Total Asset Management Manual

This document is a snapshot of the NSW Government Total Asset Management Manual
dated August 2003 – see the TAM Manual Web Site for current documents.

The Total Asset Management Manual is the latest update of the TAM Manual that was
first released by Government in 1992.
The Manual explains the five asset plans, which comprise a Total Asset Management
Strategy and provides a series of guidelines on implementing various aspects of asset
planning.

• Introduction
• TAM – An Overview
• Assessment & Decision Tools

© Copyright - NSW Government Asset Management Committee (GAMC)

Level 25, Governor Macquarie Tower,
1 Farrer Place, Sydney NSW 2000 AUSTRALIA
Phone (02) 9228 4451 Fax (02) 9228 4642
Email gamc.secretariat@dpws.nsw.gov.au
Introduction to the Total Asset Management Manual
The TAM Manual consists of three sections:
This Introduction section of the Manual explains how Total Asset Management fits
within whole-of-government planning.
The TAM Overview includes strategies and ‘how to’ guidelines to develop the five asset
plans which comprise the Total Asset Management Strategy. NSW Government
agencies are required to prepare these plans each year as part of their business
planning and budget processes.
The Assessment & Decision Tools provides a set of tools to assist agencies to
develop and implement their Total Asset Management strategies.

Each guideline in the Manual has an introductory page which gives access to the full
guideline in Adobe Acrobat PDF format. Internet links are provided to those asset
related guidelines that reside outside of the TAM Manual.
TAM within the Government Strategic Management Framework
Introduction to the Total Asset Management Manual
The NSW Government Strategic Management Framework summarises and defines the
various processes which NSW Government agencies should use to plan activities and
services, to allocate resources and to report on performance. The Framework shows
how the various processes fit together and relate to each other.
Total Asset Management planning is an integral part of the Framework at the
Implementation and Service Delivery level. Before planning at this level, each agency
should have in place a Service Delivery Strategy that defines what services they will
deliver to achieve the outcomes defined by Government and desired by the community.
The Strategy should identify and measure the outcomes to allow an agency to balance
the requirements for services against available resources.
Service Delivery Strategy guidelines are available from the Corporate Planning page of
the Government Strategic Management Framework site. Agencies should also be
familiar with Treasury’s Service and Resource Allocation Agreement guidelines which
can be found on the Treasury Policy & Guidelines Papers index page

Link to: Strategic Management Framework

TAM - An Overview

Total Asset Management is the strategic management of physical assets to best

support the delivery of agency services.
With constant reference to whole-of-government planning, the agency’s Corporate Plan,
and its Service Delivery Strategy, the TAM approach requires asset managers to
assess what assets are needed to support successful service delivery. It then calls for
detailed plans for the management of those assets which are to be acquired,
maintained or disposed of.
Agencies are required to submit an Asset Strategy to Treasury in support of
submissions for funding. This section contains guidelines for:
• The Asset Strategy which determines whether assets should be acquired,
upgraded, maintained or disposed of.
• The Office Accommodation Strategy that is an Asset Strategy restricted to
Office Accommodation assets only. Its purpose is to capture the benefits of a
whole-of-government approach to the management of office accommodation.
• The Capital Investment Strategic Plan which explains how new assets will be
acquired or existing assets upgraded.
• The Asset Maintenance Strategic Plan which gives a structured process for
planning the maintenance of existing assets.
• The Asset Disposal Strategic Plan which identifies assets that are surplus to
requirements and how the disposal process will be managed.
The Asset Strategy
TAM - An Overview
Agencies are required to submit an Asset Strategy to Treasury in support of their
funding submissions.
The Asset Strategy is the top level strategy in Total Asset Management planning and
determines whether assets should be enhanced by capital investment, maintained or
disposed of to continue their role in supporting service delivery. It determines the basic
relationships between Service Delivery Strategy and the Capital Investment, Asset
Maintenance, Asset Disposal and Office Accommodation Strategies.
• The Asset Strategy sequentially poses the following questions at five decision
"gates":
• Can service delivery be made less asset-dependent?
• Are existing assets fully used in service delivery?
• Are existing assets appropriately located for effective service delivery?
• Is the capacity of existing assets sufficient to provide the required services?
• Are assets suitable for the effective delivery of the services they are intended to
support?
• The Asset Strategy guideline is available in the Publications section below.
The draft Service Delivery Strategy guideline is available in the Premier's
Department's Strategic Management Framework.

The Asset Strategy

Office Accommodation Strategic Plan
TAM - An Overview
Agencies are required to submit an annual Office Accommodation Strategic Plan to
NSW Treasury as part of their Asset Strategy.
Investment in the office accommodation segment of the government's property portfolio
represents a major recurrent cost. The integration of office accommodation strategic
planning into each agency's TAM process provides a whole of government strategic
approach to the management of this important resource. This will:
• Directly link accommodation assets with required service delivery outcomes
• Maximise the benefits to be gained from the government's purchasing power
• Improve the standard of accommodation and enhance the capital value of stock
• Achieve cost savings whilst maximising the benefits of decentralisation
The Office Accommodation Strategic Plan determines whether accommodation assets
should be enhanced (by capital investment), maintained or disposed of. To do so it uses
a process which sequentially poses the following five questions:
1. Can service delivery be made less dependent on accommodation assets?
2. Are accommodation assets fully used in service delivery?
3. Are accommodation assets appropriately located for effective service delivery?
4. Have the accommodation assets sufficient capacity to provide the required
services?
5. Are accommodation assets suitable for the optimal delivery of the services they
are intended to support?
Agencies must annually submit a Capital Investment Strategic plan to Treasury in
support of their funding submissions.
Office Accommodation Strategic Planning
Capital Investment Strategic Plan
TAM - An Overview
A Capital Investment Strategic plan aims to provide efficient and effective planning of
limited government capital resources by ensuring that there are clear and detailed links
between assets and the service delivery outcomes they support. It applies where the
Asset Strategy indicates the need for investment in new assets or significant
improvement or upgrading of existing assets.
It involves assessment of all investment options to meet service delivery requirements
(purchase, lease, service contracts, private sector involvement and non-asset solutions)
and resources required (assets, financial, HR, IM&T, etc) using the following processes:
• Directly linking asset investment with required service delivery outcomes
• Maximising the benefits to be gained from the government's purchasing power
• Improving the standard of assets and enhance the capital value of stock
• Achieving cost savings whilst maximising the benefits of whole-of-government
planning

Capital Investment Strategic Planning

Asset Maintenance Strategic Plan
TAM - An Overview
Agencies must annually submit an Asset Maintenance Strategic Plan to Treasury in
support of their funding submissions.
The Asset Maintenance Strategic Plan aims to proactively manage the risk of the
inability of assets to support service delivery strategies. The outcome is a more
productive and reliable asset portfolio within the constraints of available resources.
Maintenance planning involves an analysis of maintenance needs against agency
service delivery objectives and government priorities.
It can be achieved by the following seven step planning process which has been
developed to link service strategies with asset maintenance:
6. Define and segment assets to meet service strategy
7. Determine required asset performance
8. Define maintenance resources and overall strategies
9. Assess condition of assets and recommend maintenance
10. Prepare Maintenance Cost Plan
11. Implement Maintenance Plan and programs
12. Monitor and review Maintenance Plan

Asset Maintenance Strategic Planning

Asset Disposal Strategic Plan
TAM - An Overview
Agencies are required each year to submit Asset Disposal Strategic Plan to Treasury in
support of their funding submissions.
An Asset Disposal Strategic Plan involves a detailed assessment of those assets that
the Asset Strategy indicates are no longer effectively meeting their service delivery
required at the lowest long-term cost to Government. This assists agencies to identify
for disposal, those redundant assets that might otherwise reduce efficient and effective
service delivery.
Asset Disposal planning involves two separate and distinct elements: the detailed
assessment of assets identified as surplus by the Asset Strategy followed by an
analysis of the physical disposal of the assets.
Disposal Planning links via the Asset Strategy with service delivery by the following five
stage process.
1. Assets identified by the Asset Strategy as surplus to service delivery
requirements are assessed in detail
2. The advantages to Government, agency and the community in divesting assets
is assessed
3. Opportunities for increasing asset value are identified
4. Disposal requirements including probity considerations are identified
5. Implementation of the Disposal Plan and performance monitoring are in place
Following the release of the Premier's Memorandum 2003-03 on 26 February 2003,
agencies are now required to submit their Property Disposal Plans to the GAMC for
review by 31 December each year. More...
Asset Disposal Strategic Plan - Continued

All proposed property disposals will be reviewed by the GAMC to determine their
strategic value in terms of wider government policies and objectives, other agency
requirements, community interest, environmental outcomes and other areas of interest.
The GAMC will nominate the appropriate means of disposal and allocate responsibility
for management of the disposal to the appropriate agency.

Asset Disposal: Strategic Planning

© Copyright - NSW Government Asset Management Committee (GAMC)

Level 25, Governor Macquarie Tower,
1 Farrer Place, Sydney NSW 2000 AUSTRALIA
Phone (02) 9228 4451 Fax (02) 9228 4642
Email gamc.secretariat@dpws.nsw.gov.au
Assessment and Decision Tools

In developing the Total Asset Management strategies listed above, Asset Managers will
be required to critically assess their agency’s operating environment and its competency
to respond to that environment.
They will need to make difficult decisions that have long-term and often critical
consequences for their agency and/or its stakeholders.
The following planning guidelines and decision tools will improve the accuracy of their
assessments and the soundness of their decisions.
The following guidelines are included in the Assessment and Decision Tools section:
• Sustainable Development
• Heritage Assets
• Demand Management
• Life Cycle Costing
• Economic Appraisal - external link to Treasury Documents
• Value Management
• Risk Management
• Post Implementation Review
• Performance Evaluation - document under review - not yet available
• Asset Information
• Private Sector Participation - external link to Treasury Documents
Sustainable Development
Assessment and Decision Tools
Sustainable Development is development that meets the needs of the present without
compromising the ability of future generations to meet their own needs
There are four primary Objectives of Sustainable Development :
• minimised risk of environmental damage arising from incomplete knowledge
• ecological sustainability and environmental protection
• socio/cultural sustainability recognising the needs of all
• economic sustainability maintaining high and stable levels of economic growth
and employment
The NSW Government is committed to:
• ensuring environmental protection in all its activities
• greater social justice for the whole community
• economic development to reduce public debt and unfunded liabilities by more
financially responsible delivery of programs
Agencies need to integrate the objectives of sustainable development across all their
business practices from Corporate Planning to Service delivery and Resource planning
This guideline considers the application of sustainable development objectives to each
stage of the Total Asset Management process.

Sustainable Development Guideline

Heritage Assets
Assessment and Decision Tools
Total Asset management focuses assets on the delivery of an agency’s primary service
responsibilities.
Organizations that have control of heritage assets also have a second service
obligation. While they use the assets in delivering their primary service, they are also
responsible for the stewardship of the assets and protection of their significance for
future generations.
Agencies must ensure both that the purposes of the Government’s Total Asset
Management policies, procedures and performance standards are met and that relevant
heritage legislation is complied with.
The management of heritage issues should be viewed as an essential part of the
management of the assets, rather than another problem and cost impost. Sustainable
management of heritage values should be treated by an agency as part of its core
business.

Heritage Assets Guideline

Demand Management
Assessment and Decision Tools
The NSW community progressively demands more or better government services in
order to raise their standard of living. In the past governments have responded to these
demands by improving their capacity to supply, but this in no longer sustainable. The
demand for service must now also be managed.
While Demand Management should be applied at each stage of the Asset Management
process, it is an essential part of the development of the Service Delivery Strategy.
The Demand Management process requires asset managers to first understand both
their clients and the true cost of providing services. They then identify demand as the
needs of services, rather than wants of assets. Decisions as to which needs are
satisfied are then made from a whole of government perspective.

Demand Management Guideline

Life Cycle Costing
Assessment and Decision Tools
In the past, comparisons of asset alternatives, whether at the concept or detailed design
level, have been based mainly on initial capital costs. However, with growing pressure
to achieve better outcomes from assets, ongoing operating and maintenance costs
must be considered as they consume most resources over the asset’s service life.
Life Cycle Costing is a process to determine the sum of all the costs associated with an
asset or part thereof, including acquisition, installation, operation, maintenance,
refurbishment and disposal costs. It is therefore pivotal to the asset management
process.
Life Cycle Costing incorporates both Life Cost Planning which occurs during
development or manufacture and implementation of that plan by Life Cost Analysis as
the asset is used or occupied.
Life Cycle Costing forms an input to evaluation processes such as Value Management,
Economic Appraisal and Financial Appraisal.

Life Cycle Costing Guideline

Economic Appraisal - external link to Treasury Documents
Assessment and Decision Tools
The New South Wales public sector is a major component of the State economy. The
efficiency with which it uses assets can have a significant impact on the overall
performance of the State economy and the welfare of its residents.
Economic Appraisal and Financial Appraisal are effective tools that have application at
every stage of Total Asset Management . They can be used for assessing the integrity
of capital investment decisions and the effective and efficient management of existing
physical assets. Application of those tools ensures that the 'best value for money' is
achieved and that scarce resources are allocated in a manner that reflects the
Government's priorities.
• Financial Appraisal reviews the purely financial aspects of a product or project
• Economic Appraisal reviews the financial and other factors that affect the
economic aspects of a product or project
Areas where economic appraisal and financial appraisal techniques should be used:
• Assessment of New or Replacement Capital Expenditure, or major Maintenance
• Assessment of Appropriateness of Design, Operating or other Standards
• Other Areas of Application such as Program Evaluation and Regulation,
Proposals and Review
The Guidelines for applying Economic/Financial Appraisal are available on the Treasury
web site http://www.treasury.nsw.gov.au/pubs

Link to: Economic Appraisal Guidelines - Summary document

Link to: NSW Government - Guidelines for Economic Appraisal
Link to: NSW Government - Financial Appraisal Guidelines
Value Management
Assessment and Decision Tools
Value Management is a powerful management tool for use in an overall strategic
management framework including the development of all Total Asset Management
Strategies.
In general terms, it may be described as a structured, analytical process for developing
innovative, holistic solutions to complex problems. It involves representatives of key
stakeholders in a facilitated workshop.
It is the team based creative approach to problem solving that sets Value Management
apart from other management tools. The process seeks improved value-for-money
outcomes that maximise the standards of quality or performance within the resource
limits available.

Value Management Guideline

Risk Management
Assessment and Decision Tools
This Guideline applies to the management of risks associated with the planning, control
and operation of the physical assets of the NSW Public Sector.
Risk management is a systematic process to identify risks that may impact on the
organization’s objectives, analyse their consequences and develop ongoing measures
to treat them.
Risk management is essential at all stages of the asset life cycle, whenever a significant
decision has to be taken. The risks associated with the decision and their implications
should be weighed with other factors when determining a course of action.
Risk management should be formally applied and documented during the Total Asset
Management process when:
• Setting strategic directions,
• Developing and evaluating programs and projects, and,
• Entering into contracts with the private sector

Risk Management Guideline

Post Implementation Review
Assessment and Decision Tools
Post Implementation Review is an evaluation process that grew out of the review of
asset performance. These asset reviews determined the suitability of the asset to the
required task and whether they could be improved to provide better value and
performance.
The same generic process can be used to review any project to ensure improvement in
future outcomes. The process can be used to review the development of an asset
strategy, a maintenance plan, a construction project or an asset procurement.
The Post Implementation Review process has two components:
• the Post Completion Review (PCR)
A PCR asks whether the process achieved what was asked for.
• the Post Implementation Review (PIR)
A PIR asks whether the process achieved what was needed.
The PCR is intended to systematically and rigorously compare the actual performance
of a project output with the stated objectives of the original project brief. The PCR
process aims to identify ways in which future project concept, design, development and
implementation can be improved.
The PIR process is designed to collect and utilise knowledge learned from project
concept through to design, development and implementation. The review focuses on
how well the project outcomes match the required performance. In the case of an asset
review, the required performance would be the optimum support of an agency’s service
outcomes.
Post Implementation Review Guideline
Performance Evaluation - document under review - not yet
available
Assessment and Decision Tools

This document is currently under development.

Please check the GAMC Web Site for current status
Asset Information
Assessment and Decision Tools
This guideline provides a systematic approach to the development of asset registers.
Asset registers are listings of information relating to various aspects of an asset
portfolio, in a form that allows data to be cross-referenced and retrieved as required.
They provide most of the information needed for Total Asset Management strategic
decision-making during the TAM process.
Agencies are required to maintain appropriate records of their non-current assets to
ensure they are:
• Efficiently and effectively used to support the delivery of service
• Properly managed throughout their life cycle
• Responsibly accounted for on their balance sheets and allowance made for
their depreciation

Asset Information Guideline

Private Sector Participation - external link to Treasury
Documents
Assessment and Decision Tools
The NSW Government has reviewed its policy and guidelines on how the private sector
can finance and deliver facilities and associated non-core services.
The Working with Government (WWG) Policy and Guidelines were released on 5
November 2001 by the Premier, Bob Carr. The WWG Guidelines are now available to
view or download in Acrobat PDF format from the Working with Government web site.

Link to: Working with Government

© Copyright - NSW Government Asset Management Committee (GAMC)

Level 25, Governor Macquarie Tower,
1 Farrer Place, Sydney NSW 2000 AUSTRALIA
Phone (02) 9228 4451 Fax (02) 9228 4642
Email gamc.secretariat@dpws.nsw.gov.au
Asset Strategy
Asset strategy

January 2001
DPWS Report Number 01045

NSW Department of Public Works and Services Cataloguing-in-Publication data

New South Wales. Government Asset Management Committee.

Asset strategy.

ISBN 0 7347 4104 9 (set)

ISBN 0 7347 4122 7

1. Asset management – New South Wales. 2. Capital investment. 3. Public administration – New South Wales
I. Title. (Series : TAM)

352.50944

 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any
process without written permission from the NSW Government Asset Management Committee. Requests and inquiries
concerning reproduction and rights should be addressed to:

Secretariat
Government Asset Management Committee
Level 23 McKell Building
2-24 Rawson Place
SYDNEY NSW 2000
Website www.gamc.nsw.gov.au
E:mail gamc@dpws.nsw.gov.au

Set consists of :

ISBN 0 7347 4122 7 Asset strategy

ISBN 0 7347 4194 4 Office accommodation strategy
ISBN 0 7347 4128 6 Capital investment : strategic planning
ISBN 0 7347 4134 0 Asset maintenance : strategic planning
ISBN 0 7347 4140 5 Asset disposal : strategic planning
ISBN 0 7347 4146 4 Sustainable development guideline
ISBN 0 7347 4152 9 Heritage asset management guideline
ISBN 0 7347 4158 8 Demand management guideline
ISBN 0 7347 4164 2 Life cycle costing guideline
ISBN 0 7347 4170 7 Value management guideline
ISBN 0 7347 4176 6 Risk management guideline
ISBN 0 7347 4182 0 Post implementation review guideline
ISBN 0 7347 4188 X Asset information guideline
Contents

1 INTRODUCTION ____________________________________________________2
1.1 Background .................................................................................................................................................2

1.2 Inputs required for the development of an Asset Strategy .....................................................................3

1.3 Segmenting the Asset Portfolio..................................................................................................................3

2 ASSET STRATEGY DEVELOPMENT ____________________________________4

2.1 The Framework ..........................................................................................................................................4

Gate 1 Asset/Service Dependency....................................................................................................................5

Gate 2 Asset Utilisation ....................................................................................................................................6

Gate 3 Asset Location.......................................................................................................................................7

Gate 4 Asset Capacity.......................................................................................................................................8

Gate 5 Asset Functionality ...............................................................................................................................9

2.3 Reporting the Asset Strategy ...................................................................................................................10

2.4 Applying the Asset Strategy.....................................................................................................................10

APPENDIX A ASSESSMENT CRITERIA FOR AGENCY _______________________11

January 2001 TAM – Asset Strategy 1

1 Introduction
1.1 Background concerned with detailed aspects of asset
management.
Since its inception in 1993, the application of
the Total Asset Management (TAM) process The Asset Strategy enables agencies to establish
has taken agencies from simply acquiring and the asset portfolio that most appropriately,
maintaining assets to a more strategic planning effectively and efficiently meets their service
approach through the development of their delivery requirements.
annual Asset Strategy followed by the Capital The development of an Asset Strategy is a
Investment, Asset Maintenance and Asset critical stage in agency strategic planning. It
Disposal strategic plans. provides the foundation for development of the
These strategic plans have enabled agencies to three detailed asset strategic plans.
focus on the service delivery requirements of the This document provides a planning process for
assets rather than on the assets themselves. the development of an Asset Strategy. The
The higher level strategic perspective that links process is not intended to be prescriptive, but is
the asset portfolio as a whole to an agency’s rather a generic structure to guide agencies in
Service Delivery Strategy is developed in the their planning process.
Asset Strategy. The individual plans are
Direction Monitoring,
Community needs and expectations
reporting, and
modification
Legislation
Government policies, priorities and strategies
Fiscal strategy

1 2 3
Inter-agency Agency corporate CEO performance
strategic planning plan agreement

Service and
resource 4 5 6
planning Service delivery Budget proposals Service and
strategy and allocations resource allocation
agreement
Total Asset
Management
Strategy
Implementation • Asset Strategy
planning 7 8 9 • Office Accommodation
Inter-agency plans Business plans TAM strategy Strategic Plan
HR plans • Capital Investment Strategic
IT plans Plan
Procurement plans • Asset Maintenance Strategic
Plan
Social responsibility
• Asset Disposal
plans Strategic Plan

Asset Maintenance
Service delivery Strategic Plan
Asset Disposal
Figure 1 Total Asset Management Strategic Plan

2 TAM – Asset Strategy January 2001

1.2 Inputs required for the 1.3 Segmenting the Asset Portfolio
development of an Asset Strategy To determine the effectiveness and efficiency of
An Asset Strategy is the vehicle by which an assets in supporting the delivery of specified
agency matches its asset portfolio to its service service outcomes, an Asset Portfolio should be
delivery requirements. It defines the basic segmented into the largest groupings that allow
relationships between the Service Delivery worthwhile analysis.
Strategy and the Capital Investment, Asset For Example, assets could be effectively
Maintenance, Asset Disposal and Office grouped by the service outputs they support:
Accommodation strategic plans along with how
these plans interlink. • Provision of neonatal transport services
A well-defined and comprehensive Service • Mitigation flood damage on the Hunter River
Delivery Strategy (refer to Premiers Department or by asset characteristics or attributes:
Service Delivery Strategy guideline) is essential
to the development of an effective Asset • Type of asset technology
Strategy. It must specify the services that will • Size of designed capacity
be provided within the resource limits available • Geographic location
to the agency, in sufficient detail to identify
potential asset options for each service delivery • Age
component. • Condition
While an Asset Strategy may be developed from Segmentation may change at different stages of
a zero asset portfolio base (ie for new or the planning process. Typical asset groupings
reorganised agency structures), it will most are similar to the service delivery characteristics
commonly be concerned with an existing asset (ie, utilisation, location, capacity, functionality).
portfolio.
For example:
Changes to an asset portfolio can become
Health buildings in the Casey Valley Area
necessary either due to changes required in the
Health Service have been grouped by the spaces
form of the assets (utilisation, location, capacity
and rooms servicing each medical speciality as
or functionality) or as a result of changes to
well as by building age. This has identified
service delivery requirements or budget
particular facilities with either surplus capacity
allocations.
or those requiring upgrading.
An Asset Strategy defines the actions required
to respond to these changes and directs the Geriatric facilities have been further grouped
detailed development of agency capital into those able to provide:
investment, asset maintenance and asset • Semi-dependent care
disposal strategic planning.
• Highly-dependent care
The Asset Strategy is prepared for a minimum • Rehabilitation services
3-year time frame and is to be reviewed and
updated annually. This will ensure that:
• Sufficient time is allowed for the planning
and implementation of changes to service
requirements
• Government assets are utilised to their full
potential
• Ongoing evaluation of asset performance
against current and future market trends to
achieve the best long term financial
performance

January 2001 TAM – Asset Strategy 3

2 Asset Strategy development
Gate 1 Gate 2 Gate 3 Gate 4 Gate 5

Asset Service Asset Asset Asset Asset

Dependency Utilisation Location Capacity Functionality

An asset segment satisfies a service delivery

2.1 The Framework characteristic when it passes successfully
Matching asset performance to service delivery through the corresponding gate. If the segment
objectives involves an analysis of the five fails a gate, its inability to meet the
fundamental service delivery characteristics of corresponding service delivery characteristic
an asset portfolio: must be analysed and action proposed to correct
the problem.
Asset/Service Dependency
If all asset segments comply with service
Can service delivery be made less asset requirements (specified in Service Delivery
dependant? Strategy) imposed at each of the gates then
assets should be maintained to the level
Asset Utilisation
determined by service delivery strategy. This
Are assets fully used in service delivery? condition will continue for as long as the service
and asset environment remains unchanged.
Asset Location
If asset segments do not comply with service
Are assets appropriately located for effective requirements imposed at each of the gates there
service delivery? is the need to examine whether services can be
Asset Capacity more cost effectively provided by:

Have the assets sufficient capacity to provide • Adjustments to the asset portfolio
required services? • Changing the way in which services are
delivered to make better use of the assets
Asset Functionality
already available
Are assets suitable for optimal delivery of the Cost benefit analysis and value management
services they are intended to support? studies can be used to:
These five characteristics form the basis of the • Clearly define service delivery strategies and
framework for development of an Asset service levels related to an asset or a group of
Strategy. assets
The framework considers each characteristic as • Help assess options at each of the gates
a ‘gate’ through which assets are analysed. The
Framework is shown in the diagram above and
described in the following sections.

4 TAM – Asset Strategy January 2001

Gate 1 Asset/Service Dependency

Gate 1

Asset
Service
Dependency

The first gate in the process encourages Issue: The charges rate at country Police
agencies to make their services less asset- Stations has reduced due to improved
dependent. procedures for handling juvenile offenders
Opportunities for reducing asset-dependency and local policing initiatives of counselling
may exist through utilisation of non-asset or less offenders.
asset-intensive solutions, cross-agency asset Strategy: Convert one of the present cells
sharing and/or cross-agency service offsetting. into an interview room. Close remaining
Joint use of IT systems, administrative functions cells, thus avoiding the need to upgrade their
or accommodation spaces (such as conference security to meet current standards. Detainees
and educational facilities) are examples of will be driven to the nearest holding station.
cross-agency asset sharing strategies.
Cross-agency service offsetting involves
reducing an agency’s need for assets by
enhancing services provided by another agency.
Examples of offsetting would include:
• Increasing the efficiency and effectiveness of
public transport in order to reduce reliance on
road assets
• Improving school education and counselling
services to reduce demands on health,
policing and judicial services
Opportunities for providing services with the
use of resources other than assets will vary
across agencies and will depend on the
relationship between assets and the services
they support. The scope for reducing asset
dependency may be limited in situations where
the asset is essentially the service (as, for
example, in the case of National Parks).
Before implementation, any options for
reducing asset-dependency should be assessed
with respect to:
• Total and relative economic advantages
compared with other options
• Demand for other resources
• The need for inter-agency agreements
• The impacts on service delivery.

January 2001 TAM – Asset Strategy 5

Gate 2 Asset Utilisation

Gate 2

Asset
Utilisation

Many assets have spare capacity often Issue:Tarrawarra District Hospital Accident
deliberately built-in for predictable future and Emergency Unit has 30% surplus daytime
growth in service demand. Surplus capacity can capacity during 70% of the year. However,
also result from reduced demand for services. the Unit runs at 92 - 105% capacity during
For example, less invasive medical procedures summer tourist season.
and more effective use of drugs reduce hospital
stays. Strategy: No appropriate off-season use can be
found and hence the utilisation of the Unit is to
However, surplus capacity may also signal that remain unchanged (but earmarked for regular
an asset portfolio is not being utilised efficiently review).
and is operating at greater than necessary cost.
Where unplanned surplus asset capacity is
identified, agencies should consider:
• Utilising surplus asset capacity to improve or
enhance service delivery (providing this can
be achieved in an efficient and effective
manner)
• Allocating surplus capacity to other agencies
via cross-agency asset sharing arrangements,
where possible
• Disposing the surplus asset capacity
following analysis of future demand
It will not always be possible or desirable to
utilise or dispose of surplus asset capacity. An
agency may elect to continue supporting surplus
assets but to review the situation regularly for
future opportunities.

6 TAM – Asset Strategy January 2001

Gate 3 Asset Location

Gate 3

Asset
Location

The impact of asset location varies with the type Issue:Demographic changes in Sydney’s
of services provided by the agency. Those inner city and east have led to excess
involving personal contact or emergency capacity at several High Schools with surplus
response are obviously more sensitive than classrooms or laboratories available at each.
administration or information services.
Strategy: Convert the vacant classroom block
The current explosion in information technology at Eileen O’Connor High School for use by
can potentially reduce sensitivity to location by the Schools Technology Advancement Unit
allowing more service interface to occur at currently housed in rented premises.
remote locations electronically. Demolish the laboratory blocks at other
There is potential for a wide range of affected schools and transfer the science
government services (eg. vehicle registrations) equipment to schools in the growing South-
to be provided with the use of Information West region.
Technology (IT).
Changing demographics has an impact on the
demand for services and location of assets.
Where relocation of assets is too expensive,
some compensatory service should be
considered. Compensatory services may provide
a cost-effective way of meeting service delivery
requirements without the need to relocate or
expand expensive infrastructure.

For example, it may be more cost effective to

extend school bus services than to relocate
schools closer to new housing estates.
Some health services in rural areas (eg. child
inoculations) could be provided by mobile
clinics or local family doctors to minimise
the impacts on the community of long travel
to the regional hospital.

Due to economic or other constraints (such as

environmental considerations) it will not always
be possible to satisfy the asset location
requirements either by relocation or by
providing compensatory service. The
assessment should be reviewed periodically for
new opportunities that may arise.

January 2001 TAM – Asset Strategy 7

Gate 4 Asset Capacity

Gate 4

Asset
Capacity

Asset capacity is concerned with asset numbers, A school that has insufficient science room
space or volume but incorporates factors such as capacity can extend the science block. It could
comfort, security, speed, power, specific safety also consider the alternative options of:
requirements, etc. • Providing some classes outside normal
The estimated levels of demand for services, school core time and accepting additional
and specific service levels, as defined in the staff or transport costs
Service Delivery Strategy will determine • Packaging some science experiments into
required asset capacity. purpose built trolleys and carrying out
science classes in the gymnasium or
Peaks and troughs in the demand for services language laboratory (with appropriate safety
along with their timing will also affect asset measures being put in place)
capacity requirements.
Both alternatives could be more cost effective than
As with every gate of the process, asset capacity extending the existing laboratory accommodation,
requirements can be met either by adjustments particularly if the increased demand for science
to the asset portfolio or by changing the way in facilities at a school was predicted to be of short
which services are delivered to make better use duration.
of the assets already available or make service
delivery less asset dependant. Issue: Load and speed restrictions on Millers
Bridge have led to greatly increased traffic
For example, cells in police stations may not delays and increased distances travelled by
meet specific safety requirements for coal trucks and consequential overloading of
detention of prisoners charged with minor alternative roads.
offences and therefore lack capacity for this
particular need. This can be addressed by: Strategy: Fund replacement of Millers Bridge
in Year 2 over two consecutive years or
• Upgrading the cells to meet the safety upgrade alternative roads
requirements for prisoners charged with
minor offences
• Streamlining arrest and bail procedures Issue: Motor traffic accident statistics have
so that these prisoners need not be held in highlighted Class 5 traffic blackspots at
custody at police stations Namboc Crossing, and Groginup and Class 3
blackspots at seven locations on the Bolyx
Decision should be made following analysis Highway.
of both options
Strategy: Fund upgrade works to Class 5
location this year; fund upgrade to Class 3
blackspots over the next three years.

8 TAM – Asset Strategy January 2001

Gate 5 Asset Functionality

Gate 5

Asset
Functionality

Asset functionality is concerned with the degree Cost benefit analyses will assist agencies in
to which the asset is suitable for the delivery of assessing alternative solutions to asset
the service it is intended to support. functionality problems.

For example, while older building assets may Issue: Several old school buildings have an
meet their intended capacity, location, and outdated electrical installation including few
utilisation service delivery requirements, power points and are therefore unable to fully
their heating, cooling, insulation, lighting, accommodate modern teaching aids such as
and ventilation functions may not satisfy overhead projectors, TVs, videos, computers,
currently accepted service delivery standards etc.
regarding comfort.
Strategy: Upgrade electrical systems to
Asset functionality can change over time due to satisfy load and power outlet requirements
either changes in service delivery requirements including the provision of spare capacity to
(eg. higher comfort levels) or the development meet developments in IT.
of more efficient methods of delivering services
(eg. assets requiring fewer resources such as
number of staff, energy, etc).
Care needs to be taken in assessing solutions to
improve asset functionality. While replacement
with newer assets may be required in some
cases, many asset functionality problems can be
overcome by:
• Retrofitting, refurbishment or upgrading of
existing assets; and/or
• Changing service delivery methods using
other rescues such as IT or HR

January 2001 TAM – Asset Strategy 9

2.3 Reporting the Asset Strategy 2.4 Applying the Asset Strategy
Agencies are required to prepare an Asset Over time all agencies will experience degrees
Strategy as part of their annual budgetary of mismatch between their service strategy and
requirements. the assets within their portfolio, either because
of changing service requirements or because of
Agency Asset Strategies are assessed by NSW asset deterioration.
Treasury. The strategic focus of Strategies is
assessed by the Department of public works and However this should be seen as the exception
Services for Treasury. Criteria for assessing not the norm. The Asset Strategy should
Asset Strategies are included in Appendix A of develop a culture in agency that contemplates
this guideline. changes to their asset portfolio only when
optimum service delivery is seriously
The Asset Strategy should include the following threatened. Otherwise only maintenance action
information: should be expected.
1. Services objectives as formulated in the
Service Delivery Strategy including: Therefore, in general, the great majority of asset
• Service outcomes to be achieved with segments will pass most of the gates, with asset
performance indicators and benchmarks maintenance as the main strategic action
• Service outputs to be delivered with required to meet service delivery. Capital
performance indicators and benchmarks investment and asset disposal strategic actions
2. Description of agency asset portfolio with will be the exception and are only required
details of segmentation used for when the assets in their present form do not fit
development of asset strategy ie. fail some gates.
3. Results of analysis of matching asset Note that mismatches are considered together. A
performance with service delivery strategies: failure to pass every gate may demand a
• Asset-service dependency different outcome for the asset segment than a
• Asset utilisation failure to pass only one gate. Misfits may also
• Asset location require an agency to re-examine its service
• Asset capacity strategy for alternatives, which minimise the
• Asset functionality dependency on assets.
4. The asset actions proposed in response:
Obviously application of the framework
• Capital Investment overview requires a detailed knowledge of the agency’s
• Asset Maintenance overview asset portfolio as well as a thorough
• Asset Disposal overview understanding of the Service Strategy. The
• The cross impact each of these proposals development of an Asset Strategy will require
has on the others the cooperation of several specialist groups
5. Benefits to the agency and/or government within an agency, corporate and service
from these proposed asset actions planners and those with a detailed knowledge of
6. Analysis of asset performance required to the asset portfolio.
deliver the required service outcomes over
duration of the asset strategy-planning Assessment at each gate of the framework will
period. also require development of a range of
7. Analysis of opportunities for joint asset or performance indicators that measure both how
service delivery between agencies well the asset portfolio supports the delivery of
8. Benefits to the agency and/or government service and how available the assets are to
for these proposed asset actions provide that support.

10 TAM – Asset Strategy January 2001

Appendix A Assessment Criteria for Agency
Budget dependent agencies’ asset strategies are Each criterion is further expanded to guide
reviewed to determine their uptake of Total agencies on issues that should be included.
Asset Management and the extent to which their While an agency’s Strategy is not formally
funding bids are based on strategic asset marked against this level of detail for
planning. compliance, it would be expected to contain a
majority of them for the Strategy to be scored as
Three categories of agency development have achieving the related criterion.
been identified:
• Level 3
Input oriented project focus – attention is
paid to individual projects
• Level 2
Output oriented asset focus – attention is paid
to asset performance and output levels
• Level 1
Outcomes oriented service focus – attention
is paid to resources that are aligned to
achieve service outcomes
Six major criteria have been established in
alignment with the Total Asset Management
approach.
Under each major criteria, minor specific
criteria have been included. These could
reasonably be expected in an agency’s Asset
Strategy.
Agencies scoring a level 3, the lowest level of
development of total asset management, would
typically achieve only two of the 6 major
criteria.
Agencies that score the 4 major criteria
illustrated would be considered to have
progressed to a level 2 while strategies that
achieve all major criteria are considered to be at
Level 1.
Agencies’ Asset Strategies are assessed against
the criteria and scored accordingly.
An Asset Strategy is considered to have
complied with a criterion if it includes that
aspect in sufficient depth to make the Strategy
and its outcome effective.

January 2001 TAM – Asset Strategy 11

ASSESSMENT CRITERIA LEVEL 3 LEVEL 2 LEVEL 1
FOR ASSET STRATEGIES
Input Oriented Output Oriented Outcome
Oriented
Project Focus Asset Focus Service Focus
Attention to individual Attention to asset Attention to
projects performance and resources aligned
output targets to achieve service
outcomes
Corporate goals & service measures
defined
• Corporate goals communicated
• Service outcomes defined & documented
• Service outcomes linked to corporate goals
• Service outputs defined & documented
• Service outputs linked to service outcomes to
be achieved by the agency
Asset strategies developed
• Use of demand management documented
• Alternative/non asset delivery strategies
considered & documented
• Asset strategies developed & documented
• Asset strategies linked to documented service
outputs
Asset output and performance targets
defined
• Asset performance criteria determined
• Performance indicators determined
• Performance benchmarks determined
Capital investment, maintenance &
disposal plans developed
• Value management /economic appraisal /risk
management applied appropriately
• Capital investment plans developed
• Maintenance plan developed
• Disposal plan developed
• Asset plans linked (capital investment,
maintenance, disposal)
• Asset plans link to established asset
performance criteria
Asset performance data collected and
reported
• Data collection/evaluation/reporting system
established
• Asset performance documented
• Linkages of asset performance to service
outcomes
• Achieving asset performance benchmarks &
budgets
Opportunities to improve asset
performance systematically identified
• Review of asset performance in achieving
service outcomes established & implemented
• Review of best service delivery options
documented

12 TAM – Asset Strategy January 2001

ASSESSMENT CRITERIA FOR ASSET STRATEGIES
CORPORATE GOALS AND SERVICE MEASURES DEFINED
Corporate goals communicated Service outputs linked to service outcomes to
be achieved by the agency
• Corporate goals for the agency (or in
conjunction with other agencies) are clearly • Performance indicators established for each
defined, and included in the agency’s service output.
corporate plan. • Linkages are evident between each service
• Corporate performance indicators defined output and the service outcome(s) it supports
and included in the corporate plan. • Service outputs, their performance indicators
Service outcomes defined & documented (PI) and benchmarks are listed for each
service outcome to be delivered.
• Service outcomes that an agency plans to
achieve are defined. (Service outcomes are
benefits delivered to the
community/consumers as a result of the
service outputs provided by an agency).
• Where a range of service outcomes are
sought, each is identified individually.
• The extent of each service output is
quantified.
• Delivery timetables for each service output
are established.
Service outcomes linked to corporate goals
• All service outcomes delivered by an agency
have links to the corporate goal or goals they
support.
• Service outcomes, and their linkages to the
agency’s corporate goals, are signed off by
the agency’s CEO.
Service outputs defined and documented
• All significant aspects of the service outputs
to be delivered are quantified and
documented. (Service outputs are services or
goods delivered by an agency or group of
agencies.)
• Service outputs and the standards to which
they will be delivered are defined.

January 2001 TAM – Asset Strategy 13

ASSET STRATEGIES DEVELOPED ASSET OUTPUT AND
Use of demand management documented
PERFORMANCE TARGETS
DEFINED
Analysis of present and future pressures driving
the demand for services is documented. Asset performance criteria determined
• Results of forecasting future demand and its • Asset performance criteria required to deliver
impact on service outputs and service service outputs is agreed by the agency (eg.
delivery strategy is documented from the image, noise levels, flow rates, security
service delivery strategy. levels etc.)
• Demand management strategies to limit • A rating system to determine the levels of
service delivery levels to the resources performance criteria required in each asset is
available, are documented. in place.
Alternative non asset delivery strategies • The rating system establishes the gap
considered and documented between required and actual asset
performance.
• Cross agency planning for joint service
delivery or asset sharing is documented in the Performance measures determined
service delivery strategy. • Performance measures of key physical
• Analysis of service delivery options with attributes of the assets, costs of maintenance
alternative use of resources (less dependent and operation and costs of services delivered
on assets) is documented in the service through the asset have been developed.
delivery strategy. • Comparison of measures is possible between
• Analysis of options to deliver different assets and over time.
services to achieve the same service delivery • Performance measures are combined with
outcomes with better use of resources, is assess asset efficiency against benchmarks
documented in the service delivery strategy. for that industry and effectiveness in
supporting service delivery.
Asset strategies linked to documented service
Performance targets determined
outputs
(benchmarks)
• Each asset strategy refers to the service
• Comparative data on the asset performance
outputs it supports.
and service delivery performance of other
Asset strategies developed and documented agencies or comparable industries is
• Detailed agency knowledge of its asset base available.
including locations, functions, physical • Targets for asset efficiency are set.
attributes and condition, is evident • Targets for asset effectiveness in delivering
• Asset base is segmented into appropriate service outputs are set.
groupings to develop the asset strategy (eg
geographic location, service type, age,
capacity, etc.).
• Gaps between the agency’s exiting and
required asset capacity is developed into
capital investment, asset maintenance and
asset disposal options.

14 TAM – Asset Strategy January 2001

CAPITAL INVESTMENT, MAINTENANCE & DISPOSAL PLANS
DEVELOPED
Value management/economic appraisal/risk • Asset portfolio has been assessed against the
management applied approximately agency’s asset strategy and assets surplus to
service delivery requirements have been
• Procedures are in place for when and how identified.
Value Management, Economic Appraisals
and risk management are used both formally • Opportunities for maximising asset disposal
and informally. value are identified.
• Evidence that Value Management and • Detailed costed program of proposed
economic appraisal is used in accordance disposals for the next year is developed and
with the above procedures. long term disposal budgets prepared.
• Summary of Value Management and Asset plans linked (capital investment
Economic Appraisal outcomes and maintenance disposal)
implementation strategies are documented. • Each project included in the Capital Works
Capital investment plans developed Plan is linked to the Agency’s Maintenance
Plan to ensure appropriate ongoing
• Asset portfolio has been assessed against the maintenance.
agency’s service and asset strategies and
gaps have been documented. • Each project included in the Asset Disposal
Plan is linked to the agency’s Maintenance
• Service Delivery outcomes have been Plan to remove ongoing maintenance no
translated into detailed project objectives. longer required.
• Project specific information including
Asset plans linked to established asset
estimated total cost, project status (major or
performance criteria
minor, new work or work in progress),
project type (eg. land acquisition, purchase or • Asset condition standards and capital works
construction of assets), commencement and standards are developed from asset
completion dates, and cash flows for each performance criteria.
year of the project, is included in the plans. • Projects contained in the asset plans comply
• Development of the capital investment plan with these standards.
is documented.
Maintenance Plan Developed
• Maintenance resources internal or external to
the organisation have been identified. (This
should include operational, strategic and
cultural influences that affect the way
maintenance is organised.)
• Long term maintenance strategies have been
defined for various asset types and for assets
within various risk categories.
• Asset condition assessments are carried out
against established asset performance
criteria.
• Detailed costed program of proposed works
for the next year developed and long term
maintenance budgets are prepared.
Disposal Plan Developed

January 2001 TAM – Asset Strategy 15

ASSET PERFORMANCE DATA OPPORTUNITIES TO IMPROVE
COLLECTED & REPORTED ASSET PERFORMANCE
Data collection / evaluation /reporting system
SYSTEMATICALLY IDENTIFIED
established Review of asset performance in achieving
• Asset management system is fully service objectives established and
understood and used by the agency. implemented
• Asset management system includes all
• Evidence that systematic reviews of asset
significant non current assets.
performance indicators against service
• Asset reporting enables efficient asset delivery outputs take place.
management and feedback to service
• Evidence that results of review are
planning.
effectively used for continuous improvement
Asset performance documented of asset management and for more effective
delivery of services.
• Data on asset performance criteria is
recorded. Review of best service delivery options
• Data on levels of asset operation or usage is documented
recorded.
• Benchmarks of best service delivery options
• Data on costs of asset maintenance and
are in place.
operation is recorded.
• Benchmarks are in a form that allows
Linkage of Asset Performance to service comparison with agency measures of the
outcomes services delivered.
• Service output measures are recorded • Evidence that results of reviews is used to
against, and related to, the assets supporting consider changing:
their delivery and can be compared over
− Services to be delivered
time.
− Methods of delivery for increased
Achievement of asset performance efficiency and/or effectiveness.
benchmarks
• Benchmarks for asset performance are in
place.
• Benchmarks are in a form that allows
comparison with asset performance measures
collected by the agency.
• Evidence that systematic review of
performance and benchmarks is undertaken.

16 TAM – Asset Strategy January 2001

 Office
Accommodation
Strategy
Office accommodation strategy

January 2001
DPWS Report Number 01049

NSW Department of Public Works and Services Cataloguing-in-Publication data

New South Wales. Government Asset Management Committee.

Office accommodation strategy.

ISBN 0 7347 4104 9 (set)

ISBN 0 7347 4194 4

1. Asset management – New South Wales. 2. Capital investment. 3. Public administration – New South Wales
I. Title. (Series : TAM)

352.50944

 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any
process without written permission from the NSW Government Asset Management Committee. Requests and inquiries
concerning reproduction and rights should be addressed to:

Secretariat
Government Asset Management Committee
Level 23 McKell Building
2-24 Rawson Place
SYDNEY NSW 2000
Website www.gamc.nsw.gov.au
E:mail gamc@dpws.nsw.gov.au

Set consists of :

ISBN 0 7347 4122 7 Asset strategy

ISBN 0 7347 4194 4 Office accommodation strategy
ISBN 0 7347 4128 6 Capital investment : strategic planning
ISBN 0 7347 4134 0 Asset maintenance : strategic planning
ISBN 0 7347 4140 5 Asset disposal : strategic planning
ISBN 0 7347 4146 4 Sustainable development guideline
ISBN 0 7347 4152 9 Heritage asset management guideline
ISBN 0 7347 4158 8 Demand management guideline
ISBN 0 7347 4164 2 Life cycle costing guideline
ISBN 0 7347 4170 7 Value management guideline
ISBN 0 7347 4176 6 Risk management guideline
ISBN 0 7347 4182 0 Post implementation review guideline
ISBN 0 7347 4188 X Asset information guideline
Contents

1 INTRODUCTION ____________________________________________________2
1.1 The need for a Strategic Approach to Office Accommodation ...............................................................3

1.2 Benefits of a Strategic Approach ...............................................................................................................4

2 AGENCY ROLES AND RESPONSIBILITIES ______________________________5

2.1 Service Agencies ..........................................................................................................................................5

2.2 NSW Treasury.............................................................................................................................................5

2.3 Department of Public Works and Services ...............................................................................................6

3 DEVELOPING THE OFFICE ACCOMMODATION STRATEGY ________________7

3.1 Development of the Office Accommodation Strategy ..............................................................................7

3.2 Service Delivery Strategy Considerations.................................................................................................7

3.3 Accommodation Asset/Service Dependency .............................................................................................9

3.4 Accommodation Asset Utilisation..............................................................................................................9

3.6 Accommodation Asset Capacity ..............................................................................................................11

3.7 Accommodation Asset Functionality.......................................................................................................11

3.8 Evaluating Strategic Options and Selecting Preferred Strategies ........................................................12

3.9 Preparing the Office Accommodation Strategy .....................................................................................12

4 REVIEWING THE OFFICE ACCOMMODATION STRATEGY ________________13

4.1 Office Accommodation Review Process ..................................................................................................13

APPENDIX A DATA REQUIREMENTS_____________________________________14

APPENDIX B OFFICE ACCOMMODATION PLANNING CHECKLIST ____________15

APPENDIX C KEY PERFORMANCE INDICATORS___________________________17

January 2001 TAM – Office Accomodation Strategy 1

1 Introduction
The NSW Government's property portfolio is a An analysis of NSW Government
key component of the State's infrastructure and accommodation in 1996 indicated that the
resources. The proper strategic planning and average office space utilisation across the NSW
management of this portfolio is therefore public sector was close to 24 m2 per employee.
essential to the central Government focus of As a consequence of the implementation of the
providing efficient and effective service Government’s Office Accommodation Reform
delivery. Program this figure has reduced to 18.75m2 per
employee in 2000.
As at 2000, the NSW Government occupied
approximately one million square metres of National and international best practice
office accommodation, housing some 52,000 standards indicate that space efficiencies
employees at a cost of around $230 million per between 15 and 18 m2 per employee are readily
annum. achievable. There is therefore considerable
room for improvement in the NSW public
sector's utilisation of office space.

Direction Monitoring,
Community needs and expectations
reporting, and
modification
Legislation
Government policies, priorities and strategies
Fiscal strategy

1 2 3
Inter-agency Agency corporate CEO performance
strategic planning plan agreement

Service and
resource 4 5 6
planning Service delivery Budget proposals Service and
strategy and allocations resource allocation
agreement
Total Asset
Management
Strategy
Implementation • Asset Strategy
planning 7 8 9 • Office Accommodation
Inter-agency plans Business plans TAM strategy Strategic Plan
HR plans • Capital Investment
IT plans Strategic Plan
Procurement plans • Asset Maintenance
Strategic Plan
Social responsibility
• Asset Disposal
plans Strategic Plan

Service delivery

Figure 1 Total Asset Management

2 TAM – Office Accomodation Strategy January 2001

 The benefits of a strategic, coordinated whole- • Achieve overall cost savings and value for
of-government approach to office money whilst maximising the results of
accommodation have been demonstrated in a decentralisation
number of ways including the reduction in the
The specific objectives of the NSW
overall space use of Government agencies.
Government for its office accommodation
Government is therefore keen for this focus on
portfolio in the short to medium term are to:
accommodation reform to continue. The
benefits and directions for this reform were • Reduce the average utilisation of office space
outlined in Premier’s Memoranda 97/2 and 99/6 across the NSW public sector to 18 m2 per
employee. (See PM 97/2)
Premier’s Memorandum 97/2 (PM 97/2), issued
in February 1997, outlined new procedures for • Reduce exposure to leasing costs
the planning and management of office • Ensure that no Government agency is
accommodation including the requirement for adversely affected in terms of office
agencies to prepare an Office Accommodation accommodation given the current lease
Strategy as part of their Total Asset Strategy. expiry schedule
An Office Accommodation Strategy is an asset
It is recognised that the savings achieved will
strategy specifically for office accommodation
vary across the State. For example, office space
and should be developed at a whole-of-agency
reductions in the Sydney Central Business
level with clear links to the agency’s corporate
District will lead to major savings while only
plan and Service Delivery Strategy.
minor savings will generally be available in
Accordingly, this document provides guidelines country areas.
to agencies on the development of an Office
In addition, some buildings, particularly
Accommodation Strategy as part of their Total
heritage assets and older office estates, have
Asset Management (TAM) processes.
design restrictions that limit improvements in
The guideline only relates to Government office space utilisation. Therefore to achieve the
accommodation and excludes operational (ie, overall target of 18m2 per employee the
non-office) accommodation such as schools, Government has adopted a target of 15m2 per
courthouses, hospitals, etc. These are addressed employee for all new fitouts in modern
in individual agency planning documents, which buildings subject to service delivery and
utilise existing asset management standards and OHS&R requirements not being compromised.
procedures in the TAM Manual.
1.1 The need for a Strategic
Approach to Office
Accommodation
The integration of Office Accommodation
Strategic Planning into each agency's TAM
process will provide a whole of government
strategic approach to the management of this
important resource. This will:
• Establish direct links between required
service delivery outcomes and
accommodation requirements
• Maximise the benefits to be gained from the
government's purchasing power
• Improve the standard of accommodation and
enhance the capital value of stock

January 2001 TAM – Office Accomodation Strategy 3

1.2 Benefits of a Strategic Approach Community
All sectors of society will benefit from a Proactive accommodation planning provides
strategic approach to the management of Government with the flexibility to meet the
Government office accommodation including: changing needs of the community. Cost and
space efficient accommodation means
• Whole of Government "reclaimed" accommodation costs can be
• Government Agencies redirected into improved services and enhanced
• Community program delivery.

Whole of Government The community as a whole benefits from

accommodation planning through the improved
Effective office accommodation planning delivery of Government services. Effective
minimises Government’s exposure to accommodation planning provides opportunities
occupancy costs thereby enhancing the financial to co-locate agencies with like service provision
performance of the State and improving the or customer base. This provides ease of access
range and quality of services provided to the to multiple government services and makes the
community by Government. Government more user-friendly for face-to-face
Agencies encounters. Co-location also provides
opportunities for agencies to share facilities
Accommodation costs are one of an resulting in cost savings from reduced space use
organisation's highest recurrent expenditure and other resource efficiencies.
items. Any strategy, which delivers efficient
management of these costs, means stronger
financial performance.
The effective planning of office accommodation
will also provide agencies with functional
efficiencies including:
• Better alignment of accommodation needs
with service delivery goals
• Reduction in the costs of "churn" (ie, the
percentage movement, relocation, etc of
employees in any one year) through
flexibility of design
• Improved service delivery
• Higher quality work environments
specifically catering to business and
employee needs
• Equitable redistribution of space based on
functionality rather than seniority/grade
• Employee satisfaction (and productivity
improvement) within a more intelligent
working environment

4 TAM – Office Accomodation Strategy January 2001

2 Agency Roles and Responsibilities
2.1 Service Agencies 2.2 NSW Treasury
Premier’s Memorandum 99/6 (PM 99/6), issued Treasury will review existing accommodation
in February 1999, outlined a number of funding and management policies to ensure they
strategies that continued the Government’s support the objectives of best practice in
reform in asset management. These strategies accommodation planning.
cover the areas of whole-of-government
coordination, investment practices, location, Treasury will also:
regional development, space utilisation, co- • Approve all office accommodation proposals
location, and lease rationalisation. Agencies are for budget sector agencies within the annual
required to address the implementation of these budget process
strategies in their Office Accommodation • Review the economic appraisals for lease
Strategy. versus own options for accommodation
In accordance with the Department of Public proposals for budget sector agencies
Works and Services’ (DPWS) coordination role
(see Section 2.3), all agencies are to liaise and
consult with DPWS in the preparation of their
annual Office Accommodation Strategy.
In accordance with PM 97/2, budget sector
agencies are required to refer any proposed
office accommodation changes to DPWS at the
earliest stage in the planning process and prior
to any approach to private sector property
owners or agents. This is to ensure that
preference is given to surplus government office
accommodation.
Non-budget sector agencies are required to seek
the advice of DPWS on any proposed office
accommodation changes. Specifically:
• Government Trading Enterprises should
include any proposed accommodation
changes in excess of 500 m2 in their
Statement of Financial Performance and
obtain Treasury approval. They must give
preference to government owned or leased
vacant space.
• State Owned Corporations should include
proposed accommodation changes within
their Statement of Corporate Intent and
obtain Treasury approval. They are not
required to give preference to surplus
government accommodation.

January 2001 TAM – Office Accomodation Strategy 5

2.3 Department of Public Works and • Development, implementation and
Services monitoring of government policy relating to
asset management
A coordinated, whole-of-Government approach • Implementation and review of the
is required to reduce any existing duplication Government Office Accommodation
and overlap of functions in the planning and Workspace Guidelines
management of government office
accommodation. • Maintenance of the Government Office
Accommodation Database
The Department of public works and Services
(DPWS) is responsible for this centralised The Department’s Policy Services Division
coordination role and advises the Budget meets these responsibilities.
Committee and relevant Ministers on the The Department of Public Works and Services
Government's current and future strategic can also provide commercial services to
property and accommodation needs. agencies on all aspects of their office
accommodation planning.
Specifically, DPWS’s roles and responsibilities
include:
• Assistance to agencies in the preparation of
their Office Accommodation Strategies
• In their role as a member of the Government
Asset Management Committee (GAMC):
− Reviewing agencies’ Office
Accommodation Strategies and reporting
progress made towards the space
utilisation targets
− Identifying the State’s future and current
accommodation needs from a whole-of-
government perspective through:
− Alignment of asset and office
accommodation resources with
Government Service delivery priorities
− Development of office accommodation
strategies for Sydney CBD and
regional centres
− Consideration and implementation of
major investment strategies
− Development and monitoring of
benchmarks and performance standards
for asset and property portfolios
• Approval and coordination of changes to
leasing arrangements including new leases
and lease renewals

6 TAM – Office Accomodation Strategy January 2001

3 Developing the Office Accommodation Strategy
Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7

Asset/ Asset Asset Asset Asset Evaluation Implement

Service Utilisation Location Capacity Functionality
Dependency

Can service Are accom- Are accom- Have accom- Are accom- Evaluate Prepare Office
delivery be made modation modation modation modation potential Accommodation
less dependent on assets fully assets assets sufficient assets suitable strategies and Strategy
accommodation used in service appropriately capacity to for optimal select preferred
assets? delivery? located for provide the service strategies
effective required delivery?
service services?
delivery?

3.1 Development of the Office 3.2 Service Delivery Strategy

Accommodation Strategy Considerations
An Office Accommodation Strategy is an asset A well-defined and comprehensive Service
strategy specifically for office accommodation Delivery Strategy is essential to the
assets. Its formulation therefore follows the development of a meaningful and effective
Asset Strategy Development Framework as Office Accommodation Strategy. It must
described in the Asset Strategy section of the specify the services to be provided in sufficient
TAM manual. detail to assess office accommodation options
against each service delivery component. (See
This Framework as applied to office Service Delivery Strategy section of the TAM
accommodation is shown in the above diagram Manual).
and described in the following sections.
With respect to office accommodation, the
The application of the framework requires a Service Delivery Strategy should:
detailed knowledge of the agency's office
accommodation portfolio as well as a thorough • Define the agency’s core business and
understanding of its Service Delivery Strategy. services it intends to deliver, examine service
delivery methods and determine the most
The development of an Office Accommodation efficient and cost effective means of service
Strategy may therefore require the cooperation delivery
of several people with specialist skills including
detailed knowledge of the accommodation • Show the agency organisational structure
portfolio. together with client and other major
stakeholder relationships
The Office Accommodation Strategy is to be
• Broadly define the resource requirements
prepared for a minimum 3-year time frame and
(human, IT and financial) of the agency
is to be reviewed and updated annually. This
and/or its various divisions/business units
will ensure:
together with the associated overall
• Where possible, suitable vacant Government accommodation needs
space is utilised as it becomes available • Establish the key accommodation issues
• Sufficient time is allowed for the planning based on the agency's and/or its
and implementation of accommodation divisional/business unit accommodation
changes needs as well as its corporate objectives
• Ongoing evaluation of leases against current
and future market trends to achieve the best
long term financial performance

January 2001 TAM – Office Accomodation Strategy 7

Criteria should be developed for assessing Hypothetical Case Study:
existing accommodation for its suitability to
support service delivery objectives. This Background
suitability will be expressed as a performance Agency A is responsible for providing advice to
gap between existing accommodation and what the community on how to access government
is required. It should be measured at each step services. The agency currently provides this
service out of a central office located in the
in the framework (eg; location, capacity,
Sydney CBD. To access this service members of
functionality etc.). the public are required to make an appointment
This gap analysis should also highlight areas of with one of the 15 consultants located in the
waste, (such as under-utilisation of space or central office.
payment of rents above market value), and Current Accommodation
clarify opportunities for improving Agency A currently employs 20 staff based in a
performance. central office located near public transport in the
Sydney CBD. The agency leases 300 m2 with
An agency’s future direction is influenced by a the lease due for expiry in 12 months time.
number of factors including budgetary
Future Direction
constraints, advances in technology, A recent Government initiative encouraging
government initiatives or changes in legislation community service agencies to improve public
etc. These factors impact on the way an agency access to their services has prompted Agency A
delivers its services and need to be taken into to review its service delivery methods.
account when determining future As a result, Agency A is planning to implement
accommodation requirements. two initiatives to improve public access to its
services.
1 The launch of an interactive Internet site that
will allow the public to access the agency’s
services online from their homes or
businesses.
2 The provision of mobile advice centres to be
situated outside shopping centres and
community halls.
Impact on Accommodation Requirements
The changes to Agency A’s service delivery
methods will impact on its future accommodation
requirements in terms of its size and location.
Size
The provision of the mobile advice centres will
take 10 of the 15 consultants out of the office for
90% of their working day and only 5 consultants
will be required to remain in the central office to
administer the agency’s online service. As a
result, the agency will only require office space
for approximately 11 staff. (5 consultants, 5
administrative staff and one workspace for the
field staff).
Location
As the agency will no longer be providing its
services directly to the public from its central
office it is not necessary for Agency A to be
located in the Sydney CBD.
Action
Terminate lease upon expiry and relocate to less
expensive accommodation with a reduced area.

8 TAM – Office Accomodation Strategy January 2001

3.3 Accommodation Asset/Service Before implementation, any options for
Dependency reducing dependency on office accommodation
assets should be assessed with respect to total
Can Service delivery be made less dependent economic advantages, demand for other
on accommodation assets? resources, the need for inter-agency agreements,
and the impacts on service delivery.
In line with the government's initiatives to
minimise expenditure, the first stage in the 3.4 Accommodation Asset Utilisation
development of an Office Accommodation
Strategy encourages agencies to critically Are accommodation assets fully used in
examine ways in which their services can be service delivery?
made less dependent on office accommodation Office accommodation utilisation is concerned
assets. principally with the assessment of floor space
Opportunities for reducing dependency on requirements. Critical questions that need to be
accommodation assets may exist through asked include:
utilisation of non-or less-asset intensive • Does floor space utilisation meet the
solutions and/or cross-agency asset sharing. Government's overall targets (see Section
Non-or less-asset intensive solutions to office 1.1)
accommodation could involve employment of: − If above the targets, can it be reduced?
− If at or below the targets is it overcrowded
• New and innovative workplace strategies
and/or does it meet OHS&R and Building
such as shared office spaces, hotelling,
Code of Australia requirements?
telecommuting, etc. in addition to traditional
open and closed office layouts (the • Is there vacant space or can it be created by
Government Office Accommodation better use of existing space?
Workspace Guidelines provide descriptions − If so can it be sublet?
of a range of workplace strategies and − If not can it be reorganised so that part of
selection criteria) it can be sublet?
• Information kiosks or call out centres or the • Is office space being used for items that can
out-sourcing of some service delivery be stored off-site?
functions It is noted that while additional office
It is noted that strategies such as telecommuting accommodation is often deliberately acquired
will also impact on IT&T requirements and for predictable future growth in service demand,
hence on the type of buildings agencies require. surplus accommodation space can also result
from reduced demand for services.
Cross-agency asset sharing involves joint use
of: However, surplus space may also signal that an
office accommodation asset is not being utilised
• IT systems and administrative functions efficiently and at greater than necessary cost.
(shared service centres), and/or
• Accommodation spaces such as conference Where unplanned surplus accommodation space
facilities, educational facilities, etc. is identified, it can be:
•
It is recognised that opportunities for breaking Utilised to improve or enhance service
the nexus between services and office delivery, providing this can be achieved in an
accommodation assets will vary amongst efficient and effective manner.
•
agencies and will depend on the extent to which Allocated to other agencies via cross-agency
office accommodation is directly related to the asset sharing arrangements.
services provided. The scope may be limited in •
Disposed of by way of sale or sub-letting
situations where, for example, a presence is arrangements.
required in or close to a particular location.

January 2001 TAM – Office Accomodation Strategy 9

It will not always be possible or desirable new opportunities to improve asset performance
however, to utilise or dispose of surplus by relocation.
accommodation space. When this is evident an One important initiative to be considered when
agency may elect to continue supporting surplus developing accommodation strategies is the
assets but to review the situation regularly for Government’s commitment to investigating
future opportunities. regional development opportunities.
PM 97/2 requires agencies to notify DPWS of If a whole agency cannot be relocated from the
any vacant or surplus office space in their Sydney metropolitan area, jobs may still be able
portfolios. Through its role of coordinating to be moved to regional centres.
leases across the State, DPWS will be able to
assist agencies in backfilling the space. The Government Office Accommodation Reform
Program requires agencies to annually test the
3.5 Accommodation Asset Location viability of relocating to regional areas as part
of their accommodation planning process. The
Are accommodation assets appropriately
test should examine whether:
located for effective service delivery?
• The agency provides services critical to
The location of offices must be carefully
regional business development
considered to support the core business of the
organisation by asking who are the clients and • There is scope to place staff at regional
who are the employees, where do they come locations
from and how do they travel. • Any withdrawal of agency staff from
The impact of office accommodation location regional locations will affect the quality of
varies very much with the type of services service to clients or the regional labour
provided. Services that require personal market
contact or emergency response are obviously • Agency activities are similar to prospective
more sensitive than administration or private sector activities in regional locations
information services. • There is scope to place staff in regional
Current developments in information locations to complement private sector
technology can potentially reduce sensitivity to developments
location by allowing more service interface to In many cases the location of the office
occur at remote locations electronically. accommodation will be determined at the outset
(eg. Government decides to extend an agency’s
There is potential for a wide range of
service delivery role in a specific new location).
government charges to be paid by credit card
In other instances, such as agency head offices,
over the telephone (as council rates, and
the requirement to be in a particular location,
electricity accounts currently are). Similarly,
such as the Sydney CBD, is not immediately
market and weather information for farmers
could be provided by means of the Internet thus evident.
reducing reliance on access to field offices.
Changing demographics in the demand for
Government services may also indicate the need
to relocate office accommodation.
It is recognised that economic or other
constraints may, at times, prevent assets from
being ideally located. This conclusion is a
valid outcome of the Office Accommodation
Strategy providing that an appropriate
assessment has been undertaken. However, the
situation should be reviewed periodically for

10 TAM – Office Accomodation Strategy January 2001

3.6 Accommodation Asset Capacity 3.7 Accommodation Asset
Have accommodation assets sufficient
Functionality
capacity to provide the required services? Are accommodation assets suitable for
Office accommodation capacity relates to the optimal service delivery?
size of the accommodation and whether it is Office accommodation functionality is
sufficient for the agency to deliver its services concerned with the degree to which the
satisfactorily. It is also concerned with accommodation is suitable for the delivery of
compliance of the accommodation with the service it is intended to support.
OHS&R and Building Code of Australia
requirements. The demand for services as For example, while older office accommodation
defined in the Service Delivery Strategy will buildings may meet their intended capacity,
determine required accommodation capacity in location and utilisation service delivery
this regard. requirements, their heating, cooling, insulation,
lighting, ventilation, etc, functions may not
Peaks and troughs in the demand for services satisfy currently accepted service delivery
along with their timing will also affect standards regarding comfort.
accommodation capacity requirements.
Other questions that need to be asked in
The nominal area requirements should be assessing office accommodation functionality
calculated in accordance with the Government include:
Office Accommodation Workspace Guidelines.
These area requirements are also to be • Does the accommodation meet the agency’s
calculated three years in advance based on the predetermined building selection criteria?
projected staff numbers. • In leased accommodation is the rental
consistent with market rentals and the desired
As with every step in the framework, the image?
required office accommodation capacity can be
met either by adjustments to the accommodation • Does the shape of the space allow for
portfolio or by changing the way in which efficient floor layouts?
services are delivered to make better use of the Care needs to be taken in assessing solutions to
existing office accommodation. reduce office accommodation functionality.
While replacement with newer assets may be
required in some cases, many asset functionality
problems can be overcome by:
•
Retrofits, refurbishment or upgrades to
existing assets, and/or
•
Reconfiguring service delivery utilising HR
and IT solutions
Cost benefit analyses will assist agencies in
assessing alternative solutions to office
accommodation functionality problems.

