TOTAL ASSET MANAGEMENT

INTRODUCTION
The Asset Strategy is the top level strategy in

Total Asset Management planning and determines whether assets should be enhanced by capital investment, maintained or disposed of to continue their role in supporting service delivery. It determines the basic relationships between Service Delivery Strategy and the Capital Investment, Asset Maintenance, Asset Disposal and Office Accommodation Strategies.

 Agencies

must annually submit an Asset Maintenance Strategic Plan to Treasury in support of their funding submissions. The Asset Maintenance Strategic Plan aims to proactively manage the risk of the inability of assets to support service delivery strategies. The outcome is a more productive and reliable asset portfolio within the constraints of available resources. Maintenance planning involves an analysis of maintenance needs against agency service delivery objectives and government priorities.

It can be achieved by the following seven step planning process which has been developed to link service strategies with asset maintenance: Define and segment assets to meet service strategy Determine required asset performance Define maintenance resources and overall strategies Assess condition of assets and recommend maintenance Prepare Maintenance Cost Plan Implement Maintenance Plan and programs

ASSET DISPOSAL STRATEGIC PLAN

Agencies are required each year to submit Asset

Disposal Strategic Plan to Treasury in support of their funding submissions. An Asset Disposal Strategic Plan involves a detailed assessment of those assets that the Asset Strategy indicates are no longer effectively meeting their service delivery required at the lowest long-term cost to Government. This assists agencies to identify for disposal, those redundant assets that might otherwise reduce efficient and effective service delivery. Asset Disposal planning involves two separate and distinct elements: the detailed assessment of assets identified as surplus by the Asset Strategy followed by an analysis of the physical disposal of the assets. Disposal Planning links via the Asset Strategy with service delivery by the following five stage process.

 Disposal Planning links via the Asset Strategy

with service delivery by the following five stage process. Assets identified by the Asset Strategy as surplus to service delivery requirements are assessed in detail The advantages to Government, agency and the community in divesting assets is assessed Opportunities for increasing asset value are identified Disposal requirements including probity considerations are identified Implementation of the Disposal Plan and performance monitoring are in place

ASSESSMENT AND DECISION TOOLS

SUSTAINABLE DEVELOPMENT
Sustainable Development is development that

meets the needs of the present without compromising the ability of future generations to meet their own needs There are four primary Objectives of Sustainable Development : minimised risk of environmental damage arising from incomplete knowledge ecological sustainability and environmental protection socio/cultural sustainability recognising the needs of all economic sustainability maintaining high and stable levels of economic growth and

Government is committed to: ensuring environmental protection in all its activities greater social justice for the whole community economic development to reduce public debt and unfunded liabilities by more financially responsible delivery of programs Agencies need to integrate the objectives of sustainable development across all their business practices from Corporate Planning to Service delivery and Resource planning This guideline considers the application of sustainable development objectives to each stage of the Total Asset Management

HERITGE ASSET MANAGEMENT

Total Asset management focuses assets on the delivery of

an agencys primary service responsibilities. Organizations that have control of heritage assets also have a second service obligation. While they use the assets in delivering their primary service, they are also responsible for the stewardship of the assets and protection of their significance for future generations. Agencies must ensure both that the purposes of the Governments Total Asset Management policies, procedures and performance standards are met and that relevant heritage legislation is complied with. The management of heritage issues should be viewed as an essential part of the management of the assets, rather than another problem and cost impost. Sustainable management of heritage values should be treated by an agency as part of its core business.

LCC
In the past, comparisons of asset alternatives, whether at

the concept or detailed design level, have been based mainly on initial capital costs. However, with growing pressure to achieve better outcomes from assets, ongoing operating and maintenance costs must be considered as they consume most resources over the assets service life. Life Cycle Costing is a process to determine the sum of all the costs associated with an asset or part thereof, including acquisition, installation, operation, maintenance, refurbishment and disposal costs. It is therefore pivotal to the asset management process. Life Cycle Costing incorporates both Life Cost Planning which occurs during development or manufacture and implementation of that plan by Life Cost Analysis as the asset is used or occupied. Life Cycle Costing forms an input to evaluation processes such as Value Management, Economic Appraisal and

MANAGEMENT DEMAND
community progressively demands more or better

government services in order to raise their standard of living. In the past governments have responded to these demands by improving their capacity to supply, but this in no longer sustainable. The demand for service must now also be managed. While Demand Management should be applied at each stage of the Asset Management process, it is an essential part of the development of the Service Delivery Strategy. The Demand Management process requires asset managers to first understand both their clients and the true cost of providing services. They then identify demand as the needs of services, rather than wants

VALUE MANAGEMENT
Value Management is a powerful management tool for

use in an overall strategic management framework including the development of all Total Asset Management Strategies. In general terms, it may be described as a structured, analytical process for developing innovative, holistic solutions to complex problems. It involves representatives of key stakeholders in a facilitated workshop. It is the team based creative approach to problem solving that sets Value Management apart from other management tools. The process seeks improved value-for-money outcomes that maximise the standards of quality or performance within the resource limits available.

