In the previous post (Most Important Actions in Tracking Life Cycle Cost of Assets), Heather stressed the importance of tracking cost at a minimum on a component basis.
Explaining further, Ross provided a concrete example.
And of course, what Heather has been describing presupposes that you have an asset inventory of some descriptions that allows you to hold that data as you’re collecting it against that level of the component.
Just as Heather was describing that I was remembering a client of mine. They had a lot of old cast iron pipes.
For some reason best known to themselves as a municipality, they had galvanized irons service feeds into their houses.
They started splitting it up so they could track the cost just as Heather described and found out that these galvanized pipes are just costing them a fortune.
They were corroding, they were blocking up, they were splitting, they were pin-holing, any possible problem you could ever have with a metal pipe they were getting with those pipes.
So for a couple of years, they track those numbers and it’s just the maintenance cost were out of all proportions for the lengths of pipe.
So they went back to, in their case, their council not a commission.
So they went back to the council and they said, “Look we’re just spending far too much money on these galvanized pipes and we’ve done the math on a big replacement program. Within five years, we’re just going to get that money straight back again.
They had a lot of trouble getting the extra money for the replacement. But when you get really good math like that, everybody just looks and says, “Well, hey do it!”
So they raised a loan I think in their case and go on and over back in the next 5 years replaced or swapped all those pipes out with new pipes and the maintenance cost after that will really quite low.
Everyone was pretty happy because when your service lines are blocking or breaking all the time, people around the water, they get grumpy.
When you got pipes that are effectively rusting from the inside you’re getting a lot of staining with the washing and things like that.
The households were really happy when that was all fixed up. The main lines were fine, the cast iron pipes. It’s just the service lines that had problems.
And until they had collected that kind of information they just don’t know what they’re dealing with.
So, once they had that information the path forward was very very clear, particularly in terms of getting a lower total cost over perhaps a decade.