Council Asset Management Strategy

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Council Asset Management Strategy

  1. 1. Asset Management Strategy Version 4.02 – 29 June 2009 CT Management Group Henshelwood & Associates
  2. 2. City of Banyule Council Asset Management Strategy Human Rights Statement In accordance with section 28 of the Charter of Human Rights, the Asset Management Strategy has been assessed as being compatible with the human rights protected by the charter. The Asset Management Strategy outlines the directions and objectives and how Council will develop Asset Management Plans that will manage and maintain infrastructure assets. This assessment is based on a Statement of Compatibility of the Human Rights protected by the Charter that are relevant to the Policy. Schedule of Changes & Amendments Version Date Changes/Amendments V1.00 Nov. 1999 Original version - developed by Votar Partners Pty Ltd V2.00 N/A Not known Updated version of original Strategy – to include the DVC, AG and MAV issues in V3.00 Jun. 2003 during 2003 and adopted by Council Changing environment instigated by AG, DVC & MAV for managing municipal V4.01 Aug 2008 infrastructure assets has necessitated a complete review of Council’s Asset Management Strategy. Undertaken by CT Management Group during 2006. Insertion of statement of Human Rights above the Schedule of Changes & V4.02 June 2009 Amendments. NB: 1. Primary number changes to Versions (eg V1.00 to V2.00) will be made when the document undergoes its regular review and when significant changes are made to standards and guidelines for inspections, intervention levels or work 2. Secondary number changes (V1.00 to V1.01) will apply to minor amendments that do not materially impact the document and are intended only to clarify or update issues. AM Strategy V4.02 - 160609.doc 2 of 62 Printed: 5/11/2009
  3. 3. City of Banyule Council Asset Management Strategy Part 1 - Executive Summary 1. Introduction Council’s Asset Management Strategy is a key link in the chain of actions required for a sound process of improving the long term management of its infrastructure assets. The Asset Management Strategy establishes the framework that determines the nature and direction of Asset Management. Its objective is to provide a structured set of actions aimed at enabling improved asset management by the organisation. The following diagram illustrates the important aspects of the improvement process, and in particular where the Asset Management Strategy document sits. This is the DVC framework. The Asset Management Strategy document is a companion to the Asset Management Policy that outlines why management of Council’s infrastructure assets will be undertaken across the organisation. The policy defines the key principles that underpin asset management for a council. Developed in accordance with Policy and Strategy, individual asset management plans will detail strategies and actions that are specific to that asset group. The original Council Asset Management Strategy was released in November 1999. Banyule City Council commissioned Votar Partners Pty Ltd to assist it with the development of overall objectives and principles for asset management in line with acknowledged good asset management practices. Since the release of the 1999 Asset Management Strategy, the Department of Victorian Communities, the Auditor General’s Office and the Municipal Association of Victoria have continued a path of ‘continuous improvement by clarifying the direction they wish the industry to pursue to improve Asset Management. This includes, financial management, asset performance and maintenance activities (Life Cycle Planning). AM Strategy V4.02 - 160609.doc 3 of 62 Printed: 5/11/2009
  4. 4. City of Banyule Council Asset Management Strategy The Strategy was subsequently reviewed during 2003 to include the DVC, AG and MAV issues in during 2003 and adopted by Council. The context of the Asset Management Strategy had not changed significantly from the original document however since then there has been a greater knowledge and emphasis on the issues driving asset management. This changing environment for managing municipal infrastructure assets has necessitated a complete review of Council’s Asset Management Strategy. However, the sound platform presented in the Votar Partners prepared edition (the latest being Version 3.0, June 2003) will be retained as a reference document. 2. Asset Management Drivers The following diagram shows the influences and drivers that are affecting Asset Management implementation. 3. Outputs of the Asset Management Strategy The strategy outlines: the current position of asset management within the City of Banyule; where the City intends to be, taking into account Council’s vision, goals and objectives from City Plan; how the City will achieve this; Key objectives for the time frame. The strategy also: links and integrates council’s plan and resources, indicating which services are to be delivered through which assets; Outlines the budgetary framework to be used for asset management; Defines the order of priority preparation of the initial asset management plans; States the key assumptions for Banyule’s management of assets; Outlines Asset Management practices, systems and improvements AM Strategy V4.02 - 160609.doc 4 of 62 Printed: 5/11/2009
  5. 5. City of Banyule Council Asset Management Strategy 4. Asset Management Strategies Column 1 in the following table outlines the strategies for future vision while column 2 outlines the current status. Actions to progress the vision are outlined in City Plan and each Annual Business Plan. Future Vision Current Status 1. Sustainability of management of assets Development of Asset Management Plans is All infrastructure assets are to be managed in a manner that ensures they can be sustained and provide the specified “levels of progressing but they are as yet incomplete. Council service” necessary for the overall benefit of the community. has prioritised this task in City Plan 2006-2010 2. Assets to meet Community ‘Needs’ Council’s Asset Management Policy requires Any proposals for upgrading or provision of new assets will be assessed as to community “need” and will involve a process of community awareness. Community Consultation community consultation. As well as identifying the specific needs of the community, the community in turn is to be made aware of process currently consists of “Best Value’ consultation issues of ongoing cost and risk. for individual services. 3. Disposal of Assets Current practice is that when an asset is to be Consideration of disposal of assets will be initiated when the economic life of the asset has expired, when its service specification is considered for disposal it is subject to a stand-alone no longer relevant (i.e. technical obsolescence), or when the need for the service provided by the asset has disappeared. investigation 4. Asset Management to be basis of Long-term Strategy This is Council Policy. AM Planning needs will be clearly identified as one of the key base drivers for long-term strategy for the City of Banyule. 5. Asset Information Systems to be fully integrated Council’s Asset Information Systems will be fully integrated with information accessible by all staff utilising corporate tools, This task is being progressively undertaken. information flow will be uninhibited between asset users, and data will require input into the system once only. 6. Asset Management Responsibility Assignment Matrix Responsibility Assignment Matrix has been developed The responsibilities and accountabilities of nominated Asset Managers will be fully defined. A Responsibility Assignment Matrix will (Refer to Appendix 3).. identify and allocate these responsibilities for the various asset groups. 7. Asset Management Plans Each key asset group is to have an Asset Management Plan, the development of which has been overseen by the relevant asset manager. Each Asset Management Plan will: Initial asset groups have been nominated in a priority Outline how that asset group will be managed in terms of usage, maintenance, renewal and/or disposal. order (Refer to Section 6.7 of the Strategy document). Provide information on current asset stock, its function, condition, operating and maintenance costs and utilisation. Define Rolling Works Programs for both Infrastructure Renewals and Maintenance Management. Address risk management issues specific to the asset group. 8. Rolling Works Programs Currently done where such rolling works programs Rolling Works Programs are to be used as the basis for formulating the Corporate Long Term Financial Model. have been developed. 9. Operational Plans Operational plans, including the rolling works programs, will meet requirements of the following planning horizons: To be developed upon completion of the various asset Provide indicative costs for works for 20 years ahead for long-term financial planning; management plans. Provide cost estimates for the forthcoming 3 to 5 years, to be outlined in City Plan; and Provide detailed costs for the Annual Budget, to be outlined in the Council’s Annual Business Plan. AM Strategy V4.02 - 160609.doc 5 of 62 Printed: 5/11/2009
