Integrated Planning and Reporting Manual - Division of Local ...

3. THE RESOURCING STRATEGY
Sound and effective planning in all phases of the asset management cycle will assist in:
setting levels for service delivery
assessing the functional adequacy of existing assets
identifying surplus or under-performing assets
assessing the assets required for new policy initiatives
evaluating options for asset provision (for example, private versus public investment)
evaluating options for funding asset acquisition
ensuring funds are available when required
ensuring assets are maintained and disposed of in an optimum manner
evaluating asset management performance, with the goal of continuous improvement.
Lifecycle costs include:
initial capital/investment costs
operation and maintenance costs
refurbishment and renewal costs
administration, overheads and taxes
depreciation
capital use charges/rate of return
end-of-life materials disposal costs.
These costs are generally separated into capital and recurrent expenditure, as illustrated here:
Cost of service
Capital expenditure
New Assets
(To accommodate growth)
Renewal
(To retain asset capabilities)
Enhancement
(To improve level of service)
Disposal
(To remove and not replace)
Recurrent
expenditure
Maintenance
Operations and
Administration
The initial capital cost constitutes a significant up-front cost and often dominates the decision as to
whether to acquire a new asset. However, analysis of investment options should be based on total
lifecycle costs, including ongoing operation and maintenance expenditure and future renewal of the
asset.
Planning & Reporting Manual Page 79 of 115