Transcript Integrating Long Term Financial Planning and Asset Management: A CEO’s Perspective International Local Government Infrastructure and Asset Management Conference Melbourne, Victoria 2nd – 3rd of May 2012 Ray.

Integrating Long Term Financial Planning and
Asset Management:
A CEO’s Perspective
International
Local Government Infrastructure and
Asset Management Conference
Melbourne, Victoria
2nd – 3rd of May 2012
Ray Burton
CEO, Townsville City Council
Queensland
Australia
Presentation Overview
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10.
CEO Perspective
Financial management journey since 2008
Asset management journey since 2008
Community survey results
Capex prioritisation
Council roles
Integrating Financial and Asset Management
Next Financial and Asset management journey
CEO’s challenges
Key Messages
CEO’s Perspective
• Reporting to Council – Clarity
• Reporting to the Community
• Accuracy, Simplicity, Compliance
• Outcome important rather than process
Townsville City Council (TCC)
Queensland
› Population: 191,119
› 13th Largest City in Australia
› Households: 74,132
› Area: 3,736 Sq. km
› Staff: 1700
› Services include:
›Water Supply
›Sewerage
›Roads
›Stormwater
›Waste
›Recreational & Community
Townsville
Leadership >>
Who is Ray Burton?
Ask Ray and staff
forums are your
chance to ask
questions of the CEO
and your fellow
employees, or just
have your say.
Financial Management Journey
Since March 2008
March 2008
July 2009
July 2010
July 2011
2012
Consolidate revenue and finance systems
Revise regulatory pricing of water, sewerage and
waste
Align rating policy
Enhance modelling of general rates
Align accounting policies
Enhance budget reporting and presentation to
council (business-as-usual v projects, risks;
opportunities; level of service impacts)
Clarify roles and responsibilities: compliance V
management accounting; asset accounting V asset
management
Develop long term financial management plan LTFMP
link to asset base
Implement budget target – top down
Develop Strategies to deliver LTFMP; efficiencies
targets
Capex prioritisation – Integrated with asset
management
Expenditure Review Committee – 130+ initiatives, >
10M actioned
Reconciliation of Financial Asset Register with
Equipment Register
Financial & Asset Management
Results
Long Term Financial Forecast
Budget
2011/12
$'000
Revenue
General Rates
Utility Charges
Water
Sewerage
Refuse and Recycling
Trade Waste
Less Discounts and Remissions
Fees and Charges
Income from Investments and Financing
Contributions and Donations
Grants and Subsidies
Other
2012/13
$'000
2013/14
$'000
2014/15
$'000
174,153
Forecast Budget
2015/16
2016/17
2017/18
$'000
$'000
$'000
184,708
2018/19
$'000
2020/21
$'000
145,834
154,673
164,046
78,860
63,451
15,515
3,250
(29,015)
22,688
7,865
1,937
33,196
12,421
83,170
66,918
16,286
3,412
(30,691)
23,659
3,757
1,743
11,410
13,040
87,300
91,635
96,184
70,241
73,729
77,389
17,094
17,943
18,834
3,583
3,762
3,950
(32,408)
(34,240)
(36,158)
24,673
25,732
26,837
3,445 Current
3,672
Assets 4,221
1,569
1,413 Cash Assets
1,272
11,866
12,341 Receivables
12,834
13,695
14,378 Inventories
15,097
195,551
206,641
100,681
81,007
19,714
4,148
(38,102)
27,950
4,346
1,145
13,348
15,852
105,387
110,313
115,470
120,868
84,794
88,758
92,907
97,250
20,636
21,601
22,610
23,667
4,355
4,573
4,801
5,042
