A Risk-Based Long-Term Capital Planning Program

This paper presents the development and application of a decision support system using system dynamics that integrates the water utility's finance and physical infrastructure with the consequence of water main failure and capital improvement plans, to demonstrate the long-term benefits of investing in condition assessment programs. A significant aspect of this decision support system, which differentiates it from standard industry applications, is that it allows the water utility to test the impact of a policy change or solution implementation to estimate the impact on utilities key metrics before the policy or solution is implemented. It also demonstrates the value of information to manage the risk of failure when making capital improvement programs. Data from a water utility in the U.S. are used to demonstrate the application of the decision support system over a 10-year planning horizon. Water utilities can use this decision support system to evaluate various financial and capital planning scenarios and strategies to sustainably manage their assets and mitigate the risk of asset failure when making capital improvement plans.