Observations on Asset Management - Why AM Is The Best Investment For Every Community
Updated: Nov 6
By George S. Hawkins, Esq. Founder and President, Moonshot Missions
I was pleased at the invitation to speak during lunch at the Buried Asset Management Institute (BAMI) annual Congress in Chicago just prior to WEFTEC. I was invited by Tom Iseley, Professor of Practice at Purdue University and one of the visionaries of this work, and his trusted colleague Wei Liao, a Lead Research Engineer at Purdue and the Executive Director of BAMI. I joined this event because I am convinced Asset Management (AM) is an essential step for a community and its utility. I arrived at this realization after 15 years of experience, starting out with no awareness of AM or
what it meant.
From this context, I started with a short version of a story many have heard me
tell before—the first water main break I visited during the infamous Snowpocalypse
weekend in December of 2009. I was impressed by the intrepid work of our crews
battling the break amidst a historic storm and stunned at the poor state of the tools
at their disposal. At the heart of it was out-of-date and frequently incorrect
information about what was happening underground, presented in old books laced
with ripped pages, handwritten notes and yellow stickies, coffee stains (and
possibly blood stains)—which all seemed to unerringly steer our teams to do the
wrong work in the wrong places. They seemed to do better when they made
decisions based on years of experience and instinct.
What I did not know is that we lacked “asset management,” and its foundation:
accurate information about what assets we had and where, along with current
information about their condition and performance. This challenge is compounded
many times over when it is underground. What I have learned since is that
investments to catalogue and assess these physical assets in a digital framework
that is easy to understand, share, and replicate can provide one of the single best
set of outcomes, and therefore investments, for a utility. I offer eleven observations
to both highlight lessons I learned about AM, and why this AM should be at the top
of every community agenda:
1. Worst Name/Best Name I vividly remember my first meeting about Asset
Management at DC Water. As members of the team assembled, I questioned
why our CFO was not present. I was surprised by the curious looks in response.
I was no expert at utility operations back then, but I thought it obvious that the
CFO should be invited to a meeting about our financial assets. As often
happened in those months, my team seemed amused (and probably nervous)
that I did not realize that AM was the process to manage our physical assets –
and for this meeting—a focus on assets “outside the fence”—or in the collection
and distribution systems for wastewater, stormwater, and drinking water.
Since then, I have often thought about the wisdom of such a confusing term.
How could we come up with a more compelling name, one that might help
breathe some excitement into such work? Professor Iseley must have thought
about this issue since he added the word “buried” to the discussion, which at
least indicated we were not talking about bank accounts.
“Asset management” is exactly the right name because it beautifully
captures the dual and essential purpose: to manage the physical assets of
the enterprise in a way that both preserves the functioning of physical
structures and deploys the resources to do this work—operating and capital
dollars and human capital in the most efficient and effective way possible.
Asset management is a fundamental duality in that way and should be a
starting point for every utility.
2. From Failure to Success: Listen First We failed twice at AM at DC
Water before we succeeded. Those failures are fairly common missteps. The
first time we tried, it came from the GM’s office and was not grounded in any
real understanding of what we were trying to do or who should do it. We had
not devoted the scale of resources needed for such an undertaking, in part
because I had no real understanding of what we needed to do. We sought to
correct course in the second effort by hiring a respected consulting firm with
a significant budget. Perhaps thinking that scale and complexity was the only
way to justify this investment, the resulting program was overly complex, not
integrated with our operating teams—and was ultimately canceled. We went
back to the drawing board, governed by two of my favorite themes: listening
first and starting from the ground up.
What we learned from talking to our team who worked outside the fence
is that their greatest interest was in GIS mapping our key assets, starting
with fire hydrants and storm drains, and then expanding from there. They
wanted to be involved in how this information was recorded and displayed.
The third time was a startling success. Our personnel became enthusiastic
partners in developing the program and encouraged our efforts to expand the
information captured. The key was that the engagement was built with them
in mind and improved their ability to do their work. Of course, over time, it
grew and required new hires and engaging all sorts of sophisticated analysis
(likelihood of failure, consequence of failure, and the rest in parallel to
predictive maintenance)—but momentum was on our side.
Most importantly, our team felt respected and heard as we jointly built
these systems, which was THE essential precursor to the culture of
innovation and change that we developed. Change was guided by the team
to help them in their work and reflect their knowledge and priorities. We held
those principles close in all the years that followed.
