Fleet Asset Management Plan

Transcription

1 Shire of Esperance Fleet Asset Management Plan December 2014 AM4SRRC

2 Document Control Asset Management for Small, Rural or Remote Com munities Document ID: 59_280_ am4srrc amp word template v10.4 Rev No Date Revision Details Author Reviewer Approver Rev 1 Jun-2014 Initial review 2013 AMP BP Rev 2 Aug-2014 Review asset register and expenditure BP Rev 3 Sep-2014 Review funding projections and final data BP SM Rev 4 Oct-2014 Review Risk Assessment BP TB, SM, CS Rev 5 Nov-2014 Incorporate review notes BP SM Rev 6 Nov-2014 Incorporate review notes BP GH 16-Dec-2014 OCM - Acceptance carried Council Asset Management for Small, Rural or Remote Communities Practice Note The Institute of Public Works Engineering Australia. Copyright 2011 All rights reserved.

3 - i - TABLE OF CONTENTS 1. EXECUTIVE SUMMARY... iii 2. INTRODUCTION Background Goals and Objectives of Asset Management Plan Framework Core and Advanced Asset Management LEVELS OF SERVICE Community Engagement 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 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 Appendix A Projected 10 year Capital Renewal Works Program Appendix B Abbreviations Appendix C Glossary... 32

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5 iii 1. EXECUTIVE SUMMARY Context The Shire of Esperance is located on Western Australia s southeast coast approximately 700 km s from Perth by road. The Shire has an area of 44,336 square kilometres and extends from Munglinup Beach in the west to Israelite Bay in the east and incorporates Salmon Gums in the north. Esperance is predominately a cropping / grazing agricultural area with a Port that actively services regional agricultural and mining industries. The Shire owns and operates a fleet of plant and equipment that enables it to provide services required by the community. Organisational mobility is essential for moving people, materials and tools to works sites. This mobility enables a range of community services and is essential to productivity and achieving the desired levels of service. Purpose & Scope This review follows Councils adoption of the 2013 Fleet Asset Management Plan (AMP) and 10 Year Plant Replacement Program (Item carried by simple majority Ordinary Council Meeting 26 th March 2013). This AMP has been developed in conjunction with relevant staff and incorporates a revised register of assets, values and useful lives. Effective Fleet management includes programs to preserve the value of equipment, measuring and minimising un-scheduled servicing, collecting, analysing and reporting data that enables informed asset management decision to be made. 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. Fleet assets represent a significant investment for the organisation and in 2014 comprised of 186 assets with: A current replacement cost $12,208,604 A depreciated replacement cost $7,129,549 An annual depreciation expense $1,208,214 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 $29,743,110 or $2,974,311 per year. Based on Council s adoption of the 10 Year Plant Replacement Program there are no funding gaps in this 10 year plan. As identified in the IPWEA Plant & Vehicle Management Manual 3rd Edition, the lifecycle plan for fleet assets is about: Purchasing assets subject to a business case using whole-of-life costs and utilisation rates. Operating assets in a manner they were designed for. Maintaining assets in line with manufacturer s requirements. Replacing assets in accordance with optimum replacement principles. Disposing of assets in accordance with utilisation and other benchmarks. Funding the 10 year replacement program using a reserve developed from internal hire rates. What we can do Provide Fleet infrastructure by: Reviewing annual budget allocations to reflect the projected renewal expenditure. Minimising the impact of peak renewal expenditure through the use of reserve funds and/or renewal plan management. Determining agreed service levels and funding strategies over the 10 year planning period. Meeting agreed funding levels for operation, maintenance, renewal and upgrade. Managing Fleet assets using best practice utilisation and optimisation strategies. Undertaking regular reviews of asset values, residuals and renewal projections.

6 iv What we cannot do Manage new or upgraded asset requirements without reviewing funding gaps and annual budget allocations. The Next Steps Actions resulting from this AMP include: Maintain data maintenance processes Review risk register and treatment plans Monitor workshop operations and resources Maintain a Fleet Management System Review workshop facilities Further develop or review Levels of Service Document operation and maintenance guidelines Further develop financial tracking & reporting Integrate Fleet systems with finance for Fair value accounting and Long Term Financial Plan 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. The 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. community for costs to the community

