1. Developing
Asset Management Plans
by
Focusing
on
Service
Ed Archer, CMA
General Manager, Corporate Services
&
Blaine Parkin, P.Eng.
Director, Corporate Asset Management

2. Introduction
Module 1: Foundations of Asset Management
 Asset Management Principles
Module 2: Long Range Financial Planning
 Financial condition
 Financial Policies
 Long-range Financial Plan
 Service-based planning
Module 3: Bringing it all Together
 Asset Management planning
 Asset condition
 Capital budget prioritization

5.  Growth
 Regulation
 Aging / Deteriorating Infrastructure
 Public Expectation
 Funding Levels
 Budget Demands
 Levels of Service
 Sustainability

6.  Focus on Short-term Issues
 Strategic Planning not linked to Asset Planning
 Segmented Organization - Silos
 Reactive Approach
 Risk???
 Life-Cycle Analysis???

7. 1. Understanding of the Risk Profile associated with
your Asset Portfolio and how it will change?
2. Business consequences of reducing capital
investment or maintenance budgets?
3. Are planned asset expenditures justified to
external stakeholders?
4. Which investment projects should be deferred
during periods of funding restraints?
5. Is appropriate asset data (knowledge) available to
support decision making?
6. Do your people have the right competencies and
capabilities?
The Institute of Asset Management

8.  Multi-disciplinary – Crosses departmental and discipline
boundaries.
 Systematic – rigorously applied in a structured
management system.
 Systems-oriented – looking at assets in their systems
context.
 Risk-based – incorporating risk into decision making.
 Optimal – Seeking the best compromise between
conflicting objectives.
 Sustainable – delivering optimal asset life-cycle value.
 Integrated – The puzzle needs to work as a whole.
The Institute of Asset Management

9. Effective Asset Management:
 Relies on sound data and judgment that considers
technical, operational and financial performance
 Holistic discipline - Requires enterprise collaboration
 Draws from business and financial management, but
also technical, engineering, operations and
maintenance.
 Uses a long-term view to evaluate asset performance,
cost and community sustainability
 Influences, and is influenced by, corporate financial
condition

10. Effective Asset Management:
 Engages Council in a dialogue about services and
service levels
 Recognizes and manages limited resources by
systematically establishing priorities
 Minimize Total Cost of Ownership while
realizing maximum potential useful life

12. “Financial condition is a government’s financial
health as assessed by its ability to meet its
existing financial obligations both in respect of
its service commitments to the public and
financial commitments to creditors, employees
and others.”
- Public Sector Accounting Board (PSAB)

13. Factors Influencing Financial
Condition
Financial Policies
Government
Financial
Condition
Service and Economic
Quality Levels Factors

14.  Degree to which we can maintain current
financial obligations and existing service
commitments without increasing the debt
or tax burden
◦ Financial assets-to-liabilities
◦ Net debt-to-total revenue
◦ Total debt per household

15. 2.5 $5,676 $6,000
2
$4,653 $5,000
$4,000
1.5 $3,225
$3,000
1 $1,925
$2,000
0.5 $1,000
$349 $315 $277
0 $0
2006 2007 2008 2009 2010 2011 2012*
Financial Assets:Liabilities Net Debt:Total Revenue
Debt per Household
* 2012 projected

16.  Degree to which we can increase financial
resources to respond to rising
commitments by either expanding
revenues or increasing debt
◦ Debt charges-to-Total revenue
◦ Municipal taxes as a % of household income
◦ Total Municipal Revenue-to-Taxable Assessment

17. 0.08
0.06
3.6%
0.04 3.1% 3.1% 3.2% 3.2% 3.4% 3.5%
0.02
0
2006 2007 2008 2009 2010 2011 2012*
Debt Charges:Total Revenue
Municipal Taxes as a % of Household Income
Total Municipal Revenue:Total Assessment
* 2012 projected

18.  Degree to which we are dependent on,
and therefore vulnerable to, sources of
funding outside our control
◦ Government Transfers-to-Total revenue

19. 0.14
0.12
0.1
0.08
0.06
0.04
0.02
0
2006 2007 2008 2009 2010 2011 2012*
Government Transfers:Total Revenue
•2012 projected

20. Doing What Matters Most

21.  Factors influencing plans and priorities
◦ Council’s Goals and Strategies
◦ Asset renewal and capacity management needs
◦ Growth management for annexed lands
◦ Employee survey feedback
◦ Accessibility for Ontarians with Disabilities Act
 Operating cost changes
◦ Service Partner budget increases
◦ Negotiated wage adjustments
◦ Transit contract increase
◦ Increases in utilities, maintenance
◦ New facilities
Focusing on Service

22.  An effective business plan that clearly
and concisely explains:
◦ how a department plans to use the resources
under its control,
◦ the extent to which intended goals and objectives
will be achieved and at what cost.

