Utility Management Challenges for the 21 st Century: Managing in an Era of Uncertainty April 2009 Uncertainty Challenges l Economy: What Does the Future Hold l Demand and Supply Forecasting l Infrastructure Repair and Replacement l Climate Change/Variability l Finances/Rates/Affordability l Workforce Challenges Asset Management as a Framework to Address Uncertainty “Meeting agreed customer and environmental service levels while minimizing life cycle costs”. To Become an Asset Management Based Organization You Need To Address 1. Customer and environmental service levels 2. Risk assessment and quantification 3. Life Cycle costs analysis using triple bottom line 4. Long Range Planning 5. Asset and data systems 6. Rational Rates and Affordability 7. Clarity of Organizational Roles and Responsibilities 8. Formal Capital Decision Making Processes 9. Track and Measure Results 10. Benchmarking Customer Service Levels and Performance Indicators l Find out from customers what services are most important to them l Set service levels and make investments needed to meet them-now and into the future l Establish and measure performance indicators Wastewater Service Levels Category Category Service Level Service Level Performance Indicators Performance Indicators Effective Effective Conveyance Conveyance (SSO sewer (SSO sewer backups) backups) By 2020, no more than one By 2020, no more than one sewer backup in 5 years, on sewer backup in 5 years, on average, at any location, average, at any location, caused by a problem with the caused by a problem with the SPU sewer system. SPU sewer system. Number of annual Number of annual SSOs SSOs as reported by as reported by location. location. Wet Weather Wet Weather Combined Sewer Combined Sewer Overflows Overflows By 2020, By 2020, CSOs CSOs shall be limited shall be limited to an average of one untreated to an average of one untreated discharge per CSO per site per discharge per CSO per site per year. year. Number of precipitation Number of precipitation - - related CSO related CSO events per CSO site per year. events per CSO site per year. Dry Weather Dry Weather Combined Sewer Combined Sewer Overflows Overflows No dry weather No dry weather CSOs CSOs are are currently allowed by regulation. currently allowed by regulation. Number of total dry weather CSO Number of total dry weather CSO events per year in events per year in SPU SPU ’ ’ s s system. system. Problem Problem Response Response SPU shall respond quickly and SPU shall respond quickly and effectively to problems with effectively to problems with potential health consequences. potential health consequences.   80% of high priority sewer 80% of high priority sewer backup/overflow problems responded backup/overflow problems responded to within 1 hour. to within 1 hour.   80% of high priority sewer 80% of high priority sewer backup/overflow problems have service backup/overflow problems have service reinstated within 6 hours. reinstated within 6 hours. Performance Indicators YTD Backups in City System 0 50 100 150 JF MAMJ JASOND   2007 Actuals Target Maximum 2008 Actuals Performance Indicators % DWW Emergency Responses Within Targeted Time 0% 50% 100% Target Min = 80% November 2006 January 2008   Performance Indicators Customers With Water Outages > 4 Hours Cum ulative ly 0 1000 2000 3000 4000 5000 6000 7000 8000 JF MAMJ J ASOND # customer s Monthly A c tual Cumulative A c tual Cumulative Target Max   Performance Indicators % Drinking Water Emergency Responses Within Targeted Times 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% JF MAMJ JASOND % Compliance Target Min   Performance Indicators Repeat Misses per 10,000 Stops for Can Service 0.00 1.00 2.00 3.00 2006 2007 2008 WMI USD Target Max   Performance Indicators Sick Leave as % of Total Hours Worked 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Q1 Q2 Q3 Q4 Actual 2005 Dept Actuals Target Max   Risk Assessment l Understand your highest risk activities l Understand the likelihood and consequences of failure of your assets l Manage based on risk cost and the cost to mitigate risk l Reduce asset risk through capital investments or changed maintenance practices and response protocols 1. Define failure. 