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Attachment 5 Asset management and governance 30 June 2017 2018–23 Water and Sewerage Price Proposal
Attachment 5
Asset management and governance
30 June 2017
2018–23 Water and Sewerage Price Proposal
Icon Water Page i
© 2017 Icon Water Limited (ABN 86 069 381 960)
This publication is copyright and is the property of Icon Water Limited.
Icon Water Page ii
Table of contents
1 Overview ............................................................................................................. 1
2 Asset management capability............................................................................ 2
3 Asset management system ................................................................................ 6
3.1 Customer and stakeholder needs ......................................................................................... 7
3.2 Statement of Corporate Intent .............................................................................................. 8
3.3 Asset management policy .................................................................................................... 8
3.4 Strategic Asset Management Plan ....................................................................................... 9
3.5 Asset management plans ................................................................................................... 13
3.6 Performance monitoring ..................................................................................................... 28
4 Governance ....................................................................................................... 29
4.1 Integrated organisational management system ................................................................. 29
4.2 Responsibilities and authorities for key functions ............................................................... 31
4.3 Investment planning and delivery ....................................................................................... 34
5 Asset management system improvements ..................................................... 39
5.1 Summary of target improvements ...................................................................................... 40
Appendix 1 Identified performance gaps.................................................................... 42
Appendix 2 Strategic Asset Management Plan .......................................................... 44
Appendix 3 Collect Water Asset Management Plan ................................................... 45
Appendix 4 Treat Water Asset Management Plan ..................................................... 46
Appendix 5 Distribute Water Asset Management Plan .............................................. 47
Appendix 6 Collect Sewerage Asset Management Plan ............................................ 48
Appendix 7 Treat Sewerage Asset Management Plan .............................................. 49
Appendix 8 Discharge Sewerage Asset Management Plan ....................................... 50
Appendix 9 Land and Buildings Asset Management Plan......................................... 51
Appendix 10 Vehicles and Plant Asset Management Plan .......................................... 52
Appendix 11 ICT Asset Management Plan.................................................................... 53
Icon Water Page iii
List of tables
Table 3-1: Information systems and functions................................................................................ 26
Table 4-1: Asset management, governance processes and supporting documents ..................... 30
Table 4-2: Investment process governance structure .................................................................... 33
Table 4-3: Project types and approval path criteria ........................................................................ 35
Table 4-4: Documentation for the capital planning process ........................................................... 36
Table 5-1: Icon Water IAM’s asset management subject maturity target state .............................. 39
List of figures
Figure 2-1: Icon Water's integrated organisational management system ......................................... 2
Figure 2-2: The IAM Asset Management Maturity Framework .......................................................... 3
Figure 2-3: Asset management capabilities improvements since 2013 ............................................ 4
Figure 3-1: Icon Water's Asset management system ........................................................................ 6
Figure 3-2: Icon Water’s strategic objectives ..................................................................................... 8
Figure 3-3: ISO 55001 Roles and Responsibilities ............................................................................ 9
Figure 3-4: Icon Water's asset management objectives drivers ...................................................... 10
Figure 3-5: Asset Management Objectives Hierarchy ..................................................................... 10
Figure 3-6: Tier 1 asset management objectives ............................................................................ 11
Figure 3-7: Projected greenfield developments in the ACT ............................................................. 12
Figure 3-8: Asset investment decision factors ................................................................................. 13
Figure 3-9: Icon Water's asset value chain decomposition ............................................................. 14
Figure 3-10: Icon Water asset breakdown by criticality ..................................................................... 15
Figure 3-11: Icon Water asset condition ............................................................................................ 16
Figure 3-12: Investment initiation key considerations ....................................................................... 18
Figure 3-13: Primary and secondary project criteria prioritisation ..................................................... 19
Figure 3-14: Asset delivery activities ................................................................................................. 21
Figure 3-15: Example of estimation framework ................................................................................. 23
Figure 3-16: Main elements of integrated asset support ................................................................... 24
Figure 3-17: Asset management information system ........................................................................ 26
Figure 4-1: Organisational structure and asset management responsibilities ................................ 32
Figure 4-2: Guiding principle focus areas for Icon Water’s IPaD .................................................... 34
Figure 4-3: Investment planning and delivery lifecycle .................................................................... 35
Figure 4-4: Icon Water Sustainability Scorecard Factors ................................................................ 37
Figure 5-1: Institute of Asset Management Conceptual Model for Asset Management .................. 39
Figure 5-2: Asset management system improvements ................................................................... 41
List of boxes
Box 1-1: ICRC Act 1997 price direction provisions ............................................................................. 1
Box 2-1: ISO 55000 series of international standards ........................................................................ 3
Icon Water Page 1
1 Overview
It is widely accepted that effective implementation of a robust asset management framework
maximises the value that an organisation produces from its assets. Accordingly, a number of national
and international regulators have linked the extent of regulation oversight to an organisation’s asset
management maturity. In the ACT, a review of the key elements of a robust asset management
framework is required by the Independent Competition and Regulatory Commission Act 1997
(ICRC Act) (see Box 1-1).
Box 1-1: ICRC Act 1997 price direction provisions1
Section 20 Directions about prices
(2) In making a decision under subsection (1), the commission must have regard to—
(b) standards of quality, reliability and safety of the regulated services; and
(e) the cost of providing the regulated services
Source: ACT Government (1997): s20(2).
Icon Water’s asset management system enables reliable and cost effective service delivery.
Management of our assets achieves business goals and creates value for the business and our
community by investing sustainably in the water and sewerage network.
The business operations of Icon Water are maturing in response to changes in customer
expectations, commercial pressures and the regulatory environment. The business transformation
initiatives undertaken since 2013 have significantly improved Icon Water’s ability to manage its water
and sewerage assets efficiently and effectively and provided a foundation for Icon Water to move to
international best practice.
Our asset management system considers our current and future asset performance and risks and
implements cost effective programs that provide the appropriate balance between each of these
criteria. Investment planning and delivery is reliant on the efficient whole of asset life cost solution.
1 Act Government, 1997. Extract from ICRC Act 1997. R23. Effective: 1 September 2016.
Icon Water Page 2
2 Asset management capability
Icon Water is an asset intensive company, with over $2 billion in water and sewerage assets. The
management of these assets through their lifecycle influences the financial, environmental and social
performance of our organisation significantly. In addition, our community, customers, shareholders
and regulators expect us to manage and operate these assets as efficiently as any comparable
business.
Asset management is a core business function undertaken as a subset of an integrated organisational
management system as illustrated in Figure 2-1. Facets of the integrated organisational management
systems such as leadership, culture, risk, safety and environment align, guide and support Icon
Water’s asset management system.
Figure 2-1: Icon Water's integrated organisational management system
Source: Icon Water.
A new operating model has been progressively employed during the 2013-18 regulatory period to
enhance asset management capability throughout the organisation. Icon Water’s approach to asset
management is developing to align with the recent International Organization for Standardization
(ISO) 55000 series of international standards for the management of infrastructure assets (ISO 2014)
and the Institute of Asset Management’s (IAM) Asset Management Maturity Framework (2015) (see
Box 2-1 and Figure 2-2). Together these frameworks build on well-established asset management
practices and incorporate the latest international contemporary thinking on best practice holistic asset
management.
Integrated Organisational
Management System
Asset management System
Asset Portfolio
Icon Water Page 3
Box 2-1: ISO 55000 series of international standards
The ISO is a worldwide federation of national standards bodies. The ISO 55000 series of
international standards represent common practices that can be applied in a management system for
asset management, including:
ISO 55000 - Asset management–Overview, principles and terminology: provides an overview
of the subject of asset management and standard terms and definitions.
ISO 55001 - Asset management– Requirements: details requirements specification for an
integrated, effective management system for asset management.
ISO 55002 - Asset management–Guidelines on the application of ISO 55001: provides
guidance for the implementation of such a management system.
Source: ISO 5500, 55001, 55002.
Figure 2-2: The IAM Asset Management Maturity Framework
Source: Asset Management Maturity Framework (2015).
During 2013–18, planning and service delivery asset management capabilities in Icon Water have
improved in response to changes in our operating environment and future demands. The initiatives to
improve practices form part of our organisational structure and our asset management system. Key
elements of the enhanced asset management capability implemented in 2013–18 are detailed below
and shown in Figure 2-3.
People
Senior leadership have demonstrated support for the importance of asset management within
the organisation by the creation and implementation of a dedicated asset management strategy
and policy.
Icon Water has invested in our people and culture during the 2013–18 period to enhance our
asset management capability to support our progression towards target state asset
management maturity.
