A Simple Asset Inventory for Very Small Drinking Water …A Simple Asset Inventory for Very Small...

Taking Stock of Your Water System

A Simple Asset Inventory for Very SmallDrinking Water Systems

Office of Water(4606 M)EPA 816-K-03-002www.epa.gov/safewaterOctober 2004

Printed on Recycled Paper

ContentsWhy Take Stock of Your Water System? An Overview of this Brochure ............................................................................................................................... 1

How to Use this Brochure .............................................................................................................................................................................................. 2

Elements of a Simple Asset Inventory .............................................................................................................................................................................. 3

How Long Will It Last? Using the Typical Life Expectancies Table ......................................................................................................................................... 4

Asset Inventory Worksheets .......................................................................................................................................................................................... 5

Drinking Water Source and Intake Structures .............................................................................................................................................................. 5Treatment System .................................................................................................................................................................................................. 9Tanks ................................................................................................................................................................................................................. 11Distribution System............................................................................................................................................................................................... 13Valves ................................................................................................................................................................................................................ 15Electrical Systems ................................................................................................................................................................................................ 17Buildings ............................................................................................................................................................................................................. 19Service Lines ....................................................................................................................................................................................................... 21Hydrants ............................................................................................................................................................................................................. 23

Next Steps: Asset Management Plan ............................................................................................................................................................................. 25

Prioritization Table ................................................................................................................................................................................................ 26 Budgeting for Rehabilitations and Replacements........................................................................................................................................................ 29

Budgeting Table ................................................................................................................................................................................................... 30How to Carry out the Plan ........................................................................................................................................................................................... 33

The Role of Key Decision Makers .................................................................................................................................................................................. 33

Next Steps ............................................................................................................................................................................................................... 33

Appendix A: Safe Drinking Water Act Primacy Agencies and Tribal Contacts ....................................................................................................................... 34

Appendix B: Sources of Financial Assistance to Drinking Water Systems .............................................................................................................................. 40

Appendix C: Sources for More Information on Asset Management ...................................................................................................................................... 42

1

Maintaining and Replacing Your Assets – The Basis of Asset Management

An important part of conducting an inventory is determining when to repair, rehabilitate, or replace an asset. At some point, continuing to repair the asset willno longer be cost-effective and you will need to rehabilitate or replace it. The worksheets in this brochure will help you get a better picture of the currentcondition of your assets, including the ones nearing the end of their useful lives. To further help you manage your assets, EPA has developed Asset

Management: A Handbook for Small Water Systems. The Handbook can be obtained by calling the Safe Drinking Water Hotline at (800) 426-4791 andrequesting document EPA-816-R-03-016. You can also download it from EPA’s Safe Drinking Water Web site at www.epa.gov/safewater/smallsys/ssinfo.htm.

Why Take Stock of Your Water System? An Overview of this Brochure

This brochure is a guide to help very small water systems, such as manufactured home communities and homeowners’ associations, assess their condition bypreparing a simple asset inventory.

Knowing what components your system has and what condition they are in will help you maintain the safety, security, and reliability of the drinking water that yoursystem provides. An asset inventory can help you in the following ways:

Keeping a precise inventory of your water system can assist you in complying with the federal Safe Drinking Water Act and with your state’s drinkingwater regulations by: helping you prepare accurate budgets, identifying concerns, and preparing for future needs (whether financial, growth-related,or regulatory).

Knowing your system’s strengths and weaknesses will help you head off sudden or unexpected problems with the system’s operation or the quality ofwater it provides.

Gaining a better overall picture of your system will enable you to spot gaps in your system’s security and take steps to address them.

Knowing the details of your system will enable you to explain its current condition and how it operates. You will be better able to answer questionsfrom customers, local health officials, and the media.

Inside this brochure you’ll find information and worksheets (both completed examples and blank) to help you prepare an asset inventory and begin to develop awritten asset management plan. You should keep a copy of this brochure with other relevant asset records and refer to them when making decisions about yoursystem. Contact your State or Tribal Drinking Water Primacy Agency for help completing the worksheets or for more information on conducting an assetinventory. Contact information appears in Appendix A.

2

How Taking Stock of Your Water

System Can Improve Your System’s

Capacity

“Water system capacity” describes a system’sability to plan for, achieve, and maintaincompliance with national and local drinkingwater standards. System capacity has threecomponents: technical, managerial, andfinancial. Completing this asset inventory willhelp you improve all three components by:

Increasing your knowledge of the physicalcomponents of your system, which willallow you to make better technical andmanagerial decisions.

