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Copyright © GHD LLC 2005
By Roger Byrne - IMESA Mentor
Reforming Local Government
Implementing a Sustainable
Infrastructure Asset Management
(SIAM) Program in South Africa
Copyright © RBA. 2009
Copyright © RBA. 2009
1. Issues Facing South African Municipalities
2. Philosophy of Advanced Asset Management
3. A National Planning Framework Model
4. The Potential Benefits of a National Approach
5. What IMESA is doing ?
Talk Agenda
Copyright © RBA. 2009
NPC – Strategic Planning Challenges
Eliminating Poverty
Reducing Inequality
Disease
Burden
HIV/AIDS Divided
Communities
Inequality Public
Sector Management
Skills
Spatial Patterns
Marginalise
the Poor
High
Unemployment
25%
Fight
Corruption
Resource
Intensive
Economy
Crumbling
Infrastructure
Poor
Educational
Outcomes
Provide
Long Term
Meaningful
Employment
Better
Managed National
Infrastructure Improved
Municipal Asset
Management
Saving Money
& Resources,
Improving Service
Delivery
Provide
Basic AM Skills
& Training
Copyright © RBA. 2009
“Highly developed and reliable infrastructure
systems raises productivity and lowers
production costs. Deficient infrastructure – along
with weak management and poor economic
organization – accounts for a large share of low
factor productivity in developing (and some
developed) countries.” OECD 1996
The Importance of Infrastructure
Copyright © RBA. 2009
South African Statistics – Valuations
In other countries it has been shown that
Municipal Cities manage over
45%
of the Nations Public Assets
IMESA’s NAMS group estimates that South African
municipal infrastructure is worth OVER
R3,000 Billion Rand
(in fact between R3,100B & R3,600B - see separate assessment)
Copyright © RBA. 2009
9
Councils :
6 Metro’s with more than 4 million people
3 Emerging metro’s with over 2 million
50 Regional cities
250 Towns & Small local councils
Population approx. 47 million people
Concentration Of Assets
Thanks to Rob Childs
Copyright © RBA. 2009
Key Issues for Larger Municipalities
Urban population growth 1.9% pa
Backlog housing & basic services
Poor service delivery
Lack of staff & skills
Economies dependent on existing infrastructure
Create employment opportunities
Amalgamation legacies – Lack of data
Climate change implications
Many Others ?
Copyright © RBA. 2009
Metro’s &
Emerging Metro’s (9) Large assets portfolios.
Adequate resources.
AM is critical
Major Provincial Cities (45) Reasonable resources.
Average portfolio.
AM is very important.
Small Municipalities (240) Small portfolios / declining growth.
AM is not critical. /Poor resources.
3
2
1
Where is our GDP Generated ?
Townships Future Capital Needs.
Basic Operations & Maintenance Plans.
Asset Registers / Value / Condition
T
75%
17%
6%
2%
GDP
Copyright © RBA. 2009
Understand Infrastructure Economics
Result 2.5% off GDP for 3/5 years
Will take well over 15 years
to fully recover (OECD)
Only 6.8% of National
Infrastructure Was Effected
Copyright © RBA. 2009
Cost of Service Level of Service
Service
Delivery
Customer
Expectations &
Willingness to Pay
Business Risk
Exposure
The Management Balancing Act
The Normal Scene
Copyright © RBA. 2009
Operations Maintenance Renewal Growth
Service
Delivery
The Management Balancing Act
The Normal Scene
RECURRENT CAPITAL
Copyright © RBA. 2009
Operations Maintenance Renewal Growth
Service
Delivery
The Management Balancing Act
The Normal Scene
RECURRENT CAPITAL
Copyright © RBA. 2009
Operations Maintenance Renewal Growth
Service
Delivery
The Management Balancing Act
The South African Scene
RECURRENT CAPITAL
Copyright © RBA. 2009
Growth
Augmentation
Disadvantaged
Housing &
Service Backlog
Service
Delivery
Recent Management Focus
The South African Scene
Copyright © RBA. 2009
Maintenance &
Renewal of
Existing Assets
Growth – New &
Augmentation
Disadvantaged
Housing &
Service Backlog
Service
Delivery
What Could Be Done ?
The South African Scene
Maintenance &
Renewal of
Existing Assets
Copyright © RBA. 2009
TOWNSHIPS TO
SMALL CITY’S
SMALL CITY’S TO
REGIONAL CITY’S TO METRO’S
Combating / Slowing Urbanisation
POOR SERVICES POTENTIAL INCOME INCREASE
BETTER SERVICES HERE WILL SLOW THIS TRANS MIGRATION
World Bank 2006
Copyright © RBA. 2009
Accounting Standards – A View of the Past
1c.103
“Like driving down a winding road in
poor visibility by ‘looking in the rear
vision mirror’”.
