Total Asset Management Manual

Transcription

1 Total Asset Management Manual This document is a snapshot of the NSW Government Total Asset Management Manual dated August 2003 see the TAM Manual Web Site for current documents. The Total Asset Management Manual is the latest update of the TAM Manual that was first released by Government in The Manual explains the five asset plans, which comprise a Total Asset Management Strategy and provides a series of guidelines on implementing various aspects of asset planning. Introduction TAM An Overview Assessment & Decision Tools Copyright - NSW Government Asset Management Committee (GAMC) Level 25, Governor Macquarie Tower, 1 Farrer Place, Sydney NSW 2000 AUSTRALIA Phone (02) Fax (02) gamc.secretariat@dpws.nsw.gov.au

2 Introduction to the Total Asset Management Manual The TAM Manual consists of three sections: This Introduction section of the Manual explains how Total Asset Management fits within whole-of-government planning. The TAM Overview includes strategies and how to guidelines to develop the five asset plans which comprise the Total Asset Management Strategy. NSW Government agencies are required to prepare these plans each year as part of their business planning and budget processes. The Assessment & Decision Tools provides a set of tools to assist agencies to develop and implement their Total Asset Management strategies. Each guideline in the Manual has an introductory page which gives access to the full guideline in Adobe Acrobat PDF format. Internet links are provided to those asset related guidelines that reside outside of the TAM Manual.

3 TAM within the Government Strategic Management Framework Introduction to the Total Asset Management Manual The NSW Government Strategic Management Framework summarises and defines the various processes which NSW Government agencies should use to plan activities and services, to allocate resources and to report on performance. The Framework shows how the various processes fit together and relate to each other. Total Asset Management planning is an integral part of the Framework at the Implementation and Service Delivery level. Before planning at this level, each agency should have in place a Service Delivery Strategy that defines what services they will deliver to achieve the outcomes defined by Government and desired by the community. The Strategy should identify and measure the outcomes to allow an agency to balance the requirements for services against available resources. Service Delivery Strategy guidelines are available from the Corporate Planning page of the Government Strategic Management Framework site. Agencies should also be familiar with Treasury s Service and Resource Allocation Agreement guidelines which can be found on the Treasury Policy & Guidelines Papers index page Link to: Strategic Management Framework

4 TAM - An Overview Total Asset Management is the strategic management of physical assets to best support the delivery of agency services. With constant reference to whole-of-government planning, the agency s Corporate Plan, and its Service Delivery Strategy, the TAM approach requires asset managers to assess what assets are needed to support successful service delivery. It then calls for detailed plans for the management of those assets which are to be acquired, maintained or disposed of. Agencies are required to submit an Asset Strategy to Treasury in support of submissions for funding. This section contains guidelines for: The Asset Strategy which determines whether assets should be acquired, upgraded, maintained or disposed of. The Office Accommodation Strategy that is an Asset Strategy restricted to Office Accommodation assets only. Its purpose is to capture the benefits of a whole-of-government approach to the management of office accommodation. The Capital Investment Strategic Plan which explains how new assets will be acquired or existing assets upgraded. The Asset Maintenance Strategic Plan which gives a structured process for planning the maintenance of existing assets. The Asset Disposal Strategic Plan which identifies assets that are surplus to requirements and how the disposal process will be managed.

5 The Asset Strategy TAM - An Overview Agencies are required to submit an Asset Strategy to Treasury in support of their funding submissions. The Asset Strategy is the top level strategy in Total Asset Management planning and determines whether assets should be enhanced by capital investment, maintained or disposed of to continue their role in supporting service delivery. It determines the basic relationships between Service Delivery Strategy and the Capital Investment, Asset Maintenance, Asset Disposal and Office Accommodation Strategies. The Asset Strategy sequentially poses the following questions at five decision "gates": Can service delivery be made less asset-dependent? Are existing assets fully used in service delivery? Are existing assets appropriately located for effective service delivery? Is the capacity of existing assets sufficient to provide the required services? Are assets suitable for the effective delivery of the services they are intended to support? The Asset Strategy guideline is available in the Publications section below. The draft Service Delivery Strategy guideline is available in the Premier's Department's Strategic Management Framework. The Asset Strategy

6 Office Accommodation Strategic Plan TAM - An Overview Agencies are required to submit an annual Office Accommodation Strategic Plan to NSW Treasury as part of their Asset Strategy. Investment in the office accommodation segment of the government's property portfolio represents a major recurrent cost. The integration of office accommodation strategic planning into each agency's TAM process provides a whole of government strategic approach to the management of this important resource. This will: Directly link accommodation assets with required service delivery outcomes Maximise the benefits to be gained from the government's purchasing power Improve the standard of accommodation and enhance the capital value of stock Achieve cost savings whilst maximising the benefits of decentralisation The Office Accommodation Strategic Plan determines whether accommodation assets should be enhanced (by capital investment), maintained or disposed of. To do so it uses a process which sequentially poses the following five questions: 1. Can service delivery be made less dependent on accommodation assets? 2. Are accommodation assets fully used in service delivery? 3. Are accommodation assets appropriately located for effective service delivery? 4. Have the accommodation assets sufficient capacity to provide the required services? 5. Are accommodation assets suitable for the optimal delivery of the services they are intended to support? Agencies must annually submit a Capital Investment Strategic plan to Treasury in support of their funding submissions. Office Accommodation Strategic Planning

