Asset Management Fundamentals: Topic 6 – Condition Assessment

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Topic 6 – Condition Assessment Table of Contents Preview …………………………………………………………………………………………………………………….. 2

Learning Objectives …………………………………………………………………………………………………. 2 Introduction ………………………………………………………………………………………………………………. 2

Condition Assessment Principles ……………………………………………………………………………….. 2 What is ‘Condition’ of an Asset and why monitor it? ……………………………………………………… 4 Objectives of Condition Assessment Process ………………………………………………………………. 5 Componentisation for Condition Assessment ……………………………………………………………….. 6 Typical Condition Assessment Process ……………………………………………………………………….. 6

Which Assets to Inspect? …………………………………………………………………………………………. 6 Criticality ………………………………………………………………………………………………………………… 7 Sampling Approaches ……………………………………………………………………………………………… 7 Condition Assessment Program ………………………………………………………………………………… 7 Benefit/Cost Considerations ……………………………………………………………………………………… 8 Survey Frequency …………………………………………………………………………………………………… 8

Condition Assessment Techniques ……………………………………………………………………………… 9 Condition Grading Systems………………………………………………………………………………………..10

The Simple Approach ………………………………………………………………………………………………10 Data Collection and Management ……………………………………………………………………………….16

Condition Survey Personnel ……………………………………………………………………………………..16 Summary ………………………………………………………………………………………………………………….17 Review Questions ………………………………………………………………………………………………………18 Review Questions and Sample Answer Summary ………………………………………………………..18 References ……………………………………………………………………………………………………………….21

Readings ……………………………………………………………………………………………………………….21 Activities ………………………………………………………………………………………………………………..22

Asset Management Fundamentals: Topic 6 – Condition Assessment

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Preview Learning Objectives

The learning objectives of this topic are as follows: • Analyse the importance of information on the condition of assets to support life cycle

decision making both for maintenance planning and longer term renewal/replacement strategies.

• Examine the linkage between condition assessment and risk management with emphasis on assessing critical assets and their components.

• Discuss various rating scales for measuring condition of assets and developing methodology for carrying out field inspections.

• Examine skills and experience required for those carrying out condition inspection of assets in the field and data collection techniques.

• Analyse how condition assessment can be used to determine remaining useful life of an asset and associated financial management data such as depreciated replacement cost for valuation purposes.

Introduction

Condition Assessment Principles In the previous Topic, we introduced the concepts of needing to develop base knowledge about the infrastructure assets. Condition assessment is a manifestation of development of that knowledge about the physical condition of the infrastructure assets and their ability to deliver the required services. These two aspects are generally intertwined (but not always). Condition Assessment (Condition Monitoring) is defined in the IIMM as follows:

The inspection, assessment, measurement and interpretation of the resultant data, to indicate the condition of a specific component so as to determine the need for some preventative or remedial action.

(IIMM 2015 p. xviii)

Condition assessment rating systems provide a standardised descriptive framework that allow comparative benchmarking with similar asset types. Results from the assessment process will provide qualitative descriptions or quantitative ratings on aspects for asset condition. Typically, condition data is used to determine the need and timing of some preventative or remedial action to prevent loss of service or economic loss. Understanding asset failure modes leads to better AM decision-making. Being aware of the possible failure modes allows effort to be focused on understanding the timing and consequences of the failure, and the expected expenditure patterns that will need to be applied to avoid such. The IIMM (p 2/80) recommends that regardless of the mix of the performance metrics being investigated, a common structure should be in place to allow more detailed assessment information to be consolidated into a common scale. This will allow informed trade off decisions to be made between different asset classes.

Asset Management Fundamentals: Topic 6 – Condition Assessment

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The AM maturity index for condition and performance monitoring is shown in the IIMM at figure 2.5.1. At the core level, condition and performance information is suitable to be used to plan maintenance and renewals to meet for the short term. For the advance level, the type, quality and amount of data are optimised to the decisions being made. The underlying data collection programme is adapted to reflect the assets’ lifecycle stage. Remember that Condition Assessment should not be carried out in isolation. Related issues need to be considered, such as:

• Risk Management. • Maintenance Management Planning • Data Collection Techniques

These issues are all addressed in other parts of the course but they will be touched on here in terms of their relationship with condition assessment procedures. Regular monitoring of the condition, particularly of critical assets, is essential to managing the risk that is faced by an infrastructure organisation of the assets failing to provide the level of service expected by its customers. As with all the practices involved in asset management there are varying levels of sophistication that can be applied and hence the minimum and advanced approach concepts can be considered here as well. In deciding on the level of sophistication to apply, various factors need to be weighed up, as follows:

• What resources are available in terms of skills of staff or external survey firms to provide meaningful condition data?

• How repeatable is the process to ensure consistency over time for subsequent surveys? • Will the cost involved be warranted for the importance of the assets involved? • What level (quality/quantity) of condition data is needed to improve decision making for

the particular assets?

