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Weddin Shire Council Asset Management Strategy – 2017 i

Weddin Shire Council

ASSET MANAGEMENT

STRATEGY

Version 8.0

May 2017

Adopted 15 June 2017

Weddin Shire Council Asset Management Strategy – 2017 ii

Document Control

Document Control NAMS.PLUS Asset Managementwww.ipwea.org.au/namsplus

Document ID: weddin_shire_council_am_strategy_v5.0

Rev No Date Revision Details Author Reviewer Approver

1.0 7/12/2011 Version 1 – Draft for Comment CL, JR, JH JR JR

2.0 14/12/2012 Version 2 – Draft Updated Figures in line with

changes to NAMS templates

CL, JR, JH JR JR

3.0 21/06/2012 Version 3 – Adopted by Council MN Council

4.0 12/5/2013 Version 4 – 2013 First draft for comment SV (JRA) MN (WSC)

5.0 14/5/2013 Version 5 – 2013 Final draft for approval SV (JRA) MN (WSC) Council

6.0 15/05/2014 Version 6 – Building AMP figures updated MN

7.0 19/05/2015 Version 7 – AMPs reviewed MN

8.0 Version 8 - Reviewed MN

NAMS.PLUS & NAMS lite Asset Management

The Institute of Public Works Engineering Australia.

www.namsplus.ipwea.org.au

© Copyright 2012 – All rights reserved.

Weddin Shire Council Asset Management Strategy – 2017 iii

Contents

EXECUTIVE SUMMARY.....................................................................................................................................5

Background .................................................................................................................................................... 5

Forecast expenditure ..................................................................................................................................... 5

Risks Critical to Council’s Operations ............................................................................................................. 5

Asset Management Capability ....................................................................................................................... 6

Strategy Outlook ............................................................................................................................................ 6

Improvement Plan.......................................................................................................................................... 7

1. INTRODUCTION .......................................................................................................................................8

1.1 LEGISLATIVE REFORM ......................................................................................................................................... 8

1.1.1 NSW Integrated Planning and Reporting (IP&R) .............................................................................. 8

1.1.2 Strategic Issues at a National Level ................................................................................................ 10

1.2 ASSET MANAGEMENT PLANNING PROCESS........................................................................................................... 12

2. WHAT ASSETS DO WE HAVE? ................................................................................................................13

3. COUNCIL’S ASSETS AND THEIR MANAGEMENT?....................................................................................15

3.1 STATE OF THE ASSETS................................................................................................................................ 15

Financial Status............................................................................................................................................ 15

Remaining Life of assets............................................................................................................................... 16

Condition Profile........................................................................................................................................... 17

10 Year Forecast Expenditure ...................................................................................................................... 18

3.2 LIFE CYCLE COST ...................................................................................................................................... 20

3.3 ASSET MANAGEMENT STRUCTURE............................................................................................................... 24

3.4 ASSET MANAGEMENT STEERING COMMITTEE................................................................................................ 24

3.5 FINANCIAL & ASSET MANAGEMENT CORE COMPETENCIES............................................................................... 25

3.6 STRATEGY OUTLOOK................................................................................................................................. 27

4. WHERE DO WE WANT TO BE?................................................................................................................28

4.1 COUNCIL’S VISION, MISSION, GOALS AND OBJECTIVES .................................................................................... 28

4.2 ASSET MANAGEMENT POLICY..................................................................................................................... 29

4.3 ASSET MANAGEMENT VISION..................................................................................................................... 29

5. HOW WILL WE GET THERE? ...................................................................................................................31

APPENDIX A - ASSET MANAGEMENT STEERING COMMITTEE CHARTER .........................................................33

APPENDIX B - ASSET MANAGEMENT GOVERNANCE ......................................................................................37

APPENDIX C - ASSET MANAGEMENT POLICY..................................................................................................40

APPENDIX D - MATURITY ASSESSMENT REPORT ............................................................................................44

Weddin Shire Council Asset Management Strategy – 2017 iv

TablesTABLE 1: ASSETS USED FOR PROVIDING SERVICES (ASSET MANAGEMENT PLAN CATEGORIES)................................................... 13

TABLE 2: FINANCIAL STATUS OF THE ASSETS ................................................................................................................... 15

TABLE 3: 10 YEAR FORECAST EXPENDITURE BY ASSET CATEGORY........................................................................................ 18

TABLE 4: LIFE CYCLE COST FOR COUNCIL SERVICES........................................................................................................... 20

TABLE 5: LIFE CYCLE EXPENDITURE FOR COUNCIL SERVICES ............................................................................................... 21

TABLE 6: LIFE CYCLE SUSTAINABILITY INDICATORS ............................................................................................................ 21

TABLE 7: GOALS AND OBJECTIVES FOR INFRASTRUCTURE SERVICES...................................................................................... 28

TABLE 8: PRIORITY ASSET MANAGEMENT STRATEGIES AND IMPROVEMENT PLAN .................................................................. 31

FiguresFIGURE 1: NSW LOCAL GOVERNMENT INTEGRATED PLANNING AND REPORTING FRAMEWORK .................................................. 9

FIGURE 2: ASSET MANAGEMENT PLANNING PROCESS ...................................................................................................... 12

FIGURE 3: ASSET REPLACEMENT VALUES $’000.............................................................................................................. 16

FIGURE 4: STATE OF THE ASSETS – PERCENTAGE OF REMAINING LIFE BY ASSET CATEGORY....................................................... 16

FIGURE 5: STATE OF THE ASSETS – CONDITION BY PERCENTAGE FOR EACH ASSET CATEGORY ................................................... 17

FIGURE 6: STATE OF THE ASSETS – CONDITION BY VALUE FOR EACH ASSET CATEGORY ............................................................ 18

FIGURE 7: CORE ASSET MANAGEMENT MATURITY – WEDDIN SHIRE COUNCIL APRIL 2013..................................................... 26

FIGURE 8: CORE ASSET MANAGEMENT MATURITY – WEDDIN SHIRE COUNCIL JULY 2012 ...................................................... 27

Weddin Shire Council Asset Management Strategy – 2017 5

Executive Summary

Background

This asset management strategy is prepared to assist council is improving the way it delivers servicesfrom infrastructure including:

Buildings

Parks and Recreation assets

Plant and Equipment

Roads and Transport assets

Sewage System assets

Stormwater Drainage and Flood Protection assets

Waste Management assets

These infrastructure assets have a combined replacement value of approximately $223M

The asset management strategy is to enable Council to show:

how its asset portfolio will meet the service delivery needs of its community into the future,

enable Council’s asset management policies to be achieved, and

ensure the integration of Council’s asset management with its long term strategic plan.1

Adopting this asset management strategy will assist council in meeting the requirements of nationalsustainability frameworks, 2010 Integrated Planning and Reporting guidelines for NSW (IP&R). Localcouncils in NSW are required to undertake their planning and reporting activities in accordance withthe Local Government Act 1993 and the Local Government (General) Regulation 2005, and providethe services needed by the community in a financially sustainable manner.

The asset management strategy is prepared following a review of the council’s service deliverypractices, financial sustainability indicators, asset management maturity and fit with council’s visionfor the future outlined in the Community Strategic Plan. The strategy outlines an asset managementimprovement plan detailing a program of tasks to be completed and resources required to bringcouncil to a minimum ‘core’ level of asset maturity and competence.

Forecast expenditure

The forecast expenditure to operate, maintain, replace, upgrade and add new infrastructure over

the next ten years is estimated at $76M2. This is aligned with the improved revenue scenario

detailed in the Long Term Financial Plan and the needs identified in the Asset Management Plans.

Risks Critical to Council’s Operations

1. Council is not able to fund current infrastructure life cycle costs at current levels of serviceunder existing financial operating conditions (life cycle sustainability index of 96%). It isnoted that the life cycle sustainability has improved by 14% from the last AM Strategy data,as road and drainage assets are being revalued for 30 June 2015. The estimated valuationfigures for the road and drainage assets are used for reviewing the relevant assetmanagement plans and the asset management strategy.

1 LGPMC, 2009, Framework 2 Asset Planning and Management, p 4.2 In real terms net of inflation.


2. Asset management capability remains below core level however significant improvementshave been made.

3. Asset condition data is fragmented particularly for significant infrastructure classes and isnot readily available for corporate reporting.

Asset Management Capability

This Asset Management Strategy includes specific actions required to improve council’s asset

management capability and projected resource requirements and timeframes. Appendix D of this

strategy details the current status of asset management maturity at an organisational level and

outlines observations, implications and recommendations for improvement planning. A summary of

the key findings are outlined as follows:

1. Council’s asset management capability in 2011 was below core level in most areas.

Significant improvements have been made in the past 2 years as evidenced by the follow up

capacity review undertaken in April 2013.

2. With continued improvements in data & systems, skills & processes and level of service

reporting core level maturity can be achieved.

3. 10 year forward outlook is that current service levels cannot be maintained for few services

with current budget allocations for the next 10 years. But, the ongoing asset revaluation has

been improving the data used for the Plans and strategy, which in turn, leading us to have

better Plans and strategy with improved data in future.

4. Any new assets will increase future costs for maintenance, operating and future renewal and

will need corresponding additional funding.

5. Residual asset and service risks that are not managed need to be reported to an Asset

Steering Committee. These risks have been identified in risk management plans for the

respective asset categories.

Strategy Outlook

1. Council is able to maintain current service levels over the next ten years provided operating

revenue is increased and efficiency gains are realised. But, Council has to relook at the

current figures first immediately after the improvement in the asset valuation.

2. Further clarification of the long term service level sustainability is required, and this strategy

discusses the organisational asset management maturity improvements required to attain a

higher level of confidence in assessing the long term position.

3. By increasing operating revenue and considering loan borrowings to fund capital works

combined with realising future efficiency gains Council is projected to return to an operating

surplus position within ten years and move to a more sustainable position.

4. Council’s current asset management has reached ‘core’ level maturity for most key areas

with the exception of Data & Systems, Skills & Processes, Levels of Service, Evaluation,

Annual Budget, Strategic Planning and Governance. Continued investment is needed to

improve these areas ensuring current performance is maintained in the areas of Annual

Reporting, Policy, Strategy and Planning.


Improvement Plan

This Strategy proposes short term actions to enable the objectives of the Strategic Plan, Asset

Management Policy and Vision to be achieved. This includes a program of tasks and resources

required to achieve a minimum ‘core’ asset management maturity which was developed during the

most recent Maturity Assessment and can be found in Table 8 and Appendix D. The priority actions

can be funded from existing operational budget allocations and are summarised as follows:

1. Include commentary in the budget following the completion of the LTFP to ensure a

statement of whether the budget will achieve the strategic plan objectives, service level

targets and address the risks in the AMPs and if Councils financial sustainability position will

improve stay the same or worsen.

2. Implement an Asset Management Steering Committee, with cross functional representation

and clearly defined and documented terms of reference, focused on coordinating the

linkages between service delivery and asset management requirements.

3. Implement state of the assets reporting and include as part of the annual report.

4. Improve the asset values by reviewing the useful lives, residual values and unit rates

5. Develop an asset capitalisation policy in accordance with the Australian Infrastructure

Financial Management Guidelines.

