Ohio RCAP s Approach to Asset

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1 What s Inside Pg. 1...Ohio RCAP s Approach to Asset Management Planning Proving to be a Success Pg. 2...Ohio RCAP s Small Towns, BIG Futures Conference Held Pg. 4...Five Pitfalls to Avoid when Entering into Public-Private Water Operations and Maintenance Service Partnerships Pg. 6...Integrating Asset Management and GIS Pg. 7...One-Size-Fits-All Asset Management FALL 2014 Ohio RCAP s Approach to Asset Management Planning Proving to be a Success John Rauch, OH RCAP Ohio RCAP is working with eight small utility systems on Asset Management planning and implementation. Four water systems and four wastewater systems have partnered with RCAP to develop Asset Management Plans. The planning process involves 12 months of intensive technical assistance and training followed by six months of assistance with implementation. By the end of the 18 month process, each community should have an asset management plan, which for most communities, includes GIS mapping, condition assessment training, a computerized maintenance management system to improve preventative and predictive maintenance, a capital improvement plan to mitigate deferred maintenance and sustainable rate recommendations. The innovative part to this approach is that all eight communities have committed at least 50% of the cost for these services. On a limited time basis, Ohio Environmental Protection Agency and Ohio Water Development Authority are covering the cost for half of the service. As the first eight communities are nearing completion, RCAP is currently working with additional communities that want to begin the process. RCAP developed a 12 Step / 3 Phase Program to organize and streamline data collection and report generation. Phase I involves a desk audit which includes an Administrative Review, GPS Mapping, Problem Area Identification and Operational Review. In this stage, we try to learn as much as possible about the utility from existing data. Phase II involves field investigation to better identify the source of documented problems and appropriate best practices. To save costs most of the field work is done by utility department staff with training from Ohio RCAP. During this phase we act as team leader and coach helping the community to organize and manage asset attribute data they collect. Phase III involves capital improvement planning, sustainable rate analysis, final report writing and result presentation to the decision making body. The twelve step program enables the owner and RCAP to critically look at the entire utility. RCAP normally finds many things working very well. However, RCAP also finds areas of operations and management that need to be optimized to get the greatest value from the utility. Then the question of risk comes into play. What happens when a component of the utility fails? Is the utility shut down or can it RCAP s Tom Fishbaugh and an operator are trying to open a corroded door.... Continue on page 3 RCAP s Wayne Cannon is evaluating a motor s condition.

2 Great Lakes RCAP assists rural communities in developing and maintaining community infrastructure and meeting other community development goals to improve quality of life. Great Lakes RCAP is a member of the Rural Community Assistance Partnership. RCAP is a national network of regional non-profit organization that provide comprehensive, on-site technical assistance and training to help small, rural communities address their drinking water, wastewater, and other community development needs. Ohio RCAP s Small Towns, BIG Futures Conference Held On August 13th and 14th Ohio RCAP held its state-wide conference in Columbus. Titled Small Towns, BIG Futures the two day conference offered tracks focused upon infrastructure, economic development, and management and leadership topics for community leaders. A wide array of engaging topics targeted to small communities were available from EPA Regulations and Design / Build Construction to Engaging Citizens Online and Economic Development the WealthWorks Way. Keynote speakers at the General Session included Ed Burghard, the CEO of Burghard Group LLC, who spoke about the importance of community branding and Rich Overmoyer, the CEO of the Fourth Economy, who discussed Economic Development Trends. Senator Sherrod Brown provided a video to address attendees on the importance of rural communities and Ohio RCAP s work in assisting those communities. Attendees also welcomed Drew Hastings, the Mayor of Hillsboro and Professional Comedian, who provided the audience with entertainment related to various rural experiences that highlighted his agricultural and other skills. Another highlight of the conference involved recognizing Timothy Leasure of the Ohio Department of Services Agency and his many years of leadership in serving rural communities throughout Ohio. Tim received RCAP s Hall of Fame award and joins three others (Steve Grossman, Mike Baker, and Karen Fabiano) who have received the award. Attendees of the conference included many county, city, village, and other local officials, engineering firms, non-profits, various entities and individuals involved in economic development and infrastructure, and international participants from Hungary and Moldova. Session handouts can be accessed on Ohio s website at Ed Burghard CEO of Burghard Group LLC Rich Overmoyer CEO of the Fourth Economy Timothy Leasure receiving RCAP Hall of Fame Award from John Rauch, RCAP State Director and Debra Martin, Great Lakes RCAP Director - 2 -

