Water Supply Asset Management Plan

Transcription

1 Kyogle Council Water Supply Asset Management Plan Version 2.01 May 2012

2 Document Control Water Supply Asset Management Plan Document ID: kyogle_water_supply_amp_v2 Rev No Date Revision Details Author Reviewer Approver /1/2012 Draft AMP AM JR JR /5/2012 Draft 2 AMP KC Revisions AM JR JR

3 - i - TABLE OF CONTENTS 1. EXECUTIVE SUMMARY... ii Context ii Relevant Asset Management Documents... ii What does it Cost?... ii What we will do... ii What we cannot do... ii Managing the Risks... ii The Next Steps... ii 2. INTRODUCTION Background Goals and Objectives of Asset Management Plan Framework Core and Advanced Asset Management Community Consultation LEVELS OF SERVICE Customer Research and Expectations Legislative Requirements Current Levels of Service Desired Levels of Service FUTURE DEMAND Demand Forecast Changes in Technology Demand Management Plan LIFECYCLE MANAGEMENT PLAN Background Data Risk Management Plan Routine Maintenance Plan Renewal/Replacement Plan Creation/Acquisition/Upgrade Plan Disposal Plan FINANCIAL SUMMARY Financial Statements and Projections Funding Strategy Valuation Forecasts Key Assumptions made in Financial Forecasts ASSET MANAGEMENT PRACTICES Accounting/Financial Systems Asset Management Systems Information Flow Requirements and Processes Standards and Guidelines PLAN IMPROVEMENT AND MONITORING Performance Measures Improvement Plan Monitoring and Review Procedures REFERENCES APPENDICES Appendix A1 Planned Expenditures used in Forecast Modelling Appendix A2 Kyogle Council 10 Year Budget Appendix B Projected 10 year Capital Renewal Works Program Appendix C Planned Upgrade/Exp/New 10 year Capital Works Program Appendix D Abbreviations Appendix E Glossary... 59

4 - ii - 1. EXECUTIVE SUMMARY Context Kyogle Council operates three water supplies servicing around four thousand people in the township of Kyogle and the villages of Bonalbo and Woodenbong, and the aboriginal community of Muli Muli. The Water Supply Service The Water Supply network comprises: Bores, Dams, Weirs Water Treatment Plants Reservoirs Water Pumping Stations Rising Mains. Reticulation Water Services and Meters These infrastructure assets have a replacement value of $19.8 M Relevant Asset Management Documents Strategic Business Plan for Water Supplies Developer Servicing Plan Water Sewer Stormwater Kyogle Integrated Water Cycle Management Strategy Study Kyogle Water Supply Augmentation Concept Development Report Bonalbo Long Term Water Supply Strategy and Drought Management Plan Urbenville Mulli Muli Woodenbong Water Supply Joint Water Supply Agreement Kyogle Council Drought Management Plan Bonalbo Dam Safety Emergency Plan Draft Drinking Water Quality Policy Northern Rivers Local Water Utilities Memorandum of Understanding Various operations and maintenance manuals and procedures Operation, maintenance, renewal and upgrades to meet service levels set by council in annual budgets. What we cannot do Council has enough funding to continue to provide water supply services at the desired service. Managing the Risks There are risks associated with providing the service and these will require monitoring to ensure intervention can be undertaken in a planned manner without any funding shocks. We have identified major risks as: Not achieving drinking water standards Premature aging of water distribution pipelines We will endeavour to manage these risks within available funding by: Continue to improve data by carrying out water sample monitoring Continue to develop the detail of the costs to manage the water supply system Additional analysis of the infrastructure data inventory and assessment of useful lives being achieved The Next Steps The actions resulting from this asset management plan are: Maintain the current assets in safe condition Continue to monitor the condition of assets so that there is adequate planning time for periods of major renewals Provide additional water supply service assets in a planned manner and only where agreed criteria are met. What does it Cost? The projected cost to provide the services covered by this Asset Management Plan includes operations, maintenance, renewal and upgrade of existing assets over the 10 year planning period is $1,535,000 per year. Council s estimated available funding for this period is $1,426,000 per year which is 93% of the cost to provide the service. This is a funding shortfall of $109,000 per year. Projected and budgeted expenditure are shown in the following graph. There is no backlog of renewal works. Councils present funding levels are sufficient to continue to provide existing services at current levels in the medium term. What we will do Council plans to continue to provide Water Supply Services to the community. This will require continuation of funding to undertake: Questions you may have What is this plan about? This asset management plan covers the infrastructure assets that serve the Kyogle Council Community s water supply needs. These assets include Bores, Dams, Weirs Water Treatment Plants Reservoirs Water Pumping Stations Rising Mains. Reticulation Water Services and Meters

5 - iii - These water supply assets are located throughout the Council areas to provide a safe and reliable supply of water. 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. Given the current funding level it is unlikely that council will have to reduce service levels for the existing water supply services. 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. Is there a funding shortfall? Councils present funding levels are sufficient to continue to provide existing services at current levels in the medium term. These funding requirements should be monitored as although the renewal of the existing water supply infrastructure can be funded, there are frequent pipeline breaks and this may be indicative that sections of the network have deteriorated more than expected. What options do we have? Resolving any 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, replacing existing and constructing new 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 transport 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. What can we do? Council can develop options and priorities for future water supply services with costs of providing the services, consult with the community to plan future services to match the community services needs with ability to pay for services and maximise benefit to the community for costs to the community. What can you do? Council will be pleased to consider your thoughts on the issues raised in this asset management plan and suggestions on how Council may change or reduce its transport services mix to ensure that the appropriate level of service can be provided to the community within available funding. What happens if we don t manage the shortfall?

6 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 Relevant Asset Planning Documents The asset management plan is to be read with Council s Asset Management Policy, Asset Management Strategy and the following associated planning documents: Kyogle Council Management Plan Kyogle Council Annual Report 2009/2010 Kyogle Council Financial Statements for the year ended 30 June 2010 Strategic Business Plan for Water Supplies Developer Servicing Plan Water Sewer Stormwater Kyogle Integrated Water Cycle Management Strategy Study Kyogle Water Supply Augmentation Concept Development Report Bonalbo Long Term Water Supply Strategy and Drought Management Plan Urbenville Mulli Muli Woodenbong Water Supply Joint Water Supply Agreement Kyogle Council Drought Management Plan Bonalbo Dam Safety Emergency Plan Draft Drinking Water Quality Policy Northern Rivers Local Water Utilities Memorandum of Understanding Various operations and maintenance manuals and procedures Kyogle Council operates three water supplies servicing around four thousand people in the township of Kyogle and the villages of Bonalbo and Woodenbong, and the aboriginal community of Muli Muli. Kyogle is located in the Richmond River catchment, and the water supply consists of an on-stream storage and filtered supply originally constructed in the 1930 s, serving approximately 3,000 persons. On stream storage behind artificial weir 25ML Raw water pump station at weir 68L/s Water Treatment Plant 3ML/day, (flocculation/sedimentation/gravity sand filters train 1.5ML/day) and (flocculation/clarification/pressure filter train 1.5ML/d), fluoridation Clear water pumping station 54L/s Hill Street Reservoir 1.5ML Mount Street Reservoir 2.2ML and James Street Reservoir 1.1ML 1209 residential connections 275 non-residential connections 44km of reticulation mains