7 Key Assumptions 5 Key assumptions have been used in the preparation of this AMP, these are presented to enable readers to gain an understanding of the levels of confidence in data used for financial forecasts. Condition It is assumed through the use of optimisation strategies and the current maintenance regime that all Passenger & Heavy Plant are in Good Condition at the point of disposal. Due to their limited residual value, some Miscellaneous assets may be retained for the balance of their useful service life and their condition may predictably deteriorate up to the point of disposal. The varying levels of operator skills and operating environments may also influence the overall asset condition and residual values. Financials Expenditure have been excluded for Homecare, Wylie Bay Landfill, FESA and Airport locations which are separately funded. Renewal projections are in 2013 dollars only. Renewal expenditure: yr Avg Operations $1,059,490 $1,080,880 $1,114,815 $1,134,198 $1,114,101 $1,121,038 Planned $390,626 $403,573 $275,595 $361,361 $182,123 $273,026 Reactive $26,955 $32,596 $337,124 $411,807 $411,603 $386,845 Grand Total $1,477,071 $1,517,049 $1,727,535 $1,907,366 $1,707,828 $1,780, yr Avg Heavy $1,128,652 $1,167,920 $1,353,636 $1,490,021 $1,284,926 $1,376,195 Light $227,972 $238,435 $266,145 $298,632 $306,370 $290,382 Misc $120,448 $110,694 $107,753 $118,714 $116,366 $114,278 Grand Total $1,477,071 $1,517,049 $1,727,535 $1,907,366 $1,707,663 $1,780,855 Asset Data Data sources: Year Heavy Plant Replacement Program Year Light Vehicle Replacement Program Excludes - HACC - Assets are either self funded or funded through external sources Excludes Fire & Emergency fleet - funded through the respective organisations Excludes - Airport Fleet - separately funded and covered by Airport AMP Excludes Wylie Bay Landfill Fleet - separately funded, to be included under separate AMP Year acquired Based on actual date provided by Fleet management staff Adjustments made based on knowledge i.e. assets acquired second hand or pre-dating existing records Values Values based on 10 Year Light and Heavy Replacement Program Miscellaneous asset details sourced by Fleet management staff Useful Life Useful Life used in the 10 Year light and Heavy Replacement Programs was determined using information provided in the Uniqco Light Fleet review 2009 and IPWEA Plant & Vehicle management Manuals Methodology The WALGA Procurement Handbook (current edition) is the guiding document in all supply and tendering processes. Heavy Managed using WALGA preferred suppliers and System.plus assessment tools Misc. Managed using local suppliers and System.plus evaluation criteria Light Managed using local suppliers and System.plus evaluation criteria Systems.plus IPWEA Fleet Management subscription service incorporates utilisation, whole of life and optimisation

8 6 The following criteria have been applied or considered in the determination of the replacement schedule and values used in this plan. The methodology is detailed in the IPWEA Plant and Vehicle Management Manual 3 rd Edition. Reference should be made to this manual for further information. Whole of life costs Projection of future costs using first principles. Utilisation A unit of work measure for comparison or benchmarking. Optimisation Predicting resale value and costs to maximise the return on investment Down time The time that an asset is unavailable for its normal use due to servicing or maintenance. Maintenance failure Any servicing or maintenance activity that is not part of regular or planned activities. Purchasing Policy Policy outlines purchasing and disposal criteria. Classifications Heavy Light Misc. Graders, loaders, trucks, rollers, road plant Staff and light operational vehicles Mowers, trailers, caravans, mixed plant

9 7 2. INTRODUCTION 2.1 Background This asset management plan is to demonstrate responsive management of assets (and services provided from assets), compliance with regulatory requirements, and to communicate funding needed to provide the required levels of service. The asset management plan is to be read with the following associated planning documents: Shire of Esperance Strategic Action Plan Motor Vehicles Policy (HR 001 September 2007) Staff Entitlements Policy (HR 002 July 2010) Staff use of Shire Equipment for Private Purposes Policy (Exec 009 September 2007) Financial Management Policy (Corp 002 September 2007) Council Budget (Current Year) Shire of Esperance Plan for the Future 2010/11 to 2012/13 Records Management Policy (Corp 009 July 2010) Light Fleet Review (Uniqco November 2009) 10 Year Heavy Plant Replacement Program 10 Year Light Vehicle Replacement Program WALGA Fleet Safety Resource Kit Table 2.1: Assets covered by this Plan Asset category Heavy Light Miscellaneous Dimension Quantity Current replacement cost Depreciated replacement cost Annual depreciation cost Includes graders, loaders, trucks, rollers, road plant 119 $10,398,576 $5,896,770 $985,626 Staff and light operational vehicles 42 $1,465,975 $1,140,219 $184,937 Includes mowers, trailers, small plant 29 $344,053 $92,561 $37,651 TOTAL 190 $12,208,604 $7,129,549 $1,208,214

