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How Are You Planning for the Future?



Capital Improvements Plan (CIP) vs Preliminary Engineering Report (PER)

Although all public utility owners are responsible for effectively operating and maintaining their infrastructure regardless of community size or available resources, significantly varying approaches exist toward forecasting, budgeting and implementing necessary improvements.  While densely populated municipalities with the financial capacity, skilled staff and available equipment afforded from a broad tax base tend to continually evaluate the condition and capacity of their components, rural communities with limited revenues frequently address deficiencies as they develop.  Traditionally accepted wisdom would suggest persistent planning followed by incremental improvements would reduce potentially negative financial, regulatory and public service availability impacts.  Most people are familiar with the Six-P Rule that states “Prior Proper Planning Prevents Poor Performance” and the lesser known version, “Proper Planning Prevents P@#$ Poor Performance”.  Common sense advocates avoiding catastrophic failure of any critical component will significantly diminish the potential for emergency conditions. However, this strategy may not necessarily be the most fiscally responsible means of managing a rural utility.


CAPITAL IMPROVEMENTS PLAN – Capital improvements planning is generally defined as the process of identify infrastructure needs, establishing a level of importance, prioritizing and scheduling improvements and budgeting accordingly.  The results are ultimately published in a Capital Improvements Plan (CIP) document.  A dynamic and functional CIP can provide cost savings when well supported by both a governmental entity and public.  If scheduled repairs and major replacement projects are implemented as recommended in the CIP, capital costs will be reduced by eliminating emergency conditions.


PRELIMINARY ENGINEERING REPORT – The Preliminary Engineering Report (PER) is a document summarizing a comprehensive engineering study that evaluates the physical condition and capacity of a particular utility.  Similar to a CIP, the PER identifies deficiencies, prioritizes improvements and presents budget and implementation strategies to complete the upgrades.  A PER also considers alternative processes, materials and means of repairing various components or systems ultimately recommending a specific project or phased projects.  Moreover, the report is a requirement for securing grant and low-interest loan assistance from State and Federal agencies if major construction activities are pending.


One of the unfortunate contradictions of most competitive grant program ranking systems is urgent public health and safety concerns along with immediate environmental protection more extensively influence scoring than other comparative factors.  Although organized utility planning and dedicated infrastructure repair and replacement programs are considerations, the weighted value placed on these efforts is significantly less than that of reactionary project scheduling.  Ultimately, the public entity with the most critical and immediate needs is more likely to receive grant assistance than the utility owner intending to prevent fundamental system failure, regardless of either’s historical operation and maintenance record.


Community planning for essential services is a universally recognized tool for anticipating problems, scheduling corrections and appropriately budgeting for implementing the corrections.  Ideally, both documents would be employed as a mechanism for forecasting utility budgets.  However, whether a public entity elects to approach the process visionary or reactionary is often a matter of available resources and one strategy may not always fit all.


At TD&H Engineering we have a thorough understanding of the limitations faced by small communities, especially those related to infrastructure maintenance and repair financing.  We can evaluate your particular circumstance and provide an unbiased recommendation for approaching imminent and prospective improvements.


Contribution by: Dustin Nett P.E.

Posted on February 11, 2014

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