7 Capital Investment Strategic Plan TAM - An Overview A Capital Investment Strategic plan aims to provide efficient and effective planning of limited government capital resources by ensuring that there are clear and detailed links between assets and the service delivery outcomes they support. It applies where the Asset Strategy indicates the need for investment in new assets or significant improvement or upgrading of existing assets. It involves assessment of all investment options to meet service delivery requirements (purchase, lease, service contracts, private sector involvement and non-asset solutions) and resources required (assets, financial, HR, IM&T, etc) using the following processes: Directly linking asset investment with required service delivery outcomes Maximising the benefits to be gained from the government's purchasing power Improving the standard of assets and enhance the capital value of stock Achieving cost savings whilst maximising the benefits of whole-of-government planning Capital Investment Strategic Planning

8 Asset Maintenance Strategic Plan TAM - An Overview Agencies must annually submit an Asset Maintenance Strategic Plan to Treasury in support of their funding submissions. The Asset Maintenance Strategic Plan aims to proactively manage the risk of the inability of assets to support service delivery strategies. The outcome is a more productive and reliable asset portfolio within the constraints of available resources. Maintenance planning involves an analysis of maintenance needs against agency service delivery objectives and government priorities. It can be achieved by the following seven step planning process which has been developed to link service strategies with asset maintenance: 6. Define and segment assets to meet service strategy 7. Determine required asset performance 8. Define maintenance resources and overall strategies 9. Assess condition of assets and recommend maintenance 10. Prepare Maintenance Cost Plan 11. Implement Maintenance Plan and programs 12. Monitor and review Maintenance Plan Asset Maintenance Strategic Planning

9 Asset Disposal Strategic Plan TAM - An Overview Agencies are required each year to submit Asset Disposal Strategic Plan to Treasury in support of their funding submissions. An Asset Disposal Strategic Plan involves a detailed assessment of those assets that the Asset Strategy indicates are no longer effectively meeting their service delivery required at the lowest long-term cost to Government. This assists agencies to identify for disposal, those redundant assets that might otherwise reduce efficient and effective service delivery. Asset Disposal planning involves two separate and distinct elements: the detailed assessment of assets identified as surplus by the Asset Strategy followed by an analysis of the physical disposal of the assets. Disposal Planning links via the Asset Strategy with service delivery by the following five stage process. 1. Assets identified by the Asset Strategy as surplus to service delivery requirements are assessed in detail 2. The advantages to Government, agency and the community in divesting assets is assessed 3. Opportunities for increasing asset value are identified 4. Disposal requirements including probity considerations are identified 5. Implementation of the Disposal Plan and performance monitoring are in place Following the release of the Premier's Memorandum on 26 February 2003, agencies are now required to submit their Property Disposal Plans to the GAMC for review by 31 December each year. More...

10 Asset Disposal Strategic Plan - Continued All proposed property disposals will be reviewed by the GAMC to determine their strategic value in terms of wider government policies and objectives, other agency requirements, community interest, environmental outcomes and other areas of interest. The GAMC will nominate the appropriate means of disposal and allocate responsibility for management of the disposal to the appropriate agency. Asset Disposal: Strategic Planning Copyright - NSW Government Asset Management Committee (GAMC) Level 25, Governor Macquarie Tower, 1 Farrer Place, Sydney NSW 2000 AUSTRALIA Phone (02) Fax (02) gamc.secretariat@dpws.nsw.gov.au

11 Assessment and Decision Tools In developing the Total Asset Management strategies listed above, Asset Managers will be required to critically assess their agency s operating environment and its competency to respond to that environment. They will need to make difficult decisions that have long-term and often critical consequences for their agency and/or its stakeholders. The following planning guidelines and decision tools will improve the accuracy of their assessments and the soundness of their decisions. The following guidelines are included in the Assessment and Decision Tools section: Sustainable Development Heritage Assets Demand Management Life Cycle Costing Economic Appraisal - external link to Treasury Documents Value Management Risk Management Post Implementation Review Performance Evaluation - document under review - not yet available Asset Information Private Sector Participation - external link to Treasury Documents

12 Sustainable Development Assessment and Decision Tools Sustainable Development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs There are four primary Objectives of Sustainable Development : minimised risk of environmental damage arising from incomplete knowledge ecological sustainability and environmental protection socio/cultural sustainability recognising the needs of all economic sustainability maintaining high and stable levels of economic growth and employment The NSW Government is committed to: ensuring environmental protection in all its activities greater social justice for the whole community economic development to reduce public debt and unfunded liabilities by more financially responsible delivery of programs Agencies need to integrate the objectives of sustainable development across all their business practices from Corporate Planning to Service delivery and Resource planning This guideline considers the application of sustainable development objectives to each stage of the Total Asset Management process. Sustainable Development Guideline

