1. Why PS 3150? Gordon Sparks, Ph.D.,P.Eng Gordon Sparks, Ph.D.,P.Eng

2. Presentation Outline Presentation Highlights Presentation Highlights –The Points To Remember PS 3150 – Background PS 3150 – Background Prepared by: Norm Snelgrove, CA The Bigger Picture The Bigger Picture –The Role of, and Relationships Between:  Financial Accounting  Asset Management  Financial Planning Some Infrastructure Management Examples Some Infrastructure Management Examples Summary & Conclusions Summary & Conclusions

3. Presentation Highlights

4. Why PS 3150? The Infrastructure Deficit!

5. Fact # 1 -- many – maybe even most – municipalities do not have the financial resources – (that is tax base) - that will be required to maintain, repair and rehabilitate the infrastructure they own, going forward – without financial help from the Province and / or Feds! many – maybe even most – municipalities do not have the financial resources – (that is tax base) - that will be required to maintain, repair and rehabilitate the infrastructure they own, going forward – without financial help from the Province and / or Feds!

6. PS 3150 is a first step -- Toward the assembly of some of the information required – namely -- Toward the assembly of some of the information required – namely -- – inventory –age –value for a municipality to determine the amount and timing of the dollars required to maintain, repair & rehabilitate the infrastructure required to deliver the services upon which our standard of living will depend going forward. for a municipality to determine the amount and timing of the dollars required to maintain, repair & rehabilitate the infrastructure required to deliver the services upon which our standard of living will depend going forward.

7. There are 2 other parts -- Part #2 – the Asset Management Plan Part #2 – the Asset Management Plan Part #3 – the Long Term Financial Plan Part #3 – the Long Term Financial Plan

8. INVENTORY OF ASSETS Age – Value- (& Condition) Financial Accounting Asset Management Financial Planning Management of Infrastructure for Service Delivery The Bigger Picture PS 3150

9. Part #2 – The Asset Management Plan

10. The Asset Management Plan -- determines the amount and timing of expenditures required to sustain your community’s infrastructure (roads, sewer and water systems, community center etc,) going forward --- determines the amount and timing of expenditures required to sustain your community’s infrastructure (roads, sewer and water systems, community center etc,) going forward --- While minimizing life cycle costs? While minimizing life cycle costs?

11. The Asset Management Plan -- Maximizes the “Bang for the Buck” Maximizes the “Bang for the Buck” It is all about “Working Smarter” – Not Harder! It is all about “Working Smarter” – Not Harder! Being “Proactive” in terms of maintenance as opposed to “Reactive”. Being “Proactive” in terms of maintenance as opposed to “Reactive”.

12. Fact # 2 -- It is possible to reduce the life cycle costs associated with maintaining, repairing, and rehabilitating infrastructure assets by 30% - 50% by taking a “Proactive” approach to maintaining your infrastructure. It is possible to reduce the life cycle costs associated with maintaining, repairing, and rehabilitating infrastructure assets by 30% - 50% by taking a “Proactive” approach to maintaining your infrastructure. Fix it before it is broken - not after! Fix it before it is broken - not after! Do the Right Thing @ the Right Time – Consistently! Do the Right Thing @ the Right Time – Consistently!

13. Part #3 – The Long Term Financial Plan

14. The Long Term Financial Plan Presents the long term plan for where the required financial resources will be obtained. Presents the long term plan for where the required financial resources will be obtained.

15. INVENTORY OF ASSETS Age – Value- (& Condition) Financial Accounting Asset Management Financial Planning Management of Infrastructure for Service Delivery The Bigger Picture Part #1 – PS 3150 Part #2 -Asset Management Part#3 – Financial Plan

16. Part#1: PS 3150 Background Prepared by: Norm Snelgrove, CA

17. 17 The Public Sector Accounting Board (PSAB) has issued new standards that will come into effect for fiscal years starting January 1, 2009. PSAB requires that local governments record their TCA on the statement of financial position (i.e. balance sheet) and amortize them over their useful life. Background - new rules

18. 18 Why should municipalities do this? Lack of knowledge about the costs of using assets and fully maintaining them limits a council’s ability to: make important financial decisions, or know if existing financing policies are appropriate and adequate. Background … But WHY?

