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ASSESSING THE CONDITION OF CONSTRUCTED ASSETS

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					ASSESSING THE CONDITION
OF CONSTRUCTED ASSETS


An Asset Management Guideline for
the Victorian Public Sector




February 1996
                      FOREWORD




Assessing the Condition of Constructed Assets is designed
to support the Asset Management Series and the guideline
issued by the Minister for Finance under section 220 of the
Building Act 1993.



It is strongly advised that these three references be read in
conjunction.



Application of the information contained in these documents
will help agencies fulfil their budgeting, planning and
reporting responsibilities established by the Government.




A Arnel
Deputy Secretary
Office of Building




                                                                Page 1
                            CONTENTS



EXECUTIVE SUMMARY




INTRODUCTION

     What is Condition Assessment
     Scope of this Document
     Government Asset Management



PHASE 1 - COLLECT THE DATABASE

     Phase 1a:   Identify the Asset Category
     Phase 1b:   Identify Required Condition
     Phase 1c:   Identify Actual Condition



PHASE 2 - ANALYSE THE DATABASE

     Phase 2a:   Establish Relative Condition Level
     Phase 2b:   Establish Condition Impacts
     Phase 2c:   Identify Appropriate Actions



PHASE 3 - MANAGEMENT REPORTING

     Phase 3a:   Calculate Condition Index
     Phase 3b:   Determine Condition Trend



APPENDIX 1:      Identify the Asset Category: Detailed Method
APPENDIX 2:      Methods of identifying Actual Condition
APPENDIX 3:      Identifying Actual Condition: Example
APPENDIX 4:      Time Frames for Action




                                                                Page 2
      PHASE 1:
COLLECT THE DATABASE

     Phase 1a: Identify Asset Category


                    ê
   Phase 1b: Identify Required Condition


                    ê
    Phase 1c: Identify Actual Condition




                   ê

      PHASE 2:
ANALYSE THE DATABASE

Phase 2a: Establish Relative Condition Level


                    ê
  Phase 2b: Establish Condition Impacts


                    ê
   Phase 2c: Identify Appropriate Action




                   ê

      PHASE 3:
MANAGEMENT REPORTING

    Phase 3a: Calculate Condition Index


                    ê
   Phase 3b: Determine Condition Trend




                                               Page 3
             EXECUTIVE                        SUMMARY

The following summarises the three phases of Condition Assessment set out in this
guideline. Each phase is described in terms of its nature, purpose and relationship
to the other phases.



Phase 1: Collect the database

This is the information-gathering and collating phase that establishes the database
essential to the next two phases.


Phase 1a             Identify the Asset Category

                     An appropriate Asset Category is assigned to each asset,
                     based on its relative strategic importance. Six Asset Categories
                     have been established.

Phase 1b             Identify Required Condition

                     The Required Condition of each asset is identified. Required
                     Condition will vary between Asset Categories. It may also
                     vary within an Asset Category, depending on the use and any
                     special status or requirements of the asset.

Phase 1c             Identify Actual Condition

                     The Actual Condition of each asset is identified either by
                     direct inspection, prediction, sampling or other appropriate
                     method.




Phase 2: Analyse the database

The database is analysed during this phase. Assessments are made of the gap
between actual and required condition and the impact of the gap. These
assessments are then used to decide the nature, timing and priority of actions needed
to close the gap.


Phase 2a             Establish Relative Condition Level

                     Actual Condition is compared with Required Condition, and is
                     rated on a five-point Relative Condition Level scale.

                                                                                 Page 4
Phase 2b            Establish Condition Impacts

                    A Condition Impact is a significant operational, financial
                    and/or legal impact arising from the asset's condition.
                    Examples are disruption to operations, loss of revenue, health
                    and safety risk.

Phase 2c            Identify Appropriate Action

                    The information gathered to date is drawn together to set
                    action priorities. These actions are identified, costed, and
                    given a priority ranking. The financial year during which
                    funds are needed is also identified. This assists forward
                    budget planning.




Phase 3: Management Reporting

In this phase information is aggregated and indicators of asset management
effectiveness developed. Information at this level provides an internal management
tool and assists reporting to the Department of Treasury and Finance.


 Phase 3a            Calculate Condition Index

                     The Condition Index is a weighted average of asset condition
                     across a group of assets. It represents the average Relative
                     Condition Level per unit of measurement relevant to
                     individual assets or classes of assets. Examples of units of
                     measurement are square metres for buildings and metre
                     length for sewers.

                     A separate Condition Index is calculated for each Asset
                     Category.

 Phase 3b            Determine Condition Trend

                     The Condition Trend compares one year's Condition Index
                     against that of previous years. It establishes whether average
                     condition across a group of assets is improving, deteriorating,
                     or being maintained at an appropriate or inappropriate level.




                                                                                   Page 5
                 INTRODUCTION



What is Condition Assessment


Definition       Condition assessment measures the nature and extent of any
                 gap between the actual and required condition of an asset. It
                 also decides what action is needed to close the gap.

Use in           This information will be the basis for all asset management
Asset            decisions including:
Management          •    maintenance and capital expenditure requirements;
                    •    budget planning;
                    •    decisions on asset acquisition, refurbishment,
                         redeployment and disposal.

Other            Condition assessment information is also a vital input to
Uses             other asset management processes including:
                    •   asset performance and utilisation;
                    •   asset valuation;
                    •   capital performance monitoring;
                    •   service pricing.



Scope of this Document


                Assessing the Condition of Constructed Assets focuses on
                the physical condition of constructed assets.

Definition of   Constructed assets are non-current physical assets. They are
Constructed     tangible and have a value. Constructed assets are sometimes
Assets          referred to as "fixed assets", but that term has not been used in
                this document.

                Constructed assets include:
                   •  infrastructure such as roads, water pipes and sewers;
                   •  structures such as bridges;
                   •  buildings such as public housing, schools, prisons and
                      hospitals;
                   •  some heritage and cultural assets.




                                                                            Page 6
Exclusions         This document excludes of the following aspects of asset
                   evaluation:
                      •   functional performance;
                      •   financial performance;
                      •   utilisation.

                   Future guidelines will cover these other aspects. They should
                   be used in conjunction with condition assessment in making
                   major asset management and planning decisions.




Government Asset Management


Government         The Victorian Government is committed to achieving major
Reforms in         reform in all aspects of the public sector. The reforms
asset              emphasise:
management
                     •   improved management techniques;
                     •   greater accountability;
                     •   reduction of costs and liabilities.

                   Part of the reform strategy is to optimise provision and use of
                   public assets.

                   Asset management is an essential part of good business
                   practice. The public sector's focus is on delivery of services.
                   Agencies should regularly assess whether assets meet service
                   delivery needs, and base decisions on this assessment.

Asset              The Asset Management Series helps agencies become more
Management         aware of their asset responsibilities and networks they can use
Series             for assistance.

                   Assessing the Condition of Constructed Assets is designed to
                   support the Asset Management Series and the guideline issued
                   by the Minister for Finance under section 220 of the Building Act
                   1993.

                   Accountability

Key                Secretaries and the heads of statutory bodies are now
Accountabilities   accountable for the planning, management and performance of
                   assets under their control. They are required to take a 'whole of
                   life' approach to the management of each asset.

                   The emphasis is on responsibility for:
                      •  using assets effectively;
                      •  maintaining assets to appropriate standards;
                      •  ensuring assets have the capacity to meet service needs;
                      •  budgeting for costs associated with the acquisition, use
                         and disposal of assets.
                                                                              Page 7
Integrated    Agencies are required to establish processes to support asset
Management    planning and budgeting on a five year rolling basis, within the
Cycle         service and financial planning framework of the Integrated
              Management Cycle.



