Asset Management Plan - Lachlan Shire...- iv - Lachlan Shire Asset management Plan - Utilities over the 10 year planning period is $59,948,000 or $5,995,000 per year. ouncil [s estimated

Lachlan Shire Council Asset management Plan – Utilities

Lachlan Shire Council

UTILITIES – WATER SUPPLY, SEWERAGE

SERVICE AND URBAN STORMWATER

DRAINAGE ASSETS

Asset Management Plan

Version 2

February 2012

AM4SRRC

Lachlan Shire Asset management Plan - Utilities

Document Control Asset Management for Small, Rural or Remote Communities

Document ID: 59_280_110218 am4srrc amp word template v10.3

Rev No Date Revision Details Author Reviewer Approver

1 February 2012 First Issue Manager

Utilities

Director

Technical

Services

2 June 2012 Adopted version Manager

Utilities

Director

Technical

Services

Asset Management for Small, Rural or Remote Communities Practice Note

The Institute of Public Works Engineering Australia.

www.ipwea.org.au/AM4SRRC

© Copyright 2011 – All rights reserved.

http://www.ipwea.org.au/AM4SRRC

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Lachlan Shire Council Asset management Plan – Utilities

TABLE OF CONTENTS

1. EXECUTIVE SUMMARY ............................................................................................................................ iii 2. INTRODUCTION........................................................................................................................................ 1

2.1 Background ..................................................................................................................................... 1 2.2 Goals and Objectives of Asset Management ..................................................................................... 2 2.3 Plan Framework ............................................................................................................................... 4 2.4 Core and Advanced Asset Management ........................................................................................... 4 2.5 Community Consultation ................................................................................................................. 4

3. LEVELS OF SERVICE................................................................................................................................... 5 3.1 Customer Research and Expectations ............................................................................................... 6 3.2 Legislative Requirements ................................................................................................................. 6 3.3 Current Levels of Service .................................................................................................................. 7 3.4 Desired Levels of Service ................................................................................................................ 16

4. FUTURE DEMAND .................................................................................................................................. 17 4.1 Demand Forecast ........................................................................................................................... 17 4.2 Changes in Technology .................................................................................................................. 18 4.3 Demand Management Plan............................................................................................................ 19 4.4 New Assets from Growth ............................................................................................................... 19

5. LIFECYCLE MANAGEMENT PLAN ............................................................................................................. 21 5.1 Background Data ........................................................................................................................... 21 5.2 Risk Management Plan .................................................................................................................. 24 5.3 Routine Maintenance Plan ............................................................................................................. 24 5.4 Renewal/Replacement Plan ........................................................................................................... 26 5.5 Creation/Acquisition/Upgrade Plan ................................................................................................ 28 5.6 Disposal Plan ................................................................................................................................. 30

6. FINANCIAL SUMMARY ............................................................................................................................ 31 6.1 Financial Statements and Projections ............................................................................................. 31 6.2 Funding Strategy ............................................................................................................................ 35 6.3 Valuation Forecasts ....................................................................................................................... 35 6.4 Key Assumptions made in Financial Forecasts ................................................................................ 37

7. ASSET MANAGEMENT PRACTICES........................................................................................................... 40 7.1 Accounting/Financial Systems ........................................................................................................ 40 7.2 Asset Management Systems .......................................................................................................... 41 7.3 Information Flow Requirements and Processes .............................................................................. 42 7.4 Standards and Guidelines............................................................................................................... 42

8. PLAN IMPROVEMENT AND MONITORING ............................................................................................... 43 8.1 Performance Measures .................................................................................................................. 43 8.2 Improvement Plan ......................................................................................................................... 43 8.3 Monitoring and Review Procedures ............................................................................................... 44

REFERENCES ................................................................................................................................................... 45 APPENDICES ................................................................................................................................................... 46

Appendix A Maintenance Response Levels of Service ................................................................................ 47 Appendix B Projected 10 year Capital Renewal Works Program ................................................................. 48 Appendix C Planned Upgrade/Exp/New 10 year Capital Works Program ................................................... 60 Appendix D Abbreviations ........................................................................................................................ 64 Appendix E Glossary ................................................................................................................................. 65

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1. EXECUTIVE SUMMARY

Context

Lachlan Shire is a large, mainly grazing and cropping agricultural area serviced by several towns and villages. It has the longest road network of any council in NSW. The Shire population has declined through drought, land aggregation, mechanisation and younger generation drifting away for education and employment. The return of rain for agriculture and growth in light manufacturing and mining may slow the decline in population.

Major issues facing the area include isolation, ageing population, floods and drought cycles.

Lachlan Shire Council is the Local Water Authority for the reticulated water supplies and sewerage systems in the towns and villages of Lachlan Shire. Council is also the bulk water supplier to Murrin Bridge Village located in the Local Government Area of Cobar Shire and provides stock and domestic water to consumers in the Kikoira and Gibsonvale localities in the Local Government Area of Bland Shire.

Council provides a water supply network to enable the provision of a potable water supply in accordance with the Australian Drinking Water Guidelines (ADWG) to the communities of Condobolin, Lake Cargelligo, Tottenham, Tullibigeal, Kikoira, Gibsonvale, Albert, Murrin Bridge and to rural consumers connected to the potable trunk water mains. Council also provides a raw water (non-potable) water supply network to the villages of Burcher and Fifield, and to non residential consumers in the Lake Cargelligo industrial precinct.

Council provides a sewerage reticulation network to enable the provision of a sewage collection and treatment process for the communities of Condobolin, Lake Cargelligo and Tottenham.

Water and sewerage services provided by Lachlan Shire Council are essential for the public health of resident’s, maintaining the amenity of the towns and villages serviced, economic development and protection of the environment. A high quality of service complying with all health, regulatory and statutory requirements needs to be maintained. Water and sewerage industries are rapidly developing in the areas of technology, process control and monitoring and analysis. Change is occurring more rapidly, particularly in regard to standards and regulatory control requiring a highly skilled and motivated workforce.

Council provides an urban stormwater drainage network to enable the provision of stormwater

collection and disposal in the townships of Condobolin and Lake Cargelligo.

The assets covered as part of this plan includes:

Water supply network

River and Dam Intakes

Surface Water Pumping Stations

Groundwater Bores and pumping stations

Water Treatment Plants

Reservoirs and Balance Tanks

Chlorination facilities

Rising Mains

Reticulation Mains and associated infrastructure including water meters, fire hydrants, control valves, etc

Trunk Mains and associated infrastructure including scour assemblies, air valves, control valves, etc

Sewerage reticulation network

Sewage Pumping Stations

Sewage Treatment Plants

Rising Mains

Gravity Reticulation Mains and associated infrastructure including access chambers, vent pipes, service junctions, etc

Low Pressure Sewerage Mains Urban stormwater drainage network

Pipes and box culverts

Kerb Inlets

Pits

Headwalls

River outfalls The assets servicing this network are aging and maintenance costs are rising; this could lead to the levels of service to decline if maintenance funding is not increased. Present funding does not allow new construction works to be undertaken without affecting maintenance and renewal. The need for augmentation of existing assets over the next 20 year period is considered unlikely as population decline and aging is forecast to continue in both the short and medium term in Lachlan Shire.

The utilities infrastructure assets have a replacement value of $139,264,000. The breakdown is as follows;

Water = $98,545,000.

Sewer = $35,543,000.

Urban Stormwater = $5,176,000.

What does it Cost?

The projected cost to provide the services covered by this Asset Management Plan includes operations, maintenance, renewal and upgrade of existing assets

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over the 10 year planning period is $59,948,000 or $5,995,000 per year.

