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Managing InfrastructureAssets

This document is the seventh in a series of bestpractices that transform complex and technicalmaterial into non-technical principles andguidelines for decision making. For titles of otherbest practices in this and other series, please refer to <www .infraguide.ca>.

Managing Infrastructure Assets — 1

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National Guide to Sustainable

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2 Managing Infrastructure Assets — October 2005

Managing Infrastructure Assets Version 1.1

Publication Date: March 2004 Reprint Publication Date: October 2005

© 2005 Federation of Canadian Municipalities and National Research Council

® All rights reserved. InfraGuide® is a Registered Trademark of the Federation of Canadian

Municipalities (FCM), Ottawa, Ontario.

ISBN 1–897094–58–2

The contents of this publication are presented in good faith and are intended as general

guidance on matters of interest only. The publisher, the authors, and the organizations to

which the authors belong make no representations or warranties, either expressed or

implied, as to the completeness or accuracy of the contents. All information is presented

on the condition that the persons receiving it will make their own determinations as to the

suitability of using the information for their own purposes and on the understanding that the

information is not a substitute for specific technical or professional advice or services. In no

event will the publisher, the authors or the organizations to which the authors belong, be

responsible or liable for damages of any nature or kind whatsoever resulting from the use

of, or reliance on, the contents of this publication.

Managing Infrastructure Assets — October 2005 3

Why Canada Needs InfraGuide

Canadian municipalities spend $12 to $15 billion

annually on infrastructure but it never seems to be

enough. Existing infrastructure is ageing while demand

grows for more and better roads, and improved water

and sewer systems responding both to higher

standards of safety, health and environmental

protection as well as population growth. The solution

is to change the way we

plan, design and manage

infrastructure. Only by

doing so can municipalities

meet new demands within

a fiscally responsible and environmentally sustainable

framework, while preserving our quality of life.

This is what the National Guide to Sustainable

Municipal Infrastructure (InfraGuide) seeks to

accomplish.

In 2001, the federal government, through its

Infrastructure Canada Program (IC) and the National

Research Council (NRC), joined forces with the

Federation of Canadian Municipalities (FCM) to create

the National Guide to Sustainable Municipal

Infrastructure (InfraGuide). InfraGuide is both a new,

national network of people and a growing collection of

published best practice documents for use by decision

makers and technical personnel in the public and

private sectors. Based on Canadian experience and

research, the reports set out the best practices to

support sustainable municipal infrastructure decisions

and actions in six key areas: municipal roads and

sidewalks, potable water, storm and wastewater,

decision making and investment planning,

environmental protocols, and transit. The best

practices are available on-line and in hard copy.

A Knowledge Network of Excellence

InfraGuide’s creation is made possible through

$12.5 million from Infrastructure Canada, in-kind

contributions from various facets of the industry,

technical resources, the collaborative effort of

municipal practitioners, researchers and other

experts, and a host of volunteers throughout the

country. By gathering and synthesizing the best

Canadian experience

and knowledge,

InfraGuide

helps municipalities get

the maximum return on

every dollar they spend on infrastructure—while

being mindful of the social and environmental

implications of their decisions.

Volunteer technical committees and working groups—

with the assistance of consultants and other

stakeholders—are responsible for the research and

publication of the best practices. This is a system of

shared knowledge, shared responsibility and shared

benefits. We urge you to become a part of the

InfraGuide Network of Excellence. Whether you are

a municipal plant operator, a planner or a municipal

councillor, your input is critical to the quality of

our work.

Please join us.

Contact InfraGuide toll-free at 1-866-330-3350 or

visit our Web site at www.infraguide.ca for more

information. We look forward to working with you.

Introduction

InfraGuide—

Innovations and

Best Practices

INTRODUCTION

InfraGuide®—Innovations and Best Practices


The InfraGuide Best Practices Focus

Storm and Wastewater Ageing buried infrastructure, diminishing financialresources, stricter legislation for effluents,increasing public awareness of environmentalimpacts due to wastewater and contaminatedstormwater are challenges that municipalitieshave to deal with. Storm and wastewater bestpractices deal with buried linear infrastructure aswell as end of pipe treatment and managementissues. Examples include ways to control andreduce inflow and infiltration; how to securerelevant and consistent data sets; how to inspectand assess condition and performance ofcollections systems; treatment plant optimization;and management of biosolids.

TransitUrbanization places pressure on an eroding,ageing infrastructure, and raises concerns aboutdeclining air and water quality. Transit systemscontribute to reducing traffic gridlock andimproving road safety. Transit best practicesaddress the need to improve supply, influencedemand and make operational improvementswith the least environmental impact, whilemeeting social and business needs.

Decision Making and Investment Planning Elected officials and senior municipal administrators need a framework forarticulating the value of infrastructure planning and maintenance, whilebalancing social, environmental and economic factors. Decision-makingand investment planning best practices transform complex and technicalmaterial into non-technical principles and guidelines for decision making,and facilitate the realization of adequate funding over the life cycle ofthe infrastructure. Examples include protocols for determining costs andbenefits associated with desired levels of service; and strategicbenchmarks, indicators or reference points for investment policy and planning decisions.

Environmental Protocols Environmental protocols focus on the interactionof natural systems and their effects on humanquality of life in relation to municipalinfrastructure delivery. Environmental elementsand systems include land (including flora), water,air (including noise and light) and soil. Examplepractices include how to factor in environmentalconsiderations in establishing the desired levelof municipal infrastructure service; anddefinition of local environmental conditions,challenges and opportunities with respect tomunicipal infrastructure.

Municipal Roads and SidewalksSound decision making and preventive maintenance are essential to managing municipal pavement infrastructure cost effectively.Municipal roads and sidewalks best practices address two priorities:front-end planning and decision making to identify and managepavement infrastructures as a component of the infrastructuresystem; and a preventive approach to slow the deterioration ofexisting roadways. Example topics include timely preventativemaintenance of municipal roads; construction and rehabilitation ofutility boxes; and progressive improvement of asphalt and concretepavement repair practices.

Potable WaterIn keeping with the adage “out of sight, out ofmind”, the water distribution system has beenneglected in many municipalities. Potable waterbest practices address various approaches toenhance a municipality’s or water utility's abilityto manage drinking water delivery in a way thatensures public health and safety at best value andon a sustainable basis. The up-to-date technicalapproaches and practices set out on key priorityissues will assist municipalities and utilities in bothdecision making and best-in-class engineeringand operational techniques. Issues such as wateraccountability, water use and loss, deteriorationand inspection of distribution systems, renewalplanning and technologies for rehabilitation ofpotable water systems and water quality in thedistribution systems are examined.

Acknowledgements . . . . . . . . . . . . . . . . . . . . . 7

Executive Summary. . . . . . . . . . . . . . . . . . . . . . 9

1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

1.1 Introduction . . . . . . . . . . . . . . . . . . . . .11

1.2 Purpose and Scope . . . . . . . . . . . . . .11

1.3 How to Use This Document . . . . . . .12

1.4 Glossary . . . . . . . . . . . . . . . . . . . . . . . .12

2. Rationale . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

2.1 Background . . . . . . . . . . . . . . . . . . . . .15

2.1.1 Ageing Infrastructure . . . . . . .15

2.1.2 Public Demands for High Levels of Service . . . . . . . . . . .15

2.1.3 Stringent Regulations . . . . . . .15

2.1.4 Population Growth/Decline . . .15

2.1.5 Liability/Risk Management . . .15

2.1.6 Limited Financial Resources .15

2.1.7 Increased Accountability . . . .16

2.1.8 Competition . . . . . . . . . . . . . . . .16

2.1.9 Technology . . . . . . . . . . . . . . . . .16

2.1.10 Canadian Initiatives . . . . . . . .16

2.1.11 International Initiatives . . . . .16

2.2 Benefits . . . . . . . . . . . . . . . . . . . . . . . .16

2.3 Challenges . . . . . . . . . . . . . . . . . . . . . .17

3. Methodology. . . . . . . . . . . . . . . . . . . . . . . . 19

3.1 Key Principles . . . . . . . . . . . . . . . . . . .19

3.2 Asset Management Requirements .19

3.2.1 Asset Value . . . . . . . . . . . . . . . .19

3.2.2 Life Cycle Management . . . . .19

3.2.3 Sustainability . . . . . . . . . . . . . . .19

3.2.4 Integration of Technical andFinancial Plans . . . . . . . . . . . . .19

3.2.5 Risk Assessment . . . . . . . . . . . .19

3.2.6 Performance Measurement . .20

3.2.7 High-Level and Detailed Plans . . . . . . . . . . . . . . . . . . . . . . . . . . .20

Table of Contents


3.3 Essential Elements . . . . . . . . . . . . . . .20

3.3.1 How Is Achievement Assessed? (Obectives) . . . . . .21

3.3.2 How Are Funding LimitationsDealt With? (Priorities) . . . . . .22

3.3.3 What Do You Have and Where Is It? (Inventory) . . . . .22

3.3.4 What Is It Worth? (Costs,Replacement Rates) . . . . . . . . .22

3.3.5 What Is Its Condition andExpected Remaining Service Life? (Conditions and Capability Analysis) . . . . . . . . .22

3.3.6 What Is the Level of ServiceExpectation and What Needs to Be Done? (Capital andOperating Plans) . . . . . . . . . . . .23

3.3.7 When Do You Need to Do It?(Capital and Operating Plans) . . . . . . . . . . . . . . . . . . . . .23

3.3.8 How Much Will It Cost and What Is the Acceptable Level of Risk? (Capital andOperating Plans) . . . . . . . . . . . .23

3.3.9 How Do You Ensure Long-TermAffordability? (Short- and Long-term Financial Plans) . . .23

3.4 Data Collection (Short- and Long- term Financial Plans) . . . . . . . . . . . . 23

3.4.1 Data Updates . . . . . . . . . . . . . . . 24

TABLE OF CONTENTS

4. Implementation . . . . . . . . . . . . . . . . . . . . . 25

4.1 Implementation Needs . . . . . . . . . . . .25

4.1.1 People . . . . . . . . . . . . . . . . . . . . .25

4.1.2 Information . . . . . . . . . . . . . . . .25

4.1.3 Information Technology . . . . . .25

4.1.4 Implementation of Computerized Asset Management Systems . . . . . . .26

4.1.5 Business Plan . . . . . . . . . . . . . .26

4.1.6 Implementation Plan . . . . . . . .26

4.1.7 Challenges . . . . . . . . . . . . . . . . .26

4.2 Emerging Trends . . . . . . . . . . . . . . . . .27

4.2.1 Municipal InfrastructureInvestment Planning . . . . . . . .27

4.2.2 National Round Table on the Environment and the Economy . . . . . . . . . . . . . . . . . . .27

4.2.3 Technology Road Map . . . . . . .27

4.2.4 Benchmarking . . . . . . . . . . . . . .27

4.2.5 Technology Tools . . . . . . . . . . .28

4.2.6 Regulations . . . . . . . . . . . . . . . .28

4.2.7 Public-Private Partnerships . .28

4.2.8 Continuous Improvement . . . .28

4.3 Application in Small or RemoteMunicipalities . . . . . . . . . . . . . . . . . . .28

4.3.1 Small Municipalities . . . . . . . . .29

4.3.2 Remote Municipalities . . . . . . .29

5. Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Appendix A: Successful Implementations. . . . . . . . . . . . 33