              Management Reporting

Management    Heads of agencies need reports on:
Information       •   overall condition of assets;
                  •   projected improvements or deterioration of assets over
                      time;
                  •   recommendations for maintaining or improving the
                      condition of assets.

              This information is fundamental to making good decisions, and
              should be available to senior managers in a consistent and
              appropriate format.

Asset         Part 5 of the Financial Management Act 1994 relates to the
Registers     management of assets. Under section 8 of the Act the Minister
              for Finance issued a ministerial direction to all departments
              requiring the establishment of appropriate procedures and
              practices for assessment of asset condition. The ministerial
              direction also requires details of asset condition to be entered in
              Asset Registers.

Annual        The Minister for Finance published guidelines to promote better
Reports       standards in buildings owned by the Crown or public
              authorities under section 220 of the Building Act 1993. Annual
              Reports must include a statement on progress in implementing
              the guidelines within each Ministerial portfolio.

Reporting     Agencies need to collect and analyse the data for the purpose of
To            performance comparisons. They are required to provide agency
Treasury      information to the Department of Treasury and Finance for
              overall government asset evaluation.




                                                                          Page 8
      PHASE 1:
COLLECT THE DATABASE

     Phase 1a: Identify Asset Category


                     ê
  Phase 1b: Identify Required Condition


                     ê
    Phase 1c: Identify Actual Condition




                    ê

      PHASE 2:
ANALYSE THE DATABASE

 Phase 2a: Establish Relative Condition Level


                     ê
   Phase 2b: Establish Condition Impacts


                     ê
    Phase 2c: Identify Appropriate Action




                    ê

      PHASE 3:
MANAGEMENT REPORTING

     Phase 3a: Calculate Condition Index


                     ê
    Phase 3b: Determine Condition Trend




                                                Page 9
                   PHASE 1
             COLLECT THE DATABASE

This is the information-gathering and collating phase that establishes the database
essential to the next two phases.


Phase 1a: Identify the Asset Category


Strategic            The most fundamental feature of an asset is its function.
importance           Function decides strategic importance. In the condition
                     assessment process this is taken into account so informed
                     judgements can be made about the priority of each asset.
                     Priority is judged not only in relation to other assets
                     controlled by the agency making the assessment, but also in
                     relation to all other State-owned assets.

Asset                A six-point Asset Category scale has been developed for this
Category             purpose. The first step in condition assessment is to assign
scale                each asset to the Asset Category that best reflects its
                     significance to the State of Victoria.

Examples             The following examples illustrate the need for an Asset Category
                     scale that characterises assets by their strategic importance to the
                     State, and by the physical requirements needed to perform their
                     function:

                     •   The community expects, and good risk management practice
                         demands, that a critical infrastructure asset such as the Hume
                         Weir is given the highest level of strategic importance. It
                         provides substantial economic benefits, and the consequences of
                         a major failure would be disastrous.

                     •   A major highway and a residential street are both roads, but will
                         be built and maintained to different standards that reflect their
                         relative strategic importance. Repairs to the major highway may
                         have priority.

                     •   A surgical operating theatre must meet very stringent hygiene
                         standards that would not be expected in a welfare centre.

TABLE A              The six-point Asset Category scale, shown as TABLE A on
Asset                page 12, places an individual asset in the context of all other
Categories           State assets. Its position on the scale depends on its relative
                     strategic importance and any specialised physical
                     requirements. The table describes each category, giving
                     examples of the types of assets generally assigned to them.

                                                                                     Page 10
               Importance of selecting the appropriate category

               Placement of assets in the wrong category can lead to poor
               priority and budget decisions at agency level. It will also
               result in inconsistent 'whole of government' condition
               assessments.

Selection by   The selection of the Asset Category can be a simple task. In
reference to   most cases the appropriate Asset Category can readily be
TABLE A        determined by checking the definitions and examples given in
               TABLE A. This is particularly so for a group of like assets
               such as secondary schools, trunk sewers, or bus shelters: here
               the strategic importance of all assets in the group is likely to
               be consistent across the state.

APPENDIX 1     APPENDIX 1 provides a detailed method of selecting the
Detailed       appropriate category. This method can be used if there is still
method         doubt after reference to TABLE A. It can also be used to
               double-check category selection from TABLE A.




                                                                        Page 11
ASSET CATEGORIES                                                                   TABLE A



CATEGORY           DESCRIPTION                         EXAMPLES

                   Assets of national significance     •   major national highways
                   that are critical to state          •   major dams and bridges
       1           functions; that is, key national
   (Superior)      and state infrastructure, and
                   heritage assets that are
                   national icons.

                   Key assets with major state         •   major infrastructure such as main
                   significance; key heritage              sewers, national railway lines, major
       2           assets; and assets that must            transmission towers, major water
     (High)        meet very rigorous special              supply mains, key bridges, interstate
                   requirements.                           highways
                                                       •   major hospitals
                                                       •   high security prisons
                                                       •   Victorian Arts Centre

                   Assets very important to state      •   major power supply grid, trunk
                   operations, including significant       drainage mains, freeways, important
       3           infrastructure and heritage             bridges, major gas supply mains
 (Above Average)   assets, and assets needing to       •   State Library of Victoria
                   meet special requirements.          •   interstate railway stations
                                                       •   prisons

                   Non-critical assets, including      •   underground drainage, railway lines
                   most buildings supporting               and sidings, power distribution grid,
       4           typical government service              major piers, gas mains, major roads,
    (Average)      delivery functions. The lowest          bridges
                   possible category for important     •   government buildings such as
                   infrastructure and heritage             offices, schools, tertiary institutions,
                   assets.                                 courts
                                                       •   public housing

                   Non-critical assets where           •   piers
       5           purely functional performance       •   railway stations
 (Below Average)   is acceptable to the public.        •   bus shelters
                                                       •   minor roads

                   Assets that can reasonably          •   workshops
       6           operate in very basic               •   car parks
     (Low)         conditions.                         •   lanes
                                                       •   sheds




                                                                                           Page 12
Phase 1b: Identify Required Condition


               Before assessing the actual condition of an asset, it is
               important to be clear on what condition the asset needs to be
               in to perform at an appropriate level. The Required Condition
               will vary between assets according to the asset's strategic
               importance, its specific function and its particular physical
               requirements.

Purpose        The purpose of establishing Required Condition is to provide
               a benchmark against which Actual Condition can be
               compared.

Definition     Required Condition is the acceptable physical condition
               needed for effective service delivery. It should:

               ♦   allow users to perform their functions without
                   unacceptable disruption;

               ♦   provide users with the level of amenity appropriate for the
                   function;

               ♦   provide a safe environment that meets statutory
                   requirements.


Variations     Required Condition varies according to function. It will vary
               not only between Asset Categories but also between
               individual assets within the same Asset Category.

Example        All non-heritage government offices are listed under Asset Category
               4. However, an office with a high profile public image such as the
               Victorian Government Tourist Bureau has a higher Required
               Condition than an office with a low profile and minimal public
               access.

Focus on       In establishing Required Condition, the emphasis should be
key elements   on those elements of the asset most important in meeting
of the asset   business needs. TABLE B on p. 16 provides a checklist of the
               key elements found in most buildings and their grounds. Use
               of this table is discussed in detail in the next section.




                                                                            Page 13
              Variations within a single asset

Assets with   Constructed assets are often complex and support a number
a number of   of functions. Required Condition is simply a judgement of the
functions     main physical requirements that must be met. It will depend
              on the specific functions and physical requirements of those
              features of the asset with most strategic importance.

