Putting Your Money Where Your Need is: Implementing an Asset Management-Focused CIP

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Abstract:

Integrating asset management concepts and tools into a utility's capital planning process often yields rapid and measurable cost savings and performance improvements. Critical to an asset management-focused capital improvement program (CIP) is the development of a thorough “business case” approach to proposed projects, requiring project sponsors to present a consistent level of information, document and analyze key issues, and support an objective evaluation of the justification, drivers, costs/benefits and priority of each potential project.

This paper will describe the business case approach to capital prioritization that the City of Virginia Beach Department of Public Utilities (DPU) utilized in 2010 to kick off its asset management program efforts. This business-oriented and financially-driven CIP planning process focuses on project prioritization through the use of detailed business case analysis and the utilization of cross-functional teams and committees to ensure a balanced perspective on capital planning and asset management issues necessary to drive organizational change.

The goal of this capital planning effort was to develop a best-in-class prioritization process that ensures a rational and sustainable CIP while responding to the business needs of both the DPU and its key stakeholders. The outcome of the effort was a final CIP document that included a validated and prioritized list of projects for the upcoming fiscal year incorporating growth, rehabilitation/renewal, and enhancement projects. Most importantly, the task concluded with a defined methodology and process through which DPU can update its CIP on an ongoing basis using the tools, templates, and techniques applied throughout the project.

Other key benefits of DPU's formal and dynamic capital investment planning process include:

• Greater understanding of the long-term service level and cost implications of capital investment decisions, including triple-bottom-line impacts.

• Strengthened long-term financial decision making, enabling accurate financial projections, and helping to ensure adequate funding and rate structures.

• Ensuring that planning, engineering, operations, maintenance, and financial perspectives are all considered.

• Fostering a culture of asset management throughout the organization.

• Creation of improved trust, understanding, and transparency with the public, elected officials, and stakeholders - strengthening the case for required investments and resources.

As DPU has found, an integrated, asset management-focused capital planning process is effective because it builds business discipline, encourages analysis of options and alternative solutions, documents expected customer and environmental impacts, and ensures alignment with strategic asset management goals.

Document Type: Research Article

DOI: http://dx.doi.org/10.2175/193864712811694857

Publication date: January 1, 2012

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  • Proceedings of the Water Environment Federation is an archive of papers published in the proceedings of the annual Water Environment Federation® Technical Exhibition and Conference (WEFTEC® ) and specialty conferences held since the year 2000. These proceedings are not peer reviewed.

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