AWWA Asset Management

Definitions Guidebook
Version 1.0

American Water Works Association

Asset Management Committee
January 2018
Acknowledgements
Asset Management Committee’s Definitions Subcommittee Members:

Luis Adorno – New Hampshire DES John Marciszewski – Echologics

Greg Baird – Cityworks Jeffrey Mortenson – Palm Bay Utilities

Alida Cameron – EPCOR Ryan Nagel- Hazen & Sawyer

Kevin Campanella – Burgess & Niple, Inc. Greg Osthues – Arcadis

David Conner – AECOM Rajesh Prasad – HDR, Inc.

Carrie Cox – Oakland County Aditya Ramamurthy – Hazen and Sawyer

Ali Diba – Spatial Wave Michelle Sheehy – AWWA

Michael Gloven – EIS Jim Siriano – AWWA

Martin Jones – Black and Veatch Robert O. Valenzuela - City of Sugarland Texas

Theresa Jurotich – CDM Smith Kurt Vause – StreamlineAM, LLC

Yuna Kim – Greeley and Hansen Thais Vitagliano – WSSC

Peter Kraft – Confluence Group John Wright – Raftelis

Jeff Leighton – Portland Water Bureau Kate Zhao – Pure Technologies

Michael Lewis – American Water

1. INTRODUCTION
1.1. INTENT
A vernacular is emerging among water utility Asset Management professionals. It includes some concepts
and nuanced uses of terms that are only understood by advanced practitioners. And even advanced
practitioners disagree about the use of certain words and phrases. This can lead to poor communication
and inconsistencies in the water industry.

This guidebook defines terms commonly used in water utility Asset Management practice. AWWA’s Asset
Management Committee developed it to help improve learning, consistency, and communication in the
water industry. The Committee encourages professionals throughout the industry to use the guidebook,
and expects the terminology in products that the Committee sponsors (e.g., publications and
presentations) to be consistent with it.

As Asset Management practice in the water industry matures, its terminology is likely to change. Thus,
the Committee plans to revise this guidance periodically to reflect changes, and invites people that use
the document to send the Committee comments on how it can be improved. Please email comments and
suggestions to research@awwa.org.

1.2. STRUCTURE
Definitions in this guidebook are grouped by common themes or families to help the reader understand
and differentiate between similar terms. The index (page 31) includes an alphabetical listing of all terms.

The Definition Families in this guidebook include:

Definition Family Description Page

Asset & Asset Organization The Asset and Asset Organization family of terms are 6
commonly used when an organization is collecting
and organizing their Asset information.

Asset Life The Asset Life family of terms are commonly used 10
when an organization is describing how long their
Asset is expected to last from a variety of different
perspectives.

Asset Management The Asset Management family of terms provides 12

high level definitions associated with the
development and implementation of an Asset
Management Program within an organization.

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 Definition Family Description Page

Asset Performance The Asset Performance family of terms are 15

commonly used when assessing an Asset to
determine Remaining Useful Life.

Asset Rehabilitation and The Asset Rehabilitation and Replacement family of 17

Replacement terms are commonly used when assessing
Rehabilitation and Replacement options available to
the Asset.

Asset Valuation The Asset Valuation family of terms are commonly 18

used when assessing an Asset to determine its value
to the organization.

Decision Making The Decision Making family of terms are commonly 19

used when making Asset Management Strategy and
investment decisions (to Repair, replace,
rehabilitate).

Information Management The Information Management System family of 22

Systems terms is focused on the Information Management
Systems that serve as Asset Management Enablers
to manage Asset data and Asset information to
inform decision making.

Levels of Service The Levels of Service family of terms are commonly 23

used when an organization wants to measure the
performance of its Assets and Asset Management
Program.

Maintenance The Maintenance family of terms are commonly 24

used in the context of maintenance management.

Risk The Risk family of terms are commonly used when 27

assessing and evaluating Asset Risk.

Water Industry Specific The Water Industry Specific family of terms are 30
specifically used in the water industry when
discussing the topic of Asset Management.

Each definition went through a discussion and vetting process with the Asset Management Definitions
Subcommittee for this project. At the end of each definition, a metadata identifier (C, M, or R) typed in

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superscript indicates the level of support the definition received from the Subcommittee. The table below
describes each identifier.

Metadata Identifier Support from Subcommittee

C Consensus on definition reached by Subcommittee

M Majority (but not consensus) on definition reached by Subcommittee

R Majority not reached on definition, but majority voted to include

definition in document anyway.

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2. ASSET AND ASSET ORGANIZATION TERMS
The Asset and Asset Organization family of terms are commonly used when an organization is collecting
and organizing their Asset information.

The full listing of Assets is called an Asset Inventory. An Asset Register typically contains a list of the Assets
at the Maintenance Managed Item level. Assets in a register are commonly organized using an Asset
Hierarchy. The Maintenance Managed Item level can be at the Asset level or the Asset Component level
or possibly even at the Asset System Level.

Sample Asset Inventory Sample Asset Register

Pump Station Pump 1 System: Pumping

Pump Station Motor 1 Pump Station 1

Pressure Control Valve 1 Pump Station Pump 1 Assembly

Pipe 1 Pump Station Pump 1

Pump Station Motor 1 Maintenance

Managed Item
Sample Pump Station Valves & Piping

Pressure Control Valve 1

Figure 1: Asset Inventory & Asset Register Example

Each Asset has its own unique set of Asset Attributes. Based on these attributes, Assets may be grouped
using various methods to allow for simpler planning, analysis, monitoring and reporting. They may be
classified as either Horizontal Assets or Vertical Assets. They may be grouped by their Asset System, their
Asset Type, or other similar characteristics. Assets within the same Asset Management Program or
Framework may be grouped by Asset Portfolio. Typically, Asset Management Plans are developed per
Asset Class. Asset Types usually have the same maintenance and renewal strategies, plans and schedule
intervals. Asset Types may be further broken down into Asset Cohorts in cases where maintenance and
renewal strategies are not the same at the Asset Type level.