13 Heritage Assets Assessment and Decision Tools Total Asset management focuses assets on the delivery of an agency s primary service responsibilities. Organizations that have control of heritage assets also have a second service obligation. While they use the assets in delivering their primary service, they are also responsible for the stewardship of the assets and protection of their significance for future generations. Agencies must ensure both that the purposes of the Government s Total Asset Management policies, procedures and performance standards are met and that relevant heritage legislation is complied with. The management of heritage issues should be viewed as an essential part of the management of the assets, rather than another problem and cost impost. Sustainable management of heritage values should be treated by an agency as part of its core business. Heritage Assets Guideline

14 Demand Management Assessment and Decision Tools The NSW community progressively demands more or better government services in order to raise their standard of living. In the past governments have responded to these demands by improving their capacity to supply, but this in no longer sustainable. The demand for service must now also be managed. While Demand Management should be applied at each stage of the Asset Management process, it is an essential part of the development of the Service Delivery Strategy. The Demand Management process requires asset managers to first understand both their clients and the true cost of providing services. They then identify demand as the needs of services, rather than wants of assets. Decisions as to which needs are satisfied are then made from a whole of government perspective. Demand Management Guideline

15 Life Cycle Costing Assessment and Decision Tools In the past, comparisons of asset alternatives, whether at the concept or detailed design level, have been based mainly on initial capital costs. However, with growing pressure to achieve better outcomes from assets, ongoing operating and maintenance costs must be considered as they consume most resources over the asset s service life. Life Cycle Costing is a process to determine the sum of all the costs associated with an asset or part thereof, including acquisition, installation, operation, maintenance, refurbishment and disposal costs. It is therefore pivotal to the asset management process. Life Cycle Costing incorporates both Life Cost Planning which occurs during development or manufacture and implementation of that plan by Life Cost Analysis as the asset is used or occupied. Life Cycle Costing forms an input to evaluation processes such as Value Management, Economic Appraisal and Financial Appraisal. Life Cycle Costing Guideline

16 Economic Appraisal - external link to Treasury Documents Assessment and Decision Tools The New South Wales public sector is a major component of the State economy. The efficiency with which it uses assets can have a significant impact on the overall performance of the State economy and the welfare of its residents. Economic Appraisal and Financial Appraisal are effective tools that have application at every stage of Total Asset Management. They can be used for assessing the integrity of capital investment decisions and the effective and efficient management of existing physical assets. Application of those tools ensures that the 'best value for money' is achieved and that scarce resources are allocated in a manner that reflects the Government's priorities. Financial Appraisal reviews the purely financial aspects of a product or project Economic Appraisal reviews the financial and other factors that affect the economic aspects of a product or project Areas where economic appraisal and financial appraisal techniques should be used: Assessment of New or Replacement Capital Expenditure, or major Maintenance Assessment of Appropriateness of Design, Operating or other Standards Other Areas of Application such as Program Evaluation and Regulation, Proposals and Review The Guidelines for applying Economic/Financial Appraisal are available on the Treasury web site Link to: Economic Appraisal Guidelines - Summary document Link to: NSW Government - Guidelines for Economic Appraisal Link to: NSW Government - Financial Appraisal Guidelines

17 Value Management Assessment and Decision Tools Value Management is a powerful management tool for use in an overall strategic management framework including the development of all Total Asset Management Strategies. In general terms, it may be described as a structured, analytical process for developing innovative, holistic solutions to complex problems. It involves representatives of key stakeholders in a facilitated workshop. It is the team based creative approach to problem solving that sets Value Management apart from other management tools. The process seeks improved value-for-money outcomes that maximise the standards of quality or performance within the resource limits available. Value Management Guideline

18 Risk Management Assessment and Decision Tools This Guideline applies to the management of risks associated with the planning, control and operation of the physical assets of the NSW Public Sector. Risk management is a systematic process to identify risks that may impact on the organization s objectives, analyse their consequences and develop ongoing measures to treat them. Risk management is essential at all stages of the asset life cycle, whenever a significant decision has to be taken. The risks associated with the decision and their implications should be weighed with other factors when determining a course of action. Risk management should be formally applied and documented during the Total Asset Management process when: Setting strategic directions, Developing and evaluating programs and projects, and, Entering into contracts with the private sector Risk Management Guideline

