Appendix E

Total Asset Management Template

New South Wales Treasury

(Reprinted by permission of the New South Wales Treasury)

ISBN 07313 3325X Total Asset Management (set of six volumes)
ISBN 07313 32482
1. Asset management — New South Wales.
2. Capital Investment.
3. Public administration — New South Wales
I. Title. (Series: TAM 2004)

This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without written permission from the NSW Treasury. Requests and inquiries concerning reproduction and rights should be addressed to NSW Treasury, The Executive Officer, Level 27 Governor Macquarie Tower, 1 Farrer Place, Sydney, NSW 2000. General inquiries concerning this document should be directed to Arthur Megaloconomos (phone 9228 4402 or e-mail Arthur.megaloconomos@mail.treasury.nsw.gov.au) of NSW Treasury. This publication can be accessed from the Treasury's Office of Financial Management Internet site at http://www.treasury.nsw.gov.au/.

Table of Contents

1. Total Asset Management Strategies
1.1 Guidelines for completing the TAM template
2. Total Asset Management Strategies template
2.1 Results, services and corporate goals identified
2.2 Asset strategies developed
2.3 Asset performance measures and targets defined
2.4 Risk management strategies developed and documented
2.5 Capital investment strategy developed
2.6 Asset maintenance strategy developed
2.7 Asset disposal strategy

1. Total Asset Management Strategies

1.1 Guidelines for completing the Total Asset Management template

The Template has been prepared to support agencies develop their Asset Strategy and integrated Capital Investment, Asset Maintenance and Asset Disposal Strategic Plans. Together these form the agency's Total Asset Management Strategies.

The template will assist NSW Treasury to assess the effectiveness of agencies' strategic asset management through the quality of their Total Asset Management (TAM) Strategies.

It will also be used by the Department of Infrastructure, Planning and Natural Resources (DIPNR) in reviewing agencies' Asset and Capital Investment Strategies to support wider state planning which better integrates land use, transport and key infrastructure planning and development.

The template is accompanied by notes describing its form, content and use. Agencies should consult their NSW Treasury analyst where they require additional advice.

A glossary of the terms used in this template and guideline is included at the end of the guideline.

Why a template?

The TAM Manual details how the Government's policy for the management of the State's assets should be implemented. It requires agencies to prepare TAM Strategies, but it does not prescribe the form or level of detail required in such strategies.

TAM Strategies have become narratives of agencies' operations and asset requirements, sometimes at the expense of substance and detail. It is difficult to assess such strategies and it is difficult for those developing them to use them to effectively manage their asset bases, or know if they adequately fulfill their reporting obligations.

A template has now been prepared to:

• Provide agencies with a disciplined structure upon which to develop their TAM Strategies consisting of their Asset Strategy and integrated Capital Investment, Asset Maintenance and Asset Disposal Strategic Plans.
• Set out the level of detail required in budget sector agencies' presentation of their TAM Strategies to Treasury.
• Set out the level of detail required in agencies' presentation of their Asset Strategies and Capital Investment Strategies to DIPNR. (See Premier's Memorandum 2003-17).
• Set out the level of detail to be provided by self funding agencies seeking Treasury agreement to undertake major capital investments.

An agency's TAM Strategies and their presentation to NSW Treasury varies only in its level of detail.

In developing its TAM Strategies, an agency requires detailed knowledge of government's vision and priorities, its own corporate goals, service delivery strategy, resource levels and its asset base.

The strategies must contain sufficient information to effectively communicate it to those within the organisation charged with its implementation and with broader agency planning. NSW Treasury and DIPNR require sufficient detail to understand the Strategies and gain confidence that government's service delivery priorities are addressed and the risks are appropriately identified and managed. The template promotes clear agency asset planning while discouraging time spent documenting unnecessary material for NSW Treasury and DIPNR.

A template clearly highlights any specific planning weaknesses which need to be addressed by an agency. It will be obvious to the agency from the quality and availability of the information sought at each step in the template, which areas of planning require further development.

