Asset Management Plan - Roads - Web Version 732013

7/28/2019 Asset Management Plan - Roads - Web Version 732013

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SAMPLE COUNCIL ASSET CATEGORY ASSET MANAGEMENT PLAN

Document Control

Document ID: 59.299.120815 nams.plus2 amp template v2

Rev No Date Revision Details Author Reviewer Approver

1 24/12/09 Updated graphs GP GP

2 1/6/10 Updated figures and values to match fairvalue

GP GP GP

3 7/1/11 To reflect current data GP GP GP

4 22/2/2011 Adopted by Council GP Council

5 Jan-Feb 2013 Reviewed and updated the plan to reflect

current data

VY GP GP

6 26/2/2013 Adopted by Council VY GP Council

Copyright 2012 All rights reserved.

The Institute of Public Works Engineering Australia.

www.ipwea.org.au/namsplus


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KU-RING-GAI COUNCIL ASSET MANAGEMENT PLAN - ROADS

Table of Contents

1. EXECUTIVE SUMMARY ...................................................................................................1Context ...................................................................................................................................1What we will do.......................................................................................................................2What we cannot do .................................................................................................................2

Managing the Risks ................................................................................................................2The Next Steps .......................................................................................................................3

2. INTRODUCTION ...............................................................................................................62.1 Background ...............................................................................................................62.2 Goals and Objectives of Asset Management ............................................................92.3 Plan Framework ........................................................................................................92.4 Core and Advanced Asset Management ................................................................112.5 Community Consultation .........................................................................................11

3. LEVELS OF SERVICE.....................................................................................................113.1 Customer Research and Expectations....................................................................113.2 Strategic and Corporate Goals................................................................................123.3 Legislative Requirements ........................................................................................133.4 Current Levels of Service........................................................................................133.5 Desired Levels of Service .......................................................................................14

4. FUTURE DEMAND..........................................................................................................154.1 Demand Drivers ......................................................................................................154.2 Demand Forecast....................................................................................................154.3 Demand Impact on Assets ......................................................................................154.4 Demand Management Plan ....................................................................................154.5 Asset Programs to meet Demand ...........................................................................16

5. LIFECYCLE MANAGEMENT PLAN ................................................................................185.1 Background Data.....................................................................................................185.2 Infrastructure Risk Management Plan.....................................................................225.3 Routine Operations and Maintenance Plan ............................................................255.4 Renewal/Replacement Plan....................................................................................285.5 Creation/Acquisition/Upgrade Plan .........................................................................345.6 Disposal Plan ..........................................................................................................355.7 Service Consequences and Risks ..........................................................................36

6. FINANCIAL SUMMARY...................................................................................................376.1 Financial Statements and Projections.....................................................................376.2 Funding Strategy .....................................................................................................506.3 Valuation Forecasts.................................................................................................506.4 Key Assumptions made in Financial Forecasts ......................................................516.5 Forecast Reliability and Confidence........................................................................52

7. PLAN IMPROVEMENT AND MONITORING...................................................................547.1 Status of Asset Management Practices ..................................................................547.2 Improvement Program.............................................................................................577.3 Monitoring and Review Procedures ........................................................................577.4 Performance Measures ...........................................................................................58

8. CONCLUSION 599. REFERENCES 6010. APPENDICES..................................................................................................................61

Appendix A Maintenance Policy and Procedure ...............................................................62Appendix B Projected 10 year Capital Renewal and Replacement Works Program.........63Appendix C Budgeted Expenditures Accommodated in LTFP...........................................64Appendix D Roads Risk Register .......................................................................................65Appendix E Abbreviations ..................................................................................................66Appendix F Glossary ..........................................................................................................67


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1. EXECUTIVE SUMMARY

Context

The Ku-ring-gai local government areais located in Sydneys northernsuburbs, 16 kilometres north of the citycentre. With nine suburbs, covering 84square kilometres, the area ispredominantly residential. There aresignificant areas of park and bushlandwith very little commercial, and noindustrial land use.

A key issue facing Council is themanagement of ageing assets in need

of renewal and replacement. Ourinfrastructure, including council roadspresent particular challenges. Theircondition and longevity can be difficultto determine.

Financing needs can be large, requiringplanning for large peaks and troughs inexpenditure for renewing and replacingsuch assets. The demand for new andimproved services adds to the planningand financing complexity.

The creation of new assets alsopresents challenges in funding theongoing operating and replacementcosts necessary to provide the neededservice over the assets full life cycle.

Ku-ring-gai Council provides a roadnetwork in partnership with the Roadsand Traffic Authority of NSW to enablevehicles and other road users to safely

travel throughout the Council area.

The Roads network comprises: Local roads Collector roads Regional roads

The road assets are classifiedaccording to their function and havevarious responsibilities. Local roads areused mainly by local traffic andgenerally have low traffic volumes and

fully maintained and constructed byCouncil.

Collector roads are those roads thatprovide a link between either stateroads or regional roads and carryhigher amounts of traffic and fullymaintained by Council.

Regional roads provide a link acrossregions and state roads with fundingprovided by the Roads and TrafficAuthority of NSW and Council generallyon a shared basis and maintained byCouncil.

These infrastructure assets have areplacement value of $ 370,301,276.

The Asset Plan Methodology

One of the important aspects of theasset management plan is the forecastof existing asset renewal requirements.For the Ku-ring-gai Roads AssetManagement Plan, three scenarioshave been considered.

Scenario 1 uses the councils assetregister valuation data to project therenewal costs. In this scenario the

acquisition year of an asset is added tothe useful life of the asset to estimatethe year when renewal is due. The costto renew the asset category can beaggregated to estimate the totalrenewal requirements for each year ofthe planning period.

Scenario 2 uses capital renewalexpenditure projections assessed bytechnical staff. The roads with aremaining useful life of less than tenyears were included in this scenario.

Scenario 3 is the reality of the situationwhen the capital renewal expendituresthat can be achieved are with availablefunds in the Long Term Financial Plan.

The results for the 3 scenariosdescribed are included in this assetmanagement plan and they revealsome inconsistencies.


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Scenario 1 indicates that the funds tomeet the forecast renewalrequirements cannot be met by thecurrent funding being planned. Thegap is $22.7M.

Scenario 2 was prepared using thetechnical estimates of what renewal isrequired to sustain the current levels ofservice, and this estimated that therenewal requirements will be beyondthe current funding capacity of council.The gap in this scenario is $5.7M.

This position is more consistent withthe community feedback and theoverall assessment of the network

made by Ku-ring Council Technicalstaff

Scenario 3 is a reflection of the actualfunding available. The differencebetween Scenario 2 and Scenario 3represents what we cant do. Thediscussion about this gap will lead usinto a much better informed communitydiscussion about what are achievableand acceptable service levels, as wellas giving a focus on managing risk

It is most probable that the valuationregisters used in Scenario 1 are not yetdeveloped to a level of maturity wherethey are reliable for producing arealistic renewal forecast. Once thedata is improved, the asset registershould be consistent with the capitalrenewal program.

For Ku-ring-gai Council, the refinementof the asset register to achieve this

situation should become an importantpart of the asset managementimprovement plan.

What does it Cost?

The forecast of the projected outlaysnecessary to provide the servicescovered by this Asset ManagementPlan (AM Plan) includes operations,maintenance and renewal of existingassets over the 10 year planning period

is $145M or $14.5M on average peryear. This is based on the Scenario 2

methodology as it is currently the mostreliable estimate.

Estimated available funding for thisperiod is $88M or $8.8M on averageper year which is 61% of the cost toprovide the service. This is a fundingshortfall of $5.7M on average per year.

What we will do

We plan to provide services for thefollowing:

Operation, maintenance, renewaland upgrade of road infrastructureto meet service levels set by councilin annual budgets.

Upgrades funded within the 10 yearplanning period.

This will be provided to the extent ofthe current budget.

