1 City of Powell River Buildings Asset Management Plan Scenario 1 and 2 Version 2.2 July 2013
2 Document Control Doc ID Rev No Date Revision Details buildings s1_v1 buildings s2_v1 buildings s1_v2 buildings s2_v2 buildings s1_v2 buildings s2_v2 buildings s1_v2 buildings s2_v th June First Draft 2 28 th June Second Draft th July Third Draft st July Fourth Draft
3 TABLE OF CONTENTS 1. EXECUTIVE SUMMARY... 1 What is this plan about?... 1 What is an Asset Management Plan?... 1 Context... 1 What does it cost?... 1 Why is there a funding shortfall?... 2 What options do we have?... 2 What happens if we don t manage the shortfall?... 2 What can we do?... 3 What we will do... 3 What we cannot do... 3 Managing the risks... 3 Confidence levels... 4 The next steps INTRODUCTION Background Goals and Objectives of Asset Management Plan Framework Core and Advanced Asset Management Community Consultation LEVELS OF SERVICE Customer Research and Expectations Strategic and Corporate Goals Legislative Requirements Current Levels of Service Desired Levels of Service FUTURE DEMAND Demand Drivers Demand Forecast Demand Impact on Assets Demand Management Plan Asset Programs to meet Demand LIFE CYCLE MANAGEMENT PLAN Background Data Infrastructure Risk Management Plan Routine Operations and Maintenance Plan Renewal/Replacement Plan Creation/Acquisition/Upgrade Plan Disposal Plan Service Consequences and Risks FINANCIAL SUMMARY Financial Statements and Projections Funding Strategy Valuation Forecasts Key Assumptions made in Financial Forecasts 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 Maintenance Response Levels of Service Appendix B Projected 10 Year Capital Renewal and Replacement Works Program Appendix C Projected Upgrade/New 10 Year Capital Works Program Appendix D Budgeted Expenditure Accommodated in LTFP Appendix E Abbreviations Appendix F Glossary... 47
4 1 1. EXECUTIVE SUMMARY What is this plan about? This asset management plan highlights the importance of understanding building performance in the context of demand for the City of Powell River services. City buildings support the delivery of community services and act as focal points for community life. They contribute to the social, cultural and economic development of the local community. The City s building assets must be strategically managed to ensure both financial sustainability and responsiveness to changing community needs. These assets include concrete, masonry, wood, steel and minor structures as well as servicing to the buildings and the services contained within the buildings. What is an Asset Management Plan? Asset management planning is a comprehensive process to ensure that delivery of services from infrastructure is provided in a financially sustainable manner. An asset management plan (AMP) 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. Context Managing our vital assets and infrastructure now and into the future will ensure the economic, social and environmental well being of our City. Though these assets age and deteriorate, by using sound asset management practices, Council and the community can be assured that the assets are used to deliver the desired services into the long term, and are managed for present and future users. Asset management plans aid in long term planning. Long term planning, including planning for future financial commitments, will allow the City of Powell River to achieve an economical and reliable buildings infrastructure system. Buildings The buildings: Precast Concrete Buildings Masonry Buildings Wood Buildings Steel Buildings Minor Buildings Building Services These infrastructure assets have a replacement value of $67,660,706. The average useful life of all assets is estimated at 62.4 years. What does it cost? The projected outlays necessary to provide the services covered by this asset management plan include operations, maintenance, replacement of existing assets and construction of new assets over a 20 year planning period is $49,228,160 or $2,461,410 on average per year. Estimated available funding for this period is $16,985,000 or $849,250 on average per year, which is 34.5% of the cost to provide the service. This is a funding shortfall of $1,612,160 ($2,461,410 less $849,250) on
5 2 average per year. Over the next 20 year period, this cumulative unfunded renewal shortfall amounts to $32,243,200. Life cycle projected outlays to provide operations, maintenance, replacement of existing assets and construction of new assets over the 62.4 year life cycle is $134,980,546 or $2,163,150 on average per year. Estimated available funding for this period is $52,993,200 or $849,250 on average per year, which is 39.3% of the cost to provide the service. This is a funding shortfall of $1,313,900 ($2,163,150 less $849,250) on average per year. Over the life cycle, this cumulative shortfall amounts to $81,987,360. Section 5.7 discusses building asset life cycle costs in detail. Projected expenditure requirements to provide services in the AMP compared with current budgeted expenditure and life cycle budget requirements are shown in the following graph. Why is there a funding shortfall? As is commonplace across Canada, the City s buildings system was constructed from municipal taxes, government grants and by other levels of government, often provided and accepted without consideration of ongoing operations, maintenance and replacement needs.