6. Prepare and implement a consistent condition rating assessment process in line with the

International Infrastructure Management Manual.

7. Ensure NAMS.PLUS3 and AIFMG training is undertaken by key staff to ensure asset

management plans, financial forecasts and valuations are reviewed and maintained at the

highest possible level.

8. Ensure linkage between the Asset Management Plans, Strategy and the Long Term Financial

Plan is maintained during the budget process.

9. Ensure service levels in AM Plans (technical and community) are updated on an annual basis.

10. Community service levels should show what is achievable with available funding in the LTFP

and be included in the CSP update.

11. Ensure an annual review is undertaken of asset maturity across the organisation.

12. Implement state of the assets reporting showing current and 10 year target and affordable

service levels for condition, function and capacity (see NAMSPLUS3 for definitions and

methodology).

13. Consider including in the next update of the Strategic Plan commentary on the important

role infrastructure plays in achieving strategic objectives and the future outlook for this

infrastructure including any challenges/risks.


1. IntroductionAssets deliver important services to communities. A key issue facing local governments throughout

Australia is the management of ageing assets in need of renewal and replacement.

Infrastructure assets such as roads, stormwater drainage, bridges, water and sewerage and public

buildings present particular challenges. Their condition and longevity can be difficult to determine.

Financing needs can be large, requiring planning for large peaks and troughs in expenditure for

renewing and replacing such assets. The demand for new and improved services adds to the

planning and financing complexity.3

The creation of new assets also presents challenges in funding the ongoing operating and

replacement costs necessary to provide the needed service over the assets’ full life cycle.4

The asset management strategy is to enable Council to show:

how its asset portfolio will meet the service delivery needs of its community into the future

to enable Council’s asset management policies to be achieved, and

to ensure the integration of Council’s asset management with its long term strategic plan.5

The goal of asset management is to ensure that services are provided:

in the most cost effective manner,

through the creation, acquisition, maintenance, operation, rehabilitation and disposal ofassets,

for present and future consumers.

The objective of the Asset Management Strategy is to establish a framework to guide the planning,construction, maintenance and operation of the infrastructure essential for council to provideservices to the community.

1.1 Legislative Reform

1.1.1 NSW Integrated Planning and Reporting (IP&R)

Local councils in NSW are required to undertake their planning and reporting activities in accordance

with the Local Government Act 1993 and the Local Government (General) Regulation 2005. The Act

requires the Deputy Director General (Local Government), Department of Premier and Cabinet must

provide guidelines that are to be followed by local councils when undertaking their planning and

reporting activities.

The Integrated Planning and Reporting Guidelines6 has been developed to provide councils with

information and guidance to assist their transition to the new planning and reporting framework.

3 LGPMC, 2009, Framework 2 Asset Planning and Management, p 2.4 LGPMC, 2009, Framework 3 Financial Planning and Reporting, pp 2-3.5 LGPMC, 2009, Framework 2 Asset Planning and Management, p 4.6 DPC, 2013, Integrated Planning and Reporting Guidelines.


In particular, local governments will effectively plan for future sustainability through longer-termplanning by developing 10 year plans, publishing these and reviewing progress annually. Thecommunity and the State then have the best information available to judge progress against theplan, and local governments can make necessary adjustments.

As at 30 June 2012, all councils in NSW were required to be working within the Integrated Planningand Reporting framework as show below.

Figure 1: NSW Local Government Integrated Planning and Reporting Framework

An outline of the three key planning elements of the framework are described below.

Community Strategic PlanThe Community Strategic Plan is the highest level plan that a council will prepare. The purpose of theplan is to identify the community’s main priorities and aspirations for the future and to planstrategies for achieving these goals.

Resourcing StrategyThe Community Strategic Plan provides a vehicle for expressing long-term community aspirations.

However, these will not be achieved without sufficient resources – time, money, assets and people –

to actually carry them out.

The Resourcing Strategy consists of three components:

Long Term Financial Planning

Workforce Management Planning

Asset Management Planning.

This Asset Management Strategy is a requirement of the Asset Management Planning component.


Delivery Program and Operational PlanThis is the point where the community’s strategic goals are systematically translated into actions.These are the principal activities to be undertaken by the council to implement the strategiesestablished by the Community Strategic Plan within the resources available under the ResourcingStrategy.

1.1.2 Strategic Issues at a National Level

At a national level, the Local Government and Planning Ministers’ Council agreed to a nationally

consistent approach for Councils to adopt a longer-term approach to service delivery and funding.

The national approach consists of three main frameworks:

Framework 1 – Criteria for Assessing Financial Sustainability

Framework 2 – Asset Planning and Management; and

Framework 3 – Financial Planning and Reporting.

The guiding principles that underpin the development of national criteria for assessing financial

sustainability allow each State and Territory to consider and determine how the elements of the

national framework will be implemented and are monitored using the following indicators:

Income generating efforts;

Efficiently delivered services that are appropriate to needs;

Short and long term financial sustainability; and

Ability to maintain, renew and upgrade assets.

Framework 2 - Asset Planning and Management has seven elements to assist in highlighting key

management issues, promote prudent, transparent and accountable management of local

government assets and introduce a strategic approach to meet current and emerging challenges.

The seven elements are:

1. Asset management policy,

2. Strategy and planning,

a. asset management strategy,

b. asset management plan,

3. Governance and management arrangements,

4. Defining levels of service,

5. Data and systems,

6. Skills and processes, and

7. Evaluation.7

Framework 3 - Financial Planning and Reporting requires councils to adopt a longer-term approach

to service delivery and funding comprising:

A strategic longer-term plan covering, as a minimum, the term of office of the councillors

and:

o bringing together asset management and long term financial plans,

7 LGPMC, 2009, Framework 2 Asset Planning and Management, pp 3-5.


o demonstrating how council intends to resource the plan, and

o consulting with communities on the plan

Annual budget showing the connection to the strategic objectives, and

Annual report with:

o explanation to the community on variations between the budget and actual results ,

o any impact of such variances on the strategic longer-term plan,

o report of operations with review on the performance of the council against strategic

objectives.8

The implementation of the IP&R framework during 2011 in NSW due to changes in legislation is

consistent with the National Framework.

8 LGPMC, 2009, Framework 3 Financial Planning and Reporting, pp 4-5.


1.2 Asset Management Planning Process

Asset management planning is a

comprehensive process to ensure that assets

are managed and maintained in a way that

enables affordable services from infrastructure

to be provided in an economically optimal way.

In turn, affordable service levels can only be

determined by assessing Council’s financially

sustainability under scenarios with different

proposed service levels.

Asset management planning commences with

defining stakeholder and legal requirements

and needs, incorporating these needs into the

organisation’s strategic plan, developing an

asset management policy, strategy, asset

management plan and operational plans,

linked to a long-term financial plan with a

funding plan.9

Figure 2: Asset Management Planning Process

9 IPWEA, 2009, AIFMG, Quick Guide, Sec 4, p 5.

Asset Management Planning Process


2. What Assets do we have?Council and others are responsible for providing infrastructure assets to provide ongoing services to

the community. The range of infrastructure assets and the services provided from the assets is

shown in Table 1.

Table 1: Assets used for providing Services (Asset Management Plan Categories)

AssetManagement

Plans

Description Services Provided

Buildings Administration Buildings

Community Buildings

The buildings provided by Weddin ShireCouncil are used to support theadministration, operational and socialinfrastructure for the community.

Parks &Recreation

Park Amenities and Structures

Parks and Reserves

Parks and Gardens

Provides for and promotes recreationand healthy lifestyles.

Facilitates sport, community and healthylifestyle.

Provides for and promotes recreationand healthy lifestyles

MiscellaneousAssets

Public Cemeteries

Public Library Assets

Office Equipment

Furniture and Fittings

Other Structures

These miscellaneous and other assetsprovided by Weddin Shire Council areused to support the administration,operational and social infrastructure forthe community and are an importantpart of the assets Council manages.

Roads &Transport

Bridges

Car parks

Culverts

Footpaths

Kerb and Gutter

Sealed Local Roads

Sealed Regional Roads

Unsealed Local Roads

Unsealed Regional Roads

Traffic facilities

The Road and Transport assets providedby Weddin Shire Council are usedprimariy to support the developmentand ongoing use of an integratedtransport network that meets the needsof pedestrians, cyclists, vehicles, freightand public transport.

Drainage andFloodProtection

Pits

Stormwater QualityImprovement Devices (SQIDS)

Pipes

Open Channels

Headwalls

Control local flooding;

Improve safety on roads throughmanaging stormwater;

Reduce adverse environmental impactsfrom stormwater runoff;

Through effective managementminimise life cycle costs for built assets


AssetManagement

Plans

Description Services Provided

SewerageServices

Gravity Mains

Pump Stations

Rising Mains

Sewer Manholes

Waste Water Treatment Plant

Effluent Reuse Systems

The Waste Water service and infrastructureprovided by Weddin Shire Council maintainspublic health by collecting domestic,business and industrial wastewater andtreats it for release back to the environment.

WasteManagement

Landfill

Transfer Station

The Waste Management assets provided byWeddin Shire Council is used to supportpublic health and is important to thecommunity and economic activities of theregion.

Source: The most current Asset Management Plan where applicable.


3. Council’s Assets and their management?

3.1 State of the Assets

Financial Status

The financial status of Council’s assets is shown in Table 3. As at the end of June 2015 (estimated),

the total replacement value of council controlled assets is calculated at $223M with a Depreciated

Replacement Cost of $162M with an Annual Asset Consumption value of $2.8M.

Table 2: Financial Status of the Assets

Asset Category ReplacementCost

($'000)

DepreciableAmount($'000)

DepreciatedReplacementCost ($'000)

DepreciationExpense($'000)

Plant & Equipment $8,726 $8,726 $2,705 $546

Office Equipment $820 $820 $176 $36

Furniture & Fittings $96 $96 $20 $4

Land $1,759 $1,759 $1,759 $0

Buildings $14,588 $14,448 $5,672 $427

Other Structures $4,145 $4,145 $2,014 $118

Roads & Transport (R&T) $105,586 $79,767 $79,497 $1,247

Bulk Earthworks (R&T) $27,372 $0 $27,382 $0

Sub Base (R&T-Regional) $7,138 $0 $7,138 $0

Stormwater (SW) $29,257 $28,578 $18,489 $286

Trenching (SW) $10,385 $0 $10,385 $0

Sewerage Network $12,285 $8,045 $6,704 $93

Library Books $355 $356 $16 $35

Other $55 $55 $21 $1

Tip Asset $701 $701 $552 $23

TOTAL $223,268 $147,496 $162,530 $2,816

Source: Note 9a of the Financial Statements for the period ending 30 June 2012

Figure 3 shows Replacement Value of Council’s assets in graphical form by asset category.


Figure 3: Asset Replacement Values $’000

(Source: Note 9a of the Financial Statements for the period ending 30 June 2012)

Remaining Life of assets

The asset consumption ratios of Council’s assets (average proportion of ‘as new’ condition left in

assets) are shown in Figure 4. The chart shows the depreciated replacement cost less residual value

of the organisation’s depreciable assets relative to their depreciable amount.

