Archived – Evaluation of the Life Cycle Asset Management Services Program

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Project Number 6B116
Final Report
February 16, 2010

Table of Contents

List of acronyms

ADM
Assistant Deputy Minister
AC
Assistant Commissioner
ACM
Asset Class Manager
ACP
Asset Class Plan
AMS
Asset Management Systems
ATON
Aids to Navigation
CCG
Canadian Coast Guard
COE
Centre of Expertise
DEP
Departmental Evaluation Plan
DFO
Department of Fisheries and Oceans
DGPS
Differential Global Positioning System
DND
Department of National Defence
EAP
Economic Action Plan
E&I
Electronics and Informatics
FAIS
Fleet activity Information System
GPS
Global Positioning System
HQ
Headquarters
IBMS
Integrated Business Management Services
IIP
Integrated Investment Plan
ILS
Integrated Logistical Services
ITS
Integrated Technical Services
LCAMS
Life Cycle Asset Management Service
LCC
Life Cycle Cost
LCM
Life Cycle Manager
LCMS
Life Cycle Management System
LCMS-GM
Life Cycle Management System - Guidance Manual
LED
Light Emitting Diode
LTCP
Long Term Capital Plan
MAF
Management Accountability Framework
MCI
Marine and Civil Infrastructure
MCP
Major Crown Projects
MCTS
Marine Communications and Traffic Services
MS
Maritime Services
MSPV
Mid Shore Patrol Vessels
NCR
National Capital Region
NCSP
National Capital Spending Plan
OAG
Office of the Auditor General
O&M
Operations and Maintenance
PAA
Program Activity Architecture
PMBOK
Project Management Body of Knowledge
PMM
Project Management Methodology
PWGSC
Public Works and Government Services Canada
R&D
Research and Development
RMAF
Results-based Management and Accountability Framework
RPP
Report on Plans and Priorities
SAR
Search and Rescue
SIPA
Marine Aids Program Information System
SLA
Service Level Agreements
TB
Treasury Board
TBS
Treasury Board Secretariat
TIES
Technical Investigations and Engineering Solutions
VHF
Very High Frequency
VLE
Vessel Life Extension
VMMR
Vessel Maintenance Management Review

 

1.0 Executive Summary

1.1 Introduction

The Canadian Coast Guard’s (CCG)’s Life Cycle Asset Management Services (LCAMS) program was created to effectively manage the CCG asset base. LCAMS falls principally under the mandate of Integrated Technical Services (ITS).  The purpose of this evaluation is to determine the extent to which the LCAMS demonstrates Value for Money (VFM).  The time frame covered in this evaluation is from 2004/05 to 2009/10. The evaluation was carried out from   April to December 2009 in the National Capital Region (NCR) and in the Regions.

1.2 Findings

After an evaluation of the program relevance and performance, the Evaluation Directorate, found that:


1.   LCAMS is aligned with Government of Canada and CCG priorities.
  • LCAMS services support priorities such as the Canada’s Northern Strategy, the Economic Action Plan (EAP), maritime security and Government of Canada Strategic Outcomes.
  • LCAMS supports the CCG Business Plan’s five key priorities

2.  LCAMS is aligned with Government of Canada and CCG roles and responsibilities.
  • LCAMS supports the CCG infrastructure which derives its mandate from the Constitution Act (1867), the Oceans Act (1996, c.31) and the Canada Shipping Act (2001).
  • The current delivery model of life cycle asset management services provided by LCAMS is sound and LCAMS delivers its services with an appropriate balance between internally managed activities and externally contracted services.  

3.  There is a continued need for LCAMS.
  • Assets are required to deliver CCG programs. CCG holds an extensive array of assets valued at over $5B. There is a need to apply life cycle asset management principles to ensure assets are available, reliable, and capable while minimizing life cycle costs. LCAMS provides this function and fulfills this need.

4.  LCAMS achieved its expected outcomes:
  • LCAMS achieves it intended outcomes with a few exceptions.
  • Overall, assets are available, reliable and capable.
  • Canadians are not getting the best value for money from a long term Life Cycle Cost perspective.

5.  LCAMS is efficient and economical:
  • LCAMS could improve its efficiency with respect to the production of its outputs by improving planning processes, and asset management systems.
  • The resources for LCAMS could not be further minimized without having an impact on the quantity or quality of outputs.

Relevance

LCAMS supports Government of Canada priorities such as Canada’s Northern Strategy, the Economic Action Plan, supporting maritime security and Government of Canada strategic outcomes including safe and secure communities, strong economic growth, and an innovative and knowledge based economy.  LCAMS is aligned with CCG priorities of Strengthening CCG as a Client-Focused National Agency; Supporting Canada’s Maritime Security Agenda; Fleet Renewal; Continued Implementation of Modernization Initiatives; and Effectively Managing the Workforce and Workplace.

LCAMS is aligned with federal and CCG roles and responsibilities. The infrastructure that LCAMS supports to deliver CCG’s mandate is derived from the Constitution Act, 1867, the Oceans Act (1996, c.31) and the Canada Shipping Act (2001). LCAMS directly supports the asset infrastructure that enables CCG Programs to support the Department of Fisheries and Oceans (DFO), and Government of Canada priorities, and to deliver services to Canadians.

There is a need for LCAMS. It is an enabler for programs, and as such, delivers benefits to public target groups indirectly by enabling CCG’s public programs, such as Maritime and Fleet Services, to operate more efficiently and effectively and providing direct services to internal CCG clients. The CCG provides vital support for marine science work, as well as for other government departments, agencies and international organizations involved in marine safety, conservation and commerce, all of which LCAMS supports. For as long as CCG delivers marine services and programs, LCAMS will be needed to provide technical support for those programs.

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Performance - Effectiveness

LCAMS performance was evaluated against its immediate and intermediate outcomes.  LCAMS was able to achieve its immediate outcomes with a few exceptions.  We found that improvements could be made with respect to inventory management and asset class management, specifically for Maritime Services (MS) with respect to the latter.  The evidence demonstrated that in the National Capital Region (NCR), with the exception of Fleet, there existed no specific asset class plans which documented the current and emerging technical requirements for each asset group, although some work has been done in strategic asset management for the Integrated Investment Plan (IIP).  Further, LCAMS is not influencing the capacity to improve MS management decisions as best as it could.  Also, LCAMS engages in inventory management services, however the evidence demonstrated that there is no overall inventory system platform common to all regions: there is a lack of timely asset counts, and finally, there is inaccurate data entry due to poorly defined business rules.  Again, LCAMS is limiting its ability to influence client management decisions by not providing a systematic inventory management services.  Finally, LCAMS is removing assets which no longer meet program requirements or are not cost effective to maintain or repair with one exception. LORAN C, an electronic positioning system which was implemented by the CCG in the 1970s, is not being disposed and consequently, LCAMS is not achieving this expected result. However, the final decision to dispose of this asset is not under the control of CCG. The $1.6M presently being spent on LORAN C would be reabsorbed and more effectively spent on other ITS priorities.   

