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BRIEFING PAPERS

FOR ELECTED MEMBERS’

BRIEFING SESSION

 

Draft Only

 

 

 

 

 

to be held at

the Civic Centre,

Dundebar Road, Wanneroo

on 18 June, 2013 commencing at 6.00pm


 

 

 

Briefing Papers for Tuesday 18 June, 2013

 

 

 

 

CONTENTS

 

L.1     Annual Budget 2013/2014  1

L.2     Integrated Planning & Reporting Framework  153

L.3     Amendment No. 122 to District Planning Scheme No. 2 - Northern Coastal Growth Corridor Development Contributions                                                                                            462

 


Late Items Agenda

L.1    Annual Budget 2013/2014

File Ref:                                              5509 – 13/59592

Responsible Officer:                           Director, Corporate Strategy and Performance

Disclosure of Interest:                         Nil

Attachments:                                       4         

 

Issue

To consider adoption of the City’s Draft 2013/2014 Budget.

 

Background

In recent years, the Council had adopted a series of Budget Principles to apply prudent financial management practices in guiding the development of the Annual Budget and Long Term Financial Plan (previously referred to as Strategic Financial Management Plan).  As the City has been currently undertaking extensive work with regard to the newly introduced Integrated Planning & Reporting Framework (IPRF) requirements, these Principles were maintained during the Budget development process.  In addition, the following key economical parameters were recognised as part of the budget development:

 

-  Forecast 2013/2014 CPI 2.5%

-  Estimated growth in service requirement 4.0%

-  Interest Rate on Investments 3.5%

 

In terms of working towards the adoption of the budget, a consistent approach to that of the previous year was taken, however as a separate report would also be presented to Council relating specifically to the IPRF, with the Long Term Financial Plan (LTFP) being a major component, this aspect will no longer be included as part of the Annual Budget report.

A series of Budget Workshops were arranged to involve and engage Elected Members as key stakeholders in the budget development process.  The Workshops focused on discreet elements of the budget as outlined below:

·        Budget Workshop 1 – Capital Works Program - Tuesday 12 March 2013

·        Budget Workshop 2 – Operating Budget - Tuesday 9 April 2013

·        Budget Workshop 3 – Preliminary Budget - Tuesday 14 May 2013

In considering the Budget, it is also timely to consider Regulation 34(5) of the Local Government (Financial Management) Regulations 1996, which requires a local government to adopt a percentage or value, calculated in accordance with Australian Accounting Standards, to be used in statements of financial activity for reporting material variances.  For 2012/2013 the Council adopted 10% for the reporting of variances and the same percentage is proposed for 2013/2014.

Detail

In developing the 2013/2014 Budget, consideration has been given to the wider international economic context which remains quite uncertain and relatively weak in most leading countries like USA, China, India and most part of Europe. Australia’s domestic growth is expected to be quite modest and stable whilst inflation is anticipated to be in the range of 2-3% in the 2013/2014 financial year supported by the record low interest rate environment (cash rate is currently 2.75%).


 

At a local level for the City, this is being reflected as lower investment income potential, slightly slower than anticipated growth, delivering lower revenue growth and an unpredictable climate moving forward.  Accordingly, a cautious approach has been taken in forecasting Revenues and activity levels for Wanneroo.

 

In conjunction with the Annual Budget development, Administration has continuously monitored the City’s financial performance for 2012/2013 to determine end of year forecasts and funding capacity for 2013/2014.  This process has identified that the current 2012/2013 end of year Actual (Estimate) position will be an operational improvement of $6.172 million over that proposed in the original Adopted Budget, with the major contributor to this better than expected result being a 50% advance payment of 2013/2014 Financial Assistance Grants at approximately $3.006 million. This forecast result leaves the City in a stronger financial opening position for 2013/2014; however, a corresponding reduction of the early grant payment is reflected in the Operating Grants budget for 2013/2014 (neutral impact over two years).

 

The following documents provide a comprehensive outline of the proposed 2013/2014 Budget:

·        2013/2014 Annual Budget Overview (Attachment 1)

·        2013/2014 Statutory Budget (Attachment 2)

·        2013/2014 Capital Works Program (including carry forwards) (Attachment 3)

·        2013/2014 Schedule of Fees and Charges (Attachment 4)

 

The City of Wanneroo Budget has experienced continuous growth and this is primarily due to the following two factors:

 

1.       Growth in the population and service area (expansion of service);

2.       Community expectation and needs; and

3.       Cost factor movements, such as Consumer Price Index (CPI), inflation or labour cost movements (increase to cost of service).

 

The City's population forecast estimates a population at 30 June 2013 of 175,081, up from 167,647 the previous year (7,434 or 4.43%).

The population growth in 2012/13 has been slightly lower than the above projection, with the following table reflecting growth statistics to end May and a projection to end June:

 

 

Actual

1/07/12

Actual

31/05/13

Forecast

30/0613

%

Incr.

New Lots Created

68,250

2,742

2,991

4.4%

Residential Development completed

58,622

1,974

2,153

3.7%

Population Increase

167,647

5,646

6,200

3.7%

 

The 2012/13 Budget was developed on the basis of a 4% growth factor, with an improvement to 5% being factored into 2013/14 in the Long Term Financial Plan.  In terms of rate revenue, the 4% growth has been achieved in 2012/13, however on current trend, 4% has been maintained for 2013/14.

 

The development of the 2013/2014 Operating Budget recognises a steady improvement in the City's financial position and an opportunity to continue building on the essential services our residents rely on, with the health and wellbeing of the Wanneroo community continuing to be supported through the Community Development Budget, whilst priorities have been placed on the community safety initiatives, maintenance and upgrade of existing assets as well as provision for the development of new community buildings and sporting facilities in various locations.

 

Operating Budget Overview

Attachment 2 provides the detailed Annual Budget, with the Statement of Comprehensive Income (Nature and Type) reflecting the following totals in respect to the Operating position.

 

 

2012/2013

Adopted  Budget

$ Million

2013/2014

Budget

$ Million

 

Increase

$ Million

 

Increase

%

Operating Income

138.286

149.805

11.519

8.3

Operating Expenditure

140.595

151.383

10.788

7.7

 

Comments relating to increases in the Operating Expenditure are:

·        Employee Costs                                                                                 $4.449 million (+7.4%)

Reflects increase in the establishment through the endorsed Workforce Plan, together with standard annual increments to pay rates endorsed in the various Collective agreements.

·        Materials and Contracts                                                                     $3.192 million (+7.8%)

Reflect CPI adjustments and ongoing expansion in asset maintenance costs and responsibilities.

·        Utility Charges                                                                                    $0.512 million (+6.9%)

Forecasted increase in Electricity, Gas and Water charges, together with growth factor for new assets and expansion of street lightning network.

·        Depreciation on Non-Current Assets                                                 $2.629 million (+9.7%)

Increase in Depreciation associated with the City’s continuously expanding asset base.  This increase when compared to 2012/2013 Revised Budget reduces to 4.8% ($1.287 million) in recognition of adjustments during the current financial year.

Administration Overhead Costs

During Budget Workshop 3, Elected Members requested Administration to provide benchmark details (ratios/graphs) on the administrative overhead costs of the City compared to total cost as part of the budget adoption material.  Administration has researched and compiled the information below based on the 2009/10 to 2011/12 actual financials comparing to Cities of Perth, Joondalup, Swan and Stirling together with the ratio for the City for Budget 2013/14.

 

Selected Councils Annual Ratio Comparison for 2009/2010 to 2011/2012

It should be noted that based on the Local Government Accounting Manual issued by the Department of Local Government, all local governments' administrative overhead costs are described as Governance costs which include administration and operation of facilities and services to members of council and all costs that related to the tasks of assisting Elected Members and ratepayers on matters which do not concern specific council services or programs.  As reflected by the ratios comparison, the City continuously maintains a very low administrative overhead ratio from 2009/10 to Budget 2013/14, at the range of 3.68% to 4.70%.

Fees and Charges

The Schedule of Fees and Charges for 2013/2014 is included as Attachment 4 for adoption by Council and to be effective from early in the new financial year (28 July or as soon as practicable).  Details of all changes from those in 2012/2013 have been highlighted in the schedule.

Rate and Rubbish Charges

In developing the Rating strategy, Administration has endeavoured to retain equity and fairness in the process, by ensuring that the setting of the Minimum Rate and calculation of the Rate-in-the-Dollar only recovers an amount (referred to as the Budget Deficiency), which is considered essential to the running of Council activities as reflected in the long term financial plan.

Based on the level of Budget Deficiency, the Rate increase has been calculated on an average 5.5% increase.  As per previous years the Domestic Refuse Collection service will form part of the normal activities of Council and be included as part of the General Rates, which ensures that the full benefit can be obtained from the State Government’s Pensioner Rate Rebate Scheme. 

It should be noted that properties rated on an Unimproved Value (UV) basis are revalued annually, whereas Gross Rental Values (GRV) are revalued every three years (next review for 2014/2015). Where a revaluation has a significant impact on the category, an adjustment can be made to the Rate-in-the-Dollar to minimise the revaluation impact. This has not been necessary for the 2013/2014 Budget period.

In accordance with the requirements of Section 6.36(1) of the Local Government Act 1995, a notice was published on 21 May 2013 detailing proposed Differential and Minimum Rates for 2013/2014. 

Due to a requirement to ensure no more than 50% of rates in any one category are minimum rated, on further modelling, it has been necessary to reduce the proposed Minimum Rate for GRV Residential Vacant.  The following table demonstrates a comparison between the 2012/2013 Rates and the proposed Rates for 2013/2014.  The City’s detailed Rate Setting Strategy is included in Attachment 2 - Annual Budget Overview.

 


 

Rate in the Dollar (cents)

Minimum Rate

$

GRV Category

2012/2013

2013/2014

2012/2013

2013/2014

Caravan Parks & Park Homes Improved

7.3520

7.7564

344

362

Commercial Improved

7.1227

7.5144

1,076

1,135

Community Groups – Major Improved**

7.8778

8.3111

228

240

Community Groups – General Improved

3.7222

3.9269

228

240

Community Groups – Surf Club Improved

1.9436

2.0505

228

240

Industrial Improved

5.9959

6.3257

1,076

1,135

Industrial Improved – Storage Unit Lesser Minimum

n/a

n/a

538

567

Residential Improved

7.3530

7.7574

1,095

1,155

Rural and Mining Improved

8.0397

8.4819

1,086

1,145

Commercial Vacant

6.0865

6.4213

1,076

1,135

Industrial Vacant

3.9192

4.1348

1,076

1,135

Residential Vacant

10.2772

10.8424

665

668

Rural and Mining Vacant

7.5130

7.9262

730

770

 



 

Rate in the Dollar (cents)

Minimum Rate

$

UV Category

2012/2013

2013/2014

2012/2013

2013/2014

Commercial Improved

0.2465

0.2597

1,076

1,135

Community Groups – Major Improved**

0.2417

0.2550

228

240

Community Groups – General Improved

0.1172

0.1237

228

240

Industrial Improved

0.2304

0.2420

1,076

1,135

Residential Improved

0.3135

0.3304

1,095

1,155

Rural and Mining Improved

0.3130

0.3211

1,086

1,145

Commercial Vacant

0.2613

0.2757

1,076

1,135

Industrial Vacant

0.2577

0.2719

1,076

1,135

Residential Vacant

0.3618

0.4296

665

701

Rural and Mining Vacant

0.3280

0.3410

730

770

** = Sporting Clubs and Major Event Providers.

The City will also be responsible for collecting the Emergency Services Levy (ESL) on behalf of the Fire and Emergency Services Authority (FESA), which is determined each year by the Minister and is classified into five categories to reflect the level of emergency service response that is available in different areas.  The City of Wanneroo levies the ESL for four of the categories in conjunction with the annual Rates charges.

The City also administrates the rebate to pensioners and seniors under the Rates and Charges (Rebates and Deferments) Act 1992 which are funded by the State Government.

For 2012/2013 Council approved the waiver of Council Rates (excluding the Emergency Services Levy) for land occupied by City of Wanneroo community groups.  The same waiver is proposed for 2013/2014 for the groups listed below with the value of Rates revenues to be waived approximately $0.050 million:

 

- AJS Motorcycle Club of WA Inc

- Kingsway Football & Sporting Club Inc

- Kingsway Olympic Sports Club

- Quinns Mindarie Surf Lifesaving Club Inc

- Quinns Rocks Sports Club

- Tiger Kart Club Inc

- Wanneroo Agricultural Society

- Wanneroo Amateur Football Club Inc, Wanneroo Cricket Club, Wanneroo Junior Cricket Club Inc & Wanneroo Junior Football Club (Wanneroo Showgrounds Clubrooms)

- Wanneroo BMX Club

- Wanneroo City Soccer Club Inc

- Wanneroo Districts Cricket Club Inc (indoor facility)

- Wanneroo Districts Cricket Club Inc & Wanneroo Districts Hockey Association Inc

- Wanneroo Districts Netball Association

- Wanneroo Districts Rugby Union Football Club Inc

- Wanneroo Horse & Pony Club

- Wanneroo Junior Motocross Club Inc

- Wanneroo Racing Pigeon Club

- Wanneroo Shooting Complex Inc

- Wanneroo Sports & Social Club

- Wanneroo Tennis

- Wanneroo Trotting & Training Club Inc

- Yanchep Golf Club

- Yanchep Sports Club Inc

- Yanchep Surf Lifesaving Club Inc

The City commenced a review of its Rating Strategy during 2012/13.  This review will continue in 2013/14, taking into account outcomes from the Integrated Planning process, impacting on the LTFP.  It is proposed this will be workshopped with Council during 2013/14 and available for consideration for the 2014/15 Rating period and beyond.

Capital Works

The 10 Year Capital Works Program (incorporated into the LTFP) has been closely reviewed, balancing the demands for new infrastructure with the need to maintain and upgrade existing assets. Asset management plans have been developed for the different asset classes as an integral part of the Integrated Planning Framework to assist with the programming of maintenance, upgrade and replacement for existing assets.

 

The 2013/2014 Budget provides a total of $42.158 million Capital Works Program, excluding $30.152 million carry forward capital projects from 2012/2013 (Attachment 3).  Some major new construction projects addressing the growth in the City include:

 

·        Commencement of a major expansion ($27m) of the Civic Centre building - $1.635 million,

·        Remediation and subdivision works of $1.600 million on Wangara industrial area,

·        In excess on $0.670 million expanding our network of footpaths in the City,

·        $2.300 million on the realignment of Brazier Road in Yanchep,

·        A further $1.500 million on the upgrade of Lenore Road in Wanneroo,

·        $2.900 million towards the construction of new district sporting facilities in the Yanchep/Two Rocks area.

Reserves

In order to meet the funding requirements of the Budget, a range of Reserve transfers are proposed from particular Reserves established for the relevant purpose.  This includes transfers from the following Reserves:

 

·        Asset Replacement

·        Butler Collaborative Infrastructure Agreement

·        City of Wanneroo Townsite

·        Commercial Refuse - Plant Replacement

·        Domestic Refuse

·        Domestic Refuse - Plant Replacement

·        Environmental Initiatives

·        Golf Course

·        Heavy Vehicle Replacement

·        Light Vehicle Replacement

·        Materials Facility Upgrade

·        Neerabup Development

·        Plant Replacement

·        Quinns Caravan Park

·        Strategic Projects/Initiatives

Through prudent budgeting in accordance with the previously adopted Budget Principles and the current Long Term Financial Plan, it has been possible to improve the City’s reserve funding capacity, which should enhance the City’s ability to meet future demands, without requirements on further loan funding.

Furthermore, to provide greater clarity and appropriate recognition of specific funding needs from reserves the establishment of an additional reserve and deletion of other reserves are proposed as follows:

Addition:

·        Asset Renewal Reserve: To be used for the purpose of setting aside necessary funds for the future requirements of asset renewal and replenishments.

Deletion:

·        Commercial Refuse Plant Reserve,

·        Domestic Refuse Plant Replacement Reserve,

·        Heavy Vehicle Replacement Reserve,

·        Light Vehicle Replacement Reserve,

It is proposed that the above 4 reserves are to be abolished to rationalise the number of reserves, particularly that service similar requirements.

Funds equal to the carried forward replacement programs are to be transferred to the Plant Replacement Reserve with the balance being transferred to the Strategic Projects/Initiative Reserve.

·        Asset Preservation Reserve,

·        Fleming Park Lake Reserve.

It is proposed that the above 2 reserves are to be abolished due to the immaterial amount involved and the balance of the funds, if any, transferred to the Municipal Account to support the on-going expenses requirements.

Loan Funding

In 2006, the City secured a $60.778 million loan from Treasury Corp, to be drawn down over five years to assist in funding major and strategic projects with the final drawdown of $14.060 million having taken place in November 2010.  Repayments are interest only, with the principal due for repayment in December 2026.

The application of the loans has been varied in successive Budgets to recognise changes in project costs, availability of alternative funding and changes in priorities and timing of projects. It is worth noting that the Loan Repayment Reserve is projected to have sufficient funds to fully repay the City’s $60.778 million loan back to State Treasury when it falls due (2026) through the previous annual transfers of $2.400 million to 2011/2012 together with forecast sale of land dividend income from Tamala Park Regional Council. 

Key Changes to Budget since Workshop 3

The development of the Annual Budget is informed and updated continuously to reflect the latest factors likely to influence the City’s operations.  As a result of a range of factors or clarification being obtained, the following adjustments have been made to the draft Budget since the previous Budget Workshop with Elected Members.

Operating Revenues -$2.692 million

Reduced to recognise that an early payment from the Grants Commission of 50% of the 2013/2014 Financial Assistance Grant will take place in 2012/2013.

Operating Expenses -$0.042 million

Reduced to recognise updated Depreciation calculations based on latest data to Budget 2013/2014.

Non Operating Revenue & Expenses +$1.977 million

Reduced to recognise recently signed contracts for the sale of the 2 EcoVision properties with 50% of the net proceeds to be recorded in 2012/2013 however also increased to reflect the funding of carry forward capital works.

New Capital +$0.900 million

To recognise an increase of $0.050 million to the furniture replacement program and a new inclusion of $0.850 million for an access road to Yanchep Playing Fields.

Carry Forward Capital +$30.152 million

To recognise the forecast value of Capital Projects which are likely to remain unspent as at the end of the current financial year, to be finished in 2013/2014.  Major projects to be carried forward include:

PR-1671 Yanchep Lagoon Redevelopment                    $0.850m

Kingsway Regional Sporting Complex                             $3.602m

Flynn Drive, Neerabup – Construct Road                        $6.341m

Lenore Road, Wanneroo – Construct Carriageway         $6.120m

Upgrade Roundabout Marmion/Hester Ave                    $0.900M

Upgrade road – McPharlin Ave                                        $0.470M

Traffic treatments – Lagoon Dr/Brazier Ave                    $0.517M

Wanneroo Road Streetscape                                           $0.927M

Wangara MRF Upgrade                                                   $0.498M

 

The carry forward projects are supported by the following funding sources:

-        Grants and Contributions                                        $5.382M

-        TPS                                                                         $9.310M

-        Reserves                                                                 $2.718M

-        Loans                                                                       $4.897M

-        Municipal                                                                 $7.845M

Consultation

In accordance with the requirements of Section 6.36 of the Local Government Act 1995, the City is required to give notice of its intention to levy Differential General Rates and Specified Minimum Payments.  Notices to this effect were advertised on 21 May 2013, open for a submission period of 21 days.  No submissions were received within the submission period.