January 2001 TAM – Office Accomodation Strategy 11

3.8 Evaluating Strategic Options and 3.9 Preparing the Office
Selecting Preferred Strategies Accommodation Strategy
Since potential strategies identified at any one The Office Accommodation Strategy should use
stage of the Office Accommodation Strategy as its structure the stages of the Development
Development Framework may conflict with Framework (see Section 3.1) and should
those at another, all potential strategies must be include:
evaluated as a whole rather than separately in
order to identify a set of preferred strategies. A summary of the agency's owned and leased
office accommodation in accordance with the
The inherent guiding principle in the selection data items given in Appendix A, Sections A1
of preferred strategies is to maximise benefits to and A2.
the agency while minimising costs (time,
• The relative performance of the
disruption and dollars).
accommodation occupied in terms of space
Over time all agencies will experience degrees utilisation and rental costs per person
of mismatch between their Service Delivery • An assessment of existing service delivery
Strategy and the office accommodation assets methods and whether they will continue to be
within their portfolios, either because of appropriate to meet your agency's corporate
changing service requirements or because of objectives
asset deterioration.
• An examination of existing work practices
The Office Accommodation Strategy should along with the extent to which they might
develop a culture in agencies that contemplates change and the impact this could have on
changes to their accommodation portfolios only office space required
when: • A review of the agency's existing
• Deterioration of an asset to the point where accommodation portfolio and its suitability to
OHS&R becomes compromised meet service delivery goals in regard to
location, size, quality and cost
• Optimum service delivery is seriously
threatened • An assessment of whether leases are to be
renewed or owned premises are to be
• Additional space is required to meet service
retained, and if not, what action is proposed.
delivery requirements
• The average space usage per person for the
• Floor space utilisation does not meet the
agency and where necessary the
Government's targets, and/or
identification of strategies to meet the
• Office accommodation costs are significantly Government's space utilisation target.
higher than market rentals
• A regional viability test to assess the viability
of a move to regional areas.
The preparation of the final Strategy should
include a commentary on the methodology with
reference to policy compliance, for each stage
including the needs analysis, assessment of
existing accommodation and the assessment of
accommodation strategies. Finally the Strategy
should explain the preferred strategies proposed
to meet the Government's accommodation
targets.
(See Appendix B for Office Accommodation
Planning Checklist)

12 TAM – Office Accomodation Strategy January 2001

4 Reviewing the Office Accommodation Strategy
4.1 Office Accommodation Review The outcome of the review process is the
Process development of regional/major centre office
accommodation strategies, which identify how
Agencies’ office accommodation strategies are Government objectives can be achieved and
reviewed by DPWS and reported to the Budget what investment decisions need to be
Committee of Cabinet via the Government considered. These strategies are developed in
Asset Management Committee. As part of this line with the Premier’s Department's Regional
review, DPWS identifies the Government’s Service Delivery Plans and in accordance with
current and future strategic property and agreed priorities and timetables. Once
accommodation needs from a whole-of- completed, the strategies are continually
government perspective by: updated and reviewed in the light of
• Identifying opportunities for relocating Government priorities and the information
jobs/functions to regional centres provided in agencies’ annual Office
Accommodation Strategies.
• Analysing key performance indicators for the
State’s property portfolio to compare agency The implementation of these strategies will
performance over time and identify under deliver a number of benefits to agencies
performing agencies and locations to be including:
targeted for review • Increased service delivery through improved
The methodology used for reviewing each access to multiple government services
agency’s Office Accommodation Strategic Plan • Opportunities for integrated service delivery.
is to:
• More efficient use of resources through
• Review each plan to identify service delivery shared facilities etc.
objectives, space use rations, accommodation
• Improved accommodation standards/work
costs and any proposed strategies to meet
environments
service delivery goals and the Government’s
space use target • Reduced accommodation costs from reduced
space use and increased flexibility
• Record proposed accommodation changes
and/or strategies identified
• Review agencies’ responses to their regional
viability tests (see Section 3.5)

January 2001 TAM – Office Accomodation Strategy 13

Appendix A Data Requirements
A1 Leasehold Office Accommodation A2 Freehold Office Accommodation
• Address of each of leasehold interest (land • Location of each premises
and/or buildings) including net floor area in • Gross floor area and net lettable area in
accordance with the Property Council of accordance with PCA survey
Australia (PCA) survey guidelines
• Staff numbers
• Gross and net lease cost expressed in dollars
per square metre • Gross site area
• Staff numbers • Title information
• Lease expiry date and any option period • Tenancy details
• Date(s) options must be exercised • Rental value including notional value
• Rent review pattern and basis of review (ie. • Capital costs and recurrent costs
Consumer Price Index, market or other) • Market value (including date and valuer's
name)

14 TAM – Office Accomodation Strategy January 2001

Appendix B Office Accommodation Planning Checklist
Stage 1 Assess Asset / Service Asset location
Dependency
Determine if accommodation assets

Examine existing service delivery are suitability located for effective
methods and determine whether they service delivery ie, do they support the
will continue to be appropriate to meet agency’s core business and needs of
the agency’s corporate objectives. stakeholders and staff.

Examine existing work practices and
Investigate opportunities to relocate
determine the extent to which they jobs/functions to regional areas.
might change and the impact this Asset capacity
could have on office space required.
Determine if accommodation assets

Identify accommodation needs have sufficient capacity for the agency
consistent with the future direction of to delivery its services satisfactorily.
the agency and taking into account
Determine area requirements in line
future trends in information with Government benchmarks for the
technology, work practices and human next three years based on projected
resources. staff numbers.

Establish criteria for key
Asset Functionality
accommodation issues (eg. utilisation,
location, capacity, functionality etc.)
Determine if accommodation assets
to be used to assess the gap between are suitable for optimal service
desired and actual performance of delivery eg. is rental consistent with
current accommodation. market rentals and the desired image.

Determine efficiency of floor layout.
Stage 2 Assess Existing
Determine if accommodation assets
Accommodation meet the agency’s predetermined

Document scope of existing office building selection criteria.
accommodation portfolio.
Identify opportunities to improve

Use the criteria identified in Stage One functionality through retrofits,
to evaluate the suitability of existing refurbishments and upgrades or
accommodation to meet service through HR and IT solutions.
delivery goals.
Asset utilisation

Calculate the average space usage per
person and where necessary identify
strategies to meet the Government’s
target of 18m2 per person across the
portfolio.

Determine if accommodation assets
are fully utilised in service delivery.

Identify existing and potential surplus
space and determine if space can be
utilised to enhance service delivery,
allocated to another agency or
disposed of.

Notify DPWS of any vacant or surplus
space.

January 2001 TAM – Office Accomodation Strategy 15

Stage 3 Evaluation

Identify opportunities for change to
meet the gap between existing and
required accommodation.

Determine whether leases should be
renewed or owned premises retained
and if not identify what action is
proposed.

Develop accommodation options in
line with the Government Office
Accommodation Reform Program.

Determine preferred options.
Stage 4 Implementation

Outline methodology with reference to
policy compliance for each stage
including the needs analysis,
assessment of existing accommodation
and the assessment of accommodation
strategies.

Identify and explain preferred
strategies proposed to meet the
Government’s accommodation targets.

16 TAM – Office Accomodation Strategy January 2001

Appendix C Key Performance Indicators
Office Accommodation
Defined Success Performance Indicator Basis of Comparison
Reduction in the area occupied per Area occupied per person Government benchmark target of
2
employee across an agency’s 2
(m /person) 18m /person across whole portfolio.
2
portfolio. 15m /person for new tenancies.

Accommodation is provided at a cost Cost per square metre Market rental

consistent with market trends. 2
($/m )

Reduction in the cost of providing Cost per employee Trend over time (present value)
accommodation per employee taking ($/person)
into account the movement in average
rents.

January 2001 TAM – Office Accomodation Strategy 17

This page is intentionally blank

18 TAM – Office Accomodation Strategy January 2001

 Capital
Investment
Strategic planning
Capital investment: strategic planning

January 2001
DPWS Report Number 01046

NSW Department of Public Works and Services Cataloguing-in-Publication data

New South Wales. Government Asset Management Committee.

Capital investment: strategic planning.

ISBN 0 7347 4104 9 (set)

ISBN 0 7347 4128 6

1. Asset management – New South Wales. 2. Capital investment. 3. Public administration – New South Wales
I. Title. (Series : TAM)

352.50944

 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any
process without written permission from the NSW Government Asset Management Committee. Requests and inquiries
concerning reproduction and rights should be addressed to:

Secretariat
Government Asset Management Committee
Level 23 McKell Building
2-24 Rawson Place
SYDNEY NSW 2000
Website www.gamc.nsw.gov.au
E:mail gamc@dpws.nsw.gov.au

Set consists of :

ISBN 0 7347 4122 7 Asset strategy

ISBN 0 7347 4194 4 Office accommodation strategy
ISBN 0 7347 4128 6 Capital investment : strategic planning
ISBN 0 7347 4134 0 Asset maintenance : strategic planning
ISBN 0 7347 4140 5 Asset disposal : strategic planning
ISBN 0 7347 4146 4 Sustainable development guideline
ISBN 0 7347 4152 9 Heritage asset management guideline
ISBN 0 7347 4158 8 Demand management guideline
ISBN 0 7347 4164 2 Life cycle costing guideline
ISBN 0 7347 4170 7 Value management guideline
ISBN 0 7347 4176 6 Risk management guideline
ISBN 0 7347 4182 0 Post implementation review guideline
ISBN 0 7347 4188 X Asset information guideline
Contents

1 INTRODUCTION ____________________________________________________2
1.1 Background .................................................................................................................................................2

1.2 The Essence of Capital Investment Planning ...........................................................................................3

2 AGENCY ROLES AND RESPONSIBILITIES ______________________________4

2.1 Service Agencies..........................................................................................................................................4

2.2 NSW Premier’s Department......................................................................................................................4

2.3 NSW Treasury ............................................................................................................................................4

2.4 Department of Public Works and Services...............................................................................................4

3 CAPITAL INVESTMENT STRATEGIC PLANNING PROCESS ________________5

3.1 The Process..................................................................................................................................................5

Stage 1 Develop Project Brief ...........................................................................................................................6

Stage 2 Generate Project Options to meet Project Brief ................................................................................7

Stage 3 Evaluate Project Options .....................................................................................................................8

Stage 4 Compare Project Options and Select Preferred Option....................................................................9

Stage 5 Prepare Capital Investment Plan ......................................................................................................10

3.2 Budget Funding Approval Procedure.....................................................................................................11

APPENDIX A CAPITAL INVESTMENT PLANNING CHECKLIST ________________12

APPENDIX B MEASURING PERFORMANCE _______________________________14

January 2001 TAM – Capital Investment Strategic Planning 1

1 Introduction
1.1 Background Thus capital investment planning must take a
reasonable and long term financial and service
The need for effective and efficient Capital perspective.
Investment planning in NSW reflects both the
size of the ongoing investment in capital Capital Investment planning aims to provide
works and the importance of the Government planning of limited government capital
services it supports. resources by ensuring that there are clear and
detailed links between assets and service
The State Capital Program currently involves delivery outcomes.
investments in the order of $5 billion per
annum. It comprises capital expenditure by both This updated guideline provides a structured
the Budget and Non Budget Sectors. process to assist agencies in their capital
investment planning and to provide a
Capital is a scarce resource and new assets give framework for new government approaches to
rise to long term maintenance and operational asset management and performance
costs. Construction of assets limits government measurement.
flexibility to change its service delivery mode
during the life of that asset.

Direction Monitoring,
Community needs and expectations
reporting, and
modification
Legislation
Government policies, priorities and strategies
Fiscal strategy

1 2 3
Inter-agency Agency corporate CEO performance
strategic planning plan agreement

Service and
resource 4 5 6
planning Service delivery Budget proposals Service and
strategy and allocations resource allocation
agreement
Total Asset
Management
Strategy
Implementation • Asset Strategy
planning 7 8 9 • Office Accommodation
Inter-agency plans Business plans TAM strategy Strategic Plan
HR plans • Capital Investment
IT plans Strategic Plan
Procurement plans • Asset Maintenance
Strategic Plan
Social responsibility
• Asset Disposal
plans Strategic Plan

Service delivery Strategic Plan

Figure 1 Total Asset Management

2 TAM – Capital Investment Strategic Planning January 2001

1.2 The Essence of Capital
Investment Planning
Capital Investment Planning applies where the
Asset Strategy indicates investment in new
assets or significant improvement or upgrading
of existing assets.
It involves assessment of all investment options
to meet service delivery requirements including
purchase, lease, service contract, private sector
involvement and non-asset solutions together
with all the required resources.
Capital investment planning provides benefits to
both agencies and Government. Strategic
planning to align an agency’s asset portfolio
with the delivery of services maximises the
effectiveness of those services and the
efficiency with which they are delivered. Poor
capital planning can restrict an agency’s ability
to deliver their services flexibly and effectively.
The NSW Treasury’s Guidelines for
Capitalisation of Expenditure in the NSW
Public Sector (June 2000), provides guidance on
the appropriate accounting and budgeting
treatment for capital and maintenance
expenditure by Budget and Non-Budget Sector
agencies.
The Treasury Guidelines on Economic
Appraisal Principles and Procedures Simplified
(March 1999), establish requirements for
evaluation of capital works, tailored to the
characteristics and scale of projects. Economic
appraisal is required for all projects with a total
cost in excess of $0.5 million.
Full reports are required on projects costing in
excess of $5 million. Summary reports are
required to be submitted for projects costing
between $1 million and $5 million.
Projects costing below $5 million may be
identified for specific reporting requirements.

January 2001 TAM – Capital Investment Strategic Planning 3

2 Agency Roles and Responsibilities
2.1 Service Agencies 2.3 NSW Treasury
All agencies are required to prepare annual The NSW Treasury reviews agency Capital
Capital Investment Strategic Plans (CISPs) as Investment Strategic Plans as part of the
part of their Total Asset Management Strategic agency’s forward estimates. Treasury makes its
Plans. This reflects the need to integrate capital funding recommendations to the Budget
planning into an agency’s annual strategic asset Committee of Cabinet for determination of
management planning and budgeting cycle. allocations to agencies.
CISPs should only contain capital investment 2.4 Department of Public Works and
proposals that have been identified in the Services
agency's Service Delivery Strategy or Asset
Strategy together with clear evidence of the On behalf of the Government Asset
pursuit of non-build options (including Management Committee (GAMC), the
information management and technology Department of Public Works and Services
solutions, contracting out, leasing etc) and reviews an agency’s Capital Investment
verification of action taken to optimise Strategic Plans to ensure that asset proposals are
financing by alternative means. strategically linked to the agency’s service
outcomes. It advises Treasury of its findings and
The plans have to include all major new works the GAMC on the state of agency strategic
proposals that are part of the funding planning. These reviews aim to benchmark
submission to Treasury. agency asset strategies to encourage increased
2.2 NSW Premier’s Department strategic asset performance and cross agency
planning, particularly in:
The Infrastructure Coordination Unit (ICU) of
• Developing and monitoring of agency
Premier's Department reviews specific agencies'
benchmarks and performance standards
Capital Investment Strategic Plans and
Enhancement Requests and provides advice to • Developing, implementing and monitoring of
Treasury. government sector asset management
The purpose is to ensure that the various plans The Department of Public Works and Services
and proposals provide for a coordinated develops and maintains the Total Asset
approach to the provision of infrastructure and Management manual.
meet the Government's overall objectives for the
planning and delivery of infrastructure to meet
the needs of the people of NSW.

4 TAM – Capital Investment Strategic Planning January 2001

3 Capital Investment Strategic planning Process
Stage 1 Stage 2 Stage 3 Stage 4 Stage 5

Project Brief Generate Short list Compare Prepare plan

Translates Project options options Detail all benefits of
service delivery Options Select options Compare options selected options
outcomes into Consider all which best and select
specific and options including satisfy service preferred option
detailed project non asset delivery
objectives solutions outcomes
Evaluate short
listed options

3.1 The Process Agency Capital Investment Plans should cover

the same period of time as the agency’s Asset
The Capital Investment planning process above Disposal and Asset Maintenance strategic plans,
is a structured process for selecting the best ie. a detailed annual plan, a three-year predictive
procurement option for capital investment plan and a longer-term projection. This will
projects identified by the Asset Strategy. The allow:
process requires a detailed knowledge of the
agency’s asset portfolio, service delivery • The development of cross agency
strategy and asset strategy. perspective on the use and redistribution of
assets that may become available
While options can include non-build solutions
such as demand management or direct • Sufficient time for the planning and
procurement of service these should generally implementation of asset changes
have been identified earlier during the
development of the Service Delivery and Asset • Ongoing evaluation of asset procurement
Strategies. methods against current and future market
trends to achieve the best long term financial
The level of detailed assessment within the performance
process will depend on the size and complexity
of the project and/or its funding time frame. A well-defined service delivery strategy is
Projects proposed for funding in the first year essential for the development of a capital
will require full assessment while those in investment strategic plan. It will specify
subsequent years may be subject to service outcomes required in sufficient detail to
progressively less detailed analysis. assess any asset investment needed to achieve
each outcome. For detail refer to the Service
When detailed assessment is required Stages 1 Delivery Strategy.
and Stage 2 may warrant the use of a formal
Value Management Study and Economic Capital Investment planning links via the asset
Appraisal. Strategy with service delivery in the following
five stages as shown in the diagram below and
For details refer to the Value Management described in the following sections.
Guidelines and The Economic Appraisal
Guidelines in the Assessment and Decision
tools section of TAM manual.

January 2001 TAM – Capital Investment Strategic Planning 5

Stage 1 Develop Project Brief

Stage 1

Develop
Project
Brief

Project brief for capital procurement can be

developed based on the information provided in
the Service and Asset strategies. It will provide
detail requirements of capital investment
project. Project briefs should answer question
such as:
• How is the required service going to be
provided?
• What level of service is required?
• Who are the customers and what are their
specific needs?
• Who are the stakeholders?
• What asset capacity is required?
• What is the time period of our investment?
• What functionality is required?
• What is the expected reliability of assets?
• What are the environmental concerns?
• What will be the impact of the capital
investment on the operation of other
agencies?
Value Management studies should be used to
generate and to answer these questions and to
ensure stakeholders input. Capital investment
planners need to use their judgement in
assessing the value management needs for a
project. It will depend on the project size and
complexity.

6 TAM – Capital Investment Strategic Planning January 2001

Stage 2 Generate Project Options to meet Project Brief

Stage 2

Generate
Project
Options

This stage generates a number of options for

satisfying the project Brief. Each option is
developed and evaluated.
Lateral thinking is encouraged to produce as
many options as possible, including alternatives
to purchase such as leasing, information
management and technology solutions,
contracting out or private sector participation.
The selection of delivery options should include
non-asset solutions even though that assessment
was done during the formulation of the service
and asset strategies.
If non-asset solutions are identified as preferred
delivery options this information should be
referred to the agency’s service planners for
assessment.
During generation of options the following
questions could be asked:
• How else may the required service delivery
outcome be achieved?
• What will the alternatives cost?
Options are checked against the project's brief.
Any significant non-compliance with the brief
will require the option to be modified or
discarded.
Depending on the size of a project, Stages 1 and
2 may form part of a Value Management Study
(see the Value Management guideline in the
Assessment and Decision tools section of the
TAM manual)

January 2001 TAM – Capital Investment Strategic Planning 7

Stage 3 Evaluate Project Options

Stage 3

Evaluate
Project
Options

The project options identified in Stage 2 are For further details, refer to the Economic
subjected to Risk Analysis, Economic Appraisal Appraisal Guideline in the Assessment and
and Sustainable Development Assessment. Decision tools section of the TAM manual.
Risk Analysis Sustainable Development Assessment
Risk Analysis is a process designed to provide Sustainable development seeks to ensure the
reasonable assurance that project objectives will needs of the present are met without
be achieved. It identifies all risks associated with compromising the ability of future generations
a project; that is, both their potential impacts and to meet their needs.
the procedures for their effective management.
Good risk management reduces costs and Sustainable development has four primary
improves outcomes by: objectives:
• Minimised risk of environmental damage
• Identifying and reducing key risk exposures arising from incomplete knowledge
• Providing greater certainty to support • Ecological sustainability and environmental
decision-making protection
• Improving the planning of contingencies for • Socio/cultural sustainability which
dealing with risks and their impact recognises the needs of all
For further details, refer to the Risk • Economic sustainability which maintains
Management guidelines in the Assessment and high and stable levels of economic growth
Decision tools section of the TAM manual. and employment
NSW Government agencies have a
Economic Appraisal
secondary service obligation to provide
A fundamental objective of Capital Investment services in a manner that will not
Planning is the development of options that adversely affect ecological, socio/cultural
make the most efficient use of financial and and economic sustainability.
other resources available to the Government.
For further details, refer to the Sustainable
Economic Appraisal is used for ranking Development Guideline in the Assessment and
competing options in order to identify the option Decision tools section of the TAM manual.
with the best benefits to the community over the
life of the project.
Details on Economic Appraisal are provided in
the Guidelines for Economic Appraisal, NSW
Treasury June 1997 and Economic Appraisal
Principles and Procedures Simplified, NSW
Treasury March 1999

8 TAM – Capital Investment Strategic Planning January 2001

Stage 4 Compare Project Options and Select Preferred Option

Stage 4

Compare
Project
Options

The information generated by the evaluation of

the project options then enables them to be
compared with respect to:
• Compliance with service delivery
requirements
• Level of risks and their management
• Economic considerations
• Cash flows
• Budgetary considerations
• Sustainable Development issues
The inherent guiding principle in the selection
of preferred strategies is to maximise benefits to
the agency while minimising costs (time,
disruption and dollars).
Asset strategic planning should develop a
culture in agencies that contemplates changes to
their asset portfolios only when:
• An asset has deteriorated to the point where
occupational health and safety (OH&S)
becomes compromised
• Optimum service delivery is seriously
threatened
• Additional space is required to meet service
delivery requirements
• Asset utilisation does not meet the
Government’s targets, and/or
• Asset operating costs are significantly higher
than market standard
• Details of all options are considered
• A summary of the analysis undertaken for
each option prepared, which includes the
reasons for selecting the preferred option(s)

January 2001 TAM – Capital Investment Strategic Planning 9

Stage 5 Prepare Capital Investment Plan

Stage 5

Prepare Capital
Investment
Plan

The Capital Investment Strategic Plan

forms the basis of funding proposals and
must provide a summary of each project, its
total cost and its expenditure time frame.
The project summary should include:
• A summary of project brief
• Links to the agency's Service Delivery
Strategy and Asset Strategy
• A summary of the maintenance requirements
of the preferred options and corresponding
linkages to the agency's Asset Maintenance
Plan
• Linkages to the agency's Asset Disposal Plan
where projects involve replacement of
existing assets
• Implications on recurrent expenditure
including ongoing operational and staff costs

10 TAM – Capital Investment Strategic Planning January 2001

3.2 Budget Funding Approval
Procedure
The current procedure for obtaining Budget
funding for capital works is as follows.
• The Treasurer annually seeks ‘bids’ for new
projects that would commence in the Budget
(ie. next financial) year from all Ministers
responsible for Budget Sector agencies.
• The Treasurer's letter also seeks information
about works in progress in relation to
projects that will not be completed before the
start of the Budget year.
• The project specific information sought from
agencies includes estimated total cost, project
status (whether major or minor, new works
or works in progress), project type (eg. land
acquisition, purchase or construction of
buildings), commencement and completion
dates, and cash flows for each year of the
project.
• Treasury reviews each project in order to
brief the Budget Committee as to whether or
not the project should be approved, amended
or rejected.
• The Budget Committee determines
“Authorisation Limits” for agencies that are
to receive capital allocations, based on the
information provided by Treasury and the
agencies in review. These limits encompass:
− Approved major works (projects with an
estimated total cost of $500,000 or more)
covering the allocation for the Budget
year, the two forward years and the total
cost to complete
− Approved minor works (projects with an
estimated total cost of less than $500,000
and annual provisions, eg. recurring land
purchases, furniture and equipment etc)
covering the allocation for the Budget
year and a commitment level for each of
the two forward years.

January 2001 TAM – Capital Investment Strategic Planning 11

Appendix A Capital Investment Planning checklist
Stage 1 Prepare Project Brief Stage 3 Evaluate Project Options

Define and segment assets (existing
Conduct economic appraisal of all
and proposed assets) to meet Project Options to review benefits,
requirements of Service Delivery analyse results
Strategy
Conduct Risk assessment of all

From Asset Strategy identify assets proposed options,
requiring alteration, upgrading,
Decide the level of risk the agency is
extension, etc. for inclusion in the prepared to accept in their service
Capital Investment Strategic Plan delivery (this information should be

From Asset Strategy identify new obtained from Service Delivery
assets for inclusion in the Capital Strategy)
Investment Strategic Plan
Conduct Sustainable Development

Determine the range of services Assessment of all options
supported by each asset
Determine overall capital investment

Conduct Value Management Study to strategies (ie. build solution, shared
ensure all stakeholders requirements services, use of private sector)
are included in Project Brief Stage 4 Compare Project Options and

Establish how long assets are required Select Preferred Option
to continue delivering service

Determine performance parameters for
Collect all information about each
each asset or asset segment project option

Set performance levels for each
Analyse and compare all information
performance parameter collected during planning process

Determine required asset functionality
Review risk management plan and

Determine required asset capacity analyse outcomes

Determine expected reliability of
Analyse economic considerations
assets including short term and long term

Identify all stakeholders and their impact
requirements
Assess cash flow requirements and

Identify customers and their specific their impact on delivery of the project
needs
Select preferred options

Identify all environmental concerns
Document decision process

Stage 2 Generate Project Options to meet

Project Brief

Conduct Value Management Studies
to generate project options

Review alternatives to purchase such
as leasing, use of IT solutions,
contracting out, purchasing of service,
private sector participation

Determine all non-asset solutions that
will achieve required service outcome

Review involvement of other agencies
in providing solutions to service
delivery requirements

Review Regional Development Plans
to incorporate specific Regional needs
in planning process

12 TAM – Capital Investment Strategic Planning January 2001

Stage 5 Prepare Capital Investment Plan If Capital Investment Plan for Year 1 has been

Present summary of Project Brief fully funded:

Distribute capital investment works
Divide Year 1 Capital Investment Plan
into the years they are required to be into programs according to
done implementation responsibilities or

Prepare detailed Risk Management reporting needs
Plan
Develop reporting and feedback

Prepare project budget and cash flow process to provide information for
plan agency annual strategic planning cycle

Identify proposed funding strategy and Monitor and review Capital Investment Plan and
adjust capital investment priorities as programs
required
Develop performance indicators to

Commit any maintenance works for monitor the Capital Investment Plan
assets to the Maintenance Plan, and and programs
cross-reference
Measure and evaluate the indicators

Examine agency service and asset
Review Capital Investment Plan and
strategies and adjust capital asset strategies where asset
investment priorities as required performance is not meeting service

Establish linkages to the agency’s delivery needs
Asset Disposal Plan where projects
Review Capital Investment Plan to
involve replacement of existing assets identify more efficient and effective

Develop short, medium and long term ways of achieving the required asset
capital investment planning availability and standards
components
Modify the Capital Investment Plan

Prepare a costed Capital Investment for future years
implementation plan

Rank the priority of the capital
investment tasks

Submit Maintenance Plan to Treasury
or agency funding authority
If Capital Investment Plan for Year 1 has not
been fully funded:

Establish if sufficient works from
Year 1 can be deferred to
accommodate funding reductions,
and/or

Identify reduced asset availability due
to funding reductions and adjust
service strategies for Year 1
accordingly

Amend Capital Investment Plan to
incorporate all changes

January 2001 TAM – Capital Investment Strategic Planning 13

Appendix B Measuring performance
B1 Developing performance • Rarely do numbers alone tell the story.
indicators Qualitative information on performance is
equally useful
Performance indicators are used to report the • Indicators should be explicit in their format
quality of service, efficiency, productivity or and expressed as a percentage, a ratio or
cost effectiveness of an agency, program or some other numerical format
activity
• The number of indicators used at any
Performance indicators compare existing management level should be limited to a
performance to a standard, target or norm for maximum of, say, seven. Larger numbers of
management purposes. indicators tend to lose relevance and their
impact is diluted
Developing performance indicators
• Indicators should be underpinned by an
• Define the key performance levels, outputs or information system that enables the
outcomes to be monitored for effective information required by the indicator to be
planning and control. For each of these key readily available
performance levels, outputs or outcomes,
define successful achievement, ie. the • In defining success, past experience has
“success factor” - that which happens when shown that input at the development stage
things are going well. from those involved in using the indicators
will help engender ownership and support for
• Determine how to measure the “success the application of the indicators
factor”, eg. dollars expended/square metre,
units completed per period, etc. B2 Application of the indicators
• Establish targets or benchmarks to compare The indicators proposed should be examined
with the achievements, eg. last period’s with the intention of:
performance, an industry average, etc.
• Culling the indicators to a workable number
When used successfully, performance indicators that will provide the information needed by
enable managers to see how their programs or managers to see that their maintenance
activities are performing and show where action activities are effective and efficient
is needed to correct a deviation from the
program or activity plan. • Assigning the resulting indicators to
appropriate management levels
However, indicators should cover the broad
It is important to remember the indicators are
range of results to be achieved. They should be
what they say they are - indicators. They are not
balanced where appropriate with qualitative
intended to be highly accurate measures of
information and be based on data that can be
performance. Instead they should be
collected without consuming disproportionate
considered quick and simple assessments to
human and/or financial resources.
guide future actions. Therefore, focus on
Key factors for performance indicators materiality rather that precision.
• Indicators should focus on outcomes As far as possible, managers should use
achieved rather than action taken performance indicators to monitor the outcomes
• Consistency in definitions and methods of they are achieving. Indicators are intended, first
measurement is essential to ensure results and foremost, as a tool to help managers
can be analysed and compared over time manage.
• Simplicity should be as highly valued as Using them for control purposes, risks misuse of
reliability. Complex approaches are data to make particular managers look more
expensive and often need a high level of successful. When this occurs, the usefulness of
expertise the tool is lost.

14 TAM – Capital Investment Strategic Planning January 2001

At this stage there are few valid industry
benchmarks against which the indicators can be
compared. Therefore, in the short term, it may
be necessary to use the performance of the
previous period as an interim benchmark.
The indicators need to be underpinned with
appropriate procedures including:
• Standardised definitions
• Standardised methods of measurement
• Coordination with information systems.
B3 Defining the planned service
outcomes
Many different outcomes arise from the capital
investment in physical assets. For the purpose of
developing an effective set of performance
indicators, the key outcomes can be grouped
into five categories:
• Physical assets are available as required to
deliver service at their intended standard.
• Capital Investment is conducted both cost-
and time-efficiently and meeting determined
milestones
• Stakeholders (including corporate
management, property managers, funding
providers, customers and community) are
satisfied with the capital investment program
• Investment in physical assets is protected
(economic lives are extended where
appropriate and asset values are optimised)
• Exposure to risks is appropriately managed
Typical performance indicators for each of the
above outcome categories are given in the
following section

January 2001 TAM – Capital Investment Strategic Planning 15

B4 Typical performance indicators
Planned service outcome 1
Physical assets are available and serviceable as required

Defined Success Performance Indicators Basis of Comparison

Assets perform at their specified Number of client complaints of service Trend over time
standard interruption per months

Assets comply with appropriate health OH&S defects reported / period Target
and safety requirements

Reduction of accidents over time No. of accidents/injuries attributable to asset Trend over time
accidents defects per period
% workforce injured

Planned service outcome 2

Capital Investment is conducted both cost- and time- efficiently

Defined Success Performance Indicators Basis of Comparison

Cost of construction is within the Capital Investment cost per unit of service Target
budget delivery ($ per user)

Capital Investment cost to useable physical Target

measure ($/m², $/km travelled)

Construction is progressing in Cost of defects arising during construction Target / trend

accordance with established schedule

16 TAM – Capital Investment Strategic Planning January 2001

Planned service outcome 3
Stakeholders are satisfied with the maintenance program

Defined Success Performance Indicators Basis of Comparison

Corporate, property managers with % clients surveyed annually (for key stakeholder Target / trend
Treasury, clients and community categories) who express satisfaction regarding:
perceive capital investment to be: • Effectiveness
• Cost efficient • Timeliness
• Timely • Assessment of a new facility
• Of an appropriate standard

Construction programs are completed No. Of complaints of unacceptable standards Trend over time
within budget allocations per period per $1000K spent

Ratio of actual construction expenditure to Target/trend

budgeted expenditure (%)

Planned service outcome 4

Exposure to risks is appropriately managed

Defined Success Performance Indicators Basis of Comparison

Risks are identified and contingency Risk management plan being implemented Target
plans are in place

Effective management practices are in % of management checklist items being Target

place implemented

January 2001 TAM – Capital Investment Strategic Planning 17

This page is intentionally blank

18 TAM – Capital Investment Strategic Planning January 2001

 Asset
Maintenance
Strategic Planning
Asset maintenance: strategic planning

January 2001
DPWS Report Number 01047

NSW Department of Public Works and Services Cataloguing-in-Publication data

New South Wales. Government Asset Management Committee.

Asset maintenance: strategic planning.

ISBN 0 7347 4104 9 (set)

ISBN 0 7347 4134 0

1. Asset management – New South Wales. 2. Capital investment. 3. Public administration – New South Wales
I. Title. (Series : TAM)

352.50944

 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any
process without written permission from the NSW Government Asset Management Committee. Requests and inquiries
concerning reproduction and rights should be addressed to:

Secretariat
Government Asset Management Committee
Level 23 McKell Building
2-24 Rawson Place
SYDNEY NSW 2000
Website www.gamc.nsw.gov.au
E:mail gamc@dpws.nsw.gov.au

Set consists of :

ISBN 0 7347 4122 7 Asset strategy

ISBN 0 7347 4194 4 Office accommodation strategy
ISBN 0 7347 4128 6 Capital investment : strategic planning
ISBN 0 7347 4134 0 Asset maintenance : strategic planning
ISBN 0 7347 4140 5 Asset disposal : strategic planning
ISBN 0 7347 4146 4 Sustainable development guideline
ISBN 0 7347 4152 9 Heritage asset management guideline
ISBN 0 7347 4158 8 Demand management guideline
ISBN 0 7347 4164 2 Life cycle costing guideline
ISBN 0 7347 4170 7 Value management guideline
ISBN 0 7347 4176 6 Risk management guideline
ISBN 0 7347 4182 0 Post implementation review guideline
ISBN 0 7347 4188 X Asset information guideline
Contents

1 INTRODUCTION ____________________________________________________2
1.1 Background .................................................................................................................................................2

1.2 The strategic planning approach...............................................................................................................3

1.3 Benefits of maintenance planning .............................................................................................................3

2 AGENCY ROLES AND RESPONSIBILITIES ______________________________4

2.1 The role of maintenance planning .............................................................................................................4

2.2 Maintenance and total asset costs..............................................................................................................4

2.3 Minimum and optimum maintenance costs .............................................................................................5

2.4 Asset deterioration......................................................................................................................................5

2.5 Capitalisation of Maintenance...................................................................................................................6

3 AGENCY ROLES AND RESPONSIBILITIES ______________________________7

3.1 Service agencies...........................................................................................................................................7

3.2 NSW Treasury requirements.....................................................................................................................8

3.3 Department of Public Works and Services...............................................................................................8

4 MAINTENANCE PLANNING PROCESS __________________________________9

4.1 Maintenance planning process ..................................................................................................................9

Stage 1 Define and segment assets to meet Service Delivery Strategy ........................................................10

Stage 2 Determine required asset performance ............................................................................................11

Stage 3 Define maintenance resources and overall strategies ......................................................................12

Stage 4 Assess condition of assets and recommend maintenance ................................................................13

Stage 5 Assess Maintenance Costs..................................................................................................................14

Stage 6 Implement Maintenance Plan and programs...................................................................................15

Stage 7 Disposal Plan and Implementation ...................................................................................................16

4.2 Overview....................................................................................................................................................17

4.3 Sources of planning information .............................................................................................................17

APPENDIX A MAINTENANCE PLANNING CHECKLIST _______________________18

APPENDIX B MEASURING PERFORMANCE _______________________________20

APPENDIX C EXAMPLE OF THE DEVELOPMENT OF A MAINTENANCE PLAN ___25

January 2001 TAM – Asset Maintenance Strategic Planning 1

1 Introduction
1.1 Background • The growth and diversity of investment in
public assets which has exposed government
A significant cost in the operation of the State of to wide ranging financial risk caused by poor
NSW is the maintenance of assets in public management of these assets
ownership. This is a cost that is likely to
• The changing expectations and technologies,
continue increasing due to:
which have prompted the renewal or
• The gradual ageing of the assets, the bulk of refurbishment of assets, despite the fact that
which were developed over the last four they functioned adequately to provide the
decades. As assets become older, there is a required level of service
tendency for maintenance to become more
costly

Direction Monitoring,
Community needs and expectations
reporting, and
modification
Legislation
Government policies, priorities and strategies
Fiscal strategy

1 2 3
Inter-agency Agency corporate CEO performance
strategic planning plan agreement

Service and
resource 4 5 6
planning Service delivery Budget proposals Service and
strategy and allocations resource allocation
agreement
Total Asset
Management
Strategy
Implementation • Asset Strategy
planning 7 8 9 • Office Accommodation
Inter-agency plans Business plans TAM strategy Strategic Plan
HR plans • Capital Investment
IT plans Strategic Plan
Procurement plans • Asset Maintenance
Strategic Plan
Social responsibility
• Asset Disposal
plans Strategic Plan

Service delivery Strategic Plan

Figure 1 Total Asset Management

2 TAM – Asset Maintenance Strategic Planning January 2001

Unless it is effectively managed this cost will 1.3 Benefits of maintenance planning
consume a high portion of the State’s available
wealth, threatening its ability to deliver current The adoption of Maintenance Planning offers a
and future services. number of benefits to both agencies and
government as a whole:
It is inappropriate to expand the capital stock to
the exclusion of adequate maintenance of Benefits to agencies
existing assets. • Assets perform at optimum levels, reducing
The issues of rising costs, escalating risk and service disruptions and losses due to asset
reduced flexibility need to be contrasted with failure
the limited potential for income growth • Risks to the agency can be identified and
available in the future to either individual ameliorated
agencies or to Government. It is clear that costs • The costs of asset maintenance can be
must be controlled and reduced, risks managed quantified and budgeted with confidence
and flexibility enhanced.
• The performance of the asset can be
1.2 The strategic planning approach reviewed to suit service delivery needs
The NSW Government’s Strategic approach to • The plan provides a foundation for
asset planning is based on Total Asset continuous process improvement
Management (TAM), which links assets to • The plan provides a feedback to improve
providing services. As part of this policy, future application of the maintenance process
agencies are required to develop Asset
• Reduced environmental impact by
Maintenance Strategic Plans in support of
controlling resource usage
submissions to the Budget Committee of
Cabinet for funding. Benefits to government
These plans must be focused on ensuring assets • Asset costs associated with service delivery
support the planned delivery of services, can be identified and minimised in the long
identify any deferred maintenance requirements term
and establish a funding plan. • Risks to the Government can be identified
The change in focus by Government from and ameliorated
capital works asset creation to strategic asset • Alternative asset and non-asset solutions can
management places an increasing importance on be compared to best suit service delivery
maintaining the service capacity of existing needs
assets. • Maintenance costs can be benchmarked
In order to successfully implement maintenance across agencies and industries
planning, agency managers need to pursue • The value of public sector assets can be
initiatives that: protected, where appropriate
• Enhance the link between service outcomes • The global environmental responsibilities of
delivered to the community and the the State such as energy management, water
maintenance of the assets involved in the usage, and pollution control can be addressed
delivery
• Establish clear links between maintenance
objectives and asset performance
• Resolve uncertainty regarding the disposal of
assets
• Gain the commitment of operational
maintenance managers and staff to
Maintenance Planning

January 2001 TAM – Asset Maintenance Strategic Planning 3

2 Agency Roles and Responsibilities
2.1 The role of maintenance planning Incremental maintenance costs are generally
relatively small and therefore tend not to receive
Maintenance planning has a key role in the the same attention as procurement and disposal
strategic management of an asset over its life costs or the more visible, day-to-day operating
span. It is therefore fundamental to an agency’s costs.
service delivery objectives. After acquiring an
asset, a periodic review of its role is required to However, the annual expenditure on
ensure it continues to match the service delivery maintenance and its impact on delaying
needs. expenditure on new works can be very
substantial. Moreover, maintenance costs over
This review is initially undertaken during the the life of an asset are often many times the
development of the Asset Strategy and may initial purchase cost.
indicate one of three options for the future of the
asset: Maintenance therefore is a principal cost
element of the total management of an agency’s
• Maintenance to meet the ongoing service assets.
role of the asset
• Renewal and adaptation to suit changed Benefits of good maintenance
service needs by capital expenditure, or • Assets will operate more reliably and
• Disposal of the asset when it is no longer economically and their operational service
required for service delivery and has no other life will be achieved
value to the agency. • Operating costs will be reduced, often
Asset Maintenance planning is a detailed exhibited in lower energy costs, reduced
assessment of those assets or asset segments, incidence of premature failure requiring
which the Asset Strategy indicates, require only expensive repair or replacement, thus freeing
strategic maintenance in order to satisfy the funds for other purposes
service delivery outcomes. • Optimisation of maintenance will allow more
effective use of the asset, alignment with
It is aimed at ensuring these assets remain service needs and a resulting reduction in the
productive at the lowest possible long-term cost demand for capital expenditure
and involves:
Capital
Disposal
• A detailed functional analysis of maintenance Procurement
5%
needs that meet the required service delivery 20%
outcomes
• The development of maintenance strategies
• The institution of procedures to ensure
adequate control of the implementation of the
maintenance plan Operating
40% Maintenance
2.2 Maintenance and total asset costs 35%
The total cost of an asset over its life comprises:
Figure 2 Typical cost of an infrastructure asset
• Capital procurement costs (including over its life
acquisition, renewal and adaptation)
• Maintenance costs over the life of the asset
• Operating costs over the life of the asset
(including staffing)
• Disposal costs

4 TAM – Asset Maintenance Strategic Planning January 2001

2.3 Minimum and optimum 2.4 Asset deterioration
maintenance costs Some part or components of the asset will fail
Maintenance is a technique to address risks before others. Timely attention to these repairs
emanating from the ownership of assets. Risk can allow the remainder of the system to
Management processes should be used to continue in service. Tyres and brakes will be
identify the risks associated with the failure or replaced several times during the life of a
non-performance of an asset. vehicle. Similarly, carpet and paint systems will
require renewal many times over the service life
These risks-of-failure costs could include: of a building.
Service delivery risk Maintenance slows the overall deterioration of
• Delivery interruption (failure) the asset by restoring the condition of its short
life components and allows its overall full
• Delivery level not achieved (eg. water
service life to be achieved. Sometimes there is a
pressure, water quality, voltage stability,
need to increase the asset performance beyond
asset image etc)
that available when the asset was new, to
Cost risk accommodate revised corporate requirements,
changed technology, social expectations,
• Higher maintenance costs, from greater asset demographics and the like. For example, to
deterioration accommodate the new computer requirements in
• Litigation payout, from failure to deliver classrooms it may be necessary to upgrade
services or failure of the asset schools electrical systems.
Social risk The diagram below shows the deterioration in
asset condition over time, the deterioration
• Occupational health and safety being regularly addressed with maintenance
• Litigation, and expenditure. The restored condition is usually
• Community disruption. below that of a new asset. At less frequent
intervals, more extensive refurbishment and
Maintenance can therefore be regarded as an upgrading commonly occurs to replace
insurance premium against the underlying risks components and to change the asset’s
associated with the operation of the asset. The functionality to accommodate changed service
aim is to select the type and level of requirements. Particular aspects of the asset or
maintenance, which results in minimal overall its overall standard may then exceed those of
cost. the original asset.
The minimum overall cost is the position where Regardless of the funds source both
the sum of the maintenance cost and the risk of maintenance and upgrades should be featured in
failure cost cross. the Asset Maintenance Plan. If the amount to be
spent on maintenance or upgrading assets
exceeds available funding, then value
management and economic appraisal techniques
can be used to test alternative courses of
maintenance action and disposal/replacement
options.
The value of alternative maintenance options
that may require significantly different
expenditure patterns over the life of the asset
can be compared by use of Life Cycle Costing
Methods. The technique allows the selection of
optimised maintenance strategies by adjusting
the cost of each proposal to allow for the
changing value of money over time.
January 2001 TAM – Asset Maintenance Strategic Planning 5
2.5 Capitalisation of Maintenance Figure 3 Effect of Maintenance over the life of
an asset
Works to an existing asset will fall into one of
the following categories:
Actual asset condition
• Works to allow the asset or its sub- Periodic maintenance
components to achieve their full life Capital injection for refurbishment
expectancy
• Works to replace sub-components at the end
of their life to protect the rest of the asset $

• Works to enable the asset to fulfil a changed

functional role (eg. changed level of lighting
need)
If these works result in greater capacity than the
original asset had, they should be capitalised. If Time
the value of the replacement is significant and Renew and adapt combined Renew and adapt combined
below the level of a separately identified sub- with maintenance to with maintenance to raise
address functionality of standards above those
element, eg. the roof of a building, it should be asset originally constructed to suit
treated as maintenance expenditure. new service standard

The identification depends on:

• The useful life of the segment being
significantly different from the asset
• The segment being capable of separate
valuation or being apportioned a separate
value, and
• The segment being significant enough to
justify the accounting effort required.

6 TAM – Asset Maintenance Strategic Planning January 2001

3 Agency roles and responsibilities
3.1 Service agencies Each agency is expected to prepare a
Maintenance Plan in accordance with the
Each agency is responsible for the on-going process outlined in Section 4. Treasury reviews
maintenance of assets to a standard appropriate these plans prior to submission to the Budget
for effective achievement of its corporate goals Committee, as part of the Capital Investment
and service delivery objectives. development process for the forthcoming
Agencies are required, as part of the budget financial year.
process, to develop an Asset Maintenance Plan Agencies should report on their maintenance
as part of their annual Asset Management strategies and achievements in their Annual
Strategy. Report
The preparation and updating of the plan and In preparing the Maintenance Plan each agency
the achievement of nominated maintenance will need to:
targets should be referenced in managers’ and
senior executives’ individual performance • Demonstrate the linkage of the proposed
agreements with performance monitoring maintenance plan to its service delivery
systems maintained by each agency. outcomes
• Indicate the basis for the maintenance budget
To achieve real benefits from maintenance
planning the agency will need to be committed • Link the Plan to the asset register
to its successful implementation. • List the maintenance tasks to be undertaken
It is expected that a fully committed agency and the approaches to be adopted
will: • List the resources required
• Provide adequate resources and training of • Provide a framework for performance
personnel monitoring and control
• Put in place an information and planning • Include targets & indicators to evaluate
system that is tailored to the agency’s culture performance achieved
and methods of operation, and • Comply with current Treasury reporting
• Be prepared to persist with use of the system needs
long enough to achieve long-term gains • Ensure assets efficiently and effectively
support service delivery and comply with
statutory requirements.

January 2001 TAM – Asset Maintenance Strategic Planning 7

3.2 NSW Treasury requirements • What sources of funding or strategies will the
agency use to address funding shortfalls?
NSW Treasury has issued Guidelines for the
• Does the Plan raise any policy issues?
Capitalisation of Expenditure in the NSW
Public Sector that provides guidance on the • Is the information in the Plan ready to be
appropriate accounting and budgeting treatment submitted to the Budget Committee for
of capital and maintenance expenditure in both decision?
Budget and Non-budget Sector agencies.
3.3 Department of Public Works and
The Guidelines require that all agencies develop Services
Maintenance Plans, which set out their approach
to optimising the economic life and operating On behalf of the Government Asset
performance of all existing assets. Management Committee the Department of
Public Works and Services reviews the asset
As there is limited capacity to increase overall maintenance plans of both budget dependent
funding within the State budget, maintenance of and non-budget dependent agencies as part of
existing assets should take precedence over the the review of their asset management strategies.
acquisition of new assets. The review looks for consistency with service
delivery strategies and effective linkages with
Agencies with asset bases having replacement
Capital Investment, Asset Disposal and Asset
value in excess of $5 million must submit Asset
Accommodation Strategic Plans. The review
Maintenance Plans to Treasury. Economic
forms part of the annual budgetary process.
appraisal and value management studies must
be offered in support of major periodic
maintenance.
In reviewing the Plan, some issues that Treasury
will consider include:
• Is the plan linked to the agency’s service
strategy and Capital Investment Strategic
Plan?
• Does maintenance strategy and methodology
appear effective in achieving service
objectives?
• Do cost estimates/maintenance standards
appear comparable with industry standards?
• Does an independent assessment appear
warranted?
• Is proposed work priorities/justified by
detailed analysis?
• Are annual cash flows separately shown for
routine maintenance, major periodic
maintenance and asset enhancement?
• Is proposed major periodic maintenance
supported by economic appraisal (or is one
proposed)?
• Does proposed level of funding exceed
present maintenance allocation?

8 TAM – Asset Maintenance Strategic Planning January 2001

4 Maintenance planning process
Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7

Define and Determine Define Assess Assess Implement Monitor and

segment required maintenance condition of maintenance maintenance review
assets to asset resources assets and costs plan and maintenance
meet service performance and overall recommend programs plan
delivery strategies maintenance
strategy action

4.1 Maintenance planning process An agency’s future direction is influenced by a

number of factors including budgetary
Maintenance planning is a structured and constraints, advances in technology,
systematic process, which ensures an agency’s government initiatives or changes in legislation
portfolio of assets supports agency service etc. These factors impact on the way an agency
delivery at the lowest possible long-term cost. delivers its services and need to be taken into
The application of the planning process requires account when determining future asset
a detailed knowledge of the agency’s asset maintenance requirements.
portfolio and good understanding of the service Maintenance planning involves:
delivery strategy.
• An analysis of maintenance needs against agency
A well-defined and comprehensive Service corporate objectives and service outcomes
Delivery Strategy is essential to the • The development of maintenance strategies
development of a meaningful and effective
Asset Maintenance Strategy. It must specify the • The instigation of procedures to ensure adequate
control of the implementation of the maintenance
services to be provided in sufficient detail to
program
assess asset options against each service
delivery component. The 7-step planning process has been developed
to link service strategies with asset maintenance.
Refer to the NSW Premier’s Department It is described in the following sections and
guideline, Service Delivery Strategy. It can be summarised in a checklist format in Appendix
accessed electronically from the Asset Strategy A. Appendix C provides an example of the
section of the TAM manual web site: development of a Maintenance Plan.
http://www.gamc.gov.au/tam).
The descriptions of each stage are not intended
Criteria should be developed for assessing to be prescriptive but rather present a range of
existing asset maintenance for its suitability to issues, which should be considered. The
support service delivery objectives. This significance of each issue and the degree of
suitability will be expressed as a performance detail evaluated in the Plan will vary from
gap between existing asset maintenance level agency to agency and with the type of asset.
and what is required. It should be measured at
each step in the Asset Strategy framework As part of the overall Asset Strategy, the
(eg. location, capacity, functionality etc.). Maintenance Plan should be coordinated with
the Capital Investment and Asset Disposal
This gap analysis should also highlight areas of strategic plans. The Office Accommodation
waste, (such as under-utilisation of an asset or Plan will contain information relevant to all
operating cost above market standard), and three plans but relate only to office buildings.
clarify opportunities for improving
performance. Preparation of the Maintenance budget is part of
the process of preparing the Maintenance Plan.
January 2001 TAM – Asset Maintenance Strategic Planning 9
Stage 1 Define and segment assets to meet Service Delivery Strategy

Stage 1

Define and
segment
assets to meet
service
delivery
strategy

An agency asset strategy should clearly define

the assets which are to be retained and
maintained and over what period of time.
Assets could be grouped into segments
according to the service outcomes they support.
It is necessary to establish why assets are
needed and what purpose they serve. Assets
should be maintained to the level that best
contributes to achieving service strategy
objectives.
Limitations that an asset imposes on an
agency’s service delivery capability must be
recognised. These would have been identified in
the agency’s Asset Strategy. They could apply
to the type of asset used, the effect of the
limitation on asset capacity, location or access,
or the impact of heritage or environmental
restrictions. Some of these limitations could be
addressed while others might warrant disposal,
replacement or review of service strategies.
Agencies also have a wider implied charter that
reflects Government priorities such as
protection of the environment or heritage assets.
These should be taken into account when
determining Service Delivery Strategy
objectives.
The alignment of an agency’s asset portfolio
with delivery of service is a fundamental step in
the development of the Maintenance Plan.

10 TAM – Asset Maintenance Strategic Planning January 2001

Stage 2 Determine required asset performance

Stage 2

Determine
required asset
performance

The required asset performance level is Once the asset performance requirements have
determined by the service to be achieved. The been defined, a range of performance outputs is
performance level defines the asset needs and set for each attribute. The minimum value of
these needs are communicated to the this range for each attribute, which achieves the
maintenance planners. desired performance level for each asset
segment, is then adopted as an asset standard.
Assets usually have many attributes, which
contribute to the achievement of the required The standard of each parameter required for an
service delivery; eg. availability, security, asset to support the delivery of service can vary
hygiene, comfort, aesthetics, image, etc. significantly throughout a facility, or across a
portfolio.
Some attributes are more necessary than others
for the asset to perform a particular service role. For example, image may vary between a
Therefore, maintaining all attributes to their courtroom and a court waiting area. Air quality
original standard might well be an unnecessary control is higher in an operating theatre than in a
burden. hospital ward, and lighting levels are more
critical in a classroom than in corridors.
For example, a room can be structurally sound,
quiet, secure, and aesthetically pleasing. Some
rooms will require lighting maintained to very
critical standards while security or aesthetics in
the same area might not be of particular
importance.
It is necessary to define broad performance
requirements that establish which attributes
must be maintained for each asset and/or asset
segment and to what level. The standard at
which a particular asset is required to perform
should allow it to satisfy its role in agency
service delivery. Any gaps between service
delivery outputs and asset performance level
should be identified here.
The range of services supported by each asset
and how long it is required to continue in
service will provide impute to the asset
performance requirements.

January 2001 TAM – Asset Maintenance Strategic Planning 11

Stage 3 Define maintenance resources and overall strategies

Stage 3

Define
maintenance
resources
and overall
strategies

A maintenance strategy that sought to prevent For example, within a building:

all failures from occurring would be costly and
• Fix when Fail maintenance is usually
disruptive. Similarly a strategy that attended to
adopted for minor mechanical, hydraulic and
all maintenance only after failure would also be
electrical plant or when attending to
costly and even more disruptive (see Section
vandalism
2.3).
• Scheduled maintenance generally applies to
An optimal balance between preventive and machinery that requires regular servicing or
corrective maintenance is needed and will vary where a statutory requirement for
with each agency’s requirements, resources, and maintenance at prescribed intervals exists (as
circumstances. with lifts or fire control equipment)
The most appropriate strategy will depend on • Condition based maintenance may be applied
the type of asset, its condition and the specific to building fabric elements (roofs, carpets,
circumstances of the agency. These may include etc) and services and reflects the
the: maintenance applied to achieve desired
service levels
• Type of asset to be maintained
• Consequences of breakdown or non- Advances in technology may allow replacement
performance of the asset, and/or of asset elements with improved materials and
techniques leading to increased performance
• Availability of resources to execute the and service life. These should be taken into
maintenance account when planning future maintenance or
Different strategies may be adopted for various replacement.
assets or components thereof. These generally Having defined the maintenance resources and
fall under three categories: overall strategies, an agency is then able to
• Fix when fail, or breakdown maintenance decide in broad terms how the maintenance
work is to be delivered; eg. by in-house staff,
• Scheduled or routine maintenance
individual external contractors and/or
• Condition based or major periodic performance based maintenance contracts.
maintenance

12 TAM – Asset Maintenance Strategic Planning January 2001

Stage 4 Assess condition of assets and recommend maintenance

Stage 4

Assess
condition of
assets and
recommend
maintenance
action

It is necessary to identify any asset deficiencies Create asset maintenance task list
that might interfere with an agency’s service
An appropriate register of assets and
delivery. This may be achieved by conducting
maintenance work is vital to the success of the
condition surveys, or by sampling and statistical
Maintenance Plan.
analysis of a large numbers of similar assets.
Asset registers should be secure and allow easy
Each asset segment is broken into components,
retrieval of the information in a useable and
which require different maintenance
flexible format. Regular feedback about asset
approaches, skills and resources. Any important
performance in achieving desire service
inter-relationships between these components
outcomes needs to be provided to service
should be identified. For example:
planners.
• A water supply scheme will consist of a dam or
reservoir, pumping stations, treatment works, Rank the maintenance tasks
distribution system and a monitoring/control system
The maintenance tasks are then ranked in order
• A freeway will consist of bridges, culverts, of priority based on supporting service
pavement types and traffic control systems objectives. It is unlikely that funds will be
• A hospital could be segmented into 10 departments available to carry out all the desired
each consisting of part of the building, the relevant maintenance tasks and therefore the tasks that
electro-medical equipment, computers, whitegoods are most important to supporting service outputs
and vehicles, etc attached to that department
should be identified and given priority.
Continuous assets such as a road or pipeline can
be segmented on an operational or regional List the criteria that determine the importance
basis if they are too large to consider otherwise. and urgency of maintenance. These may
include:
The condition of the components should be
• Statutory requirements
assessed in the light of their service delivery
role to: • Occupational health safety and rehabilitation

• Identify any defects, deterioration and deficiencies • Social

either currently effecting asset performance or • Commercial
likely to occur over the life of the Maintenance Plan
The maintenance tasks are then evaluated and
• Identify the effect on their service delivery ability ranked against these criteria with an agency-
• Determine the maintenance or renovation required wide perspective to remove regional or
to return the asset to the state when it provides most operational unit bias.
effective service
• Estimate the cost to maintain It is recognised that the assessment of asset
condition may reveal differing maintenance
Consider the risk and cost entailed in not strategies, resources and/or contractual
rectifying the deficiencies immediately. In some approaches to those established in Stage 3 and
situations it may be cheaper to live with the hence Stages 3 and 4 must be treated as
defect or substandard asset. iterative.

January 2001 TAM – Asset Maintenance Strategic Planning 13

Stage 5 Assess Maintenance Costs

Stage 5

Assess
maintenance
costs

In addition to the asset segmentation according Long-term planning

to service output requirements undertaken in
Long-term planning should show the timetable
Stage 1, a thorough understanding of asset
for replacement, disposal or modification of
performance may require assessment of other
major assets as well as any long-term
groups of assets having similar characteristics
maintenance cycles and their funding.
such as:
• Type Planning should be as long as clear decision-
making allows. For example, if a seven-year
• Age cycle is adopted for external painting, then the
• Service life plan should exceed seven years in order to
encompass at least one full painting cycle.
• Maintenance approaches
• Demographics If a major asset is scheduled for total
refurbishment in 20 years time, say, then the
• Cost structures, etc. appropriate planning period may be 20 years.
The sum of these assessments effectively
If the service delivery method or the demand for
translates into the agency’s Maintenance Plan.
the service is likely to change greatly over 5
In assessing the maintenance costs it is years than those may limit longer-term asset
important to carefully evaluate priorities and to planning.
focus on appropriate standards along with the
Medium-term planning
most cost effective solutions. Rarely will funds
be available to allow all identified tasks to be Medium-term planning schedules impending
carried out. This will require the development of major tasks, and asset downtime, programs
a proposed funding strategy that may revisit the resources, and is the basis for budget planning.
recommended maintenance established in Stage Its shorter time scale allows it to be a more
4, and to this extent Stages 4 and 5 are iterative. focused and accurate prediction than a long-
term perspective.
Planning should be done at three levels of
detail: Short-term (annual) planning
• Long-term planning Planning is a dynamic process. Priorities
• Medium-term planning, and sometimes change at short notice. The annual
plan is the final assessment of priority and is the
• Short-term (annual) planning working maintenance plan. Annual planning is
Each plan should be integrated with the also needed to confirm funding required for the
agency’s capital investment and disposal following year.
strategy.

14 TAM – Asset Maintenance Strategic Planning January 2001

Stage 6 Implement Maintenance Plan and programs

Stage 6

Implement
Maintenance
Plan and
programs

This stage involves securing finance and

scheduling the maintenance tasks to the limit of
the available funds.
If the first year of the Maintenance Plan has not
been fully funded, then it will be necessary to
review the plan to establish where funding cuts
can be accommodated. In broad terms this can
be achieved by:
• Holding over works from the first year, thus
reducing the standard of which the asset
operates, and/or
• Reducing asset availability along with
corresponding adjustments to the Service
Delivery Strategy for the first year
The use of risk management techniques allows
analysis of the risks posed by delaying
maintenance peaks on the future viability of the
asset and the risks to the service it supports.
The Maintenance Plan is then amended
accordingly and divided into programs
according to implementation responsibilities or
reporting needs.
The maintenance programs detail the execution
of maintenance and should not be recorded in
the Maintenance Plan. They are documents
internal to an agency used to schedule asset
downtime and to control the progress of works
throughout the year.

January 2001 TAM – Asset Maintenance Strategic Planning 15

Stage 7 Disposal Plan and Implementation

Stage 7

Monitor and
review
Maintenance
Plan

As with all management processes, it is Actual performance should be compared against

necessary to monitor and review the relevance, the nominated performance indicators. This
effectiveness and efficiency of the Maintenance involves reviewing asset and service objectives
Plan in relation to achieving required service and achieved results.
delivery levels. This continuous feedback is a
most important aspect of the maintenance Questioning the maintenance strategy
planning cycle. • Did it really need to be done?
Monitoring is most effectively achieved through • Was the timing and standard appropriate?
the use of performance indicators. Guidelines on • Would another method have been more
the development of performance indicators effective?
specifically for maintenance planning are given
• Would adaptation of the asset have enabled
in Appendix B. Such measures should utilise
better performance?
best practice benchmarks to provide a basis of
assessing relative performance. • Was the maintenance strategy appropriate to
the asset?
With the benefit of hindsight and the use of
collected data, it is possible to improve the • Simply, could it have been done better?
previous decisions concerning management of
assets and their maintenance so that subsequent
maintenance expenditures will be more
effective.

16 TAM – Asset Maintenance Strategic Planning January 2001

4.2 Overview Stage 6
Stage 1 • Secure finance
• Consider agency Service Delivery Strategies • Re establish priorities within available
and service levels to be achieved funding
• Decide period of time that asset is to be • Establish programs by responsibilities or
retained in service reporting needs
• Establish the purpose served by assets • Execute works programs
• Segment assets according to which service Stage 7
outputs they support • Devise indicators of asset operation and
Stage 2 maintenance effectiveness
• Decide what asset attributes are necessary to • Consider effectiveness of maintenance on
provide required service agency service delivery
• Establish asset performance levels • Undertake continuous improvement review
of maintenance process
• Set performance indicators which achieve
desired performance level • Provide feedback to asset managers and
service planners
Stage 3
4.3 Sources of planning information
• Identify agency operational strategic and
cultural influences on resourcing Planning requires information, some of which
maintenance may have to be purpose generated but some
• Set a balance between preventative and may already be available from the:
corrective maintenance responses to optimise • Agency Service Delivery Strategy
results
• Agency Asset Strategy
Stage 4 • Agency Capital Works Plan
• Identify asset service defects • Agency Asset Disposal Plan
• Establish works to ameliorate service defects • Past maintenance expenditure and budgets
• Rank tasks by priority • Inspection reports
Stage 5 • Operation and maintenance manuals
• Establish long-term maintenance • OH&S fire security survey reports
• Establish medium-term maintenance • Facility master plans
• Establish annual maintenance • Post occupancy review reports
• Consultancies

January 2001 TAM – Asset Maintenance Strategic Planning 17

Appendix A Maintenance planning checklist
Stage 1 Define and segment assets to meet Stage 4 Assess condition of assets and
Service Delivery Strategy recommend maintenance

Identify (from the agency Asset
Identify assets whose condition is
Strategy) assets required for service known and therefore not requiring
delivery and segment assets according condition assessment
to their role
Identify assets whose condition can be

Identify assets not required for service assessed by sampling; ie. assets having
delivery for inclusion in Asset predictable operating and/or
Disposal Strategic Plan maintenance environments and highly

Identify assets requiring alteration, homogeneous in terms of
upgrade, extension, etc. for inclusion manufacture, age, use, etc
in the Capital Investment Strategic
Identify assets requiring individual
Plan condition assessments
Stage 2 Determine required asset
Carry out individual and sample
performance condition assessments

Prepare a costed Asset Maintenance

Determine the range of services Task List for the period of the
supported by each asset Maintenance Plan

Establish how long assets are required
Estimate the repeat period for
to continue delivering service maintenance tasks requiring attention

Determine performance parameters for more than once during the life of the
each asset segment Plan

Set performance levels for each
Rank the priority of the maintenance
performance parameter tasks
Stage 3 Define maintenance resources and
Determine strategic drivers for
overall strategies assessment of maintenance priorities

Identify agency cultural influences Stage 5 Prepare Maintenance Plan
which affect the manner in which
Consider and assess groups of assets
maintenance is organised with similar characteristics (eg. type,

Identify strengths of agency planning, age, service life, etc) as required
technical or trade resources and staff
Distribute maintenance works into the
resources years they are required to be done

Identify strengths of external
Conduct economic appraisal of major
maintenance planning and technical or periodic maintenance proposals to
trade resources review benefits

Decide the level of risk the agency is
Commit any capital works for assets to
prepared to accept in their service the Capital Investment Plan and cross-
delivery reference

Determine overall maintenance
Examine agency service and asset
strategies (ie. Fix when Fail, strategies and adjust maintenance
Scheduled or Condition Based priorities as required
maintenance)
Develop short, medium and long term

Decide how the maintenance work maintenance planning components
will be carried out (eg. in-house
Identify proposed funding strategy and
maintenance, individual maintenance adjust maintenance priorities as
contracts and/or broad based required
maintenance contracts)

18 TAM – Asset Maintenance Strategic Planning January 2001

Stage 6 Implement Maintenance Plan and Stage 7 Monitor and review Maintenance
programs Plan and programs

Submit Maintenance Plan to Treasury
Develop performance indicators to
or agency funding authority monitor the Maintenance Plan and
If Maintenance Plan for Year 1 has not been programs
fully funded:
Measure and evaluate the indicators

Strategically Review Maintenance

Establish if sufficient works from
Plan and asset strategies where asset
Year 1 can be deferred to
performance is not meeting service
accommodate funding reductions,
delivery needs
and/or

Review Maintenance Plan to identify

Identify reduced asset availability due
more efficient and effective ways of
to funding reductions and adjust
achieving the required asset
service strategies for Year 1
availability and standards
accordingly

Modify the Maintenance Plan for

Amend Maintenance Plan to
future years
incorporate all changes
If Maintenance Plan for Year 1 has been fully
funded:

Divide Year 1 Maintenance Plan into
programs according to implementation
responsibilities or reporting needs

Develop reporting and feedback
process to provide information for
agency annual strategic planning cycle

January 2001 TAM – Asset Maintenance Strategic Planning 19

Appendix B Measuring performance
B1 Developing performance Key factors for performance indicators
indicators • Indicators should focus on outcomes
Performance indicators are used to report the achieved rather than action taken
quality of service, efficiency, productivity or • Consistency in definitions and methods of
cost effectiveness of an agency, program or measurement is essential to ensure results
activity. can be analysed and compared over time
Performance indicators compare existing • Simplicity should be as highly valued as
performance to a standard, target or norm for reliability. Complex approaches are
management purposes. expensive and often need a high level of
expertise
Developing performance indicators
• Rarely do numbers alone tell the story.
• Define the key performance levels, outputs or Qualitative information on performance is
outcomes to be monitored for effective equally useful
planning and control. For each of these key • Indicators should be explicit in their format
performance levels, outputs or outcomes, and expressed as a percentage, a ratio or
define successful achievement; ie. the some other numerical format
“success factor” - that which happens when
things are going well. • The number of indicators used at any
management level should be limited to a
• Determine how to measure the “success maximum of, say, seven. Larger numbers of
factor”, eg. dollars expended/square metre, indicators tend to lose relevance and their
units completed per period, etc. impact is diluted
• Establish targets or benchmarks to compare • Indicators should be underpinned by an
with the achievements; eg. last period’s information system that enables the
performance, an industry average, etc. information required by the indicator to be
When used successfully, performance indicators readily available
enable managers to see how their programs or • In defining success, past experience has
activities are performing and show where action shown that input at the development stage
is needed to correct a deviation from the from those involved in using the indicators
program or activity plan. will help engender ownership and support for
However, indicators should cover the broad the application of the indicators
range of results to be achieved. They should be
balanced where appropriate with qualitative
information and be based on data that can be
collected without consuming disproportionate
human and/or financial resources.

20 TAM – Asset Maintenance Strategic Planning January 2001

B2 Application of the indicators B3 Defining the planned service
The indicators proposed should be examined outcomes
with the intention of: Many different outcomes arise from the
• Culling the indicators to a workable number maintenance of physical assets. For the purpose
that will provide the information needed by of developing an effective set of performance
managers to see that their maintenance indicators, the key outcomes can be grouped
activities are effective and efficient into five categories.
• Assigning the resulting indicators to • Physical assets are available as required to
appropriate management levels deliver service at their intended standard
It is important to remember the indicators are • Maintenance is conducted both cost- and
what they say they are - indicators. They are not time-efficiently
intended to be highly accurate measures of • Stakeholders (including corporate
performance. Instead they should be management, property managers, funding
considered quick and simple assessments to providers, customers and community) are
guide future actions. Therefore, focus on satisfied with the maintenance program
materiality rather that precision. • Investment in physical assets is protected
As far as possible, managers should use (economic lives are extended where
performance indicators to monitor the outcomes appropriate and asset values are optimised)
they are achieving. Indicators are intended, first • Exposure to risks is appropriately managed
and foremost, as a tool to help managers
• Typical performance indicators for each of
manage.
the above outcome categories are given in the
Using them for control purposes, risks misuse of following section
data to make particular managers look more
successful. When this occurs, the usefulness of
the tool is lost.
At this stage there are few valid industry
benchmarks against which the indicators can be
compared. Therefore, in the short term, it may
be necessary to use the performance of the
previous period as an interim benchmark.
The indicators need to be underpinned with
appropriate procedures including:
• Standardised definitions
• Standardised methods of measurement
• Coordination with information systems

January 2001 TAM – Asset Maintenance Strategic Planning 21

B4 Typical performance indicators
Planned service outcome 1
Physical assets are available and serviceable as required

Defined Success Performance Indicators Basis of Comparison

Assets are available within appropriate Downtime as a proportion of total operating time Target
levels of downtime and/or service (%)
disruption

No. Of breakdown call-outs on critical services Target / trend

(lifts, aircon etc) per month

Cost of major defects / area. Trend over time

Total defect costs / annual expenditure Trend over time

Assets perform at their specified No. Of client complaints of service interruption Trend over time
standard per month

Age profile of assets for example:

Age / floor area Target / trend

Age / value per category Trend over time

Assets comply with appropriate health Oh&S defects reported / period Target
and safety requirements

Reduction of accidents over time No. of accidents/injuries attributable to asset Trend over time
accidents defects per period
% workforce injured

22 TAM – Asset Maintenance Strategic Planning January 2001

Planned service outcome 2
Maintenance is conducted both cost- and time- efficiently

Defined Success Performance Indicators Basis of Comparison

Cost of maintenance is reasonable Maintenance cost to relevant occupant unit Target
($/occupant)

Maintenance cost per unit of service delivery ($ Target

per user)

Maintenance cost to facility replacement cost Target

(%)

Maintenance cost to useable physical measure Target

($/m², $/km travelled)

Maintenance cost to total operational cost (%) Target

Maintenance cost to 5 year moving average Target / trend

maintenance cost (%)

Majority of maintenance is Cost of defects arising in key categories eg: Target / trend
programmed rather than emergency statutory, structural, waterproofing, key plant
items

Ratio of emergency maintenance cost to total Target / trend

maintenance cost (emergency maintenance
index)

Ratio of breakdown call-outs per period to Trend over time

average call-out rate (%).

