Asset Management

Calvin Barrett, Manager Accounting & Corporate Services, MFOADonna Herridge, AMP It Up, Project Manager, MFOADan Wilson, Watson & Associates Economists Ltd.

Agenda1. Asset Management Planning (AMP)

Overview 2. ISO 55000 Overview 3. Highlights of Jobs and Prosperity Act

Overview and draft Regulation4. AMP It Up Program Overview5. Self Assessment Tool

Municipal Landscape

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What is the population of your Municipality?

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What is Asset Management?• Asset management planning is the process of making the

best possible decisions regarding the building, operating, maintaining, renewing, replacing and disposing of infrastructure assets. The objective is to maximize benefits, manage risk, and provide satisfactory levels of service to the public in a sustainable manner. Asset management requires a thorough understanding of the characteristics and condition of infrastructure assets, as well as the service levels expected from them. It also involves setting strategic priorities to optimize decision-making about when and how to proceed with investments. Finally, it requires the development of a financial plan, which is the most critical step in putting the plan into action.

AMP ContinuumHave an AMP AMP is 

complete

AMPs used to make 

infrastructure decisions

AM linked to other strategic, financial and land use plans

Long Term Financial Planning

ISO 55000 SERIES OVERVIEW

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General Overview ISO 55000 series aims to:

Provide overview on what an asset management system is

Provide guidelines on how any organization can adopt and implement a system

Comprised of three parts: ISO 55000: Overview of asset management systems ISO 55001: Specify requirements of a system ISO 55002: Explains and elaborates on the

requirements

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ISO 55000 Defines asset management as:

“Asset Management translates the organization’s objectives into asset-related decisions, plans and activities, using a risk based approach.”

Benefits of asset management: Gives organizations the ability to realize the value of

assets through achieving their organizational goals Achieved by acknowledging and addressing:

Financial sustainability, environmental and social costs, management of risk, service levels and asset performance

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ISO 55000 Realizing these benefits come from a set of

fundamentals: Value: Assets exists solely to provide value, concern

should be on maximizing this value Alignment: Method to translate objectives into

actionable plans Technical, financial and operational decisions are what drive

success

Leadership: Culture from management sets tone, expectations and responsibilities

Assurance: Asset management ensures assets fulfil intended purpose

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ISO 55000 Asset management is the concerted effort of an

organization to realize value from its assets An asset management system creates structure so

that an organization can achieve this goal Defines an asset management system as:

“a set of interrelated and interacting elements of an organization, whose function is to establish the asset management policy and asset management objectives, and the processes, needed to achieve those objectives.”

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ISO 55000 Asset management systems are compared to

toolboxes: Includes policies, strategies, plans, business

processes and information systems which can all be utilized to provide assurance that assets will deliver high value in a sustainable manner

One component of the asset management system is what is commonly known as the asset management Plan (AMP)

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ISO 55000 Asset management systems provide structure

for the development of activities undertaken on assets and for aligning these activities with organizational objectives

Asset management system benefits include: Providing structure so that planned actions consider

implications on long-term sustainability Financial and asset information can be utilized in

tandem to determine actions, and allows risk-based solutions to be more effective by balancing performance, costs and organizational risk tolerances

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ISO 55001 & 55002 Asset management systems have requirements

that allow them to be most effective These requirements are the topics addressed in ISO

55001 and 55002 ISO 55001 describes the requirements of an

asset management system ISO 55002 provides guidance on how to

implement these requirements in an organization

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ISO 55001 & 55002 A fully developed asset management system

includes: Asset management policy Strategic asset management plan (SAMP) Asset management objectives Asset management plan (AMP)

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ISO 55001 & 55002Asset Management Policy

Principles that govern how an organization intends to utilize asset management to achieve high-level organizational objectives

The policy should, amongst others: Provide framework for setting asset management

objectives Include a commitment to continuous improvement of

the system and all components Be consistent with the organizational objectives and

all other organizational policies Be communicated and be made available

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ISO 55001 & 55002Asset Management Policy

