This article may need to be rewritten entirely to comply with Wikipedia's.. The may contain suggestions. (June 2013) Complexity characterises the behaviour of a or whose components interact in multiple ways and follow local rules, meaning there is no reasonable higher instruction to define the various possible interactions.

Internal Audit and Evaluation Documents EVALUATION OF PARKS CANADA’S ASSET MANAGEMENT PROGRAM. Office of Internal Audit and Evaluation. The items listed below are all of those matching the criteria you have selected: Human Resource Management.

The stem of the word 'complexity' - complex - combines the Latin roots com (meaning 'together') and plex (meaning 'woven'). Contrast 'complicated' where plic (meaning 'folded') refers to many layers. A complex system is thereby characterised by its inter-dependencies, whereas a complicated system is characterised by its layers. Complexity is generally used to characterize something with many parts where those parts interact with each other in multiple ways, culminating in a higher order of greater than the sum of its parts. Just as there is no absolute definition of 'intelligence', there is no absolute definition of 'complexity'; the only consensus among researchers is that there is no agreement about the specific definition of complexity. However, 'a characterization of what is complex is possible'.

The study of these complex linkages at various scales is the main goal of. As of 2010 takes a number of approaches to characterizing complexity; Zayed et al. Reflect many of these. States that 'even among scientists, there is no unique definition of complexity – and the scientific notion has traditionally been conveyed using particular examples.' Ultimately Johnson adopts the definition of 'complexity science' as 'the study of the phenomena which emerge from a collection of interacting objects'. Contents • • • • • • • • • • • • • • • • • Overview [ ] Definitions of complexity often depend on the concept of a confidential ' – a set of parts or elements that have relationships among them differentiated from relationships with other elements outside the relational regime.

Many definitions tend to postulate or assume that complexity expresses a condition of numerous elements in a system and numerous forms of relationships among the elements. However, what one sees as complex and what one sees as simple is relative and changes with time. Posited in 1948 two forms of complexity: disorganized complexity, and organized complexity. Phenomena of 'disorganized complexity' are treated using probability theory and statistical mechanics, while 'organized complexity' deals with phenomena that escape such approaches and confront 'dealing simultaneously with a sizable number of factors which are interrelated into an organic whole'.

Weaver's 1948 paper has influenced subsequent thinking about complexity. The approaches that embody concepts of systems, multiple elements, multiple relational regimes, and state spaces might be summarized as implying that complexity arises from the number of distinguishable relational regimes (and their associated state spaces) in a defined system. Some definitions relate to the algorithmic basis for the expression of a complex phenomenon or model or mathematical expression, as later set out herein.

Disorganized vs. Organized [ ] One of the problems in addressing complexity issues has been formalizing the intuitive conceptual distinction between the large number of variances in relationships extant in random collections, and the sometimes large, but smaller, number of relationships between elements in systems where constraints (related to correlation of otherwise independent elements) simultaneously reduce the variations from element independence and create distinguishable regimes of more-uniform, or correlated, relationships, or interactions. Weaver perceived and addressed this problem, in at least a preliminary way, in drawing a distinction between 'disorganized complexity' and 'organized complexity'. In Weaver's view, disorganized complexity results from the particular system having a very large number of parts, say millions of parts, or many more.

Dota 2 Go Launcher Ex Theme Download. Though the interactions of the parts in a 'disorganized complexity' situation can be seen as largely random, the properties of the system as a whole can be understood by using probability and statistical methods. A prime example of disorganized complexity is a gas in a container, with the gas molecules as the parts. Some would suggest that a system of disorganized complexity may be compared with the (relative) of planetary orbits – the latter can be predicted by applying. Of course, most real-world systems, including planetary orbits, eventually become theoretically unpredictable even using Newtonian dynamics; as discovered by modern. Organized complexity, in Weaver's view, resides in nothing else than the non-random, or correlated, interaction between the parts. These correlated relationships create a differentiated structure that can, as a system, interact with other systems. The coordinated system manifests properties not carried or dictated by individual parts.

The organized aspect of this form of complexity vis-a-vis to other systems than the subject system can be said to 'emerge,' without any 'guiding hand'. The number of parts does not have to be very large for a particular system to have emergent properties. A system of organized complexity may be understood in its properties (behavior among the properties) through and, particularly. An example of organized complexity is a city neighborhood as a living mechanism, with the neighborhood people among the system's parts. Sources and factors [ ] There are generally rules which can be invoked to explain the origin of complexity in a given system. The source of disorganized complexity is the large number of parts in the system of interest, and the lack of correlation between elements in the system. In the case of self-organizing living systems, usefully organized complexity comes from beneficially mutated organisms being selected to survive by their environment for their differential reproductive ability or at least success over inanimate matter or less organized complex organisms.

's treatment of ecosystems. Complexity of an object or system is a relative property.

For instance, for many functions (problems), such a computational complexity as time of computation is smaller when multitape are used than when Turing machines with one tape are used. Allow one to even more decrease time complexity (Greenlaw and Hoover 1998: 226), while inductive Turing machines can decrease even the complexity class of a function, language or set (Burgin 2005). This shows that tools of activity can be an important factor of complexity. Varied meanings [ ] In several scientific fields, 'complexity' has a precise meaning: • In, the required for the execution of is studied. The most popular types of computational complexity are the time complexity of a problem equal to the number of steps that it takes to solve an instance of the problem as a function of the (usually measured in bits), using the most efficient algorithm, and the space complexity of a problem equal to the volume of the used by the algorithm (e.g., cells of the tape) that it takes to solve an instance of the problem as a function of the size of the input (usually measured in bits), using the most efficient algorithm.

This allows to classify computational problems by (such as, etc.). An axiomatic approach to computational complexity was developed. It allows one to deduce many properties of concrete computational complexity measures, such as time complexity or space complexity, from properties of axiomatically defined measures. • In, the (also called descriptive complexity, algorithmic complexity or algorithmic entropy) of a is the length of the shortest binary that outputs that string. Is a practical application of this approach. Different kinds of Kolmogorov complexity are studied: the uniform complexity, prefix complexity, monotone complexity, time-bounded Kolmogorov complexity, and space-bounded Kolmogorov complexity.

An axiomatic approach to Kolmogorov complexity based on (Blum 1967) was introduced by Mark Burgin in the paper presented for publication. The axiomatic approach encompasses other approaches to Kolmogorov complexity. It is possible to treat different kinds of Kolmogorov complexity as particular cases of axiomatically defined generalized Kolmogorov complexity. Instead of proving similar theorems, such as the basic invariance theorem, for each particular measure, it is possible to easily deduce all such results from one corresponding theorem proved in the axiomatic setting.

This is a general advantage of the axiomatic approach in mathematics. The axiomatic approach to Kolmogorov complexity was further developed in the book (Burgin 2005) and applied to software metrics (Burgin and Debnath, 2003; Debnath and Burgin, 2003). • In, complexity is a measure of the total number of transmitted by an object and detected by an.

Such a collection of properties is often referred to as a. • In, complexity is a measure of the of the of the system.

This should not be confused with; it is a distinct mathematical measure, one in which two distinct states are never conflated and considered equal, as is done for the notion of entropy in. • In, is an important topic in the study of finite and. • In complexity is the product of richness in the connections between components of a system, and defined by a very unequal distribution of certain measures (some elements being highly connected and some very few, see ). • In, is a measure of the interactions of the various elements of the software. This differs from the computational complexity described above in that it is a measure of the design of the software.

• In sense – Abstract Complexity, is based on visual structures It is complexity of binary string defined as a square of features number divided by number of elements (0's and 1's). Features comprise here all distinctive arrangements of 0's and 1's. Though the features number have to be always approximated the definition is precise and meet intuitive criterion. • Johnson, Steven (2001)..

New York: Scribner. • Antunes, Ricardo; Gonzalez, Vicente (3 March 2015).. 5 (1): 209–228.:. Retrieved 17 March 2015. Vastly present in the literature, the word “complex” seems to stand for a supernatural force supposedly responsible for disturbances, a scary ghost haunting projects.

With no absolute definition of what complexity means, the only consensus among researchers is that there is no agreement about the specific definition of complexity [66]. However, a characterization of what is complex is possible. A structure is complex; if composed of several interconnected pieces [67], with dynamic networks of interactions, and their relationships are not aggregations of the individual static entities [68]. Chemical Complexity – supramolecular self-assembly of synthetic and biological building blocks in water.

Chemical Society Reviews, 2010, 39, 2806–2816 • ^ Johnson, Neil F. 'Chapter 1: Two's company, three is complexity'. Oneworld Publications. • ^ Weaver, Warren (1948). American Scientist. 36 (4): 536–44.. Retrieved 2007-11-21.

• Johnson, Steven (2001). Emergence: the connected lives of ants, brains, cities, and software. New York: Scribner. • 'Sir James Lighthill and Modern Fluid Mechanics', by Lokenath Debnath, The University of Texas-Pan American, US, Imperial College Press::, Singapore, page 31. Online at [ ] • Jacobs, Jane (1961). The Death and Life of Great American Cities.

New York: Random House. • Ulanowicz, Robert, 'Ecology, the Ascendant Perspective', Columbia, 1997 • Burgin, M. (1982) Generalized Kolmogorov complexity and duality in theory of computations, Notices of the Russian Academy of Sciences, v.25, No. 19–23 • A complex network analysis example: ' ( Grandjean, Martin (2017).. Memoria e Ricerca (2): 371–393.. • Mariusz Stanowski (2011) Abstract Complexity Definition, Complicity 2, p.78-83 •; (2000).

The Next Common Sense, The e-Manager's Guide to Mastering Complexity. Intercultural Press.. • Ho, T.K.; Basu, M. IEEE Transactions on Pattern Analysis and Machine Intelligence 24 (3), pp 289-300. • Smith, M.R.; Martinez, T.; Giraud-Carrier, C. Machine Learning, 95(2): 225-256. • Saez, J.; Luengo, J.; Herrera, F.

Pattern Recognition 46 (1) pp 355-364. • Jorg Grunenberg (2011). 'Complexity in molecular recognition'. Further reading [ ].

Internal Audit and Evaluation Documents EVALUATION OF PARKS CANADA’S ASSET MANAGEMENT PROGRAM July 2009 Office of Internal Audit and Evaluation Parks Canada Table of Contents List of Tables List of Figures Report approved by the Chief Executive Officer, Parks Canada, August 6, 2009 (PDF, 476 kb) Note: To read the PDF version you need on your system. If the Adobe download site is not accessible to you, you can download from an accessible page. If you choose not to use Acrobat Reader you can have the PDF file converted to HTML or ASCII text by using one of the.

Executive Summary and Management Responses Management of assets, both contemporary and cultural, is central to the delivery of three of the five program activities in the Agency as well as for internal service delivery. The protection of cultural assets is an end in itself, while contemporary assets are a means to achieve the Agency’s mandate and program objectives. If assets are not well managed, there could be serious impacts on the achievement of the Agency’s mandate and program results, and potentially significant health and safety and legal risks and risks to reputation. The asset management program involves a large portion of the Agency’s resources (i.e., an estimated 800 FTEs and $161M or 27% of the Agency’s total 2007/08 expenditures of $585.5M).

The existing asset inventory comprises approximately 22,000 assets of all types and approximately 16,000 high-value assets (i.e., assets valued at $10K or more). Types of assets managed by the Agency include buildings, bridges and dams, fortifications, grounds, roads and highways, marine structures, utilities, equipment and fleet. The replacement value of the Agency’s assets is variously estimated at between approximately $7B and $11B. Given the materiality of asset investment and the importance of assets for the delivery of the Agency’s program activities and strategic objective, the program was identified as a high priority for an evaluation.

The key issues we addressed were whether the program is a relevant response to the Agency’s asset management challenges (i.e., the relevance of having assets and an asset management program was not in question), and performance of the program against investment and asset condition targets set out in national plans and policies and in relation to commonly accepted asset investment benchmarks. The evaluation did not assess how assets contribute to other program goals (e.g., visitor experience goals) although this is the ultimate purpose of many assets. A key challenge is how to manage limited resources for investment in asset management to achieve the overall goals of the Agency. The Agency’s yearly investments in asset maintenance and capital renewal are far short of commonly recommended asset investment benchmarks (i.e., an annual target of investing 4% of the current replacement value of the asset portfolio in maintenance and increasing functionality and capacity). The issue has persisted for many years and will continue into the foreseeable future.

Depending on the investment standard chosen, current and future levels of investment are likely to result in deferred maintenance and capital renewal in hundreds of millions or perhaps billions of dollars which could increase the likelihood of the serious impacts noted above. To address this challenge the Agency committed, in its 2000 and 2005 Long-Term Capital Plans ( LTCPs), to increase its professional asset management capacity, expand its asset management framework, increase investment levels, focus on high-risk areas, document and improve its compliance with inspection and due diligence regimes, limit acquisition of new assets, ensure that investments result in improved asset condition and reduce the number of assets facing threats or posing hazards. We concluded that the Agency has had mixed success in implementing these strategies. Since 2005, the Agency has made some progress in expanding the asset management framework, inventorying high-risk assets and documenting and applying appropriate inspection and due diligence requirements related to asset management.

The number and professional qualifications of asset managers in the field have improved in the last two to three years. Spending on major asset repair and recapitalization has increased from the baseline identified in the 2005 LTCP. Despite the progress, we concluded that the Agency is only in the beginning stages of developing a mature asset management program. There is a lack of information on the full life-cycle costs of assets and facilities (i.e., operations, maintenance and capital costs). The Agency’s asset management system has missing information in mandatory fields for many assets. The information that is available is often erroneous, hard to interpret or out of date.

As a result, it is impossible to address basic questions such as the exact size of the inventory and why it is changing over time and the significance of the observed changes. We concluded that the Agency is still mastering the operational aspects of asset management and does not have a national level strategic focus to assets as tools for achieving the Agency’s goals.

The Agency’s overall asset investment approach directs 70% or more of its asset management expenditures each year into the major repair and asset recapitalization component of the program. We concluded that the Agency lacks a national asset management planning approach (i.e., as opposed to a long-term capital planning approach which is only part of asset management planning), lacks national information on the intended objectives of projects listed in LTCPs (i.e., renewal of existing assets, acquiring new functionality or capacity or disposing of assets) and lacks information on whether projects succeed in reaching these objectives. It has little evidence that directing the majority of investment to this component of asset management is the most relevant response to the Agency asset management challenges (e.g., relative to investing more on information quality and/or preventative maintenance of existing assets to reduce long-term costs).

There is wide spread agreement in the field that most of the existing assets managed by the Agency are relevant, although some major assets have been identified as less critical to the mandate. There is a well-defined process for identifying assets or groups of assets within the existing base that will be subject to major repair or recapitalization based on consideration of several relevant criteria. The process relies on the informed judgement of managers. It does not directly address the whole spectrum of decision-making with respect to asset operations and maintenance and renewal. There is a risk that application of the principles and guidance for investment will be inconsistent across the Agency. More formal approaches to standardize assessments of relevance and importance of assets and/or facilities, and mitigate some of this risk, are available and would help manage this risk.

We evaluated the performance of the program against thirteen national targets related to investment or asset condition. We found that with the exception of its target to invest $439M in major asset repair and recapitalization between April 2005 and March 2010, either the targets are not being met or would not likely be met or that the Agency lacks the information and/or systems to measure performance. We concluded that the major issue was not so much that targets were not met, but that performance against the range of targets has not been systematically monitored and managed.

Most of the national monitoring that has occurred focused on the use of one component of asset funding (i.e., Budget 2005 funds) and tracked progress against targets based on planned rather than actual expenditures. The six key issues identified in the course of the evaluation, associated recommendations, and management responses and action plans are shown below. OVERALL MANAGEMENT RESPONSE The Agency concurs with the fundamental findings of this evaluation and welcomes the recommendations as a means of improving its asset management capacity and preparing for the new Government Wide Investment Planning regime While Budget Plan 2005 provided Parks Canada with $209 million over five years and $75 million ongoing, only $89 million was provided over the first three years. This funding was immediately directed to urgent health and safety projects and to cultural assets in need of imminent repair rather than capacity building. In late 2005, the Agency through its Human Resources Committee and Finance Committee approved a new Asset Management framework in order to address the injection of new capital funding from Treasury Board and the delivery of its Long Term Capital Plan.