Processes
Since 2013 Icon Water mapped internal processes to align to ISO 55000 and the IAM Asset
Management Maturity Framework (2015). This work has resulted in a revised asset management
system and framework that:
Icon Water Page 4
balances cost, risk and performance to optimise decisions on the capital works program
begins to work with our customers to understand and adjust our service level to respond to their
stated preferences with prudent consideration of the balance between cost and sustainable
levels of service (refer to Attachment 3: Service standards)
formalises asset maintenance to depend on stated function and required system reliability
provides industry leading capital works planning (section 3.5.7), delivery (section 3.5.13) and
governance processes (section 4).2
Technology
implemented programs to replace aging information technology assets that will assist in
improved work delivery packaging and scheduling and improve asset data availability and
accuracy
implemented a number of data analytical tools to aid in the understanding of complex
relationships between asset data to inform asset planning decisions
developed a prioritisation tool for consideration of the balance of cost and levels of service to
inform projects and program priorities.
Figure 2-3: Asset management capabilities improvements since 2013
Source: Icon Water.
2 Icon Water’s investment planning and delivery process was acknowledged by other water utilities as an example of a Leading Practice in the recent WSAA asset management benchmarking.
Icon Water Page 5
In a recent review of capital expenditure governance and prioritisation the consultant3 made the
following comments:
“It is evident that the organisational changes have been supported by cultural change with an
increased consideration across the business to ensure that capital expenditure is justified and is
able to be linked to service delivery.”
“We have seen considerable uplift across Icon Water in capital expenditure development arising
from the redesign of the asset management framework. Particularly, a cultural change as to the
importance of rigorously justifying expenditure and challenging the status quo is evident. “
“Icon Water’s efforts to have a robust and consistent capital program for the forward regulatory
period demonstrates that it is committed to the regulatory process.”
Icon Water is committed to continuously improving our asset management system; details for future
improvement are included in section 5 of this attachment.
3 2017, Cardno, Review of Icon Water capital expenditure governance and prioritisation.
Icon Water Page 6
3 Asset management system
This attachment explains how Icon Water’s asset management system facilitates efficient capital (refer to
Attachment 6: Capital expenditure) and operating (Attachment 7: Operating expenditure) investment
programs. This attachment explains our asset management system and the application of our internal
capabilities for planning and service delivery.
As shown in Figure 2-1, Icon Water’s asset management system is incorporated into the existing integrated
organisational management system that enables certification to AS/NZS ISO 9001 (quality), AS/NZS ISO
14001 (environment), AS/NZS 4801 (safety) and the Codex Alimentarius (drinking water quality).
Icon Water is committed to operating and continually improving a suitably resourced asset management
system that aligns with the ISO55001:2014 Asset management – Management systems: Requirements (ISO
55001).
The asset management system describes the interlinked processes and the series of artefacts that support
and document asset management objectives and decision-making throughout the asset lifecycle. Figure 3-1
shows the relationship between the key elements of Icon Water’s asset management system.
Figure 3-1: Icon Water's Asset management system
The following section describes the key elements of the asset management system in the order presented in
Figure 3-1.
Icon Water Page 7
3.1 Customer and stakeholder needs
The value proposition offered by Icon Water’s assets differs depending on the perspective of the
varied stakeholders of the organisation. Customers demand a reliable high quality drinking water
service that provides sufficient pressure and flow, and technical regulations support this. Customers
also require the provision of environmentally responsible sanitation services. Our shareholders are
interested in meeting all its technical obligations an industry comparable and sustainable rate of return
(amongst other things).
Therefore, Icon Water must consider a variety of stakeholder values when determining the right
balance between levels of service and cost across its asset base.
3.1.1 Customer needs
Customer engagement represents an integral component of our approach to service delivery, and
consequently shapes decision making on asset performance. We engage with customers using
market research and willingness-to-pay surveys and through the Community Consultative Forum to
understand their needs and what they value. The top five things our customers told us they value, in
order of priority are:
These values inform the setting of our asset management objectives. Attachment 3: Service
standards describes how we engage with our customers and how we are increasingly using this
research to influence asset management decisions.
3.1.2 Legislation and regulation
Icon Water manages assets within a complex regulatory framework that includes ACT, NSW and
Commonwealth requirements (74 acts and codes). Details of the legislative framework are included in
Attachment 1: Context and background.
The key Acts that are considered in the development of asset management objectives are listed
below.
Environment Protection Act 1997 (ACT)
Independent Competition and Regulatory Commission Act 1997 (ACT)
Protection of the Environment (Operations) Act 1997 (NSW)
Public Health Act 1997 (ACT)
Territory-owned Corporations Act 1990 (ACT)
Utilities Act 2000 (ACT)
Utilities (Technical Regulation) Act 2014 (ACT)
Water and Sewerage Act 2000 (ACT)
Water Resources Act 2007 (ACT).
Icon Water Page 8
3.2 Statement of Corporate Intent
Icon Water’s Statement of Corporate Intent (SCI) (sets the overarching strategic goal and objectives
for the organisation founded on the objectives of the Territory-owned Corporations Act 1990 (ACT).
Our strategic goal to be the premier, most trusted water utility represents an ambitious, long-term
outcome that relies on coordinated collective effort from across the organisation.
To become premier and trusted means putting customers at the centre of everything we do.
Understanding customer needs and expectations involves continually improving business processes
to deliver value to customers. This will only be achieved through developing our people whilst
improving our processes and technology. 3-2 illustrates Icon Water’s strategic objectives and
outcomes detailed in the SCI.
Figure 3-2: Icon Water’s strategic objectives
Source: Icon Water.
Further context on Icon Water’s mission, objectives and service standards is provided in
Attachment 1: Context and background and Attachment 3: Service standards.
3.3 Asset management policy
The Asset management policy (Icon Water 2014) documents Icon Water’s commitment to asset
management. It identifies asset management principles and gives high-level direction on asset
management practices. The policy sets out requirements for the asset management system which
align to ISO 55001 and defines the key roles and responsibilities of Asset Owner, Asset Manager and
Asset Service Provider as shown in Figure 3-3.
Icon Water Page 9
Figure 3-3: ISO 55001 Roles and Responsibilities
3.4 Strategic Asset Management Plan
Icon Water’s Strategic Asset Management Plan (SAMP) (Icon Water, 2017) describes the principles,
governance, systems and objectives of asset management which have been adopted by Icon Water.
The purpose of the SAMP is to provide a clear framework for strategic asset decision making that
aligns with achievement of wider corporate performance objectives and targets set out in the SCI. The
SAMP will ensure that strategic asset decisions follow clear and comprehensive processes that reflect
best practice asset management principles and practices.
This SAMP defines the major processes and procedures used for the planning, development,
operation, maintenance and disposal of Icon Water assets. Furthermore, the SAMP also provides
guidance on the continuous improvement initiatives for the asset management system.
This will ensure that Icon Water’s strategic asset decision-making processes achieve an agreed
balance of cost, risk and asset performance that meets customer service delivery expectations.
The SAMP is provided at Appendix 2 to this attachment.
3.4.1 Asset management objectives
Icon Water has developed asset management objectives derived from:
1. Customer values
2. The strategic goals and objectives set out in the SCI
3. Specific goals set out within the Enterprise Asset Management Strategy (Icon Water 2017)
4. Adherence to relevant legislation, codes, licenses and technical standards
5. Demand requirement forecasts
6. Application of Icon Water corporate risk appetite
7. Analysis of current and future business drivers and impacts from the operating environment.
Icon Water Page 10
Figure 3-4: Icon Water's asset management objectives drivers
Figure 3-5 demonstrates the processes of analysing competing requirements and converting them
into asset management objectives for water and sewerage assets. These are described in terms of a
tiered hierarchy that is based on a logical decomposition of the assets. The functional hierarchical
approach establishes specific cost, risk and performance requirements at each level which are used
as the foundation for asset decisions on capital, maintenance and operating plans.
Embedded within the cascading asset management objectives are the requirements and support of
Icon Water’s integrated organisational management system (section 4.1).
Figure 3-5: Asset Management Objectives Hierarchy
Customer Values, SCI, Legislation, Demand, Risk
Appetite, Business Drivers, Operating Environment
Asset management objectives
Icon Water Page 11
Figure 3-6: Tier 1 asset management objectives
Cost Risk Performance
Water Supply
Deliver a sustainable
financial return
Comply with corporate
Risk Management
Framework including
personnel and energy
al safety requirements
Meet water quality,
demand, pressure and
flow requirements as per
Acts, Codes, Licences
and customer
requirements
Sewerage System
Deliver a sustainable
financial return
Comply with corporate
Risk Management
Framework including
personnel and
environmental safety
requirements
Meet network flow
capacity, licenced
discharge and
environmental protection
requirements and
availability requirements
as per Acts, codes and
licences and customer
requirements
3.4.2 Operating environment
Icon Water’s assets consistently deliver safe drinking water and reliable sewerage services to a
growing community of over 393,000 people. We continue to ensure the effectiveness of our asset
base both to meet current need, and to support future requirements based on predicted population
growth, varying climate scenarios, ageing infrastructure and other factors considered as part of our
annual external environmental scan.
