asset management strategy - preliminary final issue · this document should be read in context with...

Preliminary

Shire of Manjimup Preliminary Asset Management Strategy

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Document Control

Version Date Author Reviewer

0.1

(early draft for Council comment)

11 Jan 2013 Patrick Lavery Kim Swain

0.2 (updated early draft for Council comment)

22 Mar 2013 Patrick Lavery John MacDonald

0.3 (following Council comment)

17 Apr 2013 Patrick Lavery John MacDonald

1.0 11 June 2013 Patrick Lavery John MacDonald

Development of this plan has been supported by the Department of Local Government and funding from the Local

Government Reform Fund, which is administered by the Australian Government’s Department of Regional Australia, Local

Government, Arts and Sport.


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Contents

1 Introduction ................................................................................................................................................ 1

1.1 Purpose of the Asset Management Strategy ......................................................................................... 1

1.2 Overview of Services Provided by the Shire .......................................................................................... 1

1.3 Overview of the Shire’s Roles and Responsibilities ............................................................................... 2

1.4 Overview of Assets Owned by the Shire ............................................................................................... 2

2 Asset Management Framework ................................................................................................................ 4

2.1 Purpose of the Strategic Community Plan ............................................................................................. 5

2.2 Purpose of the Corporate Business Plan ............................................................................................... 5

2.3 Overview of the Asset Management Policy ........................................................................................... 5

2.4 Purpose of the Asset Management Plans ............................................................................................. 6

2.5 Purpose of the Long Term Financial Plan ............................................................................................. 7

2.6 Linkage to the Annual Budget ............................................................................................................... 7

2.7 Linkage to the Annual Report ................................................................................................................ 7

3 Council’s Asset Management Position and Goals .................................................................................. 8

4 Asset Management Governance ............................................................................................................ 10

4.1 Roles and Responsibilities .................................................................................................................. 10

4.2 Human Resourcing, Training and Awareness ..................................................................................... 12

4.3 Monitoring and Reporting .................................................................................................................... 15

4.4 Review ................................................................................................................................................. 15

4.5 Audit .................................................................................................................................................... 16

5 Asset Management Systems and Processes ........................................................................................ 17

5.1 Community Engagement and Levels of Service .................................................................................. 17

5.2 Estimating Demand ............................................................................................................................. 17

5.3 Lifecycle Planning Approach ............................................................................................................... 19

5.4 Asset Management Information Systems ............................................................................................ 21

6 Risk Management .................................................................................................................................... 23

6.1 Risk Management Framework ............................................................................................................. 23

7 Asset management constraints and financial considerations ............................................................ 24

7.1 Financial Sustainability ........................................................................................................................ 24

7.2 Current Funding Programs .................................................................................................................. 25


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7.3 Approach to Funding Gaps .................................................................................................................. 25

7.4 Other Constraints ................................................................................................................................ 25

8 Asset Management Improvement Program ........................................................................................... 27


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1 INTRODUCTION

This document should be read in context with Council’s asset management plans.

In this document, the Shire will be used to mean the geographic local government area, and Council will be

used to describe the body of staff that perform local government functions.

1.1 Purpose of the Asset Management Strategy

The Asset Management Strategy describes how and why the Council of the Shire of Manjimup manages its

assets. This includes:

�� A description of Council’s current level of asset management, and its target level

�� Setting out the framework for asset management – how the various planning, operational, and financial

documents across the Council are linked

�� Setting out the process for continual improvement in asset management practices

�� Setting out roles and responsibilities of staff, and other governance arrangements such that there is

appropriate accountability on the part of the Council as a whole

�� Describing the need for training for staff, and the appropriate number of staff to adequately manage

assets

�� Describing the processes for setting levels of service, managing risks and to planning the delivery,

operation, maintenance, renewal, replacement and disposal of assets

�� Describing the asset management information systems used, and the current quality of the data in them

�� An overview of financial considerations to do with asset management, including Council’s ability to

afford the ongoing provision of its assets

�� The constraints that Council faces in relation to asset management.

An asset management improvement plan is included for the management of all Council owned assets.

1.2 Overview of Services Provided by the Shire

Council provides the following services to its residents and visitors directly related to the assets it owns/leases:

�� Local roads and footpaths, for the purpose of enabling transport throughout the Shire

�� Drainage, to protect human life, protect property, ensure the transport network is operational during

periods of rainfall, while minimising environmental impacts, and utilising stormwater harvesting

�� Parks, gardens and playgrounds, for recreation and remembrance

�� Accommodation, through the buildings it owns/leases, for various Council services, such as Council

offices, the Town Hall, the Volunteer Resource Centre, and also for commercial opportunities


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�� Aquatic recreation, through the Aquatic Centre

�� The collection, disposal and management of solid wastes, through Council’s waste management assets

�� Camping and water supply services at Windy Harbour.

Council also owns land, vehicles, plant and machinery, furniture, information and communications technology,

and an airfield, and provides various services through them.

