International Journal of Civil, Structural,

Environmental and Infrastructure Engineering

Research and Development (IJCSEIERD)
ISSN(P): 2249-6866; ISSN(E): 2249-7978
Vol. 4, Issue 6, Dec 2014, 33-42
TJPRC Pvt. Ltd.

INFRASTRUCTURE ASSET OPTIMISATION IN LOCAL GOVERNMENTS: AUSTRALIA

STUDY
KOOROSH GHAREHBAGHI
School of PCPM, RMIT University, Melbourne, Australia

ABSTRACT
Infrastructure is an integral part of the Australian Economy. With Australias aim to be recognised as one of the
advanced economies of the modern world, it must provide sufficient and efficient Infrastructure to its Communities.
Governments at all levels, in particular Local Governments, should manage and monitor the performance of their
Infrastructure effectively and precisely. As all Governments at all levels have budget constraints, it is imperative to be able
to maintain satisfactory and adequate Infrastructure with the minimum financial requirements.
Communities in general are not completely satisfied with the services provided by their Local Municipalities.
Commonly, communities consider that by paying their rates and other Government charges, they will obtain an adequate
level of services from their Local Government. Consecutively, Local Governments should treat communities as customers
and clients and accordingly ensure that they are satisfied with the degree of services provided.
The key concept in this paper is to generate an innovative process which includes optimised management and
sustainable maintenance of Infrastructure to provide the acceptable level of service required by the community in a most
effective manner which also strengthens service delivery. This paper investigates some of the fundamental issues in
Infrastructure Asset Management such as Environmental Impact Assessment, AusLink and the Australian Road
Management Act, which the Local Governments must deal with precisely.

KEYWORDS: Australian Economy, Asset & Liability

INTRODUCTION
Infrastructure is an important major investment of developed or developing countries, therefore it is essential to
manage the Infrastructure well, in order to provide continuous sustainable and economic services. Infrastructure Asset
Management (IAM) is the discipline of managing Infrastructure assets that underpin an economy (Franks and Stewart,
2008). Furthermore, Infrastructure Asset Management (IAM) is the process of guiding the acquisition, use and disposal of
assets to make the most of their service delivery potential and manage the related risks and costs over their entire life.
Infrastructure Asset Management (IAM) is also a business process and a decision-making framework that covers an
extended time, draws from economics as well as engineering, and considers a broad range of assets.
A sound IAM approach incorporates the economic assessment of trade-offs among alternative investment options,
and uses this information to help make cost-effective investment decisions. IAM is necessary due to:

Changes in the transportation environment. Today's transportation environment is characterised by high user
demand, stretched budgets, declining staff resources, and a transportation system that is showing the signs of age.

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koorosh Gharehbaghi

Changes in public expectations. The public has makes significant investments in the Construction, Maintenance,
and Operation cost of the Infrastructure and expects that Federal, State, and Local Government and responsible
authorities manage these investments properly.

Extraordinary advances in technology. The advent of increasingly powerful computer systems has made the
practice of precise Infrastructure Asset Management possible. These computer systems not only provide
sophisticated analytical tools, but also allow company officials to perform "what if" analyses that in turn facilitate
discussions with other stakeholders.
Furthermore, the development and maintenance of essential public Infrastructure is an important ingredient for

sustained economic growth and poverty reduction (Finnerty, 2007; Dermine, 2007). Poor Infrastructure is perhaps the most
binding constraint to economic growth throughout the Australia. Infrastructure investment can lift economic growth and
properly support social objectives. Health, education, transportation, water and sanitation services help lay the groundwork
for a more productive, healthy population capable of contributing to sustained economic growth.
IAM in Local Governments
The major Infrastructure elements in Local Government mainly consist of four centred areas: Solid waste methods
and techniques such as collection, treatment and disposal; Transportation and its classifications such as roads and bridges;
Wastewater schemes such as collection, treatment and disposal; and Water supply regulatory such as distribution and
treatment. The investment into these areas requires significant monetary funds which will put great pressure on each
municipality. Although Councils use rates and other reimbursement from the residence as a financial aid, there are still
significant gaps between their (Councils) revenue and expenses. Accordingly Municipalities, and related departments and
agencies are required to consider the full range of financing and ownership arrangements. This includes utilisation of
innovative approach such as the public-private partnerships, particularly for projects costing in excess of $100 million. In
addition, Private sector investments are encouraged where projects are commercially viable and where risk can effectively
and responsibly be transferred to that sector.
The Australian Bureau of Statistics (ABS) estimates that at June 2001, Local Governments owned land and fixed
assets worth $147 billion. Although the land was worth about $41 billion, buildings, other construction Infrastructure,
plants and equipments were worth $106 billion. Furthermore, other construction Infrastructure, which included local roads,
were worth $90.7 billion. Table 1, summarises the value of the Government Assets (Australia) at June 2001
Table 1: Value of Selected Government Infrastructure - Fixed Assets (ABS)

