Review of the Weighted Average Asset Life of State Water ...€¦ · Draft Final for Issu Purpose...

25
Review of the Weighted Average Asset Life of State Water Corporation Assets Final

Transcript of Review of the Weighted Average Asset Life of State Water ...€¦ · Draft Final for Issu Purpose...

Page 1: Review of the Weighted Average Asset Life of State Water ...€¦ · Draft Final for Issu Purpose hted Average A Mana al an the te W r 2009 ontents have ew South W gic Manage ...

Review of the Weighted AverageAsset Life of State Water Corporation Assets Final

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Review of the

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Executive S

1.  Intr1.1  Brie1.2  IPA1.3  Atk1.4  Sta

2.  Ass2.1  Bac2.2  Ass2.3  Met

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Term

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Review of the

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ExecThis report change theprices from

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pplied a confeing robust centage asse

of State Water C

sset Life of Stat

was an issuagement team

he asset was

ar is depende. For short ad replaceme

d each asset and unaccep

mum score frossets related re against teent dam safendards, for eis not replacsulting overa

y original and

60% of asset

idence ratingdata. We set value in Fi

Corporation Ass

te

e and this wm.

s assessed b

dent on the and medium

ent.

on a 7 (excptable risks) om the four to condition

echnical or cety requiremeexample spiced but may ll asset cond

d adjusted co

ts by value h

g for each ahow the reliaigure 2.4.

sets

was managed

y each asset

utilisation om life assets

ellent – newfor each of derived from

n, that is expcommercial ents hence illways. In pbe supplem

dition score is

ondition scor

has a score g

sset on a 1 ability of the

d through ch

t’s capacity o

of each asswe would e

w condition anthe four crit

m data collecpected wear obsolescenclow scores wpractice whe

mented by ans shown in F

res

greater than

to 4 scale, 1overall data

ecking of da

or physical o

set and theexpect to see

nd acceptaberia defined ction. We foand tear. S

ce. This latwere reporteere spillway n additional sFigure 2.3.

4.

1 representina through the

11

ata and visits

output.

repair ande a trade-off

le risks) to 1above. The

und that theSome assetstter includes

ed for assetscapacity is

spillway in a

ng uncertaine confidence

s

d f

e e s s s s a

n e

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Figure 2.4 – C

The analysis

Consequenc

State Water hange of tang

economic andand assignedmagnitude of

SWC commeerms and su

Comparison

The cumulatidefined paraprobability of ate of valves

dam wall strportfolio risk a

Our view is tassets such aapply to longcalibration is

Where the seage and follodetermining tconsequence

age Asset Life o

hted Average Asc

Confidence gr

shows that r

ce of Failure

has assessegible and intd compliancd a score onf the consequ

ents that themmated to d

n of asset se

ve probabilitmeters for tf failure of ols in new anducture assetanalysis proc

that the Weas valves aner life assetsan issue com

ervice potentwing the typthe remainin

e of failure an

of State Water C

sset Life of Stat

rade of asses

reliable data

e

ed the consetangible conse impacts. En a 1 (catasuence.

e consequenderive a total

ervice poten

ty of failure othe Weibull d valve comd satisfactoryts for compacess.

eibull distribund gates, buts such as dammon to othe

tial rating forical pattern o

ng useful lifend the risk co

Corporation Ass

te

ssment by va

was used fo

equence of fasequences, Each asset cstrophic) to

nce scale is consequenc

ntial against

over time is distribution b

mponents andy condition. arability with

ution can be t there is not

ams, embanker agencies

r an asset wof service poe of each aosts. SWC su

sets

lue

or just over 5

ailure from nincluding hecomponent w7 (minor) im

used to assce of failure f

the benchm

estimated usbased on ord from dam The probabi

h the dam fa

used and ct sufficient okments and cwith similar a

was lower thaotential use tsset. These ubsequently

0% of the as

ine categorieealth and safwas assessempact corres

sess the confor each asse

mark asset

sing a Weiburder of magoperations sility estimateailure proba

calibrated fooperating expconcrete struassets.

an the benchhen three facwere the pcommented

ssets by valu

es which capfety, societaled against easponding to

nsequence cet.

ull distributionitude estim

staff on the oes were checbilities deriv

r short and perience to cuctures. The

hmark asset ctors were c

probability of that:

12

e.

pture the fulll safety, andach categorythe order of

cost in dollar

n. SWC hasmates on theobserved failcked againsted from the

medium lifecalibrate ande difficulty of

of the sameonsidered inf failure, the

2

l d y f

r

s e l t

e

e d f

e n e

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“We doobserveanalysisgreater otherwiin the a

For those assservice ratingexceeds a 1exceeds a 1:cost exceedsapplied.