  6. 6. City of Banyule Council Asset Management Strategy 5. Implementation Actions The following are specific actions that are necessary to exercise satisfactory implementation of the Council Strategy for all asset groups. (See Section 7.1) Action Deadline Resource 1. Asset Information Systems to be fully integrated The following systems need to be integrated AIM Authority (main corporate database) SMEC Pavement Management System 2. Asset Management Plans The following AM Plans to be completed: Road Network AM Plan Stormwater Drainage Playground Equipment & Playgrounds Street Trees Buildings & Facilities 3. Recurrent Expenditures Review recurrent expenditure on asset maintenance based upon the established service delivery criteria to establish if over- or under-servicing exists. 4. Asset Condition Assessments Develop a process for regular condition assessments, at intervals appropriate to the asset group, and ensure that funding for this is recognised in the budget 5. Provision of new assets Ensure a thorough investigation is undertaken to establish the real need/function, alternative options and associated risks 6. Road Management Plan Implement Council's Road Management Plan to meet the legislative requirements of the Road Management Act. 7. Data Capture Develop and implement a new integrated approach to data capture and asset inspections 8. Strategic Linkages Further develop the links between strategic asset management and routine asset maintenance activities. 9. Continue to implement asset based technology solutions linking with corporate information systems. 10. Continue to focus on asset preservation, sustainability and renewal rather than asset creation. 11. Continue to develop 4-year budget funding cycles to ensure sustainable and consistent asset management. 12. Ensure Council’s asset portfolio is strategically assessed to continue to meet the needs of the Community Part 2 – Working Document Part 2 provides the detail associated with the Executive Summary and the associated diagrams. AM Strategy V4.02 - 160609.doc 6 of 62 Printed: 5/11/2009
  7. 7. City of Banyule Council Asset Management Strategy Part 2 – Working Document Contents 1. INTRODUCTION ........................................................................................................................ 9 2. ASSET MANAGEMENT STRATEGY........................................................................................ 9 2.1. PURPOSE ............................................................................................................................ 9 2.2. STRATEGIC APPROACH TO ASSET MANAGEMENT .................................................................. 9 2.3. STRATEGIC FINANCIAL PLANNING ......................................................................................... 9 2.4. ASSET MANAGEMENT STRATEGIES ..................................................................................... 10 3. BACKGROUND ....................................................................................................................... 11 3.1. CITY OF BANYULE .............................................................................................................. 11 3.2. COUNCIL MANAGED ASSETS .............................................................................................. 11 4. CURRENT STATUS OF BANYULE’S INFRASTRUCTURE ASSETS ................................... 13 4.1. ASSET STOCK ................................................................................................................... 13 4.2. CONDITION ASSESSMENT ................................................................................................... 14 4.3. LEVELS OF SERVICE .......................................................................................................... 15 4.4. COMMUNITY INPUT............................................................................................................. 16 4.4.1. Consultation .............................................................................................................................. 16 4.4.2. Assessment of Need & Function ............................................................................................... 17 4.4.3. Community Feedback & User Satisfaction ................................................................................ 17 4.4.4. Community/Stakeholder Expectations....................................................................................... 18 4.5. FUNDING ‘GAP’ ANALYSIS .................................................................................................. 18 5. ASSET MANAGEMENT PRACTICES, SYSTEMS & PROCESSES ...................................... 19 5.1. ASSET MANAGEMENT PRACTICES ....................................................................................... 19 5.2. DATA INFORMATION SYSTEMS ............................................................................................ 20 5.2.1. AIM Authority Information System ............................................................................................. 21 5.2.2. Financial Management System ................................................................................................. 22 5.2.3. Customer Service Systems & Procedures................................................................................. 22 5.2.4. Geographic Information System (GIS)....................................................................................... 23 5.2.5. Road Pavement Management System (PMS)........................................................................... 23 5.3. SYSTEMS FUNCTIONALITY .................................................................................................. 24 5.4. ASSET MANAGEMENT PLANS .............................................................................................. 25 5.5. KEY ASSUMPTIONS FOR ASSET MANAGEMENT .................................................................... 26 5.6. BUDGETARY FRAMEWORK FOR ASSET MANAGEMENT .......................................................... 28 5.7. ASSET MANAGEMENT ROLES & RESPONSIBILITIES .............................................................. 32 5.8. ASSET MANAGEMENT ROLE RESPONSIBILITY ASSIGNMENT .................................................. 32 5.9. AM GOALS FOR EACH ASSET GROUP ................................................................................. 32 6. ASSET MANAGEMENT STRATEGIES .................................................................................. 33 6.1. LONG-TERM STRATEGIES................................................................................................... 33 6.2. CITY PLAN STRATEGIES ..................................................................................................... 34 AM Strategy V4.02 - 160609.doc 7 of 62 Printed: 5/11/2009
  8. 8. City of Banyule Council Asset Management Strategy 7. STRATEGY IMPLEMENTATION MEASURES ....................................................................... 35 7.1. IMPLEMENTATION ACTIONS................................................................................................. 35 7.2. ACQUISITION OF NEW ASSETS & ACCEPTANCE STANDARDS ................................................ 36 7.3. DISPOSAL OF ASSETS ........................................................................................................ 36 7.4. ASSET RECORDING, VALUATION AND REPORTING ............................................................... 37 7.5. DATA COLLECTION & INPUT INTO THE ASSET INFORMATION SYSTEM .................................... 38 7.6. PRIORITY OF AM PLAN PREPARATION ................................................................................ 38 8. RISK MANAGEMENT .............................................................................................................. 39 8.1. RISK MANAGEMENT POLICY & GUIDELINES ......................................................................... 39 8.2. RISK ASSESSMENT ............................................................................................................ 39 8.2.1. Risk/Hazard Identification.......................................................................................................... 40 8.2.2. Risk Criteria & Consequences................................................................................................... 40 8.2.3. Measure of Risk Likelihood ....................................................................................................... 42 8.2.4. Risk Analysis Matrix .................................................................................................................. 42 8.3. TREATING RISKS................................................................................................................ 42 8.3.1. Action Controls .......................................................................................................................... 