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Overview Document Transcript

  • 1. Capital Asset Management Framework Overview
  • 2. Introduction The government of British Columbia has To help public agencies find the best made strong commitments to sound fiscal solutions and apply the best capital management, public accountability management practices, the government and, above all, value for taxpayers’ dollars. has developed a Capital Asset Management That means delivering effective public Framework, consisting of three integrated services that meet people’s needs at a cost components: we can afford – a principle that underlies s a Framework Overview (this document), every part of government, including the describing the objectives, principles management of capital assets. and key elements of the framework and setting out (in the Appendix) the Hospitals, schools, highways and other Province’s life-cycle approach to capital assets are essential to the delivery capital management and the steps and of government services, and to economic approval points in the new, streamlined growth. And public-sector agencies have a capital process; key role to play in making sure these assets are acquired and managed in the most cost- s a set of Guidelines, articulating the effective manner possible. province’s minimum standards, as well as policies and processes, for capital Achieving this goal in today’s world of rapid asset management; and technological change, shifting demographics s a range of practical tools - and fast-evolving economic realities calls such as technical guidelines, sample for new ideas and approaches. Ministries, documents, templates and manuals - school districts, health authorities, Crown to be developed and refined over corporations and others leading capital time to support efficient, accountable projects and managing capital assets have capital management. Table of Contents a chance to think “outside the box” and apply fresh solutions to infrastructure This framework sets a new standard for challenges. Traditional procurement – the way the Province plans and manages Introduction 1 where assets are purchased entirely with capital assets. It paves the way for a taxpayers’ money or debt, and operated high-quality infrastructure system that The Framework 2 predominantly by the public sector – isn’t meets people’s needs and delivers on always the most efficient and certainly isn’t government’s commitment to make the Guiding Principles, the only option that should be considered best possible use of every tax dollar. Guidelines & Tools 3 for meeting public needs. Conclusion 6 More information or copies of all framework documents, can be found Appendix at www.fin.gov.bc.ca/tbs The Capital Process 7 [1]
  • 3. The Framework Objectives The key objectives of the Capital Asset Management Framework are: 1. To establish best practices in capital asset management across the public sector. 2. To support ministries, health authorities, school districts, Crown corporations and other public-sector agencies to think creatively and find the most efficient ways to meet British Columbia’s infrastructure needs. Application For example, as a first step in the capital process, agencies are expected to ask: The framework applies to all provincial public-sector agencies (e.g. ministries, s Is there another way to meet our health authorities, school districts, Crown service delivery needs that could corporations), and to the management of avoid new capital spending? all public capital assets, regardless of their s Is there a way to better manage or use dollar value or the way they’re financed. existing assets that could reduce the Specific standards of compliance are set need for additional expenditures? and through Treasury Board decision letters s Is there a way to share the cost and or letters of expectations for individual risk of capital acquisition with, for agencies. example, a private sector partner or The framework is not prescriptive but sets another public sector agency? out basic guidelines and principles, as well These are all viable alternatives to as minimum standards, which agencies are traditional, publicly-financed procurement. encouraged to exceed. Traditional procurement is still an option. However, to ensure they get the best value Challenging Assumptions for taxpayers’ dollars, agencies need to The framework encourages agencies consider as many options as may be to be creative and look beyond traditional feasible. approaches to managing capital assets. Instead of doing “business as usual”, they should explore a full range of options for meeting service delivery needs and make decisions based on what is best, rather than simply following past practices. [2]
