Life-cycle strategies and plans MODULE 6

TOOLKIT EDITION 1 2018

MODULE 6
Life-cycle strategies and plans
MODULE 6 Life-cycle strategies and plans

MODULE PURPOSE:
This module describes how asset data models and profiles prepared in line with Module 3 are used and further developed to
determine the short, medium and long term life-cycle needs and inform progressively optimised responses per sector that
respond to city developmental themes. These in turn inform the preparation of sector asset management plans that are the
focus of Module 7.

THE MODULE INDICATES PROCESSES TO ENSURE THAT:

1. Sector life-cycle strategies respond to prevailing city asset management objectives, themes and directives (including an
affordability envelope);
2. Sector life-cycle needs are reviewed in a holistic manner, over the short, medium and long term, based on data consistent with
the asset register; and
3. Draft portfolio life-cycle plans are determined for each sector that will be further considered for finalisation and adoption.

KEY FEATURES OF THE MODULE INCLUDE:

1. Indication of timelines that provide sufficient time for the required planning and consultation processes to be undertaken
annually and align with other related planning and reporting processes;
2. Indication of specific planning horizons, with increasing data confidence requirements as implementation approaches;
3. Review of ongoing and proposed new or enhanced initiatives;
4. Consideration of asset and non-asset solutions to challenges;
5. Consideration of the level of confidence in the data and processes used in the preparation of the responses; and
6. Identification of catalytic actions to improve data and information, identify and define new projects and programmes, optimise
responses and package these ready for implementation.

WHY:
More robust planning provides greater certainty of the effectiveness and efficiency of service delivery. Structured processes
and timelines facilitate improved management of risk, performance and the application of limited available resources.

OUTPUTS OF MODULE 6:
1. Lifecycle needs of the city’s asset portfolios are planned and quantified over the short, medium and long term with respect to:
• Capital needs for existing assets related to failure modes (capacity, performance & condition);
• Existing service access backlogs;
• Capital needs relating to growth as well as the ongoing additional capital renewal needs of assets still to be created;
• Operations and maintenance needs, both now and in the future, considering growth, and the future size and composition of
asset portfolios.
2. The following are considered with respect to life-cycle needs and planning:
• Existing commitments (both the customers and contractors);
• Dependencies; and
• Risks, opportunities and constraints which may affect the approach to designing lifecycle solutions.

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 Life-cycle strategies and plans MODULE 6

3. A city-wide lifecycle strategy that:

• Identifies the nature and scale of life-cycle needs across services and asset portfolios;
• Identifies commitments, dependencies, risks, opportunities and constraints;
• Identifies and assesses strategic response options; and
• Informs directives to service departments on how to prepare/deliver on particular requirements in their sectoral lifecycle
strategies.
4. Sectoral lifecycle strategies for asset portfolios identify and formulate strategic responses to existing commitments, risks and
opportunities, and constraints.
5. Component-level life-cycle strategies are prepared for inclusion in the various sectoral AMPs.
6. Life-cycle plans are prepared for a period suitable for immovable assets and are partitioned into period segments with the
required levels of accuracy.
7. Life-cycle plans for asset portfolios are optimised.

KEY NATIONAL REGULATIONS, POLICIES & STRATEGIES:

1. Municipal Finance Management Act, No. 56 of 2003
2. SABS: South African National Standard 55001: Asset Management – Management Systems – Requirements
3. Spatial Planning and Land Use Management Act, No. 16 of 2013
4. Municipal Standard Chart of Accounts
5. Standard for Infrastructure Procurement and Delivery Management
6. Maintenance Management Standard for Immovable Assets

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MODULE 6 Life-cycle strategies and plans

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 Life-cycle strategies and plans MODULE 6

CONTENTS
Module 6 Life-cycle strategies and plans

6.1 INTRODUCTION 6.1

6.2 CITY INFRASTRUCTURE LIFE-CYCLE STRATEGY 6.6

6.2.1 Why develop a city infrastructure life-cycle strategy? 6. 6
6.2.2 Identifying the nature and scale of the macro needs 6. 8
6.2.3 Identifying challenges, strategic risks, opportunities and constraints 6. 25
6.2.4 Identifying and assessing strategic response options 6. 29
6.2.5 Determining the city life-cycle strategy 6. 29

6.3 SECTOR INFRASTRUCTURE LIFE-CYCLE PLANS 6. 31

6.3.1 Why develop infrastructure life-cycle plans per sector? 6. 31
6.3.2 Confirming sector context, needs and challenges 6. 31
6.3.3 Preparing appropriate responses 6. 34
6.4.3 Sector prioritisation 6. 41

6.4 TIMELINES AND APPROVALS 6. 41

6.5 SUMMARY 6. 47

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MODULE 6 Life-cycle strategies and plans

LIST OF
Figures that appear in this toolkit

FIGURE 6.1: City and sector asset management objectives informing sector life-cycle strategy and plans 6.2
FIGURE 6.2: Linkage of city infrastructure life-cycle strategy and sector life-cycle plans 6.3
FIGURE 6.3: Planning horizons and level of detail 6.3
FIGURE 6.4: Asset (and component) life-cycle stages 6.4
FIGURE 6.5: Overview of the process to establigh the life-cycle strategies and plans 6.5
FIGURE 6.6: Cycles of increasing reliability of asset management planning instruments 6.7
FIGURE 6.7: Financial modelling rolled up from life-cycle strategies per component type 6.9
FIGURE 6.8: Illustration of key life-cycle activities influencing the portfolio health grade 6.17
FIGURE 6.9: Example of a report on portfolio renewal investment scenarios 6.18
FIGURE 6.10: Maintenance hierarchy 6.19
FIGURE 6.11: Maintenance effort per year (as a percentage of CRC) 6.21
FIGURE 6.12: Example output from the maintenance and renewals models (% CRC) 6.22
FIGURE 6.13: Example of prioritised allocation of available maintenance budget 6.23
FIGURE 6.14: Example illustrating the infrastructure life-cycle needs of various sectors overlaid on the available budget 6.24
FIGURE 6.15: Example illustrating the infrastructure life-cycle needs of existing and new infrastructure overlaid on the 6.24
available budget
FIGURE 6.16: Catalyst initiatives in support of main-stream service delivery programmes 6.26
FIGURE 6.17: Refinement of programmes and organisational preparedness ahead of implementation 6.27
FIGURE 6.18: Component data and portfoliuo status informing capital renewal programmes 6.36
FIGURE 6.19: Example multiterm capital renewal needs 6.37
FIGURE 6.20: Linking maintenance manageemt planning to asset care objectives (standards of service) 6.37
FIGURE 6.21: Example of link between portfolio maintenance managememt efficiency and budget needs 6.38
FIGURE 6.22: One cycle of planning, approval, delivery, and reporting 6.43
FIGURE 6.23: Concurrent processes in any given year 6.44

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 Life-cycle strategies and plans MODULE 6

LIST OF
Tables that appear in this toolkit

TABLE 6.1: Capital needs – current backlogs 6.12

TABLE 6.2: Capital needs – first 10 years 6.13
TABLE 6.3: Capital needs – following Periods 6.14
TABLE 6.4: Maintenance needs 6.14
TABLE 6.5: Operational needs 6.15
TABLE 6.6: Example maintenance model factors 6.21
TABLE 6.7: Overview of planning cycles 6.42
TABLE 6.8: Planning approval gates and responsible parties 6.45

Annexures
6A: Example component life-cycle strategies 6.47

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MODULE 6 Life-cycle strategies and plans

6.1 INTRODUC TION TO LIFE-CYCLE

STR ATEGIES AND PLANS

In the preceding Modules 3 and 4 techniques are provided to establish structured data and profile the existing infrastructure
portfolio and forecast service demand. In response to these needs, this module indicates the processes and techniques to be
adopted to prepare optimal asset life-cycle plans per sector.

DEFINITIONS RELATING TO LIFE-CYCLE STRATEGIES AND PLANS INCLUDE:

City infrastructure life-cycle strategy – overarching principles, themes and targets to manage infrastructure portfolio
life-cycles across all the sectors in the city to align with the city’s asset management objectives (the context and
requirements for which are indicated in Module 2).
Sector infrastructure life-cycle plan – life-cycle programmes, projects and activities over the 30-year-planning
period for the infrastructure assets (and components) under the control of a sector. As a subset of this, the sector
infrastructure life-cycle plan for the first five years, which is more detailed, dealing with activities, is referred to as the
sector infrastructure programme delivery plan (SIPDP) and is addressed in Module 7 along with the aggregated form
(covering all sectors for five years) of the city infrastructure programme delivery plan (CIPDP).
Component life-cycle strategy – the city’s default approach to the management of each of the life-cycle stages of a
particular component type (which may vary according to its criticality, ie the impact on asset management objectives
in the event of failure).

A key consideration in determining appropriate life-cycle The life-cycle plans are established in an iterative manner.
strategies and plans is the need to ensure asset management Initially, an overarching life-cycle strategy is established by
activities in the city are aligned both vertically and horizontally. contemplating the aggregate needs across the city, comprising
Accordingly, in a similar way that city asset management (AM) each of the respective infrastructure sectors, spanning from the
objectives are defined through the techniques indicated in present (using the latest audited period as a baseline) through
Module 2 as a departure point to support the city’s overarching the short, medium and long term – covering a planning period
strategic objectives, so too are sector-level AM objectives of 30 years – and, since needs will always outweigh available
determined to align with the city’s AM objectives. resources, the proposed responses are shaped in terms of an
adopted envelope of forecasted affordability. The backlog
model indicated in Section 6.2 of this module is used to craft
this over-arching strategic framework. It is informed by the city
strategic plan, as well as the city’s asset management strategy
and objectives as illustrated in Figure 6.1.

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 Life-cycle strategies and plans MODULE 6

FIGURE 6.1: City and sector asset management objectives informing life-cycle strategy and plans

The city’s infrastructure life-cycle strategy provides a necessary

framework to prepare the more detailed sector infrastructure
life-cycle plans that indicate the programmes to be pursued
in each sector. Identifying the main activities relating to the
constituent projects of these programmes, and the proposed
arrangements for their delivery, are the key outputs from this
module. In Module 7 these life-cycle plans are documented in
draft sector AM plans, and inform the preparation of a draft
strategic asset management plan (SAMP), which as noted in
Module 2, inter-alia confirms the status quo and identifies
strategic short, medium and long term response options.
These draft plans are reviewed, refined and inputs obtained
to enable final plans to be prepared (as noted in Module 7),
through a process of consultation with internal and external
stakeholders. Furthermore, in Module 7 the programmes
for the first five years are specifically reviewed, refined and
prioritised through the IDP consultation process which
results in the adoption of a final SAMP, comprising approved
programmes (as annexures indicating the CIPDP), budgets
and performance targets. These arrangements are illustrated
in Figure 6.2. The framework and processes to implement the
CIPDP are discussed in Modules 9 to 11.

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MODULE 6 Life-cycle strategies and plans

FIGURE 6.2: Linkage of city infrastructure life-cycle strategy and sector life-cycle plans

The planning horizons and the level of detail associated with each of the strategies and plans are indicated in Figure 6.3. The
detailed actions in the short (one year) and medium term (five years) are informed by the longer-term plans.

YEARS 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Detailed
Reference

programmes,
Programmes linked to planning
projects, Life-cycle stages linked to planning areas
area
activities,
locations
City infrastructure life-cycle strategy ROLLING
Sector infrastructure life-cycle plan ROLLING
Integrated development plan (IDP) FIXED YEARS
Sector asset management plans (AMPs) ROLLING
Strategic asset management plan (SAMP) ROLLING
City infrastructure programme delivery plan (CIPDP) ROLLING
Medium term revenue and expenditure framework ROLLING

FIGURE 6.3: Planning horizons and level of detail

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 Life-cycle strategies and plans MODULE 6

The life-cycle strategies and plans comprise a combination of both OPEX and CAPEX activities. As illustrated in Figure 6.4, the initial
need for an asset is typically identified as part of ongoing operations, or technical reports (such as master plans). The assessment
of viability and optimal configuration (including a review of non-asset solutions) is also the subject of operational expenditure. The
design and construction of assets are capital activities, though the roll-out of projects may also have operational activities (such as
raising community awareness).

