Preparing for Financial Year End can be stressful, here are 5 tips to help keep the work on track

The Covid-19 pandemic has had devastating effects across the world and everyone’s life has been touched in one way or another. In an attempt to try and keep the economy and businesses going, many Councils have accelerated their capital works programs by reallocating unspent funds from 2019-2020 financial year and bringing some projects forward to be done in the 2020-2021 financial year.

It is a great initiative, and it is great to see small businesses staying afloat because of this, but potentially there will be twice as many capital works projects to capitalise in the Asset Management system. Here is an incentive if ever there was one to get your processes in place and make the process as streamlined as possible.

Welcome to the Iamdata Solutions Asset Management Newsletter

Jill Singleton

Director - Asset Management Specialist & Data Analyst

Legislative Requirements

It is worth taking a minute to consider what is involved when we talk about End of Year from a Local Government Asset Management / Financial point of view.

Local Governments must meet and adhere to many legislative requirements. The main ones being:

Local Government Act

Sets out role, purpose, responsibilities, and powers of local governments including the preparation of a long-term financial plan supported by asset management plans for sustainable service delivery.

Local Government Act-Annual Reporting Section 428(2)(d)

(d) A report of the condition of the public works, under the control of Council as at the end of that year together with:

(i) An estimate (at current values) of the amount of money required to bring the works up to a satisfactory standard: and

(iii) Council’s program for maintenance for that year in respect of the works.

Australian Accounting Standards

Set out the financial reporting standards relating to, inter alia, the (re)valuation and depreciation of infrastructure assets.

Local Government (Financial Management and Rating) Amendment Act 2005

Impetus for the development of a Strategic Management Plan, comprising an (Infrastructure) Asset Management Plan and Long-Term Financial Plan.

The ISO 55000 series comprises three standards:

ISO 55000 provides an overview, principles, and terminology - standard terms and definitions.

ISO 55001 is the requirements specification for an integrated, effective management system for asset management.

ISO 55002 provides guidance for the implementation of such a management system.

We are governed by these (and other) Acts and Standards to ensure Councils manage our Assets effectively and efficiently and are in a position to report the details in an open and transparent way. This is a good thing. It encourages Councils to put in place robust processes, procedures, hardware, software, and staff to ensure the assets are managed and maintained efficiently in the most cost-effective way.

So, here are my 5 tips - I hope they help you achieve a stress-free Year End this financial year, and in the future!

1. Preparation

Preparation is key! preparing for Year End should commence at the end of the previous years’ Year End! It is an on-going cycle and the year before will have its effects of the year ahead.

Council’s Capital Works management process

When the Council develops a capital works program, many things are taken into consideration, and the items listed for capital works align with Council’s Strategic Plan and the needs of the community.

2. Analysing the data to help make informed decisions / when to renew assets / what is the optimal point?

All councils will have their own processes in place to plan capital renewal and replacement projects to meet their levels of service objectives. It will make life a lot easier if your asset data is being managed and maintained in a sophisticated Asset Management system that can calculate when an asset is due for renewal based on Useful Life, and Condition at Inspection Date. Sophisticated Asset Management systems are also capable of running end of year processes that not only calculate the value, accumulated depreciation, written down value, and annual depreciation but will also tell you when an Asset is due to expire, which is extremely helpful when putting together your capital works program for the following year.

Modelling tools are also available to help Asset Managers assess different budget scenarios to ensure that the best budgeting option is identified to maintain the asset network at the accepted level of service. Modelling different scenarios allows us to evaluate what is likely to happen over time (usually 20 years) to the network assets if we spend a certain amount of money each year on Renewal and Replacement. This is a good exercise to do as it will provide Council with good information, such as the overall condition of the network and the budget Council requires to continue to maintain the network at the agreed Levels of Service, and, if you run a model with far less budget than required, you should be able to see how much this action is likely to cost you over the upcoming years – as leaving an asset to deteriorate past it’s optimal intervention point usually ends up costing more to fix. The analysis is also a basis for stakeholder engagement. With good information, stakeholders will be able to make the correct decisions.

3. Easy Data Capture

It is important to record the capital works activities in the Asset Management system to ensure the asset data is kept up-to-date and relevant. It is important to have a high-level of confidence in the asset data to allow for various analysis to help manage your assets with more understanding and insight.

Capturing the information from the various projects and using that to update the asset data within the Asset Management system is a job that often falls to the Project Manager as part of the ‘Close Out’ process. Capturing the information in the system can be quite a chore if you do not have good processes in place, so this is probably one of the most useful tips I can give you!

This part of the project can be particularly difficult for the Project Managers to complete as they are required to provide detailed information including dimensions, materials, location, etc sometimes months after the job was finished. At the project planning and scoping stage, information will have been collected, analysed, and checked to ensure a number of factors have been considered before the commencement of the work. For example, that:

• the work is warranted.

• the scope and estimated cost of the work has been determined – e.g. identify the assets that will be affected

details to be included:

o ID’s,

o Length/Width/Area/Qty,

o Material

o Resources

o Estimated Costs

o Estimated Start / Finish

o Work (e.g. Road Reconstruction / reseal)

• the tender document has been developed based on this information.

• the supplier has been engaged and they meet all WHS requirements.

This information is being captured and utilised at the project planning stage. And, this is the information required for the updates in the Asset Management system. It makes sense to use this information you have already captured at the beginning of the project and make it available to use for the asset updates in the AMS processes.

NOTE: A simple extract containing this information for each Asset is usually enough information:

• Existing Asset ID,

• Asset Name,

• Location,

• New Material,

• New Dimensions eg: (length, width, area),

• The Work that has been done,

• The Actual Cost of the project at the Asset Level. This can be calculated by suitably apportioning the costs across the assets that have been included in the project.

For example:

4. Reporting

Once the Capital Works updates have been made in the AMS then an end of year process is usually run in the system to calculate the value, the expiry dates, and the depreciation of the assets. These end-of-year depreciation processes should be run every year even if no capital works was carried out on the asset class. The outputs from the process will be helpful to Asset Managers to help keep an eye on assets that are due for renewal and to provide a good overview of the network condition and current replacement costs.

5. Use the information you have in your Asset Management system to plan the following year’s Capital Works Program – Power BI Reports

If follow these suggestions, you will be confident that your asset data is current and correct. You can pull out information about your Assets for various analysis and reporting exercises and be assured that the data is correct. As part of the End of Year Processes, I usually produce a report showing all assets that are coming up for renewal and this list is provided to the Asset Manager to begin the process of putting together next year’s capital works program. Analysis and interrogation of the data can provide so much helpful and insightful information.

One of the easiest ways to extract valuable information out of any system is via Power BI. It is relatively easy to build customised reports and visualisations that gives you a great insight into what your asset data is telling you and the reports are easy to share with your organisation.

I have also built Power BI reports designed to pick up errors and inconsistencies in the data. When you are managing thousands of rows of data, it is very helpful to have in place automated processes. Power BI is an excellent tool to use for this type of data checking work that would be incredibly mundane and monotonous for a human.

I hope this July 1st is all plain sailing for you all!

If you would like help with your capital works updates and end of year reporting, or a quote for developing customised Power BI reports, then please contact me:

I have worked on many different projects with my Local Government clients, from designing and developing Power BI Reports, to building SQL Server databases for spatial data, to managing and maintaining GIS and the Asset Management systems. If you'd like to discuss how we might work together, then please email Jill at ➡️ jill.singleton@iamdata.solutions

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