Identifying components that may need to bereplaced or rehabilitated in the near future,which will enable you to develop a financialplan and research cost-effective options.

Inventorying your assets can be an intensive job. Get the best information you can, but use estimates if you need to. If you keep up with an assetmanagement program, new information will become available as assets are replaced or rehabilitated, and your inventory of assets will improve.

1

2

3

4

How to Use this Brochure

The worksheets on the following pages will enable you to get an idea of the overall state of your watersystem. There are worksheets for source and intake structures, treatment system, storage tanks,distribution system, valves, electrical systems, buildings, service lines, and hydrants.

Carry out the following steps to complete the worksheets:

Fill in as much information as you can about the asset’s characteristics, including quantity, size,location, age, and the manufacturer of the components. These characteristics will vary byasset type.

Using the estimates from the table, “Typical Life Expectancies of Water System Equipment,”on page 4, and taking into account the current condition of each asset, its service history, andyour experience, estimate an adjusted useful life for each of your assets. Subtract the age ofyour asset from its adjusted useful life to calculate a remaining useful life. Adjusted useful lives

are the typical life expectancies of water system assets adjusted based on the characteristicsof your system (e.g., poor source water quality, extreme weather conditions, operation andmaintenance routines). Adjusted useful lifes can be the same as or lower than typical lifeexpectancies.

Identify the contact information of the person or company you would call to service eachcomponent and include a telephone number. If you do not know who to call, you can ask yourState or Tribal Drinking Water Primacy Agency, parts manufacturers and distributors, or otherwater systems.

Once you’ve completed the asset inventory worksheets, use them to develop a basic assetmanagement plan. Completing the asset management plan worksheets (beginning on page 28)will help you prioritize the components that will need to be replaced or rehabilitated, plan forthe timing of replacement or rehabilitation, and help you determine how much money you’llneed to set aside each year if you plan to pay for replacements and rehabilitations through cashreserves.

Each worksheet is preceded by a completed example that illustrates how to fill out the worksheet. Refer tothe example if you have any questions about the sort of information you should include.

3

Elements of a Simple Asset Inventory

A note to the users of this brochure: It’s quite likely that all of the details of the asset management plan presented in this brochure will not apply to every smalldrinking water system. You should feel free to modify the worksheets and plan so they conform to the particular needs of your system. Help in using thisdocument, conducting asset inventories, and preparing future plans is available from your State or Tribal Drinking Water Primacy Agency.

Drinking Water Source

The source provides water to the

treatment and distribution systems.

Buildings, Treatment and Electrical System

Buildings contain components of a water system, including

treatment equipment, offices, and pumps.

Treatment plants provide the necessary treatment to

make water safe to drink.

Electrical systems include transformers, motor control

centers (MCCs), variable frequency drives (VFDs), alarm

circuits, sensors, level indicators, computers, and wiring.

Storage

Storage provides a

sufficient amount of water

to average or equalize the

daily water demands.

Hydrants

Hydrants provide water

for fire suppression, line

flushing, and irrigation.

Valves

Valves regulate the flow of

water through the pipes of a

drinking water system.

Service Lines

Service lines are the pipes and appurtenances that

are necessary to deliver water from the system’s

water main to the customer’s plumbing

connection. Each service line typically provides

service for one or two users or connections.

Well

Buildings,

Treatment and

Electrical SystemsStorage

Hydrant

House

Service Lines

Courtesy of Roger Bergeron, Vermont Water Supply Division

Valves

4

Remember!

A preventive maintenance program will enable you to maximize the usefullives of your assets and can help you avoid problems and cut down or delayreplacement costs. Contact your State or Tribal Drinking Water PrimacyAgency for more information on developing and implementing a preventive

maintenance program.

How Long Will It Last? Using the Typical LifeExpectancies Table

One of the most important aspects of managing your assets is determining howmuch longer you think they will last. A number of factors can affect how longyour assets will last, including routine service and proper maintenance, excessiveuse, and environmental conditions such as poor source water quality, soil quality,or climate.

The worksheets on the following pages ask you to:

1. Determine the adjusted useful life of each asset. Estimate how long theasset should last (the expected useful life) and adjust these numbers basedon the specific conditions and experiences of your system. The useful life ofan asset will be affected by water quality, operation and maintenanceroutines, the number of years the asset lasted in the past, the asset’sservice history, and its current condition.

For help in determining the adjusted useful life, you can use the table on thispage and talk to parts distributors, your State or Tribal Drinking Water PrimacyAgency, and other public water systems.

