STRATEGIC ASSET MANAGEMENT PLAN

STRATEGIC ASSET MANAGEMENT PLAN (As at ) Strategic Asset Management Plan Version 7

Document Control Document ID: Rev No Date Revision Details Author Reviewer Approver 1 April 2010 Draft Asset and Infrastructure Plan PS 2 May 2010 Comments for Executive review of SAMP 3 July 2010 Comments from Audit Committee following report on 22 June 2010 and updated asset data 4 August 2010 Comments following Executive review 5 October 2010 Comments following Executive review 6 November 2010 For Executive Review of SAMP DR 7 November 2010 Comments following Executive review PS PS PS AO AO Strategic Asset Management Plan Version 7

TABLE OF CONTENTS 1. EXECUTIVE SUMMARY... 1 2. INTRODUCTION... 4 3. ROLES AND RESPONSIBILITIES... 5 3.1 GOALS AND OBJECTIVES OF ASSET MANAGEMENT... 6 3.2 ASSET MANAGEMENT POLICY... 8 4. ASSET INVENTORY... 9 5. FUTURE DEMAND... 11 6. SERVICE LEVELS... 13 7. RISK MANAGEMENT... 15 8. LIFECYCLE MANAGEMENT PLAN... 17 8.1 MAINTENANCE... 17 8.2 RENEWAL... 18 8.3 NEW ASSETS... 20 8.4 DISPOSAL... 21 9. FINANCIAL PROJECTIONS SUMMARY... 22 9.1 FINANCIAL STATEMENTS AND PROJECTIONS... 22 10. IMPROVEMENT PROGRAM... 25 11. CONCLUSION... 28 TABLES 1. FINANCIAL INDICATORS... 2 2. COMMUNITY PLAN STRATEGIES & ASSET PLANNING OBJECTIVES... 6 3. ASSETS COVERED BY THIS PLAN... 10 4. DEMAND MANAGEMENT PLAN SUMMARY... 11 5. PROJECTED RENEWALS & FUNDING GAP... 22 6. DRAFT IMPROVEMENT PLAN... 26 FIGURES 1. SERVICE LEVEL FLOW CHART... 14 2. RISK ASSESSMENT... 15 3. LIFECYCLE COST OF AN ASSET... 17 4. PLANNED MAINTENANCE EXPENDITURE... 18 5. PROJECTED CAPITAL RENEWAL EXPENDITURE... 19 6. PLANNED NEW EXPENDITURE... 20 7. PLANNED OPERATING & CAPITAL EXPENSES... 21 8. PROJECTED RENEWALS & DEPRECIATION COMPARISON... 22 ATTACHMENTS 1. DRAINAGE INFRASTRUCTURE ASSET MANAGEMENT PLAN 2. ASSET MANAGEMENT POLICY 3. FOOTWAYS AND SHARED PATH INFRASTRUCTURE SERVICE STANDARDS 4. FOOTWAYS AND SHARED PATH INFRASTRUCTURE RISK MANAGEMENT PLAN 5. GLOSSARY

1. EXECUTIVE SUMMARY The Local Government (Financial Management and Rating) Amendment Act 2005 requires Council to develop a Long Term Financial Plan (LTFP) and an Infrastructure and Asset Management Plan (IAMP). The goal of effective asset management is to facilitate the delivery of legislated and/or desired level of service for both the present and future community via the provision and management of physical assets in a cost effective manner. The City of Unley has an obligation to its ratepayers and community to meet this goal and additionally to manage its assets in an environmentally sustainably manner. In 2009/10, the City of Unley s assets were valued for replacement at $351,000,000 with an average of $1,900,000 worth of new assets per annum being created through capital works over the next 10 years. New assets require initial capital expenditure; however they also require financial commitment for maintenance, renewal and borrowing costs which can be up to five times the initial capital expenditure over the assets useful life. To successfully maintain and operate these assets within acceptable levels of service balanced against available funding presents a challenge to Council. Draft Infrastructure and Asset Management Plans (IAMP) have been prepared for the following asset classes: Bridges* 1 ; Drainage*; Footpaths*; Kerbing and Water Table*; Open Space*; and Roads*. Plans are also currently being developed for the following: Buildings*; Information Technology; Plant and Equipment; Swimming Pool; Trees; Car Parks; and Public Lighting. These plans allow Council to analyse the sustainability and review the management of Council s infrastructure. This Strategic Asset Management Plan (SAMP) provides the overall key findings and forecast expenditures. * Required by Local Government (Financial Management and Rating) Amendment Act (2005) Page 1 of 26