Response time is appropriate Average time taken to respond to work requests Target / trend

Number of incomplete work orders at period end Trend over time

to number of work orders received during period
(%).

January 2001 TAM – Asset Maintenance Strategic Planning 23

Planned service outcome 3
Stakeholders are satisfied with the maintenance program

Defined Success Performance Indicators Basis of Comparison

Corporate, property managers with % clients surveyed annually (for key Target / trend
Treasury, clients and community stakeholder categories) who express
perceive maintenance to be: satisfaction regarding:
• Cost efficient • Effectiveness
• Timely • Timeliness
• Of an appropriate standard • Condition of assets (stakeholder sentiment
index)

Maintenance programs are completed No. Of complaints of unacceptable standards Trend over time
within budget allocations per period per $1000K spent

Ratio of actual maintenance expenditure to Target / trend

budgeted expenditure (%)

Planned service outcome 4

Exposure to risks is appropriately managed

Defined Success Performance Indicators Basis of Comparison

Risks are identified and contingency Risk management Target
plans are in place plan being implemented

Effective management practices are in % of management checklist items being Target

place implemented

24 TAM – Asset Maintenance Strategic Planning January 2001

Appendix C Example of the development of a
Maintenance Plan
By way of example, the development of a Service outcomes:
Maintenance Plan is presented in an abbreviated • Meet the growing demand for tertiary
form for the hypothetical Tarrawarra College of education in the Casey Valley
Advanced Education. The development of the
Plan follows the seven stages of the • Produce sufficient graduates to meet regional
Maintenance Planning Process. The costs industry need for highly trained specialists in
generated in this plan would be incorporated in robotics, mining, mechanical and electrical
the overarching agency Maintenance Plan. engineering
Service outputs:
Scenario:
• Increase the number of student places in
Tarrawarra College of Advanced Education is
robotics, mining, mechanical and electrical
located in the Casey Valley and occupies the
engineering by 16% per year for the next 5
site of the former Tarrawarra District Hospital.
years
The College has faculties of Science,
Engineering, Agriculture, Metallurgy and Boot • Maintain number of placements and teaching
making. hours in the remaining courses

Enrolments have grown steadily over the last 10 • Set-up the “Ongoing Education in Industry
years in line with population growth in the Scheme” to increase the skills of workers
valley. The opening of two new mines and the throughout their working lives. The scheme
establishment of a major manufacturing will offer 50 places per year for the next 3
complex within the College’s catchment have years
increased demand for mining, mechanical and
electrical engineering courses and robotics.
Outcomes from Service Delivery Strategy
The College aims to meet the demands for
education within the valley and the demands of
area industries for highly skilled workers able to
adapt to rapidly changing technology and
techniques.

January 2001 TAM – Asset Maintenance Strategic Planning 25

C1 Definition and segmentation of
assets to meet Service Delivery
Strategy
Asset Portfolio:
The campus consists of six major buildings:
Buckley Block, Gaynor House, O’Farrell
Library, O’Toole Engineering Complex, Bernie
Parker Union Building and the Administration
Building.
Asset Strategy:
The college plans to establish an annexe in
nearby Abbots Glen to conduct some courses
for the mining industry and another in Roscrea
for process engineering.
No major rebuilding to the main campus is
anticipated although major replacement of air-
conditioning equipment to two blocks and fire
protection to O’Farrell Library are planned
within 2 years.

26 TAM – Asset Maintenance Strategic Planning January 2001

C2 Determination of required asset C3 Defining maintenance resources
performance and overall strategies
Only buildings and CNC workshop training The College developed a maintenance policy
equipment are considered in this example. two years ago regarding the level of
maintenance response required and the
The College executive and senior faculty staff necessary resource levels to achieve them.
established performance standards for each asset
segment. It was decided that an emergency maintenance
response of one hour was required for
Buildings mechanical, electrical and hydraulic services,
Performance required from the College’s where breakdowns threaten the ability of critical
buildings was defined by establishing five areas to function.
parameters or qualities that must be achieved for The College’s staff level is adequate to attend to
these assets to provide the required service. an estimated 90% of emergency repairs as well
These are: as 30% of programmed maintenance. The
• Image remainder of the work is performed by local
• Ease of cleaning contractors.

• Slip resistance There has been a deliberate policy of cultivating

knowledge of the campus mechanical and
• Indoor air quality
electrical services among the private sector to
• Capacity for teaching increased number of increase the range of works they can undertake,
students and this will continue.
For each parameter, three acceptable levels were Specialist technicians on contract service CNC
defined that would equate to the highest and and robotic equipment. College staff have
lowest required standards in particular undertaken training by the equipment
throughout the facility. manufacturers to provide running repairs and
As the importance of each parameter varied adjustments, and so reduce down time that
with the activities accommodated from area to would otherwise disrupt training classes.
area, a matrix of generic areas and required
values for each parameter was developed.
Maintenance and upgrading works identified in
the maintenance plan are needed solely to retain
these standards.
CNC workshop training equipment
A majority of the computer numerically
controlled and robotic equipment installed in
workrooms has been selected to equip students
with the necessary skills to operate similar
equipment employed in the local mines and
manufacturing enterprises.
Largely, performance parameters for such
equipment are set with the decision to acquire
particular equipment.
Levels of service supplied are those
recommended by manufacturers, and hence no
performance parameters have been considered.

January 2001 TAM – Asset Maintenance Strategic Planning 27

C4 Condition assessment and C5 Preparation of the Maintenance
recommended maintenance Plan
The asset portfolio has been reviewed to The condition assessment of the College assets
determine its present condition and estimate has identified significant maintenance works in
what maintenance action and costs will be years 1 and 2 of the ten-year plan. This cannot
required over a designated period. be accommodated within the College’s
operating budget. A risk management analysis
For the purpose of this review, assets were has identified the following two groups of
divided into two groups: works that can be redefined to accommodate
• Those whose age and condition and capacity likely available funding.
are known and very similar, such as vehicles, • Those which will have only a secondary
robotic equipment, classroom and office impact on service delivery
furniture, and
• Those that can be delayed with no impact on
• Those that vary in these respects, such as the service delivery but will involve additional
building stock cost in future years because of likely
Condition assessment was necessary to establish accelerated deterioration and damage
maintenance requirements of this second group. An optimal mix of jobs from both categories has
Building assets been withdrawn from year 1 and 2 and
distributed over years 3 to 6 of the Plan.
A condition assessment of each building and
structure on the site was carried out to assess
maintenance works that will be required over
the next 10 years.
These individual reports are not included in this
example.
CNC and robotic equipment
The age and known condition of each item of
equipment meant that condition surveys were
not required. Maintenance to manufacturers’
recommendations and allowance for items of
work not covered by contract but from historic
data, considered likely to fail, is included in the
maintenance plan.

28 TAM – Asset Maintenance Strategic Planning January 2001

C6 Implementation of the C7 Monitoring of the Maintenance
Maintenance Plan Plan
The previous year’s maintenance works were All significant maintenance works carried out in
programmed to coincide with close-down of the previous year have been reviewed to decide
particular facilities, eg. term holidays and some whether the maintenance action was warranted
out-of-hours work. in terms of its impact on the service delivered
by the College or its impact on ensuring the
Urgent minor works backlogs were reduced by asset remained serviceable in the future.
60% with the introduction of charges for all
services being made to the cost centre initiating The review found:
the request. Most requests were for minor
• The use of continuous epoxy materials for
hydraulics and electrical calls.
floor and wall surfaces in food preparation
areas would have given similar performance
to the ceramic tiles used, as well as being
easier to clean and cheaper
• Replacement of roadway lighting carried out
by contractors of the local council has proved
highly cost effective
• Use of a dado to a height of 1500mm in all
corridors and classrooms will now become a
college policy as it allows economic
repainting of soiled or damaged surfaces of
lower wall areas
Performance indicators
A range of performance indicators has been
established to measure the effectiveness of the
maintenance work. These include:
• Percentage maintenance cost to replacement
value
• Percentage maintenance backlog cost to
replacement cost
• Maintenance cost per unit of service
delivered from the asset (eg. maintenance
cost per hour of teaching)
Results for each indicator over the last 5 years
form part of the College’s maintenance planning
report.

January 2001 TAM – Asset Maintenance Strategic Planning 29

C8 Typical agency roll-up of
maintenance planning
The maintenance plan for each facility forms
part of the agency’s overall maintenance plan
and is rolled up to form a regional, divisional or
area maintenance plan. An overarching agency-
wide maintenance plan is shown
diagrammatically below.
C9 Typical agency roll-up of
maintenance planning

Maintenance Plan

Overarching Plan • segmentation of agency assets to

meet service delivery strategy
• condition survey of assets in each
region
• 10 year maintenance plan for all
agency assets

Region Plan • segmentation of regional assets to

meet service delivery strategy
• condition survey of each regional
asset
• 10 year maintenance plan for all
regional assets

Facility Plan • asset performance required to meet

service delivery strategy
• maintenance resources and strategies
• facility condition survey
• facility 10 year maintenance plan

30 TAM – Asset Maintenance Strategic Planning January 2001

 Asset
Disposal
Strategic planning
Asset disposal: strategic planning

January 2001
DPWS Report Number 01048

NSW Department of Public Works and Services Cataloguing-in-Publication data

New South Wales. Government Asset Management Committee.

Asset disposal: strategic planning.

ISBN 0 7347 4104 9 (set)

ISBN 0 7347 4140 5

1. Asset management – New South Wales. 2. Capital investment. 3. Public administration – New South Wales
I. Title. (Series : TAM)

352.50944

 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any
process without written permission from the NSW Government Asset Management Committee. Requests and inquiries
concerning reproduction and rights should be addressed to:

Secretariat
Government Asset Management Committee
Level 23 McKell Building
2-24 Rawson Place
SYDNEY NSW 2000
Website www.gamc.nsw.gov.au
E:mail gamc@dpws.nsw.gov.au

Set consists of :

ISBN 0 7347 4122 7 Asset strategy

ISBN 0 7347 4194 4 Office accommodation strategy
ISBN 0 7347 4128 6 Capital investment : strategic planning
ISBN 0 7347 4134 0 Asset maintenance : strategic planning
ISBN 0 7347 4140 5 Asset disposal : strategic planning
ISBN 0 7347 4146 4 Sustainable development guideline
ISBN 0 7347 4152 9 Heritage asset management guideline
ISBN 0 7347 4158 8 Demand management guideline
ISBN 0 7347 4164 2 Life cycle costing guideline
ISBN 0 7347 4170 7 Value management guideline
ISBN 0 7347 4176 6 Risk management guideline
ISBN 0 7347 4182 0 Post implementation review guideline
ISBN 0 7347 4188 X Asset information guideline
Contents

1 INTRODUCTION ____________________________________________________2
1.1 Background .................................................................................................................................................2

1.2 The Essence of Disposal Planning .............................................................................................................3

1.3 Benefits of Disposal Planning ....................................................................................................................4

2 AGENCY ROLES AND RESPONSIBILITIES ______________________________6

2.1 Service Agencies..........................................................................................................................................6

2.2 NSW Treasury ............................................................................................................................................6

2.3 Department of Public Works and Services...............................................................................................6

3 THE ASSET DISPOSAL PLANNING PROCESS ___________________________7

3.1 The Process..................................................................................................................................................7

Stage 1 Assets Surplus to Service Delivery ......................................................................................................8

Stage 2 Benefits of Disposal vs. Retention........................................................................................................9

Stage 3 Value Maximisation............................................................................................................................10

Stage 4 Disposal Mechanism...........................................................................................................................12

Stage 5 Prepare Capital Investment Plan ......................................................................................................13

APPENDIX A EXAMPLE DEVELOPMENT OF AN

AGENCY ASSET DISPOSAL PLAN ___________________________14

APPENDIX B DISPOSAL OF REAL PROPERTY ASSETS _____________________19

APPENDIX C DISPOSAL BY PRIVATE TREATY_____________________________22

January 2001 TAM – Asset Disposal Strategic Planning 1

1 Introduction
1.1 Background
Assets are of value to an agency only if they While the guideline is generic in nature and
continue to cost effectively support the delivery relates to the full range of government assets, it
of the agency’s services. Once they no longer recognises that real property assets generally
play this role, their worth lies only in the have high values and their disposal often
benefits to be gained from their disposal. involves more complex planning and financial
issues.
Asset disposal is thus the final stage in the asset
life cycle. Its proper planning and management The guideline includes Appendices, which
is therefore an integral part of the TAM provide more detailed guidance on the
strategic process as illustrated below. application of the generic process to the disposal
of real property.
This document provides guidelines to agencies
on the strategic processes to be adopted in
planning disposal of their surplus assets.

Direction Monitoring,
Community needs and expectations
reporting, and
modification
Legislation
Government policies, priorities and strategies
Fiscal strategy

1 2 3
Inter-agency Agency corporate CEO performance
strategic planning plan agreement

Service and
resource 4 5 6
planning Service delivery Budget proposals Service and
strategy and allocations resource allocation
agreement
Total Asset
Management
Strategy
Implementation • Asset Strategy
planning 7 8 9 • Office Accommodation
Inter-agency plans Business plans TAM strategy Strategic Plan
HR plans • Capital Investment
IT plans Strategic Plan
Procurement plans • Asset Maintenance
Strategic Plan
Social responsibility
• Asset Disposal
plans Strategic Plan

Service delivery

Figure 1 Total Asset Management

2 TAM – Asset Disposal Strategic Planning January 2001

 1.2 The Essence of Disposal Therefore, the disposal of an asset identified as
Planning surplus is not a foregone conclusion. The net
disposal benefits (disposal value less disposal
Asset Disposal Strategic Planning allows costs) may be negative for some assets
agencies to cull redundant assets that might (especially fixed or purpose-built equipment
otherwise reduce efficient and effective service such as buildings, pipelines and process control
delivery. equipment) which will discourage their
Asset Disposal planning involves two separate premature disposal.
and distinct elements: the detailed assessment of The disposal value will also be dependent on the
assets identified as Surplus by the Asset market for the asset. For example, the market
Strategy followed by an analysis of the physical for two-year old cars is much larger than that for
Disposal of the assets. second hand office furniture.
An asset is identified as SURPLUS when one of Disposal benefits will not always be dictated by
the following occurs: monetary returns. Disposal relieves an agency
• The asset is not required for the delivery of of responsibility for an asset’s supervision, day-
services, either currently, or over the longer to-day management, maintenance, insurance,
planning time frame security, cleaning, etc along with housing or
storage throughout the asset’s life.
• The asset becomes uneconomical to maintain
and/or operate Under-utilised assets may be of significant
• The asset is not suitable for service delivery value to another agency. In assessing the
benefits of disposal, the advantages from the
For example, changes in service delivery whole of the government perspective must be
methods either due to advances in technology or considered.
social expectations can cause assets to become
surplus. This can also occur as a result of Assets identified as surplus to core service
changing demographic patterns or the delivery requirements, may need to be retained
economies of scale made possible by new for other reasons such as heritage, open space or
service capacity. other social environmental considerations,
which agencies may have as secondary service
Once an asset is identified as surplus, its obligations.
physical DISPOSAL will depend on one or
more of the following:
• Whether there are net disposal benefits,
either in financial or other terms
• Whether there are secondary service
obligations associated with the asset which
dictate its retention
• Whether a disposal can be carried out
without adverse impacts on the physical
environment

January 2001 TAM – Asset Disposal Strategic Planning 3

1.3 Benefits of Disposal Planning In the disposal of significant assets, agencies
should also be aware that there may be broader
A strategic approach to the management of community concerns other than those related to
Government assets and the disposal of those no service delivery, particularly when disposal
longer required will have impacts on: involves re-use or redevelopment of property
• Whole of Government assets.
• Government Agencies Ultimately, it will be of benefit to agencies to
• Community identify any such concerns and to accommodate
them where possible since this can avoid
• Environment protracted community confrontation and
Whole of Government consequent delays in the disposal of the asset.
A managed disposal strategy will assure Community
Government that its asset investments are The community will benefit from the increased
effective and that the assets are currently efficiency in overall service delivery resulting
relevant to the service it requires agencies to from disposal of assets that have become
provide, thus maximising the return on ineffective.
government investment.
Again, the disposal of assets may cause anxiety
Constant review of asset relevance offers among communities that feel their services will
Government the economies and benefits that be compromised by such disposal.
flow from new cross agency asset sharing
opportunities that can replace existing assets. To minimise this understandable concern,
agencies should break the perceived nexus
Agencies between the services they provide and the assets
Disposal planning offers agencies a means of that are used to deliver them.
disposal of unnecessary or non-performing
assets timed to minimise disruption to their When a community understands that the service
business and maximise returns by selecting it requires is, for example, education or policing
and not a school or police station, they are less
appropriate times in their market cycle to
likely to resent disposal of assets.
dispose.
Disposal may have impacts on agency clients It is the responsibility of the agency to design an
and agency staff. An agency’s clients may feel effective service delivery model using the
they will be adversely affected by disposal in portfolio of assets proposed to demonstrate to
that some aspect of service may be reduced or the community:
made more difficult. • That the change will not affect them
Staff may see disposal of a facility in which adversely, or
they work as threatening, especially if it • How special provisions will be implemented
requires them to relocate to distant premises or to minimise impacts
if it significantly alters or ends their
employment.
In both cases, an agency should consult the
affected groups, explaining the organisation’s
role, the reasons for the disposal and advise of
any compensatory measures it plans to
introduce to avoid or reduce the impacts.

4 TAM – Asset Disposal Strategic Planning January 2001

Agencies need to be sensitive to the symbolic
importance that major assets play in the
community.

The presence of a hospital or police station in a

town provides a sense of security quite apart
from the service. The symbol is in part the
service.

Agencies must consider the cultural significance

of assets such as courthouses, schools and police
stations to a community when planning their
disposal. Failure to address such concerns may
well result in community confrontation and
delays in the disposal process.

Environment
The production, maintenance and disposal of
assets can each have environmental impacts.
Hence, there are significant environmental
advantages in minimising both the number of
assets used and the density of that usage.
If asset disposal is strategically considered, is
not premature and considers further use or
recycling by future owners, then it is the final
stage of good environmental stewardship of an
agency’s assets.

January 2001 TAM – Asset Disposal Strategic Planning 5

2 Agency Roles and Responsibilities
2.1 Service Agencies All individuals involved in providing expert
advice on property disposals, including
All agencies are required to prepare annual consultants, must declare any conflicts of
Disposal Plans as part of their Total Asset interest.
Management Strategic planning. This reflects
the need to integrate disposal planning into an Such conflicts would not necessarily exclude
agency's annual strategic asset management the individual from providing advice, but an
planning and budgeting cycle. agency should be made aware of these conflicts
and information must be maintained
General Asset Disposals confidentially at all times.
Most agencies have the skills to manage the 2.2 NSW Treasury
disposal of general assets. The actual disposal
process, which may include valuation, Treasury will review existing funding and
auctioneering or agency roles can be outsourced management policies to ensure they support the
to specialists. objectives of best practice in asset planning.
Treasury will also:
Agencies should carefully consider the
advantages of engaging expertise if their • Approve all high value asset disposals for
experience in disposal activities is infrequent or budget sector agencies within the annual
not core business. budget process
Real Property Disposals • Approve all disposals in which the assets are
to be offered for sale at less than their market
All properties with a highest and best use value value (refer to NSW Treasury
in excess of $3M, including properties involving Directions/Guidelines on Asset Disposal)
joint venture arrangements and leasehold
disposals are to be referred to DPWS for the 2.3 Department of Public Works and
management of their disposal. Agencies are not Services
to dispose of smaller parts of such properties
The Department of Public Works and Services
prior to referring the disposal to DPWS.
(DPWS) is responsible for review of all agency
DPWS is to be advised of all proposed disposals asset strategic plans (including those related to
of property with a highest and best value of disposal) and for the provision of advice to
between $1M and $3M to ensure they do not Treasury as part of the budget process.
have a strategic value or are capable of
These reviews aim to benchmark agency asset
consolidation with other property.
strategies to encourage increased strategic asset
Agencies are also required to consult with performance and cross agency planning.
DPWS at the earliest possible point in the
DPWS is also responsible for the centralised
following circumstances:
coordination and management of those asset
• Where the property is capable of disposals involving real property over $3
consolidation with other Government million. This includes assistance to agencies in
properties the preparation of their property disposal plans.
• Where land exchanges, development
agreements, provision of facilities are
proposed
• Where accommodation (leased or freehold)
of sufficient value to be financially
significant to an agency becomes vacant and
available for disposal

6 TAM – Asset Disposal Strategic Planning January 2001

3 The Asset Disposal Planning Process
Stage 1 Stage 2 Stage 3 Stage 4 Stage 5

Assets Benefits of Value Disposal Disposal Plan and

surplus to disposal vs. maximisation mechanism implementation
service retention
delivery

3.1 The Process Appendix A provides an example of the

development of a Disposal Plan to guide
Asset Disposal Planning is a structured and agencies on the application of the planning
systematic process aimed at ensuring an process.
agency's asset portfolio comprises only those
assets that effectively meet its service delivery Agency Disposal Plans should cover the same
requirements at the lowest long- term cost to period of time as the agency’s Capital
Government. Investment and Asset Maintenance strategic
plans, ie. a rolling detailed annual plan, a three-
Disposal Planning links, via the Asset Strategy, year predictive plan, and a longer-term
with service delivery in the following five projection. This will allow:
stages as shown in the diagram above and
described in the following sections. • The development of cross agency
perspectives on the use and redistribution of
The process described here is generic and assets that may become available
covers the disposal of all types of assets. The
• Sufficient time for the planning and
additional aspects to be considered for the
implementation of asset changes
disposal of real property at each stage of the
process are detailed in Appendix B. • Ongoing evaluation of asset sales against
current and future market trends to achieve
Stage 1 the best long term financial performance
Assess in detail those assets identified by the
Asset Strategy as surplus to service delivery While the accuracy of a plan reduces with time,
requirements. the period of the long-term projection should be
chosen to include much of an agency’s asset
Stage 2 service life expectancy and its longest service
Assess the advantages to Government, agency life planning cycle. In the case of real property
and the community in divesting assets. assets, this could be up to 20 years.
Stage 3 As indicated previously, the process described
Identify opportunities for increasing asset value here is generic and covers the disposal of all
before their disposal. types of assets. The additional aspects to be
considered for the disposal of real property at
Stage 4
Identify disposal requirements including probity each stage of the process are detailed in
considerations. Appendix B.

Stage 5
Prepare and implement the Disposal Plan and
monitor performance.

January 2001 TAM – Asset Disposal Strategic Planning 7

Stage 1 Assets Surplus to Service Delivery

Stage 1

Assets
surplus to
service
delivery

The first stage in the disposal process is to • The potential savings available from
assess in detail those assets identified by the replacement of an asset must be weighed
Asset Strategy as surplus to service delivery against the cost of that replacement, the
needs both at the present time and over the estimated economic service life and the
longer planning time frame. market value of the asset
Assets are of value to an agency only in so Some assets are perceived to be inferior in
much as they continue to cost effectively certain aspects (particularly when compared to
support the delivery of the agency’s service. more recently acquired assets) yet may still
Once they no longer play this role, their worth provide acceptable service. Care must therefore
lies only in their disposal value. be taken to avoid replacing assets on superficial
grounds such as improved but unnecessary
An asset's continuing acceptability in service performance or higher prestige.
must be measured against its disposal and
procurement of alternative assets to provide the This can be challenging especially when
services specified in the agency Service technical experts plead the case for disposal and
Delivery Strategy. replacement. Sometimes, disposal may be more
advantageous to the operatives than the
The identification of surplus assets should agency’s clients.
include the following considerations:
If an asset is not presently used, the likelihood
• Assets may no longer support an agency’s of it being required within the foreseeable future
service objectives either because of changes should be considered. Changing demographic
in the type of service or its method of trends or service demands may see a renewed
delivery call for the asset in its present or altered state, or
• Assets can have varying service life in a new location.
expectancies. Some are required to continue
in service indefinitely with adequate Electromedical imaging equipment considered no
maintenance, eg. civil structures such as longer able to service demand in a major teaching
mass gravity dams or sewerage systems hospital may provide satisfactory service in a
smaller base hospital for many years.
• Assets such as buildings can often be
economically maintained and kept in service It is also noted that agencies may have implied
for prolonged periods, however some or secondary service obligations in addition to
become uneconomic or cannot be their core service delivery responsibilities.
economically adapted to changed operating These could include heritage and other
environments or service requirements environmental aspects related to an asset and
• Some assets may still be able to perform as may affect its disposal. The Heritage Asset
originally planned but have been made Management and Sustainable Development
redundant because of advances in technology guidelines contained in the TAM Manual should
or changed work practices be consulted in these circumstances.

8 TAM – Asset Disposal Strategic Planning January 2001

Stage 2 Benefits of Disposal vs. Retention

Stage 2

Benefits of
disposal
vs
retention

Not all assets identified as surplus will have

great residual value and in some cases this will
be negative when the disposal costs are
included. In such circumstances, the advantages
of disposing must be weighed against the cost of
continued ownership.
Many assets require significant resources for
their maintenance (repairs, servicing, etc) and
operation (staff, energy, cleaning, security costs,
etc.).
Other costs that stem from ownership include
opportunity costs on the residual value of the
asset and the cost of insurance. Property assets
may also incur various local government rates
and charges as well as those levied by other
rating authorities.
Therefore, retaining such assets in service when
they no longer effectively support service
delivery will expend resources that could
otherwise be used elsewhere and could
effectively block the acquisition of more
suitable and economic assets.

If the cost of removing redundant pipelines or

decommissioned railway tracks is greater than its
scrap value and if there is no significant risk, or
impact on re-use options, in leaving the asset in
its present state, then disposal should be decided
against.
If disposal released the land for sale or further
use, then this might well make disposal of the
assets worthwhile.
The failure to dispose of under-capacity desktop
computers restricts the organisation from
acquiring more effective technology. The real
need for greater capacity should however be
closely checked prior to decisions being made.

January 2001 TAM – Asset Disposal Strategic Planning 9

Stage 3 Value Maximisation

Stage 3

Value
maximisation

Maximisation of net benefits to both An understanding of the property cycle allows

Government and an agency requires a whole-of- maximum advantage to be made of rising
organisation and cross-agency view of the assets property markets and disposal may be delayed
to be disposed of over the period under to coincide with such cycles if a longer term
consideration. perspective is taken. Care however is required
in attempting to speculate on market trends and
The disposal value of an asset is its sale value expert advice should be sought if timing is
and the savings achieved in the cost of service important.
delivery or other benefits.
The perspective can also allow judgements to be
The sale value is dependent on the market for made on the levels of maintenance applied to
the asset and the perceived advantages it offers the asset and the best condition in which to
the buyers in that market. present it for disposal.
An asset can have a range of values to potential
buyers, with each valuing different aspects of If the disused police station is to be sold along
the asset. with adjoining blocks of government owned land
(for re-development purposes), then the state of
the building is not going to affect the value
A disused police station may be valued as a
realised.
domestic residence, a council park or a classroom
block by an adjoining school. If the station is to be sold separately or disposed
It may also be most highly valued as part of a site of for re-use (eg. as a classroom), then significant
work three years prior to sale to preserve the
for a major office development, but this might be
building's fabric might prove worthwhile.
dependent on the acquisition of adjoining sites.

A personal computer may have one value as a Repairs to computers may not be warranted if
trade-in, a second value if sold along with 1000 they are trade-ins on new models
others from an agency to a reseller and yet However, if they are to be sold to private buyers,
another price if marketed individually to students. work to repair and present them well could
realise a higher net value.
The wider and longer term the perspective that
can be taken, the greater the options for
maximising the value by most appropriately
The buyers at weekday car auctions are mainly
marketing surplus assets. motor dealers. In an effort to increase their
return, some agencies are selling their used
vehicles directly to the private used car buyer at
Saturday auctions.

10 TAM – Asset Disposal Strategic Planning January 2001

 Several transport authorities have increased their Disposal of assets from one agency to another
returns from the disposal of buses retired from may maximise the benefit to government. Such
their fleets by considering non-traditional disposals are usually transacted at market price
disposal options. by means of private treaty (see Section 3.6).
These have included establishing agency
agreements to sell the vehicles interstate and
overseas where they could be privately registered
without modification.

Part of value maximisation is seeking to

cultivate a market for disposed assets, especially
if there are many assets with short service lives
or valuable items to be disposed of. Obviously
the cost of alternative disposal processes must
be weighed against the marginal increase in
price received.
Disposal need not generate a financial outcome
to be valuable. Often opportunities will arise
including:
• Swapping one asset or site for another
• Joint disposal with owners of adjoining
properties
• Contra-deals involving construction of a
facility for an agency within a development
in payment for the land on which it is built
Other assets may have no value but disposal can
provide benefits such as avoidance of
maintenance or operating costs, staffing or
insurance costs.
Agency’s implied charters include consideration
of heritage and environmental matters imposed
by legislation. Beyond this, agencies have the
general interest of the community as an implied
charter.
This may lead to conflicts on disposal options
especially where a large part of the community
may want one disposal action while the agency's
best financial and operational interests would be
better served by other disposal means.
In such situations, unless directed otherwise an
agency should pursue that course of disposal
action that maximises benefit to itself and
government. Value management studies can be
used to resolve disputes with community
groups.

January 2001 TAM – Asset Disposal Strategic Planning 11

Stage 4 Disposal Mechanism

Stage 4

Disposal
mechanism

The disposal mechanism must be carefully

chosen to ensure that the disposal of assets is
carried out to:
• Satisfy probity considerations
• Provide adequate and equal opportunity to
purchase, including clear stipulation of the
basis on which decisions will be made
• Achieve the best return to government
• Avoid any adverse environmental impacts
Disposal will generally be by auction, tender or
private treaty. Any other proposed methods of
disposal should be referred to the Department of
Public Works and Services.
Auction is a common method of disposal
because it is usually more straightforward and
the process is open to public scrutiny. In some
circumstances the environment of an auction
may generate a higher price.
Tender is preferred where more control over the
actual disposal of the asset is required or where
the credentials of the buyer need to be assessed
in detail.
Private Treaty is a less common form of
disposal. It is generally used for the disposal of
real property although it may be applicable for
other types of assets in certain special
circumstances where there is likely to be only
one purchaser. Appendix C provides further
details on disposal by Private Treaty.
Whatever the disposal mechanism, it may be
important for an agency to be satisfied as to the
credentials of the proposed purchaser.
Department of Fair Trading searches may be
appropriate.

12 TAM – Asset Disposal Strategic Planning January 2001

Stage 5 Prepare Capital Investment Plan

Stage 5

Disposal Plan
and
Implementation

Disposal plans should cover the same period of The one-year plan should contain asset disposal
time as the agency’s Capital Investment and proposals that can be achieved. That is:
Asset Maintenance strategic plans, ie. A rolling
• They can be removed from service and if
detailed annual plan, a three-year plan in
replacement assets are involved, these will
moderate detail and a longer-term projection.
become available so that service delivery is
Although Treasury has placed financial limits not jeopardised
on the disposals that require reporting, an • Pre-disposal approval and planning
agency should implement a culture of regularly (including protracted actions such as re-
analysing all parts of its asset holdings to zoning) have or can be obtained in time for
identify those no longer necessary to support disposal to be completed within the year
delivery of services.
• The state of the market being appropriate to
This ensures agencies remain focussed on achieve a satisfactory outcome
service delivery rather than the assets.
While annual plans should be considered to be
Linkages should be made between the capital binding on an agency to achieve the actions
investment and disposal plans by listing assets proposed, the longer-term disposal plans will
for disposal that have service lives within the always have some inherent flexibility to cater
planning time frame. for changes in operating environment.
These linkages are particularly important where
the proceeds of asset disposals are being relied
upon to fund capital works. In such situations, it
is essential to allow an adequate time and
funding buffer between the disposal and
acquisition events.
While disposal plans will not contain every
asset under an agency’s control, significant
items should be listed in appropriate detail on a
long-term basis to ensure agencies are properly
prepared for disposals and replacements.

January 2001 TAM – Asset Disposal Strategic Planning 13

Appendix A Example Development of an Agency Asset
Disposal Plan
By way of example, the development of an Asset Stage 1 Assets Surplus to Service Delivery
Disposal Plan is presented in an abbreviated
Property
form for the hypothetical Tarrawarra College of
Advanced Education. The development of the Gaynor House comprising the old hospital
Plan follows the five stages of the Asset refectory and engineering laboratories is
Disposal Planning Process. The costs generated currently used to conduct bridging courses for
in this plan would be incorporated in the mature aged students from industry. These
overarching agency Asset Disposal Plan. courses are to be accommodated at the new
Abbots Glen and Roscrea annexes making the
Tarrawarra College of Advanced Education is
Gaynor House property surplus to needs.
located in the Casey Valley and occupies the
site of the former Tarrawarra District Hospital. Below-ground Mining Training Facilities
The College has facilities of Science,
Engineering, Agriculture, Metallurgy and The opening of the new mines in the area and
the establishment of the College’s new Mining
Bootmaking.
Engineering Facility also at the Abbots Glen
Enrolments have grown steadily over the last 10 annex will render the present below-ground
years in line with population growth in the mining training facilities at Abbots Bore No 3
valley. The opening of two new mines and the surplus to requirements.
establishment of a major manufacturing
Industrial Equipment
complex within the College’s catchment have
increased demand for mining, mechanical and In keeping with the College’s policy of ensuring
electrical engineering courses and robotics. that industrial training equipment is similar to
that currently used in local industry, the
The campus consists of six major buildings:
following equipment has become outmoded.
Buckley Block, Gaynor House, O’Farrell
Library, O’Tool Engineering Complex, Bernie • Plasma Cutting Robotics Equipment
Parker Union Building and the Administration • 4 Abbot A3700 Turret Lathes
Building.
• 20 Miller Centreless Grinders
The College plans to establish an annexe in
• 10 OCSO Spectrum Analysers
nearby Abbots Glen to conduct some courses
for the mining industry and another in Roscrea • 7 Fox Crucible Furnaces
for process engineering. The Abbots Glen • 4 Angelarc 600A Oil Cooled Arc Welders
Annex replaces the present below-ground
• 1 Brindrop 10t Hydraulically Operated Drop
mining training facility at the Abbots Bore No
Hammer
3.
No major rebuilding to the main campus is
anticipated although major replacement of air-
conditioning equipment to two blocks and fire
protection to O’Farrell Library are planned
within two years.

14 TAM – Asset Disposal Strategic Planning January 2001

Computer Equipment Stage 3 Value Maximisation
The College’s ongoing program of computer Property
equipment upgrading results in disposal of PCs
at three to five year intervals on a rolling basis. Gaynor College is located on a separate site
from the main campus and includes a remnant
Based on currently predicted impacts of open sclerophyll eucalypt forest, which
technological change on courses offered and the occupies 20% of the land area and connects to
rate of decline in the second hand value of the the forested areas of Meleray Park and Meleray
computers, it is expected that an average of 130 Creek.
PCs will be disposed of annually.
The buildings were constructed between 1950
Vehicles and 1958 and, while in sound condition, are not
suitable for commercial or residential reuse. The
The College’s fleet of vehicles, trucks and
highest and best use of the site is redevelopment
tractors is also upgraded on an ongoing basis
for residential use.
resulting in the following disposal program.
Vehicle Disposal Consultations with the Tarrawarra community
Every were undertaken which identified the following
Type Qty
issues regarding the disposal of the site

Cars 12 2 yrs
• The community accepted the transfer of
mining engineering bridging courses to the
Utilities 3 2 yrs new Abbots Glen annex since it was
Trucks 4 5 yrs relatively close to the Main Campus
Tractors 5 7 yrs • However, there was concern regarding the
movement of process engineering bridging
courses to the new Roscrea annex because
this is some 8 km from Tarrawarra
Stage 2 Benefits of Disposal vs. Retention
• The community also considered the remnant
Below-ground Mining Training Facilities forest to be visually and environmentally
The cost of salvaging these facilities (teaching significant and was greatly concerned that it
spaces, spur railway lines, equipment bays, etc) would be destroyed
would be uneconomic. The College assessed these concerns and the
community accepted the following proposals.
The College could make occasional use of the
facility and its retention would provide a • Alteration of bus timetables to coincide with
valuable training facility for the local mining student course schedules at the Main Campus
industry (over and above the new facilities and Roscrea
provided by the College at Abbots Glen). • Rezoning, as Bushland Conservation, that
part of the site containing the remnant forest
Changes to bus timetables will not incur any
additional costs to the Government. The
retention of the remnant forest will reduce the
value of the site by 10%. This has been offset by
arranging for Council to increase the allowable
site coverage for redevelopment by 5%.
By accommodating these community concerns,
the status of the College in the region has been
enhanced. This will lead to more effective
dealings with the community in the future.

January 2001 TAM – Asset Disposal Strategic Planning 15

Stage 4 Disposal Mechanism Computer Equipment
Property An assessment of disposal methods for the
College’s PCs has shown that the best return is
The Gaynor House site is to be offered for sale achieved by offering them for sale on a fixed
by tender with the identified highest and best price, as is/where is basis, firstly to the students
use of residential redevelopment. and then to the community in general.
Below-ground Mining Training Facilities
The fixed price will be set at 15% above the unit
It has been decided to offer these facilities to the sale price received by other Colleges in bulk
owners of the Abbots Bore No 3 Mine in return sales of their PCs to second hand dealers.
for occasional use of the facility.
This method of disposal has the added indirect
This will effectively provide for retention of a benefit of increasing the availability of
valuable training facility for the local mining computers for student study at home, including
industry at no cost to government. greater use of library and tutorial information
via the Internet.
Industrial Equipment
Vehicles
Six monthly auctions of industrial and
commercial equipment in the district have Surplus items in the College’s vehicle fleet are
consistently returned premium prices for well- disposed of through State Fleet contracts.
maintained College equipment.
Stage 5 Disposal Plan and Implementation
Sean O’Tool and Co, Auctioneers are under
See next two pages.
contract to the College for the disposal of its
surplus industrial equipment.
The exception will be the Plasma Cutting
Robotics Equipment that has a wider market
that extends beyond the local area to industries
located in the capital cities.
This item of equipment will therefore be offered
for sale by tender through industry advertising
in Sydney, Wollongong, Newcastle and
Melbourne with an expected return of $370,000
net after disposal costs.

16 TAM – Asset Disposal Strategic Planning January 2001

FIVE YEAR ASSET DISPOSAL PLAN
Income and Expenditure from/for asset disposal

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Property $’000 $’000 $’000 $’000 $’000
Gaynor Lodge 850

Abbots Bore -5 0

Tony Buckley
Parade Grounds -20 -20 1150

Industrial Equipment 120 320 40 180

Computers 40 40 40 60 60

Vehicles 180 160 180 160 180

TOTAL 1185 520 240 380 1390

(-) expenditure to prepare for disposal

January 2001 TAM – Asset Disposal Strategic Planning 17

YEAR 1 ASSET DISPOSAL PLAN
ASSET ACTIVITY TIMESCALE
July Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
PROPERTY
Gaynor Lodge Community Consultation
Tender documentation
Tenders called
Finalisation
Abbots Bore Negotiations

INDUSTRIAL EQUIPMENT
Robotics Plasma Order replacement
Cutter Call tenders
Finalise disposal
Remove equipment
Install replacement
Centreless Order replacements
Grinders (20) Call tenders
Finalise disposal
Spectrum Order replacements
Analysers (10) Call tenders
Crucible Finalise disposal
Furnaces (7)
Arc Welders (4) Order replacements
Call tenders
Upgrade workshop
Finalise disposal
Install replacements
Drop Hammer Call tenders
Finalise replacement
Computer Advertising
Equipment PC Dispose progressively
type (130)
Replace progressively
Vehicles Dispose progressively
Replace progressively

18 TAM – Asset Disposal Strategic Planning January 2001

Appendix B Disposal of Real Property Assets
Real property assets generally have much higher Heritage Properties
value than other asset types particularly those
It cannot be assumed that the absence of a
located in urban areas and they usually
heritage listing indicates that the site has no
appreciate in value. In addition, their disposal
heritage significance. Properties identified as
can involve unique and complex planning,
surplus may therefore require assessment of
environmental and social issues.
their heritage significance, which is to include
Accordingly, the following sections raise some any buildings, works, vegetation or relics
common issues under each of the five stages of located on the land.
the asset disposal process that may require
A special investigation may be required where
consideration when real property is to be sold.
the heritage significance is unknown. For
Stage 1 Assets Surplus to Service Delivery properties with possible local, regional or state
significance, this investigation may involve a
Property Ownership and Status detailed assessment and/or a conservation study
Government property is either freehold or along with the preparation of a conservation
Crown Land. Freehold property is either vested plan.
in a government Minister or in the case of Further information on heritage properties is
GTEs, SOCs and Authorities, in the agency contained in the Heritage Asset Management
itself. Guidelines within the TAM Manual.
Land that has no legal title or status
Stage 2 Benefits of Disposal vs. Retention
automatically reverts to the Crown and is
therefore classified as Crown Land under the Transfer to Another Government Agency
control of the Department of Land and Water
Property, which may be surplus to one agency,
Conservation (DLWC).
may be well suited to the needs of another. It is
Crown Land can be "reserved" for a particular the responsibility of both acquiring and
use (eg. Crown Road Reserves) or dedicated to disposing agencies to indicate to each other their
a legal entity for a specified use in which case intentions.
the property is legally vested in the Crown.
Information on opportunities to transfer
While a property may have been available for property to, and to obtain property from, another
use by (and therefore under the administration government agency is available from the
of) an agency, its legal ownership may be vested Department of Public Works and Services
in another agency’s Minister whose authority to (DPWS). This information is based on details
dispose must therefore be obtained. of non-essential land provided by all
government agencies.
Consequently, the legal status of the property
and presence of any encumbrances (eg. Negotiations for transfer of surplus property can
easements, leases, etc) needs to be determined occur directly between the parties. DPWS is to
through title searches. be consulted if more than one party is interested
in the property.
Where Crown Land is involved, DLWC should
be consulted, as it is the only agency that can It is the responsibility of both agencies involved
legally sell such land following due process. in the transfer to demonstrate that funds will be
available to settle the transfer.

January 2001 TAM – Asset Disposal Strategic Planning 19

Open Space Potential • Industrial hazards
Agencies are required to undertake a • Geology and soils
preliminary assessment of the open space • Community concerns
potential of any land currently in public As a rule, in-depth investigations of these issues
ownership that is declared surplus. are required only if it is proposed to re-zone the
In its review, the Department of Urban Affairs property or if they form impediments to
and Planning (DUAP) may recommend that part disposal.
or all of a surplus site should be used for open The zoning of the property must of course be
space purposes, in accordance with the State suitable for the proposed uses. Re-zoning may
Government's Open Space Strategy. be required and this should be assessed in
The open space potential of a site should be conjunction with the relevant Local Council.
assessed according to its significance both in the Services Upgrade
local area and in the wider region. The site may
have potential for contributing wholly or in part An assessment should be made as to whether
to an overall open space plan. development of new or upgraded services is
required to facilitate the proposed use. Then
The plan may relate to waterfront land, specific assess whether it is economical to upgrade
local needs (such as where the Government is services to permit the proposed use, compared
promoting urban consolidation), major urban to disposing of the property in its existing state.
release areas on the fringe of the city, major
urban centres, or it may relate to a regional In order to permit the proposed use and to
network or corridor of open space. maximise returns, it may be necessary to
complete the following prior to disposal:
Agencies should seek preliminary advice on
open space potential from DUAP and the Local • Remediation if contaminated
Council (or undertake their own assessment) in • Protection of heritage items
order to determine the proposed use of surplus
Relocation of Existing Facilities and Vacant
property.
Possession
Stage 3 Value Maximisation An assessment should be made as to whether
Possible Uses relocation of existing facilities and vacant
possession is required to maximise the sale
In order to maximise the disposal value, an price. Planning for relocation of facilities will
assessment should be made of the likely uses of run parallel with planning for disposal to avoid
the property after disposal. The proposed use undue delay.
should be the "highest and best" use and the
assessment therefore includes examination of Relocation may entail the construction of new
options for development of the property. facilities. Treasury should be consulted where
this involves commitment of capital works
Assessment of potential uses of the site funds prior to the proceeds from disposal being
necessarily includes investigation of the available.
constraints on the site. Depending on the
property, this may include issues such as: DPWS should be consulted where disposal is on
the basis that the purchaser provides alternative
• Land use controls as defined in planning
public facilities within the proposed
instruments applying to the land
development or elsewhere (ie. contra
• Services provision development).
• Natural areas to be conserved Valuation
• Site contamination
A valuation of the property based on market
• Traffic, noise, etc value should be obtained assuming the proposed
• Heritage considerations uses.

20 TAM – Asset Disposal Strategic Planning January 2001

Valuations may be obtained from either the In the case of disposal as freehold, an
State Valuation Office or an independent appropriate Agreement for Sale of Land
Valuer. (Contract of Sale) must be completed by the
Stage 4 Disposal Mechanism Government agency, its selling agent or legal
adviser.
Any legislative requirements peculiar to the
agency, which may affect the disposal Auctions are appropriate for smaller and less
procedure, should be identified to ensure the complex sales. In such cases, an auction is
disposal program is not delayed. generally preferred to tender because it is
usually more straightforward and the process is
For example, the State Rail Authority may open to public scrutiny. In some circumstances
require the consent of the Minister for Transport the environment of an auction may generate a
for the sale or lease of land in certain higher price.
circumstances.
Disposal by tender is preferred where some
Any overlapping of responsibilities with other control over the future use of the property is
bodies having legislative based roles should also required or where the credentials of the buyer
be identified and resolved. need to be assessed in detail.
The disposal of properties should occur on a Disposal by Private Treaty will require special
commercial basis. This means that current consideration and may apply where disposal is
market value should be realised, including when to Local Councils and community organisations
transfer is to other Agencies. for public use and in certain special
circumstances where there is likely to be only
An assessment should be made to determine
one purchaser. Appendix C provides further
whether the property will be disposed of as
details on disposal by Private Treaty.
leasehold or freehold.
In the event of a lease to a community group or
Disposal as leasehold may be considered where:
other organisation that is unable to pay market
• It is desirable to impose detailed conditions rent, an explicit subsidy should be paid out of
of use under a lease the annual State Budget. Treasury should be
• Heritage precincts of significance, whether or consulted if an arrangement of this type is being
not the property has a particular heritage contemplated.
listing Stage 5 Disposal Plan and Implementation
• It is desirable for the property to remain in
Whether freehold or Crown Land, the property
government ownership (eg. a site where
should be unencumbered prior to disposal if
location is unique or important for some
possible.
other reason, or where there is potential for
site consolidation in the future) The actual disposal of property by selling
• The site may be required for public purposes agents, or the transfer of property to another
such as schools or hospitals in future Government agency, should be monitored to
development areas, particularly those likely ensure that performance targets are achieved.
to experience increased growth as a result of The proceeds of disposal should be distributed
urban consolidation according to Treasurer’s Directions. In general,
Market rents will normally be sought although the Directions provide for the retention of 50%
lesser amounts may be acceptable (eg. where of proceeds by inner-Budget agencies and 100%
the lessee has entered into a maintenance or of proceeds by outer-Budget agencies, for
restoration contract). However, the total value application to capital works programs or to
of such arrangements should be equivalent to retire debt.
current market value.
DPWS should be notified of the disposal (ie,
Disposal as freehold is usually preferred. when settlement occurs) through reporting for
the property disposal program.

January 2001 TAM – Asset Disposal Strategic Planning 21

Appendix C Disposal by Private Treaty
Introduction Compensation payable on transfer should be the
market value, as assessed or agreed by the State
Disposal by private treaty is a formal agreement Valuation Office or independent valuer.
between two parties concerning the exchange of
an asset at a price and on terms privately agreed Disposal to Local Councils
between them.
Disposal to Local Councils by private treaty
Disposal by Private Treaty is occasionally may only occur where a Council requires an
utilised by Government as a legitimate alternate asset for its own non-profit making purposes or
method of disposal to the more common process where a Council will contractually commit to
of auction or tender. lease a property to a community.
However, disposal by private treaty will be the The basis of disposal to Councils will be the
exception rather than the rule. same as that relating to transfers to other
Government agencies, namely the market value
Agencies intending to dispose of assets by assessed or agreed by the Valuation Office or
private treaty should ensure that the necessary independent valuer.
legal powers to do so exist, particularly in the
case of real property. Where Councils propose to acquire a property
for a commercial proposition or for subsequent
Agencies should also ensure that the person or resale, the disposal shall proceed in accordance
body with these powers has approved of its with the procedures laid down in Appendix B.
disposal by way of private treaty.
Disposal at less than Market Value
In circumstances where the Governor’s approval
to a sale is required, the relevant Executive It is Government policy that market values be
Council minute should specify that the sale is to realised on the sale or lease of Government
be by private treaty. assets, unless specific approval has been granted
to the contrary.
The following sections provide guidance on the
circumstances under which disposal by Private Where it is proposed to dispose of property at
Treaty may be appropriate and the procedures to less than market value to other Government
be followed. agencies, to Councils or Community
organisations, the matter should be referred to
Disposal to other Government Organisations the Department of Public Works and Services.
The disposal of public property and assets to Factors to be considered in such sales include
other Government agencies or to Local Councils the likelihood of alternative purchasers, the
is generally by private treaty. nature of the property including its value, the
Transfer to other Agencies purpose to which it will be put, whether or not
the organisation is profit making and the extent
Agencies interested in acquiring a surplus of community support.
government property may directly approach the
owner agency or enquire as to the availability of
surplus properties through the Government’s
property disposal program.
Agencies wishing to acquire an asset are
required to ensure that the transfer and full
payment is made by the expected disposal date
shown in the Asset Disposal Plan. This is
necessary as the returns to the owner agency are
often crucial to achievement of the Capital
Works Program.

22 TAM – Asset Disposal Strategic Planning January 2001

Disposal to the Private Sector Disposal to Lessees

Disposal by private treaty to the private sector Current lessees may be offered an option to
should only occur when: acquire a property where the circumstances
outlined above have been met.
• Public competition by auction or tender has
failed to attract a purchaser, or
• It can be clearly shown that no other
purchasers exist
There may however be exceptional
circumstances in which a sale by private treaty
is appropriate provided these are adequately
assessed and documented.
Following Public Competition
When sale by public competition has failed to
attract a purchaser, offers received have been
unacceptable and it can be established that
further efforts to dispose of the asset by public
competition are unlikely to succeed, a private
treaty disposal may be negotiated within a
reasonable time of the competitive process (up
to 12 months).
Lack of Other Possible Purchasers
Direct negotiation may occur with interested
parties without public competition where it can
be clearly shown that there are no other possible
purchasers. This may be the case where,
because of location, size or other factors, there
is clearly only one purchaser.
This situation will often occur for minor parcels
of land that are surplus following government
works such as road widening where the
adjoining owner is the only likely purchaser, but
may also arise in other cases.
In all cases, the current market value for the
asset must be assessed or agreed by the State
Valuation Office or independent valuer.
Disposal to Former Owners
Former owners of land acquired by the
Government have no legal claim for preferred
treatment if that land is subsequently to be
disposed of by the Government.
A private treaty disposal to a former owner is
justified only if it meets the listed criteria.

January 2001 TAM – Asset Disposal Strategic Planning 23

This page is intentionally blank

24 TAM – Asset Disposal Strategic Planning January 2001

 Sustainable
Development
Guideline
Sustainable development guideline

January 2001
DPWS Report Number 01050

NSW Department of Public Works and Services Cataloguing-in-Publication data

New South Wales. Government Asset Management Committee.

Sustainable development guideline

ISBN 0 7347 4104 9 (set)

ISBN 0 7347 4146 4

1. Asset management – New South Wales. 2. Capital investment. 3. Public administration – New South Wales
I. Title. (Series : TAM)

352.50944

 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any
process without written permission from the NSW Government Asset Management Committee. Requests and inquiries
concerning reproduction and rights should be addressed to:

Secretariat
Government Asset Management Committee
Level 23 McKell Building
2-24 Rawson Place
SYDNEY NSW 2000
Website www.gamc.nsw.gov.au
E:mail gamc@dpws.nsw.gov.au

Set consists of :

ISBN 0 7347 4122 7 Asset strategy

ISBN 0 7347 4194 4 Office accommodation strategy
ISBN 0 7347 4128 6 Capital investment : strategic planning
ISBN 0 7347 4134 0 Asset maintenance : strategic planning
ISBN 0 7347 4140 5 Asset disposal : strategic planning
ISBN 0 7347 4146 4 Sustainable development guideline
ISBN 0 7347 4152 9 Heritage asset management guideline
ISBN 0 7347 4158 8 Demand management guideline
ISBN 0 7347 4164 2 Life cycle costing guideline
ISBN 0 7347 4170 7 Value management guideline
ISBN 0 7347 4176 6 Risk management guideline
ISBN 0 7347 4182 0 Post implementation review guideline
ISBN 0 7347 4188 X Asset information guideline
Contents

1 SUSTAINABLE DEVELOPMENT _______________________________________2

1.1 What is the Purpose of this guideline?......................................................................................................2

1.2 What is Sustainable Development? ...........................................................................................................2

1.3 What is the history of Sustainable Development? ...................................................................................3

1.4 Sustainable Development and the NSW Government .............................................................................5

1.5 Sustainable Development and Total Asset Management ........................................................................5

2 SUSTAINABLE DEVELOPMENT
IN THE TOTAL ASSET MANAGEMENT PROCESS_________________________6
2.1 Integrating SD and TAM ...........................................................................................................................6

2.2 The Corporate Plan ....................................................................................................................................7

2.3 Service Delivery Strategy ...........................................................................................................................7

2.4 Asset Strategy..............................................................................................................................................8

2.5 Capital Investment Strategic Plan.............................................................................................................9

2.6 Asset Maintenance Strategic Plan ...........................................................................................................10

2.7 Asset Disposal Strategic Plan...................................................................................................................12

APPENDIX A APPLICATION OF SUSTAINABLE DEVELOPMENT

TO TAM PLANNING PROCESSES ____________________________13

APPENDIX B ASSET ENVIRONMENTAL MANAGEMENT PLAN________________14

APPENDIX C EXAMPLE SUSTAINABLE DEVELOPMENT

OBJECTIVES AND STRATEGIES _____________________________16

APPENDIX D EXAMPLE SUSTAINABLE DEVELOPMENT CONSIDERATIONS

FOR BUILDINGS __________________________________________17

APPENDIX E EXAMPLE SUSTAINABLE DEVELOPMENT CONSIDERATIONS

FOR SMALL PRODUCTS ____________________________________22

APPENDIX F EXISTING GOVERNMENT REQUIREMENTS ____________________24

APPENDIX G CONSULTATION AND APPROVALS __________________________27

APPENDIX H CASE STUDIES ___________________________________________29

January 2001 TAM – Sustainable Development 1

1 Sustainable Development
1.1 What is the Purpose of this The following Sustainable Development
guideline? principles ensure that ecological processes and
therefore human communities and economies
The general purpose of this guideline is to can be sustained:
advise NSW Government Agencies on the need
for sustainable development to form part of their • The precautionary principle
business planning and how it can be considered • Conservation of bio-diversity and ecological
at each stage of the total asset management integrity
process. • Intra and inter-generational equity, and
1.2 What is Sustainable • Internalisation of ecological and social
Development? impact costs.
The Principles of Sustainable Development The word “environment” will be used in the
following guideline to encompass the
Fundamental to the philosophy of sustainable ecological, socio/cultural and economic
development is the fact that human communities
environments.
and economies are not separate from the
environment. An interdependence exists The Objectives of Sustainable Development
between the way humans manage the
environment, the level of cohesion in a Sustainable development has four primary
community and economic performance. The objectives:
concept of sustainable development promotes • Minimised risk of environmental damage
not only protection of the environment and arising from incomplete knowledge
creation of wealth but equitable distribution of
• Ecological sustainability and environmental
that wealth within society.
protection
Sustainable development seeks to ensure the • Socio/cultural sustainability recognising the
needs of the present are met without needs of all
compromising the ability of future generations
• Economic sustainability maintaining high
to meet their needs.
and stable levels of economic growth and
This implies that some limits on human activity employment
due to the present state of our technology and An action which promotes one of these
social systems will be necessary if the biosphere objectives at a rate which undermines the long
is to be able to accommodate our activities. term net viability of another is not sustainable
Within these limits on the development of both development. Table 1 shows the relationship
technology and social systems, growth can be between the principles and the objectives of
expected to be based on responsible use of sustainable development.
resources and to focus on investment,
technology and technical development that will
be wholly sustainable.

2 TAM – Sustainable Development January 2001

In some circumstances short term disbenefits 1.3 What is the history of Sustainable
might be acceptable to achieve longer term Development?
benefits. For example, it may be desirable to
shut down an industry that is clearly polluting During the late 1970’s and early 1980’s, a
the environment but if the industry were located number of independent scientists, activists and
in a small town and was a significant local policy-makers attempted to address the conflict
employer, closure could have significant social between preserving the environment and human
consequences. It may be possible to implement development. They began to use the term
a strategy that in the short term could be counter “sustainability” to describe the goal of
to one of the sustainable development principles integrating economic development and
but over the longer term would be sustainable. ecological health.
Careful consideration therefore needs to be
In 1987, the United Nations’ “World
given to the context of the situation.
Commission on Environment and
Benefits of Sustainable Development Development” released its report Our Common
Future (or the Brundtland Report), which
By adopting a sustainable approach to brought the terms “sustainability” and
conducting business, agencies can ensure the “sustainable development” into wide spread use.
activities pursued will benefit the community, Our Common Future defined sustainable
the environment and the economy. development as “development that meets the
needs of the present without endangering the
needs of future generations to meet their own
needs.” At the 1992 Earth Summit in Rio de
Janeiro, more than 100 nations, including
Australia, signed Agenda 21 - an international
approach towards sustainable development.
When the concept of sustainable development
was introduced in Australia, it was given an
ecological focus - hence the term Ecologically
Sustainable Development (ESD). The
Commonwealth defined ESD in 1990 as “using,
conserving and enhancing the community’s
resources so that ecological processes, on which
life depends, are maintained, and the total
quality of life, now and in the future can be
increased.” An Inter-Government Agreement
finalised in 1992 included principles for a
cooperative national approach to the
environment and in the same year a National
Strategy for Ecologically Sustainable
Development (NSESD) was announced. The
NSESD sets out the broad strategic and policy
framework under which governments can take
actions to pursue ESD in Australia.

January 2001 TAM – Sustainable Development 3

Table 1 The Principles, Objectives and Strategies of Sustainable Development

Principles Objectives Strategies

The precautionary principle Minimise the risk of Organisations should identify the potential
Where there is a threat of serious or environmental ecological, socio/cultural and economic impacts of
irreversible environmental damage, lack of full damage arising proposals and activities through environmental
or complete knowledge should not be used as from incomplete and social impact assessments, and economic
a reason for postponing mitigating measures. knowledge appraisals. They should then develop and
implement strategies to overcome such impacts.

Conservation of bio-diversity and Ecological Strategies for achieving ecological

ecological integrity Sustainability sustainability include:
The concept of bio-diversity covers species, To maintain the • Ecological protection: ecosystems, fauna and
habitat and genetic diversity. Lost diversity mechanisms by flora
means loss of genetic information, lost ability which natural • Improving quality of air, water and soil
for species to adapt, lost opportunities for processes operate.
cultural advances derived from nature, loss of • Waste avoidance and minimisation
cultural value and leads to instability in all • Hazardous materials avoidance
ecosystems. Conserving bio-diversity and
protecting eco-systems will help to ensure that
natural processes and therefore human
economies can be sustained.

Intra and Inter-generational Equity Socio/Cultural Strategies for achieving socio/cultural

The present generation should ensure that the Sustainability sustainability both now and in the future
health, diversity and productivity of economic, To maintain include:
ecological and social environments are acceptable and • A commitment to social justice
maintained or enhanced for the benefit of equitable levels of - Equity: ensuring equity in the distribution
current and future generations. Inequity in the community well of resources
distribution of resources results in increased being.
environmental degradation through lack of - Rights: recognising individual rights
social coordination and un-managed resource - Access: providing fairer access to
use. Committing to intra and inter-generational economic resources and services
equity will help maintain high levels of - Participation: providing opportunities for
‘community well-being’ and thereby ensure those who will be affected to participate in
efficient use of resources. Community well- decision making
being includes economic health, quality of life,
- Ensuring equitable distribution of the costs
and the networks, norms and trust that
and benefits of sustainable development
facilitate coordination and cooperation for
mutual benefit within the community. • Conserving aesthetic and cultural diversity, and
heritage, in both society and the built
environment
• Conserving community resources

Internalisation of ecological and social Economic Strategies for achieving economic

impact costs Sustainability sustainability include:
The economic stability of a community that is To achieve long- • A commitment to improvement not just growth
simply ignoring social issues and using up its term economic • Internalisation of social and environmental
natural resources is unsustainable. The cost stability for the impact costs
of social and environmental impacts should community.
therefore be considered in decision-making • Conservation of resources eg. Energy, water,
and built into or ‘internalised’ in the costs of soil, materials
goods and services. By internalising the costs • Using renewable or recycled resources and
of environmental and social impacts, a more recycling
accurate picture of economic and social health
• Efficient use of non-renewable resources
can be obtained and measures taken to
ensure sustainability. Internalisation of • Supporting alternative technologies
ecological and social impact costs also Ecological costing includes the concepts of:
contributes to Sustainable Development
• Polluter pays
through improved valuation of community and
natural resources. • Full-cycle costing for goods and services,
including the use of natural resources and
assets and the disposal of wastes, and
• Cost effective pursuit of environmental goals,
via use of incentive structures - including
market mechanisms

4 TAM – Sustainable Development January 2001

1.4 Sustainable Development and the 1.5 Sustainable Development and
NSW Government Total Asset Management
The NSW Government has the following key NSW Government agencies have a secondary
commitments: service obligation to provide services in a
manner that will not adversely affect ecological,
• Integrating environmental protection into all
socio/cultural and economic sustainability.
activities
• Achieving greater social justice for all Therefore, all agencies are required to integrate
members of the community sustainable development objectives over the full
spectrum of their business practices from
• Encouraging economic development and Corporate Planning through to Service Delivery
sustainable employment and Resource Planning as well as at the detailed
• Delivering more financially responsible implementation level (see Appendix F for a list
programs that reduce public debt and of existing government requirements).
unfunded liabilities
Thus in Total Asset Management, sustainable
In addition to these commitments the development objectives are considered at each
Government is a signatory to the National stage of the TAM process as illustrated in the
Strategy for Ecologically Sustainable diagram below.
Development and in accordance with the Inter-
Governmental Agreement on the Environment,
has adopted the four general principles of
sustainable development.

January 2001 TAM – Sustainable Development 5

2 Sustainable Development in the Total Asset Management
process
Identify Identify issues Identify Assess priority Develop
activities impacts and and/or risk Strategies
benefits
Identify all activities Issues that are part Impacts and benefits Priority is the Include up front cost
relating to function, of an agency’s are any change to the importance of estimates and 5-10
operation and user activities, products environment wholly or carrying out an year cost benefit
behaviour or services that can partly resulting from action estimates
interact with the an agency’s activities,
products or services. Risk is the severity
environment. and likelihood of
The cost of
environmental impact occurring
impacts should also
be considered.

2.1 Integrating SD and TAM The AEMP is a tool for identifying,

documenting and addressing the environmental
Total Asset Management ensures that assets are impacts of an agency’s activities, products or
managed to best support agency service services. While the implementation of an AEMP
delivery. As a secondary service obligation, may have initial up front costs, substantial cost
agencies are expected to contribute towards savings can be obtained over time through better
sustainable development by the services they resource management, avoidance of
deliver and the way they are delivered. environmental litigation costs, and minimised
clean-up costs. Steps for implementing an
For example, in providing training and education AEMP are shown in Appendix B.
to a community, both economic and
socio/cultural benefits are given to certain Where funding is available, agencies may
members of that community. The way in which choose to establish a full Environmental
it is provided, such as a new school, provides management system to identify and address
greater local employment, generates social environmental issues. ISO 14001 for example
interaction for the wider community and may
is an Environmental Management System
require careful consideration of the affect on
local ground water and environment. currently adopted by organisations
internationally.
Integrating Sustainable Development into Total
The kind of impacts and benefits affecting
Asset Management (TAM) will ensure that an
ecological sustainability include air, water, soil,
agency’s service provision and asset and noise pollution. Air, water and soil impacts
management support the objectives of are caused primarily through gaseous, liquid and
sustainable development. solid wastes resulting from manufacturing
processes, consumer use and disposal.
To enable sustainable development to be
incorporated into TAM, a sustainable The impacts and benefits relating to
development implementation process has been socio/cultural sustainability include community
developed. It is generic and applicable to each impacts such as social justice, equitable access to
stage of Total Asset Management and can be services, diversity, economic stability, heritage,
used to identify and address the environmental aesthetic and cultural issues and transportation.
impacts and benefits of agency activities. Impacts and benefits that should be considered in
relation to economic sustainability include
In order to make more accurate decisions during
methods of funding, the accrual of long term
the application of the generic Sustainable debt, continued funding of services either directly
Development implementation process to TAM or by user pay principles and impacts on
planning processes, agencies are encouraged to economic viability.
develop an Asset Environmental Management
Plan (AEMP).
6 TAM – Sustainable Development January 2001
2.2 The Corporate Plan Stage 1 *
Agencies should make a commitment to Define intended service delivery outcomes. The
sustainable development in their corporate plans Generic Sustainable Development process can
and develop corporate environmental policies. be used here to develop detailed Sustainable
The commitment should be to both deliver Development objectives and strategies. Broad
services that support sustainability and to sustainable development objectives and
deliver them in such a way that supports strategies are shown in Table 1. (Page 4)
sustainability. Stage 2
2.3 Service Delivery Strategy Forecast future demand and its impact on
The Service Strategy translates the broad aims service delivery outcomes.
of the corporate plan into: Future environmental considerations include
• The specific service outcomes the agency changes in the environmental regulations,
wants to achieve increased community demand for
environmentally friendly practices and the
• The service strategies to be adopted (ie. How effects of environmental degradation such as the
the agency proposes to achieve its service greenhouse effect and the hole in the ozone
outcomes) layer.
• The indicative resources (Physical assets, *
people, information, financial) required as Stage 3
input to the development of the asset Assess current service performance and identify
strategy. service delivery gaps.
In order to fulfil their secondary service
Determine whether the current service
obligation of contributing to Sustainable
performance measures up against the
Development, agencies should include
Sustainable Development objectives identified
Sustainable Development objective and
in Stage 1. Strategies should then be developed
strategies in their Service Strategy. NSW
to match performance with the Sustainable
Premier’s Department has prepared guidelines
Development objectives and resource limits.
on developing a service delivery strategy. The
These should be incorporated into service
guidelines can be accessed electronically from
delivery strategy options.
The Asset Strategy section of the Total Asset
Management manual. Stage 4 *
The following section will show where to apply Identify evaluate and select delivery strategies.
the generic Sustainable Development
implementation process in the Service Strategy The generic Sustainable Development
development framework and provide additional implementation process can be used here to
Sustainable Development considerations. evaluate the Sustainable Development
Agencies that have their own planning model performance of service delivery strategy
should apply the generic Sustainable options.
Development implementation process to that Stage 5
model in a similar way.
Document Service Delivery Strategy.
The Process
Ensure that Sustainable Development
The analytical stages where the generic evaluations are included.
Sustainable Development process should be
used are indicated by an asterisk (*). See
Appendix H for a case study of the use of the
process.
*
analytical stages where the generic Sustainable
Development process should be used

January 2001 TAM – Sustainable Development 7

2.4 Asset Strategy Gate1: Asset Service Dependency
An Asset Strategy is the vehicle by which an Can service delivery be made less asset dependent?
agency matches its asset portfolio to its service This part of the process encourages agencies to
delivery requirements. It is the analytical step assess whether they need a physical asset to
between the Service Strategy and the Capital deliver a service. Generally speaking, physical
Investment, Asset Maintenance and Asset assets consume more natural resources than
Disposal strategic plans and determines how non-asset solutions over their life span.
these plans interlink.
Typical non-asset solutions include:
In order to fulfil their secondary service • Roads and Traffic Authority works depots
obligation of contributing to Sustainable procuring bitumen in bulk rather than 200
Development, agencies should include litre drums. While requiring a bulk tank and
Sustainable Development principles in their bunds surrounding it to control spillage, it
Asset Strategic Planning. The focus will be on reduced the number of storage buildings and
the impacts the assets and their operation have the costs of handling and purchase. The
on sustainable development. The Asset sustainable development focus is providing
Strategic Development Framework in The Asset materials on an economically viable basis,
Strategy Guideline is a system for achieving a while protecting any risk of ecological
better match between service delivery and assets damage.
by assessing asset need, utilisation levels,
suitability of location, capacity, functionality, • Department of Education and Training
and condition. extending the bandwidth in which classes are
held to accommodate more students in
The following section shows where to apply the existing facilities. The sustainable
generic Sustainable Development development focus is on providing access to
implementation process in the Asset Strategy education rather than constructing more
Development framework and provides assets and the associated operational costs
additional Sustainable Development • Department of Health provide telemedicine
considerations. in a remote regional hospital to provide
The process specialist medical services. The sustainable
development focus is providing regular
Before undertaking the Asset Strategic Planning access to specialist services on an
Process, the asset portfolio should be grouped economically viable basis.
and segmented. Segmenting could be by asset
type, age, use or location. The generic Gate 2: Asset Utilisation
Sustainable Development implementation Are assets fully used in service delivery?
process should be used here to determine the In most cases under-utilised assets waste natural
environmental impacts/benefits of particular resources. They consume, for example,
asset groups. This can then be used as a basis materials, energy and water to remain operable.
for the Asset Strategy Development framework. Strategies for using the assets more effectively
The generic Sustainable Development should therefore be considered and evaluated
implementation process should be applied at all using the Sustainable Development Generic
gates of the Asset Strategy process to: process.
• Assess existing assets
• Evaluate options for improvement identified
during the process

8 TAM – Sustainable Development January 2001

Gate 3: Asset Location 2.5 Capital Investment Strategic Plan
Are assets appropriately located for the effective
service delivery?
Capital Investment Strategic Planning involves
assessment of all investment options to meet
The Sustainable Development implications of service delivery requirements including
the service being delivered in particular purchase, lease, service contract, private sector
locations should be assessed. The provision of involvement and non-asset solutions together
services may have socio/cultural and economic with all the resources required (assets, financial,
effects on the community and the regional HR and IT)
Sustainable Development implications of the
asset operating in a location should also be The Capital Investment Strategic planning
evaluated. process in the Capital Investment Planning
Guideline is a system for selecting the best
Gate 4: Asset Capacity procurement option for capital investment
Have the assets sufficient capacity to provide the projects identified by the Asset Strategy.
required services?
The following section shows where to apply the
Roads that become impassable in the wet may generic Sustainable Development
discourage growth of local markets or industry. implementation process in the Capital
Investment Strategic planning process and
Hospitals or schools that cannot support the provides additional Sustainable Development
delivery of particular services may result in considerations.
poorer health or education standards being
available. This in turn may cause excessive High Sustainable Development performance
travel to other service locations. often equates with lower operating and
maintenance life costs and reduces the
Insufficient capacity suggests that desired likelihood of environmental fines or future
service outcomes are not being achieved. The clean-up costs.
environmental impacts of this should be
evaluated using the Sustainable Development The Process
Process. Before increasing asset capacity, non-
The analytical stages where the generic
asset solutions should be explored.
Sustainable Development process should be
Gate 5: Asset Functionality used are indicated by an asterisk (*).
Are assets suitable for the optimal delivery of See Appendix H for a case study of the use of
services they are intended to support? the process.
Assets should not only function effectively
enough to provide a service but also have high
Sustainable Development performance.
For example, a road bridge must not only be
capable of carrying the required traffic load but
must not restrict flood waters. A school must
not only support optimal education but also
provide a safe and healthy environment.

