1. CWEA Asset Management Seminar Berkeley, CA, September 17, 2003 Ken Harlow, Brown and Caldwell Planning for and Funding Asset Replacements and Refurbishments : “ Making Do” with Limited Asset Knowledge

2.  What Can I Do with my Existing Asset Knowledge?  Using Class-based Knowledge to Forecast R&R Costs  The RPM: Establishing Funding Policies for Sustainability  How does the RPM Help?  Demonstration of the RPM Outline of Presentation

3. Your Board/Council Does Care about the Infrastructure!  “What is our system worth in today’s dollars?”  “How much should we be spending on R&R?”  “How much will we be spending twenty years from now?”  “What should our R&R reserve levels be?”  “How much should we contribute each year?”

4. Perfect Asset Knowledge – When???  Many agencies can’t answer these questions because of poor asset knowledge  Remedying this is a lot of work – improving asset knowledge is usually a task of many years (but worth it, of course…)  Question: What can you do with the asset knowledge you have now?

5. With only a moderate effort, you can:  Establish long-term replacement funding policy to assure infrastructure integrity  Calculate the value your infrastructure assets  Especially in California: Protect needed reserves from possible expropriation What Can I Do with the Asset Knowledge I have Now?

6. Using Class-based Knowledge to forecast R&R Costs

7. Two Kinds of Asset Knowledge  Asset specific knowledge: Age, condition, value, likely replacement and refurbishment (R&R) needs This level of knowledge is required to make dependable R&R decisions on specific assets  Asset class knowledge: Typical useful life, pricing formulas, model refurbishment programs If you can develop class-based knowledge, you can forecast aggregate R&R needs and support long-term funding policies to sustain your infrastructure

8.  An asset class is a group of assets with: Similar form and function Similar useful lives and refurbishment programs Similar replacement pricing formulas  Key: Prepare a master asset listing and assign each asset to a class (usually 20-25 classes)  Each asset class has a useful life, pricing formula, and typical refurbishment program  A refurbishment is a capital expenditure required to achieve useful life — it is not an O&M cost What is an Asset Class?

9. Typical R&R Life Cycle: Steel Tank BuildReplace A. Exterior painting (7.5 years) B: Interior coating / Floor repair (15 years) C. Floor replacement (30 years) $ Refurbishment types: AAAA A+B A+B+C Time A+B 07.51522.53037.54552.560

10. You Still Need Some Asset- specific Knowledge  Year in service  Asset class  Physical attributes (length, diameter, material, horsepower, etc.) Physical attributes are used to generate replacement costs of assets using formulas or look-up tables  And that’s all you need (if that’s all you have)

11. Using Class-based Knowledge to Generate R&R Costs  Once class-based knowledge is defined, you can simulate infrastructure performance: Asset-by-asset replacements and refurbishments over many years  Key is the cyclical nature of these “R&R” activities  Each “transaction” is costed to create a schedule of expenditures well into the future  Finally, funding policies can be tested against future expenditures to create a funding plan  All this is done easily using the Replacement Planning Model (RPM)

12.  Mesa Consolidated Water District  Orange County Water District  Irvine Ranch Water District  Maui Board of Water Supply  Orange County Sanitation District  Asheville, North Carolina  City of Roseville  City of Oxnard  Dublin San Ramon Services District  Montecito Sanitary District  MWD of Southern California  Moulton Niguel Water District Who has Used This Approach?

13. The RPM: Establishing Funding Policies for Sustainability

14. RPM R&R costs by year Useful lives Asset inventory Years in service Replacement costs Refurbishment programs Annual contributions Earnings rate Inflation rate Fund balances Elements of the Funding Analysis

15.  Replacement/Refurbishment (R&R) Fund is the fundamental tool for accumulating and disbursing R&R money  Fund performance is modeled using the RPM The R&R Fund

16.  R&R Fund balances are based on: Beginning balance Fund contribution policies R&R needs by year Interest earnings Various other policy decisions  The RPM “builds” funding policy by varying these and other parameters while observing results of the simulation Modeling R&R Fund Performance

17. How does the RPM Help?

18.  Clear delineation of R&R costs over various timeframes  Easy-to-use, friendly interface  Detailed logs of transactions; many graphical reports  Ideal for exploring policy options and recommendations with the board The RPM Shows Clearly the Patterns of Future R&R Expenditures

19.  Helps develop true asset-based funding policies  Provides an entry to asset management  Proven track record delivers confidence to your client The RPM Provides Clear, Effective Answers to Funding Questions

20.  RPM supplies the replacement value of all assets  Current asset value is of great interest and usefulness to: Staff Board Customers The RPM Also Shows what the Infrastructure is Worth

21. RPM Demonstration

22. Questions and Answers