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

FIGURESFigure 2–1: Corporate Strategic Framework for

Asset Management . . . . . . . . . . . . . .17

Figure 3–1: Asset Management PlanningFramework . . . . . . . . . . . . . . . . . . . . . .21


Table of Contents

Acknowledgements


ACKNOWLEDGEMENTS

In addition, the Decision-Making and Investment

Planning Technical Committee would like to thank the

following individuals for their participation in working

groups and peer review:

Guy CourtnayDillon Consulting Ltd., Toronto, Ontario

Gerry DavisCity of Hamilton, Ontario

Doug FloydDelcan Corporation, Vancouver, British Columbia

Denis GagnonCity of Québec, Quebec

Robert ShamessCity of Kitchener, Ontario

Dana VanierNational Research Council, Ottawa, Ontario

In addition, the Decision-Making and Investment

Planning Technical Committee would like to thank the

following individuals for their participation in working

groups and peer review:

Guy CourtnayDillon Consulting Ltd., Toronto, Ontario

Gerry DavisCity of Hamilton, Ontario

Doug FloydDelcan Corporation, Vancouver, British Columbia

Denis GagnonCity of Québec, Quebec

Robert ShamessCity of Kitchener, Ontario

Dana VanierNational Research Council Canada

Ottawa, Ontario

The dedication of individuals who volunteered their

time and expertise in the interest of the National Guideto Sustainable Municipal Infrastructure (InfraGuide) isacknowledged and very much appreciated.

This best practice was developed by stakeholders

from Canadian municipalities and specialists from

across Canada, based on a working paper prepared

by five consulting firms (R.V. Anderson Associates

Limited, CH2M HILL Canada, Dillon Consulting, Earth

Tech, and Stantec Consulting). The following members

of the InfraGuide’s Decision-Making and

Investment Planning Technical Committee provided

guidance and direction in the development of this best

practice. They were assisted by InfraGuide

Directorate staff and by R.V. Anderson Associates

Limited.

Umendra Mital, ChairCity of Surrey, British Columbia

Clarke BellingerCH2MHILL, Ottawa, Ontario

Ed KovacsCity of Cambridge, Ontario

Luc LahaieCity of Laval, Quebec

Betty Matthews-MaloneCounty of Haldimand, Ontario

Osama MoselhiConcordia University, Montréal, Quebec

Jean-Pierre PierreCity of Clarence-Rockland, Ontario

Konrad SiuCity of Edmonton, Alberta

Peter SteblinCity of London, Ontario

George TrainorCity Councillor, Charlottetown

Prince Edward Island

Jeff Potkins Technical Advisor

National Research Council Canada Ottawa, Ontario

Acknowledgements


This and other best practices could not have been

developed without the leadership and guidance of

InfraGuide’s Governing Council, the Relationship

Infrastructure Committee, and the Municipal

Infrastructure Committee, whose members are as

follows.

Governing Council:Joe AugéGovernment of the Northwest TerritoriesYellowknife, Northwest Territories

Mike Badham City of Regina, Saskatchewan

Sherif BarakatNational Research Council CanadaOttawa, Ontario

Brock CarltonFederation of Canadian MunicipalitiesOttawa, Ontario

Jim D’OrazioGreater Toronto Sewer and Watermain ContractorsAssociation, Toronto, Ontario

Douglas P. FloydDelcan Corporation, Toronto, Ontario

Derm FlynnTown of Appleton, Newfoundland and Labrador

John Hodgson City of Edmonton, Alberta

Joan Lougheed, Councillor City of Burlington, Ontario

Saeed MirzaMcGill University, Montréal, Quebec

Umendra MitalCity of Surrey, British Columbia

René MorencyRégie des installations olympiques

Vaughn PaulFirst Nations (Alberta) Technical Services AdvisoryGroup, Edmonton, Alberta

Ric RobertshawPublic Works, Region of Peel, Brampton, Ontario

Dave Rudberg City of Vancouver, British Columbia

Van SimonsonCity of Saskatoon, Saskatchewan

Basil Stewart, MayorCity of Summerside, Prince Edward Island

Serge ThériaultGovernment of New BrunswickFredericton, New Brunswick

Tony Varriano Infrastructure Canada, Ottawa, Ontario

Alec WatersAlberta Infrastructure DepartmentEdmonton, Alberta

Wally WellsThe Wells Infrastructure Group Inc.Toronto, Ontario

Municipal Infrastructure Committee:Al Cepas, City of Edmonton, Alberta

Wayne GreenGreen Management Inc.Mississauga, Ontario

Haseen KhanGovernment of Newfoundland and LabradorSt. John’s, Newfoundland and Labrador

Ed S. KovacsCity of Cambridge, Ontario

Saeed MirzaMcGill University, Montréal, Quebec

Umendra MitalCity of Surrey, British Columbia

Carl YatesHalifax Regional Water Commission, Nova Scotia

Relationship Infrastructure Committee:Geoff GreenoughCity of Moncton, New Brunswick

Joan Lougheed, CouncillorCity of Burlington, Ontario

Osama MoselhiConcordia University, Montréal, Quebec

Anne-Marie ParentParent Latreille and AssociatesMontréal, Quebec

Konrad SiuCity of Edmonton, Alberta

Wally WellsThe Wells Infrastructure Group Inc.Toronto, Ontario

Founding Member:Canadian Public Works Association (CPWA)

This document describes the fundamentalconcepts, components, and considerationsinherent in an asset management plan as amunicipal best practice. Asset managementhas been described as ”a systematic processof maintaining, upgrading, and operatingphysical assets cost-effectively. It combinesengineering principles with sound businesspractices and economic theory, and it providestools to facilitate a more organized, logicalapproach to decision-making. Thus assetmanagement provides a framework forhandling both short- and long-range planning“(US, Department of Transport (DOT), 1999).

Canadian municipalities are realizing that anasset management plan will be required toaddress the rising costs for, and competingpriorities associated with, infrastructurerenewal programs. An asset management planis also needed to address public demands fora higher level of service, more stringentregulations, population changes, limitedfinancial resources, competition, andtechnology.

BBeenneeffiittss aAnndd CChhaalllleennggeess

Asset management provides transparent,rational, and accountable cost-effectivemanagement of municipal infrastructuresystems with best value for money, savingunnecessary cost. In this capacity, assetmanagement could be viewed as a valuemanagement program at strategic and tacticallevels. Specific benefits include:

■ facilitates the establishment andsubsequent implementation of policyobjectives and the related measurement ofperformance;

■ helps in avoiding problems and potentialcrises;

■ provides better and consistent levels ofservice to the public, at less cost;

■ leads to improved and more effectivecommunication with the public;

■ improves evaluation of return on investment;

■ reduces life cycle costs;

■ improves service and performance;

■ allows for better decisions regardingresource allocation;

■ reduces risk to the municipality;

■ leads to more effective communication withratepayers, elected officials, financial ratingorganizations, and regulatory agencies;

■ allows for more accurate financial planning;

■ leads to more efficient data management;and

■ results in positive institutional change.

There are several potential challenges in asset management planning.

■ Realizing the promise engendered in anasset management plan, will be mucheasier if it is situated securely within themunicipality’s strategic and corporatebusiness plan and has the approval ofsenior levels of the municipality. The lack ofa corporate sponsor could result in a lessthan optimum overall corporate strategywith which to support the implementation of an asset management plan.

■ The asset management plan must considerthe overall life cycle costs of providing the service and be prepared to makeinvestment decisions accordingly.Alternative investment decisions may result in increased funding requirements.

■ There are significant challenges associatedwith developing a relevant and up-to-datedatabase of infrastructure inventory, andcondition and capacity information andanalysis.

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Asset management is characterized by severalkey principles, including asset value, life cyclemanagement, long-term affordability, riskmanagement and assessment, performancemeasurement, operational plans, andintegration of technical and financial plans.

Executive Summary


EXECUTIVE SUMMARY

Asset managementhas been describedas ”a systematicprocess ofmaintaining,upgrading, andoperating physicalassets cost-effectively.”


Two complementary approaches are used todevelop an asset management plan, namely, asenior-directed approach and an operationalapproach. The senior-directed approach isused for strategic long-term planning ofpolicies and programs. The operationalapproach is used for short-term capital andoperational planning of projects. Theoperational approach requires a more detailedinventory and condition data than the senior-directed approach.

EEsssseennttiiaall EElleemmeennttss

The framework for an asset management plancan be described in terms of seven questions.

1. What do you have and where is it?(Inventory)

2. What is it worth? (Costs/replacement rates)

3. What is its condition and expectedremaining service life? (Condition and capability analysis)

4. What is the level of service expectation, andwhat needs to be done? (Capital and operating plans)

5. When do you need to do it? (Capital and operating plans)

6. How much will it cost and what is theacceptable level of risk(s)? (Short- and long-term financial plan)

7. How do you ensure long-term affordability? (Short- and long-term financial plan)

This framework is applicable to both thesenior-directed and operational approaches.

IImmpplleemmeennttaattiioonn NNeeeeddss

Implementation of an asset management planrequires people, information, and technology.A business plan should be prepared to outlinethe expected costs directly related topreparing and implementing the plan, and the benefits of implementation.

An implementation plan should identify theshort- and long-term objectives of assetmanagement, a work plan, roles andresponsibilities, schedule and budget for

various milestones, and the deliverables. This best practice identifies severalchallenges in implementing an assetmanagement plan successfully, includinginstitutional, technical, and fundingchallenges. Several key initiatives andemerging trends in asset management aredescribed: the Civil Infrastructure SystemsTechnology Road Map, the MunicipalInfrastructure Investment Planning project,benchmarking, technology tools, regulations,public-private partnerships, and continuousimprovement.

SSuucccceessssffuull IImmpplleemmeennttaattiioonnss

This report summarizes several successfulimplementations of asset management inCanadian municipalities. However, successfulimplementation requires that municipalitiesovercome institutional, technical, and fundingchallenges before they can successfullyimplement asset management. Measures toovercome these challenges include:

■ improved communication;

■ education;

■ training;

■ advance planning; and

■ information technology.

