3.1 Determining asset needs

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Asset management decisions regarding acquisition, use and disposal are to be made within an integrated service and financial planning framework, and in the context of the Government's overall resource allocation policies and priorities.3 The need for assets is directly linked to the provision of services. Asset planning involves the assessment of existing assets and planned acquisitions against service delivery requirements. Proposals for new assets must be justified by a thorough evaluation of all service delivery options, and, as part of the Government budgetary process, be the subject of a comprehensive appraisal or investment evaluation.

Figure 2.5 Asset planning framework

Service delivery strategy

All entities are responsible for developing a service delivery strategy within the context of their objectives and corporate plan. The strategy is based on a needs analysis and a review of how services are currently being provided. It should:

• define the scope, standard and level of services to be provided;
• assess the methods of service delivery and the resources needed, including requirements for the use of assets; and
• consider methods of containing demand by using demand management techniques. This may involve reducing the need for the service (for example, by combining it with another service, or by dealing with the situation that causes the service to be sought). It may also involve a review of pricing policies (see Section 8.2).

Service options need to be evaluated on financial, economic, social and environmental grounds.

Non-asset options

Service delivery options that reduce or contain a requirement for the entity to use assets should be considered. Devising non-asset options should challenge traditional concepts and assumptions about the delivery of services, and enable innovative methods to be developed.

Three broad types of non-asset solutions should be considered:

• redesigning the service to reduce the need for assets (eg home-based medical care);
• increasing the utilisation of existing assets (eg the conduct of evening TAFE courses in school buildings) so that the acquisition of a new asset can be avoided; and
• using private sector contractors to provide parts or all of the service. Assets may still be required for the service, but they will be controlled and operated by the contractor rather than being controlled by the entity.

Once the service need is determined and the service strategy devised, those services that need to be supported by an asset-based solution can be determined, as can the performance requirements of those assets over the planning period.

3, Budget Sector Asset Management Principles
Budget and expenditure Review Committee, 1993

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