What is Asset Management Capacity?

Transcription

1 1 Building Asset Management Capacity Allen Mapstone IPWEA Australasia What is Asset Management Capacity? 2 When I first read the title for this session I started thinking about... is the focus on Financial capacity? Service Capacity? Organisational capacity (or Asset Management Maturity)? 1

2 3 So capacity to do what? Doesn t it get to some of the key issues being : Can we reliably answer Fundamental Questions? Like Do we have enough funding to: 4 1.OPERATE? 2

3 Do we have enough funding to 5 2. MAINTAIN? Do we have enough funding 6 3. RENEW? 3

4 Do we have enough funding 7 4. UPGRADE? What if the answer is NO? 8 Does that lack of funding and resources represent a risk to your community going into the future? 4

5 And. do we have the capacity to inform decision makers of the Options and the consequences? 9 with a suitable level of confidence in the information so that they can achieve the organizations strategic objectives and own the consequences We still experience a very specific view. It s the way we still work 10 Detailed optimised modelling Lifecycle costing Asset accounting Most discussions quickly go to that detail 5

6 ISO Asset Management Fundamentals 11 Asset management involves balancing of costs, opportunities and risks against desired performance of assets to achieve organizational objectives Fundamentals Value Alignment Leadership Assurance 12 FINANCIAL CAPACITY 6

7 Service level affordability Cannot be determined by considering historic asset management outlays or projected available budget cashflow capacity for asset management 13 The only simple, practical way is by looking at under lying trend accrual accounting projected operating result and other financial indicator results over at least a 5 year and preferably a 10 year period Is estimate of depreciation reliable and up to date? Illustrative Income Statement Operating Income Rates Other Income Total Operating Income $ Operating Expenses Other Depreciation Total Operating Expenses Operating Result Other items (e.g. cap revenues) to get net surplus Other items to get total comprehensive income Ref: AIFMM, Table 2.6.1, p 2 8 7

8 Illustrative Balance Sheet Assets Cash, Inventories & Receivables Infrastructure, Property, Plant & Equipment Total Assets Liabilities Payables Borrowings Provisions Total Liabilities $ 000 t Y Y Y Yt 15 Equity Ref: AIFMM, Table , p 2 9. t Yt Financial Sustainability Indicators Operating Surplus Ratio operating result (exclusive of capital income) expressed as a percentage of total operating income 2. Net Financial Liabilities Ratio debt and other financial liabilities less financial assets expressed as percentage of operating revenue (excl. capital income) 3. Asset Renewal Funding Ratio asset renewal and replacement expenditure for a period expressed as percentage of renewal and replacement expenditure identified in AM Plan for same period [where AM Plan is unreliable, cautiously use 3A] 4. Asset Sustainability Ratio asset replacement expenditure relative to depreciation for a period Ref: AIFMM, Table , p

9 17 SERVICE CAPACITY Sustainability Achieving the Organization s AM Objectives and Service Sustainability 18 9

10 Achieving the Organization s AM Objectives and Service Sustainability 19 Projections based on projected funding Deferral of activities and programs Likely reduction in service levels Generation of additional service risks Having productive discussions on Affordable Service Levels 20 Matching levels of service provided by an asset with the expectations of customers Expected Service Provided Service 10

11 Asset Management gives Informed Asset Investment Decisions 21 balancing costs, risks, and performance Service Levels Costs Risks Perfect World Desired Level of Service 22 May be unrealistic 11

12 Reality of Affordable Level of Service 23 Is this acceptable or can we consider other options? 24 ORGANISATIONAL CAPACITY AM MATURITY 12

13 AM Improvement (& Audit) Aimed at assisting organisation to develop and implement a continuous improvement program to enhance the AM System to more effectively deliver AM outcomes Assess AM performance Identify improvement actions Develop prioritised improvement plan Implement to improvement plan Monitor outcomes 25 Ref: IIMM, Sec 4.6, p IPWEA NAMS.PLUS 2 approaches to measuring Asset Management Maturity National Assessment Framework Aligned with ISO

14 Its no different to the way we improve at most things 27 Where are we at What's the aim Steps to improve Practice Monitor and review Identifying Improvement Actions 28 Ref: IIMM, Sec 4.6.3, p

15 Identifying Improvement Actions Here 29 Ref: IIMM, Sec 4.6.3, p 3 99 Prioritised Improvement Plan What actions do you need to do to improve performance? What is the largest maturity gap? What is most critical maturity area? What will give the most benefit for the outlay? What will give you quick wins? 30 Ref: IIMM, Sec 3.5, p

16 Implement Improvement Plan Apply good project management practices 1. Confirm the project brief or scoping report 2. Identify resource requirements external advisors, staff input hours and budget 3. Train staff 4. Monitor and control project progress (time, cost and quality) 5. Report on all aspects of project progress, cost and scope 6. Audit project outputs 7. Periodically review project objectives, scope, timeframe and composition of AM teat. Modify as appropriate 31 Ref: IIMM, Sec 3.5, p Monitor Performance Outcomes Is performance improving, staying the same or getting worse? Achievement of organisational and AM objectives Service delivery (quality, cost, etc.) AM maturity Data confidence Regularly report performance outcomes to top management (Council/Board, Audit Committee, CEO/Exec. management team) 32 16

17 Any Questions? 33 17