The policy will be utilized to set expectations and behaviours throughout the organization

Example policies: Designation of resources (i.e. personnel,

departments) to develop and maintain asset management system

Mandate adherence to federal, provincial and local laws and regulations and follow industry best-practices

Criteria for evaluating decisions and potential alternatives

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ISO 55001 & 55002Strategic Asset Management Plan (SAMP)

Detail how to implement the principles as set forth in the policy

Consider the requirements and expectations of all stakeholders i.e. Federal and Provincial governments and local

citizens Concise criteria on how to evaluate and make

decisions as it relates to asset management Outline the asset management objectives and

detail how AMP’s will be structured

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ISO 55001 & 55002Asset Management Objectives

Derived and contained within the SAMP High-level direction on how the asset

management system will enhance the ability of an organization to reach its goals

Asset management objectives shall: Be consistent with organizational objectives and the

asset management policy Continually updated through the decision-making

criteria set forth in the SAMP Be monitored and communicated to all stakeholders

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ISO 55001 & 55002Asset Management Objectives

Asset management objectives should be developed such that they are “SMART” objectives Specific, Measurable, Achievable, Realistic and Time-

bound During development, organizations should

review their risks and the importance of assets relative to their intended use or objectives

Can address total cost, return on capital, performance, levels of service, asset reliability and condition, amongst others

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ISO 55001 & 55002Asset Management Plan (AMP)

AMP’s are developed to determine what actions and what resources will be expended Process and methods in managing and maintaining

assets over their lifecycles What actions will be done, what resources will be

required and when they will be executed How results will be evaluated Financial and non-financial implications Identification and assessment of risks arising from

managing the assets in the manner prescribed

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ISO 55001 & 55002Asset Management Plan (AMP)

The actions should meet the objectives as set forth in the SAMP

Environments which the assets operate in and the requirements for maintaining assets should be reviewed, with attention paid to potential gains in efficiency i.e. performing actions on assets in groups that are

inter-dependent or inter-related, to reduce costs A structured method for identifying and

evaluating risk should be adopted and this method should be clearly documented

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ISO 55001 & 55002Asset Management Plan (AMP)

Lifecycle costs, which can include capital, financing and operational costs should be considered in the decision-making process Some decisions can have short and long-term effects,

and there needs to be a method to properly evaluate options available

Options on replacement or rehabilitation can have large consequences on costs and risk

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ISO 55001 & 55002Context of the Organization

Organizations must determine any external and internal issues that impact ability to execute actions the system deems necessary

Organizations should define the scope and boundaries of the asset management system, and the asset management policy. The SAMP should be aligned with this scope

The success of any asset management system hinges on the ability to fully integrate the system into other organizational functions or departments

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ISO 55001 & 55002Leadership

Top management should take ownership of the asset management process to ensure adoption and use of the system throughout the organization

Leaders should endorse the asset management policy, define roles and responsibilities and commit to providing resources required to carry out asset management

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ISO 55001 & 55002Planning

Determining actions necessary to address risks throughout the asset management system is vital

The SAMP should contain asset management objectives, and how the organization intends to achieve objectives is through creation of AMP’s

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ISO 55001 & 55002Support

Staff tasked with implementing and maintaining the system should be competent, aware of how asset management fits within organizational goals, and communicate to stakeholders

Information needs should be determined and provided for, and all processes should be documented

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ISO 55001 & 55002Operation

An asset management system is a dynamic entity that changes over time as external and internal challenges arise

Processes should be developed that can address changes as they present themselves while keeping the system aligned with objectives

Outsourcing operations to external parties can be beneficial when resources or expertise is not sufficient to implement or maintain a system

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ISO 55001 & 55002Performance Evaluation

Monitoring and measuring is vital to ensure the system is performing and meeting objectives

