Minimum Levels of Componentisation for Road Infrastructure Assets 11 September 2018

Transcription

1 Minimum Levels of Componentisation for Road Infrastructure Assets 11 September

2 Today s moderator Eliz Esteban Communications Officer Austroads P: E: eesteban@austroads.com.au 2

3 About Austroads The peak organisation of Australasian road transport and traffic agencies Roads and Maritime Services New South Wales Roads Corporation Victoria Department of Transport and Main Roads Queensland Main Roads Western Australia Department of Planning, Transport and Infrastructure South Australia Department of State Growth Tasmania Department of Infrastructure, Planning and Logistics Northern Territory Transport Canberra and City Services Directorate, Australian Capital Territory Department of Infrastructure, Regional Development and Cities Australian Local Government Association New Zealand Transport Agency 3

4 Our structure 4

5 Housekeeping Presentation = 35 mins Question time = 15 mins + = 5

6 GoToWebinar Please type your questions here Let us know the slide number your question relates to 6

7 Austroads Guideline and research report Download from Austroads Website: 7

8 Today s presenter Gary Rykers (presenter) Manager Asset Management Victoria & Tasmania Project Technical and Stakeholder Lead wsp-opus M: Andrew Golding (Q&A) Director, Transport System Asset Management Department of Transport and Main Roads P: (07) or E: andrew.c.golding@tmr.qld.gov.au 8

9 Agenda Topic Project Background and Introduction Why? What? Project Scope Research Report Terminology Stakeholders Guideline How? Implementation Impacts Hypothetical Case Study Q&A Presenter Gary Rykers (Technical and Stakeholder Lead) Andrew Golding (Austroads Project Manager) 9

10 Project Background and Introduction 10

11 Introduction to Team Project Team Review Team Austroads Project Manager Andrew Golding Austroads Project Working Group wsp Opus Project Leader Susan Chamberlin Stakeholders- Finance and Audit Industry Representatives Austroads Assets Task Force wsp Opus Technical & Stakeholder Lead Gary Rykers Austroads Board 11

12 The Project Team Austroads Project Working Group Shane Tepper DIPL NT Andrew Golding TMR QLD Patrick Flemming Qld Audit Office Liam Terris & Patrick Carr RMS NSW Mick Savage IPWEA Ian Barr MR WA John Comrie Independent Auditor Soula Efstathiadis DPTI SA Kelly Dang VicRoads Matt Barry NTC Kym Foster ALGA Daniel Verdouw DSG Tas Neil Pincombe TCCS ACT Ric De Santi Tas Audit Office Wayne Robinson NZTA 12

13 Project Purpose To develop prescriptive guidance material that will facilitate improved integration of Asset Management and Financial Management disciplines. The project will deliver prescriptive guidance regarding minimum levels of componentisation for complex assets, applicable to State / Territory Road Agencies and Local Government Authorities. The project deliverables will provide a benchmark to stakeholders and users (i.e. road management authorities & auditors) for driving a more consistent approach to preparation of financial statements. In turn, this will enable more efficient collation of national data sets used to enable equitable reform initiatives, such as national funding reform. 13

14 Project Purpose To develop prescriptive guidance material that will facilitate improved integration of Asset Management and Financial Management disciplines. The project will deliver prescriptive guidance regarding minimum levels of componentisation for complex assets, applicable to State / Territory Road Agencies and Local Government Authorities. The project deliverables will provide a benchmark to stakeholders and users (i.e. road management authorities & auditors) for driving a more consistent approach to preparation of financial statements. In turn, this will enable more efficient collation of national data sets used to enable equitable reform initiatives, such as national funding reform. 14

15 Project Purpose To develop prescriptive guidance material that will facilitate improved integration of Asset Management and Financial Management disciplines. The project will deliver prescriptive guidance regarding minimum levels of componentisation for complex assets, applicable to State / Territory Road Agencies and Local Government Authorities. The project deliverables will provide a benchmark to stakeholders and users (i.e. road management authorities & auditors) for driving a more consistent approach to preparation of financial statements. In turn, this will enable more efficient collation of national data sets used to enable equitable reform initiatives, such as national funding reform. 15