7 - 5 - Bonalbo is located in the Clarence Catchment, and the water supply consists of brand new WTP fed from an off stream storage with water sourced from Peacock Creek, a groundwater bore, and the off-stream storage catchment, originally constructed in 1968, serving approximately 400 persons. River bed extraction system Peacock Creek Raw water pumping station 3L/s Bore at river extraction point 1L/s Off-stream storage (Petrochilos Dam) 45ML Raw water pump station 5.7L/s Water Treatment Plant 0.3ML/day flocculation, DAF and gravity sand filter, fluoridation Clear water pumping station 4.7L/s Bonalbo Reservoir 0.9ML 165 residential connections 37 non-residential connections 7km of reticulation mains 2km trunk mains Woodenbong/Muli Muli serviced by a joint water supply with Tenterfield Shire Council for the village of Urbenville, consisting of a brand new WTP and an on stream storage behind a natural weir on Tooloom Creek, in the upper Clarence Catchment, originally constructed in 1972, serving approximately 600 persons (Kyogle LGA) and 400 persons (Tenterfield LGA). On stream storage behind natural weir 160ML (Tenterfield LGA) Raw water pumping station 9L/s (Tenterfield LGA) 0.7ML/day Water Treatment Plant, flocculation, DAF over sand filter, fluoridation (Tenterfield LGA) Clear water pumping station 12L/s (Tenterfield LGA) Urbenville Reservoir 0.9ML (Tenterfield LGA) Booster Pump Station 12L/s and re-chlorination (Kyogle LGA) Woodenbong Reservoir 0.7ML (Kyogle LGA) 179 residential connections (Kyogle LGA) 68 non-residential connections (Kyogle LGA) 6km of reticulation mains (Kyogle LGA) 9.5km trunk mains in Kyogle LGA 7km trunk mains within Tenterfield LGA The infrastructure assets covered by this asset management plan are shown in Table 2.1.

8 - 6 - Table 2.1: Assets covered by this Plan Asset Subcategory Current Replacement Cost Depreciated Replacement Cost Bore $56, $51, Dam $936, $761, Meter $805, $32, Miscellaneous $64, $35, Reservoir $3,692, $1,434, Rising Main $1,506, $326, Side Connection $3, $2, Water Service $47, $41, Watermain $6,395, $2,638, Weir $252, $137, Water Pumping Station $687, $354, Water Treatment Plant $5,380, $2,279, TOTAL $19,827, $8,097, Goals and Objectives of Asset Management The Council exists to provide services to its community. Some of these services are provided by infrastructure assets. Council has acquired infrastructure assets by purchase, by contract, construction by council staff and by donation of assets constructed by developers and others to meet increased levels of service. Council s goal in managing infrastructure assets is to meet the required level of service in the most cost effective manner for present and future consumers. The key elements of infrastructure asset management are: Taking a life cycle approach, Developing cost-effective management strategies for the long term, Providing a defined level of service and monitoring performance, Understanding and meeting the demands of growth through demand management and infrastructure investment, Managing risks associated with asset failures, Sustainable use of physical resources, Continuous improvement in asset management practices. 1 1 IPWEA, 2006, IIMM Sec 1.1.3, p 1.3.

9 - 7 - The goal of this asset management plan is to: Document the services/service levels to be provided and the costs of providing the service, Communicate the consequences for service levels and risk, where desired funding is not available, and Provide information to assist decision makers in trading off service levels, costs and risks to provide services in a financially sustainable manner Council Values and Community Plan Priorities This asset management plan is prepared under the direction of Council s vision, mission, goals and objectives. 2 Community vision is: Working together to balance Environment, Lifestyle, and Opportunity Our mission is: To meet the challenges of our unique and diverse region Our values are: Respect and respond to community needs Improve the quality of our services Be open and accessible Act with honesty and integrity Value people s contribution Support the culture of teamwork, cooperation and safety Relevant goals and objectives and how these are addressed in this asset management plan are shown in Table 2.2. Participation Communication Table 2.2: Organisation Goals and how these are addressed in this Plan Goal Objective How Goal and Objectives are addressed in AMP and To encourage public participation and provide access opportunities for the recognition of community needs and expectations and develop appropriate lines of communications to ensure that the public is kept well informed as to Council activities. Development of the service levels provided by infrastructure, and the balancing of this with the available funding and acceptable risk will require communication and consultation with the community A primary objective of the first asset management plans prepared by Council is to establish the position in relation to maintaining the current infrastructure at a level which will sustain the current standard of services. Once the current sustainability position is established community discussion can be sought to identify acceptable changes to services. 2 Kyogle Council Management Plan

10 - 8 - Management Goal Objective How Goal and Objectives are addressed in AMP To set the example in Local Government through efficient and effective management practices and provide an environment that fosters trust, encourages and rewards excellence in performance and which supports the implementation of Council's goals and policies. Quality of Life To promote the physical, social, cultural and general well-being of the Community. Roads and Traffic Services Promotion Development and To provide an adequate and safe road system appropriate to present and future vehicular and pedestrian use. To provide and facilitate the provision of a broad range of services to a standard commensurate with the needs and resources of a rural council and provide equitable access for all residents To assist and coordinate the ongoing development of Kyogle Council area and enhance and market its capacity as a location for residential opportunities, primary production, industry, commerce, government services and tourism. Environment To achieve acceptable planning, development and building standards; to manage waste collection and disposal and to protect the environment in accordance with community expectations. Council has limited resources. Asset Management Planning provides a way in which the community can be engaged in setting the priorities and allocation of these resources. The Asset Management Plan in conjunction with Long Term Financial Plans are the tools by which Council assesses the long term financial sustainability of council s infrastructure assets Planning long term sustainable infrastructure is important to enable the appropriate resources to be identified and provided Planning long term sustainable infrastructure is important to enable Council to meet its statutory requirements The provision and maintenance of public infrastructure is an important component contributing to the cultural and social needs of the community Planning and long term management of these assets is one of the principle aims of the Asset Management Plans and is essential to the sustainability of these services. Infrastructure is provided to support services. Getting the correct infrastructure appropriate to the needs of the community is a primary goal of Asset Management Planning. A primary objective of the asset management plan is to develop a lifecycle approach to the provision of infrastructure. This aims to minimise the life cycle cost of assets while maximising the service that is delivered Economic sustainability and growth is linked to the services provided by infrastructure. The Asset Management Plans will provide guidance as to the assets required, and the long term sustainability of these services. Infrastructure is provided to support services. Getting the correct infrastructure appropriate to the needs of the community is a primary goal of Asset Management Planning. Council has limited resources. Asset Management Planning provides a way in which the community can be engaged in setting the priorities and allocation of these resources. Provision of the appropriate infrastructure to support the natural environment will continue to be a long term consideration in Asset Management Planning