  • 4. Objectives: Guiding Principles Guidelines & Tools Each of the framework’s objectives is supported by a set of principles, 1 To establish best practices in capital asset management across the public sector. PRINCIPLE: Sound Fiscal & Risk Management guidelines and tools, to s Spending on capital assets will be managed within fiscal limits. s Capital asset management decisions will be supported by rigorous business case analysis. give agencies clear s Costs and risks (such as legal, environmental, health and safety, construction) will be identified, analyzed and managed throughout an asset’s life-cycle which includes planning, direction and practical acquisition, use, maintenance and disposal or renewal. support in carrying out s Risks will be allocated to those parties best able to manage them at the least cost while serving the public interest. Those parties may be in the public, private or non-profit their capital mandates. sector – or a combination of the three. The following outlines the key principles GUIDELINES & TOOLS: The framework supports consolidated capital planning – wherein all agencies’ capital plans underlying each are “rolled up” into a single, provincial plan. This strengthens the Province’s ability to assess and manage risks across government, allows trade-offs amongst government priorities, and objective and discusses supports the province in managing to a financial “bottom line”. some of the key The framework also offers guidance to agencies for developing rolling, multi-year capital asset management plans, based on their service plans – and reflecting the cost of managing assets through their full life-cycles. Specifically, it: elements of the s identifies key issues that should be addressed in capital management plans, including framework’s guidelines forecasting, inventory information, project ranking, budgeting and cost-control techniques; and tools. s sets minimum standards for analytical due diligence (e.g. for developing business cases) to ensure that agencies plan for all potential costs, risks and benefits throughout an asset’s life-cycle, including such things as maintenance; s provides tools that agencies can use to identify, evaluate, allocate and manage risk systematically and effectively; and s identifies a cross-section of risks specifically related to alternative procurement approaches (such as public-private partnerships) and offers guidance on transferring risk. [3]
  • 5. PRINCIPLE: PRINCIPLE: Strong Accountability in a Flexible and Streamlined Process Emphasis on Service Delivery s Agencies will have freedom and flexibility to carry out their capital mandates s Capital management decisions with minimal intervention from the Province. At the same time, they will be held and practices will be based, first fully accountable for managing capital assets efficiently. and foremost, on meeting service delivery needs (e.g. patient care, s Capital processes will be flexible to: students’ education) rather than s accommodate differences in project complexities and agencies’ on the delivery method experience in planning and management; (e.g. public vs. private-sector s encourage agencies to innovate and consider a full range of options to funding or asset ownership). best meet service delivery needs; and s respond to the many factors that affect service delivery needs, such as demographic shifts, emerging technologies and changes in the provincial GUIDELINES & TOOLS: economy. The framework requires public sector s The Province will use a risk-based approach to oversight. Degrees of rigour in agencies to challenge service delivery approval requirements, monitoring, reporting and other checks and balances will assumptions and explore a full range of increase in proportion to the cost, complexity and level of risk associated with options for effectively and efficiently capital projects or decisions. meeting public needs. To support this kind s Provincial oversight will also reflect the concept of “earned independence” – with of creative thinking, the framework oversight decreasing in proportion to an agency’s ability to demonstrate effective provides a range of tools for identifying, capital management. assessing and implementing alternative service delivery and public-private s All agencies will measure their performance and report results. partnership opportunities. These opportunities could include: s making more efficient use of existing assets to avoid the need for additional GUIDELINES & TOOLS: capital spending; The framework outlines the core capital responsibilities of government agencies and s entering joint-use or joint-venture draws clear lines of accountability between those responsible for service delivery arrangements with partners in the and those responsible for oversight. It also: public, private or non-profit sectors s articulates clear, streamlined budget and approval processes; (for example, sharing services or space s offers guidance in measuring and assessing service and asset performance; with other public or private-sector agencies, thereby reducing the need s explains the concept of risk-based due diligence, where the degree of analysis for capital expansion); and management required increases in proportion to the project’s cost, complexity and risk level; and s applying demand-management techniques to minimize the need for s establishes the concept of risk-based oversight, wherein the rigour of approval, capital expansion; this could include, monitoring and reporting requirements is proportional to a project’s risk, for example, encouraging the use of cost and complexity – and to the agency’s track record. This includes setting alternative dispute resolution in the standards for variance-based reporting, wherein agencies report to the Province justice system; when a project varies from its original, approved plan and are held accountable for managing those variances. s out-sourcing services; or s leveraging government assets (e.g. selling or leasing part of a property to offset the cost of [4] new construction).
