Risk Based Asset Management in Capital Works Delivery

1. Risk Based Asset Management in Capital Works Delivery Vito Albicini Former Director Infrastructure Services Bill Sharpe Manager Sustainable Asset Management Yarra City Council

2. A Common Story

3. A Common Story • Redevelopment Project funded in 2010 for $200,000 to accommodate New Tenant. Project was to be completed by February 2011 • 2012, Project on hold and not complete • Project cost now $400,000 due to poor scoping and planning. • Project target completion date June 2012 • Tenant not happy • Common story for Councils? • What do we do to stop this?

4. Key Messages • Poor Project Planning results in poor project delivery and unsatisfied customers. • Project risks need to be understood and managed. • Sound Capital Works Planning considers the ; • Capacity to deliver projects, • Life cycle cost of the project, • Environmental and social benefits • Quality and cost • Amount of stakeholder involvement, and • Councillor and Community expectations. • Project Implementation Plans are a tool to support good planning and delivery of projects. • Project Monitoring is also needed to ensure risks are managed and projects are delivered.

5. Corporate Risk Failure to appropriately manage and control capital works leads to uncontrolled and inappropriate expenditure resulting in financial and reputational loss.

6. What are Project Planning Risks? • Poor planning with limited renewal and replacement expenditure • Conflict with the long term financial plan • Poor prioritisation of works in Capital Works Program • Political influence on the priority of discretionary works • Poor project scope, understanding of project budget and project programming • Lack of understanding financial burden to Council – Life Cycle Costing • Not understanding environmental, social and compliance (Town Planning) implications

7. What are Project Delivery Risks? • Insufficient Project Management Skills across Organisation • Poor project management principles, processes and systems to manage projects • Lack of clarity of roles, responsibility and governance structure to deliver projects – Project Manager / Project Sponsor • Lack of appropriate consultation with stakeholders • No centralised electronic capital works programming, recording and tracking system

8. Risk Control Measures • Asset Management Policy 2011 • Capital Works Planning • Forecaster electronic capital works programming and management system • 30 Year Projected Capital Expenditure reporting process • Project Implementation Plans • Capital Works Monitoring • CAPMON, Executive CAPMON & PCG • Sustainable Infrastructure Network (SIN) • Project Management Principals and monitoring systems • Responsibilities clear between PM and PS • Staff professional and experienced

9. Capital Works Planning

10. Capital Works Planning Parameters • The Council Plan, the long term financial plan (LTFP) and the relevant Asset Management Plan (AMP) are the core considerations for proposing capital programs; • Projects are sorted into renewals, upgrades, new or compliance projects, initial priority ranking is provided by the Project Sponsor; • Projects submitted for consideration shall be given a priority if they are derived from a Strategic Plan, AMP, Master Plan, UDF (and the like) or from a specific Council or Executive resolution; • Projects to be submitted after integrated discussions across asset classes has occurred to encourage optimum use of resources, outputs and Project Implementation Plans developed ;

11. Capital Works Planning Parameters • Projects over $250k will be planned to be delivered over a three year period. The typical delivery model will be:- • Year 1 -Concept planning, consultation & sign off of project brief; • Year 2 - Detailed design and obtaining permits; • Year 3+ - Construction and defects liability monitoring. • Discussions and sign off between the Project Sponsor, (Service Manager), and Project Manager is required in the development of all projects. For renewal projects Asset Manager and Service Manager require sign off. For new and upgrade projects Service Manager requires sign off from Asset Manager and Project Manager; and • Projects without some level of mature planning will not progress. For example projects that are poorly scoped, or lackconsultation will not be supported

13. Capital Works Planning • PRE PLANNING Distribution of Adopted 10 Capital Works Program for review by Project Sponsors and Project Managers. (AUG) • STEP 1: INITIATION MEETING (Sept) • STEP 2: PREPARING PRIORITY LISTS FOR A PROGRAM (Sept – Mid Oct.) Assets Managers - Renewals Service Managers - Upgrades and New Works • STEP 3: DEVELOP DRAFT CAPITAL WORKS PROGRAM (Late Oct) Capital Works Planner • STEP 4: REVIEW OF DRAFT CAPITAL WORKS PROGRAM (Nov) SIN and Executive Team

