Wise Water Words - Volume 51, Issue 1 (Spring 2014)
The Concept of Assets
By Mike Wentink [Nebraska Department of Health and Human Services]A current "buzz phrase" used frequently in the water industry is "asset management." The process itself has actually been in practice for many years, but may have been practiced under different names. Within its broad definition, it is simply monitoring and maintaining items of value. Those items of value includes tangible objects and also intangible items such as intellectual property, patents and goodwill (factors that tend to make income rates high relative to investment). Within the water industry, most if not all of the focus is on tangible items such as pipes, pumps, and source water. One very important asset of any utility that is often overlooked is the knowledge and experience of the water operator who monitors and maintains the public water system assets.
It can be a challenge to associate all of the characteristics of the operator with terms commonly used in the practice of asset management, but some similarities exist. For example, the operator has an expected life (employment) span, as would pipe. The difference is that the intangible asset of institutional knowledge within the operator increases over time, where the flow characteristics of the pipe generally decreases. The values attributed to water system staffing are often regarded by utility decision-makers as merely an expense through salaries and other payroll costs. Often, minimal attention is given to the idea that institutional knowledge is an asset that might be measured and reported as such. Maintaining that asset (the operator) does take some investment over the long term, but does result in an increasing value in water system staff.
Like many other states, Nebraska has an aging water-industry workforce as Baby Boomers close in on retirement. Findings of a survey conducted by the Nebraska Section AWWA in 2009 indicated at that time that 12% of licensed water operators were ages 60 to 64, and an additional 9% of licensed water operators working in the public system were 65 or older. This 21% total reflects that about one out of five licensed water operators in public water systems were likely to retire in the following five to ten years (and that survey was conducted five years ago). Asset management also entails planning to eventually replace assets with "new equipment" of equal or greater capabilities. In the field of human resources, that process is called succession planning. That same replacement rule applies to any asset that is critical to the effective performance of the water system.
It is difficult to place a value on such an intangible asset. However, it is vitally important that water system owners view the operator as an asset, one that does appreciate in value as experience and institutional knowledge is gained. When replacement time comes by way of operator retirement, hopefully that wealth of institutional knowledge has been transferred to the replacement through the appropriate amount and type of experience necessary to succeed in the operations of the water system.