1. Define failure. Consequence Consequence of of Failure Failure 3. Determine Risk 3. Determine Risk … … Risk Risk Cost Cost = = Likelihood Likelihood of of Failure Failure x x 2. Collect and analyze data. 2. Collect and analyze data. Risk Assessment RISK SIGNATURE LEVEL DETERMINANT Likelihood Insignificant Minor Moderate Major Extreme Almost certain MMHCC Likely MMHCC Possible LMMHH Unlikely LLMHH Rare L L MMM Consequence Risk Categories include: u Asset and service reliability u Environment and public health u Financial u Legal u Public Trust u Regulatory u Safety u Security u Workforce Corporate Risk Management Corporate Risk Management An Example: Water Conservation Policy An Example: Water Conservation Policy Alternative Conservation Baseline Strategies Description and Performance Measure Public Trust Risk Regulatory Risk Asset and Service Reliability Risk Legal Risk Environmental Risk Workforce Risk Financial Risk Public Health Do Nothing No messa g in g or incentives. No performance measure. Awareness Campaign Messaging; no incentives. Less intense than 1% program. Customer survey to assess effectiveness. Results estimated <.3 MGD annual savings. Program to Shave Peak Investment Variable Less intense than 1% program. Set performance goal for peak season. Results could range from <.3 5 MGD peak season savings. Low Intensity Program / Investment Less intense than 1% program. Set performance goal on per capita demand. Results could be in range of .7 MGD annual savings. Medium Intensity Program / Investment Similar intensity to 1% program. Set performance goal to keep demand flat. Results could range from 1-1.5 MGD annual savings. High Intensity Program / Investment Intensity estimated to be greater than 1% program. Set performance goal to reduce total demand. Results could be above 1.5 MGD annual savings. Asset Risk Assessment An Example: Sewer Pipes An Example: Sewer Pipes Risk is Minimized by Risk is Minimized by Concentrating Limited Concentrating Limited Resources on Sewer Pipes Resources on Sewer Pipes with the Highest Risk Cost of with the Highest Risk Cost of Failure Failure 0.0000 0.0050 0.0100 0.0150 0.0200 0.0250 0 102030405060708090100 Years Since Installation Probability of First Failure Occuring in Given Year Asset Risk Assessment Asset Risk Assessment Asset Risk Assessment [...]... 19 80 Complan Forecast Medium-Low 19 85 Complan Forecast-Medium 19 93 WSP Forecast 19 97 Revised Forecast 20 01 WSP Forecast 280 260 Annual MGD 240 220 2003 Official Forecast 2006 Draft Forecast 200 18 0 16 0 14 0 12 0 10 0 80 60 40 20 0 19 50 19 55 19 60 19 65 19 70 19 75 19 80 19 85 19 90 19 95 2000 2005 2 010 2 015 2020 ... demand forecasting is as soon as we do a new forecast it is wrong! Demand forecasting is both art and science Demand forecasting needs to be dynamic (i.e updated frequently) Actual Water Demand and Past Forecasts 360 340 Actual Annual 19 67 SWD Forecast 19 73 RIBCO Forecast 320 300 19 80 Complan Forecast Medium 19 80 Complan Forecast Medium-Low 19 85 Complan Forecast-Medium 19 93 WSP Forecast 19 97 Revised Forecast . Forecasts 0 20 40 60 80 10 0 12 0 14 0 16 0 18 0 200 220 240 260 280 300 320 340 360 19 50 19 55 19 60 19 65 19 70 19 75 19 80 19 85 19 90 19 95 2000 2005 2 010 2 015 2020 Annual MGD Actual Annual 19 67 SWD Forecast 19 73. Forecast 19 73 RIBCO Forecast 19 80 Complan Forecast Medium 19 80 Complan Forecast Medium-Low 19 85 Complan Forecast-Medium 19 93 WSP Forecast 19 97 Revised Forecast 20 01 WSP Forecast 2003 Official Forecast 2006. Utility Management Challenges for the 21 st Century: Managing in an Era of Uncertainty April 2009 Uncertainty Challenges l Economy: What Does the Future Hold l Demand and Supply Forecasting l