Edited IDAMP- Framework- V-6 (23-8-16)pcgip.urbanunit.gov.pk/docs/DLIs/DLI1/PCGIP-IDAMP... · Acronyms & Abbreviations ADP Annual Development Program AM Asset Manager (s) AMP Asset

Framework Integrated Development &Asset Management

Plan (IDAMP)

City District Governments &Water and Sanitation Agencies

Acknowledgement

This document (IDAMP Framework) has been compiled with the efforts of Planning and Development P&D Department Punjab and The Urban Unit. We take this opportunity to acknowledge and pay regards to Mr. Mohammad Jahanzeb Khan-Chairman P&DD Board, Mr. Iftikhar Ali Sahoo-Secretary P&DD, Mr. Irfan Elahi-Ex. Chairman P&DD Board, and Mr. Waseem Ajmal Ex. Secretary P&DD, for their toiling efforts for the completion of this document.

We would like to laud the guidance provided by the PCGIP team of The World Bank especially Mr. Michael Schaeffer, Ms. Shahnaz Arshad, Mr. Sohaib Athar for the compilation and augmentation of this document. We would also like to extend our greetings to PCGIP team of the Urban Unit including Dr. Nasir Javed, Ms. Sani-e-Zahra, Mr. Abdul Razak, Mr. Abid Hussainy, Mr. Rafaqat Bhangoo and Mr. Asif Iqbal.

Without the special support of the individuals mentioned above and many others, this document would not have been possible. We are grateful for your assistance and acknowledge it in the highest of honor for us.

Foreword

Infrastructure management is the cornerstone of social equity, public health & safety and service delivery for good governance. Infrastructure is essential to achieve the increased levels of economic growth as aspired under Punjab Growth Strategy through job creation and establishment of well serviced areas in urban centers - conducive for economic investment and its enabling environment. In recent years, Government of the Punjab has increasingly focused on the need to balance the delivery of infrastructure in the short term, with the need to strive for sustainability.

Medium Term Budgetary Framework (MTBF), Medium Term Development Framework (MTDF), New Accounting Model (NAM), Project to Improve Financial Reporting and Auditing (PIFRA) are demonstration of Govt. policy and initiatives which is now driving and supporting the cities and their entities through process for asset management by policy guidelines and technical support.

Infrastructure assets and community facilities are complex by nature and require robust management practices. Sound knowledge of the location, characteristics, estimated lives, capacity and utilization, cost characteristics, risk exposure and safety requirements of assets is required to best manage them and make sustainable improvements in service delivery.

We support Local Government in achieving programs that promote sustainable quality of life to all citizens. As part of a broader and ongoing support framework for urban development and sustainable cities, we have developed this document (IDAMP Framework) with inputs from all stakeholders, led by Dr. Nasir Javed CEO the Urban Unit, Mr. Abid Hussainy Sr. Capacity Development Specialist the Urban Unit and Mr. Iftikhar Ali Sahoo, Secretary P&DD.

IDAMP Framework has been compiled to assist municipal and city asset managers to prepare Integrated Development and Asset Management Plan (IDAMP). In particular, its application will assist in strengthening IDMAP processes and outcomes, the implementation of generally accepted asset management for improved service delivery and matters related to immovable assets, improve infrastructure investment planning efforts and management for improved governance and asset management in cities.

Mohammad Jahanzaib Khan Chairman, P&DD Board

Acronyms & Abbreviations

ADP Annual Development Program AM Asset Manager (s) AMP Asset Management Plan AMS Asset Management System APPM Accounting Policies & Procedures Manual FAR Fixed Asset Register CDG City District Government CAPEX Capital Expenditures CIP Capital Investment Plan COS Cost of Service Delivery DCO District Coordination Officer DOP District of Office Planning DMD Deputy Managing Director EDO Executive District Officer EDO F & P Executive District Officer Finance & Planning GIS Global Information System IAS International Accounting Standards ICT Information & Communication Technology IDP Integrated Development Plan IDAMP Integrated Development & Asset Management Plan IPSAS International Public Sector Accounting Standards KPA Key performance Areas KPI Key Performance Indicators LED Local Economic Development MD Managing Director M&E Monitoring & Evaluation MTBF Medium Term Budgetary Framework MTDF Medium Term Development Framework NAM New Accounting Model OPEX Operational Expenditure O&M Operation & Maintenance PAO Principal Accounting Officer PCGIP Punjab Cities Governance Improvement Project PIFRA Project to Improve Financial Reporting & Audit PMS Performance Management System PPP Public Private Partnership WASA Water & Sanitation Agency

Framework Integrated Development & Asset Management Plan (IDAMP) Page 6 of 56

Contents CHAPTER 01: INTRODUCTION TO IDAMP FRAMEWORK .................................................................................. 7

1.1. INTRODUCTION ................................................................................................................................................ 7 1.2. PURPOSE OF IDAMP FRAMEWORK .................................................................................................................. 7 1.3. SCOPE OF IDAMP FRAMEWORK ...................................................................................................................... 7 1.4. LEGAL AUTHORITY OF IDAMP FRAMEWORK .................................................................................................. 7 1.5. COMPLIANCE WITH IDAMP FRAMEWORK ....................................................................................................... 8 1.6. CONTROLLER OF THE IDAMP FRAMEWORK .................................................................................................... 8 1.7. AMENDMENTS TO THE IDAMP FRAMEWORK ................................................................................................... 8

CHAPTER 02: OVERVIEW OF IDAMP ......................................................................................................................... 9

2.1. CONTEXT ........................................................................................................................................................ 9 2.2. KEY CONCEPTS ............................................................................................................................................... 9 2.3. KEY CHALLENGES ......................................................................................................................................... 12 2.4. KEY BENEFITS OF IDAMP ............................................................................................................................. 14

CHAPTER 03: POLICY FRAMEWORK FOR IDAMP .............................................................................................. 16

3.1. LEGISLATIVE ENVIRONMENT ......................................................................................................................... 16 3.2. ASSET MANAGEMENT FRAMEWORK .............................................................................................................. 17 3.3. POLICY FRAMEWORK FOR IDAMP ................................................................................................................ 18 3.4. IMPLEMENTATION FRAMEWORK .................................................................................................................... 19

CHAPTER 04: RECORDING AND REPORTING OF THE FIXED ASSETS ......................................................... 24

4.1. RECOGNITION OF PHYSICAL ASSETS .............................................................................................................. 24 4.2. REPORTING OF FIXED ASSETS ......................................................................................................................... 26 4.3. DISPOSAL OF FIXED ASSETS .......................................................................................................................... 26

CHAPTER 05: ASSET PORTFOLIO ANALYSIS ........................................................................................................ 29

5.1. ASSET CONDITION ASSESSMENT .................................................................................................................... 29 5.2. ASSET RISK MANAGEMENT ........................................................................................................................... 30

CHAPTER 06: METHODOLOGY FOR THE IDAMP ................................................................................................ 34

6.1. STEP: 1 DEVELOPMENT OF GIS BASED ASSET INVENTORY ............................................................................. 34 6.2. STEP: 2 NOTIFICATION OF LEVEL OF SERVICES (LOS) .................................................................................... 35 6.3. STEP: 3 DEVELOPMENT OF PROJECT PROPOSAL ............................................................................................. 41 6.4. STEP 4: PREPARATION OF OPERATION & MAINTENANCE (O&M) COSTS ........................................................ 45 6.5. STEP 5: COMPILATION OF PROJECT PACKAGE ................................................................................................ 45 6.6. STEP 6: FINANCIAL CAPACITY ANALYSIS ...................................................................................................... 45 6.7. STEP 7: PROJECT SELECTION AND APPROVAL ............................................................................................... 46 6.8. STEP 8: CAPITAL INVESTMENT PLAN ............................................................................................................. 47 6.9. STEP 9: FINALIZATION OF INTEGRATED DEVELOPMENT AND ASSET MANAGEMENT PLAN .............................. 47

CHAPTER 07: MONITORING AND EVALUATION OF IDAMP ............................................................................ 50

GLOSSARY ----------------------------------------------------------------------------------------------------------------------53

Chapter 01: Introduction to IDAMP Framework


Chapter 01: Introduction to IDAMP Framework 1.1. Introduction

This document may be called ‘Integrated Development Asset Management Plan’ (IDAMP) Framework of Government of Punjab (hereinafter referred as ‘’IDAMP Framework’’).

The IDAMP Framework sets out the principles/guidelines and policies for efficient and transparent asset management and reporting system. Thus, this Framework is designed to ensure the effective planning, careful management, accurate recording and reliable reporting of all the assets over the asset life cycle for optimized service delivery to the public.

1.2. Purpose of IDAMP Framework The key purpose of IDAMP Framework is the effective management of asset portfolio of the CDGs and WASAs in order to achieve service delivery objectives. Further, IDAMP Framework is intended to achieve the following purposes:

Encourage a consistent approach and a common methodology for development and management of assets;

Emphasize the importance of developing robust asset management plans linked to rigorous long term financial planning to help achieve the service delivery objectives;

Provide guidelines to ensure informed decision making by CDG/ WASA for investment in and management of those assets which help achieve the service delivery objectives;

Establish principles for the development of detailed Standard Operating Procedures for implementation and sustainability of IDAMP.

1.3. Scope of IDAMP Framework IDAMP Framework is, in initial phase, applicable to the five WASAs and Five CDGs in Punjab, namely Lahore, Faisalabad, Gujranwala, Faisalabad and Multan. Subsequently, the scope of IDAMP Framework will be extended to other public sector entities with the authorization of Government of Punjab.

Further, this IDAMP Framework provides principles and guidance about the following arenas of asset management;

• Planning of Assets Development of project proposals for rehabilitation/replacement or new assets creation

Appraisal of proposed projects

Selection of suitable projects for implementation

• Operation and maintenance (O&M) planning of assets • Recording and reporting of asset

Recording and reporting of assets and attribute data in GIS based AMS

Recording and reporting of asset in Accounting System

• Monitoring and Evaluation of implementation of IDAMP

1.4. Legal Authority of IDAMP Framework Under the provisions of ‘The Punjab Local Government Act 2013 (Act XVIII of 2013)’, Local Governments have been empowered to prepare their own Annual Development Plans and include the same in Annual Budget accordingly. The provisions of Act are reproduced hereunder:

Chapter 01: Introduction to IDAMP Framework


‘’Strategic Plans, Master Plans and Development Plans in a local government shall be prepared in the prescribed manner on specified sectoral pro forma….’’ (Section 148 - General Powers of Local Governments).

‘’A local government shall prepare the budget in the prescribed manner and in accordance with the chart of accounts notified by the Auditor-General of Pakistan’’. (Section 104 (6) – Budget)

Thus, IDAMP Framework shall provide the principles and guidelines to the Local Governments of Lahore, Faisalabad, Rawalpindi, Gujranwala and Multan in the development planning and infrastructure management.

The IDAMP Framework shall be approved and officially notified by the Chairman P&DD Board for implementation in the CDGs/WASAs of aforementioned cities.

1.5. Compliance with IDAMP Framework In order to ensure consistency and uniformity in the application of IDAMP procedures, compliance with the IDAMP Framework is mandatory. The IDAMP Framework will be reviewed on need basis and modified accordingly in order to reflect changes in the Government policies, requirement of cities in their operating conditions or global advancement in the asset management best practices. Any amendment or update of the IDAMP Framework must be processed in accordance with amendment procedures described in forthcoming section of this chapter.

