Asset Management: Tools and Techniques for Sustainable Communities

Transcription

1 TUESDAY MAY 23, :35-4:50PM Asset Management: Tools and Techniques for Sustainable Communities MODERATOR SPEAKERS Marita J. Kelley Deputy Director, Center for Local Government Services, Commonwealth of Pennsylvania Department of Community and Economic Development Andy Wardell Director, Financial Services, District of North Vancouver, BC Brian Bedford Director of Infrastructure, Province of British Columbia #GFOA2017

2 ASSET MANAGEMENT: FOR SUSTAINABLE SERVICE DELIVERY Asset Management is Long Term Financial Planning Brian Bedford, Director, Infrastructure & Engineering, Local Government Infrastructure and Finance Branch, Province of British Columbia Andy Wardell, Director, Financial Services, District of North Vancouver Co-Chair, Asset Management BC Graphics by: Presentation Media

3 Agenda Stewardship Obligations & Infrastructure A Decade of Learning BC s Asset Management for Sustainable Service Delivery Framework A Case Study District of North Vancouver

4 How to solve this problem? Service Wants Funding Reality

5 Stewardship At least the leak is on his side of the boat Graphics by: Presentation Media

6 Stewardship Context World wide value existing Gov t infrastructure - $50 Trillion US Global stock market capitalization - $55 Trillion Annual GDP - $72 Trillion Source: Strategic Infrastructure 2014 Report - World Economic Forum

7 Infrastructure Gap? You are not Alone! America - $2.0 Trillion between 2016 to 2025 Source: ASCE 2017 Infrastructure Report Card Canada - $398 Billion (fair, poor or very poor) = 35% Source: 2016 Canadian Infrastructure Report Card World - $1 Trillion gap annually Source: Strategic Infrastructure 2014 Report - World Economic Forum

8 In the beginning Current state Three/four year mandates vs 100 year asset life cycles Raw lands sales are finite and not a sustainable practice

9 Other Gap Factors The great migration Pop. shifting to cities The wait for stimulus funding Levels of service not connected to life cycle price

10 A Decade of Learning - Musts In your Organization Executive sponsors Get People Talking = Interdisciplinary team building & learning Manage and breakdown silos Research & Model Others Look Around You Think Partners Get People Talking = Interdisciplinary team building & learning Manage/breakdown silos Build a Community of Practice = Research & Model Others

11 Graphics by: Presentation Media

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13 ASSET MANAGEMENT FOR SUSTAINABLE SERVICE DELIVERY A BRITISH COLUMBIA FRAMEWORK

14 Material development Many hours and consultations by the inter-disciplinary team Relevant to Finance Officers everywhere Local Governments are in the business of infrastructure How can you have a robust long term financial plan without robust Asset Management Plans? Infrastructure is a corporate risk and a financial risk Graphics by: Presentation Media

15 Why this matters to Councils Sustainable Service Levels based on informed asset management decisions: Protect public safety Reduce damage losses Provide system reliability Value for money for taxpayers Limits liability exposure Fulfill Council s stewardship obligations Graphics by: Presentation Media

16 The CFO, Beyond Budgets, Audits & Taxes Bring services, asset and resources in to alignment Evidence project and life cycle costs Support efficient/effect use of resources Value for money for taxpayers Limit liability exposure Help build robust long term financial plans Graphics by: Presentation Media

17 SUSTAINABLE SERVICE DELIVERY Ensures that Current Community Service Needs are met Delivered in a Socially, Economically and Environmentally responsible manner Does not Compromise Ability of Future Generations to Meet their Needs Considers Community Priorities Understanding the Trade-offs between Available Resources and Desired Services

18 ASSET MANAGEMENT The process of bringing together the skills and activities of people; with information about the community s physical infrastructure assets and financial resources to ensure long term sustainable service delivery.

19 CORE ELEMENTS PEOPLE culture and capacity for informed decision-making INFORMATION to support decision-making for Sustainable Service Delivery ASSETS - physical Infrastructure to enable service delivery FINANCES understanding long term costs of service delivery

20 REVIEW, COMMUNICATE AND ENGAGE Regular Reviews on-going throughout the process Communicate internal team alignment and increased understanding Engage education and raising awareness

21 THE PROCESS Continuous quality improvement process Incremental and scalable Assess capacity, demand and results Planning what needs to be done Implementing the plans

22 ASSESS Asset Management Practices and Current State of Assets Determine organization Capacity Review core elements (People, Information, Finances and Assets) Knowing your Inventory & condition of infrastructure Level of Service and Risk for each asset category Foundation for development of asset management plans

23 PLAN Financial and Assets Plans Integrate Asset Policy - Council approved Asset Strategy - integrates all asset plans Asset Plans - readable, living documents that cost effectively evidence infrastructure needs, timing and activities for service levels Long Term Financial Plan - includes asset plans

24 IMPLEMENTATION Implement Practices, Measure and Report Establish ways to Integrate people, culture and capacity Guided by the asset management Strategy and actions Include asset management Objectives and outcomes in annual financial reports Demonstrate measurable progress Contribute to Sustainable Service Delivery

