Discussing further on the issue of engaging governing bodies to support asset management programs, Heather mentioned that this is now a big issue in the water and waste water sector.
And just one more thing I’d like to mention on the governing bodies is, one thing that I think is a huge problem now in the water and waste water industry, is that the governing bodies have the decision about the finance but the managers and the operators of the water and waste water utilities have the risks.
So the governing bodies make decisions about the finance part, whether I should spend the money on a new tank, a new well, a new pump; whether I should have more maintenance people.
They’re making the decisions about the budget and the rates and all that sort of thing but they’re not really taking on the risk part. So we have our operators and our managers who are kind of trying to keep everything running and keep the risk down.
Meaning the risk of a pipe break, the risk of a tank failure, the risk of the system running out of water. All of those risks that exist in the water utility or the risk of a breakage on the waste water side or the treatment plant failing on the waste water side, pump station not pumping, those kinds of risks.
And you might know an operator or a manager that if I don’t get money to make some sort of repair or be able to do my maintenance, I am going to have a failure and something bad is going to happen. And that risk doesn’t always get transferred up to the governing body who makes the choice of the funding.
Unfortunately we end up in the situation where people are making funding decisions without fully understanding the risk that they’re taking on. And then the poor operators and managers feel like, even without the money, I have to prevent that situation from happening.
So the risk is down with the operators and the managers and the finance decisions is up with the board.
And to get some of these dynamics to change, where the governing bodies accept and the management support it, support the operators and the managers.
We need to start figuring out how to transfer the risk discussion up to the board as well so they’re fully understanding like Ross’ example. The governing body has to understand the risk involved with not raising rates, not providing funding.
So that’s not a decision in a vacuum where the only reason I’m keeping rates low is to keep customers happy. They have to understand the flip side.
If I keep those rates low, the tank is going to fail, pipes are going to break and sewage spill out. They have to know all the risks that they take on when they choose not to fund the project or raise the rates.
PHOTO CREDIT: Eagle Falls – Lake Tahoe by David Yu via Flickr Creative Commons