Working in the Public Water System Market

It can be rewarding but requires a unique approach to several important tasks.

By Ed Butts, PE, CPI

This month’s column is the last for 2021 and covers a topic I have not written about before, but one for which I believe there is a real thirst (pardon the pun): working in the public water system market.

Many who regularly work in this branch of wells and water systems may refer to it as the municipal market—or even more simply, muni—but I prefer to call it the public water system or public works sector as the term applies not only to cities and municipalities, but community water associations, water districts, public and special service districts, and water cooperatives to name just a few.

Basically, it’s any public or private entity that provides potable water to a group of people that is regulated by a public agency—even those without their own source. So, in this final column of the year, I will outline my background in this market, review the legal definition of a public water system, discuss some of the specifics that make this work unique, and how to get into it yourself.

My Public Water Systems Background

During my first four years in the well and water systems business, my work was primarily limited to residential and irrigation well and pump work. However, in early 1978, I accepted a position with an established well drilling and water systems firm in Anchorage, Alaska, that was heavily involved with municipal and public water systems work. In fact, my first two assignments were working on a new 24-inch-diameter well and installation of a new telemetry system for the municipality of Anchorage.

Although my tenure in Anchorage was short at only six months, the experience I gained with public water systems work convinced me I could take this concept back to Oregon and my former firm, Stettler Supply Co., and develop this market there.

Hence, upon my return in late 1978, we expanded the firm and ventured into the public water systems business and ultimately changed our name to Stettler Co.

Our first important project was developing a new water system for a nearby unincorporated town and water district called Keizer that had historically received its water from the adjacent city of Salem and served around 15,000 people. Due to tightening water source issues, Salem had informed Keizer it had only six months to develop an independent water supply and thereafter could use Salem’s water for fire protection only.

This was certainly an unexpected challenge for myself as our new project manager and the firm, but by reactivating several decommissioned wells and drilling and developing a few new wells, we were able to meet the deadline. This was the springboard for the confidence we needed for Stettler’s continued expansion into the public water supply market.

After adding up my remaining 26 years of experience with Stettler as a project manager and design engineer for our design-build projects and combined with my past 17 years as a consulting engineer, I have now amassed 43 years of total experience working in all aspects of the public water supply market, along with its many associated challenges, setbacks, and achievements.

Defining Public Water Systems

The public drinking water systems regulated by the U.S. Environmental Protection Agency and delegated states and tribes provide drinking water to 90% of all Americans, which includes more than 148,000 public water systems.

The EPA classifies these water systems according to the number of people they serve, the source of their water (surface water or groundwater), and whether they serve the same customers year-round or on an occasional basis.

As defined by the EPA: “A public water system provides water for human consumption through pipes or other constructed conveyances to at least 15 service connections or serves an average of at least 25 people for at least 60 days a year.”

A public water system may be “publicly owned,” such as a city, or “privately owned,” which may include an investor-owned utility or the owner of a small mobile home park.

The EPA has defined three types of public water systems:

  • Community Water System: A public water system that supplies water to the same population year-round.
  • Non-Transient Non-Community Water System: A public water system that regularly supplies water to at least 25 of the same people at least six months per year. Some examples are schools, factories, office buildings, and hospitals which have their own water systems.
  • Transient Non-Community Water System: A public water system that provides water in a place such as a gas station or campground where people do not remain for long periods of time.

Certainly, these definitions apply to the vast majority of potable water systems that provide water to multiple residents, customers, employees, tenants, and others. The EPA delegates primary enforcement and regulatory responsibility (known as primacy) for public water systems to the states and Indian Tribes if they meet certain requirements.

Many states also expand upon these basic definitions to include “non-EPA” regulated systems, such as two to three homes with a shared well and water system. Therefore, it is in the best interests of anyone contemplating entering and working in this field to become familiar not only with the applicable EPA statutes and rules, but those of the state or states in which they reside or plan to work in.

