For those of you not familiar with asset management (or maybe think it refers to allocating investments among stocks, bonds and cash 🙂 ), here’s the sort of “nerdy” definition we practitioners use:
Asset Management is an integrated set of processes to minimize the lifecycle costs of owning, operating and maintaining assets, at an acceptable level of risk, while continuously delivering established levels of service.
At CH2M HILL we know that utilities are concerned about the state of their infrastructure—we hear this from our clients every day—and these concerns are driving a need for greater use of asset management practices. We hear this not only from utility clients, but also from airports, ports, private sector manufacturing clients, and cities and counties.
As a global leader in the delivery of asset management consulting services, CH2M HILL is committed to advancing industry understanding of asset management and awareness of the benefits of adopting asset management practices. Towards that aim, on Thursday, January 17, at the U.S. Conference of Mayors, McGraw-Hill Construction in partnership with CH2M HILL rolled out early results to our research study, “Water Infrastructure Asset Management: Adopting Best Practices to Enable Better Investments.” The study was completed in conjunction with five industry associations who reviewed the survey and distributed it to their members: American Public Works Association, American Water Works Association, National Association of Clean Water Agencies, National Association of Water Companies and Water Environment Federation. The study included 451 respondents from the U.S. and Canada, from utilities ranging from those serving a minimum population of 3,300 to a population of over 500,000.
The study indicates that 75 percent of water utilities that currently practice asset management had considered aging infrastructure to be an important factor in their decision to adopt the asset management approach. 42 percent reported that they began asset management practices because of the need to increase the reliability of their infrastructure systems.
Scott Haskins, CH2M HILL Director, Management and Strategic Consulting, underscored why these are important drivers for asset management during the conference, saying, “Adoption of asset management practices by utilities throughout the U.S. and other countries is saving ratepayers money, improving system reliability and reducing risk, and helping utilities increase service levels. These practices can be adopted by other infrastructure intensive organizations, such as transit departments, roads, and facility departments, as well as ports and airports.”
Harvey Bernstein, Vice President of Industry Insights and Alliances with McGraw-Hill Construction, said, “The study also shows that once utilities adopt asset management practices, they more greatly value its ability to allow them to understand and better conduct business; 80 percent consider the fact that asset management allows them to better explain and defend their budgets and investment decisions to governing bodies, a valuable benefit of adopting the program. In addition, 67 percent report that asset management allows them to have a better focus on their priorities. Both of these benefits can be attributed to the greater focus on data, risk assessment and lifecycle evaluation associated with asset management decision making.”
One surprising finding of the study is that water utilities using a high level of asset management practices trend toward higher levels of planned rate increases by 2017. The survey also assessed the adoption and evaluation of 14 leading asset management practices, with implementation of technology and data practices as well as strategy and performance measurement ranking high in effectiveness. You can download additional key findings from the 2013 Water Infrastructure Asset Management Study for free on the McGraw-Hill Construction site. The full report will be issued in March.
Nick Pealy is Senior Consultant in the Asset Management and Reliability Services Group in the CH2M HILL Operations & Maintenance Business Group. 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.