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A CASE STUDY: INTEGRATING TECHNICAL SCIENCE WITH MANAGEMENT SCIENCE TO MAP THE “BEST BUSINESS CASE” SOLUTION FOR A VILLAGE FACING AN SSO CONSENT ORDER

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The operating environment for US utilities has become increasingly complex over the last several decades. The “bar” for treatment and collection system performance has been steadily raised with each passing decade. At the same time, aging infrastructure requires increasing attention, a major portion of our labor force is beginning to retire, and customers have become increasingly resistant to rate increases. Consequently, managing collection and treatment systems has become more and more sophisticated. While the magnitude may vary, the nature of the challenges facing utilities, whether large or small, is pretty much the same.

Clearly the utility manger of the future will have to introduce more advanced management practices into their tool bag. Management-centered tools will need to complement the historic focus on the engineering and technical sciences, if the management team is to successfully meet these challenges. Fortunately, the management sciences are up to the challenge, providing a rich bag of relevant tools from which to select.

One of the major performance challenges confronted by many utilities is meeting the Clean Water Act's Sanitary Sewer Overflow (SSO) requirements. Many communities, large and small, are facing consent decrees that require considerable investment in the collection system – both capital and operations – to bring the community into compliance. Municipalities face substantial fines for failure to comply. It is difficult enough to map out sound engineering solutions, much less affordable ones. How can an agency determine the best course of action? What techniques can complement the technical sciences in facilitating wise investment decisions on the part of the management team and elected officials?

In January 2003, the Village of Hamburg, New York entered into a Consent Order from New York State Department of Environmental Conservation (NYSDEC) to abate SSOs. Compliance will require considerable expenditure by the Village on behalf of its ratepayers to address both capital projects and increased maintenance funding needs. The Village and the County are mutually exploring a common interest in transferring the Village's sanitary sewer system assets to the County. The Village is also evaluating the option of contracting management and operation of the collection system to the County, while maintaining ownership.

This case study presents a decision-making approach implemented by the Village and the Erie County Division of Sewerage Management in determining the best business case for operations and management of the Village sanitary sewer system. Three relatively simple asset management decision tools were selected to facilitate the decision process faced by the Village and the County, each seeking to provide cost-effective, high quality service to the customer base while protecting the environment. The three tools include: 1) Residual Asset Life Analysis; 2) Business Case Analysis; and 3) Weighted Decision Tables.

This project considered relevant aspect of SSO regulatory compliance, operations and maintenance management, sanitary sewer system evaluation, capital planning, life-cycle cost evaluation, level of service targets and rate analysis. These technical components were presented in terms of specific business case scenarios to identify impacts on customer rates, and facilitate decisions on the part of the management team and elected officials.
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Document Type: Research Article

Publication date: 2004-01-01

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