Councils should use the asset information available to them to inform their asset planning and decision-making, including decisions on acquiring, replacing or renewing assets and ongoing maintenance activities.
More asset information is available to the audited councils than they use. Although they use some of the information available to them for asset planning and decision-making—for example, information about road condition and use—this is not consistent across all asset classes. Councils depend heavily on staff experience and judgement for decision-making, without properly supporting this with objective data.
There is also room for improvement in how councils use risk to identify critical assets and prioritise maintenance and investment. Although the audited councils use risk-analysis for their road and drainage assets, they should use it across all asset classes to ensure that decisions about assets are evidence-based and best meet councils' objectives.
3.2 Asset management governance
Effective asset management and planning governance arrangements should include:
- an asset management policy that aligns with other council policies such as risk and financial management
- asset management plans across all asset classes
- documented roles and responsibilities for asset planning, covering short, medium, and long-term timeframes for both capital and operational projects
- assurance processes to confirm that asset planning outputs—such as strategies, plans and budgets—are evidence-based and support decision-making
- resource capability plans that outline the resources, skills and training necessary for the council to analyse and use asset information.
Asset management plans
AMPs document how a council plans to manage its assets to deliver an agreed standard of service and meet community needs.
Nillumbik and Mildura have AMPs covering all asset classes, including roads, buildings, and drainage.
In contrast, Colac Otway, Darebin and Hindmarsh do not have AMPs for all asset classes and have multiple AMPs in draft format. Darebin previously had AMPs for buildings and drainage, but the council did not finalise them.
Although the audited councils' AMPs are useful—they record the overall condition and age profile of asset classes—there is room for improvement. Except Nillumbik, audited councils' AMPS do not inform or align with capital and operating budgets. For example, Hindmarsh's general AMP does not clearly address service requirements or outline which asset information to use to support decision-making. A 2018 internal review of one of Darebin's AMPs highlighted that it was not aligned to the council's long-term financial plan.
Policies and guidance
We found that the audited councils have some high-level policies and guidance for asset management planning. However, these policies do not establish how to use asset information in asset planning and decision-making. The focus of existing council guidance is on budgeting and accounting processes—such as when to consider asset expenditure as a capital or operational expense.
In examples of better practice, Mildura and Nillumbik have multiple documents to guide asset management decisions. Notably, Nillumbik has an asset lifecycle policy that outlines the council's principles for accounting and reporting on assets.
Capability and resources
None of the audited councils' resource capability plans identify a need for skills in analysing asset information. Without this, councils cannot be sure they have the skills available to use asset information to support decision-making about assets.
Nillumbik engaged a consultant to review its asset management processes, which also highlighted this as an issue. Nillumbik advised that it is in the process of addressing this by reviewing current staff resourcing levels and skill sets to develop workforce plans.
Roles and responsibilities
Audited councils have not established clear roles and responsibilities for the use of asset information in asset planning and decision-making. Colac Otway and Mildura have recognised this gap. They advise that they plan to outline roles and responsibilities for all phases of the asset lifecycle—including decision-making—in future asset management strategies.
In response to findings from an external review, Nillumbik has also begun addressing this issue. Its AMPs now include functional roles and responsibility matrices for asset information use and asset planning. Hindmarsh's position descriptions include planning responsibilities. Darebin and Mildura advise that they are currently revising position descriptions, however, their asset frameworks do not articulate roles and responsibilities.
3.3 Asset planning and decision-making
Using asset information to support decision-making—as well as ongoing capital and operational planning—helps councils to:
- respond to community needs
- address areas of higher risk to the council
- share information to make decisions in a consistent way
- allocate funding to maximise benefit.
Capital planning covers the decisions councils make about the creation of new assets, or renewal or replacement of existing assets. Councils should document their processes for making these decisions and support them with asset information—such as performance, condition, utilisation, and maintenance history.
All the audited councils have used asset information to support capital planning decisions, however, this is not done consistently across asset classes. For example, Hindmarsh uses road condition surveys to support decision-making for roads, but for other classes its renewal targets are based on a percentage of depreciation costs.
Darebin also uses asset information to support capital planning for roads, but does not do so consistently for other asset classes. However, it does use capital works program guidelines and a submission form that sets evaluation criteria for capital projects. Similarly, in 2015, Nillumbik developed a framework that set evaluation criteria for capital projects. However, this was not finalised due to restructures at the council. Setting criteria for capital projects encourages councils to use and analyse asset information. For example, because of its framework, Nillumbik used traffic volume to prioritise future road works, and data on flooding to select capital projects for drainage.
Mildura uses project briefs to support bids for capital projects, however, these do not consistently rely on the council's available asset information. For example, the project brief for a street renewal did not consider the condition of the road asset or traffic count data.
