# Presentation: 686620

## The Asset Management Experience inthe City of Saskatoon

- Jan-Mark Gustafson
- Dale Clancy

##     SaskatoonCanada

- 300 km (186 mi.)
- North of the U.S. Border (Montana).
- Population 210,000.
- Temperature Range -40oF to 95oF.
- Frost penetration can be as much as 9 feet deep.
- Economic base includes  agriculture, oil and gas, potash, uranium, meat processing, a university, and an ag-biotech industry.

-     SaskatoonCanada

**Notes:**
Slide No. 2
We are from Saskatoon, Saskatchewan Canada
Saskatoon located  about 180 mi. north of the North Dakoda border with Canada.
 Our populations of 208,000 is serviced by 58,000 water services and 530 miles of water main.
 430 miles of this system cast iron.
We have approximately 300 Breaks per year and spend approximately $ 3.5 million US on repairs and replacement.

## Utilities

- Water utility:
- Clarification, filtration, softening, chloramines
- Moving to UV.
- 613 miles of water mains.
- Long-term plans, fully funded.
- Sanitary utility:
- 530 miles of mains; 37% condition assessed.
- BNR plant:  high quality effluent.
- Medium-term plans, fully funded.

## Utilities

- Storm Water Management
- Mains, ponds, and privately held concrete receptacles also known as people’s basements.
- Recent formation of utility, under-funded.
- Rehabilitation driven by capacity demands.
- Separate sanitary and storm sewer systems.
- Lowest utility rates among medium to large cities in Canada.

## History of Infrastructure Renewal in the City of Saskatoon

- 1980’s – Water Main Replacement.
- Roads and Bridge Structures.
- Sewer Main Rehabilitation.
- 2000’s – Storm Water Management.
- Sidewalk Rehabilitation.
- Asset Management – Late 1980s
- University of Saskatchewan & DFI (Stanford)
- RTA – New South Wales, Australia
- Economic decision analysis: state transition, 	survival analysis and Monte Carlo simulation.

## Asset Preservation Group

- Minimum acceptable levels of service modeled as constraints:
- Impact on customers.
- Maximum allowable risk.
- Environmental impact.
- Easier to model, easier to deal with in policy.

- To sustain the public works infrastructures at minimum long-term cost, subject to
- minimum acceptable levels of service.

## Policy Governance ®

- Outcomes  versus Costs
- Safe, clean, good tasting water.
- Reliable supply
- Sustainable.
- Affordable.
- Minimum long-term costs.
- Structure reports around these issues.

- PolicyGovernance.com

## Great Asset Management Requires People Leadership

- Manage things, Lead people

- Be Reasonable!
- Do It My Way

## Embracing Variance

## The Replacement Profile

## Older Pipe Not Necessarily Bad

## Replacement Profile – Older Pipe

## NPV  for Potential History

**Discount Rate = 6%**

**$-**

**$10,000**

**$20,000**

**$30,000**

**$40,000**

**$50,000**

**$60,000**

**1999**

**2004**

**2009**

**2014**

**2019**

**2024**

**2029**

**2034**

**Year**

**Net Present Value**

**Notes:**
We now want to plot the net present value of expenditures on repairs then replacement as a function of year for this potential history.  The replacement cost is $50,000 and the discount rate is 6%.
So, for repairs - The first break occurred in 1998.  It is considered sunk costs and therefore is not included in the calculations.The second break occurred in 2004 which would have required some principal now to pay for.  2012 some more. 2017 some more again.  Note, that the NPV profile for repairs remains flat between breaks, as the expenditures occur at the time of the breaks.
And now the NPV for replacement.  Note that the NPV continues to fall as time passes because the decision to replace has not been made.  When replacement is carried out, the NPV of replacement will be flat from there on.
Now, the total net present value.  It tracks the NPV for replacement until the first break occurs. It jumps then parallels the replacement NPV until the next break occurs.The total NPV bottoms out around 2016 to 2018.  Thereafter, NPV for emergency repairs dominates.

## Our Experience

- G.I.S. is a must.  Mobile G.I.S. as well?
- Better business decisions (urgent).
- Better science (important, but not urgent).
- Data valuable only if:
- It changes a decision, measures an outcome, ranks a priority, or keeps you out of court.
- Analysis is required; need people to do it.
- Perfection not required.
- Planning is great; action is paramount.