10 2.2 Goals and Objectives of Asset Management 8 The Council exists to provide services to its community. The Shire of Esperance owns and operates a fleet of plant and equipment to assist in providing these services. Management of the fleet is therefore critical in ensuring community, strategic and operational service levels are achieved now and in the future. The key elements of Fleet 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 Managing risks Continuous improvement in asset management practices. 1 The goal of this asset management plan is to: Document fleet management processes Document the services/service levels to be provided and their costs Provide information to support decisions regarding service levels, costs and risks in a financially sustainable manner. This asset management plan is prepared under the direction of Council s vision, mission, goals and objectives. Council s vision is: Esperance is spectacular. We have a vibrant, welcoming community that encourages new people to our region and gives a sense of belonging to those who live here. We value our natural resources and accept the responsibility to manage them for future generations to enjoy. We aim to strengthen and diversify the regions economic base in a way that compliments our social and environmental values. We are strategically located as a diverse and dynamic region that is committed to a sustainable change and growth. Above all, we are a community that makes it happen. Council s values are: Professionalism in the standards and ethics of our actions Respect through courtesy and honesty in our dealings with all people Integrity that builds community trust Dedication of a committed team that works together to provide leadership in the community Excellence in the service that we provide to the community Council s Corporate Mission: The corporate mission articulates the aim and purpose of the Shire. The Corporate Mission is intrinsically linked to the community vision: The Shire of Esperance, as custodians of community infrastructure, will endeavour to be efficient, sustainable and responsive to community needs. As a leading organisation we will operate in a responsible, transparent and ethical manner 1 IPWEA, 2006, IIMM Sec 1.1.3, p 1.3.

11 9 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 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 in accordance with the International Infrastructure Management Manual. 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. 3. LEVELS OF SERVICE 3.1 Community Engagement It is intended that future revisions of the asset management plan will incorporate community engagement 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. 3.2 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 Disability Services Act (1993) OSH Act 1984 OSH Regulations 1996 Motor Vehicle Standards Act 1989 (Australian Design Rules) Requirement Sets out role, purpose, responsibilities and powers of local governments including the preparation of a long term financial plan supported by asset management plans for sustainable service delivery. An Act for the establishment of the Disability Services Commission and the Ministerial Advisory Council on Disability, for the furtherance of principles applicable to people with disabilities, for the funding and provision of services to such people that meet certain objectives, for the resolution of complaints by such people, and for related purposes. The guidelines for employees and employers to undertake within the work environment. The guidelines for employees and employers to undertake within the work environment. The Australian Design Rules (ADRs) are national standards for vehicle safety, anti-theft and emissions.

12 Current Levels of Service Council is defining service levels in two terms. Community Levels of Service relate to the service outcomes that are expected by the community and may include safety, quality, quantity, reliability, responsiveness and cost effectiveness. Technical Levels of Service - Supporting the community service levels are operational or technical measures of performance. These may relate to utilisation, sustainability, maintenance and renewal.. Council will commence the Service Delivery Review process in 2015 and has not yet fully identified services and sub-services, current or desired levels of service. Table 3.3 represents draft measures based on the established NAMS format only. Table 3.3: Draft Service Levels only Level of Service Objective COMMUNITY LEVELS OF SERVICE Function Provide sufficient fleet assets to meet the communities desired levels of service Performance Measure - SOE policies - Best practice principles Desired Level of Service Fleet assets are managed using adopted policies and best practice standards Current Level of Service Fleet management policies and systems have been implemented and are under continual review Performance Safety Provide a fleet that is functional and operational Ensure assets are operated, maintained, serviced and repaired to required standards - Maintenance failures - Labour rates - Scheduled / unscheduled maintenance ratio Accidents / injuries / near miss statistics Measure and benchmark with national averages 0 preventable injuries per annum Not currently measured Not currently measured TECHNICAL LEVELS OF SERVICE Sustainability Utilisation Minimise whole of life costs Maximise utilisation rates - Fixed / variable costs - Internal Hire rates - Depreciation - Distance travelled - Plant hours - Service intervals - Optimised renewal Costs minimised and benchmarked with national averages Utilisation maximised and benchmarked with national averages Not currently measured Not currently measured Renewal Renewal completed on-time and within budget Renewals in accordance with Vehicle Replacement Plans Renewal within annual budgets Annual review for fluctuations in replacement and residual values 3.4 Desired Levels of Service Desired level of service will be determined using various sources including residents, feedback to Councillors and staff, service requests and correspondence. Council has yet to quantify current or proposed levels of service. This will be done in future revisions of this asset management plan and incorporate performance measures identified in the Service Delivery Review process.

