2017 ROAD MANAGEMENT REPORT

Transcription

1 IPWEA (NSW) ROADS & TRANSPORT DIRECTORATE ROAD ASSET BENCHMARKING PROJECT 2017 ROAD MANAGEMENT REPORT May 2018 The Roads & Transport Directorate is a joint initiative with

2 IPWEA NSW Division Roads & Transport Directorate Road Asset Benchmarking Project 2017 Road Management Report First Published 2018 IPWEA (NSW) 2018 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without the prior written permission of IPWEA (NSW). National Library of Australia Cataloguing in-publication data: Road Asset Benchmarking Project 2017 Road Management Report ISBN Project Manager Mick Savage, Manager Roads & Transport Directorate Prepared by Steve Verity, TechnologyOne Peer review by Jeff Roorda, TechnologyOne Steering Group Roads and Transport Directorate Management Committee Warren Sharpe OAM, IPWEA (NSW) Board Ken Halstead, IPWEA (NSW) Board Garry Hemsworth, IPWEA (NSW) Board David Andrews, IPWEA (NSW) Tony Reed, IPWEA (NSW) Cliff Toms, IPWEA (NSW) Peter McMahon, RMS Bryan Willey, Director Road Transport Strategy, Transport for NSW Richard Connors, Roads & Transport Policy Officer, Local Government NSW Lindsay Brown, Councillor Eurobodalla Shire Council, Local Government NSW John Roydhouse, Chief Executive Officer IPWEA (NSW) Jennifer Yap, Research and Policy Officer, Roads & Transport Directorate Mick Savage, Manager Roads & Transport Directorate Published by IPWEA NSW Division Roads & Transport Directorate Level 12, 447 Kent Street SYDNEY NSW 2000 T: +61 (02) F: +61 (02) M: +61 (0) E: W: IPWEA (NSW) believes this publication to be correct at the time of printing and does not accept responsibility for any consequences arising from the use of information herein.

3 Table of Contents Overview i Executive Summary iv 1. Introduction 1 2. Background 3 3. Assessing Performance 4 4. Survey Participation 6 5. Asset Management Knowledge and Capability 8 6. Regional and Local Roads as an Investment Life Cycle Funding Gap Findings Discussion Conclusion Assessment Recommendations 45 References 46 Appendices 47 List of Tables Table 1: Road & Bridge Asset Management Assessment 4 Table 2: Use of IIMM Asset Management Principles in Table 3: Adoption and Use of Road Asset Management Plans 9 Table 4: Use of Documented System for Managing Road Risks 10 Table 5: Membership of NAMS.PLUS Asset Management 11 Table 6: Road network condition assessment 11 Table 7: Condition assessment techniques predominately employed 12 Table 8: Planning for function changes in the transport network 12 Table 9: Planning for capacity changes in the transport network 12 Table 10: Road Safety Plans in place 12 Table 11: Road Safety Auditor(s) on staff 13 Table 12: Long Term Financial Plans in place 13 Table 13: Life of Long Term Financial Plans 14 Table 14: Infrastructure Effects in Long Term Financial Plans 15 Table 15: Regional & Local Road Length for Responding Councils 16 Table 16: Bridges on Regional and Local Roads for Responding Councils 16 Table 17: Bridges with Known Load Capacity 16 Table 18: Road and Bridge Valuations 17 Table 19: Asset Management Position for Roads & Bridges 17 Table 20: Roads Upgrade/New Expenditure in 2016/17 19 Table 21: Bridges Upgrade/New Expenditure in 2016/17 19 Table 22: Planned 15-year Bridge Investment 19 Table 23: Regional and Local Roads Life Cycle Cost and Expenditure 2016/17 20

4 Table 24: Road Life Cycle Cost apportioned to Usage Categories 22 Table 25: Regional and Local Bridges Life Cycle Cost and Expenditure 2016/17 22 Table 26: Road and Bridge Values Extrapolated to all local Councils 26 Table 27: Estimated Investment in New Assets Extrapolated to all local Councils 27 Table 28: Roads Life Cycle Cost and Expenditure extrapolated to all local Councils 28 Table 29: Road Life Cycle Cost and Road Usage 2016/17 30 Table 30: Bridge Life Cycle Cost and Expenditure extrapolated to all local Councils 30 Table 31: Roads and Bridges Life Cycle Funding Position 32 Table 32: Annual Life Cycle Renewal Cost and Depreciation Expense 2016/17 34 Table 33: Annual Life Cycle Renewal Expenditure and Depreciation 2016/17 35 Table 34: Annual Life Cycle Renewal Cost, Expenditure, and Depreciation 2016/17 36 Table 35: Life Cycle Cost and Expenditure 2016/17 38 Table 36: Life Cycle Funding Gap by Component and Asset Management Treatments 40 Table 37: Road & Bridge Asset Management Assessment 43 List of Figures Figure I: Distribution of Regional & Local Sealed Road Maintenance Costs 2016/17 7 Figure II: Distribution of Regional & Local Sealed Useful Lives 2016/17 7 Figure III: Capacity to Complete Benchmarking Survey Figure IV: Use of IIMM Principles since Figure V: Use and Adoption of Road Asset Management Plans since Figure VI: Use of Documented System for Managing Road Risks since Figure VII: NAMS.PLUS subscription since Figure VIII: Long Term Financial Plans in place since Figure IX: Term of Long-Term Financial Plans since Figure X: Infrastructure Effects in Long Term Financial Plans since Figure XI: Rate of Asset Consumption and Renewal 18 Figure XII: Road Life Cycle Funding Gap for responding Councils 21 Figure XIII: Bridges Life Cycle Funding Gap for responding Councils 23 Figure XIV: Councils using NAMS.PLUS for AM Plans Figure XV: Road & Bridges Asset Consumption Ratio Figure XVI: Road Life Cycle Cost and Expenditure 2016/17 29 Figure XVII: Road Life Cycle Cost Funding Gap 2016/17 29 Figure XVIII: Road Life Cycle Cost and Road Use 2010 to Figure XIX: Bridges Life Cycle Cost and Expenditure 2016/17 31 Figure XX: Bridges Life Cycle Cost Funding Gap 2016/17 32 Figure XXI: Roads & Bridges Life Cycle Costs and Expenditure 2016/17 33 Figure XXII: Road & Bridge Life Cycle Funding Gap Figure XXIII: Financial & Technical Measures of Asset Consumption and Expenditure Figure XXIV: Comparison Financial & Technical Reporting Figure XXV: Road & Bridge Asset Sustainability Figure XXVI: Life Cycle Funding Gap by Component 2016/17 39

5 Overview What this Report Delivers The Roads & Transport Directorate (R&TD) of the Institute of Public Works Engineering Australasia (IPWEA) NSW Division commissioned the Road Asset Benchmarking Project in 2005 to provide policy support information about the: Value and performance of regional roads and bridges controlled by local councils in NSW; Shortfall in funding required to bring these assets to a satisfactory condition; and the Level of practice for managing regional and local road and bridge assets. Since the first Road Management Report in 2006, the Roads & Transport Directorate (R&TD) of the IPWEA (NSW) has regularly reported the investment, management practices and trends in the estimated funding gap to satisfactorily maintain the local government road and bridge network in a satisfactory condition. The R&TD commissioned this sixth Report to ensure the latest trends and findings are reported based on data and information collated from all 128 local councils for the reporting period ending 30th June The Road Asset Benchmarking Report data, consistently collected over the past 12 years, can provide valuable insights into the performance of NSW councils and their asset management, particularly in relation to roads and bridges. Benchmarking provides comparative data that can be used collaboratively across councils to understand where changes that will benefit the organisation and community can be made. However, benchmarking is not an end in itself. It is how it s used for planning, improvement and reporting activities that matter. Evidence based comparative data, effectively analysed, and presented, can be a powerful tool for advocacy. This report also provides the trend data during a period where NSW Local Government has experienced major changes with the introduction of the Integrated Planning and Reporting framework (2012) and the Fit for the Future (FFTF) program in September 2014 following a three-year Independent Review of Local Government. In December 2015, the Government laid out plans for 35 mergers, which would have reduced the State s 152 councils to 112. Following sustained objections and legal action by some Councils, the NSW Government abandoned forced amalgamations on 27 July The transition of audit oversight and reporting to the NSW Audit Office resulted in the recent performance audit by the Auditor-General on 20 April These changes have had two likely effects. Firstly, a high and continuing scrutiny of asset management plans and underlying data. This and past reports have always highlighted that the difference between financial and asset management assessment of life cycle cost needs to be addressed and while it has improved, needs further improvement. The second, is Council asset managers have been under intense pressure to meet growing statutory reporting requirements and additional capacity and resources will be required to combine and improve asset registers, systems and business processes for all Councils Road Management Report i

6 Structure of the Report The structure of the report is as follows: Section 1 is the introduction that provides an overview of the Benchmarking Project, its approach and report structure; Section 2 provides the background, context, and purpose; Section 3 presents the assessment framework to measure performance, focusing primarily on the asset management sustainability, knowledge, and capability indicators; Section 4 reports the degree of participation and outcomes; Section 5 presents the results from responding councils of their asset management practices against seven Knowledge and Capability indicators; Section 6 reports the inventory, value, and financial position from responding councils; Section 7 reports the funding gap considering the life cycle cost and expenditure from responding councils; Section 8 presents the initial findings of the data analysis from responding councils; Section 9 extrapolates the results and findings to all councils, discusses the implications and reports against four Sustainability indicators; Section 10 presents a summary assessment if councils have made advances in their asset management practices, knowledge and capability; Section 11 provides some concluding remarks; and Section 12 provides a list of recommendations. Supporting information is also provided in the following Appendices: A B C D E F G H Council Participation lists the participating councils by IPWEA Region Asset Management Practices lists the responses to the seven (7) Knowledge & Capability questions in the survey by IPWEA Region. Road and Bridge Inventory lists the regional and local sealed and unsealed road kilometres, the number of concrete and timber bridges and the proportion of known load ratings for bridge types by IPWEA Region. Life Cycle Cost Distribution lists the lifecycle costs for maintenance and renewal treatments for regional and local sealed and unsealed roads by IPWEA Region. Asset Values lists the gross value and annual depreciation expense per kilometre for regional and local sealed and unsealed roads by IPWEA Region. Maintenance and Renewal Rates lists the Regional and Local Sealed Road Maintenance and Renewal Rates by IPWEA Region. Renewal Cost Distributions lists the regional and local sealed surface, sealed and unsealed pavement, concrete and timber bridge renewal costs for responding councils. Useful Life Distributions lists the regional and local sealed surface, sealed and unsealed pavement, concrete and timber bridge useful life for responding councils. ii ROAD ASSET BENCHMARKING PROJECT

7 Link with the National State of the Assets Report The 2015 National State of the Assets: Roads & Community Infrastructure Report (NSoA15) summarises the outcomes of data provided by 230 or 41% of local governments across Australia with a reported gross replacement value of $180 billion in local infrastructure under management. An update to the NSoA will be available in November The NSoA project provides, at the national level, a snapshot performance assessment and trend data for the current stock of community infrastructure, (i.e. roads, buildings, parks, and stormwater) in terms of condition, function, and capacity, with associated confidence levels. It also provides, as does the Road Management Report for NSW, an assessment of the current position of councils in relation to implementation of Asset Management and Long Term Financial Plans. Both reports collect, analyse, and interpret evidence-based infrastructure data that is crucial in advocating for funding needed by local government and their communities and the role it carries out at the local, regional, state, and national level. Confidence in data can only be increased by comparing the results obtained in both Reports. In addition, the NSoA Report provides an indicator framework (based on condition, function, and capacity) that is aligned and consistent with the New South Wales (NSW) Integrated Planning and Reporting framework, currently mandated as the responsibility of asset managers in NSW local authorities Road Management Report iii

8 Executive Summary Introduction There are 128 local councils in New South Wales that deliver a range of services, influenced by population density, demographics, the local economy, technology, geographic and climatic characteristics. At 30 June 2017, the combined net value of NSW council assets was $136 billion 1. These assets include infrastructure, property, plant, and equipment. The National Local Roads Data System (ALGA, 2017) reported that NSW local councils are responsible for managing approximately 165,600 km of regional and local roads. Around half of these roads (83,300 km) are sealed and the remaining 82,600 km are unsealed. The reported net value of these assets was $47 billion 2 representing around 35% of the total infrastructure net value. The gross value of NSW regional and local roads, bridges, and ancillary assets (e.g. footpaths and other road assets) was estimated at $73.1 billion at the 30 th June Context Good access and the ability to move around and connect are essential for the modern community to survive. Road and bridge infrastructure services provide for: Community access to friends and family, work, education, recreation, culture, services and community and retail centres; as well as. Transporting produce from farm to market, to the manufacturer and finished goods to the retailer and then onto the consumer. A road network is one of the key elements to the development of a region and to the nation. The huge developmental, renewal and maintenance cost of an effective road network, now and in the future, demands effective utilisation, which can only be attained when there is proper connectivity and orientation. Legislative Requirements The NSW Integrated Planning and Reporting (IP&R) framework recognises that most communities share similar aspirations: a safe, healthy, and pleasant place to live, a sustainable environment, opportunities for social interaction, education and employment and reliable and safe infrastructure. It is within this context that Asset Managers in all local councils must prepare an Asset Management Strategy and Plan/s to support the Community Strategic Plan and Delivery Program. An Asset Management Strategy gives effect to the organisation s Asset Management Policy and must identify assets that are critical to council s operations, including risk management strategies for these assets and systems for asset performance measurement and specify actions to improve asset management capability. An Asset Management Plan, among other requirements, forecasts future service delivery needs and includes at least one scenario that balances available funds in the Long Term Financial Plan with affordable service level targets that are agreed in consultation with the community. It connects the investment from community with service outcomes and plans a scenario that manages assets to provide affordable levels of service within financial, resource and risk constraints. 1 Source: Audited financial statements for Source: Audited financial statements for iv ROAD ASSET BENCHMARKING PROJECT

9 Qualifications, Skills, and Experience Civil engineers as asset managers in local authorities are responsible for implementing legislative requirements relating to planning and designing new roads and bridges, overseeing the construction of new and the renewal and maintenance of existing roads and bridges. In doing this, many environmental and social issues (including very importantly safety and equity) need to be addressed in a climate of limited funding. It is paramount that civil engineers in local authorities are given the opportunity to acquire the qualifications, skills, and experience necessary to deal with existing challenges, as well as the challenges of an uncertain future brought about by increasingly rapid technological and demographic change. It is also important that the human resource requirement for effective asset planning and management is adequately addressed in a council s Workforce Management Strategy. Key Findings 1. Investment in improving asset management practices has resulted in a corresponding reduction in the renewal gap. The funding gap has been steadily reducing since 2005, primarily for the sealed road network, with urban councils catching up on past underfunding. Rural councils with large unsealed networks and low populations are continuing to struggle to maintain their networks and trend data shows a deterioration in the funding gap for unsealed roads that now contributes to most of the current gap. Life cycle cost ($M) 2005/ / / / / /17 Roads $1,360 $1,381 $1,422 $1,424 $1,437 $1,624 Bridges $56 $62 $59 $69 $89 $90 Subtotal $1,416 $1,443 $1,482 $1,493 $1,527 $1,715 Expenditure ($M) Roads $653 $767 $745 $857 $1,004 $1,249 Bridges $44 $58 $63 $39 $76 $138 Subtotal $698 $825 $808 $897 $1,080 $1,387 Estimated funding gap ($M/year) $718 $618 $674 $597 $447 $328 Apparent errors are due to rounding The improvement in the renewal gap for sealed roads and hence the overall gap aligns with improvement in asset management and financial planning and the capacity of Councils to increase funding through community consultation Road Management Report v

