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CITY OF PRINCE GEORGE

STRATEGIC INFRASTRUCTURE ASSET MANAGEMENT PLAN

Working Paper 3: Recommendations

Prepared for:

The City of Prince George 4050 – 18th Avenue Prince George, BC V2N 4R8 Attention: Wendy Nordin Tel: 250-614-7826

Prepared by:

Earth Tech Inc. 6th Floor - 1901 Rosser Avenue Burnaby, BC V5C 6S3 Contact: Chris Lombard Tel: 604-298-6181

Scouten & Associates Engineering Ltd. 201-1968 Queensway Street

Prince George, BC V2L 1M2

Contact: Dave ScoutenTel: 250-562-7050

Project No.: 78746_03 Report

Date: February 2005

@EarthTech A Tyco Interna tional lid . Company

CITY OF

PRINCE GEORGE

EARTH TECH Inc.

Table of Contents

SECTION TITLE PAGE NO.

EXECUTIVE SUMMARY .............................................................................................. I-I

SECTION 1.0 PROJECT OVERVIEW .......................................................................... 1-1 1.1 Project Objectives.............................................................................................. 1-1 1.2 Project Structure ................................................................................................ 1-1

SECTION 2.0 RECOMMENDATIONS........................................................................ 2-1 2.1 Introduction........................................................................................................ 2-1

SECTION 3.0 STRATEGIC ASSET MANAGEMENT ASSESSMENT....................... 3-1 3.1 Phase I: Strategic Asset Management Assessment ....................................... 3-1 3.2 Establish An Asset Management Coordinating Committee ....................... 3-1 3.3 Formulate Draft Strategic Asset Management Objectives .......................... 3-2 3.4 Conduct A Top-Down Asset Management Assessment............................. 3-3 3.5 Produce Long-Range Capital Reinvestment Forecasts................................ 3-4 3.6 Determine Prince George’s Infrastructure Gap ........................................... 3-6

SECTION 4.0 FUNCTIONAL ASSET MANAGEMENT PLAN................................. 4-1 4.1 Phase II: Functional Asset Management Plan............................................... 4-1 4.2 Confirm The Strategic Asset Management Objectives................................ 4-1 4.3 Start Educating Stakeholders ........................................................................... 4-2 4.4 Start Developing Levels Of Service And Benchmarks................................ 4-3 4.5 Give Consideration To Funding Issues ......................................................... 4-5 4.6 Improve The Coordination Of Infrastructure Works ................................. 4-6 4.7 Conduct Bottom-Up Assessment To Improve The City's Asset Data..... 4-6 4.8 Develop An Asset Management Information Strategy................................ 4-8 4.9 Give Consideration To Implementation Issues............................................ 4-9 4.10 Other.................................................................................................................... 4-9

SECTION 5.0 FUNCTIONAL ASSET MANAGEMENT IMPLEMENTATION...... 5-1 5.1 Phase III: Functional Asset Management Implementation ........................ 5-1 5.2 Strategic Asset Management Objectives ........................................................ 5-1 5.3 Refine Capital Reinvestment Planning ........................................................... 5-2 5.4 Ensure That Sustainable Funding Is In Place ............................................... 5-3 5.5 Implementation .................................................................................................. 5-4 5.6 Monitor, Review, Report And Adjust ............................................................ 5-4

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EXECUTIVE SUMMARY

To assist the City of Prince George Development Services Department to proceed with an Infrastructure Asset Management Approach to municipal infrastructure investment, it is recommended that the City implements asset management through the following three phases:

1. Phase I: Strategic Asset Management Assessment.

2. Phase II: Functional Asset Management Plan.

3. Phase III: Functional Asset Management Implementation.

Figures 1 to 3 summarizes the above phases in diagrammatical format:

Executive Summary Page ii

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Figure 1: Phase I - Strategic Asset Management Assessment

City of Prince George: PHASE 1 - STRATEGIC ASSET MANAGEMENT ASSESSMENT

START

Formulate Draft StrategicAsset Management

Objectives e.g.:

1. Have stable rates that ensureadequate funding for capitalreinvestment.

2. Start to understand levels ofservice for the eventualestablishment thereof.

3. Build support for reinvestmentthrough the education ofstakeholders (Politicians, thePublic and City employees).

4. Manage all assets on a life cycleapproach and define the correctbalance between capital andoperational expenditures.

Establish An AssetManagementCoordinatingCommittee

Establish an AssetManagementCoordinatingCommittee, headed byan Asset Management"champion".

Conduct A Top-DownAsset Management

Assessment

Complete a "Top-Down"assessment of the the City'sTransportation, Utilities andEnvironmental Services Assetsthrough completion of the SixWhats questions:

1. What do you have?

2. What is it worth?

3. What is its condition

4. What is its expected servicelife?

5. What to do & When to do it?

6. What is the impact on rates?

Produce Long-RangeCapital Reinvestment

Forecasts For TheDevelopment Asset

Replacement Curves("Nessie" Curves)

$

$

$

Time

Time

Time

Transportation

Utilities

EnvironmentalServices

Define The Magnitude Of PrinceGeorge's Infrastructure

Reinvestment Gap

$

Time

Current funding

Required funding

INFRASTRUCTUREREINVESTMENT GAP

ENDYEAR 1

1

2 3

4

5

0

Executive Summary Page iii

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Figure 2: Phase II - Functional Asset Management Plan

City of Prince George: PHASE II - FUNCTIONAL ASSET MANAGEMENT PLAN

YEAR2

Based on the results of theStrategic Asset

Management Assessment,confirm the City's Strategic

Asset ManagementObjectives

1. Have stable rates that ensureadequate funding for capitalreinvestment

2. Start to understand levels ofservice for the eventualestablishment thereof.

3. Build support for reinvestmentthrough the education ofstakeholders (Politicians, thePublic and City employees)

4. Manage all assets on a life cycleapproach and define the correctbalance between capital andoperational expenditures.

5. Other, as identified duringPhase I.

Functional Infrastructure Asset Management Plan

ENDYEAR 2

Start educating stakeholders (Council, the public and municipal employees) about theneed to reinvest in infrastructure.

