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Building more realistic renewal programs




Wairoa District Council

Challenging the assumption that existing renewal forecasts are realistic was key to a partnership project between Morrison Low and a rural district council, intended to test the theory of asset design lives and service levels against available data.


Our view, developed from extensive work around New Zealand, is that renewal forecasts are being prepared very conservatively, often using theoretical asset lives. Through this innovative project, we developed a statistical model to explore the science of likelihood, built resilience into the renewal planning profile and redistributed the capital forecast to reflect a level of acceptable risk. 


The outcome is that using our approach councils can optimise their expenditure over the life of assets with greater certainty and clearly understand the risk associated with different renewal replacement strategies based on real analysis of their own networks.


The breadth of our team means we were able to demonstrate the effect of these changes all the way through to the impact on rates, and provide ready inputs to the long term plan. 


Through our analysis process we can optimise whole of life costs for different risk levels that suit the criticality of the asset. The optimisation can be set to provide the best option for cashflow minimisation, various cashflow requirements, or NPV using the council’s own network data. It can also readily show an optimised renewal strategy for different networks and different material types


Using standard design lives is just a guess in real life. What is the basis of your renewal program?


Contact:  Cushla Anich