16 Project Purpose To develop prescriptive guidance material that will facilitate improved integration of Asset Management and Financial Management disciplines. The project will deliver prescriptive guidance regarding minimum levels of componentisation for complex assets, applicable to State / Territory Road Agencies and Local Government Authorities. The project deliverables will provide a benchmark to stakeholders and users (i.e. road management authorities & auditors) for driving a more consistent approach to preparation of financial statements. In turn, this will enable more efficient collation of national data sets used to enable equitable reform initiatives, such as national funding reform. 16

17 Project Purpose To develop prescriptive guidance material that will facilitate improved integration of Asset Management and Financial Management disciplines. The project will deliver prescriptive guidance regarding minimum levels of componentisation for complex assets, applicable to State / Territory Road Agencies and Local Government Authorities. The project deliverables will provide a benchmark to stakeholders and users (i.e. road management authorities & auditors) for driving a more consistent approach to preparation of financial statements. In turn, this will enable more efficient collation of national data sets used to enable equitable reform initiatives, such as national funding reform. 17

18 How? What? Why? 5 mins 20 mins 10 mins Why? 18

19 Asset Classification Structure The classification of asset is one of the most important steps in financial reporting, asset accounting and asset management. Asset managers rely on an asset hierarchy classification for service planning, management and cost and performance reporting. Assets should be classified to suit both financial reporting and asset management purposes. The needs of accountants and asset managers should be identified and considered fully in developing the asset classification and hierarchy. - Australian Infrastructure Financial Management Manual (IPWEA 2015) 19

20 Asset Classification Structure Used to inform asset data structure and associated reporting, as follows: For use by asset management and information technology practitioners to inform asset hierarchy and/or reporting requirements. For use by asset management and financial management practitioners to inform asset valuation processes. For use by financial reporting practitioners to inform how recognised assets are rolled up for financial reporting. Asset Item Location Function Relevant accounting standard terminology > Asset Class, Component and Item 20

21 What s the problem? National Perspective Road Agencies perform similar functions in the delivery of community services, on asset types that are similar in nature and function. National reform initiatives rely on comparable financial data, sourced from road management organisations (State/Territory Authorities, Local Government Authorities, etc) 21

22 What s the problem? National Perspective The flexibility within AASB standards has led to many different interpretations; specifically in relation to AAM2102 project scope: appropriate levels of asset componentisation terminology within AASB standards (i.e. Asset Class, Component and Item) From a whole of state / cross jurisdiction perspective, this lack of consistency results in a reduction in confidence when comparing financial data and financial statements. This has the potential to inhibit effective national reform. 22

23 What s the problem? Organisation Perspective A common approach to financial valuation is the use of stereotypes which includes: Different functional road classifications having different design standards and therefore different modern day equivalents (good practice) Unit rates typically incorporating many different Asset Types, with different useful lives (questionable practice, as generally not aligned to renewal work practices) 23

24 What s the problem? Organisation Perspective Stereotype approaches adopted by many organisations typically group high value Asset Types (e.g. Pavements) with lower value Asset Types (e.g. minor culverts, signs, etc.) This approach is adequate to meet accounting standard compliance requirements, but Does not provide value to asset management functions, due to lack of transparency. 24

25 What s the problem? Organisation Perspective In such circumstances, asset management functions and financial management functions do not align well, resulting in: Inefficient organisational costs associated with data management and Lack of ability to leverage financial valuation data for use in forward planning processes. 25

26 Perspectives Individual Agency Asset Management requirements Accounting Standard requirements Cross Agency Consistent Terminology Integrated Asset Management and Financial Management Asset Management Asset Classification Structure increasing level of inventory data granularity Financial Management Financial Reporting Single Asset Classification Structure for: Asset Management Financial Management Financial Reporting 26

