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  • SIMPLE - Accounting & Economics
    Strategic Planning Total Asset Management Plan Works Resource Management SAM Practitioner Tools Contents Reports Case Studies Case Studies Life Cycle AM Processes Accounting Economics Historic Costs For over 70 years the agency had kept meticulous historic cost records Their fixed financial asset register showed that the wastewater system had cost over 490M They had even given all assets an estimated effective life and had depreciated their assets In 1998 they had over 120 M in reserves They were justifiably proud of their efforts and had been able to keep rates very low The assets had been built in open fields that were now fully built out metropolitan areas They then completed an asset revaluation and found that the asset portfolio now had a replacement value of 2 4 billion and their future renewals amounted to over 43M per year The reserves would be gone in 3 years and ratepayers would have to generate the necessary funds Understanding the replacement value of your assets is vital to any understanding of the true cost of infrastructure service delivery Knowledge of Assets Reduces Life Cycle Costs A Transport Authority realized that its policy of replacing buses every 12 years had been based on rules of thumb that had never been rigorously analyzed When they did so with a study that looked at the full life cycle costs of buses over a 25 year period it showed that the overall cost of making a bus available for traffic operation was substantially reduced by holding buses for up to 20 and 21 years Taking into account customer comfort vehicle image and driver morale the authority chose a replacement period of between 15 and 18 years The changed policy deferred the due immediately bus purchases for almost four years representing a one off saving of between

    Original URL path:,-Case-Studies/Case-Studies/SIMPLE-Case-Studies/Accounting---Economics (2016-05-01)
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  • SIMPLE - Acquire
    For over 300 years engineers have delivered projects and have created assets that have changed the face of the earth and the lives of the people using them the Brooklyn Bridge London s Sewerage System the great railways the Panama Canal to name just a few But how many of them were handed over with complete as constructed drawings an asset register an operational GIS an electronic operations manual a fully developed maintenance plan and adequate maintenance budget as well as a strategy for its renewal and a calculation of the depreciation expected or a life cycle cost analysis Or did they just get the assets some drawings and a heap of manufacturers manuals for some of the pieces The Golden Gate Bridge came with all of the above but nothing electronic of course because of the foresight of the designer He could only get the project off the ground if he convinced the bankers that he could maintain the structure in perpetuity so they would not include depreciation in the business case evaluation He did convince them and we still have the bridge This is sustainable infrastructure management Losing Ground A fast growing city averaged over 6 8 compounding

    Original URL path:,-Case-Studies/Case-Studies/SIMPLE-Case-Studies/Acquire (2016-05-01)
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  • SIMPLE - Business Risk Exposure
    Improvement Strategic Planning Total Asset Management Plan Works Resource Management SAM Practitioner Tools Contents Reports Case Studies Case Studies Life Cycle AM Processes Business Risk Exposure Public Consultation and Education Reduces Risk of Non Acceptance by Constituents In a city the technical options for improving water quality are presented as one discussion paper and the funding methods that could be chosen are treated in a separate discussion paper thus avoiding

    Original URL path:,-Case-Studies/Case-Studies/SIMPLE-Case-Studies/Business-Risk-Exposure (2016-05-01)
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  • SIMPLE - CIP Validation
    An electricity company recognized something about new capital proposals that is typical of most utilities namely that they are initiated within a small section of the organization that sees the benefits for itself but frequently does not see the benefits or the costs for the organization as a whole Some agencies appoint a project sponsor a senior executive member to smooth the way for the project development and teams vie for the most powerful sponsor who will do battle on their behalf But who fights on behalf of the corporate whole Who checks assumptions for relevance or figures for accuracy and who questions the analytical rigor and ensures that the section s goals reflect utility goals Executive committees are too busy so unless it is someone s assigned task it doesn t get done So the electricity company tasked the Corporate Finance Unit to be a corporate devil s advocate to analyze all capital proposals from a corporate perspective Up to this time the sections had used the Finance Unit to prepare their capital proposals for them so changes had to be made The Finance Unit developed a staff training program that equipped all sections to do their own capital evaluation work This stopped many proposals from ever being made and the corporate unit allowed others to gain the global benefits PS The best practice model now used at the electricity company is that a peer review team made up of specialists from all divisions supplemented by two independent experts in the field review all capital investment proposals The sponsor of the project must prove the questions asked above Value Engineering Management is a Major Capital Expenditure Evaluation Tool The application of value engineering and value management that is examining the real function a new prison had to fulfill resulted

