How to Transform Utility Management Through Smart Consolidation

Water utility consolidations are based on trust.

If you’ve followed my work, you know I focus on helping utilities make practical, sustainable business decisions. Consolidation often gets delayed because daily operations and limited resources leave little room for long‑range planning. The challenge is that waiting until a system is under real strain limits the options available. Addressing consolidation earlier, with a structured process and a clear view of risks and benefits, gives utilities more control and better outcomes for the communities they serve.

In 2019, I sat down with a group of leaders in San Francisco, convened by the US Water Alliance, to change that narrative. We spent three days developing a framework that moves consolidation from an act of desperation to an act of leadership. The result was the Guiding Principles for Utility Consolidation.

The bottom line is that consolidation is about gaining capacity, not about giving up control.

The "One Water" Reality

The document we produced isn't just another academic briefing. It’s a framework for the One Water approach. It acknowledges that our water systems are aging, our workforces are retiring, and our regulatory requirements are getting stricter. Most small-to-medium-sized utilities simply cannot "go it alone" and remain resilient.

We identified several "Core Principles" that must guide any successful interlocal agreement or asset transfer. If you’re a Town Manager or a Utility Director in North Carolina, South Carolina, or Wisconsin, these should be on your desk right now.

1. Consolidation is a Spectrum, Not a Binary

One of the biggest misconceptions is that consolidation means "selling out" to a larger city. The guidance outlines a spectrum from informal collaboration (sharing a backhoe) and contractual arrangements (purchasing water) to joint authorities and full physical mergers. You don't always need to transfer every asset to reap the benefits of scale.

2. It Must Be Locally Led

Top-down mandates from legislative bodies often end in the courthouse, not the treatment plant. For consolidation to work, the "why" must be understood by the local board and the ratepayers. It has to solve a local problem, whether that’s debt relief, water quality, or economic development.

3. Solve for the Six Aspects

In my own practice, I frequently discuss the six pillars of regionalization. Our San Francisco group reinforced that you cannot value a utility solely on its pipes and pumps. You must address:

• Infrastructure: What is the actual condition? (No more guessing).

• Financial: How is the debt being assumed?

• Legal: What does the Interlocal Agreement (ILA) look like?

• Human Resources: What happens to the operators who know where the valves are buried?

• Organizational: Who makes the decisions on Day 1?

• Political: How do we maintain the trust of the community and political leaders?

https://www.jdsolomonsolutions.com/post/five-essentials-for-a-viable-water-utility-even-when-the-money-is-free

The Valuation Trap

One of the most contentious parts of any Interlocal Agreement (ILA) is always the "value." Should it be Net Book Value? Replacement Cost? Or Debt Assumption?

The Consolidation Guidance makes it clear: the value of a utility is its ability to provide safe, reliable service into the future. If a system has $10 million in assets but needs $15 million in repairs to meet EPA standards, the "book value" is irrelevant. The real value is the liability relief provided to the selling entity and the reliability gained by the buyer.

Be Proactive with Utility Consolidations

The Wake County, NC, utility mergers of the 2000s show us that the most successful deals happen when leaders are proactive. Don't wait for a "Distressed" designation from the state. Use the US Water Alliance principles to start a conversation with your neighbors while you still have the leverage to negotiate.

https://www.jdsolomonsolutions.com/post/how-regionalization-consolidation-of-water-utilities-creates-new-projects

Knowing How (and When) to Start Consolidations

Taking a business case approach, where options ranging from “status quo” to “do everything (merge), is the best approach. Focus early on higher-level evaluations of financials, infrastructure, human resources, and information technology systems. Make sure to include off-ramps at key points in the schedule to avoid wasting people’s time if it’s clear a deal can’t be reached.

https://www.jdsolomonsolutions.com/post/why-water-utility-regionalization-requires-effective-communication

Like many business endeavors, utility consolidations are based on trust. I have been part of mergers where the financials were bad, but the trust was high, and the agreements worked. I have also been part of mergers where the financials were “no-brainers,” but the sides had limited trust and the agreements failed.

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Need help getting started? JD Solomon has performed regionalization and consolidation assessments across the eastern United States throughout his 30-year career. JD Solomon Inc. has standard assessment and implementation tools to guide utilities through the process.

How the FINESSE Fishbone Diagram Improves the Careers of Project Managers

Strong communication skills impact project success and contribute to long-term career growth for project managers.

Effective communication is critical for project managers because they connect with decision makers and coordinate teams, stakeholders, and resources to achieve project goals. Strong communication skills impact project success and also contribute to long-term career growth. The FINESSE Fishbone Diagram® facilitates effective communication through seven causal factors: Frame, Illustrate, Noise, Empathy, Structure, Synergy, and Ethics.

