Susstainingo

ouraassetss
Goveernmen
ntassettmanaagemen
nt
policcystateement
December20
000

TheSecretary
DepartmentofTreasuryandFinance
1TreasuryPlace
MelbourneVictoria3002
Australia
Telephone:+61396515111
Facsimile:+61396515298
www.dtf.vic.gov.au

PublishedbytheDepartmentofTreasuryandFinance
CopyrightStateofVictoria2000
Thisbookiscopyright.Nopartmaybereproducedbyanyprocessexceptinaccordancewith
theprovisionsoftheCopyrightAct1968.

JointDepartmentalInformationCentre
CataloguinginPublicationEntry
Sustainingourassets:governmentassetmanagementpolicystatement.
Melbourne:Dept.ofTreasuryandFinance,2000.
ISBN0731114213
1.PublicadministrationVictoria.
2.GovernmentpropertyVictoriaManagement.
I.Victoria.Dept.ofTreasuryandFinance.
352.54243909945
PublishedDecember2000.

ThisdocumenthasbeenupdatedinDecember2012.
Nochangesweremadetocontent,onlystyle.

Ifyouwouldliketoreceivethispublicationinanaccessibleformatpleasetelephone
96510909oremailmailto:information@dtf.vic.gov.au
ThisdocumentisalsoavailableinPDFformatatwww.dtf.vic.gov.au

Contents

Ministersforeword......................................................................................................1
Overview......................................................................................................................4
Scopeandapplication..................................................................................................5
WhydoweneedbetterAssetManagement?..............................................................6
Objectives.....................................................................................................................8
Principles......................................................................................................................9
Assetmanagementresponsibilities............................................................................11
Benefitsofpolicyimplementation.............................................................................12
Assetperformancemanagement...............................................................................13

Sustainingourassets
Governmentassetmanagementpolicystatement,December2000

Ministersforeword

TheBracksGovernmenthaspromisedtodeliveronfourkeypillarsresponsiblefinancial
management,promotinggrowthacrossthewholeState,deliveringimprovedservices,and
restoringdemocracyandaccountabilitytoVictoria.Thesefourpillarsprovidethefoundationfor
Governmentpolicy,includingSustainingOurAssets.
SustainingOurAssetsisconcernedwithmaintainingaflexibleportfolioofassetstoenable
servicestobedeliveredeffectivelytothecommunityandprovideafoundationforeconomic
growth.Thepolicybuildsonexistingassetmanagementpractice,andspecificallyplaces
increasedemphasisonfourmainfeatures:
1. Servicedeliveryneedsregardedasthebasisofallassetmanagementdecisions.Service
deliveryneedsaddressthesocial,environmentalandeconomicneedsofallVictorians.
2. Lifecycleapproachtoassetmanagement.Thisapproachevaluatesoperatingand
maintenancerequirements,andtheimplicationsofeventualreplacementorretirementof
assets,duringacquisitiondecisionmaking.Theplanningprocessalsoincludesevaluationof
nonassetalternativesforthedeliveryofservicestoVictorians.
3. Integratedapproachtoassetmanagementandservicedelivery,acrossallassetsandall
governmentaldepartmentsandagencies.Thismeanslookingbeyondstewardshipof
individualassets,andexaminingthetotalassetbaseduringdecisionmaking.Italsomeans
achievingbalanceacrossgovernmentportfoliostooptimiseinvestmentoutcomes.
4. Increasedemphasisonaccountabilityforassetinvestment.Thisinturnrequiresgreater
transparencyandqualityinreportingarrangements.
Theseassetmanagementfeaturesarecriticalforthecreationandmaintenanceofaportfolioof
assetsthatisresponsivetoVictoriaschangingneedswhilepreservingandsafeguarding
resourcesforfuturegenerations.SustainingOurAssetshasbeenformulatedtoprovidepolicy
directiontotheGovernmenttomeettheservicedeliveryrequirementsofpresentandfuture
Victorians.Itprovidesthefoundationofallassetmanagementrelatedactivities,suchas
planning,evaluation,acquisition,operationandultimateretirementofanasset.
ThepolicysupportsthefourkeypillarsoftheVictorianGovernmentandrespondstothe
Governmentsobjectivesbyobservingthefollowing:
effectiveandaccountableassetmanagementiscentraltosoundfinancialmanagement.
qualityassetandinfrastructurenetworksareessentialtopromotegrowthacrossthewhole
State.
aneffectiveassetbaseisnecessarytodeliverimprovedserviceswhichareaccessibletoall
Victorians.
openandtransparentassetmanagementprocessesassisttorestoredemocracyand
accountabilitytoVictoria.
TheGovernmenthasestablishedtheInfrastructurePlanningCouncilandtheInfrastructure
DeliveryCabinetCommitteeasforumsfortheplanningandevaluationoftheinfrastructure
strategy.Theseforums,alongwithGovernmentinitiativessuchasthePartnershipsVictoria
public/privatepartnershippolicy,arebeingusedtodriveeconomicgrowthinVictoriathrough
moreefficientassetinvestment.

