Business Plan Summary

Transcription

1 Owner: Business Plan Summary Program Corporate, Operational & Council Services Service grouping Corporate Services Service Type Internal Service Tom Johnson, Managing Director - Corporate Assets, CAO's Office Strategic Priority Good government Purpose The Corporate Division enables the management of assets through the development and implementation of a comprehensive and effective framework that supports decision making based on the shared principles of effective communication, risk management, long-term planning, defined levels of service, enhanced life-cycle controls and monitoring across the entire corporation. This process supports good government by providing the community with appropriate levels of service while ensuring sustainability and cost effectiveness of corporate assets. Corporate serves the decision-makers: Council, the asset owners and operators, and asset users as well as the community. Key processes Corporate Asset Risk Management Financial & Staffing In $000s Operating budget 2010 Actual 2011 Revised Budget Expenditure: 670 Non-tax revenue: 0 0 Net (tax supported): Capital budget 2010 Revised Budget Revised Budget Expenditure: 0 Non-tax revenue: 0 0 Net (tax supported): 0 0 Staffing FTEs: Percentage of expenditures budget (all rate sources): Annual per household cost of net budget ($): Establish and manages risk associated with corporate asset management. This is undertaken through a systemized analysis and assessment of the likelihood and consequence of failure of individual and groups of assets. Societal, economic and environmental risks are considered % Outsourced percentage 25% Corporate Policy and Procedures Establish and implement policies and procedures related to corporate asset management. This activity identifies the level of service desired from each asset and sets the parameters to sustain an acceptable level of service at an acceptable level of risk. The levels of service are confirmed through the Council approval of procedures and policies. Corporate Asset Life Cycle Management Determine and manage life cycles of corporate assets. This uses science to predict and manage the life cycle of an asset from design to decommissioning to sustain the service and optimize use of the asset. This combines computer modeling, historic knowledge and current condition analysis. % % Outsourced percentage 25% Outsourced percentage 25% Page 1 of 10

2 Corporate Strategic Planning/Budgeting for Assets Integrate the asset management program with the capital budget program. This enables recommendations for appropriate investment that control risk through budgeting the right amount for maintenance/monitoring and replacement/decommissioning expenses at the right time thus ensuring sustainability of service. Information regarding the condition, needs and priority of assets is made readily available through the corporate asset management process. This information is useful in making short and long-term predictions of asset life thereby enabling the drafting of budgets based on solid comparable grounds. Oversee Corporate Process and Technology Establish, develop and oversee a Corporate System including an asset registry to make informed decisions on a corporate basis. This involves the use of asset management software as an interface using Oracle data from all service areas to create useful information for use by stakeholders, compiling the information and providing reports that meet the needs of the users from operators to budget developers to auditors. This includes providing the data to meet PSAB 3150 reporting requirements. Regulatory/Policy landscape Service Delivery method Discretionary Legislative % % Outsourced percentage 0% Outsourced percentage 25% New council direction, new regulations, legislative changes The asset management process integrates broadly with most legislation while being specifically enshrined with respect to tangible capital asset inventories under Provincial legislative (PSAB 3150) requirements. Legislation is expected specifically with respect to the 'municipal asset management process'. It has just been applied to the electricity community by the Ontario Energy Board. Electrical rate changes in 2010 were not permitted without an approved asset management plan. Within five years or less we can expect asset management plans to be a pre-requisite for obtaining future transfer funding. The effectiveness of the asset management process may impact London's credit rating. Legislation and Legislative Guidelines: Municipal Act PS 3150 Tangible Capital Assets Building Code Act Environmental Protection Act Clean Water Act Environmental Assessment Act Planning Act Accessibility for Ontarians with Disabilities Act Bridges Act etc. Current state of this service The City of London owns tangible capital assets with a replacement value of $12 billion including roads, sewers, water systems, facilities, parks, arenas, land, etc. Historically these have been managed through individual systems without a corporate shared basis of information for decision making. Value is added through the consideration of assets on a corporate level as well as a service basis. This helps to ensure that limited resources are applied where needed most, minimizing risk and enhancing effective use of assets. Page 2 of 10

3 can be defined as "an integrated set of processes to minimize the lifecycle costs of owning, operating and maintaining assets, at an acceptable level of risk, while continuously delivering an established level of service." The corporate framework for asset management is currently at the conceptual stage. The program is expected to answer the following questions. What do we own? Where is it? What is it worth? What is its condition and expected remaining service life? What is the level of service expectation, and what needs to be done? When do you need to do it? How much will it cost? What is the acceptable level of risk? How do you ensure long-term affordability and sustainability? Individual departments and divisions have varying levels of established management abilities with varying levels of effectiveness. The documented listing of assets has progressed in the area of tangible assets inventory for the purpose of PSAB but more information is needed to serve the purpose of asset management. The tangible capital assets historic costing is a foundation stone for an effective asset management system. Opportunities exist to improve existing practices, expand and systemize current data collection and enable a framework that could provide clearer rationales for decision making by Council and staff. Failing to provide for corporate asset management can inhibit good decision making and may impact the corporate ability to obtain future transfer funding from senior levels of government. It must also be noted that London is currently behind many other municipalities across Canada with respect to asset management. The lack of a good corporate asset management program may impact the AAA credit rating currently enjoyed by the City. Recent enhancements to economy, efficiency and effectiveness Not yet available as development is still underway. Future direction of this service A corporate asset management program is planned to be implemented in the City of London. Existing inventory and maintenance systems are multiple and discrete to each service area constraining the ability to make a balanced corporate decision. Corporate asset management begins with looking at the existing systems and developing a framework that will enable a merging of information to support the corporate asset management program in order to effectively sustain levels of service in the long term. Staff are planned to be resourced with appropriate equipment and training. Consultants need to be retained to support the program. The need for additional resources must be assessed on an ongoing basis to support the unit as it develops if agreed upon timelines are to be achieved. The public expects the corporation to provide an appropriate level of municipal services in a cost effective, safe, legal and sustainable manner. Corporate asset management is a tool to balance risk with cost and societal needs providing sustainable services at an acceptable level including compliance with PSAB legislation and expected future asset management legislation. Page 3 of 10

4 Level of service expectations continue to increase while costs are expected to be reduced. Climate and legislative change will demand enhanced assets. The aging workforce, future retirements and lack of succession planning will impact the corporate ability to manage its assets and potentially its ability to sustain the existing levels of service. Legislation will continue to rapidly evolve in the area of public sector accounting and management. Mandatory asset management is expected to be a requisite in order to successfully source funds from transfer programs including stimulus funding initiatives. The electricity community has just been challenged with mandatory asset management planning. Other new legislation including technical requirements such as AODA clearly impact assets and will need to be accommodated in future plans and budgets. Objectives next 4 years Create Corporate Program Develop a decision making framework involving planning, engineering, economics, and finance to best manage existing and new municipal assets. Research asset management practices in selected municipalities. Review and analysis of current asset management awareness and practices in the corporation. Review and analysis of corporate expectations regarding asset management plan and provide recommendations with respect to impact on budget practices, performance measures and indicators, and reporting. Identify level of service expectations. Develop draft program and implement on a pilot basis. Implement program. Monitor and continuously improve program. Complete assessment of current practises by end of Complete level of service identification by Pilot aspects of asset management Fully implement and move to monitoring stage. Establish Network and Team Identify and set up a team of stakeholders and their expertise to deal with the launch of the development phase of corporate asset management. The vision of the network includes a quarterly meeting of senior management with a more frequent meeting schedule for divisional leads who are expert in the management of the individual systems Undertake an outreach program to identify senior stakeholders in the asset management process. Set up a second tier of field experts to participate in the development of the asset management process. Page 4 of 10