What we cannot do

We do not have enough funding toprovide all services at the desiredservice levels and therefore work willbe prioritised based on risk and assetcondition.

Only a limited number of new link roadswill be created. These roads areassociated with new developmentssuch as sub divisions.

Managing the Risks

The operations and maintenanceactivities and capital projects thatcannot be undertaken may maintain orcreate risk consequences for theorganisation. These include:

Additional cost for each block torebuild the road pavement due tothe wearing surface not beingreplaced within requiredtimeframe

Insufficient funding to carry outintermediate maintenance

(patching) to keep an asset infair condition - delaying the


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need for more major works(resurfacing or reconstruction),

Damage to vehicle and injury topassenger from MVA caused byfailed road surface

We will endeavour to manage theserisks within available funding by:

Roads Risk Treatment Plan # 1

Strategies to be developed toadvocate for additional fundingto reduce funding gaps.

Resource allocation andservice levels to be reviewed

and additional funding to berequested as part of the AssetManagement Strategy.

Roads Risk Treatment Plan #2

Formal risk monitoringprograms to be developedand integrated into the RoadsMaintenance Policy andProcedures. i.e. Regularreview and reporting ofaccident statistics, CRMrequests, major changes incondition ratings.


Review of RoadsMaintenance Policy andProcedures to further defineexisting risk managementpractices and integrate with

Councils Risk ManagementFramework.

The Next Steps

The actions resulting from this assetmanagement plan are:

Annually review the 4 year deliveryprogram and ensure it is balancedto the long term financial plan.Update the asset management plan

projections to align.

Maintain the current assets in asafe condition

Continue to assess condition andreport annually on the state of the

assets for condition, function andcapacity.

Improve asset managementcapability to provide the same orbetter service level at lower lifecycle cost whilst managing risk.

Improve life cycle cost analysis onthe optimum frequency of roadresurfacing to minimise expensivepavement repairs.


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What is this plan about?

This asset management plan coversthe road network that provides aservice to the Ku-ring-gai community.

The roads, which are classified aslocal, collector and regional, enablepeople to safely travel throughout thearea.

What is an Asset Management Plan?

Asset management planning is acomprehensive process to ensuredelivery of services from infrastructureis provided in a financially sustainablemanner.

An asset management plan detailsinformation about infrastructure assetsincluding actions required to provide anagreed level of service in the most costeffective manner.

The plan defines the services to beprovided, how the services areprovided and what funds are requiredto provide the services.

Why is there a funding shortfall?

Most of the Councils road network wasconstructed by developers and fromgovernment grants, often provided andaccepted without consideration ofongoing operations, maintenance andreplacement needs.

Many of these assets are approachingthe later years of their life and requirereplacement, services from the assetsare decreasing and maintenance costs

are increasing.What options do we have?

Resolving the funding shortfall involvesseveral steps:

1. Improving asset knowledge so thatdata accurately records the assetinventory, how assets areperforming and when assets are notable to provide the required service

levels,

2. Improving our efficiency inoperating, maintaining, renewingand replacing existing assets tooptimise life cycle costs,

3. Identifying and managing risksassociated with providing servicesfrom infrastructure,

4. Making trade-offs between servicelevels and costs to ensure that thecommunity receives the best returnfrom infrastructure,

5. Identifying assets surplus to needsfor disposal to make saving infuture operations and maintenancecosts,

6. Consulting with the community toensure that the road services andcosts meet community needs andare affordable,

7. Developing partnership with otherbodies, where available to provideservices,

8. Seeking additional funding fromgovernments and other bodies to

better reflect a whole ofgovernment funding approach toinfrastructure services.

What happens if we dont managethe shortfall?

In the event of required reductions toservice levels the reduction mayinclude an increase in maintenance andoperating expenditure for existingassets and an inability to fund new

assets.

Redirecting funding from other areasand the sale of assets will also beconsidered.

What can we do?

We can develop options, costs andpriorities for future road services,consult regularly with the community toplan future services to match thecommunity service needs with ability to


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pay for services and maximisecommunity benefits against costs.

What can you do?

We will be pleased to consider yourthoughts on the issues raised in thisasset management plan andsuggestions on how we may change orreduce the roads services to ensurethat the appropriate level of service canbe provided to the community withinavailable funding.


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2. INTRODUCTION

2.1 Background

This asset management plan is to demonstrate responsive management of assets(and services provided from assets), compliance with regulatory requirements, and to

communicate funding needed to provide the required levels of service over a 10 yearplanning period.

The asset management plan follows the format for AM Plans recommended in Section4.2.6 of the International Infrastructure Management Manual1.

The asset management plan is to be read with the organisations Asset ManagementPolicy, Asset Management Strategy and the following associated planning documents:

Roads Maintenance and Repairs Policy and Roads Maintenance Procedure Long Term Financial Plan (adopted in May 2012 and revised annually)

ASSET MANAGEMENT CRITERIA FOR ROADS

The components for Councils road network are as follows:

A. Wearing Surface

The road wearing surface is the layer on top of the pavement. For most roadsaround Kuring-Gai, this is usually the top 50mm layer of asphalt.

B. Pavement

The pavement is the layer of material between the natural subgrade (formation)and the wearing surface. The layer of pavement will be dependent on the roadtype based on the various road classifications and traffic volumes.

C. Formation

The formation is the area of road under the pavement that is required tosupport the road pavement.

The road types and the typical pavement construction are as described below:

1. Local Roads

Local roads are those roads which normally carry less than 2000 vehicles perday and heavy vehicles are usually confined to waste collection and removalistvans. The pavement construction generally consists of 40mm to 50mm ofasphaltic concrete and 10mm to 150 mm of Dense Graded Base materialnominally 20mm aggregate. The cost to replace these roads is estimated at$75 per square metre which is $25/m2 for the wearing surface and $50/m2 forthe pavement.

1IPWEA, 2011, Sec 4.2.6, Example of an Asset Management Plan Structure, pp 4|24 27.


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2. Collector Roads

Collector roads are those roads which normally carry traffic volumes between2000 and 15000 vehicles per day. The heavy vehicle component of these roadsis generally around 5% of the traffic volume. The pavement constructiongenerally consists of 50mm of asphaltic concrete and 150 to 200 mm of DenseGraded Base material nominally 20mm aggregate. The cost to replace theseroads is estimated at $90 per square metre which is $30/m2 for the wearingsurface and $60/m2 for the pavement.

3. Regional Roads

Regional roads are those roads which normally carry traffic volumes between5000 and 20000 vehicles per day. The heavy vehicle component of these roadsis generally greater than 5% of the traffic volume. The pavement constructiongenerally consists of 50mm of asphaltic concrete and 200 to 250 mm of Dense

Graded Base material nominally 20mm aggregate. The cost to replace theseroads is estimated at $132 per square metre which is $32/m2 for the wearingsurface and $100/m2 for the pavement.

Fair Value estimates for roads:

The fair value estimates for roads is based on a straight line depreciation model wherea road found to be in a good condition has a fair value equivalent to its replacementvalue. A road that has depreciated and considered to be in a poor condition will have alower fair value based on the depreciated amount of the wearing surface andpavement. As the wearing surface and pavement have different useful lives, the totalfair value is based on the cumulative cost for each component. An example of this can

be shown in the graphs below:

Pavement Depreciation Model

0

5

10

15

20

25

30

35

40

45

50

0 years 10 years 20 years 30 years 40 years 50 years

ReplacementCost$

The total fair value of a road is equivalent the sum of the depreciation of thepavement, wearing surface and formation based on its condition and age. The

annual depreciation is calculated on the amount of depreciation per year for eachof the components. For accounting purposes, the depreciation will be based on


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straight line depreciation. However, in practice a road does not depreciate in astraight line format.

