Organisations with mature asset management systems take a strategic approach to planning and using assets, and a lifecycle view of asset systems and networks, rather than a narrow focus on discrete maintenance and upgrades.
Around two-thirds of the total cost of an asset generally occurs after it is built or acquired. Effective management of the state’s approximate $159 billion infrastructure asset base is essential to maximise the value and longevity of these public assets.
Strategic justification
There are fiscal and environmental limits to building new infrastructure in response to increasing demand and the deterioration of existing assets. At the same time, technology is extending asset life and enabling smarter use, which may divert, delay or avoid the need for more costly build options.
Asset management has been identified in various public sector reviews as requiring significant improvement, including in the 2017 Service priority review. While the significant backlog in maintenance is widely recognised, it is often difficult to quantify, as asset management practice varies considerably across state agencies and government trading enterprises (GTEs). This is symptomatic of wider issues associated with a lack of overall maturity and capability in asset management across the public sector – in particular, the robustness of data capture and analysis, and prioritisation based on asset performance, risk and need. Failing to address these issues, particularly for those assets in poor condition, exposes government to considerable health and safety risk, impacts on service quality and incurs higher long-term costs.
Sector challenges and opportunities
Well-functioning asset management systems help agencies achieve service delivery objectives through optimal asset capacity and function. This is the basis for identifying and managing risks, lifecycle costs and investment decisions.
A lack of reliable and accurate information currently makes it difficult for many state agencies to understand asset needs and develop fit for purpose, risk based asset management plans. Currently this makes it challenging for state agencies and GTEs with lower levels of asset maturity to prioritise and plan maintenance pipelines. A wide range of information should be captured to support asset decision making, including, but not limited to, asset location, type, materials, age, condition and lifecycle cost.
Although the cost of maintenance and repairs are typically captured in the business case for a new asset, funding is rarely set aside for this purpose. This results in state agencies and GTEs having to continually justify funding requests, despite the need being clearly established at the point of investment. Once a new asset is subsumed into an overall infrastructure system it can be more difficult to make the case for maintenance funding.
The importance and benefits of good asset management practice are widely recognised. However, in the public sector, a lack of incentives is a major inhibitor of good practice. Currently, there is very little systemic incentive offered to state agencies and GTEs to improve their asset management maturity, relinquish assets or plan to maintain older assets with recurrent funding needs. In some cases, it is easier to attract capital funding for a new asset than for preventative maintenance funding that could extend the life of an existing asset.
In line with best practice, asset management strategies and plans should prioritise interventions such as maintenance, upgrades and replacement, according to asset criticality and level of associated risk. Resilience considerations should also be incorporated into risk assessment and management frameworks.
More sophisticated spatial asset information, including data capture, analysis and use, will enable fit for purpose asset management, such as risk-based decision-making, preventative maintenance and lifecycle asset optimisation. Information on asset use, lifecycle cost, performance and benefits should be systematically captured and used to inform planning and justification for future assets, as part of the annual strategic asset plan and business case development processes.
Central leadership and support is needed to guide consistent asset management practice across state agencies and GTEs. The Department of Finance has recently developed a Building Asset Management Framework, which is a central tool that operationalises the Strategic Asset Management Framework, with the intention of improving the maturity and consistency of application of these approaches across the public sector for building assets. This work, and the central role of the Department of Finance, means it is ideally placed to lead and support asset management practice across the public sector into the future.
A new, central incentive mechanism should be available to reward maturity in asset management practice and fund submissions that demonstrate strong alignment with service delivery outcomes and optimise the use of existing assets.
Case study
Central Melbourne’s Yarra Park Water Recycling Facility is the largest underground water recycling facility in Victoria, capable of producing 180 ML of Class A recycled water annually. The facility treats and reuses sewage from the local sewer network and irrigates the grounds surrounding the Melbourne Cricket Ground, including the heritage-listed Yarra Park and Punt Road Oval.
The publicly owned facility, operated by Downer, achieved Australia’s first ISO 55001 certification for its asset management system in 2015. The system involves coordinated and systematic asset management processes, practices and decision rules, to align asset use with functional objectives and stakeholder expectations. An asset-wide, integrated approach is taken that addresses planning, operation, maintenance, support logistics, renewal and disposal (including the business processes used to support these activities). For further information, refer to: https://www.mcg.org.au/about-us/policies/water-recycling