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What is ‘Condition’ of an Asset and why monitor it? Asset “Condition” reflects the physical state of the asset, which may or may not affect its performance. The performance of the asset is the ability to provide the required level of service to customers. Generally this can be measured in terms of reliability, availability, capacity, and meeting customer demands and needs. All of this is critical information for determining the remaining useful life of an asset and more importantly the timing for possible intervention steps to bring levels of service provided by the asset back to a desired standard. However, do not forget that other factors can also determine useful life. Factors such as:

• Technical advances which might make the existing asset obsolete. • Changes in community expectations meaning that the asset no longer has the capacity

to meet community standards. • Growth impacts meaning that the asset’s capacity falls short of the new demands. • Compliance – changing standards mean the asset becomes non-compliant. • Economic life – whereby the costs of continuing to operate the asset warrants it now

being replaced. It is critical that service organisations have a clear knowledge of the condition of their assets and how they are performing. All management decisions regarding maintenance, rehabilitation and renewal revolve around these two aspects. Not knowing the current condition or performance of an asset may lead to the premature failure, which leaves the organisation with only one option – to replace the asset (generally the most expensive option!). The unforeseen failure of an asset can have major consequences that constitute a business risk or potential loss to the organisation. Therefore the benefits of knowing the current condition and performance level of an asset are:

• Mitigation of business risks associated with asset failure, for example by proactively maintaining or upgrading an asset to reduce the probability of failure;

• Avoiding unplanned outages; pre-emptive asset remediation can also be more cost- effective than allowing the asset to deteriorate to failure;

• Accurate prediction of future expenditure requirements through understanding remaining asset life and capital investment needs;

• Identifying environmental changes that might impact asset performance; • Compliance with statutory and regulatory obligations; • Enhanced sustainability of asset base as service life can be optimised and in some

cases extended through effective, proactive management; • Understanding the asset deterioration processes; • Assessing the probability of failure, both now and in the future; • Assessing the remaining life of the asset; • Identifying the most economic intervention (maintenance, rehabilitation, renewal) and

when the intervention should be carried out, resulting in an understanding of long term operational management costs; and

• Assessing current and future demand against the available capacity.

(IIMM 2015 p 2/75 and 2/76)

Asset Management Fundamentals: Topic 6 – Condition Assessment

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Objectives of Condition Assessment Process The development and continued use of condition assessment data will allow preparation of verifiable predictive decay curves for particular asset types and hence permit prediction of remaining life. By considering the current condition point on an assumed decay curve the profile can predict the effective life (time) before failure. This failure time can be the physical end of life, a minimum level of acceptable service or the limit of capacity of the asset. This question is dealt with in more detail in a later section of this topic (see “Condition Monitoring & Useful Life”). It is important that consideration be given here to reporting on asset condition, not only at various asset component levels but also at the whole asset portfolio level. That means assessments can be made about how well a network or asset type is achieving its strategic objectives in terms of delivering outcomes against required levels of service. It is also important to develop formal condition assessment techniques to give repeatable and objective assessments. Typical asset condition questions to be considered when preparing a condition assessment strategy are:

• When was the asset constructed / rehabilitated / replaced? • Where is the asset / component in its lifecycle? • What is the asset’s theoretical effective life? • What is the estimated residual life until rehabilitation and / or replacement is necessary? • Has the asset been inspected physically and by what process? • How can the asset’s deterioration be predicted? • How can the asset’s failure be predicted? • How could planned maintenance prevent the asset’s failure or extend the time to failure? • Can the asset be rehabilitated and at what cost? • What level of service will the asset deliver once rehabilitated and for how long? • Is the asset technically or commercially obsolete? • Are asset condition gradings appropriate and relevant? • Are asset condition monitoring processes effective?

Condition monitoring of all assets, whether they are passive infrastructure assets or dynamic ones such as plant / equipment and even landscape assets, must be:

• Economically justified as a benefit to the organisation • Carried out in the most cost-effective and efficient manner • Accurate and complete • Applied consistently • Repeatable.

Each organization will have varying requirements depending on the nature of its services – their scale and criticality.

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Componentisation for Condition Assessment One of the most important aspects of condition assessment for any class of assets is to firstly break the asset down into components recognising that it these various components that make up the total asset but each component will typically deteriorate at a different rate requiring intervention in the form of maintenance or replacement at different times over the whole life cycle of the asset. Accordingly, it is important that assets are broken down into relevant groups of components before commencing the condition assessment process. It is critical that a consistent break-up be applied and that such be maintained over time for ease of reporting, benchmarking and the like. The following diagram shows a typical component break down for building assets. Source – CRC for Construction Innovation Reading 6.1 Refer also to the Local Government Victoria’s Guidelines for Measuring and Reporting the Condition of Road Assets (May 2006) to see an example of how roads should be split into both segments and components. See page 21 Figures 11and 12. This can be downloaded from the Victorian Government website Department of Planning and Community Development. Typical Condition Assessment Process Many factors need to be taken into consideration when designing the most appropriate condition assessment process for each asset class. The steps involved in condition assessment typically include;

• Determine the how many assets to monitor; • Determine which assets to monitor; • Determine the method of monitoring condition and performance; • Determine the frequency of asset inspections; and • Consider costs and benefits.