Attachment 1: Context and background outlines our current operating environment and some of the
key challenges facing Icon Water over the next five years and into the future. As we continue to
transform our business to becoming more customer-centric, we will become more reliant on real-time
data to enable efficient asset management planning to drive cost efficiencies across the business.
3.4.3 Long-term demand
Icon Water regularly updates demand and supply forecasts for water and sewerage assets to ensure
the ability to meet service requirements now and into the future. These forecasts consider multiple
data sets such as population projections, climate forecasts, technology change and government
policy and strategy.The ACT Government projects urban population growth to continue at around 1.5
per cent per annum to 2036, with a focus on the development fronts shown in Figure 3-7.
Personnel Safety
Icon Water Page 12
Figure 3-7: Projected greenfield developments in the ACT
Source: ACT Government EPSDD (2012).
The ACT Government intend to supply around half of the required new housing via greenfield
development with the remaining half to be delivered through an increased focus on urban
intensification in town centres and major transport routes. In particular, the increased focus on infill
(brownfield) developments will place greater capacity constraints on Icon Water’s existing assets that
will trigger capacity augmentations over time.
In general, overall per capita water usage continues to decline although population growth continues
to match this, leading to predicted slow increases in both required water and sewage treatment
demand over the medium to long term.
Icon Water reviews available data sets and makes a determination whether the current asset base
can accommodate the demand for water and sewerage services.
Icon Water Page 13
3.5 Asset management plans
Our asset management planning involves defining the optimal balance of cost, risk and performance
to maximise customer value of our assets. Icon Water’s asset management plans provide an
overview of the lifecycle asset activities required to maintain customer service levels. Figure 3-8
shows the key factors that are considered in the determination of the optimal balance of investment
across our asset portfolio.
Figure 3-8: Asset investment decision factors
Source: Icon Water.
3.5.1 Asset portfolio overview
Icon Water is one of the few large water utilities in Australia that manage a vertically integrated asset
portfolio for the provision of drinking water supply and sewerage services. The major components of
the diverse array of assets within Icon Water’s portfolio are shown in Figure 3-9. This figure shows the
interconnectedness of Icon Water’s asset portfolio and their role in the provision of water and
sewerage services.
Icon Water’s asset management system recognises nine separate asset classes: six related to its
water and sewerage assets, with a further three relating to ‘common assets.’ Common assets are our
mobile plant and vehicles, land and buildings, and information and communication technology (ICT)
assets. Asset management plans for each asset class contain information on the prudent and efficient
plans to manage that specific grouping of assets through its lifecycle.
Copies of the nine asset management plans are provided to the ICRC as appendices 3 to 9 of this
Attachment as commercial-in-confidence documents.
3.5.2 Asset criticality
Icon Water’s asset portfolio has a varying level of importance on individual assets dependent on their
function in the provision of our services to our customers. It is for this reason that we intimately
Icon Water Page 14
understand the relative importance of individual assets within our system and assign them varying
levels of criticality.
At Icon Water, this criticality (or risk to service provision) is defined as availability and reliability
targets. This classification is a key factor in deciding on the level of investment (either maintenance,
operations, renewal or augmentation) undertaken on assets. Assets with higher criticality will have a
greater impact (and therefore risk) on our ability to maintain our level of service to our customers and
therefore require a greater level of investment.
Figure 3-9: Icon Water's asset value chain decomposition
By way of example, Figure 3-10 shows the relative level of asset criticality across our three of our
water and sewerage asset classes.
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Figure 3-10: Icon Water asset breakdown by criticality
3.5.3 Asset condition
Knowledge of the current condition of our asset portfolio is an important consideration in determining
whether our assets can meet and will continue to maintain our customer service levels. Icon Water
undertakes comprehensive condition assessment and monitoring for selected asset classes that
provide a detailed understanding of the condition of our asset base.
The methodology for inspections follows the Institute of Public Works Engineering Australasia (2012)
practice note and preamble.
Asset monitoring and inspection methods vary with the type of assets involved, their criticality,
accessibility and the inspection methodology. Assets are given a condition score between 1 (good
condition) to 5 (poor condition and unsupported). Figure 3-11 shows the condition of the overall water
and sewerage asset systems.
Icon Water Page 16
Figure 3-11: Icon Water asset condition
Source: Icon Water (2017).
3.5.4 Asset performance
Icon Water undertakes assessments to determine whether our assets can meet current and future
asset performance requirements. In doing so, future demand, levels of service and regulatory
requirements are considered and these are informed by Icon Water’s strategic planning (section
3.4.1). The capital works program shown in Attachment 6: Capital expenditure details Icon Water’s
plans to resolve identified performance gaps as detailed in Appendix 1.
3.5.5 Predictive modelling
Icon Water utilises a number of advanced data analytics tools to aid in the understanding of complex
relationships between asset data to inform asset planning decisions. Examples where predictive
modelling is used to inform asset planning decisions include:
• Forward projections on water storage levels to help inform when new
water sources will be required and to understand current and future water
security scenarios.
• Operational decisions on which water source to utilise by balancing cost to
customers (a combination of operating costs and the cost to the
community of water restrictions) and the risk to overall urban water
security.
• Understanding the complex relationships between cost and levels of
service of our water reticulation assets. This enabled Icon Water to make
informed decisions regarding customer preference influences on the water
mains renewal program (refer to Attachment 3: Service standards).
0%
20%
40%
60%
80%
1 2 3 4 5
% o
f W
ater
an
d S
ewer
Ass
et B
ase
Asset Condition Rating
Asset Condition
Assets in GoodCondition
Assets in Poor
Condition
0%
5%
10%
15%
20%
5
15
25
35
45
55
65
75
85
95
>1
00
% o
f W
ater
an
d S
ewer
Ass
et B
ase
Assessed Remaining Life (years)
Remaining Life
Icon Water Page 17
• Utilisation of award winning predictive modelling to understand the
complex relationships between cost and levels of service of our sewerage
reticulation assets.4 This enabled Icon Water to make informed decisions
regarding customer preference influences on our proactive sewerage
reticulation maintenance and capital programs (refer to Attachment 3:
Service standards).
3.5.6 Lifecycle costing
Maintaining our level of service requires appropriate investment across the whole of the asset
lifecycle. Icon Water recognises the importance of managing its assets from a ‘whole of asset life’
perspective. Our investments are planned and monitored from the initial planning through design,
construction, maintenance, renewal until final decommissioning and disposal. For example, the
operating, maintenance and integrated support costs are considered in the asset acquisition phase
(not just the capital cost) as part of the overall assessment of the most prudent and efficient project
solution.
3.5.7 Capital works planning
The key factors identified in Figure 3-12 are considered in the determination of whether there is a
need to modify, augment or construct a new asset. The factors that are considered differ depending
on the capital investment driver. Capital works are undertaken only when there is not a cost-effective
lifecycle operational alternative available.
4 Asset Management Council, 2017: Cost Risk Performance Award.
Icon Water Page 18
Figure 3-12: Investment initiation key considerations
Capital investment decisions involve identifying, quantifying and influencing the current and desired
levels of costs, risks, and performance. Alternative options (including do nothing, maintenance and
operating options) for achieving the desired set of asset management objectives are analysed and
evaluated. The option that best represents the appropriate balance of lifecycle cost, risk and impacts
on established performance measures. This forms the basis of our initial capital works program. The
initial capital works program is then prioritised (section 3.5.8) and then run against a series of
scenarios (section 3.5.11) prior to finalisation of the most prudent and efficient program that provides
the appropriate balance of cost and levels of service for Icon Water’s asset portfolio.
Legislative Requirements
Customer Engagement
Investment Factors
Investment Drivers
Growth Investment Plans
Renewal Investment Plans
Efficiency Investment Plans
Regulation Investment Plans
Operation & Maintenance
Investment Plans
Demand
Land Releases
Asset Criticality
Asset Condition
Price Changes
Regulations Changes
Asset Performance
Asset Criticality
Asset Condition
Asset Performance
Predictive Modelling
Predictive Modelling
Quality Drinking Water
Reliable supply
Affordable Pricing
Customer Service
Environmental Sustainabilty
Technology
Risk
Predictive Modelling
Asset Performance
Asset Criticality
Asset Condition
Predictive Modelling
Asset Management Plans Program
of work
Scen
ario
Mo
del
ling
Pru
den
cy &
Eff
icie
ncy
Te
stin
g
Icon Water Page 19
3.5.8 Investment prioritisation
Icon Water uses a quantitative prioritisation tool to identify all potential projects that contribute to the
prudence and efficiency of its works program.
