building asset management plan 2017 revision · through review of common customer requests and...

BUILDING ASSET MANAGEMENT PLAN 2016-2026 BUILDING ASSET MANAGEMENT PLAN 2016-2026

REVISION HISTORY

Revision Description Date

1.0 Final AMP approved by Council following community consultation November 2016

1.1 Updates to ARRE and LTFP figures based on updated condition data, and in line with reviewed LTFP November 2017

EXECUTIVE SUMMARY

The objective of infrastructure asset management is to ensure that assets provide their required levels of services in the most cost effective manner to

cater for both present and future customers1. This Asset Management plan focuses on the management of the City of Burnside’s building assets,

which includes community, utility, amenity, sport, heritage, special and business buildings. This plan specifies the requirements for effective

management of this asset group and the corresponding financial implications. This plan is reviewed annually, with a formal update completed every 4

years.

Effective asset management of the City of Burnside’s building assets will contribute towards achievement of the following strategic objectives2:

> Fit for purpose and cost-effective infrastructure that meets community needs.

> A financially sound Council that is accountable, responsible and sustainable.

> Conservation and enhancement of the historic character of the City.

The contribution towards achievement of theses strategic goals and asset management objectives will be achieved by:

> Stakeholder consultation to establish and confirm service standards.

> A regular program of inspections and monitoring activities to assess asset condition and performance.

> Application of a systematic analysis to prioritise renewals and establish the most cost effective works programs.

> Continuously reviewing and improving the quality of Asset Management practices.

The total current replacement cost of the City of Burnside’s building assets is around $112m. The projected expenditure necessary to meet the service

standards for these building assets averages around $1.6m per year over the next 10 years. This is the average annual level of spend required to

ensure all assets are maintained in accordance to current standards and renewed at appropriate times, in line with endorsed strategies. Actual annual

expenditure requirements will differ from year to year as specific assets are due to be renewed.

1 Institute of Public Works Engineering Australia, 2015, 'International Infrastructure Management Manual'

2 City of Burnside, 2012, 'Be the Future of Burnside - Our Strategic Community Plan 2012-2025'

FREQUENTLY ASKED QUESTIONS

What is an asset?

An asset an item of property owned by the Council regarded as having

value. Council’s assets range from roads and footpaths to buildings,

playgrounds, stormwater infrastructure and street furniture.

What is an asset management plan?

The purpose of an asset management plan is to help an organisation

manage their infrastructure and other assets to an agreed standard of

service. The plan outlines what needs to be invested in each of our

asset classes in order to meet these defined service standards over

the next ten years.

This asset management plan is prepared as a core asset management

plan in accordance with the International Infrastructure Management

Manual3. It is prepared to meet legislative and organisational

requirements for sustainable service delivery and long term financial

planning and reporting.

What are the objectives of asset management?

The basic premise of infrastructure asset management is to intervene

at strategic points in an asset’s life cycle to extend the expected

3 Institute of Public Works Engineering Australia, 2015, 'International

Infrastructure Management Manual'

service life, and thereby maintain its performance. Generally speaking,

the cost of maintaining an asset decreases with planned maintenance

rather than unplanned maintenance, however, excessive planned

maintenance increases costs. An objective of asset management is to

strategically time infrastructure renewals before unplanned

maintenance costs become excessive, but not so soon that assets are

renewed before it is really needed.

Council’s goal in managing infrastructure assets is to meet the required

levels of service in the most cost effective manner for present and

future customers. The key elements of asset management are4:

> 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, and

> Continuous improvement in asset management practices.

4 Institute of Public Works Engineering Australia, 2015, 'International

Infrastructure Management Manual'

How do we determine when renewals are required?

Renewals are determined by considering the ability of an asset to meet

an agreed standard of service. This is done by regularly reviewing the

condition of assets and using this information as a basis to prioritise

renewals.

How do we determine our levels of service?

Our levels of service have been developed based on legislative

requirements, customer research and expectations, and strategic

goals.

Why does Council need an Asset Management Plan?

Under section 122 of the Local Government Act, the City of Burnside

has a legislative requirement to develop Asset Management Plans. In

addition to the legislative requirement, there is a need for the Council

to ensure effective investment in assets which need it most by having a

planned, systematic approach to Asset Management.

How does Council include community feedback into the Plan?

Council includes community feedback into Asset Management Plans in

a number of ways:

Through information provided via our annual community survey.

Through review of common customer requests and complaints in

our Customer Request Management (CRM) system, and

Through a formal community engagement process where the

community is invited to provide feedback on draft Asset

Management Plans, which is then incorporated into the final

documents.

Community = $23m

Utility = $16.2m

Amenity = $1.4m

Sport = $4.9m

Heritage = $58.8m

Special = $3.6m

Business = $4.2m

0

10

20

30

40

Amenity Business Community Heritage Special Sporting Utility

OUR BUILDING INFRASTRUCTURE

PROJECTED CAPITAL

EXPENDITURE

TOTAL CURRENT

REPLACEMENT COST OF

BUILDING ASSETS =

$112,072,297

16

2

72

6 6

8

34

BUILDING CONDITIONS

very good

good

average

poor

very poor

LTFP = long term financial plan ARRE = annual required renewal expenditure

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

ARRE

averageARRE

LTFP

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https://www.google.com.au/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjy4tyJx6TOAhXJF5QKHULtBEQQjRwIBw&url=https://www.iconfinder.com/icons/489792/build_building_construction_estate_home_house_icon&bvm=bv.128617741,d.dGo&psig=AFQjCNGm8GCyKTMLNW6Px0JOETNN6aFhkQ&ust=1470289575563395

