Asset Management Plan
Machar, Ontario
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Addendum to Asset
Management Plan
State of Local Infrastructure, Levels of Service,
Lifecycle & Financial Management Strategy
Table of Contents
Introduction .....................................................................................................................................................A-1
Overview ..........................................................................................................................................................A-2
Roads ................................................................................................................................................................A-3
State of Local Infrastructure .........................................................................................................................A-3
Levels of Service ...........................................................................................................................................A-7
Lifecycle Management Strategy ...................................................................................................................A-8
Bridges and Culverts ......................................................................................................................................A-12
State of Local Infrastructure .......................................................................................................................A-12
Levels of Service .........................................................................................................................................A-13
Lifecycle Management ...............................................................................................................................A-15
Buildings .........................................................................................................................................................A-18
State of Local Infrastructure .......................................................................................................................A-18
Levels of Service .........................................................................................................................................A-19
Lifecycle Management ...............................................................................................................................A-20
Vehicles ..........................................................................................................................................................A-22
State of Local Infrastructure .......................................................................................................................A-22
Levels of Service .........................................................................................................................................A-23
Lifecycle Management ...............................................................................................................................A-24
Machinery and Equipment ............................................................................................................................A-26
State of Local Infrastructure .......................................................................................................................A-26
Levels of Service .........................................................................................................................................A-27
Lifecycle Management ...............................................................................................................................A-28
Land Improvements .......................................................................................................................................A-30
State of Local Infrastructure .......................................................................................................................A-30
Levels of Service .........................................................................................................................................A-31
Lifecycle Management ...............................................................................................................................A-32
Population and Economic Growth ................................................................................................................A-34
Financing Strategy .........................................................................................................................................A-35
Revision #
Date
Notes
1
June 2025
o Update asset listing.
o Update asset conditions.
o Update current replacement values.
o Insert proposed levels of service.
o Insert financing strategy.
A-1
Introduction
As required by O. Reg. 588/17 (the "Regulation"), municipalities are required to include all
assets (core and non-core) in their Asset Management Plan (the "Plan") by July 1, 2024. The
Plan must include current levels of service, an assessment of inventory, and lifecycle activities
required to maintain the current level of service. By July 1, 2025, the Plan must be updated to
include the proposed levels of service the Township wishes to meet, as well as a Lifecycle
Management and Financing Strategy. The purpose of this addendum to the Township of
Machar's 2017 Asset Management Plan is to meet the July 1, 2025 requirements of the
Regulation.
The Addendum provides an update of the Township's asset inventory as at December 31, 2024.
Dollar amounts have been updated to reflect 2024 dollars. Other asset data, such as condition
ratings, have been updated where possible to reflect more accurate information. This will
provide the public with updated information on Township assets. It will also better inform
Council and Township staff in the decision-making process and planning for the future.
A-2
Overview
The addendum to the Plan includes the state of local infrastructure, current and proposed
levels of service, and a lifecycle and financing strategy for six (6) asset classes, including: Roads,
Bridges and Culverts, Buildings, Vehicles, Machinery and Equipment, and Land Improvements.
The purpose of the information presented in this addendum is to assist in decision-making and
planning for the future. Asset classes along with their current replacement values (CRVs) are
shown in Table A1. A visual representation of the assets distributed by replacement value is set
out in Figure A1. Following the presentation of each asset class is a brief discussion on the
impacts of population and economic growth. A financing strategy follows.
Table A1: Asset Class CRVs
Asset Class
Current Replacement
Value
Roads
$20,965,000
Bridges and Culverts
$6,150,000
Buildings
$1,960,200
Vehicles
$1,256,500
Machinery and Equipment
$1,253,000
Land Improvements
$307,700
Total
$31,892,400
Figure A1: CRV Distribution by Asset Class
Roads 66%
Bridges and
Culverts 19%
Buildings 6%
Vehicles 4%
Machinery and
Equipment 4%
Land
Improvements
1%
A-3
Roads
State of Local Infrastructure
The Township of Machar's road network is its largest asset category in terms of size and value.
The Township maintains roads with two types of surfaces, including 71.34 centreline km of
gravel and 44.52 centreline km of low-class bituminous (LCB). The inventory of gravel roads
includes both year-round and seasonally maintained roads, of which 9.8% of total roads are
seasonally maintained. The distribution of roads by surface type is illustrated in Figure A2.
The average age of gravel road surfaces is 3.96 years, while the average age of paved roads
surfaces is 6.3 years. Only gravel roads where date of last complete resurfacing is known have
been included in this calculation. In many cases gravel may be applied to small sections of road
as determined to be necessary, and not the entire road, so the true age of these roads is
difficult to determine. Micro-surface treatment has been applied to multiple surface-treated
Township roads, including Eagle Lake Road; however, its application has not been included in
the calculation of road age. The intent of the micro-surfacing is to increase useful life and
decrease operating costs of the already existing road surface.
The cost to replace the entire road network, in 2024 dollars, is $20,965,000. This figure excludes
normal operating expenditures, such as road signs and street lights. A breakdown of the current
replacement values for the Township's roads is shown in Table A2.
Figure A2: Road Classification by Surface Type
Gravel
61%
LCB
39%
A-4
Table A2: Road Network CRVs
Surface Type
Length (KM)
Current
Replacement Value
Gravel
71.34
$14,015,000
LCB
44.52
$6,950,000
Total
115.86
$20,965,000
Township staff assessed the condition of its gravel and paved roads. Gravel roads were
assessed on a scale consisting of Good, Fair, and Poor. Paved roads were assessed using the
Pavement Condition Index (PCI) which rates roads on a scale of 0 - 100, where 0 represents the
road in failed condition and 100 in a new condition state.
The summary of condition states for gravel roads, derived from the MTO's Manual for
Condition Rating of Gravel Surface Roads, can be found in Table A3. Table A4, derived from the
MTO's Manual for Condition Rating of Surface-Treated Pavements, details condition states for
paved roads and their corresponding values.
Table A3: Gravel Road Condition States
Condition State
Description
Good
Roadway surface well shaped with shoulder between roundings. Some
distress manifestations in slight to moderate class such as loose gravel, dust,
potholes, etc. There may be a few soft spots of frost heaving when
evaluation is made in late spring. Good drainage for surface run-off on
roadway and shoulder.
Fair
Mixture of properly shaped roadway surface and improperly shaped areas.
Shoulder distress manifestations such as ponding and overgrowth evident
between roundings in slight to moderate class. Various surface distress
manifestations present such as washboarding, potholes, etc., in slight to
moderate class. Localized breakup may be present.
Poor
Majority of roadway surface improperly shaped. Shoulder distress
manifestations in moderate to severe class. Various roadway surface
distress manifestations making travel unpleasant because of washboarding,
dust, potholes, distortions, etc. Localized breakup areas.
A-5
Table A4: Paved Road Condition States
Pavement
Condition
Index Range
Condition
State
Description
80 - 100
Excellent
Pavement is in excellent condition with just a few bumps or
depressions from slight surface deformation. No surface
defects such as streaking, potholes, or cracking distresses.
Ride is very good.
60 - 79
Good
Pavement is in good condition with just a few bumps or
depressions from slight to moderate surface deformation.
Intermittent slight to moderate surface defects and/or
cracking distresses. Ride is good.
40 - 59
Fair
Pavement is in fair condition with intermittent to frequent
bumps or depressions from slight to moderate surface
deformation. Intermittent to frequent moderate surface
defects and/or cracking distresses. Ride is fair.
20 - 39
Poor
Pavement is in poor condition with frequent bumps or
depressions from moderate surface deformation. Frequent
moderate to severe surface defects and/or cracking
distresses. Localized slight to moderate alligatoring crack
may be present indicating pavement structural failure. Ride
is poor.
0 - 19
Very Poor
Pavement is in very poor condition with extensive bumps or
depressions from moderate to severe surface deformation.
Extensive to severe surface defects and/or cracking
distresses. Frequent slight to moderate alligatoring may be
present, indicating pavement structural failures. Ride is very
poor.
A-6
At the time of assessment, gravel roads in the Township of Machar received a weighted
average condition rating of good (2.35 rated on a scale of 1-3). It should be noted that the
condition of gravel roads can change quickly based on a variety of factors including traffic
volume, weather, and grading frequency. Paved roads received a weighted average PCI rating
of 75.33, indicating the Township's paved roads are in good condition. A breakdown of road
conditions for gravel roads are displayed in Figure A3, while paved roads are shown in Figure
A4. This information is summarized in Table A5 below.
Figure A3: Gravel Road Condition Ratings
Figure A4: Paved Road Condition Ratings
Good
48%
Fair
39%
Poor
13%
Excellent
26%
Good
63%
Fair
11%
A-7
Table A5: Road Network Condition Ratings
Surface Type
Length (KM)
Condition Rating
Gravel
71.34
Fair (2.35)
LCB
44.52
75.33
Total
115.86
N/A
Moving forward, it will be important for the Township to regularly assess the condition of its
roads to maintain accurate data and plan accordingly for the future. This may include
assessment of the roads by Township staff, as well as studies completed by professional firms.
Condition data will need to be updated at minimum every five years as required by O. Reg.
588/17.
Levels of Service
Table A6 below outlines the qualitative descriptions used to determine the community levels of
service provided by the Township of Machar's road network.
Table A6: Community Levels of Service - Roads
Service
Attribute
Qualitative
Descriptions
Performance
Scope
Description, which may
include maps, of the
road network in the
municipality and its
level of connectivity
The Township's road network contains 115.86km of gravel
and paved roads which provide travel throughout the
Township and access to neighbouring municipalities. Our
most heavily trafficked road is Eagle Lake Road, the
Township's main arterial road. The Township's road network
allows numerous individuals to access areas which may
include residential, commercial, and tourist locations, such
as Mikisew Provincial Park.
Quality
Description or images
that illustrate the
different levels of road
class pavement
condition
Table A3 and Table A4 provide descriptions of road
conditions.
A-8
Table A7 describes the technical levels of service which relate to the road network.
Table A7: Technical Levels of Service - Roads
Service Attribute
Performance Measure
2024
Performance
Proposed
Performance
Scope
Number of lane-kilometres of arterial roads as a
proportion of
square kilometres of land area of the Township
0.16km/km2
Maintain
Current
Number of lane-kilometres of collector roads as
a proportion of
square kilometres of land area of the Township
N/A
Maintain
Current
Number of lane-kilometres of local roads as a
proportion of
square kilometres of land area of the Township
1.09km/km2
Maintain
Current
Quality
For paved roads in the municipality, the average
pavement condition index value
75.33
Maintain
Current
For unpaved roads in the municipality, the
average surface condition
2.35 (Good)
Maintain
Current
The Township proposes to maintain their road network in its current condition state. The
Township has no intention at this time to expand the road network. The decision to increase
the number of roads it maintains, or increase the length and width of a road, will likely only be
considered in the case of major population growth. This is not a concern at this time.
Lifecycle Management Strategy
Gravel Roads
The assessments for gravel roads are carried out by Township staff. The decision to regravel is
often based on two factors: the current condition of the road and traffic levels. Determining a
strategy for gravel roads can be challenging as the condition of these roads can change rapidly
based on weather, level of traffic, and type of traffic.
To extend the life of gravel roads, preventative maintenance is carried out. These activities
include grading, dust suppression, ditching, brushing, and spot/section replacement of gravel.
Grading may occur 2-3 times per year on average, while calcium is often added once per year,
dependent upon road traffic volumes. Ditching and brushing activities often occur in 10-year
cycles.
A-9
While much of the lifecycle management strategy is based on the observations of various
factors and difficult to predict, the Township can estimate when specific activities are likely
needed to occur. The Township's most current Road Needs Study recommends gravel roads be
resurfaced every 3-5 years. A generalized lifecycle model, with consideration taken from the
Road Needs Study, can be found in Table A8. The average annual cost per centerline kilometer
is $7,637. With 71.34km of gravel roads, the total average annual lifecycle capital cost is
$544,824.
Table A8: Generalized Lifecycle Model - Gravel Roads
Activity
Cost per Centreline
KM
Average Annual Cost
per Centreline KM
Age
Regravelling
$38,187
$7,637
5
Surface Treated Roads
In a similar manner to gravel roads, Township staff generally decide to perform specific lifecycle
activities on surface-treated roads based on their assessment of the road condition, as well as
traffic levels. Preventative maintenance, which may include ditching, brushing, and patching are
carried out as needed to extend the life of the road. Micro-surface treatment may also be
applied to higher traffic roads to extend road life. When the road is no longer feasible to repair,
resurfacing takes place as funds allow.
The Township creates 5- and 10-year capital roads plans which assists in the budgeting process.
However, the plan is not static. Based on assessments of the roads, the decision may be made
to amend the capital plan to meet the greatest needs first. A lifecycle model, found in Table A9,
provides a general outline of which activities are typically considered when completing capital
projects on road assets.
Table A9: Generalized Lifecycle Model - Surface Treated Roads
Activity
Cost per Centreline
KM
Average Annual Cost
per Centreline KM
Age
SST
$19,250
$2,750
5-7
Microsurface
$37,000
$5,286
5-7
Pulverize and DST/Full
Reconstruction
$98,500
$4,925
14-20
Total
$154,750
$12,961
A-10
Based on this lifecycle model, the average annual lifecycle capital cost is $577,024 for 44.52km
of LCB roads. Table A10 outlines the total average annual lifecycle costs for roads.
Table A10: Average Annual Lifecycle Costs - Roads
Surface Type
Average Annual Lifecycle Cost
Gravel
$544,824
LCB
$577,024
Total
$1,121,848
To meet the proposed levels of service for roads (maintain current overall rating of good), the
Township will need to continue to perform the maintenance and lifecycle activities listed
above. Annual investment in roads will need to increase to keep up with the replacement of
roads coming due for rehabilitation or replacement.
There are always risks associated with the lifecycle activities which have been suggested above.
It is important that the Township be prepared to mitigate any of these potential risks. Some of
the risks may include: faster asset deterioration than anticipated, higher
rehabilitation/replacement costs than anticipated, upgrades required to meet current design
standards, and incorrect growth assumptions.
Figure A5 displays the 10-year forecast for the estimated annual capital funding requirements.
Expenditures are not expected to be even and, therefore, plans should be made with this in
mind. Strategies could include adjusting the timeline for which certain projects take place or
contributing to reserves for known future projects. It should be noted that the figures may be
imprecise to a degree because of the uncertainty of the last date of resurfacing for many gravel
roads.
The large funding increase required in 2033 is related to Eagle Lake Road coming due for
resurfacing. As the Township's main arterial road, it is a crucial part of the road network.
Various funding options, such as grants, will be explored when it comes time to resurface the
road.
A-11
Figure A5: 10-Year Capital Forecast - Roads
0
500
1,000
1,500
2,000
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
$ (Thousands)
Capital
Average annual lifecycle costs
A-12
Bridges and Culverts
State of Local Infrastructure
The Township's inventory of bridges and culverts contains six structures. This includes four
structural culverts and two bridges. Structural culverts are defined as spanning 3 metres or
greater. The bridge and culvert assessments are based on the Ontario Structure Inspection
Manual (OSIM) inspections completed in 2024.
It is estimated that the average useful life of the bridges and structural culverts is 75 years;
however, this can vary depending on numerous factors. The average age of the Township's
bridges is 35 years, while culverts have an average age of 40 years.
The cost to replace all bridges and structural culverts, in 2024 dollars, is $6,150,000. A
breakdown of the current replacement values for these assets is shown in Table A11.
Table A11: Bridge & Culvert CRVs
Structure Type
Number of Assets
Current Replacement
Value
Bridges
2
$3,200,000
Structural Culverts
4
$2,950,000
Total
6
$6,150,000
As legislated by the Province of Ontario, it is required that all bridge and culvert structures with
a span greater than 3.0 meters be inspected under the direction of a Professional Engineer at
no greater than two (2) year intervals. The inspection methodology and reporting must be done
in accordance with the Ontario Structure Inspection Manual (OSIM). In compliance with this
legislation, the Township of Machar completed its most recent OSIM inspection in 2024, where
bridge conditions were assessed and recommendations for improvements provided in the
report.
Bridges and culverts, similar to roads, can be rated on a scale called the Bridge Condition Index
(BCI). Table A12, derived from the MTO's Ontario Structure Inspection Manual - 2008 outlines
the condition states of these assets. Table A13 outlines the weighted average bridge and
culvert condition ratings derived from the 2024 OSIM inspection. It should be noted that BCI is
not intended to rate or indicate a structure's safety, rather it is a planning tool developed by
the Ontario ministry of Transportation to help schedule maintenance and rehabilitation work.
A-13
Table A12: Bridge & Culvert Condition States
BCI Range
Condition
State
Description
70-100
Good
Not typically any maintenance required within the next five years.
60-69
Fair
Maintenance work needed within the next five years.
0-59
Poor
Maintenance work needed within one year. Structure may require
a load restriction.
Table A13: Bridge & Culvert Condition Ratings
Structure Type
Number of Assets
Condition (Weighted Average)
Bridges
2
72
Structural Culverts
4
67
Total
6
70
Moving forward, it will be important for the Township to continue with inspections every two
years so that maintenance, repairs, and replacement are planned and carried out at the time
which is most cost effective, without compromising safety.
Levels of Service
Table A14 below outlines the qualitative descriptions used to determine the community levels
of service provided by the Township of Machar's bridges and culverts.
A-14
Table A14: Community Levels of Service - Bridges & Culverts
Service
Attribute
Qualitative Descriptions
Performance
Scope
Description of the traffic
that is supported by
municipal bridges (e.g.,
heavy transport vehicles,
motor vehicles, emergency
vehicles, pedestrians,
cyclists)
The Township of Machar has two bridges and four
structural culverts. Structural culverts are classified as
spanning 3 metres or greater. None of the bridges have
loading or dimensional restrictions. This allows various
types of vehicles to cross over the bridges without
restriction, including heavy transport vehicles, motor
vehicles, emergency vehicles, pedestrians, and cyclists.
Quality
Description or images of
the condition of bridges
and how this would affect
use of the bridges
Table A12 provides descriptions of bridge and culvert
conditions.
Description or images of
the condition of culverts
and how this would affect
use of the culverts
Table A15 describes the technical levels of service which relate to the bridges and culverts.
