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					                                                                    POLICY NO: DCI 8 - CL




                            ASSET MANAGEMENT

                                       POLICY




Date Resolved By Council:                          23 May 2005

Commencement Date:                                 23 May 2005

Review Date:                                       June 2008

Revocation Date:                                   N/A

Responsible Department:                            City Infrastructure




This policy has been authorised and is included on Council’s Website.




                                                   Peter Brown
                                                   Chief Executive Officer

                                                   23 May 2005
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                           ASSET MANAGEMENT POLICY
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                                                         CONTENTS


    1.    Purpose ...............................................................................................................2
    2.    Objective ..............................................................................................................2
    3.    Why Is Asset Management Important?.................................................................3
    4.    What Is Asset Management? ...............................................................................4
    5.    Moreland’s Asset Management Vision & Goal......................................................6
          5.1     Vision: ......................................................................................................... 6
          5.2     Goal: ........................................................................................................... 6
    6.    Asset Management Framework............................................................................6
    7.    Policy Responsibilities & Relationships ................................................................8
          7.1     Council’s Role: ............................................................................................ 8
          7.2     Chief Executive Officer:............................................................................... 8
          7.3     Directors & Senior Management: ................................................................ 8
    8.    Policy Statements ................................................................................................9
          8.1     Asset Planning & Budgeting ........................................................................ 9
          8.2     Asset Operations & Maintenance .............................................................. 10
          8.3     Risk Assessment & Management.............................................................. 10
          8.4     Asset Accounting & Costing ...................................................................... 10
          8.5     Asset Management Strategies & Plans ..................................................... 11
          8.6     Information Systems ................................................................................. 11
          8.7     Data Management .................................................................................... 11
    9.    Actions, Deadlines & Review .............................................................................11
    10.   Glossary.............................................................................................................12




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1.   PURPOSE

     Moreland City Council provides a range of services to the community utilising assets.
     The elected members of Moreland City Council have stewardship to care for and
     protect these assets for present and future generations.

     The purpose of this policy is to outline a framework for the management of assets to
     deliver the City Vision. It is the intention of Council that the management of these
     assets will encompass sustainability of the built and natural environment whilst
     ensuring most appropriate delivery of Council services for the benefit of the community.

     This Policy is designed to take into consideration all assets owned or controlled by
     Council. These assets are categorised as follows:

     ●     Land
     ●     Buildings
     ●     Plant and Equipment (including motor vehicles, trucks, cranes, chainsaws, etc.)
     ●     Furniture and Fittings
     ●     Computer Equipment (including PABX systems, telephones)
     ●     Library Books (including video tapes, CD’s, DVD’s)
     ●     Artworks (including public art, monuments)
     ●     Park Assets (including sports grounds, BBQ’s, playground equipment, street
           trees)
     ●     Road Assets (including road pavement & surface, footpaths, bridges, kerb &
           channel, retaining walls, traffic signals, parking meters, street lights, street
           furniture and signs)
     ●     Drainage Assets (including underground pipes, pits, culverts and litter traps)


2.   OBJECTIVE

     The objectives of the policy are to:

     ●     Outline why asset management is relevant to Moreland City Council.
     ●     Adopt best appropriate Asset Management practices.
     ●     Provide a framework for implementing Asset Management to enable a consistent
           and strategic approach at all levels of Council.
     ●     Provide guidance to staff responsible for asset management.




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3.   WHY IS ASSET MANAGEMENT IMPORTANT?

     The Council Plan (refer to the Council Plan 2004-2008, ‘Caring Community in a
     Sustainable City’) demonstrates Council’s commitment to infrastructure by stating in its
     vision (page 2).

     “Moreland seeks to create an environmentally sustainable and liveable city, where
     people can shop, work and socialise locally. A city where a car and high income are not
     necessary for a rich and rewarding quality of life. A city, which will continue to provide a
     range of opportunities and choices for a diverse, prosperous community.”

     Council recognises that there is a need to establish an appropriate balance between
     maintaining and rehabilitating its infrastructure. Moreland is committed to achieving a
     balanced response to this dilemma in consultation with its community and it is evident
     in the Council Plan (page 20).

     “Council will responsibly manage the City’s infrastructure and Plan for its renewal
     acknowledging the important impact this has on the community’s quality of life”.

     The following diagram provides an overview of Moreland’s planning process and
     documents this policy’s direct relationship / linkage to the Council Plan. Refer to
     Council Plan 2004-2008 (pages 8 and 9).




