Appendix: Some definitions

Asset management for public entities: Learning from local government examples.

What is asset management for?

The purpose of asset management is to provide a desired level of service through the management of assets in the most cost-effective manner for present and future customers.8 This definition recognises that asset management is also about the long-term sustainability of assets and the services they support.

What is an asset management plan?

The Royal Institution of Chartered Surveyors defines an asset management plan as:

A plan covering the organisation's asset strategy together with other related matters, for example, the organisational structure and governance, roles and responsibilities, data and performance management arrangements and performance measurement information.9

What is lifecycle asset management?

Lifecycle asset management is the cycle of activities associated with planning for, creating, operating, maintaining, replacing, rehabilitating, and disposing of assets.10

Is there a difference between infrastructure and noninfrastructure assets, and does it matter?

Infrastructure assets are characterised by some particular features:

  • they are often found in a network that serves a defined community – for example, a road network, water supply, or group of leisure facilities;
  • the system as a whole is intended to be maintained indefinitely, even if individual assets or components within it are replaced or upgraded; and
  • they deliver a service to a particular level.

Non-infrastructure assets (for example, an office building), although they might stand alone rather than being part of a network, are still important. Just like infrastructure assets, they deliver a level of service and need to be managed. In that sense, the distinction between infrastructure and non-infrastructure assets is not important.

Asset management glossary

To assist your reading (of this publication, and asset management plans), we have defined the following terms that you will find in the notable examples throughout this publication.

AMP: asset management plan.

As-built: refers to a survey or drawing of the actual assets that have been constructed, recognising that they can sometimes vary from what was planned before work started on site. As-built drawings are needed to ensure that asset information systems contain data on the asset as it has been constructed, not how it was planned in theory.

Capex: stands for capital expenditure. The Royal Institution of Chartered Surveyors defines capital expenditure as: "one-off expenditure on major items which have a life of longer than one year (e.g. land and property) ... with current expenditure implications".11

Community outcomes: Under section 5 of the Local Government Act 2002, community outcomes "means the outcomes for that district or region that are identified as priorities for the time being". Community outcomes are what New Zealanders want for their local community, now and in the future. Assets have a role in supporting the achievement of those aims.

Condition assessment: Condition assessment is the systematic process of gathering data on the physical state of assets. It often involves gathering data on a sample of assets and interpolating the condition of others with similar characteristics.

The International Infrastructure Management Manual says that "asset condition reflects the physical state of the asset, which may or may not affect its performance. … The performance of the asset is the ability to provide the required level of service to customers".12 Condition is therefore different from asset performance.

Critical assets: are those assets with a high consequence of failure.13 They are often found as part of a network, in which, for example, their failure would compromise the performance of the entire network.

Critical assets should be formally identified as such in an asset information system so that their significance can influence planning. Because of their importance, their management needs special consideration. Options include reducing the effect of their failure (for example, by having a back-up asset), or reducing the likelihood of failure (for example, by not running them at full capacity).

Identifying critical assets is closely aligned with managing risk.

Development contributions: are funds paid, typically by developers, to local authorities to help with the cost of growth. These contributions are authorised by Part 8 of the Local Government Act 2002.

Level of service/service level (and relationship to performance measures): The term "level of service" has a particular meaning in asset management. In its 2007 publication Developing Levels of Service and Performance Measures, the National Asset Management Steering (NAMS) Group defines levels of service as the descriptions of the service output for a particular activity or service area against which performance may be measured.14

There is a distinction between "customer" and "technical" levels of service. The International Infrastructure Management Manual says that "customer levels of service relate to how the customer receives the service".15 Customer levels of service should define the key characteristics of the service that the customer gets, and should describe how the customer experiences the service in a way that they can understand. By contrast, technical levels of service are for the asset engineer to use. Technical levels of service are about how the organisation provides the service, should help guide day-to-day work on the assets, and form the basis of contract specifications with suppliers. They will be expressed in technical language and are often associated with technical specifications and monitoring.

Levels of service are statements. Whether they are being achieved is assessed by measuring and monitoring performance. The Royal Institution of Chartered Surveyors (RICS) in its RICS Public Sector Asset Management Guidelines defines asset base performance measures as "measures grounded in an organisation’s strategic objectives".16 Performance has to be considered from a range of perspectives. The RICS proposes five dimensions covering:

  • social, economic, and environmental/physical impacts;
  • financial imperatives;
  • stakeholder views;
  • internal excellence; and
  • innovation and learning for the future.

Another way of considering the breadth of performance is in terms of:

  • quantity/availability;
  • quality/convenience;
  • responsiveness;
  • environmental impact;
  • cost; and
  • system efficiency.

LGA: Local Government Act 2002.

Lifecycle asset management: means considering management options from the time that the need for an asset is identified, through its period of operation, to the time when the asset is disposed of.

LTCCP: Long-term council community plan.

Opex: stands for operational expenditure. Operational expenditure or operating costs, according to the International Infrastructure Management Manual "include costs for operations personnel, materials, fuel, chemicals and energy consumption etc."17 Opex is revenue spending.

Sophistication: the level of sophistication refers to the degree to which core and advanced criteria for asset management planning have been achieved. Criteria for core and advanced asset management planning are set out in the International Infrastructure Management Manual.18

Vested assets: When we use the term "vested assets" in this publication, we mean assets that are transferred to a public entity at nominal or zero cost. Typically, this might result from a situation where a developer has installed assets as part of developing a site and passes them to a public entity to manage, maintain, and deliver services through. The fair value of these assets has to be determined as they are integrated into the organisation's asset information system so that they can be appropriately managed.

8: National Asset Management Steering (NAMS) Group, Association of Local Government Engineering NZ Inc (INGENIUM) (2006) 3rd edition (Version 3.0), International Infrastructure Management Manual, National Asset Management Steering Group, Association of Local Government Engineering NZ Inc. (INGENIUM), page 1.3.

9: Jones, Keith and White, Alan D (editors) (2008) RICS Public Sector Asset Management Guidelines: A guide to best practice, Royal Institution of Chartered Surveyors, United Kingdom, page ix.

10: The Treasury (National Infrastructure Unit) in association with the National Asset Management Steering Group of the Association of Local Government Engineering NZ Inc (2009) Capital Asset Management (CAM) Leadership Training: "Towards stronger Capital Asset Management", The Treasury, Wellington, overhead slide number 7 "Definition of Lifecycle Asset Management" (Session 1).

11: Jones, Keith and White, Alan D (editors) (2008) RICS Public Sector Asset Management Guidelines: A guide to best practice, Royal Institution of Chartered Surveyors, United Kingdom, page x.

12: National Asset Management Steering Group, Association of Local Government Engineering NZ Inc (2006) 3rd edition (Version 3.0), International Infrastructure Management Manual, National Asset Management Steering Group, Association of Local Government Engineering NZ Inc. (INGENIUM), page 3.39.

13: National Asset Management Steering Group, Association of Local Government Engineering NZ Inc (2006) 3rd edition (Version 3.0), International Infrastructure Management Manual, National Asset Management Steering Group, Association of Local Government Engineering NZ Inc. (INGENIUM), page 3.58.

14: National Asset Management Steering Group, Association of Local Government Engineering NZ Inc (2007) edition 2.0 (Version 2.0), Developing Levels of Service and Performance Measures: Creating Customer Value from Community X, National Asset Management Steering Group, Association of Local Government Engineering NZ Inc., page A4/1.

15: National Asset Management Steering Group, Association of Local Government Engineering NZ Inc (2006) 3rd edition (Version 3.0), International Infrastructure Management Manual, National Asset Management Steering Group, Association of Local Government Engineering NZ Inc, page 3.7.

16: Jones, Keith and White, Alan D (editors) (2008) RICS Public Sector Asset Management Guidelines: A guide to best practice, Royal Institution of Chartered Surveyors, United Kingdom, page ix.

17: National Asset Management Steering Group, Association of Local Government Engineering NZ Inc (2006) 3rd edition (Version 3.0), International Infrastructure Management Manual, National Asset Management Steering Group, Association of Local Government Engineering NZ Inc., page 3.115.

18: See: National Asset Management Steering Group, Association of Local Government Engineering NZ Inc (2006) 3rd edition (Version 3.0), International Infrastructure Management Manual, National Asset Management Steering Group, Association of Local Government Engineering NZ Inc., page 2.11.