Table A15: Technical Levels of Service - Bridges & Culverts
Service Attribute
Performance Measure
2024 Performance
Proposed
Performance
Scope
Percentage of bridges with loading or
dimensional restrictions
0%
Maintain
Current
Quality
For bridges in the municipality, the average
bridge condition index value
72
Maintain
Current
For structural culverts in the municipality,
the average bridge condition index value
67
The Township intends to maintain its bridges so that none require load restrictions, and the
bridge condition index value remains above 70. This will be achieved through ongoing
maintenance, repair, and replacement of various bridge components.
The Township hopes to increase the BCI value for culverts through replacement and
rehabilitation. The Township believes this proposed performance to be achievable within the
next ten years through planned capital projects, including the replacement of the large
Municipal Rd N Culvert scheduled for 2025, as well as the rehabilitation of the Black Creek
Culvert on Eagle Lake Rd.
A-15
Lifecycle Management
The OSIM reports required every two (2) years are utilized as a short- and medium-term
planning tool for bridge and structural culvert repair, rehabilitation, and replacement. The
report provides recommended activities to occur on the assets within the following ten (10)
years, with priority rankings provided. Township staff review maintenance and repair options to
ensure activities occur at the best value for the lowest cost, so that the Township is maintaining
its current inventory and striving to meet its proposed levels of service.
Bridges are generally described as having a 75-80-year expected useful life; however,
maintenance, repairs, and rehabilitation activities may increase their life. Table A16 outlines a
generalized lifecycle model for bridges.
Table A16: Generalized Capital Lifecycle Model - Bridges
Activity
Age
Minor Rehabilitation
25
Major Rehabilitation
50
Replacement
80
Steel culverts have an estimated 45-60-year useful life. Table A17 outlines a generalized
lifecycle model for steel culverts. Table A18 outlines the general lifecycle model of concrete
culverts, which have an estimated 100-year useful life. It should be noted that routine
maintenance, as well as rehabilitation can extend the life of these assets.
Table A17: Generalized Capital Lifecycle Model - Steel Culverts
Activity
Age
Minor Rehabilitation
25
Major Rehabilitation
40
Replacement
60
Table A18: Generalized Capital Lifecycle Model - Concrete Culverts
Activity
Age
Minor Rehabilitation
30
Major Rehabilitation
50
Replacement
100
A-16
The 2022 OSIM Report suggests budgeting approximately 2%, or $123,000, of the overall
replacement value of the Township's entire structure inventory annually to maintain the
current system. In addition to the $123,000 annual amount, the 2024 OSIM report
recommended $745,000 in capital work be completed. Of the $745,000, $450,000 is estimated
for the replacement of the large Municipal Rd N culvert which is scheduled to be completed
Summer 2025. In addition to the recommended capital work in the 2024 OSIM Report, the
Township performs preventative maintenance in an attempt to preserve the current condition
of the assets and slow deterioration. Maintenance may include sweeping, replacing missing
nuts/bolts, installing appropriate signage, removing debris, maintaining proper drainage, etc. It
should be noted that repair and maintenance activities, although planned, can change based on
a number of factors such as different than expected rate of deterioration, updated condition
assessments, or varying growth patterns. The Township monitors changes in assets and updates
plans accordingly.
Risks must be recognized and mitigated as greatly as possible in relation to the lifecycle
activities mentioned above. Some of the risks of lifecycle activities include, but are not limited
to: increasing regulatory requirements, weather patterns, incorrect useful life assumptions,
premature asset failure, and higher maintenance and rehabilitation costs than expected.
The generalized lifecycle models for bridges and culverts, as well as recommendations and
estimates from the 2024 OSIM Report, have been used to develop a 10-year forecast for
lifecycle activities. Figure A6 shows the estimated annual capital funding requirements for the
next ten (10) years. Since the expenditures are not estimated to be the same each year,
planning ahead with the use of scheduling and reserves should be considered.
A-17
Figure A6: 10-Year Capital Forecast - Bridges & Culverts
0
100
200
300
400
500
600
($) Thousands
Capital
Average annual lifecycle costs
A-18
Buildings
State of Local Infrastructure
The Township of Machar is responsible for operating five (5) buildings. These buildings are used
for municipal and recreational use. They are a key part in carrying out the day-to-day
operations of the Municipality and providing a high level of service to residents and visitors.
The average age of the buildings is 43 years (weighted by replacement value). The Township is
working on updating its inventory going forward to calculate the average age by asset
component; however, current data is not advanced enough at this time for that figure.
The cost to replace the Township's buildings, based on 2024 insurance estimates, is $1,960,200.
A breakdown of these costs can be found in Table A18.
Table A18: Building CRVs
Department
Number of Buildings
Current Replacement Value
Administration
1
$486,200
Public Works - Roads
2
$1,127,500
Public Works - Landfill
1
$200,400
Parks
1
$146,100
Total
5
$1,960,200
Staff assessments have been carried out to determine the condition ratings of the Township's
buildings. Buildings were assessed on a scale ranging from excellent to very poor. This scale
along with corresponding descriptions can be found below in Table A19.
Table A19: Building Condition States
Condition State
Description
Excellent
Like new condition. No defects.
Good
Minor defects noticeable. Minimal repairs needed.
Fair
Some defects/deterioration in occurrence. Use of the asset not greatly
affected. Some repairs needed.
Poor
Major defects/deterioration. Function of asset severely affected. Major
rehabilitation or replacement is needed.
Very Poor
Asset is no longer functional. Replacement is needed.
The most recent assessment of buildings shows that the average condition rating is fair, based
on the weighted replacement value. This indicates that buildings in the Township may need
some repairs; however, the use of the buildings is not generally affected by these needs and
A-19
service can continue to be provided. Condition ratings distributed by current replacement value
can be viewed in Figure A7.
Figure A7: Building Condition Ratings
Moving forward, it is important that regular inspections be carried out to identify maintenance
and repair needs so that use of the buildings is uninterrupted.
Levels of Service
Table A20 outlines the qualitative descriptions used to determine the community levels of
service provided by the Township of Machar's buildings.
Table A20: Community Levels of Service - Buildings
Service Attribute
Performance
Quality
The Township maintains its buildings to a level that provides good user
experiences.
Good
7%
Fair
93%
A-20
Table A21 describes the technical levels of service which relate to the Township's buildings.
Table A21: Technical Levels of Service - Buildings
Service
Attribute
Performance Measure
Performance
Proposed
Performance
Quality
The average condition rating of all buildings in the
Municipality
Fair
Rating ≥ Fair
Number of inspections carried out annually
Not Currently Available
N/A
The Township proposes to maintain the condition ratings of buildings at a minimum of fair
through ongoing maintenance and repairs, as well as planning for the replacement of its
existing buildings as necessary. As the buildings continue to age, it is important to monitor their
conditions. The buildings need to be able to facilitate the administration of Council's policies.
The physical structures of the buildings must be adequate to serve the public and carry out
necessary tasks, they must be accessible, and they must have the necessary capacity to
facilitate staff and the public.
The proposed level of service for buildings is possible in the long-term through planning and the
use of reserves. It is important for regular maintenance and repairs to occur to keep current
buildings in good condition. Due to the high costs anticipated for building upgrades or
replacement, it will be important for the Township to transfer money to reserves to pay for
these activities as they come due so that large tax rate increases do not occur at the time in
which these activities occur.
The Township hopes to implement detailed tracking of building inspections carried out so that
deficiencies and improvements are accurately followed. This will allow Council and staff to
make informed decisions regarding the buildings.
Lifecycle Management
The current lifecycle management strategy for buildings relies upon accounting useful life
estimates, as well as condition assessments. Buildings are currently amortized in accounting
records over 50 years. This is the estimated useful life used in this Plan. However, it should be
noted that the life of buildings may be extended well beyond 50 years through preventative
and normal maintenance, minor and major rehabilitation, and component replacement. These
activities may include component replacement, regular cleaning, groundskeeping, and
inspections. Failure of building assets can pose great risks to the Township due to their critical
role in operations, as well as the costliness and complexity to replace. Some risks related to the
A-21
lifecycle activities of buildings include: cost and incorrect timing of component replacement and
complexity of planning/zoning/building regulations.
As age of components for each building are not known in entirety, the lifecycle strategy
includes only replacement of the buildings at 50 years old. With the maintenance, repairs, and
component replacement carried out by the Township, it is anticipated that buildings will last
longer than the accounting useful life. The average annual lifecycle costs have been estimated
and are shown in Table A22. Figure A8 shows the estimated annual capital funding needs for
the next 10 years. It should be noted that this graph is based on replacement of each building
every 50 years. In practice, it is more likely that costs will be smoother as building components
are replaced when needed. As data is gathered and buildings are tracked based on component,
a lifecycle and financing strategy will become increasingly accurate.
Table A22: Average Annual Lifecycle Costs - Buildings
Asset Class
Average Annual Lifecycle Cost
Buildings
$39,204
Figure A8: 10-Year Capital Forecast - Buildings
0
200
400
600
800
1,000
1,200
$ (Thousands)
Capital
Average annual lifecycle costs
A-22
Vehicles
State of Local Infrastructure
The Township of Machar's vehicle fleet makes up a crucial component of its entire asset
inventory. Five (5) vehicles, including two (2) pick up trucks and three (3) plow trucks, make up
this category. These vehicles belonging to the Public Works Department are used in daily
operations to carry out the monitoring, maintenance, and improvement of the Township road
network. Activities such as patrolling, snowplowing, pothole repair, and gravelling roads are
done with the use of these vehicles.
The pick-up trucks were purchased new in 2014 and 2018, while plow trucks were purchased
new in 2008, 2013, and 2020. As of 2024, the average age of vehicles, weighted by replacement
value, is 10 years.
The cost to replace the entire vehicle fleet, in 2024 dollars, is $1,256,500. A summary of the
replacement values is found in Table A23 below.
Table A23: Vehicle CRVs
Vehicle
Number of Assets
Current Replacement Value
Pick-Up Truck
2
$124,000
Plow Truck
3
$1,132,500
Total
5
$1,256,500
Condition assessments for vehicle assets are age-based. Condition states are summarized in
Table A24. The average condition rating (weighted average) for the assets in this class is fair.
Condition ratings by current replacement value can be viewed in Figure A9.
Table A24: Useful Life Condition States
Useful Life %
Condition State
Description
0% - 9%
Excellent
Only normal maintenance required.
10% - 49%
Good
Normal and preventative maintenance required.
50% - 74%
Fair
Some signs of deterioration. Minor repairs expected.
75% - 100%
Poor
Significant signs of deterioration. Major rehabilitation or
replacement expected soon.
>100%
Very Poor
Asset beyond useful life. Replacement is required.
A-23
Figure A9: Vehicle Condition Ratings
The Township carries out many preventative maintenance and normal maintenance activities
on its vehicles. This allows for the use of vehicles beyond their expected useful life, which is not
reflected in the condition ratings. It is hopeful for future updates that the Township will be able
conduct condition assessments on their vehicles to produce a more accurate condition rating.
Levels of Service
Table A25 below outlines the qualitative descriptions used to determine the community levels
of service provided by the Township of Machar's vehicles.
Table A25: Community Levels of Service - Vehicles
Service Attribute
Qualitative Descriptions
Reliability
The Township maintains their vehicles so they are reliable in performing
the tasks required.
Good
30%
Fair
30%
Poor
5%
Very Poor
35%
A-24
Table A26 describes the technical levels of service which relate to the Township's vehicles.
Table A26: Technical Levels of Service - Vehicles
Service
Attribute
Performance Measure
2024 Performance
Proposed
Performance
Reliability
Average reliability of vehicles (rated by staff)
Not Currently Available
N/A
Average condition rating
Fair
Rating ≥ Fair
Number of vehicle assets with a condition rating of
poor or worse
3
The Township of Machar proposes to reduce the number of vehicles with a condition of poor or
worse, and by doing this increase the average condition rating. Condition assessments carried
out on vehicles would provide a more accurate reading of their state, and may change the
current condition ratings based on age.
Township staff currently ensure to perform normal and preventative maintenance, as well as
repairs, on vehicles. Some of these activities may include component replacement, greasing, oil
changes, and regular inspections. The continuation of these activities assists in meeting the
levels of service. The replacement of vehicles will also aid the Township in meeting the
proposed service levels for vehicles. The Township's oldest plow truck is being replaced in 2025
which will improve the average condition rating. It may be challenging for the Township to
continue to meet the proposed performance on a continual basis as it is expensive to repair and
replace vehicles. There appears to be a trend of vehicle lifespans becoming shorter, and repair
costs increasing, creating financial challenge to the Municipality.
Lifecycle Management
The lifecycle management strategy for vehicles relies heavily upon age-based estimates and
accounting useful life figures. Staff and Council will identify the need to replace vehicle assets
through a review of the age and condition of vehicles, as well as current maintenance and
repair costs. The decision will be made while attempting to achieve the best value for the
lowest cost to taxpayers.
The average annual lifecycle costs for vehicles have been estimated by dividing replacement
cost by the estimated useful life. These costs are found in Table A27. Figure A10 shows the
estimated annual capital funding needs for the next 10 years.
A-25
Table A27: Average Annual Lifecycle Costs - Vehicles
Asset Class
Average Annual Lifecycle Cost
Vehicles
$91,000
Figure A10: 10-Year Capital Forecast - Vehicles
0
100
200
300
400
$ (Thousands)
Capital
Average annual lifecycle costs
A-26
Machinery and Equipment
State of Local Infrastructure
The Township of Machar's fleet of machinery and equipment is composed of items from the
Administration, Roads, and Landfill Departments. The machinery and equipment are used in
daily operations to complete administrative duties, maintain roads, and operate the Landfill.
The average age of machinery and equipment assets, weighted by replacement value, is 8
years. The cost to replace the entire asset class is $1,253,000. A summary of the replacement
values, categorized by department, is found in Table A28.
Table A28: Machinery & Equipment CRVs
Department
Number of Assets
Current Replacement Value
Administration
2
$27,000
Public Works - Roads
6
$902,500
Public Works - Landfill
2
$323,500
Total
10
$1,253,000
Condition assessments for machinery and equipment are age-based. Condition states are the
same as presented for vehicles, summarized in Table A24. The average condition rating
(weighted by replacement value) for the assets in this class is good. Condition ratings
distributed by replacement value can be viewed in Figure A11.
The Township carries out preventative and regular maintenance on its machinery and
equipment, with the intent of extending the life of the assets. With the maintenance activities
performed, there is possibility that some of the condition ratings of the assets based on age are
not truly reflective of the asset's condition. In the future, the Township hopes to conduct
condition assessments of its assets on an individual basis, producing more accurate ratings and
estimations of remaining useful life.
A-27
Figure A11: Machinery & Equipment Condition Ratings
Levels of Service
Table A29 below outlines the qualitative descriptions used to determine the community levels
of service provided by the Township of Machar's machinery and equipment.
Table A29: Community Levels of Service - Machinery & Equipment
Service Attribute
Qualitative Descriptions
Reliability
The Township maintains their machinery and equipment so they
are reliable in performing their required tasks.
Excellent
49%
Good
17%
Fair
32%
Poor
2%
A-28
Table A30 describes the technical levels of service which relate to machinery and equipment.
Table A30: Technical Levels of Service - Machinery & Equipment
Service
Attribute
Performance Measure
2024 Performance
Proposed
Performance
Reliability
Percentage of regularly scheduled maintenance
performed
Not Currently Available
N/A
Average condition rating
Good
Maintain Current
Number of machinery and equipment assets with a
condition rating of poor or worse
2
Maintain Current
The Township proposes to maintain its machinery and equipment at the levels which they are
operating at now. However, they would like to work towards providing assessment-based,
rather than age-based, condition ratings to gain a more accurate representation of these assets.
Like other assets, the Township performs regular maintenance and repairs on machinery and
equipment assets, such as oil changes, greasing parts, and component replacement. By
continuing with the current activities, the Township can meet its proposed performance for
these assets. There is concern, however, regarding the ability to afford replacement of the
larger assets (e.g. tractor, loader, compactor, backhoe) as they come due, which pose a risk to
smooth operations. Careful planning and use of reserves will be essential to ensuring
replacement occurs as needed.
Lifecycle Management
As with vehicles, the machinery and equipment strategy formation has heavily relied upon age-
based data and accounting useful life estimates. Township staff will identify machinery and
equipment assets which have reached the end of their useful life based on the reliability and
effectiveness of the asset along with a cost analysis. The decision for major rehabilitation or
replacement will be made by Council, taking into consideration various factors such as cost,
funds available, risk, and asset priority.
The average annual lifecycle costs for machinery and equipment have been estimated by
dividing the replacement cost by estimated useful life. Table A31 displays the average annual
lifecycle costs estimated to be $85,483. Figure A12 presents the estimated annual capital
funding needs for the next 10 years.
A-29
Table A31: Average Annual Lifecycle Costs - Machinery & Equipment
Asset Class
Average Annual Lifecycle Cost
Machinery and Equipment
$85,483
Figure A12: 10-Year Capital Forecast - Machinery & Equipment
0
20
40
60
80
100
120
140
160
$ (Thousands)
Capital
Average annual lifecycle costs
A-30
Land Improvements
State of Local Infrastructure
Land improvements include a variety of assets located at multiple spots within the Township.
These assets aim to provide an improved level of service to residents and visitors. Land
improvement assets include the office parking lot, speed signs, gates, fencing, lighting, water
wells for testing, playground equipment, boat launch, and dock.
The average age of these assets (weighted by replacement value) is 10 years. The cost to
replace the land improvement assets is $307,700. A further breakdown can be found in Table
A32 below.
Table A32: Land Improvement CRVs
Department
Number of Assets
Current Replacement Value
Administration
1
$33,000
Public Works - Roads
1
$9,200
Public Works - Landfill
3
$84,000
Parks
4
$181,500
Total
9
$307,700
Condition assessments for land improvement assets are age-based. Condition states are the
same as summarized under the Vehicles section in Table A24. The average condition rating
(weighted) for the assets in this class is good. A breakdown of condition ratings can be viewed
in Figure A13. It should be noted that condition based on age does not factor in some
maintenance activities that have been performed to extend useful life. Condition assessments
of each individual asset would provide the most precise rating. In the future, the Township
hopes to conduct condition assessments on these assets to provide a more accurate rating.
A-31
Figure A13: Land Improvement Condition Ratings
Levels of Service
Table A33 below outlines the qualitative descriptions used to determine the community levels
of service provided by the Township of Machar's land improvements.
Table A33: Community Levels of Service - Land Improvements
Service Attribute
Qualitative Descriptions
Reliability
The Township aims to maintain land improvements so they perform as
intended
Table A34 describes the technical levels of service which relate to the land improvements.