AAsssseett MMaannaaggeemmeenntt EEvvaalluuaattiioonn

Finally, an asset management plan should beevaluated to assess its effectiveness. This can be done through several means.

■ Monitor the condition of the infrastructureto ensure that an adequate level of serviceis maintained over the long term. For this, areplicable condition rating system should beused.

■ Monitor the performance of theinfrastructure to ensure that an adequatelevel of service is maintained over the longterm and to assess the efficiency andeffectiveness of the municipality.

■ Track unplanned spending on an annualbasis to confirm that the asset managementplan is effective. Implementation of an assetmanagement plan should reduce unplanned

spending over a period of years.

Executive Summary

1.1 Introduction

In the past, most Canadian municipalitiesfocused on expansion of their infrastructure(e.g., roads, bridges, sewers, water mains, and buildings) to support population growth.Now, many municipalities are realizing that the cost of renewing ageing infrastructures is increasing, and these infrastructures haveto be considered as ”assets.“

Asset management is not a new concept. It has been widely used for many years in realestate, property management, finance,manufacturing, information technology, andother areas of private industry. However, inthese cases, the assets are usually moreeasily converted into money and have ashorter life expectancy than is the case withmunicipal infrastructure. At the same time,abandoning or eliminating the asset at the end of its life is not typically an option formunicipal infrastructure. Furthermore, privatecompanies are motivated by profit, whereasthe provision and stewardship of basic civilinfrastructure is a fundamental and keyresponsibility of municipalities. Nevertheless,fundamental asset management concepts arestill applicable to municipal infrastructure.

Municipal infrastructure requires ongoinginvestment to sustain it. In other words,municipal infrastructure has monetary value,and its components will not last forever.

The Federal Highway Administration (US, DOT,1999) described asset management as ”asystematic process of maintaining, upgrading,and operating physical assets cost-effectively.It combines engineering principles with soundbusiness practices and economic theory, andit provides tools to facilitate a more organized,logical approach to decision-making. Thusasset management provides a framework forhandling both short- and long-range planning.“

In other words, asset management should helpmunicipalities identify the right amount ofmoney to be spent on the right things, at theright time. Asset management is a ”way ofdoing business,“ not just another programrequiring another new bureaucracy.

1.2 Purpose and Scope

This best practice is intended to providemunicipal infrastructure managers, electedofficials, and technical staff with sufficientinformation to recognize the need to developan asset management plan. The rationale forasset management as an intrinsic aspect ofthe municipal strategic and business processwill become apparent. A related objective isthe development of an appreciation amongelected officials of their role as stewards ofinfrastructure assets and the service theseassets provide, now and in the future. It is not intended to be a guide for the developmentof an asset management plan or for theimplementation of an asset managementsystem.

The report provides an overview of thecomponents of municipal infrastructure assetmanagement planning and its benefits to helpelected officials and senior appointed officialsand administrators realize the importance of developing and implementing a plancustomized for their own municipalities. Amunicipal infrastructure asset managementplan includes:

■ key principles;

■ essential elements;

■ data collection;

■ implementation needs;

■ operational considerations;

■ successful implementations; and

■ emerging trends.

1. General

1.1 Introduction

1.2 Purpose and Scope

1. General

Asset managementis not a newconcept. It hasbeen widely usedfor many years inreal estate,propertymanagement,finance,manufacturing,informationtechnology, andother areas ofprivate industry.



1.3 How To Use this Document

Section 2 gives some background on assetmanagement plans as well as the potentialbenefits and risks associated with theirimplementation.

Section 3 outlines a framework for an assetmanagement plan.

Section 4 presents some considerations forimplementation of an asset management plan.

Section 5 describes several measures toevaluate the effectiveness of assetmanagement.

InfraGuide has already published several other best practices relevant to municipalinfrastructure asset management, includingthe following.

Developing a Water Distribution SystemRenewal Plan — This document outlines twocomplementary approaches for thedevelopment of a water distribution systemrenewal plan. The senior-directed approach is used for strategic planning of policies andprograms, whereas the operational approachis used for short-term capital planning ofprojects. Both approaches use a commonframework, although they differ in terms of the level of detail. Examples are provided toillustrate the application of both approaches. A renewal plan is a key component of an assetmanagement plan.

Municipal Infrastructure ReinvestmentParameters and Their Applications — Thisdocument describes four practices that can beused to achieve adequate levels of investmentin municipal infrastructure. These methodsinclude an infrastructure asset report model,high-level parameters, detailed levelparameters, and improved communication.

Planning and Defining MunicipalInfrastructure Needs — This documentpresents five practices to assist with planningand defining municipal infrastructure needs,namely, strategic planning, informationmanagement, building public support andacceptance, exploring new and innovativemethods for continuous improvement, andprioritization models.

An Integrated Approach to Assessment andEvaluation of Municipal Road, Sewer, andWater Networks — This document outlines the need for integrated renewal planning ofmunicipal road, sewer, and water systems at a network level. It describes a five-stepprocedure for assessment and evaluation ofmunicipal infrastructure, including inventory,investigation, condition assessment,performance evaluation, and renewalplanning.

Additional best practice reports and otherdocuments related to this subject are available from the InfraGuide Web site<www.infraguide.gc.ca>.

1.4 Glossary

Asset — A physical component of a facility,which has value, enables services to beprovided and has an economic life of greaterthan 12 months. Dynamic assets have somemoving parts, while passive assets have none.

Asset management — The combination ofmanagement, financial, economic,engineering, operational and other practicesapplied to physical assets with the objective ofproviding the required level of service in themost cost-effective manner.

Asset management plan — A plan developedfor the management of one or moreinfrastructure assets that combinesmultidisciplinary management techniques(including technical and financial) over the lifecycle of the asset in the most cost effectivemanner to provide a specified level of service.A significant component of the plan is a long-term cash flow projection for the activities.

Asset management strategy — A strategy forasset management covering the developmentand implementation of plans and programs for asset creation, operation, maintenance,rehabilitation/replacement, disposal, andperformance monitoring to ensure that thedesired levels of service and other operationalobjectives are achieved at optimum cost.

1. General

1.3 How To Use This

Document

1.4 Glossary

Infrastructure — The term as used inInfraGuide refers to roads and sidewalks,potable water, wastewater, storm water, and transit.

Level of service — The defined service qualityfor a particular activity or service area againstwhich service performance may be measured.Service levels usually relate to quality,quantity, reliability, responsiveness,environmental acceptability, and cost.

Life cycle costing — A method of expressingcost, in which both capital costs andoperations and maintenance costs areconsidered, to compare alternatives. ”Presentworth“ is one way to express life cycle costs.The present worth represents the currentinvestment that would have to be made at aspecific discount (or interest) rate to pay forthe initial and future cost of the works.

Rehabilitation — Works to rebuild or replaceparts or components of an asset, to restore itto a required functional condition and extend

its life, which may incorporate somemodification. Generally involves repairing theasset to deliver its original level of servicewithout resorting to significant upgrading or renewal, using available techniques andstandards.

Replacement — The complete replacement of an asset that has reached the end of itsservice life, to provide an alternative thatsatisfies a targeted level of service.

Reinvestment — Funds allocated to capitalprojects that are rebuilding the existingmunicipal infrastructure asset base. Newcapacities and operations are excluded from infrastructure reinvestment decisions.

Service life — The period that an assetprovides an acceptable level of service. The economic service life is defined as theperiod when the present worth of the futuremaintenance costs are equal to the present worth of its replacement.

1. General

1.4 Glossary


2.1 Background

Historically, many Canadian municipalitieshave used a reactive approach to managingmunicipal infrastructure. While manymunicipalities have implemented pavementmanagement systems, most do not have assetmanagement plans for their water and sewersystems. Typically, these systems have alonger service life than roads, but theircondition is not as apparent—water andsewer systems are ”out-of-sight and,therefore, out-of-mind.“ Furthermore, only afew municipalities have an integrated assetmanagement plan for their road, sewer, and water systems.

The following paragraphs describe factorsprompting municipalities to manageinfrastructure proactively.

2.1.1 Ageing Infrastructure

In Canada, some municipal infrastructures areover 100 years old and have reached the endof their service life. In addition, most Canadianmunicipalities experienced significantpopulation growth in the two decadesfollowing World War II (i.e., baby boomers)and the proportional increase in municipalinfrastructure. As this infrastructure reachesthe end of its service life, the reinvestment ininfrastructure renewal will have to increaseaccordingly to address the echo from theinvestment in infrastructure in the twodecades following World War II.

2.1.2 Public Demands For High Levels of Service

The Canadian public demands higher levels ofservice from their municipalities. The public isalso becoming less tolerant of such things aswater supply interruptions, potholes in roads,and sewer backups. Consequently,municipalities will need to quantify the costs of providing a high level of service.

2.1.3 Stringent Regulations

All levels of government are implementingmore stringent regulations related to publichealth and safety, the environment, andfinancial issues. For example, new regulationsto define more stringent water quality criteriafor drinking water as well as wastewater andstorm water discharges will require additionalinvestments in municipal infrastructure.

2.1.4 Population Growth/Decline

Municipalities need to balance theirinvestment in terms of population growth or decline. Many municipalities rely on theadditional revenue generated from populationgrowth to cover some of the costs forrenewing older infrastructure. However, this approach is not sustainable. When amunicipality experiences a decliningpopulation and revenue base, efforts must bemade to maintain only those essential servicesand to decommission those no longer neededto provide a given level of service to thecommunity.

2.1.5 Liability/Risk Management

Many municipalities are self-insured, andneed to exercise and demonstrate anacceptable degree of due diligence in theirinfrastructure stewardship role. In somecases, ”minimum“ service standards are beingset by provincial governments, which can beused as a test of due diligence in cases oflitigation.

2.1.6 Limited Financial Resources

Demands for public money (i.e., taxes andutility fees) are increasing as the cost forsocial programs and hard services increasesacross Canada. In some cases, taxes and user rates have not increased sufficiently to compensate for inflation, increasedmaintenance responsibilities, or new facilities.Furthermore, some municipalities haveborrowed money to cover the capital cost formunicipal infrastructure, and the high cost of

2. Rationale

2.1 Background2. Rationale

While manymunicipalities haveimplementedpavementmanagementsystems, most donot have assetmanagement plansfor their water andsewer systems.


debt repayment has limited their ability toundertake other major renewal programs.Grants for infrastructure programs, fromsenior levels of government, have dwindled as the competition for funding has grown.

2.1.7 Increased Accountability

The Canadian public is becoming moredemanding of governments in terms ofaccountability and transparent decisionmaking. Governments should have a long-termplan for their infrastructure that quantifies therelationship between the level of service andthe cost of the service. As well, benchmarkingmay help municipalities improve overallefficiency and effectiveness.

