Contents of Part 1
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| Key activities |
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The starting point for asset management. Agencies must thoroughly examine the need for service and infrastructure provision and consider the full range of options for responding to it. These include both non-asset and asset solutions as well as demand management strategies and the possible role of private sector providers.
The second step. This is a systematic weighing up of the costs and benefits of the various asset based and non-asset based solutions identified. Value management is one technique that assists in this process. The appraisal, taken together with Government policy objectives, should lead agencies to develop recommendations that make the best use of scarce resources.
The essential tool for achieving service delivery objectives by means of assets. Agencies' asset management plans, decisions and activities must be fully integrated with the Government's planning processes, including departmental corporate and business plans. Risk assessment and allocation must start at the planning stage. Agencies must continue to verify service needs throughout the planning process.
Planning of funding for the asset. Assets require the commitment of funding over their entire lives ñ capital expenditure for their purchase or construction and recurrent expenditure for their ongoing maintenance and operation. The disposal value at the end of their service life must also be considered. Expenditure requirements must be covered by identified sources of funding.
A determination of the charge or price for the use of an asset. It should be based on the true cost of creating, operating, maintaining and eventually disposing of the asset, and should reflect the agency's service objectives and market conditions. The true cost includes a rate of return (ie the opportunity cost of capital investment), the operating and maintenance expenditure and a depreciation allowance. Pricing may also be used as a way of managing demand.
Decisions requiring thorough examination and economic appraisal. The options for acquiring assets include creating, purchasing or leasing. Seeking private sector involvement to provide assets or services required must also be considered. The options for disposal include alternative use, rental, sale, or sale and lease-back, and should be considered as part of the acquisition strategy.
These activities make informed decision-making possible. Agencies are accountable for the physical and financial performance of the assets they control, operate and maintain. Information about the performance and condition of an asset provided by accurate recording, valuation and reporting procedures is critical to decisions to modify, refurbish, find an alternative use for, or dispose of an asset. The maintenance of an asset register which comprises an accurate record and valuation of assets will support effective decision-making about asset utilisation.
Protecting service delivery potential is a priority when making decisions about asset use and maintenance. How long an asset is useful depends on how effectively it is maintained for its purpose. Post-acquisition reviews and evaluations must be carried out periodically to verify that required outcomes are being achieved.
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