27 Project Goals Principles used in development of Guidelines: 1. Must comply to Accounting Standards 2. Facilitate better integration of Asset Management and Financial Management 3. Facilitate harmonisation 4. Increase the ease of cross-jurisdictional comparability 5. Reduce barriers for regulatory reform Tasked with developing Prescriptive Guidance Therefore, need to codify how the prescription will apply. Primary focus on: Terminology Asset Classification Structure Item Definition 27

28 How? What? Why? 5 mins 20 mins 10 mins What? 28

29 Project Deliverables Guideline Research Report Communication Material 29

30 Program Overview Two year project Stage 1 Establish project and team Project Inception Stage 2 Literature Review Stage 3 Current practice Stakeholder Survey Stage 4 First Draft Research Report Updated First Draft Research Report Stage 5 First Draft Guideline Updated First Draft Guideline Conformance Assessment Draft Impact Statement + Gap Analysis Second Draft Research Report Stage 6 Research Report Final and Guideline Final Stage 7 Project Webinar Austroads Board Review & Approval 30

31 Project Scope 31

32 What does Prescriptive Guideline cover? Current Replacement Cost Variables Componentisation INCLUDED in Prescriptive Guidelines Curves Useful Lives Remaining Useful Lives Gross Replacement Cost unit rates Residual Value unit rates EXCLUDED from Prescriptive Guidelines Minimum levels of Componentisation to enable improved integration of asset management, financial management and financial reporting 32

33 What does Prescriptive Guideline cover? Asset Classes Road Infrastructure Assets INCLUDED in Prescriptive Guidelines Maritime Infrastructure Assets Land and Buildings Plant and Equipment EXCLUDED from Prescriptive Guidelines Intangibles Asset Types within Road Infrastructure Assets is guided by Austroads Data Standard for Road Management and Investment in Australia and NZ 33

34 Terminology 34

35 Terminology Literature Review Findings Accounting Standards Asset Class Component Item Terminology used across the various documents is significantly different, often with the same terms having different meanings to different jurisdictions. Key Finding: in principle guides do not adequately drive consistent application Description of surfacing Jurisdiction Doc Ref# Sub-component NZTA 076 Sub-class Queensland 077 Component South Australia LG

36 Alignment of Terminology in Guideline Asset Class (Level 1) Asset Sub-Class (Level 2) Level 1 and Level 2 have direct alignment to Asset Class as defined within Accounting Standards Single Asset Classification Structure for: Asset Management Financial Management Financial Reporting Confirmed that asset accounting concepts of Asset Class and Component are insufficient to fully describe the complex nature of road infrastructure assets. Asset Type (Level 3) Asset Sub-Type (Level 4) Asset Component (Level 5) Levels, 3, 4 and 5 have direct alignment to Component as defined within Accounting Standards An individual Item, within an asset group, may be recognised at Level 2, 3 or 4 subject to the Item Test Asset Sub-Component (Level 6) Level 6 provides detailed componentisation for engineering and asset management purposes 36

37 Alignment of Terminology in Guideline Asset Class (Level 1) Asset Sub-Class (Level 2) Level 1 and Level 2 have direct alignment to Asset Class as defined within Accounting Standards Floating Item concept. The level which an asset Item is recognised, may differ depending on the Item Definition Approach. Confirmed that there are different approaches to defining an Item, within the Asset Classification Structure. Asset Type (Level 3) Asset Sub-Type (Level 4) Asset Component (Level 5) Levels, 3, 4 and 5 have direct alignment to Component as defined within Accounting Standards An individual Item, within an asset group, may be recognised at Level 2, 3 or 4 subject to the Item Test Asset Sub-Component (Level 6) Level 6 provides detailed componentisation for engineering and asset management purposes 37

38 Stakeholder Engagement 38

39 Stakeholder Groups Government Split State/Territory Road Authorities NZTA TMR QLD RMS NSW ACT Govt VicRoads DSG Tas DPTI SA MRWA DoT NT Federal DIRD NTC CGC Local Government IPWEA ALGA Individual LGAs via ALGA State based groups 39

