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Example Worksheet

The text in this topic refers to the Example Required Reserve Spreadsheet.

In order to calculate the funds the system will have to set aside each year to pay for the upkeep of its assets, the managers complete the Required Reserve Worksheet. By inventorying and determining the condition of the system’s assets, and evaluating when they will need to be replaced, the managers realize:

  • That while none of the items that require replacement within the next 1-2 years (the chlorinator, the pumps, and the electrical system for the pumphouse) is very expensive, they will have to set aside approximately $16,000 in the next two years to cover the cost of replacing these assets. 
  • The replacement of pipes in this system’s distribution system is by far the most costly activity for the system. It will cost an estimated $302,000 to replace pipes, but since this cost can be spread out over 50 years, they only need to put aside an additional $6,000 a year (every year) to fund this activity.
  • The total reserve required to successfully implement this asset management plan is around $36,500 per year.

Before beginning the asset management plan process, the managers were planning on replacing the chlorinator next year but did not plan on replacing either of the well pumps until they broke. Now, they plan on using some of the system’s current reserve fund to purchase a redundant unit and to begin saving for the replacement of one of the well pumps. They also decide to meet with town officials to discuss system priorities, costs, and funding options.

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Worksheet Instructions   Step 4 – How Do I Carry Out This Plan?