The Town of Fort Frances is a rural community located in Northwestern Ontario, sharing a border with Minnesota, USA. With a declining population of under 7, 500 and aging infrastructure, the Town of Fort Frances is prioritizing asset management to make the most of limited financial and staff resources. The Town’s asset management inventory includes the following categories: road network, storm services, bridges and culverts, social housing, machinery and equipment, fleet, water services, and sanitary services.
The staff at the Town of Fort Frances support the notion that an asset management plan serves as a strategic financial document that optimizes available resources. However, their main drivers for asset management progress are commonly provincial and federal regulations and funding such as the Federal Gas Tax Fund, Public Sector Accounting Board (PSAB) requirements, O. Reg. 588/17: ASSET MANAGEMENT PLANNING FOR MUNICIPAL INFRASTRUCTURE, and the Ontario Community Infrastructure Fund (OCIF) grant requirements. However, by working with PSD’s asset management consultants, municipal staff have been able to gain a better understanding of the crucial benefits that a comprehensive asset management program and better data can bring to the community. The Town is working towards developing their asset management program, creating a five-year capital plan and making significant strides towards merging their financial and asset management data as well as software systems. Better data and a cohesive software system can lead to more meaningful physical and financial asset analysis, significantly advancing the Town’s capital planning.
The Town of Fort Frances is a remote community located in Northwestern Ontario. They are facing a declining population, aging infrastructure, and limited financial resources. Nonetheless, their case is not unique for northern Ontario communities. Many municipalities in northern Ontario are struggling with a declining population, deteriorating infrastructure, and an economy that is dependent on one or two major industries. In these cases, better management of physical and financial assets must be prioritized. The Town of Fort Frances is actively working towards advancing its asset management program and has been since 2013.
The Building Together Guide, Ontario’s guide for municipal asset management plans (AMP), initiated the development of Fort Frances’ first AMP in 2013. The Building Together Guide, accompanied by infrastructure funding requirements, pushed the municipality to launch their initial asset management practices. For example, the Federal Gas Tax Fund agreement introduced a new requirement for all Ontario municipalities to develop an asset management plan – at first for just core infrastructure categories, and then for all asset categories. A more robust regulation was later introduced by the Ontario Government in 2017, providing further incentive for asset management program development. Under the Infrastructure for Jobs and Prosperity Act, the regulation was entitled Asset Management Planning for Municipal Infrastructure (O. Reg. 588/17) and includes a list of deadlines that all Ontario municipalities must meet between the years 2019 and 2024.
The Town’s asset management program was launched in response to the new provincial regulation, as well as the need to optimize its approach to capital planning. During the development of the Town’s 2013 AMP, the Town acquired a suite of asset management software to accelerate the development of its asset management program. These integrated tools include PSD Citywide Asset Manager, GIS, Capital Planning and Analysis, and Maintenance Manager.
An Asset Management Policy was adopted by the Town in 2017 to ensure O. Reg. 588/17 compliance and to start the municipality’s journey to a more robust AM program. The policy includes a framework on the roles and responsibilities of different municipal departments and particular staff members. The purpose of the policy is to ensure that the asset management program is efficiently formulated to align with the organization’s structure and overarching objectives. For Fort Frances, this policy is a key component in securing the implementation and progress of the asset management plan. Once formalized, it is also a powerful tool for municipal staff to gain buy-in from council to invest funds into asset management practices or particular projects that are identified through those practices.
Following the completion of its policy, the Town worked with PSD’s asset management consultants to update its AMP. The team at PSD Citywide led the Town’s staff through several stages of the asset management roadmap in order to help the organization arrive at its ultimate goal: merging its financial information and asset management database and doing away with separate software systems. Merging municipal data and tools is not easily achieved. Travis Rob, the Manager of Operations & Facilities, and Dawn Galusha, the Treasurer, intend on working towards merging their complete asset management database and system within five years. Chris Vanderheyden, a Senior Asset Management Consultant at PSD Citywide, advised that this goal is achievable for a municipality of Fort Frances’ size and capacity.
The asset management roadmap is a holistic approach to corporate asset management. This approach begins by ensuring that all municipal decision-makers are knowledgeable about the benefits of asset management and its best practices.
