Principles and Concepts

Asset creation/acquisition is a major activity for water utilities and it can be a lengthy process to ensure the right asset is developed.

Asset managers need to ensure the following processes are addressed:

• Determine the need for the new asset
• Identify alternatives for provision of the new asset including non-asset solutions
• Compare the alternatives in terms of life cycle costs
• Select the alternative that best satisfies the need
• Plan the asset
• Register the asset and start the collection of the costing information
• Design and specify the asset
• Design condition monitoring and maintenance programs
• Program the construction
• Construct the asset and ensure documentation supports necessary data collection
• Collect " as constructed" plans and records
• Commission the asset
• Implement condition monitoring and maintenance programs.

As these projects move towards the time that design and documentation activities need to commence, we need to have raised the project quality or confidence level to our target, eg, we will not invest capital until we have achieved a confidence level rating of 90%.

The project validation phase needs to extend over the timeframe necessary to ensure that we deliver the project at the required time.

The actual time frame depends the time required to deliver the project, making due allowance for the validation and project development.

We use the validation or project development phase to continuously refine the project to lift its quality or confidence level rating to the required level.

This process is iterative. The organization rolls up all these individual project results to a whole-of-system strategy. If this is acceptable, the projects proceed; if not, we go back to revise the solutions.

The project validation process includes:

• Identify interdependencies and linkages of individual projects (their predecessor and successor projects)
• Analyze the scope of work
• Assess and refine the accuracy of the accuracy of the project estimates
• Identify the resources necessary to complete the projects.

The following areas are often not sufficiently addressed, but are also important:

• A truly commercial approach to the investment of capital, including a benefit cost analysis using "triple bottom line" assessments of economics, social and environmental impacts
• A logical validation process that is driven by value and risk to the business and is applied to the organization as a whole
• Using life cycle cost as the key evaluation tool
• Maintainability / operability checks
• Allowances for business risk exposure in each project in economic terms
• Understanding of the difference between life extensions of existing assets and new assets
• Ensuring that all options are assessed, including non asset solutions
• Assessing "bidding out" options to help differentiate between equal project options.

This process varies where the assets include a high degree of mechanical and electrical assets, where a higher percentage of the life cycle costs are maintenance, power, energy and chemicals, etc.

There should be a place in the asset register for new assets at the time of planning.

This will mean:

• All costs associated with creation of the asset are captured, i.e. planning and design costs as well as construction and commissioning costs
• Support information is collected progressively, and at the commissioning stage "as constructed" data is added, as shown below: