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Asset Management: Is Government setting the trend for the private sector?

The NSW Treasury Department has issued a new Asset Management policy for the public sector, known as TP19-07 Asset Management for the Public Sector. While the title may sound benign, be assured that the policy has far reaching consequences for any organisation whose business interests are governed in some format by NSW Government legislation.
Asset Management: Is Government setting the trend for the private sector?

The purpose of the policy is to establish a common framework for all eight clusters within NSW Government, including the Department of Community Services & Justice, NSW Police, and the various agencies, focusing on asset management. The outputs generated from this framework can then be incorporated into Treasury’s long-term strategic plan for the state.

What is the policy?

The Asset Management Policy for the NSW Public Sector sets out a series of core management practices relating to non-financial assets, which the Government expects their agencies to adopt. The objective of the policy is to achieve a consistent and improved approach to asset planning and delivery, underpinned by the consideration of asset lifecycle costs, performance, risk and economic modelling to support the strategic priorities of the NSW Government. Essentially, the policy is intended to assist Treasury in their long-term planning and budget forecasting, for where NSW needs to be in the provision of assets and services for a growing population. Think schools, Police stations, hospitals etc over the next 20+ years.

The policy seeks to drive better asset management through strengthening accountability, performance and capability across the public sector. Similar policies are also being introduced into VIC and QLD, with the other states likely to follow over the coming years.

Why do you need to know this?

Any business with operations or assets requiring regulation by the NSW Government, such as aged care facilities, private schools, health facilities etc, will need to have a plan in place by 2024 that complies with the new policy.  In this space, Government is setting the trend. Once the standard for management and reporting of public assets is in place, they will seek to apply this performance and compliance framework to all public and private assets of regulated organisations. Introduction of this policy follows other policies already implemented nationally in relation to safety, quality and heritage.

Why the focus on asset management?

Asset management, as defined by the NSW Government in this policy, is the coordinated activity of an organisation to realise value from assets, present and future. Value can represent financial return and/or be measured by the contribution the assets make to service delivery.

The policy is based on the ISO 55000 series of standards for Asset Management and the policy provides the flexibility for each of the clusters to either be certified to the standard or be compliant with the intention of the standard. Both options offer advantages for how an organisation intends to operate and implement the standards. It’s imperative to understand that once the cluster / agency has achieved compliance, they shall require annual certification to demonstrate that their system meets the intent of the standard and policy.

What lies at the heart of the policy?

Besides the compliance issues, there are additional objectives driving the policy:

  1. A Strategic Asset Management Plan (SAMP) needs to be developed. This document is linked to the business plan and is a long-term view of the assets that create value for an organisation.
  1. Each agency will need to produce Asset Management Plans (AMPs) as part of their policy response. An AMP is the detailed documentation of how value is being maximised by the various assets that have been created or are used by the organisation in their business operations.
  1. The context of the business needs to be emphasised, to demonstrate how the strategic asset management plan will support the business over the long term.
  1. Establishing a common vocabulary in relation to asset management will align and distinguish the various definitions of asset management that currently exist, ranging from strategic advice through to facility management and maintenance activities.

What are the deliverables that each Government business needs to understand?

Quoting directly from the Policy, there are three core deliverables for the NSW government clusters:

Core Requirement 1: Asset Management Principles

  • The Accountable Authority must ensure that all assets within this policy and under the control of the agency are managed with regards to the NSW Government's asset management principles.

Core Requirement 2: Asset Management Framework (the framework)

  • An Asset Management framework that is appropriate to the agency has been established and maintained and the framework aligns with the requirements of this policy. This includes a fit-for-purpose Strategic Asset Management Plan (SAMP), an agency-level Asset Management Policy, Asset Management Plans (AMPs) and an Asset Regi ster.

Core Requirement 3: Policy compliance and disclosures

  • The Accountable Authority of an agency is required to annually certify the agency's compliance with Core Requirements 1 and 2 of this policy and undertake a periodic assessment of their asset management maturity (in line with asset management assurance requirements).

Over the next 3 years, these three deliverables will drive significant activity across the eight clusters. The key to managing and meeting the deadline is taking a staged approach to achieving the desired outcomes. Most Government entities and those organisations which are required to comply with the policy, will have some components of a system already in place. It’s a matter of identifying the linkages between the various elements of your business management system and the ISO 55000 standard.

What are the next steps for any businesses impacted by this policy?

Each cluster in NSW Government and their various entities, is required to submit a paper to NSW Treasury by 1 July 2021, outlining how they are going to respond to the ISO 55000 requirements. If you are struggling to know where to begin, then APP can help. We have a group of professionals with extensive experience in:

  • establishing strategic and supporting frameworks around Asset Management
  • implementing strategy
  • asset life cycle management to create greater value
  • undertaking Portfolio reviews
  • asset management and maintenance plans
  • compliance and auditing of systems

Please contact Roger Ingram at roger.ingram@app.com.au with your enquiry or see further details on APP’s asset management services.

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