By Paul Marsh and Meredith Kennedy for Trilogics Technologies, Inc.

The Scorecard Concept

An infrastructure scorecard is a valuable tool for an asset manager to determine whether or not an asset is delivering more revenue over the term of its service life that it costs. Understanding whether a particular asset is a winner or a loser is valuable from a planning perspective as it allows operators to move away from focusing on age as an asset’s defining attribute for assessment.

For example, consider a cast iron water main with a design life of 50 years that was put into service in 1936. For every year past 1986, this pipe has been delivering revenue into the reserve fund as the asset has already been fully depreciated. The scorecard would show this asset as a winner for every year that this water main continues to provide reliable service beyond its design life.

Consider then another pipe commissioned into service in 1968. This pipe had its first failure in 1992, a second failure in 2002 and has been scheduled for replacement in 2007. The scorecard results for this asset are not good. Not only did this pipe only deliver 65 percent of its design life, it incurred costs associated with two unplanned operating events.

These examples show that older assets should not necessarily be replaced solely because they have reached their design life. It is not the age that matters; it is the reliability of quality service.

The infrastructure scorecard provides a comparison of planned versus actual cost of asset ownership. Using this approach, it is possible to determine scores for all of a facility’s assets. Statistics can then be used to determine trends and provides important information on balancing risks and annual budgets. For instance, when a histogram is produced for the scores for all sand cast iron water mains and compared to one for all spun cast iron water mains, it may be evident that the older sand cast mains on average did better on their scores than the spun cast mains. From this statistical fact for a single system, it could be predicted then that there is a certain probability that all spun cast iron water mains are more likely to score worse than sand cast iron water mains. Thus, a capital renewal program that targeted the replacement of the less reliable lower scoring spun cast iron water mains would improve the overall score of all the assets.

Scorecards and Maintenance

This scorecard approach is also a tool for asset maintenance planning, particularly for identifying maintenance gaps.  A base case can be developed for each type of asset, by collecting all planned maintenance costs. The scorecard compares this base case to the actual maintenance costs and operations costs incurred in the event of asset failure. These costs can be accurately captured using Asset Based Tracking, a technique which tracks an activity code for all operating and maintenance costs for each asset and provides monthly comparisons against budgets. All that is required is for each person who completes a work order to ensure the asset, time, equipment and materials are assigned the correct activity code. This used to require considerable effort on the part of work staff; modern IT systems have made tracking these costs much easier.

By comparing planned versus actual maintenance it is possible to evaluate the effectiveness of a maintenance plan. If assets are failing then either the right amount of maintenance is not being performed or the planned maintenance was not achieved. Reliability Centered Maintenance, or RCM, which uses statistical analysis of maintenance practices can be used to determine the optimum level of maintenance. Using RCM to ensure reliability may lower a utility’s maintenance costs and may also lower operating costs. This sets a sliding scale, as reliability improves, maintenance costs increase. Conversely as reliability degrades, maintenance costs and effort decreases while we expect an increase in operating costs.

Scorecards as a Communication Tool

Finally, infrastructure scorecards are a valuable communication tool between elected officials, professional engineers and asset managers. The scorecard provides infrastructure information that can be easily appreciated by elected officials as they are typically familiar with the basic accounting concepts of capital, operating and maintenance costs and depreciation. However, the scorecard is a reflection of both past successes and failures, so a first requirement is a willingness to “publish” historical failures as well as successes. This requires an atmosphere of objective critical analysis that focuses on asset reliability and not assigning personal responsibility for past mistakes.

In the end, the scorecard method and associated statistics balance the risk of asset failure against annual budgets of capital, operating and maintenance. It provides a way to make decisions about risk that are repeatable, defensible, and understandable. The infrastructure scorecard helps the asset manager to engage in a productive dialogue, with politicians and the public, about what risk of service failure we are prepared to live with and what level of service we are prepared to pay for.

For more information, contact Paul Marsh for Trilogics Technologies, Inc. at 647. 258.3133 or email paul.marsh@trilogics.com.