The tool requires a panel of assessors (subject matter experts) to discuss and rank the priority of
projects by categorising projects by capex driver and then applying a set of criteria based on the
driver to each project. The criteria and scoring are aligned with the consequence definitions and
ratings from the Icon Water risk assessment tables. Cross-business input is sought in the prioritisation
of projects.
The results of the selection of projects is again assessed for primary and secondary criteria by a
separate group with input from across the business. This verification is used to update earlier priority
scoring where variance is encountered.
The Investment Review Committee (IRC) has oversight and responsibility for the prioritisation of the
works program. This approach to investment planning aligns with the ISO 55000 series of
international standards for the management of infrastructure assets.
Figure 3-13: Primary and secondary project criteria prioritisation
3.5.9 Maintenance planning
Icon Water identifies its planned maintenance works through a proactive inspection schedule. This
involves assessing the condition of the asset (including historical failure information) against
documented level of service criteria and prioritising, scheduling and actioning the work to be
undertaken within documented time frames.
Asset reliability strategy, maintenance standards and procedures have been developed for defect
elimination, analysis of failures, condition monitoring, and improvement to maintenance strategies.
These are routinely updated to continuously improve cost efficiency, plant reliability and performance.
Icon Water undertakes comprehensive condition assessment and monitoring for selected asset
classes that provide a detailed understanding of the condition and performance of our assets. Asset
monitoring and inspection methods reflect functional criticality of assets and asset age. The approach
promotes proactive maintenance rather than reliance on manufacturer specifications for maintenance.
Operating and maintenance requirements are determined to reduce the severity of the effect of
specific failure modes, which involves:
identifying potential failure modes for a product or process;
assessing the risk associated with those failure modes, to rank the issues in terms of
importance; and
determining and carrying out corrective actions to address the most serious concerns.
Icon Water Page 20
The method identifies weak areas in asset design, the safety-critical components, or critical
maintenance and test procedures. The process enables the best maintenance to be determined to
achieve design reliability at minimum cost.
Figure 3-13 summarises at a high level the key factors that are considered in the determination of the
maintenance investment program.
Icon Water is currently renewing its works management system. The renewed system will provide a
greater data granularity and this will inform enhanced asset maintenance investment decisions.
3.5.10 Operations planning
The efficient and effective operation of water and sewerage assets is a core function for Icon Water.
To enable this throughout the asset lifecycle, a process operating plan (POP) is developed for asset
systems.
The POP is developed by defining the asset management objectives including function, performance
requirements, functional significance, consequences of asset failure, maximum outage times for asset
per functional area, operating parameters and limitations (summarised in section 3.6 and Figure
3-12). The POP also considers interactions with capital project delivery work that may have an impact
on the process performance and could require temporary flows or parameter changes.
The POP provides direction to treatment and network operations personnel, defining the operational
parameters, required operational activities and guidance for planned responses to abnormal events
(wet weather events). The operators use the POP in planning the delivery of their daily operating
activities.
Lessons learnt from process trend analysis and asset performance during abnormal events are
captured as feedback to continuously improve the POP and optimise the performance envelope for
the assets.
3.5.11 Investment scenario modelling
High cost projects (those with a forecast spend of over $2.5 million per annum) across all asset
classes and expenditure types are analysed through the program of works balance model.
This model is based on the outcomes of facilitated workshops with subject matter experts to map
projects to their impacts on Icon Water (levels of service measured against key performance
indicators (KPIs) and risk. The model develops optimised cost-saving scenarios at a minimum impact
to risk or KPIs.
The scenarios are provided to the IRC to determine the appropriate investment that balances cost,
risk and performance against Icon Water’s entire asset portfolio. The outcome of the IRC is then the
basis of the program of work that is included in asset management plans.
3.5.12 Asset delivery
Icon Water’s primary role is to deliver cost-effective, quality safe drinking water and collect and treat
sewage for its customers. These services utilise assets and it is our fundamental requirement that an
efficient and effective approach to the management of these assets is applied through the asset
lifecycle activities that is acquisition, maintenance, operation through to disposal as shown in Figure
3-14.
Icon Water Page 21
Figure 3-14: Asset delivery activities
3.5.13 Asset acquisition
Icon Water acquires assets through three main mechanisms:
developers construct and pay for the assets and gift them to Icon Water,
third parties construct assets and Icon Water pay for them,
Icon Water constructs the asset.
Irrespective of the delivery, the following processes are applied to ensure that all assets met the
requirements of Icon Water and will enable Icon Water to continue to provide reliable service to
customers:
The asset acquisition process is aligned to the international Project Management
Body of Knowledge (Project Management Institute, 1996) framework. To embed this
with the business, a program management office has been created. This office provides
greater efficiency in project delivery by standardisation of approaches and templates. A
tiered governance approach to is followed to ensure that the level of governance matches
the complexity and business risk of the project. The project management office regularly
benchmarks Icon Water’s project delivery process and systems with other organisations.
Icon Water also participates in Water Services Association Australia (WSAA) and utility
benchmarking.
Icon Water Page 22
The design of all assets is considered and accepted by the business prior to
construction. The design of new assets is guided and reviewed using standard engineering
design tools to identify and minimise safety and operability hazards5 at several points as the
design evolves. To ensure ongoing efficiency in maintenance and operations and to achieve
efficiency during asset creation, technical standards, and preferred equipped lists are utilised
as much as possible. The standards used to govern project design reduce complexity and
minimise costs of managing assts. Technical codes set out requirements for the design,
operation and maintenance of the water supply and sewerage assets, for customer protection
and for emergency management For larger, complex projects, specific value management
studies are included.
Asset is accepted and integrated within the business: The construction of the asset is
monitored to ensure that the quality, reliability and safety requirements of Icon Water are met.
During commissioning of the asset, it is tested to ensure that it meets the ongoing requirements
of the system. After commissioning, the asset is integrated into the standard operations and
maintenance of the business.
The majority (over 80 per cent value of new assets)
of asset acquisition is managed by Icon Water with
dedicated business areas responsible for this
function. All acquisition managed by Icon Water
occurs as per Icon Water’s investment planning and
delivery (IPaD) process described in section 4.3.
This gated process ensures that the full budget on a
project is not finally approved and released until
appropriate planning is in place and there is budget
certainty. This allows for scrutiny of procurement
methods.
Once a project is justified to be implemented, the
method by which it is delivered is decided in order to
efficiently manage time, cost and quality constraints
for optimal delivery performance. Each project will
be assessed for opportunities to leverage off
existing investments or operational dependencies in
addition to optimising resource requirements.
This evaluation of delivery method and allocation of
resources includes:
Project bundling to reduce management
overheads.
Project ‘unpacking’ where components of
scope are removed or planned to be delivered in
isolation for either efficiency or risk management
purposes.
Delivery allocated to the team with the relevant expertise.
5 Icon Water use both Hazard and Operability Assessments (HAZOP) and Construction Hazard Assessment Implication Reviews (CHAIRs) through the design of assets.
Example of why monitoring asset
installation is important: (Water Meters)
Ensuring customers can isolate
supply in case of a change to internal
plumbing
Ongoing access by the meter reader
which enables correct meter reads
Safer and faster meter replacement,
which decreases outage time
Incorrect installation could lead to
damage to meter, vehicles or
creation of a pedestrian hazard.
Adequate Installation
Poor Installation
Icon Water Page 23
Icon Water has recently implemented an estimation framework to support the investment planning
and development (IPaD) process in order to provide a consistent approach to project estimation and
provide guidance on the level of detail that is expected in each stage of the project (see
).
This can include external peer review of estimates on larger projects.
Figure 3-15: Example of estimation framework
Each project stage has an estimate accuracy percentage that is a guideline for realistic expectations.
This includes guidelines on calculating contingency. If the percentage of contingency requested falls
outside this guideline then additional justification is expected to be provided.
A contingency management guideline has been developed to assist in communicating the definition of
contingency management as well as describing its usage and controls in the IPaD process. It
proposes that contingency management is developed based on quantifiable analysis that is in enough
detail relevant to the project complexity. Contingency can only be accessed after approval from the
Icon Water Page 24
appropriate manager. Access to higher levels of contingency via a management reserve are at the
discretion of the IRC.
