How to Prepare an Asset Strategy
CONTENTS
INTRODUCTION
3
Part 1 – Service Requirements
5
Part 2 – Asset Portfolio
6
Part 3 – Risks and Risk Management
8
Part 4 – Performance Measures
9
Part 5 – Proposed Actions / Asset Strategies
10
Attachment A – Alignment of Asset Strategy to RSP
11
Attachment B – Process Map using Corporate Plan and RSP to develop
the Asset Strategy
12
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INTRODUCTION
All agencies are required to submit Total Asset Management (TAM) plans to NSW Treasury
regardless of their portfolio size. While common TAM principles apply, reporting
requirements are flexible, commensurate with the nature of an agency’s services and asset
portfolio. Typically, the plans of agencies with few assets are briefer than those with
extensive portfolios and broad service delivery responsibilities. However in both cases the
role assets play in service delivery and/or an agency’s business, and the efforts to best
manage the portfolios within resource limits should be made clear.
The Asset Strategy is the top level strategic plan in the TAM process and is where the service
- business/asset relationship is analysed. A robust Asset Strategy provides the platform for
subsequent detailed planning for capital investment, maintenance and disposal. NSW
Treasury has produced this document to assist agencies, especially those with a small assets
base, to develop an Asset Strategy.
This document provides instructions which supplement existing TAM Guidelines and outline
what information an agency needs to include in its Asset Strategy as well as how to present
that information.
Note: This illustrative case study document should be read in conjunction with:
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Instructions for Preparing the 2006-07 Result and Services Plan, available to
Government Agencies through Treasury’s web site at www.treasury.nsw.gov.au
What You Do and Why: An Agency Guide to Defining Results & Services (TPP04-4),
available on the Treasury website.
Asset Strategy Planning guide in the TAM Manual, available on the Treasury website.
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WHAT IS AN ASSET STRATEGY?
The Asset Strategy is the top level strategic plan in the Total Asset Management (TAM) process. It is
your agency’s ‘asset response’ to the high level service delivery requirements presented in either the
Result and Services Plan (RSP) or Statement of Business Intent (SBI). While this document refers to
alignment with the RSP, it also applies to those that produce an SBI. Regardless of agency
classification, the key element is the alignment between assets and services.
The Asset Strategy helps your agency to demonstrate the relationship between the performance of
their physical asset portfolio and the services they deliver. It also enables your agency to determine
whether the proposed services and resultant physical asset requirements are sustainable within
realistically anticipated funding levels.
Treasury uses your agency’s Asset Strategy and supporting TAM plans, together with its Corporate
Plan and (either) RSP or SBI, when considering funding proposals and advising Government. The
Asset Strategy will also help you communicate how your agency plans to manage assets to best
support service delivery with their current Budget allocation. When funding, policy, or asset issues
arise, the Asset Strategy enables your agency and Treasury to discuss the merits of the issues in terms
of how they impact on your service delivery.
You prepare an Asset Strategy by:
 Developing an Asset Portfolio which best responds to each asset-reliant service identified
from the RSP, necessitating a sound knowledge of your agency’s existing assets. Some assets
will support more than one service.
 Identifying Risk and developing Risk Management strategies to address risk of assets not
supporting services to the required level, and also not protecting the optimal value of assets at
every stage of their life cycle.
 Developing Asset Performance Measures to evaluate the effectiveness and efficiency of
assets in their role of supporting service delivery.
The key to developing the Asset Strategy is to demonstrate the alignment between services presented
in the RSP and the supporting physical asset portfolio. For those agencies that prepare an RSP, the
results logic from that plan provides context for this relationship. Attachment A illustrates this
alignment.
HOW TO DEVELOP AN ASSET STRATEGY
These instructions tell you what information you need to include in your Asset Strategy as well as
how that information should be presented.
You need to complete all parts of the Asset Strategy, but you must start with Part 1. If you
cannot demonstrate how your asset portfolio supports the services presented in the RSP, Statement of
Business Intent (SBI) or similar business planning documents, you will find it hard to answer the
remaining questions in the Asset Strategy.
Your agency should focus on establishing the links between services identified in their RSP,
Statement of Business Intent or similar business planning documents and their proposed asset
portfolio, including asset performance measures that demonstrate asset support to these services.
