Asset Management Plan

Transcription

1 BUILDING Asset Management Plan Version 1 May 2013

2 Document Control Document ID: Buildings AMP 2013 Rev No Date Revision Details Author Reviewer Approver 1 22 May 2013 JN RG WI Copyright 2012 All rights reserved. The Institute of Public Works Engineering Australia.

3 TABLE OF CONTENTS 1. EXECUTIVE SUMMARY...1 Opening Statement...1 Context...2 What does it Cost?...2 What we will do...2 What we cannot do INTRODUCTION Background Goals and Objectives of Asset Management Plan Framework Core and Advanced Asset Management LEVELS OF SERVICE Customer Research and Expectations Strategic and Corporate Goals Legislative Requirements Current Levels of Service FUTURE DEMAND LIFECYCLE MANAGEMENT PLAN Background Data Infrastructure Risk Management Plan Routine Operations and Maintenance Plan Renewal/Replacement Plan Creation/Acquisition/Upgrade Plan FINANCIAL SUMMARY Financial Statements and Projections Forecast Reliability and Confidence PLAN IMPROVEMENT AND MONITORING Status of Asset Management Practices Improvement Program Monitoring and Review Procedures Performance Measures REFERENCES APPENDICES Appendix A Projected 10 year Capital Upgrade / New Works Program...29 Appendix B Abbreviations...30 Appendix C Glossary...31

4 1 1. EXECUTIVE SUMMARY Opening Statement Prior to reading and reviewing the financial projections of this Asset Management Plan (AM Plan), it is important to understand that this report has been prepared with the interest of achieving industry standard reporting practices; in particular the IPWEA International Infrastructure Management manual, and the National Asset Management Strategy Australia (NAMS plus) template. This Asset Management Plan is very much at core status, however has been prepared with the intent to strategically establish the framework that will progress the current level of asset management for the building registry towards an advanced level in the near future. Today, we are unable to provide a Long Term Capital Works program with real confidence. The current data managed in house is considered dated, and there is concern with regard to the inconsistency in which much of the condition rating has been collected in the past. Furthermore, the building stock consists of a broad range of building types that vary in function and requirement. Accordingly, this Asset Management Plan aims to identify a strategy that will improve many of the current inconsistencies that exist. The Improvement Plan that is provided on page 25, concentrates on improving the method of condition inspections establishing clear categories based on building function and use, undertaking an adherent needs analysis on building type, Ultimately delivering a decision model that incorporates the Need with Condition which will guide future decision making on capital outlay. The Building Asset Management Plan is quite different to the other accompanying Council Asset Management Plans. Particularly, the Building registry has a much different community function to that of civil infrastructure; which are technically required for transport and drainage. Council buildings offer a range of functions that support community and social needs such as sporting complexes, community halls, libraries, and community centres. Consequently, this Asset Management Plan recognises the requirements to identify the importance of each building having the consideration of type and use. As advised this Asset Management Plan is at core status, however it must be recognised that internal staff have the intent to progress the structure of Asset Management for Buildings so that future versions of this plan will be used as an important tool for Long Term Financial Planning.

5 2 Context The goal of asset management is to provide a financially sustainable level of service at an acceptable level of risk, within Statutory and Legislative requirements, to present and future communities. As per the City Plan , Council s strategic goals for the buildings network are; Goal A vibrant and attractive city that is well planned and accessible, with safe and healthy places to live, work, and play. Objective Equitably distributed and accessible community assets and infrastructure provided and maintained in a fit for purpose condition. What does it Cost? The City of Port Adelaide Enfield currently has a building portfolio with an estimated replacement value of $177,408,733. Based on current figures the network depreciates at an annual rate of $1,993,948. What we will do We plan to ensure that the operation, maintenance, renewal and upgrade of all community buildings will achieve the expected service levels. This will be achieved by strategically planning all works over a 10 year planning period that considers the condition and function that each building serves within the community. What we cannot do At present, we do not have the required data to make educated decisions on the financial outlay for any immediate significant works program. Accordingly, we must undertake an updated needs analyses of the current building stock, and continue to gather condition data through annual inspection and valuation programs. What is this plan about? This asset management plan covers the infrastructure assets that serve the City of Port Adelaide Enfield community s cultural and sporting needs. These assets include Community Halls and Centres, Libraries, and Sporting Clubs, Public Toilets, etc. What is an Asset Management Plan? Asset management planning is a comprehensive process to ensure delivery of services from infrastructure is provided in a financially sustainable manner. An asset management plan details information about infrastructure assets including actions required to provide an agreed level of service in the most cost effective manner. The plan defines the services to be provided, how the services are provided and what funds are required to provide the services. Why may there be a funding shortfall? Most of the organisation s building network was constructed by developers and from government grants, often provided and accepted without consideration of ongoing operations, maintenance and replacement needs. Many of these assets are approaching the later years of their life and require replacement, services from the assets are decreasing and maintenance costs are increasing. What options do we have? Resolving the funding shortfall involves several steps: 1. Improving asset knowledge so that data accurately records the asset inventory, how assets are performing and when assets are not able to provide the required service levels, 2. Improving our efficiency in operating, maintaining, renewing and replacing existing assets to optimise life cycle costs, 3. Identifying and managing risks associated with providing services from infrastructure, 4. Making trade offs between service levels and costs to ensure that the community receives the best return from infrastructure, 5. Identifying assets surplus to needs for disposal to make saving in future operations and maintenance costs, 6. Consulting with the community to ensure that services and costs meet community needs and are affordable, 7. Developing partnership with other bodies, where available to provide services, 8. Seeking additional funding from governments and other bodies to better reflect a whole of government funding approach to infrastructure services.

