Agenda of Audit and Risk Committee

PALMERSTON NORTH CITY COUNCIL

Audit and Risk Committee MEETING

19 August 2019

Order of Business

NOTE: The Audit and Risk Committee meeting coincides with the ordinary meeting of the Finance and Performance Committee. The Committees will conduct business in the following order:

- Finance and Performance Committee

- Audit and Risk Committee

1. Apologies

2. Notification of Additional Items

Pursuant to Sections 46A(7) and 46A(7A) of the Local Government Official Information and Meetings Act 1987, to receive the Chairperson’s explanation that specified item(s), which do not appear on the Agenda of this meeting and/or the meeting to be held with the public excluded, will be discussed.

Any additions in accordance with Section 46A(7) must be approved by resolution with an explanation as to why they cannot be delayed until a future meeting.

Any additions in accordance with Section 46A(7A) may be received or referred to a subsequent meeting for further discussion. No resolution, decision or recommendation can be made in respect of a minor item.

3. Declarations of Interest (if any)

Members are reminded of their duty to give a general notice of any interest of items to be considered on this agenda and the need to declare these interests.

4. Public Comment

To receive comments from members of the public on matters specified on this Agenda or, if time permits, on other Committee matters.

(NOTE: If the Committee wishes to consider or discuss any issue raised that is not specified on the Agenda, other than to receive the comment made or refer it to the Chief Executive, then a resolution will need to be made in accordance with clause 2 above.)

5. Confirmation of Minutes Page 7

“That the minutes of the Audit and Risk Committee meeting of 6 May 2019 Part I Public be confirmed as a true and correct record.”

6. Business Assurance Framework and Business Assurance 2019/20 Plan Page 13

Memorandum, presented by Vivian Watene - Senior Internal Auditor.

7. Internal Audit Annual Report 2018/19 Page 39

Memorandum, presented by Vivian Watene - Senior Internal Auditor.

8. New Audit - Fixed Assets Management Process Page 83

Memorandum, presented by Vivian Watene - Senior Internal Auditor.

9. Business Assurance Charter Page 89

Memorandum, presented by Vivian Watene - Senior Internal Auditor.

10. Health and Safety – April – June 2019 Page 99

Memorandum, presented by Wayne Wilson - Human Resources Manager.

11. Surveillance in Public Space in the City Page 107

Memorandum, presented by John Annabell - Legal Counsel.

12. Risk Report Q1 2019-20 Page 109

Memorandum, presented by Miles Crawford - Risk Manager.

13. Business Continuity Report Q1 2019-20 Page 115

Memorandum, presented by Miles Crawford - Risk Manager.

14. AMP Update - Water Asset Management Planning Page 119

Memorandum, presented by Robert van Bentum, Manager - Transport & Infrastructure.

15. Committee Work Schedule Page 135

16. Exclusion of Public

To be moved:

“That the public be excluded from the following parts of the proceedings of this meeting listed in the table below.

The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under Section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:

General subject of each matter to be considered	Reason for passing this resolution in relation to each matter	Ground(s) under Section 48(1) for passing this resolution

This resolution is made in reliance on Section 48(1)(a) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by Section 6 or Section 7 of that Act which would be prejudiced by the holding of the whole or the relevant part of the proceedings of the meeting in public as stated in the above table.

Also that the persons listed below be permitted to remain after the public has been excluded for the reasons stated.

Chief Executive (Heather Shotter), Chief Financial Officer (Grant Elliott), Chief Infrastructure Officer (Tom Williams), Acting General Manager – Strategy and Planning (David Murphy), General Manager - Community (Debbie Duncan), Chief Customer and Operating Officer (Chris Dyhrberg), General Manager - Marketing and Communications (Sacha Haskell), Sandra King (Executive Officer) because of their knowledge and ability to provide the meeting with advice on matters both from an organisation-wide context (being members of the Council’s Executive Leadership Team) and also from their specific role within the Council.

Legal Counsel (John Annabell), because of his knowledge and ability to provide the meeting with legal and procedural advice.

Committee Administrators (Penny Odell, Carly Chang and Natalya Kushnirenko), because of their knowledge and ability to provide the meeting with procedural advice and record the proceedings of the meeting.

[Add Council Officers], because of their knowledge and ability to assist the meeting in speaking to their report and answering questions, noting that such officer will be present at the meeting only for the item that relate to their respective report.

[Add Third Parties], because of their knowledge and ability to assist the meeting in speaking to their report/s [or other matters as specified] and answering questions, noting that such person/s will be present at the meeting only for the items that relate to their respective report/s [or matters as specified].

PALMERSTON NORTH CITY COUNCIL

Palmerston North City Council

Minutes of the Audit and Risk Committee Meeting Part I Public, held in the Council Chamber, First Floor, Civic Administration Building, 32 The Square, Palmerston North on 06 May 2019, commencing at 9.00am

Members

Present:

Councillor Vaughan Dennison (in the Chair), The Mayor (Grant Smith) and Councillors Susan Baty, Adrian Broad, Lew Findlay QSM, Jim Jefferies, Lorna Johnson and Bruno Petrenas.

Non Members:

Councillors Brent Barrett, Rachel Bowen, Leonie Hapeta, Duncan McCann, Karen Naylor and Tangi Utikere.

Apologies:

Councillor Gabrielle Bundy-Cooke and The Mayor (Grant Smith) (early departure on Council Business)

The Mayor was not present when the meeting resumed at 2.45pm. He was not present for clauses 10 to 18 inclusive.

Councillor Tangi Utikere entered the meeting at 2.58pm during consideration of clause 12. He was not present for clauses 10 to 11 inclusive.

Councillor Duncan McCann left the meeting at 2.47pm during consideration of clause 11. He entered the meeting again at 3.00pm after the consideration of clause 11. He was not present for clause 11.

Councillor Duncan McCann left the meeting at 3.45pm during consideration of clause 16. He entered the meeting again at 3.48pm after the consideration of clause 16. He was not present for clause 16.

9-19

Apologies

Moved Vaughan Dennison, seconded Duncan McCann.

The COMMITTEE RESOLVED

1. That the Committee receive the apologies.

Clause 9-19 above was carried 14 votes to 0, the voting being as follows:

For:

The Mayor (Grant Smith) and Councillors Brent Barrett, Susan Baty, Rachel Bowen, Adrian Broad, Vaughan Dennison, Lew Findlay QSM, Leonie Hapeta, Jim Jefferies, Lorna Johnson, Duncan McCann, Karen Naylor, Bruno Petrenas and Tangi Utikere.

The meeting adjourned at 9.02am

The meeting resumed at 2.45pm

When the meeting resumed The Mayor (Grant Smith) and Councillor Tangi Utikere were not present

10-19

Confirmation of Minutes

Moved Vaughan Dennison, seconded Bruno Petrenas.

The COMMITTEE RESOLVED

1. That the minutes of the Audit and Risk Committee meeting of 18 February 2019 Part I Public be confirmed as a true and correct record.