Funding for this new framework was over 5-years to allow the Agency to focus first on priority projects, critical policies and staffing while re-defining its relationship with PWGSC. This internal evaluation was planned as a first step to developing appropriate asset management capacity, tools, policies and processes for the long term. As evidenced in this report, the Agency has recently made some notable progress in expanding the asset management framework: inventorying high-risk assets; documenting inventory; applying appropriate inspection and due diligence requirements; developing directives and standards related to asset management. The level of professionalism within the organization has increased significantly as demonstrated by the increased number of professional designations held by asset managers in the field. Improving asset information was recognized as an important issue and a project to implement a new national Real Property Management System is currently underway. As per the CEO’s direction, effective April 1st, 2009, a Director General, Infrastructure and Real Property will assume the national leadership in the delivery of the Accelerated Infrastructure Program from Budget 2009 and will provide overall direction to the Director of Real Property for the deployment of the following action plans. The Director General will report directly to the CEO.

Incomplete and Uncoordinated Asset Policy, Directive, Criteria Framework Consistent with the commitments in the 2005 LTCP there is a growing policy and directive framework to guide asset management decision-making. The current framework is not always coordinated at national office and elements of it are not widely distributed in the Agency.

The framework is heavily focused on investments in major repairs and recapitalization of assets. Recommendation 1: The CAO should review the existing framework and identify any gaps and develop a plan and schedule to address the gaps (e.g., see recommendations 3, 4, 7 and 9 for examples of how the framework might be improved). RESPONSE PLAN TARGET DATE AGREE – This evaluation has identified many of the gaps and provides suggestion on how to close them.

The Director General, Infrastructure and Real Property will provide direction to the Director of Real Property on a list of priorities that need to be addressed. The 2005 asset Management framework is already being fully deployed. A new Asset Management directive with a set of clear accountabilities has been approved and disseminated. The Agency has committed to a new governance structure for Real Property and is adding $2M for capacity building in Asset Management at national office level. Following commitments made at the Asset Management summit in April 2008, a strategic group of managers from each functional directorates and operational Director Generals’ office were formed to provide strategic direction to the Real Property branch. This group, who meets monthly, will play a key role in addressing most of these recommendations. The Asset Management Strategic Advisory Group supplemented by a consultant will review the existing framework, identify any gaps and develop an action plan to address these gaps along with the resources to implement the plan.

March 2011 Recommendation 2: The CAO should create an Intranet site containing copies of, or links to, the Agency and TB asset policies and standards, delegation of authorities, project management guidance, relevant asset management processes (e.g., for doing condition ratings or determining replacement values) similar to what currently exists for the financial management policies and guidance in the Agency. RESPONSE PLAN TARGET DATE AGREE – The intranet site was created on December 16 th, 2008 and is be updated on a regular basis to ensure it contains relevant and useful information. The Intranet site is located under Asset Management from the “Our Work” – Real Property Management section. Further, the Intranet will also be used to promulgate any changes and modifications made to Parks Canada’s Asset Management Framework.

Done Issue 2. Lack of Complete Data on Life Cycle Costs of Assets Good expenditure information is only available for true capital costs for asset projects (i.e., not necessarily facilities or individual assets). National data on maintenance expenditures is largely drawn from business units’ self-reports of planned expenditures. Little or no effort is devoted to understanding the operational costs of assets at a national or regional level. The goods and services component of asset operations and maintenance expenditures are already captured in the financial system (i.e., at the level of general ledger codes) but this information is not used consistently across the Agency. The salary costs of asset operations and maintenance are already calculated or estimated at the business unit level for purposes of long-term capital planning but again the way this is done varies considerably across business units.

Recommendation 3: The CAO in conjunction with DGs Eastern and Western/Northern Canada should define which expenditures currently captured in the financial system reflect asset operations and maintenance (i.e., goods and service expenditures are currently captured as general ledger codes). RESPONSE PLAN TARGET DATE AGREE – The Chief Financial Officer will develop the Agency protocol to capture expenditures in the financial system for asset operations and maintenance. The Director General, Infrastructure and Real Property will work with the Deputy Chief Financial Officer to address this recommendation. There is a need for the Agency to review all definitions relevant to asset management, such as maintenance, operations, capital, replacement value, etc. Once completed and validated, these definitions will assist in determining which expenditures (including salary) will be captured in the financial system. April 1 st, 2010 Recommendation 4: The CAO in conjunction with DGs Eastern and Western/Northern Canada should develop a reasonable and consistent national approach to allocating salary costs to asset operations and maintenance based on approaches already in use at the business unit level.

RESPONSE PLAN TARGET DATE AGREE – The Agency will review its current practices allocate salary expenditures to assets operating and maintenance, and inherently to capital projects. The Chief Financial Officer will develop a reasonable and consistent national approach to allocating salary costs to asset operations and maintenance based on approaches already in use at the business unit level. The Director General, Infrastructure and Real Property will work with the Deputy Chief Financial Officer to review current practices and recommend to the Chief Financial Officer the most effective and reasonable method for allocating salary costs. April 1 st, 2010 Recommendation 5: The CAO should modify the structure of the Asset Expenditure Reports so that they include information on the program activity to which the expenditure is directed (already captured at input) and the intended purpose of the expenditure (see also recommendation 13).

RESPONSE PLAN TARGET DATE AGREE - The Chief Financial Officer will modify the structure of the Asset Expenditure Reports so that they include information on the program activity to which the expenditure is directed (already captured at input) and the intended purpose of the expenditure. The Director General, Infrastructure and Real Property will work with the Deputy Chief Financial Officer to develop the best option to include pertinent information related to the Program Activity directed by the expenditure.

April 1 st, 2010 Recommendation 6: The DGs Eastern and Western/Northern Canada should inform business unit managers of the importance of coding expenditure data correctly so that they link to the Asset Expenditure Reports. They should monitor information in the reports and hold managers accountable for ensuring it is accurately completed. RESPONSE PLAN TARGET DATE AGREE – The operational DGs will continue to stress the importance of coding, through training and discussions with business unit managers. Furthermore, coding will be reviewed and where necessary challenged at the project approval stage to ensure accurate coding and data integrity. Project progress will continue to be monitored periodically through quarterly variance reporting and project progress reports. Where necessary business unit managers will be held accountable through the Agency’s performance management system On-going Issue 3. Inadequate Asset Inventory and Management Data The AMS includes assets that are not consistent with the expressed purpose of the system.

Many relevant assets in the system lack critical information, have erroneous information, have information that is hard to interpret, or out of date. Updated information is not routinely entered into the AMS. While the Agency is in the process of acquiring a new system there is little assurance that the system itself will resolve the problem of developing a culture and management structures that ensure the availability of sustainable good quality information over time. Recommendation 7: The CAO based on consultations with the operational and functional DGs should confirm the core assets and asset information (e.g., condition, replacement value, link to a facility where relevant, indications of costs of corrective measures, indications of asset or facility importance) to be included in an asset management system and outline a process and timelines for updating the inventory and information consistent with the identified requirements (see also recommendations 10 and 16). RESPONSE PLAN TARGET DATES AGREE – The Director General, Infrastructure and Real Property will confirm the core assets and fields of data that are mandatory in the current asset management system ( AMS).

Operational DGs will ensure that the inventory and asset management information are updated in accordance with agreed timelines Improving asset information was recognized as an important issue and Finance Committee has approved a project to acquire and implement a new national Real Property Management System. To address process issues, a National Asset Management Working Group with representation from national office functional DGs, operational DGs and field units that has been examining business processes will reconvene with additional support from a consultant. The Working Group will produce a list of core assets and fields in AMS that are mandatory for review by the Strategic Asset Management Advisory group, and approval by the Director General, Infrastructure and Real Property.

Since the AMS system asset inventory is reliant on the STAR system, CFO will ensure that changes to the data in the STAR system are completed in a timely manner as requested by asset management staff. June 2010 Recommendation 8: The CAO in conjunction with DGs Eastern and Western/Northern Canada should monitor progress by business units in updating information against the timeline and report annually to finance committee on progress (see also recommendation 18). RESPONSE PLAN TARGET DATES AGREE - The Director General, Infrastructure and Real Property will monitor progress by business units in updating information against the timelines and report annually to Senior Management on progress. National Office Asset Management section will provide information as required to the Director General, Infrastructure and Real Property in order to monitor and report on progress. The annual report to Finance Committee will coincide with the Agency’s annual report on Capital Planning funding envelope requirements in June.

June 2010 Estimates of the replacement value of existing assets in business unit LTCPs do not agree with other sources of the same information and are not adjusted consistently over time. Recommendation 9: CAO should provide direction for reporting on acceptable sources of valid replacement value information in LTCPs (e.g., the AMS, in-house system, an Asset Data Integrity Report) and a consistent national approach for adjusting these estimates over time. RESPONSE PLAN TARGET DATES AGREE – The Director General, Infrastructure and Real Property will develop a nationally consistent approach to estimating Current Replacement Value and maintaining this value over time. The methodology used in the Recapitalization Management Process will be reviewed and updated to form the core of the nationally consistent process for establishing CRV. An industry recognized tool will form a key part in this updating process.

Staff Asset Assessment Section – Jun 09 Engage Consultant – Aug 09 Draft CRV model – Mar 10 An Agency Current Replacement Value ( CRV) model and an approach for adjusting estimates will be developed by May 2010. The Agency’s current approach to rating the condition of assets does not directly address the Treasury Board guidance, or common practice in many jurisdictions, that condition ratings should link directly to an understanding of the cost of corrective measures.

Recommendation 10: The CAO should develop a methodology to link technical assessments of assets/facilities condition with an understanding of the costs of corrective actions (e.g., a FCI or some other measure of costs of correction action) and provide a target date and plan for implementing the measure (see also recommendation 17). RESPONSE PLAN TARGET DATES AGREE – The Director General, Infrastructure and Real Property will develop a methodology to link technical assessments of assets/facilities condition with an understanding of the costs of corrective actions by adoption of an appropriate metric. The National Asset Management Working Group will examine business processes and examine the issues associated with the implementation of a metric in Parks Canada Agency. An Agency facility metric model will be developed by Dec 2010.

Inadequate Asset Management Planning The Agency does not do asset management planning by defining conservation and service objectives and linking these to an analysis of the current asset base leading to strategic asset acquisition, renewal, operation/maintenance and disposal plans. Instead it focuses on identifying and prioritizing major repair and capital projects that it will or would like to undertake. These projects do not link to information on asset conditions, life cycles and historic and projected future costs of operations, maintenance, and capital renewal and to service and capacity objectives for assets over time. Recommendation 11: The CAO should develop an asset management plan (as opposed to a Long-Term Capital Plan) for the Agency.

An Asset Management Plan specifies the current condition and life cycle information of the asset inventory, costs of operations, maintenance and past capital investments, and future requirements based on an analysis of needs and future requirements. It would have acquisition, operations/maintenance, capital renewal and disposal components. Consideration should be given to having business units prepare asset management plans of which Long-Term Capital Plans are one component.

RESPONSE PLAN TARGET DATES AGREE – The Director General, Infrastructure and Real Property will develop a template for an Asset Management Plan, which specifies the current condition and life cycle information of the asset inventory, future costs of operations, maintenance and capital investments based on an analysis of needs and future requirements. The development of the Asset Management Plan is the driver of sound asset management planning. The AMP will serve to meet the objectives of the assets and classes of assets within its activity. The Portfolio Management Plan will serve to integrate classes of assets and activities within the program and the range of corporate strategies and priorities. These two documents will also serve to identify data requirements, data definitions, and data sources, accounting and reporting procedures.

Senior Management approval will be sought once the templates are completed. See tasks 2-7 of the Transformation Plan with respect to the Asset Management Plan and tasks 9-13 for the Portfolio Management Plan. See also tasks 30 and 31. Asset Management Plan template and portfolio management plan template developed by March 2010.

Valuation of assets in the public sector is almost universally linked to the concept of current replacement value of assets, which provides a standard for asset investment and input into determining asset condition. Although there is some dispute about the applicability of this concept to cultural assets managed by the Agency we do not foresee abandoning it given its wide spread use and acceptance. A key issue is what percentages of CRV provide reasonable benchmarks for asset investment planning. Recommendation 12: The CAO in conjunction with the DGs Eastern and Western/Northern Canada should establish the appropriate percentages of CRV for the asset portfolio or for particular categories of assets, to guide investment in asset operations, maintenance and capital renewal.

They should ensure that process and systems are in place that captures these expenditures in the financial system (see also recommendations 3 to 6). RESPONSE PLAN TARGET DATES AGREE – The Director General, Infrastructure and Real Property will establish appropriate percentages of CRV for the asset portfolio or for particular categories of assets to guide maintenance and capital investments. Process and systems will be put in place to ensure that these expenditures are captured in the financial system. The Director General, Infrastructure and Real Property via working groups will develop a consistent and appropriate percentage of CRV for all asset classes to be approved by Finance Committee. However, it is doubtful that a percentage of CRV can be established for operating expenditures given the mix of assets. The Director of Real Property will also review processes and systems to ensure that expenditures are captured in the financial system. Completion April 2010 The intended purpose of investments in major repairs and asset recapitalization (i.e., to stabilize and improve the condition of an existing asset and/or extend its useful life, to add service capacity through modifying an existing asset/facility, or to add new service capacity through acquiring additional assets) is not made clear in planning.

Recommendation 13: The CAO should modify the business unit Long-Term Capital Plan template to require that the purposes of the intended investment be shown (e.g., renewal of existing assets, new functionality or capacity, disposal of assets) allowing these projects to be linked to an overall asset management plan. RESPONSE PLAN TARGET DATES AGREE - The Director General, Infrastructure and Real Property will modify the business unit Long-Term Capital Plan template to require that the purposes of the intended investment be shown. The Director General, Infrastructure and Real Property will proceed with this recommendation following the development of the Asset and Portfolio Management Plan. It may very well be that the LTCP may be prepared at National Office for the purpose of meeting Treasury Board’s new policy suite requirements, but that the Asset Management Plan of the Field Unit and the Portfolio Management Plan of Eastern and Western Canada would be sufficiently comprehensive. April 2010 The types of assets targeted in Agency asset policy and the LTCP are not always consistent with the types of assets that are the focus of business unit LTCPs (i.e., business unit plans include IT assets, costumes, land purchases). Recommendation 14: The CAO should clearly define and communicate what types of assets should be included in business unit LTCPs and therefore what types of asset expenditures will be counted toward meeting investment targets. DGs Eastern and Western/Northern Canada should follow-up to ensure that LTCPs only include projects that are relevant to the purposes of the plan.

RESPONSE PLAN TARGET DATES AGREE – The Director General, Infrastructure and Real Property will clearly define and communicate what types of assets will be included in business unit LTCPs and therefore what types of asset expenditures will be counted toward meeting investment targets. Operational DGs will follow-up to ensure that LTCPs only include projects that are relevant to the purposes of the plan. The Director Strategic Plans in concert with Director General, Infrastructure and Real Property will modify the business unit long-term capital-planning template for the 2010/2011 fiscal year. The types of assets and the types of asset expenditures will be clarified. Clarification will be developed prior to issuing the 2010/2011 business call letter Issue 5. Risks of Irrelevant Asset Investments The Agency’s asset management framework and investments are predominately focused on capital renewal rather than operations or maintenance.

Asset investment standards suggest that an equal portion of the CRV of assets should be directed to the maintenance and capital renewal of assets. Recommendation 15: The CAO in conjunction with the DGs Eastern and Western/Northern Canada should review information on asset conditions and life cycle, and asset priorities to determine if the current allocation of resources between asset operations, maintenance and capital investment represents the best investment balance for achieving the Agency’s long-term objectives (see also recommendation 10).

RESPONSE PLAN TARGET DATES AGREE – This is a long-term objective but will require addressing many of the other gaps identified in this evaluation before this can be conducted in a useful way. The allocation of resources between asset operations, maintenance and capital investment will continue to rely on the management acumen of those in the business units until such time as sufficient information and systems exist to allow objective monitoring at a national level.