3.5.14 Integrated asset support
Icon Water applies a structured approach in the integration of elements that are essential to support
assets throughout their lifecycle. The approach focusses on early consideration of risk mitigation in
the asset lifecycle and provides:
the support needed for the system design to be effective and efficient
a structured approach to increase efficiency of maintenance & operations
reduced cost of providing support by preplanning all aspects of support.
The main elements of integrated asset support are shown in Figure 3-16.
Figure 3-16: Main elements of integrated asset support
3.5.15 Operation
Icon Water is accountable for the appropriate operation of all water and sewerage assets, this
includes monitoring the assets functionality against licence requirements and operation plans. The
performance of the network is also monitored and appropriate stakeholders are notified in the event of
unplanned outages or interruption events.
Given the specialised knowledge, training and competencies associated with running the water and
sewerage assets, and the associated regulatory obligations; Icon Water prioritises training and
upskilling of our staff. Processes are in place to ensure this training follows a tailored competency
framework. Where possible, work is scheduled to minimise resourcing constraints and conflicts
although it is still necessary to operate multiple significant sites. The total number of operations staff is
based on assessment on licence requirements with regard to resourcing peak demands and
emergency responses through rostering and overtime management.
Icon Water treatment and network operations personnel strive for continuous improvement in all areas
of operational expenditure. Regular reviews of high-value cost inputs associated with labour,
chemicals, energy and fuel usage are undertaken, with an emphasis placed on operational
efficiencies in decision-making and process optimisation for cost avoidance through reduced input
consumption. This process allows Icon Water Operations to target a cost-efficient delivery model. An
example is maximising the value from process waste. Agri-ash from our sewer treatment plant
incineration process is provided for beneficial reuse as a soil conditioner, this also reduces the impact
on our environment by reducing reliance on land fill and avoids additional operating costs.
Icon Water continues to improve its energy management practices through regular management
reviews and reporting. Icon Water continues to participate in industry-wide energy performance
benchmarking studies for our pump stations and sewage treatment plants. The benchmarking results
combined with more detailed asset performance reviews allows Icon Water to target energy efficiency
initiatives. These initiatives form part of Icon Water’s broader Energy Strategy (Icon Water 2015) and
energy management program and are described in Attachment 6: Capital expenditure.
Training and competencies
Chemicals and energy
Tooling and special
equipment
Data management
Inventory management
Safety management
Environmental management
Icon Water Page 25
3.5.16 Maintenance
Icon Water safely maintains assets in compliance with legislative requirements, specifications,
procedures and drawings. Maintenance is scheduled to ensure continuity of critical operations and to
reduce planned and unplanned downtime time events. Work is packaged and delivered in accordance
with the business activity model work management processes.
The number of maintenance staff and other direct costs are determined by the requirement to
complete planned maintenance and respond to unplanned events. Staffing levels include a range of
skilled trades, supervision, planning and engineering to meet the maintenance demand. Staff
numbers are reviewed as part of the annual planning process. Unlike some other utilities our staff are
multi-skilled in that they are competent to work on both our water and sewer assets. This provides us
with a degree of operational efficiency and allows cost savings to be achieved by consolidating crews.
Competency is verified for individual maintainers to ensure the safe performance of their duties and
that they are performed in accordance with site standards and procedures and competency
framework.
Icon Water continuously reviews the most efficient and effective balance of internal and external
resources in the delivery of our maintenance program. A recent example of this assessment resulted
in a decision to move from an outsourcing to an insource delivery model specifically for our water and
sewer pump stations.
Resource allocation, optimisation and sustainability are also considered to provide efficient and
effective maintenance outcomes. An example that illustrates this point is a program that was
established to stockpile, sort and reuse (where possible) the reclaimed material that is excavated
during maintenance activities. This program has provided increased efficiency (travel time for crews
and material costs) and reduced the volumes and the associated impacts (cost and environmental) of
land fill disposal.
Icon Water is in the process of renewing its works management system to ensure water and
sewerage services continue to be delivered to customers as efficiently as possible.
3.5.17 Asset disposal
Icon Water considers the ongoing need of assets within our portfolio to meet current and future levels
of levels of service. If the asset is no longer able to perform its inherent function and cannot be
upgraded or modified; or there is a change in the system that no longer requires that asset then a
decision may be made for disposal.
Multiple options are considered to maximise the residual value of an asset during the disposal stage
and where practical assets are reused or sold. When an asset is disposed of then the appropriate
adjustment is made on the regulatory asset base and any residual value is recognised as operational
expenditure.
An example is the treatment of Icon Water’s high security water entitlements. Since the Millennium
Drought ended, the ACT is in a position of high water security. There has also been a sustained
per-capita reduction in water consumption. This prompted a review of how to maximise value for Icon
Water’s investment in high security water entitlements. Weather forecasts trends in the middle of
June 2016 predicted a La Nina event and the water trading market have historically responded to this
by a fall in market values. To maximise asset value (the balance between level of service and cost) it
was decided that the prudent and efficient course of action was the sale of the entitlements.
3.5.18 Asset information management
ICT is a key enabler to improve productivity, efficiencies and timely decision making. Information
about assets and program delivery is required to be of adequate quality and availability. ICT and its
incorporation into business processes and decision making are essential to efficiently analyse,
Icon Water Page 26
manage and optimise our asset network for the benefit of consumers and stakeholders. Icon Water
relies on information management to:
ensure the effectiveness of the asset management system and asset management activities
support investment decision making and planning processes.
Icon Water manages a subset of its ICT assets through the support of core operational technology
(OT) systems as shown in Figure 3-17 and listed in the table below.
Figure 3-17: Asset management information system
Supporting IT Infrastructure(Servers, Databases, Switches, Security)
Information Technology (IT) Applications Operational Technology (OT) Applications
Managed by ActewAGL
through the CSA
Managed by ActewAGL
through the CSCSAManaged by Icon Water
Supporting OT Infrastructure (Virtualised cloud-based IaaS)(Servers, Databases, Switches, Security)
Managed by third party
Office Equipment(PC’s, Laptops, Printers, Phones, Tablets, Switches, Cables)
Geographic
Information System(Esri ArcGIS)
Asset
Analytics
Works
Management(Oracle WAM)
Customer
Management
Asset
Management(Oracle WAM)
Enterprise Data
Warehouse
Business
AnalyticsDigital
Customer
Icon Customers
Water & wastewater network assets
Technical
Drawing(AutoCad)
Building
ManagementCCTV
Drawing
Management(Meridian)
Building
Access Control
Advanced Metering
Infrastructure (AMI)
Time Series
Historian(Schneider Wonderware)
Industrial Control
System (SCADA)(Schneider Citect)
Industrial Internet
of Things (IIoT)(PLC’s, RTU’s, Sensors)
Telemetry Bus
Risk
Management(Guardian)
Customer
Billing(Gentrack Velocity)
Directory
Management(Active Directory)
Firewall
Human
Resources(Aurion)
Financial
Management(Oracle EBS)
Directory
Management(Active Directory)
PC
Management(Win10, MS/Office)
Management(MS/Exchange)
Icon
Intranet (SharePoint)
Records
Management (RecordPoint)
Project
Management (PMIS)
Enterprise Service Bus (ESB / ETL)
Document
Management(MS/SharePoint)
Mobility
Management(Vmware/AirWatch)
Source: Icon Water.
Table 3-1: Information systems and functions
Key Information System Function
Work management system Provides asset management and associated work management and costing functions for water and sewerage assets, contains asset information, maintenance programs, asset failure information.
Spatial information system The spatial information system is used to manage and disseminate asset information relating to water, sewer and effluent networks to its stakeholders including staff and customers.
Drawing management system
The drawing management system is a document control system of information in the form of drawing files or raster images relevant to the operation and maintenance of water and sewerage assets
Fixed assets accounting system
Manages financial information relating to Icon Water Assets
Dispatch system Managing and reporting of water and sewerage network reactive jobs, contains asset failure information and performance information in response to faults.
Icon Water Page 27
Water meter database Database containing the asset information for customer water meters.
Supervisory control and data acquisition (SCADA)
System for monitoring and controlling operation of infrastructure.
Many of these OT systems are reaching end of life and shall be either upgraded, replaced, retired or
integrated to capture efficiency improvements in asset management. Integrating our OT systems will
improve our asset data quality and availability that will enrich our customer interactions, work delivery
processes, asset planning decisions and asset management monitoring and control.
A key objective of the ICT strategy is to renew Icon Water’s ageing OT capabilities and to achieve an
integrated, robust, scalable and secure technology platform. This business change will be led through
a number of strategic programs that address technology, process, data quality, governance and
sustainability and business capability.