https://www.google.com.au/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjtlvKyx6TOAhWSNpQKHRMVAGoQjRwIBw&url=https://thenounproject.com/term/building/334386/&bvm=bv.128617741,d.dGo&psig=AFQjCNGm8GCyKTMLNW6Px0JOETNN6aFhkQ&ust=1470289575563395

http://www.google.com.au/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjW49WIyKTOAhVGrJQKHS78DlgQjRwIBw&url=http://downloadicons.net/tall-buildings-icons?page=2&bvm=bv.128617741,d.dGo&psig=AFQjCNHqD_xtYntrE51IaT5G9PinhJ2NCg&ust=1470290192206330

http://www.google.com.au/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiV8orSyKTOAhVCoJQKHTzmAfoQjRwIBw&url=http://simpleicon.com/building-2.html&bvm=bv.128617741,d.dGo&psig=AFQjCNH668rC4FPqxsQ801wb_4VB9fLjrQ&ust=1470290373460659

TABLE OF CONTENTS

EXECUTIVE SUMMARY ....................................................................................................................................................................................................... ii

FREQUENTLY ASKED QUESTIONS .................................................................................................................................................................................. iii

INTRODUCTION .................................................................................................................................................................................................................... 8

GOALS AND OBJECTIVES ............................................................................................................................................................................................... 9

LEVELS OF SERVICE ......................................................................................................................................................................................................... 11

BUILDING HIERARCHY .................................................................................................................................................................................................. 11

FUTURE DEMAND .............................................................................................................................................................................................................. 15

DEMAND FORECAST ..................................................................................................................................................................................................... 15

DEMAND MANAGEMENT PLAN ..................................................................................................................................................................................... 16

NEW ASSETS FROM GROWTH ..................................................................................................................................................................................... 16

ASSET MANAGEMENT PRACTICES ................................................................................................................................................................................. 17

STANDARDS AND GUIDELINES .................................................................................................................................................................................... 17

ACCOUNTING/FINANCIAL SYSTEMS ........................................................................................................................................................................... 17

ASSET MANAGEMENT SYSTEMS ................................................................................................................................................................................. 17

RISK MANAGEMENT ...................................................................................................................................................................................................... 19

LIFECYCLE MANAGEMENT PLAN .................................................................................................................................................................................... 22

PHYSICAL PARAMETERS .............................................................................................................................................................................................. 22

COMPONENTISATION .................................................................................................................................................................................................... 23

USEFUL LIVES AND UNIT RATES ................................................................................................................................................................................. 25

ASSET VALUATIONS ...................................................................................................................................................................................................... 26

MAINTENANCE PLAN ........................................................................................................................................................................................................ 28

RENEWAL PLAN ................................................................................................................................................................................................................. 30

RENEWAL PRIORITISATION .......................................................................................................................................................................................... 30

RENEWAL STANDARDS ................................................................................................................................................................................................. 30

REQUIRED RENEWAL EXPENDITURE ......................................................................................................................................................................... 30

REQUIRED RENEWAL EXPENDITURE ............................................................................................................................................................................ 31

.......................................................................................................................................................................................................................................... 31

IMPACT OF DEFERRING RENEWAL WORKS .............................................................................................................................................................. 32

ENHANCEMENT PLAN ....................................................................................................................................................................................................... 32

FORECAST UPGRADE/NEW ASSETS EXPENDITURE ............................................................................................................................................... 32

DISPOSAL OF ASSETS ...................................................................................................................................................................................................... 33

FINANCIAL SUMMARY ....................................................................................................................................................................................................... 34

FINANCIAL STATEMENTS AND PROJECTIONS .......................................................................................................................................................... 34

FUNDING STRATEGY ..................................................................................................................................................................................................... 35

MONITORING AND REVIEW PROCEDURES ................................................................................................................................................................ 37

IMPROVEMENT PLAN .................................................................................................................................................................................................... 37

GLOSSARY ......................................................................................................................................................................................................................... 38

BIBLIOGRAPHY .................................................................................................................................................................................................................. 44

8 | BUILDING ASSET MANAGEMENT PLAN City of Burnside

INTRODUCTION

The current building stock of the City of Burnside consists of 148 individual buildings that have a range of uses under the broad groupings of:

> Amenity e.g. public toilets

> Business e.g. Depot administration building

> Community e.g. Community Centres

> Heritage e.g. Regal Theatre

> Special e.g. Burnside CFS Fire Station

> Sporting e.g. Bowling clubs

> Utility e.g. Depot sheds

Each of these uses are determined by a range of services delivered by the building and its surrounds at the most basic level, however, all buildings

provide the service of accommodation. The type and level of this accommodation is then typically determined by the service needs of the end users of

the building.

The types and levels of service that are catered for in the City of Burnside property portfolio include:

> Highly regulated services such as kindergartens and food preparation areas.

> High profile community and operational services such as libraries, theatres, council meetings rooms and function spaces.

> Public sporting and recreational facilities at a variety of levels.

> Public toilets.

> Council field operations facilities, and

> Storage facilities and shelters.

Council’s goal is to ensure that these buildings can deliver the type and level of accommodation required now and into the future.


This Asset Management Plan provides:

> Details of what building stock Council currently owns and operates, the current state of that stock, and how much they cost to own, operate,

and maintain.

> An overview of the levels of service provided by these buildings.

> A summary of the expenditure required and planned for over the next 10 years to ensure buildings continue to provide a satisfactory level of

service.

GOALS AND OBJECTIVES

The primary objective of this Plan is to ensure that the current building stock owned and operated by the City of Burnside is managed in terms of

ongoing maintenance and renewal expenditure such that all desired levels of service are met now and into the future.

Achieving this objective will require the meeting of a number of goals in line with Councils Vision including:

> The effective management of Council’s building and facility assets in line with corporate policies, strategies and objectives, statutory and legislative requirements and regulations.

