table of contents...the asset management strategy document is a companion to the asset management...
TRANSCRIPT
Table of Contents1 EXECUTIVE SUMMARY_______________________________________________________________________________________5
2 INTRODUCTION________________________________________________________________________________________________6
2.1 Scope and Purpose _____________________________________________________________________________________6
3 STRATEGIC CONTEXT ________________________________________________________________________________________73.1 Municipal Profile _________________________________________________________________________________________73.2 Council Managed Assets _______________________________________________________________________________83.3 Council Vision and Strategic Objectives ______________________________________________________________83.4 Drivers for Asset Management _________________________________________________________________________93.5 Asset Management Policy ____________________________________________________________________________103.6 Financial Planning and the Long Term Financial Strategy _________________________________________103.7 Budgetary Frameworks for Asset Management ____________________________________________________113.8 Capital Works Budget Definitions ____________________________________________________________________123.9 Key Stakeholders and Expectations _________________________________________________________________133.10 Community Input_______________________________________________________________________________________143.11 Assessment of Community Need and Function ____________________________________________________143.12 Asset Management Practices and Systems ________________________________________________________15
4 ASSET MANAGEMENT VISION ____________________________________________________________________________17
4.1 Asset Management Vision and Objectives __________________________________________________________174.2 Asset Management Framework ______________________________________________________________________184.3 Key Elements for Asset Management _______________________________________________________________194.4 Summary of Current State ____________________________________________________________________________204.5 Asset Management Roles and Responsibilities_____________________________________________________224.6 Managing the Renewal Challenge____________________________________________________________________224.7 Benefits of Implementing this Strategy ______________________________________________________________23
5 STRATEGIC ASSET MANAGEMENT INITIATIVES ______________________________________________________19
5.1 Improvement Themes _________________________________________________________________________________245.2 Additional Information _________________________________________________________________________________265.3 Implementation and Review Aspects ________________________________________________________________265.4 Financial Implications __________________________________________________________________________________26
List of FiguresFigure 1: Corporate Asset Management Framework _______________________________________________________________18
List of Tables
Table 1: Asset Values_____________________________________________________________________________________________________8Table 2: Asset Management Budget Process _______________________________________________________________________11Table 3: Key Stakeholders and Expectations ________________________________________________________________________13Table 4: Consultation Processes ______________________________________________________________________________________14Table 5: Community Feedback and User Satisfaction Formats____________________________________________________15Table 6: Data Information Systems____________________________________________________________________________________16Table 7: Current State of Asset Management________________________________________________________________________20Table 8: Improvement Themes and Strategic Initiatives ____________________________________________________________25
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Council’s Asset Management Strategy is a key link in the chain of actions required for a sound process ofimproving the long term management of its infrastructure assets.
The Asset Management Strategy establishes the framework that determines the nature and direction of AssetManagement. Its objective is to provide a structured set of actions aimed at enabling improved assetmanagement by the organisation.
The Strategy:• Links and integrates Council’s plan and resources, indicating which services are to be delivered through
which assets;• Outlines the budgetary framework to be used for asset management;• Presents the current state of how the City is managing its assets;• Outlines asset management practices, systems and improvements.
The Asset Management Strategy document is a companion to the Asset Management Policy that outlineswhy management of Council’s infrastructure assets will be undertaken across the organisation. The Policydefines the key principles that underpin asset management for a council.
Developed in accordance with the Policy and Strategy, individual Asset Management Plans are created todetail the strategies and actions specific to that asset group (e.g. Roads).
All asset documents are subject to ongoing improvements as further information becomes available. AnImprovement Plan within each Asset Management Plan outlines in detail what actions are required to ensurecontinuous improvement.
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1 Executive Summary
2.1 Scope and Purpose
The purpose of this Asset Management Strategy is to develop a structured set of actions aimed at enablingthe City of Greater Dandenong (CGD) to improve its practices in asset management. This strategy will directthe improvements to meet service delivery needs as defined in the Council Plan and Asset Management Policy.The strategy has an 8-year outlook and applies to all assets owned or controlled by Council.
This Asset Management Strategy reviews Council’s current asset management environment and proposes aseries of strategic initiatives to achieve the following outcomes:
• Clear direction for asset management within the organisation
• Alignment with Council Plan vision and objectives
• Lifecycle management approach for assets owned or controlled by Council
• Long term financial sustainability in managing assets delivering services that meet community needs
• Maximising efficiency and effectiveness of asset management systems and processes
• Improved accountabilities and culture change with respect to asset management.
