B.2 Initial asset management framework in Nairobi City County C.1 Asset management plans with growing scope and deepening

FIGURE B.2

Initial asset management framework in Nairobi City County

Asset and liability management committee Asset transfer subcommittee

Sector chief officers

Director portfolio AM

Network, group engineers AM strategy Chief financial officer, finance

AM policy

AM operation Director, asset management

AMDR and sector AM officers Asset verification team

Facility managers

Source: Nairobi City County Government. Note: AM = asset management; AMDR = Asset Management Directorate.

The AM framework (figure B.2) indicates that strategic AM issues are the domain of the chief officers (county executive committee member, chief financial officer, and the chief officers of sectors), and the planning and system issues are the domain of the AMDR director. Finally, AM officers will be assigned to the sectors to be the conduits of the operational-level issues to ensure communication, information sharing, and data collection to feed AM and support operations in parallel.

TIME FRAME FOR STRATEGIC ACTIONS IN DEVELOPING AND IMPLEMENTING RELIABLE ASSET MANAGEMENT

The implementation of the AMS requires a decade of work, so actions are scheduled for short-, medium-, and longer-term accomplishments without specific dates. The AMS is a living document; actions may need to be added, modified, moved to a later time, or annulled as the AM systems and other operation systems (IFMIS, planning, ICT) are developed gradually. Table B.1 summarizes the most critical actions in short-, medium-, and long-term clusters.

STRATEGIC DEVELOPMENT OF ASSETS

The NCC has ambitious development plans for the next 10 years as set out in the SP and in this AMS. An about K Sh 200 billion development expenditure budget plan for the 10-year period from fiscal years 2015/16 to 2024/25 has been developed to support these plans. The development (capital) budget is allocated across 10 sectors.

Grouping the sectors enabled consideration of broader development priorities and the relative weight of each sector’s role in achieving the development

TABLE B.1 Strategic actions and responsibilities in developing the asset management system for Nairobi City County

ACTIONS PERFORMANCE INDICATOR

Short term (1–2 years) Establishing and positioning AM in the NCC organization AM framework adopted, operational

RESPONSIBLE UNITS

AMDR and county executive committee

Adopting AM policy, strategy, and short-term plan Establishing the core AM system and initial procedures AMS, policy, and plan approved Initial AM systems and initial procedures operational AMDR and AM committee

AMDR

Developing and maintaining asset registers Developing human capacities Consolidating development plans and actual performance at NCC level Initial asset inventories complete AMDR

Key staff related to AM assigned and trained AMDR Structured consolidated development plans and results are complete and shared with NCC top management AMDR

Medium term (5–6 years) Developing and maintaining full asset registers Verifying assets taken over (or to be taken over) from defunct local entities and central government bodies Settlement of disputed assets and liabilities

Developing human capacities Adequately connecting supply chain management and asset management functions, roles, and responsibilities Registers complete, reliable, operational AMDR and sectors 90% of assets verified and audited AMDR, verification team, and sectors

95% of assets settled and in full possession by NCC AM subcommittee, AMDR

Advance training for key staff related to AM AMDR AM and supply chain management are adequately linked AMDR, sectors, and supply chain management

Adopting SOPs for key AM activities and functions SOPs adopted and operational AMDR and sectors

Completing and maintaining needs assessments by sectors Complete, baselines established AMDR and sectors

Completing assessment: asset condition, value, risk, and life-cycle cost 80% of each sector’s assessment complete Sectors

Introducing information technology system for the integrated asset management system Installed and operational AMDR and ICT

Institutionalizing preventive asset maintenance and reducing the role of reactive maintenance Preventive AM institutionalized AMDR, sectors, and CFO

Increasing funding for development, repair, and maintenance Development budget > 40% of total budget Budget for repair and maintenance > 4% of current expenditures

Adopting rules and procedures for how to integrate decisions, plans, and finances on assets managed by external entities (water companies, ministries, agencies) but vital for citizens and quality of life Rules and procedures adopted and operational AMDR, sectors, CFO, and CO budget

AMDR and CO finance and planning

Long term (7–10 years) Institutionalizing integrated asset management to optimize life-cycle costs Fostering collaboration among engineering, operations, planning, finance, and AMDR Integrated AM system is in operation AMDR and sectors

Work procedures adopted and operational AMDR, CO finance and planning, and sectors

Integrating AM systems with IFMIS, capital planning, engineering, and service operations Integrated AM is operational AMDR, ICT, and respective CO finance and planning

Developing adequate human capacities for AM Staff for new systems trained AMDR and ICT

Increasing funding for development, repair, and maintenance Development budget > 40% of total expenditure Repair and maintenance > 10% of current expenditure AMDR, sectors, CFO, and CO budget

Source: Nairobi City County Government. Note: AM = asset management; AMDR = Asset Management Directorate; AMS = asset management strategy; CFO = chief financial officer; CO = chief officer; ICT = information and communication technology; IFMIS = integrated financial management information system; NCC = Nairobi City County; SOPs = standard operating procedures.

