ASSET MANAGEMENT POLICY

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Nov 18, 2013 (3 years and 10 months ago)

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POLICY NO:

DCI

8

-

CL












ASSET

MANAGEMENT


POLICY






Date Resolved By Council:

23 May 2005


Commencement Date:

23 May 2005


Review Date:

June 2008


Revocation Date:

N/A


Responsible
Department
:

City Infrastructure






This policy has been auth
orised and is included on Council’s Website.







Peter Brown


Chief Executive Officer



23
May 2005




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ASSET MANAGEMENT POLICY


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1



CONTENTS



1.

Purpose

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2

2.

Obj
ective

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2

3.

Why Is Asset Management Important?

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.

3

4.

What Is Asset Management?

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4

5.

Moreland’s Asset Management Vision & Goal

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6

5.1

Vision:

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6

5.2

Goal:

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6

6.

Asset Management Framework

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6

7.

Policy Responsibilities & Relationships

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8

7.1

Council’s Role:

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8

7.2

Chief Executive Officer:

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8

7.3

Directors & Senior Management:

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8

8.

Policy Statements

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9

8.1

Asset Planning & Budgeting

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9

8.2

Asset Operations & Maintenance

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10

8.3

Risk Assessment & Management
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10

8.4

Asset Accounting & Costing

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10

8.5

Asset Management Strateg
ies & Plans

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11

8.6

Information Systems

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11

8.7

Data Management

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11

9.

Actions, Deadlines & Review

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11

10.

Glossary

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1.

PURPOSE


Moreland City Council provides a range of services to the community utilising assets.
The elect
ed members of Moreland City Council have stewardship to care for and
protect these assets for present and future generations.


The purpose of this policy is to outline a framework for the management of assets to
deliver the City Vision. It is the intention

of Council that the management of these
assets will encompass sustainability of the built and natural environment whilst
ensuring most appropriate delivery of Council services for the benefit of the community.


This Policy is designed to take into conside
ration all assets owned or controlled by
Council. These assets are categorised as follows:




Land



Buildings



Plant and Equipment (including motor vehicles, trucks, cranes, chainsaws, etc.)



Furniture and Fittings



Computer Equipment (including PABX systems, t
elephones)



Library Books (including video tapes, CD’s, DVD’s)



Artworks (including public art, monuments)



Park Assets (including sports grounds, BBQ’s, playground equipment, street
trees)



Road Assets (including road pavement & surface, footpaths, bridges, k
erb &
channel, retaining walls, traffic signals, parking meters, street lights, street
furniture and signs)



Drainage Assets (including underground pipes, pits, culverts and litter traps)



2.

OBJECTIVE


The objectives of the policy are to:




Outline why asset
management is relevant to Moreland City Council.



Adopt best appropriate Asset Management practices.



Provide a framework for implementing Asset Management to enable a consistent
and strategic approach at all levels of Council.



Provide guidance to staff resp
onsible for asset management.




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3.

WHY IS ASSET MANAGEM
ENT IMPORTANT?


The Council Plan (refer to the Council Plan 2004
-
2008, ‘Caring Community in a
Sustainable City’) demonstrates Council’s commitment to infrastructure by stating in its
vision (page 2).


“Moreland seeks to create an environmentally sustainable and liveable city, where
people can shop, work and socialise locally. A city where a car and high income are not
necessary for a rich and rewarding quality of life. A city, which will continue to pro
vide a
range of opportunities and choices for a diverse, prosperous community.”


Council recognises that there is a need to establish an appropriate balance between
maintaining and rehabilitating its infrastructure. Moreland is committed to achieving a
b
alanced response to this dilemma in consultation with its community and it is evident
in the Council Plan (page 20).


“Council will responsibly manage the City’s infrastructure and Plan for its renewal
acknowledging the important impact this has on the com
munity’s quality of life”.


The following diagram provides an overview of Moreland’s planning process and
documents this policy’s direct relationship / linkage to the Council Plan. Refer to
Council Plan 2004
-
2008 (pages 8 and 9).


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ASSET MANAGEMENT POLICY


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4.

WHAT IS ASSET MANAGE
MEN
T?