19 Post Implementation Review Assessment and Decision Tools Post Implementation Review is an evaluation process that grew out of the review of asset performance. These asset reviews determined the suitability of the asset to the required task and whether they could be improved to provide better value and performance. The same generic process can be used to review any project to ensure improvement in future outcomes. The process can be used to review the development of an asset strategy, a maintenance plan, a construction project or an asset procurement. The Post Implementation Review process has two components: the Post Completion Review (PCR) A PCR asks whether the process achieved what was asked for. the Post Implementation Review (PIR) A PIR asks whether the process achieved what was needed. The PCR is intended to systematically and rigorously compare the actual performance of a project output with the stated objectives of the original project brief. The PCR process aims to identify ways in which future project concept, design, development and implementation can be improved. The PIR process is designed to collect and utilise knowledge learned from project concept through to design, development and implementation. The review focuses on how well the project outcomes match the required performance. In the case of an asset review, the required performance would be the optimum support of an agency s service outcomes. Post Implementation Review Guideline

20 Performance Evaluation - document under review - not yet available Assessment and Decision Tools This document is currently under development. Please check the GAMC Web Site for current status

21 Asset Information Assessment and Decision Tools This guideline provides a systematic approach to the development of asset registers. Asset registers are listings of information relating to various aspects of an asset portfolio, in a form that allows data to be cross-referenced and retrieved as required. They provide most of the information needed for Total Asset Management strategic decision-making during the TAM process. Agencies are required to maintain appropriate records of their non-current assets to ensure they are: Efficiently and effectively used to support the delivery of service Properly managed throughout their life cycle Responsibly accounted for on their balance sheets and allowance made for their depreciation Asset Information Guideline

22 Private Sector Participation - external link to Treasury Documents Assessment and Decision Tools The NSW Government has reviewed its policy and guidelines on how the private sector can finance and deliver facilities and associated non-core services. The Working with Government (WWG) Policy and Guidelines were released on 5 November 2001 by the Premier, Bob Carr. The WWG Guidelines are now available to view or download in Acrobat PDF format from the Working with Government web site. Link to: Working with Government Copyright - NSW Government Asset Management Committee (GAMC) Level 25, Governor Macquarie Tower, 1 Farrer Place, Sydney NSW 2000 AUSTRALIA Phone (02) Fax (02) gamc.secretariat@dpws.nsw.gov.au

23 Asset Strategy

24 Asset strategy January 2001 DPWS Report Number NSW Department of Public Works and Services Cataloguing-in-Publication data New South Wales. Government Asset Management Committee. Asset strategy ISBN (set) ISBN Asset management New South Wales. 2. Capital investment. 3. Public administration New South Wales I. Title. (Series : TAM) This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without written permission from the NSW Government Asset Management Committee. Requests and inquiries concerning reproduction and rights should be addressed to: Secretariat Government Asset Management Committee Level 23 McKell Building 2-24 Rawson Place SYDNEY NSW 2000 Website E:mail gamc@dpws.nsw.gov.au Set consists of : ISBN ISBN ISBN ISBN ISBN ISBN ISBN ISBN ISBN ISBN ISBN ISBN ISBN X Asset strategy Office accommodation strategy Capital investment : strategic planning Asset maintenance : strategic planning Asset disposal : strategic planning Sustainable development guideline Heritage asset management guideline Demand management guideline Life cycle costing guideline Value management guideline Risk management guideline Post implementation review guideline Asset information guideline

25 Contents 1 INTRODUCTION Background Inputs required for the development of an Asset Strategy Segmenting the Asset Portfolio ASSET STRATEGY DEVELOPMENT The Framework...4 Gate 1 Asset/Service Dependency...5 Gate 2 Asset Utilisation...6 Gate 3 Gate 4 Asset Location...7 Asset Capacity...8 Gate 5 Asset Functionality Reporting the Asset Strategy Applying the Asset Strategy...10 APPENDIX A ASSESSMENT CRITERIA FOR AGENCY 11 January 2001 TAM Asset Strategy 1

26 1 Introduction 1.1 Background Since its inception in 1993, the application of the Total Asset Management (TAM) process has taken agencies from simply acquiring and maintaining assets to a more strategic planning approach through the development of their annual Asset Strategy followed by the Capital Investment, Asset Maintenance and Asset Disposal strategic plans. These strategic plans have enabled agencies to focus on the service delivery requirements of the assets rather than on the assets themselves. The higher level strategic perspective that links the asset portfolio as a whole to an agency s Service Delivery Strategy is developed in the Asset Strategy. The individual plans are Direction Community needs and expectations Legislation Government policies, priorities and strategies Fiscal strategy concerned with detailed aspects of asset management. The Asset Strategy enables agencies to establish the asset portfolio that most appropriately, effectively and efficiently meets their service delivery requirements. The development of an Asset Strategy is a critical stage in agency strategic planning. It provides the foundation for development of the three detailed asset strategic plans. This document provides a planning process for the development of an Asset Strategy. The process is not intended to be prescriptive, but is rather a generic structure to guide agencies in their planning process. Monitoring, reporting, and modification 1 Inter-agency strategic planning 2 Agency corporate plan 3 CEO performance agreement Service and resource planning 4 Service delivery strategy Implementation planning 7 Inter-agency plans 5 Budget proposals and allocations 8 Business plans 6 Service and resource allocation agreement 9 TAM strategy HR plans IT plans Procurement plans Social responsibility plans Total Asset Management Strategy Asset Strategy Office Accommodation Strategic Plan Capital Investment Strategic Plan Asset Maintenance Strategic Plan Asset Disposal Strategic Plan Service delivery Asset Maintenance Strategic Plan Figure 1 Total Asset Management Asset Disposal Strategic Plan 2 TAM Asset Strategy January 2001