FIGURE 6.4: Asset (and component) life-cycle stages

An overview of the processes is provided in Figure 6.5, noting the use of the data and techniques indicated in the previous modules
to first inform a review at city level, this then being used to provide a context for the review of each of the sectors.

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MODULE 6 Life-cycle strategies and plans

FIGURE 6.5: Overview of the process to establish the life-cycle strategies and plans

A key objective is to improve the planning of infrastructure programmes, and apart from the need to adopt regular and thorough
review processes, it is important to provide sufficient time for these to be effectively addressed. The timelines associated with the
preparation of the life-cycle plans, and obtaining approval at key milestones, are indicated in Section 6.4 of this module.

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 Life-cycle strategies and plans MODULE 6

6.2 CIT Y INFR ASTRUC TURE LIFE-C YCLE

STR ATEGY
6.2.1 Why develop a city infrastructure life-cycle strategy?

While there is a need for sector specialists to lead in the including the promotion of business or industry. Old urban areas
implementation of city infrastructure programmes to ensure may need widespread renewal of infrastructure, or re-design in
that the technical solutions are fit for purpose, there is often a terms of a vision of a new spatial development form. Additionally,
higher-order need for developmental needs to be addressed in the city will undertake catalytic programmes and projects that
a coordinated manner across multiple sectors in a city. A typical typically take years to conceptualise, plan and implement, and
example would be that cities should address the need for housing infrastructure responses need to be progressively refined and
in terms of the coordinated provision of water, sanitation, energy, implemented as such programmes and projects mature – readers
and transportation infrastructure in addition to the dwelling are referred to the National Treasury’s guidelines for catalytic
units themselves. In a city context, increased housing would also projects. Indeed, a singular vision of the nature, location, and
imply a review of the provision of social amenities and perhaps extent of future growth needs to be established (as contemplated
also extended city offices or depots. In addition, the city may also in Module 5) and applied consistently across the sectors. The life-
be pursuing improved environmental performance through the cycle responses would need to be coordinated across sectors to
phasing in of selected green infrastructure solutions. It could be minimise customer disruption and rework and perhaps facilitate
focused on job-creation objectives by adopting selected labour- densification. The responses (including both asset and non-asset
intensive construction methods or promoting local suppliers actions) should be coordinated across sectors from a technical,
of products. Social objectives may dictate the need for mixed spatial and timeline point of view to maximise the effectiveness
developments comprising different customer groups, perhaps and efficiency of the responses.

Indeed the broad nature (or “themes”) of the city’s strategic plan (comprising the spatial development framework, growth and
development strategies, as applicable) need first to be identified at city level. Alternative delivery options must next be reviewed to
identify the optimal response strategy. These are then prioritised and scheduled over time in terms of macro-affordability (including
an assessment of revenue projections and fund availability) and the city’s investment strategy as applicable to the respective sectors.
Decision making in this regard is guided by reviewing the influence on the key performance indicators established in the form of the
AM objectives in the asset management strategy (Module 2). Providing these parameters have been well defined, and are supported
by relevant, up-to-date and sufficiently accurate data, models and analysis, the costs and benefits can be reliably assessed using the
techniques shown in Module 8. From this information, reasonable conclusions can be drawn which inform the life-cycle strategy per
sector at the city level. This will be reflected in an initial compilation of the city SAMP that will be used to provide a strategic brief to
the sectors for the preparation of life-cycle strategies at the sector level as part of the preparation of (the next round of ) sector AMPs.
This initial version of the SAMP is also informed by the city’s strategic plan, Built Environment Performance Plan (BEPP), the previous
IDP and SDBIP, city asset management objectives, Project Management Strategy, and the City Infrastructure Procurement Delivery

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MODULE 6 Life-cycle strategies and plans

Strategy (CIPDS). The strategic brief includes directives on city Naturally, the needs, targets and plans are constantly evolving
developmental themes, priorities, the assumed affordability and cannot be regarded as static. However, there comes a point
(budget envelope) per sector, and a customer growth model in the development of the asset management system (described
for the planning period. in Module 2) where the level of asset management practice
can be considered to be mature in that it meets recognised
It may be found through analysis that elements of the city minimum criteria (such as SANS 55001). So, regardless of the
strategy are not affordable, or at least not in the time frame nature and scale of the existing challenges at any point, the
envisaged, or that alternative strategies may be more life-cycle plans can be considered to be robust - in line with
appropriate. In this way, decision makers may be provided the city’s corporate objectives and the resources at its disposal.
with compelling arguments of the need to adjust the nature, As illustrated in Figure 6.6, it could typically take several years
or target scale/timelines associated with city strategies. (perhaps 6 to 10) of annual improvement iterations to reach
Indeed, a city’s strategic plan may only be considered to be this point – comprising selected improvements to the data,
robust (among other things) once the viability of its life- the associated models and analysis processes; alignment of
cycle strategy and its delivery plans (in terms of internal and the city’s asset management objectives and the assessments
external delivery capacity and affordability) have been reliably emanating from the annual preparation of asset management
established. A notable context, for example, when considering plans; and ultimately the establishment of a robust asset
the addition of new infrastructure is to observe that since new management strategy - one that is demonstrably achievable,
infrastructure in any given year may typically comprise just 1 viable and sustainable. Having reached this point, the AM
to 2% of the value of the existing infrastructure, it is critical strategy (documented in the SAMP, and carried through to the
to understand the underlying risk of failure of the existing sectors in the AMPs) can be expected to remain fairly consistent,
infrastructure assets. though regularly reviewed to modify and adapt to the changing
operational environment and to drive strategic improvements.

• Robust data models

• Informed asset data collection
• Sufficiently complete, accurate
and updated
• Establish existing asset data
knowledge
• Determine certainty, gaps • Update status (backlogs and
• Data improvement plan risk exposure)
• Update demand forecast
• Optimise responses
• Identify status (backlogs and
risk exposure) • Inform budgets
• Establish demand forecast
• Identify needs • SMART asset management
• Identify affordability targets
• High-level budgets • Review priorities and tactics
• Selected AM practice
improvements
• Assemble understanding and • Pursue organisational
document prevailing AM policy, efficiencies
targets, priorities and tactics
• Assess current AM practice
• Determine AM improvement • Certifiable asset management
plan practice

• Realistic and achievable

strategic plan

FIGURE 6.6: Cycles of increasing reliability of asset management planning instruments

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 Life-cycle
Life-cyclestrategies
strategies and plans MODULE 6
and plans

6.2.2 Identifying the nature and scale of the macro needs

A backlog model is used to provide a consistent framework to

determine and assess capital and operational backlogs (needs)
in the short, medium and long term. The minimum study period
for the assessment is 30 years, given the long expected useful
lives of municipal infrastructure assets (on average around 40
to 50 years) and the long period often associated with planning,
design optimisation and implementing infrastructure. Life-
cycle needs are assessed in the model in current-day terms (the
base year is taken to be the most recent year that has audited
data) and is used for all projections in this model – ie all figures
are in real terms, without any escalation – so that they can be
more readily understood and aggregated – escalation over
such long periods would over-shadow the figures and dilute
understanding of the trends. Naturally, when introducing the
figures back into the future budgets, assumed escalation will
need to be introduced).

As noted in Module 3, a guiding principle in the approach

adopted in CIDMS is to adopt a straight-forward model at the
highest level that is easily understood by users and decision-
makers, and can be readily applied and then drilled down in
terms of sophistication on a selected basis. In the case of life-
cycle modelling it is an essential departure point to draw a line
between capital and operational activities, as these are the main
financial classifications used in budgeting and expenditure
monitoring. Consequently, the modelling is in tandem with this.

The approach adopted is to document the life-cycle strategy

relating to each component type, as actually practiced by the
city. This in turn dictates the expected useful life, residual value
if any, and, importantly, the level of effort required to achieve
the expected useful life. This latter effort (maintenance) forms
an important element of the sector’s operational budget - any
intervention implemented during the life-cycle of an asset that
contributes to meeting its EXPECTED useful life, is operational
expenditure (and, as discussed later in this section, should be
informed by models calibrated against prevailing (and planned
improvements to) maintenance practices. Modelling of the
elements of the component life-cycle strategies is calibrated (to
the extent possible given prevailing maintenance records) to
actual costs, as illustrated in Figure 6.7.

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MODULE 6 Life-cycle strategies and plans

FIGURE 6.7: Financial modelling rolled up from life-cycle strategies per component type

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 Life-cycle strategies and plans MODULE 6

This enables benchmarking and effective review of maintenance management efficiency and effectiveness. It also provides the
platform for reviews of the life-cycle management of components, and the review of the merits of new technology pertaining to
components. This provides an excellent foundation to drive improvements in the effectiveness and efficiency of the maintenance
practices in the city.

Renewal budgets are based on replacement unit rates which

are also calibrated to actual replacement costs (where available,
or by other techniques where these are not available). These
are reviewed regularly to reflect current prevailing rates (with
all the qualifying costs and local influencing factors) to ensure
the models are sufficiently accurate. Naturally, as projects are
progressively developed and refined, further optimisation
of the life-cycle treatment takes place that may realise
further additional costs or savings, and these in turn, when
implemented, will feed back into the data-base of actual costs
which inform the unit rates (and also possibly a review of the
life-cycle strategies relating to particular component types).

Capital backlogs are considered in the backlog model in terms of the need to service customers where there is:

No infrastructure Under-provision (in Existing Other existing

provision terms of the target infrastructure that infrastructure which
level of service) does not have is in a condition
sufficient capacity or not considered
is underperforming acceptable

Needs associated with operational budgets are considered in The model is applied for the whole city (and, as necessary,
terms of: to a number of predetermined physical planning areas
as contemplated in Module 5), and provides a basis for
• Maintenance costs – benchmarked on the model indicated
understanding zero-based life-cycle needs, the impact of
below in this subsection
the city’s actual and forecasted affordability as a constraint
• Operational costs – other infrastructure-related costs that
on the tempo of addressing backlogs, the balance required
include bulk purchases, process operations, planning and
between addressing the life-cycle needs of existing and new
control, and the sector’s proportionate allocation of the
infrastructure, and review of the relative budget requirements
corporate overheads.
of the various sectors. The model is calibrated and refined

“
over time (for example this could be with respect to increased
The model is calibrated and refined over time confidence in the condition deterioration curves of particular
to provide increasing levels of confidence.” component types) to provide increasing levels of confidence.

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MODULE 6 Life-cycle strategies and plans

The model produces a picture of the full infrastructure needs at portfolio level over the planning period:

01 EXISTING CAPITAL BACKLOGS

• Capacity – assets at, or beyond, capacity (grades 4 and 5 as
defined in Module 3);
• Performance – assets not performing (grades 4 and 5
excluding any double counting of assets included above);
• Condition – assets in poor or very poor condition (as a default
initial position to which a management response is crafted,
it can also be refined through the adoption of a maximum
% of assets in condition grades 4 and 5 relating to each of
the criticality grades, once these have been developed and
adopted as a sector AM objective); and
• Access backlogs (total or partial) – based on the assessment
of the actual and targeted level of service.

02 CAPITAL BACKLOGS (NEEDS) OVER THE FIRST

10 YEARS (AND THEN SUBSEQUENT PERIODS) 03 MAINTENANCE BACKLOGS
• Growth (based on customer data as identified in Module 5) – • Status quo (in Year 0 – the last audited financial year) – actual
including private/developer-created assets; and expenditure broken down to sectors – the total including
• Ongoing additional capital renewal needs (based on the wages/salaries, and corporate overheads (including
ongoing depreciation of the existing portfolio, less any allowance for consumption of workshops, stores etc.),
infrastructure which will not be replaced – for example consumables, vehicle and contractor/supplier costs;
associated with an inner city rejuvenation project - and • Needs in Year 10, and subsequent 10-year periods – based
infrastructure added due to cater for growth). on the assumption of addressing existing backlogs over
the period, as well as growth (note capital renewal does not
contribute to the maintenance burden) – and adoption of
the maintenance model indicated below in this subsection.

04 OPERATIONS BACKLOGS
• Status quo – based on analysis of existing data in Year 0 –
bulk purchases, process management (e.g. at treatment
works etc.), and security – excluding depreciation, interest
etc. – plus service-based operations (e.g. clinics).

The application of the model is illustrated in Tables 6.1 to 6.5.

