Audit of Sydney Catchment Authority s Asset Management System

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Independent Pricing and Regulatory Tribunal

Audit of

Sydney Catchment Authority’s

Asset Management System

Report to the Minister

Water Licensing — Compliance Report

April 2009

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Audit of

Sydney Catchment Authority’s

Asset Management System

Report to the Minister

Water Licensing — Compliance Report

April 2009

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ii IPART Audit of Sydney Catchment Authority’s Asset Management System

This work is copyright. The Copyright Act 1968 permits fair dealing for study, research, news reporting, criticism and review. Selected passages, tables or diagrams may be reproduced for such purposes provided acknowledgement of the source is included.

ISBN

978-1-921328-82-4 CP-44 The Tribunal members for this review are:

Dr Michael Keating, AC, Chairman

Mr James Cox, Chief Executive Officer and Full Time Member Ms Sibylle Krieger, Part Time Member

Independent Pricing and Regulatory Tribunal of New South Wales PO Box Q290, QVB Post Office NSW 1230

Level 8, 1 Market Street, Sydney NSW 2000 T (02) 9290 8400 F (02) 9290 2061

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Audit of Sydney Catchment Authority’s Asset Management System IPART iii

1 Introduction and Overview

The Independent Pricing and Regulatory Tribunal of New South Wales (IPART) advised the Minister on 30 June 2008 of its intention to conduct an audit of Sydney Catchment Authority’s (SCA’s) Asset Management System in accordance with the requirements of its operating licence (the licence). IPART has completed the audit with the assistance of the consultant, WorleyParsons Services Limited.

The purpose of this report is to inform the Minister for Water of IPART’s findings in relation to SCA’s performance against its asset management obligation contained in the licence and set out IPART’s recommendations in response to these findings. Appendix A sets out those licence clauses relating to SCA’s asset management obligation and to auditing the management system of the Assets, comprising parts 7 and 11 of the licence. A copy of the consultant’s audit report is provided at Appendix B.

1.1 Background

The SCA was established in July 1999 to manage Sydney’s water catchment areas and infrastructure within its jurisdiction to improve water quality, protect public health and protect the environment. SCA also has the primary responsibility for supplying bulk water to Sydney Water Corporation and several smaller customers. SCA draws bulk water from the catchments of four major river systems – the Warragamba, Upper Nepean, Woronora and Shoalhaven.

Clause 7.3 of the licence requires that at least once during the term of the licence, IPART may conduct an audit of SCA’s compliance with the asset management provisions in the licence. Accordingly, IPART undertook the audit of SCA’s asset management system in concurrence with IPART’s review of the Capital and Operational Expenditure of the SCA.

The audit concentrated on identifying the asset management systems and practices and the value they provided in SCA’s compliance with the licence, the degree to which the systems were utilised and proof of the delivery of the expected value from the systems. To achieve this, IPART’s consultant reviewed the implementation of the asset management processes for a representative sample set of assets, randomly selected from SCA’s high criticality assets.

1.2 Audit Process

The consultant reviewed key documents, held discussions with the relevant asset management personnel, asked supplementary questions and compared SCA’s approach to Asset Management with current Australian and international best practice.

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2 IPART Audit of Sydney Catchment Authority’s Asset Management System

In particular, the audit assessed the robustness of SCA’s risk-based approach, the use of whole-of-life costing, and the quality and quantity of the underlying data and information used to predict asset lifecycle behaviour.

The consultant provided IPART and SCA with a draft report for comment and considered the comments received before finalising their report.

1.3 Audit Scope

The audit assessed SCA’s compliance with the asset management obligations included in the licence. These include SCA:

 Ensuring that its assets are managed consistent with:

– its obligations in the licence and all applicable laws, policies and guidelines, including the requirements of the NSW Dam Safety Committee, the principles of the Strategic Management Framework and the Total Asset Management Policy

– the lowest lifecycle cost and acceptable risk of the assets

– its assessment of the risk of loss of the assets, and capacity to respond to a potential failure or reduced performance of the assets.

 Reporting the state of each group of assets it manages.

A summary of the audit findings are listed below. Further details of the assessment of SCA’s Asset Management performance are provided in the consultant’s report which is included at Appendix B.

2 Overview of Findings

It was found that the SCA has achieved overall High Compliance with the asset management obligations in the operating licence. Specifically, IPART found that the SCA:

 Fully complied with the licence condition to manage its Assets consistent with its obligations in the licence and all applicable laws, policies and guidelines. The audit found that SCA has developed Asset Management Plans in accordance with the NSW Treasury Total Asset Management (TAM) Guidelines 06-01, 06-03 and 06-04. Additionally, SCA met the Bulk Water Supply targets and has dam safety processes certified to ISO14001.

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Audit of Sydney Catchment Authority’s Asset Management System IPART 3  Achieved High Compliance with the licence condition to ensure that its Assets

are managed consistent with the principles of the Strategic Management Framework and the TAM Policy. The audit found that SCA undertakes strategic planning in its asset management and has compiled a Surplus to Needs Assets Report dealing with asset disposal1_{. However, the report was dated 2005 and is} therefore due for review and update. (Recommendation 1)

 Achieved High Compliance with the licence conditions to manage its Assets consistent with the lowest life cycle cost and acceptable risk of the Assets, and with the whole of life2_{of the Assets. The audit found that SCA has developed} Asset Life Cycle Cost (LCC) Analysis processes for all its assets. The processes include Lifecycle Assessment, Risk Costing, Predictive Analysis and Return on Investment Analysis. Although the LCC steps are in place across each discrete phase of the asset life cycle (comprising planning, acquisition, operate, maintain and disposal), there is no evidence of a fully integrated LCC plan that would demonstrate the lowest LCC. (Recommendation 2)

 Achieved High Compliance with the licence condition to demonstrate consideration of the risk of loss of the Assets and capacity to respond to a potential failure or reduced performance of the Assets. The audit found that SCA applies a risk management process based on AS4360 principles for asset criticality ratings and condition assessment. The identification and classification of risk and allocation of asset criticality for risk treatment is considered best practice. This is evidenced through SCA’s high performance rating in the Water Services Association of Australia (WSAA) 2008 Asset Benchmarking report. However, SCA is yet to implement the WSAA 2008 Benchmarking recommendation of progressing towards a corporate wide software system (Risk Management Information System) to contain and manage its corporate risks. (Recommendation 3)

 Achieved High Compliance with the licence condition to provide information to IPART on the state of each group of assets managed by the SCA, including how the SCA satisfies its licence conditions and legal obligations relating to asset management. However, the documentation did not contain details of how the documents and processes satisfy the legislative requirements. Additionally, the information was not consolidated into one report. (Recommendation 4)

1_{TAM 06-04 (Asset Disposal Strategic Planning) broadly details asset disposal planning, which} involves detailed assessment of assets identified as surplus to needs (not required or unsuitable for service delivery, or uneconomical to operate) in the Asset Strategy, followed by an analysis of the physical disposal of the assets.