10 Road & Bridge Funding Gap ($M/yr) trend since 2005 Funding Gap trend For the first time, the report has included data on condition, function, and capacity. Trends on assets in poor condition, function and capacity have been regularly measured by the Australian Local Government Association (ALGA) in their National State of the Assets Report (NSoA) since 2012 and the combination of data from this study with the ALGA report will provide an important guide for future policy development and advocacy. Condition Profile as a proportion of Gross Value 2017 Road Network Condition Profile 98% of NSW local councils are reporting $5.5 billion (8%) of their road assets are in a poor to very poor condition. The findings in this report show a clear trend resulting from asset managers estimates of life cycle costs compared with expenditures. The renewal gap has reduced over the past 12 years however it is unknown if service levels such as condition, function and capacity have declined as councils endeavour to engage with their communities to rebalance revenues and services to demonstrate they are sustainable. This is an important measure because reducing service levels could have a cumulative impact on local and regional economies. Much of the improvement can be attributed to investment in capability and capacity building over the past 10-years. In 2008, IPWEA released NAMS.PLUS An online guided pathway for asset management planning, essentially a system of templates and modelling tools to assist councils write and update their infrastructure asset management plans, strategy and policy. vi ROAD ASSET BENCHMARKING PROJECT

11 In 2017, 87% of NSW local councils reported using NAMS.PLUS to develop their road asset management plans aligning with the NSW IP&R requirements, a major factor in the improvement of asset management planning and infrastructure sustainability across NSW. Response to the survey, level of asset and risk management practices and the funding gap for roads and bridges has improved markedly since the study commenced in Asset Management Plans Need to Improve to Predict Future Changes to Infrastructure. New assets and upgrading of existing assets valued at $539 million in 2016/17 are estimated to add $12.5 M to annual operating and future renewal costs. Upgrade requirements are likely to increase as shifts in population, demographics and changing technology drive the way we plan and deliver future infrastructure. Furthermore, almost half of NSW Councils are not planning for changes in function and capacity impacts and 30% do not have road risk management plans. Local Government will be a key stakeholder in planning and managing future infrastructure needs and funding strategies across 3 levels of government and this report highlights the need to strengthen capacity to measure and predict scenarios for infrastructure investment. Current asset management plans require further development to ensure scenarios for future infrastructure needs are developed and communicated. If significant upgrade to transport infrastructure is needed, the current arrangements for planning and funding transport networks managed by Councils is unsustainable and needs major review. Therefore, it is critical that local councils: Strengthen their strategic asset management capacity; Identify future infrastructure scenarios and report on a consistent basis the condition, function, and capacity of such assets; Maintain and implement credible life cycle asset management plans tied to an affordable service delivery model; Effectively engage with its customers on affordable levels of service; and Provide adequate funding to plan for, maintain and renew what are in effect the community s greatest financial assets with highest potential risk. 3. Asset Management Planning Has Dropped Slightly Since The initiative of the Roads and Transport Directorate to regularly update the Road Asset Benchmarking data since 2006 provides the opportunity to monitor and report on whether councils have made progress in: Asset management knowledge and capability; and Demonstrating a sustainable future. The assessment of whether councils have made advances in their asset management knowledge, capability, and sustainability, to manage their road and bridge bridges is presently measured and reported against the following eleven (11) Performance Measures shown in the following Table Road Management Report vii

12 Performance Measure Assessment Comment Knowledge and Capability 1.1 Capacity to complete benchmarking survey C Mediocre The participation rate has remained high at 95%+ since the 2005 survey and decreased 1% since Response times were notably slow. Significant variation exists in average unit costs and useful lives. 1.2 Use of IIMM principles B Good Increased substantially since 2005 and a further 6% since Adoption of road asset management plans 1.4 Management of road related risks C Mediocre D At Risk Increased substantially since 2005 but then decreased 9% from Increased substantially since 2005 and remained static at 70% since % of Councils don t have a risk management plan. 1.5 Use of long-term financial plans C Mediocre Increased 80% since 2005 but decreased 6% since Period of long-term financial plans 1.7 Infrastructure effects in longterm financial plans Sustainability 2.1 Road & bridge asset consumption ratio 2.2 Road & bridge asset life cycle funding gap 2.3 Road & bridge asset sustainability ratio B Good B Good B Good C Mediocre C Mediocre 96% of councils are financially planning more than 10-years ahead. Increased 180% since 2005 but declined slightly by 2% since The average proportion of as new condition left in the assets has increased 22% since 2005 indicating a reduction in the ageing of assets. Councils are therefore maintaining capital in their infrastructure by extending their useful life. The funding gap has decreased 54% from $718 million in 2005 to $328 million in 2017 but the rapid growth in the unsealed road funding gap and reduction in asset management planning needs monitoring as evidenced by the recent NSW Audit Office report. The gap between technical and financial estimates of asset consumption has improved but remains significant. 2.4 Funding of Life Cycle Cost B Good Funding of the life cycle costs of road and bridge assets has increased from 49% in 2005 to 81% in Five of the 11 indicators are acceptable, five areas require attention and one is at risk. The areas in need of more focus relate to: 1. Variations in unit cost of treatments and useful lives, 2. The use and adoption of sound asset management principles in resourcing strategy documents such as the longterm asset and financial plan; and 3. Ensuring confidence is increased in reporting lifecycle costs and depreciation. viii ROAD ASSET BENCHMARKING PROJECT

13 Challenges Amalgamations have had major impact on asset management resources with consolidation of asset registers, business processes and systems. Workplace demographics are likely to be consistent with general demographics and result in increasing retirement of experienced asset managers. Changing technology is likely to drive changes in infrastructure resulting in a growth of renewal well before the end of physical asset life. Asset economic life determines life cycle cost, depreciation, and infrastructure planning. Asset registers estimate useful life for every asset but the economic life could be much shorter than the physical life. The economic life is determined by function and capacity as well as by physical condition. Asset Management Plans need to report on condition, function and capacity and estimate how much of the infrastructure we are managing now will be obsolete well before physical life is reached. Investment in improving asset management practice will continue to pay dividends, however this becomes more difficult to communicate if there is no apparent and immediate crisis. Investing in strategic asset management capacity requires forward thinking leadership and good long-term decision making. There are challenges for Councils with low population and large road networks (particularly unsealed) that is getting worse and needs to be closely monitored. Current funding arrangements are failing these councils and their communities. The quality of asset registers and inconsistent reporting of asset life and depreciation is indicative of the improvement needed in the analysis and prediction of condition, function, capacity, and risk. This is likely to reflect a lack of ongoing investment in asset management capability and was highlighted in the recent report by the NSW Audit office that identified high risk asset management issues. This report observed that: Our experience at the State level shows that the preparation of annual financial statements benefits from review by independent audit committees. Councils are not currently required to have an audit, risk and improvement committee and consequently 53 councils do not have an audit committee. For those councils with an audit committee, 55 per cent play no role in the review of financial statements. Amendments made to the Local Government Act 1993 by the Local Government Amendment (Governance and Planning) Act 2016 will require all councils to appoint an audit, risk and improvement committee. Under transitional provisions, councils will not be required to comply until March 2021, six months after the next ordinary election. Conclusion The evidence collected by this report suggests that investment in asset management capacity and attention to asset management planning and reporting has substantially improved the sustainability position of most NSW local councils. Road and bridge funding levels have increased in the main, however local councils will face increasing risk exposure in the future if funding and management practices remain at current levels. These risks include: Possible decline in the condition of road and bridge infrastructure, Potential increase in personal injury and legal claims if risks are not managed, Road life cycle costs will continue to grow as assets are renewed early driven by functional and capacity drivers. These higher cost upgrades will be driven by demographic and technology change. These costs will be passed onto road users through higher transportation operating costs, Climate impacts need to be closely monitored. Natural Disaster Relief and Recovery Arrangements (NDRRA) are likely to change to require a higher level of asset management reporting on road condition and function. Current funding arrangements are inadequate for changes in function and capacity in the current transport network and a strategic approach is required between all levels of Government Road Management Report ix

14 Recommendations It is recommended the IPWEA (NSW) Roads & Transport Directorate: 1. Include the following questions in future updates of the IPWEA (NSW) Road Asset Benchmarking Report: 1. The proportion of gross asset value in good, fair, poor function and capacity for all road assets; and 2. The 10-year forward estimate of planned expenditure (LTFP) and projected outlays (AM Plan) for operations, maintenance, renewal and upgrade/new. 2. Assist local councils increase their confidence in determining unit costs and useful life of key asset groups. 3. Set a target to manage out the annual life cycle funding gap of $328 million within a 5-year timeframe and report biennially on performance of the industry towards the target. This requires a targeted strategy for the management and reporting for unsealed local roads. 4. Advocate for ongoing focus on and funding for asset management capacity building. It is recommended local councils: 1. Ensure asset management and long-term financial plans are aligned, up-to-date and compliant with best practice. 2. Continue to improve their asset management capability to a position that they can demonstrate and provide a sustainable and affordable service delivery model to their communities. 3. Continue with actions to improve the accuracy of financial reporting of infrastructure asset consumption and set a target to have technical and financial estimates of infrastructure consumption within 10 percentage points of each other before the next benchmarking report in 2-years. x ROAD ASSET BENCHMARKING PROJECT

15 1. Introduction The Roads & Transport Directorate (R&TD) of the Institute of Public Works Engineering Australasia (IPWEA) NSW Division commissioned the Road Asset Benchmarking Project in 2005 to provide a snapshot of the: Value and performance of Regional and Local roads and bridges controlled by all local councils in NSW; Shortfall in funding required to bring these assets to a satisfactory condition; and Management practices of the Regional and Local road and bridge assets. The project, delivered by Jeff Roorda & Associates a TechnologyOne Company has regularly executed the data collection, validation, analysis, and reporting for the project. This is the sixth time the report has been prepared. Over time, the aim has been to identify, monitor and report trends in the management of these assets and provide specific recommendations to improve identified deficiencies. As in past reports, this Road Management Report categorises eleven performance indicators into two broad areas that have been analysed and reported against to satisfy the objectives of the project. Knowledge and Capability 1. Capacity to complete benchmarking survey 2. Use of IIMM principles 3. Adoption of road asset management plans 4. Management of road related risks 5. Use of long-term financial plans 6. Period of long-term financial plans 7. Infrastructure effects in long-term financial plans Sustainability 1. Funding of Life Cycle Cost 2. Road & bridge asset life cycle funding gap 3. Road & bridge asset consumption ratio 4. Road & bridge asset sustainability ratio Methodology This updated report has reviewed financial and asset data provided by all 128 local councils in NSW county councils are excluded. The data required is core information that should be easily retrieved from existing management systems and officers were requested to update their data in five (5) data forms made available in the on-line data collection product called Datashare. The five (5) data forms consist of the following data points and aid in reporting against the eleven performance indicators: General Council officer contact, asset management practices and financial data. Roads Regional and Local sealed and unsealed road lengths, maintenance and renewal expenditure, unit costs and renewal cycles, plus local road usage patterns. Acknowledging there are inherent inaccuracies in the use of averaging data for a complex and highly varied road networks there was an option to provide road data at a network level or asset/service hierarchy level Road Management Report 1

16 Bridge Regional and Local concrete/steel and timber bridge inventory (quantity and square metres), maintenance, renewal and upgrade/new expenditures, unit costs and renewal cycles, plus forecast renewal funding requirements. Timber Bridge Detailed timber bridge inventory, condition, Special Schedule 7, bridge management systems, in-house skills, and forecast training needs. Other Overall performance and methods of condition assessment, status of Road Safety Audit and Pathways Strategy. Results are presented on a state-wide basis and by IPWEA region for each council in the Appendices and in anonymised tables and charts to assist in the comparing the spectrum of outcomes for all local councils. 2 ROAD ASSET BENCHMARKING PROJECT

17 2. Background The IPWEA New South Wales Division has for some time now recognised the need for improved asset management practices by councils in managing infrastructure assets that provide essential services to the community including access and mobility, recreation, flood protection and cultural and community facilities. The Division allocated asset management as a specific responsibility to a Director and formed the Roads & Transport Directorate in partnership with Local Government NSW in Considering changing technology, population trends and an ageing network of assets, the Directorate was keen (and continues) to quantify the ongoing investment and life cycle funding needs, identify any funding gap and promote asset management practices that will assist local government in sustaining the provision of access and mobility services to their communities. Good access and mobility services are essential for the modern community to survive. Good access and mobility services supports and makes possible needed community services from infrastructure including: transport of produce from farm to market and to the manufacturer and finished goods to the retailer and onto the consumer; mobility of the community to work, education, recreation, and culture. mobility of the community to service, community, and retail centres. Estimates prepared for the Australian Local Government Association projecting maintenance and renewal expenditure for local government controlled roads across Australia for the period indicated a shortfall of $17.7 billion over the 15 years, equivalent to an increase of 39% above the funding levels allocated for the period 3. A 2006 NSW Local Government Inquiry identified over $6 billion was required to bring existing local government infrastructure to a satisfactory standard. This represented around 13% of total asset value and eight times the level of expenditure at the time. In addition, a further $15 billion was estimated for replacement of existing assets over the next 15 years if the annual renewal gap remained at $500 million per annum. This did not take account of new infrastructure needs for a growing and shifting population. The first R&TD Road Management Report (2006) identified a low level of asset and risk management practices and concluded the levels of road funding were unsustainable with a life cycle funding gap of $718 million per annum equivalent to a 108% increase in funding levels at the time. The previous Road Management Report (2014) stated management practices had improved and found the lifecycle funding gap had decreased by 38% to $447M since The Road Asset Benchmarking Project has identified and quantified the extent and risk of underfunded infrastructure and contributed to many studies and funding initiatives resulting in better outcomes for the local government sector. This report focusses on the trends and future scenarios. 3 ALGA, 2010, Table 16, p Road Management Report 3

18 3. Assessing Performance Effective and efficient transport asset management in Australia is a partnership of funding, regulation and service provision that requires a collaborative and co-ordinated strategy between 3 levels of Government. Future scenarios for changes to technology, demographics and climate need to plan for profound impacts on the strategic asset management of transport assets. The initiative of the Roads and Transport Directorate to update the Asset Benchmarking data on an ongoing basis provides the opportunity to report trends on whether councils have made progress in: Asset management knowledge and capability; and Demonstrating a sustainable future. Measuring performance against these two broad areas is undertaken across eleven performance indicators listed in Table 1 below. Table 1: Road & Bridge Asset Management Assessment Performance Measure What it measures Knowledge and Capability 1.1 Capacity to complete benchmarking survey Reflects the current asset management maturity. Core or better maturity includes the capacity to engage, collaborate and communicate asset management trends to all stakeholders including regulators, customers, and funding entities. 1.2 Use of IIMM principles The International Infrastructure Management Manual (IIMM) published by the IPWEA is aligned to the ISO series of standards and provides a consistent framework for preparing, updating and communicating asset management plans, strategy and policy. Use of these principles enables the measurement and reporting of trends to other levels of Government to enable informed policy decisions on future transport strategies and funding requirements. 1.3 Adoption of road asset management plans 1.4 Management of road related risks Good practice in managing roads can be demonstrated by the adoption and use of methods and procedures for managing service levels, risks, and costs. These may be documented in a Road Asset Management Plan and/or a Road Risk Management Plan/System. 1.5 Use of long-term financial plans A long-term financial plan provides a long-term strategy to balance competing priorities with the available finance. Having a long term financial plan seeks to efficiently and equitably accommodate ongoing funding of existing services operations, maintenance, asset renewal and upgrade; and new services and assets as required. 1.6 Period of long-term financial plans 1.7 Infrastructure effects in long-term financial plans For councils providing services from infrastructure a long-term plan covering a period of at least 10 years is recommended. Good practice in asset management requires a long-term financial plan covering a minimum 10-year period supported by 20-year asset management plans. It is critical that infrastructure effects, including recognising infrastructure renewal, infrastructure network growth and Life Cycle costs for new infrastructure are fully incorporated into long term financial plans. 4 ROAD ASSET BENCHMARKING PROJECT