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 Life-cycle strategies and plans MODULE 6

TABLE 6.1: Capital needs – current backlogs

CAPITAL (REPORT PERIOD) – YR 0 PRICES

YR 0
REPLACEMENT
VALUE (RM) ACTUAL
SECTOR EXPENDITURE TECHNICAL BACKLOG
YR 0
(RM) ACCESS TOTAL INCREASE
YR 0 % INCREASE
CAPACITY/ ADDITIONAL TOTAL BACKLOG BACKLOG IN ASSETS IN ASSETS
PERFORMANCE CONDITION (RM) (RM) (RM)
(RM)
(RM) (RM)

Water 6 199 49 66 415 481 1 001 1 482 1 416 23%

Sanitation 4 966 25 73 158 231 878 1 109 1 036 21%

Roads and
31 259 468 112 1 131 1 243 8 825 10 068 9 956 32%
stormwater

Electricity 24 386 1 003 347 4 358 4 705 2 522 7 227 6 880 28%

Solid waste 2 215 131 5 13 18 0 18 13 1%

Community
6 103 201 36 298 334 219 553 517 8%
facilities

TOTAL 75 128 1 877 639 6 373 7 012 13 445 20 457 19 818 26%

% of asset replacement value 1% 8% 9% 18% 27% 26%

NOTES:
1. The replacement value (CRC) of the infrastructure is drawn 3. The technical backlog data is also drawn from the asset
from the asset register and corrected as necessary to the register. Components that are at grade 4 or 5 utilisation or
Year 0 values. In order for these estimates to be sufficiently performance may be assumed to need replacement (an
accurate, the unit rates used to determine the replacement assumption in terms of the capital cost relative to the current
costs should be calibrated to prevailing industry practice replacement cost can be made). The replacement cost of
for capital renewals, and be consistent with the adopted items which are outside the target condition (which may be
lifecycle strategy for the component types (again reflecting dependent on its criticality grade) can be determined directly
the prevailing lifecycle treatment) – as discussed in Module 3. from the CRC data. A check needs to be made to ensure that
Estimates of the value of infrastructure under the control of components are not double counted.
third-party suppliers in the city area (e.g. Eskom) are included 4. The value of the access backlog can be determined, as
for completeness, but should be ring-fenced. a minimum practice, based on the number of sites not
2. Actual expenditure is taken from the audited financial adequately serviced and the average replacement cost of
statements for Year 0. infrastructure servicing similar current sites.

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MODULE 6 Life-cycle strategies and plans

TABLE 6.2: Capital needs – first 10 years

CAPITAL (REPORT PERIOD) – YR 0 PRICES

FUTURE (YRS 1 TO 10)
SECTOR BALANCE AVERAGE
TOTAL INCREASE IN % INCREASE
GROWTH (RM) RENEWAL ANNUAL
CAPITAL (RM) ASSETS (RM) IN ASSETS
(RM) INCREASE %
Water 1 648 976 2 624 1 648 27% 2.7%
Sanitation 1 554 302 1 856 1 554 31% 3.1%
Roads and stormwater 9 598 11 617 21 215 9 598 31% 3.1%
Electricity 6 983 2 318 9 301 6 983 29% 2.9%
Solid waste 724 344 1 068 724 33% 3.3%
Community facilities 1 043 1 846 2 889 1 043 17% 1.7%
TOTAL 21 550 17 404 38 954 21 550 29% 2.9%
% of asset replacement value 29% 23% 52%

NOTES:
1. For completeness, the capital to accommodate growth refined models can be used where the models have been
includes assets to be created by private developers and developed and data is available. Such models should account
handed over to the city (the funding plan takes this into for the applicable bulk costs, reticulation and connection
consideration). charges.
2. Growth is based on estimated increase of customers in the 4. “Balance renewals” are the costs of capital renewal in the
respective customer groups as indicated in Module 4. applicable period noting that the costs to address the current
3. The estimates of the value of infrastructure that needs to backlog have been catered for in the model. Typically the
be created to accommodate growth can be based on an annualised consumption of CRC (less any assets that will not
assumed pro-rata adjustment of the current average cost per be replaced at end of life) of the progressively increasing
customer (based on current replacement costs), adjusted in extent of infrastructure is used as an indicator.
line with the prevailing level of service per area. Alternatively

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 Life-cycle strategies and plans MODULE 6

TABLE 6.3: Capital needs – following periods

FUTURE (YRS 11 TO 30)

AVERAGE
AVERAGE TOTAL INCREASE %
BALANCE TOTAL INCREASE % ANNUAL
SECTOR GROWTH ANNUAL CAPITAL IN ASSETS INCREASE
RENEWAL CAPITAL IN ASSETS INCREASE INCREASE
(RM) INCREASE (RM) (RM) IN ASSETS
(RM) (RM) (RM) IN ASSETS %
%
Water 3 296 438 3 734 3 296 53% 2.7% 7 840 6 360 103% 3.4%
Sanitation 3 108 179 3 287 3 108 63% 3.1% 6 253 5 698 115% 3.8%
Roads and
19 196 5 511 24 707 19 196 61% 3.1% 55 991 38 750 124% 4.1%
stormwater
Electricity 13 966 1 187 15 153 13 966 57% 2.9% 31 681 27 829 114% 3.8%
Solid waste 1 448 172 1 620 1 448 65% 3.3% 2 706 2 185 99% 3.3%
Community
2 086 550 2 636 2 086 34% 1.7% 6 077 3 646 60% 2.0%
facilities
TOTAL 43 100 8 036 51 136 43 100 57% 2.9% 110 547 84 468 112% 3.7%
% of asset
57% 11% 68% 147%
replacement value

TABLE 6.4: Maintenance needs

MAINTENANCE (PA)
YR 0 YR 10 YR 30
SECTOR
ACTUAL YR ASSESSED % FORECAST % FORECAST %
0 (RM) NEED (RM) INCREASE NEED (RM) INCREASE NEED (RM) INCREASE
Water 155 146 -6% 213 38% 276 78%
Sanitation 118 113 -5% 167 42% 226 92%
Roads and stormwater 587 839 43% 959 63% 1 323 125%
Electricity 813 1 004 24% 1 007 24% 1 203 48%
Solid waste 83 106 28% 93 12% 114 37%
Community facilities 102 128 28% 124 21% 153 50%
TOTAL 1 858 2 336 26% 2 563 38% 3 295 77%
% of asset replacement value 2.5% 3.1% 26%

Note: Maintenance needs are determined from the maintenance model (this includes all associated costs, including internal staff,
buildings, vehicles, equipment and materials calibrated to the specific city and its operational environment) and are linked to the
component types and criticality distribution. It is typically assumed in this high-level model that the mix of component types and
the criticality distribution across the portfolio will remain constant into the future. The condition grade distribution will also remain
as per the target (so that a singular maintenance percentage can be established for this model).

6.14
MODULE 6 Life-cycle strategies and plans

OPERATIONS (PA) TOTAL O&M (PA)

YR 0 YR 10 YR 30
SECTOR ACTUAL ASSESSED FORECAST FORECAST
ACTUAL ASSESSED YR 0 NEED YR 0 NEED YR NEED YR
% FORECAST % FORECAST %
YR 0 NEED (RM) (RM) 10 (RM) 30 (RM)
INCREASE NEED (RM) INCREASE NEED (RM) INCREASE
(RM) (RM)

Water 155 171 10% 202 18% 264 71% 310 316 415 540

Sanitation 118 130 10% 159 23% 218 85% 236 242 327 445

Roads and
587 646 10% 828 28% 1 193 103% 1 174 1 485 1 787 2 516
stormwater

Electricity 813 894 10% 1 027 15% 1 292 59% 1 626 1 899 2 034 2 495

Solid waste 83 91 10% 105 15% 133 60% 166 197 198 246

Community
102 112 10% 132 18% 172 68% 204 240 256 325
facilities

TOTAL 1 858 2 044 10% 2 453 32% 2257 76% 3 716 4 380 5 016 6 567

% of asset
replacement 2.5% 10.3% 5% 18% 35% 77%
value

TABLE 6.5: Operational needs

Note: Operations are modelled using existing expenditure as a departure point (and therefore linking it to existing levels of efficiency).
It also caters for envisaged increases in bulk acquisitions, and operational cost increases (such as operations at treatment works) or
adjustment to service standards, if any. Depreciation, loan repayments and corporate overheads are NOT included in the model.

01 DEVELOPMENT COST MODEL

A development cost model at portfolio level is needed estimates for facilities (or asset group types) determined by
to establish budget cost estimates associated with new replicating components from existing facilities (in the asset
development, densification, and upgrading. “Baseline” rates register) may understate the cost of future ones.
are determined at asset-group-type level that represent the
cost of moving from one level of service (LOS – as defined Another approach is to prepare the models from first principles
through the techniques indicated in Module 4) to another – using unit rates, though these should also be calibrated
per customer type. The model needs to indicate greenfield with the CRC valuation rates used in the asset register, where
costs for new development, and brownfield costs for changing applicable, on the assumption they in turn have been calibrated
(typically upgrading) from one LOS to another, assuming an (as indicated above). A further refinement is to consider
urban environment. Where there are existing developments of “capital cost surfaces” (as noted in Module 5) that identify cost
a similar type, the CRC unit rates from the asset register (CRC) premiums or opportunities for development which overlay the
data may be used as a departure point, adjusting as necessary typical scenario modelled above, based on location.
from brownfield to greenfield rates, and other significant
influencing factors such as average stand size or development
density. Care needs to be taken to cater for instances where
there have been significant changes in design standards (for
example, more exacting environmental standards for treatment
“ Care needs to be taken to cater for instances
where there have been significant changes
in design standards”
works, recycling facilities, or increased access, safety and energy
conservation requirements at buildings). This is because cost

6.15
 Life-cycle strategies and plans MODULE 6

02 CAPITAL RENEWAL MODEL

A capital renewal model is required to forecast capital renewal
needs, and to inform the nature of the respective programme
responses. The nature of municipal infrastructure is such that it
generally deteriorates slowly over a long period of time. For some
assets this can take more than 100 years, though the average
for cities is generally around 40 to 50 years. On the other hand,
some assets have very much shorter lives, such as gravel road
surfaces that may only last three to five years. There can easily
be a perception that the “infrastructure will be there forever”,
and, like the previous year, there will be no failure regardless
of the level of maintenance. Of course this is a falsehood. This
is illustrated in Module 3, Figure 3.25, which shows the value
distribution of the portion of an infrastructure portfolio in poor
and very poor condition as it slowly, but progressively ages. The
relatively slim extent of infrastructure in poor and very poor
condition when the portfolio is new is compared to when it is
in mid-life, and the onslaught that descends at end of life. The
deterioration may be slow, and relatively indiscernible, but it
is certain – and when it occurs, the extent of infrastructure in
poor and very poor condition can be so extensive that it has
devastating impacts on service delivery. Fortunately in recent
years this has been increasingly recognised and generally
accepted, as services have plunged into non-performance with
corresponding public outcry, which has resulted in political Cities need to draw a line – a performance standard – indicating
attention and support for improved management. at what stage the deterioration of the portfolio becomes
intolerable. Or more simply, by answering the question “how
bad is too bad?” At a very basic level, a city may want to consider
any assets in poor or very poor condition to be undesirable, and
therefore constitute a backlog. However, in the vast majority of
cases this is most likely to be unaffordable, and most probably
unnecessary from the point of view of effective use of public
funds. A more appropriate line can be drawn in the form of a
percentage of assets in a given portfolio that may be tolerated
in a poor or very poor condition. Typically, this would be linked
to asset criticality (for example, not more than 5 per cent of the
primary roads, 10 per cent of the secondary, or 15 per cent of the
tertiary roads). It is a statement of the city’s risk threshold at the
portfolio level. The concept of the Portfolio Health Index, which
summarises the condition distribution of components within a
portfolio, was introduced in Module 3 and illustrated in Figure
3.22. The required data is drawn from the asset register, which
is configured as indicated in Module 3. The model can be used
to determine and report the level of capital renewal investment
required to achieve the target performance of a portfolio (or
asset group type) of assets (or indeed illustrate the forecasted
Health Index based on other investment scenarios).

