Decentralised asset systems – where does Asset Management fit in?

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Decentralised water systems have been used by urban utilities for decades to service remote areas. These systems have typically been ‘fit-for-purpose’ and low complexity, however, remote communities facing global pressures such as climate change, population growth and water scarcity are now placing increased expectations on their water utilities to develop more sophisticated and resilient solutions that support Integrated Water Management. This creates asset management challenges for water utilities.


One of the Victorian State Government’s proposed objectives is to help transform Victorian cities and towns into the most resilient and liveable in the world. Their Water for Victoria Paper (released in 2016) therefore identified developing resilient and liveable cities and towns as being one of its nine key focus areas for the future. The government paper increases the focus on decentralised servicing options as supporting elements to achieve Integrated Water Management (IWM)(1) – and is viewed as a key initiative to enabling resilient and liveable cities and towns.

The government paper highlights a water utility’s essential role in achieving this IWM objective, which includes planning and managing all elements of the urban water cycle to improve environmental, social and economic outcomes for communities. Several measures of success were cited. Two of these are achieving IWM to drive more efficient centralised and decentralised servicing solutions, and having local communities with a greater capacity to actively participate in water management.

To understand their contribution to achieving IWM, decentralised asset systems can usually be classified into three types(2):

  1. Onsite scale: Technologies that provide services at the scale of an individual lot (e.g. rainwater tanks and greywater recycling)
  2. Cluster of development scale: Systems that operate under a common ownership model and service two or more dwellings, with water sourced or wastewater treated in the proximity, and
  3. Distributed systems: Systems that provide services to very large developments and which are generally owned and operated by water utilities.

Figure 1 below further highlights the role of decentralised asset systems to developing a resilient and liveable city and town.

Figure 1: Decentralised water assets’ role in achieving resilient and liveable cities and towns


The provision of decentralised asset systems, particularly those in communities at the extremities of a water utility’s service area, is nothing new. Centralised asset systems have the benefit of providing a safe, reliable and cost-effective supply of water, sewerage and treated water through scale and reasonably standardised solutions. Conversely, decentralised asset systems involve collecting, transporting, treating and using different water types at varying scales and geographically dispersed locations. Quite often due to cost constraints, these systems are based on a fit-for-purpose solution for individual homes or clusters of homes, to industries and built-in facilities.

The provision of decentralised asset systems is sometimes faced with multiple inter-connected asset management challenges:

  1. Meeting increasing levels of community participation and expectation.
  2. Funding their development; and
  3. Alignment of government, community and private owner interests.

Firstly, global trends such as climate change, population growth and water scarcity are not site specific and, in some cases, have bigger impacts on remote communities reliant on water sources for irrigation and their local economy. Local communities are therefore becoming more engaged in water source decisions and have increased expectations on the level of sophistication and resilience provided by their decentralised assets systems.

Secondly, the creation, operation and maintenance of more sophisticated and resilient decentralised assets is under financial pressure due to the limited funding capabilities of utilities servicing areas with a low customer base. Water utilities servicing remote communities with a small customer base (and increasing expectations) may therefore need to use different funding arrangements to deliver water resource options.

In Victoria for example, GWMWater owns and operates 15 water treatment plants – four of which are managed through a 25-year Build-Own-Operate-Transfer (BOOT) scheme(3). In other situations, addressing the resilience needs of widespread communities might be met by other private funding arrangements, such as the Private-Public-Partnership (PPP) arrangement used to create the Wonthaggi Desalination Plant in Victoria(4). NSW has been a leader in decentralised water recycling infrastructure since the Water Industry Competition Act was passed in 2006 in response to ongoing drought. The legislation created a new licensing regime for private potable, recycled and sewerage services, encouraging competition and investment in innovative water recycling businesses in order to increase non-rainfall dependent water supply. This led to innovative funding developments such as Central Park and Barangaroo.