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2 Introduction
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3.1 Municipal Profile
The City of Greater Dandenong is located 31kms from Melbourne’s CBD and is made up of 10 suburbs. TheCity covers an area of approximately 130 square kilometres and is the economic centre of Victoria’s fastestgrowth corridor.
The City is a suburban municipality with a mix of residential areas, large activity centres, extensive industrialprecincts and green wedge land used for pastoral activities and water treatment purposes. The City of GreaterDandenong has long been considered a city of opportunity, while its industrial precincts form one of Australia’smost significant and productive manufacturing areas.
3 Strategic Context
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3.2 Council Managed Assets
The City of Greater Dandenong is responsible for the management of assets valued at more than $2 Billion.These assets play an integral part in delivering the services provided by Council to serve the City. The tablebelow provides a summary of the replacement values of Council’s assets.
Table 1: Asset Values
ReplacementAsset Group Description Value as at
30 June 2014
Roads Roads, Footpaths, Bridges, Carparks $ 597,452,000
Storm Water Drainage Drains $ 208,386,000
Facilities Buildings and Leasehold Improvements $ 337,394,000
Open Space Land Improvements, Street Furniture, Playgrounds $ 63,657,000
Plant, Fleet & Equipment Plant & Equipment, minor plant & equipment, IT software $ 57,246,000
Land Council owned land, land under roads $ 759,543,000
Other Works in progress $ 14,081,000
TOTAL $ 2,037,759,000
3.3 Council Vision and Strategic Objectives
The City of Greater Dandenong is the capital city of Melbourne’s south-east and is becoming one of Victoria’scentres for living, working and shopping. The Council Plan 2013- 2017 (revised in 2015) identifies the followingvision
‘Greater Dandenong is a safe, vibrant city of opportunity for all – to visit, work, live and play.’
The Council Plan is also based on the three themes of People, Place and Opportunity, each of which aresupported by two strategic objectives. The two strategic objectives relating to the ‘Place’ theme are mostrelevant to the management of Council’s assets for service delivery:
• An environmentally sustainable city
• A city planned for the future
The Council recognises its stewardship role in appropriately managing the assets that have been provided bypast and current generations. It also aims to fulfil their obligation in ensuring a sustainable level of infrastructurefor future communities. The key challenges outlined in the Council Plan, relating to managing an optimum levelof infrastructure assets and delivering services are as follows:
• The influx of new residents and managing demographic changes such as the population that is growing predominantly in the early years and the older years and lower socio-economic conditions for many.
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• The most culturally diverse community in Victoria, with equally diverse service requirements that need to be met.
• Maintaining the municipality as the manufacturing hub of Victoria.
• Continuing to attract business, industry and tourism to the region.
• Funding asset renewal requirements relating to ageing assets, in a sustainable manner and ensuring thatrequired levels of service continue to be delivered.
3.4 Drivers for Asset Management
City of Greater Dandenong’s approach to the management of infrastructure assets can have a significantimpact on service delivery and long term financial sustainability of Council. As custodians of community assets,Council has a good understanding of the fact that there is increased pressure on future resources – bothphysical and cash reserves - to continue to provide assets at the desired levels of service.
Some of the key drivers for improving the management of Council’s assets are as follows:
• CGD is the economic centre of Victoria’s fastest growth corridor.
• Significant industrial development occurring in the Dandenong South area.
• CGD has the highest rate of heavy vehicle movement within Victoria.
• Increasing transport pressure from freight movements to and from industrial locations as well as from growth in through traffic and traffic serving commercial and residential areas.
• Provision of appropriate services, facilities and infrastructure for a growing and culturally diverse populationwith equally diverse service requirements.
• Increased pressure from the community for improved service delivery at less cost.
• Planning and decision-making for long-term sustainability and achieving a fair balance of costs and benefitsbetween present and future generations.
• The State Government’s focus on the widening renewal gap for Victorian Councils and limitations in CGD’sability to raise funds to bridge asset renewal gaps.
• Diminishing real contributions from State and Federal Government grants.
• Victorian Auditor General's reporting on local government's asset management performance
• Local Government Insurer's assessment of Council’s ability to minimise asset risks.
• Responsibilities in Acts; e.g. Road Management Act 2004, Disability Discrimination Act 1992.