Asset management is a systematic process 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 l
ives.


In simplest terms, asset management is about the way in which one looks after its
assets, both on a day
-
to
-
day basis (ie. maintenance and operations) and in the medium
to long term (ie. strategic and forward planning).


City Vision

Mayor’s Speech

Council Plan & Annual Budget
Moreland City Council

CEO’s Key Performa
nce Indicators

Long Term Financial Plan

Asset Management Strategy

Services Provision Strategy

Policy & Statutory Commitment
Strategy

Directors Accountability
Framework

Branch Plans

Unit Service Plans

Team Operation Plans

City Plan

City wide Policies, State
Policies, Asset Policies,
Municipal Strategic Statement,
Local Government Act,
Municipal Health Plan,
Moreland Open
Space
Strategy

Community
Input


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Asset Management ensures t
hat Council’s assets are capable of providing services, of
an agreed quality, in a sustainable manner, for present and future communities.



The figure below illustrates the typical lifecycle of an asset and associated asset
management functions from Plan
ning for the need to create an asset through to its
ultimate Disposal including Audit and Review of performance.

The management of
Council’s
assets
will be carried out within the framework outlined below.

REVIEW
AUDIT
DISPOSAL
RATIONALISATION
REPLACEMENT
REHABILITATION
CONDITION &
PERFORMANCE
PLANNING
STRATEGIES
CREATION &
ACQUISITION
ACCOUNTING &
ECONOMICS
OPERATIONS
MAINTENANCE
UTILISATION PHASE
OPTIMISED OPERATIONS MAINTENANCE
RENEWAL & RISK MANAGEMENT
START


To responsibly man
age its assets, Moreland City Council will require knowledge of the
following:




The number and location of assets it owns or controls



The current condition and residual lives of the assets



The current replacement value of assets



Dates that assets are const
ructed or acquired



The cost of maintenance, replacement and rehabilitation programs



How programs will be financed and funds allocated



How funding will affect the organisation’s expenditures and incomes



Levels of service acceptable or expected by the commun
ity



Whether assets will be replaced at the end of their life


More
advanced asset management

requires knowledge of:




What the assets and components consist of down to the level at which
maintenance can be managed



The rate of decay of assets


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The impact t
hat possible future failures and technological change will have, both
from a business point of view and in terms of how the assets are managed



The strategies to counter failures and changes



The optimal maintenance and renewal expenditure required for relia
bility or long
life at least cost



Whether assets are being operated efficiently and effectively



How different levels of funding will affect the level of service



What risks the many different management options constitute for the organisation



What investmen
t options there are for maintenance, rehabilitation and renewal
over the life cycle of the asset



The service capacity of components, and the potential for the service capacity to
be exceeded prior to the end of the physical life of the asset.



5.

MORELAND’S
ASSET MANAGEMENT VIS
ION & GOAL


5.1

Vision:


To be at the forefront of Asset management nationwide, providing sustainable
services so that Moreland is a great place to live, work, visit and invest.


5.2

Goal:


To operate and care for Council’s assets for present a
nd future communities by
supporting sustainable innovative services, making socially responsible decisions
and demonstrating good governance.


6.

ASSET MANAGEMENT FRA
MEWORK


The framework for implementing Asset Management to deliver the Asset Management Visi
on
and Goal is illustrated in the following diagrams.







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Policy
Strategy
Plans
Operations
AM Policy

Context and
importance

AM vision and goals

Responsibilities &
relationships

Broad timeframes and
deadlines

Integration of AM into
organisation

Audit and review
AM Strategy

Current status

Processes

Systems

Data

Planning

Implementation

Future vision

Gap analysis

Strategies and actions to
address gaps

Resources and
timeframes
AM Plans

Levels of service

Demand forecasts

Asset portfolio

AM activities

Operations

Maintenance

Renewals

Capital works

Disposals

Financial forecasts (20
years)
Operations
Plans

Reflects AM Plan
Priorities/Forecasts

Allocates necessary
resources

Contain measurable
performance indicators

Promotes Efficient
Service delivery
To set a broad
framework for
undertaking asset
management in a
structured and
coordinated way
To develop a
structured set of
actions aimed at
enabling improved
asset management by
the
organisation
To outline particular
actions and resources
required to provide
defined levels of service
To detail ‘day to day’
actions required to deliver
the defined level of
service


Note, each asset category will have its own Asset Management Strategy and Plan, which will sit under
this policy. Each asset category shall have a representative on the Asset Management Team.