The template incorporates the approach set out in the Asset Strategy Guideline which is part of the TAM Manual. Agencies are encouraged to self assess their TAM Strategies against the criteria set out in the Asset Strategy Guideline, prior to submitting them to Treasury and DIPNR. The TAM Manual is accessible on Treasury's website, www.treasury.nsw.gov.au.

By imposing a planning discipline the template is important in raising knowledge and awareness within the agency, and developing a common understanding within Treasury and DIPNR, of agency service delivery and asset dependency. It also makes it easier for NSW Treasury to assess agency compliance with TAM Policy and their need for resources. It also encourages analysis of performance across the sector and by agencies over time.

What are TAM Strategies?

TAM Strategies establish and document the assets that most appropriately, effectively and efficiently allow an agency to meet its service delivery commitments. The Asset Strategy is the overarching strategy. It is developed in response to the agency's corporate plan, its Results and Services Plan or Statement of Business Intent and its service delivery strategy, acknowledging resource levels available over the life of the strategy to deliver its services.

For agencies required to prepare Results and Services Plans annually their TAM Strategies should reflect the service deliveries set out in these plans.

What use is made of the TAM Strategies?

The Asset Strategy is for use by the agency to establish the optimum form of the assets required for them to deliver, within resource limits, the results and services sought by government. The resulting Capital Investment, Asset Maintenance and Asset Disposal Strategies detail the actions the agency proposes to undertake to manage its asset needs.

The TAM Strategies are required by NSW Treasury to ascertain the assets required for the agency to deliver government's program of services and whether agencies are planning and managing assets in accordance with TAM policy. Budget allocation decisions are influenced by the content of the TAM Strategies. Treasury agreement is also required by self funding agencies beyond the Budget process, prior to them committing to major capital investments.

In addition, the Department of Infrastructure, Planning and Natural Resources (DIPNR) draws on agencies' Asset Strategies and supporting Capital Investment Strategic Plans to advise the Infrastructure and Planning Committee of Cabinet (IPCC) on major infrastructure proposals, asset strategies and Capital Investment Strategic Plans. This committee has the central role in setting the Government's strategic direction for urban and regional development and associated infrastructure priorities through the NSW Infrastructure Strategy. This is outlined in the State Infrastructure Strategic Plan (SISP).

Agencies should consult with DIPNR to ensure appropriate alignment of their Asset Strategies and Capital Investment Strategic Plans with the SISP before these plans or specific project proposals arising from them are submitted to NSW Treasury for Budget approval considerations.

Which agencies are required to prepare TAM Strategies?

The need to prepare Asset Strategies arises from TAM Policy, which applies to all government departments, statutory authorities, trusts and other government entities. State Owned Corporations under the State Owned Corporations Act are exempt although they are encouraged to adopt aspects of TAM that are consistent with their corporate intent.

Budget sector agencies should prepare TAM Strategies based on the agency continuing to provide agreed services within its current resource limits. Depending on Government's priorities, fiscal position and other strategic factors some budget sector agencies may be invited to submit specific proposals for enhanced levels of service. Necessarily, such invitations will be limited. Non Budget sector agencies' TAM Strategies should also be developed within the resource levels available.

Some agencies through self funding are able to internally fund major projects. Procurement Policy requires these agencies to submit any such projects to Treasury for full assessment prior to approval of funding. An agency should demonstrate a need for the project, normally through an Asset Strategy and supporting Capital Investment Strategic Plan.

When are TAM Strategies required?

TAM Strategies are required by Treasury and DIPNR by the end of August to fit within the Budget cycle.

How should the template be used?

The template contains seven headings which the TAM Strategies should address. The headings cover the agency's corporate and service goals, likely resource levels, alternative service delivery strategies, risks to service delivery, performance measures and the asset strategies to achieve its service delivery goals.

Each heading seeks specific information. Explanatory notes detail the scope and depth of the information sought. Some aspects of an agency's TAM Strategies require detailed knowledge of the agency's corporate and service delivery responsibilities as well as intimate knowledge of its assets. The agency's TAM Strategies should contain sufficient information to plan and manage its asset base.

