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.
The Secretary
Department of Treasury and Finance
1 Treasury Place
Melbourne Victoria 3002
Australia
Telephone: +61 3 9651 5111
Facsimile: +61 3 9651 5298
www.dtf.vic.gov.au
Published by the Department of Treasury and Finance
© Copyright State of Victoria 2000
This book
is
copyright.
No
part
may
be
reproduced
by
any
process
except
in
accordance
with
the provisions of the Copyright Act 1968.
Joint Departmental Information Centre
Cataloguing‐in‐Publication Entry
Sustaining our assets: government asset management policy statement.
Melbourne: Dept. of Treasury and Finance, 2000.
ISBN 0 7311 1421 3
1. Public administration ‐ Victoria.
2. Government property ‐ Victoria ‐Management.
I. Victoria. Dept. of Treasury and Finance.
352.54243909945
Published December 2000.
This document has been updated in December 2012.
No changes were made to content, only style.
If you would like to receive this publication in an accessible format please telephone
9651 0909 or email mailto:[email protected]
This document is also available in PDF format at www.dtf.vic.gov.au
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Sustaining our assets
Government asset management policy statement, December 2000 i
Contents
Minister’s foreword ...................................................................................................... 1
Overview ...................................................................................................................... 4
Scope and application .................................................................................................. 5
Why do we need better Asset Management? .............................................................. 6
Objectives ..................................................................................................................... 8
Principles ...................................................................................................................... 9
Asset management responsibilities ............................................................................ 11
Benefits of policy implementation ............................................................................. 12
Asset performance management ............................................................................... 13
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Sustaining our assets
Government asset management policy statement, December 2000 1
Minister’s foreword
The Bracks Government has promised to deliver on four key pillars ‐ responsible financial
management, promoting growth across the whole State, delivering improved services, and
restoring democracy and accountability to Victoria. These four pillars provide the foundation for
Government policy, including Sustaining Our Assets.
Sustaining Our Assets is concerned with maintaining a flexible portfolio of assets to enable
services to be delivered effectively to the community and provide a foundation for economic
growth. The policy builds on existing asset management practice, and specifically places
increased emphasis on four main features:
1. Service delivery needs ‐ regarded as the basis of all asset management decisions. Service
delivery needs
address
the
social,
environmental
and
economic
needs
of
all
Victorians.
2. Life cycle approach to asset management. This approach evaluates operating and
maintenance requirements, and the implications of eventual replacement or retirement of
assets, during acquisition decision making. The planning process also includes evaluation of
non‐asset alternatives for the delivery of services to Victorians.
3.
Integrated approach to asset management and service delivery, across all assets and all
governmental departments and agencies. This means looking beyond stewardship of
individual assets, and examining the total asset base during decision making. It also means
achieving balance across government portfolios to optimise investment outcomes.
4.
Increased emphasis on accountability for asset investment. This in turn requires greater
transparency and quality in reporting arrangements.
These asset management features are critical for the creation and maintenance of a portfolio of
assets that is responsive to Victoria’s changing needs while preserving and safeguarding
resources for future generations. Sustaining Our Assets has been formulated to provide policy
direction to the Government to meet the service delivery requirements of present and future
Victorians. It provides the foundation of all asset management related activities, such as
planning, evaluation, acquisition, operation and ultimate retirement of an asset.
The policy supports the four key pillars of the Victorian Government and responds to the
Government’s objectives by observing the following:
effective and accountable asset management is central to sound financial management.
quality
asset
and
infrastructure
networks
are
essential
to
promote
growth
across
the
whole
State.
an effective asset base is necessary to deliver improved services which are accessible to all
Victorians.
open and transparent asset management processes assist to restore democracy and
accountability to Victoria.
The Government has established the Infrastructure Planning Council and the Infrastructure
Delivery Cabinet Committee as forums for the planning and evaluation of the infrastructure
strategy. These forums, along with Government initiatives such as the Partnerships Victoria
public/private partnership policy, are being used to drive economic growth in Victoria through
more
efficient
asset
investment.
