Part 4: Asset management planning

Planning to meet the forecast demand for drinking water in Auckland.

Before amalgamation, Watercare had prepared Asset Management Plans for the "wholesale" assets it owned and was responsible for that covered the next 20 years. These included dams, reservoirs, water and wastewater treatment plants, pumps, and bulk main reticulation that connected to the former network operators’ "retail" reticulation networks. The Asset Management Plans were peer reviewed and critiqued by recognised engineering consultancies, and their short-form opinions were included in the published Asset Management Plans.

The Local Government (Auckland Transitional Provisions) Act 2010 requires Watercare to prepare a one-year Asset Management Plan and stipulates the type of information that the one-year plan must include. Watercare has prepared an Asset Management Plan for 2011/12 within the required timeframe and with the required information. Watercare’s Board has approved the Asset Management Plan.

Watercare recognises that asset management planning should have a long-term focus and should bring together a comprehensive suite of engineering, financial, economic, environmental, risk, and growth information to provide a robust framework to promote optimal decisions on the types and timing of future asset interventions. Comprehensive asset planning goes well beyond the narrower requirements of the Auckland Transitional Provisions Act.

Watercare is currently preparing a 10-year Asset Management Plan. It expects to have finished a draft in September 2011. The challenges in preparing a long-term comprehensive plan at this juncture include:

  • moving from an asset base of 60,000 items to an asset base of 2 million items;
  • revaluing all assets as at 30 June 2011 and dealing with the complexities of calibrating the valuation information and assumptions of the former network operators;
  • migrating to new asset management information systems;
  • commissioning a detailed survey of all types of assets to get a clearer picture of their condition; and
  • moving to uniform service standards.

Auckland Council has issued draft asset management plan guidelines that detail the extent and type of information it expects to see in Asset Management Plans its infrastructure-intensive departments prepare. Watercare has kept abreast of these requirements and attended meetings at which the draft guidelines have been discussed.

We reviewed the 2008 Asset Management Plan prepared by Watercare. The Asset Management Plan is well written and provides a detailed assessment of the profiles of future investment in renewals and new capital. From our overview of the 2008 Asset Management Plan, we suggest that Watercare may wish to consider, when preparing its Asset Management Plan later in 2011:

  1. balancing descriptive information with "status" information (we noted, for example, that the 2008 Asset Management Plan did not contain any summary profile of the condition of assets, although there was extensive comment on the processes to establish that condition);
  2. providing a rationale for different intervention strategies (for example, we understand that Watercare is now adopting a “run to failure” approach for much of the "retail" reticulation); and
  3. summarising in the Asset Management Plan the major issues and challenges with the networks.

We recognise that consolidating assets is a significant task, and we support Watercare’s development of a longer-term Asset Management Plan. Watercare’s past experience in developing Asset Management Plans leaves it well placed to develop its new long-term Asset Management Plan. We will review this plan when a draft becomes available later in 2011.

There is a strong engagement between Council and Watercare about Watercare’s asset management planning, as this contributes significantly to the Council’s Long-term Plan and the framework for the Council’s reporting of service performance.

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