Working through each stage of the roadmap (see Figure 1), municipal staff ensured that they had the right information, data, frameworks, and processes in place to maintain an effective and sustainable asset management program. Key components of the asset management roadmap process are the asset management state of maturity report, asset management policy, condition and data structure workshop, risk and criticality models, lifecycle activity framework, level of service framework, and financial strategies. These components of the roadmap culminate in an updated AMP supported by accurate and comprehensive data, as delivered for the Town of Fort Frances in 2019.
As the Town is slowly working towards advancing its asset management program, it must update its asset database. According to Travis Rob, Fort Frances’ asset management software has not been populated with data since its installment in 2013. The initial driver to gather data was the 2009 Public Sector Accounting Board (PSAB) 3150 requirements. Municipalities were required to include capital assets in their financial reporting, consequently requiring many smaller municipalities to gather certain capital asset data for the first time.
The data gathering process for the Town of Fort Frances is a crucial priority for the community. Through a database gap analysis, PSD’s Infrastructure Data Analysts and Senior Asset Management Consultant have identified the areas in which the database needs to be updated, providing recommendations on how Fort Frances can proceed. The types of asset data analyzed include: an asset inventory that is comprised of all core and non-core asset groups; asset attributes such as measurements, materials, and other details specific to the asset type; location; historical costs; in-service years; estimated useful life; replacement cost; and assessed condition.
Prior to engaging PSD Citywide, Fort Frances has relied on its GIS data and age-based capital asset inventory data. These datasets were advanced, but there is still a critical amount of data required in order to conduct risk, lifecycle, and financial analyses. Fort Frances’ water system, including parts of the sanitary sewer network, storm sewer system, machinery and equipment, fleet, and social housing asset categories all have age-based condition data. However, since 2013 the Town has been completing annual CCTV inspections of its entire sanitary sewer network on a 10-year cycle as part of its asset management program. Some assessed condition data was also gathered on its sanitary sewer mains and incorporated into the Town’s new AMP. Furthermore, 100 percent of the Town’s road network and bridges has assessed condition data in the Town’s asset management system.
The value of assessed condition data cannot be underestimated. Assessed condition data can provide a far more accurate representation of the state of the infrastructure compared to age-based condition data. According to IAM and IIMM, asset management best practices recommend gathering assessed condition data since it provides an understanding of the asset’s status that also considers the unique environment of each asset.
As part of the asset management roadmap, the municipality works towards collecting condition data for as many asset classes and components as possible before embarking on the risk and financial assessments. To support this effort, PSD Citywide conducted a condition assessment and data structure workshop with Fort Frances staff. Staff was provided with an overview of industry standard condition assessment guidelines and the tools needed to perform their own condition assessments. Data collection templates were provided to each department. These templates are tailored to the Town’s departments based on a data structure framework developed with Town staff.
Due to a lack of resources, the data collection and condition assessment process would still take a lot of time for the Town. The Town hired a new Asset Management Plan Coordinator, Crystal Tan, EIT, to support this effort. Accompanied by the expertise of Travis Rob, P.Eng, Crystal was able to gather assessed condition data on the road network and bridges and culverts. Based on the costs associated with hiring a third-party firm to conduct the condition assessments versus the time spent by municipal staff gathering the data using data collection tools, a municipality of Fort Frances’ size can expect to save up to $100,000 a year. The following graph is a high-level representation of the results of the risk analysis performed on the Town’s core asset categories with the new data that was gathered throughout the roadmap process.
To determine Fort Frances’ funding capacity for the capital budget, all existing sources of funding must be identified and combined to enumerate the total funds available. These figures are assessed against the average annual infrastructure requirements and are subsequently used to calculate the annual infrastructure funding deficit and additional funding strategies. To develop an asset investment strategy, it requires an estimation of the cost to replace assets that have reached the end of their useful service life. To determine the replacement cost, an estimated inflation rate must also be applied to each asset type using the CPI (Consumer Price Index).
The most significant roadblock for Fort Frances in the capital planning process relates to missing data. The asset management coordinator and other staff members are still working towards developing their asset database, but this is a long process that requires a lot of time and several steps. Prior to beginning the financial strategies analysis, time was allotted to allow for certain core asset type data to be completed, however, the collection of data for land improvements and buildings is still in progress. The financial analysis was concluded without this data, but the software tools provided will allow the finance team at the Town to perform a similar analysis once the dataset is complete for the following years.