The Director General, Infrastructure and Real Property will be leading this longer-term objective. It is anticipated that the initial analysis showing expenditures by operations, maintenance and capital will be presented to management in March 2012. March 2012 Decisions related to investments in major repair or renewal of assets/facilities are guided by a widely distributed general criteria for prioritizing investment opportunities, embodied in the standard request for project approval form, and in many cases subject to approval outside local business units. Nevertheless there are risks particularly given the bottom up nature of the planning process that investment priorities for the full spectrum of asset operations (i.e., acquisition, operations, maintenance, renewal and disposal), will vary widely across the Agency and not reflect a national approach to identifying priority investments (e.g., which cultural assets are supported and which are not). Recommendation 16: The CAO in conjunction with DGs Eastern and Western/Northern Canada should develop additional tools and guidance (e.g., an API or some other measure) to ensure consistent prioritization of decisions to investment in asset operations, maintenance, renewal, acquisition or disposition and set a timetable for implementation in the Agency.

RESPONSE PLAN TARGET DATES AGREE – The Agency will continue to benchmark best practices. The principal change objective for the foreseeable future is to fully implement the Investment and Portfolio Management Plans to assist with this planning a metric appropriate to Parks Canada will be developed to assist with prioritizing investments The Director General, Infrastructure and Real Property will develop appropriate metric(s) to support the Portfolio Management Plan. March 2012 Issue 6. Failure to Meet Performance Targets, and Inadequate Measurement and Reporting Against Targets The Agency has developed many targets for asset related investment and asset conditions, most of which it does not meet or has not developed systems and processes for reporting against. Recommendation 17a: The CAO in conjunction with the DGs Eastern and Western/Northern Canada should conduct an immediate review of all its current targets for assets (i.e., 13 targets as per Table 2) and confirm which targets are still relevant and useful for the Agency.

For those targets that remain relevant, the systems and process for monitoring and reporting on performance should be identified and target dates established for when the information will be available. Particular focus should be on developing information and targets related to reach and outcomes rather than inputs (e.g., asset conditions as expressed by target FCI ratios, risk reduction, compliance rates with inspection and code compliance regimes, results of investment on asset condition). RESPONSE PLAN TARGET DATES AGREE – The Director General, Infrastructure and Real Property, in conjunction with the DGs Eastern and Western/Northern Canada, will conduct an immediate review of all its current targets for assets to refine and recommend relevant and useful targets for approval by the CEO. Through the Strategic Asset Management Advisory Group, the Director General, Infrastructure and Real Property will proceed with a complete review of all reported targets in Table 2 of this evaluation report. The proposed targets will be presented to DG/CEO committee for review and discussion.

Approved suite of targets for the 2010/2011 planning cycle (i.e., March 2010). One of the Agency’s targets has been to ensure that business units invest a minimal level of resources in major asset repair and renewal.

If minimal investments targets by business unit are still considered relevant as per recommendation 17 then: Recommendation 17b: The CAO should develop and communicate direction on what sources of funds count to meeting minimal investment targets and what are the precise targets for all relevant business units. Policy or guidance should be developed and communicated on if, and under what circumstances, business units can opt out of minimal investment target.

RESPONSE PLAN TARGET DATES AGREE - The 65% of 1997 capital investment target applies to the Management Unit A Base and does not include supplemental funds. The Director General, Infrastructure and Real Property in conjunction with the DGs Eastern and Western/Northern Canada will develop guidance on if, and under what circumstances, business units can request an exemption from the 65% investment target. The Director General, Infrastructure and Real Property in consultation with the Business Process Working Group will develop a guidance document.

March 2010 There has been no overall monitoring of performance against the complete array of targets set out in the Agency’s asset policies, its Corporate Plan and its national and business unit LTCPs. Recommendation 18: The CAO and DGs Eastern and Western/Northern Canada jointly prepare and report annually a complete picture of asset conditions, life-cycle information, actual and planned expenditures for operations, maintenance and capital, and results from previous investments and intentions for future investments.

Reporting should also include information on the actual consequences of the asset investment decisions relevant to the potential harms identified by the Agency (i.e., loss of irretrievable cultural assets, decreased visitor satisfaction, potential health and safety or legal risks). RESPONSE PLAN TARGET DATES AGREE – The Director General, Infrastructure and Real Property jointly with the Operational DGs will prepare and report annually a complete picture of asset conditions and all other pertinent information related to asset investment decisions. This report will be done at Finance Committee every June, in combination with the other reporting requirements under the LTCP. June 2010 F.C.

And every June thereafter. Introduction and Purpose Parks Canada’s mandate is to. Source: Modified from Wooldridge, S.C.

(February 2002). Balancing Capital and Condition: An Emerging Approach to Facility Investment Strategy Generally accepted accounting definitions of asset expenditures (see for example, Parks Canada’s Asset Accounting Policy and Procedures) are as follows: Operating expenditures relate to an asset’s normal performance of functions for which it is used (e.g., taxes, insurance, utilities, janitorial services, rodent and pest control, waste management, and replacement of items that normally wear out). These costs vary considerably depending on the nature and service conditions of assets. Maintenance and repair expenditures relate to sustaining assets (i.e., upkeep of property, equipment and structures) in order to realize their original anticipated useful life. Maintenance of an asset typically refers to preventative work, while repair is aimed at restoring damaged or worn-out assets to a normal operating condition. The expenditures can range from small preventative interventions to large-scale repairs or replacement of parts of an asset regardless of the cost of the intervention. Capital expenditures relate to the acquisition of new assets or to the replacement, betterment or improvement of existing assets (i.e., re-capitalization) designed to produce an enduring increase to the utility, performance, value, or capability of an asset and/or to significantly extend its useful or economic life.

As per Treasury Board accounting standards, Parks Canada treats expenditures greater than $10K that meet the above criteria as capital expenditures. Not all expenditures on assets over $10K meet these criteria and therefore not all such expenditures are capital expenditures (i.e., some are maintenance expenditures). Parks Canada defines inspection/maintenance and capital differently for purposes of preparing business unit LTCPs (see for example, Principles and Filters for Asset Investment in the 2008/09 Business Plan Guide). Maintenance (i.e., also referred to as operations and maintenance) includes the costs of inspections, which is defined as all work necessary to meet legal requirements, ensure health and safety of the assets and work to determine the condition of the asset, as well as preventative maintenance and small repairs (i.e., those under $10K). It excludes major repairs.

Capital expenditures are defined as including refurbishment, partial reconstruction, stabilization or extra-ordinary repairs, as well as replacement of an asset or component with another having the same function. In addition, feasibility studies related to assets, and evaluation and mitigation of contaminated sites are treated as capital expenditures. Various other types of expenditures for plans, ceremonies, publications, operations, marketing and those related to minor equipment (i.e., less than $10K) are excluded from the definition of capital expenditures. Major repairs (i.e., above $10K) are included here.

In short, for LTCP purposes the major repair component of maintenance in the accounting definition is treated as a capital expenditure. To avoid confusion we use the terms “true capital expenditures” throughout the report to refer to the accounting definition of capital expenditures and “ LTCP expenditures” to refer to capital expenditures as defined for purposes of preparing LTCPs. In our interviews we sought to clarify the extent to which the technical distinctions between the three types of asset expenditures were clearly understood. We found that most managers in the field have a general understanding of the accounting distinctions but that in practice the distinctions are often not critical as they are more concerned with the size, complexity and overall costs of the project, rather than whether it is a major repair or a true capital expenditure. In addition, decisions about whether a particular investment is a major repair or a true capital project often require some judgement. The Agency’s Accounting Policy and Procedures provide some examples of how to distinguish true capital expenditures from major repairs but in practice it is mostly financial managers coding expenditures who use this information rather than asset managers when they plan and implement projects on the ground.

Estimates of Asset Expenditures The Agency tracks some goods and services expenditures on aspects of operational costs (i.e., utilities, grounds keeping and replacement of items that normally wear out) in its financial system. It cannot easily identify the salary costs of asset operations. It does not routinely summarize and report on available operational cost information for assets. We did not pursue this information in the course of the evaluation. The Finance Branch in National Office reports actual maintenance expenditures ranging from $9.2M to $9.6M for the yearly financial statements. In contrast, business units in their LTCPs report planned maintenance expenditures (see Appendix F for unit level data from the 2007/08 and 2008/09 LTCPs) in the range of $40M to $42M per year. An important difference between the actual expenditures reported by Finance Branch and the planned expenditures reported in business unit LTCPs is that the former figure does not include salary costs of employees doing the inspection and maintenance work while the latter figure does include these costs.

We asked the field units that we visited how they arrived at their planned maintenance expenditures. The methods vary by field unit but generally include some or all of the salaries for staff in maintenance and skilled trades positions and asset management functions, estimates of expenditures for work on code compliance from previous years, and/or assigned maintenance budgets for coming years. In some cases, the estimates seem to include operating expenses as defined in the framework in Table 3 (i.e., costs of power or water, costs of cleaning, grounds care), which would serve to inflate the estimates.

In other cases, it was reported that actual maintenance expenditures routinely exceed the planned expenditure in the LTCP, suggesting the estimate is too low. We have used the field unit planned expenditures on maintenance as the more reasonable figure in our analysis but note there is no way to verify if actual maintenance expenditures correspond to planned expenditures short of reviewing detailed financial transactions for each business unit.

Actual LTCP expenditures are in theory captured in Asset Expenditure Reports ( AER) produced by the Agency’s financial system. All expenditures related to projects in LTCPs should be linked to this report when expenditure data are input into the system. In practice, some business units do not code expenditures as required so that they link to the AER. The true capital portion of asset expenditures is identified independently of the AER through use of an internal order code in the system (i.e., IO 3 codes). In comparing the data on true capital expenditures with the data from the AER, we found that the AER may under or over report total true capital spending sometimes by a considerable margin. For this reason, we estimated total actual LTCP expenditures as the sum of all true capital expenditures in the system and the non-true capital expenditures from the AERs. This combined data may still under report LTCP expenditures given that not all the relevant non-true capital expenditures are captured in the AER.

The combined data shows total LTCP expenditures to be $75M in 2005/06 and increasing to $121M in 2007/08 (i.e., not including land purchases but including spending on special purpose projects such as highway twinning). The total of self-reported maintenance expenditures and system generated LTCP expenditures for 2007/08 was $161M or 27% of the Agency’s total expenditures of $585.5M for the year. Asset Inventory, Replacement Value and Condition Ratings Inventory by Category What constitutes an asset for purpose of inventory and planning depends on the particular policy and information system context in the Agency. The Agency’s Asset Management Policy and Asset Accounting Policy define assets differently (e.g., the former excludes information technology assets, assets owned by third parties, historic object and artefact collections, archaeological sites and objects, land and water while the latter include large computers and servers, software, land and leasehold improvements with a historic cost of greater than $10K). The current SAP inventory is consistent with the Accounting Policy Definition of Assets. The current AMS inventory is not consistent with either definition of assets or with the intended purpose of the AMS. It was however, the basis of the inventory descriptions in the 2000 and 2005 Agency LTCPs.

Table 4 shows asset counts by the common asset categories reported in 2000 and the counts in 2008 from the AMS and SAP systems. Table 4 Number of Assets by Asset Categories and Systems (2000 and 2008) Category 2000 LTCP 2008 Asset Listed in AMS SAP 1. Bridges (road, trail bridges and structural culverts) 372 557 455 2.

Buildings (residential, office and administration, public use, operational and general use, other) 5,336 6,155 4,772 3. Equipment (office furniture and fixtures, scientific and laboratory, woodwork, metal, trade and special industry) 1,686 1,961 473 4. Fleet, Heavy Equipment & Boat (construction equipment, boats, passenger, light, medium and heavy duty trucks) 2,483 3,522 2,569 5. Fortification 260 271 231 6.

Grounds (parking, campgrounds, trails, day use, golf courses, signs, monuments & plaques) 4,020 4,335 3,130 7. Highways (national and provincially numbered highways and associated bridges) 126 138 28 8. Marine (Dams, locks, wharves, walls, breakwaters, navigation channels, heritage vessels) 1,004 1,151 1,007 9. Presentation (audiovisual and on site educational displays) 1,023 1,083 834 10. Roads (rural, urban, access, non-public roads) 752 798 730 11. Utilities (potable water systems, wastewater systems, electric power systems, solid waste systems, radio communication systems, underground storage tanks) 837 1,086 804 Sub Total Core Asset Categories 17,899 21,057 15,033 12.

Historic Objects and Reproductions 142 4 13. In Situ Archaeological Resources 534 77 14. Archaeological Collections 80 122 Sub Total Other Assets Count in Previous LTCPs 756 203 0 15.

Informatics (large computers and servers, software) 116 16. Land 18 568 17. Leasehold Improvements 8 18. No Category (includes two with blank and 427 with no category) 312 19. Planned Asset/Under Construction 524 474 20. Studies 5 Sub Total Other Assets Not In Previous LTCPs 0 859 1,166 Grand Total 18,655 22,119 16,199. Sources: AIMS 2000 data based on MS-Excel spreadsheet replicating the data reported in the 2000 Agency LTCP.

AMS 2008 data were based on AMS data file constructed from business unit web-based reports available in August 2008 and data gathered for five units on revised replacement values. The Fleet, Heavy Equipment & Boat category includes only those assets that were flagged as “in use”.

SAP 2008 data provided by the National Office Finance Branch. They are the raw counts used to prepare the Agency’s 2007-2008 financial statements and are subject to adjustments prior to preparing the statements. The AMS and SAP systems do not, and are not intended to, contain the same asset inventories. High-value assets in the first eleven categories shown in Table 4 should be common to both the AMS and SAP systems. For the inventories extracted in November 2007, 99% of the assets in SAP in these categories matched to assets in the AMS (i.e., all but 151 assets of which 144 were equipment). The inventory overlap for these categories might be even greater given incorrect or missing SAP asset ID numbers in the AMS. Based on this finding, we estimated that high-value assets represent approximately 71% of the AMS inventory.

The current AMS asset inventory is larger than the year 2000 inventory used in subsequent national level analysis, long term planning and funding requests to central agencies. The growth in the inventory is due to several factors including adding existing assets to the system since 2000, changing the way an asset is represented in the system (e.g., a highway or trail can be counted as one asset for its whole length or split into several parts and counted as separate assets), acquisition or divestiture of assets, and reclassification of assets between categories. It is also possible that some assets still in the AMS inventory have been disposed of but are not recorded as such. Therefore, the inventory represents an approximate order of magnitude estimate of the real asset holdings of the Agency. Dazzle Fusion Drivers For Windows 7. Replacement Value ( RV) by Category Many basic asset investment benchmarks depend on the concept of current replacement value ( CRV) of assets. In Parks Canada, the current replacement value of contemporary assets is defined as the estimated cost to replace or reconstruct an existing component or asset with a contemporary equivalent according to applicable codes and standards. For built heritage assets, it is the cost to reconstruct or replace the existing asset or its components with a replica that conforms to the shape, material and appearance of a specific period (Parks Canada Re-capitalization Management Process Operations Manual, March 1994).

CRV can be used in analyzing investment requirements and expenditure patterns for an asset/facility or for a portfolio of assets. There is some controversy about the meaningfulness of the concept of replacement value for some of the Agency’s assets, particularly cultural assets. Unlike a contemporary building for example, it may be difficult to accurately determine the cost of replacing a cultural asset. More fundamentally, a cultural asset is in some sense irreplaceable.

Even an exact replicate of a historic structure is not the original structure and does not have the same historic/cultural importance as the original asset. The Agency does not seek to recapitalize cultural assets (i.e., improve them, extend their capacity or to acquire replacements when the asset reaches the end of its life cycle) but rather to maintain and preserve them over very long time frames.

While this does not necessarily imply that the concept of CRV is meaningless for cultural assets, it does suggest that uses of the concept for estimating required both maintenance and capital investments maybe somewhat different for these assets compared to standard contemporary assets such as buildings. The Agency has recorded replacement values for many of its assets dating back to at least the early 1990s. Many of these values are not current (i.e., estimated in the last few years) so we use the term replacement value ( RV) rather than current replacement value ( CRV) throughout the report to refer to the data on asset values taken from the Agency’s information system (see Appendix G for a graph of dates for recorded replacement values in the AMS). Current replacement value is still used when referring to the definitions, benchmarks, and formulas in the Agency or references to external documents and the asset literature. At the level of the Agency as a whole, replacement values of $6.9B and $7.1B were reported in 1999/00 and 2000/01 respectively. The later value was reported in the 2000 LTCPs and corresponds with the year 2000 data in Table 4. In the absence of more recent data, Parks Canada has continued to use the $7.1B figure as the RV of its assets in various documents up to the present.