6 3 What happens if we don t manage the shortfall? It is likely that we will have to reduce service levels in some areas, unless new sources of revenue are found. For Council Buildings, the service level reduction may include the reduction in service levels provided to the community. What can we do? We can develop options, costs and priorities for future Council Building services, consult with the community to plan future services to match the community service needs with ability to pay for services and maximise community benefits against costs.

7 4 2. INTRODUCTION 2.1 Background This asset management plan is to demonstrate responsive management of assets (and services provided from assets), compliance with regulatory requirements, and to communicate funding needed to provide the required levels of service over a 10 year planning period. The asset management plan follows the format for AM Plans recommended in Section of the International Infrastructure Management Manual 1. This infrastructure assets covered by this asset management plan are as follows Table 2.1: Assets covered by this Plan Building Type Number Hall 17 IR Pump 3 Lease Commercial 16 Lease Community 98 Licence 42 Operational 41 Other 14 Toilets 39 Shed 5 SW Pump 10 TOTAL 285 Key stakeholders in the preparation and implementation of this asset management plan are: Shown in Table Table 2.1.1: Key Stakeholders in the AM Plan Key Stakeholder Elected Members City Manager Asset Managers of the Asset Classes Role in Asset Management Plan Represent needs of community/shareholders, Allocate resources to meet the organisation s objectives in providing services while managing risks, Ensure organisation is financial sustainable. Allocate resources to meet the organisation s objectives in providing services while managing risks, Ensure organisation is financial sustainable Identifying resource requirements for specific asset classes. Responsible for reviewing and keeping AM plan up to date Responsible for preparing budget submissions in accordance with the AM Plan Delivering nominated renewal, upgrade projects. Responsible for Asset Officer. Coordinate with Asset officers and field workgroup leaders to identify areas 1 IPWEA, 2011, Sec 4.2.6, Example of an Asset Management Plan Structure, pp

8 5 The community of need, process improvement. Participate in consultation processes Provide feedback on services. 2.2 Goals and Objectives of Asset Management The organisation exists to provide services to its community. Some of these services are provided by infrastructure assets. We have acquired infrastructure assets by purchase, by contract, construction by staff and by donation of assets constructed by developers and others to meet increased levels of service. Our goal in managing infrastructure assets is to meet the defined level of service (as amended from time to time) in the most cost effective manner for present and future consumers. The key elements of infrastructure asset management are: Providing a defined level of service and monitoring performance, Managing the impact of growth through demand management and infrastructure investment, Taking a lifecycle approach to developing cost effective management strategies for the long term that meet the defined level of service, Identifying, assessing and appropriately controlling risks, and Having a long term financial plan which identifies required, affordable expenditure and how it will be financed Plan Framework Key elements of the plan are Levels of service specifies the services and levels of service to be provided by Council, Future demand how this will impact on future service delivery and how this is to be met, Life cycle management how we will manage our existing and future assets to provide defined levels of service, Financial summary what funds are required to provide the defined services, Asset management practices, Monitoring how the plan will be monitored to ensure it is meeting the organisation s objectives, Asset management improvement plan. A road map for preparing an asset management plan is shown below. 2 Based on IPWEA, 2011, IIMM, Sec 1.2 p 1 7.