Source: Dr John Sing, Qld
Copyright © RBA. 2009
Life Cycle AM Processes and Practices
Knowledge
Of Assets Strategic
Planning Capital
Investment
Validation
Create or
Acquire Assets Asset
Accounting &
Economics Asset
Operations Asset
Maintenance
Monitor
Condition &
Performance
Monitor
Asset Risks
Repair
Rehabilitate or
Replace
Augment &
Add New
Assets
Disposal
Rationalisation
of Assets
Manage
Work
Resulting
Review &
Continuous
Improvement Predict Future
Demand & Levels
of Service
Predict
Future Cost of
Service
Predict
Future Levels
of Service =
Copyright © RBA. 2009
Ensuring Whole of City / Business Uniformity
Electricity
Aligned Business Systems (ABS)/JDE/Arcview/VKE
Housing Electricity
Aligned Business Processes (ABP)
Traffic IT & Office Fleet
Copyright © RBA. 2009
Rolling-up With Confidence – Programs
Alig
ne
d B
usin
ess P
rocesses –
Vert
ical
From asset / workface to board
Level of Service
Cost of Service
LoS Reliability
Cost of Service
Critical Risks
Copyright © RBA. 2009
Rolling-up to Whole of City
Alig
ne
d B
usin
ess P
rocesses –
Vert
ical
From Assets to Whole of City Understanding
Biggest Gaps
Value / Condition
Future Expenditure
City
Programs
Strategic Assets
Highest Risks
Key Assets
Components
Copyright © RBA. 2009
The Best Practice Model
Asset
Management
Plans Overall
Business
Plans Long Term
Expenditure
& Funding
Plans Customer &
Stakeholder
Consultation Feedback / Revision
Copyright © RBA. 2009
Rolling-up With Confidence – National
Alig
ne
d B
usin
ess P
rocesses –
Vert
ical
From Assets to National Understanding Biggest Gaps
Value / Condition
Future Expenditure
National
Provincial
Metro’s & City’s
Highest Risks
Programs
Key Assets
Funding Needs
Copyright © RBA. 2009
Improved Customer
Satisfaction
Lower Future Cost of Service
Improved Level of Service
20%
80%
+50%
Social
Environmental Social
Economic
Benefits of Introducing
Advanced AM
Benefits of Introducing SIAM
Improved Customer Satisfaction Means Improved Political
Satisfaction
Copyright © RBA. 2009
Estimated South African Benefits
IMESA BENEFITS MODEL
ESTIMATED BENEFITS
R250 - 310 Billion Rand
But remember this is just cost saving, not improved levels of
service nor customer satisfaction
Benefit / Cost 18:1 to 30:1
NPV over 20 Years
Copyright © RBA. 2009
PAS 55
TEAMQF
ISO 55000
IIMM 2011
Others
Global
Industry
Groups
NZ / AU
Can / UK
Quality
Framework
Key Success Factors / Components
BAP
LCAM
Process
BAP
Industry
Practices
Regulatory
Environment
Competency Frameworks / Education -Training Programs
Appropriate Maturity Levels (AML) for Businesses & Assets
Clear Integrated Auditable Framework – All Linked
Copyright © RBA. 2009
Guidelines for Asset Group - Asset Management
Plans (Templates) - August 2009
Cash Flow Spreadsheets for AMP’s
AMP - Content Responsibility (TOC)
Delphi Group Guideline
Computer System Improvements
IMESA Web Site - Support Materials
Asset Management
Copyright © RBA. 2009
3
2
1
Rolling Up, Down & Out Across SA
Metro’s Regionals Small
2
1 1
T
Townships
Copyright © RBA. 2009
Conclusions
IMESA are providing a vision & leadership for implementing SIAM and a National Basis in the Municipal Sector throughout RSA, and other countries in Southern Africa.
We see our approach as applicable to many countries who are just starting the asset management journey.
We want it to be part of the Global NAMS initiative fostered by IFME
Copyright © RBA. 2009
Take Home Messages
I hope you will now believe that:
Infrastructure Asset Management, Asset Management Plans, Future Expenditure Models, and Risk are vital parts of any National Strategic Planning Process
A National Asset Management Program offers huge savings in future life cycle cost and improved service delivery, implemented most cost effectively.
We believe that IMESA’s approach will assist South Africa to achieve this …
Copyright © GHD LLC 2005
ANY QUESTIONS ?
A Future Vision For A National
Asset Management Program For
South Africa
Email: [email protected] or
Global Roam cell +61 419 509 873
Copyright © RBA. 2009
Thanks For Your Time & Interest..
2012 IFME Congress
Finland June 2012