ASSET MANAGEMENT SEMINAR
24-25 NOVEMBER 2010
Technical Services Perspectives
Engineering
Leon Naudé
CONTENT
1. Introduction
2. IMESA
3. Legislation & Guidelines
4. Asset Management
5. Current Situation
6. Key Stakeholders
7. Proposed National Plan
8. Conclusion & Comments
INTRODUCTION
The municipal engineer appreciate the attention
that is given to asset management due to the
municipal asset being the tool that ensures
service delivery to the community.
Currently the municipal engineer is associated
with bad roads & potholes, dirty water from taps
and overflowing man holes.
With a national effort from all this can be turned
around with effective asset management .
IMESA
• The Institute of Municipal Engineering of
Southern Africa (IMESA)
• Institute for individual municipal engineering
practitioners.
• Promotes the engineering process of creating,
developing, integrating, sharing and applying
knowledge about infrastructure engineering and
asset management for the benefit of
communities and the profession
IMESA
• Established 1921 as chapter of British Municipal
Engineers and since 1961 as IMESA = 50 years
in 2011
• Knowledge sharing through Conferences,
Seminars, Journal and other forums like this.
• International Infrastructure Management Manual
– South African version
Asset Management
The three areas involved in Asset Management are the
following :
1. Asset : the physical item that is required to achieve the
service, which includes the purpose of the asset, lifecycle
cost, operation & maintenance, asset register and
replacement.
2. People : Operators with the skills to effectively operate
and technician with the necessary skills to maintain the
asset.
3. Finance : the Funds that is needed to keep the asset
operational and to keep the required skills.
Asset Management
Finance
People
Asset
Asset Management : Legislation
The following legislation needs to be considered :
1. Constitution of the Republic of South Africa
2. Local Government : Municipal Systems Act,
2003 (Act No. 32 of 2000).
3. Local Government : Municipal Finance
Management Act, 2003 (Act No. 56 of 2003).
4. Occupational Health and Safety Act, 1993 (Act
No. 85 of 1993)
Asset Management : Legislation
1. Constitution of the Republic of South Africa
Right of people :
Clause 24 : environment not harmful and being
protected
Clause 27 : access to sufficient water
Asset
Municipal Engineer
Asset Management : Legislation
2. LG : Municipal Systems Act, 2003
Chapter 8 deals with municipal services :
Clause 73 : access to basic services
services regularly reviewed for upgrading,
extension and improvements
Clause 57 : performance agreements with objectives
and targets, to include asset management.
Municipal Engineer
Asset Management : Legislation
3. LG : Municipal Finance Management Act
Clause 63 deals with assets
Par 1 : safeguarding and maintenance
Par 2 : asset management systems and values
Par 3 : control and registers.
Asset Management : Legislation
4. Occupational Health and Safety Act,
1993
This deal with the health and safety of
officials with the use of plant and
equipment, which forms part of the
assets.
Proper asset management is required to
comply with safety measures.
Asset Management : Guidelines
The following exist :
1. Local Government Capital Asset Management
(National Treasury)
2. GAMAP.
3. National Water Services Infrastructure Asset
Management Strategy (D.W.A.)
4. The National Infrastructure Maintenance
Strategy (D.P.W., CSIR & CIDB)
Effective Asset Management
 maximise the service potential of existing assets by
ensuring that they are appropriately used; maintained,
safeguarded and that risks are mitigated;
 optimise the life cycle costs of owning and using these
assets by seeking cost-effective options throughout an
asset’s life cycle;
 reduce the demand for new assets through optimal use
of existing assets and management of demand through
the use of non-asset service delivery options; and
 establish clear lines of accountability and responsibility
for performance.
Effective Asset Management
Asset Lifecycle
Asset life-cycle costs
Asset Management Process
Develop
Asset
Register
Determine
Condition Physical &
Est. Economic
& Residual Lives
Determine
Current
Replacement
Cost
& WD Values
Set Current &
Predict Future
Levels
of Service
Establish
Risk Ratings
(Relative
Criticality)
Develop
Appropriate
Maintenance &
Operations Plans
Develop
Appropriate
Capital
Investment
Program
Future
Expenditure /
Funding
Strategies
Determine
Failure Modes:
•Capacity
•Physical Mortality
•Level of Service
•Financial Efficiency
Complete
Stakeholder
Consultation and
Build Final AMP
Asset Register
ACQUISITION
IDENTIFICATION &
LOCATION
ACCOUNTABILITY
PERFORMANCE
DISPOSAL
ACCOUNTING




Transaction
Date
Amount
Supplier
Contractor
Reference
MANAGEMENT &
RISK
/






Asset class
Parent
or
standalone
Asset number
Identifier
Description
Location






Department
Custodian
Restrictions
Ownership
Licence
or
permits
Transfers






Capacity
Performance
measures
Condition
Assessment
Warranties
Useful life
Residual value







Date
Amount
Capacity
Condition
Remaining
useful life
Residual
value
Reason












Historical cost
Funding source
Useful life
Remaining
useful life
Residual value
Depreciation
method
Revaluation
Impairment
Depreciation
Accumulated
depreciation
Carrying amount
Disposal