1.6. Controller of the IDAMP Framework To ensure safe custody and maintain confidentiality, the Secretary P&DD has been designated as controller of the IDAMP Framework. All inquiries and matters relating to IDAMP Framework, its language/contents, implementation, scope, objectives etc. should be addressed to the Controller of the IDAMP Framework. Controller shall also ensure that the IDAMP Framework is not distributed without business intent. Further, Controller shall be responsible for ensuring that any person, party or group who receives this IDAMP Framework is informed of the confidentiality requirement.

Printing and publishing of this IDAMP Framework shall be strictly prohibited unless specifically authorized for business purpose by the Secretary P&DD. In case of issuance of IDAMP Framework for other than business purposes to the authorized users, an official notification shall be issued to effect such issuance of IDAMP Framework.

1.7. Amendments to the IDAMP Framework Any amendment (addition/ deletion/ revision/ modification) to this IDAMP Framework should be

carried out as and when the need arises. Any amendment to the IDAMP Framework might be originated by the Secretary P&DD on its own motion or a request for amendment in any part of the IDAMP Framework can be originated by a user of the IDAMP Framework or a person in an authorized management position.

Secretary P&DD (controller to the IDAMP Framework) shall have the authority to approve or reject the proposed amendment against proper justification. In case of approval of the amendment, Secretary P&DD shall notify the approved amendment to all the users of IDAMP Framework through official notification.

Note: For the purpose of IDAMP, the term ‘Asset Manager’ includes the personnel that is assigned with the custody of respective asset. Thus, Asset Manager in WASAs include Sub Division Officer (SDO) and for CDGs, Asset Manager shall be respective District Officer (DO)/ Executive District Officer (EDO).

Chapter 02: Overview of IDAMP



2.1. Context Various reforms, over the past years, have been carried out in Punjab to improve public resource management processes. Medium Term Budgetary Framework (MTBF), Medium Term Development Framework (MTDF), New Accounting Model (NAM), Project to Improve Financial Reporting and Auditing (PIFRA) are amongst the most significant initiatives.

The above initiatives, no doubt, have undeniable benefits and impacts on the planning and resource management in the Government of the Punjab but there are still two areas which need to be focused. Firstly, at provincial level, the budgeting and development planning is being made on medium term basis in the shape of MTBF and MTDF, whereas the district Governments are still operating on annual basis for their budgeting and development planning. This dichotomy needs to be addressed. Secondly, the part of asset management, which is directly linked with the service delivery and resource allocation, has, so far, not gained sufficient attention in the process of budgeting and planning, due to which the condition of assets in public sector is generally found dilapidated and their lifecycle is not optimally utilized.

The Government of Punjab has embarked upon a vision to efficient resource planning through better governance, improved service delivery, enhanced transparency and effective monitoring and control mechanism. This is a broad based target that encompasses efficient allocation of existing resources, whilst also investing in the enhancement of the service delivery potential. Recently developed Punjab Growth Strategy is also a manifestation of such efforts of the Punjab Government.

In the current fiscal and economic scenario the Government is facing multi-pronged strains on its financial and budgetary resources. It is, therefore, struggling to materialize its development and management objectives due to a lack of coherence between the development activities and financing strategy to finance the development of municipal service delivery infrastructure. As a result, many viable and high value projects might have to be aborted; furthermore the existing infrastructure could turn dilapidated without effective management, leading to an imminent loss of service delivery potential. This phenomenon is a strategic risk to the Government’s strategy and must be addressed to enhance the service delivery potential, in an efficient manner. These predicaments require the Government to work towards a lucid medium term framework which links the existing service delivery, the recurring operational and maintenance costs of the public infrastructure and the development plans to its financing strategy.

2.2. Key Concepts The concept of "Integrated Development & Asset Management Plan (IDAMP)" revolves around the international best practices of asset management and its enhancement for improving service delivery by the Local Government institutions within the available fiscal space. The processes have been derived from the well-established standards like ISO 55000 and International Infrastructure Asset Management Manual (IIMM). The process is contextualized for Punjab Province based on the intensive discussion with the respective officials overseeing the asset management.

'Asset' is defined as "a resource with economic value that an individual, organization or country owns or controls with the expectation that it will provide future benefits". Public assets could be defined as the items or properties owned by the Government for the service delivery to the public, like those of roads, buildings, water supply schemes, streets, libraries etc.

In the present context, the assets will be referred as the tangible items or properties owned/used by the City District Governments (CDGs) and Water and Sanitation Agencies (WASAs) for the service delivery objectives. Assets have been classified on the basis of their form and function in the service



delivery. Classification and categorization of assets held by the WASAs and CDGs has been detailed in the forthcoming chapters.

Every asset is bound to have certain time period for performing its operations or providing services attributed to it from acquisition to disposal. This is referred to as 'Asset Life Cycle'.

Asset Life Cycle is followed by the process of planning through which the decision of its acquisition is made. After this stage, the operational life of an asset starts during which it requires financial resources to continue its operational status under the head of 'Operations and Maintenance (O&M)'. Over the passage of time, the assets are disposed of through auction for various reasons like completion of their operational life, being unserviceable, being not cost effective, or for generating financial resources. Disposal of assets lead to the process of planning for replacement of old assets or acquisition of new assets. Asset Life Cycle is well depicted in Figure 1.

Figure 1. Asset Life Cycle

The initial cost incurred on acquisition of most of the public assets (i.e. capital cost), is generally a part of the total cost incurred during the useful life of these assets. This total cost is called the 'Life Cycle Cost'.

As a matter of fact, it has been seen that the construction cost of a facility makes up only a fraction of the total cost incurred during its 15 to 50-year useful life. This fact, nonetheless, provides a clear understanding that the capital investment is only the first and not the main cost related to Government assets.

'Asset Management' is a systematic process which allows for the maintenance, upgrading and operation of physical assets in a cost effective manner. It has been defined in ISO 55000 as "coordinated activity of an organization to realize value from assets".

Hence, 'Asset Management' is a structured process that seeks to inculcate, financial, operational and economic efficiencies from the public assets to improve and sustain their service delivery potential. Asset Management is the combination of management, financial, economic, and engineering and other practices applied to physical assets with the objective of providing the required level of service in the most cost effective manner in cities.

Asset Management is related to entire Life Cycle of an asset called Life Cycle Asset Management. After acquisition, the maintenance for operation is done continuously on the basis of assessment of performance or condition as well as for achievement of desired level of service and finally the decision of upgrading, renewal, replacement or disposal is taken. This concept has been elaborated in Figure 2.



Figure 2. Life Cycle Asset Management

If any new capital asset is planned to be built or purchased, managing it during its life as Government property would become a task of asset management. In addition, future operating costs should be factored into obligations for the city operating budget.

The accounting record of assets is maintained in a 'Fixed Asset Register'. CDG and WASA shall develop its Asset Register in the Asset Management System. Fixed Asset Register shall contain the following information, at minimum:

classification of asset asset identification number description date of purchase or date of completion original purchase cost in Rupees cost in foreign currency (where applicable) current location ownership of/responsibility for asset

The assets are primarily designed to deliver Level of Service (LOS). LOS is the defined service quality for a particular activity, against which service performance may be measured through Key Performance Indicators (KPIs). KPIs is a set of quantifiable measures used to gauge the performance of an asset in terms of meeting the operational goals for achieving the desired Level of Service. LOS usually relates to quality, quantity, reliability, responsiveness, environmental acceptability and cost. For CDG and WASA, LOS indicators have already been identified in consultation with the officials of CDG and WASAs. Details of LOS indicators have been provided in the forthcoming chapters.

The coordinated system for carrying out life cycle asset management in an effective and efficient manner is the one known as 'Asset Management System' (AMS).

During the recent years, after the advent of Information and Communication Technology (ICT), like many other systems, the Asset Management Systems have also been computerized and, now, it is the software, which deals with the life cycle management of assets and acts as decision support system.

The AMS or computerization of Assets is a combination of processes, data and software applied to provide the essential outputs for effective asset management such as reduced risk and optimum infrastructure investment.



A standard AMS has various components which include asset registration, asset categories, finance, asset maintenance and asset related reports. These components are shown in the Figure 3 given below.

For Entities with advanced asset management, all asset activities, including capital planning, originate from an Asset Management Plan, which defines long-term intentions regarding assets based on the Government’s service and program needs. When an Asset Management Plan does not exist, three areas of asset management become critically important for the capital planning process and associated budgeting which include:

Inventorying assets

Tying capital investment to life cycle costing

Estimating long-term repair and replacement needs for the entire asset portfolio.

It is the intention of IDAMP Framework that an Asset Management System (AMS) shall be established by the CDGs and WASAs in Punjab with clear Asset Management Objectives, Asset Management Policy, Asset Management Performance Indicators and Asset Management Plan which will play a key role in the O&M and replacement of assets for achievement of improved Level of Services through robust planning, budgeting and effective control and management system.

2.3. Key Challenges The biggest challenge facing Government institutions is the increasing gap in service delivery expectations and the level of actual service delivery in Punjab. Although social indicators in Punjab, according to Punjab Growth Strategy, have shown some improvement in the recent years, the province of Punjab still faces significant development challenges.

The substantially understandable reason of the increasing gap in desired level of services and the actual one is the rapid urbanization but poor management of assets in the public sector. Our cities have inadequate infrastructure and urban management capacities to meet current needs, let alone an ability to respond to growing demand. Now the real challenge for Punjab is to develop a strategy to manage the accelerating urbanization in a manner that its cities become more livable, while also serving as engines of growth.

Assets Management System

AMS Registration & Login

Addition Of Asset

GIS Mapping of Assets

Asset CategoriesFinance

Asset Maintenance

Asset Reports



In the present scenario, the cities' strategic framework and direction for economic development and spatial growth is weak, and even where plans have been prepared, they are not followed, as they have no legal force and in any case are too broad and general to be implemented.

Following are amongst the key challenges, public entities are facing in Punjab:

2.3.1. Absence of Medium Term Budgetary and Development Framework in Cities Currently, it is a dichotomy, that there is medium term budgeting and development planning at provincial level, whereas in City District Governments, Water and Sanitation Agencies and other entities working at district level are operating on annual basis. Cities make Annual Development Programmed (ADP) instead of Medium Term Development Framework (MTDF). Hence, there is limited medium term prioritization of projects beyond the annual portfolio of ‘schemes’, though it is a requirement of the Local Government budget rules.

In the ADP, projects are not prioritized according to public preferences and fail to address needs on a consistent, sustainable, and strategic basis. Budgetary planning and resource allocation practices suffer due to the lack of a coherent vision, with the consequence that spending is largely erratic, where smaller development projects are preferred and selected at the expense of important civic needs that require a longer, multi-year commitment.

2.3.2. Lack of adequate capacity Punjab cities lack adequate planning and management capacity, or the system required to gather information from the community on their preferences so as to develop a responsive and coherent funding strategy with asset management view leading to improved service delivery. Finally, many aspects of financial management in the city Government and city entities are inadequate, including management of budgets, expenditure controls, cash flow management, management of creditors, asset management, and liability management, internal audit capacity and audit controls are weak.