Sustainingourassets
Governmentassetmanagementpolicystatement,December2000

SustainingOurAssetsisaboutmaintainingaqualityassetportfoliotoprovideservicestothe
communityandafoundationforeconomicgrowththroughouttheState.Responsibleleadership
inthemanagementoftheStatesassetsisessentialtoimproveservicesforallVictorians.

LynneKoskyMP
MinisterforFinance

Sustainingourassets
Governmentassetmanagementpolicystatement,December2000

TheAssetLifeCycle

ACQUISITION

PLANNING
Accessneeds
Reviewoptions
Cost/benefits

Nonassetalternatives
Riskevaluation
CoreGovernmentownedassets
Public/privatepartnership
Monitoringand
performancemanagement

DISPOSAL
Retirement
Replacement
Renewal
Redeployment

Continuousmonitoring
Quantitativeandqualitativeassessment
AchievementofGovernmentoutcomes

OPERATION
andmaintenance
Optimiseperformance
Maintenanceprogram
Assetvaluation
Conditionsdandusage

Decisionsmadeinonephaseofanassetslife
willaffectitsperformanceinothers
e.g.apreventativemaintenanceprogrammay
impactontheoperatingandmaintenance
costs,downtime,andlongevityofanasset

Sustainingourassets
Governmentassetmanagementpolicystatement,December2000

Overview

Abetterservice,notabetterasset,isakeyindicationofsuccessfulasset
management

TheGovernmentiscommittedtooptimisingVictoriasassetbaseandrecognisesthatState
assetshaveavitalroletoplayinprovidingservicedeliverythatfulfilsthesocial,economicand
environmentalneedsofVictorians.
Goodassetmanagementrequirestheplanningandacquisitionofthemostappropriateassetsto
meetcurrentandfutureservicedeliverydemands.Thisrequiresinformeddecisionsaboutwhich
assetsareneeded,whereandinwhatnumbers.
Assetplanningismadewithcarefulconsiderationoftheneedsandcostsofmaintainingand
operatingtheassetsovertheirlifecycles,includingultimateretirementofassets.Thisapproach
recognisesthattheeffectsofdecisionsmadeduringanyphaseofanassetslifecyclewillaffect
performanceandcostsinanotherphase.
Goodassetmanagementwillalwaysresultinachievingbestvaluefromthetotalassetcostsover
theirlifecycles,includingthecostofdeliveringservicesusingtheseassets.Sustainableasset
investmentrequiresustobeaccountableinmaintainingandwiselyusingtheassetswealready
have.

Optimalassetmanagementisachievedby:
definingdesiredlevelsofservicesinconsultationwiththecommunity,andmatchingthese
withassetsthatenabletheservicestobedelivered;
adoptingalifecycleapproachtoplanningassetinvestmentandmanagementdecisions;
balancingcompetingneedsacrossallgovernmentfunctionsandselectingoptionswhichbest
meetdesiredgovernmentoutcomes;
monitoring,evaluatingandimprovingservicedelivery;
managingtherisksofassetownershipandoperationtoensurecontinuityofservice;
providingforpresentneedswhilesustainingresourcesforfuturegenerations;and
adoptingacontinuousimprovementapproachtoassetmanagementpoliciesandpractices.
SustainingOurAssetsprovidesahighlevelpolicyframeworkfortheVictorianpublicsector.The
policyisunderpinnedbydetailedguidancematerialtoassistwiththepracticalapplicationofits
features,throughtheAssetManagementSeries.Theseriesprovidestheassetpoliciesand
practicestoassistintheongoingimplementationofassetmanagement.