5 Educate stakeholders on asset management using meetings and Powerpoint presentations. Identify team members. Teams of field experts meet regularly and provide minutes of meetings and decisions reached. Identify and Assess Existing Systems Document the current status of assets and their existing management using the PSAB information as a base and developing a common corporate matrix for the management of the data Assess existing systems, identify the deficiencies and corrective actions required to support a corporate overview. The current status of inventory records management in the corporation is eclectic while corporate management requires consideration of common information. This development process will require the talents of the Division and outside consultants to collect, organize and report. Some areas have already begun this work. Document and report existing systems. Assess information and identify gaps. Recommend methods to address gaps in information and process. Prepare State of the Assets Report Report on the current state of the assets including an assessment of infrastructure gap and recommendations that address any identified issues. This is expected to take 18 months to two years to complete and is linked to the above activity Identify infrastructure gap and prepare report. Report to Council on the state of the assets. Develop Plan/Program Strategy Establish what a corporate asset management plan/program would look like and garner acceptance of the strategy Draft a corporate asset management plan. Retain consulting services with expertise in asset management and the acquisition of a software system to support the plan. Educate stakeholders and garner acceptance by Council. Assess and select software suitable for asset management purposes and implement same in order to facilitate decision-making. Successful performance of consultant. Acceptance of strategy by Council. Implementation of software system. Page 5 of 10

6 Develop Policies Establish policies where necessary regarding asset management, risk assessment, priorities and levels of service. Identify gaps in policy with respect to corporate asset management. Draft asset management policy. Garner approval of policy by Council. Implement policy change to address any deficiencies. Report on gaps in policy Prepare draft asset management policy Achieve approval by Council Implement follow-up policy update to address deficiencies, if any. Develop Standards Establish metrics and standards regarding asset management, risk assessment, priorities and levels of service. Although this is expected to take up to five to seven years to fully implement, there will be significant progress on route. Address gaps in available criteria particularly expected levels of service. Develop metrics and standards for risk, life cycle parameters and levels of service through external resources and in-house experience. Gaps identified Percentage completion developing criteria. 20% per year. Metrics and standards available Prioritize Investments The information from corporate asset management is available to systemize prioritization of the maintenance and replacement of assets. This objective integrates asset management systems to support the budgeting decision-making process to enable best value for corporate investments. A sample question the system would help to answer is whether it would be better to replace the asset rather than continue to repair the asset. Develop information in a usable friendly format for decision makers. Aid strategy development based on integrated asset management. Develop annual reports Stakeholder satisfaction level with available information Enhanced prioritization Page 6 of 10

7 Establish Performance Measures Establish measurable targets for the purpose of business planning Identify classes of performance measures for asset management specific to individual and groups of assets. Identify performance measures and document for use in business planning. Measurable targets available. Emerging issues and challenges Legislation Legislative change is expected and will impact the program in a yet to be determined fashion. The degree of impact on a developed program will be minimal compared to having legislation enacted without any corporate program available to support compliance. Economy Changing financial resources will impact any planning and budgeting process requiring a high degree of flexibility in management strategies. The program will still be available but need to be flexible and rerun to allow for an economic step change. Rates are set annually by Council. Upper tier programs like stimulus funding are not predictable in the long term. For example, if the federal government boosted the capital available in 2014 to an additional $100 million for infrastructure, decisions could be made that alter the projections of asset maintenance and replacement schedules. The system would need to rerun at the new setpoint. The overall economy affects the revenues available to run the City thereby affecting the plan to reduce gap and the ability to sustain assets. Environmental Climate change is expected to have a significant but not yet identified impact on the status of infrastructure. For example, stormwater needs are expected to increase such that existing facilities and sewers will need to be upsized or modified. Maintenance for biological pests may trigger new programs with assets. Vegetation changes could trigger different maintenance needs especially trees which are considered City infrastructure assets. Power and equipment particularly air conditioning may require upgrades to deal with temperature increases. Green energy modifications may be mandated. More severe weather may require upgrades to structures owned by the City. Other The aging workforce with associated retirements is expected to have significant impact on corporate asset management with regards to the value of knowledge. The risk associated with the loss of expertise through retirement is reduced through a strong historic database and a continual capture of data with associated asset management. Other The variety, risks, life cycle and vintage of assets are neither linear nor absolute. This complexity results in varying costs from year to year so that predictions of future needs are the best available but remain predictions only. Managing the complexity is its own challenge. Page 7 of 10