In late 2018, Colac Otway began using a new software tool that generates replacement and renewal programs using asset condition data. Although this represents a good use of asset information, the council could improve this further by using population growth and service level data to ensure capital planning decisions meet community need.
Operational planning covers the day-to-day use and maintenance of assets. Councils should use asset performance, condition, failure, maintenance and cost information to inform their operational plans and budgets for assets.
Not all audited councils consistently use asset information to inform operational plans and budgets. In an example of better practice, Colac Otway and Hindmarsh have both documented processes for using asset information to inform operational plans. Colac Otway also has an operational budget manual to support the asset management system.
Nillumbik uses previous inspection budgets to plan for operational costs, however, it does not review maintenance or failure history to inform maintenance planning. Darebin documents planned maintenance tasks using actual costs, but does not use this to inform operational plans or budgets. Mildura uses some historic asset cost information in its operational budgets, however, its staff advise they have low confidence in their cost estimates. All audited councils document intervention levels for road assets, but do not document their rationale, or whether they align with asset information.
As a result, councils are missing an opportunity to support decisions about how they allocate finite council resources.
Relying on staff judgement
Relying heavily on staff judgement to make decisions about assets—rather than informing decisions through asset information and documented processes—creates a risk that councils will not make decisions that best meet their objectives. It reduces councils' ability to defend decisions and ensure they are using resources efficiently to maximise value for their community.
Darebin, Hindmarsh and Mildura rely heavily on council staff experience when making asset management decisions and do not always document these decisions. For example, Darebin upgraded a drainage asset based on the asset team's view of the maintenance team's capability and capacity to do the required work, rather than information about the condition and use of the asset. The council did not document this decision.
3.4 Asset risk informing investment decisions
A key piece of asset information that councils should use to inform decisions about assets is the risk or criticality of an asset. Incorporating risk management into asset planning and decisions ensures that councils:
- direct limited resources to areas and projects of greater importance
- reduce the risk of assets being unable to support service delivery, or of being inefficient or detrimental to the community's health and safety
- consider risk, cost, and performance to prioritise or optimise investment decisions.
None of the audited councils consistently uses risk information in their decision-making across all asset classes.
Audited councils do consider some risks for roads and drainage assets. All councils rate the risk of roads using information about their function and capacity. Nillumbik has also done so for footpath and trails—it assesses usage data to rate footpaths and trails as high, medium, or low-risk, and uses this to drive maintenance and capital works.
Except Colac Otway, the audited councils have all used flood-monitoring programs to identify which drainage assets are critical to the council.
In an example of better practice, Mildura has mapped its drainage assets in a geographical information system, using colours to indicate risk levels. Similarly, Hindmarsh has identified critical drains and, as a result, increased inspections on those assets. Nillumbik has also mapped and colour-coded its asbestos piping based on risk levels and uses risk assessment to plan inspections for drainage systems, as discussed in Figure 3A.
Nillumbik's risk-based approach to decision-making
Nillumbik uses a risk-based approach to prioritise camera inspections for its underground drainage systems. From this process, the council found that its pipes were in an excellent condition. It found that only a small proportion required work and it was able to complete localised renewal—such replacing pipe segments—rather than replace whole pipe lengths.
Similarly, the council identified where cleaning or maintenance works would return pipes to their required service level. Nillumbik advise that this reduced the potential cost of pipe inspections for the council.
Source: VAGO, based on information from Nillumbik.
In their AMPs, Darebin and Colac Otway refer to risk-management frameworks and document their risk assessments across asset class. However, they have not used asset information to explain or quantify these risks. As a result, these high-level risk assessments do not support AMPs.
3.5 Comparison of audit findings with NAMAF
We reviewed the results of the audited councils' 2017 NAMAF self-assessments in terms of asset information and compared them with our own findings.
We found that Colac Otway and Darebin's 2017 self-assessments—both showing low maturity—accurately reflect our findings. Darebin's 2017 self-assessment differed greatly from its result in 2016, when it assessed its asset management as excellent—the highest rating available. This difference was partly due to new staff, who gave a more critical assessment score.
Nillumbik assessed its asset management as having excellent maturity, even in advanced competencies. This aligns with our findings, as we found the council has the documents NAMAF outlines as necessary for good asset management. However, NAMAF does not consider the quality of councils' asset information or how they use it for decision-making. This is an area for improvement for all audited councils, including Nillumbik.
NAMAF self-assessment scores for Mildura and Hindmarsh were also high. This does not align with our audit findings. This is because the assessments assumed that councils would finalise the draft documents and activities that were in progress at the time of the assessment, which did not always occur. These councils also scored highly on the basis of documents that, although finalised, council staff did not use.
This highlights limitations in the NAMAF questionnaire, which asks councils about their documents, but does not give as much focus to whether councils effectively implement them. Despite this, councils can still use NAMAF to ensure they have the right documents and policies to support good asset management.