This analysisasset base b23% by two c

Analysis of R

The remaininCarlo analysmainly driveneproduced b

Figure 2.5 – R

The relationssome broad aone or two emaining as

performance numerical cal

SWC has deoutcomes anaverage asseassumed the

age Asset Life o

hted Average Asc

o not have bed decay ags) for all assr than a giveise we retain

attached spre

sets with a log based on :1000 chanc100 chance

s the annuali

s results in a y optimised

condition gra

Remaining A

ng life associis. This is bn by conditiobelow for eas

Remaining life

hip betweenassumptionsgrades for set life. Ourand, becau

lculations.

erived the remnd expert judet life which 83 year wei

of State Water C

sset Life of Stat

benchmarks gainst that osets. When

en threshold, ned the origineadsheet.”

ower service the risk cosce of severeof severe lo

ised weighte

revised currreplacement

ades.

Asset Life

iated with eabased on a on shown inse of referenc

e of an asset

the conditios on the rangsome asset

r view is that se of the se

maining life dgement of ihas two peaghted averag

Corporation Ass

te

assets, per of the mode an asset's dwe elected

nal life and d

potential thast generated e loss a redoss then a twed cost of rep

rent asset set cost had be

ach service prelationship

n Figure 2.5ce.

on rating and ge of each cots below a the service p

ensitivity of a

associated win-house sta

aks, one at yge life in its S

sets

se. What weand mean d

decay variedto use a for

depreciation

an the benchfrom the an

duction of onwo point redplacement th

ervice potenteen shifted b

potential scobetween thbelow, take

assumed reondition gradbenchmark potential graassumptions

with each raaff. The resuyear 61 and aSubmission.

e did do wadecay curve

d from this mrmula to detedate. These

hmark assetsnalysis abovne point is uction is apphen a two po

tial profile. Wby one cond

ore has beenhe adjusted en from the

esidual life shde. In additioasset has a

ades are an in, do not len

ating from a ult is a profia further pea

s compare ees (using a Mmode/mean bermine a ne

e formulae ar

s, SWC has ve. Where tapplied. If tplied. Similaroint reduction

We noted thaition grade a

n derived usiservice poteSWC metho

hown in the fon, the subjea material rndicator of cd themselve

Monte Carloile of probabak at year 83

13

each asset'sMonte Carloby a margin

ew asset life,re explained

adjusted thethe risk costhe risk costrly if the riskn is similarly

t 35% of theand a further

ng a Monte-ential rating,odology and

figure makesective shift ofreduction onondition and

es directly to

o analysis ofble weighted3. SWC has

3

s o n

d

e t t k y

e r

-

d

s f n d o

f d s

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ResulResults of th

We reviewedcost. These a

Asset

Copeton

GLND

Burrendon

Blowering

Burrendong

Burrinjack

GLND

Windamere

Blowering

Keepit

Wyangala

Copeton

We noted tha

. The minassets.

2. The conby two p

3. Technica

age Asset Life o

hted Average Asc

lts he analysis

the analysisassets repres

Elem

Struc

Struc

g Struc

Struc

g Conc

Conc

Conc

e Struc

Conc

ConcDa

Old DWa

Conc

at:

nimum cond

dition grade points for the

al obsolesce

of State Water C

sset Life of Stat

s for the top sent 33% of

Table 3.1 – R

ment Grepl

cture

cture

cture

cture

crete

crete

crete

cture

crete

crete m

Dam all

crete

ition score w

is reduced inremaining s

ence is drivin

Corporation Ass

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12 assets, athe asset ba

Results for th

Gross lacement cost $M

151

141

127

120

116

93

82

73

68

62

60

57

was related

n nine of thesix assets.

g minimum c

sets

all dam strucase. The resu

e top 12 asse

ServicePotentiaOverall

condition g

4

4

3

2

5

3

5

3

3

5

3

4

to ‘expecte

e twelve asse

condition sco

ctures, in termults are show

ets by value

e al rade

Adj

Condtea

Condtea

Condtea

Condtea

Cond

Condtea

Cond

Condtea

Tecob

Tec

Condtea

Condtea

d wear and

ets, by one p

ore for two as

ms of gross wn in Table 3

ustments tograde

dition grade r)– 2 to refle

dition grade r)– 1 to refle

dition grade r)– 2 to refle

dition grade r)– 2 to refle

dition grade tear)

dition grade r)– 2 to refle

dition grade tear)

dition grade r)– 2 to refle

chnical and cbsolescence

reflect risk

chnical and cobsolesce

dition grade r)– 1 to refle

dition grade r)– 1 to refle

tear’ for te

point for three

ssets.