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Government asset management policy statement, December 2000
Sustaining Our Assets is about maintaining a quality asset portfolio to provide services to the
community and a foundation for economic growth throughout the State. Responsible leadership
in the management of the State’s assets is essential to improve services for all Victorians.
Lynne Kosky MP
Minister for Finance
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Sustaining our assets
Government asset management policy statement, December 2000 3
The Asset Life Cycle
PLANNING
Access needsReview optionsCost/benefits
ACQUISITION
Non‐asset alternativesRisk evaluation
Core Government‐owned assetsPublic/privatepartnership
DISPOSAL
RetirementReplacementRenewalRedeployment
OPERATION
and maintenance
Optimise performanceMaintenance program
Asset valuationConditionsd and usage
Decisions made in one phase of an asset’s life
will
affect
its
performance
in
others
e.g. a preventative maintenance program may
impact on the operating and maintenance
costs, downtime, and longevity of an asset
Monitoring and
performance management
Continuous monitoring
Quantitative and qualitative assessment
Achievement of Government outcomes
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Government asset management policy statement, December 2000
Overview
A better service, not a better asset, is a key indication of successful asset
management
The Government is committed to optimising Victoria’s asset base and recognises that State
assets have a vital role to play in providing service delivery that fulfils the social, economic and
environmental needs of Victorians.
Good asset management requires the planning and acquisition of the most appropriate assets to
meet current and future service delivery demands. This requires informed decisions about which
assets are
needed,
where
and
in
what
numbers.
Asset planning is made with careful consideration of the needs and costs of maintaining and
operating the assets over their life cycles, including ultimate retirement of assets. This approach
recognises that the effects of decisions made during any phase of an asset’s life cycle will affect
performance and costs in another phase.
Good asset management will always result in achieving best value from the total asset costs over
their life cycles, including the cost of delivering services using these assets. Sustainable asset
investment requires us to be accountable in maintaining and wisely using the assets we already
have.
Optimal asset management is achieved by:
defining desired levels of services in consultation with the community, and matching these
with assets that enable the services to be delivered;
adopting a life cycle approach to planning asset investment and management decisions;
balancing competing needs across all government functions and selecting options which best
meet desired government outcomes;
monitoring, evaluating and improving service delivery;
managing the risks of asset ownership and operation to ensure continuity of service;
providing
for
present
needs
while
sustaining
resources
for
future
generations;
and
adopting a continuous improvement approach to asset management policies and practices.
Sustaining
Our
Assets provides a high level policy framework for the Victorian public sector. The
policy is underpinned by detailed guidance material to assist with the practical application of its
features, through the Asset Management Series. The series provides the asset policies and
practices to assist in the ongoing implementation of asset management.
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Government asset management policy statement, December 2000 5
Scope and application
This policy applies to physical assets with a useful life of more than one year, which require
management by all Government departments, corporations, authorities and other bodies falling
under the Financial Management Act 1994.
Physical assets are:
land;
buildings;
infrastructure;
plant and equipment;
cultural collections; and
natural resources.
Financial, human and information assets (including intellectual property) are not covered by this
policy.
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Government asset management policy statement, December 2000
Why do we need better Asset Management?
We operate in a dynamic environment that has seen significant asset
related events occurring in recent years. These events provide strong
motivation and incentives for the continuous improvement in asset
planning, operating and maintenance procedures and in risk management.
Asset failures
The Victorian gas crisis, the Sydney water crisis, and the Auckland power crisis are all sobering
reminders
of
the
fragile
nature
of
service
delivery
continuity.
User expectations
Increasing awareness of consumer rights, litigation, understanding of regulatory requirements,
and the underlying causes and effects of asset failures, have contributed to higher user
expectations.
Public sector management reform
Reform of public sector management practices has seen the introduction of accrual output
budgeting and
increased
accountability
of
public
sector
managers
for
the
production
of
outputs.