23.  Financial information alone does not tell the whole story
 For a complete picture of performance, you need a
multidimensional report that includes financial and non-
financial information
 Citizens, Council and executives expect more and better
information about the results produced by municipal
programs and services, not just their cost

24. Operating Budget Service-Based Budget
Emphasis is on: Controlling money Producing a defined
level of output
Basic reporting unit: Object code Process
Efficiency: Not measured Cost per unit of output
Effectiveness/Quality Not measured Performance Indicators
:

25.  Explains the relationship between resources (costs), services and service
levels
◦ Groups activities/branches within the Operating Budget Application to
Workplan based on services
◦ Describes the impact of a change in resources on process volumes,
which should have a direct relationship to services and service levels
 Align workplan processes and performance indicators
◦ Uses indicators to describe services where discretionary changes are
possible
◦ Clarify understanding about impacts/consequences of changes
27

26. •Service Groups
Enterprise Services
•Service levels
•Cost and quality indicators
Department •Categories (staff time + costs)
•Service Levels
Services •Service Quality
•Staff costs
Operating Budget •Non-staff costs
•Program Changes
Workplan
•Staff Time for Processes
•Staff Time for Projects

27. A – Define
Processes B – Identify
Dept/Enterprise Service Projects
Tag
Category/Subcategory Tag
Client Input/ Strategic Plan/
Process List In Year Requests
Service Requests Dept. Priorities
Dept/Enterprise Service
Resource Requirements Tag
For Processes Project List
Resource Availability Prioritize In Year
Prioritized List Requests
For projects
Resource Allocation
& Capacity Planning Priorities
for Projects 1
2
3
4 Waterline
Process
Project List 5
Resource Requirements
6
Work Plan

28. Enterprise Service Department Service Enterprise Service Department Service
Asset Planning and Management Policy Development and Management Environmental Operations Solid Waste Collection and Disposal
Data Management and Analysis Waste Reduction and Disposal
Capital Budget Fire & Emergency Services Suppression
Infrastructure Planning Prevention
Facility Development Training
Design and Construction Emergency Planning
By-Laws & Regulations By-law Enforcement Dispatch
Prosecution Services Taxation Services
General Public/Transaction Services
Regulatory Investigations Water and Wastewater Billiing
POA Reception
Corporate Communications Communications Switchboard
Intergovernmental Affairs Governance Council Secretariate
Corporate Finance Corporate Finance and Accounting Leisure/Recreation Recreation Programs
Internal Audit Facility Operations - Recreation
Corporate Sustaining Services Purchasing Facility Maintenance
Compensation Management Parks Park Maintenance
Recruitment Permits & Inspections Regulatory Inspection
Health and Safety Permit Application Processing
Labour and Employee Relations Regulatory Review (Building)
Employee Development and Support Planning and Economic Development Range Planning
Long
IT Application Delivery and Data Management Planning Application Processing
Infrastructure Tool Access (Data/voice) Marketing
Professional Legal Advice Business Development
Real Estate Services Facilitation
Driver and Technician Training Data Provision
Fleet Management Roads Surface Maintenance
Mail & Print Storm Water Management Storm Water Management
Records and Information Transit Transit
Facilities Operations - Corporate Winter Control Winter Control
Culture Event Management
Culture Community Support
Focusing on Service

29. Highest
Parking
Clerks
Parks
Leisure/Recreation
Service Level
By-law
Enforcement
Building
ICT
Waste Mgmt
Purchasing Planning
Facilities Human Res. Legal Svcs.
Wastewater Culture
Winter
Fire Control
Water Roads
Accts. Payable
Storm Water Accts. Receivable
Transit
Lowest Highest
Efficiency
Focusing on Service

