With NSW Fair Trading set to audit retirement villages for the first time in many years, how can village operators ensure that their Asset Management Plans will pass the test?
NSW village operators will have their Asset Management Plans (AMPs) put under the microscope over the coming months – but ensuring that you have robust systems, strong governance and an effective communication strategy in place should help to ease the compliance burden and satisfy the auditors.
NSW Fair Trading confirmed to The Weekly SOURCE in early July that it will be carrying out audits of retirement villages in the coming months to test compliance with several requirements under the Retirement Villages Act 1999, including obligations to have a comprehensive AMP in place.
The AMP scheme requires operators to create a 10-year record of all assets worth more than $1,000 held by the village and their expected maintenance needs for the next 10 years.
These plans must then be signed off by an independent auditor or quantity surveyor before being presented to residents for approval.
The scheme was first announced in 2018 as part of the NSW Government’s Retirement Villages Amendment bill in response to Kathryn Greiner’s inquiry into the sector post-Four Corners.
But despite the lead time, many operators have been caught out by the 1 July 2022 deadline to have their AMPs in place.
Some operators leaving AMPs to the last minute
We understand that many operators didn’t have an updated asset register or AMP until recently – with some only signing up to a software provider on 30 June.
Those that did have AMPs in place were often missing key information or had weak datasets that meant they essentially needed to start from scratch.
So, how can village operators ensure they are compliant – and ahead of the game?
Asset management technology platform AssetFuture currently partners with over 27% of NSW retirement villages on their AMPs, with almost half of their customers successfully audited or about to undergo an audit with Fair Trading.
“In our experience, audits usually cover a number of different compliance elements, however this time around there is a significant focus on AMPs,” said Domenic Fonte, AssetFuture’s CEO.
“With regards to the AMP, you need to ensure that you have available an asset register, a three-year plan, 10-year plan and evidence that these plans have been shown to the residents and feedback has been recorded and potentially incorporated into future iterations of the AMP.”
Have the right systems and technology in place
This requires a good software system to capture the required data and ensure it can be produced in a timely manner.
“The requirements are so comprehensive that trying to manage this process end-to-end without centralised technology seems inconceivable, particularly for medium to large size operators,” added Domenic.
Preparing key information such as floor plans or site layouts can help to speed up the process and help with coordination on site.
“Given the detailed requirements of the legislation to keep information up to date and within 28 days for replacement of major capital, you can’t achieve this in Excel,” stated Domenic.
AssetFuture provides capital asset modelling data which contains all the information associated with the assets that would sit in an AMP to increase accuracy and reduce the time taken to compile this data.
The group has also collaborated with its retirement living industry partners to develop a templated AMP solution that is aligned with the Secretary’s guidelines.
Ensure the board and C-Suite are engaged in compliance
Also, key is taking a top-down approach to managing assets – this is not a task that should simply fall on the village manager.
Domenic says that lining up all the stakeholders early on, including representatives from property, operations, IT, finance, governance and risk, and project management – depending on the size of your organisation – will assist in implementation and alignment across the team.
“The new requirements should bring a C-suite focus to asset management that will change the perception of its role within organisations,” added Brett Hocking, the Executive Manager at property
and infrastructure consultancy firm APP, where he manages its asset and portfolio solutions division.
“If your board and executives are engaged and you have taken action to capture all of your assets, that will demonstrate to the auditors that the foundation is in place and your AMP is not just window dressing.”
Staff also need to be trained to use the systems and input the data moving forward so it remains current.
“You need to win hearts and minds within the organisation for staff to adopt it and see the benefits,” said Brett.
“Once you have a genuine data set, you can then use it for analytics and visualisation which will support everyone – the board, executives and the village managers – with the information they need to make the right decisions.”
Put an effective communication strategy in place
The role of the resident is also critical in establishing an AMP. The SOURCE has reported that many residents were concerned about contracting COVID-19 from assessors coming into their homes.
Therefore, an effective communication strategy is important, including providing a letter to the residents, a phone call, or an approach by the village managers to issue further information and then local onsite coordination between the manager and the resident.
“AssetFuture has a proven formulated approach to communicating during assessments, across all stakeholders as well as those affected by the disruption of assessors. We’ve shared all our communication frameworks to the retirement village owners to implement them with residents, ensuring their comfort and safety,” said Domenic.
AssetFuture has also set up an internal advocacy group to provide a platform for collaboration across its clients to inform consultation with resident committees and use technology to assist with this process. Domenic will share these findings with The Weekly SOURCE in the future.
Will Fair Trading take a hard-line approach?
It is early days – and expectations are that the auditors will be looking more closely at whether operators have set themselves up on the journey than at issuing penalty notices.
“It will be very difficult to get to the right level of compliance without having a genuine audit completed, or at least substantially completed,” explained Brett.
“If you can demonstrate that you have committed the resources, the data is being captured and there is a plan for the future, I think that will help to put you in the good books with the auditors when they turn up in the near future.”
But he does advise that operators consider completing a qualitative self-assessment with several metrics to measure their progress and add any missing criteria identified by the auditors to your self-assessment to show that you are moving in the right direction.
Benefits outweigh the cost and compliance burden
The new requirements have come at a cost for many operators from both a financial and a compliance perspective. Ultimately however, the scheme could prove to become an important part of your value proposition.
“There is real opportunity with the right level of focus and advice and management for asset management to genuinely drive revenue, value, and growth in organisations,” said Brett.
In turn, this should lead to better outcomes for residents and staff.
“If the information is kept up to date and there is good practice put in place, then the return on investment on having access to that information well exceeds the compliance box,” said Domenic.
“Asset management planning leads to better care and support for residents in retirement villages and in aged care facilities. Technology enables this process to be easy and allows staff to spend their time on what they do best – providing great care, rather than manually managing asset data. More focus on assets leads to better environments that are less reactive to assets which are failing onsite.”
