These philosophies now significantly influence that decision-making process, forcing these choices to be formulated in a different way than has been the practice in the past. Moreover, as the number of different technologies capable of addressing our infrastructure needs increases, so does our ability to use asset management principals to improve and optimise decisions.

Decisions are now being made encompassing not only engineering principles, but also economic, social and risk principals, all of which are being considered in conjunction with the expected life of a new or rehabilitated asset.

The introduction of these principals into the decision-making process has had a dramatic impact on the level that the trenchless rehabilitation industry is used. This is mainly a result of the influence of two of these areas, the social and economic considerations, where trenchless rehabilitation in many cases provides significant advantages over conventional construction methods.

In the other two areas, engineering principles (especially pipe condition and performance) and risk considerations, it has been closing the gap through research and an increased understanding of trenchless applications. Will trenchless rehabilitation always be the better solution? No. However, it is now being considered far more often than in the past. So how do these decision-making principles influence the choice of replacement versus rehabilitation, particularly with respect to economic and social impacts considerations?

Pipe condition and performance

An essential element of good infrastructure management is the ability to understand the current condition of the infrastructure. For the majority of utility owners the ability to collect condition information on their infrastructure network is restricted by many things, including available inspection technologies, funding, resources and system size. A good example of this is in water distribution infrastructure where even if a utility owner has the money and resources to collect data, there is a significant lack of available economical technology in the area of nondestructive condition testing, specifically on cast, ductile and steel distribution mains.

However, there is a large amount of predictive information that can assist utility owners in developing deterioration curves (e.g. life expectancy distributions for existing pipes in inventory), including maintenance history (e.g. break and leakage), soil condition, pressure losses, age and material types. Through the use of this information and statistical analysis, deterioration curves can be developed for use on the overall system.

These curves can then be used to make educated predictions of the average global system condition, enabling utilities owners to effectively manage the lifecycle of the infrastructure. This includes 10, 20 and 50-year financial needs forecasting. These forecasts can only be made by understanding the global system condition and its expected remaining life.

Recognising the average expected life of our pipes, we can calculate what our average investment should be in terms of the quantity of pipes that need to be replaced or rehabilitated in an average year.

For example, if we are anticipating that the average life of the sewer pipes in our system will be about 125 to 150 years and that we’ll have to replace them over a period of 100 years, then we also know that we need to replace or rehabilitate one per cent of our system in an average year. If we are not meeting the one per cent average, then we are simply creating a backlog or expecting our underground infrastructure to magically last longer.

As most cities have not been historically meeting an appropriate level of intervention (replacement or rehabilitation) on average over the last 50 years or so, a backlog has been created, which is called the infrastructure deficit.

Life cycle costing (economic analysis)

In the past, the economics of the decision to replace or rehabilitate infrastructure was based simply on what the difference was between the two estimates of capital cost. However, this does not necessarily produce the best decision as it does not consider the life of the intervention.

When talking about the life of an investment, we are really talking about the effective design life of the product you are choosing to use. Although cured in place pipe (CIPP) is generally a lower capital cost intervention than replacement, it may not be the way to go if its expected design life is very short. On the other hand, a longer lasting intervention such as replacement may not be worth the additional investment in terms of the proportional benefits associated with a longer life and its selection may represent a misuse of financial resources.

Today the economics, at least in the context of infrastructure decision making, must look at the overall value of the infrastructure investment, not just the initial capital cost estimates when choosing to either replace or rehabilitate. The value of the investment made is a function of the initial cost and the expected life of the investment (the design life of the new pipe or rehabilitated pipe).

Using a reasonable discount rate (interest rate minus inflation), the estimated capital cost and the life expectancy of each approach (replacement or rehabilitation); you can derive the net present value (NPV) of each alternative. This method will help determine the most economical option to best ensure your investment will be a wise one.

One example of how accounting for the design life of CIPP vs a new pipe (concrete or PVC) can put into perspective alternatives that would likely never even have been considered in the past. One pipe segment was found to be severely deteriorated and required an immediate intervention. The details of this pipe and its condition are:

525 mm sewer

3 Segments (178 m total length)

Wrc Condition Grade 5

Approximately 25 per cent ovality

7 m depth

Rock Trench

The estimated capital cost to conduct replacement of this pipe was $700,000 while rehabilitation by CIPP methods was only $68,000, which would have provided an immediate capital savings of $632,000. Although there was an immense difference between the capital costs of a new pipe versus a rehabilitated pipe, this does not automatically mean that rehabilitation is a better option.