Table A34: Technical Levels of Service - Land Improvements
Service Attribute
Performance Measure
2024
Performance
Proposed Performance
Reliability
Average condition rating of land improvement
assets
Good
Maintain Current
Number of land improvement assets with a
condition rating of poor or worse
2
Good
52%
Fair
36%
Poor
12%
A-32
The Township of Machar intends to maintain an average condition rating of good for land
improvement assets, while decreasing the number of assets in poor or worse condition. As
conditions are age-based for this asset class, it is difficult to determine whether the two assets
listed as poor or worse are physically in that condition state. The Township hopes to conduct
condition assessments to gain more accurate information.
Lifecycle Management
The lifecycle management strategy for land improvements is also age-based. The useful life
estimates are based on accounting useful life, and costs are inflated historical amounts. As
assets are used and their life is diminished, Township staff will identify the need to replace the
assets. Decisions on which assets will be replaced first will be based on the funds available, as
well as risk and asset use. Specific lifecycle activities can vary based on the large variety of
assets within this asset category. Generally, they may include routine inspections to detect
deficiencies, regular maintenance, repairs, and component replacement.
The average annual lifecycle costs have been estimated by dividing replacement cost by the
estimated useful life. These costs are found in Table A35. Figure A14 shows the estimated
annual capital funding needs for the next 10 years.
Table A35: Average Annual Lifecycle Costs - Land Improvements
Asset Class
Average Annual Lifecycle Cost
Land Improvements
$15,385
A-33
Figure A14: 10-Year Capital Forecast - Land Improvements
0
100
200
300
400
500
$ (Thousands)
Capital
Average annual lifecycle costs
A-34
Population and Economic Growth
The 2021 Census recorded a population of 969, which is a 9.9% increase over the 2016
population count of 882. The annual growth rate is approximately 1.98% per year. The
Township is expecting to see more growth and development as individuals continue to move
further north as a result of seeking a quieter lifestyle or choosing to retire in the Municipality.
A continued increase in population may necessitate the expansion of the current inventory, and
possibly the services provided; however, this would be far into the future. Because growth
related expansion is likely very far in the future, it did not impact the lifecycle management or
financial strategy within the 10-year timeframe outlined in the Plan. Another factor to be
considered would be the need for increased human capital, or skilled employees, to deliver
these services. Moving ahead it will be important to consider the effects of growth in relation to
various plans, including the Asset Management Plan. The Township will need to consider which
services are most crucial and how to fund those services while meeting its proposed levels of
service.
A-35
Financing Strategy
The financing strategy examines how the assets listed within the Plan can be funded to meet
the proposed levels of service outlined for each asset category. The financing strategy will need
to be re-evaluated on a regular basis as changes may occur.
If the Municipality proposed to meet levels of service whereby all assets were replaced at the
end of their useful life, they would need to spend $1,431,470 annually on capital items, as
shown in Table A36.
Table A36: Total Average Annual Lifecycle Costs - Capital
Asset Class
Average Annual Lifecycle Costs
Roads
$1,121,848
Bridges & Culverts
$80,500
Buildings
$39,204
Vehicles
$91,000
Machinery and Equipment
$83,533
Land Improvements
$15,385
Total
$1,431,470
The Township of Machar spent $402,000, $377,000, and $1,628,000 on capital items in 2022,
2023, and 2024, respectively. In 2024, the large increase in capital spending was only possible
with the use of reserves. It is not financially feasible for the Township to spend $1,431,470 on
capital projects each year, so they have proposed levels of service where assets are extended to
meet a life greater than expected, sometimes falling below a condition threshold of good.
The proposed annual capital expenditures for 2025-2034 are shown in Figure A15 below. The
expenditure forecast is based on the capital expenditures planned in the 2025 budget, as well
as the lifecycle activities identified in the previous sections of this document. The figures
included in the expenditure forecast have been inflated at a rate of 3.8% annually, aligning with
the 60-year historical average.
A-36
Figure A15: Annual Capital Expenditures - Inflated
Figure A16 displays a breakdown of total expected capital expenditures with their
corresponding operating costs. Operating costs have been based on historical average and
inflated based on a rate of 3.8%. Please note the operating expenses do not include expenses
not related to a capital asset. It will be important for the Municipality to make use of transfers
to and from reserves when planning for the future to smooth tax rate increases year-over-year,
eliminating sharp increases and decreases in the required tax levy.
Figure A16: Annual Capital & Operating Expenditures - Inflated
0
500
1,000
1,500
2,000
2,500
3,000
$ (Thousands)
Roads
Bridges & Culverts
Buildings
Vehicles
Machinery & Equipment
Land Improvements
0
500
1,000
1,500
2,000
2,500
3,000
3,500
$ (Thousands)
Capital
Operating
A-37
Figure A17 displays the annual funding projected to be available for the Township to carry out
capital lifecycle activities and the expected funding gap.
Figure A17: Projected Funding Available - Inflated
It should be noted that the projected funding and funding gap is based on a number of
assumptions, and therefore can change when put into practice. The proposed capital projects,
specifically for gravel roads, do not include every lifecycle activity at the ideal date. For
example, the regravelling of gravel roads should typically occur every 3-5 years; however, the
proposed regravelling projects for many roads in this Plan are stretched beyond 5 years to
create greater financial feasibility. It is also assumed that there will be a budget increase of
3.8% each year to account for inflation (based on historical inflation rates). This does not
include growth related increases or increased responsibilities handed down from higher levels
of government. Figure A17 above assumes that for 2026-2034 approximately 10% of the overall
Township budget will be set aside for capital projects, other than in years where lower amounts
of funding are expected to be required. At the time of this Plan update, the 2025 budget has
already been adopted by Council and expected funding and expenses are known or estimated.
The anticipated funding amounts include grants, municipal funds (taxation), and reserve use.
Grant funding for 2025 includes the Canada Community Building Fund (CCBF), Ontario
Community Infrastructure Fund (OCIF), the Northern Ontario Resource Development Support
Fund (Municipal Rd N Culvert replacement), and the Northern Ontario Heritage Fund
Corporation (Retaining Wall). Grant funding for 2026-2034 is only expected from the CCBF and
OCIF. Funding amounts for the expected continuing grants are based on 2025 funding
0
500
1,000
1,500
2,000
2,500
3,000
$ (Thousands)
Anticipated Funding
Projected Funding Gap
A-38
allotments. The Township will continue to search and apply for grants to cover the costs of
capital projects which have an associated funding gap.
Reserve use will play a key role in the Township's capital plan. Historically the Township has
avoided sharp tax levy increases by borrowing from and repaying reserves. It is crucial to ensure
reserves are continually being funded so that this trend can continue and the Township remains
in good financial standing.
Figure A17 above shows a funding gap in many of the years included. If funding has not been
found through other methods such as revenues, grants, or reserves, the Township will have to
explore other options such as financing or delaying lifecycle activities. Deferral of lifecycle
activities may include, but is not limited to, extending the timeframe in which road resurfacing
is completed, component rather than entire asset replacement, or letting assets drop below the
desired condition. Decisions to defer lifecycle activities will be made on a case-by-case basis but
generally will consider consequences of asset failure, probability of asset failure, and level of
usage.
SUBMITTED BY THE PUBLIC SECTOR DIGEST INC. (PSD)
WWW.PUBLICSECTORDIGEST.COM
MAY 2018
The 2017 Asset Management Plan for the
Township of Machar
w w w . p u b l i c s e c t o r d i g e s t . c o m
AMP2017
w w w . p u b l i c s e c t o r d i g e s t . c o m
machar_amp2_df_0705
Contents
Executive Summary ................................................................................................................................................................ 4
I.
Introduction & Context................................................................................................................................................ 6
II.
Asset Management ........................................................................................................................................................ 7
1.
Overarching Principles ................................................................................................................................................................. 8
III. AMP Objectives and Content ..................................................................................................................................... 9
IV. Data and Methodology ............................................................................................................................................... 10
1.
Condition Data ................................................................................................................................................................................ 10
2.
Financial Data ................................................................................................................................................................................. 11
3.
Infrastructure Report Card ....................................................................................................................................................... 12
4.
Limitations and Assumptions .................................................................................................................................................. 13
5.
Process ............................................................................................................................................................................................... 14
6.
Data Confidence Rating .............................................................................................................................................................. 15
V.
Summary Statistics...................................................................................................................................................... 16
1.
Asset Valuation............................................................................................................................................................................... 17
2.
Source of Condition Data by Asset Class ............................................................................................................................. 19
3.
Historical Investment in Infrastructure - All Asset Classes ....................................................................................... 20
4.
Useful Life Consumption - All Asset Classes ..................................................................................................................... 21
5.
Overall Condition - All Asset Classes ................................................................................................................................... 22
6.
Financial Profile ............................................................................................................................................................................. 23
7.
Replacement Profile - All Asset Classes .............................................................................................................................. 24
8.
Data Confidence ............................................................................................................................................................................. 25
VI. State of Local Infrastructure ................................................................................................................................... 26
1.
Road Network ................................................................................................................................................................................. 27
2.
Bridges & Culverts ........................................................................................................................................................................ 34
3.
Buildings ........................................................................................................................................................................................... 41
4.
Machinery & Equipment ............................................................................................................................................................ 48
5.
Land Improvements ..................................................................................................................................................................... 55
6.
Vehicles .............................................................................................................................................................................................. 62
VII. Levels of Service ............................................................................................................................................................. 69
1.
Guiding Principles for Developing LOS ............................................................................................................................... 69
2.
Key Performance Indicators and Targets ........................................................................................................................... 70
3.
Future Performance ..................................................................................................................................................................... 73
4.
Monitoring, Updating and Actions ......................................................................................................................................... 74
VIII. Asset Management Strategies ................................................................................................................................. 75
1.
Non-Infrastructure Solutions & Requirements ............................................................................................................... 76
2.
Condition Assessment Programs ........................................................................................................................................... 76
3.
Lifecycle Analysis Framework ................................................................................................................................................ 81
4.
Growth and Demand .................................................................................................................................................................... 84
5.
Project Prioritization and Risk Management.................................................................................................................... 84
IX. Financial Strategy ........................................................................................................................................................ 92
1.
General Overview .......................................................................................................................................................................... 92
2.
Financial Profile: Tax Funded Assets ................................................................................................................................... 95
3.
Use of Debt ....................................................................................................................................................................................... 99
4.
Use of Reserves ........................................................................................................................................................................... 102
X.
2016 Infrastructure Report Card ....................................................................................................................... 103
XI. Appendix: Grading and Conversion Scales ..................................................................................................... 104
machar_amp2_df_0705
List of Figures
Figure 1 Distribution of Net Stock of Core Public Infrastructure .............................................................................................. 6
Figure 2 Developing the AMP - Work Flow and Process ............................................................................................................ 14
Figure 3 Asset Valuation by Class .......................................................................................................................................................... 17
Figure 4 2016 Ownership Per Household .......................................................................................................................................... 18
Figure 5 Historical Investment in Infrastructure - All Asset Classes ..................................................................................... 20
Figure 6 Useful Life Remaining as of 2016 - All Asset Classes ................................................................................................. 21
Figure 7 Asset Condition Distribution by Replacement Cost as of 2016 - All Asset Classes ....................................... 22
Figure 8 Annual Requirements by Asset Class ................................................................................................................................. 23
Figure 9 Infrastructure Backlog - All Asset Classes ....................................................................................................................... 23
Figure 10 Replacement Profile - All Asset Classes ......................................................................................................................... 24
Figure 11 Asset Valuation - Road Network ....................................................................................................................................... 28
Figure 12 Historical Investment - Road Network .......................................................................................................................... 29
Figure 13 Useful Life Consumption - Road Network ..................................................................................................................... 30
Figure 14 Asset Condition - Road Network (Primarily Assessed) .......................................................................................... 31
Figure 15 Forecasting Replacement Needs - Road Network .................................................................................................... 32
Figure 16 Asset Valuation - Bridges & Culverts .............................................................................................................................. 35
Figure 17 Historical Investment - Bridges & Culverts ................................................................................................................. 36
Figure 18 Useful Life Consumption - Bridges & Culverts ........................................................................................................... 37
Figure 19 Asset Condition - Bridges & Culverts (Age-based) ................................................................................................... 38
Figure 20 Forecasting Replacement Needs - Bridges & Culverts ............................................................................................ 39
Figure 21 Asset Valuation - Buildings ................................................................................................................................................. 42
Figure 22 Historical Investment - Buildings..................................................................................................................................... 43
Figure 23 Useful Life Consumption - Buildings .............................................................................................................................. 44
Figure 24 Asset Condition - Buildings (Age-Based) ...................................................................................................................... 45
Figure 25 Forecasting Replacement Needs - Buildings ............................................................................................................... 46
Figure 26 Asset Valuation - Machinery & Equipment .................................................................................................................. 49
Figure 27 Historical Investment - Machinery & Equipment ..................................................................................................... 50
Figure 28 Useful Life Consumption - Machinery & Equipment ............................................................................................... 51
Figure 29 Asset Condition - Machinery & Equipment (Age-based) ....................................................................................... 52
Figure 30 Forecasting Replacement Needs - Machinery & Equipment ................................................................................ 53
Figure 31 Asset Valuation - Land Improvements........................................................................................................................... 56
Figure 32 Historical Investment - Land Improvements .............................................................................................................. 57
Figure 33 Useful Life Consumption - Land Improvements ........................................................................................................ 58
Figure 34 Asset Condition - Land Improvements (Age-based) ................................................................................................ 59
Figure 35 Forecasting Replacement Needs - Land Improvements ........................................................................................ 60
Figure 36 Asset Valuation - Vehicles.................................................................................................................................................... 63
Figure 37 Historical Investment - Vehicles ....................................................................................................................................... 64
Figure 38 Useful Life Consumption - Vehicles ................................................................................................................................. 65
Figure 39 Asset Condition - Vehicles (Age-based) ......................................................................................................................... 66
Figure 40 Forecasting Replacement Needs - Vehicles ................................................................................................................. 67
Figure 41 Comparing Age-based and Assessed Condition Data ............................................................................................... 77
Figure 42 Paved Road General Deterioration Profile .................................................................................................................... 81
Figure 43 Bow Tie Risk Model ................................................................................................................................................................. 85
Figure 44 Distribution of Assets Based on Risk - All Asset Classes ........................................................................................ 88
Figure 45 Distribution of Assets Based on Risk - Road Network ............................................................................................ 88
Figure 46 Distribution of Assets Based on Risk - Bridges & Culverts ................................................................................... 89
Figure 47 Distribution of Assets Based on Risk - Buildings ...................................................................................................... 89
Figure 48 Distribution of Assets Based on Risk - Machinery & Equipment ...................................................................... 90
Figure 49 Distribution of Assets Based on Risk - Land Improvements ................................................................................ 90
Figure 50 Distribution of Assets Based on Risk - Vehicles ......................................................................................................... 91
Figure 51 Cost Elements ............................................................................................................................................................................ 93
Figure 52 Historical Prime Business Interest Rates ................................................................................................................... 100
machar_amp2_df_0705
List of Tables
Table 1 Objectives of Asset Management ............................................................................................................................................. 7
Table 2 Principles of Asset Management .............................................................................................................................................. 8
Table 3 Infrastructure Report Card Description ............................................................................................................................. 12
Table 4 Source of Condition Data by Asset Class ............................................................................................................................ 19
Table 5 Data Confidence Ratings ............................................................................................................................................................ 25
Table 6 Key Asset Attributes - Road Network ................................................................................................................................. 27
Table 7 Key Asset Attributes - Bridges & Culverts ........................................................................................................................ 34
Table 8 Key Asset Attributes - Buildings ............................................................................................................................................ 41
Table 9 Asset Inventory - Machinery & Equipment ...................................................................................................................... 48
Table 10 Asset Inventory - Land Improvements ............................................................................................................................ 55
Table 11 Asset Inventory - Vehicles ..................................................................................................................................................... 62
Table 12 LOS Categories ............................................................................................................................................................................ 69
Table 13 Key Performance Indicators - Road Network and Bridges & Culverts .............................................................. 70
Table 14 Key Performance Indicators - Buildings ......................................................................................................................... 71
Table 15 Key Performance Indicators - Vehicles ........................................................................................................................... 71
Table 16 Key Performance Indicators - Machinery & Equipment .......................................................................................... 72
Table 17 Key Performance Indicators - Land Improvements .................................................................................................. 72
Table 18 Asset Condition and Related Work Activity for Paved Roads ................................................................................ 82
Table 19 Probability of Failure - All Assets ....................................................................................................................................... 86
Table 20 Consequence of Failure - Roads .......................................................................................................................................... 86
Table 21 Consequence of Failure - Bridges & Culverts ................................................................................................................ 86
Table 22 Consequence of Failure - Buildings ................................................................................................................................... 87
Table 23 Consequence of Failure - Machinery & Equipment..................................................................................87
Table 24 Consequence of Failure - Land Improvements.........................................................................................87
Table 25 Consequence of Failure - Vehicles..............................................................................................................87
Table 26 Infastructure Requirements and Current Funding Available - Tax Funded Assets...............................95
Table 27 Tax Change Required for Full Funding......................................................................................................96
Table 28 Effect of Changes in OCIF Funding and Reallocating Decrease in Debt Costs........................................97
Table 29 Total Interest Paid as a Percentage of Project Costs .................................................................................................. 99
Table 30 Overview of Use of Debt...........................................................................................................................101
Table 31 Overview of Debt Costs.................................................................................................................................101
Table 32 Summary of Reserves Available...............................................................................................................102
Table 33 2016 Infrastructure Report Card.............................................................................................................103
Table 34 Asset Health Scale.........................................................................................................................................104
Table 35 Financial Capacity Scale...........................................................................................................................105
machar_amp2_df_0705
4
Executive Summary
Infrastructure is inextricably linked to the economic, social and environmental advancement of a
community. Municipalities own and manage nearly 60% of the public infrastructure stock in
Canada. As analyzed in this asset management plan (AMP), the Township of Machar's infrastructure
portfolio comprises the following asset classes: road network, bridges & culverts, buildings,
machinery & equipment, land improvements and vehicles. The asset classes analyzed in this asset
management plan for the township had a total 2016 valuation of $11.3 million, of which roads
comprised 50%.
Strategic asset management is critical in extracting the highest total value from public assets at the
lowest lifecycle cost. This AMP, the township's second following the completion of its first edition in
2013, details the state of infrastructure of the township's service areas and provides asset
management and financial strategies designed to facilitate its pursuit of developing an advanced
asset management program and mitigate long-term funding gaps.