6.16
MODULE 6 Life-cycle strategies and plans

As previously noted, the steady deterioration of the entire portfolio is a certainty with each year that passes. The rate of deterioration
depends on the life-cycle treatment of the components that make up the portfolio, and their operating environment (for which
appropriate component life-cycle strategies are established – an example of which is provided in Annexure 6A). At a portfolio level,
as illustrated in Figure 6.8, this may be tempered not only by the capital renewal of the assets at end of life, but also by adding new
infrastructure or developments (assets that were not there before), and, to a lesser extent, by assets that are decommissioned. The
tempo of these activities is what determines the overall condition distribution of the portfolio.

1 600 RENEWALS

1 400
1 200
R MILLION PA

1 000
DECOMMISSION
800
600
400 INVESTMENT
ONGOING DETERIORATION
200
0
VG G F P VP

FIGURE 6.8: Maintenance needs

These patterns can be characterised in financial terms - the

annualised CRC-based consumption of value characterises a
portfolio’s deterioration. And the ratio of the DRC value (less
any residual) to the replacement value (less any residual) is
indicative of the overall health grade – as indicated in Table
2A.1 in Module 2.

Given an initial departure point of the current health grade of

a portfolio, the renewal investment needs can be determined,
as illustrated in Figure 6.9, with a view to adopting a “holding
strategy” to not deteriorate any further, or a recovery strategy to
achieve the target health grade (or, if more precise parameters
have been determined, the accepted risk tolerance). Based on affordability, and a strategy of tolerating risk below
a particular threshold, cities can use this tool to determine
the trajectory of capital investment needs at portfolio level,
or, the performance that can be expected with different levels
of investment. A key underlying assumption is that prevailing
practice (reflected in the existing component life-cycle models)
is already optimised, which may not actually be the case. A
sensitivity analysis can be undertaken to establish the change
in budget requirements in the event that the actual useful life of
components exceeds (or is less than) the expected average life,
or certain levels of life-cycle cost optimisation can be achieved.
Such analyses, when undertaken using financial indicators
only, will often yield a result that prolonged maintenance is
the cheapest option, so triggers for renewal are often driven by
service standard thresholds.

6.17
 Life-cycle strategies and plans MODULE 6

100

90
% PORTFOLIO NOT IN P/VP CONDITION

80
SCENARIO #3
Aggressive
recovery expenditure
70

SCENARIO #2
Moderate
60 recovery expenditure

SCENARIO #1
50 Holding
expenditure

40
SCENARIO #0
Existing
expenditure
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

FIGURE 6.9: Example of a report on portfolio renewal investment scenarios

03 MAINTENANCE HIERARCHY
In line with the life-cycle cost model used in this toolkit (the critical components (such as crack-sealing and edge repairs to
principles of which are summarised in Figure 6.7), the OPEX arterial road surfaces, or large transformers), whereas reactive
maintenance activities related to any given component are maintenance may be acceptable for non-critical components
considered to be the effort required for the component to (such as general lighting), providing of course that there is
achieve its expected useful life (in line with the adopted an effective mechanism to identify these and schedule the
component life-cycle strategy). These activities are defined, at necessary repairs in line with the target portfolio performance.
a high level, in the life-cycle strategies per component type (an A run-to-failure maintenance regime is a planned corrective
example is given in Annexure 6A). They may be linked, at this, maintenance approach, provided steps are taken to inspect or
or a more detailed level, to a form of maintenance management otherwise identify when the asset has failed.
system that prompts and records maintenance activities.
These activities at the component level can be considered The objective should be to plan all maintenance activities,
to be preventative or reactive in nature, as illustrated in the whether they be preventative or reactive in nature, for critical
maintenance hierarchy shown in Figure 6.10 (which is in line and not-so-critical components. In particular priority should
with the definitions provided below that are consistent with be given to minimise the risk of failure of critical assets (which,
the ones indicated in the National Infrastructure Maintenance if they were to fail, would require immediate – ie emergency
Management Standard). The most appropriate maintenance corrective action). Naturally, however, regardless of whatever
regime for any given component type can be assessed by preventative steps are taken, this risk is not normally able to be
considering the benefit-cost ratio of alternative approaches. completely and absolutely eliminated, and emergency response
Often preventative methods can prove to be cost-effective for plans are required to cater for this eventuality.

6.18
MODULE 6 Life-cycle strategies and plans

MAINTENANCE
MAINTENANCE

PREVENTATIVE MAINTENANCE CORRECTIVE MAINTENANCE

TYPE

(SLOWS DETERIORATION OR REDUCES POSSIBILITY OF FAILURE) (BREAKDOWNS/FAILURES)

MAINTENANCE
APPROACH

INTERVAL-BASED CONDITION
PLANNED EMERGENCY
(NOTE 1) BASED

INSPECTIONS/ INSPECTIONS/
INSPECTIONS TESTING MONITORING CUSTOMER CUSTOMER
COMPLAINTS COMPLAINTS
MAINTENANCE ACTIONS

SERVICING AND
MAINTENANCE
ACTIONS
(PRESCRIBED SERVICING AND MAINTENANCE ACTIONS
REPAIRS (FREQUENCY ESTIMATES
FREQUENCY) E.G. (FREQUENCY ESTIMATED BASED ON ANALYSIS
BASED ON CONDITION AND
BASED OR EXPERIENCE AND SUBJECT TO INSPECTIONS,
CRITICALITY OF ASSETS)
ON SUPPLIERS’ TESTING AND MONITORING)
MANUALS OR
EXPERIENCE

MAINTENANCE PROGRAMMES AND PROJECTS

FIGURE 6.10: Maintenance hierarchy

NOTE 1 (INTERVAL-BASED PREVENTATIVE MAINTENANCE):

Normally reffered to as “time-based' preventative maintenance, but could also be based on number of machine hours, number of
outages, machine start-and-stop events etc.

DEFINITION OF MAINTENANCE
All actions intended to ensure that an asset performs a required function to a specific performance standard(s) over
its expected useful life by keeping it in as near as practicable to its original condition, including regular recurring
activities to keep the asset operating, but specifically excluding renewal. Refer to Appendix A for a hierarchy of
maintenance type, approach and actions.

Note: Maintenance also specifically excludes restoring the condition or performance of an asset following a recognised
impairment event, which would be classified as either renewal or upgrading, depending on the circumstances

6.19
 Life-cycle strategies and plans MODULE 6

DEFINITION OF PREVENTATIVE MAINTENANCE

Maintenance carried out at predetermined intervals, or corresponding to prescribed criteria, and intended to reduce
the probability of failure or the performance degradation of an item. Preventative maintenance is planned or carried
out on opportunity.

DEFINITION OF CORRECTIVE MAINTENANCE

Maintenance carried out after a failure has occurred and intended to restore an item to a state in which it can perform
its required function. Corrective maintenance can be planned or unplanned.

04 MAINTENANCE BUDGET NEEDS MODEL

A maintenance budget estimating model needs to be adopted by the cities to inform the portfolio life-cycle cost estimates in
the short, medium and long term. This is calibrated using relevant and reliable data from the asset register and/or maintenance
management systems, to establish higher-level parameters that can be more readily used in the life-cycle modelling, benchmarking,
and in particular for forecasting purposes.

The model links the required maintenance effort to:

The type of Its replacement value Its criticality Its condition

component

Figure 6.11 illustrates the concepts of such a model, where

the cost of the annual maintenance effort is expressed as a
percentage of the replacement value of the component (which
is adjusted for escalation every year) and its criticality grade.
In cases where the maintenance effort needs to increase as
the component deteriorates, there is a percentage on-cost.
The nature and scale of the on-costs can be modelled using
advanced techniques, where considered reliable and supported
by appropriate data, or they may initially be established using
engineering judgement. In both cases they should be calibrated,
as a departure point, to existing expenditure patterns.

6.20
MODULE 6 Life-cycle strategies and plans

2,5 MOST CRITICAL

CRITICAL

2 IMPORTANT

NON-CRITICAL

1,5 CURSORY
% CRC

0,5

VERY GOOD GOOD FAIR POOR VERY POOR

FIGURE 6.11: Maintenance effort per year (as a percentage of CRC)

As previously noted, the maintenance cost in this scenario is

considered to be an all-encompassing figure (to be able to
effectively support life-cycle costing, benchmarking, options
analysis and support decision-making purposes). Consequently
it includes all directly attributable activities, including:
maintenance management planning and supervision;
implementation by skilled, semi-skilled and unskilled workers;
parts; consumables; transport for materials and staff ; any
associated plant and equipment (such as lifting rigs or bladers);
and any associated buildings and their operations, such as
workshops and stores. Where these items have capital elements
(such as vehicles, or workshops) they are reduced to an annual
cost (as if the entire process was outsourced). An example of
the model relating to specific component types is illustrated in
Table 6.6.

% CRC FOR CRITICALITY GRADE: ADDITIONAL %

COMPONENT TYPE
1 2 3 4 5 POOR V POOR
Bituminous surface 1.0 1.1 1.3 1.5 1.7 10 25
Pump 4.0 4.2 4.5 4.9 5.2 5 10
Motor 3.6 3.8 4.0 4.3 4.6 10 20
Steel pipe 0.4 0.4 0.4 0.4 0.5 15 25

TABLE 6.6: Example maintenance model factors

6.21
 Life-cycle strategies and plans MODULE 6

While the models may initially be calibrated to align with

actual costs and prevailing maintenance practice at the sector
level, cities should aim to increasingly improve confidence in
the models and thereby an understanding of the efficiency of
the prevailing maintenance management practices as well as
the degree of optimisation of the asset maintenance tasks (ie
optimisation of the component life-cycle strategies).

Once appropriately calibrated, the model can be applied to the CRC, component type, criticality and condition data in the asset
register to estimate zero-based maintenance needs of all the components in the existing portfolio. It can also be used to forecast
future maintenance needs based on the changing profile of assets over the asset management planning report period by assuming
an appropriate mix of components. Where applicable, this can be based on the assets that are currently in existence and reflected
in the asset register (in an area where the development is considered to be of a similar nature to that envisaged in the future).
Alternatively it can be determined at a rolled-up level based on the breakdown of the bulk and reticulation infrastructure associated
with the development cost model, as described in the preceding paragraphs. An example of sector-level models that can be used in
conjunction with the development cost model, for maintenance and renewal costs, is illustrated in Figure 6.12.

6,0 RENEWAL NEEDS FOR PERIOD

MAINTENANCE
5,0

WEIGHTED AVERAGE
4,0 MAINTENANCE & RENEWAL
% CRC

3,0 WEIGHTED AVERAGE LIFE-

CYCLE COST FOR PERIOD
2,0
WEIGHTED AVERAGE
MAINTENANCE
1,0

0,0
Water

Sanitation

Roads and
stormwater

Electricity

Solid Waste

Community
facilities

Operational
buildings

FIGURE 6.12: Example output from the maintenance and renewals models (% CRC)

6.22
 MODULE 6 Life-cycle strategies and plans

05 MAINTENANCE BUDGET ALLOCATIONS

Whilst the maintenance management strategy will identify budget structure. The application of the maintenance budget
and commit to selective actions to achieve improvement, should be broken down in line with the respective city’s financial
a maintenance management plan needs to be prepared to policies, budget structure and commercial tactics (to allocate
respond as effectively as possible to the prevailing operational to budget items such as salaries and wages, vehicles, facilities
environment and available resources. The maintenance budget management, consumables, spares and outsourced services) –
needs data can also be used in conjunction with the criticality again in line with mSCOA and as contemplated in Module 8.
and condition data to prioritise actual budget allocations (to
component types) as illustrated in Figure 6.13. These can be A key pre-requisite for this approach to be effective is that the
rolled up to asset types (or asset group types) in line with mSCOA structure and data in the maintenance management system
requirements. Naturally these all-encompassing maintenance needs to be aligned and linked to the asset register (in line with
budget figures should be disaggregated into the appropriate the models indicated in Module 3).

