The national funding gap between water and sewer infrastructure needs and spending is approximately $26 billion per year, according to a Water Infrastructure Network report published in 2000. For most communities, the wastewater collection system is the most valuable public asset, although it is often given a lower priority than other capital projects, especially during tight fiscal years. The average public utility rehabilitates less than 0.5 percent of their sewer system annually, which results in a system replacement period of more than 200 years. Because most pipe materials have a design life of 50 to 100 years, however, the average age and condition of our underground infrastructure are getting worse, not better.
To reverse this trend, utility managers must build and present a business case to show that funding infrastructure rehabilitation is a sound and necessary financial decision that will benefit customers and, ultimately, save money.
In many cases, funding levels and priorities for infrastructure rehabilitation have been based on rules of thumb, operator knowledge, and "seat-of-the-pants" understanding of system needs. While these are often reasonable approaches to short-term decision-making, they typically fail in the long term because:
-
Proposed budgets based on rules of thumb cannot withstand high-level scrutiny during budget-cutting times;
-
Staff turnover results in a lost knowledge base to support decisions; and
-
Undocumented assumptions cannot be tested and confirmed to demonstrate beneficial results and improve the decision-making process in the future.
To present a business case for infrastructure rehabilitation, functional objectives must be defined and a financial analysis conducted to demonstrate the savings that rehabilitation achieves within each of these functions. For example, a typical rehabilitation program would include three primary objectives:
-
Restoring capacity or keeping assets functioning at their full, original capacity. Examples include removing sediment or debris and reducing infiltration and inflow.
-
Repairing structural damage and failures in the system due to wear, corrosion, age, and/or construction-related damage. These repairs reduce the risk of system failures that could interrupt service, inconvenience the community, and increase costs as compared to scheduled maintenance and repairs.
-
Reducing maintenance needs by repairing portions of the system subject to repeated maintenance problems. Examples in a wastewater collection system are the repair of root intrusion, offset joints, pipe sags, improper service connections, and other system deficiencies that typically lead to recurring problems for system operators.
By defining these functional objectives, utility managers are able to develop specific criteria and priorities and measure the success of the objective. Further, financial analyses will demonstrate returns on infrastructure investments. These calculations provide a mechanism to defend proposed funding levels and present the business case for increasing maintenance, repair, and replacement investments. An analysis approach, coupled with condition assessment information needed to support these objectives, improves and documents infrastructure priorities for decision makers. Lastly, and possibly most importantly, the resulting benefits from investments in a maintenance, repair, and replacement program must be quantified and documented. Documentation is essential to defending the need for funding on an annual, recurring basis so the long-term success of the program is realized.
Wayne Miles is a vice president who leads CDM's infrastructure rehabilitation services group.
Joe Ridge is a vice president and economist with more than 20 years of experience in evaluating utility financial matters.