At a recent meeting of the Indiana Sanitary and Water Supply Association, held in Indianapolis, C. H. Hurd, chief engineer of the Water Department of the latter city, read the following interesting paper on “waterworks management”:
The successful administration of a waterworks plant means, in its strictest sense, economy: economy not only in the operation affecting the cost of production, but economy of the highest order in the exercise of judgment and foresight, both in the character of construction and design, arid its financial operations with a view to future growth. The plant or enterprise can well be divided into two parts—the physical and the financial plant. The physical plant is represented by the equipment and properties necessary for its operation; the financial plant or institution is represented by the investment and the returns upon such investment. The efficiency of administration, which depends almost entirely upon the relation of the operating and financial supervision, is measured by the character of service and net earnings. If those in charge of the financial affairs are not conversant with the physical conditions and requirements, the corporation or department is likely to be a failure; on the other hand, if those in charge of the design and construction are not familiar with the financial conditions and policies, the plant cannot be a success as an operating and financial concern. In this connection the designing and constructing engineer must not only so plan and carry out his work that there shall be no waste of energy and material, but he should make a careful study of the problem at hand and avail himself of a complete knowledge of the financial conditions and its possibilities. The financial head or board should also have a complete and thorough know-ledge of the ultimate effects w-hich may be produced on account of improvements before he can intelligently pass upon, or authorize such expenditures as an unwarranted investment or error in judgment in design or construction is bound to become a tax on the business until the investment is w-iped out.
Economical Equipment.—Waterworks men arc confronted almost daily with the problem of the selection of equipment. In considering such investments, it is always necessary to weigh carefully the individual items which go to make up the total annual cost. These items should include not only the operating and maintenance expense, but also the fixed charges, that is, the depreciation and interest. It frequently happens that the plant which show-s a low operating cost carries with it’ a high capital charge, and as a rule a high operating cost will mean a smaller investment, and the most efficient plant front the standpoint of engineering and invested capital will be the one w-hich will show a minimum sum total when all these various items are considered. In the selection of equipment for pumping stations, it is necessary to give considerable weight to the conditions of service as well as individual efficiencies. For example, large triple expension pumping engines, on account of their high duty, may show a good return providing they are in continuous service and always operating at their full load, but if they are to stand idle for any considerable portion of the time, or if they are operated at lower capacities, it is obvious that the fixed charges, which are going on continuously, will very much increase the unit cost for the year’s output, and it is probable that a less expensive installation under these conditions would show a better overall economy. The cost of fuel will also have a decided influence upon the character of equipment. If the cost is high, more expensive and higher duty machines may be warranted, hut if the cost is low the saving in fuel will be a lesser consideration. It should be remembered, in making improvements, that a change in one part of the plant will have a more or less direct influence upon another. F’or instance, if it should be considered desirable to install lowduty engines at a lesser cost, it will be necessary to have larger boiler capacity and greater cost of boiler room labor and coal handling, and it does not always followthat a saving in one department will mean a net saving in the entire plant. What is true in connection with pumping equipment is also true in reference to filtration plants; the conditions of service and the character of water to be treated, govern. It has been shown repeatedly that each plant presents individual problems, and a system which is advantageous for one will not necessarily give good results in another. The pipe system, which is often neglected from the standpoint of engineering, is not always thought of as being a part of the working plant, but when we take into account that the size of the pipe, and inversely the friction head, is a direct charge against pumping, it is necessary to make a balance between the capital and operating costs.
Efficiency of Operation.—The efficiency and cost of operation, which may lie considered independently from the fixed charges, will fluctuate and depend to a large measure upon the efficiency of the superintendence or management. This cost will he affected by the selection of materials, the efficiency and the cost of labor and the operating methods. Fuel and labor are usually the two principal items of cost. As a rule the average plant is wasteful in the use of fuel, not only by the loss of steam, but by the loss of fuel and heat in the boilers themselves. When we consider that the efficiency of the average boiler plant is less than 10 per cent., and that it is possible to obtain from 70 to 72 per cent., we can conceive of the enormous loss of fuel and energy even in waterworks plants. The saving in labor is also an item which must not be overlooked. While it is not always advisable to employ cheap labor, particularly to operate plants representing enormous sums of capital, it should be kept in mind that the saving of a single man is equivalent to a capital investment of approximately $12,000, and ei^ht men to an investment of nearly $100,000. The comparison of one plant with another is always valuable as a measure of economy, but proper allowance should always be made for different classes of service. The plant pumping directly into the mains, the unit cost should be more than one pumping into a reservoir of a sufficient capacity that the rate of pumping can be governed or distributed. A plant which is required to put up fire pressure, particularly in the larger cities, is always at a considerable disadvantage on account of large expenditure in equipment and the necessity of working against different heads. In other words, the unit cost per foot of head does not give comparative figures unless proper allowance is made for the difference in requirements.
Capital Expenditure and Depreciation.—While most waterworks engineers and managers give considerable attention to operating and maintenance costs, sufficient attention is not given in the average plant to interest on invested capital and depreciation. Many industrial enterprises have been failures because the management has lost sight of the fact that the physical plant depreciates, and while the investment apparently is paying substantia! dividends, sooner or later they find that the plant is w-orn out or obsolete, and that their entire investment is wiped out. Annual contributions into a renewal reserve fund are as important as the payment of taxes or for fuel. For unless such contributions and deductions are made, it is not possible to determine the net earnings nor is it possible to carry a representative physical value of the plant. Among the more important features connected with the accounting of any corporation or department of this character is to have available at all times reliable data in the forms of records showing the net physical value, the deduction for depreciation, and the additions on account of capital expenditures. To obtain the true amount of the annual depreciation in the value of any property, it is necessary to estimate a sum of money which represents the yearly depreciation of each of the component parts of the plant, and the aggregate of these sums will give the annual depreciation. Any method of arriving at this amount that does not take into account the individual depreciations of the various parts, must be an approximation at best, although it may be based upon results obtained in a correct manner for other similar plants. This depreciation should he considered in three parts and is usually classed as PHYSICAL, FUNCTIONAL and CONTINGENT. The physical depreciation is that due to natural causes or ordinary w-ear and tear of equipment In order to estimate the amount of this depreciation it is necessary to have a knowledge of the nature of service and a general acquaintance and broad experience with this character of plant. The functional depreciation, or that due to obsolescence, can only be estimated approximately by an intelligent forecast. Contingent depreciation, or special insurance, is also difficult to estimate, but it is intended to cover unforeseen accidents and destruction of property. The accumulation of funds for this purpose should be used only for this specific purpose, and when property must be replaced on account of its depreciation either from w-ear. obsolescence or accident, the cost should lie defrayed out of this renewal fund.
Revenue and Character of Service.—The careful supervision of expenses is always desirable and necessary, hut the plant cannot he a financial success without a sufficient income. One of the first essentials towards a satisfactory income is that tinwater shall lie of a high character; the second, that the rates shall be fair and equitable. If the water is not pure and is dangerous and a menace to public health, the plant should not he expected to give a reasonable return. If the water is turbid or otherwise objectionable for domestic or manufacturing purposes, it is not expected that it will be used in large quantities or by the large consumers. If the rates arc excessive, the volume of business will be small and the plant cannot he expected to be a success. The plant which will show the best economy is not the one which is especially proficient in any single department, hut is the one which is established on a sound financial basis and is so operated in all its departments that the community will be supplied with a water unquestionable in character and at rates which are reasonable. To this end, eternal vigilance and activity in directing operations and carefully considered expenditures are the price of success and the prime factors in the economical administration of a woterworks plant.