LCAMS is achieving its intermediate outcomes with respect availability, reliability and capability of its assets in the context of performing their required functions in their normal operating environments. However, Canadians are not getting the best value for money from a long term Life Cycle Cost perspective, but in the context of the refurbishment of assets, they are. Unplanned corrective maintenance expenses from 2004 to 2008 are on the rise, while during the same period preventive maintenance expenditures are declining.  We found that the gap between the two is significant.  This type of pattern is consistent with assets that have reached the end of their life cycle.  We also found that LCAMS is spending approximately $112M in EAP stimulus funding over 2 years, earmarked for vessel repair and annually allocates $47.3M per year of National Capital Spending Program (NCSP) funding to refurbish the asset base.  The NCSP funding was originally secured in 2003 because assets had not received proper preventive maintenance due to a lack of Operations and Maintenance (O&M) funding.  In short, continually bringing assets back to baseline is consistently more expensive over the long term than a preventive maintenance program. In spite of the increase in corrective maintenance expenditures, there is evidence that LCAMS has been effectively planning and managing its investments on refurbishment activities thus providing the greatest return on investment that is possible through refurbishment. 

Performance – Efficiency and Economy

We found that with respect to Engineering Services at the NCR there is a lack of staff, which is affecting LCAMS ability to produce all of its intended outputs. For example, Engineering Services at the NCR has a little more than half of the required capacity to carry out engineering requests from it client programs.  This lack of capacity in Engineering Services, especially in terms of Life Cycle Managers, impacts asset class management teams where their productivity is sub-optimized. Elsewhere, the stability of funding from one fiscal year to the next is resulting in missed opportunities and increased costs in the regions.  With respect to day to day operations, the investment made in the Asset Management System is not producing quality technical data for decision makers at the NCR, though steps are being undertaken to improve this situation.  The procurement and contracting process is resulting in delays in obtaining parts and subsequently decreasing LCAMS efficiency in the course of its maintenance activities.  Project management is an area where LCAMS has made important progress.  LCAMS implements project management methodology that is a contributing factor towards ensuring that assets are acquired, maintained and disposed of in a timely and cost-effective manner.  We also found that efficiency has improved through the re-design of the organization, starting with the Headquarters review in 2000, which lead to the new Standard Organization. Finally, a national and cohesive performance measurement strategy is seen as a measure that LCAMS should implement, which would improve monitoring of expected results and support decision making processes.

With respect to Economy, we found that resources for LCAMS could not be further minimized without having an impact on the quantity or quality of outputs.  

In short, the vast majority of activities are being carried out by LCAMS which are leading to the production of desired outputs.  This is naturally producing the expected immediate outcomes, as one would expect, but with a few exceptions. Though improvements can always be made, by and large, assets are available, they are reliable, they are capable, and in the context of refurbishment activities, satisfied at a minimum life-cycle cost.  It is important to note that there are factors that influence LCAMS’ success.  These would include operating within a complex organization, pressure to respond to increasing workload with less O&M, being obligated to maintain aging assets in spite of preferring not to, and regulatory requirements which have positive influence, thus ensuring that assets are well maintained because they must be.  We concluded that the program should be continued, and though many observations were made, we restricted ourselves to the principal recommendations in section 1.4 aimed at improving LCAMS’ performance.

1.3 Lessons learned

The evaluation team made many observations throughout this project.  This lesson in particular stood out and is worthy of mention.  Life cycle asset management requires a holistic approach in order for assets to be available, reliable, capable and satisfied at the minimum life cycle cost. However support components that are considered essential upon delivery of a new asset, were periodically omitted in the past.  Support components include training for technologists, adequate technical documentation, supply chain management and maintenance plans uploaded into databases.  Factors that led to these omissions include the reduction to support staff during Program Review in the 1990’s, and significant variances between original estimates and higher than expected construction costs.  Historically, assets were provided to regions in what is referred to an “over the wall” manner.  In others words, assets were delivered to a region without the necessary support components to operate and maintain the asset.  This led to taking responsibility for an asset by a region without adequate support. To note, CCG was called out in its last Office of the Auditor General (OAG) audit for not having proper documentation, manuals and maintenance plans on board its existing vessels.  This lesson learned should not be lost in the future as the Coast Guard undertakes the renewal of its vessels over the next thirty years. If assets lack the proper logistical support, asset management will suffer, inefficiencies will prevail and the lowest life cycle cost for assets will not be reached.

1.4 Recommendations

It is recommended that the CCG:

Recommendation  1:
We recommend that LCAMS incrementally phase in over a reasonable period of time an inventory management system by asset class and region that is consistent with DFO policies on inventory management.

Recommendation  2:
We recommend that asset class plans of a more strategic nature be developed for Maritime Services.

Recommendation  3:
We recommend that the CCG divest itself of LORAN C.

Recommendation  4:
We recommend that the CCG develop methods that can demonstrate life cycle costs at the asset class level, for vessels, and for individual assets where appropriate.

Recommendation  5:
We recommend that LCAMS develop a national performance measurement strategy which measures how well LCAMS is being delivered and which will result in monitoring the performance of its entire asset base consistently.

Recommendation  6:
We recommend that support and maintainability issues for new assets be addressed during the acquisition phase.  Clear accountability for the roles and responsibilities should be clearly defined and understood with respect to the acquisition of new assets.

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2.0 Introduction

2.1 Background

The CCG LCAMS program involves the effective life-cycle management of the CCG asset base. The program provides life-cycle engineering, conception, acquisition, maintenance and disposal services in support of CCG’s non-Fleet and Fleet assets. This program activity ensures that asset capability, reliability, availability and value, are satisfied at minimum life-cycle cost.

LCAMS are an enabling sub-activity in support of the CCG program activity, a major component of the DFO Program Activity Architecture (PAA) Strategic Outcome called Safe and Accessible Waterways.

LCAMS falls principally under the mandate of ITS. The ITS mission is to ensure clients’ technical requirements, generally defined in terms of asset capability, reliability, availability and value are satisfied at minimum life cycle cost. According to the Policy on Evaluation Section 6.1.8 subsection (a), the LCAMS program has been identified as a direct spending program which must be evaluated every five years. Therefore the DFO Departmental Evaluation Plan (DEP) slated a value for money evaluation of LCAMS during the fiscal year 2009/10. 

2.2 Evaluation objectives

According to the Policy on Evaluation, this evaluation will address value for money by including clear and valid conclusions about the relevance and performance of LCAMS.  To address value for money, the LCAMS evaluation has assessed the core issues identified below:

 

Life-Cycle Asset Management Services (LCAMS)

Core Issues

Relevance

Issue #1:  Alignment with Federal and CCG Roles and Responsibilities

Assessment of the role and responsibilities for the federal government and CCG in delivering the program.

Issue #2:  Alignment with Government and CCG Priorities

Assessment of the linkages between program objectives and (i) federal government and CCG priorities and (ii) departmental strategic outcomes.

Issue #3:  Continued Need for Program

Assessment of the extent to which the program continues to address a demonstrable need and is responsive to the needs of the CCG and Canadians.

Performance

Issue #4:  Achievement of Expected Outcomes

Assessment of progress toward expected outcomes (including immediate, intermediate and ultimate outcomes) with reference to performance targets and program reach, program design, including the linkage and contribution of outputs to outcomes.