3. Outside the Fence As we embarked on this effort, I was also surprised to
hear the level of friendly animosity between the teams that worked inside
and outside the fence of Blue Plains, our giant treatment plant. The “outside”
view was that most of the time and money was devoted to managing the
plant while the condition of the collection and distribution systems fell into disrepair. When investigated these feelings, I discovered this perception is
largely true due to the existence of stringent permits and various legal
obligations that governed almost every aspect of the treatment facility—
which required an AM program inside the fence so that compliance violations
could be avoided. Our teams at Blue Plains did not understand the irritation
felt by the crews outside the fence: they were doing what the laws dictated.
Embarking on AM outside the fence helped to level the playing field.
Creating digital mapping of assets, conditions, and the associated work
started to illuminate the causation between condition and issues that
triggered regulatory and financial consequences—particularly sanitary and
combined overflows and water main breaks. Moreover, the data also revealed
how thoughtful actions would then save us money and liability risk based on
improved future performance. The realities that AM uncovered demanded a
response and gave a compelling voice to the hardy souls working outside the
4. Asset Management Duality Almost immediately, AM helped us target
and save precious utility resources. For operations, we started replacing
existing maintenance practices that combined a standard schedule of
maintenance for most assets regardless of condition with emergency
response to those that failed. Instead, AM enabled us to target maintenance
based on need (cleaning storm drains that regularly clogged more often and
cleaning others less frequently) and start making strategic capital
investments—not just replacing old mains, but those with the most frequent
breaks—or even just segments of those with the most breaks instead of the
whole line. Not only did we do more with the same investment, but we
decreased the frequency of emergency upsets.
With time, we started adding the “consequence of failure” component to
our asset maps, so we knew where key hospitals, schools and other facilities
were, which prioritizes those projects over others. The bottom line, though, is
that we achieved far better outcomes in operations and far more productive
capital investments with the same technology that helped our crews know
what needed to be done and where in the city.
Gregory Baird, also a speaker at the BAMI Conference, highlighted that
managing infrastructure by responding to failures is five times more
expensive than maintenance of the assets, and that replacing infrastructure
is five times more expensive than repairing assets. The back-of-the-envelope
calculation is that proactive AM of infrastructure is 25 times less expensive
than either simply repairing or replacing components run to failure.
5. Asset Management and People Although AM evolves to help target
operating and capital resources to achieve better and cheaper outcomes, I
want to emphasize that these are not the only measures of success. After
doing hundreds of public meetings over the years, I heard from people
throughout the district that they wanted to see how our efforts were improving service in their neighborhoods. Each year I used to conduct Town
Halls in every ward and learned that we needed a visual way to present the
work we were doing in each ward, and what we had planned for the years
ahead. In that context, AM was essential.
So, combined with LOF (likelihood of failure) and COF (consequence of
failure) was a third fundamental overlay—responding to the needs in every
part of the city. Moreover, by visually highlighting the work we planned to do
in any neighborhood, we were able to initiate a conversation on whether we
had it right. What had we missed that needed attention? Engaging every
community in decisions gained citywide support for our overall program.
6. Known Unknowns AM also started revealing all sorts of issues in our
system that we suspected but had a hard time evaluating. For example, our
operating personnel understood that changes in the pressure of the drinking
water system could cause breaks, independent of other triggers. Think of a
reasonably sudden shut-off of water in one part of the system that raised the
pressure of the water everywhere else nearby. That pressure “transient”
would often be the reason that a piece of pipe broke, and would often affect
a collection of pipes in the same general area simultaneously. It was several
years into my tenure that my questions about this curious geographic and
temporal proximity of breaks became clear—unexpected changes to pressure
were often the cause.
AM highlighted these triggers and helped us formulate a program to be
far more thoughtful about how to minimize the threat of pressure-related
upsets. Until we had real-time AM that we could correlate to related issues
such as shut offs or other triggers, we had no real way to visualize, plan, or
respond. Assessing pressure was just one of the first truths to be highlighted
as we implemented AM.
7. Inside and Outside the Fence II The development of AM also created
a new common cause between our maintenance crews inside and outside the
fence. What I had not realized until we embarked on this program is how
many buried assets there are at the Blue Plains Treatment Plant. So much
happens underground in all the connections between various processes.
Maybe it’s no surprise, but the maintenance folks working in these
underground galleries also thought that their needs were overlooked. Those
doing this work inside the fence bonded with their counterparts and
advanced similar compelling needs at the treatment plant.
Some of the outcomes were not directly from AM but were the result of a
new level of awareness. For example, we learned that there was no
communication system that worked well underground, which was dangerous for our personnel and made the work inefficient. The result was a team-
guided project to develop, source, and implement an underground communications system that could communicate with the Fire Department if they were needed. The same system could be used in the major underground
systems outside the fence as well.
