case studies
asset managementStrategic Asset Management of a Watermain Network
Background
- The client is a Canadian water utility that manages both a watermain and sanitary sewer network, using only revenue from a water fee.
- The aim of the project was to help the utility rationalize to city council and regulators why it was necessary for them to increase the unit cost of water at a rate approaching 8% per annum. The utility also wanted to know its impact on water consumption and revenues.
- The utility wanted to develop pay-as-you-go, borrowing, or capital reserving financial strategies that would yield a least life-cycle cost for managing the system.
Approach & Scope of Work
- Appropriate strategic-level policy levers were developed to simulate the financial strategies.
- A unit cost analysis was conducted on available tender-bid documents to assess inflation in capital expenses.
Outcome
- All three scenarios (pay-as-you-go, borrowing, and capital reserving) achieve the objective of no more than 5% of the network’s length being +75 years old over 100-year simulation period.
- All three scenarios have identical capital expenditures, although these expenditures are accomplished at different times in 100-year period.
- Capital reserving has lowest cumulative total expenses.
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