Developing the Public Water Supply Business

Although I will include some of the many engineering considerations, I will primarily address public water system work as it affects the contracting side. Working in this particular branch of the well and water system business requires a totally different approach in personnel, financial, equipment, and management and staff aspects than our typical day-to-day endeavors. So let me address each individually.

Personnel Considerations

The personnel needed to effectively work (and survive) in the public water supply sector must be capable of adapting to unusual conditions, along with extended and emergency work hours and out-of-town work and the travel that goes with it, more than the typical employee.

Unlike most residential and irrigation water systems where repair or service can often wait for scheduling within a day or overnight, the instantaneous need to restore water service to a large water system generally calls for an immediate response and scheduling flexibility on the part of the firm and affected employees. This may involve pulling a crew from one job to start on repair of the public water system or calling an employee in to respond to a service call even after 5 p.m., during weekends, or on a holiday.

Extreme patience and flexibility on the part of the employee and his or her family are required. Between 1978-1986, I was the individual from our firm who generally responded to these late night and weekend emergency calls. As a result, there was more than one holiday gathering I missed due to this need.

Next, without trying to belittle anyone, individuals who work on public water systems are expected to display a degree of decorum in language and neatness in their work habits and area. By their nature, the equipment used in public water systems must function in sanitary and clean environments. This also applies to the wells, the pumps, and piping being repaired or serviced. Those working on public water systems need to recognize this need and use the appropriate methods and safeguards to maintain the water system equipment in as much of a sanitary state as is possible.

Employees of a public water system construction and repair firm are often pressured by the operator, manager, or engineer to restore water service as fast as possible, which is often caused by the fallout they are receiving from upper management or water customers.

In some cases, employees will be subject to some coaxing or insisting they work overtime to complete the repair. The employees must be able to handle what is often unintentional harassment without expressing outward anger or resentment towards the water system’s personnel. They must understand that angrily responding to a request to “move faster” or “don’t take your lunch or a break” is not productive and could damage the relationship with the operator or utility.

In these situations, they simply need to politely remind the individual that they are entitled and required to take lunch and designated breaks and will actually be more productive when taking them.

Much of the work surrounding public water systems—piping methods, control valve maintenance and repair, and electrical/control system troubleshooting—entails a higher level of knowledge and training. This is decidedly so if the firm wishes to become involved with all aspects of this field.

Employees should be sought out and hired who demonstrate proficiency in this work and a willingness to expand their knowledge along with the need to observe appropriate sanitary precautions and chlorination practices when working in water wells and systems.

This also includes the specialized piping, valving, and other equipment that is used with larger capacity and pressure water systems. Obviously, this will not come without a tradeoff as these employees will expect to be compensated for this additional level of knowledge and skills.

Lastly, the individuals charged with both project bidding and management as well as the field work must be able to effectively work with consulting engineers and water system operators and management. This work does not necessarily include the same type of inter-relationship skills that working with a homeowner or farmer involves.

There are many separate and often divided loyalties when working in the public works sector. Consulting engineers can appear to be overly firm and inflexible when it comes to following specifications and plans, but remember their primary interest is to gauge and direct everything towards the owner’s benefit. Therefore, their decisions may seem to be arbitrary and possibly even punitive at times. The best way to handle this is to try and find common ground and convince the engineer you are also primarily concerned with providing the owner with a sustainable, efficient, and long-lasting project outcome.

Remember, in this business, don’t be afraid of relinquishing a little profit if the end game has potentially more. Working with water system operators and managers can be difficult and problematic at times as they are often suspicious of a contractor’s motives and believe their primary intent is simply to receive more profit.

All I can add to this is I have had to work on both sides of this coin and have found the best way to handle these situations is to familiarize yourself with the client and their engineer as individuals and work at developing a mutually congenial, if not friendly, relationship.

The operators and managers employed by a public water system are just people who almost always have to answer to a higher authority, whether it’s an upper-level manager, board of directors, or the water customers themselves, which may explain their shortness and desire to complete repairs as quickly as possible. Understanding and working with, instead of against, this dynamic will often produce favorable results for all.