Figure 4: State of the Assets – Percentage of Remaining Life by Asset category

(Source: Financial Asset Register)

Figure 4 shows most assets have less than 50% of life remaining however, the greatest proportion of

assets in dollars terms are Roads and Transport assets which are relatively new ‘on average’ at 65%


and combined with Tip Assets at 87% these assets should be providing a relatively high level of

service.

Those remaining assets with less than 50% of their life remaining ‘on average’ account for only 18%

of the total asset stock. Council would be experiencing fair to poor levels of service with failures not

uncommon under these conditions.

If this is not the case and service levels are not as indicated above, the useful life of the assets may

not reflect the reality of the assets’ service performance and remaining life. Council needs to

relook at the useful lives during each revaluation or annual update.

Note: The above “Asset consumption ratio” graph and the explanation for that graph are not

reflecting the current conditions. The improvement in the useful lives of road and drainage assets is

not taken in to account in preparation of this graph. Council is currently revaluing its road and

drainage assets.

Condition Profile

Currently there is little to no condition data in council’s financial asset register. It is likely that this

information does exist to some extent in various operational registers, however it is not readily

available for corporate reporting on the state of the assets. It would be of value to include this

information in a corporate asset register as part of the asset management improvement plan.

The condition of Council’s assets where know is of low to medium confidence and is shown in

Figures 5 and 6.

Figure 5: State of the Assets – Condition by Percentage for each Asset Category



According to the condition data contained in the asset register 6% of the road assets (in replacement

dollar terms) are in a poor to very poor condition and will need close monitoring and due

assessment for replacement in the short term.

Figure 6: State of the Assets – Condition by Value for each Asset Category


Note: The above “State of the Assets (% and $000)” graphs and the explanation for these graphs are

not reflecting the current conditions. The improvement in the useful lives of road and drainage

assets is not taken in to account in preparation of these graphs. Council is currently revaluing its road

and drainage assets.

10 Year Forecast Expenditure

The forecast operations, maintenance, renewal and upgrade/new expenditure per asset category

over the next 10 years are estimated to cost in the order of $76M10. This is aligned with the

improved revenue scenario detailed in the Long Term Financial Plan and the needs identified in the

Asset Management Plans. The 10 year expenditure forecast for each asset category is shown in

Table 3 below.

Table 3: 10 Year Forecast Expenditure by Asset Category

ServiceOperations

($’000)Maintenance

($’000)

CapitalRenewal

Expenditure($'000)

CapitalUpgrade/NewExpenditure

($'000)

TOTAL($'000)

Plant & Equipment $4,095 $4,744 $7,094 $0 $15,933

Office Equipment $140 $254 $387 $364 $1,146

10 In real terms net of inflation.


Furniture & Fittings $5 $5 $6 $30 $46

Land $0 $0 $0 $0 $0

Buildings $1,600 $950 $1,364 $4,028 $13,602

Other Structures $1,010 $1,340 $98 $167 $2,614

Roads & Transport(R&T)

$1,900 $8,840 $16,575 $6,900 $34,216

Bulk Earthworks (R&T)$0 $0 $0 $0 $0

Sub Base (R&T-Regional)

$0 $0 $0 $0 $0

Stormwater Drainage(SW)

$0 $288 $50 $1964 $2302

Trenching (SW) $0 $0 $0 $0 $0

Sewerage Network $1,178 $480 $1,010 $313 $2,981

Library Books $8 $10 $0 $229 $247

Other $1 $9 $0 $0 $10

Tip Asset $2,647 $270 $0 $0 $2,917

TOTAL $12,584 $17,190 $26,584 $13,995 $76,014


3.2 Life Cycle Cost

Life cycle costs (or whole of life costs) are the average costs that are required to sustain the service

levels over the longest asset life. Life cycle costs include operating and maintenance expenditure

and asset consumption (depreciation expense). The life cycle cost for the services covered in this

asset management plan is shown in Table 4.

Table 4: Life Cycle Cost for Council Services

Service

Previous Year Expenditure Previous YearLife Cycle

Cost

Operations($’000)

Maintenance($’000)

DepreciationExpense($’000)

($’000/yr)

Plant & Equipment $405 $475 $546 $1,426



Land $0 $0 $0 $0

Buildings $160 $95 $427 $682

Other Structures $101 $134 $118 $353

Roads & Transport (R&T) $190 $853 $1,247 $2,290

Bulk Earthworks (R&T) $0 $0 $0 $0

Sub Base (R&T-Regional) $0 $0 $0 $0

Stormwater Drainage (SW) $0 $93 $286 $379

Trenching (SW) $0 $0 $0 $0

Sewerage Network $106 $48 $93 $247

Library Books $1 $1 $35 $37

Other $0 $1 $1 $2

Tip Asset $253 $27 $23 $303

TOTAL $1,231 $1,753 $2,816 $5,799

Source: 10 year annual average estimates from NAMS.PLUS3 expenditure template (Form 3). Depreciation

expense sourced from 30 June 2012 Financial Statements.

Life cycle costs can be compared to life cycle expenditure to give an indicator of sustainability in

service provision. Life cycle expenditure includes operating, maintenance and capital renewal

expenditure in the previous year or preferably averaged over the past 3 years.

Life cycle expenditure will vary depending on the timing of asset renewals. The annual life cycle

expenditure for Council services at the start of the planning period is shown in Table 5.


Table 5: Life Cycle Expenditure for Council Services

Service

Previous Year Expenditure Cap Renewal Exp Life Cycle Exp

Operations

($’000)

Maintenance

($’000)($’000/yr) ($’000/yr)

Plant & Equipment $405 $475 $709 $1,589



Land $0 $0 $0 $0

Buildings $160 $95 $136 $391

Other Structures $101 $134 $10 $245

Roads & Transport (R&T) $190 $853 $1,505 $2,548

Bulk Earthworks (R&T) $0 $0 $0 $0

Sub Base (R&T- Regional) $0 $0 $0 $0

Stormwater Drainage (SW) $0 $93 $50 $143


Sewerage Network $106 $48 $110 $264

Library Books $1 $1 $0 $2

Other $0 $1 $0 $1

Tip Asset $253 $27 $5 $285

TOTAL $1,231 $1,753 $2,565 $5,548

Source: 10 year annual average estimates from NAMS.PLUS2 expenditure template.

The life cycle costs and life cycle expenditure comparison highlights any difference between present

outlays and the average cost of providing the service over the long term, If the life cycle expenditure

is less than the life cycle cost, it is most likely that outlays will need to be increased or cuts in

services made in the future.

Knowing the extent and timing of any required increase in outlays and the associated service

consequences should funding not be available will assist council and the community in deciding what

services they can sustain into the future in a financially sustainable manner. This is the purpose of

the Asset Management and Long term Financial Planning.

A shortfall between life cycle cost and life cycle expenditure gives an indication of the life cycle gap

to be addressed in the Asset Management Plans and Long term Financial Plan.

The life cycle gap and sustainability indicator for services covered by this Asset Management

Strategy is summarised in Table 6.

Table 6: Life Cycle Sustainability Indicators

ServiceLife Cycle Cost

($’000/yr)

Life CycleExpenditure($’000/yr)

Life Cycle Gap*($’000/yr)

Life CycleSustainability

Index

Plant & Equipment $1,426 $1,589 $163 111%

Office Equipment $75 $78 $3 104%

Furniture & Fittings $5 $2 -$3 32%


ServiceLife Cycle Cost

($’000/yr)

Life CycleExpenditure($’000/yr)

Life Cycle Gap*($’000/yr)

Life CycleSustainability

Index

Land $0 $0 $0 100%

Buildings $682 $391 -$291 57%

Other Structures $353 $245 -$108 69%

Roads & Transport (R&T) $2,290 $2,548 $258 111%

Bulk Earthworks (R&T) $0 $0 $0 0%

Sub Base (R&T-Regional) $0 $0 $0 0%

Stormwater Drainage(SW) $379 $143 -$236 38%


Sewerage Network $247 $264 $17 107%

Library Books $37 $2 -$35 5%

Other $2 $1 -$1 50%

Tip Asset $303 $285 -$18 94%

TOTAL $5,799 $5,548 -$251 96%

Source: Tables 4 and 5

Note: *The life cycle gap is reported as a negative value where applicable.

The sustainability indicators are significantly influenced by the forecast of capital renewal and the

planned expenditure on capital renewal.

Renewal expenditure is major work which does not increase the asset’s design capacity but restores,

rehabilitates, replaces or renews an existing asset to its original service potential. Work over and

above restoring an asset to original service potential is upgrade/expansion or new works

expenditure.

The Asset Management Plans which provide the detail input into the sustainability assessment

consider three Scenarios.

Scenario 1 uses the Asset Register valuation data to project the renewal costs for renewal years

using acquisition year and useful life;

Scenario 2 uses capital renewal expenditure projections from external condition modelling systems

(such as a Pavement Management System), or a combination of average network renewals plus

defect repairs from expert technical judgement. Scenario 2 has been developed for all asset

categories. Weddin Shire Council technical staff has confirmed that the current budget is insufficient

to sustain service levels for the short to medium term (10 years). Consequently the projected

renewal expenditure shown in Scenario 2 of the asset management plans is approximately $23.5M

above the revenue forecasts projected in the Financial Plan. Further investigation and confirmation

of this position should be made in preparing for the next update of the Asset Management Plans.

This is particularly important for the asset categories where the life cycle sustainability index is low.

Scenario 3 balances the forward works program to the available funds in the Long term Financial

Plan. Where there is a substantial difference between scenarios 2 and 3, the risk of unfunded work

and risk management actions is identified in the applicable Asset Management Plan and Strategy.


At Weddin Shire:

Roads are funded at 111% of the life cycle cost. Given only 6% of the network is in a poor to very

poor condition and there is 74% of the life remaining in the asset stock it is fair to say maintaining

present funding above 111% of the life cycle cost should ensure existing service levels are

maintained over the next 10 years including replacement of existing assets when they are due.

Present funding for drainage assets is 38% of life cycle costs. As Council’s drainage assets are

relatively new, little renewal/replacements are forecast in the near future and present funding is

considered adequate for the next 10 years.

Present funding for recreation assets (other Structures) is 50% of life cycle costs. Recreation services

operating expenditure is largely operations and maintenance with major renewal item not forecast

in the next 10 years. Present funding levels are considered adequate for the next 10 years.


3.3 Asset Management Structure

The standing governance arrangement under NSW IP&R requirements will be under an Asset

Management Steering Committee (AMSC) in accordance with the following outline and charter.

The role of the AMSC includes:

Formulating an appropriate program of;

asset management governance,

service level reporting

risk management reporting

Asset Valuation data improvement

statutory compliance to achieve funded target outcomes under the asset managementdevelopment programme (AMDP) identified in the asset management strategy

Reviewing processes and providing direction on the development and implementation of anasset knowledge management strategy to ensure optimum benefit / cost / risk fortechnology systems, information management, business processes and reporting.