27 1.2 Inputs required for the development of an Asset Strategy An Asset Strategy is the vehicle by which an agency matches its asset portfolio to its service delivery requirements. It defines the basic relationships between the Service Delivery Strategy and the Capital Investment, Asset Maintenance, Asset Disposal and Office Accommodation strategic plans along with how these plans interlink. A well-defined and comprehensive Service Delivery Strategy (refer to Premiers Department Service Delivery Strategy guideline) is essential to the development of an effective Asset Strategy. It must specify the services that will be provided within the resource limits available to the agency, in sufficient detail to identify potential asset options for each service delivery component. While an Asset Strategy may be developed from a zero asset portfolio base (ie for new or reorganised agency structures), it will most commonly be concerned with an existing asset portfolio. Changes to an asset portfolio can become necessary either due to changes required in the form of the assets (utilisation, location, capacity or functionality) or as a result of changes to service delivery requirements or budget allocations. An Asset Strategy defines the actions required to respond to these changes and directs the detailed development of agency capital investment, asset maintenance and asset disposal strategic planning. The Asset Strategy is prepared for a minimum 3-year time frame and is to be reviewed and updated annually. This will ensure that: Sufficient time is allowed for the planning and implementation of changes to service requirements Government assets are utilised to their full potential Ongoing evaluation of asset performance against current and future market trends to achieve the best long term financial performance 1.3 Segmenting the Asset Portfolio To determine the effectiveness and efficiency of assets in supporting the delivery of specified service outcomes, an Asset Portfolio should be segmented into the largest groupings that allow worthwhile analysis. For Example, assets could be effectively grouped by the service outputs they support: Provision of neonatal transport services Mitigation flood damage on the Hunter River or by asset characteristics or attributes: Type of asset technology Size of designed capacity Geographic location Age Condition Segmentation may change at different stages of the planning process. Typical asset groupings are similar to the service delivery characteristics (ie, utilisation, location, capacity, functionality). For example: Health buildings in the Casey Valley Area Health Service have been grouped by the spaces and rooms servicing each medical speciality as well as by building age. This has identified particular facilities with either surplus capacity or those requiring upgrading. Geriatric facilities have been further grouped into those able to provide: Semi-dependent care Highly-dependent care Rehabilitation services January 2001 TAM Asset Strategy 3

28 2 Asset Strategy development Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Asset Service Dependency Asset Utilisation Asset Location Asset Capacity Asset Functionality 2.1 The Framework Matching asset performance to service delivery objectives involves an analysis of the five fundamental service delivery characteristics of an asset portfolio: Asset/Service Dependency Can service delivery be made less asset dependant? Asset Utilisation Are assets fully used in service delivery? Asset Location Are assets appropriately located for effective service delivery? Asset Capacity Have the assets sufficient capacity to provide required services? Asset Functionality Are assets suitable for optimal delivery of the services they are intended to support? These five characteristics form the basis of the framework for development of an Asset Strategy. The framework considers each characteristic as a gate through which assets are analysed. The Framework is shown in the diagram above and described in the following sections. An asset segment satisfies a service delivery characteristic when it passes successfully through the corresponding gate. If the segment fails a gate, its inability to meet the corresponding service delivery characteristic must be analysed and action proposed to correct the problem. If all asset segments comply with service requirements (specified in Service Delivery Strategy) imposed at each of the gates then assets should be maintained to the level determined by service delivery strategy. This condition will continue for as long as the service and asset environment remains unchanged. If asset segments do not comply with service requirements imposed at each of the gates there is the need to examine whether services can be more cost effectively provided by: Adjustments to the asset portfolio Changing the way in which services are delivered to make better use of the assets already available Cost benefit analysis and value management studies can be used to: Clearly define service delivery strategies and service levels related to an asset or a group of assets Help assess options at each of the gates 4 TAM Asset Strategy January 2001

29 Gate 1 Asset/Service Dependency Gate 1 Asset Service Dependency The first gate in the process encourages agencies to make their services less assetdependent. Opportunities for reducing asset-dependency may exist through utilisation of non-asset or less asset-intensive solutions, cross-agency asset sharing and/or cross-agency service offsetting. Joint use of IT systems, administrative functions or accommodation spaces (such as conference and educational facilities) are examples of cross-agency asset sharing strategies. Cross-agency service offsetting involves reducing an agency s need for assets by enhancing services provided by another agency. Examples of offsetting would include: Increasing the efficiency and effectiveness of public transport in order to reduce reliance on road assets Improving school education and counselling services to reduce demands on health, policing and judicial services Opportunities for providing services with the use of resources other than assets will vary across agencies and will depend on the relationship between assets and the services they support. The scope for reducing asset dependency may be limited in situations where the asset is essentially the service (as, for example, in the case of National Parks). Before implementation, any options for reducing asset-dependency should be assessed with respect to: Total and relative economic advantages compared with other options Demand for other resources The need for inter-agency agreements The impacts on service delivery. Issue: The charges rate at country Police Stations has reduced due to improved procedures for handling juvenile offenders and local policing initiatives of counselling offenders. Strategy: Convert one of the present cells into an interview room. Close remaining cells, thus avoiding the need to upgrade their security to meet current standards. Detainees will be driven to the nearest holding station. January 2001 TAM Asset Strategy 5