2.1.8 Competition

As the global economy evolves, an increasingnumber of private companies will be able toprovide many services traditionally providedby municipalities.

2.1.9 Technology

Significant advances in technology improvethe ability of municipalities to compile detailedinventories of their infrastructure, analyze theasset condition, evaluate renewal alternatives,and project the renewal needs.

2.1.10 Canadian Initiatives

To date, there have been few, if any, Canadianstandards or guidelines for municipalinfrastructure asset management. In 2002, the Canadian Institute of CharteredAccountants (CICA) explored the alternativesfor accounting and financial reporting ofinfrastructure as assets, and other assetinformation that could be provided bygovernments (CICA, 2002). Further to this, the Public Sector Accounting Board of CICArecommended that senior levels ofgovernment adopt accrual-based privatesector accounting practices for financialreporting purposes. This involves thecapitalization and depreciation of tangiblecapital assts rather than the practice ofexpensing items.

In 2002, the Ontario government passed Bill175 (Sustainable Water and Sewage SystemsAct). This Act makes it mandatory for Ontariomunicipalities to assess and report on the fullcosts of providing water and sewage services,and then to prepare and implement plans forrecovering these costs. Similar legislation maybe enacted in other parts of Canada over time.At the time of publishing this best practice, the Ontario government had not released the regulations defining the reportingrequirements for the Sustainable Water andSewage Systems Act.

2.1.11 International Initiatives

The Governmental Accounting StandardsBoard (US, GASB, 1999) in the United Statesintroduced a requirement (known as GASBStatement 34) for state and local governmentsto account for their capital infrastructureassets and submit an annual report.

New Zealand and Australia have developedasset management guidelines in response to national legislation in both countriesrequiring government agencies to use assetmanagement systems (Australian AccountingStandard 27 [AAS 27] Financial Reporting byLocal Government).

Starting in the 1980s, Great Britain undertook anationwide privatization of its water industry.To justify pricing, water utilities had to developdetailed asset management plans.

Several associations have published manualsand guides dealing with municipalinfrastructure asset management. A listing ofthese references is provided at the end of thisreport.

2.2 Benefits

Asset management provides transparent,rational, and accountable cost-effectivemanagement of municipal infrastructuresystems. It provides best value for money,saving unnecessary cost. In this capacity,asset management could be viewed as a valuemanagement program at strategic and tacticallevels (Figure 2–1).

2. Rationale

2.1 Background

2.2 Benefits


In 2002, theOntario government

passed Bill 175(Sustainable Water

and SewageSystems Act). This

Act makes itmandatory for

Ontariomunicipalities to

assess and reporton the full costs of

providing waterand sewage

services, and thento prepare and

implement plansfor recovering

these costs.

Specific benefits include:

■ facilitates the establishment andsubsequent implementation of policyobjectives and the related measurement ofperformance;

■ helps avoid problems and potential crises;

■ provides better and consistent levels ofservice to the public, at less cost;

■ leads to improved and more effectivecommunication with the public;

■ improves evaluation of return oninvestment;

■ reduces life cycle costs;

■ improves service and performance;

■ allows for better decisions regardingresource allocation;

■ reduces risk to the municipality;

■ leads to more effective communication withratepayers, elected officials, financial ratingorganizations, and regulatory agencies;

■ allows for more accurate financial planning;

■ leads to more efficient data management;and

■ results in positive institutional change.

2.3 Challenges

There are several potential challenges in assetmanagement planning.

One of the greatest challenges lies in securingconsistent and unmitigated advocacy fromsenior levels of the municipality. An approach,driven by senior management will be a bigfactor in securing the promise engendered inan asset management plan, on condition that itis situated securely within the municipality’sstrategic and corporate business plan.

Meaningful and comprehensivecommunication among relevant municipalstaff, elected officials and, of course, thepublic is also a challenge. Asset managementcould be viewed as a program a municipalitycannot afford that requires additionalresources (i.e., staff and equipment) and iswithout significant short-term benefits. Therecould be a lack of support for an assetmanagement plan from some stakeholders(e.g., operators, politicians, and the public) for those municipalities that have not yetexperienced significant problems or if long-term benefits are not clearly identified.

2. Rationale

2.2 Benefits

2.3 Challenges


Figure 2–1: Corporate Strategic Framework for Asset Management

Figure 2–1:

Corporate Strategic

Framework for Asset

Management


Implementation of an asset management plancould be challenging if it is not well definedand endorsed by all stakeholders. Members ofthe asset management team must have a clearmandate and not be expected to take on anew responsibility without appropriateadjustments.

The lack of a corporate sponsor for assetmanagement could result in less than anoptimum overall corporate strategy with which to support the implementation of a plan. The asset management plan itself cannot be sustained if it is not sufficiently flexible toaccommodate new information or needs. Itmust consider the overall life cycle costs ofproviding the service and be prepared to makeinvestment decisions accordingly. Alternativeinvestment decisions may result in increasedfunding requirements.

Finally, there are significant challengesassociated with developing a relevant and up-to-date database of infrastructure inventory,and condition and capacity information andanalysis.

Asset management provides transparent,rational, and accountable cost-effectivemanagement of municipal infrastructuresystems. It provides best value for money,saving unnecessary cost. In this capacity,asset management could be viewed as a valuemanagement program at strategic and tacticallevels (Figure 2–1).

2. Rationale

2.3 Challenges

Meaningful andcomprehensivecommunicationamong relevantmunicipal staff,elected officials

and, of course, thepublic is also a

challenge.

3.1 Key Principles

Asset management is characterized by:

■ a strategic and proactive approach thatplaces a premium on sound data andinformation, interdepartmental collaborationand an interdisciplinary managementapproach;

■ a comprehensive long-term view ofinfrastructure performance and cost, andemphasis on sustainability objectives;

■ an explicit, visible, and transparentapproach that requires effectivecommunication among all its stakeholders;and

■ business processes involving investmentchoices that are policy and performancedriven with explicit trade-offs amongcompeting priorities.

3.2 Asset ManagementRequirements

Asset management is premised on thefollowing component requirements:

■ asset value;

■ life cycle management;

■ sustainability;

■ integration of technical and financial plans;

■ risk assessment;

■ performance measurement; and

■ high-level and detailed plans.

3.2.1 Asset Value

It must be recognized that municipalinfrastructure assets have monetary value.

3.2.2 Life-Cycle Management

Assets have a limited life expectancy, andtheir rate of deterioration can be estimated.The life cycle of an asset includes planning,design, construction, operation. Maintenance,rehabilitation, and replacement. Decisionsmade at any point in the life cycle

of an asset could affect the remaining life, and have operational implications and related costs.

3.2.3 Sustainability

Sustainable development has been defined as”meeting the needs of the present generationwithout compromising the ability of futuregenerations to meet their own needs“(InfraGuide, 2003b). An asset managementplan should identify a financial plan to sustainthe assets. The financial plan should ensurethat resources are available to operate,rehabilitate and, ultimately, replace the assetsat the optimum time to achieve the lowest lifecycle cost. This requires consistent monitoringof the potential for unintended costs. The planmust also ensure that current users pay a fairshare for the service so future users do nothave to pay a higher cost for the same level of service.

3.2.4 Integration of Technical and Financial Plans

A municipality should develop an assetmanagement plan that minimizes life cyclecosts for infrastructure assets whilemaintaining an adequate level of service and an acceptable level of risk. An assetmanagement plan should also include afinancial plan that identifies the financialinvestment level required from the public.Ideally, the asset management plan andfinancial plan should be integrated so therelationship between the level of service and the cost can be quantified. This must all be done in the context of social andenvironmental impacts.

3.2.5 Risk Assessment

Risk should be managed in any decision-making process. The owner of the assetsshould analyze and document acceptable risk tolerance. Risk can be quantified bymultiplying the probability of failure by the

3. Methodology

3.1 Key Principles

3.2 Asset Management

Requirements

3. Methodology

Sustainabledevelopment hasbeen defined as”meeting the needsof the presentgeneration withoutcompromising theability of futuregenerations tomeet their ownneeds“ (InfraGuide, 2003b)



consequences of failure. Traditionally, decisionmaking focused on cost-benefit analyses. Riskmanagement can be used to quantify the costof risk reduction and the resulting benefits,and can be included as a component in theoverall cost-benefit analysis. Risk factors inthe analysis include parameters, such asfinancial, environmental, health, and safetyfactors. Negative externalities, such as thecost of disruption and delay, and social andenvironmental degradation also warrantconsideration. A good starting point is thebest practice on environmental protocols (InfraGuide, 2003c) noted in the references.

3.2.6 Performance Measurement

To optimize an asset management plan,performance of the assets should bemonitored regularly and adjustments made atthe appropriate stage in an asset life cycle toachieve an acceptable balance between cost,level of service (i.e., performance), andconsequential risks.

3.2.7 High-Level and Detailed Plans

Asset management plans should be developedfor both strategic and operational planningpurposes. Strategic planning of policies andprograms requires a high-level assessment ofthe assets, which can be completed using theprojected renewal costs and depreciation fora group of assets estimated from replacementcosts and life expectancy. This senior-directedapproach is consistent with the accrualaccounting method (common in the businessworld and regulated utilities) in which capitalcost expenses include depreciating the valueof an asset over its expected service life.

On the other hand, operational planning (e.g.,capital planning of projects and maintenance)requires more detailed information on thecondition and deterioration rate of the asset. A detailed plan can be completed by using adetailed inventory of the assets including thecurrent condition and deterioration rate. Theoperational approach lends itself to the cashaccounting method, which is predominant inCanadian municipalities. With this method, net

capital outlays are expensed on an annualbasis. To confirm that the renewal investmentis sufficient to sustain the infrastructuresystems over the long term, a replicablecondition assessment (with a measurementscale) is required on a regular basis.

The magnitude of projected costs to sustainmunicipal infrastructure over the long termcan be quickly determined using the senior-directed approach. On the other hand, it may take several years to develop acomprehensive renewal plan for largemunicipalities using the operational approach.These two approaches are not conflicting, butcomplementary to each other. Over time, theresults of the operational approach can beused to refine the senior-directed approach.

3.3 Essential Elements

The framework for an asset management plancan be described in terms of seven questions.

