City of Salisbury ASSET MANAGEMENT STRATEGY Version 6 June 2015 City of Salisbury Asset Management Strategy
Document Control Document Control NAMS.PLUS Asset Management www.ipwea.org/namsplus Document ID: asset management strategy version 5 (march 2015).doc Rev No Date Revision Details Author Reviewer Approver 1 10/12/2014 First Draft JC 2 12/12/2014 Second Draft JC SAMG 3 13/01/2015 Third Draft JC EXEC 4 27/03/2015 Final Draft (Updated budgets for 2015/16) JC EXEC 5 02/04/2015 Included additional Strategy graphs JC EXEC 6 30/06/2015 Minor changes and additions JC EXEC NAMS.PLUS Asset Management The Institute of Public Works Engineering Australasia. www.ipwea.org/namsplus Copyright 2012 All rights reserved. City of Salisbury Asset Management Strategy
Table of Contents Executive Summary... 1 1. Introduction... 4 1.1 Legislative reform... 5 1.2 Asset Management Planning Process... 6 2. What Assets do we have?... 7 3. The Organisation s assets and their management?... 8 3.1 State of the Assets... 8 3.1.1 Financial State of the Assets... 8 3.1.2 Projected Operations and Maintenance Expenditure... 9 3.1.3 Summary of future renewal and replacement expenditure... 9 3.1.4 Summary of future upgrade/new assets expenditure... 10 3.1.5 Financial Statements and Projections... 11 3.1.6 Asset management financial indicators... 11 3.1.7 Asset Consumption Ratio... 12 3.2 Life Cycle Cost... 13 3.3 Asset Management Structure... 15 3.3.1 Asset Management Framework... 15 3.3.2 Roles and Responsibilities... 15 3.3.3 Asset Owner Structure... 16 3.4 Corporate Asset Management Team... 16 3.5 Financial & Asset Management Core Competencies... 17 3.6 Strategy Outlook... 20 4. Where do we want to be?... 21 4.1 Council s Vision, Mission, Goals and Objectives... 21 4.2 Asset Management Policy... 23 4.3 Asset Management Vision... 23 5. How will we get there?... 24 6. Asset Management Improvement Plan... 25 Tables Table 1: Assets used for providing Services... 7 Table 2: Financial Status of the Assets... 8 Table 3: Life Cycle Cost for Council Services... 13 Table 4: Life Cycle Expenditure for Council Services... 13 Table 5: Life Cycle Indicators... 14 Table 6: Asset Owner Structure... 16 Table 7: Key Directions and Objectives for Infrastructure Services... 22 Table 8: Asset Management Strategies... 24 Table 9: Asset Management Improvement Plan... 25 City of Salisbury Asset Management Strategy Page i
Figures Figure 1: Asset Replacement Cost by Asset Management Plan... 8 Figure 2: Projected Operations and Maintenance Expenditure... 9 Figure 3: Projected Capital Renewal and Replacement Expenditure... 10 Figure 4: Projected Capital Renewal and Replacement Expenditure... 10 Figure 5: Projected Operating and Capital Expenditure... 11 Figure 6: Projected Operating and Capital Expenditure... 11 Figure 7: Asset Consumption Ratio... 12 Figure 8: Asset Management Framework... 15 Figure 9: Core Asset Management Maturity Assessment (Sept 2013)... 18 Figure 10: Indicative Core Asset Management Maturity Assessment (Feb 2015)... 18 City of Salisbury Asset Management Strategy Page ii
Executive Summary This asset management strategy is prepared to assist council in improving the way it delivers services from infrastructure including transport, drainage, fleet, buildings, parks & streetscapes, trees and water business assets. These infrastructure assets have a replacement value of $1.4B. The asset management strategy is to enable Council to show: how its asset portfolio will meet the service delivery needs of its community into the future, enable Council s asset management policies to be achieved, and ensure the integration of Council s asset management with its long term strategic plan. 1 Adopting this asset management strategy will assist council in meeting the requirements of national sustainability frameworks, the South Australian Local Government Act 1999, Local Government (Financial Management) Regulations 2011 and providing services needed by the community in a financially sustainable manner. The asset management strategy is prepared following a review of the council s service delivery practices, financial sustainability indicators, asset management maturity and fit with council s vision for the future outlined in the City Plan Sustainable Futures 2020. The strategy outlines an asset management improvement plan detailing a program of tasks to be completed and resources required to bring council to a minimum core level of asset maturity and competence. Strategy outlook 1. Council can maintain assets for the next 10 years at current funding and service levels within the Long Term Financial Plan. This includes: Increased Street Trees renewal expenditure to increase the frequency of Streetscape Renewal and prevent future increases to civil infrastructure maintenance budgets. Air Conditioning Renewal increased expenditure to target high priority air conditioners for renewal previously managed by sporting clubs. Commencement of a bus shelter renewal program for bus shelters in poor condition and nearing the end of their useful life. 2. The organisation s current asset management maturity is nearing core level as detailed in section 3.5. 3. Investment is needed to: Improve Information management - by increasing the quality of data in Council s Asset Management System, Confirm. Improve Lifecycle management by continually improving the data and assessment of Council s infrastructure 1 LGPMC, 2009, Framework 2 Asset Planning and Management, p 4. City of Salisbury Asset Management Strategy Page 1