Financial Considerations

The financial considerations to the owner of a public well and water systems construction and repair firm can be substantial, especially if the firm expects to perform local, state, or federal public bidding work.

The first virtually automatic financial impact to a bidding firm is the need for bonding. Bonding is a specialized type of insurance policy that is generally valid only over the duration of the project and guarantees the work or payment performed on a contract.

There are various types of bonds used in public works construction, including performance, payment, warranty, and maintenance. Of these, the two most common bonds are performance and payment bonds.

The performance bond guarantees the project will be conducted and completed on time as according to the conditions of the project plans, specifications, and contract and is used on virtually all government-funded construction agreements.

A payment bond is an assurance that all suppliers and subcontractors will receive timely payment for their goods and services in case the contractor defaults. Typically, the contractor pays a percentage of the contract amount to an insurance or bonding firm for these bonds. The percentage will vary based on the project’s dollar amount, the bonding company, the type of project, and the contractor’s risk rating but is generally between 1.5% to 5% of the total contract amount.

The cost for bonding is generally included in a line item for mobilization or prorated over the unit or lump sum costs. Projects funded by federal agencies, such as the Farmers Home Administration (FmHA), Housing and Urban Development (HUD), and Environmental Protection Agency (EPA), include stringent requirements for insurance and classification of and payment of wages and fringe benefits to employees, generally called “prevailing wages.”

This is generally under the auspices of a federal law called the Davis-Bacon Act. Anyone contemplating conducting federally funded water system work must familiarize themselves with this law.

Insurance requirements also vary between funding agencies and states, but is generally greater in scope and higher in dollar amount than most standard insurance policies. Insurance requirements for government-funded projects usually include general liability, workers’ compensation, and automobile liability at a minimum. Some agencies, though, may require additional insurance for comprehensive or all-risk coverage that may include on-site or off-site, theft, environmental, or equipment damage insurance.

Additionally, most states have their own established public bidding rules and regulations that dictate the scope and type of project that must prescribe to these rules. These are often referred to as the “Little Davis-Bacon Laws.”

Although they vary between states, some states have a bidding threshold of $25,000 to $50,000 or less in projected cost where the bidding rules do not apply, and projects can be awarded after soliciting three informal quotes from contractors without bonds or payment of prevailing wages while others have no allowed exemptions.

These rules also dictate the minimum compensation that must be paid to employees on the project. These rules not only include the hourly rate and overtime provisions, but pension and health and welfare that must be paid either to approved plans or directly to the employee as part of his overall compensation.

The final financial consideration for conducting public works projects is the potential impact to the business’ cash flow and project payments. Most government agencies are notoriously slow in processing and sending progress payments on public works projects. In many cases, contractors can expect to wait up to 60 to 75 days for payment on a specific request.

This requires diligence on the part of the contractor and their staff to keep up to date on processing invoices from suppliers and subcontractors as well as submitting timely payment requests.

In many cases, to maintain goodwill and momentum on the project, payment to suppliers and subcontractors must be made from the business’ regular cash flow within 30 days. This requires the contractor to wait up to an additional 30 to 45 days for reimbursement.

This simply means anyone planning to enter the public works construction realm needs to have excellent cash flow from other ongoing business and other projects, adequate cash reserves, and a good line of credit with their bank.

Equipment Considerations

For the most part, the equipment used on most large diameter irrigation wells or pumps can be used for public water supply work. The big jump in equipment needs will either be for firms making the transition from domestic and light commercial well and pump work or the firms that regularly work with lower capacity submersible pumping systems.

By its nature, the type of pumping equipment used in public water supply wells and pumping plants mostly involves vertical turbine and larger submersible pumps with riser pipe diameters of 6 inches and larger. This often slower, but larger in diameter, pumping equipment requires the use of larger diameter and straight and aligned wells to prevent vibration.

