The Right Projects at the Right Time for the Right Cost: How to Optimize Your Capital Plan with Business Case Evaluations

The Columbus Department of Public Utilities (DPU) has been implementing the business case evaluation (BCE) process for 5 years with staggering results, including a $60 million reduction in the DPU capital budget. The standard BCE process at DPU is defined and documented in detail. From the time a project is conceived to the time final design and construction are authorized, guidance in the form of a roadmap and several checkpoints are in place. The BCE team making the case for a project has clear roles, responsibilities, and expectations as they shepherd a capital improvements plan (CIP) project along its way to the construction phase. If the BCE fails to prove the project will provide value to customers at any of the checkpoints, the project does not proceed.The BCE process, when applied to capital assets, is based on the notion that the best opportunity to avoid cost during the life-cycle of assets is at conception by choosing the best projects. As such, more detailed analysis is required early in the capital planning process. To avoid spending more on a BCE than the potential costs savings, a policy is in place such that only projects above a certain threshold cost or organizational risk exposure are placed into the full BCE process. Smaller projects go through a greatly abbreviated validation process. Impacts of this additional analysis are also estimated based on experience, such that staff can plan for increased internal labor, consultant budget, and/or calendar time to complete a project design.When accounting for all triple-bottom line (financial, social, and environmental) costs and risks associated with projects that have gone through the BCE process at DPU, the value of conducting BCE’s totals almost $75 million. In addition, Columbus DPU’s BCE process received international recognition as a best-practice process as judged against 41 leading global utility participants in the Water Services Association of Australia’s Aquamark benchmarking on Asset Management processes in late 2012. The process was also recognized in the McGraw-Hill Construction SmartMarket Report, “Water Infrastructure Asset Management: Adopting Best Practices to Enable Better Investments” in 2013.