also work toward reducing segments of the mountains' capital investment and operating and maintenance expenditures. This process, combined with a sustainable financial plan that includes a financial market and credit agency strategy, can also help reduce the cost of capital (borrowing) with improved financial metrics, or increase the utility's ranking in receiving low-interest state revolving funds that may require asset management plans (AMPs).

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