Disclosing Your Assets Integrated TCA/AM Approaches Henry de Jager Karyn Smithard-Costanzo June 11, 2007
<ul><li>Agenda </li></ul><ul><li>Pure PSAB TCA Requirements </li></ul><ul><li>Why Integrated TCA/AM? </li></ul><ul><li>Pro...
Pure PSAB TCA Requirements <ul><li>As a  minimum  PSAB requirements include: </li></ul><ul><li>By 2010 (in time for 2009 f...
Why Integrated TCA/AM? <ul><ul><li>Timing of Asset Management Projects and PSAB requirements </li></ul></ul><ul><ul><ul><l...
The Holistic Approach  Asset Depreciation and Financing Asset Degradation and Rehabilitation Asset Management Asset Life C...
Reasons for the Move to Tangible Capital Asset Reporting <ul><li>Quantifying the Infrastructure Gap </li></ul><ul><li>Plan...
What is Asset Management Best Practice? <ul><li>Creating an Asset Management Plan </li></ul><ul><li>Institutionalizing the...
TCA/AM Project Phasing Phase One  – Assess Current State/Research Phase Two  – Planning/Framework Development Phase Three ...
Phase One  –Steps to Implementation Inventory Valuation Depreciation Manage <ul><li>Classification, segmentation, aggregat...
<ul><li>Systems </li></ul><ul><li>What systems are currently used? Any possible consolidations? </li></ul><ul><ul><li>What...
Valuation Systems Are the current systems capable of maintaining the replacement and historical costs?  Processes, Policie...
Depreciate Systems Can the current systems meet the Region’s policies with respect to depreciating assets? Will all assets...
Manage Systems Which systems will be used to support the management policies and processes? What are the system implicatio...
Phase One Overview  <ul><li>Achievements: </li></ul><ul><li>Gained understanding of asset information available for Integr...
Phase Two – Planning/Framework Development <ul><li>Planning Principles </li></ul><ul><ul><li>Sustainable </li></ul></ul><u...
Five Elements of Integrated TCA/AM Practices Processes Data and Records Information Systems Organization and People
Integrated TCA/AM Practices Basic Stand-alone operational  planning Asset inventory available for large assets  Ad hoc per...
Integrated TCA/AM Management Processes Basic Performance targets set and measured for major assets Ad hoc evaluations occu...
Integrated TCA/AM Data and Records Basic Disjointed data standards Data capture  mix of manual & automated One-off spread ...
Integrated TCA/AM Information Systems Basic Legacy, early stage systems Intermediate Silo systems –  some  integration Vis...
Integrated TCA/AM Organization and People Basic Some work units implementing AM principles for  major assets Silo approach...
Integrated TCA/AM (The Holy Grail)   <ul><li>Basic </li></ul><ul><li>Rudimentary  </li></ul><ul><li>degradation models  </...
Phase Two Outcome – Halton’s Vision for Integrated TCA/AM <ul><li>Halton Region’s infrastructure supports sustainable, pro...
Achievement – AFM Framework - Definitions  <ul><li>“ Infrastructure ” - Tangible capital assets that are composed of linea...
Achievement - AFM Policies – Definitions  <ul><li>“ Capital Betterment”  costs improve or  extend  the future economic ben...
Achievement - AFM Framework - Policies - Thresholds Asset Class Threshold Land $0 (capitalize all) Land Improvements $10k ...
Phase Two Accomplishments  <ul><li>Surveyed 15 other Canadian municipalities to understand their TCA project approach and ...
Phase Three Implementation Priorities <ul><li>2007 : </li></ul><ul><ul><li>Development of a plan for each program (includi...
Phase Three & Four Implementation Priorities  <ul><li>2008 : </li></ul><ul><ul><li>Complete AFM PSAB data collection (Q1) ...
Phase Three – Next Steps <ul><li>Identify the Team Leaders for each program </li></ul><ul><li>Hire consultants/contract st...
Phase Three Next Steps – Determine Level of Detail for AFM What We Know What We Need to Confirm Financial Classification f...
Resources <ul><li>Identify the Team Leaders for each program </li></ul><ul><li>Hire consultants/contract staff </li></ul><...