Developing, implementing and monitoring key performance indicators that link theResourcing Strategy to the Community Strategic Plan (CSP)

Developing appropriate policies to ensure effective Asset Management across theorganisation that demonstrate value for money whilst controlling risk and consequences.

Informing Council’s Senior Management Group (SMG) of progress; and

Recommending to the group organisational change as required.

3.4 Asset Management Steering Committee

A ‘whole of organisation’ approach to asset management can be developed with an Asset

Management Steering Committee 11. The benefits of committee include:

demonstrate corporate support for sustainable asset management,

encourage corporate buy-in and responsibility,

coordinate strategic planning, information technology and asset management activities,

promote uniform asset management practices across the organisation,

information sharing across IT hardware and software,

pooling of corporate expertise

championing of asset management process,

wider accountability for achieving and reviewing sustainable asset management practices.

The role of the asset management team will evolve as the organisation maturity increases over

several phases.

Phase 1

strategy development and implementation of asset management improvement program,

Phase 2

11 See Appendix A for the Charter of the Asset Management Steering Committee


asset management plan development and implementation,

reviews data accuracy, levels of service and systems plan development,

Phase 3

asset management plan operation

evaluation and monitoring of asset management plan outputs

ongoing asset management plan review and continuous improvement.

The current position on Council’s asset management team is chaired by the General Manager and

comprises Directors and engineers. The team is developing its roles and responsibilities and action

plan to implement Council’s asset management policy and strategy.

3.5 Financial & Asset Management Core Competencies

The combined National Frameworks on Financial and Asset Planning, Management and Reporting

define core competencies for each of the eleven elements. The eleven elements are categorised by

the respective framework as follows:

Financial Planning and Reporting

1. Strategic Longer Term Plan

2. Annual Budget

3. Annual report

Asset Planning and Management

4. Asset Management Policy

5. Asset Management Strategy

6. Asset Management Plan

7. Governance & Management

8. Levels of Service

9. Data & Systems

10. Skills & processes

11. Evaluation

Council’s current core competency for each of the eleven elements is detailed in Appendix D and

summarised in Figure 7 below. Current maturity or core competency is shown by the blue bars. The

maturity gap to be overcome for Council to achieve a core financial and asset management

competency is shown by the red bars.


Figure 7: Core Asset Management Maturity – Weddin Shire Council April 2013

This is a significant improvement since the previous assessment undertaken in July 2012 where

Council was well below core level competency for a greater proportion of the asset management

practice areas as shown in Figure 8 below.

An improvement plan is in place for the areas of practice requiring core competency combined

ensuring ongoing management of existing core competencies is maintained.


Figure 8: Core Asset Management Maturity – Weddin Shire Council July 2012

3.6 Strategy Outlook

1. Council is able to maintain current service levels over the next ten years provided operating

revenue is increased and efficiency gains are realised. But, Council has to relook at the

current figures first immediately after the improvement in the asset valuation.

2. Further clarification of the long term service level sustainability is required, and this strategy

discusses the organisational asset management maturity improvements required to attain a

higher level of confidence in assessing the long term position.

3. By increasing operating revenue and considering loan borrowings to fund capital works

combined with realising future efficiency gains Council is projected to return to an operating

surplus position within ten years and move to a more sustainable position.

4. Council’s current asset management has reached ‘core’ level maturity for most key areas

with the exception of Data & Systems, Skills & Processes, Levels of Service, Evaluation,

Annual Budget, Strategic Planning and Governance. Continued investment is needed to

improve these areas ensuring current performance is maintained in the areas of Annual

Reporting, Policy, Strategy and Planning.


4. Where do we want to be?

4.1 Council’s Vision, Mission, Goals and Objectives

Council has adopted a Vision for the future in the Community Strategic Plan.

Weddin Shire Community Vision Statement

“A progressive rural locality with a vibrant and welcoming community, rich in both heritageand the natural environment, with a diverse and resilient economy that supports localemployment.”

Council’s purpose or reason for existence is set out in the adopted mission statement,

Weddin Shire Community Mission Statement

“Weddin Council – Working for and with the community.”

The Strategic Plan sets goals and objectives to be achieved in the planning period. The goals set out

where Council wants to be. The objectives are the steps needed to get there. Goals and objectives

relating to the delivery of services from infrastructure are shown in Table 7.

Table 7: Goals and Objectives for Infrastructure Services

Goals Objectives

Administration To develop financial, administrative and engineering policies andprocedures to ensure all activities of Council are properly managed toobtain effective and efficient use of all resources.

To provide and maintain effective administrative support and co-ordinatestrategic/long term planning.

To provide sound financial planning and reporting.

To maintain an efficient public works and vehicle fleet.

Housing and

Community

Amenities

To protect and enhance the natural environment, to control waste disposaland to provide amenities for the public.

To plan and regulate the orderly arrangement and use of land.

To manage and minimise damage to the environment.

To efficiently collect and landfill dispose of domestic, commercial andindustrial waste.

To manage all cemeteries within the Council area.

To provide clean and well maintained public conveniences.

To make adequate provision for urban stormwater.

Sewerage To provide a cost effective, safe and environmentally responsible seweragesystem to Grenfell.

To manage the Sewerage Scheme to meet or exceed minimum levels ofservice.

Recreation and

Culture

To provide a range of facilities which enables shire residents to pursue bothactive and passive recreational and cultural activities.

To provide library facilities which largely satisfies the needs of theCommunity.

To ensure that the Council swimming pools are managed and maintained ina manner which enables and encourages frequent use.

To manage and maintain Parks, Reserves and Sporting facilities in a safe and


Goals Objectives

attractive condition which encourages frequent use by residents andvisitors.

Buildings To ensure all building work meets relevant codes and standards with regardto aesthetics and the areas heritage.

Transport and

Communication

To develop and maintain a safe and effective road system that provides allweather access for all residents.

To provide a management system to determine standards and priorities fora safe and effective road network.

To maintain and improve the classified road network in association with theRoads and Traffic Authority.

To maintain and improve Town/Village streets in accordance with Council'spriorities.

To maintain and improve roads in accordance with Council's priorities.

To provide and maintain a network of safe and effective bridges, culvertsand causeways in accordance with Council's adopted standards.

To provide and maintain a network of safe and effective footpaths inaccordance with Council's adopted standards.

To carry out a programme of street tree planting and maintenance in orderto preserve and enhance the natural environment.

To provide and maintain a safe and effective street lighting network to caterfor the current and future development of Grenfell and the Villages.

4.2 Asset Management Policy

Council’s Asset Management Policy defines the council’s vision and service delivery objectives for

asset management in accordance with the Strategic Plan, applicable legislative requirements,

community needs and affordability.

The asset management strategy is developed to support the asset management policy and is to

enable council to show:

how its asset portfolio will meet the affordable service delivery needs of the community intothe future,

enable Council’s asset management policies to be achieved, and

ensure the integration of Council’s asset management with its long term strategic plans.

Councils Asset Management Policy can be found in Appendix C.

4.3 Asset Management Vision

To ensure the long-term financial sustainability of Council, it is essential to balance the community’s

expectations for services with their ability to pay for the infrastructure assets used to provide the

services.

Maintenance of service levels for infrastructure services requires appropriate investment over the

whole of the asset life cycle. To assist in achieving this balance, Council aspires to:

Develop and maintain asset management governance, skills, process, systems and data in

order to provide the level of service the community need at present and in the futures, in the

most cost-effective and fit for purpose manner.


In line with the vision, the objectives of the asset management strategy are to:

ensure that the Council’s infrastructure services are provided in an economically optimal

way, with the appropriate level of service to residents, visitors and the environment

determined by reference to Council’s financial sustainability,

safeguard Council’s assets including physical assets and employees by implementing

appropriate asset management strategies and appropriate financial resources for those

assets,

adopt the long term financial plan as the basis for all service and budget funding decisions,

meet legislative requirements for all Council’s operations,

ensure resources and operational capabilities are identified and responsibility for asset

management is allocated,

provide high level oversight of financial and asset management responsibilities through AM

committee/GM reporting to council on development and implementation of Asset

Management Strategy, Asset Management Plan and Long Term Financial Plan.

Strategies to achieve this position are outlined in Section 5.


5. How will we get there?This document proposes short, medium and long term strategies to enable the objectives of the

Strategic Plan, Asset Management Policy and Asset Management Vision to be achieved.

The priority tasks required to achieve ‘core’ financial and asset management maturity have been

drawn from the Maturity Assessment found in Appendix D. The priority short term tasks listed by

Practice Area are shown in Table 8 below and should be achieved within the next 12 months with

little to no impact on operational resources whilst the medium and long term tasks to enhance

future capability can be found in the Maturity Assessment.

Table 8: Priority Asset Management Strategies and Improvement Plan

Practice Area Task Responsibility TargetDate

Budget

Annual Budget 1.Include commentary in the budgetfollowing the completion of the LTFPto ensure a statement of whetherthe budget will achieve the strategicplan objectives, service level targetsand address the risks in the AMPsand if Councils financialsustainability position will improvestay the same or worsen.

Engineering,Environmental &CorporateServices

Ongoing Staff time&operationalbudget

GovernanceandManagement

1.Implement an Asset ManagementSteering Committee, with crossfunctional representation andclearly defined and documentedterms of reference, focused oncoordinating the linkages betweenservice delivery and assetmanagement requirements.

2.Implement state of the assetsreporting and include as part of theannual report.



Data &Systems

1.Develop an asset capitalisationpolicy in accordance with theAIFMG.

2.Prepare and implement a consistentcondition rating assessment processin line with the IIMM.



Skills andProcesses

1.Ensure NAMS.PLUS3 and AIFMGtraining is undertaken by key staff toensure asset management plans,financial forecasts and valuationsare reviewed and maintained at thehighest possible level.

2.Ensure that current link betweenAMPS and LTFP is maintained duringthe budget process.


Ongoing Staff time& $2,500included intrainingbudget.


Practice Area Task Responsibility TargetDate

Budget

Levels ofService

1.Ensure service levels in AM Plans(technical and community) areupdated on an annual basis.

2.Community service levels shouldshow what is achievable withavailable funding in the LTFP and beincluded in the CSP update.



Evaluation 1.Ensure an annual review isundertaken of asset maturity acrossthe organisation.

2. Implement state of the assetsreporting showing current and 10year target and affordable servicelevels for condition, function andcapacity (see NAMSPLUS3 fordefinitions and methodology).



StrategicLonger TermPlan

1.Consider including in the nextupdate of the Strategic Plancommentary on the important roleinfrastructure plays in achievingstrategic objectives and the futureoutlook for this infrastructureincluding any challenges/risks.


Ongoing Staff time&operationalbudget.

Asset Values Improve the asset values to reflectthe reality of the assets


Ongoing Staff time&operationalbudget.


Appendix A - Asset Management Steering Committee Charter

Asset Management Steering Committee (AMSC)

Purpose of the AMSC - Primary Function

The primary function of the AMSC is to take responsibility for determining the program, governance,and the achievement of outcomes of the Asset Management Development Project (AMDP). TheAMSC will monitor and review the project status, as well as provide oversight of the projectdeliverable rollout.