For more detailed guidance on developing an Asset Strategy refer to the Asset Strategy Planning
guide in the TAM Manual. For further assistance with preparing your Asset Strategy please contact
your Treasury analyst.
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PART 1
SERVICE REQUIREMENTS
WHAT IS THE PURPOSE?
Agencies should be able to describe the services that they deliver and show how these support results
achieved for the community.
Part 1 should answer the following questions about service delivery:
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What services does your agency provide?
When?
Where?
To whom?
To what level?
WHAT INFORMATION SHOULD BE PROVIDED?
Part 1 is where you select from the RSP those services that depend on physical assets. Attachment B
illustrates this process.
Use existing corporate and strategic plans and recent policy documents to help identify asset-related
service details such as location, capacity, and users’ needs and expectations.
WHY IS THIS SECTION IMPORTANT?
In this section you consider all aspects of services your agency plans to deliver. This will allow you to
evaluate the requirements of the asset portfolio (Part 2). By looking at specific details of each service
you can identify asset dependency and determine characteristics required of the supporting physical
assets in terms of location, capacity, functionality, etc.
HOW LONG IS THIS PART?
The narrative for this part should be no more than one page. It is suggested one paragraph will suffice
for each service, though you should include as much detail as is necessary to adequately explain the
service.
Where your agency prepares an RSP, you should include the “results logic diagram” from that plan,
which demonstrates how the key services that your agency plans to deliver will support results that it
is trying to achieve, and how those results will support Government priorities.
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PART 2
ASSET PORTFOLIO
WHAT IS THE PURPOSE?
Your agency should look closely at physical asset needs to support each service presented in the RSP
and develop an asset portfolio which aligns with these services.
Part 2 should answer the following questions about your agency:
 What is the optimum asset portfolio to support proposed services?
 What ‘gaps’ exist between the optimum asset portfolio and your current portfolio?
Portfolio alignment and proper gap analysis rely on integration between service and resource
planning. Therefore this part should be developed through consultation between Asset Managers,
Finance Managers and Corporate Planners.
WHAT INFORMATION SHOULD BE PROVIDED?
Part 2 requires development of a diagram/process map that shows which assets or asset groups
support each of the dependent services. This is a visual tool to illustrate the linkage between assets
and the services identified in an agency’s RSP and Corporate Plan (as applicable), and enable more
focussed portfolio analysis. Creating such a map assists agencies with the remainder of Part 2 (as
illustrated in part 2 of the appended Example Asset Strategy).
In Part 2 you analyse how well your agency’s existing physical assets support each service (or service
group) and identify ‘gaps’ between performance of the existing assets/portfolio and that required to
support service delivery needs. This ‘gap analysis’ enables you to develop an asset portfolio that will
best support service delivery needs in the short and long term. As part of this analysis you are required
to evaluate your agency’s asset portfolio by looking at specific characteristics of the asset-service
relationship. In this process, each characteristic represents a ‘gate’ through which assets must pass for
analysis.
You can assess how well asset performance supports service delivery needs by answering the
following questions at these five assessment gates. Where an asset fails to satisfy the requirements of
a particular gate, corrective action must be considered and a solution proposed. When answering these
questions remember the Asset Strategy is a very high level plan; specific detail is generally not
required.
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Gate 1 - Service dependency on physical assets
 How can service delivery be made less asset dependent?
(Examine proposed service levels and alternative means of delivering services)
 Can use of IT or HR replace or reduce overall use of assets?
 Can you share components of services/assets with other agencies?
Gate 2 - Asset utilisation
 Are assets fully utilised in delivery of identified services?
 Can any surplus capacity be used to consolidate service delivery currently using other assets?
 Can any surplus capacity be used by other agencies?
 Is there private sector demand for any surplus capacity?
 Can any surplus capacity be disposed of?
Gate 3 - Asset location
 Are assets appropriately located to optimise current service delivery?
 Are assets appropriately located to support proposed future service delivery needs?
 Are assets appropriately located to support demographic changes?
 How do you plan to deal with any inappropriately located assets (e.g. disposal, procure new
assets, change service delivery, manage service demand)?
Gate 4 - Asset capacity
 What will the demand be for service delivery in the future?
