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  1. 1. ASSET MANAGEMENT Federation of Canadian Municipalities Gerry Davis, CMA Director of Capital Planning & Implementation Public Works Department City of Hamilton February 3, 2006
  2. 2. The City of Hamilton
  3. 3. <ul><li>7 Municipalities Amalgamated (2001) </li></ul><ul><li>Population 500,000 </li></ul><ul><li>6100 Lane Kms / 14,000 Segments </li></ul><ul><li>2100 Kms WM’s / 32,000 Segments </li></ul><ul><li>2500 Kms SM’s / 40,000 Segments </li></ul><ul><li>700 Facilities </li></ul><ul><li>5520 Acres of Parkland / 430 Outdoor Facilities </li></ul><ul><li>Fleet/Transit </li></ul><ul><li>Waste </li></ul>The City of Hamilton
  4. 4. Program Capital Budget ROAD / FACILITIES Program Capital Budget WATER / SEWER Applications, Databases MANAGEMENT SYSTEMS Prepare Capital Budget FINANCIAL SYSTEMS Project Manager - Surface Infrastructure Project Manager - Subsurface Infrastructure Project Manager - Infrastructure Management Systems Senior Project Manager - Infrastructure Programming Asset Management Project Analysts Manager Asset Management The Asset Management Team
  5. 5. The Role of Asset Management <ul><ul><li>We Do Not Operate, Maintain or Construct Anything </li></ul></ul><ul><ul><li>We Develop and Program Capital Projects </li></ul></ul><ul><ul><li>We Co-Ordinate Surface and Sub-Surface Needs </li></ul></ul><ul><ul><li>We Supply Life Cycle and Financial Analysis </li></ul></ul><ul><ul><li>We Try to Get the Most Asset for the Least Money </li></ul></ul>
  6. 6. Framework <ul><li>What do you have? </li></ul><ul><li>What is it worth? </li></ul><ul><li>What condition is it in? </li></ul><ul><li>What do we need to do to it? </li></ul><ul><li>When do we need to do it? </li></ul><ul><li>How much money do we need? </li></ul><ul><li>How do we achieve sustainability? </li></ul>
  7. 7. Sustainable Asset Management What do we have? What is it worth? What Condition is it in? What do we need to do to it? When do we need to do it? How much money do we need? How do we achieve sustainability? Levy Rates Roads/Bridges Waste Parks Forestry Facilities Central Fleet Transit Fleet Water Wastewater Storm
  8. 8. R.O.W – Integration & Coordination <ul><ul><li>High level of interaction between infrastructure networks </li></ul></ul><ul><ul><li>Coordination of rehabilitation/replacement activities </li></ul></ul><ul><ul><li>Strategically Optimize spending </li></ul></ul>Trench
  9. 9. Integration of Road, Sewer & Water Condition Ratings <ul><ul><li>A truly integrated approach will encompass all infrastructure types along with their associated risks, funding mechanisms and regulatory requirements. </li></ul></ul><ul><ul><li>Since the lifecycles for different asset types are dissimilar - individual asset groups will be faced with pressures at varying times in the Municipalities (decades) </li></ul></ul><ul><ul><li>True Co-Ordination = Integration of individual infrastructure condition ratings into a single right-of-way segment rating </li></ul></ul><ul><ul><li>Street right-of-way model concept developed with automated links assigned through GIS </li></ul></ul>
  10. 10. Life Cycle Analysis
  11. 11. GIS Used To Integrate Data <ul><ul><li>Street Centreline Graphic was Starting Point </li></ul></ul><ul><ul><li>Created ROW Tables for Each Asset Type </li></ul></ul><ul><ul><li>Created Data Model With Resultant Tables </li></ul></ul>
  12. 12. Socio - Economic Factors <ul><ul><li>Criteria Assessment alone is not enough </li></ul></ul><ul><ul><li>Budget Constraints Control Decision Process </li></ul></ul><ul><ul><li>Hospitals, Schools, Have Higher Priority </li></ul></ul><ul><ul><li>Land Use Data Evaluated and Added to Model </li></ul></ul><ul><ul><li>Socio-Economic Impact added to Project Decision </li></ul></ul>
