6.1 CORPORATE ASSET MANAGEMENT POLICY
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1 6.1 CORPORATE ASSET MANAGEMENT POLICY Date Adopted Next Review Officer Responsible 3 February June 2015 Manager, Performance & Delivery Group Policy Purpose: The intent of this policy is to set out a broad framework for the management of Councils assets, such that Council services meet community expectations of time, quality and value for money now and in the future. Policy: CORPORATE FRAMEWORK The policy reflects Council s vision, community outcomes and performance targets as written in the Long Term Plan. Council s vision for the district is currently under review. The intent of the revised is to create an increased focus around economic development. Alongside this Council has identified three key themes and objectives that are crucial to the Rotorua District Council s success. These are: Economic Growth Stimulating the local economy Affordability Holding rates rises to an affordable level over the 10 years. Sustainability sustainable development approach to activities and services Attracting inwards investment and wealth creation initiatives CBD revitalisation and Lakefront development integration Grow Rotorua Development Fund District Marketing Maintaining Levels of Service Increasing user pays Funding renewals and a balanced budget Energy and geothermal use Waste 2 Gold Waste minimisation The above vision and corporate objectives are about the delivery of services to the stakeholders of the District. In order to achieve these objectives more emphasis is required around the delivery of Council services based
2 on appropriate and well maintained assets. The Council s Asset Management Policy provides a formalised approach to Asset Management Planning, coupled with continued implementation and improvement Council will achieve the following. Clear direction and ownership of asset management Better and more informed decision-making by Council, staff and the community Integration of resources and knowledge and the ability to plan for present and future generations. A framework to implement continuous improvement in asset management practice Enhanced ability to understand and meet community needs and expectations Achievement of legislative and regulatory requirements ASSET MANAGEMENT ROLES AND RESPONSIBILITIES Council has restructured its focus on the delivery of AM planning aiming the strategic direction and development at a corporate level. Responsibilities for AM planning can be best described in the diagram below. Asset System owner(s) Asset planning Finance Asset Management Plan Asset Manager? Asset owner / business owner Contractors / Castlecorp delivery To achieve this policy the following key roles, responsibilities and commitments have been identified. Council To act as overall stewards for infrastructure assets that are owned or controlled by Council To set the Corporate Asset Management Policy and vision with linkages to the LTP. To approve and review Asset Management Plans To ensure appropriate resources and funding are provided, to allow services to be delivered and assets maintained, renewed and developed in line with the LTP. Asset Management Project Control Group.
3 A multi-disciplinary and cross functional Asset Management Control Group has been established to assist with the ongoing review and improvement of corporate asset management. The goal of this group will be to develop a community of asset management expertise within Council. This group will share learnings and champion organisational wide asset management planning. They will also: provide practical advice during the development or review of any asset management plan, and encourage continuous improvement, innovation and effective methods to improve asset management practice. Asset Manager/Asset Owner To prepare and review AMPs within their asset activity in line with the AM policy and direction as set by the Project Control Group Commit to the ongoing improvement and development of Asset Management Plans To efficiently manage the asset/s to the standard expected by the community ie maintain, replace and renew in line with Council s three key themes. LIFECYCLE ASSET MANAGEMENT Understanding Customer Expectations The Council will complete regular customer surveys or satisfaction surveys in all of their service provision areas to determine the community s service standard expectations. These will be measured and tracked through Council s performance measurement framework. Regular reports setting out the results of surveys, reviews and achievement of levels of service etc will be prepared and made accessible to stakeholders. Asset Planning and Budgeting All assets will be managed in accordance with the International Infrastructure Management Manual published by the Association of Local Government Engineering NZ Inc (INGENIUM) and the National Asset Management Steering (NAMS) Group. The outputs from asset management planning will drive the budget planning from a bottom s up approach (the budget will not drive the asset management practice) Budget allocations for new capital and cyclic renewals will be made subject to Council s approval via the LTP process. Asset renewal and maintenance programmes will be met prior to any new work or additional assets being considered except where such a course of action has been clearly signalled and consulted on through the LTP process. Council will periodically review all its asset stock and identify opportunities for asset rationalisation. Preventative maintenance programmes will be undertaken on all infrastructure and other assets to ensure that the lowest lifecycle cost is achieved and asset service potential is optimised. Asset Operations and Maintenance Maintenance plans shall be developed for all asset groups using asset condition data and shall incorporate a cost benefit approach as appropriate. Council will encourage all services to benchmark their asset maintenance plans and lifecycle management techniques to ensure that the Council is adopting best practice. Revaluations and Accounting The Council will maintain a detailed register of all owned assets. Council will revalue its assets on a three year rolling cycle.