Criticality
rating
Maintenance
history
Operational
history
Risk
assessment
Condition assessment
Grade
Description
Detailed Description
Estimated
Remaining Life
1
Very Good
New, sound structure or appearance, well
maintained. Continue with planned
maintenance
As estimated
2
Good
Performance acceptable with minor
deterioration (<5%). Normal planned
maintenance continues
As estimated
3
Fair
Clearly evident deterioration (10- 20%).
Significant maintenance required, consider
impairment
4
Poor
Significant deterioration in structure or
appearance. Significant impairment of
performance. Significant maintenance
required
Significantly less
than estimated
5
Very Poor
Unsound, does not perform. Reconstruction
or replacement required (>50% needs
replacement).
None or nominal
Less than
estimated
Condition assessment
Condition
100 %
Ideal
100 %
Performance
Maintenance
Condition
100 %
Ideal
Lack of proper
maintenance
100 %
Performance
Maintenance
Maintenance Policy
Planned Maintenance
Unplanned Maintenance
Condition
Monitoring
Preventative
Maintenance
Servicing
Repair
corrective
Maintenance
Current Situation
• Everyone is doing their own thing.
• We have over 30 different approaches to asset
management being used.
• Training programs are being created at a great rate,
promoting even more approaches.
• We are re inventing the wheel. There are best
appropriate practices available around the world and,
• A large movement exist for a global approach to SIAM
with BAP industry models for the maturity needed by the
organisation and their assets.
• We should pool all materials, develop a national
approach and concentrate all our efforts on
implementing it cost effectively, not re inventing it.
Current Asset Management Process
Set Current &
Predict Future
Levels
of Service
Determine
Condition Physical &
Est. Economic
& Residual Lives
Develop
Asset
Register
Establish
Risk Ratings
(Relative
Criticality)
Copyright © RBA. 2009
Develop
Appropriate
Maintenance &
Operations Plans
Determine
Current
Replacement
Cost
& WD Values
Develop
Appropriate
Capital
Investment
Program
Determine
Failure Modes:
•Capacity
•Physical Mortality
•Level of Service
•Financial Efficiency
Future
Expenditure /
Funding
Strategies
Complete
Stakeholder
Consultation and
Build Final AMP
Current Drivers
•
•
•
•
•
•
•
•
High Growth Stresses
Ageing Assets – Reliability Failures / Risks
High Debt – going broke
Inadequate budgets to perform responsibilities
Large backlog of unserved demand
Inadequate maintenance
Regulation review / price and or performance
Inadequate staff resources
Key Stakeholders
Funding Agencies
National Government
ProvincialGovernment
Owner
State / National Government
Community
NT, DWA, DPW
Regulators
Auditor General
Political Bodies
Industry Associations
LGA’s
Customers / Users
Policy / Strategy
Elected Members
Professional Assoc.
Municipal
Councils
IMESA / IMFO / LGMA
Customers / Users
Various
Contractors / Suppliers
Accountant General
Various
Others EPA , OH&S,etc.
Staff / Unions
Key National Program Model Elements
National
Quality
Framework
• Uniformity
• Transparent
• Auditable
• Maturity Model
• Cont. Imp.
Supporting
Tools
• Guides
• Templates
• BAP process
• Industry BAP
Models
• Competencies
& Training
Linked
Drivers
• Professionalism
• Regulation
• Industry
• Benchmarking
• Competencies
National Co ordination
National Co ordination
N.A.M.S.
National Asset Management Strategy.
A nationally consistent approach to
Asset Management
Benefits of National Programs
• More effective ‘whole of city’ approach
• Ability to judge merits of diverse programs and roll
up with confidence (uniform approaches) to:
o Whole of business
o Whole of City
o Whole of Nation
• Ensure more successful implementations
• Ensure that programs are sustainable
• Enables leading organisations to help drive AM in
smaller organisations
Benefits of National Programs (2)
•
•
•
•
National mentoring and advice easier
Eliminates wasteful activities e.g. Valuations
Saves re inventing the wheel
Enables BAP to be diseminated more easily
and quickly
Conclusion
• A
National
Sustainable
Infrastructure
Asset
Management (SIAM) Program offers considerable
benefits to South Africa ( 30% reduction of future life
cycle costs and better asset performance.
• South Africa is at a critical stage in rolling out its SIAM
program and can adopt a National Program without too
many issues.
• If SA doesn’t act at this time it will loose the opportunity
to adopt the structures and approaches now realised as
necessary by leading Nations such as Australia and NZ
• Training programs that develop appropriate skills and
competencies are the most critical issues.
Local Government Sector & Education Authority
(LG SETA)
• Sector skills plan.
• Learnerships Programmes.
• Education and Training Quality Assurance bodies
• Training programs that develop appropriate skills
and competencies are the most critical issues.
• Ensure Asset Management is properly covered
• IMESA to assist by offering technical expertise in the
ETQA process and being a Quality Partner
ISO Specification : 251 Asset Management
• The Institute of Asset Management (IAM) began this
journey in 2002 when it embarked upon the
development of a Publicly Available Specification
(PAS) for Asset Management with the British
Standards Institution (BSI).
• September 2008 saw the publication of BSI PAS
55:2008 which had been developed with the
assistance of over 49 organisations from 15
industries in 10 different countries.
• SABS Technical Committee : TC 251 Asset
Management established with first meeting in May
2010
Closing Remarks
• Too much talk
• For improved service delivery asset management must
be coordinated nationally from top to bottom
• National Asset Management Strategy (NAMS) is
therefore urgently needed
• IMESA is thankful to be part of this process and grateful
to National Treasury Department with starting this
process through these seminars which includes all
Affected & Interested Parties.
No Management
Asset Management
Thank You