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                                      City Vision

                                                                                   Community
                                        City Plan                                  Input

                                City wide Policies, State
                                Policies, Asset Policies,
                              Municipal Strategic Statement,
                                 Local Government Act,
                                 Municipal Health Plan,
                                 Moreland Open Space
                                         Strategy


                                                          Long Term Financial Plan
        Mayor’s Speech                                    Asset Management Strategy
                                                          Services Provision Strategy
                                                          Policy & Statutory Commitment
CEO’s Key Performance Indicators                          Strategy


                               Council Plan & Annual Budget
                                  Moreland City Council



                                   Directors Accountability
                                         Framework



                                        Branch Plans



                                     Unit Service Plans



                                   Team Operation Plans


 4.    WHAT IS ASSET MANAGEMENT?

       Asset management is a systematic process to guide the planning, acquisition,
       operation and maintenance, renewal and disposal of assets. Its objective is to
       maximise asset service delivery potential and manage related risks and costs over their
       entire lives.

       In simplest terms, asset management is about the way in which one looks after its
       assets, both on a day-to-day basis (ie. maintenance and operations) and in the medium
       to long term (ie. strategic and forward planning).




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    Asset Management ensures that Council’s assets are capable of providing services, of
    an agreed quality, in a sustainable manner, for present and future communities.

    The figure below illustrates the typical lifecycle of an asset and associated asset
    management functions from Planning for the need to create an asset through to its
    ultimate Disposal including Audit and Review of performance. The management of
    Council’s assets will be carried out within the framework outlined below.


                                                                      START
                                            REVIEW

                                                           PLANNING
                          AUDIT                           STRATEGIES



                   DISPOSAL                                    CREATION &
               RATIONALISATION                                 ACQUISITION



                                                                   ACCOUNTING &
                 REPLACEMENT                                        ECONOMICS



                                                              OPERATIONS
                    REHABILITATION



                              CONDITION &            MAINTENANCE
                             PERFORMANCE



                                   UTILISATION PHASE
                           OPTIMISED OPERATIONS MAINTENANCE
                              RENEWAL & RISK MANAGEMENT




    To responsibly manage its assets, Moreland City Council will require knowledge of the
    following:

    ●    The number and location of assets it owns or controls
    ●    The current condition and residual lives of the assets
    ●    The current replacement value of assets
    ●    Dates that assets are constructed or acquired
    ●    The cost of maintenance, replacement and rehabilitation programs
    ●    How programs will be financed and funds allocated
    ●    How funding will affect the organisation’s expenditures and incomes
    ●    Levels of service acceptable or expected by the community
    ●    Whether assets will be replaced at the end of their life

    More advanced asset management requires knowledge of:

    ●    What the assets and components consist of down to the level at which
         maintenance can be managed
    ●    The rate of decay of assets




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     ●     The impact that possible future failures and technological change will have, both
           from a business point of view and in terms of how the assets are managed
     ●     The strategies to counter failures and changes
     ●     The optimal maintenance and renewal expenditure required for reliability or long
           life at least cost
     ●     Whether assets are being operated efficiently and effectively
     ●     How different levels of funding will affect the level of service
     ●     What risks the many different management options constitute for the organisation
     ●     What investment options there are for maintenance, rehabilitation and renewal
           over the life cycle of the asset
     ●     The service capacity of components, and the potential for the service capacity to
           be exceeded prior to the end of the physical life of the asset.


5.   MORELAND’S ASSET MANAGEMENT VISION & GOAL

     5.1   Vision:

           To be at the forefront of Asset management nationwide, providing sustainable
           services so that Moreland is a great place to live, work, visit and invest.

     5.2   Goal:

           To operate and care for Council’s assets for present and future communities by
           supporting sustainable innovative services, making socially responsible decisions
           and demonstrating good governance.

6.   ASSET MANAGEMENT FRAMEWORK

The framework for implementing Asset Management to deliver the Asset Management Vision
and Goal is illustrated in the following diagrams.