The remaining useful life of a road pavement and surface is based on the formula;

(Useful Life(Useful Life(Useful Life(Useful Life x Condition Index)x Condition Index)x Condition Index)x Condition Index) //// NuNuNuNumber of condition levelsmber of condition levelsmber of condition levelsmber of condition levels

The condition levels relate to the condition of the asset. The condition index wasdeveloped to address issues arising from assets which continue to provide a servicedespite exceeding their technical useful life

Residual values for both the wearing surface and the pavement are determined bycalculating the difference in cost for the actual treatment of the roads such asstabilisation and resheeting less the cost of fully replacing a road pavement andsurface.

This infrastructure assets covered by this asset management plan are shown in Table2.1. These assets are used to provide transport services to its community.

Table 2.1: Assets covered by this Plan

Source: Roads Asset Register. Values updated February 2013

Asset category Dimension Replacement Value

Local roads 2,838,224 square metres $ 256, 448, 557

Collector roads 514,448 square metres $ 54, 455, 503

Regional roads 407,512 square metres $ 59, 397, 215

TOTAL 3,760,185 square metres $ 370, 301, 276

Key stakeholders in the preparation and implementation of this asset management plan are:

Shown in Table 2.1.1.

Table 2.1.1: Key Stakeholders in the AM Plan

Key Stakeholder Role in Asset Management Plan

Councillors Represent needs of community/shareholders, Allocate resources to meet the organisations objectives

in providing services while managing risks,

Ensure organisation is financial sustainable.Asset Management SteeringGroup (AMSG)

A multi-disciplinary and cross-functional working groupestablished to assist with strategic asset managementplanning.

Director Operations Preparation and direction of AMP

Strategic Asset Officer Preparation and direction of AMP

Pavement Engineer Development of programs and specifications for works andupdating pavement management system

Civil Works Coordinator Development of maintenance programs and quality of works


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2.2 Goals and Objectives of Asset Management

The organisation exists to provide services to its community. Some of these servicesare provided by infrastructure assets. We have acquired infrastructure assets bypurchase, by contract, construction by our staff and by donation of assets constructedby developers and others to meet increased levels of service.

Our goal in managing infrastructure assets is to meet the defined level of service (asamended from time to time) in the most cost effective manner for present and futureconsumers. The key elements of infrastructure asset management are:

Providing a defined level of service and monitoring performance, Managing the impact of growth through demand management and

infrastructure investment, Taking a lifecycle approach to developing cost-effective management

strategies for the long-term that meet the defined level of service, Identifying, assessing and appropriately controlling risks, and Having a long-term financial plan which identifies required, affordable

expenditure and how it will be financed.2

2.3 Plan Framework

Key elements of the plan are

Levels of service specifies the services and levels of service to be providedby Council,

Future demand how this will impact on future service delivery and how this isto be met,

Life cycle management how we will manage our existing and future assets toprovide defined levels of service,

Financial summary what funds are required to provide the defined services, Asset management practices, Monitoring how the plan will be monitored to ensure it is meeting the

organisations objectives, Asset management improvement plan.

2Based on IPWEA, 2011, IIMM, Sec 1.2 p 1|7.


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A road map for preparing an asset management plan is shown below.

Road Map for preparing an Asset Management PlanSource: IPWEA, 2006, IIMM, Fig 1.5.1, p 1.11.

IS THE PLAN

AFFORDABLE?

CORPORATE PLANNING

Confirm strategic objectives and establish AM

policies, strategies & goals.

Define responsibilities & ownership.

Decide core or advanced AM Pan.

Gain organisation commitment.

REVIEW/COLLATE ASSET INFORMATION

Existing information sources

Identify & describe assets.

Data collection

Condition assessmentsPerformance monitoring

Valuation Data

ESTABLISH LEVELS OF SERVICE

Establish strategic linkages

Define & adopt statements

Establish measures & targets

Consultation

LIFECYCLE MANAGEMENT STRATEGIES

Develop lifecycle strategies

Describe service delivery strategy

Risk management strategies

Demand forecasting and managementOptimised decision making (renewals, new works,

disposals)

Optimise maintenance strategies

FINANCIAL FORECASTS

Lifecycle analysis

Financial forecast summary

Valuation Depreciation

Funding

IMPROVEMENT PLAN

Assess current/desired practices

Develop improvement plan

ITERATION

Reconsider service statements

Options for funding

Consult with Council

Consult with Community

DEFINE SCOPE &

STRUCTURE OF PLAN

AM PLANREVIEW AND

AUDIT

IMPLEMENT

IMPROVEMENT

STRATEGY

ANNUAL PLAN /

BUSINESS PLAN


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2.4 Core and Advanced Asset Management

This asset management plan is prepared as a core asset management plan over a 10year planning period in accordance with the International Infrastructure ManagementManual3. It is prepared to meet minimum legislative and organisational requirementsfor sustainable service delivery and long term financial planning and reporting. Core

asset management is a top down approach where analysis is applied at the systemor network level.

Future revisions of this asset management plan will move towards advanced assetmanagement using a bottom up approach for gathering asset information forindividual assets to support the optimisation of activities and programs to meet agreedservice levels.

2.5 Community Consultation

This core asset management plan is prepared to facilitate community consultationinitially through feedback on public display of draft asset management plans prior to

adoption by the Council.

Council has completed consultation with the community on service levels and costs ofproviding the service for roads. Future revisions of the asset management plan willincorporate further community consultation on service levels and costs of providing theservice. This will assist the Council and the community in matching the level of serviceneeded by the community, service risks and consequences with the communitysability and willingness to pay for the service.

3. LEVELS OF SERVICE

3.1 Customer Research and Expectations

Council conducts Customer Satisfaction surveys every four years to determinecommunity attitudes towards the services and facilities it provides about the quality andappropriateness of each of its services. The most recent survey was conducted in2010 and this information gave us an indication on what services the neededimprovement.

In addition to this survey, Council engaged a consultant to conduct consultation withthe community on improving our infrastructure assets in 2012. The survey askedresidents the importance and satisfaction of each asset class along with their level ofsupport in increasing funding to each asset.

The results identified local roads, footpaths, drainage and community buildings as thehighest priority assets, with roads the most supported asset for continued funding andimprovements.

Most recently, Council engaged a consultant to determine the communities support forthe continuation of the special rate variation for the infrastructure levy. All funding fromthe levy is allocated to the renewal of our local, collector and regional roads. Keyresults from the survey include;

3IPWEA, 2011, IIMM.


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88% of residents are at least somewhat supportive for the continuation of thespecial rate variation to fund road renewal

92% of residents are at least somewhat supportive of Council continuing theinfrastructure levy

The organisation uses this information in developing its Strategic Plan and in allocationof resources in the Long Term Financial Plan.

3.2 Strategic and Corporate Goals

This asset management plan is prepared under the direction of the organisationsvision, aim, goals and objectives. Source Community Strategic Plan 2030

Our vision is:

Ku-ring-gai will be a creative, vibrant place where citizens respect each other andconserve the magnificent environment and society for our children and grandchildren.

Our Aim is:

Our assets are managed effectively to meet community needs and standards withinavailable resources.

Other visions and objectives and how these are addressed in this asset managementplan are:

Table 3.2: Organisational vision and objectives

Vision Objective How The Asset Management Plans contributto achieving these outcomes

Ku-ring-gai will have safeand accessible local roads

Improve the condition of localroads

Infrastructure is provided to support services. Gettithe correct infrastructure appropriate to the needs of tcommunity is a primary goal of Asset ManagemPlanning.

A primary objective of the asset management plan is tdevelop a lifecycle approach to the provision ofinfrastructure. This aims to minimise the life cycle costassets while maximising the service that is delivered

Ku-ring-gai is a place withinfrastructure and facilitiesthat accommodate the needsof the community

Establish a program that providesfunding to maintain councilassets at a sustainable standard


Increase the use of recyclingproducts in all Council managedinfrastructure developments

Use of recycled products to reduce life cycle costs isidentified within the plan.