14. Capital Works Planning • STEP 5: DECEMBER WORKSHOP WITH COUNCILLORS: Seek Council input in reviewing 5 year Capital Works and proposed New / Upgrade projects for Year 1 • STEP 6: COMPLETION OF PROJECT IMPLEMENTATION PLANS FOR DISCRETIONARY UPGRADES ANDNEW PROJECTS SELECTED BY COUNCIL. (Dec – Jan) Service Managers and Project Managers • STEP 7: SECOND REVIEW OF DRAFT CAPITAL WORKS PROGRAM (Feb) Capital Works Planner and presented to SIN and Executive • STEP 8: COUNCIL BRIEFING ON BUDGET (mid Feb.) – REFINEMENT OF YEAR 1 BUDGET AND WORKS • STEP 9: ADOPTION OF DRAFT CAPITAL WORKS PROGRAM (March – April) • STEP 10: FINALISATION OF THE CAPITAL WORKS PROGRAM (June)

15. Step 6 COMPLETION OF PROJECT IMPLEMENTATION PLANS FOR DISCRETIONARY UPGRADES ANDNEW PROJECTS. (Dec – Jan)

16. Project Implementation Plans • Roles and Responsibilities, establish Project Working Team and Project Control Group • Project Brief / Scope • Project Objectives / Outcomes • Project Assumptions • Environmental Issues to be considered • Social Implications to be considered • Project Risks • Project Constraints • Details of Other Income Sources • Detail of Planning / Approval Requirements (Permits/Required Approvals) • Community Engagement (Consultation) Process

17. Project Implementation Plans • Key Stakeholders • What ESD measures / Sustainability Initiatives are included in this project • Social Benefit Initiatives • Related Projects/Integration of Other Projects • Major Tasks – Responsibility, Timing & Costs • Life Cycle Cost / NPV / Annual Average Service Cost / Operational Costs – (New / Upgrades) • Implementation Plan (How will project be delivered e.g. traditional, single contract, fast track, design & construct etc.) • Procurement Plan (What types of contracts packages are proposed?) • Project Control (How the project will be monitored and managed?)

34. Capital Works Planning Key Benefits: • Asset Renewal funding meets 20 year Asset Management Plans • Legal / Compliance needs identified and funded (eliminating Council risks) • Upgrades and New funding determined by Council to support priority service needs • Councillors able to understand the cost to Council to fund all New / Upgrade desires listed in current Master Plans and Strategies • Organisation and Councillors have a better understanding of Councils financial sustainability with a 20 – 30 years list of works • Improved alignment with the Community and Council Plan • Improved pre-planning for Capital Works Implementation • Allocates resources to the highest priority • Better Governance as decisions based on facts.

35. Capital Works Monitoring • - CAPMON • - Exec CAPMON • - Exec PCG

36. CAPMON • Chaired by Manager Sustainable Asset Management Monthly reporting meeting with Project Managers to monitor progress of delivering all projects, renewals, upgrades or new. • Identify delivery risks and ensure control measures are in place • Guidance given to Project Managers and staff to assist with the delivery the projects • Project Managers are able to request changes to project priority and to seek direction on possible carryovers or deferrals.

40. Exec CAPMON / Exec PCG • Monthly reporting meeting with Executive to monitor progress of delivering due to significant number of politically sensitive / major projects that require Executive input or Executive Decisions • Minimises the need for Executives to attend all PCG meetings for individual projects • Maximise use of time of the Executive • Empowers Project Managers and staff to deliver the projects • Project Managers are required to report to Cap Mon Exec / Exec PCG. • Meeting split in two stages • Cap Mon Exec reviews the whole of the Capital Program • Exec PCG reviews major projects

43. Capital Works monitoring – Exec PCG

46. Capital Works Monitoring KEY BENEFITS: • 90% of Capital Program Delivered (previous average 83%) • Executive are briefed on status of Capital Works Program • Decision can be made to remove blockages • Risks are managed • Good Governance

47. Does it all work ?

48. Collingwood Leisure Centre – another Example

49. Collingwood Leisure Centre • Preplanning completed prior to provision of budget – Good Business Case • Project Implementation Plan in place • Good Governance structure in place that included Service Manager • Skilled internal Project Manager • Good Specifications • Good Architect, Consultants and Builder • Good Project Management Systems in place to Manage Time Cost Quality • Relationships well managed • Good Capital Works Reporting Tool • Regular reporting to PWT, Exec PCG and Council • The Result????

50. Collingwood Leisure CentreSuccessfully Delivered