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 Asset Portfolio

Asset Class

Asset System

Asset Type

Asset Cohort

Asset

Figure 2: Asset Groupings

ASSET
Plant, equipment, buildings, property, pipelines, infrastructure and other items that have potential or
actual value to the organization. Utility assets are the items that contribute to the production and
delivery of the utilities' service to the community or group of customers. While the main focus for
Asset Management in the utility industry is around physical assets, assets can also be intangible, such
as leases, brands, digital assets, use rights, licences, intellectual property rights, reputation or
agreements (PAS 55, 2008) (ISO 55001, 2014) (modified).M

ASSET ATTRIBUTE
A quality or feature that is a characteristic of an Asset, e.g., make, model, serial number, rated
capacity, age, length, diameter, material, etc. (IAM Asset Management - an anatomy, 2015)(modified).
C

ASSET CLASS
A logical grouping of Assets from one or more Asset Types that fulfill a similar high-level function and
tend to have a common overall Asset Management Strategy. e.g. water mains, pump stations,
buildings, fleet. C

ASSET COHORT
A group of Assets within one Asset Type having similar characteristics, such as Useful Life (e.g. cast
iron spun pipe, pre-1940 cast iron cast pipe, gate valve, ball valve, pipe of different ANSI values or
manufacturer). Assets of the same cohort typically have the same maintenance and renewal plans,
even with respect to timing of those activities. R

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 ASSET COMPONENT
A part of an Asset that contributes to the overall function of the Asset having specific attributes such
as, different life expectancy, maintenance regimes, Probability of Failure or Criticality
(SIMPLE)(Modified). C

ASSET HIERARCHY
A tiered structure to allow for organized management of Assets and asset data. An Asset Hierarchy
typically uses a parent-child relationship. The Asset Hierarchy can be based on asset function or
process in which the asset is deployed; Asset Type; asset location; or a combination of these. Grouping
by facility is commonly done near the parent level. The lowest child level is typically at the
Maintenance Managed Item level (IIMM, 2015) (Modified).C

ASSET INVENTORY
A complete list of all physical Assets for which an organization is responsible. C

ASSET PORTFOLIO
A grouping of Assets and facilities for which an organization is responsible that is within the same
Asset Management System or program scope. These are typically grouped by major business lines
where management authority and funding sources may be separated, e.g. Water Distribution versus
Wastewater Collection (ISO 55001, 2014)(Modified).C

ASSET REGISTER
A record of asset information, typically held in a spreadsheet, database or software system, including
Asset Attribute data (IIMM, 2015)(Modified). Assets may be presented in hierarchy format in the
register and are at the Maintenance Managed Item level of detail. This is typically not as
comprehensive a list as the Asset Inventory, but contains greater detail on the Assets listed. C

ASSET SYSTEM
A group of Assets that work together to deliver a required business function or purpose (PAS 55,
2008)(Modified) e.g. Chlorine Injection System, Water Storage System. C

ASSET TYPE
A group of Assets with similar function or use. This is typically at a more detailed level than Asset
Class. e.g. Asset Class = Pump Station, Asset Type = AC Motor. Asset Class = Distribution Water Mains,
Asset Type = cast iron pipe. Assets of the same type typically have similar maintenance and renewal
plans. C

HORIZONTAL ASSET
Assets which may be configured or networked for the purpose of moving materials or services from
one place to another. Also known as linear asset or frequently referred to as below ground asset due
to the location of most Horizontal Assets below ground. In the context of the water industry, this
includes pipeline assets for water distribution, collection and transmission. M

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 INFRASTRUCTURE
A collection of Assets on which the continuation and growth of a community depends, such as power,
roads, wastewater and water plants, and transportation and communication systems (AWWA Water
Dictionary, 2010) (modified). C

LINEAR ASSET
Refer to Horizontal Asset. R

MAINTENANCE MANAGED ITEM

An Asset or component that exists generally at the lowest level in the Asset Hierarchy and for which
an owner will make management decisions to Repair, rehabilitate, or typically replace instead of
running to failure. Non-maintenance managed items that may exist in the Asset Inventory but not the
Asset Register may include spare parts, small valves, and other items with low financial value that are
Run-To-Failure without any maintenance. C

VERTICAL ASSET
An Asset within a building and/or facility often comprised of multiple components, also known as an
above-ground asset. In the context of the water industry, this typically refers to Assets within pump
stations, treatment plants, and may include other facilities, such as storage facilities. M

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3. ASSET LIFE TERMS
The Asset Life family of terms are commonly used when an organization is describing how long their Asset
is expected to last from a variety of different perspectives.