2_{Whole-of-life (WOL) cost refers to the total cost of ownership over the life of an asset. For some} assets a balanced view between maintenance strategies and renewal/rehabilitation is required. The WOL asset cost assessment is based on the performance expected of the asset, the consequences and probabilities of failures occurring, and the level of expenditure in maintenance to keep the service available and to avert disaster.

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 Achieved High Compliance with the licence condition to report to IPART on the processes, practices, systems and plans for managing its Assets, and on the progress of implementing these processes, systems and plans. The audit found that SCA is in the process of implementing a Maintenance Outcomes Hierarchy3 comprising a complete suite of processes and tools for asset management, from condition monitoring and the documentation of individual assets to return on investment analysis. However, there was no evidence that SCA had developed a documented plan for the full implementation of the Maintenance Outcomes Hierarchy that included:

– timelines for the key stages of the Maintenance Outcomes Hierarchy systems in its reporting mechanism, and

– identification of assets for which there is no value in implementing all aspects of the asset management processes. (Recommendation 5)

 Achieved Full Compliance with the licence condition to provide IPART with a description of each group of assets.

 Achieved High Compliance with the licence condition to report to IPART on the assessment of the expected capability of SCA’s Assets to deliver the required services, and on information relating to the strategies and expected costs of future investments in the Assets. The audit found that the funding level for maintenance recorded in the Annual Information Return to IPART dated September 2008 was lower than that required by the SCA’s Asset Strategy dated January 2008. Although SCA has provided explanation for the majority of the variation in maintenance cost estimates and evidence of the review of its capital expenditure plan, it did not provide evidence of changes made to the original asset management driven investment as a consequence of the review. (Recommendations 6 and 7)

 Achieved High Compliance with the licence condition to provide IPART with an assessment of the major issues or constraints on current and future performance of the Assets. The audit found that SCA has identified and captured forward planning issues in reports, and are working towards implementing improvement actions identified. However, inconsistency exists in the documentation (between the Annual Information Return provided to IPART dated September 2008 and SCA’s Asset Strategy dated January 2008) as explained above. (Recommendations 6 and 7)

3_{A set of systems that together satisfy Stage 6 of the NSW Treasury TAM Guideline 06-03, which} requires the SCA to implement maintenance plans and programs.

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3 Agreed Actions

The audit has identified a number of actions that would further enhance SCA’s strong compliance in this area. These actions have been discussed with SCA and the following actions have been agreed. SCA will:

1. Review and update the Surplus to Needs Assets Plan (2005) using current asset strategy information (this was last completed in 2005).

2. Develop a Life Cycle Cost (LCC) methodology by 1 September 2010 to differentiate which asset classes will be subject to the full implementation of the Maintenance Outcomes Hierarchy. IPART acknowledges that a fully integrated LCC plan may not be as relevant for managing long lived, large scale assets such as the Warragamba dam. For this reason, it was agreed that the SCA should develop and provide IPART with a LCC methodology that examines the risk and the asset value thresholds for which the Maintenance Outcomes Hierarchy is applicable to its assets. This will provide confidence to the stakeholders that SCA’s asset investment is prudent and will deliver the right balance of service and value for money.

3. Act on the Water Services Association of Australia (WSAA) 2008 Asset Management Benchmarking recommendation to implement a corporate wide Risk Management Information System to better understand and control its business risks, improve tracking and reporting and to facilitate workflow management of identified risks.

4. Provide a matrix document that will serve as a guide for the state of the Assets information required under licence condition 7.2. SCA has provided a number of documents during the audit that together provide information to IPART on the state of each group of Assets managed by the SCA. To assist future audits of this area and SCA’s compliance generally, it has been agreed that SCA will prepare a matrix document so that all of this information can be readily assessed. IPART considers that provision of such document will achieve the same outcomes as a consolidated report (which was recommended by WorleyParsons) without the additional regulatory costs associated with preparing a separate consolidated report.

5. Set timeframes and accountabilities for the key stages of the Maintenance Outcomes Hierarchy systems and report progress against these targets to the Asset Management Committee. This will facilitate full implementation of the Maintenance Outcomes Hierarchy which is used to implement maintenance plans and programs as required by the NSW Treasury Total Asset Management Guideline 06-03.

6. Update the expenditure forecasts in the Asset Strategy to reflect SCA’s current assessment of forward expenditure requirements. This will eliminate inconsistency between the Asset Strategy dated January 2008 and the Annual Information Return to IPART dated September 2008.

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7. Fully implement the Maintenance Outcomes Hierarchy to assist in the documentation of the optimum forward asset investment requirements. This will provide the elements of and information for lowest lifecycle cost decisions in managing SCA’s assets.

4 Next Steps

IPART will continue to monitor and report SCA’s compliance with the obligations under the operating licence. As part of this process, IPART will request SCA to provide it with a report on its progress in implementing the agreed actions by 1 September 2010.

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Appendices

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A

Licence clauses relating to SCA’s asset management

obligation and to auditing the management system of

the assets

Part 7 Asset management

7.1 Asset management obligation

The SCA must ensure that its Assets are managed consistent with:

a) its obligations in the Licence, and all applicable laws, policies and guidelines with which the SCA must comply, including the requirements of the NSW Dams Safety Committee;

b) the principles of the Strategic Management Framework and the Total Asset Management Policy;

c) subject to clause 7.1(a), the lowest lifecycle cost and acceptable risk of the Assets;

d) the whole of life of the Assets; and

e) its assessment of the risk of loss of the Assets, and capacity to respond to a potential failure or reduced performance of the Assets.

7.2 Reporting on the management system of the Assets

7.2.1 At least once during the term of the Licence at a time agreed with IPART, the SCA must provide information to IPART on the state of each group of Assets managed by the SCA.

