Contract Operations Help City Meet Budget

Reducing the number of final clarifiers used in the wastewater treatment process is one of several cost-saving measures implemented.

Slowing investment and declining tax bases have forced many communities to make tough budgetary decisions. This can be particularly difficult for communities that have the added pressure of funding major infrastructure projects initiated during positive economic conditions. To reduce costs, some officials are turning to contract operations for their water and wastewater facilities to improve efficiency and better manage capital assets. All signs pointed to growth in 2002 when the City of Milan, MI, decided to expand its wastewater treatment plant. Additional capacity was envisioned as a key component in the City’s plan to attract residential development, industry and businesses. The $13.7 million expansion program was financed through a bond sale with $1 million annual bond payments to be funded primarily through new sewer tap fees projected to generate $750,000 per year. Plant expansion work began in 2005 and was completed in 2007 increasing capacity from an average daily flow of 1.5 to 2.5 MGD.

Meanwhile, a sudden and dramatic slowdown in new investment left the City struggling to make their bond repayment. Without their anticipated major source of funds, officials were faced with the unenviable task of finding ways to reduce their budget while maintaining all vital services. In addition to budget cuts, the City explored early buyouts of eligible employees and the option of contracting out all or portions of their public works operations.

The City issued a request for proposals with several options for contract operations including total Department of Public Works (DPW) operations and maintenance as well as Water and Wastewater operations and maintenance. While their focus was to reduce costs, the City also wanted to preserve as many jobs as possible. They ultimately decided to maintain their DPW with existing staff while contracting out their water and wastewater operations for the first time. The DPW retained responsibility for the wastewater collection system (manholes and sewers) and the water distribution system (water main, valves and hydrants).

In May 2007, Wade Trim began providing contract operations for the City’s water and wastewater facilities including a water treatment plant, wells and pumping stations, sanitary lift stations, storm water pumping stations, and the expanded wastewater treatment plant. Since our involvement began midway through the new wastewater treatment plant startup, we implemented a smooth transition to both plant startup and contract operations. Wade Trim staff worked closely with the City DPW to ensure overall system operation.

As part of our services, we initiated an asset management program for Milan’s water and wastewater systems to better manage capital assets and resources. Preliminary steps included developing asset listings, developing and implementing a work order system and implementing a computerized maintenance management system (CMMS). The CMMS emphasizes preventive maintenance and reduces equipment downtime and corrective maintenance costs. It also documents maintenance activities to insure warranty preservation on new equipment.

Increased efficiency in labor and chemical and power consumption, as well as CMMS results have generated $250,000 in savings. The number of final clarifiers in operation was reduced from three to two while still meeting all permit requirements. Power use has been closely monitored and plant processes adjusted to reduce consumption. Clarifier effluent weirs are being cleaned regularly to reduce fouling of the plant’s Ultraviolet (UV) disinfection system and prolong UV bulb life.

According to Dan Bishop, former Milan City Administrator, “We were able to save and apply a significant amount of money to our bond payment. Having a new set of professional eyes review our operations helped us increase efficiencies, reduce operating costs and prepare a maintenance and capital improvement plan.”

Contracting Wade Trim’s operations services has helped Milan significantly reduce costs, improve operations and preserve assets. Although the City faces tight budgets for the foreseeable future, it is positioned to attract new residents, industry and businesses using the availability of water and wastewater infrastructure that can accommodate long-term growth.

Jason Karmol is Project Manager for the City of Milan’s Water and Wastewater O&M project. He can be reached at 734.947.9700 or jkarmol@wadetrim.com.

Originally published in Innerview Vol. 22, No. 2, 2008

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