13 11 4. FUTURE DEMAND 4.1 Demand Forecast Demand may be affected by population growth, seasonal use of the Shire s road network and by factors including availability of resources such as gravel. This in turn may affect haul distances, types of plant required, plant renewal frequency and the budget. The Shires ability to meet any future desired level of service from Fleet infrastructure will be managed through successive reviews of the asset management plan. It is envisaged that the community s expectation of service will be met by the Shire s current and proposed fleet management plans. 4.2 Changes in Technology Changes in technology may result from variations to manufacturer s vehicle specifications, performance and/or safety ratings but are not forecast to have significant impact on the delivery of services covered by this plan. Technology developments in GPS tracking may lead to efficiencies and will be investigated in future revisions of the AMP. 4.3 Demand Management Plan New services are managed through a combination of managing existing assets, upgrading of existing assets and providing new assets to meet demand. Demand management practices may include non-asset solutions, insuring against risks and managing failures. Non-asset solutions focus on providing the required service without the need for council to own the assets. Examples of non-asset solutions may include the sharing of assets and resources with neighbouring or other organisations. There are no current agreements with regard to resource sharing. There are no new donated assets identified in this plan. Acquiring 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 outlines 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. Assets, including many major plant items operating outside the Esperance townsite may remain in the field for extended periods. Fleet assets not approved for private use are returned and secured within one of the Shire depots daily. Employees may be approved under Shire Policy HR001 for private use of Light operational vehicles. The age profile of the assets include in this AM Plan is shown in Figure 2.

14 12 Figure 2: Asset Age Profile Asset capacity and performance Known service performance deficiencies are detailed in Table below. Table 5.1.2: Known Service Performance Deficiencies Area Fleet maintenance facilities Fleet maintenance staff Fleet Management Systems Service Deficiency Review of workshop to include diagnostic facilities Review of workshop resources to support current and future maintenance schedules Monitor Fleet Management System to ensure adequate planning and reporting capability This plan assumes that all assets are to be renewed. Future reviews of this plan may include rationalisation of assets Asset condition Condition is measured using a 1 5 rating system as detailed in Table The condition grade of individual fleet assets has not been assessed. It is assumed through the use of optimisation strategies that all Light and Heavy plant are Condition 3 at the designated point of disposal. Some items of Misc. plant may be retained for the balance of their practical service life and their condition may predictably deteriorate up to that point.

15 Asset valuations The value of assets recorded in the asset register as at 22/10/2012 covered by this asset management plan is shown below. Current Replacement Cost $12,208,604 (Current replacement cost of all assets) Depreciable Amount $ 8,633,424 (Current replacement cost Residual) Depreciated Replacement Cost $ 7,129,549 (CRC accumulated depreciation) Annual Depreciation Expense $ 1,208,214 (CRC Residual / Useful Life) Council s sustainability reporting compares the rate of an annual asset consumption to asset renewal and upgrade. Asset Consumption Ratio 58.4% (Depreciated Replacement/Current Replacement) A Department of Local Government measure with a target of between 50 and 75%. A ratio less than 50% indicates a rapid deterioration of assets, greater than 75% may indicate an over investment in the asset base. Asset Sustainability Ratio 98.8% (Renewal expenditure/depreciation exp) A Department of Local Government measure with a target of between 90 and 110%. A ratio less than 90% may indicate under investment in renewal, greater than 110% may indicate over investment in renewal. Asset Renewal Funding Ratio 100.0% (NPV planned renewal over 10 yrs/npv required renewal 10 yrs) A Department of Local Government measure with a target of between 95 and 105%. The ratio indicates the financial capacity to continue to provide existing levels of service in the future without additional operating expenses above that currently projected. 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. Table 5.1.5: Asset Service Hierarchy Service Hierarchy Heavy Light Misc. Service Level Objective Provide and maintain fleet assets which enable major operational and construction tasks to be completed. Assets comply with all relevant standards and specifications. Provide and maintain passenger and light operational vehicles to manufacturer s specifications so as to ensure the safety of staff and public. Ensure the maximum utilisation and lowest whole of life costs while minimising environmental impacts. Assets comply with all relevant standards and specifications. Provide and maintain minor fleet assets to enable operational tasks to be completed in a safe manner. Assets comply with all relevant standards and specifications.

16 Risk Management Plan An assessment of risks 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 nonacceptable 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 5.2. Table 5.2: Critical Risks and Existing Controls What can Happen Risk Rating (VH, H) Existing Controls There are no reportable risks currently for this asset class The risk assessment for this asset class has been prepared and reviewed in conjunction with the Shire s OSH/Risk Management Officer and the relevant stakeholders. The risk register details are available by contacting the relevant officer. 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 scheduled and un-scheduled work activities. Un-scheduled maintenance is repair work carried out in response to service requests and management/supervisory directions. Scheduled maintenance is regular servicing and repair work that is managed through the Fleet Management System. Maintenance 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. Table 5.3.1: Maintenance Expenditure Trends Category Fuels & Oils $834,384 $898,255 $954,665 $981,593 $996,788 Ground Engaging Tools $26,955 $27,334 $30,026 $20,094 $16,129 Insurances $66,419 $1,822 $72,804 $50,537 $85,000 Lease Payments $2,260 $1,818 $6,225 $8,700 $4,150 Parts & Repairs Scheduled Maintenance $303,231 $315,559 $132,796 $210,637 $73,016 Parts & Repairs Unscheduled Maintenance $3,736 $277,637 $351,082 $312,912 Registrations $16,179 $17,964 $18,404 $19,052 $44,785 Scheduled Maintenance Labour $1,337 $37,106 $38,935 $43,171 Tyres, Tubes etc $87,600 $86,677 $105,693 $111,788 $65,933 Unscheduled Maintenance Labour $1,526 $29,461 $40,631 $82,400 Workshop labour $143,600 $161,021 $62,718 $74,316 $68,379 Grand Total $1,480,628 $1,517,049 $1,727,535 $1,907,366 $1,792,663 Current maintenance expenditure levels reflect the actual costs to meet required service levels. Future revision of this asset management plan will include linking required maintenance expenditures with required service levels.