19. 19 Provides an inventory against which maintenance, renewals, replacement, financing and rate setting decisions can be evaluated Starting point for evaluating the condition of infrastructure on a regular basis & highlighting changes in its condition over time Background – the benefits BENEFITS associated with having better information with regards to the stock of infrastructure:

20. 20 Background - more benefits Provides an understanding of total service costs Establishes full cost service fees and charges Provides base to establish full cost budgets Improves accountability for allocation and use of resources

21. 21 For the past several years there has been continued discussion on the Canadian infrastructure deficit. What’s the Infrastructure Deficit? Background - Infrastructure Deficit

22. 22 It has been estimated that it would cost as much as $120 billion to upgrade all infrastructure assets in Canada to an acceptable condition. It’s the concept that our federal, provincial and municipal assets are wearing out at a faster rate than they’re being replaced. Background - Infrastructure Deficit

23. 23 The goals of PS 3150 are to: Quantify the infrastructure deficit, andQuantify the infrastructure deficit, and Permit municipalities to develop capital investment plans that will allow them to achieve and maintain community sustainability.Permit municipalities to develop capital investment plans that will allow them to achieve and maintain community sustainability. Background - Infrastructure Deficit

24. 24 Background - Infrastructure Deficit In the past, all levels of government have tended to ignore asset replacement. Why? … Keep tax rates down. The result of this approach? …a general deterioration of all capital assets (infrastructure) and government’s overall financial position. The effect at the municipal level? …pushing the financial implications of infrastructure replacement requirements on to future councils and taxpayers.

25. So Why PS 3150? SUMMARY Because – Because – –With the current approach the condition of Canada’s overall infrastructure is deteriorating  Unsustainable situation! –We are downloading the cost of repairing and rehabilitating our public sector infrastructure, that supports our quality of life, onto the next generations namely - our kids and grandkids! It is time to get control of this situation! It is time to get control of this situation!

26. Part #2: The Bigger Picture The Role of, and Relationships Between: - Financial Accounting - Asset Management - Financial Planning

27. Unfortunate Truth You can not manage — What you do not measure!

28. The overall need is to: Be able to provide estimates of the timing and amounts of funding municipalities will need to maintain, repair and replace their infrastructure today, and in the future. Be able to provide estimates of the timing and amounts of funding municipalities will need to maintain, repair and replace their infrastructure today, and in the future.

29. You require the information and analytical methods that will - Enable you as the Administrators, to determine the minimum amount and timing of the dollars required to sustain your communities going forward. Enable you as the Administrators, to determine the minimum amount and timing of the dollars required to sustain your communities going forward.

30. This information will -- Enable your councils, with your support, to establish funding priorities and plans for short and long term funding support for your communities infrastructure. Enable your councils, with your support, to establish funding priorities and plans for short and long term funding support for your communities infrastructure.

31. This information is also needed to: demonstrate to the provincial and federal levels of governments, the needs and priorities related to municipal infrastructure. demonstrate to the provincial and federal levels of governments, the needs and priorities related to municipal infrastructure. Make the case for financial support! Make the case for financial support!

32. In short -- with full details relating to the inventory of infrastructure assets including: with full details relating to the inventory of infrastructure assets including: – age, –value –(and condition) – municipalities will be able to make a much better case to the senior levels of government for financial help to support the infrastructure upon which our quality of life depends. municipalities will be able to make a much better case to the senior levels of government for financial help to support the infrastructure upon which our quality of life depends.

33. Clearly -- from the information available -- Municipalities are going to need financial help from Provincial and Federal levels of government to support municipal infrastructure going forward. Municipalities are going to need financial help from Provincial and Federal levels of government to support municipal infrastructure going forward.

34. It is only reasonable that -- Municipalities be able to: Municipalities be able to: –First – demonstrate their need for money in a clear, credible manner (auditable). –Second – demonstrate that they are managing the resources available “prudently”. –Getting “value for money”

35. PS 3150 is -- The financial accounting part of the bigger management information puzzle. The financial accounting part of the bigger management information puzzle.

36. INVENTORY OF ASSETS Age – Value- (& Condition) Financial Accounting Asset Management Financial Planning Management of Infrastructure for Service Delivery The Bigger Picture PS 3150 – First Step!

37. Financial Accounting-

38. Accounts for historical transactions Accounts for historical transactions

39. Asset Management --

40. Management of the maintenance, repair, rehabilitation & replacement of infrastructure assets Management of the maintenance, repair, rehabilitation & replacement of infrastructure assets proactive not reactive management proactive not reactive management –Fix it before it is broke – save Big Bucks!

41. Asset Management -- Maximizes the “Bang for the Buck! Maximizes the “Bang for the Buck! Doing the “Right Thing” at the “Right Time”, “Consistently”! Doing the “Right Thing” at the “Right Time”, “Consistently”! Ensures you are operating in the “Sweet Spot”. Ensures you are operating in the “Sweet Spot”.