42 8.3.2. Managing High Risk Works ....................................................................................................... 43 8.3.3. Responding to Emergencies ..................................................................................................... 43 8.3.4. Contingency Planning................................................................................................................ 43 9. PERFORMANCE INDICATORS, MONITORING & REVIEW.................................................. 44 9.1. PERFORMANCE INDICATORS ............................................................................................... 44 9.2. MONITORING & REVIEW ..................................................................................................... 45 9.2.1. AM Plan Review ........................................................................................................................ 45 9.2.2. Road Management Plan Review ............................................................................................... 46 9.2.3. Audit Review Process................................................................................................................ 46 9.2.4. AM Plan Performance Measures............................................................................................... 47 9.2.5. Asset Delivery Performance ...................................................................................................... 47 9.2.6. Reporting Asset Achievements ................................................................................................. 48 9.2.7. External Factors ........................................................................................................................ 48 10. REFERENCE DOCUMENTS ................................................................................................. 48 11. APPENDICES ........................................................................................................................ 48 APPENDIX 1: - ASSET MANAGEMENT ROLES & RESPONSIBILITIES MATRIX .......................................... 49 APPENDIX 2: - ASSET CATEGORIES & RESPONSIBILITIES MATRIX ....................................................... 51 APPENDIX 3: - BUSINESS PLAN 2006/07 AM STRATEGIES, PRIORITIES & ACTIONS ............................. 54 APPENDIX 4: - SERVICE STANDARDS& PERFORMANCE MEASURES FOR EACH ASSET CATEGORY ........ 56 APPENDIX 5: - AM GOALS FOR EACH ASSET GROUP ......................................................................... 59 APPENDIX 6: - DVC CUSTOMER SERVICE SURVEY, 2005 .................................................................. 62 AM Strategy V4.02 - 160609.doc 8 of 62 Printed: 5/11/2009
  9. 9. City of Banyule Council Asset Management Strategy 1. Introduction The asset management strategy is a key element of City Plan. The strategy provides a better understanding of how to align the asset portfolio so that it best meets the service delivery needs of the local community, both now and in the future, to enable the council’s asset management policy to be achieved. The original Council Asset Management Strategy was released in November 1999. Banyule City Council commissioned Votar Partners Pty Ltd to assist it with the development of overall objectives and principles for asset management in line with acknowledged good asset management practices. Since the release of the 1999 Asset Management Strategy, the Department of Victorian Communities, the Auditor General’s Office and the Municipal Association of Victoria have continued a path of ‘continuous improvement by clarifying the direction they wish the industry to pursue to improve Asset Management. This includes, financial management, asset performance and maintenance activities (Life Cycle Planning). City of Banyule is embracing the MAV STEP Program process in order to be better prepared in asset management for the future. As part of the process this Council Asset Management Strategy has been prepared to ensure that any actions taken in developing Asset Management Plans are consistent with overall council strategy. The Strategy was last reviewed during 2003 to include the DVC, AG and MAV issues and adopted by Council. The context of the Asset Management Strategy had not changed significantly from the original document however since then there has been a greater knowledge and emphasis on the issues driving asset management. The sound platform presented in the Votar Partners prepared edition (the latest being Version 3.0, June 2003) will be retained as a reference document. 2. Asset Management Strategy 2.1. Purpose The Asset Management Strategy establishes the framework that determines the nature and direction of Asset Management. Its objective is to provide a structured set of actions aimed at enabling improved asset management by the organisation. The Executive Summary provides more explanation of the purpose of the Asset Management Strategy. 2.2. Strategic Approach to Asset Management The Council’s Asset Management Policy document details the organisational context and the linkages associated with asset management planning & strategy. 2.3. Strategic Financial Planning It is essential for sound strategic financial planning that the requirements of all asset groups are established to ensure that the overall organisational needs are assessed. Only in this way can an equitable apportionment of available funding be made across all asset groups. This can only occur if competent Asset Management Plans have been developed across all infrastructure asset groups. Apportionment is based on the strategic needs of the organisation and not the needs of a single asset group. AM Strategy V4.02 - 160609.doc 9 of 62 Printed: 5/11/2009
  10. 10. City of Banyule Council Asset Management Strategy 2.4. Asset Management Strategies Column 1 in the following table outlines the strategies for future vision while the adjoining column outlines the current status. Actions to progress the vision are outlined in City Plan and each Annual Business Plan. Future Vision Current Status 1. Sustainability of management of assets Development of Asset Management Plans is All infrastructure assets are to be managed in a manner that ensures they can be sustained and provide the specified “levels of progressing but they are as yet incomplete. Council service” necessary for the overall benefit of the community. has prioritised this task in City Plan 2006-2010 2. Assets to meet Community ‘Needs’ Council’s AM Policy requires community awareness. Any proposals for upgrading or provision of new assets will be assessed as to community “need” and will involve a process of Community Consultation process currently consists of community consultation. As well as identifying the specific needs of the community, the community in turn is to be made aware of “Best Value’ consultation for individual services. issues of ongoing cost and risk. 3. Disposal of Assets Current practice is that when an asset is to be Consideration of disposal of assets will be initiated when the economic life of the asset has expired, when its service specification is considered for disposal it is subject to a stand-alone no longer relevant (i.e. technical obsolescence), or when the need for the service provided by the asset has disappeared. investigation 4. Asset Management to be basis of Long-term Strategy This is Council Policy. AM Planning needs will be clearly identified as one of the key base drivers for long-term strategy for the City of Banyule. 5. Asset Information Systems to be fully integrated Council’s Asset Information Systems will be fully integrated with information accessible by all staff utilising corporate tools, This task is being progressively undertaken. information flow will be uninhibited between asset users, and data will require input into the system once only. 6. AM Responsibility Assignment Matrix Responsibility Assignment Matrix has been developed The responsibilities and accountabilities of nominated Asset Managers will be fully defined. A Responsibility Assignment Matrix will (Refer to Appendix 3).. identify and allocate these responsibilities for the various asset groups. 7. Asset Management Plans Each key asset group is to have an Asset Management Plan, the development of which has been overseen by the relevant asset manager. Each Asset Management Plan will: Initial asset groups have been nominated in a priority Outline how that asset group will be managed in terms of usage, maintenance, renewal and/or disposal. order (Refer to Section 6.7 of the Strategy document). Provide information on current asset stock, its function, condition, operating and maintenance costs and utilisation. Define Rolling Works Programs for both Infrastructure Renewals and Maintenance Management. Address risk management issues specific to the asset group. 8. Rolling Works Programs Currently done where such rolling works programs Rolling Works Programs are to be used as the basis for formulating the Corporate Long Term Financial Model. have been developed. 9. Operational Plans Operational plans, including the rolling works programs, will meet requirements of the following planning horizons: To be developed upon completion of the various asset Provide indicative costs for works for 20 years ahead for long-term financial planning; management plans. Provide cost estimates for the forthcoming 3 to 5 years, to be outlined in City Plan; and Provide detailed costs for the Annual Budget, to be outlined in the Council’s Annual Business Plan. AM Strategy V4.02 - 160609.doc 10 of 62 Printed: 5/11/2009