In the course of the evaluation we also identified three other RV estimates for the Agency’s assets based on documents and data currently used in the Agency. The Real Property Management Branch in National Office used the aggregate RV from 1999/00 to estimate revised values for the Agency’s asset portfolio based on a yearly construction price inflation averaging 6.5% between 1999 and 2013, and including an additional 5% of the RV for assets not included in the original count and new assets acquired since the original count. With these adjustments, the RV as of March 2000 was $7.35B. Inflating the value every year meant that it reached $10.5B in March 2008 and would increase to $16.08B by March 2013, more than doubling the RV of assets over 13 years. On average the RV increased $56M per month!

Business units are also required to report the RV of the assets in the unit each year as part of the LTCP cycle. Aggregating these unit level estimates gave a RV of $7.8B for the Agency’s assets in 2007/08. There is a methodology in the Agency’s Asset Operations Manual (1994) for calculating the CRV of assets, but in practice there is no assurance that the method has been applied consistently across the Agency and no consistency in how units report RVs for planning purposes. Both national office and field staff expressed significant reservations about the validity of the RV data in the AMS (i.e., the values are generally viewed as out of date and too low). In fact, when we first extracted data from the AMS the total RV of the Agency’s assets was shown as $119B due to data errors!

As noted, we obtained adjusted RV data from for several business units and arrived at an aggregate RV of $8.3B for the assets. In summary, we identified four estimates of the RV of the Agency’s assets for 2007/08: • $7.1B recorded in 2000 but still used in internal plans, analysis and reporting • $7.8B aggregated from business unit LTCPs in 2007/08 and 2008/09 • $8.3B from the adjusted AMS data we developed for the evaluation, and • $10.5B from the Real Property Branch’s adjustments to the 2000-recorded value based on inflation and new or missed assets. Appendix H summarizes the various estimates of RV by business unit including those from the 2000 LTCP while yearly estimates from Real Property Branch are shown in Appendix M.

We did not determine the “real” CRV of the Agency’s assets from these various estimates but noted that obtaining periodic CRVs from systematic review of assets and then inflating this value over some years, before reassessing assets on the ground, is typical of how most organizations determine CRV (Cable and Davis 2005). For this reason we think that the Real Property Branch estimate of RV is closer to the real value than the other estimates that do not take systematic account of inflation and/or missed assets in the system, although the Real Property Branch estimates also have some limitations (see footnote 8).

For purposes of describing assets, RV and condition ratings by categories, types or programs we have relied on the AMS data constructed for the evaluation since the Real Property Branch estimates were not applied to individual assets. We return to some of these aggregate RVs for the Agency in the performance section of the report. Table 5 shows the RV of the Agency’s assets for ten of the eleven core asset categories shown in Table 4. We did not include the category “fleet, heavy equipment and boat” in most of our analysis since many assets in this category were missing replacement values. In 2000, the category accounted for $94M in RV or just over one percent of the RV for the portfolio. Table 5 Number of Assets With RVs and RV By Asset Category Asset Category ($ Millions) Recorded In% Increase From 2000 Inventory 2000 2008 Count RV Count RV Count RV 1.

Bridges (road, trail bridges and structural culverts) 356 171 472 209 33% 22% 2. Buildings (residential, office and administration, public use, operational and general use, other) 5,108 1,177 5,667 1,437 11% 22% 3. Equipment (office furniture and fixtures, scientific and laboratory, woodwork, metal, trade and special industry) 1,567 32 1,727 66 10% 106% 4. Fortification 247 438 267 620 8% 42% 5. Grounds (parking, campgrounds, trails, day use, golf courses, signs, monuments & plaques) 3,636 913 4,013 1,071 10% 17% 6. Highways (national and provincial numbered highways and associated bridges) 124 1,012 136 974 10% -4% 7.

Marine (Dams, locks, wharves, walls, breakwaters, navigation channels, heritage vessels) 974 1,758 1,118 2,172 15% 24% 8. Presentation (audiovisual and on-site educational displays) 904 100 902 114 0% 14% 9. Roads (rural, urban, access, non-public roads) 722 1,133 750 1,266 4% 12% 10. Utilities (potable water systems, wastewater systems, electric power systems, solid waste systems, radio communication systems, underground storage tanks) 794 308 948 379 19% 23% Sub Total 14,432 7,040 16,000 8,309 11% 18% 11. Fleet, Heavy Equipment & Boat (construction equipment, boats, passenger, light, medium and heavy duty trucks) 2,142 94 Total 16,666 7,135 16,000 8,309.

Notes: Counts are based on assets with non-zero replacement values. Planned assets, those with no category, or an indicator of disposal have been excluded from the calculations although some of these have recorded replacement values. Sources: 2000 data were based on the MS-Excel spreadsheet replicating the data reported in the 2000 Agency LTCP. 2008 data were based on the AMS data file constructed from business unit web-based reports available to the units in August 2008 and data gathered for five units on revised replacement values. RVs for individual assets in 2008 ranged from a low of $300 to a high of $116.6M for a highway in Western Canada. Overall the number of inventoried assets with replacement values increased by 11% since 2000 and the estimated replacement value of the assets increased by 18%.

Dividing the 2008 inventory of assets with RVs into those above or below $10K in RV yielded 12,498 assets with replacement values over $10K, accounting for all but $10.1M of the $8.3B in estimated replacement value. Geographic Distribution of RVs The estimated RV of the Agency’s assets is not distributed equally between regions or business units. Sixty-six percent of the RV of the Agency’s assets is found in Eastern Canada (i.e., using RVs reported in business unit LTCPs Appendix H). Five-business units account for approximately 50% of the RV of the Agency’s assets (i.e., one or two in the West and three or four in the East depending on which RVs are used). Fourteen business units, out of 34 units reporting RVs for their assets in LTCPs, account for just over 80% of the Agency’s total RV.

Condition Ratings by Category Condition ratings of assets provide critical information for decision-making related to risk management, operation, maintenance and re-capitalization or divestiture of assets. Condition ratings should translate into a detailed report of the corrective needs and current deficiencies associated with an asset as well as related costs ( TBS Guidelines on Real Property Management). Condition ratings of assets may become increasingly important in the future for government public reporting (see Public Sector Accounting Board’s Draft Statement of Recommended Practice, July 2008, Assessment of Tangible Capital Assets).

Parks Canada’s approach to condition rating, in use at least since the early 1990s, was developed in cooperation with PWGSC ( see Re-capitalization Management Process: Operations Manual and Trainers Tool Kit, June 1994). In theory, each asset is rated on the dimensions shown in Table 6. These dimension ratings are combined, usually by taking the poorest rating across the dimensions, to arrive at an overall asset condition rating. In this system, each asset falls into one of four categories ranging from A=good or normal condition or operational capacity and low-risk, to D=Closure, high-risk, major deterioration, or non-operational state. The categories are in turn linked to time frames for major repair/re-capitalization of the asset, where good condition typically means that no major work is required in the next five years, fair means that work is required within three to five years, and poor means that work will be required within one to two years.

A rating of closure implies that the major/repair re-capitalization costs are likely to be equal to or in excess of the asset’s replacement value. In the 2000 LTCP, it was noted that proper asset life cycle management and cost efficient practice would require maintaining all the assets in good condition.

Table 6 Types of Asset Condition Ratings Used by Parks Canada Dimension Description Health and Safety The stability and performance of an asset or its components, as well as their condition and any potential threat they pose to the safety and health or the user or employee (i.e., extent of exposure to hazard and non-disabling or disabling injuries). Risk to Asset The consequence to the rest of the asset or adjacent assets if the condition of an asset or its components is not addressed (i.e., extent of loss of stability or performance) Level of Service The ability of the asset or its components to perform the role for which it was designated and to the level or quantity of use for which it was intended (i.e., extent of restrictions on normal functions and operations) Urgency The urgency of the asset’s condition rating for one or more of the other three criteria Overall Asset Condition Based on the combined H&S, RTA and LOS ratings. Source: Parks Canada Re-capitalization Management Process: Operations Manual (1994) Table 7 shows the condition profile of the Agency’s assets based on overall asset condition ratings expressed as a percentage of RV in each condition.

Note that as with RV, condition ratings of assets are not necessarily current. Appendix G shows a graph of dates for recorded condition ratings in the AMS. Counts in Table 7 are based on assets with both replacement values and conditions ratings. Notes: Counts are the number of assets with both a condition rating and a RV. Sources: 2000 data were based on the MS-Excel spreadsheet replicating the data reported in the 2000 Agency LTCP.

2008 data were based on the AMS data file constructed from business unit web-based reports available to the units in August 2008 and data gathered for five units on revised replacement values. At the portfolio level, the percentage of the recorded RV of the Agency’s assets associated with overall good condition ratings has dropped since 2000 and the percentage of asset replacement value associated with fair condition has increased. However, as noted previously, replacement values are not necessarily current and it is not possible to match assets recorded in 2000 and in 2008 to compare the profile of the same asset group over time. Therefore, comparisons of 2000 and 2008 profiles, including some positive changes at the category level, should be treated cautiously and might reflect either real improvement or deterioration of a fixed group of assets, and/or addition or deletion of new assets. Removing assets with replacement values of less than $10K, or the types of assets that Real Property Branch has suggested be deleted from the AMS (see footnote 3), does not change the overall asset condition profile shown in Table 8. The Agency’s approach to condition ratings represents a technical condition assessment that should link to the technical service life of the asset (Vanier 2000).

Another, widely recognized approach to reporting asset condition is the facility condition index ( FCI). The FCI is simply the ratio of deferred maintenance (i.e., maintenance not performed when it should have been or was scheduled to be, and which therefore is put off or delayed for a future period) over the CRV of the assets for the period.

The ratio can range from 0 to 1 with zero indicating no deferred maintenance and one indicating that deferred maintenance is equal to the CRV of an asset or assets. The FCI is a financial measure of asset condition rather than a technical condition assessment although it is possible to use technical assessments to arrive at an estimate of deferred maintenance and thereby link technical and financial measures of condition. Cable and Davis (2005) reported that the FCI was the most widely used asset indicator among surveyed US federal government departments and agencies. Many organizations set target values for the FCI at the asset portfolio level and have developed standards using the ratio as an index of asset condition. For example, the Council of Ontario Universities and the Ontario Association of Physical Plant Administrators define a FCI ratio of less than.05 as indicative of good condition assets.

A current ratio of between.05 and.10 is indicative of fair condition assets and above.10 represents assets in poor condition. In the United States, the National Parks Service has an FCI target of.14 for all regular assets,.10 for buildings, and.05 for priority buildings. The National Nuclear Security Administration had targeted improving the FCI for its mission critical facilities and infrastructure from less than.10 in 2004 to less than.05 by 2013. Linking asset condition to FCI ratios also implies that an organization can “carry” a certain amount of deferred maintenance and still have its assets within a target range. For example, with a RV of $8.3B the Agency could have deferred maintenance in any one year of $415M and still have an overall good condition asset profile.

However, since deferred maintenance is cumulative, the $415M would have to be cleared the next year along with new maintenance requirements otherwise the deferred maintenance continues to increase each year. The FCI provides additional information on asset conditions beyond Parks Canada’s current approach to rating condition of assets. It provides a more sensitive measurement scale compared to the current system (i.e., the FCI can take any value between 0 and 1 compared to the current approach that provides only four condition options), it is directly linked to an asset or assets investment requirements (i.e., consistent with TBS Guidelines), and it can serve as a basis for comparing conditions and performance between organizations and against standards and targets.

Parks Canada has discussed using the FCI but has not yet agreed to adopt the measure. We examine possible FCI ratios for the Agency’s asset portfolio and what these imply about asset condition in the performance section of the report below. Facilities The preceding analysis is based on assets as recorded in the AMS. In practice, individual assets often function as components of integrated groups or facilities. For example, a campground facility may appear in the AMS as separate components consisting of grounds, washrooms, water and/or electrical utilities to service the sites, and an access road.

Highways may appear with the road itself as one or more assets with additional associated structural culverts, bridges and maintenance equipment all inventoried as separate assets. In some cases, individual assets may support more than one facility or type of facility (e.g., utilities or roads that support both contemporary buildings and a designated national historic site). In theory, groups of assets can be aggregated and the replacement values and condition of the facility calculated based on a straight averaging of the component results or a weighted averaging of the component results (i.e., the latter is often done by engineers in assessing the standard subcomponents of a building such as the building shell, its roof, windows and doors, heating and electrical systems, etc.). The AMS has fields for recording facility ID, numbers and descriptions. As of January 2008, there were 14,082 assets with an associated facility ID (i.e., 75% of all assets in the system) representing 1,426 unique facilities.

Business units are responsible for classifying assets into facilities. The basis of this classification is not always clear and standard reports from the AMS available to business units do not include reports based on facilities. For these reasons we did not conduct a separate analysis of facilities. However, it is worth emphasizing that the number of actual facilities managed by the Agency is certainly a small percentage of the number of individual inventoried assets. Secondly, for some management purposes asset information and performance measurement at the facilities level is likely as important as asset specific information (e.g., the cost of operating and maintaining a campground facility rather than costs of each subcomponent). Contemporary Assets The 2000 and 2005 Agency LTCPs segmented the asset inventory in various ways to distinguish cultural assets from other types of assets (e.g., from contemporary and presentation assets in 2000).

Although some description was provided of the different asset segments, it was not sufficient to allow us to independently replicate the segmentations. The 2000 and 2005 LTCPs included the 756 historic objects and reproductions, in-situ archaeological resources and archaeological collections shown in Table 4 as part of Agency’s cultural resources. It is known that the inventories in the AMS are incomplete (i.e., other inventory systems in the Agency show 1,554 commemorative plaques and cairns, 212,425 individual historic objects, and in excess of 30 million archaeological resources including both objects and situ-archaeological resources). Real Property Branch has suggested removing these assets from the AMS and we have not included them in our analysis of cultural resources. The remaining cultural assets that should be in the AMS are those in the core assets categories in Table 4 that have been designated as a cultural resource under Parks Canada Cultural Resources Management Policy (1994), referred to as having a CRM designation and/or those assets with a significant heritage value as designated under Treasury Board Policy on Management of Real Property, referred to as Federal Heritage Building Review Office or FHBRO designation. A CRM designation applies to any resource having a historic value including landscapes, archaeological and historic objects and records but also any man-made structure including the core assets types shown above.

All resources administered by Parks Canada are to be evaluated for their historic value and designated as either level one (i.e., having national historic significance), level two (i.e., having historic value but not at a national level), or as having no historic value. According to Treasury Board Policy on Management of Real Property, all federal buildings 40 years of age or older must be evaluated in order to protect those which have significant heritage value. Based on consideration of historical association, architectural significance and the building’s contribution to its current environment, a building may be designated as “classified”, or “recognized” with the former designation implying a higher level of importance. In principle, all FHBRO designated buildings administered by Parks Canada would also have a CRM designation. Table 8 summarizes information on overall counts of assets with a CRM and/or FHBRO designations for the 2000 and 2008 data. FHBRO designations were not available for 2000. Table 8 Number of Cultural Resources and RV by Asset Category Asset Category ($ Millions) Recorded In 2000 Recorded In 2008 Count with CRM Designation RV N=1,532 Count With CRM Designation Count With FHBRO Designation RV N=2,004 Bridges 22 38 24 38 Buildings 721 401 694 352 440 Equipment 3.2 Fortification 215 393 228 42 585 Grounds, Monuments and Plaques 524 84 451 8 96 Highways 0 Marine 160 782 159 654 Presentation 25 9 53 2 21 Roads 11 8 Utilities 10 5 No Category 85.03 Planned Asset 260 2 8 Sub Total 1,667 1,707 1,978 406 1,856 Total Unique Assets 1,667 2,004.

Notes: Counts are the number of assets with the designation. The “N=” in the RV column is the number of assets associated with a category and having a RV. Sources: 2000 data were based on the MS-Excel spreadsheet replicating the data reported in the 2000 Agency LTCP.

