Multisector Asset Management Case Studies
Presented by
U.S. Environmental Protection Agency
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U.S. Department of Transportation,
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US. Department of Transportation
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Table of Contents
CHAPTER 1 INTRODUCTION 1-1
Section 1 Background 1-1
Section 2 The Approach to Case Study Development 1-2
Section 3 Participating Communities 1-3
Section 4 General Findings 1-3
Section 5 Acknowledgements 1-4
CHAPTER 2 THE CALGARY, ALBERTA, CANADA EXPERIENCE 2-5
Section 1 Executive Summary 2-6
Section 2 Calgary's AM Vision and Triggers for Initiating AM 2-8
Section 3 Lessons Learned 2-14
Section 4 Benefits of AM 2-16
Section 5 Calgary's AM Program — Where is it Today? 2-16
Section 6 What's Next? 2-21
Section 7 Background Facts 2-22
CHAPTER 3 THE HAMILTON, ONTARIO, CANADA EXPERIENCE 3-24
Section 1 Executive Summary 3-25
Section 2 Hamilton's AM Vision and Triggers for Initiating AM 3-28
Section 3 Lessons Learned 3-31
Section 4 Benefits of AM 3-33
Section 5 Hamilton's AM Program—Where Is it Today? 3-35
Section 6 What's Next? 3-37
Section 7 Background Facts 3-38
CHAPTER 4 THE HENDERSON, NEVADA EXPERIENCE 4-40
Section 1 Executive Summary 4-41
Section 2 Henderson's AM Vision and Triggers for Initiating AM 4-43
Section 3 Lessons Learned 4-45
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Section 4 Benefits of AM 4-47
Section 5 Henderson's AM Program—Where is It Today? 4-48
Section 6 Foundation Projects 4-49
Section 7 Information Technology Plans 4-50
Section 8 Status of Core AM Practices 4-50
Section 9 Background Facts 4-54
CHAPTER 5 THE PORTLAND, OREGON, EXPERIENCE 5-56
Section 1 Executive Summary 5-57
Section 2 Portland's AM Vision 5-58
Section 3 Lessons Learned 5-59
Section 4 Benefits of AM 5-59
Section 5 Agency Facts and Key Institutional Players 5-59
Section 6 Triggers for Initiating AM in Each Bureau 5-61
Section 7 Portland's AM Program - Where is it today? 5-64
Section 8 What's Next? 5-68
CHAPTER 6 THE SACO, MAINE, EXPERIENCE 6-70
Section 1 Executive Summary 6-71
Section 2 Saco's AM Vision and Triggers for Initiating AM 6-73
Section 3 Lessons Learned 6-76
Section 4 Benefits 6-77
Section 5 Agency Facts 6-78
Section 6 Saco's AM Program—Where is it Today? 6-80
Section 7 What's Next 6-81
CHAPTER 7 SUMMARY AND CONCLUSIONS 7-82
Section 1 For Elected Officials and Decision Makers: 7-82
Section 2 For Managers and Department Heads: 7-83
Section 3 For Practitioners of Public Works: 7-83
Section 4 For Citizens: 7-84
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CHAPTER 1 INTRODUCTION
Section 1 Background
North America's infrastructure is integral to our economic, environmental, and cultural vitality.
Federal, state, and local entities have been successfully building and operating assets for
generations. Across several sectors, our built assets are aging! Some roadway, water, and
wastewater systems are more than 100 years old.
To meet the renewal challenges and at the same
time address the essential expansion and upgrade
of our infrastructure, calls for exploring new
processes, practices and skills crucial for the
long-term sustainable management of assets.
Portland commissioners are
supportive of the AM tool, because "it
helps convey to citizens how their
money is spent." The mayor stated
that the "longer we put this off, the
faster the deterioration of the
infrastructure."
—Portland Case Study
New, internationally tested asset management
(AM)' principles and practices appropriate
across multiple sectors are surfacing in the
United States (U.S.) and Canada. These
innovative AM methods offer established
approaches for communities; in systems monitoring capabilities, information handling, and
advanced decision support systems that can function across service sectors (e.g., water,
wastewater, highways, airports, mass transit). These new tools and techniques are timely in that
they enable us to think about choices in more sophisticated ways and enhance our understanding
of condition. They facilitate the capacity to better predict failures and in so doing help decision
makers to draw more informed conclusions about optimal investment and reinvestment strategies.
At the more sophisticated levels, these
approaches take into account the service
requirements across several sectors.
AM processes and practices have emerged as a
strategic approach to infrastructure focused on
the managerial, business, and engineering
processes that enable better decision making.
The modern processes are adept at guiding
decisions considering the effective mix of
maintaining, repairing, renewing, or replacing
components within and across systems.
The Henderson mayor and council
stated that the reason for developing
an AM strategy was because it
demonstrates good business and
good stewardship. Leaving a legacy is
important to the City's culture.
—Henderson Case Study
AM strategies recognize that the key issues and drivers relating to infrastructure management are
the same across infrastructure sectors and across all communities with mature infrastructure
systems. The best practice management of infrastructure and the whole of life cycle processes are
common for infrastructure assets, yet respect that the specific application practices related to
individual asset types will be different, e.g., condition assessment practices.
1 National Asset Management Steering (NAMS) Group. 2006. The International Infrastructure
Management Manual. The NAMS Group, Thames, New Zealand.
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Section 2 The Approach to Case
Study Development
The U.S. Environmental Protection Agency
(EPA) and the Department of Transportation,
Federal Highway Administration (FHWA) have
worked together to develop case studies to
support communities that are considering
multisector or "whole of government" AM strategies. These case studies are designed to gather
lessons learned and summarize the knowledge and experiences of entities that have adopted AM
approaches across multiple infrastructure systems.
For each case study, FHWA/EPA representatives interviewed city transportation, water,
wastewater, and planning staff and compiled the information. City representatives reviewed the
resulting material. Each case study presents background information on the city's infrastructure,
history of, and reasons for applying AM tools; lessons learned to date; and benefits of AM. These
case studies also assess how far along each city is with applying best practices within each sector
(transportation, water, and wastewater).
The activities generally regarded as the steppingstones to effective AM programs include the
following:
¦ Develop an asset inventory (a list of
assets and their principal components).
¦ Assess asset condition and failure modes
(quantifying the deterioration rate and
remaining useful life of an asset).
¦ Determine residual lives (what is the
remaining useful life of the asset?).
¦ Evaluate life cycle and replacement
costs/economic evaluation (the sum of
all costs throughout the life of an asset, including planning, design, acquisition,
construction, operation, maintenance, rehabilitation/renewal, and disposal costs).
¦ Set a target level of service (a defined standard against which the quality and quantity of
service can be measured). A level of service can include reliability, responsiveness,
environmental acceptability, customer values and cost.
¦ Determine business risk exposure/criticality (the chance of something happening that will
have an effect on objectives). Risk is measured in terms of likelihood and consequences.
¦ Optimize operations and maintenance investment (keeping an asset operating as designed
or preventing it from deteriorating prematurely).
¦ Optimize capital investment strategies.
¦ Determine funding strategies.
The Calgary AM program has enabled
staff to more easily obtain requested
funding for infrastructure needs, based
on better data.
—Calgary Case Study
In Hamilton, "AM helps us show the
total picture to our constituents, and
helps us build the business case. I
highly recommend this process to
other cities."
—Hamilton Case Study
Build an AM Plan (AMP) (an enterprise-wide plan that includes AM for multisectors).
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Section 3 Participating Communities
EPA/FHWA selected North American Communities that are diverse in geographic location and
size—from small to large—that are developing AM programs involving at least water and
wastewater and transportation sectors. The participating communities include the following:
¦ Calgary, Alberta, Canada
¦ Hamilton, Ontario, Canada
¦ Henderson, Nevada
¦ Portland, Oregon
¦ Saco, Maine
We encourage you to review the case studies and to note the wide range of approaches that have
worked in these communities. Note also the benefits listed by each participant and the lessons
learned from their unique experiences.
Section 4 General Findings
The case studies provide examples of good stewardship and proactive leadership, while
demonstrating and documenting the benefits that may accrue by effective collaboration across
sectors. The drivers, leadership strategies and approaches for instituting AM programs vary for
each community—some programs were initiated by upper management, and some began at the
staff level. The communities shared a common interest in applying AM principles, saw the
benefit of cross training on key elements and envisioned the value of shared program knowledge
across multiple asset sectors. In each case, knowledge and awareness of the benefits of AM were
strengthened over time. Each of these communities is at a different stage in their journey and the
particulars of their voyage vary, yet their common goal is to produce an enterprise, or corporate-
wide, AMP.
From an evolutionary standpoint, a precursor found in the staff and management of these
communities was their steadfastness in acquiring asset practice knowledge. The AM staffs shared
a passion for their work and were significantly engaged in exchanging information with their
counterparts and colleagues throughout the national and international AM practitioner
community. In addition, there were common underpinnings that provided the foundation for the
strategic and tactical undertaking at each
location:
An advocate(s) (a champion) was a
major factor in growing the practices.
Upper management valued information
and process improvements and linked
progress in these areas with sustaining
high quality services and improving
asset life cycle decisions, and
New England Water Environment
Association has sponsored a couple of
EPA AM conferences that were
instrumental to Saco's AM program
startup and development.
—Saco Case Study
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¦ City leaders invested in the strategies and embraced the stewardship aspects of long term
practice improvements as part of their leadership responsibilities in furthering the
sustained delivery of quality services.
Throughout the interview process, the people interviewed revealed deeply held legacy values.
There was a mutual respect in regard to the intergenerational aspects of building and sustaining
community assets. Also, throughout the interview process, the depth of community pride was
apparent; as was the noticeable job satisfaction associated with having a leadership or expert role
in the application of advanced practices
Section 5 Acknowledgements
EPA and FHWA wish to thank the city participants for their active engagement in this
assessment. The interviewees" insights into their particular experiences and knowledge of
program details and challenges were indispensable to the preparation of these case studies.
The case studies also include information and examples developed by city staff for AM status
reports, budget reports, and tools and techniques including in some cases information in regards
to particular software applications. As a disclaimer, please note that the exact practice
information, tools, models and software applications deployed by these organizations may not
directly transfer to other communities and nothing in this report is intended to imply
endorsement, product assessment or draw any conclusions as to particular application,
effectiveness or transferability of products referred to in the presentations.
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Multisector Asset Management Case Studies
CHAPTER 2 THE CALGARY, ALBERTA, CANADA EXPERIENCE
The City of Calgary (City) is the largest city in the province of Alberta, Canada. It is in the
south of the province in an area of foothills and high plains, approximately 50 miles east
of the front ranges of the Canadian Rocky Mountains. Calgary's economy is dominated
by the oil and gas industry. Geospatially, Calgary is the second largest municipality in
Canada, at 328 square miles. As of the 2007 civic census, Calgary's population was
1,019,942. Between 2001 and 2006, Calgary's population grew by 12.4 percent. In the
past few years, growth is actually down from 55,000 persons per year to 35,000.
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Section 1 Executive Summary
In 1999, the City recognized the need to focus on addressing its infrastructure. Calgary is
applying asset management (AM) principles across its transportation, water and wastewater
sectors, among others. Calgary's Corporate Asset Management Program (CAMP) is a corporate
function that coordinates AM among 13 infrastructure-related business units. The City's program
is quickly evolving and flourishing at both the strategic and operational levels. The City's CAMP
was formalized in 2004 and consists of the Corporate AM (CAM) team of six staff. The CAM
team is within the Infrastructure Services business unit. AM-trained personnel are also embedded
into other business units. The CAM team is responsible for:
¦ Developing the City's CAM strategy.
The annual Infrastructure Status Reports
(ISRs).
Promoting and assisting business units
with implementing AM principles.
Helping to develop business unit asset
management plans (AMPs).
A corporate-wide infrastructure AM
strategy is one of the City's key
corporate initiatives to address
Calgary's growing infrastructure needs
and crucial for effective service
management by the corporation.
—Infrastructure Status Report, 2004
¦ Ultimately developing and implementing a corporate (City)-wide AMP.
A key component of the vision for the City's CAMP was to separate the AM function from the
Finance Department while maintaining a strong partnership. The City's rationale for this was to
focus the management of the AM program on the business side of decision making at the
corporate level rather than from purely the accountancy perspective.
From its inception, Calgary's formal AM approach has been strategic in its vision and
organizational level. First championed by an executive-level manager, the effort has been fully
embraced by the City Manager. Much effort has been focused on building an enterprise-wide
perspective and framework, then moving in a structured manner into the mid- and lower-levels of
management.
Enterprise
wide common
framework,
developed
around a
"corporate"
management
focus
"Executive
Management'
impetus and
direction
approved by
City Council
Departmental
experimenta-
tion and
testing
Infrastructure
Status Report
Developed,
followed by
strategic
level AM
Improvement
"roadmap"
Focus now shifts
to departmental
implementation,
development of
Corporate AMP,
and integration
with growth
management
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Preceding the formal structuring at the executive
level, experimentation and application of
strategic AM practices was emerging in the
Utilities Department. The Utilities Department
endeavour included whole scale business process
redesign and business continuity, implementing
work and maintenance management systems to
enhance asset workflow and decision making
and a formal restructuring of their organizational
structure to better enable AM and service
delivery.
Ultimately, AM best practices will
provide asset stewards the right
information to make the right
infrastructure decisions at the right
time.
—Calgary's Asset Management Strategy,
2005
Unlike older communities, Calgary's impetus for embracing the multisector AM concept was
dealing with its rapid growth, driven to a large extent by the exploding international energy
industry. The City needed to balance growth and renewal needs. The City is overseeing the
development of 35 new communities in Calgary. At the same time, the City's infrastructure is
also aging—the majority was constructed during the economic growth period from the 1960s to
the mid-1980s. More stringent environmental requirements and rapidly increasing construction
costs are putting increasing pressures on the already limited funds for infrastructure investment.
A corporate-wide infrastructure AM strategy is
one of the City's key corporate initiatives to
address Calgary's growing infrastructure needs
and is crucial for effective service management
by the corporation. Calgary's CAMP supports
the City's growth and development by applying
a triple bottom line concept—assessing
economic, social and environmental issues. The
City is planning its growth around the Unicity
concept, which consists of one major core city ai
initiatives against sprawl intensification in favor
As a business practice, AM is based
on the underlying philosophies of the
Triple Bottom Line, Risk Management
and Lifecycle Costing, amongst
others.
—The State of AM Report, April 2008
adjacent communities. The City has developed
Calgary has recognized a number of benefits in applying AM, which include the following:
¦ The application of AM principles has begun to positively affect the quality of decision
making—there is more validated information available for assets on which to base project
prioritization and budget allocation decisions.
¦ AM program data is useful to better justify capital and maintenance expenses to the
public—the City can better make the case for what taxpayers are paying more for and
what new assets will cost them.
¦ The council is gaining confidence in the data provided under the CAMP.
The City is ahead of most cities in North America in implementing generally recognized AM
principles and practices and is working toward its goal of developing a CAMP.
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Section 2 Calgary's AM Vision and Triggers for Initiating AM
A. Initial Vision
Corporate AM Framework
Strategy, Asset Info, People,
Processes & Systems
In 1999, the City recognized the need to focus on addressing its infrastructure needs. The City
established CAMP, oversaw the development of the CAM Strategy and developed annual ISRs to
provide council and senior management with information that supports decision making. The
City's efforts pulled together into a corporate focus several separate and rather independent
forays into AM that had been for some time informally initiated in several departments, most
notably, Roads and Water. These early efforts were internally focused within the departments and
targeted the application of practices; specific and relevant to the nature of each department's
unique service requirements. In 2004 Calgary's city council formally approved the corporate AM
program.
Calgary's AM vision for a successful
corporate AM program includes:
* Separating management of the CAM
function from the Financial Services
Department, while maintaining a
partnership;
¦ Developing business unit AM
strategies;
* Developing business unit AMPs
and, ultimately, an integrated
Corporate AMP;
* Restructuring the capital budget
process to connect 3-year business
plans with 3-year budgets;
* Using an Expert Choice business
model to rank and schedule projects;
¦ Integrating the information
technology (IT) process at the
strategic level; and
¦ Involving land use planners in
developing and implementing the
Corporate AMP.
As indicated above, before instituting the
vision of the CAMP, the Water Resources
and Roads departments were applying AM
concepts. In 1973, the Water Resources
Department started its main break program
Corporate Asset Management
Plan
Do - Check
Act
Asset Infra Infra '"j!?
Managers planning Invest
(ops) (flM plan) (Cap Budget,
Advocate Asset
Infra Stewards
Sustain
(Council)
People Competencies
Information Systems
Efficient Processes
Asset Information / Data
Triple Bottom Line, Service & Risk Mgmt
Calgary's CAM vision focuses on four key elements
that must be in balance to consistently meet service
levels and minimize the overall cost of asset
ownership—Strategy, Asset Information, People,
Processes and Systems.
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and built a database to track main breaks and house data for making main replacement investment
decisions. In a parallel endeavour, the Roads Department had developed a pavement management
system which it used to create its pavement investment plans, several years before CAMP. As
CAMP evolved, the Roads Department expanded the sophistication of its decision-making
systems by including more advanced AM concepts.
Calgary's AM governance model is not based upon a traditional centralized command and control
approach. Innovation is not dictated from the corporate office down to the various departments.
¦ Changes to current AM practices can be
developed at the corporate level (for
example, in the consistent approach on
AM planning, budgeting or governance).
¦ Or, at the departmental level (including
implementing business continuity and
benchmarking practices specific for the
Utilities Department or the use of GIS in
asset decision making in the Roads
Department).
In either case, Calgary leverages a cross-
departmental group of AM practitioners (known
as the AM Network) to disseminate and share
AM practice innovations.
¦ All AM practices are first tried in
limited pilot applications, baseline
results are established, cost-benefit
analyses are conducted, programs are
established or changed, and results are
checked.
¦ If the results warrant, the practice is
documented in the departmental AMPs
and is spread throughout the corporation via the AM Network.
This process assures that the City is confident in its plans because they have been substantially
tested, tweaked, and consensus arrived at with the practitioners. It also provides an organic and
efficient way of innovating AM both in the departments and at the corporate level.
B. AM as a Strategic Level Corporate Function
In 2004 Calgary's CAMP was formalized as a strategic-level, corporate function. The objective
was to provide a coordinated business link among the many operational, engineering-focused,
asset-managing business units and strategic, mid- to long- range planning, land use, IT, and
financial functions.
Formalizing AM as a corporate
function is a fabulous opportunity for
breaking down silos. The CAM team
can link into and coordinate projects
and provide AM services to all
business units.
—Steve Wyton, CAM Manager, 2008
Calgary staff suggests the following
keys to success:
• Separate CAM from the financial
department
• Integrate the information technology
process at the strategic level
• Integrate people involved with land
use early
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The CAM Office was established as a line of
business in the fall of 2004. The AM core team
consists of six staff, but AM support staffs are
also embedded in other business units. Through
this approach, the AM function and AM strategy
is strapped on (linked) to core City functions at
the strategic level. The CAM Manager
emphasized that this embedded approach is a key
element central for success. The CAM team is
considered to be an internal consulting group that provides direction to business units regarding
five key AM business functions: (1) Infrastructure Strategy and AM Planning, (2) Infrastructure
Investment and Capital Budgeting, (3) Infrastructure Performance Measurement and Program
Reporting, (4) Infrastructure Asset Management Advocacy, and (5) Strategic Program Support
Services. Calgary recognized early that it was important to bring land use planners on board early
in the process.
C. AM Program is Separate from
Financial Operations
A key aspect of Calgary's vision for a
successful AM program is that most of the
CAM Office is separate from the Financial
Operations Office. Although the offices work
together on projects there is an intentional
separation that protects the grassroots/technical
engineering functions and decisions from being
counteracted purely from the
financial/comptroller perspective.