1.3 Overview of the Shire’s Roles and Responsibilities

In respect to the above services, and the assets that enable them, the Council’s roles and responsibilities are to:

�� Meet any legislative requirements in relation to asset management

�� Deliver services to the highest quality that is economically sustainable given residents’ willingness to

pay and given the Council’s other funding sources

�� Manage assets so that the least lifecycle-cost for their adequate provision is achieved

�� Engage the community in setting levels of service

�� Provide adequately trained and an adequate number of staff to manage the Council’s assets

�� Provide a system of asset management governance that ensures accountability, transparency, and

mechanisms for continuous improvement

�� Ensure that the financial considerations for asset management and service provision are incorporated

into the Council’s financial planning

�� Ensure that a summary of the status of asset management is included in the Council’s annual report

�� Ensure that planning for assets and services across local, state and federal governments is adequately

coordinated.

1.4 Overview of Assets Owned by the Shire Council owns assets with a total replacement cost of around $525 million, and a written down value of $345

million, as of the 2012/13 financial year. The assets can be categorised as shown in Table 1-1. The number of

assets shown is as defined in the fixed/financial asset register kept by Council, which groups certain items such

as roads and drainage.


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Table 1-1 Summary of council-owned assets.

Asset Category No. of Assets

Cost Price Written Down

Value Annual

Depreciation

Land 28 $4,525,050 $4,525,050 $0

Buildings (excluding AquaCentre and Windy Harbour Infrastructure) 141 $37,384,484 $19,435,902 $1,321,412

Mobile Plant and Vehicles 54 $3,484,281 $1,993,153 $504,017

Plant, Machinery and Equipment 597 $7,288,110 $2,724,676 $934,734

Tools 126 $62,879 $616 $13,491

Furniture and Fittings 1447 $1,715,433 $608,620 $338,456

Roads, Footpaths, Cycle Paths and Drainage

17 (including 1304 km of roads) $456,675,625 $306,670,809 $306,209,731*

Airfield 8 $2,163,523 $927,970 $90,936

Miscellaneous Infrastructure 18 $347,325 $319,432 $13,493

Parks and Gardens 123 $5,539,082 $3,325,694 $145,012

Waste Management 20 $376,619 $248,723 $9,415

AquaCentre 5 $5,291,671 $3,955,288 $179,523

Windy Harbour Infrastructure 10 $545,734 $315,447 $21,769

Total 2594 $525,399,817 $345,051,379 $309,781,991^

* It is assumed that this figure is incorrect in the fixed/financial asset register

^ Figure is $2 higher than total of above because of total of cents making dollars. Figure is assumed to be incorrect because

of incorrect road depreciation figure.

Source: All figures and values taken from 2012/13 fixed/financial asset register


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2 ASSET MANAGEMENT FRAMEWORK

Council follows the asset management framework set out in the Department of Local Government’s Asset

Management Framework and Guidelines (May 2011), reproduced in Figure 2-1. The annual budget is assumed

to be part of the ‘Informing Strategies’, interacting with the Long Term Financial Plan.

Figure 2-1 Asset Management Framework


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2.1 Purpose of the Strategic Community Plan

The Strategic Community Plan outlines the broad direction the Shire intends to follow over the medium to long

term, and is informed by community consultation. It identifies services of particular importance to residents, and

outlines strategies the community can follow to achieve its aims. Council has a contributing role in delivering the

strategies, but is not solely responsible for them.

2.2 Purpose of the Corporate Business Plan

The Corporate Business Plan “activates the Strategic Community Plan, integrates other plans for specific

outcomes and sets out the resource strategies”, in the words of the Integrated Planning and Reporting

Framework and Guidelines (October 2010). It includes Council strategies and actions from the Strategic

Community Plan where Council has a role in the Shire strategies, and is also includes strategies and plans from

other sources.

2.3 Overview of the Asset Management Policy

The Asset Management Policy (last revised September 2010) outlines the Shire’s broad asset management

objectives, targets and plans, as well as reporting arrangements and roles and responsibilities. It gives the

directions from the Corporate Business Plan an asset management setting, and is reviewed and maintained by

the Asset Management Working Group. The broad objectives and plans of the Policy are further broken down

and articulated in this Asset Management Strategy.

2.3.1 Asset Management Drivers

The Asset Management Policy describes in broad terms the drivers for asset management in the Shire. Fleshing

these out, they can be defined as follows. More detail is provided in the asset management plans.

Governmental

�� The Western Australian Government’s Local Government Reform Program, of which asset

management is a component, and which is in turn part of the Integrated Planning and Reporting

Framework, a minimum compliance to which is required under the regulation to the Local Government

Act 1995.

�� Some services are mandated under federal or state legislation.

Community

�� Council provides its services for the benefit of residents and visitors. Residents pay Council rates for the

services. It is important, therefore, for the community to have some say in which services are provided

to what standard.

�� The size and the preferences of the community and visitors to the Shire in some cases determine the

amount and type of demand for a service.

Council


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�� Providing services at the least life-cycle cost.

�� The health and safety of its staff and the wider community.

�� Meeting legislative requirements.

�� Coordination with higher level of government planning for asset and service delivery.

�� Fulfilling Council’s environmental duty of care.

2.3.2 Asset Management Objectives

The Asset Management Policy lists the following as asset management objectives.

�� Council’s services and infrastructure are provided reliably, with the appropriate quality levels of service

to residents, visitors and the environment

�� Safeguard Council assets including physical assets and employees by implementing appropriate asset

management strategies, practices, and appropriate financial treatment of those assets

�� Create an environment where all relevant Council employees will form an integral part of overall

management of Council assets

�� Meet legislative compliance for asset management

�� Resources and operational capabilities are identified and responsibility for asset management is

allocated.