Figure 3: Asset Life

DESIGN LIFE
The period of time for which an Asset is expected to function without Rehabilitation. C

ECONOMIC LIFE
The length of time from installation to when the Asset ceases to be the lowest cost alternative to
satisfy a specified level of performance or service (WRF, 2016). C

MAXIMUM POTENTIAL LIFE

The length of time from installation to Replacement, with typical maintenance and Rehabilitation
activities taking place during the Asset's life cycle. C

PHYSICAL LIFE
The length of time from installation to when the Asset's physical state is below some "acceptable
threshold", which may be defined in terms of an unacceptable Risk of failure or some measure of
structural condition (WRF, 2016) (modified). C

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 REMAINING USEFUL LIFE
The time remaining until an Asset ceases to provide its required use in the context of design, physical,
service and economic lives. M

SERVICE LIFE
The length of time from installation to when the Asset no longer provides the required service. End
of service life can be reached due to changes in an Asset's operational context (its capacity is then
insufficient) or because service standards change (e.g. changes in water quality standards) (WRF,
2016). C

USEFUL LIFE
The period over which an Asset is expected to be available by an organization for use in the context
of design, physical, service and economic lives. M

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 4. ASSET MANAGEMENT TERMS
The Asset Management family of terms provides high-level definitions associated with the development
and implementation of an Asset Management Program within an organization. Typically, the need to
develop an Asset Management Program is outlined in the Organizational Strategic Plan which in turn
drives the development and implementation of the Asset Management System comprised of the Asset
Management Policy, Strategy, Objectives, Plans and Enablers in support of the whole Asset Life Cycle. The
Asset Management Program is developed relative to an Organization’s Asset Management Maturity and
often an Asset Management Gap Analysis is completed to help provide direction on what the priorities
should be.

Organizational
Strategic Plan

Asset Management
Asset Policy
Asset
Management Management
System Enablers Asset Management Strategy

Asset Management Objectives

Asset Management Plans

Figure 4: Asset Management

ASSET LIFE CYCLE

Stages involved in the management of an Asset (ISO 55001, 2014). These stages or activities include
asset planning, design, construction, commissioning, operation, maintenance, and
retirement/decommissioning. C

ASSET MANAGEMENT
The coordinated set of activities within an organization to realize the overall value from all Assets
through stronger governance and accountability. More specifically in the water industry it is the
combination of management, financial, economic, engineering and other practices applied to all
Assets (Infrastructure, people, processes, and systems) with the objective of providing the required
Level of Service at an acceptable level of Risk at an optimal Life Cycle Cost. M

ASSET MANAGEMENT ENABLERS

Supportive processes, systems, and activities that will facilitate the successful implementation of an
Asset Management Program, and that are a key component of an Asset Management System. C

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 ASSET MANAGEMENT GAP ANALYSIS
A formal methodology to identify and document all the differences between an organizations’ current
capabilities and practices and the future desirable Asset Management capabilities, structure and
practices. Typically, the gaps identified through this analysis enables an organization to prioritize its
needs for Asset Management implementation and would be incorporated in the Asset Management
Strategy and/or Asset Management Program. Also referred to as Asset Management Needs Analysis.)
M

ASSET MANAGEMENT MATURITY

The extent to which the capabilities, performance, and ongoing assurance of an organization have
been established and implemented for meeting the current and future needs of its stakeholders.
Asset Management Maturity ranges from Aware (e.g. corporate awareness of the benefits of Asset
Management) to Advanced (e.g. Asset Management Policy and strategy is fully integrated in the
organization’s business processes). C

ASSET MANAGEMENT OBJECTIVES

Outlined in the Asset Management Strategy, they relate to the desired performance (efficiency and
effectiveness) of the organizational Asset Management Program as well as to the desired
performance of the organization’s Levels of Service. These Asset Management Objectives must be
consistent with organizational objectives and all Asset Management Policies and must be periodically
monitored and reviewed. M

ASSET MANAGEMENT PLAN

A written representation of the intended approach for the management of Infrastructure Assets over
their life cycle based on the organization's understanding of service level requirements. A key purpose
of Asset Management Plans is to drive longer term thinking and planning and ensure the organization
is operating in a financially sustainable manner.

An Asset Management Plan typically includes Levels of Service, current performance, future demand,
Risk Management, life cycle management plans (e.g. maintenance plan, Rehabilitation and
Replacement Plan), and financial forecasts. C

ASSET MANAGEMENT POLICY

A formal document for organizational leadership (Board of Directors, Executive Management) to
signal their commitment and priorities for an Asset Management Program and provides clear
direction as to the appropriate focus and the anticipated levels of Asset Management practice and
engagement. C

ASSET MANAGEMENT PROGRAM

A formalized, systematic set of practices to implement the Asset Management Plan within the
organization, with a focus on developing Asset Management capabilities within the organization. The
Program typically includes the cohesive development, implementation, and integration of people,
processes and information systems. C

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 ASSET MANAGEMENT STRATEGY
A long-term optimized approach to management of the Assets, derived from, and consistent with, the
Organizational Strategic Plan and the Asset Management Policy. The strategy converts the
Organizational Strategic Plan and Asset Management Policy into a high-level, long-term asset
management action plan and/or Asset Management Program with well-defined and measurable
Asset Management Objectives and Key Performance Indicators (KPIs). M

ASSET MANAGEMENT SYSTEM

A framework of policies, processes, procedures, organizational structure, resources and information
systems used by an organization to establish and achieve its Asset Management Policy, Strategy and
Objectives. Note, in this context, a "system" refers to all framework elements within an organization
and not any single information technology system. M

INFRASTRUCTURE ASSET MANAGEMENT

Asset Management with a focus on physical Infrastructure Assets. It is the continual assessment of
the condition and usefulness, projected life expectancy, Criticality, and operations and maintenance
history, with a long-range plan for financing Asset Rehabilitation or Replacement (R&R). Results from
these assessments prioritize Infrastructure Assets and are typically incorporated into the
organization's annual capital improvement planning and operational budget processes. R

ORGANIZATIONAL STRATEGIC PLAN

A formal document to communicate the organizational vision, mission, goals, objectives, Levels of
Service, and the strategic actions necessary to achieve those goals. Typically, the business need/s or
driver/s for an Asset Management Program would be stated within the Organizational Strategic Plan.
R

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5. ASSET PERFORMANCE TERMS
The Asset Performance family of terms are commonly used when assessing an Asset to determine
Remaining Useful Life. Asset Condition and Performance is determined via Condition Assessments, Failure
Code tracking and Performance Monitoring. This information in turn is used to determine the Condition
Grade & Performance Grade. The condition &/or performance information, along with Asset Utilization,
the Deterioration Curve and Deterioration Rate are then able to be used to estimate the Remaining Useful
Life.