Include condition data in the Asset Management System and develop a process to maintain the currency of condition across numerous asset categories. Improve the collection of Key Performance Indicator data from the Community and Council based on set levels of Service and condition. 4. Council commit to ensuring that it focuses on asset renewals and will prioritise funding to address infrastructure that is not providing a suitable level of service. 5. Focus new assets on meeting needs identified to be critical to enhancing community wellbeing and delivered sustainably across its lifecycle. Asset Management Strategies No Strategy Desired Outcome 1 Continued Long Term Financial Planning to achieve financial sustainability. 2 Develop and annually review Asset Management Plans covering at least 10 years for all major asset classes (80% of asset value). 3 Asset management plan expenditure projections covering 10 years to inform the Long Term Financial Plan with a sustainable funding position outcome. 4 Incorporate Year 1 of Long Term Financial Plan revenue and expenditure projections into annual budgets. 5 Review and update asset management plans and long term financial plans after adoption of annual budgets. Communicate any consequence of funding decisions on service levels and service risks. 6 Report Council s financial position relating to its assets at Fair Value in accordance with Australian Accounting Standards, financial sustainability and performance against strategic objectives in Annual Reports. 7 Ensure Council s decisions are made from accurate and current information in asset registers, on service level performance and costs and whole of life costs. 8 Implement an Improvement Plan to realise core maturity for the financial and asset management competencies within 2 years. The long term implications of Council services are considered in annual budget deliberations. Identification of services needed by the community and required funding to optimise whole of life costs. Sustainable funding model to provide Council services. Long term financial planning drives budget deliberations. Council and the community are aware of changes to service levels and costs arising from budget decisions. Financial sustainability information is available for Council and the community. Improved decision making and greater value for money. Improved financial and asset management capacity within Council. City of Salisbury Asset Management Strategy Page 2
Asset Management Improvement Plan The program of tasks and resources required to achieve a minimum core asset management maturity was developed in the asset management strategy. The tasks and program are shown below. Ref Task Responsibility Target Date 1 Council endorsement of Asset Management Policy Council Nov 2015 2 Council endorsement of Asset Management Plans Council Nov 2015 3 Council endorsement of Asset Management Strategy 4 Implement a continuous improvement process to manage the Asset Register and development of Asset Management Plans 5 Undertake/update Asset Management maturity assessment 6 Condition assessments to be undertaken and recorded against the discrete asset in the asset register. 7 Deliver objectives outlined in the Asset Management Plan Operationalisation Project. 8 Continue informing Elected Members and key staff on Asset Management. Council Nov 2015 SAMG Ongoing SAMG April 2016 SAM SAMG/AMIG/ Project Team SAMG/SAM Ongoing July 2017 Ongoing City of Salisbury Asset Management Strategy Page 3
1. Introduction Assets deliver important services to communities. A key issue facing local governments throughout Australia is the management of ageing assets in need of renewal and replacement. Infrastructure assets such as roads, drains, bridges, water and public buildings present particular challenges. Their condition and longevity can be difficult to determine. Financing needs can be large, requiring planning for large peaks and troughs in expenditure for renewing and replacing such assets. The demand for new and improved services adds to the planning and financing complexity. 2 The creation of new assets also presents challenges in funding the ongoing operating and replacement costs necessary to provide the needed service over the assets full life cycle. 3 The national frameworks on asset planning and management and financial planning and reporting endorsed by the Local Government and Planning Ministers Council (LGPMC) require councils to adopt a longer-term approach to service delivery and funding comprising: A strategic longer-term plan covering, as a minimum, the term of office of the councillors and: o bringing together asset management and long term financial plans, o demonstrating how council intends to resource the plan, and o consulting with communities on the plan Annual budget showing the connection to the strategic objectives, and Annual report with: o explanation to the community on variations between the budget and actual results, o any impact of such variances on the strategic longer-term plan, o report of operations with review on the performance of the council against strategic objectives. 