Water Asset Management International 1.1 (2005) 26-30
Using advanced asset management techniques to develop a 'Strategic Capital Improvement' business plan
A systematic reconciliation of technical requests with financial capacity, with example from Fulton County, Georgia.
Duncan Rose, T. Equels, T. Taylor Ph.D.P.E., Patrick O'Connor CPA, L. Hensey P.E.
USA
ABSTRACT
Capital investment is one of the most important – and high consequence – decisions a utility faces. Because of the scale of investment typically involved, poor or wrong decisions can be very costly. To avoid the risk of poor decision-making, Fulton County Water Services Division developed and implemented a Strategic CIP Business Plan. A core tool in the advanced asset management tool bag, the Plan incorporates a 'whole-of-business’ perspective and provides for the systematic accumulation, preparation and - most importantly - presentation of key strategic material in the form of a business plan that identifies:
- The current state of the utility’s infrastructure systems,
- Its current financial condition,
- The context for and the 'demand drivers’ of the need for capital investment,
- The financial capacity of the utility’s rate base to support a proposed CIP.
Most importantly, the plan is intended to give confidence to the commission and the county that the CIP makes good and prudent business sense, and that the management team/policy board are indeed acting as good stewards of the community’s assets.
To illustrate the process, this paper outlines the application of the strategic CIP business planning process to a major CIP effort undertaken by the Fulton County Water Services Division.
Full article (PDF Format)
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