7.2.2 The information provided must include the following:

a) a description of the processes, practices, systems and plans the SCA uses in managing the Assets;

b) a description of each group of Assets;

c) an assessment of the expected capability of the assets to deliver the services required to be delivered by the SCA and meet the existing obligations of the SCA consistent with the Licence and all applicable laws with which the SCA must comply;

d) an assessment of the major issues or constraints on current and future performance of the Assets;

e) the strategies and expected costs of future investments in the Assets;

f) progress in implementing the management of the SCA’s Assets and any recommended improvements in processes, practices, systems and plans for the management of the Assets; and

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10 IPART Audit of Sydney Catchment Authority’s Asset Management System 7.3 Auditing the management system of the Assets

7.3.1 At least once during the Licence, IPART may (at a time it determines) conduct an audit of SCA’s compliance with clauses 7.1 and 7.2. The audit may form part of an Annual Audit or be conducted separately from an Annual Audit, at the discretion of IPART.

7.3.2 In addition, IPART may at any time audit the SCA’s compliance with clauses 7.1 and 7.2 for the purpose of:

a) investigating and reporting on, or reviewing the pricing of SCA’s bulk water services under the Independent Pricing and Regulatory Tribunal Act 1992; or

b) investigating compliance by SCA with specific areas of its Asset management.

7.3.3 An audit undertaken under clause 7.3.1 or 7.3.2, must comply with the scope and audit specifications determined by IPART.

7.3.4 The provisions of Part 11 apply to an audit under clause 7.3 as if the audit under clause 7.3 is an Annual audit.

7.3.5 IPART must advise the Minister of its decision to conduct an audit under clause 7.3.1 or 7.3.2 and, subsequent to the audit, provide the Minister with a report on the outcomes of the audit.

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Part 11 Annual Audit of the Licence

11.1 Commission of audits

11.1.1 IPART must initiate an operational audit of the SCA as soon as practicable after 30 June each year covering the preceding financial year, as required by this Part 11 (the Annual Audit).

11.1.2 The Annual Audit must be conducted by IPART or by a person that IPART considers is suitably qualified to perform the Annual Audit.

11.1.3 As part of the Annual Audit, IPART must invite members of the public to make submissions to it. IPART may also undertake any other Public Consultation it considers appropriate.

11.1.4 IPART may include in its Annual Audit all or any of the matters referred to in clause 11.2 and where in any Annual Audit a matter is not made the subject of that Annual Audit, IPART may require the SCA to provide IPART with a report on the matter not included in the Annual Audit.

11.2 What the audit is to report on

11.2.1 IPART or the person undertaking the Annual Audit may investigate and prepare a report on any or all of the following:

a) compliance by the SCA with its obligations in each of Parts 3, 4, 5, 6, 7, 8 and 9;

b) the SCA’s compliance with its obligations under each Memorandum of Understanding referred to in clause 2.3; and

c) any other matter required by the Licence, the Act or administrative direction to be assessed and considered as part of the Annual Audit.

11.2.2 Despite clause 11.2.1, neither IPART nor the person undertaking the Annual Audit may investigate a matter under clause 11.2.1 if the investigation of that matter is ordinarily within the regulatory activities of DEC, NSW Health or DNR and the relevant agency has undertaken an investigation of the matter. 11.2.3 Nothing in this Part 11 restricts the capacity of IPART, as part of the Annual

Audit from:

a) satisfying the requirement in clause 11.2.1 to investigate and prepare a report on a matter under clause 11.2.1 by including in its report consideration of the findings and the SCA’s response to those findings, of any investigation of the matter by DEC, NSW Health or DNR; and

b) requesting the SCA to provide information relating to an investigation of a matter by DEC, NSW Health or DNR which is ordinarily within the regulatory activities of those agencies.

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11.2.4 IPART must ensure that, subject to clause 11.2.2, the report of the Annual Audit addresses the matters in clause 11.2.1 and advises the Minister on the following matters:

a) areas in which the SCA’s performance under the Licence may be improved; b) any changes to the Licence that IPART considers necessary;

c) any penalties or remedial action required as a result of the SCA’s performance under the Licence;

d) whether the Minister should recommend that the SCA’s Licence be cancelled by the Governor under section 30 of the Act for reasons identified in the report of the Annual Audit; and

e) any other matter relating to the Annual Audit or the SCA’s Functions that it considers appropriate.

11.3 Reporting of audit

11.3.1 IPART must ensure that the report of the Annual Audit is presented to the Minister within 1 month after its receipt by IPART.

11.3.2 If the report of the Annual Audit has identified areas of non-compliance with the Licence, in addition to whatever other action is taken or required to be taken, the SCA must comply with any requirement that may be imposed on the SCA by the Minister to do the following:

a) advertise publicly and notify Customers of the areas of the non-compliance; b) provide reasons for the non-compliance;

c) identify the measures that will be taken by the SCA to address the non-compliance; and

d) provide such other advice concerning the non-compliance as is requested by the Minister.

11.4 Additional audits

11.4.1 IPART must initiate additional audits of the SCA if required by the Minister. 11.4.2 An additional audit may address one or more of the matters in clause 11.2.1 or

any other matter required by the Minister.

11.4.3 The provisions of this Part 11 applying to the Annual Audit will apply equally to additional audits under clause 11.4.1 (all necessary changes having been made), to the extent that those provisions are relevant.

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Audit of Sydney Catchment Authority’s Asset Management System IPART 13 11.5 Provision of information

11.5.1 The SCA must provide IPART (or a person appointed by IPART under clause 11.1.2) with all information within its possession or under its control necessary to the conduct of the Annual Audit or an additional audit, including whatever information is requested in writing by IPART or the person appointed by IPART.

11.5.2 The information sought under clause 11.5.1 must be made available within a reasonable time of it being requested.

11.5.3 For the purposes of the Annual Audit or an additional audit under clause 11.4.1, the SCA must, within a reasonable time of being required by IPART (or the person appointed by IPART), permit IPART (or the person appointed): a) to have access to any works, premises or offices occupied by the SCA; b) to carry out inspections, measurements and tests on, or in relation to, any

such works, premises or offices;

c) to take on to or into any such premises, works or offices any other persons or equipment as necessary for the purposes of performing the audit;

d) to inspect and make copies of, and take extracts from, any books and records of the SCA that are maintained in relation to the performance of the SCA’s obligations under the Licence; and

e) to discuss matters relevant to the audit with the SCA’s employees.

11.5.4 If the SCA contracts out any of its activities to third parties (including a subsidiary) it must take all reasonable steps to ensure that, if required by IPART, any such third parties provide information and do the things specified in Part 11 that extend to the SCA as if that third party were the SCA.

11.5.5 For the purpose of an Annual Audit or an additional audit under clause 11.4.1, the information to be provided by the SCA or a third party under clause 11.5.1 may include information over which the SCA or a third party claims confidentiality or privilege. IPART (or the person appointed by IPART) must (if required) enter into reasonable arrangements with the SCA or such third party to ensure that the confidential information or privileged information is kept confidential or privileged.