Council’s estimated available funding for this period is $43,623,000 or $4,363,000 per year. This is a funding shortfall of $1,632,000 per year which is a funding shortfall of 27% of the cost to provide the service. Council’s estimated available funding for the 10 year planning period provides for a sustainability index of 0.73.

Projected and budgeted expenditure are shown in the graph below.

This modelling uses data subject to a number of asset management assumptions and requiring further field verification through improved condition and service monitoring. It requires caution but is a useful indicator of the scope of the problem until more accurate modelling is possible.

It is also imperative to consider the effect of the longer life of utilities assets than considered in a 10 year asset management plan. Many assets have a serviceable life exceeding 50 years (over 100 years in some cases) which may provide for lower projected capital renewal costs over the short to medium term than is actual over the longer term. It is advisable that Council consider such longer term capital renewal costs when allocating funds.

When considering the allocation of funds for new infrastructure, it is also important that Council consider the life cycle cost of an asset before the project is approved. Many assets have high operation and maintenance costs which can provide a significant financial drain and lower Council’s level of sustainability. The construction cost alone does not provide any indicator of the potential life cycle cost.

A major component of the shortfall in funding relates to the operation, maintenance, renewal and upgrade of the urban stormwater infrastructure. Urban

stormwater upgrade in recent times is being partly funded through the Stormwater Levy. The modelling indicates that Councils’ present funding levels are insufficient to continue to provide existing services at current levels in the medium term.

Council through its various advocates needs to continue lobbying of the NSW State Government for the reestablishment of adequate funding for programs such as the Country Towns Water Supply and Sewerage (CTWSS) Program and actively pursue all other funding opportunities that are available for essential infrastructure.

Backlog works identified in 1996 under the CTWSS program, with the exception of Lake Cargelligo Water Treatment Plant, have remained unfunded. The CTWSS program would have provided Lachlan Shire Council up to 42.5% of the capital cost for the infrastructure identified under this program.

What we will do

Council plans to provide water, sewerage and urban stormwater drainage services for the following:

Operation, maintenance, renewal and upgrade of water, sewerage and urban stormwater drainage services to meet service levels set by council in annual budgets.

Continue to upgrade Condobolin sewerage reticulation network and STP to comply with EPA Licensing where applicable.

Fully comply with the Australian Drinking Water Guidelines where applicable.

Continue to review and investigate best practice in utilities management.

Major renewals/upgrades within the 10 year planning period include;

o Construction of the Merri Abba Bore Water Supply for Lake Cargelligo

o Replacement of the Condobolin Water Treatment Plant

o Replacement of the Condobolin Sewage Treatment Plant Trickling Filter system

o Renewal of underperforming sections of trunk mains

o Renewal of underperforming sections of reticulation mains

o Renewal of Lake Cargelligo reservoir o Investigation of groundwater sources

Condobolin town water supply

What we cannot do Council does not have enough funding to provide all services at the desired service levels or provide new

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services. Works and services that cannot be provided under present funding levels are:

New extensions to the reticulated water and sewerage networks that are not funded through either a developer contribution such as Section 64 charges or directly funded through Council’s development reserve.

New extensions to the urban stormwater water networks that are not funded through either a developer contribution such as Section 94 charges or directly funded through Council’s development reserve.

Construct backlog works.

Managing the Risks

There are risks associated with providing the service and not being able to complete all identified activities and projects. We have identified major risks as:

Failing to meet insurance and ‘duty of care’ requirements as set out in legislation (Local Government Act 1993, Public Health Act 2011, POEO Act 1997, etc.)

Being unable to meet the level of service approved by Council.

Increased requirement for inspecting hazards.

Renewing assets too late, resulting in increased operation and maintenance expenses.

We will endeavour to manage these risks within available funding by:

Applying risk management principles. Risk based Management Plans using the criteria set out under the Australian Drinking Water Guidelines are required under the NSW Public Health Act 2011 for each water supply scheme.

Adapt and apply appropriate new technologies and “best practice”, where appropriate.

Consider the life costs of construction and maintenance against the need to maintain existing assets and extend their useful life.

Having the physical resources to undertake works including skilled labour, a modern and appropriate plant fleet, resource sharing with other Councils and agencies, and outsourcing of peak load work specialist expertise, services and plant as needed.

The Next Steps

The actions resulting from this asset management plan are:

Engage the community on service delivery and funding issues raised in this AMP

Ongoing improvement of asset management systems and processes

Integration with Council’s long term Financial Management Plan

Integration with Council’s Annual Management Plan

Development of Infrastructure Risk Management Plan

Review service levels based on community consultation and determine financial implications

Periodic review of the plan

Questions you may have

What is this plan about?

This asset management plan covers the infrastructure assets that serve the Lachlan Shire Community’s water, sewerage and urban stormwater drainage services needs. These assets include treatment plants, pumping stations, reservoirs, reticulation mains, rising mains, gravity mains, access chambers, valves and fittings, etc. throughout the Council area that enable people to receive water, dispose of waste water and dispose of stormwater. It fills in details behind the strategic outcome “Water, sewer and energy utilities meet best practice standards with up to date technology” in the Lachlan Shire Draft Community Strategic Plan, ‘Living Lachlan Style 2022’.

What is an Asset Management Plan?

Asset management planning is a comprehensive process to ensure delivery of services from infrastructure is provided in a financially sustainable manner.

An asset management plan details information about infrastructure assets including actions required to provide an agreed level of service in the most cost effective manner. The Plan defines the services to be provided, how the services are provided and what funds are required to provide the services.

Why is there a funding shortfall?

Most of the Council’s water, sewerage and urban stormwater drainage network was constructed from government grants often provided and accepted without consideration of ongoing operations, maintenance and replacement needs. The period proceeding World War 2 (1946-1955) saw significant Federal and State Government investment in the construction of public utility infrastructure through schemes such as those administered by the Federal Department of Post-War Reconstruction. Subsequent investment by the State Government in the years around 1965 and 1978 also saw a significant investment in public utility infrastructure in Lachlan Shire.

Council have always adopted a ‘whole of government’ funding approach to infrastructure services. Lachlan Shire Council has typically aligned fees and charges to

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achieve full cost recovery for operation and maintenance, and partial cost recovery for asset renewal and upgrade. The State Government has required Council to implement ‘user pays’ economic policy under Best Practice Guidelines since 2003 for utilities infrastructure and have withdrawn subsidy and grant funding for the construction of infrastructure. Many smaller utilities such as Lachlan Shire with a limited consumer base and aged infrastructure are finding it difficult to achieve full cost recovery. The impact of a ten year drought has compounded this issue, resulting in deferral of major maintenance, renewal and upgrade works for a period of 10 years.

Many of these assets are approaching the later years of their life and require replacement, services from the assets are decreasing and maintenance costs are increasing.

Councils’ present funding levels are insufficient to continue to provide existing services at current levels in the medium term.

What options do we have?

Resolving the funding shortfall involves several steps: 1. Improving asset knowledge so that data

accurately records the asset inventory, how assets are performing and when assets are not able to provide the required service levels,

2. Improving our efficiency in operating, maintaining, replacing existing and constructing new assets to optimise life cycle costs,

3. Identifying and managing risks associated with providing services from infrastructure,

4. Making tradeoffs between service levels and costs to ensure that the community receives the best return from infrastructure,

5. Indentifying assets surplus to needs for disposal to make saving in future operations and maintenance costs

6. Consulting with the community to ensure that water, sewerage and urban stormwater drainage services and costs meet community needs and are affordable,

7. Developing partnership with other bodies, where available to provide services;

8. Seeking additional funding from governments and other bodies to better reflect a ‘whole of government’ funding approach to infrastructure services.

9. Continue development, implementation and review of ‘Best Practice’ management for water, sewerage and urban stormwater drainage services.

What happens if we don’t manage the shortfall?

