Review of the water industry UKWIR project when to repair, refurb or replace assets ICS Consulting

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18 Νοε 2013 (πριν από 3 χρόνια και 6 μήνες)

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Review of the water industry UKWIR project


when
to repair, refurb or replace assets


ICS Consulting


November

2011

:diagnostics/

:transformation/

:investment planning/

:portfolio optimisation/

:investment economics/

:regulation and economics/

:training/

Page :
2

©

ICS Consulting Ltd 2011

Agenda


Intro to the UKWIR project


Objectives


Deliverables


Key findings of the project


Application


Demo of the tool


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3

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ICS Consulting Ltd 2011

Project Objectives


Project commenced in Spring 2011


Development of a robust modelling and costing guidance:


Identify potential intervention strategies for different types of assets


Identify and justify asset policy decisions


Identify intervention cost approaches


Map best practice approaches to Common Framework structure


Focus primarily on non
-
infrastructure assets


Practical examples


Develop Excel Tool


Costing and deterioration examples




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4

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ICS Consulting Ltd 2011

What are the challenges to address?


Limited scope of interventions considered


used to answer:


At what point do we stop reactively repairing assets and replace it due to cost
considerations?


Should we proactively invest to get a better level of service?


Limited use of asset attributes


Lack of maintenance, environment, location, asset history, etc.


Hard to understand impact of some intervention if only have ‘age’ only


Optimal asset policy may be a mix of interventions


Optimal asset policy may not be optimal across the asset base


COTS
-

time consuming for a single intervention strategy, and may not be
well suited to a range of different interventions strategies


Focus has been on next 25 years, rather than next 5 years.

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5

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ICS Consulting Ltd 2011

Summary of the Risk Modelling Process

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6

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ICS Consulting Ltd 2011

The guidance centres on the development and build of a
risk modelling framework


The framework must start with
considering the TOP DOWN
priorities


Top down priorities are
generally communicated in
terms of service performance
(though some may be asset
performance)


Many of these will be ‘valued’


using WTP for example


We also need to model up to
these service performance
metrics



Corporate Priorities and Constraints

Customer and Environmental Values

Asset Performance

Physical Assets

Investment

Service Performance

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7

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ICS Consulting Ltd 2011

Developing a modelling approach involves a number of
stages

1

Asset and
Intervention
definition

2

Asset
deterioration
modelling

3

Service
Consequence
modelling

4

Determining
costs

5

Decision
making

Page :
8

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ICS Consulting Ltd 2011

The modelling approach involves a number of stages

Stage 1:


Identify assets to be modelled and the range of interventions


Consideration of the triggers for intervention


Intervention when a trigger is hit can be manually set or determined by
optimisation process


Modern equivalence may be relevant to capture


1

Asset and
Intervention
definition

2

Asset
deterioration
modelling

3

Service
Consequence
modelling

4

Determining
costs

5

Decision
making

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9

©

ICS Consulting Ltd 2011

The modelling approach involves a number of stages

Stage 2:


Estimate asset performance profile


Fix on fail baseline


Range of alternative intervention strategies


To model interventions and triggers


not just age only models


Ideally need some measure of condition/performance


helps identify
intervention impacts

1

Asset and
Intervention
definition

2

Asset
deterioration
modelling

3

Service
Consequence
modelling

4

Determining
costs

5

Decision
making

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10

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ICS Consulting Ltd 2011

The modelling approach involves a number of stages

Stage 3:


Estimation probability of service failure given asset failure


Estimate severity of the service failure



For the intervention strategies need to estimate:


Number of asset failures; number of interventions; asset base
profile; expected service levels


Validation techniques needed



1

Asset and
Intervention
definition

2

Asset
deterioration
modelling

3

Service
Consequence
modelling

4

Determining
costs

5

Decision
making

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11

©

ICS Consulting Ltd 2011

The modelling approach involves a number of stages

Stage 4:


Cost of interventions


Impact of interventions on operational costs


Inclusion of social costs and benefits and private costs in the costing
framework


Discounting and NPV



1

Asset and
Intervention
definition

2

Asset
deterioration
modelling

3

Service
Consequence
modelling

4

Determining
costs

5

Decision
making

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12

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ICS Consulting Ltd 2011

The modelling approach involves a number of stages

Stage 5:


Selection of the optimal asset policy


Selection of the optimal programme of investment


Use of corporate tools to support decision making is preferable


Understand sensitivity and uncertainty around the modelling inputs and
assumptions


Clear explanation of the choices made about investment


1

Asset and
Intervention
definition

2

Asset
deterioration
modelling

3

Service
Consequence
modelling

4

Determining
costs

5

Decision
making

Page :
13

©

ICS Consulting Ltd 2011

Designing the framework


Top down needs to align with bottom up


Failure Modes Analyses needed to develop the bottom up approach:


Modes


mechanical asset failure: repairable or not


Causes


maintenance, age, usage, corrosive environment…


Effects


supply interruption, pollution…..


Need to consider the impact of duty standby and duty assist


Data gaps are likely


may need to group failure modes, result asset
attributes, etc in light of that


There is only so many gaps in data that can be dealt with elicitation
and other techniques

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14

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ICS Consulting Ltd 2011

Designing the framework


Consistency in the framework is desirable


Data gaps may mean that the robustness across the whole analysis is not uniform


Deal with this using sensitivity analysis and uncertainty


Actual time and effort in modelling some elements depends on the size of the
programme in relative terms


the more the expenditure, the more effort
should be put in


It’s a journey


PR09 was a key learning point.