TCA Overall Org Chart
AFM Org Chart
 
 
TCA SAP Solution Architecture
Critical Success Factors <ul><li>1. Clear definition of scope, multi-year vision and priorities </li></ul><ul><li>2. Stake...
Critical Success Factors <ul><li>Establish Executive Sponsorship </li></ul><ul><li>Define the Vision – Integrate with Plan...
Critical Success Factors <ul><li>The more asset components a municipality decides to track, the more complex and costly it...
Critical Success Factors <ul><li>Form Interdisciplinary Teams </li></ul><ul><li>Integrate Projects – Focused on the Vision...
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Disclosing Your Assets: Integrated TCA/AM Approaches

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  • Presentation Purpose Why are we here today? Understanding of the TCA project/PSAB requirements Update work completed/next steps/resource requirements What we need to proceed: Review key outcomes &amp; provide support Review 2007-2009 AM/AFM implementation priorities &amp; provide support Provide access &amp; commitment to necessary resources WE NEED RESOURCES &amp; WE NEED MGMT COMMITTEE/PROGRAM AREAS TO NAME NAMES. (Can we give a deadline for providing the names?) If we don’t do a good job of this &amp; get a qualified audit opinion it will affect our AAA credit rating.
  • Identifying Infrastructure Gap – While the condition of certain types of infrastructure (e.g. roads) is visible and apparent, the condition of other types of infrastructure (e.g. underground, underwater or overhead systems) is not so evident. Not knowing the condition of infrastructure means facing significant financial and other risks. Planning - Information about the stock, use, and condition of infrastructure contributes to managements’, Council’s (and the public’s) understanding of the cost to provide current services and provides a basis for estimating maintenance &amp; replacement costs and required taxation rates over the long term. Stewardship - Historically, public debates about fixed asset investment have focused on assets’ up-front costs &amp; have ignored whether they are subsequently managed in a way that ensures they realize their full useful life. Program Costing – There are many advantages of recognizing the cost of using infrastructure: The differences between the full cost of providing the service and the amount charged for using the service would be disclosed publicly. Comparisons over time and with other service providers would be possible Improvement in performance may result, as managers and rate payers will have information about costs compared to the level of fees paid. Reporting costs can assist management in: Understanding costs Choosing among various service delivery choices Assisting in cost reduction initiatives Establishing charges and fees Serving as a basis for transfer payments and subsidies Establishing budgets and analyzing variances Benchmarking activities and assessing performance While including capital assets in financial statements will not necessarily completely fill this information gap, it will provide the underlying information, records and discipline that allows this information to be provided.
  • Phase One –included identifying the assets that each business at Halton currently has, identifying the information currently available about the assets &amp; assessing the completeness &amp; integrity of the information. We researched how other governments have approached the implementation of TCA accounting, and worked with our OMBI partners to develop a fairly consistent approach. Phase Two – Plan the project &amp; develop frameworks for AM &amp; AFM. Phase Three – Implementation of AFM However, what we are putting in place will continually be improved over time.
  • Thresholds Used to determine what can be charged to capital. Will have implications on our financial statements and budget We will consider our auditors’ materiality levels Will have an impact on the amount of time required to maintain the system. We will consider what other Canadian and U.S. municipalities are doing. We want to ensure our financial information remains comparable with other OMBI municipalities. Level of Detail/Pooling: The component approach allows for far better controls, management, stewardship and forecasting replacement of assets, but the more asset components a municipality decides to track, the more complex and costly it will be to manage the capital asset system. Decisions about whether to use the pooling or the component approach will have significant implications later on regarding the costing of subsequent maintenance/improvements of those assets and whether those costs are expensed or capitalized. Decisions about whether to use the pooling or the component approach will have significant implications on depreciation.