Table 1: SAMP Financial Indicators As at 30/6/2010 Total assets replacement value $ 351,322,000 Annual depreciation $ 6,051,000 Written down current value $ 233,247,000 Budgeted renewal expenditure year 1 2 $ 9,180,000 Projected renewal expenditure 10 year average $ 6,126,000 The Local Government Association adopted the following definition for financial sustainability at its March 2006 General Meeting: A council s long-term financial performance and position is sustainable where planned long-term service and infrastructure levels and standards are met without unplanned increases in rates or disruptive cuts to services. The key indicator of cost to provide the services delivered by assets is an Asset Sustainability Ratio that provides a measure to determine if assets are being replaced at the rate that they are wearing out. Asset Sustainability Ratio Capital expenditure on renewal or replacement of existing depreciable assets divided by depreciation expense. Asset sustainability ratio Year 1 151% Asset sustainability ratio 10 year average 101% Council s Long Term Financial Plan (LTFP) is based on maintaining financial sustainability by setting the Asset Sustainability Ratio at 100%. When capital expenditure on renewing or replacing existing assets is at least equal to depreciation on average over time, then Council is ensuring the value of its existing stock of physical assets is maintained. If renewal expenditure is less than depreciation then unless Council s overall asset stock is relatively new (see Asset Consumption Ratio), then it is likely that this is under-spending on renewal and replacement 3. When using this rationale consideration needs to be given to the fact that depreciation is based on historical cost or revaluation cost and for some infrastructure assets Council does not replace like for like. Council s asset sustainability ratio is above the desired ratio in Year 1 which can be attributed to the Urban Green Corridor Linear Trail that includes $3,150,000 of renewal work to existing assets. 2 Year 1 projected renewal expenditure excludes backlog. See Section 4 and 9.2 for further details. 3 LGA Local Government Financial Indicators Information Paper 9, November 2006; page 6 para 6 Page 2 of 26

Development of this SAMP has identified the further work required and reinforce the need for integrated asset management practices, as such this SAMP summarises Council s approach to asset planning; consolidated information for the asset management work undertaken to date; and improvement initiatives required to continue to improve asset management practices. Page 3 of 26

2. INTRODUCTION The Local Government (Financial Management and Rating) Amendment Act 2005 requires Council to develop a Long Term Financial Plan (LTFP) and Infrastructure and Asset Management Plan s (IAMP). Section 122 (1) (d) requires Council, when preparing and adopting its strategic management plans, to state the measures (financial and non financial) that are to be used to monitor and assess the performance of the council over the review period. The IAMP s that are consolidated to form this SAMP are extensive technical documents (refer Attachment 1 for sample document) which inform the LTFP. The combination of replacement, renewal, maintenance and new capital programs will influence the funds (predominately rates) needed to ensure that Council remains financially sustainable. This summary document provides an overview of the financial funding requirements for the Audit Committee, Elected Members and Administration. It also defines the role that Council has in respect to governance. The report will discuss: Roles and responsibilities. Goals and objectives of asset management. The demands on Council assets. Council s current levels of service. Annual budgeting to Long Term Financial Planning. Page 4 of 26

3. ROLES AND RESPONSIBILITIES Council exists to provide services to its community. These services are provided either directly or indirectly through the provision of infrastructure assets. Council s goal is to meet the required level of service in the most cost effective manner for present and future stakeholders. Elected Members, the Administration and Council s Audit Committee all have a role in ensuring the aspirations of the community are met within a framework that considers financial, environmental and social sustainability. In terms of asset management, the key responsibilities are: Elected Members: Represent their community and are responsible for ensuring the services the community require can be delivered. Review and endorse the City of Unley Asset Management Policies and Plans. Review Audit Committee reports and monitor that effective asset management practices have been implemented. Council s Audit Committee: Reviews reports from the Administration, consultants and Council s Auditors. Makes recommendations to the Council. Has a high level review role of the City of Unley s asset management activities, policies and plans. The Administration: Is responsible for advising the Council and Audit Committee on asset planning. Ensures implementation of asset planning in line with relevant legislation, policies and plans across the organisation. Page 5 of 26

