Asset Management Strategy

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Revision: 20120817221244

Published: September 2011

Contents

Executive Summary

Background

Figure 1: Distribution of Asset Replacement Values based on Asset Class


pChart

This Asset Management Strategy (AMS) has the objective of providing an accurate assessment of the current maturity of Strategic Asset Management (SAM) at Corowa Shire and developing a structured set of actions aimed at enabling the Shire to improve its Asset Management practices.

The Shire has a total infrastructure asset stock that worth almost $430.6M. Figure 1 shows how it is distributed between the major asset categories. With the vital road and transportation infrastructure representing 44% of the assets value, the Shire sees long-term planning as a critical component of its day-to-day business.

In 2009/10, the NSW Division of Local Government's Integrated Planning and Reporting Framework program in NSW gained pace and the Federal Government launched the National Asset Management Framework. The Shire of Corowa is a tier 3 council and under the guidelines is expected to endorse an Asset Management Strategy and Asset Management Plans by June 2012. The three key initiatives in relation to this are:

  • Develop long term financial plans.
  • Document core Asset Management Plans.
  • Establish an Asset Management maturity to use as a tool to guide future action plans.

Key Action Plans

Table 1: Strategic Actions
Section Task Responsibility Timeline
Levels of Service Council will undertake specific customer surveys to validate current levels of service where these have been documented and endorsed as part of Council's policy. These surveys are to be Corowa Shire specific. For asset classes that currently do not have documented Levels of Service, Council will develop these in consultation with key stakeholders. Asset Management Unit / Engineering Department 2014-15
Future Demand In future, Council will aim to link demand modelling and future upgrade modeling through a science based approach. Asset Management Unit / Engineering Department 2015-16
Risk Management To develop a corporate risk management framework based on AS3760. Further develop a specific operational risk register for each asset class based on its individual requirements. Asset Management Unit 2014-15
Maintenance Plan For those asset classes that do not have a detailed Maintenance Plan the current maintenance procedures will be documented. Asset Management Unit / Engineering Department 2013-14
Maintenance Cost Recording To record maintenance expenditure into planned and reactive categories. Asset Management Unit / Finance Department 2015-16
Program Condition Assessment To improve the efficiency of condition assessment by incorporating it with each planned inspection. Asset Management Unit 2013-14
Renewal Modelling Improve modelling methods to better represent real-world conditions and long term outcomes, including relating maintenance expense with condition, add hierarchy as a treatment trigger and improved budget estimates. Asset Management Unit / Finance Department 2013-14
Program Capacity & Functionality Assessment To enable Council to determine future upgrades and expansions, Council will develop an assessment framework that measures the asset's capacity and functionality using industry standards and legislative requirements. Asset Management Unit 2015-16

Introduction

Purpose of the Strategy

The objective of this Asset Management Strategy (AMS) is to provide an accurate assessment of the current maturity of Strategic Asset Management at Corowa Shire and then to develop a structured set of actions with an aim of enabling the Shire to improve its Asset Management practices in line with the Shire’s Community Strategic Plan.

This strategy together with a subsequent (AMP) for each asset class will provide the Shire with the detailed comprehensive information and knowledge necessary for its short-term and long-term service delivery and Asset Management planning. It provides stakeholders with performance measurements in terms of:

  • Where are we at with Asset Management?
  • Are we spending our funds wisely?
  • What is our long term position and can we deliver a desired Level of Service in the future?
  • What systems and processes have we got to put in long term control?
  • Have we achieved Asset Management excellence?

Background

Community Profile

The Shire of Corowa is a rural community centrally located on the Murray River in southern New South Wales and covers an area of 2,329 km2, within easy travelling distance to the regional cities of Albury and Wodonga. Corowa Shire is bounded by the Victorian border to the south, Greater Hume Shire to the east, Urana Shire in the north and Berrigan Shire to the west. The Shire covers an area of 2,327 km2 and includes the towns of Corowa, Mulwala, and Howlong, the villages of Balldale and Daysdale and the rural localities of Rennie, Coreen and Lowesdale.

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On the 30th June 2010, Corowa Shire had an estimated population of 11,773[1] with a forecast population of 14,002 by 2031[2]. Around 85% of the population lives in the major townships of Corowa, Howlong and Mulwala[1].