In addition to observed field conditions, historical capital expenditures can assist the township in
identifying impending infrastructure needs, and guide its medium- and long-term capital programs.
The township has invested into its infrastructure sporadically over the decades. Investments have
fluctuated during since the 1970s to 2016 and they peaked in the early 2000s. During this time,
$6.8 million was invested with $3.7 million put into the road network. Since 2015, $190,000 has
been invested with a focus on machinery & equipment.
Based on 2016 replacement cost, and age-based condition data, over 22% of assets, with a
valuation of $2.6 million, are in good to very good condition; 72% are in poor to very poor
condition. The township has provided condition information for 57% of assets based on 2016
replacement cost. Nearly 45% of the assets analyzed in this AMP have at least 10 years of useful life
remaining. However, 8%, with a valuation of $851,000, remain in operation beyond their
established useful life. An additional 44% will reach the end of their useful life within the next five
years.
In order for an AMP to be effective, it must be integrated with financial planning and long-term
budgeting. The development of a comprehensive financial plan will allow the township to identify
the financial resources required for sustainable asset management based on existing asset
inventories, desired levels of service, and projected growth requirements.
The average annual investment requirement for the above categories is $832,000. Annual revenue
currently allocated to these assets for capital purposes is $380,000 leaving an annual deficit of
$452,000. To put it another way, these infrastructure categories are currently funded at 46% of
their long-term requirements. In 2017, Machar has annual tax revenues of $1,735,000. Our strategy
includes full funding being achieved over 20 years by:
−
Increasing tax revenues by 1.3% each year for the next 20 years solely for the purposes of
phasing in full funding to the asset categories covered in this section of the AMP.
−
allocating the current gas tax and OCIF revenue and scheduled increases to the infrastructure
deficit as they occur.
−
Reallocating appropriate revenue from categories in a surplus position to those in a deficit
position.
machar_amp2_df_0705
5
−
increasing existing and future infrastructure budgets by the applicable inflation index on an
annual basis in addition to the deficit phase-in.
Although our financial strategies allow the township to meet its long-term funding requirements
and reach fiscal sustainability, injection of additional revenues will be required to mitigate existing
infrastructure backlogs.
A critical aspect of this asset management plan is the level of confidence the township has in the
data used to develop the state of the infrastructure and form the appropriate financial strategies.
The township has indicated a high degree of confidence in the accuracy, validity and completeness
of the asset data for all categories analyzed in this asset management plan.
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I. Introduction & Context
Across Canada, municipal share of public infrastructure increased from 22% in 1955 to nearly 60%
in 2013. The federal government's share of critical infrastructure stock, including roads, water and
wastewater, declined by nearly 80% in value since 1963.1
Figure 1 Distribution of Net Stock of Core Public Infrastructure
Ontario's municipalities own more of the province's infrastructure assets than both the provincial
and federal government. The asset portfolios managed by Ontario's municipalities are also highly
diverse. The Township of Machar's capital assets portfolio, as analyzed in this asset management
plan (AMP) is valued at $11.3 million using 2016 replacement costs. The township relies on these
assets to provide residents, businesses, employees and visitors with safe access to important
services, such as transportation, recreation, culture, economic development and much more. As
such, it is critical that the township manage these assets optimally in order to produce the highest
total value for taxpayers. This asset management plan, (AMP) will assist the township in the pursuit
of judicious asset management for its capital assets.
1 Larry Miller, Updating Infrastructure In Canada: An Examination of Needs And Investments Report of the Standing Committee on
Transport, Infrastructure and Communities, June 2015
Municipal $216.9B
57%
Provincial $158.4B
41%
Federal
$6.7B
2%
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II. Asset Management
Asset management can be best defined as an integrated business approach within an organization
with the aim to minimize the lifecycle costs of owning, operating, and maintaining assets, at an
acceptable level of risk, while continuously delivering established levels of service for present and
future customers. It includes the planning, design, construction, operation and maintenance of
infrastructure used to provide services. By implementing asset management processes,
infrastructure needs can be prioritized over time, while ensuring timely investments to minimize
repair and rehabilitation costs and maintain municipal assets.
Table 1 Objectives of Asset Management
Inventory
Capture all asset types, inventories and historical data.
Current Valuation
Calculate current condition ratings and replacement values.
Lifecycle Analysis
Identify Maintenance and Renewal Strategies & Lifecycle Costs.
Service Level Targets
Define measurable Levels of Service Targets.
Risk & Prioritization
Integrates all asset classes through risk and prioritization strategies.
Sustainable Financing
Identify sustainable Financing Strategies for all asset classes.
Continuous Processes
Provide continuous processes to ensure asset information is kept current and
accurate.
Decision Making &
Transparency
Integrate asset management information into all corporate purchases, acquisitions
and assumptions.
Monitoring & Reporting
At defined intervals, assess the assets and report on progress and performance.
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8
1. Overarching Principles
The Institute of Asset Management (IAM) recommends the adoption of seven key principles for a
sustainable asset management program. According to IAM, asset management must be:2
Table 2 Principles of Asset Management
Holistic
Asset management must be cross-disciplinary, total value focused.
Systematic
Rigorously applied in a structured management system.
Systemic
Looking at assets in their systems context, again for net, total value.
Risk-based
Incorporating risk appropriately into all decision-making.
Optimal
Seeking the best compromise between conflicting objectives, such as
costs versus performance versus risks etc.
Sustainable
Plans must deliver optimal asset lifecycles, ongoing systems
performance, environmental and other long term consequences.
Integrated
At the heart of good asset management lies the need to be joined-up. The
total jigsaw puzzle needs to work as a whole - and this is not just the
sum of the parts.
2 "Key Principles", The Institute of Asset Management, www.iam.org
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III. AMP Objectives and Content
This AMP is one component of Machar's overarching corporate strategy. It was developed to
support the township's vision for its asset management practice and programs. It provides key
asset attribute data, including current composition of the township's infrastructure portfolio,
inventory, replacement costs, useful life etc., summarizes the physical health of the capital assets,
enumerates the township's current capital spending framework, and outlines financial strategies to
achieve fiscal sustainability in the long-term while reducing and eventually eliminating funding
gaps.
As with the first edition of the township's asset management plan in 2013, this AMP is developed in
accordance with provincial standards and guidelines, and new requirements under the Federal Gas
Tax Fund (GTF) stipulating the inclusion of all eligible asset classes. The following asset classes are
analysed in this document: road network; bridges & culverts; buildings; machinery & equipment;
land improvements; and vehicles.
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IV. Data and Methodology
The township's dataset for the asset classes analyzed in this AMP are maintained in PSD's
CityWide® Asset Manager module. This dataset includes key asset attributes and PSAB 3150 data,
such as historical costs, in-service dates, field inspection data (as available), asset health, and
replacement costs.
1. Condition Data
Municipalities implement a straight-line amortization schedule approach to depreciate their capital
assets. In general, this approach may not be reflective of an asset's actual condition and the true
nature of its deterioration, which tends to accelerate toward the end of the asset's lifecycle.
However, it is a useful approximation in the absence of standardized decay models and actual field
condition data and can provide a benchmark for future requirements. We analyze each asset
individually prior to aggregation and reporting; therefore, many imprecisions that may be
highlighted at the individual asset level are attenuated at the class level.
As available, actual field condition data was used to make recommendations more meaningful and
representative of the township's state of infrastructure. The value of condition data cannot be
overstated as they provide a more accurate representation of the state of infrastructure. The type of
condition data used for each class is indicated in Chapter V, Section 2.
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11
2. Financial Data
In this AMP, the average annual requirement is the amount, based on current replacement costs,
that municipalities should set aside annually for each infrastructure class so that assets can be
replaced upon reaching the end of their lifecycle.
To determine current funding capacity, all existing sources of funding are identified and combined
to enumerate the total available funding; funding for the previous three years is analyzed as data is
available. These figures are then assessed against the average annual requirements, and are used to
calculate the annual funding shortfall (surplus) and for forming the financial strategies.
In addition to the annual shortfall, the majority of municipalities face significant infrastructure
backlogs. The infrastructure backlog is the accrued financial investment needed in the short-term
to bring the assets to a state of good repair. This amount is identified for each asset class.
Only predictable sources of funding are used, e.g., tax and rate revenues, user fees, and other
streams of income the township can rely on with a high degree of certainty. Government grants and
other ad-hoc injections of capital are not included in this asset management plan given their
unpredictability. As senior governments make greater, more predictable and permanent
commitments to funding municipal infrastructure programs, e.g., the Federal Gas Tax Fund, future
iterations of this asset management plan will account for such funding sources.
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3. Infrastructure Report Card
The asset management plan is a complex document, but one with direct implications on the public, a group with varying degrees of
technical knowledge. To make communications more meaningful and the AMP more accessible, we've developed an Infrastructure Report
Card that summarizes our findings in common language that municipalities can use for internal and external distribution. The report card
is developed using two key, equally weighted factors: Financial Capacity and Asset Health.
Table 3 Infrastructure Report Card Description
Financial Capacity
A municipality's financial capacity grade is determined by the level of funding available (0-100%) for each asset class for the purpose of
meeting the average annual investment requirements.
Asset Health
Using either field inspection data as available or age-based data, the asset health component of the report card uses condition (0-100%)
to estimate how capable assets are in performing their required functions. We use replacement cost to determine the weight of each
condition group within the asset class.
Letter
Grade
Rating
Description
A
Very Good
The asset is functioning and performing well; only normal preventative maintenance is required. The municipality is fully prepared for
its long-term replacement needs based on its existing infrastructure portfolio.
B
Good
The municipality is well prepared to fund its long-term replacement needs but requires additional funding strategies in the short-term
to begin to increase its reserves.
C
Fair
The asset's performance or function has started to degrade and repair/rehabilitation is required to minimize lifecycle cost. The
municipality is underpreparing to fund its long-term infrastructure needs. The replacement of assets in the short- and medium-term
will likely be deferred to future years.
D
Poor
The asset's performance and function is below the desired level and immediate repair/rehabilitation is required. The municipality is
not well prepared to fund its replacement needs in the short-, medium- or long-term. Asset replacements will be deferred and levels of
service may be reduced.
F
Very Poor
The municipality is significantly underfunding its short-term, medium-term, and long-term infrastructure requirements based on
existing funds allocation. Asset replacements will be deferred indefinitely. The municipality may have to divest some of its assets (e.g.,
bridge closures, arena closures) and levels of service will be reduced significantly.
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4. Limitations and Assumptions
Several limitations continue to persist as municipalities advance their asset management practices.
−
As available, we use field condition assessment data to illustrate the state of infrastructure and
develop the requisite financial strategies. However, in the absence of observed data, we rely on
the age of assets to estimate their physical condition.
−
A second limitation is the use of inflation measures, for example using CPI/NRBCPI to inflate
historical costs in the absence of actual replacement costs. While a reasonable approximation,
the use of such multipliers may not be reflective of market prices and may over- or understate
the value of a municipality's infrastructure portfolio and the resulting capital requirements.
−
Our calculations and recommendations will reflect the best available data at the time this AMP
was developed.
−
The focus of this plan is restricted to capital expenditures and does not capture O&M
expenditures on infrastructure.
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GAP ANALYSIS: CITYWIDE AM
Review client database and
assess against benchmark
municipalities
DATA VALIDATION 1
Collaborate with Engineering
and Finance to validate and
refine data
GAP ANALYSIS: CITYWIDE CPA
Review client database and
assess against benchmark
municipalities
DATA VALIDATION 2
Collaborate with Finance to
validate and refine data prior
to the developing financial
strategy
DATA APPROVAL
Client approves all asset and
financial data before PSD can
develop financial strategy
FINANCIAL STRATEGY
PSD submits financial strategy to
client for review
IS STRATEGY
APPROVED?
AMEND FINANCIAL STRATEGY
Collaborate with client to
redevelop financial strategy
YES
IS DRAFT
APPROVED?
AMEND DRAFT
Incorporate client feedback
and resubmit draft
NO
SUBMIT FINAL AMP DRAFT
PSD develops report card and
submits final draft for client
approval and project sign-off
YES
FIRST DRAFT
PSD submits first complete
draft of the AMP
5. Process
High data quality is the foundation of intelligent decision-making. Generally, there are two primary causes of poor decisions: inaccurate or
incomplete data, and the misinterpretation of data used. The figure below illustrates an abbreviated version of our work order/work flow
process between PSD and township staff. It is designed to ensure maximum confidence in the raw data used to develop the AMP, the
interpretation of the AMP by all stakeholders, and ultimately, the application of the strategies outlined in this AMP.
Figure 2 Developing the AMP - Work Flow and Process
NO
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6. Data Confidence Rating
Staff confidence in the data used to develop the AMP can determine the extent to which
recommendations are applied. Low confidence suggests uncertainty about the data and can
undermine the validity of the analysis. High data confidence endorses the findings and strategies,
and the AMP can become an important, reliable reference guide for interdepartmental
communication as well as a manual for long-term corporate decision-making. Having a numerical
rating for confidence also allows the township to track its progress over time and eliminate data
gaps.
Data confidence in this AMP is determined using five key factors and is based on the City of
Brantford's approach. Township staff provide their level of confidence (score) in each factor for
major asset classes along a spectrum, ranging from 0, suggesting low confidence in the data, to 100
indicative of high certainty regarding inputs. The five factors used to calculate the township's data
confidence ratings are:
F1
F2
F3
F4
F5
The data is up to date.
The data is complete
and uniform.
The data comes from
an authoritative
source
The data is error free.
The data is
verified by an
authoritative
source.
The township's self-assessed score in each factor is then used to calculate data confidence in each
asset class using Equation 1 below.
𝐴𝑠𝑠𝑒𝑡 𝐶𝑙𝑎𝑠𝑠 𝐷𝑎𝑡𝑎 𝐶𝑜𝑛𝑓𝑖𝑑𝑒𝑛𝑐𝑒 𝑅𝑎𝑡𝑖𝑛𝑔= ∑(𝑆𝑐𝑜𝑟𝑒 𝑖𝑛 𝑒𝑎𝑐ℎ 𝑓𝑎𝑐𝑡𝑜𝑟) × (1
5)
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V. Summary Statistics
In this section, we aggregate technical and financial data across all asset classes analyzed in this
AMP, and summarize the state of the infrastructure using key indicators, including asset condition,
useful life consumption, and important financial measurements.
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1. Asset Valuation
The asset classes analyzed in this asset management plan for the township had a total 2016 valuation of $11.3 million, of which roads
comprised 50%, followed by bridges & culverts at 24%. The ownership per household (Figure 4) totaled $12,788 based on 882
households for all asset categories.
Figure 3 Asset Valuation by Class
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Figure 4 2016 Ownership Per Household
$12,788
$6,453
$3,060
$1,577
$743
$825
$130
Total
Road Network
Bridges & Culverts
Buildings
Machinery & Equipment
Vehicles
Land Improvements
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2. Source of Condition Data by Asset Class
Observed data will provide the most precise indication of an asset's physical health. In the absence
of such information, the age of capital assets can be used as a meaningful approximation of the
asset's condition. Table 4 indicates the source of condition data used for the various asset classes in
this AMP. The township has condition data for 44% of all assets based on 2016 replacement cost.
Table 4 Source of Condition Data by Asset Class
Asset class
Component
Source of Condition Data
Roads Network
Paved Surface
49% Assessed - 2013
Gravel Surface
39% Assessed - 2013
Remaining segments
Age-based
Bridges & Culverts
Bridges
Age-based
Culverts
Age-based
Buildings
All
Age-based
Machinery & Equipment
All
Age-based
Land Improvements
All
Age-based
Vehicles
All
Age-based
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3. Historical Investment in Infrastructure - All
Asset Classes
In conjunction with condition data, two other measurements can augment staff understanding of
the state of infrastructure and impending and long-term infrastucture needs: installation year
profile, and useful life remaining. Using 2016 replacement costs, Figure 5 illustrates the historical
investments made in the asset classes analyzed in this AMP since 1950. Often, investment in critical
infrastructure parallels population growth or other significant shifts in demographics; they can also
fluctuate with provincial and federal stimulus programs. Note that this graph only includes the
active asset inventory as of December 31, 2016.
Figure 5 Historical Investment in Infrastructure - All Asset Classes
The township began to invest into its infrastructure in 1970 with large investments towards
bridges & culverts and buildings. Investments fluctuated between 1980 and late 1990s and peaked
in the early 2000s. During this time, $2.8 million was invested with $2.5 million put into the road
network. Since early 2000, $6.9 million has been invested with a focus on roads, bridges & culverts
and vehicles.
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4. Useful Life Consumption - All Asset Classes
While age is not a precise indicator of an asset's health, in the absence of observed condition
assessment data, it can serve as a high-level, meaningful approximation and help guide replacement
needs and facilitate strategic budgeting. Figure 6 shows the distibution of assets based on the
percentage of useful life already consumed.
Figure 6 Useful Life Remaining as of 2016 - All Asset Classes
About 44% of the assets analyzed in this AMP have at least 10 years of useful life remaining.
However, 8%, with a valuation of $850,000, remain in operation beyond their established useful
life. An additional 43% will reach the end of their useful life within the next five years.
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5. Overall Condition - All Asset Classes
Based on 2016 replacement cost, and primarily age-based condition data, over 20% of assets, with
a valuation of $2.6 million, are in good to very good condition; 72% are in poor to very poor
condition.
Figure 7 Asset Condition Distribution by Replacement Cost as of 2016 - All Asset Classes
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6. Financial Profile
This section details key high-level financial indicators for the township's asset classes.
Figure 8 Annual Requirements by Asset Class
The annual requirements represent the amount the township should allocate annually to each of its
asset classes to meet replacement needs as they arise, prevent infrastructure backlogs and achieve
long-term sustainability. In total, the township must allocate $832,000 annually for the assets
covered in this AMP.
Figure 9 Infrastructure Backlog - All Asset Classes
The township has a combined infrastructure backlog of $638,000, with bridges & culverts
comprising 59%. The backlog represents the investment needed today to meet previously deferred
replacement needs. In the absence of assessed data, the backlog represents the value of assets still
in operation beyond their established useful life.