Comment

In developing the 2013/2014 Budget, various non-controllable economic and legislative factors have been considered, including the uncertain and remaining weak international economic environment, Australia’s slowing national growth and low inflation, plus a full year better than anticipated impact of the new Building Act legislation and the flow on effects of the carbon tax.  The compound effect of these factors together with the compliance requirements of the Integrated Planning Framework creates a significant degree of complexity to the preparation of the 2013/2014 Budget.  Nonetheless, a prudent and responsible approach has been taken in forecasting revenues and activity levels for Wanneroo. 

 

This approach results in an Operating budget that reflects an 8.3% increase in Operating Income and an increase in Operating Expenditure of 7.7% when comparing to the 2012/2013 Adopted Budget.  Furthermore, the following factors and the associated risks and opportunities affecting the City’s Budget must be noted:

 

1.       On the 7 June 2013, Commonwealth Government has paid the City in advance 50% of the 2013/2014 Financial Assistance Grants which equated to $3.006 million.  This revenue will be receipted as income in 2012/2013.  This factor alone can be directly attributed to the Operating deficit (-$1.578 million) being reflected for 2013/2014. Hence notionally reinstating the grants income to a full year scenario would provide a modest Operating Surplus.

 

2.       The Reserve Bank recently cut the cash rate by another 0.25% at its May meeting with the current cash rate now reflecting as 2.75%.  Economic commentaries suggest that further rate cuts may be possible by end of this year and if they eventuate, the situation will have some detrimental impact on the City's investment earnings.

3.       Recent amendments to the Local Government (Financial Management) Regulations 1996, restrict investments effective from 1 July 2012 onwards to the following highly secured investments:

·        Authorised deposit taking institutions and the Western Australian Treasury Corporation for a term not exceeding 12 months;

·        Bonds that are guaranteed by the Commonwealth Government or a State or Territory for a term not exceeding three years; and

·        Australian currency.

 

This regulation has materially restricted the flexibility of local government investment options to low yield high security financial instruments, however; that is consistent with the City's previous prudent approach.

 

4.       A Review of Commercial Waste has been undertaken and the City will phase out a portion of the commercial business stream, in particular Bulk Bins, which operates in a highly competitive market.

5.       The changes to the Building Act which came into effect 1 April 2012 have shown minimal adverse impacts to the City's building application approval activities and revenues in 2012/2013. However, the City will continue to closely monitor the development in this regard, especially the growth in private certification practices businesses.  It is believed that the new legislation's impact will not be known until after another 12 months.

6.       The Mindarie Regional Council (MRC) Gate Fee has been modelled on a scenario of $149 per tonne, increased from this year's fee of $137 per tonne (8.6% increase).  The impact of the Gate Fee on Refuse Removal Expenses is significant given the City is the largest contributor to MRC by way of tonnages, which are estimated at approximately 78,000 tonnes, including the residue from the Wangara Recycling Centre.

 

The Budget provides a total of $42.158 million Capital Works Program (excluding $30.152 million Carry Forward Capital Projects from 2012/2013), which will deliver significant improvements to the local community.  It balances the real need for services and infrastructure in the City’s North and Coastal growth corridors whilst recognising the need for new, renewal and upgrade of facilities and services in the City’s established areas.

 

In light of the recent economic uncertainty, this Budget is considered to be financially prudent and responsible, providing efficiencies, whilst maintaining a high level of service and delivering on long-term sustainability through initiatives such as the Debt Management Strategy and addressing Asset Renewal and Upgrade.  Importantly, over the longer term, it establishes a process for building on the City’s Reserves.

 

The proposed level of rate increase of 5.5% is consistent with the principle established in the PWC report Western Australian Local Government Association Rate Setting Processes, Funding Amenity and Service Sustainability of WA Outer Metropolitan Growth Councils and actually 0.4% lower than that forecast in the previous LTFP.  This is considered appropriate when taking into account the challenges imposed by the reduced growth in income and noting that the Rate includes the Rubbish Charge.

Statutory Compliance

The accompanying Budget for 2013/2014 has been prepared in accordance with the Local Government Act 1995 (the Act), Local Government (Financial Management) Regulations 1996 and Australian Accounting Standards.

 

Pursuant to Section 6.33(3) of the Act, Administration has written to the Minister seeking approval to the Differential General Rates as published.  Confirmation of approval is required (and anticipated) prior to Budget Adoption, however at the time of writing this report is yet to be received.

 

Pursuant to Section 6.36(1) of the Act, the City has given the appropriate notice of its intention to impose Differential General Rates and Specified Minimum Payments in respect of each Differential Rate Category.  No submissions were received by close of submission period. 

In accordance with Section 6.36(5), the City may modify the proposed rates and minimum payments after considering any submissions, without the requirement for further local public notice.  The only modification proposed is to reduce the Minimum Rate for Residential Vacant from $701 to $668 to comply with the legislative requirement for a maximum of 50% of properties in a category to be rated on a minimum rate basis.

 

Sub-regulation 56(4)(b) of the Local Government (Financial Management) Regulations 1996 requires that the Rate Notices provide details and reasons for any variation in the Minimum Rate and Differential Rate from that proposed in the notice published in accordance with Section 6.36 of the Act.

Strategic Implications

The proposal accords with the following Outcome Objective of the City’s Strategic Plan 2006 – 2021:

 “4     Governance

4.6    Provide and maintain a high standard of governance and accountability

Policy Implications

Nil

Financial Implications

The timely adoption of the 2013/2014 Annual Budget will facilitate opportunities in terms of investment revenue and allow the implementation of the Capital Program.

Voting Requirements

Absolute Majority

 

Recommendation

That Council by an ABSOLUTE MAJORITY: -

1.       ADOPTS the Budget for the City of Wanneroo for the Financial Year Ending 30 June 2014, incorporating:

1.1     Statement of Comprehensive Income, showing Total Comprehensive Income of $43,106,715 Surplus.

1.2     Statement of Cash Flows, showing cash at end of year position of $145,069,608.

1.3     Rate Setting Statement, showing the need to generate $109,500,000 in Rates.

1.4     Notes To and Forming Part of the Budget.

1.5     Attachments (3) & (4) being –

(3)       2013/2014 Capital Works Program (including Carry Forwards from 2012/2013).

(4)       2013/2014 Schedule of Fees and Charges.

2.       In accordance with Section 6.47 of the Local Government Act 1995, AGREES to waive the 2013/2014 Council rates (excludes Emergency Services Levy) for land leased by the City to the following community groups:

·        AJS Motorcycle Club of WA Inc

·        Kingsway Football & Sporting Club Inc

·        Kingsway Olympic Sports Club

·        Quinns Mindarie Surf Lifesaving Club Inc

·        Quinns Rocks Sports Club

·        Tiger Kart Club Inc

·        Wanneroo Agricultural Society

·        Wanneroo Amateur Football Club, Wanneroo Cricket Club, Wanneroo Junior Cricket Club and Wanneroo Junior Football Club (Wanneroo Showgrounds Clubrooms)

·        Wanneroo BMX Club

·        Wanneroo City Soccer Club Inc

·        Wanneroo Districts Cricket Club Inc (indoor facility)

·        Wanneroo Districts Cricket Club Inc & Wanneroo Districts Hockey Association Inc

·        Wanneroo Districts Netball Association

·        Wanneroo Districts Rugby Union Football Club Inc

·        Wanneroo Horse & Pony Club

·        Wanneroo Junior Motocross Club Inc

·        Wanneroo Racing Pigeon Club

·        Wanneroo Shooting Complex Inc

·        Wanneroo Sports & Social Club

·        Wanneroo Tennis

·        Wanneroo Trotting & Training Club Inc

·        Yanchep Golf Club

·        Yanchep Sports Club Inc

·        Yanchep Surf Lifesaving Club Inc

 

3.       Differential Rating

In accordance with the provisions of Sections 6.32, 6.33 and 6.35 of the Local Government Act 1995:

3.1     IMPOSES Differential Rates and Minimum Rates for the 2013/2014 Financial Year; and

3.2     NOTES that the Differential Rates and Minimum Rates for the 2013/2014 Financial Year are inclusive of Domestic Rubbish Collection Charges where applicable, and

3.3     SETS the Differential General Rates in accordance with the following tables:

3.3.1   General Rate – Gross Rental Value & Minimum Rates

In accordance with the Minister’s approval received on xx June 2013 and subject to the provisions of Sections 6.32, 6.33 and  6.35 of the Local Government Act 1995, impose the 2013/2014 Gross Rental Value Differential Rates and Minimum Rates as follows: -

 

GRV Category

Rate in Dollar (cents)

General Minimum Rate $

Caravan Parks  & Park Homes Improved

7.7564

362

Commercial Improved

7.5144

1135

Community Groups – Major Improved**

8.3111

240

Community Groups – Surf Clubs Improved

2.0505

240

Community Groups – General Improved

3.9269

240

Industrial Improved

6.3257

1135

Industrial Improved – Lesser Minimum

N/A

567

Residential Improved

7.7574

1155

Rural and Mining Improved

8.4819

1145

Commercial Vacant

6.4213

1135

Industrial Vacant

4.1348

1135

Residential Vacant

10.8424

668

Rural and Mining Vacant

7.9262

770

** = Sporting Clubs & Major Event Providers

3.3.2   General Rate – Unimproved Value & Minimum Rates

In accordance with the Minister’s approval received on xx June 2013 and subject to the provisions of Sections 6.32, 6.33 and 6.35 of the Local Government Act 1995, impose the 2013/2014 Unimproved Value Differential Rates and Minimum Rates as follows: -

UV Category

Rate in Dollar (cents)

General Minimum Rate $

Commercial Improved

0.2597

1135

Community Groups – Major Improved**

0.2550

240

Community Groups – General Improved

0.1237

240

Industrial Improved

0.2420

1135

Residential Improved

0.3304

1155

Rural and Mining Improved

0.3211

1145

Commercial Vacant

0.2757

1135

Industrial Vacant

0.2719

1135

Residential Vacant

0.4296

701

Rural and Mining Vacant

0.3410

770

** = Sporting Clubs & Major Event Providers

 

4.       Domestic Refuse Charges

Pursuant to the provisions of Division 5 of Part IV of the Health Act (as amended) and Section 67 under Division 3, Part 6 of the Waste Avoidance and Resource Recovery Act 2007, impose the following Domestic Refuse Charges for the 2013/2014 Financial Year: -

4.1     Standard Service Charge p.a. (one 240L recycling bin & one 240L rubbish bin) included within General Rates.

4.2     Additional Service Charge p.a. (one 240L recycling bin & one 240L rubbish bin) $360.50.

4.2     Additional Recycling Service Charge Only p.a. (one 240L recycling bin) $160.00.

4.3     Additional Rubbish Service Charge Only p.a. (one 240L rubbish bin) $334.75.

4.4     Establishment Charge (per each new or additional service, one 240L recycling bin & one 240L rubbish bin) $98.90.

4.5     Establishment Charge (per each new or additional 240L recycling bin or additional 240L rubbish bin) $54.40.

5.       Private Swimming Pool Inspection Fees

In accordance with the provisions of the Local Government (Miscellaneous Provisions) Act 1960, Section 245A, IMPOSES for the 2013/2014 financial year, a Private Swimming Pool Inspection Fee on construction of $39.60 (inclusive of GST) and in each subsequent year thereafter a Private Swimming Pool Inspection Fee of $18.20 (inclusive GST) for each property where there is located a private swimming pool.

6.       Payment Incentives

In accordance with the provisions of Section 6.46 of the Local Government Act 1995, offer the following incentives for the payment of Rates and Charges: -

• Full payment

Full payment of all current and arrears of Rates and Charges and Private Swimming Pool Inspection Fees (inclusive of GST) within 35 days of the issue date on the Annual Rate Notice: -

- eligibility to enter the early incentive draw.

• Two Instalments

The first instalment of 50% of the total current Rates and Charges, Private Swimming Pool Inspection Fees (inclusive of GST) and Instalment Charge, plus the total outstanding arrears payable within thirty-five (35) days of date of issue of the Annual Rate Notice: -

- eligibility to enter the early incentive draw.

• Four Instalments

The first instalment of 25% of the total current Rates and Charges, Private Swimming Pool Inspection Fees (inclusive of GST) and Instalment Charge, plus the total outstanding arrears payable within thirty-five (35) days of date of issue of the Annual Rate Notice: -

- eligibility to enter the early incentive draw.

7.      Payment Options

In accordance with the provisions of Section 6.45 of the Local Government Act 1995, offer the following payment options for the payment of Rates and Charges and Private Swimming Pool Inspection Fees (inclusive of GST): -

•        One Instalment

Payment in full within 35 days of the issue date of the Annual Rate Notice.

·       Two Instalments

The first instalment of 50% of the total current Rates and Charges, Private Swimming Pool Inspection Fees (inclusive of GST) and Instalment Charge, plus the total outstanding arrears payable within 35 days of date of issue of the Annual Rate Notice.

The second instalment of 50% of the total current Rates and Charges, Private Swimming Pool Inspection Fees (inclusive of GST) and Instalment Charge, payable 63 days after due date of first instalment.

·       Four  Instalments

The first instalment of 25% of the total current Rates and Charges, Private Swimming Pool Inspection Fees (inclusive of GST) and Instalment Charge, plus the total outstanding arrears payable within 35 days of date of issue of the Annual Rate Notice.

The second, third and fourth instalments each of 25% of the total current Rates and Charges, Private Swimming Pool Inspection Fees (inclusive of GST) and Instalment Charge, payable as follows: -

-    Second Instalment 63 days after due date of first instalment.

-    Third Instalment 63 days after due date of second instalment.

-    Fourth Instalment 63 days after due date of third instalment.

8.      Late Payment Interest

In accordance with the provisions of Sections 6.13 and 6.51 of the Local Government Act 1995, impose interest on all arrears and current charges in respect of Rates and Charges and Private Swimming Pool Inspection Fees (including GST where applicable) at a rate of 8.45% per annum, calculated on a simple interest basis on arrears amounts that remain unpaid and current amounts that remain unpaid after thirty-five (35) days from the issue date of the Original Rate Notice, or the due date of the instalment and continues until instalment is paid.

Excluded are Deferred Rates, Instalment current amounts not yet due under the Four (4) payment options, Registered Pensioner Portions and current Government Pensioner Rebate amounts.

Such interest is to be charged once per month on the outstanding balance on the day of calculation for the number of days, as previously detailed.

9.      Instalment and Arrangements Administration Fees and Interest Charges

In accordance with the provisions of Section 6.45 of the Local Government Act 1995, for the 2013/2014 Financial Year, the following Administration Fees and Charges are imposed for payment of Rates and Charges and Private Swimming Pool Inspection Fees (inclusive of GST): -

Two Instalment Option

An Administration Fee of $5.00 for Instalment Two, together with an Interest Charge of 5.5% per annum, calculated on a simple interest basis on:

•        50% of the total current General Rate and Charges and Private Swimming Pool Inspection Fees (inclusive of GST) calculated 35 days from the date of issue of the Annual Rate Notice to 63 days after the due date of the first instalment.

Four Instalment Option

An Administration Fee of $5.00 for each of Instalment Two, Three and Four, together with an Interest Charge of 5.5% per annum, calculated on a simple interest basis on:-

•        75% of the total current General Rate and Charges and Private Swimming Pool Inspection Fees (inclusive of GST) calculated thirty-five (35) days from the date of issue of the Annual Rate Notice to 63 days after the due date of the first instalment;

•        50% of the total current General Rate and Charges and Private Swimming Pool Inspection Fees (inclusive of GST) calculated from the due date of the Second (2nd) Instalment to the due date of the Third (3rd) Instalment; and

•        25% of the total current General Rate and Charges and Private Swimming Pool Inspection Fees (inclusive of GST) calculated from the due date of the Third (3rd) Instalment to the due date of the Fourth (4th) Instalment.

10.     ADOPTS the Significant Accounting Policies as detailed in Note 1 of Attachment 2 (2013/2014 Statutory Budget).

11.     ADOPTS a percentage of 10% for the purposes of the reporting of material variances by Nature and Type monthly for the 2013/2014 Financial Year, in accordance with Regulation 34(5) of the Local Government (Financial Management) Regulations 1996.

 

12.     As part of the Budget AUTHORISES the establishment of the following new Reserve:

·        Asset Renewal.

 


 

13.     As part of the Budget AUTHORISES the deletion of the following Reserves:

 

·        Commercial Refuse Plant Replacement;

·        Domestic Refuse Plant Replacement;

·        Heavy Vehicle Replacement;

·        Light Vehicle Replacement;

·        Asset Preservation; and

·        Fleming Park Lake.

 

 

 

Attachments:

1View.

Annual Budget Overview 2013 2014

13/87087

 

2View.

2013_2014 Model Budget with carry forwards

13/87133

 

3View.

2013/2014 Capital Works Budget

13/82073

 

4View.

Fees and Charges 2013 2014

13/80687

 

  


CITY OF WANNEROO Late Items Agenda OF Elected Members' Briefing Session 18 June, 2013                          20


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


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CITY OF WANNEROO Late Items Agenda OF Elected Members' Briefing Session 18 June, 2013            154

L.2    Integrated Planning & Reporting Framework

File Ref:                                              6671 – 13/78962

Responsible Officer:                           Director, Corporate Strategy and Performance

Disclosure of Interest:                         Nil

Attachments:                                       7         

 

Issue

To approve the Strategic Community Plan, Corporate Business Plan and other components of the Integrated Planning and Reporting Framework (IPRF).

 

Background

The Integrated Planning and Reporting Framework (IPRF) has been introduced by State Government and places a requirement on all local governments to adopt relevant Plans by 30 June 2013.  The IPRF has been developed as part of the State Government's Local Government Reform Program; to provide local governments a framework for establishing local priorities and to link this information to operational functions. All local governments are currently required to produce a plan for the future under section 5.56(1) of the Local Government Act 1995. Regulations under section 5.56(2) set out the minimum requirements to achieve this, which prescribes the development of a Strategic Community Plan (SCP) and Corporate Business Plan (CBP).

 

In developing the SCP, a workshop was held with Elected Members on 31 July 2012, followed by a further report presented to Council Forum on 4 September 2012.  A Draft SCP was then presented to Council on 13 November 2012, resulting in the following resolution being adopted:

"That Council:-

1.       NOTES the draft Strategic Community Plan, "Building a Future Together" and the summary version;

2.       ENDORSES the draft "Building a Future Together" and summary document for community consultation;

3.       APPROVES the consultation process as outlined in this report."

 

The Draft SCP was then advertised for public comment, with the submission period closing 31 December 2012.  As a result of the consultation process and further review of the document, various formatting changes were implemented, along with minor grammatical corrections.  In addition, the following amendments were introduced to the strategies and objectives within the respective Pillars:

 

Pillar 1: Environment

·        Aspiration changed from 'A sustainable natural, built and healthy environment' to 'A healthy and sustainable natural and built environment'.

·        Strategy 1.1.1 amended by replacing the word 'lakes' with 'waterways'.

 

Pillar 2: Society

·        Aspiration amended to replace the word 'connected' with 'active'.

·        Strategy 2.1.2 amended by replacing the word 'culture' with 'cultural diversity'.

·        Strategy 2.2.3 amended by replacing the word 'living' with 'activity'.

·        Strategy 2.3.1 amended by replacing the word 'region' with 'community'.

 

Pillar 3: Economy

·        Strategy 3.3.4 added 'Increase walking and cycling opportunities'.