2.4 Purpose of the Asset Management Plans

The Asset Management Strategy informs the asset management plans. Each asset management plan describes:

�� Asset-specific drivers

�� Factors affecting demand, and demand forecasting

�� Options for demand management

�� Levels of service and current performance

�� The number, type, value and condition of assets owned

�� Plans for capital works

�� Plans for operations and maintenance

�� The risks involved in managing the category of assets.

In doing so, the following purposes are served:

�� Improved understanding of services and service options

�� Provision of more efficient and better targeted services

�� Risk management


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�� Enhanced resident and visitor satisfaction.

Council keeps six asset management plans. These are the:

�� Roads, Footpaths and Drainage Asset Management Plan

�� Parks and Gardens Asset Management Plan

�� Buildings Asset Management Plan

�� AquaCentre Asset Management Plan

�� Waste Management Asset Management Plan

�� Windy Harbour Infrastructure Asset Management Plan.

This does not exhaust Council’s asset base – there are also ICT, art, plant and machinery and other assets

which are not the subject of asset management plans. It is currently beyond Council’s resource capacity to

introduce formal asset management systems and plans to these other assets.

2.5 Purpose of the Long Term Financial Plan

The Long Term Financial Plan presents the results of financial modelling that includes capital costs and

operations and maintenance costs, and expected sources of revenue. It highlights funding shortfalls, and informs

Council’s annual budgeting.

2.6 Linkage to the Annual Budget

The Annual Budget is linked to the asset management suite of documents through the Long Term Financial Plan.

2.7 Linkage to the Annual Report

A summary of asset management issues and the status of asset conditions and values should be included in

Council’s annual report, so that such information is publically available.


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3 COUNCIL’S ASSET MANAGEMENT POSITION AND GOALS

Council’s current level of asset management is described in Table 3-1, set against targets which Council wishes

to achieve in the future. Generally, Council’s formal asset management is at a relatively basic level. To achieve

its targets will require significant work and at least 3-5 years. Prioritisation is indicated.

Table 3-1 Council’s current and target levels of asset management

Element Current Level Target Level Priority

Management commitment and culture

Moderate. Management is mostly committed to asset management. There is not a long history of formal asset management within Council. More information is required to persuade Councillors of requirement for commitment.

High. Councillors and management at all levels within Council demonstrates leadership in the management of assets.

High

Asset management policy

Basic. Council has an adopted Asset Management Policy which is relatively basic. Not all staff are familiar with its contents.

Moderate. The policy is more comprehensive, up-to-date, and adopted by Councillors. All staff have ready access to it and are familiar with its contents.

Medium

Service standards Basic. Council has service standard measures but generally does not have performance data, so that it cannot yet set targets.

Moderate. Council has a suite of explicit service standards and asset management KPIs and have data on performance which can be linked to expenditure. There is a moderate understanding of the link between service targets and expenditure.

Medium

Asset information and systems

Moderate for roads, footpaths and drainage.

Basic for buildings.

Tacit knowledge only for other assets.

Moderate. An asset register/information system exists containing reliable, up-to-date information. Assets are broken down into sub-assets which are suitable for identification for specific works. GIS is generally not available for assets. Systems and processes in place to record and analyse asset condition and performance.

High

Condition assessment

High for roads, footpaths and drainage, as well as AquaCentre.

Basic for buildings – buildings are given overall condition ratings which are useful for valuations but not as useful for renewals/maintenance.

Not practiced for other assets.

High. Condition assessments undertaken at regular intervals depending on asset criticality. Condition inspections are at a level appropriate to identify specific renewal/maintenance works.

High

Asset valuation High. Valuation complies with relevant regulatory and accounting standards.

High. Valuation complies with relevant regulatory and accounting standards.

Low

Renewals modelling and

Basic for roads, footpaths and drainage.


Basic. Asset condition history is stored to allow in-house analysis and future

Low


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optimisation prediction. Council staff prioritise works using other Council capital works planning processes as well as their expertise.

Maintenance standards

Moderate for roads, footpaths, and drainage.


Moderate. Maintenance standards are in place for all assets. There is a bias towards planned maintenance.

Medium

Maintenance scheduling

Basic. There is no formal maintenance scheduling. Staff decide on maintenance activities informally.

Moderate. A software package schedules maintenance activities to ensure consistency and to allow reporting and analysis.

Medium

Asset management plans

Moderate. Documentation covers most assets and are up-to-date. Documents are first asset management plans made by Council, and are based on limited information.

Moderate. Documentation covers most assets and are up-to-date. Documents become more sophisticated as information is collected.

Low

Documented procedures

Basic. There are little to no documented procedures.

Moderate. Procedures exist for major planning, operations, maintenance and disposal functions.

Medium

Rationalisation of services and assets

Not yet performed. Moderate. The choice of Council’s assets has been made based on legislative needs, Council policies and community preferences, balanced against the financial sustainability of the services. Rationalisation is considered every 5 years.

High

Capital works prioritisation and justification

Basic. Limited financial analysis is carried out before projects are added to the forward capital works program.

Moderate. A rigorous process exists for justifying capital expenditure in a least lifecycle-cost frame, although it is not so rigorous as to be excessively time-consuming.

Medium

Asset management resources/ skills/ training

See Table 4-2 High. Council is adequately staffed for asset management with skills and resources to deliver the asset management objectives.

