Risk Based Asset Management
in Capital Works Delivery
Vito Albicini
Former Director Infrastructure Services
Bill Sharpe
Manager Sustainable Asset Management
Yarra City Council
A Common Story
A Common Story
• Redevelopment Project funded in 2010 for
$200,000 to accommodate New Tenant.
Project was to be completed by February 2011
• 2012, Project on hold and not complete
• Project cost now $400,000 due to poor
scoping and planning.
• Project target completion date June 2012
• Tenant not happy
• Common story for Councils?
• What do we do to stop this?
Key Messages
• Poor Project Planning results in poor project
delivery and unsatisfied customers.
• Project risks need to be understood and managed.
• Sound Capital Works Planning considers the ;
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Capacity to deliver projects,
Life cycle cost of the project,
Environmental and social benefits
Quality and cost
Amount of stakeholder involvement, and
Councillor and Community expectations.
• Project Implementation Plans are a tool to support
good planning and delivery of projects.
• Project Monitoring is also needed to ensure risks
are managed and projects are delivered.
Corporate Risk
Failure to appropriately
manage and control capital
works leads to uncontrolled
and inappropriate
expenditure resulting in
financial and reputational
loss.
What are Project Planning Risks?
• Poor planning with limited renewal and
replacement expenditure
• Conflict with the long term financial plan
• Poor prioritisation of works in Capital Works
Program
• Political influence on the priority of discretionary
works
• Poor project scope, understanding of project
budget and project programming
• Lack of understanding financial burden to Council
– Life Cycle Costing
• Not understanding environmental, social and
compliance (Town Planning) implications
What are Project Delivery Risks?
• Insufficient Project Management Skills across
Organisation
• Poor project management principles, processes
and systems to manage projects
• Lack of clarity of roles, responsibility and
governance structure to deliver projects – Project
Manager / Project Sponsor
• Lack of appropriate consultation with stakeholders
• No centralised electronic capital works
programming, recording and tracking system
Risk Control Measures
• Asset Management Policy 2011
• Capital Works Planning
– Forecaster electronic capital works programming and
management system
– 30 Year Projected Capital Expenditure reporting
process
– Project Implementation Plans
• Capital Works Monitoring
– CAPMON, Executive CAPMON & PCG
• Sustainable Infrastructure Network (SIN)
• Project Management Principals and monitoring
systems
• Responsibilities clear between PM and PS
• Staff professional and experienced
Capital Works
Planning
Capital Works Planning Parameters
• The Council Plan, the long term financial plan (LTFP) and
the relevant Asset Management Plan (AMP) are the core
considerations for proposing capital programs;
• Projects are sorted into renewals, upgrades, new or
compliance projects, initial priority ranking is provided by
the Project Sponsor;
• Projects submitted for consideration shall be given a
priority if they are derived from a Strategic Plan, AMP,
Master Plan, UDF (and the like) or from a specific Council
or Executive resolution;
•
Projects to be submitted after integrated discussions
across asset classes has occurred to encourage
optimum use of resources, outputs and Project
Implementation Plans developed ;
Capital Works Planning Parameters
• Projects over $250k will be planned to be delivered over
a three year period. The typical delivery model will be:– Year 1 -Concept planning, consultation & sign off of
project brief;
– Year 2 - Detailed design and obtaining permits;
– Year 3+ - Construction and defects liability
monitoring.