11 - 9 - Health Goal Objective How Goal and Objectives are addressed in AMP To protect and promote the health and well-being of the Kyogle Council area Community by developing and applying environmental health and public safety measures. The provision and maintenance of infrastructure is an important component contributing to the health and safety of the community 2.3 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 the organisation will manage its existing and future assets to provide the required services Financial summary what funds are required to provide the required services. Asset management practices Monitoring how the plan will be monitored to ensure it is meeting the organisation s objectives. Asset management improvement plan 2.4 Core and Advanced Asset Management This asset management plan is prepared as a first cut core asset management plan 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. 2.5 Community Consultation This core asset management plan is prepared to facilitate community consultation initially through feedback on public display of draft asset management plans prior to adoption by Council. 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 to pay for the service. 3. LEVELS OF SERVICE 3.1 Customer Research and Expectations Council has carried out research on customer expectations during the process of developing the Council Community Strategic Plan. The integration of the Asset Management Plans with the Community Strategic Plan and the Long Term Financial Plan will continue to be developed in future revisions of the asset management plan. 3 IPWEA, 2006.

12 Legislative Requirements Council has to meet many legislative requirements including Australian and State legislation and State regulations. Relevant legislation is shown in Table 3.2. Table 3.2: Legislative Requirements Legislation Local Government Act 1993 Local Government Amendment (Planning and Reporting) Act 2009 Disability Discriminations Act, 1992 Requirement Sets out role, purpose, responsibilities and powers of local governments. The purposes of this Act are as follows: (a) to provide the legal framework for an effective, efficient, environmentally responsible and open system of local government in New South Wales, (b) to regulate the relationships between the people and bodies comprising the system of local government in New South Wales, (c) to encourage and assist the effective participation of local communities in the affairs of local government, (d) to give councils: the ability to provide goods, services and facilities, and to carry out activities, appropriate to the current and future needs of local communities and of the wider public the responsibility for administering some regulatory systems under this Act a role in the management, improvement and development of the resources of their areas, (e) to require councils, councillors and council employees to have regard to the principles of ecologically sustainable development in carrying out their responsibilities. The land management provisions of the Act require that Council prepare plans of management for all community land. The plan of management identifies the management objectives for the land category, performance indicators and performance measures to meet the objectives identified. Local Government Amendment (Planning and Reporting) Act 2009 includes the preparation of a long term financial plan supported by asset management plans for sustainable service delivery. The Federal Disability Discrimination Act 1992 (D.D.A.) provides protection for everyone in Australia against discrimination based on disability. It encourages everyone to be involved in implementing the Act and to share in the overall benefits to the community and the economy that flow from participation by the widest range of people. (a) to eliminate, as far as possible, discrimination against persons on the ground of disability in the areas of: (i) work, accommodation, education, access to premises, clubs and sport; and (ii) the provision of goods, facilities, services and land; and (iii) existing laws; and (iv) the administration of Commonwealth laws and programs; and (b) to ensure, as far as practicable, that persons with disabilities have the same rights to equality before the law as the rest of the community; and to promote recognition and acceptance within the community of the principle that persons with disabilities have the same fundamental rights as the rest of the community.

13 Legislation Work Health & Safety Act 2011 Environmental Planning and Assessment Act 1979 Plant Protection Act 1989 Environmental Protection Act 1994 Threatened Species Conservation Act, 1995 Rivers and Foreshores Improvements Act, 1948 Protection of the Environment Operations Act 1997 National Parks and Wildlife Act (1974) Native Vegetation Act 2003 Public Works Act 1912 Road Transport (General) Act 2005 Road Transport (Safety and Traffic Management) Act 1999 Roads Act 1993 Local Government (Highways) Act 1982 Requirement Sets out roles and responsibilities to secure the health, safety and welfare of persons at work and covering injury management, emphasising rehabilitation of workers particularly for return to work. Council is to provide a safe working environment and supply equipment to ensure safety. An Act to institute a system of environmental planning and assessment for the State of New South Wales. Among other requirements the Act outlines the requirement for the preparation of Local Environmental Plans (LEP), Development Control Plans (DCP), Environmental Impact Assessments (EIA) and Environmental Impact Statements. This act sets out requirements in respect to Flora Protection This act sets out requirements in respect to environmental protection An Act to conserve threatened species, populations and ecological communities of animals and plants. Under the terms of this Act Council is required to ensure the long term survival of the species identified. An Act to provide for the carrying out of works for the removal of obstructions from and the improvement of rivers and foreshores and the prevention of erosion of lands by tidal and non-tidal waters Council is required to exercise due diligence to avoid environmental impact and among others are required to develop operations emergency plans and due diligence plans to ensure that procedures are in place to prevent or minimise pollution. An Act relating to the establishment, preservation and management of national parks, historic sites and certain other areas and the protection of certain fauna, native plants and Aboriginal objects This Act regulates the clearing of native vegetation on all land in NSW, except for excluded land listed in Schedule 1 of the Act. The Act outlines what landowners can and cannot do in clearing native vegetation. Sets out the role of Council in the planning and construction of new assets. Provides for the administration and enforcement of road transport legislation. It provides for the review of decisions made under road transport legislation. It makes provision for the use of vehicles on roads and road related areas and also with respect to written off and wrecked vehicles. Facilitates the adoption of nationally consistent road rules in NSW, the Australian Road Rules. It also makes provision for safety and traffic management on roads and road related areas including alcohol and other drug use, speeding and other dangerous driving, traffic control devices and vehicle safety accidents. Sets out rights of members of the public to pass along public roads, establishes procedures for opening and closing a public road, and provides for the classification of roads. It also provides for declaration of the RTA and other public authorities as roads authorities for both classified and unclassified roads, and confers certain functions (in particular, the function of carrying out roadwork) on the RTA and other roads authorities. Finally it provides for distribution of functions conferred by this Act between the RTA and other roads authorities, and regulates the carrying out of various activities on public roads. An Act to consolidate with amendments certain enactments concerning the functions of the corporations of municipalities with respect to highways and certain other ways and places open to the public.