$832,007
$657,210
$54,820
$44,975
$41,455
$27,824
$5,724
Total
Road Network
Vehicles
Bridges & Culverts
Machinery &
Equipment
Buildings
Land Improvements
$637,960
$374,658
$170,101
$59,245
$28,851
$5,105
$0
Total
Bridges & Culverts
Road Network
Vehicles
Machinery &
Equipment
Land Improvements
Buildings
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7. Replacement Profile - All Asset Classes
In this section, we illustrate the aggregate short-, medium- and long-term infrastructure spending requirements (replacement only) for
the township's asset classes. The backlog is the total investment in infrastructure that was deferred over previous years or decades. In the
absence of observed data, the backlog represents the value of assets that remain in operation beyond their useful life.
Figure 10 Replacement Profile - All Asset Classes
Based primarily on age-based condition data, the township has a combined backlog of $638,000, of which bridges & culverts comprises
$375,000. Aggregate replacement needs will total $4.8 million over the next five years. An additional $2.4 million will be required
between 2022 and 2026. The township's aggregate annual requirements (indicated by the black line) total $832,000. At this funding level,
the township would be allocating sufficient funds on an annual basis to meet the replacement needs for its various asset classes as they
arise without the need for deferring projects and accruing annual infrastructure deficits. Currently, the township is funding 46% of the
annual requirements for tax-funded assets. See the 'Financial Strategy' chapter for achieving a more optimal and sustainable funding level.
Further, while fulfilling the annual requirements will position the township to meet its future replacement needs, injection of additional
revenues will be needed to mitigate existing infrastructure backlogs.
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8. Data Confidence
The township has a high degree of confidence in the data used to develop this AMP, receiving a weighted confidence rating of 95%. This is
indicative of significant effort in collecting and refining its data set.
Table 5 Data Confidence Ratings
Asset Class
The data is up-to-
date.
The data is
complete and
uniform.
The data comes
from an
authoritative
source.
The data is error
free.
The data is verified
by an authoritative
source.
Average Confidence
Rating
Road Network
100%
100%
100%
90%
90%
96%
Bridges & Culverts
100%
100%
100%
90%
90%
96%
Buildings
90%
90%
100%
90%
90%
92%
Machinery & Equipment
100%
100%
90%
90%
90%
94%
Land Improvements
100%
100%
90%
90%
90%
94%
Fleet
85%
85%
90%
90%
90%
88%
Overall Average Data Confidence Rating
93%
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VI. State of Local Infrastructure
The state of local infrastructure includes the full inventory, condition ratings, useful life
consumption data and the backlog and upcoming infrastructure needs for each asset class. As
available, assessed condition data was used to inform the discussion and recommendations; in the
absence of such information, age-based data was used as the next best alternative.
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27
1. Road Network
1.1
Asset Portfolio: Quantity, Useful Life and Replacement Cost
Table 6 illustrates key asset attributes for the township's road network, including quantities of various assets, their useful life, their
replacement cost, and the valuation method by which the replacement costs were derived. In total, the township's roads assets are valued
at $5.7 million based on 2016 replacement costs. The useful life indicated for each asset type below was assigned by the township.
Table 6 Key Asset Attributes - Road Network
Asset Type
Asset Component
Quantity
Useful Life (Years)
2016 Unit Replacement Cost
2016 Overall
Replacement
Cost
Road Network
Guardrails - Pooled
1
20
NRBCPI (Toronto)
$88,553.00
Paved Base
45.07km
75
Not Planned for Replacement
-
Paved Surface
51.22km
8
NRBCPI (Toronto), User-Defined Cost
$4,007,178.00
Road Base
69.84km
75
Not Planned for Replacement
-
Earth Surface
.21km
75
NRBCPI (Toronto)
$3,580.50
Gravel Surface
67.35km
10
NRBCPI (Toronto)
$1,592,386.00
Total
$5,691,697.50
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28
Figure 11 Asset Valuation - Road Network
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29
1.2
Historical Investment in Infrastructure
Figure 12 shows the township's historical investments in its road network since 1950. While observed condition data will provide
superior accuracy in estimating replacement needs and should be incorporated into strategic plans, in the absence of such information,
understanding past expenditure patterns and current useful life consumption levels (Section 1.3) can inform the forecasting and planning
of infrastructure needs and in the development of a capital program. Note that this graph only includes the active asset inventory as of
December 31, 2016.
Figure 12 Historical Investment - Road Network
Investments in the township's road network began in the mid 1990s with a large increase in the early 2000s. In the early 2000s, the
period of largest investment, $2.5 million was invested with over $2.4 million put into paved roads.
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30
1.3
Useful Life Consumption
In conjunction with historical spending patterns and observed condition data, understanding the
consumption rate of assets based on industry established useful life standards provides a more
complete profile of the state of a community's infrastructure. Figure 13 illustrates the useful life
consumption levels as of 2016 for the township's road network.
Figure 13 Useful Life Consumption - Road Network
While 6% of the township's road network has 6 to 10 years of useful life remaining, 76%, with a
valuation of $4.3 million, remain in operation beyond their useful life. An additional 17% will reach
the end of their useful life within the next five years.
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1.4
Current Asset Condition
Using replacement cost, in this section we summarize the condition of the township's road network
as of 2016. By default, we rely on observed field data as provided by the township. In the absence of
such information, age-based data is used as a proxy. The township has provided condition data for
49% of paved surface roads, and 39% for gravel roads.
Figure 14 Asset Condition - Road Network (Primarily Assessed)
Based primarily on assessed condition data, 2% of assets, with a valuation of $ 113,000 are in good
to very good condition; 93% are in poor to very poor condition.
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1.5
Forecasting Replacement Needs
In this section, we illustrate the short-, medium- and long-term infrastructure spending requirements (replacement only) for the
township's road network assets. The backlog is the aggregate investment in infrastructure that was deferred over previous years or
decades. In the absence of observed data, the backlog represents the value of assets that remain in operation beyond their useful life.
Figure 15 Forecasting Replacement Needs - Road Network
In addition to a backlog of $170,000, replacement needs are forecasted to be $4.8 million in the next five years; an additional $2 million is
forecasted in replacement needs between 2022-2026. The township's annual requirements (indicated by the black line) for its road
network total $657,000. At this funding level, the township would be allocating sufficient funds on an annual basis to meet replacement
needs as they arise without the need for deferring projects and accruing annual infrastructure deficits. However, the township is currently
allocating $140,000, leaving an annual deficit of $517,000. See the 'Financial Strategy' section for achieving a more optimal and
sustainable funding level. Further, while fulfilling the annual requirements will position the township to meet its future replacement
needs, injection of additional revenues will be needed to mitigate existing infrastructure backlogs.
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1.6
Recommendations - Road Network
−
Primarily assessed condition data indicates a backlog of $170,000 and significant 10-year
replacement needs of $5.1 million. The township should continue its condition assessments of
road surfaces (Gravel and LCB), and expand the program to incorporate all assets in order to
more precisely estimate its actual financial requirements and field needs. See Section 2,
'Condition Assessment Programs' in the 'Asset Management Strategies' chapter.
−
The data collected through condition assessment programs should be integrated into a risk
management framework which will guide prioritization of the backlog as well as short, medium,
and long term replacement needs. See Section 4, 'Risk' in the 'Asset Management Strategies'
chapter for more information.
−
In addition to the above, a tailored lifecycle activity framework should also be developed to
promote standard lifecycle management of the road network as outlined further within the
"Asset Management Strategy" section of this AMP.
−
Road network key performance indicators should be established and tracked annually as part of
an overall level of service model. See Section 7 'Levels of Service'.
−
The township is funding 21% of its long-term requirements on an annual basis. See the
'Financial Strategy' section on how to achieve more sustainable funding levels.
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34
2. Bridges & Culverts
2.1
Asset Portfolio: Quantity, Useful Life and Replacement Cost
Table 7 illustrates key asset attributes for the township's bridges & culverts, including quantities of various assets, their useful life, their
replacement cost, and the valuation method by which the replacement costs were derived. In total, the township's bridges & culverts
assets are valued at $2.7 million based on 2016 replacement costs. The useful life indicated for each asset type below was assigned by the
township.
Table 7 Key Asset Attributes - Bridges & Culverts
Asset Type
Asset Component
Quantity
Useful Life (Years)
2016 Unit Replacement Cost
2016 Overall
Replacement Cost
Bridges & Culverts
Composite Bridge
16.7m
60
NRBCPI (Toronto)
$1,269,248.00
Corrugated Steel Pipe
43.8m
60
NRBCPI (Toronto)
$699,340.00
Rigid Frame Concrete
Structure
10.8m
60
NRBCPI (Toronto)
$374,658.00
Transverse Lam. Timber
17m
60
NRBCPI (Toronto)
$355,269.00
Total
$2,698,515.00
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Figure 16 Asset Valuation - Bridges & Culverts
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2.2
Historical Investment in Infrastructure
Figure 17 shows the township's historical investments in its bridges & culverts since 1950. While observed condition data will provide
superior accuracy in estimating replacement needs and should be incorporated into strategic plans, in the absence of such information,
understanding past expenditure patterns and current useful life consumption levels (Section 2.3) can inform the forecasting and planning
of infrastructure needs and in the development of a capital program. Note that this graph only includes the active asset inventory as of
December 31, 2016.
Figure 17 Historical Investment - Bridges & Culverts
The township has invested sporadically in its bridges and culverts since 1970. In the early 1970s, the period of largest investment, $1.26
million was invested with $664,000 put into corrugated steel pipe and $595,000 put into composite bridges.
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2.3
Useful Life Consumption
In conjunction with historical spending patterns and observed condition data, understanding the
consumption rate of assets based on industry established useful life standards provides a more
complete profile of the state of a community's infrastructure. Figure 18 illustrates the useful life
consumption levels as of 2016 for the township's bridges & culverts.
Figure 18 Useful Life Consumption - Bridges & Culverts
86% of the assets have at least 10 years of useful life remaining while 14%, with a valuation of
$375,000, remain in operation beyond their useful life.
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2.4
Current Asset Condition
Using replacement cost, in this section we summarize the condition of the township's bridges &
culverts as of 2016. By default, we rely on observed field data adapted from Ontario Structure
Inspection Manual (OSIM) inspections as provided by the township. In the absence of such
information, age-based data is used as a proxy. All assets are based on age-based data.
Figure 19 Asset Condition - Bridges & Culverts (Age-based)
Age-based data indicates that while 39% of the township's bridges & culverts are in good to very
good condition, 61%, with a valuation of $1.2 million, are in poor to very poor condition.
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2.5
Forecasting Replacement Needs
In this section, we illustrate the short-, medium- and long-term infrastructure spending requirements (replacement only) for the
township's bridges & culverts. The backlog is the aggregate investment in infrastructure that was deferred over previous years or
decades. In the absence of observed data, the backlog represents the value of assets that remain in operation beyond their useful life.
Figure 20 Forecasting Replacement Needs - Bridges & Culverts
In addition to a backlog of $375,000, replacement needs will total $1.25 million in the next fifteen years. The township's annual
requirements (indicated by the black line) for its bridges & culverts total $45,000. At this funding level, the township would be allocating
sufficient funds on an annual basis to meet replacement needs as they arise without the need for deferring projects and accruing annual
infrastructure deficits. The township is currently allocating $14,000, leaving an annual deficit of $31,000. See the 'Financial Strategy'
section for achieving a more optimal and sustainable funding level. Further, while fulfilling the annual requirements will position the
township to meet its future replacement needs, injection of additional revenues will be needed to mitigate existing infrastructure
backlogs.
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2.6
Recommendations - Bridges & Culverts
−
Age-based data indicates a significant backlog of $375,000 and 15-year replacement needs of
$1.25 million. The results and recommendations from the Ontario Structure Inspection Manual
(OSIM) inspections should be incorporated into the AMP analysis and used to generate the
short-and long-term capital and maintenance budgets for the bridge and large culvert
structures. See Section VIII, 'Asset Management Strategies'.
−
Bridge & culvert structure key performance indicators should be established and tracked
annually as part of an overall level of service model. See Section VII 'Levels of Service'.
−
The township is funding 31% of its long-term requirements on an annual basis. See the
'Financial Strategy' section on how to achieve more sustainable and optimal funding levels.
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3. Buildings
3.1
Asset Portfolio: Quantity, Useful Life and Replacement Cost
Table 8 illustrates key asset attributes for the township's buildings & facilities, including quantities of various assets, their useful life, their
replacement cost, and the valuation method by which the replacement costs were derived. In total, the township's buildings assets are
valued at $1.39 million based on 2016 replacement costs. The useful life indicated for each asset type below was assigned by the
township.
Table 8 Key Asset Attributes - Buildings
Asset Type
Asset Component
Quantity
Useful Life in Years
Valuation Method
2016 Replacement Cost
Buildings
Landfill - Shed
1600 sq ft
50
User Defined
$182,300.00
Parks - Changeroom
720 sq ft
50
NRBCPI (Toronto)
$64,875.00
Public Works - Garage
3100 sq ft
50
User Defined
$581,000.00
Public Works - Storage
800 sq ft
50
User Defined
$23,000.00
Township Building
2080 sq ft
50
User Defined
$540,000.00
Total
$1,391,175.00
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Figure 21 Asset Valuation - Buildings
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3.2
Historical Investment in Infrastructure
Figure 22 shows the township's historical investments in its buildings since 1950. While observed condition data will provide superior
accuracy in estimating replacement needs and should be incorporated into strategic plans, in the absence of such information,
understanding past expenditure patterns and current useful life consumption levels (Section 6.3) can inform the forecasting and planning
of infrastructure needs and in the development of a capital program. Note that this graph only includes the active asset inventory as of
December 31, 2016.
Figure 22 Historical Investment - Buildings
The township's investments into its building assets have been sporadic starting in 1970 until 2010. Between 1975 and 1980, the period of
largest investment, $1.86 million was invested into the building assets with a focus on public works structures. The township also
invested $7.2 million in it's landfill, parks and township buildings from 1985 to 2016. Although not shown, the town has also invested
amounts in 2014 for accessibility renovations to its building assets.
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3.3
Useful Life Consumption
In conjunction with historical spending patterns and observed condition data, understanding the
consumption rate of assets based on industry established useful life standards provides a more
complete profile of the state of a community's infrastructure. Figure 23 illustrates the useful life
consumption levels as of 2016 for the township's buildings assets.
Figure 23 Useful Life Consumption - Buildings
100% of buildings assets have at least 10 years of useful life remaining.
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3.4
Current Asset Condition
Using replacement cost, in this section we summarize the condition of the township's buildings
assets. By default, we rely on observed field data as provided by the township. In the absence of
such information, age-based data is used as a proxy. All assets are based on age-based data.
Figure 24 Asset Condition - Buildings (Age-Based)
Nearly 44% of buildings assets, with a valuation of $605,000, are in good to very good condition;
43% are in poor to very poor condition.
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3.5
Forecasting Replacement Needs
In this section, we illustrate the short-, medium- and long-term infrastructure spending requirements (replacement only) for the
township's buildings assets. The backlog is the aggregate investment in infrastructure that was deferred over previous years or decades.
In the absence of observed data, the backlog represents the value of assets that remain in operation beyond their useful life.
Figure 25 Forecasting Replacement Needs - Buildings
The age-based condition data indicates zero backlog with fifteen-year replacement needs of $600,000. The township's annual
requirements (indicated by the black line) for its buildings total $28,000. At this funding level, the township would be allocating sufficient
funds on an annual basis to meet replacement needs as they arise without the need for deferring projects and accruing annual
infrastructure deficits. The township is currently allocating approximately $5,000, leaving an annual deficit of $23,000. See the 'Financial
Strategy' section for achieving a more optimal and sustainable funding level.
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3.6
Recommendations - Buildings & Facilities
−
The township should implement a condition inspection program for all building assets to better
define financial requirements for its buildings. See Section 2, 'Condition Assessment Programs'
in the 'Asset Management Strategies' chapter.
−
The data collected through condition assessment programs should be integrated into a risk
management framework which will guide prioritization of short, medium, and long term
replacement needs. See Section 4, 'Risk' in the 'Asset Management Strategies' chapter for more
information.
−
In addition to the above, a tailored lifecycle activity framework should be developed to promote
standard lifecycle management of buildings & facilities as outlined further within the "Asset
Management Strategy" section of this AMP.
−
Using the above information, the township should assess its short-, medium- and long-term
capital, and operations and maintenance needs.
−
An appropriate percentage of the replacement costs should then be allocated for the township's
O&M requirements.
−
Facility key performance indicators should be established and tracked annually as part of an
overall level of service model. See Chapter VII, 'Levels of Service'.
−
The township is funding 18% of its long-term requirements on an annual basis. See the
'Financial Strategy' section on how to achieve more sustainable and optimal funding levels.
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4. Machinery & Equipment
4.1
Asset Portfolio: Quantity, Useful Life and Replacement Cost
Table 9 illustrates key asset attributes for the township's machinery & equipment, including quantities of various assets, their useful life,
their replacement cost, and the valuation method by which the replacement costs were derived. In total, the township's machinery &
equipment assets are valued at $655,000 based on 2016 replacement costs. The useful life indicated for each asset type below was
assigned by the township.
Table 9 Asset Inventory - Machinery & Equipment
Asset Type
Components
Quantity
Useful Life in Years
Valuation Method
2016
Replacement Cost
Machinery &
Equipment
Generators
2
20
CPI (Ontario)
$14,894.00
Grader
1
20
CPI (Ontario)
$268,377.00
Loader
2
20
CPI (Ontario)
$218,400.00
Mower/Blower
1
15
CPI (Ontario)
$74,803.00
Public Works - Shop Equipment
1
20
CPI (Ontario)
$28,851.00
Computer Hardware - Pooled
1
5
CPI (Ontario)
$49,709.00
Total
$655,034.00
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Figure 26 Asset Valuation - Machinery & Equipment
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4.2
Historical Investment in Machinery & Equipment
Figure 27 shows the township's historical investments in its machinery & equipment since 1950. While observed condition data will
provide superior accuracy in estimating replacement needs and should be incorporated into strategic plans, in the absence of such
information, understanding past expenditure patterns and current useful life consumption levels (Section 7.3) can inform the forecasting
and planning of infrastructure needs and in the development of a capital program. Note that this graph only includes the active asset
inventory as of December 31, 2016.
Figure 27 Historical Investment - Machinery & Equipment
The township rapidly expanded its machinery & equipment portfolio beginning in the early 2000s. Between 2005 and 2010, the period of
largest investment, $320,000 was invested in the machinery and equipment category.
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4.3
Useful Life Consumption
In conjunction with historical spending patterns and observed condition data, understanding the
consumption rate of assets based on industry established useful life standards provides a more
complete profile of the state of a community's infrastructure. Figure 28 illustrates the useful life
consumption levels as of 2016 for the township's machinery & equipment assets.