6 3 Many of these assets are approaching the later years of their life and require replacement. The current level of funds budgeted will not meet the amounts required to replace our assets in the next 20 years and over their life cycle. Our present funding levels are insufficient to continue to provide existing services at current levels. 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 optimize 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 savings in future operations and maintenance costs. 6. Consulting with the community to ensure that the costs of buildings and services meet the 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 funding approach to infrastructure services that includes every level of government. 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 funding are found. For buildings, the service level reduction may include limited use or complete closure of buildings due to insufficient financial resources. As well, there may be service level reductions in other municipal areas in order to fund the necessary buildings infrastructure. What can we do? Sunset Park Washrooms We can develop options, costs and priorities for future buildings and services. We can consult with the community to plan future services to match the community service needs with the ability to pay for services and maximize community benefits against costs.
7 4 What we will do We plan to provide building assets with the following: Operations and maintenance and all associated services to meet service levels within the set annual budgets. What we cannot do We do not have enough funding to provide all services at the desired service levels or provide new services in the long term. Works and services that cannot be provided under present funding levels would include renewal of buildings and associated infrastructure to maintain the current level of service over the 20 year period and life cycle. Therefore, reactive repairs or renewals will be commonplace, demanding unplanned use of reserves. The result of funding at the current level will result in a growing backlog of assets requiring renewal or replacement. This will result in extreme pressure in the future to manage replacement of assets that may be failing because useful lives of assets have expired. Managing the risks There are risks associated with providing the service and not being able to complete all identified activities and projects. We have identified major risks as: Buildings deterioration Public safety risks Non compliance with regulation and standards We will endeavour to manage these risks within available funding by: Identifying assets in poor condition Reactive repairs Regular inspection and testing of buildings and services Maintenance program application Confidence levels This AMP is based on a medium level of confidence in our asset inventory data attributes. Further condition assessments will improve the confidence level. The next steps The actions resulting from this asset management plan are: Long term financial planning for asset renewals and upgrades Identification of critical assets Conditions assessment for all assets Developing an Infrastructure Risk Management Plan Undertaking community consultation Routine operations and maintenance Renewal/Replacement of assets Creation/Acquisition/Upgrade of assets Performance measurement
8 5 2. INTRODUCTION 2.1 Background This asset management plan covers all aspects of the municipal buildings system and is one of a family of nine asset management plans comprising the complete municipal asset base. This plan is intended to facilitate the strategic management of assets (and services provided), compliance with regulatory requirements, and to communicate the funds required to provide the selected levels of service over the planning periods of 20 years and the full life cycle. The asset management plan follows the format for asset management plans as recommended in Section of the International Infrastructure Management Manual 1. Municipal AMPs should be read in concert with the City s Asset Management Policy and Asset Management Strategy (once established). Municipal AMPs will influence, and be influenced by, the following associated municipal documents: Sustainability Charter; Corporate Strategic Plan; Official Community Plan (OCP); 5 Year Financial Plan; and Departmental operating plans The infrastructure assets covered by this asset management plan are shown in Table 2.1. These assets are for the City operational and public use. Table 2.1: Assets covered by this Plan Asset Category Replacement Value Precast Concrete Buildings $ 1,551,250 Masonry Buildings 10,796,552 Wood Frame Buildings 13,145,756 Steel Frame Buildings 25,659,618 Minor Buildings 160,785 Buildings Services 16,346,745 TOTAL $ 67,660,706 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 2 Key Stakeholder Role in Asset Management Plan Council To act as custodians for the community s assets. To set levels of service, risk and cost standards. To approve the Asset Management Plan and align with the Corporate Strategic Plan. To approve the asset management program. To ensure appropriate resources and funding are made available to support the asset management program. 1 IPWEA, 2011, Sec 4.2.6, Example of an Asset Management Plan Structure, pp City of Powell River Asset Management Policy 2012
