AWR Asset Management

Drinking Water Research
Advancing the Science of Water
OctoberDecember 2010 volume 20, number 4 risk assessment renewal prioritization condition assessment customer willingness to pay
Asset Management
Drinking Water Research
Advancing the Science of Water
FEATURES
The Benefits From Collaborative Research
Steve Whipp, United Utilities
2
Asset Management: Different Definitions But Consistent
Objectives
Maureen Hodgins, Foundation project manager
4
Asset Management in North America
Maureen Hodgins, Foundation project manager
6
SIMPLE: Sustainable Infrastructure Management Program
Learning Environment
8
Customer Preferences and Willingness to Pay as an Asset
Management Consideration
Jennifer Thacher, Megan Marsee, Heidi Pitts, Jason Hansen,
Janie Chermak, & Bruce Thomson, University of New Mexico
11
Tool for Risk Management of Water Utility Assets
Linda Reekie, Foundation project manager
13
Integration of Failure Costs and Risk Management Concepts
into Pipe Renewal Decisions
Frank Blaha, Foundation senior project manager & Neil Grigg,
Colorado State University
16
Condition Assessment of Water Main Appurtenances
David R. Marlow & David J. Beale, CSIRO Land and Water
18
Development of a Practical Tool to Assist in Decisions on
Rehabilitation or Replacement of Cast Iron Pipes
David R. Marlow & David J. Beale, CSIRO Land and Water
22
Main Breaks
Frank Blaha & Jian Zhang, Foundation project managers
27
GASB 34Not a Significant Driver for Asset

Management at U.S. Water Utilities
Frank Blaha, Foundation senior project
manager & Peter Gaewski, Tata & Howard Inc.
29
Key Asset Data for Water Sector Utilities
Jeff Oxenford, Oxenford Consulting, LLC
33
DEPARTMENTS
Foundation Contacts
22
Case Studies and Value of Research
Understanding Utility Performance in
Asset Management: the Strategic Asset
Management Gap Analysis Tool
9
Seattle Public UtilitiesAn Asset
Management Partnership with Australia
and New Zealand
10
Risk Management at United Utilities
15
Using the Benefit-Cost Analysis Tool
21
WaterOne Applies Foundation Research
to Prioritize Pipe Replacements
23
Developing a Main Replacement
Prioritization Tool
25
Infrastructure Decision Making:
Expanding Performance Criteria
32
Drinking Water Research Statement of Ownership, Management, and Circulation

Owned by the Water Research Foundation, 6666 West Quincy Avenue, Denver, CO 80235.
Publisher: Water Research Foundation; Editor: Cheri Dougherty; Bondholders: None; Circulation: Average number of copies distributed per month for 12-month period (July 2009 June 2010) 2,566 as follows:
paid and/or requested mail subscribers 2,446; free distribution 120. This statement has been filed on PS form 3526 with the USPS on 9/23/10 and is published herein in accord with USPS regulation 39 USC 3685.
OCTOBER DECEMBER 2010 S DRINKING WATER RESEARCH
VIEWPOINT
Helping Utilities Manage Their Assets

For most water and wastewater utilities, the basic mission is to provide high-quality
service at an affordable cost; however, costs tend to rise as infrastructure ages. North
American water and wastewater utilities are funded, for the most part, by user fees in
the form of rates and charges. With rare exceptions, these rates and charges do not
recover the full, true cost of asset ownership.
As a result, drivers such as aging infrastructure, growth, shifting population patterns
and water usage, and changing regulatory requirements place increasing importance
on implementing the most cost-effective means of infrastructure and system ownership
and operations. Increasingly, the set of practices and tools applied to these problems is
characterized as asset management.
The Water Research Foundation has been conducting research on drinking water assets since we were formed over 40 years
ago. Recognizing the global nature of the issue of asset management, the Foundations research has been characterized by
collaboration and partnership. We have worked with a number of groups both nationally and internationally on this issue,
including the Water Environment Research Foundation, National Research Council of Canada, United Kingdom Water Industry
Research, Global Water Research Coalition, Water Services Association of Australia, and others.
The Foundation, seeing a need to do an updated review of asset management as it relates to drinking water infrastructure,
commissioned the Asset Management Research Needs Roadmap in 2006. To develop this Roadmap, we convened and
organized an asset management experts workshop of around 50 participants representing water and wastewater utilities,
non-governmental research organizations, international experts, professional consultants, academics, and regulators.
The workshop came up with 12 high-priority projects and 23 other ideas. The Foundation has since funded eight projects
worth $1,675,000 towards the high-priority ideas. Seven other projects relating to asset management have also been funded
in the last few years.
Much has been accomplished in researching infrastructure asset management topics, and considerable work remains to be
done. Because infrastructure asset management involves several aspects of utility operations, our research program addresses
all components of those operations, most of which are highlighted for you in this issue of Drinking Water Research.
Sincerely,
Roy L. Wolfe, PhD

Chair, Board of Trustees
Robert C. Renner, PE, DEE

Executive Director
The Water Research Foundation is a member-supported, international, nonprofit organization that sponsors research to enable water utilities, public health agencies, and other professionals
to provide safe and affordable drinking water to consumers.
Editor: editor@WaterResearchFoundation.org; Contributing editor: Adam Lang; Art director: Cheri Dougherty
Drinking Water Research (ISSN 1055-9140) is published quarterly for $40 a year in North America ($50 elsewhere) by the Water Research Foundation,
6666 W. Quincy Ave., Denver, CO 80235-3098, Telephone: +1 303.347.6100, Periodicals postage paid at Denver, Colo.
Postmaster: Send address changes to Water Research Foundation, 6666 W. Quincy Ave., Denver, CO 80235-3098
The Water Research Foundation provides contracts for studies of problems in the water supply industry. The Foundation assumes no responsibility for the content of the research studies reported or for the opinions or statements of fact expressed by contributors in this publication. The mention of tradenames or commercial products does not represent or imply the Foundations approval or endorsement. Drinking Water
Research is published for general information purposes only.
Copyright 2009 Water Research Foundation. ALL RIGHTS RESERVED. Published in the U.S.A. Printed on recycled paper.
No part of this publication may be copied, reproduced or otherwise utilized without permission.
DRINKING WATER RESEARCH S OCTOBER DECEMBER 2010
cOLLABORATION
The Benefits From Collaborative

Research
Steve Whipp, United Utilities and Chair of Infrastructure Research Advisory Committee
The Water Research Foundation (WaterRF)

has been active for the last 20 years in
looking at issues relating to infrastructure.
The USEPA (2005) estimated that $276.8
billion needs to be invested in drinking
water infrastructure improvements to
comply with drinking water regulations
and to ensure the provision of safe water.
The Foundation has responded by funding
asset management (AM) projects and
collaborating with international research
organizations to leverage funds. Research
programs have been prioritized based on
subscriber support to address the need to
ensure that we have the systems to sustain
our society. This article will touch on the
collaborations with research organizations
on asset management projects.
Over recent years there has been a general
recognition amongst the researchers
working in the water sector of the
strengths of programs being undertaken
in different countries. In the mid 2000s,
research organizations developed
research roadmaps for AM projects
(such as the WaterRF Asset Management
Research Needs Roadmap order#91216/
project#4002) and were actively seeking to
work collaboratively. For the Foundation,
there has been much to give and much
to benefit from the collaborations with
research organizations, specifically the
Water Environment Research Foundation
(WERF) and the Global Water Research
(GWRC) and its member constituents
especially WaterRF, UK Water Industry
Research (UKWIR), WERF, and Water
Services Association of Australia (WSAA).
The Foundation and WERF have

collaborated on many topics, including
asset management. In 2009, through a
competitive process, they were awarded
$10 million over four years by the U.S.
Environmental Protection Agency through
its Sustainable Water Infrastructure
Initiative to develop and test new
technologies to cost-effectively manage
aging infrastructure. As a result, the
Foundation funded four projects in the
first year, including work on direct
and indirect costs of pipe failures
(project#4332). This success was aided by
past collaborations with WERF, especially
on the Sustainable Infrastructure
Management Planning and Learning
Environment (SIMPLE) Website and the
Strategic Asset Management Gap Analysis
Tool (both part of order/project#4013).
There has truly been international
collaboration facilitated through the
GWRC. WaterRF contributed directly
to GWRCs international AM research
program with funding, technical advisors,
and taking the lead on one project. Four
AM projects were funded by GWRC on
risk management, benefit cost analyses,
AM case studies, and key asset data. One
project developed a benefit cost analysis
tool (order#91260/project#4127) to help
in prioritizing and in decision making.
Another project assembled AM case studies
from utilities around the world to provide
guidance for those just starting out (order/
project#4111). Another project developed
a risk management tool (order#91246/
project#4126). The final project, scheduled
cOLLABORATION
to be completed in 2011, will focus on

understanding the data needed to enable
asset management (project#4187). These
organizations have also partnered on a
proposal to advance condition assessment,
which is being led by WSAA.
A key area where good progress has been
made and outputs delivered lies in the
area of risk management. Risk lies at the
heart of decision making and knowing the
probability and consequence of failure
of any asset is crucial. The Foundation
has developed a strong understanding
of the causes and mechanisms of failure
of assets, especially pipes, and has been
able to provide advice. The Foundation
collaborated with international research
organizations and drew together experience
from leading researchers and practitioners
to enable a framework for decision
making (order#91246/project#4126).
The Foundation is also collaborating
with UKWIR to build a powerful WaterRF
database of pipe main failures using a
standardized data protocol (project#4195).
The collation of information from national
and international databases will quickly
enable a good understanding of pipe
failures, with higher levels of confidence

than what a single utility would be able
to achieve.
These collaborative efforts represent
about $1 million of Foundation funding
and $1.5 million from the other research
organizations. The work of WaterRF, and
its collaborative efforts, has provided key
outputs that enable U.S. water utilities to
determine their investment needs and to
build plans to ensure that investment is
targeted to where it is needed.
Reference: USEPA
(U.S. Environmental
Protection Agency).
2005. Drinking Water
Infrastructure Needs
Survey and Assessment:
Third Report to
Congress. EPA 816-R05-001. Washington,
DC: Office of Water,
Office of Ground
Water and Drinking
Water, Drinking Water
Protection Division.
http://water.epa.
gov/infrastructure/
drinkingwater/dwns/
needssurvey.cfm
Water Research Foundation Asset Management Projects

Asset Management Research Needs Roadmap (order#91216/project#4002)
Risk Management Tool (order#91246/project#4126)
Benefit Cost Analysis Tool (order#91260/project#4127)
SIMPLE: Sustainable Infrastructure Management Program Learning Environment and Strategic Asset
Management Gap Analysis Tool (order/project#4013)
Case Studies of Best Practice and Innovation in Asset Management (order/project#4111)
Key Asset Data for Water Sector Utilities (project#4187)

U.S. Beta Testing of the UKWIR National Mains Failures Database (project#4195)
Integration of Cost of Failure With Asset Risk Management (project#4332)
aSSET mANAGEMENT dEFINED
Asset Management: Different

Definitions But Consistent Objectives
Maureen Hodgins, Water Research Foundation project manager
adapted from Asset
Management
Research Needs
Roadmap
order#91216/
project#4002
During the Water Research Foundation