    Original URL path:,-Case-Studies/Case-Studies/SIMPLE-Case-Studies/CIP-Validation (2016-05-01)
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  • SIMPLE - Service Delivery
    sites to do this let alone full treatment The highly colored nature of the water is such that the chlorine will combine with the color to produce undesirable chemicals such as chlorinated organic by products or THM s Thus it was not desirable to aim for a D grading as the water would probably be unacceptable in terms of taste This meant that the aim should be higher if Council wished to upgrade its treatment plants To get to a C grading the Drinking water standards of New Zealand need to be met that is to strip out the color and dirt by using a coagulation and filtration process Improvements to the operators skill levels and qualifications will not assist in achieving a C grading major capital expenditure is required before other actions will improve the grading To assist the process the raw water should be stored for some days to stabilize it before treatment After treatment as mentioned above further storage is needed to ensure proper disinfection Thus major capital works are required with consequential increased operating costs to improve Dunedin s treatment water grading from an E Once this expensive step is taken it is relatively easy to get a B grading A B grading can be obtained by either training the Chief Operator to gain an A grade ticket or by having continuous quality control An A grading is gained by having both of the above An A1 grading is achieved by adopting quality control measures such as ISO9000 registration Contracting Out and Buying Local In the initial stages of outsourcing there was a tendency to think big all encompassing contracts that take care of maintenance cleaning catering security etc everything rolled into one contract for easier contract management But this makes it difficult for small local

    Original URL path:,-Case-Studies/Case-Studies/SIMPLE-Case-Studies/Commercial-Tactics (2016-05-01)
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  • SIMPLE - Data and Knowledge
    and Knowledge You May Have More Data Than You Think and More Than You Want A data source for an asset class is simply the number of distinct locations that contain information about the asset These are mainly electronic databases application software etc but also include hardcopy systems Attributes are the different types of data we like to record about an asset physical financial historical political etc Thus roads may have 10 different data sources and 25 different attributes that we want need to record Booroondara Council in Victoria Australia decided to audit their data Before the audit they had been advised that there were 27 data sources the audit found 403 Maintenance Contracts Increase Information Flow and Quality BP Oil New Zealand Retail Division reduced from two pump maintenance suppliers to one In return the contractor not only maintains the pumps but also provides information on exactly what pumps exist in the different locations their make model age condition and maintenance activity This information is now provided weekly on computer disc to the BP main office for use in deciding which pumps are the most efficient and which should therefore be chosen when deciding on new pumps This information is a costless spin off from the maintenance activity The relationship had proven so successful that it was extended to include signage Data Maintenance is Boring I established the city s main database but keeping it up to date and quality controlled is a problem This is not a financial problem we have the budget rather it is a people problem the technicians or students assigned to updating data get easily bored as it is a very tedious job Because of this it requires a lot of time to perform quality control checks to ensure quality data I used to

    Original URL path:,-Case-Studies/Case-Studies/SIMPLE-Case-Studies/Data-and-Knowledge (2016-05-01)
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  • SIMPLE - Decommission
    next town where the airfield is bigger staffed and more convenient Q You mean no one uses the airstrip A Not at all it is used by gliders Q Isn t it true that gliders don t like to land on hard surfaces and they use the unsurfaced edges A Well yes Q in exasperated tones Then why did you resurface the airstrip A indignantly To preserve the asset of course Unfortunately a true story Moral An asset is only a means to an end Preservation treats them as an end in themselves and leads to wasteful decisions Doing only what is necessary to retain or enhance needed services maximizes the value of the asset as well as the council dollar All Assets should be Owned The new CEO of a rail organization announced that every single asset should be pinned down to a single business owner and then down again to a single owner within a business Common assets held centrally he argued were a recipe for waste Application of this principle reduced the locomotive fleet by 176 and wages by 25 Asset Disposals and Exit Costs Another rail organization had old rolling stock that had provided service from 1927 but now they lacked the passenger features modern travelers required their maintenance cost was high and their reliability was only about 50 of that of the new Double Deck camshaft controlled rolling stock it was time for them to go But go where Too old to be sold to another rail line the best option seemed to be to cut them up for scrap At this stage however many of the carriages were found to be lined with asbestos Not all of it just about 10 Trouble is no one knew for sure which 10 Disposal consistent with environmental

    Original URL path:,-Case-Studies/Case-Studies/SIMPLE-Case-Studies/Decommission (2016-05-01)
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  • SIMPLE - Demand Analysis
    dam or the 50m of works on water transmission mains and distribution system a water corporation turned to demand management A user pays pricing system and the reduction of wastage through public education decreased demand by over 30 and deferred the trunk works for a decade Using Demand Management 2 Educating our Customer Base Education and promotion can be an effective demand management tool when pricing solutions are either not possible or ineffective In a small town served by well water the residents were using more water than was being naturally recharged Consumption levels had to be reduced from 300ML to under 200ML to prevent the water table rising and turning the water supply saline Using educational surveys radio and press advertising competition for water saving techniques and information on water saving gardens consumption was reduced to safe levels and ten years later stood at 160ML In this case the pricing solution was questionable as most of the really large users had their water bills paid by head office as part of an inducement to locate in a remote area It was discovered that the bulk of the population did not know where their water came from and over 90 of the population when questioned considered that they were average or less than average water users Using Demand Management 3 Creating Alternatives to Demand Waste treatment capacity was limiting the ability of a City to expand industrial growth The City saved up to 30m in capital costs and up to 1m a year in operating and maintenance costs through A creative and inexpensive approach to the re use of waste materials Regulation Pricing control Cheaper on site treatment methods Scientifically trained officers advised firms about waste minimization measures and co operated with industry on waste recycling and pre treatment to

    Original URL path:,-Case-Studies/Case-Studies/SIMPLE-Case-Studies/Demand-Analysis (2016-05-01)
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