**6. Strategic, tactical and operational planning**

Strategic planning needs to be grounded on the utility's vision and mission. It should be built for the entire organization, and it aims at establishing the global and long-term corpo‐ rate directions.

The first stage is the definition by top management of clear objectives, assessment criteria, metrics to assess them, and finally, targets for every metric. Realistic objectives and targets require proficient knowledge of the context. In general, this is provided by the monitoring and feedback procedures in place. If a utility is preparing a strategic plan for the first time, setting up objectives requires taking into account the available context information, even if not structured and accurate.

The second stage is diagnosis, consisting of an analysis of external context (global and stake‐ holder-specific) and of the internal context (both organizational and infrastructure), anch‐ ored in the objectives and targets established. The context evaluation should be carried out through to the planning horizon. SWOT (strengths-weaknesses-opportunities-threats) analy‐ sis is a suitable way to express the results of this stage.

The third stage is the formulation, comparison and selection of strategies that lead to meet‐ ing the targets, given the diagnosis. The results should be expressed in a document, the stra‐ tegic plan, a document that should be synthetic, clear, and effectively disseminated to all relevant internal and external stakeholders.

**•** Operational costs, normally organized in three classes: (i) Cost of goods sold; (ii) Supplies & external services; (iii) personnel; operational costs are expressed as annual values, over

**•** Revenues, either through lump sums occurring at specific points in time (e.g. public sub‐ sidies), or distributed over the analysis period (e.g. revenues from tariffs). Revenues are

Whenever relevant, the costs of planning and designing new assets, as well as disposal costs

Since the end of the analysis horizon does not coincide in general with the end of the service life of most assets, the residual value of all assets at the end of the analysis period must be

Cost-benefit analysis may include not only direct costs and revenues, as described above, but also indirect (i.e., those that are direct costs for a third party) and intangible costs and benefits. However, practice shows that utilities often do not feel comfortable in expressing certain such costs in monetary terms (e.g., increasing public health risk because the water quality does not meet the targets). An option that is recommended by some approaches (Alegre *et al*., 2011) and successfully implemented in a good number of utilities is to express indirect and costs as performance or risk metrics, and include only direct costs in the cost

Strategic planning needs to be grounded on the utility's vision and mission. It should be built for the entire organization, and it aims at establishing the global and long-term corpo‐

The first stage is the definition by top management of clear objectives, assessment criteria, metrics to assess them, and finally, targets for every metric. Realistic objectives and targets require proficient knowledge of the context. In general, this is provided by the monitoring and feedback procedures in place. If a utility is preparing a strategic plan for the first time, setting up objectives requires taking into account the available context information, even if

The second stage is diagnosis, consisting of an analysis of external context (global and stake‐ holder-specific) and of the internal context (both organizational and infrastructure), anch‐ ored in the objectives and targets established. The context evaluation should be carried out through to the planning horizon. SWOT (strengths-weaknesses-opportunities-threats) analy‐

The third stage is the formulation, comparison and selection of strategies that lead to meet‐ ing the targets, given the diagnosis. The results should be expressed in a document, the stra‐

also expressed by their annual value over the analysis period.

of assets that reach the end of their service lives, should be included.

**6. Strategic, tactical and operational planning**

sis is a suitable way to express the results of this stage.

the analysis period.

58 Water Supply System Analysis - Selected Topics

considered.

axis of the analysis.

rate directions.

not structured and accurate.

The implementation of the strategic plan is ensured by a suitable chain of management, where the tactical and operational planners and decision makers play key roles. Implemen‐ tation should be monitored periodically (in general, annually). Strategic plans should be kept up to date, so that global and long-term directions are known and clear to the entire organization at all times. This may require reviewing and updating every 1/3 to 1/5 of the plan's horizon.

Tactical planning and decision-making should be founded on the strategies and on the strategic objectives and targets. The aim of tactical planning is to define what are the in‐ tervention alternatives to implement in the medium term (typically 3 to 5 years). IAM tac‐ tical planning is not restricted to infrastructural solutions, as it should also consider the interventions related to operations and maintenance and to other non-infrastructural solu‐ tions. Managing the infrastructure has close interdependencies with the management of other assets: human resources, information assets, financial assets, intangible assets. The IAM plan needs to address the non-infrastructural solutions that are critical for meeting the targets and are related to these other types on assets, e.g., investing in a better work orders data system.

The key stages of tactical planning are similar to those described for strategic planning. The objectives, metrics and targets need to be coherent and aligned with the strategic level. Met‐ rics should address all three dimensions of performance, risk and cost.

