ASSET MANAGEMENT STRATEGY

Version 1.0 (2006)

ASSET MANAGEMENT STRATEGY

November 2006

Prepared by: Assets and Facilities Division

Asset Management Strategy Version 1.0 (2006)

INDEX

Executive Summary .................................................................................................................1

1. Introduction .......................................................................................................................2

2. Purpose.............................................................................................................................2

3. Definitions .........................................................................................................................3

4. An overview of our current situation..................................................................................3 4.1 Council services .......................................................................................................3 4.2 Municipal profile........................................................................................................4 4.3 What does the community expect? ..........................................................................5 4.4 Summary of our community assets ..........................................................................5 4.5 Asset groups.............................................................................................................7

4.5.1 Buildings and structures .......................................................................................9 4.5.2 Roads, laneways and carparks...........................................................................11 4.5.3 Footpaths and trails ............................................................................................14 4.5.4 Furniture and signs .............................................................................................16 4.5.5 Stormwater drains...............................................................................................18 4.5.6 Parks and gardens..............................................................................................20

4.6 Organisational approach to asset management .....................................................22 4.6.1 Policy ..................................................................................................................22 4.6.2 Forward planning ................................................................................................22 4.6.3 Linking asset management to service delivery ...................................................23 4.6.4 Information systems............................................................................................24 4.6.5 Organisational structure......................................................................................24 4.6.6 Step program......................................................................................................26

5. Where do we want to be? ...............................................................................................27

6. Gap analysis ...................................................................................................................27

7. Improvement plan ...........................................................................................................29 7.1 The four pillars of asset management ....................................................................29 7.2 Asset Management Plan ........................................................................................29

8. Conclusion ......................................................................................................................30

9. References......................................................................................................................31

Appendix 1 - three year improvement plan ............................................................................32

Appendix 2 - Asset Management Plan framework .................................................................35


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Executive Summary Sustaining community assets over the longer term is one of the most important responsibilities of Glen Eira City Council. While Council has done a great deal to address this responsibility, many of our assets remain unsustainable. In reviewing our current situation in relation to our community assets, key findings are: • The Glen Eira community expects high quality community assets that match its

needs.

• The Glen Eira community owns a substantial asset base with an estimated replacement value of over $1 billion.

• Many of Glen Eira’s assets are approaching an age or condition where Council needs to renew or upgrade them. At current funding levels, preliminary modelling suggest that over 40 per cent of Glen Eira assets will be beyond a standard acceptable to the community within the next 50 years.

• Council’s current funding strategy does not provide for timely renewal of its community assets. Council needs to increase average annual renewal spending in the order of $6 million to maintain current service levels for its assets.

• Council has a good organisational approach, forward planning tools, information systems and an effective organisational structure to take the next step in asset management although opportunities exist to improve.

The way forward to the better management of Glen Eira’s community assets include:

• The need to develop and implement asset management plans for all groups of community assets to confirm levels of service, ensure that assets are managed in a cost effective manner and to more accurately identify the cost of owning these assets.

• Council revisiting its financial strategy, with a view to achieving long-term

sustainability.


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1. Introduction

“Quality of life in this community depends to a large extent on shared assets and public places: footpaths, roads, traffic controls, shopping strips, playgrounds, swimming pools, parks, libraries, aged care facilities and so on. Sustaining this infrastructure over the long term is one of the most important responsibilities of the community’s local government — Glen Eira City Council”.

So commences Glen Eira City Council’s 2002 discussion paper ‘Community Assets — Financial responsibility’. This paper highlights that many of Glen Eira’s community assets are reaching the end of the assets’ useful life and that important decisions about the future are required. Since 2002, Council has done a great deal to address this challenge. An internal restructure of the organisation has resulted in a greater focus on asset management. Council policy and key strategic plans now recognise asset management as a core function of Council, and financial planning now gives priority to maintaining our existing community assets. However, as will be discussed, many of our assets remain unsustainable and we need to maximise the use of asset management initiatives to correct this situation. 2. Purpose Asset management is important to Glen Eira City Council as it manages a large and valuable asset portfolio on behalf of the community. Good asset management provides the desired level of service (functionality and presentation) in the most cost effective manner for the present and future. It involves all activities associated with managing of our community assets including planning, creating, operating, maintaining, replacing, renewing, disposing and financial planning. Good asset management demonstrates to the community that Council is a responsible steward of their assets. Accordingly, the purpose of this strategy is to review at a high level the state of our community assets, assess how effectively our current approach to asset management is meeting the challenge of making our assets more sustainable and recommends ways in which we can improve. The steps involved are:

• Broadly review what the Glen Eira community expects from its assets

• Broadly identify Glen Eira’s community assets.

• Review the condition, sustainability and ability of different asset types to meet the community’s needs.

• Based on this preliminary review, identify opportunities for improvement.


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3. Definitions For the purposes of this document, the following definitions apply:

Asset management - is a combination of management, financial, economic, engineering and social planning as applied to fixed assets. The objective of asset management is to provide the required level of service in the most effective and efficient manner now and into the future.

Asset Management Plan (AMP) - plan that forms part of the set of strategic documents that explains and sets direction for the management of specific classes of assets.

Brownfield replacement value - is the cost to renew an asset in-situ at today’s value.1

Community asset - a fixed asset that Council controls for the purpose of satisfying a service potential or enabling the Council to meet its corporate objectives.

Greenfield replacement value - is the cost to originally construct the asset at today’s value (used to determine the replacement value of an asset for financial reporting purposes).

Level of service - is the service or standard to which Council maintains an asset. Often set at a level that meets the community’s expectations in relation to quality, quantity and cost.

Risk - probability and consequence of an event that could affect Council’s ability to meet its corporate objectives.

Whole of life cost - the cost to procure, commission, maintain, decommission and dispose of an asset, often expressed in present day value.

4. An overview of our current situation By definition, community assets exist to provide for the needs of the community, either directly, such as roads provide for the passage of traffic or, indirectly, such as community centres from which Council delivers community services. To understand whether our community assets provide for the needs of the community, we first need to understand (at least in broad terms) the key features of our community and the services Council provides to them.

4.1 Council services Council provides a range of services to the community. Services relating to the built environment include town planning, and building and maintaining the City's roads, drains, footpaths, parks and facilities. Community services include caring for children, families, young people and the elderly and staging cultural events. Other services include collecting waste, animal management, traffic management, local laws services, working with local businesses, and libraries.

