Blog

Introduction

Pipe utilities are the unseen infrastructure that support our daily lives. Out of sight and out of mind for many, pipes transport fresh- and wastewater, protect sensitive electrical and information transmission lines, provide drainage, and delivery energy in the form of oil and gas. The scope and scale of pipelines is similar to that of roadways and powerlines—extensive and ubiquitous.

The impact of pipe infrastructure on human health and development cannot be overstated. By facilitating proper sanitation and access to clean water, pipes contribute to longer lifespans and healthier lives for people across the globe. As such, pipelines of all types should be considered essential infrastructure and managed accordingly.

That means prioritizing long-term performance and value delivery over short-term cost savings; choosing the safest and most effective methods for installation and repair; remediating damaged pipes in a way that’s environmentally and socially responsible.

This article will outline the economic and social imperative of responsible asset usage and management in the context of trenchless technology. If you’d prefer to watch or listen along, check out the embedded webinar by PW Trenchless founder and CEO David O’Sullivan below. Let’s get into it!

Open Cut vs. Trenchless Replacement Techniques

Before we dive into the economics of pipes and infrastructure, we should define common methods for pipe replacement. The most common and well-known technique is open-cut replacement. This involves excavating a trench to access the length of pipe to be replaced. It has the chief benefit of simplicity, requiring less specialized equipment and training than other methods. However, its downsides are significant. Open-cut replacement often requires cutting through concrete and asphalt, causing damage that reduces the expected lifespan of the impacted road or sidewalk. It’s noisy, dirty, and disruptive to residents and commuters. Due to the volume of earth moved, the amount of heavy equipment used, and the impact on traffic during construction, open-cut replacement is a carbon-intensive process.

Trenchless technology encompasses every other form of pipe replacement. It’s in the name: replacement without digging a trench. In truth, trenchless solutions often require digging access points. However, the amount of earth excavated is a tiny fraction of what would be moved by an open-cut project. Trenchless solutions are far less polluting—up to 90% more carbon efficient than open-cut. They may be faster and are usually less noisy and disruptive to traffic. While there are situations where trenchless technology is not an appropriate solution, in most cases where open cut works, so will trenchless.

PSAB Standard 3150: Asset tracking and social responsibility

Canadian governments are subject to accounting and reporting standards set by the Public Sector Accounting Board (PSAB). These standards apply to all levels of government, from the Federal Government to local government organizations such as Crown corporations. When setting accounting standards, the Board has a number of specific goals in mind, including:

• Enforcing transparent government spending practices
• Promoting trust in public (taxpayer funded) entities through transparency and accountability
• Setting clear standards across all levels of government, allowing for apples-to-apples comparisons and performance analysis

PSAB Standard 3150 is a set of rules that covers the management of tangible capital assets by governments. Tangible meaning physically real—not intellectual property or digital assets. Capital assets meaning anything to which a dollar value may be assigned—roads, parks, buildings, and even vehicles and equipment fall under this standard, as do pipe systems.

Governments track the value of assets over time to stay on top of appreciation and depreciation. Assets worth more than $10,000 must be tracked individually, while smaller assets may be grouped into collections. Real estate is always counted individually, regardless of asset value.

This standard ensures accurate and transparent planning and budgeting for asset management. It’s a consistent accounting reporting framework for comparative analysis. In short, it’s a reporting standard that attempts to ensure fiscally responsible asset management at all levels of government.

In the context of pipeline systems, it raises questions about what the most responsible course of action is for a distressed asset. If conventional replacement methods come with higher costs, more pollution, and greater disruption to communities, is it fiscally irresponsible not to consider alternative options?

Trenchless Technology and the “Triple Bottom Line”

You may be familiar with the “triple bottom line” method of calculating value. Rather than focusing on a conventional profit/loss bottom line, the triple bottom line framework accounts for social and environmental factors as well as financial factors. It’s a system that tries to account for “people, planet, and profit” at once, and has become a standard for many public organizations.

There are different ways to calculate a triple bottom line. One simple way is through a points system. Take for example a watermain rehabilitation project along a residential street. A watermain is failing. Without remediation, it will waste significant amounts of water and possibly cause damage to other assets: roads, private property, and the surrounding environment. The watermain runs beneath a treed area valued by locals that may also contribute to local biodiversity and soil quality.

In a standard bidding process for this type of job, factoring in only cost, conventional replacement may be highly competitive against trenchless technology. In a triple bottom line framework, the true value of a less disruptive method becomes apparent. Removal of mature trees reduces the natural beauty of the region for decades if not permanently, so there’s a social component to account for. Digging trenches is highly disruptive to the local community during construction, so there’s another social factor. The act of replacing a watermain is itself highly disruptive, adding to social costs. Conventional techniques are far more carbon intensive—up to 90% more polluting than trenchless, so there’s an environmental factor to consider beyond impact to trees and wildlife.

By assigning scores on all three dimensions, a more holistic view of profit and loss emerges. The cumulative social and environmental cost of tree removal might mitigate any up-front savings from conventional replacement. This mitigation becomes even more pronounced when accounting for carbon emissions, noise pollution, traffic disruption, and other factors.

Triple Bottom Line Scoring

Let’s revisit the watermain example, exploring a possible scoring system that accounts for environmental and social costs.

Here’s a possible scoring rubric when evaluating a watermain project as described above:

• 1 point for watermain break
• 2 points for killing a tree
• 0.05 points for 1m of replacement
• 0.003 points for anode retrofit
• 0.01 points for 1m of lining

Each point adds to the social cost of the project; when combined with estimated financial impacts, we might end up with the following example evaluation:

• Do nothing, $777,435; 355.0 points
• Stay the course – replace on schedule, $847,625, 230.7 points
• Retrofit anodes – delay replacement 15 years, $579,617; 247.7 points
• Replace entire main in roadway, $1,089,536; 67.8 points
• Line – 50 year life extension, then replace, $645,877; 13.5 points

We can see that doing nothing becomes the costliest option when considering both social impact and financial cost. Replacing the entire main in the roadway is fiscally expensive, but it solves the problem long-term, resulting in less social cost overall. However, renovating the pipe rather than replacing offers both moderate fiscal costs and low social costs. This is the kind of accounting that reveals holistic value in pipe replacement.

The economic case for trenchless replacement

In the context of PSAB 3150 and triple bottom line accounting, trenchless technology is the most economically viable option for pipe remediation.

There are some important questions to ask about pipe replacement in general. In many cases, open-cut replacement is the first and default answer to pipe remediation. Can we really afford to replace pipes all the time?

The cost per meter of pipe might be insignificant, but the cost to cut and excavate a trench, install the pipe, and remediate the site is high. It disrupts the longevity of roads, reducing their expected lifespan before replacement by up to 18%. It’s carbon-intensive, often dusty and dirty, disruptive to residents and commuters alike, and is considerably more likely to result in a workplace injury than a trenchless solution.

With all this in mind, and in the context of PSAB 3150, is replacement-by-default at odds with directives to maximize asset value? By negatively impacting the environment and the people affected by each open-cut project, the math suggests that the answer is yes.