Hello Care Leaders publication talks to Jess Johnson from MDFM about the retirement village reforms in New South Wales and the changes operators need to know regarding Asset Management Plans.

Fiona: Welcome, Jess. Thanks for joining me.

Jess: Hi, Fiona. Thanks very much for having me.

Fiona: In regards to Asset Management Plans, what are the changes to the retirement village regulations that have commenced in 2021 and what do village operators need to know?

Jess: In February 2021, there was an amendment to the Retirement Villages Act, which now requires all retirement villages to create and maintain an asset management plan. Now, this is just in New South Wales at the moment, but it is looking likely that the other states will follow suit. It’s causing a few headaches amongst retirement village operators, but it’s an important issue and at the end of the day, a better asset management plan can bring a lot of positives for operators. We think it’s a good thing.

Fiona: What exactly is required of providers when implementing an asset management plan?

Jess: There are three main components of the plan. The first is an asset register. Secondly, a 10-year maintenance schedule for each of those assets. And finally, a three-year report, which is an estimate of costs and dates of maintenance that’s planned over the next three years. And also details about the potential replacement of assets that might be nearing the end of their life. 

The act and the regulations and the guidelines that have been released outline what needs to be included in your plan, but it’s not prescriptive on how to go about it. This is an area that’s causing a few challenges for operators, but the good news is that there are tools available and help available to cut through any confusion.

Fiona: What type of assets are typically included in an Asset Management Plan?

Jess: This is an area where I think operators will notice a big difference. In the past when we’ve done an asset register for a retirement village, we usually record a very small number of assets. It might be an air conditioner, a water heater, and the oven for example. But with the new requirements, we actually have to record all items of capital that the operators are responsible for that has a purchase price of a thousand dollars or more. In addition to what we typically think of as an asset, we now also need to include capital items like flooring, the roof, wall coverings, and much more. I think the guidelines use the example of a fence. There are a lot more assets and it will feel like a lot more work to put that together.

Fiona: Is it just a matter of recording the asset name and a description?

Jess: Yeah, the name and the description, but also the purchase cost and the effective and remaining life of the asset depending on when it was purchased. For new villages, this type of asset data should be pretty readily available. But for older villages, creating an asset register will mean a thorough onsite audit of the village to go around and record every one of those items. 

A good tip is when you are doing the onsite audit, it’s a really great opportunity to do a condition assessment and look for any defects on your assets and also to take photos to support your decisions around maintenance and replacement. 

Fiona: Once a provider has an Asset Management Plan in place, does it need to be kept updated?

Jess: Yes, it does. There is a fair bit of work that goes into ensuring that the Asset Management Plan’s kept up to date. Firstly, the three-year report accompanies the annual budget for the village. That will need to be produced each year. If there are any changes during the budget approval process, the plan needs to be updated within 28 days of the annual budget being approved. 

Also, as you purchase new major items of capital, they need to be added to the asset register within seven days, which is a pretty short timeframe. It’s probably not entirely realistic, particularly for larger operators. And then any actual repairs and maintenance costs also need to be entered as soon as practical after they’ve been completed. It’s certainly not a small job keeping it up to date.

Fiona: Can Asset Management Plans be set up in an Excel spreadsheet?

Jess: We think it would be a real challenge to track that level of detail across a large volume of assets in Excel. Certainly, village operators need to be thinking about investing in an asset management system or maintenance software to be able to run their asset management plan. If your village is already using a computerised maintenance management system, either for your village or maybe for a co-located residential aged care facility, you should be able to customise the software and the reporting to be able to use that to run your Asset Management Plan.

Fiona: What are some of the challenges that operators might face when implementing an Asset Management Plan?

Jess: Firstly, it is a significant amount of work to set up the asset management plan in the first place, particularly if you don’t have any sort of digital maintenance system in place. There are also a lot of decisions to be made in that setup, which really needs expertise from someone who understands how an asset management plan operates in reality. 

As I said, the regulations and the guidelines don’t tell you how to go about it. You really want your asset management plan to be meaningful and a valuable source of data. You don’t want to just be looking at it as a compliance burden. 

Another challenge that we foresee is possibly opening a can of worms with so much asset data going to the residents. One useful tool that we are preparing for clients is a policy document that describes the methodology used to achieve the asset management plan. That’s not something that’s required by the regulations, but it will provide a really good base for making decisions and also provide a bit more transparency to residents to substantiate the decisions that you’ve made.

Fiona: How can MDFM assist operators to ensure their service environment is operating at its peak and how can they contact you?

Jess: We’ve been providing asset management and facilities management services to the aged care industry for a lot of years. We are well-placed to help our clients develop their asset management plans and navigate the unique requirements and nuances of this amendment and the guidelines. 

We’re always very happy to have an informal chat with any retirement village operator or aged care provider about any challenge that they might be having with their property or with their asset management. We would love for anyone to jump on our website or give us a call and start the conversation.

Fiona: Wonderful. Thank you so much for your time, Jess.

Jess: Thank you very much for having me.