4 Discounted replacement cost (DRC) will be assigned to each of these assets with the written down value and depreciation value determined in accordance with the NZ equivalent International Financial Reporting Standards (IFRS) Depreciation charges shall be calculated for all assets on an appropriate basis. The basis for determination of depreciation shall be subject to review with the objective being to use a method that best reflects that change in service potential as a result of consumption of the asset and meet IFRS requirements. All costs will be determined on an accurate accrual basis and any cost subsidies or compliance costs will be clearly defined and transparent. Asset Systems A Council wide asset systems review is underway. The outcomes of the review is to: Develop consistent processes and data standards across all asset classes Rationalise down to a minimum number of systems with long term rationalisation centred around Hansen Ensure Fixed Asset Register is part of the AM system Integrate Contract Management process into AM systems to combine financial and operational lifecycles. ASSET MANAGEMENT PLANS Council will develop Asset Management Plans for its thirteen major groups of assets. Specifically plans will be prepared for: Land Drainage Water Wastewater Waste Management Transport Rotorua Regional Airport Aquatic Centre Parks and Open Spaces Parks, Gardens, Reserves, Cemeteries Events and Venues EEC, Convention Centre, Stadium etc Community Facilities Pensioner Housing, Community Halls Rotorua Museum of Art and History District Library Corporate Buildings Civic Centre, City Focus, Travel Office, Community House, Dog Pound. As far as possible, Asset Management Plans will be consistent with other Council strategies and planning documents. Inconsistencies will be highlighted where these are unavoidable. The Asset Management Plans should demonstrate the links between the Community Outcomes, District Plan, Growth Model, Urban Design Strategy, Transport Strategy, Sustainability Strategy, Open Space Strategy and other key documents. It is the aim of Council that all Asset Management Plans will be at a level of sophistication of at least core as measured by the Office of the Auditor General with the goal being that complex and critical assets will be developed towards core+ in areas of priority agreed by Council. An improvement plan will be developed for each Asset Management Plan with the overall co-ordination of the improvements being led by the Asset Management Planning Control Group.
5 Office of the Auditor General s Criteria for assessing Conformity to Core and advanced levels of Asset Management. Core Requirement Advanced Requirement Description of Assets Description Physical inventory Remaining useful lives Financial Description Systematic monitoring Systematic utilisation/capacity Levels of Service Defined levels of service Detailed service level options Consultation Length of Service Advanced measurement Managing Growth Demand forecasts Detailed factor analysis Demand management strategies Sensitivity analysis for capital Risk Management Risk management of critical assets Consistency with NZS4360 Integrated with corporate risks Detailed strategies Lifecycle (ODM) Gap analysis of future demand Economic evaluation tools Evaluation of options Predictive modelling techniques Financial Forecasts 10 Year forecasts Detailed financial description Planning assumptions and confidence levels Depreciation information reliability Assumptions identified Data confidence identified Financial forecast confidence Sensitivity analysis Detailed assumptions Degrees of confidence Outline improvement programmes Identified improvement plan KPI's for improvement Planning by qualified persons Suitably qualified persons Independently assessed Peer review Monitoring improvement Commitment AMP Approved at senior levels Monitored through operational plans Identified as key planning tools by the organisation Regularly updated Evolving and improving Linked to organisational plans
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