The AMSC provides a policy level overview so organisational governance requirements, concepts anddirections are established and maintained whilst allowing innovation and continuous improvementin value for money service delivery. The AMSC provides insight on long-term strategies in support oflegislative mandates.

Members of the AMSC ensure business objectives are being adequately resourced and addressed,and the project remains under control. In practice, these responsibilities are carried out byperforming the following functions:

Active involvement to monitor and review the project at regular PGC meetings

Provide assistance to the project when required

Control project scope as emergent issues force changes to be considered, ensuring thatscope aligns with the agreed business requirements of the project sponsor and keystakeholder groups

Resolve project conflicts and disputes, reconciling differences of opinion and approach

Formal acceptance of project deliverables

Ensure all asset management resource allocation is based on benefit / cost / risk analysis.

Role of the AMSC

The role of the Asset Management Steering Committee includes formulating an appropriateprogram of:

asset management governance,

service level reporting

risk management reporting

statutory compliance

to achieve funded target outcomes under the asset management development programme(AMDP) identified in the asset management strategy

Reviewing processes and providing direction on the development and implementation of anasset knowledge management strategy to ensure optimum benefit / cost / risk fortechnology systems, information management, business processes and reporting.

Developing, implementing and monitoring key performance indicators that link theresourcing strategy to the Community Strategic Plan (CSP)

Developing appropriate policies to ensure effective Asset Management across theorganisation that demonstrate value for money whilst controlling risk and loss.

Informing Council’s Senior Management Group (SMG) of progress; and

Recommending to the group organisational change as required.


Approval Responsibilities

The AMSC is responsible for approving major project elements such as:

Deliverables as identified in the project Implementation Programme

Prioritisation of project objectives and outcomes identified in the project ImplementationProgramme

Allocating appropriate budget ensuring that effort, expenditures and charges areappropriate to stakeholder expectations

Schedule of agreed implementation tasks or projects

Risk management strategies, ensuring that strategies to address potential threats to theproject’s success have been identified, estimated and approved, and that the threats areregularly re-assessed

Providing a regular risk report to Councils asset management steering committee based onthe risk management plans. The report covers significant residual risks resulting from assetbased services that result from limited resource allocation or limited capacity to controlrisks. The risk report will be quarterly of as needed for high risks needing immediateattention.

Providing a regular service level achievement report to the executive, reporting on theachievement against service level targets set in the asset management resourcing strategy.

Committee Membership

The AMSC will consist of the following stakeholder members:

Position Name

General Manager Mr Glenn Carroll

Director of Engineering Mr Bill Twohill

Director Corporate Services Mr Lachlan Gibson

Director Environmental Services Mr Brendan Hayes

The agenda items of each AMSC Meeting will determine which AMSC members will be required toattend specific meetings. For example specific AMSC meetings regarding policy and strategy mayrequire attendance by executive team. This will be determined by the Chair of the AMSC.

Role of a AMSC Committee Member

It is intended that the AMSC leverage the experiences, expertise and insight of key individualscommitted to professional project management. AMSC members are not necessarily directlyresponsible for managing project activities, but provide support and guidance for those who do.Thus, individually, AMSC members should:

Understand the strategic implications and outcomes of initiatives being pursued throughproject outputs

Appreciate the significance of the project for some or all major stakeholders and representtheir interests


Be actively involved and genuinely interested in the project initiative, and be an advocate forbroad support for the outcomes being pursued in the project

Have a broad understanding of project management issues and approaches being adopted

In practice, this means they:

Review the status of the project

Ensure the project’s outputs meet the requirements of the business owners and keystakeholders

Help balance conflicting priorities and resources

Provide guidance to the project team and users of the project’s outputs

Consider ideas and issues raised

Check adherence to project activities to standards of best practice

Foster positive communication outside the Team regarding the project’s progress andoutcomes

Input will be sought from Specialist and Technical advisors as required.

Meetings

Meeting Schedule and Progress

The AMSC team will meet monthly or as required to keep track of issues and the progress of theproject’s implementation and ongoing support to its stakeholders. The project manager chairs theAMSC and facilitates the AMSC Meeting. A meeting will be scheduled as and when required.

Meeting Agenda

At each meeting, project status will be reported to the AMSC by the Project Manager using anagenda determined by the AMSC. The agenda may include the following:

Review Project Status

Overall status

Scope status

Schedule status

Budget status

Issues Register

Outstanding issues, open points, project conflicts

Reason for deviating from agreed targets

New issues arising since the last AMSC meeting

Review and approval of project change orders

Plans for next reporting period

Specific requests for assistance of the AMSC

Consideration of other items relevant to the project

Review and summarise new actions from this meeting

Plans, dates and location for next meeting

The agenda items of each AMSC Meeting will determine which AMSC members will be required toattend specific meetings. For example specific AMSC meetings regarding policy and strategy wouldrequire attendance by Executive team.


Guidelines / Standards

The AMSC will reference relevant industry guidelines and practices.

The following guidelines and standards have also been used and referenced throughout thecorporate project:

International Infrastructure Management Manual – International edition 2006.

Australian Infrastructure Financial Management Guidelines - Edition 1.0 - 2009

Optimised Decision Making Guidelines - New Zealand edition 1 2004.

Creating Customer Value from Community assets - New Zealand edition 1 2002

Australian Standards

AS 5037 (Int):2003 Interim Australian Standard Knowledge Management

AS/NZS 4581:1999 Management System Integration – Guidelines to

Business, Government and Community Organisations

AS/NZS ISO 9000:2000 Quality Management Systems

AS/NZS ISO 9004:2000 Quality Management Systems – Guidelines for

performance improvements

AS 3806:1998 Compliance Programs

AS/NZS 4360:1999 Risk Management- updated by Risk Management Standard AS/NZS ISO31000

HB 143:1999 Guidelines for managing risk in the Australian and New Zealand public sector.

Local Government Financial Sustainability Framework - Local Government and PlanningMinisters' Council.

Various Federal and State Government Asset Management reports and studies.

Asset Management Policy

Council will consider and adopt an Integrated Total Asset Management policy drafted by the steeringcommittee. A copy of the adopted policy is attached. The policy ensures commitment to theadoption and integration of best practice Asset Management principles and practices within WeddinShire Council. Integral to the policy are:

Developing and implementing a Total Asset Management system that becomes a key part ofcorporate planning and management, and general culture of the organisation.

Reducing risk through improved Asset Management practices.

Improving decision making by providing better data on assets.

Developing an Asset Management Information System (computer software) that providesfor optimised decision making having regard to trade-offs and financial considerations) andaccurate, reliable and timely internal and external reporting of relevant information relatedto assets.


Appendix B - Asset Management GovernanceGOV_1 shows the future ongoing asset management development plan. There are ongoing

improvement tasks in the asset management plans (AMP Table 8.2), risk management actions, and

actions arising from the asset management strategy and maturity assessment. Council needs to

prioritise these improvements having regard to risk.

Online Asset Management ImprovementMonitoring System (AMIMS)

Improvement UID

Service ImprovementRegister

Service and Asset Management Development Programme Process

JRA Doc Ref Weddin Shire Council 7 Dec 2011 V2

Network Folder. Asset Management PlansAll files registered in TRIM

Maturity Audit

Word Documents

AMP - Parks

AMP - Transport

etc

Risk Management Plan

Risk Management Actions

etc

Word Document

AM Strategy and Policy

Word Documents

RMP - Transport

etc

Section 8.2Improvement

Tasks

Maturity Report

RecommendedImprovements

MaturityImprovement

Tasks

Risk ControlTasks

AM StrategyTasks

HighOr

V HighRisk

Task Description

Risk

Option 1RiskCost

Benefit

Option 2RiskCost

Benefit

Option 3RiskCost

Benefit

Decision(proceed / do not proceed / more

information needed)

Accountability for Implementation

ProjectManagement

FormFor Each

TaskReported to

SteeringCommittee

ServiceImprovement

Tasks

Service Review

Resourcing Strategy

Business Plan

Service Plans

Delivery Programme

LTFP

Service Levelreporing

ServiceLevel

reporting

ImprovementReporting

Is there a highresidual risk

Place on riskregister(see risk

managementprocess)


GOV_2 shows the documents and files that are part of the asset management plans and strategy and

a suggested process to ensure that if data or asset management plans are updated, the changes can

be tracked.

Network Folder. AM Resourcing StrategyAll files registered in TRIM

XL Files

Word Documents

Update Process for Asset Management Documents

JRA Doc Ref Weddin Shire Council 7 Dec 2011 V2

AMP - Parks

AMP - Transport

Risk Register - Parks

Risk Register – Transport

etc

etc

XL Files

NAMS data templates - Parks

NAMS data templates –Transport

etc

Word Document

AM Strategy and Policy Check out file for updateUse TRIM

Asset Manager or JRAUpdate Documents

Update Version Controlin AMP

Will the changesImpact the AM Strategy?

No

Notify AMFG

Yes

File Naming for Asset Management Plan and Risk Management Plan Documents

83_397_110816_NAMS.PLUS_AMP Transport S1V5 = Asset Management Plan (Word Document)83_397_110816_NAMS.PLUS_AMDT Transport S1V5 = Asset Management Data Template (XL File)83_397_110816_NAMS.PLUS_RMP Transport S1V5 = Risk Management Plan (Word Document)83_397_110816_NAMS.PLUS_RMDT Transport S1V5 -= Asset Management Data Template (XL File)

Cncl_Job_YYMMDD S1V5 = Scenario 1 Version 5

Scenarios and Versions

Scenario 1 (All AMPs as at Sept 2011)2010/11 Asset Register, Current BudgetScenario 2 (Transport as at Sept 2011) )Estimated Delivery Programme instead or asset register,Current Budget. (used where the asset register notproviding reliable renewal projections)Scenario 3 (to be finalised )Adopted Delivery Programme and asset register,Adopted LTFP (This shows service levels and risks of theadopted resourcing strategy))

A version is the best available data for any scenario

Word Documents

RMP - Transport

etc

Update File NamesSee Below

Legend

AMP = Asset Management PlanRMP = Risk Management PlanNAMS = National AssetManagement Strategy Templatesand Software (IPWEA)

Asset Manager tocheck in updateddocument as anew revision


GOV_3 shows the process to communicate risks from the asset management plans to asset

management committee via a regular asset team meeting to ensure council is informed of any high

residual risks


Appendix C - Asset Management Policy


Appendix D - Maturity Assessment Report

Weddin SC >> MaturityAssessment ID (192)


Framework Financial Planning & Reporting Current Risk Target Risk

Element Strategic Longer Term Plan Likelihood Unlikely Rare

Practice Area Strategic Longer Term Plan Consequence Moderate Minor

Risk Score Medium Low

CurrentScore

2.8 Core Target 3 AdvancedTarget

4

Core MaturityAssessment

Partially Meets Requirements

- -

Question: Does your council have an adopted strategic longer term plan?Observations of Current Maturity Level

1. The Community Strategic Plan (CSP) is well-presented with a strong community focus.2. The CSP clearly identifies the main priorities and aspirations for the local government area.3. The CSP establishes objectives and strategies to achieve community outcomes.4. Key Performance indicators have been assigned to each Strategic Objective.5. The CSP links well with the NSW State Plan.6. The 2012 LTFP is incomplete and does not meet the requirements of the legislation.7. The 2012 LTFP does not include a variety of scenarios, a sensitivity analysis, financial modelling or

methods of assessment.Implications of Current Maturity Level

1. The service level consequences for affordable service levels are not clear in the strategic plan.2. Costs to achieve objectives are not known.3. Does not report what will not be done if resources are insufficient.4. LTFP financial projections may not accurately project the future operating and renewal outlays

required to provide the services identified in the strategic plan.5. The Community may not be able to assess councils performance against strategic plan objectives.6. There is risk that coordinated strategic implementation of affordable community services may not

occur.7. Current Strategic Plan does not yet have links to the AM Plans and LTFP and therefore does not show

likely service level trends and impacts. Need to ensure linkages are in place between AMPs and theLTFP to show long-term service level trends and any impact they may have on the Strategic Plan.