3.5.19 Procurement
The procurement process for assets in Icon Water is predicated on achieving the best value for
money. This means that numerous cost and non-cost factors are considered when goods and
services are procured. These include factors such as the reliability of suppliers, quality of the product
and/or service, assessment of after sales service, assessment of previous experience and
assessment of the product and/or service to meet the inherent requirements. The cost and non-cost
criteria are considered by a pre-agreed weighting that results in an objective assessment of value for
money. Procurement processes are scalable depending on the complexity and level of risk and are
designed to:
ensure transparency and probity by market testing procurement submissions using individual
project-specific assessment criteria and conflict of interest governance
facilitate the management of project, commercial and technical risk.
Supply is arranged through a number of processes depending on the circumstances, from sole
supplier to public competitive tender. Depending on the complexity, a procurement plan is prepared
that sets out the process used and defines a probity plan that is agreed in advance. This plan
objectively defines the factors to be taken into account by placing a weighting on their importance.
The following list of examples demonstrates Icon Water’s commitment to gaining value for money
through our procurement within a variety of section of the asset management lifecycle:
Analysis of the appropriate procurement strategies for delivery of the capital work program
identified that a collaborative contracting procurement strategy was the most appropriate
methodology to manage the risk portfolio of the major program of work activity occurring at Icon
Water’s main sewer treatment plant. Accordingly, Icon Water assessed the various
collaborative contracting models and decided that tailoring the existing Alliance agreement with
Downer represented the best value for money for this program of work. This alliance has
enabled Icon Water to achieve efficiencies and reduce program risk through the engagement of
short term resources with specialised project management and delivery capabilities.
Projects currently being delivered via the Downer Program Alliance will continue through to
completion (estimated at up to $37 million during the 2013–18 regulatory period). Alternative
delivery mechanisms to augment Icon Water project delivery capability into the next regulatory
period are currently being evaluated to ensure prudent and efficient delivery of the program.
The development of a design panel was the most appropriate procurement strategy to manage
the risks and effectiveness of the majority of design work undertaken throughout the
organisation. This has enabled an expedited procurement process for design services in
Icon Water Page 28
addition to increasing consistency, quality and performance. An increasing volume of design is
being managed through the panel since its inception.
A complete review of the process requirements, supply chain security and lifecycle cost of
many of Icon Water’s chemical supply contracts have been assessed and revised. A result from
one of the reviews is the decision to commence the transition to a different chemical with
greater process effectiveness and supply chain security at comparable cost (that is greater
value for money).
Icon Water has reviewed and renegotiated many of the service contracts provided throughout
the period to maximise value for money. Examples of these are:
- Hydraulic data collection services contract renegotiations have resulted in the provision of
service at a lower cost.
- - Customer and corporate services delivered through contracts with ActewAGL continue to
be reviewed so that Icon Water can leverage the maximum benefit from the shared
economies of scale. The forecast for customer and corporate services in the next regulatory
period assumes that ActewAGL will deliver further efficiency improvements over time to be
passed through to Icon Water (see Attachment 7: Operating expenditure).
3.6 Performance monitoring
Icon Water has a number of Key Performance Indicators (KPI’s) in place for performance monitoring
at varying levels in the asset management system. These KPI’s range from internally set performance
indicators through to indicators set by governing bodies. These indicators have generally been in
place for many years and work is continuously being carried out to strategically align to the asset
management system.
Icon Water reports both internally and externally on a variety of KPIs. Some of this reporting is based
on specific assets whilst other reporting is for entire systems such as legislation, codes and licences.
Furthermore, Icon Water participates in utility wide performance monitoring programs such as the
National Performance Report and the National Water Accounts. Icon Water is continuously
developing and implementing a systematic approach to measure the performance for the entire asset
management system.
Icon Water has processes in place to detect and diagnose performance issues for individual asset
classes. An example is the monitoring system used by Icon Water for water quality. Icon Water uses
Codex Alimentarius based framework for drinking water quality that identifies key limits, control points
and parameters throughout the water supply system are routinely controlled, monitored and audited.
Icon Water Page 29
4 Governance
This section outlines Icon Water’s governance framework, including our:
integrated organisational management system
organisational structure which allows for clear allocation of responsibilities and accountability
and enables cross-functional representation and oversight
investment planning and delivery method
central business area which enables consistency of analysis for investment and a scalable
approach for project delivery
reporting and audit processes.
4.1 Integrated organisational management system
The integrated organisational management system enables the business to monitor and improve
organisational strategy. The integrated organisational management system defines the governance
framework, and management operating system. Further, the integrated organisational management
system characterises the linkages between the direction and control of the business, and the way we
manage our assets.
Table 4-1 lists the key asset management and governance documents, processes and enablers that
underpin the integrated organisational management system. The documents describe the conduct
and management of key business functions, and enable or support the integrated organisational
management system requirements.
Icon Water Page 30
Table 4-1: Asset management, governance processes and supporting documents
Asset management system
Asset Management Policy
Strategic Asset Management Plan (SAMP)
Asset management plans (AMPs)
Asset management processes, procedures and work instructions.
Capital governance process and supporting documents
Investment Review Committee (IRC) Charter
Investment Planning and Delivery Guide (IPaD)
Detailed IPaD Process Map
IPaD Submission Review Enabler
IPaD Stage Work Instructions
IPaD Templates
Minor Works Form
Short Form Concept Development Statement (SFCDS)
Concept Development Statement (CDS)
Short Form Technical Report (SFTR)
Technical Report (TR)
Develop Stage Proposal (DSP)
Execute Stage Proposal (ESP)
Closure Report
Project Change Request (PCR)
IPaD Tools
Prioritisation tool
Tier Classification tool
Project Initiation tool
Project Estimation Guide
Icon Water Page 31
Key enablers for the governance of the asset management system
Risk Management Framework and Policy
Quality Management Framework and Policy
Environmental Management Framework and Policy
Safety Management Framework and Policy
Structures, authorities and responsibilities
Stakeholder committees and operational forums
Content management, documentation and records
Asset information management
Risk management
Change management
Procurement
Compliance
Audit
System improvements
Consumer engagement, including willingness-to-pay surveys of customer preferences.
Source: Icon Water.
4.2 Responsibilities and authorities for key functions
This section provides an explanation of how internal structures and processes support the
functionality of asset management and oversight of project and service delivery.
4.2.1 Structures and authorities for key functions
The roles and responsibilities for asset ownership and asset management are clearly defined. Figure
4-1 maps the organisational structure and asset management responsibilities.
Icon Water Page 32
Figure 4-1: Organisational structure and asset management responsibilities
Source: Icon Water.
4.2.2 Executive governance structure
Each member of the executive takes responsibility for a portion of the asset portfolio. Icon Water staff
within each business group are responsible for the management of those assets. Table 4-2 outlines
the governance structure for the approval and oversight of investment projects.
Icon Water Page 33
Table 4-2: Investment process governance structure
Responsible person Role and responsibility
Icon Water Board The Board is responsible for the governance of Icon Water and approval projects over $10 million.
Managing Director Icon Water’s Managing Director is responsible for approving expenditure on capital works and cost increases and variations for projects greater than $3 million and less than $10 million.
Investment Review Committee (IRC)
The role of the IRC includes the prioritisation and endorsement of all stage gate submissions and change requests for Tier 1 and Tier 2 projects. Membership includes: Chief Financial Officer; General Manager, Asset Management; General Manager, Project Delivery Operations and Maintenance; General Manager, Business Services; General Manager Strategic Projects and Technology.
Project Executive Sponsor
The Icon Water executive that is recommending the project and accountable for its implementation and benefits realisation. The Sponsor is also responsible for approving the Envisage, Evaluate and Accept stage gate submissions for Tier 3 projects.
Project Sponsor Delegate (PSD)
Assigned for Project Executive Sponsor to lead the preparation of the initiation documents and to engage with subject matter experts and stakeholders across the business to ensure that the project’s impacts across the business are given due attention. Responsible for:
• reviewing all relevant stage gate submissions and change
requests
• representing submissions at the IRC
• endorsing project scope statements and accepting
handover deliverables.
Program Management Office (PMO)
Provides decision support information to the Board, IRC, PSD and delivery teams. The PMO provides:
• governance
• transparency
• delivery and project initiation support
• traceability
• standardisation of process.
Project Delivery Team
Manage the delivery of projects in the category specific to their specialisation or expertise. The lead the projects from evaluation to completion and are responsible for:
• project deliverables
• stage gate submissions (plan stage onward)
• procurement and contract management
• stakeholder management
• site management and commissioning planning.