2006 asset management research needs
workshop, the participants discussed the
different definitions for asset management
(Kirmeyer and Harp 2007) including:
ownership: managing assets to minimize

the total costs of owning and operating
them while delivering the level of service
that customers desire.
United Utilities North West, Warrington,

UK defines it this way: Asset
Management: Managing assets effectively
to ensure serviceability to customers.
A search of some key asset management

references include the following definitions:
The American Association of State

Highway and Transportation Official
(AASHTO) definition: Transportation
Asset Management is a strategic
and systematic process of operating,
maintaining, upgrading and expanding
physical assets effectively throughout
their life cycle. It focuses on business
and engineering practices for resource
allocation and utilization, with the
objective of better decision making based
upon quality information and well defined
objectives. As approved by the AASHTO
Subcommittee on Asset Management.
Electric Power Research Institute
(EPRI) defines asset management as:
A structured, integrated series of
processes aligned with business goals and
values and designed to minimize the life
cycle costs and maximize the life cycle
benefits of infrastructure asset ownership
while providing required performance
levels and sustaining the system forward.
American Water Works Association
(AWWA) defines asset management as:
Asset Management is a systematic process
to obtain the maximum value from
physical assets. The operational definition
is stated in terms of the components
of valuesthe costs and benefits of
4
The combination of management, financial,

economic, engineering and other practices
applied to physical assets with the
objective of providing the required level of
service in the most cost-effective manner.
(INGENIUM and IPWEA 2006)
A management paradigm and a body of
management practices that is applied
to the entire portfolio of infrastructure
assets at all levels of the organization,
which seeks to minimize the total cost of
acquiring, operating, maintaining and
renewing the organizations assets within
an environment of limited resources while
continuously delivering the service levels
customers desire and regulators require at
an acceptable level of business risk to the
organization. (WERF and WaterRF 2009)
An integrated set of processes to minimize
life cycle costs of infrastructure assets,
at an acceptable level of risk, while
continuously delivering established levels
of service. (AMSA et al. 2002)
While the definitions may differ, Graham
et al. (2008) point out the consistent
objectives for asset management:
Asset management seeks to manage
costs of constructing and operating capital
facilities over their full life cycles (Hughes
2006, USGAO 2004, AMSA et al. 2002).
aSSET mANAGEMENT dEFINED
Asset management seeks a systematic,

rational, and comprehensive basis to
establish priorities among alternative
expenditures (both capital and noncapital) (USDOT 1999, AMSA et al. 2002).
Asset management addresses tradeoffs
between risk and reliability (Hughes 2006).
Asset management improves prediction
of financial needs in upcoming years
allowing improved management of
rate-setting and improved relationships
between utility managers, governing
bodies, and the public (AMSA et al. 2002).
Asset management supports integration
of desired outcomes in terms of business
goals, customer service criteria, engineering
considerations, and operational factors
(USDOT 1999, AMSA et al. 2002).
References
AMSA (Association of Metropolitan Sewerage Agencies), American Water Works Association (AWWA), Association of
Metropolitan Water Agencies (AMWA), and Water Environment Federation (WEF). 2002. Managing Public Infrastructure
Assets to Minimize Cost and Maximize Performance. Alexandria, VA: AMSA.
INGENIUM (Association of Local Government Engineering NZ Inc) and IPWEA (Institute of Public Works Engineering of
Australia) (Version 3). 2006. International Infrastructure Management Manual. Wellington, New Zealand: NAMS Group.
Graham, A., G. Kirmeyer, E. Wessels, E. Tenny, D. Harp, S. McKinney, C. Saill, B. Templin, D. Hughes, and J. Fortin,
2008. Asset Management Research Needs Roadmap, order#91216/project#4002. Denver, CO: Awwa Research
Foundation.
Hughes, D., ed. 2006. Water Infrastructure at a Turning Point: The Road to Sustainable Asset Management. Denver,
CO: AWWA.
Kirmeyer, G. and D. Harp. 2007. Asset Management Practices and Needs in North American Water and Wastewater
IndustriesAwwaRF Project 4002. Presented at the American Water Works Associations Annual Conference &
Exposition (ACE). Toronto, Ontario, Canada, June 24, 2007.
WERF (Water Environment Research Foundation) and WaterRF (Water Research Foundation). 2009. SIMPLE: Water
and Wastewater Sustainable Infrastructure Management Program Learning Environment, order/project#4013.
http://simple.werf.org/home. Accessed Oct 26, 2010.
USDOT (U.S. Department of Transportation) Federal Highway Administration (FHA) Office of Asset Management. 1999.
Asset Management Primer. Washington, D.C.: USDOT FHA OAM.
USGAO (United States General Accounting Office). 2004. Water Infrastructure: Comprehensive Asset Management Has
Potential to Help Utilities Better Identify Needs and Plan Future Investments. Report GAO-04-461. Washington, D.C: USGAO.
aSSET mANAGMENT sTATUS
Asset Management in North America

Maureen Hodgins, Water Research Foundation project manager
Are utilities using asset management (AM)

programs in North America? If so, what
are they doing, and where have they seen
room for improvement? There are four
resources that address these questions
through case studies, surveys, and
benchmarking efforts:
An extensive international process
benchmarking effort, called the
Aquamark Framework, was conducted
in 2008 by Water Services Association
of Australia (WSAA). This effort looked
at 600 measures, with the majority of
participants from Australia and New
Zealand, and a few from the United States
and Canada. (WSAA 2009)
The Strategic Asset Management Gap
Analysis Tool (SAM GAP Tool) was funded
by the Water Environment Research
Foundation (WERF) and WaterRF and
developed by GHD. This 37-utility
benchmarking effort in North America
from 2008 includes roughly 160 selfassessment questions. (Graf 2010).
Fifteen case studies were conducted
by Kirmeyer and Harp (2007) and
presented at the AWWA Annual
Conference and Exposition.
A 330-city survey was carried out by the
U.S. Conference of Mayors (Anderson 2007).
Combined, these resources reveal a clear
trend of North American utilities using
AM for drinking water pipes. Utilities have
inventoried and assessed the condition of
the drinking water pipes and plan to further
develop their AM practices.
Benchmarking Studies
or established levels of AM practice (scores

of 4055%), which is comparable to those
from the Middle East and Asia. In contrast,
Australian and New Zealand participants
had scores of 6080% and are described
as having a mature level of AM practice.
North Americas lowest performance
was in Corporate Policy and Business
Planning and Business Support Systems,
and its highest performance was in Asset
Acquisition and Asset Replacement and
Rehabilitation. (WSAA 2009)
Although Graf s (2010) report on the 37
North American utilities that used the more
abbreviated benchmarking (SAM GAP) did
not identify general level of practice or the
strengths and weaknesses of practice, it
did list six areas with the largest variability
in performance by the participants. Listed
below, these areas represent the biggest
opportunities for improvements or learning
from the higher performing participants:
1. Accounting and costing
2. Strategic asset planning and asset
management plans
3. Business risk management
4. Maintenance
5. Secondary data and knowledge
6. Organization and people
Ongoing research (WERFs project,
Benchmarking and Case Studies, SAM1R06)
will analyze these areas and determine the
leading practices. (Graf 2010)
Survey and Case Study Results
The majority of the 330 cities surveyed by

the U.S. Conference of Mayors in 2007 have
Generalized results of the 2008 WSAA
some sort of asset management program,
benchmarking study describe North
American participants as having developing but they vary in degree of implementation.
6
Only 40% have a formal program, 30%

have a partial program, and 18% lack a
program but plan on using one in the
future. Kirmeyer and Harps 15 case studies
revealed that only six utilities had a clearly
defined AM goal.
The majority of cities surveyed by the U.S.
Conferences of Mayors have an inventory
of their drinking water pipes: 72% have a
full inventory, 20% have a partial inventory,
and 7% have not done an inventory. In
addition, a majority of cities have assessed
the condition of their drinking water pipes:
46% have fully assessed condition, 46% have
a partial assessment, and 7% have not done
an assessment. The leading causes cited for
pipe deterioration were general wear and
tear (63%) and corrosion (36%).
In their 15 case studies, Kirmeyer and
Harp (2007) found that condition
assessment of water mains is usually
accomplished by inferred condition based
upon indirect measures, such as routine
inspections by operating staff, valve
exercising, hydrant flow testing, water
quality monitoring, and cathodic protection
testing, as well as main break history and
leak detection. Direct measures of
condition were not used very often.
The U.S. Conference of Mayors survey

found that water main breaks continue
to be a major concern with 45% of cities
experiencing more than 50 breaks annually;
43% of city drinking water pipe system
repair and replacement cycles exceed 50
years, 65% of city sewer pipe system repair
and replacement cycles exceed 200 years.
Cost Savings and Improvements
The U.S. Conference of Mayors survey

found that 22% to 38% of cities are already
achieving capital and operating cost savings
from implementation of asset management
programs, but 50% to 60% expect to achieve
savings in the future. Kirmeyer and Harp
(2007) found that although there was
little hard data available to determine
cost savings, some utilities had seen
improvements, such as decreased breaks
and leaks, as well as reduced preventative
maintenance after introducing a valve
exercising program.
What can your utility do?
The results of the case studies, survey, and

benchmarking studies reinforce each other
indicating that North American utilities
are developing AM practices and realizing
benefits. Headway has already been
References
Anderson, R., 2007. National City Water Survey 2007: The Status of Asset Management Programs in Public Water and
Sewer Infrastructure in Americas Major Cities. Washington, DC: The United States Conference of Mayors http://www.
usmayors.org/pressreleases/documents/watersurvey_report_0907.pdf.
Kirmeyer, G. and D. Harp. 2007. Asset Management Practices and Needs in North American Water and Wastewater
IndustriesAwwaRF Project 4002. Presented at the American Water Works Associations Annual Conference &
Exposition (ACE). Toronto, Ontario, Canada, June 24, 2007.
Graf, W. 2010. Assessing Utility Practices with the Strategic Asset Management Gap Analysis Tool. Alexandria, VA:
WERF. http://www.waterrf.org/ProjectsReports/ReportLibrary/4013.pdf.
WSAA (Water Services Association of Australia). 2009. WSAA Report Card 2008-2009: Performance of the Australian
Urban Water Industry and Projections for the Future. http://www.wsaa.asn.au/Publications/Documents/WSAA Report
Card 2008-09.pdf.
Editors note:
See the article on the
next page for more
about the SAM GAP
report and how to
access the tool.
made with implementing AM programs,

inventorying pipes, and assessing pipe
condition. The 2008 WSAA benchmarking,
2008 SAM GAP benchmarking, and the
case studies point out the same areas for
improvement. Utilities should continue
to develop and formalize their AM
programs. Improvements in accounting
and costing, such as asset valuation, and
data, such as asset performance, provide
supporting information to enable life cycle
costing or optimized decision making for
strategic planning. Utility managers should
understand and apply the concepts of risk
management to their business decisions.
Maintenance of distribution system assets
could be improved, from reactive or run-
to-failure approaches to ones that may

be capable of cost-effectively extending
life. Activities that bridge or integrate
departments should be encouraged
because it will help utility staff to make
AM decisions.
If you are not sure of your utilitys level of
practice or where to focus improvements,
you can self-assess your utility with the SAM
GAP tool. It can be accessed at any time
from the Foundation Website. A customized
assessment report will be produced and
highlight areas for improvement.
SIMPLE: Sustainable Infrastructure Management

