Advanced Asset Management

at OSCD

Advanced Asset Management

at OSCD

Doug StewartOrange County Sanitation DistrictMay 5, 2005

Doug StewartOrange County Sanitation DistrictMay 5, 2005

This PresentationThis Presentation

History

AMSC

Interim work efforts

Current program

Lessons learned

Future directions

History

AMSC

Interim work efforts

Current program

Lessons learned

Future directions

Brief HistoryBrief History

Asset Management strategic plan

Consultant led approach

Peer review process

Staff led approach

Consultant advisor role

Asset Management strategic plan

Consultant led approach

Peer review process

Staff led approach

Consultant advisor role

AMSCAMSC

Cross disciplinary team

17 members – 2 EMT

Provides oversight and direction for program

Cross disciplinary team

17 members – 2 EMT

Provides oversight and direction for program

Core Management QuestionsCore Management Questions

1. What do I own?

2. Where is it located?

3. What condition is it in?

4. How is it likely to fail?

5. What is the consequence of that failure?

6. How does that consequence of failure affect my level of service (LOS)?

7. How do I choose to manage a change in LOS?

1. What do I own?

2. Where is it located?

3. What condition is it in?

4. How is it likely to fail?

5. What is the consequence of that failure?

6. How does that consequence of failure affect my level of service (LOS)?

7. How do I choose to manage a change in LOS?

Core Management Questions (cont’d)Core Management Questions (cont’d)

8. What is the resulting short and long term cash flow?

What is my sustainable LOS?

What are my long term rates?

9. Am I doing it at minimum cost?

What and how much O&M should my staff be doing?

What investment in capital should I be making?

10. Who is owns and is responsible for the asset?

8. What is the resulting short and long term cash flow?

What is my sustainable LOS?

What are my long term rates?

9. Am I doing it at minimum cost?

What and how much O&M should my staff be doing?

What investment in capital should I be making?

10. Who is owns and is responsible for the asset?

Understand what To do first

Understand what To do first

To provide staff with basic SOW for initial projects

To provide staff with basic SOW for initial projects

To know whatthe bottom line is.What can be cut

To know whatthe bottom line is.What can be cut

OCSD AMIP Program 2004-5OCSD AMIP Program 2004-5

CIP

20052005ImprovementImprovement

ProjectsProjects

20052005ImprovementImprovement

ProjectsProjects

AMIP

AMIPAMIPImplementationImplementation

PlanPlan

AMIPAMIPImplementationImplementation

PlanPlan

To set Future Funding needs at higher CLR

To set Future Funding needs at higher CLR

Complete Complete InitialInitialAMPAMP

Complete Complete InitialInitialAMPAMP

AMP

Understand how much to cut

Understand how much to cut

Understand what to do first

Understand what to do first Achieves much of the ultimate Asset Management Program Achieves much of the ultimate Asset Management Program Achieves much of the ultimate Asset Management Program Achieves much of the ultimate Asset Management Program

To provide better Understanding of Maintenance &

reliability

To provide better Understanding of Maintenance &

reliability

RCM

MaintenanceMaintenanceImprovement Improvement

ProgramProgram

MaintenanceMaintenanceImprovement Improvement

ProgramProgram

Some ResultsSome Results

CIP Review (2003-4) Test case on two projects, then 15 projects

Full review of 111 CIP projects

Saved $25.4 M in project costs and interest – deferred $6.8 m in low risk projects

CIP Review (2004-5) Full CIP Review of 128 projects

Saved $ 6.1 m in project costs and interest

What did I not say?

CIP Review (2003-4) Test case on two projects, then 15 projects

Full review of 111 CIP projects

Saved $25.4 M in project costs and interest – deferred $6.8 m in low risk projects

CIP Review (2004-5) Full CIP Review of 128 projects

Saved $ 6.1 m in project costs and interest

What did I not say?

The Asset Management PlanThe Asset Management Plan

Structure (Management Questions) Results

Rate study Asset management strategies Strategies for managing assets Collections Risk Model

Sustainability Intergenerational Equity

Structure (Management Questions) Results

Rate study Asset management strategies Strategies for managing assets Collections Risk Model

Sustainability Intergenerational Equity

2020 Cash Flow Total = $2.8 Billion

2020 Cash Flow Total = $2.8 Billion

$ Millions$ Millions

Fiscal YearFiscal Year

$0

$50

$100

$150

$200

$250

$300

$350

'04-05

'07-08

'10-11

'13-14

'16-17

'19-20

Full Secondary

Collections

Groundwater ReplenishmentSystem

TP Rehab / Upgrade

$0

$50

$100

$150

$200

$250

$300

$350

'04-05

'07-08

'10-11

'13-14

'16-17

'19-20

Full Secondary

Collections

Groundwater ReplenishmentSystem

TP Rehab / Upgrade

OCSD Expenditure - Total Future Predicted Cash Flows

0

100

200

300

400

500

600

20

06

20

09

20

12

20

15

20

18

20

21

20

24

20

27

20

30

20

33

20

36

20

39

20

42

20

45

20

48

20

51

20

54

20

57

20

60

20

63

20

66

20

69

20

72

20

75

20

78

20

81

20

84

20

87

20

90

20

93

20

96

20

99

21

02

21

05

Year

Exp

end

itu

re -

$M

(C

urr

ent

Do

llars

)

0

2,000

4,000

6,000

8,000

10,000

12,000

Ass

et V

alu

es

- $

M

CIP - Future GrowthCIP - Future LoSCIP - CurrentRenew - Future Los/GrowthRenewal - PlantsRenewal - Collection SystemOperationsMaintenanceOverheadBook ValueReplace ValueAverage Expenditure

Implementation Challenges Implementation Challenges

Few strong outside drivers

Culture of technical silos

Plate is already full

Needs strong advocate at top of organization (stay the course)

This is not taught in school (in the U.S.)

Few strong outside drivers

Culture of technical silos

Plate is already full

Needs strong advocate at top of organization (stay the course)

This is not taught in school (in the U.S.)

Lessons Learned

What We Did Well

Lessons Learned

What We Did Well Training is vital – 24 hours delivered Bring wide diversity of work groups into process AMSC - Collaborative approach – building commitment

What We Would Do Differently Today Include Board members in early education

(WIIFM) Focus on benefits and how AM will help them Catch 22 – Benchmarking

Build basis of business case on Agency data – earlier, if possible

Training is vital – 24 hours delivered Bring wide diversity of work groups into process AMSC - Collaborative approach – building commitment

What We Would Do Differently Today Include Board members in early education

(WIIFM) Focus on benefits and how AM will help them Catch 22 – Benchmarking

Build basis of business case on Agency data – earlier, if possible

Lessons Learned

What We Would Do Differently Today (cont’d)

Lessons Learned

What We Would Do Differently Today (cont’d)

Structure implementation concurrent with plan development – as you learn – start implementing – build basis for culture change

It is not as complicated as we made it out. It is just making better business decisions.

Structure implementation concurrent with plan development – as you learn – start implementing – build basis for culture change

It is not as complicated as we made it out. It is just making better business decisions.

Questions?Questions?

Orange County Sanitation DistrictOrange County Sanitation Districtwww.ocsd.comwww.ocsd.comOrange County Sanitation DistrictOrange County Sanitation Districtwww.ocsd.comwww.ocsd.com

Doug StewartAsset Management Coordinator(714) 593-7320dstewart@ocsd.com

Doug StewartAsset Management Coordinator(714) 593-7320dstewart@ocsd.com