19 Sustainability 2.1 Road & bridge asset consumption ratio 2.2 Road & bridge asset life cycle funding gap 2.3 Road & bridge asset sustainability ratio The Asset Consumption Ratio indicator gives a snapshot of the average proportion of as new condition left in assets. The road asset life cycle funding gap is a snapshot of the gap between life cycle costs and annual expenditure at a point in time. It measures whether assets are being replaced at the rate they are wearing out. It is the ratio of asset replacement expenditure relative to depreciation for a period and indicates whether local councils are replacing their assets in an optimal way to minimise whole-of-life costs. For sustainability, asset renewals should equal asset consumption on average over the life of the assets. 2.4 Funding of Life Cycle Cost To sustainably provide services from infrastructure, funding of the life cycle cost is required on average over the life of the asset. An increase in the sustainability measure indicates an increase in funding of the life cycle cost Road Management Report 5

20 4. Survey Participation The Roads & Transport Directorate launched the 2017 Road Asset Benchmarking data update by direct and formal letter to all 128 local councils in early October The data update process was made available, as in previous years, via Datashare, an on-line data collection product, with completion requested by the end of January By the end of January 2018, 55 councils (43%) had updated their data. By the end of April 2018, after extensive follow up, 126 councils (98%) had updated their data. A list of participating councils by region is shown in Appendix A. To assist the non-participating councils, the project team updated previously submitted data from publicly available sources such as annual reports, audited financial statements, and the Office of Local Government Grants Commission data return for the National Local Roads Data System. Some participating councils provided a partial response and the number responding to each of the key questions is stated throughout the report. The data collection process and communication with Councils during the project provided an insight into the asset management reporting capability and capacity to communicate emerging trends to guide intergovernmental transport policy and strategy. 4.1 Reasons for delayed response Reasons for delayed or lack of response include: Staff changes in council, resulting in loss of asset management knowledge and skills, Ineffective record keeping and delegation responsibilities, Lack of and fragmented data and systems, Reporting to outside entities seen as low priority, Emergency management and natural disaster events during the data collection period, Lack of asset management skills. 4.2 Data validation and confidence All data returns were checked and validated prior to analysis. Validation of incomplete data returns considered whether the data received was sufficient and reasonable evidence for analysis. Data inconsistencies were followed up with Councils who were generally responsive to demonstrated deficiencies and updated their numbers. The project team also queried data inputs with councils where they appeared outside the normal range, again most were responsive and updated their dataset. Evidence exists of significant and unexpected variability in unit cost of treatments and useful lives, evidence of this can be found in Appendix G & H. An example of the variability in data values can be found in the distribution of maintenance costs and useful lives for regional and local sealed roads as shown in Figure I & II. 6 ROAD ASSET BENCHMARKING PROJECT

21 2017 Distribution of Regional & Local Sealed Maintenance Cost Figure I: Distribution of Regional & Local Sealed Road Maintenance Costs 2016/ Distribution of Regional & Local Sealed Useful Lives Figure II: Distribution of Regional & Local Sealed Useful Lives 2016/17 The variations at a State-wide level could be explained by differences in location (i.e. Metro, Regional and Rural), construction type, operating conditions and the relative age and condition of sealed surfaces in these locations. This justification however is difficult to explain at a more local level when the variances are of a similar distribution Road Management Report 7

22 5. Asset Management Knowledge and Capability The benchmarking survey included questions on management practices of road infrastructure assets. Questions and responses linked to the relevant performance indicators are shown below. Performance Measure 1.1 Capacity to Complete Benchmarking Survey The delayed response rate to the Survey and quality of responses point to a perception at executive level that sharing and collaboration on asset management trends has a lower priority than statutory reporting and there is insufficient asset management capacity to do both. This would be consistent with the Audit Office of NSW report in April 2018 that identified ten high risk issues relating to councils asset management and accounting practices. This suggests a need for more investment in asset management capacity and capability, but the high response rate that is reflected in this report shows willingness and dedication by NSW Asset Management Professionals that should be recognised and applauded. If workplace demographics in NSW Local Government is consistent with the general community, there is likely to be a growing shortage of experienced asset management practitioners. Skills shortage represents a likely and high consequence risk and a strategy should be developed to understand and respond to this risk as a matter of urgency. Figure III indicates that the number of councils participating in the Benchmarking Project been consistently high since The number of validated survey forms has increased to 100%. Councils response to Survey Figure III: Capacity to Complete Benchmarking Survey Given the reduced participation rate, delayed responses to the Survey and quality of responses may indicate a diminishing level of asset management capacity and capability. This could be attributed to the fact that in NSW, the regulator, whilst mandating a framework requiring long-term asset management and financial plans, is yet to enforce audit and compliance of these requirements. Councils will need to increase and maintain at least a core level of asset management capability if they are to manage the funding gap (perceived or otherwise) to meet community demands and expectations for services. 5.1 Asset Planning and Management Performance measure 1.2 Use of IIMM principles The International Infrastructure Management Manual (IIMM) published by the IPWEA is recognised globally as the best practice guide for infrastructure managers. Aligned to the ISO series of standards, the IIMM demonstrates how to achieve the goal of achieving the appropriate balance between cost, risk, and performance from infrastructure assets in delivering the best service outcomes for all stakeholders. 8 ROAD ASSET BENCHMARKING PROJECT

23 Every Council was asked if they employed the principles contained within the IIMM. Responses are summarised below and shown for each IPWEA region in Appendix B. This represents the dividend from the investment in asset management capacity building by IPWEA in partnership with the State and Commonwealth Governments during the period and provides the foundation for future consistency in reporting of strategies and trends but there is a long way to go to achieve core asset management maturity across the Local Government sector. Table 2: Use of IIMM Asset Management Principles in 2017 Response No In part Yes Total Employing IIMM Principles Percent of total 1% 30% 70% 100% 70% of responding councils report using the principles contained in the IIMM, 30% in part and 1% said they do not use the IIMM. The application of the IIMM principles has increased 250% since 2005 and a further 6% since 2014 as shown in Figure IV. Use of IIMM Principles Figure IV: Use of IIMM Principles since 2005 Performance measure 1.3 Adoption of road asset management plans Good practice in managing roads can be demonstrated by the adoption and use of methods and procedures for managing service levels, risks, and costs. This should be documented in a Road Asset Management Plan and/or a Road Risk Management Plan/System. Councils were asked if they had an adopted Road Management Plan and/or a documented system for managing road risks either in a Road Asset Management Plan or included within the corporate risk management system. Responses are shown below and for each IPWEA region in Appendix B. Table 3: Adoption and Use of Road Asset Management Plans Response No Planned in 1 yr In progress Yes Total Adopted Road Asset Management Plan Percent of total 2% 1% 18% 80% 100% 2017 Road Management Report 9

24 Adopted Road AM Plan Figure V: Use and Adoption of Road Asset Management Plans since 2005 Overall, the adoption of Road Asset Management Plans is well progressed with 80% of Councils reporting having an adopted Road Asset Management Plan, slightly less than the last two reports which could be attributed to the merger of councils in recent times. A further 18% are in the process of developing a Road Asset Management Plan and 1 council plans to do so within 1 year. Only 2 councils are not planning the development of a Road Asset Management Plan. The reduction by 9% from 2014 to 2017 is consistent with the comments on capacity in indicator 1.1. Performance measure 1.4 Management of road related risks Evidence of road related risk management systems has progressed with 70% of Councils having a documented system for managing risk, either in a road management plan or incorporated into the corporate risk management plan. 26% of responding councils are in the process of developing a road risk management system with 3% planning to do so within 1 year. Table 4: Use of Documented System for Managing Road Risks Response No Planned in 1 yr In progress Yes Total Councils with a documented system for managing road related risk Percent of total 2% 3% 26% 70% 100% Figure VI illustrates an increased number of councils have adopted systems for managing road related risks either in a corporate risk management system or in an adopted road asset management plan. 70% of local councils have such a system in 2017 and 2014 compared to 68% in This has not changed since System for Managing Road Risks Figure VI: Use of Documented System for Managing Road Risks since ROAD ASSET BENCHMARKING PROJECT

25 In 2008, the IPWEA developed an online guided pathway for asset management planning called NAMS.PLUS which provides the tools, templates, and modelling outputs to assist councils in preparing and updating their asset management plans using a best practice approach. Councils reporting membership of NAMS.PLUS are shown below. Table 5: Membership of NAMS.PLUS Asset Management Response No Planned in 1 Year Yes Total Membership of NAMS.PLUS Percent of total 13% 0% 87% 100% 87% of councils have access to the resources to develop and update their road asset management plans. NAMS.PLUS Subscription Figure VII: NAMS.PLUS subscription since 2008 The uptake by councils to ensure access to resources for developing and updating their road asset management plans has increased by 50% since 2008 and decreased by 6% since Condition of assets For the first time in this report the survey asked the question what proportion of their road network is performing in Good, Fair and Poor condition as a percentage of gross replacement value. This aligns to Special Schedule 7 reporting in the Financial Statements. Also, what condition assessment techniques were predominately used to collect this data. Table 6: Road network condition assessment Response Good/Very Good Fair Poor/Very Poor Proportion 64% 29% 8% Value $ (bn) $46.4 $21.2 $5.5 98% of local councils are reporting $5.5 billion (8%) of their road assets are in a poor to very poor condition Road Management Report 11

26 Table 7: Condition assessment techniques predominately employed Response Advanced Assessment Profilometer & Visual Visual/Manual Total N of councils Percent of total 10% 27% 63% 100% The majority (63%) of local councils are predominately using visual/manual techniques to assess condition. Planning for Function and Capacity For the first time in this report the survey asked the question are local councils planning for function and capacity changes in the transport network. Table 8: Planning for function changes in the transport network Response No Yes Total Planning for function Percent of total 44% 56% 100% 56% of local councils are planning for function impacts in their transport network. Table 9: Planning for capacity changes in the transport network Response No Yes Total Planning for capacity Percent of total 40% 60% 100% 60% of local councils are planning for capacity impacts in their transport network. Planning for Road Safety Local councils were asked if they have a Formal Road Safety Plan in place. Table 10: Road Safety Plans in place Response No Yes Total Road Safety Plan Percent of total 66% 34% 100% Of the 123 local councils responding, 34% said they had a Road Safety Plan in place, around half were reviewed more than 2-years ago. 12 ROAD ASSET BENCHMARKING PROJECT

27 The remaining 66% that didn t have a Road Safety Plan, one third said they were considering developing one within 2-years, another third said after 2-years and the remaining third said they were not considering developing one. 50 local councils said they would be interested in additional training in the preparation of a Formal Road Safety Plan. Local councils were asked if they had a trained Road Safety Auditors on staff. Table 11: Road Safety Auditor(s) on staff Response No Yes Total Road Safety Auditors Percent of total 52% 48% 100% Of the 125 local councils responding, 48% said they had Road Safety Auditors on staff and 85% said they were aware of the free training available to all NSW councils for two Road Safety Auditors per council provided by the IPWEA (NSW). 5.2 Financial Planning Long-term financial planning is critical for local government where they have a very large value of assets relative to their income base. It assists with funding asset renewal and upgrade when required, ensures ongoing service delivery and achieving affordable service level objectives. Long-term financial plans are an essential consideration when generating, spending, and investing future income and raising and repaying borrowings as appropriate and provides a long-term strategy to balance competing priorities with the available finance. Having a long term financial plan seeks to efficiently and equitably accommodate ongoing funding of: existing services operations, maintenance, asset renewal and upgrade; and new services and assets as required. Since 2005, there has been an increasing recognition in the need for ongoing use of a long-term financial plan. Performance measure 1.5 Use of long-term financial plans Councils were asked if they had a long term financial plan, the term of the plan and whether the plan contains infrastructure effects. Summary responses are shown in Tables 12 to 14 and for each IPWEA region in Appendix B. Table 12: Long Term Financial Plans in place Response No Planned in 1 Year In progress Yes Total Councils with Long Term Financial Plan Percent of total 0% 0% 8% 92% 100% 92% of Councils responding to the survey reported having a long term financial plan in place. The remaining 8% were in the process of developing or updating their long term financial plans Road Management Report 13

28 Use of Long-term Financial Plan Figure VIII: Long Term Financial Plans in place since 2005 The use of long-term financial plans by NSW local councils has increased 80% since 2005 and declined 6% since Performance measure 1.6 Period of long-term financial plans For councils providing services from infrastructure, a long-term plan covering a period of at least 10 years is recommended 4 supported by 20-year asset management plans. All local councils were asked how long their planning period covered was in the long-term financial plan. Table 13: Life of Long Term Financial Plans Life of Long Term Financial Plans 1 yr 3 yrs 5 yrs 10 yrs 10+ yrs Total Councils with Long Term Financial Plans Percent of total 2% 2% 1% 88% 8% 100% 96% of the responding councils have developed a minimum 10-year financial plan. 4 councils have a financial plan greater than 1-year and only 2 councils manage by annual budgets. LTFP Timeframe Figure IX: Term of Long-Term Financial Plans since 2005 Fig IX indicates that councils are making good progress in long-term financial planning. 30% of local councils had long-term financial plans of at least 10 years in This has increased to 96% in DLG, 2006, Recommendation 6, p ROAD ASSET BENCHMARKING PROJECT

29 Performance measure 1.7 Infrastructure effects in long-term financial plans Poor infrastructure planning can have long term financial impacts for asset intensive organisations such as local government such impacts include: Future infrastructure renewal. A NSW Local Government Inquiry estimated that $6.3 billion is required to bring existing assets to a satisfactory standard with a further $14.6 billion needed over the next 15 years to replace existing assets 5. Infrastructure network growth. Councils need to upgrade existing services and provide new infrastructure to meet service level expectations particularly in growing communities. Upgrade typically adds to asset inventory generally without increasing revenue. Expansion on the other hand also adds to asset inventory but may be associated with generation of additional revenue. Life cycle costs for new infrastructure. Councils acquire new infrastructure both funded by council and/or provided by developers and others at no cost. Every new infrastructure asset commits local councils to fund additional operating and maintenance costs and depreciation expense over the life of the infrastructure whilst it is in service. It is therefore incumbent on current and future governments that these infrastructure effects are fully incorporated into long term financial plans. Table 14: Infrastructure Effects in Long Term Financial Plans Response No In part Yes Total Councils recognising infrastructure effects in long term financial plans Percent of total 5% 35% 59% 100% 59% of responding councils reported the inclusion of infrastructure effects in long term financial plans. 35% include part infrastructure effects with 5% reporting they do not include the financial impacts of infrastructure. Infrastructure Effects in LTFP Figure X: Infrastructure Effects in Long Term Financial Plans since 2005 Recognition of infrastructure effects (including renewal of assets, provision of growth and life cycle costs for new assets) in long-term financial plans has increased 180% since 2005 and declined 2% since JRA, 2006a, p 4. SS Road Management Report 15

