Thus, the federal government has a major stake in  protecting its existing investment in water infrastructure and ensuring that  future investments go to utilities that are built and managed to meet key  regulatory requirements. Using asset management concepts,  utilities and other organizations responsible for managing capital  infrastructure can minimize the total cost of designing, acquiring,  operating, maintaining, replacing, and disposing of capital assets over their  useful lives, while achieving desired service levels. For  example:    Life-cycle cost analysis. This report examines (1) the potential benefits of asset  management for water utilities and the challenges that could hinder its  implementation and (2) the role that the federal government might play in  encouraging utilities to implement comprehensive asset management. The utilities reported benefiting from (1) improved  decision making because they have better information about their capital  assets and (2) improved relationships with governing authorities,  ratepayers, and other stakeholders because they are better able to  communicate information on infrastructure needs and improvement plans. Among the challenges of implementing asset management, utility officials  cited the difficulty of (1) collecting the appropriate data and managing it  efficiently and (2) making the cultural changes necessary to integrate  information and decision making across departments. Finally, utilities may find that their efforts to focus  on long-term planning conflict with the short-term priorities of their  governing bodies. This  is no small challenge. While utilities need complete and accurate data for decision making, they  also need to balance data collection with data management. Currently, EPA sponsors  several initiatives to promote the use of asset management, such as training  and informational materials, technical assistance, and research. However, the officials raised  concerns about the implications of mandating asset management as  proposed in legislation being considered by the Congress. Water Industry Officials Favor an Expanded Role for EPA in Promoting Asset Management, but Raised Concerns About Additional Regulatory Requirements

Water industry officials support a greater role for EPA in promoting asset  management, both as a tool for better managing infrastructure and for  helping drinking water and wastewater utilities meet existing or proposed  regulatory requirements. Specifically, the Administrator should  better coordinate ongoing and planned initiatives to promote  comprehensive asset management within and across the drinking water  and wastewater programs to leverage limited resources and reduce the  potential for duplication;   explore opportunities to take advantage of asset management tools and  informational materials developed by other federal agencies;  strengthen efforts to educate utilities on how implementing asset  management can help them comply with certain regulatory  requirements that focus in whole or in part on the adequacy of utility  infrastructure and the management practices that affect it; and   establish a Web site to provide a central repository of information on  comprehensive asset management so that drinking water and  wastewater utilities have direct and easy access to information that will  help them better manage their infrastructure.
Why GAO Did This Study

Having invested billions of dollars in drinking water and wastewater infrastructure, the federal government has a major interest in protecting its investment and in ensuring that future assistance goes to utilities that are built and managed to meet key regulatory requirements. The Congress has been considering, among other things, requiring utilities to develop comprehensive asset management plans. Some utilities are already implementing asset management voluntarily. The asset management approach minimizes the total cost of buying, operating, maintaining, replacing, and disposing of capital assets during their life cycles, while achieving service goals. This report discusses (1) the benefits and challenges for water utilities in implementing comprehensive asset management and (2) the federal government's potential role in encouraging utilities to use it.

What GAO Found

Drinking water and wastewater utilities that GAO reviewed reported benefiting from comprehensive asset management but also finding certain challenges. The benefits include (1) improved decision making about their capital assets and (2) more productive relationships with governing authorities, rate payers, and others. For example, utilities reported that collecting accurate data about their assets provides a better understanding of their maintenance, rehabilitation, and replacement needs and thus helps utility managers make better investment decisions. Among the challenges to implementing asset management, utilities cited collecting and managing needed data and making the cultural changes necessary to integrate information and decision making across departments. Utilities also reported that the shorter-term focus of their governing bodies can hamper long-term planning efforts. EPA currently sponsors initiatives to promote the use of asset management, including educational materials, technical assistance, and research. While this is a good first step, GAO found that EPA could better coordinate some activities. For example, EPA has no central repository to facilitate information sharing within and across its drinking water and wastewater programs, which would help avoid duplication of effort. Water industry officials see a role for EPA in promoting asset management as a tool to help utilities meet infrastructure-related regulatory requirements; they also noted that establishing an EPA Web site would be useful for disseminating asset management information to utilities. The officials raised concerns, however, about the implications of mandating asset management, citing challenges in defining an adequate asset management plan and in the ability of states to oversee and enforce compliance.