Which Assets to Inspect?

The extent and repetition of condition assessment will be influenced by: • The type of the asset – its theoretical life and estimated remaining life. • The criticality of the asset. • The relative age of the asset – and whether it’s technically or commercially obsolete. • The rate of deterioration of the asset and whether there are any environmental

conditions that might accelerate such. • The economic value of the outcomes to the business and whether planned maintenance

or rehabilitation could prevent the asset’s failure or extend the time to failure and reduce overall lifecycle costs.

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Older assets that are more likely to fail and those more critical assets that have a high consequence of failure, are those that are typically the focus for a condition assessment program. Above ground assets can be assessed more easily and therefore tend to be surveyed more often than below ground assets. One example is road pavements for which there are many systems to collect condition data and good modelling on predictive deterioration curves.

Criticality For any asset class, the seriousness of risks associated with those assets can vary, making some more critical than others. Critical assets are defined as those which have a high consequence if they do not meet their level of service targets as distinct from not necessarily having a high probability of failure. Consequences typically include cost to repair, number and type of customers impacted and possible environmental impacts. It is important to identify which assets are most critical as well as the possible ways in which they might fail to meet their service standards. It is then possible to target and refine the selection of assets for the investigative activities focused on these more critical assets or components of those assets. Again, age and material might well be indicators. It may be acceptable to allow some assets or components to fail because there is limited consequence. Other assets must not be allowed to fail as this may reduce service delivery, impact health and safety or create unacceptable costs associated with the failure. The intent in assigning criticality to particular assets is to allow the appropriate development of priorities through risk mitigation plans and to incorporate the results of these plans in the intervention process. This also can drive the condition assessment process both in terms of frequency of surveys and the level of sophistication to be employed.

Sampling Approaches Pursuing a sample of the assets for condition assessment may be necessary in some circumstances and organisations should consider the opportunity for sampling to make the process more manageable and cost effective. This is particularly so for large networks of buried assets. Statistical methods need to be employed to ensure the sample size is appropriate and that sampling will give meaningful results, when extrapolated across a whole network.

Condition Assessment Program

Examples of condition and performance rating systems are provided at Section 2.5.4 in the IIMM. You should read this section now. We next consider what options / techniques are available. This will include looking at both in-house resources to carry out surveys and data collection or engaging external service providers who specialise in such activity. Remember to fully consider new technology that is rapidly changing in this area with clever techniques to measure field performance of assets through digital recording devices and global positioning systems.

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Benefit/Cost Considerations

There will be direct and indirect benefits with each possible option or technique. Some of these will also be quantifiable whereas others may not be so easily quantified. Condition assessment needs to be justified economically by considering the costs of a program and the benefits expected to be achieved. It is important to ensure that end use of the data is commensurate with collection costs to avoid too detailed an approach when an initial random sample with interpolation of results would be more cost-effective. All costs need to be included such as for specialist equipment, labour, training and data capture, storage and analysis. As with all economic analysis, a sensitivity analysis should be carried out on those parameters which are more likely to be beyond the control of the organisation, such as market forces affecting the opportunity cost of capital, community expectations/perception on risk and other factors likely to change in the long-term.

Survey Frequency

It is also important to assess the frequency of surveys and costs associated with the process. The frequency of surveys will be linked to the organisation’s needs for maintaining currency of its data and also to meet compliance obligations with issues such as Accounting Standards for valuations and depreciation calculation, compliance with other codes such as fire safety etc. With significant costs typically involved for surveys it is important that an organisation appropriately weighs up its risk profile to ensure that the frequency of surveys for particular assets (considering their criticality) in the portfolio are undertaken to mitigate risks associated with all the foregoing factors for each particular asset. Refer to the next Topic for more on risk management and criticality. It is important to recognise that some assets, because of their critical nature or rapidly changing value, might require annual inspection whereas others might be reviewed only every 3 to 5 years. Generally, no longer than 5 years should elapse between condition surveys. Other factors here include risk issues where the potential for public liability claims mean that condition surveys need to be carried out much more frequently as part of the organisation fulfilling its duty of care. One example is footpaths where there is high potential for trip and fall claims to be made on the council. Regular inspections may be conducted as frequently as weekly in some cases to ensure there are no public safety issues (trip hazards and the like). However, the following guidance is provided to assist practitioners in determining survey frequencies.

• All asset classes should be surveyed at least every five years. • Highly critical assets or critical components might be surveyed more frequently such as

every three years if deemed warranted. Consider a rolling annual survey program with say 20% of the portfolio being surveyed in a given year. Intervening year valuations can be updated by using appropriate cost indexing factors from construction price handbooks.