It is likely that council will have to reduce service levels in some areas, unless new sources of revenue are found. For water, sewerage and urban stormwater drainage services, the service level reduction may include;

1. Poorer quality of water 2. Less availability of water 3. More frequent mains breaks and interruption

of supply 4. More frequent stormwater flooding 5. More frequent breakdown and increased

inspection, operation and maintenance costs 6. Higher likelihood for sewage overflows and

harm to the environment 7. Reduced amenity to the towns and villages in

Lachlan Shire 8. Higher complaints and community

dissatisfaction (civil unrest) 9. Increased staff turnover, loss of skilled

workers 10. Non compliance with regulatory

requirements 11. Increased public health issues 12. Ultimate failure of the services

Burst water main in a residential street.

Sewer main and access chamber blocked by tree roots.

Collapsed urban stormwater culvert with resulting damage to nature strip, roadway and kerbing.

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What can we do?

Council can develop options and priorities for future water, sewerage and urban stormwater drainage services with costs of providing the services, consult with the community to plan future services to match the community services needs with ability to pay for services and maximise benefit to the community for costs to the community.

What can you do?

Council will be pleased to consider your thoughts on the issues raised in this asset management plan and suggestions on how Council may change or reduce its water, sewerage and urban stormwater drainage services mix to ensure that the appropriate level of service can be provided to the community within available funding.

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2. INTRODUCTION

2.1 Background

This asset management plan aims to demonstrate responsive management of assets (and services provided from assets), compliance with regulatory requirements, and to communicate funding needed to provide the required levels of service.

The asset management plan is to be read with Council’s Asset Management Policy, Asset Management Strategy and the following associated planning documents:

LSC Community Strategic Plan “Living Lachlan Style” (draft being prepared)

Lachlan Shire Council Management Plan

Water, Sewerage and Urban Stormwater Drainage ‘Core’ Infrastructure Risk Management Plan (draft being prepared)

Lachlan Shire Water, Sewerage and Urban Stormwater Assets Strategic Business Plan

Lachlan Shire Integrated Water Cycle Management Plan

Lachlan Shire Pricing and Developer Charges Plan (draft being prepared)

Lachlan Shire Water Supply Risk Based Management Plans to ADWG

This infrastructure assets covered by this asset management plan are shown in Table 2.1.

Table 2.1: Assets covered by this Plan

Asset Class Asset category Dimension Replacement Value

Water Surface Water Pumping Stations and associated river and dam intakes

13 of with combined capacity of

28.4ML per day

$ 3,918,000.00

Groundwater Bores and Pumping Stations

4 of with combined capacity of

17ML per day

$ 1,083,000.00

Water Treatment Plants and Chlorination Facilities

3 of with a combined capacity of 13.55ML per day

$19,276,000

Reservoirs and Balance Tanks

16 reservoirs with a combined capacity of 18.6ML and 4 ground tanks with a combined capacity of 126.8ML

$18,648,000

Rising Mains and Trunk Mains

174,757 metres $38,393,000

Reticulation Mains 100,228 metres $15,781,000

Water Meters 3172 metered connections $306,000

Telemetry SCADA PC’s, Laptops, RTU’s, Repeaters, Software, metering, process control instrumentation

$1,140,000

Sewer Sewage Pumping Stations 18 of with a combined capacity of 15.42ML per day

$4,436,000

Sewage Treatment Plants 3 off with a combined capacity of 7,000EP

$8,440,000

Rising Mains 17,473 metres $3,796,000

Gravity reticulation mains 64,469 metres

$18,467,000

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Asset Class Asset category Dimension Replacement Value

Low pressure sewerage mains

815 metres $76,000

Telemetry SCADA RTU’s, metering, process control instrumentation

$328,000

Urban Stormwater Urban pipes, box culverts, kerb inlets, pits, headwalls and river outflows

227 segments $5,176,000

TOTAL $139,264,000

2.2 Goals and Objectives of Asset Management

The Council exists to provide services to its community. Some of these services are provided by infrastructure assets. Council has acquired infrastructure assets by ‘purchase’, by contract, construction by council staff and by donation of assets constructed by developers and others to meet increased levels of service.

Council’s goal in managing infrastructure assets is to meet the required level of service in the most cost effective manner for present and future consumers. The key elements of infrastructure asset management are:

Taking a life cycle approach,

Developing cost-effective management strategies for the long term,

Providing a defined level of service and monitoring performance,

Understanding and meeting the demands of growth through demand management and infrastructure investment,

Managing risks associated with asset failures,

Sustainable use of physical resources, Continuous improvement in asset management practices.1

The goal of this asset management plan is to:

Document the services/service levels to be provided and the costs of providing the service,

Communicate the consequences for service levels and risk, where desired funding is not available, and

Provide information to assist decision makers in trading off service levels, costs and risks to provide services in a financially sustainable manner.

This asset management plan is prepared under the direction of Council’s vision, mission, goals and objectives.

The Lachlan Shire Draft Community Strategic Plan, ‘Living Lachlan Style 2022’ identifies “Our Preferred Future” with the following visions:

Progressive, vibrant and prosperous communities

Families come to stay and enjoy a relaxed, healthy way of life and strong community spirit

Our natural environment of lakes, meandering waterways and red soil plains is rich in cultural

heritage, abundant wildlife and unparalleled beauty

Everything is possible, for all.

The management of Council’s water, sewerage and urban stormwater drainage assets must support these visions, in

particular within Progressive, vibrant and prosperous communities, it includes:

The many towns, villages and settlement throughout Lachlan are alive and thriving with economic

and community activities.

Livelihoods are made through the produce and associated products of the land, the learning and

experiences of the natural environment, and the ancient and recent cultural heritage found here.

1 IPWEA, 2006, IIMM Sec 1.1.3, p 1.3.

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‘Living Lachlan Style 2022’ identifies 6 future directions to achieve the vision for 2022. One is to “Build and maintain

community infrastructure and systems” and identifies the strategic outcome “Water, sewer and energy utilities meet

best practice standards with up to date technology”.

Council’s mission is:

To engage the community and provide progressive services with the view to implementing a long term strategic plan

leading to the social and economic benefit of the community

Relevant goals and objectives and how these are addressed in this asset management plan are shown in Table 2.2.

Table 2.2: Organisation Goals and how these are addressed in this Plan

Goal Objective How Goal and Objectives are addressed in AMP

3.1 To raise awareness of the need for risk management within Council and the Shire

3.1.1 To complete the development and implementation of an Enterprise Risk Management Plan.

Through inclusion of risk management principles in the AMP for Water, Sewerage and Urban Stormwater Drainage

3.1.2 To improve public safety and reduce risks to residents

“Regular inspection program in place for all public assets”.

Work with NSW Office of Water to ensure appropriate adoption of technology and processes

Continue to liaise with NSW Office of Water through the Urban Water Branch to develop strategies for future renewal and upgrades for inclusion in the asset management plan.

3.3 To ensure assets are maintained at a level that sustains a safe and healthy environment

3.3.1 Develop and Implement an Asset Management Plan that details expected asset replacement and maintenance needs

“Continue to update fair value of water, sewerage and urban stormwater drainage assets”. Continue to develop and maintain regular inspection of asset condition and defects and develop maintenance and capital works programs for inclusion in the AMP.

3.5: To ensure urban communities have access to high quality and reliable water supplies and sewerage services

3.5.1 Implement water supply business plans and report to Council on progress

Continue to update and review Strategic Business Plan and include in Council’s Annual Management Plan and Budget.

3.5.2 Work with relevant

State Government agencies

and progress the

augmentation and upgrade of

the Lake Cargelligo Water

supply system.


3.5.3 Implement Sewerage

services business plans and

report to Council on progress

Continue to update and review Strategic Business Plan and include in Council’s Annual Management Plan and Budget.