Ku-ring-gai is a place withinfrastructure and planningsystems that accommodatethe identity of the community

Long term planning and fundingstrategy established for thedelivery of high qualityinfrastructure that meets the

needs of the community



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The Council will exercise its duty of care to ensure public safety in accordance with theinfrastructure risk management plan prepared in conjunction with this AM Plan.Management of infrastructure risks is covered in Section 5.2

3.3 Legislative Requirements

We have to meet many legislative requirements including Australian and Statelegislation and State regulations. These include:

Table 3.3: Legislative Requirements

Legislation Requirement

Local Government Act 1993 Sets out role, purpose, responsibilities and powers of localgovernments including the preparation of a long term financialplan supported by asset management plans for sustainableservice delivery.

Roads Act 1993 Sets out rule, purpose, responsibilities and powers of localgovernments relating to the management and control of road

assets.Work Health and Safety Act2011

Sets out the roles and responsibilities to ensure the health,safety and welfare of persons at work.

The Australian AccountingStandards

The Australian Accounting Standards Section 27 (AAS27)requires that assets be valued, and reported in the annualaccounts, which also includes depreciation value (i.e. how fastare these assets wearing out).

3.4 Current Levels of Service

We have defined service levels in two terms.

Community Levels of Service measure how the community receives the service andwhether the organisation is providing community value.

Community levels of service measures used in the asset management plan are:

Quality How good is the service?Function Does it meet users needs?Capacity/Utilisation Is the service over or under used?

Technical Levels of Service - Supporting the community service levels areoperational or technical measures of performance. These technical measures relate tothe allocation of resources to service activities that the organisation undertakes to bestachieve the desired community outcomes and demonstrate effective organisationalperformance.

Technical service measures are linked to annual budgets covering:

Operations the regular activities to provide services such as opening hours,cleansing frequency, mowing frequency, etc.

Maintenance the activities necessary to retain an assets as near aspracticable to an appropriate service condition (e.g. road patching, unsealedroad grading, building and structure repairs),

Renewal the activities that return the service capability of an asset up to thatwhich it had originally (e.g. frequency and cost of road resurfacing andpavement reconstruction, pipeline replacement and building componentreplacement),


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Upgrade the activities to provide an higher level of service (e.g. widening aroad, sealing an unsealed road, replacing a pipeline with a larger size) or a newservice that did not exist previously (e.g. a new library).

Asset managers plan, implement and control technical service levels to influence thecustomer service levels.4 Our current service levels are detailed in Table 3.4.

Table 3.4: Current and Desired Service Levels

KeyPerformanceMeasure

Level of Service PerformanceMeasure Process

Performance Target CurrentPerform

COMMUNITY LEVELS OF SERVICEQuality Provide a smooth riding

surfaceSurveys Satisfaction ratings

greater than 50%57%

Function Minimal delays Customer servicerequests

Number of reports ontraffic delays

Not reco

Safety Provide a safe road freeof hazards

Customer servicerequests

Number of reports onpotholes

9267 potrepaired

TECHNICAL LEVELS OF SERVICECondition Carry out routine

maintenance as perCouncil policy

See Council policyon inspections

Priority 130 days

Priority 2 & 3365 days

Priority 4, 5 & 6 1095days

Priority 7 to 10As resources permit.

As perperformmeasure

Costeffectiveness

Carry out repairs inaccordance withmaintenance schedule

Completion ofannual program

85% of program 85%

Efficiency Carry out reconstructionin accordance with PMSsystem

Completion of 95%of annual program

12 kilometres of roadreconstruction per year.

12 km

Safety Provide clear signageand pothole repairs

Annual survey Not specified Not reco

3.5 Desired Levels of Service

Indications of desired levels of service are obtained from communityconsultation/engagement. The following consultation surveys have contributed toestablishing the communities service level expectations for roads;

Customer Satisfaction Survey 2010

Closing the Gap Survey 2012

Infrastructure Levy Survey 2013

4IPWEA, 2011, IIMM, p 2.22


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4. FUTURE DEMAND

4.1 Demand Drivers

Drivers affecting demand include population change, changes in demographics,seasonal factors, vehicle ownership rates, consumer preferences and expectations,

technological changes, economic factors, agricultural practices, environmentalawareness, etc.

4.2 Demand Forecast

The present position and projections for demand drivers that may impact future servicedelivery and utilisation of assets were identified and are documented in Table 4.3.

4.3 Demand Impact on Assets

The impact of demand drivers that may affect future service delivery and utilisation ofassets are shown in Table 4.3.

Table 4.3: Demand Drivers, Projections and Impact on Services

Demand drivers Present position Projection Impact on services

Population 2011 - 114,704 2031 125,151Additional demand for new roads wiincrease life cycle costs of the road

asset group

Increased unitrates

Current costs Increase in unit rates forsurface and pavement renewal

Increase in unit rates for material anlabour will impact on future capital a

maintenance programs

Demographics32.2% bornoverseas

40% born overseasLikely to have more impact on publi

transport.

Technologicalchange

Change in road constructionmethods and the materials

used

May increase the life of roadcomponents, reducing the susceptibilto damage, or by reducing the cost

construction or maintenance

Technologicalchange

Pavementmanagement

system to monitorperformance and

Advanced systems thatimprove performance

monitoring and predict renewaland maintenance timing more

accurately

Improve programs and schedules anprioritisation work based on more

accurate data.

Environmentalawareness

Increase the use of recyclingmaterials in Councils road

construction and renewalprogram

Could result in savings in roadconstruction


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4.4 Demand Management Plan

Demand for new services will be managed through a combination of managing existingassets, upgrading of existing assets and providing new assets to meet demand anddemand management. Demand management practices include non-asset solutions,insuring against risks and managing failures.

Non-asset solutions focus on providing the required service without the need for theorganisation to own the assets and management actions including reducing demandfor the service, reducing the level of service (allowing some assets to deterioratebeyond current service levels) or educating customers to accept appropriate assetfailures 5. Examples of non-asset solutions include providing services from existinginfrastructure such as aquatic centres and libraries that may be in another community area orpublic toilets provided in commercial premises.

Opportunities identified to date for demand management are shown in Table 4.4.Further opportunities will be developed in future revisions of this asset managementplan.

Table 4.4: Demand Management Plan Summary

DemandDriver

Impact onServices

Demand Management Plan

Transportneedsincreasing

Pressure to expandcouncils Transportnetworks

Communicate options and capacity to fund TransportInfrastructure with the State Government.

Monitor community expectations and communicateservice levels and financial capacity with thecommunity to balance priorities for infrastructure withwhat the community is prepared to pay for

Increasingcommunityexpectations

Pressure to expandcouncils Transportnetworks

Funding priority works. Continue to seek grant fundingfor projects identified in the Community Strategic Planand Asset Management Plans

Improve understanding of costs and capacity tomaintain current service levels.

Continue to analyse the cost of providing services andthe capacity to fund at the current level of service

Increasing

development

Additional Transport

loads on councilsTransport network

Continue to monitor and manage development

controls

5IPWEA, 2011, IIMM, Table 3.4.1, p 3|58.


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4.5 Asset Programs to meet Demand

The new assets required to meet growth will be acquired from land developments andconstructed by Council. Essentially there will be limited new assets from growth apartfrom the new link roads proposed in the town centres associated with the LEP andsome minor sub-division approvals.

The cumulative value of new contributed and constructed asset values to meetdemand are summarised in Figure 1.

Figure 1: Upgrade and New Assets to meet Demand

Acquiring these new assets will commit the organisation to fund ongoing operations,maintenance and renewal costs for the period that the service provided from theassets is required. These future costs are identified and considered in developingforecasts of future operations, maintenance and renewal costs in Section 5.


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5. LIFECYCLE MANAGEMENT PLAN

The lifecycle management plan details how the organisation plans to manage andoperate the assets at the agreed levels of service (defined in Section 3) whileoptimising life cycle costs.

5.1 Background Data

5.1.1 Physical parameters

The assets covered by this asset management plan are shown in Table 2.1.