• Australian Accounting Standards (Fair Value) requiring the identification, valuation and depreciation of infrastructure assets.
• The National Asset Management Assessment Framework (NAMAF) and the asset management performance benchmarking undertaken via the MAV STEP Program.
• The recently published International Standards for Asset Management (ISO55000/1/2) and the potential impact on asset management expectations across all levels of government.
Therefore, the City of Greater Dandenong has a critical need to provide sound asset management and ensurethat the assets are provided and maintained at a reasonable level. This approach must correspond with thenecessary legislative and regulatory requirements, resident expectations and affordability.
3.5 Asset Management Policy
The Asset Management Policy defines the key principles that underpin asset management and addresses thedrivers (objectives and responsibilities) and the actions required to implement infrastructure asset management.It also lists the strategic planning linkages associated with asset management planning and strategy.
3.6 Financial Planning and the Long Term Financial Strategy
The Local Government Act requires Councils to prepare a Strategic Resource Plan (SRP) for at least the nextfour years. Council annually publishes a Long Term Financial Strategy (incorporating the Strategic ResourcePlan) that addresses the Council’s operational and capital works plans for the next five years.
The Long Term Financial Strategy (LTFS) exists primarily to provide the following outcomes for the City ofGreater Dandenong:
1. Establish a prudent and sound financial framework, combining and integrating financial strategies toachieve a planned outcome.
2. Establish a financial framework against which Council’s strategies, policies and financial performancecan be measured against.
3. Ensure that Council complies with sound financial management principles, as required by the LocalGovernment Act (1989) and plan for the long term financial sustainability of Council.
4. Allow Council to meet the objectives of the Local Government Act (1989) to promote the social,economic and environmental viability of the municipal district and its role in maintaining the viability ofCouncil to ensure that resources are managed in a responsible manner.
The five year forecast provides a high-level, medium term view of how Council intends to use and govern itsresources to achieve the strategic direction. This strategy has been developed without the consideration ofrate capping which will have implications on the availability of funding into the future.
The individual Asset Management Plans for the various asset categories include 20-year future fundingpredictions with capital renewal requirements generally based on financial modelling as established under theMAV Step Program. These 20-year funding programs are then fed into the Council’s Long Term FinancialStrategy which drives the Annual Budget.
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3.7 Budgetary Frameworks for Asset Management
The City of Greater Dandenong Council identifies that there is a process required to provide a strong ability tofund the management of Council’s infrastructure asset base, which is the basis of strategic financial planning.
The process below utilises four rather than the traditional two key funding areas. The first two “Non-Discretionary” areas are in recurrent and capital. The capital commitment is to fund the ongoing assetrefurbishment and renewal requirements to ensure longevity of Council’s assets.
Potholes, grading of roads
Footpath Repairs
Cost of Street Lighting
Parks Maintenance
Building Maintenance, servicing &utility costs (electricity, cleaning)
Road Reconstruction
K&C/Footpath replacement
Oval Resurfacing
Building renovation (but not upgrade)
Also includes renewal ‘Gap’funding
Road pavement wideningNew footpaths
Major park reconstruction
Building extension
New facility
Table 2: Asset Management Budget Process
Recurrent Asset CapitalOperational ManagementFunding
Maintenance & Refurbishment New/UpgradeOperations and Renewal
“Non-Discretionary” “Non-Discretionary” “Discretionary”Recurrent Operational Capital Capital
3.8 Capital Works Budget Definitions
The capital budget process breaks capital works proposals into the categories below.These are defined by the Local Government (Reporting and Planning Regulations) 2014
Non discretionary
Discretionary
Discretionary
Discretionary
Expenditure on an existing asset or on replacing an existing asset thatreturns the service capability of the asset to its original capability.
Expenditure that extends the capacity of an existing asset to providebenefits to new users at the same standard as is provided to existingbeneficiaries
Expenditure that:(a) enhances an existing asset to provide a higher level of service, or(b) Increases the life of the asset beyond its original life.
Expenditure that creates a new asset that provides a service that doesnot currently exist.