Consultants used for specialist advice.

Medium

Benchmarking Basic. Limited information available to undertake metric benchmarking.

Moderate. Expenditure on capital works, operations and maintenance, and the condition and performance of assets is monitored and benchmarked against comparable local governments.

Low

Monitoring and reporting

Basic. Reporting for roads is carried out through the ROMAN system and for buildings through the summary of condition assessments.

Basic. Responsible offers compile annual reports on performance against service standard measures and targets.

Medium

Communication with stakeholders

Basic/Moderate. Community consultation carried out as part of development of Strategic Community

Moderate. Annual surveys are made more detailed to ask more specific questions about the provision of services.

Medium


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Plan. Annual surveys are carried out as to customer satisfaction with services.

Demand/load forecasting

Basic. Demand assessed on an as needed basis.

Basic. Demand models exist for most asset types, which inform the rationalisation of assets.

Medium

4 ASSET MANAGEMENT GOVERNANCE

Asset management governance is about ensuring accountability, transparency, capability, and the provision of

reporting and review mechanisms. This serves the ultimate goal of providing services, and that the process for

providing those services is regularly improved.

4.1 Roles and Responsibilities

Table 4-1 outlines the asset management roles and responsibilities within Council.

Table 4-1 Asset management roles and responsibilities

Roles Responsibilities

Elected Representatives

� The elected representatives will be responsible for confirming the long term direction and vision of the organisation, particularly in relation to asset management and approving the asset management policy, asset management strategy and asset management plans.

� Elected representatives will also be responsible for fostering and encouraging the implementation of best practice asset management principles across the whole of organisation.

� Elected representatives approve each annual budget.

Executive Team � The CEO and Directors will have the overall responsibility of improving awareness and knowledge and encouraging the implementation of asset management practices throughout the whole of organisation.

Asset Owners � Managers, coordinators and staff in charge of assets and infrastructure shall be responsible for reviewing and providing inputs into the strategic direction of the management of assets and infrastructure. Responsibilities would include:

- Reviewing and supporting the implementation of asset management plans;

- Reviewing and coordinating with staff on the implementing of asset management improvement strategies and actions;

- Monitoring and reporting on the performance of assets against identified levels of service, service standards and performance indicators;

- Reviewing proposed capital / renewal and replacement works programs and providing recommendation to elected representatives for approval; and

- Coordinating the development of reports to meet corporate reporting requirements.

� Staff with day-to-day responsibility of assets shall be responsible for:

- Developing and maintaining the asset register;


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Roles Responsibilities

- Implementing strategies and actions outlined in the asset management plans;

- Reviewing and updating asset management plans;

- Reviewing and updating the asset risk register;

- Monitoring the performance of assets and identifying corrective works, where required;

- Developing capital / renewal / replacement works programming including budgets;

- Developing and implementing operations and maintenance strategies;

- Reporting on performance of assets to Asset Owners

Council Officers � All Council Officers shall be responsible for ensuring the principles of asset management, as outlined in the Asset Management Policy are adhered to.

4.1.1 Organisational Chart

Figure 4-1 shows Council’s organisational structure that is directly related to management of the assets for which

it has asset management plans. It demonstrates the complexity of asset management within the organisation,

and therefore the need for careful management.

Figure 4-1 Asset Management Organisational Chart

Elected Representatives

Chief Executive Officer

Director Community Services

Recreation Facilities

Libraries

Director Statutory Services

Building

Services

Planning and

Sustainability

Administration and Finance

Director Works & Services

WorksParks and Gardens

Technical Services

Roads & Drainage Asset

Management

Waste Management

Corporate Services

ICT

ART


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4.2 Human Resourcing, Training and Awareness

The current adequacy of current human resources for asset management functions, as estimated by the

Manager Technical Services, is shown in Table 4-2. It indicates if Council staff members perform the function or

if consultants or contractors perform the function. The possible ratings are More Than Adequate, Adequate,

Somewhat Inadequate, and Severely Inadequate. For Council staff, this indicates if the sufficiency of the number

and skills of the staff is adequate; for consultants/contractors, it indicates if there is sufficient budget for their

services.

In general, staff/consultant levels are Somewhat Inadequate/Adequate. More specifically, Buildings, the Timber

and Heritage Park, and Windy Harbour assets have substantial human resource inadequacies, as do the

functions of condition assessment, capital works design and planning, and capital works delivery.


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Table 4-2 Current staff adequacy for asset management functions across asset classes

Function Roads, footpaths, and drainage

Parks and Gardens

Buildings Aquatic Centre Waste Management

Windy Harbour

Timber and Heritage Park (Heritage asset)

Asset management planning – demand forecasting, levels of service setting, data presentation and analysis, life cycle asset planning, action plan development

[consultant]

Adequate

[consultant]

Somewhat inadequate

[consultant]

Severely Inadequate

[consultant]

Adequate

[Council staff]

Adequate

[consultant]

Somewhat Inadequate

[consultant]

Somewhat Inadequate

Some work undertaken under SuperTowns – as a standard works are reliant on volunteers or grants.