> Ensuring that building and facility assets are safe, accessible, well maintained and meet customers’ needs in a manner that is sustainable.

> Recognising appropriate sources of capital investment required to meet Council’s asset renewal and replacement needs.

> Maximising the service potential of current assets by ensuring they are used and maintained appropriately.

> Achieving better value for money through evaluation processes that take into account lifecycle costing.

> Minimising Council’s exposure to risk as a result of asset failures.


LEVELS OF SERVICE – OUR DRIVERS

7.2/10

7.0/10

Overall satisfaction with council’s

performance

The overall planning of the City

CUSTOMER RESEARCH

3Source: City of Burnside Community Survey

November 2015

CUSTOMER EXPECTATIONS3

Heritage listed / historic buildings

maintained / preserved / communicate

heritage plans

Maintain public facilities / toilets

LEGISLATIVE

REQUIREMENTS Requirement Legislative Acts and Regulations

Safety Work Health and Safety Act 2012

Building Code of Australia

Dangerous Substances Act 1979

Electrical Safety Act 2001

Fire and Emergency Services Act 2005

Local Government Act 1999

Relevant Australian Standards

Accessibility Disability Services Act 1993

Disability Discrimination Act 1992

Building Systems Building Act 1975

Building Regulation 2003

Graffiti Control Act 2001

Building Work Contractors Act 1985

Environment Climate Change & Greenhouse Emissions

Reduction Act 2007

Water Conservation Act 1936

Heritage Structures Heritage Act 1993

Heritage Places Act 1993


LEVELS OF SERVICE

A major focus of this Plan is to clarify the current levels of service relating to Council’s buildings. These levels of service will take into account factors

including quality, reliability, responsiveness, sustainability timeliness, accessibility and cost.

While the services delivered within each building are a primary driver of Building levels of service, they are not of themselves considered Building

Services (e.g. how well a customer is treated is not a reflection of the level of service of the building, whereas the level of comfort that customer felt in

the building is a service level that can be measured). The building levels of service relate to how well the building and its operation meet the needs of

the community and Council.5

BUILDING HIERARCHY

Levels of service reflect the hierarchical importance of a building, with an A1 building having the highest level of service & A4 the lowest.

In line with Council’s Property Strategy6, the following hierarchy has been adopted.

Building Type Building Information Description and Examples

A1 Owned and Operated Strategic importance

High visibility

High Expectation in presentation

Assets that showcase Council to the public.

Civic Centre, Library, Community Centres, Aquatic Centres

A2 Owned and operated Strategic Importance

Medium visibility

Function & Safety are critical

Assets that provide for public use.

Public Toilets, recreational assets

A3 Owned and operated Strategic Importance

Low visibility

Assets that maintain the operational activities of Council are

normally occupied.

5

6 Assetic, 2016, 'Property Strategy - City of Burnside'


Building Type Building Information Description and Examples

Function & safety are critical Works Depot, biodiversity nursery

A4 Owned and Operated Operational importance

Low utilisation

Assets that contribute to Council’s operations; are not normally

occupied.

Sheds etc

B1 Owned and Managed.

Operated by others

Medium visibility

Low use

Function & Safety are Important

Assets that are Council owned but used by others under various

leases and agreements.

Sporting and recreational clubs, community centres , kiosks

B2 Owned

Managed and operated by others

Low visibility

High use

Risk is outsourced

Assets that are fully leased to another entity and then sub leased

by that entity.

Hospitals, theatres, housing assets, sporting facilities, community halls,

B3 Owned, Managed and operated by others

Various Visibility

High use, cultural or heritage significance

Risk is outsourced

Assets that our completely outsourced include all risk in the

commercial terms.

Shops and other retail/commercial/industrial spaces. Kindergartens and sporting complexes

C1 Not owned but on council land

Land on Asset Register

Buildings not owned or maintained

Assets where the entity has a stake by means of land ownership.

Country Fire Service

LEVELS OF SERVICE ARE ESTABLISHED BASED ON:

Legislative Requirements

Customer Research and Expectations

Strategic Goals


TABLE 1: CURRENT LEVELS OF SERVICE

Service

Category

Community Service

expectation

Performance Measure Process Performance Target Current Performance

Quality Buildings and fixtures

that are in good

condition

Internal assessment annually;

independent assessment very 5

years

Condition ratings of 4 or better (out

of 5)

Will be achieved on all assets by

end of 2021 / 2022 financial

year, in accordance with the

Property Strategy Priority List

timeline

Function Buildings and fixtures

that suit their use

Annual Facility inspections and

incoming complaints highlight

issues

Less than 3 complaints annually

from a third party; less than 3

breach notices per issue; less than

3 complaints by users per issue

Compliant

Safety Buildings and fixtures

that are compliant with

legislation

Building services are contracted

externally to specialists in each

field; buildings are assessed

annually

Total compliance Current shortfalls in Essential

Safety Provisions and Disability

Discrimination Act compliance

(to be addressed in 2021 / 2022

financial year)

Continuous

Improvement

Asset management

continues to trend

towards best practice

and economic viability

Funds spent on maintenance,

operational and capital works

meet business model

requirements

Capital budget should match AMP

predicted expenditure

Compliant


TABLE 2: DESIRED LEVELS OF SERVICE

Levels of Service Performance

Measurement Process

Target Performance Actions to meet Target Performance

Assets comply with safety legislation Safety Audits 100% compliance with legislation Annual Audit

Provide safe assets to all users;

respond to unsafe conditions

appropriately

Measure time required to

respond to safety issues

reported by customers

98% of hazards made safe within

two hours for urgent safety issues.