Asset Renewal
Asset Expansion
Asset Upgrade
New Assets
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3.9 Key Stakeholders and Expectations
Council’s key stakeholders with respect to managing assets to ensure service delivery are summarised in thetable below:
Table 3: Key Stakeholders and Expectations
Key Stakeholder Perceived Expectations
Residents & Ratepayers
Industries & Other Businesses
Visitors and other users of Council Services
Councillors
Government
Employees & Volunteers
Utilities & Other Agencies
Developers
Contractors & Suppliers
Local Government Insurer
Service provision, sustainable environment, good amenities, value for money
Service provision, good transport networks, sustainable environment, value for money
Availability of services, safe environment, ease of access, good ambience
Stewardship of service provision, representation of community issues
Good infrastructure management, annual performance reporting, equitable service provision to the community
Continuity of employment, job satisfaction, safe work environment
Sound working relationship, responsiveness, good decision-making, efficient and effective processes
Responsiveness, affordable fees and charges, efficient and effective processes
Sound working relationship, continuity of work, safe work environment
Effective management of infrastructure risks
3.10 Community Input
Input from the community by way of consultation and feedback plays an important role in Councilunderstanding the needs of the community. The City of Greater Dandenong does and will use a number ofplatforms for community consultation including new education and consultation directions, and invitingcomments on asset plans. Consultation will be sought in a way which considers the diverse nature of ourcommunity.
3.11 Assessment of Community Need and Function
The assessment of community “need” for a new or upgraded asset should involve a process of communityconsultation. As well as identifying the specific needs of the community, they in turn need to be aware of theissues of cost and risk.
This community consultation process also satisfies part of the legislated “best value” principle and its ownbest value policy.
The community needs and expectations are balanced with industry best practice of Asset Management andthe “level of service” for each individual asset category that is written into their Asset Management Plan.
The importance of the “level of service” is that it allows the asset to be maintained and/orrenewed/refurbished/replaced as required while at the same time strategically managing the allocation of limitedfunding resources.
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Table 4: Consultation Processes
Process Type Description
Best Value Process
Legislation
Council Publications
Specific ProjectConsultation
Capital Works
Where benchmarking performance occurs against like Councils and service provision.
The Road Management Act provides for an opportunity for community input into theCGD Road Management Plan. The process calls for submissions through advertisingin the local press, The Government Gazette, and the adoption by Council.
Council’s website, monthly magazine: The City, agendas and minutes and specificinformation sheets detail Council issues, works and operational activities.
All major infrastructure works have a consultation phase with residents and otherstakeholders who are affected by a project. There are a number of consultationprocesses ranging from extensive for new infrastructure, to notification by letter ifworks disrupt or affect property access.
Council’s Annual City Improvement Program (CIP) is developed with a consultationprocess including internal and external stakeholders and councillors.
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Councils City Improvement Program (CIP) which includes significant investment in the renewal and upgradeof assets is developed through a consultation process. All projects are rigorously evaluated using agreed criteriaprior to Council approval to ensure a balanced approach.
Council has the ability to analyse its Customer requests and understand the issues that drive communityexpectations. The results of the analysis will be completed in detail in the Asset Management Plans.
3.12 Asset Management Practices and Systems
This section outlines the nature of current practices for Asset Management decision making and details animprovement program to enhance them in order to provide ongoing improvement to the management ofCouncil’s infrastructure assets.
Several areas that are vital to managing the asset include:
1. Asset DataInformation on the actual physical details of the assets including quantity, dimensions, age, condition, costto provide, replacement cost, useful life span, etc. It must be appropriate for the required purpose, reliableand accessible.
2. Information Systems
This includes all the data information systems necessary to competently manage the asset. Key systemsinclude the corporate accounting system, asset information system, geographic information system andcustomer request system.
3. Processes
This involves the various processes to analyse and evaluate the data from the above systems to producerelevant management reports and works programs.
4. StrategiesImplementation strategies for organisational management, including contractual and resource issues areessential to ensure that the asset management process is conducted in a sound and competent manner.
Table 5: Community Feedback and User Satisfaction Formats
Format Type Further Details
Internal Customer Surveys
Customer Request (Merit)
Office of Local GovernmentCustomer Service Survey
Online Mechanisms
Major Clubs & Groups
A survey to ascertain the customer’s level of satisfaction.
Analysis of performance. E.g. reaction times are also used as a measure ofperformance and are incorporated in Annual Reports.
A survey undertaken to discover how the residents of a municipality that theirCouncil is performing.
Available on Council’s Web Site.
Feedback from User Groups to Council Service Managers.
