Finance & Administration Report - ASSET MANAGEMENT STRATEGY
Staff report recommending the adoption of the Town's first-ever Asset Management Strategy to address infrastructure replacement funding gaps.
TOWN OF VIEW ROYAL FINANCE & ADMINISTRATION REPORT
TO: Committee of the Whole FROM: Ben Lubberts, Deputy Director of Engineering and Steve Vella, Manager of Accounting DATE: January 4, 2024 MEETING DATE: January 9, 2024
ASSET MANAGEMENT STRATEGY
RECOMMENDATION
THAT the Committee recommend to Council that the financial implications of the Asset Management Strategy be incorporated into the Draft 2024-2028 Financial Plan for discussion at the February 2024 budget meetings.
PURPOSE
The purpose of this report is to present the “Asset Management Strategy” (AM Strategy) to the Committee and solicit feedback on the recommended implementation strategies.
TIME CRITICAL
The AM Strategy proposes fixed and impending timeframes for its various implementation strategies. This is for the purpose of maintaining the forward momentum of the development of the Town’s Asset Management Program and to stay ahead of an ever-growing infrastructure replacement funding gap.
EXECUTIVE SUMMARY
Staff have drafted the Town’s first-ever Asset Management Strategy (the “AM Strategy”), which will serve as a roadmap for the development of the Town’s Asset Management Program. The AM Strategy recommends eight key tasks be undertaken over five years to advance the Town’s AM program. Successful implementation of these tasks will enhance data and decision-making on asset management, inform on sustainable long-term financial investments, and foster increased knowledge and awareness of AM principles across the organization. The AM Strategy document is included as “Attachment A” to this report.
BACKGROUND
This report builds upon the Asset Management Program development work last referenced in staff’s presentation to the Committee on December 13, 2022. At that time, staff presented the following:
- The Town’s first-ever long-term financial plan (the “Sustainable Infrastructure Replacement Plan”);
- A draft Asset Management Policy;
- Next recommended steps in developing an asset management strategy.
Council then provided support in the 2023-2027 Financial Plan to develop the AM Strategy. A copy of the Project Summary N-096 is included in this report for reference as “Attachment B”.
Development of an AM Strategy is an important part of the “Plan” process of the Asset Management BC Framework for Sustainable Service Delivery, summarized in the graphic below.
The Town’s AM Program follows the AMBC framework, which is available here in its entirety: https://www.assetmanagementbc.ca/framework/
DISCUSSION
The AM Strategy provides a roadmap for the development and maintenance of the Town’s Asset Management (AM) Program in alignment with the Town’s corporate strategic goals. It defines the framework and core elements of the Town’s AM Program and assigns governance responsibilities. As the Town’s corporate strategic goals are updated and revised from time to time, the AM strategy is also intended to be a living document to be updated at regular intervals.
The aim of the AM Strategy is to:
- describe the current state of the Town’s AM program (the “Now”),
- define the desired future state of Town’s AM program (the “Wow”), and
- develop a clear roadmap to achieve the desired future state over a 5-year timeframe (the “How”).
The Town retained a consultant to aid in the development of the AM Strategy. The process entailed conducting AM maturity assessments by interviewing key departmental staff and reviewing the Town’s current AM practices and protocols. Broad findings from the AM maturity assessments were as follows:
- AM readiness rating: The Town achieved an overall weighted average rating of 1.8 of out 5 on the Federation of Canadian Municipalities (FCM) Asset Management Readiness Scale (AMRS) For context, 94.5% of organizations that received funding from the Municipal Asset Management Program between 2017 and 2023 registered a rating of 1 or lower at the start of their project.
- Levels of service: The Town has operated at an unwritten policy level for the level of service of most of its infrastructure. In other words, the Town has not developed formal levels of service for most of its infrastructure at the written policy level.
- Lifecycle costing: While the Town considers and incorporates operational and maintenance costs of its assets (new and old), lifecycle costing has not been conducted on critical assets.