Budget
(40,109)
(42,223)
(44,450)
(46,797)
2011/12
2012/13
2013/14
2014/15
29,109
30,317
31,576
32,888
$'000
$'000
$'000
$'000
4,558
4,968
5,366
5,829
1,031 89,900 928 83,588 836 81,770753
90,091
13,882 25,753
14,437 25,419
15,014 26,753
15,615
28,172
12,518
16,645 11,485
17,477 11,818
18,351 12,162
19,268
Total Revenue
356,002
347,377
365,104
Less Expenses
Employee and Contract Labour Costs
Materials and Services
Depreciation & Amortisation
Finance Costs
Other
126,879
109,232
92,581
24,376
2,909
132,517
89,726
95,088
23,640
3,378
137,279
142,231
147,363
152,873
159,224
165,709
172,458
179,482
Investments
27,559
27,559
27,559
27,559
95,447
101,914Other
109,050
117,497
124,389 1,959
131,779 1,959
139,498
147,540
1,959
1,959
101,142
107,869Property,
115,236
123,126
136,881
144,3614,379,117
151,889 4,631,460
Plant and
Equipment130,221
3,957,416
4,152,870
23,323 Total
22,967
22,456
20,421
19,589
18,5784,408,635
17,317 4,660,978
Non-Current
Assets 21,413
3,986,934
4,182,388
3,006
3,035
3,065
3,098
3,134
3,168
3,202
3,338
Total Expenses
355,977
344,349
360,197
Prepayments
Current Assets
384,518Other
405,168
425,640
Total Current Assets
Capital Income
Contributions, Grants, Subsidies and Donations
Gain / (Loss) on sale of Capital Assets
Total Capital Income
Increase/(Decrease) in Operating Capability
25
3,028
119,863
(2,688)
94,288
-
117,175
94,288
117,200
97,316
230,743
243,829
1,963
1,563
1,628
138
2,014
469,508 1,047
493,224
518,212
129,239
123,435
124,327
446,929
Forecast Budget
2016/17
2017/18
$'000
$'000
2015/16
$'000
2018/19
$'000
2019/20
$'000
2020/21
$'000
93,839
29,659
12,888
1,764
4,131
142,281
98,377
31,164
13,271
1,839
5,412
150,063
107,045
32,723
13,667
1,923
6,649
162,007
113,153
34,363
14,078
2,011
7,958
171,563
120,547
36,088
14,504
2,104
9,341
182,584
128,889
37,902
14,945
2,200
10,801
194,737
27,559
1,959
4,882,258
4,911,776
27,559
1,959
5,131,001
5,160,519
27,559
1,959
5,341,904
5,371,422
27,559
1,959
5,557,529
5,587,047
27,559
1,959
5,777,499
5,807,017
27,559
1,959
6,029,358
6,058,876
4,796,495
5,054,057
5,310,582
5,533,429
5,758,610
5,989,601
6,253,613
10,832
20,097
9,431
27,508
67,868
11,572
21,116
9,772
28,571
71,031
12,447
22,653
10,136
29,813
75,049
13,162
24,394
10,550
30,991
79,097
13,928
26,223
10,981
32,216
83,348
14,728
28,120
11,430
33,490
87,768
15,562
25,821
11,897
34,813
88,093
1,695
3,041
135,517
Non Current Assets
Total Assets
Surplus/(Deficit) before capital income
218,359
2019/20
$'000
378,016
4,116,173
397,170
418,007
Current Liabilities
Payables
4,907
6,502
7,998
7,633
Interest Bearing Liabilities
Provisions
Other
124,094 Total
157,472
Current 152,564
Liabilities 146,135
-
-
-
-
437,389
4,305,823
457,126
4,532,962
478,097
499,566
11,530
9,569
12,382
15,127
19,735
21,414
8,477
8,784
24,550
25,499
103,831 64,292
103,809 65,266
106,234
10,162
18,646
20,897
9,102
26,485
135,796
66,646
9,540
-
-
-
Total Liabilities
23,764
341,222
16,025
381,011
Receipts
Net Rates,
Utility, Fees
& Charges &
other receipts448,879
465,783
458,961
455,087
Interest Received
Net Community Assets
3,650,390
3,846,862
4,077,875
Payments
Materials and Services and Employee Costs
343,654
445,666
Finance 244,498
Costs
3,590,033
Other 3,363,716 3,461,032
Community Equity
Asset revaluation reserve
Retained surplus
Other Reserves
Total Community Equity
Budget
2011/12
-
