Asset Management Plans In Aged Care

Retired woman lounges on deck chair

Asset Management Plans In Aged Care

Aged care facilities and retirement villages house some of our community’s most vulnerable people. So, it is critical that their infrastructure and assets are purpose-built, accessibility-friendly and safe.  

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New guidelines for asset management plans 

Aged care facilities and retirement villages house some of our community’s most vulnerable people. So, their infrastructure and assets must be purpose-built, accessibility-friendly and safe.   

With the added threat of COVID-19, this assurance of best practice health and safety procedures is ever more important, with over 1 million people living in aged care between 2019 and 2020. 

In response to these concerns, the New South Wales Government issued the “Secretary Guidelines for Asset Management Plans” in August 2021. 

The Guidelines stipulate that you must prepare a 10-year asset management plan (AMP) for each village you manage or operate. Additionally, this AMP must comply with the Retirement Villages Act 1999 (particularly sections 101A and 93 of the Act) and regulations. 

To help you understand and meet your compliance requirements, we have put together this guide on AMPs in aged care. 

Asset management plans (AMPs) 

Asset management plans document the costs, ongoing maintenance, repairs and replacement of a retirement village or aged care facility’s major assets. According to the Act, your AMP must include: 

  1. An asset register of the village’s major items of capital, including information about the effective life of items of capital. 
  2. A maintenance schedule of the village’s major items of capital, including information about capital replacement. 
  3. A 3-year report for capital maintenance, extracted from the AMP, to inform expenditure for the annual budget. 

As well as the above inclusions, you must provide the following to inform the asset management plan. 

  • A list of assets the residents own and/or use. 
  • Details on each asset’s current condition and whether any defects need rectification. 
  • The date the assets need replacement and what the cost of replacement is.  
  • The current maintenance expenditure required to ensure these assets meet statuary compliance and performance obligations. 
  • Notify residents about the update to the asset management plan and the intention to transition to the new plan 60 days before implementing the AMP. 
  • Provide a copy of the proposed AMP at the retirement village or a place of business that is easy for residents to access and review. 
  • Allow residents to comment on the proposed AMP and provide their opinions and concerns. 
  • Prepare a report of all comments received from residents. 
  • Respond to each comment explaining the revisions made as a result, why you did not make a particular revision and a copy of the report.  
  • Contract an asset auditor to perform a compilation of your assets, their condition and defects. In addition, have the asset auditor review maintenance expenditure and how it is allocated to each resident’s unit and common facility.  

The above allows you to supply the required levels of detail on a per-unit level of future capital replacement and forecast maintenance costs for the coming years. This data provides you with a defensible budget. As a result, all parties can understand the future costs of maintaining their facilities at a granular level. Altogether, this results in more certainty and fewer ‘surprises’ in unplanned capital or maintenance works.

Asset registers 

The NSW Government defines an asset register as a list of major items of capital for which operators are responsible and for which residents pay maintenance. Additionally, they require that you record all new and existing major items of capital, including items shared with other villages or aged care facilities. 

You should include the following information in your asset register: 

  • A description of each item. 
  • The ‘lifespan’ of each item. 
  • The asset ID number. 
  • The brand model number (if available/applicable). 
  • The serial number (if available/applicable). 
  • For non-buildings: 
    • The purchase date. 
    • The purchase price. 
  • For buildings: 
    • The date construction was completed. 
    • The construction cost. 
  • For shared items: 
    • The name of the other village/business using them. 

Maintenance schedules

The NSW Government defines a maintenance schedule as setting the details for maintaining and replacing the major items of capital funded by recurrent charges or from the capital works fund. 

You must include the following information in your maintenance schedule: 

  • For proposed maintenance works: 
    • A cost estimation.  
    • The proposed frequency and/or dates of maintenance. 
    • The type of maintenance. 
  • For proposed reparation works: 
    • A cost estimation. 
    • The dates of repairs. 
    • A description of the repairs. 
  • For proposed replacement: 
    • The dates of capital replacement. 
  • For a shared major item of capital: 
    • Cost estimation for the relevant proportion of capital item as determined by its use. 

3-year report

The 3-year report covers the proposed maintenance and repairs of each major item of capital and includes cost estimations and completion/reparation timelines. Additionally, the 3-year report follows the fiscal year and corresponds to the annual budget.  

You must include the following information in your 3-year report: 

  • An estimate of the costs, dates and type of proposed maintenance. 
  • An estimate of the costs and type of any proposed repairs. 
  • The amount of recurrent charges set aside in the capital works fund for capital maintenance of major items of capital. In the proposed annual budget, you must: 
    • List each item of proposed capital maintenance. 
    • Specify the expected cost for each item. 
    • Include any quotes that you have received. 
    • Finally, include provision for urgent capital maintenance. 
  • Any proposals to replace or continue to maintain items of capital at the time the 3-year report is prepared that: 
    • Are within one year of the end of their effective life. 
    • Have accumulated repair costs greater than 90% of the purchase price. 
    • Specify whether you propose to replace or continue to maintain the item. 
  • Notify residents (and prospective residents) of the 3-year report and make it available for their review.  

Residents’ financial budgets

The legislative changes focus on asset replacement and maintenance. However, you must provide an overall budget to residents that includes the following components. 

  • Capital replacement (and planned capital works). 
  • Maintenance expenditure relating to the capital assets. 
  • Operational expenditure (includes any other expense costs. For example, security, garden maintenance and administration costs). 

You should express each category on a per-residential-unit basis. Additionally, you should supply separate totals for costs associated with their unit and share of common property costs.

Retirement villages methodology

The key to a successful and compliant AMP 

By taking these steps, you can create a successful and compliant asset management plan for your aged care facilities and retirement villages. Remember to keep abreast of the latest national and state-based legislation and recommendations. Additionally, consider partnering with an asset auditor to make the process smoother and easier. 

Get help with your 10-year plan

Consult our Asset Audit & Advisory experts on your 10-year asset management plan for your retirement villages and aged care facilities.

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