The assets covered my this asset management plan are shown below;

Asset Classification Asset component

Local roads Surface, pavement and formation

Collector roads Surface, pavement and formation

Regional roads Surface, pavement and formation

Most of Councils roads are made of flexible pavements which includes base pavementmaterial dependent on the age of the road and asphalt surface. Council does not haveany full depth concrete roads.

The age profile of the assets include in this AM Plan is shown in Figure 2.

Figure 2: Asset Age Profile

Age Profile - Roads

0

5000

10000

15000

20000

25000

30000

1954

1956

1957

1958

1960

1961

1962

1963

1964

1965

1966

1967

1968

1970

1971

1972

1973

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Year

Replaceme

ntCost($000)


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The information basis for the roads asset group are;

Fair valuation register Pavement Management System Financial register Maintenance and renewal plans

5.1.2 Asset capacity and performance

Councils services are generally provided to meet design standards where these areavailable.

Locations where deficiencies in service performance are known are detailed in Table5.1.2.

Table 5.1.2: Known Service Performance Deficiencies

Location Service Deficiency

Reseal program The program is underfunded which results in resurfacing to bedeferred.

Asphalt surface Oxidation and increased traffic loads create cracking, moisturepenetration and subsequent pavement failure and safety risk.

5.1.3 Asset condition

Assessment of Council roads is detailed in the Road Maintenance and Repairs Policyand Procedure 20086 (Appendix A) roads are inspected to identify pot holes andpavement failures and all data is updated into the pavement management database.Roads are surveyed on a 5yr cycle.

More detailed inspections of all roads in a poor or very poor condition is carried outevery twelve months. Roads are also inspected on a reactive basis when pot holes ordamaged section of the roads are reported to Council by customer request.

The condition profileof our assets is shown in Figure 3.

6 The Roads Maintenance Policy, which includes procedure, was adopted 22 July 2008. The Roads Maintenanceprocedure was reviewed in September 2011.


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Fig 3: Asset Condition Profile

Table 5.1.3: Simple Condition Grading Model

ConditionGrading

Description of Condition

1 Excellent: only planned maintenance required

2 Good: minor maintenance required plus planned maintenance

3 Fair: significant maintenance required

4 Poor: significant renewal/rehabilitation required

5 Very Poor: physically unsound and/or beyond rehabilitation

5.1.4 Asset valuations

The road pavement and surface values are updated in SMEC and the fair valuationasset register on a regular basis. They are assessed and updated into registers as partof the inspection process and upon completion of capital works programs. Financerevalue council roads on a 5yr basis or once a project creating, renewing or upgradinga road is complete.

Current Replacement Cost $ 370, 301, 276

Depreciable Amount $ 59,030,000

Depreciated Replacement Cost7

$ 227,582,296

Annual Depreciation Expense

$ 6,432,205

Source Fair Valuation Register February 2013

Useful lives were reviewed in June 2012 and updated based on technical knowledgeprovided by the Engineering services staff. The useful lives are reviewed and updated(if required) at the end of each financial year.

7Also reported as Written Down Current Replacement Cost (WDCRC).


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The unit rates for the replacement of the surface and pavement and the residualvalues have been updated in February 2013 for inclusion in the plan. The residualvalues are based on the following table and calculated from sample works carried out.

Roadhierarchy

conditionrating

Surface Pavement

(5=failed) ($/m2) (% of unit replacementcost)

Local 1 0 952 0 903 0 704 3 505 3 30

Collector 1 0 952 0 90

3 0 704 3 505 3 30

Regional 1 0 952 0 903 0 704 0 305 0 10

Various ratios of asset consumption and expenditure have been prepared to helpguide and gauge asset management performance and trends over time.

Rate of Annual Asset Consumption (Depreciation/Depreciable Amount) 10.9%

Rate of Annual Asset Renewal (Capital renewal exp/Depreciable amount) 12.5% (Annual average)

Rate of Annual Asset Upgrade/New(Capital upgrade exp/Depreciable amount) 0.5% (Annual average)

Rate of Annual Asset Upgrade/New (including contributed assets) 0.5% (Annual average)

In 2013 the organisation plans to renew assets at 12.5% of the rate they are beingconsumed and will be increasing its asset stock by 0.5% in this year.

5.1.5 Asset hierarchy

An asset hierarchy provides a framework for structuring data in an information systemto assist in collection of data, reporting information and making decisions. Thehierarchy includes the asset class and component used for asset planning andfinancial reporting and service level hierarchy used for service planning and delivery.

Councils roads falls under the asset class, Roads and Transport. They are classifiedinto local, regional and collector types and valued at the component level pavement ,surface and formation.


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Kerb & Gutter

Road

Structures and

Street Furniture

Bridges Car Parks

Surface

Pavement

Formation

Substructure

Bearings

Superstructure

Fences

Guard Rails

Lighting

Pavement

Signage

Structure

Surface

Bus Shelters

Fences

Guardrail

Flora

Furniture

Lighting

Signage

Structural

Calming

Devices

Crossings

Islands

Lights

Line Marking

Raised

Crossings

Signage

Drainage

Flora/Verge

Lighting

Pavement

Signage

Asphalt

Concrete

Jersey

Drainage

Flora

Traffic

facilities

Lighting

signage

Pavement

Road Base

Shoulders

Surface

Formation

Roads

CollectorLocal

Footpaths

Cycle

waysPedestrian

Roads and

Transport

Road Pedestrian ShoppingCommuter

Class

Group

Type

Component

Regional

The road classifications are shown in the table below.

Asset Service Hierarchy

Service Hierarchy Service Level Objective

Local roads local traffic and generally have low traffic volumes and fully maintained and constructedby Council.

Collector roads provide a link between either state roads or regional roads and carry higher amounts oftraffic and fully maintained by Council.

Regional Roads provide a link across regions and state roads with funding provided by the Roads andTraffic Authority of NSW and Council generally on a shared basis and maintained byCouncil.


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5.2 Infrastructure Risk Management Plan

The Asset Management Risk Guide defines how the Risk Management processes areintegrated through out both strategic and operational Asset Management Practices.This process includes a detailed assessment of risks associated with service deliveryfrom infrastructure assets which has identified significant risks that may result in loss or

reduction in service from infrastructure assets or a financial shock to the organisation.

This risk assessment process:

identifies risks, and determines an inherent risk rating(no risk treatments inplace),

defines the existing risk treatments,

reassess the risk score (residual risk),

evaluates whether the risk is significant, controls are adequate and if a risk

treatment plan is required where risk levels are unacceptable.

Where risk levels are unacceptable a risk treatment plan is developed.

Each group of asset custodians are responsible for maintaining a risk register to assistin the identification of significant risks for their asset group. The detailed risk registersfeed relevant risk information and risk treatment actions into both the AssetManagement Strategy and Asset Management Plans.

Those significant risks with an unacceptable level of uncontrolled risk will be monitoredvia the Significant Risk Register which requires a detailed risk treatment plan to becompleted for each significant risk to assist in bringing the risk level to an acceptable

level.

Significant Risks are those that are High or Extreme with no risk treatment in place orModerate-4 or higher with risk treatments applied.

5.2.1 Roads Infrastructure Risk Treatment Plans


Strategies to be developed to advocate for additional funding to reducefunding gaps.

Resource allocation and service levels to be reviewed and additional fundingto be requested as part of the Asset Management Strategy.

Roads Risk Treatment Plan #2

Formal risk monitoring programs to be developed and integrated into theRoads Maintenance Policy and Procedures. i.e. Regular review andreporting of accident statistics, CRM requests, major changes in conditionratings.


Review of Roads Maintenance Policy and Procedures to further defineexisting risk management practices and integrate with Councils RiskManagement Framework.


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Table 5.2. Defines the operational Significant Risks for the Roads Asset Class.