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7.

POLICY RESPONSIBILIT
IES & RELATIONSHIPS


This policy will apply to staff and external service providers with asset management
responsibilities at various levels within the organisation as described in the
Responsibility Matrix.


Moreland City Council

is the provider of a large range of services using its vast portfolio
of assets and Council, having stewardship responsibility, is the final decision maker on
all matters related to asset management and care.


7.1

Council’s Role:


In support of this Policy, C
ouncil will





Act as stewards for all Council assets.



Approve the Asset Management Policy and monitor its outcomes.



Set levels of service, risk and cost standards.



Approve the Council Plan, the Annual Budget (including a five year Capital
Works Program)
and Asset Strategies and Plans in accordance with this
policy and the long
-
term financial plan.



Ensure appropriate resources for Asset Management activities are made
available.


7.2

Chief Executive Officer:


In support of this Policy, the Chief Executive Offic
er will
-




Implement the Asset Management Strategy with agreed resources.



Monitor and review performance of Council staff in implementing the Asset
Management Strategy, through the Manager Asset Management.



Ensure that accurate and reliable information is p
resented to Council for
decision
-
making.



Identify staff and external service providers with asset management
responsibilities at various levels within the organisation through a
Responsibility Matrix.


7.3

Directors & Senior Management:


In support of this Po
licy, the Managers responsible for Asset Management will
-




Develop Asset Management Strategies and Plans for the various
categories of assets.



Monitor the Asset Management Plans and implement improvements on a
12 monthly cycle.



Implement tactical plans (su
ch as maintenance programs, capital works
programs) in accordance with the Asset Management Plan and Council
Plan.


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Deliver levels of service to agreed risk and cost standards.



Present information to the Chief Executive Officer in terms of lifecycle, ris
ks
and costs.



8.

POLICY STATEMENTS


As part of the Asset Management Framework, the following statements reflect
Council’s commitment to Best Appropriate Practice Asset Management.


8.1

Asset Planning & Budgeting


1.

All assets will be managed from a life cycle pe
rspective in accordance with
the International Infrastructure Management Manual published by the
Institute of Public Works Engineering Australia Limited, within available
resources.

2.

Asset renewal and maintenance program requirements will be met prior to
an
y new or additional assets being considered except through the
processes outlined in the following statements.

3.

Will work towards at least 80% of expenditure on capital works to be
allocated to the renewal of existing assets. This allocation may include
pr
ojects to consolidate assets.

4.

Distribution of the renewal allocation for capital works is to reflect the level
of service that each asset category provides to the community. Initially this
distribution is to be based on the % of accumulated depreciation a
cross
each asset category.

5.

Capital allocations for new assets will only be made following Council’s
capital expenditure review process.

6.

All capital investment will be judged on a life cycle cost approach with
capital expenditure only being approved in conj
unction with appropriate
recurrent expenditure budgets (maintenance and operations). This
approach will look at alternative options to deliver the desired level of
service as specified in the Asset Management Strategies and Plans via
asset creation / acqu
isitions, upgrades, renewals or disposals.

7.

Business cases will be developed to support the allocation of budgets and
assist in determining priorities.

8.

Capital investment proposals will be evaluated, prioritised and selected in
accordance with criteria, whi
ch includes risk, community benefit and a cost
-
benefit analysis for both renewed and new assets.

9.

Risk analysis at project initiation stages will be undertaken to mitigate future
Council liability.

10.

Planned asset acquisitions, upgrades, renewal or disposals
will only
proceed if the proposed expenditure has been included as part of Council’s
Asset Management Plans.

11.

A 5
-
year capital works program will be developed and subjected to an
annual review.



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12.

Specific reference be given to evaluation and prioritizatio
n of projects in
terms of energy, water, materials and internal amenity in addition to
community benefit.