January 2001 TAM – Sustainable Development 9

 *
Stage 1 2.6 Asset Maintenance Strategic Plan
Prepare service delivery functional analysis for The purpose of maintenance planning is to
each project ensure the productivity and reliability of the
asset by appropriately managing the risk of asset
In this stage agencies are required to translate failure or deterioration.
service delivery outcomes into detailed project
objectives. Sustainable Development objectives The Asset Maintenance Strategic Planning
should be included here and incorporated into process in the Asset Maintenance Planning
the functional brief. Guideline is a structured and systematic process
aimed at ensuring that an agency’s portfolio of
Stage 2* assets remains appropriate and productive at the
Generate project options that meet service lowest possible long-term cost.
delivery functions. Integrating Sustainable Development principles
Stage 3* into maintenance planning relates both to
minimising adverse environmental impacts of
Short list project options, develop each, and the asset, and ensuring all environmental
evaluate benefits of the services delivered continues.
Stage 4* The integration of Sustainable Development
principles into asset operation focuses on:
Compare project options and select preferred
option • The health and safety of the asset users and
the community
In Stages 2, 3 and 4 the Sustainable • Ensuring maintenance works are affordable
Development Performance of project options and hence service delivery remains
should be evaluated using the Sustainable affordable
Development Generic Process.
• Improving efficiency in resource use and
Stage 5 decreased waste production.
Prepare Capital Investment Plan The integration of Sustainable Development
principles into the implementation stages of
Criteria for ranking project proposals should
asset maintenance is best facilitated by an Asset
include Sustainable Development principles.
Environmental Management Plan. (See
Those projects that offer the greatest
environmental benefits to the user group and the Appendix B)
wider community should therefore be given The following section shows where to apply the
high priority. generic Sustainable Development
implementation process in the Asset
Maintenance Planning process and provides
additional Sustainable Development
considerations.
The Process
The analytical stages where the generic
Sustainable Development implementation
process should be used are indicated by an
asterisk (*).
See Appendix H for a case study of the use of
the process.

*
analytical stages where the generic Sustainable
Development process should be used

10 TAM – Sustainable Development January 2001

Stage 1 Define and segment assets to meet Stage 5 Prepare Maintenance Cost Plan
service delivery strategy
The cost plan should also include cost estimates
Assets may be grouped by location, capacity, for implementing environmental related
age or any other category that is significant to changes.
its service delivery support role. Major
environmental impacts of assets could also be The impact of the proposed costs of
used to segment the portfolio, such as: maintenance should also be considered for its
impact on sustainable development. If an asset
• Disaster relief communications is not economically viable, then the service it
• Assets that contain asbestos or radioisotopes supports may be jeopardised.
• Assets located within environmentally Stage 6 Implement Maintenance Plan and
sensitive regions programs
*
Stage 2 Determine required asset An Asset Environmental Management plan can
performance be implemented as a stand-alone program or
integrated into a maintenance planning program.
Performance criteria that will allow the assets to Some agency’s have begun with an Asset
perform as required should be assessed to Environmental Maintenance Plan to
ensure any Sustainable Development impacts accommodate a gradual shift in behaviour and
are identified and those criteria amended. later integrated the system into the overall
Additional performance criteria may have to be maintenance program.
developed to ensure the asset delivers Stage 7 Monitor and review Maintenance
Sustainable Development outcomes. Plan and programs
Stage 3* Define maintenance resources and
overall strategies
The Generic Sustainable Development process
should be used here to evaluate the
environmental impacts/benefits of resources
(people, equipment and materials) and
maintenance methods. Overall strategy options
should also be evaluated using the Generic
Sustainable Development Process
Stage 4 Assess conditions of assets and
recommend maintenance
Recommendations should be evaluated using
the Sustainable Development Generic Process.

*
analytical stages where the generic Sustainable
Development process should be used

January 2001 TAM – Sustainable Development 11

2.7 Asset Disposal Strategic Plan Stage 3* Value Maximisation
Asset Disposal Strategic Planning involves Identify opportunities for increasing asset value.
continuous review of an agency’s asset holdings The value of the asset to both the community
to ensure they remain fit and in support of and the agency may be a combination of
service delivery requirements. ecological, socio/cultural and economic value.
The Asset Disposal Strategic Planning process Value maximisation strategies should be
in the Disposal Planning Guideline aims to evaluated using the generic Sustainable
ensure that an agency’s asset portfolio Development process
comprises only those assets that effectively Stage 4* Disposal mechanism
meet its service delivery requirements at the
lowest cost to government. Identify disposal requirements including probity
considerations.
The following section shows where to apply the
generic Sustainable Development Options for disposal should be evaluated using
implementation process in the Asset Disposal the generic Sustainable Development process.
Strategic Planning process and provides Agencies should consider options that reflect
additional Sustainable Development Sustainable Development objectives such as re-
considerations. use or recycling of the asset.
The Process Stage 5 Prepare and implement the
Disposal Plan and monitor
The analytical stages where the generic performance
Sustainable Development process should be
used are indicated by an asterisk (*).
See Appendix H for a case study of the use of
the process.
*
Stage 1 Assets Surplus to Service Delivery
Determine Assets that are surplus to service
delivery requirements both now and over the
planning time frame.
Assets are considered surplus if they are not
required to deliver services or no longer
contribute to Sustainable Development
objectives.
Stage 2* Benefits of Disposal vs. Retention
Assess the advantages to Government, agency
and the community in divesting assets.
The generic Sustainable Development process
should be used to assess the environmental
impact/benefits of disposal including
ameliorating ecological contamination.

*
analytical stages where the generic Sustainable
Development process should be used

12 TAM – Sustainable Development January 2001

Appendix A Application of Sustainable Development to
TAM Planning processes
Table 2 gives an overall view of how Sustainable Development is linked to TAM and its
relationship to each stage of the TAM strategy.

Table 2

Sustainable Development Service Asset Capital Asset Asset

Implementation process Delivery Strategy Investment Maintenance Disposal
Strategy Strategic and Strategic
Planning Operation Planning
Planning
Step 1
Identify activities

Step 2
Identify environmental aspects

Step 3
Identify environmental impacts,






benefits or potential
improvements.

Physical or Pollution
(Air, Water, Soil, Noise)





Biological
(Fauna, Flora, Eco-Systems)





Waste






Resource Use






Community resources






Natural resources






Community






Social Factors






Economic Factors






Heritage, Aesthetic or Cultural
impacts or benefits





Transportation impacts or
benefits

Step 4
Assess risk or feasibility

Step 5
Develop objectives and






strategies/actions to address
impacts and maintain or enhance
benefits

January 2001 TAM – Sustainable Development 13

Appendix B Asset Environmental Management Plan
An Asset Environmental Management Plan Other issues to consider in an Environmental
(AEMP) identifies, documents and addresses Management System
the impacts that assets and the way they were
• Legal requirements.
designed to operate have on the natural
environment. Development of an AEMP can • Training, awareness and competence
result in the following benefits: • Internal and external communication
• Cost savings through: • Environmental management system
documentation
− Better resource management
− Avoidance of environmental litigation • Operational control
costs, and • Emergency response
− Minimised clean-up costs
• Environmental monitoring and measurement
• More accurate application of the generic • Procedure for environmental non-
Sustainable Development process to the conformances and corrective and
TAM planning processes preventative action.
The generic Sustainable Development • Environmental management system audits
implementation process can be used to develop and reviews
an AEMP and a detailed process is shown (to
the right). Agencies should develop their own Additional points to be considered within the
specialised program and it is recommended that generic Sustainable Development
this be done by completing a pilot study of one implementation process
or a number of typical assets. The RTA for Information generated during the following
example found that by conducting a pilot study, steps should be recorded on the AEMP Register
a set of procedures could be developed for and it is recommended that this is done
dealing with proposed and existing assets. electronically. Tables 2 and 3 on the following
page give the suggested content of the AEMP
Activities, aspects, impacts and actions should
Register.
be determined by an agency’s senior
management or environmental manager and Step 1 Identify activities
those preparing the plan. This information can
then be used by staff associated with the Identify activities relating to the function of an
operation of the asset. As an information system asset and record on the Part A of the AEMP
the AEMP can be: Register. The activities should be divided into
the categories of general asset maintenance,
• Linked to an intranet system to facilitate operational issues and general activities relating
communication of the information to all staff to the function of the asset.
• Linked to an asset register Step 2 Identify natural environmental aspects
An AEMP will ideally fall under the umbrella Identify aspects of asset maintenance, operation
of an Environmental Management System. or other activities that can interact with the
natural environment. Record these on Part A of
the AEMP Register. This should include energy
and water consumption and waste production.

14 TAM – Sustainable Development January 2001

Step 3 Identify natural environmental impacts. Table 4 AEMP Register: Part B

Impacts refer to any change to the natural • Number

environment wholly or partly resulting from an • Activity / Facility
agency’s activities, products or services. Record • Objective
this information on Part A of the AEMP • Action Target Date
Register. • Estimated cost/time
• Estimated cost benefit (over 5 years)
Step 4 Assess risk
• Performance Indicator
See Table 5 Risk Ranking of Impacts for a • Person responsible
suggested system. • Monitoring schedule
• Date & Signature
Step 5 Develop objectives and actions to address
impacts.
These should be listed on the Part B of the
Table 5 Risk Ranking of Impacts
AEMP Register.
Probability (A)
Actions should then be implemented and the 5 Common/Repeating Occurrence
AEMP updated and reviewed annually through 4 Likely Occurrence
audits and self-assessment findings. 3 Moderate Occurrence
2 Unlikely Occurrence
1 Rare Occurrence
Table 3 AEMP Register: Part A
Severity (B)
• Number 5 Catastrophic: Major irreversible impact on
• Activity / Facility / Issue environment
• Environment Aspect (element of an activity) 4 Major: Major reversible impact on environment
• Environmental Impact/Benefits 3 Moderate: Minor reversible impact on environment
• Current Environmental Condition: Notes 2 Minor: Minimal effect - contained in a small area
• Probability (A) 1 Insignificant: Insignificant impact

• Severity (B)
• Risk Ranking A x B
Risk Ranking equals A x B

January 2001 TAM – Sustainable Development 15

Appendix C Example Sustainable Development
Objectives and Strategies
This table can be used as a guide in developing broad Sustainable Development objectives and
strategies within a corporate environmental policy, service delivery strategy or Environmental
Strategic Plan.
Table 6

Suggested Objectives Example Strategies

Objective 1 • Behavioural change of users
Ensure that service delivery is managed • Less asset dependent service delivery modes
in such a way as to minimise adverse
• Use of alternative technologies
ecological, socio/cultural and economic
impacts. • Strategic environmental impact assessment of major programs
• Strategic social impact assessment of major programs
• Economic appraisal and value management of major programs with
the cost of environmental and socio/cultural impacts included.
(Discounting should be used to calculate future clean-up costs)

Objective 2 • Ensure that the agency’s suppliers and contractors are

Ensure that adverse ecological, environmentally responsible.
socio/cultural and economic impacts • Ensure Environmental Impact Assessment (EIA) processes are
resulting from agency activities are comprehensive and regularly reviewed
minimised.
• Ensure environmental socio/cultural and economic mitigation policies
lead continuous improvement of practice and are regularly reviewed.
• Ensure the environmental and socio/cultural performance of agency
activities are reviewed and reported.

Objective 3 • Ensure trends in the use of natural resources and recycled materials
Ensure that the consumption of natural are reported and reviewed; and that targets are set on an annual basis
resources by the agency’s activities is • Ensure the green office concept is promulgated and adopted.
reduced.
• Ensure that the Total Asset Management process is adopted

Objective 4 • Ensure agency staff and contractors have appropriate environmental

Ensure compliance with environmental awareness training
legislation and government policy. • Develop and implement an Environmental Management System
• Ensure comprehensive monitoring and review procedures are carried
for all construction and maintenance works
• Review works procedures at regular intervals.
•

Objective 5 • Ensure that all stakeholders are involved in agency environmental

Ensure that the agency is a more open planning and decision making.
and consultative organisation.

16 TAM – Sustainable Development January 2001

Appendix D Example Sustainable Development
Considerations for Buildings
See Database of Environmental Objectives for • Continually revise leasing documents to
Buildings published by the Department of ensure lessees comply with environment
Public Works and Services (1998) for detailed regulations
descriptions of objectives. Each objective is • Undertake post-occupancy evaluations of all
numbered for easy reference to the database. developments to provide performance data
This list has been included to show the types of against design targets
Sustainable Development issues and level of • At end of facility life prepare a dismantling
detail that should be considered. Many of the and disposal plan
issues included in this section apply to a wider
range of assets than just buildings. Agencies D2 Protection of Natural and
should develop similar guidelines for other asset Cultural Environment
types in their portfolio. Natural
D1 Environment Management - • Preserve the physical viability of natural
Process Objectives ecosystems
• Consider alternatives such as the “no • Support the maintenance of biodiversity with
development” and other non-structural site remediation activities
options • Conserve viable site populations of all native
• Adopt environmental management plans species and maintain their habitats
through all phases of projects • Preserve existing landscape features
• Evaluate site and local ecosystems using a • Ensure ongoing habitat protection
structured Environment Impact Assessment
• Carry out endangered species habitat
(EIA) process
assessments
• Adopt an inter-disciplinary, integrated
• Construct on previously used or reclaimed
approach to environment design
sites
• Carry out design reviews with the Client to
• Incorporate permaculture principles in design
ensure objectives are met or exceeded
and operation at appropriate sites
• Apply EIA methods to demonstrate
• Minimise the use of chemicals for landscape
compliance with project objectives
control
• Demonstrate life cost paybacks for all
• Protect adjacent environments during
incorporated environmental measures
construction
• Provide constructive feedback to designers
• Provide education packages for visitors re the
and suppliers
environmental values of sites
• Continually revise current design practice to
encourage use of environmentally advanced
materials
• Provide user education through operation
manuals / training
• Require tenderers to validate operation and
maintenance costs where tendering to
performance specifications
• Establish the probity system for verifying
environmental credentials of manufacturers,
contractors and suppliers

January 2001 TAM – Sustainable Development 17

Cultural D3 Conservation of Resources
• Assess both the opportunities to reuse Energy
existing and the long-term viability of new
facilities • Minimise energy demand by adopting
passive design solutions as first priorities
• Carry out heritage assessments of proposed
sites • Document design options and energy
consumption forecasts in an Energy
• Identify and retain items of value to the local Efficiency Statement
community
• Minimise impact of site location re new
• Incorporate art in developments to enhance infrastructure and public transport
environment awareness
• Minimise energy demand by taking
• Minimise physical and visual adverse maximum advantage of site selection and
impacts on nearby residents planning
• Promote multi-functional role of communal • Minimise energy requirement by optimising
space and incorporate community services the building design
• Consider the shared use or provision of • Minimise energy consumption by optimising
adjacent facility infrastructures the engineering services design
• Consider social impacts through community • Where possible install renewable energy
participation systems
• Ensure social impacts of construction are • Where possible install refuelling facilities for
equitably distributed alternative-fuel vehicles
• Ensure appropriate access and facilities for • Ensure installed engineering services and
people with disability energy efficient measures are properly
• Include environmental impacts in project cost commissioned and operated
benefit analysis • Carry out programmed preventative
• Balance needs for privacy, security and maintenance in all systems to ensure efficient
social interaction operation
• Provide appropriate levels of privacy • Monitor energy use in operation and
• Provide appropriate levels of safety and implement further opportunities for
security operational efficiency
• Maximise the opportunity for local internal-
environment control by individuals

18 TAM – Sustainable Development January 2001

Water Construction Materials
• Minimise water use by installing water • Consider environmental implications of
efficient appliances, fittings, and devices construction materials
• Decrease water requirements by adopting • Adopt life cycle costing principles for
“water wise” landscape designs materials and systems selection
• Install water usage monitoring and reporting • Design for use of appropriate technology
devices level
• Implement water consumption audit and • Design for ease of future adaptability
leakage detection programs • Reduce and avoid if possible, the use of rare
• Minimise water imports and non-renewable resources
• Consider reuse of reclaimed water and • Maximise the potential life cycle length of
greywater development
• Minimise stormwater run-off and hydrologic • Use recycled and recyclable materials where
impacts fit-for-purpose
Soil • Consider reuse and recycling principles
where temporary structures are required
• Balance cut/fill and minimise importation of
fill and topsoil • Assess natural disaster risk and adopt
preventive measures
• Use site demolition or waste materials for on-
site fill and avoid transport off-site • Avoid use of rainforest timber and timber
from Australian high conservation forests
• Prevent soil erosion and siltation of
waterways • Design for use of engineered wood products
in preference to solid wood
• Use industrial wastes in materials where
possible and appropriate
• Aim to define the optimum intervention in
existing structure and systems when
refurbishing

January 2001 TAM – Sustainable Development 19

D4 Improve Quality of Air, Water • Maintain existing CFC air-conditioning so as
to reduce leakage
and Soil
• Avoid use of hazardous materials such as
Air asbestos and lead-containing products
• Specify refrigerants and processes that • Select building materials to avoid pollutant
minimise ozone depleting potential and release during fires
greenhouse warming potential • Avoid risk of electro-magnetic radiation
• Use building materials free of (EMR)
Chlorofluorocarbons (CFC) and Hydro
Noise
chlorofluorocarbons (HCFC)
• Consider optimum microclimate effects from • Protect from noise pollution of sites
site design • Design site layout to separate noise
• Design and configure development to avoid generating activities from quiet activities
undesirable wind effects • Minimise noise emitted from external
equipment
• Design to reduce the release of Carbon • Minimise noise transmission within multiple-
Dioxide (CO2) into the atmosphere occupancy buildings
• Design to reduce the emission of the Oxides Light
of Nitrogen (NOx) into the atmosphere
• Avoid overshadowing of adjoining sites
• Minimise air pollution and emissions from
buildings • Design and site buildings to avoid hazardous
or undesirable glare
• Design buildings for controllable natural
ventilation alone where possible • Design to minimise the impact of night
lighting on adjacent areas
• Ensure daylight access for habitable areas
• Maintain high level of indoor air quality Water

• Maximise effectiveness of indoor air • Maximise rainwater infiltration by designing-

circulation in permeability
• Use local exhaust ventilation for specific • Control contaminated run-offs from polluting
indoor sources sources such as parking areas
• Consider adoption of a building flush-out • Use artificial wetlands to remove pollutants
prior to occupancy • Avoid standing water conditions that
• Control humidity in mechanically ventilated encourage the generation of bio-pollutants
buildings • Protect water quality of adjacent
• Protect against release of microbial hazards environments during construction
into ambient air Soil
• Consider the common denominators of Sick • Carry out contamination testing of sites
Building Syndrome
• Install and utilise composting facilities where
• Minimise toxic fume emissions in fit-outs appropriate
within buildings
• Minimise use of chlorine-based products
• Specify suitable diagnostics for system
failure and ineffective performance • Manage the use and storage of hazardous
substances and waste
• Ensure reduction of construction
contaminants in buildings prior to occupancy
• Exceed minimum dust control standards in
construction

20 TAM – Sustainable Development January 2001

D5 Waste Avoidance and
Minimisation
• Formally apply dimensional coordination of
design where practical
• Give consideration to the ease of future
recycling of materials and components
• Give consideration to incorporating occupant
recycling equipment
• Include dedicated space requirements to
support recycling activities
• Implement waste management project plans
during project construction
• Make provision for transfer of reusable
materials to recycling or reuse stations
• Adopt special procedures for disposal of
hazardous materials
• Pay regard at all project phases and activities
to cut paper consumption generally

January 2001 TAM – Sustainable Development 21

Appendix E Example Sustainable Development
considerations for small products
This section has been included to show the Once you have determined that a purchase
types of Sustainable Development issues that should be made, there are a number of specific
should be considered when planning to product characteristics that can help identify a
purchase items like office equipment, stationery, "greener" item. Be wary of products with
maintenance equipment etc. unsubstantiated claims. Look for qualifying
statements such as the percentage of recycled
By applying the 4 R's methodology (Reduce, content.
Reuse, Recycle and Recover) at each phase of
the material life-cycle (planning, acquisition, Is the product:
operations, utilisation and maintenance, and
• Certified by an Environmental Labelling
disposal), procurement activities can be more
Program?
environmentally responsible. When purchasing,
environmental considerations should be • Designed to minimise waste?
integrated with other criteria such as • Energy efficient (eg. Office equipment with a
performance, life expectancy, quality, and value power-saving "sleep" mode)? If included in
for money (cost), as far as possible. the Energy Star labelling program, does it
Many environmental practices can be phased in compare favourably to other labelled
over time without additional costs. Although in products in the same category?
some cases "green" products may cost more, the • Less polluting during its use than competing
overall effect of adopting environmentally products (eg. Non-toxic, biodegradable
appropriate purchasing practices can result in cleaners)?
significant savings when the total costs of • Free from hazardous ingredients that would
purchasing, operation and disposal are require special disposal (eg. Mercury)?
considered.
• Free from resources that come from
In order to reduce the environmental impact of environmentally sensitive regions (eg.
your acquisition, this checklist has been Contains no lumber from tropical rainforests
designed to help you ask the right questions at such as some teak or mahogany)?
the PLANNING stage of your acquisition.
• Free from banned and/or restricted,
E1 Acquisition substances (eg. Contains no CFCs, Benzene,
or Arsenic)?
Have other options for meeting the needs been
• Manufactured from recycled materials,
explored, for example:
including a high percentage of post-consumer
• Have both departmental surplus and Crown recycled content?
Assets Disposal been checked to ensure that Is the product packaging:
no comparable product is available
internally? • Designed to minimise waste
(eg. Bulk packaging)?
• Have the feasibility of short-term rental or
sharing the product been investigated as • Reusable by the end-user?
alternatives to purchasing? • Accepted by the supplier for reuse, recycling
• Is the quantity requested appropriate and sure or recovery?
to be used? • Recyclable locally?
• Will the product be used to the end of its • Made from recycled materials?
useful life? If not, can it be easily
reallocated?

22 TAM – Sustainable Development January 2001

E2 Operation, utilisation and E3 Disposal
maintenance Can the product or its parts:
Is the product: • Be reused (eg. Furniture which can be
• Durable, with a long service life? refurbished) or reallocated?
• Accompanied by clear and comprehensive • Be resold through Crown Assets
operating instructions? (this will help ensure Distribution?
that it is used efficiently) • Be returned to the supplier for reuse,
• Easy to maintain in good operating recycling or recovery?
condition? • Be contributed to a waste exchange program?
• Economical to repair? • Be recycled locally?
• Easy to upgrade? The relative importance of each of these
• Reusable or does it include reusable parts questions will vary from one product category
(eg. rechargeable batteries)? to another. In general, choose the option that
satisfies the greatest proportion of these criteria.
Be sure to advise your suppliers that you will be
evaluating products according to these factors.
When purchasing services, require your
contractor to meet the same environmental
standards.

January 2001 TAM – Sustainable Development 23

Appendix F Existing Government requirements
In support of their statement of sustainable Social Impact Assessment
development, principles the NSW Government
is committed to the following practices under The NSW Government Cabinet Office, Social
the Environmental Planning and Assessment, Policy Development Unit issued Guidelines for
(EP&A) Act, 1979. Under the EP&A assessing Social Impacts in December 1997.
Regulation, it is necessary to justify proposals The guidelines do not impose compulsory
having regard to biophysical, economic and assessment requirements but provides agencies
social considerations and the principles of with tools to identify and evaluate the likely
ecologically sustainable development (ESD) social impacts of policies and programs.
A number of assessment criteria relating to
Comprehensive Environmental Impact
social impacts are already applied by
Assessment (EIA)
government in specific policy areas. For
An EIA will be conducted for all programs and example:
projects and encompass all stages of asset
development from inception through to For projects which require an Environmental
operation and ultimately, decommissioning or Impact Statement with an assessment of social
demolition. All identified impacts will be impacts see Is an EIS required - Best Practice
guidelines for Part 5 of the Environmental
eliminated or mitigated.
Planning and Assessment Act 1979, produced
Environmental Impact Statement (EIS) by the New South Wales Department of Urban
Affairs and Planning
An EIS must be prepared for proposals that
have the potential to significantly affect the The Cabinet Office Publication, From red tape
environment. The legal requirements for to results - Government Regulation: A guide to
environmental impact assessment are included best practice, provides guidance on both
in the Act. The consent authority is normally the designing and evaluating proposals in terms of
local council, but could be a Minister, the their impacts.
Director-General of Urban Affairs and Planning
or another authority under certain Under the national Competition Principles
circumstances. The applicant should consult the Agreement legislation Review Program,
council in the first instance to ascertain the agencies must review their legislation for anti-
consent authority. competition impact.

It is the responsibility of the agency preparing

the EIS to determine what approvals will be
required as a result of the service delivery
strategy and to demonstrate that the strategy can
meet all approval and licensing requirements. In
preparing the EIS, consultation with relevant
parties should be undertaken early in the EIA
process and their comments taken into account
in the EIS.

24 TAM – Sustainable Development January 2001

Waste Reduction and Purchasing Plans F1 Approvals or consultation that
(WRPP) may be required
The NSW Government has introduced a Local Councils
Procurement Policy with environmental
objectives and a Waste Reduction and Local Councils for development approvals
Purchasing Policy. The Waste Reduction and under Part 4 of the EP&A Act and any building
Purchasing Policy requires all agencies to approval under the Local Government Act 1993,
develop and implement a Waste Reduction and also for any alteration to local roads or buildings
Purchasing Plan. The plans should reflect the or trees of local heritage significance.
significant impact the government’s purchasing
Department of Urban Affairs and Planning
power can have on the market development for
sustainable products. The Department of Urban Affairs and Planning
(DUAP) is responsible for environmental
Government Energy Management Policy
planning issues including the coordination of
(GEMP)
State, regional coastal and metropolitan
The GEMP introduced in 1998 committed the planning.
NSW government to lower and sustainable
Consult DUAP for concurrence if the proposal
levels of energy use. The commitment extends
impacts on SEPP 14 - Coastal Wetlands, SEPP
to all aspects of energy use in the Government’s
26 - Littoral Rainforest, potential or actual koala
operations, from buildings to motor vehicles.
habitat under SEPP 44 - Koala Habitat
Specific reduction targets are to reduce total
Protection.
energy consumption of government buildings
by: Environment Protection Authority
• 15% of the 1995 level by 2001 The EPA works with all levels of government,
• 25% of the 1995 level by 2005 business and the community to help find
nationwide solutions to Australia’s environment
In addition agencies are encouraged to identify problems. The EPA manages Commonwealth
and implement energy management plans that environment protection responsibilities,
will lead to energy saving outcomes. Under the administers Commonwealth environment
policy agencies are required to monitor and protection legislation and fulfils Australia’s
report progress towards meeting the targets. To international environment protection
assist agencies the Energy Smart Government obligations. For air, water and noise licenses,
program was launched in 1996. Its aim is to approvals and certificates of registration under
encourage agencies to invest in cost effective relevant pollution control legislation; regulation
energy efficiency projects. The Sustainable of waste generation, transportation and disposal;
Energy Development Authority (SEDA) licenses for transport of dangerous goods under
provides a range of services and guidance to the Dangerous Goods Act; licenses for
participating agencies. chemicals subject to chemical control orders
under the Environmentally Hazardous
Chemicals Act.

January 2001 TAM – Sustainable Development 25

Department of Land and Water Heritage Council of New South Wales
Conservation
The Council was established in 1978 by the
The provision of water supply and sewerage Heritage Act 1977. Its charter is to develop
services to country towns in NSW is the policies and programs to conserve the State’s
responsibility of local government under the heritage and to promote community awareness
Local Government Act, 1993. of heritage and its value. It should be consulted
if the proposal is likely to affect any place or
Soil and Vegetation Management provides: building having State heritage significance, or if
• Information on soils the proposal is affected by Interim Conservation
Orders (ICO) or Permanent Conservation
• Information on design and construction of
Orders (PCO). Agencies should also consult the
erosion and sediment controls, and
TAM Capital Works Investment Heritage Asset
rehabilitation
Management Guidelines in order to prepare a
• Approvals on protected lands Heritage Asset Management Strategy.
State Lands Services should be consulted: NSW Fisheries
• Regarding effect of development on any
Threatened species of fish and marine
Crown Land
vegetation are addressed under provisions of the
• For leasing, license, or purchase of Crown Fisheries Management Act 1994
Land
• Whether the land is subject to Aboriginal
land claim or Native Title legislation
• To determine if Crown Reserves and
dedicated lands exist, whether a proposal is
compatible with the stated public purpose
State Water Management should be consulted
regarding impact on:
• Ground or surface water resources
• Clearing riparian vegetation
• Works within 40 metres of a stream
Coastal and Rivers Management should be
consulted regarding flooding and coastal areas.
National Parks and Wildlife Service
The National Parks and Wildlife Service
maintains registers of aboriginal sites and relics,
and of historic places located on its own lands
on behalf of all government agencies. NPWS
manages heritage assets and protects large tracts
of natural areas and endangered flora and fauna,
including nature reserves. To be consulted if
land clearing or impacts on natural vegetation
are likely, (particularly in relation to the
provisions of the Threatened Species
Conservation Act 1995 and Native Vegetation
Conservation Act 1997) or if sites of Aboriginal
heritage significance or land managed by the
Service are likely to be affected.

26 TAM – Sustainable Development January 2001

Appendix G Consultation and Approvals
G1 Special Legislative Requirements For aboriginal relics and places, a licence is
needed from the National Parks and Wildlife
Building and other Approvals from Council Services (NPWS) to damage, deface or remove
Under the Environmental Planning and any relics or places in the site of any works.
Assessment Act, building or activity approvals Under the National Parks and Wildlife Act,
may need to be obtained from council for there is a duty to notify NPWS of the discovery
certain works: of such relics and places.

• Building erect/demolish building, install Vegetation Protection and Weed Control

temporary structures etc Several Acts relate to the protection of
• Waste management, transport and disposal vegetation, fauna habitats and soil.
• Certain activities on community land Protected Land
• Public roads lifting or hoisting goods over
A permit is needed to injure, lop, or remove any
footways or roads, extending service pipes tree, shrub or sapling on Protected Land under
beyond road alignments the Soil Conservation Act. Protected land is
Pollution Licences and Approvals from the classified as land steeper than 18 degrees slope,
EPA environmentally sensitive land, land within 20m
of certain prescribed rivers and lakes.
Several Acts are intended to control and reduce
pollution in order to protect the environment Habitat of Endangered Flora or Fauna
and human health.
If any works, including clearing, significantly
• Pollution Control Act affect the environment or habitat of endangered
• Clean Waters Act fauna or flora, an impact statement must be
prepared and a licence be sought.
• Noise Control Act
• Environmentally Hazardous Chemicals Act Protected Plants

Licenses and approvals may be needed for: Native plants are protected under the National
Parks and Wildlife Act. A licence is needed
Water from the NPWS to pick certain plants.
• Discharge to any waters Mangroves, Sea Grasses and other Marine
• Install or modify equipment for waste Vegetation
treatment discharge
A permit is needed from NSW Fisheries to cut,
Air remove, damage or destroy mangroves, sea
• Emissions on scheduled premises grasses and other marine vegetation on public
water or land, agricultural leases or foreshores.
• Emissions and use of plant consuming more These are valuable habitats protected under the
than 300 kg of fuel hour Fisheries Management Act.
Noise
• Noise conditions of operation on scheduled
premises
Heritage and Aboriginal Items
Approval is needed from the Heritage Council
under the Heritage Act to demolish, damage,
remove or alter an item of heritage. There are
also restrictions that can be placed on works that
expose relics without consent.

January 2001 TAM – Sustainable Development 27

Noxious Weeds Environmentally Hazardous Chemicals
Noxious weeds must be controlled and Under the Environmentally Hazardous
destroyed under the Noxious Weeds Act. Chemicals Act, a licence is needed from the
EPA and safeguards are needed for storage,
Other Works on or Near Waterways transport and disposal of certain chemicals.
The Rivers and Foreshores Improvements Act
Dangerous Goods
aims to prevent erosion of land by waters and
protect rivers, lakes and foreshores. Permits are Under the Dangerous Goods Act licenses are
likely to be needed under the Act to: required from the WorkCover Authority for the
storage or transport of dangerous goods.
• Excavate or remove material within 40m of
protected waters Waste Disposal
• Reclaim or till land Under the Waste Disposal Act a license is
• Design, realign, or divert a channel needed to operate a waste depot, accept wastes
• Cause any change to a river bed or bank from other sites, transport waste or create trade
waste. The relevant authority is the EPA.
Dredging and Reclamation
The release of the ISO 14000 series standards
Under the Fisheries Management Act the for life-cycle assessment and environmental
Minister for Fisheries must be informed of any management will increase pressure to give
proposal to dredge or reclaim in any waters. consideration to design and construction
Protection of Fish Passage systems and the potential that these decisions
have on the volumes of waste produced.
Under the Fisheries Management Act:
• No works are allowed to obstruct or strand
fish across a bay, inlet, river, creek, or across
and around a flat. This may apply to certain
works including those that involve
temporarily damming or diverting waters.
• If a dam or weir is to be constructed or
altered, you must first consult the Minister of
Fisheries on the need for a fishway.
Unhealthy/Contaminated Land
Approval is needed from the EPA under the
Unhealthy Building Land Act to build on land
declared as unhealthy. The EPA has control
over contaminated sites under the
Environmentally Hazardous Chemicals Act and
may require a licence if an environmentally
hazardous waste or declared chemical waste is
to be transported.
Storage, Transport and Disposal of
Substances and Wastes
In addition to Local Government Act and
pollution control laws, several other Acts aim to
reduce waste to human health and the
environment from dangerous substances.

28 TAM – Sustainable Development January 2001

Appendix H Case Studies
Neighbourhood Improvement In contrast in the large housing estates in NSW
Program the population is predominantly low-income
earners or welfare recipients with little if any
Developing Sustainable Communities private ownership. Employment is not available
locally, facilities are solely provided by
The Neighbourhood Improvement Program was
government and the individualisation and
born out of an acknowledgment that the large
appropriateness of the built form were not seen
mono economic Public Housing had failed to
as issues that would concern public housing
deliver a sustainable living environment.
tenants. The result is whole suburbs of
Social indicators of sustainability showed the
disenfranchised communities that are
estates were failing to provide an acceptable
characterised by high rates of crime, poor health
level of amenity for thousands of public housing
levels, low education retention rates, inter-
tenants who were expected to live in them.
generational poverty and welfare dependence
The housing estates were developed using the that manifest as unstable populations with many
principles of the Radburn Planning scheme, households moving out of the area within the
which aims to separate pedestrian and vehicle first or second year.
access. It emerged as a guiding philosophy for
In other areas of Australia where these problems
American town planners in the 1920's as a
have been confronted the solutions have
response to the introduction of the motorcar into
revolved around removing the problem housing
residential neighbourhoods.
and thereby moving the tenants by large-scale
The Australian adoption of Radburn was based demolition or gentrification for re-use to private
on a misinterpretation of the social and to some housing.
extent physical context needed to support such
In NSW neither of these two options was
an initiative. American Radburn emerged in
pursued, instead the decision to develop
wealthy neighbourhoods where the upper
sustainable communities was supported as the
middle classes were eagerly embracing the new
most appropriate method for re-positioning the
technology of the domestic motor vehicle. Car
public housing estates and their tenants within a
courts were provided to the rear of the houses
broader more sustainable environment.
where garages housed the valuable family car.
Access was provided to the front and back doors The basis of the change process had to be the
of the main house, the latter off tenants themselves, they in fact are the greatest
pedestrian/bicycle paths that meandered through resource available on the estates and historically
idyllic open space corridors that linked the the most under-utilised. Acknowledging this
residential areas to the town centres. fact involves a huge paradigm shift from one
where the tenants are recipients of a patriarchal
paternalistic construct to one of reciprocal
responsibility where the tenants drive decisions
and are partners in the process of defusing and
maintaining their neighbourhoods as sustainable
communities.

January 2001 TAM – Sustainable Development 29

The nature of adopting sustainable practices The ultimate test of a community’s
often means extensive financial outlays at the sustainability lies in the physical, social,
beginning of an enterprise in return for greater economic and cultural streams being integrated
longer term cost savings over the life of the into a robust entity that can look to the future
project. In the case of the Neighbourhood where the human resources available within a
Improvement Program housing funds have been community are fully utilised. This might mean
directed from construction of new houses to re- for low economic communities the
planning and redesigning of existing non- environmental fabric could start to resemble the
sustainable communities. alternate technology, high labour initiatives of
other less affluent cultures where employment is
Probably the most obvious manifestation of generated from meeting the needs of the local
sustainability is vacancy rates, that is the community.
number of properties and the length of time
each dwelling is vacant, especially when viewed If the economic focus is to change from the
against a waiting list of applicants who are in global to the local then legislative controls that
proven housing stress. In some estates the prohibit or interfere in self-sufficiency will need
vacancy rate runs at 16% annually out of a to also change, as will the relationship between
portfolio of 1300 properties. To replace this lost those commissioned with governing and those
housing opportunity off site would require actively contributing to the development of
funding assistance ten times that required to sustainable communities.
bring the existing resource up to a sustainable
level. Whilst the Life Cycle Cost modelling for the
projects is in a large part hypothetical, the basis
When employment creation is factored in to the of the methodology aims to capture the current
cost scenario of achieving sustainable costs in providing services to the, communities
communities, it is possible to arrive at a and offset them against the investment of funds
situation where demonstrated savings from a into preventative and sustainable initiatives that
whole of government approach can contribute to impact on the need for income support, housing
a cross subsidised sustainable program, that is subsidies, cost of property damage, lost rents,
sustainability based on prevention of reduced asset values, direct service provision
community disintegration. Inter-related savings from emergency services, cost of crime and
can be achieved in the following areas: ultimately cost of criminal justice including
detention.
• Reduced vacancies
• Reduced welfare payments
• Reduced vandalism damage
• Reduced use of emergency services
• Reduced loss of rents
• Reduced administration costs
• Reduced crime
• Improved property care
• Improved asset values
• Improved community satisfaction
• Improved safety and security
The Neighbourhood Improvement Program has
already been assessed by the tenants as highly
successful, the challenge now is to ensure that
the philosophy of community change and
empowerment is continued and is not sacrificed
to the processes of commoditisation.

30 TAM – Sustainable Development January 2001

Hypothetical Case Study Stage3 Assess current service performance
and identify service delivery gaps
Organic Waste Services is a government agency
currently collecting green and kitchen waste The agency is currently meeting service
from households and agencies in the Tarrawarra demands in the Tarrawarra area. It is however
area and transport it to a landfill site. It currently not meeting new government requirements to
services 20000 households and 5 government minimise waste to landfill or to incorporate
agencies. In light of the new NSW Government Sustainable Development principles into its
target to achieve a 60% reduction in waste to business practices.
landfill by the year 2000, the agency has The tables show how to assess the Sustainable
decided to review its current practices and Development performance of current services
integrate Sustainable Development principles and develop objectives and strategies to address
into their service delivery strategy and asset environmental issues. Cost estimates, shown in
management. the left table, should be included in order to
Service Strategic planning compare long-term costs and benefits of each
option.
Stage 1 Define intended service delivery
outcomes Stage 4 Identify, evaluate and select
strategies
Adopt the broad objectives and strategies of
Sustainable Development contained in Table 1 Option A: Compost waste at source:

Stage 2 Forecast future demand and its • Provide current service to users who cannot
impacts on service delivery accommodate a compost bin
outcomes • Provide compost bins to organisations and
households who can accommodate compost
• Meeting the requirements of the Waste
bins
Minimisation and Purchasing Policy
• Give or sell waste to local worm farms
• Increased community expectation for
environmentally safe practices. Option B: Compost waste at depot and sell
compost
• Increased population in the South West of
Tarrawarra by c. 5000
• Increased population densities in the inner
city areas of Tarrawarra. (Higher densities
means that users often lack a backyard which
limits the use of on-site composting)

January 2001 TAM – Sustainable Development 31

32 TAM – Sustainable Development January 2001

Sustainable Development Evaluation of Current Service (see page 3 for evaluation of resources)

Item No. price Cost Activity Aspect Environmental Priority Objectives Potential Strategy
Waste Impact/Benefit
Trucks 20 50,000 1000000 Services • The service itself contributes to • Maintain Implement an Environmental
Investment 3 50,000 -150000 Sustainable Development by environmental Management System
ensuring that less desirable benefit
Maintenance 20 2,000 -40000
methods of waste disposal are • Minimise
Operation 20 4,000 -80000 avoided
Disposal 3 20000 60000 environmental
Cars 5 30,000 -150000 • Current agency activities have impacts
medium to high levels of
Investment .5 30,000 -15,000
environmental impacts
Maintenance 5 1000 -5000
Operation 5 5000 -25000 1 Collection of Parking • Socio/cultural: parking may Low • Minimise impact • Reduce the need to
Disposal .5 10000 5000 waste interrupt local transport on local transport collect the waste
Depot disrupting access to houses routes • Avoid peak hours
Investment 400m2 720/m and businesses
• Monitor problem areas
Maintenance
Operation 2 Transport of Driving • Ecological: air emissions (CO2) Med • Minimise • Reduce the need to
Disposal waste ecological transport the waste
• Socio/cultural: increases traffic
Admin. volume - more congestion on impacts • Shorten transport routes:
Investment roads • Minimise use of decentralise depot
Maintenance roads
• Economic: increases traffic • Look at alternatives to
Operation volume- need for more roads petrol and diesel
Disposal and therefore increased use of
IT natural resources
Investment
Maintenance 3 Dumping of Dumping • Ecological: ecosystems High • Minimise waste • Compost waste at source
Operation waste of waste • Socio/cultural: use of space to landfill to zero by providing compost bins
Disposal into landfill if possible • Compost waste at depot
sites • Economic: use of a natural
HR resource and sell compost
Salaries
Transport
Amenities
TOTALmust be
Note: Cost estimates in this table
included to show the link between
environmental initiatives and cost benefits. It
also reinforces the need for life cycle costing.
Sustainable Development Evaluation of Option A

Item No. Price Cost Activity Aspect Environmental Priority Objectives Potential Strategy
Waste Impact/Benefit
Trucks 3 50000 1500000 Services • The service itself contributes to • Maintain Implement an Environmental
Investment SD by ensuring that less environmental Management System
desirable methods of waste benefit
Maintenance 3 2000 6000
disposal are avoided and that • Minimise
Operation 3 4000 12000 waste is recycled
Disposal 1 environmental
• The activities associated with impacts
Cars 4 30000 120000
this option have minimal
Investment
environmental impacts
Maintenance
Operation 1 Collection of Parking • Socio/cultural: parking may Low • Minimise impact • Avoid peak hours
Disposal waste interrupt local transport on local transport • Monitor problem areas
Depot Delivery and disrupting access to houses routes
Investment replacement and businesses
Maintenance of bins
Operation
Disposal 2 Transport of Driving • Ecological: air emissions (CO2) Low • Minimise • Shorten transport routes:
bins and • Socio/cultural: increases traffic ecological decentralise depot
Admin.
waste volume - more congestion on impacts • Look at alternatives to
Investment
Maintenance roads • Minimise use of petrol and diesel
Operation • Economic: increases traffic roads
Disposal volume- need for more roads
IT and therefore increased use of
Investment natural resources
Maintenance 3 Provision of Material • Ecological: bins could Low • Minimise • Ensure bins are
Operation bins contaminate air, water, soil and ecological environmentally safe and
Disposal generate waste through their impacts manufactured in an
HR manufacture, use and disposal environmentally safe way.
Salaries • Ensure bins can be easily
Transport recycled
Amenities
TOTAL

33 TAM – Sustainable Development January 2001

34 TAM – Sustainable Development January 2001

Sustainable Development Evaluation of Option B

Item No. Price Cost Activity Aspect Environmental Priority Objectives Potential Strategy
Waste Impact/Benefit
Services • The service itself contributes to • Maintain Implement an
Trucks 3 50000 1500000 SD by ensuring that less environ-mental Environmental
Investment desirable methods of waste benefit Management System
Maintenance 3 2000 6000 disposal are avoided by • Minimise
recycling waste
Operation 3 4000 12000 environ-mental
Disposal 1 • The activities associated with impacts
Cars 4 30000 120000 this option have low to medium
environmental impacts
Investment
Maintenance 1 Collection of Parking • Socio/cultural: parking may Low • Minimise impact • Reduce the need to
Operation waste interrupt local transport on local collect waste
Disposal disrupting access to houses transport routes • Avoid peak hours
and businesses
Depot • Monitor problem areas
Investment 2 Transport of Driving • Ecological: air emissions Med • Minimise • Reduce the need to
Maintenance waste and (CO2) environ-mental transport waste
Operation compost impacts
• Socio/cultural: increases traffic • Shorten transport routes:
Disposal
volume - more congestion on • Minimise use of decentralise depot
Admin. roads roads
Investment • Look at alternatives to
• Economic: increases traffic petrol and diesel
Maintenance
volume- need for more roads
Operation and therefore increased use of
Disposal natural resources
IT
3 Composting Disposal • Ecological: waste production Low • Minimise waste • Look at ways to use or
Investment waste to landfill to zero sell compost
Maintenance if possible
Operation
Disposal
HR
Salaries
Transport
Amenities
TOTAL
Sustainable Development Evaluation of Current Resources
Activity Aspect Environmental Impact/Benefit Priority Objectives Potential Strategies
1 VEHICLES
Trucks and Investment Economic: non-renewable resource consumption Medium Reduce resource Look at alternative technologies
cars consumption Ensure vehicles are fuel efficient
Maintenance Ecological: soil, water, and some air contamination Contain ecological impacts Implement an AEMP
Economic: resource consumption
Operation Ecological: air emissions -air quality, greenhouse gases Contain ecological impacts Look at alternative fuels such as electricity and gas
emissions minimise fuel and oil Minimise distances
Economic: non-renewable resource consumption - fuel consumption
Implement an AEMP
Disposal Ecological: waste production. Minimise waste to landfill Reuse or recycle parts or whole asset
2 ACCOMMODATION
Depot and Investment Ecological: eco-system and air, water, soil, noise Medium Ensure building has high Include Sustainable Development objectives in brief and all project
admin pollution during construction Sustainable Development proposals
office Socio/cultural: location, aesthetics performance
Economic: natural resource consumption
Maintenance Ecological: soil, water contamination Contain ecological impacts Implement an AEMP
Operation Ecological: waste production Minimise waste to landfill Reduce, reuse, recycle waste
Economic: resource consumption - energy water increase efficiency of Use recycled office equipment and stationary
resource consumption
Conduct energy, water and waste audits and develop strategies for
more efficiency
Implement and EMS
Disposal Ecological: waste production. Minimise waste to landfill Reuse or recycle parts or whole asset
3 IT
Investment Ecological: ecological impacts during manufacture, Low Purchase environmentally Ensure equipment is energy efficient eg.: sleep modes
Economic: resource consumption - natural resources friendly, energy efficient,
recyclable equipment
Maintenance Economic: resource consumption - energy Minimise energy consumption
Operation Economic: resource consumption - energy Minimise energy consumption Institute energy saving initiatives such as turning equipment off when
not in use
Disposal Waste production Minimise waste to landfill Ensure supplier has a take back system or remanufacturing program
4 HR
Transport Economic: fuel consumption Medium Minimise fuel consumption Provide incentives to use public transport
Amenities Ecological: waste production Minimise waste production Implement and EMS
Use recycled papers

35 TAM – Sustainable Development January 2001

This page is intentionally blank
Heritage Asset
Management
Guideline
Heritage asset management guideline

January 2001
DPWS Report Number 01051

NSW Department of Public Works and Services Cataloguing-in-Publication data

New South Wales. Government Asset Management Committee.

Heritage asset management guideline.

ISBN 0 7347 4104 9 (set)

ISBN 0 7347 4152 9

1. Asset management – New South Wales. 2. Capital investment. 3. Public administration – New South Wales
I. Title. (Series : TAM)

352.50944

 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any
process without written permission from the NSW Government Asset Management Committee. Requests and inquiries
concerning reproduction and rights should be addressed to:

Secretariat
Government Asset Management Committee
Level 23 McKell Building
2-24 Rawson Place
SYDNEY NSW 2000
Website www.gamc.nsw.gov.au
E:mail gamc@dpws.nsw.gov.au

Set consists of :

ISBN 0 7347 4122 7 Asset strategy

ISBN 0 7347 4194 4 Office accommodation strategy
ISBN 0 7347 4128 6 Capital investment : strategic planning
ISBN 0 7347 4134 0 Asset maintenance : strategic planning
ISBN 0 7347 4140 5 Asset disposal : strategic planning
ISBN 0 7347 4146 4 Sustainable development guideline
ISBN 0 7347 4152 9 Heritage asset management guideline
ISBN 0 7347 4158 8 Demand management guideline
ISBN 0 7347 4164 2 Life cycle costing guideline
ISBN 0 7347 4170 7 Value management guideline
ISBN 0 7347 4176 6 Risk management guideline
ISBN 0 7347 4182 0 Post implementation review guideline
ISBN 0 7347 4188 X Asset information guideline
Contents

1 INTRODUCTION ____________________________________________________3
1.1 State Government as heritage custodian ..................................................................................................3

1.2 Heritage assets in the context of Total Asset Management .....................................................................5

1.3 Living with a heritage asset .......................................................................................................................6

2 ROLES AND RESPONSIBILITIES ______________________________________7

2.1 New South Wales Government Agencies..................................................................................................7

2.2 Local Government ......................................................................................................................................8

2.3 Other groups ...............................................................................................................................................9

2.4 Local Communities.....................................................................................................................................9

2.5 Relevant Legislation 6 ...............................................................................................................................10

3 HERITAGE MANAGEMENT PROCESS _________________________________11

3.1 Identification - learn what’s there...........................................................................................................11

3.2 Strategic Planning - fit the heritage assets to the business ....................................................................11

3.3 Detailed Planning - plan what has to be done ........................................................................................11

3.4 Implementation - do it ..............................................................................................................................11

3.5 Monitoring and Review - ensure the goals were met .............................................................................11

4 IDENTIFICATION OF HERITAGE ASSETS ______________________________12

4.1 Survey, categorisation and significance mapping of assets ...................................................................12

4.2 Asset registers ...........................................................................................................................................12

5 STRATEGIC PLANNING _____________________________________________14

5.1 Key factors for consideration ..................................................................................................................14

5.2 Continuing with current use ....................................................................................................................15

5.3 Adapting the asset to a new use ...............................................................................................................15

5.4 Transferring the asset to a new owner....................................................................................................16

6 DETAILED PLANNING AT ASSET LEVEL_______________________________17

6.1 Items to consider when preparing asset management plans.................................................................18

6.2 Funding considerations ............................................................................................................................20

7 IMPLEMENTATION _________________________________________________21

8 MONITORING, REVIEW AND FEEDBACK_______________________________22

January 2001 TAM – Heritage Asset Management Guidelines 1

APPENDIX A RELEVANT LEGISLATION ______________________________23

APPENDIX B CATEGORIES OF HERITAGE ASSETS ____________________26

APPENDIX C ASSESSMENT/CLASSIFICATION OF HERITAGE ASSETS ____27

APPENDIX D TYPICAL RECORD FOR INCLUSION IN S.H.I. DATABASE ____28

APPENDIX E CHECKLIST OF DATA FOR ASSET REGISTER _____________33

APPENDIX F GLOSSARY OF HERITAGE TERMS _______________________35

APPENDIX G CONTACT NUMBERS FOR HERITAGE ORGANISATIONS_____37

APPENDIX H NSW HERITAGE – MINIMUM STANDARDS OF MAINTENANCE

AND REPAIR _________________________________________39

2 TAM – Heritage Asset Management Guidelines January 2001

1 Introduction
1.1 State Government as heritage custodian
Heritage assets are an integral part of a community and its environment. They are the tangible
evidence of the state’s cultural origins and its progress, and the historical foundation on which many
decisions concerning the community’s future are built. Familiar examples of heritage assets in the
State are given in Table 1. These natural and built assets link the culture and history of a
community.

Table 1 HERITAGE ASSETS

Categories 1 Examples

Landscapes Royal Botanic Gardens, roadside verges containing

rare and/or endangered species, individual trees, old
growth forests and isolated remnants of bushland

World heritage parks NSW World Heritage classified Lord Howe Island
Group, Willandra Lakes Region and Central Eastern
Australian Rainforest

Places, precincts and streets The Rocks precinct and aboriginal sites Macquarie
Street

Works Sydney Harbour Bridge and Eveleigh railway

workshops

Buildings Sydney Opera House and the Walter Burley Griffin

incinerator, Willoughby

Groups of buildings Kirkbride Block at Rozelle Hospital

Rooms within buildings Sir Henry Parkes Room in the Chief Secretary’s
Building

Archaeological sites Archaeological remains at the first Government House

site

Relics and objects Furniture—Speakers Chair, NSW Parliament House

Archival records—Captain James Cook’s log,
books, paintings and photographs
Objects—the Department of Land and Water
Conservation’s collection of surveying equipment
Statues, fences, gates, pathways and street
furniture

Shipwrecks Convict ship Hive at Wreck Bay; over two thousand

shipwrecks lie within the inland rivers and coastal
waters of NSW
1
A detailed list of all categories of heritage assets is given in Appendix B
January 2001 TAM – Heritage Asset Management Guidelines 3
The broad objective of the heritage guideline is This guideline integrates conservation
to identify and conserve the environmental obligations into planning and asset management
heritage of New South Wales for the benefit of processes. It is primarily for use by those
present and future generations. engaged in business planning, development of
service strategies, facilities management, capital
Considerable work has been done since the investment strategic planning, asset
introduction of heritage legislation in the 1970s. maintenance planning and budgeting.
This can clearly be seen in conserved areas
throughout the State that have become the focal The management system described in these
point for community activities, and in the guidelines is not meant to inhibit the
widespread support for the retention and development or use of heritage assets. Instead,
maintenance of heritage assets. the emphasis is on developing management
options that maintain heritage values as an
More specifically the Government’s heritage integral part of asset management decision-
management policy and supporting legislative making.
framework aims to:
In the context of these guidelines heritage assets
• Conserve significant heritage assets for the
are specifically defined as:
benefit of present and future generations
• Systematically identify, assess and develop “a landscape, place, work, building or relic of
appropriate management strategies for architectural, archaeological, aesthetic, social,
heritage assets cultural, technical, scientific or natural heritage
significance.” 2
• Maintain required standards and conditions,
and
• Conserve by agreement rather than
compulsion.

2 NSW Department of Urban Affairs & Planning

4 TAM – Heritage Asset Management Guidelines January 2001

1.2 Heritage assets in the context of Total Asset Management
Total Asset Management focuses assets on the However, agencies must ensure that the
delivery of an agency’s primary service purposes of the Government’s Total Asset
responsibilities. Management policies, procedures and
performance standards are met and that they
Organizations that have control of heritage comply with relevant heritage legislation.
assets also have a second service obligation.
While they use the assets in delivering their The management of heritage issues should be
primary service, they are also responsible for viewed as an essential part of the management
the stewardship of the assets and protection of of the assets, rather than another problem and
their significance for future generations. cost impost. Sustainable management of
heritage values should be treated by an agency
The procedures given in this guideline may be as part of its core business.
implemented by government agencies in a
flexible manner reflecting the differing size and The need for agencies’ assets to be employed
nature of their assets, their heritage portfolios optimally is imperative. The establishment of
and agencies’ program requirements. asset performance requirements is a key
component in the process of assessing the
ongoing relevance of the agency’s portfolio, and
in making management and investment
decisions.

January 2001 TAM – Heritage Asset Management Guidelines 5

1.3 Living with a heritage asset
A substantial part of government agencies’ The benefits of occupying heritage assets can be
heritage assets comprises property: buildings, considerable. However, in some circumstances
groups of buildings, rooms within buildings and the cost of service delivery may be increased by
works. In that context, the best way of the use or occupation of a heritage asset. The
conserving a heritage asset is to maintain a costs of heritage management (including
viable and living use. Experience has shown increases in service delivery costs) should be
that unoccupied property of any kind will compared with any benefits gained from the use
deteriorate rapidly and become a target for of the asset. The net cost can then clearly be
vandals. Heritage property controlled by identified in the agency's reporting.
government agencies must therefore be secured,
properly maintained and buildings should not be Most penalties are due to backlog maintenance.
This in itself is often the product of past neglect
left vacant.
rather than the inherent poor performance of the
Immediate service delivery priorities should not asset. All assets, old or new, require
compromise the heritage values of heritage maintenance and periodic upgrading and this
property. This may call for special conservation will not usually be accepted as grounds for
expertise and/or the allocation of resources to special funding. If such costs are increased
maximise a property’s potential and to maintain because of constraints imposed through meeting
the property to an extent that is also acceptable heritage requirements or because the type of
to the community. work is now considered specialised or
antiquated, grounds for assistance may exist.
There are many feasible uses for heritage assets
that can fulfil the owner’s needs without Therefore, when budgeting for heritage
compromising the historic integrity. This means management of an asset, one that continues in
finding a use that maintains such things as the active use, the costs are not solely related to
visual setting, form and scale of the property, heritage issues, but can be apportioned between
and arranging for continuous protective care of the cost of an agency’s services (for example,
the fabric that involves the least possible calculated by the cost of an equivalent new
intervention. building) and the cost of maintaining heritage
values.
The museum use of heritage property has often
proven to be impractical and should be limited The heritage management process described in
to property of major cultural significance. Other Sections 3 to 8 gives a generalised step-by-step
options should also be explored. The Historic approach to the management of all categories of
Houses Trust, the state instrumentality assets.
responsible for maintaining and managing house
museums, manages a limited portfolio of houses
and public buildings and is not actively seeking
to expand its portfolio.
A heritage asset which continues in active use
should contribute to an agency’s service
delivery capabilities and thus to its core
business. It will almost certainly enrich the
heritage of the State for the benefit of the
community as a whole by contributing to its life,
urban quality and to the economy.

6 TAM – Heritage Asset Management Guidelines January 2001

2 Roles and responsibilities
2.1 New South Wales Government Agencies
Government agencies must identify, assess and Department of Urban Affairs and Planning
plan for the future of the natural and built
heritage assets under their control. Their The Department of Urban Affairs and Planning
heritage assets are to be managed within the (DUAP) is responsible for environmental
Total Asset Management framework. planning issues including the coordination of
State, regional, coastal and metropolitan
Agencies’ responsibilities fall into two main planning.
categories:
NSW Heritage Office
• Under Government heritage policy and
legislation, agencies are required to identify In 1996, the Minister for Urban Affairs and
and record the heritage value of the assets Planning announced the establishment of a new
under their control, and Heritage Office to provide advice to the
community and to the Minister on heritage
• As stewards of heritage assets, agencies are matters. The role of the office is to:
required to appropriately manage the use and
maintenance of their assets. • Service the NSW Heritage Council
Agencies’ service outcomes must incorporate • Maintain the NSW State Heritage Inventory
the conservation and management of any • Provide specialist advice to the community
heritage assets within their portfolios. on heritage matters
Heritage Council of New South Wales • Provide policy advice relating to heritage to
the Minister, and
The Council was established in 1978 by the
Heritage Act 1977. Its charter is to develop • Deal with smaller matters that would
policies and programs to conserve the State’s otherwise go to the Heritage Council
heritage and to promote community awareness (especially for Councils without the authority
of heritage and its value. The Council’s role for their own heritage matters).
includes: Department of Public Works and Services
• Encouraging government agencies, local The Department of Public Works and Services
government and the community to acquire (DPWS) assists agencies with all aspects of
conservation skills and to participate in heritage management. This includes dealing
identifying and conserving items of heritage with heritage issues affecting properties and the
significance development and maintenance of asset registers.
• Advising the minister on measures to be DPWS provides specialist services through their
taken under the heritage act to protect Heritage Design Services Unit. These services
heritage under threat, or of special include management of the interface with
significance, and consultants and contractors and the provision of
• Providing advice on the implementation of contract and project management services. It
the Heritage Act. can assist with the development of adaptive re-
More specifically, the council administers the use options and project or program evaluation
Heritage Act and has a determining role in tools, heritage maintenance programming, etc.
relation to alteration to property covered by These services are provided on a ‘fee-for-
conservation orders. In this context, it is service’ basis.
principally an expert advisory and
recommending body. Supported by the NSW
Heritage Office, it takes a guiding, decision-
making, and educative role towards places of
cultural significance.

January 2001 TAM – Heritage Asset Management Guidelines 7

National Parks and Wildlife Service Local Environment Plans (LEP)
The National Parks and Wildlife Service An LEP sets out developmental policies for the
(NPWS) maintain registers of aboriginal sites area administered by the local government
and relics, and of historic places located on its authority. Local government authorities are
own lands and on behalf of all government required to exhibit and gain community
agencies. acceptance for a draft LEP before it is submitted
for approval to the Minister for Urban Affairs
Enquires concerning the management of any and Planning, who ensures it conforms to the
aboriginal relics or sites should be directed to requirements of the Environmental Planning and
NPWS. It manages heritage assets and protects Assessment Act 1979, Local Government Act
large tracts of natural areas and endangered 1993, directions from the Minister, State
flora and fauna, including nature reserves. environmental planning policies and regional
environmental plans.
2.2 Local Government The LEP will identify any conservation areas
Local government authorities make and heritage items. It may stipulate development
determinations concerning development controls for zones within the area for residential,
proposals. Under the Environmental Planning industrial, open space and other activities. It will
and Assessment Act 1979, local government also cover matters such as car parking, tree
authorities in New South Wales are required to preservation and outdoor advertising.
identify and manage heritage assets which are of Development Control Plans (DCP)
significance in the areas under their
administration. They do this through heritage Several local government authorities also have
studies and planning instruments. DCP that provide detailed guidance on the
design principles which owners need to observe
Local government authorities are also to maintain the special qualities of an area.
responsible for informing and educating the
community on heritage matters. Some have Other programs and incentives
appointed specialist advisers to provide Some local government authorities now have
technical and management advice on heritage structured programs that provide protection for
matters. A number also have a Heritage heritage assets, supported by extensive
Advisory Committee to facilitate community promotion of heritage awareness, and at the
input and to promote community involvement. same time offer a comprehensive package of
Local government authorities administer encouragement and incentives for sympathetic
conservation of heritage assets as part of the development and use of the natural
environmental impact process under the environment.
following planning instruments:

8 TAM – Heritage Asset Management Guidelines January 2001

2.3 Other groups
Institution of Engineers (IE) Royal Australian Historical Society (RAHS)
The Institution of Engineers is very active in the The RAHS maintains a centre for the study,
development of policy and in the identification research, writing and publication of Australian
and mapping of items for registration. The history and provides advice on historical matters
institution plays a major role by participating in to government and statutory bodies. Its technical
conservation programs. For example, heritage information service can assist agencies seeking
assets such as Sydney Harbour Bridge and access to qualified individuals who can help
Eveleigh Railway Workshops. document the history of a heritage asset or area.
National Trust of Australia (NSW)3 Small grants are provided by the society to
community groups, individuals, churches and
The National Trust of Australia is the country’s local councils for archival and local history
largest private conservation organisation and is projects. RAHS conducts workshops and
part of a worldwide network of similar training for society volunteers.
organisations. The National Trust has no
statutory powers. Through its expert honorary Royal Australian Planning Institute (RAPI)5
committees it identifies and records historic
places of national and local significance. RAPI is a professional organisation of planners
Classification by the National Trust gives with members throughout Australia who are
recognition to the heritage value of a particular committed to excellence in the practice of urban
place or object. The Trust stimulates debate and and regional planning.
conducts campaigns aimed at raising the level of
community and government awareness of 2.4 Local Communities
conservation.
Community attitudes and expectations regarding
Royal Australian Institute of Architects heritage assets are expressed by individuals,
(RAIA)4 groups such as those mentioned in the previous
A professional organisation of architects, the section, other local historical societies, and by
RAIA promotes architecture and its public role property owners themselves.
through exhibitions, lectures, awards and public The community can actively support the
comment. The Institute contributes to the conservation of heritage assets, and groups very
formulation of heritage management policies often become involved in heritage issues related
and sustains a 20th Century Buildings of to a specific asset. This is because local
Significance Register to identify and retain communities frequently feel a sense of
outstanding works of architecture in the State. ownership, in particular towards assets in
The register is maintained by the Architecture government control. Community bodies invest
Conservation Committee (ACC). The Institute countless hours in maintaining and supporting
coordinates the register with government heritage assets across the State.
agencies and like-minded groups and maintains Government values the views of the community
lists of conservation architects and others who on conservation issues and encourages
specialise in the management of heritage assets. community participation in the management of
To date 1,000 buildings have been included on heritage assets. For this reason, the interests of
the RAIA list. both parties are usually best served when
government agencies engage in appropriate
community consultation, and seek to develop
partnerships with communities to work jointly
to identify and conserve local heritage assets.

3 Represented on the Heritage Council of NSW

4 Represented on the Heritage Council of NSW 5 Represented on the Heritage Council of NSW

January 2001 TAM – Heritage Asset Management Guidelines 9

2.5 Relevant Legislation 6
New South Wales6 Commonwealth Legislation
Government policy, conveyed through relevant Australian Heritage Commission Act 1975
legislation, requires that where assets are
The Australian Heritage Commission is an
assessed as having heritage values, the assets be
independent statutory authority established
regarded as inalienable. This means:
under the Commonwealth Australian Heritage
• The agency’s responsibilities cannot be Commission Act 1975. It provides advice on
ignored or avoided and cannot be transferred identifying natural, historic, and Aboriginal and
to another organization without approval Torres Strait Islander heritage places, many of
• Heritage values are to be understood, which are listed on the Register of the National
respected, protected and conserved Estate.
• No material change can be made to an asset The Commission’s main task is to compile and
without approval by relevant authorities update the register, which now lists more than
11,000 natural and cultural places in Australia.
• Doing only as much as is necessary to protect
The register alerts governments, planners,
and reveal the significance of an asset
decision-makers, researchers and the
• Doing work which makes heritage assets community to the heritage values of these places
useful and secure so that action can be taken to conserve them. All
• Heritage considerations should be factored places listed in the register are strictly assessed
into all asset management activities and against publicly available criteria outlining
budgeting, and national estate values.
• The agency has an over-arching The Commission does not own or manage any
responsibility to administer assets for the national estate places and does not have entry
benefit of the people of New South Wales. rights to places in the register. All are owned by
In New South Wales there are six major acts governments (Commonwealth, State or local),
and minor sections of several other Acts by business, voluntary or other organisations, or
involved in the protection of the State’s by private individuals. Listing in the register
heritage: does not “lock up” or directly affect the way
owners manage places. There is no legal
• NSW Heritage Act 1977, amended 1999 obligation on the part of owners of listed places
• Environmental Planning and Assessment Act to alter the way in which a property is managed
1979 or disposed of, nor does it mean that owners are
required to provide public access to listed
• National Parks and Wildlife Act 1974 places.
• Endangered Fauna (Interim Protection) Act,
1991
• Wilderness Act 1988
• The Historic Houses Trust Act 1988.
Regulatory controls affecting heritage assets can
be imposed through other legislation such as:
Local Government Act, Coastal Protection Act,
Clean Waters Act, Clean Air Act, Fisheries and
Oyster Farms Act, Soil Conservation Act,
Forestry Act, Historic Shipwrecks Act and the
Water Resources Act.