9 6 Road Map for preparing an Asset Management Plan Source: IPWEA, 2006, IIMM, Fig 1.5.1, p CORPORATE PLANNING Confirm strategic objectives and establish AM policies, strategies & goals. Define responsibilities & ownership. Decide core or advanced AM Pan. Gain organisation commitment. REVIEW/COLLATE ASSET INFORMATION Existing information sources Identify & describe assets. Data collection Condition assessments Performance monitoring Valuation Data AM PLAN REVIEW AND AUDIT INFORMATION MANAGEMENT, and DATA IMPROVEMENT ESTABLISH LEVELS OF SERVICE Establish strategic linkages Define & adopt statements Establish measures & targets Consultation LIFECYCLE MANAGEMENT STRATEGIES Develop lifecycle strategies Describe service delivery strategy Risk management strategies Demand forecasting and management Optimised decision making (renewals, new works, disposals) Optimise maintenance strategies DEFINE SCOPE & STRUCTURE OF PLAN IMPLEMENT IMPROVEMENT STRATEGY FINANCIAL FORECASTS Lifecycle analysis Financial forecast summary Valuation Depreciation Funding IMPROVEMENT PLAN Assess current/desired practices Develop improvement plan IS THE PLAN AFFORDABLE? ITERATION Reconsider service statements Options for funding Consult with Council Consult with Community ANNUAL PLAN / BUSINESS PLAN

10 7 2.4 Core and Advanced Asset Management This asset management plan is prepared as a core asset management plan over a 10 year planning period in accordance with the International Infrastructure Management Manual 3. It is prepared to meet minimum legislative and organisational requirements for sustainable service delivery and long term financial planning and reporting. Core asset management is a top down approach where analysis is applied at the system or network level. Future revisions of this asset management plan will move towards advanced asset management using a bottom up approach for gathering asset information for individual assets to support the optimisation of activities and programs to meet agreed service levels. 3. LEVELS OF SERVICE 3.1 Customer Research and Expectations In 2010, the Recreation Assets Needs Analysis (RANA) report was completed and endorsed by Council. The study focussed on Council owned recreation built facilities such as clubrooms, change rooms, community halls, libraries, and community centres. The RANA report summarises the key findings of the study and provides key actions and recommendations for each facility. Community consultation was undertaken with a range of stakeholders including sporting and recreation based clubs, the community and Elected Members, with the relevant feedback incorporated within the study. The organisation has not carried out any research on customer expectations since the RANA study during 2008 to It is identified within this Asset Management Plan as an important improvement strategy to undertake a similar Needs Analysis of buildings to progress the Asset Management of buildings towards an advanced level. However whilst data that informed the recommendations within the final RANA report was collected in , it is considered valid currently and may be utilised to guide a capital works program over the short medium term. The Improvement Plan (page 25) further identifies the need to continually capture condition rating scores for all buildings. This will present opportunity to then prepare a decision model that considers the condition of a building along with the functional need of the building before committing to any associated capital expenditure. 3.2 Strategic and Corporate Goals The Council exists to Plan, monitor, regulate and administer financial and community assets. Ensure that resources are used effectively, efficiently and appropriately to improve the quality of life for all people within the Council area. Relevant organisation goals and objectives and how these are addressed in this asset management plan are: Table 3.2: Organisation Goals and how these are addressed in this Plan Goal Objective How Goal and Objectives are addressed in AM Plan A vibrant and attractive City that is well planned and accessible, with safe Equitably distributed and accessible community assets and infrastructure provided and Objectives in Council s long term Asset Management Plans are achieved. 3 IPWEA, 2011, IIMM.

11 8 and healthy places to live, work and play Sustainability: Improve Building Performance Reduce greenhouse impacts of consumption choices maintained in a fit for purpose condition. Ensure that community centres, libraries, civic and leased buildings are well maintained Consider innovative ways to reduce emissions from lighting, and conserve water through smarter designed taps and other plumbing means. Regular condition audits and maintenance inspections of all Council buildings will ensure that asset defects are identified promptly and maintenance can be scheduled and carried out efficiently. The assessment includes ideas to improve the buildings efficiency and a cost estimate to include these improvements in the build. 3.3 Legislative Requirements We have to meet many legislative requirements including Australian and State legislation and State regulations. These include: Table 3.3: Legislative Requirements Legislation Local Government Act Development Act 1993 Building Code of Australia Disability Discrimination Act 1993 Requirement Sets out role, purpose, responsibilities and powers of local governments including the preparation of a long term financial plan supported by asset management plans for sustainable service delivery. Regulates development in South Australia. Sets out the principles of development for all land use types. A structural guide for building works An Act to ensure that persons with disabilities have the same rights as the rest of the community (including access to premises) 3.4 Current Levels of Service We have defined service levels in two terms. Community Levels of Service measure how the community receives the service and whether the organisation is providing community value. Community levels of service measures used in the asset management plan are: Quality Function Capacity/Utilisation How good is the service? Does it meet users needs? Is the service over or under used? Technical Levels of Service Supporting the community service levels are operational or technical measures of performance. These technical measures relate to the allocation of resources to service activities that the organisation undertakes to best achieve the desired community outcomes and demonstrate effective organisational performance. Technical service measures are linked to annual budgets covering: Operations the regular activities to provide services such as opening hours, cleaning frequency, etc. Compliance ensure that certain elements of the buildings comply with relevant legislation (eg Work Health and Safety Act 2012, Development Act 1993, Building Code of Australia, Disability Discrimination Act) Maintenance the activities necessary to retain an assets as near as practicable to an appropriate service condition (eg, painting, and structure repairs),