2.3.3. Non availability of an effective asset management system As per requirement of the cities, the assets are to be property registered in a prescribed register with all its attributes and cost associated with its acquisition and disposal. Despite this process and requirement in place, the asset inventory is incomplete, inconsistent and without any attributes and not available for asset management and asset improvement purposes.

The asset management system is a combination of assets register and information related to assets and its level of services for improved service delivery. The capacity constraints and absence of a well-defined system in entities, this system is minimally maintained or under developed with well-defined parameters. Resultantly, asset creation and its renewal decision at the CDGs & WASAs is not comprehensive and is not based on defined information leading to decision making leading to service delivery and asset management regime.

2.3.4. Lack of well-defined system for the prioritization of projects The planning and budgeting exercise in practice at the entities has limited opportunity due to absence of well-defined asset creation and development criteria linked to the service delivery in the city and WASAs service areas. The entities, consequently, rely on supply driven projects without prioritization. This aspect of prioritization is not linked to well define criteria, thus leading to creation and maintenance of assets which are not optimally planned and created with less contribution to the enhancement of service delivery.

2.3.5. Issues in Operations and Maintenance (O&M) regime of assets The O&M regime of assets is most neglected phase of the asset management impacting the life cycle of asset and its associated service delivery leading to breakdown of assets, reduction in its life cycle and its utility linked to the service delivery. There is a need to define and develop an institutionalized O&M regime linked to the asset management system.



The existing system is based on repair and maintenances after an asset is failed and no system or planning for the preventive maintenance for asset is provided. This impacts the life cycle and remaining life of the asset.

2.3.6. Missing link of assets with the service delivery and its operational cost Assets creation process sometimes does not fully account for its O&M cost and its service delivery components such as creation of a high tech RO plants or waste water treatment system whose operational cost is seldom available along with the capacity in the cities to operate thus leading to abandonment of assets before full realizations of its service delivery benefits.

2.3.7. Lack of public participation and demand in the asset creation and management The end user and community is key towards the governance of asset management and needs full realization in the planning and creation of asset , which is relatively unfocused in the entities due to absence/weakly defined process and capacity constraints.

The complaints system is neither linked with the business or cost Centre of asset neither a full scale system is created which can cater the public demand as a key factor in asset creation and management.

These challenges, as narrated above, will be addressed through a process under pinned by creation of asset management system and its processes in cities linked with asset cycle described in this manual for planning and management of asset with an integrated approach for improved service delivery. Therefore, Integrated Development and Asset Management Plan (IDAMP) is, in fact, designed to provide solution to the problems and issues enumerated above.

2.4. Objectives of IDAMP The CDGs and WASAs currently manage public capital assets worth billions of rupees. CDGs & WASAs provides various services and requires capital assets that support excellent service delivery outcomes, including facilities, base infrastructure and specialist equipment. The effective management of assets is therefore an essential business process, providing the opportunity for organizational efficiencies, improved asset utilization, reduced operating costs, more effective use of capital.

An IDAMP is a key part of the asset management process. It provides a description of the overall system components, and summarizes key asset and planning information at a single point in time. Its primary purpose is to identify the financial consequences of delivering public services through physical assets, describing:

• The importance of physical assets to delivering service delivery objectives and outcomes; • The quality of existing physical assets in terms of condition and asset performance; • The assets needed to meet or sustain current levels of service, and to address current and future

shortfalls; • The feasible asset solutions to address identified shortfalls; and • The level of commitment and planned improvements.

2.5. Key Benefits of IDAMP IDAMP shall enable the entities to realize value from assets in the achievement of their service delivery objectives. What constitutes value will depend on these objectives, the nature and purpose of the entities and the needs and expectations of its stakeholders. IDAMP shall support the realization of value while balancing financial, environmental and social costs, risk, quality of service and performance related to assets.

The benefits of IDAMP include, but are not limited to the following:

Improved service delivery: Assuring the performance of assets can lead to improved service delivery that consistently meet or exceed the expectations of consumers and stakeholders;



Improved financial performance: Improving the return on investments and reducing costs can be achieved, while preserving asset value and without sacrificing the short or long-term realization of organizational objectives;

Informed asset investment decisions: Enabling the CDG/WASA to improve their decision making and effectively balance costs, risks, opportunities and performance in respect of their assets;

Managed risk: reducing financial losses, improving health and safety, good will and reputation, minimizing environmental and social impact, can result in reduced financial, social and economic risks;

Demonstrated social responsibility: improving the entity’s ability to, for example, reduce emissions, conserve resources and adapt to climate change, enables it to demonstrate socially responsible and ethical business practices and stewardship;

Improved efficiency and effectiveness: reviewing and improving processes, procedures and asset performance shall improve efficiency and effectiveness, and the achievement of entities objectives

Enhanced public trust and confidence: through improved consumer satisfaction, stakeholder awareness and confidence;

Improved organizational sustainability: effectively managing short and long-term effects, expenditures and performance, can improve the sustainability of operations and the organization.

Chapter 03: Policy Framework for IDAMP

Framework Integrated Development & Asset Management Plan (IDAMP) Page 16 of

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3.1. Legislative Environment There are various provisions available in the relevant laws, rules and regulations that support the asset management and integrated development and asset management planning. Local Governments are required to do multi-year planning as per their mandate.

‘The Punjab Local Government Act 2013 (Act XVIII of 2013)’ empowers the Local Government to carry out integrated annual development planning for the benefits of public. The provision are reproduced hereunder:

’Strategic Plans, Master Plans and Development Plans in a local government shall be prepared in the prescribed manner on specified sectoral pro forma….’’ (Section 148 - General Powers of Local Governments).

‘’A local government shall prepare the budget in the prescribed manner and in accordance with the chart of accounts notified by the Auditor-General of Pakistan’’. (Section 104 (6) – Budget)

The Rule 3 (2) (e) of the 'Punjab District Government Rules of Business’ requires the District Government to prepare Five Years and other District Development Plans. In view of this provision, shifting of current annual system to medium term basis is in accordance with the existing rules, so it does not require any further legislation.

The Manual for Development Projects, issued by the Planning Commission of Pakistan, out of which the PC-I, PC-II and other PC Forms have been derived, also supports the medium term planning as “In order to bring flexibility into the Five Year Plan and to relate the sectoral and project-wise allocation with (i) the financial position, and (ii) project implementation, a roll-on plan of medium term is designed in which the sectoral and project-wise position is adjusted according to the foregoing year." It is further explained that for the initial three years, a roll-on plan is prepared for 'a', 'b', 'c' years. Next year, the 'a' year is ousted and ‘d’ year entered, so that the plan still remains for the three years. For the ‘b' and 'c' years, adjustments are made according to the implementation of 'a' year. This process continues.

The Punjab Development of Cities Act 1976 provides, “to establish a comprehensive system of planning and development in order to improve the quality of life in the cities of the Punjab, establish an integrated development approach and a continuing process of planning and development, to ensure optimum utilization of resources.”

The Accounting Policies and Procedures Manual (APPM) issued by Auditor General of Pakistan under New Accounting Model (NAM) define assets as “future economic benefits controlled by the entity as a result of past transactions or other past events.” The manual further stipulates that all assets will be accounted for on a modified cash basis in accordance with the definition laid down in section 3.3.2, and the directives contained in the Accounting Policies and Procedures Manual. APPM implemented under NAM delineates “Development expenditure refers to activities conducted and managed distinctly as individual projects, with finite start and end dates and clearly specified deliverables. Development projects typically involve the construction or improvement of physical assets or the development of human resources. Development projects are submitted as ‘New Item Statements’. Development budgets should have a flow-on effect to the non-development budget. When a development project is completed it should result in new items of non-development expenditure, such as salaries, maintenance and utilities".



3.2. Asset Management Framework An asset management framework brings together the inter-relationships between key organizational planning activities and asset management, allowing the entity’s strategic goals to be integrated with the asset portfolio to meet the organization’s service delivery requirements. It is important for the management of an organization to understand the intent of asset management framework before embarking on an asset.

Asset management framework comprises of following key components:

1. Leadership Commitment

2. Asset Management Policy

3. Asset Management Plans

3.2.1. Leadership Commitment Top management is responsible for developing the asset management policy and asset management objectives and for aligning them with the organizational objectives. Leaders at all levels are involved in the planning, implementation and operation of the asset management system. Top management should create the vision and values that guide policy, practice and actively promote these values inside and outside the organization. Top management also defines the responsibilities, accountabilities and asset management objectives and strategies, which create the environment for the asset management system.

Leaders should lend their authority to supporting the asset management system, and should ensure its alignment to other management systems within the organization through appropriate organizational design.

Top management and leaders at all levels are responsible for ensuring that appropriate resources are in place to support the asset management system. These resources include appropriate funding, adequate and competent human resources, and information technology support. Leaders should recognize and resolve conflicts between the internal culture of the organization and the performance of its asset management system. Top management and leaders at all levels are responsible for communicating the organization’s asset management objectives and the importance of its asset management system to all employees, customers, suppliers, contractors and other stakeholders. Communication should be two-way, with leaders being open to receiving information aimed at improving the asset management system from all levels.

3.2.2. Asset Management Policy An Asset Management Policy outlines how the Entity’s asset portfolio shall:

Meet the service delivery needs of its communities into the future. Enable the Local Government’s Asset Management Policy to be achieved. Ensure that asset management is established as part of the Local Government’s plan for the future.

Principles and key elements of asset management approach are:

Evidence base planning for assets Consult Consumers, community and stakeholders to develop LOS; Provide the defined LOS and monitor and report performance; Develop cost-effective management strategies for the long term; Understand and meet the impacts of growth through demand management and infrastructure

investment; Undertake Lifecycle Cost Analysis on all asset decisions; Undertake risk identification, assessment and control; Use physical resources sustainably;



Ensure that a comprehensive Asset Register is maintained and asset condition assessments are undertaken;

Ensure that sufficient and accurate information is captured in an Asset Management Information System to enable effective asset management, performance measurement and depreciation estimations;

Undertake continuous improvement in asset management practices; and Ensure that an infrastructure funding renewal gap is not created for future generations of

customers.

3.2.3. Asset Management Plans Asset Management plan defines current levels of service and the processes Local Governments use to manage each of their asset classes. They should be developed for all major asset classes, including, but not limited to: Tube wells, Disposal Stations, Pipelines, filtration plants, water treatment plants, machinery and equipment, roads, buildings, paths and parks and infrastructure. Asset management plan should also combine the multi-disciplinary management techniques including technical and financial plan over the life cycle of the asset in the most cost effective manner to provide required level of service delivery.

Following are the crucial sockets that need to be plugged in while formulating asset management plans:

Review of asset structure description Assessment of asset current performance level Determination of Required Standard of Service Preventive maintenance plan Corrective maintenance plan SOP's for emergency replacement or break down maintenance Budgeting & costing of relevant activities Monitoring and Review of Asset Performance

3.3. Policy Framework for IDAMP An Asset Management Policy outlines a Local Government’s asset management objectives, targets and plans. It establishes a platform for service delivery and provides a framework that enables the Asset Management Strategy and Plans to be produced. The Asset Management Policy must support a ‘whole of life’ and ‘whole of organization’ approach to asset management.