Less urgent issues actioned within a

week

Continuous review and monitoring

responses and resources – Building

Management Requests, external

communications

Provide security as required by asset

group

Security checks, audits Provide intended security with

monitoring

Continuous review and monitoring

Maintain condition, accessibility and

appearance of assets at a rating 2 or

better

Condition appraisals Maintain all assets ratings at 4 or

better

Perform condition appraisals of all

assets to identify issues to upgrade

assets to target performance

Ensure essential services available are

in working order and meet legislative

requirements

Essential services &

performance audits of asset

components

100% compliance with legislation.

Report against maintenance plans

Plan programmed maintenance

Assets meet the users' requirements

regarding suitability, convenience etc.

Customer surveys,

legislative requirements

Targets to set according to

customer surveys. Audit against

legislation

Develop customer surveys to finalise

requirements. Schedule audits

Assets to have minimal impact on

environment

Legislative requirements 100% compliance with legislation Encourage environmental audits


Levels of Service Performance

Measurement Process

Target Performance Actions to meet Target Performance

Assets to deliver optimal service at

minimum cost to Council and end users

Customer surveys, audits Targets to set according to customer

surveys

Develop customer surveys to finalise

requirements; plan cost effective

solutions

Assets to cater future demand Customer surveys,

performance audit

Suitable renewal & upgrading of

assets

Plan in advance as per statistical data

Indications of desired levels of service are currently obtained from formal surveys, residents’ feedback to Councillors and staff, service requests and

correspondence.

FUTURE DEMAND

This section of the plan analyses potential factors effecting demand including population growth, social and technology changes. The impact of these

trends is examined and demand management strategies recommended as required to modify demand without compromising customer satisfaction.

DEMAND FORECAST

Factors affecting demand include (but are not limited to) population change, climate change, changes in demographics, seasonal factors, vehicle

ownership, consumer preferences and expectations, economic factors, agricultural practices and environmental awareness. The population for the City

of Burnside was 43,986 in 2014 and is projected to grow to around 45,245 by 2031, which may realise a small increase in maintenance of our building

assets.


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. Demand Management practices include non-asset solutions, insuring against risks and managing failures.

Opportunities identified to date for Demand Management are shown below. Further opportunities will be developed in future revisions of this

infrastructure and asset management plan.

NEW ASSETS FROM GROWTH

The City of Burnside is principally a fully developed urban area with relatively few opportunities for new assets as a result of growth. However, the

Council Property Strategy provides a means to continually assess the current utilisation condition and utilisation of buildings to identify opportunities to

reconfigure, enhance or repurpose buildings to meet changes in demand.

Service Activity Demand Management Plan

Procedural change: procurement and fiscal practices

Develop panels of contractors, increase resources to cope with contractor management, retrain staff for flexible roles

Utilisation Increase functionality and multiple use focus for assets to support increased utilisation

Corporate Policies Develop meaningful Strategies to guide future planning

Technology Continue to professionally network to ensure best practice and new technologies are anticipated and accommodated


ASSET MANAGEMENT PRACTICES

This section identifies the strategies, practices and guidelines supporting Asset Management at the City of Burnside.

STANDARDS AND GUIDELINES

Asset Management practices and processes are driven by a number of legislative requirements and assisted by developed guidelines:

> Local Government Act 1999 (sets out Council’s Asset Management responsibility and the requirement to develop Asset Management Plans).

> Australian Accounting Standard 27 Financial Reporting by Local Governments 1996 (sets out the asset accounting requirements).

> International Infrastructure Management Manual, NAMS (Provides guidance and direction on asset management policy and plan development).

ACCOUNTING/FINANCIAL SYSTEMS

Council utilises 'TechnologyOne' software as Council’s financial management and accounting system. Incorporated into 'TechnologyOne' are facilities

to manage fixed assets across the organisation with extensive functionality and reporting for the full lifecycle of assets that provides full transparency,

from acquisition to disposal. The system also offers a total and comprehensive purchasing solution, encompassing controlling, maintaining and

streamlining of purchasing activities across the organisation.

ASSET MANAGEMENT SYSTEMS

Council utilises 'TechnologyOne' software as Council’s asset management system. This ensures there is full integration between operating and

financial functions. Council utilises a combined Financial / Operational Asset register that avoids any reconciliation issues that arise from two separate

registers.

TechnologyOne IntraMaps is the corporate GIS. The GIS is predominantly used to show information such as cadastral, topographic, aerial information

and asset location. It is a computer mapping system that graphically represents the geographic component of data that is housed within

TechnologyOne.

Assetic myData and Predictor are used for extended data capture and predictive modelling of Council’s asset network.


INFORMATION FLOWS

ASSET MANAGEMENT

PLAN

Asset register data on size, age, value,

remaining life of the network

Unit rates for categories of

work/material

Adopted service levels

Projections of various factors affecting

future demand for services

Correlations between maintenance and

renewal, including decay models

Data on new assets acquired by

council

Assumed Works Program

and trends

Resulting budget,

valuation and

depreciation projections

Useful life analysis

Long term financial plan

Strategic business plan

Annual budget

Departmental business

plans and budgets


RISK MANAGEMENT

The objective of the risk management process with regards to building assets is to ensure that:

> All significant operational and organisational risks are understood and identified.

> The highest risks that need to be addressed in the short to medium term are identified.

> Strategies and treatments to address risks are identified and applied.

An assessment of risks associated with service delivery from infrastructure assets has identified the most critical risks to Council. The risk assessment

process identifies and assesses risks, develops a risk rating and develops a risk treatment plan for non-acceptable risks.

The key risk management criteria relating to Council’s building assets include:

> Public health and safety.

> Service provision.

> Environmental and legal compliance.

> Security, theft and vandalism.