30.  47% of the
residential property
tax bill funds City
services
 35% funds Service
Partners (Barrie Police,
County of Simcoe, Barrie Public
Library, GO Transit, Airport, Education
Conservation Authorities, Tourism
Barrie, RVH Expansion, Health Unit) City Services
 18% funds education Service Partners
Focusing on Service

31. 72%
 72% of revenues from
8%
property tax

1%
7%
Revenue from fees, 1% 3% 2% 2% 4%
service charges
consistent with 2012 Property tax Corporate Revenues
Fees, Service Charges Reserves/Reserve Funds
budget Fines
Licenses/Permits
Interest & Investment Income
Other
Other Gov't Funding
Focusing on Service

32.  New strategies to manage sustainability are
required for 2012 and beyond
◦ Introduce an asset management charge to support
asset renewal funding requirements
◦ Increase contributions to reserves at least equivalent to
annual amortization charges
◦ Limit or eliminate development charge discounts
◦ Continue developing our asset management strategy to
ensure we maximize the useful lives of our assets and
minimize their lifecycle costs
Focusing on Service

33. “…a place where people want to live and
work; it meets the needs of its citizens,
now and in the future. It is sensitive to the
environment and reaches for a higher
quality of life.”

34.  Several influencing factors drive
assessments of financial condition:
◦ PS3150 – Tangible Capital Assets
◦ Assessment growth
◦ Community composition
◦ Organization growth and the form of local government
service delivery
◦ Community expectations about services and service
levels

37. STRATEGIC PLANNING
CITY VISION
The City of Barrie will be progressive, diverse and prosperous with opportunities for all
citizens to build a healthy and vibrant community.
GOAL GOAL
GOAL GOAL GOAL
Improve and Expand Manage Growth and
Create a Vibrant and Strengthen Barrie’s Direct and Manage
Community Involvement and Protect the
Healthy City Centre Financial Condition Economic Development
City Interactions Environment
STRATEGIES STRATEGIES STRATEGIES STRATEGIES STRATEGIES
· Improve integration · Balance service · Develop a customer service · Complete secondary · Attract and promote sector
between downtown and demands with financial strategy and enhance plan for annexed lands clustering
the waterfront resources customer experiences · Bring new employment · Engage businesses,
· Actively promote the · Develop affordable long · Improve and enhance lands to market institutions and all levels of
downtown and range plans that reflect communications with public · Explore partnerships for government to establish a
waterfront to our changes in our · Increase opportunities for joint servicing competitive local economy
residents and visitors community’s growth and/ public input/feedback on City arrangements · Establish Barrie as centre
· Encourage a mix of land or economy initiatives · Expand transportation of excellence in innovation
uses in the downtown · Diversify revenues choices, including active and entrepreneurship
· Enhance safety in the · Pursue innovation transportation · Develop Lake Simcoe
downtown through our Journey of · Advance intensification Regional Airport as an
Excellence projects in accordance employment hub
with existing policies
Business Plan and Budget
Action Items and Work Plans

38. Public
Performance Strategic
Reports Plan
Individual
Strategic
Performance Planning (a)
Evaluations
Env. Scan/
Survey
Learning and
Adjusting
Annual
Performance Planning (b)
Reporting (d)
Program Workplan
Delivery
Measuring,
Monitoring and Budget
Mgmt. Assessing
Results (c)
Other Reports
Performance
Data Indiv.
PAs
Focusing on Service

39. Council’s Corporate Sustaining
Council
Strategies Services, Service
Levels
Business Plan (includes the Budget)
Council +
Capital Performance Program Staff
Plan Plans Changes
Workplans Balanced Scorecards
Staff
Corp. Dept. Non- Planning
Systems Systems routine Data
data
Focusing on Service

40. PEOPLE
SYSTEMS SERVICE ASSETS
PROCESS

41. SERVICE ASSET
LEVEL OF SERVICE LEVEL OF PERFORMANCE

42. SERVICE
RISK COSTS

43.  City of Barrie Assets = $3.0 Billion
◦ Infrastructure Assets = $2.1 Billion
◦ Road Assets = $1.0 Billion
◦ 30% constructed / assumed within last decade
 Challenges
◦ Past Budget decisions
◦ Historic growth patterns
◦ Changes in financial reporting
◦ New Growth
 Opportunities
◦ Sense of Urgency
◦ Time
◦ Changes in financial reporting

