City of Hamilton, Ontario and Applied Asset Management Strategies

Canadian municipalities face rising costs and competing priorities when itcomes to infrastructure renewal. A promising approach to this challenge is toprepare an asset management plan — a systematic process of maintaining,upgrading and operating physical assets cost-effectively. Experts are toutingasset management as the future of infrastructure management, and the NationalGuide to Sustainable Municipal Infrastructure, a collection of best practicepublications for core infrastructure programs, includes it as one of the bestpractices.

The term asset management has several different definitions,depending on whom you talk to. However, the principle of superior management ofinfrastructure is always the same. There are several different approaches to thedevelopment of an asset management program; however, there are some keycomponents that should be common among all program development initiatives:

Building an Asset Management Team
Thereare four keys to an asset management team’s ability to change the culture ofinfrastructure management: a cross-disciplinary team; philosophy; empowerment;and education.

Asset management encompasses a wide range of expertise,including engineering, finance, business management and computer systems. Anasset management team must be cross-disciplinary in order to bring togetherexpertise from all required areas.

In addition, you must give your teamthe ability to enable and empower itself in order to accomplish what it has beenbrought together to do. In other words, the team must be given the authority toinstitute change.

When selecting personnel to build an asset managementteam, a key focus should be the philosophy of asset management. In order tocreate a change in thought and process, especially one as significant as thatwhich occurs between the old infrastructure management styles and the new onesproposed by the asset management theories, each member of the team mustcompletely believe and endorse the new philosophy.

Educating all staffon this new philosophy of asset management is the final key to a successfulimplementation plan. It is not enough to have a single group within a corporatestructure understanding and believing in the implementation of the new assetmanagement philosophy — the philosophy must flow through the entire corporation.It is vital for the survival and longevity of the initiative that it becomes thecorporate norm and methodology for conducting business. To that end, it isimperative to have a team that recognizes the important role that each groupplays within the corporate structure and how this integrates into the ongoingimplementation and revitalization of the infrastructure.

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Roles and Responsibilities
The essentialrole of an asset management group is to answer the seven essential questionsoutlined below. The responsibility of the group is to ensure that the presentand future health of the city’s infrastructure is fulfilled. This is achieved byinstilling the principles of asset management into the policies and procedure ofinfrastructure management.

Some of the vital components of these largerroles and responsibilities include: capital budget programming, managementsystems development and maintenance, integrated data systems development,infrastructure condition assessment, lifecycle analysis and rehabilitationprograms.

Principles of Asset management
There areseveral definitions of asset management within the industry. One of these is:“To provide the desired level of service in the most cost-effective manner forthe present and future owners of the asset.”

Across the industry, theobjective of asset management is fairly recognized. The objective is to answerseven basic questions: What do we have? What is it worth? What condition is itin? What do we need to do to it? When do we need to do it? How much money do weneed? How do we reach sustainability?

There is perhaps an additionalquestion that could be considered: “How do we remain sustainable?”

Thedevelopment of asset management was intended to provide a medium for thedissemination of knowledge between the distinct groups that are essential to theproper operation of infrastructure asset management, including accountants,engineers, IT specialists and politicians. The principles of asset managementprovide a common language that allows these individual groups to communicateeffectively and interchangeably.

Historically, maintenance management wasconsidered to be the leading edge principle of infrastructure management. Today,asset management is becoming recognized as the future of infrastructuremanagement. This is observed in studying the changes in data analysis. In thepast, little analysis or mining of data collected took place. Today, a keyelement of management processes is data analysis. An example of this would bethe development of deterioration curves and lifecycle analysis.

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Lifecycle Curve
The development of astructure or process that addresses the seven essential questions is where wesee innovation and individuality enter the equation. One example of such astructure may look like Figure 1 (see page 37).
Although there are varyingstructures from one utility owner to another, the goal is the same and the basemust always start with the raw data.

Infrastructure Condition AssessmentRanking
Utilization of existing, recognized condition-rating systems,such as Pavement Management Systems (PMS) through a request for proposal (RFP)process is the easiest method from which to start. However, there is virtuallyno recognized complete condition rating systems for sewer and waterinfrastructure. The closest system is the WRc sewer condition ratingmethodology, but this is still lacking in many regards. Each individual piece ofinfrastructure has its own specific set of data that can be used to access itscondition. The following is an outline of some basic data for road, water andsewer infrastructure:

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Maintenance Records
Pipe Function
Break Rate
Pressure Reduction
Soil Type

Each infrastructure asset utilizes a numerical scoring matrix with weightingfactors to determine the individual asset segment (i.e. pipe, sewer or roadsegment) priority in comparison to other segments. The specific makeup of thematrix scoring will vary from city to city and depend on the availability andsensitivity of the data.