> Business interruption.

> Financial risk (escalating costs in deterioration).

> Asset damage through storms, flooding, water damage or events such as accidents.

Risk identification for building assets can be identified from a number of resources such as:

> Cyclical and Routine inspections.

> Reports and complaints from general public.

> Information obtained from incidents.

> Advice from professional bodies.

> Past experience.

Risk ratings are determined using the City of Burnside’s risk matrix.


TABLE 3: RISK RATING MATRIX

Consequence

Insignificant Minor Moderate Major Massive

Lik

elih

oo

d

Certain Moderate High High Extreme Extreme

Likely Moderate Moderate High Extreme Extreme

Possible Low Moderate Moderate High Extreme

Unlikely Low Low Moderate High High

Rare Low Low Low Moderate High

Once risks have been assessed and rated the most significant risks (those rated as high or extreme), are isolated for treatment/control. Those

identified as moderate or low will continue to be monitored and reviewed if circumstances change.

Options to treat risk posed by building assets include (but not limited to)7:

7 International Organization for Standardization, 2009, 'ISO 31000:2009 Risk Management – Principles and Guidelines'

> risk elimination

> reduction in the cause or likelihood of the event occurring

> reduction in the consequence or severity of the event if it were to occur

> increasing the maintenance regime

> initiating council improvements

> changing operating processes and procedures

> sharing the risk through insurance or contracts

> doing nothing and accepting the risk


TABLE 4: MAJOR RISKS RELATING TO BUILDING ASSETS

Risk Consequence Likelihood Risk Rating Proposed Treatment Responsibility Completion Date

Natural disaster Massive Unlikely High Manage through existing

systems and procedures

Emergency

Response Plan

n/a

Injury sustained as a

result of inadequate

asset management

Moderate Unlikely Moderate Robust asset management

policy and plans

Regular inspection program

Maintenance program to

address defects

Engineering, Strategy

& Assets

Open Space,

Recreation &

Property

Ongoing

Injury sustained whilst

work is occurring to

renew or replace a

building asset

Major Unlikely High Contractor management

procedures

Regular site inspections and

monitoring

Construction risk assessments

Open Space,

Recreation &

Property

Ongoing

Destruction of building

by fire

Massive Possible Extreme Regular building inspections

and tagging of electrical

equipment

Open Space,

Recreation &

Property

Ongoing


LIFECYCLE MANAGEMENT PLAN

This section outlines asset performance and condition information, and uses Asset Management principles to develop broad strategies and specific

work programs to achieve the service standards previously outlined.

It presents an analysis of available asset information and the life cycle management plans covering the three key work activities to manage the

building network;

> Operations and Maintenance Plan: Activities undertaken to ensure efficient operation and serviceability of the assets. This will ensure that the

assets retain their service potential over the course of their useful life.

> Renewal Plan: Provides a program of progressive renewal of individual assets. Deteriorating asset condition primarily drives renewal needs.

> Enhancement Plan: Provides a program of system enhancements to improve parts of the system performing below target service standards and

to develop the system to meet any future demand requirements. Sub-standard asset performance primarily drives asset development needs.

PHYSICAL PARAMETERS

Buildings are general defined as being a roofed structure with at least 2 enclosed walls. This definition covers the majority of assets in Council’s

Building Register.

Council has 148 buildings in its Building Register. These range from significant buildings such as the Civic Centre to storage sheds and shelters. It

also includes buildings over which Council exercises little or no control such as the Burnside Memorial Hospital Building.


COMPONENTISATION

The majority of Council’s habitable buildings have been componentised to the Following Levels:

Structure > Sub Structure (Below Floor elements) > Super Structure (Floor to underside of Roof)

Roof Fitouts & Fittings

> Floor Coverings > Fixtures Fittings & Screens

Services

> Electrical > Hydraulic > Fire > Mechanical > Transport (Lifts) > Security


Condition Rating Description

0, 1 Very Good: Only planned maintenance required

2 Good: Minor maintenance required plus planned maintenance

3 Fair: Maintenance required

4 Poor: Significant renewal/upgrade required

5 Very Poor: Unserviceable

OUR ASSET CONDITION

The condition of our Buildings is based on the Service

Potential Index (SPI) which has been derived from the most

recent valuation assessment (2015).

BUILDING CONDITIONS

very good

good

average

poor

very poor

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

THE CONDITION OF OUR BUILDING TYPES


USEFUL LIVES AND UNIT RATES

Useful Life and Unit Rate Calculation Methodology

Building values, useful lives and Accumulated Depreciation have been calculated by APV as at 30 June 2015.

Unit rates are not used for this valuation method.

The useful life ranges shown in the table below are a weighted average useful life as calculated by APV for valuation.

TABLE 5: COMPONENT USEFUL LIVES

Component Group Component Useful Life Range years)

Structure Sub Structure 40 -150

Super Structure 40 - 200

Roof Roof Cladding 15 - 125

Fitouts & Fittings Floor Coverings 15 - 45

Fixtures, Fittings & Screens 45 - 65

Services Electrical 64 - 90

Hydraulic 70 - 100

Fire 15 - 20

Mechanical 10 - 60

Transport (Lifts) 94

Security 10 - 20


ASSET VALUATIONS

The value of Council’s Building assets is summarised in the table below. These figures are derived from valuations undertaken by APV8 & Liquid

Pacific9 as at 30 June 2015, with new buildings commissioned since that date included at cost. Annual Depreciation is an estimate only and does not

take into consideration the impact of renewal or upgrade expenditure.

TABLE 6: ASSET VALUATION FIGURES

Note, the number of Buildings excludes buildings below the valuation threshold or those marked for demolition or disposal. There a four such buildings

on the register: Laurel Ave Nursery shade house, Newland Park toilets, Newland Park storage shed, and Conyngham St Depot storage areas (all are

below the valuation threshold).