Sustainingourassets
Governmentassetmanagementpolicystatement,December2000

Scopeandapplication

Thispolicyappliestophysicalassetswithausefullifeofmorethanoneyear,whichrequire
managementbyallGovernmentdepartments,corporations,authoritiesandotherbodiesfalling
undertheFinancialManagementAct1994.

Physicalassetsare:
land;
buildings;
infrastructure;
plantandequipment;
culturalcollections;and
naturalresources.

Financial,humanandinformationassets(includingintellectualproperty)arenotcoveredbythis
policy.

Sustainingourassets
Governmentassetmanagementpolicystatement,December2000

WhydoweneedbetterAssetManagement?

Weoperateinadynamicenvironmentthathasseensignificantasset
relatedeventsoccurringinrecentyears.Theseeventsprovidestrong
motivationandincentivesforthecontinuousimprovementinasset
planning,operatingandmaintenanceproceduresandinriskmanagement.

Assetfailures
TheVictoriangascrisis,theSydneywatercrisis,andtheAucklandpowercrisisareallsobering
remindersofthefragilenatureofservicedeliverycontinuity.

Userexpectations
Increasingawarenessofconsumerrights,litigation,understandingofregulatoryrequirements,
andtheunderlyingcausesandeffectsofassetfailures,havecontributedtohigheruser
expectations.

Publicsectormanagementreform
Reformofpublicsectormanagementpracticeshasseentheintroductionofaccrualoutput
budgetingandincreasedaccountabilityofpublicsectormanagersfortheproductionofoutputs.
Thiscreatesaneedforimprovementinassetmanagementcapabilities,includinglifecycle
costingofassets,monitoringandevaluation.

Ageingassetsandageingpopulation
ManypublicassetswerebuiltshortlyafterWorldWarIIandwillsoonrequirerenewalor
replacement.Thiswillmakeheavydemandsonresources.TheageingVictorianpopulationalso
hassignificantimplicationsfortherangeofservicesandrelatedassetsthatwillberequiredin
thefuture.

Technologyandnonassetalternatives
Technologyiscreatingbetterwaysofdeliveringservices,includingarangeofnonasset
alternatives.Atthesametimeitisprovidingenhancedassetmanagementcapabilitiesand
techniquesofmonitoringandevaluation.

Privatesectorinvestmentpotential
TheGovernmentrecognisesthepotentialtooptimisevalueformoneyintheprovisionof
servicesthroughresponsibleuseofbothpublicandprivatesectorinvestment.ThePartnerships
Victoriapolicyprovidesameanstoengagewiththeprivatesector.Theprotectionofthepublic
interest(inrespectofriskandinterruptionordeclineinserviceavailability)requiresenhanced
evaluationandmonitoringofinfrastructureprojects.

Sustainingourassets
Governmentassetmanagementpolicystatement,December2000

Sustainabledevelopment
Theincreasingawarenessoftheneedforbalancebetweeneconomicdevelopmentand
environmentalandculturalneedsisnecessitatingthelifecycleapproachtomanagingassets,in
ordertoprotecttheinterestsoffuturegenerations.

Sustainingourassets
Governmentassetmanagementpolicystatement,December2000

Objectives

ThekeyobjectivesofassetmanagementaretoenabletheGovernmentto
meetitsservicedeliveryobjectiveseffectively,andtoprovideafoundation
foreconomicgrowth

ToprovidetheservicesrequiredbyVictorians
byfocusingonoutputsandoutcomes
byensuringassetsareappropriatelyusedandmaintained
byapplyingassetmanagementprinciples

Tooptimisetheservicepotentialofassets
throughimprovedmanagementoftheexistingassetbase
throughimprovedflexibilityoftheassetbase
byusingeconomiesofscaleformorecosteffectiveservicedelivery

Tomaximisevalueformoney
bytakingaccountofthefullcostsofacquiring,holding,usinganddisposingassetsthroughout
theirlifecycles
throughappropriatepartnershipswiththeprivatesector

Tocontributetoeconomicgrowth
throughmeetingservicedeliverydemandsbyprovidingtherightassetsintherightlocationin
therightamounts
toencourageassetimprovementsthatwillimprovetheglobalcompetitivenessofVictoria

Toassignresponsibilityandaccountability
byclearlydefiningownershipandcontrolofassets
bydeterminingandcommunicatingaccountabilityandreportingresponsibilitiesthroughout
eachstepoftheintegratedapproachtoassetmanagement