Program Learning Environment
The Water Research Foundation, in collaboration
with the Water Environment Research Foundation
(WERF), has expanded the Web-based knowledge
management system originally built for
wastewater utilities (called SIMPLE: Sustainable
Infrastructure Management Program Learning
Environment) to include information for drinking
water utilities. The updated Website is called
SIMPLE version 1.1. This work was performed
through Foundation project/order#4013.
SIMPLE version 1.1 is designed to (1) provide
a comprehensive understanding of asset
management at strategic and operational levels,
(2) promote information exchange among
asset management practitioners, and (3) help
implement asset management programs at
water and wastewater utilities. It is an asset
management guidance manual with a chat
room, a question and answer section, and some
interactive tools/downloadable worksheets.
Three tools were added in 20082009: the
Strategic Asset Management Gap Analysis Tool
8
(SAM GAP), Benefit Cost Analysis Tool (BCA),

and Risk Management Tool. SAM GAP is an
online questionnaire and benchmarking tool that
will help users identify areas for improvement in
their asset management programs. The Benefit
Cost Analysis Tool and the Risk Management Tool
are Microsoft Excel worksheets and guidance
information for engineers and asset managers.
WERF is adding additional tools.
How to Access SIMPLE

The SIMPLE Website is hosted by WERF
and is available to Foundation subscribers.
To access SIMPLE, log in to the Foundation
Website at www.WaterRF.org, search for
project#4013, click on SIMPLE Website
under Subscriber Report Options, then
scroll down and click on Go to the
SIMPLE Website.
Case StudIES and Value of Research

Understanding Utility Performance in Asset Management:
the Strategic Asset Management Gap Analysis Tool
Jeff Leighton, Portland Water Bureau
The Strategic Asset Management Gap Analysis (SAM GAP) tool (order/project#4013), accessible through the
SIMPLE: Sustainable Infrastructure Management Program Learning Environment Website can be used to assess
the technical maturity of a utilitys performance on asset management.
SAM GAP asks for responses to about 150 questions. The premise behind the tool is that the scores of level and extent
of practice to these questions reasonably define the utilitys overall progression in asset management. Scores are on a 0
to 5 scale, from innocence, to awareness, to low, modest, substantial, and world class practice.
The Portland Water Bureau (Bureau) first used the SAM GAP tool at the beginning of its formal asset management
program and later on to measure improvements. The Bureau has seen some areas where substantial improvement has
occurred (organizational and asset management plans), but overall, the Bureaus low practice level has improved to a
modest practice level.
The benchmarking is organized into seven areas, and this article will highlight five; organizational issues, asset
management plans, information system, data and knowledge, and certain processes and practices.
The Bureau has made a dramatic improvement in its organizational approach since it started asset management. The
SAM Gap tool suggests that the organizational aspects that really matter are a steering committee of top executives
who consider asset management issues, a single coordinator of asset management activities, and that the organization
create and follow a vision. The Bureau has done all those things, in part because the SAM GAP results guided the
organization.
Does the Bureau estimate the effective lives of its assets, or forecast future renewal liabilities? That is another set of
questions from the SAM GAP tool. The Bureau has put in place an asset forecasting model that estimates future major
repair and replacement of all of its water system assets.
To many, asset management is about helping the utility to manage risk. The SAM GAP tool defines risk management in
terms of whether there is a process for quantifying the likelihood and consequence of failure of asset. The Bureau has
created a methodology for risk ranking based on a matrix using a
1 to 5 scale for likelihood and consequence of failure. It has a risk
service level that defines mitigation requirements and time limits
for compliance. For example, assets with a high risk of failure
rating must be tested or inspected annually, repaired within 12
months, or renewed or replaced within 5 years.
Log in to the Water Research Foundation
Website at www.WaterRF.org, search
The Bureau does not possess world class practices in all areas of
for project#4013. Both the tool and the
asset management; for example, in its work management and
report are available under Subscriber
maintenance efforts. It is still a work-in-progress for certain
Report Options. To access the tool, go to
data and information system tasks, but it has an idea of where it
the SIMPLE Website and select SAM-GAP.
is headed.
The SAM GAP Report explains how to use
SAM GAP tool and discusses benchmarking
The SAM GAP tool is a valuable resource to help the Bureau
results from 37 utilities.
understand its current performance in asset management and
where it can make improvements.
How to Access the SAM

GAP Tool and Report

Seattle Public UtilitiesAn Asset Management Partnership
with Australia and New Zealand
Terry Martin, Seattle Public Utilities
In early 2002, Seattle Public Utilities (SPU) began to learn of the impressive asset management (AM)-related results
achieved by many utilities located within the water and wastewater industry in Australia and New Zealand. At that
time, key SPU staff proactively sought to form a relationship with one particular utility, Hunter Water, as well as the
entire Australian water industry on a broader level. This relationship has evolved over time and has consisted of three
distinct phases, all of which have served to strengthen SPUs AM foundation.
First, SPU, with the help of a USEPA grant, was initially given approval to move Kevin Young (of Hunter Water in
Newcastle, Australia) and his family, to Seattle for eight months to help launch SPUs AM program and establish it
permanently within the utility. Kevin was a senior-level manager at the time and has since been promoted to serve
as Hunter Waters managing director. During Kevins tenure in Seattle from the fall of 2002 through the spring
of 2003, an original AM group of five individuals was assembled, several AM-related optimization efforts were
instituted, and SPUs AM Committee (AMC) was born. Importantly, the newly created AMC mandated that all
projects in excess $250,000 undergo an early benefit/cost analysis resulting in a formalized business case. Under
this new approach, business cases were developed and presented to SPUs executive management team from which
approval was required for a particular project to proceed through design and eventual construction. Creating and
sustaining SPUs AMC has reaped very high long-term rewards for SPU. The business case process has resulted in the
dual benefit of winnowing away many projects of low value while also increasing the value of others, which were in
due course approved by leadership.
Second, as SPUs AM program began to mature, SPU strengthened its ties with the wider Australian utility sector.
This was most evident in SPU becoming the first North American utility to join the Water Services Association of
Australia (WSAA) during the summer of 2003 and eventually participating in WSAAs initial benchmarking efforts in
2004. Participation in this process not only helped SPU gain important professional connections with many AM-savvy
Australian utilities, but also allowed SPU to learn more about specific weak points within the utility as pinpointed
by the benchmarking results. SPU has gained much from participation in WSAA benchmarking and continues to be
actively involved in these annual efforts.
Third, SPU began a deeper and longer term relationship with Hunter Water based on extensive, reciprocal, and
ongoing employee exchanges. These exchanges, which now typically occur on an annual basis, consist of each utility
noting a particular set of employee skills in the other utility and importing those skills for 6 to 10 months at a time. To
date under this reciprocal exchange program, SPU has helped Hunter Water by supplying two individual long-term
employee exchanges (one involving an IT manager/professional and the other involving a pump station manager/
maintenance specialist). Likewise, Hunter Water has helped SPU to a great extent by providing long-term help
involving AM managerial support, technical assistance, and AM-based field crew deployment support. In addition to
this arrangement, Hunter Water continues to provide on-call services, which in general consist of one or more Hunter
Water employees visiting Seattle each year for targeted mentoring, usually in two week-long stints. This task-specific
assistance has consisted of supervisory control and data acquisition (SCADA), reliability-centered maintenance (RCM),
and stage gates project management concept support, as well as assistance on other AM-related topics.
As SPUs AM journey enters its ninth year, the Australian connection continues to be at the forefront providing
valuable technical help as well as insight regarding the ever-evolving world of AM in the water and wastewater
industry. Continued emphasis on customer-centric outcomes, strategic AM plans, risk management, key performance
indicator (KPI) tracking, and maintenance strategy optimization are just a few examples of areas from which SPU has
benefited greatly from this continuing AM-centric relationship.
10
uNDERSTANDING cUSTOMERS
Customer Preferences and

Willingness to Pay as an Asset
Management Consideration
Jennifer Thacher, Megan Marsee, Heidi Pitts, Jason Hansen, Janie Chermak, and Bruce Thomson,
University of New Mexico
Aging infrastructure, population growth,

and increasingly stringent regulations are
challenging water utilities in the United
States to manage their assets to maintain
service levels. Because federal and state
funding is diminishing, most of the revenue
for needed investments will come from
customers through increased rates and fees.
In this context, water utilities can gain
from integrating customer preferences
into asset management planning. Utilities
have typically gathered information from
their customers through their customer
service representatives, public meetings,
focus groups, and customer satisfaction
surveys. While information from these
sources is important, it is often not
representative of all utility customers, nor is
it quantitative in nature, making it difficult
to incorporate into utility decision-making.
A complementary method of obtaining
information about customers is by using
economic valuation surveys, which provide
a means to estimate customer willingnessto-pay, the value customers place on a
proposed investment.
The quantitative input gained from
administering economic valuation surveys
to customers can be used by water utilities
to improve investment prioritization and
rate setting, and to strengthen relationships
with customers. To help water utilities
understand and apply this approach, the
Water Research Foundation funded a study,
Assessing Customer Preferences and
Willingness to Pay: A Handbook for Water
Utilities (project#4085) to develop tools,

including economic valuation surveys, to
better characterize customer input to utility
investment priorities.
Data elicited using economic valuation
surveys can help water utilities determine
required levels of service, improve
estimates of the minimum life cycle cost
of assets, and create a long-term funding
strategy, all of which are key components of
successful asset management programs.
adapted from
Assessing Customer
Preferences and
Willingness to
Pay: A Handbook
for Water Utilities
(project#4085)
Economic valuation surveys can provide

quantitative input on customers desired
levels of service. They ask customers
to make a tradeoff between a specified
level of service and associated cost. They
allow a water utility to determine whether
customers are willing to pay for an
investment that will increase service levels.
If assets are deteriorating, they allow a
utility to determine if customers are willing
to pay for asset rehabilitation in order
to maintain current levels of service, or,
alternatively, if customers prefer decreased
levels of service and current rates. This
information gives a utility powerful
justification for its management decisions.
Economic valuation surveys support the
determination of defensible levels of service
based upon input from customers.
Economic valuation surveys can provide
important data to determine the life cycle
cost of an asset by eliciting data on external
costs to customers. The economic life of
an asset requires a utility to quantify the
11
uNDERSTANDING cUSTOMERS
costs of the asset over time. These costs

include the utilitys internal costs to repair
or replace the asset, plus the external costs
incurred by customers when the asset
performs below expected service levels.
Although internal costs, or the utilitys outof-pocket expenses to repair or replace an
asset are easy to determine, external costs
to customers are harder to quantify.
An economic valuation survey was
conducted of the residential customers of
the Albuquerque Bernalillo County Water
Utility Authority (ABCWUA) to inform
decision makers on a water pipe renewal
investment project. Various service levels
were presented in the survey to represent
water pipe renewal investments and the
associated service levels. The survey asked
for residential customer preferences for
outage frequency, outage length of time,
time for advance notification, and costs that
customers would be willing to pay to prevent
certain scenarios. These costs represent a
portion of the social costs that are input to
the total life cycle costs of assets.
Economic valuation surveys can also
be used to help water utilities prioritize
funding between various asset investment
options. The survey can quantify customer
willingness-to-pay for changes in service
12
levels associated with different investment

scenarios for different service attributes.
For example, Yorkshire Water used data
from an economic valuation survey to
prioritize different investment scenarios.
The survey was designed to quantify
willingness-to-pay for changes in various
service factors (i.e., security of water
supply, drinking water quality, inadequate
mains pressure) and resulting improved
levels of service associated with the
investment scenarios affecting the service
factors. The survey data was incorporated
into an economic optimization program
that facilitated evaluation of different
investment scenarios, and allowed for userdefined levels of risk, cost, and service.
The research report is written as a userfriendly handbook for water utilities on how
to conduct their own economic valuation
surveys. The report provides the basic tools
for water utilities to understand how to
design, implement, and analyze economic
valuation surveys. The customer survey
that was administered for the ABCWUA
is presented as a detailed case study to
illustrate the development of survey
questions, administration of the survey,
and interpretation of the survey results.
rISK mANAGEMENT
Tool for Risk Management

of Water Utility Assets
Linda Reekie, Water Research Foundation project manager
Tool for Risk Management of Water Utility