1 Brownfield is a term that refers to a developed environment such as an established backyard. Greenfield refers to an environment that is yet to be developed or established. Typically, it costs more to replace (or construct new drains) in established backyards than new subdivisions.


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Council prides itself on delivering these services at low cost with an operating cost per assessment of about 18 per cent lower than the average of our neighbouring councils. This translates to a low rate base. Council's average rates and charges are approximately 14 per cent below the average of neighbouring councils or about $8 million per year. Council regularly reviews services that it provides to the community to better understand the needs and wants of the community. Such reviews include annual surveys, best value reviews (as required by the State Government) and project specific consultation.

4.2 Municipal profile Glen Eira is a vibrant and diverse community of more than 123,000 people, approximately 53,000 households, 105 different ethnic groups and almost 6,000 registered businesses across an area of 38.7 square kilometres of Melbourne’s inner south-east. Key attributes of the City are:

• Resident population is likely to grow less than 1 per cent per annum, about 8 per cent between 2006 and 20212.

• On a percentage basis, Glen Eira has more people aged 60 and over than the Melbourne metropolitan average (21.4 per cent compared to 15.3 per cent); and slightly fewer young people than the average (1 per cent less under 20 years than the average). This is unlikely to change in the near future with a tendency to middle aged rather than young adults with lower than metropolitan average proportion of children3.

• The City is ethnically diverse with a slightly higher proportion of overseas born residents than the metropolitan average (35.7 per cent verses 32.7 per cent). Greek (predominately in Bentleigh East) and Polish (concentrated in Elsternwick, St Kilda East and Caulfield North) are the main groups of residents born overseas.

• The City has a high relative socio-economic advantage, ranking sixth highest in

the ABS SEIFA Index4 for Melbourne.

• Ninety-five per cent of Glen Eira is residential and retailing is the City’s major commercial use with about 167,000 m2 of retail floor space.

• There is an extensive transport network, an excellent grid of arterial roads,

nearby major traffic routes, three separate railway lines and a network of tramlines services in the City.

• Glen Eira has an active sporting community with about 15,000 people members

of sporting clubs. There is strong demand for improvements to recreational facilities particularly young people (15–24 years)5.

• Glen Eira has limited public open space (4.2 per cent of the total municipal area).

2 Department of Infrastructure, Victoria in the Future, 2004 3 Glen Eira City Council, Municipal Strategic Statement, 2000 4 Australian Bureau of Statistics, Socio-economic Indexes for Area, 2001 5 Stratcorp Consulting, Recreation Needs Study prepared for Glen Eira City Council, 2006


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4.3 What does the community expect? What does the above information tell us about Glen Eira’s expectations concerning community assets? The community expects:

• High quality, community assets that match the community’s lifestyle needs. • That Council will provide assets at the lowest possible cost.

• Limited open space will be of a high standard.

• Community assets will cater for the community’s diversity including the special

needs of our young and older people.

• Community assets will accommodate a modest growth in population and the community’s changing needs.

4.4 Summary of our community assets Glen Eira community assets include:

• 163 hectares of parks and reserves — enough to fill 80 MCG’s

• 43 playgrounds

• 45 sportsgrounds • 450km of drains — enough to reach Swan Hill

• 935km of kerbing — enough to reach Sydney

• 870km of on-road footpaths — enough to reach Adelaide

• 470km of roads — enough to reach Mount Gambier

• 16,000 drainage pits

• 3,300 off-street car parking spaces • 46,000 street trees

• 8,500 street lights • 69,000m2 of building area

• 2 swimming pool complexes Financial position The written down value of Glen Eira’s total assets, as Council’s Annual Report 2005-06 identifies, is $790 million6 or approximately $6,400 for each household in Glen Eira. The replacement value of these assets is much higher, estimated at over $1 billion7. Council’s Annual Report 2004-05 indicates that during the 2004–05 financial year these assets depreciated by $11.5 million. While capital expenditure in that year was $23.4 million, Council spent only $8.5 million renewing its assets, a gap of $3million between depreciation and renewal. This large gap has been long standing, leading to the conclusion in 2002 that if the status quo prevailed many of Council’s assets are unsustainable8.

6 Glen Eira City Council, 2005-06 Annual Report, 2006, p.139 (Total Non-current Assets) 7 Land plus non-current assets at estimated brownfield replacement value. 8 Glen Eira City Council, Community Assets - Financial Sustainability, 2002


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Anticipated future asset performance A recent review of Council’s assets through the Municipal Association of Victoria’s (MAV) Step Program reinforces what the annual report tells us. While the annual report shows historic performance over a relatively short period, the Step Program and asset management generally aims to assess the performance of our assets in the future over a long period. The MAV has developed a model to predict the likely capital expenditure required to sustain the various categories of assets overs a 50-year period to a nominated service standard. The model also predicts the decline in assets over time where there is a gap between anticipated and required expenditure. The model is simplistic and therefore outcomes are preliminary in nature but in broad terms, it provides an indication of what is likely to happen to our assets if the status quo remains. We developed the graphs below from the MAV model. They show that to address the current backlog of assets outside the nominated levels of service, an initial $17 million for each of the next five years is necessary while in the long term, Council’s shortfall in expenditure on renewing its assets is between $ 6 million and $7 million. These figures are tentative (accuracy in the order of 20 to 30 per cent) but do highlight there is a significant gap between what Council should spend and what it actually spends to renew its community assets. Figure 2 shows our anticipated renewal funding gap overtime. It suggests that while a small proportion of our assets do not meet service standards at present, if our funding strategy remains the same, the proportion of assets not meeting standards will increase. By 2051, the MAV model forecasts that 40 per cent of our assets maybe in an unacceptable state.

50-YEAR AGGREGATED CAPITAL FUNDING GAP in $ Separated by asset type

-2,000,000

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

2006 2011 2016 2021 2026 2031 2036 2041 2046 2051

Recreation Group

Buildings Group

Storm Water Group

Bridges Group

Roads Group

Figure 1 — renewal funding gap


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Predicted % of Asset Base Over Intervention Condition Level

05

1015202530354045

2006 2011 2016 2021 2026 2031 2036 2041 2046 2051

Figure 2 — predicted asset decline

Note that an asset is over ‘intervention condition level’ described in Figure 2 when it no longer meets minimum service level requirements. Typically, an asset reaches this level when we need to renew or upgrade between 20 per cent and 40 per cent of the whole asset9.