30 Gate 2 Asset Utilisation Gate 2 Asset Utilisation Many assets have spare capacity often deliberately built-in for predictable future growth in service demand. Surplus capacity can also result from reduced demand for services. For example, less invasive medical procedures and more effective use of drugs reduce hospital stays. However, surplus capacity may also signal that an asset portfolio is not being utilised efficiently and is operating at greater than necessary cost. Where unplanned surplus asset capacity is identified, agencies should consider: Utilising surplus asset capacity to improve or enhance service delivery (providing this can be achieved in an efficient and effective manner) Allocating surplus capacity to other agencies via cross-agency asset sharing arrangements, where possible Disposing the surplus asset capacity following analysis of future demand It will not always be possible or desirable to utilise or dispose of surplus asset capacity. An agency may elect to continue supporting surplus assets but to review the situation regularly for future opportunities. Issue: Tarrawarra District Hospital Accident and Emergency Unit has 30% surplus daytime capacity during 70% of the year. However, the Unit runs at % capacity during summer tourist season. Strategy: No appropriate off-season use can be found and hence the utilisation of the Unit is to remain unchanged (but earmarked for regular review). 6 TAM Asset Strategy January 2001

31 Gate 3 Asset Location Gate 3 Asset Location The impact of asset location varies with the type of services provided by the agency. Those involving personal contact or emergency response are obviously more sensitive than administration or information services. The current explosion in information technology can potentially reduce sensitivity to location by allowing more service interface to occur at remote locations electronically. There is potential for a wide range of government services (eg. vehicle registrations) to be provided with the use of Information Technology (IT). Changing demographics has an impact on the demand for services and location of assets. Where relocation of assets is too expensive, some compensatory service should be considered. Compensatory services may provide a cost-effective way of meeting service delivery requirements without the need to relocate or expand expensive infrastructure. Issue: Demographic changes in Sydney s inner city and east have led to excess capacity at several High Schools with surplus classrooms or laboratories available at each. Strategy: Convert the vacant classroom block at Eileen O Connor High School for use by the Schools Technology Advancement Unit currently housed in rented premises. Demolish the laboratory blocks at other affected schools and transfer the science equipment to schools in the growing South- West region. For example, it may be more cost effective to extend school bus services than to relocate schools closer to new housing estates. Some health services in rural areas (eg. child inoculations) could be provided by mobile clinics or local family doctors to minimise the impacts on the community of long travel to the regional hospital. Due to economic or other constraints (such as environmental considerations) it will not always be possible to satisfy the asset location requirements either by relocation or by providing compensatory service. The assessment should be reviewed periodically for new opportunities that may arise. January 2001 TAM Asset Strategy 7

32 Gate 4 Asset Capacity Gate 4 Asset Capacity Asset capacity is concerned with asset numbers, space or volume but incorporates factors such as comfort, security, speed, power, specific safety requirements, etc. The estimated levels of demand for services, and specific service levels, as defined in the Service Delivery Strategy will determine required asset capacity. Peaks and troughs in the demand for services along with their timing will also affect asset capacity requirements. As with every gate of the process, asset capacity requirements can be met either by adjustments to the asset portfolio or by changing the way in which services are delivered to make better use of the assets already available or make service delivery less asset dependant. For example, cells in police stations may not meet specific safety requirements for detention of prisoners charged with minor offences and therefore lack capacity for this particular need. This can be addressed by: Upgrading the cells to meet the safety requirements for prisoners charged with minor offences Streamlining arrest and bail procedures so that these prisoners need not be held in custody at police stations Decision should be made following analysis of both options A school that has insufficient science room capacity can extend the science block. It could also consider the alternative options of: Providing some classes outside normal school core time and accepting additional staff or transport costs Packaging some science experiments into purpose built trolleys and carrying out science classes in the gymnasium or language laboratory (with appropriate safety measures being put in place) Both alternatives could be more cost effective than extending the existing laboratory accommodation, particularly if the increased demand for science facilities at a school was predicted to be of short duration. Issue: Load and speed restrictions on Millers Bridge have led to greatly increased traffic delays and increased distances travelled by coal trucks and consequential overloading of alternative roads. Strategy: Fund replacement of Millers Bridge in Year 2 over two consecutive years or upgrade alternative roads Issue: Motor traffic accident statistics have highlighted Class 5 traffic blackspots at Namboc Crossing, and Groginup and Class 3 blackspots at seven locations on the Bolyx Highway. Strategy: Fund upgrade works to Class 5 location this year; fund upgrade to Class 3 blackspots over the next three years. 8 TAM Asset Strategy January 2001