4 Framework 2 Asset Planning and Management has seven elements to assist in highlighting key management issues, promote prudent, transparent and accountable management of local government assets and introduce a strategic approach to meet current and emerging challenges. Asset management policy, Strategy and planning, o asset management strategy, o asset management plan, Governance and management arrangements, Defining levels of service, Data and systems, Skills and processes, and Evaluation. 5 2 LGPMC, 2009, Framework 2 Asset Planning and Management, p 2. 3 LGPMC, 2009, Framework 3 Financial Planning and Reporting, pp 2-3. 4 LGPMC, 2009, Framework 3 Financial Planning and Reporting, pp 4-5. City of Salisbury Asset Management Strategy Page 4
The asset management strategy is to enable Council to show: how its asset portfolio will meet the service delivery needs of its community into the future, to enable Council s asset management policies to be achieved, and to ensure the integration of Council s asset management with its long term strategic plan. 6 The goal of asset management is to ensure that services are provided: in the most cost effective manner, through the creation, acquisition, maintenance, operation, rehabilitation and disposal of assets, for present and future consumers. The objective of the Asset Management Strategy is to establish a framework to guide the planning, construction, maintenance and operation of the infrastructure essential for council to provide services to the community. 1.1 Legislative reform The Local Government Act 1999 and its regulations require each Council to: have an I&, covering the management of infrastructure and other major assets of the Council for a period of at least 10 years 7 have a long-term financial plan covering a period of at least 10 years 8 maintain prudential management policies, practices and procedures for the assessment of all projects 9 prepare and consider a specially-commissioned report on the prudential aspects of a contemplated major asset acquisition or construction project (not required for road construction/maintenance or drainage) 10 have a policy on the sale and disposal of assets 11 adopt an internal control policy which safeguards assets 12 maintain accounting records of assets 13 maintain a register of community land 14 maintain a register of public roads 15. regularly estimate its asset sustainability ratio and include the updated estimate in its: 5 LGPMC, 2009, Framework 2 Asset Planning and Management, p 4. 6 LGPMC, 2009, Framework 2 Asset Planning and Management, p 4. 7 Local Government Act 1999 Section 122 (1a)(b) 8 Local Government Act 1999 Section 122 (1a)(a) 9 Local Government Act 1999 Section 48 (aa1). See also Financial Sustainability Information Paper No. 27: Prudential Management at http://www.lga.sa.gov.au/goto/fsp 10 Local Government Act 1999 Section 48(1) and 48 (3) 11 Local Government Act 1999 Section 49 (1)(d) 12 Local Government Act 1999 Section 125 13 Local Government Act 1999 Section 124(1)(a) 14 Local Government Act 1999 Section 207(1) 15 Local Government Act 1999 Section 231(1) City of Salisbury Asset Management Strategy Page 5
o long-term financial plans 16 o annual budget and 17 o mid-year budget review and 18 regularly revalue its material non-current assets in accordance with the requirements of Australian Accounting Standards 19 1.2 Asset Management Planning Process Asset management planning is a comprehensive process to ensure that assets are managed and maintained in a way that enables affordable services from infrastructure to be provided in an economically optimal way. In turn, affordable service levels can only be determined by assessing Council s financially sustainability under scenarios with different proposed service levels. Asset management planning commences with defining stakeholder and legal requirements and needs, incorporating these needs into the organisation s strategic plan, developing an asset management policy, strategy, asset management plan and operational plans, linked to a long-term financial plan with a funding plan. 20 Asset Management Planning Process ASSET MANAGEMENT PLANNING Asset Management Philosophy & Framework Service Delivery Knowledge Legal and Stakeholder Requirements and Expectations Organisational Strategic Plan Vision, Mission, Goals & Objectives, Levels of Service, Business Policies, Risk ASSET MANAGEMENT POLICY ASSET MANAGEMENT STRATEGY Objectives, level of service target and plans ASSET MANAGEMENT PLANS Services & service levels to be provided, funds required to provide services OPERATIONAL PLANS Service delivery in accordance with asset management plans Asset solutions operate, maintain, renew, enhance, retire Non-asset solutions partnerships, demand management, insurance, failure management KNOWLEDGE MANAGEMENT Asset data and information systems Operational Tactical Strategic Planning Planning Planning 16 Local Government (Financial Management) Regulations 2011 Regulation 5(c) 17 Local Government (Financial Management) Regulations 2011 Regulation 7(d) 18 Local Government (Financial Management) Regulations 2011 Regulation 9(2) 19 Local Government (Financial Management) Regulations 2011 Regulation 12 20 IPWEA, 2009, AIFMG, Quick Guide, Sec 4, p 5. City of Salisbury Asset Management Strategy Page 6