3.5.4 Investigate waste water

reuse schemes at Condobolin

and Lake Cargelligo.


3.5.5 Ensure the availability of

a skilled workforce through

appropriate training and

succession planning.

Implement appropriate training programs in partnership with CENTROC Water Utilities Alliance Council’s and Registered Training Providers.

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Goal Objective How Goal and Objectives are addressed in AMP

3.5.6 Investigation to improve

water supply by developing

alternate water sources.


3.5.7 Provision of reticulated

sewerage service to residents

within town boundaries of

Lachlan Shire Council


2.3 Plan Framework

Key elements of the plan are;

Levels of service – specifies the services and levels of service to be provided by council.

Future demand – how this will impact on future service delivery and how this is to be met.

Life cycle management – how the organisation will manage its existing and future assets to provide the required services

Financial summary – what funds are required to provide the required services.

Asset management practices

Monitoring – how the plan will be monitored to ensure it is meeting the organisation’s objectives. Asset management improvement plan

2.4 Core and Advanced Asset Management

This asset management plan is prepared as a first cut ‘core’ asset management plan in accordance with the International Infrastructure Management Manual2. It is prepared to meet minimum legislative and organisational requirements for sustainable service delivery and long term financial planning and reporting. Core asset management is a ‘top down’ approach where analysis is applied at the ‘system’ or ‘network’ level.

Future versions of this asset management plan will move towards advanced asset management using a bottom up approach for gathering asset information for individual assets to support the optimisation of activities and programs to meet agreed service levels.

2.5 Community Consultation

This ‘core’ asset management plan is prepared to facilitate community consultation initially through feedback on public display of draft asset management plans prior to adoption by Council. Future revisions of the asset management plan will incorporate community consultation on service levels and costs of providing the service. This will assist Council and the community in matching the level of service needed by the community, service risks and consequences with the community’s ability to pay for the service.

A more general community consultation including a survey and a series of focus meetings was undertaken in early 2011 to start the process of developing a Community Strategic Plan for Lachlan Shire. Under the theme of LIVING LACHLAN STYLE 2022, people were asked:

1. What do you want life in Lachlan Shire to be like in ten years time?

2. How do you believe that can be achieved?

3. What role do you expect the Council to play in that process?

The feedback from that consultation was collated into a “Community Discussion Paper” and relevant parts are incorporated into this Plan.

2 IPWEA, 2006.

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Further community consultation in late 2011 produced a Lachlan Shire Draft Community Strategic Plan, ‘Living Lachlan Style 2022’. It identifies “Our Preferred Future” with vision statements, values and future directions in broad terms. Section 2.2 discusses this further.

Section 3.2 discusses more specific elements of community desires from earlier consultation in terms of Community Levels of Service.

Other key stakeholders include;

Federal & State Government + Agencies Funding assistance and legislative/standards development

Elected Members Community representation and administration

Utilities/Developers Providers of services and infrastructure facilities

Technical Services Department Preparation of the plan

Operators and support staff Implementation of the plan

Insurers Underwrite risk management strategies associated with AM practice

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3. LEVELS OF SERVICE

3.1 Customer Research and Expectations

Council has not carried out any research on customer expectations. This will be investigated for future updates of the asset management plan.

3.2 Legislative Requirements

Council has to meet many legislative requirements including Australian and State legislation and State regulations. Relevant legislation is shown in Table 3.2.

Table 3.2: Legislative Requirements

Legislation Requirement

Local Government Act 1993 Sets out role, purpose, responsibilities and powers of local governments including the preparation of a long term financial plan supported by asset management plans for sustainable service delivery.

DLG Integrated Planning & Reporting Framework

Integration of various council planning activities into one strategic framework.

Water Management Act 2000 The objective of this Act is the sustainable and integrated management of the State’s water for the benefit of both present and future generations.

Water Management Act Amendment Bill 2004

The object of this Bill is to amend the Water Management Act 2000 to facilitate the commencement of the Act and publish Water Sharing Plans and to deal with aspects of the National water Initiative.

Protection of Environment Operations Act 1997

Sets out to protect, restore and enhance the quality of the environment in NSW, having regard to the need to maintain ecologically sustainable development, pollution prevention, the elimination of harmful wastes, the reduction in the use of materials and the re-use, recovery or recycling of materials.

Protection of Environment (Administration) Act 1991

The objects of this Act is to constitute the Environment Protection Authority (now the Office of Environment and Heritage), to provide integrated administration for environment protection and to require the Authority to perform particular tasks in relation to the quality of the environment, environmental audit and reports on the state of the environment.

National Environmental Protection Measures (Implementation) Act 1998

The objects of this Act are to make provision for the implementation of national environmental protection measures to protect, restore and enhance the quality of the environment and to ensure that the community has access to relevant and meaningful information about pollution in Australia. It is based on an Intergovernmental Agreement on the Environment 1992 (‘the IGAE’), in which the Commonwealth, State and Territory Governments agreed to work together to develop uniform national environment protection standards for the control of air, water, land and noise pollution.

Waste Avoidance and Resource Recovery Act 2001

The objects of this Act are to encourage the most efficient use of resources, to provide for the continual reduction in waste generation, to minimise the consumption of natural resources, to ensure efficient funding of waste and resource management planning and to assist with the achievement of the objectives of the Protection of Environment Operations Act

Public Health Act 2011 The objectives of this Act are to protect the public health of the community. This legislation requires compliance with the Australian Drinking Water Guidelines.

Public Works Act 1912 Sets out to provide the legal framework for an effective and transparent operation of Public Works in NSW.

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Legislation Requirement

Civil Liability Act 2002 Sets out to make provision in relation to the recovery of damages for death or personal injury caused by the fault or negligent of a person or organisations

Plumbing and Drainage Act 2011 An Act to regulate certain plumbing and drainage work and to establish a single regulator for that work, and for related purposes.

Work Health and Safety (WHS) Act 2011

Sets out roles and responsibilities for the health, safety and welfare of personal at works.

Workers Compensation Act 1987 Sets out to provide for the compensation and rehabilitation of workers in respect of work related injuries.

National Parks and Wildlife Act 1974

Consolidates and amends the law relating to the establishment, preservation and management of national parks, historic sites and certain other areas and the protection of certain fauna, native plants and Aboriginal objects.

Threatened Species Conservation Act 1995

Protection of threatened and endangered native species of flora and fauna.

Fisheries Management Act 1994 Provision for the fishery resources.

Native Vegetation Act 2003 The objects of this Act are to provide for the conservation and management of native vegetation, including protection, encouragement and promotion, improving the existing condition, encouraging revegetation and rehabilitation, preventing inappropriate clearing, and promoting the significance of native vegetation, all in accordance with the principles of ecologically sustainable development.

Environmental Planning and Assessment Act 1979

Sets out to encourage the proper management, development and conservation of natural and artificial resources for the purpose of promoting the social and economic welfare of the community and a better environment and the protection of the environment, including the protection and conservation of native animals and plants, including threatened species, populations and ecological communities, and their habitats.

Roads Act 1993 Sets out role, purpose, responsibilities and powers of road authorities including duty of care.

Other relevant Acts and Legislation

As required.

3.3 Current Levels of Service

Council has defined service levels in two terms.

Community Levels of Service relate to the service outcomes that the community wants in terms of safety, quality, quantity, reliability, responsiveness, cost effectiveness and legislative compliance.

Community levels of service measures used in the asset management plan are:

Quality How good is the service? Function Does it meet users’ needs? (Quantity – The volume of water available for consumption)

(Availability - Minimum system pressures) Safety Is the service safe? (Does the water meet the ADWG and NH&MRC water quality criteria)

Technical Levels of Service - Supporting the community service levels are operational or technical measures of performance. These technical measures relate to the allocation of resources to service activities that the council undertakes to best achieve the desired community outcomes.