Figure 28 Useful Life Consumption - Machinery & Equipment
While 86% of assets have at least 10 years of useful life remaining, 12%, with a valuation of
$78,500, remain in operation beyond their useful life.
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4.4
Current Asset Condition
Using replacement cost, in this section we summarize the condition of the township's machinery &
equipment assets as of 2016. By default, we rely on observed field data as provided by the
township. In the absence of such information, age-based data is used as a proxy. All assets are based
on age-based data.
Figure 29 Asset Condition - Machinery & Equipment (Age-based)
Based on age-based condition data, 12% of assets, with a valuation of $78,50, are in poor to very
poor condition; 86% are in good to very good condition.
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4.5
Forecasting Replacement Needs
In this section, we illustrate the short-, medium- and long-term infrastructure spending requirements (replacement only) for the
township's machinery & equipment assets. The backlog is the aggregate investment in infrastructure that was deferred over previous
years or decades. In the absence of observed data, the backlog represents the value of assets that remain in operation beyond their useful
life.
Figure 30 Forecasting Replacement Needs - Machinery & Equipment
In addition to a backlog of $29,000, the township's replacement needs total $50,000 in the next five years. An additional $457,000 will be
required between 2022-2031. The township's annual requirements (indicated by the black line) for its machinery & equipment total
$41,000. At this funding level, the township would be allocating sufficient funds on an annual basis to meet replacement needs as they
arise without the need for deferring projects and accruing annual infrastructure deficits. However, the township is currently allocating
$47,000, leaving an annual surplus of $6,000. See the 'Financial Strategy' section for maintaining a sustainable funding level. Further,
while fulfilling the annual requirements will position the township to meet its future replacement needs, injection of additional revenues
will be needed to mitigate existing infrastructure backlogs.
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4.6
Recommendations - Machinery & Equipment
−
The township should implement a component based condition inspection program for all
machinery & equipment assets to better define financial requirements for its machinery and
equipment. See Section 2, 'Condition Assessment Programs' in the 'Asset Management
Strategies' chapter.
−
Using the above information, the township should assess its short-, medium- and long-term
capital, and operations and maintenance needs.
−
An appropriate percentage of the replacement costs should then be allocated for the township's
O&M requirements.
−
The township is fully funding its long-term requirements on an annual basis. See the 'Financial
Strategy' section on how to maintain sustainable and optimal funding levels.
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5. Land Improvements
5.1
Asset Portfolio: Quantity, Useful Life and Replacement Cost
Table 10 illustrates key asset attributes for the township's land improvements, including quantities of various assets, their useful life, their
replacement cost, and the valuation method by which the replacement costs were derived. In total, the township's land improvements
assets are valued at $114,000 based on 2016 replacement costs. The useful life indicated for each asset type below was assigned by the
township.
Table 10 Asset Inventory - Land Improvements
Asset Type
Components
Quantity
Useful Life in Years
Valuation Method
2016
Replacement Cost
Land
Improvements
Dock
1
20
CPI (Ontario)
$12,270.00
Fencing - Pooled
1
20
CPI (Ontario)
$5,105.00
Lighting - Pooled
1
20
CPI (Ontario)
$17,001.00
Paved Parking - Pooled
1
20
CPI (Ontario)
$16,048.00
Playground Equipment
1
20
CPI (Ontario)
$52,737.00
Water Testing
1
20
CPI (Ontario)
$11,310.00
Total
$114,471.00
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Figure 31 Asset Valuation - Land Improvements
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5.2
Historical Investment in Infrastructure
Figure 32 shows the township's historical investments in its land improvements since 1950. While observed condition data will provide
superior accuracy in estimating replacement needs and should be incorporated into strategic plans, in the absence of such information,
understanding past expenditure patterns and current useful life consumption levels (Section 8.3) can inform the forecasting and planning
of infrastructure needs and in the development of a capital program. Note that this graph only includes the active asset inventory as of
December 31, 2016.
Figure 32 Historical Investment - Land Improvements
Expenditures in land improvements have gradually increase since 1990. Between 2010 and 2015, the period of largest investment,
$64,000 was invested with a focus on playground equipment.
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5.3
Useful Life Consumption
In conjunction with historical spending patterns and observed condition data, understanding the
consumption rate of assets based on industry established useful life standards provides a more
complete profile of the state of a community's infrastructure. Figure 33 illustrates the useful life
consumption levels as of 2016 for the township's land improvement assets.
Figure 33 Useful Life Consumption - Land Improvements
67% of the township's land improvement assets, with a valuation of $76,000, have at least 10 years
of useful life remaining. An additional 4% will reach the end of their useful life within the next five
years.
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5.4
Current Asset Condition
Using replacement cost, in this section we summarize the condition of the township's land
improvement assets. By default, we rely on observed field data as provided by the township. In the
absence of such information, age-based data is used as a proxy. All assets are based on age-based
data.
Figure 34 Asset Condition - Land Improvements (Age-based)
Based on age-based condition data, 67% of the township's land improvement assets, with a
valuation of $76,000, are in good to very good condition; 18% are in poor to very poor condition.
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5.5
Forecasting Replacement Needs
In this section, we illustrate the short-, medium- and long-term infrastructure spending requirements (replacement only) for the
township's land improvements assets. The backlog is the aggregate investment in infrastructure that was deferred over previous years or
decades. In the absence of observed data, the backlog represents the value of assets that remain in operation beyond their useful life.
Figure 35 Forecasting Replacement Needs - Land Improvements
Age-based data shows a backlog of $5000 with replacement needs totaling $33,000 in the next ten years. However, replacement needs
will total $76,000 between 2027-2036. The township's annual requirements (indicated by the black line) for its land improvements total
$6,000. At this funding level, the township would be allocating sufficient funds on an annual basis to meet replacement needs as they arise
without the need for deferring projects and accruing annual infrastructure deficits. However, the township is currently allocating $97,000,
leaving an annual surplus of $91,000. See the 'Financial Strategy' section for achieving a more optimal and sustainable funding level.
Further, while fulfilling the annual requirements will position the township to meet its future replacement needs, injection of additional
revenues will be needed to mitigate existing infrastructure backlogs.
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5.6
Recommendations - Land Improvements
−
The township should implement a condition assessment program for its land improvement
assets to precisely estimate financial needs. See Section 2, 'Condition Assessment Programs' in
the 'Asset Management Strategies' chapter.
−
The data collected through condition assessment programs should be integrated into a risk
management framework which will guide prioritization of short, medium, and long term
replacement needs. See Section 4, 'Risk' in the 'Asset Management Strategies' chapter for more
information.
−
Using the above information, the township should assess its short-, medium- and long-term
capital and operations and maintenance needs.
−
An appropriate percentage of the replacement costs should then be allocated for the township's
O&M requirements.
−
The township is fully funding its long-term replacement needs on an annual basis. See the
'Financial Strategy' section on how to achieve more sustainable and optimal funding levels
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6. Vehicles
6.1
Asset Portfolio: Quantity, Useful Life and Replacement Cost
Table 11 illustrates key asset attributes for the township's vehicles portfolio, including quantities of various assets, their useful life, their
replacement cost, and the valuation method by which the replacement costs were derived. In total, the township's vehicles assets are
valued at $728,000 based on 2016 replacement costs. The useful life indicated for each asset type below was assigned by the township.
Table 11 Asset Inventory - Vehicles
Asset Type
Components
Quantity
Useful Life in Years
Valuation Method
2016
Replacement Cost
Vehicles
Plow Trucks
3
15
CPI (Ontario)
$619,788.00
Pick Up Trucks
2
8
CPI (Ontario)
$108,007.00
Total
$727,795.00
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Figure 36 Asset Valuation - Vehicles
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6.2
Historical Investment in Infrastructure
Figure 37 shows the township's historical investments in its vehicles portfolio since 1950. While observed condition data will provide
superior accuracy in estimating replacement needs and should be incorporated into strategic plans, in the absence of such information,
understanding past expenditure patterns and current useful life consumption levels (Section 9.3) can inform the forecasting and planning
of infrastructure needs and in the development of a capital program. Note that this graph only includes the active asset inventory as of
December 31, 2016.
Figure 37 Historical Investment - Vehicles
Investments in vehicles quickly increased starting in the 2000s. In 2000-2015, the period of largest investment, $728,000 was invested
with $620,000 put into plow trucks.
Note: Investments into vehicle assets are only shown for assets currently in-service.
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6.3
Useful Life Consumption
In conjunction with historical spending patterns and observed condition data, understanding the
consumption rate of assets based on industry established useful life standards provides a more
complete profile of the state of a community's infrastructure. Figure 38 illustrates the useful life
consumption levels as of 2016 for the township's vehicles.
Figure 38 Useful Life Consumption - Vehicles
28% of assets have at least 10 years of useful life remaining; 35%, with a valuation of $258,000
remain in operation beyond their useful life. An additional 7% will reach the end of their useful life
within the next five years.
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6.4
Current Asset Condition
Using replacement cost, in this section, we summarize the condition of the township's vehicles
assets as of 2015. By default, we rely on observed field data as provided by the township. In the
absence of such information, age-based data is used as a proxy. All assets are based on age-based
data.
Figure 39 Asset Condition - Vehicles (Age-based)
Age-based data shows that 65% of the township's vehicle assets are in poor to very poor condition;
28%, with a valuation of $204,000 are in good to very good condition.
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6.5
Forecasting Replacement Needs
In this section, we illustrate the short-, medium- and long-term infrastructure spending requirements (replacement only) for the
township's vehicles assets. The backlog is the aggregate investment in infrastructure that was deferred over previous years or decades. In
the absence of observed data, the backlog represents the value of assets that remain in operation beyond their useful life.
Figure 40 Forecasting Replacement Needs - Vehicles
In addition to a backlog of $258,000, replacement needs will total over $49,000 over the next five years; an additional $276,000 will be
required between 2022-2026. The township's annual requirements (indicated by the black line) for its vehicles total $55,000. At this
funding level, the township would be allocating sufficient funds on an annual basis to meet replacement needs as they arise without the
need for deferring projects and accruing annual infrastructure deficits. However, the township is currently allocating $77,000, leaving an
annual surplus of $22,000. See the 'Financial Strategy' section for achieving a more optimal and sustainable funding level. Further, while
fulfilling the annual requirements will position the township to meet its future replacement needs, injection of additional revenues will be
needed to mitigate existing infrastructure backlogs.
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6.6
Recommendations - Vehicles
−
A preventative maintenance and lifecycle assessment program should be established for all
vehicle assets to gain a better understanding of current condition and performance as well as
the short- and medium-term replacement needs. See Section 2, 'Condition Assessment
Programs' in the 'Asset Management Strategies' chapter.
−
Using the above information, the township should assess its short-, medium- and long-term
capital and operations and maintenance needs.
−
An appropriate percentage of the replacement costs should then be allocated for the township's
O&M requirements.
−
The township is fully funding its long-term replacement needs on an annual basis. See the
'Financial Strategy' section on how to achieve more sustainable and optimal funding levels.
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VII. Levels of Service
The two primary risks to a township's financial sustainability are the total lifecycle costs of
infrastructure, and establishing levels of service (LOS) that exceed its financial capacity. In this
regard, municipalities face a choice: overpromise and underdeliver; under promise and overdeliver;
or promise only that which can be delivered efficiently without placing inequitable burden on
taxpayers. In general, there is often a trade-off between political expedience and judicious, long-
term fiscal stewardship.
Developing realistic LOS using meaningful key performance indicators (KPIs) can be instrumental
in managing citizen expectations, identifying areas requiring higher investments, driving
organizational performance and securing the highest value for money from public assets. However,
municipalities face diminishing returns with greater granularity in their LOS and KPI framework.
That is, the objective should be to track only those KPIs that are relevant and insightful and reflect
the priorities of the township.
1. Guiding Principles for Developing LOS
Beyond meeting regulatory requirements, levels of service established should support the intended
purpose of the asset and its anticipated impact on the community and the township. LOS generally
have an overarching corporate description, a customer oriented description, and a technical
measurement. Many types of LOS, e.g., availability, reliability, safety, responsiveness and cost
effectiveness, are applicable across all service areas in a municipality. The following LOS categories
are established as guiding principles for the LOS that each service area in the township should
strive to provide internally to the township and to residents/customers. These are derived from the
Town of Whitby's Guide to Developing Service Area Asset Management Plans.
Table 12 LOS Categories
LOS Category
Description
Reliable
Services are predictable and continuous; services of sufficient capacity are convenient and
accessible to the entire community.
Cost Effective
Services are provided at the lowest possible cost for both current and future customers, for a
required level of service, and are affordable.
Responsive
Opportunities for community involvement in decision making are provided; and customers are
treated fairly and consistently, within acceptable timeframes, demonstrating respect, empathy and
integrity.
Safe
Services are delivered such that they minimize health, safety and security risks.
Suitable
Services are suitable for the intended function (fit for purpose).
Sustainable
Services preserve and protect the natural and heritage environment.
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2. Key Performance Indicators and Targets
In this section, we identify industry standard KPIs for major infrastructure classes that the
township can incorporate into its performance measurement and for tracking its progress over
future iterations of its AMPs. The township should develop appropriate and achievable targets that
reflect evolving demand on infrastructure, its fiscal capacity and the overall corporate objectives.
Table 13 Key Performance Indicators - Road Network and Bridges & Culverts
Level
KPI (Reported Annually)
Strategic
−
Percentage of total reinvestment compared to asset replacement value
−
Completion of strategic plan objectives (related to roads, and bridges & culverts)
Financial
Indicators
−
Annual revenues compared to annual expenditures
−
Annual replacement value depreciation compared to annual expenditures
−
Cost per capita for roads, and bridges & culverts
−
Maintenance cost per square metre
−
Revenue required to maintain annual network growth
−
Total cost of borrowing vs. total cost of service
Tactical
−
Overall Bridge Condition Index (BCI) as a percentage of desired BCI
−
Percentage of road network rehabilitated/reconstructed
−
Percentage of paved road lane kilometres rated as poor to very poor
−
Percentage of bridges and large culverts rated as poor to very poor
−
Percentage of asset class value spent on O&M
Operational
Indicators
−
Percentage of roads inspected within the last five years
−
Percentage of bridges and large culverts inspected within the last two years
−
Operating costs for paved lane per kilometres
−
Operating costs for bridge and large culverts per square metre
−
Percentage of customer requests with a 24-hour response rate
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Table 14 Key Performance Indicators - Buildings
Table 15 Key Performance Indicators - Vehicles
Level
KPI (Reported Annually)
Strategic
−
Percentage of total reinvestment compared to asset replacement value
−
Completion of strategic plan objectives (related to buildings & facilities)
Financial
Indicators
−
Annual revenues compared to annual expenditures
−
Annual replacement value depreciation compared to annual expenditures
−
Revenue required to meet growth related demand
−
Repair and maintenance costs per square metre
−
Energy, utility and water cost per square metre
Tactical
−
Percentage of component value replaced
−
Percent of facilities rated poor or critical
−
Percentage of facilities replacement value spent on O&M
−
Facility utilization rate
−
𝑈𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑅𝑎𝑡𝑒=
𝑂𝑐𝑐𝑢𝑝𝑖𝑒𝑑 𝑆𝑝𝑎𝑐𝑒
𝐹𝑎𝑐𝑖𝑙𝑖𝑡𝑦 𝑈𝑠𝑎𝑏𝑙𝑒 𝐴𝑟𝑒𝑎
Operational
Indicators
−
Percentage of facilities inspected within the last five years
−
Number/type of service requests
−
Percentage of customer requests addressed within 24 hours
Level
KPI (Reported Annually)
Strategic
−
Percentage of total reinvestment compared to asset replacement value
−
Completion of strategic plan objectives (related to vehicles)
Financial
Indicators
−
Annual revenues compared to annual expenditures
−
Annual replacement value depreciation compared to annual expenditures
−
Cost per capita for vehicles
−
Revenue required to maintain annual fleet portfolio growth
−
Total cost of borrowing vs. total cost of service
Tactical
−
Percentage of all vehicles replaced
−
Average age of vehicles
−
Percent of vehicles rated poor or critical
−
Percentage of vehicles replacement value spent on O&M
Operational
Indicators
−
Average downtime per vehicles category
−
Average utilization per vehicles category and/or each vehicle
−
Ratio of preventative maintenance repairs vs. reactive repairs
−
Percent of vehicles that received preventative maintenance
−
Number/type of service requests
−
Percentage of customer requests addressed within 24 hours
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Table 16 Key Performance Indicators - Machinery & Equipment
Table 17 Key Performance Indicators - Land Improvements
Level
KPI (Reported Annually)
Strategic
−
Percentage of total reinvestment compared to asset replacement value
−
Completion of strategic plan objectives (related to machinery & equipment)
Financial
Indicators
−
Annual revenues compared to annual expenditures
−
Annual replacement value depreciation compared to annual expenditures
−
Cost per capita for machinery & equipment
−
Revenue required to maintain annual portfolio growth
−
Total cost of borrowing vs. total cost of service
Tactical
−
Percentage of all machinery & equipment replaced
−
Average age of machinery & equipment assets
−
Percent of machinery & equipment rated poor or critical
−
Percentage of vehicles replacement value spent on O&M
Operational
Indicators
−
Average downtime per machinery & equipment asset
−
Ratio of preventative maintenance repairs vs. reactive repairs
−
Percent of machinery & equipment that received preventative maintenance
−
Number/type of service requests
Level
KPI (Reported Annually)
Strategic
−
Percentage of total reinvestment compared to asset replacement value
−
Completion of strategic plan objectives (related to land improvements)
Financial
Indicators
−
Annual revenues compared to annual expenditures
−
Annual replacement value depreciation compared to annual expenditures
−
Cost per capita for supplying parks, playgrounds, etc.
−
Repair and maintenance costs per square metre
Tactical
−
Percent of land improvements rated poor or critical
−
Percentage of replacement value spent on O&M
−
Parkland per capita
Operational
Indicators
−
Percentage of land improvements inspected within the last five years
−
Number/type of service requests
−
Percentage of customer requests addressed within 24 hours
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3. Future Performance
In addition to a municipality's financial capacity and legislative requirements, many factors,
internal and external, can influence the establishment of LOS and their associated KPI. These can
include the township's overarching mission as an organization, the current state of its
infrastructure and the wider social, political and macroeconomic context. The following factors
should inform the development of most levels of service targets and their associated KPIs:
Strategic Objectives and Corporate Goals
The township's long-term direction is outlined in its corporate and strategic plans. This direction
will dictate the types of services it aims to deliver to its residents and the quality of those services.