Local Government has a focus on sustainable service delivery. The goal of asset management is to meet the required levels of service, in the most cost effective manner, through the management of assets for present and future customers; and to demonstrate this to customers and stakeholders.

At present, the planning and development in CDGs, WASAs and Local Government in Punjab is being executed on annual basis, viz-a-viz, there is a wide range of diverse assets under their control for which, so far, no policy exists to manage the various stages of asset lifecycle like planning, acquisition, operation and maintenance and replacement or disposal.

As the IDAM has its core focus on the coherence of planning, development and asset management, therefore, it is important to have a policy framework providing the guiding principles to address the inherent issues of existing system.

The salient features of the Policy Framework for the IDAMP are given as under:

1) The budgeting and development planning of the entities will be shifted from annual to medium term basis.



2) Asset management decisions shall be based on service delivery needs and the benefits and risks of assets, with an evaluation of alternative options that take into account of service delivery and city extension requirement. In this regard it is also linked with City Master Plan, Peri-Urban Structure Plan, Population and Level of Service Delivery (LOS).

3) Asset management plans are to be developed for the city’s assets as per IDAMP, and these shall be informed by community needs, and integrated with Local Government financial reporting frameworks.

4) Financial and asset management reporting is to be categorized in terms of operational, maintenance, renewal, upgrade and new expenditure classification to enable sound asset management decisions under IDAMP.

5) After creation, the condition or structural integrity of assets will be managed by application of an appropriate lifecycle activity i.e. operations, maintenance, renewal/upgrade and disposal.

6) Initially, an Asset Inventory shall be developed in a GIS based system. This inventory would provide information mainly consisting of the asset attribute data, the historical cost of the assets and the repair estimates for the previous 5 years. Subsequently, the asset information would be shifted to asset management software to develop an effective database and a reporting mechanism for the assets. In the asset management software, the concerned departments would be able to trace individual assets with their attribute data, ageing analysis, valuation, condition analysis and the geographical location of these assets. The software would have additional functionalities to cover the energy efficiency of the mechanical assets such as Tube Wells and Disposal Stations etc. The system will be used to assess the future capital development and maintenance requirements based on the criticality, ageing and the desired level of service of these assets.

7) The IDAMP, for the initial phase will be implemented in the City District Governments (CDGs) and Water and Sanitation Agencies (WASAs), however, it might, thereafter, be extended to other entire Local Government institutions.

3.4. Implementation Framework Implementation of IDAMP shall require a collaboration of many parts of the entities. This collaboration often involves the sharing of resources. Coordinating these resources and applying, verifying and improving their use should be objective of IDAMP. It should also promote awareness of IDAMP across the whole entity.

3.4.1. Constitution of Technical Teams A senior team (Technical Team) shall be notified to lead the process of IDAMP in WASAs and CDGs. The composition of Technical Team for WASA and CDG is given below which will be notified by the competent authority.

WASA Technical Team 1) MD Chair 2) DMD Engineering 3) Director Planning 4) Director Engineering 5) DMD Finance/Director Finance 6) DMD O&M 7) Concerned SDO/XEN as resource person

CDG Technical Team 1) DCO Chair 2) EDO (F&P) 3) EDO Works 4) DO Planning 5) DO Works 6) DO Budgets



7) DO Environment

Term of Reference The Term of Reference of the Technical Team shall be as follow:

Plan for the IDAM adaptation and implementation Plan for developing and implementing the asset inventory and its institutional home setting Selection of proposed projects based on the criteria Recommendation of the phasing of the selected projects for execution Provide technical, financial and management support to the asset managers. Monitoring of the activities relevant to IDAMP Timely execution of IDAMP activities

3.4.2. Asset Management System & its GIS Software The Implementation of the IDAMP would require the development of the complete GIS based asset inventory which would be shared with the respective departments along with the asset attribute data, condition analysis, and valuation and repair history details.

For this purpose, an Asset Management System & GIS has been developed by the Urban Unit which shall be used for the IDAMP Framework.

Asset management System- Screen shot

Includes asset condition reports,

IDAMP and long lists

Includes Asset depreciation, revaluation, auction & energy

Includes maintenance and billing

Defines asset categories for

Create new asset



GIS- Screen shot

Creation of new underground network in GIS-AMS



The AMS-GIS software requirement specifications were produced in line with the functional and non-functional requirements of the end users of the asset management system. The focus was kept on laying the foundations for the development of a robust, effective and user friendly system. The functional requirements of the software focus on the operational side of the software, in particular the areas focused include the following;

1. Asset register 2. Asset acquisition 3. Asset valuation / depreciation 4. Asset maintenance 5. Asset disposal 6. GIS functionality

Following are the broader attributes of the GIS based Asset Management Software:

Online System The system is compatible with web browsers such as Internet explorer v 9.0 or higher, Mozilla Firefox and Google Chrome

Graphical interface The system possesses a graphical interface with a comfortable and easy to navigate screen shot. The screen has easily identifiable navigation bars and bold tabs. In addition the screen should have suitable colors which are visually presentable for the users.



Hardware requirements the system is compatible to a standard processor with a speed of 2GHz or more and a Random Access Memory of 64MB or more depending on the systems used

Authentication The users would have their own respective accounts with their usernames and passwords to be able to enter the system domain and make changes to the asset register and generate other reports as per their requirements.

Password The passwords required for logins should at least have 7 characters and

have a combination of letters and numbers for enhanced security

User Interfaces The software application has user friendly interfaces to perform various functions and locate the assets on GIS map.

3.4.3. Implementation Support The Urban Unit shall provide support in the capacity building measures for the CDGs and the WASAs. This would involve regular trainings and system improvements designed to match the requirements of the users.

Standard Operating Procedures (SOPs) Manual shall be designed to enable the CDGs and WASAs in implementation of IDAMP. The SOPs Manual shall be notified by the P&D department of Government of Punjab. The main objective of the SOPs Manual is to standardize and document organizational system and procedures. SOPs Manuals are intended to provide management with a tool for effective internal control over its functions/ processes and to ensure that management objectives of smooth and efficient conduct of its operations are being achieved.

The SOPs shall prescribe, in detail, the following information:

Procedures: Procedures for functions/ processes for the development of IDAMP

Responsibilities: Specific duties to be performed by officials identified in functions/ processes

Reporting: Reporting responsibilities, guidelines and frequency of reporting

Specimen Reports/ Documents/ Registers: Reports/ Documents/ Registers to be used by the officials.

Chapter 04: Recording and Reporting of Assets


56

Chapter 04: Recording and Reporting of the Fixed Assets The Chapter 13 [Fixed Assets Management] of Accounting Policies and Procedures Manual (APPM) about recording of physical assets provides that the Government, through the development programs, makes substantial investment in the community in the form of infrastructure and other assets. Government entities are given responsibility for the development, management and maintenance of these assets. For this reason, it is important that the "Government maintains proper records of the assets” and monitors the entity responsible for the care and maintenance of the assets.

Thus, all accounting entities (centralized and self-accounting entities) shall record and report the assets as per requirements of APPM as prescribed below:

4.1. Recognition of Physical Assets

4.1.1. Acquisition of Physical Assets All the fixed assets acquired or constructed shall be expensed out in the books of accounts that is charged against the current years’ appropriation, upon purchase.

A memorandum account for fixed assets shall be kept by the DAO/AG/AGPR to record transactions relating to fixed assets.

Where claims are made in relation to expenditures for fixed assets, the claim voucher submitted to the DAO/AG/AGPR shall also include information on Fixed Assets Form (form 13B).

When the delegated officer in the Account Section of the DAO/AG/AGPR records the expenditure, in accordance with section 4.4 of chapter 4 of APPM, he/she shall, at the same time, also record the relevant information, as submitted with the claim voucher, in the fixed assets account (kept as a memorandum account by DDO-wise).

In addition to aforementioned books of accounts, every fixed asset purchased or improvement/extension made above Rs 100,000 shall be recorded in the Fixed Assets Register as a memorandum record (This threshold should be subsequently adjusted in the light of experience and better defined management information requirements.). The asset registers will record assets by category and will be used to report the assets on a regular basis.

Thus all departments/entities will maintain a "Fixed Assets Register" (form 13A) for the categories of assets, for which they are responsible. The categories of assets as prescribed in the NAM together with the categories of assets related to CDG and WASAs are as follow:

Asset Categories As per NAM

Asset Categories of CDG Asset Categories of WASA

Land & building Land Building Parking Stands

Land Buildings



Asset Categories As per NAM

Asset Categories of CDG Asset Categories of WASA

Civil works

Roads Bridges Underpasses

Overhead Reservoirs Ground Reservoir Pipelines

Plant and machinery Machinery & Equipment Tube wells Disposal Stations Water Filtration Plant Water Treatment Plants Machinery & Equipment

Vehicles Vehicles Vehicles

Furniture & fitting - -

Office equipment - -

Computer equipment - -

The following information shall be kept on the Fixed Assets Register for each asset.

Classification of asset Asset identification number Description Date of purchase or date of completion Original purchase cost in Rupees Cost in foreign currency (where applicable)current location Ownership of/responsibility for asset

The above data is the minimum required for the proper management of fixed assets.

The record of each item shall also include references to the relevant files, plans and deeds, source of acquisition, and give other relevant details such as rents payable or receivable, and restrictive covenants.

Every change affecting the ownership, occupation or change in location of the asset shall be the subject of an entry in the register.

4.1.2. Responsibility for maintenance of Fixed Asset Register The Fixed Assets Register will be maintained by the Asset Manager within the entity who should take appropriate precautions to safeguard the accuracy and integrity of the record.

Where an asset is jointly owned by more than one department/entity, the Fixed Assets Register will be kept by the nominated controlling department/entity.

Any entry in the register will only be made by an authorized officer who will sign it on every entry.



Departments/entities will regularly review their holdings of fixed assets (including land & building, plants, machinery, furniture & fittings, office equipment, computers etc.) in order to match with the fixed assets records and to identify surplus assets.

No item will be removed from the register except under proper authority. When an item is removed the record should be noted to show the date and reasons for removal and the reference of the relevant written authority.

The Public Accounting Officer shall ensure that the Fixed Assets Register kept in his/her department/entity is properly maintained and is up-to-date.

4.1.3. Donations/gifts of fixed assets Donations or gifts of fixed assets may be received by a department/entity with the approval of the PAO.

The value of the assets donated or gifted shall be in accordance with guidelines set by the Government.

Donations or gifts of fixed assets by department/entity may be made only on the authority of the MOF. Such assets shall be removed from the Fixed Assets Register on the date the fixed assets is donated or gifted.

4.1.4. Asset Generation through Public Private Partnership WASA and CDG may enter into Public Private Partnership agreement for the construction or procurement of certain assets in accordance with policy and guidelines laid under Public Private Partnership Act 2014. Thus Assets generated through PPP shall be dealt in accordance with terms and condition of PPP agreement.

4.2. Reporting of fixed assets The Asset manager shall prepare a fixed assets report from the Fixed Assets Register on a quarterly basis. This quarterly report, in a prescribed form (see section 2.2.7 of FRM), shall be sent to the concerned Accountant General. Fixed Asset Reports shall be extracted from AMS, having complete attributes of asset.