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Technical service measures are linked to annual budgets covering:

Operations – the regular activities to provide services such as opening hours, cleansing frequency, mowing frequency, etc.

Maintenance – the activities necessary to retain an assets as near as practicable to its original condition (eg road patching, unsealed road grading, building and structure repairs),

Renewal – the activities that return the service capability of an asset up to that which it had originally (eg frequency and cost of road resurfacing and pavement reconstruction, pipeline replacement and building component replacement),

Upgrade – the activities to provide an higher level of service (eg widening a road, sealing an unsealed road, replacing a pipeline with a larger size) or a new service that did not exist previously (eg a new library).

The Technical Service Levels have not been formally articulated, especially over the past 10 year drought period where all available resources had been diverted to drought emergency works and essential maintenance works only creating a more reactive environment, and which masked the impact of budget on what could be achieved with programmed maintenance.

Supporting the community service levels are operational or technical measures of performance utilised by Council to ensure that the minimum community levels of service are met. These measures of performance include;

Quarterly Budget Review Reports to Council.

Annual Performance Monitoring Report to the NSW Office of Water (a state-wide Performance Monitoring Report and a state-wide Benchmarking Report are produced from the data collected).

Load Based Licensing Annual Return on the operation of the Condobolin WTP and Condobolin STP to the Office of Environment and Heritage (EPA).

Monthly Reports on fluoride use in the reticulated Condobolin town water supply to NSW Health.

Provision of water samples to the DAL for analysis under the Australian Drinking Water Monitoring Program administered through NSW Health.

Capital Works Program Reports to the Technical Services Committee outlining budget expenditures and progress of utilities capital works.

Council’s current utilities internal service levels are detailed in Table 3.3a, Table 3.3b and Table 3.3c.

Table 3.3a: Current Service Levels Water Supply

Key Performance

Measure

Level of Service Objective

Performance Measure Process

Desired Level of Service

Current Level of Service

COMMUNITY LEVELS OF SERVICE

Quality Provide efficient and safe water supply

Customer requests

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Key Performance

Measure





Function Ensure water supply system meets community expectations

No. of planned interruptions

< 10 per 1000 customers per year

Not currently measured

Notice given to customers prior to planned interruption

>72 hours Not currently measured

Duration of planned interruptions

Maximum of 6 hours. Average of 2 hours


No. of unplanned interruptions

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Key Performance

Measure





Turbidity (NTU)

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Key Performance

Measure





Ensure appropriate fire fighting capacity

Compliance with AS/NZS 3500 and Building Code of Australia and NSW Fire and Rescue requirements for potable reticulated supplies.

Minimum hydrant flow of 10 litres per second for residential and 20 litres per second for commercial & industrial. Minimum residual pressure 150 kPa at desired flow.


Provide adequate water pressure

Minimum pressure for potable reticulated supplies when conveying 0.15 litres/second/tenement

20 metres of head pressure (200 kPa)


Minimum pressure for non potable reticulated supplies when conveying 0.15 litres/second/tenement



Minimum pressure for rural trunk transfer mains



Maximum static pressure for potable reticulated supplies



Maximum static pressure for non potable reticulated supplies



Maximum pressure for rural trunk transfer mains

120 metres of head pressure (1,200 kPa)


Budget $ 1,700,000 per annum

Maintenance Water supply assets maintained in good working condition

Customer service requests No. of unplanned repairs Instances of repairs requiring rework

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Key Performance

Measure





Renewal Water supply assets are replaced at optimum time to maximise asset usage and minimise asset maintenance requirements


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Key Performance

Measure





Action taken within agreed timeframes

Initial action 100% within 24 hours. Long term action within 16 weeks


Response to oral enquiries

100% within 72 hours


Response to written enquiries

100% within 72 hours


Function Ensure sewerage system meets community expectations

No. of system failures

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Key Performance

Measure





Wet weather bypasses of Treatment Plants or overflows from reticulation and pumping stations

Volume discharged to the environment without treatment

0 kL EPA Pollution Licence Overflow Protocol

Budget $ 910,000 per annum

Maintenance Sewerage service assets maintained in good working condition


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Key Performance

Measure





Sewerage service assets are constructed in response to changes in legislation and regulatory compliance

TBA TBA Not currently measured

Budget $ as required by legislative and compliance requirements

Table 3.3c: Current Service Levels Urban Stormwater Drainage

Key Performance

Measure





COMMUNITY LEVELS OF SERVICE

Quality Provide efficient method of collection and disposal of stormwater

Customer requests

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Key Performance

Measure





Open channel drainage maintained in good working condition

Customer service requests Instances of repairs requiring rework

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4. FUTURE DEMAND

4.1 Demand Forecast

Factors affecting demand include population change, changes in demographics, seasonal factors, vehicle ownership, consumer preferences and expectations, economic factors, agricultural practices, environmental awareness, etc.

There are several key demand drivers that may influence demands on Lachlan Shires water supply, sewerage services and urban stormwater drainage systems. These include;

Commonwealth and State Government water reform compliance requirements,

Demographic factors such as population growth, household size, occupancy rate and dwelling mix,

Water services pricing, and

The uptake of water efficient appliances. Council is presenting in the process of developing its “Integrated Water Cycle Management Plan” (IWCM) Evaluation Study. The IWCM is one of the six criteria which local water utilities in NSW have to comply with to demonstrate that their water and sewerage business is effective and sustainable and demonstrates compliance with the Australian Government’s National Competition Policy and National Water Initiative. The IWCM process provides a structured framework to assist in identifying issues in the operations of urban water services and to address these issues by determining appropriate management responses so that Triple Bottom Line (i.e. social, environmental and economic) criteria are optimised.

Key demand factor trends and impacts on service delivery are summarised in Table 4.1.

Table 4.1: Demand Factors, Projections and Impact on Services

Demand factor Present position Projection Impact on services

Population 6670 (2006 census data) To be determined from new census data. Expected to have stabilised somewhat or at worst the decline should have slowed.

The population number may not move much, but expectations for services tend to increase over time.

Demographics The age distribution for Lachlan Shire based on demographic information for the postcodes of 2877, 2669 and 2873 (2006 census data) is as follows; 0-4 years 7.37% 5-19 years 20.89% 20-39 years 20.83% 40-59 years 27.39% 60 years and over 23.52% Population is spread across 14,973 square kilometres, with the highest density of population in the towns and villages.

It is projected that the percentage of population over the age of 60 will increase significantly over the next 20 year period to almost double the present figure. It is also projected that the percentage of persons under the age of 19 years will continue to decline. Projections from the 2001 and 2006 Census indicate that the proportion of indigenous persons will continue to increase.

Increase in aged population will cause minimal impact on water, sewerage and urban stormwater drainage infrastructure. Aging population will however have an impact on human resources as Council’s workforce reflects the aging population trends.

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Demand factor Present position Projection Impact on services

Pricing Best practice ‘user pays’ pricing structure for water and sewerage services determined with the aid of FINMOD financial modelling software

Prices will increase for services to reflect scarcity and actual costs of providing the service

Demand on assets will decrease as a result of price increases.

Environmental awareness

Greater legislative requirement to comply with water saving initiatives such as WSUD and BASIX

Required disposal of obsolete assets and construction of additional assets to meet compliance

Climate change Range of significant shift in climate patterns to prolonged droughts and major flooding events

More intense rainfall and longer dry periods between

Lower awareness leading to complacency in maintenance

Consumer preferences and expectations

Trending to more households with fewer residents

Lower number of residents per residential dwelling Higher density development – flats/units/townhouses

Increased external watering (discretionary water usage) per household compared to population. Increased impervious areas such as roofs and driveways resulting in higher stormwater flows.