  11. 11. City of Banyule Council Asset Management Strategy 3. Background 3.1. City of Banyule Banyule City Council is located between 7 and 21 kilometres north-east of central Melbourne and is made up of 21 suburbs. The City covers an area of approximately 63 square kilometres and is bounded in the south by the Yarra River and in the west by the Darebin Creek. The City is primarily a residential area. While separate houses dominate, increasing numbers of semi-detached houses, townhouses and units are being built. Retaining the neighbourhood character of these residential areas is very important to the local community. Banyule also has a number of commercial centres, the largest being the Greensborough Principal Activity Centre and the Heidelberg and Ivanhoe Major Activity Centres. There are significant industrial areas in Heidelberg West, Greensborough/ Briar Hill and Bundoora, and a number of large institutions such as the Austin and Repatriation Medical Centre and Simpson Army Barracks. 3.2. Council Managed Assets Banyule City Council is custodian of and manages an extensive range of community assets, including land, valued in excess of $800m to facilitate delivery of its services to the community. The efficient and effective management and operations of these assets is vital in the current competitive environment faced by the local government sector. Council’s performance is measured on its ability to effectively manage its assets and provide a high level of customer service to its community. The State Government also benchmarks Council’s performance and funding requirements against similar municipalities based on data supplied by Council. Hence it is critical to have an asset management strategy and appropriate information systems that provide accurate data to adequately monitor and report on the condition and performance of assets and provide for informed decision-making. Typical Council infrastructure assets are found in: the road & street network, including footpaths, kerb and channel, culverts, traffic facilities, guard rails, street furniture, bus shelters, street lighting, street name & regulatory signs, and car parks both on and off-street; stormwater drainage systems; buildings and facilities of various types that provide a focus for services, such as administrative facilities and community halls; parks and recreation facilities, including active and passive recreation areas; plant and equipment, including Workshop and Depot facilities to undertake specific services; Information technology networks, including computer and telecommunication systems. There is increasing demand for resources to provide the various services for which Council has a statutory responsibility as well as those services that the community expects it to provide. At the same time, the ability to adequately fund these assets and services is becoming increasingly difficult due to competing demands. As custodian of these assets, Council is responsible for funding their maintenance and upkeep at a level of service that satisfies both the safety and amenity requirements of the community. Council needs to balance this funding of upkeep with increasing the asset base as a result of community demand and natural growth of the area. The means by which Council achieves proper management of its assets is ‘asset management’. AM Strategy V4.02 - 160609.doc 11 of 62 Printed: 5/11/2009
  12. 12. City of Banyule Council Asset Management Strategy By better understanding the extent and condition of its infrastructure assets, Council is able to more effectively plan and fund its works programs. As a consequence assets will be maintained to an acceptable standard, which will enable Council to competently deliver services to the community. As a consequence Council Insurers are more sensitive to risk exposure and this will inevitably impact premium payments. Documented management of higher risk assets (eg roads, footpaths, playground equipment) is now becoming a requirement to minimise risk exposure. This documentation involves defining the maintenance standards, levels of service including tolerance levels for the various defects, inspection and condition assessment regimes and assists council with its defence in litigation provided it is meeting the standards it has established. AM Strategy V4.02 - 160609.doc 12 of 62 Printed: 5/11/2009
  13. 13. City of Banyule Council Asset Management Strategy 4. Current Status of Banyule’s Infrastructure Assets 4.1. Asset Stock Council’s infrastructure assets include: the road & street network; bridges (road & pedestrian); stormwater drainage systems; buildings and facilities of various types that provide a focus for services; parks and recreation facilities; During 2005, an assessment was undertaken of the condition of key groups of assets, through the MAV Renewal Gap project as part of the Step Program. Financial modelling enables predictions for future funding requirements to be made based on available data and recent trends in asset life expectancies, condition, replacement costs, etc. Modelling outcome is very much dependent upon the accuracy of the input data and how assets are grouped for modelling. It is not a precise process but does provide a degree of certainty in the outcomes. The following table is a summary of Banyule Council’s asset stock taken from the Renewal Gap Project worksheets. Table: Banyule Asset Group Inventory Current Asset Group Sub-Group Quantity Unit Replacement Value Roads & Streets Pavement (Sealed Link Rds) 403,555 sq.m $13,630,705 Pavement (Sealed Collector Rds) 320,596 sq.m $10,747,081 Pavement (Sealed Access Rds) 3,227,140 sq.m $88,237,844 All Gravel Resheets 13,200 sq.m $118,800 All Asphalt Surfaces 3,793,282 sq.m $63,347,048 All Spray Seals 130,492 sq.m $760,714 Concrete Footpaths 1,451,953 sq.m $54,744,977 Other Footpaths 27,920 sq.m $1,317,675 All Kerbs 1,156 km $54,463,872 Bridges Bridges/Major Culverts Long Life 9 No. $5,387,000 Bridges /Major Culverts Short Life 1 No. $20 Stormwater Storm Water Pits 28,240 No. $24,814,980 Storm Water Pipes 6,666 km $65,418,972 Buildings Build Structure - Long life 258 No. $100,678,901 Build Structure - Short life 19 No. $2,233,000 Building Roof 277 No. $7,350,850 Build Mechanical Services 118 No. $9,636,700 Building Fit Out 277 No. $22,052,550 Recreation Assets Playground Equipment 143 No. $3,723,700 Sporting Ovals 44 No. $5,042,500 $533,707,889 NB: This figure does not include land value AM Strategy V4.02 - 160609.doc 13 of 62 Printed: 5/11/2009
  14. 14. City of Banyule Council Asset Management Strategy 4.2. Condition Assessment The condition rating ascertained by the MAV Asset Renewal Funding Gap project is considered to be ‘indicative’ of the condition and funding requirements of Council’s assets. However as asset management plans are developed for each asset group, the inventory of asset stock will be reviewed and reconciled into the relevant database for that asset group. In addition condition assessments will also be recorded that are derived from actual physical inspection and assessment of each key asset component. The model used a series of default degradation curves which have been supplied for the 20 asset sets. The Road asset default condition distributions and degradation curves have been developed via an analysis of condition data for around 30 councils and are considered to be of a high quality. It should be noted that modelling charts are prepared on the best available information at the time and are subject to change as more or updated information becomes available. The following two charts are examples from the modelling. Chart – Concrete Footpath Condition Assessment PRESENT CONDITION DISTRIBUTION BY % OF ASSET BASE 30.0 % WITHIN CONDITION RATING 25.0 20.0 15.0 10.0 5.0 0.0 0 1 2 3 4 5 6 7 8 9 10 % of Assets Within Cond 5.0 7.0 24.0 29.0 19.0 12.0 3.0 1.0 0.0 0.0 0.0 0 Good - Condition - 10 Poor This chart shows the distribution by percentage of the asset base within each of the asset condition ratings. These ratings are zero when an asset is new and in perfect condition through to condition 10 when an asset has no remaining value. This condition spread will generally come from another program source such as a full condition inspection of the asset base or an analysis of the age profile of the asset base. The SMEC PMS will provide this information when it is fully populated with data. Once the present condition distribution of the asset base is known, a degradation curve is applied to the asset set on the basis of how long you expect an asset to remain within each of the 10 condition ratings before it will jump to the next highest rating. The program uses as its variable the time in years that an asset is expected to remain within a given condition before it rises to the next highest condition rating. But the user input to deliver this detail is expressed as the % of the total asset life expected within each condition rating along with the total expected asset life. The following table is an example of the degradation curve for a concrete footpath. AM Strategy V4.02 - 160609.doc 14 of 62 Printed: 5/11/2009
