Streamline - Fall 2013 - (Page 25)

Time for Some R&R “R&R” when it involves Hawaii or the lake or just a backyard barbeque and all the accoutrements. But R&R that covers utility equipment repair and replacement? That’s work. But work smarter and not harder and you can get in more of that other kind of R&R. WE ALL LOVE BY CARL BROWN, PRESIDENT GETTINGGREATRATES.COM R&R usually should not cover those things that predictably happen every year. Those should go in the annual budget. Few small to medium sized water and sewer systems have good R&R schedules. Some have none at all. If you want to be known for how well you run a utility, R&R planning is a must-do task. What, then, is “R&R?” It is Repair, refurbishment and Replacement. It can most easily be defined by defining what it is not: • R&R usually should not cover those things that predictably happen every year. Those should go in the annual budget. • R&R should not cover construction of system backbone components – new wells, new treatment plants and such (generally, things that will be paid for with loans and maybe grants). Those should be included in a capital improvement plan. The R&R concept is easy. The math is hard. But not if you use the free spreadsheet called “ReplacementScheduler©” available at (No sign up, no anything, just download it.) The following tables are simplifications of those in this program. Thus, R&R best covers the in-between items and tasks that are needed to extend the useful life of the system. Think water tower Table 1 Best Town, U.S.A. Water System inspections, cleaning Equipment Replacement Detail Chart and repaints; not buildTotal Inspect Annual ing the water tower in and Clean Replace Repaint Replacethe first place. Year Water Service Water ment Beginning Tower #1 Truck #1 Tower #1 Costs R&R planning and 1/1/14 $0 $0 $0 $0 scheduling needs to $10,000 $0 $100,000 $110,000 1/1/15 include at least these 1/1/18 $10,000 $25,000 $0 $35,000 steps: 1/1/21 $10,000 $0 $0 $10,000 1/1/24 $10,000 $0 $0 $10,000 Figuring out what 1/1/25 $0 $25,000 $0 $25,000 you have, what 1/1/27 $10,000 $0 $0 $10,000 condition each of those 1/1/30 $10,000 $0 $100,000 $110,000 1/1/32 $0 $25,000 $0 $25,000 items is in, what needs to 1/1/33 $10,000 $0 $0 $10,000 be done first to each item 1. to keep the system in good working order, about when those actions need to happen and about what each of those actions will cost in today’s dollars. (Three example tasks are illustrated in Table 1. By the way, this listing is the heart of the “inventory” phase of asset management.) As to costs, use your best estimates. You can refine those estimates as you get more experience. a. As an example, the actions covered in this schedule concerning a service truck only include replacing the truck. But you might opt to rebuild the engine and extend the useful life of the truck for awhile. However, you should not include oil and filter changes and other minor maintenance tasks in the R&R schedule (too much detail). Include those in a general “vehicle maintenance” annual budget item. 2. Repeat Step 1. This time cover the next action that will be needed for each item. Most actions will repeat on a cycle. For example, you might plan to replace service trucks on a five to 10 year cycle depending upon the mileage you drive, severity of conditions and such. Annual annuity is the result of a present value calculation of a string of incomes (deposits) and costs (actions) through time as those costs inflate and the account balance earns interest. These complex calculations are performed by “ReplacementScheduler©.” 3. Your schedule should be entered into a spreadsheet. The spreadsheet should sum up each year’s R&R costs and culminate by doing a present value calculation to determine the annual annuity or deposit needed to do all the planned work. This scheduling and costing is a budgeting task. It is just done separate from preparation of the general budget. 25 http://www.GETTINGGREATRATES.COM

Table of Contents for the Digital Edition of Streamline - Fall 2013

From the President
From the Executive Director
Acronyms – Today’s Language
Drought or Flood?
Can Changing Your Plant Lighting Save You Money?
Source Water Protection Notes
Aging and Failing Infrastructure
Time for Some R&R
EXPO Coverage and Recap
Ergs, Joules and Other Stuff
Wastewater Math
Throwing My Loop
eLearning Benefi ts
Membership Application
Do You Know What Your VRWA Benefi ts Are
Welcome New Members
VRWA Mailbag
Board of Directors
VRWA Committees
Index to Advertisers/

Streamline - Fall 2013