Once a sufficient amount of asset and financial data is gathered, the development of financial strategies can begin. PSD Citywide’s Data Analysts work on gathering the financial data, but the following step is conducted by PSD’s Chief Financial Officer (CFO), Gerry Wolting. To determine future investment needs of infrastructure, Gerry must use the long-term financial projections. The annual infrastructure requirement, using only the end of useful life data, is calculated by dividing the replacement cost of the asset by the estimated useful life of the asset. To include the lifecycle costs of the asset, the equation is amended to the sum of the asset’s replacement cost and lifecycle activity costs divided over the estimated useful life. Even though the costs associated with lifecycle activities raise the total funds spent on the asset over its lifetime, it typically reduces the overall annual infrastructure requirement due to the asset’s extended estimated useful life.
Gerry personally looks over every client’s asset management information and utilizes his expertise to provide 5, 10, 15, and 20-year capital budget recommendations. Gerry is a chartered accountant and previously worked with the Municipality of Chatham-Kent for 30 years. He was the General Manager of Corporate sServices, Finance, Budget, IT, Legal, Customer Service, and HR. He worked with Chatham-Kent in the midst of an amalgamation of 23 municipalities in 1998 and he managed their $300 million annual budget. During his time with the Chatham-Kent, he created a software tool that helped municipalities to develop financial strategies for capital budget planning. In the following years, his expertise became an integral part of the software expansion at PSD Citywide. Ultimately, his tool was transformed into the Citywide Capital Planning and Analysis (CPA) module and Gerry continues to support PSD’s consulting staff by sharing his extensive experience and knowledge of municipal budgeting with PSD’s clients.
In the case of Fort Frances, the Town was provided with two different financial analyses; the first is an analysis of the non rate funded asset categories including road network, storm services, bridges and culverts, social housing, machinery and equipment, and fleet; the second is an analysis of rate-based asset categories including water services and sanitary services. Where data is available, lifecycle costs are introduced to produce a more advanced analysis. By using a more meaningful understanding of the costs associated with the asset’s lifespan, Gerry can quantify the benefits of these proactive measures to determine cost saving opportunities.
“The 2018 analysis determined that an annual 1.5 percent funding increase is required over the next 20 years in order to close the average annual investment requirement funding gap. However, if lifecycle strategies are introduced, the required funding increase can be lowered to around 1 percent.”
A high-level financial analysis took place in 2013 with Fort Frances’ initial asset management database. The 2013 capital budget analysis found that under 14 percent of the Town’s average annual investment requirements for the asset categories analyzed (roads, bridges and culverts, storm sewers, and social housing) was being funded by the proposed annual capital budget. Gerry recommended around a 2 percent annual increase to the capital budget over the following 10 years. According to the 2018 analysis, the increase was achieved for rate-based funded assets. These numbers do not take into account one-time funding sources – it is likely that a community will receive one-time funding sources from a grant or reallocation of funds for a single project – but these do not represent regular funding that can be expected on an annual basis and are therefore not accounted for.
The 2018 analysis determined that an annual 1.5 percent funding increase is required over the next 20 years in order to close the average annual investment requirement funding gap. However, if lifecycle strategies are introduced, the required funding increase can be lowered to around 1 percent. The required increase in average annual capital investment requirements can be fulfilled by a number of resources whether that is a reallocation funds, higher user-rates or taxes, loans, or other grant opportunities.
The next steps for the Town of Fort Frances are to continue to work towards completing its asset database. With data collection tools, enterprise asset management software, trained staff, and bolstered internal expertise, the Town can continue to commit the next five years to advancing its asset management program and merging its software systems and database. The Town has experienced some change in management in the financial department which can often cause a brief pause in project progress. However, Dawn Galusha, the Town’s new Treasurer, is interested to see the benefits that a thorough asset management program can bring to their capital budget planning.
The Manager of Operations & Facilities, Travis Rob, has dedicated significant time to advancing the Town’s asset management program. He admits that he is still slightly anxious about their capacity to maintain their progress and thoroughly utilize the results of the asset management plan. However, he hopes that over time, asset management will become part of the staff and management’s every day operations. A notably important feature of the asset management roadmap process has been the initial state of maturity assessment which assisted in opening communication across departments and with council. Travis found that this experience has significantly supported the expansion of the staff’s understanding of asset management and their data.
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