• Target the resurveys to components that need to be resurveyed. For example, a concrete tiled roof is unlikely to need another survey for 10 years if it was initially assessed to be in a very good condition

(IPWEA 2009)

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Business drivers and available condition assessment technologies will change, so the programme should be the subject of continuous review and improvement. Reading 6.2 Read case study 2.36 p 2/82.

Condition Assessment Techniques There are a plethora of techniques available to asset managers and it behoves the asset manager to select one which is most appropriate to the task involved. Visual inspection is probably the most common and simple but technology is providing now for many other ways of testing and proving condition of assets. Factors to consider include:

• Using standard industry methodologies, where available, to maximise use of industry guidance and facilitate benchmarking with other agencies;

• The applicability of the technique to the likely failure mode that is expected given the asset material and the operating environment;

• Case studies of successful (or unsuccessful) industry use in related applications – particularly in sectors where a range of different technologies are available from suppliers;

• The number and reliability of suppliers of the technique to the local market; • Whether the costs and disruption associated with more destructive techniques are worth

the improved outcomes over visual and/or non-destructive techniques; and • When considering adopting new technology or techniques, consider the impact of losing

the ability to monitor trends from previous results using old methodologies.

(NAMS and IPWEA 2011 P2/77, 78)

Buried assets create some particular challenges and are increasingly requiring the use of smart technology to assist in carrying out the task cost effectively. Gravity systems such as sewers and stormwater drainage can at least be inspected by closed-circuit television. New camera technology such as “QuickView” is even further enhancing these processes, allowing a quick overall assessment to identify sections that might need more detailed CCTV, at about one tenth of the cost. (http://www.envirosight.com/index.php/zooming/quickview/overview.html) Pressure mains are more difficult and may need to be closed down for inspection or rely on other monitoring methods like pressure testing, X-ray and the like. Reading 6.3 Refer to table 2.5.1 of IIMM at page 2/78 for a range of various condition assessment techniques for various asset types. Consistency and the repeatability are issues that always need to be considered when choosing an appropriate technique.

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Condition Grading Systems

The Simple Approach The most commonly adopted (minimum approach) condition rating system across many asset classes is the basic 1 to 5 where Condition 1 is very good or as new and Condition 5 is very poor and approaching being unserviceable. This condition rating model shown in Table 2.5.2 of the IIMM Page 2/79, is a typical approach for an organisation responsible for major groups of passive assets (e.g. roads, pipe networks, distribution assets) as well as some dynamic assets (e.g. pumps, plant and equipment). This outlines a simple method to assess asset condition, based on a top-down approach where experienced staff can often make a call on the condition grade based on asset register information, maintenance history and performance monitoring. Many visual inspection techniques do also apply this simple rating system. The Intermediate Approach The approach shown in Table 2.5.3 of the IIMM Page 2/79, involves the enhancement of the organisation’s ability to rank more effectively those assets that constitute a significant problem at condition levels 3, 4, and 5. The intermediate condition rating approach is usually expanded to suit:

• asset types • failure modes • evidence of distress.

The simple and intermediate approaches allow development of basic predictive decay curves, as discussed in later sections of this topic. The sophisticated approach using greater numbers of parameters will generate more accurate curves and give greater certainty to the current condition of the asset. The Advanced Approach Although sophisticated systems may allow the condition to be assessed on up to ten different parameters with condition scores between 0 and 1,000 they can still be broken down into the base scores of 1 to 5 if required. The adoption of sophisticated condition ranking systems may not be justified for all assets. It should be noted that it would require highly specialised and skilled inspectors to make such a fine distinction in the rating applied. Table 2.5.4 of the IIMM Page 2/80 demonstrates such a system. Reading 6.4 Go to the Case Studies 38 and 39 on Pages 2/80, 81 of the IIMM to see further examples of application of simple and sophisticated condition assessment rating systems. Refer also to Section 2.5.6 on pp 2/85-89 of the IIMM for various condition rating standards that can be applied for different classes of assets typically found in infrastructure assets.

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Activity 6.1 For a particular group of infrastructure assets that you are familiar with, through discussion with staff responsible for those assets, describe what you think would be an appropriate condition rating scoring methodology to apply to those assets. Is this actually applied in practice? Condition Monitoring and Useful Life One of the benefits of carrying out regular condition assessment over an extended period of time is that it builds up a significant body of knowledge about how the assets typically degrade over time. From this, asset managers are able to more confidently predict the future in terms of asset degradation, remaining life and optimum time to intervene with some appropriate remedial action. Reading 6.5 Refer to Figure 2.5.5 on page 2/90 of the IIMM for a representation of asset decay profile and various factors that also come into play even before physical life is exhausted. As detailed in the IIMM, condition degradation modelling can be broadly grouped under two main headings:

• Statistical modelling – by inspecting a class of assets at different ages in their life cycle and under a range of environmental conditions, it is possible to establish a mathematical model to predict how that class of assets will perform over time. As already indicated, more ongoing measurement will allow such predictive tools to be continually refined.

• Mechanism based – by predicting life based on experience in how the assets fail, and how they begin to experience difficulty in delivering required levels of service.