Recommendations1. Update the Long Term Financial Plan based on resource requirements and strategic objectives

detailed in Councils Community Strategic Plan and Asset Management Plans and Strategy.2. Develop a plan to return to an operating surplus position.3. Increase funding on capital renewals.4. Need to separate renewal, upgrade new, operations and include projections in capital expenditure.5. Ensure that CSP performance measures line up with AMP community service levels.6. Implement rolling reviews and reporting on service levels that report value for money.7. Future strategic plan update needs to communicate state of the assets and affordable options with

current and expected service levels and risks.8. Consider including in the next update of the Strategic Plan commentary on the important role

infrastructure plays in achieving strategic objectives and the future outlook for this infrastructureincluding any challenges/risks.

MaturityScore

Result Characteristic

5 Optimum life cycle costs are known and supported by high levels of data, informationand knowledge in all key areas. Political decisions are informed by multiple service level/ cost / funding model data, information and knowledge on trade-offs for economic,social, cultural and environmental consequences.

4 Council has a Strategic Longer Term Plan (ideally 20 years - at least 10 years) thatincorporates a vision, mission, values and long term service outcomes that reflects how


Council plans to provide for community needs.

4 The development of the Strategic Longer Term Plan included community engagementand reflects community needs.

4 Council has a sustainable Long Term Financial Plan (ideally 20 years - at least 10years)which establishes its prudential limits on debt, revenue raising, reserve funding, assetmanagement funding and capital works to support its Long Term Plan.

4 Council's Long Term Financial Plan is directly aligned with its Service Plans.

4 The Long Term Financial Plan clearly separates ‘recurrent expenditure’ under thecategories of operations and maintenance and clearly separates ‘capital worksexpenditure’ under the categories of renewal, upgrade and new.

4 The Long Term Financial Plan clearly identifies the ongoing maintenance, operationaland renewal impacts arising from capital works and contributed assets.

4 The Strategic Longer Term Plan includes a current position statement and discussion

4 The Strategic Longer Term Plan includes strategies for achieving objectives

3 Council has a Strategic Longer Term Plan (planning horizon of at least 5 years) thatincorporates a vision, strategic outcomes, mission, values and service outcomes thatCouncil wants to achieve.

3 The development of the Strategic Longer Term Plan included community consultationand reflects community needs.

3 The Strategic Longer Term Plan incorporates priorities and performance measures andindicates how they will be monitored and measured.

3 Council has a sustainable Long Term Financial Plan covering the period of the StrategicLonger Term Plan (at least 5 year) supporting the implementation of its Longer TermPlan.

3 The Long Term Financial Plan has been prepared based on the resource requirementsand strategic objectives detailed in Council’s Long Term Plan and Asset ManagementPlans.

2 Plan covers 4 year term of council

2 Draft plan is advertised for public comment

2 Plan reflects needs of community for foreseeable period

2 Plan includes vision and strategic objectives

2 Plan details what council intends to do in period of plan

1 Plan covers 1 year period



Element Annual Budget Likelihood Unlikely Rare

Practice Area Annual Budget Consequence Major Minor


Current Score 2.75 Core Target 3 AdvancedTarget

4


Meets Requirements

- -

Question: Does your council prepare an annual budget?Observations of Current Maturity Level

1. Annual Budget is contained in the Operational Plan.2. Do not currently assess financial shortfalls identified in the asset management plans.3. It is not clear whether the budget results in maintaining current service levels or otherwise.

Implications of Current Maturity Level1. Ongoing service and risk consequences may not be catered for.2. The financial ratios (liquidity, debt, underlying operating position) may not align with the Councils

Long Term Financial Plan.3. Budget may not sufficiently achieve service level targets identified in the resourcing strategy.

Recommendations1. Include in the annual budget commentary the trade-off between renewal of existing and

expansion/upgrade of assets.2. Include commentary in the budget linking the budget to the achievable service levels and risks in the

AMP.3. Focus on annual review of the LTFP, such that the annual budget becomes a sub-task of the LTFP

review.4. Link Asset Management Plans to Annual Budget.5. Review the commentary in the budget following the completion of the LTFP to provide a statement

of whether the budget will achieve the strategic plan objectives.6. Include in the budget commentary a note about whether the current budget improves or worsens

Councils financial sustainability position.

MaturityScore


5 Budget contains indicators of achieving council's strategic objectives

4 The Annual Budget financial ratios (liquidity, debt, underlying operating position) alignwith the Council’s Long Term Financial Plan.

4 The Annual Budget is prepared based on ‘service levels’ as reflected in the StrategicLonger Term Plan and contains indicators and measures to assess performance againstachieving Council's strategic objectives.

4 The Annual Budget clearly separates ‘recurrent expenditure’ under the categories ofoperations and maintenance and clearly separates ‘capital works expenditure’ under thecategories of renewal, upgrade and new.

4 The Annual Budget clearly indicates the ongoing maintenance, operational and renewalimpacts arising from capital works and contributed assets.

3

The Annual Budget contains estimates of revenue and expenditure with an explanationof the assumptions and methodologies underpinning the estimates, an explanation ofthe financial performance and position of the Council and has been prepared based onthe resource requirements and strategic objectives detailed in Council’s Strategic LongerTerm Plan, Asset Management Plans and Long Term Financial Plan.

3 The Annual Budget reflects the Council's strategic objectives and contains a statement ofhow Council will meet the goals and objectives of its Strategic Longer Term Plan.

3 The Annual Budget aligns with Year 1 of the Long Term Financial Plan, and was adoptedfollowing community consultation.


3 Council’s Annual Budget includes resources to implement Strategic Longer Term Planstrategies.

2 Budget is publically available and readily accessible to all interested readers

2 Budget contains estimates of revenue and expenditure for year

2 Budget includes an explanation of the council's financial position and performance

2 Budget is adopted after public advertising and consideration of comments received

1 Annual budget is available to those who ask



Element Annual Report Likelihood Likely Rare

Practice Area Annual Report Consequence Minor Minor



4


Meets Requirements

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Question: Does your Council publish an annual report?Observations of Current Maturity Level

1. The Annual Report does not distinguish between recurrent expenditure under the categories ofoperations and maintenance and capital works expenditure under the categories of renewal, upgradeand new.

2. The Annual Report does not include a statement of actual performance for the year as measuredagainst the Long Term Financial Plan, including reporting on measures of actual financial performanceagainst short and long term financial sustainability indicators.

3. The Annual Report does not include a performance assessment of progress towards achieving thegoals and strategic objectives of the Strategic Plan.

4. Cost to bring to satisfactory is $9.65M - 2012 Special Schedule 7.Implications of Current Maturity Level

1. Annual Report may not align with Asset Planning process.2. The financial outlook of Council may not be made clear in the annual report. Will service levels need

to be reduced for Council to live within its means or do revenues need to increase?

Recommendations1. Consider adding state of the assets reporting linked to the AMPs.2. Add a comment in the annual report that indicate the likely service level and risk impact of the

budget, 10 year forward programme in the AMP balanced to the LTFP.3. There needs to be a check whether the amount funded in the LTFP is $9.65M more than the current

funding level ($0.97M per year additional renewal budget).

MaturityScore


5 Annual report includes results of Value for Money audit

4 The Annual Report includes a performance assessment of progress towards achievingthe goals and strategic objectives of the Strategic Longer Term Plan.

4 The Annual Report includes a statement of actual performance for the year as measuredagainst the Long Term Financial Plan, including reporting on measures of actual financialperformance against short and long term financial sustainability indicators.

4 The Annual Report distinguishes between ‘recurrent expenditure’ under the categoriesof operations and maintenance and ‘capital works expenditure’ under the categories ofrenewal, upgrade and new.

4 The Annual Report includes a statement on “State of the Assets” and the financialsustainability of services provided by its infrastructure assets including any proposedadjustment to services/assets to address issues as they arise.

4 "The asset financial reporting within the Annual Report, is such based on the following:

3 The Annual Report complies with all statutory requirements including publication by thedue date and is made widely available to the public.

3 The Annual Report includes independently audited financial statements that areprepared on an accrual basis in accordance with the Australian Accounting Standards.

3 The Annual Report reviews the performance of the Council against its strategicobjectives and explains variations between the budget and actual results and how thesevariations impact on the Strategic Longer Term Plan.


3 The Annual Report includes details of any major changes in functions of the Council,organisation structure and/or policy initiatives and how these changes might impact onCouncil’s Strategic Longer Term Plan.

3 "In relation to the financial reporting framework in the Annual Report, the AnnualReport addresses the following issues in accordance with relevant state policies,Australian Accounting Standards and other best practice guidelines:

2 Annual report contains audited financial statements

2 Annual report is widely available to the general public

2 Annual report reports on council's operations for the year in terms of goals andobjectives for preceding year

2 Annual report contains explanation on variations between budget and actual results

1 Annual report is published each year

Framework Asset Management & Planning Current Risk Target Risk

Element AM Policy Likelihood Unlikely Rare

Practice Area AM Policy Consequence Minor Minor

Risk Score Low Low

CurrentScore

3.2 Core Target 3 AdvancedTarget

4


Meets Requirements

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Question: Does your council have an adopted asset management policy?Observations of Current Maturity Level

1. Substantial progress with the Asset Management Policy adopted June 2012.2. Asset management policy in place and included in the resourcing strategy.

Implications of Current Maturity Level1. No apparent risks.

Recommendations1. Annual review of the policy implementation by AM steering committee.

MaturityScore


5 Policy guides informed political decisions informed by data, information and knowledgeon tradeoffs for economic, social, cultural and environmental consequences

4 AM Policy provides a reasonable basis for long-term integrated decision making by theCouncil and for participative decision making by the community and subsequentaccountability to the community about the activities of the Council

4 "AM Policy clearly articulates the principles and financial implications upon whichdecisions relating to assets and their performance will be based.

4 AM Policy has organisational context and acknowledges the importance of assetmanagement in supporting services provided by Council.

4 AM Policy identifies the need for Council reporting to be categorised in terms ofoperational, maintenance, renewal, upgrade and new expenditure classifications.

4 AM Policy includes audit and review procedures, specifies review dates and has a sunsetclause.

3 Council has an adopted Asset Management Policy which defines the Council’s vision andservice delivery objectives for asset management.