The separation focuses Calgary's AM program
on the managerial side of decision making at the corporate level rather than from solely the
accountancy perspective. The result is that it enables the CAM team to better play its role as
integrator of AM practices into all business unit areas. The impetus is from a strategic level (City
Manager's Office). The organizational separation enables the CAM team to focus on the technical
aspects of infrastructure assets such as residual lives and risk management.
In addition, to proceed with Calgary's AM vision, it was important to reform the Financial
Operations Office's role and to encourage financial staff to think less like accountants and more
like financiers. (Traditionally, governmental financial accounting is restricted to using historic
costs rather than replacement costs, thereby severely limiting the utility of the financial reports
for infrastructure investment purposes; managerial accounting, on the other hand, may
incorporate replacement costs, which are much more relevant to investment decision making.)
Calgary's approach respects that both perspectives are necessary for prudent decision making.
D. Strategic Planning—CAM Strategy
City council approved CAMP and Calgary s Asset Management Strategy in 2005. The Strategic
Infrastructure Asset Management framework is a suite of corporate-wide business planning
Keeping CAM separate from the
finance department has been critical.
It has forced financial staff to think
outside the box when looking at
infrastructure funding needs.
—Steve Wyton, CAM Manager, 2008
Calgary has risen to the challenge by
developing a proactive strategy to
effectively manage its asset inventory.
This AM Strategy is the foundation for
infrastructure best practices that will
allow us to provide effective municipal
services while balancing smart growth
with a sustainable quality of life.
—Calgary's Asset Management Strategy,
2005
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processes, systems and tools that integrates the capital intense operational business units into a
common AM approach.
The objective of Calgary's AM program is to ensure the corporate-wide sustainability of service
through the strategic management of infrastructure assets. The program is enabled by instituting
(1) risk-based capital investment decision making, (2) mid- and long-term infrastructure planning,
(3) life cycle forecasting and (4) infrastructure performance measurement that links infrastructure
decisions to corporate financial, economic and growth policy.
E. Strategic Planning—Business Unit AM Strategy
Calgary's AM approach also involves applying AM strategies at the business unit/operational
level. The capital-intense service providers in the City are quickly adopting AM concepts at the
operational level. The business units are beginning to use operational AM techniques to; (1)
provide work and maintenance management, (2) manage and plan for infrastructure condition and
functionality, and (3) develop capital and operating budgets for their specific service areas. The
CAM team respects the importance of allowing the business units to develop their own best
practices, recognizing that staff members at that operational level are the best positioned to define
the detailed business processes. The development and adoption of operational AM best practices
and processes are at various levels and degrees of implementation and operation, depending on
the business unit.
F. Business Unit AMPs
To promote development of business unit AMPs, the CAM team has developed a document
entitled The Asset Management Planning Guidelines. The guidelines are designed to enable
business units to understand the basis and need
for AM plans and to provide a framework for
developing the AMPs. The business unit AMPs
documents the framework for achieving the
business unit's goals and, ultimately, the
corporate strategic goals by focusing on levels of
service, life cycle AM planning and the resulting
long-term cash flow requirements.
Life cycle costing is the brains of AM,
and the process gives you hard data
to determine funding gaps.
—Steve Wyton, CAM Manager, 2008
The CAM team has also developed the Asset Management Plan Framework, which is an
annotated Table of Contents for the business unit AMPs. It provides a succinct overview of an
AMP and describes each of the plan's required elements. The CAM team creates buy-in to the
concept of the business unit AMPs by reminding staff that the plans basically pull together what
the business unit is already doing and provides the information needed for budget requests. The
business unit AMPs also help managers assess needs requests and prepare project funding
decisions.
To obtain a snapshot of each business unit's
current capabilities and competencies with
respect to applying AM principles, the CAM
team hired a consultant to conduct an AM
assessment and develop AM improvement
strategies. The assessment was built on the
Calgary's Corporate Asset
Management team linked operational
AM, land use planning, finance and
economics to create its Infrastructure
Strategy.
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British version of the Australian AM framework and consisted of a questionnaire (29-questions).
The findings were summarized in the Asset Management and Assessment and Improvement Plan
in July 2008. This report provided the CAM team with valuable information about how to better
coordinate between business units and how best to break down the silo mentality among groups.
It's intended to facilitate development of business unit AMPs. Business unit assessments have
been completed for Recreation, Fire, Emergency Medical Services, Water, Waste and Recycling,
Roads, Transit, Fleet, IT, Corporate Properties and Parks. Outstanding assessments include
Animal and Bylaw Services, Police, and Development & Building Approvals.
G. Corporate AMP
The ultimate, long-term goal for the business unit AMPs is to roll them up into a Corporate AMP
that will organize and document the process and provide a comprehensive, sustainable approach
to citywide AM. The City expects to start generating its Corporate AMP this year (2008). The
Corporate AMP will link land use data to the capital budget and provide an integrated plan for
how services will be delivered. The eventual result of the Corporate AMP is an integrated
citywide infrastructure investment strategy.
H. Restructured Business Planning Approach
Before the CAMP could be fully implemented, the City needed to reform the capital budget
prioritization process. Since 2005, the City has been implementing a new approach for business
planning and is developing 3-year business plans coupled with 3-year budgets. Calgary refers to
this process as the Business Planning and Budget Creation (BPBC) process, which is coordinated
by the City Manager's Office and staffed from the Finance Department. The CAMP has
developed a parallel process, the 3-Year Strategic In frastructure Asset Management Business
Process (SIAM), which links AM planning, capital budgeting and infrastructure performance
measurement, and which specifically links capital prioritization of the Pay-As-You-Go and Life
Cycle Reserve to the larger BPBC process.
Prioritization of the capital budget is a CAM function (based on risk); and the Finance and Supply
group develops the operation and maintenance budgets. The business plan/budgets require that a
business case is developed for each project, and each business unit must include 100-year
infrastructure life cycle sustainability forecasts and 10-year capital investment plans.
After a detailed design process in 2009, the intent of the 3-year, SIAM business process is to link
the various operational infrastructure AM programs to other corporate-level business planning
and financial decision-making/reporting processes (1) the Multiyear BPBC process, (2) the Long
Range Financial Plan and (3) the Public Sector Accounting Board (PSAB) Tangible Capital Asset
process. 2009-2011 will be the first budget cycle using business case and business unit
information which integrates 3-year capital and operating budgets together. At its fully mature
stage, the SIAM will facilitate the provision of timely, accurate, and relevant business unit
information to the council and senior management.
I. Decision Tools
For 3 years, the City has used a decision-making process (Expert Choice Business Model
Software) to assist with the prioritization of capital expenditures. The process applies a triple
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bottom line concept and uses 21 criteria to
prioritize every project. The model facilitates a
cost-benefit assessment to identify the best
investments related to how much money is
available. This information is presented to an
Infrastructure Coordinating Committee (ICC) for
final decisions on project prioritization.
The City is also piloting the use of the RIVA
(Real-Time Inventory Valuation and Analysis) in
its major Business Units. This tool is designed to
support infrastructure life cycle modelling and
analysis. The system has the capacity to integrate
information from the various operational AM
systems (including Hansen, DataStream 7i,
Oracle World (SPL), Calgary's financial system
(PeopleSoft) and geographic information system
(GIS) (ESRI). The concept is that better
integration across operational support systems
improves strategic infrastructure business intelligence and improves asset decisions.
J. Infrastructure Status Reports
The ISR is an integral component of Calgary's integrated CAM strategy. In 2003 the Mayor
wanted to know, "What are we missing—what are we not funding that we should be funding?"
The first ISR was developed in 2004 and is considered by staff as the platform and impetus for
AM. The ISR provided the response to the Mayor's request and put a value on what infrastructure
projects should be funded. The ISR was designed to onboard (bring aboard) the council and line
departments. The line department managers had resisted the ISR until they saw how council was
using it and, thus, its value.
Upon implementation of the SIAM business process in the 2009/11 business cycle, the ISR will
compare infrastructure performance against business environment indicators and financial trends
and present the expected future effects on service targets and financing levels. While the ISR
currently provides a 10-year outlook for infrastructure performance, in the near future, it will
align the 10-year infrastructure capital plans within business unit AMPs. Thus, the ISR will be
used to make minor annual adjustments to service targets previously set in the 3-year AMPs and
to provide guidance for setting service levels for each subsequent 3-year infrastructure AMP.
K. Urban Alliance
Another component of Calgary's AM vision is the Urban Alliance program. Under this program,
the City and the University of Calgary conduct research on how to measure the effect of
infrastructure investment from the triple bottom line standpoint. The City's CAM team recently
conducted a pilot project with the University's Centre for Social Work Research and Professional
Development. The purpose of the small pilot project was to explore the social bottom line for
infrastructure, identify key social factors relevant to infrastructure, and develop a draft model to
be applied to infrastructure decision making.
The ISR is aligned with National
Research Council of Canada's
recommendations for municipalities to
be able to answer these six key
questions:
• What do we own?
• What is it worth?
• What is its remaining service life?
• What condition is it in?
• What do we spend and what should
we spend?
• What is the gap?
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CAM'S Vision:
To support the Corporate Vision of Calgary, the best place to live, through the strategic enablement of
safe and reliable infrastructure. —Program Charter, 2004
CAM'S Mission:
To implement and continuously improve asset management and stewardship. —Program Charter, 2004
CAM'S Mandate:
To manage Calgary's Asset Management Program by providing leadership and advice regarding the
implementation of Strategic Infrastructure Asset Management best practices throughout the City of
Calgary. —Calgary's Asset Management Strategy, 2004
Section 3 Lessons Learned
The City has learned many lessons developing and implementing its CAMP:
1) Developing a strategic infrastructure AM business process was an imperative to facilitate the
provision of timely, accurate and relevant information to council and senior management
from AM business units that operated the infrastructure.
¦ In building an AM program, start with a long-term view and recognize that its
development will take some time. (Do not set in concrete a firm time frame; it is a setup
for failure).
¦ A successful AM program requires a
commitment of front-end training of
staff and demands using a common AM
language. It was important to speak in
plain English and use common terms.
2) Start with things that are most practical and
meaningful.
¦ In the beginning, stick with basic
questions such as, "What do we own?
What is it worth?" [This can be
considered the Phase 1 deliverable]. If
this information is refined within 2-3
years, that is a good start].
¦ From there the program can move to
conducting risk analysis and budgeting.
3) It is essential to coordinate the delivery of
infrastructure at a community level across
business areas. The City has learned to take a
more hands on approach to the delivery of
infrastructure to build whole communities,
which is imperative to development in a new
area.
4- The AM program has enabled
staff to more easily justify
required funding for
infrastructure needs, based on
better data.
4- The general competency in
applying AM concepts has
dramatically risen, and senior
staff takes the program seriously.
4- The council is becoming more
familiar with AM concepts and
terminology.
4- As a whole, the City has come a
long way but still has work to do.
He further stated that
4- This is a double-edged sword, we
get the money, but then we need to
deliver in infrastructure renewal
and construction.
—L. Brad Stevens, General Manager Asset
Management & Capital Works
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4) Do not hesitate or give in to analysis paralysis; just take the leap into AM.
¦ It is important to encourage a hands-on approach from staff. Allowing staff to get their
hands dirty and actively participate in infrastructure needs assessments and solutions
might be the best way to obtain tangible, short-term gains/savings in AM and set the
stage for rolling ideas from lower staff levels to corporate strategic levels.
¦ City staffs realize that it is easier to make this suggestion because Calgary's executive
management supports implementing AM principles.
¦ A strictly top-down approach can exhaust the budget before gains are realized.
5) Development of the Roads business unit pilot AMP showed staff how to integrate advanced
AM concepts into long term planning horizons.
¦ Do not make the corporate strategy too prescriptive. Staff should be allowed to
collaborate, which leads to more innovation, rather than be stifled by a strict, prescriptive
strategy.
¦ Develop a program framework and processes that allow for continual evolution,
improvement and innovation. Often, municipalities will establish new programs but
inadvertently solidify processes that were intended to evolve overtime.
¦ The field of AM is continually evolving and, as such, the program's processes must be
prepared to adapt accordingly.
6) It is not important for a CAM team to have total control.
¦ In fact, CAM staff has learned that they actually get more control by giving up control—
by demonstrating good ideas, the ideas sell themselves to business unit staff.
¦ The CAM team sets guidelines on minimum expectations, so there is consistency, and an
AM program framework for the business units to follow.
7) Embedding AM staff in the business units is a recipe for success.
¦ Encourage business units to move forward with AM on their own and not wait for
directives from the CAM team. Calgary has seen very good ideas come from the business
units that were eventually incorporated into the Corporate Strategic Plan.
¦ Bringing all business units to the table has taught some of the smaller business units how
to interact with the larger, older business units, voice their needs and compete for funds.
While it is not yet the mandate of the CAMP to coordinate capital infrastructure delivery and
investment in community developments, the CAM team is working with land use planning
staff to establish growth management strategies and capital coordination processes as part of a
proposed Integrated Infrastructure Strategy. This strategy was under development at the time
this case study was being developed.
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Section 4 Benefits of AM
The beneficial outcomes that City staff members have attributed to the CAMP include the
following:
1) Applying AM principles has begun to positively affect decision making—there is more and
better-validated information available for assets on which to base project prioritization and
budget decisions.
¦ AM program data is useful to better justify capital and maintenance expenses to the
public—the City can better make the case for what taxpayers are paying more for and
what new assets will cost them.
¦ The council is gaining confidence in the data provided under the CAMP.
¦ AM provides a great opportunity for breaking down silos between business areas and
getting them to coordinate on AM projects.
2) Institution of the CAM function has encouraged individual business units to implement AM
principles and supports the development of a corporate-wide AM strategy.
¦ The process of assessing available data has had the added benefit of forcing business
units to clean up their data (clean house).
¦ The CAM process of bring the separate business units together for discussion about
projects has acquainted and educated groups to the necessary trade-offs between assets.
3) The Water Resources business unit projects that the AM approach to replacement and
rehabilitation decisions has already saved $30 million in capital replacement and averted $16
million in main break repair costs over the past 10 years. It will have saved a total of $50
million on capital replacement over the original 30-year time horizon by 2027. Better, more
substantiated AMPs and business cases more readily yield requested funding.
¦ Improved data about assets helps the City target certain projects that generate the most
significant payback.
¦ Improved asset information also helps validate when an asset or project is already
optimized, and money can be saved when council knows that additional budget is not
needed for optimized assets/projects.
¦ The ISR has been proven to be useful to the council and business units. The report was
originally designed to onboard council members to the AM process, and now business
unit managers and staff turn to the report as the first source for asset/infrastructure
information.
Section 5 Calgary's AM Program — Where is it Today?
The Corporate Asset Management Teams recent accomplishments include the following:
¦ Expanded the governance scope of ICC to include growth management.
¦ Leveraged the AM Network to develop AM Plan framework.
¦ Linked capital cost escalation to capital budgeting in supported 2008 capital budget
adjustments.
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¦ Started to institutionalize AM as a corporate strategy—conducting corporate-wide AM
assessments.
* Delivered an AM program integration strategy, including developing communications
and change management plans, linking AM to other corporate projects.
¦ Developed the ISRs.
* Completed CAM business process design for budgeting and began the process
automation with Real-time Asset Valuation Analysis (RIVA).
A. Status of Water arid Wastewater AM Practices
Much of the City's infrastructure is
still relatively young. The City has
essentially completed an asset inventory for
all water, wastewater and stomiwater assets.
The assessment of asset condition and
failure modes will be ongoing and is being
addressed on a priority basis. These
assessments have been conducted for the
entire water network infrastructure and are
nearly complete for the wastewater
infrastructure.
The City has developed rough estimates for
water and wastewater treatment plant
infrastructure, but these estimates use
industry averages and experience {gut feel) of operations staff. Refinements of the estimates will
come from experimenting and testing. The City has (1) a high confidence level in its estimates
for the residual lives of water network assets, (2) is about a year away from an equal level of
confidence with the wastewater and stormwater networks, and (3) has estimates from the
operations supervisors for the major treatment plant assets.
Evaluation of life cycle and replacement costs will likely be done on a priority basis as each
asset class ages into consuming significant resources (money, repair costs, replacement levels)
that provide payback for the effort of estimating the amount of resources the asset class will
require in the coming decade.
¦ The City has not established a formalized target level of service for water and
wastewater assets. The working assumption is that generally water and wastewater
treatment plants will be upgraded because of changed regulations and City growth, rather
than because of asset was deterioration. A comprehensive study on these assets is
considered premature because the assets are relatively new.
¦ The City is well along in determining business risk exposure/criticality for its
largest network infrastructure elements (force and feeder mains, syphons, reservoirs) and
has started doing so with pump and lift stations. It plans to have this information by 2009.
¦ For water and wastewater small mains replacement or rehabilitation decisions, staff are
using City asset databases extensively and scientifically to optimize operations and
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maintenance investment. Staff
members are not, however, using
these data for maintenance
decisions. Asset information and
criticality estimates are used to
prioritize inspections of large-main
assets. The inspections, in turn,
with criticality concerns can
then result in proactive capital
replacement. Under current
operating procedures, maintenance
of large mains is still uniform for
all those assets.
¦ The City has begun a project to set
the size and priority of pump and lift station maintenance and replacement work on the
basis of asset history, condition and criticality. This project is expected to affect decisions
by 2009. Water Resources has a long-term funding strategy to optimize investment
strategies that are reported annually to management and city council . The dynamic
growth of Calgary presents issues, yet staffs feel that they are doing very well in large
part because they know the City's needs and the ability of the current infrastructure to
address the needs.
Water resources staff members plan to develop the first business unit AMP by the end of 2008,
refining it to meet senior management's need for comprehensive, long-term planning by 2010.1n
addition to applying best practices the Water Resources business unit has done the following:
¦ Diverted $500,000 per year from water main replacement starting in 1997 to build an
infrastructure database and research the status of the infrastructure. $2.5 million was
diverted to new electromagnetic field inspection technologies that determined the
condition of 110,000 meters of the worst water mains, and $2 million per year has been
diverted from main replacement to mains rehabilitation via corrosion protection, (anode
retrofit), all using what are now standard AM approaches to capital management. This
has resulted in the savings of tens of millions of dollars.
¦ Used the database of 30,000 sewer video inspections combined with cost-benefit analyses
of the alternative strategy of sewer lining (rather than sewer replacement), to cancel a
planned expansion in the sewers replacement budget from $4 million to $10 million. The
new strategy involves investing in more inspections, spot repairs and lining.
* Used AM cost-benefit and triple bottom line risk-management analysis to justify, cost-
size and initiate a $1 million per year water feeder main inspection program. It will also
use new sensing technologies to avert the largest risks of feeder main failure applying a
least cost approach. This new undertaking was in response to the massive feeder main
failure in 2004 that cost over $ 1 million in repairs and significantly compromised service
to an area for months.
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B. Status of Roads AM Practices
The Roads business unit has an asset inventory of all assets in a GIS. The assets are broken into
following major categories (with many subcomponents): Pavement; Concrete (which includes
sidewalks, curb and gutter, medians); Bridges; Streetlight System; Traffic Signals; Traffic Signs
and Road Markings.
¦ The Roads business unit is consolidating individual systems and developing a single asset
register for all its assets.
¦ The Streetlight System, Traffic Signals and Traffic Signs have been completed, and the
unit is working on the Pavement, Concrete, Bridges and Road Markings.
¦ By mid-2009, the asset register is expected to be centralized for all the assets listed
above. The Roads business unit has a bridge management system that houses data on
extensive condition assessments of the bridges. The City also has a bridge preservation
program, which is separate from the bridge management system.
The business unit's status with assessing asset condition and failure modes is as follows:
¦ A visual condition inspection of 100 percent of the road network is performed annually.
¦ International Roughness Index information is collected using a laser-equipped van for a
sample of the pavement network.