Clause 10-19 above was carried 12 votes to 0, the voting being as follows:

For:

Councillors Brent Barrett, Susan Baty, Rachel Bowen, Adrian Broad, Vaughan Dennison, Lew Findlay QSM, Leonie Hapeta, Jim Jefferies, Lorna Johnson, Duncan McCann, Karen Naylor and Bruno Petrenas.

Councillor Duncan McCann left the meeting at 2.47pm

11-19

Health and Safety Report Jan - Mar 2019

Memorandum, dated 29 April 2019 presented by the Human Resources Manager, Wayne Wilson.

Moved Vaughan Dennison, seconded Leonie Hapeta.

The COMMITTEE RESOLVED

1. That the Audit and Risk Committee note the information contained within the memorandum titled `Health and Safety Report Jan – Mar 2019’ dated 29 April 2019.

Clause 11-19 above was carried 11 votes to 0, the voting being as follows:

For:

Councillors Brent Barrett, Susan Baty, Rachel Bowen, Adrian Broad, Vaughan Dennison, Lew Findlay QSM, Leonie Hapeta, Jim Jefferies, Lorna Johnson, Karen Naylor and Bruno Petrenas.

Councillor Tangi Utikere entered the meeting at 2.58pm

Councillor Duncan McCann entered the meeting at 3.00pm

12-19

Surveillance in Public Space in the City

Report, dated 5 April 2019 presented by the Legal Counsel, John Annabell.

Moved Vaughan Dennison, seconded Leonie Hapeta.

The COMMITTEE RESOLVED

1. That the memorandum titled “Surveillance in Public Space in the City” dated 5 April 2019, be noted and be received for information.

Clause 12-19 above was carried 13 votes to 0, the voting being as follows:

For:

Councillors Brent Barrett, Susan Baty, Rachel Bowen, Adrian Broad, Vaughan Dennison, Lew Findlay QSM, Leonie Hapeta, Jim Jefferies, Lorna Johnson, Duncan McCann, Karen Naylor, Bruno Petrenas and Tangi Utikere.

13-19

Risk Management Progress YTD March 2019

Memorandum, dated 12 April 2019 presented by the Risk Manager, Miles Crawford.

Moved Vaughan Dennison, seconded Bruno Petrenas.

The COMMITTEE RESOLVED

1. That the Committee note developments for risk reporting to the Audit and Risk Committee and Management’s progress made to the strategic and operational risk profiles.

Clause 13-19 above was carried 13 votes to 0, the voting being as follows:

For:

14-19

AMP Update - Property Asset Management Planning

Memorandum, dated 29 March 2019 presented by the Property Manager, Bryce Hosking and the Asset and Planning Manager, Jono Ferguson-Pye.

Moved Vaughan Dennison, seconded Leonie Hapeta.

The COMMITTEE RESOLVED

1. That the Audit and Risk Committee receives the memorandum titled “AMP Update – Property Asset Management Planning” dated 29 March 2019.

Clause 14-19 above was carried 13 votes to 0, the voting being as follows:

For:

15-19

AMP Update - Wastewater Asset Management Planning

Memorandum, dated 29 April 2019 presented by the Transport & Infrastructure Manager, Robert van Bentum.

Moved Vaughan Dennison, seconded Bruno Petrenas.

The COMMITTEE RESOLVED

1. That the Audit and Risk Committee receives the memorandum titled “AMP Update – Wastewater Asset Management Planning” dated 29 April 2019.

Clause 15-19 above was carried 13 votes to 0, the voting being as follows:

For:

Councillor Duncan McCann left the meeting at 3.45pm

16-19

New Audit - Fixed Assets Management Process

Memorandum, dated 9 April 2019 presented by the General Manager -Strategy and Planning, Sheryl Bryant.

Due to the absence of the report author, Elected Members referred the report to the following meeting.

Moved Vaughan Dennison, seconded Leonie Hapeta.

The COMMITTEE RESOLVED

1. That the item be referred to the Audit and Risk Committee meeting on 19 August 2019.

Clause 16-19 above was carried 12 votes to 0, the voting being as follows:

For:

Councillors Brent Barrett, Susan Baty, Rachel Bowen, Adrian Broad, Vaughan Dennison, Lew Findlay QSM, Leonie Hapeta, Jim Jefferies, Lorna Johnson, Karen Naylor, Bruno Petrenas and Tangi Utikere.

Councillor Duncan McCann entered the meeting at 3.48pm

17-19

Management Agreed Corrective Actions Implementation Progress March 2019

Memorandum, dated 2 April 2019 presented by the General Manager -Strategy and Planning, Sheryl Bryant.

Due to the absence of the report author, Elected Members resolved to include discussion of the report at the following meeting.

Moved Vaughan Dennison, seconded Bruno Petrenas.

The COMMITTEE RESOLVED

1. That the Committee receive the Memorandum titled `Management Agreed Corrective Action Implementation Progress March 2019’ dated 2 April 2019 and its two Appendixes for information.

2. That discussion of the quarterly report is held at the 19 August 2019 meeting.

Clause 17-19 above was carried 13 votes to 0, the voting being as follows:

For:

18-19

Committee Work Schedule

Moved Vaughan Dennison, seconded Leonie Hapeta.

The COMMITTEE RESOLVED

1. That the Audit and Risk Committee receive its Work Schedule dated May 2019.

Clause 18-19 above was carried 13 votes to 0, the voting being as follows:

For:

The meeting finished at 3.51pm

Confirmed 19 August 2019

Chairperson

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Audit and Risk Committee

MEETING DATE: 19 August 2019

TITLE: Internal Audit Annual Report 2018/19

Presented By: Vivian Watene, Senior Internal Auditor

APPROVED BY: Sheryl Bryant, General Manager - Strategy & Planning

RECOMMENDATION(S) TO Audit and Risk Committee

1. That the Committee note the completion of the 2018/19 Internal Audit Plan.

ISSUE

1. In accordance with the Internal Audit Charter, this Memorandum informs this Committee on the Internal Audit activities for the year ended 30 June 2019.

BACKGROUND

2. The Internal Audit Division embarked on its transformation journey prompted by the Chief Executive’s restructuring exercise started in June 2018.

3. Business Assurance is the new name for the Internal Audit Division. It excludes the Risk Management coordination function which is now managed by a newly created position entitled Risk Manager.

4. Though the Business Assurance methodology will continue to be based on the International Internal Auditing Standards (the Standards), its approach is collaborative in that the auditor and the business unit co-develop a practical solution to the weaknesses identified from the audit.

5. The relevant Managers and staff surveyed post audit expressed 92% satisfaction feedback on the auditor’s approach, technical proficiency, professionalism, and how the audit results were communicated.

INDEPENDENCE

6. In 2018/19, an internal instruction ended a long-standing practice of quarterly informal direct communication and interaction between the Senior Internal Auditor and the Chairperson of the Audit and Risk Committee without senior management present. However, it has since been clarified that the Senior Internal Auditor is able to have direct access to the Chairperson of the Audit and Risk Committee as per the Internal Audit Charter.