14

replacement3.1 below.

o condition e

6 (wear and ct risk cost

5 (wear and ct risk cost

5 (wear and ct risk cost

4 (wear and ct risk cost

5 (wear and )

5 (wear and ct risk cost

5 (wear and )

5 (wear and ct risk cost

commercial and -1 to

k cost

commercial ence

4 (wear and ct risk cost

5 (wear and ct risk cost

en of the 12

e assets and

4

t

2

d

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4. The impFor examyears foa 37% re

5. The techstandardperforma

As an exampefficiency stuhat the strucupstream facailure. Fromemaining as

The Blowerinobsolescenceconsequencewe are not awesolved by a

serviceable.

We found froshorter life asobsolescencemodified anddepreciated a

Overall the rassessment was applied t

Sensitivity te

We were not emaining as

of any sensiti

We also carriand that 42%adjustment. Ohe life of exis

age Asset Life o

hted Average Asc

pact of movinmple a shift fr a 200 year eduction or n

hnical obsoleds. These ance and ext

ple, we lookedy. The damcture had bece. The grad

m Figure 2.5set life, or ne

ng dam cone, before te cost. We asware of any oadditional w

om long-livessets. For exe. The approd upgraded tat the new as

results of thbut is not imto 35% of the

ests

able to undeset life. Thisivity tests car

ied out a hig% of assets haOur analysissting assets

of State Water C

sset Life of Stat

ng an asset from a gradecurrently as

nearly 75 yea

escence scorare being tend the life

ed at the resm was constreen assessede had been this adjustmearly half its

crete structuthe conditiossume the 3other factors

works to the

d assets of xample pumpoach is differeto extend itssset life assu

he analysis mpacted frome asset base

ertake sensits did not howrried out by S

h level analyad no adjust

s suggests thby about hal

Corporation Ass

te

by one poine 6 to 4 redussumed assears for a 200

re relates to addressed

of the assets

sults for the ructed in 196ed as a condn reduced toment represasset life.

ure was ranon grade w3 ranking is bs which wouldassets but n

this type, thps and valveent for earth service cap

umption. The

show that 4m the consee and a 2 poin

tivity tests ofwever impact SWC.

ysis assumintment to assuhat the impalf the current

sets

nt has a matces asset life

et life. A move year asset l

shortcomingin capital

s.

Blowering D68 with a 200dition grade

o 2 to reflectsents a shift

nked a 3 bewas downgrbecause of thd impact on tnot writing o

he approaches are genera and concret

pability and ae life of the o

42% of the equence cosnt reduction

f changing aon the findin

ng that 50% oumed lives. W

act of the cot assumed 16

terial impact e by on averement from gife.

gs in asset pexpenditure

Dam which w0 year assum

4 with a not the conseqt from an av

cause of tecaded one he lack of cathis. In prac

off the origin

h to asset seally replacedte structuresasset life, woriginal asset

asset base t adjustmentto a further 2

ssumptions ngs of our re

of the RAB rWe assume ndition base60 years.

on remaininrage 27% or grade 5 to 3

performance e projects

we visited asmed asset lifote to say cquence cost verage 63%

chnical and point beca

apacity of thectice this obsoal assets wh

erviceability d due to conds where theseith the additt is extended

has a condt. A one poi23%.

on the resulteview. We ar

related to exthat new ass

ed asset life

15

ng asset life.just over 50would show

against newto improve

s part of thefe. We notedracks in theof an asset

% to 15% of

commercialuse of thee spillway asolescence ishich are still

differs fromdition and/ore assets aretional assetsd.

dition basedint reduction

ting averagere not aware

isting assetssets have nois to reduce

5

0 w

w e

e d e t f

l e s s l

m r e s

d n

e e

s o e

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FindinOur findings documents aanalysis but hassumptions.