8 Service changes with financial impact (+/-) Corporate Development Objective Support the development of the corporate asset management program using the expertise of consultants specializing in the asset management area. This includes development of strategies, policies, procedures, standards, criteria, outreach programs and reporting whereby a management consultant helps to build the framework for an asset management program. The outcome of these strategies is to increase the efficiencies and effectiveness of our investments in the City's assets. Implementation year 2012 Target year Funding type Ongoing Budget Implications in $000s Year Gross Expenditure Non -Tax Supported Revenue Net Budget (Tax Supported) Operating budget Year 1: 0 0 Year 2: 0 0 Year 3: 0 0 Ongoing annual: Beginning year Capital budget 0 0 Year 1: Year 2: Year 3: Future years: Beginning year Actual consultant expense to be determined by the end of The above numbers are estimated only. Software System and Consultants Objective Implement an asset management computer software system to integrate data from multiple sources and provide reports in useful formats for decision makers from operators to Council. This element supports a fundamental piece of the corporate asset management program and requires specific computer system consulting expertise. Until such a time as the program framework is designed, we cannot select the software most appropriate to meet London's needs for risk management, transparency, compliance and decision-making. Implementation year 2012 Target year Funding type Ongoing Budget Implications in $000s Year Gross Expenditure Non -Tax Supported Revenue Net Budget (Tax Supported) Operating budget Year 1: Year 2: 0 Year 3: 0 Ongoing annual: Beginning year Page 8 of 10

9 Capital budget Year 1: Year 2: 0 Year 3: 0 Future years: Beginning year This capital budget is intended to allow for the initial purchase of software and equipment while the ongoing expense is intended to pay for updates as the software evolves. The operational expense is intended to cover the needs for a technologist to maintain and troubleshoot the asset management database. Statistics and performance measures A Activity measures Description of measurements Identify the replacement value of assets on an ongoing basis as percentage complete Actuals 2006 Actuals 2007 Actuals 2008 Actuals 2009 Actuals 2010 Expected 2010 Actuals 2011 Forecast 2012 Forecast 2013 Forecast 2014 Forecast 2015 Forecast 2016 Forecast Accuracy of result is expected to improve as the asset management program develops. Description of measurements Develop process (% completeness and accuracy)that identifies the values of infrastructure gaps and report annually Actuals 2006 Actuals 2007 Actuals 2008 Actuals 2009 Actuals 2010 Expected 2010 Actuals 2011 Forecast 2012 Forecast 2013 Forecast 2014 Forecast 2015 Forecast 2016 Forecast Accuracy of result is expected to improve as the asset management program and data develop. B Efficiency measures Description of measurements Number of user reports per year Actuals 2006 Actuals 2007 Actuals 2008 Actuals 2009 Actuals 2010 Expected 2010 Actuals 2011 Forecast 2012 Forecast 2013 Forecast 2014 Forecast 2015 Forecast 2016 Forecast ,000 2,000 Use will accelerate as data becomes available, reports are developed online and corporate asset management reaches full implementation. 0 Page 9 of 10

10 C Effectiveness/Quality/Satisfaction measures Description of measurements Identify percentage stakeholder satisfaction through survey of operations, administration Actuals 2006 Actuals 2007 Actuals 2008 Actuals 2009 Actuals 2010 Expected 2010 Actuals 2011 Forecast 2012 Forecast 2013 Forecast 2014 Forecast 2015 Forecast 2016 Forecast Survey to be completed near commencement and completion of program. Description of measurements % completion of the asset registry Actuals 2006 Actuals 2007 Actuals 2008 Actuals 2009 Actuals 2010 Expected 2010 Actuals 2011 Forecast 2012 Forecast 2013 Forecast 2014 Forecast 2015 Forecast 2016 Forecast Reflects the development of the software systemization of corporate asset management. 5 Page 10 of 10