4.5 Asset groups We will now look at our community assets in more detail, grouping the assets into the categories of buildings and structures; roads, laneways and carparks; footpaths and trails; furniture and signs; stormwater drains; and parks and gardens. Details of the assets include purpose, broad description, reliability of the data available for the asset (explanation of rating in Table 1 below), estimate of brownfield replacement value, an assessment of average condition, age and expected total life, an assessment on whether we can sustain the asset group in the longer term and commentary about the asset group.

9 IIMM 206 (p.3.44)


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Confidence grade

General meaning

A Highly reliable Sound records, procedures, investigations exist for the asset. We have used the best method for analysis, which we have documented.

B Reliable Same as ‘A’ but has minor shortcomings, for example, some of the data is old, missing, needs confirming and/or is an extrapolation of available data.

C Uncertain Sound records, procedure, investigations exist for the asset. Analysis is incomplete or we are unable to support fully the findings due to limited quality information.

D Very uncertain We have based information about the asset on verbal reports and/or cursory inspection and analysis.

Table 1 - confidence grade

While the confidence grade data maybe low, we may still be able to assess the future performance and financial requirements for an asset based on that level of reliability. The reliability we ultimately achieve for each asset group will depend on the cost of collecting such data and the benefit such data provides.


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4.5.1 Buildings and structures Purpose: Glen Eira’s buildings provide the necessary infrastructure for the delivery of

many of Council’s diverse range of services such aged care, town planning, recreation and maternal and child health.

Description: Glen Eira owns 178 buildings and structures. Buildings vary in size from the Town Hall complex in Caulfield to a storage shed in a reserve. The building and structures group includes buildings, swimming pools, rotundas, sheds, footbridges and a velodrome.

Sub-group

Key statistics Buildings Swimming pools Other

Reliability of data C A B

Replacement value $157million Not assessed Not assessed

Renewal expenditure $600,000 Ad-hoc Not assessed

Average condition Good Very poor Not assessed

Average age (years)

70 40 Various

Expected life (years)

50–100 years 40 years Various

Sustainable No Replacement required

Not assessed

Condition

Despite the average age, many of our community buildings are structurally in good condition. However, being structurally sound does not mean a building meets the needs of the community. User needs or expectations do change and buildings often need to be rebuilt or refurbished for these reasons (eg. changing rooms that are too small for current community expectations or the occupancy of a building changes from meeting rooms to child care). Changing government regulations also require Council to upgrade a building so the community can continue to use it. Examples of where legislative changes have prompted upgrade are:

• The need to remove hazardous material such as asbestos;

• new regulations require Council to install lifts, ramps and widening of doors and other improvements as necessary to ensure universal access to buildings, while new regulations relating to children services require Council to increase the size of children’s rooms and outdoor space in children centres; and


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• building approvals apply to the whole of a building so minor works requiring a building permit will necessitate Council upgrading the whole building to meet current building standards.

Swimming pools are an asset class that present a challenge to Council. The existing pools are old and in poor condition. They do not meet current standards. Grants possibly available to Council to upgrade these pools are not nearly as significant as the grants that were available to councils when the pools were constructed in the 1950s or 1960s. Council is currently reviewing options to redevelop its pool complexes.

Maintenance

Over the last five years, Council has spent an average of $750,000 each year on the maintenance of community buildings or about 0.5 per cent of the replacement value. This is much lower than the 1.0 per cent to 1.5 per cent that the CSIRO’s National Committee on Rationalised Buildings (1995) recommends. Such information suggests we may not be undertaking sufficient maintenance that could lead to accelerated decline in our buildings.

Renewal, upgrade and new

We anticipate that a large number of Council’s buildings will reach the end of their useful lives over the next 20 years due to age and being no longer fit for purpose. Council staff estimate that the cost to renew these assets is an average $1.5 million per annum (a significant increase on the recent average of $0.6 million). Should upgrading or expansion of these assets be necessary at the time of renewal then the cost will be much higher.

Council has good financial data on the value of its buildings. Council collects data about the use of key buildings but this information is not analysed. Information on the age and condition of the buildings is limited. Improving this information would allow us to assess more accurately how much should be spent on maintaining, renewing and upgrading these assets.

Forward planning

Clear strategic direction exists in some service areas relating to buildings. For example, an objective of Council’s Community Plan 2010 to “co-locate Council and community services in Urban Villages” provides clear direction on how we need to maintain and manage existing libraries and some community facilities. However, buildings such as public toilets in strip shopping centres lack the same strategic direction making it difficult to assess whether we are managing these assets in an optimal way. Improved long-term service planning will allow Council to improve the effectiveness of its expenditure on buildings and structures.


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4.5.2 Roads, laneways and carparks Purpose: Roads, laneways and carparks provide for road-based transport. The road

surface and associated kerbing also form part of Council’s stormwater drainage network.

Description: The road network consists of some 470 kilometres of pavement and 935 kilometres of kerbing. Most roads and car parks in Glen Eira are made of a gravel pavement with some form of gravel and bitumen surface. Kerbing is made of either concrete or bluestone pitchers. Laneways are made of similar materials to roads as well as concrete and bluestone pitchers.

Sub-group

Roads

Key statistics

Road surface

Road base

Kerbing Laneways Carparks

Reliability of data B C B D D

Replacement value

$150million $10million Unknown

Renewal expenditure

$4.4million $125k $260k

Average condition Very good

Good Poor Poor Poor

Average age (years)

6 60 60 60 60


10–30 100 70 80 60

Sustainable Yes Possibly No No No

Condition The average condition of our local roads is good, however many laneways and car parks are in poor condition. Typical of the standards of construction of the 1930s and 1950s, about 85 percent of Glen Eira’s roads have lateral slopes (cross-falls) steeper than design standards of today and have little underground drainage. In the past, to keep costs low road authorities expected the kerbing to accommodate all stormwater runoff. The lack of underground drainage and relatively steep crossfalls concerns many residents as it is common for water to lie in the streets after rain for some period and modern vehicles (being lower than earlier vehicles) may scrape entering and exiting a property.


