ASSET MANAGEMENT SEMINAR

ASSET MANAGEMENT SEMINAR

24
-
25 NOVEMBER 2010


Technical Services Perspectives

Engineering


Leon Naudé


CONTENT

1.
Introduction

2.
IMESA

3.
Legislation & Guidelines

4.
Asset Management

5.
Current Situation

6.
Key Stakeholders

7.
Proposed National Plan

8.
Conclusion & Comments



INTRODUCTION

The

municipal

engineer

appreciate

the

attention

that

is

given

to

asset

management

due

to

the

municipal

asset

being

the

tool

that

ensures

service

delivery

to

the

community
.


Currently

the

municipal

engineer

is

associated

with

bad

roads

&

potholes,

dirty

water

from

taps

and

overflowing

man

holes
.


With

a

national

effort

from

all

this

can

be

turned

around

with

effective

asset

management

.



IMESA

•
The

Institute

of

Municipal

Engineering

of

Southern

Africa

(IMESA)


•
Institute

for

individual

municipal

engineering

practitioners
.


•
Promotes

the

engineering

process

of

creating,

developing,

integrating,

sharing

and

applying

knowledge

about

infrastructure

engineering

and

asset

management

for

the

benefit

of

communities

and

the

profession


IMESA

•
Established

1921

as

chapter

of

British

Municipal

Engineers

and

since

1961

as

IMESA

=

50

years

in

2011

•
Knowledge

sharing

through

Conferences,

Seminars,

Journal

and

other

forums

like

this
.


•
International

Infrastructure

Management

Manual

–

South

African

version


Asset Management

The

three

areas

involved

in

Asset

Management

are

the

following

:

1.
Asset

:

the

physical

item

that

is

required

to

achieve

the

service,

which

includes

the

purpose

of

the

asset,

lifecycle

cost,

operation

&

maintenance,

asset

register

and

replacement
.

2.
People

:

Operators

with

the

skills

to

effectively

operate

and

technician

with

the

necessary

skills

to

maintain

the

asset
.

3.
Finance

:

the

Funds

that

is

needed

to

keep

the

asset

operational

and

to

keep

the

required

skills
.


Finance

People


Asset Management


As s e t


Asset Management : Legislation

The

following

legislation

needs

to

be

considered

:


1.
Constitution

of

the

Republic

of

South

Africa

2.
Local

Government

:

Municipal

Systems

Act,

2003

(Act

No
.

32

of

2000
)
.

3.
Local

Government

:

Municipal

Finance

Management

Act,

2003

(Act

No
.

56

of

2003
)
.

4.
Occupational

Health

and

Safety

Act,

1993

(Act

No
.

85

of

1993
)



Asset Management : Legislation

1
.

Constitution

of

the

Republic

of

South

Africa


Right

of

people

:


Clause

24

:

environment

not

harmful

and

being

protected


Clause

27

:

access

to

sufficient

water




Municipal Engineer

Asset


Asset Management : Legislation

2
.

LG

:

Municipal

Systems

Act,

2003


Chapter

8

deals

with

municipal

services

:


Clause

73

:

access

to

basic

services



services

regularly

reviewed

for

upgrading,

extension

and

improvements


Clause

57

:

performance

agreements

with

objectives

and

targets,

to

include

asset

management
.




Municipal Engineer


Asset Management : Legislation

3
.

LG

:

Municipal

Finance

Management

Act


Clause

63

deals

with

assets


Par

1

:

safeguarding

and

maintenance


Par

2

:

asset

management

systems

and

values


Par

3

:

control

and

registers
.





Asset Management : Legislation

4
.

Occupational

Health

and

Safety

Act,

1993



This

deal

with

the

health

and

safety

of

officials

with

the

use

of

plant

and

equipment,

which

forms

part

of

the

assets
.


Proper

asset

management

is

required

to

comply

with

safety

measures
.




Asset Management : Guidelines

The

following

exist

:


1.
Local

Government

Capital

Asset

Management

(National

Treasury)

2.
GAMAP
.

3.
National

Water

Services

Infrastructure

Asset

Management

Strategy

(D
.
W
.
A
.
)

4.
The

National

Infrastructure

Maintenance

Strategy

(D
.
P
.
W
.
,

CSIR

&

CIDB)



Effective Asset Management


maximise

the

service

potential

of

existing

assets

by

ensuring

that

they

are

appropriately

used
;

maintained,

safeguarded

and

that

risks

are

mitigated
;


optimise

the

life

cycle

costs

of

owning

and

using

these

assets

by

seeking

cost
-
effective

options

throughout

an

asset’s

life

cycle
;


reduce

the

demand

for

new

assets

through

optimal

use

of

existing

assets

and

management

of

demand

through

the

use

of

non
-
asset

service

delivery

options
;

and


establish

clear

lines

of

accountability

and

responsibility

for

performance
.