Issue #5:  Demonstration of Efficiency and Economy

Assessment of resource utilization in relation to the production of outputs and progress toward expected outcomes.

 

The evaluation has also determined whether a performance measurement strategy has served to gather valid and reliable data; draws lessons learned from this experience, i.e., distinguish what does and does not function well; and propose recommendations to help improve program delivery. 

2.3 Methodology

2.3.1 Methodology

An evidenced-based approach to the evaluation was undertaken, whereby conclusions and recommendations are based on objective, quantitative and documented evidence to the fullest extent possible. 

A multiple lines of evidence approach was used for the evaluation and included:

  • Review of CCG files and program documentation;
  • Case studies in two Coast Guard regions (Quebec and Maritimes), and;
  • Almost 100 Interviews with CCG NCR and regional staff from ITS. MS and Fleet;
  • Review of relevant national and regional databases (financial databases, Fleet activity Information System (FAIS), Marine Aids Program Information System (SIPA));
  • Review and analysis of information collected.

2.3.2 Limitations

Several factors affecting the rigour of this evaluation limited our ability to draw definitive conclusions and should be considered when assessing the findings of this evaluation:

  • FAIS is a semi-automated system that collects data on the activities carried out by the Fleet.  There are concerns about the reliability and consistency of the data in FAIS.  While some FAIS information is used in this report, the evaluation team has concerns about the accuracy of the information.  Also, information in FAIS can be interpreted in different ways by CCG staff.   
  • A partial and disorganized performance measurement strategy, especially at the activity, outputs and immediate outcomes level of the results chain, thus reducing the availability of performance data in support of the outcomes limited our ability to perform an objective assessment of the effectiveness and efficiency of the program.

2.4 Program Profile

Background

The CCG’s mandate is derived from the Constitution Act, 1867, which gives the federal government exclusive authority over navigation and shipping and over beacons, buoys, lighthouses and Sable Island. The Oceans Act (1996, c.31) confers on the Minister of Fisheries and Oceans responsibility for services for the safe, economical and efficient movement of ships in Canadian waters, through the provision of aids to navigation, marine communications and traffic management services, icebreaking and ice management services, and channel maintenance. It also gives the Minister responsibility for search and rescue, pollution response and support of other government departments, boards and agencies through the provision of ships, helicopters and other services.  The Canada Shipping Act, 2001 confers on the Minister of Fisheries and Oceans responsibilities, powers and obligations with respect to aids to navigation, Sable Island and St. Paul Island, search and rescue, pollution response and vessel traffic services. These responsibilities are exercised by the CCG.

In addition to the NCR, which serves as the CCG’s national headquarters, the CCG has five regions, each headed by an Assistant Commissioner (AC), the regions are: Pacific, Central and Arctic, Quebec, Maritimes and Newfoundland and Labrador. Situated in regional headquarters, ACs are responsible for delivering programs and activities in their regions in accordance with national and regional priorities and within national performance parameters.

It was decided in 2000, under direction of the Commissioner of the CCG, that going forward all technical services would be provided under a single authority (cost centre) be that of the ITS Directorate and using one approach to asset management. The CCG became a Special Operating Agency Model in 2005  and the implementation of a standard National Organizational Structure started in 2009.  

ITS is accountable to deliver LCAMS to its clients in order to ensure all their technical requirements, generally defined in terms of asset capability, reliability, availability and value, are satisfied at minimum life cycle cost. Specifically, ITS manages the conception, design, acquisition, installation, in-service support, and disposal of CCG’s physical assets (ships, systems and equipment, including information technologies for CCG operational systems and for administrative systems in ships and shore-based assets) through a common national Life Cycle Management System (LCMS). It should be noted that the acquisition of large CCG vessels is under the purview of Major Crown Projects (an entity of the CCG) in consultation with LCAMS.

Organizational Structure

ITS headquarters is responsible for the preparation, implementation and monitoring of the strategic and technical policies as well as the technical standards, specifications, processes and procedures necessary to ensure the safe and effective operation, maintenance and repair, and disposal of CCG’s physical assets. ITS Regions are responsible for the materiel condition, and thus the operational availability and reliability of nationally-managed (and in some cases, regionally-managed) systems and equipment assigned to each Region.

Clients

LCAMS clients consist of two major CCG Directorates: Fleet and MS. A brief description Fleet and MS assets follow.

Fleet Asset Description:

LCAMS supports all CCG ships and boats within the fleet including icebreakers, marine service vessels, research vessels, air cushion vehicles, and program boats.  This currently consists of 114 operational vessels.  The work of LCAMS includes maintenance, refit, modification and disposal of ships and boats, including the Level 2 and 3 maintenance, repair and modifications of all shipboard systems (Hull, Mechanical, Electrical, Electronics and information management systems) not undertaken by the ships’ engineering departments.  LCAMS staff is generally not responsible for carrying out Level 1 in-service maintenance which is done by Fleet personnel while the ship is sailing.

Maritime Services Assets:

Maritime Services assets include two categories of assets: Aids to Navigation (ATON) and Marine Communications and Traffic Services (MCTS) assets.             

ATON

The Aids to Navigation Services Program provides more than 17,000 short-range marine aids, including visual aids (lighthouses and buoys), sound aids (fog horns), radar aids (reflectors and beacons) and long-range marine aids such as the Differential Global Positioning System (DGPS). LCAMS is responsible for the conception, acquisition, maintenance, repair and disposal of these assets.

MCTS

MCTS provides maritime distress and safety communications, conducts vessel screenings, regulates vessel traffic movement, and provides information systems and public correspondence on a 24/7 basis. This service is delivered through a network of 22 centres and supporting communications towers across Canada.  LCAMS maintains assets for the Marine Communications and Traffic Network, Information Support Systems, MCTS Information Services and MCTS Information Support Systems. ITS ensures the total life cycle management of the assets, including conception, acquisition, in-service maintenance, repair and disposal.

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LCAM funding sources:

LCAMs has four major sources of funds.

Tier 1 O&M and Minor Capital Funding

  • Fund salaries
  • On-going operating cost assosicated with planned and predictive maintenace
  • Address regulatory requirements
  • Minor capital investments for assets less than $1 million

 
National Capital Spending Plan (NCSP)

  • Refurbish accumulated corrective maintenance

Long Term Capital Plan (LTCP)

  • Perform new installations and major upgrades to existing assets

Economic Action Plan (EAP)

  • Money allocated to Coast Guard for vessel refit and major repairs of the Fleet’s largest vessels as well as the acquisition of 98 small boats and craft.

3.0 Observations and Recommendations

3.1 Program relevance


Is LCAMS aligned with Government of Canada and CCG priorities?

LCAMS falls principally under the mandate of ITS.  It is responsible for the asset infrastructure that enables the CCG Programs to support Government priorities and to deliver services to Canadians.  These services support Government of Canada priorities such as Canada’s Northern Strategy, the Economic Action Plan, supporting maritime security and Government of Canada strategic outcomes including safe and secure communities, strong economic growth, and an innovative and knowledge based economy. 