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We currently have good financial and condition information about our road assets. However, with potentially a large gap between what we need to spend on these assets and what funds are currently available, we do need a detailed assessment of options to optimise how and what we spend on our roads. We can achieve this through the development of an Asset Management Plan for roads and laneways, which we will discuss later. Renewal, upgrade and new Our preliminary assessment is that we require an average of $6.4 million a year spent on renewal to sustain our local roads, $1.6 million higher than our current spend. Where practical, Council addresses both the shape of the road and the lack of underground drainage when it reconstructs a road, although because roads last a long time, addressing these issues can take generations.

Many of the components of our road assets have a highly variable rate of aging so it is difficult to predict when Council will need to replace specific roads. However, we do know (as shown in Figure 3) that many of our roads pavements and kerbing are nearing the end of the average expected life.

Figure 3 - age profile of road assets

The kerbing is of particular concern as it tends to decline rapidly towards the end of its life (refer to Figure 5), crumbling under the weight of vehicle traffic. While 65 per cent of our kerbing is in good condition now (refer to Figure 4), Council is likely to have to replace most of it in the next 20 years.

Age profile - constructed roads

4.3%

0.1%

32.4%

63.2%

0.1%

0%

10% 20%

30% 40% 50% 60% 70%

1-20 21-40 41-60 61-80 81-100

Age of road (years)

Portion of network (%)


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% of kerb length

13%9%

43%

25%

6%2% 1%

0%5%

10%15%20%25%30%35%40%45%50%

Excellent Very good Good Fair Poor Very poor Failed

Figure 4 - condition of kerbing

0

1

2

3

4

5

6

7

8

0 10 20 30 40 50 60 70 80

Average age

Con

ditio

n

Figure 5 - deterioration of kerbing


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4.5.3 Footpaths and trails Purpose: Glen Eira’s footpaths and trails exist to allow pedestrians to move easily

and safely throughout the City.

Description: The footpath network consists of some 860 kilometres of on-road paths. The vast majority of footpaths are concrete. Some are asphalt and others are brick. We do not recognise informal gravel walking tracks as Council assets.

Sub-group

Key statistics On road reserve Off road

reserve

Reliability of data A D

Replacement value $55million Unknown

Renewal expenditure $1.4million Ad-hoc

Average condition Good Good

Average age (years)

65 65


50–100 years

Sustainable Possibly No

Footpaths are within the road reserve and off-road reserve in our parks and gardens. Footpaths generally have a sealed surface of either concrete or asphalt. The majority of footpaths are within the road reserve and issues with on-road are similar to off-road paths.

Concrete97%

Brick1%

Asphalt2%

Figure 6 - on-road footpaths by surface type.

With an ageing population where trips and falls are more likely to cause serious injury, ensuring the footpaths are mostly free of trip hazards and is smooth is a priority. We do


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this by grinding lips or using asphalt wedges (see examples of asphalt wedges in Figure 7 and Figure 8).

Renewal, upgrade and new

With the balance of funds available for footpath works, we replace sections of footpath back to new on a priority basis. Such an approach can give the footpath network a patchwork appearance that some residents do not like.

At present, the footpath outside about 8,200 properties (15 per cent of total properties) has at least one slab that is in poor condition; about 2,300 properties (4 per cent of total) have at least one footpath slab in very poor condition. Figure 7 and Figure 8 show examples of footpaths in poor and very poor condition.

Figure 7 - poor condition footpath Figure 8 - very poor condition footpath Providing that the Glen Eira community continue to accept this standard of footpath management and Council can maintain the available funding in real terms, we can expect Council to be able to sustain on-road footpath standards. We have not yet assessed our ability to sustain off-road paths.

Streetscapes The community and traders see streetscape (including footpaths) of shopping centres as an important element in improving the appearance and vibrancy of these commercial and retail centres. The challenge is to keep the streetscapes looking fresh and contemporary and this often means providing a face lift of a streetscape although functionally the asset is still in good condition. While footpaths in a residential street may have a useful life of between 50 and 100 years, we tend to replace streetscapes in our major strip shopping centres more frequently. Footpaths in shopping centres are a higher risk to Council than in residential streets due to the higher number of pedestrian.

Council’s Community Plan 2010 identifies the need to renew our shopping centre streetscapes; therefore, Council has been spending $500,000 per year, successfully undertaking this work with significant positive community comment and support from the local traders. We have not undertaken a detailed assessment of whether available funds are sufficient to meet the communities expectations and it is likely we need to consider this a part of an overall strategy specifically dealing with streetscapes.


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4.5.4 Furniture and signs Purpose: Outdoor furniture and signs exist to improve the amenity, safety and/or

ease of access throughout the City.

Description: Council owns outdoor furniture, signs and traffic signals within road reserves and parks and gardens. For the purposes of this strategy, it does not include signs and furniture ancillary to buildings. Typical assets in the group include street and reserve nameplates, directional signs, and park benches.

Key sub-groups Key statistics

Furniture Signs and Signals

Reliability of data C C

Replacement value $5–10 million

Renewal expenditure $0.2million

Average condition Unknown Unknown

Average age Unknown Unknown

Expected life 20–30 years 10–20 years

Sustainable Possibly No

Condition We only have basic information about our street furniture and street signs. Preliminary estimates of financial information are available but we have not yet assessed condition, age and useful remaining life. Renewal, upgrade and new We renew assets in this group when found to be defective. Defects are found either through regular inspections (mainly in our parks) or through requests from a resident. We install new furniture and signs either as part of implementing a park master plan or in response to individual requests.


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Street furniture and signs as a group have a low value compared to other categories of community assets. However, there are a large number and the community see these assets on a daily basis so maintenance and timely replacement has a big impact on the community’s overall perception of Council. Actions that will improve this perception include:

• The prompt repair or replacement of damaged items;

• The prompt removal of graffiti; and

• Regularly replace furniture and signage that looks tired.


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4.5.5 Stormwater drains Purpose: The drainage system removes stormwater from roads and properties and

transfers it to Melbourne Water’s main drainage system that includes waterways.

Description: The drainage network consists of about 16,000 pits and 450 kilometres of underground drains. Drains vary in diameter from 150mm to 1.2metres and are commonly concrete with some clay and different types of plastic.