Assets (2008, order#91246/project#4126)
aims to help users identify risks and
potential mitigation options in a consistent
manner across all areas of the utility asset
management activity.
Risk is often defined as probability times
consequence. The term risk is defined in
the publication as a measure of the degree
of exposure to the consequences that might
result from events that might happen. Risk
is defined in quantitative terms, including
combinations of frequency and probability
of the event occurring. The event might not
happen, and if it does, there may not be
exposure to the full risks due to mitigations.
The set of circumstances capable of
producing the consequences is not certain
but probabilistic.
A risk management process upon which the
risk management tool for water utilities is
based was adapted from the International
Infrastructure Management Manual (2002)
and the AS/NZS 4360 2004
Standard. It is a five-step
approach as illustrated
in figure1, which was
incorporated into a Microsoft
Excel spreadsheet-based tool.
The first stage of establishing
the context ensures that the
risk management process
supports the utilitys overall
business plan and identifies
the business objectives,
appropriate stakeholders,
standards, and regulations
that must be addressed.
The second stage of identifying risks

involves identifying business consequences
including consequences to customer
service, health and safety, the environment,
regulatory compliance, and finances. It
also includes identifying the initiating
event or the root cause such as pump
failure, power failure, or Cryptosporidium
breakthrough. Since several consequences
affecting several business objectives may
result from a single initiating event, the
tool allows risks to be evaluated in terms
of each business consequence. The tool
allows the magnitude of each business
consequence to be assigned independently.
The tool also allows a single chain of causes
to be identified for each initiating event.
The probability or frequency of individual
consequences is entered in the same way as
the probability of the initiating event. Four
causes can be entered for each initiating
event, plus a root cause, which is selected
for a user-editable list.
continued next page
Figure 1: Five Step Approach for Risk Management Process

Source: Tool for Risk Management of Water Utility Assets. 2008 UK Water Industry Research Limited.
Developed from the International Infrastructure Management Manual, 2002 and the AS/NZS 4360: 2004.
13
rISK mANAGEMENT
The third stage of evaluating risks

determines the size of the risk, preferably
in quantified terms. For each identified risk
there is a need to determine the magnitude
of the frequency of occurrence for the
consequences and the magnitude of the
consequences. This includes identifying
the probability of the initiating event
occurring, and the probability that it will
lead to business consequences, as well as
the identification of the chain of causes,
leading to a root cause. It will also identify
existing controls in place to control the risk.
The tool leads the user through a series of
steps to rank risks for treatment evaluations
and to identify treatments to eliminate root
causes or to control risks.
More Risk Management Resources

A risk management framework for water quality assessment is
presented in the Foundation report, Application of HACCP
for Distribution System Protection (2006, order#91131/
project#2856). The Hazard Analysis and Critical Conrol Points
(HACCP) system helps utilities focus resources on key risks
to improve emphasis on operations processes and controls.
Twelve sequential steps are used to plan and implement a
HACCP system. For each significant hazard identified, the
utility identifies critical control points in the process where
consequences of failure are irreversible. Critical limits are
established for the critical control points, monitoring is
established, and corrective action plans are developed.
A risk management methodology for capital maintenance
in the water industry is presented in the Foundation report,
Applicability of Reliability Centered Maintenance in the
Water Industry (2006, order#91138/project#2953). Reliability
centered maintenance (RCM) is a process used to determine the
maintenance requirements of an asset in its current operating
context. It is a scientific and systematic approach to ensure
the right maintenance task is done at the right time and the
maintenance dollars are applied in the most effective manner.
In following the RCM process, the identification of the failure
consequences helps the utility identify the potential risk of asset
failure, which helps to prioritize maintenance requirements to
manage risk.
14
The fourth stage of identifying the options

includes identifying and evaluating available
treatment options and establishing the ones
that are viable for implementation. The tool
allows treatment to be ranked in order of
financial benefits or overall risk reduction.
The tool allows users to choose their
preferred options, rather than forcing the
calculated best option to be selected.
The fifth stage of risk treatment is the
funding and implementation of the
treatment. Treating a risk does not usually
eliminate it, but rather reduces it to a
lower value residual risk. The tool allows
identification of residual risk from the initial
risk reduction provided by treatments.
Monitor, review, communicate, and
consult are identified as necessary for each
of the five stages and involves checking
the treatments that have been delivered,
evaluating tolerated risks, and reviewing
lessons learned.
The report, Tool for Risk Management of
Water Utility Assets and the accompanying
CD-ROM that contains the tool are available
to Foundation subscribers as order#91246/
project#4126. In 2009, the electronic
tool was integrated into the SIMPLE:
Sustainable Infrastructure Management
Learning Environment (order/
project#4013) Website under SAM-TOOLS.
The research was funded by a group of
members of the Global Water Research
Coalition (GWRC). The lead was United
Kingdom Water Industry Research (UKWIR)
and the other funders were the Water
Environment Research Foundation, the
Water Research Foundation, and Water
Services Association of Australia. Mott
McDonald was commissioned to develop a
framework and tool for risk management of
water utility assets.

Risk Management at United Utilities
Steve Whipp, United Utilities
United Utilities (UU) manages risks with a process called the Business Unit Risk Assessment or BURA, which allows
any member of staff to enter issues of concern. This forms a key part of UUs corporate governance and ensures that
risk is dealt with on a consistent basis. Any risk is defined as a product of the consequence and the probability of
its occurrence. UU uses an eight tier model where issues with financial, regulatory, service, operational, compliance,
systems, people, political, and media relations consequences are entered onto a matrix. Each issue is then assigned a
probability rating and multiplying these provides a total score as shown in the figure below. All risks are maintained on
UUs Risks and Issues database (RAID).
Any risks that fall on the light blue area of the chart are required to be actively managed by an assigned owner of the
risk and are formally reviewed on a monthly basis. Management of risks entails considering mitigating actions, which
are represented on RAID as actions to be monitored. Top risks are upwardly reported with the most serious risks being
considered in the monthly board meetings. The effectiveness of mitigation is closely monitored.
Risk assessment and quarterly scenario planning are undertaken looking at a five year horizon. New risks are added to
the RAID with the help of a BURA manager. UU has found that the BURA manager is essential to ensuring a consistent
approach and that any risk is neither under or overstated. UU also uses a standard form to provide a discipline in
defining and explaining any risk. The BURA process is used for internal business governance and control and can also
be used for external communication with regulators and with insurers.
Consequence of
occurrence
Severe
High
Medium
Low
Risk
16
24
32
14
21
28
12
18
24
10
15
20
12
16
12
Remote
Unlikely
Likely
Very
Likely
Probability of occurrence
15
Failure Costs
Integration of Failure Costs and Risk

Management Concepts into Pipe
Renewal Decisions
Frank Blaha, Water Research Foundation senior project manager and
Neil Grigg, Colorado State University
In North America, pipe breaks are the most

commonly used factor in determining
when renewal of a pipeline is needed. Pipe
renewal is a broad term meaning any
intervention to improve the condition of a
pipeline, including repairs, rehabilitation, or
replacement. In a Foundation study, break
history was cited by 75% of respondents
as a criterion used in this determination,
which was nearly twice as much as the next
most commonly-cited criterion of pipe age
(Kirmeyer et al. 1994). Understandably, there
is focus on preventing breaks, especially
for large diameter and critical pipelines,
because of the potential property damage
and disruptions to water system operations.
For large diameter and critical pipelines,
the prevention of breaks is even more
important, since large diameter failures can
be disruptive to water system operations as
well as to areas near the failure.
Introducing additional risk factors, such
as break location, pipe size, and materials,
enables utilities to base renewal decisions on
cost-based estimates of risk of failure. Risk
should take into account multiple factors, and
the commonly accepted equation for it is:
Risk = Likelihood x Consequences
Given this equation, we can influence risk
by changing the likelihood of failure or
by changing the consequences of failure.
By renewing a pipe on a timely basis, we
may reduce both the likelihood and
consequences, thus reducing overall risk to
customers and the utility.
16
Research to develop and improve tools

and technologies to predict the likelihood
of failure has focused on condition
assessment work, such as non-destructive
electromagnetic inspection, which
produces useful data to help manage the
likelihood part of the equation. Compared
to likelihood, the consequences part of
the risk equation seems underrepresented
in pipeline risk management discussions.
However, if the potential consequences of a
failure are high, this also creates a high risk
pipeline that would be the better focus of
actions and expenditures when compared
with other, similar pipelines in terms of size,
age, or operating conditions. This can also
help identify possible high value mitigation
activities the utility could take to reduce risk
(for instance, finding and exercising valves
near high risk pipelines).
A new Foundation project#4332,
which started in 2010, will explore the
Integration of Cost of Failure with Asset
Risk Management. This project will
develop additional knowledge about costbased risk of failure and consequence issues
and provide software tools to improve
integration of the risk factors. This research
will build off other work the Foundation
has funded, such as the preparation of
tools and techniques to help track costs
associated with failures (Cromwell et al.
2002), will explore means to incorporate
understanding of possible increased public
health risk that results from pipe breaks
Failure Costs
(Kirmeyer and LeChevallier 2001; Sadiq

et al. 2009), and will consider approaches
used in other countries to manage risk for
their regulatory requirements that might be
adapted to the North American situation
(MacDonald et al. 2009; Group et al. 2009).
This project will also increase
understanding of the direct and indirect
costs associated with pipe breaks, and

explore means to consider risks associated
with factors with high social and
environmental impacts that might result
from pipe breaks. Utilities have advised
the Foundation that all such costs can be
considerations in managing pipelines and
all relevant information should be used in
making pipeline renewal decisions.
References
Cromwell, J.E., III, H. Reynolds, N. Pearson, Jr., and M. Grant. 2002. Cost of Infrastructure Failure, order#90918/
project#2607. Denver, CO: Awwa Research Foundation and American Water Works Association.
MacDonald, M., Z.A. Barnes, M. Caudwell, P.R. Chadwick, N. Clarke, A. Grove, A.I.J. Heather, S. Mellot, and P.D. Selby.
(2008) 2009. Tool for Risk Management of Water Utility Assets, order#91246/project#4126. London, England:
UK Water Industry Research Limited. Reprint, Denver, CO: Water Research Foundation.
Kirmeyer, Gregory J., W. Richards, and C. Dery Smith. 1994. An Assessment of Water Distribution Systems and
Associated Research Needs, order#90658/project#706. Denver, CO: Awwa Research Foundation and American
Water Works Association.
Kirmeyer, G. and M. LeChevallier. 2001. Pathogen Intrusion Into Distribution Systems, order#90835/project#436.
Denver, CO: Awwa Research Foundation and American Water Works Association.
Sadiq, R., Y. Kleiner, and B. Rajani. 2009. Proof-of-Concept Model to Predict Water Quality Changes in
Distribution Pipe Networks (Q-WARP), order#91244, project#2970. Denver, CO: Water Research Foundation.
Group, M., D. Cook, B. McAndrew, and G. Shuker. 2009. Large Diameter Trunk Main Failures, order#91266/report
#4076. London, England: UK Water Industry Research Limited. Reprint, Denver, CO: Water Research Foundation.
17
condition Assessment
Condition Assessment of Water