2008 Data were based on AMS data file constructed from business unit web-based reports available to the units in August 2008 and data gathered for five units on revised replacement values. In the 2008 data, all but 26 of the FHBRO designated assets had a CRM designation so that the total number of unique cultural assets identified in the AMS was 2,004. The number of FHBRO designated buildings owned by Parks Canada in the AMS does not match the number recorded independently by the Federal Heritage Building Review Office (i.e., 512 as of March 2007 ). Whether these additional buildings are currently inventoried in the system and not flagged as designated, have incorrect flags, or are miscoded in data entry, is not known. There is no readily available independent source of assets with a CRM designation, so it is not possible to validate the accuracy of the CRM inventory. The 1,667 cultural assets in 2000 represented 11% of the Agency’s core assets (i.e., not including fleet) and 24% of the replacement value of the asset portfolio. In 2008, the 2,004 cultural assets also represented 11% of the core non-fleet assets and 22% of the replacement value of the asset portfolio.

Table 9 shows the condition profile of the cultural assets including those with no category and planned assets in 2008. Notes: Counts are the number of assets with both a RV and a condition rating Sources: 2000 data is based on the MS-Excel spreadsheet replicating the data reported in the 2000 Agency LTCP. 2008 data is based on the AMS data file constructed from business unit web-based reports available to the units in August 2008 and data gathered for five units on revised replacement values.

As with the results shown in Table 6 for the whole asset portfolio, the condition profile of cultural assets is somewhat poorer in 2008 compared to 2000. Comparisons of the overall profile of cultural assets to all other assets also show a poorer profile of cultural assets (i.e., the overall profile of all other assets in 2008 was 27% good, 42% fair, 29% poor, and 2% closed compared to the totals for 2008 in Table 9). Again, comparisons over time and between the cultural assets and other assets should be treated cautiously because of the known incompleteness of the inventory, out of date values and the changes in the inventory over time. Assets by Program Activity In 2000, assets in the inventory were linked to product service packages ( PSPs) in the asset system. PSPs represented what are essentially sub-activities in the current Program Activity Architecture ( PAA) structure used by all government departments and agencies for planning and reporting. We mapped these PSP codes to the existing programs of the Agency in order to compare asset data over time.

In the current system, unlike the data in 2000, an asset can be assigned on a percentage basis to more than one program activity or sub-activity (i.e., an asset can support both the visitor service program and internal service delivery if a visitor centre and administrative offices are located in the same facility). Table 10 shows the results for asset counts and asset replacement values. Table 10 Number and Replacement Value of Assets By Program Activity Program Activity ($ Millions) Recorded In 2000 Recorded In 2008 Counts RV N=16,392% Of RV Counts RV N=15,988.2% Of RV Heritage Places Establishment 20 8 0.1 10.4 0.01 Heritage Resources Conservation 4310 1,936 27 4,122 2,981 40 Public Appreciation and Understanding 1780 381 5 983 114 2 Visitor Experience 7061 2,889 41 7,827 2,735 37 Townsite Management 0 209 3 392 211 3 Highway Management 0 1,173 16 409 810 11 Internal Service Delivery 3382 517 7 3,126 510 7 No Activity Identified 1197 Sub Total 17,750 7,114 16,869 7,361. Notes: Counts are the number of assets associated with a program.

The “N=” is the number of assets associated with a program and having a RV. Sources: 2000 data were based on the MS-Excel spreadsheet replicating the data reported in the 2000 Agency LTCP. 2008 Data were based on the AMS data file constructed from business unit web-based reports available to the units in August 2008 and data gathered for five units on revised replacement values.

The table suggests that the percentage of the replacement value of the assets associated with each program activity has shifted over time so that a much higher percentage is now associated with the heritage resource conservation program and somewhat less with public appreciation and understanding, visitor experience and highway management. Table 11 shows the condition profile of assets by program activity for the two time periods.

Notes: Counts are the number of assets with both a RV and a condition rating Sources: 2000 data were based on the MS-Excel spreadsheet replicating the data reported in the 2000 Agency LTCP. 2008 data were based on the AMS data file constructed from business unit web-based reports available to the units in August 2008 and data gathered for five units on revised replacement values. Again it appears that the condition profile of assets associated with each of the Agency’s program activities has shifted over time.

It is important to note that the number of assets associated with a program has dropped significantly since 2000 (i.e., 92% of the core assets in 2000 were associated with a program whereas only 66% of the core assets in 2008 were associated with a program). It is not clear to what extent changes in the number of assets associated with particular program, and by extension the RVs and condition ratings, reflect missing data verses reconfiguration of the program activities.

We know for example that the Agency changed the definition of the public appreciation and understanding and visitor experience programs in 2007/08 to move all activities and services associated with on-site visitors to the visitor experience program (e.g., personal and non-personal interpretation sub activities previously associated with public appreciation and understanding are now linked to visitor experience). Given this change we would expect that fewer and fewer assets would be associated with the Public Appreciation and Understanding Program over time. We also heard other concerns about how assets are associated with programs. For example, current practice is to associate roads other than highways with the visitor experience program. This may not be appropriate in all cases. With the restructuring of the Agency’s PAA, some aspects of the historic canals are associated with the conservation program, some with visitor experience program and some with the throughway and townsite management program. Currently, canal assets (including dams and water level control assets) are largely linked with the conservation program.

The Agency has not undertaken a comprehensive review of how its assets are associated with its revised PAA and whether the current data is appropriate. For all these reasons, the nature and significance of the changes over time in the asset profile associated with particular program activities are ambiguous.

High-Risk Assets In its 2000 LTCP, the Agency identified significant risk to health and safety (i.e., high exposure to health hazards and/or risk personal injury) as its top investment criteria. In the 2005 LTCP, it set a specific target to reduce the percentage of assets requiring investment because of health and safety concerns (discussed in more detail in the performance section of the report). Recently, the concern with health and safety has focused particularly on bridges and dams in response to widely reported failures in other jurisdictions. A special effort was made to compile an up-to-date inventory of existing bridges and dams (November 2007). This inventory contains 494 bridges (i.e., 41% highway bridges, 29% road bridges, and 30% trail bridges), and 302 dams. The AMS includes more bridges and dams than the recent inventory. Bridges in the AMS data shown in Table 4 are distributed between the bridge and highway asset categories.

Dams are all part of the marine category. Of the 302 dams in the recent inventory, 63% were rated in good or fair condition (based on number of assets, not percentage of RV associated with condition ratings).

Only three lacked condition ratings. For bridges, 20% lacked condition ratings and 57% were in good or fair condition (again reflecting number of assets by condition). These condition ratings are somewhat poorer than those recorded in the AMS based on a somewhat different inventory (i.e., 70% dams good or fair and 65% bridges good or fair). The recent inventory also provides additional data on the date of last inspection, information on who performed the inspection, other kinds of condition ratings for bridges, and other notes and observations. Thus, it serves as part of the Agency’s due diligence requirements for documenting high-risk assets and as a baseline for future planning. The recent inventory has not been used to update the information in the AMS.

It was also reported that the Agency will undertake to update the inventory again based on the recent definition of bridges based on its January 2008 Directive for Design, Construction, and Inspection of Vehicular and Pedestrian Bridges. Summary of Asset Inventory, RV and Condition Ratings In summary, what constitutes an asset varies across different policies, directives and plans and between asset systems. There are clearly many problems with the completeness and quality of the data in the existing AMS inventory. Known updates to asset information (e.g., dams and bridge data, business unit internal systems with updated RVs, results of the Asset Data Integrity Project) are not routinely used to improve the information in the AMS. The problems are widely acknowledged in the Agency.

Therefore, the Agency has at best an approximate understanding of what assets it owns, their condition and replacement values. Based on the imperfect data available for the evaluation, it appears that the inventory is growing over time. The reasons for the growth include adding existing assets to the systems, changing the way an asset is represented in the systems and/or acquisition/disposal/and reclassification of assets. It is also probable that some assets still in the AMS inventory have been disposed of but are not recorded as such. We found at least four estimates of the RV of the Agency’s assets in use in 2007/08. It is likely that the estimate based on adjusting for inflation and missed assets (i.e., $10.5B as of March 2008) is closer to the real value than others (i.e., from $7B to just over $8B).

However, there is no way to determine the precise contemporary RV of the Agency’s assets given existing replacement values. Based on the asset inventory we constructed for the evaluation, the RV of the Agency’s assets was $8.3B. This represented an 18% increase in the RV between 2000 and 2008. Virtually all of the estimated replacement value is accounted for by 70% to 75% of the inventory with current replacement values over $10K.

The percentage of the inventory identified as cultural assets in the system (i.e., defined as assets with CRM and/or FHBRO designations), has remained more or less the same over time, as has the percentage of the overall replacement value represented by cultural assets. The number and replacement value of assets associated with program activities has changed markedly over time. Condition ratings of assets provide critical information for decision-making related to risk management, operation, maintenance and re-capitalization or divestiture of assets and are likely to become increasingly important in government public reporting based on the Public Sector Accounting Board’s draft statement of recommended practice with respect to tangible capital assets. Conditions profile of the Agency’s inventory of assets has become slightly poorer over time, with cultural assets having a slightly poorer profile than other assets in the inventory both in 2000 and in 2008.

The meaning and significance of these changes is uncertain given the basic problems with the inventory. Finally, we noted that the Agency’s approach to condition rating of assets is based on technical assessments of condition rather than financial assessment of condition as measured by the facility condition index (i.e., the FCI). The FCI provides additional information including a more sensitive measurement scale (i.e., ratios can range along a continuum from 0 to 1), a direct link to the cost of repair/maintenance, and a basis for comparing asset conditions to other organizations.

There have been internal discussions in the Agency of the meaning and applicability of the concept for the Agency’s assets but no decision on whether to adopt and implement the index. Activities, Outputs and Reach Key asset activities include planning and prioritization of asset investments, monitoring progress, acquiring, operating, maintaining, renewing and/or disposing of assets and maintaining good asset information.

Asset Management Planning and Long-Term Capital Planning The Agency does not produce asset management plans. By this we mean it does not produce plans matching an analysis of existing assets (supply, condition, costs) to projected asset demands based on corporate and business priorities and service delivery strategies and then translating these into specific strategic acquisition, renewal, operations and maintenance and disposal plans. Instead the Agency’s asset planning largely consists of producing business unit LTCPs each year as part of the annual cycle of overall business unit planning and an Agency LTCP every five years. LTCPs focus on describing major repair and capital projects to be undertaken over a five-year period. As discussed below in the section on relevance, other planning processes particularly management planning may also impacted on asset planning. Business unit LTCPs are an important output of the asset management process as the mechanism for translating the Agency’s overall investment objectives into concrete on-the-ground projects.

They also serve as a key input into the analysis and reporting by the DGs Eastern and Western/Northern Canada to the Finance Committee of the Executive Board. There have been four cycles of business unit LTCPs in the time period covered by the Agency’s 2005 LTCP (i.e., plans starting in 2005/06 and continuing each year through the most recent plans starting in 2008/09).

All units have produced LTCPs each year although not all units complete all elements of the template. The LTCP is a spreadsheet template where each funded project is listed with a description, the park or historic site where the asset(s) is/are located, its link to one or more program activities, the source of funds for the projects, the names of the assets involved, whether the asset(s) have a CRM designation, prior years investment, planned investments by year for each of the five years covered by the plan, anticipated future year investment and the total estimated cost of the project. A separate listing and detail is provided for projects for which no funding source is currently available.

The LTCPs include a summary table showing the RV of the unit’s assets, its 65% investment target, planned investment as a percentage of these values and a line for reporting the aggregate maintenance and inspection expenditures for each year of the plan. Plans are usually prepared by December of the year preceding the start of the plan, and approved as part of the unit’s overall annual business plan in the January to March period.

Although an attempt was made in the first two planning cycles to link projects in plans with specific asset numbers, this was dropped in 2007/08. Listed projects now include those where a specific asset can be inferred from the projects title and others that are about classes of assets (e.g., renew signs) or costs for services (e.g., cost of a service agreement with PWGSC). At one time, plans also included the health and safety condition rating of the asset(s) related to the project. This has also been dropped. Sources of funding referenced in plans include more than the basic distinctions between A-base, Budget 2005 and revenue used in the 2005 Agency LTCP; and therefore, require some interpretation in order to link them to the overall plan.

The RV of assets in the unit and in some cases the 65% investment target shown in individual plans are often not consistent with other sources of the same information. Finally, we noted that LTCPs do not distinguish the major objectives of the listed asset projects (i.e., objectives in the sense of the investment framework shown in Table 3 such as major repair, functional improvement, addition of capacity, replacement or disposal of an existing asset). We review some of these issues in latter sections of the report. Monitoring of the plans and seeking approval for changes in the original 2005 LTCP targets is the responsibility of the DGs Eastern and Western/Northern Canada.

They report to and receive approval from the Finance Committee of the Executive Board. In practice, reporting has largely consisted of showing summaries of planned expenditures aggregated from business unit LTCPs for the upcoming five-year period for A-base (including revenue), Budget 2005 and special purpose funds. There has been no attempt to report systematically on actual expenditures against plans (i.e., the July 2008 presentation does include expenditure data for some projects supported by Budget 2005 funds but this is incomplete and is not linked to plans).

Presentation and approval of changes in investment targets has focused on the Budget 2005 funds (e.g., seeking approval to advance funds for the 2010/15 period for use in the 2005/10 period; changing the profile of spending Budget 2005 funds by program activity for the 2005/10 period). There is no attempt to show how these changes in Budget 2005 investment plans affect the original overall investment plans in the 2005 LTCP. The approval process has also served to allocate Budget 2005 funds to program activities for the 2010/15 period. This provides some certainty to business units so that they can engage in long-term planning and project implementation (although not all of these funds have been allocated to projects particularly in the East). In effect, business unit LTCPs, in as much as they define future projects and spending intentions lead to a future Agency wide LTCP (i.e., a bottom up approach to Agency wide long-term capital planning). There is no analysis showing if, and how, these plans are coordinated with or lead to achieving the asset objectives in the Agency’s Corporate Plan (i.e., how planned future spending links to maintaining or improving the condition of cultural resources in the resource conservation program or the condition of assets associated with the townsite and throughway program).

In short, the Agency has established overall targets for the asset program (i.e., Corporate Plan condition targets) but these are not linked to an analysis of current inventories, conditions and costs of the targeted assets and are not translated into strategic acquisition, renewal, operations and maintenance, and disposal plans. The Agency does have a well-defined process for producing business unit level LTCPs that prioritizes investment projects and could with some modification be used to distinguish acquisition, renewal and disposal projects. However, there is no analysis or monitoring to show that the bottom up nature of this process results in projects consistent with the Agency’s corporate targets for asset conditions in either the short or long-term. Monitoring of the plans has largely focused on planned use of one funding source (Budget 2005 funds). Acquisitions and Disposals One simple measure of the extent of asset activity is the number of assets acquired and disposed of over time. Unfortunately, there is no straightforward and reliable way to determine this relatively simple statistic given the Agency’s current information systems.

The AMS does include a date for year of acquisition. But this data should be treated cautiously. Thirty-nine percent of the assets representing 30% of the RV of the portfolio were missing the date for year of acquisition in the database we constructed for the evaluation. In addition, it is possible that in some cases date of acquisition is a report of the date on which an asset was inventoried and some relevant assets are currently captured in the AMS.

Based on the limited data we had available in August 2008, we found 1,296 assets (not including the fleet, heavy equipment and boat category) were acquired since 2000. These were mostly buildings (26%), equipment (21%), plaques, general grounds, day use grounds, parking areas, trails (17%), utilities (14%), and roads and presentation assets (16%) with a collective RV of $295M. Our January 2008 extraction of fleet data showed 1,168 vehicles with an acquisition date subsequent to 2000 with the majority being light trucks, passenger vehicles and miscellaneous equipment. This totalled to approximately 2,400 assets over seven years or on average 352 assets per year with approximately half of these on average being fleet related assets. The AMS also has a field to show if an asset is closed (i.e., the equivalent of disposed). As of January 2008, 273 non-fleet, and 141 fleet assets (i.e., 414 in total) were shown as closed.

Again, more than half of the closed non-fleet assets were buildings (149), followed by assets in the grounds monuments and plaques category (45) and equipment (30). The RV of the closed non-fleet assets was approximately $60M. We also attempted to document asset acquisitions and disposals in the SAP inventory of high-value assets. The number of inventoried assets has increased over time (i.e., 15,295 in March 2002 to 16,199 in March 2008 or by 904 assets, see Appendix I for details). This is a net result of adding 1,657 assets with new asset identification numbers and subtracting 931 assets whose identification numbers were removed since 2002. Unfortunately, adding and subtracting asset identification numbers occurs both with real acquisitions and disposals but also when assets are transferred between asset categories. We were not able to identify a practical way to separate these types of transactions without detailed tracing of electronic and paper records for each asset.