Start developing levels of service and benchmarks for service delivery.

Give consideration to funding issues e.g., rate setting, funding options, capitalreserves, etc.

Improve the coordination of infrastructure works.

Conduct Bottom-Up assessment to improve the City's asset data collected during theStrategic Asset Management Assessment:

- Finalise Inventory.- Refine asset valuation.- Perform asset specific condition assessment.- Refine service life and remaining service life assessments.- Risk considerations.- Service level considerations.

Develop an asset management information strategy:- Identify the information requirements to support PHASE III:ASSET MANAGEMENT IMPLEMENTATION- Geographic Information System (GIS)- Computerised Maintenance Management System (CMMS)- Asset Management software

Give consideration to implementation issues:- Internal staffing resources.- Local consultants and contractors.- Contract pricing issues.

Other, as identified during the Strategic Asset Management Assessment (Phase I)

2

3

4

5

6

7

8

9

1

0

Executive Summary Page iv

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Figure 3: Phase III - Functional Asset Management Implementation

YEAR3 +

City of Prince George: PHASE III - FUNCTIONAL ASSET MANAGEMENT IMPLEMENTATION

Strategic Asset Management Objectives are nowofficial City policy, has stakeholder (Council, the publicand City employees) support and are filtered throughand reflected in the City's decisions and actions.

Refine capital reinvestment planning with the help of advanceddecision support tools:- Roads MS e.g. Pavement Management Systems etc.- Bridge MS e.g. Planet Bridge; Pontis; Bridgit etc.- Utilities MS e.g. SEAMS, CAFE etc.- Environmental Services MS e.g. spreadsheet applications.

or- HARFAN that consolidates all aspects into 1 application.

1

Strategic Asset Management Objectives

Functional Asset Management Implementation

2

Ensure that sustainable funding is in place.

3

Implementation.

4

Monitor, review, report and adjust.

5

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SECTION 1.0 PROJECT OVERVIEW

1.1 PROJECT OBJECTIVES

The City of Prince George Development Services Department (the Department) is proceeding with an Infrastructure Asset Management Approach to municipal infrastructure investment, similar to what is now pursued by several Canadian municipalities. To that end, the City of Prince George has appointed Earth Tech Inc. in participation with Scouten & Associates Engineering Ltd. to develop a Strategic Infrastructure Asset Management Plan (SIMP). The intent of the SIMP would be to provide the City with the guidance needed to stay on course as the asset management plan is implemented during subsequent stages. A key step of the project is to determine the current status of the Department’s asset knowledge and the steps needed to complete the tasks of obtaining the asset knowledge.

Through a series of workshops with the operating divisions within the Department, a number of key inputs to asset management within the City were established, including deficiencies in the asset inventory, condition assessment standards, life span assessment, life-cycle costing and risk analysis. The final stage of the project will include recommendations on a series of steps for each Division to take to implement the SIMP.

1.2 PROJECT STRUCTURE

The ultimate objective of the SIMP is to form the basis for the second stage of the project, namely the Functional Infrastructure Management Plan (FIMP). Implementation of the SIMP and FIMP will enable the City to not only meet required levels of service in the most cost effective manner, but to also ensure the long-term financial sustainability of its municipal infrastructure. To meet the objectives of this project and the SIMP in general, the project has been divided into three phases, each with a particular deliverable at the end of each stage, as follows:

Phase 1 - Determine the Current City of Prince George Asset Knowledge: What is the current level of asset information in the City of Prince George? The project team has investigated where Prince George is in its current ability to answer the “Six Whats” of asset management for each of the utilities, parks and transportation infrastructure classes. This first portion of the project has served to document the state of current asset inventories, current condition assessment standards, the ability of the City to conduct life-cycle analysis on its assets, to know what risk analysis parameters should be used, and anticipate and plan long term asset replacement capital budgets, etc. This phase of the work was conducted through a number workshops with City staff, interviews and other information gathering techniques to establish the City’s current level of asset knowledge,

Section 1.0: Project Overview Page 1-2

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the results of which are recorded in the report named Working Paper 1: Current

Prince George Asset Knowledge, dated September 2004.

Phase 2 - Comparison With Municipal Best Practices: What level of sophistication does Prince George require in terms of its asset management solution? The project team will conduct an asset management “gap” analysis between the observed level of asset knowledge within the City, and municipal best practice as defined by best practice guidelines like the National Guide on Sustainable Municipal Best Practices and the NRC’s Municipal Infrastructure Investment Planning project. The outcome of this gap analysis will form the foundation of a defensible business case to support the Functional Infrastructure Management Plan. The results from the gap analysis were recorded in the report named Working Paper 2: Comparison With Municipal Best Practices, dated November 2004.

Phase 3 - Recommendations: What is the optimal asset management solution for the City of Prince George and how will this solution be implemented? This implementation plan will detail the precise steps that will be required to implement the selected Strategic Infrastructure Management Plan. This deliverable could be used by Prince George to consider the need for consultants and internal resources to implement the plan in the most cost effective manner. The implementation plan is recorded in this report called Working Paper 3: Recommendations.

The basic structure of the project could be summarized in the diagram shown in Figure 1-1. The diagram reflects the recognition that there is potentially a spectrum of strategic asset management solutions available to the City, ranging from basic to sophisticate. The most preferable plan for Prince George will be contingent upon a range of factors, as follows:

Costs and benefits to the City

Legislative requirements

The size, complexity and condition of the assets

The risks associated with failure

Time to implement

The skills and resources available to the organization

Customer expectations

Organizational design

Ability to integrate current City systems and work groups

Hardware and software solutions

Based on the findings of the first two phases of the project, the recommended strategic infrastructure asset management plan for the City would strive to find the optimal balance between these factors.