Key statistics Drains

Reliability of data D

Replacement value $132million

Renewal expenditure $1.2million

Average condition Poor

Average age (years) 70

Expected life (years) 100

Sustainable No

Condition Of all our infrastructure assets, drainage currently poses our greatest challenge. Glen Eira is an intensely developed City with only limited opportunities for new subdivisions. Hence, developers and the general community tend to assume that a comprehensive stormwater drainage network exists. This is not the case. The facts are: • Many roads do not have underground stormwater drains; and

• many properties do not have direct access to Council’s drainage network. In addition to this, the existing infrastructure • Is old;

• was not designed to modern standards; and

• original sizing of the drains did not assume the density of development that now exists.

A Melbourne Water study in the late 1990’s estimates that over 10,000 properties in Glen Eira will flood during a major storm event due to floodwater exceeding the capacity


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of Melbourne Water’s drainage network. It is also likely many of these properties experience flooding during relatively minor storm events. We have not yet assessed the number of additional properties that will experience flooding because of the lack of Council drainage but it is likely to be substantial (Council has received over 8,000 requests for action relating to drainage since 1996). Joints in newer drains resist tree root and sediment intrusion. This is not the case for older drains (being the majority of Glen Eira’s drains) and tree roots and sediment build-up is common. Council cleans out the drains using specialist equipment, which is very effective in addressing known issues.

Figure 9 - tree root intrusion Figure 10 - sediment build-up

Renewal, upgrade and new Our preliminary assessment is that we require about an average of $1.2million per annum to renew Council’s drainage system in a timely manner. This is about the amount we are currently spending. However, with almost all of Council’s drains having a remaining life of less than 50 years, it is likely that we will need $2.4 million a year for the next 50 years. Such an amount is likely to address only the issue of renewal and does not address the need to upgrade or extend Council’s drainage system to meet current design standards. A comprehensive investigation into the capacity of Council drainage network is currently underway. To date, Council staff have identified over $20 million in works where Council could improve the capacity of its drainage system to meet current design standards. In addition to the lack of Council drainage to address current flooding issues, Melbourne Water is predicting that climate change will lead to less but more severe rainfall events. This may lead to changes to the way the Council manages flooding and may require Council to replace drains with even larger drains. As development increases, and land becomes more valuable, there is increasing pressure from the community to allow owners to develop over Council drains in easements. We therefore anticipate that in the long-term it will cost more to maintain, replace and upgrade our drains within property easements.


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4.5.6 Parks and gardens Purpose: Parks and gardens assets exist to provide passive and active recreational

opportunities for the Glen Eira community as well as improve the aesthetics of our public spaces.

Description: The parklands in Glen Eira contain 45 sports grounds, 43 playgrounds, park trees, 44, 000 street trees, lawns, park and sports oval lighting, gardens, drinking fountains, war memorials and miscellaneous structures. It includes ancillary items such as subsoil drainage, irrigation systems and other physical assets.

Key Sub-groups Key statistics

Street trees Playgrounds Other

Reliability of data A A C

Replacement value $36m $4m Unknown

Renewal expenditure $800,000 $250,000 Not assessed

Average condition Good Very Good Good

Average age (years) Not assessed

Not assessed

Not assessed

Expected life (years) 30–60 10–20 5–20

Sustainable Yes Possibly Possibly

Parks assets are very visible community assets and are highly valued.

Condition Council has good data on the type, location, condition and value of playgrounds and miscellaneous structures. In recent years, Council has added irrigation systems, subsoil drainage, and flood lighting to many sports fields and new playgrounds. Such new assets improve the use of these facilities however to maintain these new assets, additional funding is necessary for maintenance and replacement of the assets at the end of life. Common to many upgrade works within Council, there is presently little means of identifying these costs and ensuring they are addressed in future financial plans. Renewal, upgrade and new Council (due to relevant accounting standards) does not identify gardens, trees and other landscape features as assets. However, the community would benefit from an asset management approach to such features to ensure optimal use of Council funds and ensure the standards of the features remain acceptable to the community.


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Forward planning Council uses park master plans to identify the community’s future requirements for it parks and gardens and is progressively upgrading these facilities. The plans cover all elements of the park including active and passive recreation facilities, furniture, lighting and signage. We develop master plans in consultation with the affected members of the community. Various customer surveys and consultation suggests that the Glen Eira community highly values street trees as contributing to making this a leafy City. However, Council has recognised that not all existing street trees are appropriate for planting in the nature strip and there are approximately 11,000 sites where Council could plant additional trees. In response, we are currently preparing a Street Tree Strategy that will plan for us to replace inappropriate trees and provide for the planting of new trees.


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4.6 Organisational approach to asset management At Council, we deliver asset management in an integrated manner. Key elements of our asset management framework are policy, forward planning, information systems and organisational structure.

4.6.1 Policy In June 2005, Council adopted an Asset Management Policy that commits Council to fulfil its role as the steward of the community’s assets to achieve the following goals: • Council’s assets are essential assets. Non-essential assets should be redeployed

or disposed of in order to acquire or improve assets of a higher priority.

• The benefit to be delivered by each asset is to be clearly specified by the setting of levels of service.

• Assets are to be fit for purpose.

• Procurement of new assets or refurbishment of existing assets must have regard to whole of life cost of the asset.

• There is to be an asset management plan for each category of asset.

• Asset management is to anticipate risks and manage them to the maximum extent possible.

The policy drives the direction of asset management within Glen Eira including the development of this strategy.

Council also has other policies that relate to asset management. An example is ‘Ownership of Property by Council’ that Council adopted in August 1995. The objective of this policy is to ensure that Council owns property only where essential to carry out its functions and that dealings in property are characterised by professionalism and propriety.

4.6.2 Forward planning We undertake both short term and long term planning to achieve Council’s objectives including those relating to asset management. Key strategic documents include:

Glen Eira City Council Community Plan 2010

Council adopted this long-term plan in 2004. The plan identifies Council’s strategic priorities as:

• Maximising capital expenditure to fix up community assets (and having the financial base to do so);

• redirecting development towards better serviced Urban Villages and Neighbourhood Centres rather than traditional residential streets; and

• providing core local government services at value-for-money commensurate with an acceptable risk profile.

The plan places an emphasis on must do projects, which are principally renewal works.