44. Past Approach New Approach
 Reactive  Started in late 2008
 No pressure to replace  Corporate Approach
 Level of knowledge

45.  Demonstrate good stewardship over the City’s existing
assets to support services at desired levels
 Additional capacity needs of the City are provided for in
a sustainable manner
 Develop an optimal investment program
 Produce a Capital Plan that is:
◦ Reliable and executable
◦ Addressing the City’s most critical needs
◦ Matched with available financial resources
◦ Aligned with advancing Council’s Strategic Goals

46. How everything works together...

48. Elements
Lifecycle of an AM
AM System
Processes
& Practices
Strategic
Asset
Management
Planning
Framework

49.  What is the current state of my assets?
 What is my required level of service?
 Which assets are critical to sustain performance?
 What are my best O&M and CIP investment strategies?
 What is my best long term funding strategy?

51.  Asset Register
◦ Asset Hierarchy
◦ Record Layout
 Failure Modes
◦ Physical Mortality
◦ Capacity
◦ Level of Service
◦ Financial Efficiency
 Residual Life
 Lifecycle & Replacement Costs

52.  Sustainable
 Quality, Quantity, Reliability and Environmental
Standards
 Customer Demand
 Regulation
 Monitor performance as changes occur
◦ Growth
◦ Regulatory requirements
◦ Technology improvements

53.  Focus on Service
◦ Which assets are most critical to service delivery?
 Uniformity in dealing with different assets
 Integrated approach
 Prioritization of investment to address critical assets first
 Relationship: Risk Exposure – Funding Scenarios

54.  Probability of Failure
◦ Asset Failure Modes
◦ Remaining Lives
 Consequence of Failure
◦ How does the asset contribute to service delivery?

61.  Optimized Decision Making
 Plan Analysis
 Identify Options
◦ Costs
◦ Benefits
◦ Timing
 Apply Model
 Sensitivity Analysis

62. Immediate needs
• Increased operating budget pressures:
– Unprecedented growth from 2001 - 2006
– Limited land supply for future growth
– High fixed costs, or costs growing at rate that exceeds inflation
– High reliance on the tax rate as a source of revenue combined
with significant pressure to control tax rate increases
– Aging infrastructure that requires replacement at the same
time as new infrastructure is required to support growth
– Reliance on debt financing, combined with
development charge discounts
– General economic conditions

63. Several factors influencing financial
condition require coordination and
cohesive planning if they are going to be
effectively managed.

64. • Council’s main contribution is a long-term vision
and a set of priorities
– Do our strategic priorities provide sufficient, appropriate
direction for building a long range financial plan?
– Have we costed our strategic priorities?
• Stick to the plan, once established
• Demand the annual Budget and Business Plan
reflect the strategies identified in the Long Range
Financial Plan
– Update plans regularly

65. O&M Investment
 Balance preventive, predictive and corrective
maintenance
 Reporting and recording O&M costs
 Minimize overall lifecycle costs
 Maintenance Strategies System Performance
 Analysis of the causes of asset failure and develop
specific response plans
 Develop guidelines for work management

66. Capital Investment
 Identify alternative options
 Develop lifecycle options (costs, benefits and timing)
 Application of lifecycle cost model

67. Maintain Differently Refurbish, then Replace

68.  Full economic costs and revenues associated with
service delivery
 Absorb annual variations by using an average lifecycle
cost estimate
 Holding account for the total demand in funds required
for service delivery
◦ Optimized renewal of existing assets
◦ Expectations for new assets
 Full costs of asset services are allocated to and
recovered from users who receive benefits from the cost

70.  Touches all parts of the organization
 Clear connectivity: Strategic Plan to Daily activities
 Higher performance levels
 Lower Total Cost of Ownership
 Greater consistency
 Increased confidence and credibility
 Optimized Decision Making:
◦ Costs
◦ Risks
◦ Performance
◦ Sustainability

71.  Managing services, not just costs
 It’s not about the assets
 Success lies in collaboration
◦ Process
◦ Culture
 Management approach drives data
requirements

72. QUESTIONS or COMMENTS
earcher@barrie.ca
bparkin@barrie.ca