14 Legislation NSW Road Rules 2008 Valuation of Land Act 1916 Crown Lands Act, 1989 Heritage Act, 1977 Building Code of Australia Building Fire and Safety Regulation 1991 Electrical Safety Act 2002 Building Regulation 2003 Plumbing and Drainage Act 2002 Rural Fires Act, 1997 Dangerous Goods Safety Management Act 2001 Fire and Rescue Service Act 1990 Public Records Act 2002 Surveillance Devices Act Civil Liability Act, 2002 Companion Animals Act, 1998 Rural Fires Act, 1997 Requirement A provision of road rules that are based on the Australian Road Rules so as to ensure that the road rules applicable in this State are substantially uniform with road rules applicable elsewhere in Australia. This act sets out requirements in respect Land Valuation An Act to provide for the administration and management of Crown land in the Eastern and Central Division of the State of NSW Council has large holdings of Crown land under it care, control and management. An Act to conserve the environmental heritage of the State. Several properties are listed under the terms of the Act and attract a high level of maintenance cost, approval and monitoring. The goal of the BCA is to enable the achievement of nationally consistent, minimum necessary standards of relevant, health, safety (including structural safety and safety from fire), amenity and sustainability objectives efficiently. This Act sets out the regulations for things such as means of escape, Limitation of people in buildings, Fire and evacuation plans and testing of special fire services and installations. This act sets out the installation, reporting and safe use with electricity This act sets out requirements in respect to Building Requirements This act sets out requirements in respect to Plumbing Requirements An Act to establish the NSW Rural Fire Service and define its functions; to make provision for the prevention, mitigation and suppression of rural fires. Under the terms of this Act Council is required to mitigate any fire that emanate from bushland. This act sets out the safe use, storage and disposal of dangerous goods This act sets out requirements in respect to Emergency Services for Fire and Rescue This act sets out requirements in respect maintaining Public Records This act sets out requirements in respect use of Surveillance Devices An Act to make provision in relation to the recovery of damages for death or personal injury caused by the fault of a person An Act to provide for the identification and registration of companion animals and for the duties and responsibilities of their owners. Under the terms of the Act Council is required to provide and maintain at least one off leash area. It currently has eleven areas identified as off leash. An Act to establish the NSW Rural Fire Service and define its functions; to make provision for the prevention, mitigation and suppression of rural fires. Under the terms of this Act Council is required to mitigate any fire that emanate from bushland. 3.3 Current Levels of Service Council has defined service levels in two terms. Community Levels of Service relate to the service outcomes that the community wants in terms of safety, quality, quantity, reliability, responsiveness, cost effectiveness and legislative compliance.

15 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? Does the service have sufficient capacity or is it 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 council undertakes to best achieve the desired community outcomes. Technical service measures are linked to annual budgets covering: Operations the regular activities to provide services such as opening hours, cleansing frequency, mowing frequency, etc. Maintenance the activities necessary to retain an assets as near as practicable to its original condition (eg road patching, unsealed road grading, building and structure repairs), Renewal the activities that return the service capability of an asset up to that which it had originally (eg frequency and cost of road resurfacing and pavement reconstruction, pipeline replacement and building component replacement), Upgrade the activities to provide an higher level of service (eg widening a road, sealing an unsealed road, replacing a pipeline with a larger size) or a new service that did not exist previously (eg a new library). Council s current service levels are detailed in Table 3.3.

16 Table 3.3: Current Service Levels COMMUNITY LEVELS OF SERVICE Quality Theme Community Expectation Water supplied tastes good Clear Measure Customer surveys and Customer requests Community Planning Current Service Level Response To be provided from the Resident Survey and Community Plan research Acceptable Level of Service Response Requests received should not increase annually % of network that is poor or very poor Has not been fully assessed at this time Further assessment required to inform future revisions of the Water Supply Asset Management Plan Function Connection available Reliable supply Customer surveys and Customer requests Community Planning To be provided from the Resident Survey and Community Plan research Requests received should not increase annually % of network that is poor or very poor Has not been fully assessed at this time Further assessment required to inform future revisions of the Water Supply Asset Management Plan Capacity/Utilisation Safe to drink Meets health standards Monitoring and reporting program % of network that is poor or very poor Meets all health requirements Has not been fully assessed at this time Meets health standards Further assessment required to inform future revisions of the Water Supply Asset Management Plan

17 TECHNICAL LEVELS OF SERVICE Budget Area Activities Measure Current Funded Level of Service Operations Comply with health requirements Monitoring and reporting program Regular inspection of key components Meets all health requirements Inspections being undertaken Optimal Level of Service Meets all health requirements Inspections being undertaken Operations Cost $702,000 pa Will need to increase to $888,330 pa over the next 10 years to maintain current funding levels due to some asset growth Maintenance Remove hazards Respond complaints to Reactive maintenance to limit of budget allocation. Planned Maintenance Provide Maintenance Repairs undertaken Repairs identified from inspections are scheduled and carried out Repairs identified from inspections are scheduled and carried out Supply Maintained Times supply is not available Provision across areas of supply is reliable Provision across areas of supply is reliable Maintenance Cost $78,000 pa Will need to increase to $98,700 pa over the next 10 years to maintain current funding levels due to some asset growth

18 Renewal Budget Area Activities Measure Current Funded Level of Service Replacement of active assets, pipe networks and treatment facilities. Frequency Identified renewal works can be completed The works program and long term financial plan have been developed to deliver a satisfactory service standard. Identified capital works have been included in the long term financial plan Verification and improvement of the useful lives used for valuation purposes, matching these actual services standards will assist to improve financial reporting and planning Renewal Cost Works identified and funded in LTFP $1.17 M over 10 years Upgrade/New Provide services in a cost effective manner Cost, Corporate Strategy Achieved by a combination of Council and Contract works Upgrade/New Cost Works identified and funded in LTFP $5.3 M over 10 years Optimal Level of Service Water Supply System Average Useful Lives Water Mains years Rising Mains 80 years Reservoir assets years Dams years Water Treatment Plant and Equipment 25 to 80 years Water Service 80 years Water Meters 15 years Works identified in the asset register $4.8M (Scenario 1) Achieved by a combination of Council and Contract works Works identified and funded in LTFP $5.3 M over 10 years 3.4 Desired Levels of Service At present, indications of desired levels of service are obtained from various sources including residents feedback to Councillors and staff, service requests and correspondence. Council has yet to quantify desired levels of service. This will be done in future revisions of this asset management plan.

