Welcome to the BPH Asset Management Program. This is the seventh PowerPoint in the series developed to provide additional information and guidance on developing an asset management plan. The PowerPoints are broken out to follow along with different Asset Management Plan elements. For example, this presentation should be viewed when you are preparing for your Lifecycle Cost (LCC) submittal. The last presentation, O&M should be reviewed along with this one.

In this PowerPoint we will explain different approaches you may use to track and monitor lifecycle costs. If you don’t currently track and monitor lifecycle costs that is okay. The idea is you will identify the process you want to adopt and start incorporating it into your routine day to day operations. It is important since you likely don’t have the time to track everything we suggest that you start by focusing your efforts on the lifecycle cost of the critical assets first. By doing so, it will help you to make decisions for rehabilitation or replacement. The submission for this step is to identify how you will track and monitor the lifecycle costs for the critical assets. Maybe you are unsure of what entails lifecycle costs for an asset. If you are asking yourself this question, you will have a clear understanding of what lifecycle costs are by the end of this presentation.

PLEASE NOTE: When you print this out you will need to either print it in color or overview the pdf while looking at it in screen view. Throughout the presentation we

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have provided direction in the notes section to view specific items on the slide while reading through the speaker notes. We will reference specific colors of circles, rectangles, or ovals to indicate where on the slide the element of interests are located. So if you don’t have a color printer you may want to follow along on the computer using the electronic pdf version.

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So you may ask, What are lifecycle cost (LCC) anyway?

Lifecycle Costs is the process of identifying and documenting all the costs involved over the life of an asset. Basically, what activities are to be completed that will help sustain the function and useful life of an asset.

It is important to understand the total cost of ownership of an asset since it is often far greater than the initial capital cost of constructing the asset. The overall LCC can vary significantly depending on which approach you decide to take in the rehabilitation and renewal efforts for a given asset. Therefore, by tracking these costs and evaluating different alternatives you will be able to make more informed investment decisions. In the next slide we will cover the benefits to tracking LCC in more detail.

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Over time it cost more to use an asset, because of increased operation and maintenance costs. You will notice in the graph below that as an asset gets older the operation and maintenance costs tend to increase. This is one reason why you should consider the costs over the whole life of an asset. Doing so really will aid your Utility in decision making. Big picture, you want to get all of the useful life out of the asset, at the lowest costs possible. This means you need to understand when you should repair, rehabilitate, replace, or do nothing.

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Lifecycle Costs

Again you will notice in the graph that as an asset gets older the operational and maintenance costs tend to increase. Tracking these costs can help you make the most informed renewal decisions. As your O&M costs go up your asset is getting closer to its point of failure so tracking these items can help you prevent these failures or simply to better estimate when that may occur.

The equation the EPA uses for lifecycle costs is as follows:

Life cycle cost= original cost

– salvage value

+ operating costs

+ maintenance costs

+ renewal ( repair, replace, and rehabilitation)costs

+ decommissioning costs

There are other definitions and potential lifecycle costs (legal, social, and environmental) that you could use, but for our purposes we will use the EPA’s.

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Part of tracking LCC’s for your critical assets means you also should compare the different asset renewal scenarios. The major scenarios you will compare include:

• Repair- is there a major repair that you can do that will give you the 80% additional life (if your asset has a estimated useful life (EUL) of 10 years, by doing the repair it will give you another 8 years of life on your asset. Is the cost for this alternative reasonable?

• Rehabilitate- you would choose to do a full asset rehabilitation, even if it costs a little more, because you will get 100% additional life. In turn you may save more money in the long run.

• Replace- is it cheaper to just replace the asset? Would it be better to run to fail or replace the asset before failure? Is it a cheap, easily replaced asset or maybe you have a backup on hand that you can get up and running quickly. If so maybe you can just run the asset to fail then replace it. Most critical assets won’t fall under this category. Consider “lead” times, if necessary, to get the new asset online or replace the function of the asset.

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• Do nothing- Exactly what it says continue to do what you do.

We will go into more detail on alternative solutions in the next slide.