Main Appurtenances
David R. Marlow and David J. Beale, CSIRO Land and Water
Introduction
An appurtenance is by definition an
item associated with another of greater
importance. A key class of appurtenances
managed by water utilities are those valves
associated with the water supply networks.
These valves allow critical system functions to
be performed, including control and isolation
of flow, release of trapped air, control of
pressure, and access to water. To provide
such functions, it is not uncommon for water
utilities to have up to 21 appurtenances for
every mile of water main (MacLean and
Keane 2007, Deb et al. 2006). Developing
strategies to address appurtenance failures
is critical (Schumi 2009), but many utilities
have little or no condition assessment data on
assets nearing their life expectancy (USEPA
2005, USEPA 2007).
To help address this challenge, the Water
Research Foundation (WaterRF), in
collaboration with the Water Services
Association of Australia (WSAA), has
commissioned a research project#4188,
Condition Assessment of Water Main
Appurtenances, to develop a guidance
manual on condition assessment for valves.
The research draws upon information elicited
from industry workshops, a Web-based
survey, and industry case studies developed
within the United States, Australia, and the
United Kingdom.
Research Focus
Condition assessment is the process of

measuring the state of an asset in some way.
For many assets, the underlying motivation
is to ascertain structural integrity and
infer probability of failure. For water
18
valves, condition assessment is also often

undertaken to assess functionality. As such,
the assessment process must address the
following questions:
1. Can the valve be located and accessed?
2. Is it structurally sound?
3. Does it work?
4. What is the likelihood of failure?
The research has shown that this process
most often involves simple tasks such as
making a visual assessment in conjunction
with valve exercising. More specialized
equipment for inspection and interpreting
results can, however, be used when the
additional expense is warranted.
Overall, the research has focused on
condition assessment from a holistic
asset management perspective, and
covered issues such as condition grading
approaches, risk-based prioritization,
sampling schemes, selection of inspection
tools and techniques, data collection, and
inspection procedures.
Insights into Industry Practices
Case studies and workshops undertaken as

part of the research highlighted that there
are currently a wide range of management
strategies applied to appurtenances. The
strategy adopted is driven by different asset
management philosophies, budget and
resource constraints, customer attitudes,
service requirements (especially with
respect to hydrant maintenance), and the
characteristics of the asset stock.
An interesting insight into some of these

differences is the approach to fire hydrant
management taken in different countries.
For example, one U.K. utility is currently
working to reduce the number of fire
hydrants in its network (in conjunction with
rehabilitation of water mains), which is
possible due to changes in technology used
by fire fighters. A risk-based approach to
assessing hydrant location is being applied
to aid this process. This contrasts strongly
with case studies in the United States where
the approach to hydrant provision and
management is driven by issues relating to
fire insurance premiums.
Depending on predominant issues and
drivers, condition assessment practices
also vary widely between different
utilities. Even for the same asset class,
practices ranged from do nothing to do
everything on a planned cycle. A key factor
in determining the strategy adopted is
resourcing. For example, one utility in the
United States has dedicated crews for each
type of appurtenance, which ring fences
resources to ensure maintenance tasks
are undertaken. In contrast, a case study
partner in Australia noted that maintenance

is undertaken by non-dedicated crews,
so tasks like valve exercising are often
deprioritized in the face of other demands.
At the extreme, one U.K. case study partner
had undertaken no formal inspection for
more than a decade even though it was
known there were a range of issues with
non-functioning isolation valves.
Similar problems had been noted by one
of the U.S. case study partners. In response,
the utility has implemented a phased
management approach intended to address
the backlog in valve condition assessment
and maintenance. In the first phase, the
utility focused on assessing isolation valves
with the highest consequence of failure. The
initial effort, which began in 2005, focused
on large valves (>12 inches). By 2010, most
of the utilitys 2,000 large valves had been
assessed and inoperable valves restored.
The second phase is to focus on valves
of any size associated with critical pipes
(i.e., pipes with a potentially high failure
consequence). The condition of these
valves will again be assessed and efforts will
be made to improve their reliability.
References
Deb, A. K., J.K. Snyder, J.O. Hammell, Jr., and S.B. McCammon. 2006. Criteria for Valve Location and System
Reliability, order#91136/project#2869. Denver, CO: Awwa Research Foundation (AwwaRF).
USEPA (U.S. Environmental Protection Agency). 2005. Drinking Water Infrastructure Needs Survey and Assessment:
Third Report to Congress. EPA 816-R-05-001. Washington, DC: Office of Water, Office of Ground Water and Drinking
Water, Drinking Water Protection Division. http://water.epa.gov/infrastructure/drinkingwater/dwns/needssurvey.cfm.
USEPA (U.S. Environmental Protection Agency). 2007. Distribution System Inventory, Integrity and Water Quality.
Washington, DC: American Water Works Association, Office of Water, Office of Ground Water and Drinking Water,
Total Coliform Rule Issue Paper. http://www.epa.gov/ogwdw/disinfection/tcr/pdfs/issuepaper_tcr_ds-inventory.pdf.
MacLean, R. and K. Keane. 2007. Distribution System Valve Management: Leveraging Technology & Equipment to
Deliver Results. Presented at the American Water Works Associations Annual Conference & Exposition (ACE) Toronto,
Ontario, Canada, June 26, 2007.
Schumi, P. 2009. Criticality of Valve Operability. Presented at the MI-AWWA/MWEA Joint Conference. Lansing, MI,
February 2009.
19
Editors note:
For more information
on condition
assessment and
renewal, see
Foundation
reports Condition
Assessment
Strategies and
Protocols for Water
and Wastewater
Utility Assets, order/
project#3048 and
Assessment and
Renewal of Water
Distribution Systems
order#91025F/
project#2772.
Insights into Best Practices
While there are obvious differences in

practices, the research has provided
insights into best practices for some
elements of condition assessment. For
example:
Utilities should implement a risk-based
approach to condition assessment.
Condition assessment should be part of
maintenance schedules, and procedures
for scheduling should be sufficiently
flexible to take advantage of ad hoc and
opportunistic inspections.
A service level should be set in terms of
percentage of valves operating (e.g., 95%
of all valves should be operable) to allow
assessments of whether maintenance
regimes are effective.
There should be a prescribed

methodology for determining if a valve is
sealing adequately.
Isolation valves on large pipes should be
inspected on a regular basis (noting the
frequency of inspection varies greatly;
e.g., 2-year cycles in one utility; 1015
year cycles in another).
These and other research findings will
be detailed in the research report, which
presents the research approach and
insights gained with respect to condition
assessment as a maintenance, tactical, and
strategic management tool. In response
to requests from industry partners, the
research will also deliver a practitioners
guidance manual that presents the
research findings in a practical format.
Utilities should use an objective

inspection checklist for each of the
appurtenance types.
Water Research Foundation Projects on Long Term Performance

Prediction of Pipe Materials

Long-Term Performance Prediction for PVC Pipes (order#91092F/project#2879)
Long-Term Performance Prediction for PE Pipes (order#91194/project#2975)
Long-Term Performance of Ductile-Iron Pipe (project#3036)

Long Term Performance of Asbestos Cement Pipe (project#4093)
Long-Term Performance Prediction of Steel Pipe (project#4318)
The Foundation has several more projects about pipe failures, pipe lining materials, and condition assessment that can
be accessed on our Website.
20

Using the Benefit-Cost Analysis Tool
Eric Brainich, Portland Water Bureau
The Benefit Cost Analysis (BCA) Tool (order#91260/project#4127), provides a step-by-step guide for developing a
benefit cost analysis to determine the economic justification for a project, or the prioritization of a group of competing
projects. The tool has been structured to enable the user to follow a flow chart through the various sequential steps
of creating a benefit cost analysis. In some steps the user is able to conduct either a basic or a more detailed analysis,
which takes into account more complex economic theory.
The Portland Water Bureau (Bureau) was looking to make more informed investment decisions. It had a good handle
on estimating the life cycle costs of its project alternatives but needed the tools to help analyze the benefits of its
decisions. Specifically, the Bureau wanted to know how many benefits, in dollar terms, a project would yield for every
dollar spent on that project.
The BCA tool uses a triple bottom line (TBL) approach that views the perspective of an entire society. All impacts
are identified then monetized, however distant from the utility, including direct, indirect, tangible, and intangible
benefits and costs. This distinction is what separates benefit cost analysis from fiscal impact analysis fiscal impact
analysis looks at the much narrower impacts of a potential decision on the flow of revenues in and expenses/
expenditures out of the utility.
The Bureau used the BCA tool, and the spreadsheets provided on the Website, to develop its own approach. It has a
guidance document on BCA and expanded it to include guidelines on how to monetize the benefits to its customers
in areas such as water outages (reliability), fire flow, pressure, safety, water quality, and some community and
environmental impacts.
The majority of the Bureaus decision making now uses a systematic and quantifiable way to measure whether a dollar
spent on a project would yield a greater amount of benefits over the life of the project. The largest impacts are often
on its service levels. Benefit cost analysis provides for the systematic identification and subsequent projection of the
streams of benefits and costs associated with a management option; the option can take the form of a specific capital
project (build a new treatment plant), a change in the level of service (higher reliability of service in a particular service
area), or a program option (require low flow toilets).
The BCA also helps the Bureau manage risk. Often, project or program benefits minimize the risk costs to its
customers. The BCA has created a methodology for quantifying the changes in risk cost (likelihood of an event times
the consequence of that event, valued in dollar terms) and comparing them to the cost of a project to determine the
economic soundness of a project.
The BCA tool is a valuable resource to help a utility make more informed decisions. Applying this tool has directed the
Bureaus scarce resources to those projects providing the greatest returns for its customers.
The BCA tool is available to Foundation subscribers as order#91260/project#4127. In 2009, the electronic tool
was integrated into the SIMPLE: Sustainable Infrastructure Management Learning Environment (order/
project#4013) Website under SAM TOOLS.
The tool was funded by a group of members of the Global Water Research Coalition. The lead was the Water
Environment Research Foundation and the other funders were the United Kingdom Water Industry Research and
the Water Research Foundation.
adapted from Benefit Cost Analysis Tool order#91260/project#4127
21
Pipe Rehabilitation Tool
Development of a Practical Tool