13.

That the distribution of renewal allocation takes environmental impacts into
consideration as opposed to merely percentage accumulated depreciation.


8.2

Asset Operations & Maintenance



1.

The Chief Executive Officer will delegate the responsibilities for service
provision and asset management activities to Council officers.

2.

Appropriate planned maintenance regimes to assist Council’s assets to
meet their desi
gn lives will be initiated in the most cost effective manner.

3.

Maintenance plans will be prepared incorporating best available analysis
techniques, cost benefit analysis and plans to improve upon energy and
water efficiency.

4.

Benchmarking of all asset mainte
nance and life cycle management
techniques will be undertaken to ensure that Council is adopting best
practices.

5.

All activities under planned or reactive maintenance regimes will be
captured within Council’s Asset Management Systems. This information
will

assist in the analysis of current and future maintenance and capital
expenditure. It will also assist in the management of risk.


8.3

Risk Assessment & Management


1.

All activities in the assessment and management of risk will be undertaken
within the framewo
rk outlined in the Risk Management Policy.

2.

All staff responsible for and involved in activities associated with the
management of Council’s assets will be trained to ensure that appropriate
asset and risk management practices are applied.


8.4

Asset Accounting

& Costing


1.

Council will keep detailed asset registers on all assets under its care and
control.

2.

Assets will be revalued at intervals of no greater than 4

years using the
deprival valuation as the basis in accordance with the Australian
Accounting Standar
ds.

3.

Effective economic lives will be given to each asset group with the written
down and depreciation values determined in accordance with the Australian
Accounting Standards.

4.

Council will determine the cost of asset service delivery on a full cost
recover
y basis, which as a minimum includes the appropriate distribution of
costs and overheads (including administration & finance charges,
operation, maintenance and depreciation).



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8.5

Asset Management Strategies & Plans


1.

Council will develop Asset Management S
trategies and Plans that will apply
to all asset categories under its care and control. These Asset Management
Strategies and Plans will:



Give consideration to the management of the asset over its whole life
cycle.



Provide information on future maintenance
, operational, upgrade,
renewal and/or disposal requirements.



Identify the level of service that will be delivered by the asset and how
the service will be monitored.



Provide the basis for financial planning for assets.



Comply with the intent of all Asset

Management Policy statements.


8.6

Information Systems



1.

Council will implement a Corporate Total Asset Management System.

2.

The Asset Management Steering Committee will identify corporate Asset
Management System enhancements.



8.7

Data Management



1.

Information
regarding the condition, creation / acquisition, maintenance,
renewal, refurbishment and disposal of assets rests with the relevant Asset
Managers, to ensure continued accuracy of Council’s asset registers.



9.

ACTIONS, DEADLINES &

REVIEW


This policy shall
be linked and read in conjunction with the Total Asset Management
Strategy, which is being developed to meet the needs and expectations of Council.


Key Action

To Be Completed By

Establish an Asset Management
Steering Committee

May 2005

Complete the Tota
l Asset
Management Strategy

July 2005

Implement a Corporate Asset
Management System

June 2006

Complete Asset Management
Strategies and Plans for each asset
category

June 2006

Asset Management Policy to be
reviewed by Council’s Internal
Auditor

June 2008



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References:

International Infrastructure Management Manual


Version 2.0, 2002

MAV Asset Management Improvement “Step” Program


Program Outline and Asset
Management Framework



10.

GLOSSARY


The following terms have been used in this Policy. A definiti
on is given for each one to
assist with better understanding of the Policy.


Advanced Asset Management

Asset Management that employs predictive modelling, risk management and optimised
decision
-
making techniques to establish asset lifecycle treatment opti
ons and related
long term cashflow predictions.


Asset

A physical component of a facility, which has value, enables services to be provided
and has an economic life of greater than 12 months.


Asset Management

The combination of management, financial, eco
nomic, engineering and other practices
applied to physical assets with the objective of providing a required level of service in
the most cost
-
effective manner.