YEAR END STATUS

7. Appendix A is a schedule of the approved 2018/19 Internal Audit Plan and its projects’ year-end status.

New Audits

8. All planned Internal Audit reviews have been completed, except for one, entitled Grant/Subsidy Revenue review, which has been deferred to the next financial year.

9. The reason for deferring the Grant/Subsidy Revenue review was due to the departure of the staff, in March 2019, who was responsible for the Council’s grant and subsidy fund raising activities. The vacant position was filled in July 2019.

10. The Conference and Function Centre Revenue Process audit, a 2019/20 project, was brought forward to 2018/19.

11. Conference and Function Centre Revenue Process

· The objective of Conference and Function Centre Revenue Process audit was to provide assurance over the adequacy, effectiveness & sustainability of the processes and controls over the Conference and Function Centre’s revenue generating activities by ensuring the reported revenues are complete, accurate and in compliance with the agreed terms & conditions, Council policy and any other relevant regulatory requirements.

· Audit was able to give a Substantial Assurance rating. It identified that there is a sound system of controls to achieve the system objectives. There are, however, some minor weaknesses of non-compliance with good practices.

· A high-level Executive Summary report is in Appendix B for information.

12. Animal Control Revenue Process

· The overall objective of the audit was to provide assurance over the adequacy and effectiveness of current internal controls and processes put in place over the Council’s Animals control revenue processes.

· Audit gave a Limited Assurance rating to Management on this review mainly due to the areas of non-compliance with the Dog Control Acts and the Council’s own Policies. There are also areas of inefficiencies in the processes.

· A high-level Executive Summary report of this review is in Appendix C for information.

13. In 2018/19 Internal Audit in conjunction with management, made a total of 157 recommendations. Of which: 20% have been implemented, 55% not yet due, and 24% have past the due date, as illustrated below in Table 1:

Table1: 2018/19

14. Table 2 below shows over the last 4 years since 2015/16, Management has implemented 63% of the recommendations. Through which, the internal control environment would have been strengthened.

15. The 35 (or 8%) recommendations, overdue by longer than 6 months, require attention are represented in Appendix D.

16. Management also needs to implement the recommendations (9%) less than 6 months overdue, especially those that have been ranked high (14) and medium (13) risks in Table 2 below.

Table 2: 2015/16 –2018/19

Routine Reviews

17. The following paragraphs summarised the activities for the year on the Internal Audit routine reviews:

18. Accounts Payable and Accounts Receivable Data Analysis

a. The irregularities in the Accounts Payable noted were investigated and satisfactory resolved.

b. Incorrect treatment of Goods and Services Tax for some rental properties were brought to the business attention and corrected during the year.

19. Cash Spot Checks

a. All issues identified from the Cash Spot Checks by Management were resolved.

b. Internal Audit conducted two spot checks during the year. The issues identified were resolved.

20. Credit Card Transactions:

a. The situation where several credit card holders had not accounted for their expenses in a timely manner in the first half of the year has improved.

The business purpose for some expenses not clearly stated has also been an area that requires continuous attention.c. Credit card transactions though not necessarily being classified as sensitive expenditure, they have attracted much public interest in the past. Keeping a good record and proper audit trail is prudent and advisable.

21. Journal Transactions

a. Some journals lack source documentations. The journals and their appropriate supporting documents are part of the Council records to inform both current and the future users/readers why the journals were required and how the figures were derived.

b. Internal Audit intends to continue this routine check in the future.

22. Miscellaneous Sample Check

a. Employee Leave reconciliations between the Time Recording module and Payroll system were consistently not being carried out, nor the issues identified being followed up, in a timely manner. A timely leave reconciliation is particularly critical during the salary/wage increases which were generally back-dated. Annual Leave utilised by the staff but have not being deducted from the Payroll records in a timely manner could result in an overpayment to the staff concerned.

23. Payroll Master File Weekly Audit

a. Previously reported cash pay-outs to staff, in lieu of their annual leave which exceeded what was permitted by the Holidays Act 2003, have not been repeated. This is prudent.

24. Staff Expense Disbursements

a. Some expenses should have been authorised by the General Manager, as stipulated by the Management Team’s Expense Policy (MT18), were instead authorised by the Divisional Heads. This issue was brought to Management’s attention.

b. Some Invoices/Receipts were either not enclosed for reimbursement or were not being submitted in a timely manner. This is not a good business practice.

c. The tardiness reported above were not evidenced in the 4th quarter’s sample check. This is commendable.

25. Internal Audit Reviews Follow Up

a. This is a routine update (rather than by exception) in response to the Audit and Risk Committee’s request. There are two different schedules:

b. One schedule (Appendix D) is called Timeline Missed. This is a schedule of the suggested improvements by Internal Audit from the prior audit reviews where Management has now missed the agreed implementation timeline by 6 months or longer.

c. Another schedule (Appendix E) lists issues raised by Audit New Zealand and were detailed in their final management report to the Council received in October 2018. This Schedule contains management’s agreed actions and the implementation progress status updated by management on the agreed actions, among other details. The Schedule also includes pending corrective actions from the prior years’ audit.

NEXT STEPS

26. To deliver the Business Assurance Plan to be approved by this Committee.

27. To report the progress made in the delivery of the Business Assurance Plan.

1. Compliance and administration

Does the Committee have delegated authority to decide? If Yes quote relevant clause(s) from Delegations Manual <Enter clause>		Yes
Are the decisions significant?		No
If they are significant do they affect land or a body of water?		No
Can this decision only be made through a 10 Year Plan?		No
Does this decision require consultation through the Special Consultative procedure?		No
Is there funding in the current Annual Plan for these actions?		Yes
Are the recommendations inconsistent with any of Council’s policies or plans?		No
The recommendations contribute to Goal 5: A Driven and Enabling Council
The recommendations contribute to the outcomes of the Driven and Enabling Council Strategy
The recommendations contribute to the achievement of action/actions in Not Applicable
Contribution to strategic direction	This activity assists the organisation working towards more efficient and effective in its systems and processes; especially those functions reviewed as outlined in Appendix A; the 2018/19 Internal Audit Plan.

Attachments

1.	Appendix A 2018/19 Internal Audit Plan Projects Year End Status ⇩
2.	Appendix B Conference and Function Centre Revenue Process Audit ⇩
3.	Appendix C Animal Control Revenue Process Audit ⇩
4.	Appendix D Internal Audit Recommendations Time Line Missed ⇩
5.	Appendix E External Audit Recommendations Implementation Progress ⇩

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Audit and Risk Committee

MEETING DATE: 19 August 2019

TITLE: Health and Safety – April – June 2019

Presented By: Wayne Wilson - Human Resources Manager

APPROVED BY: Heather Shotter, Chief Executive

RECOMMENDATION(S) TO Audit and Risk Committee

1. That the Committee note the information contained within the Health & Safety report.

This report covers the period 1 April to 30 June 2019. The information included in this report is discussed at the appropriate H&S Committee, the Main H&S Committee and the Executive Leadership Team.