The template approach does not require such detail to be provided in the final presentation of the TAM Strategies document to Treasury and DIPNR. Samples of the agency data used to develop this document should be appended to provide reviewers with confidence in its rigour. By setting clear and reasonable expectations, unnecessary work can be avoided in preparing and assessing the strategies.

Glossary

Results

What the agency is trying to achieve for society. Results are the intended impacts that the services have on the community, the environment or the economy.

Services

The end products the agency delivers for external consumption.

Results and Services Plan (RSP)

A concise statement of the agency's results, services, result indicators and service measures.

Total Asset Management Manual

The Total Asset Management Manual is an internet based document explaining the NSW Government's Total Asset Management Policy and provides details of the five component strategies forming the Total Asset Management Strategies. It also contains a series of guidelines on implementing various aspects of asset planning. The Total Asset Manual can be found at www.treasury.nsw.gov.au.

2. The Total Asset Management Strategies template

This template provides agencies with a structure to construct their Asset Strategy and integrated Capital Investment, Asset Maintenance and Asset Disposal Strategies.

The Asset Strategy

2.1 Results, services and corporate goals identified

2.1.1. Identify the goals of the agency sector in which the agency is located.

• NSW agencies are organised into cluster groups related to their combined service delivery focus, e.g., Human Services Cluster.
• This information should be available from the cluster CEO committees which discuss sector issues.

2.1.2. Identify the agency's corporate goals. Indicate which are being pursued in conjunction with other agencies and the responsibilities of each.

• All corporate goals should be included as each will have asset implications, requiring current or new assets to implement them.

2.1.3. List the corporate performance indicators for each corporate goal.

2.1.4. Clearly define and quantify each of the results the agency pursues based on there being no change in the agency's service delivery. Identify the corporate goal(s) that each result supports.

• This information should be available from an agency's Corporate Plan and Results and Services Plan (RSP) or Statement of Business Intent (SBI). Where results support several corporate goals, indicate whether that support is of major or minor significance.

2.1.5. Clearly define and quantify each of the changed results the agency plans to deliver based on delivering an enhanced level of service. Identify the corporate goal(s) that each result supports.

• Where results support several corporate goals, indicate whether that support is of minor or major significance to achieving that goal.
• Agencies should not commit undue expenditure on detailed planning of such proposals for enhanced service delivery, until invited to submit specific proposals.
• Early discussion about such proposals with NSW Treasury is important to avoid wasted effort.

2.1.6. Clearly define and quantify each of the services the agency delivers based on there being no change in the services being delivered. Identify links to the result(s) each supports.

• Include all significant aspects of the services being delivered.
• This may entail extensive detail which has usually already been developed by agencies. Where such information exists, refer to it at this item and append it in part or in full to this template in its current form.
• While detailed data is important in preparing and implementing Asset Strategies, it is sufficient at this item for those reviewing the strategy to understand the quality of the information around which it was developed rather than to sight extensive data. Services should be aligned with the agency's corporate plan, Results and Services Plan or Statement of Business Intent.
• The Results and Services Plan requires current services to be prioritised, identifying those considered least important or which could be scaled back.

2.1.7. Outline present and future pressures driving demand for services.

• This should include:
  1. Demographic pressures, market factors, changed government policy, cross-sector objectives, future settlement development plans and the effect of changed service delivery by other agencies.
  2. New standards and changed operating environments.
  3. Demands for higher levels of assets where the asset is confused with the services delivered, e.g., police stations rather than policing etc.
• Details of these pressures and when they are likely to occur allows DIPNR to predict future trigger points for investment and Treasury to better understand the basis for that future investment.

2.1.8. Clearly define and quantify each of the changed services the agency plans to deliver based on delivering enhanced levels of service. Identify links to the result(s) each will support.