3.1 Goals and Objectives of Asset Management The goals and objectives of infrastructure asset management are: 1. Adopting a life cycle approach; 2. Developing cost-effective management strategies for the long term; 3. Providing a defined level of service and monitoring performance against that service level; 4. Understanding and meeting the demands of growth through demand management and infrastructure investment; 5. Managing risks associated with asset failures; 6. Sustainable use of physical resources; and 7. Continuous improvement in asset management practices. To manage these sometimes conflicting interests, Council needs to adopt a triple bottom line approach to its decision making. This approach considers social, environmental and economic impacts on an even weighted system. Effective asset management planning supports Council to deliver its Community Plan as can be observed in the table below. Table 2: Community Plan Strategies and Asset Planning Objectives Community Plan 2015 Strategies 1.1 Enhance community well being, quality of life and social development through the provision of quality recreational and sporting opportunities. 1.4 Enhance the health and well being of the community through facilitating and regulating the provision of appropriate services and facilities. 2.4 Enhance and develop the unique cosmopolitan character of main street and shopping precincts within the City. 3.1 Ensure that urban development and infrastructure meet the changing needs of the community while maintaining the City s heritage, amenity and character. 3.3 Ensure that the City s water resources are harnessed and reliance on potable/mains water and the River Murray for irrigation is minimised. Asset Planning Goals and Objective Providing a defined level of service and monitoring performance against that service level. (Goal and Objective No. 3). Providing a defined level of service and monitoring performance against that service level (Goal and Objective No. 3). Continuous improvement in asset management practices ((Goal and Objective No. 7). Understanding and meeting the demands of growth through demand management and infrastructure investment (Goal and Objective No. 4). Understanding and meeting the demands of growth through demand management and infrastructure investment (Goal and Objective No. 4). Managing risks associated with asset failures (Goal and Objective No. 5). Sustainable use of physical resources (Goal and Objective No. 6). Page 6 of 26

Community Plan 2015 Strategies 3.4 Ensure the efficient use of energy and other natural resources within the management of Council s assets and operations. 3.5 Ensure the protection, enhancement and management of the natural and built environment of the City in order to strengthen its environmental sustainability. 3.7 Ensure the long term management of all Council assets. 3.8 Ensure a sustainable, safe and integrated transport system is developed and maintained for the community considering a balance between intra-city and inter-city demands. Asset Planning Goals and Objective Sustainable use of physical resources (Goal and Objective No. 6). Continuous improvement in asset management practices (Goal and Objective No. 7). Sustainable use of physical resources (Goal and Objective No. 6). Continuous improvement in asset management practices (Goal and Objective No. 7). Adopting a life cycle approach (Goal and Objective No. 1). Developing cost-effective management strategies for the long term (Goal and Objective No. 2). Continuous improvement in asset management practices (Goal and Objective No. 7). Understanding and meeting the demands of growth through demand management and infrastructure investment (Goal and Objective No. 4). Page 7 of 26

3.2 Asset Management Policy In 2006 the State Government undertook changes to the Local Government Act 1999 that required councils to develop and adopt strategic plans to ensure long term financial sustainability. To do this it required Council s to develop: 1. an Asset Management Policy; 2. Infrastructure and Asset Management Plans; and 3. a Long Term Financial Plan. An Asset Management Policy has been developed (refer Attachment 2) and was adopted by Council on 23 February 2009 (Council report 424/2009). The purpose of an Asset Management Policy is outlined in the International Infrastructure Management Manual: Asset Management Policy and strategy development translates an organisation s broad strategic outcomes and plans into specific objectives, targets and plans relevant to a particular portion of the organisation. An adopted Asset Management Policy provides the framework which, together with the Community Plan 2015, enables the asset management strategy and specific objectives, targets and plans to be produced. An Asset Management Policy establishes a framework and principles for the long term management of community assets and will assist the Council to fulfil its obligations. Furthermore, the policy will enable: effective financial planning; planning for and access to grant funding opportunities; engagement in long term planning for services; provision of appropriate assets for identified service needs; security for community lessees to plan their service provision; transparent and effective decision making; and a City-wide context to the creation of future assets. Page 8 of 26