2. What Assets do we have? Council uses infrastructure assets to provide services to the community. The range of infrastructure assets and the services provided from the assets is shown in Table 1. Table 1: Assets used for providing Services Asset Management Plan Transportation Building Parks and Streetscape Drainage & Waterways Salisbury Water Street Trees Fleet Description The Transportation Asset Management Plan includes; Roads, kerbing, footpath, traffic devices, signage, lighting etc. The Building Asset Management Plan includes; sporting clubs, reserve shelters, libraries, recreation centres, municipal offices, The Parks & Streetscapes Asset Management Plan includes; playgrounds, fencing, furniture, irrigation, landscaping, sporting reserves etc. The Drainage & Waterways Asset Management Plan includes; stormwater pits & pipes, open drains, dams etc. The Salisbury Water Asset Management Plan includes; distribution & harvesting pipes, pipes, filtration equipment, wells, bores, tanks pumps etc. The Street Trees Asset Management Plan includes street trees/streetscapes The Plant and Fleet includes: heavy vehicles, light vehicles and trailers City of Salisbury Asset Management Strategy Page 7
3. The Organisation s assets and their management? 3.1 State of the Assets 3.1.1 Financial State of the Assets The financial status of the organisation s assets is shown in Table 2. Asset Management Plan Replacement Cost Table 2: Financial Status of the Assets Residual Value Depreciable Amount Depreciated Replacement Cost Depreciation Expense Transportation 765,757,000 0 765,757,000 460,396,000 11,241,000 Drainage & Waterways 388,823,000 0 388,823,000 262,917,000 4,151,000 Buildings 98,037,000 49,936,000 48,101,000 73,679,000 1,068,000 Fleet 9,326,000 269,000 7,057,000 5,195,000 1,059,000 Parks & Streetscapes 76,421,000 2,381,000 74,040,000 35,636,000 2,261,000 Street Trees 332,000 7,000 325,000 67,000 1,000 Salisbury Water 68,941,000 1,457,000 67,484,000 57,511,000 1,516,000 Total 1,407,637,000 54,050,000 1,351,587,000 895,317,000 21,297,000 Figure 1 shows the replacement values of Council s assets of each Asset Management Plan as a proportion of the total asset replacement value. Figure 1: Asset Replacement Cost by Asset Management Plan City of Salisbury Asset Management Strategy Page 8
3.1.2 Projected Operations and Maintenance Expenditure Future operations and maintenance expenditure is forecast to trend in line with the value of the asset stock as shown in Figure2. Note that all costs are shown in current 2015 dollar values (i.e. real values). Figure 2: Projected Operations and Maintenance Expenditure 3.1.3 Summary of future renewal and replacement expenditure Projected future renewal and replacement expenditures are forecast to increase over time as the asset stock increases from growth. The expenditure is summarised in Fig 3. Note that all costs are shown in current 2015 dollar values (i.e. real values). The projected capital renewal and replacement program is shown in Appendix A of each Asset Management Plan. City of Salisbury Asset Management Strategy Page 9
Figure 3: Projected Capital Renewal and Replacement Expenditure 3.1.4 Summary of future upgrade/new assets expenditure Figure 4: Projected Capital Renewal and Replacement Expenditure Projected upgrade/new asset expenditures are summarised in Fig 6. The projected upgrade/new capital works program is shown in Appendix B of each Asset Management Plan. Note that all costs are shown in current 2015 dollar values (i.e. real values). City of Salisbury Asset Management Strategy Page 10
3.1.5 Financial Statements and Projections The financial projections are shown in Fig 5 for projected operating (operations and maintenance) and capital expenditure (renewal and upgrade/expansion/new assets). Note that all costs are shown in current 2015 dollar values (i.e. real values). Figure 5: Projected Operating and Capital Expenditure 3.1.6 Asset management financial indicators Figure 6 shows the asset management financial indicators over the 10 year planning period and for the long term life cycle. Figure 6: Projected Operating and Capital Expenditure City of Salisbury Asset Management Strategy Page 11