The economy of Corowa Shire is based on manufacturing, agriculture and tourism. The agricultural industry is based on grazing, cropping and intensive irrigation activities. Major food processing facilities are located adjacent to Corowa and also at Wahgunyah in Victoria. In September 2010, Corowa Shire's total gross regional product was valued in excess of $1,200 million[3].

How have we defined Strategic Asset Management?

With the principles embraced over the last couple of years, Asset Management is now a process of logic used to guide the planning, acquisition, operation and maintenance, renewal and disposal of assets. Its objective is to maximise asset service delivery potential and manage related risks and costs over their entire lives. In simplest terms, asset management is about the way in which the Shire looks after its assets, both on a day-to-day basis (i.e. maintenance and operations) and in the medium to long term (i.e. strategic and forward planning).

Figure 2 below illustrates the typical lifecycle of an asset and associated asset management functions from planning for the need to create an asset through to its ultimate disposal including audit and review of performance of that asset.

The traditional approach to asset management has been “last year’s budget plus X%”. That is to say, asset management decisions are purely budget driven. This is illustrated by Figure 3 below which shows that the resultant service level delivered by the asset is an outcome. Corowa Shire, over the last two years, with the extensive work done in the Asset Management Unit has recognised that too often this approach leads to a lack of link between service delivery and financial planning.

Corowa Shire, in embracing this strategy has a clear focus on Strategic Asset Management (SAM) i.e. the alternative focus of ensuring that the assets are capable of providing services, of an agreed quality, in a sustainable manner, for present and future communities. This is not merely a matter of spending more money but instead is spending money wisely in a targeted manner. The decision to adopt a Strategic Asset Management System which can deliver long term prediction of service levels is fundamentally a step in the right direction for the Shire and this Strategy encapsulates the results of this service-centric analysis. Figure 4 illustrates the framework for SAM and Shire's corporate SAM system. The three noteworthy differences here are:

  • Budget and Service Level form a feedback loop as each is dependent on the other.
  • SAM allows the optimal Service Level to be adopted for the available Budget with an understanding of the predicted outcomes.
  • The adopted Service Level drives the required Funding Programs and thus remains connected to the Budget.

Alignment with the National Asset Management Framework

In line with the recent Local Government National Framework and State-wide Guidelines, the Shire is committed to the seven key elements:

  • Development of an Asset Management Policy
  • Strategy and Planning
  • Governance and Management Arrangements
  • Defining Levels of Service
  • Data and Systems
  • Skills and Processes
  • Evaluation

The key Strategic Actions as documented in Section 7 demonstrate the Shire's direction in achieving the above outcomes. The KPI's described in Section 8 demonstrate how we intend to measure our success in terms of evaluation. An Asset Management Maturity diagnostic for the Shire is provided in Section 9.

Relationship of Strategy with other Shire Documents

As per the NSW Division of Local Government's Integrated Planning and Reporting Framework Manual this Asset Management Strategy is related to the following key documents based on the diagram below.

  1. Corowa Shire Council's Asset Management Policy
  2. Corowa Shire Council's Corporate Management Plan
  3. Corowa Shire Council's Asset Management Plans

Legislative Control of Asset Management

  1. Australian Council of Local Government's National Asset Management Framework
  2. NSW Division of Local Government's Integrated Planning and Reporting Framework