Example       A divisional headquarters of the Victoria Police is a government
              office building and would be assigned to Asset Category 4. In
              practice, however, the building supports a number of interrelated
              functions:

              ♦   public areas such as reception, waiting areas and conference
                  rooms;

              ♦   office areas such as those for senior police and administrative
                  staff;

              ♦   restricted areas such as operations area, storage and computer
                  rooms.

              The Required Condition needs to satisfy service delivery needs in
              each area. Some areas will be satisfied at a different level. For
              instance, the public areas and the computer rooms may require a
              higher standard of finish than the operations and storage areas.

              The Required Condition of the asset will take these variations into
              account.

Need          Careful and objective identification of Required Condition is a
for           very important part of the condition assessment process. If
care          the Required Condition identified is too high or low, the result
              can be either unnecessary expenditure on maintenance or
              refurbishment, or deterioration of the asset and loss of value
              through under-expenditure.




                                                                             Page 14
Phase 1c: Identify Actual Condition


              Actual Condition is the last part of the database collected in
              Phase 1 in preparation for analysis in Phase 2.

Need to       An asset's actual physical condition and the acceptability of that
monitor       condition can fluctuate considerably over its useful life,
condition     particularly if there is a change in its function. Information on
              Actual Condition is needed at any time so agencies can make
              effective decisions on the management of assets.


              Focus of Actual Condition assessment

Focus         All constructed assets consist of a number of elements that can
on key        be identified and measured. In assessing Actual Condition it is
elements      important to identify and focus on those elements of the asset
              most important to business needs.

Examples      Security systems are critical in a prison but not in most offices.
              Finishes are very important for a heritage building but not a railway
              station. Substructure is critical for a bridge but not a shed.


              Asset Elements

TABLE B:      TABLE B on p. 16 lists the major elements likely to be found in
Asset         most buildings and their grounds. The elements are grouped
Elements      under the headings Fabric Elements, Services Elements and Site
              Elements.

              TABLE B provides a useful checklist of the elements important
              to an asset's effective operation. It can be adapted to apply to
              infrastructure and other constructed assets.

Life Cycle    Elements have potentially different life cycles: for example, a
variations    well constructed boundary wall lasts much longer than the
              gates attached to it. Different elements of a single asset can
              therefore be at different stages of deterioration. The asset's
              overall Actual Condition is the result of independent
              examination of the condition of its key elements.

Examples      If the boundary wall mentioned above was a key element of the
              security system of a kindergarten, its condition would be taken into
              account in assessing Actual Condition. The overall assessment,
              however, should not be prejudiced by the poor condition of the gate
              alone; it is a minor part of the security system and may be easily fixed
              at small cost.




                                                                             Page 15
ASSET ELEMENTS                                                            TABLE B



FABRIC                        SERVICES                    SITE
ELEMENTS                      ELEMENTS                    ELEMENTS


Substructure                  Reticulated Services        Site Works
e.g. foundations               e.g. sanitary plumbing     e.g. roads
     stumps                         water supply               footpaths
     earthworks                     gas                        paved areas
                                    electricity                landscaping
Superstructure
e.g. columns                  Environmental Control
     floors                    e.g. ventilation           External Structures
     staircases                     space heating         e.g. boundary walls
     roof                           evaporative cooling         fences, gates
     external walls                 air conditioning            outbuildings
     windows                                                    covered ways
     external doors           Communications
     internal walls            e.g. telephone
     internal partitions            computer links        External Services
     ceilings                       monitoring systems    e.g. storm water drainage
                                                               sewer drainage
Finishes                      Fire Protection                  water supply
 e.g. internal paint                                           gas
      external paint          Security                         fire protection
      floor finishes                                           electricity
      wall finishes (tiles)   Lighting                         communications
                                                               special services
Fittings                      Transportation systems
 e.g. fitments                 e.g. lifts
      sanitary fixtures             escalators
      special equipment             walk ways
                                    hoists, conveyors




                                                                                Page 16
             Assessment Criteria

Assessment   When the key asset elements have been identified, they should
against      be assessed against a limited number of clear criteria. These
criteria     may vary according to the function of the asset.

Criteria     Some key criteria for buildings include:
                • Health and Safety: Is there a health and/or safety risk ?

                • Security: Is there a security risk ?

                • Functioning: Does it function satisfactorily ?

                • Amenity: Is the level of amenity acceptable ?




             The criteria may not all be relevant to every element. The
             criteria chosen should lend themselves to consistent
             interpretation and ready and economical assessment.


             Assessing key elements against the criteria

             There are various approaches available for assessing asset
             elements against criteria.

APPENDIX 3   A practical example of identifying Actual Condition, using
             direct inspection, is given in APPENDIX 3. The example is
             based on a secondary school built in 1971. It explains each step
             of the process, including: selection of the key asset elements;
             use of assessment criteria; use of the information to reach
             conclusions about the school's Actual Condition and its
             Relative Condition Level.

             The example highlights the need to think clearly about:
               •  the purpose of the assessment;
               •  the key asset elements;
               •  the appropriate assessment criteria;
               •  the way the condition information is to be obtained.

Level        In the process of assessing asset elements against the criteria it
of           is advisable to include details on how well the criteria are met.
detail       There should be enough detail to describe both the condition
             and any major risks that would be associated with a failure to
             take action.

Example      A comment such as '80 per cent of the south wall has severely cracked
             paint' is far more informative than 'paint cracked.' It should also be
             made clear whether paint condition means wooden window frames are
             starting to rot.




                                                                          Page 17
Identifying   Failure to identify the underlying causes of problems such as
underlying    poor paint condition can lead to serious deterioration of the
causes        asset. Examples are rising damp and termite damage.
              Underlying causes need prompt, specialised treatment to
              prevent further damage.

              Methods of assessing Actual Condition

Assessment    Assessing Actual Condition does not always need detailed
methods       inspection of an asset. Methods of assessment are either
              based on prediction or direct inspection. They can vary from a
              study that comments on specific details of individual assets to
              a sample survey identifying broad trends.

Choosing      The particular situation determines the appropriate method of
a method      assessment. In many cases a broad assessment is adequate.
              More than one method may be needed where an agency has a
              wide range of assets or needs the information to make both
              strategic and operational decisions.

Technical     Specialised technical advice is often needed in assessing actual
advice        condition, even at very broad levels. Agencies without
              significant experience in condition assessment should consider
              using expert technical advice.

Direct        Direct inspection can range from superficial to detailed
Inspection    physical examination. When direct inspection of the asset or
method        one of its key elements is not practicable, physical
              measurement and non-destructive testing can be used:
                •   For elements of the asset that cannot be reliably assessed
                    by direct inspection;
                •   When the level of detail required warrants such
                    measurements.

Examples      Inspection of elements such as stormwater pipes and sewers may be
              made by video cameras. Electronic equipment may be needed to
              measure the condition of buried power cabling.

Predictive    A predictive method of condition assessment involves
methods       modelling, estimating or approximation of asset condition. It
              makes predictions about future condition.

APPENDIX 2    Both direct inspection and predictive methods are discussed in
              detail in APPENDIX 2.

Inspection    The inspection cycle varies depending on the condition of the
cycles        building. An asset judged to be below its Required Condition
              should be inspected more frequently than one considered to be
              above its Required Condition. Inspection cycles for elements
              that involve moving parts should be reasonably short.




                                                                         Page 18
      PHASE 1:
COLLECT THE DATABASE

      Phase 1a: Identify Asset Category


                     ê
    Phase 1b: Identify Required Condition


                     ê
      Phase 1c: Identify Actual Condition




                    ê

      PHASE 2:
ANALYSE THE DATABASE

Phase 2a: Establish Relative Condition Level


                     ê
  Phase 2b: Establish Condition Impacts


                     ê
   Phase 2c: Identify Appropriate Action




                    ê

      PHASE 3:
MANAGEMENT REPORTING

     Phase 3a: Calculate Condition Index


                     ê
    Phase 3b: Determine Condition Trend




                                               Page 19
                   PHASE 2
             ANALYSE THE DATABASE

The database is analysed during this phase. Assessments are made of the gap
between actual and required condition and the impact of the gap. These
assessments are then used to decide the nature, timing and priority of actions needed
to close the gap.