Icon Water Page 34
4.3 Investment planning and delivery
The Investment Planning and Delivery Manual (provided as confidential Appendix 12 to this
attachment) describes the processes for the initiation and approval of all significant investment
projects. These governance processes ensure that only projects that are efficient, prudent, and
benefit the community and stakeholders are approved. Icon Water’s IPaD process was acknowledged
by other water utilities as an example of Leading Practice in the recent WSAA asset management
benchmarking. Five guiding principles are applied across the organisation for decision making and
project planning. Figure 4-2 illustrates the guiding principles and focus areas for investment planning
and delivery.
Figure 4-2: Guiding principle focus areas for Icon Water’s IPaD
4.3.1 Gating process
The governance framework depends on a thorough and end-to-end gated process that:
achieves consistent and repeatable decision making
identifies and manages risks
achieves efficiency of project delivery
controls the progressive release of funding based on stage by stage justification.
The gating process is a system where each ‘gate’ requires authority for a project to proceed according
to the investment planning and delivery lifecycle. Figure 4-3 illustrates how the gating process
corresponds to the investment planning and delivery lifecycle.
Excellence
(How well)
Developing prudent,
innovative and cost efficient
solutions
Assuring sustainability, safety, quality
and fit for purpose
Strategic Alignment
(What/When)
Achieving business
objectives and goals
Prioritising projects and
analysing portfolio
decisions
Collaboration
(Who)
Engaging and consulting all stakeholders
Considering viable options
Benefits
(Why)
Realising project
outcomes
Measuring success (post
delivery)
Governance
(How)
Ensuring project & program
performance
Ensuring project & program
conformance
Icon Water Page 35
Figure 4-3: Investment planning and delivery lifecycle
The lifecycle consists of three main phases: Initiate, Implement and Integrate. Each of the seven
stages of the project lifecycle - Envisage, Evaluate, Plan, Develop, Execute, Accept and Monitor -
corresponds to a stage gate for assessing the prudence and efficiency of investment decisions.
Prudency and efficiency objectives are incorporated throughout the project lifecycle. Evaluation of the
current risks at each stage of the project lifecycle underpins our decisions to proceed with a project
compared with the ‘do-nothing’ option. Project classification involves defining the scope, cost, and
complexity at the initiation stage of project planning. Assessments determine the risk profile of the
project. Table 4-3 outlines the project types and associated criteria defined in the Investment Planning
and Delivery Manual, and which define the approval path for project endorsement.
Table 4-3: Project types and approval path criteria
Project Type Criteria
Path 1 - Major Projects More than one option to be assessed as a solution.
Concept design and full project planning required.
Path 2 - Expedited Projects
Only one option to be assessed as solution.
<1 week concept design work as complexity is low.
Path 3 - Minor Works <$75 000 total project cost.
Only one option to be assessed with minimal design.
Path 4 - Emergency Projects
Relate to reactive action required to resolve a critical interruption to service provision. These are usually classified with a priority score of 8 or above.
Can only be classed as ‘Emergency’ as approved by the Project Executive Sponsor.
Source: IPAD Manual, Icon Water, 2017.
The path that is allocated to a project determines the relevant gating process. For example, the ‘Major
Project’ path involves more comprehensive and relevant stage gate reviews. This risk-based
approach defines the commercial decisions for project approval. Consistent with the risk based
Initiate Phase
Gate 1
Envisage Stage
Gate 2
Evaluate Stage
Gate 3
Plan Stage
Gate 4
Develop Stage
Gate 5
Execute Stage
Gate 6
Accept Stage
Gate 7
Monitor Stage
The problem
and need
are
identified.
Project is
registered
and
prioritised.
Stakeholders
are
Potential
solutions to
resolve
problems are
identified and
evaluated
Concept
design is
performed.
An option is
Project scope
is detailed.
Project
Management
Plan is
developed.
Detail design
is performed.
Approach to
market
Handover is
planned.
Construction
/ Build
activities.
Project
handover
acceptance.
Post-
implementati
on reviews
are
performed.
Project
closure
documentati
on is
developed.
Defects
management
.
Benefits
realisation
Formal
closure.
Implement Phase Integrate Phase
Icon Water Page 36
approach, higher value projects have stricter governance requirements to support decision making for
prudence and efficiency of investment. Table 4- describes the standard documentation developed for
project planning and delivery.
Table 4-4: Documentation for the capital planning process
Planning document Description Purpose
Short-form concept
development statement
(SCDS)
Developed for new projects commencing more than 24 months from current date.
To articulate the problem and risk to the business, including preliminary cost estimates.
Concept development
statement (CDS)
All projects with > 1 week concept design and > 1 feasible option. Developed at project commencement.
To articulate the problem and risk to the business, includes preliminary cost estimates to resolve problem. Recommends approach to evaluate options and obtain funding to perform evaluation and concept design activities.
Technical report (TR) Prepared for all projects with total project cost >$100 000 which are not an emergency.
Note that the assessment detail is scaled to the level of the project.
To evaluate and recommend options and to set out all capital cost considerations. Recommends an option and obtains funding for initial project planning.
Development stage proposal
(DSP)
Describes detailed design for new projects and preliminary project plan to manage the project.
To determine requirements for the tender process and obtain funding for detailed design and procurement.
Execution stage proposal
(ESP)
Describes project design and/or construction phase and project plan.
To obtain funding for construction and implementation activities.
Source: Icon Water.
4.3.2 Investment Review Committee
The IRC operates as a centralised governance body which has oversight of our investment programs.
The function of the IRC is to provide consistency of analysis and decision making across the
investment program, including by:
identifying priorities for the investment program
integrating decision making across the business and minimising fragmentation
taking into account business and strategic objectives as well as the acceptable balance of cost,
risk and performance.
The IRC is central to the business’ project initiation, delivery and approval processes, and addressing
considerations of proportionality of the scale and complexity of capital expenditure (capex) projects.
All Tier 1 and Tier 2 projects are considered by the IRC.
Icon Water Page 37
In assessing and prioritising projects the IRC has regard to:
Icon Water’s stated business and strategic objectives
governance principles
capex and other budgets approved by the Icon Water Board.
The IRC enables investment decisions to be based on a whole-of-business perspective.
4.3.3 Sustainability Scorecard
Icon Water has incorporated a sustainability assessment via a scorecard in the evaluation of projects.
This enables the balancing of the Territory Owned Corporations Act 1990 objectives at a project level
for environmental and social responsibilities. The scorecard enables the current situation and each
option under consideration to be given a score (where a lower score is less sustainable). The
inclusion of this scorecard was recognised at the Infrastructure Sustainability Council of Australia
awards in 2015.6
The factors that are evaluated in the scorecard are listed in Figure 4-4. These factors assist Icon
Water to consider the balance of financial health, environmental sustainability, cultural vitality and
social responsibility to meet the needs of the present without compromising the ability for future
generations to meet their own needs. Two projects – Cotter Dam and Googong Water Treatment
Plant Chemical upgrade have achieved commended national ratings by the Infrastructure
Sustainability Council of Australia.7
Figure 4-4: Icon Water Sustainability Scorecard Factors
Source: Icon Water.
6 Icon Water received the Highly Commended award at the Infrastructure Sustainability Council of Australia for Organisational Leadership in 2015.
7 Infrastructure Sustainability Council of Australia, 2015 Infrastructure Sustainability Update https://isca.org.au/images/publications/2015ISCAAnnualUpdate_PartA.pdf
Resources
•Energy Use
•Water Use
•Materials
•Land Use
Environment
•Discharges
•Waste
•EcologyClimate Change
People and Place
•Community
•Heritage
•Urban & Landscape
•Workforce
Icon Water Page 38
4.3.4 Benefits framework
Icon Water has developed a benefits management framework to identify, plan, manage and report all
potential benefits at a program level. This is currently being piloted across the business
transformation projects and will be rolled out across all projects after the trial. This benefits realisation
framework will be embedded into the investment planning and delivery process.
In a recent review of capital expenditure governance and prioritisation the consultant8 made the
following comments:
“Icon Water’s planned approach to benefits realisation is relatively sophisticated when
compared with other organisations in Australia responsible for significant capital expenditure.”
4.3.5 Reporting and audit process
Monthly reporting on the progress of the investment program includes information about project status
and expenditure. Consistent reporting enables comparison of the expenditure program over time, and
includes:,
Pipeline Report
Project Traffic Light Report
Projects In Distress Report
Schedule Status Report
Program Financial Report.
Furthermore, for water and sewerage projects, monthly project implementation reviews are conducted
between project managers and the Manager Projects Delivery, supported by the Program
Management Office.