1. What do you have and where is it?(Inventory)

2. What is it worth? (Costs/replacement rates)

3. What is its condition and expectedremaining service life? (Condition and capability analysis)

4. What is the level of service expectation, and what needs to be done? (Capital and operating plans)

5. When do you need to do it? (Capital and operating plans)

6. How much will it cost and what is theacceptable level of risk(s)? (Short- and long-term financial plan)

7. How do you ensure long-term affordability?(Short- and long-term financial plan)

This framework is applicable to both senior-directed and operational approaches. Figure 3–1 illustrates the placement of thesequestions within an asset management plan.The significance and implications of thesequestions are explained in the subsequentparagraphs. Finally, the relevance ofsubordinate or corollary considerationsrelated to alternative levels of service, theacceptance

3. Methodology

3.2 Asset Management

Requirements


Asset managementplans should be

developed for bothstrategic and

operationalplanning purposes.Strategic planning

of policies andprograms requires

a high-levelassessment of theassets, which can

be completed usingthe projected

renewal costs anddepreciation for a

group of assetsestimated from

replacement costsand life expectancy.

Figure 3–1: Asset Management Planning Framework

of higher risk and operational costs are alsosituated within the asset management plan.

3.3.1 How Is Achievement Assessed?(Objectives)

Policy objectives are typically expressed interms of service levels. Businesses andresidents expect certain levels of service frominfrastructure providers, and a comprehensiveunderstanding of what is expected aids in

effectively planning for infrastructuremaintenance, repair, and investment.Corporate or community goals, as reflected inthe direction provided by elected officials andmunicipal administration, generally set thetone for the levels of service the communitywants and is willing or able to supportfinancially. These goals should reflect thevalues of the community.

3. Methodology


Figure 3–1:

Asset Management

Planning Framework


Policy objectivesare typicallyexpressed in termsof service levels.Businesses andresidents expectcertain levels ofservice frominfrastructureproviders, and acomprehensiveunderstanding ofwhat is expectedaids in effectivelyplanning forinfrastructuremaintenance,repair, andinvestment.

Service levels represent service cost trade-offs, established in a flexible, rational, andtransparent manner. As such, they assist andsupport decision making and investmentplanning related to the planning, development,operation, maintenance, rehabilitation, andreplacement of municipal infrastructure. Theobvious benefits in achieving and maintaininglevels of service include health and safety, physical/natural development,economic/social development, quality oflife/living standards, risk management, andreducing life cycle cost.

3.3.2 How Are Funding Limitations DealtWith? (Priorities)

Declining revenues and a growing demand for maintaining and expanding the quality of municipal infrastructure have placedenormous strain on alternatives. In the contextof limited funding, it is crucial that prioritiesare established both objectively and relative to municipal and corporate policy objectives.

Decision makers at the municipal level areconstantly engaged in comparing alternativecourses of action. The ultimate objective is tosort out the desirable from the undesirable.Models are often put in place to assure thatthe decision-making process is rational andobjective; one way is through the use of anasset management plan, which allowsalternatives to be assessed objectively incorrelation to strategic policy objectives.

3.3.3 What Do you Have and Where Is It?(Inventory)

The senior-directed approach requires anestimate of the quantity of the asset group(e.g., total length of water main). If the quantityis not readily available, it may be estimated bypro-rating quantities for other municipalitiesbased on population.

For the operational approach, a detailedinventory is required for each component,encompassing such characteristics as pipelength, diameter, material, and year ofinstallation. Best Practices for Utility-Based Data (InfraGuide, 2003d) as a guide foriidentifying, storing, and managing sewer and

water system data. This best practice canbe adapted for roads and other utilities.

The level of detail in either approach willdepend on the availability and requirement of data.

3.3.4 What Is It Worth? (Costs/Replacement Rates)

Several techniques have been used toestablish the value of municipal infrastructureassets, including original book value,appreciated book value, and replacementvalue.

For renewal planning, replacement cost isgenerally the preferred method for quantifyingthe value of an asset. For the senior-directedapproach, an average unit replacement costcan be used for a group of assets. A moredetailed cost estimate is usually warrantedwhen using the operational approach. Forexample, unit costs can be estimated for eachpipe size when estimating the value of waterdistribution and wastewater collectionsystems.

3.3.5 What Is Its Condition and ExpectedRemaining Service Life? (Condition and Capability Analysis)

For the senior-directed approach, the averageage of the asset group can be used as anindicator of its condition. Examples of assetcondition assessments include system-wideinvestigations while others target conditionassessment of high-risk system components.

For the operational approach, data should becompiled on the condition and performance of each component. A replicable conditionassessment protocol, such as determinationmodels, should be adopted (with ameasurement scale) to provide a consistentbasis for monitoring the condition of eachcomponent. The value of an asset can be usedto determine an appropriate level of effort forits condition assessment (i.e., inspect theexpensive assets as they are more expensiveto replace).

3. Methodology



Decision makers at the municipal level

are constantly engaged in comparing

alternative courses of action. The

ultimate objective is to sort out the

desirable from the undesirable.

3.3.6 What Is the Level of ServiceExpectation and What Needs To BeDone? (Capital and Operating Plans)

Typically, there are several alternatives forrenewal of municipal road, sewer, and watersystems. Each alternative could produce adifferent service life and a different capitalcost. The life cycle costs (including currentrenewal cost, future maintenance andoperating costs, and future renewal costs) as well as social costs for each alternativeshould be estimated to identify the preferredalternative. The renewal plans for all thesesystems should be integrated to minimizeoverall costs and disruption.

3.3.7 When Do You Need To Do It? (Capital and Operating Plans)

For the senior-directed approach, theremaining service life of an asset group canbe estimated by subtracting the average ageof the asset group from the typical service life estimates for that asset group.

For the operational approach, the remainingservice life of a component can be estimatedbased on its age, current condition, andmodelled deterioration rate. The deteriorationrate of any asset can be estimated bycomparing the current condition and that from previous inspections with the age andcondition of a selection of similar assets. It isalso possible to consider potential economicgrowth and the related increase in the taxbase, as well as integrated ”corridorrehabilitation.“ In this case, a multi-attributedecision-support system can be used.

3.3.8 How Much Will It Cost and What Is the Acceptable Level of Risk? (Short-and Long-Term Financial Plans)

Based on the renewal priorities and assetvaluation determined in the previous steps, it is possible to project the costs forinfrastructure renewal. As noted previously,the senior-directed approach should be usedfor strategic planning whereas the operationalapproach should be used for operationalplanning. The renewal costs from both theoperational approach and the senior-directed

approach should be compared to ensure theshort- and long-term plans are consistent.

3.3.9 How Do You Ensure Long-TermAffordability? (Short- and Long-TermFinancial Plans)

It is important to develop a financial plan that demonstrates how revenues will coverthe projected costs for infrastructuremanagement, including renewal. Municipalcouncil should endorse the financial plan so adirect linkage can be made between renewalcosts and the level of service.

It is important to project renewal costs over at least one life cycle for each component so a financial plan can be developed thatanticipates any projected increases in cost.The overall plan should encompass one lifecycle of the longest-lived component of thesystem.

Two examples in the best practice, Developinga Water Distribution System Renewal Plan(InfraGuide, 2004), illustrate the applicationof the senior-directed and operational approaches to renewal planning for water distribution systems. These approaches can beadapted to project the renewal costs for municipal road and sewer systems.

3.4 Data Collection

Effective asset management begins withreliable, useful, and consistent data.

The asset management plan should addressdata needs and data quality as well as dataintegration, accessibility, and maintenance.

InfraGuide has published Best Practices forUtility-Based Data (InfraGuide, 2003d) that presents a foundation and guide for identifying, storing, and managing sewer and water system data. It can be adapted for roads andother utilities and recommends the use of a documented data model/structure, data collection standards, standard data units,and standard location referencing. It also makes suggestions for collecting, maintaining, properly storing, and effectively managing data.

3. Methodology


3.4 Data Collection


The deteriorationrate of any assetcan be estimatedby comparing thecurrent conditionand that frompreviousinspections withthe age andcondition of aselection of similarassets.


3. Methodology

3.4 Data Collection

All affecteddepartments within

a municipalityshould participatein the preparation

of an assetmanagement plan

to standardize datacollection andpromote data

sharing.

All affected departments within a municipalityshould participate in the preparation of anasset management plan to standardize datacollection and promote data sharing. Updatethe plan periodically to reflect changingneeds, new technologies, and newopportunities. In some cases, pilot tests shouldbe initiated to confirm the feasibility and costsof some data collection and managementtechnologies.

In light of the significant amount of datarequired to complete an integrated assetmanagement plan for municipal infrastructureusing the operational approach, municipalitiesshould compile the inventories in relationaldatabases. Ideally, the databases should belinked to a geographic information system(GIS) to facilitate spatial analysis and use ofthe data.

It is highly recommended that municipalitiescompile an inventory of their currententerprise databases and other data sources(GIS, spreadsheets, word processing files,manual records, etc.) along with a descriptionof the data they contain. Linkages betweencomplementary data should be identified.

The format and content of the databases willvary depending on the size of the municipality,

available funding, the severity of the problemsor apparent inefficiencies, and the capabilitiesof municipal staff. In some cases, it may takeseveral years for a municipality to compile acomprehensive inventory of its infrastructure.However, each municipality should adopt anappropriate plan for data collection andmanagement that will eventually allow themunicipality to manage its systems proactivelyin a cost-effective manner. At the outset, thekey question is: What information do I need tocollect and at what level of detail, to answerspecific management questions? Typically,these questions have at their core: How do weidentify and prioritize, over the coming years,capital expenditure needs to maintain, repair,and replace the infrastructure asset base,while meeting assigned levels of performanceand service? Finally, how data collection willbe prioritized must also be answered.

3.4.1 Data Updates Municipalities should not underestimate theeffort required to maintain infrastructure dataand keep it up-to-date. Formal quality controlprocesses should be in place to ensure thequality of the data is improved over time. Somemunicipalities require developers to submitinfrastructure data in an approved format fornew subdivisions.

4.1 Implementation Needs

”Asset management is a comprehensivebusiness strategy employing people,information, and technology to effectively andefficiently allocate available funds amongstvalid and competing asset needs“ (TAC, 1999).

4.1.1 People

As always, people are the most valuableresource for any endeavour. A successfulimplementation of asset management willrequire commitment from all levels within the municipality. A ”champion“ should beappointed to lead the asset management team and report to senior management at the municipality.

The asset management team, reporting to the champion, should include representativesfrom the various departments within themunicipality (e.g., planning, design andconstruction, operations and maintenance,customer service, finance, informationtechnology). In some cases, representativesfrom external agencies (e.g., utilitycompanies), elected officials, and the publicshould also be included. This participation maytake the form of asset management teams or,alternatively, public advisory and/or utilityadvisory committees. External advisors may be enlisted to assist with the development andimplementation of the asset management plan.

In some municipalities, the implementation of comprehensive asset management mayrequire organizational changes. In thesecases, business process redesign and achange management strategy may be requiredto make the transition as smooth as possible.