3.1.7 Asset Consumption Ratio The asset consumption ratios of Council s assets (average proportion of as new condition left in assets) are shown in Figure 7. Figure 7: Asset Consumption Ratio Note: Street Tree assets have not previously been capitalised and therefore the value in the asset register is relatively low. There are 70,000 street trees in the City of Salisbury which will be capitalised as streetscape renewal programs are completed. The asset consumption ratio graph shows as expected that the Salisbury Water assets are relatively new, fleet assets tend to be older due to deferring replacement of items while the remaining asset classes are around halfway through their lifecycle. City of Salisbury Asset Management Strategy Page 12
3.2 Life Cycle Cost Life cycle costs (or whole of life costs) are the average costs that are required to sustain the service levels over the longest asset life. Life cycle costs include operating and maintenance expenditure and asset consumption (depreciation expense). The life cycle cost for the services covered in this asset management plan is shown in Table 3. Asset Management Plan Table 3: Life Cycle Cost for Council Services 2015/16 Expenditure 2014/15 Life Cycle Cost Operations ($ 000s) Maintenance ($ 000s) Depreciation Exp ($ 000s) ($ 000s/yr) Transportation 3,365 6,019 11,241 20,969 Drainage & 272 2,212 4,151 6,858 Waterways Buildings 2,205 2,621 1,068 6,322 Fleet 1,774 837 1,059 3,692 Parks & 2,725 12,049 2,261 17,290 Streetscapes Street Trees 0 2,730 1 2,731 Salisbury Water 2,119 809 1,516 4,443 All Services 12,460 27,277 21,297,000 62,305 Life cycle costs can be compared to life cycle expenditure to give an indicator of sustainability in service provision. Life cycle expenditure includes operating, maintenance and capital renewal expenditure in the previous year or preferably averaged over the past 3 years. Life cycle expenditure will vary depending on the timing of asset renewals. The life cycle expenditure at the start of the plan is shown in Table 4. Table 4: Life Cycle Expenditure for Council Services Asset Management Plan Operations ($ 000s) 2015/16 Expenditure Maintenance ($ 000s) Renewal Exp ($ 000s/yr) Life Cycle Exp ($ 000s/yr) Transportation 3,365 6,019 9,356 18,740 Drainage & 272 2,212 1,335 3,819 Waterways Buildings 2,205 2,621 4,985 9,811 Fleet 1,774 837 1,484 4,095 Parks & 2,725 12,049 1,315 16,089 Streetscapes Street Trees 0 2,730 1,100 3,830 Salisbury Water 2,119 809 147 3,075 All Services 12,460 27,277 19,722 59,459 The life cycle costs and life cycle expenditure comparison highlights any difference between present outlays and the average cost of providing the service over the long term, If the life cycle expenditure City of Salisbury Asset Management Strategy Page 13
is less than the life cycle cost, it is most likely that outlays will need to be increased or cuts in services made in the future. Knowing the extent and timing of any required increase in outlays and the service consequences if funding is not available will assist organisations in providing service to their communities in a financially sustainable manner. This is the purpose of the AM Plans and long term financial plan. A shortfall between life cycle cost and life cycle expenditure gives an indication of the life cycle gap to be addressed in the asset management and long term financial plan. The life cycle gap and life cycle indicator for services covered by this asset management plan is summarised in Table 5. Asset Management Plan Life Cycle Cost ($ 000s /yr) Table 5: Life Cycle Indicators Life Cycle Expenditure ($ 000s /yr) Life Cycle Gap * ($ 000s /yr) Life Cycle Indicator Transportation 20,969 18,740-2,229 89% Drainage & 6,858 3,819-3,039 56% Waterways Buildings 6,322 9,811 3,489 155% Fleet 3,692 4,095 403 111% Parks & 17,290 16,089-1,201 93% Streetscapes Street Trees 2,731 3,830 1,099 140% Salisbury Water 4,443 3,075-1,368 69% All Services 62,305 59,459-2,846 95% Note: * A life cycle gap is reported as a negative value. The table above shows a $2.85M life cycle gap overall with the majority of this gap being present in the asset categories with longer lives and/or newer assets. The Drainage & Waterways AMP shows limited expenditure required in the short term but significant expenditure is required starting from 2040. The Salisbury Water AMP assets are generally new and are reflected in the lifecycle gap which also indicates significant future expenditure. The Street Trees AMP shows an excess of $1.1M which is due to the fact that street trees have not been historically capitalised and therefore have very little depreciation. The Life Cycle Gap is determined using the expenditure in the first year compared to the average expenditure required for the life of the asset. As described above long lived assets with high value such as drainage pipes & pits, road pavement and kerbing are still in generally good condition and limited expenditure has occurred on these assets. As such an overall life cycle gap currently exists but will not in the future when expenditure will increase as these assets near the end of their useful lives. City of Salisbury Asset Management Strategy Page 14