3 Continued... Ohio RCAP s Approach to Asset Management Planning take parts off the shelf and continue to operate? What are the risks of failure? In some cases it makes sense to run a component to failure; then replace it. In other cases, failure of a pump, tank, or chemical feeder may be catastrophic. Implementation begins once the plan is adopted by the governing board. RCAP continues to assist and train the local staff using the CUPSS program from USEPA to manage assets, track maintenance and manage replacement and rehabilitation. The goal at the end of the period is for utility management to get into the habit of using GIS Mapping and Computerized Maintenance Management Software such as CUPSS to manage their assets. We would be remiss if we did not mention this process improves the community s institutional memory. All too often, small systems suffer when a key person is no longer taking care of the utility and everyone must learn what was in that person s head when they left. Participating communities expect real savings from their investment of time and capital. They expect to see longer life from assets because preventative and predictive maintenance measures are being completed. They also expect more cost effective capital replacement as part of the plan. Informational systems within the utility can be expected to improve because of the planning. Digital mapping in and of itself improves locating underground components of the utility. They hope to reduce emergency repairs by being proactive and fixing assets before they fail. Reductions in unplanned overtime may even cover the initial investment in the planning process. Although Ohio RCAP s accomplishments to date are small in the number of systems that could benefit from Asset Management Planning (AMP), the success is huge in comparison to where RCAP was prior to partnering with funding agencies to make AMP a reality. Currently, in the second year of the partnering approach, RCAP has experienced more demand for this service than RCAP has resources to provide them. That in and of itself tells us we are doing good work for small systems. Another factor in our success is being able to bundle sustainability services including GIS, Rate Studies, Capital Improvement Plans, Energy Audits, Digital Maintenance Plans and Long Term Management Plans into one package, which makes it more attractive to small systems. The third factor in the success of our approach is it only cost the utility about half of what these services would be if they had to cover the entire cost. 3 Phase 12 Step Asset Management Program Phase 1 Desk Audit 1. Administrative Review of Utility Management 2. Develop an Asset Inventory (GPS Data Collection) 3. Construction and Maintenance History (Identify Problem Areas) 4 Operational Review (Historical vs. Best Practices and Energy Audit) Phase 2 Field Investigations/Identification of Appropriate Best Management Practices 5. Initial Condition Assessment (Reporting & Monitoring Standards) 6. GIS Mapping with Important Attributes (Permanent Electronic Record) 7. Identify Best Management Practices (Performance Benchmarks) 8. Set- up CMMS Software with Preventative Maintenance, Predictive Monitoring and Rehabilitation / Replacement Escrow Phase 3 Report Preparation 9. Capital Improvement Plan to address Deferred Maintenance 10. Asset Management Plan (Long Term Capital Budgeting) 11. Rate Analysis (Affordable and Sustainable Rate) 12. Public Meeting to discuss Asset Management Plan results Copyright 2014 by WSOS Community Action Commission, Inc. All Rights Reserved Although the pilot projects have all been chosen there are still opportunities for systems that would like to benefit from this process. Most of the funding agencies consider these planning activities as eligible project expenses and can consider funding this work from their programs. Contact John Rauch, Ohio RCAP State Director, at if you would like additional information

4 Five Pitfalls to Avoid when Entering into Public- Private Water Operations and Maintenance Service Partnerships By Michael H. Novac, IN RCAP Introduction The vast majority of water treatment utilities in the United States are owned and operated by public sector organizations (e.g. cities, towns, regional water districts, and other local government entities). In recent years, many of these entities have turned to the private sector to either assist in the operations and maintenance of their water utility or to completely manage these systems with the governmental entity retaining ownership. When developing these partnerships there are a number of issues to be considered during the service agreement development process. Public private water partnerships are most successful when both parties are willing to cooperate during contract agreement development process. The following five sections will discuss some of the pitfalls to avoid when developing a service agreement with a private entity: 1. Scope of Services 2. Performance Criteria 3. Risk Allocation 4. Contract Duration, Terms and Termination 5. Bonding and Insurance Scope of Services An important factor in developing a successful water utility partnership is to avoid confusion and miscues during the scope of services development process. The utility may take either a flexible or prescriptive approach in the management and operations of the water utility. Cost should be considered during this process, realizing that the more prescriptive an agreement is the more it may cost. Another issue to consider while developing the scope of services is whether your state has enabling legislation that allows for long-term facility contract operations. Regardless of the approach, the scope of work should clearly require performance parameters that must be met. Allowing the private partner the flexibility to choose cost-effective alternatives that meet performance criteria is an excellent way to assure a cost effective approach to managing the utilities performance. Performance Criteria Performance criteria should be clear and establish the level of performance required to meet both quality standards and quantity needs. The proposer needs to be aware of all current conditions and provided with a list of events that would be considered uncontrollable for which performance measures would be relaxed. As an example, the water sector requires adherence to standards set by the Federal Safe Drinking Water Act and additional state primacy regulations. Fines and penalties may be assessed for failure to meet these compliance standards. Who pays these fines and assessments will depend upon whether the system was capable of compliance or the result of the partner s failure to provide contractual services that created the non-compliance. Measurable performance criteria also make it easier to measure and assess management performance. Risk Assessment It is imperative that the utility reveal to the service partner any as is risks that are currently in evidence that may impact the performance of the utility. Discussions between the utility and the service partner should also address on-going or future capital improvement plans and the responsibilities of implementation of those plans. It may be reasonable to shift certain risks to the private partner after - 4 -