9 6 Key Stakeholder Chief Administrative Management Group Managers and staff Officer and Role in Asset Management Plan To provide strategic advice and leadership in the management of infrastructure assets. Ensure outcomes support the Corporate Strategic Plan. To validate and challenge proposals to ensure they meet the Corporate Strategic Plan objectives and community service needs. To ensure the community and key stakeholder inputs are integrated into asset management plans. Establish current levels of service for assets, compare to benchmarks and community needs and identify gaps or challenges. To draft asset management plans To implement the asset management program with agreed resources. To develop, implement and review the asset management program using the International Infrastructure Management Manual as a guide, documenting required allocation of funding and improvement plans for individual asset groups, using the principles of life cycle costing. To develop and implement maintenance, and capital works programs in accordance with the Asset Management Plan and Strategy, the Corporate Strategic Plan and the 5 Year Financial Plan. Deliver Council approved levels of service to agreed risk and cost standards. To manage infrastructure assets in consideration of their long term sustainability. To develop and implement maintenance and capital works programs in accordance with asset management plans and report to the Management Group and to Council. The City s organizational structure 3 for service delivery for infrastructure assets is detailed below: 2.2 Goals and Objectives of Asset Management The City exists to provide services to its community, of which some are provided by infrastructure assets. We have acquired infrastructure assetss through purchasing, contract, construction and by contributionn of assets constructed by developers and others to meet increased levels of service. 3 City of Powell River, Corporate Strategic Plan (Draft)
10 7 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 life cycle 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 organization s objectives. Asset management improvement plan. Recreation Complex 4 Based on IPWEA, 2011, IIMM, Sec 1.2 p 1 7.
11 8 A road map for preparing an asset management plan is shown below: Road Map for preparing an Asset Management Plan Source: IPWEA, 2006, IIMM, Fig 1.5.1, p 1.11.
12 9 2.4 Core and Advanced Asset Management This asset management plan is prepared as a core asset management plan over a 20 year and life cycle planning period in accordance with the International Infrastructure Management Manual 5. It is prepared to meet minimum legislative and organizational 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 optimization of activities and programs to meet agreed service levels. 2.5 Community Consultation This core asset management plan is prepared to facilitate community consultation. Future revisions of the asset management plan will incorporate community consultation on service levels and costs of providing the service. This will assist Council and the community in matching the level of service needed by the community, service risks and consequences with the community s ability and willingness to pay for the service. 3. LEVELS OF SERVICE 3.1 Customer Research and Expectations The organization has not carried out research on customer expectations. This will be investigated for future updates of the asset management plan. 3.2 Strategic and Corporate Goals This asset management plan is prepared under the direction of the organization s vision, mission, goals and objectives. Our vision 6 is a sustainable Powell River that provides for: Economic Diversity a resilient economy. Social Well Being a vibrant, safe and healthy community. Healthy Environment a diverse and healthy natural environment. The mission 6 of the City of Powell River is to ensure the provision of quality services, in a manner that promotes prosperity and economic, environmental and social health and well being for current and future generations, while living within our means. Relevant organization goals and objectives 6 and how these are addressed in this asset management plan are discussed in Table IPWEA, 2011, IIMM. 6 City of Powell River, Corporate Strategic Plan (Draft)
13 10 Table 3.2: Organization Strategic Priorities Strategic Priorities Objective How Strategic Priorities and Objectives are addressed in AM Plan Live Within our Means Governance Sustainability Asset Management The City will strive towards longterm financial sustainability and best practices in internal processes. The City will strive to develop comprehensive governance regimes supporting community cohesion, self sufficiency and an informed and engaged citizenry. The City will be a leader in increasing our environmental, social/cultural and economic sustainability. The City will follow best practices in asset management and seek to maximize capital utilization and stewardship. The Buildings Asset Management Plan is a best practice management tool for the financial stewardship of municipal