Asset management reporting and reviewing

[Council staff]

Adequate

[Council staff]

Adequate

[Council staff]

Somewhat Inadequate

[Council staff]

Adequate

[Council staff]

Somewhat Adequate

[Council staff]

Somewhat inadequate

[Council staff]

Somewhat Inadequate

Operations [Council staff]

Adequate

[Council staff]

Adequate

[Council staff]

Somewhat Inadequate

[Council staff]

Adequate

[Council staff]

Adequate

[consultant]

Adequate

[Council staff]

Somewhat Inadequate

Maintenance [Council staff]

Adequate

[Council staff]

Adequate

[Council staff]

Somewhat Inadequate

[Council staff]

Adequate

[Council staff]

Somewhat Inadequate

[Council staff]

Adequate

[Council staff]

Somewhat Inadequate

Condition assessment [consultant]

Somewhat Inadequate

[consultant]

Somewhat Inadequate

[consultant]

Somewhat Inadequate

[consultant]

Somewhat Inadequate

[Council staff]

Somewhat Inadequate

[consultant]

Somewhat Inadequate

[Council staff]

Somewhat Inadequate Buildings assessed but limited assessment of exhibits

and heritage items – undertaken by volunteers

Data management [Council staff]

Somewhat Inadequate

[Council staff]

Adequate

[Council staff]

Adequate

[Council staff]

Somewhat Inadequate

[Council staff]

Adequate

[Council staff]

Adequate

[Council staff]

Somewhat Inadequate Heritage data maintenance management - reliant on

volunteers.


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Function Roads, footpaths, and drainage

Parks and Gardens

Buildings Aquatic Centre Waste Management

Windy Harbour

Timber and Heritage Park (Heritage asset)

Capital works design and scheduling (new, upgrades, replacements, renewals)

[consultant/Council staff]

Somewhat Inadequate/ Adequate

[consultant/Council staff]

Somewhat Inadequate/Adeq

uate

[consultant]

Severely Inadequate

[consultant]

Somewhat Inadequate

[Council staff]

Adequate

[consultant]

Adequate

[Council staff]

Some works being undertaken under the SuperTowns project – as a standard

Somewhat Inadequate

Capital works delivery [contractor]/Council Staff

Somewhat Inadequate/Adeq

uate

[contractor]

Somewhat Inadequate

[contractor]

Somewhat Inadequate

[contractor]

Somewhat Inadequate

[contractor]

Adequate

[contractor]

Adequate on a per project

basis

[Council staff]

Adequate when funds and resources are allocated.

Subcontractor management [Council staff]

Adequate

[Council staff]

Adequate

[Council staff]

Adequate

[Council staff]

Adequate

[Council staff]

Adequate

[Council staff]

Adequate

[Council staff]

Adequate

Asset financial planning [Council staff]

Adequate

[Council staff]

Adequate

[Council staff]

Somewhat Inadequate

[Council staff]

Severely Inadequate

[Council staff]

Adequate

[Council staff]

Adequate

[Council staff]

Somewhat Inadequate

Limited financial resources to implement general asset management and upgrades to a standard of museums

preservation and conservation standards.

Community engagement [Council staff]

Adequate

[Council staff]

Adequate

[Council staff]

Adequate

[Council staff]

Adequate

[Council staff]

Adequate

[Council staff]

Adequate

[Council staff]

Adequate


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Targets and the current status of training and awareness in asset management for Council staff are listed in

Table 4-3. These are in addition to existing role qualifications and training.

Table 4-3 Current and targeted levels of training and awareness

Role/Position Target level of training/awareness Current level of training/awareness

Councillors Awareness of Asset Management Policy

Somewhat Inadequate

General staff Awareness of Asset Management Policy

Somewhat Inadequate

Asset Management Officer, Manager Technical Services, Manager Planning and Sustainability

Training in PAS 55 or similar standard

IPWEA ‘Asset Management for Small, Rural or Remote Communities’ or similar

IPWEA ‘Infrastructure Financial Management’ or similar

Somewhat Inadequate

Somewhat Inadequate

Somewhat Inadequate

Manager Administration and Finance IPWEA ‘Infrastructure Financial Management’ or similar

Somewhat Inadequate

4.3 Monitoring and Reporting

4.3.1 Asset sustainability indicators

Under the Local Government Act, Council must report on the following asset sustainability indicators. These are

calculated for each asset category. Definitions and targets are shown in Table 4-4.

Table 4-4 Asset sustainability indicators

Ratio Definition Measurement Target

Asset Consumption Ratio

Measure of the condition of assets against the capital outlay required to maintain the asset to its service potential

Depreciated Replacement Cost (WDV) : Current Replacement Cost

50-75%

Asset Sustainability Ratio

Measure of whether Council is renewing or replacing existing non-financial assets at the same rate that the assets are depreciating

Capital Expenditure on Replacement / Renewal Works: Depreciation Expense

90-110%

Asset Renewal Funding Ratio

Measure of the ability of Council to fund its projected asset renewals and replacements in the future

NPV of Planned Capital Expenditure on Renewals: NPV Renewal Expenditure (over 10 years)

95-100%

4.4 Review

The Asset Management Strategy and asset management plans are reviewed annually by the Asset Management

Working Group When reviewing these documents, consideration must be given to all aspects covered, including

current performance against levels of service, the adequacy of human resources, the adequacy of asset

information systems, and the quality of their data.


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The Asset Management Policy is reviewed every four years by the Asset Management Working Group.

4.5 Audit

There is limited provision for internal audit of asset management. External audit is conducted as required by

regulation.