30 6. Regional and Local Roads as an Investment 6.1 Road inventory The responding councils reported a total road length of 165,347 km as shown below. Road lengths for each IPWEA region is shown in Appendix C. Table 15: Regional & Local Road Length for Responding Councils Road Length in km Sealed Unsealed Total Regional Roads 15,192 3,206 18,398 Local Roads 68,469 78, ,949 Total 83,661 81, ,347 Note: 128 Councils responded to question These road lengths are consistent with those reported in the Australian Local Government Association s National Local Roads Data System. 6.2 Bridge inventory Responding councils reported a total of 10,064 bridges as shown in Table 9. 22% are located on regional roads and 78% on local roads. Concrete /steel bridges account for 82% of the total, with 18% of timber construction. Bridge inventory for each IPWEA region is shown in Appendix C. Table 16: Bridges on Regional and Local Roads for Responding Councils N of Bridges Concrete/steel Timber Total Regional Roads 2, ,236 Local Roads 6,123 1,705 7,828 Total 8,293 1,771 10,064 Note: 128 Councils responded to the question Knowledge of the load capacity of bridges is important for councils when considering requests for use of bridges by heavy loads and high mass vehicles. The number and percentage of bridges with known load ratings reported by councils in the 2017 return is shown below. Load capacity inventory for each IPWEA region is shown in Appendix C. Table 17: Bridges with Known Load Capacity N of Bridges Concrete/steel Timber Total Regional Roads % 28 42% % Local Roads 1,294 21% % 2,069 26% Total 1,744 21% % 2,547 25% 16 ROAD ASSET BENCHMARKING PROJECT

31 6.3 Road and Bridge Investment The responding councils reported a replacement value of $73.0 billion for road and bridge assets. 18% of this value is held in non-depreciable assets such as earthworks/formation. The assets are reported to have a depreciated replacement cost (written down net worth) of $47.7 billion. Annual consumption of the assets, reported by depreciation expense is estimated at $943 million. Investment details are shown in the Tables below and Figure XI. Table 18: Road and Bridge Valuations Asset Category Replacement Cost ($M) Depreciable Amount ($M) Depreciated Replacement Cost ($M) Annual Depreciation Expense ($M) Sealed Roads $43,372 $35,977 $30,266 $584 Unsealed Roads $8,664 $3,951 $4,621 $96 Concrete/Steel Bridges $4,743 $4,664 $3,268 $47 Timber Bridges $513 $503 $249 $8 Ancillary Road Assets $15,782 $14,733 $9,298 $208 Total $73,074 $59,827 $47,701 $943 Note: Data from all councils. The asset management position measured by the Asset Consumption Ratio, the rate of asset consumption and renewal are reported below. Table 19: Asset Management Position for Roads & Bridges Asset Category Asset Consumption Ratio (DRC-RV)/DA Rate of Asset Consumption (Deprn/DA) Rate of Asset Renewal (Renewal Exp/ DA) Sealed roads 69.8% 1.6% 1.4% Unsealed roads 53.3% 2.4% 1.4% Concrete/Steel bridges 68.9% 1.0% 0.7% Timber bridges 48.4% 1.6% 2.8% Ancillary Road Assets 58.9% 1.4% N/A Total 65.3% 1.6% 1.0%* Note: Data sources as for Table 16. Asset renewal expenditures sourced from Tables 21 and 23. * excludes Ancillary Road Assets The Asset Consumption Ratio 6 (average proportion of as new condition left in assets) of the road and bridge assets of the responding councils is reported at 65.3%. On average, the assets are approximately one third through their expected life. If local councils are maintaining and renewing its assets in accordance with a well-prepared asset management plan, then the fact it s Asset Consumption Ratio may be relatively low and/or declining should not be a cause for concern providing it is operating sustainably. Overall, the assets are being consumed at a rate of 1.6% (of the depreciable amount) per annum, suggesting an average 60-year life and the rate of asset renewal is 1.0% (around 100 years). 6 IPWEA, 2012, AIFMG Ver. 1.3, Financial Sustainability Indicator 8 (DRC-RV)/Depreciable Amount), p Road Management Report 17

32 Asset Consumption and Renewal 2017 Figure XI: Rate of Asset Consumption and Renewal Asset renewal in 2016/17 was less than asset consumption for sealed and unsealed roads and concrete bridges. Sealed roads annual asset renewal was 86% of the rate of consumption. Unsealed roads - annual asset renewal was 57% of the rate of consumption. Concrete/steel bridges annual asset renewal was 65% of the rate of consumption. For timber bridges, asset renewal was greater than asset consumption in 2016/17: Timber bridges asset renewal was 172% more than the rate of asset consumption. Timber bridges reported by responding councils are being renewed at a rate nearly twice that they are being consumed, which reflects the investment priority given by local councils to renewing ageing timber bridges. For sustainable service delivery, the rate of asset renewal should equal the rate of asset consumption on average over the long term. This does not mean that asset renewal should equal asset consumption in each and every year. Asset consumption is an annual average figure over the life of the asset, whereas the rate of annual asset renewal can vary widely, depending on community, funding priorities and where the assets are in their lifecycle. It is important that councils understand their asset management position, know what asset renewals are required to continue to provide the levels of service that the community needs and how the asset renewals are to be funded. An asset management plan documents how and what services are provided and the outlays required to fund operations, maintenance, capital renewal and upgrade/new over the long term, typically a 10 to 20-year planning period. The asset management plan forecasts should align with the long term financial plan and assist Councils in deciding the allocation of community resources. 6.4 Investment in New Roads & Bridges The investment in new road infrastructure constructed by developers (contributed free-of-cost to councils) and expenditure incurred by councils to upgrade existing road and bridge assets reported by the responding councils in 2016/17 was $270 million as shown below. The value of contributed (free of cost by developers and others) road assets reported by 45 responding councils was $1,816,742. Councils invested $222 million in upgrading existing and new road assets in 2016/17 as shown below. 18 ROAD ASSET BENCHMARKING PROJECT

33 Table 20: Roads Upgrade/New Expenditure in 2016/17 Upgrade/New Expenditure in 2016/17 ($M) Sealed Roads Unsealed Roads Total Regional Roads $41 $3 $43 Local Roads $153 $25 $178 Total $194 $28 $222 Note: 75 Councils reported these figures. Investment in upgrading existing and constructing new bridges was $46 million in 2016/17 as shown below. Table 21: Bridges Upgrade/New Expenditure in 2016/17 Upgrade/New Expenditure in 2016/17 ($M) Concrete Bridges Timber Bridges Total Regional Roads $16 - $17 Local Roads $13 $16 $30 Total $30 $17 $46 Note: 39 Councils reported these figures. In summary: Contributed assets New road assets constructed by councils New bridge assets constructed by councils Total $ 2 million $222 million $46 million $270 million 6.5 Planned 15-year Investment in Bridges Responding councils reported a planned investment in bridges over the next 15 years of $476 million as shown below. Table 22: Planned 15-year Bridge Investment Planned Investment in Bridges ($M) Years 1-5 Years 6-10 Years Total Regional Concrete $25 $27 $7 $59 Local Concrete $58 $42 $43 $142 Subtotal $83 $69 $50 $201 Regional Timber $16 $3 $3 $22 Local Timber $134 $69 $50 $253 Subtotal $150 $72 $53 $275 Grand Total $233 $141 $103 $ Road Management Report 19

34 7. Life Cycle Funding Gap 7.1 Regional and Local Roads To determine the life cycle funding gap, Councils were asked to record actual expenditure for the reporting period, the estimated average cost per kilometre and in-service useful life for the following activities on regional and local roads: Routine maintenance Sealed road resurfacing Sealed pavement rehabilitation Unsealed road resheeting This provides a road management model from which responding councils can use to understand their own position and help form an aggregated position across the state as discussed in Section 8. The road life cycle cost, expenditure, and resulting funding gap for responding councils is shown below. Table 23: Regional and Local Roads Life Cycle Cost and Expenditure 2016/17 Length (km) Rate ($/km/yr) Life Cycle Cost ($/yr) Expenditure ($/yr) Funding Gap ($/yr) N of Councils REGIONAL ROADS Sealed Roads Routine maintenance 14,888 $4,918 $73,225,242 $73,225,242 $0 121 Resurfacing 12,263 $3,455 $42,373,470 $44,432,038 -$2,058, Pavement renewal 9,974 $6,471 $64,544,712 $68,697,562 -$4,152, Sub total $14,845 $180,143,424 $186,354,843 -$6,211,418 Unsealed Roads Routine maintenance 2,908 $3,540 $10,295,496 $10,295,496 $0 32 Resheeting 1,076 $4,480 $4,820,391 $1,674,439 $3,145, Sub total $8,020 $15,115,887 $11,969,935 $3,145,952 Total Regional $22,865 $195,259,311 $198,324,778 -$3,065,466 LOCAL ROADS Sealed Roads Routine maintenance 66,487 $3,832 $254,803,285 $254,803,285 $0 126 Resurfacing 54,795 $2,699 $147,883,032 $181,876,035 -$33,993, Pavement renewal 48,761 $6,174 $301,028,163 $208,299,639 $92,728, Sub total $12,705 $703,714,481 $644,978,960 $58,735, ROAD ASSET BENCHMARKING PROJECT

35 Unsealed Roads Routine maintenance 77,848 $1,791 $139,414,816 $139,414,816 $0 101 Resheeting 53,757 $4,625 $248,647,159 $53,194,699 $195,452, Sub total $6,416 $388,061,975 $192,609,515 $195,452,459 Total Local $19,121 $1,091,776,455 $837,588,475 $254,187,981 Grand Total $41,986 $1,287,035,767 $1,035,913,252 $251,122,514 Note: Rates are averages based on councils updating their inventory, expenditures, average cost, and useful lives. Road maintenance expenditure is assumed to be adequate. Apparent errors are due to rounding. A negative funding gap is an indicator of expenditure peaks caused by past renewal patterns or underfunding. Average life cycle cost and depreciation are not a guide to expenditure required in the short term and asset management plans connected to long term financial plans are essential planning and reporting tools. The responding councils reported life cycle costs of around $1.28 billion per annum and spent $1.03 billion during 2017 Roads Life Cycle Funding Gap ($M/yr) 2016/17 leaving a funding gap of $251 million per annum. Figure XII: Road Life Cycle Funding Gap for responding Councils The 2016/17 Road life cycle gap can be affected by peaks and troughs in funding allocations due to one-off grants, natural disasters and quantity of contributed assets coming online. Councils can manage and reduce this funding gap by: Improving knowledge of assets and their performance, Reviewing service levels and costs, Improving maintenance to extend asset lives, Improving efficiency in service delivery, Developing and using cost effective asset renewal methods, Rationalising assets, and/or Increasing funding. This can be achieved with strong governance, leadership, and capable resource allocation to ensure confidence that a sustainable service delivery model can be maintained and communicated to the communities that local government serve Road Management Report 21

36 7.2 Life Cycle Cost apportioned to Usage The survey asked councils to estimate the percentage use of their roads by traffic volumes for three road use categories: residential, business and commercial, and higher mass vehicle. The model apportioned the percentage of road life cost to the three road use categories. The results are summarised below. Table 24: Road Life Cycle Cost apportioned to Usage Categories Road Use Category % of Road Life Cycle Cost Residential 75.6% Business/Commercial 19.5% High Mass Vehicles 4.9% Total 100.0% 7.3 Bridges Councils were asked to provide details on bridge management actions including routine maintenance, renewal (replacement) cycles and average cost of treatments. This data was analysed to provide a bridge management model for responding councils and is aggregated into a State-wide position for regional and local roads in Section 9. The bridge life cycle cost, expenditure, and funding gap for responding councils is shown below. Table 25: Regional and Local Bridges Life Cycle Cost and Expenditure 2016/17 Area (m 2 ) Rate ($/m 2 /yr) Life Cycle Cost ($/yr) Expenditure ($/yr) Funding Gap ($/yr) N of Responding Councils REGIONAL ROADS Concrete/steel bridges Routine maintenance 300,861 $15 $4,605,531 $4,605,531 $0 55 Bridge renewal 107,336 $58 $6,223,019 $13,592,844 -$7,369, Sub total $73 $10,828,550 $18,198,375 -$7,369,824 Timber Bridges Routine maintenance 8,761 $47 $414,446 $414,446 $0 9 Bridge renewal 4,918 $75 $367,071 $1,626,852 -$1,259,781 5 Sub total $122 $781,517 $2,041,298 -$1,259,781 Total Regional $195 $11,610,067 $20,239,673 -$8,629, ROAD ASSET BENCHMARKING PROJECT

37 Area (m 2 ) Rate ($/m 2 /yr) Life Cycle Cost ($/yr) Expenditure ($/yr) Funding Gap ($/yr) N of Responding Councils LOCAL ROADS Concrete/steel bridges Routine maintenance 948,745 $9 $8,839,129 $8,839,129 $0 84 Bridge renewal 277,963 $48 $13,204,009 $17,112,120 -$3,908, Sub total $57 $22,043,138 $25,951,249 -$3,908,111 Timber Bridges Routine maintenance 120,097 $56 $6,724,710 $6,724,710 $0 47 Bridge renewal 82,571 $56 $4,610,747 $12,206,570 -$7,595, Sub total $112 $11,335,457 $18,931,280 -$7,595,824 Total Local Roads $169 $33,378,595 $44,882,529 -$11,503,935 Grand Total $364 $44,988,662 $65,122,202 -$20,133,540 Note: Rates are averages based on councils updating their inventory, expenditures, average cost, and useful lives. Bridge maintenance expenditure is assumed to be adequate. Apparent errors are due to rounding. The responding councils are responsible for life cycle cost of around $45 million per annum and spent around $65 million in 2016/17 which was $20 million more than the life cycle cost Bridges Life Cycle Funding Gap ($M/yr) Figure XIII: Bridges Life Cycle Funding Gap for responding Councils 2017 Road Management Report 23