These high-level goals are vital in identifying strategic (long-term) infrastructure priorities and as a
result, the investments needed to produce desired levels of service.
State of the Infrastructure
The current state of capital assets will determine the quality of services the township can deliver to
its residents. As such, levels of service should reflect the existing capacity of assets to deliver those
services, and may vary (increase) with planned maintenance, rehabilitation or replacement
activities and timelines.
Community Expectations
The general public will often have qualitative and quantitative insights regarding the levels of
service a particular asset or a network of assets should deliver, e.g., what a road in 'good' condition
should look like or the travel time between destinations. The public should be consulted in
establishing LOS; however, the discussions should be centered on clearly outlining the lifecycle
costs associated with delivering any improvements in LOS.
Economic Trends
Macroeconomic trends will have a direct impact on the LOS for most infrastructure services. Fuel
costs, fluctuations in interest rates and the purchasing power of the Canadian dollar can impede or
accelerate any planned growth in infrastructure services.
Demographic Changes
The composition of residents in a municipality can also serve as an infrastructure demand driver,
and as a result, can change how a municipality allocates its resources (e.g., an aging population may
require diversion of resources from parks and sports facilities to additional wellbeing centers).
Population growth is also a significant demand driver for existing assets (lowering LOS), and may
require the township to construct new infrastructure to parallel community expectations.
Environmental Change
Forecasting for infrastructure needs based on climate change remains an imprecise science.
However, broader environmental and weather patterns have a direct impact on the reliability of
critical infrastructure services.
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4. Monitoring, Updating and Actions
The township should collect data on its current performance against the KPIs listed and establish
targets that reflect the current fiscal capacity of the township, its corporate and strategic goals, and
as feasible, changes in demographics that may place additional demand on its various asset classes.
For some asset classes, e.g., minor equipment, furniture, etc., cursory levels of service and their
respective KPIs will suffice. For major infrastructure classes, detailed technical and customer-
oriented KPIs can be critical. Once this data is collected and targets are established, the progress of
the township should be tracked annually.
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VIII. Asset Management Strategies
The asset management strategy section will outline an implementation process that can be used to
identify and prioritize renewal, rehabilitation and maintenance activities. This will assist in the
development of a 10-year capital plan, including growth projections, to ensure the best overall
health and performance of the township's infrastructure. This section includes an overview of
condition assessment, the lifecycle interventions required, and prioritization techniques, including
risk, to determine which capital projects should move forward into the budget first.
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1. Non-Infrastructure Solutions & Requirements
The township should explore, as requested through the provincial requirements, which non-
infrastructure solutions should be incorporated into the budgets for its infrastructure services.
Non-infrastructure solutions are such items as studies, policies, condition assessments,
consultation exercises, etc., that could potentially extend the life of assets or lower total asset
program costs in the future without a direct investment into the infrastructure.
Typical solutions for a municipality include linking the asset management plan to the strategic plan,
growth and demand management studies, infrastructure master plans, better integrated
infrastructure and land use planning, public consultation on levels of service and condition
assessment programs. As part of future asset management plans, a review of these requirements
should take place, and a portion of the capital budget should be dedicated for these items in each
programs budget.
It is recommended, under this category of solutions, that the township should develop and
implement holistic condition assessment programs for all asset classes. This will advance the
understanding of infrastructure needs, improve budget prioritization methodologies and provide a
clearer path of what is required to achieve sustainable infrastructure programs.
2. Condition Assessment Programs
The foundation of an intelligent asset management practice is based on having comprehensive and
reliable information on the current condition of the infrastructure. Municipalities need to have a
clear understanding regarding the performance and condition of their assets, as all management
decisions regarding future expenditures and field activities should be based on this knowledge. An
incomplete understanding of an asset may lead to its untimely failure or premature replacement.
Some benefits of holistic condition assessment programs within the overall asset management
process are listed below:
−
understanding of overall network condition leads to better management practices
−
allows for the establishment of rehabilitation programs
−
prevents future failures and provides liability protection
−
potential reduction in operation/maintenance costs
−
accurate current asset valuation
−
allows for the establishment of risk assessment programs
−
establishes proactive repair schedules and preventive maintenance programs
−
avoids unnecessary expenditures
−
extends asset service life therefore improving level of service
−
improves financial transparency and accountability
−
enables accurate asset reporting which, in turn, enables better decision making
Condition assessment can involve different forms of analysis such as subjective opinion,
mathematical models, or variations thereof, and can be completed through a very detailed or very
cursory approach. When establishing the condition assessment for an entire asset class, a cursory
approach (metrics such as good, fair, poor, very poor) is used. This is an economical strategy that
will still provide up to date information, and will allow for detailed assessment or follow-up
inspections on those assets captured as poor or critical condition later.
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The Impact of Condition Assessments
In 2015, PSD published a study in partnership with the Association of Municipalities of Ontario
(AMO). The report, The State of Ontario's Roads and Bridges: An Analysis of 93 Municipalities,
enumerated the infrastructure deficits, annual investment gaps, and the physical state of roads,
bridges and culverts with a 2013 replacement value of $28 billion.
A critical finding of the report was the dramatic difference in the condition profile of the assets
when comparing age-based estimates and actual field inspection observations. For each asset
group, field data based condition ratings were significantly higher than age-based condition ratings,
with paved roads, culverts, and bridges showing an increase in score (0-100) of +29, +30, and +23
points respectively. In other words, age-based measurements maybe underestimating the condition
of assets by as much as 30%.
Figure 41 Comparing Age-based and Assessed Condition Data
36
32
40
59
62
69
Bridges (Structure)
Culverts (Structure)
Paved Roads
Assessed
Age-Based
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2.1
Pavement Network
Typical industry pavement inspections are performed by consulting firms using specialized
assessment vehicles equipped with various electronic sensors and data capture equipment. The
vehicles will drive the entire road network and typically collect two different types of inspection
data: surface distress data and roughness data.
Surface distress data involves the collection of multiple industry standard surface distresses, which
are captured either electronically using sensing detection equipment mounted on the van, or
visually by the van's inspection crew. Roughness data capture involves the measurement of the
roughness of the road, measured by lasers that are mounted on the inspection van's bumper,
calibrated to an international roughness index.
Another option for a cursory level of condition assessment is for municipal road crews to perform
simple windshield surveys as part of their regular patrol. Many municipalities have created data
collection inspection forms to assist this process and to standardize what presence of defects would
constitute a good, fair, poor, or critical score. Lacking any other data for the complete road network,
this can still be seen as a good method and will assist greatly with the overall management of the
road network.
It is recommended that the township continue its pavement condition assessment program and
that a portion of capital funding is dedicated to this. We also recommend expansion of this program
to incorporate additional components.
2.2
Bridges & Culverts
Ontario municipalities are mandated by the Ministry of Transportation to inspect all structures that
have a span of 3 metres or more, according to the OSIM (Ontario Structure Inspection Manual).
Structure inspections must be performed by, or under the guidance of, a structural engineer, must
be performed on a biennial basis (once every two years), and include such information as structure
type, number of spans, span lengths, other key attribute data, detailed photo images, and structure
element by element inspection, rating and recommendations for repair, rehabilitation, and
replacement.
The best approach to develop a 10-year needs list for the township's structure portfolio relies on
the structural engineer who performs the inspections to also produce a maintenance requirements
report, and rehabilitation & replacement requirements report as part of the overall assignment. In
addition to defining the overall needs requirements, the structural engineer should identify those
structures that will require more detailed investigations and non-destructive testing techniques.
Examples of these investigations are:
−
Detailed deck condition survey
−
Non-destructive delamination survey of asphalt covered decks
−
Substructure condition survey
−
Detailed coating condition survey
−
Underwater investigation
−
Fatigue investigation
−
Structure evaluation
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Through the Ontario Structure Inspection Manual (OSIM) recommendations and additional detailed
investigations, a 10-year needs list can be developed for the township's bridges.
2.3
Buildings & Facilities
The most popular and practical type of buildings & facilities assessment involves qualified groups of
trained industry professionals (engineers or architects) performing an analysis of the condition of a
group of facilities and their components, that may vary in terms of age, design, construction
methods and materials. This analysis can be done by walk-through inspection (the most accurate
approach), mathematical modeling or a combination of both. The following asset classifications are
typically inspected:
−
Site Components - property around the facility and outdoor components such as utilities,
signs, stairways, walkways, parking lots, fencing, courtyards and landscaping
−
Structural Components - physical components such as the foundations, walls, doors,
windows, roofs
−
Electrical Components - all components that use or conduct electricity such as wiring,
lighting, electric heaters, and fire alarm systems
−
Mechanical Components - components that convey and utilize all non-electrical utilities
within a facility such as gas pipes, furnaces, boilers, plumbing, ventilation, and fire extinguishing
systems
−
Vertical Movement - components used for moving people between floors of buildings such as
elevators, escalators and stair lifts
Once collected, this information can be uploaded into the CityWide®, the township's asset
management and asset registry software database in order for short- and long-term repair,
rehabilitation and replacement reports to be generated to assist with programming the short- and
long-term maintenance and capital budgets.
It is recommended that the township conduct inspections of structures and expand its condition
assessment program for all buildings. It is also recommended that a portion of capital funding is
dedicated to this.
2.4
Vehicles and Machinery & Equipment
The typical approach to optimizing the maintenance expenditures of vehicles and machinery &
equipment, is through routine vehicle and component inspections, routine servicing, and a routine
preventative maintenance program. Most makes and models of vehicles and machinery assets are
supplied with maintenance manuals that define the appropriate schedules and routines for typical
maintenance and servicing, and also more detailed restoration or rehabilitation protocols.
The primary goal of sound maintenance is to avoid or mitigate the consequence of failure of
equipment or parts. An established preventative maintenance program serves to ensure this, as it
will consist of scheduled inspections and follow up repairs of vehicles and machinery & equipment
in order to decrease breakdowns and excessive downtimes.
A good preventative maintenance program will include partial or complete overhauls of equipment
at specific periods, including oil changes, lubrications, fluid changes and so on. In addition, workers
can record equipment or part deterioration so they can schedule to replace or repair worn parts
before they fail.
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The ideal preventative maintenance program would move progressively further away from reactive
repairs and instead towards the prevention of all equipment failure before it occurs.
It is recommended that a preventative maintenance routine is defined and established for all
vehicles and machinery & equipment assets, and that a software application is utilized for the
overall management of the program.
2.5
Parks and Land Improvements
CSA standards provide guidance on the process and protocols in regards to the inspection of parks
and their associated assets, e.g., play spaces and equipment. The land improvements inspection will
involve qualified groups of trained industry professionals (operational staff or landscape
architects) performing an analysis of the condition of a group of land improvement assets and their
components. The most accurate way of determining the condition requires a walk-through to
collect baseline data. The following key asset classifications are typically inspected:
−
Physical Site Components - physical components on the site of the park such as fences,
utilities, stairways, walkways, parking lots, irrigation systems, monuments, fountains
−
Recreation Components - physical components such as playgrounds, bleachers, back stops,
splash pads, and benches
−
Land Site Components - land components on the site of the park such as landscaping, sports
fields, trails, natural areas, and associated drainage systems
− Minor Park Facilities - small facilities within the park site such as: sun shelters, washrooms,
concession stands, change rooms, storage sheds
It is recommended that the township implement a parks condition assessment program and that a
portion of capital funding is dedicated to this.
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3. Lifecycle Analysis Framework
An industry review was conducted to determine which lifecycle activities can be applied at the
appropriate time in an asset's life, to provide the greatest additional life at the lowest cost. In the
asset management industry, this is simply put as doing the right thing to the right asset at the right
time. If these techniques are applied across entire asset networks or portfolios (e.g., the entire road
network), the township can gain the best overall asset condition while expending the lowest total
cost for those programs.
3.1
Paved Roads
The following analysis has been conducted at a fairly high level, using industry standard activities
and costs for paved roads. With future updates of this asset management strategy, the township
may wish to run the same analysis with a detailed review of township activities used for roads and
the associated local costs for those work activities. All of this information can be entered into the
CityWide® software suite in order to perform updated financial analysis as more detailed
information becomes available. The following diagram depicts a general deterioration profile of a
road with a 30-year life.
Figure 42 Paved Road General Deterioration Profile
As shown above, during the road's lifecycle, there are various windows available for work activity
that will maintain or extend the life of the asset. These windows are: maintenance; preventative
maintenance; rehabilitation; and replacement or reconstruction.
Excellent: Maintenance
Good: Preventative Maintenance
Fair: Rehabilitation
Poor: Replace
100
75
50
25
0
Years in Service
30 Years
Condition
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The windows or thresholds for when certain work activities should be applied to also coincide
approximately with the condition state of the asset as shown below:
Table 18 Asset Condition and Related Work Activity for Paved Roads
Condition
Condition Range
Work Activity
Very Good
(Maintenance only phase)
81-100
−
Maintenance only
Good
(Preventative maintenance phase)
61-80
−
Crack sealing
−
Emulsions
Fair
(Rehabilitation phase)
41-60
−
Resurface - mill & pave
−
Resurface - asphalt overlay
−
Single & double surface treatment (for rural roads)
Poor
(Reconstruction phase)
21-40
−
Reconstruct - pulverize and pave
−
Reconstruct - full surface and base reconstruction
Very Poor
(Reconstruction phase)
0-20
−
Critical includes assets beyond their useful lives
which make up the backlog. They require the same
interventions as the 'poor' category above.
With future updates of this asset management strategy, the township may wish to review the above
condition ranges and thresholds for when certain types of work activity occur, and adjust to better
suit the township's work program. Also note: when adjusting these thresholds, it actually adjusts
the level of service provided and ultimately changes the amount of money required. These
thresholds and condition ranges can be updated and a revised financial analysis can be calculated.
These adjustments will be an important component of future asset management plans, as the
province requires each municipality to present various management options within the financing
plan.
It is recommended that the township establish a lifecycle activity framework for the various classes
of paved road within their transportation network.
3.2
Bridges & Culverts
The best approach to develop a 10-year needs list for the township's bridge structure portfolio
relies on the structural engineer who performs the inspections to develop a maintenance
requirements report, a rehabilitation and replacement requirements report and identify additional
detailed inspections as required.
3.3
Buildings & Facilities
The best approach to develop a 10-year needs list for the township's facilities portfolio would be to
have the engineers, operational staff or architects who perform the facility inspections to also
develop a complete portfolio maintenance requirements report and rehabilitation and replacement
requirements report, and also identify additional detailed inspections and follow up studies as
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required. This may be performed as a separate assignment once all individual facility
audits/inspections are complete.
The above reports could be considered the beginning of a 10-year maintenance and capital plan;
however, within the facilities industry, there are other key factors that should be considered to
determine over all priorities and future expenditures. Some examples would be functional and
legislative requirements, energy conservation programs and upgrades, customer complaints and
health and safety concerns, and customer expectations balanced with willingness-to-pay initiatives.
It is recommended that the township establish a prioritization framework for the facilities asset
class that incorporates the key components outlined above.
3.4
Vehicles and Machinery & Equipment
The best approach to develop a 10-year needs list for the township's vehicles and machinery &
equipment portfolio would first be through a defined preventative maintenance program, and
secondly, through an optimized lifecycle vehicle replacement schedule. The preventative
maintenance program would serve to determine budget requirements for operating and minor
capital expenditures for renewal of parts, and major refurbishments and rehabilitations. An
optimized replacement program will ensure a vehicle or equipment asset is replaced at the correct
point in time in order to minimize overall cost of ownership, minimize costly repairs and downtime,
while maximizing potential re-sale value. There is significant benchmarking information available
within the vehicles industry in regard to vehicle lifecycles which can be used to assist in this
process. Once appropriate replacement schedules are established, the short- and long-term budgets
can be funded accordingly.
There are, of course, functional aspects of vehicles management that should also be examined in
further detail as part of the long-term management plan, such as vehicles utilization and
incorporating green vehicles, etc. It is recommended that the township establish a prioritization
framework for the vehicles asset class that incorporates the key components outlined above.
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4. Growth and Demand
Growth is a critical infrastructure demand driver for most infrastructure services. As such, the
township must not only account for the lifecycle cost for its existing asset portfolio, but those of any
anticipated and forecasted capital projects associated specifically with growth. Based on the 2016
census, the population for Machar has decreased 4.4% since 2011 to reach 882. Population changes
will require the township to determine the impact to expected levels of service and if any changes
to the existing asset inventory may be required.
5. Project Prioritization and Risk Management
Generally, infrastructure needs exceed municipal capacity. As such, municipalities rely heavily on
provincial and federal programs and grants to finance important capital projects. Fund scarcity
means projects and investments must be carefully selected based on the state of infrastructure,
economic development goals, and the needs of an evolving and growing community. These factors,
along with social and environmental considerations will form the basis of a robust risk
management framework.
5.1
Defining Risk Management
From an asset management perspective, risk is a function of the consequences of failure (e.g., the
negative economic, financial, and social consequences of an asset in the event of a failure); and, the
probability of failure (e.g., how likely is the asset to fail in the short- or long-term). The
consequences of failure are typically reflective of:
−
An asset's importance in an overall system:
For example, the failure of an individual computer workstation for which there are readily
available substitutes is much less consequential and detrimental than the failure of a network
server or telephone exchange system.
−
The criticality of the function performed:
For example, a mechanical failure on a road construction equipment may delay the progress of
a project, but a mechanical failure on a fire pumper truck may lead to immediate life safety
concerns for fire fighters, and the public, as well as significant property damage.
−
The exposure of the public and/or staff to injury or loss of life:
For example, a single sidewalk asset may demand little consideration and carry minimum
importance to the township's overall pedestrian network and performs a modest function.
However, members of the public interact directly with the asset daily and are exposed to
potential injury due to any trip hazards or other structural deficiencies that may exist.
The probability of failure is generally a function of an asset's physical condition, which is heavily
influenced by the asset's age and the amount of investment that has been made in the maintenance
and renewal of the asset throughout its life.