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5 ASSET MANAGEMENT SYSTEMS AND PROCESSES

5.1 Community Engagement and Levels of Service

As part of setting out the broad strategies for the Shire in the Strategic Community Plan, workshops were held

with the community. Council has a contributing role in some of strategies, and where Council has a role and

these strategies are related to asset management, they have been incorporated into the asset management

plans. A breakdown of responsibilities between Federal, State and local governments can be found in the

Strategic Community Plan.

Direct community input into levels of service is based around customer satisfaction surveys. Council does not

currently have data sufficient to present cost implications of different levels of service, however. The

accumulation of such data is a long-term goal for Council.

Levels of service are currently set by Council’s asset management staff using their knowledge and experience,

and also using external consultancy when required. Council has service standards with respect to each of the

asset categories for which it has asset management plans.

5.2 Estimating Demand

5.2.1 Factors affecting demand

Each asset class has a different set of drivers of demand. The range of drivers includes the levels of service set

(which includes meeting legislative standards), the resident population and their demographics, tourist numbers,

and the amount of impermeable area and predicted rainfall (for drainage), amongst others. Population is one

driver common to many assets, and is therefore presented in this strategy rather than being repeated in each

asset management plan.

5.2.2 Population projections and demographics

The Shire of Manjimup has experienced a fluctuating population over the last 50 years. In 1961, the population

was 10,195 people; in 1976 it was 8,402; by 2001 it had climbed to 10,309, but in the last decade has declined

slightly. A trend towards an older demographic has been experienced. Table 5-1 shows the population data from

the Australian Bureau of Statistics for the period 2001-2011, and the accompanying annual growth rates. The

average of those growth rates is -0.21%.

Given the history of a fluctuating population, rather than any steady trend, some caution must be adopted when

projecting future population levels. The long term trend (1961 to 2011) is of a negligible negative growth rate (-

0.007%), but there have been periods of both significant growth and significant decline. As it is better to be

somewhat conservative in allowing for infrastructure, a steady 0.20% growth rate has been adopted for

projecting the future population for infrastructure purposes. Given the SuperTown growth plan may result in

significant population growth, this should be regularly reviewed.


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The resultant population projections are shown in Figure 5-1, and summarised in Table 5-2. The projections

suggest that the need for additional infrastructure because of population increases will be limited. Regular

reviews will allow asset management planning to adjust accordingly.

Table 5-1 ABS population data for Manjimup between 2001 and 2011

Year Population Annual growth rate

2001 10,309 N/A

2002 10,238 -0.69%

2003 10,091 -1.46%

2004 9,997 -0.94%

2005 9,932 -0.65%

2006 9,798 -1.37%

2007 9,875 0.78%

2008 10,022 1.47%

2009 10,159 1.35%

2010 10,159 0.00%

2011 10,098 -0.60%

Average annual growth rate -0.21%

Table 5-2 Projected population for Shire of Manjimup - summary

Year Population Annual growth rate

2013 10,138 0.2%

2018 10,240 0.2%

2023 10,343 0.2%

2028 10,447 0.2%

2033 10,552 0.2%


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Figure 5-1 Projected population for Shire of Manjimup

5.3 Lifecycle Planning Approach

Council’s goal is to provide assets that meet service levels at the lowest lifecycle cost. This does not necessary

imply the cheapest installation cost; operation, maintenance and disposal costs must also be incorporated, and

may radically alter the choice of infrastructure. Consideration must also be given to availability of parts, materials

and resources, the simplicity and standardisation of operations, environmental issues, and health and safety

issues, and may be given to appearance.

The general process is as shown in Figure 5-2.

Figure 5-2 Asset lifecycle process

8000

8500

9000

9500

10000

10500

11000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

Historical (ABS) Projected

Step 1

• Need for asset(s) is determined. Demand is rigorously analysed according to procedure. Non asset solutions for the service are considered. The timing of the project is also considered.

Step 2

•Options to deliver the asset(s) are considered, bearing in mind levels of service. A decision matrix is used to incorporate lifecycle cost analysis. Projects that do not satisfy health and safety or environmental standards are not to progress.

Step 3• Detailed design is undertaken of the selected option, and the project is delivered. Asset information is tranferred to the asset register. Operation and maintenance commences.

Step 4• Renewal or disposal.


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5.3.1 Asset Creation, Renewal and Replacement Works

Generally, Council staff identify the need for and plan future works, only using consultants for particularly

specialised works. A procedure for asset lifecycle planning must be developed to guide Shire staff and

consultants when considering asset installations.

A suggestive decision matrix for lifecycle cost analysis is presented as Table 5-3 for new, renewal and

replacement works.

Table 5-3 Suggestive lifecycle planning decision matrix

Criterion Weighting Option A Option B Option C

Fitness to purpose [/10] 2.0

Relative lifecycle cost score [/10] 3.5

Ease and standardisation of operation [/10] 1.5

Availability of parts/materials/resources [/10] 1.5

Environmental performance [/10] 1.0

Appearance [/10] 0.5

Weighted score [/100]

The relative cost score referenced in Table 5-3 would be derived (in a method to be determined) from the yearly

asset cost calculated for each option as set out in Table 5-4.