to Assist in Decisions on Rehabilitation
or Replacement of Cast Iron Pipes
David R. Marlow and David J. Beale, CSIRO Land and Water
Cast iron (CI) water mains represent one

of the largest classes of water utility pipe
assets. Many utilities undertake an annual
rehabilitation program to renovate or replace
a portion of these mains. Each year, water
utility managers must therefore decide how
best to allocate a limited pool of infrastructure
dollars to address service issues. When a
section of CI main has a long documented
break history, the decision to rehabilitate the
pipe is generally straightforward. For sections
where breaks are less frequent, factors like
fire flow deficiencies, red water complaints,
and/or biofilm concerns, along with the
types of customers served by the main all
need to be considered.
Once the decision has been made to
rehabilitate a pipe or a cohort of pipes,
additional factors need to be considered to
determine which approach to undertake.
Pipe replacement or renovation can be
undertaken using a range of techniques
(e.g., traditional trenching, narrow

trenching, pipe bursting/splitting, slip
lining, polymeric lining, cement mortar
lining, etc.). However, the choice of which
technique to use is influenced by a range
of technical and financial constraints.
With these issues in mind, the focus of
project#4234, Practical Tool for Deciding
Rehabilitation vs. Replacement of Cast
Iron Pipe, is to develop a simple tool
that will assist water utilities to identify
assets that should be replaced and those
that are candidates for renovation. The
decision support tool will consider both
the technical and financial risks associated
with a range of rehabilitation techniques,
taking into account the technical aspects
of CI as a pipe material. The tool will also
consider the direct costs of renovation and
replacement, the potential life span of the
various viable options, and their relative
indirect/intangible costs.
Foundation Contacts
Customer Service
Phone: +1 888.844.5082 or +1 303.347.6121
Fax: +1 303.730.0851
E-mail: rfreports@WaterRF.org
Editorial Questions
Phone: +1 303.347.6111
E-mail: editor@WaterRF.org
Order Drinking Water Research
Phone: +1 303.347.6248
E-mail: tfreeman@WaterRF.org
Address/Phone Changes
Phone: +1 303.347.6243
E-mail: emahoney@WaterRF.org
22
Foundation Subscription Program

Phone: +1 303.347.6128
E-mail: pschrader@WaterRF.org
Solicited & Unsolicited Research Programs
Phone: +1 303.347.6188
E-mail: crayburn@WaterRF.org
Tailored Collaboration Program
Phone: +1 303.347.6104
E-mail: rkarlin@WaterRF.org

WaterOne Applies Foundation Research
to Prioritize Pipe Replacements
Dan Smith, WaterOne
As water systems age, the need for infrastructure replacements through asset management programs becomes
greater and greater. Water District No. 1 of Johnson County, Kansas (WaterOne) is a relatively young utility but the
corrosive soils within its service territory has taken a toll on the buried infrastructure necessitating the need for an
asset management program. As WaterOne has developed its asset management program, it has looked to WaterRF for
guidance on various issues, such as pipe replacement, renewal, and corrosion.
WaterOne serves over 400,000 people in 17 cities of a growing, affluent section of the Kansas City metropolitan area.
WaterOne has over 2,500 miles of water mains with some approaching 100 years of age in a service territory covering
272 square miles. The pipeline materials consist of cast iron, ductile iron, PVC, PCCP, HDPE, and AC.
Historically, WaterOne has done an excellent job of planning for the future water supply needs of the utility by
developing a master water supply plan that forecasts production, transmission, and distribution needs 20, 30, and 40
years into the future. These plans are then built into the utilitys financial model for capital planning needs and for the
issuance of bonds for financing of the water supply master plan.
In the late 1990s, WaterOne recognized that a major component was missing from the financial model. That
component was the inclusion of funding for replacing aging infrastructure. The Water District has been developing
asset management programs for both its distribution and production facilities to deal with its aging infrastructure since
early 2000. Replacement programs and monitoring of its assets are now incorporated into the Water Districts longterm financial plan.
The most difficult asset to address is buried infrastructure since it cannot be seen except when it ruptures or is
excavated for a tap or relocation. WaterOne retained consulting services to develop a Nessie Model of its buried assets
so it could begin the process of identifying what classes of assets were most likely in need of replacement and to assist
in the overall financial planning needed for buried assets. Once this was completed, a more detailed approach was
necessary to identify specifically which pipes needed to be replaced.
WaterOnes engineering staff worked closely with its IT/geographic information system (GIS) department to develop
an in-house pipe replacement prioritization schedule (PRPS). The PRPS utilizes various data available through the
utilitys GIS system and business management software (BMS) to create a prioritization schedule that is based on eight
categories. One of the categories is directly based on the financial viability of the proposed replacement utilizing a
financial break-even formula developed in Water Research Foundation (WaterRF) report, Decision Support System
for Distribution System Piping Renewal (2002, order#90892/project#2519). The list of criteria is as follows, in no
order of importance:

Financial break-even formula
Break history, breaks/miles/year
Pipe diameter
Pipe material
Pipe age
Corrosiveness of soil
continued on page 24
23
continued from page 23
WaterOne Applies Foundation Research to Prioritize Pipe Replacements

Pipe replaceable as part of a city street/sewer improvement project
Large or critical water user
Each segment of pipe is rated against the criteria on a 5 point scale. All of the criteria are valued programmatically
through the GIS and BMS systems. After the evaluation process is completed, a spreadsheet is developed, which lists
the utilitys entire pipe segments based on the highest to lowest rating. WaterOnes 2,500 miles of pipe results in
approximately 60,000 pipe segments. Needless to say, attempting to address all 60,000 pipe segments is a daunting
task so the engineering staff evaluates only the top 5% of pipe segments for replacement consideration. The PRPS is
updated yearly to ensure continual evaluation of the pipe segments to be replaced or rehabilitated.
The PRPS process has been successful in helping WaterOne focus on the correct segments of pipe so that its capital
dollars are expended as efficiently as possible. In addition, the PRPS has been used to justify the utilitys pipe
replacement efforts to its governing body and customers as well as the 17 cities served by the utility. When a city or
customer complains about a main break in their city or yard, the utility is able to explain the methodology used to
replace pipe within the system.
For corrosion issues, WaterOne drew upon the WaterRF report called External Corrosion and Corrosion of Buried
Water Mains (2005, order#90987/project#2608). WaterOne believes the root cause of most its main breaks is due
to loss of structural strength of the metallic pipe system due to corrosion. While there are numerous causes of main
breaks such as ground shift from changing soil, moisture content, and frost action to pressure transients, the bottom
line reason the pipe failed, in most cases, is because the structural integrity of the pipe wall has diminished. The loss of
structural integrity of the pipe over the years is generally due to corrosion of the exterior pipe wall. WaterOne started
a corrosion control program, which is still in its infancy, in an attempt to prolong the life of its buried metallic pipe
system. The utility now installs a sacrificial anode whenever it excavates a main for repair or relocation. The utility is
also beginning to evaluate the proactive installation of sacrificial anodes on its existing metallic piping system.
In addition to the projects mentioned above, WaterOne has also referenced Prioritizing Water Main Replacement
and Rehabilitation (2002, order#90898/project#459) for guidance on developing practical and cost-effective
distribution system renewal techniques. The information provided from all these WaterRF reports has helped WaterOne
develop an asset management program suitable for its own unique system.
References
Deb, A., Y. Hasit, H. Schoser, J. Snyder, G.V. Loganathan, and P. Khambhammettu. 2002. Decision Support System
for Distribution System Piping Renewal, order#90892/project#2519. Denver: AwwaRF and AWWA.
Deb, A. F. Grablutz, Y. Hasit, J. Snyder, G.V. Loganathan, and N. Agbenowsi. 2002. Prioritizing Water Main
Replacement and Rehabilitation, order#90898/project#459). Denver: AwwaRF and AWWA.
Romer, A., G. Bell, S. Duranceau, and S. Foreman. 2004. External Corrosion and Corrosion of Buried Water Mains,
order#90987/project#2608. Denver: AwwaRF.
24

Developing a Main Replacement Prioritization Tool
David M. Hughes, American Water
There is a tremendous need to invest and upgrade Americas drinking water infrastructure. According to a 2007 USEPA
survey, the 20-year capital investment needed for public water systems is estimated at about $335 billion. There is no
question that aging infrastructure is in need of renewal, but a continuing issue that needs to be addressed is the order
in which pipes are to be renewed. If a pipe is replaced too soon, it may not have reached its full life cycle. Replace
a pipe too late and incur some unavoidable costs for additional repairs and damages caused by main failures and
compromise the level of service provided to the customer. One clear goal of most replacement programs is to reduce
the cost and number of breaks as a program proceeds.
The St. Louis County Water Co., now part of Missouri American Water (MAW), was one of the early experimenters
in the field of main prioritization as one of the subjects of a study through the Water Research Foundation,
Prioritizing Water Main Replacement and Rehabilitation (2002, order#90898/project#459). This project
developed a decision tool, which utilized main break data and cohort analysis as the key criteria that helped MAW
make pipe replacement decisions.
Improved main break data collection and the advent of a geographic information system (GIS) led to a search for a
new tool in 2008. Working with GL Denton Noble (GL), MAW prepared main and main break data for incorporation
with a GIS network designed for the project. The pipe network was sourced from a computer-aided design (CAD)
to GIS translation that was performed by MAW. GL then scrubbed the database to remove any non-pipe lines. A
GIS process was then created by GL to assign pipe installation year and material based on annotations from the CAD
database. The GIS was populated with geo-coded main break data segregated by corrosion, joint failures, and breaks.
Following a period of data cleansing to verify and cross check data, GL put their program called Main Replacement
Prioritization (MRP) to work.
The MRP model is a three-step function that reflects the earlier decision tool, but with some notable enhancements
including:
1. The first step utilizes main break history to construct a condition assessment model of all ferrous pipes.
2. The second step looks at a series of possible performance indicators to be used for renewal criteria for pipe
segments and selects weightings to be given for these criteria.
3. The third step constructs a multiyear project program taking into account the annual budget available and the
proximity of other mains that are subject for replacement.
Step 1 performs both a cohort and proximity analysis for families of ferrous water pipe. In other words, pipes of like
material and diameter within close proximity of one another are assigned a break curve based upon past history. In
this way, for example, a block of 4-inch cast iron main lacking a recorded break history near 4-inch cast iron pipes with
numerous breaks are grouped together. In work supported by the Computer Aided REhabilitation for Water Networks
(CARE-W) work in Europe, this approach, while not perfect, has been found to be more predictive of future breaks
than other statistical studies. This tendency towards failure is then incorporated into a broader set of performance
criteria in step 2.
Step 2 allows the utility to select other criteria that it feels are elements for replacement criteria. MAW added to the
condition assessment six other weighting factors including:
1. The presence of critical customers (usually hospitals and schools).
2. If the pipe was galvanized steel the utility has a goal to phase all of this material out of use, as it is often
associated with water quality complaints and poor flow.
continued on page 26
25
continued from page 25
Developing a Main Replacement Prioritization Tool