As highlighted above, asset condition degradation typically accelerates over time for most assets and their components. Hence condition grades can be utilised to assess the remaining useful life of these components through the application of appropriate degradation models. Decay curves exist for different types of assets or their components and these curves are obviously impacted on by a range of issues such as the environment in which the asset sits. For instance buildings close to the ocean will have a shorter life due to more aggressive corrosion impacts. Pipes in acid sulphate soils similarly will typically be impacted more aggressively than those in other soils. The following curve is one that mathematically represents typical asset deterioration for many infrastructure assets and has been shown from experience to be fairly reliable. Varying the value of “J” impacts the shape of the curve as described below.

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(INGENIUM 2006) Altering the deterioration = ƒ (condition, life) n algorithm is possible when evidence on the actual deterioration of materials is gathered and analysed. Different component types will deteriorate in different ways and different rates. Changing the power function ‘n’ from 2 to 3 does reflect the more rapid end of life deterioration curve of mechanical or electrical components. Using n = 2 generally provides consistency and has been proven to be a good planning indicator over the past decade in a number of different industries. Using n = 2, an asset in good condition (grade 2) has 55% of its life remaining. The progressive step from grade 1 to grade 2 is significant but reflects reality, i.e. an asset will be in a very good condition for about half of its life. However, this gap can significantly impact the long-term financial analysis when an asset changes from a grade 1 to a grade 2. For example, consider the financial consequences of a property surveyor assessing roofing material to be grade 1 when it is actually grade 2. The 20 year budget projections would need to increase. The reality is that the work would only be carried out when needed. Hence, the analysis is still a very good long-term planning tool. It is obviously important to clearly establish the criteria applicable for assigning a particular condition rating score to an asset component and that such then be applied consistently throughout the inspection process. Remaining life may be estimated from condition where reliable condition decay profiles are available. Where condition is the sole determinant in renewal intervention the estimated remaining life may be determined by estimating the time until the asset reaches the minimum service level. Useful life may be estimated by the following formula: Useful life = Age + Remaining life

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A method developed for assessing the remaining and useful life for road assets where condition data and reliable condition decay curves are not available is reported in IPWEA, 2007. This involves the following steps:

• Establish a panel of persons with local expertise in operating, maintaining and managing the local road network.

• Identify the local factors that affect the useful life of the road network assets: e.g. o Traffic volumes, o Heavy vehicle traffic volumes, o Environmental conditions (subgrade, rainfall, pavement materials, etc.),

• Review those factors which critically affect performance of the road network, • Identify assets nearing the end of their life and group in like age groups; e.g.

o Surfaces (10-15 yrs, 15-20 yrs, 20-25 yrs, >25 yrs), o Pavements (45-50 yrs, 50-55 yrs, 55-60 yrs, >60 yrs),

• Identify a sample of road assets representative of critical performance factors and age groups

• Inspect the sample of road assets and assess the remaining life of each asset by consensus, i.e. how long before renewal treatment is required to maintain the agreed service levels,

• Add estimated remaining life to the age of each asset to give the estimated useful life for each factor and age group,

• Document the process and make recommendations for any change to existing useful lives.

A method for determining useful life is given in Local Government Victoria’s Guidelines for Measuring and Reporting the Condition of Road Assets. Its recommendations for assessing remaining and useful life are: Total Useful life should be derived from actual local data where assets have been renewed or show sufficient distress to enable remaining life to be determined. Where this data is not available Councils need to use the best available estimates of remaining life and asset age to determine total useful life. Total useful life is the elapsed life plus the estimated remaining life of the asset. Total Useful Life = Age + Remaining Life Remaining life should be determined from either age or condition, depending on where the asset is in its lifecycle. Age based assessment of remaining life is recommended in the early part of the asset lifecycle where visible signs of distress are not evident or are difficult to reliably convert to remaining life. The more difficult method of using condition to determine remaining life should only be applied for assets nearing end of life when signs of distress become evident. The regular inspections of roads as part of road management plans can be used to check which assets are nearing the end of life and should be assessed on a condition basis.” (Local Government Victoria, 2006 Page 2) However, it is important to also recognise that condition is not the sole determinant in estimating remaining life. A multi-condition test should be used as shown in the Table 1.1.

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Table 1.1. Multi-Condition Test for Determining Remaining Life Remaining life determining Factor

Test Example

Condition Functional suitability

Function Period until the asset no longer provides the required level of service or economic benefits. Condition Period until asset reaches condition intervention level for renewal

Public image of CBD streetscape is not acceptable to community. Bridge is unable to carry legal loadings. Time until asset condition deteriorates to renewal intervention condition rating.

Capacity and utilisation

Capacity Period until the physical capacity of the asset is reached. Utilisation Period until the utilisation limits (high or low) of the asset are exceeded.

Stormwater runoff from growth area exceeds capacity of downstream drainage system. Usage of child care centre falls due to demographic changes.

Cost and efficiency

Cost and efficiency Period until operating costs exceed acceptable limits.