[Note: This clause is limited by section 24FF and section 25A of the Independent Pricing and Regulatory Tribunal Act 1992 (IPART Act). For example:

 if IPART is advised by the SCA that the information provided by it is confidential, section 24FF of the IPART Act sets out the manner in which IPART is to deal with that information; or

 under section 25A of the IPART Act, IPART cannot require the SCA to produce a cabinet document.]

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B

WorleyParsons Services Limited – Audit of System

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IN DEPENDENT PRICING AND REGULAT OR Y TRIBUN AL ( IPAR T)

Audit of Sydney Catchment Authority's

Asset Management System

301015-00417 - 00-GE-RPT-0002 27-Feb-09

Infrastructure

Level 12, 333 CollinsStreet Melbourne Vic 3000 Australia Telephone: +61 3 8676 3500 Facsimile: +61 3 8676 3505 www.worleyparsons.com WorleyParsons Services Pty Ltd ABN 61 001 279 812

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INDEPENDENT PRICING AND REGULATORY TRIBUNAL (IPART)

AUDIT OF SYDNEY CATCHMENT AUTHORITY'S ASSET MANAGEMENT SYSTEM

c:\documents and settings\carsten.berberich\my documents\worleyparsons\301015 00413 ipart\sca assessment 2008\report\finalisation\2009 versions incorporating final ipart comments\clean\ipart am report round

2\00417_00_ge_rpt_0002_rev2 sca am audit clean2.doc

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SYNOPSIS

This report presents the findings of an audit of the Sydney Catchment Authority’s Asset Management. It specifically considers the degree of compliance of the Sydney Catchment Authority Asset Management with the requirements of clauses 7.1 and 7.2 of the authorities Operating Licence...

Disclaimer

This report has been prepared on behalf of and for the exclusive use of IPART, and is subject to and issued in accordance with the agreement between the IPART and WorleyParsons Services Pty Ltd. WorleyParsons Services Pty Ltd accepts no liability or responsibility whatsoever for it in respect of any use of or reliance upon this report by any third party.

Copying this report without the permission of IPART or WorleyParsons Services Pty Ltd is not permitted.

301015-00417-00-GE-RPT-0002 - AUDIT OF SYDNEY CATCHMENT AUTHORITY'S ASSET MANAGEMENT SYSTEM

REV DESCRIPTION ORIG REVIEW WORLEY-

PARSONS APPROVAL DATE CLIENT APPROVAL DATE A Outline Draft [ ] S Wise [ C Berberich [ ] P Draayers 2-Oct-08 B Amended Draft – Issued

for Internal Review

[ ] S Wise [ C Berberich [ ] P Draayers 31-Oct-08 C Amended Draft - Issued

for IPART Review

[ ] S Wise [ C Berberich [ ] P Draayers 7-Nov-08 0 Issue to client

S Wise C Berberich P Draayers

9-Jan-09 1 Minor modifications

S Wise C Berberich P Draayers

18-Feb-09 2 Minor modifications

C Berberich S Wise P Draayers

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c:\documents and settings\carsten.berberich\my documents\worleyparsons\301015 00413 ipart\sca assessment 2008\report\finalisation\2009 versions incorporating final ipart comments\clean\ipart am report round 2\00417_00_ge_rpt_0002_rev2 sca am audit clean2.doc

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GLOSSARY/DEFINITIONS ...6 Abbreviations...6 Glossary/Definitions...7 Compliance Table Assessment ...7 EXECUTIVE SUMMARY ...8 1. INTRODUCTION ...11 1.1 Background ...11 1.2 Sydney Catchment Authority ...11 1.2.1 SCA’s Purpose...11 1.2.2 Regulatory Framework...12 1.3 Asset Management Issues Identified in Previous Reviews/Audits ...12 1.4 Approach to this Asset Management Audit ...13 1.5 Scope of Services of this Audit ...14 2. METHODOLOGY ...15 2.1 Overview ...15 2.2 Draft Audit Plan ...15 2.3 SCA Audit Interviews ...16 2.4 Conduct of the Audit ...16 2.5 Audit Team ...16 2.6 SCA Asset Management Key Performance Indicators (KPIs) ...17 2.7 Verification/Proof of Performance ...17 3. SCA’S ASSET MANAGEMENT PLAN...19 3.1 Introduction...19 3.2 Reference Documents for the Audit...19 3.3 SCA Asset Management Framework...23 3.3.1 Regulatory Requirements ...23

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3.3.2 Key Performance Indicators ...24 4. AUDIT FINDINGS BY SECTION ...27 4.1 Operating Licence Clause 7.1 – Compliance with Asset Management Obligations ...27 4.1.1 Clause 7.1(a) Compliance with Regulatory Obligations...27 4.1.2 Clause 7.1(b) Compliance with Strategic Management Framework and TAM Policy 28

4.1.3 Clause 7.1(c) Compliance with Lowest Life Cycle Cost (LCC) and Acceptable Asset Risk 31

4.1.4 Clause 7.1(d) Demonstration of Whole Of Life (WOL) Asset Cost Assessment .32 4.1.5 Clause 7.1(e) Demonstration of Asset Risk Assessment (Loss, Capacity to Respond to a Potential Failure or Reduced Performance) ...34 4.2 Operating Licence Clause 7.2 – Compliance with Management System: Reporting on Assets...35

4.2.1 Clause 7.2.1 State of the Asset Report Submission ...35 4.2.2 Clause 7.2.2(a) Description of SCA Asset Management Processes, Practices, Systems and Plans ...37 4.2.3 Clause 7.2.2(b) Description of SCA Asset Groupings ...37 4.2.4 Clause 7.2.2(c) Description of SCA Asset Capability to Meet Service Delivery and Existing Legal Obligations ...38 4.2.5 Clause 7.2.2(d) Assessment of SCA Asset Current and Future Performance Issues or Constraints ...39 4.2.6 Clause 7.2.2(e) Assessment of SCA Strategies and Expected Future Asset Investment Cost...41 4.2.7 Clause 7.2.2(f) Assessment of SCA progress in implementing asset management and any recommended Improvements ...43 4.2.8 Clause 7.2.2(g) Assessment of any Other SCA Asset Management Information Required by IPART...45 5. CONCLUDING REMARKS ...51

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Appendices

APPENDIX 1 : SCOPE OF AUDIT (SCHEDULE 3)

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GLOSSARY/DEFINITIONS

Abbreviations

Commonly used abbreviations or acronyms used within this report are provided in Table A. Table A: Abbreviations

