Heather stressed the importance of understanding the terminology in the asset management industry so that everybody will be on the same page when terms like “asset management,” “managing assets,” “O & M as an investment” are mentioned.
Ross then discussed the planning cycle, citing their experience in New Zealand.
Yes, and just sort of coming back to this thought about balancing off the, either building new assets or repairing them or operating and maintaining them, coming back to that discussion about changing standards over time particularly the environmental and or quality and safety standards.
One of the things that have been happening in New Zealand, bearing in mind we’ve been doing asset management for 20 plus years now, there’s a natural temptation, when you got a significant upgrade program for treatment plant coming along, to push it out a little bit in the planning cycles so that it doesn’t skew the numbers and scare everybody.
So originally, we have a three-year political cycle in New Zealand, so ten years of straight political cycles will be like a 12-year of the sort of planning for you, for here.
And people would always put stuff in their third annual year, say the year after, that really ‘scary’ stuff. And now the regulators of ours, a federal government have gotten a little bit wise to that.
Now they’re saying hey, you have to go out 30 years, say ten political cycles, in your case it would be 40 years here in the US. So, it’s a bit harder to hide the stuff.
But one of the things is, if you’ve got a substantial environmental standard related upgrade coming out at year 30 or 40, that can change the way you are going to configure your networks to make that and other works. And that can then have impacts on your rehabilitation replacement programs and/or your operations and maintenance.
You’ve got to operate and maintain things, but you might choose to sequence the work a little bit differently to get everything ready for that change.
So, we’ve got coastal erosion on some of our coasts. So, one of my clients has got a big wastewater treatment plant that’s actually could be inundated within 30 years through coastal erosion and a bit of sea-level rise.
And so, the conversation we’re starting to have is, well, do we put into the planning that we’re going to have a hundred-million-dollar replacement of this plant, and we’re going to move it. If we are going to move it, what’s it going to do with the rest of the system?
And it’s excellent to have those sorts of conversations early because otherwise, you could end up doing a whole lot of asset replacement to a plant that isn’t going to be there in 20 years.
And it’s getting that bigger picture planning going that helps them form your shorter term, say three to ten years decision-making.