Asset Management Plan

A plan developed for the management of asset categories that combines mu
lti
-
disciplinary management techniques (including technical and financial) over the
lifecycle of the asset in the most cost
-
effective manner to provide a specific level of
service. A significant component of the plan is a long
-
term cash flow projection fo
r the
activities.


Asset Management Strategy

A strategy for asset management covering the development and implementation of
plans and programs for asset creation, operation, maintenance, rehabilitation /
replacement, disposal and performance monitoring to
ensure that the desired levels of
service and other operational objectives are achieved at optimum cost.


Asset Management Steering Committee

A group appointed by the Chief Executive Officer to review and monitor the corporate
asset management improvement
program and ensure the development of integrated
asset management systems and plans consistent with organisational goals and
objectives.


Asset Register

A record of asset information considered worthy of separate identification including
inventory, histori
cal, financial, condition, construction, technical and financial
information about each asset.


Basic Asset Management

Asset management that relies primarily on the use of an asset register, maintenance
management systems, condition assessment and defined
levels of service to establish
alternative treatment options and long term cash flow predictions.

Priorities are usually established on the basis of financial return gained by carrying out
the work (rather than risk analysis and optimised decision making).


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Capital Expenditure

Expenditure used to create new assets or to increase the capacity of existing assets
beyond their original design capacity or service potential. Capital expenditure
increases the value of asset stock.


Components

Specific parts of

an asset having independent physical or functional identity and having
specific attributes such as different life expectancy, maintenance regimes risk or
criticality.


Council Plan

A document produced by Council to inform stakeholders of its objectives, i
ntended
activities, performance, income and expenditure required for a period of one financial
year. It may also indicate anticipated future short
-
term income and expenditure.


Depreciation

The wearing out, consumption or other loss of value of an asset w
hether arising from
use, passing of time or obsolescence through technological and market changes. It is
accounted for by the allocation of the cost (or revalued amount) of the asset less its
residual value over its useful life.


Disposal

Activities necess
ary to dispose of decommissioned assets.


Infrastructure

Stationary systems of assets forming a network and serving whole communities, where
the system as a whole is intended to be maintained indefinitely at a particular level of
service potential by the
continuing replacement and refurbishment of its components.


Level of Service

The defined service quality for a particular activity or service area against which service
performance may be measured. (eg. Street lighting in a roadway). Service levels
usual
ly relate to quality, quantity, reliability, responsiveness, environmental
acceptability and cost.


Lifecycle

The cycle of activities that an asset goes through while it retains an identity as a
particular asset i.e. from planning and design to decommissi
oning or disposal.


Maintenance

All actions necessary for retaining an asset as near as practicable to its original
condition, but excluding rehabilitation or renewal. Fixed interval maintenance is used
to express the maximum interval between tasks.


Oper
ation

The active process of utilizing an asset which will consume resources such as
manpower, energy, chemicals and materials. Operation casts are part of lifecycle costs
of an asset.



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Planned Maintenance

Planned maintenance activities fall into 3 categ
ories:




Periodic


necessary to ensure the reliability or to sustain the design life of an
asset.



Predictive


condition monitoring activities used to predict failure.



Preventative


maintenance that can be initiated without routine or continuous
checking.


Rehabilitation

Works to rebuild or replace parts or components of an asset, to restore it to a required
functional condition and extend its life, which may incorporate some modification.
Generally involves repairing the asset to deliver its original lev
el of service without
restoring to significant upgrading or renewal, using available techniques and standards.


Renewal

Works to upgrade, refurbish or replace existing facilities of equivalent capacity or
performance capability.


Replacement

The complete r
eplacement of an asset that has reached the end of its life, so as to
provide a similar, or agreed alternative, level of service.


Replacement Cost

The cost of replacing an existing asset with a substantially identical new asset.


Risk Management

The appli
cation of a formal process to the range of possible values relating to key
factors associated with a risk in order to determine the resultant changes of outcomes
and their probability of occurrence.


Useful Life

The period over which a depreciable asset is

expected to be used.


Valuation

Assessed asset value which may depend on the purpose for which the valuation is
required,

ie, replacement value for determining maintenance levels, market value for lifecycle
costing and optimised deprival value for tariff
setting.