42. “The Sweet Spot” “The “No Brainer” Maintenance Costs $/yr Good Fair Poor Very Poor Condition “Sweet Spot” Lower cost – Better Service Cost to Maintain Vs Condition

43. Asset Management -- “Optimizes” – “Optimizes” – – the “type” and “timing” of maintenance activities so as to minimize the life cycle costs of providing the desired level of service. Demonstratably delivers – Demonstratably delivers – --“Best Bang For The Buck”

44. Financial Management

45. Financial Management is -- Planning for the financial future! Planning for the financial future! Addresses the issue of -- Addresses the issue of -- - “Financial Sustainability” - “Financial Sustainability”

46. Issues -- Financial Sustainability of Community! Financial Sustainability of Community! The Infrastructure Deficit The Infrastructure Deficit Maximizing “Bang for the Buck Maximizing “Bang for the Buck –“Value For Money”

47. Some Examples Roadway Pavements Roadway Pavements

48. Pavement Performance & Life Cycle Management

51. In Short -- You can reduce the cost of providing a paved road by 30% to 50% by – You can reduce the cost of providing a paved road by 30% to 50% by – –Doing the “Right Thing”, at the “Right Time” “Consistently”. Proactive preventative maintenance vs reactive maintenance! Proactive preventative maintenance vs reactive maintenance!

52. Typical Profile of City Pavements Pavements – ---- many 40 to 60 years old

53. Two peak periods ---The 1950s to late 60s. Followed by the early 1970s to mid 1980s. The earlier peak is now nearing the end of its life Pavements – 40 to 60 yrs old

54. Bridge Example

55. One of 2100 Short – Span Bridges In Rural Saskatchewan Most 40 to 60 years of Age - $500,000 to $1 million Each To Replace Most will have to be replaced within next 20 yrs - > $1B = $50m/yr = 10% of Annual Provincial Highway Budget

56. Town of Dalmeny Profile of Infrastructure Assets

57. Summary of Dalmeny Road Assets

58. Road Construction Year by Type and Area Year Total Road Area = 132,242 m 2 Road Area (m2)

59. Replacement Cost of Curb & Gutter = $ 1,248,181 Total Road Network Replacement Cost = $ 4,817,393 Year Curb & Gutter Construction Year by Length Curb Length (m)

60. Summary of Dalmeny Water Main Assets

61. Water main Construction by Year Year Total of 12,856 m of water main Total water main Replacement Cost = $ 2,776,253 Length of Pipe (m)

62. Summary of Dalmeny Sanitary Main Assets

63. Sanitary sewer Construction by Year Year Total of 9,531 m of sanitary sewer Total Sanitary sewer Replacement Cost = $ 2,293,322 Installed Pipe (m)

64. Dalmeny Summary 2007 $ 8,541,365 $ 1,382,796 $ 2,491,188 $ 3,631,931 $ 76,722 $ 242,052 $(2007)

65. Projected Financial Needs Town of Dalmeny Town of Dalmeny

66. Future Infrastructure Changing demands Changing demands Changing populations Changing populations

67. Estimated Road Replacement Year by Area Year Toad Area (m2)

68. Year Estimated Curb Replacement Year by Length Curb Length (m)

69. Forecasted Road Replacement Costs by Year (to current standard) Year $ 1,103,297 $ 1,230,986 $ 1,025,742 Estimated Replacement Cost ($2007)

70. Summary of Buckland Road & Bridge Assets

71. Road Construction Year by Class and Km Year

72. Road Replacement Costs ($ 2008) by Class Road Class Total Network Replacement Cost = $ 24,034,431 Replacement Cost ($2008)

73. Bridge Construction by Year Year Total of 16 Bridges Total Bridge Replacement Cost = $ 8,580,000 Number of Bridges

74. RM of Buckland Summary 2008 $ 10,182,941 $ 5,754,475 $ 4,428,466 $ 35,339,808 $ 237,244 $ (2008)

75. Example RM of Buckland - Bridges

76. Bridges Bridge Assessments Bridge Assessments –Remaining useful life? –For illustration assume a 60 year life

77. Bridge Replacement Cost ($ 2008) by Year Year In the next 10 years 9 bridges will reach the end of their useful lives Replacement Cost ($2008)

78. 9 Bridges – replaced next 10 years The total replacement cost of these bridges is $ 4,795,000 Current Total Budget for RM is $1.5m/yr - 10 years – total budget = $15 million Bridge replacement as % of Total Annual Budget - $4.7m/$15m = 28% of total RM Budget! - $4.7m/$15m = 28% of total RM Budget! - Really????? Now what ???

79. Mission of PS 3150 -- First stepFirst step Financial Accounts – Inventory – Age - ValueFinancial Accounts – Inventory – Age - Value Next StepsNext Steps Asset Management PlanAsset Management Plan Long Term Financial PlanLong Term Financial Plan Permit municipalities to develop capital investment plans that will allow them to achieve and maintain community sustainability.Permit municipalities to develop capital investment plans that will allow them to achieve and maintain community sustainability.

80. Questions?