  15. 15. City of Banyule Council Asset Management Strategy Chart – Concrete Footpath Degradation Curve Life in Years at the start of Cond Range 0 1 Go 2 - 3 4 Asset Condition 5 6 7 - 8 Poor 9 10 0.0 10.0 20.0 30.0 40.0 50.0 60.0 Asset Life in Years The following table is not definitive but does provide a guide as to condition assessment prior to detailed assessments being conducted. Table: Banyule Indicative Asset Condition Assessment Intuitive Condition Confidence in Asset Group Assessment & Condition Data Comments Roads & Streets Very Good Bridges Good Stormwater Sound - continuing Buildings Good Recreation Assets Very Good 4.3. Levels of Service One of the key basics of service delivery to the community is to provide the levels of service that the current and future community want, and are prepared to pay for, in the most cost effective manner. This is also applicable to the infrastructure and other assets utilised for the delivery of these services. Sound asset management practice also involves affordable costs. The ‘level of service’ is the defined service quality for a particular activity or service area against which service performance can be measured. It provides the basis for the life cycle management strategies and works programmes identified within the Asset Management Plan. Levels of service can be broken down into three basic aspects: Function – its purpose for the community Design parameters – what is required of and from the structure itself Standards and performance levels- the delivery of the service Levels of Service are determined from the public consultation process and customer satisfaction surveys. They reflect the strategic objectives of Council and are based on: Customer expectations for quality of service and willingness to pay Legislative requirements; environmental standards, regulations and legislation that impacts the way assets are managed AM Strategy V4.02 - 160609.doc 15 of 62 Printed: 5/11/2009
  16. 16. City of Banyule Council Asset Management Strategy Council’s mission and objectives as stated in the strategic plan Available resources, particularly financial constraints Organisational delivery mechanisms Design Standards and Codes of Practice All Banyule’s service level standards, the Levels of Service, have or will be developed in consultation with relevant internal stakeholders to ensure that they can be met with existing resources, both human and financial. The consultation has involved analysis of historical patterns of Customer Requests and includes complaints, defects and responsiveness. The ‘standards’ will be provided to Council for review and adoption within the asset management framework and where required publicly displayed to invite community feedback. A measure that Council is achieving a range of service levels is confirmed in the DVC Annual Customer Service Survey which sees Council achieving consistently high scores of community satisfaction. The challenge is to determine levels of service that stakeholders can understand and therefore have a capability to input into the process. Appendix 6 outlines responses from the DVC Customer Service Survey. Levels of service are dependent upon funding, so if Council experiences tight fiscal constraints in some of its service areas, these levels of service may not be met. As at 2006, only the levels of service (Intervention Levels) outlined in the Road Management Plan have a statutory obligation to be achieved. 4.4. Community Input Input from the community by way of consultation and feedback plays an important role in Council understanding the needs of the community. Banyule City Council uses a number of platforms for community consultation including: 4.4.1. Consultation • Best Value Process where benchmarking performance occurs against like Councils and service provision. • Legislation – The Road Management Act provides for an opportunity for community input into the Banyule Road Management Plan. The process calls for submissions through advertising in the local press and The Government Gazette and adoption by Council. • Specific project consultation - All major infrastructure works have a consultation phase with residents and other stakeholders who are affected by a project. There are a number of consultation processes ranging from extensive for new infrastructure, to notification by letter if works disrupt or affect property access. • Capital Works. - Council’s Annual Capital Works Program, New Works and Services (NW&S), is developed with extensive community consultation. Expressions of Interest (EOI) can be submitted for maintenance, upgrade or new assets. These are called for annually and evaluated by standard criteria and are deemed as .Part A (non discretionary) and Part B (discretionary). Approval of these works occurs during the formulation of the budget and all submitters are informed if their submission is successful or not. • Council Publications – Monthly newsletters The Banyule Banner, agendas and minutes and specific information sheets detail Council issues, works and operational activities. It is intended to undertake specific asset category consultation as levels of service are developed through Asset Plans. AM Strategy V4.02 - 160609.doc 16 of 62 Printed: 5/11/2009
  17. 17. City of Banyule Council Asset Management Strategy 4.4.2. Assessment of Need & Function The assessment of community “need” for a new or upgraded asset should involve a process of community consultation. As well as identifying the specific needs of the community, they in turn need to be aware of issues of cost and risk. This community consultation process also satisfies part of the legislated “best value” principle and its own best value policy. All of the Council assets considered in this report have been established and built to provide a “level of service” of functionality to the end user. This “level of service” has been developed based on a balance of the needs and expectations of the community as users and occupiers and the Council as asset owners / managers and most importantly the ability of the community to pay for the service through rates & charges. The community needs and expectations are balanced with industry best practice of asset management and subsequently the “level of service” for each individual asset category will be written into the asset management plan. It is important to note that within the level of service guidelines are the criteria for “condition intervention”, based on asset preservation and risk management (see the following section). These criteria then allow the prediction of asset renewal costing based on condition or age which ever is first. The importance of the “level of service” is that it allows the asset to be maintained and/or renewed/refurbished/replaced as required while at the same time strategically managing the allocation of scarce funding resources. Council’s Capital Works (New Works and Services) Program which includes significant investment in maintenance and renewal of assets is developed through an exhaustive community consultation process. All projects are rigorously evaluated using agreed criteria prior to Council approval to ensure a balanced approach. Council has the ability to analyse its Customer Requests and understand the issues that drive community expectations. The results of the analysis will be completed in detail in asset category plans. 4.4.3. Community Feedback & User Satisfaction • Internal Customer Surveys • Customer Request – Analysis of performance eg reaction times are also used as a measure of performance and are incorporated in Annual Reports. • OLG Customer Service Survey results (refer to Appendix 6) • Online mechanisms - available on Council web site AM Strategy V4.02 - 160609.doc 17 of 62 Printed: 5/11/2009
  18. 18. City of Banyule Council Asset Management Strategy 4.4.4. Community/Stakeholder Expectations Stakeholder expectations for each asset category will be developed within the asset category plans. The following table is proposed to identify the issues for the following groups. Residents Businesses Local Community Groups Visitors/Shoppers Transport User groups Through Travellers Emergency & Service Authorities Government Organisations 4.5. Funding ‘Gap’ Analysis The funding ‘gap’ is the measure of the funding shortfall where service levels are not being provided at the specified/required level. It applies to both maintenance and renewal of assets. Gap analysis techniques are to be utilised to measure the gap between the current and relevant quality levels of service. An example of such a technique was the 2005 Moloney Gap Modelling project established by the MAV to assist councils establish the indicative magnitude of any gaps applicable to them. As Council’s data sets become more complete, gap analysis techniques will be introduced to more precisely measure any gap. AM Strategy V4.02 - 160609.doc 18 of 62 Printed: 5/11/2009
