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HomeMy WebLinkAboutINS-18-017 - Updated Corporate Asset Management PolicyREPORT TO: Community and Infrastructure Services Committee DATE OF MEETING: April 9, 2018 SUBMITTED BY: Jason Winter, Director Asset Management (519)741-2600 x4630 PREPARED BY: Jason Winter, Director Asset Management (519)741-2600 x4630 WARD(S) INVOLVED: All DATE OF REPORT: February 12, 2018 REPORT NO.: INS-18-017 SUBJECT: Updated Corporate Asset Management Policy ___________________________________________________________________________ RECOMMENDATION: That the updated Corporate Asset Management Policy be approved. BACKGROUND: In January 2012, Council approved a Corporate Asset Management Program Policy (Policy #I- Management including roles and responsibilities. REPORT: In September of 2017, the City of Kitchener was accepted to participate in the Climate and Asset Management Network (CAMN), an initiative through FCM to better integrate climate change and sustainability goals into decision-making about infrastructure assets and services. Climate change is expected to affect a broad range of municipal assets and government services. Preparing for climate change is a matter of risk management and good governance and the development of effective asset management practices can improve community resilience and reduce the severity of these effects over time. One of the required CAMN program milestones is to review and update the to align climate change adaptation andmitigation strategies. This updated policy will replace the existing 2012 policy and ensure linkages to key components of both asset stewardship and sustainability. *** This information is available in accessible formats upon request. *** Please call 519-741-2345 or TTY 1-866-969-9994 for assistance. 7 - 1 ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: The recommendation of this report supports the achievement of the vision through the delivery of core service. FINANCIAL IMPLICATIONS: None. COMMUNITY ENGAGEMENT: INFORM advance of the council / committee meeting. ACKNOWLEDGED BY: Justin Readman, Interim Executive Director of Infrastructure Services 7 - 2 Policy No:Click here to enter text. POLICY Approval Date:Click here to enter a Policy Title:CORPORATE ASSET date. MANAGEMENT POLICY Reviewed Date:Click here to enter text. Policy Type:ADMINISTRATIVE Next Review Date:Click here to enter Category:Governance text. Reviewed Date:Click here toenter text. Sub-Category:Corporate Last Amended:January 16, 2012 Author:Director, Asset Management Replaces:GOV-COR-506 Dept/Div:Infrastructure Services, Asset Management Repealed:Click here to enter a date. Replacedby:Click here to enter text. Related Policies, Procedures and/or Guidelines: INS-13-100 Corporate Asset Management Program Update Corporate Asset Management Strategy Update INS-17-036 Asset Management and Water Infrastructure Program INS-17-049 Climate and Asset Management Network Funding Opportunity 1.POLICY PURPOSE: Program including roles and responsibilities related to Asset Management and the linkages to the Corporate Climate Action Plan. 2.DEFINITIONS: Asset Management is a combination of management, financial, economic, engineering, and other practices applied to physical assets with the objective of providing the required level of service in the most cost-effective manner at an acceptable level of risk. It involves data-driven decision-making and actions throughout the lifecycle of physical assets. Corporate Asset Management the application of asset management practices on a corporate level to maximize consistency among the diverse asset categories, a financial planning framework, and create linkages to other resiliency frameworks including climate adaptation and mitigation strategies. 1 of 9 7 - 3 Policy No: Policy Title:CORPORATE ASSET MANAGEMENT POLICY Asset Management Plans (AMPs) asset specific plans which are regularly updated to develop data-driven strategies and operational recommendations necessary to achieve objectives and service level expectations. Asset Management Plans consist of two distinct but dependent phases: Phase 1 AMP provides a current state of the asset category including: o a comprehensive inventory; o a current financial valuation; o climate related influences impacting sustainability and resiliency; and o the current position the assets sit within their lifecycle (where possible). This phase 1 plan assesses gaps in the data and operational-related activities in order to develop a comprehensive lifecycle management strategy based on measurable data and observations that are acquired through inspections. This phase identifies essential information needed and how it will be collected to inform decision making based on reliable information about condition and risk. Phase 2 AMP includes a lifecycle management strategy that seeks to extend the useful life of the asset and/or provide the lowest lifecycle cost while minimizing service risks. Staff use data-driven information to directly assess the assets the overall condition of the asset along with the cause and effect of an activity on an asset with respect to condition and level of service. Risk factors associated to climate change are also analyzed and integrated into adaptation strategies to ensure Each AMP will be evaluated every three to four years to account for growth and changes to service expectations. Lifecycle a series of stages through the age of an asset that characterizes the ability of the asset to meet an expected level of service and retain its identity as an asset. Lifecycle Cost the total cost of ownership of an asset throughout its life. This may include but is not limited to capital costs, operating costs, maintenance costs, renewal costs, replacement or disposal costs, and environmental costs. Physical Asset or Tangible Capital Assethas the following features: It is physical in nature It has value 2 of 9 7 - 4 Policy No: Policy Title:CORPORATE ASSET MANAGEMENT POLICY It enables services to be provided It is subject to lifecycle costing It has an economic