Section 1.0: Project Overview Page 1-3

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Figure 1-1: Diagrammatical Presentation Of The Project Structure

Strategic Infrastructure Asset Management Program Options(Increasing Detail and Complexity)

STRATEGIC PLANNING:Answers The Following Questions

Related To The City Of PrinceGeorge's Assets:



3. What is its condition?

4. What is the remaining service life?

5. What do you need to do & When doyou need to do?

6. What is the impact on City cost?

Option 1Basic

Option 2Knowledge

Option 3Competence

Option 4Advanced

Most basic functionalityonly. Data may beincomplete, missing keyfunctions, or only partiallyeffective

All functionality is presentand meets allrequirements. Goodoverall practice, optimalbalance between costand benefit

Some functionalitypresent. May servebasic purpose, but belimited or timeconsuming

Most functionality ispresent. Meets mostrequirements, but thereis room for improvementin terms of data quality,access to information,time requirements, etc

PHASE 1 - DETERMINE THECURRENT CITY OF PRINCEGEORGE ASSET KNOWLEDGE:

What is the City's current abilityto answer the "Six Whats" ofasset management?

PHASE 2 - COMPARISON WITHMUNICIPAL BEST PRACTICES

According to municipal best practice,evaluation of the City's currentsituation, levels of service and othercriteria, where should the City be interms of its ability to answer the "SixWhats" of asset management?

PHASE 3 - RECOMMENDATIONS:

What resources does the City need to enable it toanswer the "Six Whats" of asset management?

- What hardware and software are recommended?- What manpower is recommended?- What organisational structural changes arerecommended?- What financial resources are recommended?

Option 5Sophisticated

State of the arttechnology used.Conforms to bestcurrent internationalpractice. The "Ideal"situation if there were nofinancial or otherresource constraints

i ,___ __ ~~ --.:-.

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SECTION 2.0 RECOMMENDATIONS

2.1 INTRODUCTION

Based upon the two previous phases of the study namely the assessment of the City’s current asset knowledge and the best practice scan, a number of areas were highlighted where the City could improve its ability to answer the “Six Whats” of Asset Management. This section of the report will outline the recommendations of the study in terms of the following steps the City should take to becoming more asset management oriented and to ultimately ensure the long-term sustainability of its infrastructure:

1. Phase I: Strategic Asset Management Assessment

2. Phase II: Functional Asset Management Plan

3. Phase III: Functional Asset Management Implementation

The steps outlined above present an easily understandable and logical process for the City of Prince George to improve its asset knowledge for determining the City’s “infrastructure gap”, start the functional processes such as stakeholder education, service level development and the “Bottom-Up” assessment of the City’s assets. Phase I and Phase II of the project encapsulates both the top-down and bottom-up asset management assessment of the City’s assets. Depending on the success of the Strategic Asset Management Assessment, the City might be sufficiently comfortable with the quality of the asset data collected that it can proceed directly to the third phase of the project without the bottom-up asset assessment.

The final step is the implementation plan that will see the purchasing of information technology tools to assist the City in optimizing its rehabilitation and/or replacement of assets, the ramping up of City rates to allow for increased capital expenditure, and the actual execution of projects that maintain or improve the service level provided by the assets.

The following sections describe Phases I to III in greater detail:

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SECTION 3.0 STRATEGIC ASSET MANAGEMENT ASSESSMENT

3.1 PHASE I: STRATEGIC ASSET MANAGEMENT ASSESSMENT

The Strategic Asset Management Assessment is aimed at the high-level assessment of the City’s assets to determine the resources needed to maintain the assets at a sustainable level, and to start laying the groundwork towards implementing asset management within the City. Phase I is divided into the following five steps:

1. Establish an Asset Management Coordinating Committee.

2. Formulate draft Strategic Asset Management Objectives.

3. Conduct a top-down asset management review.

4. Produce long-range capital reinvestment forecasts for the development asset replacement curves.

5. Define the magnitude of Prince George’s infrastructure reinvestment gap.

It is estimated that the Strategic Asset Management Assessment will take approximately one year to complete, depending on the resources available to conduct the assessment as well as the difficulty encountered to generate the necessary data. The steps of Phase I is discussed in greater detail below:

3.2 ESTABLISH AN ASSET MANAGEMENT COORDINATING COMMITTEE

It is important that the City demonstrates its corporate commitment to asset management through the establishment of an Asset Management Coordinating Committee under the leadership of an asset management “champion”. The champion will be tasked with selling the benefits of asset management in an enthusiastic way and to obtain the buy-in from the different City divisions participating in the project. The Asset Management Coordinating Committee should preferably be made up of senior representatives from the Roads, Utilities and Environmental Services Divisions, who will be responsible for coordinating and managing the collection of asset data during the top-down asset management assessment. Other members of this committee should include the GIS Coordinator, the Chief Engineer Development Services, a representative of the City’s Finance Department as well as other individuals the committee sees fit.

Section 3: Strategic Asset Management Assessment Page 3-2

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The objectives of the committee should be established at its inception and should be reviewed on a regular basis to ensure that it remains relevant to (then) current conditions. Strategic objectives for the Asset Management Coordinating Committee would be as follows:

Formulation of the City’s strategic asset management objectives.

Communication with and education of stakeholders on asset management-related issues.

Coordination of internal and external asset data collection efforts.

Establishing the structure of the asset management database and consideration of linkages between Divisions and to other municipal applications.

To give consideration to the establishment of levels of service and benchmarks for service delivery.

3.3 FORMULATE DRAFT STRATEGIC ASSET MANAGEMENT OBJECTIVES

One of the first tasks of the Asset Management Coordinating Committee would be to set Strategic Asset Management Objectives for the City. The City’s infrastructure asset managers must have a clear understanding of what the “owner”, (generally the municipal government), wants to accomplish and how the infrastructure service can contribute to that owner’s success. The conditions and needs at the higher levels are continually changing and asset managers must constantly be able to update their information. In other words, strategic planning needs to be an integral part of the on-going management approach at all levels of the City to provide up-to-date information and successful results.