The diagnosis should be carried out based on the metrics selected, for the present situa‐ tion and for the planning horizon. Due to the system behavior of the water infrastruc‐ tures, there is the need to adopt a progressive system-based screening progress, aimed at identifying the most problematic areas. In general, the water systems under analysis should be divided into sub-systems, and the metrics assessed for each of them. The most problematic are captured and analyzed in more detail. For those that do not display sig‐ nificant overall problems, there is the need to confirm that they do not have relevant lo‐ calized problems. If they do, these localized areas need to be retained as well for detailed analysis. This screening process leads to the identification of priority areas of interven‐ tion. For these, the diagnosis needs to be more detailed in order for the causes of the problems to be properly understood. The screening process may not apply to non-infra‐ structural interventions affecting the entire organization (e.g. organizational changes, IT and information system upgrades).

The next stage is actually producing the plan, and is one of the most work-intensive as it encompasses the demanding engineering processes involved in identifying and developing feasible intervention alternatives for each of the subsystems, and the assessment of their re‐ sponses over the analysis horizon for the metrics selected. For each subsystem, the interven‐ tion alternatives need to be compared, and that alternative which best balances the set of metrics for the chosen objectives, over the long-term, will be selected. The set of best inter‐ ventions alternatives, compatible with the financial resources that can be mobilized and with the planning horizon, will be included in the tactical plan. The plan must make allow‐ ance for the resources needed to implement it.

On the other hand, analyzing over long periods of time must account for what is usually a changing context: societal values and expectations evolve; regulations become more de‐ manding; technologies improve; urban areas progress; the climate and the environment

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61

The current emphasis on water-energy efficiency is driven by most of the above factors of change. However, old paradigms are broadly accepted without being questioned. For in‐ stance, drinking water networks are still designed in most developed countries to re‐ spond to fire flows. Is this the most rational approach? In the Netherlands, for instance, this paradigm is changing. Smaller diameter networks are not only less expensive but al‐ so generally behave better in terms of water quality. Firefighting is ensured from a basic trunk main grid. If paradigm shifts occur, rehabilitation interventions need to take them

The fact that most water systems are far from ideal today is a consequence of a growth proc‐ ess that has been forced to react to that changing context over the decades. Most mature sys‐ tems today are not exactly what they would be if we were to start with a clean slate. Yet, it is common to see preventive maintenance or rehabilitation strategies centered on replacing the pipes with a higher risk of failure with new pipes of the same size. Would it not make sense to try to project the best possible system for a given time horizon – 20, 30 years – and use those very same opportunities of intervention to make the present day system gradually

The fact is that there are many cases when the water networks are adequately and efficiently designed and operated, meeting the hydraulic, water quality and energy targets for the present and for the expected future demands. In these cases, the key driver for rehabilitation is indeed the risk of pipe failure, usually assessed through the combination of failure proba‐ bility and component importance (in terms of the consequence its failure). Much of the lead‐ ing-edge theory and practice is tailored for these situations, where the like-for-like

In classical terms, infrastructures used to be seen as living through a sequence of stages, from the initial design, through constructing new (or extending), operating, maintaining and rehabilitating or replacing by new again. This is indeed the typical AM approach for other types of physical assets. In mature infrastructures, however, all these stages co-exist, and designing new, extending, maintaining or rehabilitating are fundamentally parts of the

The IAM framework introduced in sections 3 to 6induces essentially one approach to the problem, illustrated in Fig. 4 in very simple terms. IAM planning starts from an existing in‐ frastructure and aims at optimizing its behavior over the analysis period, enabling a pro‐ gressive improvement of the infrastructure condition and functional response. In wellmaintained mature infrastructures, this requires that the fair value at the end of the

fluctuate and change; natural resources become scarcer.

into account.

morph into that better design?

replacement strategy fits well.

planning horizon is not lower than the initial value.

same process.

The detailed diagnosis and the design and analysis of infrastructural and operational in‐ tervention alternatives are not trivial tasks and often require the use of sophisticated mod‐ eling tools. This is where the more advanced research efforts have been centered, such as mentioned in section 2 (e.g. Skipworth *et al*., 2002; Sægrov ed., 2005; Sægrov ed., 2006; Malm *et al*., 2012; Renaud *et al*., 2011; Alegre and Almeida ed., 2009).

The last stages of tactical planning are the implementation, monitoring and periodic review of the plan. Implementation is materialized via operational management. Monitoring and reviewing are critical for the continuous improvement process. It is recommended that the tactical plan defines their modes, responsibilities and periodicity. Operational IAM planning aims at implementing the interventions selected in the tactical level.
