Melbourne Water & AECOM – Improved ESG outcomes for natural assets through balancing cost, risk and performance

Natural assets such as waterways and their supporting assets including sediment ponds and trees are vital in urban areas. They are critical in managing rainfall events as they facilitate the processing and collection of stormwater. Additionally, these assets provide a range of ecosystem services including heat reduction, carbon sequestration, and provide habitats for flora and fauna[1]. When uncovered, waterways and wetland linked sediment ponds can also be a source of amenity for the people living within urban areas. Melbourne Water (MW) values its natural assets and has invested in setting up a decision-making framework that allows for the cost, risk and performance of these assets to be accurately reflected.

The project commenced by establishing performance through applying the MW Level of Service (LoS) framework to three asset groups: waterways, sediment ponds and trees. The LoS Framework was initially developed for built assets and is aligned with ISO 55001 and the IIMM[2]. In applying the framework to natural assets, the project team drew heavily on the Healthy Waterways Strategy[3] and its values as this is the guiding strategy for all waterways assets at MW. The LoS was drafted with a level of hierarchy to translate the developed service objectives into technical objectives, and then develop performance measures for these objectives. The service objectives are what MW delivers to the community and customers for each service area. Technical objectives help with delivering the service objectives and performance measures are quantitative measurements to assess achievement against the technical objectives and defined performance targets.

Once what performance looked like was identified, the project moved on to risk. Defining what the risk of not achieving the LoS is and what was needed to make an informed decision. A risk process and risk tool was developed for each asset group. These tools allow maintenance activities to be prioritized based on the MW corporate risk framework. This considers consequence of failure at a corporate level based on seven criteria including environment, customer/ service, regulation and financial. For each asset area the most applicable consequence criteria were selected to guide the prioritization. Ultimately each asset was assigned a consequence level with assets that have a significant impact on required service levels, if they fail, given a higher consequence rating and assets with minimal or no impact on service levels given a lower criticality rating. After determining the likelihood based on condition of the assets and the consequence of the risk, the overall level of risk can be determined.

Cost was then considered through the development of flexible decision-making frameworks for each asset group. They act as an extension of the risk assessment tools, determining at what risk level intervention actions are to be taken, and what those interventions should be. They bring all the developed processes together to assist MW in determining the best operational approach to deliver the determined LoS and use it as the basis for long-term financial forecasts and asset management plans. There are multiple costs considered including the costs of not achieving the LoS which includes not meeting the HWS and the accompanying regulatory requirements, as well as the cost of providing the desired performance level through maintenance, planned or reactive, as well as the impact of inspection timing. The decision-making framework has allowed MW to set performance targets and develop maintenance schedules that best meet the needs of the community while managing risks and balancing this against the available budget.

When this work was commenced, there were no natural assets specific resources available, and the process described here was developed specifically for MW utilizing the asset management frameworks established at a corporate level with a focus on built assets. Over the years we have been working in this space other organisations have engaged, and resources have begun to be developed.

This program of work challenged people to think laterally including those at MW who had great experience managing the assets but less in asset management and an AM team who were very experienced in physical / traditional asset classes and had to learn about LoS for natural assets. This has led to change in how assets are managed across the organization.

  • Program and project management

The development of the decision-making framework for each service area was a collaborative process, assisted by AECOM’s technical team. The technical lead at MW for each service area engaged with AECOM and stakeholders within MW. At every step, a combination of focused working group and stakeholder engagement through workshops was employed. The outcomes of workshops were then brought back to refine the decision-making framework.

The dual approach of focused working group and stakeholder engagement through workshops meant that the development of the decision-making framework was iterative. This broke the process into achievable tasks and meant that there was broader stakeholder support for the framework that has led to strong uptake of the developed systems for decision making.

Initially these works started as different projects that were elevated in a more programmatic approach to deliver greater value through shared lessons learnt and thus drive effectiveness and efficiencies.

  • Benefit/Value of the project or service to the community or organization

MW is therefore able to undertake the work required to provide amenity associated with the waterway natural assets, manage the sediment ponds so that the environmental quality of downstream habitats is protected, and manage its trees to protect tree health, as well as public and worker safety, MW assets and third-party property. MW can do this with confidence that the programs are demonstrably focused and efficient, and that stakeholders understand and embrace the social value this work provides. This, in turn, ensures adequate support for natural assets, leading to positive impact on the environment that MW manages, and the community uses.

The programmatic approach adopted increased the value of the work as lessons learnt were able to be shared across the three asset groups.

The collaborative approach between MW and AECOM as well as other stakeholders allowed for individual’s unique strengths, skills and experience to be leveraged to achieve outcomes for MW based on balancing cost, risk and performance for each service area.