38 8. Findings 1. 98% (126) of NSW councils participated in the 2017 IPWEA (NSW) Roads & Transport Directorate s Road Asset Benchmarking Project update. 2. Responding councils report significant variation in unit costs and useful lives for similar type assets % of local councils (33% in 2007/08, 48% in 2009/10, 61% in 2011/12, 66% in 2013/14) report using in full the principles of the International Infrastructure Management Manual, the internationally recognised best practice reference on infrastructure asset management % of councils (82% in 2011/12, 89% in 2013/14) have an adopted Road Asset Management Plan % of councils (83% in 2011/12, 93% in 2013/14) subscribe to the IPWEA NAMS.PLUS online pathway for writing and updating their asset management policy, strategy, and plans. 6. Road related risk was being addressed through a road asset management plan or within a corporate risk management plan in 70% of the responding councils (46% in 2007/08, 52% in 2009/10 and 68% in 2011/12, 70% in 2013/14). 30% of Councils don t have a risk management plan % of local councils are planning for function impacts in their transport network % of local councils are planning for capacity impacts in their transport network % of local councils are reporting $5.5 billion (8%) of their road assets are in a poor to very poor condition % (66% in 2007/08, 67% in 2009/10, 94% in 2011/12, 96% in 2013/14) of responding councils indicated they have a minimum 10-year long term financial plan % (22% in 2007/08, 33% in 2009/10, 54% in 2011/12, 60% in 2013/14) of responding councils long term financial plans recognise the effects of infrastructure including financing infrastructure renewal, and providing for growth and life cycle costs for new infrastructure. 12. Local councils are responsible for the management of 165,347 km of regional and local roads combined and 10,064 concrete/steel and timber bridges. 13. Councils load capacity knowledge of their bridges is limited to 21% of concrete and 45% of timber bridges. 14. The responding councils roads and bridges have a gross replacement value of $73 billion, which is being consumed at the rate of $943 million per annum. 15. Road and bridge assets for responding councils are reported to have 65% of their average as new condition (service life) remaining (68% in 2007/08, 69% in 2009/10, 61% in 2011/12, 60% in 2013/14). The assets are being consumed at a rate of 1.6% of the depreciable amount. 16. Asset renewal in 2016/17 was less than asset consumption for: 1. Sealed roads annual asset renewal was 86% compared to 82% in 2007/08, 64% in 2009/10, 62% in 2011/12 and 61% in 2013/ Unsealed roads - annual asset renewal was 57% compared to 50% in 2007/08, 30% in 2009/10, 40% in 2011/12 and 34% in 2013/ Concrete/steel bridges annual asset renewal was 65% compared to 45% in 2007/08, 59% in 2009/10, 17% in 2011/12 and 34% in 2013/ Timber bridge renewal was 172% more than the rate of asset consumption (542% in 2007/08, 453% in 2009/10, 241% in 2011/12, 197% in 2013/14). 18. The investment in new road infrastructure during 2016/17 reported by responding councils was $270 million. 19. Responding councils reported a planned investment in bridges over the next 15 years of $476 million. 20. The road life cycle cost for the responding councils was estimated at $1.28 billion for the year. Funding in 2016/17 was reported at $1.03 billion leaving a funding gap of $251 million per annum. 21. The estimated apportionment of road life cycle cost to the three major road use categories based on councils best estimate of percentage traffic usage of roads was that residential use was responsible for 76% of the road life cycle cost, business, and commercial usage 19% and high mass vehicles 5%. 22. The bridge life cycle cost for the responding councils was estimated at $45 million for the year. Expenditure in 2016/17 for bridges was $65 million exceeding the lifecycle cost by $20 million indicating the investment priority given to bridge renewal in 2016/ ROAD ASSET BENCHMARKING PROJECT

39 9. Discussion 9.1 Asset management practices Whilst there was a very high response rate to the survey very few councils provided a fully completed survey dataset in a form suitable for analysis. The data sought was basic financial and asset data used for strategic and day-to-day management of roads and bridges. Notwithstanding this fact, most of the responding councils failed to answer all the questions and the project team sourced financial valuation data from grant commission returns therefore increasing the confidence in the replacement value, depreciation, and consumption ratio of all regional and local roads and bridges across NSW for which local government has responsibility. Response to maintenance and capital expenditures, unit costs and renewal cycles was low resulting in a low confidence assessment of lifecycle costs and identification of a credible funding gap prompting the need for improved awareness in councils to understand lifecycle costs and ongoing sustainability of service delivery. Guidelines to assist councils in asset management and for preparing asset management plans have been available since 1994 with the National Asset Management Manual and International Infrastructure Management Manual and subsequent updates. Regarded as the best practice reference manual, all Councils should be using the International Infrastructure Management Manual as their asset management reference. In 2008, IPWEA released the online guided pathway for Asset Management planning known as NAMS.PLUS ( that provides a system of templates and modelling tools to assist councils write and update their infrastructure asset management policy, strategy, and plans. The increasing number of councils subscribed to NAMS.PLUS is shown in Figure XIV and demonstrates most councils have access to the capability tools. NAMS.PLUS Subscription Figure XIV: Councils using NAMS.PLUS for AM Plans The NSW Integrated Planning & Reporting Framework requires councils to have a 10-year financial plan supported by 10+ year asset management plans to ensure sustainable service delivery for their communities. Councils have made significant improvements in developing asset management and long-term financial plans since % of councils now have an adopted road asset management plan, a decrease from % of councils have a long-term financial plan with 96% of them covering 10-years or more. The funding gap identified in the survey and level of road related risk practices also requires councils to improve their road related risk management practices to sustain service delivery, minimise liability exposure and potential for increases in insurance premiums. 70% of councils have a risk management plan for road related risks, which is an increase from the 10% reported in IMEA, IPWEA, Road Management Report 25

40 9.2 Road transport infrastructure investment The estimated investment to replace the NSW local council transport infrastructure is $73 billion ($45.9 billion in 2007/08, $59.2 billion in 2009/10 and $61.8 billion in 2011/12, $65.7 billion in 2013/14). This represents an investment of $9,296 for each of the 7.9 million people 9 in NSW or 21 metres per person. The assets are reported as being consumed at an estimated $943 million per annum ($735 million in 2007/08, $889 million in 2009/10 and $1,049 million in 2011/12, $907 million in 2013/14). Road infrastructure investment values are shown below. Table 26: Road and Bridge Values Extrapolated to all local Councils Replacement Cost ($M) Depreciable Amount ($M) Depreciated Replacement Cost ($M) Annual Depreciation Expense ($M) Sealed Roads $43,372 $35,977 $30,266 $584 Unsealed Roads $8,664 $3,951 $4,621 $96 Concrete/Steel Bridges $4,743 $4,664 $3,268 $47 Timber Bridges $513 $503 $249 $8 Roads Ancillary $15,782 $14,733 $9,298 $208 Total $73,074 $59,827 $47,701 $943 Note: Data from Table 18, includes all 128 councils. Performance measure 2.1 Road & Bridges Asset Consumption Ratio The Asset Consumption Ratio indicator gives a snapshot of the average proportion of as new condition left in assets 10. Road & Bridge Asset Consumption Ratio Figure XV: Road & Bridges Asset Consumption Ratio ABS Australian Demographic Statistics, Jun IPWEA, 2012, AIFMG V1.3, Financial Sustainability Indicator 8, p Calculation (DRC-RV)/Dep. Amount) 26 ROAD ASSET BENCHMARKING PROJECT

41 Figure XV indicates that the asset consumption ratio (average proportion of as new condition) of road and bridge assets has increased 22% since In 2017, road and bridge assets had 65.3% of their service life remaining indicating a reduction in the ageing of assets. If a council is operating sustainably, with asset renewal equal to asset consumption and annual revaluation of assets, the change in the Asset Consumption Ratio indicator would be due to the value of contributed assets. A council that is renewing assets at a rate less than consumption and with no or limited contributed growth assets should see its Asset Consumption Ratio indicator reducing. New Road & Bridge Infrastructure Additional road and bridge assets contributed to and constructed by councils in 2016/17 are estimated to increase the replacement value of road and bridge assets by $539 million or 0.7%. The table below shows the estimated value extrapolated to 128 councils. Table 27: Estimated Investment in New Assets Extrapolated to all local Councils Source of new Assets Sample Size New Asset Value ($M) Value extrapolated to all Councils ($M) Contributed by Others 45 $2 $5 Upgrade & New Roads constructed by Councils 75 $222 $378 Upgrade & New Bridges constructed by Councils 38 $46 $156 Total $270 $539 Note: Data sourced from Sec 6.4. Sample size extrapolated to 128 councils. (e.g. $222 M/75 x 128 = $378 M), apparent errors due to rounding. 9.3 Road Funding Position Extrapolating the 2016/17 funding gap from the responding councils to all 128 NSW local councils will give an indication of the total road funding gap. The extrapolated road funding gap for all councils in NSW is estimated at $375 million ($614 M in 2007/08, $677 M in 2009/10, $567 M in 2011/12, $433 M in 2013/14). Table below shows the road model for the responding councils extrapolated to 128 councils. Funding the life cycle cost will require a 30% increase in expenditure (80% in 2007/08, 91% in 2009/10, 66% in 2011/12, 43% in 2013/14). A negative funding gap is an indicator of expenditure peaks caused by past renewal patterns or underfunding. Average life cycle cost and depreciation are not a guide to expenditure required in the short term and asset management plans connected to long term financial plans are essential planning and reporting tools Road Management Report 27

42 Table 28: Roads Life Cycle Cost and Expenditure extrapolated to all local Councils Length (km) Rate ($/km/yr) Life Cycle Cost ($/yr) Expenditure ($/yr) Funding Gap ($/yr) REGIONAL ROADS Sealed Roads Routine maintenance 15,295 $4,918 $75,227,034 $75,227,034 $0 Resurfacing 15,295 $3,455 $52,850,218 $55,417,763 -$2,567,544 Pavement renewal 15,295 $6,471 $98,978,481 $105,346,823 -$6,368,343 Sub total 15,295 $14,845 $227,055,733 $235,991,620 -$8,935,887 Unsealed Roads Routine maintenance 3,174 $3,540 $11,237,244 $11,237,244 $0 Resheeting 3,174 $4,480 $14,219,258 $4,939, $9,279,974 Sub total 3,174 $8,020 $25,456,501 $16,176,527 $9,279,974 Total Regional 18,469 $13,672 $252,512,234 $252,168,147 $344,087 LOCAL ROADS Sealed Roads Routine maintenance 68,037 $3,832 $260,743,471 $260,743,471 $0 Resurfacing 68,037 $2,699 $183,621,094 $225,828,996 -$42,207,901 Pavement renewal 68,037 $6,174 $420,029,391 $290,643,804 $129,385,587 Sub total 68,037 $12,705 $864,393,956 $777,216,270 $87,177,686 Unsealed Roads Routine maintenance 79,086 $1,791 $141,631,900 $141,631,900 $0 Resheeting 79,086 $4,625 $365,803,694 $78,258,757 $287,544,938 Sub total 79,086 $6,416 $507,435,594 $219,890,657 $287,544,938 Total Local Roads 147,123 $9,324 $1,371,829,550 $997,106,927 $374,722,623 Grand Total 165,592 $9,809 $1,624,341,784 $1,249,275,074 $375,066,710 Note: Data from responding Councils extrapolated to 128 councils Rates are averages based on councils updating their inventory, expenditures, average cost, and useful lives. Road maintenance expenditure is assumed to be adequate. Apparent errors are due to rounding. The life cycle cost and 2016/17 expenditure for NSW regional roads and local roads is show in Fig XVI. The life cycle funding gap for regional and local roads is shown in Fig XVI. 28 ROAD ASSET BENCHMARKING PROJECT

43 Road Life Cycle Cost and Expenditure ($M/yr) Figure XVI: Road Life Cycle Cost and Expenditure 2016/ Road Life Cycle Funding Gap ($M/yr) Figure XVII: Road Life Cycle Cost Funding Gap 2016/ Road life cycle cost and road usage Table 17 showed the percentage of the road life cycle cost apportioned to road use categories by the following groupings for the responding councils: Residential, Business and commercial, and Higher mass vehicle. The estimated road life cycle cost related to usage scaled up to all 128 councils is shown in Table 29 below. Note, the sample traffic classification used in this instance are best estimates as little to no data is held for traffic volumes classified by road use. This data and analysis was included in the benchmarking report to explore and test assumptions and trends relating to loads on the network. Further research into the life cycle cost and road usage is possible by improving the accuracy of road usage traffic volume by detailed sampling of typical urban and rural road categories, and, relating the traffic usage and its effect on useful life of the road asset components. This approach would provide insight on the load effects of key asset components such as bridges and road surface and pavements Road Management Report 29

44 Table 29: Road Life Cycle Cost and Road Usage 2016/17 Road Use Category % of Road Life Cycle Cost Road life cycle cost for all councils ($/yr) Residential 75.6% $1,228,193,651 Business/Commercial 19.5% $316,855,027 High Mass Vehicles 4.9% $79,293,106 Total 100.0% $1,624,341,784 The percent of lifecycle cost by road use category since 2010 shows an increasing proportion of high mass vehicles on the regional and local road network. Percent of Life Cycle cost by road use Figure XVIII: Road Life Cycle Cost and Road Use 2010 to Bridge Funding Position Extrapolating the data from the responding councils for bridges will also give an indication of sustainable funding levels for bridges on regional and local roads. 2016/17 expenditure on bridges on regional and local roads is estimated at approximately $47.2 million more than the life cycle cost ($3.9 M greater in 2007/08, $3.3 M greater in 2009/10, $29.6 million less in 2011/2, $13.4 million less in 2013/14). Table 30: Bridge Life Cycle Cost and Expenditure extrapolated to all local Councils Area (m 2 ) Rate ($/m 2 /yr) Life Cycle Cost ($/yr) Expenditure ($/yr) Funding Gap ($/yr) REGIONAL ROADS Concrete/steel bridges Routine maintenance 300,861 $15.3 $4,605,531 $4,605,531 $0 Bridge renewal 300,861 $58.0 $17,443,018 $38,100,511 -$20,657,494 Sub total 300,861 $73.3 $22,048,549 $42,706,042 -$20,657, ROAD ASSET BENCHMARKING PROJECT

45 Area (m 2 ) Rate ($/m 2 /yr) Life Cycle Cost ($/yr) Expenditure ($/yr) Funding Gap ($/yr) Timber Bridges Routine maintenance 8,761 $47.3 $414,446 $414,446 $0 Bridge renewal 8,761 $74.6 $653,906 $2,898,099 -$2,244,193 Sub total 8,761 $121.9 $1,068,352 $3,312,545 -$2,244,193 Total Regional 309,622 $74.7 $23,116,901 $46,018,587 -$22,901,686 LOCAL ROADS Concrete/steel bridges Routine maintenance 948,745 $9.3 $8,839,129 $8,839,129 $0 Bridge renewal 948,745 $47.5 $45,068,003 $58,407,191 -$13,339,188 Sub total 948,745 $56.8 $53,907,132 $67,246,320 -$13,339,188 Timber Bridges Routine maintenance 120,097 $56.0 $6,724,710 $6,724,710 $0 Bridge renewal 120,097 $55.8 $6,706,190 $17,754,084 -$11,047,894 Sub total 120,097 $111.8 $13,430,900 $24,478,794 -$11,047,894 Total Local 1,068,842 $63.0 $67,338,032 $91,725,114 -$24,387,082 Grand Total 1,378,464 $65.6 $90,454,933 $137,743,701 -$47,288,768 Note: Data from responding Councils extrapolated to 128 councils Rates are averages based on councils updating their inventory, expenditures, average cost, and useful lives. Bridge maintenance expenditure is assumed to be adequate. Apparent errors are due to rounding. The life cycle cost and 2016/17 expenditure for bridges on NSW regional roads and local roads is shown in Fig XIX. The life cycle funding gap for regional and local road bridges is shown in Fig XX. Bridge Life Cycle Cost and Expenditure ($M/yr) Figure XIX: Bridges Life Cycle Cost and Expenditure 2016/ Road Management Report 31