¦ Condition assessments are performed regularly for all other asset classes as determined
by the asset manager;
¦ Useful lives have been estimated for all asset classes; an annual ISR is produced that
reports on the condition of all assets, replacement value and remaining life.
¦ Planned activities include developing rigorous deterioration models for assets;
determining the dominant failure mode for each asset. Also, historically the Roads
business unit has focused on physical failure but is looking at other failure modes as well
(capacity, demand, financial efficiency, and so on).
Status of determination of residual lives is as follows:
¦ An annual ISR is produced to report the condition of all assets, replacement value and
remaining life; and useful lives have been estimated for all asset classes.
¦ The business unit bases residual life on a time scale for certain assets that do not have
well-defined deterioration curves, such as signs, but would like to develop models that
will account for physical condition and levels of service for these assets. Pavement,
structures and steel poles have better deterioration curves associated to them.
¦ To evaluate life cycle and replacement costs/economic evaluation, the business unit
has performed some life cycle costing on its assets by analysing annual budgets and
estimated lives of its assets. In addition, life cycle costing and economic evaluation was
part of the business unit AMP.
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Levels of service are defined for many of the Roads assets.
¦ These levels of service include such things as response times to customer complaints,
time taken to complete one pass of the major roads for snow and ice control, response
time to replace priority signs,
response times for responding to
traffic signals trouble calls, and so
on.
¦ The Roads business unit conducts
an annual citizen satisfaction
survey that is specific to roads.
This business unit uses this data to
understand customer values and
expectations. This year Roads will
work with the CAM team to refine
its definition of asset levels of
service.
The business unit has completed a high-
level risk assessment for all its assets. The
risk assessment was done for each asset class, not the individual assets. This risk assessment
allowed the business unit to understand the asset areas that have the greatest business risk
exposure ratings. The next step will be to look at business risk exposure for individual (high-risk)
assets and to state the business risk exposure using a common measure (dollars).
With respect to optimizing operations and maintenance investment the City's Roads
department has several initiatives.
* Pavement & Concrete: The Materials & Research section is actively involved in testing
the performance of a variety of materials. Asphalt mix designs are chosen on the basis of
the test results.
* The City also has a laser-equipped van that it uses to perform inspections that measure
the International Roughness Index of the pavement. It uses this information along with
visual condition inspections to define the surface overlay program.
* Streetlights: The City has a pole and cabinet painting program to extend the life of these
assets, and the City is using junction boxes to splice underground cables rather than
replacing entire spans. The resulting cost savings allow more repairs to be completed in
the same budget. The City completed a streetlight retrofit project to replace the
luminaries on residential streetlights with lower wattage streetlights that minimized the
amount of light pollution. The result environmental benefits and financial efficiencies.
* Traffic Signs: The City has installed test signs facing different directions (to vary the
sunlight exposure) to evaluate the performance of different reflective materials. It uses
test results when specifying materials for use on the signs.
* Road markings: The City monitors a number of test sections to evaluate the performance
of different types of paint and durable markings.
Kl^l 11
§1
fj 1
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The City's capital investment strategies are optimized using the Transportation Infrastructure
Investment Plan (TUP). The TUP defines the priority and timing of major infrastructure
construction projects and life cycle maintenance programs for the Roads department.
¦ The City reviews this plan is reviewed every 2 to 4 years to update priorities and funding.
According to the annual citizen satisfaction survey, transportation issues continue to be a
main concern for Calgary's citizens.
¦ This TUP update addresses these concerns by recommending infrastructure and programs
that improve mobility; align to council's approved sustainability principles; and reflect
themes in council goals and priorities for the 2009-2011 business planning cycle.
¦ The City developed a robust and inclusive methodology that considered input from
multiple stakeholders and measured alignment to smart-growth principles. TUP 2009-
2018 forms the basis for the Roads department's 3-year business plan, and capital budget
and is one of the main mechanisms to implement strategic planning objectives and
promote smart growth.
The Roads business unit is planning to refine its AMP in conjunction with determining a
funding strategy. In 2008 the Roads business unit hired a consulting team to help develop its
first business unit AMP. As part of the process, current business practices were reviewed and
evaluated against world's best practices. The AMP also included a 100-year funding forecast on
the basis of a preferred management strategy for each asset type.
C. Information Technology
Calgary found that it was important to establish early the approach to integrating the IT process at
the corporate, strategic level. Collaboration with the IT group has been a key to sustained AM
process improvement. The City purchased the RIVA business intelligence tool to assist with life
cycle costing analyses. The Roads, Buildings, and Fire business units are getting underway with
life cycle costing using these tools. Calgary's approach to integrating all business unit data
systems is to wait for the IT market to produce more attractive and viable solutions.
Section 6 What's Next?
In the near term, the CAM team will support the business units in developing their AMPs. The
long-term goal of the CAMP is to develop a sustainable process to deliver a sustainable City built
on a hierarchy of plans. The CAMP's ultimate focus will be on cost, level of service, risk
relationships, and corporate and business unit strategies.
The highlights of the CAM team's objectives for 2008 and into 2009/1 l(from the Strategic AM
Update, 2008) include the following:
¦ Manage the 2009/11 capital budget prioritization process, including management of the
ICC prioritization process and the delivery of capital expenditure.
¦ Manage the initiation of AM planning for the corporation including completing AM
assessment for 13 business units, delivering 13 preliminary AM Implementation Plans
and a draft corporate implementation plan; developing an AMP Guideline and a
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preliminary Corporate AMP Strategy; and developing an overarching Infrastructure
Strategy for the corporation.
¦ Provide ongoing infrastructure reporting to Council and the Administrative Leadership
Team.
¦ Enable various business process and IT improvements in the corporation as related to
AM, including implementing a corporate-wide AM business process that links to other
corporate business functions.
¦ Develop and support an external infrastructure advocacy framework for presentation to
the ICC, including developing an external Infrastructure Advisory Committee.
¦ Further support the research of Canadian AM standards and best practices by working
with Edmonton/Vancouver establishing the Trilateral Learning Forum and continued
support national AM through active participation in the National Roundtable for
Sustainable Infrastructure, InfraGuide, Municipal Infrastructure Investment Plan, the
Urban Alliance and other university-based research projects.
¦ Provide professional advice and governance support to the Mayor's office, the
Administrative Leadership Team and the ICC regarding sustainable infrastructure
strategy and financing.
¦ Assist the ICC to identify key systemic financing issues within the existing capital
budgeting methodology, including prioritization of the corporate infrastructure bucket
capital requirements.
Section 7 Background Facts
Calgary is governed in accordance with Alberta's Municipal Government Act (1995). The
citizens vote for members of the Calgary city council every 3 years, with the most recent vote in
October 2007. City council consists of the Mayor and 14 full-time council members. The City has
an operating budget of $2.1 billion for 2007. Forty one (41) percent is from property taxes. $757
million in property taxes are collected annually, with $386 million from residential and $371
million from non-residential properties. Fifty-four percent of the budget is for wages of the
13,043 city employees and expenditures.
Thirteen (13) business units manage the City's infrastructure and are involved in the AM program
¦ Calgary Police Service ¦ Parks
¦ Civic Partners ¦ Recreation
¦ Corporate Properties & Buildings ¦ Roads
¦ Emergency Medical Services ¦ Transit
¦ Fire ¦ Waste & Recycling Services
¦ Fleet Services ¦ Water Resources/Water Services
¦ Information Technology
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A. Water and Wastewater Resources
The Water Resources business unit is responsible for the operation and maintenance of all water,
wastewater and drainage infrastructure in the City. Water Resources is also responsible for the
collection, transmission, treatment, and disposal of all wastewater and stormwater generated in
Calgary.
¦ Calgary's storm system runs 3,600 kilometers (km) of mains, 29 pump stations and 148
retention ponds.
¦ The water system includes two water treatment plants (Glenmore and Bearspaw,
undergoing upgrades) a concrete gravity dam, 70,000 valves, 4,600 km of transmission/
distribution pipe, reservoirs, pump stations and 290,000 service connections.
¦ The City operates three wastewater treatment plants (Bonnybrook, Fish Creek and Pine
Creek) 4,000 km of wastewater mains, 295,000 lateral connections, 55,000 manholes and
27 sewage lift stations. The business unit also operates the Glenmore Reservoir and
Glenmore Dam.
B. Roads Resources
The Roads business unit is responsible for assessing, designing and optimizing permanent and
temporary traffic controls; maintenance and operation of street lighting and traffic controls;
infrastructure repair and life cycle maintenance of structures, roadways, sidewalks and other
roadway assets; street cleaning and snow and ice control; reviewing new road infrastructure
designs, monitoring quality, and managing delivery processes (e.g., local improvements and new
subdivisions).
Roads assets include:
¦ 7,042 lane-km local roads; 2,711 lane-km collector roads; 2,879 lane-km arterial roads.
¦ 6,057,447 square meter (m2) sidewalks; 2,129,000 meter (m) pavement markings;
6,537,000 m streetlight wires.
¦ 161 vehicular bridges; 117 pedestrian bridges; 93 other (light-rail, rail subways and
parks).
¦ 122,000 traffic signs; 3,070 traffic signal poles.
¦ 280 pede strian corridors.
69,297 streetlight poles; 78,921 lamps; 793 traffic cabinets; 534 streetlight cabinets.
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Multisector Asset Management Case Studies
CHAPTER 3 THE HAMILTON, ONTARIO, CANADA
EXPERIENCE
The City of Hamilton (City) is a port city in the Canadian province of Ontario with a
population of approximately 500,000. Hamilton is on Lake Ontario midway between
Toronto and Buffalo, New York, on the western end of the Niagara Peninsula. Its major
physical features are Hamilton Harbour, marking the northern limit of the City, and the
Niagara Escarpment running through the middle of the City across its entire breadth,
bisecting the City into upper and lower parts. Hamilton is known as Canada's Steeltown
because of the presence of major steel manufacturers. Hamilton's population is
expected to increase to 622,420 by 2031 at the current growth rate.
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Section 1 Executive Summary
Hamilton is applying asset management (AM) principles across its transportation, water and
wastewater assets. Hamilton has a dedicated AM group of 22 staff that is responsible for buried
infrastructure (water and wastewater distribution and collection) and above ground assets
(pavement, bridges, parks, public works facilities). The AM group resides within the Capital
Planning and Implementation Division, within Public Works. The AM group sets and facilitates
all AM policy and oversees and coordinates all infrastructure projects. The General Manager of
Public Works ensures that the AM policy is carried out across other divisions and promotes the
policies and practices across the corporation.
Two senior staff co-manage the group.
¦ One manager is in charge of surface assets and finance.
¦ The other is responsible for buried infrastructure and information technology.
The AM group is responsible for the citywide
condition assessment of surface and subsurface
assets. The condition assessment is used to
forecast and schedule appropriate rehabilitation
and reconstruction activities to produce an
annual capital budget program. The AM group
monitors current levels of service, life cycle
trends and deterioration models to plan and
develop (1) an integrated 3- to 5-year detailed
budget, (2) a 20-year long-range capital budget
City's infrastructure investments.
The need to develop a strong
technical AM program that optimizes
asset life cycle is critical in the quest
for sustainability.
Gerry Davis—Senior Director, Capital
Planning & Implementation, 2008
(3) a 100-year financial forecast to predict the
The City's vision for an AM program began in 1998 when senior managers began focusing on
questions about asset sustainability and funding issues. They became acquainted with the
international model for managing assets (as characterized in the International Infrastructure
Management Manual). The managers began to apply AM principles and developed a financial
sustainability plan.
In 2000, the Province of Ontario required the
amalgamation of the Regional Municipality of
Hamilton-Wentworth and six other
municipalities into one city. The reorganization
brought about by the amalgamation provided the
impetus for creating and funding an AM group.
City managers planted the seed for
AM in 1998, and the reorganization
caused by amalgamation of the
municipalities gave managers the
impetus for creating and funding an
AM group in 2001.
¦ There was general consensus around the
need to move away from the silo mentality of keeping asset groups separate, and
Promoted a more integrated approach to dealing with the economic and geographic
diversity of the seven municipalities that were being joined through the amalgamation.
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Hamilton's AM approach is an integrated, bottom-up approach that gained momentum in
conjunction with the amalgamation.
Top executive managers seize upon the opportunity presented in the amalgamation. Today, a
decade later, the city council highly values the City's AM approach. Information provided by the
AM group helps council members deliver quality services at the lowest possible tax structure
while also addressing their constituents" needs with respect to infrastructure projects and
necessary funding, and it helps the council make the business case for projects.
Top down
strategic
directive
(amalgamation,
PSAB)
AM Group &
Infrastructure
Coordinating
Committee
Formed
¦c
Water/
wastewater
Implementation
Transportation
Implementation
Capital
State of
>
programming
planning and
budgeting
Infrastructure
Report
Constant communication and education of
council members has been instrumental to
Hamilton's successful AM program. The
communication and education strategies
between AM staff and council members include:
(1) annual one-on-one meetings and (2) City
tours and (3) developing informational materials
for specific issues. These approaches have built
relationships and trust between City staff and the
council and have built credibility for
the AM program.
AM helps us show the total picture to
our constituents, and helps us build
the business case. We take our
alternative solutions to the people to
get buy-in to the best solution. I highly
recommend this process to other
cities.
—Russ Powers, City Councillor
The City is ahead of most cities in
North America in implementing
generally recognized AM principles
and practices and is working toward
its goal of development of an
Enterprise Asset Management Plan.
Asset Management Strategy
Performiflc* Hua
Time
Q
High level Assessment
Sustainability Plan
Detailed Assessment
Infrastructure Management
What do we need to do?
O
Defined Level of Service Options
Asset Management Plan
The City has experienced the
benefits of applying the AM
principles. Staff members feel that
their program is validated because
of the many representatives from
U.S. and Canadian cities that have
sought Hamilton AM staff expertise
and the many inquiries about the City's AM program. The dialogue with other cities has provided
significant value in developing theories and approaches to AM. It was in light of these
consultations Hamilton initiated a national AM group known as CNAM (Canadian Network of
Asset Managers). This group's board of directors consists of 14 people representing 7 major cities
across Canada. To date, the group has successfully run two national working sessions drawing
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participation from more than 120 people representing more than 30 cities and municipalities from
across the country.
The State of the Infrastructure annual
report is an invaluable communication
and long-term planning tool. It serves
as the AM program's guiding
document and is key in providing a
communication bridge between the
AM group and the city council.
—Russ Powers, City Councillor
City of Hamilton
2006 Infrastructure Report Card
Rating
2006
Comments
Trend
2020
Other benefits of AM include the following:
* Via the AM program, staff can
demonstrate to City management and the
public that the City is using its resources
cost-effectively.
¦ The AM processes and information
produced has sped up the capital budget
development process.
¦ The process has taught all players to see
the community as a whole and how the
assets function together to deliver a higher quality of life.
The City has produced State of the Infrastructure Reports on Public Works Assets for 2005 and
2006. The reports have served to promote support for the AM program from staff, politicians and
the public . The focus of the reports is to evaluate the current state of various public works assets
within the City to; (1) predict their status in 2020, (2) identify major funding gaps and (3)
recommend policy. The
reports present over the life
cycle of the asset, operating
and capital costs improving
the understanding of revenue
requirements.
The City also develops annual
State of the Infrastructure
Report Cards to provide an
easy-to-understand reference
(updated regularly) to track
the City's path toward
sustainability.
The City's Public Works
Department developed a
strategic plan in 2007 titled
Innovate Now! A Compass to
Public Works to 2017. The
strategic plan; (1) defines the
City's fundamental purpose,
(2) explains its vision for
2017, (3) identifies top
priorities critical for achieving
the vision and plans.
Asset
Group
Public
Transit
Services
Central Fleet
Services
Waste
Management
Services
Forestry
Services
Traffic
Services
Cemetery
Services
Facilities -
Communal &
Corporate
B
B
The transfl system appears to be sufficiently funded at this
lime, on a full pay-as-you-go bass Ratio of tares to subsidy
is currently about 1:1. and is projected to increase to 1 2:1 as
ridership increases Future growth of the City, as well as
plans to improve and expand service will require annual
increases In the Transit budget of 3% plus inflation
Fleet Services ins now on a fult-cost recovery basts wrth full
replacement charges to the user departments Slight
increases in reserve fund contributions can result in
significantly lower cost over all and should be implemented
as soon as possible
Waste Management Services are rapidly growing This will
create a 'bubble" of assets that will require rehabilitation and
replacement in a similar short time frame in the future
Future growth of the Cily will also put tremendous pressure
on this service The Waste Management Master Plan ts
currently being developed However, failure to develop and
mplement the necessary infrastructure reinvestment policies
in the short-term will cause the future trend to deteriorate
rapidly
Forestry Services face the largest revenue gap of all Public
Works assets, or approximately 5* the current levels
Forestry assets offer significant environmental benefits, and
realistic expectations and plans must be developed
Reliance on capital will only exacerbate the problem,
ultimately increasing cost 40% Doubling the tree canopy
coverage from 14% to 30% needs to be revisited Even if
developers were forced to plan one tree per new property,
ongoing liability for these increased forestry assets need to
be considered
Traffic Services are under-funded by at least S10 million I
year Growth of the City will increase assets Some current
assets are approaching the end of their useful life and
pavement markings and signage are not up to standard
Cemetery Services are slightly under-funded However,
analysis includes contributions to reserves for rehabilitation
of facilities and ultimately replacement of those facilities
Two nsks that should be addressed through future analysis
and policy insufficient funding m the trust funds require
annual contribution of S2M from the levy and private
cemetertes being transferred to the City should be
abandoned
Facilities face a significant shortfall in revenue Lack of
operating and maintenance funding results in accelerated
deterioration Facilities are more capital intensive than most
assls, unlike other assets, a good proportion of operating
budgets is spent on program delivery and not necessarily on
asset preservation Service levels and expectations are
closely linked, with partial funding coming from user fees with
the associated sensrtrvity to social impact and quality of life
There is still a great deal of work to be done in this area in
terms of more-well founded State of the Infrastructure Report
in the future.
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Section 2 Hamilton's AM Vision and Triggers for Initiating AM
A. Initial Vision
The foundation was set for Hamilton's AM program in 1998 in the Water and Wastewater
program. The leading edge (champions) for Hamilton's AM vision included the Directors of
Water and Wastewater and the Capital Finance Department and several council members. At this
point, the staff looking at the sustainability of assets were not yet calling the endeavour AM —
they just "knew they had a problem" and recognized that "getting a handle on how to sustain the
City's infrastructure" was critical to the future well-being of the community.
As a starting point, Hamilton focused on thinking about asset sustainability and funding issues.
They began by reviewing a study by the Canadian National Research Council called the
Municipal Infrastructure Investment Program and learned about the International Infrastructure
Management Manual for managing assets. The initial challenges were obvious:
¦ The City's infrastructure was aging (with some assets dating back to the mid-1800s),
¦ There was little available data on assets,
¦ Water prices were insufficient to cover
actual construction and maintenance
costs.
Realizing that they were facing a potential crisis,
the staff developed models on sustainability.
They concluded that Hamilton needed to start
increasing water rates by 8 to 10 percent
annually to over the long run sustain their
services. The city council recognized the value
of the AM based approach and approved the
increase in rates for water and wastewater
services to address the funding gap identified in the initial financial sustainability plan.
B. Amalgamation
In 2000, the Province of Ontario required that the Regional Municipality of Hamilton-Wentworth
and six other municipalities be combined into one city. On January 1, 2001, the new City of
Hamilton was formed from the amalgamation of the regional municipality of Hamilton-
Wentworth and its six municipalities (Hamilton, Ancaster, Dundas, Flamborough, Glanbrook and
Stoney Creek). After the amalgamation, Ontario hired a new City Manager and executive team
for Hamilton.
Obviously, at the crux of the challenges associated with the amalgamation was the complexity of
integrating a multitude of assets that were previously managed under seven different jurisdictions.
