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STRATEGIC ASSET
MANAGEMENT POLICY
FIN 03
CATEGORY: FINANCE
Adopted:
June 5 2019
1.
Purpose
The purpose of this policy is to provide leadership and commitment to the development
and implementation of the Township's asset management program. It is intended to
guide the consistent use of asset management across the organization, to facilitate
logical and evidence-based decision-making for the management of municipal
infrastructure assets and to support the delivery of sustainable community services now
and in the future.
By using sound asset management practices, the Township will work to ensure that all
municipal infrastructure assets meet expected performance levels and continue to
provide desired service levels in the most efficient and effective manner. Linking service
outcomes to infrastructure investment decisions will assist the Township in focusing on
service rather than budget driven asset management approaches.
This policy demonstrates an organization-wide commitment to the good stewardship of
municipal infrastructure assets, and to improve accountability and transparency to the
community through the adoption of best practices regarding asset management
planning.
2.
Definitions
Unless otherwise noted, the definitions provided in this document align with those
outlined in Ontario Regulation 588/17 (O. Reg. 588/17), Asset Management Planning for
Municipal Infrastructure, under the Infrastructure for Jobs and Prosperity Act, 2015.
Asset management (AM) - the coordinated activity of an organization to realize
value from assets. It considers all asset types, and includes all activities involved in the
asset's life cycle from planning and acquisition/creation; to operational and maintenance
activities, rehabilitation, and renewal; to replacement or disposal and any remaining
liabilities. Asset management is holistic and normally involves balancing costs, risks,
opportunities and performance benefits to achieve the total lowest lifecycle cost for each
asset (ISO 55000).
Asset management plan (AMP) - Documented information that specifies the activities,
resources, and timescales required for an individual asset, or a grouping of assets, to
achieve the organization's asset management objectives (ISO 55000). Under O. Reg.
588/17, by 2021. AMPs for core municipal infrastructure assets will be required to
include the current levels of service being provided; the current performance of each
asset category; a summary of assets in each asset category, their replacement cost,
average age, condition information, and condition assessment protocols; lifecycle
activities required to maintain current levels of service; discussion of population and
economic forecasts; and documentation of processes to make inventory- and condition-
related background information available to the public.
Capitalization threshold - the value of a municipal infrastructure asset at or above
which the Township will capitalize the value of it and below which it will expense the
value of it.
Green infrastructure asset - an infrastructure asset consisting of natural or human-
made elements that provide ecological and hydrological functions and processes and
includes natural heritage features and systems, parklands, stormwater management
systems, street trees, urban forests, natural channels, permeable surfaces and green
roofs.
Level of service - parameters, or combination of parameters, which reflect social,
political, environmental and economic outcomes that the organization delivers.
Parameters can include, but are not necessarily limited to, safety, customer satisfaction,
quality, quantity, capacity, reliability, responsiveness, environmental acceptability, cost,
and availability (ISO 55000).
Lifecycle activities - activities undertaken with respect to a municipal infrastructure
asset over its service life, including constructing, maintaining, renewing, operating and
decommissioning, and all engineering and design work associated with those activities.
Municipal infrastructure asset - an infrastructure asset, including a green
infrastructure asset, directly owned by the Township or included on the consolidated
financial statements of the Township.
3.
Background
The Township is responsible for providing a range of essential services to the community
which includes environmental management, planning and development, protection,
recreation and culture, government, social, family, health and safe and reliable
transportation networks. To deliver these services, it owns and manages a diverse
municipal infrastructure asset portfolio of roads, water and sewer utilities, facilities, fire
and emergency services, parks and recreation assets. As the social, economic, and
environmental wellbeing of the community depends on the reliable performance of these
municipal infrastructure assets it is critical to implement a systemic, sustainable
approach to their management.