Deterioration Curve

Deterioration Rate
(slope of the line at defined
point in time)

Figure 5: Deterioration Curve Example

ASSET CONDITION
The physical state of the Asset (IIMM, 2015). Condition is a key parameter in determining Remaining
Useful Life, and can be used to predict how long it will be before an Asset requires Repair,
Rehabilitation or Replacement. C

ASSET PERFORMANCE
A measure of the extent to which an Asset is fulfilling its intended function. C

ASSET UTILIZATION
The capacity of the Asset utilized to meet service level requirements. C

CONDITION ASSESSMENT
A technical assessment of an Asset followed by the interpretation of the resultant data to determine
its current and/or future physical condition, performance, Probability of Failure, and/or Remaining
Useful Life (IIMM, 2015) (SIMPLE)(modified). The assessment can be based on a desktop analysis,
physical observation/inspection, interviews, and/or through the use of instrumentation. M

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 CONDITION CURVE
A graphical representation of Asset Condition over time where the y-axis represents dependent
variables such as Condition Grades, condition ratings, Probability of Failure, etc. and the x-axis
represents independent variables such as time, cycles, or frequencies which influence condition and
may be converted to time. The general aim of the curve is to support decision-making regarding the
timing of assessment, inspection and Renewal intervention. M

CONDITION GRADE
A measure of the physical integrity of an Asset (IIMM, 2015). C

DETERIORATION CURVE
The path by which an Asset deteriorates and passes through different stages of its life and the
associated Probability of Failure throughout the life. Also commonly referred to as Decay Curve,
Degradation Curve, Condition Curve or Performance Curve. M

DETERIORATION RATE
The rate at which an Asset approaches failure (end of life) (IIMM, 2015). Also commonly referred to
as Decay or Degradation Rate. C

FAILURE CODES
A list of logical alphanumeric abbreviations or cross-referenced numeric values representing a list of
common descriptions of the root cause(s) of failure. C

PERFORMANCE GRADE
A measure of Asset Performance in the context of service levels. C

PERFORMANCE MONITORING
Continuous or periodic quantitative and qualitative assessments of the actual performance compared
with specific objectives, targets or standards (IIMM, 2015). C

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6. ASSET REHABILITATION AND REPLACEMENT TERMS
The Asset Rehabilitation and Replacement family of terms are commonly used when assessing
Rehabilitation and Replacement options available to the Asset. Replacement and Rehabilitation Planning
is performed to determine when a Capital Expenditure may be required. Depending on the Asset, there
may be different combinations of Replacement and Rehabilitation available to the Asset; from
Rehabilitation to Restoration, to full Renewal and Replacement.

CAPITAL EXPENDITURE (CAPEX)

Expenditure used to create new Assets or to increase the capacity of existing Assets beyond their
original design capacity or service potential. CAPEX increases the value of Asset stock (IIMM, 2015). C

REHABILITATION
Works to rebuild or replace parts or components of an Asset, to restore it to a required functional
condition and extend its life, which may incorporate some modification. Generally involves repairing
the Asset to deliver its original Level of Service without resorting to significant upgrading or Renewal,
using available techniques and standards (IIMM, 2015). C

RENEWAL
The Replacement of an existing Asset with a new Asset of equivalent capacity or performance
capability (IIMM, 2015) (SIMPLE)(Modified). C

REPLACEMENT
The complete Replacement of an existing Asset that has reached the end of its Useful Life. C

REPLACEMENT & REHABILITATION PLANNING

Using available data on Asset age, condition, performance, Reliability and expected life to forecast
when the Asset will require Replacement or Rehabilitation. C

RESTORATION
Maintaining a majority of the existing Asset, while transforming its appearance and functionality to
"as new", and in some instances, "better than as new" (SIMPLE)(modified). C

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7. ASSET VALUATION TERMS
The Asset Valuation family of terms are commonly used when assessing an Asset to determine its value
to the organization.

ASSET VALUATION
A process for determining the value of an Asset. There are primarily three approaches to valuing an
Asset; the cost approach, market approach and income approach. The approach used will depend on
the purpose for which the valuation is required.

The Market Approach is used when there is an active and known used market in which comparable
sales can be measured and quantified (this is often used for land and buildings, as well as vehicles).

The Income Approach is determined by measuring an Asset’s income generating capability, usually by
calculating the Net Present Value or using a discounted cash flow method.