Strategic Asset Management System

Figure 2: Asset Management Practices
Asset Management Practices.png

Current Position and Status of our Asset Planning

Shire's Asset Stock

Asset Stock and Replacement Costs

Table 2: Asset Stock and Condition
Asset Category Replacement Value Written Down Value Average Condition
Buildings $392,000 $93,103 4.4
Equipment $9,740 $8,780 1.0
Runways $4,749,883 $4,078,214 2.5
Balldale Water Equipment $117,474 $21,821 4.4
Balldale Water Main $1,033,013 $436,775 3.5
Furniture and Fittings $252,633 $139,919 2.8
Land Improvement $1,760,767 $1,452,573 1.3
Office Equipment $719,514 $519,285 2.0
Other Equipment $407,905 $215,785 2.8
Amenities Blocks $1,700,000 $791,463 3.5
Community Buildings $45,967,880 $19,103,565 3.8
Operational Buildings $3,209,119 $2,016,518 2.8
Playground Equipment $659,582 $518,115 2.3
Buildings $3,262,642 $1,925,576 2.8
Equipment $205,064 $185,437 1.0
Gravity Sewer Main $18,349,797 $13,151,310 2.6
Rising Sewer Main $2,701,663 $2,095,347 2.5
Sewer Manhole $4,298,935 $2,794,063 2.9
Sewer Pump Station $2,301,804 $1,127,842 3.0
Sewer Pump Station Well $1,938,079 $1,522,176 2.4
Sewer Treatment Works $19,969,154 $13,648,674 2.0
Kerb and Gutter $15,194,783 $13,024,444 2.2
Stormwater Box Culvert $2,280,709 $1,599,303 2.4
Stormwater Equipment $59,778 $59,130 1.0
Stormwater Main $28,415,054 $26,447,893 1.8
Stormwater Pits $3,625,798 $3,328,359 1.8
Stormwater Pump Station $450,000 $256,615 3.2
Stormwater Rising Main $542,555 $512,231 1.9
Traffic Island $1,545,465 $1,443,753 1.6
Bridges $8,119,587 $7,682,857 1.6
Carparks $2,135,663 $1,534,024 2.7
Footpaths $5,661,322 $4,835,340 2.2
Rural Sealed Roads $86,653,654 $67,688,059 2.6
Rural Unsealed Roads $53,580,531 $50,355,700 2.1
Urban Sealed Roads $32,880,699 $31,047,846 1.6
Urban Unsealed Roads $2,236,253 $2,079,683 2.0
Rising Water Mains $2,827,773 $1,508,780 3.4
Trunk Water Mains $8,954,955 $6,051,111 2.8
Water Bore $226,550 $174,694 2.0
Water Fireline $85,770 $69,975 2.2
Water Mains $23,043,847 $16,220,188 2.7
Water Pump Station $2,659,309 $709,735 3.9
Water Reservoir $6,387,609 $4,081,599 2.4
Water Treatment Plant $15,073,144 $9,192,356 2.4
Total $430,588,100 $329,690,661

Levels of Service

The Shire of Corowa has set a series of strategic Levels of Service (LoS) to guide the management of its assets. For each major asset category, the LoS define a number of Service Level Outcomes in terms of Performance Outcomes and Measures, KPIs and Targets for Achievement.

Detailed Level of Service information for Council’s various asset classes can be found in Section 3 of the relevant Asset Management Plan.

Snapshot of Health of Asset Stock

Condition is measured using a 1 – 5 rating system as suggested in the NSW Division of Local Government's Integrated Planning and Reporting Framework Manual.

Table 3: Condition Rating System
Rating Condition Description
1 Excellent Only cyclic maintenance required.
2 Very Good Minor maintenance required plus cyclic maintenance.
3 Good Significant maintenance required.
4 Average Major maintenance required.
5 Poor Significant renewal/upgrade required.

On an average Council's assets range between Condition 2 and Condition 3 across the various asset classes.

For detailed condition profiles of Council’s various asset classes refer to Section 5 of the relevant Asset Management Plan.

Asset Management Maturity

Asset Management Maturity is the level or ability of the Shire to achieve contemporary best practice Asset Management. In general terms contemporary best practice Asset Management for Corowa Shire means the following:

  • We know what we own or have responsibility or legal liability for.
  • We have recorded these assets in a register down to an identifiable level and our valuations are reported at a component level.
  • We monitor the condition, functionality, capacity, performance, utilisation and costs of assets down to the managed component level and aggregate this data up to give outputs of cost and performance at the portfolio levels.
  • We understand and have recorded the current levels of service in terms of reliability, repeatability and quality of service as well as our responsiveness to any asset failures.
  • We understand the likely future levels of service required based on population growth, demographic changes and community expectations.
  • We understand the long term (10 years plus) funding needs of our municipality to meet customer expectations in both capital and maintenance expenditure.
  • We monitor and report on the condition, performance and functionality of our assets against prescribed service levels and regulatory requirements.
  • We have uniform processes across our whole organisation for the evaluation of any investment in:
  • Capital works
  • Maintenance
  • Operations
  • We have a consistent method of developing annual needs based budgets.
  • We regularly report and compare actual performance against planned performance – costs, service levels and responsiveness.

Measuring the Shire’s Asset Management Maturity

An Asset Management Maturity diagnostic of the Shire of Corowa based on the International Infrastructure Manual.

