Creating an asset management plan from scratch is not as daunting as it sounds. Many NSW councils, including the Conargo Shire Council, have successfully done just that in less than 12 months.

By Michael Mills

In 2011, 42 Group Three councils with populations under 10,000 across NSW undertook an assessment audit as part of the NSW Integrated Planning and Reporting (IPR) framework.

The audit, which ran from July to September 2011, was conducted using the IPWEA NAMS.PLUS maturity model, which is fully compatible with the National Assessment Framework (NAF).

Most councils were initially well below core – most had no or minimal asset management plans – and none linked to long-term financial planning. Most had no asset management strategy.

The Conargo Shire Council, in the Riverina region to the state’s south west, was one such audited local government that did not have any asset management plans, strategy or policies in place. 

However, in the space of less than a year, the council has been able to develop a 10-year financial plan and asset management. This was made possible by the adoption of the IPWEA’s NAMS.PLUS tools.

The Council’s General Manager Barry Barlow says, prior to the change, the organisation had used a basic asset register that recorded the value of each item. 

“We didn’t have an idea of the ongoing maintenance and renewal needs of those assets,” he says. “We conducted an overview of the assets just before the start of the new financial year and tried to incorporate something into the budget to a reasonable level.

“But we didn’t have a clear indication of the exact funds needed for each asset.”

Jeff Roorda was engaged by Conargo to assist the council upgrade their planning using the NAMS.PLUS tools.

“The council was really well run before this, but essentially it was reactive,” he says. “If someone said to council: ‘Are you financially sustainable?’, they wouldn’t have been able to answer the question. The assumption would then be: ‘No, you probably aren’t’.”

Roorda says the council’s new approach balances the long-term financial plan with the asset management plan. The asset managers conducted a stringent regime of tests to ensure the plans were sustainable. 

“They carried out a number of scenarios to determine what services levels they could afford,” he says. “They reported the current and target service levels based on the asset management plan and the council adopted them. 

“They also modelled the potential risks and the council accepted that they were all manageable at the determined service levels. From the outset, the council was very enthusiastic about the project.”

Thanks to the new tools, Conargo is able to allocate its resources towards maintaining and improving its assets with much more confidence.

“The 10-year financial plan has mapped out a way to maintain our assets to a fairly high level,” Barlow says. “We’ve got adequate funds and reserves that can cover any unforseen expenditure, and we’ve got funds set aside to renew assets when required. 

“The whole planning process has given us a lot more certainty in ensuring we can sustain our assets into the future.”

Roorda adds: “The council can now report on the state of the assets on an annual basis. It can track, for the first time, whether the service levels are improving or declining. It also allows them to look at providing the same service level at lower cost or providing a higher service level at the same cost.”

By participating in the audit, the councils were able to apply for up to $30,000 in funding from the NSW Department of Local Government under the Commonwealth’s Local Government Reform Fund (LGRF). About $5000 was available to fund the use of NAMS.PLUS tools and templates, as well as training costs. 

Conargo’s Director of Engineering David Kerslake says this assistance was crucial to completing the change. “We’re a small rural council with limited resources, so we don’t have specific staff for asset management,” he says. 

“It’s handled by the engineering department: myself and a few staff. So, to get assistance under the LGRF to help us complete the audit and set out a plan for what we need to put in place has been very beneficial. 

“We’re pretty proud of what we’ve achieved. There was only one little red box when we last reviewed the audit, and that was only because we needed some extra data. We are now thinking about getting some extra staff in after doing the review. The council has embraced the process and are actually driving it.”

It’s a story that has been repeated across NSW. A follow-up to the original audit was conducted from June to July 2012. It revealed that more than 80 per cent of the original participants have core-level asset management plans, strategies, policies and long-term financial planning. Furthermore, all have improvement programs in place to maintain or improve current maturity. 

For councils that haven’t embarked on this journey, take solace in the fact that all of this was achieved in less than 12 months.

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