Alignment of Financial Planning, Accounting, and Physical Assets - A Case Study

Gregg HouserCity of Moncton

Ben MollerAssetic

Peter SimciskoWatson & Associates Economists Ltd.

Learning Objectives• Understanding how much asset information is

needed to begin the asset management journey• Reconciling financial assets with physical assets• Understanding at what scale value is realized

from assets (individual asset, system, or portfolio)

City of Moncton

City of Moncton

ISO 55000• “Assets exist to provide value to the organization

and its stakeholders.”• “Asset management enables an organization to

realize value from assets in the achievement of its organizational objectives”

• “Asset management involves the balancing of costs, opportunities and risks against the desired performance of assets, to achieve the organizational objectives.”

Beginning of AM Journey The City of Moncton requires an asset management system that identifies opportunities for real-time inventories and reporting of an integrated asset management database.

Implementation of the resulting solution will help ensure the City is able to provide reliable, timely and uninterrupted service to its current and future residents in a cost effective and sustainable manner.

All of the City of Moncton’s tangible Capital Assets will be included in the asset management system.

* The City knew they did not have an asset register that would support their future asset management program.

Initial StateFINANCIAL

ASSETS

ORACLE Fixed Assets GIS

Hansen/Infor

Harfan

Fleet Maintenance

PHYSICAL ASSETS

Objective“...to ensure the City is able to provide reliable, timely and uninterrupted service to its current and future residents in a cost effective and sustainable manner….”

• No formal Asset Management Policy• No formal Strategic Asset Management Plan• No formal Asset Management Plans (for different asset

types/classes)

Haven’t worked out the “How”...need to clarify the “What” (value)

Financial Register• Global similarities

Canada IFAC USA

What is it: List of fixed assets that belong to an accounting entity.

Purpose: Track value of assets for depreciation (or valuation) to be recorded for management and taxation purposes.

Financial Register• Ownership • Financial view of asset• Asset consumption based on accounting data (‘Financial

Consumption’)• Value of the asset ….. NOT ….. Value from the asset

Financial Register3% annual

consumption (amortization)

Physical Register

Physical Register

Physical Register• Capital treatment selected based on a well-defined set of

situations

Business Process • Asset Creation• Asset Renewal (Capital

Works Project• Financial Reporting

• Subdivision development• Capital works projects

Business Process • Synchronizing with the

City’s GIS• Tracking valuation with

financial transactions (Accounting Module)

• Output for Predictor• Maintaining historical

condition assessments (future)

Business Process Functional Location

(Road Name)

Road Segment Asset

Surface Component

Road Bed Component

System Navigation

Sync with GIS/Predictor modeling

Accounting Reporting

Data cleanup• Road stubs• 2,762 road segments• 6,041 financial records

How much information is needed?• Clear idea of what you own (what your assets are)• Condition data• Understanding of priorities (criticality),

documented if possible• Financial register clarity – having an asset register

that is as ‘clean’ as possible before merging with physical asset register – CONSISTENCY

• Documenting business process – understanding what different parts of the organization do, how, and why

Aligned Register

Financial Register

Physical Asset

Register

Asset Management

Register –“Aligned” Register

Aligned RegisterFinancial

view of assetsPhysical view

of assets

Aligned Outcome

Service Level

Funding Programs

Budget

Service Level

Funding Programs

Budget

Old Moncton New Moncton

Unaligned Service OutcomeCurrent Budget: 1.4% of Replacement Value

Aligned Service OutcomeIdeal Roads Budget: 2.5% of Replacement Value

< Financial Amortization> Current Budget

Value from Assets• Starting point: detailed condition assessment

reports on City’s major facilities (33/187 facilities, but 74% of replacement value)• Each dept. managed their own facilities based

on available budget and apparent condition of their assets

• Very reactive vs. proactive• Due to newly available data, tendency to fall

into trap of maintenance management vs. lifecycle management

Value from Assets• Ability to obtain funding was a main objective

• Needed to be able to show which assets needed to be funded.

• Looking at the long term vs. short-term annual needs.

Next Steps

• Asset Management Policy

• Strategic Asset Management Plan

• Implementing tools to support Asset Management Plan

• Asset Management Plan

Questions?Contact Me:

Gregg Houser City of Moncton, Deputy Treasurer

gregg.houser@moncton.caPeter Simcisko

Senior Consultantsimcisko@watson-econ.ca