TABLE B.2 Development and rehabilitation plans by sectors: Long-term preliminary list form

K Sh (billions)

SECTORS AND GROUPS

Physical infrastructure and productive sectors (40% of development budget) Transport, roads, and public works Water, energy, forestry, environment, and natural resources Agriculture, livestock, development, and fisheries Information, communication, and e-governance Governance, social, and service sectors (30% of total development budget) Public service management County health services Education, children, youth affairs, sports, culture, and social services Economic sectors (30% of total development budget) Finance and economic planning Trade, industrialization, cooperative development, and tourism Lands, housing, and urban planning Total

Source: Nairobi City County Government. DEVELOPMENT REHABILITATION

objectives set out in the CIDP 2014–17 and 2018–22 (NCC 2014a, 2018) and the SP 2015–25 (table B.2). The projects were identified in various forums, including Kenya Vision 2030; the first medium-term plan dissemination forums; medium-term expenditure framework consultative forums; and the second medium-term plan consultations and other development consultations at devolved levels. The AMS incorporates these project plans from the noted sources without modification.

WARDS DEVELOPMENT FUND

To address existing disparities and promote equitable distribution of resources in NCC, the Wards Development Fund (WDF) was established under the WDF Act 2014, section 4 (NCC 2014d). This fund will be set aside to provide financing of community-based projects for an amount of not less than 5 percent of all the ordinary revenue of NCC in each financial year. The fund also can receive donations or loans from other authorized organizations.

Eligible community-based projects are identified annually by the Ward Development Committee established under section 19(11) of WDF Act 2014 and included in the annual budget. On an annual basis, a minimum of five projects and a maximum of 25 projects will be submitted per ward under the fund. During the period 2015–25, an estimated K Sh 24 billion will be appropriated to various capital programs across NCC over the 10-year SP period. The projects for FY 2015/16 have been identified for all 85 wards for a total of K Sh 1.7 billion.

DEVELOPMENT FINANCING

Developments will be funded from savings in the recurrent budget, through incurring debt, or by engaging in public-private partnerships. Large infrastructure projects will be financed through external borrowing, as this effort is concessional and requires longer periods of time than commercial banks normally offer. NCC will look into money and capital markets through bond issues by the end of this SP period.

Long-term borrowing will be used only to finance development projects as approved in the CIDP (with an annual limit of debt service as 5 percent of total revenues in recently audited financial statements), and projects funded by debt will be funded only for their expected useful life. Operation and maintenance expenditures will not be funded through debt. To maintain debt at sustainable levels, NCC’s annual borrowing per the debt management strategy will be capped at 15 percent of total revenues.

REFERENCES

Cambridge (City of). 2013. Asset Management Plan—Core Service Sustainability. Ontario,

Canada: City of Cambridge. https://www.cambridge.ca/en/learn-about/resources/Asset -Management-Plan---City-of-Cambridge---AODA.pdf. NCC (Nairobi City County). 2014a. Nairobi County Integrated Development Plan (CIDP)

Covering the Period 2013–17. Nairobi City County Government. https://www.cog.go.ke /downloads/category/82-county-integrated-development-plans-2013-2017. NCC (Nairobi City County). 2014b. Nairobi County Strategic Plan 2015–2025. Nairobi City

County Government. NCC (Nairobi City County) 2014c. Nairobi County Urban Development Master Plan. Nairobi City

County Government. https://www.kpda.or.ke/documents/Nairobi%20Integarted%20

Urban%20Development%20Master%20Plan.pdf. NCC (Nairobi City County). 2014d. Nairobi City County Wards Development Fund Act. Nairobi

City County Gazette Supplement no. 4, February 11, 2014. http://kenyalaw.org/kl/fileadmin /pdfdownloads/Acts/NairobiCityCountyWardsDevelopmentFundAct2014.pdf. NCC (Nairobi City County). 2018. Nairobi County Integrated Development Plan (CIDP) Covering the Period 2018–22. Nairobi City County Government. https://repository.kippra.or.ke /handle/123456789/2019.

APPENDIX C

County Asset Management Plan Model

INTRODUCTION

This asset management (AM) plan is built on the county asset management strategy, the county strategic plan, and the county integrated development plan drafted for Nairobi City County (NCC). This AM plan is an interim plan as opposed to the commonly understood AM plans, because the county has just started to develop an AM system, strategies, plans, and procedures. Therefore, this AM plan covers the first one- or two-year period and is focused on establishing the initial AM framework, systems, plans, and databases.

Figure C.1 provides a comprehensive schematic picture of the AM plan sequences, with sophistication deepening from top to bottom. More detailed AM plans will be developed, adopted, and implemented. Basic AM plans can be developed gradually in the short to medium term, while the county can adopt advanced AM plans in the medium to long term (5 to 10 years’ time). The asset management plan of the City of Cambridge, Ontario, Canada, offers glimpses into the nature of an advance stage AM Plan (Cambridge 2013).

INTERIM ASSET MANAGEMENT PLAN

Establishing the Asset Management Directorate (AMDR) or appointing a dedicated team is strong evidence of the common understanding that the county government’s goals and strategic priorities strongly depend on the size, scope, and quality of infrastructure. However, utilization of assets depends on the capacity, quality, and reliability of asset management systems and practices. This plan is the first asset management plan in the county’s history, and it is interim, since it focuses exclusively on establishing the initial framework, adopting an initial strategy of sector AM plans, collecting basic information, and developing asset inventories. The county has a development plan and program, but those were developed before and outside of this AM plan. That is why this interim AM plan focuses on establishing systems and excludes specific asset development plans that would discuss investment, refurbishment, replacement, or maintenance plans, which can be incorporated in this AM plan or a revised version of it in one to two years.