 Are assets capable of supporting expected demand for service delivery in the short and long
term (quantitative demand and level of service)?
 How do you plan to deal with any insufficient asset capacity (e.g. procure new assets, change
service delivery, manage service demand)?
Gate 5 - Asset functionality
 Are assets functionally suitable to support optimal service delivery?
 Do assets comply with legal requirements or relevant standards?
 How do you plan to deal with any sub-optimally functional assets (e.g. planned maintenance,
procure new assets, change service delivery)?
See the Luna Park Reserve Trust Asset Strategy – Illustrative Case Study as a guide.
HOW LONG IS THIS PART?
This part should consist of:
1. A diagram/process map identifying what physical assets (or groups of assets) are
needed to optimally support each of the asset-dependent services. Where your agency
prepares an RSP, this process map may be linked to your results logic diagram.
2. One schedule for each asset-dependent service identified in the RSP, assessing
performance for existing assets in supporting service delivery. Each schedule should
be in tabular form (approximately one page), and address each of the five ‘assessment
gates’.
3. An analysis of the ‘gaps’ between the performance of the existing asset portfolio and
that required to best support service delivery needs. This analysis should also be in
tabular form, and approximately one to two pages.
Sound knowledge of your agency’s existing physical assets is central to developing the optimal asset
portfolio it needs to support service delivery. An up-to-date asset register is a key tool. For more
detailed guidance see the Asset Information guideline in the TAM Manual, available on the Treasury
website.
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PART 3
RISKS AND RISK MANAGEMENT
WHAT IS THE PURPOSE?
Your agency’s risk management strategies should ensure that services are delivered to the required
standard/level and that government’s investment in physical assets is protected.
Part 3 should answer the following questions about your agency:
 What are the major risks that service delivery, to the required level, will not be supported by
assets, or that services will not be delivered?
 What are the likely consequences to service delivery if these risks occur?
 What are the major risks to asset value not being protected?
 How do you plan to manage each of these risks?
WHAT INFORMATION SHOULD BE PROVIDED?
Part 3 consists of two schedules that identify major asset related risks to service delivery. Each
schedule should present this information in a table.
The risks identified in this part should be discussed in the context of the service delivery performance
and risks identified in the RSP, and also in the context of protecting asset performance in its own
right.
Schedule 3A - Service Risk shows service-related risk i.e.
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Risk that asset performance will prevent services being delivered as planned.
Risk that asset performance will not support required service levels.
Schedule 3B - Asset Risks shows asset-related risk i.e.
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Risk that the expected life of assets will not be realised.
Risk that assets will not comply with statutory requirements.
Management strategies to address each of these risks should also be included.
For more detailed guidance on risk assessment and management see the Risk Management Guideline
available on the Treasury website.
HOW LONG IS THIS PART?
Each of these two schedules should be presented in tabular form. While the length of the schedules
will be determined by the number of identified risks for your agency, it is suggested each schedule be
approximately one page.
See the Luna Park Reserve Trust Asset Strategy – Illustrative Case Study as a guide.
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PART 4
ASSET PERFORMANCE MEASURES
WHAT IS THE PURPOSE?
Your agency should be able to demonstrate that physical assets are managed efficiently and that those
assets should support services in the long term. Your agency’s service performance measures should
be used to establish targets or levels against which the performance of its assets, in supporting service
delivery, can be measured.
Part 4 should answer the following question about your agency:
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How will you know how well your asset portfolio is supporting service delivery to the
required level (what measures will you use)?
WHAT INFORMATION SHOULD BE PROVIDED?
Part 4 consists of two schedules that set out key performance information for your agency. Each
schedule should present this information in a table.
Schedule 4A - Effectiveness Measures (service-focussed) show how well your agency’s assets
support service delivery needs and reflect the most important measures used by your agency to assess
asset performance. Examples of relevant measures include client satisfaction, program/course
participation rates, response times, and rate of staff injuries.
 Use the RSP to identify the two or three most important measures for each of your agency’s
services.
 Select measures that demonstrate the relationship between service performance and associated
asset performance.
Schedule 4B - Efficiency Measures (asset-focussed) show how well your agency’s assets are being
managed in their own right, for example maintenance costs per sqm, return on investment, and
compliance with industry standards or statutory requirements.