assets and enables long term financial planning for all municipal buildings asset infrastructure. The Buildings Asset Management Plan will assist the organization to engage the community in discussion on buildings asset infrastructure. The Buildings Asset Management Plan is a best practice tool for the implementation of sustainable asset infrastructure management. The Buildings Asset Management Plan is a best practice tool in the management of asset infrastructure and seeks to maximize capital utilization and stewardship. The City will exercise its duty of care to ensure public safety in accordance with the Infrastructure Risk Management Plan prepared in conjunction with this AM Plan. Management of infrastructure risks is covered in Section Legislative Requirements We must meet many legislative requirements including Canadian Federal and Provincial legislation and Provincial regulations. These include: Table 3.3: Legislative Requirements Legislation Local Government Act 1996 Community Charter 2003 PSAB 3150 Accounting Standards BC Building Code BC Electrical Code BC Plumbing Code BC Fire Code Requirement Provides a legal framework and foundation for the establishment and continuation of local governments. Sets out the legal framework for the powers, duties and functions of municipal organizations. Provides municipal organizations with the authority to address existing and future community needs. Tangible Capital Asset accounting standards for the public sector, including municipalities. Applies the core concepts of the National Building Code to the construction of buildings. Applies the core concepts of the National Electrical Code for electrical systems. Applies the core concepts of the National Plumbing Code for plumbing systems. Applies the core concepts of the National Fire Code for fire safety. 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 organization is providing community value.
14 11 Community levels of service measures used in the asset management plan are: Quality Function Capacity/Utilization 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 organization undertakes to best achieve the desired community outcomes and demonstrate effective organizational performance. Technical service measures are linked to annual budgets covering: Operations the regular activities to provide services such as daily inspections and janitorial services. Maintenance the activities necessary to retain assets as near as practicable to an appropriate service condition (e.g. inspections, condition assessments, painting, roof repairs etc.) Renewal the activities that return the service capability of an asset up to that which it had originally (e.g. replacement of buildings and building services). Upgrade the activities to provide a higher level of service (e.g. replacing a building with a larger size) or a new building that did not exist previously (e.g. new washrooms to parks, new storage building, new service buildings, etc.). Asset managers plan, implement and control technical service levels to influence the customer service levels. 7 Our current service levels are detailed in Table 3.4. Future iterations of this document will provide the subsequent yearly measurements of levels of service, as a means of measuring performance. Table 3.4: Current and Optimal Service Levels Key Performance Measure Level of Service Objective Performance Measure Process Performance Measured Optimal Level of Service COMMUNITY LEVELS OF SERVICE Quality To provide safe, clean and accessible buildings Customer service complaints relating to safety, accessibility and cleanliness Number of complaints unknown 0 complaints Function The ease of parking, directional signage, and experience at a facilities Customer service complaints relating to parking, signage and experience at facility Number of complaints unknown 0 complaints Capacity/ Utilization Capacity is matched to user s need Customer service complaint relating to over or under capacity Number of complaints unknown 0 complaints 7 IPWEA, 2011, IIMM, p 2.22
15 12 Key Performance Measure Level of Service Objective Performance Measure Process Performance Measured Optimal Level of Service TECHNICAL LEVELS OF SERVICE Operations Servicing and management Constancy of cleaning and inspections 2012 daily cleaning and inspections Daily cleaning and inspections Maintenance Respond to service requests and provide scheduled maintenance Buildings meet legislative standards Budget $589,000 $661,400** Reactive service requests and scheduled maintenance is completed within reasonable time frames reactive service requests estimated 0 service requests Budget $269,000* $265,200** Renewal Upgrade/New Buildings meets users needs Accessible to people with physical challenges Construction of new Buildings *2013 budget is out of the ordinary ** 20 year average ***average over life cycle Useful life of building assets should be increasing Renewals should include provision of wheelchair access 2012 avg 62.4 years critical buildings have wheelchair access System components are economically replaced within operating life cycles Critical buildings will provide wheelchair access Budget $0 $1,084,306*** Public use of City properties have adequate building facilities 2012 Although we do not have exact data there have been requests for additional City buildings. Accommodate City properties with adequate/required buildings for public Budget $0 $152,244*** 3.5 Desired Levels of Service Indications of desired levels of service are obtained from community consultation/engagement. The asset management planning process includes the development of two scenarios to develop levels of service that are financially sustainable. 