 

Detail

Following the development of the Draft SCP, the organisation has utilised the guidance published by the Department of Local Government to develop the other Plans and Resourcing Strategies required under IPRF:

 

 

This new integrated framework builds on the City's existing work and ensures that this is geared towards meeting the wider community's expectations and aspirations within the organisation's financial and resource capacity.  Importantly, the context for the City must take into consideration the forecast growth, which will see the population of the City of Wanneroo increase from an estimated 175,000 to 249,000 during the 10 Year life of the SCP.


 

Accordingly, the following draft documents have now been completed, the drafts of which were presented to the Council Forum meeting of 4 June 2013:

 

·        Strategic Community Plan

·        Corporate Business Plan

·        Asset Management Framework (incorporating Asset Management Policy, Asset Management Strategy and Summary Asset Management Plan)

·        Workforce Management Plan

·        Long Term Financial Plan

 

External Assessment of Compliance Requirements

 

In developing the IPRF, the City engaged Consultants KPMG to evaluate the draft Plans and provide an assessment of the progress towards completion of each IPRF component.  The resulting gap analysis provided a basis for identifying the work required to:

 

-        Meet the minimum compliance requirements by 30 June 2013

-        Improve the IPRF processes and component Plans in the short term to ensure better alignment and integration (during 2013/14)

 

As this is the first year of implementation of the new legislative requirement, the City has focused efforts in addressing the gaps identified by KPMG to ensure in the first instance that the minimum statutory requirements of the IPRF are met. The redrafted Plans were then further reviewed by KPMG and confirmation provided to the City that the content of these are in accordance with the requirements. The various Plans are required to be adopted by Council by 30 June 2013.

 

The status of each key IPRF component and the identified improvements that will be addressed as next steps during 2013/14 and beyond are detailed below:

 

Strategic Community Plan (Attachment 1)

 

-        Current status

 

The City's Strategic Community Plan (SCP) Building a Future Together 2013/14 – 2022/23 articulates the community aspirations, with specific strategies which will be implemented to achieve the stated objectives. The development of the SCP provided an opportunity to revisit the overarching vision, objectives and strategies of the previous Strategic Plan 2006-2021 (Revised 2010) in light of feedback from the community, Elected Members, and other stakeholders. 

 

The priorities of the community under the City's vision of Building a Future Together have been grouped into four pillars, being Environment, Society, Economy, and Civic Leadership, as workshopped with Elected Members. Within each pillar is a set of objectives that will be addressed to deliver on the priorities identified by the community.

 

The SCP informs the Corporate Business Plan. All operational business and projects to be delivered are required to align with the SCP. This approach ensures that the efforts and resources are appropriately directed to achieving the strategic objectives, and in turn the aspirations of the community. 

 

Since the SCP was presented to Council Forum on 4 June 2013, the key change to the SCP has been to review the methodology for measuring and reporting back to the community the achievement over time of the strategic objectives and aspirations.

 

 

 

This has resulted in the addition of two performance measures against each of the objectives within the four pillars of Environment, Society, Economy, and Civic Leadership. These improved measures will enable more comprehensive annual reporting on the City's progress.

 

-        Next steps

 

Periodic reviews of the SCP will be undertaken in order to adapt our actions to account for any shifts in community expectations and priorities. The SCP will be reviewed within two years and endorsed by Council prior to 30 June 2015.  This review will focus on the strategies to ensure that they are still appropriate for achieving the community objectives.

 

A full review of the SCP will be undertaken within four years in accordance with the requirements of Regulation 19C (4) of the Local Government (Administration) Regulations 1996 and presented to Council by 30 June 2017. This will include going back to the community to test whether the vision, aspirations and objectives need to be changed in light of any changes to community priorities or capacity changes on the part of the City.

 

Corporate Business Plan (Attachment 2)

 

-        Current Status

 

The Corporate Business Plan (CBP) details the City's priorities and actions for achieving the objectives and aspirations of the community as set out in the SCP.  Essentially it operationalises the SCP and becomes a delivery plan.  It is at the heart of the IPRF as it informs, and must take into account, all other components of the framework including the:

 

Workforce Plan (WFP)

Assets Management Plans

ICT Strategic Plan

Long Term Financial Plan (LTFP)

 

The CBP is essentially a contract between the CEO and the Elected Members that states how the City will activate the SCP. It aims to provide transparency and greater accountability by informing the community of the City's commitments.

 

The CBP comprises two key aspects; these being one-off projects and the business as usual operational activities that will be delivered over a four-year period.  The Corporate Business Plan directly informs the development of the Workforce Plan by quantifying the level of human resource that will be required to deliver on projects and operational activities and the development of the Long Term Financial Plan. This move from an annual to a four-year delivery plan through the Corporate Business Plan enables more effective budgeting and project implementation over a longer timeframe.

 

The development of the CBP provides in a single source document the extent of activity being undertaken in terms of day to day service delivery, along with an ambitious list of new projects to be delivered each year. The review by KPMG highlighted pressure points within the organisation where there appears to be a heavy reliance on the goodwill of employees to deliver the projects along with business as usual activities. A lack of consistently mapped corporate processes means that the City lacks a true understanding of the baseline resourcing levels which in turn impairs the City's ability to accurately identify opportunities for process efficiency or to purposefully plan workforce requirements.

 

Since the CBP was presented to the Council Forum of 4 June 2013, the key change to the document has been to amend the format that the priority projects and actions are presented. These are now listed without the dollar figures and instead, an indication of when the projects will be delivered, together with their funding source is detailed.

 

-        Next steps

 

Critical improvements to the ongoing development of the CBP are:

 

-        Prioritise the understanding of core business outcomes and the mapping of corporate processes. This will:

 

o   provide a sound baseline for understanding the human resources required to support business delivery, and where processes can be made more efficient.

o   build capacity within the City.

 

 

-        Introduce one single point of coordination and oversight of projects:

 

o   the implementation of a Project Management Framework will enable improved end to end project governance, controls, accountability, planning and budgeting in relation to projects.

o   this is essential if the City is to have clarity on how we activate the SCP and in turn understand the true levels of human resourcing and financing required.

 

The CBP will be reviewed, reprioritised and reported on annually to provide information to the community and statutory bodies on the City's progress in delivering services, projects and other operations to meet the community's short term, medium term and long term aspirations. The CBP will evolve as a rolling four-year Plan which generates the annual budget and informs the Resourcing Plans described below.

 

RESOURCING FRAMEWORK

 

Workforce Plan (Attachment 3)

 

The Workforce Plan (WFP) is a resourcing strategy which coordinates the human resource requirements for delivering the City's operations. The WFP aligns with the operational and project priorities of the CBP to ensure the workforce needs and limitations are addressed. The WFP also details strategies for addressing both the present and anticipated workforce issues.

 

The WFP has been developed through:

 

-        Analysis of internal and external environment and workforce

-        Workforce implications of the SCP and CBP

-        Growth projections and strategies to meet future workforce needs

 

Since the WFP was presented to the Council Forum of 4 June 2013 a number of changes have been made. These have been to finesse the format and grammar within the document, and to include a section that identifies the key human resourcing risks for the City and how these have been addressed through the WFP strategies.

 

Next steps

 

As the WFP derives information of the human resource requirements from the services and projects detailed within the CBP, ongoing work will be required to maintain and improve these linkages as the CBP is amended in the future. As a resourcing baseline for the delivery of business-as-usual services has not been established, this will aid the costing of changes to services subject to the City's population growth. 

 

 

The work to establish the baseline will be informed thorough understanding core business processes, and the required human resources to deliver these at particular levels of service.

 

It will also be important to review and strengthen the alignment and integration of the WFP with the Asset Management Plans and ICT Strategic Plan. In particular, the linkages of human resource strategies with those strategies which incorporate the City's future growth, changes in the external environment, internal business processes, assets such as office accommodation, vehicles, office equipment and the opportunities from technological resources such as devices, hardware/software and systems. This will ensure that the human resource strategies maximise opportunities and address the challenges in each of these areas.

 

Strategic Asset Management Plan

 

-        Current Status

 

The City has an ongoing commitment to sustainable asset management and has previously adopted an Infrastructure Asset Management Policy and Asset Management Plans for most of the City's Infrastructure assets.  The IPRF, however requires a more comprehensive and integrated approach.  Given the scale of the City's operation, it has been determined that addressing the requirements of the IPRF can best be achieved through the adoption of an Asset Management Framework.

 

The components of the Framework that are presented for adoption include:

 

·        Asset Management Policy (Attachment 4)

This policy will supersede the existing Infrastructure Asset Management Policy and provide overarching key principles against which assets are to be managed.  This will ensure there is an organisation-wide commitment to asset management, and the framework and objectives for the development of the AM Strategy and AM Plans.

·        Asset Management Strategy (Attachment 5)

The Strategy sets asset management objectives, practices and strategies for the improvement of the asset base and the asset management system, and drives the entire asset management process. It ensures the objectives of the AM Policy one implemented, and provides the management framework to enable the implementation of detailed Asset Management Plans.

·        Summary Asset Management Plan (Attachment 6)

This document summarises the outputs from the detailed AMPs on the long term asset renewal demand predictions and provides the link to the long-term financial planning and strategic planning. This Plan also brings together the corporate requirements such as Levels of Service and AM Data and Systems from the various detailed asset management plans and improvement planning summaries.

 

Since the Council Forum of 4 June when these documents were presented, they have been further reviewed, and a number of minor changes made. These changes have been primarily to the grammar and formatting, in order to improve the clarity and readability of the documents.

 

-        Next Steps

 

The City is currently developing its asset management capacity and capability; Asset Management Plans currently focus primarily on infrastructure assets however, and exclude other asset classes such as ICT, Plant, Fleet, and Land. 

 

 

The City will therefore review and consider a consistent approach and common corporate framework for the management of all assets, including consistency in the asset registers across all asset classes. Asset renewal demand should be integrated as a critical and mandatory consideration in all financial and capital decision making as this is key financial information for asset management strategies and the Long Term Financial Plan. In addition, processes to ensure that asset projects incorporate "whole of life" project costing for upgrades or new assets will ensure that the CBP and budget / Long Term Financial Plan are developed with accurate information.

 

The Asset Management Strategy outlines a range of tasks and strategies dealing with areas of accountability, integration, lifecycle management, standards and levels of service.  These will need to be assigned, prioritised and progressively implemented.  In addition, further analysis is required in terms of the long term financial impact of the predicted renewal program and funding strategies considered for integration into the City's long term financial planning.

 

ICT Strategic Plan

 

-        Current Status

 

The City is currently developing an Information and Communication Technology (ICT) Strategic Plan which presents the City's approach to planning for, and managing, technology to improve business operations and ultimately service delivery to the community. The ICT Strategic Plan is not a legislative requirement of the IPRF (and is not included for adoption) however as a key contributor to productivity and a critical enabler of business, it is seen as a significant component of the City's overall framework for planning and reporting.

 

-        Next Steps

 

Through the ICT Strategic Plan, a comprehensive evaluation of the technological opportunities to support the medium to longer term strategies of the WFP – such as the enabling of smart workplaces - and improvements to internal operations and service delivery will be undertaken. This will be achieved through understanding business processes and operational requirements.  This is also coupled with an appreciation of the strategic requirements of the organisation and an exploration of appropriate ICT solutions to enable business process improvement and to support our business into the future. By maximising the appropriate use of ICT solutions the City may also reduce the demands on additional human resourcing that is required, with potential for increased efficiency.

 

Long Term Financial Plan (Attachment 7)

 

-        Current Status

 

The City has developed a Long Term Financial Plan (LTFP) which is a 10-year rolling plan that draws from the Workforce Plan and Asset Management Framework, and informs the Corporate Business Plan to activate Strategic Community Plan priorities. The LTFP provides an indication of the City's long term financial sustainability to enable early identification of financial issues and their longer term impacts. The estimates and projections of the LTFP have been developed based on the City's business activities, financial commitments, community priorities and a set of assumptions (which include factors such as population growth, inflation forecasts, and revenue streams).

 

The City's financial resilience has been improving through successive budgets and the draft LTFP presents a reasonably strong position.  Initiatives such as the Community Facility Plan and proposed Development Contribution Plan provide significant opportunities to improve the City's financial sustainability by reducing the demand on Municipal capital funding. 

 

This is offset, however in the longer term by operational requirements, including significant asset management responsibilities.  It is important therefore that strategies are developed with a much longer-term perspective than the 10 years covered by the LTFP.

 

The 10 Year Capital Works Program is linked to the LTFP and included in the current documents.  For Elected Member information, there have been no changes to the 10 Year Capital Works Program 2013/14 – 2022/23 as presented to Budget Workshop 3 other than those reported at the Council Forum on 4 June 2013, being:

 

Community Buildings:  increase Furniture Replacement Program in Year 1 (PR-2203) from $30,000 to $80,000.

Pathways:                     delete Marmion Avenue pedestrian underpass project in Year 4 ($50,000).

Roads:                          add Access Road to Yanchep Active Open Space (YAOS) in Year 1 ($850,000) to reflect Council's committed contribution to road construction.

Sports Facilities:           Increase budget for Yanchep/Two Rocks Playing Fields in Year 2 from $2,280,000 to $3,240,000 to correctly reflect potential cost of the YAOS project.

 

Since the LTFP was presented to the Council Forum of 4 June 2013 minor grammatical and formatting changes have been made to the document. Additional information has also been included, these being changes to the following areas:

 

o   Statement of Cash Flow (as part of the IPRF compliance requirement);

o   Information about a review of the City's Rating Strategy by external consultants, the findings and recommendations of which will be workshopped with Elected Members during 2013/14;

o   A section on risk assessment which identifies the prevailing global and local economic, legislative, social and environmental considerations;

o   A Disclaimer to protect the City's interests in relation to the reliance and use of the information provided in the document by third parties.

 

-        Next Steps

 

The City will focus efforts on strengthening the processes, systems and knowledge of planning for whole of life costing for operating and capital projects.  Improvements to the financial planning model will be made to enable scenario modelling, such as the impact of introducing individual projects, with whole of life costs and the impact on rates over the longer term, or modelling for different scenarios of growth, and to enable sensitivity analysis testing. 

 

The Long Term Financial Plan will be reviewed in conjunction with reviews of the Strategic Community Plan.  This will involve a desktop review every two years (or annually prior to development of the Annual Budget) and a full review undertaken every four years.  Importantly, reviews will need to progressively consider strategies to address the long term implications of predicted asset renewal demand.

 

Improvements to IPRF processes

 

It is recognised that there is room for further improvement to IPRF content and processes employed by the City. This will maximise the opportunity to apply the framework as a tool that drives improved planning, prioritised budgeting, and ultimately the longer term sustainability of the organisation whilst ensuring alignment to aspirations of the community. The opportunity for this lies in exploring improvements and the work required to:

 

 

-        Embed IPRF processes as part of 'the way we work' so that it is not a bolt-on to business as usual, but an integral part of it;

-        Undertake a comprehensive corporate change program to address business process inefficiencies and improve capacity and productivity;

-        Implement improved governance and assurance frameworks particularly around projects;

-        Undertake a comprehensive review and evaluation of the technology that is required to support improved business processes, and the opportunities of technological advancement to enable business improvement, achievement of strategies (such as workforce strategies) and to support the anticipated growth of the organisation.

Consultation

Extensive consultation has been undertaken throughout Wanneroo's diverse community in the development of inputs to the Strategic Community Plan which included the following key elements:

 

·        Thinking Ahead Marketing Campaign – posters, bus signage, media advertising and giveaways to raise awareness of the integrated planning process.

·        Post Card Campaign - distribution of reply paid postcards through shopping centres, sports venues, Clarkson Rail Station, playground, libraries and community programs – which elicited 1,781 responses.

·        Resident phone survey – undertaken by Catalyse Market Research – which elicited 403 responses.

·        Business phone survey – undertaken by Catalyse Market Research – which elicited 126 responses.

·        Focus Groups – two with youth aged 12 – 24; one each with young families, older families, adult singles/couples with no children at home, seniors 55 plus.

·        In depth interviews – with people with a disability or impairment or their carers; and with people with a non-English speaking background.

 

Further consultation occurred when the Draft Strategic Community Plan was published in November 2012, the results of which have been incorporated into the latest Draft of the Plan.

 

The adoption of the Strategic Community Plan will necessitate publication of a Local Public Notice informing of the availability of the SCP.  It is proposed that all of the components of the IPRF would be publicly available on the City's website.

 

Any significant changes arising from reviews of these documents in subsequent years are required to be reported back to the community and to be tested against community aspirations.

Comment

Whilst the City has developed the IPRF to ensure statutory compliance, it is recognised that the scale of activity will require improvements through successive versions.  It is however considered to be an excellent launch into the process.  Importantly, the components meet the requirements of legislation.  It should be noted however the City's scorecard in terms of the various ratios prescribed reflect a mixed result, generally due to the unique growth rate experienced and impact on the City's asset base.

 

The task of developing and integrating the components of the IPRF has been particularly informative and enlightening and has identified the need to consider fundamental changes and improvements to facilitate operational efficiency and effectiveness.

 

 

 

Through the growth of the organisation, the City has placed heavy reliance on the goodwill of employees to deliver on services and projects to an expanding community. This coupled with processes that are not always optimised and ICT systems which may not adequately support business requirements into the future (given the City's growth projections), means the organisation could struggle to continue to grow efficiently and sustain the required level of outputs.

 

In order to establish an organisation that is geared to the requirements of servicing a much larger community, it is proposed to implement a transformational change program initially to the corporate areas and systems of the organisation. This process will need to be balanced with continuing to maintain the delivery of business as usual activities.

 

Further consideration will need to be given to the implications and requirement to defer some discretionary projects during the period of this program to create the necessary capacity within the organisation.

Statutory Compliance

The development of the Integrated Planning and Reporting Framework is a legislative requirement of local governments. Specifically, it is prescribed by section 5.56 of the Local Government Act 1995 (Planning for the Future) and Division 3 of the Local Government (Administration) Regulations 1996.

Strategic Implications

The proposal accords with the following Outcome Objective of the City’s Strategic Plan 2006 – 2021:

 “4     Governance

4.6    Provide and maintain a high standard of governance and accountability

Policy Implications

The continuous improvement in the City's Integrated Planning and Reporting Framework will have implications across a range of policies, with the first being the replacement of the existing Infrastructure Asset Management Policy with a more comprehensive Asset Management Policy.

Financial Implications

The introduction of the LTFP does not of itself impose financial implications, in fact its purpose is to provide greater clarity and transparency of decision making on long term capacity and financial sustainability.

 

Implementation of a Transformational Change Program to introduce improvements to efficiency and effectiveness of corporate processes and ICT systems will have a budgetary implication; however this will depend on the scale and staging of the activity.  Further planning is required in this respect to work within current budgetary provisions.

Voting Requirements

Absolute Majority

 


 

 

Recommendation

That Council:-

 

1.       By absolute majority Adopts the 10-year Strategic Community Plan 2013/14 – 2022/13 'Building A Future Together', as detailed in Attachment 1;

 

2.       By absolute majority Adopts the 4-year Corporate Business Plan 2013/14 – 2016/17 as detailed in Attachment 2;

 

3.       ADOPTS the Workforce Management Plan 2013-2017 as detailed in Attachment 3;

 

4.       Rescinds the Infrastructure Asset Management Policy as adopted on 5 February 2013 – CS06-02/13;

 

5.       Adopts the Asset Management Policy as detailed in Attachment 4;

 

6.       Adopts the Asset Management Strategy as detailed in Attachment 5;

 

7.       Adopts the Summary Asset Management Plan as detailed in Attachment 6; and

 

8.       Adopts the 10-year Long Term Financial Plan 2013/14 – 2022/23 (inclusive of 10-year Capital Works Program) as detailed in Attachment 7.