4. ASSET INVENTORY The asset inventory in Table 3, on the following page, has two replacement values for each asset category where the SAMP replacement values are based on the draft IAMPs completed to date, and the LTFP replacement values are based on the most recent valuations. It should be noted that many of the values do not equate and a key improvement initiative is for the two data bases to be consolidated. Further explanation for the discrepancies is detailed below. To substantiate the financial forecast determined for this SAMP, a comparison has been made between the two sets of values. As the totals are within 1.5% of each other, the financial indicators and financial forecast are valid for this SAMP. Details on the differences between the replacement values are as follows: Bridges, drainage Buildings, IT, plant and equipment Footpaths Kerb Open space Roads Trees Swimming Centre LTFP has lower capital values as the current valuation in the finance system was done 30/6/2006 with revaluation due 30/6/2011. IAMP was not completed at the time of preparing this SAMP, therefore LTFP figures have been adopted. IAMP forecasting did not account for driveway crossovers and pram ramps. Revaluation underway with revised IAMP and forecast to be completed May 2011. LTFP has lower capital values as the current valuation in the finance system was done 30/6/2007 with revaluation due 30/5/2012. LTFP includes Swimming Pool assets in Reserve Structures ($2,093,000) and values for the two ovals and tennis courts therefore higher replacement value than IAMP. IAMP forecasting did not account for the increased cost of paving for King William Road ($6,000,000 difference in cost) and there have been no revaluation adjustments in the IAMP data since 2006. (Note: financial forecast for roads was manually adjusted in this SAMP to reflect increased cost.) Non-capitalised asset therefore not included in Finance s data. Replacement value determined as 27,300 trees at $220 each. LTFP has Swimming Centre assets split between Buildings and Open Space structures. The figures for the draft IAMP replacement value are from Maloneys Valuation 2008.. Page 9 of 26

Strategic Asset Management Plan Table 3: Assets covered by this Plan Asset category LTFP Replacement Value SAMP Replacement Value Bridges 34 vehicular and 17 pedestrian bridges $5,555,000 $6,922,790 Buildings 106 buildings ranging from the Civic Centre through to public toilets and $48,624,000 $48,624,000 sheds Drainage 76 kilometres of pipe drainage, 12.4 kilometres of lined creek and 1,641 $54,124,000 $62,121,000 side entry pits Footpaths 330 Kilometres of footpath and 2.5 kilometres of bike path $34,241,000 $29,804,739 Information Technology Kerb and Water Table Open Space 333 items of hardware and 33 items of software $4,118,000 $4,118,000 312 kilometres of various types of kerbing and road drainage $20,607,000 $19,253,195 2 ovals, 26 playgrounds, 7 parks with tennis courts and various other structures and lighting $8,995,000 $4,627,337 Plant and Equipment Fleet cars, minor plant, major plant and workshop minor plant $5,664,000 $5,664,000 Roads 156 kilometres of roads, 11.12 kilometres of laneways, 3,500 signs and $174,192,000 $165,627,020 88.7 kilometres of line marking. * Trees 22,300 street trees and 5,000 park trees $6,006,000 Swimming Centre 1 x 50 meter pool, two junior pools and buildings $4,559,710 TOTAL: $356,120,000 $351,321,791 * Non-capitalised asset, therefore value amount ($6,006,000) not included in Replacement Value total. Page 10 of 28

5. FUTURE DEMAND The IAMPs developed to date have considered factors that may influence demand for assets and potential methods for managing this demand. The key factors identified are: Population growth; Changing demographics; Housing density; Climate change; and Changes in technology Although Changes in technology will have an impact, this can be difficult to predict. Therefore the financial forecasts in the IAMPs are based on current technologies and service provision methodologies. Technology changes include construction materials and techniques, maintenance techniques, operational practices, information systems and externalities impacting on the assets (i.e. a change in preferred travel method from private cars to bicycles or public transport). The factors which will influence demand for assets will also influence: Future operations, maintenance and renewal requirements; Management of existing assets; Upgrading existing assets when demand is understood; and Decisions regarding provision of new assets. An example of a basic Demand Management Plan is outlined below. Table 4: Demand Management Plan Summary Service Activity Capacity of local storm water system to handle existing and increased flows. Capacity of regional storm water creek system that continues to place properties at risk of flooding. Need for new assets such as car parking facilities as a result of urban development. Provision of community based activities from community centres and sporting facilities. Demand Management Plan A Storm Water Master Plan has been endorsed by Council but will require approximately $15 million to implement over the next 30 years. The Council, along with four other metropolitan councils, has plans to mitigate flooding. This plan, however, will require the City of Unley to contribute $10 million. Ensure that all commercial or major developments provide funds to enable supply of sufficient car parking space. Ensure Council has an endorsed plan (Strategic Building Review) that ensures appropriate building resources are available to deliver needed services. Page 11 of 28