6
For a detailed understanding of the impact of this body
of legislation refer Appendix A

10 TAM – Heritage Asset Management Guidelines January 2001

3 Heritage management process
Identify Strategic Detailed Implement Monitor
Planning Planning

Identify assets Determine heritage Produce work plan Allocate resources Review and evaluate
Assess assets management policy Identify & rank risks Implement plan
Record assets Review corporate Secure resources
objectives and service
Register assets strategy Incorporate into asset
management plan
Produce a
Conservation Plan
Determine future use

Figure 1 The heritage asset management process

3.1 Identification - learn what’s there 3.3 Detailed Planning - plan what has
This step involves identifying and assessing to be done
heritage items under the agency’s ownership or At this point it is necessary to develop a
control; registering them for inclusion in the management program for individual heritage
State Heritage Inventory Program; and items. This involves: identifying and ranking
surveying them and completing condition the tasks required to implement the program;
assessments to provide information for strategic testing the extent of risks entailed in the
and detailed planning for short and long-term adoption of the preferred option; assessing the
management of the heritage assets in the likely extent of human, technical and financial
portfolio. resources required; finalising the economic,
financial and service delivery outcomes; and
3.2 Strategic Planning - fit the preparing a maintenance plan to be incorporated
heritage assets to the business into the portfolio Asset Management Plan.

This step links heritage needs to the agency’s 3.4 Implementation - do it

corporate objectives and service strategies. It
involves determining heritage management This involves securing approvals, resources and
policies and making decisions concerning the funding and implementing the program to the
future use of heritage assets. extent of the available funds and other
resources.
Decisions are made that affect all future
management actions including whether a
particular asset is to continue in its present role, 3.5 Monitoring and Review - ensure
be adapted to a new role or be transferred to the goals were met
another agency or owner. This involves testing
and confirming functional and economic This phase involves setting in place mechanisms
requirements and service outcomes. and implementing an ongoing monitoring
program to review the effectiveness and
A Conservation Plan should be produced and efficiency of heritage management activities.
incorporated into the agency’s overall Asset
Management Plan and Capital Investment Success will be measured in terms of the
Strategic Plan. agency’s overall business outcomes, service
delivery obligations and asset portfolio
performance requirements. It may be necessary
to amend future phases of the asset management
program to address new or changed
circumstances.
January 2001 TAM – Heritage Asset Management Guidelines 11
4 Identification of heritage assets
Identify

Identify assets
Assess assets
Record assets
Register assets

4.1 Survey, categorisation and 4.2 Asset registers

significance mapping of assets Government agencies are required to maintain
Agencies are required to survey their portfolios an accurate register of all assets which have a
to identify any assets, which may have heritage service potential and/or the capacity to provide
significance. Standard heritage categories7 economic or social benefits, and which may be
should be used to organise the survey and begin used in the production of goods and services.11
the process of heritage assessment. The For convenience and security this data should be
Department of Urban Affairs and Planning stored and updated electronically. Agencies
(DUAP) assessment guidelines and criteria8 should continuously update their asset register
must be used as the basis of assessment and to allow efficient, day-to-day management of all
classification. It is also wise to obtain assets, including those of heritage significance.
professional advice from qualified heritage
practitioners to clarify the heritage significance The register should be an information tool for
of any items or assets. continuously improving asset management and
should enable agencies to reduce the risks
Generally, it is necessary to gather a range of associated with inappropriate use or under-
information about the area in which the items or utilisation being overlooked
assets are located9. Typically this would include
the history, architectural characteristics, In 1988, Section 170 was added to the Heritage
development patterns and the topography of the Act, requiring NSW Government agencies to
area. If a number of heritage items are located prepare a Heritage and Conservation Register.
within one area they should be surveyed at the In particular, agencies are required to:
same time.
• Ensure that the heritage assets on the register
The survey should reveal dominant heritage are being monitored
features, define the location of specific items, • Update the heritage register annually at least,
and place them within their historical context10. and preferably continuously
Information concerning government policies • Make the particulars of registered heritage
and other matters, which influenced the assets available for public inspection, and
acquisition of an asset, can help to establish • Submit particulars of the heritage assets to
whether the asset has state or regional the Heritage Council of New South Wales for
significance, and could be included in funding inclusion in the State Heritage Inventory
applications. (SHI)12 database.

7 Summarised in Appendix B
8 Summarised in Appendix C 11 Refer Total Asset Management Manual, Asset
9 A sample of a record detailing information covered in Registers
the initial survey is given in Appendix D 12 Data supplied concerning each asset for inclusion in
10 A detailed check list of items for inclusion in the asset the S.H.I. database
register is given in Appendix E should follow the format given in Appendix D

12 TAM – Heritage Asset Management Guidelines January 2001

In 1999, additional provisions were added to The register should contain a fundamental
section 170 of the NSW Heritage Act. These record of current facts concerning an agency’s
provisions require government instrumentalities heritage assets, used to assist with making
(including state owned corporations) to maintain decisions about their management. The register
their identified heritage items in accordance should be referred to before any maintenance,
with the best practice heritage management planning, or capital work projects are
principles issued by the Minister and guidelines contemplated.
issued by the Heritage Council. In addition, Any links between registers should be shown,
annual reports need to include a summary of for example inclusion in the agency’s register
heritage items listed in their section 170 and inclusion in other registers such as the
registers and a statement on the condition of the Australian Heritage Commission’s Register of
State significant heritage items in the care of the the National Estate, the RAIA managed 20th
agency. Century Buildings of Significance Register,
A large proportion of heritage assets will consist Institution of Engineers Register of Significant
of buildings and works. However, furniture, Engineering Works, or the National Trust’s
fittings, written records and art works should register. This will assist in coordinating inter-
also be surveyed to assess whether they should agency and inter-governmental activities and
be included in the heritage and conservation avoid duplication of effort and costs.
component of the agency’s asset register.
The register should be continuously updated as
changes occur. This will help to ensure that the
information is reliable and relevant. For
example, it is necessary to:
• Add new information about heritage assets
• Add new information about existing assets
when they qualify for heritage registration,
and
• Delete information about assets that have
been disposed of or found to be of
insufficient heritage significance.

Figure 2 Relationships between Agency Asset

Heritage Register; Section 170 and S.H.I.
Asset details Registers

Agency
Government Section 170
Information
Agency Heritage
System
Asset Register Asset
Registration
Incorporates all assets
Apply Total Asset
Management System

State State
Heritage Information
Inventory System
Program
S.H.I.P

January 2001 TAM – Heritage Asset Management Guidelines 13

5 Strategic planning
Strategic
Planning

The next step is to determine management 5.1 Key factors for consideration
strategies for the agency’s heritage assets. An
agency may choose to continue to use the asset What performance is required from the
in its present role, to adapt it to a new role or to asset, and what contribution should it make
transfer the asset to a new owner. to service outcomes?

Several different types of input and activities are • These answers should be compared to the
required for heritage asset strategic planning: ability of the asset to deliver this
adoption of an agency-wide heritage performance.
management policy/strategy; reference to many What are the statutory requirements relating
of the agency’s other strategic planning to the asset?
resources; assessment of fitness-for-purpose;
assessment of benefits to the agency and to the Statutory requirements relating to heritage may
public; consideration of options for future use, derive from several sources:
and specialist heritage planning expertise. • A Local Environment Plan (LEP)
Professional expertise should be sought by • Regional Environmental Plan (REP)
employing experienced conservation • Interim Conservation Order (ICO) or
practitioners to prepare a Conservation Plan for Permanent Conservation Order (PCO)
individual items or groups of items where
appropriate. All potential controls should be checked to
determine any constraints affecting future
A good Conservation Plan is an essential development. A Conservation Plan should
problem-solving tool, which clearly establishes include details of any statutory requirements.
the significance of the heritage asset. It may
make recommendations for future use, however What are the needs of Government?
there is no standard brief. Conservation Plans • Does the Government have a particular
should be reviewed regularly and updated as interest in the asset?
necessary.
• Does government policy affect the re-use of
such assets?
• Is there a current government policy
regarding heritage assets in that particular
area?
What are the needs of the community?
• Does the community have a particular
interest in the asset?
• How will community interest be harnessed?
• Will a change of use create community
opposition?

14 TAM – Heritage Asset Management Guidelines January 2001

Which is the preferred option for use? 5.3 Adapting the asset to a new use
• Continue with the current use? Current uses may no longer be functionally or
• Adapt the asset to a new use? financially compatible with the agency’s service
delivery requirements and it may be more
• Could the asset be better used by another
appropriate for the asset to be put to another
agency, and is transfer of ownership an
use. This is known as “adaptive re-use”. The
option?
aim is to find a use that meets the agency’s
What is required to achieve the selected service requirements and at the same time
option? conserves intrinsic heritage values. Business
• Determine what work is to be undertaken and needs must be balanced with heritage
when; obtain any necessary approvals; obligations.
allocate management, technical, financial and Agencies are advised to use established
any specialist resources and skills; and methodologies such as value management and
develop internal and external economic appraisal to help determine whether a
communications strategies. new use would be more appropriate.
How will the agency determine whether the Examples of successful adaptive re-use of
strategy adopted meets desired outcomes? heritage assets include Sydney Park (formerly
• What are the desired outcomes and what are the St Peters Brickworks), East Sydney
the criteria for assessing whether the asset is Technical College, Pyrmont Bridge, the
meeting them? Powerhouse Museum, the First Government
House Site, the Walsh Bay precinct, Rodd
Island and the Quarantine Station.
5.2 Continuing with current use Effective use of heritage assets can produce
The best way to effectively manage a heritage many benefits:
asset is to maintain a viable and living use for it. • Lower operating costs - after catch-up
Many State-owned heritage assets such as maintenance or improvements have been
schools, courthouses and fire stations remain in carried out, lower maintenance costs and
full and active use. As a general rule, this lower energy consumption may be possible
ensures their maintenance and conservation.
• An attractive working environment - offices
However, it is important that heritage values are
can be quieter, may not require air
not jeopardised by short-term decisions by
conditioning and are often in pleasant
owners, occupiers or users, for example through
surroundings
inappropriate development, use, maintenance or
refurbishment. • A link between the agency and the local
community - heritage assets attract public
Agencies should bear in mind that part of their attention, and conservation activity often
heritage management responsibility is ensuring attracts public support. Links with the
that building users are appropriately aware of community can be enhanced through open
heritage significance and conservation days, allowing public access to facilities,
constraints. Where appropriate this may extend forming trust groups etc.
to the occupiers or users having contractual
obligations. • Employment and business opportunities -
direct and indirect employment can result, for
example through tourism-related business
activities
• Status and recognition - heritage assets are
valued and known in the community.

January 2001 TAM – Heritage Asset Management Guidelines 15

5.4 Transferring the asset to a new
owner
In some cases a heritage asset may not support
the efficient delivery of an agency’s services. In
spite of this, the responsibility for maintaining
the asset’s heritage values remains with the
agency. However, the agency may consider
transferring the use and/or control of the asset to
another agency. This could be arranged by
transferring the title, or by leasing or licensing
the asset to that agency, or by another form of
agreement.
Maximum effort should be made to avoid
abandoning or destroying heritage assets. The
potential loss incurred to society by the
destruction of a heritage asset must be fully
assessed, with reference to professional heritage
expertise. Demolition of heritage assets requires
the consent of the Heritage Council.13

13 See also Total Asset Management Manual guidelines on

Asset/Property Disposal

16 TAM – Heritage Asset Management Guidelines January 2001

6 Detailed planning at asset level
Detailed
Planning

Having determined how an asset is to be used, The scope of detailed planning will be
detailed planning at asset level is the next step. determined by the future use requirements.
This requires a combination of experience, Management methodologies such as value
foresight, detailed knowledge of the agency’s management, risk management and economic
requirements, and technical and specialist appraisal can be used to assess and confirm the
heritage expertise. The detailed planning must functional, economic, financial, social and
incorporate whatever is necessary to protect, cultural benefits that will be generated. If used
conserve, reveal and explain the heritage at the right time these methodologies can help to
significance of the asset. prioritise works and ensure maximum value for
money.14
The success of an agency’s heritage
management will be evident if heritage values Planning should clearly identify the human,
are conserved and extended, and will be seen in technical, financial and physical resources
outcomes such as: required; including their availability, cost,
respective roles, responsibilities and
• The quality of conservation work and the
accountabilities.
standard of finishes
• The extent to which functional requirements Key steps during this phase include:
are met • Identifying and prioritising tasks, to generate
• Successful integration of old and new a work plan for each asset, and
elements. • Prioritising and scheduling this work in
Successful outcomes depend on less tangible relation to the agency’s other asset
things such as: management projects.
• Whether innovative solutions are found to
accommodate service delivery needs within
heritage constraints
• The quality of the interaction between the
parties involved, and
• The extent of community satisfaction with
the processes and outcomes.

14 See also Total Asset Management Manual , Value

Management/Risk Management/Economic Appraisal

January 2001 TAM – Heritage Asset Management Guidelines 17

6.1 Items to consider when preparing asset management plans
When preparing an asset management plan for Asset Maintenance Plan
heritage items, reference should be made to
It is important that agencies recognise heritage
many of the agency’s management planning
property as an “asset” not merely as the source
strategies, resources and reports. In particular
of maintenance liabilities. However, heritage
the following items should be considered:
property may require detailed attention, frequent
If continuing with the current use maintenance, specialist advice, specialist
tradespeople, and therefore budgeting based on
Conservation Plan special heritage requirements. Assets of high
Having decided to continue with the current use, cultural significance may require a very high
review the Conservation Plan. standard of maintenance at all times. Others
may be maintained to general commercial
Document the policies, procedures and standards, whilst others that are not presently in
performance standards that are recommended in use should be maintained to prevent
order for heritage significance to be retained in deterioration, discourage vandals and ensure
continued use and/or future development. public safety.
Integrate these recommendations with the Maintenance strategies are governed by an
agency’s overall asset management strategy. agency’s particular requirements and
Ensure that an appropriate level of funding is circumstances and may include a mix of “fix
allocated. when fail” or breakdown maintenance,
preventative maintenance, servicing
Capital Investment Plan maintenance, cyclic maintenance, and
Determine whether capital investment is the condition-based maintenance. When assets are
best solution. Where capital investment is registered their condition should be assessed
required, identify and document long and short- and decisions made about maintenance
term capital investment requirements in relation priorities.
to the delivery of services. In some instances it will be necessary to
Identify what needs to be done to cover any schedule maintenance to address specific needs,
shortfall between what exists and what is eg. a stonework program. Guidelines should be
needed. Identify the most cost effective provided for building managers concerned about
solutions and incorporate these in the agency’s protecting the significance of the place on a
Capital Investment Strategic Plan.15 day-to-day basis, and for future
owners/occupiers.
The costs for maintenance are met from
agencies’ recurrent allocations. Major periodic
maintenance costs are reviewed by the Budget
Committee in the same way as major new
capital works, within the context of the
Government’s overall budget priorities. These
must be supported by economic appraisals and
value management studies. It is advisable for
agencies to prepare budgets for all stages of a
conservation program in connection with a
single asset and for the portfolio as a whole.

15 See Total Asset Management Manual, Capital Investment

Planning

18 TAM – Heritage Asset Management Guidelines January 2001

Maintenance planning should follow the If adapting the asset to a new use
structured and systematic process defined in the
Total Asset Management Manual16. The As for continued use, plus Development re-use
preliminaries include linking the asset to the options
agency's service strategies and defining the level Investigate re-use and development/design
of performance required. This is aimed at options. Ensure these options are compatible
ensuring assets remain productive at the lowest with heritage requirements. If conflicts arise, for
possible long-term cost, and includes example between the development/design
conservation of the heritage value of assets. options, heritage needs, and/or service delivery
obligations, the preferred option may need to be
Long-term plans (more than 10 years) should
provide for the replacement or modification of justified through a “Statement of Heritage
major components. Medium-term plans (five to Impact”. Arrange for all necessary approvals
and notify relevant authorities and organisations
ten years) should define impending major tasks.
Both long-term and medium-term plans should about change of use. Develop an internal and
then be integrated with the agency’s Capital external communication strategy.
Investment Strategic Plan and provide for
down-time and other impacts on productive If considering transferring the asset
capacity. An annual program will be required to
control the implementation of the maintenance As for continued use, plus Transfer strategy plan
program. Take all constraints into account. Prepare a
Once a maintenance plan is drafted all necessary transfer strategy to ensure that heritage values
approvals should be sought, and notice of any are fully understood and are not compromised
significant works may need to be provided to during the process. Ensure that the asset will not
relevant authorities and organisations. be left unprotected or unoccupied and therefore
prone to vandalism. The asset should be
thoroughly documented and any moveable items
should be protected. Arrange for all necessary
approvals and notify relevant authorities and
organisations about change of use. Develop an
internal and external communication strategy.

16 See Total Asset Management Manual, Maintenance Planning

January 2001 TAM – Heritage Asset Management Guidelines 19

6.2 Funding considerations
This phase involves securing finance, and Are special funding programs available?
ensuring that the work planned is within the
limit of the available resources and funds. Across-Agency Capital Programs are available
Agencies should clearly demonstrate how the where there are economies of scale or
funding sought is linked to service strategies management advantages to funding programs
and overall obligations. that effect several agencies.
Heritage Assistance Grants Program
Several questions are frequently asked:
Commonwealth Government funding is
Who is responsible for securing funding?
available through the National Estate Grants
The agency controlling the asset is responsible Program (NEGP). This is the Commonwealth’s
for managing the heritage asset and for major heritage funding program and is
organising the funds required to conserve the coordinated by the Australian Heritage
asset’s heritage values, whether the funds are Commission. The program is undertaken in
from its own resources, other sources or from cooperation with State and Territory
Treasury. governments and provides funds for national
estate identification, conservation, promotion
How is funding secured? and education projects.
State Government funding is secured through The Department of Urban Affairs and Planning,
normal annual applications for capital works Heritage Office administers the Heritage
and maintenance expenditure, as part of normal Assistance Grants Program. This program is
business planning and budgeting. Guidance aimed primarily at funding non-government
should be sought from the agency’s relationship projects.
manager in Treasury to comply with the
Strategic Management Cycle and the current Public Buildings Stone Conservation Program
timeframe for planning of activities. This 20-year program was established to make
Can funding be secured to cover all activities the best use of limited resources and skilled
in the asset management strategy? labour to conserve significant stone buildings
within NSW. The Department of Public Works
Rarely will funds be available to allow all and Services manage the program. Works are
identified tasks to be carried out at one time. It funded from within an agency’s own resources.
is therefore critical to carefully assign priorities
and to identify the most cost-effective solutions.
Planning for heritage assets will certainly span
five to ten years, and because of the nature of
heritage assets may extend to longer periods of
fifty years or more. It is important to make
allowance for the higher than usual costs that
could be incurred for maintenance of heritage
assets.

20 TAM – Heritage Asset Management Guidelines January 2001

7 Implementation
Implement

Key steps during this phase are: Unless an agency has adequate in-house
resources it should seek specialist input, as
• Securing funding and other resources
sound advice will pay off in the long term. For
• Obtaining approvals from relevant authorities example, the services of a qualified
and organisations, and conservation practitioner could be engaged to:
• Community liaison • Oversee the agency’s heritage asset
During implementation, agencies should management activities
continue to bear in mind that the intrinsic value • Help establish the agency’s advisory panel
of heritage assets must be maintained, and that and to liaise with other interested parties
assets should be optimally employed. It is
• Prepare field studies and surveys
essential to have realistic asset performance
requirements in relation to service outcomes. • Assist in obtaining appropriate consents and
approvals
This will assist agencies in the ongoing decision
making during implementation. • Develop specifications and contract packages
and assist with tendering activities
The asset register and the plans that are
• Identify skilled contractors and tradespeople
prepared dealing with heritage assets must be
to execute conservation or restoration work
practical and manageable, should contain
appropriate information for decision-making, • Provide competent on-site supervision and
and should not be burdened with irrelevant quality assurance procedures, and
material. • Assist in the preparation of education and
Heritage asset management activities should be communications programs
coordinated with other bodies. For example, In this way it should be possible to avoid
studies, surveys, and other information- inadvertent, often irreparable damage to an
gathering activities should be coordinated with asset.
work carried out by other government agencies
or historic, preservation and environmental
groups. This could extend to joint decision-
making and agreements that serve the
conservation purposes of all parties. Similar
agreements could apply to monitoring activities.

January 2001 TAM – Heritage Asset Management Guidelines 21

8 Monitoring, review and feedback
Monitor

In keeping with sound asset management Ideally, these possibilities should be addressed
practices, agencies should monitor and review through an appropriately structured risk
the relevance, effectiveness and efficiency of management plan, following established NSW
the assets under their control and the Government guidelines. The plan should
implementation of their management programs. incorporate strategies to deal with these sorts of
problems.
Additionally, agencies are required to monitor
the state of conservation of heritage assets Monitoring of heritage projects should form an
included in the Heritage and Conservation integral part of the agency’s overall asset
Register and to take action to ensure that the monitoring activities, and should include
qualities and characteristics that justified measures that specifically relate to maintenance
registration are not eroded. An agency’s of the heritage values of the assets in the
monitoring system should alert it to any activity portfolio. Systematic monitoring of the ongoing
that could result in changes in the character or relevance of the assets should:
use of the heritage assets under its control. This
• Ensure that they are appropriate to the
could include new and continuing projects or
corporate needs of the agency and its short
programs that may originate with other
and long-term goals
government agencies, other levels of
government, the private sector or the • Identify under-performing assets
community. • Ascertain reasons for performance
The integrity of a heritage asset may be deficiencies, and
diminished by changes to its location, design, • Determine what action should be taken to
setting, materials, workmanship, feeling, or remedy unfavourable situations.
association. Many activities can have an adverse • Monitoring of the heritage management
impact on heritage values, for example: process should be approached from the
• Physically destroying, damaging, or altering perspective that it is always possible to
all or part of the asset improve upon past decisions concerning
management of an asset, upon how a heritage
• Isolating the asset from its setting, or altering
asset is employed, and how the asset is
the character of the setting when that
maintained. Successes and failures should be
environment contributes to the asset’s
incorporated in any future strategies and
integrity
programs, and actual performance should be
• Introducing visual, audible, or atmospheric compared against anticipated performance.
elements that are out of character with the
asset or that alter its setting
• Neglecting an asset and leaving it vulnerable
to theft, vandalism, trespass, unlawful
occupation, deterioration or destruction, or
• Transferring, leasing, or selling the asset

22 TAM – Heritage Asset Management Guidelines January 2001

Appendix A Relevant legislation
A1 New South Wales legislation
In New South Wales there are five major acts Section 170 of the Act, added in 1988, requires
and minor sections of several other Acts State government agencies to prepare a Heritage
involved in the protection of the State’s and Conservation Register of heritage items
heritage. they control, own or occupy.
NSW Heritage Act 1977 Further amendments to the NSW Heritage Act
in 1999 included additional clauses to section
The Heritage Act is concerned with all aspects 170 requiring government instrumentalities to
of historic conservation. The scope of the maintain their identified heritage items in
legislation ranges from the most basic accordance with the best practice heritage
protection against damage and demolition to management principles issued by the Minister
restoration and communication activities. The and guidelines issued by the Heritage Council.
Act can affect all properties, whether in In addition, annual reports need to include a
government, church, institutional, private, or summary of heritage items listed in their section
corporate ownership. 170 registers and a statement on the condition of
Many measures are available to the Minister for the State significant heritage items in the care of
Urban Affairs and Planning under the Act to the agency.
ensure timely and appropriate protection of the Additional changes include:
environmental heritage. This includes: orders to
control demolition (S130); emergency orders to • Replacing provisions for making Permanent
halt demolition (S136); interim conservation Conservation Orders (PCOs) with provisions
orders (ICO); and, permanent conservation for listing items on the State Heritage
orders (PCO). Register
For example, the Heritage Council’s approval is • Provisions for minimum standards of repair
necessary to carry out any kind of development for items listed on the State Heritage Register
activity on any item protected by either • To impose further obligations on government
permanent or interim conservation orders. instrumentalities in respect of items of
Demolition or removal of a property from a environmental heritage that they own or
government agency’s Heritage and occupy (with government instrumentality
Conservation Register requires the consent of being extended to include State owned
the NSW Heritage Council. corporations)
The Act enables owners and the public to be • To increase the maximum penalty for an
involved in the heritage system through offence against the Act from 200 penalty
submissions and hearings about the placing or units to 10,000 penalty units (currently
removing of conservation orders and appeals $1,100,000)
about development decisions.
Appeals against the decisions of the Heritage
Council and local government authorities on
items covered by conservation orders are made
to the Minister, irrespective of whether the
approval was made under the Heritage Act, the
EPA Act or the Local Government Act. The
Minister then decides whether the matter should
be referred to the Land and Environment Court
or be determined by him/her following the
recommendation of a Commission of Inquiry.

January 2001 TAM – Heritage Asset Management Guidelines 23

Environmental Planning and Assessment Act National Parks and Wildlife Act 1974
1979
The NPW Act, 1974 provides the legislative
The Environmental Planning and Assessment framework for the management of historic sites
Act allows for the protection of heritage assets and protection to Aboriginal places and relics,
at local and regional levels through the in addition to the protection of natural areas and
preparation of Environmental Planning endangered flora and fauna. Natural areas
Instruments (EPI), the development assessment include national parks, State recreation areas,
process; and, the environmental impact wild and scenic rivers, wildlife refuges and
assessment process. nature reserves.
EPI include: Endangered Fauna (Interim Protection) Act,
1991
• State Environmental Planning Policies
(SEPP) The Act amends the EPA Act and NPW Act and
• Local Environmental Plans (LEP) requires an assessment of the environmental
impact on protected fauna to be undertaken as
• Regional Environmental Plans (REP), and part of the development process.
• Development Control Plans (DCP)
Wilderness Act 1988
Many local councils have gazetted an LEP for
items of environmental heritage in their local The Act enables the declaration and
area. The LEP list items of heritage significance management of wilderness areas.
and are based on studies undertaken by The Historic Houses Trust Act 1988
conservation practitioners. The LEP will also
list the council requirements if an owner wishes The Act enables the management, curation and
to undertake development on a listed site. interpretation of house museums and a small
selection of major public buildings owned by
Such requirements can include: the State for conservation and educative
• Preparation of a Conservation Management purposes. The Trust plays an important role in
Plan to accompany the DA education and setting exemplary standards of
conservation work within a philosophical
• Preparation of a Statement of Heritage
framework.
Impact
• Referral of the application to the NSW Other
Heritage Council if demolition or major Regulatory controls affecting heritage assets can
alterations are proposed. be imposed through other legislation such as the
Listing of an item on a heritage LEP does not Local Government Act, Coastal Protection Act,
preclude development of that item. However, it Clean Waters Act, Clean Air Act, Fisheries and
requires the property owner to demonstrate an Oyster Farms Act, Soil Conservation Act,
understanding of the heritage significance of the Forestry Act, Historic Shipwrecks Act and the
property and the means by which that Water Resources Act.
significance will be protected, and preferably
enhanced, by the proposed development.

24 TAM – Heritage Asset Management Guidelines January 2001

A2 Commonwealth Government
legislation
Australian Heritage Commission Act 1975
The Australian Heritage Commission is an
independent statutory authority established
under the Commonwealth Australian Heritage
Commission Act 1975. It provides advice on
identifying natural, historic, Aboriginal and
Torres Strait Islander heritage places, many of
which are listed on the Register of the National
Estate.
The Commission’s main task is to compile and
update the register, which now lists more than
11,000 natural and cultural places in Australia.
The register alerts governments, planners,
decision makers, researchers and the community
to the heritage values of these places, so that
action can be taken to conserve them. All places
listed in the register are strictly assessed against
publicly available criteria outlining national
estate values.
The Commission does not own or manage any
national estate places and does not have entry
rights to places in the register. All are owned
variously by governments (Commonwealth,
State or local), by business, voluntary or other
organisations, or by private individuals. Listing
in the register does not “lock up” or directly
affect the way private owners manage places.
There is no legal obligation on the part of
owners of listed places to alter the way in which
a property is managed or disposed of, nor does
it mean that owners are required to give the
public access to listed places.

January 2001 TAM – Heritage Asset Management Guidelines 25

Appendix B Categories of heritage assets
Landscapes - including those created by Objects - including crockery, bottles, toys, and
mining, farming, even the changing shape of a furniture.
growing town, and that often reflect specific
techniques of sustainable land-use, considering Archaeological/historical site (maritime) -
the characteristics and limits of the natural shipwrecks such as river barges, coastal
environment they are established in, and a steamers and all that sank with them.
specific spiritual relation to nature. Archaeological/historical site (terrestrial)
Places - a place may be a garden or area of Ruins and foundations - of early domestic,
landscape associated with an historic house, or rural and industrial buildings and complexes.
it may be a natural area that supports rare or
endangered birds and animals and includes Deposits - including such things as rubbish pits
cemeteries, old roads, remnant bushland areas, and the accumulation of dirt and objects under
street trees and geological sites. the floors of old buildings.

Works - usually associated with commercial

industrial or engineering development which
include: mines, breweries, tanneries,
brickworks, woollen mills, steelworks, railways,
wharves, early iron suspension bridges or their
remains, water supply plants, sewage treatment
plants.
Buildings - public buildings including:
museums, libraries, courthouses, police stations,
prisons, hospitals, institutions for training such
as universities, technical colleges, school
buildings, council chambers and halls, churches,
houses and simple cottages including those
made of timber slabs, mud bricks and
corrugated iron, commercial buildings,
factories, forts, rural buildings, small country
pubs and grand city hotels, clubs, workshops.
Structures - such as wells, drainage systems,
flood mitigation levees, pipelines, winding
houses, mineshafts, dams and bridges, retaining
walls, sea walls.
Relics - must be over 50 years old, but may be
many things: crockery, household utensils,
historic equipment used for crafts, fragments of
tiles and ornaments, clay pipes and a wide range
of personal items such as clothing and
jewellery.
Machinery and tools - such as steam and
hydraulic powered engines and presses, farm
tools drawn by horse and bullock, mine
machinery, hand tools, scientific instruments,
moveable items such as ferry boats and
locomotives.

26 TAM – Heritage Asset Management Guidelines January 2001

Appendix C Assessment/classification of heritage assets
A critical step in the heritage asset management In addition the item must retain “the integrity of
process is to ensure that assessment and its key attributes of significance”. It should be
classification of assets is valid, appropriate and noted that an item does not have to be intact, or
relevant. The recommended method for even in good condition to retain its integrity.
assessment and classification is detailed in the Heritage significance may relate to the asset
Heritage Assessment Guidelines published by itself.
the Department of Urban Affairs and Planning
(DUAP). Significance may be rare or It may also relate to its wider context, both
representative across a number of values. physical and historic. For example, its
significance may arise from being part of a
The DUAP guidelines provide an objective wider set of similar assets.
means of assessment and aim to establish
standard criteria that can be applied consistently The methodology has been established to avoid
throughout the State. The criteria are compatible errors being made in assessments,
with those used by the Australian Heritage recommendations and reporting that could have
Commission and fall within two linked groups long-term adverse effects.
as outlined in the following table. Both need to
For example, an incorrect assessment could lead
be assessed when establishing the heritage
to incorrect data that some time later is used to
significance of an asset or group of assets.
make a management decision that results in
To be assessed as significant an item must unsympathetic upgrading, development and/or
qualify under one of the five “nature of use that does irreparable damage to the asset
significance” criteria and must also qualify and to a diminution of the heritage values.
under one of the two “degree of significance”
It is important to ensure the methodology is
criteria. carefully followed so that there is consistency in
establishing heritage values across all agencies
and that the quality of the information recorded
in the register is of the highest standard.

NSW Heritage Office Heritage Significance Criteria

Group 1 Criterion Nature of significance Concern
1 Historic Range of historical content
2 Aesthetic and technical Creative or technical accomplishments
3 Social Community regard or esteem
4 Scientific and Research or archaeological potential
archaeological
5 Other Other special values

January 2001 TAM – Heritage Asset Management Guidelines 27

Appendix D Typical record for inclusion in S.H.I. database
The accompanying record shows the range of
information that would normally be submitted
to the Heritage Council for inclusion in the State
Heritage Inventory (S.H.I.) database.

28 TAM – Heritage Asset Management Guidelines January 2001

 Marine Ministerial Holding Corporation SHI Number
4920018
Marine Ministerial Holding Corporation S170 Register

Item Name: MSB Bond Store No. 3

Address: 30 Windmill Street Corner: Hickson Street

Suburb / Nearest Town: Millers Point 2000 State: NSW
Other/Former Names: MSB Bond and Free Store No. 3; Parbury's Bond Store No. 3
Area/Group/Complex: Walsh Bay Precinct Group ID: 4920027
Local Govt Area: Local Government Area: DUAP Region: Historic region:
Sydney City Sydney South Sydney
Property Identifier:
Boundary:
Item Type: Built Group: Government and Ad Category: Other - Government &
Owner: Marine Ministerial Holding Corporation
Owner Codes: Code 2: Code 3:
Current Use: Arts centre
Former Uses: Bond store
Assessed Significance: State Endorsed Significance: State
Statement of Significance: Bond Store No. 3 is of significance for its historical association with the development
of the waterfront trade in the Miller's Point and Walsh Bay area. In its architectural
merits, Bond Store No. 3 ranks with three other 19th century bond stores - Grafton
Bond (1881) and Parbury's No. 1 Bond (1880s) both in Hickson Road, and Oswald
Bond (c1890) in Argyle Place. The building also contributes to the unique streetscape
quality of Walsh Bay. The site has potential archaeological research value. (DPWS
Heritage Group, 1998)
Historical Notes or Bond Store No. 3, originally known as Parbury's Bond Store No. 3, was completed in
Provenance: 1892 as a warehouse for Lamb & Parbury. The building partly incorporated the Wool
Pressing Store that was existing on site. (The Wool Pressing Store, built c.1880s, had
replaced an earlier single-storey bond store erected on the site in c.1850s.) In 1894
Parbury's Bond Store No. 3 was purchased by Central Wharf Stevedoring Co. In 1900
the first reported victim of bubonic plague came from Central Wharf. The Sydney
Harbour Trust resumed Parbury's Bond Store, among other buildings, in the first
decade of 1900's. In 1936, the building was transferred to the Maritime Services Board
and became known as MSB Bond Store No. 3. Extensions to the building were made in
1947-51 when the adjoining Bond Store No. 4 was constructed. As usage of the
building as a warehouse declined in 1980's, the State Government began looking for
new uses. In 1993-4, conservation analysis and works were undertaken to allow part of
the building on Windmill Street to be converted into an Aboriginal Arts and
Performance Centre. The project, however, was halted as a result of the proposed
redevelopment of Walsh Bay precinct. (Heritage Group 1998)

National Themes:

Prepared by DPWS Heritage Design Services

Full Report
This report was produced using State Heritage Inventory database software provided by the Heritage Office of New South Wales

January 2001 TAM – Heritage Asset Management Guidelines 29

 Marine Ministerial Holding Corporation SHI Number
4920018
Marine Ministerial Holding Corporation S170 Register

Item Name: MSB Bond Store No. 3

State Themes: Commerce

Government and administration
Study Themes:
Designer:
Maker / Builder:
Year Started: 1880
Year Completed: 1892 Circa: Yes
Physical Description: Bond Store No. 3 is a six-storey, brick-faced building in Queen Anne Revival style,
with three-storey fronting Windmill Street. It is the most intact warehouse building in
the Miller's Point and Walsh Bay area, which dates from the period of Sydney's
mercantile history predating the Sydney Harbour Trust. Externally, architectural
features include cornices, string courses, lintels, hoods and base courses, all visible on
the front (southern) elevation. The front wall on Windmill Street probably incorporated
the basement walls of the former Wool Pressing Store. Internally, the cast iron
decorative columns contain fine architectural details. Bond Store No. 3 contains
machinery with historical engineering interest. The whole building demonstrates
methods for handling goods, especially wool, in the late 19th and early 20th centuries.
It has three 19th century hydraulic lifts built by Mort's Dock and Co, a four-sheave
hoist, and substantial remains of a cart hoist. The cart hoist in the centre of the building
allowed a section of the floor to be lowered from the ground floor to the third level
basement. This device appears to be the only of its kind in the Walsh Bay area. The
building also contains the 1890s remnants of a large and unusual internal cart ramp
from Pottinger Street. (DPWS Heritage Group, 1998)
Physical Condition: Good
Modification Dates: Sandstone detailing removed from the western-most entry. (Sydney City Council 1989)
Recommended Refer to relevant recommendations contained in REP16-Walsh Bay. Retain, conserve,
Management: and maintain in accordance with the Burra Charter. Preparation of a Conservation Plan
recommended. Any proposed works should minimise damage to original fabric. Liaise
with Heritage Office for archaeological Permit if substantial excavation on site is
proposed.
Further Comments:
Historical Significance: Bond Store No. 3 is of significance for its historical association with the development
of the waterfront trade in the Miller's Point and Walsh Bay area. (DPWS Heritage
Group, 1998)
Aesthetic Significance: Bond Store No. 3 ranks in architectural merit with three other 19th century bond stores
Grafton Bond (1881) and Parbury's No. 1 Bond (1880s) both in Hickson Road, and
Oswald Bond (c1890) in Argyle Place. The building also contributes to the unique
streetscape quality of Walsh Bay. (DPWS Heritage Group, 1998)
Social Significance: Further research required.

Prepared by DPWS Heritage Design Services

Full Report
This report was produced using State Heritage Inventory database software provided by the Heritage Office of New South Wales

30 TAM – Heritage Asset Management Guidelines January 2001

 Marine Ministerial Holding Corporation SHI Number
4920018
Marine Ministerial Holding Corporation S170 Register

Item Name: MSB Bond Store No. 3

Technical / Research: The site has potential archaeological research value. (DPWS Heritage Group, 1998)
Rare Assessment
Representativeness:
Integrity/ Intactness:
References:
Studies: Author: Title: Year:
National Trust National Trust of Australia (NSW) Classification 1989
Author: Title: Number: Year
Anglin Associates Maritime Services Board Heritage and 1028 1990
Conservation Register: Sydney Harbour
Sydney City Council City of Sydney Heritage Inventory 1162 1989

DPWS Heritage Group, Ministry For The Arts Heritage and MFTA007 1998
Verena Ong Conservation Register

Listings: Name: Title: Number: Date:

Heritage Act - Permanent Conservation Order - Walsh Bay 00559 25/02/199

Heritage Act - s.170 NSW State agency heritage register - Bond Store No.3 MFTA007 01/08/199

Heritage Act - s.170NSW State agency heritage register 4920018 27/03/199

Regional Environmental Plan REP16 05/12/199

Heritage study 162 15/02/198

National Trust of Australia register 13/07/197

Within a National Trust conservation area - West Rocks 23/07/197

Register of the National Estate

Custom Field One:

Custom Field Two:
Custom Field Three:
Custom Field Four:
Custom Field Five:
Custom Field Six:
Data Entry: Date First Entered: 08/05/1998 Date Updated: 18/03/1999 Status: Completed

Prepared by DPWS Heritage Design Services

Full Report
This report was produced using State Heritage Inventory database software provided by the Heritage Office of New South Wales

January 2001 TAM – Heritage Asset Management Guidelines 31

 Marine Ministerial Holding Corporation SHI Number
4920018
Marine Ministerial Holding Corporation S170 Register

Item Name: MSB Bond Store No. 3

Images:

Picture of the Asset

Caption:
Copyright:
Image by: Image Date: 1028.bmp

Image Number: Image 1028t.bmp

Path:
Image File:
Thumb Nail Path:
Thumb Nail File:
Data Entry: Date First Entered: 08/05/1998
Date Updated: 18/03/1999

Status: Completed

Prepared by DPWS Heritage Design Services

Full Report
This report was produced using State Heritage Inventory database software provided by the Heritage Office of New South Wales

32 TAM – Heritage Asset Management Guidelines January 2001

Appendix E Checklist of data for asset register
1 Name and category of asset 4 Juridical data

Name of asset Owner

Category of asset

Name/address/city

Description

Contact person/position

Inventory of moveable items

Phone number/fax number
2 Specific location
Legal status

Location/address

Details of legal and administrative

City/postcode
provisions for the protection of the

Local Government Authority
property (date and text)

Region

Decrees or orders which protect the

Electorate
nominated property (date and text)

Real property description

Laws or decrees which govern the

Location plan: refer exhibit #
protection of the asset (date and text)

Map reference: refer exhibit #

Master plan for historic preservation

DP plan number
land-use plan, urban development

Site area
plan, regional development plan or

Current zoning
other infrastructure projects

Surveyed by, survey date

Town planning regulations and orders
3 S.H.I. description issued in application of these plans

Category including zoning, permitted uses, etc.

S.H.I. sub-category
What are the penalties foreseen in case

S.H.I. period of a contravention of these juridical

S.H.I. theme provisions?

Architectural style (if applicable)
What, if any, juridical or other

Architects measures exist which encourage the

Engineers revitalisation of the asset in full

Other respect of its historic authenticity and
its social diversity?
Responsible administration

Details of the mechanism or body
already set up or intended to be
established in order to ensure the
proper management of the asset.
Information on institutions or
associations concerned with the
safeguard of the asset, at local
community, regional, State and
Commonwealth level.

January 2001 TAM – Heritage Asset Management Guidelines 33

5 Listings 7 State of preservation conservation
Commonwealth
Diagnosis
(statutory for Commonwealth property)
History of preservation/conservation

Measures for

Register of National Estate (register):
preservation/conservation (include
Australian Heritage Commission
management plans or proposals for

Register of National Estate (interim):
such plans)
Australian Heritage Commission

Agent responsible for
NSW statutory preservation/conservation

Heritage Conservation Register
Development plans for the region
Permanent Conservation Order: 8 Thematic significance
Heritage Council of NSW

Local historical themes

Heritage Conservation Register

Regional historical themes
Interim Conservation Order:

State historical themes
Heritage Council of NSW

National themes

Heritage Conservation Register

Date of assessment
S130 Orders:

Author of historical notes
Heritage Council of NSW

Regional Environmental Plan (REP) 9 Justification for inclusion in the
Heritage Schedule agency’s heritage list

Local Environment Plan (LEP)
Evaluation of significance (nominate
Heritage Schedule—Conservation value category [ie. historic, aesthetic,
Area social, scientific or other] and whether

NSW government department heritage rare, associative or representative).
register (S110)
Additional information should be
Non-statutory provided under three separate
headings as follows:

Register of National Trust of Australia
• The reasons for which the asset is

Within National Trust Conservation
considered to meet the criteria
Area: National Trust

Register of Significant 20th Century • An evaluation of the asset’s present
Architecture: Royal Australian state of preservation as compared
Institute of Architects with similar assets elsewhere

Institution of Engineers (NSW) • Indications as to the authenticity of
Heritage Register the property.

Archaeological zoning plan 10 Occupancy/use

NSW heritage database (where applicable)

Other—please specify
State of occupancy/use
6 History
Category of occupancy/use (public or

Description and inventory private)

Photographic, film and/or video
Accessibility to the general public
documentation
Category of present use

History
Category of future permitted use

Bibliography

Construction date

34 TAM – Heritage Asset Management Guidelines January 2001

Appendix F Glossary of heritage terms
adaptation order lasts for one year or until it is revoked or a
permanent conservation order is made.
Modifying a heritage asset or item to suit
proposed compatible uses. Permanent Conservation Order (PCO)

Burra Charter An order made under Section 44 of the Heritage

Act to protect a significant heritage item in
Charter and guidelines adopted by Australia NSW. This order remains in place indefinitely,
ICOMOS that establishes the nationally unless revoked.
accepted standard for the conservation of places
of cultural significance. preservation

conjectural reconstruction Maintaining the fabric of a place in its existing

state and retarding deterioration.
Alteration of a heritage item to simulate a
possible earlier state which is not based on reconstruction
documentary or physical evidence; treatment Returning a place as nearly as possible to a
that is outside the scope of the Burra Charter’s known earlier state by the introduction of
conservation principles. See also reconstruction. materials (new or old) into the fabric—not to be
conservation confused with conjectural reconstruction.

All the processes of looking after a place so as restoration

to retain its cultural significance; includes Returning the existing fabric of a place to a
maintenance and according to circumstances, known earlier state by removing accretions or
may include preservation, restoration, by reassembling existing components without
reconstruction and adaptation, and commonly the introduction of new material.
will be a combination of more than one of these.
Section 60 Application
conservation instrument or conservation order
Application made under Section 60 of the
A permanent or an interim conservation order, Heritage Act, to make changes to an item
or a Section 130 or 136 Order under the NSW covered by an ICO or PCO.
Heritage Act, 1977.
Section 117 Direction (G21)
exemptions
Direction issued under Section 117 of the
Work on heritage items covered by conservation Environmental Planning and Assessment Act,
orders that can be exempted under Section 57(2) 1979 that requires local councils to address
of the Heritage Act from the requirement to heritage issues when preparing Local
obtain the Heritage Council’s consent. Environment Plans.
ICOMOS: International Council on Monuments Section 130 Order
and Sites
An order made under Section 130 of the
An international organisation linked to Heritage Act to control demolition. This order
UNESCO that brings together people concerned normally lasts for one year unless revoked.
with the conservation and study of places of
cultural significance. There are national Section 132 Notice
committees in sixty countries including
Notice of intent to demolish or harm an item
Australia.
covered by a Section 130 order under the
Interim Conservation Order (ICO) Heritage Act.
An order made under Section 26 of the Heritage
Act to control demolition and development. The

January 2001 TAM – Heritage Asset Management Guidelines 35

Section 136 Order
An emergency order made under Section 136 of
the Heritage Act to halt or prevent demolition.
This order lasts for 40 days unless revoked.
Section 167 Certificate
A certificate issued by the Heritage Council
specifying the conservation instruments
applying to a property under the Heritage Act.
Section 170 Register
Section 170 of the Heritage Act requires each
New South Wales government agency to
prepare and maintain a register of heritage items
in their ownership or under their control.

36 TAM – Heritage Asset Management Guidelines January 2001

Appendix G Contact numbers for heritage organisations
Australian Heritage Commission
phone (02) 6217 2111

NSW Heritage Office

phone (02) 9635 6155
fax (02) 9891 4688

Department of Public Works and Services

Heritage Design Services
phone (02) 9372 8494

Historic Houses Trust

phone (02) 9692 8366

Institution of Engineers, Australia

Heritage Branch
phone (02) 9929 8544

National Parks and Wildlife Service

Asset Management
phone (02) 9585 6469

National Trust of Australia (NSW)

phone (02) 9258 0123

Royal Australian Historical Society (RAHS)

phone (02) 9247 8001

Royal Australian Institute of Architects

(RAIA)
Architecture Conservation Committee
phone (02) 9356 2955

Royal Australian Planning Institute (RAPI)

phone (02) 9247 5857

January 2001 TAM – Heritage Asset Management Guidelines 37

This page is intentionally blank

38 TAM – Heritage Asset Management Guidelines January 2001

Appendix H
NSW Heritage - Minimum Standards of Maintenance and Repair

MARCH 1999

NSW Heritage
@Heritage Amendment Regulation 1999
Extract from New South Wales Government Gazette No.27, 1999

MINIMUM STANDARDS OF
MAINTENANCE AND REPAIR

NEW SOUTH WALES GOVERNMENT GAZETTE No. 27

January 2001 TAM – Heritage Asset Management Guidelines 39

MINIMUM STANDARDS FOR MAINTENANCE AND REPAIR

Minimum Standards have been established in the Heritage Amendment Regulation 1999 to
ensure that heritage significance is maintained. Owners are required to achieve minimum
standards of maintenance and repair. The standards are set out in the Regulation, and relate to:
• Weatherproofing;
• Fire protection;
• Security; and
• Essential maintenance.
They do not require owners to undertake restoration works, but where works are needed owners
may apply for financial assistance through the Heritage 2001 funding program.
Where these standards are not met and the heritage significance of the item is in jeopardy the
Heritage Council has the power to order repairs after consultation with the owner.
As a last resort, if negotiations have failed and the owner does not comply with the order, the
Heritage Council can arrange for the works to be carried out and charge the expenses to the
owner. The Minister may consent to the Heritage Council's prosecution of the owner for failure
to comply with an order.
A copy of the Heritage Amendment Regulation 1999, extracted from the New South Wales
Government Gazette No.27, 1999 is included for your information.

NEW SOUTH WALES GOVERNMENT GAZETTE No. 27

40 TAM – Heritage Asset Management Guidelines January 2001

1596 LEGISLATION 5 March 1999

Heritage Amendment Regulation 1999

under the Heritage Act 1977

His Excellency the Governor, with the advice of the Executive Council, has made the following
Regulation under the Heritage Act 1977.

CRAIG KNOWLES, M.P.,

Minister for Urban Affairs and Planning

Explanatory note

The object of this Regulation is to impose minimum standards with respect to the maintenance and
repair of buildings, works and relics that are listed on the State Heritage Register or within a
precinct that is listed on that Register.
This Regulation is made under the Heritage Act 1977, including sections 118 (as substituted by the
Heritage Amendment Act 1998) and 165 (the general regulation-making power).

NEW SOUTH WALES GOVERNMENT GAZETTE No. 27

January 2001 TAM – Heritage Asset Management Guidelines 41

1596 LEGISLATION 5 March 1999

Clause 1 Heritage Amendment Regulation 1999

Heritage Amendment Regulation 1999

1 Name of Regulation
This Regulation is the Heritage Amendment Regulation 1999.
2 Commencement
This Regulation commences on 2 April 1999.
3 Amendment of Heritage Regulation 1993
The Heritage Regulation 1993 is amended as set out in
Schedule 1.
4 Notes
The explanatory note does not form part of this Regulation.

NEW SOUTH WALES GOVERNMENT GAZETTE No. 27

42 TAM – Heritage Asset Management Guidelines January 2001

1596 LEGISLATION 5 March 1999

Heritage Amendment Regulation 1999

Amendments Schedule 1

Schedule 1 Amendments
(Clause 3)

[1] Part 1, heading

Insert before clause 1:

Part 1 Preliminary

[2] Clause 3 Interpretation

Insert at the end of clause 3:
(3) Notes in the text of this Regulation do not form part of this Regulation.

[3] Part 2, heading

Insert before clause 4:
Part 2 Fees and forms

[4] Part 3
Insert after clause 9:

Part 3 Minimum standards of maintenance and repair

9A Minimum standards imposed

Pursuant to section 118 of the Act, the standards set out in this Part are imposed as
minimum standards with respect to the maintenance and repair of a building, work or
relic that is listed or within a precinct that is listed on the State Heritage Register.
Note. Section 119 of the Act requires the owner of the building, work or relic to ensure
that it is maintained and repaired to standards that are not less than the minimum
standards-imposed by this Part. Nothing in this Part affects any requirement for the
approval under Part 4 of the Act of any aspect of maintenance or repair.

NEW SOUTH WALES GOVERNMENT GAZETTE No. 27

January 2001 TAM – Heritage Asset Management Guidelines 43

1596 LEGISLATION 5 March 1999

Heritage Amendment Regulation 1999

Schedule 1 Amendments
9B Inspection
(1) The building, work or relic, and its curtilage or site, must be inspected to
identify maintenance and repairs that are needed to ensure compliance with
section 119 of the Act in respect- of the standards set out in clauses 9C-9H.

(2) The inspection must be carried out at least once every 12 months in the case
of the standards set out in clauses 9C-9G and at least once every 3 years in
the case of the standards set out in clause 9H.

Note. The maintenance and repair requirements of section ll9 of the Act are
ongoing and are not limited to matters identified by an inspection carried out
for the purposes of this clause.

(3) The inspection is to be carried out by a person with expertise and experience
appropriate to the nature of the item concerned.

(4) In the case of a relic kept in a repository or as part of a collection, the

inspection is to extend to the conditions under which the relic is kept.

(5) In the case of a relic that is attached to or forms part of land, the inspection is
to include an assessment of the stability of the site of the relic.

9C Weather protection
(1) The following systems or components, if present, must be maintained and
repaired (including by being cleaned and secured) when and to the standard
necessary to ensure a reasonable level of protection for the building, work or
relic, and its curtilage or site, against damage or deterioration due to weather:

(a) surface and sub-surface drainage systems,

(b) roof drainage systems, including gutters, rainwater heads, down pipes
and storm water drainage systems,

(c) water storages, dams, ponds, retention basins, watercourses, batters,

levee banks, sea walls and other flood and erosion mitigation measures,

NEW SOUTH WALES GOVERNMENT GAZETTE No. 27

44 TAM – Heritage Asset Management Guidelines January 2001

1596 LEGISLATION 5 March 1999

Heritage Amendment Regulation 1999

Amendments Schedule 1

(d) roofs, walls, doors and windows (including the glass components of
doors and windows) and other components intended to exclude sun,
rain, wind, hail, snow or other weather elements, including their
security against the effects of high winds,

(e) systems or components which might be at risk of damage or

dislodgment by high winds, including damage by falling, trees and
branches, tidal inundation or wave action,

(f) systems and components such as damp proof courses, flashings,

ventilation systems and other measures intended to prevent the ingress
of water or dampness or to reduce its effects,

(g) lightning conductors,

(h) any other system or component designed to protect the building, work
or relic or its curtilage or site against damage or deterioration due to
weather.

(2) Doors and windows of a building may, as an alternative to being repaired, be

boarded up, but only:

(a) if the building is unoccupied, or

(b) as a short term measure pending repair.

(3) If an opening to a building is designed or intended to have a door,

window or other closure in place and does not have the door, window
or other closure in place, the opening must be boarded up.

9D Fire protection
(1) Vegetation, rubbish and any other material that could create a fire hazard for
the building, work or relic is to be removed and not permitted to accumulate.

Note. Vegetation and other items can be of heritage significance, and their removal
may require the approval of the Heritage Council or the local council.

NEW SOUTH WALES GOVERNMENT GAZETTE No. 27

January 2001 TAM – Heritage Asset Management Guidelines 45

1596 LEGISLATION 5 March 1999

Heritage Amendment Regulation 1999

Schedule 1 Amendments

(2) The following systems or components, if present, must be maintained and

repaired when and to the standard necessary to ensure a reasonable level of
protection for the building, work or relic against damage or destruction by
fire:

(a) lightning conductors,

(b) fire detection and control systems, including smoke and beat detectors
and fire sprinkler systems and including associated alarm and
communication systems,

(c) stores of inflammable materials or rubbish,

(d) building services such as electricity, gas and heating systems,

(e) any other system or component designed to protect the building, work
or relic from damage or destruction by fire.

9E Additional fire protection for unoccupied buildings

(1) The following additional fire protection measures must be taken for the
protection of a, building that is to be unoccupied for a continuous period of
60 days or more:

(a) heating or gas services must be shut down, gas or oil supply to those
services must be turned off at the mains or other point of connection to
supply, and portable gas or oil storages must be removed,

(b) permanent or temporary smoke detection systems must be installed

with associated communication systems connected to the Fire Brigade
and, if the building will be unoccupied for a period of 6 months or
more, provided with a permanent power supply.

(2) This clause does not apply to any outbuilding within the curtilage or site of a
building unless the out-building has been constructed or adapted for use as a
dwelling.

(3) The use of a building for storage of goods or materials does not constitute
occupation of the building for the purposes of this clause if the building
ordinarily has another use or is a building of a kind not ordinarily used for
storage.

NEW SOUTH WALES GOVERNMENT GAZETTE No. 27

46 TAM – Heritage Asset Management Guidelines January 2001

1596 LEGISLATION 5 March 1999

Heritage Amendment Regulation 1999

Amendments Schedule 1

9F Security
(1) Fencing or surveillance systems appropriate to the nature and location of the
building, work or relic must be installed to secure it and its site and prevent
vandalism.

(2) The following systems or components, if present, must be maintained and

repaired when and to the standard necessary to ensure a reasonable level of
security for the building, work or relic:

(a) boundary and internal fences and gates, including associated locking
mechanisms,

(b) in the case of a building, the walls, roof and other building elements,
doors, windows and other closures, including glazing and associated
locking and latching mechanisms,

(c) any electronic surveillance or alarm system installed on the site,

(d) any other system or component designed to ensure the security of the
building, work or relic.

(3) Doors and windows of a building may, as an alternative to being repaired, be

boarded up, but only:

(a) if the building is unoccupied, or

(b) as a short term measure pending repair.

(4) If an opening to a building is designed or intended to have a door, window or
other closure in place and does not have the door, window or other closure in
place, the opening must be boarded up.

9G Additional security measures for unoccupied buildings

(1) The following additional security measures must be taken for the protection
of a building that is to be unoccupied for a continuous period of 60 days or
more:

(a) if an electronic surveillance or alarm system is installed, the system

must be connected to a Police Station or a commercial security
provider,

NEW SOUTH WALES GOVERNMENT GAZETTE No. 27

January 2001 TAM – Heritage Asset Management Guidelines 47

1596 LEGISLATION 5 March 1999
Heritage Amendment Regulation 1999
Schedule 1 Amendments

(b) if no electronic surveillance or alarm system is installed, arrangements

must be in place for regular surveillance of the building, work or relic,
as appropriate to its nature and location.

(2) This clause does not apply to any outbuilding within the curtilage or site of a
building unless the outbuilding has been constructed or adapted for use as a
dwelling.

(3) The use of a building for storage of goods or materials does not constitute
occupation of the building for the purposes of this clause if the building
ordinarily has another use or is a building of a kind not ordinarily used for
storage.

9H Essential maintenance and repair

(1) Essential maintenance and repair of a building, work or relic (being
maintenance and repair necessary to prevent serious or irreparable damage or
deterioration) must be carried out whenever necessary.

(2) Essential maintenance and repair includes:

(a) the taking of measures (including inspection) to control pests such as

termites. rodents, birds arid other vermin, and

(b) the taking of measures to maintain a stable environment for in-situ

archaeological relics.

(3) The requirement for essential maintenance and repair extends to (but is not
limited to) the following:

(a) foundations, footings and supporting structure of any building, work or

relic,

(b) structural elements such as walls, columns, beams, floors, roofs and
roof structures. and verandah or balcony structures,

(c) exterior and interior finishes arid details,

(d) systems and components (such as ventilators or ventilation systems)

intended to reduce or prevent damage due to dampness,

NEW SOUTH WALES GOVERNMENT GAZETTE No. 27

48 TAM – Heritage Asset Management Guidelines January 2001

1596 LEGISLATION 5 March 1999

Heritage Amendment Regulation 1999

Amendments Schedule 1

(e) fixtures, fittings and moveable objects attached to the building, work or relic, or to its curtilage
or site,

(f) landscape elements on the site of and associated with the building, work or relic, including
vegetation, garden walls, paths, fences, statuary, ornaments and the like.

9I Conservation management plans

(1) A conservation management plan is a plan prepared by the owner of a
building, work or relic for the conservation of the building, work or relic.

(2) A conservation management plan endorsed by the Heritage Council for a

building, work or relic may:

(a) provide that a standard set out in this Part does not apply to the
building, work or relic (in which case the standard does not apply to it),
or

(b) impose additional standards of maintenance and repair for the building,
work or relic (in which case those standards are imposed as minimum
standards with respect to the maintenance and repair of the building,
work or relic, in addition to those set out in this Part).

[51 Part 4, heading

Insert before clause 10:
Part 4 Miscellaneous

NEW SOUTH WALES GOVERNMENT GAZETTE No. 27

January 2001 TAM – Heritage Asset Management Guidelines 49

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50 TAM – Heritage Asset Management Guidelines January 2001

 Demand
Management
Guideline
Demand management guideline

January 2001
DPWS Report Number 01052

NSW Department of Public Works and Services Cataloguing-in-Publication data

New South Wales. Government Asset Management Committee.

Demand management guideline.

ISBN 0 7347 4104 9 (set)

ISBN 0 7347 4158 8

1. Asset management – New South Wales. 2. Capital investment. 3. Public administration – New South Wales
I. Title. (Series : TAM)

352.50944

 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any
process without written permission from the NSW Government Asset Management Committee. Requests and inquiries
concerning reproduction and rights should be addressed to:

Secretariat
Government Asset Management Committee
Level 23 McKell Building
2-24 Rawson Place
SYDNEY NSW 2000
Website www.gamc.nsw.gov.au
E:mail gamc@dpws.nsw.gov.au

Set consists of :

ISBN 0 7347 4122 7 Asset strategy

ISBN 0 7347 4194 4 Office accommodation strategy
ISBN 0 7347 4128 6 Capital investment : strategic planning
ISBN 0 7347 4134 0 Asset maintenance : strategic planning
ISBN 0 7347 4140 5 Asset disposal : strategic planning
ISBN 0 7347 4146 4 Sustainable development guideline
ISBN 0 7347 4152 9 Heritage asset management guideline
ISBN 0 7347 4158 8 Demand management guideline
ISBN 0 7347 4164 2 Life cycle costing guideline
ISBN 0 7347 4170 7 Value management guideline
ISBN 0 7347 4176 6 Risk management guideline
ISBN 0 7347 4182 0 Post implementation review guideline
ISBN 0 7347 4188 X Asset information guideline
Contents

1 INTRODUCTION ____________________________________________________2
1.1 Purpose of the guidelines............................................................................................................................2

1.2 The demand - asset linkage........................................................................................................................2

1.4 What is Demand Management? ................................................................................................................4

2 GOVERNMENT POLICY ON DEMAND MANAGEMENT _____________________5

2.1 Agency roles and responsibilities...............................................................................................................5

2.2 Reporting requirements .............................................................................................................................5

2.3 Monitoring and feedback ...........................................................................................................................5

THE DEMAND MANAGEMENT PROCESS ___________________________________6

3.1 Overview......................................................................................................................................................6

Stage 1 Know your clients .................................................................................................................................7

Stage 2 Establish the true costs.........................................................................................................................8

Stage 3 Identify the demand .............................................................................................................................9

Stage 4 Develop Demand Management response..........................................................................................10

Stage 5 Implement and evaluate.....................................................................................................................11

4 BENEFITS OF DEMAND MANAGEMENT _______________________________12

APPENDIX A DEMAND MANAGEMENT STRATEGIES _______________________13

APPENDIX B INDUSTRY EXAMPLES OF DEMAND MANAGEMENT ____________16

January 2001 TAM – Demand Management Guidelines 1

1 Introduction
1.1 Purpose of the guidelines 1.2 The demand - asset linkage
In the context of public sector asset Demand motivates the supply of services and
management, demand can be described as the leads to the provision and use of resources
needs and expectations of the community and including physical assets. Community demand
government as well as the ambitions and for security leads to provision of police services,
aspirations of sectional groups. judiciary and detention of offenders, leading to
the construction and maintenance of police
Communities expect that government at its stations, courthouses and prisons.
various levels will provide for their security, for
education of their children and the workforce, Demand for education leads to schools and
for transport of people and goods, for colleges. Demand for transport leads to roads,
community health and so on. In addition, railways, seaports and airports. The list is
sectional interests within the community endless. This process can be depicted as:
harbour hopes that their particular concerns,
DEMAND
SERVICE
ASSET
whether social or economic, will be catered for.
The linkage between demand, service supply
These needs, expectations, hopes and and provision of assets is far from
aspirations are the driving force for the supply straightforward. Demand involves humans, and
of services. They are a key input into the human behaviour can be very complex. As a
process of asset management. simple example, when demands are satisfied by
The purpose of these Guidelines is to: the supply of a service, new expectations arise.
When one need is satisfied, other needs will also
• Raise awareness of the connection between need to be satisfied.
community needs and expectations and the
subsequent delivery of services and As well, people tend to compare their
expenditure on resources including physical circumstances to others and expect equivalent
assets treatment. Thus, when town X receives a
hospital, school, bridge or infrastructure, the
• Suggest ways that agencies can respond to citizens of town Y are encouraged to seek a
the needs and expectations in a manner that similar asset.
best matches service delivery (and the
relevant supporting assets) to the available Therefore, supply of a service tends to foster
resources demand. Instead of the linear sequence as
shown above, the relationship between demand,
• Assist agencies incorporate demand
services and assets is often cyclical.
management techniques into their asset
management planning
For simplicity, in the remainder of the
Guidelines the notion of need, expectation, hope
and aspiration will be grouped under the
common description of ‘demand’.

Government agencies are in the business of

supplying services to the community.
Physical assets are a means to providing these
services. They are usually not the service in
themselves.

2 TAM – Demand Management Guidelines January 2001

1.3 Why manage demand?
Over time communities expect higher level of For example, services that promote healthy
services from government as part of a lifestyle changes will improve the quality of life
progressive improvement in the standard of of members of the community at large. Other
living. examples could include promotion of public
transport to reduce the use of private vehicles
In response, public sector agencies have striven with their resulting smog and gridlock.
to meet these expectations by increasing the
scale and scope of services they deliver. They Consideration of community expectations and
have focussed on planning, organising and demand, whether they are related to promoting
controlling the supply of services and resources or decreasing the expectations and demand
required to support them. The rapid growth of should be matched with consideration of supply
our stock of physical assets over the past wherever the public sector plans to provide
decades is evidence of how successfully this services. Neither the community nor the
was pursued. government should rely on supply side policies
alone.
Focussing on service supply alone is not
sustainable in the long term, as: If agencies keep building assets without some
• Demand will always outstrip supply constraint on demand it is likely that their capital
requirements to operate and maintain these assets
• The capital cost of additional assets must be will eventually jeopardise the services they are
considered in the light of the limited seeking to provide.
resources of the community at large, and
• It will cause the overall stock of assets to
grow, bringing about an increase in the
operating and maintenance costs of the
assets.
The question of ensuring that the resources of
the community are distributed equitably among
the whole range of government services is also
pertinent. Within the finite resource limits of the
community, services provided of one type and
in one region reduce its ability to provide other
types of services or to deliver them elsewhere.
A whole of government view of service delivery
focuses on delivery of a range of government
services that will provide maximum benefits to
the community overall rather than on individual
agencies maximising the delivery of a particular
service.
There are circumstances where it may be
beneficial to increase the demand for certain
services.

January 2001 TAM – Demand Management Guidelines 3

1.4 What is Demand Management?
Demand management policies enable the A number of agencies are already applying
interaction between supply of service and demand management in its various forms with
demand for assets. considerable success.
Demand Management is defined as: Demand Management has the potential to become
‘The active intervention in the market to a key element of reform in the resource planing
influence the demand for services and the and management process, encouraging agencies to
assets generated and/or used in the supply of jointly plan service delivery.
these services in order to best match Demand can be managed in a variety of ways:
available resources to real needs and to
ensure the services provided are delivered • By reducing the underlying need for the
with the best value for money.’ service.
For example, actions to raise awareness of
Successful demand management requires
the benefits of pregnant women taking foliate
agencies to clearly understand that their
will reduce the need for medical and social
corporate role is not to provide ever more
support for children with neural tube defects
services, but to provide:
• By changing the way in which community
• Effective service outcomes to meet needs will be met to reduce pressure on
identified community needs available resources.
• Assess if this need is changing and For example, the Department of Housing is
• To respond appropriately and within the trialing different accommodation alternatives
resources available. to reduce the demand for individual
accommodation units
This requires that agencies develop a close
• By educating consumers to limit their
working relationship with their clients based on
consumption.
thorough knowledge of their characteristics,
For example, educating water users to save
needs and expectations.
water during droughts has led to significant
Demand management is not intended to reduce reduction in demand.
the scope or standard of services in order to • By pricing mechanisms.
offset management deficiencies elsewhere. For example, charging consumers a truer
Rather it is concerned with aligning demand for price for water encourages its more
services with the available resources to ensure responsible use and may reduce the demand.
genuine needs are met and community benefit is
maximised. • By revising service delivery levels.
For example, the threshold at which benefits
The concept of managing the demand-service- become available or the level at which
asset relationship in a holistic sense is one of the benefits are provided will be changed.
basic tenets of Total Asset Management. It
• By imposing legal penalty.
affects all elements of an agency’s operations -
For example, fines can be imposed for use of
its financial, social, technical and environmental
fixed sprinklers during the evening to reduce
activities. It is a fundamental aspect of the day-
demand for additional reservoir pumping
to-day business of the public sector and its
capacity.
people.
Selecting the correct technique to manage
particular demands is critical as the financial
and social implications on the target group and
the community generally could be severe.

4 TAM – Demand Management Guidelines January 2001

2 Government policy on Demand Management
2.1 Agency roles and responsibilities 2.3 Monitoring and feedback
All agencies need to apply the principles and Demand Management is an evolving process
procedures of Demand Management to all requiring ongoing review in order to achieve the
aspects of their service delivery. Relevant stages most equitable, cost-effective and efficient
would include, but need not be limited to: service delivery and best use and distribution of
resources.
• Strategic service and resource planning
• The preparation of economic appraisals Agencies need to regularly monitor the
effectiveness and achievements of their Demand
• The conduct of Value Management Studies. Management processes and, where necessary,
Each agency is expected to apply the principles fine tune and/or re-define measures so that they
of Demand Management in a structured and achieve the desired outcomes.
systematic manner that suits the nature, scale
At an early stage in the application of Demand
and complexity of their particular programs and
Management, it is expected that review and
projects.
monitoring will be largely restricted to
2.2 Reporting requirements qualitative assessment of the efficiency and
effectiveness of Demand Management
There are no separate overall reporting measures.
requirements for Demand Management.
However, agencies would provide an analysis As agencies become more familiar with
and discussion of the underlying demand and its Demand Management and skilled in the
management within existing formal reporting application of its procedures, they will be
structures concerning the acquisition and use of expected to develop more formal reporting
physical assets. Some agencies, such as Sydney procedures based on quantitative performance
Water, have separate demand management evaluation criteria.
reporting requirements under their Operating
Licences.
Examples of formal reporting structures where
this may be appropriate include Economic
Appraisals, Value Management Study Reports,
annual Capital Investment Strategic Plans and
annual Maintenance Plans. Within economic
appraisals, demand management issues can be
addressed within the context of the ‘no-build’
options.