 

 

 

Attachments:

1View.

Strategic Community Plan

13/86101

Minuted

2View.

Corporate Business Plan

13/87275

Minuted

3View.

Workforce Management Plan 2013-2017

13/87360

Minuted

4View.

Asset Management Policy

13/73383

Minuted

5View.

Asset Management Strategy

13/73378

Minuted

6View.

Summary Asset Management Plan

13/76426

Minuted

7View.

10 Year Long Term Financial Plan

13/87808

Minuted

  


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CITY OF WANNEROO Late Items Agenda OF Elected Members' Briefing Session 18 June, 2013          258

 

Asset Management Policy

 

 

Policy Owner:           Infrastructure

Contact Person:          Manager Asset Management

Date of Approval:      

 

 

1.       Policy Statement

 

The purpose of this policy is to guide the strategic management of all City assets in accordance with the Integrated Planning & Reporting Framework (IPRF) strategies, relevant Legislation & Regulations, Australian Standards, Australian Accounting Standards, recognised best practice principles (International Infrastructure Management Manual IIMM) and other City policies.

 

It will be achieved by

·    having an Asset Management Strategy (AMS);

·    having a Summary Asset Management plan providing guidance for individual Asset Management Plans for each specific asset class; and,

·    ensuring that the AMS and associated systems are kept up to date.

 

This policy provides an integrated and multidisciplinary environment for undertaking asset management in such a way as to:

1.1     Ensure that assets service the community for current and future generations;

1.2     Ensure that assets provide a level of service and risk the community is willing to support;

1.3     Ensure the sustainable management of assets;

1.4     Encourage and support the economic and social well being of our community; and,

1.5     Allow informed decision making, incorporating whole of lifecycle costing principles.

 

2.       Key Definitions

 

2.1     Assets

 

In accordance with the International Infrastructure Management Manual 2011, Infrastructure Assets are ……stationary systems 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. The network may include normally recognised ordinary assets as its components.

 

The assets to be considered in this policy include,

·    Infrastructure assets such as roads, kerbing, stormwater drainage, pathways, bridges, buildings, playground equipment, public open spaces, sporting facilities, reserves;

·    Fleet, plant and equipment;

·    Information Technology such as computer hand ware and software; and

·    Museum artefacts and art collections.

 

2.2     Asset Management

 

The combination of management, financial, economic, engineering and other practices applied to assets from their planning, acquisition, operation, maintenance, replacement and disposal, to ensure that the assets meet the priorities of the Strategic Community Plan with the objective of providing the required level of service in the most cost-effective manner.

 

3.       Objective

 

The key objective of this policy is to ensure that there is organisation-wide commitment to asset management and that the objectives of the City's AMS are achieved. This will ensure financial data on asset renewals, maintenance of existing assets and new assets are identified and form part of City’s Long Term Financial Plan.

The principal objective of asset management is to enable the City to meet its service delivery objectives efficiently and effectively and through this policy aim to achieve the following:

3.1     Support the City’s vision and strategic objectives through a dynamic framework that will enable asset management to be undertaken in a structured and integrated manner with consideration to full lifecycle costing and assessment of the feasibility and cost of future replacement.

 

3.2     Provide an essential framework and rationale for recognised best practice asset management decision-making and compliance with relevant Australian Accounting Standards, relevant Legislation & Regulations, Australian Standards, recognised best practice principles (International Infrastructure Management Manual) and other City policies  and informing the organisation on how it will maintain its assets to meet service delivery requirements.

 

3.3     Complement and build on the City’s Strategic Community Plan, and provides a more formalised approach to asset management principles and methodology and integration with the IPRF Framework.

 

3.4     Provide the framework for the preparation of an Asset Management Strategy and Plans for all assets classes.

 

3.5     This policy also outlines the importance of asset management and what needs to be considered to ensure:

 

3.5.1    Financial, social and environmental sustainability issues are clearly understood and recognised by Council (ie: the Elected Members) and the community while providing for present needs and sustaining resources for future generations.

 

3.5.2    A whole of life approach is incorporated into asset management processes, enabling informed decision-making to meet service needs over the life of an asset from planning, acquisition, operation, maintenance, renewal, investment through to disposal and incorporation into the long term financial plan.

 

3.5.3    Level of service needs form the basis of asset management with asset performance being measured against levels of service defined in the Asset Management Plans.

 

3.5.4    Management of assets is undertaken in a structured and integrated way. When assessing the renewal of an asset, upgrades are to be considered to actively reduce the environmental footprint of the asset and increase the opportunities for the use that the asset provides.

 

3.5.5    Corporate responsibility and resources are identified and established for assets inventory, condition, use and performance.

 

3.5.6    Risk management is considered as part of asset management planning.

 

3.5.7    Legislative and regulatory requirements are achieved including maintenance of an accurate asset register in accordance with the requirements of the appropriate accounting standards to enable accurate reporting and effective decision making.

 

3.5.8    New innovative ways of meeting level of service requirements are sought through continuous improvement.

 

4.       Details

 

The IPRF requires all local governments to plan for the future including consideration of how the City will continue to deliver services to the community on a long-term basis in a financially sustainable and efficient manner. A strong focus on long-term strategic asset and financial planning is important because there is:

·    increasing demand for services as the population grows and changes;

·    increasing community expectation in relation to service provision, accountability and value for money;

·    a limited ability to grow revenue/finite resources; and,

·    the need to maintain, renew or replace infrastructure which is unable to meet future demand.

 

This Asset Management Policy has been prepared to provide a foundation for the Asset Management Strategy and related Asset Management Plans for individual asset classes. This Policy, Asset Management Strategy and Asset Management Plans make up the Strategic Asset Management Plan Resourcing Framework in the City’s IPRF as depicted in Figure 1 below.

 

Figure 1: Asset Management and the Integrated Planning and Reporting Framework

 

 

4.1     Custodianship

 

As custodians of the City’s assets, Council is required to represent the community as the asset owner to ensure that assets and services are maintained for present and future generations at an equitable cost.

 

4.2     Technical and Professional

 

Administration has a responsibility to provide technical and professional advice to Council so that it is in the position to make the best decisions on behalf of the community.

 

4.3     Consideration by City

 

The City will, as part of its consideration of asset management:

4.3.1      Involve and consult with the community and key stakeholders on determining service standards when developing level of service for each asset function;

4.3.2      Act as custodians of assets on behalf of the community and as part of providing quality infrastructure and community facilities, undertake to develop industry standard, affordable and financially sustainable Asset Management Plans that include defined levels of service for each asset function;

4.3.3      Integrate the Asset Management Strategy and Asset Management Plans with the City’s Strategic Community Plan and associated Long Term  Financial Plan to provide quality assets that support services that are appropriate, accessible, responsive and sustainable in accordance with the defined needs of the community;

4.3.4      Manage assets in a systematic and sustainable manner;

4.3.5      Ensure asset information is accurate and up-to-date, allowing for appropriate planning, both in the short and long term, and for informed decision making to occur including monitoring asset utilisation and prediction of future demand changes;

4.3.6      Manage its assets utilising a team approach through multi-discipline cross-function asset teams such as:-

·   Infrastructure Asset Management Steering Committee (IAMSC);

·   Information Technology (IT) Steering Committee;

·   Fleet Management Steering Group; and,

·   Property Services.

4.3.7      Allocate appropriate resources to ensure asset management practices are undertaken effectively, including timely maintenance and renewal to ensure that lifecycle costs are optimised for both existing and new infrastructure assets;

4.3.8      Prior to the consideration of any major works/renewal or improvement to an  asset, undertake a critical review of the need and whole of life cost of that asset, including capital, maintenance, operating, renewal, refurbishment, upgrade and disposal costs;

4.3.9      Utilise the ‘Renew before New’ concept for the development of the draft Ten Year Capital Works Program;

4.3.10    Consider the outputs of the Annual Asset Renewal Demand Modelling analysis undertaken for assets in the development of the Ten Year Capital Works Program and Strategic Financial Management Plan;

4.3.11    Continually seek opportunities for multiple and flexible use of assets where appropriate;

4.3.12    Ensure that the roles and responsibilities for all assets are well defined, understood and assigned appropriately;

4.3.13    Develop and implement a framework for the evaluation and prioritisation of asset related projects based on demonstrated need for the assets;

4.3.14    Develop and apply consistent construction and maintenance standards to assets built by the City and through the Community and/or the Land Developer; and,

4.3.15    Identify, through risk management and condition assessment, initiatives to reduce the exposure to injury, liability and asset failure.

 

 

 

 

5.       Policy Application

 

This policy applies to Council, Executive Management, staff, Committees of Management, the community and land developers involved in development of new assets and the operation, maintenance, refurbishment, renewal, upgrading and disposal of existing assets.

 

6.       Roles and Responsibilities

 

Responsibility for asset service delivery and asset management, including accountability and reporting requirements of day-to-day operations, needs to be clearly established and clearly communicated. This will ensure that Council and the City's staff are clearly aware of their responsibilities and roles in relation to asset management.

 

To manage assets effectively, responsibility for their control must be defined and assigned. Asset registers are to be kept up-to-date and provide timely and meaningful information that meets council and management decision-making requirements.

 

6.1     Council

 

6.1.1      To provide stewardship and act as custodians for infrastructure assets;

6.1.2      To set corporate Asset Management Policy with linkages to the City’s Strategic Community Plan and Long Term Financial Plan;

6.1.3      To determine levels of service risk and cost standards associated with assets;

6.1.4      To approve and review the Asset Management Strategy and the Summary Asset Management Plan and monitor the outcomes;

6.1.5      To ensure appropriate resources and funding for asset management activities are made available to integrate Asset Management Policies, Strategies and Plans into the Corporate Governance framework;

6.1.6      To provide consistent and transparent decision making processes based on adopted criteria; and,

6.1.7      To provide an advocacy role with State and Federal Governments and the community.

6.2     Chief Executive Officer and the Senior Management Team

 

6.2.1      To continually promote asset management across the organisation, and with Council and the community;

6.2.2      To validate and challenge proposals to ensure they meet the City’s Strategic Community Plan objectives and community service needs;

6.2.3      Ensure integration and compliance with the Asset Management Policy and Strategy with other policies and business processes of the City.

6.2.4      To foster and support a multi-discipline, cross-functional responsibility for asset management;

6.2.5      To monitor the performance of staff in implementing asset management;

6.2.6      To ensure community and key stakeholders inputs are integrated into Asset Management Plans; and

6.2.7      To provide effective communication between staff, Council and the community.

6.3     Asset Owners

 

6.3.1      To develop, implement and review Asset Management Plans based on sound business principles;

6.3.2      To continually seek innovative ways of meeting service needs and deliver enhanced services and organisational performance by optimising and rationalising assets in order to provide the best possible quality and value for money ;

6.3.3      To ensure staff are appropriately trained and skilled to perform the required asset management functions and keep up to date on best practice relating to asset management;

6.3.4      To ensure that accurate and reliable asset information is presented to the Council for informed decision-making; and,

6.3.5      To undertake regular reviews of the Asset Management Policy;

6.3.6      To champion the development, implementation and review of the Asset Management Strategy;

6.3.7      To develop AMP's, using the International Infrastructure Asset Management Manual as a guide, documenting required allocation of funding and improvement plans for individual infrastructure asset groups, using the principles of lifecycle analysis;

6.3.8      In consultation with the community and key stakeholders, identify levels of service for Council’s consideration/approval;

6.3.9      In accordance with the approved Council level of service, deliver those services to agreed risk and cost standards;

6.3.10    To ensure the efficient and effective use of funds as approved by Council and the optimisation of life cycle cost of all assets;

6.3.11    To provide effective communication between staff and the EMT;

6.3.12    To develop and implement maintenance, conservation, preservation, refurbishment and capital expansion, capital upgrade and refurbishment/renewal programs in accordance with AMP's;

6.3.13    To develop and implement procedures that ensure the asset databases are maintained and updated and provide required reports to Council to meet their statutory and legal responsibilities;

6.3.14    To promote and raise awareness of AM to Council, staff, users and community; and,

6.3.15    To measure and report on asset performance including utilisation and costing to ensure that the costs incurred do not outweigh the benefits derived and balance expenditure requirements with the funding ability of the City with reference to the capacity or otherwise of ratings income.

6.3.16    Engage up to date technologies, methodologies and continuous improvement processes

6.3.17    To ensure that assets are universally accessible in accordance with the City's Disability Access and Inclusion Plan.

 

7.       Implementation and Review

 

Review of this Policy shall take place according to the adopted Policy and Procedure Framework or as determined by Council.

 

 

Responsibility for Implementation

Director Infrastructure

 

Versions

Next Review

Record No:

4 July 2006

 

516924

4 May 2010 - IN01-05/10

March 2012

TRIM: 10/1009

5 February 2013 – CS06-02/13

December 2015

TRIM: 12/154740

28 May 2013

 

TRIM: 13/73383

 

 


CITY OF WANNEROO Late Items Agenda OF Elected Members' Briefing Session 18 June, 2013            266

 

 

Asset Management

Strategy

 

 

 

 

 

 

 

 

 

DISTRIBUTION SCHEDULE

 

Revision No.

Date

Distribution

Reference

R1.0

 

 

TRIM 13/73378

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

TABLE OF CONTENTS


1    Executive Summary. 3

2    Introduction. 5

3    Department of Local Government Asset Performance Standard Requirements. 7

4    Strategic Asset Management Plan. 8

4.1  Overview.. 8

4.2  Asset Management Policy. 9

4.3  Asset Management Strategy (this document) 9

4.4  The Summary AM Plan and Detailed AM Plans. 9

5    Asset Management Strategy & Framework. 11

5.1  Purpose of the Strategy. 11

5.2  Scope of the Strategy. 11

5.3  Focus of the Strategy. 12

5.4  Strategic Objectives and Outcomes. 12

1)              5.4.1.............................................................. Direction, Accountability and Integration. 12

2)              5.4.2........................................................................................ Lifecycle Management 12

3)              5.4.3...................................................................... Data and Information Management 12

4)              5.4.4......................................................................... Standards and Levels of Service. 12

5)              5.4.5.................................................... Skills, Processes and Continuing Improvement 12

6    Asset Management Strategy Objectives. 14

6.1  Direction, Accountability and Integration. 14

6)              6.1.1............................................ Strategy for Direction Accountability and Integration. 15

6.2  Lifecycle Management 17

7)              6.2.1.................................................................... Summary of the Current Asset Base. 17

8)              6.2.2...................................... Corporate Business Plan (CBP) - Asset Related Projects. 17

9)              6.2.3................................................................................................ Financial Context 17

10)          6.2.4........................................... Estimated Asset Replacement Costs By Asset Class. 18

11)          6.2.5......................... Proposed Renewal Expenditure and Asset Renewal Performance. 19

12)          6.2.6..................................................................... Strategy for Lifecycle Management 22

6.3  Data and Information Management 25

13)          6.3.1................................................... Strategy for Data and Information Management 25

6.4  Standards and Levels of Service. 26

14)          6.4.1....................................................... Strategy of Standards and Levels of Service. 26

6.5  Skills, Processes and Continuous Improvement 27

15)          6.5.1....................................................................................... The IPRF Requirements. 27

16)          6.5.2............................................................... Asset Management Competency Levels. 27

17)          6.5.3................................ Strategy for Skills, Processes and Continuous Improvement 29

7    Glossary of Terms. 30

7.1  Definitions. 30

7.2  Abbreviations. 32

APPENDIX A : The Asset Responsibility Matrix. 33

APPENDIX B : The Asset Management Cycle (Process) 34


 

1    Executive Summary

Local Governments are asset-intensive organisations, in particular infrastructure assets such as roads. The estimated replacement cost of the City infrastructure assets is approaching $1.2 billion. This exposes the City to considerable risk, not only financial but also political, physical, operational and legal.

The current growth of the City and demand for services, together with its longer-term development, has significant and far-reaching implications for the City's infrastructure and physical asset base. Coupled with this, the State Government enacted legislation in August 2011 introduced the Integrated Planning and Reporting Framework (IPRF). This framework requires all local governments to adopt a long-term future planning and reporting regime that includes giving consideration to how services will continue to be delivered to the community in a financial and sustainable manner.

This is the City's first Asset Management Strategy under the IPRF. It is part of the City's Strategic Asset Management Resourcing Framework that comprises the following documents:

·   Asset Management Policy (AM Policy)

This provides the overarching asset management policy and the key principles against which assets are to be managed.

·   Asset Management Strategy (AM Strategy)

The Strategy sets asset management objectives, practices and strategies for the improvement of the asset base and the asset management system.

·   Summary Asset Management Plan and Detailed Asset Management Plans

These translate the asset management strategies into programs for implementation.

The scope of this strategy relates to the physical assets of the City such as infrastructure, buildings, plant and equipment, and information and communications technology (ICT). It focuses on providing the basis for the development of future AM Plans that ensure the full integration of asset management into the City's corporate planning process and the continuing and future provision of services to the community to the right standard, at the right time and place, and at the right cost.

These are complex challenges, not least of which will be how to balance investment in new assets with the need to maintain the efficient and effective provision of community services from the existing asset base.

In considering this, the City's vision is for a portfolio of high-performing and sustainable assets that are managed to international standards of practice; that strive to meet the priorities and aspirations of the community and the strategic and operational needs of the City and are balanced within the City's financial context.

Against this background, the strategy sets asset management objectives and outcomes that are consistent with the City's Asset Management Policy, meet the requirements of the IPRF, and define a road map for the development of the City's asset management capacity and capability necessary to meet the challenges of the future.  It also identifies how these objectives and outcomes will be achieved.


 

The City has developed the following strategic objectives for the AM Strategy:

·   Direction, Accountability and Integration

To develop a Whole-of-City asset management system and process that provides direction across the organisation, promotes clear accountability at all levels of management and integrates asset management into the corporate planning process.

·   Lifecycle Management

To manage the City's assets on the principles of lifecycle management to ensure their most effective and efficient performance.

·   Data and Information Management

To ensure the quality and accuracy of asset data and information that enables analysis of asset performance and effective decision-making.

·   Standards and Levels of Service

To develop asset management standards and levels of service that reflect community aspirations and satisfies the internal requirements of the City's business units.

·   Continuous Improvement

To develop an organisation-wide asset management function with a culture of continuous improvement in skills, processes, knowledge and practices.

 

 

 


CITY OF WANNEROO Late Items Agenda OF Elected Members' Briefing Session 18 June, 2013            271

 

2    Introduction

In October 2010, the Department of Local Government released the Integrated Planning and Reporting Framework (IPRF), which became law in August 2011. The IPRF consists of a Strategic Community Plan (SCP) and a Corporate Business Plan (CBP) that is informed by various strategies, including Long Term Financial Planning (LTFP), Workforce Planning (WP), and Asset Management (AM).

The IPRF requires all local governments to plan for the future including consideration of how they will continue to deliver services to the community on a long‑term basis in a financially sustainable and efficient manner.

Assets are fundamental to Councils’ overall service delivery and planning. Responsibility for assets requires strong and informed Council and executive oversight to achieve and maintain sustainable asset management outcomes.

Asset management must form part of an effective integrated planning and reporting framework, linking with, and supporting long-term financial planning and strategic planning to ensure that the appropriate level of funds and resources are available to continue to provide services to the community in accordance with Council’s objectives as set out in the Strategic Community Plan (SCP).

