Enhancing Stormwater Asset Management strategies to strengthen financial sustainability

at Logan City Council By Ashish Shah

Logan City

– Heart of South East Queensland

– In between Brisbane and Gold Coast

– 6th largest Council in Australia– 293,000 residents* – Population is increasing by 2%

each year– 960 sq km land area

Logan City Council

– $775.5 million 2013/2014 annual budget

– $4.28 billion in assets

– 2,138 kilometres of roads (including 85 kilometres of unsealed roads) and 1200 km of Stormwater Concrete pipes

– 50* bridges

– 871 parks and reserves

– 110,000 rateable properties

* June 2012

At Logan Logan City Council's (LCC) Financial Sustainability Strategy

identifies and plans to address some concerns over Council's future forecast net operating surplus/deficits which have been and are forecast to be in deficit for a number of years.

Council's forward estimates presented in the strategy indicate that due to the levels of depreciation, Council's operating revenues will need to be increased even further to match Council's operating costs.

As it stands throughout the 10 year time horizon of the model, Council is not fully funding depreciation.

Why SW AM Project?

• to assist with Council’s financial sustainability in the era of demanding funding priorities, growing and expanding asset bases and increasing community expectations

• to understand the abnormality between the renewal expenditure trend and demand in comparison to historical financial reporting which was based on traditional accepted useful lives.

SW Asset Mgmt

• Improving the data quality, confidence and performance expectation of SW Assets.

• The significance of the asset data, current replacement costs and life expectancy has drastically increased as Australian Local Governments have been required to adopt accrual accounting practices and meet related regulations.– Advanced maturity/ research/ modelling in road space

but SW still poor cousin!!

Focus

Enhancing asset management strategies to strengthen financial sustainability

– Asset management strategies towards the long term viability

– Reflecting on the strategies of optimal treatments and asset performance through improved knowledge/ confidence and evidence

Replacement Value of Stormwater Drainage Assets as at 30 June 2015

Sub Class Count (no) Length Written Down Value$ million

Total Replacement Value$ million

Pipes <600mm33,988 688 km $153.8 $203.8

Pipes 600mm to <1200mm9,496 297 km $188.6 $245.3

Pipes >=1200mm2,829 104 km $174.2 $229.5

Culverts<600mm37 477 m $0.1 $0.2

Culverts 600mm to <1200mm247 3,841 m $2.5 $3.3

Culverts > =1200mm897 23 km $78.6 $101.5

Channels175 22 km $2.9 $17.9

Drainway 5,895 N/A $21.3 $48.7Field Gully 624 N/A $1.3 $1.5Gross Pollutant Trap 420 N/A - -Gully 21,258 N/A $84.7 $101.9Headwall 4,944 N/A $1.8 $2.3Manhole 13,290 N/A $29.5 $33.9Total Pipes Length 1089km Total Culverts

Length 49.318 kmTotal Stormwater Drainage $739.3 $989.8

How - Methodology

• Know me to be informed:– Review of asset register & componentization*, – unit rates, – renewal project data and condition data to

recommended appropriate useful lives, – unit rates and valuation methodology to be supported

by additional condition data capture/ assessment• Simple analogy to Roads (Seal/ Surface,

Pavement, Subbase, Earthworks)

SW pipe make up

Image Courtesy from Structural design - Melbourne Water www.melbournewater.com.au

Key ingredients

• Stormwater Pipes, Pits, Headwalls and Culverts better aligns with modern asset management practices

• Renewal (relining, part pit rehab) from no. of projects and industry research– Greater than 1m deep, 600m or larger, a good

economical candidate of renewal treatment• Pipe, trench (incl of base)

Continue…• incorporating asset performance observations

(CCTV, age and historical field knowledge)– 6km of 1200km pipe network

• Risk based sampling– Visual validation (of no significant issues)

• Unit rates review– National benchmarking (JRA and associates)

Useful life phase 1

Asset Category Previous Useful Life

Adopted Useful Life

Box Culvert 100 100

Headwall 50 100

Pipe 100 100

Pipe (Large Dia Pipe) 100 100

Pipe (Large Dia Trench) 100 200

Stormwater Pits (Longer performing Component) 15 - 100 200

Stormwater Pits (Renewed/able Component) 15 - 100 50 - 100

Summary

Revaluation Category

Revaluation Dimensions Dimension Unit

Current Replacement Cost

Written Down Value

Annual Depreciation

Pipes 1,091,166.39 Length (m) $678,768,692 $516,696,610 $6,415,072

Pits 44,322.00 Quantity $191,186,699 $161,401,583 $1,274,765

Channels Not provided for Valuation

Box Culverts 29,182.62 Length (m) $105,096,225 $81,311,211 $1,044,154

Headwalls 4,974.00 Quantity $2,363,440 $1,789,447 $23,419

Totals (2015 Revaluation Closing Balances) $977,415,057 $761,198,851 $8,757,410Totals (Pre-Revaluation Figures Closing Balance 30 June 2014) $1,408,379,378 $995,374,873 $15,499,370

% Variation -31% -24% -43%

Outcome

• The improved alignment of Asset Management practices and financial reporting of stormwater assets has resulted in a $6.4 Million reduction in annual reported depreciation.

• This is a material reduction in depreciation expense for this asset portfolio.

Next phases

Collaboration, resource sharing and open data (across Public Sector)

• Further componentation (reflection of design, construction and asset life cycle practices)

• Seeking support and collaboration from many Councils for additional evidence and calibration

• Opendata standard for asset management data sharing

• Industry collaboration and research partners• Learning and knowledge share with other pipe

asset owners (water, wastewater and gas)

SW pipe make up

Image Courtesy from Structural design - Melbourne Water www.melbournewater.com.au

D B

A

C

Collaboration

The larger the •benchmarking base, •asset performance data, •supporting analysis and input

for collective intelligence from industry, the broader and robust would be the methodology and outcomes for all of us to share and benefit from

Questions

Thanks very much

Contact: Ashish Shahashishshah@logan.qld.gov.au

M: 0434 327 923

Acknowledgement: Jeff Roodra, Cherie Lee

David Lovell, Robert Strachan and David Lyness