REACTIVE
400
PREVENTATIVE
350
PREDICTIVE
R MILLION

300

250

200

150

100

50

0
Building fabric & external facilities
Building services
Civil structures
Water-retaining structures
Electrical equipment
Mechanical equipment
Bulk pipes
Pipes
Water meters
Metalwork
Pavement
Road structural layers
Earthworks
Road structures
Kerbs & drainage
Road furniture (general)
Signs
Road marketing
Public lighting
HV sub-station
HV conductor
MV primary sub-station
MV conductor
MV equipment
LV conductor
Sports facilities

FIGURE 6.13: Example of prioritised allocation of an actual budget made available for maintenance

06 OVERALL LIFE-CYCLE NEEDS AND AFFORDABILITY

Figure 6.14 provides an example of an assessment of the life- growth, and the potential benefits to be accrued from improved
cycle needs, in constant Rand terms) of the various sectors in a operational and revenue management performance.
city to address existing backlogs (assumed to be eradicated over
a 10 year period) and growth. This data is overlaid onto the city’s Figure 6.15 illustrates the same data but split between the
likely affordability profile and illustrates the nature and order life-cycle needs of the existing (lower row) and new (upper
of magnitude of the affordability gap, which in turn points to row) infrastructure, once again pointing to high-level strategic
the need for a strategic review and prioritisation of LOS and SOS challenges and the need to determine optimised, prioritised
targets and strategies, the impact (risks and opportunities) of and coordinated responses to the competing life-cycle needs.

6.23
 Life-cycle strategies and plans MODULE 6

R6 000
EXPENDITURE NEED PA (R MILLION)

R5 000

R4 000

R3 000

R2 000

R1 000

0 10 YEAR 20 30

CAPEX budget availability OPEX budget availability Water Sanitation

Roads & stormwater Electricity Solid waste Community facilities

FIGURE 6.14: Example illustrating infrastructure life-cycle needs per sector overlaid onto the available budget

R6 000
EXPENDITURE NEED PA (R MILLION)

R5 000

R4 000

R3 000

R2 000

R1 000

0 10 YEAR 20 30

CAPEX budget availability OPEX budget availability Renewals cost Technical backlogs cost

Maintenance cost Operations cost Renewals cost Growth cost

Access backlogs cost Maintenance cost Operations cost Year 0 CAPEX

Year 0 OPEX Existing Assets

FIGURE 6.15: Example illustrating the infrastructure life-cycle needs of

existing and new infrastructure overlaid onto the available budget

6.24
MODULE 6 Life-cycle strategies and plans

6.2.3 Identifying challenges, strategic risks, opportunities and constraints

The delivery of services through the city’s infrastructure requires implementing a range of programmes. These programmes
comprise a logical sequence of short, medium, and long-term activities with certain interdependencies, depending on the
nature and scale of the intervention. Indeed it could take several years to determine the optimal approach to achieving a
particular outcome for some of the larger or more strategic infrastructure programmes. This includes considering appropriate
asset (infrastructure) and non-asset solution options. Within each of these programmes, there would typically be a logical
sequence of phased activities to reach a point of completion of the outputs, and perhaps even longer for the benefits of the
programmes to be realised and outcomes tangibly measured. Some of the programmes may also have technical, spatial, or
social interdependencies that should be borne in mind in planning the infrastructure-related activities at portfolio level.

Whilst it is prudent to conduct periodic reviews of some Naturally, however, in the annual planning process (and
of the more far-reaching initiatives to ensure that they annual review of the IDP), there is a need to review
are still relevant, on track and indeed going to yield budget, technical, legal and social needs, opportunities
desirable outcomes relative to the required investment, and constraints relating to current commitments – at a
there is generally a need to stay the course with previous project and programme level (comprising both capital and
commitments and bring them to a satisfactory conclusion. operational budget initiatives). This is typically done by
This is especially true while implementing projects and the responsible directorate, or section within a directorate.
programmes that give effect to a current integrated One should also review the same issues at a city and
development plan (IDP). portfolio level. The latter includes a review of any changes
in the city’s strategic objectives or priorities, whilst taking
into account new or updated strategic information from
ongoing projects, programmes and strategic reviews. This
could include externally imposed strategic or emergency
responses that were not sufficiently catered for in previous
budgets and plans, or perhaps where revenue/expenditure
budget efficiencies have been realised. There could also be
internally inspired changes in strategy or strategic direction,
linked for example, to the development and adoption of a
new IDP, or the need to improve maintenance management
practices.

6.25
 Life-cycle strategies and plans MODULE 6

In this section, it is the annual review of city-level This relates to main-stream service delivery projects
infrastructure-delivery commitments, dependencies, encompassing the entire life cycle of infrastructure,
strategic risks, challenges, opportunities and constraints that comprising the capital portion traditionally associated with
are considered. This analysis provides the strategic status new, upgrading and renewal construction projects, as well
and context in the initial draft of the SAMP (represented by as infrastructure maintenance and operations expenditure.
the “establish strategic brief” action indicated in Figure 7.2 As illustrated in Figure 6.16, it also importantly includes the
in Module 7), which in turn informs the preparation of the expenditure that acts as a catalyst to future service delivery,
detailed draft sector AMPs (which feed back to the SAMP, the comprising:
finalisation of which is contemplated in Module 7. • Studies which identify and define the need for projects
and programmes (for example in response to a long term
bulk supply challenge);
• Maintenance Strategies and Plans;
• Operational Strategies and Plans;
• Project and programme viability and configuration
optimisation reports;
• Practice assessments and improvement plans; and
• Design and contract documentation preparation.

FIGURE 6.16: Catalyst initiatives in support of main-stream service delivery programmes

6.26
MODULE 6 Life-cycle strategies and plans

As illustrated in Figure 6.17, there needs to be a review to ensure that programmes have been sufficiently planned to ensure that
they are deserving (and qualify in terms of the asset management strategy) to receive application of the city’s limited available
resources.

FIGURE 6.17: Refinement of programmes and organisational preparedness ahead of implementation

The departure point in this process is to confirm the current position and identify what has changed since the last review in the
internal and external infrastructure-delivery environment. This will require the following assessments:

1. A review of the city’s performance in infrastructure asset 4. Confirmation of the state of implementation of existing
management against the city’s established performance CAPEX and OPEX programmes, including performance
measures and targets, benchmarked against other cities against the city’s metrics such as use of available funds,
2. An update of the infrastructure life-cycle needs over asset creation, sustainability of the asset portfolio, and
the reporting period (using the models and approaches reduction of backlogs
indicated in Section 6.2.2) 5. Confirmation of the planning areas to be used for life-
3. Confirmation of any adjustments made to the structure cycle planning and a review of the need for changes to
or nature of the city’s AM system (established in line with any aspects of the customer growth model or forecast (for
Module 2) that may require review of previously identified example based on more reliable or updated data becoming
projects and programmes to achieve improved vertical available, adjustment or refinement of the growth models
alignment with organisational objectives, the city’s long- or changes in demand management strategies)
term development strategy, IDP, infrastructure asset
management objectives, asset management policy, asset
management strategy or statutory requirements

6.27
 Life-cycle strategies and plans MODULE 6

6. A review of strategic risks – an update of the likelihood and

nature, location or scale of impact of previously identified
risk events as well as identification of new strategic
infrastructure delivery risks, which include:
• The integrity and efficacy of the asset management
system across the city (performance, finance and
risk management models and processes; data
quality; planning, reporting, and decision-making
processes; capital, operations, and maintenance works
management; organisational governance, capacity and
competency) – using the performance metrics reflected
in the AM strategy (determined in line with Module 2)
• Internal capital project and programme delivery –
8. Flagging opportunities for potential application of the city’s
assessing actual performance in the previous year and
strategic themes such as areas identified for redevelopment
trends analysis using the performance metrics; reviewing
or densification; industrial or commercial growth; special
the efficacy of existing controls, and the adequacy of
projects or events; infrastructure greening; the adoption
project preparation activities to underpin the required
of labour-intensive methods of construction; use of local
pace of delivery; and mitigating under-expenditure on
materials/products; non-asset solutions (such as the
programmes due to unforeseen delays at project level
imposition of tariff controls, the introduction of awareness
• Internal operations and maintenance project and and educational programmes to encourage behavioural
programme delivery risk analysis – how adequate is change or bylaws); maintenance management practices or
the maintenance schedule to cover the risk of under- or tools; or organisational efficiency drives
overuse of available funds? This can be due to changes in
9. A review of common themes of infrastructure asset
actual maintenance needs which may be unforeseen at
management practice improvement needs identified at the
project level (such as a need for emergency repairs), but
sector level which can be most effectively be addressed at
can be assessed at programme level in the short, medium
city level
and long term in view of infrastructure condition,
criticality, and the prevailing maintenance regime 10. A review of the need to adjust maintenance management
practices or asset maintenance regimes (reflected in the
• Physical failure risk (based on updated failure mode
component asset life-cycle strategies) to achieve the
status and criticality data, rolled up and reported to asset
target standards of service, and/or achieve cost or risk
group type level per sector) of existing infrastructure as
management efficiencies
indicated in Module 3
11. A review of fund availability - accurate to within five per
• External supply risks, such as availability of bulk services,
cent for the first five years, indicative for years 6 to 10 (10
specialist products or services
per cent accuracy), and broadly indicative for years 11 to
7. A review to identify new technology, products, strategies, 30 (25 per cent accuracy), as well as an assessment of the
methodologies, models and techniques with a view associated risks, opportunities, or constraints on funding
to further assessment at the city (in the case of cross-
12. A review of operational efficiency and effectiveness
cutting application) or sector level. The aim is to ensure
improvements
that innovative solutions are adopted where benefits can
be demonstrated (where applicable, using the life-cycle 13. A review of funding options in line with the AM strategy,
costing techniques indicated in Module 8 to assess and and identification and review of potential packaging of
demonstrate potential benefits). The level of detail of the activities across sectors’ departments (for example for
required analyses would depend on the nature and scale of funding of programmes through a PPP initiative)
the potential impacts and benefits, as per the requirements 14. A review of programme or project coordination (location/
of the AM System (contemplated in Module 2) time/technology) risks and opportunities.

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MODULE 6 Life-cycle strategies and plans

6.2.4 Identifying and assessing strategic response options

The outputs from Sections 6.2.2 and 6.2.3 on the status and context of the city-level infrastructure delivery challenges provides
the departure point to identify and assess strategic response options. The existence and efficacy of existing responses to
the stated strategic objectives, risks and opportunities should be identified and reviewed. Where the existing responses are
considered to be inadequate, or could be improved, alternative strategic options should be identified. These are assessed
in terms of target outcomes and performance metrics indicated in the asset management strategy that follow the “SMART”
principle (specific, measurable, achievable, relevant, and time based). As noted in Section 6.2.1, where asset management
practice is not yet sufficiently mature, proposed new metrics should be proposed to increasingly develop a robust asset
management strategy - covering both the performance of the AM system and the service-delivery performance of the assets.

The selection of a preferred solution is based on an assessment assessments and recommendations on the most appropriate
of the applicable financial, social, environmental and economic city-level strategic response options and their implications are
costs and benefits indicated in Module 8. Where aspects are documented as a preliminary input to the SAMP document
identified that do not have any cross-sectoral implications (for to be used to provide an initial strategic brief to the sector
example, identifying new pipe replacement techniques) the departments (this is indicated as the first initiating step in the
assessment of the appropriateness of adopting or allowing the preparation of the sector AMPs in Figure 7.2 which provides an
alternative technology is deferred for assessment as part of the overview of the subsequent sector AMP preparation process).
review of the sectoral life-cycle strategies. The outputs of the

6.2.5 Determining the city life-cycle strategy

The outputs from Section 6.2.4 above inform the determination of strategies and tactics to be adopted in the preparation of
the next annual round of the SAMP and sector AMPs. The selection of the options, or the extent to which they are adopted, are
determined by affordability (in terms of the uncommitted and discretionary portion of the available funds), and the strategic
objectives and priorities of the city.

As applicable, the summary of the city’s life-cycle needs (built

up from a summary per sector as indicated in Section 6.2.2) is
updated and reflected in the initial draft of the SAMP to reflect
the application of the adjustments, for example the following:
• Changes in the initial backlogs (which could be due to
changes or refinements in the definitions of what constitutes
backlogs, actions that have been implemented to reduce
the backlogs, a surge or reduction in growth compared to
previous forecasts or improved delivery performance)
• Changes in the time frame for addressing the various
backlogs – due to shifts in strategic priorities, organisational
efficiency improvements, or affordability
• Changes in operational effectiveness or efficiency
• Changes in affordability (availability of funds)
• Changes in strategic objectives and/or priorities
• Improved status, life-cycle and growth data or models.