  19. 19. City of Banyule Council Asset Management Strategy 5. Asset Management Practices, Systems & Processes 5.1. Asset Management Practices This Section outlines the nature of current practices for AM decision making and details an improvement program to enhance them in order to provide ongoing improvement to management of the Council’s infrastructure assets. Several areas that are vital to managing the asset include: Asset data: Information on the actual physical details of the assets including quantity, dimensions, age, condition, cost to provide, replacement cost, useful life span, etc. It must be appropriate for the required purpose, reliable and accessible. Information systems: This includes all the data information systems necessary to competently manage the asset. Key systems include the corporate accounting system, asset information system, geographic information system and public request system. Ideally, data should be input once only into one of these systems and be accessible through other systems through interfacing. Processes: This involves the various processes to analyse and evaluate the data from the above systems to produce relevant management reports and works programs. Strategies: Implementation strategies for organisational management, including contractual, people and resource issues, are essential to ensure that the asset management process overall is conducted in a sound and competent manner. The following chart illustrates the relationship Corporate Data Information Systems Data analysis and evaluation processes Asset Management Plans Implementation Strategies to facilitate service delivery AM Strategy V4.02 - 160609.doc 19 of 62 Printed: 5/11/2009
  20. 20. City of Banyule Council Asset Management Strategy 5.2. Data Information Systems The data information systems used for the management of assets involves a combination of processes, data and software. These are applied to provide the essential information outputs for effective asset management of risk and optimum infrastructure maintenance and refurbishments. Council currently uses the following main data information systems for recording relevant asset data information: There are three Customer Request Management Systems in use which include Merit CRM, NOMAD & eServices CRM. Merit CRM System captures request types for Infrastructure Maintenance, Graffiti, Older Adult Bookings, Community Safety, Pre-booked collections for Waste Management, Engineering Developments / Drainage & Traffic Engineering. NOMAD Parks & Buildings Request System manages requests for Buildings, Parks Maintenance, Bushland Management, Horticultural Services, Tree Care & Administration. eServices browser based CRM module manages request for Waste Management (excluding pre-booked collections), Local Laws, Cleansing, Health, Revenue and Risk. The Corporate Accounting System utilised at Council is Civica’s Authority Financials. Some of the financial modules include General Ledger, Accounts Receivable, Accounts Payable, Bank Reconciliation, Requisitioning & Purchasing. Council’s Geographic Information System is Exponare (MapInfo). Council uses the SMEC Pavement Management System which captures the road network, including road surface & pavement, pathway and kerb & channel details. The system also assists with modelling which the new eServices AIM (Asset & Infrastructure Management) system does not do. For more information on AIM refer to 5.2.1. The table below summarises the current data systems as described above: Module System CRM Merit CRM, NOMAD & eServices CRM Financials Corporate Authority System, Purple Octopus & Powerbudget GIS Exponare Pavement Management SMEC These systems contribute to the overall management of the long term planning of its infrastructure assets in order to: Know what and where its assets are; Know their condition; Establish suitable operational, maintenance and renewal regimes to suit the assets and level of services required of them by present and future customers; Establish asset function and asset maintenance to meet the needs of the present and future customers; Review maintenance practices and optimising operational procedures; Implement management strategies for resources and work programs; Improve risk management techniques; and AM Strategy V4.02 - 160609.doc 20 of 62 Printed: 5/11/2009
  21. 21. City of Banyule Council Asset Management Strategy Identify the true cost of operations and maintenance and predict future capital investments and maintenance expenditure required to optimise the asset function and lifecycle. Asset management systems using software have become an essential tool for the management of Council’s infrastructure assets. Asset management draws on the information contained in these systems, which are briefly outlined below. 5.2.1. AIM Authority Information System Council is implementing the Civica Asset & Infrastructure Management System, AIM, as its Corporate Asset Information System. AIM provides full lifecycle analysis of assets within an enterprise wide asset management solution and delivers cohesive processing and reporting requirements to fully meet Council workflows. The system is designed to improve the management of Council’s Infrastructure by applying best practice principles to support the delivery of services to its community and customers. The AIM system is a separate application which utilises modules within Authority & uses eServices as a medium to deliver a single consistent environment. The main benefit of the AIM integrated model over a ‘best of breed’ product is the ability to effectively integrate with the Authority Financial Management system to meet AAS27 legislative requirements & to address Council’s infrastructure and asset portfolio as a corporate requirement set down by the organisation’s Asset Management Plan. This single database environment eliminates disparate data storage, data duplication and batch processing allowing Council to consolidate all asset information in a single location with each application module leveraging the benefits of common components designed to operate as one. In future AIM will provide links to remote computing devices to allow updating of asset information whilst in the field environment. Civica has recently purchased a mobile computing solution from Precision Data. Precision Data has allocated two staff members to work along side Steve Carter (Civica consultant) to develop the solution. Development will only include integration to AIM. Other modules to follow include Animals & Infringements. The table below summaries our data system plans for the future: Module System AIM eServices AIM Stage 1 – Fleet, Playgrounds & Roads; eServices AIM Stage 2 & 3 – Buildings, Drainage, Footpaths, Kerb & Channel, Street Furniture, Signs, Street Trees CRM eServices CRM Stage 2 – Planning, Construction, Parks, Childrens Services, Leisure & Culture. Financials Corporate Authority System, Purple Octopus & Powerbudget GIS Exponare Pavement SMEC Management AM Strategy V4.02 - 160609.doc 21 of 62 Printed: 5/11/2009
  22. 22. City of Banyule Council Asset Management Strategy 5.2.2. Financial Management System Council’s Financial Management system is the Civica Authority Financials System and its financial modules. The Financial modules include General Ledger, Accounts Payable, Accounts Receivable, Purchasing, Bank Reconciliation, Trusts, Payroll, HR Management, Contract Management, Stores, Fixed Assets & Project/Job Costing. The General Ledger module sits at the hub of the Authority Financial System. It controls all of the subsidiary financial modules. The GL module recognises accounts that control subsidiary ledgers. It validates that postings to these accounts can only be processed via the affected subsidiary module. This ensures that the subsidiary ledgers remain in balance with the controlling general ledger accounts. Several electronic interfaces exist throughout the financial modules. Some include timesheet data from the Xpedite Community Programs system into Authority, Local Laws interfaces to Vic Roads & Perin Court, Australia Post downloads from the Post website & EFT data file transmission to Commonwealth Bank through their Diammond Services application. Two other Financial systems available are Purple Octopus & Powerbudget. Purple Octopus is a reporting application developed in-house, assisting Council with Live Cost Reports, Prior Year Cost Reports, End of Month Reports, Variance Reports, NW&S Reports and other Miscellaneous Reports. Powerbudget is an application acquired through Chameleon Technologies to assist with budgeting. Purple Octopus and Powerbudget both link & interface with the Corporate Informix Authority database. 5.2.3. Customer Service Systems & Procedures Council uses Smart Track (Merit CRM 9) as its customer request tracking system to record customer enquiries for road based infrastructure assets (roads sealed and unsealed, pathways and kerb & channel). Enquiries from the community are received in person at Customer Service Centres, by telephone, e-mail, fax or letter. The Merit database registers details of the enquiry including: Request reference number Date of request received Originator of request – name and address Request/repair details – location, type, size, quantity Description of the actual maintenance works Inspection/assessment date Completion/repaired date. The Customer Request System enables the response times to be monitored for inspections and that appropriate action is undertaken. It should be noted that ‘actioning’ a request doesn’t necessarily mean that the request has been fulfilled but simply that appropriate action has taken place. Appropriate action may well mean that an asset defect, such as a damaged pathway has been inspected and: AM Strategy V4.02 - 160609.doc 22 of 62 Printed: 5/11/2009