  • 6. 2 PRINCIPLE: To support provincial public-sector agencies to think creatively and find the most efficient ways to meet British Columbia’s infrastructure needs. GUIDELINES & TOOLS: The framework does not assume that s criteria that can be used to help identify suitable projects for alternative capital procurement; Value for Money any one sector is inherently more efficient s Value for money will be determined in building and operating public assets. s technical tools and methodologies, through a rigorous examination Instead, it emphasizes that capital such as strategic options analysis of service delivery options and decisions will be based on a practical, and business case analysis, that business case analysis, considering project-specific assessment of a full range agencies can use to examine the factors such as service levels, of options to determine which provides feasibility, cost-effectiveness and costs, promotion of growth and the best value for money while serving efficiency of various capital employment opportunities, and the the public interest. management options; and protection of critical public interests. To support this assessment, the s a discussion of various financing s A key aspect of achieving value for framework provides: options and their implications for money involves agencies demonstrating agencies‘ and the Province’s s an overview of a variety of alternative- the most efficient use of resources to balance sheet. meet or exceed service delivery goals. service delivery, public-private partnership and project-delivery models; s Value for money will be enhanced through strategic use of public and private sector resources. PRINCIPLE: PRINCIPLE: GUIDELINES & TOOLS: The framework outlines standards Protecting the Public Interest Competition and Transparency for competitive, open, transparent s Safeguarding the public interest will s Agencies procuring private procurement of capital-related services. be paramount in determining the best sector services will use fair, Specifically, it: service delivery options. open, competitive processes – s describes the government’s policy consistent with government s Public interest issues such as service approach to capital procurement, procurement policies. effectiveness, health and safety, including objectives and principles; environmental protection, access, s Agencies will disclose the details s details best practices and steps privacy, equity, transparency and of competitive processes and to follow for both traditional security will be rigorously assessed their outcomes, while protecting (public sector) and alternative in making capital decisions. proprietary and commercially capital procurement; and confidential information. s offers criteria and processes for reviewing, assessing and, where GUIDELINES & TOOLS: appropriate, accepting unsolicited The framework offers guidelines and tools proposals from the private sector, to help agencies assess public interest without compromising government’s considerations and emphasizes that an commitment to open and competitive agencies’ primary mandate is to serve processes. the public effectively. [5]
  • 7. Conclusion To ensure the most effective and efficient public services; to realize the best value for taxpayers’ dollars; to achieve a sustainable, balanced provincial budget; and, at the same time, to maintain hospitals, schools, highways and other essential infrastructure, British Columbia must explore new ways of funding and managing capital assets. Recognizing this practical and economic imperative, the government has developed a Capital Asset Management Framework with two key objectives: s to establish best practices in capital asset management across the public sector; and s to support provincial public-sector agencies to think creatively and find the most efficient ways to meet British Columbia’s infrastructure needs. The framework promotes alternative service delivery options, including public-private partnerships, and provides checks and balances to ensure accountability and effective management of risk through all phases of capital projects. It also underlines agencies’ inherent responsibilities to meet public service delivery needs and serve the public interest. Ultimately, the framework will ensure that taxpayers get the maximum value for their capital dollars – both in terms of maintaining modern, affordable infrastructure, and through the effective delivery of services. [6]
  • 8. Appendix: The Capital Process Life-Cycle Orientation The concepts and processes articulated in this framework are presented in Governance relation to four typical stages in the Service Delivery life-cycle of a capital asset. This is Risk Management intended for ease of orientation, to Reporting emphasize the interrelationship of Accounting each phase and to promote a full-life cycle approach to capital management. The four principal phases are: Planning - including the identification of baseline supply and demand information (e.g., inventory information), service delivery options and business case analysis; In addition, a variety of overarching capital management issues relevant Implementation - acquisition, to every phase in the life-cycle (e.g., or design and construction; governance and risk management) are discussed throughout the framework. Operations - asset in use and related service delivery, including performance reporting; and, Capital Asset Management Process Renewal or disposal - end of The chart on the following page outlines an asset’s useful economic life, or the major stages in the capital asset requirement for services is to be management process and identifies renewed or no longer needed. potential approval points based on the complexity, risk and cost of projects or the track-record of an agency. [7]
  • 9. Planning Service Plan Identify Supply & Demand Information (Capital Needs) Strategic Options Analysis Alternative Public-Private Asset Disposal/ Traditional Service Delivery Partnership Leveraging Procurement Business Cases The Capital Process Capital Asset Management Plans (Agencies) Steps and Approvals Consolidated Capital Plan (Finance) Treasury Board Approval REPORTING & MONITORING Implementation APPROVED – APPROVED Alternative Capital Procurement Project Traditional Procurement SOLICIT – eg. Expression of Interest/ Request for Qualifications or Proposals Design Evaluate/Negotiate Tender Contract Award Award/Construct Operations OPERATIONAL – OPERATIONAL Alternative Capital Procurement Traditional Procurement Contract Management On-going Maintenance Monitoring & Reporting Monitoring & Reporting Performance Evaluation & Reporting Performance Evaluation & Reporting Potential Treasury Board Decision Points (Based on project cost, risk and complexity or agency Planning Renewal/ track record). Disposal Potential Open Cabinet Discussion for Major Capital Projects [8]