Non-Current Liabilities
157,472Payables
152,564
146,135
103,831 23,362
103,809 22,134
106,234 22,935
135,796
Interest Bearing Liabilities
361,630
355,216
Cash Flow from
Operating
Activities 349,319
Provisions
16,499
16,345
16,187
129,001
163,974
160,562
153,768
113,371
116,191
121,361
154,442
Total Non-Current Liabilities
401,491
393,695
388,441
124,094
42,176
42,176
42,176
Net Cash Provided by Operating Activities
2012/13
25,541
$'000
24,624
$'000
324,106
15,859
364,589
307,453
15,690
348,684
347,775 423,733
343,955
7,865
3,757
435,620
4,886,849
Budget Forecast
2013/14
2014/15
2015/16
2016/2017 2017/18
26,585
27,671 $'000 28,802
29,980
$'000
$'000
$'000
$'000
293,059
15,516
335,160
360,325
414,257
3,445
4,347,616
4,618,437
551,433
3,754,007
42,176
661,692
895,288
(24,823) 776,336
(23,609)
(23,291)
3,914,569(2,402)
4,068,337
(2,487) 4,181,708
(566)
42,176
42,176
42,176
4,347,616
4,618,437
(246,086)
(226,092)
5,604,210
2020/21
$'000
462,900
4,968
486,133
5,366
510,569
5,829
(298,348)
(19,552)
(1,728)
(312,752)
(18,540)
(700)
(327,755)
(17,278)
(537)
5,887,441
(245,336) (257,524) (271,295) (284,550)
1,017,393 (22,422)
1,142,774
(22,935)
(21,378)1,271,563
(20,386)
4,297,899
4,419,260 (627)4,573,702
(585)
(605)
(655)
42,176
2019/20
$'000
42,176
42,176
123,131
130,834
139,778
148,240
159,507
170,828
(147,596)
49,298
1,200
(3)
(180,605)
78,122
1,200
(26)
(188,700)
90,526
1,200
(50)
(204,595)
100,184
1,200
(75)
(163,887)
51,597
1,200
(90)
(171,201)
51,662
1,200
(118)
(178,296)
50,503
1,200
(145)
(187,084)
53,167
1,200
(173)
(196,196)
55,833
1,200
(203)
(97,317)
(97,101)
(101,309)
(97,024)
(103,286)
(111,180)
(118,457)
(126,738)
(132,890)
(139,366)
(18,521)
15,000
(19,735)
15,000
(21,414)
12,000
(20,897)
4,000
(20,097)
6,000
(21,116)
10,000
(22,653)
9,000
(24,394)
7,000
(26,223)
5,000
(28,120)
Net Cash Provided by Financing Activities
(18,521)
(4,735)
(6,414)
(8,897)
(16,097)
(15,116)
(12,653)
(15,394)
(19,223)
(23,120)
Net Increase/ (Decrease) in Cash Held
(33,509)
(6,312)
(1,818)
8,321
3,748
4,538
8,668
6,108
7,394
8,342
123,409
89,900
83,588
81,770
90,091
93,839
98,377
107,045
113,153
120,547
4,077,875
(199,339)
95,873
6,149
-
379,426
399,461
419,788 366,172
440,811
401,142
385,391
3,672
4,221
4,346
4,558
5,357,468
2018/19
$'000
233,894
14,205
278,079
114,242
3,846,862
95,524
(234,008)
254,716
14,105
297,623
105,905
3,650,390
82,329
5,119,172
275,836
14,287
317,794
4,886,849
5,119,172
5,357,468
5,604,210
5,887,441
Cash Flow from Investing Activities
Payments for Property, Plant & Equipment
Subsidies, Donations and Contributions for capital expenditure
Proceeds from sale of Property, Plant & Equipment
Other
Net Cash Used in Investing Activities
Cash Flows from Financial Activities
Proceeds from Borrowings
Repayment of Borrowings
Cash at Beginning of Reporting Period
Cash at End of Reporting Period
89,900
83,588
81,770
90,091
93,839
98,377
107,045
113,153
120,547
128,889
Asset Management Journey
Since March 2008
March 2008
July 2009
July 2010
Asset Management Organisational Structure | Roles &
Responsibilities
Asset Management Strategy Plan 2008 - 2011
Asset Management Policy | Leadership | Communication
Structure
10 Year Capex Consolidation (AiCE) System | Prioritisation
Optimise Asset Management Systems
Asset Management Plans:
>ROADS > STORMWATER > WATER > WASTEWATER