8. Fire Department II, and Insurance Undertaking AM has additional
benefits that we had not anticipated. Perhaps the most important was how
vital the information we were digitizing was to the Fire Department. Their
Battalion Chiefs had been using the same printed, out-of-date books to
identify both the location of fire hydrants, their condition, and volume of
water flow, which they consulted when under time pressure to put out a fire.
Neither agency had good information on hydrants, the size or pressure of the
lines that served them, or even their precise location.
From early on, our AM effort worked in concert with the Fire Department
to make sure the information was in a format and system that was useful to
them. The Fire Department outfitted their Battalion Chief trucks with the
same iPads that we used in our trucks, and their efficiency rose accordingly.
Recording the data also started revealing a painful reality—starting with the
17 models of hydrants, some dating back nearly a century, which were in use
in the district. No wonder it was so expensive to maintain these hydrants—
the inventory we needed if not doing a full replacement was ridiculously
difficult to source in a timely fashion.
Using the new asset data, and after conferring with the Fire Department,
we settled on two models to be used consistently and with their support: an
enhanced annual inspection and replacement program.
I was gratified to learn a few years later that these operational
improvements and targeted investments led to improvements to the rating
that the district receives to help set insurance premium rates. Due almost
entirely to our fire hydrant asset management program, the district went
from one of the worst ratings to one of the best. This improvement reduced
DC Water’s insurance premiums, and even better, saved the taxpayers of the
District considerable money across many agencies—and of course, reflected
that the people and structures of the city were safer from harm. By helping
to achieve this outcome, we found a wide range of new allies and friends,
including in the Mayor’s and Council’s offices, which were a tremendous asset
to all our efforts in the years ahead. That kind of outcome is rarely counted
in the cost benefit of an AM program, but in my view is nearly priceless.
9. City Agencies and Integration The positive “externalities” of AM kept
multiplying. One of the great complaints from the public is the tendency for
agencies to do work in the street, spend precious public money to resurface
the street, and then have a second agency come back and dig it up just a
short time later. Not only does this compound the disruption; any tax or
ratepayer knows it is a waste of money. Digitizing our assets enabled us to
communicate with our partners that work in the street—the Department of
Transportation for sure, but also the electric, gas and telecom companies.
The result was not just fewer instances of the multiple disturbances on
the same street, but the parallel savings of agencies who jointly planned
work and shared the expense of excavation and resurfacing. Much like fire
insurance, this transformation impressed the people we served on every
important level and saved their precious money. Again, that was a message
the Mayor and Council loved to highlight, and again, gained us friendships in
the municipal building.
10. Integration and Smart Cities The third aspect on this theme is how
mayors, council members, and other leaders in the community liked to
highlight how their community is becoming a “smart community.” This
attribute, stemming from successes noted above and many others, was a
leading reason for companies and businesses to choose locations in the city
and region, for young people to come back and seek employment in the
region, and perhaps most importantly for the district and surrounding
jurisdictions, to specifically target companies choosing these locations for
reasons other than government. As in most areas, we prized recruiting
Microsoft and Amazon and the rest—and one of the reasons that Amazon
decided to locate a major new corporate office in Northern Virginia was
access to top digital services and talent.
Every community wants to attract businesses and young people and offer
career paths for those looking for good, stable jobs. Training and hiring
people to start digitized AM systems is one way to develop the next
generation of employees and demonstrate a commitment to the future.
11. Federal and State Funding The final point here is one of the most
important: many states require AM programs as a pre-requisite for receiving
federal and state funding assistance with either favorable rates and terms or
as a grant or with loan forgiveness. This requirement is understandable,
because the agencies doling out these funds want to know whether the
projects selected will deliver the most benefit to public health and the
environment. AM is the foundation of making these decisions.
I certainly understand this requirement, even as I hope federal and state
agencies will be aware that AM programs for small and under-resourced
communities may be less sophisticated than larger utilities with better
resources. It imperative to consider how programs should be redesigned with
disadvantaged communities in mind. I formed Moonshot Missions to help
these communities with AM and related improvements precisely to overcome
this challenge—but that is a story for another time!
The bottom line, though, is not only does asset management enable a
utility to better allocate its own scarce resources but enables that same
utility to access federal and state financial resources that may well be critical
to a program and its success.
If you have any questions or comments on this essay, or would like to discuss how Asset Management might be a benefit for your community, please contact Moonshot Missions at email@example.com