46 2017 Bridge Life Cycle Funding Gap ($M/yr) Figure XX: Bridges Life Cycle Cost Funding Gap 2016/17 The funding for regional and local road bridges has increased with expenditure exceeding annual lifecycle cost by $47.3 million during the year, a significant increase from the $13.4 million shortfall in 2013/ Combined Funding Position The combined road and bridge funding shortfall for all 128 NSW local councils at the end of June 2017 is estimated at $328 million as shown below and Fig XXI below. Table 31: Roads and Bridges Life Cycle Funding Position Life cycle cost ($M) 2005/ / / / / /17 Roads $1,360 $1,381 $1,422 $1,424 $1,437 $1,624 Bridges $56 $62 $59 $69 $89 $90 Subtotal $1,416 $1,443 $1,482 $1,493 $1,527 $1,715 Expenditure ($M) Roads $653 $767 $745 $857 $1,004 $1,249 Bridges $44 $58 $63 $39 $76 $138 Subtotal $698 $825 $808 $897 $1,080 $1,387 Estimated funding gap ($M/year) $718 $618 $674 $597 $447 $328 Apparent errors are due to rounding The estimated funding gap is equivalent to a 24% increase in funding above the 2016/17 expenditure levels (75% in 2007/08, 83% in 2009/10, 66% in 2011/12, 41% in 2013/14) or a decline in service delivery if asset management principles are not applied and maintained to manage the gap. This therefore emphasises the need to continue actions to manage the funding gap and ensure infrastructure services are sustainable for future generations. 32 ROAD ASSET BENCHMARKING PROJECT

47 Road & Bridge Life Cycle Cost, Expenditure & Funding Gap 2016/17 ($M/yr) Figure XXI: Roads & Bridges Life Cycle Costs and Expenditure 2016/17 Asset management principles to be applied to manage the gap include: Ensuring local councils have adequate accurate knowledge on their road assets and how their assets are performing. Ensuring that sealed roads are resurfaced/resealed at the optimum time to maintain waterproofing of pavements and minimise failure. Consultation and selection of appropriate levels of service and costs to meet community needs with the available resources. Ensuring that unsealed roads are resheeted at the optimum time to meet agreed service levels with available resources. This will require an increase in funding from $86 million in 2013/14 to $297 million for all councils if service levels reported in the survey are to be maintained. Making efficiencies in operations, maintenance, resurfacing and pavement renewal aimed at reducing life cycle costs. Improving maintenance practices and funding if necessary to extend pavement life and defer projected renewal. Rationalise (dispose) of unnecessary infrastructure assets. Reduce service levels in consultation with the community. Identify future renewal needs and expenditure required to meet agreed service levels and document in a Road Asset Management Plan; and Increase funding or reallocate from other service areas where possible and agreed. Performance measure 2.2 Road & bridge asset life cycle funding gap The road asset life cycle funding gap is a snapshot of the gap between life cycle costs and annual expenditure Road Management Report 33

48 Road & Bridge Life Cycle Funding Gap ($M/yr) Figure XXII: Road & Bridge Life Cycle Funding Gap The Roads and Bridges life cycle funding gap has decreased 54% from $718 million in 2005 to $328 million in Sealed roads saw a reduction in the life cycle funding gap of $386 million from $464 million in 2012 to $78 million in The funding gap for unsealed roads has increased $194 million since 2012 and concrete and timber bridges has decreased with timber bridge funding consistently being above the life cycle cost for the last 12-years. 9.7 Comparing expenditure with renewal cost and depreciation A comparison of annual life cycle renewal cost (the asset managers assessment of what it costs on average each year to renew the assets) and reported depreciation expense for the 128 NSW councils is shown below. Table 32: Annual Life Cycle Renewal Cost and Depreciation Expense 2016/17 Sealed Roads ($M) Unsealed Roads ($M) Conc. bridges ($M) Timber bridges ($M) Total ($M) LIFE CYCLE RENEWAL COST Renewal (Required Capex) 2016/17 - Resurfacing (reseals) $236 $236 - Pavement renewal $519 $519 - Resheets $380 $380 - Bridge renewal $63 $7 $70 Subtotal Life Cycle Renewal Cost $755 $380 $63 $7 $1,205 Depreciation Expense $584 $96 $47 $8.1 $735 Renewal Cost / Depreciation 129% 396% 133% 91% 164% 34 ROAD ASSET BENCHMARKING PROJECT

49 Table 32 indicates that there is a considerable difference in assessment of asset consumption as reported by asset managers and that reported by depreciation expense in council s financial statements. The asset managers assessment of asset consumption reported against depreciation expense for 2016/17 is: 129% for Sealed roads (54% in 2007/08, 60% in 2009/10, 74% in 2011/12, 84% in 2013/14), 396% for Unsealed roads (44% in 2007/08, 80% in 2009/10, 85% in 2011/12, 28% in 2013/14), 133% for Concrete bridges (70% in 2007/08, 93% in 2009/10, 100% in 2011/12, 64% in 2013/14), and 91% for Timber bridges (65% in 2007/08, 89% in 2009/10, 96% in 2011/12, 78% in 2013/14). Overall it is 164% for local roads and bridges (53% in 2007/08, 65% in 2009/10, 77% in 2011/12, 64% in 2013/14). Performance measure 2.3 Road & Bridge Asset Sustainability Ratio The Asset Sustainability Ratio measures whether local government is replacing or renewing its non-financial assets in an optimal way to minimise whole-of-life costs and thus cost-effectively maintain preferred service levels. It is the ratio of asset replacement expenditure relative to depreciation for a period and if the ratio is 100% on average over time, local government is ensuring value of existing assets is maintained. Table 33 compares 2016/17 capital renewal expenditure with depreciation expense, known as the Asset Sustainability Ratio. The Asset Sustainability Ratio is used as a measure of whether assets are being replaced at the rate they are wearing out over time. It is the rate of asset replacement expenditure relative to depreciation for a period. Depreciation expense reports the consumption of service potential of assets in financial terms for the reporting period. In this case, expenditure was $878 million and depreciation $735 million. Table 33: Annual Life Cycle Renewal Expenditure and Depreciation 2016/17 Sealed Roads ($M) Unsealed Roads ($M) Conc. bridges ($M) Timber bridges ($M) Total ($M) RENEWAL EXPENDITURE Renewal (Actual Capex) 2016/17 - Resurfacing (reseals) $281 $281 - Pavement renewal $396 $396 - Resheets $83 $83 - Bridge renewal $97 $20 $117 Subtotal renewal expenditure $677 $83 $97 $20 $878 Depreciation Expense $584 $96 $47 $8 $735 Renewal Exp / Depreciation 116% 87% 205% 256% 119% In 2016/17, the Asset Sustainability Ratio is 119% (81% in 2007/08, 61% in 2009/10, 58% in 2011/12 and 94% in 2016/17) 2017 Road Management Report 35

50 The Asset Sustainability Ratio for: Sealed roads are 116% (82%, 64% 62% & 93%), Unsealed roads are 87% for (50%, 30%, 40% & 83%), Concrete/steel bridges are 205% (54%, 59%, 17% & 85%) and Timber bridges are 256% (542% in 2007/08, 453% in 2009/10, 241% in 2011/12 and 333% in 2013/14). If the ratio is 100% on average over time, local government is ensuring value of existing assets is maintained. Local government should be replacing/renewing assets when they need to be replaced. When asset portfolios are young, this can be 50% or less. When assets are old, the ratio may be more than 100%. Therefore, using depreciation expense as a measure of average asset renewal need at a point in time is an incorrect assumption. A comparison of the above expenditure, annual life cycle renewal cost and depreciation results is shown below. Table 34: Annual Life Cycle Renewal Cost, Expenditure, and Depreciation 2016/17 Sealed Roads ($M) Unsealed Roads ($M) Conc. bridges ($M) Timber bridges ($M) Total ($M) Renewal Expenditure $677 $83 $97 $21 $878 Annual Life Cycle Renewal Cost $755 $380 $63 $7 $1,205 Depreciation $584 $96 $47 $8 $735 The local road asset managers assessment of annual life cycle renewal cost is $1.2 billion per annum. This is their estimate of the value of the local road assets that is being consumed (used up) each year. The amount spent on capital renewal of the assets for 2016/17 was $878 million. This is 73% (43% in 2007/08, 39% in 2009/10, 45% in 2011/12 and 60% in 2013/14) of the annual life cycle renewal cost and 119% of depreciation expense (81% in 2007/08, 60% in 2009/10, 58% in 2011/12 and 94% in 2013/14). Depreciation expense as reported by NSW local councils is $735 million per annum, some 61% of the asset manager s assessment of asset consumption (53% in 2007/08, 65% in 2009/10, 77% in 2011/12 and 64% in 2013/14). Reporting expenditure and asset consumption (lifecycle cost and depreciation) since 2005 is shown in Figure XXIII. Expenditure & Asset Consumption ($M/yr) Figure XXIII: Financial & Technical Measures of Asset Consumption and Expenditure ROAD ASSET BENCHMARKING PROJECT

51 The above chart illustrates the comparison between the renewal expenditure and the financial (depreciation) and technical (annual lifecycle renewal cost) assessment of asset consumption. Comparing the two scenarios in percentage terms further highlights the disparity. Financial & Technical Assesment of Asset Consumption Figure XXIV: Comparison Financial & Technical Reporting While the financial assessment indicates road and bridge assets were being renewed at a rate of 119% of depreciation during 2016/17, the technical assessment based on annual lifecycle estimates shows they were being renewed at 73% for the same period, a 46 percent point difference. In theory, the technical assessment of useful life and unit costs should align with the asset lives and costs in the asset register. Since 2009, NSW local councils have been required to value their roads and bridges at fair value based on these principles. While technical and financial estimates of asset consumption need to be aligned it is evident the gap between the two has increased from 33 percentage points in 2005 to 46 suggesting the difference in the technical and financial reporting of asset consumption and renewal has declined since the benchmarking project commenced. A key recommendation from the last report was to reduce this gap within 10 percentage points within 2-years Reasons for the ongoing variation may include: Some councils may be valuing assets at greenfield (cost to acquire the asset in an undeveloped location) values rather than brownfield (cost to replace the asset s service potential in existing location) values. The estimated asset useful lives used by councils for financial reporting may be based on industry standards, not actual performance and field operating conditions of the assets and therefore understate depreciation expense. The estimated asset lives assessed by the asset managers may be based on technical measures, not community priorities/available resources therefore overstating the annual life cycle renewal cost. Performance measure 2.4 Funding of Life Cycle Cost Trends in the comparison of life cycle renewal cost and expenditure can be used as an indicator of whether councils are maintaining the operating capability of their assets. Over the life of the assets, asset renewal should keep pace with consumption to ensure services from infrastructure are sustained. The comparison of life cycle cost (maintenance plus required renewal) with life cycle expenditure (maintenance plus actual renewal expenditure) is summarised in Table Road Management Report 37

52 Table 35: Life Cycle Cost and Expenditure 2016/17 Sealed Roads ($M) Unsealed Roads ($M) Conc. bridges ($M) Timber bridges ($M) Total ($M) LIFE CYCLE COST Maintenance $336 $153 $13 $7 $509 Renewal (Required Capex) - Resurfacing (reseals) $236 $236 - Pavement renewal $519 $519 - Resheets $380 $380 - Bridge renewal $63 $7 $70 Subtotal renewal $755 $380 $63 $7 $1,205 Life Cycle Cost (maint & renewal) $1,091 $533 $76 $14 $1,715 LIFE CYCLE EXPENDITURE Maintenance $336 $153 $13 $7 $509 Renewal (Actual) - Resurfacing (reseals) $281 $281 - Pavement renewal $396 $396 - Resheets $83 $83 - Bridge renewal $97 $21 $117 Subtotal renewal $677 $83 $97 $21 $878 Life cycle Exp (maint & renewal) $1,013 $236 $110 $28 $1,387 Life Cycle Exp / Life Cycle Cost 93% 44% 145% 192% 81% Note: Data extrapolated to all 128 councils. 38 ROAD ASSET BENCHMARKING PROJECT

53 To provide sustainable services from infrastructure, funding of the life cycle cost is required on average over the life of the asset. An increase in the sustainability measure indicates an increase in funding of the life cycle cost. Funding of Life Cycle Cost Figure XXV: Road & Bridge Asset Sustainability Funding of the life cycle costs of road and bridge assets has increased from 49% in 2005 to 81% in The sustainability of sealed roads and bridges increased in the period while unsealed roads remain relatively flat. Timber bridges continue to be funded at well above life cycle cost because of allowing ageing timber bridges to deteriorate to levels requiring expenditure well above the life cycle cost. Similar funding levels above life cycle costs may be required for other road assets at some time in the future if assets continue to be underfunded. Developing asset, risk management and long-term financial plans will assist in managing the financial, social, and environmental impact of deteriorating assets and potential reduction in service levels. 9.8 Managing the Gap The 2016/17 gap consists of several components as shown in Fig XXVI. Each component requires a different approach to manage the gap and move towards a sustainable service delivery model. Table 36 summarises the recommended management treatments to manage out the funding gap. Life Cycle Funding Gap 2016/17 ($M/yr) Figure XXVI: Life Cycle Funding Gap by Component 2016/ Road Management Report 39

54 Table 36: Life Cycle Funding Gap by Component and Asset Management Treatments Component Sealed Surface Sealed Pavement Unsealed Pavements Bridges Gap ($M / yr) 07/08 09/10 11/12 13/14 16/17 $187 $230 $171 -$5 -$45 $303 $316 $293 $149 $123 $124 $131 $103 $289 $297 $4 -$3 $30 $13 -$47 Asset Management Treatment Develop/review road hierarchy and service levels in consultation with the community. Increase knowledge of asset performance, costs and useful life. Explore, develop, and apply maintenance and renewal treatments to suit available resources that result in lower life cycle costs. Identify and develop year future infrastructure scenarios in the AM Plan aligned to the Long-term Financial Plan. Explore funding options to finance life cycle cost and agreed service levels. Total $618 $674 $597 $447 $328 The investment of $539 million on new assets and upgrading of existing assets in 2016/17 shown below (ref: Table 27) will add to the future life cycle cost and potentially add to the funding gap. Contributed by Others Upgrade & New Roads Upgrade & New Bridges Total $5 million $378 million $156 million $539 million This is estimated to add $12.5 million 11 to annual operating and future renewal costs for roads and bridges in 2016/17 and following years. 11 Calculation: $539M x 2.3% (0.7% maintenance [Maintenance expend/grc] + 1.6% depreciation [ref Table 12]). Apparent errors due to rounding. 40 ROAD ASSET BENCHMARKING PROJECT