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1. When deciding on the best approach to take to maintain your asset you will want to focus on which solution would give you the most bang for your buck. In other words consider which approach will cost the least over the long run while still providing the same expected level of service?

2. Consider Alternative Solutions and their associated costs when making investment decisions:

A. Refer back to the EPA definition of LCC which includes the original, salvage, operating, maintenance, renewal, and decommissioning costs. See below for a recap.

B. Additional life- how much additional life will I get for each of my renewal scenarios?

C. O&M- are my O&M costs much lower if I replace my asset with a new or more technologically advanced asset?

D. Risks- what is the risk if I just repair instead of rehabilitating my asset? What is the risk if I don’t take action at all or if I wait too long to take action?

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EPA Definition of LCC

Original Costs

Salvage Costs

Operating Costs

Maintenance Costs

Renewal Costs (repair, rehab or replace)

Decommissioning Costs

Looking at all the difference scenarios can be a daunting tasks that is why there are tools out there to assist you with making the right decisions. On the next slide we will go into more detail on other renewal strategies you may consider when making investment decisions.

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We overviewed some basic renewal scenarios (strategies) such as: repair, rehabilitate, replace, or do nothing. Here we will go into more detail and cover some additional strategies to get you thinking.

• Status Quo- This means to do what you are already doing/make no changes.

• Increase Maintenance- Can you extend the life of your asset by increasing the maintenance on it and is this the most cost effective scenario to conduct at this point?

• Operate Differently- Ask yourself, am I operating my asset appropriately or is there something I can do differently that would extend the life of the asset and still be cost effective.

• Repair- Is there any action you can do to mend the asset structurally?

• Rehabilitate- Is there any action you can do to mend the asset structurally and correct the cause of the asset’s decline?

• Replace with similar asset- Does it make sense to replace the asset with the same or similar asset?

• Replace with improved asset- Is there new technology out that greatly improves upon your assets function?

• Reduce the cause of failure- What is causing my asset to fail? Can I reduce how long

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I use this asset, by reducing the demand? For example, is there too much pressure in the line?

• Reduce Level of Service- Is there a LOS goal that can be changed to lower the demand on this asset?

On the next slide we will discuss the LCC submittal.

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Okay so what are you going to turn in to BPH for this submittal? Well if you refer back to your guidance you can find the answer to this question. In the guidance click on the tab titled Lifecycle Cost (see blue circle). As always you will find some questions to help you assess what you are doing now. It also gives you information on additional tools and where to find them (see purple rectangle). In the orange box (see green rectangle) it tells you more about your submittal and what to submit and in the yellow box (see red rectangle) you will see an example of this submittal. In this yellow box you will delete out the example and enter in your own submittal.

Basically you will need to turn in a summary of how you track or plan to track your Lifecycle costs. We understand that if you are just starting your LCC tracking you may not know how to get started. Part of this presentation is to overview a couple methods to get you thinking and to consider adopting if you decide they fit your needs.

In the orange highlighted section (see green rectangle) we provide a description that outlines the three main options for tracking your LCCS.

The first two are ones that we will cover in more detail during this presentation, and the last option would be for you if you decide on using a different method than the two we cover in this presentation. Please remember your AM team can adopt or use any

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approach that allows you to capture lifecycle costs for your critical assets and fits your Utility's needs. If you go this route, then your AM team will just need to ensure that you explain your process in enough detail so the BPH reviewer understands the process. Also, please include documentation of your program as appropriate. So the submittal for this step may include, but is not limited to: a summary describing process, charts, tables, screen shots of the program, etc.

Don’t forgot to include your Utility’s names when you submit this form (see yellow circle)!!!

Okay so let’s take a closer look at a couple tools available for tracking LCC. We want to remind you these are available and will aid you in the process, but you are not limited to these tools. If you find there is another approach that will allow for tracking and monitoring of LCC you can submit your summary and approach information to BPH for review.

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So let’s get into more detail on a couple the tools you may want to consider for tracking LCC!