> PARKS > FLEET > BULIDINGS > ICT
Asset Owner (Custodianship)| Service Provider Profiling
All Assets Portfolios Renewal Modelling: My-Predictor
Current Level of Services Consolidation for Review
July 2011
Asset Management Strategy Plan 2011 - 2015
Summary Asset Management Plan
Long Term CapEx Prioritisation System
Community Attitude Survey (Engagement) 2011
Operation & Maintenance Management
Strategy Plan 2011 – 2015
Asset Management
Performance Management Plan 2011 - 2015
Financial & Asset Management
Results
Asset and Population Growth
Forecast Growth in Assets & Population
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
Assets (Annual Capex/Total PPE) %
Population %
Townsville City Council (TCC)
Queensland
›Total Assets Repl. Cost:
$ 5.1B
›Annual average CapEx: $187M
Replacement Cost:
$1.5B
Pipes: 2646km
Dams: 2
Replacement Cost:
$1B
Pipes: 1377km
Replacement Cost:
$1.2B
Length : 1614km
Replacement Cost:
$ 270M
Area : ha
›Annual average OpEx: $360M
Replacement Cost:
$459M
Pipes: 574km
Replacement Cost:
$200M
Replacement Cost:
$80M
Replacement Cost:
$20M
Financial & Asset Management
Results
Operating Result
$'000
Operating Result - Opex % Assets
30,000
14.0%
20,000
12.0%
10,000
10.0%
0
-10,000
8.0%
-20,000
6.0%
-30,000
-40,000
4.0%
-50,000
2.0%
-60,000
-70,000
0.0%
Operating surplus/(deficit) (LHS)
Opex % Assets (RHS)
Financial & Asset Management
Results
Debt and Capex
$'000
Debt, Capex, Opex % Assets
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
Capex (LHS)
Debt (LHS)
Financial & Asset Management
Results
Community Engagement | Capex Prioritisation
TOWNSVILLE CITY HAS THE ASSET INFRASTRUCTURE IN PLACE TO DELIVER THE
SERVICES AT PRESENT AND IN THE FUTURE SUSTAINABLY …
Community
Attitude Survey
Service
Level
Long term
Capital
Investment
Prioritisation
3 Years
Financial & Asset Management
Results
Community Engagement
 Over half (55.3%) of all Townsville
residents were either satisfied or very
satisfied with Council’s delivery of
services and facilities in the past 12
months.
 Total of 1003 interviews were
conducted
 52 services and facilities measured in
this survey
Further analysis of the survey data was conducted
Importance Scale:
Importance
oCrucial – Must Have
oImportance – Certainly
Expect
oNice to have – but not
important
oNot Very Important
oUnnecessary
Community Attitude Survey 2011
Results
e.g.: Public Toilets Service Levels Index
Suburbs within 15 km from
Flinders Square
Importance Scale:
oCrucial – Must Have
oImportance –
Certainly Expect
oNice to have – but not
important
oNot Very Important
oUnnecessary
Community Attitude Survey 2011
Results
e.g.: Public Toilets Service Levels Index
Suburbs > 15km and < 30km
from Flinders Square
Importance Scale:
oCrucial – Must Have
oImportance –
Certainly Expect
oNice to have – but not
important
oNot Very Important
oUnnecessary
Community Attitude Survey 2011
Results
e.g.: Public Toilets Service Levels Index
Suburbs > 30km from
Flinders Square
Capital Investment Prioritisation
Results
Quadruple Bottom Line (QBL) Risk Appraisal
Teams of experts assess the Council’s CapEx plan, focusing on four risk areas (Governance,
Social, Environmental and Finance) at Program level and the scores are combined to give an
overall “Average Priority Score” (APS), which ranks projects at program level by importance
within all Departments.
