Small Water Utilities in Selected States Are Implementing Some Asset Management Practices, and EPA, USDA, and State Officials Have Identified Benefits and Challenges

The small water utilities we interviewed in our sample of 10 states are  implementing some asset management practices, and the state SRF  officials we interviewed in these states said that large water utilities are  more likely to implement asset management practices than small water  utilities. Officials at almost all (23 of 25) of  the small water utilities in the selected states told us they had maps  that identify the location of at least some of their assets. Minimum life-cycle cost. Officials from 19 of the 25 small  water utilities we reviewed in the selected states told us they conduct  regular maintenance, but officials from 9 of 25 said they knew the cost  of rehabilitation versus the cost of replacement for all water utility’s  assets. Long-term funding plan. Cost savings. Human resources. Information. Political support. EPA and USDA recognize the benefits to water utilities and their loan  programs and the need for water utilities, particularly small water utilities,  to increase their use of asset management, but the agencies do not  collect information on asset management that would enable them to track  their efforts or compile information on costs and benefits that could be  used to encourage wider use. To help small  water utilities implement asset management, EPA and USDA provide  funding for the development of asset management plans, free or low-cost  tools such as software to develop asset management programs and  plans, classroom training, and one-on-one technical assistance or  coaching. First, EPA and USDA do not collect information that tracks the results of  the agencies’ training efforts (e.g., whether participating utilities use asset  management practices). This is consistent with our January 2004 report on selected agencies’  experiences and lessons learned in designing training and development  programs and our March 2004 guide on assessing strategic training and  development efforts for human capital, in which we reported that  evaluating training programs is key to ensuring that training is effective in  contributing to the accomplishment of agency goals and objectives. In  addition, both EPA and USDA collect feedback from water utilities on their  experience in training. According to these officials, the agency did not receive  enough responses to analyze and include the data in the final reports. EPA and USDA officials told us that  they had not considered compiling information about the benefits of asset  management into one source, and they are not required to. However,  providing information on benefits and costs to those who have not  attended the agencies’ trainings could help encourage them to adopt  asset management practices. An EPA official told us that, in 2006, the agency considered compiling  information on cost savings by asking a question in a potential nationwide  study of water utilities’ use of asset management but did not pursue this  study because, among other things, the agency did not have the  resources to pay for it at that time. Existing data collection efforts such as EPA’s needs  assessment surveys may be a cost-effective means of doing this. By  continuing to include questions in the clean water needs assessment  survey and considering questions about water utilities’ use of asset  management to include in the drinking water needs assessment survey,  EPA may have better assurance that it is collecting information in a cost- effective way to assess the results of its asset management training  efforts with USDA. Recommendations for Executive Action

As EPA and USDA continue to consider ways to track and promote water  utilities’ implementation of asset management, we recommend the  following:
First, that the Administrator of EPA direct the Office of Groundwater  and Drinking Water and Office of Wastewater Management to  continue to include questions on water utilities’ use of asset  management in the clean water needs assessment and consider  including questions about water utilities’ use of asset management in  future drinking water infrastructure needs assessment surveys. IV), EPA generally agreed with our findings  and recommendations. Our objectives were to examine (1) what is known about the use of asset  management among the nation’s water utilities—particularly small water  utilities—including benefits and challenges, if any, for water utilities  implementing asset management and (2) steps, if any, that the  Environmental Protection Agency (EPA) and U.S. Department of  Agriculture (USDA) are taking to help small water utilities implement asset  management. EPA’s 2011 Drinking Water Infrastructure  Needs Survey and Assessment calculated the need among small water  utilities serving fewer than 10,000 people for 35 of the 50 states. During these interviews, we asked officials to estimate the use of asset  management practices by water utilities’ in their state, the benefits for  utilities and lenders of using asset management, the challenges small  utilities experience in implementing asset management, funding and  technical assistance for asset management available to water utilities in  their state, and the asset management practices for which small utilities  are most in need of technical assistance.
Why GAO Did This Study

Recent catastrophic breaks in water mains and sewer discharges during storms are indicators of the nation's old and deteriorating water and wastewater infrastructure. EPA estimates that small water utilities—those serving fewer than 10,000 people--may need about $143 billion for drinking water and wastewater infrastructure repairs and replacement over 20 years. EPA and USDA provide the three largest sources of federal funding for water infrastructure. In a March 2004 report, GAO found that water utilities may benefit from implementing asset management—a tool used across a variety of sectors to manage physical assets, such as roads and buildings.
GAO was asked to review water utilities' use of asset management. This report examines (1) what is known about the use of asset management among the nation's water utilities—particularly small water utilities— including benefits and challenges and (2) steps EPA and USDA are taking to help small water utilities implement asset management. GAO selected a nongeneralizable sample of 25 water utilities in 10 states based on largest infrastructure needs and interviewed EPA, USDA, state, and water utility officials.

What GAO Found

The small water utilities GAO reviewed in 10 selected states are implementing some asset management practices, although state officials said that large water utilities are more likely to implement asset management than small utilities. The asset management practices these small utilities used include identifying key assets, such as pipelines, treatment plants, and other facilities, and assessing their life-cycle costs. For example, officials from 23 of the 25 small water utilities GAO reviewed said they had maps that identify the location of at least some of their assets. However, of the 25 small water utilities, officials from 9 said they knew the cost of rehabilitation versus replacement for all of their assets. Officials from the Environmental Protection Agency (EPA), U.S. Department of Agriculture (USDA), and the 10 selected states identified benefits and challenges for small water utilities using asset management. The benefits that EPA, USDA, and state officials identified include cost savings and more efficient long-term planning. The key challenges these officials identified include the availability of funding to cover start-up and maintenance costs, the availability of human resources, information on how to implement asset management practices, and political support from elected officials to begin an asset management program or increase user rates.
EPA and USDA are taking steps to help water utilities implement asset management by providing funding, free or low-cost tools such as software, one-on-one technical assistance, and classroom training for small water utilities that plan to implement asset management practices. EPA and USDA collect feedback from training participants, but do not collect information that will help track the results of the agencies' training efforts (e.g., whether utilities participating in such training implemented asset management practices). GAO identified in a March 2004 guide that evaluating training programs is key to ensuring training is effective in contributing to the accomplishment of agency goals and objectives. EPA officials told GAO that they had considered collecting nationwide data on water utilities' use of asset management but did not have the resources to pursue it. Leveraging existing data collection methods may be a cost-effective way for the agencies to collect this information. EPA conducts periodic needs assessment surveys of water utilities and has included questions about asset management use in the wastewater survey, but not in the drinking water survey. EPA officials said they did not receive enough responses to questions in the wastewater survey, and they have not considered including them in the drinking water survey. By continuing to include questions on wastewater utilities and considering questions about drinking water utilities' use of asset management in the surveys, EPA could have better assurance that it has information on the effectiveness of its training efforts with USDA. In addition, EPA and USDA officials told GAO that the agencies share anecdotal data on the benefits of asset management through technical assistance, but had not considered compiling such information into one document to encourage water utilities to adopt it. EPA and USDA are not required to compile such information, but doing so could provide information on benefits, including cost savings, and costs to water utilities that have not received training and could help encourage them to adopt asset management practices.

What GAO Recommends

GAO recommends that EPA consider collecting information about utilities' use of asset management through its needs assessment surveys, and that EPA and USDA compile the benefits of asset management into one document. EPA and USDA generally agreed with GAO's findings and recommendations.