Mississippi State Department of Health

Water System Asset Management


Asset Management is a framework for water systems to effectively allocate their resources to balance water quality, cost and requirements.

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What is Asset Management?

Clean, safe drinking water is what all public water systems in Mississippi strive for on a daily basis. Customers want their water to meet the requirements of the Safe Drinking Water Act and remain aesthetically pleasing in the areas of taste, color and smell. Maintaining quality and safety can be challenging as vital assets age or suffer from poor operations or maintenance. Asset Management is balancing resources, time, and funding to meet the sometimes conflicting demands of water demand, quality, cost and safety. Asset Management is a framework to help utilities provide the desired level of service at the lowest life cycle cost. It’s also is a way of thinking about management in a more efficient and customer-centric way.

The framework of asset management consists of 5 core concepts:


There are practical advantages for operating your water system as well:

Good Business Practice

Good asset management has impacts on the daily/weekly activities, actions taken, and decisions that are made to keeping the water flowing for your customers. It affects funding for needed projects and could become a regulatory requirement for operation and capacity development. Asset management should be the way you do business, not an afterthought or future possibility.

All personnel and decision makers of the water system should support the process, and be aware of conditions so that actions can be taken before failures occur. Complaints of water quality or low pressure may be indicative of a larger problem with key assets that are near the end of their life span. While the benefits may not be immediately realized, and the framework can mean a lot of work to put in place, it will enable the utility to work smarter, not harder.

The Core Framework of Asset Management

Core 1: Current State of Assets

Developing your asset inventory answers common questions about your drinking water assets:

Some questions to consider in the process:

This is an important step that takes time depending on the number of assets that you have and the level of detail that you will try to achieve. Attempt to get the best data possible, but also consider it a work in progress that adds data over time.

Core 2: Level of Service

Your water system is in the business of providing potable, reliable drinking water at reasonable pressures and flows. Level of service defines what your want your assets to provide and how you want them to perform. It can be a balance of what both the water system and customers decide as long as complies with the required rules and regulations.

What defining level of service does:

Level of service establishes goals for your system and for your customers. Good goals are SMART: Specific, Measurable, Attainable, Realistic and Time-bound. Good goals may come at a slightly higher cost, but customers may be willing to take on that cost if service is better.

Goals to consider in determining your level of service:

Core 3: Critical Assets

Not every asset you have is equally important to keeping the water system operating. Consider your system’s assets very carefully to decide which assets are critical and why. Considerations for critical assets include:

Assets can fail in four ways:

The consequence of failure can lead to repair/replacement costs, collateral damage, public health impacts, etc.

Core 4: Life Cycle Costing

This core element involves knowing exactly how much and what type of maintenance to do on an asset during its life, and the correct point to replace the asset that would optimize operational and capital expenditures.

If you knew this information for each and every asset in your utility, you would know that every dollar spent was necessary and that it was being spent at the right time for the right reason. However, to do only the necessary maintenance to get the maximum life out of the asset to the point of failure is almost impossible to predict. To do this more simply:

Some of your major assets may have individual components that will have independent life cycles that play a role in the longevity of the major asset. That level of detail would need to be taken into consideration as you fine-tune your plan. Elements such as distribution can be a fairly complicated network of materials and sizes that have to balance with the effort of maintenance and the true-life cycle costs.

Life cycle planning leads to capital improvement planning, where you prioritize expenditures over the next 5, 10, or even 20 years to determine necessary maintenance for your system to continue to be sustainable and achieve your service goals.

Core 5: Long-Term Funding

Managing and operating a water system at a desired level of service and reasonable cost to your customers requires that you have a sustainable funding strategy.

You should fund the operation and maintenance, repair, rehabilitation and replacement of assets at an appropriate level thought internal funding and external funding.

External funding for capital projects comes from loan and grant programs and from bonds. Most federal and state loan and grant programs fund only capital projects, and the water system is responsible for the overall operations and maintenance. When your water system applies for funding from state and federal agencies for capital expenses, you are more likely to be successful if you demonstrate that your rates are sufficient to cover the added operation and maintenance costs that the new project might incur.

Internal funding for day-to-day operations comes from water system rates and fees. These rates and fees should be sufficient to recover the cost of operations. Besides customer rates, a utility may have other fees such as connection fees, stand-by fees, reconnection fees, and developer impact fees.

Getting Started

Implementation may seem daunting, but it is a best practice to your water system’s long-term sustainability. Let the core elements be your guide, and let your program evolve over time just as your assets and staffing change over time.

To aid you in the effort, the MSDH Bureau of Public Water Supply has compiled various resources, including an asset management template based in Microsoft Excel that guides you through many of the core elements of asset management.

References and Resources

Rate-Setting and Financing

Strategic Planning

Links referenced on this page
Example Plan    http://msdh.ms.gov/msdhsite/index.cfm/30,19942,76,xlsm/Asset_Management_Plan_example.xlsm
Planning template    http://msdh.ms.gov/msdhsite/index.cfm/30,19941,76,xlsm/Asset_Management_Plan_template.xlsm
Asset Management: A Handbook for Small Water Systems (2003)    http://www.epa.gov/ogwdw/smallsystems/pdfs/guide_smallsystems_asset_mgmnt.pdf
Taking Stock of Your Water System: A Simple Asset Inventory for Very Small Drinking Water Systems (2004)    http://www.epa.gov/safewater/smallsys/pdfs/final_asset_inventory_for_small_systems.pdf
Bridging the Gap: Video for Public Officials and Water Managers.    https://courses.worldcampus.psu.edu/public/buried_assets/
Life-Cycle Cost Analysis    http://www1.eere.energy.gov/femp/program/lifecycle.html
Setting Small Drinking Water System Rates for a Sustainable Future - STEP Guide Series (January 2006, 62 pages)    http://www.epa.gov/ogwdw/smallsystems/pdfs/guide_smallsystems_final_ratesetting_guide.pdf
Strategic Planning: A Handbook for Small Water Systems - STEP Guide Series (September 2003, 30 pages)    http://www.epa.gov/ogwdw/smallsystems/pdfs/guide_smallsystems_stratplan.pdf

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