1. Using Risk to Help Define Your Capital Plan
CNAM Working Group
February 2, 2016
Using Risk to Help Define Your Capital Plan
Troy Mander & Leanne Brannigan
Corporate Asset Management
Region of Peel

2. Agenda Asset Management at Peel
Using Asset Levels of Service & Risk Management for Asset Planning
Reporting
Take-aways

3. Asset Management at Peel

4. Peel’s Asset Management Status
Asset management is a way of business in Peel:
Asset Management Policy
Approved asset levels of service
Enterprise Asset Management Strategy
Enterprise Asset Management Plan
The annual Infrastructure Status & Outlook Report
A public report on the state & direction of Peel’s infrastructure
Enterprise Data Management Plan
Regular reporting to Executive Management:
State of the infrastructure
Infrastructure investment needs
Updates on key infrastructure issues & risks
Regular risk assessments for all assets
Program asset management plans in progress

5. Corporate Asset Management
Strategic
Direction
Priorities & Risk Tolerances
Strategic AM
Analysis,
Corporate Policy &
Standards
Detailed AM & Capital Planning
“Frontline” asset management
Capital & Operating Plans
Corporate Asset Management
Programs & Service Areas
Council & Executive Management
Asset Data, Criteria & Costs
Service Objectives
Capital Planning Directions
Needs, Priorities & investments
Challenge Assumptions

6. Modelling & Reporting Flow
Corporate Reporting
Program Data
Corporate Analysis

7. Using Asset Levels of Service & Risk Management for Asset Planning

8. The Risk Management Advantage:
Making better asset management decisions!

9. ? The Challenge: What are the organization’s asset priorities?
Water ?
Affordable Housing
Long Term Care
Waste Management
Roads
Shelters
Waste Water
What are the organization’s asset priorities?
Need a consistent systematic approach across very different asset types

10. Risk Management ? Risk #1 #2 #3 #4
A consistent measure to assess & prioritize asset needs across very different asset classes
Risk #1 #2 #3 #4

11. Risk
The chance of something happening that will impact the achievement of an organization’s objectives
Can be an opportunity or threat
Cannot be eliminated – only managed

12. Risk Management
Processes & structures directed towards the effective management of potential opportunities & threats
Continuous, proactive & systematic
Includes policies, procedures & practices to ID, prioritize, respond to, & monitor risks

13. Risk Management Advantages/Considerations
Provides a strategic, objective measure of organizational priorities
Powerful reporting capabilities
Initial assessments can be done with little data (improves as data matures)
Does not need to be overly precise for strategic decision-making
Rely on the expert judgement of staff
Factor in the data gaps as part of the risks
Can be modelled with simple tools (e.g. Excel)
Requires some knowledge of risk management & asset subject matter
Developing consequence & likelihood measures
Facilitating the risk assessment sessions – asking the right questions

14. Asset LOS Dictate Risk & Needs
Meeting Asset Levels of Service
Less risk to services
Fewer asset needs
Not Meeting Asset Levels of Service
More risk to services
More asset needs

15. Assessing the Priorities

16. Asset Levels of Service
Condition, performance & maintenance targets/requirements to:
Maintain state of good repair
Ensure adequate quality & quantity of service
Enhance service delivery
Control external risks to assets, services, public health & safety
Measure the state of the assets
Meet regulatory requirements (non-discretionary)
ALOS should describe targets to achieve/connect to a desired service outcome
Asset Level of Service
Service Outcome
Structurally sound bridges
Safe services
Adequate pipe capacity
Sufficient quantity of service
Adequate HVAC capacity
Sufficient quality of service
Back-up Power Supply
Service reliability

17. Tips for Developing ALOS
Start with the services
What are the service objectives?
What are the levels of service the customers expect to receive?
What are the regulatory requirements?
Define relevant ALOS for each asset class
Each asset class should be governed/defined by the same ALOS requirements
e.g.: allowable # of watermain breaks may differ between less critical local mains vs. more critical feedermains
Should be focused on what is necessary to control/manage the various risks to services
The ALOS targets should be practical & achievable to manage the risks to services at acceptable/reasonable levels
Do they satisfy applicable regulations?

18. Tips for Developing ALOS
Keep the ALOS simple
Objective based/focused
Minimize the number of ALOS
Only enough to determine whether the asset fully meeting the service need
Avoids the collection of too much data
Continually question “Why do we need this ALOS?”
ALOS targets & status are clearly measurable
Data to support the measures are or will be readily obtainable
Avoid using design criteria
Too detailed, prescriptive & numerous
A factor that contributes to the ALOS 17

19. Making the Connections: Customer Services Assets Risk Asset Levels of Service

20. Making the Connection: Customer Services Assets Risk Asset Levels of Service
Strategic
Service
Objective
CLOS
Major
Assets
Affected
Threats
Inherent
(Maximum)
Risk Level
Residual
(Target)
Risk Level
ALOS
Targets
Current
State of
Assets
Current Risk
Priority
A safe, reliable road network
Safe Roads
Pavement & Base
Bridges & Major Culverts
Retaining Walls
Storm Sewers
Storage Facilities
Pavement structure failure
Falling earth
Structural failure
Pipe/road collapse
Major roof leaks
High
Medium
Medium
Low
PCI = 70
Condition = B (Good)
Condition = C (Fair)
FCI = 10%
(Fair)
PCI = 55
Condition = D (poor)
Condition = C (Fair)
FCI = 12% (Fair)
High
Medium
Low #3 #5 #4 #1 #2 19

21. Reporting

22. Current Asset Needs & $’s
Measuring the Risk
Current Asset Needs & $’s
Asset
Class
Total Risk Mitigation over given time period
(e.g. 10 years)
Inherent (Unmitigated) Risk – Highest Estimated level of risk. No ALOS controls.
Target Risk – Desired risk after implementing all practical ALOS controls.
Current Risk – Estimated level of risk under present infrastructure conditions.
Projected Risk (over given time period) assuming no investments in the infrastructure
Estimated Risk assuming recommended capital investments are implemented over the given time period

23. Risk Profile

24. Risk Mitigation
Remaining Risk
10-year Mitigated Risk
$38.3M
$218.2M
$332.5M
$682.7M
Waste Management
Wastewater
Transportation
Water
10-Year Asset Management Investment Plan Recommendations
$20.5M
$263.2M
$339.1M
$729.6M
Proposed 10-Year Capital Plan

25. Take-aways: Developing ALOS & Risk Assessments
Don’t expect perfection the first time
It’s a learning journey
Start with something & ID opportunities for later improvements
Manage expectations
Keep it simple
Clear, meaningful measures & reporting
Process before software
Adapt software to the processes
Communicate, Communicate
Maintain open channels & an open mind
A mix of art & science
Combine expert judgement with facts & stats

26. Questions Contact: Troy Mander, Manager, Corporate Asset Management
(905) X4483