A strong focus on long-term asset planning is important because there is:

·    Increasing demand for services as the population grows and changes;

·    Increasing community expectations in relation to service provision, accountability and value for money;

·    Limited ability to grow revenue and finite resources; and,

·    A need to maintain, renew or replace assets.

The City has responded to the IPRF with the development of a Draft 10 year Strategic Community Plan (2013/14 to 2022/23) which represents the Community's Long Term aspirations inclusive of a 4 year Corporate Business Plan and a one year Operational Plan.

These plans are supported by a Resourcing Framework that outlines the City's capacity to deliver services and manage its assets over the next 10 years. The Resourcing Framework contains the following four plans:

·    Long Term Financial Plan;

·    Strategic Asset Management Plan incorporating:

-   Asset Management Policy (AM Policy);

-   Asset Management Strategy (AM Strategy, this document); and,

-   Summary AM Plan and Detailed AM Plans.

·    Workforce Management Plan; and,

·    Information and Communication Technology Strategic Plan.

Figure 1 below shows how the City's various plans relate to each other under the new IPRF and where the components of the Strategic Asset Management Plan fit into this structure.

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Figure 1: Asset Management and the Integrated Planning and Reporting Framework


 

3    Department of Local Government Asset Performance Standard Requirements

All local governments in Western Australia are required to demonstrate compliance with the Department of Local Government’s Advisory Standards (Basic Standard) for each level of planning under the IPRF.

They are required to achieve, by July 2013, a base standard for the Asset Management Framework which encompasses the following:

·    Development of an AM Policy;

·    Development of an AM Strategy including:

-   AM Plans that considers major asset classes;

-   Processes that link AM Plans to Long Term Financial Plans;

-   Defined levels of service and affordability;

-   Governance and management arrangements;

-   Data and systems to support asset management; and,

-   Improvement of skills and processes.

·    Development of a process for evaluating AM Plans, processes and asset sustainability;

·    Linking of asset management to the Annual Report.

These standards are designed to encourage continuous improvement along the asset management continuum.

 

The basic standard for asset management in the IPRF is:

·   The existence of Asset Management Plans for significant and critical asset classes; and,

·   Key Performance Indicators (KPIs) that meet these standards. These KPIs are summarised in Table 1.

Table 1: Key Department of Local Government Performance Standards for Asset Management


Key Performance Indicator

Measure

Basic Standard

Advanced Standard

Asset Consumption Ratio (Aged condition of asset stock)

Written Down Asset Value

Divided by

Current Replacement Costs

Ratio can be identified;

and ratio is ≥ 50%

Ratio between 60% and 75%

Asset Sustainability Ratio (Extent of asset replacement at end of useful life)

Capex on Asset Replacement/Renewal

Divided by

Depreciation Expense

Ratio data can be calculated;

and ratio is ≥ 90%

Ratio between 90% and 110%

Asset Renewal Funding Ratio   (Capacity to fund asset renewal without increasing current operating liabilities)

NPV of Planned

10-year Capex on Renewals

Divided by

NPV of Required 10-year Capex on Renewals

Ratio data can be identified;

and ratio is between 75% and 95%

Ratio between 95% and 105%; and

ASR is within 90% and 110%; and

ACR is within 50% and 75%

 

Estimations of the City's ratios are contained in section 6.2.5


 

4    Strategic Asset Management Plan

4.1     Overview

The City's Strategic Asset Management Plan is a sub-set of Council's Resourcing Framework encompassing (as depicted in Figure 1):

·    AM Policy;

·    AM Strategy;

·    Summary AM Plan and Detailed AM Plans.

Asset Management is a task of managing non-current assets for the lowest lifecycle cost. It is a multi-disciplinary task combining key areas of expertise in:

·    Management;

·    Planning;

·    Finance;

·    Economics;

·    Property;

·    Engineering; and

·    Maintenance.

One of the biggest challenges facing the City is how it will sustainably balance the timely provision of new facilities for our rapidly growing areas as well as ensuring that the existing portfolio of assets, particularly long life assets like infrastructure assets, are maintained, refurbished and/or upgraded to suitable standards that are acceptable to the community.

The cost of maintaining, upgrading and renewing infrastructure assets represents a large component of the City's Operating and Capital Works Budget. The City needs to ensure that its assets are managed efficiently to demonstrate value for money but also to reduce their impact on the environment.

The City has care, control and responsibility of a diverse and extensive portfolio of assets which are used to deliver services to the community. Assets have been accumulated over a number of years and have either been purchased, constructed or gifted from other tiers of government, private developers or the community.

 

Assets are often built or acquired in waves that align with economic need or prosperity. All these assets require maintenance, refurbishment and renewal activities throughout their lifecycle. If the Council intends to continue its services through these assets, it will need to adequately budget for these activities in its annual budgets and long term financial plan.

 

The most cost effective way to do this is to maintain or renew assets at the optimum time. Renewing assets too early wastes life in the asset, whereas renewing assets too late increases risk and consequently increases costs. The challenge for the City is to choose the optimum time for the maintenance and renewal of its assets and ensure sufficient funds and resources are available to undertake these activities. For this to happen, the City needs to understand its assets and be able to estimate the optimum replacement cycle and then put in place strategies to ensure funds and resources are available when required.

 

At the most basic level, the following need to be in place to achieve the above outcomes:

·    Know what assets are owned or controlled by the City;

·    Know their condition;

·    Understand the expected life of the assets;

·    Understand what assets are required to underpin current and future service needs;

·    Decide what future asset needs mean in terms of acquisitions, maintenance and disposals;

·    Know the cost to provide the service and managing assets;

·    Have a system in place to prioritise resource allocation that it is aligned with the Strategic Community Plan and Corporate Business Plan;

·    Have all of the above summarised in an AM Plan; and,

·    Ensure that all costs (and revenues) are captured in the financial management system and entered into the Long Term Financial Plan.

Current Position

The City has much of the above practises in place for infrastructure assets. Formalising the relevant documents and documenting the associated processes and procedures will be the focus of improvements to ensure compliance. Also this practise will also need to be applied to other assets such as Fleet, Plant & Equipment and IT assets.

4.2     Asset Management Policy

The adoption of an AM Policy will ensure that there is organisation-wide commitment to asset management and outlines the framework and objectives that enables the development of the AM Strategy and AM Plans.

Current Position

Council previously adopted an Infrastructure AM Policy. This Policy has been reviewed to incorporate the requirements of the IPRF and also to include other assets such as Fleet, Plant & Equipment and IT assets.

4.3     Asset Management Strategy (this document)

The AMS is the asset response to service needs and drives the entire asset management process. It is a high-level corporate management document that ensures the objectives of the AM Policy is implemented, and provides the management framework to enable the implementation of detailed AM Plans.

Current Position

This AM Strategy document has been prepared as part of IPRF requirements.

4.4     The Summary AM Plan and Detailed AM Plans

The Summary AM Plan will bring together the corporate requirements of the various detailed AM plans and improvement planning summaries. The Summary AM Plan and detailed AM Plans:

·    Demonstrate how the City will manage its assets and ensure service delivery continues in line with the aspirations of the SCP and CBP.

·    Contain the basic tools to enable Council to make informed decisions on the allocation of resources in order to maintain all major assets to the standard required to satisfy service delivery needs.

·    Will ultimately provide guidance on the long-term (10 years) allocation of financial and physical resources required to ensure the continuing operational performance of the City assets.

·    Set out how the council delivers service to the community on a long-term sustainable basis and the assets required to underpin service delivery.

·    Capture and document corporate knowledge about assets and the required service levels to support service delivery.

Current Position

The City has adopted AM Plans for most of the City's infrastructure assets such as Roads & Pathways, Stormwater Drainage and Buildings. The review of these AM Plans are currently in progress including the development of the Parks AM Plan and Natural Area AM Plan. AM Plans for Fleet, Plant & Equipment and IT are still to be developed.

 


 

5    Asset Management Strategy & Framework

Council is the custodian of a significant portfolio of assets and through its AM Policy, AM Strategy and AM Plans, it will be able to make better informed decisions on behalf of the community. The City recognises that it will not always be able to meet all of the community's expectations and sometimes difficult choices will need to be made but these decisions will be made in the best interest of the community as a whole.

5.1     Purpose of the Strategy

The purpose of this AMS is :

·    To set objectives and outcomes and ensure that the management of its assets is consistent with the AM Policy and meets the minimum requirements of the IPRF; and

·    To outline a road map for the development and improvement of its asset management capacity in relation to the current and future service requirements whereby the City will achieve benefits in terms of:

­  Meeting legislative requirements;

­  Better quality data for decision-making;

­  Reduced risk of asset failures and improved risk management;

­  Better long-term financial management and planning;

­  Minimised lifecycle costs and improved sustainability; and,

­  Auditable decision making and reporting.

5.2     Scope of the Strategy

The assets considered in this strategy include the following asset classes:

Table 2:  Asset Classes considered in this AM Strategy

Asset Class

Assets included in the Asset Class

Land

Vacant and developed freehold land. 

Transport Assets

Roads, Carparks, Pathways, Kerbs, Bridges, Bus Shelters, Roadside Furniture, Signage, Street Lighting.

 

Building Assets

Libraries, Public Halls, Multi-Purpose Community Facilities, Public Toilets, Houses, Museums, Council Offices, Leisure Centres, Amenity Buildings, Furniture.

Stormwater Drainage Assets

Drains, Pipes, Culverts, Pits, Gross Pollutant Traps, Wetlands.

Park Assets

Parks, Gardens, Sports Ovals, Play Equipment, Irrigation Systems, Skate Parks, Tennis Courts, Golf Course, Park Furniture, Sports Field Lighting.

Natural Areas and associated assets

Conservation and foreshore fencing, signage, beach access ways and limestone tracks.

Plant and Equipment

Motor Vehicles, Trucks, Construction Equipment, Gardening Equipment.

ICT

Computer Systems & Equipment.

Art Collections

Museum Artefacts and Art Collections

5.3     Focus of the Strategy

This AMS focuses on developing and improving existing internal capacity and processes to enable the implementation of the AM Policy objectives. It also formally integrates asset management into the corporate and business planning regime by informing and being informed by the Strategic Community Plan, Corporate Business Plan and Long Term Financial Plan.

The key focus areas for this AMS are therefore to:

·    Develop asset management knowledge and capacity;

·    Understanding the current asset base;

·    Shape the asset requirements for the future; and,

·    Integrate asset management into the corporate planning process.

5.4     Strategic Objectives and Outcomes

In keeping with the focus areas, the following strategic objectives have been identified for achieving best practise asset management outcomes (Table 3 lists these objectives with their desired outcomes and Section 6 provides further details) :

5.4.1 Direction, Accountability and Integration

To develop an asset management framework and process that provides direction across the organisation, promote clear accountability at all levels of management, and integrate asset management into the corporate planning process.

5.4.2 Lifecycle Management

To manage the City’s assets on the principles of lifecycle management to ensure their most effective and efficient performance.

5.4.3 Data and Information Management

To ensure the quality and accuracy of asset data and information that enables analysis of asset performance and effective decision-making.

5.4.4 Standards and Levels of Service

To develop asset management standards and levels of service that reflect the aspirations of the community and satisfies the internal requirements of the City's service units.

5.4.5 Skills, Processes and Continuing Improvement

To develop an organisation-wide asset management function with a culture of continuing improvement in skills, processes, knowledge and practices.

Table 3:  Strategic Objectives and Outcomes

Strategic Objective

Desired Outcome

Direction and Accountability

Defined roles and responsibilities and accountabilities that are clearly understood across the organisation and integrated into the City business and resources planning process.

Lifecycle Management

A portfolio of assets that is aligned with the City corporate, financial and business objectives, which is effectively and efficiently managed from asset conception, planning, design, use and disposal.

Data and Information Management

The ability to identify, analyse and model asset trends that enhance asset efficiency and effectiveness and enable informed decision-making.

Standards and Levels of Service

A portfolio of assets that is aligned with community and organisational expectations and priorities having regard to the financial context of the City.

Skills, Processes and Continuing Improvement

Ongoing improvement in asset management competency and capacity.

 


 

6    Asset Management Strategy Objectives

6.1     Direction, Accountability and Integration

Asset management is a core part of the City’s operations and overall long-term sustainability that requires clear guidance and leadership from across the organisation.

As a first step in the governance and management of the City’s asset management process and the management of the asset base itself, the following has been identified as asset management tasks that need to be assigned within an asset management governance and management framework:

·    Development of a matrix setting out responsible officers for each task over the entire asset management lifecycle for each major asset group or asset ownership portfolios (refer to Appendix A: Asset Responsibility Matrix);

·    Representation from across the organisation to ensure that asset management supports the required service delivery;

·    Ensuring that management practices are applied consistently across the organisation and supported by a continuous improvement plan;

·    Ensuring an ongoing organisational commitment to asset management and that it is adequately resourced;

·    Developing an asset hierarchy including common asset numbers and linkages across asset registers;

·    Ensuring that data and systems are in place to support improvements in asset management practices.

·    Ensuring asset inventory information is up-to-date and regularly reviewed;

·    Ensuring asset condition assessments are regularly undertaken and associated reports are maintained;

·    Ensuring the chart of accounts structure and system is sufficiently componentised to allow the reporting of operating, maintenance, renewal, upgrade and new expenditure at the appropriate component levels and by asset hierarchy in the Finance and Asset Management Systems;

·    Applying Risk Assessment tools to support decision making;

·    Annual review and update of the AM Strategy and AM Plans;

·    Annually revise the asset renewal demand projections in the Summary AM Plan and Detailed AM Plans.

·    Updating the renewal model and ensure that the LTFP is updated;

·    Monitoring and evaluation of asset management performance, including reporting to the Executive Management Team;

·    Annually revise the roles & responsibilities matrix and update a skills assessment gap in order to refine the ongoing training program for Officers and Elected Members;

·    Analysis of the realistic useful life of assets in order to refine the renewal demand model;

·    Ensure assets are reflected at fair value so that realistic Asset Sustainability indicators can be developed;

·    Develop and document a formal process for the handover of new assets to asset owners, which ensure any impacts on 'Business As Usual' are taken into account;

·    Improvement of skills and processes relating to asset management;

·    Manage, monitor, review and report upon the implementation of the AM Plans;

·    Develop strategies for communications with asset owners, ICT, Finance, the Executive Management Team and other stakeholders.

·    Integration of asset management into the corporate planning, business and reporting process.


 

6.1.1 Strategy for Direction Accountability and Integration

The roles, responsibilities and associated accountabilities adopted in the City’s AM Policy for the management of assets are shown in Table 4.

The actions and status of this strategic objective is summarised in Table 5.

Table 4: Asset Management Roles and Responsibilities

Entity

Role

Responsibility & Accountability

Council (Elected Members)

 

Strategy

·   To provide stewardship for infrastructure assets.

·   To set levels of service, risk and cost within available resources.

·   To approve and review AM Policy, AM Strategy and Summary AM Plan; and monitor the outcomes.

·   Ensure appropriate allocation of AM resources/funding.

·   To provide consistent and transparent decision making processes based on adopted criteria.

·   To provide an advocacy role with State and Federal Governments and the community.

Chief Executive Officer and

Senior Management Team

Corporate/ Organisational Objectives &

 

Translation of Objectives & Plans into Business Plans/Service Strategies Planning

·   To Implement the AM Policy.

·   To continually promote asset management across the organisation, and with Council and the community.

·   To validate and challenge proposals to ensure they meet the City’s Strategic Community Plan objectives and community service needs.

·   To ensure the integration and compliance with the AM Policy, AM Strategy, other policies and business processes of the City.

·   To foster and support a multi-discipline, cross-functional responsibility for asset management.

·   To ensure community and key stakeholders inputs are integrated into AM Plans.

Asset Owners

Strategy Implementation

 

Service Provision

·   To undertake regular reviews of the AM Policy.

·   To champion the development, implementation and review of the AM Strategy and AM Plans for individual asset groups.

·   To continually seek innovative ways of meeting service needs and deliver enhanced services and organisational performance.

·   To ensure the efficient and effective use of funds as approved by Council and optimising life cycle cost of all assets.

·   To promote and raise the awareness of AM to Council, EMT, staff, users and community.

·   To measure and report on asset performance, utilisation and costing.

·   To implement improvement plans for asset group.

 

 

Table 5: Direction and Accountability Strategy

Strategic Objective: Direction and Accountability

Defined roles and responsibilities and accountabilities that are clearly understood across the organisation and integrated into business and resources planning process.

 

Item

Strategy

Action Required

Status

Governance and Management Arrangements

Development of governance and management arrangements

Development of roles and responsibilities and assignment of asset management tasks.

Progressing – need to cover all assets and formalise documentation on roles and responsibility.

Nominated senior corporate sponsor of asset management.

Complete – CEO responsibility.

Nominated owner of the corporate function.

Complete - Director Infrastructure responsibility.

Active involvement of Executive Management Team and asset owners.

Complete - three asset management working groups are established for consultation;

a) Infrastructure Asset Management Steering Committee (IAMSC);

b) IT Steering Committee; and

c) Fleet Management Steering Group.

Elected members are kept informed of asset management progress.

Progressing – Review of AM Policy, AM Strategy and Summary AM Plan is to be reported to Council. Progress of this AMS will be reported in future.

 


 

6.2     Lifecycle Management

The development of a strategy to align the City assets, which are managed from asset conception, planning, design, use and disposal, with its corporate, financial and business objectives requires an analysis of the City’s existing asset base and the management of assets on the basis of the asset management cycle and associated processes.

6.2.1 Summary of the Current Asset Base

The City’s asset base is comprised of four asset categories. The estimated current replacement cost of these assets and the value of unfunded renewal demand is as shown in Table 6. The current replacement cost has been estimated using current 2012 unit rates. Note that this plan only considers depreciable assets.

Table 6: Summary of the City's current portfolio of major depreciable assets.

Asset  Class

Estimated Current Replacement Cost ($)

Predicted Value of Current Unfunded Renewals (Backlog) ($)

ICT

Data Not Included

0

Infrastructure Assets

1,166,794,000

5,544,000

Fleet, Plant and equipment

Data Not Included

0

Grand Total

1,166,794,000

5,544,000

Notes:

1.    Data for ICT, Fleet, Plant & Equipment assets have not been included in the table at this time.

2.    Assets considered here are those that depreciate over time. Assets such as Road Formation do not deteriorate as once constructed, do not require future reconstruction. Similarly, Land does not depreciate and therefore has not been included the table.

6.2.2 Corporate Business Plan (CBP) - Asset Related Projects

The CBP outlines a program for a significant number of projects within the Capital Works Program over the next 10 years. The majority of these projects will have implications for asset management.

Integration of these projects into the asset management process is included in the Summary AM Plan and Detailed AM Plans.

6.2.3 Financial Context

Asset expenditure forecasts and ratios will inform the LTFP.

The information and results of the expenditure forecasts, indicators and renewal/replacement gaps provide a baseline from which the City will review its current asset base in the manner described in this strategy. This will enable the City to prioritise and plan asset expenditure to reflect the needs of critical and significant assets in the context of the availability of funds.

All data used in compiling the status of the current asset base has been sourced from asset databases which are a consolidation of analysis of the following:

·    10-Year Capital Works Program.

·    Infrastructure Asset registers (Transport, Buildings, Parks and Stormwater Drainage Assets).

·    Corporate Property database.

·    Roman 2 (Road Asset Management Software).

·    Plant and equipment registers.

·    ICT asset register.

All calculations are based on current known data and asset replacement values based on 2012 unit rates. This strategy provides for all asset data to be checked and verified, following which the status of the existing asset base will be reviewed and updated.

