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Asset Management <br />Asset management policies are intended to guide the Commission in protecting and safeguarding <br />the investment in regional facilities and equipment. Capital assets shall be kept in sound <br />working condition. Replacement, maintenance and rehabilitation shall be provided for, so that <br />total system costs are minimized while reliable, high quality service and high water quality <br />standards are maintained. <br />Policy Al MWMC assets shall be insured for replacement value so that, in the event of a <br />loss, plant and equipment could be restored to working condition. <br />Policy A2 The Commission shall maintain afully-funded Equipment Replacement Reserve <br />so equipment may be replaced or rehabilitated when needed, without creating volatility in the <br />operating budget. <br />Policy A3 Equipment provided for by the Equipment Replacement Reserve shall include all <br />rolling stock, all computer equipment and all other equipment with a historical cost between <br />$10,000 and $200,000, a projected replacement cost between $10,000 and $200,000, and with a <br />useful life expectancy of between one and up to 20 years. <br />Discussion -The equipment list shall be reviewed annually and estimates of replacement cost <br />and life expectancy adjusted. The analysis shall make use of other estimates, such as inflation <br />and available resources, such as interest earnings on the reserve balance. <br />Before equipment is replaced, an analysis shall be done to determine if it should be kept in use <br />longer, rehabilitated to extend its life, replaced with similar equipment, or replaced with different <br />equipment. Equipment that outperforms projections in useful life expectancy may be replaced <br />with funds accumulated in the reserve. <br />Policy A4 Major Rehabilitation work shall be funded from the Capital Reserve and <br />appropriated annually into a budget line item called Major Rehabilitation. <br />Policy A5 The Major Rehabilitation work shall be capitalized if it extends the useful life of <br />the asset beyond the original estimate. If the Major Rehabilitation work does not extend the life <br />of the asset, but enables the asset to reach its originally estimated useful life, then it will be <br />considered major maintenance work and not capitalized. <br />" ° 2005 MWMC Financial Plan Page 18 <br />