Optimizing Infrastructure Investments Using the Triple Bottom Line Approach

By Rod Lovely

A major water main break is a costly lesson to utilities, government funding entities and the community about the high social, environmental and economic costs that can be incurred from aging infrastructure. Beyond the terrible loss of millions of gallons of water, a break can cause considerable damage to roadways, structures and property as well as trigger traffic delays and other disruptions to people’s livelihood. These are the triple bottom line costs that we must consider when planning our infrastructure investments.

Virtually every municipality in America is faced with finding a way to cost-effectively meet customer needs with increasingly limited dollars. It’s a difficult challenge to optimize and prioritize cost effective maintenance, rehab and replacement of a complex system of pipes, plants and mains that are 50-100 years old in a sustainable manner. A growing number of utilities are adopting an asset management approach to address their aging infrastructure and the associated triple bottom line costs that must be considered when planning infrastructure investments.

Failure, Costs and Risk

Every agency inherently understands that a ‘we’ll fix it when it breaks’ approach costs substantially more than a planned replacement strategy focused on minimizing lifecycle costs. Of course, they would also like to have the clairvoyance to schedule a replacement immediately prior to a costly failure. Imagine the cost savings if we could plan for the rehabilitation of every water pipe the day before it fails! 

While this level of planning may not be possible for every asset, agencies can use the power of statistics to assign the likelihood of failure by comparing performance and condition measures with historical values.

Likelihood of failure data allows us to create deterioration curves and improve the accuracy of predicting the likely end of life for assets. It also allows us to develop maintenance strategies to extend an asset’s life. When this strategy is applied across the entire asset portfolio, savings are realized.

We can also assess the social, economic and environmental (triple bottom line) costs that would occur if an asset failed.  For example, a water main that supplies a health care facility and supporting businesses would be rated critical because there are tremendous costs at stake in terms of social value of the health care facility, the economic value of the businesses and environmental value that would be lost with a system failure.    

By combining the likelihood of failure and the triple bottom line costs, we can determine the risk cost for each asset, and subsequently, prioritize maintenance and capital improvement projects by focusing first on the assets with the highest risk costs.  Furthermore, for large projects with multiple alternatives, we can determine the best solution by comparing the triple bottom line benefits to the community for each alternative over the lifecycle of the system. 

An Optimized Strategy

According to the Environmental Protection Agency, the five core questions of asset management were created to help organizations initiate a management approach that uses asset information and levels of service benchmarks to minimize the likelihood of failures that are most costly to the community served. Addressing these questions enables agencies to optimize investment strategies that take into account the value that assets contribute to the social, economic and environmental welfare of the community.

1. What is the current state of the assets?
2. What are the desired Levels of Service?
3. Which assets are critical to sustained performance?
4. What are the best O&M and CIP investment strategies to minimize triple bottom line costs and maximize benefits?
5. What is our best long term funding strategy?

Finally, all agencies that manage aging infrastructure take their responsibility very seriously and work hard to maintain assets while planning for the future.  Short-term politics often make it difficult to plan long-term strategies. To realize a sustainable future that avoids costly failures, agencies need support from our community leaders to implement asset management strategies that preserve the value our infrastructure contributes to the social, economic, and environmental fabric of our communities.

Roderick (Rod) Lovely, a principal professional at Kleinfelder, has over 25 years of experience in the field of infrastructure asset management and supporting technologies. He can be reached at RLovely@kleinfelder.com.

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