In summary, it is clear the inventory is growing. But it is impossible to determine how much of this change is due to adding existing assets to the inventory, real acquisitions and disposals and changes to the classification of assets in the system. It is likely that the vast majority of acquisitions and disposals involve contemporary assets particularly in the categories of buildings, fleet, plaques, general grounds, day-use grounds, parking areas, trails, and utilities and to a lesser extent, roads and presentation assets. Inspection and Maintenance Another core activity of the asset management program is inspection and maintenance. Inspection ensures that assets continue to comply with various legal codes and standards (i.e., fire code, dam and road safety standards, water quality standards, etc.). Maintenance is a more general term and can include inspection and work to keep an asset in normal operating condition outside of strict code compliance requirements. The AMS has a capacity to plan and monitor code compliance and preventative maintenance work.

It contains a list of national maintenance standards and requirements developed by PWGSC after a review of relevant codes and legislation and last updated in 2006 (i.e., currently 249 standards). These standards concern equipment found in buildings, and are mainly related to the protection of staff under the Canadian Labour Code. Each business unit with relevant equipment (i.e., 142 units such as national parks, national historic sites, service centers, townsites, etc) is supposed to complete an inventory, for inclusion in the AMS, linking the equipment to assets and/or facilities. Table 12 shows six categories of equipment for which code compliance standards exist and the AMS inventory counts for each category.

Table 12 Categories of Equipment Related to Buildings Requiring Code Compliance Inspection and Counts of Inventoried Equipment in the AMS Categories Examples Count Architectural Chimneys and stacks, exterior stairs and railings, ladders, overhead powered doors. Source: Spreadsheet produced by Real Property Branch from AMS (October 2008) The AMS also offers the capacity to include Parks Canada guidelines or business unit specific preventive maintenance standards (i.e., 191 as of October 2008 including for example Parks Canada’s potable water standards. The AMS currently shows 1,197 pieces of equipment linked to Parks Canada and business unit standards.

The system does not currently include Parks Canada’s recently developed bridge and dam inspection standards and the soon to be developed wastewater directive standards. These kinds of asset related standards arise from due diligence requirements and not from code compliance concerns. The AMS was developed primarily with the intention of capturing code compliance related to equipment in buildings although reporting on inspections related to assets is possible. Several units do not have code compliance equipment inventories in the AMS (i.e., five out of 142 where an inventory would be expected). Comparisons of the counts of equipment requiring code compliance inspections in the AMS with counts produced from spreadsheets developed for four business units in the mountain park block found that in three cases the AMS has a substantially larger inventory than the spreadsheets, and in one case the spreadsheet contains substantially more equipment than the AMS. It is not clear which counts are more accurate. For these four business units more than 30,000 inspections are required each year, suggesting that for the Agency as a whole the number would be much higher.

A business unit can use the AMS to create work orders to track inspection and maintenance. Since equipment is linked to assets, once an asset or facility is identified in a work order the system automatically identifies the associated equipment and tells users the kind and frequency of inspection required. Inspection frequencies can range from weekly to once every 12 years. The inspections are conducted by skilled trades people in the field unit (i.e., plumbers, electricians or carpenters), by general works personnel, or staff working at the location, or contracted out. Once the requirement and frequency are identified the user can schedule the work in the system (i.e., which week during the year) and can follow-up to show if the planned work was cancelled, completed, deferred, or partially completed.

Use of work orders also allows the unit to track costs of inspection and maintenance work. The system can produce a report showing labour, equipment and goods and services costs associated with different types of inspection and maintenance functions and totalled for the year. A review of the system information for 2007/08 (Real Property Branch, July 2008) found that 63% of the 142 units with code related equipment inventories were using work orders in the system, 60% were actually planning the work, and 49% were reporting on the work. The review did not assess the extent to which work orders, planning or reporting was done for the complete inventories, only whether it was done for at least some of the assets. In summary, we found a general consensus among managers we interviewed on the importance of having good information on inspection and code compliance/due diligence requirements.

For the Agency as a whole, the required number of code compliance inspections likely numbers in the tens of thousands annually with additional due diligence requirements and internal inspection standards as well. The AMS has the capacity to track and record this information and includes documented national code compliance requirements. However, the interest in having the information has not translated into all units maintaining complete equipment inventories in the system or using the national system to create work orders for inspection and maintenance, schedule the work and report on results of inspection and maintenance activities. This is not to say that the work is not done.

In some cases, in-house paper or electronic systems are used in place of, or to supplement, the AMS. However, at a national level, the information is incomplete and poses a risk that lack of compliance may lead to health and safety, legal or reputational risks for the Agency. Maintaining Data In our interviews with managers in the field, we found consensus on the importance of having an asset inventory and recording some basic information such as the RV and condition of the assets. As noted, all managers also support having good information on legal and statutory requirements for inspections and maintenance. However, for most managers, both in the field and in the Real Property Group in national office, updating the current asset information is not a priority. At the field level, managers we spoke to were familiar with the assets they manage on a day-to-day basis and do not rely on system information.

A few field units have never used, or have given up using, the AMS altogether and rely on in-house systems or databases. We were told that business units have been directed to maintain up to date information in the AMS but this has not been followed-up to ensure compliance. A common theme in our interviews was the need for additional personnel to populate and keep up-to-date any asset management system. The Agency recognized in the 2005 LTCP that it required improved information on assets to effectively direct efforts to the highest priorities, ensure vigilance in monitoring and oversight, and to make strategic decisions leading to the renewal of the asset base. Finance Committee of the Executive Board (November 2006) approved in principle a plan to acquire a new more comprehensive system to replace the existing AMS. The new system will be a commercial of the self system implying it will have a track record of successful implementation in other organizations and vendor based support and training compared to the current system which was built within the Agency. The system is intended to have both inventory and work order components and capture the kinds of inspection and due diligence requirements reviewed above as well as investment requirements, capital project planning and reporting, and energy monitoring.

The cost of acquiring the system over the period April 2007 to March 2010 was estimated at $3.5M including software, maintenance, data conversion, and training, with $345K ongoing annual costs. As of August 2008, the Agency was awaiting PWGSC approval to issue a Request for Proposals to acquire a new system. Assuming the new system is acquired by January 2009, it is expected that it will take until approximately April 2011 to fully test and implement the system in all business units with reasonably good core data. In the meantime, the Real Property Branch reports that it has begun work to identify existing business unit asset inventories and has begun mapping asset business processes.

In summary, managers at the business unit level are ultimately responsible for assuring that asset information in the national systems is up-to-date. In some cases the information can be entered directly in the systems while in others it must pass through national office before being entered in the system.

Managers agree that basic asset and code compliance inventory is important but have not made keeping this information up-to-date a priority. Direction to maintain and update information in the existing system has been given but compliance has not been monitored and enforced. The Agency has recognized the importance of good information and that it needs to improve its information base. Addressing this problem has largely focused on acquiring a new real property management system. This will be the Agency’s third asset related information system since 2000. Each system has provided, or should provide, improvements over the previous one. There is a risk that simply acquiring a new system, one with much more capacity for managing multiple aspects of asset operations, maintenance and renewal, will not address some of the fundamental problem of committing to and ensuring the long term completeness and quality of the core asset information.

Reach of LTCP Expenditures LTCP expenditures include both major repair and true capital expenditures. This is the major expenditure stream in the asset management program (i.e., approximately 75% of the estimated expenditures in 2007/08). Activities associated with this component of the program include developing project proposals and plans, assigning work to internal staff, contracting with PWGSC or others if required, implementing the project, monitoring or supervising the work and ensuring that the final product conforms to codes, standards and design specifications. A basic measure of the reach of the asset management program would be the number of assets or facilities that are subject to major repair or recapitalization each year.

However, as noted previously, LTCPs do not link projects to individual assets or facilities and therefore cannot be used to determine the overall reach of the program (i.e., the number of listed projects in the 2007/08 plans varied from 847 in the first year of the plan to 508 in the final year). The Agency’s financial system does not link capital expenditures to the inventory of high-value assets in the system. Another indicator of the reach of the LTCP expenditure component of the asset management program would be the number of partners that are engaged in supporting asset repair, renewal or acquisition. Again, the Agency does not have comprehensive statistics on this aspect of reach. A few projects in business unit LTCPs list partners or another specific organization as the source of funds for the project. We were uncertain as to the completeness and validity of this information, although it appears likely that the total number of partners involved in asset related projects is small.

Summary of Asset Management Activities, Outputs and Reach The Agency does not do asset management planning in the sense of linking service delivery and conservation objectives to an analysis of existing assets leading to defined acquisition, renewal, operation and maintenance and disposal plans. Instead it focuses on planning major repair and renewal projects ( LTCPs) as well as projects that business units would like to undertake but do not have the funding for.

The LTCPs do not provide complete information on the intended purpose of the asset investments (i.e., acquisition, renewal or functional improvements, disposal) and do not link investments with information on the condition of assets or asset life cycles. There is no process to ensure this bottom up project planning will achieve overall corporate objectives. There is little monitoring of the plans against actual expenditures. Most of the focus has been on monitoring and adjusting future plans for the Budget 2005 fund component of total LTCP expenditures. The Agency lacks good information on basic measures of most asset management program activities including: • The overall number of assets acquired and disposed of in a given period, • The extent of inspection and maintenance activities, and • The reach of the LTCP expenditure component of the program in terms of either the number of assets or facilities that are subject to interventions, or the number of partners engaged to support major repair, recapitalization or acquisition projects.

The Agency has recognized that it requires improved asset information and has launched a process to acquire a new information system. Acquisition of the new system is not anticipated for several months and will require more than two years of work before good core data are available for the majority of business units. In the meantime, the Real Property Branch reports that it has begun work to identify existing business unit asset inventories and has begun mapping asset business processes. Given the history of the Agency acquiring and abandoning asset information systems, there is a risk that the new system will face similar challenges in ensuring that information is maintained over the long term. Maturity of the Asset Management Program There are a number of models in the literature for evaluating the maturity of asset management function’s inputs, activities and outputs (e.g., governance, roles and responsibilities, policies, information systems, planning, acquisition and disposal, and performance measurement and management).

We did not formally evaluate the Agency’s asset management program against these criteria but did note that in several respects the Agency is at the early stages of a mature asset management program, despite a long history of managing assets. In particular, the Agency is still developing its understanding, and making readily available at a national level, information on the extent and nature of its asset inventory, the condition of assets, changes in condition over time, inspection and maintenance regimes and activities, total life cycle costs of assets and facilities (i.e., operations, maintenance and capital costs), and the objectives and outcomes of asset investments (i.e., as defined in Table 3). In addition to its internal use for asset management, it is likely that the Agency will face increasing pressure overtime to publicly report on this kind of information. As a consequence of not having this information, we concluded that the Agency’s overall national asset management focus was on operational aspects of asset management (i.e., getting funds to business units to respond to urgent needs and for “holding things together”).

It simply does not have the information to know if local decisions result in using assets as a strategic tool for driving achievement of the mandate and program goals. Evaluation Results Ensuring Assets Are Relevant The evaluation did not question the relevance of assets to deliver on the Agency’s mandate and program activity results or therefore the relevance of an asset management program per say.

Instead, we focused on two questions related to the relevance of the current program for addressing the Agency’s asset management challenges and objectives. First, we asked whether the Agency’s decision-making processes for asset investment support relevant investments for achieving government and program objectives/results (i.e., are the right assets being acquired/maintained, and are irrelevant assets being identified and disposed)? Second, whether the balance of investment between repair/capitalization and maintenance/basic asset management capacity is the most relevant response to the Agency’s fundamental needs and issues? Our focus was on the asset program as whole rather than on particular assets or assets within a particular business unit. Before addressing these two aspects of the asset program’s relevance, we reviewed management’s views on the relevance of the asset base. Views on the Relevance of Existing Assets and Investments There is implicit or explicit recognition in the Agency that not all current assets are relevant to the overall strategic objective and program activity goals.

This is reflected for example in efforts, some successful and others not, to devolve governance and administration in some townsites in national parks to forms of municipal government including transfers of major assets to the new municipal entity. Similarly, attempts have been made over the years to transfer responsibilities for major highways to other organizations since operation of this kind of infrastructure is not a core aspect of the Agency’s mandate. Although the Agency might not deem these assets to be high priorities in terms of mandate delivery, it should be recognized that there are major constraints on its ability to divest itself of these non-critical assets. The same situation can arise as well with certain national park establishment agreements where commitments were made to create a variety of infrastructure that in the current context may not be viewed as relevant or economically sustainable.

At the local level, many managers we spoke to can identify an asset or facility that they consider irrelevant to the Agency’s current or future needs. However, they view the vast majority of their assets as relevant and necessary. Managers for example may be responsible for many cultural assets that are important to the Agency’s mandate (e.g., the Eastern Ontario Field Unit) and have little flexibility to dispose of assets.

In many cases then, the issue is not whether assets are relevant but rather whether the choices managers make to invest in specific assets are the most relevant for advancing the Agency’s mandate and goals. In this regard, one of the most pervasive themes in our interviews with managers on the ground was the sense that many assets require urgent attention and are high priorities for some kind of repair or recapitalization work. Given this, the vast majority of expenditures on assets are, in their view, justified and the risk of irrelevant investment is low. The processes managers use to make these choices is reviewed in some detail in the next section. Finally, we hear from some managers that in cases where divestiture of an asset is possible and desirable, that the costs for doing this are not adequately appreciated and supported in the asset planning process, and that this can be a barrier to disposing of irrelevant assets (e.g., the priority is on asset acquisition and repair/recapitalization rather than costs associated with demolition and site clean up).

Decision-Making Processes to Ensure Relevance The Agency’s policy and directive framework for asset management implies a hierarchy of decision-making with respect to asset investment starting first with the question of whether there is a non-asset solution to a need or demand. If there is no non-asset solution, then an asset solution that addresses more than one aspect of the mandate is the preferred option.

Additional principles for investment can be seen as secondary to these considerations (i.e., once an asset is shown to be necessary and relevant to program objectives, then provision should be made in planning to ensure that its use and operation comply with appropriate legislation, guidelines and standards, and plans and that it can be sustained over its full life cycle). One factor that influences some asset decisions in some locations is the national park and national historic site management planning process. Each national park and national historic site is required, by legislation, to prepare a long-term plan for the site, covering a ten to fifteen year horizon.

The plans are tabled in Parliament. Stakeholder consultations are a required aspect of the planning process. Plans must be reviewed every five years and updated when required.

Management plans differ in the extent to which they deal with asset related questions. Some business units, Central Ontario is a good example, that are heavily asset dependent have management plans that focus extensively on asset management. Others plans provide broad outlines of future directions for the unit where the impacts on assets or facilities are indirect or very general. We asked managers in our interviews to what extent decisions about particular assets or facilities were constrained by the time frames and review requirements associated with management planning (i.e., did a manager have some flexibility to acquire, investment in or dispose of assets if it was not first identified in the management plan for the site).

In general, management plans were not seen as a major constraint to investing in or disposing of assets, although many assets or facilities (e.g., campgrounds) have specific stakeholders who may resist efforts to close a facility. The major decision-making tool for asset investment is the request for project approval ( RPA) form or a variant of it. The form was designed to reflect the considerations and criteria in the Agency’s Capital Planning Directive.

For each proposed project, a statement of the objectives, deliverables and a work schedule is outlined. There is further discussion of the implications of the project for health and safety, financial and legal liabilities, and investment urgency, as well as the relations to and impacts on program objectives, alternatives to the proposed assets considered, and consequences of delays. If the proposed project is less than $2M and no funding from outside the business unit is required to carry out the work, the decision to approve a project proposal rests with the business unit manager. In fact, all the managers we spoke to in the field characterised their process as consensual involving the whole management team for the unit to decide which projects to approve locally and which projects to propose for funding outside the unit. In practice, many investment decisions are made outside business units.

Managers must seek regional approval of projects valued at $2M to $10M. More importantly they must apply for funds provided in Budget 2005 to support projects in their unit. Again, this involves preparing an RPA, which are reviewed by one or more committees who make recommendations for approval by the DG Eastern or Western/Northern Canada. In the East, there is one committee of financial, asset and senior managers who review the proposals and make recommendations. In the West the process is somewhat more elaborate as sub-committees review proposals supporting particular program activities.