Council currently uses the following main data information systems for recording relevant asset data information:
Table 6: Data Information Systems
Module System
Customer Requests Merit CRM
Financials Computron Software
Records Management Objective
Mapping (GIS) IntraMaps
Asset Management Conquest
Works Management Vendor: Field Tec
Road Pavement Management SMEC
Drainage Management Wincam
Renewal Modelling Moloney Asset Management Systems
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4.1 Asset Management Vision and Objectives
The City of Greater Dandenong’s vision for asset management is as follows:
‘As custodians of community assets, the City of Greater Dandenong will provide assets that are accessible,safe, sustainable and responsive to the needs of the community and the contemporary environment.’
This asset management vision is supported by the following objectives as outlined in the Asset ManagementPolicy:
• To achieve Best Appropriate Practice in Asset Management as it applies to the different asset groups
• To adopt a long term sustainable asset management approach, incorporating life cycle costing into capitalinvestment decisions, including new, expansion or upgrade projects funded by external grants.
• To develop and review Asset Management Plans for each infrastructure asset group, that link to the LongTerm Financial Strategy and local government performance and financial reporting frameworks.
• To develop and review service targets and standards in consultation with the community, to ensure long term sustainability of the assets supporting service delivery.
• To give priority to asset renewal or refurbishment when making capital investment decisions thereby ensuringCouncil’s existing assets are properly maintained for ongoing provision of acceptable levels of service.
• To develop effective and affordable preventative maintenance programs aimed at minimising life cycle costsand maximising the service potential of assets
• To apply appropriate risk management principles and practices for staff, contractors, property and the community.
• To implement and maintain an integrated Asset Management System to ensure a common asset data setis available for strategic, operational and financial reporting purposes.
• To be a progressive Council in Asset Management by incorporating cross collaboration and cultural change.
4 AssetManagement
Vision
4.2 Asset Management Framework
The above vision and objectives will be achieved by implementing an asset management framework that isintegrated with Council’s planning framework as outlined in the diagram in Figure 1. This framework is alsoconsistent with the MAV STEP Program, which is now focusing on the integration of the following three mainareas for Councils:
• Assets: achieving a 'Core' then 'Advanced' level of asset management maturity
• Services: delivering services within a financially sustainable context
• Financial Sustainability: ensuring expectations do not exceed funding capacity.
This Asset Management Strategy is a key component of this framework and drives Council’s approach toreaching core maturity and progressing to advanced maturity levels.
Figure 1: Corporate Asset Management Framework
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IMAGINE 2030 COMMUNITY PLAN
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SERVICESTRATEGIES
SERVICEPLANS
OPERATIONAL PLANSServices delivery in accordance with asset
management plans.
Asset Solutions – operate, maintain, renew,
develop, retire.
Non-asset solutions – partnerships, demandmanagement, insurance, failure management
INFORMATION SYSTEMS,
PROCEDURES & RESOURCES
ASSET MANAGEMENT STRATEGY
ASSET MANAGEMENT POLICY
ASSET MANAGEMENT PLANS
COUNCIL PLAN
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4.3 Key Elements for Asset Management
There are eleven core quality elements of Asset Management identified under the National Asset ManagementAssessment Framework. These elements are listed below with the following definitions:
1. Strategic PlanningIs Council’s process of defining its strategy, or direction, and making decisions on allocating its resourcesto pursue this strategy; including its capital and people.
2. Annual BudgetThe Annual Budget is Council’s budget prepared for a 12-month period. The Annual Budget outlines boththe income and expenditures that are expected to be received and paid over the coming year.
3. Annual ReportAn Annual Report is a comprehensive report on Council’s activities throughout the preceding year. Local Government annual reports are intended to give ratepayers and other interested parties information aboutthe Council’s activities and financial performance.
4. Asset Management PolicyAn Asset Management Policy is a high level document that describes how Council intends to approach asset management within the organisation.
5. Asset Management StrategyAn Asset Management Strategy is a strategy for the implementation and documentation of asset management practices, plans, processes and procedures within an organisation.
6. Asset Management PlansAsset Management Plans are plans developed for the management of one or more infrastructure asset classes with a view to operating, maintaining and renewing the class in most cost effective manner possible,whilst providing a specific level of service.
7. Governance and ManagementThe Governance Framework is a set of rules and policies designed to ensure that responsibilities within anorganisation are well defined, and that the business runs smoothly. While Management are the staff in charge of authorising and delivering such rules. It is very important that Asset Management is intertwinedinto this framework.