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Glen Eira City Council Community Plan 2006–10

Council has recently reviewed the Community Plan and has adopted Glen Eira City Council Community Plan 2006–10 as its Council Plan. The plan aims for Council to complete key strategic asset management projects and to expend $60.5 million on asset renewal and $40.2 million on other capital works over the next five years (excluding major projects).

Council reviews its Council Plan annually.

4.6.3 Linking asset management to service delivery At the outset, we have identified that the service planning directs how we manage our assets. Table 2 demonstrates the link between various Council services and the asset groups.

Build

ings

&

Stru

ctur

es

Roa

ds, L

anew

ays

& C

ar p

arks

Foot

path

s an

d Tr

ails

Furn

iture

& S

igns

Stor

mw

ater

D

rain

s

Park

s &

Gar

dens

ServiceCommunity Services ●Recreation ● ● ● ●Transport Infrastructure ● ●Business Support (Streetscapes) ● ● ●Governance & Administration ●Amenity ● ● ●Stormwater Management ●

Link

Asset Group

Table 2 - link between service and asset group

In recent years, Council has undertaken service planning primarily through Best Value reviews of individual services. The reviews include an assessment of quality, cost, responsiveness to the needs of the community, continuous improvement and consultation with the community about the service that Council delivers.

We also review the current and future needs for Council services through service specific strategies or plans. Table 3 shows examples of such documents and the implication for managing community assets at Glen Eira.


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Document Implications for asset management

Municipal Early Years Plan 2006-09

Currently being finalised, this plan will contribute to improved local planning of buildings and facilities used by young children and their families.

2006 Recreation Needs Plan A resource document that assists Council with defining what recreation assets the community expects now and in the future and at what level of service.

Various Best Value reviews Helps define levels of services for our community assets.

2005–07 Disability Action Plan Plan identifies the need to upgrade progressively our community assets for universal access.

2005 Road Management Plan Set minimum standards for the inspection, maintenance and repair of roads and footpaths within Glen Eira road reserves.

1996 Drainage Strategy Establish design policy for upgrading Glen Eira’s drainage system and set priorities for flood hazard works.

Table 3 - documents influencing asset management at Glen Eira

While service planning at Glen Eira helps identify what the community requires in terms of our community assets, defining how the assets will be able to provide for the future demand and what funding will be necessary is less understood.

4.6.4 Information systems Council currently has a number of information systems in place related to asset management. This includes a pavement management system, asset registers, databases relating to various categories of assets, and a customer request tracking system for monitoring and scheduling maintenance works on our assets. There are also numerous works and maintenance management and job costing systems in place. Council also has a comprehensive risk management database that systematically records details of risk and actions taken to eliminate or reduce that risk. Council’s insurer consistently ranks Glen Eira as one of the best performing councils in relation to risk management systems and culture. Council is about to update and improve its information systems by purchasing a corporate asset management system that will contain a centralised asset register. The new system will also allow Council to have a centralised and consolidated view of its assets, their condition and performance, and records relating to these assets. This is not possible with the current arrangement of a large number of discrete systems and lists. We will be rolling out the new system in 2006 with various asset types added to the centralised asset register over a period of one to two years. Asset management system modules for later consideration include risk management and modelling.

4.6.5 Organisational structure An internal restructure of the organisation in 2004 resulted in the creation of the Assets and Facilities Division (refer to Figure 11). This directorate has primary responsibility for keeping community assets in a satisfactory condition, managing them in a financially sustainable manner. The other divisions are mainly responsible for setting service


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standards and delivering services to the community and they are, along with their clients, the primary users of the assets (refer to Table 4).

Figure 11 — organisational structure

Council has an excellent reputation in relation to risk management including risk associated with its assets reinforced by Council’s division responsible for risk management reporting directly to the Chief Executive Officer. An asset management committee was established in 2004. The executive management team determines the membership of this committee and approves its terms of reference. The committee must take a whole of organisation approach to all asset management issues. Asset Class Community

Services CommunityRelations

Assets & Facilities

City Development

Finance

Buildings & structures SM (SM) (SM), AM, MP, TS,

SD, TS

Roads, laneways and carparks

(SM) (SM) (SM), AM, MP, TS

SM, SD SD, TS

Furniture and signs (SM) (SM) SM, AM, MP, TS

SD, TS

Footpaths and trails (SM) (SM) SM, AM, MP, TS

SM, SD SD, TS

Stormwater drains SM, AM, MP, TS

(SM), SD SD, TS

Parks and gardens (SM) SM (SM), AM, MP, TS

SD, TS

Table 4 - divisional role in asset management

LEGEND: SM — Service Provider for most of the assets in the group, (SM) — Service Provider for some assets in the group, AM — Asset Manager, TS — Technical Support, MP — Maintenance Provider, SD — Support Division, Shaded — responsibility for producing AMPs

Council

Assets and Facilities

City Development

Community Relations

Community Services

Finance

Corporate Counsel(Risk

Management)

Chief Executive

Officer


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4.6.6 Step program Council participates in the Municipal Association of Victoria (MAV) Step Program. It is partly a self-assessment tool, which the MAV has designed to build awareness and capacity in asset management for Victorian local government. In addition, the program aims to set minimum process standards for asset management. Self-assessment process Part of the self-assessment process is to review Council’s progress in developing asset management within the organisation. The last self-assessment was in March 2006. The table below (a summary of the Step Program scorecard) shows our progress against set milestones.

Glen Eira City Council MAV Scorecard Review

0

1

2

3

4

5

Nov 04 Mar 05 Oct 05 Mar 06

Policy Strategy

AM Plans Operations

A

B

C

D

E

F

Figure 12 - scorecard review

The scores are from F (preliminary) to A (comprehensive). Glen Eira scores B for policy as Council has adopted an Asset Management Policy. From the MAV’s perspective, we need to strengthen our policy by referencing other asset management related policies (such as risk management) and business processes as well as identify organisational context for asset management. These are minor issues, which Council can address at the next review of the policy. We will achieve a ranking of A for strategy when Council adopts this strategy. A C for plans indicates that we are still developing Asset Management Plans. Plans for buildings, roads, footpaths, right-of-ways and drainage are already well underway and we plan to prepare and finalise a plan for streetscapes, street furniture and signs by June 2007. Finally, a score of B for operations indicates most asset registers are accurate and up to date (drainage register needs cross checking against GIS database); we are undertaking at least basic condition assessments on most groups of assets; and we have some formal processes for regularly reporting the outcomes of condition assessment.