Impact Factor (JCC): 5.7179

Index Copernicus Value (ICV): 3.0

Infrastructure Asset Optimisation in Local Governments: Australia Study

35

Table 1 also includes railways, roads, bridges, tunnels, airports, harbours, pipelines, dams and the like. Since
2001, there have been significant Infrastructure Asset developments in particular in Melbournes south eastern suburbs.
All of these activities require significant investment not only from the Federal and State Government but also from Local
Government. These ongoing Infrastructure Asset developments are all part of the Australias expansion planning for the
future. In addition, effective IAM is a vital part of these in progress and complex planning processes and accordingly it
must be updated frequently.

All Councils are responsible for ensuring that their Infrastructure assets (within their

municipalities) are safe, functional, properly maintained and managed to maximise benefits for the community and the
environment. In general Infrastructure assets within Australian municipalities fall under various categorisations, table 2,
summarises these categories and includes their related items.
Table 2: Asset Categorisation in Local Governments
Asset Type

Buildings

Communication
Energy Production
and Distribution

Environment and
Waste Management

Land

Natural Resources
Plant and
Equipment
Recreation

Transport and Roads

Water and Waste

Water

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Classes and Related Issues

o Commercial.
o High Rise.
o Industrial.
o Public and Private.
o Residential.
o Internet (Lines, service providers etc).
o Satellites.
o Telephone (Lines etc).
o Power (electricity) Grids.
o Power (electricity) Plants.
o Power (electricity) Suppliers.
o Cleaning and Pollution Control
(Environmental Sustainability).
o Garbage and Waste Collection.
o Nature-strip Landscape.
o Recycling.
o Rubbish Tips (Landfill and Transfer
Stations).
o Water and Sewerage.
o Land for development (Zones etc).
o Land Restrictions (cultural heritage
etc).
o Public Open Space - Parks and
Gardens.
o Minerals.
o Raw Materials.
o Reserves.
o Devices and Machinery.
o Production Factories.
o Aquatic Centres.
o Community Centres.
o Cycling and Bike Paths.
o Sports Clubs.
o Parking and Public Transport.
o Road or Overpass Works.
o Road Safety.
o Transport Groups and Alliances.
o Truck and Heavy Traffic.
o Pipelines and Channels.
o Recycling centres.

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koorosh Gharehbaghi

As it can be noticed each Asset has been classified into specific group, and its own classes and related issues such
as Service Authorities etc. Effective Infrastructure Asset Management Planning (IAMP) in Local Governments is vital for
any Economic Development in the municipalities. This Economic Development consists of, efficient Business Information
Services, successful Economic Development Unit within the Council, and operational Major Projects and Program
guidelines (Ineichen, 2007). All though most of Local Municipalities in Australia have an annual detailed Infrastructure
Asset Management Plans (IAMP), they usually assess their Expenditure plans on average every 5 years. Some of these
IAMP include Coastal and Foreshore Management, Road Management, Traffic and Transports Management, and Waste
Management.
Furthermore, as a part of IAMP, municipalities adopt and utilise Asset Management policies to demonstrate
municipalitys organisational commitment towards best practice management of the Infrastructure assets, to provide the
desired level of service in the most cost-effective manner for the present and the future. In addition, the Australian
Councils use the following principles to guide IAMP and decision making processes associated with:

Ensuring service delivery needs form the basis of Infrastructure Asset Management. This includes providing for
present needs while sustaining resources for future generations.

Integrate Infrastructure Asset Management with corporate, financial, business and budgetary planning.

Informed decision making, incorporating a life-cycle approach to Infrastructure Asset Management. This includes
establishing accountability and responsibility for asset condition, use and performance.
Likewise, any future IAMP needs to be integrated into Councils current plans and strategies at different levels.

These levels include (Finnerty, 2007; Dermine, 2007):

Strategic. Ensuring that, the service delivery intentions and requirements of the sustainable Infrastructure Asset
Management policies are set out in the Council Plan.

Operational. Making certain that asset management plan recognises specific actions involving both asset and nonasset options. Activities are scrutinised to verify compliance with asset management policies and strategies.

Performance Management. Making sure that there is an effective link between the strategic and operational levels
(as discussed above) to conclude if the required outcomes are being achieved in the most efficient method.
Performance management and measurement raises awareness of the responsibilities, opportunities and risks
inherent in IAM.