8 APV Valuers and Asset Management, 2015, 'Valuation of City of Burnside Building Assets'

9 Liquid Pacific, 2015, 'Burnside City Council 2014 Fair Valuation'

Building Type Current Replacement Cost Depreciated amount Depreciated Replacement Cost Annual Depreciation

Community $22,961,976

$4,313,623

00

$18,648,352 $347,612

Utility $16,236,510 $2,432,257

$13,804,252 $246,224

Amenity $1,400,020 $186,019

$1,214,000 $16,848

Sport $4,886,415 $803,417

$4,082,997 $81,600

Heritage $58,793,926 $11,068,275 $47,725,650 $893,606

Special $3,584,050 $324,517 $3,259,532 $50,642

Business $4,209,400 $909,524 $3,299,875 $78,865

TOTAL: $112,072,297 $20,037,635 $92,034,658 $1,715,401


$0 $50,000,000 $100,000,000 $150,000,000

Community

Utility

Amenity

Sport

Heritage

Special

Business

Current Replacement Cost

Depreciated amount

Depreciated Replacement Cost

Annual Depreciation


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.

Maintenance includes responsive and planned activities.

Responsive maintenance is unscheduled repair work carried out to rectify defects an remove hazardous situations in response to service requests

and management/supervisory directions.

Planned maintenance is work that is planned and scheduled often as a preventative measure against failure, activities include inspection, servicing of

plant and equipment and cleaning, this may include cyclical maintenance activities (undertaken on a regular cycle) such as replacing air conditioning

filters or repainting.

Maintenance expenditure trends are shown on the following page. These figures have been extracted from the Asset Management System.


$0

$50,000

$100,000

$150,000

$200,000

$250,000

2013/14 Expenditure 2014/15 Expenditure 2015/16 Budget

OUR MAINTENANCE EXPENDITURE

Average = $195,162


RENEWAL PLAN

Renewal expenditure is major work that does not increase the asset’s design capacity but restores, rehabilitates, replaces or renews an existing asset

or component to its original service potential. Work over and above restoring an asset to original service potential is considered enhancement or new

works expenditure.

Currently, assets requiring renewal are identified from estimates of remaining life and building inspections from which cost estimates for renewal are

prepared, prioritised and scheduled in future works programmes. These renewals currently make up the Long Term Financial Plan for Building

renewal shown on the following page.

Predictions are based on building component condition, treatment costs and component degradation profiles. Modelling has been undertaken using

condition measures derived from current asset valuation figures. The results of this modelling are shown on the following page. While these results

are the most accurate figures available at this stage, these figures will be revised after a full physical condition assessment of the buildings has been

undertaken.

RENEWAL PRIORITISATION

Prioritisation of renewals is based on asset importance and cost benefit.

RENEWAL STANDARDS

Renewal work is always carried out to current standards and capacity unless a reduced capacity can be justified.

REQUIRED RENEWAL EXPENDITURE

Required renewal expenditure is shown below. Note that identified investment may change based on the outcomes of a full physical condition

assessment of buildings.


REQUIRED RENEWAL EXPENDITURE

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

ARRE average ARRE LTFP


IMPACT OF DEFERRING RENEWAL WORKS

Renewal works identified in terms of renewal strategies may be deferred if the cost (or aggregate cost) is beyond the current financial ability to fund it.

This can occur when there are short term renewal profile peaks, or higher priority works are required on other infrastructure asset groups.

When renewal works are deferred, the impact of the deferral on the assets ability to still provide the required level of service will be assessed.

Although the deferral of some renewal works may not impact significantly on the short-term operation of the assets, repeated deferral will create a

liability (backlog) in the longer term.

ENHANCEMENT 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, or through ‘gifts’ provided to the Council.

FORECAST UPGRADE/NEW ASSETS EXPENDITURE

Planned upgrade/new asset expenditures are summarised in Figure 1.


FIGURE 1: FORECAST UPGRADE / NEW ASSET EXPENDITURE

New assets and services are to be funded from Council’s Capital Works Program and grants where available.

DISPOSAL OF ASSETS

Council has no building assets proposed to be decommissioned. As such, there is no funding required or expected from the decommissioning of any

assets at this point in time. The process to identify potential disposal of building assets is considered through the City of Burnside’s Property Strategy.

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026


FINANCIAL SUMMARY

This section contains the financial requirements resulting from all the information presented in the previous sections of this infrastructure and 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.

FINANCIAL STATEMENTS AND PROJECTIONS

FIGURE 2: FORECAST EXPENDITURE FOR BUILDING ASSETS

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

New / Upgrade

Maintenance

Renewals


FUNDING STRATEGY

Asset renewal requirements for the next 10 years have been determined by utilising the APV valuation data to assess when the sub-components of

each building are due for renewal. These calculations are based on the year of construction and the estimated useful lives of these components.

It is expected that future revisions of this plan will refine this data further once condition assessments of all buildings and their associated components

have been undertaken.

As can be seen in Figure 3, the Long Term Financial Plan (LTFP) figures closely align with the Annual Required Renewal Expenditure.

FIGURE 3: LONG TERM FINANCIAL PLAN FUNDING AND ANNUAL REQUIRED RENEWAL EXPENDITURE (ARRE)

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

ARRE

average ARRE

LTFP


$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Maintenance Cost

Major Rehabilitation

Other Services Renewal

Full Fitouts & Fittings Rehab

Roof Renewal

Superstructure Rehab

INVESTMENT REQUIRED BY RENEWAL TYPE


PLAN IMPROVEMENT & MONITORING

MONITORING AND REVIEW PROCEDURES

This infrastructure and asset management plan will be reviewed during annual budget preparation and amended to recognise any changes in service

levels and/or resources available to provide those services as a result of the budget decision process.