4.2 Changes in Technology

Technology changes are forecast to have little effect on the delivery of services covered by this plan. However new technology is constantly emerging and this may improve operational aspects of some of the various components of the water, sewerage and urban stormwater drainage networks, e.g. variable speed drives on pump motors, installation of power factor correction equipment at pump stations, more efficient and effective pumps, etc..

Technology changes which will aid in the delivery of services covered by this plan are detailed in Table 4.2.

Table 4.2: Changes in Technology and Forecast effect on Service Delivery

Technology Change Effect on Service Delivery

Updating to GPS based survey, design and construction technology.

Reduce field set out requirements. More accurate records of assets.

Updating computer technology and software.

Improve asset management systems to enable better and more strategic financial and operational planning. Improve efficiency or expand range of internal and external services provided. Better computer modelling of capacity and system constraints to allow more informed decisions

Trenchless pipe laying and longer lengths of under boring of road assets

Less disturbance of other assets

Rain water tanks Modify consumption patterns and volumes from alternate sources + reduced urban stormwater runoff from properties

Materials technology & product design Investigate likely benefits of emerging technologies, such as oPVC water mains, solar electricity generation technologies, to reduce or contain costs, improve effectiveness, improve safety.

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4.3 Demand Management Plan

Demand for new services will be managed through a combination of managing existing assets, upgrading of existing assets and providing new assets to meet demand and demand management. Demand management practices include non-asset solutions, insuring against risks and managing failures.

Non-asset solutions focus on providing the required service without the need for the council to own the assets. Examples of non-asset solutions include providing services from existing infrastructure such as aquatic centres and libraries that may be in another council area or public toilets provided in commercial premises.

Opportunities identified to date for demand management are shown in Table 4.3. Further opportunities will be developed in future revisions of this asset management plan.

Table 4.3: Demand Management Plan Summary

Service Activity Demand Management Plan

Water supply infrastructure maintenance and upgrades, including augmentations

Upgrades and infrastructure extensions/augmentations to meet development expansion and changes identified in relevant review reports and planning studies. This will also include more extensive use of Council’s water modelling package and thorough analysis of the asset management system database.

Sewerage service infrastructure maintenance and upgrades, including augmentations

Upgrades and infrastructure extensions/augmentations to meet development expansion and changes identified in relevant review reports and planning studies. This will also include more extensive use of Council’s modelling package and thorough analysis of the asset management system database.

Urban stormwater drainage maintenance and upgrade

Upgrades and network extensions to meet population growth demand and changes identified in review reports and planning studies. Account for climate change.

Safety Improvement plan Upgrades to improve user safety. Regular open drain inspections.

4.4 New Assets for Growth

The new assets required to meet growth will be acquired free of cost from land developments and constructed/acquired by Council. The new contributed and constructed asset values are summarised in Figure 1.

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Figure 1: New Assets for Growth

Acquiring these new assets will commit council to fund ongoing operations and maintenance costs for the period that the service provided from the assets is required. These future costs are identified and considered in developing forecasts of future operations and maintenance costs.

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5. LIFECYCLE MANAGEMENT PLAN

The lifecycle management plan details how Council plans to manage and operate the assets at the agreed levels of service (defined in Section 3) while optimising life cycle costs.

5.1 Background Data

5.1.1 Physical parameters

The assets covered by this asset management plan are shown in Table 2.1.

Council’s water, sewerage and urban stormwater drainage assets are spread through 2 towns and 5 villages and various rural communities. Seasonal changes have significant impacts on the consumption of the differing asset classes;

Water supply assets experience a higher level of consumption in summer when demand for water is high and low consumption in winter when demand for water is low.

Sewerage assets experience a higher level of consumption in times of high rainfall in regards to increased volumes and higher levels of maintenance in times of drought with items such as increased root damage to sewer mains and increased blockages when flows are insufficient to flush solids.

Urban stormwater assets typically have the highest level of consumption during times of rainfall, although urban drainage systems are used to convey any surface water to a river, stream or Lake including water from water mains breaks and irrigation water that finds its way into the urban stormwater drainage system.

Asset Class Asset category Dimension

Water Surface Water Pumping Stations and associated river and dam intakes

13 of with combined capacity of 28.4ML per

day

Groundwater Bores and Pumping Stations 4 of with combined capacity of 17ML per day

Water Treatment Plants and Chlorination Facilities

3 of with a combined capacity of 13.55ML per day

Reservoirs and Balance Tanks 16 reservoirs with a combined capacity of 18.6ML and 4 ground tanks with a combined capacity of 126.8ML

Rising Mains and Trunk Mains 174,757 metres

Reticulation Mains 100,228 metres

Water Meters 3172 metered connections

Telemetry SCADA PC’s, Laptops, RTU’s, Repeaters, Software, metering

Sewer Sewage Pumping Stations 18 of with a combined capacity of 15.42ML per day

Sewage Treatment Plants 3 off with a combined capacity of 7,000EP

Rising Mains 17,473 metres

Gravity reticulation mains 64,469 metres

Low pressure sewerage mains 815 metres

Telemetry SCADA RTU’s, metering

Urban Stormwater Urban pipes, box culverts, kerb inlets, pits, headwalls and river outflows

227 segments

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The age profile of the assets include in this AM Plan is shown in Figure 2.

Figure 2: Asset Age Profile

Age information varies in quality. Acquisition dates come from records, estimates and interviews of former staff. This is particularly evident with Condobolin where many of the utilities records were destroyed when the Condobolin Municipality was amalgamated with Lachlan Shire in 1978. Records are also incomplete for the assets transferred to Council from the Central Tablelands County Council in 1990. Future revisions of the AMP will endeavour to improve the age profile.

5.1.2 Asset capacity and performance

Council’s services are generally provided to meet design standards where these are available. Deficiencies in service performance were identified from council service requests, correspondence, councillor’s questions and meetings, field inspections and community consultation.

Locations where deficiencies in service performance are known are detailed in Table 5.1.2.

Table 5.1.2: Known Service Performance Deficiencies

Location Service Deficiency

Condobolin Water Treatment Plant Nearing end of design life, inadequate taste and odour treatment capability, inadequate environmental performance (backwash disposal)

Condobolin Trickling Filter Sewage Treatment Plant

Nearing end of design life

Condobolin water supply reticulation – pre 1950 mains

Nearing or past end of design life, inadequate design capacity for current fire fighting standards, unacceptable risk profile

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Location Service Deficiency

Condobolin gravity sewerage mains – pre 1960

Nearing end of design life, unacceptable risk profile

Tullibigeal and Kikoira/Gibsonvale pipeline

Nearing end of design life, inadequate design capacity, unacceptable risk profile

Lake Cargelligo Reservoir Inadequately constructed, unacceptable risk profile

B Section Pipeline – Trunk Main C to Tottenham

Nearing end of design life, inadequate design capacity, unacceptable risk profile

Other service deficiencies are yet to be identified as part of the improvement plan

5.1.3 Asset condition Council does not currently have a comprehensive condition rating across the water supply, sewerage services or urban stormwater drainage system assets. This is seen as a high priority in future versions of this asset management plan.

Council intend to use the following condition rating system.

Condition is measured using a 1 – 5 rating system3 as detailed in Table 5.1.3.

Table 5.1.3: IIMM Description of Condition

Condition Rating Description

1 Excellent condition: Only planned maintenance required.

2 Very good: Minor maintenance required plus planned maintenance.

3 Good: Significant maintenance required.

4 Fair: Significant renewal/upgrade required.

5 Poor: Unserviceable.

5.1.4 Asset valuations

The following figures are shown in Council’s Financial Statements as at 30th June 2011.