40 Stakeholder Groups Functional Split Assets Owners State Road Authorities Local Governments Funders Treasuries DIRD Grants Commission Advisory Associations ALGA IPWEA NTC Finance / Auditing Industry Regulatory Standards Boards Government Treasuries Auditors General Valuers General Advisory Associations Auditor Reference Groups State-based industry groups 40

41 Stakeholder Survey Participants Financial/Audito r 48% Technical/Engineering 52% Number of Verified Respondents:

42 Do we need a Guideline? There was very strong support to the need for prescriptive asset componentisation Guidelines 42

43 Research Report 43

44 Research Report Structure Report provides details which support the Guideline Executive Summary 1. Introduction 2. Methodology 3. Deliverables Overview 4. Literature Review Summary 5. Stakeholder Survey Summary 6. Discussions and Determinations 7. Alignment Assessments 8. Guideline 9. Impact Assessment and Transition Statement 44

45 Guideline 45

46 Guideline Structure PART 1 PART 2 Attachment A Attachment B Attachment C Attachment D Attachment E Guideline Overview Guideline Application Item Test Process Workflow Asset Classification Structure Item Test Worksheet Statement of Conformance Hypothetical Case Study 46

47 Key Guideline Outputs Guideline provides a structured approach to determining, for groups of assets: the recommended Item definition approach, and the associated minimum inventory data requirements Item definition approach Describes recommendation for how a group of assets will be recognised as an Item, including relationship to the levels of the Asset Classification Structure. Options are: Average Weighted Asset Network Asset Simple Asset Complex Asset Minimum inventory data requirements Describes the minimum level of asset inventory data that should be available to an organisation and that should be expected by an auditor. Options are: Desk top assumptions Sample data Full asset inventory data Component level inventory data 47

48 Key Guideline Components (pun intended) INPUTS Asset Classification Structure (Appendix B) Gross Replacement Costs METHODS Item Test Process Workflow (Appendix A) Table 1 OUTPUTS Item Definition Approach Minimum Inventory Data 48

49 Asset Classification Structure Refer Appendix B Asset Class Item recognition level depended on Item Test Component Separate identification of the Asset Sub-Classes, in the notes to financial statements 49

50 Gross Replacement Cost Estimates Asset Class (level 1) Road Infrastructure Asset Sub-Class (level 2) Roads Roadside Drainage Mechanical & Electrical Structures Land Under Roads Asset Type (level 3) As per Austroads Data Standard Refer appendix B for details GRC estimates to be established via reference to existing agency information, such as: Previous financial year valuations Cost reports for information management systems Analysis of current contract schedules 50

51 Item Test Item Test can be applied at: Level 2: Asset Sub-Class Level 3: Asset Type Item Test is dependent upon: % of Gross Replacement Cost (GRC), relative to a group of assets As well as three qualifying questions to test: Is it practical to apply an average weighted unit rate to the group of assets? (e.g. Roadside) Are Items in Asset Type common? (e.g. Signs) Is it practical to split items into Components? (Earthworks) 51