  • Historical cost is defined as the cost a municipality paid at the time an asset was originally purchased or built PSAB requires that historical be used for financial reporting However PSAB also supports the disclosure of replacement costs and depreciation based on current values for information purposes (replacement costs) Does the Region want to report on both historical and replacement costs? Nothing precludes management from using estimated replacement costs for the purposes of rate setting and future revenue requirements for asset replacement planning OMBI has determined that historical cost is the preferred method of valuing capital assets. Historical cost provides the most reliable (and auditable) value of an asset
  • What will our depreciation methods and useful lives be? What about exceptions? Will we use the same depreciation method for accounting and for replacement? Considerations: Does the asset deteriorate based on volumes produced? Does the asset deteriorate based on the number of hours in service? Does the asset deteriorate based on the number of years in service? At a constant or increasing rate each year?
  • Ongoing Financial Reporting Considerations (AFM) How regularly will the Region review asset master files to ensure accurate and relevant? How frequently will reconciliations be undertaken to general ledger? How often will independent data be obtained to support asset acquisition, asset disposal, and amortization? Ongoing Asset Management Considerations (AM) How frequently will asset maintenance schedules be updated? How often will a reconciliation of asset maintenance schedules to actual asset maintenance activities and history be undertaken? How will the Region determine asset condition and how will it be monitored over time (initially and ongoing)? How will the Region assess an asset’s remaining useful life?
  • During Phase One we delivered comprehensive surveys of each business to determine the asset information already available that could be applied to AFM. We also assessed the degree &amp; sophistication of AM in each business. We developed a high level understanding of the systems currently being used to manage our assets. We took a look at what other governments such as those in the U.S., Australia, and the Canadian provinces did.
  • Key management staff were educated by our consultants on AM best practices &amp; impacts of PSAB requirements Help Halton’s management teams understand where they are with AM relative to international best practices Forms the basis for developing plans for 2007-2009 AM &amp; AFM work Forms the basis for developing corporate policies &amp; standards for AM &amp; AFM Sustainable We will develop and maintain infrastructure assets to be environmentally and economically sustainable in support of our communities. Strategic We will take an integrated and fiscally responsible approach to managing and implementing our infrastructure systems in support of the goals, values and priorities of our Council and other orders of government. Balanced We will optimize new and existing infrastructure, balancing renewal, upgrading and expansion with regard for asset life cycle requirements. Community Focused We will involve our customers, business partners and stakeholders in evaluating level of service options. Informed We will develop and maintain accessible asset and financial information to help us make knowledgeable decisions at all levels of our organization.
  • Based on international best practices, our consultants identified five key performance areas for TCA/AM: practices, processes, data &amp; records, systems &amp; technology, organization &amp; people. They then clearly articulated what AM best practices were within each of these KPA’s
  • Maturity Stages Reactive Repair. firefighting and emergency repairs Demand Maintenance. a more planned approach to maintenance . Preventive Maintenance. predefined preventive maintenance plans Predictive Maintenance. use breakdown histories for just-in-time maintenance. Reliability Centered Maintenance optimize maintenance within overall system risk assessment . Life Cycle Management. asset lifecycle cost approach, with integrated costs and criticality .
  • Capital projects undergo examination and development of business case: Triple bottom line Life cycle cost impact “ do nothing” scenario As a result, both capital and O &amp; M costs are declining over time They have identified KPIs, Service Level Indicators, Criticality and Risk