55 10. Conclusion This 2017 Road Asset Benchmarking report found that NSW councils are responsible for managing 165,347 km of regional and local roads and 10,064 bridges with a replacement cost of $73 billion. The life cycle cost of the road and bridge network is estimated at $1,714 million per annum for 2016/17. Expenditure of $1,387 million was spent during the same period which is 81% of the life cycle cost resulting in a $328 million shortfall. The shortfall indicates rural councils with large unsealed networks and low populations are continuing to struggle to maintain their networks and trend data shows a deterioration in the funding gap for unsealed roads that now contributes to most of the current funding gap. Furthermore, 98% of local councils are reporting $5.5 billion (8%) of their road assets are in a poor to very poor condition. As a result, competition for adequate funding to maintain council s infrastructure assets is also under pressure. Therefore, it is critical for councils to: Identify their infrastructure assets and report performance on a regular and consistent basis, Implement regular life cycle analysis in asset management plans, Provide adequate funding to maintain and renew what are in effect their community s greatest financial assets. The findings in this report show a clear trend resulting from asset managers estimates of life cycle costs compared with expenditures. The renewal gap has reduced over the past 12 years however it is unknown if service levels such as condition, function and capacity have declined as councils endeavour to engage with their communities to rebalance revenues and services to remain sustainable. The evidence collected by this report suggests that investment in asset management capacity and attention to asset management planning and reporting has substantially improved the sustainability position of most NSW local councils. Road and bridge funding levels have increased in the main, however local councils will face increasing risk exposure in the future if funding and management practices remain at current levels. These risks include: Possible decline in the condition of road and bridge infrastructure, Potential increase in personal injury and legal claims if risks are not managed, Road life cycle costs will continue to grow as assets are renewed early driven by functional and capacity drivers. These higher cost upgrades will be driven by demographic and technology change. These costs will be passed onto road users through higher transportation operating costs, Climate impacts need to be closely monitored. Natural Disaster Relief and Recovery Arrangements (NDRRA) are likely to change to require a higher level of asset management reporting on road condition and function. Current funding arrangements are inadequate for changes in function and capacity in the current transport network and a strategic approach is required between all levels of Government. Councils have a low level of knowledge of the load carrying capacity of bridges. This applies to only 21% of concrete bridges and 45% of timber bridges. Poor knowledge of the state of infrastructure is a risk to councils and inhibits community benefits from more efficient use of regional and local roads by the transport industry. New assets and upgrading of existing assets valued at $539 million in 2016/17 are estimated to add $12.5 million to annual operating and future renewal costs. Upgrade requirements are likely to increase as shifts in population, demographics and changing technology will drive changes to supporting infrastructure and almost half of NSW Councils are not planning for changes in function and capacity impacts and 30% do not have road risk management plans. Local Government will be a key stakeholder in planning and managing future infrastructure needs and funding strategies across three levels of government and this report highlights the need to strengthen capacity to measure and predict scenarios for infrastructure investment. Current asset management plans require further development to ensure scenarios for future infrastructure needs are developed and communicated Road Management Report 41

56 If significant upgrade to transport infrastructure is needed, the current arrangements for planning and funding transport networks managed by Councils is unsustainable and needs major review. Therefore, it is critical that local councils: Strengthen their strategic asset management capacity; Identify infrastructure future scenarios and report on a consistent basis the condition, function, and capacity of such assets; Maintain and implement credible life cycle asset management plans tied to an affordable service delivery model; Effectively engage with its customers on affordable levels of service; and Provide adequate funding to plan for, maintain and renew what are in effect the community s greatest financial assets with highest potential risk. 42 ROAD ASSET BENCHMARKING PROJECT

57 11. Assessment Table 35 summarises the assessment of whether councils have made advances in their asset management practices, knowledge and capability to manage their regional and local road and bridge assets. The assessment is reported in terms of: A = Exceptional B = Good C = Mediocre D = Poor F = Failing High Quality Acceptable Requires Attention At Risk Critical and High Risk Of the eleven (11) measures, five are acceptable, five require attention and one area is at risk. The areas requiring attention relate to: 1. Variations in unit cost of treatments and useful lives; 2. The use and adoption of sound asset management principles in resourcing strategy documents such as the longterm asset and financial plan; and 3. Ensuring confidence is increased in reporting lifecycle costs and depreciation. Table 37: Road & Bridge Asset Management Assessment Performance Measure Assessment Comment Knowledge and Capability 1.1 Capacity to complete benchmarking survey C Mediocre The participation rate has remained high at 95%+ since the 2005 survey and decreased 1% since Response times were notably slow. Significant variation exists in average unit costs and useful lives. 1.2 Use of IIMM principles B Good Increased substantially since 2005 and a further 6% since Adoption of road asset management plans C Mediocre Increased substantially since 2005 but then decreased 9% from Management of road related risks D At Risk Increased substantially since 2005 and remained static at 70% since % of Councils don t have a risk management plan. 1.5 Use of long-term financial plans C Mediocre Increased 80% since 2005 but decreased 6% since Period of long-term financial plans B Good 96% of councils are financially planning more than 10-years ahead. 1.7 Infrastructure effects in long-term financial plans B Good Increased 180% since 2005 but declined slightly by 2% since Road Management Report 43

58 Sustainability 2.1 Road & bridge asset consumption ratio B Good The average proportion of as new condition left in the assets has increased 22% since 2005 indicating a reduction in the ageing of assets. Councils are therefore maintaining capital in their infrastructure by extending their useful life. 2.2 Road & bridge asset life cycle funding gap C Mediocre The funding gap has decreased 54% from $718 million in 2005 to $328 million in 2017 but the rapid growth in the unsealed road funding gap and reduction in asset management planning needs monitoring as evidenced by the recent NSW Audit Office report. 2.3 Road & bridge asset sustainability ratio C Mediocre The gap between technical and financial estimates of asset consumption has improved but remains significant. 2.4 Funding of Life Cycle Cost B Good Funding of the life cycle costs of road and bridge assets has increased from 49% in 2005 to 81% in ROAD ASSET BENCHMARKING PROJECT

59 12. Recommendations It is recommended the IPWEA (NSW) Roads & Transport Directorate: 1. Include the following questions in future updates of the IPWEA (NSW) Road Asset Benchmarking Report: 1. The proportion of gross asset value in good, fair, poor function and capacity for all road assets; and 2. The 10-year forward estimate of planned expenditure (LTFP) and projected outlays (AM Plan) for operations, maintenance, renewal and upgrade/new. 2. Assist local councils increase their confidence in determining unit costs and useful life of key asset groups. 3. Set a target to manage out the annual life cycle funding gap of $328 million within a 5-year timeframe and report biennially on performance of the industry towards the target. This requires a targeted strategy for the management and reporting for unsealed local roads. 4. Advocate for ongoing focus on and funding for asset management capacity building. It is recommended local councils: 5. Ensure asset management and long-term financial plans are aligned, up-to-date and compliant with best practice. 6. Continue to improve their asset management capability to a position that they can demonstrate and provide a sustainable and affordable service delivery model to their communities. 7. Continue with actions to improve the accuracy of financial reporting of infrastructure asset consumption and set a target to have technical and financial estimates of infrastructure consumption within 10 percentage points of each other before the next benchmarking report in 2-years Road Management Report 45

60 References ALGA, 2006, National Financial Sustainability Study of Local Government, Australian Local Government Association, Canberra ALGA, 2010, The Local Roads Funding Gap Study of Local Roads Funding in Australia TO , Australian Local Government Association, Canberra ALGA, 2015, National State of the Assets 2015, Australian Local Government Association, Canberra IPWEA, 2015, 2nd edn., Australian Infrastructure Financial Management Manual, Institute of Public Works Engineering Australasia, Sydney, IPWEA, 2015, 3rd edn., International Infrastructure Management Manual, Institute of Public Works Engineering Australasia, Sydney, IPWEA, 2008, NAMS.PLUS An online guided pathway for Asset Management Planning [Online]. Available: JRA, 2006, Local Government Infrastructure, Sustainability and Practice, Volume 2, Report on Independent Inquiry into the Financial Sustainability of NSW Local Government, Local Government Association of NSW and Shires Association of NSW, Sydney, May JRA, 2006, 2005 Road Management Report, Road Asset Benchmarking Project, IPWEA (NSW) Roads & Transport Directorate, Division, Sydney, September JRA, 2009, 2008 Road Management Report, Road Asset Benchmarking Project, IPWEA (NSW) Roads & Transport Directorate, Division, Sydney, September JRA, 2011, 2010 Road Management Report, Road Asset Benchmarking Project, IPWEA (NSW) Roads & Transport Directorate, Division, Sydney, May JRA, 2013, 2012 Road Management Report, Road Asset Benchmarking Project, IPWEA (NSW) Roads & Transport Directorate, Division, Sydney, May JRA, 2015, 2014 Road Management Report, Road Asset Benchmarking Project, IPWEA (NSW) Roads & Transport Directorate, Division, Sydney, May Local Government Association of NSW and Shires Association of NSW, Final Report: Findings and Recommendations, Independent Inquiry into the Financial Sustainability of NSW Local Government, Sydney, May NSW Audit Office, 2018, Report on Local Government 2017, NSW Audit Office 46 ROAD ASSET BENCHMARKING PROJECT

61 Appendices By IPWEA Region: A B C D E F Council Participation Asset Management Practices Road and Bridge Inventory Life Cycle Cost Distribution Asset Values Maintenance and Renewal Rates State-wide: G H A Renewal Cost Distributions Useful Life Distributions Council Participation A1. Councils by IPWEA Region and Participation Region Council Participation 1. Bathurst Regional Council 2. Blayney Shire Council 3. Cabonne Shire Council 4. Cowra Shire Council 5. Forbes Shire Council Central West 6. Lachlan Shire Council 7. Lithgow City Council 8. Oberon Council 9. Orange City Council 10. Parkes Shire Council 11. Weddin Shire Council 1. Central Coast Council 2. Cessnock City Council 3. Dungog Shire Council 4. Lake Macquarie City Council Hunter 5. Maitland City Council 6. Muswellbrook Shire Council 7. Newcastle City Council 8. Port Stephens Council 9. Singleton Council 10. Upper Hunter Shire Council 2017 Road Management Report 47

62 Region Council Participation 1. Kiama Municipal Council 2. Shellharbour City Council Illawarra 3. Shoalhaven City Council 4. Wingecarribee Shire Council 5. Wollondilly Shire Council 6. Wollongong City Council 1. Hornsby Shire Council 2. Hunters Hill Council 3. Ku-ring-gai Council 4. Lane Cove Municipal Council Metro North 5. Mosman Municipal Council 6. North Sydney Council 7. Northern Beaches Council 8. Ryde City Council 9. The Hills Shire Council 10. Willoughby City Council 1. Bayside Council 2. Burwood Council 3. Canada Bay Council 4. Canterbury-Bankstown Council 5. Georges River Council Metro South 6. Inner West Council 7. Randwick City Council 8. Strathfield Municipal Council 9. Sutherland Shire Council 10. Sydney City Council 11. Waverley Council 12. Woollahra Municipal Council 48 ROAD ASSET BENCHMARKING PROJECT

63 Region Council Participation 1. Blacktown City Council 2. Blue Mountains City Council 3. Camden Council 4. Campbelltown City Council NSW Metro West 5. City of Parramatta Council 6. Cumberland Council 7. Fairfield City Council 8. Hawkesbury City Council 9. Liverpool City Council 10. Penrith City Council 1. Bellingen Shire Council 2. Coffs Harbour City Council Mid North Coast 3. Kempsey Shire Council 4. Mid-Coast Council 5. Nambucca Shire Council 6. Port Macquarie-Hastings Council 1. Armidale Regional Council 2. Glenn Innes Severn Council 3. Gunnedah Shire Council 4. Gwydir Shire Council 5. Inverell Shire Council New England 6. Liverpool Plains Shire Council 7. Moree Plains Shire Council 8. Narrabri Shire Council 9. Tamworth Regional Council 10. Tenterfield Shire Council 11. Uralla Shire Council 12. Walcha Council 2017 Road Management Report 49

64 Region Council Participation 1. Ballina Shire Council 2. Byron Shire Council 3. Clarence Valley Council North Coast 4. Kyogle Council 5. Lismore City Council 6. Richmond Valley Council 7. Tweed Shire Council 1. Bogan Shire Council 2. Bourke Shire Council 3. Brewarrina Shire Council 4. Broken Hill City Council 5. Central Darling Shire Council 6. Cobar Shire Council Orana 7. Coonamble Shire Council 8. Dubbo Regional Council 9. Gilgandra Shire Council 10. Mid-Western Regional Council 11. Narromine Shire Council 12. Walgett Shire Council 13. Warren Shire Council 14. Warrumbungle Shire Council 1. Bega Valley Shire Council 2. Eurobodalla Shire Council 3. Goulburn Mulwaree Council South East 4. Queanbeyan-Palerang Regional Council 5. Snowy Monaro Regional Council 6. Upper Lachlan Shire Council 7. Yass Valley Council 50 ROAD ASSET BENCHMARKING PROJECT

65 Region Council Participation 1. Albury City Council 2. Balranald Shire Council 3. Berrigan Shire Council 4. Bland Shire Council 5. Carrathool Shire Council 6. Coolamon Shire Council 7. Cootamundra-Gundagai Regional Council 8. Edward River Council 9. Federation Council 10. Greater Hume Shire Council 11. Griffith City Council South West 12. Hay Shire Council Total Hilltops Council 14. Junee Shire Council 15. Leeton Shire Council 16. Lockhart Shire Council 17. Murray River Council 18. Murrumbidgee Council 19. Narrandera Shire Council 20. Snowy Valleys Council 21. Temora Shire Council 22. Wagga Wagga City Council 23. Wentworth Shire Council Note: For non-responding councils, the report uses the audited Financial Statements and the NSW Grants Commission data where appropriate Road Management Report 51

66 B Asset Management Practices B1. Use of International Infrastructure Management Manual Principles 2016/17 Region No In part Yes Total Central West Hunter Illawarra Metro North Metro South Metro West Mid North Coast New England North Coast Orana South East South West Total Percent of total 1% 30% 70% 100% B2. Adoption and Use of Road Asset Management Plans 2016/17 Region No Planned in 1 yr In progress Yes Total Central West Hunter Illawarra Metro North Metro South Metro West Mid North Coast New England North Coast Orana South East South West Total Percent of total 2% 1% 18% 80% 100% 52 ROAD ASSET BENCHMARKING PROJECT

67 B3. Use of Documented System for Managing Road Related Risk 2016/17 Region No Planned in 1 yr In progress Yes Total Central West Hunter Illawarra Metro North Metro South Metro West Mid North Coast New England North Coast Orana South East South West Total Percent of total 2% 3% 26% 70% 100% B4. Membership of IPWEA NAMS.PLUS online guided pathway for Asset Management 2016/17 Region No Planned in 1 Yr Yes Total Central West Hunter Illawarra Metro North Metro South Metro West Mid North Coast New England North Coast Orana South East South West Total Percent of total 13% 0% 87% 100% 2017 Road Management Report 53

68 B5. Road Safety Plan in place 2016/17 Region No Yes Total Central West Hunter Illawarra Metro North Metro South Metro West Mid North Coast 5-5 New England North Coast Orana South East South West Total Percent of total 66% 34% 100% B6. Road Safety Auditor(s) 2016/17 Region No Yes Total Central West Hunter Illawarra Metro North Metro South Metro West Mid North Coast New England North Coast Orana South East South West Total Percent of total 52% 48% 100% 54 ROAD ASSET BENCHMARKING PROJECT

69 B7. Use of Long Term Financial Plan 2016/17 Region No Planned in 1 Yr In progress Yes Total Central West Hunter Illawarra Metro North Metro South Metro West Mid North Coast New England North Coast Orana South East South West Total Percent of total 0% 0% 8% 92% 100% B8. Planning period of Long Term Financial Plans 2016/17 Region 1 yr 3 yrs 5 yrs 10 yrs 10+ yrs Total Central West Hunter Illawarra Metro North Metro South Metro West Mid North Coast New England North Coast Orana South East South West Total Percent of total 2% 2% 1% 88% 8% 100% 2017 Road Management Report 55