- Data and information: The Town has procured software and has established data collection processes but is underutilizing both due to a lack of AM data standards.
- Culture and AM awareness: There is strong cultural support for AM throughout the organization, however Council and staff could benefit from structured AM training.
The AM Strategy recommends eight key tasks be undertaken over five years to advance the Town’s AM program. The key tasks are included below with their proposed year of completion:
- Adopt an AM Policy and AM Strategy (2024)
- Establish levels of services for all assets (2024-2025)
- Prepare AM Plans for all critical asset (2025-2028)
- Integrate data used to develop the Sustainable Infrastructure Replacement (SIR) Plan back into the Town’s existing AM software (2023 project N-042, 2024 completion)
- Conduct a data audit and establish standards for asset-related data (2024)
- Increase contributions to capital renewal reserve as per the SIR Plan (2024-ongoing)
- Establish Cross-Departmental AM Working Group (2024)
- Enroll staff and Council in AM training (2024-ongoing)
Successful implementation of these tasks may advance the Town’s AMRS rating from 1.8 to 3.4 by 2028.
Outstanding key tasks and associated funding sources will be further detailed in the non-core project entitled “Asset Management Program Improvements” to be presented in the Draft 2024-2028 Financial Plan budget package for Council’s deliberation in February 2024.
SUSTAINABILITY/CLIMATE CHANGE IMPACTS
The AM Strategy has indirect impacts on climate change through the implied reduction of consumption and emissions realized through the optimized management of the Town’s assets.
FINANCIAL IMPLICATIONS
The AM Strategy implies Council’s ongoing support of associated project elements included in the “Asset Management Program Improvements” project. The project proposes spending $180,000 on AM improvements over five years. Details of the project costs and planned schedule will be included in the DRAFT 2024-2028 Financial Plan for Council’s consideration at the February 2024 budget workshops.
If Council approves the recommendation proposed in this report, the DRAFT 2024-2028 Financial Plan will include not only funding for advancing the AM Strategy, but also the financial implications recommended by the SIR Plan. This includes increasing contributions to the capital renewal reserve from an allocation of casino revenue, increases in sewer utility revenue, increases in property taxes, taxation room created by debt retirement, and non-market change taxation revenue. Each item will be detailed in the draft financial plan, so Council can consider each item independently, while seeing the impact as a whole to the total budget.
Senior levels of government require annual reporting on View Royal’s progress toward a mature asset management program. Implementing an AM Strategy will help ensure the Town continues to qualify for external infrastructure-related funding programs, such as the UBCM Community Works Fund and Strategic Priorities Fund.
Funding support for the development of View Royal’s Asset Management Strategy was provided in part by the Local Government Infrastructure Planning Grant Program offered by the BC Ministry of Municipal Affairs.
CONCLUSION
The AM Strategy presented in this report offers the Town a roadmap to mature its AM Program over the next five years. Implementation of the key tasks recommended in the Strategy will result in enhanced AM practices, data and decision-making, sustainable financial investment in capital asset renewal, and Council and staff’s increased knowledge and awareness of asset management principles. The Committee and Council’s support of AM Strategy will also signal an ongoing commitment to asset management in View Royal that will help ensure the Town continues to qualify for external infrastructure funding programs.
Staff recommend Council considers the AM Strategy document while seeing the effect it would have on the financial plan. This approach is akin to “try before you buy” – consider each financial implication of the strategy as incorporated into the DRAFT 2024-2028 Financial Plan, and if desired, adjust the strategy before finalizing and adopting the document.
| CONCURRENCE: | Initials | Comments |
|---|---|---|
| Acting Chief Administrative Officer | SJ | Support recommendation |
| REVIEWED BY: | Initials |
|---|---|
| Director of Corporate Administration | As above |
| Director of Finance | DLC |
| Director of Engineering and Parks | IL |
ATTACHMENTS:
Attachment A – Asset Management Strategy V1 Attachment B – N-096 Strategic Asset Management Plan project summary
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