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     Policy                     Strategy                           Plans                   Operations

                                To develop a                   To outline particular       To detail ‘day to day’
   To set a broad               structured set of              actions and resources       actions required to deliver
   framework for                actions aimed at               required to provide         the defined level of
   undertaking asset            enabling improved              defined levels of service   service
   management in a              asset management by
   structured and               the organisation
   coordinated way                                                                         Operations
                                                                                           Plans
                                                                                           •R eflects AM Plan
                                                               AM Plans                     Priorities/Forecasts
                                                                                           • Allocates necessary
                                                               • Levels of service
                                                                                           resources
                                                               • Demand forecasts
                                                                                           • Contain measurable
                                AM Strategy                    • Asset portfolio
                                                                                             performance indicators
                                • Current status               • AM activities
   AM Policy                                                                               • Promotes E  fficient
                                      –Processes                    –Operations
                                                                                             Service delivery
   • Context and                      –S ystems                     –Maintenance
     importance                       –Data                         –R enewals
   • AM vision and goals              –Planning                     –Capital works
   • Responsibilities &               –Implementation               –Disposals
     relationships              • Future vision                • Financial forecasts (20
   • Broad timeframes and       • Gap analysis                   years)
     deadlines                  • S trategies and actions to
   • Integration of AM into       address gaps
     organisation               • R esources and
   • Audit and review             timeframes




Note, each asset category will have its own Asset Management Strategy and Plan, which will sit under
this policy. Each asset category shall have a representative on the Asset Management Team.




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7.   POLICY RESPONSIBILITIES & RELATIONSHIPS

     This policy will apply to staff and external service providers with asset management
     responsibilities at various levels within the organisation as described in the
     Responsibility Matrix.

     Moreland City Council is the provider of a large range of services using its vast portfolio
     of assets and Council, having stewardship responsibility, is the final decision maker on
     all matters related to asset management and care.

     7.1   Council’s Role:

           In support of this Policy, Council will –

           ●     Act as stewards for all Council assets.
           ●     Approve the Asset Management Policy and monitor its outcomes.
           ●     Set levels of service, risk and cost standards.
           ●     Approve the Council Plan, the Annual Budget (including a five year Capital
                 Works Program) and Asset Strategies and Plans in accordance with this
                 policy and the long-term financial plan.
           ●     Ensure appropriate resources for Asset Management activities are made
                 available.

     7.2   Chief Executive Officer:

           In support of this Policy, the Chief Executive Officer will-

           ●     Implement the Asset Management Strategy with agreed resources.
           ●     Monitor and review performance of Council staff in implementing the Asset
                 Management Strategy, through the Manager Asset Management.
           ●     Ensure that accurate and reliable information is presented to Council for
                 decision-making.
           ●     Identify staff and external service providers with asset management
                 responsibilities at various levels within the organisation through a
                 Responsibility Matrix.

     7.3   Directors & Senior Management:

           In support of this Policy, the Managers responsible for Asset Management will-

           ●     Develop Asset Management Strategies and Plans for the various
                 categories of assets.
           ●     Monitor the Asset Management Plans and implement improvements on a
                 12 monthly cycle.
           ●     Implement tactical plans (such as maintenance programs, capital works
                 programs) in accordance with the Asset Management Plan and Council
                 Plan.



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           ●     Deliver levels of service to agreed risk and cost standards.
           ●     Present information to the Chief Executive Officer in terms of lifecycle, risks
                 and costs.


8.   POLICY STATEMENTS

     As part of the Asset Management Framework, the following statements reflect
     Council’s commitment to Best Appropriate Practice Asset Management.

     8.1   Asset Planning & Budgeting

           1.    All assets will be managed from a life cycle perspective in accordance with
                 the International Infrastructure Management Manual published by the
                 Institute of Public Works Engineering Australia Limited, within available
                 resources.
           2.    Asset renewal and maintenance program requirements will be met prior to
                 any new or additional assets being considered except through the
                 processes outlined in the following statements.
           3.    Will work towards at least 80% of expenditure on capital works to be
                 allocated to the renewal of existing assets. This allocation may include
                 projects to consolidate assets.
           4.    Distribution of the renewal allocation for capital works is to reflect the level
                 of service that each asset category provides to the community. Initially this
                 distribution is to be based on the % of accumulated depreciation across
                 each asset category.
           5.    Capital allocations for new assets will only be made following Council’s
                 capital expenditure review process.
           6.    All capital investment will be judged on a life cycle cost approach with
                 capital expenditure only being approved in conjunction with appropriate
                 recurrent expenditure budgets (maintenance and operations).         This
                 approach will look at alternative options to deliver the desired level of
                 service as specified in the Asset Management Strategies and Plans via
                 asset creation / acquisitions, upgrades, renewals or disposals.
           7.    Business cases will be developed to support the allocation of budgets and
                 assist in determining priorities.
           8.    Capital investment proposals will be evaluated, prioritised and selected in
                 accordance with criteria, which includes risk, community benefit and a cost-
                 benefit analysis for both renewed and new assets.
           9.    Risk analysis at project initiation stages will be undertaken to mitigate future
                 Council liability.
           10.   Planned asset acquisitions, upgrades, renewal or disposals will only
                 proceed if the proposed expenditure has been included as part of Council’s
                 Asset Management Plans.
           11.   A 5-year capital works program will be developed and subjected to an
                 annual review.




