Making predictions and forecasting how a year will unfold is always a tricky thing. You want to know what is expected to happen, hoping the news will be all positive and glowing. Who wants bad news to start off a brand new year? However, for the information to be credible, you need to get an objective and honest opinion to get a real sense of what is likely to come.

As we begin 2006, the trenchless market continues to emerge from the economic downturn it suffered several years ago. The condition of the water and sewer infrastructure continues to deteriorate, resulting in more municipalities facing EPA-issued consent orders to upgrade theirsystems. Those cities and municipalities already under a consent order have incorporated trenchless programs to the line items of their budgets to ensure that the regulations are met. Questions of how these repairs will be paid for — federal funding and user rate increases — is always at issue as these officials wrestle this dilemma.

Today, efficient and cost-effective rehabilitation methods are needed more than ever. New regulations have spurred utility systems across North America to improve their asset management and preventative maintenance programs. Sewer and water system owners are working to comply with federal regulations to bring their systems up to code, while simultaneously meeting new accounting practice requirements as outlined by the Governmental Accounting Standards Board.

All of these areas have one thing in common: money — as in how and who will bear the cost of the work? The situation also leads to another question: Which areas of trenchless rehabilitation will be reaping the rewards of these projects? Cured-in-place pipe (CIPP)? Laterals?

It would be nice to have a crystal ball to look into to accurately predict the future. But to get a pretty good indication of how the rehab market might fare in 2006 and which issues are most important, Trenchless Technology called upon a group of highly-respected industry professionals — engineers, academics, association leaders, manufacturers and contractors — for their perspective.

What the Panel Says
We presented several questions to them: What are the growth areas in rehab? What are your thoughts on asset management and funding? As always, the panel does not fail to inform.

When addressing the key issues facing the trenchless rehab market in 2006, our panel offers an array of responses to the question of what is the most pressing issue facing the trenchless industry — based on their status as a manufacturer, association, owner, etc. Funding, education, training and inspection all highlight their comments.

“Attracting good talent has to be one of the biggest issues,” says Chris Brahler, president and CEO of TT Technologies, a manufacturer of rehab equipment. “It’s talent at all levels, but especially at the contractor level. The biggest challenge contractors have today is attracting the talent they need in order to take on the work that’s out there. We’re seeing a lot of cases where contractors are unable to take on more work right now because they can’t get the people.”

Keith Hanks knows and understands trenchless technology. As the assistant division engineer with the wastewater conveyance division of the Los Angeles Bureau of Engineers, Hanks has utilized a variety of trenchless rehab and installation techniques over the years to enhance and upgrade the City’s infrastructure and he is a strong advocate of the technology.

From his perspective, he has different opinions about key issues and at the top of his list is resolving the issue of non-compliant CIPP. “When tested, we have had several instances where the liner fails to meet the flexural modulus requirement, the wall thickness requirement or a tensile pull test — which is used by us as a measure of the ability of the material installed in the field to match the laboratory sample properties that we used to size the liner — or a combination thereof,” he explains. “In many cases, removal is impractical, relining is problematic and cost penalties still leave the owners with less than they contracted to receive. The owner/installer are both further ahead to realize that failure is not an acceptable alternative.”

But Hanks’ thoughts also mirror those of Brahler with regard to having enough qualified contractors to do the work. “As we move into our settlement agreement compliance phase of rehabilitating 60 miles of pipe per year, we are concerned that we will not be able to find enough quality contractors to do the CIPP installation.”

Along with finding enough quality contractors, the panel also notes that continuing to educate municipal representatives is a key issue as many still need to understand the basic technology concepts and associated benefits that trenchless methods bring to their communities. The need to educate engineers and owners on how the methods work is also there.

“[There are] too many engineers and owners who do not fully understand the limits and capabilities of each method and what should be used where,” says Dennis Doherty, P.E., with Jacobs Civil, a leading trenchless design firm. “In essence, more training and certification is required by contractors, owners, owners’ reps and engineers specifying trenchless methods. Not only pipe rehabilitation but also manhole rehabilitation.”

Funding Constraints
But the topic of “pressing issues” always comes back to money and funding, or the lack thereof, to pay for the mandated infrastructure repairs. Recent natural disasters in the United States — Hurricanes Katrina and Rita — as well as the ongoing Iraq war will affect the amount of money available to municipalities, they say. The cuts being made to pay for these expenditures are being felt in the infrastructure sector.

“The identification of funding sources to offset the reduction in federal money will become a priority in 2006,” says Gerry Muenchmeyer, president of NASSCO. “It appears with the funds needed for hurricane relief and funding the war in Iraq, little money will be available on the federal level. Municipalities must look for higher water and sewer rates to continue work on upgrading their infrastructure assets.”

This assessment is something that the panel agrees with. “The federal government has signaled that it will not continue to fund water and wastewater [work] at previous levels. Clearly it has resulted in shifting the burden from the federal to the state and local levels,” says Sanjiv Gohkale, an associate professor and director of the construction management program at Vanderbilt University in Nashville, Tenn. “A greater and greater portion of the water and wastewater funding will have to come from the users’ rates. Local authorities are left with no choice but to increase rates in order to maintain their systems.”

Hanks concurs, but adds, “It is to our advantage to use the most efficient methods available to rehabilitate these sewers. Product reliability may become a key issue. CIPP is a very effective way of producing rehabilitation; however, uncertainty with the installed product’s material properties leads to conservative [more expensive] designs. Improving the ability to meet specifications may allow more cost-effective designs.”