19 FUTURE DEMAND 4.1 Demand Forecast Factors affecting demand include population change, changes in demographics, seasonal factors, vehicle ownership, consumer preferences and expectations, economic factors, agricultural practices, environmental awareness, etc. Demand factor trends and impacts on service delivery are summarised in Table 4.1. Table 4.1: Demand Factors, Projections and Impact on Services Demand factor Present position Projection Impact on services Development Population increase and higher density development is not significant No significant change anticipated Minimal increase in demand due to development Increasing Costs The cost to construct, maintain and renew infrastructure is increasing at a rate greater than council s revenue Anticipated to continue Cost of renewing water supply systems is increasing The need to carefully target and plan infrastructure is increasing in importance as maximising the service that can be delivered within the funding limitations will be under pressure. Treatment Standards Standards for treatment of potable water are high Requirements are only likely to ever increase Increased treatment cost. Redundancy of existing plant High cost of replacement plant Climate Change Higher frequency of extreme weather events Unknown, but changes likely. Cannot be anticipated or planned for. Availability of disaster relief funding to assist council will be important Periods of sustained low rainfall increase requirements for additional water supply storage Addition costs may be imposed to fund environmental initiatives e.g. carbon tax 4.2 Changes in Technology Technology changes forecast to have minimal impact on the delivery of services covered by this plan. See Table 4.2. Table 4.2: Changes in Technology and Forecast effect on Service Delivery Technology Change Construction methods and the materials used Effect on Service Delivery May increase the life of water supply system components, reducing the susceptibility to damage, or by reducing the cost of construction or maintenance

20 Demand Management Plan 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 council to own the assets. Examples of non-asset solutions include providing services from existing infrastructure such as aquatic centres and libraries that may be in another council area or public toilets provided in commercial premises. Opportunities identified to date for demand management are shown in Table 4.3. Further opportunities will be developed in future revisions of this asset management plan. Table 4.3: Demand Management Plan Summary Service Activity Communicate options and capacity to fund Water Supply Infrastructure with the community Funding priority works Improve understanding of costs and capacity to maintain current service levels Demand Management Plan Monitor community expectations and communicate service levels and financial capacity with the community to balance priorities for infrastructure with what the community is prepared to pay for Continue to seek grant funding for projects identified in the Kyogle Community Plan and Asset Management Plans Continue to analyse the cost of providing service and the capacity to fund at the current level of service Kyogle has worked with other Councils in the region to prepare a Drought Management Plan, and is working on a regional approach to demand management for water supplies, as well as a long term regional water strategy Kyogle is working with other Councils in the region to prepare a Drinking Water Quality Management Plan

21 New Assets for Growth The new assets required to meet growth will be acquired free of cost from land developments and constructed/acquired by Council. The new contributed and constructed asset values are summarised in Figure 1. Figure 1: New Assets for Growth (Cumulative) $5.3M of additional water supply assets has been forecast in the long term financial plan. Acquiring these new assets will commit council to fund ongoing operations and maintenance costs for the period that the service provided from the assets is required. These future costs are identified and considered in developing forecasts of future operations and maintenance costs. 5. LIFECYCLE MANAGEMENT PLAN The lifecycle management plan details how Council 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 age profile of the assets include in this AM Plan is shown in Figure 2.

22 Figure 2: Asset Age Profile Note: Good information is available on the age of network assets, and the age profile reliably reflects the staged construction of the network over time. Plans showing the Water Supply assets are: Financial Valuations Technical Inventory Maintenance and Renewal Plans Asset capacity and performance Council s services are generally provided to meet design standards where these are available. Locations where deficiencies in service performance are known are detailed in Table Table 5.1.2: Known Service Performance Deficiencies Location In this first Asset Management Plan detailed performance deficiencies have not been identified Service Deficiency In the development of next asset management plans, and in particular as these plans are developed and integrated along with the Long Term Financial Plans and Community Plans service deficiencies will be identified

23 Asset condition The condition profile of assets included within this AM Plan is shown in Figure 3. Figure 3: Asset Condition Profile Note: A detailed condition assessment of the assets has not been undertaken. A condition rating of 1 has been applied as the default rating in the absence accurate data, and may not reflect the actual condition of assets. Condition assessment of pressurised water reticulation assets is difficult and expensive. Condition is measured using a 1 5 rating system 4 as detailed in Table Condition Rating Table 5.1.3: IIMM Description of Condition Description 1 Excellent condition: Only planned maintenance required. 2 Very good: Minor maintenance required plus planned maintenance. 3 Good: Significant maintenance required. 4 Fair: Significant renewal/upgrade required. 5 Poor: Unserviceable. Typical condition ratings are represented in the following photos. 4 IIMM 2006, Appendix B, p B:1-3 ( cyclic modified to planned, average changed to fair )

24 Typical Condition 1 Mechanical Equipment Typical Condition 2 Mechanical and Civil Infrastructure

25 Typical Condition 3 Mechanical Equipment Typical Condition 4 Rising Main on Condition 5 Timber Trestle

26 Condition 5 Electrical Equipment Asset valuations The value of assets recorded in the asset register as at 2011 covered by this asset management plan is shown below. Current Replacement Cost $19,827, Depreciable Amount $19,827, Depreciated Replacement Cost $8,097, Annual Depreciation Expense $211, Council s sustainability reporting reports the rate of annual asset consumption and compares this to asset renewal and asset upgrade and expansion. Asset Consumption 1.10% (Depreciation/Depreciable Amount) Asset renewal 1.50% (Capital renewal exp/depreciable amount) Annual Upgrade/New 0.80% (Capital upgrade exp/depreciable amount) Annual Upgrade/New 0.80% (Including contributed assets) Council is currently renewing assets at % (renewal component only) of the rate they are being consumed and increasing its asset stock by 0.80% in the first year. The major growth in assets occurs in year

27 of the plan (Total Growth over 10 years is $5.3M. This equates to a growth of 26% over the 10 year period of the plan). To provide services in a financially sustainable manner, Council will need to ensure that it is renewing assets at the rate they are being consumed over the medium-long term and funding the life cycle costs for all new assets and services in its long term financial plan 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. Council s service hierarchy is shown is Table Table 5.1.5: Asset Service Hierarchy Bore Dam Weir Service Hierarchy Water Treatment Plant Reservoir Water Pumping Station Rising Main Water Main Water Service Meter 5.2 Risk Management Plan Supply of water Service Level Objective Maintain adequate medium term supply for distribution Maintain water quality to standard Maintain adequate short term supply for distribution Distribute water supply and maintains water pressure Distribute to users An assessment of risks 5 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 are summarised in Table Kyogle Council Core Infrastructure Risk Management Plan

28 Table 5.2: Critical Risks and Treatment Plans Service or Asset at Risk Not meeting drinking water guidelines What can Happen Highly variable raw water can lead to poor final water quality Risk Rating (VH, H) High Risk Treatment Plan Complete Kyogle Water Supply Augmentation Develop Drinking Water Quality Management Plan Associated Costs Within existing Deterioration of water supply system High numbers of main breaks leaving customers without water High Continue to improve data by keeping records of main breaks and their locations Renewal of water supply system components Within existing Deterioration of water supply system Underfunding of renewals leading to frequent failures and higher operating and maintenance costs High Ensure funding for renewals is provided in the medium and long term Implement preventative maintenance programs for all mechanical and electrical components Within existing Drought Failure Failure of a water supply to a community High Continue to implement drought management plan and involvement in regional strategies Within existing 5.3 Routine Maintenance Plan 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 Maintenance plan Maintenance includes 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, building roof replacement, etc. This work generally falls below the capital/maintenance threshold but may require a specific budget allocation. Proposed maintenance expenditure is shown in Table

29 Year Table 5.3.1: Maintenance Expenditure Trends Maintenance Expenditure 2011 $78, $78, $78,000 Maintenance expenditure is planned to remain constant in real terms over the period covered by this asset management plan. Current maintenance expenditure levels are considered to be adequate to meet current service levels. Future revision of this asset management plan will include closer linking of the maintenance expenditures with required service levels. Assessment and prioritisation of reactive maintenance is undertaken by operational staff using experience and judgement Standards and specifications Maintenance work is carried out in accordance with the following Standards and Specifications. Relevant engineering Australian Standards Relevant standards and specifications for public health, water supply and construction and works Northern Rivers Local Government Development and Design Specifications NRLG Construction Specifications Summary of future operations and maintenance expenditures 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 2011 dollar values.