3.3 Asset Management Structure 3.3.1 Asset Management Framework The Asset Management Policy, Strategy and Plans will be provided to Council for adoption. The relationships between the Asset Management Policy, Strategy and Plans are outlined in Figure 8 below. Figure 8: Asset Management Framework AM Policy Principles, requirements and responsibilities for AM inked to organisational strategic objectives. AM Strategy AM Objectives, AM Practices, Action Plans for AM Improvement, Audit and Review processes. AM Plan Asset/Service Description, Levels of Service, Demand Forecasts, Lifecycle Activities, Cash flow Forecasts 3.3.2 Roles and Responsibilities Council Key Stakeholder Responsible for adopting the Asset Management Policy, Strategy and Plans. Chief Executive Officer Responsible for implementing the Asset Management Policy, Strategy and Plans. Strategic Asset Management Group Responsible for developing strategic and systematic approach to the sustainable management of Council s Assets. Asset Management Implementation Group Responsible for developing the operational links and processes which enable the implementation of the strategic management of Council s Assets. City of Salisbury Asset Management Strategy Page 15
3.3.3 Asset Owner Structure The majority of infrastructure assets are managed with the City Infrastructure Department. As a consequence the City Infrastructure Department has organisational responsibility to maintain the Policy and Strategy as well as facilitate the continual improvement of Council s Asset Management System (Confirm). The Asset Owners responsible for management and reporting on each asset class is provided in Table 6 below. Table 6: Asset Owner Structure Asset Management Plan Transportation Drainage & Waterways Buildings Fleet Parks & Streetscapes Street Trees Salisbury Water Asset Owner Manager Civil & Waste Manager Civil & Waste Manager Property & Buildings Manager Business Support Manager Parks & Landscape Manager Parks & Landscape Manager Salisbury Water 3.4 Corporate Asset Management Team A whole of organisation approach to asset management is led by the Strategic Asset Management Group, in Technical Services. This team co-ordinates with Asset Owners, Finance, IT and Executive to deliver Corporate Asset Management. The benefits of a corporate asset management team include: demonstrate corporate support for sustainable asset management, encourage corporate buy-in and responsibility, coordinate strategic planning, information technology and asset management activities, promote uniform asset management practices across the organisation, information sharing across IT hardware and software, pooling of corporate expertise championing of asset management process, wider accountability for achieving and reviewing sustainable asset management practices. The role of the asset management team will evolve as the organisation maturity increases over several phases. Phase 1 strategy development and implementation of asset management improvement program, Phase 2 asset management plan development and implementation, reviews of data accuracy, levels of service and systems plan development, Phase 3 asset management plan operation evaluation and monitoring of asset management plan outputs ongoing asset management plans review and continuous improvement. City of Salisbury Asset Management Strategy Page 16
A large improvement project to operationalise the asset management plans is currently being scoped. Some of the key objectives of the project are; to ensure that CoS has correct and accurate data to deliver Asset Management modelling in the future to ensure that CoS has an accurate and complete asset register to deliver efficiency improvement by o Allowing for more realtime budget line management o Deliver mobility in the field o Reduce manual, paper based systems o Reduce duplication of effort and data entry to review, document and implement standardised business processes for repetitive asset management tasks 3.5 Financial & Asset Management Core Competencies The National Frameworks on Asset Planning and Management and Financial Planning and Reporting define 10 elements. 11 core competencies have been developed from these elements to assess core competency under the National Frameworks. The core competencies are: Financial Planning and Reporting Strategic Longer Term Plan Annual Budget Annual report Asset Planning and Management Asset Management Policy Asset Management Strategy Asset Management Plan Governance & Management Levels of Service Data & Systems Skills & processes Evaluation Council s maturity assessment for the core competencies is detailed in Appendix A and summarised in Figure 9. The current maturity level is shown by the blue bars. The maturity gap to be overcome for Council to achieve a core financial and asset management competency is shown by the red bars. City of Salisbury Asset Management Strategy Page 17
Figure 9: Core Asset Management Maturity Assessment (Sept 2013) A maturity assessment was undertaken in September 2013 (Figure 10) from which a project was implemented to review and develop an Asset Management Policy, Strategy and Plans for major asset classes. The adoption of this strategy, plans and policy will result in achieving core maturity for these areas. The maturity assessment has been updated to reflect the Asset Management Improvement Process that has been undertaken and pending Council endorsement of the Asset Management Policy, Strategy and Plans. Figure 10: Indicative Core Asset Management Maturity Assessment (Feb 2015) Core maturity will be achieved by implementing: City of Salisbury Asset Management Strategy Page 18