All DAOs shall also prepare a fixed assets report, DDO-wise, from the fixed assets account on a quarterly basis. This quarterly report, in a prescribed form (see section 2.2.7 of FRM), shall be sent to the concerned Accountant General.

The Accountant General shall check the quarterly report send by the PAOs with the data in the fixed assets account and investigate any differences.

The Accountant General shall consolidate the information for including into the Annual Accounts.

4.3. Disposal of Fixed Assets

General Principles Surpluses should be sold as quickly as possible, subject to value for money considerations and guidelines set by the Government in relation to disposal of assets.

Surplus assets shall be sold on the open market by means of public auction or tender. Asset Manager, custodian of asset, shall assess performance of asset and shall approve its disposal. Asset shall be deleted from AMS system when its disposal is approved by relevant asset manager.



Where open market value is not available, department/entity should follow guidelines set by the Government in order to use their own values, the District Value or a suitably qualified private sector value.

CDGs/ WASAs shall ensure that appropriate systems of control are instituted over the disposals of assets. In particular they should ensure that the staff concerned is properly supervised and that duties are adequately separated; for example that staff responsible for selling assets do not also value them.

Where a loss of asset has taken place, it shall be taken off the Fixed Assets Register and included in the Loss Register as set out in section 8.3.2 of chapter 8 of APPM Manual.

Disposal of assets to other Government departments/entities The transfer of assets by one department/entity to another will be treated as an arms-length transaction i.e. the asset will be sold on cash basis instead of as a book entry going through some settlement/exchange account. On transfer the asset shall be removed from the Fixed Assets Register by a delegated officer within the department/entity. The delegated officer shall also inform the DAO/AG/AGPR of this transfer, who shall make the adjustment in the fixed assets account.

If the department/entity receiving the asset is under the jurisdiction of another DAO/AG/AGPR, that department/entity shall inform the concerned DAO/AG/AGPR of the assets transferred, on the Fixed Assets Form.

Trade-ins and swaps Each trade-in arrangement will only to be approved by a delegated officer within a department/entity having the authority to incur expenditure representing the gross value of the purchase transaction, i.e. actual expenditure plus the value given by the supplier for the items traded-in.

Similarly, swap arrangements shall be approved in each case by a delegated officer empowered to incur expenditure equal to the estimated gross value of the items being acquired in the swap.

On trade-ins or swaps the asset traded-in or swapped shall be removed from the Fixed Assets Register and new asset shall be added to the Fixed Assets Register by a delegated officer within the department/entity.

The delegated officer shall also inform the DAO/AG/AGPR of this trade-in or swap, who shall make the adjustment in the fixed assets account.

Accounting for Proceeds from Disposals Receipts from the sale of fixed assets shall be credited to the appropriate account head in the relevant Federal or Provincial Consolidated Fund.

Sale receipts shall be accounted for on a gross basis. Sale expenses will not be netted off the sale proceeds but shall be separately accounted for as an expenditure item.

In relation to disposal of assets to other Government department/entity, the value of the asset on transfer will be its original cost, as recorded in the books of transferee department.



The double entry in relation to proceeds from disposal is as follows.

Dr Bank account

Cr Revenue head account

[To record proceeds from disposal of fixed asset]

Also

Cr Fixed assets account

[To record disposal of fixed asset in the memorandum account]

The double entry for trade-in is as follow.

Dr Expenditure head account

Cr Bank account

[To record the net expenditure incurred during trade-in of fixed asset]

Also

Dr Fixed assets account (new asset)

Cr Fixed assets account (old asset)

[To add the new asset and remove the old asset during a trade-in, from the memorandum account]

The double entry for swap is as follow.

Dr Fixed assets account (new asset)

Cr Fixed assets account (old asset)

[To add the new asset and remove the old asset during a swap, from the memorandum account]

Chapter 05: Asset Portfolio Analysis


56

Chapter 05: Asset Portfolio Analysis Asset portfolio analysis plays a key role in an asset management system. Without the knowledge of existing asset conditions and risks associated, any planning regarding asset management shall be unsuccessful. Asset base analysis comprises of two basic elements namely:

1. Asset Condition Assessment

2. Asset Risk Management

5.1. Asset Condition Assessment

Asset physical condition reflects the physical state of the asset which may or may not affect its performance. It is imperative for an organization to have a clear picture of the physical condition of their assets and their current level of service. All management decisions regarding maintenance, rehabilitation and renewal revolve around these two aspects. Oblivion to the current asset condition may lead to the premature failure. Asset physical condition analysis is used to determine the need and timing of some preventative or remedial maintenance to ensure desired Level of Service and prevent service breakdown.

Following factors contribute to the overall condition of an asset: Its age Its operating environment (what weather etc. it is exposed to) Its apparent wear and tear Asset’s performance Asset’s contribution to service delivery

According to USEPA GHD; Asset condition can be analyzed by using the following methodology. Based on condition assessments survey carried out by Sub Division Officer (WASA) / District Officer (CDG) (hereinafter referred as the ‘’Asset Manager’’) score from 01 - 05 shall be awarded by the Asset Managers for each factor. Asset condition can be specified using the following scales:

1. Physical Condition

Physical Condition

New/ Excellent Condition

Minor Defects Only

Moderate Deterioration

Significant Deterioration Unserviceable

Score 1 2 3 4 5

2. Asset Performance (KPIs)

Performance (KPIs)

Meets Performance

Targets

Minor Performance Deficiencies

Considerable Performance Deficiencies

Major Performance Deficiencies

Doesn’t Meet

Performance Targets

Score 1 2 3 4 5



3. Asset reliability

Reliability As Specified by Manufacturer

Random Breakdown

Occasional Breakdown

Periodic Breakdown

Continuous Breakdown

Score 1 2 3 4 5

Asset Condition Rating An average score shall than be calculated by the department technical team and final score shall be awarded on the basis of average score of all the factors.

Average Score 1 2 3 4 5

Asset Condition Excellent Good Fair Poor Failing

Category A B C D F

Average figures may be rounded off to the nearest whole number for convenience

Action on the basis of Condition Assessment

5.2. Asset Risk Management

Risk is defined by ISO 55000-Asset Management as’’ effect of uncertainty on objective’’ Risk is a situation involving exposure to danger or possibility of loss. The risk related to physical assets is called Asset Failure risk. Simply put, it means that assets have inherent risks or the potential for failure. These risks must, therefore, be clearly understood and managed to ensure cost-effective service delivery.

Asset risk management comprises of three components Risk Identification Risk Assessment Risk Control

Category Asset Condition Actions Required

A Excellent Only Normal Maintenance Required

B Good Minor Maintenance And Rehabilitation Required

C Fair Significant Maintenance And Minor Rehabilitation Required

D Poor Significant Renewal/ Upgrade Required

F Failing Major Renewal/Replacement Required



5.2.1. Risk Identification

It is the process of identifying each and every situation that can cause asset failure. All the vulnerabilities inherent in the physical assets as well as the contributing factors that may trigger and enhance the vulnerabilities should be duly noted.

5.2.2. Risk Assessment ISO 55002 states that “the organization should determine the actions that are necessary for addressing risks when planning for its asset management system. The overall purpose is to understand the cause, effect and likelihood of adverse events occurring, to manage such risks to an acceptable level, and to provide an audit trail for the management of risks. The intent is for the organization to ensure that the asset management system achieves its objectives, prevents or reduces undesired effects, identifies opportunities, and achieves continual improvement.” When addressing risks in the asset management system, the organization should determine the risk assessment criteria (e.g. likelihood and consequence, and risk attitude) within asset management decision making for its asset management system. A risk matrix may be used as part of this process.”

For every risk there are some conditions or vulnerabilities that give rise to such risk. These vulnerabilities are called the risk factors/ contributing factors. The greatest risk associated with Asset Management is “Asset Failure Risk”. There are two basic factors that determine the magnitude of Asset Failure Risk.

Probability (likelihood) of Asset Failure

Impact of Asset Failure

a) Probability of Asset Failure The probability of asset breakdown can be defined as the likelihood that the asset will fail. Asset breakdown does not necessarily means that an asset is faulty and has stopped working; it can also mean that the asset is not contributing to the service delivery as it should.

Following factors can be analyzed to predict the probability of Asset Failure:

Asset Condition Asset Effective Age Past Failure history

Combined with the asset condition, asset probability of failure can be calculated according to the following scales:

Condition A B C D F

Probability of failure

Very Low Low Medium High Very High

Probability of Failure Rating

1 2 3 4 5

b) Impact of Asset Failure

Impact of the asset failure means the gravity of damage failure of said asset would do to service delivery. The larger the affect to service delivery the more impact it has. Thus, assets can be categorized into two broader categories in respect of the impact, namely:

Critical Assets Non Critical Assets



Critical assets are those assets which are essential for the service delivery and their failure may have severe impact on the business. Failure of a critical asset will adversely affect delivery of service if not bring it to a halt. It should be kept in mind that critical assets are those that have adverse consequences of failure but not necessarily a high probability of failure. It is important to identify critical assets, to target and refine maintenance plans, capital expenditure plans, and investigative activities at the critical areas.

Potential consequences of asset failure are assessed against 5 key strategy elements: Service Delivery – Asset’s is not performing well Environment - damage to the environment Customer - disruption of the customer/community Efficiency- costs associated with the failure Culture – potential for injury or damage when repairing a failed asset

Based on the aforementioned potential impacts/consequences associated with the failure of asset, impact of an asset to the service delivery can be assigned using the following scale.

Impact Total System Failure

Facility/ Sub-Division

Failure

Asset Failure Major Component

Failure

Minor Component

Failure Scale Value

5 4

3

2

1

Risk Rating The overall risk depends on both the probability and consequence of the event. As mentioned above, the overall asset failure risk depends upon the Probability of asset failure and Impact of Asset Failure (Asset Criticality)

Thus asset failure risk is the product of probability rating and the impact rating. Thus, asset failure risk can be categorized into following ratings:

i. Low Risk ii. Moderate Risk

iii. High Risk iv. Significant Risk

Calculation steps for risk rating are shown in the following table:

Probability

Impact (criticality assessment)

1 2 3 4 5

1

Low Risk Low Risk Low Risk Moderate Risk

High Risk

2

Low Risk Low Risk Moderate Risk

High Risk High Risk

3

Low Risk Moderate Risk High Risk High Risk Significant Risk

4

Moderate Risk High Risk High Risk Significant Risk

Significant Risk

5

High Risk High Risk Significant Risk

Significant Risk

Significant Risk



5.2.3. Risk Control

In order to plan asset management in light of the Physical Condition and assessed Asset Failure Risks the following matrix may be used to identify action plan for asset management.