Service Activity Provision of ongoing asset replacement in light of limited oil availability and carbon based trading. Provision of new assets above those already owned by the City and its community. Demand Management Plan Look at alternative material that minimise use of crude oil as a base material and at the same time look to maximise life of oil based assets to ensure source is available and carbon tax is minimised. Develop a process that identifies and explains the cost of delivering new assets or changed services such that the Council recognises the full life cycle cost of delivering new assets. The State Government 30-year Plan for Greater Adelaide (including the Eastern Adelaide Region) and Unley s strategy for a sustainable local city, both seek a growth in population, focused on main road transit corridors and key residential precincts convenient to services, employment and the Adelaide CBD. Development in the inner city reduces pressure for urban sprawl, underpins the local economy and maintenance of services and provides greater alternative housing opportunities. The existing valued heritage and character building areas can be largely maintained and much of the creeks and flood plain areas avoided for more intensive urban consolidation development. The new intensive development will comprise medium to high rise mixed use development (retail and/or commercial and residential above) along the key activity road corridors of Greenhill Road, Unley Road, Goodwood Road, King William Road, Glen Osmond Road, Anzac Highway and South Road, and medium rise residential development on Fullarton Road and key precincts around the western end of the tram line, Buttercup Bakery, Charles Street (Unley) and Julia Farr. In addition, a major opportunity for an integrated transit orientated development hub may occur in the longer term around the Keswick train station and Defence Barracks, including Anzac Highway, Greenhill Road, the Showgrounds and to the west and north in the West Torrens Council area. The improvement and maintenance of the creeks (flooding), open-space, roads, paths (pedestrian and cycle) and public realm generally (paving, landscaping, seating, signs, art, etc.) in these locations will need to support the new development. The Council is progressing Development Plan Amendments for planning policy change, with stage 1 for historic and character neighbourhoods approved in late 2009, and drafts being prepared for stage 2 for residential regeneration precincts and stage 3 for mixed use medium and high rise development on the priority (Greenhill and Unley Roads) key road transit corridors, for Council consideration in 2011. Page 12 of 28

6. SERVICE LEVELS Service levels are the link between community need, satisfaction and the cost of providing the service. Generally, a higher level of service costs more to deliver than a lower level of service. A decision to provide an increased level of service will usually require additional funding. A decision to reduce funding will generally result in lower service levels. Two service levels have been developed for each IAMP. They are: Community levels of service; and Technical levels of service. Community levels of service define the service from the customer perspective and can be measured by customer feedback and by Council s own data collection and measurement. Technical service levels define the way a service is planned and delivered and can be measure by comparing with industry best practice and customer satisfaction. Technical levels of service are developed, implemented and controlled in order to influence the community service levels. The customer and technical dimensions are usually dependent on each other, such that high technical quality contributes to high service quality. The technical levels of service will incorporate a minimum level of service, which is desirable, or industry practice (refer to Attachment 3 for example Service Plan). Future updates of the IAMPs will investigate and quantify desired levels of service using the SMART methodology that provides: Specific Measurable Achievable Relevant Time bound initiatives for both technical and community requirements. The levels of service reflected in the individual IAMP s include: Quality; Functionality; Safety; Condition; Amenity; Accessibility; and Cost effectiveness. The following flow chart is sourced from the Institute of Public Works Engineers Australia (IPWEA) and indicates this relationship and the need for continual review of asset management plans to ensure this financial sustainability. Page 13 of 28

Figure 1: Service Level Flow Chart STAKEHOLDER & LEGAL REQUIREMENTS & NEEDS ORGANISATIONAL STRATEGIC PLAN Vision, Mission, Goals, Objectives, Level of Service, Business Policies, Risk SERVICE PLANNING ASSET MANAGEMENT PLANS LONG TERM FINANCIAL PLAN Funding plan OPERATIONAL PLANS SERVICE DELIVERY at agreed service levels and cost Future service levels are generally based on the service level measures developed and documented in the IAMPs with the desired service levels selected to balance community needs and available resources. While the City of Unley community generally believes that it receives a high level of service (based on previous customer surveys) this level of service is not documented and has not been benchmarked against other local government authorities. One of the key improvements identified is the need to document the current level of service, consider whether the service level is appropriate and determine the resource implications. Page 14 of 28