The committees forward recommendations to an overall committee that then makes recommendations to the DG for approval. In the Mountain Parks, there is an additional layer of committee structure including one for cultural resources and one for visitor experience, that also considers projects within the block based on RPAs, and who make recommendations for approval to the Executive Director of the Mountain Parks.

In addition to Budget 2005 funds, a review of funding sources cited in business unit LTCPs suggests, particularly in the West, a variety of other special purpose funds received by the Agency are used for particular asset investments (e.g., ecological integrity funding for national parks received in Budgets 2003 and 2005, funds from the Federal Contaminated Sites Accelerated Action Plan, or from the Federal House in Order Strategy or from other government departments such as Natural Resources Canada to make energy improvements in buildings). Each of these funding allocations likely involves review of project proposals outside the local business unit. Adding these sources of funds together with funds from Budget 2005, suggests that approximately three quarters of the overall planned spending in 2008/09 was reviewed and approved outside the business units, with a higher proportion in the West compared to the East. We were also told that some decisions are essentially made at a regional level.

For example, a finance committee decision to invest in renewal of signs resulted in the Office of the DG East essentially programming work across the region into individual business units LTCPs. Local managers, therefore, approve a portion of their asset investments based on criteria found in the Capital Planning Directive, and propose projects for approval outside the business unit based on these same considerations. Managers, in general, support these processes and find them useful.

There is some desire, particularly with Budget 2005 funds, to see them allocated over a longer time frame to allow for more certainty about future resources. The process is designed to allow managers some freedom within the general framework developed by the Agency to respond to local requirements and to make local business unit managers ultimately responsible and accountable for managing the assets in their unit. The major risk in this approach is that, despite the widespread use of the RPA form, and some regional or national approval of projects or LTCPs, that managers will be inconsistent in their application of the principles and guidance available in the Agency’s policies and directives. For example, managers routinely decided to invest in some cultural assets and not others given their evaluation of the importance of the asset for delivery of Agency and business unit goals. Whether this process is done consistently is not clear despite the kinds of coordinating mechanisms reviewed above.

In effect, the Agency lacks the necessary information to assure that LTPC expenditures contribute to a single strategic approach to asset management. Formal Processes for Determining Relevance of Assets As the preceding discussion makes clear, relevance is not a straightforward judgement of whether an asset or facility serves current goals or objectives. It involves a complex set of considerations of current and future program needs in relation to the mandate and changing environmental conditions (e.g., changing demographics of users), evaluation of non-asset solutions and the substitutability of assets, actual and future utilization rates, stakeholder relations and economic development and health and safety concerns, code compliance issues, and the function of the asset within the complete local service offer.

There are formal processes to assist organizations in making these judgements (e.g., Cable and Davis 2005). An example is the asset priority index ( API) used by the National Parks Service in the United States that ranks assets on a scale of 0 to 100 with higher scores meaning the asset is more critical in supporting the mission and strategic goals of the organization.

The index has two components or criteria: mission dependency and asset substitutability. Mission dependency is given more weight in the evaluation (i.e., 80%). Factors considered include the asset’s importance for the overall organizational mission or subcomponents of the mission such as resource protection, or recreational use (i.e., including statistics on use), geographic location of the asset in relation to local strategic goals or plans, ability to accommodate future changes in program direction, impacts on interaction with stakeholders, short and long-term program support functions and importance to the operations of a site. Asset substitutability (20% of the evaluation) is the degree to which a comparable substitute asset exists to fulfill the functional requirements or purpose of the asset being evaluated. Assets with noteworthy historic significance, those whose alternatives would come only at substantial cost, and assets that fulfill a function that could not be easily fulfilled by any other asset have low substitutability and would score high on this portion of the API. Many of these criteria overlap with the asset investment principles and criteria found in the various Parks Canada asset plans, policies and directives.

The difference is largely one of the extent of formal systematic assessment based on a common rating system, verses the current approach in Parks Canada which relies on managers applying informed judgement based on broad principles largely within the context of their own business units. There have been internal discussions in the Agency about implementing an API assessment, but no decision has been made about whether this is a useful and relevant indicator for the Agency’s assets. As with other kinds of performance information, importance or relevance might best be viewed at the level of facility goals and objectives rather than at the level of each of the roughly 22,000 assets in the current inventory.

A rating of the priority or relevance of the structures comprising a historic site for example needs to also consider the contemporary infrastructure that supports the facility in determining overall investment priorities. In our interviews with managers across the country, we found mixed support for the idea of implementing the API approach in the Agency. Many managers recognize the potential value of the tool but were concerned with the practicalities of implementing it (i.e., they are concerned with how much time would be required to agree on a standard approach and work out a common consensus on what assets were in fact priorities). Some managers commented that the current planning and prioritization processes in the Agency serve much the same function, and would produce similar results as the API process without the attendant work of formally rating all assets.

Balancing Maintenance Vs Capital Investment Another aspect of relevance concerns the overall balance of the spending on maintenance and LTCP projects. In 2007/08, for example, the Agency allocated 75% of the investment in assets to LTCP expenditures and 25% to inspection and preventative maintenance. As will be reviewed in more detail below, common asset investment benchmarks suggest investing equal percentages of the CRV of assets or facilities in maintenance and capital expenditures. It is also commonly observed that failure to perform routine maintenance within the normal period, results in deferred maintenance and higher repair costs. Deferred repair in turn can ultimately lead to higher costs to recapitalize or replace assets.

Vanier (2000) for example, references the “law of fives” in which deferred maintenance results in repairs equalling five times the original maintenance costs and deferred repairs can lead to renewal costs up to five times the cost of the repair. Therefore, focusing more investment on higher cost repairs and recapitalization and less on inspection and preventative maintenance may serve to increase the long-term asset management costs of the Agency. A few of the managers we interviewed both in national office and in business units raised this point. Management in the Agency is aware that lack of normal maintenance and repair can lead to higher long-term costs (see 2000 and 2005 LTCPs) and has used this information to justify, in part, its requirements for additional funding to manage assets. However, consistent with their focus on “capital” investment, the plans are largely silent on how much investment is required or is planned for operations and maintenance. During the course of the evaluation, we could not identify any analysis or rational by the Agency for devoting the majority of investment to major repair and recapitalization of assets (i.e., although there is some analysis based on aging infrastructure that many assets require this kind of work, this is not the same as an analysis of the relative impacts of the balance of investment between maintenance and capital). In fact, it is evident that much of the Agency’s asset management framework, planning processes and accounting are focused on asset repairs and recapitalization (i.e., much of the management framework concerns principles and criteria to guide these investments, the national planning processes focuses on securing and allocating funds to carry out these projects, and the financial system largely produces data and reports that are about expenditures on these projects).

Until relatively recently, there was little in the management framework regarding asset inspection and maintenance regimes, and as yet no guidance on tracking and managing operational costs of assets. In short, the Agency’s overall asset investment strategy and most of its existing framework, processes and systems focus on major repairs or recapitalization of, or acquiring new, assets. Our major observation is not that this investment focus is wrong, but rather that the Agency has not done the analysis to show that this is the most cost effective approach to asset investment in the long-term. Summary Ensuring Relevance It is generally acknowledged that not all existing assets, including some major assets, are relevant to the mandate (e.g., highways, townsite assets). However, most managers on the ground do not think there are many assets that are not relevant to the program. Investment decisions related to major repairs and recapitalization of assets are based on consideration of the criteria found in the Agency’s Capital Planning Directive.

The process is widely reported to involve consensus input from all the functions represented at the business unit management tables, and in most cases is supported by review and decision-making outside the business unit. It relies on the informed judgement of managers who are required to consider a wide variety of factors. There is a risk that application of the principles and guidance might be inconsistent across the Agency. More formal approaches to rating relevance and importance of assets and/or facilities for mitigating this risk are available. The majority of the Agency’s asset investments, and much of its asset management framework and processes, are focused on major repairs, recapitalization and acquisition of assets. Fewer resources are devoted to ensuring good management information and regular inspections and preventative maintenance.

This may or may not be the most relevant approach for ensuring that the Agency asset management program is efficient and effective in the long-term. At this point the Agency lacks the information and analysis to support either approach. Performance Against Targets As noted, the Agency’s specific performance targets in the 2005 LTCP relate to program inputs (i.e., the overall level of capital investment nationally, locally, by program activity, etc) and to certain types of condition ratings of, or threats to, assets in general or to specific types of assets. Financial Targets and Performance Table 13 reproduces the framework for asset expenditures shown in Table 3 and situates the Agency’s investment targets and general accepted asset investment within the framework. Table 13 Asset Expenditure Framework and Investment Targets and Benchmarks Primary Objective Asset Operations Operating Expenditures Sustaining Assets Maintenance/Repair Expenditures Asset Functional Improvement Asset Capacity Improvement Capital Expenditures Secondary Objective Utilization Utilities Maintenance and Repair Renewal and Backlog Upgrade Alterations and Repair Addition New and Replace Agency Targets Approximately $40M per year • LTCP investment of $439M between April 2005 and March 2010 (i.e., $122.8M per year by 2009/10). • Specific portions of $439M investment allocated to each program activity • $91M in revenue from increased user fees to be invested in visitor related assets between April 2005 and March 2010 (2005 LTCP) • Selected business units to investment 65% of their 1997 Capital allocation in LTCP capital expenditures each year starting by 2007/08 • 10% of asset investment to be targeted for Heritage Presentation Assets Investment Benchmark 1% of CRV of Asset Base per year 2% of CRV of Asset Base per year 2% of CRV of asset base per year Targeted FCI Values. Source: Framework is modified from Wooldridge, S.C.

(February 2002). Balancing Capital and Condition: An Emerging Approach to Facility Investment Strategy.

Targets are drawn from the 2005 Agency LTCP and the Guide for Business Planning Agency Investment Targets Maintenance, Repair and Inspection The Agency did not set a target for investments in maintenance, repair, and inspections in its 2005 LTCP. Subsequently business unit LTCPs have reported planned expenditures in the range of $40M to $42M per year for the Agency as a whole (see Appendix F). As noted however, the current financial system does not have an efficient way to identify what these planned expenditures were or to track actual expenditures against the plans, particularly the salary component of the expenditures. No attempt has been made at either a regional or national level to assess the variance between planned and actual maintenance expenditures. We conclude therefore, that the Agency lacks the information to determine whether it is meeting its planned investment levels set out in business unit LTCPs. Overall Investment in Repair and Recapitalization Original 2005 LTCP Target The 2005 LTCP capital investment target was to increase the total amount of investment in the core asset types from an estimated $34M in 2005/06 to $122.8M by March 2010. In total, $439.1M was to be invested over five years.

Expenditures on land were excluded from the target. In addition, the target was based on the Agency’s core funding for assets.

Investments supported by short-term, project-specific, time-limited funding (e.g., funds supporting the celebration of the 400 th Anniversary of Quebec and for twinning the TransCanada Highway in the mountain parks) were not included as part of this core funding. The targeted investment level was set in relation to the generally accepted benchmark, discussed below, that organizations should invest 2% of the CRV of assets in capital expenditures. In the Agency’s case, this would have required $143M investment per year based on a RV of $7.1B. Although the 2005 LTCP makes reference to a planned $140M for the asset investment program, only $122.8M of this (1.7% of the RV) was to be directed to major repairs and recapitalization and then only ten years after the RV was out of date. For this reason, we treated the investment target as a commitment to an absolute level of investment rather than as a commitment to achieve a particular investment standard. Table 14 shows the three sources of funding that could contribute to the investment target and the expected amount of funds available in each year of the 2005 LTCP.

Table 14 2005 LTCP Expenditure Targets by Year and Source of Funds Source of Funds ($ Thousands) 20/07 20/09 2009/10 Total Existing 34,100 34,100 34,100 34,100 34,100 170,500 Revenue 9,000 15,000 17,000 25,000 25,000 91,000 Sub Total 43,100 49,100 51,100 59,100 59,100 261,500 Budget 2005 9,350 21,250 36,550 46,750 63,750 177,650 Total 52,450 70,350 87,650 105,850 122,850 439,150. Source: 2005 Agency LTCP The Agency expected existing funding to remain stable, and that new revenue and Budget 2005 funds would cover increasingly significant portions of the total investment (i.e., revenue is 17% of the investment in year one and 22% in year five, while Budget 2005 is 18% in year one and 52% in year five given that the amount of funds from Budget 2005 increased over time).

Subsequent Agency policies and documents were not always clear on these principles and targets, including some confusion in the 2005 LTCP itself, and therefore managers were confused about what precisely the Agency was trying to achieve in terms of overall investment. In particular, there was confusion about whether this investment target included the amounts spent on maintenance and inspection. We confirmed in our interviews with senior managers that it did not include maintenance expenditures. Business Unit Planned Spending in Relation to Target and RV of Assets Business unit LTCPs serve as the tool to translate the Agency’s overall investment targets by source of funds into specific projects.

The Agency’s interest in tracking and reporting on source of funds for asset investment is largely driven by accountability concerns (i.e., being able to demonstrate how funds accorded the Agency in 2005 were invested, or that revenue based expenditure was consistent with planned results) rather than a need to link sources of funds to results. Table 15 summarizes data on business unit planned spending for the two most recent cycles (i.e., we did not have complete data on the first two planning cycles). Table 15 Business Unit Planned Expenditures by Source of Funds Source of Funds ($ Thousands) 20/09 20/11 Average Existing 38,825 33,173 35,038 29,702 34,184 Revenue 12,765 17,434 14,714 15,104 15,004 Sub Total 51,590 50,607 49,752 44,806 49,189 Budget 2005 37,259 63,946 64,901 52,268 54,594 Total 88,849 114,553 114,653 97,074 103,782. Source: 2007/08 and 2008/09 Business Unit LTCPs Note: Planned expenditures in 2007/08 were slightly more than actual expenditures for the year shown in Table 14. Comparing Table 15 to Table 14 shows that at the planning level, average spending based on existing funds is closely aligned with the expectations in the 2005 LTCP. Programming of Budget 2005 funds exceed the expectations in the 2005 LTCP particularly in 2008/09, and revenue as a source of funds is not keeping pace with the expectation in the 2005 LTCP.

Increased Budget 2005 spending during the planning period reflects the fact that Finance Committee approved (June 2007) advancing $35M of Budget 2005 funds from 2010/15 into the remainder of the period covered by the 2005 LTCP. This coupled with the fact that total business unit planned spending for 2007/08 and 2008/09 exceeded the targets in the 2005 LTCP suggested that the Agency’s total planned spending for the period covered by the 2005 LTCP might have increased over the original target. The possibility is not identified or discussed in the Agency’s documents so we have conducted the evaluation of performance against the original targets.

Table 16 shows the average planned expenditure by source of funds separated into the Eastern and Western/Northern Canada. Table 16 Four Year Average Planned Expenditure by Source of Funds and by Region ($ Thousands) East West Existing 14,262 19,923 Revenue 32 14,972 Sub total 14,294 34,895 Budget 2005 27,147 27,447 Total 41,441 62,342. Source: 2008/09 Business Unit LTCPs On average, 60% of the planned investment over the four years shown in the table will be in the West although assets in Western/Northern Canada account for only 44% of the estimated RV of the Agency’s asset portfolio (i.e., using RVs reported in business unit LTCPs Appendix H). In contrast, about 60% of the reported maintenance expenditures take place in the East compared to the West (see Appendix F for details). Average expenditures based on “existing” funds tend to be higher in the West. Virtually all of the revenue-supported investment occurs in Western Canada and in the Mountain Parks in particular. This is reviewed in more detail below.

Budget 2005 as a source of funds is virtually identical in the East and West/North, reflecting the fact that an equal portion of these funds was allocated for distribution to the DG for each region. Budget 2005-supported projects appear in every business unit LTCP. Business unit 2007/08 LTCP expenditures tend to be reasonably highly correlated with the RV of the units’ assets for that year (r=.59).

The correlation is even higher (r=.73) between the three-year average LTCP expenditure and the 2007/08 RV of assets. Finally, self-reported maintenance expenditures in business unit LTCPs are also highly correlated with the adjusted business unit RVs assembled for the evaluation (r=.71). In short, although not a perfect correlation, the trend, consistent with expectations, is clearly for units with higher asset RVs to plan to invest more in both asset maintenance and LTCP projects. In summary, the Agency’s intent was to increase its core investment in major repairs and asset recapitalization of various types of built assets, equipment, and presentation or fleet assets. Core investment resources were either existing funds, new funds from Budget 2005 or new funds anticipated from increased revenues. There was considerable confusion concerning this target and the target may have been implicitly changed in subsequent planning cycles and as a result of Finance Committee decisions although this was not made clear. The target is translated into on the ground action through individual business unit planned LTCP expenditures.