The Asset Management Coordinating Committee should establish Strategic Asset Management Objectives through comprehensive discussions with key stakeholders such as politicians, regulatory agencies, industry, interest groups and the general public. At first, this process could reveal significantly different points-of-view. However, through consultation and involvement, stakeholders can generally reach consensus, providing a strong focus for the asset management process. Once set, these objectives should be relevant in the medium to long term and provide the basis for asset management decision-making. However, as individuals change at the political or management level, the emphasis on particular objectives may also change. As a result, infrastructure asset managers should stay attuned to the changing environment in terms of political and public opinion. This will help managers fine-tune their approach and priorities and stay aligned with the conditions of the day.

Based on the best practice review summarized in Working Paper II of this study, the following draft strategic asset management objectives could be used as a starting point for discussions:

Have stable rates that ensure adequate funding for capital reinvestment.


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Start to understand levels of service for the eventual establishment thereof.

Build support for reinvestment through the education of stakeholders (politicians, the public and City employees).

Manage all assets on a life cycle approach and define the correct balance between capital and operational expenditures.

3.4 CONDUCT A TOP-DOWN ASSET MANAGEMENT ASSESSMENT

A “top-down” review of the assets under management by the Development Services Department will provide the data required for a high-level overview of these assets, and will enable the coordinating Committee to make the necessary strategic level decisions to maintain the assets in a sustainable manner. The high level overview will cover the following questions for each of the Department’s assets:



3. What is its condition?

4. What is its expected service life?

5. What to do and when to do it?

6. What is the impact on rates?

The review will cover these Six Whats questions in a level of detail that supports the 80/20-rule in that it would provide sufficient information to develop long-range capital forecasts, while using a high-level knowledge of asset inventory, valuation, condition and service life assessment. This first pass at establishing an asset database with inventory, condition, replacement value and service life attributes will form the basis for the refinements in the “bottom-up” approach that is part of the Functional Asset Management Plan in Phase II.

Tables 3.1 to 3.3 provide examples of the level of detail of the information to be captured during the top-down asset management assessment:


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Table 3.1: Example Of Condition Rating Scale For The Top-Down Asset Management Assessment

Table 3.2: Typical Asset Expected Service Lives (Source: InfraGuide)

Table 3.3: Example Of Asset Inventory Data For The Top-Down Asset Management Assessment

The detail to which the asset inventory is broken down for the top-down asset management assessment depends on the availability of asset data, therefore trade-offs between time, cost and data collection effort are required. Experience has shown that the focus of the top-down assessment is usually on compiling an asset inventory coupled with a high-level assessment of condition and service life. When the top-down assessment is followed by a more detailed bottom-up assessment, the focus shifts to refining the inventory and conducting more detailed condition and remaining service life assessments.

3.5 PRODUCE LONG-RANGE CAPITAL REINVESTMENT FORECASTS

This step will use the asset data generated during the Strategic Asset Management Assessment to produce long-range capital forecasts for the development asset replacement curves. Depending on the detail of asset data collected during the previous step, the capital replacement curves will

Condition Grade Description

1 Sound modern structure/asset, operable and well-maintained.

2 As 1, but showing some minor signs of deterioration. Routine refurbishment and maintenance required.

3 Functionally sound, but appearance significantly affected by deterioration, structure/asset is marginal in its capacity to prevent leakage, mechanical and electrical plant and components function adequately but with some reduced efficiency and minor failures.

4 Deterioration has a significant effect on performance of asset due to leakage or other structural problems. Mechanical and electrical plant and components function but require significant maintenance to remain operational. Equipment functional but obsolete.

5 Serious structural problems having a detrimental effect on the performance of the asset. Will require major overhaul/replacement of the asset in the short term. Equipment obsolete.

Expected Service LifeSewers 40 to 140 yearsWater Mains 40 to 120 yearsRoads 10 to 80 yearsMajor Structures 30 to 100 yearsEquipment 10 to 20 years

Asset Group Asset Name Sub-Asset Category 2005

Replacement Cost

Original Installation

Year

Most Recent Significant

Rehabilitation Year

CONDITION RATING

(1-5)

Expected Service Life

(years)

Civil 1,429,000$ 1982 2002 2 50Mechanical 545,000$ 1982 1999 2 20Electrical 346,000$ 1982 1999 2 15Electronic/Instrumentation 293,000$ 1999 - 2 10

Wastewater Treatment Plant Primary Clarifier


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represent the required annual expenditure on rehabilitation and/or replacement for all of the Development Services Department’s assets over the next 50 to 100 years. These types of curves have a sinuous shape due to different assets reaching the end of its expected service life over time, and are often referred to as “Nessie” curves after the bulging shape of the back of the so-called Loch Ness Monster. Figure 3.1 and 3.2 presents two examples of asset replacement curves for a major Canadian city’s non-linear water and wastewater assets.

Figure 3.1 shows the city’s annual reinvestment needs for the period 2004-2100 for all water and wastewater treatment plants, pump station and reservoirs and other non-linear assets. While the majority of the annual reinvestment amounts follow a set pattern, a number of expenditure spikes are evident, occurring at twenty-year intervals throughout the analysis period. These spikes are related to the large number of mechanical assets on the wastewater treatment plant requiring reinvestment according to a cycle pre-determined by the asset group’s expected service life. Figure 3.2 presents the increase in the collective expected service life of all these assets as a result of continuous expenditure on reinvestment.

This type of detailed assessment would be of considerable value for the Prince George in determining a sustainable rate of asset reinvestment.