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          12.   Specific reference be given to evaluation and prioritization of projects in
                terms of energy, water, materials and internal amenity in addition to
                community benefit.
          13.   That the distribution of renewal allocation takes environmental impacts into
                consideration as opposed to merely percentage accumulated depreciation.

    8.2   Asset Operations & Maintenance

          1.    The Chief Executive Officer will delegate the responsibilities for service
                provision and asset management activities to Council officers.
          2.    Appropriate planned maintenance regimes to assist Council’s assets to
                meet their design lives will be initiated in the most cost effective manner.
          3.    Maintenance plans will be prepared incorporating best available analysis
                techniques, cost benefit analysis and plans to improve upon energy and
                water efficiency.
          4.    Benchmarking of all asset maintenance and life cycle management
                techniques will be undertaken to ensure that Council is adopting best
                practices.
          5.    All activities under planned or reactive maintenance regimes will be
                captured within Council’s Asset Management Systems. This information
                will assist in the analysis of current and future maintenance and capital
                expenditure. It will also assist in the management of risk.

    8.3   Risk Assessment & Management

          1.    All activities in the assessment and management of risk will be undertaken
                within the framework outlined in the Risk Management Policy.
          2.    All staff responsible for and involved in activities associated with the
                management of Council’s assets will be trained to ensure that appropriate
                asset and risk management practices are applied.

    8.4   Asset Accounting & Costing

          1.    Council will keep detailed asset registers on all assets under its care and
                control.
          2.    Assets will be revalued at intervals of no greater than 4 years using the
                deprival valuation as the basis in accordance with the Australian
                Accounting Standards.
          3.    Effective economic lives will be given to each asset group with the written
                down and depreciation values determined in accordance with the Australian
                Accounting Standards.
          4.    Council will determine the cost of asset service delivery on a full cost
                recovery basis, which as a minimum includes the appropriate distribution of
                costs and overheads (including administration & finance charges,
                operation, maintenance and depreciation).




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     8.5   Asset Management Strategies & Plans

           1.    Council will develop Asset Management Strategies and Plans that will apply
                 to all asset categories under its care and control. These Asset Management
                 Strategies and Plans will:
                 ●      Give consideration to the management of the asset over its whole life
                        cycle.
                 ●      Provide information on future maintenance, operational, upgrade,
                        renewal and/or disposal requirements.
                 ●      Identify the level of service that will be delivered by the asset and how
                        the service will be monitored.
                 ●      Provide the basis for financial planning for assets.
                 ●      Comply with the intent of all Asset Management Policy statements.

     8.6   Information Systems

           1.    Council will implement a Corporate Total Asset Management System.
           2.    The Asset Management Steering Committee will identify corporate Asset
                 Management System enhancements.

     8.7   Data Management

           1.    Information regarding the condition, creation / acquisition, maintenance,
                 renewal, refurbishment and disposal of assets rests with the relevant Asset
                 Managers, to ensure continued accuracy of Council’s asset registers.


9.   ACTIONS, DEADLINES & REVIEW

     This policy shall be linked and read in conjunction with the Total Asset Management
     Strategy, which is being developed to meet the needs and expectations of Council.

           Key Action                            To Be Completed By

           Establish an Asset     Management     May 2005
           Steering Committee

           Complete   the     Total      Asset   July 2005
           Management Strategy

           Implement  a   Corporate      Asset   June 2006
           Management System

           Complete     Asset     Management     June 2006
           Strategies and Plans for each asset
           category

           Asset Management Policy to be         June 2008
           reviewed by Council’s Internal
           Auditor



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      References:
      International Infrastructure Management Manual – Version 2.0, 2002
      MAV Asset Management Improvement “Step” Program – Program Outline and Asset
      Management Framework


10.   GLOSSARY

      The following terms have been used in this Policy. A definition is given for each one to
      assist with better understanding of the Policy.

      Advanced Asset Management
      Asset Management that employs predictive modelling, risk management and optimised
      decision-making techniques to establish asset lifecycle treatment options and related
      long term cashflow predictions.

