Melbourne Asset Management Plan / Department of Transport and Planning
The City of Melbourne, the capital of the Australian state of Victoria, uses asset value to drive asset management in two ways:
First, the city communicates the asset inventory in part through asset value. The City Asset Plan includes both the fair, written-down value (current depreciated value) and a replacement value for each of the assets owned by the agency, including numerous infrastructure assets such as roads, bridges, footpaths, drainage, and other assets. The city uses these two numbers to communicate the extent and condition of their assets to the public and other stakeholders.
Second, the city uses two performance measures related to asset value to demonstrate fiscal responsibility: the ratio of renewal and upgrade expenditures to depreciation, and the ratio of total capital replacement expenditures to depreciation. These measures are variations of an asset sustainability ratio, which summarizes whether an agency is investing sufficiently to maintain asset value and conditions. The city of Melbourne set performance targets of 0.5 for the renewal and upgrade ratio and 1.0 for the capital replacement ratio. Meeting those targets means that the city is investing at a level sufficient to maintain or improve asset value. The table below demonstrates these measures. It shows the actual values from 2016 through 2019, and forecasts values for 2020-2021.
| CAPITAL WORKS PERCENTAGE OF DEPRECIATION | 2016-17 ACTUAL ($'000) | 2017-18 ACTUAL ($'000) | 2018-19 ACTUAL ($'000) | 2019-20 ACTUAL ($'000) | 2020-21 Forecast ($'000) |
|---|---|---|---|---|---|
| Renewal & Upgrade Works | 53,190 | 58,698 | 55,722 | 71,836 | 108,668 |
| Depreciation | 57,717 | 58,507 | 57,889 | 61,048 | 64,658 |
| Renewal & Upgrade / Depreciation Totals | 79% | 86% | 82% | 85% | 168% |
| Five-Year Average | 116% | ||||
| All Capital Works / Depreciation Totals | 136% | 180% | 211% | 202% | 288% |
| Five-Year Average: | 205% |
In addition to calculating asset sustainability ratios based on actual historical data, the city estimates the performance measures for 10 years into the future, predicting depreciation and capital expenditures. This allows the city to better align planned expenditures and needs.
Source: City of Melbourne. City of Melbourne Asset Plan 2021-31. City of Melbourne, 2021. Web access: http://www.melbourne.vic.gov.au/about-council/governance-transparency/policies-protocols/Pages/asset-plan-2021-31.aspx
Read more in the chapter: 5.5.2 Using Asset Value to Support TAM Decisions