Risk mitigation is traditionally thought of in terms of safety and liability factors. In asset
management, the definition of risk should heavily emphasize these factors but should be expanded
to consider the risks to the township's ability to deliver targeted levels of service
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−
The impact that actions (or inaction) on one asset will have on other related assets
−
The opportunities for economic efficiency (realized or lost) relative to the actions taken
5.2
Risk Matrices
Using the logic above, a risk matrix will illustrate each asset's overall risk, determined by
multiplying the probability of failure (PoF) scores with the consequence of failure (CoF) score, as
illustrated in the table that follow. This can be completed as a holistic exercise against any data set
by determining which factors (or attributes) are available and will contribute to the PoF or CoF of
an asset. Figure 43 (known as a bowtie model in the risk industry) illustrates this concept. The
probability of failure is increased as more and more factors collude to cause asset failure.
Figure 43 Bow Tie Risk Model
Failure
Event
CONSEQUENCES OF FAILURE
Includes immediate and long-
term economic, social and
environmental
PROBABILITY OF FAILURE
Increased by fundamental and
immediate causes such as age,
or observed condition
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Probability of Failure
In this AMP, the probability of a failure event is predicted by the condition of the asset.
Table 19 Probability of Failure - All Assets
Asset Classes
Condition Rating
Probability of Failure
ALL
0-20 Very Poor
5 - Very High
21-40 Poor
4 - High
41-60 Fair
3 - Moderate
61-80 Good
2 - Low
81-100 Excellent
1 - Very Low
Consequence of Failure
The consequence of failure for the asset classes analyzed in this AMP will be determined either by
the replacement costs of assets, or other attributes as relevant. These attributes include material
types, classifications, or size. Asset classes for which replacement cost is used include: bridges &
culverts, buildings & facilities, land improvements, vehicles, and machinery & equipment. This
approach is premised on the assumption that the higher the replacement cost, the larger (and likely
more important) the asset, requiring a higher risk scoring.
Assets for which other attributes are used include: roads. Attributes are selected based on their
impact on service delivery. Scoring for roads, the risk is based on classification as it reflects the
traffic volumes and number of people affected.
Table 20 Consequence of Failure - Roads
Table 21 Consequence of Failure - Bridges & Culverts
Road Classification
Consequence of failure
Gravel
Score of 1
LCB
Score of 3
Replacement Value
Consequence of failure
Up to $200k
Score of 1
$201 to $300k
Score of 2
$301 to $400k
Score of 3
$401 to $500k
Score of 4
$501k and over
Score of 5
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Table 22 Consequence of Failure - Buildings & Facilities
Table 23 Consequence of Failure - Machinery & Equipment
Table 24 Consequence of Failure - Land Improvements
Table 25 Consequence of Failure - Vehicles
The risk matrices that follow show the distribution of assets within each asset class according to the
probability and likelihood of failure scores as discussed above.
Replacement Value
Consequence of failure
Up to $50k
Score of 1
$51k to $150k
Score of 2
$151k to $500k
Score of 3
$501k to $1 million
Score of 4
Over $1 million
Score of 5
Replacement Value
Consequence of failure
Up to $10k
Score of 1
$11k to $50k
Score of 2
$51k to $100k
Score of 3
$101k to $150k
Score of 4
Over $150k
Score of 5
Replacement Value
Consequence of failure
Up to $10k
Score of 1
$11k to $30k
Score of 2
$31k to $50k
Score of 3
$51k to $80k
Score of 4
Over $80k
Score of 5
Replacement Value
Consequence of failure
Up to $50k
Score of 1
$51k to $100k
Score of 2
$101k to $150k
Score of 3
$151k to $200k
Score of 4
Over $200k
Score of 5
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Figure 44 Distribution of Assets Based on Risk - All Asset Classes
Figure 45 Distribution of Assets Based on Risk - Road Network
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Figure 46 Distribution of Assets Based on Risk - Bridges & Culverts
Figure 47 Distribution of Assets Based on Risk - Buildings & Facilities
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Figure 48 Distribution of Assets Based on Risk - Machinery & Equipment
Figure 49 Distribution of Assets Based on Risk - Land Improvements
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Figure 50 Distribution of Assets Based on Risk - Vehicles
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IX. Financial Strategy
1. General Overview
In order for an AMP to be effective and meaningful, it must be integrated with financial planning
and long-term budgeting. The development of a comprehensive financial plan will allow the
township to identify the financial resources required for sustainable asset management based on
existing asset inventories, desired levels of service and projected growth requirements.
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Figure 51 Cost Elements
Growth
Requirements
Service
Enhancements
Inflation Requirements
Renewal Requirements
Amortization of Historical Cost of
Investment
Principal & Interest Payments
Operations and Maintenance Costs
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Figure 51 depicts the various cost elements and resulting funding levels that should be
incorporated into AMPs that are based on best practices. Municipalities meeting their operational
and maintenance needs, and debt obligations are funding only their cash cost. Funding at this level
is severely deficient in terms of lifecycle costs.
Meeting the annual amortization expense based on the historical cost of investment will ensure
municipalities adhere to accounting rules implemented in 2009; however, funding is still deficient
for long-term needs. As municipalities graduate to the next level and meet renewal requirements,
funding at this level ensures that need and cost of full replacement is deferred. If municipalities
meet inflation requirements, they're positioning themselves to meet replacement needs at existing
levels of service. In the final level, municipalities that are funding for service enhancement and
growth requirements are fiscally sustainable and cover future investment needs.
This report develops a financial plan by presenting several scenarios for consideration and
culminating with final recommendations. It includes recommendations that avoid long-term
funding deficits. As outlined below, the scenarios presented model different combinations of the
following components:
−
the financial requirements (as documented in the SOTI section of this report) for existing assets,
existing service levels, requirements of contemplated changes in service levels (none identified
for this plan), and requirements of anticipated growth (none identified for this plan)
−
use of traditional sources of municipal funds including tax levies, user fees, reserves, debt, and
development charges
−
use of non-traditional sources of municipal funds, e.g., reallocated budgets
−
use of senior government funds, such as the federal Gas Tax Fund, Ontario Community
Infrastructure Fund (OCIF)
If the financial plan component of an AMP results in a funding shortfall, the province requires the
inclusion of a specific plan as to how the impact of the shortfall will be managed. In determining the
legitimacy of a funding shortfall, the province may evaluate a municipality's approach to the
following:
−
In order to reduce financial requirements, consideration has been given to revising service
levels downward.
−
All asset management and financial strategies have been considered. For example:
-
If a zero debt policy is in place, is it warranted? If not, the use of debt should be
considered.
-
Do user fees reflect the cost of the applicable service? If not, increased user fees should
be considered.
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2. Financial Profile: Tax Funded Assets
2.1
Funding Objective
We have developed scenarios that would enable the township to achieve full funding within 5 to 20 years for the following assets: Road
Network; Bridges & Culverts; Machinery & Equipment; Buildings; Land Improvements; Vehicles. For each scenario developed, we have
included strategies, where applicable, regarding the use of tax revenues, user fees, reserves and debt.
2.2
Current Funding Position
Table 26 and Table 27 outline, by asset category, Machar's average annual asset investment requirements, current funding positions, and
funding increases required to achieve full funding on assets funded by taxes.
Table 26 Infrastructure Requirements and Current Funding Available: Tax Funded Assets
Asset class
Average
Annual
Investment
Required
Total Funding Available in 2016
Annual
Deficit/Surplus
Taxes
Gas Tax
OCIF
Taxes to
Reserves
Total Funding
Available
Road Network
657,000
34,000
56,000
50,000
0
140,000
517,000
Bridges & Culverts
45,000
14,000
0
0
0
14,000
31,000
Machinery & Equipment
41,000
26,000
0
0
21,000
47,000
6,000
Buildings
28,000
5,000
0
0
0
5,000
23,000
Land Improvements
6,000
97,000
0
0
0
97,000
91,000
Vehicles
55,000
56,000
0
0
21,000
77,000
22,000
Total
832,000
232,000
56,000
50,000
42,000
380,000
452,000
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2.3
Recommendations for Full Funding
The average annual investment requirement for tax funded categories is $832,000. Annual revenue
currently allocated to these assets for capital purposes is $380,000, leaving an annual deficit of
$452,000. To put it another way, these infrastructure categories are currently funded at 46% of
their long-term requirements.
In 2017, Machar had annual tax revenues of $1,735,000. As illustrated in Table 27, without
consideration of any other sources of revenue, full funding would require the following tax change
over time:
Table 27 Tax Change Required for Full Funding
Asset class
Tax Change Required for Full Funding
Road Network
29.8%
Bridges & Culverts
1.8%
Machinery & Equipment
-0.3%
Facilities
1.3%
Land Improvements
-5.2%
Vehicles
-1.3%
Total
26.1%
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Table 28 Effect of Changes in OCIF Funding and Reallocating Decreases in Debt Costs
Considering all of the above information, we recommend the 20 year option that includes capturing the changes. This involves full funding
being achieved over 20 years by:
−
Increasing tax revenues by 1.3% each year for the next 20 years solely for the purpose of phasing in full funding to the asset categories
covered in this section of the AMP.
−
allocating the current gas tax and OCIF revenue as outlined in Table 26.
−
Reallocating appropriate revenue from categories in a surplus position to those in a deficit position
−
increasing existing and future infrastructure budgets by the applicable inflation index on an annual basis in addition to the deficit
phase-in.
Without Capturing Changes
With Capturing Changes
5 Years
10 Years
15 Years
20 Years
5 Years
10 Years
15 Years
20 Years
Infrastructure Deficit
452,000
452,000
452,000
452,000
452,000
452,000
452,000
452,000
Change in OCIF Grant
N/A
N/A
N/A
N/A
0
0
0
0
Changes in Debt Costs
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Resulting Infrastructure Deficit
452,000
452,000
452,000
452,000
452,000
452,000
452,000
452,000
Resulting Tax Increase Required:
Total Over Time
26.1%
26.1%
26.1%
26.1%
26.1%
26.1%
26.1%
26.1%
Annually
5.2%
2.6%
1.7%
1.3%
5.2%
2.6%
1.7%
1.3%
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Notes:
−
As in the past, periodic senior government infrastructure funding will most likely be available
during the phase-in period. By Provincial AMP rules, this periodic funding cannot be
incorporated into an AMP unless there are firm commitments in place. We have included OCIF
formula based funding, if applicable, since this funding is a multi-year commitment.
−
We realize that raising tax revenues by the amounts recommended above for infrastructure
purposes will be very difficult to do. However, considering a longer phase-in window may have
even greater consequences in terms of infrastructure failure.
Although this option achieves full funding on an annual basis in 20 years and provides financial
sustainability over the period modeled, the recommendations do require prioritizing capital
projects to fit the resulting annual funding available. Current data shows a pent-up investment
demand of $184,000 for paved roads, $375,000 for bridges & culverts, $29,000 for machinery &
equipment, $0 for buildings, $5,000 for land improvements and $258,000 for vehicles. Prioritizing
future projects will require the current data to be replaced by condition based data. Although our
recommendations include no further use of debt, the results of the condition based analysis may
require otherwise.
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3. Use of Debt
For reference purposes, Table 23 outlines the premium paid on a project if financed by debt. For
example, a $1M project financed at 3.0%3 over 15 years would result in a 26% premium or
$260,000 of increased costs due to interest payments. For simplicity, the table does not take into
account the time value of money or the effect of inflation on delayed projects.
Table 23 Total Interest Paid as a Percentage of Project Costs
Interest Rate
Number of Years Financed
5
10
15
20
25
30
7.0%
22%
42%
65%
89%
115%
142%
6.5%
20%
39%
60%
82%
105%
130%
6.0%
19%
36%
54%
74%
96%
118%
5.5%
17%
33%
49%
67%
86%
106%
5.0%
15%
30%
45%
60%
77%
95%
4.5%
14%
26%
40%
54%
69%
84%
4.0%
12%
23%
35%
47%
60%
73%
3.5%
11%
20%
30%
41%
52%
63%
3.0%
9%
17%
26%
34%
44%
53%
2.5%
8%
14%
21%
28%
36%
43%
2.0%
6%
11%
17%
22%
28%
34%
1.5%
5%
8%
12%
16%
21%
25%
1.0%
3%
6%
8%
11%
14%
16%
0.5%
2%
3%
4%
5%
7%
8%
0.0%
0%
0%
0%
0%
0%
0%
3 Current municipal Infrastructure Ontario rates for 15 year money is 3.2%.
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It should be noted that current interest rates are near all-time lows. Sustainable funding models
that include debt need to incorporate the risk of rising interest rates. The following graph shows
where historical lending rates have been:
Figure 52 Historical Prime Business Interest Rates
As illustrated in Table 23, a change in 15 year rates from 3% to 6% would change the premium
from 26% to 54%. Such a change would have a significant impact on a financial plan.
2.70%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
1990
1994
1998
2002
2006
2010
2014
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Table 30 and Table 31 outline how Machar has historically not used debt for investing in the asset
categories as listed. There is currently $0 of debt outstanding for the assets covered by this AMP
with corresponding principal and interest payments of $0.
Table 30 Overview of Use of Debt
Asset class
Debt at
December
31st, 2016
Use of Debt in Last Five Years
2011
2012
2013
2014
2015
Road Network
0
0
0
0
0
0
Bridges & Culverts
0
0
0
0
0
0
Machinery & Equipment
0
0
0
0
0
0
Buildings
0
0
0
0
0
0
Land Improvements
0
0
0
0
0
0
Vehicles
0
0
0
0
0
0
Total Tax Funded
0
0
0
0
0
0
Table 31 Overview of Debt Costs
The revenue options outlined in this plan allows Machar to fully fund its long-term infrastructure
requirements without further use of debt. However, as explained in section 7.3.2, the recommended
condition rating analysis may require otherwise.
Asset class
Principal & Interest Payments in Next Ten Years
2017
2018
2019
2020
2021
2022
2027
Road Network
0
0
0
0
0
0
0
Bridges & Culverts
0
0
0
0
0
0
0
Machinery & Equipment
0
0
0
0
0
0
0
Buildings
0
0
0
0
0
0
0
Land Improvements
0
0
0
0
0
0
0
Vehicles
0
0
0
0
0
0
0
Total Tax Funded
0
0
0
0
0
0
0
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4. Use of Reserves
4.1 Available Reserves
Reserves play a critical role in long-term financial planning. The benefits of having reserves
available for infrastructure planning include: the ability to stabilize tax rates when dealing with
variable and sometimes uncontrollable factors; financing one-time or short-term investments;
accumulating the funding for significant future infrastructure investments; managing the use of
debt; and, normalizing infrastructure funding requirements. By infrastructure class, Table outlines
the details of the reserves currently available to Machar.
Table 32 Summary of Reserves Available
Asset class
Balance at December 31st, 2016
Road Network
0
Bridges & Culverts
0
Machinery & Equipment
202,000
Buildings
0
Land Improvements
0
Vehicles
202,000
Total Tax Funded
404,000
There is considerable debate in the municipal sector as to the appropriate level of reserves that a
municipality should have on hand. There is no clear guideline that has gained wide acceptance.
Factors that municipalities should take into account when determining their capital reserve
requirements include:
-
breadth of services provided
-
age and condition of infrastructure
-
use and level of debt
-
economic conditions and outlook
-
internal reserve and debt policies.
The reserves in Table 32 are available for use by applicable asset categories during the phase-in
period to full funding. This, coupled with Machar's judicious use of debt in the past, allows the
scenarios to assume that, if required, available reserves and debt capacity can be used for high
priority and emergency infrastructure investments in the short to medium-term.
4.2 Recommendation
As Machar updates its AMP, and expands it to include other asset categories, we recommend that
future planning should include determining what its long-term reserve balance requirements are
and a plan to achieve such balances.
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X. 2016 Infrastructure Report Card
The following infrastructure report card illustrates the township's performance on the two key factors: Asset Health and Financial
Capacity. Appendix 1 provides the full grading scale and conversion chart, as well as detailed descriptions, for each grading level.
Table 33 2016 Infrastructure Report Card
Asset class
Asset Health
Grade
Funding
Percentage
Financial Capacity
Grade
Average
Asset Class Grade Comments
Roads
F
21%
F
F
Based on 2016 replacement cost,
and primarily condition data, over
23% of assets, with a valuation of
$2.6 million, are in good to very
good condition; 72% are in poor to
very poor condition.
The township is underfunding its
assets. Tax-funded categories are
funded at 46%.
Bridges & Culverts
C
31%
F
D
Buildings
C
18%
F
F
Machinery & Equipment
C
115%
A
B
Land Improvements
C
1617%
A
B
Vehicles
D
140%
A
C
Average Asset Health Grade
D
Average Financial Capacity Grade
F
Overall Grade for the Township
F
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XI. Appendix: Grading and Conversion Scales
Table 34 Asset Health Scale
Letter Grade
Rating
Description
A
Excellent
Asset is new or recently rehabilitated
B
Good
Asset is no longer new, but is fulfilling its function. Preventative maintenance is beneficial at this stage.
C
Fair
Deterioration is evident but asset continues to full its function. Preventative maintenance is beneficial
at this stage.
D
Poor
Significant deterioration is evident and service is at risk.
F
Very Poor
Asset is beyond expected life and has deteriorated to the point that it may no longer be fit to fulfill its
function.
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Table 35 Financial Capacity Scale
© 2018, The Corporation of the Township of Machar. All Rights Reserved.
The preparation of this project was carried out with assistance from the Government of Canada and the Federation of
Canadian Municipalities. Notwithstanding this support, the views expressed are the personal views of the authors, and the
Federation of Canadian Municipalities and the Government of Canada accept no responsibility for them
Letter Grade
Rating
Funding percent
Timing Requirements
Description
A
Excellent
90-100 percent
Short Term
Medium Term
Long Term
The municipality is fully prepared for its short-, medium- and long-term
replacement needs based on existing infrastructure portfolio.
B
Good
70-89 percent
Short Term
Medium Term
Long Term
The municipality is well prepared to fund its short-term and medium-term
replacement needs but requires additional funding strategies in the long-term
to begin to increase its reserves.
C
Fair
60-69 percent
Short Term
Medium Term
Long Term
The municipality is underprepared to fund its medium- to long-term
infrastructure needs. The replacement of assets in the medium-term will likely
be deferred to future years.
D
Poor
40-59 percent
/ Short Term
Medium Term
Long Term
The municipality is not well prepared to fund its replacement needs in the
short-, medium- or long-term. Asset replacements will be deferred and levels
of service may be reduced.
F
Very Poor
0-39 percent
Short Term
Medium Term
Long Term
The municipality is significantly underfunding its short-term, medium-term,
and long-term infrastructure requirements based on existing funds allocation.
Asset replacements will be deferred indefinitely. The municipality may have to
divest some of its assets (e.g., bridge closures, arena closures) and levels of
service will be reduced significantly.
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