33 Gate 5 Asset Functionality Gate 5 Asset Functionality Asset functionality is concerned with the degree to which the asset is suitable for the delivery of the service it is intended to support. For example, while older building assets may meet their intended capacity, location, and utilisation service delivery requirements, their heating, cooling, insulation, lighting, and ventilation functions may not satisfy currently accepted service delivery standards regarding comfort. Asset functionality can change over time due to either changes in service delivery requirements (eg. higher comfort levels) or the development of more efficient methods of delivering services (eg. assets requiring fewer resources such as number of staff, energy, etc). Care needs to be taken in assessing solutions to improve asset functionality. While replacement with newer assets may be required in some cases, many asset functionality problems can be overcome by: Retrofitting, refurbishment or upgrading of existing assets; and/or Changing service delivery methods using other rescues such as IT or HR Cost benefit analyses will assist agencies in assessing alternative solutions to asset functionality problems. Issue: Several old school buildings have an outdated electrical installation including few power points and are therefore unable to fully accommodate modern teaching aids such as overhead projectors, TVs, videos, computers, etc. Strategy: Upgrade electrical systems to satisfy load and power outlet requirements including the provision of spare capacity to meet developments in IT. January 2001 TAM Asset Strategy 9

34 2.3 Reporting the Asset Strategy Agencies are required to prepare an Asset Strategy as part of their annual budgetary requirements. Agency Asset Strategies are assessed by NSW Treasury. The strategic focus of Strategies is assessed by the Department of public works and Services for Treasury. Criteria for assessing Asset Strategies are included in Appendix A of this guideline. The Asset Strategy should include the following information: 1. Services objectives as formulated in the Service Delivery Strategy including: Service outcomes to be achieved with performance indicators and benchmarks Service outputs to be delivered with performance indicators and benchmarks 2. Description of agency asset portfolio with details of segmentation used for development of asset strategy 3. Results of analysis of matching asset performance with service delivery strategies: Asset-service dependency Asset utilisation Asset location Asset capacity Asset functionality 4. The asset actions proposed in response: Capital Investment overview Asset Maintenance overview Asset Disposal overview The cross impact each of these proposals has on the others 5. Benefits to the agency and/or government from these proposed asset actions 6. Analysis of asset performance required to deliver the required service outcomes over duration of the asset strategy-planning period. 7. Analysis of opportunities for joint asset or service delivery between agencies 8. Benefits to the agency and/or government for these proposed asset actions 2.4 Applying the Asset Strategy Over time all agencies will experience degrees of mismatch between their service strategy and the assets within their portfolio, either because of changing service requirements or because of asset deterioration. However this should be seen as the exception not the norm. The Asset Strategy should develop a culture in agency that contemplates changes to their asset portfolio only when optimum service delivery is seriously threatened. Otherwise only maintenance action should be expected. Therefore, in general, the great majority of asset segments will pass most of the gates, with asset maintenance as the main strategic action required to meet service delivery. Capital investment and asset disposal strategic actions will be the exception and are only required when the assets in their present form do not fit ie. fail some gates. Note that mismatches are considered together. A failure to pass every gate may demand a different outcome for the asset segment than a failure to pass only one gate. Misfits may also require an agency to re-examine its service strategy for alternatives, which minimise the dependency on assets. Obviously application of the framework requires a detailed knowledge of the agency s asset portfolio as well as a thorough understanding of the Service Strategy. The development of an Asset Strategy will require the cooperation of several specialist groups within an agency, corporate and service planners and those with a detailed knowledge of the asset portfolio. Assessment at each gate of the framework will also require development of a range of performance indicators that measure both how well the asset portfolio supports the delivery of service and how available the assets are to provide that support. 10 TAM Asset Strategy January 2001

35 Appendix A Assessment Criteria for Agency Budget dependent agencies asset strategies are reviewed to determine their uptake of Total Asset Management and the extent to which their funding bids are based on strategic asset planning. Three categories of agency development have been identified: Level 3 Input oriented project focus attention is paid to individual projects Level 2 Output oriented asset focus attention is paid to asset performance and output levels Level 1 Outcomes oriented service focus attention is paid to resources that are aligned to achieve service outcomes Six major criteria have been established in alignment with the Total Asset Management approach. Under each major criteria, minor specific criteria have been included. These could reasonably be expected in an agency s Asset Strategy. Agencies scoring a level 3, the lowest level of development of total asset management, would typically achieve only two of the 6 major criteria. Agencies that score the 4 major criteria illustrated would be considered to have progressed to a level 2 while strategies that achieve all major criteria are considered to be at Level 1. Agencies Asset Strategies are assessed against the criteria and scored accordingly. An Asset Strategy is considered to have complied with a criterion if it includes that aspect in sufficient depth to make the Strategy and its outcome effective. Each criterion is further expanded to guide agencies on issues that should be included. While an agency s Strategy is not formally marked against this level of detail for compliance, it would be expected to contain a majority of them for the Strategy to be scored as achieving the related criterion. January 2001 TAM Asset Strategy 11

