The goal of an asset management program is to minimize the life-cycle cost of water utility assets, while continuing to provide the service levels expected by utility customers. The life-cycle cost of an asset includes both the utilitys internal costs to maintain the asset, and external costs borne by customers, the community, and the environment when the asset fails. This project demonstrates how to integrate external costs into asset management through an application of the threshold break rate model, a pipe-replacement decision-model that minimizes the life-cycle cost of water mains. The model is employed to determine which six-inch-diameter steel water pipes in the Albuquerque Bernalillo County Water Utility Authority (ABCWUA) distribution system should be scheduled for replacement. The external costs of water outages, estimated through a choice-experiment survey of ABCWUA residential customers, are included in the model, and model outputs with and without external costs are compared. Assuming a 5% discount rate, 6% percent more pipes in the distribution system are recommended for replacement when external costs are taken into consideration. The threshold break rate model is appealing because it does not require estimation of future pipe-break rates, and it can be used even when a full history of pipe breaks is not available. However, data from the ABCWUA may not satisfy an underlying assumption of the model that the function representing the present worth of a pipe over time is unimodal.
Water-pipes--Maintenance and repair--Economic aspects--New Mexico--Bernalillo County., Water-supply--Economic aspects--New Mexico--Bernalillo County., Life cycle costing--New Mexico--Bernalillo County.
Marsee, Megan. "Integrating external costs into water utility asset management : an application of the threshold break rate method." (2011). http://digitalrepository.unm.edu/wr_sp/5