3 AM Policy has a direct linkage with Council’s Strategic Longer Term Plan and Long TermFinancial Plan.

3 AM Policy requires the adoption of Asset Management Plans informed by communityconsultation and local government financial reporting frameworks.


3 AM Policy defines asset management roles, responsibilities and reporting framework.

3 AM Policy identifies a process for meeting training needs in financial and assetmanagement practices for councillors and staff.

2 AM Policy adopted by Council

1 AM Policy in place but not adopted by Council OR some awareness by Council of assetmanagement policy elements and asset management principles.



Element AM Strategy Likelihood Likely Unlikely

Practice Area AM Strategy Consequence Major Minor

Risk Score High Low


5


Meets Requirements

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Question: Does your council have an adopted asset management strategy?Observations of Current Maturity Level

1. Asset management strategy has been completed and linked to asset management plans.Implications of Current Maturity Level

1. No apparent risks.

Recommendations1. Link upgrade new to service level targets.2. Ensure integration between AM strategy (supported by AMPs), CSP, LTFP and SS7.3. Identify key infrastructure risks. (IP&R requirement).4. Ensure AM Planning drives the budget process and planning for new, upgrade and renewals.

MaturityScore


5 Strategy includes analysis of cost/benefit options for service delivery

5 Strategy drives asset management planning and service delivery

4 Planning for New assets and the Upgrade of assets is driven by Council's Strategic LongerTerm Plan, Council’s Service Plans and Council’s Asset Management Plans.

4 Strategy details out how the councils get to where it wants to be including comparisonwith current situation and proposed future to highlight where strategies will need to bedeveloped to cater for any changes

4 Strategy details where the councils wants to be

3 Council has an Asset Management Strategy which shows how the asset portfolio canmeet the service delivery needs of the community and defines the future vision of assetmanagement practices within Council.

3 Council’s Asset Management Strategy is linked to Council's Asset Management Policyand integrated into Council’s Strategic Longer Term planning and annual budgetingprocesses.

3 Council's Asset Management Strategy documents the current status of assetmanagement practices (processes, asset data and information systems) within theCouncil and what actions Council must take to implement the Asset Management Policy,including resource requirements, timeframes and accountabilities.

2 Strategy shows what assets the council has

2 Strategy fits with the council strategic plans

1 Draft AM Strategy Prepared but not adopted by Council



Element AM Plans Likelihood Unlikely Rare

Practice Area AM Plans Consequence Major Moderate



4


Meets Requirements

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Question: Does your council have adopted asset management plans?Observations of Current Maturity LevelStatus of Asset management plans

Roads and Transport – Complete

Stormwater Drainage and Flood Protection – Complete

Buildings – Complete

Parks and Recreation – Complete

Sewage System – Complete

Plant and Equipment – Complete

Waste Management – CompleteCommunity and Technical levels of service completed for all asset classes however not yet linked to funding inthe LTFP.Implications of Current Maturity Level

1. There is a risk Service level reporting is not linked to the CSP and LTFP funding.

Recommendations1. Ensure ongoing annual review in line with the asset management improvement plan ensuring risk

management actions report on what will and will not be done.2. Ensure there is one scenario for each AMP that aligns with the adopted LTFP (scenario 3).3. Ensure the target service levels and risks in the risk register are based on scenario 3.

MaturityScore


5 AM Strategy & AMP provide optimum value for defined service using scenarios to informservice performance. Multiple scenarios to show best value options

4 Planning for new and upgraded assets driven by Asset Management Strategy and AMP.Highly responsive to policy direction

4 Asset Management Plans include future demand projections and forecasts based onpopulation and demographic projections.

4 Asset Management Plans are influenced by the level of community enquiry – Feedbackon Customer levels of service.

4 Asset Management Plans include the financial requirements to meet target levels ofservice levels for at least the next 10 years for each asset class and are correlated withthe data in the Long Term Financial Plan.

4 Asset Management Plans include a process for optimising decisions to obtain the bestvalue outcome for defined levels of service utilising scenario modelling and tradeoffs.

4 AMPs include Infrastructure Risk Management Plan

3 AMPS adopted by Council for all material asset groups in a consistent format inaccordance with industry best practice (E.g. Appendix A of the InternationalInfrastructure Management Manual (IIMM)) and are available to all relevant staff acrossthe organisation.

3 AMPs define which asset groups are covered by each Plan in accordance with a clearlydocumented Infrastructure Asset Hierarchy.

3 AMPS cover at least 10 years and


3 a. Refer to Council's Asset Management Policy and Asset Management Strategy;

3 b. Include all assets and document asset inventory information for the assetgroup/category as recorded in the asset register;

3 c. Document the asset hierarchy within each asset group;

3 d. Document the current condition of assets;

3 e. Document the adopted useful lives of assets;

3 f. Include risk assessment and criticality profiles;

3 g. Provide information about assets, including particular actions and costs to provide adefined (current and/or target) level of service in the most cost effective manner

3 h. Include demand management forecasts;

3 i. Address life cycle costs of assets;

3 j. Include forward programs identifying cash flow forecasts projected for:

3 i. Asset Renewals;

3 ii. New Assets and Upgrades of existing assets;

3 iii. Maintenance expenditure;

3 iv. Operational expenditure (including depreciation expense);

3 k. Address asset performance and utilisation measures and associated targets as linkedto levels of service;

3 l. Include an asset rationalisation and disposal program; and

3 m. Include an asset management improvement plan.

3 n. Include consideration of non-asset service delivery solutions (leasing private/publicpartnerships)

3 o. Recognise changes in service potential of assets through projections of assetreplacement costs, depreciated replacement cost and depreciation expense.

3 p. Include consideration of possible effects of climate change on asset useful lifes andmaintenance costs

3 AMPs link to the Council’s AM Policy, AM Strategy, Strategic Longer Term Plan, LongTerm Financial Plan and other relevant Council Policy objectives.

3 AMPs have all been prepared in association with community consultation.

2 Separate AMP's for each asset group - high level overall framework but not consistent

2 AMP's in place but not regularly reviewed or adopted

2 AMPs include all assets on asset register

2 AMPs Include an improvement plan

1 Reactive and fragmented



Element Governance and Management Likelihood Likely Rare

Practice Area Governance and Management Consequence Major Minor

Risk Score High Low


4


Meets Requirements

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Question: Does your council have good management practices linking AM to service delivery?Observations of Current Maturity Level

1. AM steering committee in operation.2. Position description roles and responsibilities exist down to manager level but not further down.

Implications of Current Maturity Level1. Reputational exposure may be increased should unexpected asset failure occur.

Recommendations1. Implement the governance business process maps in the appendix especially the risk management

business process.2. Apply the capital investment decision criteria in the AMPs in the 10 year capital works programme.3. AM steering committee apply risk management audits to key activities to ensure risk control actions

are in place and followed.4. Implement state of the assets reporting showing service level trends and targets.

MaturityScore


5 Common purpose and focus on service delivery with agreed nexus between funding andservice outcomes.

5 Bottom up and top down feedback on performance with defined measures for servicedelivery and governance

4 Accountability mechanisms are maintained to ensure that Council resources are usedoptimally to address Council’s strategic asset management objectives, as detailed in theAsset Management Strategy and Asset Management Plans.

4 Council utilises their Infrastructure Asset Hierarchy as a basis for consistent reportingacross the organisation.

4 Community levels of service and technical levels of service are monitored are reportedto the Executive Management Team and Council.

4 When the Council and Executive consider the annual Capital Works Program, theyprioritise works based on cost/benefit assessments (including risk) with resourceimplications reflected into the Long Term Financial Plan.

4 The Executive and Council are provided with an annual ‘State of the Assets’ reportcovering asset condition, asset performance, intervention levels, level of servicemonitoring and future financial sustainability options and consequences.

4 Council has an Internal Audit Committee with competency to understand advancedasset management and the Internal Audit Committee provides an independent reviewand annual report on asset management performance across the whole organisation tothe Council.

3 Council has mechanisms in place to provide high level oversight by the Council, CEO/GMand Executive Management Team, for development and implementation of the AssetManagement Strategy and Asset Management Plans.

3 Roles and responsibilities are clearly defined in a matrix or policy, identifying positionsresponsible for determining levels of service and positions responsible for managing theassets to meet service delivery needs.

3 The staff structure and position descriptions clearly define asset management functions,responsibilities and skill requirements for managing all asset classes.


3 Council has a documented process for making capital investment decisions, which isdriven by Council’s Strategic Longer Term Plan, Long Term Financial Plan and the ServicePlan and explicitly details the impacts on the future operations and maintenancebudgets, “Whole of Life” costs and risk management assessments.

3 Council involves all its departments in Asset Management.

3 Council has an Asset Management Steering Committee, with cross functionalrepresentation and clearly defined and documented terms of reference, focussed oncoordinating the linkages between service delivery and asset managementimplementation.

3 There are internal processes to promote Asset Management across Council

2 Multi-disciplinary AM Steering Committee in operation with regular meetings

2 AM improvement plan in operation

1 Informal AM Steering activities



Element Levels of Service Likelihood Likely Rare

Practice Area Levels of Service Consequence Major Minor

Risk Score High Low


4



- -

Question: Does your Council have a defined process for determining current and target levels ofservice and costs?

Observations of Current Maturity Level1. Service Planning is reflected in Asset management Plans at an overview level.2. Current service levels are backed up by statement of funds allocated to each expenditure category.

Implications of Current Maturity Level1. Strategic Plan may need to be reviewed in the future if AMPs / AM strategy show that community

service level aspirations cannot be achieved.2. Risk is that Council may not be aware of the mismatch between community aspirations and what can

be delivered.

Recommendations1. Ensure service levels in AM Plans (technical and community) are updated on an annual basis.2. Community service levels should show what is achievable with funding available in LTFP in be

included in the CSP.

MaturityScore


5 Optimum life cycle costs known and supported by high levels of data, information andknowledge in all key areas. Political decisions informed by data, information andknowledge on tradeoffs for economic, social, cultural and environmental consequences.

5 Documented feedback on long term cumulative impacts of decisions on service levels.

4 Council has undertaken the process of identifying the costs associated with each level ofservice, including the increased cost or decreased cost associated with increasing ordecreasing each level of service respectively to assist in scenario modelling.

4 Target community levels of service are defined through community consultation,considering population and demographic change projections, trend analysis andcustomer feedback and requests.

4 Council has a communication plan to communicate information on infrastructure servicedelivery issues and Councils management of these issues to external stakeholders,

4 The cost of maintenance and operational activities are reported against adopted levelsof service.

4 Council, in conjunction with the community, regularly reviews its community levels ofservice and technical levels of service, to determine the financial impact of a change inservice levels. If a change occurs this is then reflected into the Asset Management Planand Long Term Financial Plan.

3 Council has Service Plans for each of its services which have been developed inconsultation with the community.

3 Council has undertaken the process of defining, quantifying and documenting currentcommunity levels of service and technical levels of service, and costs of providing thecurrent levels of service.

3 Current and target levels of service (for both community levels of service and associatedtechnical levels of service) are clearly defined in each Asset Management Plan.

3 Technical levels of service are incorporated into service agreements and/ormaintenance, operational and capital renewal procedures.