36 ASSESSMENT CRITERIA FOR ASSET STRATEGIES Corporate goals & service measures defined Corporate goals communicated Service outcomes defined & documented Service outcomes linked to corporate goals Service outputs defined & documented Service outputs linked to service outcomes to be achieved by the agency Asset strategies developed Use of demand management documented Alternative/non asset delivery strategies considered & documented Asset strategies developed & documented Asset strategies linked to documented service outputs Asset output and performance targets defined Asset performance criteria determined Performance indicators determined Performance benchmarks determined Capital investment, maintenance & disposal plans developed Value management /economic appraisal /risk management applied appropriately Capital investment plans developed Maintenance plan developed Disposal plan developed Asset plans linked (capital investment, maintenance, disposal) Asset plans link to established asset performance criteria Asset performance data collected and reported Data collection/evaluation/reporting system established Asset performance documented Linkages of asset performance to service outcomes Achieving asset performance benchmarks & budgets Opportunities to improve asset performance systematically identified Review of asset performance in achieving service outcomes established & implemented Review of best service delivery options documented LEVEL 3 LEVEL 2 LEVEL 1 Input Oriented Output Oriented Outcome Oriented Project Focus Asset Focus Service Focus Attention to individual projects Attention to asset performance and output targets Attention to resources aligned to achieve service outcomes 12 TAM Asset Strategy January 2001

37 ASSESSMENT CRITERIA FOR ASSET STRATEGIES CORPORATE GOALS AND SERVICE MEASURES DEFINED Corporate goals communicated Corporate goals for the agency (or in conjunction with other agencies) are clearly defined, and included in the agency s corporate plan. Corporate performance indicators defined and included in the corporate plan. Service outcomes defined & documented Service outcomes that an agency plans to achieve are defined. (Service outcomes are benefits delivered to the community/consumers as a result of the service outputs provided by an agency). Where a range of service outcomes are sought, each is identified individually. The extent of each service output is quantified. Delivery timetables for each service output are established. Service outcomes linked to corporate goals All service outcomes delivered by an agency have links to the corporate goal or goals they support. Service outcomes, and their linkages to the agency s corporate goals, are signed off by the agency s CEO. Service outputs defined and documented All significant aspects of the service outputs to be delivered are quantified and documented. (Service outputs are services or goods delivered by an agency or group of agencies.) Service outputs and the standards to which they will be delivered are defined. Service outputs linked to service outcomes to be achieved by the agency Performance indicators established for each service output. Linkages are evident between each service output and the service outcome(s) it supports Service outputs, their performance indicators (PI) and benchmarks are listed for each service outcome to be delivered. January 2001 TAM Asset Strategy 13

38 ASSET STRATEGIES DEVELOPED Use of demand management documented Analysis of present and future pressures driving the demand for services is documented. Results of forecasting future demand and its impact on service outputs and service delivery strategy is documented from the service delivery strategy. Demand management strategies to limit service delivery levels to the resources available, are documented. Alternative non asset delivery strategies considered and documented Cross agency planning for joint service delivery or asset sharing is documented in the service delivery strategy. Analysis of service delivery options with alternative use of resources (less dependent on assets) is documented in the service delivery strategy. Analysis of options to deliver different services to achieve the same service delivery outcomes with better use of resources, is documented in the service delivery strategy. Asset strategies linked to documented service outputs Each asset strategy refers to the service outputs it supports. Asset strategies developed and documented Detailed agency knowledge of its asset base including locations, functions, physical attributes and condition, is evident Asset base is segmented into appropriate groupings to develop the asset strategy (eg geographic location, service type, age, capacity, etc.). Gaps between the agency s exiting and required asset capacity is developed into capital investment, asset maintenance and asset disposal options. ASSET OUTPUT AND PERFORMANCE TARGETS DEFINED Asset performance criteria determined Asset performance criteria required to deliver service outputs is agreed by the agency (eg. image, noise levels, flow rates, security levels etc.) A rating system to determine the levels of performance criteria required in each asset is in place. The rating system establishes the gap between required and actual asset performance. Performance measures determined Performance measures of key physical attributes of the assets, costs of maintenance and operation and costs of services delivered through the asset have been developed. Comparison of measures is possible between assets and over time. Performance measures are combined with assess asset efficiency against benchmarks for that industry and effectiveness in supporting service delivery. Performance targets determined (benchmarks) Comparative data on the asset performance and service delivery performance of other agencies or comparable industries is available. Targets for asset efficiency are set. Targets for asset effectiveness in delivering service outputs are set. 14 TAM Asset Strategy January 2001