30 Figure 4: Projected Operations and Maintenance Expenditure The increase in maintenance and operations during the planning period is due to the construction of additional water supply assets. Deferred maintenance, ie works that are identified for maintenance and unable to be funded are to be included in the risk assessment process in the infrastructure risk management plan. Maintenance is funded from the operating budget and grants where available. This is further discussed in Section Renewal/Replacement Plan Renewal 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 service potential. Work over and above restoring an asset to original service potential is upgrade/expansion or new works expenditure Renewal plan The ranking criteria used to determine priority of identified renewal proposals is detailed in Table

31 Available budget Water main break history Condition Risk Regulatory Standards Criteria Table 5.4.1: Renewal Priority Ranking Criteria Weighting No weighting criteria adopted No weighting criteria adopted No weighting criteria adopted No weighting criteria adopted No weighting criteria adopted Total 100% Renewal will be undertaken using low-cost renewal methods where practical. The aim of low-cost renewals is to restore the service potential or future economic benefits of the asset by renewing the assets at a cost less than replacement cost. Examples of low cost renewal include water main relining Renewal standards Assets requiring renewal are identified comparing 3 Scenarios. Scenario 1 uses the Asset Register valuation data to project the renewal costs for renewal years using acquisition year and useful life, or Scenario 2 uses capital renewal expenditure projections from external condition modelling systems (such as Pavement Management Systems), or a combination of average network renewals plus defect repairs. Scenario 3 balances capital renewal expenditure with the Long Term Financial Plan. It is common that the valuation registers used in Scenario 1 are not developed to a level of maturity where they are reliable for producing a realistic renewal forecast. Ideally when this asset register is sorted by remaining life from 1 to 10 years this should be consistent with the capital renewal program. For Kyogle Council the refinement of the asset register to achieve this situation should become an important part of the asset management improvement plan. Renewal work is carried out in accordance with the following Standards and Specifications. Relevant engineering Australian Standards Relevant standards and specifications for public health, water supply and construction and works Northern Rivers Local Government Development and Design Specifications NRLG Construction Specifications Summary of projected renewal expenditure Projected future renewal expenditures are forecast to increase over time as the asset stock ages. The costs are summarised in Figure 5. Note that all costs are shown in 2011 dollar values. The projected capital renewal program is shown in Appendix B.

32 Figure 5.1: Projected Capital Renewal Expenditure (Scenario 1 - from Asset Register) The renewal projection (forecast) in Scenario 1 (Using the asset/valuation register) generates a highly variable renewal profile. Whilst the long term averages and total values from this register are sound, the shorter term renewal forecast are not, and are inconsistent with the known capital renewal plans. This indicates that further refinement of the asset register is required before it is valuable as a capital renewal planning tool. This should be given a high priority in the asset management improvement plan. Figure 5.2: Projected Capital Renewal Expenditure (Scenario 2 - from Average Network Renewal Estimates) Figure 5.3: Projected Capital Renewal Expenditure (Scenario 3 Balanced with Long Term Financial Plan)

33 Deferred renewal, ie those assets identified for renewal and not scheduled for renewal in capital works programs are to be included in the risk assessment process in the risk management plan. The asset renewals identified in the Kyogle asset register show that $4.8M expenditure is required over the next 10 years. This compares with $1.17M provided in the long term financial plan. Further investigation of the consequences resulting from this situation should be developed for the next update of the Water Supply Asset Management Plan. Asset Renewals are to be funded from capital works programs and grants where available. This is further discussed in Section 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 Council 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 councillor or community requests, proposals identified by strategic plans or partnerships with other organisations. Candidate proposals are inspected to verify need and to develop a preliminary estimate. Verified proposals are ranked by priority and available funds and scheduled in future works programmes. The priority ranking criteria is detailed in Table Table 5.5.1: Upgrade/New Assets Priority Ranking Criteria Available budget Criteria Weighting No weighting criteria adopted

34 Land use planning priorities Public health needs Regulatory standards No weighting criteria adopted No weighting criteria adopted No weighting criteria adopted Total 100% Standards and specifications 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 projected upgrade/new assets expenditure Projected upgrade/new asset expenditures are summarised in Figure 6. The projected upgrade/new capital works program is shown in Appendix C. All costs are shown in current 2011 dollar values. Figure 6: Projected Capital Upgrade/New Asset Expenditure New or upgrades totally $5.3M have been included in this asset management plan. New assets and services are to be funded from capital works program and grants where available. These are listed in total in Appendix C, and have been identified in the long term financial plan. Funding is further discussed in Section 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 are shown in Table 5.6, together with estimated annual savings from not having to fund operations and maintenance of the assets. These

35 assets will be further reinvestigated to determine the required levels of service and see what options are available for alternate service delivery, if any. Where cashflow projections from asset disposals are not available, these will be developed in future revisions of this asset management plan. Table 5.6: Assets identified for Disposal Asset Reason for Disposal Timing Net Disposal Expenditure (Expend +ve, Revenue ve) No assets identified for disposal in this asset management plan Operations & Maintenance Annual Savings 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 The financial projections are shown in Figure 7 for projected operating (operations and maintenance) and capital expenditure (renewal and upgrade/expansion/new assets), net disposal expenditure and estimated budget funding. Note that all costs are shown in 2011 dollar values.