Current Replacement Cost $96,000,000

Depreciable Amount $96,000,000

Depreciated Replacement Cost $44,153,000

Annual Depreciation Expense $1,405,000

The value of assets recorded in the Technical Services Department asset register as at 14 February 2012 covered by this asset management plan is shown below. Assets were last re-valued using the NSW Reference Rates Manual with construction cost indices current to 30

th June 2011. The figures below also take into account the value of the Merri

Abba Bore Pipeline project which is scheduled to come into operation May 2012. This one project will increase the value of water supply assets by 30%. Changes to infrastructure requirements to comply with regulatory requirements imposed on Council Infrastructure such as the POEO Act 1997 and the Public Health Act 2010 have also been incorporated.

Current Replacement Cost $139,264,000

Depreciable Amount $139,264,000

Depreciated Replacement Cost $72,934,000

Annual Depreciation Expense $2,331,000

3 IIMM 2006, Appendix B, p B:1-3 (‘cyclic’ modified to ‘planned’, ‘average’ changed to ‘fair’’)

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Council’s sustainability reporting reports the rate of annual asset consumption and compares this to asset renewal and asset upgrade and expansion.

Asset Consumption 1.70% (Depreciation/Depreciable Amount)

Asset renewal 0.20% (Capital renewal exp/Depreciable amount)

Annual Upgrade/New 10.0% (Capital upgrade exp/Depreciable amount)

Annual Upgrade/New 10.0% (including contributed assets)

Council is currently renewing assets at 9.8% of the rate they are being consumed and increasing its asset stock by 10.0% each year.

To provide services in a financially sustainable manner, Council will need to ensure that it is renewing assets at the rate they are being consumed over the medium-long term and funding the life cycle costs for all new assets and services in its long term financial plan.

5.2 Risk Management Plan

Council has not completed a Risk Management Plan for its entire water supply, sewerage services and urban stormwater drainage infrastructure. Future versions of this plan will incorporate risk management. Council is in the process of completing a Risk Based Management Plan under the Australian Drinking Water Guidelines for the Lake Cargelligo Water Supply Scheme. Similar Management plans are to be prepared for Council’s other drinking water supplies and will into the Asset Risk Management Plan.

An assessment of risks4 associated with service delivery from infrastructure assets will be used to identify critical risks that will result in loss or reduction in service from infrastructure assets or a ‘financial shock’ to the organisation. The risk assessment process identifies credible risks, the likelihood of the risk event occurring, the consequences should the event occur, develops a risk rating, evaluates the risk and develops a risk treatment plan for non-acceptable risks.

5.3 Routine Maintenance Plan

Routine maintenance is the regular on-going work that is necessary to keep assets operating, including instances where portions of the asset fail and need immediate repair to make the asset operational again. 5.3.1 Maintenance plan Maintenance includes reactive, planned and specific maintenance work activities.

Reactive maintenance is unplanned repair work carried out in response to service requests and management/supervisory directions.

Planned maintenance is repair work that is identified and managed through a maintenance management system (MMS). MMS activities include inspection, assessing the condition against failure/breakdown experience, prioritising, scheduling, actioning the work and reporting what was done to develop a maintenance history and improve maintenance and service delivery performance.

Specific maintenance is replacement of higher value components/sub-components of assets that is undertaken on a regular cycle including repainting, building roof replacement, etc. This work generally falls below the capital/maintenance threshold but may require a specific budget allocation.

Actual past maintenance expenditure is shown in Table 5.3.1.

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Table 5.3.1: Maintenance Expenditure Trends

Year Maintenance Expenditure

2008/2009 Water $2,294,000

2009/2010 Water $2,642,000

2010/2011 Water $2,471,000

2008/2009 Sewer $1,137,000

2009/2010 Sewer $1,143,000

2010/2011 Sewer $1,202,000

2008/2009 Urban Stormwater $39,000



Current maintenance expenditure levels are considered to be inadequate to meet required service levels. Future revision of this asset management plan will include linking required maintenance expenditures with required service levels.

Assessment and prioritisation of reactive maintenance is undertaken by operational staff using experience and judgement.

5.3.2 Standards and specifications

Maintenance work is carried out in accordance with the following Standards and Specifications.

NSW Code of Practice for Plumbing and Drainage

Relevant WSSA codes

Relevant Australian Standards

Relevant Industry Specifications and Codes of Practice

AUS-SPEC D11 & C401

Relevant ‘Manuals” provided with specialised equipment (e.g. Pumps, blowers, screens, mixers, etc.) 5.3.3 Summary of future operations and maintenance expenditures Future operations and maintenance expenditure is forecast to trend in line with the value of the asset stock as shown in Figure 4. Note that all costs are shown in 2011/2012 dollar values.

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Figure 4: Projected Operations and Maintenance Expenditure

Deferred maintenance, i.e. works that are identified for maintenance and unable to be funded are to be included in the risk assessment process in the infrastructure risk management plan.

Maintenance is funded from the operating budget and grants where available. This is further discussed in Section 6.2.

5.4 Renewal/Replacement Plan

Renewal expenditure is major work which does not increase the asset’s design capacity but restores, rehabilitates, replaces or renews an existing asset to its original service potential. Work over and above restoring an asset to original service potential is upgrade/expansion or new works expenditure.

5.4.1 Renewal plan

Assets requiring renewal are identified from one of three methods provided in the ‘Expenditure Template”.

Method 1 uses Asset Register data to project the renewal costs for renewal years using acquisition year and useful life, or

Method 2 uses capital renewal expenditure projections from external condition modelling systems (such as Pavement Management Systems), or

Method 3 uses a combination of average network renewals plus defect repairs in the Renewal Plan and Defect Repair Plan worksheets on the ‘Expenditure template’.

Method 1 was used for this asset management plan.

The ranking criteria used to determine priority of identified renewal proposals is detailed in Table 5.4.1.

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Table 5.4.1: Renewal Priority Ranking Criteria

Criteria Weighting

Age 20%

Material 30%

Failure Consequence 50%

Total 100%

Renewal will be undertaken using ‘low-cost’ renewal methods where practical. The aim of ‘low-cost’ renewals is to restore the service potential or future economic benefits of the asset by renewing the assets at a cost less than replacement cost.

Examples of low cost renewal include pipeline relining and active mains high pressure water jetting programs for sewerage services.

5.4.2 Renewal standards

Renewal work is carried out in accordance with the following Standards and Specifications.

NSW Code of Practice for Plumbing and Drainage

Relevant WSSA codes

Relevant Australian Standards

Relevant Industry Specifications and Codes of Practice

AUS-SPEC D11 & C401

Relevant ‘Manuals” provided with specialised equipment (e.g. Pumps, blowers, screens, mixers, etc.)

5.4.3 Summary of projected renewal expenditure

Projected future renewal expenditures are forecast to increase over time as the asset stock ages, and as additional new assets are added. The costs are summarised in Figure 5. Note that all costs are shown in 2011/2012 dollar values.

The projected capital renewal program is shown in Appendix B.

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Figure 5: Projected Capital Renewal Expenditure

Deferred renewal, i.e. those assets identified for renewal and not scheduled for renewal in capital works programs are to be included in the risk assessment process in the risk management plan.

Renewals are to be funded from capital works programs and grants where available. This is further discussed in Section 6.2.

5.5 Creation/Acquisition/Upgrade Plan

New works are those works that create a new asset that did not previously exist, or works which upgrade or improve an existing asset beyond its existing capacity. They may result from growth, social or environmental needs. Assets may also be acquired at no cost to the Council from land development. These assets from growth are considered in Section 4.4.

