An asset inventory is a list of items of value owned by the water system, with information about each item. The inventory increases your knowledge and understanding of the system and gives you specific information to make better financial decisions. It will also help you schedule repairs and replacements to ensure that you are getting the greatest value possible from your assets. If you do not know what you have, you cannot manage it effectively.
Steps to Preparing an Asset Inventory
There are five main steps in preparing an asset inventory. These steps are explained further in the following sections.
- Step 1: Obtain a plan of the water system
- Step 2: Identify and list the water system’s assets
- Step 3: Determine the life expectancy of components
- Step 4: Calculate the remaining service life of each asset
- Step 5: Create a list of service providers
Obtain a clear and current plan of your water system. Include information on all the components on your system from all available sources – from your water source, treatment system, distribution system, storage, etc. so it is gathered together in one place. You will then have ready access to the data for the later steps of preparing an asset management plan or when communicating with stakeholders, such as when issuing your annual report.
Information on your system can be found from As-built Plans; Well Logs; Maintenance Logs; Land Surveys; Manuals and Receipts; Construction Permits; Risk Assessment Reports; and Annual Reports.
Create a schematic of your water system that consists, at a minimum, of the water source, treatment, and distribution components. The schematic will help you list your assets.
When you are listing the assets, also collect and record the following information for each:
- Service History
- History of Breaks and Malfunctions
- Useful Life
Detailed information may include the manufacturer’s name and the item’s model number, installation date, and original cost. A more detailed version may include the condition of the asset and its remaining useful life.
The figure below is an example of a schematic for a small water system. However, you will find that each system is different.
Find information about the expected life of your water system’s components by referring to a list of Typical Life Expectancies, such as this one: Typical Life Expectancies on the Canadian Water Directory web site.
There is some flexibility in the way you define an “asset”. Some of your water system’s “assets” may consist of a single component, such as a pump. Other “assets” may result from the combination of several components that together make an “asset”, such as a pumping station, which includes pumps, pipework valves and other components. You might consider grouping components of similar life expectancy as one “asset”, for example, group curb stop valves and corporation stop valves together as one asset.
Knowing when to repair, rehabilitate or replace an asset will help you get the most value from your assets. Still, at some point, continuing to repair the asset will no longer be cost-effective, and you will need to rehabilitate or replace it. To prepare and budget for replacements, you will need to calculate the remaining service life of each asset.
Several factors can affect an asset’s service life, including the quality of routine servicing and maintenance, excessive use and environmental conditions, such as poor source water quality, soil quality, and climate. Use your local knowledge, combined with the manufacturers’ recommendations, to calculate the remaining service life. Assets that are in poor condition, not regularly maintained, or subject to excessive use or soil quality issues will be at the lower end of the expected useful service life range.
Once you have an up-to-date inventory of assets, it is a good idea to record details of the people and companies who can service the assets and of suppliers who can provide replacements and upgrades (see: CanadianWater.Directory). Store this information with your inventory records to save time in the future when you have questions or concerns about individual assets. This information can also be used to help explain repair and replacement costs to users when developing a budget or proposing a rate increase.
To help you create an Annual Operating Budget, you can complete Excel worksheets available at the Canadian Water Directory's Financial Best Practices web page.
- Click on this link to the web page to access the Excel worksheets: Financial Best Practices
- Once on the web page, click on the worksheets listed under BMP A.