Maintenance costs for a timber bridge exceeds life cycle costs of replacement bridge.

Safety and compliance

Safety Period until asset is not able to provide safe services. Compliance Period until the asset’s usage no longer complies with existing and planned legislative/regulatory requirements.

Safety incidents reach non- acceptable level. Asset will not comply with new legislation to be enacted in 2 years time.

Location Location Period until the location of the asset becomes unsuitable or causes economic inefficiencies.

Council swimming pool is located in one centre with declining population and where large residential growth has occurred in another area.

The critical information is the estimated remaining life. This should be estimated from the best available information available which may include a pavement management system with 30 years of performance data, a building condition system, Closed Circuit Television (CCTV) inspection and condition rating of underground pipe assets, sampling and strength testing of pressure pipe assets. If this information is not available, estimated remaining life may be

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estimated by the consensus of a panel of experienced management, supervisory and operational staff. In the event of no meaningful data on how the assets condition decays over time, a proxy straight line for deterioration over the notional total life of the asset, may have to suffice. The condition/remaining life assessment process can be used to review useful life using the formula Estimated useful life = age + remaining life This process can be used to conduct the review of useful life of assets required by accounting standards. It is necessary to document the process into a report from a responsible officer to justify and substantiate the review process for audit purposes. (IPWEA 2007) We will see in later Topics on financial management how the assessment of remaining useful life is used to determine the written down replacement cost of the asset or effectively its depreciated replacement cost. Once a comprehensive data model is established with the whole asset and its components recorded on asset registers, it can be a relatively simple task to calculate the current cost of replacing those assets with their modern equivalent. This then gives a value of the current replacement cost. However for accounting purposes, we are more concerned with the written down value or depreciated value taking into account the value of the service potential of the asset that has already been consumed. Hence the importance of the condition assessment process to give us a more accurate picture of the remaining useful life of the asset, From that we can then calculate the depreciated replacement cost. Reading 6.6 Download the Victorian Government’s report entitled ‘Guidelines for Measuring and Reporting the Condition of Road Assets’ May 2006. Peruse Section 11 of this report to see a practice guide to assist councils with the determination of road asset condition and financial reporting.

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Data Collection and Management Data collection and management is allied to the whole subject of information management which we dealt with in the previous Topic. However, it is important to recognise here that managing the considerable volume of data that will flow from the condition assessment process, is vital to the success of that process. Data collection techniques can obviously benefit from appropriate use of technology with electronic data capture through hand held devices and the like. Also, those collecting the data must be suitably qualified to carry out the inspection process and make determinations about the condition rating, utilising scoring systems such as those described earlier in this topic. Efficient and cost effective management of the significant amount of data that will inevitably be generated from the condition and performance assessment process is an important consideration and one that needs careful attention prior to commencing the data collection process. This needs to be addressed in a systematic way to avoid potential pitfalls that can derail the success of the final outcome being sought. It is also imperative that any systems employed be compatible and able to integrate with the organisation’s existing platform and systems such as its GIS and any existing asset management systems. Accordingly, adoption of an Information Management Strategy early in the process is highly recommended.

Condition Survey Personnel Whether being carried out by in-house personnel or an external provider, it is critical that the Surveyor(s) utilized to carry out the on-site condition assessment process are appropriately qualified for the task. Surveyors use their knowledge of the asset components to provide accurate, reliable and complete information for the Asset Manager to decide on the timing and scope of works. It is not the responsibility of the surveyor to identify the timing of works. Therefore, it is the role of the surveyor to ensure that the data is:

o Complete – appropriate level of detail o Reliable – the data collected is consistent between surveys and between surveyors o Accurate – measurements and assessments are made with accuracy in mind.

Resource Cost Lives Qty Cond. Student C B B/C C/D Trained builder B B B B/C Experienced Surveyor A A/B A/B A/B Specialist engineer A A A/B A Selecting who is to undertake the condition survey should be carefully considered. Consider the following example for say a building survey. Although it is tempting to employ low cost students, their experience and skill levels should be balanced with their costs and the resulting data confidence.Although low cost resources can adequately identify the assets (asset names and quantities), they may struggle to confidently assess condition grades and remaining lives. Where the student can provide a good overall view at minimal cost, the confidence of both quantities and condition may suffer. A trained builder would have a better understanding of how to measure quantities and a practical knowledge of condition for potentially twice the cost. An experienced property surveyor may provide the optimal outcome at a realistic cost. A specialist Engineer would be the most expensive option to provide a highly reliable result.

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Reading 6.7 There are a number of related sources of advice available on carrying out condition assessments for infrastructure assets. IPWEA has produced a series of Practice Notes to provide assistance to field personnel in carrying out condition surveys for a range of different asset classes. Go to the following website to see some examples of such material available. http://www.ipwea.org.au/bookshop/pns/ Activity 6.2 For the same particular group of infrastructure assets that you selected in Activity 6.1, comment on the likely shape of the degradation curve for those assets, how you would go about determining an average remaining life for those assets, who would be most appropriate for carrying out condition surveys and how frequently they should be done.