36 Figure 7.1: Projected Operating and Capital Expenditure and Budget (Scenario 1 - from Asset Register) As discussed in Section 5.3 the expenditure projection (forecast) in Scenario 1 (Using the asset/valuation register) is not consistent with the required works program or the long term financial plan, and is indicative of the continuing work required to improve the asset register. Figure 7.2: Projected Operating and Capital Expenditure and Budget (Scenario 2 - from Average Network Renewal Estimates)

37 Figure 7.3: Projected Operating and Capital Expenditure and Budget (Scenario 3 Balanced with Long Term Financial Plan) Financial sustainability in service delivery There are three key indicators for financial sustainability that have been considered in the analysis of the services provided by this asset category, these being long term life cycle costs/expenditures and medium term projected/budgeted expenditures over 5 and 10 years of the planning period. Table shows the projected (forecast) expenditures for the Long Term Financial Plan, with the assessment being made for the 3 scenarios used in this asset management plan. The 3 Scenarios are summarised in the following table 6.0

38 Table 6.0: Sustainability Indicators Summary Kyogle Water Supply Kyogle Council S1_V1 Sustainability of Service Delivery for Water Supply Asset Register ($000) Summary - What does it cost? Cost over 10 years Cost per year Available funding over 10 years Funding per year Funding shortfall Percentage of cost Life Cycle Cost (long term) Life Cycle Cost = depreciation + operations + maintenance + upgrade (10 year average] Life Cycle Exp. =capital renewal expenditure. + operations + maintenance + upgrade expenditure. 10 year average] Kyogle Water Supply S2_V2 Optimal Renewal ($000) Kyogle Water Supply S3_V1 Balanced with LTFP ($000) $18,932 $15,346 $15,349 $1,893 $1,535 $1,535 $14,261 $14,261 $14,261 $1,426 $1,426 $1,426 $467 $109 $109 75% 93% 93% $16,286 $16,286 $16,286 $14,261 $14,261 $14,261 Life Cycle Gap [life cycle expenditure - life cycle cost [-ve = gap] -$2,025 -$2,025 -$2,025 Life Cycle Sustainability Indicator [life cycle expenditure / LCC] 88% 88% 88% Medium Term (10 yrs) Sustainability 10 yr Ops, Maintenance & Renewal & Upgrade Projected Expenditure 10 yr Ops, Maintenance & Renewal & Upgrade Planned (Budget) Expenditure $18,932 $15,346 $15,349 $14,261 $14,261 $14, yr Funding Shortfall [10 yr proj. exp. - planned (Budget) exp.] -$4,671 -$1,085 -$1, yr Sustainability Indicator [10 yr planned exp. / proj. exp.] 75% 93% 93%

39 Short Term (5 yrs) Sustainability 5 yr Ops, Maint & Renewal & Upgrade Projected Expenditure $13,627 $9,718 $9,669 5 yr Ops, Maint & Renewal & Upgrade Planned (Budget) Exp $9,607 $9,607 $9,607 5 yr Funding Shortfall [5 yr proj. exp. - planned (budget) exp.] -$4,020 -$111 -$62 5 yr Sustainability Indicator [5 yr planned exp. / proj. exp.] 70% 99% 99%

40 Summary of Table 6.0 Scenario Long Term Medium Term Lifecycle 5 Year 10 Year Scenario 1 Water Supply S1_V1 Asset Register 88% Sustainability Ratio (Target is 100%) 70% Sustainability Ratio (Target is 100%) 75% Sustainability Ratio (Target is 100%) Based on the comparison of current expenditures (10 Year Average) to the Projected (Forecast Expenditures) using depreciation as the long term renewal requirement. Based on the comparison of current expenditures (5 years) to the Projected (Forecast Expenditures) using the renewals due from the asset register. In isolation this ratio of <100% would indicate that renewal requirements are not being fully funded. Scenarios 2 & 3 have been undertaken to validate the real position. The apparent significant shortfall requires further assessment and the asset register should be reviewed to ensure that it reliably reflects the short term position. Based on the comparison of current expenditures (10 years) to the Projected (Forecast Expenditures) using the renewals due from the asset register. In isolation this ratio of <100% would indicate that renewal requirements are not being fully funded. Scenarios 2 & 3 have been undertaken to validate the real position. The apparent significant shortfall requires further assessment and the asset register should be reviewed to ensure that it reliably reflects the medium term position Scenario 2 Water Supply S2_V1 Optimal Renewal 88% Sustainability Ratio (Target is 100%) 99% Sustainability Ratio (Target is 100%) 93% Sustainability Ratio (Target is 100%) Same calculation for Scenario 1, 2 & 3 Based on the comparison of current expenditures to the Projected (Forecast Expenditures) using the works program to assess the renewal requirements. Based on the comparison of current expenditures to the Projected (Forecast Expenditures) using the Long Term Financial Plan funding for the renewal requirements.. Scenario 3 Water Supply S3_V1 Balanced with LTFP 88% Sustainability Ratio Same calculation for Scenario 1, 2 & 3 99% Sustainability Ratio The minor shortfall is due to the need for additional operational maintenance required for new assets being created. 93% Sustainability Ratio The shortfall is due to the need for additional operational maintenance required for new assets being created. For the overall assessments used in this asset management plan (including the Executive Summary) the assessments made under Scenarios 2 and 3 are used. Long term - Life Cycle Cost Life cycle costs (or whole of life costs) are the average costs that are required to sustain the service levels over the longest asset life. Life cycle costs include operations and maintenance expenditure and asset

41 consumption (depreciation expense). The average annual life cycle cost for the services covered in this asset management plan is $1,628,600. Life cycle costs can be compared to life cycle expenditure to give an indicator of sustainability in service provision. Life cycle expenditure includes annual average of operations, maintenance and capital renewal expenditure (10 year average). Life cycle expenditure will vary depending on the timing of asset renewals. The life cycle expenditure at the start of the plan is $1,426,100. A shortfall between life cycle cost and life cycle expenditure is the life cycle gap. The life cycle gap for services covered by this asset management plan is $202,500 per year. Life cycle expenditure is 88% of life cycle costs giving a life cycle sustainability index of 0.88 The life cycle costs and life cycle expenditure comparison highlights any difference between present outlays and the average cost of providing the service over the long term. If the life cycle expenditure is less than that life cycle cost, it is most likely that outlays will need to be increased or cuts in services made in the future. Knowing the extent and timing of any required increase in outlays and the service consequences if funding is not available will assist organisations in providing services to their communities in a financially sustainable manner. This is the purpose of the asset management plans and long term financial plan. Medium term 10 year financial planning period This asset management plan identifies the projected operations, maintenance and capital renewal expenditures required to provide an agreed level of service to the community over a 10 year period. This provides input into 10 year financial and funding plans aimed at providing the required services in a sustainable manner. For the medium term assessment used in this asset management plan Scenario 2 is used. This Scenario uses the medium term requirements to maintain service levels for this period. These projected expenditures may be compared to budgeted expenditures in the 10 year period to identify any funding shortfall. In a core asset management plan, a gap is generally due to increasing asset renewals for ageing assets. The projected operations, maintenance and capital renewal expenditure required over the 10 year planning period is $1,535,000 per year. Estimated (budget) operations, maintenance and capital renewal funding is $1,426,000 per year giving a funding shortfall of $109,000 per year and a 10 year sustainability indicator of This indicates that Council has 93% of the projected expenditures needed to provide the services documented in the asset management plan. Short Term 5 year financial planning period For the short term assessment used in this asset management plan Scenario 2 is used. This Scenario uses the short term requirements to maintain service levels for this period. For this period 99% of projected expenditures is funded giving a 5 year sustainability indicator of 0.99 Financial Sustainability Indicators

