Part 2: Life cycle costing of urban water systems

The second installment of this series discusses what the authors have developed as a life cycle methodology for assessment of urban water systems.

By S.N. Tucker, V.G. Mitchell and L.S. Burn, CSIRO Building, Construction and Engineering

Editor's note: To follow is part two of a nine-part series of articles written by Australia's Commonwealth Scientific and Industrial Research Organization (CSIRO), a research organization supporting Australia's industry needs. CSIRO Urban Water recently undertook a major research project designed to thoroughly investigate the nation's water supply. The series will address research results with implications for urban water supply on a global scale.

Contents
Cost functions are the most desirable method for providing cost information
Life cycle cost modeling
Application and future development
Australia's water supply series

Water, wastewater and stormwater infrastructure has been traditionally costed from either a capital or operating cost point of view. The calculation of the full costs of the infrastructure (excluding externalities) associated with the provision of water services over the full life cycle provides a fairer basis for the comparison of traditional and alternative approaches to water supply and disposal. Life cycle costing (LCC) involves combining the estimated capital, maintenance, operating and replacement costs over the whole life of an infrastructure facility into a single value, which takes into account expenditure occurring at different stages in the life of the infrastructure.

An extensive review has found that there is little published literature that documents the application of LCC to the total urban water cycle. Single components of infrastructure services in water supply, wastewater and stormwater services have been considered in isolation.

We have developed a life cycle methodology for assessment of urban water systems. The methodology has been applied to five classes of potable water assets: storage, transport, pumping, treatment and disposal. The life cycle costs associated with each of these classes of asset were defined in three categories: establishment, operation and replacement costs. Each category was further sub-divided into several sub-categories (e.g. capital, installation, maintenance, staff, as appropriate for the category) to enable explicit cost functions to be defined.

Cost functions are the most desirable method for providing cost information
Provision of data for LCC models is often an enormous task. Urban water system models are no exception, with a huge data load required for estimating sufficiently accurate total costs, to enable comparison of alternatives.

Cost functions are the most desirable method for providing this cost information. The establishment costs and operation and maintenance costs of the item of infrastructure are defined as mathematical functions of one or more variables relating to the physical size, nature, throughput, capacity or type of infrastructure item. Efficiency of modeling and data entry requires as few cost functions as possible.

The cost functions developed so far are as simple and generic as practically possible for the various items of the urban water system. For example, it would be very desirable to have one function for all pipes, but in practice there is a common form of formula but with different coefficients depending on pipe type. A typical cost function is shown in Figure 1 for reservoirs as a function of capacity.

Life cycle cost modeling
A methodology for determining life cycle costs of urban water, wastewater and stormwater infrastructure has been developed and implemented at the component level of these systems, as part of a Tool for Assessing Water Systems (TAWS), to determine the full costs associated with the provision of urban water services over the required assessment period.

The model has been structured to enable other characteristics such as greenhouse gas emissions, and embodied and operating energy calculations to be implemented over the whole life of infrastructure when need and resources allow. The emission of greenhouse gases, particularly CO₂, is a significant measure of the impact on the environment of the construction and operation of an urban water system over its life cycle, and attention needs to be given to the abatement of the emission of CO₂, especially from wastewater treatment plants. (Back to top)

Application and future development
Cost functions have been utilized in the planning model TAWS to allow optimization and planning cost comparisons between different scenarios for urban water system, indicating that potential savings of up to 65% may be obtained by innovation in the installation of urban potable water systems. Preliminary analysis of sewer systems has indicated that potential savings exist, especially when connecting smaller systems that currently utilize septic tanks. Further work will aim at identifying areas with the most potential for savings.

The most important action to be undertaken as soon as possible is the acquisition of an extensive database of all establishment, operating, and maintenance and replacement costs to enable the cost functions to be determined with more confidence. A structure for collecting and collating details of an urban water system will be designed and implemented. Essentially this requires water authorities to collect data in an appropriately disaggregated form, instead of the traditional accounting methods where breakdowns of costs into infrastructure items are rarely recorded.

A full LCC model includes the costs of all impacts, both directly and indirectly controllable by the water authorities, i.e. the coverage of the costs should be extended to externalities (those impacts resulting from water systems implementation that are not included in the authorities' responsibilities or budgets).

The impact of technology and system change and its effect on the level of service provided needs to be assessed. This is especially true in light of the arbitrary methods of defining customer service contracts in Australia. These impacts can best be assessed utilizing LCC concepts, but in addition, incorporating the concepts of costs associated with risk (externalities). This is necessary as water authorities become more focussed on the cost effectiveness of their systems, and allows selection of the highest quality system at the lowest cost.

Another critical area is asset management, especially in the area of pipelines. Asset management, requires consideration of a large number of factors such as condition monitoring, probability and consequence of pipe failure, the correct selection of pipe rehabilitation or replacement techniques, and the development of planning models to allow correct decisions and timing of asset replacement or rehabilitation to occur. Currently, decisions made on pipe replacement are very subjective and are based upon the number of failures that occur in the pipe rather than on economic considerations. In each of these processes, LCC plays a critical part as these decisions need to be made based on total life cycle cost implications. (Back to top)

About the authors: S.N. Tucker, V.G. Mitchell and L.S. Burn are with CSIRO Building, Construction and Engineering. For more information on CSIRO, visit their website at http://www.dbce.csiro.au. (Back)

Australia's water supply series

Part 1: An introduction to Australia's water supply
Part 2: Life Cycle Costing in Urban Water Systems
Part 3: UVQ: A Water and Contaminant Balance Model
Part 4: TAWS: Tools for Assessing Alternative Water Systems
Part 5: The Scenario Manager
Part 6: Peak Leveling in Urban Water Reticulation Systems
Part 7: Peak Load Management at Waste Water Treatment Plants
Part 8: Economic Scale of Graywater Reuse Systems
Part 9: Septic Tank Replacement
(Back to top)

This article appeared in the December 2000, Number 16, edition of Innovations, a bimonthly online magazine "showcasing new technology, products and services impacting on Australia's built environment."