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Building Together: Guide for Municipal Asset Management Plans

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Part Three:  Elements of a detailed asset management plan

An asset management plan is a strategic document that states how a group of assets are to be managed over a period of time. The plan describes the characteristics and condition of infrastructure assets, the levels of service expected from them, planned actions to ensure the assets are providing the expected level of service, and financing strategies to implement the planned actions. A detailed asset management plan has the following sections:

• Executive summary
• Introduction
• State of local infrastructure
• Expected levels of service
• Asset management strategy
• Financing strategy

Future provincial capital funding will be conditional on municipalities ensuring that their asset management plans include, at minimum, all of the content described here. All data and analysis supporting the asset management plan (including what is specified in this document and any additional work the municipality chooses to undertake) must be documented and kept on file.

This guide is intended to be a starting point for municipal asset management planning. Municipalities are responsible for tailoring their asset management plans to their unique needs and ensuring that all of the relevant expertise has been brought to bear in developing them. 

Through the web portal, municipalities can access a range of resources to help them develop their asset management plans

1 Executive summary

The executive summary is typically the final section to be prepared, and provides a succinct overview of the plan.

2 Introduction

The introduction:

• explains how the goals of the municipality are dependent on infrastructure. This could include discussing how infrastructure assets support economic activity and improve quality of life. The municipality’s goals may already be set out in documents, including the strategic plan and/or the Official Plan, or may need to be developed in consultation with residents.
• clarifies the relationship of the asset management plan to municipal planning and financial documents (e.g. how the plan impacts the budget, Official Plan and Infrastructure Master Plan).
• describes to the public the purpose of the asset management plan (i.e. to set out how the municipality’s infrastructure will be managed to ensure that it is capable of providing the levels of service needed to support the municipality’s goals).
• states which infrastructure assets are included in the plan. Best practice is to develop a plan that covers all infrastructure assets for which the municipality is responsible. At a minimum, plans should cover roads, bridges, water and wastewater systems, and social housing.
• identifies how many years the asset management plan covers and when it will be updated. At a minimum, plans must cover 10 years and be updated regularly. Best practice is for plans to cover the entire lifecycle of assets.
• describes how the asset management plan was developed - who was involved, what resources were used, any limitations, etc.
• identifies how the plan will be evaluated and improved through clearly defined actions. Best practice is for actions to be short term (less than three years) and include a timetable for implementation.  

3 State of local infrastructure

This section of the plan summarizes in one or more tables:

• Asset types (e.g. urban arterial road, rural arterial road, watermains) and quantity/extent (e.g. length in kilometres for linear assets).
• Financial accounting valuation and replacement cost valuation. Financial valuation uses historical costs and depreciation assumptions. Replacement cost valuation is forward-looking and accounts for expected inflation, changes in technology and other factors.
• Asset age distribution and asset age as a proportion of expected useful life.
• Asset condition (e.g. proportion of assets in “good,” “fair” and “poor” condition). Asset condition must be assessed according to standard engineering practices. For bridge structures, condition is based on an analysis of bridge inspection reports.

This section also discusses how and when information regarding the characteristics, value, and condition of assets will be updated.

This section is supported by:

• an inventory database of infrastructure assets covered by the plan, which includes basic asset information (e.g. asset type/class, physical description, location, expected useful life, etc.) and information that will require regular updates (e.g. replacement cost, condition, performance, etc.). The database could take the form of a simple spreadsheet or a more complex system supported by dedicated asset management software, such as Municipal DataWorks.
• records of all assumptions, which could be incorporated into the asset inventory or recorded in stand alone documentation.
• a data verification policy and a condition assessment policy that sets out when and how asset information will be verified and when and how assets will be assessed to determine their condition. This policy must be consistent with provincial requirements - for instance, the requirement that municipal bridges be inspected every two years.

4 Desired levels of service

While the introduction of an asset management plan explains in a general way how the goals of the municipality rely on infrastructure, the levels of service section is much more detailed. This section:

• defines levels of service through performance measures, targets and timeframes to achieve the targets if they are not already being achieved. For example, levels of service for a water system could include:
• “X” breaks per 100 km of watermain per year are acceptable;
• Watermain breaks will be repaired within “X” hours of initiation of repair, 95 per cent of the time;
• Customer complaints will be responded to within 24 hours;
• The meeting of all regulatory requirements.
• discusses any external trends or issues that may affect expected levels of service or the municipality’s ability to meet them (e.g., new accessibility standards, climate change impacts).
• shows current performance relative to the targets set out. A table may be useful for this.

This section is supported by documentation that specifies which performance measures are associated with which assets, current performance and expected performance over the planning period, as well as all assumptions. One way to link performance measures and current/expected performance to the relevant assets is through the asset inventory database.