Asset management is such an approach, and refers to the set of policies, practices and
procedures that allow an organization to realize maximum value from its municipal
infrastructure assets. An asset management approach allows organizations to make
informed decisions regarding the planning, building, operating, maintaining, renewing,
replacing and disposing of municipal infrastructure assets through a wide range of
lifecycle activities. Furthermore, it is an organization-wide process that involves the
coordination of activities across multiple departments and service areas. As such, it is
useful to adopt a structured and coordinated approach to outlining the activities, roles
and responsibilities required of organizational staff, as well as the key principles that
should guide all asset management decision- making.
A comprehensive and holistic asset management approach will support efficient and
effective delivery of expected levels of service and ensure that due regard and process
are applied to the long-term management and stewardship of all municipal
infrastructure assets. In addition, it will align the Township with provincial and national
standards and regulations such as the Infrastructure for Jobs and Prosperity Act, 2015
and Ontario Regulation 588/17, enabling the organization to take full advantage of
available grant funding opportunities.
The approval of this policy is an important step towards integrating the Township's
strategic mission, vision and goals with its asset management program, and ensuring
that critical municipal infrastructure assets and vital services are maintained and
provided to the community in a reliable, sustainable manner.
4.
Alignment with the Township's Strategic Direction
This policy aligns with the Township of Chatsworth Strategic Plan 2017and the Parks
and Recreation Master Plan 2018. As the Township's related Plans are updated, this
policy shall be revised to align with emerging and evolving policies, strategies, actions
and priorities. The following passages outline key strategic priorities listed within this
document that the development of an asset management program will support:
4.1 Strategic Plan Adopted 2017
Support and align with the vision of the Township's Strategic Plan: "Working to
meet the needs of our residents through strong leadership, public engagement,
fiscal accountability and a proactive community strategy";
Support and align with stated pillars of sustainability, goals and strategic direction
in the areas of:
a)
Economic Development implementation
b)
Fiscal management, Accountability and Sustainability
c)
Fostering community Development
d)
Continuous improvement, and
e)
Quality of Life
4.2 Parks and Recreation Master Plan Adopted December, 2018
Support the objectives of the Township's Recreation Master Plan in the areas of:
a)
An overview of local demographics;
b)
Identify relevant trends in sport and recreation;
c)
Assess key municipal indoor and outdoor recreation facilities and make
recommendations to meet future needs;
d)
Identify the types of parkland required to meet active and passive
recreational needs;
e)
Outline the priority, timing and costs associated with the Master Plan's
Recommendations;
5.
Policy Statement
To guide the Township, the following policy statements have been developed:
5.1 The Township will implement an organization-wide asset management program
through all departments. The program will promote lifecycle and risk management
of all municipal infrastructure assets, with the goal of achieving the lowest total
cost of ownership while meeting desired levels of service.
5.2 The Township will implement continuous improvement protocols and adopt best
practices regarding asset management planning, including:
a)
Complete and Accurate Asset Data
b)
Condition Assessment Protocols
c)
Risk and Criticality Models
d)
Lifecycle Management
e)
Financial Strategy Development
f)
Level of Service Framework
5.3 The Township will develop and maintain an asset inventory of all municipal
infrastructure assets which includes unique ID, description, location information,
value (both historical and replacement), performance characteristics and/or
condition, estimated remaining life and estimated repair, rehabilitation or
replacement date; and estimated cost repair, rehabilitation or replacement costs.
5.4 The Township will develop an asset management plan (AMP) that incorporates all
infrastructure categories and municipal infrastructure assets that meet the
capitalization threshold outlined in Appendix "A", the amortization periods outlined
in Appendix "B" and the Lifecycle Schedule outlined in Appendix "C". The AMP will
be updated at least once every five years in accordance with O. Reg. 588/17
requirements, to promote, document and communicate continuous improvement of
the asset management program.
5.5 The Township will integrate asset management plans and practices with its long-
term financial planning and budgeting strategies. This includes the development of
financial plans that determine the level of funding required to achieve short-term
operating and maintenance needs, in addition to long-term funding needs to
replace and/or renew municipal infrastructure assets based on full lifecycle costing.