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The MAV has recognises that for councils like Glen Eira who are reaching an AAAA ranking, the self-assessment process is becoming less useful. In response, the MAV is proposing Advanced Step from October 2006. The new program will provide Council with new asset management related stretch goals and therefore ensure the Step Program will remain relevant to Glen Eira. We propose to continue to be involved in the Step Program as an important tool in developing an asset management culture at Glen Eira. 5. Where do we want to be? Consistent with Community Plan 2010 our objective for asset management is: to ensure our community assets continue to meet the needs of the Glen Eira community through responsible financial, risk and asset management. To achieve this objective, our long-term goals are that:

1. Council’s only assets will be essential assets.

2. We will have set levels of service for our community asset (internal and customer focused) that meet the needs of the community and have a high level of compliance in meeting these levels of service.

3. We will continue to maintain and renew our assets in the most cost effective manner.

4. We will understand the risk associated with our assets and manage them to the maximum extent possible.

5. Council’s income will be capable of sustaining our assets to the level of service acceptable to the Glen Eira community.

6. We will retain best practice in asset management as a means of achieving our goals.

6. Gap analysis If we compare where we want to be (in Section 5) against what we already have in place, some gaps in our current asset management strategy are evident. Table 5 is a summary of gaps that we have identified.

Where do we want to be? Gap 1. Essential assets only Council’s only assets will be essential assets.

Council policy enables effective decisions about its asset portfolio however, reviews of the portfolio are ad-hoc rather than systematic. Our assets registers are largely complete but there are still opportunities to improve accuracy and completeness so that we can fully assess whether all assets are essential.


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Where do we want to be? Gap 2. Service levels match community needs We will have set levels of service for our community assets (internal and customer focused) that meet the needs of the community and have a high level of compliance in meeting these levels of service.

We have tentative, technical levels of service for most of our asset types but we have not documented or tested these against the community expectations. We have limited indicators that measure the community’s satisfaction with our assets performance. We mainly focus on measuring service performance standards rather than standards related to our assets. Monitoring of levels of service is not comprehensive or systematic.

3. Cost effective assets We will be continuing to maintain and renew our assets in the most cost effective manner.

We have effective systems in place to ensure we maintain assets in a cost effective manner. However, we have not documented many of these systems. We have good information about our assets but we are still to finalise an assessment of the condition and the expected remaining life of many (low value) assets. We only consider whole of life cost in preparing business cases for capital works. Extending such consideration to other key phases of a project such as during design and prior to commissioning is likely to reduce further the whole of life cost of our assets.

4. Effective risk management of assets We will understand the risk associated with our assets and manage them to the maximum extent possible.

Council has excellent risk management policies, strategies, programs and practices for the management of its assets but we have not yet fully assessed the implications of under resourcing of maintenance and renewal of our assets. Our organisational structure ensures in broad terms that management roles and responsibilities for groups of assets are clear however, we need to review this to ensure there are no gaps.

5. Financial sustainability Council’s income will be capable of sustaining our assets to the level of service acceptable to the Glen Eira community.

Council has a large gap between funds necessary to renew our assets on an on-going basis and funds available. For this reason, most of our assets are unsustainable. We may be under funding maintenance of some groups of assets that may accelerate the rate of decline of these assets. When we decide whether to upgrade or purchase a new asset, the focus is on the capital works rather than whether Council’s financial base can support on-going maintenance, operational and renewal requirements.


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Where do we want to be? Gap 6. Best practice We will retain best practice in asset management.

We will soon have achieved an AAAA ranking in the MAV Step Program however, best practice is a moving target and so we will need aim continuously improving our practices to maintain best practice. We do not have asset management plans for the groups of community assets or strategies for the management of special classes of assets such as street trees or streetscapes.

Table 5 - gap analysis

7. Improvement plan From the gap analysis, we have identified opportunities for improvement and a recommended three-year improvement plan for implementation. The improvement plan centres on themes that the MAV calls the four pillars of asset management namely policy, strategy, plans, and operations. The importance of the four pillars is discussed in section 7.1. A key component of the improvement plan is the development of Asset Management Plans (AMPs). Section 7.2 details a suggested framework for such plans. Appendix 1 details the improvement plan.

7.1 The four pillars of asset management The four pillars of asset management are policy, strategy, plans, and operations. Each pillar operates in conjunction with the other to provide for a continuous improvement cycle as illustrated in the Figure 13.

Knowledge Steps

DataWisdom Knowledge Information

OperationsPolicy Strategy Plans

Planning Steps

DataWisdom Knowledge Information


Planning Steps

Wisdom Knowledge Information


Planning StepsOperationsPolicy Strategy PlansPolicy Strategy Plans

Planning Steps

Figure 13 — asset management improvement links

7.2 Asset Management Plan Asset management plans are documents that describe Council’s current understanding of an asset group. AMPs focus on the physical characteristics and attributes of assets.


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AMPs also identify priorities for future updates and suggest improvements to practices and processes. We will prepare asset management with regard to Section 2.5 of the International Infrastructure Management Manual. The typical structure and content of Council’s Asset Management Plans are described in Appendix 2. 8. Conclusion This strategy has identified some major challenges for Glen Eira City Council to confront in relation to asset management. Key findings are: • The Glen Eira community expects high quality community assets that match its

needs.

• The Glen Eira community owns a substantial asset base with an estimated replacement value of over $1 billion.

• Many of Glen Eira’s assets are approaching an age or condition where Council needs to renew or upgrade them. At current funding levels, preliminary modelling suggest that over 40 per cent of Glen Eira assets will be beyond a standard acceptable to the community within the next 50 years.

• Council’s current funding strategy does not provide for timely renewal of its community assets. Council needs to increase average annual renewal spending in the order of $6 million to maintain current service levels for its assets.

• Council has a good organisational approach, forward planning tools, information systems and an effective organisational structure to take the next step in asset management although opportunities exist to improve.

The way forward to the better management of Glen Eira’s community assets include:

• The need to develop and implement asset management plans for all groups of community assets to confirm levels of service, ensure that assets are managed in a cost effective manner and to more accurately identify the cost of owning these assets.