Hazards, Incidents and Near Misses Reported

Quarter	Sep 17	Dec 17	Mar 18	Jun 18	Sep 18	Dec 18	Mar 19	Jun 19
Hazards	4	3	3	6	31	2	4	1
Incidents	58	12	33	37	21	36	24	27
Near Misses	27	8	23	18	25	20	26	53
Lost Time (days)	129.15	133.06	93.8	39.1	45.08	49	118.46	87.6
L.T. Injuries	17	9	12	8	8	6	12	9

Lost Time Injuries were lower in the quarter with 1 back and 1 knee injury accounting for 60% of the lost time.

Manual Handling

The last report commented on the steps Council was taking to reduce manual handling incidents. In this quarter 233 staff attended a Move at Work session. Feedback was very positive. Further sessions have been arranged for Library staff. The effectiveness of this programme will be monitored by the number of manual handling incidents.

Investigations

No investigations required this quarter.

Previous Investigations

Number of Recommendations 24

Number of Recommendations Completed 24

External Review

The formal external review of our H&S processes and procedures was completed by Safe On Site in April 2018. A programme of work has been developed, involving 47 actions to address the issues.

Status of Actions High Medium Low

Completed 5 11 1

On-going action (completed but continues) 6 9

In Progress 5 3

Awaiting completion of a prerequisite action 5 1

On Hold (Timing) 1

All of the actions that are awaiting completion of a prerequisite action relate to standardised standard operating procedures. A consultant has been engaged to assist with this work.

Training

Attachment one shows the details of H&S specific training undertaken this calendar year. This captures most of the training provided but not all, as H&S can be a component of other courses and it does not capture the on-the-job instruction type learning. The highlighted courses are those that new employees undertake. Not included is the H&S induction that all new staff receive.

Wellness

The Activate Wellness Gym was used 1198 times during the quarter or an average of 92 times per week by 116 individual staff members during the period.

Annual leave.

Dec 17	Mar 18	Jun 18	Sep 18	Dec 18	Mar 19	Jun 19
2277	2433	1556	1660	3287	2051	1884

Total days of annual leave taken over the quarter.

The average annual leave balance per staff member is 24.9 days (entitled plus accrued leave).

Turnover for the quarter of permanent staff was 16 or 2.8%. The annual turnover rate was 13.7%. Normally we measure employee initiated turnover only which is 10.3%. Employee initiated turnover are resignations and retirements. Our benchmark is 12% which ensures that we have enough turnover to refresh the organisation.

Date

Dec 17

Mar 18

Jun 18

Sep 18

Dec 18

Mar 19

Jun 19

Employee Initiated

Other

Attachment Two is the H&S report for the quarter that is discussed at H&S committees.

Wayne Wilson

HUMAN RESOURCES MANAGER

Attachment One: Details of H&S specific training undertaken this calendar year.

Event	Sep 18	Dec 18	Mar 19	Jun 19
Accident and Event Investigation			14
Arboriculture Workplace Assessor	1
Breathing Apparatus				8
Chainsaws Use and Safety	6
Chemical Handling & Spill Management		1
Chemical- Cleaners				6
Concrete Saw	20
Confined Space Entry	11			2
Customer Conflict Awareness				31
Dealing with Critical Incidents	11
Dealing with Difficult People
Dealing with Mental Health		23
Defibrillator Training		8
Drainlaying	2
Driver Assessment Training			28	18
Driver’s License – Class 1R (Restricted)		1
Driver’s License – Class 3L (Learners)				1
Driver’s License – Class 5L (Learners)				1
Driver’s License – Class 4L (Learners)
Driver’s License – Class 1 (Car License)	1		1	4
Driver’s License – Class 2 (Medium Rigid Vehicle)	1	1	2	2
Driver’s License – Class 3 (Medium Combination)		1
Driver’s License – Class 4 (Heavy Rigid)		1	1	3
Driver’s License – Class 5 (Heavy Combination)		1
Driver’s License – Class 6 (Motorcycle)		1		1
Drug Awareness Training for Managers			8
Electric Glass Truck	7
Electric Rearpacker Truck	7
Elevated Working Platform (Scissor Lift and Boom)	4
Embracing Change	74
Endorsement (D) Dangerous Goods
Endorsement (F) Forklift				3
Endorsement (R) Roller	1	1	1	2
Endorsement (T) Tracks	1	1	1	2
Endorsement (W) Wheeled Special Type	1	1	1	3
First Aid Certificate	30	9	5	15
Forklift OSH Certificate	1	4
Growsafe
Harassment Prevention and Awareness		26	35
Height Safety Advanced
Height Safety Intro		1
H&S Rep Stage 1	3
H&S Rep Stage 2
How To: Tell Your Story
ID Plant & Trees	3
Managing Mental Health	30
Managing Performance Masterclass
Move at Work (Manual Handling)				233
Other PCBUs – Dealing with Sub/Contractors		36
Playground Safety Inspections Level 2
Quad Bike Training	14
Resilience	11	10
Site Induction Training: Collections				2
STMS Level 1 – Site Traffic Management	6	2		6
TC1 – Basic Traffic Controller Level 1	5	2	1
Truck Loader Crane/Hi Ab				4
WCTL (Waste Collection Traffic Leader)			4
Workplace Physical Discomfort Seminar				27
Total Number of Events	24	20	13	21
Total Number of Staff Attending	253	131	102	374

Highlighted Courses are for new staff, in addition all new staff complete a H&S induction.

1. Compliance and administration

Does the Committee have delegated authority to decide? If Yes quote relevant clause(s) from Delegations Manual <Enter clause>		Yes
Are the decisions significant?		No
If they are significant do they affect land or a body of water?		No
Can this decision only be made through a 10 Year Plan?		No
Does this decision require consultation through the Special Consultative procedure?		No
Is there funding in the current Annual Plan for these actions?		No
Are the recommendations inconsistent with any of Council’s policies or plans?		No

The recommendations contribute to Goal 5: A Driven and Enabling Council
The recommendations contribute to the outcomes of the Driven and Enabling Council Strategy
The recommendations contribute to the achievement of action/actions in The action is: Providing a safe and healthy workplace
Contribution to strategic direction	Proving a safe and healthy workplace.

Attachments

Quarterly Dashboard Apr - Jun ⇩

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Audit and Risk Committee

MEETING DATE: 19 August 2019

TITLE: Risk Report Q1 2019-20

Presented By: Miles Crawford - Risk Manager

APPROVED BY: Grant Elliott, Chief Financial Officer

RECOMMENDATION(S) TO TO AUDIT AND RISK COMMITTEE

1. That the Committee note the organisational risk profile for Q1 2019-20.

ISSUE

For the Committee to note:

1. developments in risk management processes and reporting.

2. To inform the Committee on risk management profile for the 1st Quarter, 2019-20.

BACKGROUND

3. Risk management work is ongoing with workshops applied across the organisation to further clarify Council’s risk profile. Workshop focus has recently moved from identifying risks to identifying risk controls and determining their effectiveness.