  • It is important to realize that software is only a tool, and the data are more valuable than the software. Importance of data standards Hierarchy of data (primary, secondary, tertiary) Criticality should dictate the condition assessment program It is important to realize that software is only a tool, and the data are more valuable than the software. Importance of data standards Hierarchy of data (primary, secondary, tertiary) Criticality should dictate the condition assessment program
  • On line, real time information (24-hours) accessible to all levels of the organization Benefits – Move innovations to improve performance Better understanding of cost/performance Able to tell the story to policy makers &amp; citizens
  • 1. Development of AFM policies: Developed 90% of Halton’s AFM policies (based on policies adopted by other governments) Developed Halton’s thresholds Identified mandatory asset attributes required for AFM
  • Based on work with OMBI pilots and financial categorization utilized by other governments, developed a proposed asset categorization for financial reporting
  • Importance of AFM Level of Detail The level of detail used in the asset accounting register has impacts on: Depreciation (i.e. different $ when use high level vs. component view) Capital betterments Asset accounting database size/resources required to maintain Time required to inventory &amp; value pre 2009 assets Chargebacks Time required to set up capital project or P.O. for subsequent replacement Ability to automatically transfer information from work orders OMBI and other performance or statistical reporting Ability to report consistently on assets across all businesses Therefore, this has to be a joint decision between Budgets, Operations &amp; Finance
  • Disclosing Your Assets: Integrated TCA/AM Approaches

    1. 1. Disclosing Your Assets Integrated TCA/AM Approaches Henry de Jager Karyn Smithard-Costanzo June 11, 2007
    2. 2. <ul><li>Agenda </li></ul><ul><li>Pure PSAB TCA Requirements </li></ul><ul><li>Why Integrated TCA/AM? </li></ul><ul><li>Project Phasing </li></ul><ul><li>Critical Success Factors </li></ul><ul><li>SAP Presentation </li></ul><ul><li>Questions </li></ul>
    3. 3. Pure PSAB TCA Requirements <ul><li>As a minimum PSAB requirements include: </li></ul><ul><li>By 2010 (in time for 2009 financial statement preparation): </li></ul><ul><ul><li>Establish policies & thresholds for TCA’s </li></ul></ul><ul><ul><li>Compile inventory of all tangible capital assets that meet definitions/thresholds including: </li></ul></ul><ul><ul><ul><li>Historic cost </li></ul></ul></ul><ul><ul><ul><li>Acquisition/in service date </li></ul></ul></ul><ul><ul><ul><li>Useful life </li></ul></ul></ul><ul><ul><ul><li>Residual value </li></ul></ul></ul><ul><ul><li>Amortize assets </li></ul></ul><ul><ul><li>Categorize assets </li></ul></ul><ul><ul><li>Calculate annual additions, disposals, amortization for each asset category </li></ul></ul><ul><ul><li>Calculate value of Assets Under Construction (Work-in-Progress) </li></ul></ul><ul><ul><li>Modify financial statements to present Tangible Capital Assets (along with other required PSAB changes) </li></ul></ul><ul><ul><li>Present budgeted information in the financial statements calculated on a consistent basis as actuals </li></ul></ul>
    4. 4. Why Integrated TCA/AM? <ul><ul><li>Timing of Asset Management Projects and PSAB requirements </li></ul></ul><ul><ul><ul><li>Enhancements to existing AM systems for fleet and Plants </li></ul></ul></ul><ul><ul><ul><li>New AM requests for Long Term Care, Social Housing, and Facilities Management </li></ul></ul></ul><ul><ul><li>Create common vision for Integrated TCA/AM across the corporation </li></ul></ul><ul><ul><li>Meet PSAB requirements </li></ul></ul><ul><ul><li>Create an implementation strategy 2007-2012 </li></ul></ul><ul><ul><li>Define what the operating fund, capital fund, reserve fund, balance sheet statements will look like </li></ul></ul><ul><ul><li>Define what the operating and capital budgets will look like </li></ul></ul><ul><ul><li>Create consistent definitions, policies and terminology for Asset Management and Asset Financial Management </li></ul></ul><ul><ul><li>Ensure consistent accounting treatment of asset-related expenditures </li></ul></ul><ul><ul><li>Improve understanding of asset accounting processes by all stakeholders </li></ul></ul><ul><ul><li>Provide a consistent framework for making decisions </li></ul></ul><ul><ul><li>Create a ‘ first step ’ to building a corporate asset management program </li></ul></ul><ul><ul><li>Effectively implement and enhance systems to support Integrated TCA/AM </li></ul></ul>