The FINESSE Fishbone Diagram®

A visual helps us remember the basic aspects of effective communication. The fishbone diagram was an obvious choice since it is a common tool for depicting cause-and-effect relationships among technical professionals.

The underlying issue with effective communication for technical professionals is complexity and uncertainty.

Major decisions that take months to resolve, require a significant amount of investment, and involve many people (and some calculations) are complex and uncertain. Directing, giving orders, and providing statuses on normal operating issues do not necessarily require a lot of finesse. I learned a lot about the difference by sailing on the ocean.

If the underlying issue is complexity and uncertainty (the fishbone’s tail), then the effect we seek is effective communication (the fishbone head). The solutions (or the root causes) are in the bones of FINESSE.

How FINESSE Benefits Project Managers

This is a brief description of each bone:

Frame

Frame is all about “a problem well-framed is a problem half solved.” Decision makers like to change the frame when they don’t get what they want, so framing also involves tying down the frame. Most projects go awry, or not as planned, when the project frame breaks down.

In project management, we usually charter projects to make sure they are framed well. Chartering involves defining the project's objectives, scope, stakeholders, and key deliverables and assigning authority to the project manager.

For project managers, the Frame in FINESSE is already established through chartering.

Illustrate

Illustrate is one of the more meaningful bones in the FINESSE Fishbone Diagram® for project managers, making communication more effective.

Most project managers provide too many graphs and tables that are not useful to decision makers. Decision makers need to know what time it is, not how the watch is made.

Illustrate is about the many visuals available to make us more or less effective. There are a handful of essential graphics and a handful of troublesome (but common) ones.

For project managers, focusing on the six essential visuals within the Illustrate bone of the FINESSE Fishbone Diagram® is very helpful.

Noise

Noise is concerned about noise reduction. Noise is anything that distracts or confuses your audience, getting in the way of your message. The burden of effective communication is on the sender, not the receiver.

Three simple rules for reducing noise within the FINESSE Fishbone diagram are:

Be consistent

Avoid “fixing” the data

Use “smoothing” wisely

For project managers, the detailed focus on reducing noise is beneficial in producing effective communication. One person's data is another person's noise, so noise reduction is truly a causal factor in making sure what you are saying is understood.

Empathy

Empathy is being able to put yourself in the shoes of the decision maker. The FINESSE chain is only as strong as the weakest link, and the empathy link is a big one. Empathy is also the start of the bottom fin of FINESSE, which focuses on the audience.

Empathy has an added layer of complexity when dealing with decision makers. Decision makers usually make multiple high-stakes decisions simultaneously, under pressure, and with lots of uncertainty. Keep these points in mind to empathetically communicate with them.

The techniques for empathizing with decision makers are important, but so is focusing on being ready for empathy. After all, the burden of effective communication is on you (the project manager), not the message receiver.

Take time to reflect on these questions:

How are you feeling right now, and how might that influence your response?

What emotions might the other person be experiencing?

What’s the ultimate goal of this interaction?

Remembering these will help project managers stay calm, focused, and intentional. Empathy is about making the other person feel seen and heard, so keeping your emotions in check is crucial.

Structure

Structure usually consists of an opening, the main body, and a close. The trick is that decision makers may only pay attention to the first act (the opening).

What’s more, decision makers care most about the opening and closing (Q&A). They care little about the main body because that’s the part they trust you as the project manager to do best.

Unfortunately, many project managers are most interested in sharing the details of the main body.

It is important for project managers to have the structure and discipline to use a three-act or five-act structure in every presentation they deliver. The Structure bone in the FINESSE Fishbone Diagram® helps you to do that.

Synergy

Synergy recognizes that decisions with complexity and uncertainty move through an inner circle of advisors and require multiple presentations. Group effects can hurt you or help you.

For project managers, the second S in FINESSE provides the techniques and tools to get through the many gatekeepers of every project. The FINESSE Checklist also provides a nice way to make sure you have Synergy covered on both the front and back end of your communication.

Ethics

Ethics are the way we make decisions. Ethics are the tail fin of the FINESSE Fishbone Diagram®, and just like a fish, our ethics provide the direction to our communication.

For project managers, the challenge is often telling the bad news to a group that you know will not receive it well. Duty-based ethics are at the core of FINESSE. Once again, the techniques and tools provided within the Ethics bone will help you communicate fairly and consistently regardless of the audience. You get one shot at credibility.

Powering Your Career as a Project Manager with FINESSE

Strong communication skills impact project success and contribute to long-term career growth for project managers. The FINESSE Fishbone Diagram® facilitates effective communication through seven causal factors: Frame, Illustrate, Noise, Empathy, Structure, Synergy, and Ethics. Visit our Resources page at JD Solomon Solutions for communication and facilitation resources, including the FINESSE Checklist.

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JD Solomon Inc. provides solutions for program development, asset management, and facilitation at the nexus of facilities, infrastructure, and the environment. Visit our Program Development page for more information on business cases, third-party assessments, phasing projects, and related services.