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Figure 3.1: Capital Reinvestment Curve For Non-Linear Water and Wastewater Assets 2004-2100 (Canadian City example)

Figure 3.2: Implied Service Life For Non-Linear Water and Wastewater Assets 2004-2100 (Canadian City example)

Total Water and Wastewater Reinvestment Needs (excluding mains)

$-

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

2004

2006

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Year

Rei

nves

tmen

t Am

ount

WW Pump StationsW Non-TreatmentWTP 2WTP 1WWTPAverage Annual Reinvestment

Average annual reinvestment = $38m

Average Annual Reinvestment and Implied Service Life

$-

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

2004

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nves

tmen

t Am

ount

-

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Impl

ied

Serv

ice

Life

WW Pump StationsW Non-TreatmentWTP 2WTP 1WWTPAverage Annual ReinvestmentExpon. (Implied Service Life)

Average annual reinvestment =

$38m

= = = -11--------------------------------,-

= = = = = - - ---

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3.6 DETERMINE PRINCE GEORGE’S INFRASTRUCTURE GAP

The final step in Phase I is to determine the magnitude of Prince George’s infrastructure gap. The term “infrastructure gap” has become a popular way to refer to the difference in a city’s current funding level for infrastructure reinvestments and the amount that is needed to maintain the infrastructure in a sustainable manner. Figure 3.3 presents an example of the infrastructure gap for the water main rehabilitation and replacement of a city in British Columbia:

Figure 3.3: Water Main Infrastructure Gap For A City In British Columbia

Annual Cost of Water Main ReplacementCity of Chilliwack

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

1920

1930

1940

1950

1960

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Year

Ann

ual C

ost

Pre

sent

- 20

04

Maximum in 2039

2004 Desired Reinvestment = $790,0002004 Desired Reinvestment = $790,000

2004 Actual Reinvestment = $200,0002004 Actual Reinvestment = $200,000

Funding Gap $590,000Funding Gap $590,000

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SECTION 4.0 FUNCTIONAL ASSET MANAGEMENT PLAN

4.1 PHASE II: FUNCTIONAL ASSET MANAGEMENT PLAN

The Functional Asset Management Plan will see the City lay the groundwork for implementing asset management principles through all layers of the Development Services Department. This phase is of critical importance as it will form a key building block for the Functional Asset Management Implementation in Phase III. Phase II is divided into the following nine steps:

1. Confirm the Strategic Asset Management Objectives.

2. Start educating stakeholders about the need to reinvest in infrastructure.

3. Start developing levels of service and benchmarks for service delivery.

4. Give consideration to funding issues.

5. Improve the coordination of infrastructure works.

6. Conduct the Bottom-Up approach to improve the asset data collected during the Strategic Asset Management Assessment.

7. Develop an asset management information strategy.

8. Give consideration to implementation issues.

9. Other, as identified during the Strategic Asset Management Implementation.

It is estimated that the Functional Asset Management Planning phase will take approximately one year to complete, depending on the resources at the City’s disposal as well as any issues that might come to light during Phase I. However, the City might be able to start working on some of the steps outlined above in parallel with the top-down asset assessment, which would put it in a good position to start Phase III (implementation) sooner than the start of Year 3 as outlined in this report. The following sections will shed more light on the steps outlined above:

4.2 CONFIRM THE STRATEGIC ASSET MANAGEMENT OBJECTIVES

Phase I saw the development of draft Strategic Asset Management Objectives for the City. Following the asset data collection and assessment during Phase II, the Asset Management Coordinating Committee would now have significantly more asset data at their disposal and a much better idea of the infrastructure challenges facing the City.

Section 4: Functional Asset Management Plan Page 4-2

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In addition, the Committee would have to start educating stakeholders on the need for reinvestment, therefore it is an opportune time to refine and/or confirm the draft Strategic Asset Management Objectives set in Phase I. The analysis in Phase I might for example show that the City faces a much greater than expected infrastructure funding gap than previously expected, therefore the focus of the Objectives might have to change to accommodate aspects such as eradicating deferred maintenance. Whatever the situation painted by the Strategic Asset Management Assessment, the final Objectives chosen should be reflective of the City’s short, medium and long-term asset management goals, and be phrased in language that is understandable to stakeholders such as politicians and the public alike.

4.3 START EDUCATING STAKEHOLDERS ABOUT THE NEED TO REINVEST IN INFRASTRUCTURE

A key task of the Asset Management Coordinating Committee would be to start educating the public, Council and even internal staff members on the need to reinvest in infrastructure. It is therefore important that the top-down asset management assessment conducted in Phase I be presented in sufficient enough detail and in a format that it could be used as a tool to educate the stakeholders. It is recommended that the City makes use of graphs, charts and diagrams to summarize the findings of Six Whats assessment for presentation to stakeholders. Figures 4.1 and 4.2 provide examples of an asset valuation and condition assessment of all the drinking water infrastructure of a Canadian city, recently presented to its council:

Figure 4.1: Asset Management Education Tool Related To Asset Replacement Value

Water Mains73%

$130 million

Pump Stations1%

Storage Facilities5%

Chlorination Facilities0.1%

Water Wells1%

PRV's0.2% Meters

3%

Service Connections13% Hydrants

2%Valves

2%

Water MainsWater WellsPump StationsChlorination FacilitiesStorage FacilitiesPRV'sMetersService ConnectionsHydrantsValves

TOTAL REPLACEMENT VALUE = $177 MILLION


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Figure 4.2: Asset Management Education Tool Related To Asset Condition

Graphs such as these are powerful tools in raising the profile of asset management issues and creating public awareness to enlist support and advocacy of infrastructure-related issues. The City’s web-site, Council meetings, local newspapers and billing inserts are all channels that the City could use to communicate with its stakeholders on issues such as the infrastructure gap and the need for sustainable infrastructure rates and charges.

4.4 START DEVELOPING LEVELS OF SERVICE AND BENCHMARKS

The Canadian National Guide To Sustainable Municipal Infrastructure (InfraGuide) states that service levels are a composite indicator that reflects the social and economic goals of the community, and might include parameters related to safety, customer satisfaction, quality, quantity, capacity, reliability, responsiveness, environmental acceptability, cost and availability. Although this is not an easy process and could take a number of years to refine into the desired format, many Canadian municipalities have already embarked on defining service levels for their service delivery.