Condition

Failure Risk State

Low Moderate High Significant

A

Regular Maintenance

Regular Maintenance

Preventive Maintenance

Priority Maintenance

B

Regular Maintenance



Priority Rehabilitation

C




Immediate Rehabilitation

D




Immediate Replacement

E





Assets that require “immediate Replacement/ Rehabilitation” should be top priority Assets that require “ Priority Rehabilitation” should be accommodated if resources allow Assets that require “Preventive/ Priority maintenance” should be carefully monitored to

prevent the need for their replacement Assets that require regular maintenance does not pose a risk and can be operated with regular

maintenance schedule

Chapter 06: Methodology for the IDAMP


56

Chapter 06: Methodology for the IDAMP The methodology/processes for the preparation of 'Integrated Development and Asset Management Plan (IDAMP) consist of following steps:

Step 1: Development of GIS based Assets Inventory Step 2: Notification of Level of Service (LOS) Step 3: Development of Project Proposal Step 4: Preparation of Operations and Maintenance (O&M) Costs Step 5: Compilation of Project Package Step 6: Financial Capacity Analysis Step 7: Projects Selection and Approval Step 8: Capital Investment Plan Step 9: Finalization of Integrated Development and Asset Management Plan

6.1. Step 1: Development of GIS based Asset Inventory The existence of a GIS based inventory of assets is the lynchpin of developing an integrated approach to Asset Management. This involves the collection and updation of asset attributed data and the physical location mapping of the assets in the system. In the context of IDAMP, initially an asset inventory of existing assets shall be developed in the Asset Management System (AMS). Subsequently, asset attribute data and physical location of replaced and new assets shall be updated in the AMS on the basis of IDAMP. The stages for initial development of asset inventory are broadly listed as under:

1. Identification of asset categories 2. Collection of asset attribute data 3. Development of asset inventory in AMS

6.1.1. Identification of Asset Categories Assets of respective entities shall be categorized and grouped on the basis of similar characteristics and utilization. Initially, assets having significant importance in service delivery shall be classified into following categories:

Asset Categories – CDGs Asset Categories – WASAs

1. Roads

2. Bridges 3. Underpasses 4. Buildings 5. Parking Stands

6. Land 7. Machinery & Equipment 8. Vehicles

1. Tube wells

2. Disposal Stations 3. Water Treatment Plants 4. Overhead Reservoirs 5. Machinery & Equipment

6. Vehicles 7. Land 8. Buildings 9. Pipelines



6.1.2. Collection of Asset Attribute Date For the development of GIS based asset inventory, asset attribute data shall be collected from the CDGs and WASAs. This is the first step leading towards the Integrated Development and Asset Management Plan. Initially, existing assets data shall be collected through survey forms. For this purpose, a survey form shall be designed for each category of asset for the respective entities. The Forms shall be filled out by the asset managers in concerned departments of CDGs and WASAs. The asset attribute data shall include the following information in respect of each asset:

Asset Number Asset Description and Specification Asset Location and Custodian Asset Acquisition Year and Cost Asset Present Condition and Risk Asset Residual Life

6.1.3. Asset Portfolio Analysis The assets shall be categorized as per condition, assets performance, age, level of service, failure history and risk associated with failure as per criteria prescribed in the ‘Chapter 05: Asset Portfolio Analysis’. The score will be awarded by Asset Managers related with the asset operations and management.

6.1.4. Updating the Asset Inventory in AMS A GIS based Asset Management System (AMS) has been developed for the CDGs and WASAs. The entire assets shall be recorded and mapped in the AMS as per their attributes and location in line with the requirement of IDAMP.

Initially, asset inventory in AMS shall be created on the basis of asset attributed data collected through the survey forms. In order to determine the GIS location of assets, a separate android based survey shall be conducted.

Meanwhile, trainings and capacity building of asset managers of WASAs and CDGs shall be conducted on AMS. Further, asset managers shall be provided with the controlled access rights to the AMS.

Subsequently, Asset Managers shall use their authorized log-ins to update their respective assets and attribute data in the AMS.

6.2. Step 2: Notification of Level of Services (LOS)Asset shall be planned and managed for the desired service delivery to the consumers. For this purpose, an asset divergence analysis shall be undertaken to determine if the existing assets inventory is suitable for optimal delivery of the service delivery requirements that the assets are intended to support. The activities that would usually be undertaken in the analysis are:

Identify Current Level of Services — identify the current level of service being delivered by the existing assets

Set Target Level of Services — ascertain the target level of service to meet the service delivery requirements

Ascertain the Service Delivery Gap ⁻ assess the gap in the existing level of service and target level of service

Evaluate Asset Performance Indicators — determine if the existing asset portfolio meets the existing service delivery requirements and is capable to meet the service delivery gap;



Planning for the Assets – In case existing assets are not sufficient to meet the target service delivery requirements, asset planning shall be undertaken in respect of rehabilitation of existing assets or creation of new assets.

Thus, CDGs and WASAs shall design the LOS indicators for the respective services. Further, the entities shall compute their existing LOS and set target LOS for the next three years. Target LOS shall be used as key performance indicators to assess the performance of assets and monitor the extent of service delivery by the entities. This output based approach shall allow entities to manage the asset as per the design and LOS requirement consistent with the city requirement of service delivery.

Thus, WASAs shall notify the existing LOS and target LOS for the upcoming the years against the following indicators:

Sr. No. Indicator Unit Description

1 Service Coverage

1.1 Water Coverage % Percentage of population with access to water services in comparison to total population

1.2 Sewerage Coverage %

Population with sewerage services (direct service connection) as a percentage of the total population

2 Water Production and Consumption

2.1 Water production LCPD

Total annual water supplied to the distribution system (ex-treatment plant and including purchased water, if any) expressed by population served per day.

2.2 Water consumption LCPD

(Total annual water sold + Total annual volume of free supplies) expressed by population served per day

2.3 Metered water consumption LCPD Total annual metered water consumed expressed by metered population served per day

3 Non-Revenue Water/ Water Loss

3.1 Unaccounted for water %

Difference between total water produced (ex-treatment plant) and total water consumed (which is water sold plus free supplies) expressed as a percentage of total water produced.

3.2 Non-revenue water % Difference between total water produced (ex -treatment plant) and total water sold




expressed as a percentage of total water produced.

4 Metering Practices

4.1 Proportion of functional meters %

Total number of water connections with functional/operating meters expressed as a percentage of total number of metered water connections

4.2 Metered water supply %

Volume of water sold that is metered expressed as a percentage of total volume of water sold

5 Operational Performance / Pipe Network Performance

5.1 Pipe breaks Breaks /Km Total number of pipe breaks per year expressed per km of the water distribution network.

5.2 Sewerage blockages Blockages /Km

Total number of blockages per year expressed per km of sewers

5.3 Pipe leakages Leakages/Km

Total number of pipe leakages per year per km of the water distribution network

6 Cost and Staffing

6.1 Unit operational cost - water sold (production cost at consumer end) Rs. /m3

Total annual operating expenses divided by the total annual volume of water sold.

6.2 Unit operational cost - water produced (gross production cost) Rs. /m3

Total annual operating expenses divided by the total annual water of water produced.

6.3 Staff per 1000 water and sewerage connections Ratio

Total number of staff expressed as per thousand water and sewerage connections

6.4 Water supply staff per 1000 water connections Ratio

Total number of water supply staff expressed as per thousand water connections

6.5 Sewerage staff per 1000 sewerage connections Ratio

Total number of sewerage staff expressed as per thousand sewerage connections

6.6 Salary cost as proportion of Operating costs %

Total annual salary costs (including salaries, wages, pensions, other benefits, etc.) Expressed as a percentage of total annual operating costs.




6.7 Power and Electricity Costs as proportion of Operating Costs %

Total annual power/electricity costs of the utility expressed as a percentage of total annual operating costs.

7 Water Quality

7.1 Chemically Unfit Water Samples at Tap %

Total number of chemically unfit water samples at tap expressed as a percentage of total samples taken

7.2 Biologically Unfit Water Samples at Tap %

Total number of biologically unfit water samples at tap expressed as a percentage of total samples taken

7.3 Water Quality - Required Samples Tested for residual chlorine

%

Total number of residual chlorine samples carried out expressed as a percentage total number of residual chlorine samples carried out as per standards

7.4 Water Quality - Samples having residual chlorine %

Total no of residual chlorine samples that passed the relevant standard expressed as a percentage of Total no of residual chlorine samples carried out

8 Quality of Services

8.1 Continuity of Service Hrs. / Day Average hours of service per day for water supply.

8.2 Water Supply Complaints %

Total number of water supply complaints per year expressed as a percentage of the total number of water supply connections.

8.3 Sewerage Complaints %

Total number of sewerage complaints per year expressed as a percentage of the total number of sewerage connections.

8.4 Revenue/ Billing Complaints %

Total number of revenue or billing complaints expressed as a percentage of total water and waste water connections

8.5 Waste water Treatment – Primary %

Proportion of collected sewage that receives primary treatment only, i.e. involving settlement with the intention of removing solids, but not biological treatment. Both lagoon and mechanical treatment can be included, where appropriate.




8.6 Waste water Treatment – Secondary %

Proportion of collected sewage that receives at least secondary treatment, i.e. removing oxygen demand as well as solids, normally biological. Both lagoon and mechanical treatment can be included, where appropriate.

9 Billings & Collections

9.1 Average Revenue of Water & Waste water Rs. / m3 Total operating revenue divided

by total water sold

9.2 Collection Period months

Year-end accounts receivable/Total annual operating revenues expressed in months equivalent of sales.

9.3 Billing Efficiency %

Total no. of bills issued and delivered at door step expressed as a percentage of Total connections (water +waste water)

9.4 Collection Efficiency (Physical) % Total number of bills paid expressed as percentage of total number of bills issued

9.5 Collection Efficiency (Financial) % Total amount of bills received expressed as a percentage of total amount of bills issued

10 Financial Performance

10.1 Operational cost coverage Ratio Total annual operational revenues/Total annual operating cost

For CDGs, initially following LOS indicators shall be used to monitor the performance and service delivery:

Sr. No. Indicators Unit Description

1 Functioning Schools/ Schools Efficiency

1.1 Functioning schools % Total number of functioning schools expressed as a percentage of total number of schools

1.2 Enrollment in school % Percentage of total number of students enrolled in schools

2 Solid Waste Management Efficiency




2.1 Collection efficiency % Total amount of solid waste collected expressed as a percentage of total solid waste produced

2.2 Disposal efficiency % Total amount of solid waste disposed off expressed as a percentage of total solid waste collected

3 Roads Efficiency

3.1 Roads with condition "A" (Excellent) % Total number of roads with condition “A”

expressed as a percentage of total roads

3.2 Roads with condition "B" (Good) % Total number of roads with condition “B” expressed as a percentage of total roads

3.3 Roads with condition "C" (Fair) % Total number of roads with condition “C” expressed as a percentage of total roads

3.4 Roads with condition "D" (Poor) % Total number of roads with condition “D” expressed as a percentage of total roads

3.5 Roads with condition "F" (Failing) % Total number of roads with condition “F” expressed as a percentage of total roads

4 Traffic system efficiency

4.1 Functioning traffic signals % Total number of functioning traffic signals expressed as a percentage of total number of traffic signals

4.2 Road signage % Percentage of signage on roads

4.3 Working Street Light % Percentage of working street lights as of total street lights

5 Health Services efficiency

5.1 Functioning BHUs % Total number of functioning BHUs expressed as a percentage of total number of BHUs

5.2 Functioning Hospitals % Total number of functioning hospitals expressed as a percentage of total number of hospitals

5.3 Functioning Dispensaries % Total number of functioning dispensaries expressed as a percentage of total number of dispensaries

7 Citizens satisfaction for service delivery

7.1 Complaints resolved to total complaints % Total number of complaints resolved expressed

as a percentage of total number of complaints

7.2 Complainants showing satisfaction % Percentage of complaints satisfied in relation to complaints dissatisfied

8 Asset Management System implementation




8.1 Number of logins issued to Personnel

Number Total number of logins issued to Personnel

8.2 No of Assets entered in the system No. of

assetsTotal number of Assets entered in the system

9 Pollution in city

9.1 No of days air pollution was at acceptable levels

No. of

Days

Total number of days air pollution was at acceptable levels

6.3. Step 3: Development of Project Proposal After having complete and updated Existing Inventory record and performance targets, Asset Managers shall assess; what shall be done to achieve those targets. In order to fulfill the service delivery gap between existing LOS and target LOS, Asset Manager shall identify projects to be done to achieve the target. Asset Manager shall develop project proposal.