The managers that were promoting the concept of AM saw the amalgamation as a strategic
opportunity to establish a whole new service program called Asset Management. In 2001 the
managers created an AM group. The initial AM group began developing forecasts for the City's
There were several triggers for
Hamilton's AM program:
• Forward thinking by managers
• The amalgamation
• Public Sector Accounting Board
requirements
• Drinking water and wastewater
regulations
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overall asset life through 2031. The basic concept
was to present with greater confidence the
dynamic life cycle requirements of Hamilton's
agmg infrastructure.
The Future is Dynamic
Typical Age Distribution of Infrastructure
0-26% of asset life
Minor Maintenance
25-50% of asset life
Major Maintenance
50-75% of asset life
Rehabilitation
75-100% of asset life
Replacement
2007
2019 2031
The 2001 amalgamation was a
catalyst for our AM program, now
arguably one of the most mature
programs established in Canada.
Gerry Davis—Senior Director of Capital
Planning and Implementation, 2008
If you do not attend the coordination
meetings, you do not get funding for
your projects.
—Infrastructure Project Coordinating
Committee
To establish its importance and authority, the executive team gave the new AM group control of
funding and approval of infrastructure improvement projects. Under the process:
* All projects were required to go through the AM group for review to ensure that AM
processes were applied and that the projected costs were correct.
If not, the AM group would send back
the project plan for further refinement.
The AM group's authority is not based
upon a legal constmct, rather the
group's role is to encourage other
groups to adopt AM best practices, and
it defines and approves projects and
moves them along to the Director, then
to Council.
These figures were the catalyst
needed to energize the asset
management movement in Hamilton.
—Gerry Davis, Senior Director of Capital
Planning & Implementation, 2008
Over time, the confidence in the AM group's capacity grew to a point where Hamilton's Council
looks for other groups to follow the same policies and processes as the AM group. Staff members
believe that the authority given to the AM group to control the budget has been one of the major
keys to making improvements to the AM processes and practices.
In a further process refinement, the General Manager created the Infrastructure Project
Coordinating Committee to provide a forum for all business units to become jointly involved
through the review of the infrastructure projects planned by the AM group. This coordination
allows feedback and issue identification before the plan is finalized. To ensure participation,
senior managers instituted a participation rale: If you do not attend the coordination meetings,
you do not get funding for your projects.
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The City also found that it was essential to include the operations and maintenance (O&M)
representatives at the coordination meetings. Their asset specific knowledge and close contact
with the assets, made it essential that the O&M staff members play an important role in
identifying and prioritizing projects.
C. Public Sector Accounting Board
There is no provincial or federal mandate for AM in Canada; however, the Public Sector
Accounting Board (PSAB) requires municipalities to account for their worth including value
assets (based on historic costs). This PSAB requirement is similar to the Governmental
Accounting Standards Board Statement 34 in the United States. Hamilton has three full-time
members responsible for addressing PSAB requirements. They report conjointly to the AM
managers and Finance Department managers. City staff reports that the PSAB requirements
provided further impetus for applying AM principles.
D. Drinking Water and Wastewater Regulations
New drinking water and wastewater regulations also provided momentum for applying AM
principles. An outbreak of Escherichia coli m Ontario in 2000 caused seven deaths and the
expenditure of $250 million, Ontario enacted new regulations related to drinking water and
wastewater quality and protection. The 2002 Safe Drinking Water Act (SDWA) was enacted to
protect human health through the control and regulation of drinking water systems and drinking
water testing.
The SDWA requires certificates of approval for water and mandates AM concepts such as risk
assessments, sustainability plans and growth projections. The act also requires municipalities to
conduct a risk analysis that presents probability of failure, critical it\ and contaminant detect
ability. Municipalities also must prepare financial plans that present data on costs, rates and
forecasting revenue requirements, including replacement. The legislation sets a minimal
acceptable level of service for drinking water treatment plants. These regulations are seen as
major legislative drivers for AM.
The Sustainable Water and Sewage Systems Act also passed in 2002, makes it mandator} for
municipalities to assess the costs of providing water and sewage sendees and to recover the
amount of money needed to operate, maintain and replace them. Although, the Act is not yet in
force pending associated regulation. The
requirements set under the SDWA are seen
as precursors to the regulations in the
Sustainable Waters and Sewers Act. Under
the Sustainable Waters and Sewers Act,
municipalities will be required to provide a
full cost report for both their water and
wastewater operations—including
information on the infrastructure and
investment needed to provide water and
wastewater services, the full cost of
providing those services and the revenue
obtained to provide those services—and a
cost-recovery plan describing how the
of
staff
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municipality intends to pay for the full cost of
providing the services. In addition, the act will
require municipalities to establish and maintain a
dedicated reserve account for their water and
wastewater operations so that cost recovery plan
revenues are segregated from the municipality's
general revenues.
E. Strategic Plan
The City's strategic plan for public
works calls for the City to run its AM
program from a triple bottom line
perspective—taking into account
environmental and social performance
in addition to financial performance.
In the 2007 strategic plan called Innovate Now! A Compass to Public Works to 2017, the City
identified three core capabilities it wants to maintain and strengthen: environmental knowledge and
advocacy, adaptability and integrated community sustainability planning. The City added five new
strategies to support and enhance its services (students of the community; employee-centered;
cross-enterprise efficiencies; risk tolerance; and culture of innovation). The City's strategic plan for
public works calls for the City to run its AM program from a triple bottom line perspective—taking
into account environmental and social performance in addition to financial performance.
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Vision 2017: To be recognized as the center of environmental and innovative
excellence in Canada.
Fundamental Provide safe, strategic and environmentally conscious services
Purpose: that bring our communities to life. Innovate Now! A Compass to
Public Works to 2017, 2007
Section 3 Lessons Learned
The City has learned several lessons developing and implementing its AM program. The Senior
Director of Capital Planning and Implementation offered that getting the process started can be
overwhelming and that it is difficult to even determine where to begin. Another lesson learned is
that it is important to form a strong relationship with decision makers (i.e., city council) to build a
successful and credible AM program. The State
of the Infrastructure report has been important in
setting the program's framework and as a go-to- Understanding basic AM issues and
guide for staff and council. policies, is a key component of the
discussion with the community on
what services it wants in the future,
how much it is willing to pay, and in
what manner it is willing to pay for
them.
—2006 State of the Infrastructure Report
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"Just jump in! We made mistakes and asked for forgiveness (instead of permission)."
"Do not be afraid to step forward—even if you fall on your face, you are still moving
forward."
Senior Director of Capital Planning and Implementation
Additional insights offered by staff and managers to others initiating AM programs include the
following:
1) Do not reinvent the wheel. Build on what
has been done by other communities.
Follow the International In frastructure
Management Manual—it is cradle-to-
grave in its approach.
* The City realized that assets were
becoming liabilities and that
coordinating and approving every
capital project through the AM group
was critical. The authority given to
the AM group to control the budget
was essential to making the process
work.
¦ Strive to achieve quick wins or early
demonstrations of clear
improvements in the AM process.
Also demonstrate early how better
information to improve decision
making.
2) Educate the public and council on the value of the infrastructure. Clearly demonstrate the
critical need to change from the current practice. Hamilton did the latter by developing
forecasts for the City's overall asset life through 2031.
¦ Use participatory strategies (council tours and presentations to the public) to involve
users in changing the current practice.
¦ The biggest challenge may be on the people side: (1) getting staff politicians and public
to buy in and participate (2) convincing people to change their mindset (even getting
them to listen).
3) Upper management support is essential to the success of an AM program.
4) People who are willing to play in an unrestrained format (i.e., they have open minds and an
innovative spirit) are valuable to the process.
¦ Staff had to break through the mindset that AM was not a data system and teach people
that it goes beyond that—AM is a business model, a way of thinking and making
investment decisions about physical assets.
¦ Staff and managers must exercise patience with all parties.
Be tolerant of mistakes because it is the only way to move forward and improve.
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¦ Be willing to share knowledge and experience with peers.
5) Departure of key people has a huge effect on the AM process, and lack of adequately trained
staff can be a major challenge.
6) Improvements can be made as an industry
much quicker than as individual cities.
Section 4 Benefits of AM
1) A key benefit the City has realized from its
AM program is the strong working
relationship it has built between the AM
group and city council.
¦ The council has fully accepted the AM
principles and practices and recognizes that the AM program helps them do their job and
that they are doing the right thing for their community.
¦ The council has confidence in the funding requests made by the AM group on behalf of
the Public Works Department, and funding requests are more easily approved.
¦ The council has embraced the AM policies and can better relate return on investment data
to funding decisions. The AM program has benefitted greatly from working to obtain
buy-in from council members.
2) Constant communication and education of council members has been crucial to Hamilton's
successful, sustainable AM program.
¦ Every year, the asset managers meet with every council member to review the latest 3-
year capital plan.
¦ The managers spend a day with each council member and update them on the status of
the AM program.
¦ Staff members refer to these meetings as Council Boot Camp.
3) Also once a year, the AM group takes the mayor and council members on a bus tour to every
ward. The City tours with council members are very well received and are considered a
reality check for members to present their specific issues and compare issues with other
wards.
¦ This approach has helped the AM group reduce hesitation from council members to
promote projects in other wards.
¦ The AM group also provides ward maps to each council member denoting current and
future public works projects and meets with council members throughout the year about
specific projects.
The communication strategies
between AM staff and council
members include annual one-on-one
meetings (Council Boot Camp),
citywide tours with all council
members, and development of ward-
specific informational materials.
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¦ The AM group also provides information to council members when they are responding
to constituents about the status of specific projects.
Additional beneficial outcomes that City staff members have attributed to the AM program
include the following:
¦ The process has taught all players to see the community as a whole and how the assets
function together to deliver a better quality of life.
¦ Via the AM program, staff can demonstrate to city management and the public that the
City is using its resources cost effectively.
¦ The AM process, and information produced, has sped up the capital budget development
process.
¦ The AM process sets expectations and the demands are greater for how and what to
deliver. AM raises the understanding of community needs.
¦ The council asks more informed questions now and has asked that the AM program
incorporate other areas, such as parks.
¦ The AM process enabled the City to provide a better and more efficient level of service—
the AM group is a one-stop shop.
¦ The City now is better able to quantify what assets it has and what they require to sustain
performance.
¦ AM staff members are recognized by their peers as experts on the AM process. Having
staff asked to speak at conferences across North America reinforces that the City is doing
the right thing.
¦ The finance department now reports on asset deficits and uses AM concepts in its budget
projections.
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Section 5 Hamilton's AM Program—Where Is it Today?
The City is finalizing its asset inventory. The City's assessment of asset condition and failure
modes has been done for some time for roads and wastewater, and the assessment for water
system is just being finished. The AM group has determined residual lives (the remaining useful
life) of its asset inventory and has evaluated life cycle and replacement costs.
The City sets a target level of service at a high level for annual presentation to the city council.
The staff plans to include willingness to pay techniques in water and pavement condition
techniques in transportation to develop future levels of service. Staff members have just
completed business risk exposure/criticality scores for linear water assets (pipes) and are in the
process of establishing scores for plants and facilities. Nothing has been done for wastewater yet.
Business risk exposure scores were developed for roads through the Red Hill Valley
sustainability plan.
With respect to optimization of operations and
maintenance investment, staff members say that
although they are not 100 percent there yet, the
framework for this step exists. The City is just starting
this on the transportation side and is setting key
perfonnance indicators for linear assets and water and
wastewater treatment plants.
In the water program, the City is changing operating
practices on the basis of capital strategies. The City is
in the process of issuing a request for proposal (RFP) to
provide the City with a Right of Way Asset
Management Business Optimization (RAMBO)
system. The City is planning to build the RAMBO
system, which will draw 011 captured data and greatly
assist in optimizing decisions across various asset
types. Optimize capital investment strategies—staff
members say they are doing this step, yet it is not
optimized.
The State of the Infrastructure reports and working
relationship with the corporate finance group is
assisting the City in determining its funding strategy.
The City aspires to developing its Enterprise Asset
Management Plan within a couple years. Again, the
RAMBO system will assist with this task.
A. Red Hill Valley Project
A project following the AM framework developed for
roads is the Red Hill Valley Project. This is a very
large infrastructure project that consists of construction
of the north-south leg of the 403 QEWT parkway ; an 8-
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km, four-lane, 90 km/hour, controlled-access parkway; a truck-climbing lane; multiple
stormwater management ponds; stabilization and realignment of Red Hill Creek; construction of
combined sewer overflow pipe; and landscape management. For this project, the AM group
identified trends and issues that the community will face over the life cycle of these new assets.
B. Information Technology
After the amalgamation, the City inherited seven different road and bridge management systems.
Hamilton decided to replace all systems with the Hansen pavement management system, which
provides the City with the ability to do activity-based costing. Hamilton now has 5 years of
pavement management data. Field crews have the ability to input data directly into the Hansen
data system. Hansen has also been the information management platform for water and
wastewater data since 1995, including failure codes and customer service codes and this is
directly tied to payroll. A similar capability is not yet available on the roads side.
C. Ongoing AM Projects
The AM activities in progress include the following:
¦ Ongoing asset inventory data capture and initial assessment. Hamilton is using a Global
Position System to determine the exact location of sewer lines as staff moves through
maintenance inspections. Ongoing data is capture from as-built drawings
¦ A Road inspection program to monitor the condition and commission repairs or
rehabilitation of all paved surfaces.
¦ A Bridge Management System that includes the inspection of bridges every 2 years
¦ A maintenance pothole inspection program that includes full system inspection of a 3-
year cycle, including development of a condition assessment rating system to support this
program
¦ Multiyear, program-based contracts for relining the sewer system.
¦ Linking construction to the AM program so that an asset condition assessment can be
updated in an efficient and reliable manner when construction is completed.
¦ Ongoing capture of water pipe condition assessment along with asset attributes such as
soil conditions, pipe material and installation date
¦ Ongoing data analysis of assets such as tracking breaks per km, flow problems, odor
complaints, back-ups, flows, pressures, and such.
¦ Hydrant inspection program performed by operations staff.
¦ The ongoing geospatial data capture in Intergraph and Hansen.
¦ Conducting pavement condition survey every 5 years with Hansen (using use laser trucks
and video capture including sign inventory).
¦ Implementing business processes for the Water main Management Framework.
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Section 6 What's Next?
After the initial impetus, Hamilton's approach to implementing AM practices has been largely
bottom-up—that is, driven by concerted but rather separate efforts within each sector (Water and
Transportation) loosely integrated by the co-managers. This strategy (as opposed to a top-down
approach driven by a highly integrated roadmap) allowed the City to adopt best practices at the
asset level faster.
¦ Hamilton will continue to work toward developing an Enterprise Asset Management
Plan.
* Staff members say a challenge they have is that their strategies are not adequately
documented because they simply have not had the time to devote to it.
¦ The next step will be to take the two frameworks that exist— (water and wastewater and
transportation) —and pull out the commonalities to set a common AM framework
The AM group will continue to research and integrate innovative AM tools.
¦ Staffs are looking to update deterioration models, using a significantly larger data set to
more accurately reflect the deterioration of linear water and wastewater assets.
* Another tool the AM group is studying is the Pipe Assessment Technique Rationalization
Tool, which measures actual pipeline distress (direct assessment) or surrounding factors
that will likely influence pipeline deterioration (indirect assessment).
* The City is also applying trenchless rehabilitation techniques in the maintenance of its
linear water and wastewater assets. Trenchless rehabilitation techniques for maintaining
and rehabilitating wastewater and stormwater pipelines and manholes include cured-in-
place pipe, sliplining, pipe bursting and spray lining.
The City expects to achieve sustainability with water and wastewater assets at current levels of
service in 2009—a remarkable goal for the AM program.
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Section 7 Background Facts
Citizens of Hamilton are represented by three
tiers of government. The federal representation
consists of five members of parliament serving
in the Parliament of Canada. At the provincial
tier, there are five elected members who serve in
the Legislature of Ontario. The municipal tier
consists of one mayor, elected city wide and 15
city council members, elected individually by
each of the 15 ward divisions to serve on the
Hamilton city council.
The Hamilton city council is granted authority to
govern by the province through the Municipal
Act of Ontario. Ontario has supervisory privilege
over the municipality and the power to redefine,
restrict or expand the powers of all
municipalities in Ontario. Further, the province
provides oversight of Hamilton city council
through the Ontario Municipal Board. The
Municipal Act gives authority to the city council to
dictate tax on property and water and wastewater
rates. The City can enter into debt without going to
the province. The City uses the gas tax fund and the
property levy to fund the O&M and capital
programs. The City receives $80 million for O&M
and capital.
The AM group resides in the Capital Planning and
Implementation Division, within the Public Works
Department. The AM program encompasses the
following asset groups:
* Water: pipes, pumping stations, storage
facilities and treatment facilities (centralized and communal systems)
¦ Wastewater: pipes pumping stations, storage facilities
* Stormwater: pipes, pumping stations, storage facilities and treatment facilities (ponds)
* Waste Management: landfill, transfer stations and any other diversion or processing
facilities
* Roads: streets, sidewalks, bridges, culverts, signs, signals, markings, street lights,
* Facilities: arenas, pools, recreation centers, heritage and other buildings (estimated at 300)
¦ Open Spaces: parks, trails, fields
* Transit: rolling inventory, facilities
* Fleet: balance of fleet inventory that is not included in specific programs
The City of Hamilton was named the
2005 recipient of the first annual
Infra Guide National Award of
Excellence for leadership and
innovation in municipal infrastructure
management.
The Hamilton model demonstrates
that the burden of proof rests squarely
on the shoulders of the City
department managers. Council
members are better able to make the
right funding decisions when they are
armed with the data they need and
fully understand the principles of AM.
Gerry Davis—Senior Director of Capital
Planning and Implementation, 2008
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After the amalgamation combined the assets of seven municipalities, the City is responsible for a
significant infrastructure asset portfolio, including the following:
¦ 6,200 lane-kilometers (km) of roads in 14,000 segments 350+ bridges and culverts
¦ 2,100 km of water mains in 32,000 segments
¦ 2,500 km of sewer mains in 40,000 segments
¦ 700 facilities
¦ 5,520 acres of park land and 430 outdoor facilities
¦ Multiple fleet and transit systems
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Multisector Asset Management Case Studies
CHAPTER 4 THE HENDERSON, NEVADA EXPERIENCE
The City of Henderson (City) is the second largest city in Nevada and is 7 miles
southeast of Las Vegas. The City is primarily a residential community and is in the
middle of the Mojave Desert, near Lake Mead. Henderson's population is approximately
270,000, and the City comprises 103 square miles. Henderson has experienced
tremendous growth over the past 20 years—growing from 60,000 in 1989 to its current
population of 270,000. An average of 1,000 new people a month have been attracted to
Henderson over the past decade. City planners project its population to be
approximately 468,000 by the year 2035.
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Section 1 Executive Summary
Henderson is applying asset management (AM) principles across its transportation, water and
wastewater sectors. Henderson's integrated AM approach involves the Department of Utility
Services (DUS) and the Public Works Department (PWD). DUS is responsible for water,
wastewater, and reclaimed water services. PWD is responsible for construction and maintenance
of streets, curbs and gutters, sidewalks, flood control and stormwater management structures,
traffic control signage and markings, City facilities and buildings, and the City's fleet and fleet
repair shop.
The City's vision for an AM program stemmed from the city council's 1999 City of Henderson
Strategic Plan. The Mayor and council designated the development and implementation of a
citywide AM and maintenance program as council Priority No. 7. The City's AM approach is top
down—conceived by upper management and carried through by middle managers who are
adamant about involving technical and field staff in the AM program-building process.