• Discussions and sign off between the Project Sponsor,
(Service Manager), and Project Manager is required in the
development of all projects. For renewal projects Asset
Manager and Service Manager require sign off. For new
and upgrade projects Service Manager requires sign off
from Asset Manager and Project Manager; and
• Projects without some level of mature planning will not
progress. For example projects that are poorly scoped,
or lack consultation will not be supported
COMMUNITY
RESOURCES
COUNCIL
FINANCIAL PLAN
COUNCIL
PLAN
SUSTAINABILITY
ASSET STRATEGY
LEGISLATION
ASSET POLICY
Discretional Capital Works
Non Discretional Capital Works
(essentially the acquisition of new assets)
(essentially the renewal of existing assets)
Compliance / Risk Projects
September
Call for List of Projects to be reviewed
and submitted
Bids
submitted to
Capital Works
Planner
by end
November
List of projects is entered into BIDDER
in priority order by Service Managers
Information Systems, Fleet &
Plant & Equipment:- policy &
replacement programs, draft
AMP
Road , Open Space, Buildings
Asset Management Plans
First Draft Capital Works Program
Compiled by Capital Works Planning
Early November
Consider Carry Over Projects
(essentially projects in the current
capital works program that will be
completed next financial year)
CAPMON
Approves list of projects
and any carry over
amounts (if any)
Finance Branch provides $ value for
Capital Works Program based on long
term financial plan
Executive make
changes if required
to address Council
Plan goals and
objectives
Draft Capital Works Program
considered by SIN and Executive
Draft list of projects considered by
Council at Councillor workshop in
early December
CAPMON
Approves list of projects
and any carry over
amounts (if any)
Prioritised Lists for each Asset Component is prepared
and entered into Forecaster
Call for
Councillors to
provide list of
Priority projects
Project implementation Plans are
prepared by Service Managers and
Agreed to by Project Managers
Received and Reviewed by Capital
Works Planning
Executive make
changes if required
to address Council
Plan goals and
objectives
Second Draft Capital Works Program
considered by SIN & Executive
Second Draft Capital Works Program
Completed in February and presented
to 2nd Councillor workshop
Project implementation Plans are
further refined by Service Managers
and Agreed to by Project Managers
Received and Reviewed by Capital
Works Planning
Executive make
changes if required
to address Council
Plan goals and
objectives
Final Draft Capital Works Program
considered by SIN & Executive
Council Approve Final Draft Capital
Works Program as part of budget
process in March
Council Adopts Capital Works
Program as part of budget process in
June
Consider Carry Over Projects
(essentially projects in the current
capital works program that will be
completed next financial year)
Capital Works
Program
advertised for
Public Comment
during April
Capital Works Planning
•
PRE PLANNING Distribution of Adopted 10 Capital Works Program
for review by Project Sponsors and Project Managers. (AUG)
•
STEP 1: INITIATION MEETING (Sept)
•
STEP 2: PREPARING PRIORITY LISTS FOR A PROGRAM (Sept –
Mid Oct.)
Assets Managers - Renewals
Service Managers - Upgrades and New Works
•
STEP 3: DEVELOP DRAFT CAPITAL WORKS PROGRAM (Late
Oct)
Capital Works Planner
•
STEP 4: REVIEW OF DRAFT CAPITAL WORKS PROGRAM (Nov)
SIN and Executive Team
Capital Works Planning
•
STEP 5: DECEMBER WORKSHOP WITH COUNCILLORS:
Seek Council input in reviewing 5 year Capital Works
and proposed New / Upgrade projects for Year 1
•
STEP 6: COMPLETION OF PROJECT IMPLEMENTATION
PLANS FOR DISCRETIONARY UPGRADES AND NEW
PROJECTS SELECTED BY COUNCIL. (Dec – Jan)
Service Managers and Project Managers
•
STEP 7: SECOND REVIEW OF DRAFT CAPITAL WORKS
(Feb)
Capital Works Planner and presented to SIN and Executive
•
STEP 8: COUNCIL BRIEFING ON BUDGET (mid Feb.) – REFINEMENT OF
YEAR 1 BUDGET AND WORKS
•
STEP 9: ADOPTION OF DRAFT CAPITAL WORKS PROGRAM (March –
April)
•
STEP 10: FINALISATION OF THE CAPITAL WORKS PROGRAM (June)
PROGRAM
Step 6
COMPLETION OF PROJECT IMPLEMENTATION
PLANS FOR DISCRETIONARY UPGRADES AND
NEW PROJECTS. (Dec – Jan)
Project Implementation Plans
– Roles and Responsibilities, establish Project Working
Team and Project Control Group
– Project Brief / Scope
– Project Objectives / Outcomes
– Project Assumptions
– Environmental Issues to be considered
– Social Implications to be considered
– Project Risks
– Project Constraints
– Details of Other Income Sources
– Detail of Planning / Approval Requirements
(Permits/Required Approvals)
– Community Engagement (Consultation) Process
Project Implementation Plans
– Key Stakeholders
– What ESD measures / Sustainability Initiatives are
included in this project
– Social Benefit Initiatives
– Related Projects/Integration of Other Projects
– Major Tasks – Responsibility, Timing & Costs
– Life Cycle Cost / NPV / Annual Average Service Cost /
Operational Costs – (New / Upgrades)
– Implementation Plan (How will project be delivered e.g.
