1. www.apv.net David Edgerton FCPA Director Quality + Expertise + Flexibility + Innovation = Confidence & Real Value Strategic Asset Management: Issues, Challenges and Opportunities PICPA Public Financial Management Symposium Mon 30 May 2016 Fiji

2. www.apv.net Firstly …. Why are we here? Why is ‘Asset Management’ a key issue for all governments? Is this something new or a passing fad?

3. www.apv.net Let’s get some perspective Governments provide a range of services to our communities For example – – Transportation – Health and Education – Security and Protection – Water and Sewerage – Communications and Information Technology – Miscellaneous Community Services

4. www.apv.net Let’s get some perspective To deliver the services we use assets For example – Roads, Bridges, Footpaths, Kerb and Channel, Traffic Signals – Schools, Hospitals – Police buildings and equipment, Prisons – Dams, pipes, reservoirs, treatment plants – Towers, Microwave links, cable – Libraries, halls, office buildings

5. www.apv.net These cost a huge amount of resources Asset Lifecycle Costs – Acquisition – Maintenance – Operation – Renewal / Upgrade – Disposal Cost of acquisition often less than 15% total lifecycle cost Typically Over 95% of total Balance Sheet Over 95% total budget Depreciation is major expense item on P&L

6. www.apv.net The reality Limited resources Ageing populations Ageing Infrastructure Asset Management Performance – Limited at best !!!!! High level dependency on foreign aid Critical need to develop skills and capability

7. www.apv.net Of particular concern…. Asset Registers seem to focus on small value items Major assets not well accounted for Asset Registers cannot be relied upon Financial Statements …. Qualified or No Opinion No accountability or transparency Difficult to assess Asset Management Performance Funding agencies demanding improved accountability

8. www.apv.net So what is ‘Asset Management’ ISO:55000 Asset Management Standard – Defines assets and asset management system – Focus on realising value from assets by managing the relationship between Cost, Risk and Performance – 73 different elements

9. www.apv.net ISO:55000

10. www.apv.net Asset Management = Corporate Governance Everything you do in order to achieve your objectives – Policies – Processes – Planning – Organisational Structure – Culture – Leadership / Tone at the Top

11. www.apv.net Asset Management is a Journey Need to start somewhere (first step) The Journey will never end Must always strive for continuous improvement Critical aspects are Culture and Leadership Each government and agency is unique No ‘one size fits all’ solution However … concepts provide the path

12. www.apv.net Australian National Asset Management Framework National Council of Local Government Ministers 2006

13. www.apv.net The first step …..

14. www.apv.net Vanuatu Project First step is always to work out what you have, what those assets do and what condition they are in. If you don’t know what you have and what condition they are in then how can you manage them ?

15. www.apv.net Vanuatu Project Analyse portfolios & Establish High Level Policies (Dec 2015) Develop and document Processes (Feb 2016) – including asset accounting Identify assets (Mar – April 2016) Develop valuation framework and hierarchies (April 2016) Develop capability of GoV staff to undertake own valuations (May 2016) – One-on-One Training and Group Workshops – Fair Value Pro software APV provides mentoring and quality review roles (May – Nov 2016) – Regular review and training Assets to be on books 31 Dec 2016

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19. Data collected Description Location Dimensions / Materials Components Condition Plus tailored data

20. www.apv.net Post Valuation Development of Asset Management Framework Develop Maintenance Plans Address Cyclone Pam backlog Develop SAM plan Ongoing inspection, valuation and condition assessment

21. www.apv.net Ultimately Assist Government of Vanuatu take a huge leap down its asset management journey – Increased autonomy and control – Improved budgeting – More tailored service delivery – Better use of resources – Better outcomes for their communities

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23. Final Thoughts There is no easy solution Each and everyone of you is unique Each requires a tailored, well planned strategy The strategy will need to evolve with ever changing circumstances Essential to integrate Asset Management with Asset Accounting With the right skills, tools and capability, the goal can be achieved.

24. www.apv.net Questions David Edgerton FCPA Email: David@apv.net Web: www.apv.net Mob: 0412 033 845 Work:(07) 3221 3499