Articles, Blog

Life-cycle planning for capital assets

November 24, 2019


Well I get really excited about
life-cycle planning because it’s not just the construction of the project that you
need to be worried about. It’s following an asset to the end of its useful life,
including all the maintenance in between. And when you’re using tools like
life-cycle investment models, you’re able to project how much money you need at a
certain point in time to replace that aging infrastructure. It also gives you
the ability to analyze any trade-offs between service cost and risk. So
life-cycle planning for us, involves using three different resources to compile a
list of all First Nation assets. So we use the Acres Report submitted to INAC,
or amortization schedule from the auditors, as well as our insurance
listing. From these three documents we compile a list of all the assets, and
then we can better plan for their repair, maintenance, upgrades, or ultimate
replacement. Being able to show the community the amount of reserve funding
that you need to be prepared, in order to keep your assets at a level that’s going
to meet the service needs for the community. It’s important to plan ahead
for the replacement of our assets because nothing lasts forever. We have to
be able to determine the lifespan of an asset and we have to be able to replace
it. And so it’s very important to budget for that replacement reserves start at
bank accounts, so we have initial investment already for the next cycle of
our assets. If you don’t do life-cycle planning, you open yourself up to
multiple risks, such as health and safety risks, liability risks, financial risks.
They could ultimately end up affecting operations of the band. Life cycle
planning also helps you manage your funds better. As you know that this year
we have to replace five fridges, so knowing that you can make bargains with
companies for better deals. One of the most important assets that we found hard to plan for is the replacement of our file servers. I remember thinking if I
could only wait until April to get that new file server, and much like everything
else, if you plan for something bad to happen, quite often it does. We lost our
file server two weeks before the end of the fiscal year, the amount of effort to
replace the file server and planning that has to go into redoing all of your
document management is something that is worth planning for.

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