  13. 13. Integrated Decision Support System Capital Priority List <ul><li>Co-ordination of Works </li></ul><ul><li>Integrated condition rating </li></ul><ul><li>Decision Making </li></ul><ul><ul><li>Performance </li></ul></ul><ul><ul><li>Enhancement </li></ul></ul><ul><ul><li>Rehab & Replace </li></ul></ul>Prioritized Sewer Program Forecasting Model - Lifecycle Analysis $$ Funding Levels External Factors Optimized Capital Works Program Prioritized Water Program Prioritized Road Program Prioritized Bridge Program
  14. 14. <ul><li>STATE OF THE INFRASTRUCTURE REPORT </li></ul><ul><li>– PHASE 1 </li></ul>
  15. 15. Process <ul><li>Began in early 2005 </li></ul><ul><li>Public Works Department Assets </li></ul><ul><li>Divisional Input </li></ul><ul><li>Department Management Team </li></ul><ul><li>Corporate Management Team </li></ul><ul><li>2006 – 2015 Capital Budget - Council </li></ul>
  16. 16. Objective of the Report <ul><li>it is a financial plan </li></ul><ul><li>long-term & strategic </li></ul><ul><li>service based </li></ul><ul><li>life-cycle based </li></ul><ul><li>the basis of a communication tool </li></ul><ul><li>easily updatable </li></ul><ul><li>not a budget </li></ul><ul><li>not short-term/tactical </li></ul><ul><li>not project specific </li></ul>What it is What it is not It identifies trends and issues. Not solutions
  17. 17. Asset Groups Reviewed <ul><li>Water </li></ul><ul><li>Wastewater </li></ul><ul><li>Storm </li></ul><ul><li>Roads / Bridges </li></ul><ul><li>Waste Management </li></ul><ul><li>Parks and Open Space </li></ul><ul><li>Facilities </li></ul><ul><li>Transit </li></ul><ul><li>Fleet </li></ul>
  18. 18. Asset Rating <ul><li>Infraguide Best Practices </li></ul><ul><li>Asset Management Manual (NZ / AUS) </li></ul><ul><li>Based upon ASCE State of the Infrastructure Reports </li></ul><ul><ul><li>Condition & Performance </li></ul></ul><ul><ul><li>Capacity vs. Need </li></ul></ul><ul><ul><li>Funding vs. Need </li></ul></ul><ul><li>Assigns a letter Grade A thru’ F </li></ul>
  19. 19. Other Notable Points <ul><li>Investment requirements were derived by adding allowances for: </li></ul><ul><ul><li>Growth (0.5% per annum) </li></ul></ul><ul><ul><li>Engineering (15%) </li></ul></ul><ul><ul><li>Contingencies (10%) </li></ul></ul><ul><ul><li>Overhead & Admin (10%) </li></ul></ul><ul><ul><li>Cost Allocations ($10 million over water, sanitary & roads) </li></ul></ul><ul><li>Cost of borrowing - 50% of the total annual capital expenditure. </li></ul><ul><li>Operating investments - 2.5% of the total replacement value or current operating budget. </li></ul><ul><li>All values are calculated in current dollars (2005). </li></ul>
  20. 20. Impact on Rate & Levy * excludes SWMMP initiatives n/a (13) 21 8 5 - 15 Fleet 2% (8) 90 82 15 - 50 Transit 2% (8) 62 54 25 - 50 Facilities & Open Spaces 2% (10) 37 27* 25 - 50 Waste Management 8% (41) 164 123 25 - 40 Roads Levy Programs 19% (19) 42 23 80 - 100 Storm (4%) 4 104 108 100 Sanitary 12% (12) 117 105 75 - 100 Water Rate Programs Impact Deficit ($M) Sustainable Budget ($M) 2005 Budget ($M) Life Cycle Projections (years) Programs