The Plan has a life of 4 years and is due for revision and updating within 2 years of each Council election.

IMPROVEMENT PLAN

The asset management improvement plan generated from this infrastructure and asset management plan is shown below.

TABLE 7: IMPROVEMENT PLAN

Item #

Task Importance Urgency Risk

Responsibility Resources Required

Start Date End Date

1.

Develop and Implement building

level 2 condition assessment

methodology and process

High High High Open Space, Recreation and

Property Operating Budget Dec 2016 Mar 2018

2.

Establish renewal forecasts based

on condition audits.

High High High Open Space, Recreation and

Property Operating Budget Dec 2016 July 2019

3.

Review update and improve

building asset data breadth &

depth

Moderate Medium Medium

Open Space,

Recreation and

Property

Internal Resources Aug 2017 July 2019


GLOSSARY Annual Required

Renewal Expenditure

(ARRE)

The amount needed to be spent in a given year to maintain assets to their agreed level of service.

Annual service cost

(ASC)

An estimate of the cost that would be tendered, per annum, if tenders were called for the supply of a service to a performance

specification for a fixed term. The Annual Service Cost includes operating, maintenance, depreciation, finance/ opportunity and

disposal costs, less revenue.

Asset condition

assessment

The process of continuous or periodic inspection, assessment, measurement and interpretation of the resultant data to indicate

the condition of a specific asset so as to determine the need for some preventative or remedial action.

Asset group Grouping of assets of a similar nature and use in an entity's operations (AASB 166.37)

Asset management The combination of management, financial, economic, engineering and other practices applied to physical assets with the

objective of providing the required level of service in the most cost effective manner.

Assets Future economic benefits controlled by the entity as a result of past transactions or other past events (AAS27.12).

Property, plant and equipment including infrastructure and other assets (such as furniture and fittings) with benefits expected to

last more than 12 month.

Average annual asset

consumption (AAAC)

The amount of a local government’s asset base consumed during a year. This may be calculated by dividing the Depreciable

Amount (DA) by the Useful Life and totalled for each and every asset OR by dividing the Fair Value (Depreciated Replacement

Cost) by the Remaining Life and totalled for each and every asset in an asset category or class.

Capital expansion

expenditure

Expenditure that extends an existing asset, at the same standard as is currently enjoyed by residents, to a new group of users.

It is discretional expenditure, which increases future operating, and maintenance costs, because it increases council’s asset

base, but may be associated with additional revenue from the new user group, eg. extending a drainage or road network, the

provision of an oval or park in a new suburb for new residents.


Capital expenditure Relatively large (material) expenditure, which has benefits, expected to last for more than 12 months. Capital expenditure

includes renewal, expansion and upgrade. Where capital projects involve a combination of renewal, expansion and/or upgrade

expenditures, the total project cost needs to be allocated accordingly.

Capital funding Funding to pay for capital expenditure

Capital grants Monies received generally tied to the specific projects for which they are granted, which are often upgrade and/or expansion or

new investment proposals.

Capital investment

expenditure

Refer capital expenditure

Capital new expenditure Expenditure which creates a new asset that is additional to Council’s previous asset complement.

Capital renewal

expenditure

Expenditure on an existing asset where a previously existing asset is replaced - giving a new asset with a new useful life -

without enhancement of the service capability except where this is incidental and unavoidable.

Capital upgrade

expenditure

Expenditure, in where an upgraded asset replaces a previously existing asset with enhanced capability or functionality, where

an option existed for replacement without the enhanced capability or functionality. The replacement of a 300mm stormwater

pipe with a 500mm stormwater pipe results in an upgraded asset. The replacement of a model 135J grader with a model 135K

grader where the model 135J grader is no longer available, would not result in an upgraded asset, despite any improvement in

operational capability.

Component An individual part of an asset which contributes to the composition of the whole and can be separated from or attached to an

asset or a system.

Componentisation The practice of considering the components of a fixed asset individually, to account for the fact that these components have

unique physical and economic lives.

Cost of an asset The amount of cash or cash equivalents paid or the fair value of the consideration given to acquire an asset at the time of its

acquisition or construction, plus any costs necessary to place the asset into service. This includes one-off design and project

management costs.


Current replacement cost

(CRC)

The cost the entity would incur to acquire the asset on the reporting date. The cost is measured by reference to the lowest cost

at which the gross future economic benefits could be obtained in the normal course of business or the minimum it would cost, to

replace the existing asset with a technologically modern equivalent new asset (not a second hand one) with the same economic

benefits (gross service potential) allowing for any differences in the quantity and quality of output and in operating costs.

Current replacement cost

‘as new’ (CRC)

The current cost of replacing the original service potential of an existing asset, with a similar modern equivalent asset, i.e. the

total cost of replacing an existing asset with an as NEW or similar asset expressed in current dollar values.

Cyclic maintenance Replacement of higher value components/sub-components of assets that is undertaken on a regular cycle including servicing

and replacement of air conditioning equipment components etc. This work generally falls below the capital/ maintenance

threshold and needs to be identified in a specific maintenance budget allocation.

Depreciable amount The cost of an asset, or other amount substituted for its cost, less its residual value (AASB 116.6)

Depreciated replacement

cost (DRC)

The current replacement cost (CRC) of an asset less, where applicable, accumulated depreciation calculated on the basis of

such cost to reflect the already consumed or expired future economic benefits of the asset

Depreciation /

amortisation

The systematic allocation of the depreciable amount (service potential) of an asset over its useful life.