7 RISK MANAGEMENT The process for managing City of Unley risks is consistent with the International Risk Management Standard ISO 31000:2009. It involves six key steps ensuring feedback through a monitoring and review process and appropriate communication and consultation. This process is represented in the table and flow chart below. Figure 2 Risk Assessment Principles for managing risk 2. Establish the context 1) Creates value 2) Integral part of organisational processes 3) Part of decision making 4) Explicitly addresses uncertainty 5) Systematic, structured & timely 6) Based on the best available information 7) Tailored 8) Takes human & cultural factors into account 9) Transparent & inclusive 10) Dynamic, iterative & responsive to change 11) Facilitates continual improvement & enhancement of the organisation 1. Communicate and consult 3. Indentify risks 4. Analyse risks 5. Evaluate risks 6. Treat risks Risk Assessment 7. Monitor and Review (ISO 31000:2009) The Council is committed to effective risk and opportunity management in order to: Improve its ability to deliver community priorities, services delivery and outcomes for the City of Unley; Maximise opportunities and minimise the impact and likelihood of risk; Protect its employees, assets, liabilities and its community by avoiding or mitigating losses; and Provide greater certainty for our employees, residents, stakeholders and the community in which we operate by understanding and managing our risks. As a result of this, the City of Unley has embraced Risk Management as part of its management process and the Council has recently considered and adopted a policy on Risk and Opportunity Management. This policy was adopted at the Council meeting of 24 May 2010 and can be found on the Council website www.unley.sa.gov.au. Page 15 of 28

The policy seeks to: Add value to all the activities of the City of Unley; Assist in achieving the Council s goals and deliver programs and services within a tolerable level of risk; Embed risk and opportunity management into all management activities, critical business systems and processes; Ensure all risks are consistently assessed and managed within the City of Unley s risk and opportunity framework. The development of SAMPs also has a component of risk associated with the ownership of the various assets as well as their maintenance and replacement. To mitigate or minimise this risk, all IAMPs have undergone a risk evaluation (refer to Attachment 4 for Sample Risk Assessment). This risk plan will be used to drive improvement and development of processes within maintenance and replacement programs for the various assets. Page 16 of 28

8. LIFECYCLE MANAGEMENT PLAN All assets follow a defined lifecycle. This lifecycle includes creation, maintenance, upgrade, renewal and disposal. Significant time is spent on the decision to create a new asset; rather than the financial costs of maintaining that asset from creation through to its disposal or replacement. These costs are around five times the initial capital expenditure over the assets useful life as depicted in the figure below. Figure 3: Lifecycle Cost of an Asset Lifecycle cost of an asset 60000 50000 Disposal Accumulative Cost ($) 40000 30000 20000 Renewal/Upgrade Maintenance 10000 0 Creation 1 2 3 4 5 6 7 8 9 10 8.1 Maintenance Plan 8.1 Maintenance Plan Age Routine maintenance is the regular on-going work that is necessary to keep assets operating until the end of their useful life, including instances where portions of the asset fail and need immediate repair to make the asset operational again. The definition of maintenance used in the preparation of the SAMP and the individual IAMPs is: Recurrent expenditure, which is periodically or regularly required as part of the anticipated schedule of works required to ensure that the asset achieves its useful life and provides the required level of service. It is expenditure, which was anticipated in determining the asset s useful life. Page 17 of 28

The modelling behind the development of this SAMP indicates an increase in required maintenance commensurate with the level of new assets that are being constructed by Council. Future maintenance expenditure is forecast to trend in line with the value of the asset stock. Figure 4 shows the estimated maintenance expenditure across all the IAMP s developed so far. Note: all costs are shown in 2009 dollar values with no adjustments for price increases. It should also be noted that the scale of the figure below only ranges from $6.9m to $7.1m and as such the peaks and troughs are only relatively small. Figure 4: Planned Maintenance Expenditure $7,150 Forecast Maintenance Expenditure (20 year forecast period) $7,100 Projected Costs ($'000) $7,050 $7,000 $6,950 $6,900 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Year 8.2 Renewal Plan Renewal expenditure is major work which does not increase the asset s design capacity but restores, rehabilitates, replaces or renews an existing asset to its original service potential. Figure 5 illustrates the projected capital renewal expenditure until 2029 and summarises costs. Note that all costs are shown in 2009 dollar values across all the IAMP developed thus far and have not been adjusted for price increases. Page 18 of 28