Effective Asset Management


Asset Lifecycle


Asset life
-
cycle costs


Asset Management Process

Develop

Asset

Register

Determine

Failure Modes:

•
Capacity

•
Physical Mortality

•
Level of Service

•
Financial Efficiency

Future

Expenditure /

Funding

Strategies

Determine

Condition
-


Physical &

Est. Economic

& Residual Lives

Determine

Current

Replacement

Cost

& WD Values

Set Current &

Predict Future

Levels

of Service

Develop

Appropriate

Maintenance &

Operations Plans

Develop

Appropriate

Capital

Investment

Program

Establish

Risk Ratings

(Relative

Criticality)


Complete

Stakeholder

Consultation and

Build Final AMP


Asset Register








































ACQUISITION


IDENTIFICATION &
LOCATION


ACCOUNT
-
ABILITY


PERFORMANCE


DISPOSAL


ACCOUNTING


MANAGEMENT &
RISK



Transaction
Date



Amount



Supplier /
Contractor



Reference



Asset class



Parent or
standalone



Asset number



Identifi
er



Description



Location



Department



Custodian



Restrictions



Ownership



Licence or
permits



Transfers



Date



Amount



Capacity



Condition



Remainin
g
useful life



Residual
value



Reason



Capacity



Performance
measures



Condition
Assessment



Warranties



Useful life



Residual value



Criticality
rating



Maintenance
history



Operation
al
history



Risk
assessment




Historical cost



Funding source



Useful life



Remaining
useful life



Residual value



Depreciation
method



Revaluation



Impairment



Depreciation



Accumulated
depreciation



Carrying amount



Disposal


Condition assessment

Grade

Description

Detailed Description

Estimated
Remaining Life

1

Very Good

New, sound structure or appearance, well
maintained. Continue with planned
maintenance

As estimated

2

Good

Performance

acceptable with minor
deterioration (<5%). Normal planned
maintenance continues

As estimated

3

Fair

Clearly evident deterioration (10
-

20%).
Significant maintenance required, consider
impairment

Less than
estimated


4

Poor

Significant deterioration in s
tructure or
appearance. Significant impairment of
performance. Significant maintenance
required

Significantly less
than estimated

5

Very Poor

Unsound, does not perform. Reconstruction
or replacement required (>50% needs
replacement).

None or nominal




Condition assessment

Condition

Performance

100 %

100 %

Ideal


Maintenance

Condition

Performance

100 %

100 %

Ideal

Lack of proper
maintenance


Maintenance

Maintenance Policy
Planned Maintenance
Unplanned Maintenance
Condition
Monitoring
Preventative
Maintenance
Servicing
Repair
corrective
Maintenance
Maintenance Policy
Planned Maintenance
Unplanned Maintenance
Condition
Monitoring
Preventative
Maintenance
Servicing
Repair
corrective
Maintenance

Current Situation

•
Everyone

is

doing

their

own

thing
.


•
We

have

over

30

different

approaches

to

asset

management

being

used
.


•
Training

programs

are

being

created

at

a

great

rate,

promoting

even

more

approaches
.


•
We

are

re

inventing

the

wheel
.

There

are

best

appropriate

practices

available

around

the

world

and,


•
A

large

movement

exist

for

a

global

approach

to

SIAM

with

BAP

industry

models

for

the

maturity

needed

by

the

organisation

and

their

assets
.


•
We

should

pool

all

materials,

develop

a

national

approach

and

concentrate

all

our

efforts

on

implementing

it

cost

effectively,

not

re

inventing

it
.



