Asset Management – Tracking Life Cycle Cost of Assets

Here’s another question from a participant and Heather’s answer.

If the utility wants to start tracking the minimum life cycle cost for their assets, what are the most important actions they should be taking to do so?

Heather:

I would say one of the most important and it is something we see over and over and over again, is that people are not tracking cost on a per asset basis or even on a per-component basis.

So if you wanted to break your system up into, say, you have two pump stations, three wells, some pipes, something like that, the cost of a couple of tanks, the costs aren’t even broken down by tanks, by wells, by pumps.

Generally speaking, you’ll see your operation and maintenance cost, just in a big lump. And people might know I’ve spent $20,000 last year but they have no idea if that 20,000 was spent on pipes or pumps or wells or whatever.

So a lot of times, we don’t have costs that are broken down so we can see what people have actually done. Without that kind of detail, it’s really hard to make decisions about:

• How much have I spent on a pump over time?
• How much have I spent on a well?
• Is there one pump that’s causing most of the maintenance?

Meaning that one might need or maybe that leans towards a replacement. Whereas my other pumps are doing just fine and that if I continue to repair those as they break, I’ll be doing well.

Start tracking cost at a minimum on a component basis

So I would say the most important thing you can do is start tracking cost at a minimum on a component basis, saying at least I’m tracking them by pump stations or wells or tanks.

So starting there may be at the very beginning but then digging deeper, saying each pump, each well, each tank.

How much am I spending on pipes to the extent it can, tracking it to the piece of pipe. Because the more you can break it down into those individual components, the easier it is to make decisions about what to do, with repairs or replacements.

When you don’t have that data, you’re kind of flying blind because you really don’t know what’s happening. You don’t know how you’re spending your time and effort.

And as one example, we were looking at some data for a utility that did finally start tracking very specific work activities that their crews were doing.

So everybody had to use a code so we could know what kind of activity they were doing. Were they doing pump lubrication? Were they doing a pump repair? Were they doing outside yard work?

And there’s a way to then track how many hours were spent on each type of thing. And it turns out that they weren’t spending their time the way they thought they were.

The bulk of the time was not being spent on pump maintenance.

It was being spent on outside yard work to keep the pump station sites looking good. And you don’t know that until you start to track the data and look at it.

So the more you can break those individual activities down, so you know what you’re doing, you know what money you’re spending on it, you know what spare parts are being put in it.

That really detailed level data on a per-asset or a per-component basis really help you start to make those decisions.

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