What is Asset Management?

Transcription

1 David Allen, Chief Administrative Officer, City of Courtney Andy Wardell, Manager, Financial Services, District of North Vancouver Co-Chairs, Asset Management BC What is Asset Management? How can Asset Management help municipalities manage their infrastructure? Asset Management enables Council/Board and staff to plan strategically for the replacement of current and future infrastructure It is a business plan for the services a local government provides to their communities focused on physical assets that sustain the services 1

2 A Penny Now, or a Dollar Later Canada Infrastructure Report Card October 2012 ( $171.8 Billion (Poor and Very Poor) Report card emphasizes importance of an assetmanagement system/ practices = increase longevity of assets and optimize investments in maintenance and rehabilitation BC Replacement Values (WAG) $175 Billion Total Assets $17.5 Billion (Poor and Very Poor) = 10% of Canadian report card total Sustainability of Services Must be the Key Objective 2

3 Current State Demand for Services Growing & Costing more Infrastructure - Aging Funding - Constrained Sustainability The keys: Council/Board Stewardship Asset Management Plans Long Term Financial Plans Sustainability Indicators progress tracking Challenges = short term vs long term focus Tax rate, tax rate, tax rate Three year mandates vs 100 year assets Theoretically perpetual life of local governments 3

4 What if we do Nothing? Huge spikes in taxation and user fees Life cycle cost inflation Lower standard of living Intervention from senior governments (or not ) Who was asleep at the switch? What are the Solutions? Generate Revenue Contain Costs Manage Demand for Services Address Ageing Infrastructure The connection between price and service MUST be made 4

5 AM is Not New! We do AM every day The questions are Do we do it well? Do our business practices support AM? Do we know our long term AM needs? Do our LTFP s consider long term AM? Consider all matters respecting asset management strategies, tools and results for the betterment of BC communities Recommend specific programs, tools or best practices to assist BC communities respecting sustainable asset management Disseminate information to the greater community Support development of a local government asset management strategy for the province 5

6 AssetSMART - A tool for local governments to assess capacity to manage assets AM Roadmap A guide to assist local governments implement asset management practices NAMS The only well established standardized asset management planning methodology available that is also part of a robust approach to financial sustainability 6

7 NAMS (Australia s National Asset Management Strategy) 25 years ahead of Canada Asset Management Plans are the key: Levels of Service Fair/Replacement Value Asset Conditions & Risk 20 year Financial Requirements life cycle 60+ Canadian governments have trained on NAMS The Sustainable Foundation Interdisciplinary Integration of Best Practices Financial Sustainability Indicators Financial Planning Asset Management Engineering Standards SALGA GFOA NAMS IIMM Accounting Standards PSAB + GIS Inventories 7

8 Strong Financial Plans Without Asset Management Plans? AM and LTFP are related organization-wide endeavours and behaviours Without AM - are your cost containment or revenue/tax strategies truly informed decisions? The budget might be balanced but at what cost? What Does It Take? Council Vision & Executive Team alignment Change management abilities Developing champions at all levels Continuously improvement mindset Acknowledge the Limiting Forces of Success Measuring to Learn Interdisciplinary team work (Senge) 8

9 Measuring to Report Learn Measuring to learn requires: Systems thinking Time to talk across the silos An open mind Cultural shifts over time Overcoming: Systems blindness A command/control mentality (Senge) Asset Management Roadmap Goal #1 - Define Needs Evaluate and Report on the State of Infrastructure 1. What do you own and where is it? 2. What is it worth? 3. What condition is it in and expected remaining service life? 9

10 Asset Management Roadmap Goal #2 - Develop Solutions Implement sustainable infrastructure asset management practices 4. What needs to be done and When do you need to do it? 5. How much will it cost? Asset Management Roadmap Goal #3 - Secure Funding via Long Term Financial Plan Ensure Adequate Fiscal Tools and Resources to Fund Infrastructure 6. How will we pay for it over the long term? 10

11 Sample AMP Views Levels of Service Physical Condition Risk Rating Matrix Fair/Replacement Values Road KPIs and condition benchmark Road Unit Cost Impacts Road backlog Levels of Service Community - relate to how the community receives the service in terms of safety, quality, quantity, reliability, responsiveness and function. 11

12 2013 Physical Condition Risk Rating Matrix Improved risk management (Likelihood & Consequence) Better capital budget prioritization Informed Decision-making by Council 12

13 Roads - Unit Cost History Unit cost drives ability to pave road sqm within financial resources Road Backlog 637,000 sqm Andy Includes Cap Road Cost to clear backlog = $12 million 20% of road network 13

14 Working AM into the LTFP Asset Management Plans allow you to: Identify and track progress on your infrastructure gap Project future life cycle financial requirements Ensure your on the right path to financial sustainability Communicate performance on AM stewardship obligations Working AM into the LTFP GFOA LTFP Best Practices Integrate Existing Assets Progress to Steady State Replacement Uses Best Practices Risk Management Updates AM Plans including LOS annually & integrates into municipal culture Integrating Growth Impacts on Existing Assets New Assets (Contributed/Constructed) 14

15 Sustainability Indicators Three key financial indicators adopted and applicable to all local governments in Australia Focus = financial performance, financial position and asset management performance Combined = powerful tool to help decision makers focus on and comprehend key outcomes and implications over time Use by Local Government Auditor Generals in Australia and New Zealand to track Council performance Financial Sustainability Fair Value 1% to 15% Operating surplus ratio (the percentage by which major controllable revenue varies from expenses) (100%) maximum Net financial liabilities ratio (the significance of the net amount owed compares to revenue) 90% to 110% Asset sustainability funding ratio/asset renewal funding ratio (the extent to which assets are being replaced at the rate they are wearing out). 15

16 Sustainability Measures Final Comment In the interest of maintaining a standard of living for ourselves and the next generations we must focus on steady state replacement of assets augmented by reasonable reserve levels and debt financing Sewer - Condition Based Steady State Funding versus End of Useful life 16

17 Summary Council s/board s stewardship role includes services, assets and financial resources Asset Management enables Council/Board and staff to plan strategically The path to sustainable municipal government requires: Service, Asset, and Financial Plan integration Informed Decisions Tracking performance over time David Allen Dallen@courtenay.ca Ext. 228 Andy Wardell Wardella@dnv.org