Project Proposal shall include the following activities:

1. Projects Identification 2. Preparation of Projects 3. Project Appraisal 4. Project Screening and Phasing

6.3.1. Projects Identification Projects shall be identified by the Asset Managers in consultation with the local body representatives. While doing the identification of projects, Asset Manager shall conduct Community Consultation Surveys to identify the community aspirations towards existing service quality and required service quality. The results of such consultations shall assist the Asset Managers in identification of most desirable areas for service improvements.

Identified projects shall broadly be classified into following types:

A. Replacement/ rehabilitation of Existing Assets

B. Creation of New Assets

A. Replacement of existing assets Asset inventory shall provide the basis of the input for all existing assets and conditions of assets which are linked to their level of service delivery. The concerned Asset Manager shall identify category-wise list of assets for Replacements /Rehabilitation.

Existing assets having significant contribution in the service delivery shall be included in the proposed list on following basis:

Assets have reached to its replacement year; and/ or Assets have condition rating D (poor) & F (failing); and/or Assets have High risk of failure There are regulatory/ statutory directions to replace the asset.



B. Creation of New Assets The requirement of service delivery enhancement based on the growing needs of population, development intervention and extension in services in extended boundary of city requires planning for the new assets to be integrated with the existing network of assets and system.

The new asset shall be planned by the concerned Asset Manager after considering the needs in its operational area. Asset Manager shall separately include the new projects in the list of proposed projects.

6.3.2. Preparation of Projects Having identified the type of projects (replacement/ new), Asset Manager shall prepare project for the appraisal. While preparation of projects, Asset Manager shall conduct the physical survey of proposed asset/ site/facility and record the results on Physical Inspection Form. This will help the Asset Manager in identification of complete aspect of asset/ facilities for project preparation.

Project preparation shall include the following activities: 1. Preparation of technical design or project technical specifications 2. Rough cost estimation of the projects on following basis:

a) Latest Market Rate System (MRS) rates b) The cost of non-MRS items shall be based on:

Latest procurement cost with 10% annual increase or An open market quotation

3. Operation and maintenance (O&M) costing of proposed projects

6.3.3. Project Appraisal After the preparation of projects, economic and financial appraisal shall be performed by the Asset Managers for the identified projects. The rationale behind the project appraisal is to identify financial and economic yardsticks for the selection/rejection of projects from among competing alternative proposals for investment. Economic and financial appraisals represent complementary yet distinct ways to estimate the net benefits of a project. Both are based on the difference between the with-project and the without-project situations. The said appraisals are complementary because for a project to benefit the economy, it must be financially sustainable. The basic difference between the financial and economic benefit-cost analyses of a project is that the former compares benefits and costs to the enterprise in constant financial prices, while the latter compares the benefits and costs to the whole economy measured in constant economic prices i.e. in an economic appraisal we use ECONOMIC (or SHADOW) prices NOT FINANCIAL prices in the following manner:

Exclude all taxes and duties and subsidies Use the economic discount rate not financial market rate If overvalued exchange rate then value imports and exports more highly Use the opportunity cost of labor

While performing the project appraisal, following techniques shall be performed; Net Present Value (NPV): NPV is the difference between the present value of cash inflows and the present value of cash outflows

Internal Rate of return (IRR): IRR is a metric used in capital budgeting, measuring the profitability of potential investments. Internal rate of return is a discount rate that makes the net present value of all cash flows from a particular project equal to zero.

6.3.4. Project Screening and Phasing After preparation of projects and project appraisal, all the proposed projects (replacement & new) shall be screened and phased over the three year period.



For this purpose, a five element Screening & Phasing Criteria shall be applied for assessment of projects on the following attributes for replacement of project assets and/ or development of new assets with a project approach:

1. Project Purpose: This criterion provides purpose and relevance of the asset to the integrated planning/master plan. If there is no master plan for the area, while assigning the lowest and highest score it shall be considered how the said project is connected to overall betterment of the system. It tries to identify projects of strategic importance for the development of the locality, so it factors in the consequences of delaying the project and the status of the existing services.

2. Public Response & Service Delivery Improvement: This composite index gives public desirability of the project from the perspective of service delivery improvement as per different user groups and stakeholders in society. It looks into the political support and whether there has been articulated positive or negative response from resident groups, NGO's or the public at large

3. Environmental Impact: This considers the improvement brought by the project in the environment. This exercise will screen and assign the marks according to contribution of projects/assets. Distinguishing between direct and indirect impact, it identifies the potential environmental benefits and costs of the project and gives higher scores to those projects that make an improvement to living standards, public health and a green environment.

4. Socio-Economic Impact: This element analyzes the project according to its effect on the socio-economic aspects in the community, direct benefits and service delivery improvement to low income or vulnerable groups with minimum or now services or connectivity. This index also looks for those projects that create employment locally or have a positive contribution to the local or regional economy and thus receive a higher ranking.

5. Feasibility of Implementation: This aspects look at how practical is to implement the project on site with all rights of way, disturbances to the existing services and completion on site. The ability to carry out O&M and technical expertise in the department /entity is also important. It also identifies if there are any external factors that may negatively impact the outcome of the proposed project.

The table with the Screening and Phasing Criteria description is provided below to be used.

Criteria No

Criteria description Lowest score

Highest score

1

Project Purpose Does the project fill a gap in a wider system of service

delivery? Whether the existing services are dealing with the

problem? Whether the project will contribute to city master plan/

regional development goals? Whether the deference/ delay of the project is going to

affect citizens’ health, safety, property, prosperity etc.?

01

20



2

Public Response & Service Delivery Improvement Is the project likely to get support from municipal

leadership? Will the project get approval from higher levels of entity? Does the project have a local 'champion' or where did the

project idea originate from? Is there support or opposition from residents, NGO's and

community groups in the immediate vicinity of the proposed facility/ project?

01

20

3

Environmental Impact Does the project provide any benefits to the quality of

public spaces in the city e.g. parks, green infrastructure, water bodies, boulevards, open spaces, etc.?

Does the project confer direct benefits to the quality of the local environment e.g. air quality, water pollution, waste reduction, etc.?

01

20

4

Socio-Economic Impact Does the project bring improvements to low income

neighborhoods? Does the project contribute to a more harmonious society? Will the project bring in direct revenue? Does the project has acceptable economic appraisal/ cost

effectiveness? Are there indirect economic benefits from this project in

the long term, e.g. employment creation, investment generation, increase in land/property prices, reduction in citizens’ expenditures, etc.?

01

20

5

Project Feasibility of Implementation Ease of implementation of project in respect of technical

design? Has an institutional needs assessment been carried out with

regard to planning, implementing and managing the proposed infrastructure?

Will the external factors negatively impact the outcome of the proposed project?

Is there a capable system in place to implement and operate this project or is external support needed?

01

20

Scores shall be assigned to each project by the respective Asset Managers. In case, there is more than one Asset Manager, scores shall be assigned by each Asset Manager and total score by Asset Managers shall be averaged out in respect of each project.

Based on the final average score, each project shall be screened and phased out over the three years. The screening and phasing scheme against the score obtained by each project is as follow:



Cumulative Average Score Phasing Plan

100 -------71 Year 1

70 -------- 51 Year 2

50 ------- 21 Year 3 20--------- 1

Or Feasibility of Implementation score is less than

10

Rejected

6.4. Step 4: Preparation of Operation & Maintenance (O&M) Costs The operation and maintenance (O&M) costs shall be computed for all the assets by the respective Asset Managers. The O&M costs shall be bifurcated into following sections:

1. O&M costs of existing assets without considering the proposed projects (replacement/ new) 2. O&M costs after considering the screened projects ( replacement/ new)

Thus, total O&M cost for the assets is computed to arrive at estimated O&M costs for upcoming years by considering the selection/ rejection of screened projects. For instance, if a screened project is not selected by the Technical Team or it is phased in different year, the cost computed for the existing asset may be used for O&M budgeting process. Further, the entities shall prepare an Asset Management Plan. The AMP shall include a detailed O&M plan in respect of all the assets. The O&M plan shall contain the schedule of activities for the effective operationalization and maintenance of all the assets held by the entity.

6.5. Step 5: Compilation of Project Package After completion of above mentioned steps, Asset Manager shall consolidate this working to produce a Project Package. Project Package shall include following at minimum;

Screened Project along with allocated score O&M Cost along with AMP Supporting Document(s) that are used by Asset Manager to allocate score

Asset managers shall submit their Project Package to the respective planning authorities.

6.6. Step 6: Financial Capacity Analysis Planning authorities of the entity shall analyze potential financial sources to finance capital investments. The capital investment funds available to Local Government unit may result from:

Local capital revenues: These include revenues generated only once, e.g. from selling a property that is owned by the CDGs & WASAs, and not needed for public use. Also, included here are incomes generated from renting of own properties or assets for use to public interest.

Planned operating surplus (balance): This is the net operating surplus calculated as the balance (difference) between Cities/WASAs operating revenues and operating expenditures.

Using the capital reserve fund: Although CDGs & WASAs have not yet started to set up a capital reserve fund for the replacement of capital equipment or capital investments, this represents one of the potential possibilities in the future.



Central Government transfers: This foresees the transfer from central/provincial Government coming either in the form of conditional grant for investments or unconditional grant, which can be used for capital investments.

Donor Grants: This comprises all incomes for which the CDGs & WASAs are assured they will be raised from donors, by clearly identifying the donor, fund, their requests and the year.

This estimation would guide the Technical Team for final decision regarding selection and phasing of projects.

6.7. Step 7: Project Selection & Approval Once Planning authorities have analyzed the potential financial sources and received Project Package from Asset Managers, these shall be presented to Technical Team for selection of projects.

Technical Team shall evaluate the proposed projects against following factors and score to each project:

Criteria No


Highest score

1 Relevance

Whether the project design is fundamentally suited for achieving the goals associated with the project?

Whether the proposed project complied with the applicable legal regulations?

01 20

2 Short Term Assumptions Performance

Has funding been secured/allocated within the Local Government budget for this project?

If required then whether the external sources of funding have been secured?

01 20

3 Efficiency

Whether the proposed project is financially and/ or economical viable?

Whether the proposed project would be able to attain time & cost efficiency?

Will the proposed project going to improve the overall efficiency of the service delivery?

01 20

4 Effectiveness

Does the project contribute towards long term sustainable development, e.g. renewable energy, clean water supply, waste treatment, recycling, etc.?

Does the project improve the social status and access to social services (health, education, etc.) for women and children?

Whether the project will be able in achieving the associated wide objectives?

