Advancing Your

Asset Management

Program

GFOA of Western Canada 2015 Annual Conference

Whitehorse, YK September, 2015

2

Introductions

Ross Homeniuk

Director,

Global Infrastructure Advisory

National Leader,

Infrastructure Asset Management

3

Background

Public infrastructure is a growing

concern. As cities, utilities, and

public institutions and agencies,

we are challenged to balance

current and future requirements,

while living within our means.

Changing Environments

Limited Resources

Shifting Priorities

Aging Infrastructure

4

Background

Many of us are revisiting our approach to infrastructure asset

management to help better understand, plan for, and address

these challenges and opportunities.

Target limited

resources

Adapt to

changing realities

Enhance

transparency and

defensibility

■ Link assets and investments to the services they support

■ Quantify and evaluate LOS, risk and value-for-money

■ Plan-for and prioritize needs and opportunities

■ Accommodate growth without compromising existing infrastructure

■ Incorporate social considerations into plans and decisions

■ Improve resiliency and adaptability to internal and external change

■ Communicate the business case behind spending decisions

■ Justify new or increased investment based on ROI

■ Demonstrate responsibility, stewardship and due diligence

5

Drivers - Canada

The push for better asset

management is being

supported at many levels

■ Federal

■ Provincial

■ Industry

■ Grass Roots

6

Drivers - Alberta

Many drivers impacting push for

better asset management in

Western Canada’s public sector

■ Aging asset base

■ Development and growth

■ Economic downturn

■ Increased scrutiny

■ Climate change

■ Funding programs

7

Asset Management

Asset management involves balancing infrastructure system

costs, opportunities and risks against the desired performance

of assets, to achieve business goals and objectives.

Infrastructure value is created

and sustained by managing the

trade-offs between service, risk

and cost over an asset’s lifecycle.

Understanding these factors, and

their contributors, help us to…

Align assets and service outcomes

with current and future objectives

Manage the risks associated with

meeting these requirements

Optimize lifecycle investment and

minimize total cost of ownership

8

Asset Management

Important to recognize that effective asset management requires

that we move beyond minimum financial reporting requirements

and consider how these relate to long-term needs.

TCA Reporting Planning and

Forecasting

9

Asset Management

Effective asset management programs strengthen the asset

management function, and enhance the asset management

system needed to drive planning and decision making.

Strengthen the organizational enablers

needed to support and sustain the asset

management program over the long-term.

Technology People

Data Process

Policy &

Governance

Strengthen the AM Function

Enhance the activities, practices and tools

guiding robust, effective infrastructure

investment planning and decision making.

Define Goals

Assess Needs

Evaluate Options

Identify Priorities

Develop Plans

Track Outcomes

Enhance the AM System

10

Strengthen the AM Function

Functional alignment is critical to program

implementation, sustainment, and its overall

success. An objective assessment of current

organizational capacity and operating

environments provides an understanding of key

gaps and opportunities for improvement.

Technology People

Data Process

Policy &

Governance

11

Enhance the AM System

Define Goals

Assess Needs

Evaluate Options

Identify Priorities

Develop Plans

Track Outcomes

An integrated Level of

Service (LOS)

framework provides a

common platform for

measuring system

performance relative to

internal and external

goals and

requirements.

Corporate

Level-of-Service

Requirements (i.e. Why we’re here…)

Customer

Level-of-Service

Requirements (i.e. What we deliver…)

Technical

Level-of-Service

Requirements (i.e. What we do…)

Serv

ice M

anag

em

ent

Business Entity

CoLOS 1

TLOS 3

CoLOS 2

TLOS 4

TLOS 5

CoLOS 3

TLOS 1

TLOS 2

CLOS 1

CLOS 2

CLOS 3

CLOS 4

TLOS 6

CLOS 5

TLOS 7

CLOS 6

TLOS 8

12

Enhance the AM System

Define Goals

Assess Needs

Evaluate Options

Identify Priorities

Develop Plans

Track Outcomes

Operational

Requirements (i.e. Needed Activities)