Topromotebalancebetweendevelopmentandsustainability
byminimisingdemandofnewassetsthroughtheuseofnonassetservicedelivery
alternativeswhereappropriate
bymakingassetdecisionsthatconsiderandprotecttheneedsoffuturegenerations

Sustainingourassets
Governmentassetmanagementpolicystatement,December2000

Principles

Effectiveassetmanagementisacontinuousprocesscoveringthelifecycle
oftheasset.Thefollowingprinciplesapply:

Servicedeliveryneedsformthebasisofallassetmanagementpracticesanddecisions
allassetmanagementactivitiesshouldaimtoimproveservicedeliverythroughouttheState

Anintegratedapproachtoplanning
assetplanningandmanagementaretobeintegratedintocorporateandbusinessplans,and
budgetaryandevaluationprocesses

Informeddecisionmaking
assetmanagementdecisionsaretobebasedonevaluationofallalternatives(includingnon
assetalternatives)thattakeintoaccountallcostsincurredthroughoutthelifecycleofthe
assets,fromacquisitiontodisposal,andrelatedbenefitsandrisks
assetmanagementdecisionsaretoberesponsivetoperformancemeasurementand
monitoring

Assetmanagementwithinawholeofgovernmentpolicyframework
allassetmanagementactivitiesaretobeundertakenaspartoftheGovernmentsoverall
resourceallocationandmanagementframeworkforthewholeofVictoria
competingneedsofdifferentgovernmentportfoliosaretobebalancedinordertoachieve
desiredGovernmentoutcomesandminimiseduplication

Accountabilityandresponsibility
accountabilityforservicedelivery,andaccountabilityforassetmanagement,shouldgohand
inhand
ownership,control,accountabilityandreportingrequirementsforassetsaretobe
established,clearlycommunicatedandimplemented
reportingrequirementsshouldincludetimelyandmeaningfulinformation.
evaluationofthecontributionofassetmanagementtomeetdepartmentalobjectivesisto
formpartofperformancemanagement.
assetregistersaretobemaintainedatalevelthatmeetgovernmentandmanagement
decisionmakingrequirements.

Sustainability
planningistoincludeevaluationofallpotentialmethodstomeetthedemandsforservice
delivery,includingnonassetsolutions,anddemandmanagementstrategies.

Sustainingourassets
Governmentassetmanagementpolicystatement,December2000

IntegratedAssetManagementapproach

Community

Appropriateness
assessment

needsandexpectations

Governmentpolicy

Outcomes

Effectiveness
assessment

Corporateplanning

Servicestrategy

Asset
alternatives

Nonasset
alternatives

Efficiency
assessment

Budgetprocess

Businessplanning

Evaluation

10

Sustainingourassets
Governmentassetmanagementpolicystatement,December2000

Assetmanagementresponsibilities

SustainingOurAssetsrequiresleadershipthroughoutthewholeof
government.Thefollowingrequirementsneedtobeconsideredthroughout
theprocessofservicedelivery:

Appropriateness
Responsibilitiestoensuretheappropriatenessofassetmanagement:
PositioningassetstomeetthelongtermservicedeliveryprioritiesofGovernment
Clearcommunicationoftheaspirationsforpublicsectorassetstoallpublicsector
departmentsandagencies
Alignmentofassetmanagementphilosophy,goalsandactionswithGovernmentpolicy
Integratingassetmanagementstrategyandresourceallocationdecisionsacrossgovernment

Effectiveness
Responsibilitiestoensuretheeffectivenessofassetmanagement:
Cleardirectionandcommunicationofobjectiveswithinpublicsectordepartments
Forwardthinkingservicestrategiestogainimprovedflexibility,sustainability,cost
effectivenessandeconomicgrowthfromassets
Proactiveinvestigationofnonassetandassetalternativestomeetservicedeliveryneeds
Ensuringcongruencyofstrategicgoalsbothwithinandbetweenpublicsectordepartments
andagenciesinordertominimiseduplicationofactivitiesandredundancyinresources
Integrationofassetmanagementactivitiesandresourceallocationdecisionsacross
government,andacrossallassets