An additional area is assessed for Renewal Projects, and the scores give an overall “Average
Priority Score” (APS), which ranks projects at program level by importance.
The Average Priority Score system is used as an aid in the decision-making process to identify
imperative projects that should be completed.
Low Scores
Projects
CapEx Cost Running Total
Medium Scores
Projects
High Scores
Projects
Capital Investment Prioritisation
Results
Quadruple Bottom Line (QBL) Risk Appraisal
Financial
Services
Budgeting
High Priority
Projects
CapEx
Performance
Medium Priority
Projects
> Performance Indicators
>Services distribution %
> O&M Impact
Councillors
Workshop
EMT Approved
Draft CapEX
Executive
Management
Team Review
Council Affordability (LTFMP)
Low Priority
Projects
Re-distribution of
non-approved
projects
Councils’ Roles
Integrated Financial & Asset Management
COUNCIL
TO PROVIDE THE LEVEL OF
SERVICES, THE CURRENT AND
FUTURE COMMUNITY WANT AND
AGREED TO PAY FOR…
TO ENSURE TOWNSVILLE HAS
THE INFRASTRUCTURE IN PLACE
TO DELIVER THE SERVICES AT
PRESENT AND IN THE FUTURE,
SUSTAINABLY …
Service Delivery
Community
Engagement
Cost of Services
Level of Services
Capital Investment
New | Upgrade Capital
Renewal Capital
Operations and Maintenance
TO OPERATE AND MAINTAIN
ASSETS AND SERVICES AT LOWEST
LIFECYCLE COST
TO MAKE DECISIONS REGARDING
LEVEL OF RATES, COST
EFFECTIVENESS, LEVEL OF DEBT,
TIMING AND LONG TERM
SUSTAINABILITY
Operational Cost
Maintenance Cost
Long Term Financial Management Plan (LTFMP)
Budget
Integrating Financial & Asset Management
Integrating Financial & Asset Management
Council Financial Performance
Increasing Capital Demand
FM
AM
FM
AM
FM
AM
Increasing Cost of Services
Increasing Operational costs
Optimum new/upgrade investment
Quadruple Bottom-line Capex Risk
assessment
Capex Prioritisation
Efficiency of Operational Costs
Efficient Lifecycle cost Management
Improve Pro-active Maintenance & Reduce
Reactive Maintenance
Optimum Cost of Services
Community Survey 2011
Current ,Agreed & Desired Level of Services
Development
Next Practice Financial & Asset Management
Integrating
Financial & Asset Management
What Next?
Financial & Asset Management Journey
From 2012
FM
AM
Upgraded Systems
Agree Level of Services Review
Standardise charts of accounts and costing for work
orders and projects WBS
Operation & Maintenance Management
Strategy 2011 – 2015
Develop Business Intelligence to enhance reporting
Use of alerts and exception reporting; KPIs and lead
indicators
Consolidate Fixed Asset Register (FAR) and Equipment
Register (ER)
Asset Management Performance
Management Plan 2011 - 2015
Councillors Asset Management Workshop
Asset Management Systems
Review
Critical Assets
Management Plan
Develop enhanced workflow and process automation
ISO 55000 Awareness Plan
Enhance LTFMP for Commercialised business units,
target return on capital
Financially | Carbon Tax Informed
Asset Management Plans
CEO’s Roles & Challenges
Integrating Financial & Asset Management
• Maintain integrity of process
• Funding opportunities
• Effective investment
• Focus long term sustainable
• Competing priorities (personalities)
• Infrastructure liabilities
• Ineffective reactive maintenance
• Short term budget
Townsville City Council
Integrating Financial & Asset Management
Key Messages
Engage Community
Get the foundations right – Structure, Systems,
Process, Policy
Integrate Key Planning Process
Integrating Long Term Financial Planning and
Asset Management:
a CEO’s Perspective
Questions…
Ray Burton
CEO , Townsville City Council