Pay Now or Pay More Later: Building a Better Business Case for Funding Sewer Rehabilitation Using Return On Investment Analyses

This paper presents the framework for a return on investment (ROI) analysis that has been used to demonstrate the financial argument for funding infrastructure rehabilitation. Examples of ROI analyses are presented for three sewer basins in the City of Raleigh, NC. The ROI analysis method includes traditionally-accepted financial calculations such as energy savings from infiltration and inflow (I/I) removal in terms of reduced transport and treatment costs as well as deferred capital expenditures because of capacity restoration. In addition, the ROI calculation includes resulting reductions in a variety of other management, operation, and maintenance costs including cleaning, root removal, and crew time spent on work orders and emergency responses. The methodology can be tailored to local conditions and guidance is provided in selecting appropriate cost factors depending on a range of system-related parameters.As shown in the case study, the ROI analysis can be used to evaluate alternative sewer rehabilitation approaches and select the approach that provides the best ROI for a given project. For example, in some areas with low I/I rates, the best ROI is achieved using a focused point repair approach that is aimed at addressing structural and maintenance problems. Areas with higher I/I rates achieve a better ROI by using a more comprehensive sewer rehabilitation approach that includes measures aimed at maximizing I/I reduction.The methodology presented shows that a positive return on investment can be achieved when funding sewer rehabilitation at levels higher than is typical for most utilities today. The case is made that funding sewer rehabilitation at higher levels is a financially sound decision and is necessary to control utility costs and customer rates in the future. It can also show that waiting until failure of some critical, high risk assets will cost the utility more money than a well-planned and executed asset condition assessment and rehabilitation program.