Capital

Infrastructure

Requirements (i.e. Needed Assets)

Corporate

Level-of-Service

Requirements (i.e. Why we’re here…)

Customer

Level-of-Service

Requirements (i.e. What we deliver…)

Technical

Level-of-Service

Requirements (i.e. What we do…)

Serv

ice M

anag

em

ent

Asset and O

pera

tions

Managem

ent

Business Entity

CoLOS 1

TLOS 3

CoLOS 2

TLOS 4

TLOS 5

CoLOS 3

TLOS 1

TLOS 2

CLOS 1

CLOS 2

CLOS 3

CLOS 4

TLOS 6

CLOS 5

TLOS 7

CLOS 6

TLOS 8

Assets 3

Ops 4

Ops 5

Ops 6

Assets 4

Assets 1

Assets 2

Ops 1

Ops 2

Ops 3

Relationship modeling

identifies linkages

between physical

infrastructure and the

service it supports.

Risk analysis is used to

identify and evaluate

service gaps and

enhancement

opportunities.

13

Enhance the AM System

Define Goals

Assess Needs

Evaluate Options

Identify Priorities

Develop Plans

Track Outcomes

Establishes the case for change and clearly

defines the need for the investment.

Business Needs &

Desired Outcomes

Identification, analysis, and screening of a

comprehensive list of options to demonstrate

due diligence in the selection of choices.

Preliminary Options

Screening

Full comparison of each viable option against

the evaluation criteria identified in the

preliminary analysis

Viable Options

Analysis

Recommendation of a preferred option

based on the net advantages of the viable

option over all others.

Justification &

Recommendation

Strategic considerations for how the

investment will be managed and supported.

Managing the

Investment

Lifecycle summary of benefits and costs

associated with implementing the

recommended investment.

Lifecycle

Summary

A structured business

casing framework

provides an effective

platform for evaluating

project options and

defining scope, budget,

schedule and lifecycle

management

requirements.

Lifecycle

Bu

sin

ess C

asin

g F

ram

ew

ork

14

Enhance the AM System

Define Goals

Assess Needs

Evaluate Options

Identify Priorities

Develop Plans

Track Outcomes

A multi-criteria

prioritization (MCP)

model evaluates

projects based on

business objectives

and service impacts,

and prioritizes

investment on a value-

for-money basis.

Essential LOS

Maintain ELOS

Address Regulated Change

Quality LOS

Maintain QLOS

Enhance QLOS

Image LOS

Maintain ILOS

Enhance ILOS

Economic

Improve Operational Efficiency

Support Business Growth

Environmental

Improve Environmental Stewardship

Social

Improve Corp. Social

Responsibility

Support Community

Development

Business Objectives

Investment No. 1

Investment No. 2

Investment No. 3

Investment No …

Improve Climatological

Resiliency

15

Enhance the AM System

Define Goals

Assess Needs

Evaluate Options

Identify Priorities

Develop Plans

Track Outcomes

Capital investment

plans (CIP) are

developed using risk

and scenario analysis

to evaluate and stage

prioritized projects

based on funding,

resource and

deliverability

constraints. $

YR 1 YR 2 YR 3 YR 4 YR 5

Low Risk Filter Full Staging Flexibility

Moderate Risk Filter Limit Staging Variance

High Risk Filter

Prioritized Projects

Maintain Recommended Staging

16

Enhance the AM System

Define Goals

Assess Needs

Evaluate Options

Identify Priorities

Develop Plans

Track Outcomes

The validation of

investment outcomes

against business case

goals and objectives

demonstrates value for

money and ensures the

ongoing transparency

and defensibility of the

planning process.