Current Asset Management Process

Copyright © RBA. 2009

Develop

Asset

Register

Determine

Failure Modes:

•
Capacity

•
Physical Mortality

•
Level of Service

•
Financial Efficiency

Future

Expenditure /

Funding

Strategies

Determine

Condition
-


Physical &

Est. Economic

& Residual Lives

Determine

Current

Replacement

Cost

& WD Values

Set Current &

Predict Future

Levels

of Service

Develop

Appropriate

Maintenance &

Operations Plans

Develop

Appropriate

Capital

Investment

Program

Establish

Risk Ratings

(Relative

Criticality)


Complete

Stakeholder

Consultation and

Build Final AMP


Current Drivers

•
High

Growth

Stresses


•
Ageing

Assets

–

Reliability

Failures

/

Risks

•
High

Debt

–

going

broke


•
Inadequate

budgets

to

perform

responsibilities

•
Large

backlog

of

unserved

demand

•
Inadequate

maintenance


•
Regulation

review

/

price

and

or

performance

•
Inadequate

staff

resources





Key Stakeholders

Municipal
Councils

National Government

Auditor General


NT,
DWA
,
DPW

Others EPA , OH&S,etc.

Funding Agencies

Regulators

Industry Associations

Policy / Strategy

Customers / Users

Contractors / Suppliers

Staff / Unions


State / National Government

Owner

Community


Elected

Members

Professional Assoc.


LGA’s

ProvincialGovernment

Customers / Users

IMESA / IMFO / LGMA

Various

Various

Accountant General


Political Bodies


Key National Program Model Elements

National

Quality

Framework

Supporting

Tools

Linked

Drivers

•

Uniformity

•

Transparent

•

Auditable

•

Maturity Model

•

Cont. Imp.

•

Guides

•

Templates

•

BAP process

•

Industry BAP


Models

•

Competencies


& Training

•

Professionalism

•

Regulation

•

Industry

•

Benchmarking

•

Competencies


National Co ordination


National Co ordination


N.A.M.S.

National Asset Management Strategy.


A nationally consistent approach to
Asset Management




Benefits of National Programs

•
More

effective

‘whole

of

city’

approach


•
Ability

to

judge

merits

of

diverse

programs

and

roll

up

with

confidence

(uniform

approaches)

to
:


o
Whole

of

business

o
Whole

of

City


o
Whole

of

Nation


•
Ensure

more

successful

implementations


•
Ensure

that

programs

are

sustainable


•
Enables

leading

organisations

to

help

drive

AM

in

smaller

organisations





Benefits of National Programs (2)

•
National

mentoring

and

advice

easier

•
Eliminates wasteful activities e.g. Valuations

•
Saves re inventing the wheel

•
Enables BAP to be diseminated more easily
and quickly





Conclusion

•
A

National

Sustainable

Infrastructure

Asset

Management

(SIAM)

Program

offers

considerable

benefits

to

South

Africa

(

30
%

reduction

of

future

life

cycle

costs

and

better

asset

performance
.


•
South

Africa

is

at

a

critical

stage

in

rolling

out

its

SIAM

program

and

can

adopt

a

National

Program

without

too

many

issues
.


•
If

SA

doesn’t

act

at

this

time

it

will

loose

the

opportunity

to

adopt

the

structures

and

approaches

now

realised

as

necessary

by

leading

Nations

such

as

Australia

and

NZ


•
Training

programs

that

develop

appropriate

skills

and

competencies

are

the

most

critical

issues
.



Local Government Sector & Education Authority
(LG SETA)

•
Sector

skills

plan
.


•
Learnerships

Programmes
.


•
Education

and

Training

Quality

Assurance

bodies



•
Training

programs

that

develop

appropriate

skills

and

competencies

are

the

most

critical

issues
.

•
Ensure

Asset

Management

is

properly

covered


•
IMESA

to

assist

by

offering

technical

expertise

in

the

ETQA

process

and

being

a

Quality

Partner



ISO Specification : 251 Asset Management

•
The

Institute

of

Asset

Management

(IAM)

began

this

journey

in

2002

when

it

embarked

upon

the

development

of

a

Publicly

Available

Specification

(PAS)

for

Asset

Management

with

the

British

Standards

Institution

(BSI)
.


•
September

2008

saw

the

publication

of

BSI

PAS

55
:
2008

which

had

been

developed

with

the

assistance

of

over

49

organisations

from

15

industries

in

10

different

countries
.


•
SABS

Technical

Committee

:

TC

251

Asset

Management

established

with

first

meeting

in

May

2010





Closing Remarks

•
Too

much

talk

•
For

improved

service

delivery

asset

management

must

be

coordinated

nationally

from

top

to

bottom

•
National

Asset

Management

Strategy

(NAMS)

is

therefore

urgently

needed

•
IMESA

is

thankful

to

be

part

of

this

process

and

grateful

to

National

Treasury

Department

with

starting

this

process

through

these

seminars

which

includes

all

Affected

&

Interested

Parties
.



No Management


Asset Management


Thank You