• Include sufficient details of the services to enable details of the assets required, to be determined elsewhere in the Asset Strategy.
• Agencies should not commit undue expenditure on detailed planning of such proposals for enhanced service delivery, until invited to submit specific proposals. Early discussion about such proposals with Treasury is important to avoid wasted effort.

2.1.9. List the performance indicators established for each service.

• Performance indicators could relate to the service overall or to significant aspects.
• There should be few enough indicators to be manageable but sufficient to show the effectiveness of the service delivery.

2.1.10. Outline cross-agency and cross-cluster joint service delivery and asset sharing options, either considered or proposed.

• Outline alternative means of achieving the results sought by the agency.
• Outline service delivery options that have been explored with other agencies. Outline the advantages and disadvantages of these options for each agency.

2.1.11. Outline alternative, less asset dependent service delivery options, either considered or proposed.

• Outline any additional non asset resources such as staff, that would be required for these options to be effective and the overall advantage and disadvantage.

2.1.12. Outline options, considered or proposed, to deliver different services or changed service levels that achieve results more economically.

• Outline the advantages and disadvantages of these options including the impacts on stakeholders including other agencies.

2.1.13. Indicate the range in total resources predicted to be available annually from the Budget, over the next ten years.

• Planning of results and services is of necessity iterative. While driven by community need and government direction, it also considers the resources available, in setting service levels that can be sustained in the longer term.
• Future resources may vary for reasons beyond an agency's control.
• Canvass such risk, its extent and likelihood here. Outline the measures to manage these potential risks here and detail them at item 4.
• Discuss the range in future Budget allocations likely to be available to the agency with NSW Treasury.

2.1.14. Indicate the resource range predicted to be available from other sources over the next ten years.

• Include funding from all sources including Commonwealth allocations.
• Outline the certainty of this funding and measures to manage these risks. Detail risk management strategies at item 4.

2.1.15. Estimate the percentage of these resources that the agency will spend on provision, maintenance and operation of its asset base.

• Agencies are required to support a range of resources to ensure delivery of services.
• The amount of funding it expends on its asset base is a function of the total funding available and the agency service delivery strategy which determines what and how services will be delivered, determining the required range of resources.

2.1.16. Outline demand management strategies, either considered or proposed, to keep service levels sustainable within resource limits.

• Outline the current expectations of stakeholders and the means proposed to change this.
• Estimate the impacts of the demand management measures on stakeholders and on the results the agency is pursuing.

2.2 Asset strategies developed

2.2.1. Outline the asset performance criteria required to deliver agreed services.

• Having established details of the services being delivered, determine details of the way in which the assets must perform.
• This could include their capacity, location, fitness for their service role, required service life and adaptability.
• The number of criteria selected should be the minimum necessary for efficient and effective service delivery.

2.2.2. Outline how the required asset performance was established.

• This information indicates the rigorous process which determined asset performances and performance levels.
• Show how the asset performance decisions relate to both service delivery levels and to the environment in which the assets must operate.
• For example specified levels of asset reliability or security may be vital in some assets for service delivery while in others aesthetics, privacy or air quality may be vital.
• Show how the required performance levels are used to assess gaps between existing and required assets.

2.2.3. Outline the agency's level of knowledge of its asset base, the basis on which the asset base was segmented, and the analysis of the asset base involved in developing the Asset Strategy.

• Provide evidence of the asset detail that is maintained by the agency and the information systems used to manage that data.
• Advise on what basis assets are segmented or grouped for more effective management.
• Advise how the agency acquires and updates knowledge of its asset base.

2.2.4. Detail each asset strategy and the service(s) it supports.

• Include all high level strategies affecting the asset base.
• Strategies are usually developed separately for each major asset type, group or segment.
• Several strategies may apply to the one group of assets.
• Examples of high level asset strategies include planning appropriate maintenance to ensure asset service lives of 50 years, upgrading security to meet changing risks, accommodating new technologies within particular portfolios, planning use of heritage assets to maximise their service delivery while protecting their cultural values, designing new assets to accommodate regular capacity upgrades or reducing some standards at which low risk assets will be operated.
• Asset Strategies are applied to ensure services can be delivered now and over time.
• Link the services or groups of services to each asset strategy detailed.

