Introduction to Asset Management Gordon Sparks, Ph.D. Professor - PowerPoint PPT Presentation

Introduction to Asset Management Gordon Sparks, Ph.D. Professor Emeritus, Civil Engineering University of Saskatchewan Technical Advisor, AM-SK

What is Asset Management?

Infrastructure Asset Management : - Is Asset Management focusing on infrastructure , rather than financial assets. - Asset Class for todays discussion - Bridges

 Infrastructure Asset Management is:  The planning related to determining what is required in terms of activities and costs to:  Create  Operate  Maintain  Renew, and  Dispose, Of a infrastructure asset so it provides the Desired Level of Service .

A Lifecycle Forecast for Infrastructure Assets includes activities & Costs related to: – Create – Operate – Maintain – Renew – Dispose

An Asset Management Plan:  “Documents”  Life Cycle Activities & Costs required so they provide the “ Desired Level of Service ”

The Asset Management Plan: - Provides the “Information” required for: - “ Informed Discussions ” - Which leads to: - “ Informed Decisions ”

Asset Management Plans Link to other Planning Activities

Example Asset Management Plan Version 1.0 November 2018

Table of Contents 1.1 The Purpose of the Plan 1.2 Asset Description 1.3 Levels of Service 1.4 Future Demand 1.5 Lifecycle Management Plan 1.6 Financial Summary

Pulling It Altogether Output of an Asset Management Plan

What We Cannot Do! - The Long Term Financial Plan will also identify what infrastructure / services we do not currently have enough funding to sustain at the desired standard going forward

Managing the Risks Are present funding levels sufficient to continue to manage risks in the medium term? The main risks and consequences are for example: - extreme weather events - flooding - ???

1.7 Asset Management Systems are a combination of: - Information / Technology / Software • Financial Accounting • Asset Register • Analysis • Life Cycle Costing • Teams • Administration • Finance • Public Works • Political Leaders

Monitoring and Improvement Program • Formally develop and implement a Continuous Improvement Plan for Asset Management. • Review and update the asset useful lives and current replacement costs in the Asset Register. • Develop a Plan for Capital Renewals and Upgrades. • Review Risks and Develop a Risk Management Plan. • Develop Customer and Technical Levels of Service.

Topic of Today’s Discussion: - Developing Asset Management Plans for Rural Bridges

Challenge:  1468 Rural Bridges  Predominately Treated Timber structures  85.6% Timber (1256)  7.8% concrete (114)  6.6% Steel/concrete (98)  Useful Service Life  Highly Variable  Assume - 50 to 60 years

Rural Bridges - Saskatchewan

Roads Class 5 and Better – Bridges Restricted

Roads Class 5 and Better – Bridges Poor

Roads Class 5 and Better – Bridges Fair

Roads Class 5 and Better – Bridges Good

Road Classes 6 & 7 – Bridges Fair, Poor, Restricted

So Major Challenge: - the “Sustainability” of the Rural Bridges! So “what” Could & Should be Done! - Clear need for an - Asset Management Plan for Rural Bridges

Rural Bridges 50 Years + 250 Number by Age 771 Bridges 52% 200 1468 Bridges in Total 150 100 50 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 75+ Age - Years

Rural Bridges Number by Age 60 Years + 250 488 Bridges 33% 200 150 100 50 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 75+ Age – Years

Rural Bridges Number by Age 250 200 70 Years + 145 Bridges 10% 150 100 50 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 75+ Age - Years

Cost to Replace a Rural Bridge  Range from $300,000 - $1,300,000  Assuming average $600K  145 bridges 70+ years - $87 million to replace  488 bridges 60+ years - $292 million to replace  771 bridges 50+ years - $421 million to replace Current Rate of Bridge Replacement - in the order of 5 bridges/yr. - 5 x $600,000 = $3 million/yr.

- Conclusion: - Rural Bridges are not “sustainable” at current funding level of $3 million/yr. -

Options: - Access more funding to sustain All Bridges - All Road Classes - 488 bridges 60+ yrs replaced over 10 yrs = 50 Bridges/yr. - 50 x $600,000 Bridge = $30 million/yr.

 Minimal Option:  Priority/Focus on Timber Bridges on Class 5+ Roads  Restrict & Close Bridges on Class 6 &7 Roads as required with time.  “ Minimal Option ” – not acceptable – but order of magnitude of absolute minimum funding required “Going Forward”.