Table 5.2: Significant Risks and Treatment Plans

Ref

#

Asset Categoryor Type /

Usage Level

ConditionRating Risk Description

PreTreatment/

Control

Risk Score(Inherent Risk)

Existing Treatments /Control Measures:

PostTreatment/

Control

Risk Score(Residual Risk)

Additional RiskTreatment Actions

Required

1All RoadCategories

3 - Fair

Additional cost foreach block torebuild the roadpavement due tothe wearingsurface not beingreplaced withinrequired timeframe

High* Infrastructure Levy /additional funding

MediumRoads Risk

Treatment Plan # 1

2All Road

Categories3 - Fair

Insufficient fundingto carry outintermediatemaintenance(patching) to keepan asset in fair

condition -delaying the needfor more majorworks (resurfacingor reconstruction)

High* Short term reallocation ofcapital road works funding Moderate

Roads Risk

Treatment Plan # 1

14

Category 'A'Roads= ALL REGIONALRoads + LOCALand COLLECTORroads with trafficvolumes greaterthan 10,000 vpd

4 - Poor/ VPoor5 - Failed

Damage to vehicleand injury topassenger fromMVA caused byfailed road surface

High* Roads Maintenance Policy &Procedures

Medium

Roads RiskTreatment Plan #2

Roads RiskTreatment Plan # 3

17

Category 'A'

Roads= ALL REGIONALRoads + LOCALand COLLECTORroads with trafficvolumes greaterthan 10,000 vpd

3 - Fair

Damage to vehicle& injury topassengers fromMVA caused bypoor roadalignment andprofile

Medium

* Signage, Guard rails, Linemarking, median rumble strip* Roads Maintenance Policy &Procedures

Medium



20

Category 'A'Roads= ALL REGIONALRoads + LOCALand COLLECTORroads with trafficvolumes greater

than 10,000 vpd

3 - Fair

Damage to vehicle& injury from MVAcaused by narrowroad / reducedroad width

Moderate

* Signage, Guard rails, Linemarking,* Roads Maintenance Policy &Procedures

Moderate



23

Category 'A'Roads= ALL REGIONALRoads + LOCALand COLLECTORroads with trafficvolumes greaterthan 10,000 vpd

3 - Fair

Damage to vehicle& injury from MVAcaused byhazardousshoulder (i.e. nokerb, edge drop orhigh embankment)

Medium

* Edge drop patching /shoulder edge repairs as partof the formal controlsmarking,* Roads Maintenance Policy &Procedures

Moderate

Roads RiskTreatment Plan #2.



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5.3 Routine Operations and Maintenance Plan

Operations include regular activities to provide services such as public health, safetyand amenity, e.g. street sweeping, grass mowing and street lighting.

Routine maintenance is the regular on-going work that is necessary to keep assetsoperating, including instances where portions of the asset fail and need immediaterepair to make the asset operational again.

5.3.1 Operations and Maintenance Plan

Operations activities affect service levels including quality and function through streetsweeping and grass mowing frequency, intensity and spacing of street lights andcleaning frequency and opening hours of building and other facilities.

Maintenance includes all actions necessary for retaining an asset as near aspracticable to an appropriate service condition including regular ongoing day-to-daywork necessary to keep assets operating, e.g. road patching but excludingrehabilitation or renewal. Maintenance may be classifies into reactive, planned andspecific maintenance work activities.

Reactive maintenance is unplanned repair work carried out in response to servicerequests and management/supervisory directions.

Planned maintenance is repair work that is identified and managed through amaintenance management system (MMS). MMS activities include inspection,assessing the condition against failure/breakdown experience, prioritising, scheduling,actioning the work and reporting what was done to develop a maintenance history andimprove maintenance and service delivery performance.

Specific maintenance is replacement of higher value components/sub-components ofassets that is undertaken on a regular cycle including repainting, replacing airconditioning units, etc. This work falls below the capital/maintenance threshold but mayrequire a specific budget allocation.

Actual past maintenance expenditure is shown in Table 5.3.1.

Table 5.3.1: Maintenance Expenditure Trends

Maintenance ExpenditureYear

Planned and Specific Reactive

2009/2010 $ 858, 690 $ 214, 6732010/2011 $ 944, 844 $ 236, 211

2011/2012 $ 938,018 $ 234,504

Planned maintenance work is allocated as 80% and reactive work is 20% of totalmaintenance expenditure.

Maintenance expenditure levels are considered to be adequate to meet projectedservice levels, which may be less than or equal to current service levels. Wheremaintenance expenditure levels are such that will result in a lesser level of service, theservice consequences and service risks have been identified and serviceconsequences highlighted in this AM Plan and service risks considered in theInfrastructure Risk Management Plan.


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Assessment and prioritisation of reactive maintenance is undertaken by Council staffusing experience and judgement.

5.3.2 Operations and Maintenance Strategies

The organisation will operate and maintain assets to provide the defined level ofservice to approved budgets in the most cost-efficient manner. The operation andmaintenance activities include:

Scheduling operations activities to deliver the defined level of service in themost efficient manner,

Undertaking maintenance activities through a planned maintenance system toreduce maintenance costs and improve maintenance outcomes. Undertakecost-benefit analysis to determine the most cost-effective split between plannedand unplanned maintenance activities (50 70% planned desirable asmeasured by cost),

Maintain a current infrastructure risk register for assets and present servicerisks associated with providing services from infrastructure assets and reportingVery High and High risks and residual risks after treatment to management andCouncil/Board,

Review current and required skills base and implement workforce training anddevelopment to meet required operations and maintenance needs,

Review asset utilisation to identify underutilised assets and appropriateremedies, and over utilised assets and customer demand managementoptions,

Maintain a current hierarchy of critical assets and required operations andmaintenance activities,

Develop and regularly review appropriate emergency response capability, Review management of operations and maintenance activities to ensureCouncil is obtaining best value for resources used.

Critical Assets

Critical assets are those assets which have a high consequence of failure but notnecessarily a high likelihood of failure. By identifying critical assets and critical failuremodes, organisations can target and refines investigative activities, maintenance plansand capital expenditure plans at the appropriate time.

Operations and maintenances activities may be targeted to mitigate critical assetsfailure and maintain service levels. These activities may include increased inspectionfrequency, higher maintenance intervention levels, etc.


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Standards and specifications

Maintenance work is carried out in accordance with the following Standards andSpecifications.

Ausspec 4 Road Reserve Maintenance AS1160-1990 Bituminous emulsions for construction and maintenance of

pavements

AS4283-1995 Cold mixed asphalt for maintenance patching

AS2008-1997 Residual Bitumen for pavements

AS3727-1993 Guide to residential pavements

Austroads Guide to Traffic Engineering Practice, Part 13 Pedestrians.

AS2436-1981 Guide to noise control on construction maintenance anddemolition sites.

Sealed Local Roads Manual: July 2005 authored by ARRB Group


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5.3.3 Summary of future operations and maintenance expenditures

Future operations and maintenance expenditure is forecast to trend in line with thevalue of the asset stock as shown in Figure 4. Note that all costs are shown in current

2012 dollar values (i.e. real values).

Figure 4: Projected Operations and Maintenance Expenditure

The small increase is indicative of the need to fund operations and maintenanceassociated with the new assets created during the planning period.

Deferred maintenance i.e. works that are identified for maintenance and unable to befunded are to be included in the risk assessment and analysis in the infrastructure riskmanagement plan.

Maintenance is funded from the operating budget where available. This is furtherdiscussed in Section 6.2.


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5.4 Renewal/Replacement Plan

Renewal and replacement expenditure is major work which does not increase theassets design capacity but restores, rehabilitates, replaces or renews an existingasset to its original or lesser required service potential. Work over and above restoringan asset to original service potential is upgrade/expansion or new works expenditure.

5.4.1 Renewal plan

Assets requiring renewal are identified from estimates of remaining life obtained fromthe roads asset register. Candidate proposals are inspected to verify accuracy ofremaining life estimate and to develop a preliminary renewal estimate. Verifiedproposals are ranked by priority and available funds and scheduled in future worksprogrammes.