Phase 2a: Establish Relative Condition Level

Definition           Relative Condition Level is a direct comparison of an asset's
                     Actual Condition with its Required Condition.

TABLE C              It is expressed in a five-point Relative Condition Level scale.
                     The scale is shown and explained in TABLE C on p. 21.

Purpose              The purpose of comparing actual and required condition is to:
                       •  examine the level of fitness for purpose;
                       •  assess the extent of under or over-provision;
                       •  set maintenance, refurbishment, replacement or disposal
                          requirements.

                     Use at strategic level

Broad                At a strategic level, a broad analysis of Relative Condition
analysis             Level across all assets or groups of like assets provides
                     valuable information on the general state of the asset base.

Examples             An agency with 60 per cent of its assets at Relative Condition Level
                     -1 (below Required Condition) would need to commit funds to a
                     catch-up maintenance program to prevent those assets from
                     becoming further run down.

                     An agency with 35 per cent of its assets at Relative Condition Level
                     +2 (well above Required Condition) would need to reassess the
                     current use of those assets, and consider reallocating some
                     maintenance funding to other agency priorities.

                     Use at operational level

Asset                At an operational level, the Relative Condition Level of
management           individual assets or groups of like assets helps agencies to
decisions            decide priorities for asset management decisions. It can also
                     assist maintenance and capital expenditure decisions.



                                                                                   Page 20
Asset            The Relative Condition Level is also an important input into
valuation        asset valuation.

                 Use in Agency Reporting

Reporting        The Department of Treasury and Finance needs strategic level
to               information from agencies so it can report to the Minister for
Treasury         Finance on the general condition of the State's assets. In
                 particular, Treasury needs to be sure that assets are not being
                 run down unintentionally, and are being maintained at
                 Required Condition.

                 There are reporting requirements created by both the Financial
                 Management Act 1994, and the Guidelines issued by the
                 Minister for Finance under section 220 of the Building Act 1993.
                 Relative Condition Level is the base information needed for
                 such reports.



RELATIVE CONDITION LEVEL                                                    TABLE C


LEVEL       DESCRIPTION         COMMENT

                                All asset elements meet Required Condition, and:
                                ♦ some key elements significantly exceed Required
   +2       Well
                                  Condition
            Above               ♦ many elements well exceed Required Condition
            Required            ♦ any minor deterioration evident has no affect on the

            Condition             asset's functioning or availability
                                ♦ asset is very well maintained.

                                All asset elements meet Required Condition, and:
                                ♦ many elements exceed Required Condition
   +1       Above
                                ♦ some physical deterioration may be present but it does
            Required              not affect the asset's function or availability
            Condition           ♦ asset is well maintained.

                                All key asset elements meet Required Condition, and:
                                ♦ the asset's functioning and availability are at acceptable
    0       At
                                  levels
            Required            ♦ some elements may be deteriorating
            Condition           ♦ asset may need some minor maintenance.

                                Some asset elements do not meet Required Condition,
            Below                 and:
   -1                           ♦ condition of some key elements is below the limit of
            Required              acceptability
            Condition           ♦ deterioration affects asset function or availability

                                ♦ asset needs significant maintenance and may need

                                  renewal or upgrade.




                                                                                    Page 21
                 Many asset elements do not meet Required Condition,
     Well        and:
-2               ♦ condition of many key elements is below the limit of
     Below         acceptability
     Required    ♦ deterioration significantly affects asset function or

     Condition     availability
                 ♦ asset in urgent need of major maintenance or

                   refurbishment.




                                                                   Page 22
Phase 2b: Establish Condition Impacts


Operational,         Where the Relative Condition Level shows a significant
financial            variation between Actual Condition and Required Condition,
and legal            there is likely to be a significant impact on the operation of
impacts
                     the asset. There may also be financial and legal impacts.
                     These need to be clearly identified as they are important in
                     making decisions and setting priorities.

TABLE D              TABLE D below shows the Condition Impacts that should be
Condition            considered, and gives an example of each impact. The order
Impacts              of operational, financial and legal impacts does not imply a
                     hierarchy of importance: each type of impact should be
                     considered independently. More than one impact may be
                     relevant in any particular case.




CONDITION IMPACTS                                                           TABLE D


CONDITION        DESCRIPTION                    EXAMPLES
 IMPACT
                                                Arterial road in reasonable condition and
       0         Nil / Negligible               handling its peak traffic loads adequately
                                                and safely.
Operational Impacts:
                                                Malfunctioning air-conditioning system
       1         Moderate Disruption            causes oppressive conditions for
                                                occupants. Need to re-locate staff pending
                                                repairs.
                                                Badly leaking roof in a warehouse makes it
       2         Major Disruption               unsuitable for storing valuable plant and
                                                equipment.
Financial Impacts:
                                                Road surface roughness is higher than
                                                recommended, causing premature
       3         Increased Costs
                                                deterioration and increased maintenance
                                                costs.
                                                Well-positioned office building has serious
       4         Loss of Revenue                non-compliance with Building Regulations.
                                                Upper floors cannot be leased.
Legal Impacts:
                                                Loose handrails on a stairway; fraying
                                                carpet in corridors; unacceptable height
       5         Possible Liability
                                                variations in the junction of flooring
                                                materials. All of these examples are a
                                                potential danger to health and safety.
                                                Pedestrian bridge with severe concrete
       6         Illegal Condition              cancer of foundations is considered unsafe
                                                for use.




                                                                                    Page 23
             When to assess Condition Impacts

Assessment   Where an asset has a Relative Condition Level of +1 or +2 (too
needed       good) or -1 or -2 (too bad) an assessment of the impact on
             operations, costs and liabilities is needed.

Assessment   Assets at Relative Condition Level 0 are unlikely to be
not          experiencing any serious negative impacts and would
needed       probably be allocated Condition Impact 0. These assets
             should be included in the agency's routine maintenance
             program to protect them from deteriorating.


             Use of Condition Impacts

Importance   Condition Impacts considered with Asset Category are a
             major determinant of the priority and urgency of action to be
             taken in respect of a particular asset.

Examples     An asset's condition is a breach of law or so unsafe that it leaves the
             State open to prosecution or compensation litigation in the event of
             deaths or injuries. It attracts Condition Impact 6 (illegal condition.)
             It should be given the highest priority for urgent rectification work
             whatever its Asset Category.

             An asset in Asset Category 3 (above average) cannot be fully utilised
             due to deterioration in some areas. It has attracted both Condition
             Impact 1 (moderate disruption) and Condition Impact 3 (increased
             costs). However, it might be reasonable to defer refurbishment for
             two or three years if the impacts are assessed as not critical relative
             to other agency needs.




                                                                              Page 24
Phase 2c: Identify Appropriate Action

                   The diagnostic information needed for making decisions is now
                   available. The questions that remain to be answered are:
                       ♦ does remedial action needs to be taken?

                       ♦ how much will it cost?

                       ♦ what is its priority?




                   Evaluation of all the information available will provide the
                   answers.

                   Remedial Action

                   Remedial action is the repairs and/or refurbishment needed
                   to rectify the problems found in the assessment of Actual
                   Condition and restore the asset to its Required Condition.

                   Costs

                   Estimated costs need to be provided at this stage. Urgent
                   works have budget priority. Cost will be an important factor
                   in balancing other expenditure over the five year asset
                   planning cycle.