4. FUTURE DEMAND 4.1 Demand Drivers Drivers affecting demand include population change, changes in demographics, climate changes and social pressures, etc. 4.2 Demand Forecast The present position and projections for demand drivers that may impact future service delivery and utilization of assets were identified and are documented in Table Demand Impact on Assets The impact of demand drivers that may affect future service delivery and utilization of assets are shown in Table 4.3.
16 13 Table 4.3: Demand Drivers, Projections and Impact on Services Demand drivers Present position Projection Impact on services Population 13, to 2011 population increase 1.6% 8 Demographic Median Age of the population 2006 to 2011 median age increased from 47 to Geographical Isolated community Less transient people and no freeways Climate Change Mild winters and summers Slight increase in senior population Social Pressure Increase use of building for arts and culture Continued increase Heritage One building currently owned As buildings age more buildings may become available for purchase by City 4.4 Demand Management Plan Small increase in demand Slight reduction in use of City buildings less growth in active structured sport, greater growth in passive recreation Community more desirable for families and seniors therefore increase in building use Small increase in demand Increase in demand for building usage Higher operations and maintenance costs due to age Demand for new services will be managed through a combination of managing existing assets, upgrading of existing assets and providing new assets to meet demand and demand management. Demand management practices include non asset solutions, insuring against risks and managing failures. Non asset solutions focus on providing the required service without the need for the organization to own the assets and management actions including reducing demand for the service, reducing the level of service (allowing some assets to deteriorate beyond current service levels) or educating customers to accept appropriate asset failures. 9 Table 4.4: Demand Management Plan Summary Demand Driver Impact on Services Demand Management Plan Population Increase in buildings use Renewal program to consider increasing building use to meet the needs of an increasing population Demographic Slight decrease in buildings use Create activities that appeal to this sector of the population Geographical Community more desirable for families and seniors therefore increase in building use Manage the use of the building more efficiently Climate Change Small increase in demand Manage the use of the building more efficiently Social Pressure Heritage Increase in demand for building usage Higher operations and maintenance costs due to age Manage the use of the building more efficiently Organizations to contribute to the operations of the Heritage building Opportunities identified to date for demand management are shown in Table 4.4. Further opportunities will be developed in future revisions of this asset management plan. 8 Statistics Canada Focus on Geography Series, 2011 Census 9 IPWEA, 2011, IIMM, Table 3.4.1, p 3 58
17 Asset Programs to meet Demand The new assets required to meet growth will be acquired with funding from different levels of government or general taxation by the City. New assets are discussed in Section 5.5. At this time, buildings are not anticipated to be contributed from developers. There is not a cost to the City in acquiring new assets from developers, but the acquisition of new assets will commit the organization to fund ongoing operations, maintenance and renewal costs for the periods that the service provided by the assets is required. These future costs are identified and considered in developing forecasts of future operations, maintenance and renewal costs in Section 5. Figure 1 estimates the cumulative value of assets that may be added from new construction (not construction to replace existing buildings) by the City over the next twenty years. The City has included the proposal of a new library at a cost of $9,500,000 in this asset management plan as an upgrade/new asset. Figure 1: Upgrade and New Assets to meet Demand (Cumulative) 5. LIFE CYCLE MANAGEMENT PLAN The life cycle management plan details how the organization plans to manage and operate the assets at the agreed levels of service (defined in Section 3) while optimizing life cycle costs. 5.1 Background Data Physical parameters The assets covered by this asset management plan are shown in Table 2.1. These assets include precast concrete, masonry, wood frame, steel frame and minor buildings, and buildings services. The age profile of the assets include in this AM Plan is shown in Figure 2.