4.1.2 Information

Effective information management is critical tothe success of asset management. The abilityto provide feedback throughout the life cycleof an asset is essential to manage it

effectively. Feedback will, over time, allow themunicipality to optimize the management of itsassets in terms of life cycle costs, level ofservice, and risk. Ideally, information should beshared among the various departments withina municipality.

4.1.3 Information Technology

Information technology (IT) continues toevolve rapidly. It is now possible to gather,store, analyze, retrieve, and communicateenormous quantities of data. Ideally,information technology should integrate thefollowing systems within a municipality:

■ maintenance management system;

■ customer information system;

■ purchasing;

■ finance and human resources;

■ mapping and asset inventory managementsystems;

■ capital asset plans;

■ operations, such as water meter reading,supervisory control and data acquisition(SCADA), and laboratory informationmanagement systems (LIMS); and

■ other applications (e.g., hydraulic models,traffic models).

Since the development of a detailed assetmanagement plan requires extensive data,with condition rating systems anddeterioration models as well as decision-support systems, numerous software toolshave been developed. Some well-developedpavement management systems provide mostof the functionality required by an assetmanagement system for roads. However,maintenance management systems for waterand wastewater systems typically focus on themaintenance of these systems and do notadequately address their renewalrequirements and financial plan.

4. Implementation

4.1 Implementation

Needs

4. Implementation

As always, peopleare the mostvaluable resourcefor any endeavour.A successfulimplementation ofasset managementwill requirecommitment fromall levels within themunicipality.


4.1.4 Implementation of Computerized AssetManagement Systems

Several references describe the process for implementing a computerized assetmanagement system (e.g., NZ National Asset Management Steering Group, 2000;TransEducation Program, 2000). One reference(Lemer, 2002) lists the names of severalcompanies that have developed commerciallyavailable software for infrastructure assetmanagement. However, this reference states:”None of the packages available in early 2002 provide a comprehensive solution forinfrastructure asset management.“ It isimportant to realize that software is only atool, and the data are more valuable than the software.

4.1.5 Business Plan

A business plan should be developed forimplementing asset management. It shouldclearly outline the expected costs and benefitsof the implementation. Senior management atthe municipality should endorse the businessplan.

4.1.6 Implementation Plan

An implementation plan should identify theshort- and long-term objectives of the assetmanagement plan, a work plan, roles andresponsibilities, schedule and budget forvarious milestones, as well as deliverables.The implementation plan should be updatedperiodically to reflect current information and priorities.

To facilitate buy-in from stakeholders, theimplementation plan should address a fewproblems that can be easily resolved (i.e.,”quick wins“). Municipalities should alsorecognize that they do not have to compile adetailed inventory of their entire infrastructurebefore they can start applying assetmanagement. With proper planning,municipalities can compile an inventory andconduct a condition assessment of theirsystems over a period of years.

While several references describe theprocess for implementing asset management

systems, the Transportation AssetManagement Guide (NCHRP, 2002) includes aself-assessment exercise to characterize amunicipality’s current asset managementpractices and identify specific opportunitiesfor improvement.

4.1.7 Challenges

Municipalities must overcome institutional,technical, and funding challenges before they can successfully implement assetmanagement.

Institutional challenges:

■ need for leadership and consistentadvocacy (senior level commitment); and

■ organizational issues (conflicting priorities,lack of resources, poor communicationbetween departments, silos of knowledgeand responsibilities, lack of training,reliance on other agencies).

Technical challenges:

■ limitations of asset management systems;

■ no data standards, performance measures,and maintenance standards;

■ lack of automated and cost-effective non-invasive and non-destructive inspection and condition assessment tools;

■ no domain-specific decision-supportsystems to assist in establishing thepriorities among competing renewalprojects; and

■ the lack of life cycle performanceinformation and of information to quantifysocial and environmental costs.

Funding challenges:

■ inadequate funding; and

■ the lack of ongoing funding support.

Several measures can be used to addressthese challenges: improving communication,education, training, and advance planning.Appendix A describes the implementation ofasset management systems in severalCanadian municipalities.


4. Implementation

4.1 Implementation

Needs

Municipalitiesshould also

recognize that theydo not have to

compile a detailedinventory of their

entireinfrastructure

before they canstart applying asset

management.


4.2 Emerging Trends

Numerous studies and initiatives intended toimprove our understanding and appreciationof municipal infrastructure illustrate emergingtrends in asset management. Among theseare:

■ municipal infrastructure investmentplanning;

■ the National Round Table on theEnvironment and the Economy;

■ the Technology Road Map;

■ increased awareness of the importance ofbenchmarking;

■ the development of technology tools;

■ recent changes to government regulations;

■ increased use of public-privatepartnerships; and

■ the implementation of continuousimprovement plans.

4.2.1 Municipal Infrastructure InvestmentPlanning

The Institute for Research in Construction(IRC) is conducting a three-year project toevaluate and develop prototype support toolsand techniques to help asset managers withmunicipal infrastructure investment planning(MIIP). The National Research Council,Department of National Defence and severalmunicipalities fund the MIIP project.Additional information is available from<www.irc.nrc-cnrc.gc.ca/uir/miip/>.

4.2.2 National Round Table on theEnvironment and the Economy

The National Round Table on the Environmentand the Economy (NRTEE) acts as a catalyst inidentifying, explaining, and promoting, in allsectors of Canadian society and in all regionsof Canada, principles and practices ofsustainable development. Specifically, NRTEEexplores issues that have both environmentaland economic implications, and attempts toidentify actions that will balance economic

prosperity with environmental preservation.The management of municipal infrastructureassets clearly falls within this mandate. This isillustrated by reference to the Round Table’s”Environmental Quality in Canadian Cities: The Federal Role“ in which life-cycle costinganalyses of proposed infrastructure projectsand alternatives are encouraged.

4.2.3 Technology Road Map

Four national organizations (Canadian Societyfor Civil Engineering, Canadian Council ofProfessional Engineers, Canadian PublicWorks Association, and the National ResearchCouncil) have published the Technology RoadMap (TRM) for Canada’s civil infrastructuresystems over the next decade. (A copy of the TRM can be downloaded from<www.cscs.ca>.) The TRM represents anational consensus on the current state of civilinfrastructure systems (CIS), a vision for theindustry and a strategy for meeting the long-term needs of Canada’s CIS throughtechnology innovation.

4.2.4 Benchmarking

Benchmarking is defined as ”a systematicprocess of searching for best practices,innovative ideas, and highly effectiveoperating procedures that lead to superiorperformance—and then adapting thosepractices, ideas, and procedures to improvethe performance of one’s own organization“(AWWA, 1996).

There are two types of benchmarking(AwwaRF, 1996).

Metric benchmarking is the quantitativemeasurement of performance in terms ofinputs, outputs, outcomes and therelationships between them.

Process benchmarking is the mapping ofone's own process and subsequentcomparison of your process with those ofother companies with exemplary performancein a similar process.

4. Implementation

4.2 Emerging Trends

The TechnologyRoad Map (TRM)represents anational consensuson the current state of civilinfrastructuresystems (CIS), avision for theindustry and astrategy formeeting the long-term needs ofCanada’s CISthrough technologyinnovation.

Several metric benchmarking studies haverecently been completed (or are beingconducted) in Canada to compare theperformance of municipalities in terms ofvarious technical and financial indicators.These include:

■ the Ontario Municipal Chief AdministrativeOfficers Benchmarking Initiative (OMBI)<www.caobenchmarking.ca>;

■ the Ontario Municipal PerformanceMeasurement Program (MPMP)<www.nationmun.ca/MPMP2001.htm>; and

■ the Canadian National Water andWastewater Benchmarking Partnership.

Caution must be used when using metricbenchmarking since performance measuresdo not necessarily account for the uniquecircumstances within each municipality (e.g.,demographics, climate). Furthermore, financialperformance measures do not provide a trueindication of the efficiency of a municipality.Nevertheless, an analysis of trends inperformance indicators over several years willallow a municipality to determine whether itsperformance is improving.

4.2.5 Technology Tools

Rapid advances continue in the developmentof technology tools, such as assetmanagement software, GIS, data collectiontools (e.g., GPS), inspection and operationtechnologies, and rehabilitation technologies.Some municipalities have also started usingthe Internet for customer service, informationsharing, event management, and e-commerce.

4.2.6 Regulations

In 2002, the Ontario government passed Bill175 (The Sustainable Water and SewageSystem Act). This Act makes it mandatory forOntario municipalities to assess and report onthe full costs of providing water and sewageservices, and then to prepare and implement a plan for recovering those costs. Similarlegislation may be enacted in other parts ofCanada over time.

4.2.7 Public-Private Partnerships

Opportunities for private companies toparticipate in the delivery, ownership,operation, and financing of municipalinfrastructure are expected to increase overtime. Comprehensive asset management willimprove the opportunities for competitiveservice delivery through an improved ability to articulate needs and evaluate alternativeproject delivery methods. Finally, the use ofasset management planning may improve theselection method used to enter into public-private partnerships.

4.2.8 Continuous Improvement

Some municipalities have implementedcontinuous improvement programs throughAWWA’s QualServe program, ISO 9000, andISO 14000; others have developed anenvironmental management system. A newISO standard (ISO/TC 224) is being developedto address service activities related to drinkingwater and sewerage.

4.3 Application In Small or RemoteMunicipalities

Asset management is applicable to allmunicipalities regardless of size and location.Municipalities should develop animplementation plan that maximizes the use oftheir existing data and tools. The plan must betailored for each municipality to account for itssize, organizational structure, available dataand tools, condition of its systems, funding,and targeted levels of service. Theimplementation plan should strive forcontinuous improvement.

Strategic planning can be carried out with thesenior-directed approach using an electronicspreadsheet to quantify the value of theinfrastructure and the long-term investmentneeded to sustain it.

Operational planning requires municipalities to compile an inventory of their municipalinfrastructure. As a minimum, scaled mapsshould be prepared for the sewer and water


4. Implementation

4.2 Emerging Trends

4.3 Application In Small

Or Remote

Municipalities

Opportunities forprivate companies

to participate in the delivery,

ownership,operation, and

financing ofmunicipal

infrastructure areexpected to

increase over time.


4. Implementation

4.3 Application In Small

or Remote

Municipalities

For smallmunicipalities, thenext step in theimplementation ofasset managementshould include theimplementation ofa maintenancemanagementsystem and thepreparation of arenewal plan.

networks to indicate the pipe size, material,and year of installation. A similar map shouldbe prepared to indicate the width of roads,road standard (e.g., rural, urban), and surfacetreatment. Identification numbers assigned toeach component in a system allow allcondition and performance data to bereferenced to a component.

