University of Newcastle &

Xact Project Consultants

Moving strategic asset management from

the plant room to the boardroom

4

Overview of Presentation

• Putting Asset Management on the VC’s Radar!

• The Newcastle University Journey

• Strategic Asset Management

• Overview

• Framework (SAMF)

• Plan (SAMP)

• Lessons Learnt

What about your University?

• Do you understand the risk profile associated with

your asset portfolio?

• Do you need more GFA or less?

• Have you measured capacity / utilisation?

• Have you assessed functionality backlog?

• Are you investing heavily in old stock?

• Have you assigned an Asset Strategy to every

building to target investment

• Does your Executive understand asset mang’t

• Are investment decisions based on a “list of projects”

• Have you ever knocked a building down?

• Do you have the budget to maintain your assets?

UoN Situation in 2011

• No SAMP

• No formal Framework

• EOI process to identify needs

• Capital Development Committee

• No space system

• No future Demand Forecast

• Condition Audit

• Inadequate Budgets

• Disconnect between Executive / Faculty and IFS

• Excellent Environmental Performance – sector wide

Strategic Asset Management

a brief overview

P Lennon

What is Strategic Asset Management?

PAS 55: Systematic and coordinated activities and practices

through which an organisation optimally and sustainably

manages its assets and asset systems, their associated

performance, risks and expenditures over their lifecycle for

the purposes of achieving its organisational strategic plan.

Draft ISO 5500: the coordinated activities of an organization to

realize value from assets.

TEFMA SAM Guideline:

The planned alignment of physical assets with business need.

SAM in the Tertiary Education Sector

Tasks and

Functions

Processes and

Competencies

Resource

Management

Property Information

Repairs and Maintenance

Site Selection & Acquisition

Construction & Handover

Refurbishment and Refit

Estate Management

Asset management

Facilities Management

Property Portfolio Management

Strategic Facilities Planning

Long-term Asset Management

Support Services Management

Optimizing the use of resources

Tactical Concerns Strategic Concerns

10

The Need for Change

The NSW Auditor General’s Report stated:

I reviewed a sample of annual reports and found

universities only disclose limited information on

outcomes achieved from their asset management

practices. I believe universities should report how

effectively they are managing the $8.6 billion worth of

infrastructure assets they control.

Facilities/Asset Management

Tactical Facilities/Asset Management

13

TEFMA Asset Planning

SAMP Needs Assessment Maturity

Characteristics of the University Estates

• There is a growing maintenance backlog at most Universities.

• The backlog is generally driven by over-investment in new facilities (estates

are growing) and under- investment in the existing estate (operating budgets

are not).

Expenditure Category

Ave Exp %

ARV

Required

Exp % ARV

Budget Gap

%ARV

Maintenance 0.69% 0.88% 0.19%

Asset Replacement 0.18% 1.32% 1.14%

Refurbishment 1.08% 2.12% 1.04%

Total 1.95% 4.32% 2.37%

Xact’s Principles of Asset Management

• Space is everything

• Asset Management needs to move from the Plant

Room to the Board Room

• The full asset life cycle needs to be considered:

• Asset decisions must be informed decisions, based

on measured performance

Benefits of SAM

“The prize for getting it right is certainly very big and

touches almost all parts of an organisation. The

available case studies and increasing hard evidence

demonstrate a mix of:

• higher performance levels

• lower costs

• greater consistency

• increased confidence and credibility

• happier customers, staff and regulators

• more sustainable outcomes

Key Components of UoN SAM

UoN SAMF (PAS55) Assessment

a brief overview

Peter Lennon

PAS55

Asset Management

System (SAMF)