The well alignment tolerances for a public water supply well are generally more strict and controlled than those found with a typical irrigation well. This requires greater attention to detail when drilling the well.

The added weight of filled riser pipe and large drop cable with submersibles, or lineshaft with large diameter column pipe, which is commonly used with many public water systems, also increases the weight of the unit.

Vertical turbine pumps are often selected for use in public water systems over submersible pumps due to their higher efficiency, greater reliability, slower speed, and easier access to the motor for repair. Generally, setting and pulling vertical turbine pumps requires the use of elevators for the column and a method to safely handle the lineshaft to prevent bending or other damage. These factors often combine to increase the pulling weight of a vertical turbine pump over a comparable submersible unit by up to 50%.

Even seemingly minor items, such as the need to purchase special equipment for piping joint assembly and testing or chain tong wrenches for larger pipes when conventional pipe wrenches were used in the past, can present additional investment cost to the contractor.

The next consideration of a public water supply well and pump is access to the well. Most wells and pumps used in this type of service are placed within a structure for sanitary protection as well as protection from weather, damage to the motor and electrical equipment, and possible vandalism. This generally requires pulling the pump through an access hatch opening in the roof.

In these situations, the required layback from a pump hoist can be substantial or excessive, thereby reducing the pulling capacity of the hoist. This may require renting of a large crane and certified operator to pull or install a well pump. If not originally planned for, this additional cost can be the death knell to a project’s profits.

The last equipment consideration involves the many specialized test meters and instruments that are often used to diagnose control and three-phase power problems, assist with troubleshooting, and diagnose water quality issues. These meters can pose a significant investment to the business that is typically not present with most single-phase residential water systems.

Management and Staff Considerations

The issues with public water systems surrounding the impact to management and staff are often the most severe as they combine all the previous considerations.

Management must provide the financial resources to adequately fund the new business or expansion; find and purchase the equipment; supervise and schedule the ongoing effort; balance the fiduciary needs of the client with those of the overall business and with the specific
cash flow requirements of the project; help the employees ride through the difficult projects; and provide constant support for the other unrelated tasks.

Management, including field supervisors and upper management, must carefully track and schedule the progress of a project to remain within the projected time frame of completion; anticipate payments for suppliers and subcontractors before they occur; coordinate the efforts
of those working on the project; and, above all, ensure a safe working environment for all employed on the project.

Support and secretarial staff must also step up in many cases and accept roles they previously didn’t have. The support staff must accurately review time sheets and prepare payroll checks based on the actual work classification assigned to the employee; review and process supplier
and subcontractor payments; prepare and submit timely interim progress payment requests on the project; and prepare and submit prevailing wage documentation to the applicable agency.

For many projects, this accumulation of tasks requires the efforts of a full-time employee. The important roles management and the support staff play in their part of public works projects definitely cannot be understated.

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You may think after reading all of this that I didn’t enjoy the decades I worked on public water system projects, but nothing could be further from the truth. Although there were certainly challenges and setbacks along the way, I thoroughly enjoyed the experience we had as a team.

Along the way, I managed to work alongside many talented people from all trades and made life-long friends with individuals I never would have had the opportunity to know if I hadn’t worked in this field.

The main items to remember, if contemplating a venture into this branch of work, is to enter it with your eyes wide open, educate yourself as to the differences associated with this type of well and water systems work, and finally, be ready to accept all the various challenges, accomplishments, problems, and enjoyment that await you!

Until next month, happy holidays to all and work safe and smart.

Learn How to Engineer Success for Your Business
 Engineering Your Business: A series of articles serving as a guide to the groundwater business is a compilation of works from long-time Water Well Journal columnist Ed Butts, PE, CPI. Click here for more information.

Ed Butts, PE, CPI, is the chief engineer at 4B Engineering & Consulting, Salem, Oregon. He has more than 40 years of experience in the water well business, specializing in engineering and business management. He can be reached at epbpe@juno.com.