BUILDING VICTORIA’S FUTURE

CONDITION ASSESSMENT
a strategic look at your constructed assets

August 1996

Your agency is responsible

for the condition of constructed assets
under its control.

Condition assessment is a process which measures both the

actual and required condition of a constructed asset.

It also identifies the actions needed to maintain that asset

at its required standard.

Condition assessment is a basic public sector responsibility

and is required by government.

Agencies need to provide for regular:

■ inspections
■ condition reporting
■ maintenance and rectification actions
on the assets under their control.

W H AT A R E C O N S T R U C T E D A S S E T S ?

Constructed assets, sometimes referred to as fixed or non-current

physical assets, include:

■ structures such as bridges, piers and dams
■ built environments such as public buildings, schools, hospitals,
housing, and offices
■ infrastructure such as road, rail, telecommunication and sewer
networks.

Constructed assets can be complex and may require dif ferent

methods to assess their conditions throughout their lives.

O F F I C E O F B U I L D I N G

D e p a r t m e n t o f I n f r a s t r u c t u r e
I N F O R M AT I O N S H E E T 14
 WHY ASSESS ASSET CONDITIONS?

It is fundamental for agencies to know the condition of their

assets. This knowledge, together with an understanding of how

conditions af fect ser vice provision, will improve asset

management planning.
'Another of the benefits of A delicate balance is needed when making investment decisions

consolidated financial on assets. The challenge is to neither under-invest and

inadver tently run your assets down, nor over-invest and put an
statements will be greater unnecessar y strain on funds.

understanding of the size, value Information on the condition of assets

and condition of the asset base is fundamental to making good
management decisions.
used for service delivery.
This will enable rationalisation, GOVERNMENT POLICY

Government policy requires agencies to establish and manage

through either sale or
processes to monitor the condition of assets under their
alternative use, of assets that control. The following summarises the policy requirements for

condition assessment:
are not being efficiently
■ In 1993, the Cabinet Budget and Expenditure Review
utilised.' Committee gave the government’s view on condition
assessment.

– Alan Sockdale, Treasurer The Victorian Commission of Audit Repor t stated that asset
conditions needed to be seriously addressed.
Roger Hallam MLC, Minister for Finance,
■ In 1994, the Financial Management Package called for a
commenting on the
condition assessment of all assets.
Trial Consolidated Financial Report of The Minister for Finance guideline, Standards of Publicly
the Government of Victoria. Owned Buildings, released pursuant to the Building Act
1993, requires strategic action to be taken, especially in
relation to public buildings.
This extract highlights the impact
■ In 1995, the Asset Management Series outlined asset
effective condition assessment will condition policy and practice requirements for constructed
have on asset planning in Victoria. assets.

Policy documents, including the:

■ Integrated Management Cycle
■ Investment Evaluation Policy and Guidelines
require you to draw upon your asset condition information.

In July 1996 the Victorian Government released the Trial

Consolidated Financial Repor t on the operations and financial

position of government agencies. This is the first whole-of-

government accrual-based financial statement.

The reliability of this repor t will depend significantly upon

realistic condition assessments and valuation of assets.

 IT’S IN YOUR HANDS THERE ARE GUIDELINES TO HELP

All agencies are responsible and accountable for making In Februar y 1996, Asset and Building Policy released the

condition assessment decisions on the assets they own or guideline Assessing the Condition of Constructed Assets. This

control. Agencies are encouraged to seek advice on assessing guideline applies to all government constructed assets.

the condition of their assets, but ultimately, they must take The condition assessment process uses the same information

responsibility for any decisions. for asset repor ting as required by asset and financial managers

It is impor tant to clearly define the required conditions for your administering their asset por tfolios.

assets, as the range of possibilities may appear endless.

Assessing the Condition of
A good understanding of Constructed Assets
condition assessment provides a
requires practice and experience. condition assessment methodology.

As skills and confidence increase, agencies will learn to The guideline is divided into three phases:

optimise the ef for t and direction put into assessments. Phase One – Collect the Database

Consequently agencies: This covers:

■ should focus attention on assets which of fer a high level
of ser vice and are significant to the organisation
■ should appropriately assess assets which provide few
ser vices but are significant to the organisation
■ could experiment with their assessment methods on assets
which currently provide few ser vices but show potential
■ need only conduct minimal assessments, suf ficient to
satisfy management and repor ting needs, on assets which
provide few ser vices and are of minor significance
to the organisation.
W H E R E D O I S TA RT ?
All constructed assets must be assessed on an ongoing basis.
This need not necessarily be done all at once or by direct
inspection. The most ef fective asset management and repor ting
is achieved through a planned condition assessment program,
tailored to suit the organisation.
A range of methods may be required for comprehensive
assessment. Predictive methods are commonly used for planning
■ understanding the impor tance of your assets within a
whole-of-government context
■ determining the appropiate asset condition for a required
level of per formance, which will then provide a reference
for measuring actual condition
■ doing the actual condition assessment, which may be by
predictive methods or by direct inspection.
The primary driver
behind condition assessment
is service delivery.
Phase Two – Analyse the Database
This covers:
■ establishing the asset's relative condition level, which is
a comparison of the actual condition and the required
condition
■ identifying condition impacts, which involves evaluating
the impact of the actual condition on:
- the provision of ser vices

purposes and direct inspection is often used to evaluate - operational costs

conditions for operational needs. - health and safety

■ identifying appropiate action together with its cost and
There is no single priority.
condition assessment method
appropriate for every situation.

Your agency needs to take individual asset circumstances

into account to obtain the best results from condition

assessment.
Phase Three – Management Repor ting

The third phase of the guideline provides per formance

repor ting measures.

The guideline details the:

■ condition index measure
■ condition trend per formance indicator

which give a broad view on the management of your

agency’s assets.

These measures also suppor t repor ting required by the

Depar tment of Treasur y and Finance on constructed assets.

The guideline explains how to prepare and present the index

and trend and provides advice on interpreting the results.

Asset reporting requires

a firm commitment to
effective condition assessment.

WHERE TO FIND OUT MORE

Department of Infrastructure
Office of Building

Asset and Building Policy

Level 1, 33 St Andrews Place, East Melbourne 3002

Telephone 03 9651 5800 Facsimile 03 9651 2346

Building Ser vices Agency

Level 3, 33 St Andrews Place, East Melbourne 3002

Telephone 03 9651 0052 Facsimile 03 9651 0064

14
Prepared by Asset and Building Policy
Production by the Public Af fairs Branch
Depar tment of Infrastructure I N F O R M AT I O N S H E E T