12 9 Renewal the activities that return the service capability of an asset up to that which it had originally (eg building component replacement), Upgrade the activities to provide a higher level of service (eg office / room configuration) or a new service that did not exist previously (eg a new library). Asset managers plan, implement and control technical service levels to influence the customer service levels. 4 Our current service levels are detailed in Table 3.4. Table 3.4: Current and Desired Service Levels Key Performance Measure Level of Service Objective Performance Measure Process Current Performance COMMUNITY LEVELS OF SERVICE Quality Function Capacity/ Utilisation Ensure buildings are structurally safe and clean. Consider buildings that meet identified community needs The building must match the identified need TECHNICAL LEVELS OF SERVICE Maintenance Ensure buildings are structurally safe and clean. Overall Condition Index by structural assessment. Needs Analysis study Needs Analysis study Overall Condition Index by structural assessment. Reasonable To be reviewed To be reviewed Reasonable Renewal Based on Needs Analysis study Community use Upgrade/New Accessibility DDA requirements Reasonable New Buildings to be considered through Needs Analysis study Community Use 4 IPWEA, 2011, IIMM, p 2.22

13 10 4. FUTURE DEMAND An updated Needs Analysis study (similar to RANA) is considered vital for progressing this current Asset Management Plan from Core status to an Advanced level. The Needs Analysis study will consider the future demand by considering various qualitative and quantitative indicators (as discussed below). From this information, the updated study will pave the way for informed decision making on community needs in a changing demographic. The Needs Analysis research will consider the demand for community, sporting,and recreation building assets to align with the changing demographics and population increases. Upon completion of the study in June 2015 Council will have accurate and comparable information upon which to base future decisions concerning community and sporting building assets. Council will use this information as the driver to forecast future capital expenditure and ongoing maintenance expenditure requirements. Future demand and expenditure for building assets will be impacted by a variety of issues including: Changing community expectations may impact on the quality and nature of facilities provided by Council and this has been a discernable trend where community groups require (demand) higher standards in the facilities they use. Simple examples include requests for state of the art kitchen facilities, air conditioning in sports stadiums, increased storage requirements and supply of computing facilities in Council libraries. The inclusion of sustainability measures in new facilities and retrofitting existing facilities has an initial cost prior to any return on investment. Council will need to examine various methods to reduce power and water use across operation and non operational facilities. Construction of new facilities incorporating significant sustainability measures (for example solar power generation) will add to the initial capital cost of the facility whilst returning a reduced environmental footprint in the longer term. Current and changing legislation has an impact on expenditure for existing and new facilities. Perhaps the most significant example is the implementation of Council s DDA Action plan commencing approximately 15 years ago. One focus was the improvement in accessibility to facilities including public toilets and sporting and recreational buildings. Given the large number of facilities total expenditure has been considerable. Future changes to legislation may have a similar impact. Conflict exists due to the location of many of Council's sporting facilities (buildings and playing areas) that are surrounded by residential zones. Noise, parking and traffic are major concerns and as the use of Council s facilities increase due to demand, the problem intensifies. One option is to relocate a number of sporting facilities to non residential areas however there is a substantial cost associated with this in terms of land acquisition and building. As the demographics of the Council areas change and community trends vary, there may be a number of options for the consolidation of sport, recreation and operational facilities. Expenditure can be maximised by providing joint use facilities where various community groups operate from one physical building or a number of operational functions.

14 11 5. LIFECYCLE MANAGEMENT PLAN The lifecycle management plan details how the organisation plans to manage and operate the assets at the agreed levels of service (defined in Section 3) while optimising life cycle costs. 5.1 Background Data Physical parameters The assets covered by this asset management plan are shown in Table 2.1. The assets are varied in type and function. Accordingly, it is identified in the Improvement Plan to categorise the buildings by function with the future Asset Management Plan for Buildings to report on the Community functional buildings such as Community Centres, Community Halls, Libraries, Sporting Clubs, Toilets, etc. Smaller items, such as sheds and other will be excluded, while Pump Stations will be classified separately with an individualised Asset Management Plan given the technical function of this group. The age profile of the assets include in this AM Plan is shown in Figure 2. Figure 2: Asset Age Profile Age profile information is not currently available. An age profile will be developed in future revisions of the asset management plan Asset condition Condition is captured by Council s Valuation Contractor Maloney Field Services. The following graph is not considered an accurate reflection of the current building asset stock. The valuation data only considers the structural appearance of the building, without methodically weighting wet areas and other structural components of each building. An accurate building assessment must have a greater technical consideration. Council s Asset Management staff are in the process of reviewing and developing the process for condition rating. This is further identified in the Improvement Plan, with the consideration of tendering for a specialised Building Inspection contractor, with a regard for Asset Management to undertake this work. The condition profile of our assets based on current Valuation Data is shown in Figure 3..