5 a specified period of time or to institute a grace period after which the private partner becomes responsible for capital improvements. In systems that currently need repairs, the parties may initiate a work metric that requires the private partner to initiate and complete a pre-determined number of repairs. In-depth assessments of utility facilities and procedures are an excellent starting point for the discussion with service providers prior to discussing contractual responsibilities assigned to each party. Contract Duration, Terms, and Termination There are a number of options available to the public partner in regard to contract length. Contract lengths may vary from one to five years with automatic or negotiated extensions. Systems that require extensive repairs or capital improvements may see contract lengths of twenty years or more. The benefits of longer contract periods allow for better planning and budgeting for capital improvements, lower life cycle costs, and enhanced risk profile without shifting the risk to the private partnership. Private partners are more willing to invest their own capital if contract lengths are extended. This enables the utility to access capital through the private partner and their balance sheets. There are public utility concerns with regard to performance level drops by private partners over extended contract periods, but these concerns can be mitigated by a well- drafted contract. A welldrafted contract will give the private partner ample incentive to perform and the public partner options for enforcing performance or terminating the contract. The most general categories of termination contained in contract provisions for water utilities are: 1. Termination for cause: Entails failure of the private partner to satisfy system performance standards, bonding and insurance or regulatory regulations. 2. Termination for convenience: Termination for causes other than poor performance in which the private partner may seek compensation. 3. Termination for extraordinary situations: Situations which may increase contractual costs that exceed the predetermined amount. An example would be the increase of service fees due to uncontrollable circumstances that exceeds the typical yearly contractor escalator. Bonding and Insurance Insurance and bonding requirements are extremely important aspects of successful public-private partnerships. It is important to clearly specify bonding and insurance requirements during contract negotiations. Insurance requirements should require liability, both general and automotive, worker s compensation, and property coverage. A waiver of subrogation is a reasonable contract request and allows for the relinquishment by an insurer of the right to collect from another party for damages paid on behalf of the insured. Performance bonds as a surety for operation and maintenance performance will provide an additional incentive to meet contract requirements. Summary It is imperative that the responsibility for ensuring water services does not end once a privatesector operator assumes the operations and maintenance responsibilities. The public entity needs to continue to monitor and oversee, to the extent possible, the operations and performance of the contract operator and remain accountable to the ratepayers and customers. Monthly operational and maintenance reports should be required and submitted to the public entity or contract manager, if one is assigned. Dispute resolution should be established at the onset of the contract to set ground rules on how to manage areas of uncertainty when unplanned events occur or issues arise that were not previously contemplated, agreed to or discussed in the contract. Successful public-private service partnerships depend on clearly-defined rights and responsibilities of both entities and diligent oversight by the public entity

6 Integrating Asset Management and GIS Kim Padgett, KY RCAP For far too many years, the acronym GIS (Geographic Information System) brings to mind making pretty maps on a computer. Although the first known use of the term was in 1968, the first known application of spatial analysis was in the early 1800s to document the percentages of death by cholera. Some small water systems in Kentucky are finding out first hand that GIS is much more than gathering x, y, and z coordinates to make Rural Trenton colorful maps and documenting percentages. The systems are beginning to fully realize the potential of managing their assets through GIS. Morgantown Utilities Commission provides water, sewer, and gas to the residential and commercial population within the incorporated city limits serving a population less than 2,500. Morgantown s infrastructure is old, outdated, and difficult to locate due to years of resurfacing the state roads through town. With RCAP assistance, the City received state funding to purchase Global Positioning System (GPS) equipment and GIS software to expand the city s mapping capabilities to include water infrastructure. Having used similar systems to inventory assets for the gas utility as mandated by law, Chris Phelps trained the water operators to collect valve, hydrant, and meter locations. He and his coworkers mapped leaks including spatial and non-spatial attributes of all feature types. Mapping the water system was the initial step for Morgantown in developing an Asset Management Plan. Mr. Phelps then contacted RCAP for assistance with creating an asset management inventory that included replacement costs for all assets. Like many small, rural cities in Kentucky, Augusta, Mount Olivet, and Trenton were in need of asset management assistance for their water systems. GIS mapping was recommended by the Kentucky Division of Water during the sanitary surveys as the planning step toward creating an asset inventory and eventually an asset management plan. With RCAP assistance, the cities received funds through the Capacity Development Assistance Program for Small Systems program to hire a contractor to map their water system assets; additionally, Trenton was able to secure a GPS hand unit. Upon completion... Continue on next page 7 Morgantown Utilites operator Chris Phelps, GPSing a leak. GPS Unit - 6 -