52 Process Workflow and Table 1 Table 1: Item Definition Approach and / or Refer Appendix A: Item Test Process Workflow Option GRC% Weighted Average Unit Rate Practical? Common Items? Item Test applied at Asset Sub-Class (level 2) Components Recommended Item Definition Approach Practical? (Including Minimum Inventory Data Required) 1 <1% Yes N/A N/A Average Weighted Asset 1 2 1% to <5% Yes N/A N/A Average Weighted Asset Avg. weighted GRC Unit Rate, combining unit rates for individual Asset Types, applied to a group of assets that make up an Item. Concept of modern day equivalent applied, to describe the typical assets expected within a segment, typically differentiated by functional road classification 2. If inventory data is not available for the group of assets, an estimate of assets within a segment, typically by functional road classification 2, may be extrapolated from sample data or desk top assumptions. Avg. weighted GRC Unit Rate, combining unit rates for individual Asset Types, applied to a group of assets that make up an Item. Concept of modern day equivalent applied, to describe the typical assets expected within a segment, typically differentiated by functional road classification 2. If inventory data is not available for the group of assets, an estimate of assets within a segment, typically by functional road classification 2, may be extrapolated from sample data. Start Item Test Applied at Asset Sub- Class Level Determine Road Infrastructure Class GRC Estimate Asset Sub-Class GRC Amoun ts Estimate Asset Sub-Class GRC % Is Sub-Class GRC% 5%? Yes Item Test Applied at Asset Type Level Estimate Asset Type GRC Amounts Estimate Asset Type GRC % Item Test No NTC Expenditure Classification GRC% <1% Guidelines Is it practical to apply an average weighted unit rate to the group of Yes Asset Sub-Class assets? 1 GRC? GRC% 1-<5% No No Yes GRC% <1% Are Items in Asset Type common? ² Austro ad s Data No Stand ard Yes Asset Type Are Items in Asset GRC% 1-<5% GRC? Type common? ² No GRC% 5-<10% No Is it practical to split Items GRC% 10% into Components? ³ Yes Item Definition Approach Average W eighted Asset Average W eighted Asset Network Asset Simple Asset Network Asset Simple Asset Simple Asset Complex Asset Minimum inventory data requirements Avg. Weighted GRC Unit Rate based on desktop assessment Avg. Weighted GRC Unit Rate based on sample data Avg. GRC U nit Rate based on desktop assessment Individual Recognition based on des ktop assessment Avg. GRC U nit Rate based on s ample data Individual Recognition based on sample data Individual Recognition based on full inventory Items Recognised at Componen t Level based on full component level inventory Recognition level within Asset Classification Structure Items recognised at Sub-Class (level 2) Items recognised at Type (level 3) Items recognised at Componen t (level 5) Conduct Valuation Fair Value Calculation Is actual GRC% within same range as previous estimate? Yes NOTES: Financial Report Financial Reporting Complete during the year of the next scheduled revaluation cycle Financial Statement & Audit 1. The adoption of a Weighted Average Asset valuation approach requires application of t he modern day equivalent concept t o describe the typical assets expected, often diff erentiated by functional road classifications. This approach is generally considered practical for low value groups of assets, where road standards provide an adequate level of guidance regarding the asset types specified for construction, typically diff erentiated f or each functional road classification. 2. This question is a prompt to establish if individual Items, within a group of assets, are similar t o the point where a common gross replacement cost unit rate can be applied. The term common in t his question should not be interpreted t o mean that a consistent modern day equivalent would be assigned for every individual Item within the group of assets. Rather, Items within a group of assets may still be assessed as common where Item attribution, such as asset dimensions and materials, will result in a dif ferent unit rate. 3. This question is a prompt to determine if Items within a group of assets can be split into separable asset components (level 5), in accordance with complex asset requirements. 4. The Item Test should be applied, up to the point of fair value calculation, at least 12 months in advance of t he next scheduled revaluation cycle. This should allow sufficient t ime to address identified data gaps and to consult with internal stakeholders and auditors. Complimentary methods to put the Item Test into action 52

53 Item Definition Approach little or minimal value (group Asset Types) Average Weighted Asset (e.g. Roadside Asset Types) Network Asset (e.g. Signs) Value significant value Benefit Simple Asset (e.g. Culvert) Complex Asset (e.g. Pavement Base & Sub-base) Complexity Item Definition Approach determined via Item Test (i.e. GRC% and Qualifying Questions) 53

54 Minimum Inventory Data Complexity of inventory data required is determined via Item Test. That is: GRC% and Qualifying Questions Options are: Desk top assumptions Sample data Full asset inventory data Component level inventory data Average Weighted, Network or Simple Average Weighted, Network or Simple Simple Assets Complex Assets 54