This creates a need for improvement in asset management capabilities, including life cycle
costing of assets, monitoring and evaluation.
Ageing assets and ageing population
Many public assets were built shortly after World War II and will soon require renewal or
replacement. This will make heavy demands on resources. The ageing Victorian population also
has significant implications for the range of services and related assets that will be required in
the future.
Technology and non‐asset alternatives
Technology is creating better ways of delivering services, including a range of non‐asset
alternatives. At the same time it is providing enhanced asset management capabilities and
techniques of monitoring and evaluation.
Private sector investment potential
The Government recognises the potential to optimise value for money in the provision of
services through responsible use of both public and private sector investment. The Partnerships
Victoria policy provides a means to engage with the private sector. The protection of the public
interest (in respect of risk and interruption or decline in service availability) requires enhanced evaluation and monitoring of infrastructure projects.
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Government asset management policy statement, December 2000
Objectives
The key objectives of asset management are to enable the Government to
meet its service delivery objectives effectively, and to provide a foundation
for economic growth
To provide the services required by Victorians
by focusing on outputs and outcomes
by ensuring assets are appropriately used and maintained
by applying
asset
management
principles
To optimise the service potential of assets
through improved management of the existing asset base
through improved flexibility of the asset base
by using economies of scale for more cost effective service delivery
To maximise value for money
by taking account of the full costs of acquiring, holding, using and disposing assets throughout
their life
cycles
through appropriate partnerships with the private sector
To contribute to economic growth
through meeting service delivery demands by providing the right assets in the right location in
the right amounts
to encourage asset improvements that will improve the global competitiveness of Victoria
To assign responsibility and accountability
by clearly defining ownership and control of assets
by determining and communicating accountability and reporting responsibilities throughout
each step of the integrated approach to asset management
To promote balance between development and sustainability
by minimising demand of new assets through the use of non‐asset service delivery
alternatives where appropriate
by making asset decisions that consider and protect the needs of future generations
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Sustaining our assets
Government asset management policy statement, December 2000 9
Principles
Effective asset management is a continuous process covering the life cycle
of the asset. The following principles apply:
Service delivery needs form the basis of all asset management practices and decisions
all asset management activities should aim to improve service delivery throughout the State
An integrated approach to planning
asset planning
and
management
are
to
be
integrated
into
corporate
and
business
plans,
and
budgetary and evaluation processes
Informed decision making
asset management decisions are to be based on evaluation of all alternatives (including non‐
asset alternatives) that take into account all costs incurred throughout the life cycle of the
assets, from acquisition to disposal, and related benefits and risks
asset management decisions are to be responsive to performance measurement and
monitoring
Asset management within a whole of government policy framework
all asset management activities are to be undertaken as part of the Government’s overall
resource allocation and management framework for the whole of Victoria
competing needs of different government portfolios are to be balanced in order to achieve
desired Government outcomes and minimise duplication
Accountability and responsibility
accountability for service delivery, and accountability for asset management, should go hand
in hand
ownership, control,
accountability
and
reporting
requirements
for
assets
are
to
be
established, clearly communicated and implemented
reporting requirements should include timely and meaningful information.
evaluation of the contribution of asset management to meet departmental objectives is to
form part of performance management.
asset registers are to be maintained at a level that meet government and management
decision making requirements.
Sustainability
planning is
to
include
evaluation
of
all
potential
methods
to
meet
the
demands
for
service
delivery, including non‐asset solutions, and demand management strategies.
