Keeping Regulators Happy: Actionable Asset Management Plans for Water

Keeping Regulators Happy: Actionable Asset Management Plans for Water Utilities

Juston Manville

Many states have Clean Water State Revolving Funds to develop strategic asset management plans (SAMPs). Since strategies used in asset management are very similar to those outlined in most consent order corrective action plans, why not be proactive by creating a SAMP before regulators come knocking?

Asset Management Framework

The practice of asset management uses an active management framework to help organizations realize the best value for their assets. Asset managers do this by balancing capital expenditure (CapEx) and operational expenditure (OpEx) based on business risk exposure (BRE), with an eye on continuous improvement. The SAMPs are data-driven and developed with engineering, operations, information technology, and finance department input. To maximize organization performance, using an asset management approach, the following steps should be taken:

Develop an Authoritative Asset Register/ Asset Hierarchy

There is a saying that “you can’t manage what you don’t know.” It’s not a coincidence that most corrective action plans start with the requirement for a mapped inventory of assets. The foundation of asset management is an authoritative asset register and an inventory of managed assets in a hierarchical format. Asset hierarchies can be organized functionally by systems and processes or by asset location. What’s important in organizing assets is that managed assets have a parent-child relationship. Each asset’s cost and condition can be “rolled up” to make data-driven decisions across asset classes.

Define Level of Service Goals

Motivational speaker Zig Ziglar has said, “A goal properly set is halfway reached.” Setting level of service (LOS) goals is where active management of assets starts and, unfortunately, where most corrective action plans end. Too often, there are references to setting goals, but there is little follow-up. I recently worked with a client that has been under a “draft consent order” since 2005. In reading the mandate and the corrective action plan, I didn’t see targets or goals set around getting out of the order of consent.

My immediate recommendation for this client was to develop LOS goals and measure the criticality to mitigate risk using BRE. According to the Water Environment Foundation (WEF), BRE is “a method of calculating (scoring) the

Continuous Improvement Method

nature and level of exposure that an organization is likely to confront through a potential failure of a specified asset or group of assets.” (WERF, Water Research Foundation, GWRC, GHD Consulting Inc., 2010). The assets with the most critical BRE have the greatest probability of failure, and the greatest consequence due to failure will be the assets that are the highest risk. Defining BRE related to LOS goals allows organizations to set short- and long-term performance management strategies based on their unique tolerance for risk. In addition, the ability to show progress against LOS goals, in my experience, is the best way to show stakeholders that a utility is performing well.

Measure Outcomes

Key performance indicators (KPI) help measure progress and focus on LOS goals. Developing meaningful and, most importantly, visible KPIs across all levels of the organization is a critical step in communicating an organization’s performance. This is what regulators and utility managers want to see. The KPIs and reporting of progress of goals may seem simple, but this step is highly dependent on robust data models and technology systems. The KPIs must provide a clean line of sight into organizational performance. Measuring outcomes and

Analyze Data and Modify for Performance

Consultants like to talk about aligning people, processes, and technology; however, while measuring outcomes is technical and time-intensive, analyzing and modifying business processes for performance is always the most complicated part of asset management. The area, therefore, where the “people and process” intersect with the SAMPs can also provide the most benefit in organizational performance. Creating a culture of asset management is complicated, but worth it. Experience says that allowing every level of an organization to “own” its part of the process is where a winning culture is created.

Adjust Goals for Improvement

Strategic asset management is not a destination; it’s a journey. Humans are not perfect, and there is always a way to do something better and more efficiently. Regulators want to see a path for improvement, so don’t be afraid to scrap a plan gone wrong and start over. Always strive to be better, even if your goal is going well. Regular meetings to adjust processes based on data are signs of high-performing organizations and make future change more manageable.

Conclusion

Continuous improvement is the ultimate goal in any performance-driven organization; therefore, developing a SAMP before being mandated to create a consent order-driven corrective action plan makes sense. With the available Clean Water State Revolving Funds, why not get paid for performance? It’s proven that a strategic asset approach is the best path for high-performance utilities, and it also keeps regulators happy.

References

WERF, Water Research Foundation, GWRC, GHD Consulting Inc. (2010). “What is Business Risk Exposure?” Retrieved Sept. 20, 2021, from https://simple.waterrf.org/simple/ media/BRE/index.html.

Juston Manville, MIAM, is asset management leader with CHA Consulting Inc. in Winter Springs. S