Summary In this topic, we have focused on the importance of the condition assessment process as one of the inputs to the asset management process in determining maintenance and renewal needs for the assets and assessing remaining useful life. Remember that whilst important this is only one factor and there are others detailed that impact on these management decisions as well. These concepts are closely linked with associated material on risk management through consideration of the criticality of various assets or components of those assets. There are also strong linkages to the earlier material on levels of service as condition should be measured in terms of how well the asset is delivering the required level of service. As with all other aspects of the asset management process we again focus on the minimum to advanced approach to this part on condition assessment. This topic covers the importance of breaking assets down into their components when carrying out a condition assessment. It provides details on various rating systems starting with the simplest core approach of a 1 to 5 scale leading into more sophisticated rating systems as we get into the more advanced approaches. This also relates to the question of cost benefit ratios with the cost of sophistication used being tempered by the benefit expected from the process followed. This topic provides significant information on typical degradation curves showing how assets perform over time and the importance of developing and verifying these through repeated condition assessments to build confidence in the data. Hence the importance of utilising a well- documented repeatable process that will stand up to audit scrutiny. The topic also provides information on frequencies of inspection and the typical skills and experience desirable for those undertaking the field surveys. Finally some issues were raised, that will be covered in more detail in later topics such as financial management including determining depreciated replacement values of assets through the condition assessment process.

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Review Questions

1. What is involved in condition assessment of infrastructure assets and why is it important in the asset management process?

2. What are the main objectives of condition assessment for infrastructure assets and comment on how this process sits within the overall asset management process?

3. What is meant by componentisation of an asset – Give examples and discuss various grading systems for condition surveys and how to choose the most appropriate?

4. How do assets typically degrade over their useful life and how can condition assessment be used to measure remaining useful life?

Review Questions and Sample Answer Summary 1. What is involved in condition assessment of infrastructure assets and why is it important in

the asset management process? Answer Summary dot points; • Discuss the core and advanced approaches that can be applied and importance of

selecting process that weighs up the following: – o What resources are available in terms of skills of staff or external survey firms to

provide meaningful condition data? o How repeatable is the process to ensure consistency over time for subsequent

surveys? o Will the cost involved be warranted for the importance of the assets involved? o What level of condition data is needed to improve decision making for the

particular assets? • Comment on the following main benefits of knowing the current condition and

performance level of an asset: o Ability to plan for and manage the delivery of the required level of service. o Avoidance of premature asset failure, leaving open the option of cost effective

renovation. o Risk management associated with asset failures, and mitigation of the

consequences of failure. o Accurate prediction of future expenditure requirements through understanding

remaining asset life and capital investment needs. o Refinement of maintenance and rehabilitation strategies.

• Comment on the issues of criticality for various assets or asset components and how that might impact on the level of sophistication applied for the condition assessment process.

2. What are the main objectives of condition assessment for infrastructure assets and

comment on how this process sits within the overall asset management process? Answer Summary dot points; • Discuss the following major outcomes as reasons for carrying out condition

assessments: o Identify those assets which are in a condition that is below acceptable levels or

approaching such level.

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o Predict when asset failure to deliver the required level of service is likely to occur o Ascertain the reasons for performance deficiencies o Determine what corrective action is required and when (maintenance,

rehabilitation, renewal) o Record asset failures for use in advanced AM techniques.

• Comment on the following typical asset condition questions which should be considered when preparing a condition assessment strategy :

 When was the asset constructed / rehabilitated / replaced?  Where is the asset / component in its lifecycle?  What is the asset’s theoretical effective life?  What is the estimated residual life until rehabilitation and / or replacement is

necessary?  Has the asset been inspected physically and by what process?  How can the asset’s deterioration be predicted?  How can the asset’s failure be predicted?  How could planned maintenance prevent the asset’s failure or extend the time

to failure?  Can the asset be rehabilitated and at what cost?  What level of service will the asset deliver once rehabilitated and for how

long?  Is the asset technically or commercially obsolete?  Are asset condition gradings appropriate and relevant?  Are asset condition monitoring processes effective?

• Comment on the relationship of condition assessment within the context of the overall AM process highlighting its importance in decision making by being able to determine the need and timing of some preventative or remedial action to prevent loss of service or economic loss, but recognising the impacts that the following also have on such decision making: o Technical advances which might make the existing asset obsolete. o Changes in community expectations meaning that the asset no longer has the

capacity to meet community standards. o Growth impacts meaning that the asset’s capacity falls short of the new demands. o Compliance – changing standards mean the asset becomes non-compliant. o Economic life – whereby the costs of continuing to operate the asset warrant it now

being replaced.

3. What is meant by componentisation of an asset – Give examples and discuss various grading systems for condition surveys and how to choose the most appropriate?

Answer Summary dot points; • Comment on the importance of breaking the asset down into components recognising

that it these various components that make up the total asset but each component will typically deteriorate at a different rate requiring intervention in the form of maintenance or replacement at different times over the whole life cycle of the asset.