18 15 Figure 2: Asset Age Profile Asset capacity and performance The organization s services are generally provided to meet design standards where these are available. Currently there are no known service deficiencies Asset condition Where possible, condition is monitored in accordance with recommended service and maintenance standards. Condition is also monitored during planned and unplanned reactive maintenance. Siding on Complex Roof
19 16 The condition profile of our assets is shown in Figure 3. Figure 3: Asset Condition Profile Condition is measured using a 1 5 grading system 10 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 Asset valuations The value of assets recorded in the asset inventory register as at December 31, 2012 covered by this asset management plan is shown below. Assets are valued at current replacement cost. Current Replacement Cost $67,660,706 Depreciable Amount $67,660,706 Average useful life 62.4 years Annual Depreciation/ Consumption Expense $1,084, IPWEA, 2011, IIMM, Sec 2.5.4, p 2 79.
20 17 Useful lives were reviewed in June 2013 by the Manager of Engineering Services and the Director of Infrastructure. Key assumptions made in preparing the valuations were: Precast Concrete Buildings have an average useful life of 70 years Masonry Buildings have an average useful life of 70 years Wood Frame Buildings have an average useful life of 65 years Steel Frame Buildings have an average useful life of 70 years Minor Buildings have an average useful life of 40 years Building Services have an average useful life of 62 years Various ratios of asset consumption and expenditure have been prepared to help guide and gauge asset management performance and trends over time. Following are the ratios for 2013: Rate of Annual Asset Consumption 1.60% (Depreciation/Depreciable Amount) 20 Year Rate of Annual Asset Renewal 0% (Capital renewal exp/depreciable amount) Rate of Annual Asset Upgrade/New 0% (Capital upgrade exp/depreciable amount) Rate of Annual Asset Upgrade/New 0% (including developer contributed assets) Historical Data Historical cost $31,745,446 Net Book Value $12,020,054 Annual Amortization Expense $1,021,642 Historically, and as reported in our financial statements, the cost of the buildings infrastructure assets valued at their in service date is $31,745, Infrastructure Risk Management Plan An assessment of risks 11 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 organization. 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 prioritized corrective action, together with the estimated residual risk after the selected treatment plan is operational are summarized in Table 5.2. These risks are reported to management and Council. 11 City of Powell River Buildings Asset Infrastructure Risk Management Plan to be developed
21 18 Table 5.2: Critical Risks and Treatment Plans Risk Earthquake Fire Water contamination (excluding drinking water) Service or Asset at Risk All municipal services; Buildings structurally damaged All municipal services; Buildings structurally damaged Swimming pool What can Happen Loss of life or buildings, unable to provide services Loss of life or buildings Sickness, injury, possible death Risk Rating (VH, H) Risk Treatment Plan H Determine which buildings have been designed for seismic activities and start a project of seismic upgrades H Maintenance program to exercise fire hydrants at buildings Annual fire drills to ensure staff is familiar with emergency evacuation procedures Installation of sprinkler systems M Routine testing of water and policy for activities near the pool area Procedure for handling CL2 Renewal of building services as useful lives end Residual Risk * L M L Note * The residual risk is the risk remaining after the selected risk treatment plan is operational. 5.3 Routine Operations and Maintenance Plan Operations include regular activities to provide services such as staff training, maintenance strategies, and reporting of safety issues. 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 Operational activities affect service levels including building quality, safety and accessibility. 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 but excluding rehabilitation or renewal. Maintenance may be classified 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 based on the number of failures/breakdowns, prioritizing, 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 are undertaken on a regular cycle including building mechanical components, and roof repairs. This work falls below the capital/maintenance threshold but may require a specific budget allocation. In the past the organization has not separately recorded operational and maintenance costs. As a consequence of this, the 2013 Buildings Asset Management Plan is unable to differentiate historic