4. While further work is required to collate risk management information, the organisation has been proactive in contributing that risk information and adopting risk management as a new process.

5. Along with working to collate information, risk management continues to lead and support a risk-based approach across Council for how it achieves its work objectives. Current work includes:

· Leading a review of standard operations procedures (SOP) to help control Health and Safety risk.

· Leading a review of lone worker risk for Council staff.

· Leading a review of security risk review for Councils physical assets and personnel.

· Leading a review of business continuity arrangements to further develop the organisations engagement with plans and processes.

· Supporting Infrastructure project risk management via the Project Review Board.

· Supporting a risk-based approach to asset management via Asset Management Plan development.

· Supporting the delivery of Council plans under Goals 1-4 via the Strategic Forum.

· Supporting the development of Business Assurance Strategy and Plan FY20, which will ensure risk controls are in place and working effectively.

6. Work is ongoing to adopt a risk information management system to better achieve communication and oversight of Council’s risks. A preferred system has been identified and a project for its eventual application within Council has been initiated.

7. An updated risk management policy has recently been finalised and submitted for Executive Leadership Team approval. The purpose of this policy is to define how the Council will behave with regard to risk management. The policy will be applied through a risk management framework, which is under development.

Risk Profile

8. Appendix 1 is the Risk Management Dashboard - Q1 2019-20. The purpose of the dashboard is to succinctly provide an overview of councils risk profile, which can then support Council decision-making in conditions of uncertainty.

9. The dashboard presents information on the distribution of Councils risks by business unit, risk category, link with Council’s Strategic Goals, risk severity, and control effectiveness.

10. The dashboard also focusses on the top organisational risks which Council faces. These are defined by whether their impact would result in Council’s ‘loss of mandate and social licence to operate’. The Council currently has six top risks as detailed in the dashboard.

11. Many of the risks have been rated as an extreme or high threat. These ratings may be artificially high - risk assessment is an unfamiliar process for many managers and they may be over-rating them, the organisation hasn’t yet consolidated its risk attitude towards what qualifies an extreme or high threat, and many of the controls that reduce risk severity have not yet been identified.

12. Even where controls are identified, many of them are fresh and may not yet provide clear benefit. Further work over the next quarter will provide Council with a better understanding of its risk controls and their effectiveness.

NEXT STEPS

13. Risk Management continues to run workshops and meet with managers on an ongoing basis to gather and refine risk information. The next risk dashboard will have smaller grey areas of information that has not yet been assessed.

14. Councils risk attitude needs to be set to accurately reflect the organisation’s combined risk appetite, risk capacity and risk tolerance. Once this is set, further progress will be made towards ensuring uniformity of risk perception when assessing risk severity with managers.

15. The risk management framework is in development. This document will be designed to tie in with plans and strategies across the organisation to promote and apply a risk-based approach to achieving organisational objectives.

16. Compliance and administration

Does the Committee have delegated authority to decide? If Yes quote relevant clause(s) from Delegations Manual <Enter clause>		Yes
Are the decisions significant?		Yes
If they are significant do they affect land or a body of water?		No
Can this decision only be made through a 10 Year Plan?		No
Does this decision require consultation through the Special Consultative procedure?		No
Is there funding in the current Annual Plan for these actions?		No
Are the recommendations inconsistent with any of Council’s policies or plans?		No
<Enter text>
The recommendations contribute to Goal 5: A Driven and Enabling Council
The recommendations contribute to the outcomes of the Driven and Enabling Council Strategy
The recommendations contribute to the achievement of action/actions in a plan under the Driven and Enabling Council Strategy The action is: <Enter text>
Contribution to strategic direction	<Enter text>

Attachments

Risk Management Dashboard Q1 2019-20 ⇩

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Audit and Risk Committee

MEETING DATE: 19 August 2019

TITLE: Business Continuity Report Q1 2019-20

Presented By: Miles Crawford - Risk Manager

APPROVED BY: Grant Elliott, Chief Financial Officer

RECOMMENDATION(S) TO Audit and Risk Committee

1. That the Committee note Management’s progress made towards developing Council business continuity and emergency management functionality.

issue

1. Significant business disruption has been recognised as a ‘Top 10’ risk for the Council achieving its operational and strategic objectives. Audit reviews of the function continue to recommend that the Council complete its training of the business continuity plans and develop a testing programme.

2. Civil Defence Emergency Management (CDEM) functionality has been recognised as a ‘Top 10’ risk. A Ministry of Civil Defence assessment of CDEM has noted many areas for improvement, including documentation, systems, processes, and capacity and capability.

BACKGROUND

Business continuity

3. Following the Councils organisational restructure, there is a need to lift the awareness of business continuity arrangements across the organisation and further work is required to embed business continuity into how Council operates on a day-to-day basis.

4. Expressions of Interest (EOIs) have been sent to business continuity consultants for review of Councils business continuity arrangements. Consultants have been asked to build upon the Councils existing plans; ensuring plans are progressive, agile and fit for purpose; and to use their consultation process to grow Council awareness and engagement.

Emergency management

5. ‘Team Tiger’ has been assembled to review Councils CDEM arrangements and identify what is required for it to become exemplary in its delivery of CDEM services across the key activities of Reduction, Readiness, Response and Recovery (4Rs).

6. The objectives of the review are to:

· Conduct a qualitative assessment of PNCC’s CDEM delivery including a review of the MCDEM EOC Capability Assessment completed in 2018

· Identify priority risk areas

· Research and observe what others are doing well

· Prepare a 2-year CDEM development plan with high level recommendations towards achieving exemplary status. Among other things, the plan will include recommendations for CDEM structure, systems and capability.

NEXT STEPS

Business continuity

7. The business continuity review is proposed to be implemented across four stages (with delivery dates):

Stage 1 (in August 19) - A review of business unit BCPs to understand the current state of BCP arrangements and opportunities for improvement, including integration with parallel change/transformation processes.

Stage 2 (in October 19) - Establish resilience champions from across the organisation and provide tools and resources to enable them to enhance existing BCPs in their respective work areas.

Stage 3 (in December 19) - Building the capacity of staff to adapt in the face of disruption and having organisational processes that allow agile responses to disruption is key to getting through unexpected events. This will be measured with an organisational resilience benchmark survey.

Stage 4 - Engage the Executive Leadership Team via a presentation and short interactive activity to help gain support for ongoing risk and resilience management efforts at the senior level.

8. Two out of three proposals for consultant work have been tendered to Council. The most suitable proposal will be approved once the third has arrived.

Emergency management

9. Starting on the end of July, Team Tiger is engaging emergency management professionals that have been identified to us as delivering best practice CDEM services. The team will be looking for information on:

· CDEM structure and resourcing

· Organisational commitment

· Executive / Governance support

· CDEM capability (including EOC)

· Systems / technology

10. The team will collate the information gathered from engaging emergency management professionals and compile high level recommendations (the development plan) for the project sponsor - Tom Williams on Friday 6 September.