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 Life-cycle strategies and plans MODULE 6

In addition to the above, based on the assessments undertaken,

directives are provided in the initial SAMP for the sector
departments to take into account when preparing the more
detailed sector life-cycle plans and draft AMPs. The following
are examples of the types of directives that could materialise:
• Determine options to increase bulk water, sanitation and
electricity supply capacity by 2022 in Hazelwood to facilitate
the proposed programme of housing densification in that
area
• Establish procedures to improve data completeness and
accuracy on new infrastructure, in line with the new adopted
targets
• Assess the merits of an identified new loss-control technology
• Determine the impact on each of the respective sectors of
the new adopted customer growth forecast for the city
• Assess the implications on all bulk and reticulation services of
the proposed new inner city regeneration programme
• Assume nominal increase of 3 per cent in the capital budget
available and 7 per cent on the operational budget based on
roll-out of revenue enhancement measures, but allow for an
eight per cent increase in bulk costs
• Bring forward implementation of projects with significant
job-creation opportunities by giving higher priority to
economic outcomes
• Based on benchmarking data, examine the operational
efficiency of the roads maintenance operations • In terms of a new and emergency strategic intervention in
the city, identify capital programmes which can be deferred
to contribute to establish the required additional funding
over the next two financial years, and note the implications
• Plan to prepare project designs and documentation for short,
medium and long term to a value in excess of 20 per cent
of the expected available budgets to mitigate risk of under-
expenditure due to unforeseen project delays
• Aim to achieve a maximum of only 5 per cent of arterial roads,
10 per cent secondary roads and 15 per cent of tertiary roads
in poor and very poor condition by 2020
• Participate in planning for a combined schools education
programme on municipal services to raise awareness of the
need to care for the community’s infrastructure.

As noted in Section 6.2.1 as these directives are set, put into practice, reviewed and refined as considered necessary over a number
of annual iterations, they will become increasingly robust and some will become entrenched as part of the established strategic
response of the city and will be documented as such in the asset management strategy.

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MODULE 6 Life-cycle strategies and plans

6.3 SEC TOR INFR ASTRUC TURE

LIFE-CYCLE PLANS
6.3.1 Why develop infrastructure life-cycle plans per sector?

The sector life-cycle plans drill down the city-wide portfolio Naturally in any given year, there will be a number of ongoing
life-cycle strategy (discussed in Section 6.2 above) to the level projects and programmes and other than simply updating and
at which implementation is managed, generally in the form reviewing these in line with the city-wide directives, there is also
of programmes within a sector. Included in this ambit are not a need for a strategic review at the sector level. While this may
only the projects and activities within the sector but also the have formed part of the city’s review previously undertaken, it
coordination of cross-sectoral programmes. The sector budgets is now also contemplated by the sector at the planning area,
that were summarised in broad life-cycle categories in the city- programme and project level.
wide portfolio life-cycle strategy (above) are now reviewed and
refined through a process of linking to specific programmes,
projects and activities. These are packaged and scheduled in
line with the programme and project management framework
determined in Modules 9 to 11. Whilst the initial focus of this
toolkit is on capital projects, in line with mSCOA prescripts, it is
noted that similar requirements pertain to programmes to be
funded from the operational budget (as illustrated in Figure 6.4
including the identification and initial definition of CAPEX and
OPEX projects and programmes, as well as the maintenance and
operational activities associated with completed infrastructure).

6.3.2 Confirming sector context, needs and challenges

In this section, the annual review of sector-level infrastructure This process begins with receipt of the city-wide (SAMP)
needs, delivery commitments, dependencies, strategic risks, directives, which will include confirmation of the customer
opportunities and constraints is considered. As with the growth scenario and planning areas; a preliminary indication
assessment at the city-level, in line with good AM practice, of expected budget availability to the sector for the various
this exercise relates to the entire life cycle of infrastructure. It life-cycle elements over the 30-year planning period (for initial
comprises not only the capital portion traditionally associated planning inputs); and strategic and tactical directives in terms of
with new, upgrading and renewal/rehabilitation construction asset management and asset performance.
projects, but also operational expenditure (as noted above in
the section dealing with the city-level assessment).

The expected budget availability for first five years will be broken down as follows:

C APEX OPEX
New infrastructure programmes Bulk purchases
Upgrading (of existing infrastructure) programmes Operations: contractor costs and internal labour, plant
Renewals programmes and vehicles, and materials
Land acquisition or servitude registration Maintenance: contractor costs and internal labour,
plant and vehicles, and materials

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 Life-cycle strategies and plans MODULE 6

The estimated budget availability for years 6 to 30 will be stated on the basis of a simple split between CAPEX and OPEX. For
modelling purposes, all budget figures are reduced to current day (Year 0) figures (implying an annual escalation of previous year’s
baseline figures).

An update and refinement of the infrastructure life-cycle needs

over the report period (in line with the model structure indicated
in Section 6.2.2) is established for the specified planning
areas. The data and models are updated and improved, where
applicable, based on separate reports or studies that have been
concluded. These should improve, on an assessed risk basis,
the certainty of the needs data (for example data from surveys
and inspections, or improved processes of analysis). In simple
terms, this means refining the data and models where the cost
of doing so can be motivated in terms of the decision it supports
(for example, asset replacement, or confirming the nature or
location of backlogs). Area-based reports are aggregated to
establish an updated and refined report on the overall sector
life-cycle needs.

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MODULE 6 Life-cycle strategies and plans

Other sector-based review activities include:

1. Reviewing and confirming the sector performance in
infrastructure delivery and the efficacy of the AM system,
based on the metrics determined in line with Module 2
2. Reviewing and confirming asset management practices
improvement actions required in the sector (based on a
structured assessment of prevailing and target practice and
by identifying prioritised actions) as indicated in Module 2
3. Confirming the status of current (CAPEX and OPEX)
projects and programmes, such as the state of completion; • Capital project and programme delivery risk - analysis
changes in viability (in terms of significant changes to of identification, inception and progress risks, over- and
predicted final costs and/or benefits/outcomes); changes under-expenditure risks, quality risks, funding risks,
to the implementation schedule (of the project and other and coordination (location, time, and technology) risks
dependant activities); and annual budget needs. This will within the sector as well as in common programmes with
result in an update to the schedules and cash flows (and other sectors
possibly changed priority) of committed and uncommitted • Maintenance project and programme delivery risk -
programmes analysis of the adequacy of the maintenance schedule to
4. Review and confirmation of the effectiveness of prevailing cover the risk of under- or overuse of available funds due
and planned demand management tactics (as contemplated to changes in actual maintenance needs
in Module 5) • Operations project and programme delivery risk -
5. Review of the budget availability, level of current analysis of the adequacy of the maintenance schedule
commitments and determination of the nature and scale of to cover the risk of under- or overuse of available funds
the discretionary portion due to changes in actual infrastructure operations’ needs
6. Review and confirmation of the adequacy of the project • The effectiveness of the capital and operational
identification and definition activities to cater for future programmes in supporting the AM objectives
capital project and programme implementation • Physical failure risk of existing infrastructure (based on
7. A review of sector risks – an update of the likelihood and updated failure mode status and criticality data, rolled
nature, location or scale of impact of previously identified up and reported to asset group type level per sector and
risk events and the effectiveness of existing controls (in the rolled up for the whole sector) as indicated in Module 3
risk register), as well as identification of new infrastructure • External supply risks, such as availability of bulk supply,
delivery risks – which include: specialist products or services
• The integrity and efficacy of the asset management 8. A review to identify new technology, products, strategies,
system in the sector department (performance, finance methodologies, models and techniques which could be
and risk management models and processes; data beneficial to the effectiveness or efficiency of infrastructure
quality; planning, reporting, and decision-making delivery
processes; capital, operations, and maintenance works
9. A review of opportunities in the sector for potential
management; organisational governance, capacity and
application of the city’s strategic themes
competency)
10. A review of the city’s performance in infrastructure asset
management benchmarked against sector departments in
other cities to identify potential areas for improvement;
11. A review of programme or project coordination (location/
time/technology) opportunities (within the sector as well as
with other sectors on integrated programmes)
12. A review of the outcomes of previously completed
programmes and lessons learned.

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 Life-cycle strategies and plans MODULE 6

6.3.3 Preparing appropriate responses

This section considers the approach to be adopted in preparing

appropriate responses to the needs, challenges, risks and
opportunities identified in Section 6.3.2. The parameters to
be assessed when considering the benefits of implementing a
proposed initiative, or in considering the merits of alternative
approaches, are determined as part of establishing the AM
system, as indicated in Module 2 of the toolkit. The processes
to be adopted in the various types of assessments are indicated
in Module 8.

Responses will typically be in the form of capital or operational

initiatives. Typically these will be in the form of programmes
which may consist of multiple discrete projects and activities.
Some of these may be capital in nature, and others will be
operational. Typical elements of different types of projects (for
example, environmental impact assessments, the design and
documentation stage, procurement etc.) are defined in a project
and programme management framework – established in line
with Module 9. In the same way, guidance is also given on the
duration and cost of these activities, as a basis for establishing
a realistic estimate of the schedule and cash flow for each
initiative.

The accuracy of the budget needs of the proposed responses (overall and per year) should be as follows:

10% 20% 40%

Programmes accurate within 10 per Programmes accurate within 20 per CAPEX and OPEX within 40 per cent
cent for first five years cent up to 10 years accuracy after 10 years

The achievement of these targets will need to be demonstrated in terms of the quality of the process adopted as well as the
confidence in the input data. A draft schedule of the programmes, the associated cash flows, viability and priority ranking will be
established and will provide input to the preparation of the sector AMP and SAMP documents contemplated in Module 7.

6.34
MODULE 6 Life-cycle strategies and plans

01 ASSESSMENT OF NEW TECHNOLOGIES

New technology may present itself in many different forms,
and the potential benefits may be direct or indirect, tangible
or intangible. Where new materials, products, or methods
of construction become available, an assessment of the
benefits needs to be made, and where applicable, compared
to the existing approach. In this regard, the city must have a
documented life-cycle strategy for each of its component types,
which indicates the following:

The manner in which The typical The trigger for The rules for
needs for the initial maintenance renewal (and the decommissioning
capital investment regime that applies manner in which this
are identified (though this may is normally applied
vary depending on – e.g. replacement,
the criticality of the rehabilitation and the
component) and the type of treatment) and
expected useful life any residual value

An example of a life-cycle strategy is included in Appendix 6A. Where the initial assessment of an alternative approach indicates a
positive result, it will often be appropriate to pilot the implementation of the new technology to test and improve the confidence in
the data used in the assessment.

02 STUDIES, INSPECTIONS AND REPORTS (OPEX)

Where specialist services are required to inform management
strategy, tactics or operations, these will typically be operational
budget items, and may be addressed collectively, for example
under a term contract for an infrastructure inspection
programme.

03 CAPITAL PROJECT IDENTIFICATION, CONFIGURATION

AND VIABILITY ASSESSMENT (OPEX)
When there is a reported need for a capital project intervention, the first step is to prepare a report that confirms the aim of the project,
and considers various conceptual design alternatives (which could, for example, be considering the most appropriate site, technical
configuration, whether to employ non-asset solutions, or assessing different life-cycle options that could be adopted). Once the nature,
location and design approach of the project have been determined, and the viability demonstrated (using techniques indicated in
Module 8), and the report is approved, the preliminary and detailed design proceeds and preparation of contract documentation as
part of the capital programme and in line with the processes and approval gates indicated in Modules 9 to 11.

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 Life-cycle strategies and plans MODULE 6

04 NEW AND UPGRADING WORKS (CAPEX) 05 RENEWALS (CAPEX)

The opportunity to influence the life-cycle costs of infrastructure In the previous section, the approach to determining the
is typically at its peak during the design stage. It is essential, required level of investment for a particular portfolio was
therefore, that the full life cycle of a proposed new asset is indicated. Once the intensity of investment of the capital
contemplated in the design stage, and opportunities for life- renewal programme has been determined, it is linked back to
cycle optimisation are identified and assessed. This could, the initial source data in the asset register (as illustrated in Figure
for example, include the use of specific materials or design 6.18) to determine the priorities (based on the criticality and risk
configurations to facilitate longer life, and ease of access exposure data at component level) and packaged for practical
to components for inspection and replacement purposes. implementation. The interventions can be grouped taking into
Ideally these aspects should be reviewed and signed off by account facility or depot areas, or based on asset or component
the operations department responsible for maintenance and types as appropriate to the city’s Procurement Strategy
renewal. As part of the documentation processes associated (prepared in line with Modules 9 to 11 as part of assembling
with capital projects, maintenance (and where applicable, the AM system contemplated in Module 2). It may consider
operations) manuals must be prepared in line with the sector’s different approaches for various applications within the sector
maintenance management strategy and plan and submitted as (for example acquisition of capital spares and replacement by
part of the handover procedures for new or upgraded works. in-house resources, or an outsourced supply-and-install term
contract, and specific contracts for large and infrequent works).