Communication of information about program status to the IRC enables corporate oversight, and
management of changing expectations for the budgeting process. Changes to the scope, cost or
timing of a project must be endorsed by the IRC or Project Executive Sponsor via a project change
request. The audit process provides assurance that changes to the works program, including in terms
of cost or scope, are positive, proactive, prudent and efficient decisions of the business.
8 2017, Cardno, Review of Icon Water capital expenditure governance and prioritisation.
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5 Asset management system improvements
Icon Water subscribes to continual improvement in asset management system and governance to
align with our strategic goal to be the premier, most trusted water utility. The organisational strategy
involves further developing our enterprise-wide asset management and governance, and to continue
to translate strategic planning and goal setting into operational actions.
In 2018–23, Icon Water will continue to implement the Enterprise Asset Management Strategy, which
will enable alignment with ISO 55001 and deliver the appropriate level of maturity across the IAM’s
asset management subjects shown in Table 5-1 and Figure 5-1. Icon Water has assessed the
appropriate target maturity level with regard to our levels of service impact on customers and our
organisation’s scale, complexity and operating environment.
Table 5-1: Icon Water IAM’s asset management subject maturity target state
IAM asset management subject IAM asset management target maturity
Strategy and planning
Asset management decision making Excellent
Lifecycle delivery Excellent
Asset information Optimising
Organisation and people Optimising
Risk and review Excellent
Source: Icon Water.
Figure 5-1: Institute of Asset Management Conceptual Model for Asset Management
Source: Asset Management Landscape, Institute for Asset Management (2011).
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5.1 Summary of target improvements
Leadership
The Asset Owner (Icon Water Executive) will have improved data to enable more informed
asset management decision.
People
Continue to invest in our people to refine our capabilities and provide a culture that supports
our target state asset management maturity.
Processes
Refine our processes and operating models to enable compliance with ISO 55001 and IAM
asset management subject target maturity levels.
Continue to work with our customers to understand and adjust our services to respond to their
stated preferences with prudent consideration of the balance between cost and sustainable
levels of service.
Technology
Refine and integrate our asset data and information systems, including through renewal of the
asset and works management system.
Enhance our data analytics capability to provide deeper insights into our asset data to optimise
our asset planning decisions.
Develop systems to enhance our interaction and service with our customers.
The key initiatives planned for 2018–23 to reinforce processes and refine asset management are
illustrated in Figure 5-2.
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Figure 5-2: Asset management system improvements
Source: Icon Water.
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Appendix 1 Identified performance gaps
9 Some of these projects have been identified, but the funding arrangements are under negotiation.
10 Capital Contributions projects.
Asset Class Current or near Future Performance Gaps Projects planned or in progress to
resolve gap9
Water Sources
Security of critical infrastructure compared with Commonwealth Standards
Safe and clear access to assets
Upgrade to fencing and intruder detection
Bendora Dam Spill way bridge and various work and heights improvements
Water Treatment
Ability to continue to comply with Codex Alimentarius (drinking water quality guidelines) due to aging infrastructure
Security of Chlorine supplier and equipment
Renewal to Googong Clarifiers
Disinfection system upgrade (in progress)
Water Distribution
Small percentage of network unable to meet current ACT fireflow requirements
Ongoing meter accuracy to National Measurement Institute requirements
Smart metering & customer access to data
Water Mains replacement (hydraulic failure)
Meter Replacement
Monitoring triggers to determine appropriate investment timing
Sewer Collection & Transfer
High levels of blockages and chokes compared with other similar sized utilities
Urban infill leading to several transfers mains at capacity
Urban encroachment leading to need for additional ventilation
Potential changes in EPA air emission standards
Sewer Mains replacement & Maintenance programs
Multiple sewer main augmentation projects10
Multiple upgrades to ventilation at several sites (in progress)
Ongoing odour studies
Sewer Treatment
Approaching capacity limit for Nitrogen removal
Inability to consistently meet emissions licence at LMWQCC
Upgrade Bioreactors
Solids Handling and Furnace Upgrade
Land & Buildings
Operational buildings at key sites do not meet contemporary requirements of a modern workforce and have legacy issues (for example asbestos)
Upgrades to administration and control centres at several sites
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ICT
The majority of Icon Water’s operational technology systems are at end of life. That is, they are either no longer supported by the vendor, do not have a vendor supported product development roadmap, or are based on aged technologies that are not well used in the current technology environment.
A number of ICT systems are also at end of life, requiring renewal or replacement to shift the capability on to a contemporary technology platform. This will assist in the management of any current and future security risks to these systems and the associated data.
The existing suite of end of life systems are not able to support the implementation of our strategies without significant expense and risk to customise system functionality.
Implementation of a new Asset Management and Maintenance System
Upgrade of the existing geo-spatial system to a supported version
Retirement of legacy citrix applications and implementation of a supported SharePoint platform.
Enhanced security controls over critical ICT systems.
Implementation of asset modelling tools.
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Appendix 2 Strategic Asset Management Plan
This appendix contains Icon Water’s Strategic Asset Management Plan, which is attached as a pdf file.
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Appendix 3 Collect Water Asset Management Plan
This appendix contains Icon Water’s Collect Water Asset Management Plan, which is attached as a confidential pdf file.
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Appendix 4 Treat Water Asset Management Plan
This appendix contains Icon Water’s Treat Water Asset Management Plan, which is attached as a confidential pdf file.
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Appendix 5 Distribute Water Asset Management Plan
This appendix contains Icon Water’s Distribute Water Asset Management Plan, which is attached as a confidential pdf file.
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Appendix 6 Collect Sewerage Asset Management Plan
This appendix contains Icon Water’s Collect Sewerage Asset Management Plan, which is attached as a confidential pdf file.
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Appendix 7 Treat Sewerage Asset Management Plan
This appendix contains Icon Water’s Treat Sewerage Asset Management Plan, which is attached as a confidential pdf file.
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Appendix 8 Discharge Sewerage Asset Management Plan
This appendix contains Icon Water’s Discharge Sewerage Asset Management Plan, which is attached as a confidential pdf file.
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Appendix 9 Land and Buildings Asset Management Plan
This appendix contains Icon Water’s Land and Buildings Asset Management Plan, which is attached as a confidential pdf file.
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Appendix 10 Vehicles and Plant Asset Management Plan
This appendix contains Icon Water’s Vehicles and Plant Asset Management Plan, which is attached as a confidential pdf file.
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Appendix 11 ICT Asset Management Plan
This appendix contains Icon Water’s Information and Communication Asset Management Plan, which is attached as a confidential pdf file.
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Appendix 12 IPaD Manual
This appendix contains Icon Water’s Investment Planning and Delivery Manual, which is attached as a confidential pdf file.
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Abbreviations and acronyms
ABS Australian Bureau of Statistics
ACT Australian Capital Territory
ADWG Australian Drinking Water Guidelines
AMP Asset management plan
AMS Asset management system
AMSRC Asset Management System Review Committee
CCF Community Consultative Forum
CDS Concept development statement
EAM Enterprise asset management
DSP Development stage proposal
ESP Execution stage proposal
IAM Institute of Asset Management
ICRC Independent Competition and Regulatory Commission
ICRC Act Independent Competition and Regulatory Commission Act 1997
ICT Information and communication technology
IMS Integrated management system
IPaD Investment planning and development manual
IRC Investment Review Committee
ISO 55001 ISO 55001:2014 Asset management – Management systems: Requirements
MOO Maintenance & Operations Optimisation Project
MRA Maintenance requirements analysis
OT Operational technology
POP Process operating plan
QMS Quality management system
SAMP Strategic asset management plan
SCADA Supervisory control and data acquisition
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SCI Statement of Corporate Intent 2017-–18 to 2020–21
TOC Territory-owned Corporations Act 1990 (ACT)
TR Technical report
WSAA Water Services Association of Australia
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References
ACT Government (1990). Territory-owned Corporations Act 1990 (ACT).
ACT Government (1997). Independent Competition and Regulatory Commission Act 1997. A1997-77.
A. P. Counsel. Canberra, ACT Government.
Global Forum on Maintenance & Asset Management, (2014). The Asset Management Landscape.
IAM (2015). Asset Management Maturity Framework.
Icon Water (2014). Asset Management Policy.
Icon Water (2015). Energy Strategy.
Icon Water (2017). Investment Planning and Delivery manual.
Icon Water (2017). Benefits Management Framework.
Icon Water (2017). Strategic Asset Management Plan.
Institute for Public Works Engineering Australia (2012). Preamble to condition assessment practice
note.
Project Management Institute (1996). A Guide to the Project Management Body of Knowledge.
Standards Australia (2014). ISO55001.
WHO and FAO (2003). Codex Alimentarius Alinorm: 2003/13A (HACCP) and Good Manufacturing Practice (GMP).