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Government asset management policy statement, December 2000
Integrated Asset Management approach
Government policy
Corporate planning
Business planning
Service strategy
Budget process
Evaluation
Outcomes
Non‐asset
alternatives
Asset
alternatives
E f f e c t i v e n e s s
a s s e s s m e n t
A p p r o p r i a t e n e s s
a s s e s s
m e n t
E f f i c i e n c y
a s s e s s m e n t
Community
needs and expectations
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Government asset management policy statement, December 2000 11
Asset management responsibilities
Sustaining Our Assets requires leadership throughout the whole of
government. The following requirements need to be considered throughout
the process of service delivery:
Appropriateness
Responsibilities to ensure the appropriateness of asset management:
Positioning assets to meet the long‐term service delivery priorities of Government
Clear communication
of
the
aspirations
for
public
sector
assets
to
all
public
sector
departments and agencies
Alignment of asset management philosophy, goals and actions with Government policy
Integrating asset management strategy and resource allocation decisions across government
Effectiveness
Responsibilities to ensure the effectiveness of asset management:
Clear direction and communication of objectives within public sector departments
Forward‐thinking service strategies to gain improved flexibility, sustainability, cost
effectiveness and
economic
growth
from
assets
Proactive investigation of non‐asset and asset alternatives to meet service delivery needs
Ensuring congruency of strategic goals both within and between public sector departments
and agencies in order to minimise duplication of activities and redundancy in resources
Integration of asset management activities and resource allocation decisions across
government, and across all assets
Efficiency
Responsibilities to ensure the efficiency of asset management:
Formulating all
asset
management
activities
‐from
planning
through
to
implementation
–
in
response to Government policy service delivery strategies
Integration of asset plans and asset management with corporate and business plans
Timely delivery of quality budgetary and reporting information to facilitate appropriate
decision making in the context of integrated asset management (across government and
across all individual assets)
Ongoing evaluation of outputs and assets to improve operating, pricing and investment
efficiencies
Performing asset recognition, registration, valuation, charging, depreciation and maintenance
functions
consistent
with
policy
requirements
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Government asset management policy statement, December 2000
Benefits of policy implementation
The Government is responsible for the assets held by the State, and for the
provision of services contracted by the State through assets held by others.
The scale of investment exposes the Government to a range of considerable risks. A strategic
approach to managing State assets enables the Government to manage these risks, and obtain
better value for money in the delivery of services to all Victorians.
The benefits of a strategic approach are:
Appropriateness
aligns assets with services and community expectations
promotes sustainable development objectives
effectively allocates resources available to the Government across departments and agencies,
maximising outcomes and minimising duplication
Effectiveness
minimises demand for new assets
all associated costs are considered and optimised over the life cycle of assets
existing assets
are
maintained
and
used
more
effectively
(timely
maintenance
is
cheaper
than
repairs or new asset acquisitions)
realises opportunities to use private sector assets for public purposes
realises opportunities for the public sector to partner with the private sector
Efficiency
demonstrates to the community and the Government that services are being delivered
effectively
achieves improved accountability for use of resources through published performance
measures
provides a basis for the Government to evaluate and balance the trade off between service,
price and quality
provides benchmarks which can be used to evaluate outcomes and plan future investments.
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Government asset management policy statement, December 2000 13
Asset performance management
Improved future asset investment outcomes and clear accountability for
these outcomes requires systematic measurement and evaluation of asset
performance
Performance of assets is to be evaluated by both quantitative and qualitative
measures.
Quantitative performance
management
measures
include:
the cost effectiveness of the assets in service delivery throughout their life cycles
the efficiency of output prices paid compared to established benchmarks
the contribution made by assets to support economic growth
Qualitative performance management measures include:
user satisfaction with the services delivered
affordable and equitable public access to essential assets
transparency and
accountability
of
all
asset
decisions
made
throughout
the
life
cycle
the sustainability and continuity of service provision
Performance measurement raises public sector and Government awareness of the
responsibilities, opportunities and risks inherent in asset management.
Regular measurement and evaluation of performance assists the Government to determine if it is
achieving its desired outcomes in the most effective manner. This is achieved via the
establishment and comparison of benchmarks for the price of service delivery (output pricing).
Monitoring and evaluation of performance is dependent on reporting arrangements which
deliver timely, accurate and comprehensive information.
The Asset Management Series provides guidance on the approach, and technical publications
provide information and updates on the more dynamic aspects.
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Government asset m
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