the Next 5 to 10 Years - Institute of Hospital Engineering, Australia

ihea.org.au

the Next 5 to 10 Years - Institute of Hospital Engineering, Australia

Warren Corlett

Manager, Asset Management

Capital Management

November 2009

Asset Management

A high level overview for the

next five to ten years…


Asset Management

Government policy for the next

five to ten year?


Planning for future investment needs

Tools for Victorian infrastructure planning:

‣ Asset Management Framework: to improve the link between asset decisions

and service needs

‣ Service Strategies & Asset Strategies: to ensure long term service needs are

being met

‣ Multi-Year Strategy: present proposals for consideration over next 10 years to

meet future demand

‣ Geo spatial mapping present asset proposals being developed for next 10-

year period


The Asset Management Framework

Where did it come from?

The Asset Management Framework (AMF):

+ approved by the Expenditure Review Committee (ERC) of Cabinet March 2005

+ to deliver on Sustaining our Assets –Victorian Government’s Policy Statement

+ origins in Victorian Government initiatives and reforms undertaken since 1990

+ is to further consolidate strategic asset management thinking

+ is still recognised world-wide as preferred practice

+ is a natural development of the Resource Allocation Framework

+ complements the Department Funding Model (DFM)

+ responds to the need to achieve long-term benefits from the asset base.


The Asset Management Framework

What is its purpose?

Overarching goals of the Asset Management Framework are to:

+ link all asset investment to service delivery

+ strengthen and integrate management arrangements

+ minimise costs of asset ownership - meet required service levels - sustain

infrastructure.

The Framework is to give departments an incentive to make the best

economic choices.

It’s about trade-offs between maintenance and the replacement of

assets - so decisions made in one phase of an asset’s life will positively

affect functioning inothers.


The Asset Management Framework

What are the main Components?


The Asset Management Framework

Relationship between DTF Lifecycle Guidance Material

Element 1 – MYS

Proposal

Development

Element 2 – Lifecycle Guidance

Element 3 - Reviews

Element 4 -

Reporting

***Operations are not covered by the 4 elements under the Gateway Initiative


Asset Management

Understanding the

asset base?


Total Facility

Fabric

substructure

superstructure

fittings

Columns

Floor

Upper floors

Staircases

Roof

External walls

Windows

External doors

Internal walls

Ceilings

Fitments

Sanitary fixtures

Special equipment

Building

Services

mechanical reticulated

services

Sanitary plumbing

Water supply

Gas

Other fuel

Other

electrical reticulated services

lighting

HVAC (Mech. Environmental Control)

Space heating

Ventilation

Evap. Cooling

Air conditioning

Other

fire protection

communications

Telephone

Computer links

Monitoring Systems

Control systems

Other

security

transport

Lifts

Escalators

Walk-ways

Other (cranes, hoists, etc)

centralised energy

other

Grounds

SiteWorks

Roads

Footpaths

Paved areas

Boundary Walls

Fencing

Gates

Outbuildings

Covered ways

Landscaping

Improvements

External Services

External stormwater drainage

External sewer drainage

External water supply

External gas

External fire protection

External electricity

External communications

External special services

Taxonomy of Building elements


Total Facility

Building

Grounds

Fabric

substructure

superstructure

fittings

Columns

Floor

Upper floors

Staircases

Roof

External walls

Windows

External doors

Internal walls

Ceilings

Fitments

Sanitary fixtures

Special equipment

Services

mechanical reticulated

services

Sanitary plumbing

Water supply

Gas

Other fuel

Other

electrical reticulated services

lighting

HVAC (Mech. Environmental Control)

Space heating

Ventilation

Evap. Cooling

Air conditioning

Other

fire protection

communications

Telephone

Computer links

Monitoring Systems

Control systems

Other

security

transport

Lifts

Escalators

Walk-ways

Other (cranes, hoists, etc)

centralised energy

other

SiteWorks

Roads

Footpaths

Paved areas

Boundary Walls

Fencing

Gates

Outbuildings

Covered ways

Landscaping

Improvements

External Services

External stormwater drainage

External sewer drainage

External water supply

External gas

External fire protection

External electricity

External communications

External special services

Taxonomy for IFRS Componentisation

Structure/Shell/Building Fabric

Site Engineering Services/Central plant

Trunk Reticulated Building Systems

Fit Out

Combined Fit Out & Trunk Reticulated Building Systems


Useful lives (years) of building components

by major asset sub-category

Component

Structure/ Shell/

Building Fabric

Site Engineering

Services / Central plant

Trunk Reticulated

Building Systems

Fit Out

Combined Fit Out &

Trunk Reticulated

Building Systems

Public Hospital 50 30 50 15 – 30

(average 25)