IAM Strategies within Local Governments

The most appropriate IAM solution could also be achieved by minimising Infrastructure lifecycle costs. This for
example could include reduction of expected costs in accordance to the risks, actual costs, and benefits analysis.
The benefit analysis could be utilised to quantify the expected cost of alternate and competing decisions in terms of
Infrastructure replacement, maintenance or other strategies. Effective IAM strategies may in turn produce significant sum
of savings, which provide financial assistance for the existing Infrastructure in relation to extending the service life or
deferring replacement of the active Assets.
Furthermore, the cost effectiveness of various Infrastructure replacement and maintenance strategies should be

Impact Factor (JCC): 5.7179

Index Copernicus Value (ICV): 3.0

Infrastructure Asset Optimisation in Local Governments: Australia Study

37

compared, and the optimal strategy be selected on the basis of lowest mean life cycle cost. However, in practice the
selection of strategies may not be so straightforward since it may depend on the degree of uncertainties associated with
each predicted life cycle cost. On the other hand, risk-based decision analyses such as Integrated Economic Decision
Analysis (IEDA) could be used to optimise the operation, maintenance and replacement of existing Infrastructure.
The IEDA is a risk-based life cycle costing techniques which contains specific dependencies of Infrastructure towards
natural degradation, environmental and perturbing factors. Unexpected perturbation to the system functioning, such as act
of GOD including earthquake, would also be evaluated in the IEDA. IEDA would provide information and evaluation of
the cost effectiveness as well as performance of the system under various considerations. Figure 1, is a proposed IEDA
framework in relation to achieving the optimum maintenance or replacement strategy.

Figure 1: IEDA Framework

As it can be noticed, the proposed framework indicates the significance of the database which contains all the
relevant and updated information. First, from this database the conceptual model is established. This conceptual model is
grouped into, deterioration, environmental or others such as disturbance, sub-models. The purpose of this is not only to
categorise different aspects, but also to rank them in accordance to the actual risk which they maybe be associated with,
which is aided by the testing of the Hypothesis. Second, the model (probabilistic element) is created to calculate modes of
failure and service life which is also aided by the testing of the hypothesis. Third, a system life cycle cost analysis is
carried out to observe any risk cost benefits and rank the most appropriate to least suitable costing strategy. This is too
aided by hypothesis testing and cost estimation and proper budgeting techniques. The next stage, sensitivity analysis is
carried out to identify the constraints to improve the data gathering process. This stage also needs to ensure its alignment to
the hypothesis. The next two stages consist of risk analysis and the optimisation process to create an appropriate
Infrastructure maintenance and replacement strategies.
AUS Link
In November 2002, the Australian Federal Government initiated a cooperative transport planning called AusLink.
The Australian Commonwealth supports AusLink with $15 billion in funding for road and rail projects in the five years to
30 June 2007. AusLink aimed to develop transport corridors of strategic national importance such as rail and road links
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koorosh Gharehbaghi

between cities and to improve connections to production and distribution centre, major ports and airports. It encouraged
more integrated and efficient Infrastructure investment within Australia. In 2002 AusLink developed a five-year
multimodal national plan for the network, based on input from both the public and private sectors. It funded the projects
that best contributed to national objectives on the strategic transport network and incorporated the best solutions
embracing, wherever possible, new technology and better Infrastructure management systems.
As part of the strategic and operational decision making process, a new inter-Governmental agreement was
introduced between the Federal, State and Local Governments to underpin new Infrastructure planning and funding
arrangements for the network. In addition, joint public and private sector development of projects were encouraged to
increase the combination of funding. Also, a national advisory body was established to advise transport ministers (at both
state and federal levels) on priorities for national Infrastructure investment and reforms to support inter-modal integration
and Infrastructure pricing.
The AusLink project evaluation methods were developed to help improve the quality of decision making and
allocation of resources. At the time it was proposed that eventually AusLink will evolve into a broader national transport
policy by integrating improvements to IAM practices and related issues. Figure 2 illustrates the connection of
Infrastructure Asset Management Initiatives for Local Governments with the AusLink.

Figure 2: AusLink IAM Initiatives for Local Governments

Figure 2, represents the AusLink IAM initiatives for local Governments. At the centre is the Infrastructure Asset
Management with in-house processes and practices. This Infrastructure Asset Management is supported by councils
strategies and operational budgets which include capital works and maintenance. The next stage is the Infrastructure Asset
Management Measurement and Evaluations which includes all the measurements such as short and long term records of
Councils Infrastructure Asset Management performance, and Benchmarking evaluations. From this final stage
implementation the Road Act 2004 is incorporated together with significant strategic regional projects such as AusLink
The Australian Road Management Act 2004 has regulated road management responsibilities in Victoria

