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Ed Archer, CMA
General Manager, Corporate Services
&
Blaine Parkin, P.Eng.
Director, Corporate Asset Management
Developing
Asset Management Plans
by
Focusing
on
Service
Introduction Module 1: Foundations of Asset Management Asset Management Principles
Module 2: Long Range Financial Planning Financial condition Financial Policies Long-range Financial Plan Service-based planning
Module 3: Bringing it all Together Asset Management planning Asset condition Capital budget prioritization
Growth
Regulation
Aging / Deteriorating Infrastructure
Public Expectation
Funding Levels
Budget Demands
Levels of Service
Sustainability
Focus on Short-term Issues
Strategic Planning not linked to Asset Planning
Segmented Organization - Silos
Reactive Approach
Risk???
Life-Cycle Analysis???
1. Understanding of the Risk Profile associated with
your Asset Portfolio and how it will change?
2. Business consequences of reducing capital
investment or maintenance budgets?
3. Are planned asset expenditures justified to
external stakeholders?
4. Which investment projects should be deferred
during periods of funding restraints?
5. Is appropriate asset data (knowledge) available to
support decision making?
6. Do your people have the right competencies and
capabilities?
The Institute of Asset Management
Multi-disciplinary – Crosses departmental and discipline
boundaries.
Systematic – rigorously applied in a structured
management system.
Systems-oriented – looking at assets in their systems
context.
Risk-based – incorporating risk into decision making.
Optimal – Seeking the best compromise between
conflicting objectives.
Sustainable – delivering optimal asset life-cycle value.
Integrated – The puzzle needs to work as a whole.
The Institute of Asset Management
Effective Asset Management:
Relies on sound data and judgment that considers
technical, operational and financial performance
Holistic discipline - Requires enterprise collaboration
Draws from business and financial management, but
also technical, engineering, operations and
maintenance.
Uses a long-term view to evaluate asset performance,
cost and community sustainability
Influences, and is influenced by, corporate financial
condition
Effective Asset Management:
Engages Council in a dialogue about services and
service levels
Recognizes and manages limited resources by
systematically establishing priorities
Minimize Total Cost of Ownership while
realizing maximum potential useful life
“Financial condition is a government’s financial health as assessed by its ability to meet its existing financial obligations both in respect of its service commitments to the public and financial commitments to creditors, employees and others.”
- Public Sector Accounting Board (PSAB)
Service and
Quality Levels Economic
Factors
Financial Policies
Government
Financial
Condition
Factors Influencing Financial
Condition
Degree to which we can maintain current
financial obligations and existing service
commitments without increasing the debt
or tax burden ◦ Financial assets-to-liabilities
◦ Net debt-to-total revenue
◦ Total debt per household
$349 $315 $277
$1,925
$3,225
$4,653
$5,676
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
0
0.5
1
1.5
2
2.5
2006 2007 2008 2009 2010 2011 2012*
Financial Assets:Liabilities Net Debt:Total Revenue
Debt per Household
* 2012 projected
Degree to which we can increase financial
resources to respond to rising
commitments by either expanding
revenues or increasing debt ◦ Debt charges-to-Total revenue
◦ Municipal taxes as a % of household income
◦ Total Municipal Revenue-to-Taxable Assessment
3.1% 3.1% 3.2% 3.2% 3.4% 3.5% 3.6%
0
0.02
0.04
0.06
0.08
2006 2007 2008 2009 2010 2011 2012*Debt Charges:Total Revenue
Municipal Taxes as a % of Household Income
Total Municipal Revenue:Total Assessment
* 2012 projected
Degree to which we are dependent on,
and therefore vulnerable to, sources of
funding outside our control ◦ Government Transfers-to-Total revenue
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
2006 2007 2008 2009 2010 2011 2012*
Government Transfers:Total Revenue
•2012 projected
Doing What Matters Most
Factors influencing plans and priorities ◦ Council’s Goals and Strategies ◦ Asset renewal and capacity management needs ◦ Growth management for annexed lands ◦ Employee survey feedback ◦ Accessibility for Ontarians with Disabilities Act
Operating cost changes ◦ Service Partner budget increases ◦ Negotiated wage adjustments ◦ Transit contract increase ◦ Increases in utilities, maintenance ◦ New facilities
Focusing on Service
An effective business plan that clearly and concisely explains: ◦ how a department plans to use the resources
under its control,
◦ the extent to which intended goals and objectives will be achieved and at what cost.