2. Subtract the estimated age of each asset from its adjusted useful life todetermine its remaining useful life (or how many months or years remainbefore you will have to replace or significantly rehabilitate the asset).

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A Hydropneumatic Storage Tank

A Metal Storage Tank

13

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40/1/8 40/1/8 40/1/8 40/1/8 40/1/8

Preparations for Pipe Installation in aDistribution System

14

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Preparations for Pipe Installation in aDistribution System

15

An Air-Pressure Relief Valve

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40/10/8 40/10/8 40/10/8 40/10/8 40/10/8

16

An Air-Pressure Relief Valve

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17

A Variable Frequency Drive

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18

A Variable Frequency Drive

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19

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40/1/8 40/1/8 40/1/8 40/1/8 40/1/8

A Pumphouse

20

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A Pumphouse

21

Service Lines Deliver Water to the Customer’sPlumbing Connection

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22

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Service Lines Deliver Water to the Customer’sPlumbing Connection

23

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40/1/8 40/1/8 40/1/8 40/1/8 40/1/8

Hydrants Provide Water for Fire Suppression, LineFlushing, and Irrigation

24

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Hydrants Provide Water for Fire Suppression, LineFlushing, and Irrigation.

25

Next Steps: Asset Management Plan

Once you have completed the worksheets in this booklet, you can use them to develop an asset management plan. Asset management is a planning process thatensures that you get the most value from each of your assets and have the financial resources to rehabilitate and replace them when necessary. The worksheetson the following pages will guide you through the process of creating an asset management plan.

A completed asset management plan will help you:

Prioritize your assets to make sure that you allocate funds to the rehabilitation or replacement projectsthat are most urgent and most important for system operation and customer safety.

Estimate how much money you will need to set aside each year to pay for the replacement orrehabilitation of your assets.

You should review, revise, and update the worksheets in this booklet, including your asset managementplan, at least once a year. Updated information in the worksheets will give you a better picture of yoursystem’s position and better prepare you to meet your water system’s future needs.

For more complete information on how to develop and implement an asset management plan, see EPA’sAsset Management: A Handbook for Small Water Systems (EPA 816-R-03-016), which you can obtain bycalling the Safe Drinking Water Hotline at (800) 426-4791.

Just as an asset inventory is one part of asset management, asset management is part of a largermanagement concept called strategic planning. Strategic planning helps you prepare for and addressanticipated and unexpected problems. It uses asset management to evaluate your system’s currentphysical situation, and it also evaluates your system’s financial and managerial situation. It requires you tomake fundamental decisions about your water system’s purpose, structure, and functions.

For more information on strategic planning, see EPA’s Strategic Planning Workbook (EPA 816-R-03-015),which you can obtain by calling the Safe Drinking Water Hotline at (800) 426-4791.

A Storage Tank that Has Outlived Its Useful Life!

26

Things to Keep in Mind

Assets that are more important to your ability to deliver safe water should have a higher priority because these assetsaffect public health.

Assets with short remaining useful lives should have a higher priority because you will have to replace these assetssoon.

Assets for which there is less redundancy should have a higher priority because your system will have troublecontinuing to operate without them.

Prioritization Table

Use the inventory information you collected on the worksheets to fill out the prioritization table. Consider how important the asset is to your ability to provide safedrinking water to your customers, how soon you will need to replace an asset to adequately serve your customers (its remaining useful life), and how important theasset is to the operation of your system (can other assets do the same job?).

In the column labeled “Asset,” list a short name for the asset (e.g., chlorinator). List different components of the asset on separate lines.

In the column labeled “Remaining Useful Life,” enter the value you determined for that asset on its worksheet (earlier in the booklet). Components of yourasset that have different remaining useful lives should be listed on separate lines. For example, the building roof and the building structure in the example onpage 19 have different useful lives and, therefore, should be listed separately.

In the column labeled “Importance,” describe the importance of each asset to the operation of your system and the protection of public health. Assets that arerequired to keep your system running are usually more important than assets that just make its operation more efficient. Assets that may affect public healthare more important than those that improve the aesthetics of your water. Assets without a backup unit available (i.e., there is no redundant unit) should havea higher priority than units that have a backup (i.e., a redundant unit).

In the column labeled “Priority,” rank your assets according to how important it is to reserve money for them. Consider impact on public health, remaininguseful life, and importance to your system’s operation when ranking your assets.

27

Prioritizing Your Assets: Completed Example

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28

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Prioritizing Your Assets

29

Budgeting for Rehabilitations and Replacements

Once you have inventoried and prioritized your assets, you should determine how much money you will need to rehabilitate or replace them. Budgeting for theseprojects now can help avoid large, unplanned expenditures in the future and will ensure that you allocate your resources efficiently.