                   Identifying Priorities

Critical           The most critical factors in evaluating the information and
factors            deciding on priorities are:
                     ♦    Asset Category: how important is the asset ?
                     ♦    Condition Impacts: how serious is the risk ?
                     ♦    Costs.

TABLE E            TABLE E on p. 25 shows a way of assembling the information
Establish action   so all relevant factors are easily and quickly identified.
and funding        Funding requirements for a five year rolling program are
priorities
                   determined. The table gives examples of how to balance the
                   relative importance of the various factors to decide action and
                   funding priorities.

Timing             A time frame for action should be decided based on an
                   evaluation of the critical factors in each case.

APPENDIX 4         However, there are broad conclusions that can be drawn by
                   looking at both Relative Condition Level and Condition
                   Impacts in relation to each Asset Category. APPENDIX 4
                   discusses these conclusions and how they may affect
                   decisions.




                                                                           Page 25
ESTABLISH ACTION AND FUNDING PRIORITIES                                                                                               TABLE E


            Asset              Relative             Condition              Problem and Remedial Action                       Cost                    Year
 Asset     Category           Condition              Impacts                                                               Estimate     Priority   Funding
                                Level                                                                                       $000's                 Required

State            4                  -1                    1, 3            Part of roof leaks into library and craft                                    Next
                                                                          rooms, some damage to books and
                                                                                                                             170           2        financial
School A      (Average)            (Below          (Moderate Disruption   materials. Replace roofing on south side.                                    year
                             Required Condition)     Increased Costs)


State            4                  -2                 2, 3, 5            Condition of plumbing and wiring could be a                              Urgent: this
                                                                          health and safety risk. Major repairs
                                                                                                                             900           1         financial
School B      (Average)         (Well Below         (Major Disruption     required to Rooms 1 to 12. Build new toilet                                   year
                             Required Condition)     Increased Costs      blocks.
                                                    Possible Liability)


State            4                  +1                      0             No action required - new building was                                         -
                                                                          completed two years ago. Re-assess
                                                                                                                              -            -
School C      (Average)            (Above            (Nil/Negligible)     condition in 5 years.
                             Required Condition)


Bridge           2                  -2                    2, 6            Recent floods have undermined bridge's                                   Very urgent:
                                                                          substructure. Three out of four lanes are
                                                                                                                            5,000          1           this
on major       (High)           (Well Below         (Major Disruption     closed to traffic, and no trucks are permitted                            financial
highway                      Required Condition)    Illegal Condition)    on the remaining lane. Major reconstruction                                  year
                                                                          work is required.

Country          3                  -1                 1, 3, 4            Important historic building open to tourists 4                            Year after
                                                                                                                             435           3
                                                                          days per week. Prisoner cells and witness                                   next
Court -    (Above Average)         (Below          (Moderate Disruption   room unusable - alternative space leased.
house                        Required Condition)     Increased Costs
                                                    Loss of Revenue)
                                                                          Needs restoration to restore full function and
                                                                          realise tourist revenue potential.

Bus              5                  -1                    1, 4            Vandals caused major damage and removed                                      Next
                                                                          seats. Condition causing loss of patronage.
                                                                                                                             68            2        financial
Terminal       (Low)               (Below          (Moderate Disruption   Repair, repaint, and replace seats. Install                                  year
Shelter                      Required Condition)    Loss of Revenue)      secure Information display.
      PHASE 1:
COLLECT THE DATABASE

      Phase 1a: Identify Asset Category


                     ê
    Phase 1b: Identify Required Condition


                     ê
     Phase 1c: Identify Actual Condition




                    ê

      PHASE 2:
ANALYSE THE DATABASE

 Phase 2a: Establish Relative Condition Level


                     ê
   Phase 2b: Establish Condition Impacts


                     ê
    Phase 2c: Identify Appropriate Action




                    ê

      PHASE 3:
MANAGEMENT REPORTING

   Phase 3a: Calculate Condition Index


                     ê
   Phase 3b: Determine Condition Trend
                    PHASE 3
              MANAGEMENT REPORTING

In this phase information is aggregated and indicators of asset management
effectiveness developed. Information at this level provides an internal management tool
and assists reporting to the Department of Treasury and Finance.


                     As outlined in the Introduction, reports on the condition of
                     assets are required at two levels - internal agency reports, and
                     reports to the Department of Treasury and Finance.

Internal             Heads of agencies need reports on the overall condition of the
agency               agency's assets, condition trends, and projected improvements
reports              or deterioration of assets over time. They also require well-
                     substantiated recommendations for all asset management
                     decisions, including re-deployment, refurbishment and
                     maintenance.

Reports              The Minister for Finance introduced 'whole of government'
to                   reporting to monitor the condition of the State's assets. The
Treasury             reporting process set out in this chapter is designed to support
                     Treasury requirements. Agencies need to prepare their reports
                     in a uniform format so Treasury can aggregate the
                     information. The reports will be based on information
                     gathered as part of condition assessment.
Table H              Table H on page 33 shows a way of assembling information
Reporting to         for reporting to Treasury.
Treasury

Level of             Agencies need to aggregate their reports at both agency and
aggregation          Ministerial portfolio level. Separate reports are prepared for
                     each Asset Category, allowing analysis based on relative
                     strategic importance. This is a key factor at both agency and
                     government level.

Format               The reports need to provide information in the form of:

                                    ♦   Condition Index;
                                    ♦   Condition Trend.

Condition            Condition Index is a weighted average expressing the current
Index                overall condition of a group of assets. A weighted average
                     achieves a balanced view by representing individual assets in
                     proportion to their relative size.

Condition            Condition Trend shows movements in the Condition Index
Trend                over successive years, indicating whether overall asset
                     conditions are improving , stable or deteriorating.



                                                                                  Page 28
           Grouping assets for reporting purposes

Asset      Reports to the Department of Treasury and Finance are at
groups     both agency and Ministerial portfolio level. However, agencies
           also need to disaggregate their figures. This serves both
           internal management purposes and requests from Treasury
           for more detailed information to support or explain aggregate
           figures.

           Appropriate asset groups need to be selected for these
           purposes.

Asset      The key asset groups are the six Asset Categories. Further
Category   breakdown may not be necessary if all an agency's assets in a
groups     particular Asset Category are of the same class. For example
           in Asset Category 4 an agency's assets may be all office
           buildings.

Sub-       An agency with more than one class of assets in a particular
groups     Asset Category will need to develop sub-groups to reflect the
           different functions and to support benchmarking. For
           example in Asset Category 2 the agency may have both
           bridges and highways.

           For internal management purposes, an agency may choose to
           create sub-groups of assets related to expected life-cycle. An
           example is sub-groups for schools built in the 1960's and those
           built in the 1970's.




                                                                       Page 29
Phase 3a: Calculate Condition Index

Definition         The Condition Index is a weighted average of the condition of
                   a group of assets. It is calculated using the Relative Condition
                   Level of assets multiplied by the relevant unit of measure.

Unit               The unit of measure used for a group of assets depends on the
of                 nature of the assets. In buildings the unit of measure is gross
measure            area in square metres. The relevant unit of measure for drains
                   is metre length.

                   The Condition Index has three key values:

Interpretation       •       Value of 0: indicates that the current condition of assets
                             in the group is on average satisfactory.

                     •       Positive value: indicates that the current condition of
                             assets in the group is on average better than required. The
                             closer the value is to the maximum of +2 the wider the
                             variation from Required Condition.

                     •       Negative value: indicates that the current condition of
                             assets in the group is on average lower than required.
                             The closer the value is to the minimum of -2 the wider the
                             variation from Required Condition.