• Council revisiting its financial strategy with a view to achieving long-term

sustainability.


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9. References

1. Glen Eira City Council Asset Management Policy, 2005

2. Glen Eira City Council Municipal Strategic Statement, 2000

3. Glen Eira City Council Community Assets Financial Sustainability, Discussion Paper, February 2002.

4. Glen Eira City Council Glen Eira 2010, Community Plan, GECC, 2005.

5. Auditor General Victoria Management of Roads by Local Government, Performance Audit Report, Melbourne, June 2002

6. Auditor General Victoria Managing Stormwater Flooding Risks in Melbourne, Performance Audit Report, Melbourne, July 2005

7. Department of Infrastructure Facing the Renewal Challenge, Victorian Local Government Infrastructure Study, Melbourne, December 1998.

8. Department of Victorian Communities Accounting for Infrastructure Assets, A Guide, Melbourne, 2003

9. Department of Victorian Communities Asset Management Initiatives for Local Government, Status Report, Melbourne, www.dvc.vic.gov.au/local_gov.htm

10. Department of Victorian Communities Guidelines for Developing an Asset Management Policy, Strategy and Plan, Melbourne, August 2004

11. Department of Victorian Communities Asset Management Performance Measures Survey, Guidelines for Completing Data Survey for 2004-05

12. Department of Victorian Communities Sustaining Local Assets, Local Government Policy Statement, Melbourne, 2004

13. Institute of Public Works and Engineering Australia International Infrastructure Management Manual (Version 3.0), 2006

14. Municipal Association of Victoria Asset Management Improvement STEP Program, Program Outline.

15. Municipal Association of Victoria (MAV) Asset Management Improvement STEP Program, Asset Management Framework, MAV.


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Appendix 1 - three year improvement plan Notes: AMC - asset management committee, * - In consultation with other divisions Theme Goals By whom Resources Target date AM policy 1. Update Council’s Asset Management Policy to bring it in line with the MAV Step

Programs requirements for Council to endorse.

2. Systematically review compliance of Council Policy ‘Ownership of Property by Council’

6

1



In-house

In-house

June 2007

June 2007 (then every three years)

AM strategy 3. Develop specific strategies for managing unique classes of assets which either have high

risk or special needs, namely:

(a). Complete the Glen Eira Street Tree Strategy

(b). Develop a Glen Eira Streetscape Strategy

1 2 3 4 6

Assets and Facilities *

In-house June 2007 (then review yearly)

4. Address Renewal Funding Gap by:

(a). Review annually the 50 year asset performance projections using the MAV Step Model or similar modelling tool.

(b). Using outcomes of asset performance modelling, develop long-term financial plans that address the renewal gap to inform Council’s five year resource plan


Finance

In-house

In-house

June 2007 then annually

June 2007 then

review by December annually


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Theme Goals By whom Resources Target date AM Plans 5. Develop asset management plans for the following categories of assets:

(a). Buildings and structures

(b). Roads, laneways and carparks

(c). Footpaths and trails

(d). Furniture and signs

(e). Stormwater drains

(f). Parks and recreation

As a minimum, the plans will identify desirable levels of service and associated long-term funding requirements to sustain the asset group.

1 2 3 4 5 6

Assets and Facilities *

In-house

June 2007 (then review annually)

6. Review and update asset management strategy on a three year cycle. 6 Assets and Facilities *

In-house June 2010 (then every 3 years)


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Theme Goals By whom Resources Target date AM operational 7. On rollout of the new asset management system (AMS)

(a). Review accuracy and completeness of asset register; determine cost to bring to an appropriate standard and; refer to budget for funding consideration

(b). Establish master asset management register that identifies location, internal ownership, management arrangements and condition of assets.

1 6

6

Asset Managers

AMC

In-house

June 2008

June 2008

8. Purchase and rollout risk management and modelling modules for new AMS 4 5 6 Finance $30,000 (included in

the purchase of the AMS)

June 2009

9. On rollout of modelling modules, undertake community surveys (such as focus groups and questionnaires) to determine the community’s expected service levels for key assets.

2 6 In-house + $30,000

June 2010

10. Develop and implement capital works handover process to record and sign off asset details and maintenance requirements etc. to ensure whole of life costs are minimised.

2 3 6 Assets and Facilities *

In-house June 2007

11. Lead a review of organisational roles and responsibilities to ensure we have assigned an asset manager and service provider to all assets

4 6 Assets and Facilities *

In-house June 2007

12. Continue to increase staff awareness of asset management across the whole of the organisation. Including the following:

(a). Present findings of annual Step Program update to the Senior Management Group

(b). Include asset management awareness training with the rollout of the new asset management system.

3 4 6 AMC In-house Annually

June 2007

13. Further develop and refine on-going monitoring and reporting for asset management including:

(a). Participate in the MAV Advanced Step Program to demonstrate continuous improvement and report findings of annual review to Council.

(b). Develop corporate key performance indicators that measure asset management performance across the organisation.

6 AMC In-house Annually

June 2007

June 2007


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Appendix 2 - Asset Management Plan framework

The framework for basic Asset Management Plans at Glen Eira is:

1. EXECUTIVE SUMMARY

2. INTRODUCTION

This section provides an overview of all the elements of the network assets covered by the plan. It contains the justification for owning and operating the asset.

3. LEVELS OF SERVICE

This section documents the current levels of service, and defines the levels of service that are proposed, to confirm the basis of provided services.

4. FUTURE DEMAND

This section is to provide details of growth forecasts that affect the management and utilisation of the assets.

5. LIFE CYCLE ISSUES

This section outlines what is proposed or planned to manage and operate the assets at the agreed levels of service while optimising lifecycle costs.

6. FINANCIAL INFORMATION

This section contains the financial requirements resulting from all the information presented in the previous sections.

7. ASSET MANAGEMENT PRACTICES

This section is to outline the information available on assets, the information systems used and the processes used to make decisions on how the asset will be managed.

8. PLAN IMPROVEMENT AND MONITORING

This section provides details on the identified improvements to this Plan and existing asset management processes.

9. REFERENCES

10. APPENDICES

Detailed advice on how to prepare an Asset Management Plan is available in the Institute of Public Works and Engineering Australia International Infrastructure Management Manual (Version 3.0), 2006.

Documents

ASSET MANAGEMENT STRATEGY