The worksheet on page 32 will help you figure out how much money you need to reserve each year to fund your highest priority activities.

It is important that you update this worksheet every year, and as new information becomes available, because your system’s priorities and finances may change.Costs of new assets or rehabilitations may also change. Updating your worksheet annually and setting aside the required reserve amount will help ensure that youhave enough money to cover rehabilitations and replacements when you need them.

Remember that although the total reserves needed each year may seem like a lot of money, it is easier to put aside $200 a year to replace a chlorinator than tocome up with $2,000 once it fails.

The budgeting worksheet asks for the estimated cost of rehabilitation and replacement activities associated with your highest priority assets. Remember to gatherinformation on all of the costs associated with the rehabilitation or replacement of an asset, such as equipment purchase, installation, pilot tests, labor charges,cleanup, and disposal of the replaced asset. To determine what a rehabilitation or replacement might cost, you can:

Consult with your State or Tribal Drinking Water Primacy Agency;

Ask local contractors and businesses for estimated costs;

Contact equipment manufacturers; and

Talk to other systems about the cost of their rehabilitations or replacements.

The budgeting worksheet does not include standard operation and maintenance costs such as chemicals for disinfection. It accounts only for funds you will need toreplace or rehabilitate your assets. You should keep standard operation and maintenance costs in mind when thinking about financing your asset management plan.

30

Budgeting Table

The table on the next page will help you determine how much money you will need to set aside each year to ensure you can continue to deliver safe and securedrinking water to your customers and pay for the necessary replacement of your assets. A completed example follows the blank worksheet.

In the column labeled “Asset,” list the short name for your asset (e.g., chlorinator). You should list different components of the asset on separate lines.

In the column labeled “Activity,” list the rehabilitation and replacement activities that you expect to perform. Provide enough detail so that you can determinethe cost of each activity.

In the column labeled “Cost,” fill in the expected cost of each activity. Make sure to include the complete cost including preparation, cleanup, and disposal ofany waste.

In the column labeled “Years Until Action Needed,” fill in the remaining useful life of the asset from the inventory worksheets you completed earlier.

Divide the cost by the years until action needed. Enter the result in the column labeled “Reserve Required Each Year.” This is the amount of money you willhave to set aside each year to ensure that you have enough money to perform the required activity in the allotted time.

Add up the amounts in the “Reserve Required Each Year” column and enter the total in the box marked “Total Per Year.” This is the amount of money youshould be setting aside each year to be able to pay for all of your planned replacements or rehabilitations.

31

Budgeting for Rehabilitation and Replacement of Assets: Completed Example

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32

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33

How to Carry out the Plan

It may be overwhelming to see how much money you should be saving each year to fund the replacement and rehabilitation of your assets. You can finance capitalimprovements by saving the total per year cost of replacements (calculated in the budgeting table) in a reserve account. Alternatively, you can use the money youalready have more efficiently and put the savings towards replacing and rehabilitating your assets. Here are some strategies that could help you use your currentresources more efficiently or raise additional funds:

Form partnerships with other water systems to reduce operating costs. This may allow you to simplify management and obtain bulk purchasing agreements.

Consider charging rates or increasing your rates to raise revenue. If your system does not already do so, you can charge your customers a separate fee forwater. Alternatively, consider assessing a flat fee for infrastructure improvements or for funding a reserve account. Check with your State or Regional TribalDrinking Water Primacy Agency for more information on setting rates.

Apply for financial assistance. Banks and government agencies can help fund infrastructure projects such as treatment system upgrades and distribution linerepairs. For large projects, you may want to research funding options such as state and federal drinking water grant and loan programs. Appendix B lists somesources of funding for which your system may qualify. Consult your State or Regional Tribal Drinking Water Primacy Agency for information on fundingsources that might be available to your system.

The Role of Key Decision Makers

Key decision makers (for example, the Board of Directors of the Association, elected officials of the community, or owners of manufactured housing associations)make critical decisions about the finances of your water system. For this reason, they need to understand the financial requirements related to the rehabilitationand replacement of the system’s equipment and assets. The information compiled in this brochure should be presented to key decision makers and incorporatedinto the annual budget. This information should be reviewed annually and modified as necessary. The key decision makers can also present this information to thepublic at a board meeting and in the water system’s annual Consumer Confidence Report.