TABLE F            TABLE F is an example of how the Condition Index is
Condition          calculated for a group of assets.
Index




CONDITION INDEX                                                                TABLE F

                 RELATIVE               ASSET           RELATIVE
    ASSET        CONDITION               AREA           CONDITION         CONDITION
                   LEVEL                (sq.m.)          LEVEL x            INDEX
                                                       ASSET AREA
   COLUMN 1       COLUMN 2              COLUMN 3          COLUMN 4           COLUMN 5


Building 1               0                9,000                  0

Building 2           -1                   7,000             -7,000

Building 3           -1                   3,000             -3,000

Building 4           -2                 12,000            -24,000

Building 5           +1                   5,000            +5,000


Totals                                  36,000           - 29,000               - 0.8


                                                                                     Page 30
Using     Each step followed in TABLE F is explained as follows:
TABLE F
           (i)   Column 2: list the Relative Condition Level of each asset;

           (ii) Column 3: list the total units of measure of each asset;

           (iii) Column 4: multiply Column 2 by Column 3 for each
                 asset;

           (iv) Add Column 3

           (v) Add Column 4

           (vi) Column 5: divide total of Column 4 by total of Column 3

          The resulting weighted average gives the Condition Index for
          the whole group of assets.

Example   In the example in TABLE F, the Condition Index has a negative
          value (- 0.8) indicating that overall the group of five buildings is not
          satisfactorily maintained.




                                                                               Page 31
Phase 3b: Determine Condition Trend

Definition             Condition Trend is a comparison of the current year's
                       Condition Index with that of preceding years.

Use                    Condition Trend monitors variations in overall asset condition
                       over time. In particular, measurement of trends is a tool for
                       protecting the long term viability of assets by maintaining
                       optimum condition. It can also show whether expenditure on
                       assets is above or below that required.

Trend                  Useful information is gained by comparing the Condition
period                 Index of two successive years. However, a longer monitoring
                       period gives a fuller picture of trends.

Table G                The nine possible interpretations of Condition Trend are
Condition Trend        described in TABLE G below.

CONDITION TREND                                                                   TABLE G

  CONDITION
   INDEX               TREND       INTERPRETATION
Previous     Current
  Year        Year
                                   Optimum asset conditions appear to exist, but over-
                       Upward      investment seems to be occurring. Management needs to
      0      +0.4
                                   look at why investment in assets is running higher than
                                   necessary.
                                   An ideal situation – overall optimum asset conditions appear
                       Constant    to be maintained. The result suggests good practice and
      0           0
                                   other managers could benefit from benchmarking.
                                   Previous optimum asset conditions appear to have
                       Downward    deteriorated due to under-investment. Management needs to
      0      - 0.3
                                   look at why investment in assets is running lower than
                                   necessary.
                                   Asset conditions appear to be better than needed and to be
                       Upward      attracting increased over-investment. Management needs to
 + 0.8       +1.1
                                   review the situation.
                                   Asset conditions appear to be better than needed and to be
                       Constant    kept at above-standard condition, suggesting sustained over-
 + 0.8       + 0.8
                                   investment. Management needs to review the situation.
                                   Asset conditions appear to be better than needed but getting
 + 0.8       + 0.4     Downward    closer to the optimum. Management should monitor to ensure
                                   that action is taken at an agreed rate, and that under-
                                   investment does not inadvertently occur.
                                   Asset conditions appear to be unsatisfactory, but action is
  - 1.2      - 0.7     Upward      being taken to improve the situation. Management should
                                   monitor to ensure action is taken at an agreed rate and over-
                                   investment does not inadvertently occur.
                                   Asset conditions appear to be unsatisfactory and no action is
                       Constant    being taken to improve the situation. Suggests continuing
  - 1.2      - 1.2
                                   under-investment. Management review needed.
                                   Asset conditions appear to be unsatisfactory and getting
                       Downward    worse. Management review needed to correct increasing
  - 1.2      - 1.5
                                   under-investment.

                                                                                           Page 32
REPORTING TO TREASURY                                                                                                                    TABLE H
ASSET    ASSETS          TOTAL      REPLACE-   CONDITION       CONDITION
CATE –     IN           UNITS OF      MENT       INDEX          TREND                               NOTES                                    KEY ACTIONS
GORY     GROUP          MEASURE       COST                  Long        From
                         - MENT        $m                   Term      Last year
                                                                                  Hume Highway and Western Ring Road are           •   $30m upgrade of Goulbourn Valley
                                                                                  in very good condition. Western Highway is           Highway in 1996-97
  1      National        1000 km      680          0        Upward    Constant    improving.       Goulbourn Valley Highway        •   Regular maintenance continues
         Highway                                                                  recently added to National Highway network       •   Funding needs to be sustained at
                                                                                  and needs improvement                                current levels
            AI                                                                    Recent downward trend reflects uncertainty       •   No major works being undertaken
  2      Hospitals       640,000      1500       + 0.2      Upward    Downward    on future of hospitals pending decisions on          pending decision
           (7)             m2                                                     rationalisation of hospital system               •   Minor maintenance and urgent and
                                                                                                                                       essential works continue
         Melbourne                                                                Three of the four prisons will be closed over    •   Condition will be maintained at
  3       based         66,000 m2     183         - 1.2    Downward   Downward    the next few years. In most cases the                current level until buildings are
          prisons                                                                 buildings have little or no resale value.            vacated.
            (4)
                                                                                  Half of these buildings are in poor condition.   •   No major works being undertaken
          Country                                                                 A strategic review is considering options            pending decision
  4        courts:                                                                such as co-location.       When review is        •   Minor maintenance and urgent and
           Non –        16,000 m2      40         - 0.6    Downward   Constant    completed, an upgrading program will be              essential works continue
          heritage                                                                commenced for the courts that are to be
            (26)                                                                  retained.

                                                                                  Piers were designed for low maintenance          •   Complete review of future needs of
         Piers in non                                                             and are in good condition. Uses are now              ports by 1997
         commercial
  5                       14 no.      150        + 1.1     Downward   Constant    changing and same loading capacities may         •   Minor upgrades only to be
            ports
                                                                                  not be needed. A strategic review is being           undertaken until strategy plan is
                                                                                  undertaken to determine future needs.                completed
                                                                                  A maintenance program has been in place          •   An intensive program to reduce
            Fire                                                                  for 15 years, but recent changes are not fully       current undergrowth levels has
  6       access         700 km        30         - 0.1    Downward   Downward    effective   in     controlling undergrowth.          commenced
          tracks                                                                  Condition needs to be improved for effective     •   Regular maintenance program to
                                                                                  risk management.                                     be upgraded
APPENDIX 1
IDENTIFY ASSET CATEGORY - DETAILED METHOD


      This detailed method for assigning the appropriate Asset Category is
      designed to achieve consistent and comparable results. It was used to
      establish TABLE A on p.12. The detailed method can be used in cases
      where there is still uncertainty as to the appropriate category for a
      particular asset or class of assets after reference to TABLE A. It can also
      be used to check or support decisions made by reference to TABLE A.


      KEY ELEMENTS

      The elements of constructed assets are shown in TABLE B on p.16. This
      checklist of elements is used to identify elements critical to successful
      functioning of the asset under consideration: its key elements.


      PHYSICAL CHARACTERISTICS

      Each key element will have a number of physical characteristics needing
      independent consideration. The physical characteristics to consider are
      shown in TABLE I below.




PHYSICAL CHARACTERISTICS                                                       TABLE I


PHYSICAL                     DESCRIPTION
CHARACTERISTIC

Capability                   Covers specific performance requirements including
                             reliability and flexibility.
Construction / Finish        Covers construction, workmanship, technical
                             finish.
Exceptional Demands          Covers exceptional demands including:
                                •  hygiene levels, for example in critical health services;
                                •  security, for example to safeguard people or
                                   information;
                                •  technical requirements, for example in advanced
                                   laboratories.
Appearance                   Covers any particular image that is required for the service
                             the asset supports or as a result of the nature of the asset,
                             for example a heritage asset.