Financial information alone does not tell the whole story
For a complete picture of performance, you need a
multidimensional report that includes financial and non-
financial information
Citizens, Council and executives expect more and better
information about the results produced by municipal
programs and services, not just their cost
Operating Budget Service-Based Budget
Emphasis is on: Controlling money Producing a defined level of output
Basic reporting unit: Object code Process
Efficiency: Not measured Cost per unit of output
Effectiveness/Quality:
Not measured Performance Indicators
Explains the relationship between resources (costs), services and service
levels
◦ Groups activities/branches within the Operating Budget Application to
Workplan based on services
◦ Describes the impact of a change in resources on process volumes,
which should have a direct relationship to services and service levels
Align workplan processes and performance indicators
◦ Uses indicators to describe services where discretionary changes are
possible
◦ Clarify understanding about impacts/consequences of changes
27
Enterprise Services
Department
Services
Operating Budget
Workplan
•Service Groups
•Service levels
•Cost and quality indicators
•Categories (staff time + costs)
•Service Levels
•Service Quality
•Staff costs
•Non-staff costs
•Program Changes
•Staff Time for Processes
•Staff Time for Projects
Client Input/
Service Requests
Resource Allocation
& Capacity Planning
for Projects
In Year Requests
Work Plan
Project List
Resource Requirements
For Processes
Prioritize In Year
Requests
Process
Resource Requirements
Priorities
1
2
3
4
5
6
Waterline
Resource Availability
For projects
A – Define
Processes B – Identify
Projects
Prioritized List
Strategic Plan/
Dept. Priorities
Dept/Enterprise Service
Tag Category/Subcategory Tag
Process List
Dept/Enterprise Service
Tag
Project List
Enterprise Service Department Service Enterprise Service Department Service
Policy Development and Management Solid Waste Collection and Disposal
Data Management and Analysis Waste Reduction and Disposal
Capital Budget Suppression
Infrastructure Planning Prevention
Facility Development Training
Design and Construction Emergency PlanningBy-law Enforcement DispatchProsecution Services Taxation ServicesRegulatory Investigations Water and Wastewater Billiing
POA Reception
Communications Switchboard
Intergovernmental Affairs Governance Council Secretariate
Corporate Finance and Accounting Recreation Programs
Internal Audit Facility Operations - Recreation
Purchasing Facility Maintenance
Compensation Management Parks Park Maintenance
Recruitment Regulatory Inspection
Health and Safety Permit Application Processing
Labour and Employee Relations Regulatory Review (Building)
Employee Development and Support Long Range Planning
IT Application Delivery and Data Management Planning Application Processing
Infrastructure Tool Access (Data/voice) MarketingProfessional Legal Advice Business Development
Real Estate Services Facilitation
Driver and Technician Training Data Provision
Fleet Management Roads Surface Maintenance
Mail & Print Storm Water Management Storm Water Management
Records and Information Transit Transit
Facilities Operations - Corporate
Event Management
Culture Community Support
Culture
Asset Planning and Management
By-Laws & Regulations
Corporate Communications
Corporate Finance
Corporate Sustaining Services
Winter Control Winter Control
Environmental Operations
Fire & Emergency Services
General Public/Transaction Services
Leisure/Recreation
Permits & Inspections
Planning and Economic Development
Focusing on Service
Serv
ice L
evel
Efficiency
Highest
Lowest Highest
Accts. Payable
Accts. Receivable
Building
By-law Enforcement
Clerks
Culture Facilities
Fire
Leisure/Recreation
Parking
Parks
Planning
Human Res. Legal Svcs.