11. Compliance and administration

Does the Committee have delegated authority to decide? If Yes quote relevant clause(s) from Delegations Manual <Enter clause>	Yes
Are the decisions significant?	No
If they are significant do they affect land or a body of water?	No
Can this decision only be made through a 10 Year Plan?	No
Does this decision require consultation through the Special Consultative procedure?	No
Is there funding in the current Annual Plan for these actions?	No
Are the recommendations inconsistent with any of Council’s policies or plans?	No
The recommendations contribute to Goal 5: A Driven and Enabling Council
The recommendations contribute to the outcomes of the Driven and Enabling Council Strategy
The recommendations contribute to the achievement of action/actions in a plan under the Driven and Enabling Council Strategy

Attachments

Nil

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Audit and Risk Committee

MEETING DATE: 19 August 2019

TITLE: AMP Update - Water Asset Management Planning

Presented By: Robert van Bentum, Manager - Transport & Infrastructure

APPROVED BY: Tom Williams, Chief Infrastructure Officer

RECOMMENDATION(S) TO Audit and Risk Committee

1. That the Audit and Risk Committee receives the memorandum titled “AMP Update – Water Asset Management Planning”.

1. ISSUE

1.1 Council’s Audit & Risk Committee of 20 August 2018 resolved “that a rolling audit of the Asset Management Plans be established and that this item remain on the Committee’s work schedule until they are completed”. A reporting schedule has been established and to date the following have been presented to the Audit and Risk Committee:

· A general overview of AM planning has been presented the Committee - 20 August 2018.

· An update on the condition and performance of the footpaths - 19 November 2018.

· An AMP update on Wastewater Asset Management Planning – 6 May 2019

· An AMP update on Property Asset Management Planning – 6 May 2019

1.2 The reporting schedule for the committee included a report on the condition and performance of each of the three water assets. Given the scope of the three waters area and the significant value and complexity of the assets being managed, separate reports for each of the three water’s activities were proposed. Following presentation of the update for Wastewater, this report provides an update for water assets. This report deals with the condition and performance of the water assets under the following headings:

· Overview of the water network assets

· Current asset condition and performance understanding

· Current renewal strategy and priorities

· Improvement to the renewal strategy

· Summary

2. overview of the WATER ASSETS

2.1 The water system comprises the following key asset components:

· Two Large Dams in Turitea Catchment

· Water supply systems serving Palmerston North, Ashhurst, Longburn and Bunnythorpe

· 566 km of pipeline and 27,800 service connections

· 14 impoundment reservoirs storing 21,000 m3

· One 4 log water treatment facility at Turitea

· Nine bores at 7 bore stations

2.2 The replacement value of the water assets is $233M (2017 valuation).

2.3 Figure 1 below illustrates the extent of the network, water sources, reservoirs and treatment infrastructure.

2.4 The water supply network dates from 1888 however around 90% of the network has been installed since 1950 with one third of network made up of Asbestos Cement (AC) pipes with smaller lengths of cast iron and more modern PVC and PE pipes (refer figures 2 and 3).

2.5 The life expectancy of water pipes, buildings and civil structures is typically 60 – 175 years in normal conditions. However mechanical and electrical asset components at the treatment plant, bore stations and pump stations have much shorter expected lives of between 10-35 years. Council has been undertaking routine inspections particularly of treatment plant and bore station mechanical and electrical assets to assess their condition to determine the urgency and level of renewals.

2.6 Asset condition is graded on a scale of 1 to 5 (excellent to poor) based on guidelines from the International Infrastructure Management Manual. The condition inspections undertaken to date indicate most of the assets are in good physical condition with some deterioration impacting on performance. This reflects the fact that the bulk of the assets are in the early to middle part of their asset lifecycle.

Figure 1 Overview of Palmerston North Water Supplies & Sources

Figure 2 Age Profile of the Water Network

Figure 3 Material Composition of the Pipe Network

3. UNDERSTANDING OF current asset condition and performance

3.1 The collection of asset condition information is critical to the management of the assets and the prediction of the likely renewal requirements.

3.2 The largest portion of the non-trunk watermains are AC pipe which most being install in the 1960s and 1970s. They are prone to failure due to the gradual softening of the pipe walls. Most of the pipe bursts in recent years are AC pipes which can lead to loss of service during the repair period as well as discoloured water complaints due to high water flows disturbing sediment which has settled in the pipes. There is evidence that the rate of deterioration in AC pipe accelerates close to the end of the pipe’s life when compared to other pipe materials. Given the quantity of AC pipe in the network and the assessment that much of the pipe is close to end of life, it is critical that there is adequate investment in renewal of the AC pipe network before there is widespread failure and a significant impact on level of service.

3.3 Some limited in-house investigations have been carried out to try to model the predicted timing of AC pipe failure based on various attributes. However, due to the limited pipe condition information, the model parameters have not been able to be sufficiently “calibrated” to predict with any confidence the likely rate and locations of pipe failure in the network.

3.4 A comprehensive AC pipe condition life assessment is costly due to the cost of isolating, excavating, sampling and testing of the pipes as well as the reinstatement and the AC material disposal costs. Typical costs per sample are in the range of $10k to $12k.

3.5 Current generic approaches to modelling of AC pipe failure, based on New Zealand wide data, calculates an expected pipe life based on the rate of pipe deterioration to achieve a residual wall thickness at which a pipe will fail given the normal network operating pressures. The AC pipe manual presents predicted deterioration rates in terms of mm of wall thickness per year. The data is presented in terms of percentiles as shown in Figure 4.

Figure 4 National AC Deterioration Rate

3.6 Small numbers of samples collected and tested in the city have been used to determine the typical deterioration rate compared with the National Model. PNCC AC pipes appear to be performing at around the 50th percentile level, i.e. they appear to align with the model rates.

3.7 Based on this comparison the National AC Model deterioration rates have been used to determine the pipe lives for different AC pipe diameters based on their wall thickness and operating pressures. The yellow bar in Figure 5 represents the PNCC adopted pipe lives, which are typically assessed to be longer than the national average lives and the 50% percentile band for any pipe size. That is, it is assumed that AC pipes will last longer than the national average. While the pipe life modelling has been used to calculate the long run annual renewal budget requirement, pipe burst data has been used to prioritise the locations of renewal work within the city.

3.8 The data in Figure 5 indicates that 100mm pipe has the shortest expected life (average 60 years) due to their thinner wall, with progressively longer lives for pipes of larger diameters e.g. 150mm pipe – 70 years and 225mm pipe – 80 years. Council has been prioritising the renewal of 100mm pipes in the network. While the average pipe lives are a guide, some pipes can be expected to last significantly longer under ideal conditions.

Figure 5 PNCC AC Pipe Lives Related to the National AC Model

3.9 As other pipe materials, excepting cast iron, are reasonably young and currently perform well they do not feature in the renewal programme. Cast iron pipe while not prone to burst does contribute to discoloured water events so is also being replaced at a steady rate.