                                                                                        Page 35
   LEVEL OF NEED

   The physical characteristics need to be met at different levels in different
   assets. For example, a forensic research laboratory would need a much
   higher level of technical finish than a secondary school science room.
   There are three levels of need: high, typical or basic. One of these
   levels is assigned to the physical characteristics of the key elements.

   The following questions need to be answered to decide the level of need:

           (i)        Can the physical characteristic be met without any special
                      requirements? If the answer is yes assign a level of basic
                      need against this characteristic.

           (ii)       If the answer is no are the special requirements moderately
                      important? If the answer is yes assign a level of typical
                      need against this characteristic.

           (iii)      If the answer is no the special requirements must be very
                      important. Is it mandatory to have rigorous special
                      requirements? If the answer is yes assign a level of high
                      need against this characteristic;
           (iv)       If the answer is no review the earlier questions.


   ASSET CATEGORY GUIDE

   The following guide shows how to use the information gathered above to
   make a judgement on the most appropriate Asset Category. The level of
   need assigned to the majority of key elements is the critical factor
   because the number of key elements varies for different assets.

Category                      Level of Need

            1                 Assigned levels of high need for Capability and for
        Superior              Construction / Finish.

            2                 Assigned a level of high need for Exceptional Demands
           High               and for at least one other physical characteristic.

            3                 Assigned high need for one physical characteristic, and
      Above average           mostly typical needs for the other physical
                              characteristics.

            4                 Typical needs dominate.
        Average


            5                 Some typical needs, more basic needs.
      Below average


            6                 Basic needs dominate
           Low



   Reference to TABLE B confirms whether the Asset Category chosen is
   appropriate in the context of the full range of government assets.
                                                                                    Page 36
Page 37
    APPLYING THE DETAILED METHOD - EXAMPLE
    To illustrate the process outlined, the example used is a major hospital
    with extensive surgical, intensive care and radiography facilities. Site
    elements are not being assessed in this example. What is the
    appropriate Asset Category for this asset?

    STEP 1:        KEY ELEMENT

    Key elements are identified using TABLE B as a checklist. A scan
    through this table identifies the key elements of the hospital building as
    follows:


KEY FABRIC          Finishes:                   Wall and floor finishes, internal paint
ELEMENT             Fittings:                   Sanitary fittings, special equipment

KEY SERVICES        Reticulated services:       Electricity, water supply, sanitary plumbing
ELEMENT             Environmental control:      Ventilation, space heating
                    Fire protection:
                    Communications:             Telephone, computer links
                    Transportation systems:     Lifts

    STEP 2         LEVEL OF NEED

    The level of need for each physical characteristic of the key elements is
    assessed by asking the questions set out earlier in this appendix. The
    levels of need identified are as follows:

                                KEY FABRIC                        KEY SERVICES
PHYSICAL                         ELEMENT                            ELEMENT
CHARACTERISTIC                  (as listed above)                  (as listed above)

CAPABILITY                        Typical need                       Typical need
CONSTRUCTION /
FINISH                            Typical need                         High need
EXCEPTIONAL
DEMANDS                            High need                           High need

APPEARANCE                         Basic need                         Basic need


    STEP 3         ASSET CATEGORY

    After checking the results against the guide, the conclusion is that this
    hospital building be placed in Asset Category 2. Reference to TABLE A
    confirms this as the appropriate Asset Category for a major hospital.




                                                                                      Page 38
APPENDIX 2
METHODS OF IDENTIFYING ACTUAL CONDITION

    The following is an outline of two broad methods of identifying actual
    condition; predictive and direct inspection. It also covers the basis for
    decisions on which method to use for a particular group of assets or for a
    particular purpose.


    PREDICTIVE METHOD

    Estimating current and future condition is the essence of the predictive
    method. Predictive condition assessments involve modelling, estimation
    or approximation of asset condition.

    By drawing on analysis of information from previous years, a predictive
    method makes assumptions about the likely current condition and predicts
    future condition. A predictive method offers a sound and cost-effective
    way to examine assets and support strategic decision-making. At a broad
    level it allows for consideration of risks and options for planning purposes.

    A predictive method has several characteristics:

           •   Uses life cycle approaches to look at asset condition;
           •   Can be modified to suit assessment of particular asset
               categories;
           •   Synthesises previous experience and results of direct inspection
               of a sample.


ADVANTAGES OF        •   provides a fast and objective way to estimate condition
PREDICTIVE           •   readily understood by strategic asset managers
METHOD               •   allows important condition issues to be analysed
                     •   supports effective strategic decision-making with minimum data


DISADVANTAGES        •   dependent on the quality of the information available
OF PREDICTIVE        •   relies on the assumptions underpinning the method
METHOD               •   can provide unrealistic results if not validated by direct
                         inspection sampling from time to time


    A predictive method is the most cost-effective way to support strategic
    decisions. For the results to be credible, the method needs to be
    designed or modified with the help of technical specialists.

    A number of established predictive methods are currently in use in the
    Victorian Government sector. Further information on these methods can
    be obtained from the Office of Building, Department of Planning and
    Development.




                                                                                      Page 39
    DIRECT INSPECTION

    Direct inspection means actually looking at the asset. It can vary from a
    superficial walk-through to a detailed specialised inspection.

    It can also include physical measurement and non-destructive testing.
    Elements such as stormwater pipes and sewers may be inspected by
    video cameras. Electronic equipment may be needed to inspect the
    condition of buried power cabling.

    A form with standard questions is often used to assist in data gathering.


ADVANTAGES OF        •   provides a snapshot of current condition
DIRECT               •   focuses on immediate condition issues
INSPECTION           •   provides very specific information for maintenance programs



DISADVANTAGES        •   tends to focus on negative issues rather than opportunities
OF DIRECT            •   provides little understanding of past or future condition
INSPECTION           •   can be time consuming and costly if not well planned and
                         managed


    Direct inspection is an important part of any condition assessment. When
    undertaken by experienced assessors, an on-site assessment remains
    the most effective way to ensure condition is properly understood and
    recorded.

    A number of established direct inspection methods are currently in use in
    the Victorian Government sector. Further information on these methods
    can be obtained from the Office of Building, Department of Planning and
    Development.


    SELECTING AN APPROPRIATE METHOD

    Condition assessment does not always mean a detailed look at all assets
    is needed. In many cases a broad assessment or sampling is adequate.

    The most appropriate method provides information needed for optimal
    use of assets in both the short and long term.

    Any method chosen should have the following characteristics:

               ♦   be easy to use and audit;
               ♦   have simple data collection and data entry;
               ♦   allow easy calculations;
               ♦   be cost-effective;
               ♦   be widely used so practical experience can be shared.




                                                                                       Page 40
     Both predictive and direct inspection methods can be applied to all
     classes of constructed assets. The purpose of the assessment and the
     nature of the information required will in some degree decide the
     appropriate method.



PREDICTIVE    Provides information that   Used when an estimation of the remaining useful
METHOD        best supports strategic     life of an asset or of its key elements is needed.
              decision-making             Usually supported by direct inspection sampling to
                                          confirm assumptions.



DIRECT        Provides information that   Used when a realistic basis is required for setting
INSPECTION    best supports operational   immediate priorities. Does not give a forward view
METHOD        decision-making             and may be inappropriate for strategic decision-
                                          making when used alone.




     A combination of predictive and direct inspection methods is often used to
     support decisions on a group of assets. Both methods may need to be
     applied to cover the range of information and detail needed.

