1. Institutionalising Integrated Asset Management for Accurate Reporting
By: Emmanuel Ngcobo
Chairperson: KZN Municipal Asset Management Forum

2. Municipal Asset Management Practises
Tagging assets with Barcodes/Asset Numbers
Verification of Assets (Good, Average, Poor)
Tracking Movements of Assets (Locations)
Asset Take-ons/Write-offs; Disposal Processes
Updating Asset Registers with changes as per above
Capitalisation of Completed Projects from WIP/AUC and Componentisation
Calculation of Depreciation; Monthly Reconciliations
AFS Disclosures (Note 10;11;12; Appendix B)
The financial statements are free from material mis-statements (in other words, a financially unqualified audit opinion) and there are no material findings on reporting on performance objectives or non-compliance with legislation.
CLEAN AUDIT OUTCOME

3. ‘’Decaying municipal assets place service delivery in peril’’
‘’Poor municipal infrastructure causes power cuts: energy minister’’
‘’At present, several smaller municipalities are struggling to operate and maintain their services infrastructure in a cost-effective and sustainable manner.’’
‘’Decaying municipal assets place service delivery in peril’’
‘’New data shows that municipalities are failing to sustain assets’’ Oct 2016

4. Asset Management Concept
Asset management, broadly defined, refers to any system that monitors and maintains items of value to an entity or group. It may apply to both tangible assets such as buildings and to intangible concepts such as computer systems and software. This being a systematic process of acquiring, operating, maintaining, upgrading, and disposing of assets cost-effectively.

5. Acquire Maintain Assess Value Dispose COST EFFECTIVE VALUE CHAIN
PLANNING
COST EFFECTIVE
VALUE CHAIN
Acquire
Maintain
Assess
Value
Dispose

6. Asset Management Simplified
Scarce Resources/Funding Constraints
Critical/Strategic Assets
Impact of Failure
Prioritise
Higher Revenue Generating Assets
Strategically located Assets
Tourism Nodes/Areas
Industrial Areas (*loss of jobs/businesses)
Sensitive Areas….
RISK ASSESSMENT

7. Asset Management Concept
Acquisition:-
> IDP Alignment > Master Plans > Budget/SDBIP Stages > Procurement Plans > Bid Committees (BSC)
Recording:-
> As-Builts Drawings > Warranties/Guarantees > GIS Information
Operating and Maintenance/Monitoring:-
> O & M Plans driven by conditional assessments as required by GRAP17
Disposals:-
> Decommissioning (Regulations) > Attaining Best Possible value on Disposal

8. IDP/Master Plan/ MTERF Budget
Acquire
Maintain
Assess
Value
Dispose
Infrastructure Asset Management Plan
Investment Plan
Operations and Maintenance Plan
IDP/Master Plan/ MTERF Budget

9. Asset Management Concept: Municipal Point of View
‘’To provide an agreed level of service in the most cost effective manner for present and future communities…’’

10. Asset Management Concept: Detailed Point of View
‘’A strategic and integrated set of comprehensive processes (including management, financial, operating, maintenance and engineering) to gain lifetime effectiveness, return from physical assets and utilization while considering risks’’

11. Long-Term Direction/ Sustainability
Asset Management
(Service Delivery)
Strategic Management
Socio-Economics
Accounting
Engineering
Information Technology
Human capital (Skills)
Long-Term Direction/ Sustainability
Interrelationships / Interdependencies

12. Municipal Asset Management Practises
Tagging assets with Barcodes/Asset Numbers
Verification of Assets (Good, Average, Poor)
Tracking Movements of Assets (Locations)
Asset Take-ons/Write-offs; Disposal Processes
Updating Asset Registers with changes as per above
Capitalisation of Completed Projects from WIP/AUC and Componentisation
Calculation of Depreciation; Monthly Reconciliation
AFS Disclosures (Note 10;11;12; Appendix B)
The financial statements are free from material mis-statements (in other words, a financially unqualified audit opinion) and there are no material findings on reporting on performance objectives or non-compliance with legislation.
CLEAN AUDIT OUTCOME

13. ‘’Decaying municipal assets place service delivery in peril’’
‘’Poor municipal infrastructure causes power cuts: energy minister’’
‘’At present, several smaller municipalities are struggling to operate and maintain their services infrastructure in a cost-effective and sustainable manner.’’
‘’Decaying municipal assets place service delivery in peril’’
‘’New data shows that municipalities are failing to sustain assets’’ Oct 2016

14. The Asset Management Strategy
Outlines how the organisation’s asset portfolio will
support its service delivery
Develops an asset portfolio to support service
delivery
Sets asset management priorities
Undertakes gap analysis (available vs. required)
Sets performance levels needed to achieve efficient
service performance
Provides the basis for the more detailed Asset
Management Plan (Life-Cycle approach)

15. Practical Implementation
Municipal Leadership buy-in & embrace of Asset
Management
Proper Asset Management Structure (and human
resources)
Defined municipal processes & procedures to ensure synergy & working relations for all stakeholders
Proper IT Systems (Inclusive of GIS; O & M data recordings)

16. Benefits of an Integrated Strategic Asset Management Approach
Asset reliability and uptime
Maintaining maximum available capacity
Maintaining security, worker & public safety
(Reduced Risk Exposure)
Avoidance of law suits and regulatory fines
Eliminates/Minimizes higher cost of repairs and
reactive maintenance (Higher returns on strategic assets)
Sustainable provision of municipal services

17. MSCOA SEGMENT
ADDRESS
Funding
Source of Income for Repairs & Maintenance
Funding known upfront i.e. during planning phase
Differentiating Opex/Capex at planning phase
Function
Recording standardisation/Uniformity of asset categories
Item
Asset/Expenditure
Regional Indicator
Where is this Assets/For which Community
Classification
Organisational/vote
Project
Operational/Capital - Links the Fixed Asset Register (FAR) automatically aligns with the IDP and MTREF
Costing
Item Impact on the ‘Business’ (Tariffs/Cost Drivers)

18. mSCOA Asset Management System…
"Allows budgeting for ""new capital"" projects requested in the integrated development plan (IDP).“ "Anticipates completion and subsequent operational costs of these ""new capital"" projects.“ "Calculates existing and anticipates new planned assets' maintenance, insurance and a percentage of ""un-planned"" maintenance.“ "Calculates depreciation, taking into account the impact of major repairs.“ "Calculates profit or loss on planned disposals.“

19. mSCOA Asset Management…
"Provides for a (contract) retention payment schedule.“ "Provides for grant and work-in-progress (WIP) or contract management payment schedules to assist the main budget module with its forecasting and cash flow management.“ "Supplies the general ledger's main budget module planned budgets with the full mSCOA segments as a budget line. This functionality should be able to provide this for both expenditure and balance sheet items.“ "Provide the asset maintenance plan."

20. SIPDM_NATIONAL TREASURY

21. …..www.municipalassets.co.za…. “Leaders are Visionaries
Asset Managers think for Future Communities
…Asset Managers are Leaders”
Do Your Part
…..