6.2.4 Estimated Asset Replacement Costs By Asset Class

As the data for Land, Plant & Equipment and ICT assets are not yet available, the figures below only represents infrastructure asset renewal demand.

Table 7 shows the estimated current replacement cost by asset class. Total replacement cost for all infrastructure assets are estimated at $1,166,794,000.

Replacement/Renewal estimates have been derived from the recently developed Asset Databases. This contains a schedule of rates for replacement/renewal of assets.

         Table 7: Estimated Asset Replacement Cost - Infrastructure

Infrastructure Assets

Estimated Current Replacement Cost ($)

Predicted Value of Current Unfunded Renewals (Backlog) ($)

Transport

677,428,600

1,372,650

Buildings

218,243,200

801,250

Parks

90,730,000

3,370,100

Stormwater Drainage

180,392,300

0

Total Infrastructure Assets

1,166,794,000

5,544,000

Notes:

1     The Predicted Value of Unfunded Renewals is an estimate as at 30 June 2013.  The 'backlog' reflected in Figure 2 overleaf has been reduced through the level of Renewal expenditure proposed in 2014.


 

6.2.5 Proposed Renewal Expenditure and Asset Renewal Performance

The data presented here relates to infrastructure asset renewal demand.

6.2.5.1    Renewal Expenditure Results - Infrastructure Assets

The current renewal funding allocation for infrastructure assets in the City’s draft 2013/14 Ten Year Capital Works Program and the resultant estimated asset renewal demand impact and value of unfunded renewal demand (backlog) is as shown in Figure 2.

 Figure 2: Predicted Asset Renewal Demand and Unfunded Renewals – Infrastructure Assets Only

Notes:

1.   The City's planned renewal expenditure for years 2014 to 2023 is based on the draft 2013/14 Ten Year Long Term Financial Plan.

2.   The Predicted Annual Renewal Demand Impact includes the value of unfunded renewal from previous year (backlog).

3.   Positive backlog figures represents value of unfunded renewals while negative values represent the value of renewed assets that have yet to reach intervention. It should be noted that this graph represents one strategy to fund renewals.

4.   The predicted value of unfunded renewals shown in each year is the total renewal demand inclusive of backlog less renewal funding allocated in that year. 

 

Figure 2 demonstrates that the City is currently managing its renewal demand with the current proposed renewal expenditure at least in the first 8 years. In year 9 and 10, the resultant value of unfunded renewals start to increase. Further asset renewal funding will be required in these years to bring the unfunded renewals to manageable levels.

6.2.5.2    DLG Key Performance Indicators (Asset Ratios) – Infrastructure Assets

The predicted Asset Performance Ratios resulting from the proposed 10 year Capital Renewal Expenditure detailed in the previous section is shown in Figure 3.

Figure 3: Predicted Asset Performance Ratio Indicators – Infrastructure Assets Only

The estimation of the current Asset Ratios specified by the Department of Local Government are shown in the following table.

Table 8: Estimated Asset Ratios

Key Performance Indicator

Measure

Ratio

Basic Standard

Asset Consumption Ratio

Written Down

Asset Value (WDV)

Divided by

Current Replacement Costs

80%

Ratio can be identified; and ratio is ≥ 50%

Asset Sustainability Ratio

Capex on Renewal & Replacement

Divided by

Depreciation Expense

43%

Ratio data can be calculated; and ratio is ≥ 90%

Asset Renewal Funding Ratio

NPV of Planned

10-year Capex on Renewals

Divided by

NPV of Required 10-year

Capex on Renewals

75%

Ratio data can be identified; and ratio is between

75% and 95%

 

Based on Figure 3, the performance indicators are within reasonable limits over the next 8 years. High growth within the City of Wanneroo will continue to influence the results of these Asset Performance Ratios. The results of the calculated ratios are further discussed below:-

·     Asset Consumption Ratio (ACR)

The ACR highlights the aged condition of physical assets. All local governments will be required to report this ratio utilising current financial records.

The basic standard set by the DLG is a ratio of no less than 50%. The current ACR for the City's Infrastructure Assets is estimated at 80%.

The indicative target is between 40 – 80%. This ratio is relatively high for Wanneroo due to its most valuable assets being relatively new. It is likely to remain high with continuing high growth anticipated and the construction of new infrastructure assets.

·     Asset Sustainability Ratio (ASR)

The ASR measures the extent of asset replacement at the end of useful life. The ratio is intended to indicate whether a local government is renewing or replacing existing non-financial assets at the same rate that its overall stock of assets is wearing out.  It is calculated by measuring capital expenditure on renewal or replacement of assets relative to the rate of depreciation of assets for the same period.

The basic standard set by the DLG is a ratio of no less than 90%. The current ASR for the City's Infrastructure Assets is estimated at 43%. The DLG's Asset Management Framework and Guidelines publication provides the following explanation in respect to the ASR (page 38):

"If capital expenditure on renewing or replacing assets is at least equal to depreciation on average over time, then the local government is ensuring the value of its existing stock of physical assets is maintained. If capital expenditure on existing assets is less than depreciation then, unless a local government’s overall asset stock is relatively new, it is likely that it is underspending on renewal or replacement. This is likely to result in additional maintenance costs for assets that have exceeded their useful life that exceed the costs of renewal and replacement. This situation could progressively undermine a local government’s financial sustainability as it is confronted with failed assets and significant renewal and replacement costs that cannot be accommodated without sudden large rate increases."

A ratio of 100% indicates that asset stock is being replaced at a sustainable level. It is recognised however that this may be 50% or less when asset portfolios are young.  A large percentage of the City's assets are in new to very good condition with approximately 85% of the total asset base at or below condition 2 (a rating of 0 represents a new asset and 10 assets that are failing). Less than 1% of the asset base is at or above condition 8, which represents assets that require immediate attention.

With the City's current mix of old and new assets and continued high growth, the current ASR is at an acceptable level. As the stock ages it should increase but continued growth may keep it relatively low.

·     Asset Renewal Funding Ratio (ARFR)

The ARFR measures the capacity to fund asset renewal without increasing operating liabilities.

The basic standard set by the DLG is a ratio of between 75% and 95%. The current ARFR for the City's Infrastructure Assets is estimated at 75%.

The target for sustainable assets is between 95-105%. The indicators predicted in future years suggest that for the latter part of the 10 year capital works program, there is a need to increase renewal funding allocated where the ratio has dipped below the 60% mark.

It must be noted that the ASR and ACR ratios are dependent on calculating the Written Down Value of assets. At this stage the City has yet to revalue its assets based on Fair Value. This is being addressed as part of the improvement plan suggested in this Strategy.

The calculations used here to determine the Written Down Value for infrastructure asset have been based on Depreciated Current Replacement Cost obtained from Asset Management databases.


 

6.2.6 Strategy for Lifecycle Management

The strategy for Lifecycle Management is outlined in Table 9.

Table 9: Lifecycle Management Strategy

Strategic Objective: Lifecycle Management

A portfolio of assets that is aligned with corporate, financial and business objectives, which is efficiently and effectively managed from asset conception, planning, design, use and disposal.

 

Item

Strategy

Action Required

Status

Asset Knowledge

Develop a detailed understanding of the asset portfolio in terms of asset inventory; asset condition, value, cost and appropriateness; and remaining life.

Carry out a comprehensive asset audit, including land holdings, revenue assets, Fleet, Plant & Equipment and IT assets.

Progressing

Confirm condition of significant & critical assets.

Progressing

Develop maintenance & renewal programs that align with strategy and asset owner requirements.

Progressing

Goals & Objectives

Asset Management Strategies and Plans will align the asset portfolio with the strategic goals and objectives of the local government.

Integrate asset strategies and plans into Asset Strategy and Planning documents that reflect the Strategic Community Plan, Corporate Business Plan, ICT Strategy and Long-term Financial Plan.

Progressing – asset management framework documents are complete but are yet to be fully integrated into internal business processes.

 

Adopt a performance management system based on a balanced scorecard approach, i.e. financial, customer, internal business, and environmental and social perspectives.

Progressing – performance is assessed on financial basis.

 

Develop a Performance Management System comprising sets of Performance Objectives, Key Performance Indicators and Measures of Performance for each asset class.  The Performance Management System will be drawn up and agreed in consultation with asset owners.

Progressing – not currently measured.

Service Drivers

Asset Strategies and Plans to address the long, medium and short-term needs of each service demand set.

Implement an integrated whole-of-organisation strategic and planned approach to asset management.

Each directorate will define the criteria required of their assets having regard to the following:

·    Asset type;

·    Location;

·    Utility;

·    Serviceability and functionality;

·    Condition;

·    Amenity; and

·    Financial criteria.

Progressing - The current management of assets is principally driven by the requirements of the physical upkeep of assets, the operational requirements and through community surveys.

Asset Management and Financial Reporting

Consolidate all asset data into a single comprehensive database linked to financial and accounting systems.

Check, cleanse and verify all asset data across all registers, records and systems.

Ongoing

Manage the Renewal Gap

Prioritising and grading the importance of each asset.

Complete - hierarchy established

Identifying significant and mission critical assets.

Progressing

Assessing the continuing need and standards/levels of service for these assets.

Progressing

Defining minimum asset condition and in-use efficiency and effectiveness to support service levels.

Progressing

Assessing their condition.

Progressing – some assets conditions are assumed based on age.

Assessing the risk and impact on the services and operations of any failure to meet standards/levels of service.

To be addressed

Develop individual asset plans for mission critical assets and the balance of asset classes by reference to the financial context and availability of funds.

Progressing – yet to progress Fleet, land and ICT

Asset Management Key Financial Performance Indicators

Establish a new budgeting and financial reporting regime that reflects the whole-of-life management of assets.

 

Develop new budget processes and financial reporting regimes for each asset type that is based upon their actual operating and service performance requirements as part of individual asset plans.

Asset Consumption Ratio: refine the estimation of this ratio as improvements are made to financial & asset data.

Asset Sustainability Ratioconfirm a ratio that reflects the true position by:

·    Examining and confirming asset Written Down Values;

·    Reviewing the estimated expenditure on asset renewal and replacement; and,

·    Refining the budget process and methodology.

Asset Renewal Funding Ratio: Calculate ratio following finalisation of asset renewal program.

Requires substantial additional work - This strategy presents initial assessments of asset replacement costs, expenditure forecasts, renewal gaps and ratios. These will inform the LTFP.

Asset Management Cycle & Processes

Introduce Asset Management processes based on acknowledged leading practice principles for the public sector that cover all stages of asset lifecycles.

Construct and implement processes for:

·    Strategic Asset Planning;

·    Asset Programs;

·    Asset & Service Delivery Programs;

·    Performance Management & Review; and,

·    Develop and monitor processes for Improvement.

To be addressed

 


 

6.3     Data and Information Management

6.3.1 Strategy for Data and Information Management

The strategy for data and information management is contained in Table 10.

Table 10: Data and Information Management Strategy

Strategic Objective: Data and Information Management

The ability to identify, analyse and model asset trends that enhance asset efficiency and effectiveness and enable informed decision-making.

 

Item

Strategy

Action Required

Status

Data Systems

Consolidate asset management data and information onto a single AM System that satisfies the following criteria:

·    Linkage to the Financial system;

·    Categorisation of asset classes and hierarchies;

·    Capacity to store and record all asset details;

·    Maintenance planning and management;

·    Works management;

·    Procurement and contract management;

·    Develop management and work processes;

·    Basic reporting functions;

·    Capacity for development to meet the expanding data and information management needs;

·    Compatible with web-based devices to transfer data between operational sites and the AM System;

·    Local government experience;

·    Strong systems support.

Convert to an AM System within 12 months.

Define required asset data and asset information requirements.

Define asset management information reporting hierarchy and requirements that are consistent with governance and management arrangements.

Collate data onto individual spreadsheets for transfer into an AM System

Develop specification for an AM System.

Select and implement an AM System.

Develop processes and procedures.

Currently working with Civica to implement asset management module.

6.4     Standards and Levels of Service

6.4.1 Strategy of Standards and Levels of Service

Strategies are contained in Table 11.

Table 11: Standards and Levels of Service Strategy

Strategic Objective: Standards and Levels of Service

A portfolio of assets that is aligned with community and organisational expectations and priorities having regard to the financial context of the local government.

 

Item

Strategy

Action Required

Status

Levels of Service (LOS) & Property/Facility Management Standards

Expand/enhance the community surveys to include information relating to the condition, use and effectiveness of assets.

Document a LOS framework that clearly defines and documents LOS for:

·    Community;

·    Technical;

·    Compliance; and

·    Internal services.

 

Design survey template for community feedback on assets; and methodology to interpret and analyse responses for input into strategies.

To be addressed

 

 

 

 

Agree and set minimum internal and external standards for each asset category/facility supported by an inspection and management regime.

Progressing

Document a register of legislative compliance requirements, codes of practice and standards, and other relevant obligations; and develop processes to ensure their compliance.

Progressing

Performance Measurement

Develop a performance measurement system that comprises performance outcomes, performance standards and targets, performance indicators and measures, and bases of measurement and benchmarks.

Develop methodologies to measure and analyse the performance of assets, and the asset management systems and processes used in their management, against LOS and financial criteria.

To be addressed

 


 

6.5     Skills, Processes and Continuous Improvement

6.5.1 The IPRF Requirements

The IPRF notes that asset management is a journey where the initial stage is achieving core competency, and ongoing development reaches an advanced level of competency or maturity.

The Department of Local Government acknowledges that the preparation of an AM Strategy and Plan is an iterative process, which may take several years to refine into mature documents that meet a core level of maturity.

The various levels of Asset management Practices are defined below:

Minimum (M):       The absolute basic level of asset management. Data is presented in top-down models.

Core (C):               Asset Management which relies primarily on the use of an asset register, maintenance management systems, top down condition assessment, simple risk assessment and defined levels of service, in order to establish a long-term cash flow projection.

Intermediate (I):    Those asset groups that may be defined as Intermediate are either undergoing the process of moving from Core to Advanced status or would benefit by having more that a core level of Asset Management Practice but does not require advanced Asset Management Practice.

Advanced (A):      Asset Management which employs predictive modelling, risk management and optimised decision making techniques to establish asset lifecycle treatment options and related long term cash flow predictions.

The City needs to understand the nature of the gap between the current AM practices and the desired AM practices for each of its Asset Classes and Asset Types. The understanding of this gap will drive the City's improvement process and the identification of a timeline of critical tasks required to close the gap.

Not all Asset Types will have the same appropriate asset management practices. The level of AM practice will in most instances be based on the level of risk exposure and consequences of failure. The higher the risk associated with failure, the higher level of AM practice is required.

The City of Wanneroo’s objective is to attain an ‘Intermediate’ standard over a period of five years. The Summary AM Plan sets out a program of work to achieve this objective.

 

6.5.2 Asset Management Competency Levels

Table 12 provides definitions for Core and Advanced levels for each element of asset management. These definitions are based on the Institute of Asset Management Manual, and will be used as measures of continuous performance progress.


 

Table 12: Asset Management Competency Levels

AM Activity

Core

Advanced

Governance

·  AM formally established within corporate structure.

·  Established and proven whole-of-organisation co-ordination and management.

·  Executive Management fully and transparently involved in AM with appropriate levels of responsibility and accountability.

·  AM embedded in organisational culture.

Organisational Capacity, Roles & Responsibilities

·  AM ‘champion’ embedded in Executive Management Team with executive authority.

·  AM organisational capacity & capability.

·  Clear roles & responsibilities and levels of authority.

·  All AM capability & capacity requirements in place.

·  Established structure, roles & responsibilities linked with size & nature of asset base.

·  Senior Managers fully aware of AM

·  Stakeholder needs communicated & documented.

Policy, Objectives & Strategy

·  AM policy and strategy fully aligned with asset plan.

·  AM aligned with other organisational policies, e.g. sustainability.

·  AM fully aligned with organisation-wide policies and business strategy.

·  Endorsed by Executive Management Team.

·  AM strategy is whole-of-life based and continually updated using accurate and comprehensive information systems.

Information Systems

·  AM information fully defined and supports development and implementation of AM information systems.

·  Information relevant to AM needs and reported to senior management and stakeholders.

·  Proactive planning of AM information requirements.

·  Regular consultation with stakeholders.

·  Information output focused on asset performance.

·  Information is actively analysed to inform strategy & decision-making.

Asset Planning

·  Plans are integral with AM policy & Strategy, and business planning.

·  Based on risk management/ contingency plans, targets, asset criticality, and business/service requirements.

Based on short, medium and long-term time horizons.·      

·  Plans driven by corporate objectives.

·  Financial optimisation modelling and options testing techniques employed.

In-use Asset Performance

·  Established procedures to monitor and measure performance of assets, e.g. condition, criticality, sustainability & effectiveness.

·  Performance objectives identified and used.

·  Performance linked to strategic priorities and risk.

·  Performance management supports business strategy and is an integral part of AM.

·  Performance evaluated against value for money, business effectiveness & sustainability.

·  Measured using accurate and comprehensive information systems.

Acquisition & Disposal

·  Acquisition & disposal strategies integral to AM

·  Long-term strategic planning considers technological and market forces.

Performance Review

·  AM strategic & operational review program implemented across the organisation.

Use of KPI’s across the organisation.·      

·  Evidence of continued improvement in AM capability and asset performance.

Asset Management System Audit

·  Audit program based on risk assessments and corporate governance requirements.

·  Training requirements identified and are on-going.

·  Feedback sought from stakeholders.

·  Achieving benchmark efficiencies and effectiveness.

 

6.5.3 Strategy for Skills, Processes and Continuous Improvement

Table 13: Continuous Improvement Strategy

Strategic Objective: Continuous Improvement

Ongoing improvement in asset management competency and capacity.

 

Item

Strategy

Action

Status

Asset Management Awareness, Knowledge and Understanding

Enhancement and development of asset management practices on an ongoing basis.

Develop awareness, training and development programs for all levels of staff and Elected Members that caters for induction and ongoing development.

Progressing

These programs will be planned to align with the implementation of the improvement strategy.

To be addressed

Develop a system of self- and external assessment.

To be addressed

Benchmark against other jurisdictions, WALGA, Department of Local Government requirements, and other bodies.

To be addressed

Maintain a process to track developments and innovations in best practice.

To be addressed

Skills & Experience

Develop and acquire skills and experience necessary to fulfil the requirements of the IPRF in Asset Management

Undertake skills audit.

Identify required skills.

Close gaps through a plan for recruitment, up-skilling & training.

To be addressed

 



 

7    Glossary of Terms

7.1     Definitions

The following terms are used in this framework.

Assets” are future economic benefits controlled by the City as a result of a past transaction or event whereby:

·    Its value can be measured reliably, and;

·    Its value must exceed a stated materiality threshold being $5,000 or form part of a network asset group, and;

·    It must be probable that future economic benefits of the asset will eventuate  (i.e. the asset acquired supports the delivery of Council services to the community in line with Councils’ objectives).

Asset Management” refers to the combination of management, financial, economic, and engineering and other practices applied to assets from their planning, acquisition, operation, maintenance, replacement and disposal, to ensure that the assets meet the priorities of the Strategic Community Plan with the objective of providing the required level of service in the most cost-effective manner.

Asset Management Plan” refers to a long term plan that combines multi-disciplinary asset management techniques to outline the assets activities, program and resources applied to provide a defined level of service for each asset class over the lifecycle of the asset.

Asset Management Strategy” means a strategy or approach for asset management.

Asset – Current” refers to an asset that can easily be converted to cash within the next 12 months.