Efficiency
Responsibilitiestoensuretheefficiencyofassetmanagement:
Formulatingallassetmanagementactivitiesfromplanningthroughtoimplementationin
responsetoGovernmentpolicyservicedeliverystrategies
Integrationofassetplansandassetmanagementwithcorporateandbusinessplans
Timelydeliveryofqualitybudgetaryandreportinginformationtofacilitateappropriate
decisionmakinginthecontextofintegratedassetmanagement(acrossgovernmentand
acrossallindividualassets)
Ongoingevaluationofoutputsandassetstoimproveoperating,pricingandinvestment
efficiencies
Performingassetrecognition,registration,valuation,charging,depreciationandmaintenance
functionsconsistentwithpolicyrequirements

Sustainingourassets
Governmentassetmanagementpolicystatement,December2000

11

Benefitsofpolicyimplementation

TheGovernmentisresponsiblefortheassetsheldbytheState,andforthe
provisionofservicescontractedbytheStatethroughassetsheldbyothers.

ThescaleofinvestmentexposestheGovernmenttoarangeofconsiderablerisks.Astrategic
approachtomanagingStateassetsenablestheGovernmenttomanagetheserisks,andobtain
bettervalueformoneyinthedeliveryofservicestoallVictorians.
Thebenefitsofastrategicapproachare:
Appropriateness
alignsassetswithservicesandcommunityexpectations
promotessustainabledevelopmentobjectives
effectivelyallocatesresourcesavailabletotheGovernmentacrossdepartmentsandagencies,
maximisingoutcomesandminimisingduplication

Effectiveness
minimisesdemandfornewassets
allassociatedcostsareconsideredandoptimisedoverthelifecycleofassets
existingassetsaremaintainedandusedmoreeffectively(timelymaintenanceischeaperthan
repairsornewassetacquisitions)
realisesopportunitiestouseprivatesectorassetsforpublicpurposes
realisesopportunitiesforthepublicsectortopartnerwiththeprivatesector

Efficiency
demonstratestothecommunityandtheGovernmentthatservicesarebeingdelivered
effectively
achievesimprovedaccountabilityforuseofresourcesthroughpublishedperformance
measures
providesabasisfortheGovernmenttoevaluateandbalancethetradeoffbetweenservice,
priceandquality
providesbenchmarkswhichcanbeusedtoevaluateoutcomesandplanfutureinvestments.

12

Sustainingourassets
Governmentassetmanagementpolicystatement,December2000

Assetperformancemanagement

Improvedfutureassetinvestmentoutcomesandclearaccountabilityfor
theseoutcomesrequiressystematicmeasurementandevaluationofasset
performance

Performanceofassetsistobeevaluatedbybothquantitativeandqualitative
measures.

Quantitativeperformancemanagementmeasuresinclude:
thecosteffectivenessoftheassetsinservicedeliverythroughouttheirlifecycles
theefficiencyofoutputpricespaidcomparedtoestablishedbenchmarks
thecontributionmadebyassetstosupporteconomicgrowth

Qualitativeperformancemanagementmeasuresinclude:
usersatisfactionwiththeservicesdelivered
affordableandequitablepublicaccesstoessentialassets
transparencyandaccountabilityofallassetdecisionsmadethroughoutthelifecycle
thesustainabilityandcontinuityofserviceprovision

PerformancemeasurementraisespublicsectorandGovernmentawarenessofthe
responsibilities,opportunitiesandrisksinherentinassetmanagement.
RegularmeasurementandevaluationofperformanceassiststheGovernmenttodetermineifitis
achievingitsdesiredoutcomesinthemosteffectivemanner.Thisisachievedviathe
establishmentandcomparisonofbenchmarksforthepriceofservicedelivery(outputpricing).
Monitoringandevaluationofperformanceisdependentonreportingarrangementswhich
delivertimely,accurateandcomprehensiveinformation.
TheAssetManagementSeriesprovidesguidanceontheapproach,andtechnicalpublications
provideinformationandupdatesonthemoredynamicaspects.

Sustainingourassets
Governmentassetmanagementpolicystatement,December2000

13

TheeprinciplessoftheSuustainingOurAssetts
policyderiveffromtheccentralpriincipletha
at
serviccedeliveryyneedsforrmtheba
asisofasseet
managementpracticesaanddecisio
ons.Servicce
deliveeryneedscomprise thesociall,economiic
anden
nvironmen
ntalneedssacrossreegionalan
nd
m
metropolittanVictoriia

14

Sustainingourassets
Governmentassetmanagementpolicystatement,December20000

www
w.dtf.vic.govv.au

Sustainingourassets
Governmenta
assetmanagementpollicystatement,December2000

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