sustaining our assets policy statement

8/18/2019 Sustaining Our Assets Policy Statement

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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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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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2 Sustaining our assets

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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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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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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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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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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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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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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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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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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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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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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sustaining our assets policy statement

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