5 Asset management strategy

The asset management strategy is the set of planned actions that will enable the assets to provide the desired levels of service in a sustainable way, while managing risk, at the lowest lifecycle cost (e.g., through preventative action). This section of the asset management plan:

• summarizes planned actions, including:
  • Non-infrastructure solutions – actions or policies that can lower costs or extend asset life (e.g., better integrated infrastructure planning and  land use planning, demand management, insurance, process optimization, managed failures, etc.).
  • Maintenance activities – including regularly scheduled inspection and maintenance, or more significant repair and activities associated with unexpected events.
  • Renewal/rehabilitation activities – significant repairs designed to extend the life of the asset. For example, the lining of iron water mains can defer the need for replacement.
  • Replacement activities – activities that are expected to occur once an asset has reached the end of its useful life and renewal/rehabilitation is no longer an option.
  • Disposal activities – the activities associated with disposing of an asset once it has reached the end of its useful life, or is otherwise no longer needed by the municipality.
  • Expansion activities (if necessary) – planned activities required to extend services to previously unserviced areas - or expand services to meet growth demands.
• Discusses procurement methods. To ensure the most efficient allocation of resources, best practice is for a number of delivery mechanisms to be considered - such as working with other municipalities to pool projects and resources, or considering an AFP model. As previously mentioned, the design-build-finance-maintain AFP model takes a lifecycle perspective and builds effective asset management directly into the contract.
• Includes an overview of the risks associated with the strategy (i.e. ways the plan could fail to generate the expected service levels) and any actions that will be taken in response.

Undertaking options analysis is necessary to develop the strategy section of the asset management plan. This analysis compares different actions that would enable assets to provide the needed levels of service.

Options must be compared based on:

• Lifecycle cost – the total cost of constructing, maintaining, renewing and operating an infrastructure asset throughout its service life. Future costs must be discounted and inflation must be incorporated. Municipalities need to use appropriate indices to calculate discount or inflation rates. For example, planned maintenance projects could use a standard inflation measure, while large capital projects may require a more specific measure that better reflects changes in construction costs.
• An assessment of all other relevant direct and indirect costs and benefits associated with each option. Examples include:
• Direct Benefits and Costs
• Efficiencies and network effects (such as savings in wastewater treatment due to conservation and efficiency improvements to the water system or savings of time and vehicle operating costs for users of transportation infrastructure).
• Investment scheduling to appropriately time expansion in asset lifecycles (for example, consider delaying the resurfacing of road assets before an imminently-planned expansion to save costs and minimize waste).
• Safety (accident reduction and impact on both property damage and injury/fatalities).
• Environmental impacts such as greenhouse gas emissions or nutrient loading.
• Vulnerability to climate change impacts or climate change adaptation.
• Indirect Benefits and Costs
• Municipal wellbeing and health.
• Amenity values.
• Value of culturally or historically significant sites.
• Municipal image.
• An assessment of the risks associated with all potential options. Each option must be evaluated based on its potential risks, using an approach that allows for comparative analysis. Risks associated with each option can be scored based on quantitative measures when reasonable estimates can be made of the probability of the risk event happening and the cost associated with the risk event. Qualitative measures can be used when reasonable estimates of the probability and the cost associated with the risk event cannot be made.

Opportunities to save resources by coordinating solutions to multiple problems must be explored. The asset management strategy is the set of actions that, taken together, has the lowest total cost - not the set of actions that each has the lowest cost individually. All decisions made regarding the set of preferred solutions and the person making the decision must be recorded.

6 Financing strategy

As noted on page 9, having a financial plan is critical for putting an asset management plan into action. In addition, by having a strong financial plan, municipalities can demonstrate that they have made a concerted effort to integrate asset management planning with financial planning and budgeting and to make full use of all available infrastructure financing tools.

This section of a detailed asset management plan:

• shows yearly expenditure forecasts broken down by:
• Non-infrastructure solutions.
• Maintenance activities.
• Renewal/rehabilitation activities.
• Replacement activities.
• Disposal activities.
• Expansion activities (if necessary).
• provides actual expenditures for these categories from the previous two to three years for comparison purposes.
• gives a breakdown of yearly revenues by confirmed source (i.e. loans and senior government grants should not be included unless an agreement has been executed).
• discusses key assumptions and alternative scenarios where appropriate.
• identifies any funding shortfall relative to financial requirements that cannot be eliminated by revising service levels, asset management and/or financing strategies, and discuss the impact of the shortfall and how the impact will be managed.

This section is supported by documentation explaining how the expenditure and revenue forecasts were developed. Expenditure forecasts must be consistent with the options analysis supporting the strategy section of the asset management plan. Revenue forecasts must be documented separately, along with the assumptions made and alternative scenarios. Ten years is considered a minimum timeframe for expenditure and revenue forecasts. However, a best practice is to use a forecast period that covers the entire lifecycle of assets.

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