The Canadian National Water and Wastewater Benchmarking Initiative has developed, through consultation with utility participants, a utility management model with related goals and performance measures. This utility management model presents an example of how to develop attainable service levels and to measure performance against set industry benchmarks. Figure 4.3

Water Utility Condition Assessment

GOOD27%

NEW17%

REPLACE15%

POOR14%

FAIR27%

........ :


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presents the water and wastewater utility goals as developed through the National Water and Wastewater Benchmarking Initiative:

Figure 4.3: Water And Wastewater Utility Goals And Performance Measures (Benchmarks)

The City of Kamloops presents a good example of how service levels have been set and incorporated into the City’s strategic planning process. The City has adopted some of the goals and performance measures of the National Water and Wastewater Benchmarking Initiative into its annual Business Planning Process, examples of which are shown below:

Reliability &Sustain-ability

InfrastructureAdequacy

CostEfficiency

PublicHealth &Safety

Safe &Productive

WorkEnvironment

CustomerSatisfaction

EnvironmentalProtection

12 PM's e.g.Capital

Reinvestment/

ReplacementValue

4 PM's e.g.No. of Hoursof StorageCapacity at

ADD

23 PM's e.g.O&M Cost /Ml Treated

9 PM's e.g.Length of

MainCleaned /

Length

2 PM's e.g.No. of Water

QualityComplaints /

1,000Customers

8 PM's e.g.No. of sick

Days Takenper FTE

3 PM's e.g.Volume of

Treated Water /Vol. of Raw

Water

UTILITY GOALS

PERFORMANCE MEASURES (PM's)

WA

TER

18 PM's e.g.Length CCTV

Inspected /100km

3 PM's e.g.% of DesignAAF Utilized

37 PM's e.g.Per-UnitBiosolids

Cost

5 PM's e.g.Number ofReported

Surcharges

2 PM's e.g.No. of OdourComplaints /

1,000Customers

4 PM's e.g.No. of

Accidents /1,000 Labour

Hours

3PM's e.g.Kg BOD

Discharged toEnvironmentper CapitaW

AST

EW

ATE

R

4 PM's e.g.Length ofEroded

Stream /Length ofStreams

4 PM's e.g.Stormwater

Fees /Serviced

Population

3 PM's e.g.O&M +

Indirect Costs/ 100km

Length ofDrainage

4 PM's e.g.Value of

Damage dueto Flooding /

ServicedPopulation

2 PM's e.g.Are There

StormwaterRegulations?

3 PM's e.g.No. of TrainingHours for SWEmployees /EmployeeST

OR

MW

ATE

R

NATIONAL WATER AND WASTEWATER BENCHMARKING INITIATIVEUTILITY MANAGEMENT MODEL

3 PM's e.g.No. of Beach

Closures

•••••••• •••••••• ••••••••


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Table 4.1: Examples of Service Levels From The City Of Kamloops (from the City of Kamloops 2004 Business Plan)

Core Service: Water Treatment and Distribution

Goal 1: Reliable and sustainable water distribution infrastructure

Performance Measure 2004 Target 2003 Actual

1. Number of main breaks / 100km 3 3.9

2. Number of valves exercised or repaired / 100km 36 36

3. Number of pump failures per year 0 0

Core Service: Wastewater Collection, Treatment and Disposal

Goal 2: Meet service and performance requirements at sustainable cost

Performance Measure 2004 Target 2003 Actual

1. Operating cost per million liters $55 $54.94

2. Operating cost per 100km of pipe $148,000 $148,228

3. Total pump station operating cost versus total

number of pump stations

$30,800 $30,898

Service levels such as those shown above present City staff with the ability to demonstrate to Council and other stakeholders the affect that certain funding decisions might ultimately have on the quality of service provided by the City. It is therefore recommended that the City of Prince George start to develop service levels during the Functional Asset Management Planning phase of the project.

4.5 GIVE CONSIDERATION TO FUNDING ISSUES

Having sufficient funding for infrastructure reinvestment is probably the one of the most important issues that the City will have to address if it wants to achieve its strategic asset management objectives. Dedicated or earmarked funding mechanisms are an option for addressing the infrastructure gap and achieving fully funded and sustainable infrastructure. These

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funding methodologies ensure a stable, predictable revenue stream exclusively dedicated to certain asset classes, whether it be roads, water or wastewater assets, or parks and recreation facilities.

Utility or full-cost recovery models, or usage models, entail a charge laid directly on the asset user based upon the intensity of use of the asset, and is mostly seen in the application of water and wastewater rates and charges. Roads, bridges and other assets such as those managed by the Environmental Services Division do not have the equivalent of the utility model for to generate revenue. However, dedicated general tax revenues are an option to fund reinvestment of these assets, but it requires a good understanding of the finding gaps/needs and a full buy-in from political stakeholders to allow for this type of funding allocation.

It is therefore recommended that the City start to consider infrastructure funding mechanisms as soon as the high-level asset review is complete and the City has an estimate of its infrastructure funding gap. It might be that the initial assessment of the funding gap be slightly reduced based upon the findings of the bottom-up assessment, however it would still serve to focus attention on the need to generate revenue for infrastructure reinvestment within the short to medium term.

4.6 IMPROVE THE COORDINATION OF INFRASTRUCTURE WORKS

The asset management workshops with Transportation, Utilities and Environmental Services Divisions during the first phase of this study (see Working Paper I: Current Prince George Asset Knowledge) have highlighted the need for better coordination of capital projects. This problem is not unique to the City of Prince George though, as many cities have advanced pavement management systems with little or no consideration being given to the underground infrastructure such as the water, sewer and storm water mains.

The improved coordination of capital projects, especially between Roads and Utilities, presents one of the most complex challenges of asset management. However, if the City is able to better coordinate capital projects it stands not only to achieve considerable capital savings, but to also reduce disruption to services and to demonstrate that capital planning is not being done on a piecemeal, uncoordinated basis.