  21. 21. A SSET G ROUP R ATING 2005 C OMMENTS T REND 2020 Water B Wastewater B Water and wastewater are moving towards sustainable funding. Therefore, the assets are being maintained at an appropriate level of service. However in both asset categories there are significant increases in asset replacement/rehabilitation required over the next 20 years as a result of the aging of the underground inventory. Roads D A significant backlog exists in the road infrastructure and the assets continue to deteriorate. This backlog needs to be addressed to avoid a further slide in asset condition. Storm water C A long-range plan is currently being prepared for stormwater management. An asset management plan needs to be completed and its costs assessed in terms of impact on the water and sewer revenues, since this function was transferred to the rate program with little (if any) additional funding. Waste Management B - Many new facilities are being built and new programs being implemented over the next few years. Other facilities are older and will require attention. The challenge will be to immediately implement sustainable management practices in all areas, including funding for future replacement. Facilities C Many facilities are at the end of their useful lives, and the funding for maintenance and replacement is not at a sustainable level. This will have a negative impact on service levels if not addressed in the short term. Transit B Currently sustainable, but subject to the vagaries of senior levels of government for funding. System expansion will be a significant challenge in the future. Fleet C Cost recoverable operation as a result of a chargeback system for fleet services. Significant replacement backlog exists, which negatively impact operating costs.
  23. 23. Asset Management Planning Process <ul><li>Not Project based, but Service based </li></ul><ul><li>Not fixed-term, but Life-Cycle based </li></ul>1 to 3 Years Detailed Operating and Capital Budget OPERATIONAL PLANNING TACTICAL PLANNING 3 to 20 Years Budget Forecast STRATEGIC PLANNING Sustainable Asset Management Life Cycle 25 – 100
  24. 24. Total Value = $68,800 Asset Replacement Value (per 50’ frontage) Fleet - $775 Roads - $23,400 Solid Waste - $690 Public Buildings - $4,600 Water - $13,500 Sanitary & Combined - $13,600 Storm - $6,250 Parks & Open Spaces – $1,600 Transit – $950 Fleet $600 Roads $23,700 Solid Waste $1,700 Public Buildings $4,600 Water $13,300 Sanitary & Combined $13,600 Storm $8,500 Parks & Open Space $1,600 Transi t $1,200
  25. 25. Household Daily Cost 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 Transit (*excluding user fees) Newspaper Milk Bread Coffee Cable TV Internet Cell phone Gas (One Car Only) Electricity Water Wastewater Storm Roads Waste Mgt Facilities Fleet Sustainable Daily Cost per Household Current Daily Cost per Household
  26. 26. Major Recommendations <ul><li>Review other assets in detail </li></ul><ul><li>Identify optimal O & M expenditure </li></ul><ul><li>Review O & M activities on a Business Case basis </li></ul><ul><li>Review ROI of rehabilitation alternatives </li></ul><ul><li>Review Capital debt financing </li></ul><ul><li>Additional funding identified to include staff, O & M and Capital </li></ul><ul><li>Develop and implement a plan to ensure community engagement </li></ul><ul><li>Develop plan to reach Sustainability </li></ul>
  27. 27. <ul><ul><li>Continue to Adapt Our Processes and Programs </li></ul></ul><ul><ul><li>Develop Risk Assessment Data Models </li></ul></ul><ul><ul><li>Implement an Integrated Decision Support System </li></ul></ul><ul><ul><li>Integrated CIP – Return on Investment (GFOA) </li></ul></ul><ul><ul><li>State of the Infrastructure Report (Phase II) </li></ul></ul>Future Directions
  29. 30. Gerry Davis, CMA Director of Capital Planning and Implementation Public Works Department [email_address] 905.546.2424 x4621 fax 905.546.4435