1. Asset Plus Cost Report in CUPSS- this tool may be good for someone starting out with a very basic approach. Understand this will only give you a piece of lifecycle costs. It allows you to track planned and unscheduled maintenance, but you have to take this information and further evaluate to determine the alternative solution that best suits your Utility's needs.

2. BPH Lifecycle Excel Tracking Tool- BPH has worked with systems around the state to develop a lifecycle tool that can aid you in tracking LCC costs. This tool allows tracking of planned and unscheduled maintenance and helps you too evaluate alternative solutions all in one place.

So what will we get out of using one of these tools?

• By tracking the lifecycle costs you will have a better understanding of when the asset will reach the end of its life. In addition, the BPH tool will assist you with deciding what type of asset renewal will be most cost effective or if it even is cost effective.

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• By going through this process it will help you to prioritize Capital Improvement Plan projects.

So lets take a look at these two tools closer.

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Since you will be using CUPSS lets look at this option first.

The CUPSS tool is called the Asset Plus Cost report. This is a newly added feature to the CUPSS Version 1.3.9. Let’s take a look at what kind of information the report can generate.

• When you generate a report it will produce the asset details for the selected assets.

• The tool provides a snapshot of O&M and Renewal Costs for selected assets for the past five years. In other words, you will be able to see your assets O&M and renewal costs for the last five years (including this year) in the report when it is entered into CUPSS.

• Compares Planned, Unscheduled, and Total Costs over a five year period.

• In the end it should assist you with making the most cost effective decisions for rehabilitation or replacement.

This tool is very simple in nature; however, it can give you a good start to LCC tracking.

Lets now look at how the tool works before going into the BPH LCC Excel Tracking Tool.

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To use the Asset Plus Cost Report you will need to enter all of the planned and unplanned tasks for all of your critical assets and any costs associated with these tasks (see yellow circle). If you do not do this you will not be able to get an accurate picture in forecasting trends. Therefore, if you decide to use the CUPSS program to track your assets LCC then you will need to make sure you track all of the activities related to your critical assets LCC are being tracked in it! You will also need to make sure you have completed the related costs for all of your critical assets (see red circle). This includes the original, replacement, and routine maintenance cost and frequency. If you decide to track LCC Cost elsewhere you will not need to put in all of these costs in CUPSS. If you need more information on how to do this refer back to the O&M PowerPoint.

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Once you have started entering in costs for your O&M tasks you can run the asset plus cost report to start to track your results. When you want to run the report you will:

1. Open the MY O&M section in CUPSS (see yellow circle)

2. Then click on the Search/Print Option at the right-hand corner of the table (see green circle)

When you do this you will be taken to the search screen which we will cover in more detail on the next slide.

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On the search screen you will need to:

1. Select the Asset Plus Costs Report (see yellow circle)

2. Filter by any specific information or just not include any further selections if you want to see all information that is tracked.

3. Click on view results and it will open up the report (see red circle).

Once you do this you will be taken to the search results page shown on the next slide.

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In the search results page you will see total costs associated to your assets to date (see red rectangle). You can also click on an asset and then right click on it to edit the asset if needed (see green circle).

If you want see the whole Asset Plus Cost Report just click the Print Report Button on the report screen (see yellow circle). This will bring all of the data into Excel where you can further manipulate. It will open at first as a Comma Delimited file or better known as a CSV and you would need to go to File and click Save As, browse to save in the appropriate folder, provide the File Name, and in the drop down menu for Save as type choose Excel Workbook. This will then save the file as an Excel xlsx extension file.

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Lets discuss the Asset Plus Cost Report in more detail.

In column A you will see your Asset Name listed for each asset you selected during the querying of the report. If you find that you don’t have all of records you want to see, then you should go back and revise the query.

In column B-H you will see costs broken out by planned and unscheduled maintenance, and repairs and rehabilitations (see red circle). In column I you will see the remaining useful life for the assets. In columns J-N you will find the costs entered broken out by year for the past five years (including the current year (see yellow circle).

If you look closer at column N you will see that the title for two different columns have been combined. Both yearly costs for 2016 and asset type are written into cell N1. All of your entered asset costs should still show up correctly (including your 2016 costs). We will show you on the next slide that this is shifting the records. This means the columns from that point on are lined up incorrectly. BPH has notified the USEPA of the issue.

