Asset Management Plans

Writing Asset Management Plans
a good practice workshop
National Asset Management Steering Group
(NAMS)
Course Objectives
 Know how to apply knowledge of your assets to develop a good
practice AM plan.
 Be able to critique key components of an AM plan.
 Understand the requirements for AM plans and what auditors
are looking for.
Audit Feedback
 Key Messages post 2006 LTCCPs
 Improvement in quality of AM planning from 2004, BUT still a long
way to go
 Up to date asset information and good analysis of information
needed
 Development of performance frameworks and levels of service
need work. Over 65% of TAs had performance measure
shortcomings
 Lack of information on additional capacity requirements, how this
will be delivered and options considered.
 Lack of linkage of future service level and capacity with identified
capital projects
AMP is a function of the entire organisation.
AMP and LTCCP linkages
Some good practices include:
 Structure your executive summary to fit straight into the LTCCP
format (need to understand corporate requirements).
 Map your community outcome measures to your customer
levels of service and technical levels of service.
 Set up network folders with all supporting information held in
one place – try not to repeat too much across documents
 Other?
Basic elements of the AMP
 Service/activity description
 Asset description (condition/performance/value)
 Levels of service (current/future)
 Growth and demand (demand drivers, demand mgt)
 Lifecycle plans – operational/renewal/capital (growth/LOS)
 Financial forecasts – (expenditure/funding)
 Management practices (outsourcing strategies, etc)
 Improvement plan
 Risk management, ongoing improvement, assumptions,
confidence levels (what-ifs) should filter through all sections.
Core versus Advanced AM plans
 The core approach can be typified as ‘top down’ with decisions
made using simple analysis processes using data relating to a
low level of asset component breakdown.
Core AM plan
Advanced AM plan
Intermediate AM plan

Core versus Advanced AM plans
 The core approach should still cover all the elements of AM
planning, but at a simpler level, e.g.:
 Risk management includes identification of critical assets
 Asset registers have low level of component breakdown
 ODM – simple benefit-cost processes for major decisions
 Levels of service defined based on historical performance
 Financial forecasts based on broad assumptions
 Audit Criteria
Asset description
Why are you writing this section?
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Objectives of a good asset description AM plan section
LG Act requirements
 Schedule 10
 Identify the assets or groups of assets
 Asset capacity
 Implies information on:
 Type
 Quantity
 Location
 Life
 Condition
 Capacity
 Performance
 Criticality
Contents – Asset description
 Description of asset base (asset parameters – location, type,
quantity, materials)
 Critical assets
 Other assets
 Asset performance and utilisation
 Historical information/trends
 Asset condition / remaining life
 Historical information/trends
 Asset valuation (lives, replacement costs, depreciation)
 Data Confidence
 Future Improvement
Further guidance
 Issues relating to asset information
 Gaps in asset data
 Particularly critical /high value assets
 Information not reviewed /updated
 Poor analysis of data
 Data rich /information poor
 Difficult to extract /analyse date
 Analysis tools not used well
 Lack of understanding of condition /performance
 Out dated information
 Grading processes inconsistently applied
 Lack of analysis
 Detailing with assets owned or managed by others
Good examples – Data Confidence Levels
Attribute D C B A
Unit Cost for Replacement
Condition/Remaining Life
Asset Size
Asset depth (for pipelines)
Material
Date of Installation
Asset Type
Location
Length (pipelines)
Quantity (other assets)
Deterioration Rates
Asset Performance
Checklist
 Have I provided a comprehensive picture about the assets in
this asset area /activity?
 Is the information provided at a summary level maximising use
of tables and graphs?
 Can I provide an audit trail back to data sources?
 Does asset valuation data comply with accounting practices
 Are critical assets identified?
 Have assumptions been included?
 Is data confidence stated?
Levels of Service
Why are you writing this section?
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Objectives of a good levels of service section
LG Act requirements
 Schedule 10
 Service provision levels and standards
 Statement of intended levels of service
 Performance targets and measures for assessment of actual levels
of service provision
 Intended levels of service and targets in detail for each of first 3
financial years and outline for subsequent years
 Cost of achieving and maintaining identified levels of service
Contents – Levels of service