    5. 5. The Holistic Approach Asset Depreciation and Financing Asset Degradation and Rehabilitation Asset Management Asset Life Cycle Focused Capacity & Operations Asset Financial Management Financial Sustainability, Balanced Budgets, Expenditures Leveling, Cost of Service Asset Data Status & Condition Asset Plans
    6. 6. Reasons for the Move to Tangible Capital Asset Reporting <ul><li>Quantifying the Infrastructure Gap </li></ul><ul><li>Planning </li></ul><ul><li>Stewardship </li></ul><ul><li>Accountability </li></ul><ul><li>Program Costing </li></ul>
    7. 7. What is Asset Management Best Practice? <ul><li>Creating an Asset Management Plan </li></ul><ul><li>Institutionalizing the associated practices and processes </li></ul><ul><li>Continual data and records collection and management </li></ul><ul><li>Investment in tools and technology to support the practice </li></ul><ul><li>Annual planning </li></ul><ul><li>Performance reporting </li></ul><ul><li>Ongoing communication and training </li></ul>
    8. 8. TCA/AM Project Phasing Phase One – Assess Current State/Research Phase Two – Planning/Framework Development Phase Three – Implementation of Integrated TCA/AM ----------------------------------------------------- Phase Four – Continuous Improvement
    9. 9. Phase One –Steps to Implementation Inventory Valuation Depreciation Manage <ul><li>Classification, segmentation, aggregation </li></ul><ul><li>Estimated useful life </li></ul><ul><li>Materiality </li></ul><ul><li>Historical cost </li></ul><ul><li>Replacement cost </li></ul><ul><li>Appraisals </li></ul><ul><li>Units of output/service </li></ul><ul><li>Declining balance, Straight line, Residual value </li></ul><ul><li>Additions, Disposals, Write downs </li></ul><ul><li>Budgets, Reporting </li></ul>Standard Hierarchy, AM Framework, Policies/Standards, degree of integration, system requirement & project impacts
    10. 10. <ul><li>Systems </li></ul><ul><li>What systems are currently used? Any possible consolidations? </li></ul><ul><ul><li>What new projects are currently underway that will track AM inventories? </li></ul></ul><ul><ul><li>How will the information be used to provide financial management information, to meet accounting requirements, to tie into budgets? </li></ul></ul>Processes, Policies, Practices Thresholds/Materiality Classification, segmentation, aggregation Data/Information What data is currently available? How will the gaps be addressed? How to inventory network assets? What level of detail should be tracked? What process changes will be required to the information we receive from contractors? How will coding of capital POs an invoices change? How will data be structure during transition? Organization Who in the organization will be responsible for inventorying assets? (Centralized, decentralized?) Inventory
    11. 11. Valuation Systems Are the current systems capable of maintaining the replacement and historical costs? Processes, Policies, Practices Historical, replacement, appraisals Defining capital costs Data/Information What valuation approach should be used when historical cost information is unavailable? Organization Will this be managed centrally or within each department? Who will maintain replacement values – Operations or Finance?
    12. 12. Depreciate Systems Can the current systems meet the Region’s policies with respect to depreciating assets? Will all assets be depreciated by SAP or will we allow other systems to calculate depreciation and pass it back to SAP? Processes, Policies, Practices Declining balance Straight line Others Data/Information Is there sufficient detail on usage patterns to determine the most appropriate depreciation methodology? Organization Depending on the level of complexity desired as part of the vision, are there sufficient staff resources to manage the depreciation methodology?
    13. 13. Manage Systems Which systems will be used to support the management policies and processes? What are the system implications of the policy decisions and what upgrades will be required? Processes, Policies, Practices Financial Reporting, Budgets, Risk Management, Rate Calculations, Cash Planning, Performance Reporting Additions, Disposals, Write-downs Data/Information For insurance purposes, how will risk management be notified of new assets, asset dispositions or changes in asset valuations? Organization Is there capacity to undertake periodic inspection programs to complete condition assessments?