2.2.5. Outline the gaps between the agency's existing and required asset base to continue service delivery on a no-change basis. Outline the capital investment, asset maintenance and asset disposal options.

• The gaps identified in the asset base should reflect changes considered necessary to continue delivery of existing service levels.
• Assessments of non asset and less asset based options to close the gap should be included as should proposed changes to service delivery which could impact on asset requirements.
• The iterative nature of all planning requires aspects of service delivery to be reconsidered when addressing gaps in the resources needed to deliver them.

2.2.6. Outline the gaps between the agency's existing and required asset base to provide enhanced service delivery. Outline the additional capital investment asset maintenance and asset disposal options to close the gaps.

• Some agencies may be invited to submit specific proposals for the delivery of higher levels of service, based on Government priorities and factors, including the quality of their asset and overall planning.
• In developing the asset strategy, agencies should not commit extensive effort to planning for enhanced service delivery unless they are invited to submit specific proposals. Rather, they should prepare preliminary assessments of options to enhance service delivery.
• Assessments of non asset and less asset based options to close the gap should be included as should changes to service delivery which could impact on asset requirements.

2.3 Asset performance measures and targets defined

2.3.1. List all asset effectiveness measures kept by the agency.

• Asset effectiveness measures determine the value of the asset in delivering the agency's services. Effectiveness measures allow comparisons between assets and between agencies.
• The measures can be of a discrete asset or of components or aspects of an asset if these are significant to the service delivery.
• Link each of them to the services the asset is used to provide.
• Effectiveness measures link service measures to measures of the assets supporting their delivery.

2.3.2. Compare the effectiveness results obtained over consecutive years. Indicate the conclusions drawn and outline actions to improve effectiveness.

• Compare the effectiveness of the asset base over time and the effectiveness of particular assets or asset classes.
• Improvements may focus on the managing the asset, changes to its operation or changes to other resource strategies or to the services and their delivery.

2.3.3. Document effectiveness targets or benchmarks.

• Effectiveness targets could reflect appropriate targets from other jurisdictions or from similar industries.
• Include timeframes for achieving each target.

2.3.4. List all asset efficiency measures kept by the agency.

• Asset efficiency is the measure of how economic of means the asset is in supporting the delivery of services.
• It could include measures of the asset's operation, how fully it is used or the amount of energy, staffing or other support it requires to deliver service.

2.3.5. Compare the efficiency results obtained over consecutive years. Indicate the conclusions drawn and outline actions to improve asset efficiency.

• Compare the efficiency of assets over time and of particular assets or asset classes.
• Results should take into account differences between assets that may account for the different measures, e.g., 24 hour operation or greater staff numbers could account for higher energy usage.

2.3.6. Document efficiency targets or benchmarks.

2.3.7. List all asset management efficiency and effectiveness measures and outline actions to improve asset management effort.

• Asset management functional performance measures gauge how well all the aspects of asset management were undertaken.

2.4 Risk management strategies developed and documented

2.4.1. Document the risk management strategies developed for each service delivered.

• Risks to service delivery can come from either the assets supporting its delivery or from failures beyond assets.
• Focus at this item on asset related risks to service delivery.
• Failures can risk current delivery or future delivery.

2.4.2. Outline the planning procedures in place for conducting both formal and informal Risk Management, Economic and Financial Appraisal, and Value Management exercises.

• Provide evidence of when and how these assessment and decision making tools are used in the agency's asset planning process.

2.4.3. Summarise the application of Risk Management, Economic and Financial Appraisal and Value Management studies to each asset strategy.

• Risk management, Economic and Financial Appraisal and Value Management should be appropriately considered for each asset strategy proposed.
• Include brief summaries of them here. These studies should be extended to project or program specific studies, depending on their size and risk, as their planning progresses.
• They are essential for all proposed major capital works submitted for Budget funding approval and should be included at item 5.