Abbreviation Full Description

ADWG Australian Drinking Water Guidelines AIR Annual Information Return

AMSP Asset Maintenance Strategic Plan

ANCOLD Australian National Committee on Large Dams CMMS Computerised Maintenance Management System DECC Department of Environment and Climate Change FMECA Failure Modes Effect Criticality Analysis

IM&ICT Information Management and Information Communication Technology

IPART Independent Pricing and Regulatory Tribunal

LCC Life Cycle Costing

MWP Metropolitan Water Plan

ODM Optimised Decision Making OH&S Occupational Health and Safety

SIR Special Information Return

SCA Sydney Catchment Authority SWCM Act Sydney Water Catchment Management Act

TAM NSW Treasury Total Asset Management Guidelines WOL Whole of Life

WorleyParsons WorleyParsons Services Pty Ltd WSAA Water Services Association of Australia

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Glossary/Definitions

The glossary/definitions for terms or phrases used within this report are provided in Table B: Table B: Glossary and Definitions

GENERAL TERMS AND DEFINITIONS

Term Meaning

Audit period The SCA Operating Licence asset management review period Bulk Water Raw Water supplied to Sydney Water (under the Bulk Water Supply

Agreement) and to local councils Bulk Water Supply

Agreement

The Bulk Water Supply Agreement between the SCA and Sydney Water signed on 13 April 2006.

Function Means a power, authority or duty.

Maximo The SCA Computerised Maintenance Management System

Minister The Minister responsible for administering the provisions of the SWCM Act 1998.

Operating Licence The SCA’s Licence, issued on the 8th February 2006, and expiring on or about 1 July 2009

Compliance Table Assessment

The compliance ratings used in the Asset Management assessment against each auditable operating licence clause are in accordance with those provided to WorleyParsons by IPART. These are:

Term Meaning

Grading of Compliance

The following ratings are used to grade achievement of compliance with a Licence condition.

Full compliance All requirements of the condition have been met.

High compliance Most requirements of the condition have been met with some minor technical failures or breaches.

Moderate compliance The major requirements of the condition have been met. Low compliance Key requirements of the condition have not been met but minor

achievements regarding compliance have been demonstrated. Non compliance The requirements of the condition have not been met.

Insufficient information Relevant, suitable or adequate information to make an objective determination regarding compliance was not available to the auditor.

No requirement The requirement to comply with this condition does not occur within the audit period or there is no requirement for SCA to meet, such as a definition, a requirement placed upon another agency or the requirement was met in an earlier audit period.

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EXECUTIVE SUMMARY

The Sydney Catchment Authority (SCA) manages Sydney’s drinking water catchments and catchment infrastructure and supplies water on a wholesale basis to Sydney Water, to a number of local councils and to approximately 60 direct retail customers. It was established under the Sydney Water Catchment Management (SWCM) Act of 1998 and is required to operate to an operating licence.

The Independent Pricing and Regulatory Tribunal (IPART) is an independent body that oversees the regulation of the water, gas, electricity and public transport industries in New South Wales, including SCA. Amongst its responsibilities, IPART is empowered to conduct an audit of SCA’s compliance with Clauses 7.1 and 7.2 of its operating licence, relating to asset management, once during SCA’s licence period.

WorleyParsons Services Pty Ltd (WorleyParsons) has been engaged by IPART to conduct an audit of SCA’s compliance with the requirements of Clauses 7.1 and 7.2 of its operating licence.

This audit has found that SCA demonstrates a high level of compliance with the requirements of Clauses 7.1 and 7.2 of its licence. In summary, thirteen licence requirements have been audited. The audit has found that SCA demonstrates full compliance with two requirements of the audit. High levels of compliance are assessed against ten of the requirements and for one requirement it has been determined that there is no requirement applying to SCA. The findings are summarised in Table ES 1.

SCA is currently implementing a complete suite of processes and tools for asset management, covering the full spectrum of asset management activities, from condition monitoring and the documentation of individual assets to return on investment analysis. This collective set of processes and tools is termed the ”Maintenance Outcomes Hierarchy” by SCA.

SCA has designed its asset management processes around the requirements of the NSW Total Asset Management (TAM) guidelines and around the requirements of its licence and other regulatory requirements such as occupational health and safety regulations. It has provided evidence of compliance with the regulatory requirements identified sufficient for WorleyParsons to assess full compliance against item 7.1 (a) of the licence.

The strategic planning demonstrated by SCA through its Asset Strategy and its Asset Management Strategic Plan, as well as the plan for asset disposal in its Surplus to Needs Assets report and the evidence of compliance with TAM guidelines has resulted in the assessment that SCA demonstrates high levels of compliance with item 7.1 (b) of its licence. One issue identified being that the Surplus to Needs Asset Report may be out of date and should be reviewed.

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Table ES 1 High Level Audit Findings Summary

Clause Requirement Compliance

The SCA must ensure that its Assets are managed consistent with: 7.1 (a) Obligations in the Licence, and all applicable laws, policies and

guidelines, including the requirements of the NSW Dams Safety Committee;

FULL COMPLIANCE

7.1 (b) the principles of the Strategic Management Framework and the Total Asset Management (TAMS) Policy;

HIGH COMPLIANCE

7.1 (c) subject to clause 7.1(a), the lowest life cycle cost and acceptable risk of the Assets;

HIGH COMPLIANCE

7.1 (d) the whole life of the Assets; and HIGH COMPLIANCE

7.1 (e) its assessment of the risk of loss of the Assets, and capacity to respond to a potential failure or reduced performance of the Assets

HIGH COMPLIANCE

7.2.1 At least once during the term of the Licence at a time agreed with IPART, the SCA must provide information to IPART on the state of each group of Assets managed by the SCA

HIGH COMPLIANCE

7.2.2 The information provided must include the following:

(a) a description of the processes, practices, systems and plans the SCA uses in managing the Assets;

HIGH COMPLIANCE

(b) a description of each group of Assets; FULL COMPLIANCE

(c) an assessment of the expected capability of the Assets to deliver the services required to be delivered by the SCA and meet the existing obligations of the SCA consistent with the Licence and all applicable laws with which the SCA must comply;

HIGH COMPLIANCE

(d) an assessment of the major issues or constraints on current and future performance of the Assets;

HIGH COMPLIANCE

(e) the strategies and expected costs of future investments in the Assets; HIGH COMPLIANCE

(f) progress in implementing the management of the SCA’s Assets and any recommended improvements in processes, practices, systems and plans for the management of the Assets; and

HIGH COMPLIANCE

(g) such other information reasonably required by IPART NO REQUIREMENT

Asset Lifecycle Cost Analysis processes developed and being implemented by SCA include Lifecycle Assessment, Risk Costing, Predictive Analysis and Return on Investment Analysis. Assessment of these processes has have resulted in the assessment that SCA demonstrates a high level of

compliance against item 7.1 (c) and item 7.1 (d) of its licence. WorleyParsons recommends that SCA identify, document and report on timeline targets for the implementation of the processes to achieve full compliance.