Class 5+ - 339 Treated Timber Bridges  130 Bridges built 1962 – 1971 therefore 47 to 56 yrs. old  Assuming 130 Bridges replaced over next 10 years = 13 Bridges /yr.  Average Cost/ Bridge on Class 5+ = $800,000/bridge  13 Bridges/yr . x $800,000 = $10.4 million/yr.  $10.4 million/yr. – Minimal Option

 Summary - Current Funding for Rural Bridge - 5 bridges/ yr. $3 million/ yr. - replacement rate – Bridges unsustainable! - Funding Level Required to Sustain All Bridges on all Class of Roads - 50 Bridges/yr. - $30 million/yr - Minimal Funding – Sustain only Bridges on Class 5+ Roads - 13 Bridges per yr. - $10.4 million/yr.

What Is Required?  Develop “Credible” Asset Management Plan for all Bridges.  Address the question:  Are there bridges that are “no longer” needed going forward?  Are there bridges that the “costs” for the service provided can not be justified?

Another Issue:  How is “Inter – Generational Equity” going to be addressed?  Those using the bridges over the next 50 years should each pay their share.  Folks today should not have to bear the financial burden of the cost of replacing a bridge that will serve folks for the next 50+ years.  Option – Finance the Bridge over Time Going Forward

Cost to Replace a Bridge – Annualized - $600,000 at 4% over 50 years - Annual Cost (A/P ,I,N) = $600,000 x (A/$600,000, 4%, 50yrs) = $600,000 x .04655 = $27,930/yr -

$600,000 at 3% 0ver 50 years = $600,000 x .03887 = $23,322/yr - $600,000 at 2% over 50 years = $600,000 x .03182 = $19,092/yr

Summary  The Capital Costs of $600,000 for a Bridge  Translates into in the order of $24,000/yr.  $2000/month/bridge!  Capital Costs only

Costs in the order $2000/month per Bridge = $2000/month / 30 days/month = $67/day Average Daily Traffic = 10 vehicles =$6.70/vehicle

Vehicles/day (ADT) Cost/vehicle/crossing 10 = $6.70/vehicle 20 = $3.35/vehicle 40 = $1.67/vehicle 50 = $1.34/vehicle 100 = $.67/vehicle

So Major Challenge: - regarding the “Sustainability” of the Rural Bridges! So “what” Could & Should be Done!

1) N eed for a “ Transportation Network Plan ” to determine: - Which Bridges are “Required” Going Forward ? - Which Bridges can be “decommissioned”? - Economic considerations - Social considerations 2) Asset Management Plans for all Bridges

Example: Transporation Network Plan

2 Cars x 2 miles x $.60/mile = $2.40/day 1 Truck/day x 2 miles x $1/mile = $2.00/day Total $4.40/day x 365 days/yr = $1606/year $150,000 to replace bridge – 75 yr Life = $2000/yr at 0% 2 Mile Detour 2 Cars 1 Truck / Day

2) Asset Management Plans for All Bridges

Life Cycle Costs

Foundation of Asset Management Plans:  Asset Registers  An inventory of infrastructure assets

Asset Register: Excel Spreadsheet Useful Life Replacement Cost Year Constructed

Output: Asset Management Plan

An Asset Management Plan:  “Documents” the information / data related to infrastructure assets, and thus supports:  “Informed Discussions” , and  “Informed Decisions”

Next Steps: Developing AMP For Bridges  Build on Existing Bridge Inspection Program  Inspection Program – Assesses “Condition” of Bridges ever 3 years  Add development of Feasible “Maintenance, Repair, Rehabilitation, Replace, Decommission, Alternatives for each Bridge.  Add “Life Cycle Costing Analysis” of M &R etc. Alternatives for each Bridge and select a “Costs/Effective” M & R etc. Strategy for each Bridge – document in Asset Management Plans for each Bridge.  Integrate individual AMP’s for each Bridge together into a “Bridge Network Management Plan & Long Term Financial Plan”.

1) Transportation Network Plan 2) Asset Management Plans for each Bridge. 3) Bridge Network Management Plan & Long Term Finance Plan Will Support:  “Informed Discussions ”, and  “ Informed Decisions ”  Maximize “ Back for the Buck ”!

Topics for Further Discussion: “Innovation” in Bridge Replacement  Large Diameter Culverts  Modular Bridges  Prefabricated Fiberglass Composites  Etc.

Concept Design: Culvert Bridge