    14. 14. Phase One Overview <ul><li>Achievements: </li></ul><ul><li>Gained understanding of asset information available for Integrated TCA/AM </li></ul><ul><li>Assessed current state of AM in each business </li></ul><ul><li>Identified AM systems currently used </li></ul><ul><li>Researched other governments’ approaches to TCA implementation </li></ul><ul><li>Assisted OMBI pilots/development of OMBI Guide V2 </li></ul><ul><li>Outcomes: </li></ul><ul><li>Established basis for developing corporate policies & standards for AM & AFM </li></ul><ul><li>Established basis for determining level of detail to use in the asset accounting register for each business </li></ul>
    15. 15. Phase Two – Planning/Framework Development <ul><li>Planning Principles </li></ul><ul><ul><li>Sustainable </li></ul></ul><ul><ul><li>Strategic </li></ul></ul><ul><ul><li>Balanced </li></ul></ul><ul><ul><li>Community Focused </li></ul></ul><ul><ul><li>Informed </li></ul></ul>
    16. 16. Five Elements of Integrated TCA/AM Practices Processes Data and Records Information Systems Organization and People
    17. 17. Integrated TCA/AM Practices Basic Stand-alone operational planning Asset inventory available for large assets Ad hoc performance management Decisions not consistently driven by asset information Intermediate Multi-year operational and financial planning Asset inventory complete Predictive maintenance of major assets Asset information supports operational decisions Visionary Comprehensive integrated long- range planning Management practices and decisions aligned with plans Sophisticated consultation with customers Service level scenario modeling across asset classes Advanced Asset plans completed for all asset classes Service levels are defined and managed Performance is evaluated Strategic decisions supported by asset information Customer input is solicited
    18. 18. Integrated TCA/AM Management Processes Basic Performance targets set and measured for major assets Ad hoc evaluations occur Capital project planning focused on growth Intermediate Performance targets set for all assets Operations manuals are developed Templates and standard designs developed Asset information considered in some decisions Visionary Real-time performance management Business case prioritization Sophisticated risk Modeling Sustainable Infrastructure Management Planning Advanced KPI’s defined & compared to targets Life cycle optimization Criticality and risk analysis Capital & operation planning considers options Asset information integrated into decisions
    19. 19. Integrated TCA/AM Data and Records Basic Disjointed data standards Data capture mix of manual & automated One-off spread sheets Decisions based on expert knowledge Intermediate Localized data base using application of emerging data standards Asset info. is electronic and transactions captured automatically Visionary Data confidence measurement and reporting Asset reports updated automatically Asset data fully accessible to staff Select data accessible to customers Advanced Data warehouse of aggregated transactions - normalized data and standards Ability to benchmark Less reliance on experts Knowledge repository
    20. 20. Integrated TCA/AM Information Systems Basic Legacy, early stage systems Intermediate Silo systems – some integration Visionary Integrated asset systems Common foundation Management & assessment tools Information accessible & secure Advanced Applications integrated Documented IT strategy & data architecture Asset & financial systems integrated
    21. 21. Integrated TCA/AM Organization and People Basic Some work units implementing AM principles for major assets Silo approach Intermediate AM vision is defined Executive support AM process is developed Roles and responsibilities are established Visionary Organization is designed to optimize AM AM highly Integrated Collaboration across departments and functions AM information & processes inform decisions at all levels Advanced Asset owners Identified Asset teams are functioning AM process is standardized Staff at all levels are trained Communication is dynamic