37

Government

Housing

74 30 49 24 36

Secondary Schools 55 30 55 20 37

Primary

Schools

80 30 55 30 42

Relocatables 30 20 20 20 20

TAFE Institutes 42 31 37 22 29

Police Stations 45 23 35 23 29

Law Courts 68 23 35 24 29

Prisons 80 30 45 23 34

Taxonomy for IFRS Componentisation

Structure/Shell/Building Fabric

Site Engineering Services/Central plant

Trunk Reticulated Building Systems

Fit Out

Combined Fit Out & Trunk Reticulated Building Systems


A1 Hospitals (big teaching hospitals) renewals due

longer-term average (using 2004 modelling )


Asset Management

investment for the next five to

ten years…


Investment factors

‣ Factors include:

– age and size of the existing asset stock

– high associated cost to maintain assets at required service levels

– complexity and capacity constraints to deliver the State’s infrastructure

program to meet increasing and emerging service delivery needs.


Present Status: Our complex infrastructure is more obsolete

$12.6b

Roads/Rail: Currently being updated

$6.4b (in 2009 for 14 major hospitals)

Roads


Victoria’s General Government Sector assets

‣ Complex and ageing asset base is becoming obsolete

‣ Some complex & long-lived assets are victims of changing demography

‣ Complex assets require greater ongoing investment to continue to meet

service needs

‣ Victoria has the Asset Investment Allocation Model (AIAM) to identify

‘sustain’ investment requirements.


Delivery observations on the ‘big four’ [departments]

Observations on the ‘big four’:

– long term service strategy is underdeveloped

– some investments made lacks clear & unequivocal need

– some investments good for proponent department but are bad for the State

– nearly all business cases prepared have critical issues

too many business cases – many should never have been done

– delivery capability is already stretched

– base support systems are typically inadequate

– planning and performance assessment are patchy

– risk management & balance sheet management is not service centric

– governance relies on a handful of people

– stakeholder engagement is last minute


Selecting infrastructure investments

+ Govt Investment performance requires the need to :

‣ understand past:

• departmental delivery capacity

• size of the total ‘delivered infrastructure task’

(i.e. ‘past behaviour a predictor of future likelihood’)

‣ understand current status of Govt asset base.

‣ forecast future, to:

• compare supply against demand (and prioritise appropriately)

• look at modelled-implications of various policy-shift options.


Asset Management

investment for the next five to

ten years…


How are we fairing?

Health Portfolio Metropolitan and Rural New Works TEI

1,400.0

1,200.0

1,000.0

800.0

$ M

600.0

400.0

200.0

Health Portfolio Metro TEI

Health Portfolio Rural TEI

Health Portfolio Total TEI

0.0

1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Year


Summary of key findings

• Deteriorating constructed asset base is stabilised

• Strategic long-term investment needed in A1, A2 & Metro B Hospitals

• Significant elements in A1, A2 & Metro B hospitals’ building fabric &

infrastructure are not at required condition


The sustain envelope – infrastructure program

Infrastructure Program 2002-03 to 2008-09

$70

$60

A1

Expenditure $ millions

$50

$40

$30

$20

$10

$0

-$10

A2

B

E

C D

0 50 100 150 200 250

Per annum capex

Number of Projects


Sustain envelope investment profile

Invesment in A1 and A2 Hospitals

2.5%

Investment as a percentage of

replacement cost

2.0%

1.5%

1.0%

0.5%

Invesment in Facilities

0.0%

0% 20% 40% 60% 80% 100%

Facility Obsolescence


Asset Management

Portfolio decisions by Government

not individual investments…


Outer Ring Road proposal


Matching Proposals to Demand


Matching Proposals to Demand


Box Hill Hospital


Box Hill in 1950’s


Box Hill Hospital – Current Demographics


Box Hill Hospital- Future Demographics


Box Hill Hospital

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