8. Levels of ServiceLevels of Service can be defined as the service quality for a given activity. Levels of Service are often documented as a commitment to carry out a given action or actions within a specified time, or the provisionof infrastructure to meet a desired level.
9. Data and SystemsAsset Data is qualitative and/or quantitative information used to identify and describe an asset group or group of assets. The Systems are the framework in which the data is processed and stored.
10. Skills and ProcessesThe level of skill and knowledge within the organisation in regards to Asset Management, along with a setof interrelated tasks that endeavour to increase awareness and learning.
11. EvaluationHow Council internally evaluates and monitors its performance in Asset Management.
Table 7: Current State of Asset Management
Asset Management Current StatusElement
Asset Management Policy
Asset ManagementStrategy
Asset Management Plans
Governance &Management
The AM Policy has recently been updated to incorporate best practice aspectssuch as:• Integrating it with Council’s planning framework and long term financial plans• Identifying asset management roles and responsibilities• Identifying approach to asset management skills enhancement and training.The updated version is now ready for adoption by Council.
The existing AM Strategy was adopted by Council in 2008 and now requiresupdates to reflect strategic actions to achieve core maturity and progresstowards advance maturity, as defined in the NAMAF Audit. Hence thisdocument has now been prepared to provide the strategic direction for assetmanagement improvements over the next 8 years, up to 2022.
• Council is committed to developing Asset Management Plans for all itsmajor infrastructure assets, to continue to deliver the required levels ofservice.
• AMP’s have been developed for Roads, Drainage, Buildings and Facilitiesassets. These plans are now being reviewed with key information beingextracted for communicating to internal and external stakeholders.
• An Asset Management Plan for Open Space assets is currently beingdeveloped after completion of the required asset data capture activities.
• The steering committee for Asset Management (to be referred to as theService and Asset Management Steering Group) and its terms of referenceneed to be reviewed, to provide a more cross-functional and integratedapproach to service planning and asset management improvements andassociated culture change.
• A roles and responsibilities matrix has been drafted, listing the key roles andresponsibilities for lifecycle management of the different infrastructure assetgroups. The matrix will go out for consultation and approval from EMT.
• Standard templates exist for CIP submissions, evaluation and scoring, todetermine the priorities for implementation. These templates should befurther improved to ensure that whole-of-life costs are considered in theevaluation process, along with a more comprehensive risk assessment toassess consequences of not proceeding. An independent review of the CIPImprovement Program is currently undertaken with recommendations tofollow.
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4.4 Summary of Current State
A summary of CGD’s current maturity levels with respect to the key asset management elements are outlinedin the table below. The Improvement Plan in relation to these elements has been produced and is monitoredregularly.
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Asset Management Current StatusElement
Levels of Service
Data & Systems
Skills & Processes
• Community satisfaction feedback regarding levels of service are assessedvia the annual local government satisfaction survey conducted by theDepartment of Transport, Planning & Local Infrastructure (DTPLI)
• Community input has been sought on the Road Management Plan, whichoutlines the technical levels of service with respect to assets in the roadreserve.
• Service Plans are in draft stage and requiring further development. It isintended that the plans will be updated and included in the reviewed AssetManagement Plans.
• Council has implemented the Conquest asset management system (with20 licences) as its corporate asset register and to undertake the requiredasset valuations/financial reporting.
• Asset inventory data is recorded in Conquest for:o Infrastructure assets such as roads, footpaths, bridges, drainage pits
and pipes, buildings & facilities and only minimal data relating to Open Space assets such as playground equipment, barbecues, furniture, etc.
o Plant, fleet and equipment, including IT assets and artworks• Other systems used for recording asset inventory data include:o DMC Access database for traffic and parking signso Intramaps GIS for street trees and signage
• Fleet assets are managed via the Ausfleet Fleet Mgt System.• Costs of maintenance works undertaken are only in the ComputronFinancial system and are not recorded against the relevant assets inConquest, except for major patching on road segments.
• Investigations are currently under way for implementing more integratedwork order and mobile computing functionality.
• Well-established processes exist for recording condition assessments andrevaluations relating to the Roads asset group, with condition assessmentsundertaken at the frequencies specified in the Road Management Plan.
• A sample of 4% of CGD’s drains were inspected via CCTV cameras, toassess the overall condition of the drainage network. Processes have nowbeen established to inspect only the critical drains.
