Optimal Scheduling of Water and Wastewater Main Replacement Based on Whole Life Cycle Costing
Globally, aging water and wastewater infrastructure is rapidly deteriorating and sometimes failing, with potentially dire human, environmental and financial consequences. As this aging process continues, utilities are faced with excessive costs they can no longer afford. InfoMaster LCCA (Life-Cycle Cost Analysis) can play a crucial and growing role in this challenge. It is designed specifically to help water and wastewater utilities effectively manage their critical assets while maintaining the desired level of service at the lowest life cycle cost. By seeking the lowest life cycle cost and reinvesting the savings, utilities are able to generate a new revenue stream to help close the infrastructure gap and place their assets on the road to efficiency and sustainability. InfoMaster LCCA has the capacity to transform how infrastructure is conceived, designed and delivered to enable a sustainable future and continue to promote economic development and quality of life.
InfoMaster LCCA arms water and wastewater utilities with sophisticated predictive analytics and modeling capabilities that help them accurately assess the aging processes of their pipes and estimate their remaining economic lifetimes and failure and severity potential and distribution over time. The end of the economic life for an existing pipe is defined as the point in time when the present value of the future total ownership costs is no longer the lowest life cycle cost alternative (i.e., when it is cheaper to buy a new pipe). At that time, the pipe is replaced. InfoMaster LCCA predicts pipe deterioration and failures in the network, determines the optimal replacement date for each pipe, replaces any selected pipe assets, then moves to the next year and repeats the process on the updated pipe asset set. This enables users to ensure the smartest distribution of dollars spent on replacement and repair of their assets. It also helps them create reliable, cost-effective, risk-based capital improvement plans that enhance operational efficiency and quality of service and keep assets performing at peak condition while making the most of limited budgets. Both net present value and equivalent uniform annual cost (EUAC) calculations can be considered. The former approach is useful for assessing investment benefits over the planning period while the latter translates the required total investment into a year-by-year annual cost basis for ease of budgeting.
InfoMaster LCCA lets utilities carry out a wide range of risk-based economic life-cycle cost analysis, accurately estimating the lifetime performance of each individual pipe in their water and wastewater networks, including their expected failures, repairs and eventual replacement, and the associated costs of optimizing the management of those high-risk assets. This knowledge will help them to preserve structural, hydraulic and water quality integrity and ensure that their networks operate well into the future at maximum cost savings.
InfoMaster LCCA can also be applied in the life cycle analysis of other critical infrastructure systems.
Strategic Asset Management
Managing water and wastewater pipes to the lowest life-cycle cost and accounting for failure risk (i.e., the product of failure likelihood and failure consequence) is the best basis for creating an optimal replacement strategy. .
The cost of owning an aging asset (pipe) warrants its replacement when it exceeds the new asset’s (pipe’s) ownership cost. This serves as the basis for InfoMaster LCCA strategic asset management.
Strategic asset management is aimed at maintaining the desired level of service at the lowest life cycle cost — the best appropriate cost for rehabilitating, repairing or replacing an asset. The goal is to find the point in the asset’s life cycle or economic life where the cost of replacement is balanced against the expected cost (or consequences) of failure, the accelerating cost to maintain it, and the declining level of service. To find this point, a utility must know which pipes are most critical to sustain desired system performance and service level and gauge their remaining useful life. Critical pipes are those that have a high failure risk and major consequences if they fail. Consequence of failure can depend on a number of pipe attributes, including depth, number of connected customers and proximity to critical facilities (rivers, wetlands, hospitals, schools, manufacturing, high density housing, airports, military facilities, etc.). The remaining useful life of these pipes is estimated using probabilistic pipe deterioration condition curves (options include the non-homogeneous Markov Chain, non-homogeneous Poisson process, Linear Extended Yule Process, Cox proportional hazards model, or the time-based probabilistic Weibull and Herz models). This helps utilities make risk-based decisions by choosing the right mains for replacement, at the right time, for the right reason. This process will help them reduce pipeline failures and their adverse effects, minimize life-cycle costs and give their stakeholders the assurance of long-term system sustainability and security.
InfoMaster LCCA equips utilities with a comprehensive set of decision making tools designed to help them effectively manage their critical physical assets while maintaining the desired level of service at the lowest life cycle cost. The optimum period for main replacement is determined by minimizing the present value of the total cost of ownership.
Whole Life-Cycle Costing
InfoMaster LCCA balances capital (replacement) expenditure against marginal cost to minimize the overall cost of asset ownership. Marginal cost can be expressed as the present value of the expected risk cost (or consequences) of pipe failure, the accelerating cost to maintain it (maintenance cost) and declining level of service (operational cost). These costs can also include internal resources and overheads; leakage, additional pumping, and traffic and disruption costs; and costs related to sustainability, resiliency, greenhouse gas emissions, and health and safety. At the same time, the discounted (or present value) replacement cost declines as pipe renewal is deferred. The total ownership cost, or expected life-cycle cost, typically forms a convex shape, where the minimum point (i.e., when the gradient is zero) depicts the optimal time of replacement. This optimal replacement time defines the end of the pipeâ€™s economic life.
InfoMaster LCCA enables a water or wastewater system to maintain the desired level of service in the most cost-effective manner. In particular, it lets utilities determine the optimal time to replace each pipe in their water and wastewater networks based on analytical cost-effective risk-based economic life-cycle cost management strategies, strengthen their infrastructure assets in a phased manner, and place these assets on the road to sustainability. It provides a perfect bridge to more proactive, efficient operations with readily apparent, defensible cost-benefit results. It allows utilities to proactively rehabilitate or replace their pipes on a continual basis rather than wait to repair failing or damaged ones when it is considerably more expensive and disruptive to system operations. It also helps them reduce the gap between available funding and current need for reinvestment.
A critical part of any asset management plan is presenting and selling it to administrators, elected officials, rate payers, and other key stakeholders. Implementing such recommendations is expensive, and approvers demand supporting documentation and options. With InfoMaster LCCA, utilities are well-positioned to maintain their financial sustainability and receive the support they need to keep their water and wastewater systems operating properly and cost effectively well into the future.
Core Elements of InfoMaster LCCA
InfoMaster LCCA combines the following key elements of a sound Asset Management Plan:
- Asset Inventory and Condition Assessment
- Level of Service
- Critical Assets (Pipes)
- Life Cycle Costing
- Long-term Funding Strategy
InfoMaster LCCA allows water and wastewater utilities to examine comparative projected life cycle costs for competing capital, O&M and risk reduction project solutions and allows for appropriate comparison and ranking of alternative capital values and lengths of time based on the amount of capital available. It helps utilities minimize the total cost of ownership of their water and wastewater infrastructures to their customers based on a desired level of sustained performance, and determine the cash flow requirements for projects.
Discover some of the many benefits of InfoMaster LCCA:
- Ensure the long-term sustainability of the utility
- Assess pipe condition and criticality
- Prolong asset life and improve decisions about asset rehabilitation, repair and replacement
- Promote system reliability, resiliency and sustainability
- Consistently meet customer demands
- Maintain desired level of service
- Set realistic rates based on sound operational and financial planning
- Create budget focused on activities critical to sustained performance
- Meet service expectations and regulatory requirements
- Reduce energy needs and costs
- Enhance system security and safety
- Acelerate response to emergencies
- Reduce overall costs for both operations and capital expenditures