Innovyze Introduces InfoMaster LCCA: Comprehensive Economic Life Cycle Cost Analysis Helps Water Utilities Close Infrastructure Gap, Meet ASCE Grand Challenge
Revolutionary New Extension Lets Users Optimize Rehabilitation, Performance, Value and Total Ownership Costs of Infrastructure Projects Over Their Economic Life Cycles
Broomfield, Colorado, USA, September 13, 2016 — Innovyze, a leading global innovator of business analytics software and technologies for smart wet infrastructure, today announced the release of InfoMaster LCCAfor developing a sound long-term, cost-efficient asset rehabilitation program based on a Life Cycle Cost Analysis that takes total ownership costs into account. Available as an extension to its industry-leading InfoMaster asset management software, InfoMaster LCCA dramatically expands the software’s powerful predictive analytics for enhanced reinvestment decisions by using a rigorous risk-based economic life cycle planning approach to accurately estimate the lifetime performance of water and wastewater pipes plus an in-depth view of the long-term costs of maintaining, operating, upgrading and replacing them. InfoMaster LCCA supports optimal decision making by determining the best time to replace pipes based on the present value of total ownership costs (or equivalent uniform annual costs) and life-cycle cost alternatives as well as the optimal budget allocation for phased capital improvement projects.
Asset integrity management is about managing the potential to fail. Failure is defined as the point where pipe fails to achieve required levels of service. Globally, aging water, wastewater and stormwater infrastructures are rapidly deteriorating and sometimes failing — with potentially dire human, environmental and financial consequences. As this aging process continues and utilities are challenged with meeting investment needs that continue to increase well beyond available funding, the need for effective cost-based life cycle asset integrity management is becoming more pressing.
These infrastructures have traditionally been evaluated from either a capital or maintenance and repair cost point of view. But calculating the full costs of water/wastewater infrastructure services over the full life cycle (planning horizon) provides a more accurate basis for comparing traditional and alternative approaches to water supply and wastewater collection and disposal. Life Cycle Costing Analysis (LCCA) involves combining estimated capital, maintenance, operating, risk and replacement costs over the whole life of an infrastructure facility into a single value, one that takes into account expenditures occurring at different stages in that life. This is the premise of strategic asset management and InfoMaster LCCCA. The software can be effectively used to help water and wastewater utilities in maintaining the desired level of service at the lowest life cycle cost. The goal is to find the point in the asset’s life cycle or economic life where the cost of replacement is balanced against the expected cost (or consequences) of failure, the accelerating cost to maintain/repair it, and the declining level of service.
Maintaining water and sewer assets in fit-for-purpose condition throughout their economic lifespans is a primary goal for utilities worldwide. The oldest assets are not necessarily the top priority. Utility managers must decide when should they repair, when should they rehabilitate, and when should they replace their pipes? These decisions typically account for over 70% of a utility’s annual expenditures.
The decision to replace a pipe must be based on the comparison of two alternatives: replacing the pipe, incurring the replacement (capital) cost and future marginal (operations plus maintenance plus risk) costs associated with the new line, or keeping it for the time being, saving the replacement cost but incurring future marginal costs. It is essential to base any replacement strategy on an economic life cycle basis, rather than short-term benefits such as the pipe’s initial capital cost, or end-of-service life when the asset can no longer serve its intended purpose, or end-of-physical life when the asset becomes physically non-functioning.
For water and wastewater systems, the life cycle costs for pipes encompass the total ownership costs (marginal costs plus capital costs): the costs of operating them, the costs of maintaining them, and the risk of failure costs over their economic lifespans through to their replacement. These costs can also include internal resources and overheads; leakage, repair, additional pumping and traffic and disruption costs; and costs related to sustainability, resiliency, greenhouse gas emissions and health and safety. Risk costs represent the likelihood (probability) of pipe failure times the consequence (severity) of failure costs. By conducting a wide-ranging risk-based economic life cycle cost analysis, InfoMaster LCCA accurately estimates the lifetime performance of each individual pipe in the water and wastewater network, including their expected failures, repairs and eventual replacement, and the associated costs of optimizing the management of those high-risk assets and helping to preserve structural integrity and ensure that the network operates well into the future at maximum cost savings.
InfoMaster LCCA arms users with sophisticated predictive analytics and modeling capabilities that help them accurately assess the aging processes of their pipes and estimate their remaining economic lifetimes and failure and severity potential and distribution over time. The end of the economic life for an existing pipe is defined as the point in time when the present value of the future total ownership costs is no longer the lowest life cycle cost alternative (i.e., when it is cheaper to buy a new pipe). At that time, the pipe is replaced. InfoMaster LCCApredicts pipe deterioration and failures in the network, determines the optimal replacement date for each pipe, replaces any selected pipe assets, then moves to the next year and repeats the process on the updated pipe asset set. This enables users to ensure the smartest distribution of dollars spent on replacement and repair of their assets. It also helps them create reliable, cost-effective, risk-based capital improvement plans that enhance operational efficiency and quality of service and keep assets performing at peak condition while making the most of limited budgets. Both net present value and equivalent uniform annual cost (EUAC) calculations can be considered. The former approach is useful for assessing investment benefits over the planning period while the latter translates the required total investment into a year-by-year annual cost basis for ease of budgeting.
InfoMaster comprehensive asset integrity modeling techniques provide reliable asset failure predictions, even for limited failure records. These techniques include the non-homogeneous Markov Chain (NHMC), non-homogeneous Poisson process (NHPP), Linear Extended Yule Process (LEYP), Cox proportional hazards model, and advanced time-based probabilistic Weibull and Herz models. They can be effectively used to evaluate a variety of asset characteristics related to failure, and can consider all assets in the enterprise.
InfoMaster LCCA allows water and wastewater utilities to examine comparative projected life cycle costs for competing capital, O&M and risk reduction project solutions and allows for appropriate comparison and ranking of alternative capital values and lengths of time based on the amount of capital available. It also assists users in developing a sound business case for justifying replacement needs to ratepayers and key stakeholders. In short,InfoMaster LCCA helps utilities minimize the total cost of ownership of their water and wastewater infrastructures to their customers based on a desired level of sustained performance and determine the cash flow requirements for projects.
“Organizations worldwide face the constant challenge of sustaining and improving the performance and extending the life of their assets with limited resources,” said Paul F. Boulos, Ph.D., BCEEM, Hon.D.WRE, Dist.D.NE, Dist.M.ASCE, NAE, President, COO and Chief Innovation Officer of Innovyze. “The new InfoMaster LCCA delivers critical tools for meeting this challenge. In particular, it lets users determine the optimal time to replace each pipe in their water and wastewater networks based on cost-effective risk-based economic life cycle cost management strategies, strengthen their infrastructure assets in a phased manner, and place these assets on the road to sustainability. It also helps them reduce the gap between available funding and current need for reinvestment. This revolutionary new extension reflects Innovyze’s commitment to continuous product evolution designed to meet the ever-changing needs of our industry. Our customers count on this commitment to help make their organizations the best run in the world. We are proud to introduce this powerful new solution, knowing that it will make an immediate difference in people’s lives, our communities, and our society.”
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