Formulate the Problem

This process is the first step in the whole decision making process. The basic question to ask is "Why is the decision necessary?"

The main activities during the strategic planning process are to:

• Predict the decay pattern of an asset
• Identify the likely failure modes
• Establish the range of possible rehabilitation or renewal options before total failure.

An asset ages at different rates throughout its life cycle. Different treatment options are available depending on the condition of the asset. Most assets will pass through a series of treatment/cost segments:

• Do Nothing
• Maintenance
• Renewal/Rehabilitation
• Replacement.

These systems relate to the various capital improvements available to extend the life of the asset. Routine (optional) maintenance and other works to allow the asset to reach its initial intended life are to be considered separately.

As the asset passes from one cost segment to another, the optimal treatment cost increases significantly. It is therefore important to be able to pick the point at which this transition takes place and try to maintain an asset in the most cost effective manner.

Moreover, applying different treatment options to assets with similar conditions will also result in different outcomes.

It is also pertinent at this stage to clearly define what you are going to achieve, define your criteria, and what are your objectives.

The comparison of the treatment options should take into consideration:

• Timing
• Different impacts on both the asset and the environment
• Extension of effective life
• Reduce O&M cost
• Improved level of service (correlated to improved rates charges)
• Improved production (income)
• Risk cost reduction.

Not all benefits or impacts are tangible. However, attempts should be made to quantify them through some correlation (e.g. additional revenues through willingness to pay may be correlated to the improved level of service).

The first important issue is therefore to determine the rate of decay of the asset. The ultimate life and mode of failure of an asset can be influenced or affected by many physical and environmental factors that will cause identical assets to fail in different ways over a variable period. Therefore, the decay pattern of an asset has to be determined in its own right.