7 Continued... Intergrating Asset Management and GIS of the GIS mapping, RCAP assisted each city with the creation of an asset inventory comprised of their purchase source, water tank, master meters, waterlines, hydrants and water valves. Asset information included but was not limited to type, capacity, size, material, construction dates, inspection dates, current condition and estimated useful life. Needless to say, this asset inventory will be crucial as the cities work toward the completion of an asset management plan. Since water systems have the most capital intensive assets to manage, USEPA strongly encourages an asset management plan that includes an electronic system focused on maintenance and rehabilitation work orders. They also recommend regular inspections of assets that include condition assessments. The maintenance history, coupled with GIS analytical tools, can provide both insight and prioritization for decision makers to utilize their limited budgets wisely for rehabilitation or replacement of their assets. Manager of the Trenton system, Benn Stahl stated, Throughout the duration of this project, Kimberly Padgett and Chris Wells of RCAP, helped anytime there were questions or concerns with paper work or making sure that we were on target with the program timeline. The benefits of this program are great not only to the City of Trenton but to the State of Kentucky as well. One-Size-Fits-All Asset Management Nettie Harper, WV RCAP There is a sizeable array of water and wastewater systems in various stages of sustainability throughout the country. However, when it comes to Asset Management a one-size-fits-all is indicative of systems no matter if the utility is really small or the largest. The results of implementing an asset management program benefit all systems of varying sizes. The structure, ultimately leading to the goal of sustainability through long term planning, is basically initiated with some of the same base considerations: 1) Finding out what is owned by the system and in what condition; 2) Comparing the quality of services provided by the system to those expected by customers and regulatory requirements; 3) Determining which assets are critical to providing services, either vital to operations or high risk of failure; 4) Identifying and documenting all the costs involved in the life of an asset; 5) Documenting actual revenue and expenses to be used to develop a long term financial strategy to assure the system will be able to provide future customers with potable water or sanitary sewer services. The EPA/State Asset Management Workgroup has identified nine sections of an asset management plan to include: Introduction, Staff Information, Level of Service, Asset Inventory, Operation and Maintenance, Capital Improvements, Financial Strategy, Compliance, and Preparedness. Each utility has its own unique characteristics. While core components of planning may basically be the same and all systems can benefit from identified Best Management Practices, the utilities approach diverges from the one-size-fits-all. Utilities have different types of equipment, operations, staffing, etc. and determining the most appropriate tool to achieve a suitable asset management plan is necessary. The financial strategies for long term planning must be tailored to each system to be effective. Asset management is not just a piece of paper in the file drawer; it must be a commitment by the water or wastewater system staff as well as the governing board in conducting future business practices and strategies to achieve sustainability. One of the most recent asset management resources developed is the Reference Guide for Asset Management Tools. The U S Environmental Protection Agency (EPA) and EPA/State Asset... Continue on back page - 7 -

8 GREAT LAKES RURAL COMMUNITY ASSISTANCE PROGRAM Non-Profit Org. U.S. Postage PAID Fremont, Ohio Permit #262 Administering Agency: WSOS CAC Inc. P.O. Box S. Front St. Fremont, Ohio Mary Chipps Chairperson Deb Martin Director Kristin Woodall Editor C Printed on recycled paper. Continued... One-Size-Fits-All Asset Management Management Workgroup gathered data and organized this manual to provide information for technical assistance providers and state agencies helping with asset management for small and medium sized drinking water and wastewater systems. Utilities implementing asset management can benefit by using the document to find more information, guidance, and resources available for developing and building their plan. Section 1 of the tool explores each of the nine asset management components that should be included in an asset management plan. Each component is described and includes a listing of additional resources available that could be utilized for a more in-depth understanding of the component. This is followed by the correlation of the factor to the EPA Effective Utility Management (EUM) attribute. Section 2 is devoted to additional elements that could be included to augment the plan, such as sustainable practices for energy management, water efficiency, and climate change. Included in this section are resources for regional and multi-sector asset management planning. The reference tool includes many State asset management tools that are made available to users of the guide. Resources listed in the guide include available software, manuals, handbooks, websites, spreadsheets, templates, and more. The document Appendix provides a quick reference summary of tools listed throughout the manual. Internet access to this resource is:

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