As expected, both planned “ LTCP” and maintenance expenditures tend to be proportional to the RV of business unit assets. Regionally, the absolute amount of planned investment is higher in the West than in the East, representing a higher portion of the RV of the assets, based on higher than average expenditures of existing funds and virtually all of the revenue-supported investment occurring in that region. In contrast, self-reported planned maintenance expenditures are higher in the East.

Performance Against Overall Investment Target Table 17 shows the Agency’s overall LTCP expenditure targets, total actual or planned expenditures and adjustments to remove special purpose expenditures for the original planning period (i.e., Appendix J shows LTCP expenditures by business unit and year). The 2005 LTCP targets for 2010/11 and beyond are based on the assumed steady-state expenditures in the plan.

Actual expenditures could not be disaggregated by source of funds, as this information is not recorded in the system. Table 17 Actual and Planned LTCP Expenditures By Year ($ Thousands) Actual Planned 20/07 20/09 20/11 20/13 Targeted Expenditures (see Table 13) 52,450 70,350 87,650 105,850 122,850 122,850 122,850 122,850 Total LTCP Expenditures 78,354 115,160 122,532 133,785 119,653 98,027 99,092 103,722 Twining Highway -9,214 -28,152 -20,778 -19,200 -5,000 Quebec 400 th -985 -2,931 -15,492 Land Acquisition -3,273 -1,730 -1,645 LTCP Expenditures 64,883 82,347 84,617 114,585 114,653 98,027 99,092 103,722 LTCP Expenditures Minus Target 12,433 11,997 -3,033 8,735 -8,197 -24,823 -23,758 -19,128.

Sources: Targets from the 2005 LTCP; Actual Expenditures and Amounts for non-eligible expenditures are from the Agency’s financial system; Planned Expenditures are from the 2008/09 cycle of business unit LTCPs. Total LTCP expenditures include unallocated Budget 2005 funds in Eastern Canada. The table shows that the Agency’s LTCP expenditures were close to or exceeded the target for the first three years of the plan (although at least for 2007/08 actual expenditures did not meet the planned expenditures in the business unit LTCPs as shown in Table 15). Planned expenditures in 2008/09 will also exceed the target for that year.

The total actual and planned LTCP expenditures for 2005/06 through 2009/10, if realized, would be $461M, exceeding the overall targeted spending of $439.1M. In the longer term, planned expenditures fall short of the yearly total of $122.8.M targeted in the 2005 LTCP. In the most recent business unit planning cycle, total LTCP expenditures peak in 2008/09. In the last three years of the planning period, LTCP expenditures average about $100M per year or about $68M less than targeted in the 2005 LTCP for the three years combined. Since the source of funds for actual expenditures is not recorded in the financial system a detailed analysis of which sources contributed to exceeding the overall investment target or are implicated in not meeting the sustained yearly investment target was not possible.

Based on the incomplete planning data for the period, the overall investment target was likely met by spending more of the Budget 2005 funds than anticipated (i.e., funds were advanced from future periods), and perhaps more spending of existing funds. Together, these sources more than compensated for the smaller than anticipated investment based on revenue from user fees. In the long-term, advancing Budget 2005 funds and lower amounts of revenue likely serve to reduce the Agency’s capacity to attain the yearly-sustained investment target of roughly $123M per year.

LTCP Expenditures by Program Activities The 2005 LTCP identified how each funding source would be invested in the Agency’s program activities. This allocation strategy was developed based on an analysis of unfunded projects conducted by the offices of the DGs Eastern and Western/Northern Canada in consultation with national office branches. The goal was to ensure adequate resources were directed to unfunded investment needs, while also ensuring that available resources were distributed between program activities (i.e., that no one program activity monopolized all the available resources).

It is not clear that this was the most relevant approach to determining investment requirements by program activity since it did not consider existing asset conditions and life cycles associated with each program or the impacts of funded projects on the condition, life spans and overall objectives for the programs. The original targeted spending for each funding source by program activity is shown in Table 18 along with re-profiled spending for Budget 2005 funds approved by Finance Committee (June 2007). Table 18 Targeted LTCP Expenditures by Program Activities and Source of Funds Program Activity ($ Millions) 2005 LTCP Allocations June 2007 FC Existing Budget 2005 Revenue Total Revised Budget 2005 Allocation 2005/2010 Heritage Places Establishment 3.4 3.4 Heritage Resources Conservation 40 51.6 91.6 47.1 Public Appreciation and Understanding 16 23.1 39.1 22.7 Visitor Experience 51 51.6 91 193.6 49.4 Townsite 10 1.8 11.8 11.6 Throughway Infrastructure 8 46.3 54.3 77.7 Internal Service Delivery 42 3.6 45.6 5.2 Total 170.4 178.0 91.0 439.4 213.7.

Sources: 2005 Agency LTCP for original targets. June 2007 Presentation to Finance Committee for Revised Budget 2005 Fund Targets The revised profile increased the amount of Budget 2005 available for the period covered by the 2005 LTCP (i.e., borrowing $35M of Budget 2005 funds from the 2010/15 period) and slightly decreased the overall funding from this source for the resource conservation, public appreciation and understanding and visitor experience program activities while providing more funding for townsites, highways and internal services. It is not clear how this affected the overall planned spending by program activities for the period (i.e., did non-Budget 2005 targets change, and if so in what ways). We attempted to construct a record of both business unit planned and actual spending by program activity but were not successful. We were not able to obtain the complete record of business unit LTCPs and in the early years those we did compile included significant amounts of unallocated Budget 2005 funds not assigned to a program activity.

Allocation of planned spending to program activities was further complicated by projects linked to two or more programs requiring some assumptions about how much of the total project budget was related to each activity. Actual expenditures by program activity existed for the true capital portion of LTCP expenditures but the remaining portions of the expenditures (i.e., IO-2 codes) were not assigned to program activities in the Asset Expenditure Reports. We concluded therefore that the Agency lacks readily available information to assess whether actual spending is consistent with the original, spending targets based on all sources of funds by program activity. There is detailed information available from the Offices of DGs Eastern and Western/Northern Canada on actual spending of the Budget 2005 funds by program activity. LTCP Expenditures Based on Revenue from Increased Fees The 2005 LTCP projected that $58.9M in visitor-related revenue in 2004/05 (the baseline year) would increase to $83.3M by 2008/09 as a result of increased user fees, for a total of $91M in new funds for investment in visitor-related assets between April 2005 and March 2010. At the end of the period there would be $24.5M each year in new revenue for investment in these assets.

The direction, that new revenue from user fee increases would be invested in visitor related assets, was subsequently reflected in the Agency’s (February 2006) Users Fees and Revenue Management Policy. We know from the Agency’s financial records that revenue from the fees used to predict the $91M in new funds has actually increased faster than the predictions of the model (i.e., the model predicted $41.2M in new revenue over the first three years of the LTCP while the Agency has realized $47.1M in new revenue over the baseline during the period). However, it was only the portion of this revenue due to increased fees, as opposed to changing patterns of consumption, which was to be directed to visitor-related assets (i.e., up to a limit of $25M per year). The Agency lacks a national mechanism to make this distinction.

We also know that, with the exception of the Mountain Parks, the number of visits to most Parks Canada national parks and national historic sites has been declining in recent years suggesting that many locations would not have any increased revenue after taking account of declining consumption of the services. We have already seen in Tables 16 and 17 that planned revenue supported asset investments do not keep pace with the revenue investment targets in the 2005 LTCP, and second that the vast majority of revenue-supported projects occur in the mountain parks. The mountain parks typically account for approximately 55% and 60% of all visitor related fee revenue generated in the Agency. Since at least 2005/06, the Mountain Parks have been identifying and pooling a portion of each units’ revenue from entry fees (i.e., separated into fee increase and visit increase streams) and from camping fees. The pooled revenue is then allocated to investments in visitor experience related assets, as well as covering some operational and maintenance related expenditures for visitor services, programs or assets. To access funds in the pool, managers create project proposals (i.e., the RPA) and submit these to the Visitor Experience Advisory Board ( VEAB) consisting of senior managers in the block, who review and recommend projects for approval by the Executive Director of the Mountain Parks.

Table 19 shows total revenue collected or anticipated due to entry fee increases and from camping and amounts allocated or planned to be allocated between April 2005 and March 2010. Table 19 Revenues from User Fees and Allocations to Visitor Experience Assets in the Mountain Parks ($ Thousands) 20/07 20/09 2009/10 Total First Five Years Revenue from increased PUF fees and camping 7,230 11,880 12,512 16,864 18,360 66,846 Allocations to visitor experience assets 3,128 15,660 11,905 15,225 16,347 62,265.

Source: Office of the Director General Western and Northern Canada Based on these data, the Mountain Park Block is likely to collect 73% of the new revenue anticipated in the 2005 LTCP (i.e., $66.8M out of $91M). It is reported they have or will have invested 93% of that revenue back into visitor-related assets. The DGs Office Western/Northern Canada who provided the data, reported that portions of this investment were directed to visitor service assets in townsites and roads (i.e., about a third of the investment). We did not verify if all the investment was directed to assets associated with the visitor experience program activity as envisioned in the 2005 LTCP. Minimal Level of LTCP Expenditures By Business Units As one element of its strategy to reach its overall LTCP expenditure target, the Agency sought to ensure that selected business units contributed to maintaining a minimal level of capital investment each year.

The target, starting in 2003/04, was that each unit would invest at least 50% of the capital budget it received in 1997 into asset recapitalization, and that by 2007/08 this would increase to 65% of the original budget. The capital budget allocated to various units in 1997 was $42.6M. Allocations were made to field units, but also to service centres, and to national office and the office of the DG East. In theory, investing 65% of this allocation would result in a minimal investment of $27.7M each year.

In practice, only certain units were expected to make capital investments and meet the targets. Based on the original capital allocation obtained from National Office Finance Branch and discussions with the Offices of the DGs Eastern Canada and Western/Northern Canada, we found that 33 of the 41 business units that received a capital allocation in 1997 were expected to comply with the 65% target for a total minimal investment of $24.4M per year. The original allocations and resulting targets are shown in Appendix K, along with the performance of business units against their targets. Based on our LTCP expenditure data, we found that eight business units did not meet the target to invest 65% of their 97 capital allocations in LTCP expenditures for 2007/08.

Taking the average LTCP expenditures over the period 2005/06 through 2007/08 we also found that eight units (i.e., not all the same units) did not spend on average 65% of their capital allocation on LTCP expenditures. It is worth noting that this result is based on expenditures on assets from all sources of funds (i.e., including Budget 2005 funds). A strict interpretation of the target would require units to meet the target from the existing A-base rather than all sources of funds. We also noted that most of the units that did not meet the target had planned expenditures in 2007/08 that exceeded their 65% targets. It is not clear whether the difference between the actual expenditures we identified in the financial system and the planned expenditures is due to problems in coding expenditures, or whether the planned expenditures did not take place.

The gap between actual and targeted expenditures amounts to about $2.4M to $2.5M a year over these business units. Based on summaries and reports provided by the Offices of DGs Eastern and Western/Northern Canada it is clear that management was aware that some units were not meeting the target and did not intend to meet the target given a variety of other financial pressures in the units. The target itself was intended to avoid exactly this situation where units’ diverted funds intended for capital investment to meet other operational pressures. In reporting to Finance Committee, it was routinely noted that the targets were being meet based on totalling the targeted amounts regionally and reporting planned spending against the aggregate regional target. The fact that some units did not and would not meet the target was not clearly identified although the information was available in business unit LTCPs.

In summary, the issue is not so much that targets were not met, but rather the manner in which this was monitored and followed-up in the Agency. It seems clear that allowing some units to essentially opt out of the target was contrary to its fundamental intent. LTCP Expenditures in Heritage Presentation Assets The Agency’s Business Planning Guide has included for several years the target that a minimum of 10% of each business unit’s asset investments must be targeted to heritage presentation assets. The guide did not provide a definition of heritage presentation assets and the template for the LTCPs did not include a section to identify which projects were targeted at heritage presentation assets. It was suggested that heritage presentation assets referred to assets associated with non-personal interpretive programs such as exhibits, displays, panels and audio-visual equipment. True capital expenditures for this sub sub-activity were recorded as $2.7M in 2005/06, increasing to $4.7M in 2006/07 before decreasing to $2.4M in 2007/08. It is not clear how compliance with the target would influence future true capital expenditures (i.e., LTCP expenditures could involve repairs rather than true capital).

We therefore concluded that the Agency lacks the necessary tools to monitor progress against this target. Performance Against Asset Investment Benchmarks The Parks Canada Real Property Branch in National Office (June 2007) compared reported asset operating costs of a sample of other federal departments and found these typically represented 1% of the replacement value of assets. A subsequent study, (Corporate Research Group, March 2008) commissioned by the Branch, supported this standard (i.e., 1.17% was suggested). As we had no data on operational costs of assets, performance against this benchmark was not evaluated.

The literature on asset management and TBS guidance suggest that organizations should be annually investing approximately 2% to 4% of the CRV of its asset portfolio in maintenance and an additional 2% in capital investment. Parks Canada’s Principles and Filters for Asset Investment (Annex 2 to the Business Plan Guide 20/13) includes these targets as reasonable investment levels. TBS guidelines recognize that actual investment levels might not meet these guidelines, depending on competing organizational or government priorities. Relevant Investment Standards For Parks Canada The investment standards are based on current replacement value, a recommended percentage of which becomes the benchmark investment level or standard. There was some question raised in the course of the evaluation about the relevance of the concept of current replacement value particularly for the Agency’s cultural assets. Although we recognized that replacement value has a different meaning for these assets than for contemporary assets, we nevertheless concluded, based on our review of the literature and the widespread use of the concept that the advantages of using it as a basic measure of asset value for all assets far out weight any disadvantages. A more critical question is whether the specific standard of investing 4% of the CRV is a reasonable investment target for the Agency’s asset base.

In the course of the evaluation, a few business unit managers indicated that this level of investment was not required to adequately maintain and renew their particular asset bases. Similarly, a recent study of the operation of the Trent Severn Waterway, by an independent panel created by the government, recommended a combined investment of 1.5% of RV for both maintenance and capital expenditures (for the canal), largely on the grounds that the 4% guideline set by Treasury Board was inconsistent with the panel’s experience of actual investment levels in the public and private sector. In contrast, the study by the Corporate Research Group (March 2008) suggested that the combined 4% investment target for maintenance and capital was too low for Parks Canada given its mix of different kinds of assets and asset life spans. For maintenance they recommended 2.33% of the CRV and for capital they recommended an average investment of 2.85% of CRV for the portfolio as a whole with separate percentages for different types of assets (i.e., recommended investment percentages by category of assets ranged from 1.19% to 5.06% of CRV).

These estimates attempt to take into account factors such as the remote locations of many assets resulting in potentially higher transportation, material and labour costs; different investment requirements resulting from assets with very different life spans, and the reputed higher costs for work on heritage verses contemporary assets ). We did not attempt to determine which of these various standards best represent the “real” investment requirements of the Agency’s asset base. In theory, good historic information on asset related expenditures and the true costs of deferred investments over time would provide an empirical basis for customizing investment standards to the Agency’s specific asset base. In the absence of this information, we used the 2% benchmarks as the basis of our analysis of the adequacy of current investment, the level of deferred investment, the condition of assets based on deferred maintenance, and future investment requirements. Procedures and Issues for Assessing Investments Against the Benchmarks This analysis depends on the RV of assets and knowledge of past, present and future maintenance or capital expenditures. We have identified a number of problems with these data already (i.e., different estimates of RV, only data on planned maintenance expenditures are available, LTCP expenditure data do not likely capture all relevant expenditures from all business units). These factors limit the accuracy of the analysis.

We used the data that existed to develop several scenarios of current and future deferred investments to provide order of magnitude estimates of the potential liabilities. Maintenance and capital expenditures were defined for purposes of the analysis consistent with the LTCP definitions used in the Agency (i.e., major repair costs are treated as part of capital expenditures).