• Building condition assessments are undertaken bi-annually and recordedin Conquest.
• General safety inspections are undertaken on Open Space assets.Processes will need to be established to undertake condition assessmentson critical Open Space assets.
• Service planning generally has only a short term horizon (eg: 1- 3 years). Itneeds to have a more long-term focus to adequately influence the longerterm financial forecasts in the Asset Management Plans and the LTFS.
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Asset Management Current StatusElement
Skills & Processescontinued
Evaluation
• Risk assessments are generally undertaken only at a corporate/high leveland need to be more specific to infrastructure asset groups, so that criticalassets may be identified and appropriate risk mitigation strategies can beimplemented.
• Regular reporting is undertaken on the achievement of the service leveltargets specified in the Road Management Plan.
• An integrated works management system will be implemented to regularlyreport to EMT on asset condition. Additional process and systems will berequired to report on management improvement actions, asset performanceand the levels of service delivered from all asset groups.
• An annual ‘State of the Assets’ report should also be compiled to informCouncillors and the community on CGD’s investments and assets used forservice delivery.
4.5 Asset Management Roles and Responsibilities
CGD has a Roles and Responsibilities Matrix that outlines which CGD Staff Member is responsible for eachAsset Management function within Council. The matrix comprises of the 13 asset classes along with the 100different asset types within Council. Each asset type has listed against it the officers responsible for providingthe various functions below.
- Service Planning - Operations - Design - Construction/Acquisition
- Maintenance - Renewal Planning - Disposal - Asset Data Management
4.6 Managing the Renewal Challenge
In regards to Asset Management, the biggest financial challenge facing CGD is the cost of renewing its assetinfrastructure. The City of Greater Dandenong has had the majority of its asset infrastructure built betweenthe 1950’s to 1980’s. Many years on this period of development has created a large peak in the need to re-inject capital funds in the form of asset renewal. In order to ensure these funds are accurately budgeted forand spent, there is a critical need to introduce systems and processes that develop precise asset managementdata.
As CGD’s assets continue to age, more investment in asset maintenance and renewal expenditure will berequired to ensure that the current level of service is delivered to the community. Whilst CGD has addressedits short-term financial sustainability issues, there will be major forthcoming challenges in meeting asset renewalrequirements on an annual basis. These requirements, inclusive any the backlog from underfunding of previousyears, is an issue that can only be addressed over the long period. Council’s Long Term Financial Strategy forthe next 5-year period (ie: 2015/16 to 2019/20) provides a long term framework that balances the need formore infrastructure funding with affordable rates.
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It indicates that:
• A strategic outcome of the LTFS is to endorse an in-principle strategy of allocating funds to meet assetrenewal and maintenance requirements as a priority in the development of the annual Capital Improvementprogram and recurrent programs.
Council has been assessing its renewal gap since 2005 via the use of the Moloney Asset Management System.This system contains modelling software that provides Council with a comprehensive overview on its capitalfunding liabilities and future demand. It also provides directions on how Council can better understand itsfinancial and service obligations associated with ageing infrastructure. The interim modelling clearly showsthat:
• The forecasted renewal expenditure of $75.8 million over the next 5 years (ie: an average of $15 million perannum) on CGD’s infrastructure asset groups is appropriate for the current asset stock.
• This will need to significantly increase to:
o An average of $16.7 million per annum for the following 5 years (ie: Years 6 – 10).
o An average of $17.5million per annum beyond Year 10. (ie: for Years 11 – 20).
It should also be noted that these asset renewal projections may increase further as:
• They do not include requirements for several sub-groups within the Open Space asset class and as theasset data knowledge relating to these asset groups improves, this estimate is likely to increase further.
• The renewal estimates for infrastructure assets (excluding roads assets) are currently under-estimated, asthey are based on construction in ‘greenfields’ instead of in built up areas. (ie: brownfields).
Therefore if CGD was to maintain the current level of funding towards infrastructure renewal into the longerterm, it may result in a renewal gap in the order of $2 - $3 million per annum over the next 5 – 20 years. Thiscalculation clearly shows the importance of having a forecast longer than 5 years in the Long Term FinancialStrategy. CGD’s Asset Planning Unit will seek to develop the Long Term Financial Strategy forecasts to moreaccurately model the above mentioned renewal liabilities and assess long term sustainability.