SCA has provided evidence of the adoption of a risk management framework based on AS 4360. It has completed a risk analysis and classification of its assets and developed action plans in response to the outcomes of the risk assessment, demonstrating a high level of compliance with the

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Item 7.2 of SCA’s operating licence requires it to provide information on the status of each group of its assets. This information is available in various reports and forms. It is recommended that SCA develop a consolidated report in future to simplify the process of determining compliance with the operating licence and to harness the benefits that this consolidated knowledge would provide regarding the state of its assets.

Whilst it is recommended that SCA compile a State of the Assets Report, it is considered that SCA provides adequate information to show high compliance with item 7.2.1 of its licence. Items 7.2.2 (a) and (b) are assessed largely on the same basis as item 7.2.1. The level of compliance for 7.2.2(a) is considered to be high rather than full due to the lack of a documented plan for the full implementation of the Maintenance Outcomes Hierarchy and the fact that the implementation is incomplete. The framework developed for asset management by SCA has resulted in an assessment of full compliance for item 7.2.2 (b) of the licence.

The assessment of SCA’s documentation of its future asset investment strategy has identified that there are inconsistencies between investment plans identified in the Asset Strategy and SCA’s current capital and operational expenditure expectations. This inconsistency between documented expenditure requirements for asset management has resulted in an assessment of high compliance rather than full compliance against item 7.2.2 (c), as it highlights contradictions in SCA’s current plan and statements made in its Asset Strategy regarding the need for increased investment to manage ageing infrastructure. It also leads to an assessment of high rather than full compliance for item 7.2.2 (e), where it highlights that the Asset Strategy should be updated to be consistent with SCA’s current expenditure plan.

SCA has provided evidence of the review of its capital expenditure plan. However it has not provided evidence of the review process and changes to the drivers behind the original asset management investment which justify the change. It has also not provided documentation regarding the

consideration of its asset management drivers in the reduction of forecast operational expenditure in 2008/09 and 2009/10 from $19.11 M to $14.14. Whilst information was provided to WorleyParsons regarding the review of forecast capital expenditure and operational expenditure during this audit and in the review of past and future capital and operating expenditure for the IPART review of prices for the Sydney Catchment Authority, 2009, the information provided did not adequately describe the rationale behind the reduction in operational expenditure.

By demonstrating the incorporation of forward planning issues and the outcomes of system reviews in its asset management, SCA is considered to show high compliance with item 7.2.2(d).

This audit’s assessment of overall high performance by SCA in the area of Asset Management is supported by assessment of SCA’s asset management during the Water Services Association of Australia (WSAA) 2008 Asset Management Benchmarking Project. The benchmarking project has previously (in 2004) identified opportunities for improvement, such as in Maintenance Management Systems. The most recent assessment has shown significant improvement against the improvement opportunities identified in the 2004 assessment.

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1. INTRODUCTION

1.1 Background

WorleyParsons Services Pty Ltd (WorleyParsons) has been engaged by the Independent Pricing and Regulatory Tribunal (IPART) to complete an audit of the asset management practices of the Sydney Catchment Authority (SCA). For the purposes of this audit, compliance has been assessed against the following clauses of SCA’s Operating Licence:

• 7.1 - Asset Management Obligation, and

• 7.2 - Reporting on the management system of the Assets

The scope of the assignment is described in Schedule 3 of the agreement between IPART and WorleyParsons, which is attached in Appendix 1.

1.2 S ydney

Catchment

Authority

SCA is a NSW state owned corporation. It is responsible for the supply of bulk raw water for the Greater Sydney, Illawarra, Blue Mountains and the Southern Highlands regions of NSW.

SCA’s role is derived from the Sydney Water Catchment Management Act 1998 (SWCM Act – ‘the Act’) and the Operating Licence issued to SCA. Under Part 7.3 of the Operating Licence, IPART may undertake an audit of SCA’s performance against the asset management requirements of its Licence. IPART reports the findings to the NSW Water Minister.

The asset base reviewed comprises storage dams, delivery pipeline systems, water pumping stations and online monitoring systems.

1 . 2. 1 S C A ’ s Pur p o s e

The SWCM Act defines the roles, purpose and objectives of SCA. Its role is to manage and protect the catchment areas and infrastructure works, supply raw water and bulk water to its customers; and to regulate specified activities within the catchment area. SCA’s has the responsibility to protect the 16,000 square kilometres of drinking water catchment, manage dams, pipelines and other

infrastructure and to supply raw water of the required quality to its customers. SCA’s customers include Sydney Water, two local councils and approximately 60 other retail customers that are directly supplied from SCA’s infrastructure.

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1.2.2 Regulatory Framew ork

The regulatory framework applicable to SCA consists of a combination of operating licence, government department directives, water management planning and other legislation and various other guidelines and regulations. The framework is comprised of aspects of:

1. Regulatory authority requirements 2. Catchment protection

3. Environmental planning

4. Water supply (meeting Bulk Water Supply Agreements)

5. Implementation of the 2006 NSW Metropolitan Water Plan (MWP) The specific regulatory aspects considered for this asset management audit are:

• SCA’s Operating Licence

• The MWP (asset investment versus asset maintenance)

• The NSW Treasury Total Asset Management (TAM) Guidelines

• Raw water quality protection to comply with the Australian Drinking Water Guidelines (ADWG) and Section 36 of the SCWM Act

• NSW Dam Safety Committee Guidelines

• Miscellaneous supporting legislation, guidelines, Standards and regulations, which may impact Asset Management practices or investment costs. Examples include the Dangerous Goods Act, OH&S Act and boiler and pressure vessel regulations.

1.3 Asset Management Issues Identified in Previous

Review s/Audits

A number of previous reviews of SCA’s asset management performance have been assessed to identify common themes or outstanding issues that might potentially impact service delivery. These reviews include:

• Cardno-Atkins 2005 Review of the SCA Operational and Capital Expenditure and Asset Management

• SCA’s Submission to IPART’s Review of Prices, September 2008

• The IPART 2008 Issues Paper

• The Water Services Association Australia (WSAA) - Asset Management Benchmarking 2008 report (confidential to the SCA at the time of audit)

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A discussion of the key issues arising out of these reviews is detailed in Section 4.2.5 of this report.

