Integrating a capable work management system (WMS) with your Geographic Information System (GIS) can provide a streamlined process for managing an asset through its installation or retirement lifecycle: designed, cost-estimated, approved, scheduled, constructed, as-built reported, GIS reconciled, and completed. This process is enabled by the use of compatible units (or construction standards).
A compatible unit (CU) is a design element that includes the materials, labor, and equipment that represent standardized units of work, such as the installation of a wood pole or transformer asset. In addition, compatible units also include specific accounting information to account for charges based on the Federal Energy Regulatory Commission (FERC) system of accounts.
Capturing the asset installation and retirement detail combined with the FERC code forms the basis for the asset unitization process. To give a better understanding, the remainder of this article will describe a detailed scenario.
Work Request (WR) 1234 was designed, cost-estimated and approved to install a 45’ Pole with Pole Assemblies, Down Guys and a Single Transformer. The estimated costs were:
| WR | Type | CU | Description | Qty | Estimated Cost | Estimate % |
|---|---|---|---|---|---|---|
| 1234 | Install | WD45 | 45′ Pole | 1 | $1,050.00 | 15% |
| 1234 | Install | FR1600 | Pole Assembly | 1 | $1,050.00 | 15% |
| 1234 | Install | DG1725 | Down Guy | 2 | $2,800.00 | 40% |
| 1234 | Install | XFR1100 | Transformer | 1 | $2,100.00 | 30% |
| Estimate Total | : | $7,000.00 | 100% | |||
WR 1234 was scheduled, constructed on June 1, 2011, as-built reported, GIS reconciled, and completed as-designed. “As-designed” means that the construction in the field was built as the design instructed; no modifications to CU’s were needed.
But, the total actual costs reported in the finance system for Work Request 1234 is $7500.00. This includes costs for material, equipment, labor, and accounts payable (e.g. construction contractors). The increased costs were due to the unexpected rocky soil conditions.
With WR 1234 complete and actual costs reported, the asset unitization for the 4 CU transactions can be calculated. Asset unitization is the process of taking the actual total WR costs and applying it to each individual CU transaction based on the CU estimate percentage (e.g. 15% for WD45). The estimate percentage is used because the finance system only tracks cost by WR and not by CU. The end result is:
| WR | Fiscal Year | Type | CU | FERC | Qty | Actual Cost ($7500 x Estimate %) |
|---|---|---|---|---|---|---|
| 1234 | 2011 | Install | WD45 | 364 | 1 | $1,125.00 |
| 1234 | 2011 | Install | FR1600 | 364 | 1 | $1,125.00 |
| 1234 | 2011 | Install | DG1725 | 364 | 2 | $3,000.00 |
| 1234 | 2011 | Install | XFR1100 | 364 | 1 | $2,250.00 |
After asset unitization, the results are summarized and passed on to Continuing Property Records (CPR). The CPR tracks the current financial asset register which represents the current value of a utility’s installed assets at a point in time. The cost of the assets installed on WR 1234 would be added to the CPR corresponding to the year they were installed in and the CPR would increase by $7500 for that year. All utility assets that are added to the CPR begin depreciating on an annual basis after they have been installed. Each CU has a corresponding depreciation schedule which provides the number of years that the asset will retain value on the books. At the simplest level, straight-line depreciation will be used and the value of an asset will be decreased each year by an equal amount until it reaches $0.
The next installment of this series will explore asset depreciation in more detail, will show how CU removals are applied to the CPR, and finally how this process relates to the Cost of Work in Progress (CWIP).
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