LCAMS is aligned with CCG priorities.  LCAMS is strengthening CCG as client-focused national agency by engaging in consultations with its clients, government departments and international governing bodies in the planning and management of CCG services. LCAMS supports Canada’s maritime security agenda by improving information sharing with the Department of National Defence (DND) .  LCAMS mandate aligns specifically with one of Fleet’s Renewal goals which is to better maintain existing vessels through life cycle management.  LCAMS engages in modernization initiatives through the conversion of lighted buoys to Light Emitting Diode (LED), converting buoys to plastic material, and addressing the modernization of maintenance practices and procedures in the Vessel Maintenance Management Review (VMMR) Project. Finally, LCAMS is effectively managing the workforce and workplace by creating a National Vessel Maintenance Centre of Expertise which will provide a proactive capacity to investigate and resolve important and urgent technical issues that impact on vessel reliability and availability as well as monitor compliance and efficiency of established standards and best practices .

In sum, LCAMS activities and outcomes address both government-wide intiative and Canadian Coast Guard priorities.

Is LCAMS aligned with federal and CCG roles and responsibilities?

LCAMS is aligned with federal roles and responsibilities.  The infrastructure that LCAMS supports to deliver CCG’s mandate is derived from the Constitution Act, (1867), [navigation, shipping, beacons, buoys and lighthouses], the Oceans Act (1996, c.31) [responsibility for movement of ships in Canadian waters] as well as the Canada Shipping Act (2001) [aids to navigation, search and rescue, pollution response and vessel traffic services].   As a Special Operating Agency, the CCG helps DFO meet its responsibility to ensure safe and accessible waterways for Canadians. The CCG also plays a key role in ensuring the sustainable use and development of Canada’s oceans and waterways. As reported in the DFO 2008-09 Report on Plans and Priorities (RPP), changes were made to the PAA, and LCAMS was added as a new sub-activity to better reflect the investment and activities pertaining to life-cycle management of Coast Guard physical assets that support both the fleet and on-shore operations.

LCAMS is aligned with CCG roles and responsibilities.  It directly supports the asset infrastructure that enables the CCG Programs to support DFO and Government of Canada priorities, and to deliver service to Canadians. The CCG is a complex organization. The CCG employs approximately 4,500 individuals.  Its physical assets alone are worth approximately $5 billion, and include: Vessels, such as large and medium icebreakers, buoy tenders, science and research vessels and a multitude of small craft and air cushion vehicles; Land-based communications, such as assets supporting Marine Communications and Traffic Services; Navigation Systems, such as DGPS, LORAN-C, lighthouses, beacons, buoys; Surveillance systems, such as radars; and other assets such as towers, software applications, cranes and lifts and vehicles. 

At a high level, acquisition, design, maintenance and disposal must be handled internally. To be effective, a high degree of communication required within CCG, that is amongst Fleet, MS and LCAMS at the national and regional levels.  Interdependencies with respect to program delivery are such that all three partners must coordinate in order to operate efficiently. Ongoing communcations translate into an understanding of each partners needs and evolves into confident relationships which yields more efficient coordination.  There was agreement amongst LCAMS, Fleet and MS that the best approach for CCG is to examine its core business, focus on those activities that can be done most efficiently and contract out other components where possible.  With respect to service delivery, herein lies the opportunity to examine opportunities for which activities can be done internally or externally. 

Presently, there is no single enterprise in Canada that can provide and coordinate all of the services needed to design, acquire, support and dispose of CCG assets.  However, contracting out is considered on a case-by-case basis taking in to account many variables such as geography, multi-tasking, capacity in private industry, LCAMS internal capacity, etc. That being said, it should be noted that CCG does contract certain services in certain parts of the country such as commissioning, maintenance, decommissioning of floating aids, maintenance of some fixed aids and infrastructure.  LCAMS continues to analyse its operations to assess whether certain situations merit contracting out, and conducts business case analyses as required.  Given the unique service infrastructure required for vessel refit, over 80% or approximately $60 million of the annual refit work is contracted to the commerical marine industry. Regardless of how work is carried out, LCAMS remains accountable for performance and delivery of services.

Is there a continued need for LCAMS?

There continues to be a need for the services LCAMS provides its clients.  The CCG owns and operates the federal government’s civilian fleet, and provides key maritime services to Canadians. It is estimated that CCG’s assets are worth over $5B.  The CCG is the national institution by which Canada exerts its influence and presence in much of Canada’s waters.  The CCG has a long history of delivering maritime services on behalf of the government of Canada and well defined programs and services.  LCAMS delivers benefits to public target groups indirectly by enabling CCG’s public programs, such as Maritime and Fleet Services, to operate more efficiently and effectively.

Services Value ChainFigure 1 The Services Value Chain

3.2 Program performance

The Services Value Chain illustrates how LCAMS, or ITS in this instance, provides support to Maritime and Fleet Services, who in-turn provide Safe and Accessible Waters to the Canadian public.  In addition, a management layer concerned with the Sustainability Services for Engineering and Production Services provide services to the Canadian taxpayer by ensuring that sustainable, accountable, economical, efficient, and effective value added services are rendered.

The CCG also provides vital support for marine science work, as well as for other government departments, agencies and international organizations involved in marine safety, conservation and commerce, all of which LCAMS supports. Clients of LCAMS include CCG program areas such as: Fleet, ATON, Waterways Management Services, MCTS, Icebreaking Services, Search and Rescue (SAR) Services, Environmental Response Services, and Coast Guard College and Maritime Security. 

The delivery of the technical aspects of Coast Guard operations is vital for the realization of the CCG vision, which is to:

  • Protect the marine and freshwater environment;
  • Maintain maritime safety;
  • Facilitate maritime commerce and sustainable development;
  • Support marine scientific excellence; and
  • Support Canada's maritime priorities.

For as long as CCG delivered marine services and programs, LCAMS will provide technical support for those programs. While the organization has undergone changes and continues to do so currently, the core demand for technical support services remains. These needs still exist today as much as they did 40 years ago.  CCG has the same mandate. 

The need to provide services to Canadians such as search and rescue, navigational aids services, ice breaking, etc. are ongoing and relevant. Service Level Agreements (SLA) and the need for clear operating guidelines illustrate the need to continually improve on the services LCAMS provides its clients.

LCAMS is continuously being adjusted based on the changing needs of the programs they support, which may well include technological changes. For example, innovations in communications technology, and the advent of computer technology, have resulted in new needs i.e. DGPS. Some of the new technologies have made quantum leaps.  Climate change has also given rise to increased ice breaking services resulting from multi year ice drifting into navigable waters. Climate change has also led to the development of the Northern Strategy, a direct response to potential sovereignty issues in Canada’s Arctic.  The melting polar ice cap has made the Arctic more accessible.  This has lead to increased navigation of foreign vessels, hence requiring a more pronounced presence leading to an eventual increase in assets and the continued need for LCAMS.

