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Using an Asset Management Program to Support Financial Analysis and Long Term Planning

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Many utilities struggle with accurate long-term financial forecasting of capital needs including the significant funds required for R&R (Rehabilitation and Renewal) as critical infrastructure components and systems age. Balancing the financial requirements for R&R projects with requirements for new growth and regulatory compliance is an ongoing challenge for many in our industry. Financial issues are moving to the forefront at a time when utilities are facing funding constraints and increasing pressure from the public and stakeholders to reduce costs and hold rates steady. The ability to borrow money is also becoming more difficult, with credit rating agencies taking a closer look at long term system reinvestment policies and financial sustainability. To address these challenges as part of an overall asset management philosophy, Lee County Utilities (LCU) realized the need to integrate capital and financial analysis into their asset management program to ensure that:

A comprehensive asset valuation and effective useful life (EUL) methodology was established to support long-term financial planning.


Financial planning was addressed in parallel with an inventory, condition and criticality assessment strategy and incorporated risk and service levels.


Comprehensive financial information and data was available to staff to support utility-wide capital and financial planning efforts.


The approach was rational and defensible and supports communication and discussions with stakeholders and public officials.


A long-term plan was established to support stakeholder's desire for a forward-lookingand stable rate structure.
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Keywords: Asset Management; Capital Planning; Financial Planning; Rehabilitation and Renewal Planning

Document Type: Research Article

Publication date: 2010-01-01

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