 Who our customers are
 Customer expectations/consultation findings

 Social (including leisure)
 Cultural

Levels of service are output descriptions supported by
quantifiable performance measures
The performance measure indicates how the
organisation is performing in relation to that level of
service
Customer performance measures measure how the
customer receives the service (“what the customer gets”).
Technical performance measures are focused more on
technical criteria that demonstrate effective organisational
performance (“what we do”).
Some definitions
Level of service examples
Accessibility:
 Park facilities are provided that meet community demand.
 Park facilities are accessible to everyone.
Quality/ Quantity:
 Services protect property and people from the impacts of
flooding.
 Pleasant tasting and looking drinking water is provided
 Customer friendly and effective call centre operation is provided
Reliability/ Responsiveness:
 Enquiries are resolved promptly and efficiently.
 Impacts on health from poor air quality are minimised
Sustainability:
 Adverse effects of waste on the environment are minimised.
Examples of customer and technical performance
measures
Quality Annual survey shows that 80%
of residents and businesses are
satisfied with the look and feel of
the roads.
Minimum specific standards for
design: e.g. road width, footpath
width, grass berms, landscape
areas at intersections.
Reliability A 24×7 service is available for
reporting problems.
No more than x% of customers
experience an unexpected
sewerage service problem.
Time
/convenience
Nearest playground is within 15
minutes walk.
Provide ‘x’ playgrounds per 10,000
population in urban areas.
Affordability Annual survey shows ‘x’% of
users are satisfied that fees are
fair and reasonable.
Costs less than average for industry
(benchmarking results against
similar organisations).
Health No ‘No Bathing’ notices issued. Less than ‘x’ sewage overflows
each year due to public sewerage
faults.
Accessibility People with disabilities agree
that physical access is not a
barrier at any community facility
Disability access standards are
complied with at all community
facilities
Core value Customer perf measure Technical perf measure
Documenting existing levels of service and PM
 Start by collating and documenting existing statements and
measures in use
 Map them to your community outcomes or strategic objectives.
 Map them to your customer values.
Presenting performance targets and results
 Example presentation.
Checklist for reviewing levels of service and
performance measures
Alignment
1. Is there an explicit link between community outcomes, the rationale for the
activity, the levels of service and performance measures?
Coverage
2. Do the levels of service and performance measures cover all core aspects of the
activity?
3. Do the levels of service and performance measures address areas of customer
issues or concern identified?
SMART measures
4. Does each level of service and performance measure concisely cover only one
aspect of the activity (Specific)
5. Are the performance measures quantifiable and Measurable?
6. Does the AM or business plan reasonably demonstrate how performance gaps
will be actioned and funded (Achievable)?
7. Are the performance measures a good indicator of the level of service
(Relevant)?
8. Do the performance measures provide useful information to stakeholders about
the performance of the department/organisation (Relevant)?
9. Are targets set for 1, 2, 3 and 10 years (or other specific time periods)? (Time
bound)
Checklist for reviewing levels of service and
performance measures
Robust
10. Are performance measures auditable (can you demonstrate where the data
came from and could you replicate the results readily)?
11. Are you relying on assumptions or estimates that might invalidate the results?
12. Are performance measurement procedures clearly defined?
13. Is there an over reliance on performance measures that relate to customer
satisfaction?
Community involvement
14. Have the community been consulted in the development of levels of service?
15. Is there a transparent process by which consultation results have been
considered and used in establishing future performance targets?
Simplicity
16. Have you filtered all levels of service and performance measures that don’t add
value to the business (typical numbers of measures to use are discussed on
page A4/10)
Growth and demand
Why are you writing this section?
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Objectives of a comprehensive growth and demand section
LG Act requirements
 Schedule 10
 Assess and manage the asset management implications of
changes to demand for, or consumption of, relevant services
 Additional asset capacity required in respect of changes to
demand and consumption of services
 Remember:
 For services covered by sanitary or water service
assessments growth and demand was a key component of
these assessments.
Contents – Growth and demand
 Growth projections
 Demand projections
 Ability of …(insert activity name)… to meet demand
 Risks of not meeting future demand
 Demand management strategies
 Key asset programmes to meet Growth
 Confidence levels and assumptions
 Future improvement
Growth and demand
 Demand factors
 impacts of population change, land use, business growth
 changes in level of use of services
 Changes in customer expectations
 Need to understand drivers for changing demand
 Demographic analysis
 Demand modelling
 Societal and other trends
 Determine impact on service area
 Relate to customer groups
Checklist
 Is data used for population and other projections consistent
across the organisation?
 Is the information used comprehensive and relevant to this
activity area?
 Has the demographic information been interpreted for this
activity area such that issues are clearly identified?
 Are the forecasts based on the latest growth forecasts?
 Have all the likely demand factors been taken into account?
 Have the risks associated with the forecasts been documented?
 Have you identified future improvements required?
Lifecycle management
Why are you writing this section?