Given the severity of the condition of this pipe, there was a real concern that rehabilitation may only provide a short extension to the life of the pipe. Contrary to that, a large capital expenditure would be throwing money away if the extension of life on the pipe does not warrant the increased expenditure. Lifecycle costing provides a method of comparing apples to apples on different intervention options with differing design lives and costs.

By applying an adjustment factor based on a discount rate and anticipated design life to the cost of various intervention strategies – CIPP or replacement in this case – we can determine what the net present value of each alternative is.

In this case the lifecycle cost of replacement in terms of a net present value (NPV), using an adjustment factor based on a 4 per cent discount rate and a design life of 100 years, is $714,000 (versus its capital cost of $700,000). Again using an adjustment factor based on a 4 per cent discount rate but a design life of only 5 years, the lifecycle cost (NPV) of the CIPP rehabilitation is $332,000 (versus its capital cost of $68,000).

While $332,000 is a lot closer to $700,000 than $68,000, it does put into perspective the value of the reduced capital cost even if the rehabilitated pipe were to last only another 5 years. Even though this was an unconventional consideration of CIPP due to the advanced level of deterioration of the existing pipe, it is still approximately half the lifecycle cost of a new pipe. So even in circumstances where you are faced with severely deteriorated pipes it can pay to question the validity of the conventional decision to replace. As an aside, this pipe was rehabilitated in 2003 and has shown no signs of further deterioration.

In the past, the conventional approach to decision-making would not have ever considered CIPP as a viable technical option because of the focus on a design life objective alone and the possibility of a reduced design life due to the advanced level of deterioration on the existing pipe. The conventional approach could have many cases that resulted in the unnecessary expenditure of monies which could have been redirected to address other needs in the system.

Risk

There are two considerations in calculating risk: the probability of a pipe failing and the consequence of a pipe failing. The probability of a pipe failing is largely focused on the observed condition of the pipe but also considers the surrounding environment in terms of its potential to contribute to deterioration. The consequence of a pipe failing is largely focused on the criticality of the pipe within the system, including the number of affected customers, the predicted environmental impacts and the potential impacts to public health and safety.

Once we understand what the risks are, we need to determine what our risk tolerance is. Risk in the context of making decisions is really about choosing when or if to intervene and about management versus elimination. Depending on the individual circumstances, the level of risk tolerance will vary. Whether your intervention is to apply a Trenchless Technology or replace a piece of underground infrastructure, both options will dramatically reduce your risk exposure.

Social costs (impacts)

Social impacts are another area in which trenchless rehabilitation can provide significant benefits. Although social impacts can be difficult to define in terms of tangible costs, it is widely accepted that disruptive construction techniques do come with a cost.

These social costs range from vehicular lane closures and pedestrian disruption to more tangible costs such as the reduced life of pavement due to trenching or other damages associated with disruptive construction techniques.

The simplest way to compare the significance and difference between the social cost of replacement and rehabilitation is to quantify the nature, magnitude and duration of the disruption of each alternative and put them on an order of magnitude scale to see if there is a significant difference between alternatives. In most cases the rehabilitation option will clearly have a lower social impact.

Another significant social impact that influences our decisions rightly or wrongly is our new understanding of how much pipe must be replaced or rehabilitated in an average year. If for example a utility owns 2,500 km of wastewater collection pipe and they are forecasting replacement over a 100-year period, then they are required to intervene on 1 per cent of their system, on average, over the next 100 years. This means that an average of 25 km must be rehabilitated or replaced every year.

Moreover, as stated earlier this does not account for the backlog most cities or utilities have already created. Given the large amount of pipe that needs to be addressed every year, the social implications of strictly replacing this much pipe would be extremely large and beyond both the financial capacity of most cities and the tolerance level of its citizens. It would be, therefore, unachievable to address the volume of pipe in need of upgrading without the use of technologies that lower the lifecycle cost and the social impacts of intervention on the community.

Conclusion

Trenchless Technologies, over the next several decades, will have one of the most significant influences – if not the most significant influence – on the reduction of the buried infrastructure (water distribution and wastewater collection) deficit. Although in many cases the use of trenchless technologies will be preferred over replacement based on economic analysis alone. Even if this were not the case, cities and utilities are also going to have to face the daunting task of dramatically reducing the social impact on the public and other infrastructure caused by the large volume of work our underground water and wastewater pipes will require over the next several decades.