5.5.1 Selection criteria

New assets and upgrade/expansion of existing assets are identified from various sources such as councillor or community requests, proposals identified by strategic plans or partnerships with other organisations. Candidate proposals are inspected to verify need and to develop a preliminary estimate. Verified proposals are ranked by priority and available funds and scheduled in future works programmes. The priority ranking criteria is detailed in Table 5.5.1.

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Table 5.5.1: Upgrade/New Assets Priority Ranking Criteria

Criteria Weighting

Regulatory change – non-compliance with existing infrastructure

40%

Community expectation 30%

Security of supply 20%

Development areas 10%

Total 100%

5.5.2 Standards and specifications

Standards and specifications for new assets and for upgrade/expansion of existing assets are the same as those for renewal shown in Section 5.4.2.

5.5.3 Summary of projected upgrade/new assets expenditure

Projected upgrade/new asset expenditures are summarised in Figure 6. The projected upgrade/new capital works program is shown in Appendix C. All costs are shown in current 2011/2012 dollar values.

Figure 6: Projected Capital Upgrade/New Asset Expenditure

New assets and services are to be funded from capital works program and grants where available. This is further discussed in Section 6.2.

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5.6 Disposal Plan

Disposal includes any activity associated with disposal of a decommissioned asset including sale, demolition or relocation. Assets identified for possible decommissioning and disposal are shown in Table 5.6, together with estimated annual savings from not having to fund operations and maintenance of the assets. These assets will be further reinvestigated to determine the required levels of service and see what options are available for alternate service delivery, if any.

Where cashflow projections from asset disposals are not available, these will be developed in future revisions of this asset management plan.

Table 5.6: Assets identified for Disposal

Asset Reason for Disposal Timing Net Disposal Expenditure (Expend

+ve, Revenue –ve)

Operations & Maintenance Annual

Savings

Old Water Treatment Plant Lake Cargelligo

Obsolete 2014 $70,000 $1,500

Lake Cargelligo 4.0ML Reservoir Reservoir reaching unserviceable condition

2015 $120,000 $1,500

Albert Reservoir Reservoir reaching unserviceable condition

2020 $45,000 $1,500

No sewer assets identified for disposal within next 10 years at time of preparation of this asset management plan

No urban stormwater assets identified for disposal within next 10 years at time of preparation of this asset management plan

Additional assets to be determined

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6. FINANCIAL SUMMARY

This section contains the financial requirements resulting from all the information presented in the previous sections of this asset management plan. The financial projections will be improved as further information becomes available on desired levels of service and current and projected future asset performance.

6.1 Financial Statements and Projections

The financial projections are shown in Figure 7 for projected operating (operations and maintenance) and capital expenditure (renewal and upgrade/expansion/new assets), net disposal expenditure and estimated budget funding.

Note that all costs are shown in 2011/2012 dollar values.

Figure 7: Projected Operating and Capital Expenditure and Budget

6.1.1 Financial sustainability in service delivery

There are three key indicators for financial sustainability that have been considered in the analysis of the services provided by this asset category, these being long term life cycle costs/expenditures and medium term projected/budgeted expenditures over 5 and 10 years of the planning period.

Long term - Life Cycle Cost

Life cycle costs (or whole of life costs) are the average costs that are required to sustain the service levels over the longest asset life. Life cycle costs include operations and maintenance expenditure and asset consumption (depreciation expense). The life cycle cost for the services covered in this asset management plan is $6,002,000 per year (operations and maintenance expenditure plus depreciation expense in year 1).

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Life cycle costs can be compared to life cycle expenditure to give an indicator of sustainability in service provision. Life cycle expenditure includes operations, maintenance and capital renewal expenditure in year 1. Life cycle expenditure will vary depending on the timing of asset renewals. The life cycle expenditure at the start of the plan is $3,899,000 (operations and maintenance expenditure plus budgeted capital renewal expenditure in year 1).

A shortfall between life cycle cost and life cycle expenditure is the life cycle gap.

The life cycle gap for services covered by this asset management plan is -$2,103,000 per year (-ve = gap, +ve = surplus).

Life cycle expenditure is 65% of life cycle costs giving a life cycle sustainability index of 0.65.

The life cycle costs and life cycle expenditure comparison highlights any difference between present outlays and the average cost of providing the service over the long term. If the life cycle expenditure is less than that life cycle cost, it is most likely that outlays will need to be increased or cuts in services made in the future.

Knowing the extent and timing of any required increase in outlays and the service consequences if funding is not available will assist organisations in providing services to their communities in a financially sustainable manner. This is the purpose of the asset management plans and long term financial plan.

Medium term – 10 year financial planning period

This asset management plan identifies the projected operations, maintenance and capital renewal expenditures required to provide an agreed level of service to the community over a 10 year period. This provides input into 10 year financial and funding plans aimed at providing the required services in a sustainable manner.

These projected expenditures may be compared to budgeted expenditures in the 10 year period to identify any funding shortfall. In a core asset management plan, a gap is generally due to increasing asset renewals for ageing assets.

The projected operations, maintenance and capital renewal expenditure required over the 10 year planning period is $5,995,000 per year.

Estimated (budget) operations, maintenance and capital renewal funding is $4,363,000 per year giving a 10 year funding shortfall of -$1,632,000 per year and a 10 year sustainability indicator of 0.73. This indicates that Council has 73% of the projected expenditures needed to provide the services documented in the asset management plan.

Medium Term – 5 year financial planning period

The projected operations, maintenance and capital renewal expenditure required over the first 5 years of the planning period is $7,309,000 per year.

Estimated (budget) operations, maintenance and capital renewal funding is $4,155,000 per year giving a 5 year funding shortfall of -$3,154,000. This is 57% of projected expenditures giving a 5 year sustainability indicator of 0.57.

Financial Sustainability Indicators

Figure 7A shows the financial sustainability indicators over the 10 year planning period and for the long term life cycle.

Figure 7A: Financial Sustainability Indicators

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Providing services from infrastructure in a sustainable manner requires the matching and managing of service levels, risks, projected expenditures and funding to achieve a financial sustainability indicator of 1.0 for the first years of the asset management plan and ideally over the 10 year life of the AM Plan.

Figure 8 shows the projected asset renewals in the 10 year planning period from Appendix B. The projected asset renewals are compared to budgeted renewal expenditure in the capital works program and capital renewal expenditure in year 1 of the planning period in Figure 8.

Figure 8: Projected and Budgeted Renewal Expenditure

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Table 6.1.1 shows the shortfall between projected and budgeted renewals

Table 6.1.1: Projected and Budgeted Renewals and Expenditure Shortfall

Year Projected Renewals ($000)

Planned Renewal Budget ($000)

Renewal Funding Shortfall ($000)

(-ve Gap, +ve Surplus)

Cumulative Shortfall ($000)

(-ve Gap, +ve Surplus)

2012 $15,577.30 $228.00 -$15,349.30 -$15,349.30

2013 $4.43 $350.00 $345.57 -$15,003.73

2014 $440.06 $200.00 -$240.06 -$15,243.79

2015 $363.53 $370.00 $6.47 -$15,237.32

2016 $332.08 $370.00 $37.92 -$15,199.40

2017 $2,375.11 $370.00 -$2,005.11 -$17,204.51

2018 $35.30 $370.00 $334.70 -$16,869.81

2019 $170.42 $370.00 $199.58 -$16,670.23

2020 $604.21 $370.00 -$234.21 -$16,904.44

2021 $5.70 $370.00 $364.30 -$16,540.14

Note: A negative shortfall indicates a funding gap, a positive shortfall indicates a surplus for that year.

Providing services in a sustainable manner will require matching of projected asset renewals to meet agreed service levels with planned capital works programs

Documents

Asset Management Plan - Lachlan Shire...- iv - Lachlan Shire Asset management Plan - Utilities over the 10 year planning period is $59,948,000 or $5,995,000 per year. ouncil [s estimated