"Top Down"
impetus and
direction
(mayor/council
through city
manager)
Enterprise
wide common
framework,
definitions,
change
management
focus
Foundation
projects drive
program to
asset level
Aggregation
back up to
an eventual
Enterprise AM
Plan
The Mayor and council gave the City's AM program momentum from the top. At the same time,
the technical and field staff members were already looking for better tools to do their jobs (e.g.,
data systems, asset inventory). According to the AM Program Manager, "the bottom line is that
the City wants to demonstrate good business and good stewardship." This top-down approach
ensures that staff members are talking the same
AM language, understand its usefulness and
therefore buy in to the process, early. AM staff
members anticipate that the top-down approach
will enable them to reach their endpoint more
quickly — developing an enterprise asset
management plan (AMP). Via the AMP, City
staff will respond directly to the Mayor and the
council's Priority No. 7—development and
implementation of a citywide AM and
maintenance program.
The City evaluates its organizational culture and
uses the information to engage staff in its journey to excellence, as promoted by the City
Manager. The City incorporated organizational psychology concepts, such as culture assessments
and change management, while developing the AM strategy. This approach appears to have put
the City well on its way to a successful AM program. The process assures that all players (from
The Mayor and council gave the City's
AM program momentum from the top.
At the same time, the technical and
field staff members were already
looking for better tools to do their jobs.
"The bottom line is that the City wants
to demonstrate good business and
good stewardship."
—AM Program Manager, 2008
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the Mayor and council, to managers, to technical and field staff) are engaged and on the same
page regarding the usefulness of applying AM principles.
City managers feel that momentum supporting the AM concept is maintained at all levels because
of several factors.
¦ The Mayor and council have a high level of
confidence in staff, and this relationship has
supported the cause.
¦ The City's management is committed
strategically to AM, and AM planning is
included in the City's performance measures,
goals and objectives.
* The City promotes small-town values, and staffs
are proud to support the City and community.
The City has recognized a number of benefits in
applying AM, which include the following:
¦ Managers see visible energy and excitement
from the people AM affects the most. Some feel
that the biggest achievement is that all levels of
staff are engaged. This, combined with the
commitment from the top, is likely a recipe for
success. AM provides more tangible information about return on investment and makes
it easier to ask the council for money when the budget needs estimates is less fuzzy.
¦ There is now a roadmap, a path forward, to demonstrate good stewardship of the public's
assets.
The Citywide AM Action Team (CAMAT) developed this self portrait of the AM approach. It
depicts a group of people heading down the road together on a school bus on the road toward a
Strategic Asset Management Plan. It depicts that they have completed Identification of
Requirements and Development of Program Objectives and that they still need to develop an
Implementation Plan and Life Cycle Strategy on their quest to develop an AMP.
OF
cuwftfrsrATiB
% ^Ar/lATf% A '
MaNa^fMfMT PLAN
City of Henderson
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Section 2 Henderson's AM Vision and Triggers for Initiating AM
The initial vision of the City's AM initiative was based on a citywide strategic planning approach
and ran from 1999 to 2007. In 2008 the City restructured its AM approach to a department-wide
program, which involves DUS, PWD, Parks & Recreation, Information & Technology (IT), and
Finance. Under this context, the City began developing its AM program from a high-level
perspective of the entire City, and then moved its focus to its infrastructure support departments.
All the departments and others continue to be
linked to the overall strategy through liaisons to
the departmental AM initiatives.
The Mayor and council stated that the
reason for developing an AM strategy
was because it demonstrates good
business and good stewardship.
Leaving a legacy is important in the
Citv's culture.
Strategic AM is critical. Implementing
a comprehensive, strategic AM
program will enhance use and
preservation of City assets.
—AIIM Focus Group, 2001
The City's initial AM approach was triggered in
1999 when the Mayor and council conducted
their first strategic planning session. Developing
an AM strategy was one of the objectives that
evolved from that session. The vision for an AM
program arose when the Mayor and council
polled the City's department heads with the question: "What issues keep you up at night?" The
management of the City's infrastructure and assets was found to be a key issue. The Mayor and
council stated that the reason for developing an AM strategy was because it demonstrates good
business and good stewardship. Launching a legacy is important in the City's culture.
In December 2000, the Executive Management
Team created an Asset & Infrastructure:
Inventory & Management (AIIM) Focus Group.
The role of the group was to develop a citywide
framework for identifying the needs, elements
and benefits of a suitable AM and inventory
program. The focus group conducted general
research on identification of assets, maintenance
regimes, best practices, regulatory criteria and
identified areas needing improvements. They published a report in September 2001 titled Asset
and Infrastructure: Inventory and Management (AIIM) White Paper. The purpose of the white
paper was to help the Mayor and council determine what the City's AM needs were and how to
proceed. Underlying the implementation challenges was keeping in mind the City's unique
internal culture and
being sensitive to the
departmental interests.
In 2002, DUS was
asked to take the lead
for carrying the City's
AM program forward
and deciding on the
next steps. An Asset
Management Steering
Committee (AMSC)
was formed that
consisted of seven
Mission
The AMP will develop and implement a consistent, integrated, comprehensive
framework in order to:
• Support the stewardship of public assets
• Enhance departmental asset management practices
• Meet established standards
• Support regulatory compliance
• Accurately forecast future financial requirements
Vision
In the coming years, the City of Henderson will be faced with continued growth
and aging of its asset base. The AMP will help meet these challenges by
implementing a decision-making framework to guide departments in managing
the City's assets with increased efficiency and cost-effectiveness.
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department directors. The committee met quarterly to provide
direction and support for the AM program and ensure
coordination of individual departmental initiatives.
The City also created the CAMAT (the AM working group)
which created the City's charter, mission and vision in 2004,
as presented in the City of Henderson Asset Management
Program Charter. The CAMAT group was then suspended
after having met the objectives for which it was formed.
In 2004 the City hired a consultant to support further
development and implementation of the AM program and to
prepare a preliminary gap analysis to identify where the City
stood regarding management of its existing and future assets.
The Asset Management Program Gap Analysis and Review
report was published in June 2006.
After the gap analysis was completed, DUS managers were anxious to move the AM program
forward and show some tangible results. The original city wide approach laid out in the white
paper was converted to a department-wide approach to develop an AM framework, and PWD
joined with DUS. The citywide approach laid a solid foundation on which the more specific,
department-wide construct was formed. The citywide approach was championed (lead) by the
Assistant City Manager.
During the period where the City was initiating its AM program, it was also experiencing
tremendous population growth. Responding to
growth issues was monopolizing staff time and
resources. Managers and staff came to believe
that AM could be the key to meeting the
challenges of growth.
The city began to realize that deferring the issue
of maintenance, because of lack of resources and
planning, could eventually lead to big problems.
The City needed a systematic AM program to
address and track operations and maintenance of assets. Additionally, the Governmental
Accounting Standards Board Statement 34 requirement (which requires the City to disclose the
book value of its entire infrastructure) and aging infrastructure were motivators for pushing
forward with an AM program.
The Program Manager stated that staff and management expectations were varied—managing
expectations has been a continuing challenge both citywide and departmentally. There is a broad
understanding throughout every level that AM is a transformational project that will change the
way the City does business. Bringing consultants on to develop detailed project activities helped
to focus and structure staff expectations.
The City is very committed to implementing organizational psychology concepts, such as change
management, in its AM initiative. The change management portion of the AM initiative is
City of Henderson
Asset Management
Program GAP Analysis
and Review
June 2006
While the City was initiating its AM
program, it was also experiencing
tremendous population growth.
Managers and staff came to believe
that AM could be the key to meeting
the challenges of growth.
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strongly supported by senior management. To determine whether the organization was ready for
AM, the City administered the Dennison™ organizational culture assessment.
¦ The idea behind these assessment tools is that once the perceptions of staff are
understood, the perceptions can be
addressed.
A key finding of the cultural assessment
was that the issues and perceptions in
one department were very similar to
other departments.
The City's staff appreciate the focus
nn arlrln&nninn miltiiral i'qqiin its AM
What information is most important for
decision makers? Funding, optimal
renewal, asset condition, resource
priorities.
—AM Program Manager, 2008
The City management's culture highly promotes
soliciting good ideas from the field level up to
the strategic planning and management level.
Understanding the organizational culture is of
great importance to the new City Manager, and
she continues to encourage staff to use assessment information to assist the City on its journey to
excellence. Change management is written into every AM task order scope of work.
The City is also diligent about ensuring that all staff members are buying into and understanding
their role and knows the importance of their
input in building the AM strategy. Early in the
process, AM staff received feedback on
workshop evaluation forms from field staff that
included responses such as, "How do I fit into
this program?" and "I don't know why I'm
here." Now the AM staffs provide a brief
presentation at the beginning of every workgroup
meeting to present the big picture of the AM
program and to reinforce for all staff of their role
in the process.
One of the key issues identified was
the need to improve communication
about what AM means to the
organization—and that the style and
method of communication must be
tailored to individual groups.
—Finding of organization culture
assessment, 2007
The City's staffs appreciate the focus on addressing cultural issues in the AM strategy. They feel
that it encourages everyone to understand how their particular job contributes to the program's
overall success. In addition, it helps address
communication challenges up and down the
management chain and across departments.
Section 3 Lessons Learned
AM staff members feel strong support from City
leadership has removed many barriers and
obstacles. This also presents a challenge because
staffs feel they are under ct microscope to
produce results in a project that is inherently
slow to capture tangible results.
Understanding basic AM issues and
policies, is a key component of the
discussion with the community on
what services it wants in the future,
how much it is willing to pay, and in
what manner it is willing to pay for
them.
—2006 State of the Infrastructure Report
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¦ Internal resourcing needs (mainly time commitment on an already lean staff) continues to
emerge as an issue.
¦ Diverse funding sources and the budget process in general is a continuing challenge, now
highlighted because of a downturn in the economic climate.
¦ Furthermore, the Mayor and council will likely be changing in the coming year—and
staffs are unsure of the effect the change will have on the AM initiative.
1) The City learned many lessons developing and implementing an AM program:
¦ The citywide approach was the right way to start, although it took more time than
expected. Later adjustment to a department-wide approach was a successful tactic.
¦ The magnitude of time and effort needed should not be underestimated.
¦ Stability in the executive management (Mayor/City Manager/council) gave the City
consistency in support from the top and established AM as a strategic issue.
¦ Developing clear AM program definitions of terms was important to ensure clear
communication and consistent understandings.
2)
3)
The change management process and emphasis on cultural organization was instrumental and
led to involvement in the AM initiative from all levels of the organization.
¦ The importance of change management should not be underestimated. Understand that
people are not averse to change if they understand the purpose and they have a voice in
its management and can participate in planning the changes.
¦ Consistent and explicit communication of the process and benefits of AM to field,
technical and administrative staff is a key to a successful AM program.
¦ Constant communication to all levels is imperative. Tools for keeping all staff involved
included; the project Web site, staff meeting updates, focus groups, interviews and
feedback forms were useful.
Educating staff about the process and components of AM is extremely important. For
example, many people erroneously think that
developing a Computerized Maintenance
Management System (CMMS) is the end
point.
It is important that decision makers
understand the concepts and value of
AM so that they will continue to fund
and sustain the AM program.
Expertise from consultants who transfer
that knowledge and environment of
ownership to City staff is beneficial.
Understanding basic AM issues and
policies, is a key component of the
discussion with the community on
what services it wants in the future,
how much it is willing to pay, and in
what manner it is willing to pay for
them.
—2006 State of the Infrastructure Report
Developing a roadmap for the future was helpful.
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¦ It is important to plan for
ensuring that institutional
staff and consultant
knowledge is passed on, e.g.,
document processes, conduct
training sessions.
¦ It is important to know how
to reach everyone that's
involved.
NO |
RIGHT
TURN
4)
Incorporating a feedback form at
the end of every meeting,
coupled with the immediate and
aggressive implementation of
suggested changes has
substantially increased the perceived quality of communication by attendees.
5) Funding consistency over the life of a project—much less the life cycle of the asset—is a
substantial challenge for the General Fund Departments.
Section 4 Benefits of AM
1) The beneficial outcomes that City staffs have attributed to the AM program include the
following:
¦ Managers see visible energy and excitement from the people AM affects the most. Some
feel that the biggest achievement is that all levels of staff are engaged. This, combined
with the commitment from the top, is likely a recipe for success.
¦ AM provides more tangible information about return on investment and makes it easier to
ask the council for money when the budget needs estimates are less fuzzy.
¦ There is now a roadmap, a path forward, to demonstrate good stewardship of the public's
assets.
* An AM umbrella has opened over many ongoing projects, which has allowed
communication and connectivity across the projects.
¦ Staff at all levels are using common AM terminology and embracing AM concepts.
* Staff are learning to communicate all the way through the organization, about specific
assets.
¦ Because of the cultural assessment initiative, there is now an awareness of the City's
organizational culture that benefits the City as a whole.
2) In the long run, the City as a whole will benefit from a staff educated in AM principles.
¦ The support of top management has led to a great deal of visibility for the AM program
This helps educate staff and the community about the program's goals.
¦ Planning for the AM strategy includes a policy of training and knowledge transfer from
consultants, as well as senior staff with critical institutional knowledge. Planning for
knowledge transfer benefits the City as a whole.
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The citywide review of Capital Improvement Projects (CIP) is a major step forward. The City is
now looking at capital projects holistically with other groups and moving it forward in a
coordinated fashion.
Section 5 Henderson's AM Program—Where is It Today?
DUS and PWD each have a roadmap of projects that were identified through the gap analysis.
These projects are referred to as Foundation Projects. They are designed to strengthen specific
AM practices throughout the participating organizational units. The time frame for completing
the first set of Foundation Projects is within the next 2 years.
As the departments move through the projects, they will coordinate activities through the Joint
Program Management Team. This steering team comprises representatives from DUS and PWD
and meets even other week to coordinate the projects.
Program Approach
PHASE 1
ASSESSMENT
PHASE 2
DESIGN
TASK 1
TASK 3
Needs &
Strategy
Assessment
TASK 2
TASK 4
TASK 7
TASK 8
Business
Process
TASK 6
Foundation Projects
TASK 5
Implementation
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Section 6 Foundation Projects
1) The current status of the City's AM program.
¦ DUS completed the Inventory Management Strategy Foundation Project.
¦ DUS and PWD are working on the Enterprise Asset Management System Master Plan.
¦ The DUS Risk Assessment Foundation Project meeting to present the initial results of the
asset risk scoring task was held on May 29, 2008.
¦ DUS and PWD are beginning a joint scope negotiation on the Data Standards and CMMS
Foundation Projects.
¦ Organizational Culture projects are being reviewed with departmental and citywide
efforts.
¦ DUS has hired consultants to assist with evaluating and organizing pertinent DUS asset
data for the purposes of risk scoring; developing initial risk scores for DUS assets and
identify high-, medium- and low-risk assets that can be used for prioritizing maintenance
and renewal activities (this includes development of probability of failure scores and
consequence of failure scores); documenting the asset risk assessment process to ensure
repeatability in the future; and building the capacity of DUS staff using the
methodologies for calculating asset risks.
2) Current AM tasks specific to the departments are as follows:
DUS
PWD
¦ Pump station condition assessment
and performance evaluation
Capital program management software
project modules
¦ Inventory management
implementation
Work order system using Rover Pen
technology for facilities maintenance
¦ Information Technology (IT)
integration strategy
Traffic signage inventory, condition
assessment and replacement
¦ Supervisory Control and Data
Street light pole inventory, condition
assessment and replacement
Acquisition (SCADA)
Wonderware implementation
Safe routes to school—inventory and
condition assessment of sidewalks,
curb/gutter, signs and crosswalks around
all Henderson schools
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Section 7 Information Technology Plans
¦ The City is negotiating project scope with a consultant for a CMMS Implementation Plan
and Software Procurement. The City's goal was to have a CMMS vendor selected by
December 31, 2008. CMMS-like systems that are now in use, such as CarteGraph and
PMC, will be integrated or decommissioned.
¦ The City is working with a consultant on an Enterprise Application Integration project
reviewing major applications such as Geographic Information System (GIS), SCADA,
Financials, Laboratory Information Management Services, and the like.
CIP management is facilitated by a commercial software package.
* The software is a common repository for capital project information across all
departments in the City and includes general project information, cost estimates
(including the associated operations and maintenance costs), fund modelling and a record
of project prioritization within specific programs.
¦ The City is configuring the project management modules of the software, including
detailed project schedules, risk and issue management, and budget and expense tracking
for implementation in August 2008.
The City does not have IT systems in place for renewal decision support or materials
management. Staff stated that DUS's historical data does not rate a high confidence level. The
data being captured through current AM initiatives is mainly stored in GIS; this data is readily
available and reliable.
The City has an overarching IT integration strategy for AM for DUS and PWD. "Hie AMSC
worked with the IT department to develop the strategy. The City funded two IT positions for the
AM initiative. The City is considering middleware and data warehouse solutions. Data standards
projects are not yet underway.
Section 8 Status of Core AM Practices
The City's level of AM practice is summarized
below.
The City is building an asset inventory for all
assets within DUS and PWD. A list of assets and
an asset hierarchy was developed for water and
wastewater assets specifically for the DUS Risk
Assessment Foundation Project. Bits and pieces of
asset inventory exist in various databases and
spreadsheets. The Data Standards project will
address this for both departments.
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The DUS Risk Assessment project is the first cut to assess asset condition, failure modes and
residual lives across DUS. In PWD, roadway condition assessment occurs at regular intervals,
with rehabilitation and replacement schedules, taking into account deterioration rates and useful
life calculations, managed through
the City's MicroPaver software
package. Fleet assets are also
routinely condition assessed, and a
standardized, optimum-renewal,
decision-making process is applied.
Traffic, flood and facility asset
processes are less defined.
The City has not formally started to
conduct an economic evaluation of
life cycle and replacement costs.
This is an important goal of the
City's AM initiative. Draft levels of
service were developed for both
departments during the Needs &
Strategy Assessment. These levels of
service will be further refined during
the Business Process portion of Phase 2.
Risk scoring or determination of business risk exposure/criticality has been conducted at a high
level for DUS via the Risk Assessment Foundation Project. The City will continue to fine tune
the risk scoring to asset level (most of the work done so far is at the system/process level). This
has not been initiated yet for PWD. In DUS, the City is just beginning to talk about how the risk
scoring data will be used to drive maintenance policy and optimize operations and maintenance
investment. The City will use this data for long-term financial strategies, and optimization will
be addressed as the process is refined.
The City is negotiating scope on a CIP validation project to optimize capital investment
strategies. With respect to the step to determine a funding strategy, the City has long-term
funding strategies in place, but the connectivity with AM is still in the beginning phases. The City
has a citywide AM charter, mission and vision but does not have formal AM plans or an
enterprise-wide AMP. PWD staff members estimate that they will have PWD's first strategic
AMP by the middle to end of calendar year 2009 and will pilot test one asset type such as flood
control assets. DUS will also produce their first strategic AMP during this time frame.
A. Addressing the Deferred Maintenance
Issue
An issue raised by several managers is the need to
continue to change the mindset about maintenance of
assets. In the past 3 years, the new deputy directors have
pushed for a more proactive perspective on maintenance.
Because of rapid population growth, the City added a
significant amount of new infrastructure and experienced
very few failures. The City was not focused on
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maintenance until there was an
equipment failure at the wastewater
treatment plant. This incident was a
wake-up call and invigorated a new
discussion about how the City manages its
assets. Newly hired staff with experience
in older cities that experienced frequent
infrastructure failures promoted a mindset
of being more proactive rather than
reactive to system failure and
maintenance issues.
City staff members are now challenging
themselves to better manage maintenance
and plan to assemble a workgroup to
revise operation and maintenance manuals to address recurring maintenance. The City has also
funded a maintenance manager position. Managers said that the City is working to move from
concentrating solely on capital needs and balancing those needs with maintenance needs. They
realize that getting data management systems in place is crucial to managing assets. The City
plans to develop a data support system that will help managers make decisions to manage assets
and balance capital needs with maintenance needs.