January 2001 TAM – Demand Management Guidelines 5

The Demand Management process
Know your Establish the Identify Develop Implement &
clients true costs Demand response evaluate

Client attitudes Direct costs Needs/Wants Identify appropriate Effect schedules,

Client response to Indirect costs Services/Access strategies management
service charges Develop strategies measures or Plan
Factors influencing
Effect on Client demand into actions Monitor
expenditure Special/temporal Evaluate options Review & evaluate
Client response to demand patterns Select preferred
incentives Demand depth/ options
strength

Figure 1 The demand management process

3.1 Overview
Demand Management involves a number of key In the implementation phase, a plan is prepared
steps within the three characteristic phases of documenting the process stages including
any strategic management process - procedures for implementation, monitoring and
Preparation, Analysis, Planning and evaluation of the defined demand management
Implementation. response.
The preparation phase involves gaining a This process is outlined in the diagram above.
proper understanding of your clients together While it should be applied at each stage of the
with establishing the true costs of providing Asset Management process, it is an essential
service. This then provides the basic part of the development of the Service Delivery
information for the analysis and planning Strategy. NSW Premier’s Department has
phase in which the demand is clearly identified developed a guideline on developing a Service
and a response to its management formulated. Delivery Strategy. This can be accessed through
the Links part of the Asset Strategies section of
the TAM Manual).

6 TAM – Demand Management Guidelines January 2001

Stage 1 Know your clients

Know your
clients

Supply strategies require you to know your The client's attitudes

services and products. Demand strategies
require a comparable knowledge of your client’s The attitudes of clients to the agency, the
needs, motivations, expectations and operating service offered, their social values and other
factors will affect whether they will participate
procedures.
in and support demand management initiatives.
This not only enables an agency to better serve
its clients, but also provides the basic In each case empowerment of clients to see
information required to evaluate and distinguish alternatives will reduce the likelihood of
‘needs’ from ‘wants’, and hence the demand for defeatist client/victim mentalities emerging
services. which make it difficult for them to adapt and
engenders resistance to agency action.
The client's response to changes in service
and/or service levels The client's response to incentives

The decisions of clients to accept or oppose Incentives are useful to attract client
demand side initiatives will be influenced by participation. These can be explicit (eg. a
how they perceive the changes will affect their financial benefit) or implicit (eg. an
improvement in the quality of life of future
activities.
generations). Incentives can also include the
The effect on the client's expenditure provision of other services to offset the impact
on clients.
The impact of demand management strategies
on the client’s expenditure must be considered. Lower prices through increased production and
The effect will vary with decreased costs enabled Texas Instruments to
• The wealth of the consumer and the density gain a major share of the hand-held calculator
market. However, when the company followed
of their use of services
the same approach with digital watches they were
• The intensity of their reliance and use of unsuccessful - people found the watches
services unattractive.
• Availability of alternative form of service They did not know that their customers wanted
• The client’s perceived ability to change their attractive, affordable digital watches.
consumption patterns.
Part of the solution is often to empower the
client to see viable alternatives to the service by:
• Information and education on lifestyle
changes
• Offering alternative service delivery
methods.

January 2001 TAM – Demand Management Guidelines 7

Stage 2 Establish the true costs

Establish
the true
costs

Knowledge of the true costs of providing Financial cost will generally be defined by an
services and operating assets - whether they are agency's accounting system, which should be
financial, social or environmental - is essential able to show:
for sustainable service delivery.
• Interest and redemption of loans
For example, many inner budget agencies use • Allocations for extensions, renewals and
heritage-listed assets, which place particular improvements of assets and technology
obligations on their budgets.
• Allocations for maintenance and operating
Knowledge of the true costs of these obligations costs
enables government and treasury to establish a • Recurrent cost of staff
more rational and equitable operating
environment for such agencies, thereby • Administrative overheads
improving their efficiency of service provision. Economic cost is derived from analysing all the
From the perspective of demand management, a costs and benefits of various ways in which a
thorough knowledge of the true costs of service project objective can be met.
provision and asset operation provides an In essence, an economic appraisal of these costs
essential basis for: shows:
• Assessing the impacts of potential strategies • Whether the benefits of a project exceed its
aimed at influencing demand costs
• Monitoring and evaluating the effects of the • Which among a range of options to achieve
chosen demand management response. an objective has the highest net benefit, or
The true costs of providing service and • Which option is the most cost effective if
associated asset operation encompass: project benefits are equivalent.
• The full range of costs to the agency Sydney Water uses an approach that ranks
• Any costs that fall on other agencies or demand options in terms of levied cost. (ie. the
sections of the community present value of cost of the option to the
community divided by the present value of the
Both the ‘financial’ and ‘economic’ costs need annual reduction in demand for water resulting
to be established. from the option).

Concerted action in diverse fields such as This cost does not include costs and benefits that
smoking prohibition, micro-economic reform and are transfer payments between Sydney Water and
environmental protection was preceded by its customers, such as: forgone revenue, reduced
information on true costs. Knowledge gives the customer bill or proceeds from sales of reclaimed
incentive for change. effluent. It represents the cost to the community
to achieve a certain level of water saving by
Financial costs are evaluated by assessing the means of reducing demand or reducing losses. In
Sydney Water’s calculations ‘cost to the
value of net cash flows that result from the
community’ means cost incurred by Sydney
implementation of a project. Water and its customers.

8 TAM – Demand Management Guidelines January 2001

Stage 3 Identify the demand

Identify the
demand

Before demand management options can be WANTS NEEDS UNDERLYING

developed, the current and future demands must (ASSETS) (SERVICES) NEED
be identified and quantified. Hospitals Health Care Health & Wellbeing

Data can be obtained through traditional market

Schools Colleges Education Employment / Career
and demographic analyses. These analyses Universities Readiness
should be aimed at providing the baseline data
to establish: Police Stations Security Community Safety &
Court Houses Security
• Needs as distinguished from wants or Prisons
expectations Power Stations Electrical Comfort Security
• Demand for services as distinguished from Technology

demand for assets related to those services Dams Water Clean hands/clothing

• The factors which influence the demand Thirst

Green gardens
• Spatial and temporal demand patterns
Roads Railways Transport Ability to relocate
• The depth or strength of the demand Seaports Airports Access to services
Understanding the ‘needs vs. wants’ and Parks Playing Passive/ Recreation
‘service vs. assets’ relationships is central to Fields Community organised
identifying the real demand since there is often Facilities leisure activity
a direct link between these relationships.
For example, the community may want a
hospital (asset) but the need (service) is for
health care. They may want schools, colleges,
universities, etc but the need is for education.
Other examples are listed in the adjoining table.

January 2001 TAM – Demand Management Guidelines 9

Stage 4 Develop Demand Management response

Develop
response

This key stage in the demand management The attraction of working on the demand side is
process involves identifying appropriate the almost limitless variety of approaches that
strategies that could be used to influence can be used to influence demand. There is no
demand and combining them into options for one solution. In many cases a range of
evaluation. coordinated strategies will often be more
successful than a single strategy.
The types of strategies that can be used to
influence demand generally fall under four The key is to be able to seek out the effective
generic headings. These are shown below and strategies by identifying and evaluating as many
described in detail in Appendix A. options as possible.
Education During early stages of demand management,
Aims to influence the level of demand by making clients
aware of the financial, social and environmental costs
agencies should be prepared to experiment to
and benefits of their actions. see what works and what doesn't in particular
situations, and to apply the same energy and
Pricing
Aims to change demand by altering the unit price
cleverness that has characterised past efforts in
charged for a service. the supply side where services have been tested
and refined over a long period.
Technological Innovation
Can result in less resource-intensive solutions to demand Value Management has proved in practice to be
or provide alternative measures to offset demand.
invaluable in uncovering innovative options and
Management Procedures evaluating their effectiveness, and should be
Involve changing administrative and management considered an essential companion to demand
practices to alter the way services are supplied, to whom
they are supplied and/or resources used in meeting side management. It also has a role in testing the
demand. validity of the demand at the outset of the
process.
Regulation and Operational Changes
Are other management procedures, which can be used The rigour of identifying and evaluating options
alone or in conjunction with other demand management
techniques. can expose fallacies in the assumptions that
many people take for granted when approaching
a problem. This leads to a clearer understanding
of the problem itself, and consequently to the
chance of finding a more effective solution.

10 TAM – Demand Management Guidelines January 2001

Stage 5 Implement and evaluate

Implement
& evaluate

As a necessary part of any implementation The implementation plan should also include
process, a demand management plan needs to targets for altering demand and a structured
document: procedure for evaluating the effects of the
selected initiatives on demand, costs and, where
• Client profiles
applicable, revenues.
• True costs of providing services
Where quantitative measures are desired, data
• The demand analysis will need to be collected and assessed in order
• Option analysis and the preferred option to identify changes in demand directly
• Implementation and evaluation. attributable to the selected demand management
initiatives.
The implementation and evaluation section of
the plan could include: Particular attention should be given to
monitoring and evaluating the impacts on
• Programs to inform clients of demand clients. Significant hardships not predicted
management initiatives and why they were should be ameliorated by timely supplementary
introduced and to empower clients to find action.
alternatives
Attention should also be given to identifying
• Training for staff in the skills involved in
any unexpected outcomes such as transference
successfully applying the demand
of demand from one type of service or product
management strategies.
to another.

January 2001 TAM – Demand Management Guidelines 11

4 Benefits of Demand Management
The combination of supply and demand side The benefits of demand management can be
policies will allow agencies to optimise the summarised as improving value for money
trade-off between available resources, service spent on services through:
delivery and asset performance and cost, for the
• More efficient allocation of resources to
mutual benefit of both the agency and its clients.
programs and projects of greatest need
It will allow a fairer distribution of the limited
resources that are available to the public sector • Reduced waste and misuse of resources by
and better outcomes obtained for the public reducing the provision of unnecessary
funds involved. services by communicating (through charges,
education or other means) the true cost of the
The benefits of Demand Management will vary service
with the type of service provided. However,
there have been sufficient examples of dramatic • Deferred capital and recurrent expenditures
savings in areas as diverse as electrical power by reducing excessive consumption
consumption, water consumption, transport • Greater client participation and control over
usage and waste disposal to demonstrate the the cost of the service.
value of the process.
Consistently rising demand for water in the
The Sydney Harbour Tunnel has reduced traffic Hunter region suggested the need to build a new
delays and travel times. It has also provided the dam by 1987 at an estimated cost of $100
opportunity to dedicate one lane of the Harbour million. The dam would raise water prices for
Bridge for buses. many years and flood large areas of valuable
rural land.
In the long term, the resulting shorter bus travel
times will encourage public transport therefore However, using pricing and education demand
reducing the demand for further car crossings. management strategies, the Hunter Water Board
was able to reduce future demand by 30%
enabling the dam, along with an additional $50
million for reticulation works, to be deferred for
10 years.
The Hunter Water Board therefore continued to
meet the community's need for water at a lower
longer-term cost and avoided the environmental
issues associated with the proposed dam.

12 TAM – Demand Management Guidelines January 2001

Appendix A Demand Management strategies
A1 Introduction
Community demands mirror social In the private sector, the strategy might be more
circumstances. Issues, which range from basic appropriately called promotion - one of the
physical needs, economic conditions, private sector’s most powerful marketing tools.
technological change and tradition to
advertising and fashion, influence them. Examples of where education has been used to
Agencies should not simply follow community alter demand and hence asset requirements
demands - this can be a path with no end. through behavioural patterns are illustrated
Agencies should realise the impact the services below.
they provide have on individual consumers and As with all strategies there is a time delay
the community generally. between commencing an education strategy and
Agencies should attempt to identify and achieving the changes sought. This will vary
separate genuine ‘needs’ from more unrealistic with the activity or attitude, but in the case of
‘wants’ in order to allow the limited resources entrenched behaviour that is being reinforced by
of the public sector to be targeted effectively to commercial interest such as smoking, the
where they can do the most good. avoidance campaign can be arduous.

There are many ways of influencing demand. Sometimes the link between the issue at the
They generally fall under the following four basis of the education campaign, and the effects
headings. sought on the asset are indirect, whereas in other
cases good correlations occur.
A2 Education
Education strategies trade on the assumption ISSUE EFFECT SOUGHT ON
that awareness of the costs and benefits of ASSETS

various types of consumption will change the Health Smoking avoidance Fewer hospital beds
behaviour of clients. This in turn will influence Fewer operating suites
Sun protection
Fewer nursing homes
the demand for public sector services - and
Heart disease
thereby the demand for assets.
Waste Recycling Fewer land-fill sites
Another role for education is to temper public Disposal
expectations to the realities of the prevailing Less road damage

circumstances. Lobby groups sometimes seek to Conservation of

raise expectations (ie. to elevate demand) above scarce resources

reasonable levels, and even to distort the public Driving Alcohol consumption Fewer hospitals
perception of the benefits and costs. Fewer courts
Speeding limits
To satisfy these unrealistic expectations, funds Seat belt restraint
tend to be diverted from areas of real need.
Education offers a method of countering this
situation.

January 2001 TAM – Demand Management Guidelines 13

A3 Pricing strategies
The underlying premise of pricing strategies is Marginal cost pricing means that all costs due to
that, when clients are charged the true cost of an increase in the output of a service are
the service, consumption will tend to reflect its incorporated into the price of the increased
true value to the client. On the other hand, if output.
something is cheap, there is little cost incentive
to use it prudently and avoid wastage. The economic viewpoint is that pricing based on
average cost of production can be inefficient
An agency can choose to encourage or and that the optimum allocation of resources
discourage consumption; to direct consumption occurs when the price equals the marginal cost.
from one form to another; or to encourage the
option of choice over levels of service by However, in the case of government agencies
offering a range of rates (eg. 24 hour availability that are monopoly suppliers, prices set at
at $x/hour or 8 hour availability at $y/hour). marginal cost may fail to cover total costs thus
requiring a subsidy payment. For these agencies
Pricing strategies are being used extensively by to break even or achieve a lower subsidy level,
commercial sector agencies, particularly the prices may be set either using a Ramsey pricing
power and water authorities, where performance or an average cost pricing approach.
is dominated by concepts of economic
efficiency and commercial discipline. While pricing strategies can be effective in
influencing the location and distribution of
Knowledge of the true cost of providing a demand and its occurrence with time, they can
service and related assets (see Section 3.3) is the often result in unexpected outcomes.
starting point for the development of pricing
strategies. Decisions can then be made For example, demand can be simply transferred
regarding the cost recovery structure on which to other services. A decision to recover the cost
pricing is to be based. of bus and rail transport could lead to increased
road usage and in turn, increase demand for
In a perfectly competitive market, it is generally medical services resulting from a pro-rata
accepted that for most services the price should increase in road trauma and air pollution.
be based on the marginal cost (ie. the cost of
producing an additional unit) rather than the Care therefore needs to be taken in the
average cost. formulation and application of pricing structures
aimed at influencing demand.

14 TAM – Demand Management Guidelines January 2001

A4 Technological innovation A5 Management procedures
Technology can be used to influence demand Unlike the other strategies, changes to
for assets by offering less asset-intensive management and administrative procedures alter
solutions to the demand, or alternatively by the demands placed on an agency’s existing
offering measures to offset the demand. assets and other resources.
Technological systems pervade almost every This can be achieved directly by utilising other
aspect of service provision. Increased use of the assets outside the agency through long-term
available innovative and advanced systems can leasing or short-term hiring arrangements, or by
be a powerful means of reducing the demand sharing another agency’s under-utilised assets
for, and dependence on, capital assets. and resources.
Technology can however increase the demand It may also be achieved indirectly by changing
for services, increasing overall cost. Less the way in which services are provided, or, the
invasive surgical procedures may make new delivery of government services may be
procedures appropriate for more patients. contracted to the private sector.

Innovative Building Design NSW Health has introduced several asset sharing
service delivery solutions. Community health
Technologically advanced control systems for services have been co-located with public
energy efficient air conditioning, ventilation and hospitals at Coffs Harbour Hospital and Manning
lighting reduce power demands. This can delay Base Hospital and co-location of community
or even remove the need for new or upgraded health services and General Practitioner clinics at
power stations. Iluka.
A private hospital has been co-located on the
public hospital site at Royal North Shore.
Health Services
High technology non-invasive surgery techniques
can reduce the time patients spend in hospitals A Motor Registry Office used to bill all its
thereby reducing the demand for overnight licence holders at the end of the month, so that
hospital accommodation, catering, laundry and so for three weeks out of four there was little
on. Overall demand may be managed through demand for space. But in the fourth week, the
increased use of ambulatory care and non- week that everyone came in to renew their
hospital based services, resulting in a change in licences, the crowds would extend out onto the
the venue from which services are provided. footpath.
The Registry Office claimed that it needed
enlarged premises to cope with this ‘demand’.
Computer Data Storage and Retrieval But changing its management practice to
continuous billing solved the issue far more
High technology advancements in this area has cheaply.
the potential to allow remote access to agency
data, making information kiosks possible, and
making access to government services more
streamlined and economic.

January 2001 TAM – Demand Management Guidelines 15

Appendix B Industry examples of Demand Management
B1 The water supply industry
Water supply authorities have been introducing The argument against ‘pay for use’ and
demand side strategies for some years (leaving metering arises where there is surplus capacity.
aside restrictions imposed in time of drought, a In such a case the financial reasons for reduced
demand side control used since the beginning of consumption may be insufficient to justify the
history). changeover costs, but arguments of
The objective has been to match consumption to conservation of resources remain valid.
the capacity of the resource and to defer the As meters and pricing policies are introduced,
expansion of headworks such as new dams, the process can be progressively refined in
pumping stations and supply mains, as well as consultation with users to allow prices to match
distribution networks. levels of service. That is, for a higher or lower
These headworks and distribution networks are price, the client can select the reliability and
expensive and can be environmentally volume of service he/she wants to pay for,
contentious. instead of the ‘one service - one fee’
Water pricing has been the main weapon, with a arrangements of the past.
progressive move to tariffs based on the level of Water authorities are also introducing
consumption in place of tariffs based on educational programs to influence consumption.
property values. These programs appeal to the financial,
This does not mean that tariffs based on environmental and moral concerns of the
property value are being discarded. These tariffs community, and give advice on how to, for
are attractive because the income stream is example:
predictable and assured, whereas incomes from
• Reduce the volume of water used industrially
tariffs based solely on consumption tend to be
and domestically
highly variable, depending on climatic and
economic conditions from year to year. • Reduce wastage by correcting leaks
Consequently, authorities are tending towards • Handy hints such as how to use more
recovery of capital expenditure by a base charge efficient garden watering systems and how to
determined by property type or value or select plantings that need less water
connection size, plus a consumption component Some agencies, such as Sydney Water are
(or series of components) determined by the implementing a comprehensive package of
volume of water consumed. demand management options including:
Systems based on charging for water use depend
• Water efficiency measures such as the
on the ability to measure consumption; therefore
auditing and retrofitting of residences and
it is necessary to install meters for all clients.
commercial/ industrial facilities
This is expensive, and each water supply
authority has had to assess the benefits that • Active leakage reduction on its water supply
might accrue. system
In practice, the effect on water demand has been • Recycling of effluent from sewage treatment
dramatic. There are examples where meters plants
have been installed coupled with a moderate • Increased pricing of water to reflect the true
pricing policy, annual consumption has been value of resource lobbying for the
reduced by more than 30%. introduction of appropriate water efficiency
standards for showerheads and washing
machines
• Potential introduction of low-level permanent
restrictions

16 TAM – Demand Management Guidelines January 2001

B2 The electrical power industry
Electrical power supply agencies lead the field Pricing Strategies
in developing and analysing demand side
programs. This is due largely to the impetus A wide range of rate options is being used by
given by the energy crises of the 1970's and the different agencies with the objective of:
enormous costs involved in expanding the • Obtaining an optimum electrical load
supply capacity of a power grid. distribution
The agencies realised a dollar spent on • Minimising costs to clients
influencing consumption gave a higher return • Preserving the financial viability of the
than a dollar spent on increasing supply. agency
Demand side strategies have mainly involved • Minimising future costs
actions on the clients' side of the meter, either • Addressing social and environmental
directly caused or indirectly stimulated by the concerns.
agency. These actions include:
Extensive literature is available on the various
Load management systems being used in the electrical power
These are activities by which the operation of a industry.
client's equipment may be altered to change the
level of demand. Incentives in the form of rate
reductions are usually offered.
Load controls can work in two ways: clients can
control their loads by voluntarily altering the
use of equipment in response to pricing
strategies. Or, agencies may control clients'
loads by utilising a signal activated remotely or
at the point of use.
Remote control involves the use of a
communications system, while point of use
control may involve techniques such as cyclic
timers, time clocks or thermostats.
Strategic conservation
The objective here is to reduce client
consumption through energy conservation
programs.
A broad spectrum of programs has been devised
covering almost every major end use and every
appliance. These programs combine pricing
incentives, education and technological
innovation.
Options include installing insulation within
buildings to improve thermal performance;
improved heating, ventilation and air
conditioner efficiency; solar programs; and
energy efficient appliances and uses.

January 2001 TAM – Demand Management Guidelines 17

This page is intentionally blank

18 TAM – Demand Management Guidelines January 2001

Life Cycle
Costing
Guideline
Life cycle costing guideline

January 2001
DPWS Report Number 01053

NSW Department of Public Works and Services Cataloguing-in-Publication data

New South Wales. Government Asset Management Committee.

Life cycle costing guideline.

ISBN 0 7347 4104 9 (set)

ISBN 0 7347 4164 2

1. Asset management – New South Wales. 2. Capital investment. 3. Public administration – New South Wales
I. Title. (Series : TAM)

352.50944

 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any
process without written permission from the NSW Government Asset Management Committee. Requests and inquiries
concerning reproduction and rights should be addressed to:

Secretariat
Government Asset Management Committee
Level 23 McKell Building
2-24 Rawson Place
SYDNEY NSW 2000
Website www.gamc.nsw.gov.au
E:mail gamc@dpws.nsw.gov.au

Set consists of :

ISBN 0 7347 4122 7 Asset strategy

ISBN 0 7347 4194 4 Office accommodation strategy
ISBN 0 7347 4128 6 Capital investment : strategic planning
ISBN 0 7347 4134 0 Asset maintenance : strategic planning
ISBN 0 7347 4140 5 Asset disposal : strategic planning
ISBN 0 7347 4146 4 Sustainable development guideline
ISBN 0 7347 4152 9 Heritage asset management guideline
ISBN 0 7347 4158 8 Demand management guideline
ISBN 0 7347 4164 2 Life cycle costing guideline
ISBN 0 7347 4170 7 Value management guideline
ISBN 0 7347 4176 6 Risk management guideline
ISBN 0 7347 4182 0 Post implementation review guideline
ISBN 0 7347 4188 X Asset information guideline
Contents

1 INTRODUCTION ____________________________________________________2
1.1 Why use Life Cycle Costing? .....................................................................................................................2

1.2 What is Life Cycle Costing?.......................................................................................................................2

1.3 Distribution of Costs over the Asset Life Cycle........................................................................................3

1.4 Linkages with Total Asset Management...................................................................................................4

2 MODELLING LIFE CYCLE COSTS ______________________________________5

2.1 Life Cycle Costing Models .........................................................................................................................5

2.2 LCC Breakdown into Asset Cost Elements ..............................................................................................5

2.3 Estimating Asset Cost Elements ................................................................................................................6

3 THE LIFE CYCLE COSTING PROCESS__________________________________7

3.1 Overview......................................................................................................................................................7

Stage 1 Plan LCC Analysis ...............................................................................................................................8

Stage 2 Select/Develop LCC Model ..................................................................................................................9

Stage 3 Apply LCC Model ..............................................................................................................................10

Stage 4 Document and Review LCC Results .................................................................................................11

Stage 5 Prepare Life Cost Analysis ................................................................................................................12

Stage 6 Implement and Monitor Life Cost Analysis .....................................................................................13

APPENDIX A THE CONCEPT OF DISCOUNTING AND ITS APPLICATION________14

January 2001 TAM – Life Cycle Costing 1

1 Introduction
1.1 Why use Life Cycle Costing? 1.2 What is Life Cycle Costing?
The determination of costs is an integral part of The Life Cycle Cost (LCC) of an asset is
the asset management process and is a common defined as:
element of many of the asset manager’s tools, " the total cost throughout its life including
particularly Economic Appraisal, Financial planning, design, acquisition and support
Appraisal, Value Management, Risk costs and any other costs directly attributable
Management and Demand Management. to owning or using the asset".

In the past, comparisons of asset alternatives, Life Cycle Costing adds all the costs of
whether at the concept or detailed design level, alternatives over their life period and enables an
have been based mainly on initial capital costs. evaluation on a common basis for the period of
Growing pressure to achieve better outcomes interest (usually using discounted costs). This
from assets means that ongoing operating and enables decisions on acquisition, maintenance,
maintenance costs must be considered as they refurbishment or disposal to be made in the light
consume more resources over the asset’s service of full cost implications.
life. Life Cost Planning
For example, the operating costs of a hospital Life Cost Planning concerns the assessment and
consume an equivalent of the capital cost every 2 comparison of options/alternatives during the
to 3 years and can continue to do so for 40 years design/ acquisition phase. It utilises similar
or more. The operating costs of a school can techniques as those for Economic Appraisal in
consume the equivalent of its capital cost every 4
that future, nominal costs are discounted to
to 5 years and remain in service for a century.
today's dollar Discounted Cost.
Both the capital and the ongoing operating and The application of Discounted Cost analyses to
maintenance costs must be considered wherever Life Cost Planning differs from that in
asset management decisions involving costs are Economic Appraisal in that Life Cost Planning
made. This is the Life Cycle Cost approach. generally:
Life Cycle Costing is a process to determine the • Considers all cost components within asset
sum of all the costs associated with an asset or options over the asset’s life
part thereof, including acquisition, installation,
• Does not directly consider benefits or
operation, maintenance, refurbishment and revenue streams that are generally assumed
disposal costs. It is therefore pivotal to the asset to be equal amongst the options being
management process as an input to the compared (benefits and revenues are
evaluation of alternatives via Economic considered in the evaluation of options).
Appraisal, Financial Appraisal, Value
Management, Risk Management and Demand
Management
There is an Australian Standard on Life Cycle
Costing (AS4536) that includes examples of the
application of Life Cycle Costing in its
appendices.

2 TAM – Life Cycle Costing January 2001

Life Cost Analysis 1.3 Distribution of Costs over the
Life Cost Analysis enables the creation, Asset Life Cycle
operation and disposal costs of a selected Life Cycle Costing can be carried out during
alternative to be monitored throughout its life to any or all phases of an asset's life cycle. It can
enable accurate and timely decision-making as be used to provide input to decisions regarding
to how these costs can be minimised. Where asset design, manufacture, installation,
ownership of the asset changes over time, each operation, support and disposal.
owner, takes responsibility for decisions
required during the period of ownership only. By the end of the concept and definition phases
of acquisition, more than half of the asset’s life
Life Cost Analysis is used as the basis for costs may be committed by decisions made with
monitoring and management of costs over an respect to asset features, performance,
asset’s life. It is essentially a financial reliability, technology, and support resources.
management tool and hence costs are generally By the end of design and development phases,
not expressed as real or discounted costs but as even more of the asset's life costs may be fixed.
nominal costs (ie. estimated costs that are to be The interaction between potential savings and
paid when due) to enable a comparison of the asset costs is shown in Figure 1 - Potential
predicted cost and the actual cost. This enables Savings and Cost Relationship
better prediction and adjustment of the Life
Cycle Costing model.
Appendix A provides a summary of the Early identification of acquisition and
discounting concept along with an explanation ownership costs enables the decision-maker to
of the differences between real, discounted and balance performance, reliability,
nominal costs. maintainability, maintenance support and other
goals against life cycle costs. Decisions made
early in a asset's life cycle have a much greater
influence on life cycle costing than those made
late in a asset's life cycle, leading to the
development of the concept of discounted costs.

Figure 1 Potential Savings and Cost Relationship

Cost of
making
Cost
changes

Potential for
Time making
savings

January 2001 TAM – Life Cycle Costing 3

1.4 Linkages with Total Asset
Management
TAM reflects priorities for whole-of-life asset
management, extended planning requirements
for new works, and new relationships between
services planning and asset procurement
activities.
Costs may change and accumulate as a program
or project progresses. Therefore initial
provisions made to manage whole-of-life costs
should be evaluated and updated before
committing to one alternative. A LCC model
provides a mechanism to compare these costs.

4 TAM – Life Cycle Costing January 2001

2 Modelling Life Cycle Costs
2.1 Life Cycle Costing Models 2.2 LCC Breakdown into Asset Cost
A Life Cycle Costing (LCC) model is Elements
essentially an accounting structure containing Estimating the total LCC requires breakdown of
terms and factors which enable estimation of an the asset into its constituent cost elements over
asset's component costs. time. The level to which it is broken down will
There are a number of commercially available depend on the purpose and scope of the LCC
models that can be used for LCC analysis. study and requires identification of:
However, in some cases it may be appropriate to • Significant cost generating activity
develop a model for a specific application. In components
either case, the Life Cycle Costing model • The time in the life cycle when the
should: work/activity is to be performed
• Represent the characteristics of the asset • Relevant resource cost categories such as
being analysed including its intended use labour, materials, fuel/energy, overhead,
environment, maintenance concept, operating transportation/travel and the like.
and maintenance support scenarios and any
constraints or limitations Costs associated with LCC elements may be
further allocated between recurring and non-
• Be comprehensive enough to include and recurring costs. LCC elements may also be
highlight the factors relevant to the asset estimated in terms of fixed and variable costs.
LCC
• Be easily understood to allow timely To facilitate control and decision-making and to
decision- making, future updates and support the life cycle costing process, the cost
modification information should be collected and reported in
a manner consistent with the defined LCC
• Provide for the evaluation of specific LCC breakdown structure.
elements independently of other elements
Before selecting a model, the purpose of the
analysis and the information it requires should be
identified. The model should also be reviewed
with respect to the applicability of all cost
factors, empirical relationships, constants,
elements and variables.

January 2001 TAM – Life Cycle Costing 5

2.3 Estimating Asset Cost Elements Methods of Analyses
The method used to estimate asset cost elements One or more of the following methods for
in LCC calculations will depend on the amount analysing cost data should be used.
of information needed to: Engineering Cost Method
• Establish asset use patterns and operational The Engineering Cost Method is used where
characteristics and hence expected asset life there is detailed and accurate capital and
• Understand the technology employed in the operational cost data for the asset under study. It
asset involves the direct estimation of a particular
Sources of Cost Data cost element by examining the asset component-
by-component.
By definition, detailed cost data will be limited
in the early stages of the asset life, particularly It uses standard established cost factors (eg.
during the design/acquisition phase. Cost data firm engineering and/or manufacturing
during these early stages will therefore estimates) to develop the cost of each element
generally need to be based on the cost and its relationship to other elements (known as
performance of similar asset components Cost Element Relationships - CER).
currently in operation. Analogous Cost Method
Where new technology is being employed, data This method provides the same level of detail as
can only be based on estimated unit cost the Engineering Cost Method but draws on
parameters such as $/construction unit, historical data from components of other assets
construction unit/labour hours, specified or having analogous size, technology, use patterns
suggested by the technology. and operational characteristics.
More information on asset component costs will Parametric Cost Method
become available during use of the asset,
enabling more complete and descriptive costs to The Parametric Cost Method is employed where
be defined. actual or historical detailed asset component
data is limited to known parameters.
This available data from existing cost analyses
is used to develop a mathematical regression or
progression formula that can be solved for the
cost estimate required.

AS 4536 contains an example of regression

analyses to find the cost per vehicle to undertake
new delivery routes based on known delivery
costs and known route distances. A formula of
the form y=a+bx is then solved for the required
route.
(y is vehicle costs, a is a transport constant, b is
the slope of the regression line and x is the route
distance)

6 TAM – Life Cycle Costing January 2001

3 The Life Cycle Costing Process
Plan Select/ Apply Document Prepare Implement
Analysis Develop Model and Review Life Cost and
Model Results Analysis Monitor
Life Cost
Analysis

Life Cost Planning Life Cost Analysis

3.1 Overview All stages may be performed iteratively as

needed. Assumptions made at each stage should
As shown in the attached diagram, Life Cycle be rigorously documented to facilitate such
Costing is a six-staged process. The first four iterations and to aid in interpretation of the
stages comprise the Life Cost Planning phase results of the analysis.
with the last two stages incorporating the Life
Cost Analysis phase. The six stages are: LCC analysis is a multi-disciplinary activity. An
analyst should be familiar with the philosophy,
• Stage 1: Plan LCC Analysis which underlies Life Cycle Costing (including
• Stage 2: Select/Develop LCC Model typical cost elements, sources of cost data and
• Stage 3: Apply LCC Model financial principles), and should have a clear
understanding of the methods of assessing the
• Stage 4: Document and Review LCC uncertainties associated with cost estimation.
Results
Depending upon the scope of the analysis, it
• Stage 5: Prepare Life Cost Analysis
will be important to obtain cost inputs from
• Stage 6: Implement and Monitor Life Cost individuals who are familiar with each of the
Analysis phases of the asset life cycle. This may include
representatives of both the supplier(s) and the
user(s).

January 2001 TAM – Life Cycle Costing 7

Stage 1 Plan LCC Analysis

Plan
Analysis

The Life Cycle Costing process begins with • Identify any underlying conditions,
development of a plan, which addresses the assumptions, limitations and constraints
purpose, and scope of the analysis. The plan (such as minimum asset performance,
should: availability requirements or maximum capital
cost limitations) that might restrict the range
• Define the analysis objectives in terms of of acceptable options to be evaluated.
outputs required to assist management
decisions. Typical objectives are: • Identify alternative courses of action to be
evaluated. The list of proposed alternatives
− Determination of the LCC for an asset in
may be refined as new options are identified
order to assist planning, contracting,
or as existing options are found to violate the
budgeting or similar needs
problem constraints.
− Evaluation of the impact of alternative
courses of action on the LCC of an asset • Provide an estimate of resources required and
(such as design approaches, asset a reporting schedule for the analysis to
acquisition, support policies or alternative ensure that the LCC results will be available
technologies) to support the decision-making processes for
− Identification of cost elements which act which they are required.
as cost drivers for the LCC of an asset in The plan should be documented at the beginning
order to focus design, development, of the Life Cycle Costing process to provide a
acquisition or asset support efforts focus for the rest of the work. The intended
• Delineate the scope of the analysis in terms users of the analysis results should review the
of the asset(s) under study, the time period plan to ensure that their needs have been
(life cycle phases) to be considered, the use correctly interpreted and clearly addressed.
environment and the operating and
maintenance support scenario to be
employed.

8 TAM – Life Cycle Costing January 2001

Stage 2 Select/Develop LCC Model

Select/
Develop
Model

Stage 2 is the selection or development of an • Determine the data required to develop these
LCC model that will satisfy the objectives of the estimates, and identify sources for the data.
analysis. • Identify any uncertainties that are likely to be
The model should: associated with the estimation of each cost
element.
• Create or adopt a cost breakdown structure
• Integrate the individual cost elements into a
(CBS) that identifies all relevant cost
unified LCC model, which will provide the
categories in all appropriate life cycle phases.
LCC outputs required to meet the analysis
Cost categories should continue to be broken
objectives.
down until a cost can be readily estimated for
each individual cost element. Where • Review the LCC model to ensure that it is
available, an existing cost breakdown adequate to address the objectives of the
structure may provide a useful starting point analysis.
for development of the LCC breakdown • The LCC model including all assumptions
structure (see Section 2.2). should be documented to guide and support
• Identify those cost elements that will not the subsequent phases of the analysis
have a significant impact on the overall LCC process.
of the asset(s) under consideration or those
that will not vary between alternatives. These
elements may be eliminated from further
consideration
• Select a method (or methods) for estimating
the cost associated with each cost element to
be included in the model (see Section 2.3).

January 2001 TAM – Life Cycle Costing 9

Stage 3 Apply LCC Model

Identify the
demand

Application of the LCC Model involves the • Categorise and summarise LCC model
following steps: outputs according to any logical groupings,
which may be relevant to users of the
• Obtain data and develop cost estimates and analysis results (eg. fixed or variable costs,
their timing for all the basic cost elements in recurring or non-recurring costs, acquisition
the LCC model. or ownership costs, direct or indirect costs).
• Validate the LCC model with available • Conduct sensitivity analyses to examine the
historical data if possible. impact of variations to assumptions and cost
• Obtain the LCC model results from each element uncertainties on LCC model results.
relevant combination of operating and Particular attention should be focused on cost
support scenarios defined in the analysis drivers, assumptions related to asset usage
plan. and different discount rates.
• Identify cost drivers by examining LCC • Review LCC outputs against the objectives
model inputs and outputs to determine the defined in the analysis plan to ensure that all
cost elements that have the most significant goals have been fulfilled and that sufficient
impact on the LCC of the asset(s). information has been provided to support the
• Quantify any differences (in performance, required decision. If the objectives are not
availability or other relevant constraints) met, additional evaluations and modifications
amongst the alternatives being studied, to the LCC model may be required.
unless these differences are directly reflected • The LCC analysis (including all
in the LCC model outputs. assumptions) should be documented to
ensure that the results can be verified and
readily replicated by another analyst if
necessary.

10 TAM – Life Cycle Costing January 2001

Stage 4 Document and Review LCC Results

Document
and
Review
Results

The results of the LCC analysis should be A formal review of the analysis process may be
documented to allow users to clearly understand required to confirm the correctness and integrity
both the outcomes and the implications of the of the results, conclusions and recommendations
analysis along with the limitations and presented in the report. If such a requirement
uncertainties associated with the results. The exists someone other than the original analysts
report should contain the following. should conduct the review (to ensure
objectivity).
Executive Summary: a brief synopsis of the
objectives, results, conclusions and The following elements should be addressed in
recommendations of the analysis. the review:
Purpose and Scope: a statement of the analysis • The objectives and scope of the analysis to
objective, asset description including a ensure that they have been appropriately
definition of intended asset use environment, stated and interpreted
operating and support scenarios, assumptions, • The model (including cost element
constraints and alternative courses of action definitions and assumptions) to ensure that it
considered. is adequate for the purpose of the analysis
LCC Model Description: a summary of the • The model evaluation to ensure that the
LCC model, including relevant assumptions, the inputs have been accurately established, the
LCC breakdown structure and cost elements model has been used correctly, the results
along with the methods of estimation and (including those of sensitivity analysis) have
integration. been adequately evaluated and discussed and
that the objectives of the analysis have been
LCC Model Application: a presentation of the
achieved
LCC model results including the identification
of cost drivers, the results of sensitivity analyses • All assumptions made during the analysis
and the output from any other related analyses. process to ensure that they are reasonable and
that they have been adequately documented.
Discussion: discussion and interpretation of the
results including identification of uncertainties
or other issues which will guide decision makers
and users in understanding and using the results.
Conclusions and Recommendations: a
presentation of conclusions related to the
objectives of the analysis and a list of
recommendations along with identification of
any need for further work or revision of the
analysis.

January 2001 TAM – Life Cycle Costing 11

Stage 5 Prepare Life Cost Analysis

Prepare
Life Cost
Analysis

The Life Cost Analysis is essentially a tool,

which can be used to control and manage the
ongoing costs of an asset or part thereof. It is
based on the LCC Model developed and applied
during the Life Cost Planning phase with one
important difference: it uses data on nominal
costs.
The preparation of the Life Cost Analysis
involves review and development of the LCC
Model as a "real-time" cost control mechanism.
This will require changing the costing basis
from discounted to nominal costs. Estimates of
capital costs will be replaced by the actual
prices paid. Changes may also be required to the
cost breakdown structure and cost elements to
reflect the asset components to be monitored
and the level of detail required.
Targets are set for the operating costs and their
frequency of occurrence based initially on the
estimates used in the Life Cost Planning phase.
However, these targets may change with time as
more accurate data is obtained, either from the
actual asset operating costs or from
benchmarking with other similar assets.

12 TAM – Life Cycle Costing January 2001

Stage 6 Implement and Monitor Life Cost Analysis

Implement
and
Monitor
Life Cost
Analysis

Implementation of the Life Cost Analysis

involves the continuous monitoring of the actual
performance of an asset during its operation and
maintenance to identify areas in which cost
savings may be made and to provide feedback
for future life cost planning activities.
For example, it may be better to replace an
expensive building component with a more
efficient solution prior to the end of its useful
life than to continue with a poor initial decision.

January 2001 TAM – Life Cycle Costing 13

Appendix A The Concept of Discounting and its
Application
A1 The Discount Rate and its A2 Nominal, Real and Discounted
Components Costs
Since asset component costs for differing For the purposes of discounting, there are three
options occur at varying times throughout the relevant expressions of asset component costs.
asset life cycle, they can only be compared by These are:
reducing them to costs at a common base date.
Nominal Cost, CN
This is achieved through the well-known
process of discounting that reflects the net The expected price that will be paid when a cost
changes in the real value of an asset component is due to be paid (ie. including inflation and
as a result of: price movements due to changes in efficiency,
technology, etc.)
• Decreases in value due to inflation
Real Cost, CR
• Increases in value due to the (potential)
interest earned if the money expended on the The cost expressed in values of the base date
asset component was otherwise invested excluding inflation but including price
movements due to changes in efficiency,
The discounting of costs takes account of three
technology, etc.
elements:
1. The interest rate available from long term Discounted Cost, CD
investment in bank or government bonds The Real Cost discounted by the Real Discount
2. The interest rate that business would expect Rate which is equivalent to the Nominal Cost
as a return for risk discounted by the Nominal Interest (or
3. The inflation rate that would affect the Discount) Rate.
purchasing power of the currency
The real discount rate makes allowance for A The Discounted Cost is thus often referred to as
and B. the Net (or Discounted) Present Value.

The nominal discount rate makes allowance for

A, B and C.
Note that discounting does not incorporate
changes due to price movements as a result of
changes in efficiency, technology, etc. since
these are in essence real changes in value.
The discount rate thus reflects the net changes
in real value due to the compounding effect of
interest (potentially) earned on money and the
discounting effects of inflation as expressed in
the following formula.
Thus the Discount Rate reflects the real rate of
interest at which money is borrowed or lent ie.
the absolute (or nominal) interest rate at which
money is borrowed or lent discounted for the
effects of inflation. Consequently, the terms
discount rate and real interest rate are
synonymous.

14 TAM – Life Cycle Costing January 2001

Therefore, for an asset component having a
Nominal Cost, CN in Year n, then the Real Cost
(or Present Value), CR at the base date (Year 0)
is given by:

CR = CN (1 + f )
−n

and the Discounted Cost (or Net Present Value),

CD at the base date (Year 0) is thus:

CD = CR (1 + d )
−n

= CN (1 + f ) (1 + d ) −n
−n

= CN (1 + f )
−n (1 + i ) − n
(1 + f ) −n
= CN (1 + i ) −n
(1 + i)
(1 + d ) =
(1 +f)
(1 + i)
d= -1
(1 +f)

where d = (Real) D iscount Rate

i = N ominal Interest (or D iscount) Rate
f = Inflation Rate
For this reason, i is often referred to as the
Nominal Discount Rate since it is the rate
applied when discounting Nominal Costs.

January 2001 TAM – Life Cycle Costing 15

This page is intentionally blank

16 TAM – Life Cycle Costing January 2001

 Value
Management
Guideline
Value management guideline

January 2001
DPWS Report Number 01054

NSW Department of Public Works and Services Cataloguing-in-Publication data

New South Wales. Government Asset Management Committee.

Value management guideline.

ISBN 0 7347 4104 9 (set)

ISBN 0 7347 4170 7

1. Asset management – New South Wales. 2. Capital investment. 3. Public administration – New South Wales
I. Title. (Series : TAM)

352.50944

 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any
process without written permission from the NSW Government Asset Management Committee. Requests and inquiries
concerning reproduction and rights should be addressed to:

Secretariat
Government Asset Management Committee
Level 23 McKell Building
2-24 Rawson Place
SYDNEY NSW 2000
Website www.gamc.nsw.gov.au
E:mail gamc@dpws.nsw.gov.au

Set consists of :

ISBN 0 7347 4122 7 Asset strategy

ISBN 0 7347 4194 4 Office accommodation strategy
ISBN 0 7347 4128 6 Capital investment : strategic planning
ISBN 0 7347 4134 0 Asset maintenance : strategic planning
ISBN 0 7347 4140 5 Asset disposal : strategic planning
ISBN 0 7347 4146 4 Sustainable development guideline
ISBN 0 7347 4152 9 Heritage asset management guideline
ISBN 0 7347 4158 8 Demand management guideline
ISBN 0 7347 4164 2 Life cycle costing guideline
ISBN 0 7347 4170 7 Value management guideline
ISBN 0 7347 4176 6 Risk management guideline
ISBN 0 7347 4182 0 Post implementation review guideline
ISBN 0 7347 4188 X Asset information guideline
Contents

1 INTRODUCTION ____________________________________________________2
1.1 What is Value Management?.....................................................................................................................2

1.3 Purpose of the Value Management Guideline..........................................................................................2

1.4 Linkages with Total Asset Management...................................................................................................2

2 VALUE MANAGEMENT POLICY _______________________________________3

2.1 VM perspective ...........................................................................................................................................3

2.2 Value Management assessments................................................................................................................3

2.4 Roles and Responsibilities..........................................................................................................................3

3 CONCEPT AND APPLICATION ________________________________________5

3.1 Value Management concept.......................................................................................................................5

3.2 Application of Value Management in Total Asset Management ............................................................6

3.3 Value Management benefits.......................................................................................................................7

3.4 Value Management investment return .....................................................................................................7

4 VALUE MANAGEMENT PROCESS _____________________________________9

4.1 NSW public sector model...........................................................................................................................9

4.2 Value Study duration ...............................................................................................................................10

4.3 Value Study workshop .............................................................................................................................10

4.4 Value Study Group...................................................................................................................................11

4.5 Value Study Team ....................................................................................................................................11

5 VALUE MANAGEMENT PROCEDURES ________________________________12

5.1 Information phase: ...................................................................................................................................12

5.2 Function analysis phase: ..........................................................................................................................13

5.3 Ideas/options phase: .................................................................................................................................15

5.4 Evaluation phase: .....................................................................................................................................15

5.5 Action plan: ...............................................................................................................................................16

5.6 Analysis and reporting:............................................................................................................................17

APPENDIX A EVALUATION MATRICES ___________________________________19

APPENDIX B CASE STUDIES ___________________________________________21

January 2001 TAM – Value Management Guideline 1

1 Introduction
1.1 What is Value Management? 1.3 Purpose of the Value
In general terms, Value Management may be Management Guideline
described as a structured, analytical process for The primary purpose of the Value Management
developing innovative, holistic solutions to Guideline is to clarify Government policy and
complex problems. outline the VM process in a way that assists
Value Management has the following key Government agencies in its use and application.
characteristics: The Value Management Guideline is also
• It has a specific methodology recommended for the use of members of the
building and construction industry and other
• It is based upon a creative problem solving professionals so that they may better understand
approach their role in the conduct of studies, timing, costs
• It involves key stakeholders in a managed and benefits.
team approach
Specifically, this document aims to foster an
• It focuses on function ie. what it must do, not appreciation of the process, to show the possible
what it is extent of its use, and to draw up procedures for
• The approach is focused on achieving value- implementing value studies.
added solutions
1.4 Linkages with Total Asset
• It is based upon on integration Management
• The focus is on project learning
TAM reflects priorities for service planning,
The greatest gains through the adoption of whole-of-life asset management, extended
Value Management have been demonstrated planning requirements for new works, and new
when it is directed towards obtaining maximum relationships between services planning and
value from a total system. The examination of asset procurement activities.
function remains fundamental, however this
occurs within the system wide context. It is the Provision for a Value Management study at
systematic analysis of functions, which sets each step of the TAM process will ensure that
Value Management apart from other approaches the best value is obtained.
to improving value. For a major project/program, several VM
studies may be needed, for example at the
Value Management studies should be scheduled
service planning stage, the concept development
at optimal points in the project lifecycle and is
stage, at the construction stage, at the operation
structured to meet the objectives relevant to the
and maintenance stage and, ultimately, at
particular stage of the project.
disposal.
Applications of Value Management to
government projects include but are not
restricted to:
• Establishing and verifying project objective
analysing project briefs
• Optimising design solutions
• Resolving conflicts and improving
communication and
• Creating and analysing a range of options for
executive consideration.

2 TAM – Value Management Guideline January 2001

2 Value Management policy
2.1 VM perspective Projects of $5 million and over
Value Management and Economic Appraisal are Formal Value Management Studies are required and
companion tools for program and project submissions to Treasury require a summary of the
development. Value Management addresses the Value Management Study outcomes, copies of the
technical and functional dimension while Value Management Study reports, and the agency’s
Economic Appraisal addresses the resource preferred direction and implementation strategy.
allocation perspective. Designated projects
2.2 Value Management assessments Due to the importance and/or sensitivity of
The use of Value Management throughout the certain projects, Treasury may attach specific
development of a project is a requirement for all Value Management assessment and reporting
Government agencies. This requirement applies requirements.
particularly to the early development stages 2.4 Roles and Responsibilities
including:
Responsibilities of the respective agencies and
• The establishment of project objectives
sectors are outlined as follows:
• Preparation of the project brief, and
Treasury
• Consideration of concept and design options.
In reviewing the agency’s Asset Strategic Plans
The application of Value Management to the
and budget submissions, some questions that
concept stage will particularly assist in defining
Treasury will consider include:
project objectives, needs and scope, focusing
attention upon issues to be examined in the • Is the proposed program or project linked to
Economic Appraisal. the agency’s service delivery strategy and
capital investment strategic plan?
With the increasing involvement of the private
sector eg, Build, Own, Operate and Transfer • Is proposed work justified by detailed
(BOOT) schemes etc, the clear definition of analysis?
objectives, performance criteria and scope is of • Does the proposal raise any particular policy
fundamental importance. These projects should issues?
have been subjected to a concept Value
• Is the information in the proposal in a form
Management Study prior to any involvement in
suitable for Budget Committee
the market place.
consideration?
Value Management reporting requirements
Value Management is a powerful means of
parallel those for Economic Appraisal. These
achieving compliance with such requirements as
procedures are as follows:
well as achieving stakeholder buy-in to the
Projects less than $5 million planning and approvals processes.
No formal requirements exist in terms of project Premier’s Department
submissions to Treasury. However, Value
In reviewing the agency’s Asset Strategic Plans
Management techniques should be applied,
and budget submissions, some questions that
particularly in establishing the project rationale
will be considered include:
and considering options.
• Has the proposed work included detailed
analysis of regional and other agency
initiatives?
• Are there opportunities for shared
infrastructure or shared service provision

January 2001 TAM – Value Management Guideline 3

Department of Public Works and Services Each of these plans and the programs and
projects that flow from them are to be based on
The Department of Public Works and Services sound principles of analysis and planning. Value
(DPWS) reviews the asset plans of both budget Management is an appropriate tool that can be
dependent and non-budget dependent agencies used to develop and implement these plans.
as part of the review of their asset management
strategies. The review looks for consistency Every agency is expected to:
with their service strategies and for effective
linkages with their Capital Investment, • Have in place an effective planning process
Maintenance and Asset Disposal plans. for when and how Value Management will
be used
DPWS will also check the agency’s asset • Demonstrate compliance with government’s
planning and decision making process for policy in relation to the use of Value
robustness and look for evidence of the Management when applying for the funding
appropriate application of tools such as Value of significant projects
Management.
Private sector
Service Agencies
The Government requirements for the use of
Agencies responsible for the delivery of Value Management apply to the procurement of
services on behalf of Government are all public infrastructure, including that
responsible for the effective management of undertaken by the private sector.
their assets to a standard that is appropriate for
effective achievement of its corporate goals. This applies equally to the single consultancy
commission (eg. design development) as it does
As part of the budget process agencies are to projects autonomously managed by the
required to develop Total Asset Management private sector.
strategies involving three interlinked planning
processes, namely: The former involves the private sector’s
participation in the Value Management process
• Capital Investment Strategic Planning whereas the latter will require its management
• Asset Disposal Planning of the process.
• Asset Maintenance Planning

4 TAM – Value Management Guideline January 2001

3 Concept and application
3.1 Value Management concept
Value Management is a structured, systematic As a result each specialist group within the
and analytical process that seeks to achieve all industry is responsible for issuing, reviewing
the necessary functions at the lowest total cost and updating the criteria and requirements of its
consistent with required levels of quality and own field. This approach tends to emphasise the
performance. performance and costs of the part without due
consideration of performance and costs of the
Underlying the Value Management theory is the whole.
principle that there is always more than one way
to achieve project objectives and that The concept of value as used in Value
examination of the alternatives will produce the Management distinguishes this method from
most acceptable conclusion. conventional methods of cost review. It
achieves this by considering the relationship
At the core of the Value Management process is between function, cost, and worth.
the analysis of functions from the point of view
of the system as a whole (including the Value Management is not a review process per
relationship or cost impact of design decisions se, but rather a means to assist in the better
on the project and/or scheme operation). It is management of the procurement process.
this aspect in particular that distinguishes Value
Value Management essentially aims to produce
Management from other methods of improving
solutions creatively and economically by:
value.
• Identifying unnecessary expenditure
Function analysis involves clearly and
succinctly identifying what things actually do or • Challenging assumptions
perhaps more importantly, what they must do to • Generating alternative ideas
achieve the objectives. • Promoting innovation
Through the analysis of functions, it is possible • Optimising resources
to identify wastage, duplication and unnecessary
• Saving time, money and energy
expenditure thus providing the opportunity for
value to be improved. • Simplifying methods and procedures
The functional analysis perspective not only • Eliminating redundant items
enables Value Management to explore the • Updating standards, criteria and objectives.
project and/or program brief but also to test the
assumptions and needs perceived by the
author(s) of the brief.
Taking a system wide view has particular
relevance to the construction industry. For the
most part, the construction industry has a
compartmentalised approach to the design of
facilities.

January 2001 TAM – Value Management Guideline 5

3.2 Application of Value Management in Total Asset Management
The system based functional analysis of Value At the project level it can be used to:
Management allows consideration of complex
• Resolve a problem
interrelationships. Consequently, Value
Management has a broad range of applications • Clarify needs versus wants and set priorities
throughout the strategic planning and • Challenge the robustness of the business case
procurement processes. It is particularly useful for the project
in focussing or distilling objectives and
• Generate stakeholder commitment
priorities, and in generating alternative
solutions. • Share information and clarify expectations
The application of Value Management varies in • Review/establish performance requirements
intent and outcome depending on the timing • Review design solutions
within the delivery or resolution process. • Set/agree project objectives
The use of Value Management in the strategic • Review scope/functions to be provided
planning process is especially useful in
• Create/confirm options for detailed analysis
analysing service strategies and in generating
alternate and innovative options for meeting • Create/select alternatives to achieve agreed
service needs. This includes the identification of functions
options that do not require additional capital • Select a preferred option for detailed
investment for physical assets. planning or development
At the strategic planning level Value • Clarify whole of life cycle costs
Management can be used to: • Clarify stakeholder values that must be
• Test and validate planning assumptions addressed
• Identify and confirm stakeholder values • Review/develop the project brief
• Create a shared vision or agreed direction • Align the project functions to resources, and
• Develop alignment to Corporate directions • Create/review action plan to progress the
project
• Establish Master Planning principles and
objectives, and At the project level Value Management should
• Define key challenges and strategies be planned on an integrated basis. For most
projects best Value Management results are
achieved by scheduling a Value Study for both
the concept and early documentation (say 35%)
stages.
This application program provides a framework
to identify the most appropriate concept and
final design solution that reflects best value for
money including:
• Program and project activity stages, and
• Anticipated Value Study outcomes for
corresponding program or project stages.

6 TAM – Value Management Guideline January 2001

3.3 Value Management benefits 3.4 Value Management investment
Amongst the benefits that a Value Management return
Study is able to achieve are: The results of project based Design Value
• A better understanding of needs and the Studies undertaken on budget sector projects in
functions necessary to meet those needs NSW have exceeded expectations based on
international experience. Value Studies
• A better definition of program or project completed at the Concept Stage have exceeded
objectives those results by an even wider margin.
• A better definition of quality and
When considering the return on investment, a
performance standards
point of particular importance is that the earlier
• Clearer briefs that Value Management is introduced in the
• Reduced wastage of resources procurement process, the greater the possible
improvement in value.
• Capital funds savings
• Improved operational efficiencies This is illustrated in the return on investment
diagram below for the procurement phases of
• Team building and strategies which concept, design and documentation.
− Create a climate of shared understanding
− Reduce conflict and risks The graph of “Cost impact of making changes
− Foster joint ownership of problems and over time” below illustrates the inverse
solutions relationship between the cost of making changes
and the potential for making savings. Again it
− Create new ideas for improved outcomes
illustrates the importance of scheduling the
− Enhance the skills of the participants
Value Management Study at the earliest stage of
− Save on project development time and the project lifecycle to optimise potential value
ultimate service delivery to the improvements.
community

As a direct result of involvement in the

structured workshop process, participants
generally achieve a better overall understanding
of the project. In many cases there can be a
major transformation of perceptions.
Communication and networking can be
enhanced through the workshop process. This,
in turn, can have a significant impact throughout
the program planning and project development
processes.
Specific Value Management study outcomes are
demonstrated in the case studies included in the
Appendices. These case studies have been
selected to demonstrate outcomes for various
stages in the procurement process.

January 2001 TAM – Value Management Guideline 7

Figure 1 Return on investment
Ratio of accrued savings to cost of value study

Ratio 0:1 to 200:1

Stage of project 0 50 100 150 200

development
Concept
Early design
early sketch

final sketch

Final design
design development

final documentation

Figure 2 Cost impact of making changes over time

Cost of making
changes

Cost

Potential for
making savings
Time

8 TAM – Value Management Guideline January 2001

4 Value Management Process
4.1 NSW public sector model
This section provides an overview of the Value Evaluation
Management process, which has been
Sorting and prioritising value improvement
specifically tailored to NSW public sector
options to identify viable alternatives. It should
needs, ie. a process capable of analysis at the
be noted that evaluation of options may
earliest concept stage, with multi stakeholder
continue beyond the Value Management Study.
participation.
Action plan
The model maintains the elements of the
traditional value management process, also Identification of actions/strategy required to
known as the “job plan”, and is outlined in the achieve Value Study outcomes and to provide
following steps of a Value Study: ongoing management framework for project
progression.
Information
Analysis and reporting
Identification and testing of program or project
rationale from the perspective of stakeholders’ Final reporting includes a description of
positions eg. alignment with Corporate outcomes and documentation of rationale to
Objectives and/or Service Strategies. ensure appropriate focus is maintained through
the project development stages.
Function analysis
Although the core of the traditional approach is
Identification and ranking of primary and maintained the NSW Public Sector Model for
secondary functions and their associated cost Value Management differs in terms of timing,
and worth relationship. workshop duration, structure, and Study Group
Ideas generation composition.
Generation of value improvement options The diagram below illustrates the model, its
through innovation and alternate means of timeframe and the commitment expected of the
achieving the required function. key participants.

Figure 3 Value Study Group

Workshop input
say 2 days.

function generate action analysis &

information evaluation implementation
analysis ideas plan reporting

Value Study Team Project life

total study timeframe
say 4 weeks

January 2001 TAM – Value Management Guideline 9

4.2 Value Study duration 4.3 Value Study workshop
There is no hard and fast rule concerning The Value Study Workshop forms the pivotal
duration, save that sufficient time be allocated element of the total process with all phases of
to ensure all phases are appropriately addressed. the “job plan” being addressed either whole or
in part.
It might be quite appropriate to complete a
Value Study in a matter of days where either the The workshop provides the vehicle for bringing
scope of work, the range of issues or the the key stakeholders together in a forum which:
stakeholder group is small. • Maximises their contribution
Equally, the Value Management process may be • Draws on their combined knowledge
integrated into the overall program or project • Maximises the benefits of group dynamics
management strategy and, hence, be used as a rather than the same people acting in
long-term management strand. isolation, and
The timeframe typically adopted is some four to • Ensures the most cost effective use is made
six weeks which allows sufficient time for the of participants’ time by concentrating their
necessary preparatory work, workshop, analysis contribution into a short duration workshop.
and reporting (for further details refer to section 5).
The importance of the Workshop reinforces the
need to achieve a time commitment from key
participants for the full workshop session.
In summary, the Workshop process capitalises
on the opportunity to explore the overlapping
areas of knowledge and experience between the
various disciplines and interests groups.
Figure 4 reflects the benefits of the participation
and knowledge/expertise overlap obtained
through the Value Management process, rather
than the filtering which often occurs in the
traditional procurement approach.

mechanical
s
Figure 4 Constructive overlap
process

civil/ architectural/ electrical &

structural instrumentation

owner’s
requirements

10 TAM – Value Management Guideline January 2001

4.4 Value Study Group Service providers and/or user representative
The Value Study Group generally comprises a These representatives should advise on
disparate group of people representing the functional requirements from an operational
various stakeholders and others associated with perspective and should contribute to the
the program or project together with a specialist generation of alternative ideas.
Value Study Team. The composition and
selection of the Value Study Group is of Design team and project consultants
fundamental importance to the success of the In project studies key players in the design
process. process should participate. They are particularly
important as they can provide background data
Experience has shown that in order to gain the
concerning evolution of the project from their
appropriate multi stakeholder and multi
specialist standpoints, key issues or concerns,
disciplinary representation on major
and identification of assumptions that have
government projects the Value Study Group
influenced design decisions. Further, based on
size typically averages 17 people. There is
their detailed knowledge, this group will
often pressure to considerably exceed this
provide essential participation in the generation
number, but for practical reasons the number of
and evaluation of alternative ideas and options
participants in Workshop Sessions should be
for value improvement.
restricted.
Contribution
Executive Management
The contribution of the various participants will
An overt commitment by Executive
vary, ranging from one or two members of the
Management greatly enhances the Value
Value Study team (outlined in section 4.5) being
Management process by providing the Value
virtually fully committed, to stakeholder
Study Team with a corporate benchmark for
participation of one or two days for the actual
maintaining the study focus. Consequently,
attendance at the initial Value Study Workshop workshop.
sessions by Executive Management is strongly 4.5 Value Study Team
recommended.
The NSW model has developed the benefits of
In certain circumstances it may be appropriate an external team of specialists in the Value
to involve a representative from the relevant Management process, the members of which
Minister’s office. This situation applies take varying roles and levels of management
particularly to new initiatives and/or high throughout the Value Management phases.
profile projects.
The Value Study Team participates in the
Program agency representatives Workshop Session to provide the structure and
The Program Agency should be represented in independent level of enquiry, probing and
such a way that a full span of issues can be discussion on the study topic.
addressed ranging from program rationale Typical roles of the Value Study Team members
through to detailed project function include facilitation, organisation, reporting, and
requirements. The participation of a senior technical independence.
executive of the agency is essential during that
part of the study in which objectives and Independent technical specialists
rationale are being examined (usually the first
In certain instances it will be beneficial and/or
half day of a workshop). In program or project
essential to include in the Value Study Team a
concept studies, it is usual for the relevant
person with technical or other specialist
Agency Program Manager to participate in the
expertise pertaining to a particular study topic.
whole of the workshop session.
This gives the Value Study Team an extra
dimension and enhances the level of incisive
review and analysis in the Value Management
process.

January 2001 TAM – Value Management Guideline 11

5 Value Management procedures
This section provides an overview of the • Identify and prepare background material.
specific elements of the Value Management The assembled background material should
Procedure. This is provided to assist potential represent a précis of the topic and
participants gain an appreciation of the extent of perspectives of the stakeholders and
effort required in a Value Management Study. participants. As such it provides an
immediate identification of key issues, areas
5.1 Information phase: of conflict, assumptions by various parties,
Pre-workshop etc.

As Value Management is often looked to as a In addition it begins the process of

means of resolving emerging problems, identification of the functional requirements
providing direction, etc. there is sometimes a of the program or project.
tendency to truncate this phase in the rush to Logistics
complete the Value Study.
This concerns all matters associated with
This tendency should be actively resisted making the Value Study happen. Some suggest
because much of the ultimate success of the that these matters are of little consequence.
Value Study is dependent on the thorough When however the workshop exercise is
coverage of the activities contained within this concentrated within, say, a two-day framework
phase. These activities fall in to two categories - it is vital that everything is in place prior to the
scope and logistics. event. Essential activities include:
Scope • Formation of Value Study Team including
The activities under this category are all technical specialists
associated with establishing the focus and • Establish study timetable
bounds of the Value Management Study. The • Identify and gain commitment of
information that is gathered, assessed, and stakeholders
consolidated, forms the foundation for all
subsequent analysis. • Nominate, invite and brief participants
• Arrange venue
Key activities are:
• Brief presenters for workshop component of
• Canvass issues and concerns the Information Phase
• Establish Value Management Study • Distribute consolidated background material.
objectives.
The objectives form the basis for
maintenance of Value Study focus,
particularly during the workshop ie. they
form an ongoing benchmark. The objectives
should be framed in a manner that permits
evaluation of the outcomes in terms of their
consistency with corporate or service
strategies.

12 TAM – Value Management Guideline January 2001

Workshop 5.2 Function analysis phase:
The information phase of the actual Value Study Workshop
Workshop has several components, which
encompass: In this phase of a Value Study functions are
identified and analysed. The thrust of a Value
• Confirmation of Value Study objectives Study is concentrated upon function, the cost of
• Scheme and project overview those functions and the worth of those
functions.
• Project assumptions
• Project imperatives in terms of cost and Certain key questions are asked during the
funding analysis of functions, namely:
• Project imperatives in terms of time and • What does it do?
other criteria • What must it do?
• Key issues and concerns. • What does the function cost?
The workshop commences with the presentation • What is the function worth?
of information by key participants. This
A number of techniques have been developed to
provides an overview from the stakeholder’s
identify and analyse functions. These include
own perspective. It presents an opportunity to
Functional Hierarchies and the use of Function
quickly gain an appreciation of value
Analysis System Technique (FAST).
judgements, and rationale, which underpin the
proposal(s) being considered. These techniques commence with the more
The background information gathered during global functions of the total system and then
the pre-workshop phase is tabled. This includes extend to specific functions of individual
relevant data concerning the client’s corporate, components. They can also be completed in the
regional, area and project objectives. reverse order.

The information phase provides the opportunity The purpose is to provide the basis upon which
to explore the total project rationale, questioned alternatives may be generated and evaluated
from a functional viewpoint, always with the with the view to eliminating or combining
intention of searching for alternative solutions functions, and to ensure that there is
that will provide the client with best value for compatibility between functions within the
money. whole system.

This part of the information phase also offers The hierarchy shown in the diagram below was
the opportunity to identify assumptions that developed to demonstrate the logical
have been made in the project development relationship between the functions. The function
from all stakeholders’ points of view. definition is expressed in active verb and
measurable noun terms. This extremely rapid
method of analysis involves the Value Study
Group taking a system wide view of the project.

January 2001 TAM – Value Management Guideline 13

Table 1 Example of a functional hierarchy diagram.
Hierarchy levels
Level 1 Level 2 Level 3 Level 4
• Control pollution Management • Provide money • Collect rates
strand • Manage facility

• Protect public health

• Provide sewerage Infrastructure • Collect and • Pump sewerage • Monitor activities

service strand remove waste • Transport • Maintain system
• Reduce water • Sewerage
pollution

• Enhance quality of life • Re-use water • Treat sewerage

• Discharge effluent

• Accommodate growth • Irrigate land

The resulting diagram is not as detailed as a If the subject project is a building, it is, of itself,
traditional FAST diagram, however it may be a system comprising many parts serving a
sufficient to identify functions and assign order common function. Within the building there are
of costs. When performing a FAST diagram, the many sub-systems such as the air-conditioning,
relativities and linkages between the functions transportation, etc.
are established in detail.
Taking a wider view of a system, if the subject
The functional examination from a system building is a hospital it forms part of the health
perspective is fundamental and involves an system; a bus depot forms part of the
analysis of the combination of interrelated, transportation system; and a dam forms part of
interdependent, or interacting elements forming the water supply system.
a collective entity and serving a common set of
objectives.

14 TAM – Value Management Guideline January 2001

5.3 Ideas/options phase: 5.4 Evaluation phase:
Workshop Workshop
One outcome of a value study is the preparation Option evaluation: criteria and ranking
of a “shopping list” of alternative ideas which to
Each idea/option generated needs to be carefully
achieve value improvement. Lateral thinking is
considered by the group as a whole and
encouraged during this phase with the purpose
decisions taken on which ideas should be
of producing as many ideas as possible, even
evaluated in detail.
those ideas that at first sight may seem
unworkable or unreasonable. The basis for the The ideas are evaluated in terms of the
generation of ideas and options is encompassed advantages and disadvantages they offer to the
by the following questions: project with respect to value improvement. This
• How else may the required function be includes those ideas that, in spite of additional
performed? capital cost, could lead to a better return on
investment.
• What else will perform the required
function? There is a tendency at this stage to discard ideas
that might lead to additional re-design or to a
• What will the alternatives cost?
disruption of the program. In some cases, say
There are several ways in which the study may involving a project where time is of the essence,
be structured in order to facilitate idea it may be too late in the development process to
generation. The method will depend upon the implement change but in other cases such
number of people in the study and the nature of changes can be incorporated within an
the project. In project terms various parts of the acceptable time frame.
project will need to be specifically targeted for
As a general guide it is common to retain the
idea generation (eg. use of space within
majority of the ideas/options for detailed
buildings, security systems, etc). If it is a single
evaluation.
product that is being considered, then the
product will need to be analysed component-by- A range of evaluation tools exists to assist this
component or aspect-by-aspect. process. These will be used appropriate to the
situation at hand. For example, Evaluation
Where there are more than say seven or eight
Matrices may be used when it is desirable to
people in the study, it is useful to generate ideas
determine the relative priorities of a list of
in small groups and then to hold plenary
objectives or project criteria.
sessions in which all ideas generated are
identified and discussed. The process works by considering one pair of
criteria at a time and taking decisions as to the
relative priority of each criterion.
These matrices are especially beneficial when
considering issues and/or objectives at the
earliest stages of project development.
However, they may also be employed to rank
detailed design criteria, for example the
functional requirement of a floor finish.