Finally, the Treasury Board Policy on Management of Materiel applies to DFO.  The policy requires departments to manage materiel in a sustainable and financially responsible manner that supports the cost-effective and efficient delivery of government programs.  Compliance with the requirements of this policy is expected to result in a federal materiel management regime that embodies sound materiel management practices and generates maximum long-term economic advantage to the Crown by considering the full life cycle costs and benefits of assets. The CCG recognizes the need to develop and implement a national LCMS to promote the efficient and effective management of capital assets, their systems and equipment. It has bestowed this responsibility to LCAMS which is delivered primarily through ITS. LCAMS is required support an asset base that supports current and future program requirements as opposed to reactive asset condition investments.

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3.2.1 Effectiveness

To what extent has LCAMS influenced the capacity to improve client management decisions necessary for the cost-efficient and effective delivery of their programs?

Background

Fleet and MS management decisions are guided by an Asset Class Manager (ACM) through asset class management and asset class plans.  The ACM provides support to the client’s necessary decisions concerning asset replacement, maintenance and / or modification.  ITS also offers training services, inventory management services and asset acquisition services, which are also designed to influence the capacity to improve client management decisions.

Findings

The LCAMS logic model describes the need for Asset Class Plans (ACP), however there is an absence of these at the national level, which, to some extent, limits LCAMS ability to influence client management decisions. Though asset class plans per se are not in place, the information required to develop the plans is, for the most part, available and it is used to guide clients’ decisions. The evidence demonstrated that in the NCR, with the exception of Fleet, there existed no specific ACPs which documented the current and emerging technical requirements for each asset group.  Processes are in place for example to provide information on the condition of individual ships, allowing Fleet to decide which are at greatest risk to program delivery, and assist in prioritizing which vessels need to be addressed first. In its wake, the Fleet Renewal Plan, currently in development, is designed to deal with ships that need to be replaced over time, while a shorter term plan addresses which ships require maintenance.  The lack of a Fleet Renewal Plan has been a contributing factor to the difficulty in managing the longer-term maintenance of assets... For example, LCAMS cannot plan effective longer term maintenance of assets  if expected vessel life lengths are not understood. Indeed, LCAMS cannot make effective maintenance management decisions when they do not know whether an asset is to be kept in service over a short or a long period of time.   As well, MS noted that daily issues were adequately addressed; however they expressed concerns with regards to the strategic planning of assets, and looking into the future.  MS must equally communicate definitions for its asset classes in order for LCAMS to effectively address this concern. 

Similarly, the LCAMS logic model requires inventory related activities to be undertaken however they are not being completed in a manner that will influence client management decisions.  Inventory management plays a key role in LCMS, even driving preliminary considerations for service delivery options as early as the conception phase.  In 1997, the CCG approved and implemented a single national asset management system designed, among other things, to track inventory.  However, a 2007 OAG audit found that the accuracy of its then inventory information management system was less than 50% accurate. 

The Audit Readiness Assessment Phase One report produced by Ernst & Young in 2007 found that there was no consistency between locations in the systems used to track inventory at DFO, and that some locations use off-the-shelf applications, others use Excel and some are manually tracked. The report also found a lack of timely asset counts where one region performed rotational counts at physical locations on an annual basis, but no counts for inventory held on vessels, while in two other regions, the last physical counts were conducted during the late 1990s.  In 2008, their Phase Two report found a lack of procedures, processes and controls where inventory values in regions are often created purely on estimate and not as a result of physical counts and suggested the need for a consistent inventory costing process.  

Respondents noted that there is inventory recorded on the current database system in excess of what is actually on hand.  This is due to a lack of clearly defined business rules, a finding which is also supported by the CCG 2006 A-Base Review Report; a lack of cost information making it impossible to track maintenance costs of assets; poor record keeping by employees and contractors; and a lack of standards to determine the minimum number of spare parts that are required in a region. 

There is ample evidence that LCAMS provides useful advice to its clients at all levels of the organization.  Their role in providing effective advice was acknowledged by Fleet and MS both at NCR and in the regions.  One of the distinctive hallmarks was the iterative process and collaborative nature in which advice is provided.  LCAMS seems to perform its best work when it involves its counterparts, Fleet and Maritime Services, at various points in time in the processes that lead up to making decisions. 

In short, we noted that a few of the activities as prescribed in the logic model are not occurring, which impact on the achievement of this outcome.  Our findings suggest that improvements could be made with respect to inventory management and asset class management and with respect to the latter specifically for MS. 

Recommendation #1
We recommend that LCAMS incrementally phase in over a reasonable period of time an inventory management system by asset class and region that is consistent with DFO policies on inventory management. 

Recommendation #2
We recommend that asset class plans of a more strategic nature be developed for Maritime Services.

To what extent has LCAMS provided technical solutions [assets] that meet clients’ new or modified operational requirements?

Background

During the conception phase, a Life Cycle Manager (LCM) plays a key role to ensure the carrying out of the activities associated with the planning, development, definition and selection of a preferred solution to an operational requirement.  The LCM establishes appropriate Research and Development (R&D) activities to explore and evaluate possible solutions to problems; ensures the inclusion of logistical support requirements i.e. supply chain management or training; develops the maintenance concept; and provides technical advice on possible solutions to the operational requirement.  The process may include conducting engineering studies; preparing preliminary engineering drawings; reviewing life cycle costs; planning and engaging in engineering tests; and constructing and installing a technical solution.

Findings

Some of the work that LCAMS LCMs carry out involves the gathering of information from clients and delivering a technical solution.   Much of their work however may not involve the client directly and is done behind the scenes, such as carrying out R&D, creating engineering drawings, reviewing costs, etc.  In some cases assets such as buoys have been in existence for decades and long since designed, or in other cases, off the shelf products exist that don’t require extensive designing, just confirmation that there is conformity with the program requirement.  In other cases, the technology is so complex that it is well beyond the comprehension of the end user. In short, appreciating the work that has gone or goes into finding the appropriate asset may not always be evident to the end user. 

Overall, clients are satisfied with the technical solutions they receive. Our findings suggest that LCAMS consults with its clients with regard to their required operational needs and does provide options or various technical solutions to their clients. Clients see the participation of the end user as a key component to the successful development of a technical solution.  LCAMS will conduct trial and error tests in the field sometimes in collaboration with the clients.  Success stories include LED conversions on buoys, the solarisation of shore lights, the application of radar technology to buoys in the Bay of Fundy, and improving Very High Frequency (VHF) communications coverage in the Pacific region.  Communicating and collaborating with LCAMS clients was seen as key factors to success, engaging them where appropriate, and being mindful of complying with any regulatory requirements as well as stated needs.  In short, it is our assessment that the evidence demonstrated that LCAMS is suitably providing technical solutions that meet client’s new or modified operational requirements.

To what extent has LCAMS preserved assets to an established standard of operating capability?

Background

The CCG’s objective is to optimize the total life cycle cost of an asset.  The life cycle cost of maintenance and logistics support is typically higher than the cost of capital acquisition for complex systems therefore the maintenance of assets is a key aspect to achieving this objective. An asset’s Maintenance Plan is a key document in maintenance management. Factors that influence the Maintenance Plan’s tasks include the operational significance of the system and its associated sub-systems and equipment; safety implications of failure; regulatory requirements; and cost effectiveness of conducting the selected maintenance action.  The two most frequent types of maintenance that are performed on assets are preventive and corrective maintenance.  Preventive maintenance is characterized as any planned maintenance action required to prevent or reduce the likelihood of system or equipment failure such as lubrication or cleaning.  Corrective maintenance is any unplanned maintenance action required to correct a fault or restore failed equipment to an established standard of operating capability.