Development of these tools is enabling us to improve planning of our sediment pond desilting program resulting in more efficient and effective asset management.” Alison Rickard, Senior Asset Manager, Service Enablement – Healthy Waterways

Prioritisation of the hazardous tree management program allows us to direct our limited budget to areas with the greatest risk. Expansion of the prioritisation method to incorporate more aspects of risk, means we can be confident that we are addressing the highest level of risk possible with our resources.” Dr. René Van der Sant, Senior Asset Manager, Service Enablement Waterways Catchments & Geotechnical

The decision-making framework for natural assets is required to be flexible and adaptable to the unique characteristics and needs of each asset or service group. This is different to more standard built assets where the requirements and decision-making inputs are relatively consistent. The approach developed in this program has been applied across three service areas within natural assets, each building on the successes and lessons learnt from the previous service area(s) to develop a more adaptable framework.

The MW program team has proactively introduced and promoted the work to other teams within MW. This is in keeping with the positive and open working relationship developed between all parties, which allowed ideas to be freely shared and discussed to address a challenge that is unusual in the field of asset management.

This work has already generated considerable interest throughout the rest of MW, as well as other teams at AECOM. In addition to extending the approach to other natural assets, MW is also planning to introduce it to the Silvan WTP and sewerage assets. Asset management processes more commonly applied to built assets were tailored for natural assets. This, in turn, has been identified as a valuable improvement by groups managing built assets, who are now looking to adopt this approach as well. This will allow MW to make evidence-based decisions on investments across its entire portfolio with consideration given to impacts to all its values. The outcomes of this project are also expected to act as a case study for other organisations with similar challenges associated with defining community focused value from natural assets.

The project team was primarily comprised of members from MW and AECOM. Over the two and a half years of the program, there have been numerous people involved from both MW and AECOM. Each service area has been led from MW with Kylie Swingler and Michelle Slater leading Waterways Amenity, Alison Rickard leading Sediment Ponds and Rene Van der Sant leading Tree Hazards. Key to the success of the work has been having AECOM act as the asset management lead with a consistent team working across all three service areas. The team at AECOM has been led by Frédéric Blin and Ian Martin and supported by Julie-Anne Latham, Amy Spark and Farzaneh Salehi. The Waterways amenity work was additionally supported by Simon Treadwell from Jacobs providing environmental expertise and Jackie Myers at RMIT providing research support.

As an example asset group, MW operates roughly 600 sediment ponds across Melbourne. Most of these sit within housing developments and are a critical part of the stormwater management systems. Many of them feed into wetlands which provide water quality improvements as well as amenity to the housing developments. The sediment ponds fulfil an important role by protecting waterways and bays from pollutants and sediment. To manage the sediment ponds appropriately and ensure they continue to effectively and efficiently remove sediment and pollutants; they are desilted when deemed full of sediment. There is a nominal desilting frequency of every 5 years; however, there is variance across the ponds, with several ponds requiring desilting more regularly while other sediment ponds only require desilting every 10 years. The sediment ponds were previously desilted on a reactive basis, but aided by this work Melbourne Water is moving to a program of planned desilting operations. The Sediment Ponds program was initially based on the volume of sediment to be removed. It has been found that utilising an output focused target of sediment extracted has not been the most appropriate as there is difficulty in accurately determining in situ sediment volumes available for disposal, and decisions have been made to forgo extraction in other difficult to desilt sediment ponds.

The decision-making framework was applied to the sediment ponds in full to enable MW to better balance the performance, cost and risk of the desilting program. The sediment ponds component of the project built on the work undertaken in the Waterways Amenity Service Area to provide greater clarity to the decision making of when to desilt the sediment ponds and how to prioritise the condition assessment of the ponds. The first step was to develop LoS through a consultation process with all the relevant stakeholders at MW. These are captured in Figure 1.

The technical objectives developed in the LoS speak to the complexity of what superficially appears to be a straightforward asset group. There are many different stakeholders and groups affected by the performance of sediment ponds and they play a critical role in the ecology of Melbourne’s waterways as well as the resilience of the city.

Once the performance measures were finalized, we assessed the availability and quality of the data needed to meet these. This then allowed for a risk tool to be developed to aid in the prioritization of sediment ponds for desilting.

Adding in a risk tool with consequence and criticality assigned to each sediment pond has allowed risk to now underpin the decisions made about when sediment ponds are inspected and from this when they are desilted. This then allows MW to prioritize the costs associated with these and inspect and desilt inline with the available budget or alternatively have evidence for why a larger budget is required. The risk process is provided in Figure 2 and the decision-making framework for sediment ponds provided in Figure 3.

Figure 1: LoS for sediment ponds

Figure 2: risk considerations for sediment ponds

Figure 3 Decision making framework for sediment ponds

[1] Municipal Natural Assets Iniative, 2022. Developing levels of service for natural assets: an introduction for local governments, Canada:

[2] International Infrastructure Management Manual

[3] Melbourne Water, 2018. Healthy Waterways Strategy, Melbourne: State Government of Victoria

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