2.5 Capital investment strategy developed

2.5.1. Detail the gaps in the current asset base required to deliver the services agreed in the Results and Services Plan, based on there being no change in the services being delivered.

• Gaps may be due to changes in the assets' operating environment including changed stakeholder expectations, changed legislation or deterioration of assets over time.
• The level of service delivered however should remain unchanged.

2.5.2. Detail the gaps in the current asset base required to deliver enhanced services.

• Gaps described here will be due to plans to deliver enhanced levels of services.
• As distinct from general planning of alternative asset solutions, agencies should not engage in extensive planning of specific projects unless they are invited to submit specific proposals.

2.5.3. Detail the project objectives required for the assets to effectively deliver services.

• The project objectives translate the service delivery strategy and the asset operating environment into requirements that the project must meet.
• Provide the project objectives for each project or each group of similar projects.

2.5.4. Document the Capital Investment Projects Proposed. Provide project specific information including estimated total project or program cost, project status (major or minor, new work or work in progress), project type (e.g., land acquisition, procurement of assets), commencement and completion dates and projected cash flows. Show links to Asset Maintenance and Asset Disposal Strategies and Information Communication Technology Strategic Plan where applicable.

• Provide detail on each of the works proposed, similar smaller scale projects, on a program basis.
• Details linking the proposals to the services they support and information supporting funding should already be included elsewhere in this document.

2.6 Asset maintenance strategy developed

2.6.1. Outline the maintenance resources, internal or external to the agency.

• All resources, including human resources, available to the agency affect the maintenance delivery options that can be considered.
• Other resources affecting maintenance delivery include knowledge of the asset base, administrative, technical and procurement skill levels, management and construction technology and financial resources.

2.6.2. Outline the long term maintenance strategies for each asset type or risk category. (Include operational, strategic and cultural influences affecting the way maintenance is organised and delivered.)

• Include strategies to address urgent, major, programmed, geographically isolated and high risk maintenance. Outline any links between individual strategies.
• Outline any inter agency strategies. Highlight any constraints on maintenance planning and delivery stemming from service delivery pressures, or organisational pressures.
• Examples might include security difficulties in providing maintenance access or retention of certain maintenance capacities on staff to address emergency breakdowns.

2.6.3. Outline the results of assessing asset condition against performance criteria, for assets to continue to deliver service based on no change in the services being delivered.

• This gap between the current assessed standard of the asset base and the standards required should consider the resources available over the life of the asset strategy.
• A gap larger than the financial resources available to address it indicates the agency must review its asset and other resource standards or the levels of service it plans to deliver.
• The gap should not include increased requirements to support the delivery of enhanced services.

2.6.4. Outline the results of assessing asset condition against performance criteria, for assets to deliver enhanced service.

• Gaps described here will be due to plans to deliver enhanced levels of services.
• As distinct from general planning of alternative asset maintenance solutions, agencies should not engage in extensive planning of such programs unless they are invited to submit specific proposals.

2.6.5. Document the Asset Maintenance Works Proposed. Provide a prioritised, costed program of proposed works for the forthcoming year and longer term budget projections.

• Details linking the proposals to the services they support and information supporting funding should already be included elsewhere in this document.

2.7 Asset disposal strategy

2.7.1. Identify assets assessed as surplus to service delivery requirements for disposal.

• Include all assets no longer supporting service delivery or which are likely in the future not to support service delivery, due either to deterioration of the asset or changed service requirements.
• Detailed property disposal plans are required for all real property assets in accordance with details provided in the TAM Manual and Asset Disposal Strategic Planning guideline.
• Treasury assesses these plans and provides advice on overall disposal strategies to the Government Asset Management Committee.
• Consider all disposals over the full timeframe of the asset strategy.

2.7.2. Identify opportunities to maximise disposal values.

• Include both agency and interagency opportunities.

2.7.3. Document the Asset Disposal Strategy. Provide a costed program of disposals for the forthcoming year and over the longer term. Show links to the Asset Maintenance Strategy.

• The program should include any expenditure required to plan and achieve the disposals.