Leading Sustainable Asset Management Implementing Sustainable Infrastructure Asset

Leading Sustainable Asset Management "Implementing Sustainable Infrastructure Asset Management in a Large Metro City - Durban – as a pilot scheme for a National Municipal Approach for South Africa” A Paper by Roger Byrne: AM Mentor / Auditor World Bank, RSA National Treasury, e. Thekwini Municipality (Durban) RBA Copyright © RBA. 2009

Basic Philosophy Infrastructure services are critical to the standard and cost of living and national economic growth » Sound Asset Management is critical to any infrastructure rich business (private & public) » Extending the life of existing assets is far cheaper than building new. . » » An effective Integrated National Program offers considerable benefits to Cities, Agencies & the Nation as a whole. » Huge savings in future life cycle cost and improved service delivery are possible. RBA Copyright © RBA. 2009

Talk Agenda » Background » The approach being taken » The results achieved so

South African Statistics – Valuations Population 46 manage Millionover Municipal Cities 278 Municipalities 30 Million in Metro’s 52% 6 Metro’s & Emerging Metro’s ADANTAGES OVER AUSTRALIA of the Nations Public Assets 3 Emerging Metro’s » LARGE CITIESLevel HAVE ONLY ONE COUNCIL Literacy 48% (25%) (Community Wealth) Scarce Technical Resources » COUNCILS PROVIDE ALL PUBLIC SERVICES except » PROVENCES (STATES) LEGAL IMESA’s NAMS group. EDUCATION estimates that HEALTH South African » NATIONAL INTERSTATE ROADS, RAIL, HIGHER EDU municipal infrastructure is worth OVER DEFENCE & ELECTRIC GEN & GRID R 6, 000 Billion Rand (in fact between R 3, 600 B & R 3, 900 B - see separate assessment) RBA Copyright © RBA. 2009

Public Infrastructure & Mngt. Effort Glo 20 YRS Asset Creation bal 80% + of Effort ly: W Asset O&M Rehabilitation C. M. 1 20% - of Effort We e g row ren OPERATE & MAINTAIN Bu ew 96% OF LIFE 77 YEARS ou t W h A l o ack w we e dis our a r ass of ll d pos sse ets ts a at a ma o w e o inte t ab bou e m f ap nan out ana pro t 1. x. 0 1% 5% ce g e the. 8% glo live bally othe is s red r 97 % uci ng ? ? ? ass et Construction Design / Documentation Plan 80 YRS 40 YRS C. M. 6 C. M. 2 C. M. 5 Renewal Rehabilitate (2) Renewal Rehabilitate (1) C. M. 4 C. M. 3 60 YRS Long Lived Assets (60 - 80 YRS) Copyright © RBA. 2009 C. M. : CONDITION MONITORING BLUE AREA : OPERATION & MAINTENANCE NOTE: CONDITION MONITORING IS A PLANNED MAINTENANCE ACTIVITY RBA

Concentration Of Assets Councils : 6 Metro’s with more than 4 million people 3 Emerging metro’s 50 Regional cities 250 Towns & Small local councils 7 Copyright © RBA. 2009 Thanks to Rob Childs i@Consulting RBA

Where is our GDP Generated ? 3 Metro’s & Emerging Metro’s (9) GDP Large assets portfolios. Adequate resources. AM is critical 75% Major Provincial Cities (45) 2 Reasonable resources. Average portfolio. AM is very important. 17% Small Municipalities (240) 1 Future Capital Needs. Basic Operations & Maintenance Plans. Asset Registers / Value / Condition Copyright © RBA. 2009 Small portfolios / declining growth. AM is not critical. /Poor resources. Townships A 6% 2% RBA

The Management Balancing Act RECURRENT Operations CAPITAL Maintenance Renewal Growth RISK Service Delivery The

The Other Elephant In The Room - Backlog Services RECURRENT Operations CAPITAL Maintenance Renewal

The Backlog – Housing & Services RBA Copyright © RBA. 2009

Combating / Slowing Urbanisation POOR SERVICES POTENTIAL INCOME INCREASE SMALL CITIES REGIONALS & & TOWNSHIPS LARGER CITIES METRO’S BETTER SERVICES HERE WILL SLOW THIS TRANS MIGRATION World Bank 2006 RBA Copyright © RBA. 2009

Durban City – e. Thekwini Municipality Durban e. Thekwini Municipality Population 4. 4 Mill. (150 K pa) Area 230 sq. kms. Coastal Length 98 kms. Asset Value - 320 Billion Rand RBA Copyright © RBA. 2009