Fleet

Assets are being maintained however there appears to be a chronic lack of funding that is needed to ensure that all assets are suitably preserved or, alternatively, to refit or replace assets in a timely manner.  From a Fleet perspective, there was strong evidence that vessels are maintained.  There is evidence that documented maintenance plans are kept in the regions for Fleet assets.  For example, the Quebec Region case study supported this finding, describing a rigorous approach to planning the maintenance of its vessels where a detailed plan is produced before each planned maintenance period.   

Most LCAMS respondents qualified their responses to reflect that assets are well maintained in spite of its financially restrained environment.  NCSP funding was introduced as a means to refurbish assets that had deteriorated because of a lack of O&M funding.  However if NCSP funding were consequently no longer available, current levels of O&M funding would not be sufficient to maintain the assets that the NCSP funding was designed to refurbish.  This scenario could eventually usher back the need for NCSP funding.  The inadequacy of O&M funds was underscored in the CCG 2006 A-Base Review Report.

Transport Canada’s Marine Safety maintenance requirements are a factor that influences maintenance of vessels ensuring that it is planned and carried out. Complying with regulatory requirements is mandatory. Maintenance activities under these requirements account for approximately 70% of all maintenance that is carried out on a vessel.  Failing to pass regulatory inspection would result in vessels that are not operational.

There are challenges that prevent LCAMS from successfully achieving this outcome which are beyond its control. For example the deterioration of equipment that is beyond economical repair, low reliability of assets due to wear and tear or aging vessels pose certain challenges with respect to obtaining parts.  In some cases, the consequence of scarcity of parts means more effort is expended in obtaining them, locating them from unconventional sources or suppliers and in some cases a premium may be paid to produce custom replacements. It was noted that electronic equipment and associated software specifically designed for vessels can be difficult if not impossible to obtain.  Some of the underlying causes are that manufacturers no longer produce the parts due to advances in technology, or manufacturers of the original equipment may no longer be in business.  Unconventional suppliers may include European scrap yards or EBay. If an identical spare part cannot be found, replacing the part often results in having to do a complete system overhaul.  

Maritime Services

From an MS perspective, there was also strong evidence that assets are adequately maintained.  Maintenance on floating aids to navigation follows a fairly routine maintenance schedule year after year.  Many of the buoys are of a seasonal nature and so when they are removed from the waters in the fall, any required structural maintenance can be performed.  The Quebec Region case study found that Marine and Civil Infrastructure (MCI) engineers produced in 2004 a Fixed Aids Master Plan presenting in detail the current state of the fixed aids network and the investment required during the next 20 years to ensure an adequate life cycle management of fixed aids in the Quebec Coast Guard territory.  Individuals responsible for marine communications equipment also reported that they have maintenance plans in place to deal with the specific needs and particularities of their assets.

Human and financial resource shortfalls were cited as a barrier to providing effective preventive maintenance.. There is a lack of funding available to suitably engage in preventive maintenance.  Some regions are unable to inspect all of their land sites on a rotating four year basis, and implement a preventive maintenance plan.  From a corrective maintenance perspective, some regions have eliminated after hours support of technicians during weekends and evenings, which in one instance, reduced the availability of equipment used for communicating emergency distress signals for an extended period of time. Budgets in some cases have not increased for several years, while materials, inventory and outsourcing costs have increased. Generally speaking, with respect to Fleet and shore based assets, the findings suggest that ITS engages in the refurbishment of assets to bring these back to baseline. 

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To what extent has LCAMS removed assets which no longer meet program requirements or are not cost effective to maintain or repair?

According to the Life Cycle Management System - Guidance Manual (LCMS - GM), disposal action is taken under the following conditions:

  • when as asset is no longer operationally required; no longer capable of satisfying the operational requirement;
  • prohibitively expensive to operate and maintain;
  • being replaced by another system / equipment;
  • destroyed, un-repairable, worn out, consumed; or,
  • held in inventory surplus to requirements. 

It falls to supply chain management, in collaboration with a Life Cycle Manager and/or an Asset Class Manager, to ensure that disposal and replacement of material is economic and efficient.  The process involves identifying opportunities for the re-allocation of disposal of surplus, excess or obsolete material and the timing of planned disposal actions to ensure that maximum benefits are achieved and supply chain support continues uninterrupted.

Fleet

Generally, assets are properly disposed of when there is a requirement to do so.  In some cases, when a vessel is not disposed of, and it is placed in a state of either warm or cold lay up, there is a possibility Fleet may request that it be brought back into service.  For example, Fleet is currently at its maximum operational capacity, and so there could be pressure to bring a vessel back into service when another vessel is undergoing prolonged refurbishments under a VLE. This is a potential consequence stemming from existing program demands and a limited number of vessels to deliver those programs.  Also, vessels Fleet elects to keep in a warm or cold lay up still need to be maintained in some way and can consume O&M and capital/refit resources that could be used to maintain vessels that are actively operating.

Maritime Services

With respect to ATON and MCTS assets are being disposed of when required, and in an appropriate manner.  The disposal of electronics and informatics assets is consistent with existing LCMS best practices i.e. identifying opportunities for the re-allocation of disposal of surplus.  With respect to MCI assets one respondent noted that “we don’t effectively remove it (assets) in time, but we do dispose of it in time”.  As a rule, there is generally little funding earmarked for the disposal of assets, possibly due to the heavy demands currently placed on maintaining existing assets.  This lack of funding is generally not so much of an issue for the disposal of smaller assets or those that are easily accessible i.e. not located in remote locations. In some cases, funding to dispose of assets may be available through capital projects i.e. the replacement of communications towers, though this is not always the case as there may be restrictions on the use of this funding for the disposal of assets.  LCAMS could improve its performance on elements that are under its control i.e. clearer procedures; however on the whole LCAMS is disposing of assets which no longer meet program requirements or are not cost effective to maintain or repair.   

There is one asset, LORAN C, that is not being disposed of and consequently, LCAMS is not achieving its expected result.   LORAN C is an electronic positioning system which was implemented by the Canadian Coast Guard (CCG) in the 1970s.  Today, a large majority of mariners navigating Canadian waterways have come to rely more on modern navigational technologies such as the Global Positioning System (GPS) and Differential GPS.  “In 2002, it was concluded that the LORAN C navigation system is not required for the purposes of marine security in Canada.” 1 The cost to maintain LORAN C on an annual basis is approximately $1.6M and is summarized in table 1 below.   The 2006 A-Base Review Report reached a similar conclusion, also noting that this asset had not yet been decommissioned, which placed “extra demands on already limited O&M funding”. It is worth noting that LCAMS is using O&M funding to maintain LORAN C that was originally intended to maintain other assets. The funds used to maintain LORAN C could indeed be reabsorbed and more effectively spent on other ITS priorities.