17 15 Assessment and prioritisation of reactive maintenance is undertaken by Management and operational staff. Maintenance response times for all assets under this AMP are prioritised relevant to the nature of any fault, the asset affected and services provided. The safety and health of the community and staff are given the highest priority and maintenance tasks are undertaken accordingly Standards and specifications Maintenance work is carried out in accordance with the following Standards and Specifications. Motor Vehicles Standards Act 1989 Dept of Infrastructure and Transport - Australian Design Rules 3rd Edition Australian Dangerous Goods Code 7th Edition Road Traffic Act 1974 Road Traffic (Vehicle Standards) Regulations 2002 Road Traffic (Vehicle Standards) Rules 2002 Road Traffic (Towed Agricultural Implements) Regulations 1995 Vehicles Information Bulletins (Safety and Standards) and Vehicle Standards Bulletins (VSB s) published through the Department of Transport WA Manufacturers vehicle specifications Summary of future operations and maintenance expenditures Future operations and maintenance expenditure requires review in line with desired levels of service. Planned maintenance schedules will be required and should trend in line with the value of the asset stock as shown in Figure 4. Note that all costs are shown in 2013/14 dollar values. Figure 4: Projected Operations and Maintenance Expenditure

18 Renewal/Replacement Plan Fleet renewal expenditure may include the major refurbishment or the complete replacement of an existing asset in any category. Purchase or provision of fleet assets other than existing is considered new expenditure Renewal plan Renewal planning for Fleet assets may involve calculating optimum replacement using various data including downtime, repair and maintenance costs, resale values, utilisation based on distance travelled or engine time. Calculating the optimum replacement point ensures maximum resale value, avoids increased maintenance and repair costs and in the long term reduces annual plant replacement costs. The Shire s Fleet Asset management system ensures renewal is based on the principals for Fleet Asset Management detailed in the IPWEA Plant and Vehicle Management Manual (current edition) Renewal standards Renewal work is carried out as per Maintenance standards 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. Figure 5: Projected Capital Renewal Expenditure

19 Creation/Acquisition/Upgrade Plan Refer to Council s adopted 10 Year Fleet Renewal Plan Selection criteria The priority for new or upgrade proposals may vary depending on the nature, scale and location of the asset and utilises the IPWEA Systems Plus Fleet Management System optimisation calculations, whole of life cost calculations and vehicle comparison tools 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 upgrades or new assets are detailed in the 10 year Fleet Replacement program. 5.6 Disposal Plan This plan assumes that all assets are to be renewed. Disposal of Light and Heavy fleet assets typically involves trade-in at the time of asset replacement. Miscellaneous plant items may have little or no residual value or disposal costs. Disposal or non-renewal may be considered when identifying options for the management of assets in a later stage of planning and may include decommissioning, sale or relocation. 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 Operations, Projected Total Maintenance and Projected Renewal expenditure against the Projected Current Budget funding.

20 18 Figure 7: Projected Operating and Capital Expenditure and Budget Figure 7a: Asset Management Indicators

21 Financial sustainability in service delivery Light Vehicles and Heavy Plant plans have been developed using utilisation and optimisation strategies based on IPWEA s System Plus Fleet Management System and are combined with Miscellaneous plant to develop the 10 Year Fleet renewal program. Life cycle costs (or whole of life costs) are the average costs that are required to sustain the service levels over the asset life. Life cycle costs include operations, maintenance and renewal expenditure. Life cycle costs can be compared to life cycle expenditure to give an indicator of sustainability in service provision and will vary depending on the timing of asset renewals. A shortfall between life cycle cost and life cycle expenditure is the life cycle gap. Figure 8 shows the projected renewal from the Renewal Plan in Appendix B together with the budgeted renewal and renewal gap. Fleet Management renewal projections are based on a 10 year plan only and matching projected expenditure beyond 2023 has not been included in this AMP. Figure 8: Projected Fleet Renewal and Budget expenditure showing Renewal Gap Table 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. Projections beyond the 10 year plan are based on estimations only.