Figure 5: Projected Capital Renewal Expenditure Projected Capital Renewal Forecast (20 year forecast period) $25,000 $20,000 Projected costs ($'000) $15,000 $10,000 $5,000 $0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Year In 2010 there is $13,727,289 of unfunded renewals (backlog) that has been identified during the development of IAMPs to date. The backlog identified is based on a theoretical date derived by comparing the estimated life of the asset with its actual construction date. These backlog assets have reached the end of their economic life, however many are still serviceable and therefore have not been programmed for replacement. Further analysis of the condition and performance of these assets compared to documented service levels will aid the rationalisation of this backlog and provide a program to manage their replacement as required. The primary areas contributing to the backlog are roads, kerbing and open space assets. Unfunded renewals in road seals are particularly critical as a seal beyond its useful life represents an increased risk of water entry into the pavement base with potential for premature failure of this more expensive asset (seal rates per square metre are around $16/m 2 with pavement rates being up at $125/m 2 ). When IAMPs are reviewed in detail and service levels adopted over the next 12 18 months, further analysis will be undertaken to provide recommendations to manage the backlog and the renewal program. In 2020 in Figure 5 above, there is $15,247,459 of capital renewal forecast that is predominantly attributed to drainage and roads. In 2024, the $10,342,375 capital renewal forecast mainly comprises buildings and footpaths. Page 19 of 28

8.3 New Assets A considerable financial challenge facing Council is from the creation of new assets and the future funding of these assets over their lifecycle. Lifecycle costs of these assets will usually be up to five times the cost of purchase or construction. A number of large infrastructure projects are planned in the next 5-10 years including: 1. Brown Hill/Keswick Creek Flood Mitigation Project; 2. Council s Storm Water Master Plan; 3. Strategic Building Review; 4. Open Space Strategy; and 5. Alternative Water Plan. The creation of new assets should not be considered unless Council has financial capacity in its LTFP that provides sufficient funds annually for maintenance and renewal. Proposed new asset expenditures across all the IAMPs is summarised in Figure 6. All costs are shown in 2009 dollar values and have not been adjusted for price increases. Figure 6: Planned Capital New Asset Expenditure New Assets Forecast (20 year forecast period) $5,000 $4,500 $4,000 $3,500 Projected costs ($'000) $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Year Page 20 of 28

8.4 Disposal Plan Disposal includes any activity associated with disposal of a decommissioned asset including sale, demolition or relocation. Each of the IAMPs has considered assets for disposal (where appropriate). Plant and Equipment and Information Technology assets have relatively short lifecycles and may have a residual value identified in a disposal plan. Page 21 of 28

9. FINANCIAL PROJECTIONS SUMMARY The development of a 20 year long term renewal program for all infrastructure assets from this SAMP provides direct input into Council s 10 year Long Term Financial Plan (LTFP). The purpose of an IAMP is to identify the level of service required and to balance that against funding levels. This defined level of service is then reflected in the 10 year LTFP to provide the service in a sustainable manner. This section contains the aggregated financial requirements resulting from the information presented in all the IAMP s and projects this financial requirement over the next 20 years. 9.1 Financial Statements and Projections The financial projections for the next 20 years are shown in Figure 6 (see page 20) for planned operating (operations and maintenance) and capital expenditure (renewal and upgrade/expansion/new assets) across all asset groups. Figure 7. Planned Operating and Capital Expenditure Projected Operating & Capital Expenditure (20 year forecast period) $40,000 $35,000 $30,000 Projected Costs ($'000) $25,000 $20,000 $15,000 New Assets Renewals Maintenance $10,000 $5,000 $0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Year Note that all costs are shown in current 2009 dollar values and are not adjusted to reflect movements in the cost of asset provision. Page 22 of 28

Figure 8: Projected Renewals and Depreciation Average Renewal and Average Depreciation $25,000 $20,000 Proected Costs ($,000) $15,000 $10,000 Projected Renewal Depreciation Average Renewal $5,000 $0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Year Table 5 below shows the gap between projected and planned renewals and the annual and cumulative funding gap between projected and planned renewals. Table 5: Projected Renewals and Funding Gap Page 23 of 28