a continuous improvement strategy to assess and report on the performance of council controlled assets, and a rigorous assessment of the asset register ensuring it satisfies the accounting valuation, insurance and operational requirements of the organisation. City of Salisbury Asset Management Strategy Page 19
3.6 Strategy Outlook Strategy outlook 1. Council is able to maintain assets for the next ten years at current funding and service levels within the Long Term Financial Plan. This includes: Street Trees renewal increased expenditure to increase the frequency of Streetscape Renewal and prevent future increases to civil infrastructure maintenance budgets. Air Conditioning Renewal increased expenditure to target high priority air conditioners for renewal. Commencement of a bus shelter renewal program for bus shelters in poor condition and nearing the end of their useful life. 2. The organisation s current asset management maturity is nearing core level. 3. Investment is needed to: Improve Information management - by increasing the quality of data in Council s Asset Management System, Confirm. Improve Lifecycle management by continually improving the data and assessment of Council s infrastructure Include condition data in the Asset Management System and develop a process to maintain the currency of condition across numerous asset categories. Improve the collection of Key Performance Indicator data from the Community and Council based on set levels of Service and condition. 4. Council commit to ensuring that it focuses on asset renewals and will prioritise funding to address infrastructure that is not providing a suitable level of service. 5. Focus new assets on meeting needs identified to be critical to enhancing community wellbeing and delivered sustainably across its lifecycle. City of Salisbury Asset Management Strategy Page 20
4. Where do we want to be? 4.1 Council s Vision, Mission, Goals and Objectives Council has adopted a Vision and values for the future in the Council Strategic Plan. Our Values: Excellence in building a community of opportunity and spirit in a quality environment. 21 The City Plan articulates five core organisational values. These values are the principles we use to define what is critical to the City of Salisbury, both as a community and an organisation. They influence our behaviour and provide clear guidance on what is important for service delivery at both the strategic and operational level. 22 This is achieved via Salisbury s City Plan Sustainable Futures and the following four Key Directions: The Strategic Plan sets goals and objectives to be achieved in the planning period. The Key Directions set out where the organisation wants to be. The objectives are the steps needed to get there. Goals and objectives relating to the delivery of services from infrastructure are shown in Table 7. 21 City of Salisbury Annual Plan 2014/15 22 Sustainable Futures 2020 City of Salisbury Asset Management Strategy Page 21
Table 7: Key Directions and Objectives for Infrastructure Services Key Direction The Prosperous City The Sustainable City The Living City Achieving Excellence Objectives To enhance and create quality urban areas with high amenity and integrated infrastructure To deliver suitably integrated infrastructure that maximises economic efficiencies and opportunities for the community To have sustainable and resilient natural environments that support biodiversity and contribute to quality amenity To reduce corporate carbon emissions via mitigation as well as optimising renewable energy options To reduce resource consumption and minimise waste generation To deliver sustainable water management and improve water security for the city To have sustainable and resilient built environments that contribute to quality amenity To have a community that embraces healthy and active lifestyles To have a city where a quality of life is achievable To deliver sustainable, creative and innovative solutions that enable excellent operations and service delivery To ensure informed and transparent decision-making that is accountable and legally compliant To apply business and resource management that enables excellent service delivery and financial sustainability Council s Asset Management Policy defines the council s vision and service delivery objectives for asset management in accordance with legislative requirements, community needs and affordability. City of Salisbury Asset Management Strategy Page 22