PAS55 Assessment Framework

22

UoN PAS 55 Performance Score

SAMF Category UoN

Score

Mean

PAS55 Min Accreditation Level

Governance 1.3 3 Asset Management Plans 1.9 3

Enablers & Controls 1.6 3

Asset Implementation

Plans

1.2 3

Performance Assessment 1.9 3 Management Review 0.8 3

UoN SAMF Self-Assessment (PAS55) 23

SAMF Maturity Scale 24

UoN

Current UoN SAMF is immature and needs significant

improvement

Strategic Asset Management Plan

SAMP1

DFarragher

Process

– Researched SAMP nationally and internationally

– Established a Working Group

– Engaged Xact Consulting

– Assessed the Estate Performance

– Established AM Gateway process –adopted by

Council

– Conducted Consultation

– Presented our results to Executive and Council

26

Reference Material

TEFMA – Strategic Asset Management Guideline 2010

IAM - Asset Management – An Anatomy 2012

IIMM – Intern’l Infrastructure Management Manual 2011

Managing the University Campus – Alexandra den Heijer

BSI – PASS 55 – Asset Management – Specification for the

Optimised Management of Physical Assets 2008

ANOA – Best Practice Guide on the Strategic & Operational

Management of Assets by Public Sector Entities 2010

27

SAMPs - research

• No SAMPs found follow TEFMA guideline

• Very few include performance data

• Big emphasis on Capital Works

• No evidence based management information

• Described the campus but not performance of assets

• Unable to find Asset Management Policy

• Static or historical information

• Only some included plans /future targets

• Outlines expenditure but not LCC budget

requirements / backlog, strategies for assets

28

SAMP Working Group

ABSOLUTELY CRITICAL TO SUCCESS

• Director - Chair

• Finance – Capital and Opex staff

• Audit and Risk

• FM

– Ops, Maint Planner, Engineers

– Capital – PM’s

– Space

– Enviro

29

SAMP Process

Performance Assessment

- Donna Farragher

16 Asset Classes

Buildings

Roads, Bridges, Retaining Walls, Kerbs and Gutters

Footpaths and Cycling Paths

Stormwater Assets

Open Spaces

High Voltage/Low Voltage Electrical

Landscape

Waste Water

Gas

Water Supply

Fire Services

Car Parks

Bushland

Communications & IT

1. Street Lighting

32

SAMP Performance Assessment 33

A newcastle.edu.au

34

Capacity 35

0

10,000

20,000

30,000

40,000

50,000

60,000

Office Research Laboratory General Teaching Specialist Teaching Library

Gro

ss F

loo

r A

rea

Core Space Type

Estate Space Requirements

Required Space

Actual Space

36 Utilisation

• Assessed timetabled teaching space, residential and library

• No data for research, general teaching, specialist teaching,

commercial and residential use

•Assessment of labs is critical as it is the most expensive

space to operate and takes longer to deliver

•The current low levels of utilisation across all teaching

space suggest that there is sufficient teaching space to meet

current needs and some capacity to meet future growth

37

Functionality Assessment

Functionality

Overall Functionality Rating Distribution 38

39

40

Overall Condition Rating Distribution

Environmental Sustainability

SAMP recommends that Institutions measure

performance and develop integrated strategies for

• Energy

• Greenhouse gas emissions

• Water consumption

• Waste management

• Landuse and ecology

42

Expenditure Trends – Peter Lennon

45

Maintenance and Asset Replacement

Expenditure as a % ARV from 2000 to 2011

Investment in Refurbishment

46

Broad Maintenance Strategies

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Average

% A

sset

Rep

lacem

en

t V

alu

e

Year

UoN Maintenance Expenditure

UoN MI (% ARV) UoN ARI (% ARV) Sector Avg MI

Sector Avg ARI UoN Target MI MI +ARI Target

Maintenance + Asset Replacement Target

Maintenance

Reduce the target using

differential levels of

service for various asset

groups.

Increase budget

allocations

Risk: The Asset Death Spiral

Gap Analysis & Risk Assessment – Peter

Lennon

Asset Priority Index

• Strategic Alignment

• Dependency

– Intradependency – Can the required functions be

delivered out of alternative facilities on campus or

through temporary facilities?

– Interdependency – Can the activity be delivered in

another way?

• Consequence

Building Code

Building Name Campus Strat.

Align.

Intra Depend.

Inter Depend.