January 2001 TAM – Value Management Guideline 15

Option development 5.5 Action plan:
Those ideas showing most potential are Workshop
developed to a stage where they are shown to be
workable or otherwise. This may include The final action in a Workshop is the
preparing detailed drawings and cost estimates. preparation of the Action Plan, which
Part of this process may continue after the encapsulates the outcomes and provides a
Value Study is over. framework for subsequent tasks/evaluation/
decision-making. It represents the consensus of
The extent to which option development occurs views of the Value Study Workshop participants
is dependent on the workshop duration, for and those ideas that show greatest potential for
example, a 3-day workshop may allow the value improvement are highlighted.
Value Study Group to be in the position to make
final decisions on option adoption. Ideally, the workshop outcomes and the Action
Plan should be made the subject of a
Alternatively, a 1-day workshop may rely upon presentation to the client (including senior
the Action Plan resolution period for evaluation. representatives of Management), at which the
Some options may require advice beyond either entire Value Study Group attends.
the expertise and/or authority of those present at The Plan identifies target dates for each item
the Value Study. For example a system wide and nominates people to take responsibility for
option which might negate or defer the need for the pursuit of those items and any reporting.
work. This would normally then require further
corporate direction The ultimate success is dependent upon the
effort with which the Action Plan is pursued.
Action Plan Co-ordinators should be nominated
at the conclusion of the workshop to ensure the
appropriate effort is applied and Action Plan
Nominees have a common point of reference.
The elements that should be included are:
• List all activities to be carried out
• Identify people responsible for each activity
• Indicate time frame (for each activity) for
further evaluation and decision(s), and
• Specify finalisation date.
It is especially important to involve the client in
the co-ordination activities.
Ideally, follow-up sessions are scheduled for
Action Plan Nominees approximately one
month after the Value Study Workshop. At that
time the implementation schedule is examined
to ensure that all value improvement
opportunities are being pursued fully and to
determine further actions.
This is an extremely useful approach as it gives
the Action Plan Nominees a clear focus and thus
tends to promote positive action.

16 TAM – Value Management Guideline January 2001

5.6 Analysis and reporting: Strategic or concept stage

Post-workshop Value Study reporting

Reporting principles In many instances it is beneficial to integrate a

formal follow-up reporting session by Action
Reporting requirements for Value Studies vary Plan nominees into the reporting phase. This
considerably according to the project stage at helps to:
which the Value Study is undertaken. As a “rule
of thumb”, the earlier a Value Study is • Maintain the ongoing focus of the Value
undertaken the more substantial the reporting Study
requirements. • Continue the high level of commitment
which Value Management invariably
The reasons for this are best illustrated by
generates, and
examining the two most common phases at
which project based Value Management Studies • Consolidate and better define outcome
are undertaken. reporting.
Strategic or concept studies The following outlines the reporting framework
that best suits this approach. However, the
Such Value Studies invariably deal with a reporting scope (Interim Report and Final
multiplicity of factors and/or issues. As these Report) defined below should be addressed in
studies are used to establish/confirm the project the Value Study Report irrespective of whether
framework, rationale and direction, the or not a follow-up session is undertaken.
reporting needs to document all relevant issues
dealt with during the study. Interim report

The period of relevance of these The Value Study Team should provide an
reports/findings, equates to a benchmark from interim report approximately two weeks after
which to continually monitor the project’s the Value Study Workshop to provide Action
achievement of the project’s objectives. Plan nominees with a rationale of key issues.
This assists with the resolution of Action Plan
30% - 35% design development issues. The report content should include:
These Value Studies are primarily concerned • Value Study findings
with design performance. The purpose of the
Value Study is to identify a range of options that • Project rationale and objectives
will meet the functional requirements. • Précis of the project scope
Decisions on design options will normally be • Précis of the Value Study scope
taken within weeks rather than months. • Summary outline of key functions, with
“system” implications
• Description of value improvement options,
together with a description of rationale
and/or implications
• Outline of the Action Plan
• Appendices incorporating papers presented
to the Value Study by participants and others.

January 2001 TAM – Value Management Guideline 17

Final report
The interim report forms the basis for the final
report. After the follow-up meeting the final
report should provide Project Management and
the Client with a detailed record, commentary
and distillation of rationale.
It should present the outcomes of the follow-up
meeting and executive summary of the Value
Management Study as a whole. In Concept
Studies this provides a benchmark from which
to monitor project development in terms of
ensuring:
• Alignment with agency corporate goals
• Design development reflects concept
philosophy.
Design stage
Value Study reporting
In Design Stage Value Studies a report is
primarily a set of minutes of the workshop. The
reason being that design decisions are invariably
taken within weeks of completion of the Value
Study Workshop, hence the relativity of Design
Stage Value Study Report is substantially
shorter.
In cases where a major shift in option emphasis
occurs, the reporting requirements will equate to
those prepared covering a Concept Stage Value
Study.
The Value Study Report must document the
impact (advantages and disadvantages) of the
various ideas/options with regard to program
and project goals.

18 TAM – Value Management Guideline January 2001

Appendix A Evaluation matrices
This appendix contains two techniques commonly used in value studies – priority setting matrices
and weighted evaluation matrices.
A.1 Priority setting matrices
These matrices are used when it is desirable to determine the relative priorities of a list of objectives
or project criteria. The process works by considering one pair of criteria at a time and taking
decisions as to the relative priority of each criterion.
These matrices are especially beneficial when considering issues and/or objectives at the earliest
stages of project development. However, they may also be employed to rank detailed design
criteria, for example the functional requirements of a floor finish.

functional objectives total score weighted score

B C D E F G H I
A
B
C
D
E
F
G
H

January 2001 TAM – Value Management Guideline 19

A.2 Weighted evaluation matrices
These matrices are used to facilitate the evaluation of a range of solutions to a particular problem.
Their most common use is in the selection of project strategies (for example, design and siting) or in
the selection of a particular building element (for example, facades).
The process works by considering each solution or proposal in turn, evaluating them against a pre-
determined set of criteria which have been ranked in order of importance using the prioritising
matrix. The major benefit of this system is that it allows quite subjective data to be analysed on an
objective basis.

Weighted evaluation matrix

functional objectives

weighted score of
functional objectives
potential solutions total
1 performance rating
weighted rating
2 performance rating
weighted rating

20 TAM – Value Management Guideline January 2001

Appendix B Case Studies
B1 A Strategic Health Program
Brief To prepare a comprehensive Strategic Services and Asset Management Plan addressing both
Description models of health care and associated recurrent costs as well as capital costs for the re-alignment
of assets (57 different facilities), over a seven-year program, to better accommodate and support
future service delivery requirements.
Area Health servicing a population of 500,000 people with a changing profile of health care needs.
It had a budget scope of $279M (June 96 $) that had increased to $326M (June 97).
Government to fund approx. 70% with the Area to contribute balance from mixture of asset
disposals and recurrent savings.
The Program had reached the stage of Project Definition Plan (PDP).

Objectives Review the Draft Project Definition Plan and ensure it was appropriate as the basis for proceeding
with detailed development and implementation of the program.

Stakeholders • Health Department including: Information & Asset Services; Financial Management &
Planning; Capital & Asset Management; Services Development; Mental Health
• Area Health Service including: CEO & Executive Management Team; Health Services; Capital
Works; Mental Health; Primary Health; Cardiovascular; Oncology; Hospitals Managers;
Nursing Services
• Department of Public Works & Services; Government Architect
• Project Director & Manager – Capital Insight

Method A two-day workshop following the VM Job Plan. The Key Themes given to the sub-groups for the
final Development Phase were:
• Program Scope/Variations/Cash Flows and Funding
• Program Inter-relationships/Dependencies/Services Sequencing and Integration
• Program Transition/Flexibility – of 2 major facilities in the program
• Program Benefits and Risks

Summary of • Confirmed the robustness of the Model of Care and program strategy as the most appropriate
Outcomes way to provide future services
• Identified variations and the importance of presenting a comprehensive business case for their
inclusion in the program
• Noted the need to assess the costs of not doing the program as part of the Business Case
• Confirmed a set of values which were agreed as being collectively important for the program
and identified the key principles upon which the program should proceed
• Noted the critical importance of resolving an agreed funding strategy with the Government and
highlighted potential funding options
• Confirmed the givens and major constraints for the Program
• Identified and challenged a range of assumptions for the program’s planning
• Noted the need to review expected recurrent savings especially in the light of potential further
changes in inter-Area flow patterns
• Identified the major risks to the Program and developed some initial strategies to manage
these risks

Further NSW Health Department

Information

January 2001 TAM – Value Management Guideline 21

B2 Exhibition Facility
Brief The new Sydney Showground Facilities are located in the Homebush Bay Olympic Park precinct.
Description The facilities were planned to be ready to stage the Sydney Royal Easter Show in early 1998 and
to be used during the Sydney 2000 Olympics.
Facilities comprised the complete replacement of the former Showground.
At the time of the Value Management Study, the project was at Schematic design Stage. Design
was assigned in three packages to three design consortia – one of which was responsible for
overall site integration. The project budget was $258M. The Cost Plan showed potential overrun of
$70M. The Study Workshop took place over three days in April 1997.

Objectives Refine the design proposals against brief, budget and program for the showground and exhibition
facilities, which will comprise the new Sydney Showground at Homebush Bay.

Stakeholder • Olympic Co-ordination Authority

Participants • Sydney Organising Committee for the Olympic Games
• Royal Agricultural Society
• The design consortia
• The Project Manager

Method A three-day workshop. The three design “zones” were dealt with separately, one each day.
The facilitation strategy centred on “reconciling” the design response proposals:
• To the original design brief
• The cost plan of the design responses to the budgeted funds
• Functional requirements of the facilities in “show” mode, non-show mode, Olympic and
Paralympic modes and as integrated elements of the whole Olympic Park

Summary of • The essence of the design proposals as presented were embraced by the stakeholders, with
Outcomes directions able to be given for the design development to be further advanced
• Agreed variations and identified opportunities for further design adjustments which reduce the
estimated cost plan to within the approved budget
• The identification of opportunities for staging and sequencing of the development, both
permanent and temporary, which can optimise funds effectiveness whilst facilitating operational
objectives

Further Royal Agricultural Society

Information

22 TAM – Value Management Guideline January 2001

B3 Infrastructure Project
Brief Motorway development to replace a section of the Pacific Highway that has a poor accident
Description record and has been the subject of community concern regarding tourist traffic delays and
safety. Traffic volumes have grown at a faster rate than improvements to the existing highway
have been able to cope with.
The investigation corridor passes through a region that requires consideration of a number of
issues including environmental, agricultural, economic, road engineering and social concerns.
It was at the stage of identifying a preferred route within the investigation corridor in order to
prepare an Environmental Impact Study (EIS).

Objectives Review the work undertaken on the upgrade project to date to ensure it meets the project
objectives and to recommend a preferred route, if appropriate, to progress the project to the next
stage of development.

Stakeholders • Roads & Traffic Authority

• Local Government – Councillors & Executive Management
• Dept Urban Affairs & Planning
• Dept of Land & Water Conservation
• NSW Agriculture
• National Parks & Wildlife Service
• Koala Carers Caldera Environment Centre
• Conservation of North Ocean Shores
• Residents Associations
• Australian Cane Farmers Association
• NSW Cane Growers’ Association
• NSW Sugar Milling Co-operative
• Consultant Specialists in Traffic, Transport, Road Design, Hydrology & Agriculture
• The Project Manager

Method A two-day workshop following the VM job plan. Key presentations were required to outline site
investigations, environmental and engineering issues and community concerns. Early
establishment of the values of the stakeholders was critical to achieve a shared appreciation as
well as active involvement in setting parameters against which route selection options could be
tested and aligned. Sub-groups were established to assess the route options in sections
enabling localised focus and sensitive analysis.

Summary of • Agreed on a suggested route to be further refined and developed by the project team in
Outcomes progressing the project to the next stage
• Identified the values important to the participants which the project must reflect, and in doing
so recognised the environmental sensitivities, the agricultural viability and community/social
dimensions of the project
• For each section where route options were identified, the sub-groups suggested an option for
further development and refinement together with a rationale, and in some cases,
qualifications to progress the project

Further NSW Roads & Traffic Authority

Information

January 2001 TAM – Value Management Guideline 23

This page is intentionally blank.

24 TAM – Value Management Guideline January 2001

 Risk
Management
Guideline
Risk management guideline

January 2001
DPWS Report Number 01055

NSW Department of Public Works and Services Cataloguing-in-Publication data

New South Wales. Government Asset Management Committee.

Risk management guideline.

ISBN 0 7347 4104 9 (set)

ISBN 0 7347 4176 6

1. Asset management – New South Wales. 2. Capital investment. 3. Public administration – New South Wales
I. Title. (Series : TAM)

352.50944

 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any
process without written permission from the NSW Government Asset Management Committee. Requests and inquiries
concerning reproduction and rights should be addressed to:

Secretariat
Government Asset Management Committee
Level 23 McKell Building
2-24 Rawson Place
SYDNEY NSW 2000
Website www.gamc.nsw.gov.au
E:mail gamc@dpws.nsw.gov.au

Set consists of :

ISBN 0 7347 4122 7 Asset strategy

ISBN 0 7347 4194 4 Office accommodation strategy
ISBN 0 7347 4128 6 Capital investment : strategic planning
ISBN 0 7347 4134 0 Asset maintenance : strategic planning
ISBN 0 7347 4140 5 Asset disposal : strategic planning
ISBN 0 7347 4146 4 Sustainable development guideline
ISBN 0 7347 4152 9 Heritage asset management guideline
ISBN 0 7347 4158 8 Demand management guideline
ISBN 0 7347 4164 2 Life cycle costing guideline
ISBN 0 7347 4170 7 Value management guideline
ISBN 0 7347 4176 6 Risk management guideline
ISBN 0 7347 4182 0 Post implementation review guideline
ISBN 0 7347 4188 X Asset information guideline
Contents

1 INTRODUCTION ____________________________________________________3

2 WHAT IS RISK MANAGEMENT? _______________________________________4

2.1 General ........................................................................................................................................................4

2.2 Guideline terminology ................................................................................................................................5

2.3 Asset management implications ................................................................................................................6

2.4 Legislative requirements ............................................................................................................................6

3 RISK MANAGEMENT REQUIREMENTS _________________________________7

3.1 Policy requirements ....................................................................................................................................7

3.2 Linkages with Total Asset Management...................................................................................................8

3.3 Integrating with other decision tools.........................................................................................................9

3.4 Agency roles and responsibilities.............................................................................................................10

4 RISK MANAGEMENT PROCESS ______________________________________11

4.1 Proposal familiarisation ...........................................................................................................................13

4.2 Risk analysis..............................................................................................................................................14

4.3 Risk response planning ............................................................................................................................16

4.4 Formal reporting ......................................................................................................................................18

4.5 Risk management implementation..........................................................................................................19

4.6 Advanced techniques and software .........................................................................................................20

5 CHECKLIST FOR RISK MANAGEMENT ________________________________21

Initiation ...............................................................................................................................................................21

1 Proposal familiarisation ...........................................................................................................................21

2 Risk analysis..............................................................................................................................................21

3 Risk response planning ............................................................................................................................22

4 Reporting...................................................................................................................................................22

5 Risk management implementation..........................................................................................................22

APPENDIX A RISK MANAGEMENT PLAN _____________________________23

APPENDIX B CASE STUDIES _______________________________________24

APPENDIX C1 RISK ACTION SCHEDULE - TYPICAL FORMAT _____________35

APPENDIX C2 RISK ACTION SCHEDULE ______________________________36

January 2001 TAM – Risk Management Guideline 1

APPENDIX D EXAMPLES OF SOURCES OF RISK ______________________39

APPENDIX E CALCULATING RISK FACTORS__________________________41

2 TAM – Risk Management Guideline January 2001

1 Introduction
Managing risk is an integral part of good Size, however, is not the only consideration.
management and is something many managers Projects or programs, which are inherently
do already in one form or another. Sensitivity complex or risky will also benefit from
analysis or scenario planning for a project or particular attention to risk management. This
economic appraisal are familiar examples, as are might occur when there are important political,
assessing the contingency allowance in a cost economic or financial aspects, sensitive
estimate or budget, buying insurance, revising environmental or safety issues, or complex
contract provisions or undertaking community regulatory and licensing requirements.
consultation during project planning.
Asset procurement involving the development
Although the term ‘risk’ may not be used when or use of new technology, or unusual legal,
these activities are undertaken, the concept of insurance, underwriting or contractual
risk is central and the activities share a common arrangements are further suitable applications.
objective, namely to recognise and prepare for a
range of possible future outcomes. There is also a relevant standard for Risk
Management, titled, “Australian and New
Many NSW Government agencies undertake Zealand Standard– AS/NZS 4360”
projects involving significant capital outlays.
Three aspects of these projects make risk
management desirable:
• Their size implies there may be large
potential losses unless they are managed
carefully. Such projects may also involve
unbalanced cash flows, when large initial
investments are necessary before any returns
are obtained.
• For assets with potentially long lives, risks
associated with changing economic
conditions, varying levels of demand for
services, new competition and maintenance
and disposal requirements must be analysed
and managed to ensure the investment is
worthwhile.
• Large investments that lie outside the
Government’s ability or desire to fund from
its own resources and involve private sector
participation may require an additional focus
to identify and manage the residual risks for
Government.

January 2001 TAM – Risk Management Guideline 3

2 What is risk management?
2.1 General
Risks arise because of limited knowledge, NSW Government asset planning and
experience or information and uncertainty about procurement strategies implemented in recent
the future. They may also arise through changes years have led to:
in the relationships between the parties involved
• Different allocations and specifications of
in an undertaking. This latter category is
responsibility
particularly relevant to current reforms in the
supply, ownership, operation and maintenance • Innovative forms of financing
of assets for public purposes where contracting • New forms of control and accountability, and
out and private sector participation initiatives
• Increased choice of contractual
are being undertaken.
arrangements.
Risk management is aimed at providing a These changes have exposed agencies to a range
structured way of identifying and analysing of new risks. They have increased the
potential risks, and devising and implementing importance of incorporating risk management
responses appropriate to their impact. These when undertaking strategic planning and testing
responses generally draw on strategies of risk project viability.
prevention, risk transfer, impact mitigation or
risk acceptance. Within a single project or Risk management should begin at the strategic
proposal each of these strategies may have planning stage of a proposed project or program
application for different individual risks. and continue through its life.
Risk analysis is a part of risk management. It
addresses the question: What might go wrong as
compared with expectations? While risk
management, as well as asking this question,
seeks to resolve: What should be done about
this?
Risk management processes are designed to
assist planners and managers to systematically
identify risks and develop measures to address
them and their consequences. The aim is to
produce more reliable planning, greater
certainty about financial and management
outcomes and improved decision making.

4 TAM – Risk Management Guideline January 2001

2.2 Guideline terminology Risk management
The following terms are defined in the context The set of activities concerned with identifying
of this guideline and the application of risk potential risks, analysing their consequences
management to the proposal planning/service and devising and implementing responses so as
strategy and Total Asset Management process: to ensure that proposal or project objectives and
delivery goals are achieved. This includes
Risk management of on-going risks associated with
The possibility that an expected outcome is not ownership of assets.
achieved or is replaced by another, or that an Contract or project risk management
unforeseen event occurs. This is a broad view of
risk that includes both uncertainty due to future The management of risks for the procurement,
events and the consequences of limited construction phase and lifetime use of a capital
knowledge, information or experience. It is asset.
measured in terms of consequences and
likelihoods.
Risk exposure
Arises from the possibility of economic,
financial or social loss or gain, physical damage
or injury, or delay. The significance of risks is
the impact they may have on the achievement of
proposal objectives, delivery goals or
management effectiveness.
Risk consequences
The impacts on desired outcomes from the risk
event occurring. Essentially, the concern
focuses on loss since, although windfalls may
also result, they do not create a liability or cost.
It is these consequences that create the need for
management attention.
Risk analysis
The process of identifying risks, estimating their
likelihoods and evaluating potential
consequences.

January 2001 TAM – Risk Management Guideline 5

2.3 Asset management implications Procurement to disposal
In asset management, it is convenient to think In the procurement, maintenance and disposal
about two principal categories of risk stages, the focus is on efficient and effective
management applications: project and service delivery. Here, risk
management is directed towards achieving more
Strategic/Feasibility favourable and reliable outcomes in terms of:
Risk management as applied in the strategic • Timeliness
planning stages of the Total Asset Management
• Cost and quality of the asset
process, from the corporate plan, service and
asset strategy to the feasibility of the more • Functional and service delivery requirements,
specific capital investment, asset maintenance and
and acquisition/disposal plans. • Ensuring that the best procurement option is
Risk management at this level is concerned selected
with: These different applications impose different
• Ensuring corporate, service and strategic requirements for risk management at different
objectives will be achieved project stages. It is essential to recognise that
risks may change as a project progresses and
• Confirming risk consequences do not there will be a need to review and update
compromise the viability of the proposal for management provisions as the nature of risks
any stakeholder, and change to match project requirements. For
• Ensuring that the best planning options are major projects, several risk analyses may be
selected. conducted:
• At concept development and appraisal stages
of the proposal
• For the procurement and construction of the
approved project, and
• For maintenance and disposal strategies.
2.4 Legislative requirements
Risk management is mandatory under
legislation for some classes of hazardous
facilities and activities. The risk management
processes described in this guideline are
supplementary to the standards set by the
legislative requirements. They do not replace or
supersede them.

6 TAM – Risk Management Guideline January 2001

3 Risk management requirements
Total Asset Management (TAM) is part of a Where agencies are uncertain as to designated
larger reform program within NSW aimed at status, they should consult with their Agency
improving value from public sector assets and Relationship Manager in Treasury.
increasing productivity in capital works
investment. Risk management can contribute to The central agencies will also retain discretion
these objectives through more economic service for designating particular projects as
delivery, opportunities to reduce uncertainty and circumstances may require.
costs, and more effective contingency planning. For Private Sector Participation proposals, the
Risk Management Plan should detail the impact
3.1 Policy requirements on State Government borrowing requirements
NSW Government agencies are required to and recurrent outlays. Details about Private
adopt a structured and systematic risk Sector participation proposals are outlined in the
management process within their asset and NSW Government Guideline titled “ Guidelines
capital works management procedures. for Private Sector Participation in the Provision
of Public Infrastructure”. A link to this
The policy requirements for risk management document is available from the private sector
responsibilities of NSW public sector agencies participation section of this document
are as follows:
Risk Evaluation and Risk Management
Risk Management Plan Responses
For designated proposals, a Risk Management For other major asset management activities,
Plan is to be prepared and included in including new projects valued from $5 million
documentation submitted to Treasury for the to $20 million, procurement selection,
Budget Committee of Cabinet. maintenance and disposal strategies, agencies
Designated proposals will include: are required to undertake risk evaluation and
prepare risk management responses, but
• All new projects valued in excess of $20 external formal reporting will not be required.
million
Risk management procedures for these activities
• All proposals which involve private sector
should form part of the normal asset
financing
management processes and provide input to
• Proposals which are characterised as being agency strategic management and planning. In
significantly sensitive in economic, these cases, risks and their associated
environmental or political terms, and management proposals should be evaluated as
• Complex or innovative projects where part of value management studies and economic
significant risks in terms of viability, appraisals.
procurement or Government commitment Unless exempted by Treasury, all Budget
can be identified. dependent and nominated non-budget dependent
agencies are required to utilise the NSW
Department of Public Works and Services to
manage the private sector interface on Capital
Projects over $500,000 in value.

January 2001 TAM – Risk Management Guideline 7

Table 1 Policy requirements summary
Projects Action required Who by Application
Designated Develop a Risk Management Plan Agency Report to Budget Committee via Treasury
Input to Agency planning process
$5M - $20M Identify risks and prepare Agency Input to Agency planning process
management responses (including economic appraisals and value
management studies)
Less than $5M No formal requirements

Note:
The term “projects” includes any major asset-related activities from feasibility to disposal stages.

3.2 Linkages with Total Asset

Management
TAM reflects priorities for whole-of-life asset
management, extended planning requirements
for new works and new relationships between
services planning and asset procurement
activities.
Risk management needs to be a part of the asset
management process as a program or project
progresses. Provisions made to manage risk
should be reviewed and updated as
circumstances and risk exposure change over
time.
For a major project, several risk studies may be
needed, for example at the concept development
stage, at the construction stage, at the operation
and maintenance stage and, ultimately, at
disposal.

8 TAM – Risk Management Guideline January 2001

3.3 Integrating with other decision tools
When significant planning decisions are The integration of risk management with
involved, risk management should be combined economic appraisal and value management
with an Economic Appraisal (or Financial provides a strong foundation for effective
Appraisal where appropriate) and a Value decision-making.
Management study. Co-ordination of these tools
is depicted at Appendix E. Agencies should apply the risk management
approach appropriate to the scale of the risk and
The Economic Appraisal should include an reporting should be incorporated within
evaluation of economic, investment and finance established documentation procedures.
risks and propose suitable management
measures. In a similar fashion, value Figure 1 (below) demonstrates the interaction of
management studies should address risk factors those tools and how they can complement each
relevant to the topic of the study. This may other in the planning process.
concern project concept, feasibility, functional
and design aspects or risks associated with the
procurement, delivery and contracting
arrangements.
Figure 1 Integrating Risk Management

Integrating Risk Management

Integrating risk management with economic appraisal and value management in the planning process

ECONOMIC APPRIASAL RISK MANAGEMENT VALUE MANAGEMENT

•
1. Specify Objectives

2. Identify Options For each viable option 2. Develop Options (Note 3)

• Establish the risk content
• Identify risks of each
3. Modify Options in Light of option 3. Identify and Evaluate
Risk Review and VM Risks (Note 3)
Study • Assess their magnitude
• Develop treatment
strategies
(Note 1)
4. Evaluate options 4. Evaluate options (Note 3)

Prepare a Risk Management

5. Select preferred option Plan (where required) for the 5. Prepare a Study Report
recommended option (where required) for the
recommended option
(Note 2) (Note 2)

Note 1 At this stage, the risk a review involves many options and should therefore be limited to an overview
Note 2 The Plan and VM Study Report should address the preferred option in comprehensive detail
Note 3 The Value Management process can be used flexibly to address single issues eg. Clarify objectives or
multiple issues eg. agree objectives, identify and evaluate options.

January 2001 TAM – Risk Management Guideline 9

3.4 Agency roles and responsibilities Department of Public Works and Services

The roles of the principal agency groups in The Department of Public Works and Services
reference to risk management are as follows: (DPWS) provides assistance to central agencies
on technical and procurement risk generally,
Treasury and provides risk management services to
agencies in relation to development,
NSW Treasury has developed a “Risk
management, procurement and asset
Management and Internal Control Toolkit”
management programs.
(Treasury Document TPP 97-3) designed to
assist agencies in implementation of an efficient DPWS manages the interface with the
and effective risk management and internal construction industry and provides contract or
control framework. project risk management services for projects
over $500,000.
The kit consists of:
Contract or project risk management relates to
• Risk Management and Internal Control
procedural aspects of procurement and project
Assessment Guidelines
delivery and is aimed primarily at ensuring
• Risk Management and Internal Control probity, independence and efficiency for
Assessment Matrix Government in these processes.
The toolkit is part of the Treasury’s Policy and Service Agencies
Guidelines Papers, and is available online at:
http://www.treasury.nsw.gov.au/pubs/rmic/rmicfram.htm Service agencies are required to ensure risk
Treasury provides assistance to agencies in the management procedures for major projects are
management of financial and economic risk, completed and comply with designated and new
government budgetary strategy and implications project requirements, including the nomination
on Loan Council guidelines, including risk- of designated proposals.
sharing principles. Treasury will also be
involved in the nomination of designated
proposals.

10 TAM – Risk Management Guideline January 2001

4 Risk Management Process
The objective of risk management is to identify and analyse risks and manage their
consequences. Risk management involves several key steps that have general application and can
be applied at various stages of the asset cycle. The process outlined below should serve as a
guide to agencies but can be adapted to individual needs.

Proposal Risk Analysis Response Reporting Implementing

Familiarisation Planning

Define objectives Identify risks Identify responses Collate schedules & Effect schedules,
Identify criteria Assess risks Select best management management
measures measures or Plan
Define key elements Rank risks responses
or Monitor Review &
Screen minor risks Develop action evaluate
Write risk
& management Management Plan

Figure 2 The risk management process

The process of risk management should

commence at the strategic planning stage of a Risk response planning
proposed project. The steps in the process are: • Identify the feasible responses to moderate
and major risks. Risk responses will include:
Proposal familiarisation
− Risk prevention
• Define proposal/project scope and objectives − Impact mitigation
• Identify criteria for assessing the proposal or − Risk transfer
project − Risk acceptance
• Define the key elements and issues − Select the best response
• Develop risk action schedules for major
Risk analysis risks
• Identify all risks that might impact on the • Develop management measures for
proposal or project moderate risks
• Assess the potential likelihood and
consequences of each risk
• Screen risks to discard the minor risks having
low impacts and low likelihood of
occurrence
• Identify moderate and major risks that
require management attention

January 2001 TAM – Risk Management Guideline 11

Reporting
• For major undertakings, prepare a Risk
Management Plan
• For other projects, compile and collate risk
action schedules and measures
Risk management implementation
• Implement the action schedules and
management measures
• Monitor the implementation
• Periodically review risks and evaluate the
need for additional risk management
The main output from the process is the
definition of action schedules and management
measures and assignment of responsibility for
implementation.
For designated undertakings, the Risk
Management Plan summarises the risk analysis
process and documents in detail the action
strategies for managing individual risks.
Monitoring and evaluating implementation is
essential.

12 TAM – Risk Management Guideline January 2001

4.1 Proposal familiarisation

Proposal
familiarisation

As a preparatory step, familiarity with the Identify criteria

proposed project or activity needs to be gained
and key parameters and assumptions identified. The assessment criteria for a proposal or project
This should follow definition of the risk are concerned with how well its objectives will
management brief and assignment of be met and possibly the appropriateness of these
responsibilities for undertaking the risk objectives. They will reflect the principal
management evaluation. For illustrative purposes of the proposal and its means of
purposes, familiarisation can be seen to execution and assist in defining key elements.
comprise three activities: In the planning stages of the asset cycle, the
criteria will reflect strategic concerns, while in
Define objectives
the delivery, maintenance and disposal stages
This involves the risk management group the criteria are likely to concern the efficient
becoming familiar with: completion of procurement, cost control, service
delivery, quality and the like.
• The nature and scope of the proposal, its key
objectives, and Define key elements
• The relationship between these and the This involves separating the proposal or project
agency’s objectives and strategies. into a set of base elements for structuring the
This step links risk management into the analysis.
agency’s main strategic plans, including its
The initial separation is usually into the major
service, capital investment, asset maintenance,
items or activities, but the detailed structure
and disposal strategies and into the agency’s
depends on the nature of the associated risks.
procurement, operating, maintenance and
disposal procedures. A broad view of the asset or activity at this
stage is more appropriate than a detailed one to
avoid a loss of focus on the main issues and to
establish a balanced framework for the analysis.
In practice, a range of 20 to 50 items or
elements is commonly targeted. The items
should be distinct and meaningful, and cover the
entire proposal scope or procurement and
operational aspects.

January 2001 TAM – Risk Management Guideline 13

4.2 Risk analysis

Risk
analysis

There are several ways in which risks can be

identified:
Identify risks
Checklists, similar projects, brainstorming • Risk checklists provide a useful starting point
for some projects. Agencies carrying out
many similar projects can construct their own
checklists based on their experience or
project databases, and/or draw on
Assess likelihoods & consequences
Evaluation
information from specialist industry,
Determine risk factors research, insurance, or management
expertise.
• Examining similar current or previous
Rank risks projects, risk analyses or project evaluations.
Identify major and moderate risks • Brainstorming or workshopping may be
Major risks: Develop Risk Action Schedule valuable for projects involving new or
Moderate risks: Specify management measures unusual risks, innovative management
arrangements or to develop initial checklists.
Screen minor risks
Minor risks: Accept risk Risk management teams comprising multi-
disciplinary backgrounds are well suited to this
phase. They can be supported by the many
Identify risks specialist techniques applicable to particular
kinds of projects or risks. For example, hazard
The analysis begins with listing the risks that analysis may be directed to specific safety
might affect each key element of the project. issues or complex environmental applications,
The aim is to generate a comprehensive list of while failure modes analysis can be used for
the relevant risks and document what each one examining risks in technical systems.
involves.
Some of the main risk areas appropriate to
The analysis should include a description of the different proposal or project stages are listed in
risk and how it might arise, possible initiating the table below. A more detailed list is provided
factors, the main assumptions and a list of the in Appendix D.
principal sources of information.

Table 2 - Main risk areas

Planning and proposal stages Project procurement & management stages
− commercial − construction and maintenance
− technological − health and safety
− contractual − human factors
− economic − natural events
− environmental − organisational
− financial − systems
− political

14 TAM – Risk Management Guideline January 2001

 Assess risk likelihood and consequences For straightforward risks, qualitative assessment
can be used to estimate the likelihood and impact
The second step of the analysis is to determine of each risk, and to set cut-off points for the
or estimate both the likelihood of a risk arising determination of major, moderate or minor status.
and its potential consequences.
A more formal structured approach is
All available data sources should be used to recommended for more complex assessments.
understand the risks. These may include: There are many suitable methods available,
historical records; procurement experience; including the preparation of risk factors. Risk
industry practice; relevant published literature; factors are a simple instrument for ranking risks
test marketing and market research; experiments and are based on scaling and then combining the
and prototypes; expert and technical judgement likelihood of a risk and the severity of its
and independent evaluation. impact. A risk factor will be high if the risk is
The assessment involves: likely to occur or its impacts large, and highest
if both are present.
• An estimate of the likelihood of each risk
arising. This might be done initially on a Appendix E illustrates two simple techniques
simple scale from ‘highly unlikely’ to for calculating risk factors.
‘almost certain’, or numerical assessments of
A risk-ranking matrix (Figure 3) can provide a
probability might be made
graphic presentation of risk classes and assist
• An estimate of the consequences of each risk, reporting.
in terms of the proposal/project criteria. This
might be done initially on a simple scale The risk ranking and risk factors provide a basis
from ‘negligible’ to ‘very severe’, or to set cut-off points to determine which risks
quantitative measurements of impacts might may be discarded (minor) or identified as major
be used and moderate risks.
Determine significant risks As a working definition:
The objective is to identify significant risks that • Minor risks can be accepted or ignored
must be managed, and to screen those minor • Moderate risks are either likely to occur or to
risks that can be accepted and so excluded from have large impacts but not both. Management
further consideration. measures should be specified for all
moderate risks
To compare risks a ranking mechanism is used.
• Major risks are those risks with both a high
likelihood of arising and a large impact.
These risks will require close management
attention, and the preparation of a formal risk
Moderate risk Major risk action schedule
High
impact Specify management Develop Risk action
measures schedule

Figure 3 Risk ranking matrix

Minor risk Moderate risk

Low Accept Specify management

impact measures

Low High
Likelihood Likelihood

January 2001 TAM – Risk Management Guideline 15

4.3 Risk response planning

Response
planning

Identify feasible responses

Identify feasible responses Overall strategies for managing classes of risks

should be determined at the agency level, as it is
Checklists, projects ,data, brainstorming, evaluation at this level that the policy decisions must be
made about the extent to which the agency is
prepared to accept or tolerate risk.
Select the best response There are four broad strategies for dealing with
risks and their consequences:
Evaluation
Risk prevention
Risk prevention is directed to eliminating
Develop sources of risk or substantially reducing the
likelihood of loss from their occurrence.

Risk Action Schedules
For major risks Examples include the selection of alternative

Management measures proposals, design and engineering changes,
For moderate r risks quality assurance procedures, asset utilisation
studies, operations reviews, regular audits and
Allocate responsibilities and resources checks and preventive maintenance.
Impact mitigation
Impact mitigation is directed to minimising the
consequences of risks. Some risks, such as those
associated with market variations or weather,
cannot be avoided. Risk management must then
be directed to coping with their impacts. Impact
mitigation measures include contingency
planning, contract terms and conditions,
inspections and checks to detect technical
compliance or security breaches, and recovery
programs.

16 TAM – Risk Management Guideline January 2001

Risk transfer Select the best response
Risk transfer shifts responsibility for a risk from Selection of the best response involves trade-
the agency to another party, who ultimately offs between the potential benefits of
bears the consequences if the risk arises. implementing a response and the actual costs of
doing so. Established practice may assist in the
The agency will normally incur a cost for the selection of alternatives but the overall objective
other party assuming the risk. is to recognise which risks to address and which
Insurance is a well-known risk transfer strategy risks to accept and to confidently select the best
for physical and other assets and activities and value response.
for a limited range of commercial risks. As part of this process, it is useful to examine
In procurement, contracts and agreed risks at the project or program level to develop
procedures entered into between an agency and wider decision rules for controlling and
its contractors or suppliers are the primary managing risk at a strategic level. The aim is to
means of allocating risk between the parties identify common risks and general responses
involved. that occur in more than one circumstance or that
have wide potential effects.
The specific terms of a contract also provide a
means of transferring risk. The aim is to place Selecting the most appropriate option involves
or neutralise significant sources of risk via balancing the cost of implementing each option
contractual measures between the agency, the against the benefits derived from it. In general,
prime contractor and insurance providers. the cost of managing the risk needs to be
commensurate with the benefits derived.
A general principle of risk management is that
risks should be the responsibility of those best Develop management measures and risk action
able to control them. Equally, reward should be schedules
commensurate with accepting risk For moderate risks, management measures should
responsibility. be prepared. These are simple action statements
The risk analysis process, in identifying how that specify the activities necessary to meet the risk
risks might arise, can provide the initial guide to event.
which party is best able to manage risks and the For major risks, risk action schedules should be
most appropriate form of contract. The analysis developed to enable successful risk management in
also identifies the potential impacts, and so may practice and over time.
aid in determining a fair price for taking the
risks involved. Appendix C provides the outline of a typical
risk action schedule. The risk action schedule
Most risk transfer strategies require decisions to should assign individual responsibilities and
be taken very early in the life of a project, time frames and identify those who are
usually in the pre-tender phases. responsible for follow-up.
Risk acceptance Risk action schedules may be applied by the
Risk acceptance occurs when risks cannot be agencies having responsibility for undertaking
avoided or transferred, or the costs of doing so or overseeing large procurements or for
would not be worthwhile. Risks must then be managing assets.
accepted. Impact mitigation measures and Alternatively, or in addition, agencies might
monitoring may nevertheless be appropriate and require them to be developed and implemented
should be recommended in these circumstances. by contractors providing products or services to
the public sector, as part of their control and
oversight procedures.

January 2001 TAM – Risk Management Guideline 17

4.4 Formal reporting

Reporting

Formal reporting is an important phase of the

risk management process, particularly given
what may be long project lead times, complex
procurements and lengthy operational life
cycles.
For formal reporting of designated or major
undertakings, a Risk Management Plan
summarises the results of the risk management
process, action strategies and implementation
framework. In particular, it describes the risk
management measures and action schedules to
be implemented to reduce and control risks.
The Plan includes provision for implementation
and ongoing reporting. Appendix A provides a
typical format for a Risk Management Plan.
For projects that are not designated, collation
and summary of action schedules and
management measures provides an adequate
basis for reporting.
For a summary of reporting requirements see
Table 1 Policy requirements summary. (Page 8)

18 TAM – Risk Management Guideline January 2001

4.5 Risk management implementation

Implementation

The most important task in risk management is

implementation of the action schedules and
management measures and allocation of
management resources. This should be followed
by monitoring the effectiveness of these
measures over time. Planning for
implementation requires particular attention to
be given to resources required, management
responsibilities and timing of tasks.
Monitoring of risks and risk management
effectiveness should be a routine and recognised
activity. The frequency of monitoring, and the
responsibility for it, should be specified in either
the Risk Management Plan or summary
documentation.
Review and evaluation
Ongoing review of the proposal or project and
the evaluation of risks is essential to ensure a
Risk Management Plan or action schedules
remain relevant. As the proposal or project
proceeds and the focus changes from strategic
concerns to more operational ones, different
forms of risk analysis and risk management may
be needed. The review process should be
specified in the Risk Management Plan or
summary documentation.

January 2001 TAM – Risk Management Guideline 19

4.6 Advanced techniques and software
Many specialised techniques have been These techniques and tools enhance the role of
developed to assist managers undertaking risk the manager. They provide assistance in
analyses and risk management. Some have wide analysis and evaluation tasks, but do not
application, while others are specific to substitute for good judgement and management
particular kinds of assets or risks. The table experience.
below summarises a few of them.

Table 3 Risk management: specialist techniques

Techniques Applications
Sensitivity analysis Very wide application, from economic appraisal and financial
feasibility to operations and maintenance models
Scenario analysis Economic appraisals and feasibility studies
Decision analysis Choice amongst uncertain alternatives
Risk engineering Wide application to proposals, projects and budgets, through all
stages in the life of an asset
Failure modes, effects and criticality analysis Analysis of designs and operating plants; may be directed to
safety, plant integrity or ensuring production is maintained
Fault tree analysis Identifies the causal factors that may lead to a risk arising
Event tree analysis Identifies the consequences of an initiating event
Hazard analysis, HAZOP Safety analysis for operating plant
Probability assessment Quantification of risk probabilities and consequence distributions
Risk surveys Continuing monitoring of risk in a project or a pool of assets, to
identify high-risk areas

20 TAM – Risk Management Guideline January 2001

5 Checklist for risk management

Assemble risk management resources
Initiation

Appoint the team leader and ensure a
breadth of skills/experience within the
team

Assign risk management responsibilities
appropriate to task

1 Proposal familiarisation Specify objectives and criteria

Familiarise the team with the proposal,
assemble documentation and define the
key objectives

Assess the proposal in relation to the
Agency’s objectives and strategies

Determine assessment criteria for proposal
Define key elements

Define key elements (target 20-50
elements, items or activities) to structure
risk analysis

2 Risk analysis Identify risks

Prepare a comprehensive schedule of risks
for each element

Describe each risk and list the main
assumptions
Assess risk likelihoods and consequences

Assemble data on risk and their
consequences

Assess risk likelihoods

Assess risk impacts
Identify significant risks

Rank risks to reflect impacts and
likelihoods

Where applicable, estimate risk factors

Discard/accept minor risks

Identify moderate risks for management
measures

Identify major risks for detailed risk action
planning

January 2001 TAM – Risk Management Guideline 21

3 Risk response planning Identify feasible responses

For each moderate and major risk, identify
the feasible responses

Responses may include:
• Risk prevention
• Impact mitigation
• Risk transfer and insurance
• Risk acceptance

Describe each feasible response and list
main assumptions
Select the best response

Evaluate the benefits and costs for each
response

Select the preferred response
Develop management measures and action schedules

Specify risk management measures for
moderate risks

Develop risk action schedules for major
risks
• Actions required (what is to be done?)
• Resources (what and who?)
• Responsibilities (who?)
• Timing (when?)

For designated proposals, produce the Risk

4 Reporting
Management Plan

For other projects, collate and summarise
risk action schedules and measures

Implement measures and action strategies

5 Risk management

Monitor the implementation
implementation • Assign responsibilities
• Timing

Undertake periodic review and
performance evaluation

22 TAM – Risk Management Guideline January 2001

Appendix A Risk management plan
Typical format
For designated proposals, a risk management plan must be prepared by agencies and submitted
Treasury and to the Budget Committee of Cabinet as part of project approval procedures. A
typical format for an RMP is presented below.

Risk Management Plan

1 Proposal familiarisation
1A Scope, issues and objectives
1B Criteria
1C Key elements

2 Risk analysis
2A List of risks
2B Table of impacts, likelihoods and risk factors
2C Priority list of major, moderate and minor risks

3 Risk management
3A Major risks: summary of risk action schedules
3B Moderate risks: summary of management measures
3C Schedule of discarded minor risks

4 Implementation monitoring
4A Resources and responsibilities
4B Implementation monitoring plan
4C Review and evaluation plan

Appendices
Detailed risk action schedules for major risks (see Appendix C1)

January 2001 TAM – Risk Management Guideline 23

Appendix B Case studies
This section provides brief summaries of a number of case studies illustrating a range of risk
management applications. These have been drawn from various agency and corporate
experience. They include identified risks, estimated consequences and proposed risk measures.
Case #1 Arterial road extension
Proposal familiarisation Risk analysis
The project involved a dual-lane carriageway Risks were identified on behalf of the client by
extension, with grade-separated interchange and drawing on a systematic consideration of the
linkage bridgework, pedestrian and landscaping key elements from concept development
elements. Procurement was to be on the basis of through to post-completion reviews and
a design, construct and maintenance tender, maintenance operation in workshop forums. The
supported by Agency financing. workshops involved multi-disciplinary teams
reflecting a breadth of experience. Risks
The objectives of the project were to achieve included aspects of the new procurement
functional and cost effective outcomes, approach and the availability of suitable
encourage innovation, provide for substantial tenderers, oversight of design development and
private sector involvement, and trial a new delineation of maintenance responsibilities.
procurement strategy. Assessment criteria for
the procurement included compliance with Likelihoods and consequences were estimated
design specifications and value-added for each significant risk. Consequences ranged
innovations. from additional cost or time penalties to impacts
on project viability.
The key elements of the procurement were the
sixteen stages of the project from concept Risk management
development, through community consultation
and briefing to construction, operation and Risk measures were set out as remedial
maintenance of the road. activities either to be undertaken by the
contractor or agency. They included procedural
arrangements, contract provisions or revised
procurement conditions. They are set out against
the individual risks in the table below.

24 TAM – Risk Management Guideline January 2001

Risk management table: Arterial road extension
Risk Consequences Risk measures
Industry does not respond to No responses received to Expressions Alter the conditions and/or documents.
procurement strategy of Interest/tender Industry consultation
Substantially higher costs than Invite responses from selected
anticipated contractors
Non-conforming bids are offered Revise/discard procurement concept
No legal precedents exist for new Time and cost of legal disputes Use proven conditions of contract
conditions of contract Nominate alternative dispute
resolution methods
Difficult to price maintenance High tender costs Insure against the unknowns in the
component because scope of the maintenance period
maintenance task is not known (eg Provide for traffic volume adjustment
axle loads may vary and increase across the maintenance period
maintenance demands)
Nominate risks to be addressed by
contractor
Utilities not completely identified Cost (repairs and/or relocation). Review concept
Geometrical constraint Conduct utility survey of site/areas
Hold discussions with utility authorities
Geotechnical status of the site is Cost increase Investigate sub surface conditions
unknown Remediation delays Advise tenderers of history of site
Current environmental standards Cost Review/monitor environmental
change Project viability affected standards
Environmental review process too Project viability affected Review concept design changes
narrow Time and/or cost impacts of required Conduct an EIS
design changes Form and liaise regularly with a
Oversights in the Environmental community committee
Review may necessitate the process
being repeated
Community resistance to concept
Tenders are in different formats Difficult to compare tenders Require schedule formats for critical
data
Nominate format for other responses

January 2001 TAM – Risk Management Guideline 25

 Risk Consequences Risk measures
Insufficient or inadequate information Poor pricing Initiate early contact with utilities
provided on which to base tender No responses Provide all known and available
Inadequate design information to tenderers
Include PC provisions for third party
costs
Total project costs not identified Low construction but high overall Conduct discounted cash flow analysis
project costs of total project costs
High construction but low overall Ensure appropriate risk apportionment
project costs Include statement of assumptions in
tenders
Include schedules for tenderers to
break up their costs
Tender exceeds the cost limit for the Project not viable Review project or DCM concept
project including the following:
• Funding
• Concept
• Design
• Scope
Design is deficient Legal problems/unclear liability Develop a review/ acceptance process
Reduced asset life Ensure code and performance criteria
Safety problems compliance
Inconsistent with user expectations Pay for changes requested
Project construction adversely impacts Community resistance Limit types of construction equipment
on local community because of: Poor project image to be used
• Access Require a sedimentation control plan
• Noise for construction and operation
Document standards to be maintained
• Dust
during construction in tender
Comply with EPA requirements
Maintain community information and
liaison
Maximum permissible axle loadings Reduced pavement life Obtain increased funds for
increase Increased maintenance cost maintenance
Structural damage
Contractor’s ongoing financial viability Bankruptcy Require ongoing bond from contractor
Takeover/merger for maintenance costs
Lower maintenance activity Include step in rights and criteria in
contract
Include termination rights and criteria
in contract

26 TAM – Risk Management Guideline January 2001

Case #2 Commercial budget and business plan
Proposal familiarisation Assessment criteria were:
An Australian communications equipment and • The level of profitability, and
service provider had prepared a business plan • The level of residual risk to which the
and budget for the next financial year. The company was exposed.
objectives were to:
Key elements of the project were the main
• Reduce costs revenue and expenditure items in the budget.
• Withstand an anticipated substantial increase
Risk analysis
in competition, and
• Generate a significant improvement in Risks were identified in a workshop involving
profitability. the senior managers of the company.
Examples of risks are shown in the tables.
Management was concerned that the key risks
had been addressed adequately in the business Likelihoods, consequences and risk priorities
plan and that the budget projection was were not identified separately. Risk priorities
reasonable. were assessed directly by the responsible
managers

Risks Risk ranking

1 Increased competition Major (likely, severe impact): develop action plan as key part of the
Marketing Plan
2 Price changes Moderate (result of Item 1): monitor
3 Negative customer price perception Moderate: include in Marketing Plan
4 Lack of product penetration Minor (mature product)
5 Competing product, product substitution Major (related to Item 9): review with R&D and include in Marketing
Plan
6 Shift in pattern of demand Moderate (unlikely but high impact): monitor
7 Slow fault correction response Moderate: include monitoring in Operations plan
8 Industrial action Major (due to staff reductions): include in HR Plan
9 Technological change Major: include with Item 5.
10 Fee for service leakage Major (likely, potentially large impact on revenue)
11 Price change processes inadequate Moderate (large impact): review
12 Insufficient cross-selling Moderate (likely, but low impact): include training in HR Plan

January 2001 TAM – Risk Management Guideline 27

Risk management Management plans, which were in effect risk
action schedules, came to form an important
Options for managing risks were developed by part of the Business Plan. The table shows
the senior managers in a team workshop. The responses to risks in one area may appear in the
following table summarises the responses to action plans of several different managers. The
Item 10, the fee-for-service leakage risk action proposed included provisions for
(revenue loss from under-charging by customer monitoring and reporting together with progress
service personnel), and the recommended
and completion dates.
actions.
Risk action schedule (extract)
10 Fee for service leakage: Major risk
Risk measures Management actions
1 Managers to identify sources of leakage Review Fee-for-service usage and billing, to be assessed by
managers responsible
2 Better QA QA Manager tasked to ensure billings aspects covered in
procedures
3 Improve computer systems to link work and MIS Manager tasked to provide feasibility estimates for further
account records assessment
4 Show staff how loss can be measured Incorporate in staff training
5 Follow up and audit fee-for-service quotes Delay action until tasks 8.1.1 and 8.1.3 completed
6 Contract out activities Not feasible yet, no current action
7 Provide additional training and support Training Manager tasked to modify training for relevant customer
service staff

28 TAM – Risk Management Guideline January 2001

Case #3 Health services facility
Proposal familiarisation Risk analysis
A major new health facility was proposed for a A schedule of procurement risks was prepared
greenfields site in regional NSW. A design, reflecting contract conditions, contractor
document and construction procurement method performance and client and principal
applied. responsibilities. Risks included inadequate
performance by the contractor, client service
The objective of the project was to provide an specifications and communication and key
up-dated facility with substantial private sector contract provisions.
involvement in both the areas of planning and
construction, and service provision. The Consequences of individual risks were itemised
assessment criteria for the procurement and their significance rated. Generally the
concerned the capability of the tendering parties consequences represented either additional cost
and cost competitiveness of both construction implications, delays to construction or facility
and recurrent costs. commissioning or the potential for dispute
under the contract.
The key elements of the project were the main
project phases including concept development, A sample of identified risks and consequences
design briefing and contract, expressions of are included in the following table.
interest and tender, stakeholder consultation,
design development, construction, operation and Risk management
maintenance. Risk responses ranged from briefings and
confirmation of contingencies to the client to
procedural provisions, confirmation and
adjustment of contract provisions and
requirements placed on the project management
team or contract principal.
An extract of individual risk measures are
included in the table below.

Risk management table (extract): Health facility

Risk Consequences Risk measures
Design fails to meet Client Additional cost and delays for the Produce accurate design brief and
requirements Client check tender submissions for
compliance
Poor consultant performance Deterioration of relationships, delay to Performance monitored and reported
project and eligibility for future commissions
controlled
Design or documentation Rework or extra work necessary Risk placed with contractor under
errors/omissions terms of contract

User group changes design Cost and delay to project Manage changes to ensure only
essential changes are made and that
they are made in adequate time
Currency fluctuation excessive Equipment costs become prohibitive Methodology for adjustment
incorporated in contract and early
ordering of equipment

January 2001 TAM – Risk Management Guideline 29

Risk management table (extract): Health facility – continued.
Risk Consequences Risk measures
No interest rate on overdue payments Unrealistic rates charged Rates stated under standard
stated documentation and within General
Conditions of Contract
Public liability and contract works Principal exposed to cost of loss Insurance taken out by Principal
insurance policy not taken out by
contractor or lapses
Subcontractor/subconsultant Contractor attempts to pass on loss Risk stays with contractor under terms
insolvency of contract
Progress payment delays Breach of contract by Principal Notices of breach received and
payment delegation can be withdrawn
or revised
Variation disputes Deterioration of relationships, recourse Contract structure requires review and
to arbitration determination before arbitration can
proceed
Process to include Client participation
Access denied for private sector Client in breach of separate contract Contract structure provides for access
participation to work and for progressive handover
Project Director to concur in clauses
relating to interface with contractor
Principals equipment not delivered Commissioning delayed Program monitored and contract
structure allows for conditional
completion and handover
Project Director required to report
status of Principal supplied items each
month
Faults during defects liability period Facility operation hindered Security deposit retained and contract
structure gives right to repair and
recover costs
Budget overruns Client dissatisfaction Onus placed with Project Manager to
provide suitably skilled staff to monitor
and manage the budget process
Unfavourable media reports Client dissatisfaction Contractual restriction on media
releases

30 TAM – Risk Management Guideline January 2001

 Case #4 Toll road development (feasibility stage)
Proposal familiarisation Risk analysis

The proposal involved extensive improvement Five major areas of risk were identified. These
of a regional road system on a major corridor. were:
Two main options were under consideration — Risk areas Examples of risk
developing a new tollway or upgrading the Economic Population and traffic growth
forecasts, discount rates, benefit
existing road system. values
Financing Ownership, funding sources, debt /
The project objectives were to improve safety, equity ratios, residual risks for
reduce travel times and costs and provide Government
opportunities for private sector participation. Environmental Environmental approval processes,
community involvement, potential
Assessment criteria for the project included the need for new legislation
timeliness and viability of the upgrade and flow- Political Taxation, toll charges,
through effects on safety, traffic flow, regional parliamentary support
development, requirements for Government Construction Physical construction problems,
site access, spoil locations,
support and the environmental and community disruption to community services,
impacts of the development. contractor insolvency, industrial
disputes
Key elements of the project were drawn from
the major phases of the project including
concept development, economic and financial Likelihood and priorities
analysis, environmental assessment,
procurement and tendering, community Likelihoods and impacts were assessed for the
consultation and construction planning. principal risks. The following matrix (figure 4)
shows the assessments for a sample of the risks.

Moderate risk Major risk

High
impact Specify management Develop Risk action
measures schedule

Figure 4 Risk ranking matrix

Minor risk Moderate risk

Low Accept Specify management

impact measures

Low High
Likelihood Likelihood

January 2001 TAM – Risk Management Guideline 31

Some risks, like construction risks, were Risk management
identified as of minor impact and required no An extended risk management schedule was
further action in this phase of the project. developed to cover all moderate and major
Moderate and major risks required more risks. As an example, the extract below
detailed analysis. The financing structures summarises some of the risks and risk measures
created for implementing the project were considered in the environmental planning and
identified as providing the greatest potential tender processes. For many risks, multiple
risks for the Government. responses were appropriate, particularly when
there were several parties involved.
Risk action schedules were developed for all
major risks, with recommendations on
implementation covering resources, timing and
monitoring. The principal measures for
environmental risks, for example, were included
in a detailed Environmental Strategy Plan.

Risk management table (extract): toll road

Risk Consequences Risk measures
Environmental Planning
Delayed start to process Delay, cancellation Start planning early
Public consultation fails Delay Develop explicit management plan
Additional studies needed Delay and additional costs Prepare contingency plans
Appeals or challenges Delay May be reduced by SEPP conditions
Departmental liaison problems Delay Create Steering and Working
Committees
Large number of submissions Delay, depends on number Arrange adequate support resources
Cabinet approval delayed Delay, cancellation Start ministerial briefing early
Tender Process
Insufficient information provided by Cannot evaluate tenders Tender cost subsidy
tenderer Clear specification requirement
Too much information provided by Time and cost Limit tender period
tenderer Nominate level of information
Tenders in different formats Difficult to compare Include schedule for key data
Specify format for responses
Design differs from concept Delay Reject bid
Change tender
Negotiate to obtain conforming tender

32 TAM – Risk Management Guideline January 2001

Case #5 Tender risk assessment
Project familiarisation Risk analysis
The project involved demolition of an overhead As part of the tender documentation, major risks
roadway where significant implications for of the demolition project were identified by
continuing use of adjoining infrastructure arose. agency staff, impacts assessed and likelihoods
These implications included loss of life and estimated. These risks included damage to
disruption to major services. adjoining infrastructure, protracted interruption
to services, failure to complete within time
The objectives of the project were the timely frame and injury to works personnel.
and safe removal of the obsolescent roadway, at
the lowest practical cost. Tenders had been Reference to these factors was included within
called and assessment criteria included tender documentation. As part of the tender
compliance with tender requirements, capacity evaluation an assessment was made of how well
to meet programming deadlines and restricted each tenderer addressed these factors and the
site access and procedures to minimise adverse risk measures proposed. An additional measure
risk impacts. outlined in tender submissions was also
considered. An outline of the principal risks and
The key elements of the project concerned the minimum measures is presented in the
main phases of work and precautions proposed following table.
by tenderers to address the sensitive aspects of
the demolition. These included cranage Risk management
provisions, removal of debris and excess
material, precautions to retain structural The selection of the preferred tenderer took into
integrity and preparatory measures prior to site account how well the risk implications
access. associated with the work were addressed and
any additional measures that reduced potential
liabilities, within the context of meeting time
and cost constraints. Tender acceptance was
made conditional on these procedures being
observed or completed during execution of the
works.

January 2001 TAM – Risk Management Guideline 33

Risk management table: Tender assessment
Risk Consequences Risk measures
Work not completed to deadline Delays to adjoining services Detail preparatory work
Additional costs Assured method of temporary span
Adverse publicity holding
Establish reserve cranage capacity
for contingencies
Power lines damaged Loss of service Adequate protection of wiring
Additional costs Method of work to minimise likelihood
of line interference
Damage to rail or signalling Loss of service Protection for signalling
Adverse publicity Security of span lift
Additional costs Minimisation of debris from lift
activities
Derailment due to debris on the track Injury or loss of life Plan to minimise debris
Damage to equipment Preventive measures to exclude
Loss of service debris from service easement
Collapse of roadway segment in Injury or loss of life Lighten span to reduce likelihood of
easement Loss of service failure
Damage to equipment No loading of span after first section
removed
Adverse publicity
Injury or fatality to contractor personnel Injury / loss of life Reduction of personnel in danger
Delay to works areas
Adverse publicity Precaution measures / training
Barriers to access to live equipment
Coordination with service agency

34 TAM – Risk Management Guideline January 2001

Appendix C1 Risk action schedule - Typical format
Risk action schedule
1 Recommended risk management actions
1A Summary
1B Impact

2 Risk identification and assessment

2A Activity description
2B Risk identification
3 Responses to risk
3A Alternative courses of action
3B Consequences of alternatives

4 Implementation
4A Proposed actions
4B Resource requirements
4C Responsibilities
4D Timing
4E Reporting

January 2001 TAM – Risk Management Guideline 35

Appendix C2 Risk action schedule
Case study
This appendix provides a simplified risk action schedule from a Government procurement
project. The project is concerned with the provision of integrated communication facilities for a
large fleet of vehicles that must operate in several regions.
Details are provided for two major risks and the associated responses.

Risk action schedule - Integration software

1 Recommended risk management actions
1A Summary
The Project Manager will contact her counterpart in Northern Region to establish a joint team to
liaise on system specification and operations across the regional boundary.
The Engineering Manager will set system specifications and commence development of common
modules. He will obtain advice and assistance for managing software development, and monitor
requirements for additional rack space.
The Quality Manager will review and monitor the implementation of software development
procedures by the contractor.
1B Impact
These measures will minimise the impact of delay in specifying integration protocols in the
adjoining region and assist in maintaining project milestones.
2 Risk identification
2A Item description
The “Integration Software” item consists of the software necessary to integrate the new
communications system with the operating protocols in the adjoining region.
2B Risk identification and assessment

No. Risk description Priority assessment

1 Requirements unknown at contract start date Major problem, high likelihood due to
specification delays and high impact risk.

2 Installation and integration problems. Major risk.

3 Fleet compatibility problems during changeover. Minor risk, acceptable.

4 Difficulties in measuring software performance. Moderate risk (high likelihood but low impact).

5 Lack of in-house software management skills. Moderate risk.

6 Time for extended reliability testing not available. Moderate risk.

7 Requirement for hardware upgrades. Moderate risk.

36 TAM – Risk Management Guideline January 2001

3 Responses to risk
3A Alternative courses of action for major risks
Risk 1 Requirements not specified fully
Response no. Description

1.1 Liaise with adjoining region to obtain advance specifications

from project team and contractor.

1.2 Create joint specification team with adjoining region.

1.3 Delay start of all software development.

1.4 Start development of common system modules, with provisions for delay
until specific integration details are available.

Risk 2 Installation and integration problems

Response no. Description

2.1 Fix specification for “our” side of system.

2.2 Create joint integration team with adjacent region.

2.3 Pre-test modules.

2.4 Specify integration modules with parameters.

3B Consequences of alternatives

Risk 1 Requirements not specified fully

Response no. Assessment of responses

1.1 Low cost, high effectiveness.

1.2 May not be acceptable to other contractor.

1.3 Only feasible to delay for 4 weeks.

1.4 These should be started, to reduce potential project delay.

Risk 2 Installation and integration problems

Response no. Assessment of responses

2.1 Should be done, Engineering Manager to action.

2.2 Pursue as part of 1.1.

2.3 This is contractual requirement.

2.4 Only feasible in part; discuss with contractor.

January 2001 TAM – Risk Management Guideline 37

4 Implementation
4A Proposed actions
The Project Manager will contact her counterpart in the adjoining region to establish a joint
liaison team. This team’s responsibilities should be more extensive than software integration
alone. They should cover communication system specifications and protocols.
The Engineering Manager will ensure system specifications are fixed as soon as possible (they
are already firm for many of the contracted elements). Development of common modules will be
started.
The Quality Manager will review and monitor the implementation of software development
procedures by the contractor.
4B Resources
No additional resources required.
4C Responsibilities

Manager Responsibilities

Project Manager Contact project manager.

Nominate members of joint team.
Set terms of reference.

Engineering Manager Fix system specifications.

Specify common modules.
Obtain advice and assistance.
Monitor requirements for rack space.

Quality Manager Monitor software development.

4D Timing
Liaison to start immediately.
4E Reporting
Managers are to report every two weeks to the Project Management Committee.

38 TAM – Risk Management Guideline January 2001

Appendix D Examples of sources of risk
Planning and feasibility stages
Commercial & strategic Environmental
• competition • amenity values
• market demand levels • approval processes
• growth rates • community consultation
• technological change • site availability/zoning
• stakeholder perceptions • endangered species
• market share • conservation/heritage
• private sector involvement • degradation or contamination
• new products and services • visual intrusion
• site acquisition Political
Economic • parliamentary support
• discount rate • community support
• economic growth • government endorsement
• energy prices • policy change
• exchange rate variation • sovereign risk
• inflation • taxation
• demand trends Social
• population growth
• community expectations
• commodity prices
• pressure groups
Contractual
Project initiation
• client problems
• analysis and briefing
• contractor problems
• functional specifications
• delays
• performance objectives
• force majeure events
• innovation
• insurance and indemnities
• evaluation program
• joint venture relations
• stakeholder roles and responsibilities
Financial
Procurement planning
• debt/equity ratios
• industry capability
• funding sources
• technology and obsolescence
• financing costs
• private sector involvement
• taxation impacts
• regulations and standards
• interest rates
• utility and authority approvals
• investment terms
• completion deadlines
• ownership
• cost estimation
• residual risks for Government
• underwriting

January 2001 TAM – Risk Management Guideline 39

Project delivery stages
Procurement and contractual Human factors
• contract selection • estimation error
• client commitment • operator error
• consultant/contractor performance • sabotage
• tendering • vandalism
• negligence of parties Natural events
• delays - weather, industrial disputes
• landslip/subsidence
• damages and claims
• earthquake
• errors in documentation
• fire
• force majeure events
• flood
• insurance and indemnities
• lightning
Construction and maintenance • wind
• buildability • weather
• contractor capability Organisational
• design and documentation
• industrial relations
• geotechnical conditions
• resources shortage
• latent conditions
• scheduling
• quality controls
• operational policies
• equipment availability and breakdowns
• management capabilities
• obsolescence
• management structures
• industrial action
• personnel skills
• materials availability
• work practices
• shut-down and start-up
Systems
• recurrent liabilities
• health and safety • communications or network failure
• accident, injury • hardware failure
• OH&S procedures • linkages between sub-systems
• contamination • software failure
• noise dust and waste • policies and procedures
• disease
• irradiation
• emissions

40 TAM – Risk Management Guideline January 2001

Appendix E Calculating risk factors
Two simple techniques are illustrated below for The risk factor (RF), varies from 0 (low) to 1
calculating risk factors. Both are essentially (high). It reflects the likelihood of a risk arising
based on establishing quantitative criteria in and the severity of its impact. The risk factor
reference to likelihoods and risk consequences. will be high if a risk is likely to occur, if its
impacts are large, or both.
The key objective is to create a means to
nominally rank risks and identify the most Rank components or work packages in
significant. decreasing order of their risk factors, to generate
a risk profile. The ranking and the risk factors
Example 1 are used to decide which risks are acceptable
To estimate the likelihood of each risk arising and unacceptable, and to enable risk
and assess its impacts, initially use verbal scales management priorities to be set.
that are readily understood. The tables show Risk profile
examples. Where necessary, adapt or adjust
Risk factor (RF)
these to suit the circumstances, or use different
1.0
scales for different criteria. Convert the verbal
assessments to numerical measures.
0.8
Risk L Risk impact I
Priority area
likelihood 0.6
Almost certain 0.9 Extreme 0.9
0.4
Highly likely 0.7 Very high 0.7
Likely 0.3 Medium 0.3
0.2
Unlikely 0.1 Low 0.1
Rare 0.01 Negligible 0.01
0
Components ranked in order of decreasing RF
Calculate a ‘risk factor’ or combined risk
measure for each major risk:
L = risk likelihood measure, on a scale 0 to 1
= average of likelihood factors;
I = impact measure, on a scale 0 to 1
= average of impact factors;
RF = risk factor
= L + I - (L x I)

January 2001 TAM – Risk Management Guideline 41

Example 2
This technique users different quantitative values for
likelihoods and consequences and derives risk factor
values by simple addition. However, the objective,
namely to develop a ranking of risks, remains the
same.
Risk likelihood Scale
Frequent Likely to occur frequently 1
(several times per year)
Reasonably Likely to occur several times 0
probable in life of operation (once per
year)
Occasional Likely to occur sometime in -1
life of operation (once in 10
years)
Remote Unlikely but possible in life of -2
operation (once per 100
years)
Very unlikely Very unlikely (might occur -3
once per 1000 years)

Risk impact Damage Scale

Catastrophic > $10 million 7
Critical $1 million < $10 million 6
Major $100,000 < $1 million 5
Minor $10,000 < $100,000 4
Negligible < $10,000 3

42 TAM – Risk Management Guideline January 2001

In this example, risk factors are calculated by adding the likelihood and impact scores, and risk
priorities are assigned on the following score groupings:
Risk likelihood
Frequent Probable Occasional Remote Very unlikely
Risk impact [1] [0] [-1] [-2] [-3]
Catastrophic [7] 8 7 6 5 4
Critical [6] 7 6 5 4 3
Major [5] 6 5 4 3 2
Minor [4] 5 4 3 2 1
Negligible [3] 4 3 2 1 0

Risk profiles
Risk priorities are then allocated as follows:
Score Ranking Management Action
[5], 6, 7, 8 Major risk Imperative to suppress risk to lower level
4, [5] Medium risk Corrective action required in a reasonable time frame
<4 Low risk Corrective action where practicable.

January 2001 TAM – Risk Management Guideline 43

This page is intentionally blank

44 TAM – Risk Management Guideline January 2001

 Post
Implementation
Review
Guideline
Post implementation review guideline

January 2001
DPWS Report Number 01056

NSW Department of Public Works and Services Cataloguing-in-Publication data

New South Wales. Government Asset Management Committee.

Post implementation review guideline.

