Strategic business planning
The NSW Government's Best-Practice Management of Water Supply and Sewerage Framework (PDF 160 KB) requires local water utilities to prepare and implement a sound 30-year Strategic Business Plan (SBP) and Financial Plan (FP) for their urban water supply and sewerage businesses.
The SBP enables the local water utility (LWU) to review and update its 30-year Total Asset Management Plan (TAMP) for the provision of appropriate, affordable and cost effective water supply and sewerage services to meet community needs, while protecting public health and the environment. The review of the TAMP and the preparation of the SBP and FP need to be in accordance with the Strategic Business Planning Check List (PDF 152 KB) and the NSW Strategic Business Planning Guidelines (PDF, 1790.69 KB).
Community consultation is an integral element in preparing a SBP which needs to identify the levels of service which provide the best value for money for the community. The SBP must include an updated TAMP, the major components of which are identified in the LWU's adopted scenario in its 30-year IWCM Strategy.
The SBP must document the utility's proposed management of assets and the resources required to meet the levels of service negotiated with the community. It is essential that robust financial planning and asset management planning be undertaken in the SBP. The TAMP must include evidence based asset renewal for the next 5 years, should match the utility's ability to obtain the required resources, meet community demands and manage the business risks. The financial plan must disclose the typical residential bills (TRBs), in current dollars, required to meet these levels of service.
A LWU's peak planning documents for its water supply and sewerage businesses are its current Integrated Water Cycle Management (IWCM) Strategy and SBP. The boxes below summarise the key outcomes of the IWCM Strategy and SBP.
Integrated Water Cycle Management (IWCM) Strategy
- 'Right sizes' any projects and identifies the best-value 30-year IWCM scenario and Strategy on a triple bottom line (TBL) basis. It includes a 30-year TAMP and FP.
- Identifies the lowest uniform level of stable typical residential bills (TRBs) to meet the levels of service negotiated with the community and the price path for the next 4 years in current dollars.
- The adopted IWCM scenario includes an update of the existing 30-year renewals plan, with only proven evidence based renewals included for the first 5 years. The renewals plan takes account of any avoided, re-sized, abandoned or re-prioritised works.
- An IWCM Strategy is prepared every 8 years.
- NSW Office of Water (NOW) concurrence is needed to the IWCM Issues Paper, the final IWCM Strategy and scenario and the Financial Plan prior to LWU implementation of the scenario.
Strategic Business Plan (SBP)
- Reviews and updates the LWU's existing 30-year TAMP, identifies any opportunities to downsize or defer significant projects and includes a FP.
- Analyses the renewals component of the TAMP to develop a sound 30-year renewals plan, the first 5 years of which include only proven evidence based renewals that provide value for money.
- Identifies the lowest uniform level of stable TRBs to meet the levels of service negotiated with the community and the price path for the next 4 years in current dollars.
- A SBP is prepared every 8 years, ie. 4 years after preparing the IWCM Strategy .
- Provide to NSW Office of Water for registration, your final SBP and FP.
The IWCM Strategy and SBP need to be prepared every 8 years on a rotation of every 4 years, as shown below. This involves preparing a TAMP and FP every 4 years, updating these plans annually, and including any necessary corrective action in your annual Action Plan to Council.
Note: All the key requirements of a SBP are addressed by an IWCM Strategy in accordance with the IWCM Check List (PDF 224).
The Strategic Business Planning Check List (PDF 152 KB) supersedes any earlier Check Lists and is suitable for defining the scope of work for engaging a consultant to undertake preparation of a LWU's SBP. In addition, the LWU may elect to undertake specific items of the Check List in-house.
For more information, or to discuss any aspect of strategic business planning, contact an urban water officer.
The SBP Check List identifies the following key water supply and sewerage inputs from your SBP to Council's Integrated Planning and Reporting (IPR) system:
- Community Strategic Plan
- 4-year Delivery Plan
- Annual Operating Plan
- Annual Report.
The NSW Office of Water has developed the powerful NSW Financial Planning Model for Water Supply and Sewerage (FINMOD) to enable LWUs to carry out 30-year projections of their income, balance sheet and cashflow statements and prepare a robust 30-year Financial Plan. Use of FINMOD or similar software is recommended for identifying the required lowest uniform level of stable TRBs for the adopted 30-year TAMP and a price path for the next 4 years in current dollars. The FINMOD software and a user manual and financial planning guidelines are available to NSW local water utilities.
The urban water officer can provide a copy of the FINMOD software and the user manual and guidelines on request.
A water supply and sewerage planning data set has been compiled by the NSW Office of Water to assist LWUs, based on the data reported by each LWU in the NSW Performance Monitoring System, since and including 1994/95. An example data set based on the data reported by Coffs Harbour City Council (PDF 1.1 MB) can be downloaded. Such data sets are now available for each LWU on request from the NSW Office of Water by contacting an urban water officer (Performance Monitoring).