CIP Validation Approach

All organizations will have a capital improvement program (CIP) for the next several years.

Some CIPs will be significant, with hundreds of millions of dollars in capital works, while for some agencies the CIP may be much smaller. For an average asset portfolio, the renewal program should be 1-2% per annum of the current replacement value (for assets with 50 - 100 year lives). The CIP  will be roughly proportional to an organization's size and served population. Significant growth will be reflected in an enlarged CIP program.

In all organizations, there will be certain projects in the CIP budgets which seem inadequately justified. A quick way to start the asset management improvement program is to expose these projects to a thorough review and validation process and to use this approach to raise the awareness across the organization of the potential benefits that can be derived from the implementation of advanced asset management.

If we choose the right project, then the case study will expose our organization to the key life-cycle asset management processes and practices:

• Demand analysis
• Condition assessment
• Reliability/performance assessment
• Levels of service
• Business risk exposure
• Quality of data
• Optimized renewal decision making
• Life-cycle cost analysis
• Triple bottom line reporting
• Functionality of information systems required to complete the analysis
• Organizational implications
• Cultural change and training requirements
• Failure mode analysis.

These case study projects can take considerable time and effort to complete, especially when the advanced asset management training is provided as part of the study.

Many organizations cannot afford those resources in the early stages of their program. A single project that is related to an asset that is causing a problem for the organization may be more appropriate.

To get the best out of this approach we should review a set of projects that represent a full cross section of the CIP, covering all key failure modes such as:

• Capacity
• Reliability/renewal
• Improved level of service
• Business efficiency.

The best way to start these programs is to choose a group of projects and expose these to the CIP validation process by:

• Using the CLR1 to identify the projects that represent the greatest risk to us
• Choosing a sample of those projects to proceed to CLR2
• Choosing those that warrant a CLR3 or full life-cycle cost analysis approach.

We can now return to the needs analysis and more readily determine the priorities.

The only disadvantage to this approach is the amount of resources required to complete the training and the necessary analysis.