1. ASSET MANAGEMENT

2. The cornerstone of long term financial sustainability
Financial sustainability has been the ‘buzz-word” in the municipal space for a considerable number of years, and with good reason.
But what are we really talking about? What is financial sustainability?
Although there are numerous theoretical definitions for financial sustainability, it effectively relates to being able to be there for your beneficiaries in the long term, or simply put…
..the ability not to stop the provision of services or sacrifice quality because we ran out of money.

3. The cornerstone of long term financial sustainability
How do we achieve sustainability in the future?
Not only do municipal assets form the basis for revenue generation, but the extent and quality of services are products of the manner in which these assets are operated and maintained.
Definition of asset management (LGIAMG)
The process of decision making, planning and control over the acquisition, use, safeguarding and disposal of assets to maximise their service-delivery potential and benefits, and to minimise their related risks and costs over their entire life.

4. The cornerstone of long term financial sustainability
Building on asset management
Sustained
Reliable
infrastructure
&
Service delivery
revenue
O&M
LOS & SOS
Lifecycle
cost
Asset
management
Demand

5. EXAMPLE: STRATEGIC OBJECTIVES
Alignment of strategic objectives and asset management objectives
Prioritise 70% of investment in revenue generating
assets 3
Target investments in targeted growth areas
(60% of all capital spending)
Eradicate service access backlogs by 2030
Maintain the productive capacity vested in assets
by ensuring that asset consumption does not
exceed 50% at portfolio level
Reduce water distribution losses to below 30%
Target 20% of total renewal expenditure as
green renewal
A safe and workable workforce
Social upliftment
Unifying city identity yet celebrating diversity
Financial health and sustainability
Environmental sustainability
Economic development
Spatial efficiency
EXAMPLE: STRATEGIC OBJECTIVES 6 5 4 1
EXAMPLE : ASSET MANAGEMENT OBJECTIVES 2

6. Alignment of strategic objectives and asset management objectives
Adopted from

7. Asset management plans – Value chain
The asset management system reaches across virtually all areas of a municipality, and so does its asset management plans.
An asset management plan deals with all activities associated within an asset portfolio:
regulations and objectives
needs (demand)
conceptualisation
funding
procurement and creation
operations
performance and maintenance
renewal
decommissioning and rehabilitation
accounting
Adopted from

8. Asset management plans – Value chain

9. Portfolio planning processes Implementation authorised
Asset management plans – Value chain
Needs and opportunities, taking into account the current asset portfolio no
Preparation & briefing
Infrastructure planning
Strategic resourcing
Project initiation
Does the project require a feasibility study?
Portfolio planning processes
Prefeasibility
Feasibility
New, renewal, upgrading?
yes
Project planning processes
Proceed with procurement
Project terminated
Is there sufficient information to proceed?
Implementation authorised
Implementation deferred
Concept & viability
Design development
Production information
Manufacture, fabrication and construction information
Detailed design processes
Works
Hand over
Site processes
Package completion
Close out processes
Adopted from

10. what exactly needs to be funded? Do we really know?
Bridging the infrastructure funding gap for sustainable service delivery
Even the most dynamic economies are faced with infrastructure funding constraints.
Whilst striving to bridge the gaps of the past, we find ourselves faced with daily outcries for higher levels and standards of services, both in rural and urban communities. Coupled with the challenge of ageing infrastructure, the funding gap keeps expanding.
A variety of funding models and instruments exists,
but…
what exactly needs to be funded?
Do we really know?

11. Lifecycle strategies and plans
Bridging the infrastructure funding gap for sustainable service delivery
What does the future hold 10, 15 or 30 years from now?
What needs to be funded?
Customer
profiling
Future
demand?
Lifecycle strategies and plans
Infrastructure
profiling

12. Drivers of effective asset management
Currently, what drives asset management in South African Municipalities?
Legislation and regulation (GRAP, MFMA, SIPDM, SPLUMA, SANS 55000)
Reactive needs identification
Effective asset management is a product of the alignment of:
objectives
needs
resources
and the discipline to meet the objectives with in the confinements of regulations and constraints.

13. Drivers of effective asset management
So what are the drivers of effective asset management?
Asset management practices
Service provision models
Leadership
and teams
Policy,
Strategy
and plan
Information systems
Risk
management
Monitoring and improvement

14. THE END