Renewal programmes are typically planned to have a

reasonably constant intensity of implementation (and therefore
“smoothed” annual budget), so the renewal interventions
should be packaged with this in mind. A simple trigger can be
established for multiple small renewals or replacements (such
as meter replacement, small reticulation, or tertiary roads), such
as condition or performance data (supported by documented
life-cycle costing information that can be periodically reviewed).
However larger capital renewal interventions (as may be
defined in the AM Strategy), will require analysis of the merits
of alternative technical solutions, including a comparison of the
life-cycle costing of the options.

COST OF DATA REMAINING USEFUL

CONDITION UTILISATION PERFORMANCE CONFIDENCE LIFE ALGORITHM
COMPONENT LEVEL

OPERATION

SHORTEST RUL - REPLACEMENT NEED

CRITICALITY REPLACEMENT PRIORITY

COST OF
CONDITION UTILISATION PERFORMANCE OPERATION
PORTFOLIO LEVEL
RISK EXPOSURE

CAPITAL RENEWAL PROGRAMME

LEVELS AND STANDARDS OF SERVICE TARGETS/RISK APPETITE

PORTFOLIO/PROGRAMME LEVEL OF EXPENDITURE BUDGET AVAILABLITY

FIGURE 6.18: Component data and portfolio status informing capital renewal programs

6.36
 MODULE 6 Life-cycle strategies and plans

Figure 6.19 illustrates an output of capital renewal needs taken directly from the asset register data (from Ekurhuleni) illustrating the
need to smooth the annual budgets, with implementation priority being influenced by the criticality of components.

FIGURE 6.19: Example multi-term capital renewal needs

2 500

2 000 OPERATIONAL BUILDING

COMMUNITY FACILITIES
1 500
R MILLION

WASTE FACILITIES

ELECTRICITY NETWORK
1 000
ROADS, RAIL AND STORMWATER

500 NETWORK

ERWAT
0 SANITATION NETWORK

WATER SUPPLY NETWORK

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

06 MAINTENANCE – MAINTENANCE OPTIMISATION, MONITORING

STATUS AND PERFORMANCE DATA (OPEX)
Figure 6.20 is an extract from the National Maintenance Management Standard which indicates the linkages from the AM objectives
to “asset care objectives” which will be adopted as performance measures and targets in the asset management strategy, and
typically will relate to standards of service, such as frequency and duration of outage, or asset condition. These in turn point to
conduct an assessment of the sector’s exposure to asset performance risk, based on failure mode status and criticality data. At
sector level, a strategic review of this will be made in a Maintenance Management Strategy, and this will be applied in each year’s
Maintenance Management Plan.

ORGANISATIONAL
AM OBJECTIVES
OBJECTIVES

PERFORMANCE
MONITORING ASSET CARE OBJECTIVES
AND EVALUATION

FAILURE MODES AND

EXECUTION OF WORKS
INTERVENTION LEVELS

BUDGETING FOR ASSET MAINTENANCE

CARE APPROACHES

MAINTENANCE AND
ASSET CARE ACCOUNTING
RENEWAL PLANS

FIGURE 6.20: Linking maintenance management planning to asset care objectives (standards of service)

6.37
 Life-cycle strategies and plans MODULE 6

A Maintenance Management Strategy reviews current practices,

identifies opportunities for improvement (informed by the
practices assessment methodology indicated in Module 2), and
considers the benefit-cost of any improvement actions. It also
identifies and considers the impacts of obsolescence and merits
of opportunities presented in the form of new management
technologies and techniques, as well as potential improvements
to component life-cycle strategies, and determines an
implementation strategy including, where appropriate, a
change management plan. Benchmarking can provide useful
insights in such an exercise - whilst there are multiple unique
characteristics of any given city (such as condition, size, and
distribution of the infrastructure, as well as the operating
environment due to influences such as topography or climate),
there are also trends that can be used to identify scope
and opportunity for maintenance management efficiency
improvements. Apart from applying technically sound and
optimised maintenance interventions on infrastructure, the
efficiency of the management system will generally also
have considerable bearing on the overall performance of the
maintenance activities (and therefore standards of service).
This can include a range of logistical challenges, including the
nature, size and competency of the maintenance teams, their
location, access to materials and spares, availability of vehicles
and drivers, works orders processes, availability of reliable
information etc.

With appropriately calibrated models of the resource implications of the component life-cycle strategies that are linked to the
nature, extent and location data in the asset register, strategic options and opportunities can be examined. Figure 6.21 illustrates
an example where the potential solution to meeting the maintenance needs of an infrastructure portfolio can be demonstrated and
quantified in terms of a combination of targeted budget and performance responses.

FIGURE 6.21: Example of link between portfolio maintenance management efficiency and budget needs

R200
MAINTENANCE COST (MILLION PA)

R180
R160
R140 INCREASED BUDGET

R120
R100
R80 IMPROVED EFFICIENCY
R60
R40 NON-CRITICAL
R20 IMPORTANT ASSETS
R- CRITICAL ASSETS

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 EXISTING EXPENDITURE

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MODULE 6 Life-cycle strategies and plans

A Maintenance Management Strategy should be prepared for each sector and reviewed at least every 5 years. As appropriate, the
strategy would include a change management plan. The strategy would have a 5 year planning horizon with Annual Maintenance
Management Plans which review the plan (guided by the strategy) each year based on the resources made available.

The approach to determining the level of the maintenance (and stated targets of risk exposure and performance) should
budget needs is indicated in the previous section of this be reported. The level of accuracy of the model also needs to
module. The model attaches a percentage CRC to estimate the be considered, depending on the extent to which it has been
maintenance budget per year for each component (adjusted effectively calibrated to the specific operations of the sector
for its criticality and condition). This approach facilitates the in the city. Another aspect to consider is how effective the
establishment of a complete picture of the maintenance needs prevailing technical approach to maintenance is as well as how
across different geographic areas (such as depot or planning effectively and efficiently the activities are implemented. Cities
areas) and also of the asset and component types within the should as a minimum have the maintenance strategy and its
sector, now and into the future. This can be rolled up to Asset operational processes documented per sector. This should be
Type (as per the mSCOA requirements), or other levels as used as a basis for review of opportunities for maintenance
required. The city-level life-cycle strategy provides a preliminary management improvements. Where applicable, this should be
indication of the budget availability, and therefore the extent to facilitated by the benchmarking of practices with other cities. A
which the needs can be addressed. The implications of the level key element of the effectiveness of the maintenance planning
of funding made available should be assessed and reported. will be to ensure that relevant and up-to date data is fed back
In simple terms, the ability to maintain the more critical assets from the maintenance inspections to provide accurate condition
effectively needs to be determined. Subsequently an analysis of (and other failure mode) data – in line with the models indicated
the extent to which other assets can be maintained or should in Module 3 of this toolkit.
be sweated, and the implications of this on standards of service

The application of the available funding is planned (in line with mSCOA requirements) at asset type level (for example water meters,
or electrical equipment). The funding is apportioned to the various maintenance budget cost items in line with mSCOA and the
sector’s specific approach to maintenance, noting current commitments (for example salaries and wages, and corporate overheads/
internal charges) and any discretionary portion that can be applied. Preventative and reactive maintenance activities are scheduled
and prioritised in line with the prevailing management practices and available resources and budget.

6.39
 Life-cycle
Life-cyclestrategies
strategies and plans MODULE 6
and plans

06 OPERATIONS – BULK SUPPLIES, PROCESS

MANAGEMENT (OPEX)
In a similar way to the strategic review of maintenance, an
Operations Management Strategy should be prepared for
each sector at least every 5 years to review the effectiveness
and efficiency of infrastructure operations – including an
assessment of the performance of operational activities as well
as operational management performance; observing changes
made or expected in the statutory environment; identification
of opportunities to improve performance and/or reduce
costs of operational activities such as at treatment works,
or security (for example through new technology or proven
management techniques); and assessment of the reliability and
cost of bulk purchases and review of alternative strategies. As
with maintenance management, benchmarking can provide
useful insights on strategic improvement opportunities. As
appropriate, the strategy would include a change management
plan. The strategy would have a 5 year planning horizon with
Annual Operations Management Plans that are reviewed each
year ahead of implementation. The approach to determining the level of the operations
budget needs is indicated in the previous section. It takes the
current expenditure as the departure point, but is guided by
the Operations Management Strategy forecasts and the actual
amounts indicated by the city. There could, for example, be
new commercial or technical arrangements for operational
activities such as process management and bulk supplies.
Naturally the availability, cost and performance of bulk services
(such as electricity and water) can have a considerable impact
on the performance of the city in delivering infrastructure-
related services. Especially with a planning horizon of 30 years,
it is necessary to have a firm long-term strategy in terms of
the availability of bulk supplies and, where necessary, identify
suitable responses in terms of specific demand management
initiatives and/or alternative supply.

07 DECOMMISSIONING
In many instances city infrastructure is regarded as being There may also be plans to re-configure the nature of
established in perpetuity, until a decision is taken not to use development in certain areas, in which case infrastructure will
the assets any longer, due for example, to reconfiguration of the not be replaced (or upgraded) but may be discarded.
system. An obvious exception is landfill sites, where provision
is made from the initial establishment of the site for restoration The life-cycle plans should therefore actively identify assets that
once it is full and to be closed. It has been recognised that are to be decommissioned and make sure that the necessary
there is a need for greater attention to be given to appropriate actions are scheduled for implementation in line with the
decommissioning of assets, for example replaced pipes, unused approach that will form part of the city’s Disposal Policy and be
sports facilities, unused pump stations and the like, in the aligned with the city’s AM Strategy.
interests of public safety and to mitigate misuse or abuse (for
example reconnection of old and decrepit pipe networks).

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MODULE 6 Life-cycle strategies and plans

6.3.4 Sector prioritisation

The proposed responses identified in Section 6.3.3 are geared to be in line with the indicative sector budget forecast indicated
by the city. In the final analysis, there may be more or less funds available, or Council may elect to give more priority to other
programmes. To facilitate effective decision making in this regard, each of the programmes are accorded a priority score in line
with the prioritisation parameters identified in the AM System. Where there have been changes to the viability or priority ranking
of previously approved and committed programmes, these are highlighted with recommendations on the way forward. The sector
should identify projects or programmes to accommodate an increase or decrease in value of five per cent (or proportion stated in
the AMS) of the budget that could be deferred or accelerated depending on the funds available and the priorities of Council. Where
practicable, this could also be informed by flagging options for adjustment of the balance of programmes between capital and
operational expenditure actions, and any associated performance and risk implications.

6.4 TIMELINES AND APPROVALS

There is a need to provide sufficient time for the required planning to take place ahead of committing city’s resources to
programmes, as evidenced by the processes indicated in the preceding sections of this module, and indeed in the following
module (Module 7). Particular milestones along the way are necessary to confirm and approve the essential steps and
frameworks for the following steps to avoid re-work.

Table 6.7 provides an overview of the salient cyclical planning

cycles – some of which are fixed to the periods between
elections (such as the establishment of an IDP), others that
are updates between these periods (for example the IDP
updates), and others that are required annually (such as the
Annual Financial Statements and Reports). The figure also
notes the reporting / planning horizons of each (which vary
from reporting the previous financial year to planning up to 30
years into the future). The establishment and periodic review
of the city’s Delivery Management Strategy (which forms part
of the AM Strategy documented in the SAMP) is illustrated in
the table for reference purposes – the formulation of which are
contemplated in Modules 9 to 11.