Assets requiring renewal/replacement are identified from the three methods providedin the Expenditure Template.

Method 1 uses Asset Register data to project the renewal costs usingacquisition year and useful life to determine the renewal year, or Method 2 uses capital renewal expenditure projections based on renewal

values of roads with remaining useful lives less than 10 years. Method 3 uses budgeted renewal figures identified in the Long Term Financial

Plan.

A combination of these methods was used to prepare the 3 renewal scenarios includedin this asset management plan. Assets requiring renewal are identified comparing 3Scenarios.

It is common that the valuation registers used in Scenario 1 are not developed to a

level of maturity where they are reliable for producing a realistic renewal forecast.Ideally when this asset register is updated this should be consistent with the capitalrenewal program. For Ku-ring-gai Council the refinement of the asset register toachieve this situation will become an important part of the asset managementimprovement plan.

Scenario 2 is prepared using the technical estimates of what renewal is required tosustain the current levels of service, and it is common that that this estimate will bebeyond the current funding capacity of council. Scenario 3 is a reflection of the actualfunding available. The difference between Scenario 2 and Scenario 3 represents whatwe cant do. The discussion about this gap will lead us into a much better informedcommunity discussion about what are achievable and acceptable service levels, as

well as giving a focus on managing risk.


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The useful lives of assets used to develop projected asset renewal expenditures areshown in Table 5.4.1. Asset useful lives were last reviewed on 30 June 2012.

Table 5.4.1: Useful Lives of Assets

Asset (Sub)Category Useful life Surface Useful life pavement

Local roads 10 - 25 yrs depending ontreatment

50-60 yrs depending ontreatment

Collector roads 5 - 22 yrs depending ontreatment


Regional roads 20-50 yrs depending ontreatment


Data sourced from Fair Valuation Register

5.4.2 Renewal and Replacement Strategies

The organisation will plan capital renewal and replacement projects to meet level ofservice objectives and minimise infrastructure service risks by:

Planning and scheduling renewal projects to deliver the defined level of servicein the most efficient manner,

Undertaking project scoping for all capital renewal and replacement projects toidentify:

o the service delivery deficiency, present risk and optimum time forrenewal/replacement,

o the project objectives to rectify the deficiency,o the range of options, estimated capital and life cycle costs for each

options that could address the service deficiency,o and evaluate the options against evaluation criteria adopted by Council, ando select the best option to be included in capital renewal programs,

Using low cost renewal methods (cost of renewal is less than replacement)wherever possible,

Maintain a current infrastructure risk register for assets and service risksassociated with providing services from infrastructure assets and reporting VeryHigh and High risks and residual risks after treatment to management and

Council,

Review current and required skills base and implement workforce training anddevelopment to meet required construction and renewal needs,

Maintain a current hierarchy of critical assets and capital renewal treatmentsand timings required,

Review management of capital renewal and replacement activities to ensureCouncil is obtaining best value for resources used.


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Renewal ranking criteria

Asset renewal and replacement is typically undertaken to either:

Ensure the reliability of the existing infrastructure to deliver the service it wasconstructed to facilitate (e.g. replacing a bridge that has a 5 t load limit), or

To ensure the infrastructure is of sufficient quality to meet the servicerequirements (e.g. roughness of a road).8

It is possible to get some indication of capital renewal and replacement priorities byidentifying assets or asset groups that:

Have a high consequence of failure, Have a high utilisation and subsequent impact on users would be greatest, The total value represents the greatest net value to the organisation, Have the highest average age relative to their expected lives, Are identified in the AM Plan as key cost factors, Have high operational or maintenance costs, and Where replacement with modern equivalent assets would yield material

savings.9

The ranking of renewal projects is determined by SMEC Pavement ManagementSystem and the fair valuation asset register. The future program is included in theLong Term Financial Plan.

Renewal and replacement standards

Renewal work is carried out in accordance to Standards and Specifications including

the following;

AS1160-1990 Bituminous emulsions for construction and maintenance ofpavements.

AS2436-1981 Guide to noise control on construction maintenance anddemolition sites.

AS4283-1995 Cold mixed asphalt for maintenance patching.

AS2008-1997 Residual Bitumen for pavements.

AS3727-1993 Guide to residential pavements.

AS/NZ road design Standards

A guide to the design of new pavement for light traffic (APRG21)

Sealed roads manual (ARRB)

AP 8/81 Visual assessment of pavement condition

AP 11.1/88 Guide to traffic engineering practices Part 1 Traffic Flow

AP 11.2/88 Guide to traffic engineering practices Part 2 Roadway capacity

AP 36/95 Australian adoptions and innovations in road and pavementengineering

AP 60/98 Guide to stabilisation in roadworks

AP-232/03 Guidelines for treatment of stormwater run off from the roadsinfrastructure

8IPWEA, 2011, IIMM, Sec 3.4.4, p 3|60.

9Based on IPWEA, 2011, IIMM, Sec 3.4.5, p 3|66.


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APG - 17/04 Pavement design a guide to the structural design of roadpavements

APG 66/02 Asphalt guide

APG 76/04 Sprayed sealing guide

5.4.3 Summary of future renewal and replacement expenditure

Projected future renewal and replacement expenditures are forecast to increase overtime as the asset stock increases from growth. The expenditure is summarised in Fig5. Note that all amounts are shown in real values.

The projected capital renewal and replacement program is shown in Appendix B.

Figure 5.1: Projected Capital Renewal Expenditure (Scenario 1 - from Asset Register)

The renewal projection (forecast) in Scenario 1 (Using the asset/valuation register)generates a highly variable renewal profile. Whilst the long term averages and totalvalues from this register are sound, the shorter term renewal forecast are not, and are

inconsistent with the known capital renewal plans. This indicates that furtherrefinement of the asset register is required before it is valuable as a capital renewalplanning tool. This should be given a high priority in the asset managementimprovement plan.


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Figure 5.2: Projected Capital Renewal Expenditure (Scenario 2 roads with remaining useful lives of

less than 10 years)

The current renewal expenditure is anticipated to be insufficient for the short term andthere is likely to be reduction in service levels and increasing risks.

Figure 5.3: Projected Capital Renewal Expenditure (Scenario 3 Balanced with Long Term Financial

Plan)

The first 10 years of expenditure shown in Fig 5.3 matches the funding provision in thelong term financial plan. The peaks in renewal outside of the 10 year long termfinancial planning period (2023 & 2024) are indicative of what cannot be done.


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Deferred renewal and replacement, i.e. those assets identified for renewal and/orreplacement and not scheduled in capital works programs are to be included in the riskanalysis process in the risk management plan.

Renewals and replacement expenditure in the organisations capital works programwill be accommodated in the long term financial plan. This is further discussed inSection 6.2.

5.5 Creation/Acquisition/Upgrade Plan

New works are those works that create a new asset that did not previously exist, orworks which upgrade or improve an existing asset beyond its existing capacity. Theymay result from growth, social or environmental needs. Assets may also be acquiredat no cost to the organisation from land development. These assets from growth areconsidered in Section 4.4.

The total amount of funding allocated for new or upgraded roads is $ 3million (LTFP)over the next ten years. This is an annual average value of 300K.

5.5.1 Selection criteria

New assets and upgrade/expansion of existing assets are mainly associated with newdevelopments such as sub divisions. New link roads are planned in the town centresassociated with the development contributions plan.

5.5.2 Capital Investment Strategies

The organisation will plan capital upgrade and new projects to meet level of service

objectives by:

Planning and scheduling capital upgrade and new projects to deliver thedefined level of service in the most efficient manner,

Undertake project scoping for all capital upgrade/new projects to identify:o the service delivery deficiency, present risk and required timeline for

delivery of the upgrade/new asset,o the project objectives to rectify the deficiency including value

management for major projects,o the range of options, estimated capital and life cycle costs for each

options that could address the service deficiency,o management of risks associated with alternative options,

o and evaluate the options against evaluation criteria adopted byCouncil/Board, and

o select the best option to be included in capital upgrade/new programs, Review current and required skills base and implement training and

development to meet required construction and project management needs, Review management of capital project management activities to ensure

Council is obtaining best value for resources used.