4.7 Benefits of Implementing this Strategy
By implementing this strategy, Council aims to improve the asset management practices to provide a moresustainable service delivery process. The key benefits are:
• Implementing processes that will allow improved asset management and financial planning
• Demonstrating sound governance of Council’s assets
• Optimising the life of Council’s assets
• Responding to the changing drivers and allowing for environmental pressures without compromising servicedelivery
• Monitoring asset performance and responding accordingly
• Improving accountabilities for asset management performance
• Ensuring cost effective solutions for the management of the assets
• Obtaining consistent and reliable data across asset groups
• Ensuring long term sustainability in delivering adopted levels of service.
5.1 Improvement Themes
Several themes (5 no.) have been identified in this strategy to improve the administration of asset managementfor Council. These themes will position the organisation to achieve its desired vision for asset managementalong with enabling Council to achieve asset management core maturity and progressing to advanced assetmanagement maturity.
It is anticipated that from these themes, an Improvement Plan will be developed and evaluated accordingly.
As can be seen in the following table, a series of strategic initiatives have been classified under the five themes.
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5 Strategic AssetManagement
Initiatives
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The strategic initiatives have been classified under the following 5 themes in the Improvement Plan.
Table 8: Improvement Themes and Strategic Initiatives
Theme Description
Governance
Planning &Service LevelManagement
Data andSystems
Processes
PerformanceReporting
• Improved asset management and governance frameworks to implement bestappropriate asset management practices
• Defined accountabilities for service planning and lifecycle management activities relatedto infrastructure assets, with position descriptions and performance plans updatedaccordingly.
• Skills assessment and organisation-wide asset management capability building andchange management via appropriate communication, training and developmentprograms.
• Improved evaluation of capital investments, incorporating whole-of-life costs and riskassessments.
• Improved asset management plans and long-term forecasts for infrastructure assetexpenditure.
• Improved engagement with the community on affordable asset service delivery.• Well documented long-term service plans with current and target service levels andassociated costs
• Annually provide the estimated renewal requirements to be incorporated into Council’sLong term Financial Strategy.
• Better integration between the Long Term Financial Strategy and the service planningand asset management planning outputs.
• A centralised, integrated and accurate asset register in Conquest• Improved inventory and condition information on the asset portfolio• Consistent classification of asset groups to adhere to Local Government financialreporting regulations.
• Improved componentisation of buildings for depreciation purposes and optimisinglifecycle maintenance costs
• More effective utilisation of integrated asset management information systems• Improved and streamlined work order management and mobile computing capabilitiesfor field maintenance activities
• Improved ability to determine asset lifecycle and service delivery costing.
• Improved processes for infrastructure risk assessment.• More accurate estimates for infrastructure asset renewals• Consistent application of processes across all asset groups
• Regular reporting to senior management, Councillors and the community on assetmanagement performance, asset management projects and service levels delivered.
5.2 Additional Information
A preliminary assessment of the recently released ISO55001 standards for asset management indicates thatthe key elements of this standard are already covered in the NAMAF (which CGD uses as a tool to improve itsasset management). Therefore it is identified that the improvement initiatives outlined in this strategy areincorporating the key principles of ISO55001.
It should also be noted that some initiatives are ongoing after the initial implementation and hence extendbeyond the term of this strategy. Eg: performance reporting, training, etc.
5.3 Implementation and Review Aspects
The Service and Asset Management Steering (SAS) Group needs to be responsible for driving theimplementation of the AM Improvement Plan. Appropriate resources, timeframes and priorities will be requiredto ensure that the strategic initiatives are delivered in their entirety. This will enable Council to achieve theNAMAF’s goal of core maturity.
Most of the initiatives may be undertaken by internal resources. The Improvement Plan provides some veryhigh level estimates for external resource budgets regarding field data capture. The SAS Group will also needto monitor and report on the progress of the Improvement Plan to EMT and Council on a quarterly basis.Appropriate systems may also need to be configured to monitor and report on these actions upon request.
5.4 Financial Implications
This is estimated to be in the order of $140,000 and has only been provided for preliminary budgeting purposes.More detailed cost estimates, including any software configuration/purchase costs and internal/externalresource requirements will need to be developed based on a detailed implementation plan.
A comprehensive mid-point review of the entire Asset Management Strategy should be completed by the SASGroup no later than December 2018.
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Nature of expense Timeframe Amount
External resources – professional services for field data capture. 2015-16 $140,000
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