    22. 22. Integrated TCA/AM (The Holy Grail) <ul><li>Basic </li></ul><ul><li>Rudimentary </li></ul><ul><li>degradation models </li></ul><ul><li>from manufacturer/ </li></ul><ul><li>expert </li></ul><ul><li>experience </li></ul><ul><li>Large assets only </li></ul><ul><li>Deterioration/ </li></ul><ul><li>condition </li></ul><ul><li>based on age </li></ul><ul><li>Simulation based on </li></ul><ul><li>large asset group </li></ul><ul><li>(i.e., pavement) </li></ul><ul><li>asset focus </li></ul><ul><li>no system modeling </li></ul><ul><li>List of projects </li></ul>Intermediate Age based condition decisions Statistical correlation 25-100 year financial model for individual utilities/system Triple Bottom Line considerations Project prioritization <ul><li>Visionary </li></ul><ul><li>Sustainable </li></ul><ul><li>Infrastructure </li></ul><ul><li>Management </li></ul><ul><li>Planning (SIMP) </li></ul><ul><li>Fundamentally </li></ul><ul><li>rethinking: </li></ul><ul><li>Service delivery </li></ul><ul><li>Ownership </li></ul><ul><li>Prioritization </li></ul><ul><li>Funding </li></ul><ul><li>Management of </li></ul><ul><li>assets </li></ul>Advanced Models: adaptive Asset renewals based on experience & simulations Mature life cycle management Modeling of network inter- connectedness Variable correlations
    23. 23. Phase Two Outcome – Halton’s Vision for Integrated TCA/AM <ul><li>Halton Region’s infrastructure supports sustainable, prosperous communities by providing environmentally sound services that meet community expectations within an integrated, transparent and accountable framework. </li></ul>
    24. 24. Achievement – AFM Framework - Definitions <ul><li>“ Infrastructure ” - Tangible capital assets that are composed of linear assets and their associated specific components, generally constructed or arranged in a continuous and connected network. Includes: Transportation, Water/Wastewater/Storm Water Linear & Treatment Plants </li></ul>
    25. 25. Achievement - AFM Policies – Definitions <ul><li>“ Capital Betterment” costs improve or extend the future economic benefits of the assets in excess of that originally assessed. Service potential is enhanced if one of the following occurs: </li></ul><ul><ul><li>There is an increase of 10% or more in the previously assessed physical output or service capacity; </li></ul></ul><ul><ul><li>Associated operating costs are lowered by at least 10%; </li></ul></ul><ul><ul><li>The original useful life is extended by at least 10%; or </li></ul></ul><ul><ul><li>The quality of output is improved </li></ul></ul>
    26. 26. Achievement - AFM Framework - Policies - Thresholds Asset Class Threshold Land $0 (capitalize all) Land Improvements $10k Buildings & Building Improvements $10k Leasehold Improvements $10k Machinery & Equipment $5k Vehicles $5k Linear Assets $50k
    27. 27. Phase Two Accomplishments <ul><li>Surveyed 15 other Canadian municipalities to understand their TCA project approach and status </li></ul><ul><li>Participated in OMBI Reporting Guidelines </li></ul><ul><li>Continue to participate in OMBI Reporting Subcommittee </li></ul><ul><li>Chairing working group meetings with our local municipalities </li></ul><ul><li>Determined high level roadmap for a SAP AFM solution </li></ul><ul><li>SAP consultant reviewed our current SAP structure, gained an understanding of our objectives for TCA and educated key Halton financial and I&IT staff on SAP modules available to support AFM </li></ul><ul><li>SAP consultant provided high level solution structure/work plan for a SAP with recommendations for integration with AM systems, capital project mgmt systems, and corporate AM/AFM reporting tool </li></ul><ul><li>Reviewed AM/AFM data requirements (based on best practices). Can be used to structure integrated AM/AFM reporting tool (SAP BW) </li></ul>
    28. 28. Phase Three Implementation Priorities <ul><li>2007 : </li></ul><ul><ul><li>Development of a plan for each program (including level of detail, operational needs, criticality) </li></ul></ul><ul><ul><li>Begin AFM PSAB data collection (to be completed Q1 2008) </li></ul></ul><ul><ul><li>Development of common asset repository software solution structure </li></ul></ul><ul><ul><li>Begin Integrated TCA/AM education </li></ul></ul><ul><ul><li>Confirm AFM asset definitions/thresholds </li></ul></ul><ul><ul><li>Align AM strategies </li></ul></ul><ul><ul><li>Begin determination of financial impacts of PSAB </li></ul></ul><ul><ul><li>Development/implementation of Governance structure </li></ul></ul>