The Cost Approach is typically used where there is no active market for an Asset. It reflects the cost
to replace the Asset, less adjustments for Depreciation. C

DEPRECIATED REPLACEMENT COST

The current Replacement Cost of an Asset less accumulated Depreciation to reflect the remaining
service potential of the Asset, taking into account the condition and service consumption. C

DEPRECIATION
The systematic allocation of the depreciable amount of an Asset over its Useful Life (IIMM, 2015)
(modified). C

LIFE CYCLE COST

A methodology that provides an estimate of the total capital, operating and maintenance costs of an
Asset over its operating life. Relevant costs include planning, design, acquisition, installation,
maintenance, Rehabilitation, financing, retirement/ decommissioning/ disposal and any other costs
directly attributable to operating or using an Asset. C

MARKET VALUE
The estimated amount at which an Asset would be exchanged on the date of valuation, between a
willing buyer and a willing seller, in an arm's length transaction and when the parties have each acted
knowledgeably, prudently and without compulsion (IIMM, 2015)(modified). C

REPLACEMENT COST
The current cost of replacing an existing Asset with a new modern equivalent Asset that provides the
same or similar Level of Service potential. C

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8. DECISION MAKING TERMS
The Decision Making family of terms are commonly used when making Asset Management Strategy and
investment decisions (to Repair, replace, rehabilitate). Many factors weigh into the decision making
process and a variety of analytical tools are available to support making these decisions. Some focus
primarily on the costs, others incorporate additional factors, such as required Levels of Service, and other
societal or environmental considerations.

BENEFIT COST ANALYSIS

A systematic approach to estimating the Life Cycle Costs and benefits of an alternative (or set of
alternatives) to determine if an investment is justified and, if so, the value it will provide. Also known
as cost benefit analysis (CBA). C

BUSINESS CASE ANALYSIS

An evaluation of the objectives of an investment proposal and an analysis for each project alternative.
It includes review of the value for money, scope, costs and benefits, Risks, and schedule. The Business
Case Analysis provides enough information such that an investment option can be chosen, based on
an objective appraisal of the relative strengths and weaknesses of alternatives to meet a stated
business objective, often captured in a comprehensive Life Cycle Cost Analysis. C

COST BENEFIT ANALYSIS

Reference Benefit Cost Analysis for definition. C

DISCOUNT RATE
A rate used to relate and compare future and present money values, taking Inflation and the cost of
debt (interest) rates into consideration. C

INFLATION
The rate of increase applied to costs incurred at a future time to reflect the relative purchasing power
of money relative to a particular time, usually the present (IIMM, 2006). C

INTERNAL RATE OF RETURN (IRR)

The Discount Rate at which the Net Present Value of all the cash flows (both positive and negative)
from a project or investment equal zero. Internal Rate of Return is used to evaluate the attractiveness
of a project or investment. C

LIFE CYCLE COST ANALYSIS

An engineering economic analysis method for assessing the total cost of ownership for an alternative
(or set of alternatives), including all Life Cycle Costs and benefits. C

MONETIZATION
The process of assigning a financial value to a benefit or impact in order to create a common
denominator for criteria-based comparative analysis. C

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 MULTI-CRITERIA ANALYSIS
A technique to compare alternative project solutions using a variety of criteria. Each alternative is
given a relative score for each criterion being evaluated as opposed to assigning a financial value. In
some cases, criteria are assigned a relative weighting factor, and the sum of weighted scores for each
alternative are used to help choose a solution. C

NET PRESENT VALUE

The difference between the benefits and costs expressed in monetary terms in today's dollars. To
convert future cash flows into today's dollars, the time value of money needs to be taken into account.
This is done through the use of a Discount Rate. NPV is a key component in Benefit Cost Analysis. C

OPTIMIZED DECISION MAKING

A method of identifying the best value compromise between a set of competing objectives or
influences. Optimizing involves adjusting inputs with constraints in order to maximize/minimize an
objective function. This usually represents the lowest combined business impact of costs, Risks and
performance losses, or the maximization of net value, over the Life cycle. C

SENSITIVITY ANALYSIS
A method of determining how the results of an alternative analysis respond to incremental changes
in the value assigned to one or more project variables, about which there may be uncertainty. C

SUSTAINABILITY
In the context of Asset Management, Sustainability refers to the designing, building, operating and
funding of Infrastructure Assets in ways that do not diminish the social, economic and ecological
processes required to maintain human equity, diversity, and the functionality of natural systems. The
integration of Asset Management and Sustainability is possible due to the overlap of core concepts
inherent in both frameworks. Sustainability's focus is on life cycle (planning, design, construction,
operation, maintenance, Repair and Replacement, disposal) where a Triple Bottom Line Analysis can
be performed. C

TRIPLE BOTTOM LINE ANALYSIS

A method of assigning financial values to financial, social, and environmental factors that do not have
an assigned Market Value, such as service interruptions to customers, noise, pollution, traffic delays,
community aesthetics, consumer confidence, and public health and safety Risks. C

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 WILLINGNESS TO PAY
A measurement of the rate payers' Willingness to Pay for a change in the Level of Service or specific
product. The Willingness to Pay assessment methodology is normally conducted through a series of
surveys and applying some process of optimization. Willingness to Pay is distinguished from ability to
pay in that willingness reflects a value judgement on the part of a person, whereas ability to pay
reflects a person's capability to use financial resources to compensate another party for a specific
level of service or product. Results of a Willingness to Pay assessment can be used to assess benefits
as part of the Benefit Cost Analysis. C

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9. INFORMATION MANAGEMENT SYSTEM TERMS
The Information Management System family of terms is focused on the Information Management Systems
that serve as Asset Management Enablers to manage asset data and asset information to inform decision
making.