  23. 23. City of Banyule Council Asset Management Strategy repairs are straight-forward and have been implemented as soon as a work crew is available - the appropriate action in this case is when the repair work has been completed; or repairs are significant and need to be undertaken on a special works program along with a number of similar works and the site has been made safe until such time as repairs are undertaken - the appropriate action is when the repair work has been listed on the future works program not when it has been completed; or the defect was found not to warrant any remedial action at that stage as it was below specified intervention levels - the appropriate action in this case is when the decision is made that no repair work is warranted. Whatever the response, it is noted against the original request. 5.2.4. Geographic Information System (GIS) Council currently uses Exponare for enquiry which is software specifically designed by Ersis Australia for Banyule City Council. Exponare does not let you create layers or modify existing layers. The property layers link to the Corporate Authority Informix database. All property related queries search the Authority database & display the result through Exponare. Exponare links directly with Civica’s Authority system. In the future Banyule will be moving away from Exponare to Mapinfo’s latest instalment Exponare. Exponare builds on its predecessor and increases the functionality & user-friendliness to create a more powerful GIS solution. Exponare’s enquiry module also allows integration into Council’s Corporate System. There are two separate levels of integration. Firstly, client based via Authority (or the 4GL programs) and secondly browser based via eServices. For mapping layers to function in AIM amongst other Authority modules, information has to pass between Authority/eServices & Exponare. For eServices (the new browser based product), Mapinfo have not yet provided information to Civica with any planned work for two way integration of their Browser product. The integration is one way from eServices to MapInfo’s Exponare Public. For Authority (client based product), the integration relies upon an existing Informix table aualmapl. In order for information (ie. layers) to be passed both ways between Authority and Exponare, two additional fields were required and this work has been completed by Civica. In future, integration enhancements will be required by Mapping Vendors (ie. MapInfo) to read these new fields and provide necessary ‘layered’ spatial information. Therefore the functionality available in 2006 is only one way integration from Authority to Mapinfo’s Exponare. 5.2.5. Road Pavement Management System (PMS) In 2005, Council changed to the SMEC Pavement Management System which is utilised by a number of municipal Councils in and around Melbourne. SMEC replaced the RoadPak Pavement Management System (PMS) that was the data management tool for the road network, including road surface and pavement, pathway and kerb and channel. With a PMS, visual structural defect surveys are undertaken on a cyclical basis and the results are recorded against the relevant road section. The AM Strategy V4.02 - 160609.doc 23 of 62 Printed: 5/11/2009
  24. 24. City of Banyule Council Asset Management Strategy PMS analyses the road condition to determine priority based periodic maintenance activities (such as re sheets and reconstructions) for roads. Experience showed that the RoadPak system was inadequate in delivering the type of modelling required by Council for effective management of the asset and its use was abandoned. The SMEC PMS does the above and also has the required modelling capabilities. The above systems utilise key base asset data for any road asset information. This base data is considered sacrosanct and its integrity must be preserved otherwise any information obtained can quickly become unreliable and therefore worthless. This base data set includes: 1. SMEC Pavement Management System Data is the corporate database for all road assets. 2. Road Register is to be derived from the SMEC PMS Database as a select set of roads (namely those under Council's responsibility) as opposed to all roads including VicRoads, roads in private subdivision, etc. which may also be listed. 3. Road Hierarchy is determined by the Road Register as documented in both the Road Management Plan & Road Asset Management Plan. 4. Road Management Plan, RMP, a statutory plan under the Road Management Act 2004, is derived from the Road Asset Management Plan, RAMP. NB: Version 1 of the RMP was developed in advance of the first RAMP as a convenience to meet tight timelines surrounding the loss of non-feasance. Future versions will follow the RAMP. 5. Asset Valuations as per the agreed corporate process. 5.3. Systems Functionality The main functional requirements of these asset management systems are summarised as follows: Records and stores attributes to identify individual asset clearly; Defines relationship (components) within and between assets; Enables customisation including description fields; Provides specialist databases (interfaces) to cover unique attributes or specific applications; Capital, maintenance and condition based reports (either customised or delivered by manipulating the database); Export selected data; and Allows for a range of accounting treatments. This will assist in determining asset information for long-term capital and maintenance funding requirements to ensure that assets do not fall below their nominated minimum asset condition rating. AM Strategy V4.02 - 160609.doc 24 of 62 Printed: 5/11/2009
  25. 25. City of Banyule Council Asset Management Strategy 5.4. Asset Management Plans The relevant Asset Manager(s) for each asset group is to develop a specific Asset Management Plan that will outline how that asset group will be managed. The Asset Management Plan is a written representation of the intended Asset Management programs based on the organisation’s understanding of customer requirements, budget and resources, existing and projected networks, asset conditions and performance. It acts as a vehicle for communication with customers and other parties with an interest in the organisation’s AM activities. The level of detail contained within the Asset Management Plan will vary depending upon the complexity of the asset group under consideration. The Asset Manager must therefore determine the appropriate level of detail based upon the broad corporate objectives. In general, the Asset Management Plan will: • Describe the asset (physical, financial), the objective/purpose/function of the asset (or each key component of it) • Define the service levels • Define the intended time frame (lifecycle) of the asset or key components, together with measures, both upward and downward, as to how well the objective is being met. • Provide information asset condition, operating and maintenance costs • Outline how that asset group will be managed in terms of usage, maintenance, renewal and/or disposal. • Define Rolling Works Programs for both Infrastructure Renewals and Maintenance Management for periods of three to five years • Recognise the decline in service potential • State assumptions and confidence levels • Outline an improvement program • Identify key performance measures • Be prepared by someone who ‘knows the business’ • Have the firm commitment of the organisation • Be reviewed regularly AM plans are dynamic documents and therefore must be updated periodically to be effective as a management tool and reference document. The plan should reflect changes in objectives/policies, customer expectations, improvements in AM systems or data in general. The prime guidance used for development of Council’s Asset Management Plans is the International Infrastructure Management Manual (IIMM) developed jointly by the NZ National Asset Management Steering Group and the Institute of Public Works Engineering of Australia. This manual is highly recognised around the world as one of, if not the leading Infrastructure Management Manual for public works authorities such as municipal councils. In Victoria, the MAV, DVC and Auditor General are ‘driving’ the process. The following diagram sets out the preferred structure of asset management plans to conform to International Infrastructure Management Manual. This is the basic format most commonly used within local government in Australia. AM Strategy V4.02 - 160609.doc 25 of 62 Printed: 5/11/2009