4.3.1 Small Municipalities

For small municipalities, the next step in theimplementation of asset management shouldinclude the implementation of a maintenancemanagement system and the preparation of arenewal plan. Small municipalities will notlikely have all the in-house expertise requiredto implement asset management. Furthermore,it may not be cost effective for smallmunicipalities to use some asset managementtechnologies.

The Province of Alberta and several municipalassociations have sponsored an initiativecalled the Alberta Municipal InfrastructureManagement System (MIMS). MIMS is anaffordable, easy to use set of tools to assistmunicipalities in managing and sustainingtheir infrastructure through solid decision

making. It allows users to track municipalinfrastructure assets for roads, water, storm,and sanitary sewer networks. Users knowwhat they own and its current state. Theinformation can be used for capital planningtasks, such as forecasting, budgeting, andfunding allocations.

MIMS includes a data registry as well as GIScapabilities. It also has a self-assessment toolto assist municipalities in identifying the gapbetween current infrastructure data and theappropriate data that should be collected.Additional information on MIMS can beobtained from <www.albertamims.org>.

4.3.2 Remote Municipalities

Remote municipalities may not have access to some technologies for data collection,inspection, and renewal of municipalinfrastructure. Even though municipal staffgenerally have local knowledge and expertisein managing municipal infrastructure, thisknowledge can be lost with the person(corporate memory loss); therefore, assetmanagement should still be implemented toensure continuity of knowledge.

5. Evaluation

The following points describe severalmeasures that can be used to evaluate the effectiveness of asset management.

■ Monitor the condition of the infrastructureto ensure an adequate level of service ismaintained over the long term. A replicablecondition rating system (with ameasurement scale) should be used. Forexample, many Canadian municipalitieshave adopted the sewer rating systemdeveloped by the Water Research Centre inthe United Kingdom (WRc, 1986). Similarly,many Canadian municipalities use thePavement Quality Index (TAC, 1997) toquantify the condition of roads.

■ Monitor the performance of theinfrastructure to ensure an adequate levelof service is maintained over the long term and to assess the efficiency andeffectiveness of the municipality. Technicalperformance measures (e.g., number ofwater main breaks, number of complaints,number of sewer blockages) can be used totrack the performance of the infrastructure.Financial performance measures (e.g., costto treat 1 cubic metre of water, totaloperating cost per km of sewer) can beused to assess the efficiency of the service.

■ Track unplanned spending on an annualbasis to confirm that the asset managementplan is effective. Implementation of an assetmanagement plan should reduce theunplanned spending over several years.

■ Track total spending, on an annual basis, for each program as well as condition andperformance data to optimize spending.Activity-based costing (ABC) and activity-based management (ABM) will assist inoptimizing funding and budgets.

■ Conduct a value engineering review of theasset management plan.

■ Conduct a risk assessment study to confirmthat risks are effectively quantified andmitigated.

■ Monitor program delivery measures toconfirm that the asset management plan is on schedule and budget.

■ Conduct benchmarking to compare theperformance of the municipality with others.This may identify areas for improvement.

5. Evaluation



There are many examples of successful assetmanagement implementations in Canada. Fiveare summarized here.

City of Surrey, British Columbia

A city-wide asset management program forthe City of Surrey has been underway since1996. Up until 1996, each department operatedautonomously, with separate assetmanagement systems and approaches. TheCity saw the potential to eliminate systems andprocess redundancy, to combine and leveragestaff and inventory, and to achieve greaterefficiency by capitalizing on possiblesynergies.

Objectives

The objective of the city-wide assetmanagement program was to:

■ find a common communication platform;

■ plan and measure those processes andprograms which would lead to lower cost ofownership and better performance;

■ introduce measurement control points andcollection of performance measurementmetrics;

■ increase the use of preventivemaintenance, condition monitoring, failurecode analysis, and reports;

■ support business process (re)engineeringfor increased workflow efficiency andeffectiveness;

■ encourage continuous improvement of totalcosts, performance, and user satisfaction;

■ infuse the use of best practices into theprocess; and

■ measure actual results to verifyimprovement plans.

Approach

Surrey began its asset management programby first defining its goals ”to improve customerservice by ensuring all City assets are properlymaintained through cost effective and processefficient means.“ The City’s asset base is verydiverse, with pumps and controls, water,sewer, roads, drainage, traffic, park and trees,and corporate facilities. Assets can rangefrom brand new to almost 100 years old, andare in various life cycle stages and conditions.

Implementation began with a team approachby representatives from each departmentincluding Engineering, Corporate Facilities,Parks, Finance and Information Technology.Ongoing implementation and maintenance ofthe system was transferred after Phase I ofthe project to the individual departments.

Asset management requires a strong andstable technological base, with the flexibility tobe used by each department with its uniquebusiness requirements, and is a strategic leverfor an asset management program. Like otherorganizations in an asset-intensive industry,the design group faced some basicphilosophical issues. Should they go with aproduction-centric or a financial-centricapproach to technology? The result: aproduction-centric philosophy and acustomizable, best-of-breed solution to assistin the overall asset management solution, tohelp track the total cost of ownership (TCO) ofassets, and to ensure the City’s stewardshiprole was addressed. Asset information, whichhad been captured in legacy systems, wastransferred into the new system, andpreviously unrecorded asset data weremanually entered into the system. Immediatecost savings resulted through the reduction in

A. SuccessfulImplementations

Appendix A: Successful Implementations



the number of legacy systems and in theduplication of data entry.

Through the city-wide approach, which wasundertaken by a steering committee, a designteam and focus groups, the City looked at thecosts of not providing asset management,assessed the business requirements, andassociated gaps, provided cost-benefitanalysis, and defined the projectimplementation and ongoing management.

Strategies applied in the City of Surrey wererevised a number of times as the assetmanagement team acquired more knowledgeand expertise with asset management.Business processes are constantly refined to obtain efficiencies, or to attain goals setthrough performance metric evaluations.Capital budgeting is beginning to be driven by asset failures predicted through the assetmanagement program, instead of emergencyand short-term plans.

Benefits

The asset management program has been thecatalyst for significant changes in businessprocesses along with a raised awareness ofregulatory requirements, budgeting limitations,and the need for long-term planning.

Other non-quantifiable gains made through the process have been the establishment ofdefined and documented business processesfor many functions throughout thedepartments. This has included improvedreporting capabilities; improved processefficiencies in purchasing, contracts, invoicingand cataloguing; full integration with the City’sfinancial system; the ability to retrieve thehistory of materials and purchasingtransactions; improved business processesand work flow in many functional areas;clearer delineation of individualresponsibilities within the processes andfunctional areas; and improved computerliteracy of staff.

These are fundamental building blocks inestablishing an asset management program.

From these processes, and through thecapture of asset data, key performanceindicators are being established andmonitored, which will provide unique insightinto how the City should structure itscontinued improvement initiative.

Further benefits to a fully implemented assetmanagement program have includedenhanced risk management, establishment of performance metrics, efficiency gains, areduction in corporate memory loss, and acentral repository for asset and costing data.

Payback Period

The payback period for the investment wasidentified as seven years after fullimplementation. Full implementation includedcompletion of detailed asset information andassociated preventive maintenance and jobplans as well as integration to otheroperational systems. The City considers itselfto be two years away from city-wide fullimplementation, but the benefits alreadygained are considerable. What is exciting arethe significant opportunities to realize futureefficiencies in labour productivity andincreased reliability of the assets in use.

Future Projects

Future projects include integration with GIS, apavement management system, customizationof a processing and tracking system(AMANDA), a parks irrigation system and aprocess control system (SCADA). A Web-based platform is being evaluated for the nextupgrade. Hand-held technology has beenimplemented in a pilot program. Based on thesuccess of the project, the integrationpossibilities will be extended for use by theproject team as a whole.

Asset management is accomplished throughthe concerted efforts of technicians, clerical,trades, and management staff, and through asupportive business culture for assetmanagement.

The assetmanagement

program has beenthe catalyst for

significant changesin business

processes alongwith a raisedawareness of

regulatoryrequirements,

budgetinglimitations, and theneed for long-term

planning.



City of Hamilton, Ontario

The Asset Management Section at the City of Hamilton was formed in 2001 duringrestructuring initiatives related to theamalgamation of the Region of Hamilton-Wentworth and six former area municipalities.The Asset Management Section isorganizationally structured within the PublicWorks Department.

The strategies applied in the City of Hamiltoninclude:

■ adoption of an organizational structure thatreflects the various infrastructure systemsbeing managed;

■ full integration of all individual assetinformation data sets and programminginitiatives; and

■ development of capital works programs thataddress all the needs of a given section ofmunicipal right-of-way.

Asset management continually reviews,develops, and implements trenchlesstechnology for the rehabilitation of thesubsurface infrastructure. Existingsewer/water maintenance managementsystems are being linked through theapplication of advanced GIS techniques tofacilitate a completely integrated assetmanagement approach.

Strategies are being implemented inconjunction with the development andimplementation of bridge and pavementmanagement systems. These systems havethe technical capability to move the statisticalanalysis into the GIS format required for trendanalysis. This work includes the developmentof land use data applications to address thesocio-economic factors related toinfrastructure programming initiatives.

Asset management is responsible for allcapital budgeting related to the City ofHamilton. This team compiles all requiredcapital project and account data into a budgetfor presentation to City Council. The approvedbudget is monitored and regular budgetvariance reports are generated for seniormanagement teams.

The Asset Management Section is activelypursuing other initiatives, such as projectmanagement of a data collection and assetcreation exercise for right-of-wayinfrastructure assets: sidewalks, catch basins,signs, and trees.

City of Québec, Quebec

The Development and Planning Section at theCity of Québec was formed in 2001 duringrestructuring initiatives related to theamalgamation of the City of Québec and 12former area municipalities. The Developmentand Planning Section is organizationallystructured into the Engineering Service. The infrastructure assessment/project co-ordination role is accomplished by technicalspecialists working in the individualinfrastructure asset areas. The specific areasinclude surface infrastructure, subsurfaceinfrastructure, and infrastructure managementsystems.

The strategies applied in the City of Québecinclude:

■ adoption of an organizational structure thatreflects the various infrastructure systemsbeing managed;

■ full integration of all individual assetinformation data sets and programminginitiatives; and

■ development of capital works programs thataddress all the needs of a given section ofmunicipal right-of-way.

The subsurface infrastructure team hasdeveloped and implemented an integratedasset management approach. Enhancedcapability is being developed within theexisting sewer and water maintenancemanagement system to enable conditionanalysis of the sewer system from the networklevel. This team is responsible for theadministration of the City’s CCTV, zoomcamera, and remote field eddy currentcontracts.

These strategies are being implemented inconjunction with the development andimplementation of pavement management



systems. The Surface Infrastructure Team isalso working on refinements to the decisionmodel within that system. The entire pavementwill be inspected and the data implementedinto a road management system, capable oflife cycle analysis and budget forecasting.