Economic life Refer useful life

Expenditure The spending of money on goods and services. Expenditure includes recurrent and capital.

Fair value The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties, in an arms-

length transaction.

Group of assets Refer asset group

Heritage asset An asset with historic, artistic, scientific, technological, geographical or environmental qualities that is held and maintained

principally for its contribution to knowledge and culture and this purpose is central to the objectives of the entity holding it.


Infrastructure assets Physical assets of the entity or of another entity that contribute to meeting the public's need for access to major economic and

social facilities and services, eg. roads, drainage, footpaths and cycleways. These are typically large, interconnected networks

or portfolios of composite assets The components of these assets may be separately maintained, renewed or replaced

individually so that the required level and standard of service from the network of assets is continuously sustained. Generally

the components and hence the assets have long lives. They are fixed in place and are often have no market value.

Level of service The defined service quality for a particular service against which service performance may be measured. Service levels usually

relate to quality, quantity, reliability, responsiveness, environmental, acceptability and cost).

Maintenance and renewal

gap

Difference between estimated budgets and projected expenditures for maintenance and renewal of assets, totalled over a

defined time (eg 5, 10 and 15 years).

Maintenance expenditure Recurrent expenditure, which is periodically or regularly required as part of the anticipated schedule of works required to ensure

that the asset achieves its useful life and provides the required level of service. It is expenditure, which was anticipated in

determining the asset’s useful life.

Modern equivalent asset A structure similar to an existing structure and having the equivalent productive capacity, which could be built using modern

materials, techniques and design. Replacement cost is the basis used to estimate the cost of constructing a modern equivalent

asset.

Non-revenue generating

investments

Investments for the provision of goods and services to sustain or improve services to the community that are not expected to

generate any savings or revenue to the Council, eg. parks and playgrounds, footpaths, roads and bridges, libraries, etc.

Operating expenditure Recurrent expenditure, which is continuously required excluding maintenance and depreciation, eg power, fuel, staff, plant

equipment, on-costs and overheads.

Pavement management

system

A systematic process for measuring and predicting the condition of road pavements and wearing surfaces over time and

recommending corrective actions.

Planned maintenance Repair work that is identified and managed through a maintenance management system (MMS). MMS activities include

inspection, assessing the condition against failure/breakdown criteria/experience, prioritising scheduling, actioning the work and

reporting what was done to develop a maintenance history and improve maintenance and service delivery performance.


PMS score A measure of condition of a road segment determined from a Pavement Management System.

Rate of annual asset

consumption

A measure of average annual consumption of assets (AAAC) expressed as a percentage of the depreciable amount

(AAAC/DA). Depreciation may be used for AAAC.


renewal

A measure of the rate at which assets are being renewed per annum expressed as a percentage of depreciable amount (capital

renewal expenditure/DA).


upgrade

A measure of the rate at which assets are being upgraded and expanded per annum expressed as a percentage of depreciable

amount (capital upgrade/expansion expenditure/DA).

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

Recoverable amount The higher of an asset's fair value less costs to sell and its value in use.

Remaining life The time remaining until an asset ceases to provide the required service level or economic usefulness. Age plus remaining life

is economic life.

Renewal Refer capital renewal expenditure

Residual value The net amount which an entity expects to obtain for an asset at the end of its useful life after deducting the expected costs of

disposal.

Revenue generating

investments

Investments for the provision of goods and services to sustain or improve services to the community that are expected to

generate some savings or revenue to offset operating costs, eg public halls and theatres, childcare centres, sporting and

recreation facilities, tourist information centres, etc.

Risk management The application of a formal process to the range of possible values relating to key factors associated with a risk in order to

determine the resultant ranges of outcomes and their probability of occurrence.

Section or segment A self-contained part or piece of an infrastructure asset.

Service potential The capacity to provide goods and services in accordance with the entity's objectives, whether those objectives are the

generation of net cash inflows or the provision of goods and services of a particular volume and quantity to the beneficiaries


thereof.

Service potential

remaining

A measure of the remaining life of assets expressed as a percentage of economic life. It is also a measure of the percentage of

the asset’s potential to provide services that is still available for use in providing services (DRC/DA).

Strategic management

plan (SA)

Documents Council objectives for a specified period (3-5 yrs), the principle activities to achieve the objectives, the means by

which that will be carried out, estimated income and expenditure, measures to assess performance and how rating policy

relates to the Council’s objectives and activities.

Useful life Either:

(a) the period over which an asset is expected to be available for use by an entity, or

(b) the number of production or similar units expected to be obtained from the asset by the entity.

It is estimated or expected time between placing the asset into service and removing it from service, or the estimated period of

time over which the future economic benefits embodied in a depreciable asset, are expected to be consumed by the council. It

is the same as the economic life.

Value in use The present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at

the end of its useful life. It is deemed to be depreciated replacement cost (DRC) for those assets whose future economic

benefits are not primarily dependent on the asset's ability to generate new cash flows, where if deprived of the asset its future

economic benefits would be replaced.

Source: DVC 2006, Glossary


BIBLIOGRAPHY

APV Valuers and Asset Management, 2015. Valuation of City of Burnside Building Assets.

Assetic, 2016. Property Strategy - City of Burnside.

City of Burnside, 2012. Be the Future of Burnside - Our Strategic Community Plan 2012-2025. Adelaide: City of Burnside.

Institute of Public Works Engineering Australia, 2015. International Infrastructure Management Manual. Wellington: National Asset Management

Steering Group.

International Organization for Standardization, 2009. ISO 31000:2009 Risk Management – Principles and Guidelines.

Liquid Pacific, 2015. Burnside City Council 2014 Fair Valuation.

New Focus, 2015. Annual Community Survey 2015 - City of Burnside.