RISK MANAGEMENT
This Guideline applies to the management of risks associated with

the planning, control and operation of the physical assets of the NSW Public Sector. Risk management is a systematic process to identify risks that may impact on the organizations objectives, analyse their consequences and develop ongoing measures to treat them. Risk management is essential at all stages of the asset life cycle, whenever a significant decision has to be taken. The risks associated with the decision and their implications should be weighed with other factors when determining a course of action. Risk management should be formally applied and documented during the Total Asset Management process when: Setting strategic directions, Developing and evaluating programs and projects, and, Entering into contracts with the private sector

POST IMPLEMENTATION REVIEW

asset performance. These asset reviews

determined the suitability of the asset to the required task and whether they could be improved to provide better value and performance. The same generic process can be used to review any project to ensure improvement in future outcomes. The process can be used to review the development of an asset strategy, a maintenance plan, a construction project or an asset procurement.

 The Post Implementation Review process has two components: the Post Completion Review (PCR)

A PCR asks whether the process achieved what was asked for.
the Post Implementation Review (PIR) A PIR asks whether the process achieved what was needed. The PCR is intended to systematically and rigorously compare the

actual performance of a project output with the stated objectives of the original project brief. The PCR process aims to identify ways in which future project concept, design, development and implementation can be improved. The PIR process is designed to collect and utilise knowledge learned from project concept through to design, development and implementation. The review focuses on how well the project outcomes match the required performance. In the case of an asset review, the required performance would be the optimum support of an agencys service

ASSET INFORMATION
This guideline provides a systematic approach to the

development of asset registers. Asset registers are listings of information relating to various aspects of an asset portfolio, in a form that allows data to be cross-referenced and retrieved as required. They provide most of the information needed for Total Asset Management strategic decision-making during the TAM process. Agencies are required to maintain appropriate records of their non-current assets to ensure they are: Efficiently and effectively used to support the delivery of service Properly managed throughout their life cycle Responsibly accounted for on their balance sheets and allowance made for their depreciation

Benefits of maintenance planning The adoption of Maintenance Planning offers a number of benefits to both agencies and government as a whole:

 Benefits to agencies
Assets perform at optimum levels, reducing service disruptions and losses due to asset failure Risks to the agency can be identified and ameliorated The costs of asset maintenance can be quantified and budgeted with confidence The performance of the asset can be reviewed to suit service delivery needs The plan provides a foundation for continuous process improvement The plan provides a feedback to improve future application of the maintenance process Reduced environmental impact by controlling resource usage

 Benefits to government
Asset costs associated with service delivery can be identified and minimised in the long term Risks to the Government can be identified and ameliorated Alternative asset and non-asset solutions can be compared to best suit service delivery needs Maintenance costs can be benchmarked across agencies and industries The value of public sector assets can be protected, where appropriate The global environmental responsibilities of the State such as energy management, water usage, and pollution control can be addressed

MAINTENANCE AND TOTAL ASSET

The total cost of an asset over its life comprises:

Capital procurement costs (including acquisition, renewal and adaptation) Maintenance costs over the life of the asset Operating costs over the life of the asset (including staffing) Disposal costs

 Incremental maintenance costs are generally

relatively small and therefore tend not to receive the same attention as procurement and disposal costs or the more visible, day-to-day operating costs. However, the annual expenditure on maintenance and its impact on delaying expenditure on new works can be very substantial. Moreover, maintenance costs over the life of an asset are often many times the initial purchase cost. Maintenance therefore is a principal cost element of the total management of an

 Benefits of good maintenance

Assets will operate more reliably and economically and their operational service life will be achieved Operating costs will be reduced, often exhibited in lower energy costs, reduced incidence of premature failure requiring expensive repair or replacement, thus freeing funds for other purposes Optimisation of maintenance will allow more effective use of the asset, alignment with service needs and a resulting reduction in the demand for capital expenditure

ASSET DETERIORATION
Some part or components of the asset will fail before

others. Timely attention to these repairs can allow the remainder of the system to continue in service. Tyres and brakes will be replaced several times during the life of a vehicle. Similarly, carpet and paint systems will require renewal many times over the service life of a building. Maintenance slows the overall deterioration of the asset by restoring the condition of its short life components and allows its overall full service life to be achieved. Sometimes there is a need to increase the asset performance beyond that available when the asset was new, to accommodate revised corporate requirements, changed technology, social expectations, demographics and the like. For example, to accommodate the new computer requirements in classrooms it may be necessary to

THE ROLE OF MAINTENANCE PLANNING

Maintenance planning has a key role in the strategic

management of an asset over its life span. It is therefore fundamental to an agencys service delivery objectives. After acquiring an asset, a periodic review of its role is required to ensure it continues to match the service delivery needs. This review is initially undertaken during the development of the Asset Strategy and may indicate one of three options for the future of the asset: Maintenance to meet the ongoing service role of the asset Renewal and adaptation to suit changed service needs by capital expenditure, or Disposal of the asset when it is no longer required for service delivery and has no other value to the agency.

 assessment of those assets or asset segments,

which the Asset Strategy indicates, require only strategic maintenance in order to satisfy the service delivery outcomes. It is aimed at ensuring these assets remain productive at the lowest possible long-term cost and involves: A detailed functional analysis of maintenance needs that meet the required service delivery outcomes The development of maintenance strategies The institution of procedures to ensure adequate