Region Salary O&M Total
Pacific 310,000 325,000 635,000
Newfoundland 422000 560,000 982,000
Total 732,000 885,000 1,617,000

Table 1 Cost of Loran C

Recommendation #3
We recommend that the CCG divest itself of LORAN C.

To what extent are CCG assets available for their intended purpose?

Background

An asset’s operational availability can be defined as the percentage of time that an asset is serviceable and capable of performing its required function over the total time allotted for actual operation. Factors that impact on an asset’s availability include failures, logistics delays, and administration delays. 

Fleet

Fleet’s assets are available for their intended purpose.  There is a gap between what is planned versus actual days assigned, however on the whole, vessel availability remains consistent year over year.  The Quebec Region Case Study illustrates this point below:


Figure 2 – Quebec CCG – Vessel Availability

The graph illustrates that on the whole, availability is generally constant.  There were a few examples of vessels that were unavailable for extended periods of time and because they required unplanned maintenance.  Vessels are generally tasked at full capacity, and so if a breakdown occurs or there is a delay in returning a vessel, this has implications for the program, and often, there is no alternative asset or “workaround”.  As one respondent put it, when a vessel fails, it is a “show stopper”.

Assets are aging, and this is having an impact on their availability. Older assets require longer and more frequent maintenance periods, which impact their availability.  The 2006 A-Base Review Report found that “the resulting continuous degradation of systems’ effectiveness, reflected in the reduced and predictable reliability and availability of ships and shore-based systems, has resulted in steady increases in unanticipated asset and infrastructure failures”. In short, assets are older and failures are on the rise.  Table 2 illustrates the age of vessels in the CCG.  With over 58% of Fleet’s large vessels over 25 years of age, LCAMS faces an important challenge with respect to ensuring asset availability.

Vessels

Current Number

Vessels over

Vessels

Vessels

25 Years Old

15 to 24 Years Old

Under 14 Years Old

LARGE VESSEL FLEET

Large Ships (over 88m)

6

83%

17%

0%

Design Life - 30 years

Medium Ships (48 to 87m)

28

46%

54%

0%

Design Life - 30 years

Smaller Ships (33 to 47m)

6

83%

17%

0%

Design Life - 15 to 20 years

TOTAL Large Fleet

40

58%

43%

0%

SMALL VESSEL FLEET

Small Vessels and Air Cushion Vessels (ACVs) (up to 33m)

36

42%

39%

19%

Design Life - 15 to 20 years

SAR Lifeboats (14m)

38

0%

5%

95%

Design Life - 15 years

TOTAL Small Fleet

74

20%

22%

58%

TOTAL FLEET

114

33%

29%

38%

Table 2 Age of Vessels

Maritime Services

ATON assets are almost always available for their intended purposes.  Both LCAMS and ATON clients concurred with the reliability measures illustrated in the tables below.  Assets are available to deliver the services close to one hundred percent of the time. The two tables below illustrate the percentage of time that Fixed Aids and Floating Aids were providing the service .

Region

# of Aids

%

Reliability

2004-05

2005-06

2006-07

2007-08

Central and Artic

2,417

40.5%

99.89%

99.90%

99.50%

99.18%

Maritimes

937

15.7%

98.29%

98.95%

98.87%

98.31%

Newfoundland

742

12.5%

99.17%

99.36%

99.55%

99.31%

Pacific

1,293

21.7%

99.82%

99.89%

99.66%

99.89

Quebec

570

9.6%

99.37

99.11%

99.13%

99.39%

Summary

5,959

100%

99.42

99.56%

99.40%

99.27%

Table 3 Fixed Aids Reliability

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Region

# of Aids

%

Reliability

2004-05

2005-06

2006-07

2007-08

Central and Artic

4,645

41.4%

99.83%

99.84%

99.82%

99.75%

Maritimes

4,018

35.8%

99.17%

99.36%

99.52%

99.50%

Newfoundland

860

7.7%

97.25%

97.89%

99.27%

98.34%

Pacific

487

4.3%

99.61%

99.73%

99.46%

99.62%

Quebec

1,204

10.8%

99.66%

99.34%

99.50%

99.57%

Summary

11,214

100%

99.20%

99.33%

99.55%

99.45%

Table 4 Floating Aids Reliability

MCTS assets are available for their intended purpose.  With respect to communications equipment, towers and antennas, the evidence demonstrated that the intended service was being provided. 

In some cases, an asset could be considered available and meeting its level of service, but its infrastructure may in fact be at risk of imminent failure. For example, some fixed aids to navigation are designed to communicate highly accurate positioning to mariners.  Any modest lean in these structures yields miscalculations, thus misguiding vessels and causing them to potentially run aground.  These structures guide vessel pilots through narrow passages through densely populated areas and there is a real risk of environmental disasters. Similar concerns of assets being at risk were raised with respect to communications towers, and with respect to aging communications equipment.  Some communications towers and equipment used for emergency response are at risk of failing.  There is cause for concern for in some cases there are no replacements available which could ultimately impact on asset availability.

To what extent are CCG assets reliable?

Background

Reliability is thought of as the probability that an item can perform its intended function for a specific interval under stated conditions.  In other words, reliability is how probable is it for a given floating aid to navigation to remain in its position with its light functional during the navigational period.

Fleet

Overall, Fleet’s larger vessels are reliable, though a small number of large vessels did not perform as reliably as others.   For example, the Quebec Region Case Study found that assets were very reliable.  A main indicator of a vessel’s reliability is the number of unplanned maintenance days it requires during which the vessel is unavailable for clients. Figure 3 illustrates the number of unplanned maintenance days for each vessel during the 2004-09 period.  As a caveat, it should be noted that not all unplanned maintenance is attributable to LCAMS. For example, in the case of Fleet a vessel could require unplanned maintenance due to damage caused by operator error or in the case of Maritime Services a fixed navigational aid may require unplanned maintenance due to damage from adverse weather conditions.


Figure 3 Quebec CCG – Vessels: Days of Unplanned Maintenance

With the exception of the two air cushion vehicles, the Radisson, Louis M Lauzier and the Frederick G. Creed, the number of unplanned maintenance days is relatively low. 

However as noted in the previous section, there is a decrease in reliability of ships due to their degradation.   The age of vessels is an issue. Older assets are less reliable, and are more prone to failure.  Furthermore, aging equipment requires increased maintenance, requiring additional repair time and older vessels require more structural work.  Delays are caused in cases where to replace a specific part, one must replace many of the surrounding parts, thus adding to the repair time.  In some cases, parts are very old, even obsolete and difficult to replace, sometimes requiring several months to obtain.  In spite of this, once the work is completed, the assets are considered reliable.  In short, age reduces an asset’s probability that it can perform its intended function for an expected or desired time period. 

Reliability of assets can be affected if they are not used for their original intended purpose by the clients and their operators.  For example, in the case of trawlers in Newfoundland, some undergo periods of continuous trawling 24 hours a day for two weeks at time, when these vessels were designed for at most 6 hours of trawling per day. When these types of practices occur, this translates into a challenge for LCAMS with respect to assets that perform reliably for their originally intended purpose. 

