I was catching up on the news here in New Zealand this evening, and on our online news sites was this article about a major water main break in Los Angeles that has flooded UCLA, including a recently refurbished stadium, and forced the shutdown of Sunset Boulevard.
An estimated 8 million gallons have flowed from a burst 30-inch, 93-year-old pipe riveted steel high-pressure pipe. The article stated that the city is on a 300-year replacement cycle for main lines.
Having been involved personally in local problems of a similar scale for the communities I was working in, my professional sympathy is extended to the infrastructure managers involved in this incident. It would be fair to say they are not having a good day, week or month as a result of this break, and the subsequent damage.
One of the questions that are often asked about infrastructure asset management is, ‘What is the return on investment?‘
Counting the cost of unplanned infrastructure failure
An incident like this demonstrates the risk cost incurred when major assets experience unplanned failure.
From my experience, the direct costs associated with this failure will be at least three times, and in this particular incident given the University and Stadium damage – probably many multiples more again, than a planned shutdown and repair.
The additional costs come from the direct costs associated with the shutdown, repair, and third-party damage associated with the incident, and also emergency services costs, road diversions, emergency traffic management and road repair costs.
Clearly, there is also a range of legal and insurance considerations that will also add to the costs of the incident.
Indirect costs, often not considered the infrastructure asset management ROI question, include:
- costs associated with the post incident investigation,
- peer reviews of reports,
- political oversight and interface,
- media relations,
- communication etc.
These can involve major diversion of internal resources in dealing with and managing the incident and may need to follow up actions. This resource diversion means other important projects will be losing resource for this period.
Depending on the type incident the loss of trust with your governance/council/board can be devastating and have major long-term organizational consequences.
The importance of infrastructure asset management
Well executed infrastructure asset management provides the ability to improve the management of utility networks, and to understand, quantify, manage and over time mitigate the risks associated with the unplanned failure of major assets.
This does not mean you will not have an unplanned failure of major assets – that can still happen.
Our experience is that infrastructure asset management provides a much better understanding of your risks, and development of optimal intervention strategies, which in time works to mitigate the likelihood of such failures.
Your governance and senior managers can be advised of the level of risk, and the true risk costs associated with current practices, and asset replacement cycles. Informed decisions can then be made about the required long-term level of investment, and investment priorities.
You don’t need too many incidents like this one that has just happened in Los Angeles to fund an effective infrastructure asset management program – that will give you a long-term and sustained return on investment.
If you want to know the answer to the ROI question then do the math.
Calculate what one or two major pipeline unplanned failures would cost you – working on a 3-6 multiplier on your usual planned repair costs.
Then work out what you could achieve with an infrastructure asset management program with those funds.
You might be surprised at the result.
PHOTO CREDIT: Mail Online