55 Item Test Worksheet See Guideline Attachment C Used to record, by asset group: GRC% estimates Answers to Item Test qualifying questions Data Gaps identified Recommended Item Definition Approach (Output) Minimum Inventory Data Requirement (Output) Notes in Item Test Worksheet align to Guideline Process Steps 55

56 Key Procedural Requirements Attachment B prescribes minimum requirements for level 1 Asset Class, level 2 Asset Sub-Class and level 3 Asset Type. Each level of the Asset Classification Structure must have a many to one relationship with the level immediately above it, as per Attachment B. For the purposes of applying the Item Test, the Gross Replacement Cost of the Road Infrastructure Asset Class (GRC Road Infrastructure ) is to exclude the value of Land Under Roads. 56

57 Key Procedural Requirements Implementation of the Guideline includes separate identification of the Asset Sub- Class categories (as a minimum) in the notes to financial statements. An entity may make a decision not to value selected Asset Types If they consider the collective value to be highly immaterial and they consider desk top assumptions related to asset data to provide negligible value to asset management functions. Any such decisions will be subject to normal auditing processes to assess the appropriateness of materiality assessment decisions. If an entity decides not to value selected Asset Types, this is to be acknowledged in the notes to the financial statements. 57

58 How? What? Why? 5 mins 20 mins 10 mins How? 58

59 Project Success Question: What does success for this project look like? Answer: Organisations adopt Guideline as part of next revaluation cycle Answer: Organisations adopt Asset Classification Structure for asset management functions Answer: Auditors use Guideline to supplement annual audit of financial statements Answer: Increased consistency* in financial statements allows greater comparability * Level 2 categories reported (as a minimum) in the notes to financial statements. 59

60 Implementation Step Step Description Recommended Timing 1 2 Apply the Item Test, up to the point of fair value calculation. This should be a relatively quick and easy process, which will assist with organisation specific implementation planning. Consult with internal stakeholders and auditor regarding proposed changes to business processes. >12 months in advance of the next scheduled revaluation cycle 3 Address identified data gaps, including associated information management considerations, and complete fair value calculation. 4 Complete financial report and financial statement, including audit. During the year of the next scheduled revaluation cycle 60

61 Implementation Step Step Description Recommended Timing 1 2 Apply the Item Test, up to the point of fair value calculation. This should be a relatively quick and easy process, which will assist with organisation specific implementation planning. Consult with internal stakeholders and auditor regarding proposed changes to business processes. >12 months in advance of the next scheduled revaluation cycle 3 Address identified data gaps, including associated information management considerations, and complete fair value calculation. 4 Complete financial report and financial statement, including audit. During the year of the next scheduled revaluation cycle Leave at least a 12 month lead time, in advance of their next scheduled revaluation cycle 61

62 Implementation Step 1 Quick process, to apply the Item Test, up to point of determining recommended: Item Definition Approach Minimum Inventory Data Requirements GRC estimates to be established via reference to existing agency information, such as: Previous financial year valuations Cost reports for information management systems Item Test 12+ months Analysis of current contract schedules 62

63 Implementation Base Expectation Collaboration required with: Asset Manager, Finance Manager and IT Manager. Auditor (of financial statements) Data Gaps identified will require time to address Guideline is not a substitute for organisation business processes. Implementation is likely to require changes to current business processes. Level of impact will depend on the asset management and financial management practices currently in place for the organisation. 63

64 Potential Impacts See Research Report Section 9 for further details Potential impacts can be grouped into the following categories: Depreciation Expense / Asset Portfolio Value Financial Reporting & Audit / Compliance Risk Revaluation Timing Disclosure Requirement Asset Management Information Systems Cost/Effort Imposition Unit Rates / Useful Lives Potential to Realise Value to Organisation 64

65 Relative Impacts Level of impact will depend on asset management and financial management practices currently in place for the organisation. 65

66 Disclosure Requirements AASB 108 Change in policy or Change in estimate Auditor assessment based on merit (i.e. organisation specific determination) Anticipate likely outcome to be change in estimate, for the following reasons: Will continue to assess fair value, via current replacement cost methodology Change in componentisation unlikely to significantly impact the valuation approach Therefore, unlikely to materially impact the organisation s financial statements. 66