4.2 Asset Management Policy Council s Asset Management Policy defines the council s vision and service delivery objectives for asset management in accordance with the Strategic Plan and applicable legislation. This Policy has been approved by the Strategic Asset Management Group and awaits endorsement by Council. The asset management strategy is developed to support the asset management policy and is to enable council to show: how its asset portfolio will meet the affordable service delivery needs of the community into the future, enable Council s asset management policies to be achieved, and ensure the integration of Council s asset management with its long term strategic plans. 4.3 Asset Management Vision To ensure the long-term financial sustainability of Council, it is essential to balance the community s expectations for services with their ability to pay for the infrastructure assets used to provide the services. Maintenance of service levels for infrastructure assets requires appropriate investment over the whole of the asset life cycle. To assist in achieving this balance, Council aspires to: Develop and maintain asset management governance, skills, process, systems and data in order to provide the level of service the community need at present and in the futures, in the most costeffective and fit for purpose manner. In line with the vision, the objectives of the asset management strategy are to: ensure that the Council s infrastructure services are provided in an economically optimal way, with the appropriate level of service to residents, visitors and the environment determined by reference to Council s financial sustainability, safeguard Council s assets including physical assets and employees by implementing appropriate asset management strategies and appropriate financial resources for those assets, adopt the long term financial plan as the basis for all service and budget funding decisions, meet legislative requirements for all Council s operations, ensure resources and operational capabilities are identified and responsibility for asset management is allocated, provide high level oversight of financial and asset management responsibilities through Audit Committee/CEO reporting to council on development and implementation of Asset Management Strategy, Asset Management Plans and Long Term Financial Plan. Strategies to achieve this position are outlined in Section 5. City of Salisbury Asset Management Strategy Page 23
5. How will we get there? The Asset Management Strategy proposes strategies to enable the objectives of the Strategic Plan, Asset Management Policy and Asset Management Vision to be achieved. Table 8: Asset Management Strategies No Strategy Desired Outcome 1 Continued Long Term Financial Planning to achieve financial sustainability. 2 Develop and annually review Asset Management Plans covering at least 10 years for all major asset classes (80% of asset value). 3 Asset management plan expenditure projections covering 10 years to inform the Long Term Financial Plan with a sustainable funding position outcome. 4 Incorporate Year 1 of Long Term Financial Plan revenue and expenditure projections into annual budgets. 5 Review and update asset management plans and long term financial plans after adoption of annual budgets. Communicate any consequence of funding decisions on service levels and service risks. 6 Report Council s financial position relating to its assets at Fair Value in accordance with Australian Accounting Standards, financial sustainability and performance against strategic objectives in Annual Reports. 7 Ensure Council s decisions are made from accurate and current information in asset registers, on service level performance and costs and whole of life costs. 8 Implement an Improvement Plan to realise core maturity for the financial and asset management competencies within 2 years. The long term implications of Council services are considered in annual budget deliberations. Identification of services needed by the community and required funding to optimise whole of life costs. Sustainable funding model to provide Council services. Long term financial planning drives budget deliberations. Council and the community are aware of changes to service levels and costs arising from budget decisions. Financial sustainability information is available for Council and the community. Improved decision making and greater value for money. Improved financial and asset management capacity within Council. City of Salisbury Asset Management Strategy Page 24
6. Asset Management Improvement Plan The tasks required to achieve a core financial and asset management maturity are shown in priority order in Table 9. Table 9: Asset Management Improvement Plan Ref Task Responsibility Target Date 1 Council endorsement of Asset Management Policy Council Nov 2015 2 Council endorsement of Asset Management Plans Council Nov 2015 3 Council endorsement of Asset Management Strategy 4 Implement a continuous improvement process to manage the Asset Register and development of Asset Management Plans 5 Undertake/update Asset Management maturity assessment 6 Condition assessments to be undertaken and recorded against the discrete asset in the asset register. 7 Deliver objectives outlined in the Asset Management Plan Operationalisation Project. 8 Continue informing Elected Members and key staff on Asset Management. Council Nov 2015 SAMG Ongoing SAMG April 2016 SAM SAMG/AMIG/ Project Team SAMG/SAM Ongoing July 2017 Ongoing City of Salisbury Asset Management Strategy Page 25