    29. 29. Phase Three & Four Implementation Priorities <ul><li>2008 : </li></ul><ul><ul><li>Complete AFM PSAB data collection (Q1) </li></ul></ul><ul><ul><li>Complete determination of financial impacts of PSAB on budgets, rates, tax levies </li></ul></ul><ul><ul><li>Develop a long range financial plan by business area </li></ul></ul><ul><ul><li>Complete implementation of basic systems for each business </li></ul></ul><ul><ul><li>Define service levels, KPI’s, risk </li></ul></ul><ul><li>2009 : </li></ul><ul><ul><li>Revise the long range financial plan </li></ul></ul><ul><ul><li>Continue to develop AM plans for businesses </li></ul></ul>
    30. 30. Phase Three – Next Steps <ul><li>Identify the Team Leaders for each program </li></ul><ul><li>Hire consultants/contract staff </li></ul><ul><li>Educate teams </li></ul><ul><li>Determine Level of Detail to use in Accounting Register (2009 & ideal state) </li></ul><ul><li>Identify resources to inventory/value assets </li></ul><ul><li>Inventory/value assets </li></ul><ul><li>Depreciate assets </li></ul><ul><li>Assess financial impacts </li></ul><ul><li>Implement SAP/RIVA AFM solution </li></ul><ul><ul><li>Basic </li></ul></ul><ul><ul><li>Automated </li></ul></ul>
    31. 31. Phase Three Next Steps – Determine Level of Detail for AFM What We Know What We Need to Confirm Financial Classification for Financial Statement Note Level of Detail for Asset Accounting Register General Cap. – Buildings <ul><li>Structural Elements </li></ul><ul><ul><li>Foundation </li></ul></ul><ul><ul><li>Interior structural walls </li></ul></ul><ul><ul><li>Exterior doors & windows </li></ul></ul><ul><ul><ul><li>Windows </li></ul></ul></ul><ul><ul><ul><li>Curtain walls </li></ul></ul></ul><ul><ul><ul><li>Etc. </li></ul></ul></ul><ul><ul><li>Roofing </li></ul></ul><ul><ul><ul><li>Roof coverings </li></ul></ul></ul><ul><ul><ul><li>Skylights </li></ul></ul></ul><ul><li>HVAC System </li></ul><ul><li>Plumbing </li></ul><ul><li>Fire Protection </li></ul>
    32. 32. Resources <ul><li>Identify the Team Leaders for each program </li></ul><ul><li>Hire consultants/contract staff </li></ul><ul><li>Educate teams </li></ul><ul><li>Determine Level of Detail to use in Accounting Register (2009 & ideal state) </li></ul><ul><li>Identify resources to inventory/value assets </li></ul><ul><li>Inventory/value assets </li></ul><ul><li>Depreciate assets </li></ul><ul><li>Assess financial impacts </li></ul><ul><li>Implement SAP/RIVA AFM solution </li></ul><ul><ul><li>Basic </li></ul></ul><ul><ul><li>Automated </li></ul></ul>
    33. 33. TCA Overall Org Chart
    34. 34. AFM Org Chart
    35. 37. TCA SAP Solution Architecture
    36. 38. Critical Success Factors <ul><li>1. Clear definition of scope, multi-year vision and priorities </li></ul><ul><li>2. Stakeholders buy-in </li></ul><ul><ul><ul><li>CAO & Senior Management support </li></ul></ul></ul><ul><ul><ul><li>Departmental management support </li></ul></ul></ul><ul><li>3. Resource commitments </li></ul><ul><ul><ul><li>Access to the right resources as required </li></ul></ul></ul><ul><ul><ul><li>Central coordination/prioritization of resources (IT & departmental) </li></ul></ul></ul><ul><li>4. Effective inter-project Communication </li></ul><ul><li>5. Funding </li></ul>
    37. 39. Critical Success Factors <ul><li>Establish Executive Sponsorship </li></ul><ul><li>Define the Vision – Integrate with Plans </li></ul><ul><li>“ Do Something!” – Create Culture of Learning </li></ul><ul><li>Nurture Champion(s) </li></ul><ul><li>Dedicate Resources </li></ul>
    38. 40. Critical Success Factors <ul><li>The more asset components a municipality decides to track, the more complex and costly it will be to manage </li></ul><ul><li>However a single asset approach provides no control over the stock and no information about asset cost, location and capital attributes </li></ul><ul><li>The level of precision required for financial statement purposes may be significantly different from the level of precision required to manage operations, user rate setting and asset management purposes </li></ul>
    39. 41. Critical Success Factors <ul><li>Form Interdisciplinary Teams </li></ul><ul><li>Integrate Projects – Focused on the Vision </li></ul><ul><li>Define & Meet Stakeholder Needs </li></ul><ul><li>Provide Timely Information </li></ul><ul><li>Link Data to Decisions to Strategy </li></ul><ul><li>Communicate, Communicate, Communicate </li></ul>

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