15 12 Fig 3: Asset Condition Profile Condition Ratings as per Valuation Data 60 Buildings 50 Number of Buildings Condition Rating Condition is measured using a 1 5 grading system 5 as detailed in Table Table 5.1.3: Simple Condition Grading Model Condition Grading Description of Condition 1 Very Good: only planned maintenance required 2 Good: minor maintenance required plus planned maintenance 3 Fair: significant maintenance required 4 Poor: significant renewal/rehabilitation required 5 Very Poor: physically unsound and/or beyond rehabilitation As advised on page 11, the above graph is not considered an accurate reflection of the current building asset condition. To progress from the current core status of Asset Management Plan to an advanced level, Council must incorporate a higher level of building inspection expertise. Currently, Council utilises the condition scores provided for Valuation. The current data also includes sheds and other smaller type assets many of which include descriptions of machinery and gardening sheds, outbuildings, toilet blocks, and water tanks. Future Condition calculations will consider and weight 3 components of a building 1. Structural.70% 2. Wet Areas 20% 3. Miscellaneous 10% The following page provides an example of how the inspection criteria is gathered and calculated to provide an Overall Condition Index. 5 IPWEA, 2011, IIMM, Sec 2.5.4, p 2 79.

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17 14 Such method of Condition Rating is expected to provide greater consistency in calculating a score, and importantly a repeatable method of data analysis during the inspection. Unfortunately, only a small cross section of buildings have been included in the condition rating trial and as such the data is not ready for current reporting. However, internal Asset Management staff are confident with this process, and are ready to proceed with a thorough inspection of all building stock Asset valuations The value of assets recorded in the asset register as at June 2012 covered by this asset management plan is shown below. Assets are valued at their current written down value. Current Replacement Cost $177,408,733 Depreciable Amount $60,094,934 Depreciated Replacement Cost 6 $117,313,799 Annual Depreciation Expense $1,993,948 Useful lives are varied depending upon the type and category of building. The useful lives are provided by Maloney Field Services based on a condition inspection conducted to identify maintenance requirements for budgeting purposes. Key assumptions made in preparing the valuations were: Straight line depreciation has been used. 5.2 Infrastructure Risk Management Plan An assessment of risks 7 associated with service delivery from infrastructure assets has identified critical risks that will result in loss or reduction in service from infrastructure assets or a financial shock to the organisation. The risk assessment process identifies credible risks, the likelihood of the risk event occurring, the consequences should the event occur, develops a risk rating, evaluates the risk and develops a risk treatment plan for non acceptable risks. Critical risks, being those assessed as Very High requiring immediate corrective action and High requiring prioritised corrective action identified in the Infrastructure Risk Management Plan, together with the estimated residual risk after the selected treatment plan is operational are summarised in Table 5.2. These risks are reported to management and the Council. 6 Also reported as Written Down Current Replacement Cost (WDCRC).

18 15 Table 5.2: Critical Risks and Treatment Plans Service or Asset at Risk What can Happen Risk Rating (VH, H) Risk Treatment Plan Buildings Fire High Building Maintenance Inspections, regular check upon fire equipment, training internal staff on use of fire prevention equipment. Residual Risk * Moderate Buildings Electrical Failure High Regular testing and tagging of electrical equipment Moderate Note * The residual risk is the risk remaining after the selected risk treatment plan is operational. Treatment Costs Unknown Various based on building type 5.3 Routine Operations and Maintenance Plan Operations include regular activities to provide services, e.g. electrical, air conditioning. Routine maintenance is the regular on going work that is necessary to keep assets operating, including instances where portions of the asset fail and need immediate repair to make the asset operational again Operations and Maintenance Plan Operations activities affect service levels including quality and function through cleaning frequency, security monitoring, provision of utilities such as power and water, essential maintenance and opening hours of building and other facilities. Maintenance includes all actions necessary for retaining an asset as near as practicable to an appropriate service condition including regular ongoing day to day work necessary to keep assets operating, eg painting, cleaning, building repairs but excluding rehabilitation or renewal. Maintenance may be classifies into reactive, planned and specific maintenance work activities. Reactive maintenance is unplanned repair work carried out in response to service requests and management/supervisory directions. Planned maintenance is repair work that is identified and managed through a maintenance management system (MMS). MMS activities include inspection, assessing the condition against failure/breakdown experience, prioritising, scheduling, actioning the work and reporting what was done to develop a maintenance history and improve maintenance and service delivery performance. Specific maintenance is replacement of higher value components/sub components of assets that is undertaken on a regular cycle including repainting, replacing air conditioning units, etc. This work falls below the capital/maintenance threshold but may require a specific budget allocation. Actual past maintenance expenditure is shown in Table Table 5.3.1: Maintenance Expenditure Trends 2007/ / / / /12 Building Maintenance $2,680,887 $2,765,779 $2,120,856 $2,025,927 $2,020,795 Public Conv. Maint. $160,733 $193,919 $259,062 $154,994 $230,303 Total $2,841,620 $2,959,698 $2,379,918 $2,180,921 $2,251,098