2 Service levels in some areas - fragmented

1 Service levels are consequences of annual budget allocaton and not defined.



Element Data & Systems Likelihood Likely Rare

Practice Area Data & Systems Consequence Major Minor



4



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Question: Does Council have the data and systems to perform asset management activities?Observations of Current Maturity Level

1. Capitalisation applied in the asset register for all assets - Balancing to the ledger.2. Inventory approximately 80% correct.3. Unit rates are indexed annually.4. Component level asset register currently in XL spreadsheets CIVICA. MapInfo used for spatial data.

Using reflect for maintenance management.5. Residual values are utilised where required.6. Core level assessment on unit costs but additional work needed on useful lives.7. Generally high organisational awareness of the importance of a single up to date asset register with

supporting unit costs and useful lives that represent actual funded service levels.Implications of Current Maturity Level

1. Risk that changes made in the technical register are not reflected in the financial register.2. Un-necessary time and burden on staff if adequate processes are not in place to control data and

system requirements.

Recommendations1. Asset accounting policy needed to manage asset capitalisation in accordance with AIFMG.2. This maturity audit can be used to benchmark asset management data and systems performance

over time.3. Suggest using the IIMM condition scoring 5= failed, 1 = as new.

MaturityScore


5 Annual skills and knowledge audit on capacity and capacity needed to deliver corporateplan with linked service provision plan.

5 Asset data is integrated and responds to required decision support information neededfor optimised service delivery

4 Asset data is available to operations, design and planning staff across services areaswhen planning and undertaking works.

4 Asset renewal funding requirements and funding gaps are determined utilising up todate asset condition information and scenario modelling used to optimise life cycle costswith risk tradeoffs.

4 Asset Management systems have risk management functionality available to predictcriticality of assets, record risk assessments, risk treatment, treatment costs and residualrisk.

4 Council records the results of asset condition surveys and defect assessments againstindividual assets, linked to the componentised inventory in the asset register. Timeseries condition data is maintained to allow monitoring of asset performance.

4 Asset Management systems are able to predict asset life based on various assessmentfactors and compare actual against predicted deterioration behaviour.

4 Council's Asset Management system can generate works orders based on interventionlevels and customer requests which are also linked to the asset register. It has thecapacity to monitor completion targets and perform facilities management functions.

4 Council's Asset Management system is integrated with other corporate knowledgesystems such as the finance, GIS and property information systems.


4 Functionality of Council's Asset Management systems includes the ability to generatemaintenance and renewal programs based on available budget and future conditionprofiles, to generate scenario specific cash flow forecasts and to generate optimisedprograms.

4 Council's Asset Management systems are used to monitor asset performance over time.

4 Council has documented data standards for inclusion in Asset Management systemsupon the commissioning of new (and/or modified) assets.

4 Council benchmarks its infrastructure funding gap against State and National indicators.

4 Council’s Asset Management system used to manage operations and maintenancefunctionality is driven by an asset knowledge management strategy, with specialisedfunctionality for each service area to monitor operations and maintenance costs andtrends.

4 Data is available and accessible to enable performance measurement and reportingagainst Key Performance Indicators used to measure levels of service. Processes andinformation are driven by an asset knowledge management strategy linked to the AssetManagement Plans and the Long Term Financial Plan.

4 Data and systems allow projections which inform a range of service provision scenariosand costs. Adopted scenarios are incorporated into Asset Management Plans and theLong Term Financial Plan with an annual review in line with legislative requirements andpolicy papers issued by State Government

3 Council has a consolidated, integrated, accurate, up to date and completecomponentised asset register with the required functionality to ensure security and dataintegrity, which includes all information about each asset sorted by asset group.

3 There is a common corporate data framework used across all asset groups, which isdefined by Council’s Infrastructure Asset Hierarchy.

3 Council has documented repeatable methodologies to carry out consistent assetcondition surveys and defect identification assessments, as documented in a ConditionRating Assessment Manual for applicable asset classes.

3 Council's asset financial reporting functionality is comprehensive and includes audittrails, depreciation calculations, reporting thresholds and records of acquisition anddisposal of assets

3 Council's systems, procedures and processes allow it to benchmark its assetmanagement performance against like Councils over time.

3 Asset Management systems have the functionality to generate maintenance andrenewal programs and produce associated cash flow forecasts.

3 Council has defined and documented procedures for determining asset replacement andtreatment unit rates, which are then stored in Council’s Asset Management system.

3 Council has a defined process for operations, maintenance, renewal and upgradeplanning for its existing assets.

2 Skill & knowledge requirements determined

2 Audit completed to determine current skill & knowledge levels

1 Ad hoc and fragmented approach to data management driven by current projects



Element Skills and Processes Likelihood Likely Rare

Practice Area Skills and Processes Consequence Major Minor



4



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Question: Does council have the data & systems knowledge to perform asset data managementactivities?

Observations of Current Maturity Level1. Skills and processes in place to keep asset register up to date but additional documentation needed

on service level and maintenance management trends.2. Training evidenced for NAMS.Lite only.3. Reviews of assets useful life has not been evidence based.4. There has been strong emphasis on linking AMPs to LTFP.5. Skills requirements is understood but not documented or formalised.6. Skills and processes are not yet at core level. The improvement programme will enable core maturity

in all areas within 12 months.Implications of Current Maturity Level

1. Extended useful lives have a tendency to understate depreciation results.2. Untrained staff can provide inappropriate results compromising clarity in data and processes.3. There is a risk that the skills needed for maintaining asset management systems, both technical and

financial, may not always be considered in corporate decisions.

Recommendations1. NAMS.PLUS2 and AIFMG training required.2. Apply the AIFMG checklist to determine useful life and remaining life and cross check useful lives

using NAMS.Plus template for sampling based validation of useful life.3. Review and update asset lives and unit costs (replacement, renewal, residual) as part of a co

ordinated and overall revaluation process. This needs to include likely impacts on future asset values,depreciation and impacts on annual reporting and financial statements.

4. Ensure that asset management processes and improvements are documented and reported.5. Ensure that current link between AMPS and LTFP is maintained during the budget process.

MaturityScore


5 Annual skills and knowledge audit on capacity and capacity needed to deliver corporateplan with linked service provision plan.

4 Following each Annual Budget cycle, Asset Management Plans and the Long TermFinancial Plan are updated to reflect the current financial position and to maintaincurrency between all documents.

4 Council has a process which incorporates research into the determination of asset livesbased on condition and consumption rates.

4 Council has a service rationalisation process linked to a Disposal Policy that identifies anyservices (and associated assets) that are surplus to community needs.

4 Council has a documented process that identifies the outcomes of service deliveryreviews for input into Asset Management Plans and the Long Term Financial Plan.

4 When undertaking operations and maintenance activities there is a process to allowstaff to communicate asset related issues to other service areas.

4 There is a process to analyse risks and incorporate risk mitigation strategies intocontingency plans within the planning cycle.

4 Asset failures and causes of failures are recorded and analysed to identify failure trendsand asset group rectification strategies.


4 Council has a process whereby community enquiry and operational response issues arelinked to individual assets.

4 Council has an Optimum Decision Making framework to ensure consistent decisionmaking. The Optimum Decision Making framework considers multivariable criterialinked to service and performance standards. There is a shift in emphasis from assetcondition to service performance and value.

4 Capital Works are prioritised based on the application of business cases incorporatingwhole of life costing, risk and benefit quantification and all data used in decision makingis documented and recorded.

4 Staff are trained in best practice operating and maintenance procedures and activities.

4 Contingency plans in place to ensure continuity of activities when staff turnover occurs

4 Asset Knowledge Management Strategy identifies data framework requirements

3 Council has a process to review and update the Asset Management Strategy on amaximum of a 5 year cycle. The Asset Management Strategy is to be formally adoptedby Council.

3 Council has a process to review and update Asset Management Plans for all asset groupson a maximum of a 3 to 4 year cycle consistent with the Council election cycle. AssetManagement Plans are formally adopted by Council.

3 Council has a process to identify operational risks, assign responsibilities and monitorrisk treatment actions all recorded within a risk register.

3 Council has a process to annually review and update the financial forecasts for all assetclasses and update the Long Term Financial Plan.

3 Council has assessed the skills and knowledge required to perform asset datamanagement activities, conduct financial reporting valuations and develop AssetManagement Plans. Council has a current asset management skills matrix. Staff trainingneeds have been identified and training scheduled.

3 Council has a defined methodology for assessing the Remaining and Useful Life, ResidualValue and Depreciation Method of assets.

3 Council has a process to collect and record asset data into an Asset Management systemupon the commissioning of new (and/or modified) assets, including built andcontributed assets.

3 Council has formal processes for the handover of assets to asset custodians/owners.

3 Council has a process to communicate the financial implications of the AssetManagement Plans to internal and external stakeholders.

3 Council provides ongoing training programs for councillors, council management andofficers on key asset management topics.

2 Skill & knowledge requirements determined

2 Audit completed to determine current skill & knowledge levels

2 Documented asset data management procedures

1 Ad hoc and fragmented approach to data management driven by current projects



Element Evaluation Likelihood Possible Rare

Practice Area Evaluation Consequence Moderate Minor



4



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Question: Does council have a process to evaluate progress and use of resources onimplementation of the National Frameworks?

Observations of Current Maturity Level1. Council has established improvement actions in each AMP.2. Council is well placed to move to core maturity for all Practice Areas.

Implications of Current Maturity Level1. The reporting of achievement against the core level targets is an important element of the

improvement plan.2. Without a means of reporting progress against the State and National Framework will leave the

Council exposed.

Recommendations1. Implement the evaluation process that is part of this report.2. Ensure an annual review is undertaken of asset maturity across the organisation.3. Update this maturity assessment following completion of asset management plans and updated

strategy.4. Implement state of the assets reporting showing current and 10 year target and affordable service

levels for condition, function and capacity (see NAMSPLUS2 for definitions and methodology).5. Monitor and report on benefit cost risk to maintain optimum level of reporting.

MaturityScore


5 Council undertakes an annual audit within the organisation to report on trends on TripleBottom Line/Quadruple Bottom Line service delivery and accompanying financialsustainability compared to the Strategic Longer Term Plan.

5 Qualitative Key Result Areas (KRA’s) are set for Community levels of service. KRA’s aremonitored, measured and reported to Council, against time based ‘targets’.

4 Council has a documented evaluation process by which asset managementimprovements are identified, timeframes established, resources allocated, actioned,monitored and reported to the Internal Audit Committee and Council

4 Quantitative Key Performance Indicators (KPI’s) are set for Technical levels of service.KPI’s are monitored, measured and reported to Council against time based ‘targets’.

4 Council benchmarks its asset management performance improvement against State andNational indicators and reports annually on its asset management improvementperformance against set targets.

3 Council has a documented evaluation process by which asset managementimprovements are identified, timeframes established, resources allocated, actioned,monitored and reported to the Executive Management Team and/or CEO

3 Technical levels of service are monitored and performance reported.

3 Community levels of service are monitored and performance reported.

2 Improvement tasks are included in staff performance plans and reviews

1 No formal evaluation process