Purchasing
Roads
Transit
Winter Control
Waste Mgmt
Storm Water
Wastewater
Water
ICT
Focusing on Service
47% of the residential property tax bill funds City services
35% funds Service Partners (Barrie Police,
County of Simcoe, Barrie Public Library, GO Transit, Airport, Conservation Authorities, Tourism Barrie, RVH Expansion, Health Unit)
18% funds education
Education
City Services
Service Partners
Focusing on Service
72% of revenues from
property tax
Revenue from fees,
service charges
consistent with 2012
budget
72%
1% 7%
8%
4% 2% 2% 3% 1%
Property tax Corporate Revenues
Fees, Service Charges Reserves/Reserve Funds
Fines Interest & Investment Income
Licenses/Permits Other
Other Gov't Funding
Focusing on Service
New strategies to manage sustainability are required for 2012 and beyond ◦ Introduce an asset management charge to support
asset renewal funding requirements
◦ Increase contributions to reserves at least equivalent to annual amortization charges
◦ Limit or eliminate development charge discounts
◦ Continue developing our asset management strategy to ensure we maximize the useful lives of our assets and minimize their lifecycle costs
Focusing on Service
“…a place where people want to live and
work; it meets the needs of its citizens,
now and in the future. It is sensitive to the
environment and reaches for a higher
quality of life.”
Several influencing factors drive
assessments of financial condition: ◦ PS3150 – Tangible Capital Assets
◦ Assessment growth
◦ Community composition
◦ Organization growth and the form of local government
service delivery
◦ Community expectations about services and service
levels
CITY VISION
The City of Barrie will be progressive, diverse and prosperous with opportunities for all
citizens to build a healthy and vibrant community.
GOAL
Create a Vibrant and
Healthy City Centre
GOAL
Strengthen Barrie’s
Financial Condition
GOAL
Improve and Expand
Community Involvement and
City Interactions
GOAL
Manage Growth and
Protect the
Environment
GOAL
Direct and Manage
Economic Development
· Improve integration
between downtown and
the waterfront
· Actively promote the
downtown and
waterfront to our
residents and visitors
· Encourage a mix of land
uses in the downtown
· Enhance safety in the
downtown
STRATEGIES· Balance service
demands with financial
resources
· Develop affordable long
range plans that reflect
changes in our
community’s growth and/
or economy
· Diversify revenues
· Pursue innovation
through our Journey of
Excellence
STRATEGIES
· Develop a customer service
strategy and enhance
customer experiences
· Improve and enhance
communications with public
· Increase opportunities for
public input/feedback on City
initiatives
STRATEGIES· Complete secondary
plan for annexed lands
· Bring new employment
lands to market
· Explore partnerships for
joint servicing
arrangements
· Expand transportation
choices, including active
transportation
· Advance intensification
projects in accordance
with existing policies
STRATEGIES· Attract and promote sector
clustering
· Engage businesses,
institutions and all levels of
government to establish a
competitive local economy
· Establish Barrie as centre
of excellence in innovation
and entrepreneurship
· Develop Lake Simcoe
Regional Airport as an
employment hub
STRATEGIES
Action Items and Work Plans
STRATEGIC PLANNING
Business Plan and Budget
Strategic
Planning (a)
Annual
Planning (b)Performance
Reporting (d)
Measuring,
Monitoring and
Assessing
Results (c)
Learning and
Adjusting
Program
Delivery
Strategic
Plan
Mgmt.
Reports
Public
Performance
Reports
Individual Performance Evaluations
Other Performance
Data
Env. Scan/
Survey
Workplan
Budget
Indiv. PAs
Focusing on Service
Council’s Strategies
Corporate Sustaining Services, Service
Levels
Council
Business Plan (includes the Budget)
Capital Plan
Performance Plans
Program Changes
Council + Staff
Workplans Balanced Scorecards
Corp. Systems
Dept. Systems
Non-routine
data
Planning Data
Staff
Focusing on Service
SERVICE
PEOPLE
ASSETS
PROCESS
SYSTEMS
SERVICE
LEVEL OF SERVICE
ASSET
LEVEL OF PERFORMANCE
SERVICE
COSTS RISK
City of Barrie Assets = $3.0 Billion
◦ Infrastructure Assets = $2.1 Billion
◦ Road Assets = $1.0 Billion
◦ 30% constructed / assumed within last decade
Challenges
◦ Past Budget decisions
◦ Historic growth patterns
◦ Changes in financial reporting
◦ New Growth
Opportunities
◦ Sense of Urgency
◦ Time
◦ Changes in financial reporting
Past Approach
Reactive
No pressure to replace
Level of knowledge
New Approach
Started in late 2008
Corporate Approach
Demonstrate good stewardship over the City’s existing
assets to support services at desired levels
Additional capacity needs of the City are provided for in
a sustainable manner
Develop an optimal investment program
Produce a Capital Plan that is:
◦ Reliable and executable
◦ Addressing the City’s most critical needs
◦ Matched with available financial resources
◦ Aligned with advancing Council’s Strategic Goals
How everything works together...