While the purchase of advanced software tools to assist in the coordination of capital planning is scheduled for Phase III of this project, the City should at this stage already strive to improve the coordination of infrastructure works and to develop the protocols and decision criteria to better coordinate capital projects.

4.7 CONDUCT BOTTOM-UP ASSESSMENT TO IMPROVE THE CITY'S ASSET DATA

This step is essentially an extension of the Strategic Asset Management Assessment conducted in Phase I and entails improving the asset data collected during the first cut at the Six Whats questions. While the top-down assessment relies upon a high-level knowledge of asset inventory,


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asset value, condition and service life, the bottom-up assessment will be much more data driven to produce a much higher degree of confidence in the data. This step will see the use of asset-specific condition assessment and ratings, such as WRc condition rating for sewers and storm mains, and the DER & U ( D – degree of the defect, R – relevancy of defect, E – extent of defect, U – urgency) rating system for bridges, and statistical or probabilistic tools for water mains, for example.

The bottom-up assessment will also give greater consideration to asset functionality (where the asset is in good condition but not meeting e.g., the regulatory requirements) and asset utilization (where the asset is in good condition but not meeting the capacity requirements) issues. While elements of asset risk could also be incorporated in the initial top-down asset assessment, the bottom-up assessment will consider asset risk in much greater detail. While there are many ways to define risk, risk is generally deemed to be the product of the probability of asset failure (condition) and the impact of asset failure (criticality), which could be defined for each asset element considered in the analysis. By determining the severity of the risks associated with not reinvesting, the City would be able to compare disparate infrastructure elements on a corporate level and determine which critical areas require the most urgent action. Figure 4.4 presents an example of how asset risk could be incorporated into the Six Whats assessment:

Figure 4.4: Incorporation Of Asset Risk Into The Six Whats Of Asset Management

What do weown?

1

What is itworth?

2

What is itsrisk rating?

3

What is itscondition?

3a

What is theimpact offailure?

3b

What is theremainingservice life?

4

What/Whento do it?

5

What is thecost

impact?

6

The "Six Whats" of Asset Management -Incorporating Asset Risk

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The ultimate goal of the bottom-up assessment is to provide credibility to condition ratings and risk assessments, and to refine the capital replacement curves generated in the top-down assessment. This is especially true for those assets where there might be a lack of support for renewal and where significant deterioration is not yet evident. While the top-down assessment could be completed in less than a year, the bottom-up assessment would be a continuous process of refinement that would feed data into the asset management tools to be purchased in Phase III.

4.8 DEVELOP AN ASSET MANAGEMENT INFORMATION STRATEGY

As confirmed by InfraGuide and through Earth Tech’s experience, there is no single computerized information management system that can meet the all of the business requirements that are supported by a computerized maintenance management system (CMMS), an asset management system (AMS) or a geographic information system (GIS). For example:

GIS has been recommended by many practitioners as the best system to house an asset inventory. While GIS has many applications within municipal linear systems (roads, sewer and water mains), it is not a useful tool for complex facilities such a water/wastewater treatment plants, buildings and other non-linear systems.

A CMMS is the most logical system to store the primary asset inventory for complex facilities, but this same inventory may conflict and duplicate the GIS asset inventory within the linear systems, since GIS and CMMS systems are not compatible with each other’s databases.

CMMS’s do not have advanced asset management functionality and are constructed around operational and maintenance needs (usually focused on the short term), while asset management programs must factor in the long term (5 to 100 years).

How should CMMS, GIS, and AMS integrate with corporate financial systems? CMMS’s is designed around activity based costing principles, while most municipal budgets are designed around departmental cost centers and annual budgeting cycle that are not usually activity based.

The outcome of this step may require trade-offs between functionality and data duplication. In order to be successful, precise linkages with utility planning functions and utility maintenance functions will need to be defined and aligned to the overall asset information management strategy. The Strategic Asset Management Assessment would shed light on the exact nature of the City’s asset management information needs, therefore it is recommended that these gaps be recorded and studied as part of the development of the asset management information strategy.


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4.9 GIVE CONSIDERATION TO IMPLEMENTATION ISSUES

While the first phases of asset management planning might be more of a desk-bound exercise with a focus on generating asset data, the ultimate intent of asset management is to rehabilitate and replace infrastructure. A number of Canadian cities have gone through the process of defining their infrastructure gap and of identifying candidate projects to address the gap. However, having completed the desktop assessment they have also found that there is either a lack of resources within the city to manage so many capital projects, or that there are not a sufficient amount of contractors within their city to actually perform the work. This could perhaps be exacerbated by the current high and increasing construction prices in British Columbia and Canada in general.

Based on conversations with the City staff during the initial workshops for this project (see Working Paper I: Current Prince George Asset Knowledge) it is highly likely that the actual implementation of a large number of capital rehabilitation or replacement projects might also present a problem to Prince George. Especially in the Environmental Services Division, staff members are already having difficulty in performing day-today operations and maintenance task together with overseeing capital projects during the summer time.

While the actual ramping up of expenditure on capital rehabilitation and replacement is at the minimum two years away for Prince George, it is recommended that the City start giving consideration to implementation issues well in advance to prevent potential implementation issues from arising during this stage.

4.10 OTHER

The Functional Asset Management Plan must be flexible enough to accommodate any issues that come to light during the initial asset assessment in Phase I, and be able to adjust initial timelines and focus depending on the severity of the City’s infrastructure gap.

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SECTION 5.0 FUNCTIONAL ASSET MANAGEMENT IMPLEMENTATION

5.1 PHASE III: FUNCTIONAL ASSET MANAGEMENT IMPLEMENTATION

The third and final phase of moving Prince George from its current situation towards becoming an advanced or sophisticated asset management practitioner is the Functional Asset Management Implementation. Where the focus of the Phase I and II is on laying the groundwork for implementation through collecting and refining asset data, the focus of Phase III is on determining the most opportune projects to invest in with the help of decision tools, and to ensure that the City has sufficient funds to sustain its infrastructure. Essentially, Phase I and II is aimed at addressing the first four Six Whats questions (asset inventory, valuation, condition and service life). Phase III therefore builds on the information generated in Phase I and II to address questions five and six of the Six Whats (project identification, timing and funding).

