Multi-year Strategy links

The Asset Strategy, Asset Management Plan and Multi-Year Strategy have specific roles in the Government’s integrated asset management approach used across the Victorian General Government sector.

Departments should use the asset strategy to drive their asset management direction and to steer their development of asset and asset-related proposals put forward as part of the Budget process. Recent ERC decisions require a 10-year Multi-Year Strategy from each department.

The diagram below shows how the Asset Strategy, Asset Management Plan and Multi-Year Strategy relate.

The Asset Strategy sets the direction and communicates decisions on service levels and who provides them. It aligns asset management to the corporate strategy and ensures the asset base supports departmental objectives and Government vision. It presents the existing situation and the direction to be taken to best support departmental objectives and Government policies, priorities and targets including Growing Victoria Together.

The Asset Strategy has two main parts:
1. Present situation – states the current size, condition, cost and forward renewal consequences of the existing asset portfolio which provides a background for decision-making.
2. Future possibilities – identifies future opportunities and directions. It provides short reference papers on various key topics. The information presented is drawn from long-range forecasts (including renewal forecasts, demographic studies, studies of industry changes.)

The Asset Strategy:

• is crucial to the MYS as it provides the explicit context to interpret it.
• provides information that can assist in decision-making at the ERC 1 level.
• should be consistent with the overall strategic focus of the entity.
• documents what are going to be expanded, contracted, or remain as they are.
• presents the timing when what is urgent, what can wait, and where are the fund sources.
• considers the clearing out of the asset ‘deadwood’ as equally important as the identifying of what improvement is needed.
• focuses on service outcomes rather than the assets themselves.
• is the product of multi-disciplinary, ongoing and iterative development and refinement over time.
• contributes to the corporate planning process and integrates and interfaces as required with the Service Strategy, HR
• strategy and IT strategy.
• confirms what is to be done holistically. The direction, nature and broad areas of priority investment remain clear and in focus and are not clouded by the forms of funding or modes of delivery.
• facilitates taking decisions from the owner / strategic purchaser perspective
• considers the overall direction in an uncluttered way
• provides information packaged at a sufficiently high level to enable whole-of-sector issues to be explored
• provides the over-arching macro rationale for asset investment decisions without technical language or micro details.

Asset Management Plan

The Asset Management Plan is the translation of the Asset Strategy into planned and timed actions, together with the methods of monitoring and improving those actions. It assists departments to select and progress proposals that offer maximum benefits at minimum cost to Government.

The Asset Management Plan has four main parts:

1. A cash profile over ten years showing maintenance, renewal and known required / proposed works
2. Reference to analysis carried out to justify individual projects (asset and non-asset solutions) including risk and sensitivity analysis and funding profile
3. The likely consequences of deferring renewal and known required / proposed works
4. A method of monitoring performance.

The Asset Management Plan considers and tests the options available. It presents them to Central agencies in a document which examines feasible options and:

• central agencies can better take a whole-of-sector consideration
• central agencies would have an increased surety that the options considered, the approach used to examine them, and the conclusions reached, are consistent with Government requirements
• it breaks down some of the `principal – agent’ inequality in information available in the material presented to DTF
• it enables an informed and judged consideration and the opportunity for DTF to work with departments to identify and test or re-test the best opportunities to realise optimal asset investment and improve the resource allocation mix
• it provides the lead-time and the vehicle to apply the best options in terms of asset initiative, funding and delivery approaches
• it permits an improvement in a multi-year strategy including ‘works’ program formulation and lowers the overall risk of making poor investment, delivery or funding choices.
• it is specifically suited to consider the mix of asset and non-asset solutions at the whole-of-portfolio level (in line departments) and sector-wide level (in Central agencies and agencies with whole-of-state infrastructure / development responsibilities).
• it enables resource allocation to be optimised and to achieve the best fit of asset investments to satisfy growth, flexibility and sustainability requirements of Government.

Multi-Year Strategy

The Multi-Year Strategy forms the listing of non-asset-based and asset-based options understood by Central agencies and the departments to offer the best proposals for Government to maximise benefits and minimise the overall costs of State assets.

The MYS is driven by the departmental Asset Strategy and flows from the Asset Management Plan, however each of the three is quite separate in itself. Specifically:

• Asset Strategy sets the direction and communicates up-front decisions on the level of services provided in the output delivered and who will provide them.
• Asset Management Plan delivers the Asset Strategy in planned and timed instalments together with the methods of monitoring and improving those actions.
• Multi-Year Strategy contains proposals which departments / agencies have assessed as best meeting service delivery requirements in their asset investments.

For further information about the Multi Year Strategy, please contact:

Julie Walsh
Assistant Director
Budget and Financial Management Division
Department of Treasury and Finance
Tel: (03) 9651 0365
Email: julie.walsh@dtf.vic.gov.au