The BPH has found there are two main reasons why it is important to back up your

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CUPSS database and to update the CUPSS program periodically.

1. Backup your database: This is important to have in case there is an issue which happens to corrupt your database and you lose the data. By having a backup of the data, it would allow you to bring in the data from your backup file thus restoring your database to the date of which the backup was made.

2. Update the CUPSS Program: You want to make sure that as the CUPSS program is updated you are working with the latest version. This is important, because as problems are communicated to the USEPA by users just like you, the agency has worked to resolve many of them and the latest version of the CUPSS program will contain these revisions.

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Starting with Column O you will notice that the columns do not have the right titles. For example, Column O should be titled Asset Type not Asset Category, Column P should be titled Asset Category not Asset Location, column Q should be titled Asset Location not Asset ID and so on and so forth . This goes on until the end of our asset details (or column AZ (see blue arrows).

This should only be a problem if you are needing all of your inventory details if you are only concerned with tracking some of your critical assets lifecycle costs then you will be okay. Again, EPA has been notified of this issue and is working towards correcting it in the future. We recommend that you periodically check the USEPA website to see if there is a newer version. It is important to always remember to back up the program prior to an update to ensure you have a copy of your CUPSS database on a flash drive, server, cd, etc.

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Now let’s go over the BPH’s LCC Tool. This tool was developed for systems that want to track their full LCC costs in an easy to track format. This format will also provide the user with more detail than what is given in CUPSS which will give you a clearer picture to aid in making rehabilitation or renewal decisions.

Note: We recommend that you use CUPSS to track the O&M tasks even if you decide to track their related O&M costs outside of the program. However, we don’t expect for you to duplicate your efforts of tracking costs. If you decide to track your O&M costs using another approach other than the CUPSS program, you will not be expected to also track them in CUPSS.

Okay so what can you expect if you use the BPH’s LCC tool?

• Well for one it will track full lifecycle costs and not O&M and renewal only.

• It tracks each critical asset separately so it is easy to use and track.

• It provides a snapshot of all of your costs over a ten year period as opposed to five years

• Compares Planned, Unscheduled and total costs over a ten year period instead of five year period

• Charts show costs over time which is helpful in predicting failure. The tool

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includes two charts one that compares planned and unscheduled costs over time and one that charts out total O&M costs over time. By using these charts they should help see trends that may allow you to predict asset failure in advance.

• Alerts you to remaining asset life. You will be able to see if you are approaching the end of the useful life for the asset.

• Tracks last Major Repair/Rehab date. This will help you keep track of regularly scheduled repairs and/or rehabs. If it also extended your EUL it will calculate a new Remaining useful life for you.

• Compares renewal scenarios and their associated costs. This will help assist you it making the most appropriate and cost effective decisions.

• Assist you with being proactive and cost effective!!!

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The BPH LCC Tool can be found by going to the BPH’s Asset Management Page at ww.wvdhhr.org/oehs/eed/i&cd/Asset_management.asp.

When you open the Excel based workbook you will see three worksheets inside (see red circle). The first one which is highlighted in blue is the Instructions for using the page (see orange circle in inset). The next tab over is your template for all critical assets except for tanks (see purple circle in inset). The last tab is the template you will use for your tanks (see blue circle in inset).

Now lets take a closer look at each section of the tool.

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When you click on the LCC Instructions sheet you will see the detailed instructions for using this tool as part of your AM program. Please make sure to read this over well before you start using the tool. When you read this over you will see you will need to create a copy of the sheet for each critical asset. You will need to create a copy exactly how it is explained in the sheet to ensure your sheet calculates and charts your numbers correctly.

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We will go through the instructions using the critical assets sheet. For all of your tanks you will use the worksheet named Critical Asset Tank instead and follow the same instructions using that sheet. To make a copy of the appropriate worksheet you will need to:

• Right click on the tab at the bottom of the appropriate sheet i.e. Critical Asset (see red circle).