Methodology

SWC has tasurveys, expWeibull detemethodology were used. It

Data Reliabi

Data on condassets. The che remaininghat there arhese are ma

Robustness

i) The servsome asupgraderolled inextendedbut we conditioncondition

ii) The assstructureassets obe appropotentia

iii) The cuman accequality dcalibratiocalibratio

iv) We chalshown ina step fr2 is 48%about 15

age Asset Life o

hted Average Asc

ngs are based ond worksheehave not had. Our main fi

y

ken a detaiert opinion o

erioration cuis in placeswould be he

lity

dition has beconfidence og half as lessre inconsisteaterial. There

of Analysis

vice potentiassets where ed to new stnto the RABd. This couldhave not s

n, rather thn, that these

set base is es where intor parts of asopriate. Shorl where the m

mulative probpted method

data over theon of curveson is an issu

llenge the ren Figure 2.5 rom grade 6 %. Using a m5%.

of State Water C

sset Life of Stat

on the reviewets. We haved full accessndings are s

led approacon service prves. This

s unclear anelpful to docu

een collectedof the data iss reliable or

encies with s is further wo

s

al includes anew standartandards. WB. The secod be represeeen this. Alan a two-wenhanceme

predominanterventions tssets. Againrt and mediumodelling is v

bability of faid of analysise life of assets for dams ae common to

elationship beas the stepsto 4 is an av

more even g

Corporation Ass

te

w of State We discussed ks to the SWChown below

h to the estpotential andapproach is

nd we had dument the pro

d from the fis also reportuncertain. Wsome asset ork to improv

an element frds are being

When this woond benefit iented in the ll the adjust

way adjustments would pr

ntly long-liveto address d, a two-way

um life assetvalid.

ilure is mode, the calibratts. This may nd concrete o other agen

etween the ss between coverage reductrading curve

sets

Water’s approkey issues w

C modelling t.

timation of wd consequens consistent ifficulty in unocess more

ield interviewted with som

We noted fromdata althoug

ve the quality

for technicalg applied. Fork is compis that the asset mode

tments are ent, either rovide.

ed assets sdeteriorationadjustment

ts tend to be

elled throughtion of the cbe possible structures is

ncies with sim

service potenondition gradtion of 27% i

e, a step cha

oach and exwith SWC. Wto trail data a

weighted asnce of failure

with good nderstandingclearly.

wing local stame 50% of vam inspection gh we are uy of the data.

obsolescenFor example lete, the caplife of the a

el by an increone-way, tha deteriorat

uch as damn in service

of the service replaced at

h a Weibull durves depenwith short ors not demon

milar assets.

ntial score anes appear inin asset life w

ange in grade

xamination oWe have carrie

and test the

sset life basee and the a

practice. Hg how the s

aff and inspalue good orof the sprea

unsighted as.

nce which is dam spillwaypital expendasset being ease in servhat is a detetion or impr

ms, weirs anpotential is

ce potential t the end of

distribution. Wnds on evider medium lifenstrated. The

nd remainingnconsistent. Fwhereas a ste would be e

16

of supportinged out somesensitivity of

ed on assetpplication of

However thepreadsheets

ecting somer reliable butadsheet datas to whether

a driver forys are being

diture will bemodified is

vice potentialerioration inrovement in

nd concreteto renovatescore wouldtheir service

While this isence of goode assets; thee difficulty of

g asset livesFor exampletep from 4 toequivalent to

6

g e f

t f

e s

e t

a r

r g e s l

n n

e e d e

s d e f

s e o o

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Audit Trails

We were noworkings to boutturn asset

We formed tappropriate aHowever the fe particular

service poten

Our opinion assumptions sufficiently roDeterminationconsistent wDeterminationfe assets su

age Asset Life o

hted Average Asc

ot able to fobase data. At life. Our find

the view thaand consisteanalysis is n

rly with the ntial applied.

is that whileusing condi

obust to jun. The curr

with other an. The 160 ych as dams

of State Water C

sset Life of Stat

ollow clear ts such we wdings are the

at the methont with goodnot sufficientuse of the W

e there mayition based astify a chaent 160 yea

agencies wityear asset lifand structure

Corporation Ass

te

trails from thwere not ableerefore based

odology of ud practice. Thtly mature anWeibull distr

y well be a assessmentsnge in the ars for existth similar afe is consistes. .

sets

he 83 year e to test the sd on the data

using a conhere is scopnd tested to pribution and

case to reds, the analys

asset life ting assets

assets and ent with othe

average lifesensitivity ofa and tests w

ndition basedpe to improveprovide robuthe impact

duce the asssis and dataassumptionsand 75 yeashould be

er agencies

e proposed f the assumpwe have been

d asset life e the quality ust assessme

of the step

set life from a provided tos applied toars for new retained fowith predom

17

through theptions on then able to do.

is generallyof the data.

ents of assetchanges in

the currento us are noto the 2006

assets areor the 2010minantly long

7

e e

y t

n

t t

6 e 0 g

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Compn determininollowing info

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ii) Useful liv

a. Total MResour

b. Internatbeen pr

c. Asset MWorks D

iii) Financiastatemeasset claSydney

iv) Previous09).