5.6 The Township will explore innovative funding and service delivery opportunities,
including but not limited to grant programs, public-private partnerships (P3),
alternative financing and procurement (AFP) approaches, and shared provision of
services, as appropriate.
5.7 The Township will develop meaningful performance metrics and reporting tools to
transparently communicate and display the current state of asset management
practice to Council and the community.
5.8 The Township will consider the risks and vulnerabilities of municipal infrastructure
assets to climate change and the actions that may be required including, but not
limited to, anticipated costs that could arise from these impacts, adaptation
opportunities, mitigation approaches, disaster planning and contingency funding.
Impacts may include matters relating to operations, levels of service and lifecycle
management.
5.9 The Township will align all asset management planning with the Province of
Ontario's land- use planning framework, including any relevant policy statements
issued under section 3(1) of the Planning Act; shall conform with the provincial
plans that are in effect on that date; and, shall be consistent with all municipal
official plans.
5.10 The Township will coordinate planning for interrelated municipal infrastructure
assets with separate ownership structures by pursuing collaborative opportunities
with neighbouring municipalities and jointly-owned municipal bodies wherever
viable and beneficial.
5.11 The Township will develop processes and provide opportunities for municipal
residents and other interested parties to offer input into asset management
planning wherever and whenever possible.
6.
Roles and Responsibilities
The development and continuous support of the Township's asset management
program requires a wide range of duties and responsibilities. The following passages
outline the persons responsible for these tasks:
6.1 Council
a)
Approve the AM policy and direction of the AM program
b)
Maintain adequate organizational capacity to support the core practices
of the AM program
c)
Prioritize effective stewardship of assets in adoption and ongoing review
of policy and budgets
d)
Establish and monitor levels of service
6.2 Senior Management Team
a)
Development of policy and policy updates
b)
Provide corporate oversight to goals and directions and ensure the AM
program aligns with the Township's strategic plan
c)
Ensure that adequate resources are available to implement and
maintain core AM practices
d)
Provide departmental staff coordination
e)
Develop and monitor levels of service and make recommendations to
Council
f)
Track, analyze and report on AM program progress and results
6.3 Treasurer
a)
Manage policy and policy updates
b)
Provide organization-wide leadership in AM practices and concepts
c)
Provide departmental staff coordination
d)
Monitor levels of service
e)
Coordinate and track AM program implementation and progress
6.4 Chief Administrative Officer (CAO)
a)
Provide organization-wide leadership in AM Practices and concepts
b)
Work in conjunction with CFO for AM implementation and progress
c)
Ensure senior management team staff coordination and participation
and progress
6.5 Departmental Staff
a)
Utilize the new business processes and technology tools developed as
part of the AM program
b)
Participate in implementation task teams to carry-out AM activities
c)
Implement and maintain levels of service
d)
Provide support and direction for AM practices within their department
e)
Track and analyze AM program progress and results
7.
Key Principles
The Township shall consider the following principles as outlined in section 3 of the
Infrastructure for Jobs and Prosperity Act, 2015, when making decisions regarding asset
management:
7.1 Infrastructure planning and investment should take a long-term view, and decision-
makers should take into account the needs of citizens by being mindful of, among
other things, demographic and economic trends.
7.2 Infrastructure planning and investment should take into account any applicable
budgets or fiscal plans.
7.3 Infrastructure priorities should be clearly identified in order to better inform
investment decisions respecting infrastructure.
7.4 Infrastructure planning and investment should ensure the continued provision of
core public services.
7.5 Infrastructure planning and investment should promote economic competitiveness,
productivity, job creation and training opportunities.
7.6 Infrastructure planning and investment should ensure that the health and safety of
workers involved in the construction and maintenance of infrastructure assets is
protected.
7.7 Infrastructure planning and investment should foster innovation by creating
opportunities to make use of innovative technologies, services and practices,
particularly where doing so would utilize technology, techniques and practices
developed in Ontario.