Asset – Non Current” refers asset that cannot easily be converted to cash within next 12 months

Attractive Item” refers to an item defined as below:

·    has a value of less than $5k (exc GST );

·    has an attractive nature;

·    is prone to misappropriation for private use or theft.

 “Council” means the elected council (comprising Councillors) of the City.

Depreciation” is a systematic charge that recognises the wearing out or consumption of the non- current asset over its useful life.

Gap Analysis” a method of assessing the gap between current asset management practices and the future desirable asset management practices.

“Infrastructure” comprises the asset sub-classes defined in section 5 of the Asset Management Framework and Guidelines issued by the Department of Local Government.

Level of Service” describes the outputs or objectives of the activity the City intends to deliver to the customer. Service levels usually relate to quality, quantity, reliability, responsiveness, statutory functional requirements, environment, acceptability and cost.

Life Expectancy” is the estimated or expected time between placing the asset into service and removing it from service.

Life Cycle” means the phases of activities that an asset goes through, including planning, design, construction, acquisition, operation, maintenance, rehabilitation and disposal.

Maintenance” means regular ongoing day-to-day work necessary to keep an asset operating to achieve its optimum life expectancy.

“Network Asset Group” refers to a collective group of assets; whilst individually do not function for their intended purpose and may be under the threshold of an asset defined herein, but collectively in a group of assets, functions as intended and exceeds the threshold of an asset, e.g. desktop computers, servers, laptops etc.

 “Operations” means the regular activities to provide public health, safety and amenity and to enable the assets to function e.g. road sweeping, grass mowing, and cleaning, street lighting and graffiti removal.

Renewal” means works to upgrade an asset, refurbish an asset or the replacement of part(s) of an asset to ensure continuing equivalent capacity or performance capability.

Replacement” means the complete replacement of an asset that has reached the end of its life, to provide a similar or agreed alternative, level of service.

Replacement Cost” means the cost of replacing an existing asset with an identical new asset.

Risk” means probability and consequence of an event that could impact on the Council’s ability to meet its corporate objectives.

City means the collective City organisation.

Strategic Community Plan” means the plan containing the long-term goals and strategies of the City.

Stakeholders” are those people/sectors of the community that have an interest or reliance upon an asset and who may be affected by changes in the level of service of an asset.

Upgrade” means enhancing an existing asset to provide higher level of service.

Whole of Life Cost” refers to the total cost of an asset throughout its life cycle.


 

7.2     Abbreviations

AM – Asset Management

AMF - Asset Management Framework

AM Plan - Asset Management Plan

AM Policy – Asset Management Policy

AM Strategy – Asset Management Strategy

AMWG – Asset Management working group

GIS – Geographical Information System

IAMSC – Infrastructure Asset Management Steering Committee

IT – Information Technology

ICT – Information Communication Technology

IIMM – International Infrastructure Management Manual

LGPMC - Local Government and Planning Ministers’ Council

LOS - Level of Service

LTFP – Long Term Financial Plan

NAMAF - National Asset Management and Financial Planning Assessment Framework

NFSF – National Financial Sustainability Framework

O & M - Operations and Maintenance

WAAMI – West Australian Asset Management Improvement (Program)

WALGA – West Australian Local Government Association

 


CITY OF WANNEROO Late Items Agenda OF Elected Members' Briefing Session 18 June, 2013            301

 

APPENDIX A : The Asset Responsibility Matrix

The Asset Responsibility Matrix sets out general responsibilities for various stages of the asset lifecycle at an Asset Sub-Class Level. More detailed analysis of responsibilities for Asset Management activities will be undertaken and reported as part of the Asset Management Planning process.

Table 14: The Asset Responsibility Matrix

Element

Description

Owner

The Asset Owner who is ultimately responsible for the asset.

Client

The Client who requires the asset to deliver services.

Planning

Asset Planners are responsible for planning to meet the needs of the community through the use of specific assets. Asset planning covers the following items:

·      Consultation with users

·      Identifying users' needs

·      Setting service levels

·      Identifying future demand

·      Risk identification

Design

Asset design covers the preparation of concept, preliminary and construction drawings. Where asset designs are prepared by external entities the officer responsible for Asset Design is responsible for their specification and procurement.

Construction

Construction deals with the physical acquisition of an asset, either by

construction or purchase. The Asset Constructor is responsible for

managing the acquisition and ensuring that the Council Tendering and

Purchasing Guidelines are adhered to during that process.

Operation

Asset operation covers the day-to-day use of the asset. The officer responsible for Asset Operations uses the asset to provide a service to the community. Actions by asset operators could include:

·      Setting and managing lease arrangements

·      Monitoring and reviewing service levels

·      Responding to Citizen/user enquiries

·      Requesting additional capital works to increase the level of service

Maintenance

The Maintenance Manager is responsible for maintenance of the asset. This includes contact with citizens when requests for maintenance are received from users.

Renewal

The Manager responsible for Asset Renewal plans and executes major works to the asset that either result in a significant extension of its operating life or replacement of the asset at the end of its life.

Disposal

The Manager responsible for Disposal of an asset arranges for its disposal according to Council policy and statutory requirements.

 


 

APPENDIX B : The Asset Management Cycle (Process)

The IPRF framework ensures a consistent approach to asset management. Figure 4 represents best practise stages of the Asset Management Cycle. The management of the assets on the basis of this cycle will ensure that the objectives of the City's AM Policy are met.

The headings in this section will be used to guide the detailed Improvement Plan in the Summary AM Plan.

Figure 4: Asset Management Cycle

                                                           

A1.   Organisational Objectives

The foundations of good asset management are:

·    having an understanding of the of the aims and objectives;

·    the adoption of an AM Policy and Asset Management Framework.

These foundations ensure that Asset Management Strategies and Plans are placed in the context of wider organisational issues, and developed to align the objectives of the City‘s assets with its business and service objectives.

A2.   Asset Strategies and Plans

The AM Strategy and AM Plans define how the City manages its assets in terms of:

·    The organisational arrangements for asset management;

·    Corporate processes for assets;

·    Performance measures and measurement;

·    Data management; and,

·    Capacity management.

The City's AM Strategy and AM Plan will be developed from:

·    An understanding of the community, business and financial drivers behind the City’s aims and objectives;

·    The service models that deliver the City services; and,

·    An understanding and knowledge of the City existing asset base, i.e. condition, location, use, suitability, functionality and cost-in-use.

The structure of AM Plans will contain the following:

·    Links with the CBP and LTFP;

·    The goals and objectives, and service/business drivers that have asset implications;

·    The financial context;

·    The asset base gap: existing state vs. desired future state;

·    10-year vision for asset base;

·    Critical success factors;

·    Plan for each asset category (closing the gaps);

·    Resource implications (capital and recurring expenditure implications; ICT and HR; investment and disposal strategies; and approach to sourcing and procurement);

·    Performance management;

·    Organisational arrangements for asset management, e.g. governance, roles and responsibilities, processes, data management and capacity management; and,

·    Actions and milestones to deliver the strategy, including on-going strategy development, change and improvement.

A3.   Programs

Programming is the translation of the asset strategy and plan into a program of projects for implementation. The CBP describes projects, which have implications for the asset base.

Asset Programs translate strategy and plans into detailed programs of action. This includes:

·    The review of the asset base to identify potential projects;

·    Project evaluation – Business Cases;

·    Asset program development and evaluation;

·    Financial planning for assets

A4.   Delivery

The efficient and effective delivery of asset strategies and programs pose particular challenges in finding the most efficient way to deliver its services, such as:

·    Resources and capability;

·    Means of delivery;

·    Project structure and governance;

·    Project plans;

·    Communications;

·    Performance measurement; and

·    Risk management.

A5.   Review

This is the process of assessing the performance of the entire asset management system.

The Department of Local Government has set a number of standards and ratios that Western Australia local governments are expected to achieve over time. These also include encouragement for a process to ensure continuous improvement.

The City will be developing a set of metrics for the management of its asset base through key performance indicators, additional business ratios and benchmarking to enable positive action to be taken to improve delivery, efficiency and the quality of services to the community.

Key areas of performance to be addressed in the review process include:

·    Organisational performance;

·    Balanced scorecard;

·    Key performance indicators;

·    Asset performance;

·    Benchmarking; and

Data validation.·    

A6.   Change and Improvement

The City recognises that asset management is an organisation-wide function and activity, which means that changes and improvement may be necessary to any and all parts of the organisation, and may be concerned with:

·    The Asset Management Process

-    Improving policy and strategy;

-    Improving programming;

-    Improving delivery;

-    Improving review;

      and,

·    Contextual (Corporate) Areas

-    Leadership;

-    Culture;

-    Customer service;

-    Organisational structure, roles and responsibilities and governance;

-    Resources, Skills and capacity;

-    Data management.

                                        


CITY OF WANNEROO Late Items Agenda OF Elected Members' Briefing Session 18 June, 2013            306

 

 

 

Summary

Asset Management Plan

 

 

 

 

 

 

 

 

 

 

DISTRIBUTION SCHEDULE

Version No.

Date

Distribution

Reference

1.0

 

 

TRIM 13/76426

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table of Contents

1.      Introduction. 3

2.      Summary of the Detailed Asset Management Plan. 5

3.      Scope of this Summary. 7

4.      Current AM Performance – Infrastructure Assets. 8

4.1.  What Infrastructure Assets do we currently have?. 9

4.2.  What is the condition of our Infrastructure Assets?. 10

4.3.  What is the current asset management position. 11

1.                  4.3.1............................................................................... Asset Management Plans. 11

2.                  4.3.2.................................................................................. Levels of Service (LOS) 12

3.                  4.3.3............................... Asset Renewal Demand Predictions - Infrastructure Assets. 13

4.                  4.3.4............................................................................ Asset Management Practice. 18

5.      Data and System Requirements. 20

5.1.  Current Status. 20

5.2.  Asset Management Systems. 20

5.3.  Improvement 21

5.                  5.3.1....................................................................... Common Corporate Framework. 21

6.                  5.3.2...................................................................... Asset Inventory and Information. 21

7.                  5.3.3............................................................................................. Asset Condition. 21

8.                  5.3.4............................................................................... Asset Financial Reporting. 21

9.                  5.3.5................................................................... Maintenance & Renewal Programs. 21

10.               5.3.6................................ Asset Maintenance, Renewal and Replacement Unit Rates. 21

6.      Glossary of Terms. 22

6.1.  Definitions. 22

6.2.  Abbreviations. 23

6.3.  References. 24

APPENDIX A : Asset Components - Key Variables and Assumptions. 25

APPENDIX B : Asset Condition Rating Description. 28

APPENDIX C : Attributes of Core & Advanced AM Practices. 29

APPENDIX D: Asset Management Gap Analysis. 30

APPENDIX E : Asset Management Process Improvement Plan Template. 38

 

 

 


CITY OF WANNEROO Late Items Agenda OF Elected Members' Briefing Session 18 June, 2013            308

1. Introduction

The City has responded to the Department of Local Government's (DLG) requirement to develop an Integrated Planning and Reporting Framework (IPRF) with the development of a a Draft 10 year Strategic Community Plan (2013/14 to 2022/23), which represents the Community's Long Term aspirations, inclusive of a 4 year Corporate Business Plan and a one year Operational Plan.

These plans are supported by a Resourcing Framework that outlines the City's capacity to deliver services and manage its assets over the next 10 years. The Resourcing Framework contains the following four plans:

·    Long Term Financial Plan

·    Strategic Asset Management Plan incorporating

-   Asset Management Policy (AM Policy);

-   Asset Management Strategy (AM Strategy); and

-   Summary Asset Management Plan (Summary AM Plan, this document) and Detailed Asset Management Plans (AM Plans).

·    Workforce Management Plan; and,

·    Information and Communication Technology Strategic Plan.

Figure 1 below shows how the City's various plans relate to each other under the new IPRF and where the components of the Strategic Asset Management Plan fit into this structure.

Figure 1: Asset Management and the Integrated Planning and Reporting Framework

 

 

 

 

 

 

 

 

 

 

 

 

 


Assets are fundamental to Councils’ overall service delivery and planning. Responsibility for assets requires strong and informed Council and executive oversight to achieve and maintain sustainable asset management outcomes.

 

The City's AM Policy has provided the overarching key principles against which assets are to be managed to ensure that there is organisation-wide commitment to asset management, and the framework and objectives for the development of the AM Strategy and AM Plans.

The AM Strategy sets asset management objectives, practices and strategies for the improvement of the asset base and the asset management system, and drives the entire asset management process. It ensures the objectives of the AM Policy are implemented, and provides the management framework to enable the implementation of detailed AM Plans.

This document, the Summary AM Plan, summarises the outputs from the detailed AM Plans on the long term asset renewal demand predictions and provides the link to and supports the long-term financial planning and strategic planning. This is required to ensure that the appropriate level of funds and resources are available to continue to provide services to the community in accordance with Council’s objectives as set out in the Strategic Community Plan (SCP).

The Summary AM Plan also brings together corporate requirements such as Levels of Service and AM Data and Systems from the various detailed AM Plans and improvement planning summaries. More work is required in the areas of Accountabilities and Responsibilities, Risk Management and Future Demand impact. This document aims to provide a holistic view of the City's AM performance and it should be noted that all figures presented in this Plan are based on 2012 dollars.

This Summary AM Plan and the detailed AM Plans will:

·    Demonstrate how the City will manage its assets and ensure service delivery continues in line with the aspirations of the SCP and CBP.

·    Contain the basic tools to enable Council to make informed decisions on the allocation of resources in order to maintain all major assets to the standard required to satisfy service delivery needs.

·    Ultimately provide guidance on the long-term (10 years) allocation of financial and physical resources required to ensure the continuing operational performance of the City assets.

·    Set out how the council delivers service to the community on a long-term sustainable basis and the assets required to underpin service delivery.

·    Capture and document corporate knowledge about assets and the required service levels to support service delivery.

 

 

 

 

 

 

 


 

2. Summary of the Detailed Asset Management Plan

Figure 2 shows the inputs and outputs for the development of detailed AM Plans, which is consistent with the processes described in the AM Strategy.

Figure 2: Asset Management Plan Development

The essential inputs for an AM Plan are:

·   Asset performance standards derived from:

−   Business and service objectives articulated in the Corporate Business Plan (CBP);

−   Levels of service;

−   Performance standards; and,

−   Service demand drivers.

·   Asset Details and Utilisation determined by:

−   Location;

−   Condition;

−   Capacity & functionality;

−   Utilisation;

−   Cost-in-use;

−   Value; and,

−   Amenity.

·   Asset Management Evaluation related processes including:

−   Risk assessments;

−   Renewal gap predictions;

−   Prioritisation; and,

−   Financial context and LTFP.

The combination of these elements defines the optimum asset portfolio, which enables the development of the detailed AM Plans, in turn shaping strategies for Operation and Maintenance, Renewal and Replacement, Disposals and Capital Investment for new assets.

At this stage the City is developing its asset management capacity and capability. Together with the Asset Management Strategy, this Summary AM Plan will provide a pathway for further development of the detailed AM Plans that will contribute to the delivery of services to the community in the most efficient and effective manner.

This Summary AM Plan will provide:

·    an overall summary of the City's asset performance;

·    a summary of the associated long term asset renewal demand extracted from the detailed AM Plans; and,

·    details of the corporate level actions and progress improvement tasks common to each of the detailed AM Plans.


 

3. Scope of this Summary

The assets considered in this summary at this time relate only to infrastructure assets which form the major part of the City's asset base. Data for other asset classes such as Land, ICT, Fleet, Plant & Equipment have yet to be included. These will be added in later revisions of this document.

Table 1 summarises the City's portfolio of infrastructure assets. Further breakdown of these assets to various asset types is provided later in this document. The estimated replacement cost of infrastructure assets is approaching $1.2 billion with a current asset renewal backlog, at the end of 2012/2013 financial year, estimated at $5.5 million.

The figures presented in this document are based on the best available information. Asset data will continually be reviewed and updated on an ongoing basis to improve the integrity and robustness of the information presented. These figures will be used in developing the City's  long-term financial plans.

Note: Some groups are based on estimates and may rise as data is improved and values are revisited.

Table 1: Estimated Asset Replacement Cost – Infrastructure Assets

Asset Class

Current Replacement Cost

Estimated Written Down Value

Predicted Value of Current Unfunded Renewals (Backlog)

Infrastructure Assets

$        1,166,794,170

$        1,020,322,772

$        5,543,975

Infrastructure assets include the following asset groups and asset types:-

Transport Assets - Roads, Pathways, Kerbs, Carparks and Bridges (Underpasses).

Building Assets - Libraries, Public Halls, Multi-Purpose Community Facilities, Public Toilets, Houses, Museums, Council Offices, Leisure Centres and Amenity Buildings.

Stormwater Drainage Assets - Drains, Pipes, Culverts, Pits and Gross Pollutant Traps.

Park Assets - Parks, Gardens, Sports Ovals, Play Equipment, Irrigation Systems, Skate Parks, Tennis Courts, Golf Course, Park Furniture and Sports Field Lighting.

The above infrastructure asset types represent the major components of the asset class. There are other asset types, such as Conservation and Foreshore area assets and special street lighting assets owned by the City, that are yet to be included. Once data becomes available, this information will be included.

The current status and asset performance of Infrastructure Assets and associated activities are further discussed in Section 4.


 

4. Current AM Performance – Infrastructure Assets

The City has an ongoing commitment to sustainable asset management and determining its long term financial demand is a key component. The City needs to be able to predict how much money it needs now and in the long term for the provision of new, upgrading and renewal/rehabilitation of its assets to ensure the continued services provision through these assets. This information will in turn assist in the development and review of the City’s long-term financial plan.

To enable the City to confidently and reliably predict its asset needs including its renewal demand, the following key activities shall be included in the detailed AM Plans together with the establishment of the listed key input variables and assumptions:-

·     Ensure that key asset data and information is recorded as assets are created and ensure that the asset inventory for all asset classes are kept up to date in the asset registers;

·     Asset condition assessments are undertaken on a regular basis to enable predictions to be made on remaining life of assets;

·     Renewal/replacement costs and unit rates are current and reliable to determine Current Replacement Cost (CRC);

·     Estimated asset useful lives which are based on historical performance and/or information available within the industry;

·     Asset renewal intervention condition levels established to reflect agreed levels of service for asset replacement, renewal or rehabilitation;

·     Adopt asset deterioration curves that reflect the pattern of consumption for the various asset components; and

·     Determine the City’s future demand and assumptions for predicting growth for new assets.

A summary of some of the key inputs, variables and assumptions for the various asset types/components used in the detailed AM Plans are listed in Appendix A. These key inputs have been used in predicting the City's long term asset renewal demand.

The intervention condition which represents the asset condition at which renewal is due before an asset reaches failure has been determined based on historical budget availability. However, this may not necessarily correlate with the optimum intervention point from an asset management perspective. From a strategic perspective, there may be an opportunity for Council to consider intervention levels based on desired Levels of Service. 

The AM performance for infrastructure assets will be addressed within the following headings:-

·     What Infrastructure Assets do we currently have? – Section 4.1

Provides a summary breakdown of asset values of the various asset groups.

·     What is the condition of our Infrastructure Assets? – Section 4.2

Provides a summary breakdown of the asset condition profile of the various asset groups.

·     What is the current asset management position? – Section 4.3

Provides a summary of the performance of asset related activities of the various asset groups in terms of :-

−   Development of Asset Management Plans

−   Levels of Service Performance

−   Asset Renewal Demand Profile, Predictions and Performance

−   Asset Management Practice and Improvements

4.1.   What Infrastructure Assets do we currently have?

Tables 2 and Figures 2 provides a breakdown of infrastructure assets.