The time and resources to make the change to adapt to the learning
could be considerable


and may not always be worth it
.

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15

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ICS Consulting Ltd 2011

The key messages in risk modelling


Need to estimate pre
-

and post
-
investment profiles


Data gaps are inevitable and infill commonplace


Uncertainty around data should be explicitly considered in the analysis.


Survival analysis is most popular in modelling end
-
of
-
life failures for assets


Best practice is to use the Weibull distribution


AND many assets are repairable in nature


A mix of interventions should be included in the modelling framework


Proactive and reactive; Repair, refurbish and replace


Different levels of the asset hierarchy


The restoration times for the different types of interventions


rather than assets!


Intervention impacts articulated in terms of asset attributes and history


Performance, energy consumption, condition, nrs failures / refurbishments


Need better intervention benefits tracking

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16

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ICS Consulting Ltd 2011

Key messages in risk modelling


NI assets…. need to capture system reliability


BUT some reliability modelling techniques are resource and time consuming


need to be pragmatic given this


All service impacts need to be expressed in monetary figures


Aim for Cost Benefit Analysis (CBA) for all investments


Decisions based on CBA need to be made at the programme level even
though the modelling is at asset group level.


Uncertainty and sensitivity analysis are crucial


Understand robustness of decisions and the impact of data gaps and modelling
errors

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17

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ICS Consulting Ltd 2011

Examples and Demo of the Tool

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18

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ICS Consulting Ltd 2011

The Example in the Tool


Asset Selection by the Steering Group


Rapid Gravity Filter


Simplified to the four major assets


Actuator


Blower


Tank


Pipework


Demo of costing and deterioration modelling principles

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19

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ICS Consulting Ltd 2011

What does the data need to look like?


Excerpt of the failure data for actuator…..


Need to model qualitative data as a dummy

Asset ID

AGE

Nr Operations

Location

Replaced

Repaired

Time Start

Time End

A1

4

14

Outdoor

0

1

2007

2011

A2

8

11

Indoor

1

2

2005

2011

A3

8

12

Indoor

1

2

2006

2011

A4

7

15

Outdoor

1

4

2007

2011

A5

6

15

Indoor

0

1

2005

2011

A6

8

6

Outdoor

1

5

2007

2011

A7

8

16

Indoor

0

2

2005

2011

A8

4

9

Outdoor

0

1

2006

2010

A9

1

2

Indoor

0

0

2004

2005

A10

3

7

Indoor

0

0

2005

2008

A11

12

1

Indoor

0

4

2005

2011

A12

2

15

Indoor

0

0

2005

2007

A13

4

19

Outdoor

1

1

2007

2011

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20

©

ICS Consulting Ltd 2011

Weibull modelling….


Stata and R Weibull model


Stata estimates the shape parameter (
b
and
1/b
); R estimates (
1/b
) only


Intercept and predictor coefficients in R are scaled by
b
. Hence for the
constant in Stata of
-
10.28, the equivalent in R is
-
10.28/3.595 = 2.861


Key: Know the parameterisation of the software and the modelling tool !

Call:
survreg(formula = Surv(AGE, REPLACE) ~ LOCATION + OPERATIONS,
data = mydata)
Value
Std. Error
z
p
(Intercept)
2.8606
0.19093
14.983
9.53E-51
LOCATIONoutdoor
-0.75814
0.16871
-4.494
7.00E-06
OPERATIONS
0.00134
0.00893
0.151
8.80E-01
Log(scale)
-1.27941
0.16437
-7.784
7.05E-15
Scale= 0.278
Weibull distribution
Loglik(model)= -57.4 Loglik(intercept only)= -71.7
Chisq= 28.44 on 2 degrees of freedom, p= 6.7e-07
Number of Newton-Raphson Iterations: 7
n= 50
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©

ICS Consulting Ltd 2011

What about repairable rates


Again, know the parameterisation of the software and the tools


Need to use count data regression


note: the offset/exposure


Choice between exponential and power model


need to be sure which you
are modelling


depends on the nature of the age variable

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22

©

ICS Consulting Ltd 2011

Looking at the Tool…..

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©

ICS Consulting Ltd 2011

Summary of inputs and outputs


Service measures and social values


Discount rates


Energy prices & carbon prices


Asset lists


age and attributes


Deterioration models


Weibull end of life survival rates


Repairable failures


Service impacts


Interventions


costs and impacts


Intervention strategies


Age based triggers


(Repairable) failure based triggers



Pre and post simulation strategies


Age profile


Numbers of failures


Numbers of interventions


Intervention costs, energy costs


Service WTP, carbon costs


Cost benefit assessment of each strategy


Change in risk/service benefits (between pre
and post)


PV of Benefits


PV of Costs


NPV


Graph of breakdown of NPV by asset


Ranking of strategies


to select ‘best’ one

Page :
24

©

ICS Consulting Ltd 2011



Review of the water industry UKWIR project


when
to repair, refurb or replace an asset


ICS Consulting


November

2011

:diagnostics/

:transformation/

:investment planning/

:portfolio optimisation/

:investment economics/

:regulation and economics/

:training/