Next Steps

Once you have completed the worksheets and tables in this brochure and identified your system’s needs, you can use the results to help you evaluate yourinfrastructure and shape decisions about your water system. Do not stick the worksheets and tables in a drawer and forget about them! You should try to reviewthe worksheets at least once a year and make changes as your system’s situation changes. Developing a good picture of when you will need to replace your assetsand how much money you will need to fund those replacements will allow you to continue to deliver safe and secure drinking water to your customers.

Remember!

The worksheets in this guide could contain sensitive information about your water system. Make sure you store the worksheets, as well as all otherinformation about your system’s assets, in a secure location.

34

Appendix A: Safe Drinking Water Act Primacy Agencies and Tribal Contacts

For additional information or to learn more about the laws in your own state, please contact your EPA Regional Coordinator or State or Tribal DrinkingWater Primacy Agency.

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Tribal Contacts

For additional information or to learn more about the laws governing your tribe, use the contact information provided below.

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Appendix B: Sources of Financial Assistance to Drinking Water Systems

System improvements can be funded by raising rates and obtaining loans or grants. The table below provides information on some programs that may providefinancial assistance to help you maintain assets in good condition, replace deteriorated assets that have outlived their useful lives, and continue to provide safe andsecure drinking water to your customers. Consult your State or Regional Tribal Drinking Water Primacy Agency for additional information.

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Before you apply for funding, find out what each source will pay for and what information it will need to consider in your application. Ask about local matchingfund requirements, application procedures, what makes a project “fundable,” and special program requirements and restrictions. Ask to see applications frompreviously funded projects. Get an idea of what information is required for an application; most lending and granting agencies will want to see financial statementssuch as budgets, income statements, and cash flow documents.

42

Computer Programs

CAPFinance. The Environmental Finance Center at Boise State Universityhas developed an easy-to-use computer program to help water systemsinventory their assets and analyze funding options for rehabilitation andreplacement of assets. For more information or to order a copy, call (208)426-1567 or visit Boise State’s website at http://sspa.boisestate.edu/efc/services.htm.

Show-me Water Ratemaker. The Missouri Department of Natural Resourceshas developed software to help water systems set rates. To obtain a freecopy visit www.dnr.state.mo/us/oac/Ratemakerbrochure.pdf or call (800)361-4827.

Documents

A Guidebook of Financial Tools, produced by the Environmental FinancialAdvisory Board and the Environmental Finance Center Network, is availablein PDF format at www.epa.gov/efinpage/guidbkpdf.htm. It is also availableby e-mailing [email protected] or by calling (800) 490-9198.

Financial Accounting Guide for Small Water Utilities, by Michael D. Peroo,1997, Kansas Rural Water Association. This document is available from theNational Drinking Water Clearinghouse at West Virginia University, (800)624-8301.

Asset Management: A Handbook for Small Water Systems (EPA 816-R-03-016) and Strategic Planning: A Handbook for Small Water Systems (EPA816-R-03-015), part of EPA’s Simple Tools for Effective Performance(STEP) Guide Series. These documents are available from EPA’s SmallSystems Information and Guidance Web site (www.epa.gov/safewater/smallsys/ssinfo.htm) and by calling the Safe Drinking Water Hotline at (800)426-4791 and requesting the guides by document number.

Sources of Technical and Financial Assistance for Small Drinking Water

Systems (EPA 816-K-02-005). This document is available from EPA’s SmallSystems Information and Guiance Web site (http://www.epa.gov/safewater/smallsys/pdfs/tfa_sdws.pdf) and by calling the Safe Drinking Water Hotlineat (800) 426-4791 and requesting document EPA 816-K-02-005.

Other Organizations

The Safe Drinking Water Act Primacy Agency in your state (see AppendixA for a list of contact information)

EPA’s Environmental Finance Program provides financial and technicalassistance to water systems and other regulated entities. Visitwww.epa.gov/efinpage/ or call (202) 564-4994 for more information aboutthe program, for access to the program’s publications, and to reach theEnvironmental Finance Center network.

U.S. EPA Safe Drinking Water Hotline, (800) 426-4791

National Rural Water Association, (580) 252-0629, www.nrwa.org

Rural Community Assistance Partnership, (888) 321-7227, www.rcap.org

American Water Works Association, (303) 794-7711, www.awwa.org

Manufactured Housing Institute, (703) 558-0400,www.manufacturedhousing.org

Appendix C: Sources for More Information on Asset Management

A Simple Asset Inventory for Very Small Drinking Water …A Simple Asset Inventory for Very Small...

Documents

Transcript of A Simple Asset Inventory for Very Small Drinking Water …A Simple Asset Inventory for Very Small...