A gap between projected renewals and current renewals generally indicates that further work is required to manage service levels and funding to eliminate any funding gap. It must be noted that the figures reported in this SAMP are: Based on draft IAMPs produced to date. Based on unfunded backlog works that require further investigations. Based on a depreciation rate that is not being adjusted to reflect new assets and capitalised renewal work. Not allowing for any grant funding availability. Page 24 of 28

10. Draft Improvement Program In early 2010 Council engaged the services of consultants Morrison Low to undertake a review of the methodology, unit rates and assumptions contained within the draft asset plans developed to date. This review concluded that: The initiation of a structured asset management planning program at the City of Unley has had an immediate and positive impact on the approach to ensuring long term sustainability of assets across all categories The forecast data and information in the plans appears accurate and relevant, and whilst not yet complete the works gives enough of an indication that when each of the asset management plans are completed they will provide an important tool with which to support Council s Long Term Financial Plan and strategic initiatives. While Morrison Low endorsed the Asset Management Plan development to date, it suggested that a number of improvements need to occur. The recommendations included: Provision of additional resources to support asset management processes; Preparation of an overall Strategic Asset Management Plan (SAMP); Incorporating the financial forecasts from SAMP into the LTFP; Defining and review of service levels; Develop a graphically based risk management tool; Prepare a consolidated improvement program; and Further development of a condition based assessment for each asset class. The SAMP and associated IAMPs have been prepared in accordance with the International Infrastructure Management Manual. They have been prepared to meet minimum legislative and organisational requirements for sustainable service delivery and long term financial planning and reporting. The Asset Management Plan Review undertaken by Morrison Low has indicated that the Council can be confident that the work that informs this document is sound. The Review also provided valuable information to inform the Improvement Plan (refer Table 6) for Asset Plans. Future revisions of this SAMP and IAMP will move into more advance asset planning processes to refine the existing asset management processes to support the optimisation of activities and programs to meet agreed service levels. This SAMP has been based on existing data or newly collected data as part of the individual IAMP. It is anticipated that the plans will be revised and enhanced over the next two years, the emphasis of which will be to manage the long term funding gap. A key component in each of the plans is the improvement plan or a list of tasks requiring completion between now and the next revision of the plans. Table 6 is a consolidated Draft Improvement Plan. Page 25 of 28

Table 6 Draft Improvement Plan Create: Review: Improve: Asset Plan for: Asset Plan for: Asset Register Buildings Information Technology Plan & Equipment Swimming Pool Trees Car parks Public Lighting Bridges Drainage Footpaths Kerbing and Water Table Open Space Roads Service Standard (Service Service Standard (Service Available data on the Levels) for: Levels) for: condition and lifecycle of Building Assets. Kerbing and Water Table Open Space Roads Buildings Information Technology Plan & Equipment Drainage Footpaths Bridges Swimming Pool Trees Useful life of each Asset as part of the creation and review of Asset Plans. Long Term Financial Plan as a result of new and revised Asset Plans. Internal process such as: Revaluation processes Ongoing identification of new assets Records management for assets Resources for Asset Planning Page 26 of 28

Create: Review: Improve: Service delivery strategies as part of the development and reviews of each Asset P lan. Risk based approach to Asset Management (including development to of assessment tools). Undertake risk asse ssments for Bridges Kerbing and Water Table Open Space Buildings Information Technology Plan & Equipment Swimming Pool Trees Revi ew risk assessment for Footpaths Drainage Roads Asset Database. Lifecycle cost analysis of projects. Consolidation of databases via revaluation process. Page 27 of 28

11. CONCLUSION The City of Unley commenced its Asset Management journey approximately three years ago. To date draft IAMPs hav e been completed for: Bridges; Drainage; Footpaths; Kerbing and Water Table; Open Space; and Roads. Plans are also currently being developed for the following: Buildings; Information Technology; Plant and Equipment; Swimming Pool; Trees; Car Parks; and Public Lighting. This SAMP presents consolidated information for the asset management work undertaken to date and provides direction through improvement initiatives to ensure a better understanding of what is required to implement and integrate asset planning into Council's processes. This initial SAMP enables Co uncil to benchmark where it is in the asset planning journey. It provides measures and direction to track improvement initiatives as Council continues to move towards more sophisticated and integrated asset management practices and therefore more effective and sustainable service to its community. Page 28 of 28