3.10 An annual budget of $1.3 M for pipe renewal was adopted in the 2011 AMP. This was subsequently increased to $2M in 2014, based on the evidence of rising pipe burst rates and the modelling of AC pipe life outlined in this section. The level of pipe renewals was reviewed in 2017 and assessed to be adequate. Over the last 6 years around 0.4% to 0.6% per annum of the network has been renewed at a rate of 4 km per year with three quarters of the pipes being AC and the balance cast iron.

3.11 The last ten years of pipe burst history has been plotted in Figure 6. The significant reduction in 2006-07 was attributed to the implementation of a significant pressure reduction in the network from 80 metres to 45 metres implemented in 2004. The graph also highlighted the timeliness of the renewal funding increase in 2014, as shown by the sharp increase in pipe bursts which occurred 2014-2016 and the levelling off in bursts which has occurred since that date.

Figure 6 No. of Pipe Bursts by Financial Year and Pipe Size

3.12 While the pipe burst rate has stabilised it is entirely possible that the rate of deterioration may increase again in the future and on-going monitoring is required. Table 1 summarises the remaining lengths of AC pipe in the network and the period in years required to renew each pipe size based on the current renewal budget of $2m per annum. Currently Council is replacing around 4 km of 100 and 150 AC pipe per year.

Table 1 AC Pipe Renewal Rates and Costs

Pipe Diameter (mm)	Length of pipe (m)	Estimated Cost ($000)	Period to replace (years)
100	96,300	48,000	24
150	59,500	36,000	18
200	2,300	1,600	0.8
225	6,200	4,600	2.3
250	300	225	0.1
300	2,000	1,600	0.8
375	1,500	1,350	0.7
Total	168,100	93,375	46.7

3.13 It is estimated that it will take more than 46 years to replace all of the AC pipe in the network, based on current renewal budgets. While the deterioration modelling suggests that the larger diameter pipes (>225mm) may last a further 30 to 40 years beyond their current life of 50 to 70 years, it is likely that the smaller 100 and 150mm pipes will need to be replaced within the next 10 to 20 years, and certainly more quickly that the current renewals budget allows. Officers will be developing a more optimised renewal profile based on condition assessment and modelling to identify more accurately funding requirements.

3.14 Separately Council has approved programme funding to investigate, design and implement pressure reduction within the network. Reduction of pressures in areas of the network currently subject to very high pressures can extend the remaining life of the AC pipe in those areas, by allowing for greater deterioration of the pipe before failure occurs.

3.15 Apart from the water pipes, there are other parts of the reticulation network that are critical to the safe and reliable supply of water. Officers have highlighted increasing rates of failure of assets such as tobies and water meters. The practice to date has been to replace meters and tobies as they fail, however it has become clear that the remaining tobies and meters have started to approach the end of their life and are failing in larger numbers each year. Officers believe that pro-active programmes to renew all aged tobies and meters are required, both to avoid the costly incremental failure currently occurring but also provide the necessary backflow protection to the network. Additional renewal funding over 4 to 5 years of $500k/annum will be required to renew these assets.

3.16 For the water source asset groups such as the water treatment plant and bore stations, while renewal funding has been set to match the expected asset life, there has been some significant under-budgeting in the last couple of years due to:

· Rapid changes in technology particularly for electrical and mechanical components which results in the requirement to replace the asset prior to its end of life due to obsolescence and the inability to reliably operate and maintain the assets

· Improved asset condition assessment and a more risk averse approach to renewal which prioritises early replacement to avoid reactive replacement following the failure of a component and the risk of supply disruption or technical non-compliance

3.17 Effective management of water assets is designed to ensure the assets are maintained and renewed to meet the required levels of service committed to by Council. The levels of service are confirmed and adopted by Council through the Long Term Plan every 3 years. The current 2018-28 LTP includes the following specific KPIs relevant to the asset management of the water activity:

· The Council provides a good quality, safe water supply (the target is no more than 40 complaints received relating to clarity, taste or odour per 1000 connections per year) and comply with criteria of the Public Health Act 1956 (as amended by the Health (Drinking Water) Amendment Act 2007).

· The Council provides adequate water supply for firefighting in residential areas and industrial/commercial areas (the target is 25l/s for residential areas and 50 l/s for industrial and commercial area)

· The Council’s water supply assets are maintained and developed to meet current and future needs.

· The Council manages its Water Activity in a financially sustainable way

3.18 For the 2018-19 year, Public Health Act 1956 (as amended by the Health (Drinking Water) Amendment Act 2007) and Drinking Water Standards for New Zealand have been achieved. However, the Council KPI for complaints relating to clarity, taste and odour target was not achieved due to a major mains burst on the Ashhurst rising main event resulting in loss of supply for nearly 6 hours to the Ashhurst community.

3.19 While compliance with the LTP performance indicators indicates effective asset management, there has been evidence of issues with the performance and reliability of some water assets which highlight the need for the development of an optimised asset management strategy. Specific areas of concern include:

3.20 Changes to Drinking Water Standards: It is considered very likely that new Drinking Water Standards will mandate the achievement of a minimum chlorine residual in the reticulation network and multi-barrier treatment for all sources. To enable this to be achieved without significant impacts on water aesthetic quality, requires the provision of storage for any new source development and provision of UV treatment for protozoa. All the existing water sources will need to be upgraded to provide for the additional treatment and storage, which will require investment in additional land and related infrastructure and therefore an increased capital investment will be required.

3.21 Source Capacity and Resilience: Palmerston North urban supply relies on a single surface water source (Turitea dams) supplemented by 6 bores at 4 bore stations. Longburn, Bunnythorpe and Ashhurst are supplied from single groundwater bores. Council has identified the need to expand the number of sources and provide source resilience for the township supplies. Investment in additional bore sites and connections from the city to Longburn and Bunnythorpe supplies are programmed in the current LTP.

3.22 Network Resilience. Currently there is a single trunk main from the Turitea WTP to Ngahere Park reservoirs and then dual mains across the Fitzherbert Avenue bridge supplying most of the city. The consequences of failure of this pipeline or bridge crossing include significant reductions in peak water supply availability and service pressures for large parts of the city. Construction of a second (duplicate) trunk main from Turitea WTP to the Ngahere Park Reservoirs is about to begin and Council is continuing discussions with Massey University regarding a connection between the Ngahere Park reservoirs and the Massey bore supply and network. Work is continuing with identifying an alternative option to deliver a second water crossing of the Manawatu River.

4. water Renewal Strategy and Priorities

4.1 The key objective of the current renewal strategy is to maintain the overall condition and service potential of the network and treatment plant. This is achieved by renewing the assets which have either reached the end of their functional life (non-critical) or before the end of the asset’s life where failure would result in unacceptable consequences (critical).