• Discuss examples of how various assets can be broken into components and segments using a road or a building as an example.

• Comment on the various grading systems along the continuum from the simple core approach of a 1 to 5 rating and what these typically describe through intermediate and sophisticated or advanced systems that move into a larger number of ratings with commensurately more difficulty in measuring them.

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• Discuss the cost benefit ratio assessment that should considered when selecting the rating system to be used and comment on the following factors that should also be weighed up:

o The type of the asset o The criticality of the asset o The relative age of the asset o The rate of deterioration of the asset o The economic value of the outcomes to the business. o

4. How do assets typically degrade over their useful life and how can condition assessment be used to measure remaining useful life? Answer Summary dot points; • Discuss the typical degradation profile that applies to most infrastructure assets and the

mathematical representation through the power curve which can be impacted by changing its parameters.

• Comment on how remaining life may be estimated from condition where reliable condition decay profiles are available. Where condition is the sole determinant in renewal intervention, the estimated remaining life may be determined by estimating the time until the asset reaches the minimum service level.

• Discuss the formula typically used: – Estimated useful life = age + remaining life

• Comment on techniques that can be employed where there is insufficient condition data available to be able to confidently assess the remaining useful life of an asset. Refer to the suggested process as detailed in the section on “Condition Monitoring and Useful Life” in this topic.

• Discuss the importance of not relying purely on physical condition assessment in determining remaining useful life and look at the multi condition test also as detailed in table 1.1.

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References INGENIUM 2006, “NAMS Property Manual” Association of Local Government Engineering New

Zealand Inc. Thames, New Zealand

IPWEA 2007, “NAMS.PLUS Asset Management”, Institute of Public Works Engineering

Australia, Sydney 2007

IPWEA 2009, “Buildings Condition and Performance Assessment Guidelines”, Institute of Public

Works Engineering Australia, Sydney 2009

Local Government Victoria 2006 “Guidelines for Measuring and Reporting the Condition of Road

Assets”. Department of Victorian Communities Spring Street Melbourne IPWEA (2015) International Infrastructure Management Manual V 5.0

Readings

Reading 6.1 Refer also to the Local Government Victoria’s Guidelines for Measuring and

Reporting the Condition of Road Assets (May 2006) to see an example of how roads should be split into both segments and components. See page 21 Figures 11and 12.

This can be downloaded from www.dtpli.vic.gov.au/_data/assets/pdf_file/0020/225191/0706- 16MeasuringReporting.pdf.

Reading 6.2 Read case study 2.36 p 2/82. Reading 6.3 Refer to table 2.5.1 of IIMM at page 2/78 for a range of various condition

assessment techniques for various asset types. Reading 6.4 Go to the Case Studies 38 and 39 on Pages 2/80, 81 of the IIMM to see further

examples of application of simple and sophisticated condition assessment rating systems. Refer also to Section 2.5.6 on pp 2/85-89 of the IIMM for various condition rating standards that can be applied for different classes of assets typically found in infrastructure assets.

Reading 6.5 Refer to Figure 2.5.5 on page 2/90 of the IIMM for a representation of asset decay profile and various factors that also come into play even before physical life is exhausted.

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Reading 6.6 Download the Victorian Government’s report entitled ‘Guidelines for Measuring and Reporting the Condition of Road Assets’ May 2006. Peruse Section 11 of this report to see a practice guide to assist councils with the determination of road asset condition and financial reporting.

Reading 6.7 There are a number of related sources of advice available on carrying out condition assessments for infrastructure assets. IPWEA has produced a series of Practice Notes to provide assistance to field personnel in carrying out condition surveys for a range of different asset classes. Go to the following website to see some examples of such material available. http://www.ipwea.org.au/bookshop/pns/.

Activities

Activity 6.1 For a particular group of infrastructure assets that you are familiar with, through discussion with staff responsible for those assets, describe what you think would be an appropriate condition rating scoring methodology to apply to those assets. Is this actually applied in practice?

Activity 6.2 For the same particular group of infrastructure assets that you selected in Activity 6.1, comment on the likely shape of the degradation curve for those assets, how you would go about determining an average remaining life for those assets, who would be most appropriate for carrying out condition surveys and how frequently they should be done.

  • Preview
    • Learning Objectives
  • Introduction
    • Condition Assessment Principles
  • What is ‘Condition’ of an Asset and why monitor it?
  • Objectives of Condition Assessment Process
  • Componentisation for Condition Assessment
  • Typical Condition Assessment Process
    • Which Assets to Inspect?
    • Criticality
    • Sampling Approaches
    • Condition Assessment Program
    • Benefit/Cost Considerations
    • Survey Frequency
  • Condition Assessment Techniques
  • Condition Grading Systems
    • The Simple Approach
  • Data Collection and Management
    • Condition Survey Personnel
  • Summary
  • Review Questions
  • Review Questions and Sample Answer Summary
  • References
    • Readings
    • Activities