Introduction to Water Infrastructure Asset Management - Global Drinking Water Management and Conservation - page 146

Chapter 7
Introduction to Water Infrastructure
Asset Management

7.1 Introduction

A water utility typically has a large amount of physical assets made up of water
treatment plants, pumping stations, reservoirs, and a network of distribution pipes.
All these assets need to be used carefully and maintained for optimum performance.
This requires an adequate inventory of all assets, including additions and scrapping
and replacement of worn-out assets. This chapter reviews the key requirements of
proper management of all these assets. In addition, we present a Decision Support
System (DSS) that determines the number of years an asset must be used in order to
minimize costs, when costs are considered over an in

nite horizon. This DSS is

presented in two forms: discrete and continuous time.
The second section of this chapter integrates the element of risk into the DSS in
both discrete and continuous time. Risk is integrated in an abstract fashion in order
to provide flexibility, as a municipality may decide to consider some risks and not

others. It includes a brief discussion on the makeup of risk and the way in which
different risk elements can be combined to introduce overall risk for a utility.
Great Britain was among the

first countries to plan for municipal asset man-
agement. Privatization of water services in the 1980s resulted in the development of
detailed asset management plans by these utilities. New Zealand, Australia, and the
United States have also adopted accounting practices with respect to infrastructure
in the late 1990s. Canada has also adopted modern accounting practices for
infrastructure, including full cost recovery and depreciation, as opposed to charging
all capital costs in the year in which they occurred.