  26. 26. City of Banyule Council Asset Management Strategy Diagram: Structure of an Asset Management Plan Rolling Works Programs for both Infrastructure Renewals and Maintenance Management for periods of at least four years are to be produced, to be utilised for financial strategy developed in City Plan. Asset management plans must show how much the Council needs to be spending each year in each asset group. Measures of performance are to be both upward (strategic) and downward (operational). Upward measures indicate how effectively Council is performing at the corporate level in meeting its agreed levels of service within the particular asset group. Downward measures indicate whether the individual Asset Manager is meeting the specific requirements of the Management Plan. 5.5. Key Assumptions for Asset Management AM requirements are specified in a number of documents including Australian Accounting Standards, Design Manuals, various relevant Guidelines, Council’s AM Policy, etc. The following key assumptions provide a summary as guidance for those developing AM Plans and the funding strategies that arise from them: 1. “Lifecycle” approach to determine budget requirements for all infrastructure assets. 2. Regular asset condition assessments undertaken at intervals as outlined in each asset management plan. AM Strategy V4.02 - 160609.doc 26 of 62 Printed: 5/11/2009
  27. 27. City of Banyule Council Asset Management Strategy 3. The assessment of any new asset to be provided must account for risks associated with the type of asset proposed. For instance with footpaths, some aesthetically pleasing designs can be prone to litigation from trips and have high maintenance costs as a consequence even if structurally sound. 4. Life-spans for various assets and groups of assets to be determined from local experience and also by benchmarking with other councils in a similar position (usage patterns, weather and other issues that may impact on the life of the asset). 5. Where detailed information is not available, estimates to be based on best aggregated information from other sources. 6. Service levels to be ascertained at a sustainable practical level and by reference to community requirements, drawing on experiences elsewhere if information is not known locally. 7. Until determined otherwise by Council, it shall be assumed that the function of an infrastructure asset will be maintained in perpetuity. 8. Depreciation is the systematic allocation of the depreciable amount (service potential) of an asset over its useful life. Depreciation is not a measure of required expenditure on assets in any given year. 9. Depreciation can only be used as an average guide of renewal spending required across a network, where there is no better information available to take into account peaks and troughs in renewal needs. 10. For large and complex assets, such as the road network, drainage system, recreation facilities, five-year ongoing programs (asset plans) of rehabilitation/renewal works will be developed from which annual core programs of works will be prepared; 11. Long-term capital works programs are to be reviewed no less frequently than every three years to ensure that they are in line with Council’s overall strategy. 12. Prior to any major refurbishment or rehabilitation of an asset, the following assessment needs to be undertaken: that there still a need for the asset (short and long term) legislative requirements are being met opportunities for rationalisation opportunities for multiple use capacity to generate income ability to improve energy efficiency safety issues to be addressed future liability including ultimate retention/disposal operability and maintainability issues 13. Council’s Long-term Financial Strategy will have as a basis for its formulation the financial requirements of arising from Asset Management Planning. 14. Asset Valuation should reflect a condition based assessment wherever practicable; 15. Where it is proposed to create a new asset, the business case submitted shall include a reasonable assessment of life-cycle impacts (including its eventual decommissioning or disposal) as well as ongoing operational and maintenance costs which will need to be factored into future budgets. AM Strategy V4.02 - 160609.doc 27 of 62 Printed: 5/11/2009
  28. 28. City of Banyule Council Asset Management Strategy 16. The level of renewal funding required will be determined according to asset management plans, taking into account asset age, condition and service level requirements. 17. Depreciation can only be used as an average guide of renewal spending required across a network, where there is no better information available to take into account peaks and troughs in renewal needs. 18. The annual asset renewal budget is to be managed in order to ensure that, as much as is practicable, there is an equitable distribution of projects to meet needs across the organisation. 19. Asset management also includes the physical monitoring of the asset. A physical verification of assets will be undertaken on an agreed timetable. 20. Asset performance is also to be monitored at periodic intervals, to ensure that it is meeting the intended function and/or the service being provided is continuing to be utilised by the community (ie the impact of demographic or other changes have removed the need for the asset or the eservice being provided). 5.6. Budgetary Framework for Asset Management The traditional local government method for determining the annual budget allocations has been to view the budget expenditure items as either recurrent operational costs generally treated as ‘non-discretionary’ or capital expenditures, generally ‘discretionary’. The following table illustrates this: Table 5.6.1 – Traditional Local Government Budget Process Recurrent Funding Capital Funding Refurbishment, Renewal, Upgrade and Maintenance & Operations New Potholes, grading of roads Road pavement widening Footpath repairs K&C/footpath replacement Cost of street lighting Major park reconstruction Parks maintenance Building extension Building maintenance, servicing & New facility utility costs (electricity, cleaning) “Non-Discretionary” “Discretionary” The City of Banyule has recognised the shortcomings of this and has adopted the process in Table 5.6.2 to provide for better ability to fund the management of Council’s infrastructure asset base into the future, which is the basis of strategic financial planning. This process utilises four rather than the traditional two key funding areas. The first two “Non-Discretionary” areas are in recurrent and capital. The capital commitment is to fund the ongoing asset refurbishment and renewal requirements to ensure longevity of council’s assets. AM Strategy V4.02 - 160609.doc 28 of 62 Printed: 5/11/2009
  29. 29. City of Banyule Council Asset Management Strategy Table 5.6.2 – Asset Management Budget Process Consequential Recurrent Recurrent Funding Asset Management Capital Costs Maintenance & Refurbishment and New/Upgrade Upgrade and New Operations Renewal Road reconstruction New assets Potholes, grading of K&C/footpath Road pavement Additional maintenance roads replacement widening load Footpath repairs Oval resurfacing New footpaths Upgrades Cost of street lighting Building renovation (but Major park More or less Parks maintenance reconstruction not upgrade) maintenance Building maintenance, Building extension Building maintenance, servicing & utility costs Also includes renewal ‘Gap’ New facility servicing & utility costs (electricity, cleaning) funding (electricity, cleaning) “Non-Discretionary” “Non-Discretionary” “Discretionary” Capital “Non-Discretionary” Recurrent Capital Recurrent It is essential to show, when council considers its discretionary capital expenditures for new and upgraded assets, is the consequential imposition of recurring operational and maintenance costs that will occur once the new or upgraded asset becomes operational. This consequential additional cost is “non- discretionary” as it will be incurred if the new asset is provided. As new and upgraded projects are brought forward for consideration with the annual budget, they will also have an assessment of the recurrent costs presented to Council as part of the overall project cost projections. Table 5.6.3 outlines total project capital costs and also establishes the consequential maintenance and operations costs. Tables 5.6.4 & 5.6.5 indicate income sources. AM Strategy V4.02 - 160609.doc 29 of 62 Printed: 5/11/2009

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