A large part of determining the scoring matrixdesign is data trends or data drilling. By analysis of the available data youcan identify trends that will help determine scoring and weight factors withinthe matrix. Additionally, the development of deterioration curves for individualasset types can be utilized to determine the condition in cases where specificcondition data is not known. These curves can be developed from a reasonablerepresentative set of system data. As the percentage of available dataincreases, the curves can be refined to better reflect the specificdeterioration of the asset within the system.

The ultimate asset managementsystem is a system that provides an overall right of way (ROW) rankingencompassing all infrastructure with in that ROW. In order for this system toaccount for all infrastructure, it must take a truly integrated approach thatencompasses all types of infrastructure along with, but not limited to, itsassociated risk factors, funding mechanisms, socio-economic factors, politicalfactors and regulatory requirements.

Since the lifecycles for differentasset types are dissimilar, individual asset groups will be faced with pressuresat varying times in the decades ahead. In order to visualize the integration ofthese assets, automated links assigned through the utilization of GISapplications must be developed.

Over the past few years, the applicationdevelopment industry has developed Integrated Decision Support System’s(I.D.S.S.). These systems provide a centralized source from which to integrateseveral asset data sets. The integrated systems can then be divided into basiccategories: condition rating analysis sets; decision models; and budgetmodels.

Condition rating analysis encompasses the development of formulasand equations to provide a summation of an integrated infrastructure conditionrating for each right of way. This portion of the system must be flexible enoughto include “what if” programming logic, which allows for the varyinginfrastructure makeups with in individual ROW (i.e. road, water, combined sewer,road and water, road, water, sanitary sewer, and storm sewer).

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Decision models allow for the development of capital programs. They have thecapability of determining what type of intervention should be done, when themost beneficial timing is for a particular intervention and its associated cost.The model should also have the capabilities of packaging ROWs into capitalprojects. Moreover, with the development of trenchless technologies forsubsurface infrastructure and varying budget restraints between the differentfunding sources, it is important for the decision model to be able to identifyinterventions for individual pieces of infrastructure that can be utilized. Thisthen allows for the individual system service levels to be maintainedindependently of potential restraints of other infrastructure within the ROW,which could include budget restraints, regulatory requirements, etc.

Budget models allow for the ability to forecast the average systemcondition using different budget scenarios. In other words, it permits theprojection of future funding requirements based on different predeterminedservice levels. This module within the I.D.S.S. is the key element that allowsutility managers and politicians to effectively make recommendations anddecisions.

The most essential aspect to an integrated system is itsability to include not only currently available data sets, but also any futuredata sets. Therefore, it is important for these systems to be flexible enough toincorporate the growth and expansion that occurs within the asset managementindustry.

Future of Asset Management
The future ofasset management is an ongoing revitalization of processes and procedures thatwill ensure the best possible management of infrastructure. Asset management asit pertains to cities and municipalities has a long way to go; we are only justbeginning to scratch the surface. Some significant additions coming to theintegration of infrastructure include: private utility infrastructure within thecity’s ROW and the incorporation of risk management and emergency response datasets.
Asset management can also have the potential to greatly influence areasof risk management and emergency response. This is something that has not beenutilized to date. Identification of critical infrastructure through an co-ordination with these two groups will greatly assist a corporation indealing with claims and emergency response situations.

Furtherintegration of utility infrastructure into the ROW management model will be asignificant addition to the process and will impact the outcome of the ROWcondition assessments. Further-more, this will improve the over all ROWdecision-making process.

In conclusion, the technical advancements ofasset management can only be accomplished through the propagation of assetmanagement philosophies. These philosophies must not only propagate throughindividual corporations but through out the industry. This subsequently enablesthe specific technical aspects of asset management to advance through thedissemination of knowledge and ideas.

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Kevin Bainbridge, A.Sc.T, is project manager of asset management, capitalplanning and implementation with the City of Hamilton, Ontario, Canada.

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