Planned Outcomes

■ Service Impact

■ Business Impact

■ Cost

■ Schedule

■ Quality

Actual Outcomes

■ Service Impact

■ Business Impact

■ Cost

■ Schedule

■ Quality

17

Starting your asset management journey…

Build Buy-in and Support

Formalize Commitment

Set Clear Direction

Develop the Plan

18

Build Buy-In and Support

Establishing a common understanding of stakeholder viewpoints

is crucial in proactively building common vision and focus on

asset management needs and priorities.

Stakeholder Key Issues Business Goals Area of Influence Expected benefit from asset management

Finance (Example)

■ PS-3150

reporting

requirements

■ Financial stability

■ Maintain compliance

■ Fair valuation of

assets

■ Understand cash-flow

requirements

■ Stable financial plan

■ Historic financial

information

■ Financial accounts

■ Financial plan

■ Stable long term

financial plan

■ Cost savings

■ More readily

available information

Council

Leadership

Engineering

Operations

Etc…

19

Formalize Commitment

An Asset Management Policy

formalizes an organization’s

commitment to and provides a

clear understanding of goals

and objectives, roles and

responsibilities.

Asset Management Vision

Goals and Objectives

Roles and Responsibilities

Strategic Relationships

20

Set Clear Direction

An asset management strategy sets clear direction by defining

the actions through which the vision will be achieved. The

actions are expressed in the form of business improvements

which are staged based on urgency and return on investment.

AM Plan(s)

AM Strategy

AM Policy Principle/ Objective

Action

Improvement/ Investment

Improvement/ Investment

Action

Improvement/ Investment

Principle/ Objective

Action

Improvement/ Investment

Improvement/ Investment

21

Develop the Plan

An Asset Management Plan (AMP) serves as the business

plan, documenting an organization’s approach and strategy

for meeting defined business and service objectives through

ongoing investment in operations, infrastructure and

business change.

■ Why are we

here as an

organization?

■ What is our

vision and what

do we want to

achieve?

■ What services

do we need to

support these

goals?

■ At what level do

we need to

provide them?

■ How does our

infrastructure

support service

delivery?

■ Where are the

gaps and

opportunities?

■ What do we

need to do to

achieve this?

■ What capital and

operating

investment is

needed?

■ What will this

cost us and how

will we pay?

■ What trade-offs

are needed to

make this

sustainable?

Business Goals

and Objectives

State of

Infrastructure

Desired Levels

of Service

Financial

Strategy

Management

Strategy

22

Asset Management Plans

Business Goals

and Objectives

Desired

LOS

Financial

Strategy

Promote Sustainable

Service Delivery

Economic

Environmental

Social

Balance Budgets

Operate Efficiently

Stewards to the Environment

Resilient to Climate Change

Accessible and Responsive

Support Community

Development

$ of projected deficit

OPEX variance as % of budget

GHG emissions as % of 2010

Values

Unmitigated Climate Risk

Hrs needed to respond to

service request

# of denied development

requests

Assets

Activities

Activities

Assets

Activities

Assets

Activities

Assets

Grant

Tax

Reserve

Borrow

Fee

$ of sustaining capital vs. revenue

Crew utilization rate

Overtime hours as % of

budgeted

$ of backlogged upgrades

# systems requiring

adapt. Plan

$ of backlogged adaptation

works

Hrs of crew backlog

Yrs of backlogged

serviced land

State of Infrastructure

Asset Management Strategy

$

1 2 3 4 5 6 7 8 9 10

$

1 2 3 4 5 6 7 8 9 10

$

1 2 3 4 5 6 7 8 9 10

$

1 2 3 4 5 6 7 8 9 10

$

1 2 3 4 5 6 7 8 9 10

$

1 2 3 4 5 6 7 8 9 10

$

1 2 3 4 5 6 7 8 9 10

$

1 2 3 4 5 6 7 8 9 10

23

Barriers to Success

Losing focus on the Business

Infrastructure doesn’t exist to be infrastructure. It exists to

serve a purpose. When done effectively, asset management

helps us align our infrastructure, and associated capital and

operating investments with our business goals and priorities.