3. Pipe diameter less than 6 inches like galvanized steel, another utility goal to phase out.
4. A head loss of more than 10 psi per 1000 feet of pipe. The data was obtained by calibrated hydraulic model
evaluation.
5. A high ratio of repair cost to replacement cost, which reflects part of the evaluation seen in the previous
prioritization model.
6. A main located on a street where road paving or reconstruction is scheduled.
Working with the consultant, MAW considered various weightings of these items, choosing one weighting scheme
that seemed to best fit appropriate selection criteria. During this process, additional data errors were identified such as
removing main breaks from pipes that had been retired and replaced.
Step 3 used another element of the GIS based model to schedule a five-year program of main renewal to organize
projects. The model can take the various ranked main segments and using cost estimates for replacement determine
a level of pipe renewal appropriate in terms of budget limitations or a targeted length of main to be replaced over
several years. A final step of the process is to organize annual projects by grouping projects based on proximity of other
mains to be replaced. So a main scheduled in the fifth year of a five-year program might be shifted to the first year if it
is adjacent to a very poor main scheduled in the first year of the program.
This methodology was applied in a system that did not have a fully developed GIS, but the model clearly shows the
value of GIS in such a process. The model also demonstrated the importance of good main break data, which MAW
had provided. The model itself continues to be improved. A next step suggested by the utility is to have the ability to
assign different costs of renewal for same size pipe based on the option to rehabilitate instead of replace or to take
into account different costs of restoration.
Reference
Deb, A. F. Grablutz, Y. Hasit, J. Snyder, G.V. Loganathan, and N. Agbenowsi. 2002. Prioritizing Water Main
Replacement and Rehabilitation, order#90898/project#459. Denver: AwwaRF and AWWA.
26
Main Breaks
Main Breaks
Frank Blaha, Water Research Foundation senior project manager
and Jian Zhang, Water Research Foundation project manager
As the recent unseasonably cold weather

spanned the United States this winter,
water utilities were forced to be concerned
about, and cope with, frozen pipes and
temperature-induced broken mains in
places where such concerns are unusual.
An Immense Problem
Although broken mains make headline news

each winter, they come as no surprise to
utility managers. Due to the nations aging
water infrastructure, pipe and main breaks
are on the rise. An estimated 700 breaks take
place each day, or 250,000 a year, according
to the USEPA. Water Research Foundationsponsored research found breaks occur
annually at an average of 20 to 30 times per
100 miles of pipe per year.
The impacts of these breaks are significant.
One study found average associated costs
with the breaks can vary from $5,000 to
$500,000 or more for large-diameter main
failures and one large pipe failure in a large
city cost upwards of $8 million. Beyond the
expense, breaks cause
billions of gallons of water loss and
millions in unrecovered revenue each year;
service disruptions and traffic snarls;
damage and costs to repair roads,
buildings, and landscaping;
chemical and biological contaminants
introduced into the water supply; and
eroded public trust in the utilitys ability
to prevent breaks and minimize impacts.
Given the high dollar value associated with
such failures, saving even a small percentage
of current costs to address main repair/
replacement can easily cover the price of
the largest utilitys subscription payment.
Foundation Research Can Help
For more than 20 years, the Foundation has

allocated a portion of its annual budget to
infrastructure research with a substantial
portion devoted to distribution system repair
and replacement. It has a number of published
reports on understanding pipe deterioration
and failure methods including the following:
Failure of Prestressed Concrete Cylinder
Pipe (2008, order#91214/project#4034)
Large Diameter Trunk Main Failures
(2009, order#91266/project#4076)
The Effect of Corrosion Pitting on
Circumferential Failures in Grey Cast Iron
Pipes (2005, order#91053F/project#2727)
Long-Term Performance Prediction
for PVC Pipes (2005, order#91092F/
project#2879)
Several more reports have been published on
pipe and infrastructure condition assessment
techniques, including the following:
Condition Assessment Strategies and
Protocols for Water and Wastewater
Utility Assets (2008, order/project#3048)
Installation, Condition Assessment,
and Reliability of Service Lines (2007,
order#91167/project#2927)
Workshop on Condition Assessment
Inspection Devices for Water
Transmission Mains (2004,
order#91028F/project#2871)
The following Foundation reports discuss
methods to help optimize pipe repair and
replacement work:
Asset Management Planning and
Reporting Options for Water Utilities
(2006, order#91095/project#2848)
Editors Note:
This article is excerpted
from the March
2010 Water Research
Foundation eNewsletter,
Water Research Update.
27
Main Breaks
Risk Management of Large-Diameter

Water Transmission Mains (2005,
Assessment and Renewal of
Water Distribution Systems (2004,
order#91025F/project#2772)
Prioritizing Water Main Replacement
and Rehabilitation (2002, order#90898/
project#459)
Water Main Evaluation for
Rehabilitation/Replacement (1986,
The Foundation also has ongoing studies on
all of these topics.
this report found some willingness among

customers to accept and understand
infrastructure failures. It also provides
research and tools around which to build
a communications plan for a utilitys pipe
asset management strategy.
A related project and completed report,

Large Diameter Trunk Main Failures
(2009, order#91266/project#4076) details
the causes and typical frequencies of largediameter trunk main failures. It then offers
a tool to help utilities model failures and
plan for these large capital improvements.
Most recently, the Foundation hosted a

related Webcast exclusively for subscribers,
Criteria for Optimized Distribution Systems
When confronting the question of which
Recommended Metrics and Approach. This
pipes to renew, utilities may want to model
Webcast presents the results of a nearly
the probability of pipe failure. Main Break
completed study done in collaboration
Prediction, Prevention, and Control
with the Partnership for Safe Water (PSW)
(2007, order#91165/project#461) found
to develop metrics and criteria to define
that main break modeling is complex and
optimized distribution systems to allow for
requires that models be optimized and
an expansion of PSW into distribution system
tested with the utilities data. Most useful
are models for aggregated pipe systems that optimization. Three areas are being proposed
to measure and define distribution system
can compile information about network
optimization, levels and management of
conditions and help establish utilities
longer-term capital improvement programs. disinfectant residual, pressure, and main
breaks. For main breaks, the optimization
goal is a level of 15 combined leaks and
Traditionally, managers flag a main for
breaks per 100 miles per year on utilityreplacement when the costs of operating
owned distribution systems. Webcast replays
the main outweigh the cost of replacing
are available at no charge to subscribers,
or rehabilitating it. Managers addressing
allowing utilities to learn more about
infrastructure renewal issues may also
these measures of distribution system
benefit from a review of Customer
optimization. It is the intent of PSW to launch
Acceptance of Water Main Structural
its distribution system optimization program
Reliability (2005, order#91081/
in February 2011.
project#2870). The report provides
a detailed assessment of customer
The Foundation strongly believes its
sensibilities related to infrastructure,
research into the causes and costs of main
providing guidance on what factors are
failures can benefit many subscribers.
of most concern to customers, how best
These reports and Webinar can be accessed
to communicate with customers about
when a utility faces the immediate
infrastructure failures and replacement,
challenge of a series of breaks or when
and how to assess customer tolerance for
planning its long-term response to strategic
failures. While it is commonly understood
asset management.
that customers want or demand no failures,
28
GASB 34
GASB 34Not a Significant Driver

for Asset Management
at U.S. Water Utilities
Frank Blaha, Water Research Foundation senior project manager and Peter Gaewski, Tata & Howard Inc.
After the issuance in 1999 of Governmental

Accounting Standards Board (GASB)
Statement No. 34, Basic Financial
Statementsand Managements
Discussion and Analysisfor State and
Local Governments (GASB 34), there was
discussion in the water community about
how this new standard was going to be a
significant driver of asset management
activities at U.S. water utilities. While
it appeared that compliance might be
difficult, it was thought it would be helpful
in getting needed resources to maintain
aging distribution systems. Even now,
GASB 34 is still sometimes cited as a new
requirement that will be driving asset
management activities at U.S. utilities
in the coming years. However, GASB 34
is over 10 years old and all compliance
dates for GASB 34 are at least seven years
in the past. In a recent evaluation of this
standard (GASB 2009), it was found to have
been successful overall, and not in need of
significant revision. Despite this generally
positive impact, as it specifically applies to
U.S. water utilities, GASB 34 has not been a
significant driver behind asset management
activities. An analysis of the requirements
in GASB 34 reveal why the impact to water
utilities has been minimal.
GASB 34 represented a fundamental
change in reporting requirements for local
government, as well as a significant change
for public accounting and the financial
markets. In particular, GASB 34 required
that full accrual accounting principles
were to be used for government-wide
statements, meaning that revenues and
costs were to be accounted for as they

occurred, and costs could not be shifted
to future years by delaying payment. GASB
34 required state and local governments
to report on long-lived infrastructure
capital assets such as roads and bridges
installed since 1980, and include in their
statements the financial commitment
to those assets. In particular, GASB 34
required state and local governments to
calculate the financial commitment to
long-lived infrastructure assets in one of
two ways. One was to establish the original
cost of the infrastructure assets and report
how much of the estimated original cost
had been used up (depreciated) over
that time. This depreciation method
of accounting for infrastructure assets
was termed the Traditional Approach.
Alternatively, state and local governments
could, if they met certain requirements,
report as an expense the cost to maintain
or renew those same infrastructure assets
on an annual basis. This second method
of accounting for infrastructure assets was
termed the Modified Approach and was
viewed by many in the water community
as constituting an asset management
approach to maintaining infrastructure
assets. Clearly, these general statements
seem to set the stage for major impacts
in the water community, but there must
also be an accounting for the details
of what utilities are really subject to
GASB requirements, what assets are
really included, and how the financial
commitment to those assets are addressed.
continued next page
29
GASB 34
First, GASB 34 is written for state and local

government and not specifically for water
utilities, so some aspects of GASB 34 do
not correlate well with the reality of water
utilities. For example, this standard does
not apply to investor-owned water utilities,
so immediately a number of water utilities
are not impacted by GASB 34, which lessens
its overall impact. Where the utility is
reported as part of a municipal government,
as opposed to being its own enterprise zone,
the financial director of the city is likely
going to use the more common Traditional
Approach (depreciation method) for
assessing the value of all assets, and not
treat the water utility assets any differently
than other city assets. This approach is
easier, more familiar, and accepted, so
again there is a tendency to avoid the asset
management outcomes that are potentially
inherent in GASB 34.
Also of importance in understanding the
diluted impact of GASB 34 on water utilities
is the age criterion of infrastructure assets
that are addressed in this standard. The
infrastructure assets included in GASB
34-compliant financial reports only need
to date back to 1980. Assets installed in
1979 or earlier do not need to be included
in the financial reporting, and almost all
water utilities have large quantities of pipe
installed long before 1980 still serving
successfully. It is the older pipe that is
generally of concern to utilities when they
point to the need for infrastructure renewal
and the large funding gaps necessary for
this renewal.
Even when a utility or finance director
wants to use the Modified Approach (asset
management) to address infrastructure
assets, the time and difficulty in setting up
a Modified Approach system seems fairly
daunting. The GASB 34 requirements to
create a Modified Approach include:
30
Establishing, and making public,