Table 5-4 Yearly asset cost

Option A Option B Option C

A. Expected lifetime

B. Expected acquisition and installation cost

C. Expected yearly operation cost

D. Expected yearly maintenance cost

E. Expected disposal cost

F. Lifetime cost [=B+AC+AD+E]

G. Yearly asset cost [=F/A]

5.3.2 Operation and Maintenance

Council has maintenance standards for:

�� Roads, footpaths and drainage


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�� Parks and gardens

�� Public toilets

Council intends to develop standards for the following asset categories:

�� AquaCentre assets

�� Windy Harbour assets

�� Waste Management assets

There are no operations procedures at present.

5.3.3 Asset Disposal

Assets will be disposed of when the redundancy or non-compliance of the asset has been demonstrated through

a procedure to be developed.

5.4 Asset Management Information Systems

The current status of asset management information systems for the various asset classes is as shown in Table

5-5.

Table 5-5 Asset management information systems

System Applicable asset classes Functions, and information contained

Level of adequacy

Excel Land; Buildings; Vehicles, Plant and Tools; Furniture and Fittings; ‘Infrastructure’; Windy Harbour Infrastructure; Aquatic Centre.

Excel is used for basic asset registers.

Replacement cost value, annual depreciation, useful life, acquisition date, remaining useful life, asset number and description are held.

For buildings, condition ratings are also included.

Somewhat inadequate.

It would be advantageous to break some assets down into component assets.

Desirable information to include would be: dimensions (where appropriate), condition information (for those assets not currently having them), material (where appropriate), defects, and maintenance history.

GIS Roads, footpaths, cycle paths and drainage

GIS is used to graphically display asset locations.

Asset locations are held.

Somewhat inadequate.

ROMAN Roads, footpaths and drainage ROMAN is used as an asset register, a survey data retrieval system, and a maintenance and renewal programming system.

Adequate


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Asset number, useful life, age, condition, materials, dimensions, defects, valuations, survey data, and renewals programs are held.

The quality of the data held for each of the asset categories is shown in Table 5-6.

Table 5-6 Asset data adequacy

Asset category Data held Data adequacy

Roads, Footpaths and Drainage Asset number, useful life, age, condition, materials, dimensions, defects, valuations, survey data, and renewals programs. Location data held in GIS.

Data is updated regularly.

Data meets needs.

Data is ‘clean’ and accurate.

Parks and Gardens Replacement cost value, annual depreciation, useful life, acquisition date, remaining useful life, asset number and description. Location data not held in GIS.

Data is updated infrequently.

Data does not meet needs fully.


Buildings Replacement cost value, annual depreciation, useful life, acquisition date, remaining useful life, asset number and description. Location data not held in GIS.




Aquatic Centre Replacement cost value, annual depreciation, useful life, acquisition date, remaining useful life, asset number and description. Location data not held in GIS.




Waste Management Assets Replacement cost value, annual depreciation, useful life, acquisition date, remaining useful life, asset number and description. Location data not held in GIS.




Windy Harbour Infrastructure Replacement cost value, annual depreciation, useful life, acquisition date, remaining useful life, asset number and description. Location data not held in GIS.




Other assets (IT, artwork, plant and machinery, furniture etc)

Replacement cost value, annual depreciation, useful life, acquisition date, remaining useful life, asset number and description. Location data not held in GIS.





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6 RISK MANAGEMENT

6.1 Risk Management Framework

Effective infrastructure risk management involves the assessment of risks associated with all facets of service

delivery, from asset planning through to operations and maintenance. The process involves the identification of

risks and hazards associated with the asset, an assessment of consequences and impacts on elements such as

public health and safety, service delivery, and costs, and identification of mitigation measures to reduce the risk

exposure to an acceptable level.

Council adopted a Risk Management Policy in April 2012. It follows ISO 31000: Risk Management, setting up a

likelihood/consequence method of rating risks.

Council’s Risk Management Framework and Risk Register details how risks are managed and what the present

risks and risk actions are.


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7 ASSET MANAGEMENT CONSTRAINTS AND FINANCIAL CONSIDERATIONS

7.1 Financial Sustainability

A comparison of the value of Council-owned assets to roughly comparable local governments in Western Australia and South Australia is presented in Table 7-1. Information has

been taken from the annual financial statements of each local government from the 2011-12 financial year. It is important to note that what is presented is the written down value

of assets – one local government area might have significantly older assets, resulting in a lower written down value. The data must therefore be used as only an indication.

Replacement values would be a better guide but are not publically available.

The following are the most pertinent observations:

�� The total value of Council’s assets is the highest amongst all the local governments presented by a considerable margin. This suggests that Council’s valuation

methodology may be different to that of most other Councils. It should be reviewed.

�� In terms of asset value per resident population, Council’s is second highest, with only the Shire Nannup higher. Per capita, Council owns around 3.5 times the value of

assets compared to the average of the other councils (the Shire of Nannup being around 6.6 times higher)

�� Council’s income per head of population is higher than average

�� Despite Council’s higher than average income, Council’s income:asset value ratio is the second lowest of the local governments presented, with only the Shire of

Nannup being lower. Council’s income:asset ratio is less than half the average of the other local governments.

These observations suggest that, if the current valuation is accurate, Council’s asset base is highly financially unsustainable at the present rate of income. While there is not a

recommended income:asset ratio, it is commonly accepted that local governments generally do not have the financial resources to sustain their asset bases; Council’s ratio is the

second worst amongst those listed, suggesting that Council’s problem in providing its assets and services in the long term is particularly severe. A rationalisation of assets and/or

payment for services is highly likely to be necessary and should be conducted in the near term, after a review of the current valuation.