traditional, single contract, fast track, design & construct
etc.)
– Procurement Plan (What types of contracts packages
are proposed?)
– Project Control (How the project will be monitored and
managed?)
Capital Works Planning
Key Benefits:
• Asset Renewal funding meets 20 year Asset Management
Plans
• Legal / Compliance needs identified and funded
(eliminating Council risks)
• Upgrades and New funding determined by Council to support
priority service needs
• Councillors able to understand the cost to Council to
fund all New / Upgrade desires listed in current Master
Plans and Strategies
• Organisation and Councillors have a better understanding of
Councils financial sustainability with a 20 – 30 years list of
works
• Improved alignment with the Community and Council Plan
• Improved pre-planning for Capital Works Implementation
• Allocates resources to the highest priority
• Better Governance as decisions based on facts.
Capital Works Monitoring
- CAPMON
- Exec CAPMON
- Exec PCG
CAPMON
• Chaired by Manager Sustainable Asset
Management Monthly reporting meeting with
Project Managers to monitor progress of
delivering all projects, renewals, upgrades or
new.
• Identify delivery risks and ensure control
measures are in place
• Guidance given to Project Managers and staff
to assist with the delivery the projects
• Project Managers are able to request changes
to project priority and to seek direction on
possible carryovers or deferrals.
Exec CAPMON / Exec PCG
• Monthly reporting meeting with Executive to monitor
progress of delivering due to significant number of
politically sensitive / major projects that require
Executive input or Executive Decisions
• Minimises the need for Executives to attend all PCG
meetings for individual projects
• Maximise use of time of the Executive
• Empowers Project Managers and staff to deliver the
projects
• Project Managers are required to report to Cap Mon
Exec / Exec PCG.
• Meeting split in two stages
– Cap Mon Exec reviews the whole of the Capital Program
– Exec PCG reviews major projects
Capital Works monitoring – Exec PCG
Capital Works Monitoring
KEY BENEFITS:
• 90% of Capital Program Delivered
(previous average 83%)
• Executive are briefed on status of Capital
Works Program
• Decision can be made to remove
blockages
• Risks are managed
• Good Governance
Does it all work ?
Collingwood Leisure Centre –
another Example
Collingwood Leisure Centre
 Preplanning completed prior to provision of budget –
Good Business Case
 Project Implementation Plan in place
 Good Governance structure in place that included
Service Manager
 Skilled internal Project Manager
 Good Specifications
 Good Architect, Consultants and Builder
 Good Project Management Systems in place to Manage
Time Cost Quality
 Relationships well managed
 Good Capital Works Reporting Tool
 Regular reporting to PWT, Exec PCG and Council
 The Result????
Collingwood Leisure Centre
Successfully Delivered
Collingwood Leisure Centre
RESULT:
 Delivered under budget - $7.8 Million
 Delivered by Christmas as required – 16
December 2011
 ESD elements included
 Quality achieved
 Happy Service Managers
 Happy Stakeholders
 Happy Councillors
 Happy Community
In Summary
• Poor project planning results in poor project delivery
• Understand and manage Project Risks
• Consider capacity to deliver projects, life cycle costs,
environmental and social benefits.
• Allow Planning time. Time for, cost, quality , governance
and stakeholder management.
• Use of Project Implementation Plans a must.
• Monitor performance to ensure projects are delivered.
Risk Based Asset Management
in Capital Works Delivery
Questions…….