42 Figure 7A shows the financial sustainability indicators over the 10 year planning period and for the long term life cycle (including Upgrade/New). Figure 7A.1: Financial Sustainability Indicators (Scenario 1 - from Asset Register) Figure 7A.2: Financial Sustainability Indicators (Scenario 2 - from Average Network Renewal Estimates) Figure 7A.3: Financial Sustainability Indicators (Scenario 3 Balanced with Long Term Financial Plan)

43 Providing services from infrastructure in a sustainable manner requires the matching and managing of service levels, risks, projected expenditures and funding to achieve a financial sustainability indicator of 1.0 for the first years of the asset management plan and ideally over the 10 year life of the AM Plan. Figure 8 shows the projected asset renewals in the 10 year planning period from Appendix B. The projected asset renewals are compared to budgeted renewal expenditure in the capital works program and capital renewal expenditure in year 1 of the planning period in Figure 8. Figure 8.1: Projected and Budgeted Renewal Expenditure (Scenario 1 - from Asset Register) Table S1 shows the shortfall between projected and budgeted renewals for Scenario 1 Table S1: Projected and Budgeted Renewals and Expenditure Shortfall (Scenario 1 - from Asset Register)

44 Kyogle Year Projected Renewals ($000) Planned Renewal Budget ($000) Renewal Funding Shortfall ($000) (-ve Gap, +ve Surplus) Cumulative Shortfall ($000) (-ve Gap, +ve Surplus) 2012 $4, $ $4, $4, $0.00 $56.00 $ $4, $0.00 $58.00 $ $4, $10.25 $60.00 $ $4, $0.00 $61.00 $ $3, $20.91 $ $ $3, $3.46 $10.00 $6.54 -$3, $3.89 $ $ $3, $ $ $ $3, $16.85 $ $ $3, Figure 8.2: Projected and Budgeted Renewal Expenditure (Scenario 2 - from Average Network Renewal Estimates) Table S2 shows the shortfall between projected and budgeted renewals for Scenario 2 Table S2: Projected and Budgeted Renewals and Expenditure Shortfall (Scenario 2 - from Average Network Renewal Estimates) Kyogle Year Projected Renewals ($000) Planned Renewal Budget ($000) Renewal Funding Shortfall ($000) Cumulative Shortfall ($000)

45 (-ve Gap, +ve Surplus) (-ve Gap, +ve Surplus) 2012 $ $ $ $ $ $ $61.00 $ $ $ $59.00 $ $ $ $57.00 $ $ $ $ $ $ $ $4.00 -$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $83.00 $3.00 Figure 8.3: Projected and Budgeted Renewal Expenditure (Scenario 3 Balanced with Long Term Financial Plan) Table S3 shows the shortfall between projected and budgeted renewals for Scenario

46 Year Table S3: Projected and Budgeted Renewals and Expenditure Shortfall (Scenario 3 Balanced with Long Term Financial Plan) Kyogle Projected Renewals ($000) Planned Renewal Budget ($000) Renewal Funding Shortfall ($000) (-ve Gap, +ve Surplus) Cumulative Shortfall ($000) (-ve Gap, +ve Surplus) 2012 $ $ $0.00 $ $56.00 $56.00 $0.00 $ $58.00 $58.00 $0.00 $ $60.00 $60.00 $0.00 $ $61.00 $61.00 $0.00 $ $ $ $0.00 $ $10.00 $10.00 $0.00 $ $ $ $0.00 $ $ $ $0.00 $ $ $ $0.00 $0.00 Note: A negative shortfall indicates a funding gap, a positive shortfall indicates a surplus for that year. Providing services in a sustainable manner will require matching of projected asset renewals to meet agreed service levels with planned capital works programs and available revenue. A gap between projected asset renewals, planned asset renewals and funding indicates that further work is required to manage required service levels and funding to eliminate any funding gap. We will manage the gap by developing this asset management plan to provide guidance on future service levels and resources required to provide these services, and review future services, service levels and costs with the community Expenditure projections for long term financial plan Table shows the projected expenditures for the 10 year long term financial plan. Expenditure projections are in current (non-inflated) values. Disposals are shown as net expenditures (revenues are negative).

47 Year Table 6.1.2: Expenditure Projections for Long Term Financial Plan ($000) (Scenario 3 Balanced with Long Term Financial Plan) Operations ($000) Maintenance ($000) Projected Capital Renewal ($000) Capital Upgrade/ New ($000) Disposals ($000) 2012 $ $78.00 $ $ $ $ $78.59 $56.00 $ $ $ $79.22 $58.00 $ $ $ $79.88 $60.00 $ $ $ $80.56 $61.00 $4, $ $ $98.34 $ $22.00 $ $ $98.43 $10.00 $23.00 $ $ $98.52 $ $23.00 $ $ $98.61 $ $24.00 $ $ $98.70 $ $25.00 $0.00 Note: All projected expenditures are in 2011 values 6.2 Funding Strategy Projected expenditure identified in Section 6.1 is to be funded from future operating and capital budgets. The funding strategy is detailed in the organisation s 10 year long term financial plan. The long term financial plan funds these projections with the exception of the increase in operations and maintenance over the 10 years of the asset management plan. These increases are due to the need to operate and maintain the additional assets being created. This variance is not substantial, but should be considered in the next update of the asset management plan and long term financial plan. 6.3 Valuation Forecasts Asset values are forecast to increase as additional assets are added to the asset stock from construction and acquisition by Council and from assets constructed by land developers and others and donated to Council. Figure 9 shows the projected replacement cost asset values over the planning period in 2011 dollar values.

48 Figure 9: Projected Asset Values Depreciation expense values are forecast in line with asset values as shown in Figure 10. Figure 10: Projected Depreciation Expense

49 The depreciated replacement cost (current replacement cost less accumulated depreciation) will vary over the forecast period depending on the rates of addition of new assets, disposal of old assets and consumption and renewal of existing assets. Forecast of the assets depreciated replacement cost is shown in Figure 11. The effect of contributed and new assets on the depreciated replacement cost is shown in the darker colour. Figure 11: Projected Depreciated Replacement Cost 6.4 Key Assumptions made in Financial Forecasts This section details the key assumptions made in presenting the information contained in this asset management plan and in preparing forecasts of required operating and capital expenditure and asset values, depreciation expense and carrying amount estimates. It is presented to enable readers to gain an understanding of the levels of confidence in the data behind the financial forecasts. Key assumptions made in this asset management plan are: Use of the existing inventory data Use of existing valuations, useful lives and remaining lives determined from the condition rating Use of current expenditure information as best as this can be determined That the current expenditures are not resulting in a decline in the service levels provided in the medium term Accuracy of future financial forecasts may be improved in future revisions of this asset management plan by the following actions. Full Implementation of a single Asset Register