4.2 The approach to renewals is divided into non-critical and critical assets based on the following distinction and definition:

· Non-critical assets are those which can be allowed to fail before they are renewed on the basis that the consequences of failure are localised, and repairs can be undertaken in a cost-effective and timely manner with little impact on the community served

· Critical assets are those which cannot be allowed to fail based on the significant consequences of failure (e.g. consent non-compliance or public health) impacting large numbers of customers and repairs require specialist external resources which cannot be completed without significant delay

4.3 Based on this objective the key elements of the current renewal programme include:

· Non-critical: Pipe network renewals driven by condition inspection or operational information which identify problems such as root ingress, pipe blockages, pipe collapse resulting in overflows, loss of service and/or high levels of maintenance

· Non-critical: Minor pump station mechanical, electrical and control equipment renewal in response to unscheduled outages requiring unscheduled repairs and maintenance

· Critical: Pro-active scheduled renewal of large diameter supply mains where condition inspections identify severe pipe deterioration or defects

· Critical: Pro-active renewal of Turitea WTP and the bore stations mechanical, electrical and control equipment renewals based on regular condition assessments with renewal timing scheduled prior to end of life

· Critical: Renewal of back-up generation and electrical power supply to ensure continuity of services during power outages.

4.4 In respect of the critical assets the understanding of asset condition is continuously developing as better information is obtained on the condition of the entire asset portfolio. With respect to the bore stations, recent detailed condition assessments have identified a number of deficiencies associated with meeting current hazardous chemical handling legal requirements and addressing health and safety risks for operations staff and contractors.

4.5 Renewal funding for the Turitea WTP and bore stations has been largely focussed on renewal of the major mechanical components such as Backwater Pumps and concrete channel repairs and sealing including replacing feed pipe to channel and temporary bypass pipework system. Condition information on the large number of smaller mechanical and electrical components has been more limited. However, this has been improved over the last year and a considerable backlog in respect of renewals has been identified. Council has approved additional funding to begin to address this backlog.

4.6 It has become clear that levels of investment in critical plant and equipment renewal must increase significantly for the next few years. The scoping of the extent and detail of the additional renewal work required is on-going.

5. improvements to the renewal strategy

5.1 It is acknowledged that the current approach to renewal planning for the water activity cannot provide the necessary certainty around renewal funding requirements nor the assurance that renewals have been optimised. The strategy for improvement is based around two key elements namely:

· Implement an organisational focus on asset management planning through the proposed establishment of the Asset and Planning Division within the Infrastructure Unit

· Invest in enhanced condition assessment and performance modelling to inform optimised renewal planning

5.2 Organisational Focus on Asset Management Planning

5.2.1 In reviewing the organisation wide approach to asset management and how this has been given effect to through the Infrastructure Unit, it became apparent to Council Officers that there has historically been a lack of resourcing and focus on asset management planning across the Council. While the whole of the asset management approach is not broken, the maturity of the asset management approach varies across the different asset groups. For example, the maturity of the asset management approach for water assets is well advanced compared to property assets.

5.2.2 The proposed new Asset and Planning Division (APD) will take a whole of organisation approach to asset management and separate the operational (present day focus) from the planning function (forward looking focus). This approach will ensure asset management is given appropriate priority and is not crowded out by operational demands. The APD will seek to make asset management an organisational responsibility, not just the responsibility of those managing the core business of assets daily and avoid a siloed approach.

5.2.3 The proposed APD is in the process of being resourced and once operational will seek to refocus the organisation’s approach to asset management, including the approach to developing the renewals programme for water associated with AMPs.

5.3 Condition Assessment and Performance Modelling

5.3.1 Recent unexpected plant and equipment asset failures has identified the on-going need for investment in a continuous process of asset condition assessment. Early work started on developing 5 year rolling plant and equipment renewal plans will be extended to all water asset groups. Council staff as well as contractors will be required to record and update asset condition as part of normal operation providing updated estimates of optimised remaining life.

5.3.2 A greater focus will be given to planning for renewal of critical assets to ensure that renewals are undertaken in a timely manner to limit the risk of major failure in any part of the system. The planning will extend to back-up systems such as generators and standby plant and equipment to ensure these are reliable and can operated when required.

5.3.3 Carry on AC pipe sampling, closely monitor the pipe burst rate and use this information to optimise the pipe renewal fund and re-prioritise the renewals

5.3.4 Use improved asset condition information and network and treatment plant modelling to identify the priorities for renewal funding so that Council can make choices about the level of renewal funding with the knowledge of the risks associated with not renewing specific infrastructure in a timely manner.

6. summary

6.1 Over the past 10 years around $8m has been spent on renewal of water assets, representing most of the budgeted funding collected by Council. While most of the water network and facilities have been assessed as being in good physical condition, operational events and more detailed asset condition inspection information have identified some asset groups for which the risk of failure and the likelihood of significant negative impacts on levels of service compliance is high.

6.2 With more AC pipes approaching the latter part of their life cycle, increased failure rates of tobies and meters in the network and the identified deficit in respect of plant and equipment renewals, an increase in renewal investment requirements is certain. A significant increase in the next 2 to 3 years to address a renewal deficit in the plant and equipment assets and to address failing meters and tobies is urgently required. The extent of future renewal funding increases particularly for pipeline assets is more uncertain and depends on improved asset condition data, modelling of AC failure rates, modelling of network capacity constraints and the success of investment in reducing network pressures in district metering areas.

6.3 The establishment of the Asset and Planning Division will enable appropriate priority and focus to be given to asset management. This will be essential if Council is to move from the current largely descriptive Asset Management Plans to optimised asset management planning which consider lifecycle operation and maintenance costs as well as appropriate risk assessments to develop a range of alternative renewal investment profiles for consideration by Council.

7. Next steps

7.1 Establish Asset Planning Division.

7.2 Develop a more optimised renewal based on profile condition assessment and modelling to identify more accurately requirements.

7.3 Incorporate findings into next draft of AMP for consideration by Council.

8. Compliance and administration

Does the Committee have delegated authority to decide? If Yes quote relevant clause(s) from Delegations Manual <Enter clause>		Yes
Are the decisions significant?		No
If they are significant do they affect land or a body of water?		No
Can this decision only be made through a 10 Year Plan?		No
Does this decision require consultation through the Special Consultative procedure?		No
Is there funding in the current Annual Plan for these actions?		Yes
Are the recommendations inconsistent with any of Council’s policies or plans?		No
The recommendations contribute to Goal 4: An Eco City
The recommendations contribute to the outcomes of the Eco City Strategy
The recommendations contribute to the achievement of action/actions in the Three Waters Plan The action is: Provide safe and adequate water supply to the city.
Contribution to strategic direction	Asset management planning that better informs the approach to asset renewals, asset condition and monitoring of water assets will enable the provision of on-going safe water supply for the city and its residents.

Attachments

Nil

Vaughan Dennison (Chairperson)
Bruno Petrenas (Deputy Chairperson)
Grant Smith (The Mayor)
Susan Baty	Lew Findlay QSM
Adrian Broad	Jim Jefferies
Gabrielle Bundy-Cooke	Lorna Johnson

1.	Appendix A Business Assurance Framework and 2019/20 Business Assurance Plan ⇩
2.	Appendix B Previously Approved 2019/20 Internal Audit Plan ⇩

1.	Appendix A Business Assurance Charter Changes Tracked ⇩
2.	Appendix B Business Assurance Charter August 2019 FINAL ⇩