The following five steps are envisioned for Phase III:

1. Strategic Asset Management Objectives.

2. Refine capital reinvestment planning with the help of advanced decision support tools.

3. Ensure that sustainable funding is in place.

4. Implementation.

5. Monitor, review, report and adjust.

At this stage it is envisioned that the Functional Asset Management Implementation would start at the beginning of Year 3, but this would depend on the successful completion of Phase I and II. No definite end-point for the Functional Implementation has been defined as it will be a continuous process that should be reviewed on a regular basis, with annual feedback to the City’s stakeholders.

The five steps of Phase III are outlined as follows:

5.2 STRATEGIC ASSET MANAGEMENT OBJECTIVES

The City’s Strategic Asset Management Objectives should always serve as the start and end point of its asset management initiatives. It is envisioned that the Objectives would now be official City policy with the support of the public, politicians and City staff, are filtered through all levels of the City and reflected in the City’s decisions and actions. For example, no capital expenditure for

Section 5: Functional Asset Management Implementation Page 5-2

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new infrastructure should be approved without the consideration of the full life cycle cost of the assets, from commissioning to operations and maintenance to disposal.

As time goes by and the City is able to move closer to having sustainable infrastructure, it might be that some of the Objectives are modified to reflect the (then) current situation or falls away altogether. Decisions revising the Objectives will be part of the fifth step of Phase III, and is related to monitoring, reviewing and adjusting the Functional Asset Management Plan.

5.3 REFINE CAPITAL REINVESTMENT PLANNING

This step will see the refinement of the City’s capital reinvestment planning i.e. decisions on what projects to perform and the timing of these projects. The high volume of detailed asset data, the requirement for connectivity between City databases as well is the complexity involved in the coordination of reinvestment in different asset classes would necessitate advanced decision support tools to assist the City in its asset management efforts. Based on the assessment of information technology issues during Phase II, the City would be in the position to purchase advanced asset management software or develop certain applications to assist in refining the reinvestment planning process. Although the actual review of asset management software tools was beyond the scope of this assignment, it would be worthwhile noting some of options available at this moment:

Roads: Pavement management systems such as the City’s PCMS (Pavement Condition Management System) and TMMS (Transportation Maintenance Management System).

Bridges: PONTIS, BRIDGIT or BRIDGE MANAGER.

Utilities: SEAMS, CAFÉ or a variety of computerized maintenance management systems (CMMS’s).

Environmental Services: Spreadsheet applications and CAFÉ.

Integrated: HARFAN.

Figure 5.1 presents an example of the potable water performance modeling tool SEAMS:


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Figure 5.1: The SEAMS Method For Modeling Interventions For Potable Water Systems

A software tool or a number of tools could assist the City’s capital reinvestment planning through:

Producing optimized, cost-effective capital plans, including scheduling, techniques and costs.

Identification rehabilitation priorities based on multiple decision criteria for cost effective scheduling and project selection.

Refinement of results and priorities based on the Six Whats criteria, risk, service levels, cost/benefit, socio-economic impacts or other City objectives.

The implementation of asset management software tools presents a significant investment in time and money for the City, therefore it is recommended that the City conducts sufficient due diligence before any decision is made in this regard. This is especially true in the light of the fact that the asset management software industry is still much in its infancy. Therefore, chances are slim that the City would find a single, integrated solution that would address all of its asset management challenges.

5.4 ENSURE THAT SUSTAINABLE FUNDING IS IN PLACE

Having gone through the steps of defining (and refining) the City’s infrastructure gap, it is the responsibility of the Asset Management Coordinating Committee to annually present to Council the progress on the Functional Asset Management Implementation. If the asset management

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assessments have been done correctly and the Committee has laid the necessary groundwork as up to this point, members will be much better equipped to present and defend their budget strategies to Council, through the following:

Being able to demonstrate impacts of and trade-off involved in reinvesting in certain assets, in terms of service levels, cost/benefit, socio-economic factors and other criteria.

Being able to demonstrate the optimal trade-off between capital and operation and maintenance expenditures, and capital rehabilitation and replacement.

The ability to generate multiple “what-if?” scenarios for reinvesting in different assets or the complete portfolio of assets at different points in time.

Being able to model the effect of different funding scenarios based upon expansion projections, renewal policies and existing or future budgetary constraints.

5.5 IMPLEMENTATION

The implementation step is ultimately what asset management is all about: actually spending money on asset rehabilitation and replacement to ensure the long-term sustainability of the City’s assets. This step presents a significant planning, communication and coordination challenge to the City to minimize disruption to the public while maximizing the opportunity to invest. The Best Practice Scan (Working Paper II) highlighted a number of best practices for coordinating capital projects, including the establishment of a capital project coordinating committee, corridor upgrades, restrictive practices, approval processes and other technical practices.

The initial phases of this project can provide the necessary information to identify asset reinvestment opportunities, but it requires significant commitment from the City to follow through and successfully implement these opportunities.

5.6 MONITOR, REVIEW, REPORT AND ADJUST

An asset management undertaking of this nature and complexity would require continuous monitoring and adjustment to ensure that the City remains on track in wiping out the infrastructure gap and remains committed to having sustainable infrastructure. It is also probable that the focus and urgency of the Functional Asset Management Plan need to be adjusted as time passes and the City gains a better understanding of its asset management challenges. It will therefore be the responsibility of the Asset Management Coordinating Committee to keep the politicians and the public abreast of the progress in addressing the City’s infrastructure challenges, and to continuously ensure that a sustainable revenue stream is available for the execution of capital reinvestment projects.

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