67 Hypothetical Case Study See Guideline Attachment E Collaborative effort to apply the Item Test (Step 1) Joe Finance Jane Engineering Jack Capital Works Jerry Planning Outputs: Item Test Worksheet (Attachment C) Data Gaps 67

68 Hypothetical Case Study See Guideline Attachment E Business decisions are required regarding Item definition approach adopted. Examples as follows: Asset Management need results in alternative to recommended Guideline minimum: For Road Barriers and Pathways, an asset management need has previously been identified which triggered collection of a full inventory data set. As such, it was decided to treat these two Asset Types as Simple Assets, as opposed to the minimum Guideline recommendation of Network Assets. 68

69 Hypothetical Case Study See Guideline Attachment E Average Weighted Asset approach may be adopted for multiple Asset Types in an Asset Sub-Class: The total estimated GRC% of the Roadside Asset Sub-Class is 5.9%. The remaining Asset Types within the Roadside Asset Sub-Class were all relatively low value, totalling 3.2% when Road Barriers and Pathways are excluded. Some of the remaining Asset Types were considered common and some were not. Some of the Asset Types has data sets and some did not. Notwithstanding these complexities, a balanced decision was made to treat the Roadside Asset Sub-Class (excluding Road Barriers and Pathways) as an Average Weighted Asset, based on 10% sample data collected across differing functional road classes. 69

70 Hypothetical Case Study See Guideline Attachment E Some Asset Types may be broken into Asset Sub-Types: Abdul has a structured hierarchy for ITS Assets, with suitable Asset Sub-Types. Some ITS Assets Sub-Types already have a full inventory data set. He has been requesting funds to complete a data collection program for remaining Sub-Types, due to technological obsolescence and the need for asset upgrade programs. Kick off a 20% sample data collection program for remaining ITS Assets Sub Types, to support this already identified asset management need. 70

71 Hypothetical Case Study See Guideline Attachment E Complex assets need to identify which Components will be adopted: Bridges are a Complex Asset. Components for valuation purposes will be Superstructure and Substructure, because renewal program often replaces superstructure and maintains existing substructure (i.e. different useful lives). Decision was made not to separately componentise Substructure and Footings, as per Guideline example, because they have a similar useful life. Rather, footings will be incorporated into the Substructure component. 71

72 Hypothetical Case Study See Guideline Attachment E A Network Asset approach may be adopted, in consideration of functional road classifications. Treat Open Drains and Kerb & Channel as a single Asset Type called Roadside Drainage. Recognise as Network Asset, with a Modern Day Equivalent for each functional road class. Kerb & Channel data recently collected to be supplemented by desk top for Open Drains. 72

73 Hypothetical Case Study See Guideline Attachment E Top Management support Barry Chief Financial Officer Bob Executive Director Engineering More consultation Auditor Works Managers 12 month implementation plan Update of capitalisation and financial valuation business processes Mapping of asset management register to finance fixed asset register Data collection program (desk top and field based) Staged approach 2019/20 Roads, Roadside and Drainage Asset Sub-Classes 2020/21 Mechanical & Electrical, Structures and Land Under Roads 73

74 Benefits Individual organisations Improved data integration Increased reporting efficiencies Greater transparency and evidence for financial valuation reporting Improved availability of financial information to inform forward planning processes Greater confidence in financial information to inform performance metrics Improved data analytics to inform optimised decision making by top management. 74

75 Benefits Wider road sector Consistent reporting Cross organisation knowledgesharing More equitable reform initiatives. 75

76 Questions? Andrew Golding Director Transport System Asset Management Department of Transport and Main Roads P: (07) or E: 76

77 Upcoming Austroads webinars Topic Guide to Project Delivery Part 5: Road Construction Quality Assurance Operations of Automated Heavy Vehicles in Remote and Regional Areas Date 20 September 25 September Register at 77

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