     Specialised technical advice is often needed in undertaking condition
     assessment. Considerable time and money can be lost by the
     inexperienced through:

                •   Collection of incorrect or inappropriate data;
                •   Use of an unsuitable assessment method;
                •   An assessment method being inappropriately applied.


     SELECTING COMMERCIAL PRODUCTS

     A condition assessment method must provide verifiable assessments and
     consistent results to be reputable. Commercial products should be
     carefully checked to ensure their effectiveness has been tried and tested.
     They should be backed by on-going research, development and product
     availability. Technical support should also be available locally.

     An agency may choose to tailor a commercial product or develop its own
     method. However, this decision should only be made when an agency
     already has a sophisticated understanding of its requirements, and is
     certain that available commercial products do not meet its needs.




                                                                                       Page 41
APPENDIX 3
IDENTIFYING ACTUAL CONDITION: EXAMPLE


    The following uses the example of a secondary school built in 1971. It
    demonstrates how TABLE B can be used with assessment criteria to
    identify Actual Condition. In this example the purpose of the condition
    assessment is to decide maintenance priorities.


    KEY ELEMENTS

    Because the school was built comparatively recently the standards to
    which it was built are known. It can be assumed that the building's major
    structural elements are still in reasonable condition unless direct
    inspection reveals otherwise.

    A study of the non-structural elements given in TABLE B identifies the
    elements of importance to the school at this stage. The key elements to
    be checked against the assessment criteria are

                  •   Roof
                  •   Electrical lights and fittings
                  •   Internal and external painting
                  •   Floor and wall finishes


    ASSESSMENT CRITERIA

    The assessment criteria are

                  •   Health and Safety: Is there a health and/or safety risk ?
                  •   Security: Is there a security risk ?
                  •   Functioning: How well does it function ?
                  •   Amenity: Is the level of amenity acceptable ?


    INSPECTION

    Direct inspection is an appropriate method of identifying Actual Condition
    in this example. The inspection consists of a walk-through of the school,
    appraising the building's external fabric and its interior, room by room.

    Although the inspection concentrates on key elements, other elements
    are superficially checked to confirm that the assumptions made were
    valid.

    Elements important to health, safety and functioning are given particular
    attention.



                                                                                 Page 42
       INSPECTION RESULTS

       The inspection shows internal and external painting is in reasonable
       condition, and records confirm that the school was repainted two years
       previously. It also shows that the heating system is another key element in
       this school. A number of other elements of immediate concern are
       identified.

       TABLE J demonstrates how the elements requiring attention were
       checked against the assessment criteria.


ACTUAL CONDITION EXAMPLE                                                             TABLE J

                      ASSESSMENT CRITERIA
 ASSET                                                                      COMMENT
                IS THERE    IS THERE    DOES IT       IS THE
ELEMENT         A HEALTH         A     FUNCTION     LEVEL OF
                & SAFETY    SECURITY     SATIS-      AMENITY
                  RISK ?      RISK ?   FACTORILY   ACCEPTABLE


ROOF                                                             Major corrosion on southern and western
                  Yes         n/a         No           No        sides. Roof is unsafe. Staff interviewed
                                                                 about white stains and powder deposits
                                                                 on library floor: revealed that water enters
                                                                 the room when it rains.



LIGHT                                                            PCBs in old light fittings may be leaking in
                  Yes         n/a         No           n/a       rooms 4,5,12,14 &18.
FITTINGS

EMERGENCY                                                        Most emergency       exit   lights   are   not
                  Yes         Yes         No           n/a       functioning.
LIGHTS

FLOOR                                                            Threadbare in corridors with major wear
                  Yes         n/a         No           No        and holes in classrooms 5,10,14,16 and
FINISHES:                                                        library.
Carpet

WALL                                                             Missing and broken wall tiles in wet areas
                  Yes         n/a         No           No        of rooms 7 and 14 - dangerous condition
FINISHES:
Tiles

       The inspection results provide sufficient information to conclude that
       overall Actual Condition of the building is less than that required for a
       school; an Asset Category 4 building. Allowing for normal wear and tear,
       the condition is poorer than expected for a school building receiving
       regular basic maintenance.


       RELATIVE CONDITION LEVEL

       The school would be assigned Relative Condition Level -1 (below
       Required Condition). If attention is given to the roof, carpet, tiles, light
       fittings and emergency lighting, it could be re-assessed at Relative
       Condition Level 0 (at Required Condition).



                                                                                               Page 43
APPENDIX 4
TIME FRAMES FOR ACTION

         Scheduling actions to close the gap between actual and required
         condition depends on a number of factors identified during the condition
         assessment process.

         The factors are:

                       •   the Asset Category;
                       •   the significance of the Relative Condition Level;
                       •   the severity of the Condition Impacts.

         The cost of rectification and the financial year in which funding can be
         made available are also important factors to be considered, particularly in
         the case of works that can safely be deferred.

         A schedule for action needs to be considered for each individual case.
         However, broad conclusions can be drawn on appropriate time frames for
         action by looking at the Asset Categories against each Relative Condition
         Level and each Condition Impact.

         These time frames are shown separately as TABLE K below and TABLE
         L on page 45.




TIME FRAMES: RELATIVE CONDITION LEVEL                                                TABLE K


                      Asset Category
Relative
Condition                  1             2           3           4           5           6
                      (Superior)       (High)      (Above     (Average)    (Below       (Low)
Level                                             Average)                Average)
       +2                                                REASSESS SUITABILITY FOR
   (Well Above
Required Condition)                                        PURPOSE IMMEDIATELY
       +1                             REASSESS SUITABILITY FOR PURPOSE
      (Above
Required Condition)                          WITHIN 1 - 2 YEARS
        0
        (At                        NO ACTION: MONITOR AND REVIEW IN 5 YEARS
Required Condition)
       -1                                                    ATTENTION WITHIN
      (Below
Required Condition)                                              1-2 YEARS
       -2                                       IMMEDIATE ATTENTION
   (Well Below
Required Condition)




                                                                                          Page 44
Page 45
TIME FRAMES: CONDITION IMPACTS:                                                     TABLE L


                        Asset category

Condition                   1             2         3           4           5           6
                        (Superior)      (High)    (Above    (Average)     (Below       (Low)
Impact                                           Average)                Average)
         0
       (Nil/                         NO ACTION: MONITOR AND REVIEW IN 5 YEARS
     Negligible)
         1                            ATTENTION WITHIN              ATTENTION WITHIN
(Moderate Disruption)
                                         1 - 2 YEARS                    5 YEARS
         2                           IMMEDIATE ATTENTION                ATTENTION WITHIN
       (Major
     Disruption)                                                           1 - 2 YEARS
         3                      ATTENTION WITHIN                    ATTENTION WITHIN
     (Increased
       Costs)                       3 YEARS                             5 YEARS
         4                             ATTENTION WITHIN                 ATTENTION WITHIN
     (Loss of
     Revenue)                             1 - 2 YEARS                       3 YEARS
         5                              RECTIFY WITHIN                    RECTIFY WITHIN
     (Possible
      Liability)                          1 - 2 YEARS                        3 YEARS
         6
      (Illegal                                   IMMEDIATE ACTION
     Condition)




          The time frames shown for Relative Condition Level do not always match
          the time frames for Condition Impacts. It is important to consider both
          possible time frames independently. The most appropriate time frame in
          any particular case is the one that minimises risk.

          The tables provide a useful guide for making decisions, especially when
          deciding budget needs over a five year period. However, agencies will
          also need to assess whether the time frames match their own corporate
          priorities.




                                                                                         Page 46

				
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Description: ASSESSING THE CONDITION OF CONSTRUCTED ASSETS