22 19 maintenance expenditure trends. Future iterations of this plan will be able to show past maintenance expenditure for planned and specific maintenance expenditure, and for unplanned expenditure. Maintenance expenditure levels are considered to be marginal to meet projected service levels, which may be less than or equal to current service levels. Where maintenance expenditure levels are insufficient, lesser levels of service may result. The service consequences and service risks are to be considered in the Infrastructure Risk Management Plan. Assessment and prioritization of reactive maintenance is undertaken by City staff using experience and judgement Operations and Maintenance Strategies The organization 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. 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. Review current and required skills base and implement workforce training and development to meet required operations and maintenance needs. Review asset utilization to identify underutilized assets and appropriate remedies, and over utilized 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 best value is obtained 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 organization s service hierarchy is shown is Table Table 5.3.2: Asset Service Hierarchy Service Hierarchy Major Buildings Minor Buildings Building services Service Level Objective To provide buildings that fall within code and are safe for public use. To provide buildings that fall within code and are safe for public use. To effectively operate and maintain buildings for public use 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, organizations can target and refine investigative activities, maintenance plans and capital expenditure plans at the appropriate time. Operations and maintenance activities may be targeted to mitigate critical assets failure and maintain service levels. These activities may include increased inspection frequency, higher maintenance
23 20 intervention levels, etc. Critical assets failure modes and required operations and maintenance activities are detailed in Table Table : Critical Assets and Service Level Objectives Critical Assets Critical Failure Mode Operations & Maintenance Activities Fire Halls Loss of electrical to building Loss of water service Building is safe for use Vehicle or equipment breakdown City Hall Loss of electrical to building Computer equipment breakdown Building is safe for use RCMP building Loss of electrical to building Building is safe for use Ensure 24/7 access to electrical generators Ensure water is not shut off to the buildings Renewal and maintenance programs Scheduled maintenance and testing of vehicles and equipment Ensure access to electrical generators Ensure regular data backups are in place and laptops are available with necessary software programs Renewal and maintenance programs Ensure access to electrical generators Renewal and maintenance programs Standards and specifications Maintenance work is carried out in accordance with the following Standards and Specifications. BC Building Code BC Electrical Code BC Plumbing Code BC Fire Code Summary of future operations and maintenance expenditure Future operations and maintenance expenditure is forecast to trend in line with the value of the asset stock as shown in Figure 4. Note that all costs are shown in current 2013 dollar values (i.e. real values).
24 21 Figure 4: Projected Operations and Maintenance Expenditure 5.4 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 by using the asset inventory register data to project the renewal costs using acquisition year and useful life to determine the renewal year. The useful lives of assets used to develop projected asset renewal expenditure are shown in Table Asset useful lives were last reviewed in June Table 5.4.1: Useful Lives of Assets Asset Category Precast Concrete Buildings Masonry Buildings Wood Frame Buildings Steel Frame Buildings Minor Buildings Buildings Services Average Useful Life 70 years 70 years 65 years 70 years 40 years 62 years
25 Renewal and Replacement Strategies The organization will plan capital renewal and replacement projects to meet level of service objectives and minimize 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 option that could address the service deficiency. o Evaluate the options against evaluation criteria adopted by Council. 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, or To ensure the infrastructure is of sufficient quality to meet the service requirements 12 It is possible to get some indication of capital renewal and replacement priorities by identifying assets or asset groups that: Have a high consequence of failure. Have a high utilization and subsequent impact on users would be greatest. The total value represents the greatest net value to the organization. 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.
