AWWA ACE63199

This paper discusses how to apply fundamental business principles to the financial challenges of funding massive capital improvement programs (CIP). Case studies from utilities of various sizes facing differing challenges are presented to illustrate these principles. Use of a rational methodology to prioritize CIP projects and convert this prioritization into an implementable schedule is illustrated. The process for development and application of prioritization criteria is explored and outcomes from systems are presented to demonstrate use of the technique. These criteria involve a mixture of customer service, financial performance, risk and criticality and support for economic development. In addition, application of Business Case Evaluation (BCE) is presented for a major water supply and treatment program in the southeastern United States. BCE establishes the underlying drivers for a project, identifies all feasible alternatives, uses life cycle costing (capital, refurbishment and replacement, and operations and maintenance) to compare alternatives and defines the risk and benefits of each to select the best outcome for the customer. Application of this methodology is demonstrated using a case study. This approach has consistently shown that significant cost savings and effective risk mitigation can be achieved through use of this technique. Includes tables, figures.