One manager stated that preventing deferred maintenance also requires awareness of staffing
needs at the highest levels. The City prides itself in running an efficient local government and
states on its Web site, "Lowest employee to resident ratio in the Vegas Valley demonstrating
government efficiency." This manager feels that the City must acknowledge that additional staff
members are needed for developing and implementing AM, including better maintenance and
renewal management.
Another asset maintenance issue the
City is confronted with is the timing
of the developer-donated
infrastructure and the challenges
faced planning for the operation and
maintenance costs associated with
that infrastructure. Also, the
Southern Nevada Land Sales Act
provides funds to the City for
creating bicycle and walking trails
and open spaces, but the funds do not
provide for maintenance of these
facilities. Hie City is left trying to
come up with additional maintenance
funds.
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B. Completed Projects
AM projects already completed by DUS and
DUS
¦ Reservoir Rehab Program
¦ Large Meter Inventory
¦ CarteGraph Program
¦ Water Treatment Plant Condition
Assessment
¦ Inventory Management Strategy
¦ GIS Enhancements
¦ Needs & Strategy Assessment
(including Organizational Culture
Survey)
¦ Citywide Sewer Vulnerability Study
include the following:
PWD
¦ Capital Program Management
Software—Planning Modules
¦ Pavement Inventory of Major Arterial
Roadways
¦ Storm Drain Inventory and Condition
Assessment
¦ Needs & Strategy Assessment
(including Organizational Culture
Survey)
¦ Information Technology Integration
Strategy
C. What's Next?
Execution of the Foundation Projects is ongoing. AM program funding and resourcing issues will
continue to be a challenge and that the City will likely hit a point at which AM could impede day-
to-day operations as staff try to implement AM strategy and perform their other full-time jobs.
AM staff members feel that the momentum for
firmly established. They see that the challenge
as soon as possible. The staff and managers
are eager to document successes. AM leaders
will also continue to manage the change in
culture toward full buy-in and
implementation of the AM program at all
staff levels.
1) DUS and PWD will work jointly on
developing data standards and a CMMS.
2) Upcoming specific projects for DUS
include Pittman Wash Improvements
and Pipeline Condition Assessment; CIP
Validation; Geodatabase Conversion;
and Workforce Development.
3) Near-term projects planned for PWD
include:
moving forward with the City's AM program is
is in determining how to accomplish all the pieces
The AM Program will develop and
implement a consistent, integrated,
comprehensive framework in order to:
• Support the stewardship of public
assets
• Enhance department asset
management practices
• Meet established standards
• Support regulatory compliance
• Accurately forecast future financial
requirements
—City of Henderson AM Mission
Statement, 2004
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¦ Conversion of easement, vacation, right-of-way and benchmark data into GIS; customer
complaint database conversion into new customer relationship management system;
* Strategic asset plans for streets and flood assets (risk and condition assessments, demand
planning, replacement strategies);
¦ Asset handover processes for developer-
donated and City-built assets;
* Leadership coaching for all supervisory
levels.
4) AM leaders have their eye toward eventual
development of an enterprise AMP. Staff see
the endpoint as an AM program and data
system that promotes coordination of asset
construction and maintenance so that they
can do a better job of balancing asset
renewal needs with growth.
5)
Via the AMP, the AM staff will have
responded directly to the Mayor and council's
Priority No. 7—development and implementation of a city wide AM and maintenance
program.
Section 9 Background Facts
Henderson, incorporated in 1953, was chartered in 1965 as a council and manager form of
government. The Mayor and council address legislative needs. Four council members (four wards)
are elected at large. The City Manager is appointed by council. As of January 2008. the City has
3,197 employees (1,899 full-time, 1,298 part-time). The annual City budget is $221.4 million.
1) DUS assets include the following water,
¦ Water: 15 million gallons per
day (mgd) water treatment plant,
1,200 miles of water lines, 40
reservoirs, 24 pump stations, 90
pressure reducing stations,
10,000 fire hydrants, 28,000
valves
* Wastewater: 32 mgd water
reclamation facility, 945 miles of
sewer lines, 12 lift stations,
19,500 manholes, 69 kV
substation
* Reclaimed Water: 50 miles of
reclaimed water lines, seven
wastewater and reclaimed water assets:
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reservoirs, three pump stations
2) PWD assets include the following public works assets:
¦ Streets: 806 centerline miles of roadway, including appurtenances such as sidewalk, curb
and gutter, traffic markings and street lighting
¦ Traffic: 178 signalized intersections and school crossing signal systems
¦ Flood: 12 detention basins; 304 miles of storm drainage including channels, culverts and
pipe; 3,600 drop inlets; and 4,100 manholes
¦ Fleet: More than 1,400 vehicles including police cars and motorcycles, fire equipment,
heavy equipment and utility vehicles
¦ Facilities: More than 1,440,000 square feet of building space including police substations,
fire stations, recreation centers and City operations and maintenance buildings
The organizational structure of the City's AM team includes the AMSC, which consists of the
Director of Utility Services (chair), Director of Finance, Director of Public Works, Assistant
Director of Public Works, Director of Parks & Recreation, Chief Information Officer, and
Manager of Budget and Strategic Planning.
The AM Program Manager oversees and coordinates all AM activities. The Joint Program
Management Team consists of the AM Program Manager, the PWD Senior Technical Analyst,
the Assistant Public Works Director, both Deputy Directors of Utility Services, and the Manager
of Utility Management Services. This group meets every week to coordinate the AM activities of
DUS and PWD. The team also negotiates scopes for task orders. Project-based departmental AM
teams are staffed from all levels of the organization at the start of a Foundation Project.
The initial budget and schedule for the citywide phase of the AM program (2004-2006) was
$250,000. The departmental-focused AM program is funded at $3,500,000 for (2007-2009).
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Multisector Asset Management Case Studies
CHAPTER 5 THE PORTLAND, OREGON, EXPERIENCE
The City of Portland (City) with a population of 568,000 comprises an area of
approximately 145 square miles in north-western Oregon. Located on the Willamette
River at its confluence with the Columbia River, Portland is the center of commerce,
industry, transportation, finance and services for a metropolitan area of more than 2
million people. Portland is the largest city in Oregon and the second largest city in the
Pacific Northwest. City planners project that the Portland region will grow by a million
new residents in the next 20 to 30 years.
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Section 1 Executive Summary
Portland is beginning to apply asset management (AM) principles in its transportation, water and
wastewater sectors. Although not highlighted in this case study report, Portland's AM program
also involves managing parks, affordable housing and civic facilities (city-owned facilities such
as government offices, parking garages, and sports and entertainment venues).
Portland has applied traditional AM tools
* In the transportation sector for more than
20 years.
¦ In the past 5 years, in the water and
wastewater sectors, and
* Has begun to apply the principles
characterized in the International
In frastructure Management Manual.
Although the City's transportation, water,
stormwater and wastewater sectors started with,
and continue to use, different AM frameworks,
the City supports collaboration and the alignment
of these frameworks with the long-term goal of developing a citywide AM plan. At this stage, the
sectors use common definitions and terminology but do not apply, as of yet, consistent technique.
The City has set up a City Asset Managers Group and assigned Bureau of Planning staff to
promote partnering between bureaus to improve AM practice and coordination for all City assets.
Portland's approach to AM consists of the following general process:
"Bottom
up"sector
oriented
~
Integration
into status
of assets
reports
¦>
Common
framework
-~
Enterprise
AMP for
Council
members
The Bureau of Planning has developed five annual reports on the status and condition of the
City's physical infrastructure. Via these reports, the City takes a holistic approach to ensure that
its assets are adequate to provide desired levels of service. The reports provide an accounting of
the number of assets, condition, replacement value, current service levels and cost of unmet
needs. Information in the reports is intended to assist the City's efforts to ensure that the
infrastructure is in good condition and that operation, maintenance, rehabilitation and
development programs are as efficient, effective and coordinated as possible.
Commissioners stated that they were
supportive of the AM tool because "it
helps convey to citizens how their
money is spent." Mayor Tom Potter
stated that the "longer we put this off,
the faster the deterioration of the
infrastructure," and that the annual
reports prepared by the planning staff
provide a "good heads up for
everybody."
—City Council Meeting
February 27, 2008
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Beginning, two years ago, the annual reports introduced data
confidence level scores (a rough assessment of the quality of
the data included in the report). Last year, the report
introduced the concept of business risk exposure (a
weighting of the probability of failure by the consequence of
failure). The city council says these additions improve the
quality and usefulness of the asset report in the decision-
making process.
The City Asset Managers Group receives policy and
resource direction from the Planning and Development
Directors. The directors group coordinates long-range
planning and manages certain cross-bureau planning and
development initiatives. Each AM report is presented to the
city council at the start of annual budget work sessions.
While AM best practices will take a number of years to
implement, Portland has made strides to integrate principles
from the International Infrastructure Management Manual.
At this early point in Portland's AM experience, the City has
recognized a number of benefits in applying AM principles
including the following:
¦ AM creates a common language across sectors and clarifies bureau missions
* AM helps to deliver more efficient, cost-effective services
Section 2 Portland's AM Vision
Portland seeks to develop a sustainable asset base that responds to social, economic and
environmental needs. The goal for physical assets is to cost-effectively provide a desired level of
service.
A variety of federal, state and city policies guide the upkeep of the City's infrastructure including
the following:
* State and federal regulations, policies and standards, such as the Clean Water Act,
National Bridge Inspection Standards and Governmental Accounting Standards Board
(GASB) Statement 34
* State planning requirements mandating that the City develop a public facilities plan as a
component of the City's Comprehensive Plan
¦ Municipal-bonded debt covenants
* City capital improvement plan (CIP) budget manual, which requires bureaus to analyze
operations and maintenance costs and savings m new projects
City of Portland
Asset Status and Conditions Report
December 2007
RISK = Likelihood x Consequence
Via this report, the City takes a holistic approach
to ensure that the City's assets are adequate to
provide desired levels of service.
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Section 3 Lessons Learned
Applying AM practices and attempts to integrate infrastructure sectors has taught Portland several
lessons:
1) Engage the support of top management (bureau directors and
city council) to enable policy and budget decisions needed to
strengthen business practices.
¦ Find small, early successes to show the value of AM.
¦ Learn best practices from other communities, in the United
States and abroad.
2) Recognize the varied business needs of each sector.
¦ Involve staff at all levels of an organization to implement
AM.
¦ Build institutional knowledge and expertise on AM to
sustain best practice.
3) Allocate resources to collect and maintain reliable asset data.
Section 4 Benefits of AM
At this early point in Portland's AM experience, the staff group recognizes that AM can do the
following:
* Create a common language across sectors and clarify bureau missions
¦ Help to deliver more efficient, cost-effective services
¦ Improve business and planning decisions at all levels
* Increase knowledge of assets
¦ Improve bureau coordination and accountability—for use in making choices in the types
and levels of service
Section 5 Agency Facts and Key institutional Piayers
Portland is a home rule charter city and is the last remaining commission form of government
among large cities in the United States. The Mayor, four Commissioners and the Auditor are
elected at-large. The Mayor and the Commissioners make up the city council. The Auditor is not
part of city council and has no formal voting authority. The Mayor and Commissioners also serve
as administrators of City departments, individually overseeing bureaus/offices and carrying out
policies approved by city council.
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The Portland Office of Transportation (PDOT) is
responsible for 31 transportation asset classes. These assets
include some 4,000 lane-miles of roads, 15 7 bridges, 992
traffic signals and more than 53,000 street lights. Hie City
also owns 10 streetcars; an aerial tram; various support
facilities; traffic calming devices; signs; parking meters;
pavement markings; bikeways; guardrails; retaining walls;
and traffic signal computer controllers. The city's
transportation system is valued at approximately $8.1
billion.
The Bureau of Environmental Services (BES) provides
sewage and stormwater collection and treatment services to
555,000 people, numerous commercial and industrial
facilities, and six wholesale customers. The existing system
consists of a 1,445-mile network of separated storm and
sanitary sewers, 878 miles of combined sewer lines that
carry stormwater runoff and sanitary waste, 96 pumping stations and 2 wastewater treatment
plants. The city's sewer and stormwater systems are valued at more than $5 billion.
The Portland Water Bureau (PWB) delivers potable drinking water for consumption and fire
protection. The City is the largest supplier of domestic water in Oregon, serving more than
800,000 people and providing about 100 million gallons of water per day, or about 36 billion
gallons per year. About 60 percent of the water is delivered to customers within City limits. The
remaining 40 percent is sold to customers in 19 surrounding cites and special water districts.
Water is supplied from the Bull Run watershed and the Columbia South Shore wellfield through
more than 2,000 miles of pipes. The water system is valued at $5.3 billion.
The Bureau of Planning conducts long-range, comprehensive planning for the City and helps
coordinate cross-bureau infrastructure issues, including AM. This assistance occurs through
bimonthly meetings with the department directors to facilitate collaboration on policies, programs
and projects that affect multiple bureaus; coordinating the City Asset Managers Group; and
producing the annual City Asset Status and
Conditions Report. The AM staff group briefs
and seeks direction from the directors group.
The Auditor's Office receives and maintains
all documents relating to the accounts and
contracts of the City, including its debts,
revenues and financial affairs. The Auditor
conducts financial and performance audits of
City bureaus and their functions. The Auditor
ensures that the City is getting the most value
for money spent and is efficiently managing its
funds. In the past 5 years, the Auditor has
evaluated maintenance practices of
transportation and water systems.
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Section 6 Triggers for Initiating AM in Each Bureau
The Portland story is one of individual sector needs and multisector aspirations.
A. Citywide
In Fiscal Year (FY) 2001-2002, the city council set strategic priorities as part of ^Managing for
Results exercise. City council identified the City's deteriorating physical infrastructure as an
immediate strategic priority. To address this issue, an interbureau team was formed in 2003,
composed of infrastructure asset managers, the Bureau of Planning, and Financial Planning. This
team initiated collaboration on AM issues and prepared annual reports on the City's physical
assets. Their reports to city council in 2003 and 2004 focused on the current and projected
condition of infrastructure, not on the strategies needed to manage assets over the whole life.
Efforts to describe assets and needs varied from bureau to bureau as did confidence in the
information, making it difficult for city council to make decisions using information in the report.
In 2005 the interbureau committee became the City Asset Managers Group, adopting a more
holistic approach to AM and looking for ways to
collaborate on common AM issues. While
transportation had an existing AM program, Portland has taken a bottom-up
other bureaus were just beginning to adopt AM approach to AM, with activities
principles and techniques. By joining forces, the originating in the various infrastructure
group identified common, long-term AM needs sectors. However, the City supports
and is now working to align AM approaches and collaboration among these sectors
reporting. The staff group produced an annual and the alignment of diverse AM
City of Portland Assets and Conditions Reports frameworks with the long-term goal of
in 2005,2006 and 2007. developing a citywide asset
management plan.
In FY 2005-2006 budget process, City
Commissioners asked for better data on the
funding gap in capital maintenance. They had questions about the quality and completeness of the
data and doubts about the bureaus' stated funding needs. To address city council's concerns and
to reflect the current state of City AM, the 2005 report added three features: common definitions
for basic AM terms, data confidence levels and bureau observations on their AM activities.
More recently, the City has made progress in emphasizing risk analysis and using that
information to prioritize projects. The additional level of detail provided on confidence and risk
was well received by the council. Commissioners voiced support for that the AM tool, because,
"it helps convey to citizens how their money is spent." The Mayor was clear, "the longer we put
this off, the faster the deterioration of the infrastructure," and that the annual reports prepared by
the planning staff provide a "good heads up for everybody." It is apparent that city council
promotes the AM process, is increasingly knowledgeable about it and that their confidence in the
process has grown with familiarity.
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The Bureau of Planning seeks opportunities to advance
AM practices in the Portland Plan, an inclusive,
citywide effort to guide how Portland develops over the
next 30 years. The Portland Plan will update a number
of planning documents, including the 1980
Comprehensive Plan, the 1988 Central City Plan and the
1989 Public Facilities Plan.
A major product of the Portland Plan is a coordinated
20-year infrastructure plan, the Citywide Systems Plan
(CSP), which will address transportation, water,
stormwater, sewer, parks and publicly owned buildings.
The CSP is designed to update the City's 1989 Public
Facilities Plan and will include an inventory and general
assessment of the condition of the significant public
facility systems. It will provide a list of significant
public facility projects, estimates of when and where
each project will be needed with rough cost estimates.
The CSP will also discuss existing and potential funding
mechanisms and their ability to fund the development of
each public facility project. The CSP will go beyond the state planning requirements to
incorporate a more coordinated and comprehensive look at the City's infrastructure on the basis
of community goals and best practices.
B. Office of Transportation
In the early 1970s, PDOT started to track bridge conditions in response to a federal mandate for
biennial bridge inspections of bridge surfaces and supporting structures. PDOT had been tracking
condition information before this mandate, but with the mandate, it redesigned the AM tracking
system to fit the federal government's standards. A second impetus came with GASB Statement
34, adopted in 1999. GASB 34 requires the government to report the value of infrastructure
assets.
In the early 1980s, PDOT developed a Pavement
Management System (PMS) to enable it to
inventory and track the condition of its pavement
assets, including street lights. The City
recognized that the PMS assisted with making
recommendations for project prioritization and
helped PDOT identify optimal solutions that fit
within budget constraints. In 1995 gas tax dollars
declined. This focused attention on the
transportation asset backlog and appropriate
levels of service. The PMS provided helpful data to assess and prioritize paving backlogs. The
current AM program for PDOT grew out of this inventory, which now tracks data on 31 asset
groups.
In 1986 PDOT issued its first asset status and conditions report. Starting with the 2000 report,
PDOT wrote several condition reports focused on aging infrastructure and introduced the concept
In 1995 the City experienced its first
impact of reduction in available gas
tax dollars, which focused the
attention on the transportation asset
backlog and assessing the level of
service of transportation assets.
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of managing for results. This shift involved looking more comprehensively at existing assets,
defining institutional priorities, and examining levels of service and related costs. Improvements
to asset tracking and reporting also supported the citywide asset status and condition reporting,
which began at approximately the same time.
In recent years, PDOT has moved PMS responsibilities to the construction engineer; instituted a
pavement moratorium policy regulating street cuts; and conducted a business practice study,
which will provide greater ability to target future investments for paving assets. PDOT is now
updating pavement management practices, partially in response to audit reports. These updates
include new pavement condition rating methods, replacing 25-year-old PMS software and
changing street preservation activities.
C. Bureau of Environmental Services
In BES, several factors converged as the impetus for instituting AM. In 2002 the Chief Engineer
asked his staff to create a group to better coordinate capital construction to reduce conflicts with
other City construction projects. Thus, a citywide coordination effort was initiated, which has
evolved into the current citywide coordination workgroups. Concurrently, the BES staff was
learning about the practice and benefits of AM
via a West Coast benchmarking effort and
decided to implement AM practices (including _
life cycle costs, triple bottom line, risk, failure BES determined that by 2010—2015,
modes, residual lives and the concept of how to ^0 ^ percent of the Citys
score/prioritize projects) in their System Plan wastewater pipe would be 100 years
update. This initiative has evolved into part of an<^ that an AMP could help focus
the CSP, coordinated by the Bureau of Planning. reconstruction and rehabilitation
needs.
Through the analytical work related to the
System Plan update, the bureau determined that by 2010-2015, 70 to 80 percent of their
wastewater pipe was going to be 100 years old and that an Asset Management Plan (AMP) could
help focus its reconstruction and rehabilitation needs. As part of the System Plan update, the
bureau is developing a sewer rehabilitation plan that incorporates many AM concepts that aid in
asset repair or replacement decisions.
In BES's case, AM planning started with middle management and moved up, with the goal of
undertaking benchmarking with a focus on best practices. Addressing aging infrastructure
continues to be an increasingly prominent need, and the bureau recognizes the value of AM in
facilitating better decisions regarding asset renewal and replacement.