19 16 It appears within the above table that Council is spending less on its maintenance programs since 2007/2008. However, the higher expenditure in 2007/2008 and 2008/2009 is a reflection of the project work undertaken in those years in comparison to what has been required in 2009/2010 and 2010/2011. The works required in 2007/2008 and 2008/2009 involved the refurbishment of the Glanville Hall and the Semaphore Palais. Given that these costs were allocated as maintenance and not captured as capital works, indicates a requirement to review the current structure of reactive type maintenance. As with all Council asset types, there must be a strategy in place to implement an inspection program to achieve a condition rating system for all buildings. Having an understanding of the expected cost and type of work to be undertaken, will justify whether the programmed works are to be considered either capital or maintenance type works. It is important to note that the City of Port Adelaide Enfield currently owns 285 buildings which consist of 41 operational buildings, such as the Civic Centre, Depots, Libraries, and Community Centres. There is a further 98 Lease Community buildings that must further be maintained to achieve the levels of service desired by those groups that use these buildings Operations and Maintenance Strategies The organisation will operate and maintain assets to provide the defined level of service to approved budgets in the most cost efficient manner. The operation and maintenance activities include: Scheduling operations activities to deliver the defined level of service in the most efficient manner, Undertaking maintenance activities through a planned maintenance system to reduce maintenance costs and improve maintenance outcomes. Undertake cost benefit analysis to determine the most cost effective split between planned and unplanned maintenance activities (50 70% planned desirable as measured by cost), Maintain a current infrastructure risk register for assets and present service risks associated with providing services from infrastructure assets and reporting Very High and High risks and residual risks after treatment to management and Council/Board, Review current and required skills base and implement workforce training and development to meet required operations and maintenance needs, Review asset utilisation to identify underutilised assets and appropriate remedies, and over utilised assets and customer demand management options, Maintain a current hierarchy of critical assets and required operations and maintenance activities, Develop and regularly review appropriate emergency response capability, Review management of operations and maintenance activities to ensure Council is obtaining best value for resources used. Asset hierarchy An asset hierarchy provides a framework for structuring data in an information system to assist in collection of data, reporting information and making decisions. The hierarchy includes the asset class and component used for asset planning and financial reporting and service level hierarchy used for service planning and delivery. The organisation s service hierarchy is shown is Table Table 5.3.2: Asset Service Hierarchy To be determined Service Hierarchy Service Level Objective Currently all buildings are inspected at least annually to ensure safety for all users.

20 17 Critical Assets Critical assets are those assets which have a high consequence of failure but not necessarily a high likelihood of failure. By identifying critical assets and critical failure modes, organisations can target and refine investigative activities, maintenance plans and capital expenditure plans at the appropriate time. Operations and maintenances activities may be targeted to mitigate critical assets failure and maintain service levels. These activities may include increased inspection frequency, higher maintenance intervention levels, etc. Critical assets failure modes and required operations and maintenance activities are detailed in Table Table : Critical Assets and Service Level Objectives Air Conditioning Electrical Infrastructure Critical Assets Critical Failure Mode Operations & Maintenance Activities IT Server Rooms at Civic Centre Fire Panels at Civic Centre Standards and specifications Failure resulting in inability for users to conduct daily business. Failure resulting in inability for users to conduct daily business. Failure resulting in inability for staff to conduct daily business. Potential loss of records. Failure resulting in potential safety risk for staff and the community. Loss of infrastructure and records Maintenance and repairs in accordance with Australian Standards. Maintenance and repairs in accordance with Australian Standards. Maintenance and repairs in accordance with Australian Standards. Maintenance and repairs in accordance with Australian Standards. Maintenance work is carried out in accordance with the following Standards and Specifications. Building Code of Australia Safe Operating Procedures under Occupational Health and Safety Australian Standards and Codes