life greater than three (3) years It can be decommissioned or replaced Resilience The capacity of the City of Kitchener to function, so that the people living and working in the city adjust easily to change or recover quickly from any stresses or shocks they encounter. Sustainability- Meeting the needs of today without compromising the needs of future generations. It is about maintaining or improving the standard of living by protecting human health, conserving the environment, using resources efficiently and advancing long-term economic competitiveness. It requires the integration of environmental, economic and socio-cultural priorities into policies and programs and requires action at all levels--citizens, industry, and governments. Asset Categories- Management Program fall into one of twelve following categories. Each group Enterprise Asset CategoriesTax-Based Asset Categories Water UtilityFleet Gas UtilityFacilities (civic, maintenance, fire, community centres, arenas, art & culture buildings, etc.) Wastewater (Sanitary) UtilityRoads & Traffic (pavement, sidewalks, bridges, culverts, traffic signs, lighting) Stormwater UtilityParks & Open Spaces (sports fields, playgrounds, pedestrian bridges, pathways, recreational trails) Parking Enterprise (parking Forestry (street trees, natural areas, active structures, parking lots)parkland) Golf Enterprise (courses, club houses)Cemeteries 3 of 9 7 - 5 Policy No: Policy Title:CORPORATE ASSET MANAGEMENT POLICY 3. SCOPE: POLICY APPLIES TO THE FOLLOWING: All Employees AllFull-Time EmployeesAllUnion ManagementC.U.P.E. 68 Civic Non UnionC.U.P.E. 68 Mechanics TemporaryC.U.P.E. 791 StudentI.B.E.W. 636 Part-Time EmployeesK.P.F.F.A. Specified Positions only: Other: CouncilLocal Boards & Advisory Committees This policy applies to all staff and Council using or managing municipally owned physical assets that provide services for the City. Other physical assets owned by the city and not currently defined as specific asset categories may be included as future categories. For example; cultural artefacts; firefighting infrastructure; and information technology infrastructure all have significant spending requirements along with acquisition, maintenance and retirement phases. Including them in the asset management program will help balance investment priorities across all asset types and ensure a consistent approach to physical asset investments and lifecycle management. 4. POLICY CONTENT: Asset Management is an integrated and data-driven approach to effectively manage existing and new assets. The intent is to maximize benefits, reduce risk and provide expected levels of service to the community in a sustainable manner. Effective asset management practices are fundamental to achieving sustainable and resilient communities. The City of Kitchener Strategic Plan identifies the Corporate Asset Management onal and financial Prosperity Act, 2015 to create and maintain thorough Asset Management plans (AMPs) for all asset categories.The most consistent and cost effective asset management strategies include a data-driven, risk-based approach that combines long-range financial planning and effective maintenance activities. The goal is to sustain a systematic approach that optimizes the management of the City's assets with minimal risk and in the most cost effective way. Asset 4 of 9 7 - 6 Policy No: Policy Title:CORPORATE ASSET MANAGEMENT POLICY management planning is cyclical to ensure that growth, new technologies andthe introduction of new services are added to the framework. This process ultimately ensures that sustainable and resilient infrastructure is provided for through a process of continuous improvement. Sustainability and Resiliency Investments in community infrastructure, emergency planning and resource management (urban forests, source water) were historically based on a relatively stable climate and weather patterns. The effects of climate change are creating more extreme variations in local weather patterns and longer term changes to local climatic conditions. Infrastructure fails to perform as it should under these conditions in the following ways: invasive species migrate to new habitat and decimate local urban forests; frequent heat waves put vulnerable populations at risk; there increased risk of localized flooding and periods of drought; etc. This can have severe social environmental and economic consequences on local governments if the risk is not adequately managed. Climate change is expected to affect a broad range of municipal assets and government services. Preparing for climate change is a matter of risk management and good governance and the development of effective asset management practices can improve community resilience and reduce the severity of these effects over time. Incorporating sustainability and resiliency into asset planning identifies risks and better manages assets that pose a significant risk to the community from the effects of climate change, even though they may not be at the end of their lifecycle. In many cases there may be sound business cases for replacing assets early (an example is the replacement of the Further considerations of risk around the lifecycle costs/longevity of the assets impacted by items like procurement; maintenance and replacement processes; and decisions are important. By not considering sustainability may lead to short- term asset planning hence not aligning to climate adaptation strategies and goals. 