01 20



Criteria No


Highest score

5 Sustainability

If there is risk, does the project design include a risk mitigation strategy?

Whether the proposed project would be able to sustain if external financial or technical support has been withdrawn after completion?

01 20

Final project score shall be derived on basis of scores allocated by Technical Team and Asset Manager to the individual project. Score given by Technical Team and Asset Manager shall be clubbed by 70% and 30% respectively. Final Approved and Phased List of Projects shall be prepared as per the following scores schedule;

Cumulative Average Score

Phasing Plan

100 ------ 71

Year 1

51 ----- 70

Year 2

21------50

Year 3

1-------20

Rejected

6.8. Step 8: Capital Investment Plan Capital Investment Planning (CIP), in the context of CDGs, its entities and WASAs shall include capital investment on the enterprises established and owned by them for the provision of municipal services. CIP also include the investment by the private sector through Public-Private Partnerships (PPP). After having the details of existing assets, requirements of their operations and maintenance, current and desired level of service delivery and the information of available financial resources, the CDGs and WASAs will prepare their CIP.

CIP for assets and new assets shall be advised by Technical Team after knowing the finances /resources available in the city from all forms of sources. Each individual project shall be marked with a source of fund from which it shall be financed.

6.9. Step 9: Finalization of Integrated Development and Asset Management Plan

6.9.1 Compilation of IDAMP Integrated Development and Asset Management Plan shall be compiled in the form of a single book. This shall be prepared in accordance with policies and guidelines suggested by Planning and Development Department, Punjab. This budget book shall include the budgeted development expenditures and associated non development expenditures. Same shall be forwarded to competent authority for approval.



6.9.2 Preparation of Logical Framework Matrix (LFM) Log-frame matrix shall be prepared for projects selected and approved by the Technical Team of the entity.

A log-frame matrix is a concise document that outlines the key features that lead to a project achieving its goal.A log-frame consists of a 4 column by 4 or 5 row matrix.

The first column represents the hierarchy of activities to outcomes that needs to occur for the project to succeed.

The second column represents the indicators that are appropriate measures of whether the activities, outputs or outcomes have been achieved.

The third column represents the data source, or means to verify the indicator. The last column is very important, and outlines the assumptions that need to hold true for that

particular activity, output or outcome to occur.

The Log-frame Matrix

Narrative Summary Verifiable Indicators (OVI)

Means of Verification (MOV)

Important Assumptions

GOALS

PURPOSE

OUTPUTS

ACTIVITIES



Chapter 07:: Monitoring and Evaluation of IDAMP


56

Chapter 07: Monitoring and Evaluation of IDAMP CDGs and WASAs shall develop processes to provide for the measurement, monitoring, analysis and evaluation of the entity’s assets, asset management system and asset management activities. In the development of these processes, the following should be taken into account:

Setting of performance metrics and associated indicators Confirmation of compliance with the requirement Examination of historical evidence The use of documented information to facilitate subsequent corrective actions and decision

making.

7.1. Establishment of M&E Unit A Monitoring and Evaluation (M&E) Unit shall be established for continuous monitoring of implementation and compliance of the IDAMP. M&E Unit composition for WASA and CDG is given below;

WASA M&E Unit Managing Directors shall nominate DMD/Director/Deputy Director, who shall not be part of Technical Team of IDAMP or may create an independent unit with name of Monitoring and Evaluation Unit. CDG M&E Unit DCO shall nominate EDO/DO/DDO, who shall not be part of Technical Team of IDAMP or may create an independent unit with name of Monitoring and Evaluation Unit.

7.2. Term of References for M&E Unit The M&E Unit shall have the following terms of references:

Ensure that Asset Management System (AMS) is updated in all aspects Review and evaluation of performance of IDAMP Team (Technical Team & Asset

Managers) M&E Unit shall monitor;

Levels of services performance of an asset, including financial and non-financial performance the effectiveness of the asset management system

M&E Unit shall receive and evaluate the following reports from the entity and Asset Managers: Report on Key Performance Indicators (Target vs Achieved) Report on projects implementation status Report of Log-frame Matrix Report on any hindrance observed while implementing the project

Evaluation of projects implemented during the year and its status with respect to IDAM Plan developed

Conduct Internal Audit at planned intervals to identify and address potential gaps in system and identify opportunities for performance improvement

Review the entity’s asset management policies, procedures and systems, at planned intervals, to ensure its continuous improvement, adequacy, suitability and effectiveness

Provide recommendation and guidelines to IDAMP Team

CDG/ WASA shall retain appropriate documented information as evidence of the results of monitoring, measurement, analysis and evaluation.

Chapter 07: Monitoring and Evaluation of IDAMP


7.3. Function of M&E Unit 7.3.1. Internal Audit

M&E Unit shall conduct internal audits at such intervals as may be prescribed. Internal audit shall be conducted to obtain assurance on whether;

a) asset management system conforms to the organization’s own requirements for its asset management system

b) asset management system is effectively implemented and maintained c) procedures developed to prepare IDAM Plan are adhered to

M&E unit shall prepare and submit Internal Audit Report on such intervals as may be prescribed to the Competent Authority. This would help M&E Unit and respective entity to identify and address potential gaps in system and avail such opportunities for performance improvement.

7.3.2. Management Review M&E Unit shall review the entity’s asset management policies, procedures and systems, at planned intervals, to ensure its continuing suitability, adequacy and effectiveness.

The management review shall include consideration of;

a) the status of actions previously highlighted in reviews

b) changes in external and internal factors that are relevant to the asset management system

c) information on the asset management performance, including trends in

nonconformities and corrective actions

monitoring and measurement results

audit results

d) asset management activity

e) opportunities for continual improvement

f) changes in the profile of risks and opportunities

M&E shall prepare and submit a Management Review Report on such intervals as may be prescribed to the Competent Authority. The Management Review Report shall include decisions related to continual improvement opportunities and any need for changes to the asset management system. Any such changed shall be accordingly updated in IDAM Plan.

The organization shall retain documented information as evidence of the results of management reviews.

7.3.3. Continual Improvement of IDAM Plan M&E Unit shall continually improve the suitability, adequacy and effectiveness of IDAM Plan.

a) Nonconformity and corrective action In case of non-conformity or incident, M&E Unit shall:

i) react to the nonconformity or incident, and, as applicable: take action to control and correct it deal with the consequences

ii) evaluate the need for action to eliminate the causes of the nonconformity or incident, in order that it does not occur or recur elsewhere, by:

Chapter 07: Monitoring and Evaluation of IDAMP


reviewing the nonconformity or incident;

determining the causes of nonconformity or incident;

determining if similar nonconformities exist, or could potentially occur;

iii) Recommend any action needed;

iv) Review the effectiveness of any corrective action taken

M&E Unit shall, through a formal report, communicate the findings and recommendations to the Competent Authority for consideration and further actions.

The entity shall retain documented information as evidence nature of non-conformity and results of corrective actions taken.

b) Preventive action M&E Unit shall establish processes to proactively identify potential failures in asset performance and evaluate the need for preventive action.

M&E Unit shall, through a formal report, communicate the findings and recommendations to the Competent Authority for consideration and further actions.

The entity shall retain documented information as evidence nature of preventive actions taken to avoid any incident.

Glossary


Glossary Asset Item, thing or entity that has potential or actual value to an

Organization

Asset Life Period from asset creation to asset end-of-life Asset management Coordinated activity of an organization to realize value from assets

Asset management Documented information that specifies the activities, resources and Plan timescales required for an individual asset or a grouping of assets to

achieve the organization’s asset management objectives

Asset Management system for asset management whose function is to Management establish the asset management policy and asset management System objectives

Asset portfolio Assets that are within the scope of the asset management system

Asset system Set of assets that interact or are interrelated Asset type Grouping of assets having common characteristics that distinguish

those assets as a group or class Audit systematic, independent and documented process for obtaining audit

evidence and evaluating it objectively to determine the extent to which the audit criteria are fulfilled

Capability asset management measure of capacity and the ability of an entity

system, person or organization to achieve its objectives

Competence ability to apply knowledge and skills to achieve intended results

Conformity Fulfilment of a requirement

Continual Recurring activity to enhance performance improvement

Critical asset Asset having potential to significantly impact on the achievement of the organization's objectives

Depreciable Asset A non-current asset having a limited useful life

Depreciation An amount representing the reduction of the service potential during an accounting period

Documented Information required to be controlled and maintained by an Information organization and the medium on which it is contained

References


Effectiveness Extent to which planned activities are realized and planned results achieved

Level of service Parameters, or combination of parameters, which reflect social, political, environmental and economic outcomes that the organization delivers

Life Cycle stages involved in the management of an asset

Maintenance: The actions required for an asset to achieve its expected useful life. Maintenance can be planned or unplanned. Planned Maintenance includes measures to prevent known failure modes and can be time or condition- based. Repairs are a form of unplanned maintenance to restore an asset to its previous condition after failure or damage. Expenses on maintenance are considered operational expenditure.

Monitoring Determining the status of a system, a process or an activity Objective result to be achieved

Organization person or group of people that has its own functions with responsibilities, authorities and relationships to achieve its objectives

Organizational Overarching objective that sets the context and direction for an Objective organization's activities Organizational Documented information that specifies the programs to achieve the Plan organizational objectives Performance Measureable result Policy Intentions and direction of an organization as formally expressed by

its top management

Predictive action Actions to monitor the condition of an asset and predict the need for preventive action or corrective action

Process Set of interrelated or interacting activities which transforms inputs into outputs

Rehabilitation Works to rebuild or replace parts of an asset to enable it to the original capacity and performance, and materially extend its useful life (which may be a full or partial extension of life - i.e. less than its original expected useful life).

Remaining Useful The time remaining until an asset ceases to provide the required Life standard of performance or economic usefulness Replacement: The complete replacement or reconstruction of an asset with one that

performs to a similar standard of performance, as a result of which the asset life can be considered to have re-commenced

Risk Management The application of a formal process that identifies the exposure of

References


a municipality to service performance risk and determines appropriate responses.

Stakeholder Person or organization that can affect, be affected by, or perceive themselves to be affected by a decision or activity

Asset Management Plan Documented information that specifies how organizational objectives are to be converted into asset management objectives), the approach for developing asset management plans, and the role of the asset management system in supporting achievement of the asset management objectives

Upgrading The augmentation or alteration of an asset that results in a material improvement to capacity or performance. Expenses on upgrading works are considered capital expenditure

References


References

‘ISO 55000 Asset Management –Overview, principles and terminology’ – International Standard

‘ISO 55001 Asset Management –Management systems-Requirements’ – International Standard

‘ISO 55002 Asset Management – Management systems-Guidelines for the application of ISO 55001’ – International Standard

‘Project Selection Criteria’ by Michael Schaeffer & Wesal Ashur, World Bank Group

‘Medium Term Budget Framework Manual’ by Michael Schaeffer & Wesal Ashur, World Bank Group

‘Project Appraisal Manual’ by Michael Schaeffer & Wesal Ashur, World Bank Group

‘Managing Project Risk’ by Michael Schaeffer & Wesal Ashur, World Bank Group

‘City Infrastructure Investment Programming & Prioritization Toolkit’ by Cities Development Initiative for Asia (CDIA)

‘Manual for Development Projects’- Planning Commission of Pakistan