The useful livypical range

Asset Genera

definition(asset life

years)

Dams and associated works

Buildings astructures

Plant and equipment

Pipelines afittings

Drains and channels

Source: Atkins Plant and equipm

A review of Tuseful life est

age Asset Life o

hted Average Asc

parisong appropriarmation:

ves adopted

ves included

Management rces Manage

tional Infrastrovided in the

ManagemenDepartment

al statementsnts were revasses. HowWater and W

s reports pre

ves have beof useful live

Table 5

l ns e in

TypicRang

100 200

nd 60-10

10-4

nd 40-10

80-15

Cardno analysment for some a

Table 5.1, Atimates are r

of State Water C

sset Life of Stat

on witate useful li

by Cardno i

d in the follow

Planning Gement, Qld;

tructure Mane 2006 Editio

t Guidelines1992;

s prepared bviewed, but mwever, the asWater Corpor

epared for IPA

een summaries is shown t

5.1 - Extracts

cal ge

State Water

- 0

30-200

00 2-92

40 3-30

00

50 5-15

sis of public daagencies would

ppendix A areasonably co

Corporation Ass

te

th Othves to be a

n previous v

wing guidanc

uidelines (19

ual (2002 Edon;

s for Water

by the larger most providesset useful liration, Weste

ART for Syd

ised in Tabletogether with

s from Financ

r Water Corporation

WA

0 3-200

3-150

1-85

2-151

10-150

ata include mobile

and State Waonsistent wit

sets

her Agadopted by

valuations in

ce material:

994 and 200

dition) - it sh

Supply and

Australian wed very broaives provideern Australia

dney Catchm

e 5.1 and prh useful lives

cial Statemen

Seq Water QLD

SC

15-150 102

40-80 11

3-10 21

51

1

plant which wo

ater’s asset th that used b

gencieSWC, Atkin

Australia;

01 editions)

hould be note

d Sewerage

water utilitiesad ranges ford in the fina were quite c

ment Authority

resented in ds accessed fr

ts for Useful

CA SydneWate

00-00

200

0-00

50-10

20-00

25-40

50-50

65-14

00 150

uld therefore ha

register indicby other Aus

es ns/Cardno re

Dept of Env

ed that no g

Schemes, N

s. A numberr a very limit

ancial statemcomprehensi

y (Worley Pa

detail in Approm other so

Lives

ey er

GoulbuMurraWate

Up to 2

00

0 2-10

40

40-12

ave low useful li

cates that Sstralian water

18

eviewed the

vironment &

uidance has

NSW Public

r of financialted range of

ments for theive; and

arsons, June

pendix A. Aources.

urn ay er

WaterCareNZ

200 189

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tate Water’sr authorities.

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The analysis he range 10average reguand civil work

Other appro

The Nationalcapacity or dhistorically apmedium termmaintain to a

Regulatory a

The regulatomains and sehe expenditexpenditure maintenance plan. The oneor depreciatioa realistic denternational maintenance approach.

onal Water In

age Asset Life o

hted Average Asc

shows that 00 to 200 yeulatory asset ks is in the ra

aches

Water Initiadepreciation pplied the lat

m given the good condit

asset lives i

ory approachewers is to ature to maiis termed acosts norm

e annual chaon. This appepreciation c

accounting costs over

nitiative Prici

of State Water C

sset Life of Stat

in general aears. The on

life is 60 yeange 100 to 2

ative6 identifwith the anntter approachuncertaintie

tion and perfo

n the UK

h to assets wassume that intain assetan infrastruc

mally over a arge is maderoach was acharge. This

standards. a medium t

ng Principles

Corporation Ass

te

average assene exception

ears although200 years.

fies two appnuity approach. The annus of the lifeormance in t

with long livthey will rems in good

cture renewa20 year pere to reflect bpplied to refl

s is a regulaThe appro

term period,

s

sets

et lives for dn is the Sydh the reporte

proaches to ch or RAB B

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22

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