Evaluations should be able to address any shortcomings and recommend steps to correct

Internal audits should be run at planned intervals to ensure all requirements of the system are met

Management should review policies, strategies and objectives to ensure alignment with organizational goals

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ISO 55001 & 55002Improvement

Nonconformity or incidents can and do happen Organization should develop plans and

processes to control and limit negative effects Document and review past problems, how they were

dealt with, and any potential insights into how to prevent in the future

Preventative actions that address root causes of problems should be developed

Continuous improvement to the system will be necessary over time, and strategies and processes should be implemented

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Asset management overview

www.ipwea.org/communities/community-home/librarydocuments/viewdocument?DocumentKey=429de71b-7bc3-4b65-a000-5b8c536cfbc0

Province of Saskatchewan

Jobs and Prosperity ActOverview and draft Regulation

Infrastructure for Jobs and Prosperity (IJPA) Act (aka Bill 6)

Purpose:“…encourage principled, evidence-based and strategic long-term infrastructure planning…”Principles:• Long term view• Decision-makers should take into account the needs of Ontarians• Take budget and fiscal plans into consideration• Infrastructure priorities clearly identified in order to better inform

investment decisions• Continued provision of core public services• Evidence based and transparent

IJPA Regulation Consultation Process

• Extensive Province-wide consultation process at nine (9) locations

• Participants varied– Municipal staff– Councillors– Consultants– Contractors/builders

• Submission due date was August 19th

• Finalize Regulation ?

Highlights of draft Regulation1. Definitions:• "Core infrastructure assets" include paved and unpaved roads;

bridges; culverts; any assets involved in wastewater collection, conveyance, treatment and disposal; urban and rural stormwatersystems; water treatment, distribution and transmission, and; public and non-profit housing infrastructure.

• "Infrastructure assets" includes "Core infrastructure assets" and all other Tangible Capital Assets consolidated on the financial statements of the municipality.

3. Mandatory infrastructure asset management planning information to be included in a strategic asset management policy (more about that later)

Highlights of draft Regulation5. A municipality would have to prepare an asset management plan that contains:(1)Progress on outcomes(2)Listing of all assets with replacement costs and condition(3)Levels of service – current and proposed and an estimate of

expenditures to achieve that level of service, and targets and timelines

(4)Lifecycle management strategy including options for activities to achieve the proposed levels of service and the financial viability –with a summary of all activities that will be undertaken in relation to achieving the proposed levels of service

Highlights of DRAFT Regulation5) A financial strategy that explains how activities

summarized under (4).(c) will be funded, and that,a) shows expenditure forecasts, based on activities identified

under paragraph c) of subsection (4)* for at least 10 years from the date of the asset management plan,

b) provides actual expenditures on infrastructure activities from the previous five years, broken down by asset type,

c) provides revenue forecasts broken down by source for the next 5 years, including increase or decrease in revenues compared to existing revenues, and

d) discusses key assumptions and alternative funding considerations

* References “a summary of all activities that will be undertaken in relation to achieving the proposed level of service “

MFOA’s AMP It Up Program

MFOA and asset management• Training, tools, templates, guides• Building capacity• Challenges in small municipalities• New initiatives• What’s next?

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• MFOA’s Board strongly supports good AM and long-term financial plans

• AM has been a primary focus of our work for several years and probably for several years to come

• Support our members by building AM– Training– Tools

• Templates, guides, spreadsheets

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Asset Management (AM)

• Asset management roadmap– Have had/will have numerous training sessions

on all aspects of AM identified in the 2012 Guide– Multiple delivery techniques (class room,

webinars, live streaming, on demand, in house) • Recent:

– April 2016 Asset Management Symposium in partnership with LAS

– Upcoming webinar series on creating an asset management culture done in conjunction withCNAM

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AM: Training

• In partnership with MMA, MFOA has produced:– AM report cards– Checklists– Spreadsheets for budgeting – Tip sheets– AM case studies– Shared services guide