• Click on move or copy (see blue circle).

• Click to highlight the sheet where you want the copy to be placed in front of. Here we have highlighted the critical asset sheet, so the new sheet will be placed right in front of it when you go to create it.

• Click on create a copy so there is a checkmark in the box (see yellow circle). This is important or it will simply move the tab and you would be editing your template to create other tabs for critical assets.

• Click okay (see orange circle).

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As you can see Excel created a new tab at the front of the Critical Asset tab we selected in the previous slide and called it Critical Asset (2) (see red circle). You can now double-click on the created name and rename it (see orange circle). Notice we have renamed it to Snow Hill Tank 1 (see purple circle). You can also click and hold over the worksheet name and drag it wherever you would like to keep it. You can repeat this process for each one of your assets. If the asset you are tracking is a tank go through all of the above steps with the Critical Asset Tank Sheet.

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Once you have made a copy of the appropriate sheet for each of your critical assets you can start entering in the information. We have provided this legend to assist you in the process. At the top of each page you will see a legend in column H, I and J (see slide above).

In the legend you will see that all of the cells you need to fill out now (some are at the beginning of your asset LCC tracking process and others as you continue through the tracking and monitoring process.

• Cells highlighted in yellow should be completed when commencing asset tracking activities.

• Cells highlighted in dark orange will need completed closer to when you are projecting asset renewal to take place.

• Cells highlighted in light orange will need to completed as you are tracking your asset’s O&M cost activities.

• Cells highlighted in purple that are not required for the tool to run the calculations; however, you can enter any additional information you want to track into them.

• Cells that are left in white are general calculated items which means these are using the information you have entered to calculate total costs by each category. For ease of review, we have displayed planned and unplanned, in light green and light red, respectively.

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o Planned asset costs (anything you planned to do ahead of time) is highlighted in light green.

o Unplanned (unscheduled) asset costs or anything you had not planned for is highlighted in light red.

• The total of your planned and unplanned costs will be highlighted in blue.

Please note: Any other items that will be calculated for you will be highlighted in light grey.

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All of the fields highlighted above in yellow will need to be entered as soon as you start your LCC process. If you do not know the original cost for an asset that is okay, but you will mostly want to track this cost on all of your newer assets. In reality knowing what the cost back in 1963 to get the tank online is of little relevance now. Also, if there is no salvage or decommissioning costs that is also fine, just enter 0 for these items. The rest of the items do need a number so do your best to figure out these numbers. If in doubt do your best to estimate the value. In addition, you will need to remember to update the current year at the first of the year every year or your remaining useful life will not be accurate.

The cells highlighted above in dark orange will need to be filled in as appropriate. As an example, think about whether you can you rehabilitate the asset, how much will it cost, and how many additional years of life will you add on to the lifespan by completing the rehabilitation? You may not know what you need to repair or rehabilitate on your asset until it is starts to fail, if this example best fits your scenario, you may have to wait to put these numbers in once you start having problems. So how do I know when it is a problem? Well if you track all the related activities for the “critical” asset you should see the O&M cost start to go up. There is a point where if you didn’t intervene certain failure would likely be imminent. So by tracking and evaluating the information it will help you to spot trends, estimate failures, and make more informed investment decisions.

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You also may want to track the last time you completed a major repair or rehabilitated the asset so you can keep an eye to when you may need to repeat the process again. Many times operators find that it is best to budget for the rehabilitation of an asset on a regular schedule i.e. a pump motor might need to be rehabilitated every 10 years or so. When you enter this number into cell B7 you will also need to remember to update your estimated useful life, if needed, so that your remaining useful life will be accurate. For example, if you rehabilitated your asset and you project that this action will give you another 10 years of life then enter 10 into cell B8 (estimated useful life). Once you enter a number into cell B7 your sheet will calculate the remaining useful life from that cell instead of cell B6 (year installed).

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For all of your tanks you will be required to enter in the date for the last time you have the tank inspected internally. You will also include how often you conduct this inspection (i.e. every 10 years). Once you enter in these numbers the tool will let you know when the next inspection is due.