ISBN 0 7347 4104 9 (set)

ISBN 0 7347 4182 0

1. Asset management – New South Wales. 2. Capital investment. 3. Public administration – New South Wales
I. Title. (Series : TAM)

352.50944

 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any
process without written permission from the NSW Government Asset Management Committee. Requests and inquiries
concerning reproduction and rights should be addressed to:

Secretariat
Government Asset Management Committee
Level 23 McKell Building
2-24 Rawson Place
SYDNEY NSW 2000
Website www.gamc.nsw.gov.au
E:mail gamc@dpws.nsw.gov.au

Set consists of :

ISBN 0 7347 4122 7 Asset strategy

ISBN 0 7347 4194 4 Office accommodation strategy
ISBN 0 7347 4128 6 Capital investment : strategic planning
ISBN 0 7347 4134 0 Asset maintenance : strategic planning
ISBN 0 7347 4140 5 Asset disposal : strategic planning
ISBN 0 7347 4146 4 Sustainable development guideline
ISBN 0 7347 4152 9 Heritage asset management guideline
ISBN 0 7347 4158 8 Demand management guideline
ISBN 0 7347 4164 2 Life cycle costing guideline
ISBN 0 7347 4170 7 Value management guideline
ISBN 0 7347 4176 6 Risk management guideline
ISBN 0 7347 4182 0 Post implementation review guideline
ISBN 0 7347 4188 X Asset information guideline
Contents

1 INTRODUCTION ____________________________________________________3
1.1 Background .................................................................................................................................................3

1.2 Alternative Review Strands .......................................................................................................................3

1.3 Successfully implementing Post Implementation Review Strategies......................................................5

1.4 Benefits of performing a Post Implementation Review...........................................................................7

2 SELECTING AN APPROPRIATE STRATEGY _____________________________8

2.1 Post Implementation Review .....................................................................................................................8

2.2 Post Completion Review.............................................................................................................................8

METHODOLOGY 10
3.1 A Generic process .....................................................................................................................................10

Stage 1 Define Review Objectives and Structure ..........................................................................................11

Stage 2 Background Research ........................................................................................................................12

Stage 3 Allocate Resources and Determine Evaluation Framework ...........................................................13

Stage 4 Data Collection....................................................................................................................................14

Stage 5 Analyse and compare data.................................................................................................................15

Stages 6&7 Identify Major Issues and Findings/Link to Feedback Mechanism ........................................16

4 DATA COLLECTION TECHNIQUES ____________________________________17

4.1 Generally ...................................................................................................................................................17

4.2 Questionnaire ............................................................................................................................................17

4.3 Participant Interview ...............................................................................................................................17

4.4 Expert Walk-Through (Infrastructure/ Building Projects) ..................................................................17

4.5 Observation ...............................................................................................................................................18

4.6 3 + 3 Survey...............................................................................................................................................18

4.7 Workshop ..................................................................................................................................................18

4.8 Discussion ..................................................................................................................................................18

5 PIR/PCR OUTCOMES _______________________________________________19

5.1 PIR Results................................................................................................................................................19

5.2 Implementing Feedback...........................................................................................................................19

5.3 Information Bank .....................................................................................................................................19

5.4 External Standards...................................................................................................................................20

January 2001 TAM – Post Implementation Review 1

APPENDIX A PIR PLANNING AND ASSESSMENT CHECKLIST ________________21

APPENDIX B PCR PLANNING AND ASSESSMENT CHECKLIST _______________22

APPENDIX C PIR REPORTING FORMAT __________________________________23

2 TAM – Post Implementation Review January 2001

1 Introduction
1.1 Background 1.2 Alternative Review Strands
The Post Implementation Review (PIR) process This guideline is structured around the Post
is designed to collect and utilise the knowledge Implementation Review process, and includes a
learned throughout a project to optimise the second review process, more limited in its
delivery and outputs of projects in the future. focus, the Post Completion Review.
A PIR can be used on a wide range of projects Post Implementation Review
from the design and construction of buildings to (Did the agency get what it needed?)
the development of an asset strategy or an asset
register. PIR is a comprehensive feedback mechanism
designed to assess project outcomes. This
PIR is a process, a tool and a means of assessment focuses on how well the project
collecting and communicating information. A outcomes were matched to the actual needs that
PIR can be used to evaluate all stages in the the project aimed to fulfil.
asset life cycle.
This evaluation will indicate how well the
This document is intended to provide a generic agency communicated (through the project
structure for NSW public sector agencies when brief) the project outcomes and how well these
conducting PIR studies. The objective is to were achieved.
define the principles, practices and outcomes of
PIR studies to develop a feedback mechanism to Post Completion Review
optimise decision-making on future projects. (Did the agency get what it asked for?)

The guideline provides a generic structure that A Post Completion Review (PCR) is intended to
is intended to provide flexibility to permit the systematically and rigorously compare the
actual performance of the project outcome with
PIR process to be tailored to:
the stated objectives of the original brief. The
• The service delivery requirements and PCR process seeks to identify ways in which
outcomes required by an individual agency future project conception, design development,
• The objective of the review (efficiency, and implementation can be improved.
effectiveness and outcomes of the A number of strands of PCR exist including;
project/program)
• Economic Review
• The size, location and complexity of the
project/program. • Brief Compliance Review
This guideline will assist those either • Procurement Process Review
performing a PIR in-house or commissioning a • Performance Review
PIR from an external consultant. It provides • Technical Review.
assistance on preparing a PIR brief, monitoring
the progress of the review team and judging the
efficiency and effectiveness of the completed
product.
A PIR generally follows a simple process.
However the process can develop into an
elaborate system, as even a simple project is a
diverse collection of an almost unlimited
number of variables. To overcome this
complexity, it is essential to have a clear focus
on the objectives of the review, its composition
and the likely applications of the review’s
findings.

January 2001 TAM – Post Implementation Review 3

Figure 1 describes the relationship between the two While the conceptual diagram (Figure 1) shows
mutually exclusive strands of PIR. Commonality of a total feedback process, clearly there is
various components of the two strands provides both feedback between each of the strands. Any
the basis for a mutual sharing of information, and notions of “continuous improvement” and
the desired information linking the two strands. achieving “best practice” are not achievable
unless effective feedback mechanisms are
developed.

Figure 1 Types of Evaluation

Agency Service Requirements

Agency Procurement Program

Project Performance
Brief

Design

PIR Documentation PCR Feedback

Feedback Mechanism Mechanism

Project Development/
Construction

Commission

PCR
Implementation 1. Economic Review
2. Brief Compliance
Review
3. Procurement
PIR Process Review
Assessment of
4. Performance
Project/Service
outcomes Review
5. Technical Review

Post Implementation Review (PIR)

Post Completion Review (PCR)

4 TAM – Post Implementation Review January 2001

A fully developed model of PIR should be 1.3 Successfully implementing Post
linked to an information management system Implementation Review Strategies
that focuses on the management of information
and the easy application of PIR feedback for the The implementation of an effective and
continuous improvement of the planning, successful PIR will require the dedication of
procurement and implementation processes. those involved in the review process, access to
This system needs to be able to integrate the all relevant information and personnel, and
results of a PIR with other relevant project finally a commitment to apply the knowledge
material and make it available to the right gleaned from the study.
people, at the right time and in the easiest form
During the course of a PIR it should be stressed
for application to future projects.
that criticism of specific individuals is
The process of combining the outcomes of a undesirable and counter productive. A PIR
number of PIRs into a resource tool is very should not be used to find fault or apportion
often assumed. However this is not the case and blame. A professionally performed PIR should
will require careful planning and evaluation by provide a balanced assessment focusing on
the individual agencies if maximum value is to positive and negative feedback. This focus on
be obtained from a series of completed PIRs. an overall constructive feedback process should
be emphasised throughout the review process.
The involvement of decision makers in the PIR
will help to overcome the feeling that they
themselves are being evaluated. Project decision
makers should be used as an information
resource able to answer questions about the
history of the project.
The PIR need not be limited to new or recently
completed projects. A project may be significant
if it seems to be performing exceptionally,
effectively or poorly, or it is a key service
delivery resource. Formal evaluation of any
asset may provide information that could be the
basis for improving the economical operation
and maintenance of all asset types.

January 2001 TAM – Post Implementation Review 5

There are a number of reasons why PIR is not Generally agencies should aim to review
pursued more effectively: between 1 in 5 and 1 in 10 of all completed
• At the end of each phase of a project the projects. All pilot projects or projects involving
assembled team disbands and moves quickly innovative procurement systems should be
to the next project evaluated. These guidelines provide a broad
range of techniques to assist agencies in
• Long project timeframes. Some asset based developing a PIR. However, the final
projects can have extensive timeframes responsibility for implementing a PIR remains
between feasibility and occupation. (Up to 3- with each agency.
5 years)
In overview the following key points should be
• Due to the long turnover period many of the
considered:
factors that produced the original asset
solution change. These factors include • PCRs of the design and construction of built
service delivery requirements, political assets are best undertaken when the project
factors, budget, state of the economy, has been occupied for two (2) to five (5)
industry practices, etc. years
• Where projects exhibit shortcomings there is • More numerous indicative studies are
an unwillingness to expose participants to preferred to fewer investigative studies
perceived “criticism” • Employ a range of techniques to demonstrate
• In an increasingly litigious society criticisms the validity of the findings
may be taken as libellous • Involve the original design development and
• There are rarely funds for effective and procurement team if possible
continuous PIRs • Project users have strong opinions about their
• PIR itself is often seen as ineffective. Overly projects and are a valuable source of feed-
complex and long-winded studies are back
perceived as time wasting • PCR can be cost-effective and a range of
• The asset management industry has not simple survey techniques are available
developed a culture of critical examination • Develop a “keyword” classification system to
and evaluation group and sort feed-back issues
• There is no effective mechanism for • There has to be an organisational
developing a “collective” reference system. commitment to respond to the feedback.
Compare for example the legal and medical
professions with their extensive case Ultimately a PIR program is a continuous,
histories. repetitive and divergent process. As one project
PIR is completed and its findings applied, new
To successfully conduct a PIR a number of key projects are completed. This requires a
points should be considered by the project team: continuous cycle of PIR. In order to obtain the
• What decisions are key to improved project maximum benefit from a continuous PIR
value? program an information feedback system will
need to be adopted that is suitable for the
• Who makes these decisions?
purposes of each individual agency. (Refer to
• When and where are these decisions made? section 5 PIR Outcomes).
• What issues impact on them?
• What other reference material is used?

6 TAM – Post Implementation Review January 2001

1.4 Benefits of performing a Post
Implementation Review
Post-Implementation Reviews are the last step
in the project delivery process and represent
closure of the feedback loop. Notionally PIR
provides the means where the lessons learnt
from previous projects are fed-back into the
process, to the benefit of future projects. Given
the massive resources expended in both asset
and non-asset procurement it is a serious
criticism that feedback is not pursued more
diligently.
Undertaking a PIR can generate both short and
long term gains. Short-term gains include:
• Identification of the ways to improve the
functional value of a project
• Identification of ways and means to assist
asset users overcome occupational problems
and
• Increasing user morale through the
continuous improvement of asset created
environments.
Longer-term gains may include:
• Learning from precedent
• Economies resulting from improved project
performance
• Improved concept criteria and project
briefing
• Development of more precise design criteria;
and
• Improved decision-making.
The purpose for undertaking a PIR is to gain
information and understanding with which to
improve project decision-making. A
successfully completed PIR may or may not
result in a recommended action plan. In its
simplest form, it will provide a forum for
discussion and the basis for improved
understanding between members of a project
team. A more complex PIR may extend the
current body of knowledge to the agency or
beyond it to the industry in general.

January 2001 TAM – Post Implementation Review 7

2 Selecting an appropriate strategy
Post Implementation Review is a generic Procurement/ Delivery Process Review
description of a range of reviews, or
evaluations, which vary with the key Agencies may wish to assess the effectiveness
stakeholders in the performance of a project. A of the process used to deliver the project.
clear understanding of the purpose of the review Typically this review would examine the time
is therefore a prerequisite for successful and resources used to deliver the project and
implementation. Generally reviews are either review matters such as the level of variations
defined as Post Implementation Review or Post and disputes etc. It would examine whether
Completion Review. original time and cost targets were met and may
include ‘benchmarking’ against accepted norms,
2.1 Post Implementation Review or against other similar projects. Given the
range of contractual systems employed it is
A PIR is designed to evaluate how well the brief worth gaining feedback on the merits of each
predicted project delivery requirements. In a contracting strategy employed. Interviews with
rapidly changing environment many projects, key participants to determine the level of
which faithfully meet the briefed requirements, consultation are also suggested. (This review
are considered to perform poorly because parallels Performance Reviews of consultants
service requirements have changed and building contractors).
dramatically.
This form of PCR essentially focuses on the
When this occurs, the root problem is clearly the concerns of the project manager, particularly,
inability to accurately predict project cost, time, decision-making and communication.
requirements not the quality of the project This type of review has been consistently
solution. undertaken by Department of Public Works and
Services.
2.2 Post Completion Review
Asset Performance Review
Economic Review
The traditional PCR concentrates on user
Due to the increasingly stringent feasibility
feedback of the project performance. For
process being adopted for projects, especially
buildings, this review would typically focus on
economic appraisal, an important strand of PCR
physical planning issues and examine whether
is to evaluate whether the project met its
the range of spaces are appropriately sized,
economic or service predictions. Such an
relationships between spaces are correct, the fit-
evaluation is critical if these predictive tools are
out and engineering services are acceptable, etc.
to be properly developed.
Feedback on the durability, ease of use and
Brief Compliance Review
maintenance of finishes and fittings is also
An important aspect of PCR is to assess whether appropriate. Comment from key staff, cleaning
the completed project complied with its original and maintenance staff and end users (be they
brief, and, as a separate issue, whether the school children, hospital patients, visitors or
completed project meets the end user general public) should be sought.
requirements. Examination of these issues
Such a review tends to employ questionnaire,
provides insight into how effective the
observation, walk-through and interviews as
translation of brief to reality has been.
data collection techniques. (Refer to section 4
This component of PCR seeks to describe or to PIR Data Collection Techniques).
explain cause and effect relationships to enable
project decision-makers to improve the quality
of their future decisions.

8 TAM – Post Implementation Review January 2001

The NSW Health Department, The Department
of Education and Training and The Department
of Public Works and Services have undertaken a
number of reviews of this kind in recent times.
(Refer to section 3 Stage 2 for further sources of
PIR information).
Technical Review
A wide range of technical reviews may be
undertaken. Generally this kind of review would
be triggered by perceived consistent
deficiencies, or a major technical change. A
specialist team would conduct a review of
procurement and operational issues, with a view
to identifying good and bad practice. Such a
review could include examination of defects
records and maintenance activities. Specialists
reviews of engineering services, typically air-
conditioning, communications, hydraulics,
Building Management Control System, etc,
would be undertaken by the relevant disciplines.
Appropriate specialists would similarly
undertake detailed operational reviews.

January 2001 TAM – Post Implementation Review 9

3 Methodology
Define Undertake Allocate Collect Field Analyse & Identify Link findings
Review background Resources Data compare major to feedback
objective research and data issues/ mechanism
and Determine findings
structure Evaluation
Framework

Feedback Loop

Figure 2 The Planning Process

3.1 A Generic process

The general methodology for PIR & PCR is
based on a generic problem-solving strategy.
This process is described in Appendix A “PIR
planning and assessment checklist” and
Appendix B “PCR planning and assessment
checklist”
The process for performing both the PIR & PCR
should generally follow the Planning Process
shown in Figure 2.

10 TAM – Post Implementation Review January 2001

Stage 1 Define Review Objectives and Structure

Define
Review
objective
and
structure

Effective pre-planning and continuous To successfully complete this first stage and
monitoring of the PIR/PCR process is vital to define the PIR/PCR objectives, it is critical that:
avoid the inevitable ‘explosion’ of available
• PIR/PCR objectives are developed that are
information beyond the ability of the PIR/PCR
achievable within the constraints of time and
team to evaluate. This stage is essential to make
cost factors
the optimum use of available resources and to
specify intended objectives and required • PIR/PCR process and activities are described
performance measures. rather than the outcomes to be achieved. This
will focus the team on effective
Initially the scope of the PIR/PCR including the implementation rather than simply end
needs of key stakeholders and major issues results.
should be addressed. A program or agenda
should be prepared to keep the process on Additional elements to be considered at this
schedule. This agenda should include: stage include individual agency corporate gaols
and objectives. The ongoing goal of best
• PIR/PCR objectives practice by NSW Government agencies together
• Specific issues for investigation with community expectations will also impact at
this stage. Significant attention should be
• Define a priority list
focused on the type of feedback required and
• Define/select performance measures for matching this to data collection techniques
comparison. selected. Other aspects to be considered include
A new PIR team’s first task will be to clearly the fee, time frame and personnel required,
identify the: including the facilitator and any specialist
technical expertise.
• Context and limits of the evaluation
The extent of involvement of the original
• Possible concerns of individual stakeholders
project team is often debated since there is a
• Resources available for the review and perception they may be defensive and biased.
potential sources of data However the value of their experience relating
to a project and the historical knowledge base
they can bring to the process warrants their
inclusion.

January 2001 TAM – Post Implementation Review 11

Stage 2 Background Research

Undertake
background
research

The smooth running of the PIR process will

require the project team to undertake as much
background research as is practical. However
this research should be relevant to the specific
PIR/PCR objectives.
Available background material typically
includes:
• Feasibility studies
• Value management reports
• Cost plans
• Contract documentation
• Progress reports
• Site minutes etc.
The pre-planning stage of the PIR/PCR should
identify a specific timeframe for background
research. Access to written documentation and
individuals will need to be sourced from other
agencies and from private consultants. The
PIR/PCR team should consider this aspect in the
pre-planning stage and attempt to make the
maximum use of available material. They
should become as familiar with the background
of the project as possible. This will avoid
unnecessary confusion in the data collection and
subsequent phases of the review process.
The research stage will provide an opportunity
for the PIR/PCR team to gain a broad grounding
of the project procurement/ delivery process and
associated relevant issues for the effective
implementation of the evaluation process.

12 TAM – Post Implementation Review January 2001

Stage 3 Allocate Resources and Determine Evaluation Framework

Allocate
Resources
and
Determine
Evaluation
Framework

The resources and framework employed should

be capable of both achieving the objectives of
the PIR/PCR and generating suitable
performance measures.
Consideration should be given to the PIR/PCR
process objectives when considering:
• The identification of specific information
targets
• Appropriate resources required
• The cost/benefit of achieving the identified
information targets.
Interviews with key project stakeholders in the
procurement/ delivery of the project will allow a
greater understanding of the history,
background and sensitivities of the project.
Generally, key project stakeholders would be
used to review the PIR/PCR process on an
ongoing basis.
A framework or structure outlining the major
process stages in the review process will be the
end product of this stage. The framework will
describe the specific responsibilities, time
frames and objectives of each major stage in the
evaluation process.
In order to ensure maximum benefit from
undertaking PIR/PCR the methodology should
be tailored to the characteristics of the particular
project being investigated.

January 2001 TAM – Post Implementation Review 13

Stage 4 Data Collection

Collect Field
Data

Team members will be tempted to collect more To minimise any pre-existing concerns of the
data than is actually required to achieve the set various project stakeholders, planning of the
objectives. This temptation should be resisted, data collection process should consider:
as it will lead to:
• How the evaluation team is to be introduced
• A significant increase in cost, time and to the project stakeholders
complexity with no real gain to the original • Identifying, and notifying each stakeholder
objectives of the PIR/PCR of the PIR/PCR process at its commencement
• The data collection process becomes so and inviting their involvement in its
complex or so time consuming that those development and implementation.
respondents required may not wish to give • Limiting the number of group sessions used
additional time to complete a survey or to collect data.
answer further questions.
Whichever data collection techniques are used
Specific data collection techniques include: consideration should be given to insuring that
• Questionnaires information generated is in a form suitable for
analysis and comparison. Specific attention
• Participant interview
should be made at this stage to performance
• Expert walk through in the case of measurement data, which is critical to the
infrastructure or buildings success of both a PIR and a PCR.
• Observation
• 3 + 3 surveys
• Workshops
• Discussion
(Refer to section 4, Data Collection
Techniques).
The techniques should be selected primarily for
their appropriateness to the project rather than
their inherent logic or intellectual rigour.
Essentially it is more desirable to gather data
that is timely, in an appropriate form, and at a
reasonable cost than it is to have the best
possible information.

14 TAM – Post Implementation Review January 2001

Stage 5 Analyse and compare data

Analyse &
compare
data

Analysis of survey results, preparation of the

draft report for review by key personnel, and
linking the findings to the evaluation objectives
is the culmination of any PIR/PCR. This stage
is the most critical, difficult and time-
consuming stage of the evaluation.
Success will depend on:
• Accurate translation of the data
• An effective data management system that
enables the PIR/PCR team to receive and
manage new information
• Coordination between agency employees and
relevant consultants
• Communication of the objectives of the study
to the relevant consultants and project
participants.
This stage is essentially built on the successful
completion of all previous stages. The PIR/PCR
team should be driven by the original objectives
and evaluation plan to complete it. The most
appropriate and effective format of the findings
should be directly linked to the objectives of the
evaluation and consideration given to a generic
format that can readily be adapted across all
project types.
A workshop to review draft results and obtain a
collective view of the PIR/PCR process can
provide an opportunity to review and reflect
prior to the completion of the final document.
Where survey results indicate a lack of data or
inconclusive results it may be necessary to carry
out additional primary research.

January 2001 TAM – Post Implementation Review 15

Stages 6&7 Identify Major Issues and Findings/Link to Feedback Mechanism

Identify Link findings

major to feedback
issues/ mechanism
findings

The PIR/PCR report can perhaps be best

prepared using the format of the data collection
technique used. The report should include
findings of the study as well as
recommendations and future actions.
A copy of the completed evaluation should be
made available so as the evaluation results can
be acted upon and provide:
• Valuable input into the ongoing updating and
continuous improvement of the Agency’s
project strategy
• Opportunity for ongoing refinement of the
PIR/PCR process applied by individual
agencies.
Items of specific interest to individual agencies
may form the basis for articles in the Agency
Newsletter.
The document is not regarded as public
information and further distribution should be
carefully considered.
(Refer to Section 5 - PIR Outcomes)

16 TAM – Post Implementation Review January 2001

4 Data collection techniques
4.1 Generally 4.3 Participant Interview
A range of techniques is available to conduct Structured, or loosely structured, interviews are
PIR/PCR. Most are based on social sciences an effective way of getting direct feedback from
approaches and, where more sophisticated key staff/users. Experience would indicate
exercises are required, the input of sociologists interviews tend to be hard to control and a
or psychologists could be considered. flexible approach is suggested. A checklist of
target issues is recommended. Output tends to
The following criteria should be considered in be verbatim quotes.
selecting the data-collection techniques for each
PIR/PCR: 4.4 Expert Walk-Through
• Appropriateness and validity to the project (Infrastructure/ Building
• Uniqueness Projects)
• Completeness This approach employs a team of “experts” to
visit the facility and assess its performance by
• Comprehensibility
observation. If the team is well selected, a
• Controllability significant amount of information can be
• Cost gleaned simply by observation. Some amazingly
powerful indicators of design problems can
• Timeliness of feedback
include pedestrian desire-lines across lawns
• Accuracy and reliability where paths have not been provided,
‘temporary’ signage replacing the designed
4.2 Questionnaire
signs, posters and notices covering
Perhaps the most commonly employed ‘observation’ windows, corridors used for
technique is the structured questionnaire. This storage purposes, windows propped open for
approach requires the development of a range of ventilation, broken door hardware, offices or
questions geared to measuring user responses to spaces accommodating more than their designed
the required subject areas. capacity, etc. Construction detail issues can
include leaking roofs, overflowing gutters,
A major advantage of this approach is that it cracking brickwork, excessive heat gain,
allows the survey of a large sample of users and defective door hardware, leaking taps etc.
thereby improves statistical reliability.
While this approach is effective it is preferable
Generally the best advice is “keep it simple”. to combine observation with interviews to check
There are many pitfalls with questionnaire that the identified problems are correctly
design. diagnosed. Similarly it is often desirable to
Before embarking on the cost of a major survey allow users to participate in the “walk-through”.
it is recommended that pilot questionnaires be Identification of these “problems” raises further
tested. Also consider carefully how the issues as to whether the cause was briefing,
questionnaires are to be analysed. construction, supervision or user initiated.

January 2001 TAM – Post Implementation Review 17

4.5 Observation
Where user behaviour patterns are a major concern
non-participant observation may be appropriate.
Typical examples from road design would be a
traffic count. Buildings with large pedestrian
movements could undertake pedestrian counts.
Simple devices like time-lapse movies could be
considered. Often attending the site at critical
times can provide insight into these issues.
Historical records of service outputs, number of
patients, customer complaints, etc can be
obtained.
4.6 3 + 3 Survey
A very simple technique for gaining quick
responses is the “3 + 3” questionnaire, which
asks users to list three positive aspects and three
negative aspects of the project. One good
outcome of this technique is that it gives equal
weight to positive features. Unfortunately it is
often easier to focus on negative issues rather
than positive ones.
4.7 Workshop
The techniques of Value Management can be
applied to PCR. A structured workshop can be
organised with key participants to gather user
responses. This approach has the advantage of
being a focussed, short duration technique.
4.8 Discussion
Unlike sociological or market surveys PCRs
have a very small sample size. Often there may
only be one CEO responsible for a service
delivery strategy, one Principal of a primary
school or one Nurse Unit Manager of the
Emergency Department. In these instances the
PCR team need to make judgements about the
validity of the data and try to disentangle the
complex, conflicting issues of personality,
organisation, morale, physical environment, etc.
This issue of how to translate the survey results
requires the input of experienced personnel.
Generally it is suggested that a larger number of
over-view surveys is preferable to limited in-
depth studies that may be skewed by specific
project conditions. Unlike scientific experiments
it is rarely possible to isolate any of the
variables.

18 TAM – Post Implementation Review January 2001

5 PIR/PCR outcomes
5.1 PIR Results 5.3 Information Bank
Clearly the data generated and analysed from a Ideally feedback gained across a range of
PIR will impact on briefing, design and studies should be accessible to the widest
procurement or delivery. Ideally, PIR results audience. Such a possibility would allow a
should be translated into briefing or comparison of results across projects. Architects
specification requirements. Such requirements about to embark on the design of a new
can be endorsed by the agency and incorporated operating theatre could access results from
into future project briefing or standard design PCRs of recently completed theatres. A service
guides. Where the same organisation has delivery planner could access feedback on the
responsibility for the whole process this establishment of call centres by other agencies,
desirable linkage can be achieved more readily. etc. This approach would also overcome some
of the statistical validity issues discussed earlier
5.2 Implementing Feedback since it would provide a larger sample.
The objective of any feedback system should be During the late 1980’s both the Schools
to link the findings back to the right people, at Building Research and Development Group of
the right time and in the right format, for easy the then NSW Department of Public Works and
application and understanding to each new the former Commonwealth Department of
project. Housing and Construction, developed
Agencies need to be aware that the PIR process computerised data-bases for retrieval and
may identify deficiencies, for example layout sorting of results (Reference #5). Both systems
problems, which are causing distress at the user employed categorisation systems, by both user-
level. Ideally these problems should be defined functions, eg. building department, and
eliminated by alterations, if required. Where the by technical or building function, planning,
problems are generated by lack of user relationships, engineering services, acoustics,
awareness, or inappropriate delivery/operational thermal comfort, etc. Such a categorisation
practices, some form of awareness raising or allowed flexible retrieval and sorting as outlined
retraining may need to be considered. in figure 3.

Figure 3 Classification System

SERVICE ISSUES PLANNING UNIT TECHNICAL ISSUES

(School) (School) (School)

Student/Staff Issues Administration Space Requirements

Growth/Expansion Staff Facilities Architectural
Technology Change Relationships Acoustics
Learning Techniques Learning Areas Comfort Conditions
Library Openings
Communal Areas Security
Support Finishes
Services
Communication
Furniture/Fixtures

January 2001 TAM – Post Implementation Review 19

The success of this approach relies heavily on 5.4 External Standards
suitable classification of survey data. Adoption
of a standard classification system across the Where feedback indicates inappropriate external
building industry would ideally allow for more standards (Australian Standards, Building
effective sharing of feedback. If this could be Codes, etc), recommendations can be made to
attained then a ‘collective’ feedback system the relevant agencies. Clearly such a course is a
would be achievable. more substantial undertaking and reflects the
real difficulties of building a more responsive
There is a wide spectrum of feedback retrieval feedback process.
systems that an agency can apply to manage the
information generated from a PIR program. The The credibility of the PIR/PCR process rests on
spectrum is graphically described in the the way survey results are handled. Production
following figure 4. of another report to sit on the shelf is not
satisfactory. Organisations need to accept
Figure 4 Feedback Spectrum responsibility for the feedback achieved and
respond appropriately.

Complexity

Shelf Storage Electronic

System Data Base

The issues arising from the storage, retrieval

and administration of PIR/PCR results is a
reflection of a general condition affecting the
whole asset creation industry. Earlier
approaches like the Sfb (Building Component
Index) system are largely discontinued.
Attempts by the former National Public Works
Committee (now the Australian Procurement
and Construction Council) to establish standard
nomenclature have been beneficial. The
National Committee for Rationalised Building
(NCRB) has also invested efforts into the
development of an industry-wide information
system and have produced glossaries of
terminology and conceptual models as a first
step. (Reference #5 & #10).

20 TAM – Post Implementation Review January 2001

Appendix A PIR Planning and Assessment Checklist
A1 Service Level Requirements

Where are project objectives defined
and service requirements?

Did the completed project align with
the project service objectives?

Did the project meet service needs
upon completion?

Was an Economic appraisal done?
(Required for all projects costing
>$500,000)
A2 Project Planning

Was a Value Management Study
done? (Required for all projects
costing >$1,000,000).

Was a Risk Analysis done?

Was Private Sector Participation
considered? (Required for all Projects
costing >$5 Million).
A3 Project Outcomes
Consideration of the project outcomes will
include the following questions:

Have the desired benefits as expected
in the EA/VMS accrued?

Have the Client’s needs been met?

What are the customer effects?

What are the environmental effects?

Was the Scope of Works delivered to
the required technical standard?

Was the project completed on time?

Was the project completed within
budget?

January 2001 TAM – Post Implementation Review 21

Appendix B PCR Planning and Assessment Checklist
B1 Brief Assessment

Was the scope of Works fully
detailed?

Project total cost known to within
acceptable order of accuracy?

Implementation Plan available?

Environmental impacts adequately
assessed?
B2 Design Performance

Was the Tender and Procurement
Process followed properly?
B3 Project Approvals

Was the Project Approval process
followed and the necessary approvals
obtained?
B4 Construction/ Delivery Process
Control

Was a Project Management Plan
compiled?

Was this Project Management Plan
monitored against targets set, that is,
cost and physical progress?

Where the actual performance
deviated from Plan were corrective
actions taken? These actions include
necessary officers informed and
adjustments made to the Plan.

22 TAM – Post Implementation Review January 2001

Appendix C PIR Reporting Format
The following format should be used.
Project Summary Sheet/Executive Summary
The project Summary Sheet is attached to the completed report and contains basic project data
such as project title, asset location, project manager’s name, client name and position, together
with a brief description of the procurement process covering time, cost and completion.
Contents
1 Executive Summary
1.1 Overall Assessment
1.2 Lessons Learned
1.3 Follow-up Actions
2 Background
2.1 Project Background and Objectives
2.2 Scope, terms of reference, direction and project team
3 Project Efficiency
3.1 Evaluation objectives to be achieved
3.2 Criteria to be meet
3.3 Project Costs (Planned vs Actual)
4 Project Approval and Management.
4.1 Approvals
4.2 Procurement
4.3 Handover/Completion
5 Operational Performance
6 Performance Assessment and Measurement
7 Overview and Observations
8 Recommendations and Conclusion.
Appendices
A User Survey Results.
B Other additional information as may be appropriate.

January 2001 TAM – Post Implementation Review 23

This page is intentionally blank

24 TAM – Post Implementation Review January 2001

Asset Information
Guideline
Asset information guideline

January 2001
DPWS Report Number 01057

NSW Department of Public Works and Services Cataloguing-in-Publication data

New South Wales. Government Asset Management Committee.

Asset information guideline.

ISBN 0 7347 4104 9 (set)

ISBN 0 7347 4188 X

1. Asset management – New South Wales. 2. Capital investment. 3. Public administration – New South Wales
I. Title. (Series : TAM)

352.50944

 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any
process without written permission from the NSW Government Asset Management Committee. Requests and inquiries
concerning reproduction and rights should be addressed to:

Secretariat
Government Asset Management Committee
Level 23 McKell Building
2-24 Rawson Place
SYDNEY NSW 2000
Website www.gamc.nsw.gov.au
E:mail gamc@dpws.nsw.gov.au

Set consists of :

ISBN 0 7347 4122 7 Asset strategy

ISBN 0 7347 4194 4 Office accommodation strategy
ISBN 0 7347 4128 6 Capital investment : strategic planning
ISBN 0 7347 4134 0 Asset maintenance : strategic planning
ISBN 0 7347 4140 5 Asset disposal : strategic planning
ISBN 0 7347 4146 4 Sustainable development guideline
ISBN 0 7347 4152 9 Heritage asset management guideline
ISBN 0 7347 4158 8 Demand management guideline
ISBN 0 7347 4164 2 Life cycle costing guideline
ISBN 0 7347 4170 7 Value management guideline
ISBN 0 7347 4176 6 Risk management guideline
ISBN 0 7347 4182 0 Post implementation review guideline
ISBN 0 7347 4188 X Asset information guideline
Contents

1 INTRODUCTION ____________________________________________________2
1.1 The New Perspective ..................................................................................................................................2

1.2 What is an Asset Register...........................................................................................................................3

2 AGENCY ROLES AND RESPONSIBILITIES ______________________________5

2.1 Service Agencies..........................................................................................................................................5

3 ASSET REGISTER DEVELOPMENT PROCESS ___________________________6

3.1 Needs Analysis ............................................................................................................................................7

3.2 Planning the system ....................................................................................................................................9

3.3 Planning the Asset Register .....................................................................................................................11

3.4 Implementing the Asset Register.............................................................................................................15

APPENDIX A INFORMATIONAL NEEDS ___________________________________17

APPENDIX B IDENTIFYING SYSTEM NEEDS - FUNCTIONAL LINKAGES ________18

APPENDIX C ASSET REGISTER MODELS _________________________________20

APPENDIX D ASSET REGISTER HIERARCHY ______________________________22

APPENDIX E ASSET INFORMATION STRUCTURE __________________________23

APPENDIX F BUSINESS CASE FORMAT __________________________________24

APPENDIX G THE TOTAL ASSET MANAGEMENT SYSTEM___________________25

January 2001 TAM – Asset Information Guidelines 1

1 Introduction
1.1 The New Perspective
Wonderful, even if exaggerated, urban myths Therefore, the asset register should be seen as
abound of agencies being unaware of the assets the core of an agency’s information
they owned. In reality, in the past agencies management system as shown in the figure
were able to manage their assets with modest below.
levels of information that was centrally recorded
and historic costs were recorded only for The potential to integrate all the different
accounting purposes. functional registers and plans to create more
efficient information linkages is growing as
Local asset managers were familiar with each of technology advances.
their assets and less pressured to ensure their
cost-effectiveness. The development and improvement of asset
registers is therefore a key element of the Total
Much has changed with the environment in Asset Management process.
which public assets operate and consequently
the information necessary for agencies to
manage their assets has also changed.
The increased demands for government services
without a similar increase in government
resources has led to a focus on service, and Service
Strategy
whole of life asset management approach. Condition Asset
Assessment Strategy
Consequently, the need for asset information
has increased significantly.
Total Asset Management utilises asset registers Asset Maintenance
to provide an invaluable source of information Disposal History
concerning the agency’s asset usage and on- Asset
going capacity to be an efficient and effective Register
service provider.
Capital Maintenance
In addition, asset registers provide the Works Planning
information base for further management
improvement techniques such as benchmarking.
Reporting Operations

Figure 1 The Asset Register

2 TAM – Asset Information Guidelines January 2001

1.2 What is an Asset Register
Asset registers are listings of information The collection of data is very costly and should
relating to various aspects of an asset portfolio, focus on those aspects of assets that need to be
in a form that allows data to be cross-referenced known. The following assets are required by
and retrieved as required. Government statute to be included in the asset
registers:
Assets should be recorded if they have a service
potential and/or the capacity to provide • All State owned property and infrastructure
economic benefits that may be used in the including assets which may be regarded as
delivery of agency services. inalienable, such as heritage buildings and
parkland
An asset register may be computer, card file or
paper based and contain data relating to one or • Leased assets or property which is owned
more asset categories including: and/or operated by other bodies but in which
the state has legal interests, such as:
• Service delivery functions − Water treatment plants which have been
• Physical properties created under Build, Own, Operate (BOO)
• Technical data schemes
− Office accommodation
• Financial information
− Rolling stock
• Property title details − Other assets where lease arrangements
• Key operational data include responsibility for the State to meet
ongoing costs for maintenance to pre-
• Maintenance data
determined levels of service capacity
• Performance records • Buildings or work under construction
In more sophisticated asset management needing a holding entry on an asset register
systems, specific data sets may be kept in The following criteria should be considered
separate registers and not in the main asset when determining which assets are to be
register. included in the asset register.

January 2001 TAM – Asset Information Guidelines 3

Cascading Economic Life
Some asset systems are made up of major Economic life should exceed 12 months to
components that may be changed or replaced warrant inclusion in the register and to attract
during the service life of the overall asset depreciation.
system.
Integration with other resource registers
A fire-fighting appliance may consist of a cab
chassis vehicle onto which are mounted ladder Assets are but one of the resources used to
units, water tanks, pumps, and communications provide services and each of these resources
equipment. Each of these components will have relates one to another. The main categories of
different service lives and may be replaced resources include assets, human resources,
separately. information and information technology.

Changing needs may also lead to a change of While asset registers are separate to information
components. It is necessary for such systems relating to each of these resources, a
components to be registered and tracked commonality of structure and information
separately as well as recorded as being part of a coding across each resource register will permit
cross referencing for more effective planning
particular appliance.
and management. This will allow, for example,
Expected life staff costs for particular medical units or
information management needs in primary
The expected life of an asset is a function of schools to be obtained
utility, life costs and technical or social
obsolescence.

Materiality
Materiality is a lower limit on cost below which
items should be expensed. The limit on
individual items is usually set by each agency.

4 TAM – Asset Information Guidelines January 2001

2 Agency Roles and Responsibilities
2.1 Service Agencies
Agencies are required to maintain appropriate
records of their non-current assets to ensure they
are:
• Efficiently and effectively used to support
the delivery of service
• Properly managed throughout their life cycle
• Responsibly accounted for on their balance
sheets and allowance made for their
depreciation

January 2001 TAM – Asset Information Guidelines 5

3 Asset Register Development Process
Conduct Plan the Plan the Implement the
needs system asset register
analysis register

Identify information Review the system Choose the Prepare action plan
needs development register model Establish data
Identify system options Establish assets management procedures
needs Review data hierarchy Prepare business case
Prioritise needs collection Establish Implement plan
requirements information
Choose options hierarchy

Figure 2 The asset register development process

This guideline provides a systematic approach The basis steps in establishing an asset register
to the development of asset registers. The four are:
stage process described in the following
• Focus on the asset’s ability to service
sections can be used to initiate the asset register
delivery
and for its operation and further development.
• Define information reporting requirements
Due to the central functional role of the asset for relevant issues
registers, it is imperative to plan their
integration into the agency’s management • Identify optimal system structure for
information system. All agencies are different facilitating efficient reporting
and have different needs but consistency of • Design a register structure to suit both
approach is to be encouraged. government needs and the agency’s
functional/management structure
There are four stages in the process:
• Identify the optimal technology to achieve
• Conduct a needs analysis desired system development
• Plan the system • Plan the implementation of improvements
• Plan the asset register • Justify the project through a cost benefit
• Implement the register analysis and obtain funding approvals
• Set up the new system and implement new
data collection and reporting procedures
• Run the system efficiently on a day to day
basis

6 TAM – Asset Information Guidelines January 2001

3.1 Needs Analysis

Conduct
needs
analysis

Identifying Information Needs Management Reporting

The business goal of all agencies is to provide The emphasis for all agencies is to maximise the
the best and most cost effective level of service utilisation and economic life of existing assets
possible to match client and community needs. before the creation of new assets. Information is
required to define the asset base and to assess its
Irrespective of what computer system an agency value, condition and level of utilisation.
decides to adopt, or the level of sophistication,
there are basic data sets that are needed for Utilisation measures will require asset data to be
effective management of its service functions able to be linked to information on other
and for financial and strategic planning. resources such as staff or finance, and to service
output reports
There are also demands from State Government
to facilitate statewide financial and strategic Summary information is also required on the
planning. operation and maintenance of the asset base.
Management reporting summaries should be
Management should identify information needs available to the planning level.
by looking at the three main areas of demand for
information and asking objectively if Operations Management
improvements can be made. Information is
demanded for planning, management reporting Asset management initiatives must be
and operations management. developed at both operational and business
management levels.
Planning Information
On the basis that ‘you cannot control what you
The Service Delivery Strategy will define service cannot measure’, data collection storage and
delivery responsibilities and set the scene for management, are essential activities and hence
development of strategic business plan(s) for the asset registers assume a pivotal role in the asset
individual services or activity centres that management system.
comprise the ‘business’.
These needs give rise to specific reporting needs
to justify both current and long term budget and
revenue fixing. This in turn dictates the data and
information to be collected.

January 2001 TAM – Asset Information Guidelines 7

Identifying Reporting Needs Prioritising Data Needs
To determine reporting needs, the Asset Priorities will be dictated by a number of criteria.
Manager should consult senior management. These criteria are generic to all functions but can be
Reporting inputs and outputs at each broadly aligned to the planning, management, and
management level should be identified and operating functions:
recorded for each section.
• Planning
The information collected should also include − Accessibility of data
timing requirements. Information demands may − Flexibility to modify and extend the
be mainly cyclic for management reporting, and system
activity based for operations. − Ease of updating data
The data requirements to satisfy these needs can • Management
then be incorporated in the planned − Ability to produce relevant, timely reports
development of the asset register. − Flexibility to develop customised reports
To promote uniformity of approach and provide − Relevance of the data and outputs to the
agencies with a manageable framework within “business”
which to develop their systems, the NSW • Operations
Government has developed The Total Asset − Cost effectiveness of the system
Management Systems (TAMS) and CAMSYS − Security of the data and information
softwares are described in Appendix G. − Connectivity to other systems and activity
areas
Identifying System Needs
− Reliability of the system
In the past, asset registers for different asset When reviewing existing systems or planning
categories were kept separately by each justifying proposed improvements, managers
business manager, as were all the operating should apply these criteria to identify tangible
records. Linkages were weak resulting in poor benefits.
communications between business sections.
The best practice approach might be to rank
Once the desired reporting structure has been potential improvements by assessing them
defined, information flows can be charted. against these criteria on a scale of 1 to 5.
These charts can identify the origins of both
management and operational data needed for
reporting and they will show linkages between
registers and other management systems.
This will highlight opportunities for improved
data communication and the potential for
additional functionality including linkages to
corporate business functions.
These functional linkages along with possible
outputs are discussed in detail in Appendix B.

8 TAM – Asset Information Guidelines January 2001

3.2 Planning the system

Plan the
system

Identifying the System Development

Components
The latest computer technology, allows a Geographical Information Systems can be
flexible and modular approach for establishing used as a front-end function to aid in the spatial
asset management database systems and identification of assets or groups of assets in the
reporting for all levels of operations and registers. These are usually used in conjunction
management within the organisation. with CAD systems.
This is made possible by the linking of the The benefits are:
primary ‘asset register’ module with the other
• Mapping representation of the assets
registers (modules), as discussed earlier.
• Rapid downloading of field data
The agency’s desired structuring will be
achieved by the application of appropriate, • Quick identification of assets by area
available, and affordable, technology. The (polygon)
objective is to make the asset data as accessible • Plan generation for operation & maintenance
as possible and in a format that can benefit the • Identification of adjacent services
real time management of the agency’s business.
• Incident analysis
Data collection and storage methods must also,
• As a planning and design tool
of necessity, become more sophisticated to
match the increasing handling capability, and Global Positioning Systems work in
hence demands, on the asset management conjunction with Geographical Information
system. System to provide instant location information.
There are many available data collection options The benefits are:
although these basically fall into the following • Improved management data for operation &
categories maintenance operations
• Improved monitoring of emergency response
operations
• Improved data for fleet management
Data Loggers, including Lap-Top Computers
can be used to facilitate direct download into the
asset registers. The benefits are:
• Rapid collection of data
• Predetermination of data to be collected
• Automatic formatting
• Direct download to system
• Quality control

January 2001 TAM – Asset Information Guidelines 9

Compact Disk Technology can be employed to The main sources of asset data are:
provide linked images such as certificates,
• As constructed drawings
photographs etc. which help in the
administration and planning of the assets. The • Work order / project costing
benefits are: • Operating reports
• Paperless office • Maintenance reports
• Direct reference to important documents and • Condition audit reports
information • Call reports
• Visual records of asset characteristics and • Inventory stocktake
condition
Choosing the Best Options
Spreadsheets are basic tools for the storage and
analysis of data. They have their uses in one off In choosing the most appropriate technologies,
situations but more sophisticated database the benefits of both the system structure and the
software is increasingly being utilised because technology should be considered. The system
of the speed, retrieval abilities, and report design should take into account any existing
generating features. systems and procedures but should not maintain
them to the detriment of long-term goals and
Identifying Data Collection Requirements outcomes.
The major cost in running a data management It should also be stressed that it is far better to
system is in collection and maintenance of the have a simple but effective system than a
data. To obtain the greatest value from data complicated system that is difficult to
systems the information must be complete and understand and which nobody wants to use.
current.
When desirable reporting and system
Costs of maintaining the database are partly a improvements have been identified and before
function of reporting needs and frequency of consideration of the costs, the Asset Manager,
update. The frequency depends on cyclic as facilitator for the information planning
reporting patterns, as well as maintenance and process, should circulate draft proposals to all
inspection schedules. the key managers.
The maintenance schedules, in turn, need to be The benefits, capital costs and potential cost
appropriately planned to reflect the criticality of savings of each technology option should be
the assets to the system. In the past maintenance assessed. Readers should refer to the Value
was carried out and data collected according to Management Guidelines in the TAM Manual.
instruction manuals rather than a prioritised
maintenance plan. This has resulted in
redundant data being stored.
“Reliability Centred Maintenance” is the name
given to an approach that recognises the
performance capability, system criticality and
minimum service requirements of each asset.
The information flow charts should be used to
assist in the review of existing data collection
activities in order to identify the ‘who, what,
when, and how’ for each operation. This will
form a reference base for data collection and a
guide to estimating the cost of the proposed
improvements.

10 TAM – Asset Information Guidelines January 2001

3.3 Planning the Asset Register

Plan the
asset
register

Choosing the Register Model

The model format to be adopted for the Asset The Database may often serve several purposes,
Register should be chosen to match the type of eg:
organisation and its management structure. • Establishing levels of use
Registers can classify assets by service, • Planning space allocation
functional area or both. Which is used will • Planning maintenance/cleaning
depend on the size and complexity of the
operation • Calculating service capacity
• Calculating insurance and other liabilities
Generally, if a number of activities exist to
support one service function then there is merit It is likely to have a growing number of uses
in keeping all the information together. therefore it should be made as flexible and
extendible as possible.
Where there is no integration between service
areas they might be dealt with as autonomous
units.
The other option is where there is a matrix of
activity with certain functions serving several
other functions.
There are three basic types of models as
illustrated in the following diagram (Figure 3).
These are described in detail in Appendix C.

Unified Segmented Umbrella

Composite Autonomous Integrated

Management

Operations

Figure 3 Asset Register Models

January 2001 TAM – Asset Information Guidelines 11

Establishing the Asset Hierarchy
The effectiveness of an asset management This not only allows for ease of consolidation
database system depends on its ability to allow for reporting but is also the logical level from
operators to quickly and easily store, recall, sort, the point of view of identifying components and
analyse and evaluate different types of sub-components. As a guide, Appendix D
information about assets. shows typical asset register hierarchies for
different types of agencies.
This can best be achieved by following a
hierarchical structure and designing a An asset identification system should be used
meaningful and recognisable asset numbering consistently throughout the organisation. The
system. application should match the operational needs
of the information asset system including
Taking this approach, assets may be defined at a movement of assets and information linkages
number of levels within a system; from the with other functions: ie, a GIS, design models,
system level itself, to sub-systems, facilities or on-site tagging etc.
components of the system according to the
information to be collected. The requirements for asset identification are:
• A unique number that stays with the asset for
the whole of its life that enables searching
System Level 1 for, and tracking of assets. Where there is a
Sub-System Level 2 need to track sub-systems, or components
separately the numbering system must enable
Facilities Level 3
unique numbering down to this level.
Components Level 4
• A code that says what the asset does and can
Sub Components Level 5 be used for operations and maintenance
analysis
Figure 4 Asset Hierarchy • A location indicator for finding the asset on
site: eg coordinates in a GIS or linkage to the
system/sub-system of which it forms part.
The component is the lowest level of recording • A nodal number that identifies its position in
for non-current assets. Sub-components may be the system for network analysis, etc
recorded for costing or maintenance purposes
• Incorporation of existing numbering system
The system approach has the following benefits: (if applicable), thereby reducing the need to
re-number assets or support different styles
• Assets can be viewed in their logical of information systems.
hierarchy
• Assets can be grouped the way they are
managed
• The structure assists in ensuring that all
assets are covered
• There is flexibility with level of detail
• Data entry in minimised
• The system allows for reporting at different
levels
In planning the asset hierarchy a consistent
approach is recommended. For example,
‘buildings’ in water, sewerage, and property
registers should all appear at facility level.

12 TAM – Asset Information Guidelines January 2001

In practice, it is recommended that the Data sets will record data in the database
following three number identifiers be used: according to how the asset hierarchy has been
1. Reference Code (System/Sub-system code, structured. For example, performance data could
etc) that varies with function tell managers how the system has behaved on a
2. Internal record Number (Unique identifier system wide level or down at the level of
used by system) that is always the same individual components. Data sets might be seen
3. Asset ID (same as 2. or user defined or use as providing slices of information about the
existing asset number) that is always the assets.
same The database structures should be systematically
Establishing the Information Hierarchy built up through focus group meetings of the
various stakeholder groups. This will prepare
With any record database system it is important managers for change, encourage ownership, and
to first identify ownership and category / groups ensure approval of the final proposals.
of assets to be recorded.
There is no limit to how wide or narrow the
The actual breakdown of categories by service, definition of assets may be, nor how much data
area etc. will be determined by the register is collected. The assets profile to be recorded
model structure chosen for the agency. will differ from agency to agency.
In the information hierarchy the breakdown
structure is as follows:

OWNER: The agency

ASSET The service or asset group

CATEGORY: breakdown according to the asset
model structure adopted

REGISTER: A grouping of data sets by

function eg. assets, operations
etc.

DATA SET: A collection of data concerning

one asset characteristic or activity

DATA: Recorded attributes about an

asset or an asset related activity.

January 2001 TAM – Asset Information Guidelines 13

 Asset register Operational Maintenance
requirements requirements

System

Ph

Te

Fin

Op

Ut
En

et c

Co
Ta
Sub-System

ch

et c
ys

an

ilis
tio

erg

sk

st s
nic
ic

c ia

na

ati
hy

s
al

yu
al

le
l

on
arc

sa
g.
Facilities
ie r

g
pe

e
th

rfo
se

rm
As

an
Components

ce
da
ta
Sub Components

Data sets
Figure 5 Information Hierarchy Slices of information about the assets

In practice, the content of the asset register will Primary asset data should be accurately updated
be determined by the usefulness of the data. For when new capital investment projects are
example, a vehicle can be broken down into handed over, and/or when enhancements and
small parts but the cost of maintaining replacements alter the material nature of
information on them all, is not worthwhile, individual assets and hence the value of the
since the car “operates as a cohesive whole”. asset base.
Another example is where a hospital ward or a The tables in Appendix E may serve as a guide
group of wards could be considered to be the to the data required to populate the various data
operational “unit” for assets accounting rather sets.
than the individual beds. It is critical not to
break up assets smaller than needed for
operational needs.
Access control is very important and the system
must prioritise usage and prevent accidental or
unauthorised editing of the data. By necessity a
system must include a full user/action audit trail
and employ regular backup procedures.
Availability of only the relevant reports
appropriate to the function of the user will save
time and maintain a focus on designated
activities.

14 TAM – Asset Information Guidelines January 2001

3.4 Implementing the Asset Register

Implement
the
register

Preparing an Action Plan Establishing Data Management Procedures

As part of a business case submission for the As a part of a business case submission for the
system improvements, a development schedule system improvements, operating schedules
should be prepared. From experience reported to should be prepared.
date, one major caveat is not to be tempted to
develop a totally integrated system all at once. These schedules will take into account the data
collection schedules previously identified and
While the overall strategic vision should be the various activities and resources applied to
strongly supported and maintained throughout the upkeep and operation of the asset registers.
the development process, the action plan should An annual cost estimate should be derived from
adopt a measured, step by step approach, with these schedules.
data having the greatest payback being collected
first. Resource scheduling should be based on the
application of several best practice principles
For assets already held in the portfolio, the for efficient data collection and management.
incorporation of additional data should be These should be considered for implementation
prioritised according to the Government’s as standard procedures for the agency:
requirements and urgency of need to improve
• The person(s) who benefits most from the
the agency’s service capabilities.
accuracy, relevance and timeliness of the
Appropriate milestones should be identified data should be responsible for its collection
throughout the implementation process up to the and input
handover stage (completion of project). Updates • If data collection is a by-product of
should be made to the project management operations, it is more likely to be carried out
schedule to suit the project. The final proposal cheaply and efficiently
including cost schedules for each activity and
milestone should be documented. • Where there are likely to be many users and a
number of people supplying and/or inputting
The following milestones may be appropriate: data, an Asset Manager should take overall
responsibility for ensuring the relevance and
• Planning and feasibility studies
the accuracy of the data supplied and
• Broad user requirements ultimately recorded
• Detailed functional procedures • Key personnel should be trained in the
• Technical design operation of the asset management database
system and responsibilities defined (and
• System development
allocated) for its general upkeep
• Training and implementation guides
• Procedures should also be established to
• Ongoing operations and maintenance ensure that any updates or changes are
• System review procedures authorised and correctly recorded

January 2001 TAM – Asset Information Guidelines 15

• For security reasons, data entries and changes Implementing the Plan and Reviewing the
should be carried out by the person Register
responsible for generating the information,
with the exception that updating certain The preparedness of key managers is important.
primary information about assets (eg. Throughout the development process they
creating or deleting an asset), should only be should have been regularly involved and be
performed by a designated person (eg. the fully aware of the improvements and upgrades
Asset Manager), operating in accordance proposed.
with defined procedures The managers should make special
• Site plans and servicing information is best arrangements during the transition period to the
assembled at the time of commissioning of new system, including if necessary for the
the asset or at the time of acquisition parallel running of both existing and new
systems.
• It is important to identify the usage of the
data at operational level as well as for Once budgets are approved, the equipment
management reporting should be purchased, space allocated, staff
Preparing a Business Case trained, and software installed.

The Systems Manager should prepare an Asset The Asset Manager should take charge of the
Register Business Case incorporating all the initialisation of the asset register model and the
data, information, and planning establishment of the information and asset
recommendation that have been identified hierarchies. The registers will then be ready for
throughout the development process. A business populating with data.
case format is included for reference in Some data may be transferred from existing
Appendix F. spreadsheets or databases, other will have to be
A key part of the business case is the cost entered manually from drawings, card systems,
benefit analysis. This enables comparison of record files etc. New data will accumulate as
alternative solutions and requires the operations and maintenance crews begin to use
quantification of all the financial and economic the new reporting procedures.
benefits of the proposal to be compared with the There are several other data collection
costs. preparation exercises to be carried out
Inputs should have been prepared during the depending on the technical options chosen.
development process for the costs of reporting, These include digitising of the GIS cadastral
data collection, and technology. This will be base, programming of data loggers, and training
offset against the cost savings and benefits from of operatives.
improved communication, planning, and asset If the agency is undergoing a complete change
structures. from historical costing and reactive maintenance
Where it is not possible to quantify the costs, practises to current cost accounting and
then recommendations for a valued judgement condition based maintenance systems, then it is
have to be made. Otherwise an acceptable return recommended that a program of condition
on investment should be demonstrated. Any audits should be undertaken progressively
redundancy of existing systems should also be starting with the most critical assets. This will
considered. provide a base case for future activity planning.

16 TAM – Asset Information Guidelines January 2001

Appendix A Informational Needs
Output Demands Information Needs
Corporate Plan Service standards
CORPORATE Approval of annual program and budgets Budget schedules
Submission to Treasury Resource data
Approve asset policies and standards Accounting data
Technical data
Annual accounts and report Asset valuation data
Management plan System data
PLANNING STRATEGIC Resourcing plans Cost and utilisation data
INFORMATION PLANNING System design Physical data
Business plans Service/demographic data
System condition analysis Condition data
Environmental impact review Incident data
Capital works program Financial data
CAPITAL Detailed design Technical data
WORKS Business cases Design data
PLANNING Cost estimates Unit cost data
Ranking project options Ranking scores
System condition analysis Condition codes
Economic analysis Benefits
PROJECT Financial analysis Cashflow data
DEVELOPMENT Review of asset standards and renewals Parameters and criteria
criteria
Specifications Technical data
MANAGEMENT Criteria
INFORMATION Project progress reports Performance data
QA procedures Insurance data
Implementation plans Priorities
PROJECT Work planning and scheduling Cost estimates
IMPLEMENTATION Time constraints
Contract documents Contract data
Project monitoring and control Completion progress
Valuations and earned value
Analysis of lifecycle costs Cost data
ASSET DISPOSAL Utilisation reports Survey data
Failure/incident analysis Asset age profiles
Rolling programs for operation & Technical data
management renewals
Physical data
ASSET Outage data reports Breakdown data
OPERATIONS Collect inspection data Inspection data
Carry out work schedules Cost data
OPERATIONS Asset criticality analysis Risk data
INFORMATION Maintenance history reports Historical data
MAJOR Asset condition data reports Condition data
PERIODIC Carry out work schedules Work schedule data
MAINTENANCE Spares inventory reports Spares data
Audit reviews Inspection data
Priorities for rolling program Renewal criteria
ASSET Risk assessment
REHABILITATION Carry out work schedules Costs and budgets
Work schedule data

January 2001 TAM – Asset Information Guidelines 17

Appendix B Identifying System Needs - Functional
Linkages
In the past asset registers for different asset Opportunities should be highlighted for
categories were kept separately as were all the improved data communication and the potential
operating records. Linkages were weak resulting for additional functionality including linkages to
in poor communications between business corporate business functions.
sections.
An example of these functional linkages along
Once the desired reporting structure has been with possible planning outcomes is given in the
defined, information flows can be mapped. diagram below.
These charts can identify the origins of both
management and operational data needed for
reporting purposes and the linkages between
registers and management systems.

Asset Management System

Fire Insurance Heritage Environment Images Emergency

Numbers

Asset Registers

Property GIS Maintenance Maintenance Operations Capital

History Works

Revenues Accounts Work Order System

Corporate Management System Work Management System

18 TAM – Asset Information Guidelines January 2001

Development of the appropriate functional The greatest problem of management is
linkages can allow a wide range of useful insufficient data for decision making. Asset
outputs from the asset database. These include: Management provides this data in a format
appropriate to the management level reading it.
• The potential for the linking of computer
mapping and images to the physical register. Links with corporate management and work
This provides the benefits of identification of management functions have the potential to
assets and the spatial information analysis. greatly enhance an agency’s efficiency as
• System data can be down loaded to design follows:
programs. • A work management system can run and
• A capital works creation and disposal facility monitor work orders. Links are necessary
could be linked to the asset register. This with the accounting system to record
would facilitate future planning and expenditure, and with asset registers to
budgeting. record the new works completed. The system
must integrate work schedules to prioritise
• A maintenance management function
programming for:
provides maintenance budgets and facilitates
resource planning. The maintenance register − New works
should include an asset condition audit − Renewals
feature, which, in conjunction with an − Routine and reliability centred
assessment of priorities and asset criticality, maintenance
can produce future work and resource − Reactive maintenance (action requests)
schedules. • The accounting system links to the asset
• A maintenance history function would register to update:
further assist the planning process by − Valuation summaries
providing information on how much had − Current written down value, and
been spent, how many breakdowns occurred, − Depreciation schedules
and how many complaints had been received. in the general ledger.
• Action requests (reactive maintenance) can • The revenue model could also link with the
be logged from the “calls” desk and provide asset registers and accounting system. In the
not only a record of where problems have case of local authorities, active links with the
occurred, but generate schedules of urgent property and water meter registers could
and non-urgent reactive maintenance work to allow for generating rates notices.
be carried out.
• There are a number of statutory and
• Environmental issues related to an asset may administrative information databases that can
also be logged in the “incident” register or effectively be linked to the main asset
recorded as a note against the asset. register system: eg, insurance schedules, fire
• Materials, spares and tools inventories are safety records, etc
needed as a support to operations and
maintenance functions. This register could be
supported by a stocktake function.
• There are a number of other databases that
could be linked to the asset register to
enhance existing functions: eg. heritage
listing, land register, energy usage, etc.
• Operations routines and emergency functions
could be linked to the asset base along with a
register or resources and costs that will
facilitate future resource scheduling.

January 2001 TAM – Asset Information Guidelines 19

Appendix C Asset Register Models
Unified Segmented Umbrella
Composite Autonomous Integrated

Management

Operations

Unified Composite Model Segmented Autonomous Model

This model may be appropriate for small or very A segmented model might be employed by large
focused organisations such as libraries, hospitals organisations with separate business centre
etc. It may also be appropriate for an operating diverse assets: eg the ferries and buses
organisation where there are geographical of the State Transit authority or the rolling stock
divisions with identical structure in each area and track of State Rail.
but a centralised management structure: eg.
small local authority, Education, Police, etc. Alternatively, organisations might be segmented
on a geographical basis such as the Housing
The benefits of this style of model are: Department or by service location such as four
regional water and sewerage business of Sydney
• All the information is held in one database
Water.
• Reporting can be diverse and flexible
depending on what the operators and The main benefit of this type of structure is that
managers wish to know it focuses efforts on the management of
individual products or asset groups.
• There is more overall control by the users
Caveats are:
Caveats are:
• Culture and communication problems
• Managers must be very clear as to what they
are trying to achieve • Common corporate functions cannot be
easily managed across all the asset groups
• There is the danger that the system will
become difficult to manage as it grows in • There is a danger that the structure and
size treatment of the different asset groups
evolves along different lines
• Switching costs to an alternative system are
high
• The reason for collecting data may not be
appreciated by the data collectors

20 TAM – Asset Information Guidelines January 2001

Umbrella Integrated Model
Frequently, asset information spans more than However it is noted that this model needs to be
one register and will need to be selectively carefully planned and the data reviewed
accessed by different users. periodically to determine its integrity and
continuing usefulness.
This structure is appropriate where there is a
multi-disciplinary organisation with Key managers should be consulted regarding
consolidated reporting responsibilities and any long term corporate planning that may
common funding sources such as local influence the model structure. Opportunities for
government agencies. change should be reviewed, as it may be
possible to refocus activities in more productive
In local government various services are ways.
operated separately but there are common
assets, such as property, and plant and If the structure suits the needs of the agency’s
equipment. There are also common corporate strategic direction then the model
management functions: eg. accounting. pitfalls should be avoided and the benefits
maximised.
The advantages of an integrated system are:
• The model can closely and sensitively reflect
the workings of an organisation
• All relevant tables can be updated
automatically
• Synergies of time and effort produce cost
savings
• Reduction in the risk of errors and omissions
• Allows staff to focus on core activities
• Common definitions and standard operating
rules
• Encourages standardised behaviour across
different disciplines: eg. accounting,
administration, engineering
• More effective management control
• Allows for summary information and
reporting
• Facilitates linkages with GIS

January 2001 TAM – Asset Information Guidelines 21

Appendix D Asset Register Hierarchy
SERVICE LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 Level 5
(System) (Sub-System) (Facility) (Component) (Sub-Component)
Parks Property Playground Play Equipment
Recreation Area Swimming Pool Pump
gardens Flower Beds
Buildings Property Admin Area Building 1 Waiting Room Windows
Wards Building 2 Ward Carpet
Recreation Area Landscaping Wall Bricks
NB All sites will have service facilities to Water
Drainage
Sewerage
NB All buildings will have service components Power
Air conditioning
Heating
Water Supply Water System Distribution Pipeline Pipe
Pumping Station Pump
Reservoir level Sensor
Telemetry Autodial System
Tunnel Portal
Headworks Borefield Instrument House
Dam/Weir Bridge
Pipeline Valve
Pumping Station Access Road
Reservoir Structure
River Intake Weir
Telemetry Repeater
Treatment Works Transmitter
Tunnel Alum Doser
Lining
Sewerage Sewerage System Collection Pipeline Pipe
Pumping Station Pump
Telemetry Modem
Tunnel Manhole/Shaft
Treatment / Residual Biosolids Building
Management Management Channel
Effluent Fittings
Management Flowmeter
Pipeline Lagoon
Pumping Station Pager
Storage Chlorination
Telemetry Equipment
Treatment Works
Urban Drainage Catchment Sub-Catchment Conduits Pipes
Storage Structures Channels
Gross Polln Traps Screen
Road System Road Segment Pavement
Culverts
Drains Traffic Lights
Signal System
Kerbs & Gutters
Gas Supply System Sub-System Gas Main Pipe
Meters Meter
Plant & Equipment Property Site Mobile Plant Tractor
Vehicles
Boats Computer
Office Equipment
Flood Mitigation River Region Flood Gate
Flood Gauge

22 TAM – Asset Information Guidelines January 2001

Appendix E Asset Information Structure
OWNER Agency
CATEGORY Module: eg, Property
REGISTERS Datasets

CLASSICAL DATA
Physical Data Financial Construction Technical Reporting

Data Name Est. replacement Manufacturer Description Audit trails

cost

Data Address Est. residual life Constructed by Capacity Valuation

Data Description Est. residual value Construction/ Dimensions Age profiles

Acquisition date

Data ID Economic life Enhancement Date Design Data

Data Asset Number Land value Cost Designer

Data Reference Number Valuation date Warranty

Data File Numbers Depreciation method Drawing Numbers

Data Co-ordinates

OPTIONAL DATA - Can be incorporated in functional registers

Service Data Classifications Functionality Performance Unit Costs

Data LGA Functional class Function Main type Material

Data Community Activity class Suitability Criticality Quantity

Data Population Land classification Disposal potential Failure rate max Unit rate

Data Zoning Custodianship Lease potential Out time max Cost factors

Data Percentage use Development potential Responsibility Service life

Data Condition Age

Data Overheads

Functional Registers

OPERATIONS Insurance Leases Risks Contractors

MANAGEMENT Procedures Heritage Functionality Performance

OPERATIONS Costs Budget Liability claims Asset utilisation

MONITORING Customer surveys Action requests Energy usage Security

MAINTENANCE Work required Task details Cost estimates Trades

PLANNING Budgets Procedures Tools Materials

MAINTENANCE Work done Failures Job costing Performance

HISTORY
CAPITAL WORKS Improvements Capital works Budgets Disposals
PLANNING

January 2001 TAM – Asset Information Guidelines 23

Appendix F Business Case Format
Introduction Recommendation
• Definition of need and evidence of • Statement of recommendation
supporting data indicative of current • Sign-off by responsible officers
shortcoming or need.
Attachments
• Event history
• Decision criterion • Program
• Location sketch
Submission detail
• Supporting data
• Scope of proposed work
• Cost benefit analysis data
• Associated and on-going work obligations
• Options and benefits
• Technical justification for proposed option
• Long term planning perspective
Proposed work
• Details of the work program
• Resources to be employed
• Proposed monitoring of outcomes
• Performance indicators
Funding requirements
• Schedule of payments
• Schedule of overheads and recurrent
expenditure
• Expected financial benefits ie. schedule of
revenues
• Summary of funding requirements
• Assumptions
Financial (& economic) evaluation
• Net present value analysis
• Sensitivity analysis
• Compliance with statutory regulations
• Critically and downsize risks
• Asset management life cycle costs
• Value management study outcomes (if
applicable)
• Environmental investigation study (if
applicable)

24 TAM – Asset Information Guidelines January 2001

Appendix G The Total Asset Management System
The pressures and demands on Government Within the same system are six modules for the
authorities are greater than ever before. There different asset categories. These all operate in a
are more stringent performance and accounting similar way but are specifically tailored to the
criteria, and their planning, budgeting and fiscal assets concerned. The modules are:
responsibilities are under constant scrutiny.
• Property and buildings (including parks)
NSW Department of Public Works and • Water supply and sewerage systems
Services, the Department of Lands and Water
Conservation and the Roads and Traffic • Stormwater drainage
Authority, have a role to support and assist • Flood mitigation
Government agencies. • Plant and equipment
Two computer based asset management systems • Roads and bridges
TAMS and CAMSYS have been developed for
TAMS and CAMSYS can be customised to suit
the purpose of achieving their asset
individual requirements including extension to
management goals. The DLWC has also
interface with geographical information systems
developed a financial model for water supply
and interface with additional modules such as:
and sewerage business planning.
• Defect maintenance system
TAMS and CAMSYS allow agencies to:
• Works management system
• Plan and budget for assets
• The RTA asset maintenance management
• Manage and optimise asset maintenance system.
• Measure performance against established
targets
• Satisfy the requirements of AAS27
• Develop performance predictions for assets
The core of the system is an asset register,
which records all financial, location,
construction and performance requirement
information for each asset.
An easy and flexible range of functions provides
a “whole of life” management system,
including:
• Condition rating
• Maintenance planning
• Maintenance history
• Operations management
• Operations monitoring
• Capital works management
• Asset disposals

January 2001 TAM – Asset Information Guidelines 25

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26 TAM – Asset Information Guidelines January 2001