The infrastructure management systems teamhas been instrumental in the development ofthe integrated data sets and the automation ofthe various data set implementation exercises.This team provides the technical capability tomove the statistical analysis into the GISformat required for trend analysis at thesystem level. Work has included thedevelopment of land use data applications toaddress the socio-economic factors related to infrastructure programming initiatives.

City of Edmonton, Alberta

To ensure that the City would be in satisfactoryfinancial condition and could effectivelyfinance services on a continuing basis,Edmonton’s civic administration developed the10-Year Long-Range Financial Plan in the mid-1990s. Results from preliminary researchundertaken in 1998 confirmed a sizeable andgrowing discrepancy between infrastructurerequirements and the funds available tofinance those requirements, otherwise knownas the infrastructure gap. It was clear that acomprehensive strategy was required, as theCity could not afford to invest and re-invest inthe rehabilitation and development of itsphysical assets. A direct reaction to thoseresearch findings was the development of the1998 Infrastructure Strategy.

The Infrastructure Strategy addresses thefunding challenges associated with ageinginfrastructure and a booming economy. The overall goal is to ensure the City’sinfrastructure is in a good state of repair, thatexpansion and restoration programs aresufficiently funded, and that these programsare as efficient and effective as possible. TheOffice of Infrastructure was created in 2000 todevelop and implement strategies, tools, andprocesses that support the City’s plans andpriorities for the sustainable renewal,

upgrading, and expansion of infrastructure.Another essential component for thesuccessful implementation of the strategy is acommunications plan to raise awareness ofinfrastructure issues and solicit support fromkey stakeholders and citizens at large.

Senior management supports theInfrastructure Strategy initiative and providesthe basis for co-ordination and co-operationbetween internal departments. To fulfil theneed for input by external stakeholders, theInfrastructure Technical Advisory Committee(ITAC) was also established. It consists oftechnical stakeholders with expertise indesign, development, and management, andprovides an external perspective andguidance to the City. Representing a broadcross-section of professional organizations,business associations, community groups,academia, and provincial departments, ITAC’sinput assists the City as it continues to refineand validate strategies, processes, andplanning tools.

The physical assets, developed and used by the City of Edmonton to support thecommunity’s social and economic activities,are organized into 12 key infrastructure areasand include such diverse assets as drainageand sewers, roads, parks, buildings, recreationfacilities, fleet vehicles, transit, traffic control,waste management, computer networks,affordable housing, and library resources.Since 2000, the City has collected data oninfrastructure inventory, replacement value,average age, and expected asset life, as wellas financial investment needs and fundinginformation for these assets. This, in additionto a standardized rating system developed in2001, provides the foundation for effectiveasset management and decision making.

A five-point standardized rating system wasdeveloped to evaluate the state and conditionof the City’s infrastructure assets. Three keycriteria—physical condition, demand/capacity,and functionality—are used to apply aconsistent method of comparison betweendissimilar infrastructure elements. Byidentifying which assets are most in need of



repair, the rating system provides a high-levelcorporate perspective, which contributes toimproved decision making in the capitalpriorities planning process. The rating systemvalidates investment requirements bycapturing the City’s infrastructure assetinventory and highlighting infrastructureelements with the greatest need for funding.Additional innovative tools, such as a riskassessment methodology, in combination withconfirmed asset management techniques,such as life cycle costing, are being developedand evaluated.

The risk assessment methodology will applydeterioration functions to quantify theprobability and impact of infrastructure failurein relation to funding deficiencies. This willenable the prediction of the future state andcondition of infrastructure assets in relation tocurrent investment scenarios. By determiningthe severity of the risks associated withcurrent infrastructure investment, the civicadministration will be able to comparedisparate infrastructure elements on acorporate level and determine which criticalareas require the most urgent action.

Life cycle costing, on the other hand, enablesthe assessment of future investmentrequirements by considering the total cost ofan asset over its life expectancy rather thanlimiting decisions to initial construction costs.The Mobile Equipment Services Branch,having successfully implemented life cyclecosting management, reports that the practicehas proven to be cost effective. The use of lifecycle costing is being promoted on acorporate-wide basis.

Successful implementation of theInfrastructure Strategy also requires theintegration of the strategy with the City’s majorcorporate initiatives. It is essential that theasset inventory, state and condition assetratings, and critical need areas all be takeninto consideration as Edmonton develops itsannual Corporate Business Plan, CapitalPriorities Plan and 10-Year Long-RangeFinancial Plan. Internally, the City has initiatedpreliminary talks in an effort to better

standardize, simplify, and integrate IT systems,which will enhance asset managementpractices. It is expected that, according to theEnterprise Resource Planning initiative, theCity's Spatial Land Inventory Managementdatabase, Computerized MaintenanceManagement system, Planning One StopService (POSSE) and Systems, Applicationsand Products (SAP) in Data Processing will be integrated to facilitate ease of use andinformation sharing.

Despite the development and use of thosetools and processes, adequate financialresources are still needed. The City ofEdmonton is exploring alternative fundingstrategies to help reduce the growinginfrastructure gap. In 2003, City Councilapproved land drainage as a utility, resulting inself-sustained fee-for-service delivery and theconsequent removal of drainage services fromthe City’s tax-supported capital budgetprojections. The Sanitary Servicing StrategyFund is a partnership between the City anddevelopers and builders to finance jointly theconstruction of major sanitary sewers tosupport development. This initiative hasreduced the civic fiscal burden and enableddevelopment to proceed that might otherwisehave been delayed. The City has alsointroduced another cost-sharing partnership to ensure that developers pay their share ofnew infrastructure; the Arterial RoadwayAssessment partners with developers in theconstruction of arterial roadways to servicenewly developed areas. For the first time since 1983, the City of Edmonton revised itsdebt management fiscal policy to allow themunicipality the option of assuming tax-supported debt to pay for criticalinfrastructure projects that would otherwisebe unfunded. City Council has given approvalto borrowing $50 million in 2003 and willconsider borrowing the same amount foranother four years to support capitalinfrastructure projects.

Edmonton will continue to implement theInfrastructure Strategy as it developscorporate and departmental business plansand other key initiatives. This includes the


development and deployment of effective andefficient infrastructure management tools,processes, and strategies to assign prioritiesfor the sustainable renewal, upgrading, andexpansion of infrastructure. The City will alsocontinue to explore new funding approachesand management strategies to address theinfrastructure gap.

City of Kitchener, Ontario

The City of Kitchener is designated as a lowertier municipality within the province of Ontariowith a population of approximately 197,000.Although within a regional municipality, theCity is responsible for the delivery andmaintenance of a significant portion of ”hard“municipal services and associatedinfrastructure. This includes full responsibilityfor all sidewalks, sanitary sewers, natural gaslines, and most roads, storm sewers, andwater mains.

The goal of the City’s Integrated AssetManagement System is to gather, inventory,store, and analyze all available data regardingthe state of municipal infrastructure. From this, City staff are developing a completeunderstanding of the extent, condition, andoperating performance of the networks.

This will lead to better understanding anddevelopment of efficient proactive strategiesconcerning maintenance, rehabilitation, andreconstruction of the City’s infrastructure andimproved cost effectiveness of the divisionalwork processes.

In 1995, the City of Kitchener’s EngineeringDivision embarked on the development andimplementation of a GIS-based integratedinfrastructure management system (IIMS).Since then, considerable effort has beenexpended in the systematic collection of dataand the development of analysis tools andcriteria. Through systematic collection ofsanitary sewer data, water main data and road inventories, the City has developed aprioritized plan for upgrades to infrastructureto maintain a sustainable level of funding.

Recent work by the Engineering Divisionincludes the interconnection of workmanagement applications to the infrastructuremanagement tools, and enhancements to thecollection and dissemination of data. The Cityhas recently developed a low-cost method ofcollecting inventory and defect data forsidewalks incorporating GIS technology and isdeveloping a similar process for the collectionof road defect inventories.


References


References

NCHRP (National Cooperative Highway Research

Program), 2002. Transportation Asset ManagementGuide.

New Zealand, National Asset Management Steering

Group and the Institute of Public Works Engineering of

Australia, 2000. International InfrastructureManagement Manual.

R.V. Anderson Associates Limited, 2002. Ahead of theWave – A Guide to Sustainable Asset Management forCanadian Municipalities. Prepared for the Federation

of Canadian Municipalities.

TAC (Transportation Association of Canada), 1997.

Pavement Design and Management Guide.

—, 1999. Highway Asset Management Systems: APrimer.

—, 2001. Measuring and Reporting Highway AssetValue, Condition and Performance.

TransEducation Program, 2000. Infrastructure Asset

Management System Manuals – Volumes 1 and 2.

American Public Works Association (APWA).

US, DOT (United States, Department of

Transportation), 1999. Asset Management Primer.Federal Highway Administration (FHWA), Office of

Asset Management.

US, GASB (United States, Governmental Accounting

Standards Board), 1999. Statement No. 34–BasicFinancial Statements and Management’s Discussionand Analysis for State and Local Governments.

WRc (Water Research Centre), 1986. SewerageRehabilitation Manual.

AMSA (Association of Metropolitan Sewerage

Agencies), 2002. Managing Public InfrastructureAssets to Minimize Costs and Maximize Performance.

AWWA (American Water Works Association), 1996.

Benchmarking for the Water Industry: AchievingBreakthrough Performance. Participant Guide for

Satellite Teleconference.

AwwaRF (American Water Works Association

Research Foundation), 1996. PerformanceBenchmarking for Water Utilities.

CICA (Canadian Institute of Chartered Accountants),

2002. Accounting for Infrastructure in the PublicSector.

CSCE, CCPE, CPWA, and NRC (Canadian Society for

Civil Engineering, Canadian Council of Professional

Engineers, Canadian Public Works Association, and

National Research Council of Canada), 2003. CivilInfrastructure Systems Technology Road Map 2003-2013. A National Consensus on Preserving Canadian

Community Lifelines.

Lemer, A.C., 2002. Getting the Most Out of YourInfrastructure Assets–A Guide to Using InfrastructureAsset Management Systems. American Public Works

Association (APWA).

National Guide to Sustainable Municipal

Infrastructure (InfraGuide), 2003a. Sustainable Municipal Infrastructure Principles and Guidelines.

http:// www.infraguide.ca . —, InfraGuide 2003b. InfraGuide Glossary..

—, InfraGuide 2003c. Accounting for Environmental

—, InfraGuide 2003d. Best Practices for Utility-

Based Data.

—, InfraGuide 2004. Developing a Water Distribution

System Renewal Plan.


Notes

decision making and investment planning managing ... _asset... · managing infrastructure assets...

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