COMPUTERIZED MAINTENANCE MANAGEMENT SYSTEM (CMMS)

A software and information system tool for planning, coordination, scheduling of maintenance
activities, the labor resources to deliver them, and other essential supporting resources (IAM Asset
Management - an anatomy, 2015). C

GEOGRAPHIC INFORMATION SYSTEM (GIS)

An enterprise data management system designed to capture, store, manipulate, analyze, manage,
and visualize geographic or spatial information. C

INFORMATION MANAGEMENT SYSTEM

An enterprise system, typically administered and managed by the organizational Information
Technology Department, to collect, compile, manage data and extract meaningful information on the
performance of existing Assets (e.g. condition, performance, operations etc.) and their associated Life
Cycle Costs and use it for effective decision making. Organizations typically have one or more
Information Management Systems in place (e.g. GIS, CMMS, SCADA, Financial Information System,
Customer Information System, Project Management Systems etc.). The Information Management
System is only one element of an Asset Management System and the terms should not be used
interchangeably. M

WORK MANAGEMENT SYSTEM

The integrated processes and procedures that help an organization schedule and perform work
efficiently and effectively, meet its customers and employee needs, utilize Assets, and evaluate
performance (Arthur, 2016). R

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10. LEVELS OF SERVICE TERMS
The Levels of Service family of terms are commonly used when an organization wants to measure the
performance of its Assets and Asset Management Program. Typically, organizations develop several
Performance Measures to monitor how they are performing and how their Assets are performing. Some
of these become Key Performance Indicators that are regularly reported on at higher levels in the
organization. Some of the measures also are utilized to inform the Levels of Service that are reported on
to customers, governmental bodies and the surrounding community.

DEMAND ANALYSIS
A predictive analysis to determine expected future service requirements and if the requirements can
be provided by existing Asset Systems or if Asset Systems must be expanded or can be downsized. M

LEVELS OF SERVICE
A statement of outputs or objectives that an organization or activity intends to deliver to customers
and stakeholders (IIMM, 2015) (modified).C

PERFORMANCE MEASURE
A qualitative or quantitative metric of actual performance against a standard or other target, often in
relation to delivering Levels of Service (IIMM, 2015) (modified). C

KEY PERFORMANCE INDICATOR (KPI)

A Performance Measure that is considered important to the organization (IIMM, 2015). C

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11. MAINTENANCE TERMS
The Maintenance family of terms are commonly used in the context of maintenance management.

Maintenance Planning is what ties Maintenance to the overall organizational strategy and Asset
Management Strategy. It uses available data on asset age, condition, performance, Reliability and
expected life to determine and select the most appropriate maintenance strategy and further develop the
proposed maintenance intervals, tasks, resources and safety requirements. The applicable maintenance
strategies include: Predictive Maintenance, Preventive Maintenance and Reactive or Run-to-Failure
Maintenance. Often Reliability Centered Maintenance (RCM) is used to optimize the strategies and plan
selected.

Maintenance then falls into two categories, Planned or Unplanned Maintenance. A combination of
planned Preventive and Predictive work as well as planned or unplanned corrective work forms Backlog
Maintenance. The work can then become Scheduled or Unscheduled. It may be Deferred, left in the
Backlog or placed on the schedule. Once the schedule is set, any corrective work or Repairs that occur
not on the schedule is considered Break-in Work. The cost to complete the maintenance work is typically
considered an Operational Expenditure.

BACKLOG MAINTENANCE
Work required to avoid further Asset breakdown, or to restore an Asset back to its previous condition
but is not yet on the maintenance schedule. It can include either planned or Unplanned Maintenance.
A planned backlog allows for more efficient and effective scheduling of maintenance resources. C

BREAK-IN WORK
Work performed that was not on the schedule. To monitor this, typically the schedule is locked (e.g.
at the beginning of a work week) and any work that interrupts the schedule is considered Break-in
Work. C

CORRECTIVE MAINTENANCE
A maintenance task applied to rectify the failure of equipment, machine or system, restoring it to the
required level of performance. Corrective Maintenance may be planned or unplanned, scheduled or
unscheduled. C

DEFERRED MAINTENANCE
In the short-term, Deferred Maintenance is any postponed maintenance activities due to resource
availability and priority.

In the long-term, Deferred Maintenance is any maintenance or Repair needed to bring current Assets
up to at least a minimum-acceptable physical condition level, often referred to as unfunded or
unaccomplished maintenance or backlog. Deferred Maintenance should not cover work needed for
growth, enhancements, or increases in capacity (Issues in Deferred Maintenance, 1994). C

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 OPERATIONAL EXPENDITURES (OPEX)
Expense items incurred in the day-to-day operation of the system. They are not able to be capitalized
and typically include maintenance expenditures as well as other operating expenditures such as
salaries, supplies, utilities, etc. C

PLANNED MAINTENANCE
Maintenance that is predetermined based on the selected maintenance strategy with maintenance
tasks documented, and labour and material requirements and work and safety procedures identified.
Maintenance strategies include Predictive, Preventive or Run-to-Failure in which case the Corrective
Maintenance can still be planned. C

PREDICTIVE MAINTENANCE
Maintenance carried out to monitor the condition of the Asset where attributes of the Asset such as
temperature, vibration, and oil quality are used to predict when Asset failure might occur. Also known
as PdM or condition monitoring. C

PREVENTIVE MAINTENANCE
Maintenance conducted to maintain the operating condition of the Asset and slow Asset deterioration
through cost-effective actions. Preventive Maintenance is performed while the equipment is still
working condition, so that it does not break down unexpectedly. Preventive Maintenance can be
further categorized by what triggers the Preventive Maintenance.