25 Why do Asset Management? Clear picture of future costs and risks for infrastructure assets and service delivery Make informed decisions about community plans and priorities considering future costs and risks Ensure important services are affordable for the community today and sustainable for generations to come (leaving a legacy) Asset Management is critical to achieving selfreliance and sustainably delivering services

26 Senior Government Support (Canada) Funding programs leverage AMBC s work LGs must evidence progress in Asset Management Future funding depends on evidence

27 Beyond the Engineered Built Environment Natural Capital

28 Asset Management is Long Term Financial Planning Bringing Assets, Services and Resources into Alignment A Case Study in Sustainable Service Delivery Graphics by: Presentation Media

29 Big Picture Official Community Plan Goals, Strategies, Actions Service Levels Demand Management Success Measures Strategic Plans Long Term Financial Plan Financial Policy Forecast and Analysis Asset Management Funding Priorities Success measures Services Corporate Plan Finances Program level -----> Annual Budget / Reporting

30 Prioritization The right mix, balance, timing: Priority Impact Direction Key plans Community Financial m$ M,S,L Timing Criteria Rank Base Target Capital O&M Replace >10 1. Renewal AMP (risk) $ $ - $ - 2. Future capital Various $ $ 6.0 $ 5.0 Entire process is community-driven, adjusted annually

31 Prioritization

32 The District Today Over $2 Billion in assets Revenues $+- $200 million pa 16 Asset Management Plans Assets in poor / very poor condition $100M Full asset lifecycle costing Interdisciplinary team learning, building and mutual trust Asset Management staff work in Financial Planning Asset Management fully integrated into Community & Long Term Financial Planning Staff fully trained on AM & LTFP best practices Graphics by: Presentation Media

33 How did We Get Here? On Sustainable Service Delivery Path since 2004 Interdisciplinary team building and establishing mutual trust takes time Pilot project based; annual asset management plan updates Continuous quality improvement mind-set

34 Pulling It All Together Organizational Alignment Integrate Best Practices Tools Risk Management

35 Critical Path #1 Organizational Alignment Multi-disciplinary Team Building Continuous Quality Improvement Always Pilot Project based Managing the Limiting Forces of Success Demming Quality is a journey that never ends

36 Critical Path #2 Best Practices/Standards How = Financial Sustainability Indicators (LGASA/IPWEA) How = Long Term Financial Planning Best Practices (GFOA) How = National Asset Management Strategy (NAMS) or whatever you use How = International Infrastructure Management Manual (IIMM) How = Accounting Standards Audited Asset Inventories Graphics by: Presentation Media

37 Critical Path #3 Key Asset Tools Asset Management Policy Asset Management Strategy = corporate vision and performance reporting Asset Management Roadmap Asset Management Plans and Risk Registers Accounting Standards Audited Asset Inventories Graphics by: Presentation Media

38 Critical Path #4 Risk based approach Decisions inform Annual and Long Term Financial Plans Asset Renewals based on Prioritized Risks 16 Asset Management Plans Asset Risk Register for each asset & AMP Asset Risk Management Plan Graphics by: Presentation Media

39 Risk Registers

40 Physical Conditions Very Good Good Fair Poor Very Poor = $100 Million

41 Why is it sustainability so hard? Sustainability metrics must be jointly produced by experts, users and systems designers, not in isolation. To embed metrics and decision support capabilities in living, breathing processes, communities of practice that share this goal and span relevant perspectives must be nurtured. When this is done well, measurement processes engender new, effective waves of participation across broad segments of society. - Marc Levy & James Cameron 2013 Graphics by: Presentation Media Graphics by PresentationMedia

42 Financial Sustainability Ratios Used by hundreds of local governments to track sustainability Reviewed by Auditor Generals to assess progress to toward sustainability Award winning work of: IPWEA Australian Finance Management Guidelines LGASA Financial sustainability program John Cormie of JAC Comrie Pty Ltd

43 Financial Sustainability Measures Operating Surplus Ratio (Replacement Value depreciation) Minimum Benchmark - A small surplus every year = 0% Maximum Benchmark Surplus of 15% (revenue expenses) Asset Sustainability Ratio (five year moving average) Numerator - $$ spent on renewal of existing assets Denominator - $$ required in asset management plans Net Financial Liabilities Ratio Debt Maximum 100% of major continuing revenues

44 Operating Surplus Ratio DNV Operating Surplus Ratio (Replacement Value depreciation) Minimum Benchmark - A small surplus every year = 0% Maximum Benchmark Surplus of 15% (revenue expenses)

45 Asset Sustainability Ratio DNV Asset Sustainability Ratio (five year moving average) Numerator - $$ spent on renewal of existing assets Denominator - $$ required in asset management plans

46 Financial Sustainability Ratios That Work! Graphics by: Presentation Media

47 Everything is hard before it is easy. - Goethe

48 Graphics by: Presentation Media