70 B9. Infrastructure Effects in Long Term Financial Plans 2016/17 Region No In part Yes Total Central West Hunter Illawarra Metro North Metro South Metro West Mid North Coast New England North Coast Orana South East South West Total Percent of total 5% 35% 59% 100% 56 ROAD ASSET BENCHMARKING PROJECT

71 C Road and Bridge Inventory C1. Road Lengths 2016/17 Region Road Length in km Regional Roads Local Roads Sealed Unsealed Subtotal Sealed Unsealed Subtotal Total Central West 1, ,633 5,809 9,153 14,962 16,596 Hunter ,641 2,266 9,907 10,774 Illawarra , ,993 5,493 Metro North , ,438 3,725 Metro South ,958-3,958 4,264 Metro West , ,966 8,532 Mid North Coast ,064 3,465 7,529 8,261 New England 2, ,302 5,610 14,041 19,651 21,953 North Coast ,458 3,076 7,534 8,469 Orana 2,902 1,954 4,857 4,681 16,663 21,344 26,200 South East 1, ,432 4,640 5,584 10,223 11,655 South West 3, ,982 12,287 23,155 35,443 39,425 Total 15,192 3,206 18,398 68,469 78, , ,347 Percent of total 9% 2% 11% 41% 47% 89% 100% Note: Data for all 128 councils 2017 Road Management Report 57

72 C2. Bridge Inventory 2016/17 Region N of Bridges Regional Roads Local Roads Conc. Timber Subtotal Conc. Timber Subtotal Total Central West Hunter Illawarra Metro North Metro South Metro West Mid North Coast ,375 1,554 New England ,376 North Coast ,172 Orana South East ,048 South West ,254 Total 2, ,236 6,123 1,705 7,828 10,064 Percent of total 22% 1% 22% 61% 17% 78% 100% Note: Data for all 128 councils C3. Knowledge of Bridge Load Capacity 2016/17 N of Bridges Region Regional Roads Local Roads Conc. % Timber % Conc. % Timber % Total Central West 46 35% % 25 47% 41% Hunter 43 28% % 61 49% 25% Illawarra 24 35% % 12 34% 30% Metro North 6 32% % 1 33% 18% Metro South - -% % - - 1% Metro West 4 3% % 1 9% 2% Mid North Coast 55 34% 11 65% % % 35% New England 46 11% 2 67% 80 10% % 18% North Coast 54 34% 3 19% % % 40% Orana 31 11% 2 100% 24 6% 11 41% 9% South East 60 22% 9 45% % 74 41% 26% South West 81 24% 1 50% % 18 31% 20% Total % 28 42% % % 25% 58 ROAD ASSET BENCHMARKING PROJECT

73 D Life Cycle Cost Distribution D1. Regional Sealed Road Lifecycle Costs by IPWEA Region 2016/17 Region Length (km) Maintenance LCC ($/km/yr) Resurfacing LCC ($/km/yr) Pavement LCC ($/km/yr) Central West 1,523 $4,477 $4,173 $2,431 Hunter 858 $7,564 $2,812 $6,030 Illawarra 62 $10,520 $3,154 $714 Metro North 286 $4,419 $790 $5,917 Metro South 307 $14,611 $5,668 $5,424 Metro West 530 $8,235 $6,668 $14,534 Mid North Coast 723 $7,041 $3,871 $9,868 New England 2,115 $3,852 $2,773 $4,617 North Coast 890 $6,606 $3,510 $5,455 Orana 2,902 $3,428 $1,677 $2,911 South East 1,123 $4,472 $1,404 $2,414 South West 3,473 $3,126 $2,424 $3,270 Total 15,192 $4,820 $2,789 $4,249 D2. Regional Unsealed Road Lifecycle Costs by IPWEA Region 2016/17 Region Length (km) Maintenance LCC ($/km/yr) Resheet LCC $/km/yr Central West 110 $21,958 $6,012 Hunter 9 $9,742 $592 Illawarra 39 - $3,157 Metro North Metro South Metro West 35 $911 $1,667 Mid North Coast New England 187 $2,770 $5 North Coast 45 $2,778 $2,173 Orana 1,954 $2,640 $1,521 South East 309 $957 $160 South West 509 $3,250 $1,672 Total 3,206 $3,212 $1, Road Management Report 59

74 D3. Local Sealed Road Lifecycle Costs by IPWEA Region 2016/17 Region Length (km) Maintenance LCC ($/km/yr) Resurfacing LCC ($/km/yr) Pavement LCC ($/km/yr) Central West 5,809 $3,086 $1,920 $2,586 Hunter 7,641 $6,230 $2,603 $9,110 Illawara 4,326 $3,842 $2,785 $2,020 Metro North 3,378 $3,343 $1,623 $2,764 Metro South 3,958 $6,733 $4,147 $9,903 Metro West 7,617 $4,224 $3,203 $6,693 Mid North Coast 4,064 $4,436 $2,872 $7,188 New England 5,610 $2,467 $1,450 $1,986 North Coast 4,458 $3,647 $1,807 $3,930 Orana 4,681 $2,752 $1,491 $2,038 South East 4,640 $3,707 $1,061 $1,778 South West 12,287 $1,980 $1,525 $2,644 Total 68,469 $3,721 $2,160 $4,397 D4. Local Unsealed Road Lifecycle Costs by IPWEA Region 2016/17 Region Length (km) Maintenance LCC ($/km/yr) Resheet LCC $/km/yr Central West 9,153 $2,139 $3,039 Hunter 2,266 $4,440 $2,513 Illawara 666 $1,191 $6,988 Metro North 61 $6,154 $878 Metro South Metro West 349 $9,433 $2,186 Mid North Coast 3,465 $2,383 $4,444 New England 14,041 $2,074 $1,115 North Coast 3,076 $2,686 $2,711 Orana 16,663 $1,138 $3,089 South East 5,584 $2,455 $685 South West 23,155 $1,166 $4,965 Total 78,480 $1,776 $3, ROAD ASSET BENCHMARKING PROJECT

75 E Asset Values E1. Regional and Local Sealed Road Asset Values 2016/17 Region Length (km) GRC ($000) GRC/Km ($ 000/km) Deprn ($ 000) Deprn/km ($ 000/km) Central West 7,332 $2,413,087 $329 $28,633 $3.91 Hunter 8,499 $5,940,739 $699 $77,789 $9.15 Illawarra 4,788 $2,747,907 $574 $46,496 $9.71 Metro North 3,664 $3,035,743 $829 $42,047 $11.48 Metro South 4,264 $6,353,507 $1,490 $71,189 $16.69 Metro West 8,147 $6,138,724 $753 $102,569 $12.59 Mid North Coast 4,788 $3,049,265 $637 $41,724 $8.71 New England 7,725 $2,184,493 $283 $24,638 $3.19 North Coast 5,348 $2,917,362 $546 $37,748 $7.06 Orana 7,583 $2,491,964 $329 $27,128 $3.58 South East 5,763 $2,209,427 $383 $26,921 $4.67 South West 15,760 $3,890,044 $247 $56,746 $3.60 Total 83,661 $43,372,262 $518 $583,628 $6.98 E3. Regional & Local Unsealed Asset Values 2016/17 Region Length (km) GRC ($000) GRC/Km ($ 000/km) Deprn ($ 000) Deprn/km ($ 000/km) Central West 9,264 $731,190 $79 $8,927 $0.96 Hunter 2,275 $332,955 $146 $3,317 $1.46 Illawarra 705 $200,287 $284 $4,073 $5.78 Metro North 61 $21,181 $345 $169 $2.76 Metro South Metro West 384 $34,958 $91 $726 $1.89 Mid North Coast 3,473 $2,785,611 $802 $12,391 $3.57 New England 14,228 $1,136,599 $80 $10,922 $0.77 North Coast 3,121 $397,635 $127 $9,008 $2.89 Orana 18,617 $1,299,344 $70 $17,099 $0.92 South East 5,893 $626,705 $106 $6,294 $1.07 South West 23,664 $1,097,303 $46 $23,122 $0.98 Total 81,685 $8,663,768 $106 $96,048 $ Road Management Report 61

76 F Maintenance and Renewal Rates F1. Regional and Local Sealed Roads Maintenance and Renewal Rates 2016/17 Region Length (km) GRC ($000) Maintenance ($ 000) Maint / GRC Capital Renewal ($ 000) Renewal / GRC Central West 7,332 $2,413,087 $24, % $36, % Hunter 8,499 $5,940,739 $54, % $91, % Illawarra 4,788 $2,747,907 $21, % $33, % Metro North 3,664 $3,035,743 $12, % $28, % Metro South 4,264 $6,353,507 $31, % $37, % Metro West 8,147 $6,138,724 $36, % $78, % Mid North Coast 4,788 $3,049,265 $23, % $42, % New England 7,725 $2,184,493 $21, % $32, % North Coast 5,348 $2,917,362 $22, % $27, % Orana 7,583 $2,491,964 $22, % $20, % South East 5,763 $2,209,427 $22, % $18, % South West 15,760 $3,890,044 $35, % $54, % Total 83,661 $43,372,262 $328, % $503, % F2. Regional and Local Unsealed Roads Maintenance and Renewal Rates 2016/17 Region Length (km) GRC ($000) Maintenance ($ 000) Maint / GRC Capital Renewal ($ 000) Renewal / GRC Central West 9,264 $731,190 $22, % $5, % Hunter 2,275 $332,955 $10, % $1, % Illawarra 705 $200,287 $ % $6, % Metro North 61 $21,181 $ % $ % Metro South Metro West 384 $34,958 $3, % $ % Mid North Coast 3,473 $2,785,611 $8, % $8, % New England 14,228 $1,136,599 $29, % $5, % North Coast 3,121 $397,635 $8, % $2, % Orana 18,617 $1,299,344 $24, % $5, % South East 5,893 $626,705 $14, % $3, % South West 23,664 $1,097,303 $28, % $14, % Total 81,685 $8,663,768 $149, % $54, % 62 ROAD ASSET BENCHMARKING PROJECT

77 G Renewal Cost Distributions G1. Sealed Road Resurfacing Renewal Cost Distribution 2016/17 Renewal Cost (< $/km) Regional Sealed Surfaces N of Councils reporting this value Local Sealed Surfaces $10, $20, $30, $40, $50, $60, $70, $80, $90, >$100, Average $/km $72,009 $60, Regional Road Sealed Surface Average Renewal Cost/km Distribution 96 responses 2017 Local Road Sealed Surface Average Renewal Cost/km Distribution 104 responses 2017 Road Management Report 63

78 G2. Sealed Road Pavements Renewal Cost Distribution 2016/17 Renewal Cost (< $/km) Regional Sealed Pavements N of Councils reporting this value Local Sealed Pavements $100, $200, $300, $400, $500, $600, $700, $800,000-1 $900, $1,000, >$1,000, Average $/km $477,066 $353, Regional Sealed Pavement Average Renewal Cost/km Distribution 71 responses 2017 Local Sealed Pavement Average Renewal Cost/km Distribution 82 responses 64 ROAD ASSET BENCHMARKING PROJECT

79 G3. Unsealed Road Resheeting Renewal Cost Distribution 2016/17 Renewal Cost (< $/km) Regional Unsealed Roads N of Councils reporting this value Local Unsealed Roads $5,000-2 $10, $15, $20, $25, $30, $35,000-7 $40, $45, $50, >$50, Average $/km $47,471 $29, Regional Unsealed Roads Average Renewal Cost/km Distribution 14 responses 2017 Local Unsealed Roads Average Renewal Cost/km Distribution 66 responses 2017 Road Management Report 65

80 G4 Concrete Bridges Renewal Cost Distribution 2016/17 Renewal Cost (< $/m 2 ) Bridges on Regional Roads N of Councils reporting this value Bridges on Local Roads $1, $1, $2, $2, $3, $3, $4, $4, $5, $5, $6, >$6,500-8 Average $/m² $4,024 $4, Regional Concrete Bridges Average Renewal Cost/m 2 Distribution 64 responses 2017 Local Concrete Bridges Average Renewal Cost/m 2 Distribution 75 responses 66 ROAD ASSET BENCHMARKING PROJECT

81 G5. Timber Bridges Renewal Cost Distribution 2016/17 Renewal Cost (< $/m 2 ) Bridges on Regional Roads N of Councils reporting this value Bridges on Local Roads $1,000-1 $1,500-2 $2, $2, $3, $3, $4, $4, $5, $5, $6, >$6, Average $/m² $3,474 $3, Regional Timber Bridges Average Renewal Cost/m 2 Distribution 24 responses 2017 Local Timber Bridges Average Renewal Cost/m 2 Distribution 46 responses 2017 Road Management Report 67

82 H Useful Life Distributions H1. Sealed Road Resurfacing Useful Life Distribution 2016/17 Useful Life (yrs) Regional Roads Sealed Surfaces N of Councils reporting this value Local Roads Sealed Surfaces >35-3 Average UL Regional Road Sealed Surface Average Useful Life Distribution 112 responses 2017 Local Road Sealed Surface Average Useful Life Distribution 103 responses 68 ROAD ASSET BENCHMARKING PROJECT

83 H2. Sealed Road Pavement Useful Life Distribution 2016/17 Useful Life (yrs) Regional Roads Sealed Pavements N of Councils reporting this value Local Roads Sealed Pavements >100-1 Average UL Regional Sealed Pavement Average Useful Life Distribution 102 responses 2017 Local Sealed Pavement Average Useful Life Distribution 96 responses 2017 Road Management Report 69

84 H3. Unsealed Road Useful Life Distribution 2016/17 Useful Life (yrs) Regional Unsealed Roads N of Councils reporting this value Local Unsealed Roads > Average UL Regional Unsealed Roads Average Useful Life Distribution 27 responses 2017 Local Unsealed Roads Average Useful Life Distribution 68 responses 70 ROAD ASSET BENCHMARKING PROJECT

85 H4. Concrete Bridges Useful Life Distribution 2016/17 Useful Life (yrs) Bridges on Regional Roads N of Councils reporting this value Bridges on Local Roads > Average UL Regional Concrete Bridges Average Useful Life Distribution 73 responses 2017 Local Concrete Bridges Average Useful Life Distribution 84 responses 2017 Road Management Report 71

86 H5. Timber Bridges Useful Life Distribution 2016/17 Useful Life (yrs) Bridges on Regional Roads N of Councils reporting this value Bridges on Local Roads > Average UL Regional Timber Bridges Average Useful Life Distribution 35 responses 2017 Local Timber Bridges Average Useful Life Distribution 55 responses 72 ROAD ASSET BENCHMARKING PROJECT

87 H6. Estimated Bridge Component Useful Life Distribution 2016/17 Estimated Useful Life (yrs)* Bridge Component Timber Concrete Steel Composite Min Max Min Max Min Max Min Max Girders Corbels Deck Headstock Piles Abutment Kerb Handrail Wingwalls *Values are the average of inputs from responding councils. The number of responding councils to each question are tabled below. H7. N of Responding Councils providing Bridge Component Useful Life 2016/17 N of Responding Councils Bridge Component Min (N 0 ) Timber Concrete Steel Composite Max (N 0 ) Min (N 0 ) Max (N 0 ) Min (N 0 ) Max (N 0 ) Min (N 0 ) Max (N 0 ) Girders Corbels Deck Headstock Piles Abutment Kerb Handrail Wingwalls Road Management Report 73

88

89

90