• Condition-Based – a maintenance activity that is performed on an Asset as needed and

identified through Predictive Maintenance or through an Asset Condition Assessment
• Time-Based – a maintenance activity that is performed on an Asset on a periodic basis based
on schedule or age (e.g. annual lubrication).
• Usage-Based – a maintenance activity that is performed on an Asset based on usage (e.g. UV
bulb Replacement after 5,000 hours). C

REACTIVE MAINTENANCE
Maintenance that occurs after an Asset has already failed. It often is the result of having no
maintenance strategies in place, but can also occur if the Run-to-Failure or Plan-to-Replace strategy
has been selected for that specific Asset. If Reactive Maintenance occurs on an Asset that has a
Predictive or Preventive Maintenance strategy in place, it may need to be further evaluated to confirm
if the maintenance plan needs modification to address the root cause of the problem. C

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 RELIABILITY CENTERED MAINTENANCE (RCM)
A specific process used to identify the policies which must be implemented to manage the Failure
Modes which could cause the functional failure of any physical Asset in a given operating context (SAE
JA 1011, 2009). Initially developed by the commercial aviation industry and published by FS Nowlan
and HF Heap with the US Department of Defense, it is widely used by many Asset intensive industries
and requirements for the process are now governed by SAE JA 1011 supported with SAE JA 1012
published by the Society of Automotive Engineers. M

REPAIR
Action to restore an Asset to its previous condition after failure or damage (IIMM, 2015). This is
typically completed as a part of Corrective Maintenance. C

RUN-TO-FAILURE
A maintenance strategy that intentionally allows an Asset to operate until failure before corrective
action is taken based on a determination that the cost to maintain exceeds the consequences of
failure. Also known as No Scheduled Maintenance and Plan-to-Replace. C

SCHEDULED MAINTENANCE
Planned or Unplanned Maintenance that has been placed on the schedule. R

UNPLANNED MAINTENANCE
Corrective work required in the short-term to restore an asset to working condition that has not been
predetermined and has no resource requirements identified. Typically this is emergency work, but is
also the result of a Reactive Maintenance strategy. C

UNSCHEDULED MAINTENANCE
Planned or Unplanned Maintenance that is not yet on the schedule. Similar to Backlog. R

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12. RISK TERMS
The Risk family of terms are commonly used when assessing and evaluating Asset Risk. Assessing and
evaluating Asset Risk should occur within the context of organizational Risk Management, which includes
the components of Risk Assessment and Risk Mitigation. Risk is first identified by looking at all potential
impacts concerning Assets, including hazards due to operation of those Assets as well as the potential
Asset Failure Modes. Consequence of Failure and Probability of Failure are evaluated, sometimes using
structured methods, such as Failure Modes and Effects Analysis. Assets can then be assigned a Criticality,
or a Business Risk Exposure score. When determining Consequence and Probability of Failure, the
Redundancy and Reliability of the Asset and Asset System are taken into account. Risk Mitigation
strategies and plans are then evaluated, prioritized (as described in the Decision Making family of terms)
and included in the Asset Management Plans.

BUSINESS RISK EXPOSURE (BRE)

A measure of overall Asset Risk and is estimated by considering and combining the Probability of
Failure (PoF) and the Consequence of Failure (CoF) of an Asset. M

CONSEQUENCE OF FAILURE
A measure of the direct and/or indirect costs of Asset failure. Direct costs are out of pocket costs to
the Asset owner such as the cost of water loss, Repairs, fines, property damage, etc. Indirect costs are
typically not paid directly by the Asset owner and may include costs of business or customer
interruptions, traffic delays, public perception or reputation, and property costs not paid by the Asset
owner, etc. Costs are also often categorized as "Triple Bottom Line" or TBL which refers to financial,
environmental and societal costs. M

CRITICAL ASSET
Assets that are identified as having the greatest potential to impact the achievement of the
organizational objectives (i.e. Assets with the greatest relative Consequence of Failure). These are
Assets that meet defined Criticality measures. C

CRITICALITY
An Asset prioritization measure often used to determine "what" Assets to focus on. Criticality is
normally based on potential Consequences of Failure, not Risk, and is used to determine higher priority
Assets for Risk Management activity. M

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 FAILURE MODES
The ways or modes in which an Asset may fail. Assets may fail through one or more of these Failure
Modes:

• Capacity – Pressure or flow requirements exceed design capacity

• Level of Service – Service requirements exceed Asset capabilities
• Efficiency – The cost of maintaining and operating the Asset exceeds the cost of
Replacement or other options to deliver the same capability
• Physical Mortality – The Asset physically stops working, fails structurally, or is otherwise
nonoperational (SIMPLE)(modified). M

FAILURE MODES AND EFFECTS ANALYSIS (FMEA)

A commonly used Risk Assessment technique in Asset Management that is systematic and focuses on
identifying Failure Modes and mechanisms and the effects of the associated failures. M

PROBABILITY OF FAILURE
A measure of the likelihood of an event happening at a point in time, normally expressed as a numeric
frequency or as a percentage. All Failure Modes should be considered when determining the
Probability of Failure (capacity, level of service, efficiency and physical mortality). The probability can
be determined qualitatively or quantitatively from available data, such as Asset age, performance and
Condition Assessment results, operation and maintenance history, demand forecasting, cost analysis,
and experiences with that type of Asset in general. M

REDUNDANCY
The incorporation of additional Assets or Asset Systems not necessary to meet the functional
requirements, but which are available in case of Asset or Asset System failure. These need not be
identical Assets or Asset Systems, but should provide the capability to meet the functional
requirements. C

RELIABILITY
The ability of an Asset or Asset System to consistently perform its intended function according to its
specifications. C

RISK
The product of the consequences of a failure event and the associated probability of occurrence. Risk
can be expressed in qualitative or quantitative terms and in terms of a value over time (Risk cost). M

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 RISK ASSESSMENT
The overall process of risk identification, risk analysis and risk evaluation. When assessing Risk,
common techniques include:

• Identification: Condition Assessment, incident investigation, risk assessment workshops

• Analysis: deterioration modeling, root cause analysis (RCA), Failure Mode and Effects
Analysis (FMEA),
• Evaluation (selecting Mitigations): Reliability Centered Maintenance (RCM), Benefit Cost
Analysis, Multi-Criteria Decision Analysis. M

RISK MANAGEMENT
Coordinated activities to manage Risk in the context of organizational objectives and required Levels
of Service. C

RISK MITIGATION
Activities to reduce the level of Risk, and may be specific to reductions in Probability of Failure or
Consequence of Failure. M

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13. WATER INDUSTRY SPECIFIC TERMS
The Water Industry Specific family of terms are specifically used in the water industry when discussing the
topic of Asset Management.

