Res 2016-032/Water Reuse Asset Management Plan

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City of San Marcos Water Reuse System Asset Management Plan 5 San Marcos Reuse System Relative Risk Assessment 5.1 Risk Assessment Process For most utilities, it is a challenge to prioritize asset replacement and /or rehabilitation and to set the timeline over which renewal actions should take place. A business risk assessment can help a utility establish inspection, maintenance, and repair priorities for its existing assets. The business risk assessment is a standard approach used in advanced asset management to better manage an individual asset across its entire economic life. The risk assessment considers the condition of a system asset in terms of how likely it is to fail. The risk assessment also factors in the consequence associated with failure of an asset. The following section summarizes the business risk assessment conducted for the San Marcos reuse system assets. The objective of the business risk assessment process is to mathematically compute the risk of asset failure (ROF), which is accomplished using the following equation (Figure 5.1): Likelihood of Failure Age Material Performance Capacity Maintenance Consequence _ X of Failure Safety Customers Environment Collateral Damage Regulations Performance Failure Damage Non - Compliance Figure 5.1 - Risk of Failure Equation The Likelihood of Failure (LOF) is an assessment of an asset's ability to meet its intended levels of service. The Consequence of Failure (COF) measures the potential impact that an asset failure may have on utility customers and the surrounding area. Consequence of failure is generally related to location and links the impact of the failure in terms of repair cost, disruption to the public and economy, impairment of system operation, regulatory compliance, public health and safety, and damage to the environment. February 2016 Page 24