22 20 Table 6.1.1: Projected and Budgeted Renewals and Expenditure Shortfall Year Projected Renewals Planned Renewal Budget Renewal Funding Shortfall (-ve Gap, +ve Surplus) Cumulative Shortfall (-ve Gap, +ve Surplus) 2014 $840,000 $840,000 $0 $ $1,277,000 $1,277,000 $0 $ $1,307,000 $1,307,000 $0 $ $848,000 $848,000 $0 $ $1,414,000 $1,414,000 $0 $ $1,197,000 $1,197,000 $0 $ $1,452,000 $1,452,000 $0 $ $1,213,000 $1,213,000 $0 $ $1,310,000 $1,310,000 $0 $ $1,076,000 $1,076,000 $0 $0 Note: An negative shortfall indicates a funding gap, a positive shortfall indicates a surplus. 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 and planned asset renewals indicates that further work is required to manage required service levels and the funding gap. This review follows Councils adoption of the 2013 Fleet Asset Management Plan (AMP) and 10 Year Plant Replacement Program (Item carried by simple majority Ordinary Council Meeting 26 th March 2013). Projected renewal expenditure will need to be assessed where significant variations occur and returned to Council for funding consideration Expenditure projections for long term financial plan Table shows the projected expenditures for the 10 year long term financial plan. New assets and disposals are detailed in the 10 year Fleet Management Plan. Table 6.1.2: Expenditure Projections for Long Term Financial Plan Year Operations Maintenance Projected Capital Renewal 2014 $1,121,000 $660,000 $839, $1,121,000 $660,000 $1,276, $1,121,000 $660,000 $1,306, $1,121,000 $660,000 $848, $1,121,000 $660,000 $1,413, $1,121,000 $660,000 $1,197, $1,121,000 $660,000 $1,452, $1,121,000 $660,000 $1,212, $1,121,000 $660,000 $1,309, $1,121,000 $660,000 $1,076,330 Sub-total $11,210,000 $6,600,000 $11,933, year total cost $29,743,110 Annual total cost $2,974,311

23 Funding Strategy Projected expenditure identified in Section 6.1 is to be funded from future operating and capital budgets. 6.3 Valuation Forecasts Asset values are not forecast to increase significantly as a result of new or renewed assets. Figure 9: Projected Asset Values Figure 10: Projected Depreciation Expense

24 22 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. Figure 11: Projected Depreciated Replacement Cost 7. ASSET MANAGEMENT PRACTICES 7.1 Accounting/Financial Systems Accounting and financial systems The current financial package provided by Civica is Authority. BIS is utilized for financial reporting Accountabilities for financial systems Accountability for the finance system resides with the Director Corporate Resources with the Manager Financial Services having prime responsibility for system maintenance and development Accounting standards and regulations All local governments in Western Australia are required to prepare financial statements in accordance with the Local Government Act 1995, Local Government (Financial Management) Regulations 1996 and applicable Australian Accounting Standards (as they apply to local governments and not-for-profit entities) Capital/maintenance threshold Council has adopted a capitalisation materiality level of $5,000 for all asset classes. (Resolution S ). Items of plant and equipment that fall below this have been included to ensure the network value has been

25 23 included in future renewal projections. Assets below the materiality limit that have not been identified in this AMP may include hand tools, power tools, gardening equipment and some other minor plant Required changes to accounting financial systems arising from this AM Plan There are no proposed changes to the accounting/financial systems resulting from this asset management plan. The restructure of the existing general ledger/chart of accounts took place in June 2014 and will facilitate improved asset management reporting in future revisions of this plan. 7.2 Asset Management Systems Asset management system The Shire of Esperance has adopted the NAMS.Plus format for Asset Management and has undertaken the relevant training modules as a base for managing infrastructure asset data and the production of Asset Management Plans. A review of Asset Management Information Systems is expected in 2014/ Asset registers Asset data is currently managed through Authority and through the IPWEA Systems plus Fleet Management System. Information collected may vary according to asset class but will include Asset ID, Name, description, year acquired, condition and current replacement cost as a minimum Linkage from asset management to financial system The financial systems are not intrinsically linked to the Asset Management data. It is anticipated that future Asset Management information systems may be linked to financial accounting systems Accountabilities for asset management system and data The Asset Management system and processes are managed through a Strategic Group within the Shire who give direction to Officers to ensure assets are audited, associated plans are developed and Asset Management processes are further developed and implemented Required changes to asset management system arising from this AM Plan As the Asset Management systems and processes are still being developed there are no direct changes resulting from the AMP. 7.3 Information Flow Requirements and Processes The key information flows into this asset management plan are: Council strategic and operational plans, Service requests from the community, Network assets information, The unit rates for categories of work/materials, Current levels of service, expenditures, service deficiencies and service risks, Projections of various factors affecting future demand for services and new assets acquired by Council, Future capital works programs, Financial asset values. The key information flows from this asset management plan are: The projected Works Program and trends, The resulting budget and long term financial plan expenditure projections, Financial sustainability indicators.