Lifecycle AM
Processes & Practices
Strategic Asset
Management Planning
Framework
Elements of an AM System
What is the current state of my assets?
What is my required level of service?
Which assets are critical to sustain performance?
What are my best O&M and CIP investment strategies?
What is my best long term funding strategy?
Asset Register
◦ Asset Hierarchy
◦ Record Layout
Failure Modes
◦ Physical Mortality
◦ Capacity
◦ Level of Service
◦ Financial Efficiency
Residual Life
Lifecycle & Replacement Costs
Sustainable
Quality, Quantity, Reliability and Environmental
Standards
Customer Demand
Regulation
Monitor performance as changes occur
◦ Growth
◦ Regulatory requirements
◦ Technology improvements
Focus on Service
◦ Which assets are most critical to service delivery?
Uniformity in dealing with different assets
Integrated approach
Prioritization of investment to address critical assets first
Relationship: Risk Exposure – Funding Scenarios
Probability of Failure
◦ Asset Failure Modes
◦ Remaining Lives
Consequence of Failure
◦ How does the asset contribute to service delivery?
Optimized Decision Making
Plan Analysis
Identify Options
◦ Costs
◦ Benefits
◦ Timing
Apply Model
Sensitivity Analysis
Immediate needs
• Increased operating budget pressures:
– Unprecedented growth from 2001 - 2006
– Limited land supply for future growth
– High fixed costs, or costs growing at rate that exceeds inflation
– High reliance on the tax rate as a source of revenue combined
with significant pressure to control tax rate increases
– Aging infrastructure that requires replacement at the same
time as new infrastructure is required to support growth
– Reliance on debt financing, combined with
development charge discounts
– General economic conditions
Several factors influencing financial
condition require coordination and
cohesive planning if they are going to be
effectively managed.
• Council’s main contribution is a long-term vision
and a set of priorities
– Do our strategic priorities provide sufficient, appropriate
direction for building a long range financial plan?
– Have we costed our strategic priorities?
• Stick to the plan, once established
• Demand the annual Budget and Business Plan
reflect the strategies identified in the Long Range
Financial Plan
– Update plans regularly
O&M Investment
Balance preventive, predictive and corrective
maintenance
Reporting and recording O&M costs
Minimize overall lifecycle costs
Maintenance Strategies System Performance
Analysis of the causes of asset failure and develop
specific response plans
Develop guidelines for work management
Capital Investment
Identify alternative options
Develop lifecycle options (costs, benefits and timing)
Application of lifecycle cost model
Maintain Differently Refurbish, then Replace
Full economic costs and revenues associated with
service delivery
Absorb annual variations by using an average lifecycle
cost estimate
Holding account for the total demand in funds required
for service delivery
◦ Optimized renewal of existing assets
◦ Expectations for new assets
Full costs of asset services are allocated to and
recovered from users who receive benefits from the cost
Touches all parts of the organization
Clear connectivity: Strategic Plan to Daily activities
Higher performance levels
Lower Total Cost of Ownership
Greater consistency
Increased confidence and credibility
Optimized Decision Making:
◦ Costs
◦ Risks
◦ Performance
◦ Sustainability
Managing services, not just costs
It’s not about the assets
Success lies in collaboration
◦ Process
◦ Culture
Management approach drives data
requirements