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Objectives of a comprehensive lifecycle management section
LG Act requirements
 Schedule 10
 How the provision of additional asset capacity will be undertaken
 How the maintenance, renewal and replacement of assets will be
undertaken
 How the costs for the above will be met
Typical Contents
 Operations and Maintenance
 Strategies /tactics
 Trends and costs
 Renewal
 Strategies /tactics
 Trends and costs
 Creation and Acquisition
 Strategies /tactics
 Trends and costs
 Disposal and Rationalisation
 Assessments undertaken (cemeteries /public toilets)
 Managing Risk
 Future Improvement
Strategies to deliver the level of service
 A common problem in asset or activity management plans and
LTCCPs.
 A level of service gap is identified (e.g.: we aim to increase
customer satisfaction from 65% to 80%) with no clear strategy in
place to deliver this.
 Level of service gaps will normally require some change to
current AM strategies and budgets. The links should be clear.
Showing the outcome / LOS / strategy link
Community
Outcome/Priority
Level of service target (what we want to
achieve)1
Asset Management Strategy2.
Reduce flooding of 340 habitable floors in 6 years
(with a focus on growth areas in first 3 years).
Demand management
Asset lifecycle management
95% of stormwater flooding incidents attended
and made safe within 4 hours.
Customer service
100% of blocked drain incidents attended and
situation made safe within 4 hours
Customer service
Less than 20 stormwater blockages per 100km
pipe per annum.
Asset lifecycle management
Less than 10 routine repairs to stormwater pipes
per 100km pipe per annum.
Asset lifecycle management
Meet or exceed DSR targets within DSR budget. Financial management
Auckland is safe.
Auckland is a great
place for business.
No lost time incidents or fatalities by Council staff
and contractors working on ACC stormwater
system.
Health and Safety
Overflows from combined systems reduced to
defined service levels of between 1 and 12 per
year (depicted in Figure 2.3) by 2021.
Demand management
Asset lifecycle management
Auckland is
beautiful and clean.
Auckland is well
cared for. Develop a regulatory regime to control zinc from
unpainted galvanised iron by 20083.
Environmental management
Showing the outcome / LOS / strategy link
Environmental Management Strategy: Reduce the effects of stormwater quality discharges on the
environment through at-source control and stormwater treatment where appropriate.
Current actions to achieve this strategy include:
Sediment/contaminant removal from the road area via street sweeping and roadside catchpits.
Promoting good management of private streams through the publication of Watercourse guidelines
(available at ACC and Metrowater venues and websites) and the implementation of a stream management
framework.
…etc
We plan to review/improve/develop these activities by:
Advocating provisions in the Regional Policy Statement and Regional Plan, and developing supporting
provisions in the District Plan and bylaws, to control future use of roofing by 2008 (following further analysis
of options such as galvanized roof repainting/ replacement in industrial/commercial areas), i.e., at-source
control.
Reviewing cesspit maintenance and performance on arterial roads and the City-wide street sweeping
regime by 2010 and implementing the outcomes of that review.
Etc
Financial forecasts should reflect the costs to deliver these actions.
Checklist
 Are asset condition grading and performance monitoring processes
described that are appropriate and relevant to the criticality of the
asset and the expected failure modes?
 Is it clearly stated how operations and maintenance strategies will
deliver levels of service and performance targets?
 Are operations and maintenance activities described/grouped at
sufficient detail for AM analysis?
 Are risk management practices evident in maintenance and operations
practices?
 Is there evidence of optimisation of maintenance practices?
 Is the supporting operations /maintenance documentation and data
adequate and well managed?
 Are the 3 year O&M forecasts ‘highly reliable’ and 10 year forecasts
‘reliable’?
Checklist
 Are the strategies and decision making processes for acquisition
/supply of key asset deliverables clearly defined?
 Are the lifecycle costs for new assets considered?
 Have the relevant standards for the creation of new assets been
identified?
 Have future asset renewals requirements been forecasts based on
analysis of expired life, condition and performance factors?
 Is there a documented strategy for renewal of each asset group?
 Is there a process described for optimisation of renewals?
 Is the process for identifying and disposing of surplus /obsolete assets
identified?
 Are the 3 year capital works forecasts ‘highly reliable’ and 10 year
forecasts ‘reliable’?
 Are the practices described in the plan actually happening?
 Are future lifecycle management improvements identified?
Financial Forecasts
Why are you writing this section?
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Objectives of a comprehensive financial forecast section?
LG Act requirements
 Schedule 10
 Estimated expenses of achieving and maintaining levels of service
provision
 Estimated expenses associated with maintaining the service
capacity and integrity of assets
 Statement of how the expenses are to be met
 Statement of estimated revenue levels, other sources of funds and
the rationale for their selection.
 Balanced Budget requirements S100
 Other financial policy sections
Financial forecasts
 Are the key output of an AM plan
 Must be prepared for at least 10 years
 Cover operational, maintenance, renewal and capital (new)
costs
 Be linked to the management strategies
 List key assumptions and confidence levels
Contents
 Summary of financial policies
 Development Contributions
 Asset valuation (if not covered in asset description section)
 Method of developing financial forecasts
 Confidence levels and key assumptions
 Financial forecasts
What will your financial forecasts be based on for each
budget area?
Summarise this clearly (more detail may be provided in asset lifecycle
section) eg:

estimates by staff (approx 20% of network value over 5 years).
Modified LOS
and
Capital Works
AMP Forecasts
Current LOS/Budgets
Version 1 Budget
Amended Budget
Financial
Model/
Constraints
LOS Budget Iteration Process
Balanced Budget
Budget Setting Process
Data confidence
 Aspects to be considered in assessing data confidence include:
 asset (age / type / location) data
 condition grading
 performance data
 demand forecasts
 The confidence in the asset data used as a basis for the
financial forecasts can be assessed using the grading system
shown in the next slide.
 A similar grading should be made on the confidence of the
assumptions made.
Data Confidence

Checklist
 Is there an appropriate categorisation and definition of asset
expenditure types, consistent with the lifecycle section of the AM
plan?
 Have expenditure types been consistently applied?
 Are assumptions and confidence levels stated for projects?
 Is the methodology for compiling each budget line clear.
 Do CAPEX forecasts differentiate between growth and changes
to levels of service?
 Are asset renewals based on identified projects, or a renewals
profile (or a combination of both?)
 Are there major renewals / capex in the AMP just beyond the 10
year LTCCP period? this may need:
 further explanation in the LTCCP
 further consideration re prudent financial management and
balanced budget
Checklist (continued)
 Is forecast expenditure generally consistent with descriptions of
assets and lifecycle management strategies?
 Do expenditure forecasts reflect
 The size of the asset base (are the assets growing?)
 The age profile of the assets?
 The expected condition and performance of the assets?
 Are the useful lives used for renewal forecasts consistent with
the accounting policies and with lives used in the valuation?
 If there is ‘flat lining’ of O&M expenditure, is there adequate
justification?
 Has depreciation been forecast for new assets?
 Has depreciation been adjusted for retired or disposed-of
assets?
Improvement planning
Why are you writing this section?
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Objectives of a good improvement planning section
Approach to improvement planning
Time (years)
Future Vision
(Best Practice)
Current Status
Appropriate
Practice
Sophistication of AM practices
Achievable Milestones
& Review Points
Needs Identified Review
Contents
 Assessment of current practice
 Asset Knowledge
 Strategic Planning Processes
 Current Asset Management Practices
 Asset Management Plan
 Information Systems
 Organisational Tactics
 Planned improvements
 Improvement Programme
 Monitoring and review
Prioritise the improvements
Checklist
 Have all improvements identified during plan development been
included in the programme?
 Does the improvement plan:
 Identify weak areas?
 Document how weak areas will be addressed?
 Identify a timeframe for completion of improvements?
 Document resource requirements?
 Is the programme realistic and achievable?
 Is the analysis of improvements comprehensive and cover data,
systems, processes, the plan and implementation practices?
 Is information on achievement of previously identified
improvements documented?
 Are KPI’s for measuring performance included?
 Is the process for internal reporting on achievement of
improvements tasks recorded?

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