Standards and specifications for new assets and for upgrade/expansion of existingassets are the same as those for renewal shown in Section 5.4.2.


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5.5.3 Summary of future upgrade/new assets expenditure

Projected upgrade/new asset expenditures are summarised in Fig 6. All amounts areshown in real values.

Fig 6: Projected Capital Upgrade/New Asset Expenditure

Expenditure on new assets and services in the organisations capital works programwill be accommodated in the long term financial plan. This is further discussed inSection 6.2.

5.6 Disposal Plan

Disposal includes any activity associated with disposal of a decommissioned assetincluding sale, demolition or relocation. These assets will be further reinvestigated todetermine the required levels of service and see what options are available foralternate service delivery, if any. Any revenue gained from asset disposals isaccommodated in the organisations long term financial plan.

Where cash flow projections from asset disposals are not available, these will bedeveloped in future revisions of this asset management plan.


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5.7 Service Consequences and Risks

The organisation has prioritised decisions made in adopting this AM Plan to obtain theoptimum benefits from its available resources. Decisions were made based on thedevelopment of 3 scenarios of AM Plans.

Scenario 1 - What we would like to do based on asset register data

Scenario 2 What we should do with existing budgets and identifying level of serviceand risk consequences (i.e. what are the operations and maintenance and capitalprojects we are unable to do, what is the service and risk consequences associatedwith this position). This may require several versions of the AM Plan.

Scenario 3 What we can do and be financially sustainable with AM Plans matchinglong-term financial plans.

The development of scenario 1 and scenario 2 AM Plans provides the tools fordiscussion with the Council and community on trade-offs between what we would like

to do (scenario 1) and what we should be doing with existing budgets (scenario 2) bybalancing changes in services and service levels with affordability and acceptance ofthe service and risk consequences of the trade-off position (scenario 3).

5.7.1 What we cannot do

We do not have enough funding to provide all services at the desired service levelsand therefore work will be prioritised based on Councils Pavement ManagementSystem and available funding.

Only a limited number of new link roads will be created. These roads are associatedwith new developments such as sub divisions.

5.7.2 Service consequences

Operations and maintenance activities and capital projects that cannot be undertakenwill maintain or create service consequences for users. These include:

Continue to apply temporary treatments to roads by maintenance crews to helpkeep roads serviceable until they can be reconstructed.

5.7.3 Risk consequences

The operations and maintenance activities and capital projects that cannot beundertaken may maintain or create risk consequences for the organisation. These

include:

Additional cost for each block to rebuild the road pavement due to the wearingsurface not being replaced within required timeframe

Insufficient funding to carry out intermediate maintenance (patching) to keep anasset in fair condition - delaying the need for more major works (resurfacing orreconstruction),

Damage to vehicle and injury to passenger from MVA caused by failed roadsurface

These risks have been included with the Infrastructure Risk Management Plansummarised in Section 5.2 and risk management plans actions and expendituresincluded within projected expenditures.


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6. FINANCIAL SUMMARY

This section contains the financial requirements resulting from all the informationpresented in the previous sections of this asset management plan. The financial

projections will be improved as further information becomes available on desired levelsof service and current and projected future asset performance.

6.1 Financial Statements and Projections

The financial projections are shown in Fig 7.1 7.3 for projected operating (operationsand maintenance) and capital expenditure (renewal and upgrade/expansion/newassets). Note that all costs are shown in real values.

Figure 7.1: Projected Operating and Capital Expenditure and Budget (Scenario 1 - from Asset

Register)

As discussed in Section 5.4 the expenditure projection (forecast) in Scenario 1 (Usingthe asset/valuation register) is not consistent with the required works program or thelong term financial plan, and is indicative of the continuing work required to improvethe asset register.


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Figure 7.2: Projected Operating and Capital Expenditure and Budget (Scenario 2 Roads with

remaining useful lives of less than ten years)

The Scenario 2 renewal requirements are based on the renewal costs of roads withremaining useful lives of less than ten years. This level of funding is not currently beingachieved, and indicates a future reduction in services levels and increased risk.


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Figure 7.3: Projected Operating and Capital Expenditure and Budget (Scenario 3 Balanced with Long

Term Financial Plan)

The first 10 years of Scenario 3 have been balanced with the funding available. Inpractice to achieve this infrastructure renewal projects will be deferred. The detailedproject implications and the service and risk consequences of this should form the

basis of developing an advanced asset management plan.

6.1.1 Sustainability of service delivery

There are four key indicators for service delivery sustainability that have beenconsidered in the analysis of the services provided by this asset category, these beingthe asset renewal funding ratio, long term life cycle costs/expenditures and mediumterm projected/budgeted expenditures over 5 and 10 years of the planning period.

Asset Renewal Funding Ratio

Asset Renewal Funding Ratio10 - 56%

The Asset Renewal Funding Ratio is the most important indicator and reveals that overthe next 10 years, the organisation is forecasting that it will have 56% of the fundsrequired for the optimal renewal and replacement of its assets. (Scenario 2)

10AIFMG, 2009, Financial Sustainability Indicator 8, Sec 2.6, p 2.18


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Long term - Life Cycle Cost

Life cycle costs (or whole of life costs) are the average costs that are required tosustain the service levels over the asset life cycle. Life cycle costs include operationsand maintenance expenditure and asset consumption (depreciation expense). The lifecycle cost for the services covered in this asset management plan is $7.9M per year

(average operations and maintenance expenditure plus depreciation expenseprojected over 10 years).

Life cycle costs can be compared to life cycle expenditure to give an initial indicator ofaffordability of projected service levels when considered with age profiles. Life cycleexpenditure includes operations, maintenance and capital renewal expenditure. Lifecycle expenditure will vary depending on the timing of asset renewals. The life cycleexpenditure over the 10 year planning period is $ 8.8M per year (average operationsand maintenance plus capital renewal budgeted expenditure in LTFP over 10 years).

A shortfall between life cycle cost and life cycle expenditure is the life cycle gap. Thelife cycle gap for services covered by this asset management plan is $900K per year

(-ve = gap, +ve = surplus).

Life cycle expenditure is 112% of life cycle costs.

The life cycle costs and life cycle expenditure comparison highlights any differencebetween present outlays and the average cost of providing the service over the longterm. If the life cycle expenditure is less than that life cycle cost, it is most likely thatoutlays will need to be increased or cuts in services made in the future.

Knowing the extent and timing of any required increase in outlays and the serviceconsequences if funding is not available will assist organisations in providing servicesto their communities in a financially sustainable manner. This is the purpose of the

asset management plans and long term financial plan.

Medium term 10 year financial planning period

This asset management plan identifies the projected operations, maintenance andcapital renewal expenditures required to provide an agreed level of service to thecommunity over a 10 year period. This provides input into 10 year financial and fundingplans aimed at providing the required services in a sustainable manner.

These projected expenditures may be compared to budgeted expenditures in the 10year period to identify any funding shortfall. In a core asset management plan, a gapis generally due to increasing asset renewals for ageing assets.

The projected operations, maintenance and capital renewal expenditure required overthe 10 year planning period is $ 14.5M on average per year.

Estimated (budget) operations, maintenance and capital renewal funding is $ 8.8M onaverage per year giving a 10 year funding shortfall of $5.7Mper year. This indicatesthat Council expects to have 61% of the projected expenditures needed to provide theservices documented in the asset management plan. (Scenario 2)


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Medium Term 5 year financial planning period

The projected operations, maintenance and capital renewal expenditure required overthe first 5 years of the planning period is $14.5M on average per year.

Estimated (budget) operations, maintenance and capital

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