Step 3 – How Do I Plan for the Future?

Now that you have prioritized your assets, you will have to determine how much it will cost to rehabilitate and replace them as they deteriorate. To properly protect public health and deliver safe water, you need to rehabilitate and replace your assets in addition to operating your water system. Many systems will need considerable lead-time to budget and gather the necessary funds. By developing an asset management plan, you will be able to allocate your resources in the most efficient way.

The Required Reserve Worksheet will lead you through the steps necessary to determine how much money you need to put in reserve each year (for the next five years) to fund your highest priority activities. This reserve should be protected from other use.

The worksheet will give you an idea of how much money you should set aside to fund your reserve account this year. Changes in your system’s finances and costs of new assets can change from year to year. It is important that you update this worksheet every year. This will ensure that you have enough reserves to cover necessary rehabilitations and improvements. This worksheet only helps account for additional funds you will need to rehabilitate or replace your assets. Standard O&M costs (e.g., chemicals for disinfection) are not included in the calculations on this worksheet.

Remember that while the total reserves needed each year may at first seem overwhelming, it is easier to put aside $500 a year to replace a storage tank than to pay $20,000 to replace it when it fails. Step #4 will discuss some of your system’s options for raising revenues to carry out your asset management plan. Contact your State or Regional Tribal Coordinator for additional ideas on funding options available to your system.

Remember! A preventive maintenance program will allow you to maximize the useful lives of your assets and can help you avoid problems and cut down or delay replacement costs. Contact your State or Regional Capacity Development Program through Primacy Agencies or Tribal Contacts for more information on developing and implementing a preventive maintenance program.