This document has been updated in December No changes were made to content, only style.

Transcription

1 s Government asset management policy statement December 2000

2 . The Secretary Department of Treasury and Finance 1 Treasury Place Melbourne Victoria 3002 Australia Telephone: Facsimile: Published by the Department of Treasury and Finance Copyright State of Victoria 2000 This book is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act Joint Departmental Information Centre Cataloguing in Publication Entry : government asset management policy statement. Melbourne: Dept. of Treasury and Finance, ISBN Public administration Victoria. 2. Government property Victoria Management. I. Victoria. Dept. of Treasury and Finance Published December This document has been updated in December No changes were made to content, only style. If you would like to receive this publication in an accessible format please telephone or mailto:[email protected] This document is also available in PDF format at

3 Contents Minister s foreword... 1 Overview... 4 Scope and application... 5 Why do we need better Asset Management?... 6 Objectives... 8 Principles... 9 Asset management responsibilities Benefits of policy implementation Asset performance management Government asset management policy statement, December 2000 i

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5 Minister s foreword The Bracks Government has promised to deliver on four key pillars responsible financial management, promoting growth across the whole State, delivering improved services, and restoring democracy and accountability to Victoria. These four pillars provide the foundation for Government policy, including Sustaining Our Assets. Sustaining Our Assets is concerned with maintaining a flexible portfolio of assets to enable services to be delivered effectively to the community and provide a foundation for economic growth. The policy builds on existing asset management practice, and specifically places increased emphasis on four main features: 1. Service delivery needs regarded as the basis of all asset management decisions. Service delivery needs address the social, environmental and economic needs of all Victorians. 2. Life cycle approach to asset management. This approach evaluates operating and maintenance requirements, and the implications of eventual replacement or retirement of assets, during acquisition decision making. The planning process also includes evaluation of non asset alternatives for the delivery of services to Victorians. 3. Integrated approach to asset management and service delivery, across all assets and all governmental departments and agencies. This means looking beyond stewardship of individual assets, and examining the total asset base during decision making. It also means achieving balance across government portfolios to optimise investment outcomes. 4. Increased emphasis on accountability for asset investment. This in turn requires greater transparency and quality in reporting arrangements. These asset management features are critical for the creation and maintenance of a portfolio of assets that is responsive to Victoria s changing needs while preserving and safeguarding resources for future generations. Sustaining Our Assets has been formulated to provide policy direction to the Government to meet the service delivery requirements of present and future Victorians. It provides the foundation of all asset management related activities, such as planning, evaluation, acquisition, operation and ultimate retirement of an asset. The policy supports the four key pillars of the Victorian Government and responds to the Government s objectives by observing the following: effective and accountable asset management is central to sound financial management. quality asset and infrastructure networks are essential to promote growth across the whole State. an effective asset base is necessary to deliver improved services which are accessible to all Victorians. open and transparent asset management processes assist to restore democracy and accountability to Victoria. The Government has established the Infrastructure Planning Council and the Infrastructure Delivery Cabinet Committee as forums for the planning and evaluation of the infrastructure strategy. These forums, along with Government initiatives such as the Partnerships Victoria public/private partnership policy, are being used to drive economic growth in Victoria through more efficient asset investment. Government asset management policy statement, December

6 Sustaining Our Assets is about maintaining a quality asset portfolio to provide services to the community and a foundation for economic growth throughout the State. Responsible leadership in the management of the State s assets is essential to improve services for all Victorians. Lynne Kosky MP Minister for Finance 2 Government asset management policy statement, December 2000

7 The Asset Life Cycle PLANNING Access needs Review options Cost/benefits ACQUISITION Non asset alternatives Risk evaluation Core Government owned assets Public/privatepartnership DISPOSAL Retirement Replacement Renewal Redeployment Monitoring and performance management Continuous monitoring Quantitative and qualitative assessment Achievement of Government outcomes OPERATION and maintenance Optimise performance Maintenance program Asset valuation Conditionsd and usage Decisions made in one phase of an asset s life will affect its performance in others e.g. a preventative maintenance program may impact on the operating and maintenance costs, downtime, and longevity of an asset Government asset management policy statement, December