D. Water Bureau
In 2004 the PWB formed a Water Asset Management Group as part of a reorganization and
expansion of its Engineering Department. Initiating the AM group was also in response to an
auditor's report that discussed the PWB's water system maintenance efforts and difficulties
completing capital projects. The Chief Engineer, the Operations Group Director, and the
Construction Group Director formed the original Asset Management Steering Committee and
worked to ensure organizational and budget support. The Senior Engineer in the Asset
Management Group defined the role and the nature of the PWB's AM program. The PWB also
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developed an AM charter, signed by the management
team. The charter defines the objectives of pursuing AM.
Early AM efforts in the PWB responded to short-term
needs or questions.
¦ Useful life of assets, maintenance practices and
replacement values.
¦ International utility benchmarking project.
¦ Identifying key processes and best practices and
trying to make progress in those areas (e.g., risk
methodology). PWB staff members stated that
they are making slow, steady progress to adopt
AM concepts.
Our Maiu|>cmml Charier
vPCKTLAND' ~> 77—.-//
WATER
u u r t a ti ' Cp- I t-d.
The Water Bureau developed an AM
charter, signed by the management
team. The charter defines the objectives
of pursuing AM.
Section 7 Portland's AM Program - Where is it today?
The 2007 Asset Status and Conditions Report found the
following:
¦ A current replacement value of $21.5 billion.
¦ An annual funding gap of at least $112 million
(between available funding and need).
¦ At current funding levels, some of Portland's
infrastructure will continue to deteriorate.
¦ Risk of asset failure is a key measure and should
be identified and reported.
¦ Green infrastructure plays a key role in the City's
infrastructure services and should be accounted for
similarly to traditional infrastructure.
Each year, individual bureaus and the citywide staff make
incremental improvements to the annual City Asset Status
and Conditions Report with the long-term goal of
developing a citywide AMP.
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The City's level of AM practice, with respect to the core AM best practices, is summarized below
for PDOT, BES and the PWB.
A. Transportation
PDOT is in its 21st year of annually
reporting on the inventory, condition,
replacement value and deferred
maintenance of its assets. PDOTs
confidence in the current status of
inventory, condition and replacement
value information varies from low
(street lights) to optimal (bridges).
PDOT has developed an inventory of
100 percent of its 31 asset classes,
including all pavement and bridges. The
bureau intends to improve the inventory
of signs and markings to enhance
information about pavement markings
by type (e.g., paint vs. thermal plastic
markings). The City has legacy
condition data for bridges and retaining walls and is re-rating the condition of 3,949 miles of
pavement.
PDOT does not apply the concept of remaining life and is moving more toward implementing an
aggressive preventative maintenance program based on condition such as visual distresses, traffic
loadings and rating factors, which will assist with budgeting and decision making. PDOT presents
level of service options and targets in its financial plans. In 2004 the bureau adopted a life cycle
perspective on level of service options.
Risk analysis is done informally now, and the new PMS will help PDOT with better risk analysis
information for pavement assets. The bridge AM program has a well-developed risk analysis
component. With respect to maintenance and capital investment strategies, for PDOT, a
paving project is considered a capital improvement if it requires more than 2 inches of road cut or
costs more than $250,000. On a project basis, PDOT conducts a cost study to determine whether
it is more cost-effective to perform maintenance work or contract the project out as a CIP, in
which case, other funding must be identified.
The primary funding source of PDOT s discretionary operating revenue, the State Highway Trust
Fund, is not indexed to inflation and has not been increased by the Oregon Legislature since
1993. The transportation maintenance liability has continued to increase faster than revenues.
PDOT plans to explore alternative revenue sources to address maintenance needs. The new PMS
will help PDOT to identify the most appropriate fixes for pavement problems that fit within
budget constraints. Since 2001 PDOTs asset teams have completed eight AMPs in the following
areas: streetlights, structures, traffic signals, sidewalks, signs, pavement, pavement markings and
parking. These plans provide ongoing guidance for asset preservation and renewal strategies.
Current Condition of City Assets
December 2007
TBD |
sr
I
I
~ "1
Civic Parks Affordablo
Housing
Portland's annual asset report summarizes the physical
condition of six asset groups.
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B. Bureau of Environmental Services
BES applies AM practices of asset inventory, condition assessment and computerized
maintenance management systems for its treatment and pump stations and collection system. BES
has developed an inventory of 99 percent of its combined, stormwater and sanitary systems and
has assessed the condition of about 75 percent of that system. Ninety-nine percent of the separate
storm system has been inventoried, and 20 percent of that system has been assessed for state of
condition
BES has an active project to improve
the projection of the remaining useful
life of pipe assets and is developing
deterioration curves for various types
of pipes; BES will evaluate the use of
these curves to strengthen its optimized
renewal decision making processes and
practices.
The levels of service applied by BES
are generally permit-based (e.g., driven
by the standards and requirements
listed in the City's National Pollutant
Discharge Elimination System
permits), and stormwater and sanitary
sewer system design standards are
developed around such standards.
The bureau is now using risk as a
priority-ranking criterion for
evaluating and recommending capital and operating activities. The BES system plan will
incorporate system inventory, condition, geographical information system (GIS) data and failure
records in an AM context to develop a risk register consisting of Likelihood of Failure B
Consequence of Failure.
To define maintenance and capital investment strategies, the recommended solutions
(projects) will be based on life cycle cost analysis that looks at the triple-bottom-line ranking of
projects that considers financial, social and environmental benefits of a project. The intended
result is that project expenditures will result in optimal asset value and customer service for
possibly lower costs than in the past. Mortality is based on decay curves under development.
BES is moving toward daily dynamic optimization in its combined sewer overflow (CSO) and
sanitary sewer programs. CIP projects are rated and ranked on the basis of pre-established criteria
by bureau managers.
BES has no systematic projections yet for funding strategies beyond 5 years. BES is in the
process of developing its first AMP. BES has established a new System Planning Program to
provide continuous and coordinated infrastructure planning that integrates the bureau's various
watershed, stormwater and wastewater plans. BES intends to update the System Plan to include a
sewer rehabilitation plan, updated treatment plan, stormwater plan and updated combined and
sanitary sewer system plans. Hie System Plan update is driven by the need to address the
Replacement Value of City Assets
December 2007
14 billion
S 3 billion
W'lion bi„ion
Portland's annual asset report estimates the replacement value
of six asset groups.
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bureau's aging infrastructure and a desire to provide a prioritized list of potential projects for
inclusion in the bureau's capital improvement program after year 2011 (after completing the CSO
construction project). The new sewer rehabilitation plan element will identify the appropriate
sewer maintenance routines (and repairs) to enable the individual infrastructure components to
reach an optimal useful service life at an overall minimum cost. The AM-driven sewer
rehabilitation program will blend both operational and capital expenditures to optimize the
system's performance.
C. Water Bureau
The citywide AM initiative pushed
forward the bureau's efforts to obtain
inventory, condition and
replacement value/remaining life
estimates for the entire water system
(which was the basis for developing
the Status and Condition report of
2006). As part of the individual AMPs
for asset groups, understanding failure
modes and developing deterioration
curves are two tasks underway
(although progress varies with the
asset group).
With respect to life cycle processes,
staff members stated that the bureau has been slow to embrace total life cycle cost comparisons
when evaluating alternatives and that there is a bias toward capital solutions to problems. The
organization now looks at operating costs of alternatives (in engineering planning), and some of
the business case developments by AM look at triple-bottom-line costs.
During the budget process in 2005, the bureau established effectiveness measures for budget
programs. There were then, and are still, about 200 of these measures. Many of the measures are
very detailed and focus on individual asset group activities, as opposed to representing key
service levels. A key effectiveness measure for the PWB is the number of customers without
water (the goal is less than 5 percent without water for more than 4 hours in a year). Until last
July, there was no software system to record this information. Now, a GIS tool can calculate the
number of services out of water when a valve is closed. However, while the tool is now available,
there is still limited information being communicated (from the field mechanics, through their
supervisors, to dispatch and to the data entry clerks) on valve closure start and, especially, end
times. The need to complete this step has been highlighted as a priority in the construction crew
work order.
Led by the Asset Management Group but accomplished using an organization-wide committee, a
risk methodology was developed (following models from Australia and New Zealand using a 1
to 5 scale for consequence and likelihood) and has now been applied to more than 100 assets or
asset groups. The methodology identified high-risk assets that previously were given little
attention. This year's budget process included using the risk ranking for project selection (it was
not the only method used). The risk methodology is now being used as part of the citywide AM
effort to select projects for funding. The PWB conducted a system-wide evaluation of risks and
Annual Funding Gap
December 2007
PDOT BES Water Park* Civic Affordable
Housing
Portland's annuaI asset report shows the annual funding gap of six
asset groups.
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the likelihood and consequence of
failure of many of their key assets. As
of November 2007, the bureau had
assessed 200 asset/failure mode
combinations.
With respect to maintenance and
capital investment strategies, the
PWB's AM team has recommended
strategies in its individual AMP.
There is no rigorous CIP or project
management software system.
The bureau"s long-range funding
plan includes applying a planning
model to forecast future funding needs
for maintaining, repairing and
replacing the assets.
Risk Management Approach
ANALYZE THE RISK
IDENTIFY THE RISK
ESTABLISH THE
CONTEXT
RESPOND TO THE RISK
MONITOR
REVIEW
COMMUNICATE
AND
CONSULT
The 2007 City Asset Status and Conditions Report introduced the
risk management process.
The bureau developed AMPs for mains, valves, meters, pump stations and tanks. Many of the
distribution system assets have been analysed as part of asset plans.
Section 8 What's Next?
A. Whole-of-City
Portland is at a crossroads in AM practice. Each bureau is making incremental AM improvements
according to internal business needs. Each fall, the City Asset Managers Group prepares the
whole-of-city Asset Status and Conditions Report. Bureau directors need to decide whether to
pursue a whole-of-city AMP. Such an AMP would require a common vision and a concerted,
multiyear commitment of policies and resources. Other upcoming decision points include
recommendations for near- and long-term improvements to AM practice (through the annual
whole-of-city reports), how the Mayor-elect defines infrastructure roles and gives budget
instructions and determining long-term infrastructure policies and priorities, as recommended
through the CSP.
The City Asset Managers Group will soon conduct an AM gap analysis of participating City
bureaus. Survey results will shape a survey of other communities for transferable AM best
practices. The Bureau of Planning will manage this activity, with assistance from several
consulting firms.
B. Bureau-level Improvements
The BES plans to complete its System Plan in the spring of 2009, which will recommend
operating activities and capital projects to address system deficiencies that were determined
through an AM framework. The bureau also continues to participate in the Water Services
Association of Australia (WSAA) AM benchmarking project to identify bureau strengths and
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weaknesses. Findings from the
benchmarking process will help
the bureau detennine strategic
next steps and identify a long-
term direction for its AM
program.
The PWB plans to implement
AM for all program areas and
asset classes. The primary driver
behind the current initiative is
observing efforts in other utilities
and proposing actions, mimicking
applicable best practices. The
focus for improvement includes
doing risk ranking and
establishing cost-effective risk
treatment; setting key service levels; developing business cases (using total life cycle cost, triple
bottom line, risk cost) and establishing guidance; forecasting asset budget needs (for
maintenance, repair and replacement); completing bureau AMP. The PWB is very active in
promoting and developing a single, system-wide AMP. The PWB is also participating in the
WSAA benchmarking project.
PDOT staff expressed concern that there is no funding available to move AM forward
systematically. Despite the lack of funding, PDOT continues to track assets and their conditions
to inform decision making. PDOT also plans to implement risk assessment and life cycle costs
across assets to better allocate the limited resources for transportation operations and
maintenance. PDOT will continue to update the AMPs, which are used by each asset class to
guide the work it does to effectively and efficiently manage the assets.
At the strategic level, the Bureau of Planning will continue in its role of providing coordination
among the bureaus, helping to develop a common AM framework and working toward a citywide
AM plan. The bureau will continue to improve the annual City Asset Status and Conditions
Report to reflect improvements in data collection and management. Finally, the Bureau of
Planning is also coordinating the update of the City's public facilities plan as it updates the City's
comprehensive plan. The CSP will guide long-term infrastructure investments in light of the
ongoing AM work of the bureaus.
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Multisector Asset Management Case Studies
CHAPTER 6 THE SACO, MAINE, EXPERIENCE
The City of Saco (City) is on Maine's southern coast at the mouth of the Saco River on
the southerly side of Saco Bay in the Gulf of Maine. Saco is the tenth largest city in
Maine. It is part of the Portland-South Portland-Biddeford, Maine Metropolitan Statistical
Area. Saco continues to be a key area in the state for residential growth and a key area
in which industrial and commercial companies are investing. Saco was ranked among
the top five cities in Maine for this growth. Saco has a land area of 38.5 square miles
and a population of 18,230.
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Section 1 Executive Summary
Saco is applying asset management (AM) principles across its wastewater and transportation
sectors. The City purchases water from a private company, Biddeford-Saco Water Company. The
City's AM plan (AMP) will also include other departments within the City. The Public Works
Department is responsible for wastewater and transportation services and has taken the lead on
the City's AM program development. An AM committee representing all the City departments
was created in January of 2007. That committee was active during the discussions establishing
the goals and direction of the committee and the asset inventory phase.
The City's vision for an AM program initiated
from its required response to Governmental
Accounting Standards Board (GASB) Statement
34. When addressing GASB, the Financial
Director at the time pushed for implementing
AM concepts and applying best practices in City
management. Thus, the stage for AM was
already set in the City because of an orientation
for best management practices. The major
impetus for formalization of an AM program
came in 2007 after management staff attended
the Advanced Asset Management Workshop held by the U.S. Environmental Protection Agency
(EPA) and sponsored by New England Water Environment Association (NEWEA). The
NEWEA-sponsored EPA workshop provided the breakthrough framework around which the Saco
approach has been successfully mobilized, and the EPA materials provided visuals to demonstrate
the AM principles to management.
The NEWEA-sponsored EPA
workshops provided the breakthrough
framework around which the Saco
approach has been successfully
mobilized, and the EPA materials
provided visuals to demonstrate the
AM principles to management.
The City's AM approach is very much a collaborative, top down approach—that is, considerable
effort has gone into establishing a common framework (including definitions and a 10-step
rocidmcip for implementation) before implementing department-specific initiatives to strengthen
AM practices. The framework adopted was that promulgated by EPA. Saco's modest size means
that the same staff that created the framework is also executing its implementation.
"Top Down"
Citywide
10-step process,
Aggregation
impetus and
common
five core AM
back up to an
direction (City
framework,
questions,
eventual City
Manager,
~
definitions,
~
EPA worksheet ~
State of Assets
Finance
from EPA AM
form starting
Report
Director, Public
workshop
point for
followed by its
Works Director)
materials
implementation
first AMP
The City has come a long way in a short time. The shortened time frame is likely because of
using the existing framework provided by the EPA workshop and materials. Saco demonstrates
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that small communities can successfully apply
AM principles and develop AM programs. Small
city programs might be on a smaller scale and
might be less formalized than larger cities"
programs, but as Saco has demonstrated, the
programs are effective in supporting
infrastructure sustainability needs.
The City has recognized a number of benefits in
applying AM principles including the following:
¦ City departments are looking at assets on
the basis of sustainability, life cycle costs and financial effects into the future.
¦ Knowledge of what assets the City has is incredibly useful in making resource decisions
for budgeting. The AM tools help prepare for the future.
¦ The community does not want to see spikes in tax bills, so everyone is better served by
applying AM principles to plan to avoid spikes in taxes from projects that were not
planned and budgeted.
As budgets become more accurate,
the information provided through AM
will allow a rational decision process
to capital investment and
maintenance.
—Michael Bolduc, Public Works Director
Saco prides itself in striving to be a green and sustainable city. Going Green Magazine voted
Saco as Greenest City in Maine. Managers agree that AM principles work nicely toward the
sustainability goal—providing information on how to manage assets, how to prioritize
construction and operation and maintenance (O&M) on the basis of life cycle costs. The City is
creating a position that was originally referred to as the Energy Coordinator, but it has renamed
the position to Sustainability Coordinator. The
Sustainability Coordinator will be responsible
for incorporating AM into energy and
sustainability projects.
The Public Works Director stated that the elected
officials and City Administrator have been
extremely supportive of the efforts under the AM
program. "They provide support and trust our
judgment to move forward—without that
support, we could not have moved forward like we have."
The elected officials and City
Administrator provide support and
trust our judgment to move forward—
without that support, we could not
have moved forward like we have.
—Michael Bolduc. Public Works Director
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Section 2 Saco's AM Vision and Triggers for Initiating AM
The City's multisector AM program was initiated in January 2007 after the Public Works
Director and Deputy Director attended the Advanced Asset Management workshop held by EPA
and sponsored by NEWEA. The workshop espoused the AM principles promoted in the
International In frastructure Management Manual. The managers were excited by the ideas
presented, felt that the AM principles made sense and were a natural progression for the City's
vision of AM.
They presented the concepts to the City
Administrator who supported the idea. The City
Administrator asked that the program vision be
expanded beyond wastewater and transportation
to other departments such as fire, police and
facilities and that level of service standards be
developed for every service the City provides.
New England Water Environment
Association has sponsored a couple of
EPA AM conferences that were
instrumental to our AM program
startup and development.
—Michael Bolduc, Public Works Director
International Infrastructure Management Manual
System Layout;
Data Hierarchy;
Data Standards;
Data Inventory
Condition
Assess Protocol,
Rating
Methodologies
Expected Life
Tables;
Decay Curves
Valuation;
Life Cycle Costing
Demand Analysis;
Balanced Scorecard;
Performance Metrics
Determine
Residual
Life
Determine
Life Cycle Costs
& Replacement 3
Set Target
LOS
Assess
Condition,
Failure Modes
Inventory
Assets
Determine
Appropriate
Maintenance
Fund
Your Strategy
Build the AMP
Determine
Appropriate
CIP
Assign
BRE Rating
(Criticality)
FMECA;
Business Risk Exp;
Delphi Technique
Root Cause
ORDM
Confidence Level
Rating;
Strategic Validation;
ORDM
Renewal Annuity
Asset Mgt Plan,
Polices & Strategy,
Annual Budget
Saco based its AM process on the AM Plan Process presented at the EPA Advanced AM Workshop.
The Public Works Department took the lead in developing the City's AM program. An AM
committee was formed in January 2007 representing all the City departments (except schools,
which could become involved at a later date). The committee was active during the discussions
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establishing the goals and direction of the committee and the asset inventory phase. The Public
Works Director heads up the committee, which met once or twice a month until February 2008.
In February, the asset inventory project hit a
roadblock due to server capacity issues. The City
had to purchase and install a new server to
accommodate its database needs. This caused a
delay in implementation and access to the
databases. To date, a significant amount of staff
resources has been involved in data collection
and start up of the geographic information
system (GIS) assets.
Before the workshop, the City had been working
on a number of independent projects such as
computerized O&M programs, a GIS mapping
system (Environmental Systems Research
Institute), strategic planning, and sustainability issues. The Public Works Director realized that
the strategic plan did not pull everything together in terms of resource allocation (there was still
too much competition for funding) and did not provide an adequate framework for decision
making. Then he received a flyer from NEWEA for the EPA AM workshop. He stated, "Asset
management seemed to be the right mechanism to pull all the plans together into one plan that
incorporates the City's entire infrastructure/'
Before this, the City's former Financial Director actively pushed the City to use the GASB
Statement 34 modified method for infrastructure reporting. Under GASB Statement No. 34,
eligible infrastructure capital assets are not required to be depreciated under specific
requirements. Saco is one of the few communities using the modified valuation method. The
former Financial Director's work was instrumental in moving the City toward AM. The City
Administrator, who supports AM concepts and
applying best practices in City management,
supported the efforts of the former Financial
Director. The Public Works Director stated,
"Without her dynamic support, we would not
have moved forward as quickly."