WATER MAIN BREAK

The structural failure of the primary water main conduit or associated joint, tap, fitting or lateral
resulting in a loss of service. R

WATER MAIN LEAK

The structural failure of the primary water main conduit or associated joint, tap, fitting or lateral not
resulting in an immediate loss of service. R

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14. INDEX

Asset, 5 Depreciated Replacement Cost, 16

Asset Attribute, 5 Depreciation, 16
Asset Class, 5 Design Life, 8
Asset Cohort, 5 Deterioration Curve, 14
Asset Component, 6 Deterioration Rate, 14
Asset Condition, 13 Discount Rate, 17
Asset Hierarchy, 6 Economic Life, 8
Asset Inventory, 6 Failure Codes, 14
Asset Life Cycle, 10 Failure Modes, 26
Asset Management, 10 Failure Modes and Effects Analysis (FMEA), 26
Asset Management Enablers, 10 Geographic Information System (GIS), 20
Asset Management Gap Analysis, 11 Horizontal Asset, 6
Asset Management Maturity, 11 Inflation, 17
Asset Management Objectives, 11 Information Management System, 20
Asset Management Plan, 11 Infrastructure, 7
Asset Management Policy, 11 Infrastructure Asset Management, 12
Asset Management Program, 11 Internal Rate of Return (IRR), 17
Asset Management Strategy, 12 Key Performance Indicator (KPI), 21
Asset Management System, 12 Levels of Service, 21
Asset Performance, 13 Life Cycle Cost, 16
Asset Portfolio, 6 Life Cycle Cost Analysis, 17
Asset Register, 6 Linear Asset. See Horizontal Asset
Asset System, 6 Maintenance Managed Item, 7
Asset Type, 6 Market Value, 16
Asset Utilization, 13 Maximum Potential Life, 8
Asset Valuation, 16 Monetization, 17
Backlog Maintenance, 22 Multi-Criteria Analysis, 18
Benefit Cost Analysis, 17 Net Present Value, 18
Break-in Work, 22 Operational Expenditures (OPEX), 23
Business Case Analysis, 17 Optimized Decision Making, 18
Business Risk Exposure (BRE), 25 Organizational Strategic Plan, 12
Capital Expenditure (CAPEX), 15 Performance Grade, 14
Computerized Maintenance Management Performance Measure, 21
System (CMMS), 20 Performance Monitoring, 14
Condition Assessment, 13 Physical Life, 8
Condition Curve, 14 Planned Maintenance, 23
Condition Grade, 14 Predictive Maintenance, 23
Consequence of Failure, 25 Preventive Maintenance, 23
Corrective Maintenance, 22 Probability of Failure, 26
Cost Benefit Analysis. See Benefit Cost Analysis Reactive Maintenance, 23
Critical Asset, 25 Redundancy, 26
Criticality, 25 Rehabilitation, 15
Deferred Maintenance, 22 Reliability, 26
Demand Analysis, 21 Reliability Centered Maintenance (RCM), 24

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Remaining Useful Life, 9 Sensitivity Analysis, 18
Renewal, 15 Service Life, 9
Repair, 24 Sustainability, 18
Replacement, 15 Triple Bottom Line Analysis, 18
Replacement & Rehabilitation Planning, 15 Unplanned Maintenance, 24
Replacement Cost, 16 Unscheduled Maintenance, 24
Restoration, 15 Useful Life, 9
Risk, 26 Vertical Asset, 7
Risk Assessment, 27 Water Main Break, 28
Risk Management, 27 Water Main Leak, 28
Risk Mitigation, 27 Willingness to Pay, 19
Run-to-Failure, 24 Work Management System, 20
Scheduled Maintenance, 24

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15. WORKS CITED
Arthur, G. (2016, November 27). Work Management: Definition, Process, Features and Skills. Retrieved
from Aspirant Forum: https://aspirantforum.com/2016/11/27/work-management-definition-
process-features-and-skills/

Evaluation Criteria for Reliability-Centered Maintenance. (2009). SAE International.

Hatry, H. P., & Liner, E. B. (1994). Issues in Deferred Maintenance. Urban Institute, U.S. Army Corps of
Engineers.

IAM Asset Management - an anatomy (Version 3 ed.). (2015). Institute of Asset Management.

IIMM. (2006). International Infrastructure Management Manual.

IIMM. (2015). International Infrastructure Management Manual (5th Edition ed.). Institute of Public
Works Engineering Australia.

ISO 55001. (2014). International Standards Organization.

McTigue, N. (2010). The Water Dictionary: A Comprehensive Reference of Water Terminology (2nd ed.).
American Water Works Association.

PAS 55. (2008). BSI British Standards.

SIMPLE. (n.d.). (Water Environment Research Foundation) Retrieved 2017, from Sustainable
Infrastructure Management Program Learning Environment: simple.werf.org

WRF, D. M. (2016). Selecting Methods for Projecting Life Cycle Asset Management Investment Needs.
Water Research Foundation.

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