26 24 These will impact the Long Term Financial Plan, Strategic Longer-Term Plan, annual budget and departmental business plans and budgets. 7.4 Standards and Guidelines Standards, guidelines and policy documents referenced in this asset management plan are: IPWEA International Infrastructure Management Manual Australian Standards Relevant accounting and Fair Value standards Department of Local Government Integrated Planning and Reporting Framework and Guidelines Shire of Esperance Asset Management Strategy 2012 to 2014 Shire of Esperance Strategic Community Plan Shire of Esperance Corporate Business Plan 2014/ /18 Shire of Esperance Long Term Financial Plan Shire of Esperance Infrastructure Asset Management Plan 8. PLAN IMPROVEMENT AND MONITORING 8.1 Performance Measures The effectiveness of the asset management plan can be measured in the following ways: The degree to which the required cashflows identified in this asset management plan are incorporated into the organisation s long term financial plan and Community/Strategic Planning processes and documents, The degree to which 1-5 year detailed works programs, budgets, business plans and organisational structures take into account the global works program trends provided by the asset management plan; 8.2 Improvement Plan A separate Asset Management Strategy 2012 to 2014 has been adopted by Council. This document details the status and goals for Asset Management and sets out an action plan to achieve them. This document is due for review in The asset management improvements generated from this asset management plan are shown in Table 8.2. Table 8.2: Improvement Plan Task No Task Responsibility Timeline 1 Monitor procedures to ensure the Asset Register is maintained and accurate 2 Review risk register periodically and implement any treatment plans. 3 Ensure adequate workshop resources are available to support the fleet maintenance schedule 4 Ensure the Fleet Management System continues to support best fleet management practices Asset Management 2014/15 Asset Management Asset Management Asset Management 5 Monitor and implement Service Delivery Review recommendations Corporate Resources Asset Management 6 Review the integration of the fleet asset register with the financial systems for long term planning Asset Management Corporate Resources On-going On-going On-going On-going 2014/15

27 Monitoring and Review Procedures This asset management plan will be reviewed during annual budget preparation and amended to recognise any material changes in service levels and/or resources available to provide those services as a result of the budget decision process. A full review of this Asset Management Plan is expected within 5 years. REFERENCES IPWEA Plant and Vehicle Management Manual 3 rd edition International Infrastructure Management Manual International Edition 2011 Shire of Esperance Annual Plan and Budget Shire of Esperance Asset Management Policy Shire of Esperance Asset Management Strategy 2012 to 2014 Shire of Esperance Financial Management Policy 2007 Shire of Esperance Records Management Policy 2010 Shire of Esperance HR 001 Motor Vehicles Shire of Esperance ECEC 009 Staff use of Shire Equipment for Private Purposes Relevant accounting and Fair Value standards Department of Local Government Integrated Planning and Reporting Framework and Guidelines Shire of Esperance Strategic Community Plan Shire of Esperance Corporate Business Plan 2014/ /18 Shire of Esperance Long Term Financial Plan Shire of Esperance Infrastructure Asset Management Plan DVC, 2006, Asset Investment Guidelines, Glossary, Department for Victorian Communities, Local Government Victoria, Melbourne, IPWEA, 2006, International Infrastructure Management Manual, Institute of Public Works Engineering Australia, Sydney, IPWEA, 2008, NAMS.PLUS Asset Management Institute of Public Works Engineering Australia, Sydney, IPWEA, 2009, Australian Infrastructure Financial Management Guidelines, Institute of Public Works Engineering Australia, Sydney, IPWEA, 2011, Asset Management for Small, Rural or Remote Communities Practice Note, Institute of Public Works Engineering Australia, Sydney,