In addition to following the processes outlined in
the EPA workshops and the process described in
the International Infrastructure Management
Manual, the City is modeling its AM program on the programs implemented by Orange County
Sanitation District and Hamilton, Canada. The Public Works Director plans to issue the first
Status of Assets Report by January 2009 with a report card like the one Hamilton has produced to
communicate the status of the City's infrastructure to elected officials. He also hopes to develop
the city wide AMP before the end of 2009.
The City has been working on its first AMP for 18 months. The City's draft AMP states that the
basic functional process for developing the information in an AMP is the following:
¦ Know the physical and functional characteristics of the assets.
The modified approach gave the City
not only the numbers needed to fulfill
the accounting reporting requirements
on the financial statements, but an
asset management tool that can be
used in managing the City's most
valuable assets. It goes back to the
old notion that you cannot manage
what you do not measure.
—Lisa Parker, former Financial Director
AM, using the techniques taught in
EPA's AM training workshops, is the
way to go. These techniques are
needed to manage the City's
infrastructure.
—Michael Bolduc, Public Works Director
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Determine an acceptable standard or level of service on the basis of business objectives
and customer needs.
Determine the current condition and performance of the assets and the systems and
facilities of which each asset forms a part.
Determine the assets" likely failure modes and the probable time and failure. The failure
modes will include condition or structural failure, end of useful life, under capacity, not
meeting established level of service, and no longer economic to own and operate.
Determine the optimal solution to overcome the failure mode on the basis of a justified
business case including costs and risk.
Document these decisions in the AMP.
Review the draft AMP against the organizations capacity and capability of completing
the plan, including the amount of risk that the plan represents to the organization.
Rationalize and document the trade-offs necessary to undertake implementation of the
plan.
Review the plan and update periodically.
In this community, I am very proud of
The City is converting its water and wastewater what we have done in AM. We have
O&M data from MP2 to Azteca's Cityworks started a good structure on which to
software, which will tie into the City's GIS. The build toward the future.
City is in the early stages of implementing —Rick Michaud, City Administrator
Cityworks. The first AMP will be tied to
Cityworks, include the value of current assets
and project future renewal, maintenance and regulatory costs.
The Public Works Department is using Cityworks to track all calls for service. Work orders are
attached to assets that have been developed in the GIS database. This allows staff to track work
history and cost of maintenance on each asset. Cityworks will also be used to track inspections
and condition assessments of City assets. The wastewater treatment plant (WWTP) staff members
are in the process of converting to Cityworks to track maintenance on all assets at the treatment
plant and all pump stations. Once the database is complete and the reporting is established, the
City expects to be able to pull together the budgetary reports and capital plan for the city council.
The City developed its own GIS mapping system to store the asset inventory information tied to
asset location. The GIS inventory is fairly complete—the inventory of gas company assets is still
incomplete. The City intends to introduce Toughbooks for use in the field soon. To assess the
conditions of pipelines, the City also shares a closed-circuit television unit with two other
communities.
The City Administrator required the establishment of levels of service for all City assets,
including human resources. To date, the City has developed Level of Service Statements for many
of its assets including WWTP operations to prevent sanitary sewer overflows and combined
sewer overflows (CSOs), gravity sewers, household waste transfer facility, information
technology (IT) Help Desk services and other operations such as maintaining athletic fields and
personnel response time to customer request. Each level of service statement includes a
discussion of the level of service goal, level of service element, reliability, standards, service
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response, future demands, improvements, maintenance of service levels, compliance with
minimum standards and asset allocations.
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Section 3 Lessons Learned
The City learned many lessons developing and
implementing its AM program:
1) Initiating the AM process forced the
departments to work together to prepare an
inventory of the City's assets. The most
critical information for decision makers is an
understanding of the condition of the assets
today and how well they are performing in
relationship to residents' expectations.
2) Bringing department heads and mid-level managers on early in the process and inviting them
to be on the AM committee was the right approach to take.
¦ Although there was initial resistance to change, the acceptance of the AM program and
its principles has been more forthcoming.
¦ Taking the initial step of just getting started was the most important. AM is a new way of
thinking and conducting business in the City.
The most critical information for
decision makers is an understanding
of the condition of the assets today
and how well they are performing in
relationship to our residents'
expectations. It is critical to know the
condition of the asset, whether it is
functioning as needed, whether it is
functioning efficiently, and what the
cost is to maintain the asset,
—Michael Bolduc, Public Works Director
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¦ Using the principle of determining useful life of assets proved to be a very powerful tool
for management buy-in to the program, as well as budget preparation.
3) Data is only as good as data input. Correct data is needed to make good decisions. Ensure that
data is correct and is input correctly into data systems.
¦ It might be difficult to get buy-in from all groups, but if all parties are educated about the
process, usefulness and benefits of multisector AM, necessary players can be brought on
board.
¦ Go ahead and consider human assets from the beginning of the process, it is an important
piece of the program. Some departments, e.g., police and fire departments, are heavily
focused on human assets.
¦ Understand in advance the technical limitations to coordinating and consolidating a
Computerized Maintenance Management System (CMMS).
4) The original AM committee was too large and unmanageable. Paring it down to include a
good cross-section of representatives from asset groups was a good idea.
5) Educate elected officials about the AM concepts and plan early in the process and continue to
keep them abreast of progress.
6) Hiring a consultant could have prevented some of the unforseen missteps or exposed the
problems encountered (especially with IT) earlier in the process.
Section 4 Benefits
City departments are looking at assets on the basis of sustainability, life cycle costs and financial
effects into the future.
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1) The City now has a good idea on what assets
it has, the condition the assets are in and the
cost of the assets.
¦ Knowledge of what assets the City has is
incredibly useful in making resource
decisions for budgeting. The AM tools
help prepare for the future, and applying
AM principles is a "healthy thing to do."
Knowledge of what assets the City
has is incredibly useful in making
resource decisions for budgeting. The
AM tools help prepare for the future,
and application of AM principles is a
"healthy thing to do."
—Ron Michaud, Mayor
¦ AM provides hard data as to what real
performance of assets is, and why the City needs to invest in infrastructure.
2) Having an AM program helps the City plan for its financial future.
¦ The AM program has led infrastructure data to be cleaned up, compiled, organized and is
more accessible now—"data is now at our fingertips." O&M manuals were even
overhauled to incorporate AM principles.
¦ The community does not want to see
spikes in tax bills, so everyone is better
served by applying AM principles to
plan to avoid spikes in taxes from
projects that were not planned and
budgeted.
The community does not want to see
spikes in tax bills, so everyone is
better served by applying AM
principles to plan to avoid spikes in
taxes from projects that were not
planned and budgeted.
—Rick Michaud, City Administrator
3)
¦ The asset information helps with
succession planning for asset
maintenance, and the documentation is
available for someone else to come in
and follow the succession plan. This
makes succession planning easier because it is explicit knowledge.
The AMP will be a long-term plan that discusses replacement values. This will be a tool to
inform the council about what the assets are
worth, and the council members will have
the information they need to make good
decisions.
4)
Initially, the fire chief was reluctant to step
out on the AM program. He used level of
service information made available because
of the AM program for his budget request
and became an advocate. He promotes the
AM program and said, "As long as we are
moving ahead, we can be patient since we
know there are long-term benefits."
Every year we are accountable to
voters for what we have done in terms
of budget line items. AM arms us with
hard data as to what real performance
of assets is—why we need to invest. If
we don't do this, here is the impact.
Having AM helps the City plan for its
financial future.
—Ron Michaud, Mayor
Section 5 Agency Facts
The City is empowered to levy a property tax on both real and personal property in its boundaries.
The City operates under the mayor-council-city administrator form of government. Policy-
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making and legislative authority is vested in the seven-member city council. The council is
elected on a nonpartisan basis. The part-time Mayor and council members are elected to 2-year
terms from seven districts (or wards). The city council is responsible for passing ordinances,
adopting the budget and confirming mayoral nominations of committees and the City
Administrator.
The City Administrator is responsible for carrying out the policies and ordinances of the city
council, for overseeing the day-to-day operations of the City and for appointing the heads of the
City's departments, some with city council confirmation. The City provides a full range of
services, including police and fire protection; sanitation services; constructing and maintaining
highways, streets, and infrastructure; WWTP; solid waste collection; public education; health and
social welfare; recreation; general administration; and economic development.
The City has prepared a 5-year Capital Improvement Plan Policy. This policy outlines all the
capital assets owned by the City, their historical costs, their estimated useful lives and their
estimated replacement years and costs. With this information, the City will be better able to plan
for replacements, which will aid in its budget preparation in future years because it will have a
better idea of fiscal impacts from replacement being projected. In the current fiscal year,
approximately $6,743,694 was budgeted to fund various capital improvement projects, including
numerous capital asset additions and infrastructure maintenance projects. The City continues to
remain significantly below state-mandated thresholds for allowable debt liability.
The Public Works Department operates and
following:
* Commercial Pier
¦ Landfill and Transfer Station
¦ Public Works Facility
* Sanitary Collection Systems
* Wastewater Treatment Facility
Sanitary Collection System. The City
maintains and operates a sanitary
collection system consisting of both
combined (storm and sanitary) and
sanitary-only waste. The system is
composed of 4- to 72-inch lines of various
materials including clay, concrete and
polyvinyl chloride pipe. The system has
1,516 manholes, 338,902 feet of gravity
lines and 78,970 feet of pressure force
main. Tire system has six CSOs that the
Department of Environmental Protection
regulates. Additionally, the City recently
accepted maintenance of approximately
125,000 feet of house services.
maintains the City-owned infrastructure including the
¦ Stormwater Collection System
¦ Street Lights
¦ Traffic Signals
* Transportation
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Stormwater Collection System. The City maintains an extensive system of open and closed
stormwater collection systems. The closed system consists of 216,600 feet of piping from 8-inch-
diameter pipe to 10x10 box culverts, 1,796 catch basins, 381 drain manholes, and 29 water
quality detention units. The open system consists of 312,561 feet of drainage ditches, 6,178 of
cross culvert and 16,852 feet of driveway culverts.
Wastewater Treatment Facility.
The Wastewater Treatment
Department operates a biological
activated sludge secondary
treatment facility that is permitted
to treat an average of 4.2 million
gallons per day (mgd) and a peak of
8.4 mgd. The treatment process also
allows for an additional 5.6 mgd of
primary treated stormwater. The
Wastewater Treatment Department
maintains and operates 29 pumping
stations throughout the City.
Transportation. The City operates
and maintains a transportation system consisting of single, two-lane and four-lane roads; bicycle
paths; sidewalks; parking lots; traffic signals; and street lighting. The City also operates and
maintains an Amtrak train station and loading platfonn. The transportation system is composed of
the following elements (the units are approximated): 256 lane-miles of roadway comprised of 21
lane-miles of state arterials; 54 lane-miles of state collectors; 179 lane-miles of town ways; 45
miles of sidewalks; parking lots; 15 signalized intersections; 1,610 street lights; three City-owned
bridges. The roads and sidewalks are inspected and rated annually for condition assessment.
Section 6 Saco's AM Program—Where is it Today?
The City's 3-year plan for its AM program is presented on the next page. The City's program is
close to completion of all Year One projects and has begun several projects under Year Two,
including developing the AMP.
The AM program hit a snag with IT issues and development of its database in the first half of
2008. The issues are being resolved and the program soon will be back on track. The City's level
of AM practice, with respect to the core AM best practices, is summarized below.
The City's asset inventory is essentially complete for assets exceeding $8,000 in value. Some
assets have been aggregated to meet the threshold, such as radio equipment and personal
computers. The City has completed its asset condition assessments. Staff members have made
educated guesses on the life and remaining life of an asset. They have not conducted a detailed
study on the useful life or failure modes of some longer-term assets like sewers. The City has
completed a determination of residual lives on the basis of the assets' estimated life expectancy
and current age. The City has not begun to evaluate life cycle and replacement costs. This
exercise will not start until the third year of the program.
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Setting a target level of service has
been a hard concept for many of the
departments. The City has made
some headway in this area, but it
still needs a great deal of work. The
levels of service evaluated to date
have been tied to assets.
Departments that are less dependent
on assets, such as the Police
Department are still being educated
about the need for this evaluation.
This will be a major focus in the
upcoming year. The City has not
started to determine business risk
exposure/criticality. This will be
initiated in Year Three of the
program.
The City has used the CMMS in the
Wastewater Treatment Department
for 20+ years, and Public Works has used it in the fleet operations for 15 years to optimize O&M
investment. The City works application should be available soon for use at an interdepartmental
level. The WWTP has recently made the switch to Cityworks, replacing the MP2 program. The
City is developing a report to the council on road maintenance. The City has not yet developed a
plan to optimize capital investment strategies or a long-range funding plan for its AM
program for full-cost pricing. The City plans to ultimately develop an AMP—an enterprise-wide
plan that includes AM for multiple infrastructure sectors.
Section 7 What's Next
Saco will continue to address AM program funding and resources
issues. Saco is a small town and does not have the staff and resources to
dedicate to the AM program. Even with its small staff, Saco is seeing
progress with its AM program.
Year One
•
A comprehensive inventory and listing of the City assets
•
An evaluation of the asset condition
•
An idea of the expected life of the asset
•
Developing a database accessible to all departments
•
Two AM level of service statements from each department
Year Two
•
Completing the AM database
•
Refining the life expectancies
•
Risk Assessment
•
Level of Service statements (continuing)
•
Budgetary reporting
•
GASB-34 reporting
•
Develop AMP
•
Additions and deletions
Year Three
•
Plan revision
•
Additions and deletions
•
Integration with Strategic Plan
V
The City has made great strides in its AM program, with more that still needs to be done.
The Public Works Director plans to submit the first State of the Assets Report to council in
December 2008 and the AMP by the end of 2009. With delivery of the first State of the Assets
Report, the AM committee plans to present the status of the asset register and results of asset
condition assessments. In the near future, the City will begin to assess formal business risk scores
and criticality for its infrastructure assets.
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Multisector Asset Management Case Studies
CHAPTER 7 SUMMARY AND CONCLUSIONS
These five case studies provide insight into the issues surrounding public sector management in
communities that range from (1) a very large metropolitan city to (2) a suburban residential city
to (3) a small city. Although the scale of the challenges facing each of the jurisdictions varies, the
primary issue remains the same - how to keep the level of service equal to or better than what
exists today in the face of dramatically rising costs. Public assets, regardless of their current
condition, will eventually become public liabilities that every agency must manage. There are a
number of lessons represented in the case studies that apply to virtually all public sector
organizations.
Section 1 For Elected Officials and Decision Makers:
In every case, agencies cited the importance of infrastructure as a quality of life consideration for
the community. Clean water, sanitary sewers, transportation, good public facilities are essential
to the "triple bottom line" of economic, social, and environmental quality of the community.
Sustaining these services is not an easy job, particularly where there is rapid population growth,
expanding commerce, and aging infrastructure.
¦ In Calgary, officials asked "What are we missing"?
¦ In Hamilton, officials were committed to keeping service levels at the 2009 levels.
¦ In Henderson, officials asked managers "What issues keep you up at night?
¦ In Portland, Commissioners voiced support for that the AM tool, because, "it helped
convey to citizens how their money is spent."
¦ In Saco, officials want to avoid unplanned spikes in tax bills from unplanned projects or
failures.
The context suggests the need for a more proactive approach to managing public infrastructure
and led to the development of asset management programs in each of these communities.
In every community, support from the high-level officials was cited as a critical component to
making the management programs work. Communications between those who allocate funds
and those who run the programs were identified as prime areas for improvement.
The studies suggest that officials should expect that inventory and condition reports will show
enormous needs associated with long-term sustainability. It is critical to make known the
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challenges associated with maintaining levels of service. Becoming knowledgeable as to the
depth of the challenges appears to be an essential step along the pathway for developing strategic
programs to respond to the needs. The case studies clearly demonstrate that it is possible to plan
for future service levels and take steps to make sure that forward thinking plans become the basis
for action.
Perhaps the single most important lesson is that communities are much better positioned to face
the challenges when they move from "gut feelings" to knowledge management structures and to
better inform investment decisions. Improved processes and techniques that provide the basis for
informed decision are tested and available. More developed approaches are not necessarily way
more expensive. It is very much about a way of thinking. The approaches can be tailored to
provide benefits in the context of real world resource constraints and approach applicable to the
relative size of communities. Frequently, getting a handle on the situation is the least expensive
approach over the long term.
Section 2 For Managers and Department Heads:
In the communities studied, programs to proactively manage assets relied heavily on the
commitment and work of managers and department heads in the respective agencies. In most
cases, these individuals were already practicing at least some of the asset management techniques
in their current programs. Often, knowing the complete inventory, condition, and performance
history of community assets was cited as the primary benefit to proactive management. Every
community said that asset management helped establish a more solid basis for strategic planning,
for setting performance level expectations, for budgeting, and for allocating resources - both
physical resources and human resources.
Documentation of agency processes is an important function for managers. By defining expected
performance levels, analysis techniques, decision matrices, long-term development, operations
and maintenance programs, agencies remove the mystery and provide the necessary linkage
between investment and real measureable performance. Managers reported better
communications with elected officials and citizens because of the availability of information from
their asset management programs. Most of the agencies cited improvements in auditing as an
additional benefit.
In the case studies where high population growth was a factor, managers saw asset management
as an important part of assuring that city services allocated to protecting and maintaining existing
investments were on par with the attention paid to new investments. In these same communities,
information from asset management systems also provided a strong basis for evaluating future
liability of "developer provided - city maintained" facilities.
Section 3 For Practitioners of Public Works:
Proactive management of infrastructure requires a new level of communication within the
agency. The case studies showed that if investment decisions were to be made on the basis of
need and long-term performance, it is essential that accurate, organized and up-to-date data be
available to decision makers. Agencies reported that sometimes existing data collection programs
did not provide the right information, were incomplete, or were not accurate enough for
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investment decisions. In Portland, the agency not only collects data but also reports as to the
quality of its data in the annual report. The city recognizes that data collection can be expensive
and balances that expense against what is needed for good investment decisions.
For some practitioners, asset management represents a major change from day-by-day
management to long-term focus. The implication is that all efforts, however small, represent
infrastructure investments by the community and have long-term effects on the performance
quality and life of the assets. Every case study indicated that solid two-way communication
throughout the agency was critical to making asset management work. The bottom line is that
everyone plays an important role in managing and sustaining the communities" assets.
Section 4 For Citizens:
The case studies are all about stewardship and the sustainability of the assets owned and operated
by the community. These assets are essential to the deliver of services. The case studies cite the
value of infrastructure to the quality of life in the community and the importance of sustaining
these systems, indefinitely. The studies speak to the business risk nature of public investments
and the desire to assure the continuity of service. The case studies communities were driven "to
avoid spikes in the tax rates due to unplanned projects" such as responding to water main breaks,
emergency bridge repairs, pump station failures and similar events. They recognized the essential
aspects of investing in the data and information necessary to fully comprehend what needed to be
done and identify opportunities to improve.
Each of these communities were at different stages in development of their asset management
programs. Some communities where very mature and they had full inventories, annual reporting,
and well documented processes. Others were still in the process of inventory and developing the
framework for investment decisions. All the agencies felt it was important to "get started" and
they anticipated the need to grow their knowledge as to approaches and practices along the way.
Every community cited substantial benefits as a result of moving to proactive asset management.
The common major benefits cited were:
1- Improved communication between departments.
4- Better knowledge of the assets and ability to better justify budgetary requests for
maintenance and improvements.
1- Staff with increased energy and excitement.
i- Elected officials" that became advocates and champions as they gained exposure to the
benefit of the approaches and techniques.
Each of the communities recognizes that they still have a lot of work, yet to be done. All agreed
that their work to date represented improved management and they are able to cite benefits that
that already resulted from their efforts. It was clear, time and again, that the elected officials were
most excited by their improved ability to carry out their stewardship responsibilities and to
sustain the deliver of their "triple bottom line" - communities that are socially desirable,
environmentally safe, and economically sound.
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