 Identify the three or four most important efficiency measures for each of your agency’s assets.
 Demonstrate how efficiently assets are being managed over time or by comparison with
similar assets.
HOW LONG IS THIS PART?
While the length of each of these two schedules will be determined by the number of services for your
agency, it is suggested each schedule should be approximately one page.
See the Luna Park Reserve Trust Asset Strategy – Illustrative Case Study as a guide.
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PART 5
PROPOSED ACTIONS/ASSET STRATEGIES
WHAT IS THE PURPOSE?
As a high level plan the Asset Strategy is designed to support strategic discussion between your
Minister, the Budget Committee of Cabinet, and Treasury (and other central agencies). Internally it
supports strategic discussion between Asset Managers, Finance Managers and Corporate Planners.
Part 5 should inform other TAM plans about short term and long term strategies to ensure continuous
physical asset support to services, and efficient use of financial and other resources available to your
agency. It identifies assets that are, or will, no longer be needed to support service, assets that need to
be procured to ensure required service support, and required level of maintenance for remaining
assets. In short, Part 5 is a brief summary of capital investment, disposal, maintenance and office
accommodation needs, which will then be developed in the corresponding TAM plans.
Part 5 should answer the following question about your agency:
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What actions are recommended to ensure that physical assets support service delivery needs
in the short and the long term (consider capital investment, disposal, maintenance and
accommodation needs)?
WHAT INFORMATION SHOULD BE PROVIDED?
Part 5 should provide sufficient information about required asset performance to enable development
of a:
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Capital Investment Strategic Plan
Asset Disposal Strategic Plan
Asset Maintenance Strategic Plan
Office Accommodation Strategic Plan
HOW LONG IS THIS PART?
While the amount of narrative for this part will vary with the size and nature of each agency,
approximately half a page for each strategic plan is suggested.
Detailed guidance on developing each of the abovementioned Strategic Plans, together with
assessment and decision making tools, is available in the TAM Manual, on the Treasury website. The
Manual also contains the non-mandatory TAM Template, provided previously to help agencies
develop their TAM plans. The Template contains notes which all agencies should find useful,
regarding the scope and depth of key information sought.
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ATTACHMENT A
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ATTACHMENT B
CORPORATE
CORPORATE PLAN
PLAN
ASSET
ASSET STRATEGY
STRATEGY PLAN
PLAN
RSP
RSP
In what areas does your
agency really need to
make a difference over
the next three years?
KEY RESULT AREAS
What eventual RESULTS for the
community do you want to
achieve?
STEP A
Select those results which will be dependent on the
agency’s assets working well
In each of these areas
what specifically do
you want to achieve?
INTENDED
OUTCOMES
What INTERMEDIATE
RESULTS do you want to
achieve?
STEP B
Select those intermediate results which will be
dependent on the agency’s assets working well
What impediments are
there to your intended
outcomes that you can
do anything about?
RISK ANALYSIS
What are the major RISKS that
services will not be delivered as
planned, or that expected results
will not be achieved?
STEP C
Identify asset-related risks which may prevent the
achievement ofresults
What are the likely consequences
if these risks occur?
How do you manage these risks?
How will you judge how
successful you have
been?
PERFORMANCE
INDICATORS
What will you do to
achieve the outcomes
and manage the risks?
STRATEGIES
How will you know how well you
are achieving your results?
- RESULT INDICATORS
How will you know how well you
are delivering your services? SERVICE MEASURES
STEP D
Select services which will be dependent on the agency’s
What STRATEGIES or initiatives do you assets working well
have to improve value for money?
What SERVICES do you provide?
What services could be scaled back or
temporarily suspended in order to free
up resources for higher priority
services?
What major strategies or initiatives
need to be in place to ensure that you
have the organisational capability to
deliver the services and achieve the
results?
STEP E
Develop asset portfolio to support services
STEP F
Identify the level of performance required by the assets
to achieve the planned service performance level,
results and to address risks
STEP G
Identify any existing asset performance standards
relevant to the asset types identified
STEP H
Develop performance measures to report on how
well the assets meet
• the standard necessary to support service and to
address risks
• the existing standards for the asset types
STEP I
Analyse and report on actual performance
STEP J
Identify benchmarks and compare performance to them
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