Ensuring Whole of City / Business Uniformity Aligned Business Processes (ABP) Electricit Electrici y ty Housing Traffic Fleet IT & Office RBA Aligned Business Systems (ABS)/JDE/Arcview/VKE Copyright © RBA. 2009

The Evolution of Asset Management 1993 2005 1996 2004 2000 2015 20032008 2014 2002

Asset Service Practice Notes Roads Water & Stormwater Sanitation Drainage Plant & Vehicles Buildings CAP & Performance Street Lighting Kerbs & Gutters Parks Bike & Footpaths Plant & Equipment RBA Copyright © RBA. 2014

The Next Evolutions in AM Web Based Tools RBA Copyright © RBA. 2009

CIDMS MODULAR STRUCTURE RBA Copyright © RBA. 2014

Infrastructure Assets Strategic Plan RBA Copyright © RBA. 2009

Asset Plans Asset. Management Plans RBA Copyright © RBA. 2009

Rolling-up With Confidence Aligned Business Processes – Vertical From asset / workface to Council Level of Service Cost of Service Critical Risks Lo. S Reliability Copyright © RBA. 2009 Cost of RBA Service

Integrated Asset Management Plan 25 year Future Expenditure Models Renewal Operations Maintenance Growth RBA

e. Thekwini Outputs – Agencies RBA Copyright © RBA. 2009

Rolling-up to Whole of City Aligned Business Processes – Vertical From Assets to Whole of City Understanding City Biggest Gaps Highest Risks Programs Strategic Assets Key Assets Components Value / Condition Copyright © RBA. 2009 Future RBA

e. Thekwini Outputs – Whole of City Predicted LCAM Expenditure Current 18 Billion pa

Understanding Average Life consumed e. Thekwini: Value of EUL Consumed 70% of our assets ($220 B ) are over 50% consumed. 100, 000 90, 000 80, 000 70, 000 CRC R(million) 60, 000 50% of our assets are over 70% consumed. 40, 000 30, 000 R 220 billion 70% of Value Over 50% 20, 000 We have an ageing (Mature) profile but just enough time to manage this 10, 000 0 0% 10% 20% 30% 40% 50% 60% % of Expected Useful Life Consumed Copyright © RBA. 2009 70% 80% 90% 100% RBA

Durban’s Greatest Asset Risks We now understand the top 250 risks to the city

Rolling-up – Nationally Aligned Business Processes – Vertical From Assets to National Understanding National Biggest Gaps Highest Risks Provincial Funding Needs Metro’s & Cities Programs Key Assets Value / Condition Copyright © RBA. 2009 Future RBA

Individual Departments Success Factors COMMITTED MANAGEMENT SIAM POLICY & FRAMEWORKS BENCHMARKING WITH OTHER BAP

Whole of City – Key Success Factors COMMITTED MANAGEMENT & COUNCILLORS SIAM GUIDES UNIFORM Wo. C FRAMEWORKS EXTERNAL AUDITORS & BENCHMARKING DEDICATED WELL TRAINED & SUPPORTED PRACTITIONERS Copyright © RBA. 2014 RBA

National Programs Key Success Factors POLITICAL BACKING / COMMITMENT LEGISLATION ISO 55000 IIMM 2015 CIDMS REGULATIONS TRANSARENCY SIAM GUIDES FRAMEWORKS PROFESSIONAL ASSOC. EDUC. BACKING IMESA / SAMA Copyright © RBA. 2014 RSA Auditor General & Treasury / Finance REGULATORS AUDITORS DEDICATED WELL TRAINED & SUPPORTED PRACTITIONERS OTHER STAKEHOLDER BACKING RATEPAYERS RBA

IMESA 10 Box Training IMESA SIAM Training Programs 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 RBA Copyright © RBA. 2009

Rolling Out SIAM e. Learning Training Between 2010 and 2015 IMESA has trained some

Rolling Up, Down & Out Across SA 3 1 A Small Townships Copyright ©

We Need to Change our DNA Fire fighting Centric Unplanned Asset Centric Planned Portfolio

Asset Centric Organisations Long Term Asset Management Plans Service Delivery Capital Project Delivery Operations Growth Design & / New Doc Rehabilitation Maintenance Construct Augmentation Acquire Repairs Improved Handover Lo. S Staffing to suit optimised / justified workloads from WMS RBA Copyright © RBA 2011

Take Home Messages » I hope you will now believe that: » Infrastructure Asset Management, Asset Management Plans, Future Expenditure Models, are vital parts of any National Strategic Planning Process » A National Asset Management Program offers huge savings in future life cycle cost and improved service delivery, implemented most cost effectively. RBA Copyright © RBA. 2009

Hope the RSA Program is Now Clearer RBA