28 26 Appendix A Projected 10 year Capital Renewal Works Program Esperance - Appendix A Projected 10 Year Capital Renewal Program Net Capital Expenditure (2013 dollars) Category Alias Description Heavy AE1 AE1 Alroh Tracaire 3pt. PTO Aerator $0 B7 B Sewell B200 PTO Road Broom $8,609 B8 B Sewell TB2000 Trailer Road Broom $41,040 C23 C Modern Twin Berth Caravan $132,127 C24 C Modern Twin Berth Caravan $132,127 C25 C Modern Twin Berth Caravan $128,221 C26 C Modern Ablution Caravan $106,367 C27 C Modern Single Berth Caravan $80,642 C28 C Elross Twin Berth Caravan $100,797 C29 C Elross Ablution Caravan $86,112 C30 C Single Berth Caravan $41,850 C31 C Elross Single Berth Caravan $44,929 D11 D Caterpillar D6T XL Bulldozer $294,604 FR9 FR Hamm HD12W Vibratory Road Roller $30,978 G39 G Caterpillar 12M Grader - Condingup $266,104 $266,104 G40 G Caterpillar 12M Grader - Cascades $288,545 $288,545 G41 G Caterpillar 12M Grader - Grass Patch $248,331 $248,331 G42 G Caterpillar 12M Grader - Central $224,295 $224,295 G43 G Caterpillar 12M Grader - Construction $207,399 G44 G Caterpillar 12M Grader - Construction $207,345 GM4 GM Howard Pegasus 493 PTO Roller Mower $52,995 L48 L Caterpillar 416E Backhoe Loader $97,715 $97,715 L50 L Caterpillar 416E Backhoe Loader $126,144 $126,144 L52 L Caterpillar 256C Skid Steer Loader $62,269 $62,269 L54 L Caterpillar 930H Front End Loader $196,737 $196,737 L55 L Caterpillar 924H T/C Front End Loader $203,542 $203,542 L56 L Caterpillar 924H T/C Front End Loader $170,363 L58 L JCB 155 Skid Steer Loader $28,358 L59 L Caterpillar 432F TC Backhoe Loader $111,528 L60 L Caterpillar 432F TC Backhoe Loader $111,528 LL5 LL SFM Tri-Axle Low Loader $62,722 MR 14 MR Ammann AP240 Multi-Wheel Roller $137,331 MR16 MR Bomag BW25RH Multi-Wheel Roller $150,345 MR17 MR Bomag BW25RH Multi-Wheel Roller $138,545 RB2 RB Broons BH1220 Rockbuster $67,340

29 27 Esperance - Appendix A Projected 10 Year Capital Renewal Program Net Capital Expenditure (2013 dollars) Category Alias Description SL5 SL5 99 Howard PEHD 3pt. PTO Rota Slasher (Town) $11,464 T100 T Mitsubishi Fuso FM65 Medium Tip Truck $90,240 T101 T Mitsubishi Fuso FM65 Tip Truck $82,100 T102 T Mitsubishi Fuso FS500 8-Wheel Tip Truck $192,444 $192,444 T103 T Mitsubishi Fuso FS500 8-Wheel Tip Truck $192,444 $192,444 T104 T Nissan GW470 Prime Mover $127,711 $127,711 T105 T Hino FY Wheel Tip Truck $165,760 T107 T Isuzu NPR300 SiTec Medium Tip Truck $56,881 T108 T Mitsubishi Fuso FV500 Prime Mover $123,030 $123,030 T109 T Mitsubishi Fuso FS500 8-Wheel Tip Truck $160,746 $160,746 T110 T Mitsubish Fuso FM600 Tip Truck $85,585 T111 T Hino 300 Series Dual Cab Tip Truck $22,621 T112 T Isuzu NPR300 Tip Truck $30,801 T113 T Hino FG1628 Medium Tip Truck $80,734 T114 T Hino FG1628 Medium Tip Truck $88,237 T99 T Isuzu FVR 950 Medium Tip Truck $81,015 TC25 TC New Holland TM125 4WD Tractor - RB2 $135,423 TC30 TC New Holland TS115A FWA Tractor - Rural $79,459 $79,459 TC33 TC Gianni Ferrari Turbo 4 60" Mower $57,320 $57,320 TC34 TC John Deere " Mower $30,575 $30,575 TC35 TC New Holland TD WD Tractor - Town $48,957 TR17 TR Andrei 1200L Fuel Tanker Single Axle $6,442 TR19 TR Flemco Vehicle Carrier Dual Axle $8,063 TR21 TR Morris 1200L Fuel Tanker Dual Axle $6,196 TR24 TR " Water Pump Single Axle $0 $0 $0 $0 $0 TR30 TR Custom 4x7 Boxtop Trailer Single Axle $3,332 TR36 TR Bitumen Spraying Trailer $18,161 TR37 TR x7 Boxtop Trailer Single Axle $2,790 TR40 TR Sign Trailer Dual Axle $3,515 TR43 TR Bobcat Trailer Dual Axle $16,566 TR46 TR Custom 3" Water Pump Single Axle $8,024 TR48 TR Custom 3200L Fuel Tanker Dual Axle $7,483 TR49 TR Custom 8x4 Rubbish Trailer Dual Axle $0 TR51 TR Custom 8x5 Boxtop Sign Trailer Dual Axle $4,874 TR52 TR Custom 8x5 Boxtop Sign Trailer Dual Axle $4,874 TR53 TR Custom 3200L Fuel Tanker Dual Axle $7,483 TR54 TR Bobcat & Profiler 9t Trailer Single Axle $20,664