1. Nick Fish, Commissioner | Michael Stuhr, P.E., Director Portland Water Bureau May 3, 2016 Briefing for the Portland Utility Board Asset Management at the Portland Water Bureau

2. Water System Major Assets Portland Water Bureau | Portland Utility Board2 2 Water Sources 2,330 Miles of Pipe 41 Pump Stations 66 Tanks and Covered Reservoirs 14,350 Hydrants 178,500 Meters Bull Run Watershed Columbia South Shore Well Field 130 Drinking Fountains Estimated replacement value is $8.0 billion.

3. Condition of Assets 3 Portland Water Bureau | Portland Utility Board Very Good Good Fair Poor Very Poor To Be Determined Total water system asset value is $8.0 billion About 9% of the assets are in very poor to poor condition, representing about $0.7 billion. About 5% of the Distribution System is in poor or very poor condition, representing about $250 million. $8.0 billion

4. What is Asset Management? A combination of … business practices Applied to physical assets With the objective of providing the required level of service In the most cost effective manner Portland Water Bureau | Portland Utility Board 4

5. What is Asset Management? Planning— Document current condition, risks, and practices; recommend strategic improvements in an asset management plan Decision Support—Use economic tools like business cases to evaluate projects and programs Identifying Service Levels— Measure performance against the goals for the services the bureau provides. Risk Management—Reducing the likelihood the asset will fail or the consequences of failure. Forecasting—Analyzing available information to determine future needs. Portland Water Bureau | Portland Utility Board 5

6. PWB Uses Leading-Practices in AM American Water Works Association National Asset Management Committee—Chair is Jeff Leighton, Senior Engineer at the Water Bureau. Provide Training and Advice to Others—Invited to share bureau’s risk-management, business-case, and asset-management plan development effort at conferences and events. Served on over 20 Advisory Committees for asset management Practice Survey—National AWWA survey on the level of practice of AM among North American utilities Portland Water Bureau | Portland Utility Board 6

7. What drives the CIP? Regulatory Compliance Public Health Protection Risk Mitigation Projects in Construction Public Expectations Cost-to-Benefit Analyses Stewardship and Partnership Council Direction LESS DISCRETION MORE DISCRETION Portland Water Bureau | Portland Utility Board

8. Capital Improvement Planning 8

9. Project Planning and Design Portland Water Bureau | Portland Utility Board 9

10. Asset Management Plans (AMPs) 10 Levels of Service Asset Inventory and Valuation Asset Condition and Performance Failure Modes and Useful Life Business Risk Exposure Maintenance, Repair, and Replacement Strategies Budget Forecasting

11. Portland Water Bureau | Portland Utility Board AWWA Survey— AMP Benchmark 11 All utilities Large utilities Water Bureau now Water Bureau in 2005 Data source: American Water Works Association, 2015 Establishing the Level of Progress in Utility Asset Management Survey Results. Denver, Colorado.

12. Supporting Decision-Making Portland Water Bureau | Portland Utility Board 54 business cases in 2014 and 2015 19 business cases as part of Planning process 35 additional business cases conducted by Asset Management estimated to reduce risks and avoid costs of more than $18 million 12

13. 13 Portland Water Bureau | Portland Utility Board All utilities Large utilities AWWA Survey—Business Case Benchmark Water Bureau now Water Bureau in 2005 Data source: American Water Works Association, 2015 Establishing the Level of Progress in Utility Asset Management Survey Results. Denver, Colorado.

14. Service Level Targets and Performance Portland Water Bureau | Portland Utility Board 14

15. 15 Targets reevaluated and adjusted periodically based on customer expectations and/or ability to provide service level All utilities Large utilities AWWA Survey—Service Level Benchmark Water Bureau now Water Bureau in 2005 Portland Water Bureau | Portland Utility Board Data source: American Water Works Association, 2015 Establishing the Level of Progress in Utility Asset Management Survey Results. Denver, Colorado.

16. Service Level Improvement Portland Water Bureau | Portland Utility Board Consulting Customers about Service Levels—Online survey starts in May; final report in fall 2016. Service Level Improvement Project— Cross-functional team will tackle improving service levels using recommendations from customers, AM plans, and subject-matter experts in the bureau. 16

17. Portland Water Bureau | Portland Utility Board Managing Risk Putting effort into high- consequence mains and valves next to or crossing major roads or railroads Addressing high risks part of bureau’s highest-level performance measures, reported in budget 17

18. Portland Water Bureau | Portland Utility Board Catastrophic Failure Avoided—NE Grand Ave Major highway crossing and pipe badly out of alignment above Estimated to cost at least $10 million if pipe had failed. Triple-bottom-line benefits: Avoid disruption of traffic on major road Avoid potential safety issue (social) Identified early and repaired when ODOT had already planned a closure 18

19. Forecasting—Evaluating Useful Life Portland Water Bureau | Portland Utility Board 19 Failure Curve (Weibull Curve)—Statistical Estimate of Failure Based on Failure of Similar Pipe

20. Portland Water Bureau | Portland Utility Board Estimating Annual Replacement Rate 20 Able to Estimate Replacement Needs in Miles per Year, Based on Weibull Curve Data

21. Quantified Benefits of AM Portland Water Bureau | Portland Utility Board Avoiding risks to major transportation corridors, human health and safety, and property Eliminate annual hydrant overhauls. Net benefit: $400,000 a year in avoided costs Reduce maintenance on redundant pumps. Net benefit: $20,000 a year in avoided costs 21

22. Progress in Implementing AM Portland Water Bureau | Portland Utility Board 22

23. Two-Year Plan for Asset Management Portland Water Bureau | Portland Utility Board 23

24. Major Tactical Goals and Objectives Portland Water Bureau | Portland Utility Board Levels of Service and Customer Consultation Asset Management Plans and Strategy Implementation Manage Risk of Asset Failure Business Case Evaluations Implement Reliability Centered Maintenance Water Loss and Outages Forecast Infrastructure Replacement Needs Capitalization Policy Technology Systems and Business Workflows Benchmarking Developing Asset Management Competency Alignment with International Standards 24

25. Questions Portland Water Bureau | Portland Utility Board 25