7.8 Infrastructure planning and investment should be evidence based and transparent,
and, subject to any restrictions or prohibitions under an Act or otherwise by law on
the collection, use or disclosure of information,
a)
Investment decisions respecting infrastructure should be made on the
basis of information that is either publicly available or is made available
to the public, and
b)
Information with implications for infrastructure planning should be
shared between the Township and broader public sector entities and
should factor into investment decisions respecting infrastructure.
7.9 Where provincial or municipal plans or strategies have been established in
Ontario, under an Act or otherwise, but do not bind or apply to the Township, as
the case may be, the Township should nevertheless be mindful of those plans and
strategies and make investment decisions respecting infrastructure that support
them, to the extent that they are relevant.
7.10 Infrastructure planning and investment should promote accessibility for persons
with disabilities.
7.11 Infrastructure planning and investment should minimize the impact of infrastructure
on the environment and respect and help maintain ecological and biological
diversity, and infrastructure should be designed to be resilient to the effects of
climate change.
7.12 Infrastructure planning and investment should endeavour to make use of
acceptable recycled aggregates.
7.13 Infrastructure planning and investment should promote community benefits, being
the supplementary social and economic benefits arising from an infrastructure
project that are intended to improve the well-being of a community affected by the
project, such as local job creation and training opportunities, improvement of public
space within the community, and any specific benefits identified by the community.
Appendix "A"
Capitalization Thresholds
Asset Category
Capitalization Threshold
(ranges are dependent on sub class*)
Land
$0
Building and Building Improvements
$5,000 or greater
Machinery and Equipment
$5,000 or greater
Vehicles and equipment
$5,000 or greater
Infrastructure expenditures
$25,000 or greater
Pooled Assets
Combined total of $5,000 or greater
All other Assets
Individual unit cost - $10,000 or greater
Asset Classes
General Capital
Tangible capital assets that are not part of the Infrastructure
Asset class, includes; Parks, Recreation facilities, Fire, EMS,
Police, Waste Collection and Disposal, Landfill
Infrastructure
Capital
Tangible capital assets are composed of "linear assets" and their
associated specific components, generally constructed or
arranged in a continuous and connected network. Includes (but
not limited to): Transportation Infrastructure (roads, bridges,
tunnels, public transit, drainage systems), utilities (telephone,
gas, electrical) and Environmental Infrastructure (Water delivery
systems, waste water treatment, storm drainage systems.
Primary Categories
Land
Buildings
Equipment
Roads
Water, Sewer and other utility systems
Bridges and Culverts
Motor Vehicles
Furniture and fixtures
Functional Classifications
General Government
Protective Services
Transportation Services
Environmental Services
Health Service
Recreation and Cultural Service
Planning and Development
APPENDIX "B"
AMORTIZATION METHOD
Asset Category
Amortization of Cost less Savage Value
Land
Not amortized
Land Improvements
Straight line over useful life of each asset unit
Parks Infrastructure
Straight line over useful life of each asset unit
Buildings & Improvements
Straight line over useful life of each asset unit
Construction in Progress
Not Amortized
Machinery, Vehicles and
Equipment
Straight line over useful life of each asset unit
Technology/Communication
Straight line over useful life of each asset unit
Infrastructure (e.g. water,
wastewater, roads etc.)
Straight line over average useful life of each segment for cost
APPENDIX "C"
USEFUL LIFE
Estimates of useful life (for annual amortization calculation) will be determined by the
Township of Chatsworth based on reasonable assumptions. The following common asset
categories will be assigned useful lives as follows:
ASSET CATEGORIES
USEFUL LIFE
Land
0
Land Improvements
20 years
Buildings
40 years
Furniture
20 years
Computer Systems/Photocopiers
3-5 years
Leasehold Improvements
15 years
Machinery and Equipment
5 - 20 years
Vehicles
5-10 years
Roads Surface
3-25 years
Road Base
40 years
Bridges
50 years
Water
40 - 80 years
Communications
10 years
Landfill
Volume
Street Lights
30 years
Road Signs
10 years
Municipal Drains
50 Years