5 of 9 7 - 7 Policy No: Policy Title:CORPORATE ASSET MANAGEMENT POLICY City Strategic Plan Priorities and Directions Aspects of the Asset Management Program reside throughout Strategic Plan. Most specifically in two sections: Section 4 Sustainable Environment and Infrastructure 4.5 Strengthen the capability and capacity within the organization to manage sustainable in the long-term. the development and renewal of infrastructure through federal or provincial programs and other partnerships. Section 5 Effective and Efficient City Services 5.2 Improve the design and delivery of city services so that they provide what citizens want in the most reliable, convenient and cost-efficient way Corporate Asset Management Program The major components of the program include a corporate asset registry, corporate work management systems, decision support tools, asset management plans, and a consistent framework for developing and maintaining levels of service across asset categories. Asset Registry tangible capital assets including their current total cost of ownership, performance characteristics, maintenance history, condition scoring and estimated remaining life. Corporate Work Management Systems These systems track workflow from service request to work completion and integrate existing major information systems to track asset performance, service costs over time and improve the quality and reliability of data in the asset registry. Asset Management Plans Both phases of AMPs will be developed within divisions for asset categories specific to those divisions. The plans will leverage the data in the registry and known best practices to identify and implement improvements in business processes in order to balance a level of service that meets customer expectations with the costs and risks associated with providing the service. 6 of 9 7 - 8 Policy No: Policy Title:CORPORATE ASSET MANAGEMENT POLICY Levels of Service - An important component of developing detailed asset management plans is to correlate the cause and effect of operational and maintenance activities to the infrastructure and to what degree the activities need to continue to meet the agreed upon level of service. As well, sustainability/lifecycle cost performance indicators are crucial to embed into on- going operational activities and measurements. A balance must be struck between maintaining the current condition/health of the asset versus activities directly related to providing services. Not having effective levels of service lead to reactive management and potentially to high social, environmental and financial costs. The emphasis is to define, develop and implement a level of service framework that results in a consistent set of expectations across infrastructure categories that support the city's sustainability and resiliency targets. The objectives of the Corporate Asset Management Program are to: 1. Establish and maintain a record of the total cost of ownership and lifecycle/depreciation of all physical assets owned by the City. 2. Review, on an on-going basis the business processes related to asset acquisition, asset maintenance, asset disposition and service provision. Establish a set of consistent corporate sustainability standards to promote optimization in how assets are managed and costed throughout lifecycle. 3. Modify current business processes, where justified to improve operational effectiveness and efficiency both from sustainability and service level perspectives. 4. Ensure all legislative requirements and regulatory standards are met. 5. Support the development and improvement of data-driven decision- making tools that promote doing the right thing to the right asset at the right time. 6. The development of enhanced communication tools to illustrate complex concepts in plain language to all stakeholders and having the ability to justify the long-term benefits of the lifecycle sustainability approach. 7. Achieve continuous improvement in asset management process through on-going improvements to data quality to provide increased forecast reliability. 7 of 9 7 - 9 Policy No: Policy Title:CORPORATE ASSET MANAGEMENT POLICY Roles & Responsibilities Following is the governance framework for the Corporate Asset Management Program. CITY COUNCIL CORPORATE LEADERSHIP TEAM CORPORATE ASSET MANAGEMENT SPONSOR (Chief Financial Officer) ASSET & INFORMATION MANAGEMENT STEERING COMMITTEE (Chair, Asset Leads, IT Leads, Finance Leads, Sustainability Leads) DIRECTOR OF ASSET MANAGEMENT (Chair of the Steering Committee) ASSET MANAGEMENT LEADS/STEWARDS (12 Categories) Council approves asset management policies and asset funding allocation through the annual corporate budget process. An overarching expectation of a standard of care is required by Council to ensure commitment to effective asset management practices. Corporate Leadership Team provides corporate oversight to the program to ensure that the goal and directions of the program are maintained and that the program remains consistent with the overall corporate Strategic Plan. Chief Financial Officer is the executive sponsor of the Asset Management Program providing overall leadership to the program and reporting on the program to the Corporate Leadership Team. Asset & Information Management Steering Committee - provides leadership and strategic direction for supporting systems/processes specific to the delivery of asset/work management information for the City of Kitchener. Further, in support of the city-wide asset management strategies, the committee provides leadership and governance to the Asset Management Policy statement through the provision of information necessary for long-range forecasts of asset investment needs, service levels, risks, costs and other performance measures. Asset Leads/Stewards Directors with accountability over one or more of the 12 asset categories. Asset Leads are responsible for the assets themselves, where as Asset Stewards are responsible for the service delivery programs associated with the assets. Asset Leads/Stewards are also responsible for the management of the asset registry to which they are assigned. The responsibilities extend to all of the improvement projects 8 of 9 7 - 10 Policy No: Policy Title:CORPORATE ASSET MANAGEMENT POLICY that impact on the sustainability of their assets.There is joint responsibility between Asset Leads and Stewards in developing appropriate financial plans and service expectations within the asset categories for which they are accountable. 5. HISTORY OF POLICY CHANGES Administrative Updates 2016-06-01 I-506 policy template re-formatted to new numbering system and given new number GOV-COR-506 Formal Amendments 9 of 9 7 - 11