The documents need to be prepared on a cyclical basis –

accounting for last year, managing this year, and planning for
next (or the following) year – there is really no beginning or
end, however Figure 6.22 illustrates the timelines relating to
the preparation of these documents as applies to ONE linear Figure 6.23 references the same activities but indicates the
process – from preparing initial plans for the sectors and the concurrent aspects that need to be undertaken in any given
city based on a strategic brief (starting 18 months ahead of the year relating to finalising the plans for next year, initiating the
year of implementation) through obtaining stakeholder inputs plans for year thereafter, and accounting for last year. (Please
and confirmation of budgets, programmes and performance note that the preparation of the Maintenance Management
(including the IDP process) the year before implementation, Strategy and the Operations Management Strategy happens
through the year of implementation, then accounting for actual only every 5 years –in the years when this is required, the both
expenditure and performance once the year is over. the strategy and plans will be prepared).

6.41
 PLANNING
TIMELINE: YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6
HORIZON
Long term City Strategic City Strategic
Fixed 30 years
strategic plan: Plan Plan

Spatial
Spatial Spatial
representation Fixed 5, 10
Development Development
of long term and 20 years
Framework Framework
plan:

Integrated Integrated Fixed 5 years

Medium term
Development IDP Review IDP review IDP Review IDP Review Development IDP Review with annual
delivery plan:
Plan (IDP) Plan (IDP) review

Short, medium Sector AM Sector AM Sector AM Sector AM Sector AM Sector AM Sector AM

and long term Plans, plans, plans, plans, plans, plans, plans, Rolling 5, 15
infrastructure Strategic AM Strategic AM Strategic AM Strategic AM Strategic AM Strategic AM Strategic AM and 30 years
planning: Plan Plan Plan Plan Plan Plan Plan

Delivery Delivery
Delivery Management Management Fixed 5 years
management Strategy (DMS) DMS review DMS review DMS review DMS review Strategy (DMS) DMS review with annual
strategy: – included in – included in review
the SAMP the SAMP

Medium Term Medium Term Medium Term Medium Term Medium Term Medium Term Medium Term
Revenue and Revenue and Revenue and Revenue and Revenue and Revenue and Revenue and
Budget plan: Rolling 3 years
Expenditure Expenditure Expenditure Expenditure Expenditure Expenditure Expenditure
Framework Framework Framework Framework Framework Framework Framework

Service delivery Service delivery Service delivery Service delivery Service delivery Service delivery Service delivery Service delivery
and budget and budget and budget and budget and budget and budget and budget and budget Rolling 1
implementation implementation implementation implementation implementation implementation implementation implementation year
plan (SDBIP): plan plan plan plan plan plan plan

Annual
Current and
performance Annual Report Annual Report Annual Report Annual Report Annual Report Annual Report Annual Report
previous year
reporting:

Current and
Annual financial Annual Financial Annual Financial Annual Financial Annual Financial Annual Financial Annual Financial Annual Financial
previous year
reporting: Statements Statements Statements Statements Statements Statements Statements
comparison

Maintenance Annual Annual Annual Annual Maintenance Annual

Fixed 5 years
Maintenance Management Maintenance Maintenance Maintenance Maintenance Management Maintenance
with annual
Management: Strategy Management Management Management Management Strategy Management
review
and Plan Plan Review Plan Review Plan Review Plan Review and Plan Plan Review

Operations Annual Annual Annual Annual Operations Annual

Fixed 5 years
Operations Management Operations Operations Operations Operations Management Operations
with annual
Management: Strategy Management Management Management Management Strategy Management
review

6.42
TABLE 6.7: Overview of planning cycles
Life-cycle strategies and plans MODULE 6

and Plan Plan review Plan review Plan review Plan review and Plan Plan review
MODULE 6 Life-cycle strategies and plans

FIGURE 6.22: One cycle of planning, approval, delivery and reporting (excluding items at fixed intervals longer than one year)

Note: the Strategic AM Plan (SAMP) documents the Delivery Management Strategy as part of the Asset Management Strategy.

6.43
 Life-cycle strategies and plans MODULE 6

FIGURE 6.23: Concurrent processes in any given year (relating to plans and reports for surrounding years)

Note: the colours of the activities indicated under Year 1 indicate the planning periods to which they apply – for example those indicated
in orange are activities relating to the planning for year 2 but are undertaken in Year 1.

6.44
MODULE 6 Life-cycle strategies and plans

Table 6.8 indicates the documents that require review and consideration for approval as milestones in the process. Each city should
schedule its deadlines for submission, where applicable, according to the annual meeting programmes.

REF DOCUMENT APPROVAL

1 Strategic brief for AM planning (SAMP) C
2 Draft sector AM plans (AMPs) C
3 Draft strategic AM plans (SAMPs) including Delivery Management C
Strategy
4 Draft Integrated Development Plan (IDP) C
5 Legkotla outcomes B
6 IDP consultation outcomes B
7 Final Integrated Development Plan (IDP) B
8 Final SAMP and sector AM plans B
9 Sectors’ Maintenance Management Strategy B
10 Sectors’ Annual Maintenance Management Plans E
11 Sectors’ Operations Management Strategy B
12 Sectors’ Annual Operations Management Plans E
13 Final budget B
14 SDBIP - measures B
15 SDBIP - targets A
16 Performance review outcomes A
17 Annual Report B
Note - other approval gates relating to delivery are addressed in CIDMS Modules 9 to 11
- CIDMS planning documents are highlighted

REF AUTHORITY MEMBERS (WHERE APPLICABLE)

A Mayor / Executive Mayor Mayor / Executive Mayor
B Council Council
C Mayoral Committee or Executive Committee Mayor and MMC / Executive Mayor and councillors
elected to the Executive Committee
D Accounting Officer City Manager
E Asset Management Committee City Manager, Chief Financial Officer, Head
of Corporate Asset Management, Heads of
Departments for infrastructure planning and
implementation, Risk Manager, Internal Audit,
Corporate Planning Department
TABLE 6.8: Planning approval gates and responsible parties

6.45
 Life-cycle strategies and plans MODULE 6

6.5 SUMMARY

This module indicates the approach to the annual review of life- The benefit to cities will be in ensuring that programmes
cycle needs initially at the city level to inform the formulation implemented by the city are effectively aligned with their stated
of strategic directives to sectors (in the form a first iteration strategic and AM objectives taking into account the prevailing
of the SAMP), and the development of proposed project and status of the infrastructure. Once again, the collaboration of
programme responses per sector in terms of the overarching the cities in adopting this approach provides the additional
city-level directives. benefit of being able to benchmark performance to identify and
leverage opportunities for innovation to improve practice and
The module provides models to underpin the life-cycle planning, service delivery.
and indicates processes to make sure that the plan is not simply
a progression on earlier ones, but that a strategic review is
conducted at city and sector level to: maximise alignment with
city objectives, address prevailing risks and opportunities and
improve practice in pursuit of the city’s asset management
objectives (set in the AM strategy developed in terms of Module
2).

REFERENCE
CIDB. July 2017. Maintenance Management Standard for Immovable Assets.

6.46
 ASSET LIFE-CYCLE ELEMENT

TYPE
NEW/ MAINTENANCE
COMPONENT SCOPE

(YEARS)
RENEWAL DISPOSAL OPERATIONS

6.47
UPGRADING

RESIDUAL
PLANNED UNPLANNED

EXPECTED
VALUE (%)
CAPEX CAPEX OPEX
CAPEX

USEFUL LIFE

DESCRIPTOR
OPEX OPEX

COMPONENT
COMPONENT
Water network pipes • Replacement
uPVC pipe 80 0 • Block-to-block lengths • Needs of full block-
(excluding valves, identified to-block
Steel pipe 80 0 hydrants, customer in master lengths
• Response
connections and meters) plans and/ of pipe or
• Routine to reports/
for reticulation pipes in or hydraulic lengths of
• Disconnect water quality complaints
HDPE pipe 80 0 built-up areas analysis pipes of same
MODULE 6 Life-cycle strategies and plans

Pipe - and abandon testing • Repair of pipes

• Pipe lengths of same associated attributes
water decommissioned • Periodic or ad hoc
APPENDICES

attributes (excluding with new based on

AC pipe 40 0 pipes acoustic leak replacement of
valves, hydrants, customer developments/ condition
detection short lengths
connections and meters) standards/ and/or
of pipe
between pipe intersections changes in performance
HDPE pipe 80 0 or valves for bulk pipes and demand/ (e.g. bursts,
6A – Example component life-cycle strategies

reticulation pipes outside densification breakages,

built-up areas losses)
Mag-flow and • Response
mechanical • Needs to reports/
10 0 • Replacement
meters (metallic determined complaints
of meters • Removal of Regular
and plastic) • Individual meters, each during • Repair of • Repair of
(including replaced meters reading of
including the associated township meter faults meters
Water ancillary and housing, and customer and
valves, control mechanism, establishment identified • Replacement
meter equipment) transportation to zone meters,
meter chamber/box and or densification by meter of meter lids
based on designated scrap and reporting
Prepaid meters 5 0 lid/cover or application readers • Ad hoc
condition/ heap of meter faults
for new/ replacement
performance
changed use of individual
meter

• Response
uPVC pipe 80 0
to reports/
complaints
• Needs • Replacement
• Repair of pipes
identified of full
or ad hoc
Steel pipe 80 0 in master manhole-
replacement of
plans and/ to-manhole • Jetting of
• Removal of short lengths
or hydraulic lengths of pipes based
Sanitation network pipes decommissioned of pipe
analysis pipe including on number
Pipe - • Manhole-to-manhole pipes and • Ad hoc CCTV
HDPE pipe 80 0 associated manholes of blockages
sewer lengths for outfalls and transportation to inspections
with new based on • Regular
reticulation pipes designated scrap of pipes with
developments/ condition rodding of
heap repeated
standards/ and/or sewer pipes
blockages
Clay pipe 100 0 changes in performance
• Ad hoc
demand/ (e.g.
rodding of
densification blockages)
pipes where
blockages
AC pipe 40 0
have occurred
 ASSET LIFE-CYCLE ELEMENT

TYPE
NEW/ MAINTENANCE
COMPONENT SCOPE

(YEARS)
RENEWAL DISPOSAL OPERATIONS
UPGRADING

RESIDUAL
PLANNED UNPLANNED

EXPECTED
VALUE (%)
CAPEX CAPEX OPEX
CAPEX

USEFUL LIFE

DESCRIPTOR
OPEX OPEX

COMPONENT
COMPONENT
• Collective
Sewer customer • Replaced • Response
• Needs replacement
connections connections are to reports/
determined of customer
• Individual pipes disconnected complaints
Pipe - during connections
uPVC pipe 80 0 associated with customer from the • Repair of pipes
water township of same
connections, grouped per reticulation or ad hoc
establishment attributes per
pipe length (manhole to system and left replacement
or densification pipe length
manhole) in situ
basis
• Large valves (≥300mm)
Isolating valves
within reticulation
(butterfly and 20 0
network, pump stations
gate)
and reservoirs are
Other valves considered as individual
(air release, components (associated
• Replacement
non-return 15 0 valve chambers/boxes/ lids
of individually
and pressure included)
itemised
reducing) • Small Valves (<300mm)
valves
and hydrants within
• Needs (including • Periodic • Response
reticulation network,
identified chambers and inspection to reports/
pump stations and
in master lids where and complaints
reservoirs are grouped • Removal of
plans and/ applicable) operation of • Repair of
on the basis of the parent decommissioned
or hydraulic based on valves and valves and
pipe or facility (associated valves/hydrants/
analysis condition hydrants hydrants
Valves valve chambers/boxes/lids boxes/lids from
associated and/or • Repacking • Replacement
and included) reticulation
with new performance of leaking of chamber
hydrants • Valves (≥150mm) within system and
developments • Collective gland seals lids
WWTWs are considered transportation to
• Needs replacement identified • Ad hoc
as individual components designated scrap
identified in of grouped during replacement of
All types of (associated valve heap.
20 0 design of new valves and routine grouped valves
hydrants chambers/boxes/ lids
facilities hydrants inspections and hydrants
included)
based on
• Valves (<150mm) within
condition
WWTWs are included in
and/or
the facility
performance.
• PRV, non-return and air
release valves considered
as individual components
(associated valve
chambers/boxes/ lids
included where applicable)

6.48
Life-cycle strategies and plans MODULE 6
MODULE 6 Life-cycle strategies and plans