      Asset
      A physical component of a facility, which has value, enables services to be provided
      and has an economic life of greater than 12 months.

      Asset Management
      The combination of management, financial, economic, engineering and other practices
      applied to physical assets with the objective of providing a required level of service in
      the most cost-effective manner.

      Asset Management Plan
      A plan developed for the management of asset categories that combines multi-
      disciplinary management techniques (including technical and financial) over the
      lifecycle of the asset in the most cost-effective manner to provide a specific level of
      service. A significant component of the plan is a long-term cash flow projection for the
      activities.

      Asset Management Strategy
      A strategy for asset management covering the development and implementation of
      plans and programs for asset creation, operation, maintenance, rehabilitation /
      replacement, disposal and performance monitoring to ensure that the desired levels of
      service and other operational objectives are achieved at optimum cost.

      Asset Management Steering Committee
      A group appointed by the Chief Executive Officer to review and monitor the corporate
      asset management improvement program and ensure the development of integrated
      asset management systems and plans consistent with organisational goals and
      objectives.

      Asset Register
      A record of asset information considered worthy of separate identification including
      inventory, historical, financial, condition, construction, technical and financial
      information about each asset.

      Basic Asset Management
      Asset management that relies primarily on the use of an asset register, maintenance
      management systems, condition assessment and defined levels of service to establish
      alternative treatment options and long term cash flow predictions.
      Priorities are usually established on the basis of financial return gained by carrying out
      the work (rather than risk analysis and optimised decision making).
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    Capital Expenditure
    Expenditure used to create new assets or to increase the capacity of existing assets
    beyond their original design capacity or service potential. Capital expenditure
    increases the value of asset stock.

    Components
    Specific parts of an asset having independent physical or functional identity and having
    specific attributes such as different life expectancy, maintenance regimes risk or
    criticality.

    Council Plan
    A document produced by Council to inform stakeholders of its objectives, intended
    activities, performance, income and expenditure required for a period of one financial
    year. It may also indicate anticipated future short-term income and expenditure.

    Depreciation
    The wearing out, consumption or other loss of value of an asset whether arising from
    use, passing of time or obsolescence through technological and market changes. It is
    accounted for by the allocation of the cost (or revalued amount) of the asset less its
    residual value over its useful life.

    Disposal
    Activities necessary to dispose of decommissioned assets.

    Infrastructure
    Stationary systems of assets forming a network and serving whole communities, where
    the system as a whole is intended to be maintained indefinitely at a particular level of
    service potential by the continuing replacement and refurbishment of its components.

    Level of Service
    The defined service quality for a particular activity or service area against which service
    performance may be measured. (eg. Street lighting in a roadway). Service levels
    usually relate to quality, quantity, reliability, responsiveness, environmental
    acceptability and cost.

    Lifecycle
    The cycle of activities that an asset goes through while it retains an identity as a
    particular asset i.e. from planning and design to decommissioning or disposal.

    Maintenance
    All actions necessary for retaining an asset as near as practicable to its original
    condition, but excluding rehabilitation or renewal. Fixed interval maintenance is used
    to express the maximum interval between tasks.

    Operation
    The active process of utilizing an asset which will consume resources such as
    manpower, energy, chemicals and materials. Operation casts are part of lifecycle costs
    of an asset.




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    Planned Maintenance
    Planned maintenance activities fall into 3 categories:

    ●     Periodic – necessary to ensure the reliability or to sustain the design life of an
          asset.
    ●     Predictive – condition monitoring activities used to predict failure.
    ●     Preventative – maintenance that can be initiated without routine or continuous
          checking.

    Rehabilitation
    Works to rebuild or replace parts or components of an asset, to restore it to a required
    functional condition and extend its life, which may incorporate some modification.
    Generally involves repairing the asset to deliver its original level of service without
    restoring to significant upgrading or renewal, using available techniques and standards.

    Renewal
    Works to upgrade, refurbish or replace existing facilities of equivalent capacity or
    performance capability.

    Replacement
    The complete replacement of an asset that has reached the end of its life, so as to
    provide a similar, or agreed alternative, level of service.

    Replacement Cost
    The cost of replacing an existing asset with a substantially identical new asset.

    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 changes of outcomes
    and their probability of occurrence.

    Useful Life
    The period over which a depreciable asset is expected to be used.

    Valuation
    Assessed asset value which may depend on the purpose for which the valuation is
    required,
    ie, replacement value for determining maintenance levels, market value for lifecycle
    costing and optimised deprival value for tariff setting.




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