Marlborough District Council Roading Assets - Activity Management Plan 2015 - 2018 SECTION 1 EXECUTIVE SUMMARY Asset Type Comment Traffic Signs Capital investment as a result of requests for additional signage and upgrading of rural areas to national standards Street Lighting New assets created by new roads in urban subdivision and increase in lighting standards in existing areas Traffic Signals None in Marlborough and none expected to be required in next 6 years. 1.5 ASSET MANAGEMENT PRACTICES 1.5.1 Introduction The effective application of Asset Management processes will reduce the long-term costs of ownership, commensurate with providing the best levels of service, within the available funding constraints. This section of the Activity Management Plan will present an analysis of asset information available, the information systems utilised, and the decision making process used to manage the assets and therefore determine funding levels required to maintain the assets. 1.5.2 Accounting Financial Systems Financial Management processes will be carried out through the Council’s Financial Management and job costing systems. The Council will record costs against specific funding categories as they are incurred through contractual arrangements or as they are processed through the Council’s payroll structure. The accounting system the Council uses is an Accrual Accounting System, which backdates the expenditure to the financial year in which it is ordered even if it occurs in the next financial year. Valuation of assets is undertaken in accordance with the International Accountancy Standard (IAS) modified to New Zealand requirements (NZ IAS16 Property, Plant and Equipment), the Property Institute of New Zealand (PINZ) Valuation Practice Standard No. 3 (PS-3) and New Zealand local authority asset management practice (NZ NAMS Group Infrastructure Asset Valuation & Depreciation Guidelines). For asset management purposes, expenditure on maintaining the roading asset is divided into: Category Description Operational Activities which have a no effect on asset condition but are necessary to keep the asset utilised appropriately (e.g. power costs, overhead cost, etc) Maintenance The on-going day-to-day work required to keep assets operating at required service levels, i.e. repairs and minor maintenance. Renewal Significant work that restores or replaces an existing asset towards its original size, condition or capacity. Capital Works to create a new asset, or to upgrade or improve an existing asset beyond its original capacity or performance, in response to changes in usage, customer expectation, or anticipated future need. Disposal Any cost associated with the disposal of a decommissioned asset. Table 5.2.1 – Expenditure Categories The category of expenditure needs to be determined as the physical work is ordered and paid for. For accounting purposes, expenditure is divided into three categories; maintenance, renewal and capital. The accounting system amalgamates operational and maintenance costs into a maintenance category. There can be discrepancies between the asset management and accounting descriptions of work. Council have identified through the Land Transport Programme, protocols for the categorisation of expenditure to satisfy both systems. Council also needs to balance the costs involved in doing the detailed breakdown of expenditure versus the degree of accuracy required. 30 September 2014 Page 26 of Section 1