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Table 7-1 Asset-related financial and demographic information for a range of local governments

7.2 Current Funding Programs

Further analysis of current funding is to be provided in the final issue of this Strategy.

7.3 Approach to Funding Gaps

Further discussion of the approach to addressing any funding gaps is to be provided in the final issue of this Strategy.

7.4 Other Constraints

Apart from financial constraints for financing asset maintenance and renewals, Council also faces the following constraints:

Local government Population Area (km2)

Pop. density

(ppl/km2) Annual Income

Written down

non-current

assets value

Asset intensity

per capita

($/pp)

Income:

assets ratio

Income per

capita

Shire of Nannup 1,347 2934.6 0.46 3,806,976$ 91,048,363$ 67,593$ 4.2% 2,826$

Shire of Broomehill-Tambellup 1,270 2609.1 0.49 4,254,681$ 32,983,189$ 25,971$ 12.9% 3,350$

City of Albany 36,551 4312.3 8.48 46,746,563$ 260,448,376$ 7,126$ 17.9% 1,279$

Shire of Collie 9,470 1710.9 5.54 23,413,977$ 94,956,428$ 10,027$ 24.7% 2,472$

Shire of Dardanup 13,125 526.1 24.95 12,772,301$ 65,589,017$ 4,997$ 19.5% 973$

Shire of Augusta-Margaret River 12,509 2123 5.89 26,833,021$ 189,753,582$ 15,169$ 14.1% 2,145$

Shire of Plantagenet 5,071 4877.2 1.04 9,565,895$ 64,589,317$ 12,737$ 14.8% 1,886$

Shire of Northam 11,258 1432.3 7.86 17,214,241$ 63,135,309$ 5,608$ 27.3% 1,529$

Mid Murray Council (SA) 8,511 7957 1.07 29,148,000$ 135,979,000$ 15,977$ 21.4% 3,425$

Wattle Range Council (SA) 12,554 3923.5 3.20 20,260,000$ 148,509,000$ 11,830$ 13.6% 1,614$

Average of above 11,167 3240.6 3.45 19,401,566$ 114,699,158$ 10,272$ 16.9% 1,737$

Shire of Manjimup 9,773 7028 1.39 26,979,258$ 345,377,337$ 35,340$ 7.8% 2,761$


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�� A relatively small number of staff to carry out asset management functions

�� A limited budget for engaging consultants to assist in asset management functions

�� A lack of historical asset performance and condition data.


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8 ASSET MANAGEMENT IMPROVEMENT PROGRAM

As described in Table 3-1, Council’s current level of formal asset management is relatively basic, and there are

improvements to be made in most areas.

Council’s strategy for improving asset management to bring it up to a more established level of asset

management is the following:

1. Review the current valuation. If required, revise the current valuation. Update long term financial plan,

asset management strategy and plans accordingly. The valuation affects the perceived asset

management status and has a bearing on many asset management recommendations.

2. Improve asset awareness. Conduct condition assessments for all assets which have not yet been

condition assessed, and select and implement an asset information system for assets other than roads,

footpaths and drainage (this may be as simple as Excel).

3. Measure current performance and set performance targets. Performance against service level

measures described in the asset management plans should be recorded in the 2013-14 financial year

so that realistic performance targets can be set.

4. Conduct a rationalisation/divestment review of Council assets. It appears from the present

valuation of assets that Council’s asset base is at an unsustainable level, and a rationalisation and/or

divestment of assets may be required.

5. Improve supporting asset management documentation and increase training. Maintenance

procedures, an asset disposal policy, and an asset planning procedure should be developed. Asset

management staff should receive training as outlined in Table 4-3.

6. Review asset management level and update improvement program.

A prioritised improvement program to deliver this strategy is set out in Table 8-1.


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Table 8-1 Asset management practices improvement program

Priority Improvement area Action Timing Responsible organisational

area

1 Asset valuation Commission review of current asset valuation. If review indicates valuation should be revised, commission revision of valuation, and then update asset management plans and strategy accordingly

2013-14

2 Asset awareness Condition inspect waste management assets

2013-14

2 Asset awareness Condition inspect Windy Harbour assets 2013-14

2 Asset awareness Condition inspect parks and gardens assets

2013-14

2 Asset awareness Select and develop an engineering asset management information system to store information on Windy Harbour, buildings, waste management, parks and gardens, and AquaCentre assets

2014-15

3 Asset performance Institute mechanisms for recording performance against levels of service

2013-14

3 Asset performance Record progress against levels of service annually

2013-14

4 Demand/load forecasting Develop demand models for priority assets 2013-14

4 Asset rationalisation/divestment

Review possibility of divestment of assets to private owners or to establish public-private partnerships, or to dispose of assets

2014-15

5 Maintenance Develop maintenance programs for waste management, Windy Harbour, buildings and AquaCentre assets

2013-14

5 Capital works planning Institute a least lifecycle cost capital works planning process and procedure

2013-14

5 Asset management planning

Review asset ratios and replacement profiles using data from condition inspections

2013-14

5 Staff training Relevant staff to receive training as described in Table 4-3

2013-14