Case Study
Asset Risk Management Solution for a City’s Pipeline Renewal and Replacement Program
Kennedy Jenks (KJ) provided a major city with interactive risk management tools to understand how best to implement a robust capital improvement plan to phase the replacement of their potable water pipelines.
This multi-year KJ project involved in-depth analyses of the water resources, municipal decision-making processes, and desired outcomes for a major city’s (the City’s) extensive network of potable water pipelines. KJ used collected data to calculate the risks and ramifications of pipeline failure, as well as the costs of replacement for the City’s water distribution pipeline systems. KJ implemented a system to facilitate identification and prioritization of the pipelines to be slated for replacement, within the City’s budget and timeline.
The City owns and operates a public water system that supplies potable water to two-thirds of the residents, businesses, and public institutions within the City limits, as well as two adjacent cities. The City embarked on a program to replace aging waterlines to continue to provide a high level of service to customers.
The Challenge
Failure of water infrastructure is costly: it requires the repair and replacement of failed infrastructure, causes downstream impacts, and affects the surrounding community. Failure impacts the environmental sustainability and livability of the City, the economy, the City’s engagement with its residents, and the City’s commitment to excellence. Properly maintaining and rehabilitating older pipelines is essential to maintain water quality and reduce the risk of failures.
The City plans to rehabilitate 44 miles of pipeline over the course of 15 years. Pipe segments are a variety of ages and material types. For a comprehensive evaluation of the City’s existing pipes, the City developed a Pipeline Renewal and Replacement Program (PRRP) to assess pipeline condition, develop factors that represent risk of failure, and prepare a Capital Improvement Plan (CIP) for pipeline replacement.
To accomplish these ambitious objectives, the City engaged KJ to develop a pipeline condition and asset management tool to assess and prioritize pipeline segments for replacement. The primary challenge was gathering and managing the data relating to pipe age, materials, construction method, and current condition. With some pipes in service for 70 years, data sources were varied.
The City then required criteria and metrics to establish a prioritized replacement program. Additional data required included:
Likelihood of failure,
Consequence of failure,
Replacement of CIP pipe,
Locations of other City projects that could coordinate with pipeline replacement, and
Prioritizing pipelines with a high number of historical failures.
Managing these layers of data was a significant challenge.
The Solution
KJ’s solution relied on asset management principles to develop key criteria and risk of failure. KJ got to work developing a tool that could manage and analyze relevant data to prioritize pipeline segments for replacement. This asset risk management approach helped the team understand what impact the City’s assets could have on the ability to meet its mission. To perform an effective risk assessment, the City needed to determine what the assets did, identify the condition of assets, and define their goals.
In order to provide the City with a tangible measurement tool, KJ developed a risk matrix to assess asset failure and provide a road map for pipeline replacement priorities. The levels of service mandated by the City’s mission and vision were embedded in the risk matrix, which described how the City measures acceptable performance and the various weightings used to develop each asset’s criticality to meet the City’s goals.
This approach very clearly shows how failure tangibly impacts the mission and vision of the City. KJ developed a risk matrix to describe:
Unacceptable Risks: Unacceptable risks are risks that will not be tolerated in the organization. Some mitigation needs to be put in place regardless of the cost. Often this is expressed as a tolerance to the consequence of failure (CoF), with assets having a CoF greater than a certain number mitigated with redundancy or other methods.
Tolerable Risks: Tolerable risks are risks deemed acceptable without any mitigations in place. The larger this zone occupies, the larger ‘risk tolerance’ the organization has.
ALARP Risks: As-low-as-reasonably-practicable (ALARP) risks are risks the organization is willing to tolerate given that appropriate mitigations are put in place. These mitigations often cannot fully reduce the risk while still allowing for the action to be effectively completed, so the organization is willing to handle some risk or order to continue operating. Proactive replacement often addresses risks in this zone for water pipes.
Risk of pipeline failure is calculated by weighting the CoF by an estimate of the likelihood of failure (LoF). CoF was determined using the levels of service mandated by the City’s mission and vision, and included factors like pipeline location, replacement cost, pipe redundancy, and pipe diameter. KJ worked with City staff to determine an optimum weighting of each of the CoF factors and combined them into a complete CoF. Weighting the CoF results enabled the City to prioritize individual factors and more accurately reflect the City’s goals for the PRRP.
To facilitate the exploration of City’s CoF and LoF tolerance, KJ next developed a simulation of investment needs based on these factors. This simulation is accessed using an interactive GIS dashboard that allows the user to explore the impact of LoF and CoF replacement factors when it comes to expected replacement costs and length of pipe replacement in a given time period.
The user varies LoF and CoF to identify pipe segments of a given risk score. By changing the replacement year window, the user can determine the priority of recommended replacements for pipe segments and their associated costs. The dashboard then provides a rough estimate to replace the identified pipes. This way, the user understands approximately how much pipe replacement can be accomplished within a given budget.
The consequence of failure (CoF) refers to the impact of a pipeline failure on water customers, City residents, businesses, and those traveling through the City. The consequence can be in the form of loss of water service, closure of a roadway, damage to other City utilities, or insufficient water for firefighting.
The likelihood of failure (LoF) refers to the potential for each waterline segment to fail and is typically based on pipeline age, material composition, construction method, soil corrosivity, and pressure.
The Result
The interactive dashboard developed by KJ enabled the development of a list of capital improvement recommendations based on a comprehensive risk assessment of the City’s water mains. KJ’s efforts have resulted in a clear path to planning and budgeting for pipeline replacement projects for the City, while reducing the funds being diverted for pipeline maintenance.
This mathematically rigorous analysis is only part of KJ’s holistic approach to asset management. This framework highlights the four major business processes core to effective utility management:
Business Risk Management
Capital Improvement Management
Asset Performance Management
Emergency Response Planning
In addition, the City has a clear rationale for capital improvement planning. The dashboard makes it easy to communicate to ratepayers where City finances are going and why. Priorities and project status can be presented in easy-to-understand visuals pulled from data dashboards. In making decisions easier to prioritize, the dashboard also makes those decisions and priorities easier to communicate.