Thirdly, as asset systems become decentralised, the boundaries for their management and performance outcomes become unclear. Water utilities must ensure oversight is not lost and all decentralised asset systems are still manageable throughout their entire lifecycle, having regard to organisational, government and community expectations, and spatial or technical considerations. In the case of privately funded assets, this creates an additional dimension of complexity as the objectives, policy and strategy of the organisation, government, community, and that of the private owner may differ. This conflict may be driven by different investment criteria with conflicting measures of performance and therefore success.

Given the importance of decentralised asset systems to achieving IWM, how does a water utility best manage these inter-connected asset management challenges?


Centralised and decentralised asset systems should be created under a holistic asset management framework that includes an Asset Management System (AMS) as recommended by ISO 55000, the international standard for asset management. Readers may recall from our February 2016 edition of QSI that we believe ISO 55000 promotes:

  • Decision making driven by a unified purpose by setting a framework that facilitates the review of asset management plans for centralised and decentralised assets in aggregate, allowing an organisation to prioritise their investments based on a long-term view of cost reduction and service level efficiency.
  • Measurement criteria aligned to asset management objectives through requirements that force the review of asset performance and improvement of asset management. This creates feed-back loops that relate strategic documents and plans for centralised and decentralised assets to the long-term objectives of the organisation, government and community, and potentially those of private owners.

An AMS which follows an organisation’s policy and strategy (which is assumed to have some alignment to the objectives of government and local communities) as shown in Figure 2 below, can achieve an optimised return on investment and growth, clarity of accountability and some constructive tension, increased attention to the long-term, flexible workforce management, improved corporate image and meet customer and demand trends.

QSI 19-Water-EI-Decentralised Water Solutions-2

Figure 2: Link between strategy and policy, the Asset Management System and the organisational structure, processes and tools

The AMS provides a vital link between the organisation’s strategies and policies, and the various organisational structures, processes and tools necessary for stewardship of centralised and decentralised asset systems. More importantly, it can differentiate the needs for centralised and decentralised asset systems, regardless of ownership, different stakeholder expectations, spatial or technical differences, and provide specific and resilient solutions for global trends such as climate change, population growth and water scarcity.

For decentralised asset systems owned by the water utility, the performance of these assets and their impact on centralised systems should be regularly assessed to ensure their alignment to the organisation’s strategies and policies. It’s also likely that the community served by the decentralised asset system will need higher levels of consultation during all stages of the lifecycle of these assets, to ensure alignment with community strategies and policies. For privately-owned decentralised assets, a holistic AMS should be capable of adapting to flexible operation models and processes that can address the requirements of all stakeholders. Periodical stakeholder engagement with the private owners must be undertaken to align strategies and policies. In both cases, long-term planning is key to ensuring benefits are realised for all parties.

Further to an organisation’s strategies and policies –  socio-economic, ecological and public health impact must also be factored in when assessing options for servicing new areas with decentralised asset systems.

After a feasible option is selected, the Key Performance Indicators used to the evaluate performance of these decentralised asset systems and reported to board should support the strategies and policies of the organisation, government, local communities, and if applicable, the private investor. Furthermore, these indicators should be consistent throughout all stages of the asset lifecycle, from construction through to operation, maintenance and replacement decisions.

There is no doubt that decentralised asset systems are becoming increasingly relevant to water utilities to support their Integrated Water Management strategies and will require higher levels of sophistication and resilience to mitigate global trends in climate and population growth. They will also need to attract diverse funding arrangements, with higher levels of input required from local communities and private owners. Holistic AMS frameworks –  which provide strategic policy and performance oversight of centralised and decentralised asset systems from the perspective of different stakeholders – are a robust way of managing these unique assets.

(1) Victoria State Government Water for Victoria Paper (2016).
(2) Cook, Tjandraatmadja, Ho and Sharma. Definition of Decentralised Systems in the South East Queensland Context. Urban Water Security Research Alliance (2009).
(3) GWM Water (2016). Water Treatment.
(4) Department of Environment and Primary Industries (2016). Public Private Partnership.