Lord Howe Island Board s5

LORD HOWE ISLAND BOARD

Business Paper

ITEM

LHIB Strategic Asset Management Plan Update

BACKGROUND

In 2002 the LHIB Internal Auditors observed that the process for monitoring and authorising preventative maintenance and repairs on Board owned plant and equipment was informal and that the majority of work is carried out on a judgement basis.

LHIB manages assets across a broad range of categories, including roads, electricity generation and distribution network, aerodrome, jetty and marine facilities, commercial, residential and public buildings, visitor and recreational facilities, Permanent Park Preserve infrastructure, waste management facility and plant and equipment.

To improve LHIB management of its assets a Strategic Asset Management Plan (SAMP) was prepared and adopted in 2013. The last update to the SAMP was in September 2014, however, it is preferable that the updates be completed before March each year, so that budgets can be prepared for the following year.

CURRENT POSITION

Version 1, Revision 3 of the SAMP, dated 2nd March 2015, brings the review of the document in line with the budget process. This version has undergone minor changes, taking into account works and planning undertaken during the last six months.

The revised SAMP is included as Attachment 1 to this paper. Attachment 2 is a summary of the changes since the September 2014 version and a Table showing the 10 year Asset Expenditure Forecast.

The major changes to the SAMP, details of which are included in Attachment A, or items of note, include:

1.  As of 30 June 2014, LHIB assets were valued at approx $41M, down from $46M for the previous year.

2.  Over the next 10 years the Board should spend:

a.  $29.7M on Capital, up from $26.9M in the previous version

b.  $18.0M on Maintenance of Assets, up from $17.9M in the previous version

3.  The Airport Terminal building refurbishment of $1.2M has been included for 2015/16 and 2016/17, to reflect the opportunity available through the NSW Government’s $50M Regional Tourism Infrastructure Fund : Airports.

4.  A recent inspection of the jetty has revealed some damage to the main beams, resulting in an increase of $45,000 each for 2016/17 and 2017/18 for the repairs.

5.  In the short term, the two major projects, being the Runway project ($8M) and the Hybrid Renewable Energy Project ($4.5M), are funded through NSW and Federal government grants. Funding via a loan from the NSW Treasury for up to $6M has been approved by the NSW Government for the remainder of the Renewable Energy project.

6.  $245,000 each for purchase and minor renovations of Met Houses 1 and 2 has been included in 2015/16.

7.  A significant investment of $1.1M is required for the Waste Management Facility to rejuvenate aging assets and maintain current achievements in diversion from landfill and EPA licence compliance.

8.  Inclusion of the aviation refuelling shed, tractor and fuel trailers, valued at $65,000.

9.  Increase to the cost of vehicle and plant maintenance to reflect more likely costs to maintain reliability.

Capital bid requests, totalling $1.795M for 2015/16, were submitted to NSW Treasury in early March 2015 and utilised the SAMP.

RECOMMENDATION

It is recommended that the Board:

1.  Note this paper.

2.  Approve Version 1, Revision 3 of the LHIB Strategic Asset Management Plan.

Prepared ______Andrew Logan Manager, Infrastructure & Engineering

Services

Endorsed ______Penny Holloway Chief Executive Officer