26 23 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 Weighting Have a high consequence of failure 20% Have a high utilization and subsequent impact on users would be greatest The total value represents the greatest net value to the organization Have the highest average age relative to their expected lives Are identified in the AM Plan as key cost factors 20% 20% 10% 10% Have high operational or maintenance costs 10% Where replacement with modern equivalent assets would yield material savings 10% Total 100% Renewal and replacement standards Renewal work is carried out in accordance with the following Standards and Specifications. BC Building Code BC Electric Code BC Plumbing Code BC Fire Code Summary of future renewal and replacement expenditure Projected future renewal and replacement expenditure are forecast to increase over time as the asset stock increases from growth. The expenditure is summarized in Figure 5. Note that all amounts are shown in real values. The projected capital renewal and replacement program is shown in Appendix B.
27 24 Figure 5: Projected Capital Renewal and Replacement Expenditure Deferred renewal and replacement, i.e. those assets identified for renewal and/or replacement and not scheduled in capital works programs, are to be included in the risk analysis process in the Infrastructure Risk Management Plan. Renewals and replacement expenditure in the organization s capital works program will be accommodated in the long term financial plan. 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 organization from land development. These assets from growth are considered in Section Selection criteria New assets and upgrade/expansion of existing assets are identified from various sources such as Council or community requests, proposals identified by strategic plans or partnerships with other organizations. Candidate proposals are inspected to verify need and to develop a preliminary renewal estimate. Verified proposals are ranked by priority and available funds and scheduled in future works programs. The priority ranking criteria for new assets will be incorporated into the next iteration of this Buildings Asset Management Plan Capital Investment Strategies The organization 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:
28 25 o The service delivery deficiency, presents 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 option that could address the service deficiency. o Management of risks associated with alternative options. o Evaluate the options against evaluation criteria adopted by Council. o Select the best option to be included in capital upgrade/new programs. Review current and required skills base and implement training and development to meet required construction and project management needs. Review management of capital project management activities to ensure best value is obtained for resources used. Standards and specifications for new assets and for upgrade/expansion of existing assets are the same as those for renewal shown in Section Summary of future upgrade/new assets expenditure The City has included the proposal of a new library at a cost of $9,500,000 in this asset management plan as an upgrade/new asset. Projected upgrade/new asset expenditures are summarized in Figure 6. The projected upgrade/new capital works program in shown in Appendix C. All amounts are shown in real values. Figure 6: Projected Capital Upgrade/New Asset Expenditure Expenditure on new assets and services in the organization s capital works program will be accommodated in the long term financial plan, if these projects are planned. 5.6 Disposal Plan Disposal includes any activity associated with disposal of a decommissioned asset including sale, demolition or relocation. Assets identified for possible decommissioning and disposal have not been identified. Where
29 26 cashflow projections from asset disposals are not available, these will be developed in future iterations of this asset management plan. 5.7 Service Consequences and Risks The organization has prioritized decisions made in adopting this AM Plan to obtain the optimum benefits from its available resources. Decisions were made based on the development of two scenarios. Scenario 1 The current 20 year average budget per year for capital renewals is nil, and does not provide sufficient funding to replace assets as they reach the end of their useful life. Funding will be used towards reactive maintenance rather than replacement of assets. This will require additional resources, may require reduction in levels of service, and will increase risk consequences. The 20 year budget for operations, maintenance and replacement of existing assets is projected to be an average of $849,250. Scenario 2 The optimal level of budget required for capital renewals should be based on the average annual consumption of the building assets. Based on the current replacement cost of $67,660,706 and an average life of 62.4 years, a budget of $1,084,306 would be required for optimal capital renewal and replacement of the building assets. In addition, it is necessary to retain the current operating and maintenance budgets as forecasted. The annual life cycle costs for operations, maintenance and replacement of existing assets is projected to be an average of $2,010, What we cannot do There are some operations and maintenance activities and capital projects that may be unable to be undertaken within the next 20 years. These include: Regular inspection program for all building assets. Planned maintenance for all building assets. Renewal of building assets to maintain the current level of service.