Conseq. API

NEWL NEWBOLDS LABORATORY [CITY] CITY 1.0 1.0 1.0 1.0 1.0

CON CONSERVATORIUM OF MUSIC [CITY] CITY 4.0 3.0 3.0 4.0 3.6

NH NORTHUMBERLAND HOUSE [CITY] CITY 3.0 2.0 2.0 2.0 2.4

UNH UNIVERSITY HOUSE CITY 4.0 3.0 3.0 4.0 3.6

A ARCHITECTURE CALLAGHAN 3.0 3.0 3.0 2.0 2.8

Overall Needs Rating – Refurbishment Priorities

Building Code Building Name Campus OFR OCR

Overall Needs Index (ONR)

API Risk Rating

Risk Level

BHPP BHP NIER P BLOCK Callaghan 2.0 2.5 2.2 5.0 13.8 High

MC MCMULLIN BUILDING Callaghan 2.4 2.6 2.5 5.0 12.5 High

H HUNTER BUILDING Callaghan 2.3 3.0 2.6 5.0 11.9 Medium

EHA EDWARDS HALL BLOCK A Callaghan 2.2 2.6 2.4 4.0 10.4 Medium

MS MEDICAL SCIENCES Callaghan 2.7 2.8 2.8 4.6 10.3 Medium

P PHYSICS BUILDING Callaghan 2.4 2.7 2.5 4.0 9.8 Medium

CON CONSERVATORIUM OF MUSIC [CITY] City 2.1 2.5 2.3 3.6 9.7 Medium

W BEHAVIOURAL SCIENCES Callaghan 2.4 2.8 2.6 3.8 9.1 Medium

EE ENGINEERING E - ELECTRICAL Callaghan 2.2 2.3 2.3 3.0 8.2 Medium

EHB EDWARDS HALL BLOCK B Callaghan 2.0 2.6 2.3 3.0 8.1 Medium

EHC EDWARDS HALL BLOCK C Callaghan 2.0 2.6 2.3 3.0 8.0 Medium

Needs Index

Build Code

Building Name Campus Asset Replace. Value (ARV)

Mainten. Backlog

Function. Backlog

Total Backlog

Facilit.s Needs Index (FNI)

BHPP BHP NIER P BLOCK Callaghan $535,040 $425,021 $355,340 $780,361 -0.46

MC MCMULLIN BUILDING Callaghan $17,027,539 $4,133,483 $10,336,864 $14,470,347 0.15

H HUNTER BUILDING Callaghan $58,536,042 $4,662,650 $40,101,069 $44,763,719 0.24

EHA EDWARDS HALL BLOCK A Callaghan $4,625,992 $1,015,917 $2,671,131 $3,687,049 0.20

MS MEDICAL SCIENCES Callaghan $20,208,894 $4,873,695 $5,308,413 $10,182,108 0.50

P PHYSICS BUILDING Callaghan $7,219,858 $1,496,649 $3,857,841 $5,354,490 0.26

CON CONSERVATORIUM OF MUSIC [CITY]

City $16,156,540 $3,878,623 $6,323,879 $10,202,502 0.37

W BEHAVIOURAL SCIENCES Callaghan $11,747,570 $2,561,512 $6,855,140 $9,416,651 0.20

EE ENGINEERING E - ELECTRICAL Callaghan $5,193,349 $1,655,876 $3,514,404 $5,170,280 0.00

EHB EDWARDS HALL BLOCK B Callaghan $6,985,631 $991,601 $5,392,374 $6,383,975 0.09

EHC EDWARDS HALL BLOCK C Callaghan $7,140,985 $996,709 $5,400,119 $6,396,828 0.10

Asset Strategy

Donna Farragher

1: Limit Growth in GFA, improve efficiency

2: Disposal of Surplus Assets

3: Redevelopment/Refurbishment

4: Differential Maintenance Response Levels

5: Environmental Management

ASSET STRATEGIES SAMP 1

Strategy 3: Redevelop or Large Scale Refurb

STRATEGY 4: DIFFERENTIAL MAINTENANCE

RESPONSE LEVELS

Maintenance Response

1. Critical

2. Comprehensive

3. Managed

4. Reactive

STRATEGY 5: ENVIRONMENTAL MANAGEMENT

Greenhouse gas emissions target (20% by

2015)