Understanding relationships between our business

priorities, our service requirements, and our physical

infrastructure assets helps us understand the

dependencies of improvement on business outcome

Will also help in identifying relationships between

stakeholders and establishing plans to overcome silos, and

communicate and manage needed change.

Isolating improvement

Sound Policy and Governance, People, Process, Data and

Technology are organizational enablers needed to successfully

introduce and support effective asset management over the

long term.

To be effective, an AMP must consider the interrelationships

between all of these factors, and how they will work

together to support business need.

Integrated strategy needed to ensure that needed supports

get introduced along with improvements to practices and

tools.

24

Barriers to Success

Trying to control everything

Pushing asset management from the top is difficult and often

results in conflict and animosity between corporate and

business unit teams. Eventually this results in business units

“doing their own thing” after the initial push has subsided.

Balance corporate control with business unit autonomy –

AMP must introduce overall guidance and support, while

respecting that some flexibility is needed for OCs to

function effectively

Change strategies should be tailored to each operating

company, demonstrating and aligning structure around

common needs and priorities, while respecting OC

mandates and intricacies

Limiting engagement

Stakeholder engagement is critical to achieving buy-in and

support for EAM corporately and within the operating

companies.

Identify stakeholders and dependencies early on

Keep engagement and change management at the forefront

of all work activities

Work collaboratively and flexibly to effectively target and

utilize people’s time

Employ proven facilitation techniques to maximize input and

contribution

Track and communicate progress – nothing builds support

like success.

25

Available tools and resources

Over the past decade significant advancements have been

made in the field of asset management across Canada, and

much information aimed at supporting this process introduced.

Infrastructure Asset Management Alberta (IAMA) www.assetmanagementab.ca

Asset Management BC (AMBC) www.assetmanagementbc.ca

Saskatchewan Municipal Asset Management (SMAM) www.assetmanagementsk.ca

Municipal Finance Officers’ Association of Ontario (MFOA) www.mfoa.on.ca

Canadian Network of Asset Managers www.cnam.ca

Federation of Canadian Municipalities (FCM) www.fcm.ca

Institute for Asset Management www.theiam.org

Institute of Public Works Engineers of Australasia www.ipwea.com

New Zealand Asset Management Support www.nams.org.nz

International Standards Organization ISO 55000:2014 www.iso.org

26

Take-Aways…

A robust approach to

asset management

supports us in making

sustainable and

effective plans and

investment decisions

Guides us in targeting limited resources

by weighing the trade-offs between front-

line outcomes, costs and risk to service

Supports us in adapting to changing

realities by considering needs and

investment requirements over the entire

asset lifecycle

Enhances transparency and defensibility

by introducing rigour and consistency

into how needs and priorities are

established and communicated

27

Take-Aways…

Policy and Governance – Aligns asset

management thinking and provides mandate

by demonstrating executive support

People – Builds organizational competence

and capacity and integrates thinking in to day-

to-day activity

Process – Introduces consistency and

transparency in to planning and decision

making activities

Data – Informs and supports the objective

assessment of needs and investment priorities

Technology – Reinforces procedure and

supports and streamlines the collection,

management and use of information

A successful asset

management program

is built upon a well

thought-out foundation

of organizational

enablers and supports

28

Take-Aways…

AMPs are meant to be living documents and

evolve over time as needs, practices and

priorities change

AM system components are used to

demonstrate alignment between spending and

strategic goals and priorities.

Initial plans will be basic, reporting current

practice and spending priorities, and establish

a plan for AM system improvement.

Mature plans will demonstrate progress in

meeting service objectives, inform budgeting

and guide long-term investment strategy

Asset Management

Plans guide long-term

investment and provide

a platform for

benchmarking and

improvement

Thank you

Ross Homeniuk

Director,

Global Infrastructure Advisory

T : +1.204.891.7569

Email: rhomeniuk@kpmg.ca

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