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AM: Tools

• MFOA’s focus is to try to address capacity issues that most often arise in smaller municipalities

• Multi-pronged approach includes:– Training– Tools – Coaching– And our new tools (AM plan and planning guide

and AM self assessment tool)

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Building Capacity

• Some programs allow funds to be used to develop AMPs. These include:– Ontario Community Infrastructure Fund– Ontario Municipal Partnership Fund– Federal Gas Tax

• Provincial support for first round studies• Provincial support for current MFOA

programs

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Building Capacity (con’t)

• Significant progress being made• Like TCA accounting, is a front-end loaded

process• Large and on-going task• Some urbans still several years from having a

comprehensive AM plan• Significant issues in some smaller

municipalities to have good AM plans– Consequently, our recent efforts have focused on

small places

Observations to date

• Most municipalities in Ontario are small• Many of them face AM challenges:

– Lots of geography (large area, rivers, etc)– Limited tax base (farmland, Crown land, etc)– Limited full time staff (limits independent work

and how staff works with consultants)– May have limited analytical capacity– Can have lots of assets relative to population or

tax base– Succession/continuity

Challenges in Small Places

Barriers and Difficulties Encountered:

• Inter-departmental • Asset classes, age and condition differ• Different stages at different times• Skipped key steps• Combines technical, governance and

communications plans• Integrated into other processes

Who has AMP?

A. YesB. No

Yes

No

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Do you think your AMP is complete?

A. YesB. No

Yes

No

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How Refined is your AMP?A. Beginning our AMP journeyB. Need to add more assets or

refine our existing onesC. AMP is complete but needs

to be integrated into other processes

D. AMP is complete and integrated into other processes

Begin

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P jou

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AMP i

s com

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AMP i

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MFOA is working on four projects with financial assistance from MMA:1. Customized AM assistance on site2. Customized AM assistance off site3. Communities of Practice Guide4. On-line AM self assessment tool (SAT)

MFOA’s Current Programs

• Will send AM experts (finance and engineering) to a municipality to:– Assess your existing AMP– Determine your level of

involvement/knowledge/comfort with the plan– Identify next steps that can have the biggest

impact in advancing your plan– Devise a near and medium term work plan

Project 1

– Detailed evaluations of the status of AMP before/after as well as value of the assistance provided

– Will acquire very good information on state of AM in small places

• Must complete the SAT– Can accommodate 20 municipalities in this

program– Coaching vs doing

Project 1 (con’t)

• Similar to project 1 in purpose, objectives,eligibility and deliverables

• Will deal with municipalities more remotely– Skype sessions, phone interviews

• But still customized attention• We can accommodate 70 municipalities in

this program (90 in total between projects 1 and 2)– Managing budget for an extra 5. – Have 95 in total.

Project 2

• Program A - Pilot Program– 20 municipalities (originally 10)– Expert resources available at your municipality

• Program B - One on One Assistance– 75 municipalities (originally 70)– Assistance provided on an individual basis to

municipalities

Overview of Program A and B

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Overview of Program A and BDuring/Ongoing Support Post‐ Program Analysis

In Person Visit

(Program A)

Phone calls

WebinarComplete 

Self Assessment

AMP Other Information

Final Assessment and feedback 

on pilot

Pre‐ Program Analysis

May to July July to December

2017

• 95 Municipalities with populations under 20,000

• Preparing a guide on how to create a community of practice– Similar to PSAB sharing group

• It is thought that this can be very beneficial to smaller municipalities

• An extension of MFOA’s work on shared services

• Complete before the end of 2016

Project 3

• Two key components– Asset management maturity framework, and– On-line self assessment tool (SAT) to determine

where a municipality sits with respect to the maturity framework

• Framework must be consistent with the current AM guide from the Province as well as direction that MoI is providing with its regulatory framework

Project 4

Self-Assessment Tool

Tool

DetailedGuide