condition goals for the assets, which are
being reported.
Estimating spending levels necessary to
achieve or maintain the condition target.
Comparing the estimated need to
maintain the asset with actual spending
levels.
Documenting that the assets are being
preserved in approximately the condition
goal that was established.
These requirements are further perceived to
require that a system of managing the assets
be established that includes:
Having a current asset inventory.
Assessing and establishing the current
condition of the asset inventory and/or
assets.
A basis for tracking the condition of the
assets.
The condition assessment of the assets
should be done at least every three years.
The results of the three most recent
assessments should show that the
infrastructure assets are being preserved at
or above the established condition level.
The requirements for establishing
a Modified Approach to managing
infrastructure assets are substantially
difficult and time consuming if applying
these to potable water distribution systems.
Thus, these requirements are likely to
result in few utilities pursuing a Modified
Approach to reporting infrastructure asset
value.
Finally, utilities using the Traditional
Method of addressing the changing value of
assets are depreciating historical cost, and
the historical cost of a pipeline network
from 1980 is simply not representative of
GASB 34
current replacement value for an equivalent

pipeline, even less so for pipelines installed
prior to 1980. Thus, the GASB 34-compliant
numbers that result from this exercise are
not representative of the replacement costs
that utility companies are familiar with.
The costs reported by USEPA and others for
maintenance of water infrastructure assets
run into hundreds of billions of dollars
over the next 20 years (USEPA 2009), yet
this would not be the result of a GASBcompliant analysis.
The impact of GASB 34 on drinking water
utilities is much less than some predicted
for a number of clear and understandable
reasons, with a few of the major reasons
identified above. While GASB 34 is a driver
behind asset management activities at
some utilities, it is by no means a major
driver across the country for improved
water utility asset management. Without
substantial changes to its structure, it
seems unlikely that GASB 34 will become
a major driver behind water utility asset
management activities in the near future.
References
Cromwell, J. Personal email correspondence with Peter Gaewski, April 2010. USEPA (U.S. Environmental Protection
Agency). 2009. Drinking Water Infrastructure Needs Survey and Assessment: Fourth Report to Congress. EPA 816-R-09001. Washington, DC: Office of Water, Office of Ground Water and Drinking Water, Drinking Water Protection Division.
http://water.epa.gov/infrastructure/drinkingwater/dwns/needssurvey.cfm
Governmental Accounting Standards Board (GASB). 2010. Facts about GASB, Government Accounting Standards Board,
2010 2011. Norwalk, CT: GASB. http://www.gasb.org.
Governmental Accounting Standards Board (GASB). 2009. The Users Perspective, Statement 34, 10 Years Later.
Norwalk, CT: GASB, http://www.gasb.org.
Governmental Accounting Standards Board (GASB). 1999. Statement No. 34, Basic Financial Statementsand
Managements Discussion and Analysisfor State and Local Governments. Norwalk, CT: GASB.
31

Infrastructure Decision Making:
Expanding Performance Criteria
Matt Smith, Philadelphia Water Department
The Philadelphia Water Department (PWD) needs to make decisions about drinking water infrastructure for
replacement and renewal, maintaining water quality, and smart abandonment of redundant mains. PWD also wants
to coordinate drinking water, sewer, and storm water infrastructure projects to minimize construction costs. PWD is
exploring additional data and criteria to be considered for these decisions.
PWD has an established process for both facility and street-side capital planning. High priority projects are readily
identified and routine time related intervals for capital projects for facilities are scheduled in the 35 year horizon based
on previous experience of facility and design staff. Planning for street-side capital improvements is achieved through a
PWD developed scoring system, which feeds projects to the design branch.
Capital facilities inspection protocols were developed for condition assessment of unit processes to assist facility
managers in planning capital projects. The internally developed scoring system addresses street-side infrastructure
capital planning, but could be improved upon with the consideration of more performance criteria.
The tools were in place for planning capital expenditures for its assets; however, PWD was managing its assets instead of
doing asset management. The concept of asset management can be a daunting task. The Water Research Foundation
report, Asset Management Planning and Reporting Options for Water Utilities (AMPRO), (order#91095/
project#2848) was helpful because it compiled utility experiences on managing assets and added the concept of
building blocks for developing a program. The publication offered 3 different approaches to determining asset condition
and planning renewal and replacements. The Basic approach used traditional concepts of valuation and service life. The
High-End approach used key performance measures to assess asset condition. The Strategic approach incorporated
elements of Basic and High-End approaches plus some additional features. The High-End and Strategic approaches
screened nearly 50 performance measures, narrowing them down to 7 performance measures including:
1. service reliability-interruptions
2. service reliability-main breaks
3. water quality
4. R&R status
5. maintenance activity
6. preventive maintenance
7. age vs. service life
The participating utilities favored the Strategic approach, followed by the High-End and Basic approaches, noting that
any approach is better than nothing. The research team found that setting system-specific weights to the performance
criteria and system-specific scales in assigning value points was valuable in addressing likely decision-maker and
stakeholder interests. Data management was acknowledged to be a greater challenge for the High-End and Strategic
approach. Data presentation objectives were shown for consideration by utilities depending on the audience.
Overall, AMPRO is a valuable publication for utilities to utilize whether they are just beginning an asset management
program or have pieces in place, and offers suggestions to further the development of their program.
Reference
Matichich, M., R. Booth, J. Rogers, E. Rothstein, E. Speranza, C. Stranger, E. Wagner, and P. Gruenwald. 2005. Asset
Management Planning and Reporting Options for Water Utilities, order #91095/project #2848. Denver, CO:
Awwa Research Foundation.
32
Data Management
Key Asset Data for Water Sector Utilities

Jeff Oxenford, Oxenford Consulting, LLC
The Water Research Foundation and Water

Environmental Research Foundation jointly
funded the project, Key Asset Data for
Water Sector Utilities (project#4187). The
goal of this project was to create a list of
terms and a classification system that explain
key drinking water and wastewater system
assets and related performance indicators
to promote continued development of asset
management programs.
A literature review and survey were
conducted to identify current practices
and possible sources for terminology. Two
workshops were held with participating
utilities and other organizations to gain
insights and consensus on terminology
used, current practices, and level of detail
needed to support asset management
programs. Public comment was solicited via
an interactive Website.
The project, which is scheduled for
completion in 2011, will provide the
following components:
Asset hierarchy A generic three level
asset hierarchy was developed to provide
structure in identifying key assets. The
hierarchy identifies approximately 500
water and wastewater asset terms. The
hierarchy is viewed as a framework for the
other output from the project and not the
definitive structure to be used by asset
managers as most asset managers already
have such structures in place.
Performance indicators Performance

indicators (PIs) are quantifiable
measurements, agreed to beforehand,
that reflect the critical success factors of
an organization. Over 50 key water and
wastewater PIs were identified to support
asset management programs. Indicators
were divided into two tiers based on
recommended priority. For each indicator,
definitions, assumptions, methods to
calculate, and values reported in the
literature are summarized. The PIs chosen
are those commonly associated with the
assets. Other indicators relating to human
resources and financial issues were not
always included.
A-Z glossary Definitions were developed
for each of the assets, attributes, and
terms used to describe PIs. This included
definitions for assets like sewer force
mains and descriptive terms like water
main breaks.
The Website, www.assetdata.org, was
developed to support the project.
Subscribers can log on and view the
hierarchy, attributes, PIs, and glossary.
The Foundation is exploring options for
hosting the Website after the project has
been completed so that it may continue to
be used and modified. To assist utilities in
using this content, all products are available
in the Microsoft Word format.
Attributes Attributes are data that is or

should be collected about the asset to
support management and operations
functions including maintenance and
replacement decisions. The report
provides a summary attribute data that
should be collected about assets.
33
Join in
Make the Most of Your Foundation Subscription.
Read one of our more than 800 reports

Listen to one of our Webcasts
Read our enewsletters and print publications
Guide the research agenda
Participate in an advisory committee
Apply for co-sponsorship of your research
Help with our research

AWR Asset Management

Hochgeladen von

Dokumentinformationen

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

AWR Asset Management

Hochgeladen von

Copyright:

Verfügbare Formate

Drinking Water Research

Advancing the Science of Water

Drinking Water Research

Advancing the Science of Water

GASB 34Not a Significant Driver for Asset

Drinking Water Research Statement of Ownership, Management, and Circulation

OCTOBER DECEMBER 2010 S DRINKING WATER RESEARCH

Helping Utilities Manage Their Assets

Roy L. Wolfe, PhD

Robert C. Renner, PE, DEE

DRINKING WATER RESEARCH S OCTOBER DECEMBER 2010

The Benefits From Collaborative

The Water Research Foundation (WaterRF)

OCTOBER DECEMBER 2010 S DRINKING WATER RESEARCH

The Foundation and WERF have

to be completed in 2011, will focus on

failures, with higher levels of confidence

Water Research Foundation Asset Management Projects

Asset Management Research Needs Roadmap (order#91216/project#4002)

Risk Management Tool (order#91246/project#4126)

Benefit Cost Analysis Tool (order#91260/project#4127)

Case Studies of Best Practice and Innovation in Asset Management (order/project#4111)

Key Asset Data for Water Sector Utilities (project#4187)

DRINKING WATER RESEARCH S OCTOBER DECEMBER 2010

aSSET mANAGEMENT dEFINED

Asset Management: Different

During the Water Research Foundation

ownership: managing assets to minimize

United Utilities North West, Warrington,

A search of some key asset management

The American Association of State

OCTOBER DECEMBER 2010 S DRINKING WATER RESEARCH

The combination of management, financial,

aSSET mANAGEMENT dEFINED

Asset management seeks a systematic,

DRINKING WATER RESEARCH S OCTOBER DECEMBER 2010

aSSET mANAGMENT sTATUS

Asset Management in North America

Are utilities using asset management (AM)

or established levels of AM practice (scores

The majority of the 330 cities surveyed by

OCTOBER DECEMBER 2010 S DRINKING WATER RESEARCH

aSSET mANAGMENT sTATUS

Only 40% have a formal program, 30%

The U.S. Conference of Mayors survey

The U.S. Conference of Mayors survey

The results of the case studies, survey, and

DRINKING WATER RESEARCH S OCTOBER DECEMBER 2010

aSSET mANAGMENT sTATUS

made with implementing AM programs,

to-failure approaches to ones that may

SIMPLE: Sustainable Infrastructure Management

OCTOBER DECEMBER 2010 S DRINKING WATER RESEARCH

(SAM GAP), Benefit Cost Analysis Tool (BCA),

How to Access SIMPLE

Case StudIES and Value of Research

How to Access the SAM

DRINKING WATER RESEARCH S OCTOBER DECEMBER 2010

Case StudIES and Value of Research

OCTOBER DECEMBER 2010 S DRINKING WATER RESEARCH

Customer Preferences and

Aging infrastructure, population growth,

Utilities (project#4085) to develop tools,

Economic valuation surveys can provide