1.4 Approach to this Asset Management Audit

Discussion of approach to the Asset Management audit

In assessing the compliance of SCA’s asset management practices against Clauses 7.1 and 7.2 of its Operating Licence, WorleyParsons audited:

1. SCA’s asset management systems to ensure that SCA is managing its assets consistent with Clause 7.1 (a) – (e) of the Operating Licence

2. SCA’s State of the Assets Reporting - Clause 7.2

A project inception meeting was held between IPART and WorleyParsons to establish a shared understanding of the scope, approach, processes and outputs of the asset management audit. WorleyParsons then visited SCA’s Penrith office to gain an understanding of asset management practices and systems and gather documentation of the system and evidence of SCA’s performance in the area of asset management. Where the WorleyParsons audit team was not able to draw adequate conclusions from the initial data obtained, clarification requests were raised and further information sought.

To maximise the efficiency of the audit and minimise the time required to review and finalise the draft, key issues identified were included in fortnightly project management reports, which were circulated to SCA.

The audit concentrated on identifying the asset management systems and practices and the value they provided in SCA’s compliance with its Operating Licence, the degree to which the systems were utilised and proof of the delivery of the expected value from the systems. The last two were assessed by reviewing the asset management of a number of specific assets, selected at random from SCA’s high criticality assets.

Reference Documents for Audit

The reference documents obtained from SCA to enable WorleyParsons to establish the degree of compliance with Clauses 7.1 and 7.2 of the Operating Licence are detailed in Section 3 of this report. Key requirements and corresponding documents for the audit are presented in Table 1-1.

WorleyParsons has acted in an independent, third party, audit role in carrying out this assessment. WorleyParsons has sought to draw conclusions on the basis of facts and supporting documentary evidence demonstrating, SCA Asset Management compliance with the Operating Licence clauses. Compliance has been assessed against WorleyParsons’ interpretation and understanding of the requirements of the Operating Licence. This assessment does not comment on the suitability of the Operating Licence clauses nor on any aspects of SCA’s Asset Management falling outside the Licence clauses.

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Table 1-1 Key Requirements

Assessment Requirement Description Key Reference Document(s)

Operating Licence Clause 7.1 Meeting SCA Asset Management Obligations

SCA Asset Strategy

Operating Licence Clause 7.2 Reporting on the Management System of the Assets

SCA Asset Management Framework, Corporate risk assessment, Service Delivery Strategy

1.5 Scope of Services of this Audit

Schedule 3 of the IPART agreement with WorleyParsons sets out the scope of services and the deliverables for this audit. Schedule 3 is included in Appendix 1 for reference.

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2. METHODOLOGY

2.1 Overview

This assignment has been completed in accordance with the scope of works and conditions of contract between IPART and WorleyParsons.

A project inception meeting has been held between IPART and WorleyParsons to establish a shared understanding of the scope, approach, processes and outputs of the asset management audit. The inception meeting has also sought to identify client contacts, methodology and protocols for information requests to SCA staff.

WorleyParsons has then visited SCA’s Penrith office to gather documentary evidence supporting SCA’s asset management practices. Where SCA documents initially provided to the WorleyParsons audit team have not fully demonstrated compliance with Operating Licence clauses, further

information has been requested by WorleyParsons.

The asset management documents provided by SCA have then been reviewed by WorleyParsons. The degree to which the processes described in the documents have been implemented and the value added by the asset management practices within the SCA Asset Management Framework have been determined. This has included a review of the implementation of the processes for a

representative sample set of SCA’s assets. The sample set has included a dam, a pipeline delivery system, an online control system, an aqueduct and a water pumping station. Assets within these categories have been selected at random.

All documentation received from SCA has been assessed for compliance against Operating Licence Clauses 7.1 and 7.2. The findings are discussed in section 4 of this report. These findings have then been graded by WorleyParsons using a set of compliance grading measures provided by IPART. The gradings are tabulated at the end of Section 4 of this report.

2.2 Draft

Audit

Plan

To ensure that the audit requirements outlined in the Operating Licence and the brief are addressed, the scope of the audit has been confirmed with IPART and a draft audit plan (Project Execution Plan or PEP) has been prepared by WorleyParsons following the project inception meeting. This has subsequently been approved by IPART.

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2.3 SCA Audit Interview s

A number of meetings have been undertaken with SCA staff during the audit:

1. Onsite meetings have been held at SCA’s Penrith office, to establish a common understanding of the audit requirements and identify and collect appropriate documentation required for the audit

2. Teleconferences have been held with SCA staff to discuss clarification or information requests

3. The draft report and results have been presented to SCA and IPART personnel

Information requests have been provided to SCA in advance of meetings where possible, to allow SCA the opportunity to prepare and collate the necessary documentary evidence.

2.4 Conduct of the Audit

The audit has been undertaken to verify the compliance of SCA’s asset management and asset investment decision making processes with its Operating Licence.

The audit team has assessed examples of SCA’s documentation as evidence of the authority’s progress in the implementation of its asset management systems. A sample of 5 assets, representing dams, pipelines, raw water pumping stations, aqueducts and online chemical dosing systems, have been chosen for a review of SCA’s implementation of its asset management and investment systems. Recommendations have been made where compliance with Operating Licence clauses could not be verified. Comments provided by the audit team are based on facts and evidence and the judgement of the auditors.

2.5 Audit

Team

The asset management audit team has primarily consisted of Sean Wise (analyst) and Carsten Berberich (Project Manager). WorleyParsons has completed a review of SCA’s operational

expenditure and capital expenditure for IPART at the same time as the asset management audit. The overall team utilised for the SCA (Capital and Operational Expenditure and Asset Management) reviews is presented in Figure 2-1.

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Figure 2-1: SCA Capital Expenditure, Operational Expenditure and Asset Management Audit Team

2.6 SCA Asset Management Key Performance Indicators (KPIs)

KPIs relating to Asset Management have been identified in various SCA documents. These have been used in the assessment of SCA’s compliance against Operating Licence clauses. They have also been used to assess SCA’s performance against its own targets in the implementation of its asset management system and in consideration of the basic performance of SCA as a reflection of the outcomes of the implementation of its asset management processes.

2.7 Verification/Proof

of

Performance

Verification of compliance with licence requirements has been undertaken through review of documentation and information provided by SCA. The overall findings for each clause of the

Operating Licence have been documented by WorleyParsons using compliance gradings provided by IPART.