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The items shown in light orange above will need to be tracked continuously through your LCC tracking period. You will need to track all planned and unscheduled O&M and renewal activities for your asset.

In the O&M Activity Column you will enter in what you want to call your activity (or task). For example, you may have completed your monthly routine maintenance on the Snow Hill PRV. In this instance you could put in Monthly Routine Maintenance here. The next column is the Type of O&M Activity. In this column you will see it has a dropdown list you can choose from (see red circle). The choices are the same as the ones you had in CUPSS (for more information please refer back to the O&M PowerPoint). It is very important you do not skip this step, if you do the tool will not calculate any information for you. In the next column, you will enter the O&M Activity Details and can include any additional information you may want to track. For example, you could write in the details of what was actually done to or monitored on the asset so that you can refer back to these in the future. Next you will need to enter the date of the activity. Please enter in your date in the MM/DD/YYYY format to ensure that your information is calculated correctly.

Now you will enter in the cost of your activity in the next two columns. We understand that sometimes filling in only one of these costs may be appropriate. If you only have labor costs for an item only fill in cost information for labor costs and leave the O&M

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cost column empty. For example, a routine maintenance activity on your gate valves may only have labor cost since no parts where bought. If you incurred any costs beside labor cost you will put that cost into the column titled O&M Cost.

Once all of the appropriate information is entered in for your O&M activity your total cost will automatically be calculated. In addition, you will notice that the tool will start tracking yearly totals and begin charting this information appropriately.

Lets take a closer look at these calculations now.

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Okay now you have started your tracking, so what can you expect to see happen on the tool? Well the first thing you should notice is that the yearly tracking cells (I12-W17) on your sheets should start populating numbers. For each year (over the next 10 years) entered onto the sheet the tool will breakout and calculate totals for all of the asset’s planned and unscheduled O&M and renewal activities. It will also total both of these for each year for you to see. Through this you should be able to see your costs starting to rise and if failure is starting to occur. You can also see if your unscheduled activities are significantly higher than your planned (this is something that you want to avoid and could be alluding to a bigger problem).

For users that would rather see this information presented as a chart, we have included charts for you to see. Let’s take a closer look at this on the next slide.

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The same information that we showed you in the tables on the last slide will also be charted out on two different charts. On the first chart you will see both planned (green line) and unscheduled (orange line) O&M charted out so that you can see them side by side and compare the two. On the second chart you will see the total cost of O&M (both planned and unscheduled costs combined).

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When you start noticing your cost go up as in the chart above you need to start looking closer at this asset. How much have you spent? Based on the increase in costs how much longer do you have until complete failure? Remember, this is about being more proactive and less reactive so you want to use these tools to do just that. We also discussed earlier that understanding the appropriate “lead” time can be necessary to get the asset rehabilitated, repaired, or replaced prior to complete failure. Basically what is the optimum time for taking action by considering what remaining useful life is left, will rehabilitation extend the useful life, or is it just the best investment scenario for you to replace the asset. These are the kind of questions you should try to answer to lead you in understanding the next steps to your maximizing your investments.

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Other things to keep in mind……..

Some assets can reach the end of their useful life before they quit working. Regulations may change, the asset is not economical anymore, you increase your level of service, or maybe capacity requirements increase which exceeds the design capability of the asset.

Changes in technology and changes in user requirements can be key factors impacting the useful life of an asset.

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• Are important when evaluating total costs

• Aids in determining the best renewal strategy

• Backs your renewal project up with facts

• Aids in decision making

• HELPS YOU BECOME MORE PROACTIVE AND LESS REACTIVE!

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An Asset Management Plan is always changing as you must continuously update different parts of it so as you become more familiar with the process you can add in more information. We recommend you continually track, and annually evaluate the LCC so when it is time to consider your next Capital Improvement Project it will help you make the most informed investment decision. Remember your AM Plan should be evergreen!

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Completion of Your Asset Management Plan: The AMP should provide a summary of all the elements, findings, objectives, and targets to managing, and implementing the AM.

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These photos show an actual system that does not have a very good asset management plan in place.

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