KPI in New Directions

Recommendations

• Achieve a certified 5 star Green Star rating on

new facilities

• Enhance energy efficiency during

refurbishments

• Green power

• Solar arrays

• Water saving devices in new and refurbished

Strategy Development Checklist

• Institutional Priorities

• API

• Condition

• Functionality

• Capacity

• Utilisation

• Environmental Performance

• SAMP Maintenance Strategy

• ARV, Backlog, FNI

• Risk

Asset Management Gateway

A Brief Overview of the Gateway Process and

Outcomes – Donna Farragher

Asset Management Gateway

Current Stage Complete Complete

1. Idea 2. Consultation

3. NeW Directions Alignment

(GATE 0)

4. EC Review

(GATE 1)

5. Advisory Group Review

& Prioritise

6. SAMC Review & Prioritise

7. Strategy Development

8. Strategy Review

9. Strategy Prioritisation and Approval

(GATE 2)

10. Business Case Initiation

11. Council Review of

Business Cases

(GATE 3)

12. Project Initiation

13. Project Development

14. Pre - Implementation

(GATE 4)

15. Implementation

16. Transition and Closing

(GATE 5)

64 Science and IT

Asset Implementation Plans

Content, Template, 3 (or 5) & 10 Year Horizons

– Capital Investment Plan

– Maintenance Plan

– Space Management Plan

– Surplus Asset Plan

Governance

A Brief Overview of the Governance

University Council

Finance Committee

Strategic Development

Committee

Executive Committee

Strategic Asset Management Committee

Research & Innovation Advisory

Group

Campus

Environment Advisory

Group

Education Advisory

Group

Project

Steering Committees

Communities of Practice

Project Control

Groups

Project Sponsors

Infrastructure and Facilities Services

Asset Strategic Planning

Capital Development

& Project Delivery

Facilities Operations & Maintenance

Strategic Asset Management Governance Framework

68

Strategic Asset Management Committee

•Vice-Chancellor and President (Chair) ;

•Chief Operating Officer (Deputy Chair) ;

•Chairs of the Asset Management Advisory Groups ;

•Chief Financial Officer ;

•Director, Infrastructure & Facilities Services ;

•Deputy Vice-Chancellor (Academic);

•Deputy Vice-Chancellor (Research); and

•a Pro Vice-Chancellor appointed by the Vice-Chancellor;

Role of SAMC

Lessons Learnt & Next Steps

71

Lessons Learnt

• Engage with the VC early using evidence-based

management information

• Engage experts in asset management

• Use an integrated approach

• Seek resources early (budget and staff)

• Establish a multi-disciplinary team

• Take everyone on the journey (as influencers)

• Build capacity immediately

• Audit your ability to undertake Performance

Assessment (systems, data, staff)

• Get your Executive to approve methodology of

assessment (capacity)

TEFMA Guideline

• Recommend a review of the guideline

• Further development of the Strategy Component

• Network of Asset Managers

• Improvement in risk component

• More detail on the AIP’s their content, role, structure

• Information on how to assess service dependency

and location performance assessments

72

Keys to Success

• The PAS55 SAMF

– Provides credibility to the process

– VC’s comment – best thing to come out of facilities for years.

• The “Huston we have a problem” moment.

– Need a comprehensive estate performance assessment. (The SAMC MUST

understand the problem.)

– Inherently some parts are accepted, other are not.

– Need action plan for making the “questioned” performance ratings more

transparent and robust.

• Focus on some key concepts

– SAM maturity will increase top down & reduce bottom up

– Space is everything (don’t build it unless you are sure you need it)

– Owning an estate is expensive (LCOC 2.5 x capital cost)

– Avoid the maintenance death spiral

– Underinvestment in maintenance & refurbishment is driving a decrease in estate

quality

• Drive the SAMC (as opposed to waiting and reacting)

“If you think education is expensive, try ignorance”.

Derek Bok, former Harvard President

THANK YOU

CRICOS Provider 00109J | www.newcastle.edu.au

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