Impact Factor (JCC): 5.7179

Index Copernicus Value (ICV): 3.0

Infrastructure Asset Optimisation in Local Governments: Australia Study

39

(and other states) in conjunction of requiring authorities to maintain road assets to the standards. The standards were
adopted after consultation with the communities and end-users. Subsequently, each municipalitys Road Management Plan
(RMP) identifies responsibilities, maintenance standards and inspection processes required to manage civil liabilities.
Furthermore, each municipalitys RMP must demonstrate that the Council as the road authority is responsible for
managing all the road assets under its control. The RMP consists of four main elements; a register of public roads which
entails the list of roads for which the Council is responsible; a road asset register, which includes a list of all assets in the
road reserve and includes valuation of these assets; a road asset management system which provides an outline of how road
assets will be managed to deliver a safe and efficient road network; and a schedule of maintenance standards which
contains the development of responsible maintenance standards to meet community expectations. The Australian Road
Management Act 2004 is a fundamental part of AusLink and it controls and restricts the authority, ownership and
responsibility of all the main and connecting roads within Australia.
As previously discussed, Aus Link was involved in the developing Infrastructure Investment Plan, which assisted
Australias Transport Infrastructure to better meet the challenges which Australia faces in the global market place. To be
effective all Government, at all levels, need to be successfully involved in this extensive exercise. This extensive exercise
included the creation of broad and detailed Acts such as Infrastructure Road Management Act 2004, which in turn involved
the refinement of processes and practices. A 2009 review of AusLink, suggested that the proposed objectives were
successfully met and other similar initiatives were proposed based on the AusLink productive outcome.
The close relationship between AusLink and Local Governments will ensure an improved framework for
decision-making and investment of the Assets. This close relationship is required to sustain the future demand of the public
and the community.

CONCLUSIONS
The outcome of this paper was to create an innovative process which included optimised management and
sustainable maintenance of Australian Infrastructure to provide the satisfactory level of service required by the community
in a most effective manner which also strengthens service delivery.
This paper focuses on Local Governments and their Communities. As such, this paper incorporated not just
knowledge and management of technical interventions, but also a definition of current required levels of service,
and prediction of planning for future levels of service. In addition, the need to recognise that IAM is directed at
maintaining levels of service rather than maintaining the Infrastructure perse (in isolation), which requires a
reconsideration of what constitutes effective Infrastructure management. For many years, Australian Local Governments
had to manage their extensive Infrastructure in an environment of reducing funding. Although this had a series of
consequences, a positive outcome is the development of alternative methods of rehabilitating Infrastructure and the better
use of the funds. Furthermore, reduction of funding has also resulted in a gradual decline in the integrity of the
Infrastructure. This has been exacerbated by the corresponding increase in the levels of use. The private sectors role in
implementing Infrastructure Asset Management practices in Australia is very important in fulfilling the local Governments
responsibilities to their Communities.
As the demand for better and improved Infrastructure increases, the Municipalities need to be aware of the
increased demand and hence create an optimised Infrastructure Assent Management process to be able to handle with the

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koorosh Gharehbaghi

ever escalating demand. The development of an effective and operational system and the collection of data relating to the
condition of the Infrastructure and related assets are imperative. Furthermore, Infrastructure performance models need to
be constantly developed and maintained to assist with the development of priorities. This information will be used to
investigate and report on the levels of funding that will be required to sustain the Infrastructure at a level determined by
Municipalities. Finally, optimised IAM in Local Governments is necessary due to the changes of Infrastructure
environment, changes in public expectation in term of investments in Infrastructure and emerging technologies. An
effective IAM needs to incorporate IEDA, propers Management Acts (such as the Australian Road Act), and strict
Environmental regulation (especially during Construction stage), and provide alternative options. These alternative options
must not only be achievable but also flexible to ensure different options are evaluated and programmed. In conclusion,
assessment of past practices and the investigation of new operations such as AusLink will encourage effective, efficient
and innovative use of the resources.

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Australian Bureau of Statistics (ABS), http://www.abs.gov.au

2.

Australian Government, Department of Infrastructure, Transport, Regional Development and Local Government
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of

Infrastructure,

Transport,

Regional

Development

and

Local

Government,

http://www.auslink.gov.au
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Dermine, Jean, Asset & liability management: the bankers guide to value creation and risk control, 2nd edition,
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Finnerty, D. John, Project financing: asset-based financial engineering, 2nd edition, Hoboken, N.J.: Wiley, 2007.

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Franks, Stewart and Stewart G., Mark, Development of Integrated Life Cycle Costing for Infrastructure Asset
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Gharehbaghi, Koorosh, Infrastructure Asset Diagnostics: Operations and Maintenance, Asset Management and
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12. Goodman, Alvin and Hastak, Makarand, Infrastructure Planning Handbook, American Society of Civil
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Impact Factor (JCC): 5.7179

Index Copernicus Value (ICV): 3.0

Infrastructure Asset Optimisation in Local Governments: Australia Study

41

13. Gransberg, D. Douglas , Lopez del Puerto Carla, and Humphrey Daniel, Relating Cost Growth from the Initial
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Projects, p235-241, Volume 133, Number 3, March 2007.
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Queensland University of technology, 2006.

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