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JD Solomon writes and consults on decision-making, reliability, risk, and communication for leaders and technical professionals. His work connects technical disciplines with human understanding to help people make better decisions and build stronger systems. Learn more at www.jdsolomonsolutions.com and www.communicatingwithfinesse.com.

Mean Life, Service Life, and the Two-Thirds Rule of Thumb

The two‑thirds rule provides a clear, defensible starting point for planning and forecasting long-term needs.

Asset managers and reliability engineers often talk past each other when the conversation turns to “life.” Service life, useful life, design life, and mean life carry different meanings depending on whether you sit in operations, finance, or engineering. The confusion is understandable. What matters is whether we can translate these concepts into decisions that improve reliability and reduce lifecycle cost. That’s where a simple rule of thumb—mean life is roughly two‑thirds of service life—can be surprisingly useful.

How Long Does That Pump Last?

“How long will that pump last?” asked the old salty operator as we all looked at the submersible pump sitting on the shop floor. Clearly, this was a challenge from the ranking member of the owner’s team to the ranking member of the consultant’s team as we began the next phase of a major project. There were 7 or 8 of our subordinates who immediately turned their eyes to me.

I knew it was a submersible pump and thought it was a Flygt. However, I could not tell whether it was a 4-inch or an 8-inch discharge. I couldn’t see the nameplate to get the horsepower. Technically, all of this matters; practically, it does not.

“We usually say around 20 years,” which was my default number for submersible pumps. “Some organizations say 30 years, but it really depends on the operating context and rebuild strategies.”

His head nodded. I waited for his next move.

But how did I know? Was it experience or luck?

It turns out that it was the two-thirds rule. The cut sheet for most submersible pumps will say their service life is something like 25, 30, or 25+ years. By experience, I have seen quite a few submersible pumps still in place after 30 years. Two-thirds of 30 is 20.

The critical bearings in a submersible pump running on a heavy-duty cycle (12 hours per day) are expected to last between 80,000 and 100,000 hours (18 to 22 years), so there is a strong reliability case for also stating 20 years.

The two-thirds rule works on just about every class of asset, even those that are not mechanical. Here’s why.

Service Life and Mean Life

Below is a quick summary of mean life and service life.

I have written several articles about asset life. If you want more details about the “big three,” see the following article.

Three Ways to Look at Asset Life

For more on the many ways to calculate asset life, see also the following article.

12 Ways to Look at How Long an Asset is Useful

Service Life Defined

Service life is a functional, operations-based concept. It reflects how long an asset performs its intended function at an acceptable level of risk and cost. It is shaped by operations, maintenance, environment, and economics.

Mean Life Defined

Mean life, on the other hand, is a statistical construct. It comes from fitting a probability distribution—usually Weibull—to failure data and calculating the average time to failure.

Never Perfect Alignment

Service Life and Mean Life rarely align perfectly, and they don’t need to. But when you’re planning budgets, setting replacement cycles, or communicating risk to decision makers, having a simple, defensible relationship between the two helps.

The Two-Thirds Rule of Thumb

The two‑thirds rule of thumb emerges from typical Weibull behavior. Mechanical assets often have shape parameters (β) between 2 and 4. When service life is defined at a high reliability threshold—say, the point where 90% or 95% of units are still surviving—the ratio of mean life to service life tends to fall in a narrow band.

It’s not a law of reliability engineering, and it’s not universal. But it is practical, repeatable, and close enough for early‑stage planning.

Comparing Shape Parameters

The table below illustrates this relationship. It compares mean life to the time at which 90% of units are still surviving for common Weibull shape parameters. The resulting ratios show why the two‑thirds heuristic persists.

A Practical Foundation

When failures are random (β = 1), mean life and service life are essentially the same. But as assets move into wear‑out behavior—where most mechanical equipment lives—the ratio stabilizes around 0.6 to 0.7. That’s the practical foundation for the two‑thirds rule.

Connecting for Decision Makers

Of course, no rule of thumb replaces real data. When we have a solid failure history, a Weibull analysis will always give us a better answer. But when we’re building a capital plan, briefing leadership, or estimating long‑term needs, the two‑thirds rule provides a clear, defensible starting point. The bridge between statistical reliability and functional asset management is exactly the kind of connection decision makers need.

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Need help getting started? JD Solomon Inc. provides practical solutions to align asset useful life and strengthen your asset management and reliability program.

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JD Solomon is the founder of JD Solomon, Inc., the creator of the FINESSE Fishbone Diagram®, and the co-creator of the SOAP criticality method^©. He is the author of Communicating Reliability, Risk & Resiliency to Decision Makers: How to Get Your Boss’s Boss to Understand and Facilitating with FINESSE: A Guide to Successful Business Solutions.