Figure 2: Percentage breakdown Asset Replacement Cost – Infrastructure Assets

Table 2: Estimated Asset Replacement Cost - Infrastructure Assets

Infrastructure Assets

Estimated Current Replacement Cost

Predicted Value of Current Unfunded Renewals (Backlog)

Transport

677,428,547

1,372,625

Road – Pavement

263,360,281

0

Road – Seal

160,435,241

1,166,580

Road – Kerb

150,308,900

196,000

Pathway Assets

88,230,570

0

Carpark Assets

10,093,555

10,045

Bridge Structures

5,000,000

0

Buildings

218,243,197

801,250

Buildings - Structure

** 154,403,843

183,105

Buildings - Roof

25,758,897

82,485

Buildings - Services

19,109,316

245,500

Buildings - Fitout

18,971,142

290,160

Parks

90,730,114

3,370,100

Playground Assets

11,982,474

1,092,961

Irrigation Assets

69,660,621

1,615,321

Park Structures

8,748,615

582,418

Park Furniture & Equipment

338,400

79,400

Stormwater Drainage

180,392,313

0

Stormwater Drainage - Structures

6,093,805

0

Stormwater Drainage - Assets

174,298,508

0

Grand Total

1,166,794,170

5,543,975

Notes:  *    Assets considered here are assets that depreciate over time (eg. does not include valuations for Road Formation – once constructed, does not require future reconstruction).

            ** Replacement cost for Building Structures are derived from deducting the Roof, Services & Fit‑out component costs from the full building replacement cost. Generally when the Structural Component of a building reaches the end of its life, all other components of the building are renewed (i.e. full building replacement).

4.2.   What is the condition of our Infrastructure Assets?

Figure 3 and Table 3 show the current asset condition profile within each of the asset groups.

The chart in Figure 3 shows that a large percentage of the assets are in new to very good condition with approximately 98% of the total asset base at or below condition 5 (a condition rating of 0 represents a brand new asset and 10 represents assets that is failing). Under one percent of the asset base is at or above condition 8, which represents assets that require immediate attention.

Figure 3: Current Condition Profile by Asset Groups – Infrastructure Assets

Table 3: Current Condition Distribution by Asset Groups - Infrastructure Assets

Condition

Asset Groups

(Asset Replacement Cost and % of total asset base)

Total All Asset Groups

Transport

Stormwater Drainage

Buildings

Parks

0

10,807,214

3,560,004

473,618

2,844,672

17,685,508

(0.88%)

(0.29%)

(0.05%)

(0.23%)

(1.52%)

1

453,392,229

152,689,292

148,053,000

22,332,503

776,467,026

(36.79%)

(12.39%)

(15.63%)

(1.81%)

(66.55%)

2

116,104,262

23,549,007

40,068,090

16,490,194

196,211,550

(9.42%)

(1.91%)

(4.23%)

(1.34%)

(16.82%)

3

44,611,297

204,036

14,587,436

14,994,220

74,396,989

(3.62%)

(0.02%)

(1.54%)

(1.22%)

(6.38%)

4

25,951,966

76,139

6,346,482

11,333,661

43,708,248

(2.11%)

(0.01%)

(0.67%)

(0.92%)

(3.75%)

5

19,854,083

73,370

6,630,653

15,203,133

41,761,239

(1.61%)

(0.01%)

(0.70%)

(1.23%)

(3.58%)

6

1,622,710

159,486

1,041,960

2,120,727

4,944,883

(0.13%)

(0.01%)

(0.11%)

(0.17%)

(0.42%)

7

4,514,211

80,980

757,790

3,965,317

9,318,297

(0.37%)

(0.01%)

(0.08%)

(0.32%)

(0.80%)

8

417,325

0

189,447

1,181,019

1,787,791

(0.03%)

(0.00%)

(0.02%)

(0.10%)

(0.15%)

9

0

0

0

0

0

(0.00%)

(0.00%)

(0.00%)

(0.00%)

(0.00%)

10

153,246

0

94,724

264,668

512,638

(0.01%)

(0.00%)

(0.01%)

(0.02%)

(0.04%)

Totals

677,428,547

180,392,313

218,243,197

90,730,114

1,166,794,170

(54.96%)

(14.64%)

(23.04%)

(7.36%)

(100.00%)

 

4.3.   What is the current asset management position

4.3.1.   Asset Management Plans

The City has developed core AM Plans for a number of its asset groups namely:

·   Roads;

·   Pathways;

·   Buildings; and

·   Stormwater Drainage.

Reviews are currently in progress for the Road AM Plan and the Pathways AM Plan. These two AM Plans will be amalgamated to become a Transport Assets AM Plan incorporating roads, pathways, bridges and carparks. Street lighting will be included in future revisions of this Plan. The Building AM Plan has also been reviewed with the development of Parks AM Plan and Natural Areas AM Plan nearing completion.

In general, the core AM Plans address the following:

· Describe the asset (physical, financial);

· Describe the objective/purpose of the assets;

· Define the current levels of service;

· Describe future demand requirements for service delivery;

· Describe the risks associated with the assets;

· Define the intended time frame (lifecycle) of the asset or key components;

· Include financial information;

· Recognise the decline in service potential;

· State assumptions and confidence levels;

· Outline an improvement program;

· Identify key performance measures; and,

· Describe the process for regular reviews.

The format used for the AM Plan documents follow the Institute of Public Works Engineering Australia (IPWEA) AM Plan template and covers the following key elements addressing the above requirements:-

·   Levels of service  – specifies the services and levels of service to be provided by the City;

·   Future demand – details how this will impact on future service delivery and how this is to be met;

·   Life cycle management  – details summary asset data, capacity, performance and condition, risk management issues and how the City will manage its existing and future assets to provide the required services;

·   Financial summary – identifies what funds are required to provide the required services;

·   Asset Management Practices; highlights current AM activities and improvement initiatives to advance AM to desired levels of AM practices.

·   Plan Improvement and Monitoring – describes how the plan will be monitored to ensure it is meeting the City’s objectives and identify improvement opportunities in asset management practises within the City.

AM Plans are dynamic documents that should be updated periodically to be effective as a management tool and reference documents. The plans will reflect changes in objectives/policies, customer expectations, improvements in asset management systems and/or data.

4.3.2.   Levels of Service (LOS)

The City currently does not have a formalised LOS framework in place and has partially documented service level standards for infrastructure assets within the detailed AM Plans. These are defined as Community and Technical LOS for each activity in the AM Plans.

A LOS framework will need to be developed and documented to enable a consistent approach in determining LOS standards and measurements. The different LOS standards are defined below along with the performance measures.

4.3.2.1.     Community LOS

This is how the community relates to the service provided.

Community LOS may include appearance, level of cleanliness, maintenance responsiveness, quality and type of consumables, safety and accessibility.

In the AM Plans, the performance measurement of the LOS expected from the community has been to utilise the results of the City's biennial Community Perception Survey. These surveys commenced in 2002/2003.

In this survey, the community is asked to rate the importance of the City's various services and facilities to determine the following:-

·    Overall satisfaction with the City;

·    Perceived importance and satisfaction with services and facilities; and,

·    Performance strengths, weaknesses and gaps.

Most services provided by the City are underpinned by assets in some way. These survey results provide strong indicators as to the importance and criticality of particular assets used in service delivery.

To date, community satisfaction relating to assets has generally been good, as reported in the Community Perception Surveys.

4.3.2.2.     Technical LOS

Community and technical LOS can often mean the same thing, but can also be interpreted differently.  For example, a stormwater pipe network can be designed to meet identified technical requirements and have sufficient hydraulic capacity to take water from Point A to Point B and in so doing protect property.  However if the design results in an unacceptable visual addition to the streetscape it may not be meeting the community criteria in terms of appearance.

Technical LOS will be based on the asset policy, strategy and industry accepted standards or practises. Performance measures for this activitiy rely heavily on having a good asset management system in place to record relevant activities and tasks against time and cost. At present the City's asset management system lacks the ability to track performance monitoring of these activities. Further improvements in this area have been identified for implementation.

4.3.2.3.     Compliance

This is how the City complies with legislation, codes, standards and practices, including internal policies and practices. This requirement is generally met as the City's minimum standards for the provision of infrastructure assets meets Australian Standards.

4.3.2.4.     Internal Clients & Stakeholders

This is how the assets and the services provided by the internal service providers of the City are supporting the service objectives of internal clients, i.e. the asset owners.

Further clarity and documentation is required to ensure that all stakeholders are aware of their roles and responsibility for the various assets.

4.3.3.   Asset Renewal Demand Predictions - Infrastructure Assets

Evaluating the City’s Infrastructure Renewal Demand is undertaken using available asset data. Data is extracted from the asset registers and analysed. The City currently uses a simple in‑house Asset Renewal Demand Prediction and Modelling tool which uses a series of spreadsheets loaded with asset data, together with pre‑determined modelling variables and assumptions (these are defined in Appendix A), to model future asset renewal demands. The results of the analysis are summarised in Figures 4 to 11 below.

Development of the City’s Renewal Demand Prediction and Modelling tool continues to be improved and enhanced for useability and to ensure the results are accurate and reliable. The Model has been reviewed by an independent consultant and is considered to be a sound and reasonable tool to use for predicting long term asset renewal demand.   

4.3.3.1.     Asset Renewal Demand Predictions (50 year profile)

Figure 4: Asset Renewal Demand (50 year Profile) – Transport Asset Group

Figure 5: Asset Renewal Demand (50 year Profile) – Buildings Asset Group

Figure 6: Asset Renewal Demand (50 year Profile) – Parks Asset Group

Figure 7: Asset Renewal Demand (50 year Profile) – Stormwater Drainage  Asset Group

Figure 8: Asset Renewal Demand (50 year Profile) – Consolidated Infrastructure Assets

The asset renewal demand profiles shown above in Figures 4 to 8 show the 50 year predicted asset renewal profile assuming the assets are renewed as required in each financial year. It should be noted that the graphs above are based on existing assets and new assets which will be acquired in accordance with the ten year Capital Works Program. In addition to this an allowance of 3% has been made for future gifted assets and a nominal increase of 1% has been applied for future assets acquired beyond the ten year Capital Works Program (total nominal annual growth figure of 4% from Year 11).  

The renewal demand for Transport Assets represents the largest component as depicted in Figure 8 followed by Park assets. The high renewal demand for Park assets in the 50 year profile is also due to the reoccurring renewal demand of the shorter life span Park assets over this period. A high number of Park assets have shorter lives as compared to Transport and Building assets. Playground assets and barbeques, for example, have useful lives ranging from 10 to 15 years.

The average predicted asset renewal demand in the first 10 years is $11.9M per annum. This average is expected to double to $19.5M per annum in the following 10 years between 2024 and 2033. The average predicted for the 10 years between 2034 and 2043 is significant being in the order of $27M per annum.

The City's current 2013/14, average ten year asset renewal budget allocation is $10.8M per annum. The City's needs to consider longer term budget strategies in order to manage the future impacts of the significant increase in the predicted renewal demand expected outside the current budgeting timeframe.

4.3.3.2.     The 2013/14 Ten Year Asset Renewal Funding Performance

Figure 9 shows the 10 year profile of predicted asset renewal demand assuming assets are renewed as required in each financial year.

Figure 9: Asset Renewal Demand (10 year Profile) – Consolidated Infrastructure Assets

Figure 10 shows the current renewal funding allocation for infrastructure assets in the City’s draft 2013/14 Ten Year Capital Works Program and the resultant estimated asset renewal demand impact and the resultant value of unfunded renewal demand (backlog).

The chart in Figure 10 demonstrates that the City is currently managing its renewal demand with the current proposed renewal expenditure at least in the first 8 years. In year 9 and 10, the resultant value of unfunded renewals start to increase. Further asset renewal funding will be required in these years to bring the value of unfunded renewals to manageable levels. This can be achieved by considering a 20 year planning window.

 

Figure 10: Predicted Value of Unfunded Renewals– Consolidated Infrastructure Assets

Notes:

1.     The City's planned renewal expenditure for years 2014 to 2023 (figures based on the draft 2013/14 Ten Year Long Term Financial Plan).

2.     The Predicted Annual Renewal Demand Impact includes the value of unfunded renewal from previous year (backlog).

3.     Positive backlog figures represents value of unfunded renewals while negative values represent the value of renewed assets that have yet to reach intervention. It should be noted that this graph represents one strategy to fund renewals.

4.     The predicted value of unfunded renewals shown in each year is the total renewal demand inclusive of backlog less renewal funding allocated in that year. 

4.3.3.3.     DLG Key Performance Indicators (Asset Ratios) – Infrastructure Assets

The predicted Asset Performance Ratios resulting from the proposed 10 year Capital Renewal Expenditure detailed in the previous section is shown in Figure 11.

Figure 11: Predicted Asset Performance Ratio Indicators – Infrastructure Assets Only

Based on Figure 11, the performance indicators are within reasonable limits over the next 8 years. This is consistent with the result of the predicted unfunded renewals depicted in Figure 10.

Both the Asset Consumption and Asset Sustainability Ratios will heavily be influenced by the high growth within the City of Wanneroo. These ratios will differ greatly in comparison to fully established Local Governments with little or no growth. The results of the calculated ratios are further discussed below:-

·   Asset Consumption Ratio (ACR)

The ACR highlights the aged condition of physical assets. The basic standard set by the DLG is a ratio of no less than 50%. The current ACR for the City's Infrastructure Assets is estimated at 80%.

The indicative target is between 40 – 80%. This ratio is relatively high for Wanneroo due to its most valuable assets being relatively new. It is likely to remain high with continuing high growth anticipated with construction of new infrastructure assets.

·   Asset Sustainability Ratio (ASR)

The ASR measures the extent of asset replacement at the end of useful life.

The basic standard set by the DLG is a ratio of no less than 90%. The current ASR for the City's Infrastructure Assets is estimated at 43%.

A ratio of 100% indicates that asset stock is being replaced at a sustainable level. It is recognised however that this may be 50% or less when asset portfolios are young. With the City's current mix of old and new assets and continued high growth, this figure is at an acceptable level. As growth declines and the asset stock ages, this ratio is expected to increase to industry acceptable levels.

·   Asset Renewal Funding Ratio (ARFR)

The ARFR measures the capacity to fund asset renewal without increasing operating liabilities.

The basic standard set by the DLG is a ratio of between 75% and 95%. The current ARFR for the City's Infrastructure Assets is estimated at 75%.

The target for sustainable assets is between 95-105%. The indicators predicted in future years suggests that for the latter part of the 10 year capital works program, there is a need to increase renewal funding allocated where this ratio has dipped below the 60% mark.

It must be noted that the ASR and ACR ratios are dependent on calculating the Written Down Value of assets. At this stage the City has yet to revalue its asset based on Fair Value. This is being addressed as part of the improvement plan suggested in this the AM Strategy.

The calculations used here to determine the Written Down Value for infrastructure assets have been based on Depreciated Current Replacement Cost obtained from Asset Management databases.

 


 

4.3.4.   Asset Management Practice

The City’s current level of AM practice and the desired level of AM practice for each asset group and type is summarised in Table 5. The various levels of AM practices are further discussed in Appendix C including the key attributes of core and advanced asset management.

Not all Asset Types will have the same appropriate asset management practices. The level of AM practice will in most instances be based on the level of risk exposure and consequences of failure. The higher the risk associated with failure, the higher the level of AM practices required.

Process improvement initiatives and tasks will be identified in order to close the gap between the current and the desired AM practices. It is intended that the City will progress toward the desired practise for infrastructure assets within the next five years.

It has also been identified as part of the development of the individual detailed AM Plans, that for significant Special Purpose Facilities, specific detailed AM Plans will need to be prepared to ensure the continued viability of each of these facilities (e.g. Aquamotion, Kingsway Sports Stadium, Civic Centre Admin Building, Wanneroo Library & Cultural Centre). 

As a minimum, current asset management practices for infrastructure assets have been developed to meet minimum legislative requirements and to ensure community safety. 

Improvements to Asset Management practices for infrastructure assets have included:

·   Development of core AM Plans for the various infrastructure asset groups;

·   Formation of Asset Working Groups for Buildings and Park assets;

·   Identification of high risk critical assets;

·   Development of asset inventory registers recorded at asset component level;

·   Determination of Levels of Service for various asset types;

·   Undertaking asset condition assessments and data recording of critical assets;

·   Preparation of Capital Asset Renewal Programs for inclusion in the ten year Capital Works Program; and,

·   Undertaking long term asset renewal demand predictions for incorporation into the Long Term Financial Plan.

The IPWEA NAMS.Plus program also provides a Gap Analysis tool to analyse the current level of AM practice in comparison to a desired level of practice and recommends priorities for improvement. This tool has been used to examine the City’s present position and the results of the analysis are included in Appendix D. The resultant recommended priorities for improvement in shown in the Table 4 below.

Table 4: Recommended Priorities for Asset Management Improvement Activities

Priority

Practice Area

 

Priority

Practice Area

1

Revaluation Process

 

=7

Asset Management Strategy

2

Sustainability Reporting

 

=7

Reporting Asset Consumption

3

Risk Management

 

=8

Asset Management Accountability and Responsibility

4

Service Levels and Delivery Costs

 

=8

Asset Identification and Recording

=5

Risk Management Process

 

9

Future Demand Impacts

=5

Life Cycle Costs and Investment Decisions

 

10

Asset Condition Data

6

Asset Data Maintenance

 

11

Asset Management Plans

=7

Long Term Financial Plan

 

12

AM Policy

Table 5: Current and Desired Level of AM Practice

Asset  Group

Asset Type

LEVEL OF AM

Levels of Service

Demand

Asset Register

Condition

Risk

Lifecycle Strategies

Current

Desired

Current

Desired

Current

Desired

Current

Desired

Current

Desired

Current

Desired

Transport Assets

Roads

C

C

C

A

C

A

I

A

M

C

C

A

Pathways

C

C

C

A

C

C

C

A

M

C

C

A

Carparks

C

C

C

A

C

C

C

A

M

C

C

C

Bridges

C

C

C

C

C

C

C

C

M

C

C

C

Building Assets

Critical Buildings

C

C

C

A

C

A

C

A

M

C

C

A

Other Buildings

C

C

C

A

C

C

C

A

M

C

C

C

Minor Structures

C

C

C

C

C

C

C

A

M

C

C

C

Parks &  Natural Area Assets

Playground Equipment

C

A

C

A

C

A

I

A

M

C

C

A

Irrigation Assets

C

C

C

C

C

C

C

A

M

C

C

A

Park Structures

C

C

C

C

C

C

C

C

M

C

C

C

Park Furniture

C

C

M

C

C

C

C

C

M

C

C

C

Sports Lighting

M

C

C

A

C

I

C

C

M

C

C

A

Sporting Surfaces

M

C

M

C

C

C

C

C

M

C

C

C

Conservation Structures

C

C

C

C

M

C

C

C

M

C

C

C

Foreshore Structures

C

C

C

C

M

C

C

C

M

C

C

C

Stormwater Drainage Assets

Drainage System

C

C

C

C

C

C

C

C

M

C

C

C

Sumps & Fencing

C

C

C

C

C

C

C

C

M

C

C

C

Special Structures

C

C

C

C

C

C

C

C

M

C

C

C

Significant Special Purpose Facility

Aquamotion

C

A

C

A

C

A

C

A

M

C

C

A

Civic Centre

C

C

C

C