Muenchmeyer envisions that with the significant cuts in funding, the market will be negatively affected unless new funding sources are identified. “Funding of projects that were scheduled for release in the southeast hurricane disaster area will more than likely be re-directed to relief efforts,” he says. “Rehab projects may be delayed a year or two in this region. The ever-increasing number of cities under EPA consent decree that must remain on an aggressive rehabilitation schedule will offset, to a degree, other downward pressures of the market… The consequence of reduced funding levels whether local, state or federal will cause the already failing infrastructure to deteriorate even further. Sooner or later, the renovation or replacement will need to be accomplished for the economy to prosper.”

Growth Opportunities
So what areas will see the most work — laterals? CIPP? Pipe bursting? As trenchless methods become more and more accepted by municipalities, all the techniques could have a good year. However, laterals are projected by the panel to see the most work in 2006.

“Laterals are clearly an issue for the near future,” says Hanks. “With increasing concern about infiltration and inflow and rehabilitation of pipes to eliminate spills due to root intrusion, the house connection lateral is the next logical area to address. Once joint intrusion roots have been sealed out, the roots intruding from laterals will need to be dealt with.”

Gil Carroll, director of business development at Applied Felts and Maxliner, agrees and sees the overall rehab market continuing to expand, in particular the lateral market. “We see the lateral market moving along at a very healthy pace and feel that it will continue to expand nicely as the market matures.” Carroll also tabs work in smaller cities as a key area for trenchless work, saying “For all of trenchless, smaller cities would be a natural candidate for growth as their infrastructure deteriorates along the rest of the country. This could also be an opportunity for ‘smaller’ trenchless companies to emerge and begin to perform trenchless repairs.”

Doherty isn’t ready to jump on the lateral bandwagon just yet and points to the ownership question of the laterals. “With respect to lateral rehabilitation, the jury is still out and education of the owners and public in general is required,” he says. “Although 40 to 60 percent of all infiltration and inflow may come from laterals, ownership of the laterals and to what point is the key issue, that may not be resolved until policy-makers are educated about the benefits of taking ownership or at least paying for rehabilitation to reduce overall O&M and capital costs.”

Other areas that show “potential” include the water market (although customers are moving cautiously toward implementing trenchless methods here), as well as manholes.

“There are nearly 20 million existing manholes [in the United States], many of which require various levels of renovation,” Muenchmeyer says. “This market should continue at a steady pace.”

The Advent of Asset Management
Asset management is a term that is no longer uncommon for those in the trenchless industry. It’s been the buzzword of sorts in the industry over the last few years — along with CMOM and GASB 34 — as more and more communities begin implementing asset management plans in their communities in 2006, forcing utility owners to operate their utilities as a business to control O&M and capital improvement costs.

Doherty sees asset management in just that light. “While federal funding is currently in decline and will be so for the foreseeable future, the advent of asset management, GASB 34 and CMOM in combination with new U.S. EPA requirements for control of SSOs and CSOs and general dischage requirements will actually force the owners to behave like a business to control O&M and capital improvement costs, such as done in the United Kingdom,” Doherty says. “These new funds will be for maintaining existing sewer and water systems, decreasing infiltration and inflow and improving hydraulics of existing systems to reduce captial improvement costs, especially within many high growth areas such as greater Atlanta, Florida and Las Vegas.”

“Hopefully it will yield more information to assist owners at prioritizing and planning the management of the infrastructure for which they are responsible,” says Joanne Hughes, chairperson of the North American Society for Trenchless Technology (NASTT) and vice president of Raven Lining Systems. “More than likely, the rehab market will benefit from this increased knowledge by presenting cost-effective alternatives to repair and increase capacity vs. replace.”

Hanks agrees with Hughes’ assessment. “Increasing asset management will only increase the level of system rehabilitation,” he says. “A continuing focus on the system may change the nature of rehab to preventative rather than corrective.”

And a part of this move toward asset management has been aided with NASSCO’s Pipeline Assessment Certification Program (PACP). “Collecting the primary data and identifying the defects in a sewer line with the common PACP language ensures that a municipality cannot only identify immediate renovation needs but can re-evaluate a sewer system over time and determine its rate of deterioration,” says Muenchmeyer. “This program is a key element to asset management for the municipality.”

Muenchmeyer adds that new modules are planned for the program to include defect coding for laterals and manholes, as well as a QA/QC module to monitor the quality of defect reporting.

Carroll believes quality assurance to be at the forefront during the year and also touts the benefits of PACP. “Between Applied Felts and Maxliner, we are very in touch with the European market where there does seem to be a strong commitment to quality by all the players,” he says. “And that appears to have greatly improved efficiencies, as well as market growth, to the point where trenchless is widely accepted and encouraged. Not that it is a perfect system but I think this attention to quality would help advance the U.S. market a great deal as it continues to mature.”

“[Asset management] is only going to help trenchless technologies become accepted at a faster pace,” Brahler says. “When asset managers are losing 30 to 40 percent of their assets in a water system and it comes to the forefront, we think we’ll see substantial resources committed to solve that loss.”

Conclusion
“Education of the owners, consulting engineers, contractors and the general public as to the advantages and limitations of trenchless techniques as compared to trenched construction [is critical],” says Gohkale. “Clearly there are situations where trenched construction continues to make sense… Although with each passing day, trenchless techniques are more and more accepted as an alternative to trenched construction, there needs to come a day when trenched construction becomes the alternative to trenchless construction.”

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