Separate tables of results are provided for the asset categories of:

  • Buildings, Facilities, Transport & Drainage Assets
  • Sewer & Water Assets

Each table provides a baseline of the Shire’s asset management maturity levels (yellow) as of 30 June 2012. The Shire intends to assess the maturity every two years to benchmark performance.

Each table also shows the ideal maturity level for a Local Government Authority (blue). Specific actions to allow Corowa Shire to continue to improve towards the ideal target are documented in Section 7.

Snapshot of Asset Management Issues Facing the Shire

Long-Term Projections

The long term projections are based on Level of Service targets as shown in the table and graph below. For detailed long term projections showing scenario modelling please refer to Council's Asset Management Plans.

Strategic Actions

Table 1: Strategic Actions
Section Task Responsibility Timeline
Levels of Service Council will undertake specific customer surveys to validate current levels of service where these have been documented and endorsed as part of Council's policy. These surveys are to be Corowa Shire specific. For asset classes that currently do not have documented Levels of Service, Council will develop these in consultation with key stakeholders. Asset Management Unit / Engineering Department 2014-15
Future Demand In future, Council will aim to link demand modelling and future upgrade modeling through a science based approach. Asset Management Unit / Engineering Department 2015-16
Risk Management To develop a corporate risk management framework based on AS3760. Further develop a specific operational risk register for each asset class based on its individual requirements. Asset Management Unit 2014-15
Maintenance Plan For those asset classes that do not have a detailed Maintenance Plan the current maintenance procedures will be documented. Asset Management Unit / Engineering Department 2013-14
Maintenance Cost Recording To record maintenance expenditure into planned and reactive categories. Asset Management Unit / Finance Department 2015-16
Program Condition Assessment To improve the efficiency of condition assessment by incorporating it with each planned inspection. Asset Management Unit 2013-14
Renewal Modelling Improve modelling methods to better represent real-world conditions and long term outcomes, including relating maintenance expense with condition, add hierarchy as a treatment trigger and improved budget estimates. Asset Management Unit / Finance Department 2013-14
Program Capacity & Functionality Assessment To enable Council to determine future upgrades and expansions, Council will develop an assessment framework that measures the asset's capacity and functionality using industry standards and legislative requirements. Asset Management Unit 2015-16

Key Performance Indicators

Table 4 below set out the relevant Key Performance Indicators (KPIs) that the Shire will use to assess the quality and effectiveness of its Asset Management practices.

Table 4: Key Performance Indicators
KPI Measurement Method
Overall Asset Management Maturity Measured in terms of the maturity index in this strategy Appendix.
Asset Service Levels Measuring actual v/s targets.
Funding Needs Desired v/s actual and monitoring of any gaps.
Customer Satisfaction Measured in terms of customer response through community surveys.
Asset Health and Performance Measured through regular condition assessments and comparing historical network health with current health.
Asset Consumption Rates Measured in terms of asset loss i.e. proportion of assets that fall below acceptable levels each reporting period.
Sustainability Index Ratio of Actual Funding v/s Desired Funding to meet service levels.
Asset Health Index Ratio of the Written Down Value v/s Replacement Value

Asset Management Maturity Matrix

Figure 3: Asset Management Maturity Matrix - Buildings, Facilities, Transport & Drainage Assets
Maturity Model Matrix - Other Assets.jpg

Figure 4: Asset Management Maturity Matrix - Sewer & Water Assets
Maturity Model Matrix - Sewer & Water Assets.jpg

Strategy Review

Any Strategy must be a dynamic document, reflecting and responding to changes over time. A full review of this Asset Management Strategy should take place:

  • Every three years to document progress and set out proposals for the next five years;
  • Following changes to the Shire’s Community Strategic Plan.

References

  1. ^ a b Australian Bureau of Statistics (2012), National Regional Profile: Corowa Shire (A) (Local Government Area), http://www.abs.gov.au/ausstats/abs@nrp.nsf/Latestproducts/LGA12300Population/People12006-2010?opendocument&tabname=Summary&prodno=LGA12300&issue=2006-2010 
  2. ^ forecast.id (June 2011), Riverina Cities - Population and Household Forecasts (2006 to 2031) - Corowa Shire, .id 
  3. ^ Compelling Economics (September 2010), REMPLAN 
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