Guest Column | January 21, 2014

Consultant's Corner: Asset Management: Why It Matters To The Water Industry

NickPealy

By Nick Pealy, CH2M HILL Senior Consultant, Asset Management and Reliability Services

Aging infrastructure, increased water scarcity, and stricter environmental regulations are among just a few of the challenges water utilities are facing. In a recent assessment from the American Society of Civil Engineers, U.S. infrastructure — drinking water, wastewater, solid waste, roads, bridges, and rail — earned a D+ grade, with the water sector ranking lowest. While a slight improvement over the D grade received in 2009, it’s clear that delayed maintenance and underinvestment has put the nation’s infrastructure in a holding pattern, and the water sector can no longer afford to do business as usual.

Whether or not you have prescribed to asset management as a remedy or solution to address these challenges, asset management is helping utilities and other infrastructure intensive organizations (airports, ports, private sector manufacturing clients, and cities and counties) make smarter decisions—both for investments in new assets and in the operations and maintenance of existing ones.

Water utilities have found that adopting asset management practices not only allows them to explain and defend budgets to governing bodies for capital projects, but it helps them identify and focus on the top priorities. Combined together, this means that utilities are more equipped to rule out unnecessary costs and can more easily determine which assets to invest in today and make targeted improvements to achieve an overall more sustainable solution.

In 2013, McGraw-Hill Construction in partnership with CH2M HILL conducted a research study, “Water Infrastructure Asset Management: Adopting Best Practices to Enable Better Investments.” The purpose of the study was to investigate how many U.S. and Canadian utilities, serving a population of 3,300 to more than 500,000, utilize asset management practices. With responses from 451 utilities, the study was helpful in evaluating where the water industry stands in terms of adopting an asset management approach.

In total, the survey assessed the adoption and evaluation of 14 core asset management practices, finding that these prescribed practices can save ratepayers money, improve system reliability, reduce risk, and help utilities increase service levels. However, rather than relying on a utility’s self-definition of an asset management practice, the survey listed the leading practices and asked respondents to indicate which practices they have utilized. With 43 percent of practitioners only using four to six of the 14 practices, it was clear that an opportunity exists for wider adoption of the asset management approach among water utilities.

Despite only using a few asset management practices, water utilities are seeing immediate benefits. When asked the single biggest driver of wider use of asset management by water utilities, 39 percent of respondents indicated significant needs in the industry to replace, upgrade, or expand existing infrastructure. As more utilities move towards asset management to help manage their infrastructure and facilities, greater efficiencies and cost savings will be uncovered.

Download a free copy of the Water Infrastructure Asset Management SmartMarket Report for the complete study results and analysis and learn the impact of asset management adoption on how utilities make decisions about which physical assets to invest in now and which can be put on hold.

Nick Pealy is Senior Consultant for Asset Management and Reliability at CH2M HILL. Nick joined CH2MILL in September, 2012, after spending nearly 24 years with the City of Seattle (almost exclusively in the utilities) as a director and senior utility executive responsible for finance, human resources, information technology, and operations and maintenance (which he was responsible for more than 5 years). He has extensive experience in the water, wastewater, stormwater and solid waste industries, with expertise in finance, human resources, organizational and employee development, technology, strategic planning, asset management, operations planning management, and emergency management. Nick lives in the Great Northwest, and spends most his time on Whidbey Island when he isn’t traveling.