21 Summary of future operations and maintenance expenditures Based on the average of the previous 3 years of maintenance expenditure (refer to table 5.3.1), and applying a 3.3% CPI growth rate 8 the following graph depicts the future maintenance expenditure. Figure 4: Projected Operations and Maintenance Expenditure Projected Maintenance Expenditure $3,500, $3,000, $2,500, $2,000, $1,500, $1,000, $500, $ / / / / / / / / / /21 Deferred maintenance, ie works that are identified for maintenance and unable to be funded are to be included in the risk assessment and analysis in the infrastructure risk management plan. Maintenance is funded from the operating budget where available. This is further discussed in Section Renewal/Replacement Plan Renewal and replacement 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 or lesser required service potential. Work over and above restoring an asset to original service potential is upgrade/expansion or new works expenditure Renewal plan Assets requiring renewal/replacement are identified from one of three methods provided in the Expenditure Template. Method 1 uses Asset Register data to project the renewal costs using acquisition year and useful life to determine the renewal year, or Method 2 uses capital renewal expenditure projections from external condition modelling systems (such as Pavement Management Systems), or Method 3 uses a combination of average renewals plus defect repairs in the Renewal Plan and Defect Repair Plan worksheets on the Expenditure template. Method 3 was used for this asset management plan. 8 Consumer Price Index provided by Council Finance Department

22 19 The useful lives of assets used to develop projected asset renewal expenditures are shown in Table Asset useful lives were last reviewed Maloney Field services, Table 5.4.1: Useful Lives of Assets Not Applicable Asset (Sub)Category Useful life At this time useful lives are determined from a whole of building perspective and a remaining useful life assessed at the time of valuation Renewal and Replacement Strategies The organisation will plan capital renewal and replacement projects to meet level of service objectives and minimise infrastructure service risks by: Planning and scheduling renewal projects to deliver the defined level of service in the most efficient manner, Undertaking project scoping for all capital renewal and replacement projects to identify: o the service delivery deficiency, present risk and optimum time for renewal/replacement, o the project objectives to rectify the deficiency, o the range of options, estimated capital and life cycle costs for each options that could address the service deficiency, o and evaluate the options against evaluation criteria adopted by Council, and o select the best option to be included in capital renewal programs, Using low cost renewal methods (cost of renewal is less than replacement) wherever possible, Maintain a current infrastructure risk register for assets and service risks associated with providing services from infrastructure assets and reporting Very High and High risks and residual risks after treatment to management and Council, Review current and required skills base and implement workforce training and development to meet required construction and renewal needs, Maintain a current hierarchy of critical assets and capital renewal treatments and timings required, Review management of capital renewal and replacement activities to ensure Council is obtaining best value for resources used. Renewal ranking criteria Asset renewal and replacement is typically undertaken to either: Ensure the reliability of the existing infrastructure to deliver the service it was constructed to facilitate (eg replacing a bridge that has a 5 t load limit), or To ensure the infrastructure is of sufficient quality to meet the service requirements (eg roughness of a road). 9 It is possible to identify capital renewal and replacement priorities by identifying assets or asset groups that: Have a high consequence of failure, Have a high utilisation and subsequent impact on users would be greatest, The total value represents the greatest net value to the organisation, Have the highest average age relative to their expected lives, Are identified in the AM Plan as key cost factors, Have high operational or maintenance costs, and Where replacement with modern equivalent assets would yield material savings IPWEA, 2011, IIMM, Sec 3.4.4, p Based on IPWEA, 2011, IIMM, Sec 3.4.5, p 3 66.

23 20 The ranking criteria used to determine priority of identified renewal and replacement proposals is detailed in Table Table 5.4.2: Renewal and Replacement Priority Ranking Criteria Criteria To be Reviewed as per the Improvement Plan a Needs Analysis report is to be undertaken. Weighting Total 100% 5.5 Creation/Acquisition/Upgrade Plan New works are those works that create a new asset that did not previously exist, or works which upgrade or improve an existing asset beyond its existing capacity. They may result from growth, social or environmental needs. Assets may also be acquired at no cost to the organisation from land development. These assets from growth are considered in Section Selection criteria New assets and upgrade/expansion of existing assets will be identified from the future Needs Analysis report; as identified in the Improvement Plan. The Needs Analysis report will consider function and usage value provided to the community. Based on this information, and having consideration of the Condition rating index scores (from future building inspections), an educated decision can then be made on future building asset upgrades Capital Investment Strategies The organisation will plan capital upgrade and new projects to meet level of service objectives by: Planning and scheduling capital upgrade and new projects to deliver the defined level of service in the most efficient manner, Undertake project scoping for all capital upgrade/new projects to identify: o the service delivery deficiency, present risk and required timeline for delivery of the upgrade/new asset, o the project objectives to rectify the deficiency including value management for major projects, o the range of options, estimated capital and life cycle costs for each options that could address the service deficiency, o management of risks associated with alternative options, o and evaluate the options against evaluation criteria adopted by Council, and o select the best option to be included within capital upgrade/new programs, Review current and required skills base of staff and implement training and development to meet required construction and project management needs, Review management of capital project management activities to ensure Council is obtaining best value for resources used.