The compliance gradings used are presented in Table 2-1.

Audit findings are discussed and gradings of compliance and recommendations are tabulated in Section 4 of this report.

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Table 2-1 Compliance Ratings

Term Meaning

Grading of Compliance

The following ratings are used to grade achievement of compliance with a Licence condition.

Full compliance All requirements of the condition have been met.

High compliance Most requirements of the condition have been met with some minor technical failures or breaches.

Moderate compliance The major requirements of the condition have been met. Low compliance Key requirements of the condition have not been met but minor

achievements regarding compliance have been demonstrated. Non compliance The requirements of the condition have not been met.

Insufficient information Relevant, suitable or adequate information to make an objective determination regarding compliance was not available to the auditor.

No requirement The requirement to comply with this condition does not occur within the audit period or there is no requirement for SCA to meet, such as a definition, a requirement placed upon another agency or the requirement was met in an earlier audit period.

Any information, advice from SCA and processes have been assessed only to the extent that their contribution to SCA’s compliance with Operating Licence obligations and asset reporting

requirements could be objectively demonstrated.

Recommendations have been made in areas where non-compliance or limited compliance is apparent. Comments provided by the audit team are supported by facts, evidence and rationale.

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3. SCA’S ASSET MANAGEMENT PLAN

3.1 Introduction

This section introduces SCA’s asset management systems and processes and describes how they relate to SCA’s regulatory requirements and framework as well as providing detail on KPIs relevant to SCA’s asset management.

3.2 Reference Documents for the Audit

SCA documents used by WorleyParsons to either define asset management processes or to confirm the level of implementation of its processes by SCA are listed in Table 3-1 :

Table 3-1 Reference Documents

Documentation provided Operating Licence

Clause (s)

Relevance to Operating Licence Clause(s)

SCA Strategic Management Framework – process diagram All All

Quality Systems Certification letter 13/10/2008 from NCSI Quality Auditor 7.1 (a) Ongoing Compliance Verification for Dam Safety

SCA ISO9001/14001 System Compliance Certificate 7.1 (a) Certified as per Dam Safety

SCA Annual Water Quality Monitoring Report 2006-07 7.1 (a) Evidence of compliance as input supply to customers, in line

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Clause (s)

SCA Asset Maintenance Strategic Plan,

SCA Asset , 2006 Office Accommodation and IM& ICT Strategies SCA Asset Surplus to Needs report

7.1(b) TAMS compliance – Guideline TAM 06-01

TAMS compliance – Guideline TAM 06-03 TAMS compliance – Guideline TAM 06-04

SCA Capital Project Summary Sheets 7.1 c) Alignment of asset management costs and practices with Capital

business cases CD2005-00068: SCA Procedure for Asset Acquisition by contract V2

SCA Asset Data Upload – Prospect Raw Water Pumping Station Various SCA files supporting examples for 5 assets – Business Case, Asset condition, Maintenance Performance, PM Schedules, Dam Surveillance Report, Job Plans and Options Studies

7.1 d)

7.1d), 7.2.2 e)

WOL - Acquisition of assets in lifecycle WOL – Asset Operation (handover from design)

WOL - Maintenance response schedules and job plans for assets

Corporate Risk Management Framework Version 3, July 2006 7.1e) Corporate risk management system

Condition Assessment of Fish River

Supply Main – Leura to Cascade Dam 24/4/2007

7.1 (e), 7.2.2 (e), 7.2.2 (f) Asset risk assessment, progress in implementation and cost estimates

Asset Criticality Report, Sept 2005 v2.0 (final) 7.1 (e) Risk assessment methodology, high risk asset listing

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Clause (s)

Asset Strategy Jan 2008 7.1 b) 7.2.1, 7.2.2 c), d) TAM Guidelines, Asset reporting and ability of assets to meet

service delivery needs CD2004-00038 Asset Identification Standard v0.11.8.pdf

DATA CAPTURE TOOL V4.1 - PROSPECT RWPS 5.xls

7.2.2 b) Procedure, and example, of Asset grouping and description from

location to equipment level

SCA Corporate Plan 2007 – 2012 7.2. Reporting on State of the Assets

Annual Maintenance Report 7.2.1, 7.2.2c) Ability to meet service delivery, Reporting on assets

SCA Pricing Submission to IPART – 12 September 2008.pdf 7.2.2 c), d) Ability to deliver services and identification of constraints/issues

Statement of Financial Framework 2007-2008 (May 2007) 7.2.2d), e) Reporting on ability to meet service delivery requirements

IPART Water issues paper for Review of Prices for SCA 7.2.2 d) identification of constraints/issues for consideration in audit

IPART Capital Expenditure, Asset Management and Operational Expenditure Overview and Supplementary Reports (Atkins-Cardno) Feb and July 2005

7.2.2 d) identification of constraints/issues from the previous

determination

SCA Annual Information Requirements – Table 3.1, line item 22: Mtce of Assets

7.2.2 e) SCA current and future investment cost in asset management

Audit of Sydney Catchment Authority s Asset Management System

Independent Pricing and Regulatory Tribunal

Audit of

Sydney Catchment Authority’s

Asset Management System

Report to the Minister

Water Licensing — Compliance Report

April 2009

Audit of

Sydney Catchment Authority’s

Asset Management System

Report to the Minister

Water Licensing — Compliance Report

April 2009

ISBN

Contents

1

Introduction and Overview

1.1

Background

1.2

Audit Process

1.3

Audit Scope

2

Overview of Findings

3

Agreed Actions

4

Next Steps

Appendices

A

Licence clauses relating to SCA’s asset management

obligation and to auditing the management system of

the assets

Part 7 Asset management

Part 11 Annual Audit of the Licence

B

WorleyParsons Services Limited – Audit of System

Audit of Sydney Catchment Authority's

Asset Management System

SYNOPSIS

CONTENTS

Appendices

GLOSSARY/DEFINITIONS

EXECUTIVE SUMMARY

1. INTRODUCTION

1.1 Background

1.2 S ydney

Catchment

Authority

1.3

Asset Management Issues Identified in Previous

Review s/Audits

1.4

Approach to this Asset Management Audit

1.5

Scope of Services of this Audit

2. METHODOLOGY

2.1 Overview

2.2 Draft

Audit

Plan

2.3

SCA Audit Interview s

2.4

Conduct of the Audit

2.5 Audit

Team

2.6

SCA Asset Management Key Performance Indicators (KPIs)

2.7 Verification/Proof

of

Performance

3.

SCA’S ASSET MANAGEMENT PLAN

3.1 Introduction

3.2

Reference Documents for the Audit