8 Overview A better service, not a better asset, is a key indication of successful asset management The Government is committed to optimising Victoria s asset base and recognises that State assets have a vital role to play in providing service delivery that fulfils the social, economic and environmental needs of Victorians. Good asset management requires the planning and acquisition of the most appropriate assets to meet current and future service delivery demands. This requires informed decisions about which assets are needed, where and in what numbers. Asset planning is made with careful consideration of the needs and costs of maintaining and operating the assets over their life cycles, including ultimate retirement of assets. This approach recognises that the effects of decisions made during any phase of an asset s life cycle will affect performance and costs in another phase. Good asset management will always result in achieving best value from the total asset costs over their life cycles, including the cost of delivering services using these assets. Sustainable asset investment requires us to be accountable in maintaining and wisely using the assets we already have. Optimal asset management is achieved by: defining desired levels of services in consultation with the community, and matching these with assets that enable the services to be delivered; adopting a life cycle approach to planning asset investment and management decisions; balancing competing needs across all government functions and selecting options which best meet desired government outcomes; monitoring, evaluating and improving service delivery; managing the risks of asset ownership and operation to ensure continuity of service; providing for present needs while sustaining resources for future generations; and adopting a continuous improvement approach to asset management policies and practices. Sustaining Our Assets provides a high level policy framework for the Victorian public sector. The policy is underpinned by detailed guidance material to assist with the practical application of its features, through the Asset Management Series. The series provides the asset policies and practices to assist in the ongoing implementation of asset management. 4 Government asset management policy statement, December 2000

9 Scope and application This policy applies to physical assets with a useful life of more than one year, which require management by all Government departments, corporations, authorities and other bodies falling under the Financial Management Act Physical assets are: land; buildings; infrastructure; plant and equipment; cultural collections; and natural resources. Financial, human and information assets (including intellectual property) are not covered by this policy. Government asset management policy statement, December

10 Why do we need better Asset Management? We operate in a dynamic environment that has seen significant asset related events occurring in recent years. These events provide strong motivation and incentives for the continuous improvement in asset planning, operating and maintenance procedures and in risk management. Asset failures The Victorian gas crisis, the Sydney water crisis, and the Auckland power crisis are all sobering reminders of the fragile nature of service delivery continuity. User expectations Increasing awareness of consumer rights, litigation, understanding of regulatory requirements, and the underlying causes and effects of asset failures, have contributed to higher user expectations. Public sector management reform Reform of public sector management practices has seen the introduction of accrual output budgeting and increased accountability of public sector managers for the production of outputs. This creates a need for improvement in asset management capabilities, including life cycle costing of assets, monitoring and evaluation. Ageing assets and ageing population Many public assets were built shortly after World War II and will soon require renewal or replacement. This will make heavy demands on resources. The ageing Victorian population also has significant implications for the range of services and related assets that will be required in the future. Technology and non asset alternatives Technology is creating better ways of delivering services, including a range of non asset alternatives. At the same time it is providing enhanced asset management capabilities and techniques of monitoring and evaluation. Private sector investment potential The Government recognises the potential to optimise value for money in the provision of services through responsible use of both public and private sector investment. The Partnerships Victoria policy provides a means to engage with the private sector. The protection of the public interest (in respect of risk and interruption or decline in service availability) requires enhanced evaluation and monitoring of infrastructure projects. 6 Government asset management policy statement, December 2000

11 Sustainable development The increasing awareness of the need for balance between economic development and environmental and cultural needs is necessitating the life cycle approach to managing assets, in order to protect the interests of future generations. Government asset management policy statement, December

12 Objectives The key objectives of asset management are to enable the Government to meet its service delivery objectives effectively, and to provide a foundation for economic growth To provide the services required by Victorians by focusing on outputs and outcomes by ensuring assets are appropriately used and maintained by applying asset management principles To optimise the service potential of assets through improved management of the existing asset base through improved flexibility of the asset base by using economies of scale for more cost effective service delivery To maximise value for money by taking account of the full costs of acquiring, holding, using and disposing assets throughout their life cycles through appropriate partnerships with the private sector To contribute to economic growth through meeting service delivery demands by providing the right assets in the right location in the right amounts to encourage asset improvements that will improve the global competitiveness of Victoria To assign responsibility and accountability by clearly defining ownership and control of assets by determining and communicating accountability and reporting responsibilities throughout each step of the integrated approach to asset management To promote balance between development and sustainability by minimising demand of new assets through the use of non asset service delivery alternatives where appropriate by making asset decisions that consider and protect the needs of future generations 8 Government asset management policy statement, December 2000

13 Principles Effective asset management is a continuous process covering the life cycle of the asset. The following principles apply: Service delivery needs form the basis of all asset management practices and decisions all asset management activities should aim to improve service delivery throughout the State An integrated approach to planning asset planning and management are to be integrated into corporate and business plans, and budgetary and evaluation processes Informed decision making asset management decisions are to be based on evaluation of all alternatives (including nonasset alternatives) that take into account all costs incurred throughout the life cycle of the assets, from acquisition to disposal, and related benefits and risks asset management decisions are to be responsive to performance measurement and monitoring Asset management within a whole of government policy framework all asset management activities are to be undertaken as part of the Government s overall resource allocation and management framework for the whole of Victoria competing needs of different government portfolios are to be balanced in order to achieve desired Government outcomes and minimise duplication Accountability and responsibility accountability for service delivery, and accountability for asset management, should go hand in hand ownership, control, accountability and reporting requirements for assets are to be established, clearly communicated and implemented reporting requirements should include timely and meaningful information. evaluation of the contribution of asset management to meet departmental objectives is to form part of performance management. asset registers are to be maintained at a level that meet government and management decision making requirements. Sustainability planning is to include evaluation of all potential methods to meet the demands for service delivery, including non asset solutions, and demand management strategies. Government asset management policy statement, December