24 21 6. FINANCIAL SUMMARY This section contains the financial requirements resulting from all the information presented in the previous sections of this asset management plan. The financial projections will be improved as further information becomes available on desired levels of service and current and projected future asset performance. 6.1 Financial Statements and Projections At present, it is difficult to accurately provide the future capital works program until such time Asset Management staff perform a Needs Analysis on all buildings. The Needs Analysis will consider all social requirements and the function that the building provides to the community. In addition Council Asset Management data will include structural condition indexes for all buildings. The inclusion of this technical data along with social qualitative data will deliver informed financial decisions on and target expenditure and resources to priority areas identified during the analysis stage. However for the purpose of this report and until such time that decision modelling can be performed, the following table depicts historic expenditure which can be used as a guide for future capital projections. Table 6.1.1: Capital Expenditure 2008/ / / /12 Actual Capital Spend $612,698 $1,356,284 $2,416,689 $4,034,017 Major Projects Lefevre CC, Lefevre CC, Klemzig Reserve Rosewater FC Klemzig Reserve, Rosewater FC Note the Major Projects are only those of significant worth within the annual year these projects do not form the entire budget for that year. Currently it is not possible to demonstrate any particular trend using the capital works expenditure. However the impact of varying projects on annual expenditure can be illustrated. Additionally, experience shows that major projects transverse across financial year budgets. Having consideration of the possible projects ahead that will only form part of the works required, it is reasonable to expect that the capital expenditure will be within a $3,000,000 bracket ~ on average. 6.5 Forecast Reliability and Confidence The expenditure and valuation projections in this AM Plan are based on best available data. Currency and accuracy of data is critical to effective asset and financial management. Data confidence is classified on a 5 level scale 11 in accordance with Table IPWEA, 2011, IIMM, Table 2.4.6, p 2 59.

25 22 Table 6.5: Data Confidence Grading System Confidence Grade A Highly reliable B Reliable C Uncertain D Very Uncertain E Unknown Description Data based on sound records, procedures, investigations and analysis, documented properly and recognised as the best method of assessment. Dataset is complete and estimated to be accurate ± 2% Data based on sound records, procedures, investigations and analysis, documented properly but has minor shortcomings, for example some of the data is old, some documentation is missing and/or reliance is placed on unconfirmed reports or some extrapolation. Dataset is complete and estimated to be accurate ± 10% Data based on sound records, procedures, investigations and analysis which is incomplete or unsupported, or extrapolated from a limited sample for which grade A or B data are available. Dataset is substantially complete but up to 50% is extrapolated data and accuracy estimated ± 25% Data is based on unconfirmed verbal reports and/or cursory inspections and analysis. Dataset may not be fully complete and most data is estimated or extrapolated. Accuracy ± 40% None or very little data held. The estimated confidence level for and reliability of data used in this AM Plan is shown in Table Table 6.5.1: Data Confidence Assessment for Data used in AM Plan Data Confidence Assessment Comment Demand drivers Uncertain This data will be able to be access from the Needs Analysis Growth projections Uncertain report once completed. Operations expenditures Reliable Maintenance expenditures Reliable Projected Renewal exps. Reliable Asset values Asset residual values Reliable Asset useful lives Reliable Condition modelling Uncertain Reliable Network renewals Uncertain Reliable Defect repairs Uncertain Reliable Upgrade/New expenditures Uncertain Disposal expenditures Uncertain Can use past expenditure on existing buildings Strategies are in place to gather and utilise data relating to Needs Analysis and Condition Rating. An understanding on disposals and Building renewals / upgrades can then be made on sound information relating to asset function. Condition Rating will provide improved useful life data. Over all data sources, the data confidence is assessed as a low to medium confidence level for data used in the preparation of this AM Plan.

26 23 7. PLAN IMPROVEMENT AND MONITORING 7.1 Status of Asset Management Practices Accounting and financial systems Assets are recorded at fair value in Council's financial management system (Technology 1 Finance One) in the following classifications: Land Buildings Infrastructure Plant & Equipment Furniture & Fittings Library Books Waste Bins Software Accountabilities for financial systems To ensure that Council's most valuable asset classes such as Land, Buildings and Infrastructure are recorded as accurately as possible at fair value at all times they are tested annually for impairment by an external valuer, Maloney Field Services. The data collected forms part of the external audit performed by Deloittes. Accounting standards and regulations The applicable accounting standards are: AASB116 "Property, Plant & Equipment AASB138 "Intangible Assets" Capital/maintenance threshold There is no capital threshold in practice although it is anticipated that a policy to provide guidance in this area will be developed and introduced in the near future. At the moment, capital amounts are recognised on a case by case basis using professional judgement. The frequency and timing of maintenance work performed on an asset is not a finance function and is covered elsewhere in this document. Required changes to accounting financial systems arising from this AM Plan None Asset management system HANSEN Asset registers Buildings Roads (Seal, Base, Kerb, Footpath)