14 Integrated Asset Management approach Community needs and expectations Appropriateness assessment Outcomes Government policy Corporate planning Effectiveness assessment Non asset alternatives Service strategy Asset alternatives Budget process Efficiency assessment Business planning Evaluation 10 Government asset management policy statement, December 2000

15 Asset management responsibilities Sustaining Our Assets requires leadership throughout the whole of government. The following requirements need to be considered throughout the process of service delivery: Appropriateness Responsibilities to ensure the appropriateness of asset management: Positioning assets to meet the long term service delivery priorities of Government Clear communication of the aspirations for public sector assets to all public sector departments and agencies Alignment of asset management philosophy, goals and actions with Government policy Integrating asset management strategy and resource allocation decisions across government Effectiveness Responsibilities to ensure the effectiveness of asset management: Clear direction and communication of objectives within public sector departments Forward thinking service strategies to gain improved flexibility, sustainability, cost effectiveness and economic growth from assets Proactive investigation of non asset and asset alternatives to meet service delivery needs Ensuring congruency of strategic goals both within and between public sector departments and agencies in order to minimise duplication of activities and redundancy in resources Integration of asset management activities and resource allocation decisions across government, and across all assets Efficiency Responsibilities to ensure the efficiency of asset management: Formulating all asset management activities from planning through to implementation in response to Government policy service delivery strategies Integration of asset plans and asset management with corporate and business plans Timely delivery of quality budgetary and reporting information to facilitate appropriate decision making in the context of integrated asset management (across government and across all individual assets) Ongoing evaluation of outputs and assets to improve operating, pricing and investment efficiencies Performing asset recognition, registration, valuation, charging, depreciation and maintenance functions consistent with policy requirements Government asset management policy statement, December

16 Benefits of policy implementation The Government is responsible for the assets held by the State, and for the provision of services contracted by the State through assets held by others. The scale of investment exposes the Government to a range of considerable risks. A strategic approach to managing State assets enables the Government to manage these risks, and obtain better value for money in the delivery of services to all Victorians. The benefits of a strategic approach are: Appropriateness aligns assets with services and community expectations promotes sustainable development objectives effectively allocates resources available to the Government across departments and agencies, maximising outcomes and minimising duplication Effectiveness minimises demand for new assets all associated costs are considered and optimised over the life cycle of assets existing assets are maintained and used more effectively (timely maintenance is cheaper than repairs or new asset acquisitions) realises opportunities to use private sector assets for public purposes realises opportunities for the public sector to partner with the private sector Efficiency demonstrates to the community and the Government that services are being delivered effectively achieves improved accountability for use of resources through published performance measures provides a basis for the Government to evaluate and balance the trade off between service, price and quality provides benchmarks which can be used to evaluate outcomes and plan future investments. 12 Government asset management policy statement, December 2000

17 Asset performance management Improved future asset investment outcomes and clear accountability for these outcomes requires systematic measurement and evaluation of asset performance Performance of assets is to be evaluated by both quantitative and qualitative measures. Quantitative performance management measures include: the cost effectiveness of the assets in service delivery throughout their life cycles the efficiency of output prices paid compared to established benchmarks the contribution made by assets to support economic growth Qualitative performance management measures include: user satisfaction with the services delivered affordable and equitable public access to essential assets transparency and accountability of all asset decisions made throughout the life cycle the sustainability and continuity of service provision Performance measurement raises public sector and Government awareness of the responsibilities, opportunities and risks inherent in asset management. Regular measurement and evaluation of performance assists the Government to determine if it is achieving its desired outcomes in the most effective manner. This is achieved via the establishment and comparison of benchmarks for the price of service delivery (output pricing). Monitoring and evaluation of performance is dependent on reporting arrangements which deliver timely, accurate and comprehensive information. The Asset Management Series provides guidance on the approach, and technical publications provide information and updates on the more dynamic aspects. Government asset management policy statement, December

18 The principless of the Sustaining Our Assets policy derive from f the central principle that service deliveryy needs form the basis of asset management practices and decisions. Service delivery needs comprise the social, economic and environmental needss across regional and metropolitan Victoria 14 Government asset management policy statement, December 2000

19 Government asset management pollicy statement, December