It should be noted that the unplanned maintenance data from figure 3 was retrieved from Fleet’s FAIS report which did not specify whether the unplanned maintenance was attributable to LCAMS, the age of the vessel or if assets were not used for their original intended purpose.  

Maritime Services

ATON and MCTS assets are performing in their operational environments quite reliably.  As discussed in the previous section, the evidence demonstrates that floating and fixed aids to navigation in tables 3 and 4 have very high reliability or availability ratings. However, growing reductions in O&M funding puts future reliability and availability at risk. Year over year, this group of assets has a high probability of performing their intended function.  ATON assets, on the whole, perform reliably with respect to factors under LCAMS’s control, but reliability can vary as a result of factors beyond their control such as visual obstruction of aids due to overgrowth of vegetation or hydro conditions such as water currents unique to a particular site. 

With respect to ATON, the factors that can impact on asset reliability of fixed navigational aid structures, and in the case of MCTS assets and communication towers, these are at risk of not being able to perform their intended function thus increasing the probability of failure if the repair or replacement of certain of these assets is not addressed.  The refurbishment of communications towers with NCSP funding has been credited with helping address asset reliability through the replacement of those structures that are at risk of imminent failure.

To what extent are CCG assets capable?

Background

An asset can be thought of as capable where in a first instance it has met a client’s approved new or modified operational requirement, and once in its operating environment, it proves to be able of fulfilling its intended functions.

Fleet and Maritime Services

Fleet assets are quite capable with the majority of them able to fulfill their intended functions and in fact with respect to a few of these assets, they even exceeded client expectations. 

MS assets are capable of fulfilling their intended functions. Clients from ATON expressed their satisfaction with their asset performance, and noted that migrating over to new technology such as LED lights and plastic buoys provide recent demonstrable evidence that LCAMS is able to provide assets that are capable.  MCTS clients as well as LCAMS Electronics and Informatics (E&I) respondents expressed similar levels of satisfaction with respect to their assets, and being able to fulfill their intended functions.

Isolated incidents were reported by respondents with respect to a few assets.  For example, in one case LED lights were purchased in spite of clearly not being able to perform to the desired specifications and fulfill their intended functions in their operating environment. There were a large number of failures in the field after their deployment, necessitating the use of ships and helicopter to conduct the repairs.  Over the years, improved definitions of roles and responsibilities has greatly reduced this type of incident; or issues with new generations of engines causing frequency interferences for communications equipment on board ships.  Few of these types of incidents were reported over the period covered by this evaluation and therefore not a significant problem overall.

To what extent are CCG asset technical requirements satisfied at a minimum life cycle cost?

Background

According to the LCMS-Guidance Manual, “the objective of implementing the LCMS is to maximize the benefit of employing an asset while minimising the cost of that capability. Assets start to incur costs the moment they are conceived; a price is paid for their conception and acquisition; support costs and enhancement costs accrue during the in-service phase. Even in the disposal phase, there are financial commitments in removing and disposing of the asset and its associated materiel. The Life Cycle Cost (LCC) represents the total cost of the acquired asset through all its life cycle phases.”

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Figure 4 Asset Spending over Time

Figure 4 above illustrates the relative cost associated with a new asset over its life cycle.  Initially there is a sharp rise in costs due to acquisition of assets followed by a relatively stable period of expenditures as preventive maintenance activities dominate, followed by an increase of corrective maintenance expenditures due to the age of the asset. 

Findings

Canadians are not getting the best value for money from a long term LCC perspective, but in the context of the refurbishment of assets, they are.  Planned maintenance expenditures have been decreasing which is consistent with the reduction in available funding.  The current emphasis has been to fund essential operational services, then repairing problems that are causing service outages and thus perform corrective maintenance followed by prioritizing planned maintenance requirements. The focus in any given year has been to prioritize which assets are most in need of maintenance rather than focusing on preserving assets.  The 2006 A-Base Review Report reached a similar conclusion, noting that “due to limited O&M, the priority has been placed on the corrective and regulatory maintenance to the detriment of preventive and predictive maintenance”  This scenario results in overall increased LCC.  It is also indicative of the general health of the asset base, the approach to asset management that LCAMS must resort to in order to ensure assets across the board continue to function and raises the question as to whether this approach is sustainable in the long run.     
 
Refurbishment expenditures also provide insights into the nature of maintenance activities. In 2003, additional capital funds secured through the NCSP in the amount of $47.3M per year were allocated to refurbish the asset base.  The NCSP funding was in response to the insufficiency of O&M funding which led to the neglect and deterioration of assets.  A lack of preventive maintenance will reduce the life expectancy of an asset.  An injection of funds is required in order to bring the asset back to baseline and re-establish its original life expectancy. Clearly, since the advent of the NCSP funding in 2003 life cycle costs have not been minimized due to not carrying out the required preventive maintenance.  Furthermore, in 2009-10, LCAMS received approximately $112M in EAP stimulus funding, for vessel repair. Again, with the introduction of the EAP stimulus funding, life cycle costs have not been minimized due to not decommissioning vessels and replacing them at the end of their life cycle. 

LCAMS is satisfying technical requirements at a minimum LCC through the effective short term management of NCSP and EAP funding. There is evidence that LCAMS has been effectively planning and managing its investments on refurbishment activities thus providing the greatest return on investment. 

Modifications to LCAMS financial reporting system would greatly improve its ability to monitor and report on the life cycle costs of its assets.  There currently are challenges in terms of attributing costs to specific assets at CCG and stating conclusively that technical requirements are or are not satisfied at a minimum life cycle cost. The current accounting system does not lend itself to reporting on both the acquisition and maintenance costs over the life of an asset and nor does the current inventorying system at CCG lend itself to attributing costs to individual assets when maintenance is carried out.

Recommendation #4
We recommend that the CCG develop methods that can demonstrate life cycle costs at the asset class level, for vessels, and for individual assets where appropriate.

Are there any external factors and/or general challenges/barriers that influence the success of LCAMS?

LCAMS operates in a challenging environment.  The CCG has over 4000 employees, is a complex organization and has to provide much of its services in often difficult environmental and logistical conditions. There are several factors worth noting that influences LCAMS ability to be successful:

Complex Organization
As noted above, the CCG is a complex organization.  There are three Directorates that must coordinate their efforts to deliver programs from a national perspective.  Each Directorate must coordinate the activities of their own staff at each of the five regions and ensure there is a high degree of coordination between regions. Furthermore, there must be coordination amongst the three Directorates at the national and regional level, and there must some degree of continuity amongst all five regions.  Achieving some level of consistency in operations from one region to the next requires a high degree of coordination and communication at all levels of CCG.  LCAMS is but one of the players, and to be successful in achieving its outcomes, depends on the cooperation and collaboration of the other two directorates.  In short, this is not a simple, straightforward environment.

Inadequate Funding
Though assets are by and large being suitably maintained, on the whole, there is a lack of funding to adequately address all of LCAMS activities and expected outputs.  Our objective assessment revealed that few areas had adequate resources to carry out their mandate.  Monitoring Life Cycle Costs of assets and LCAMS overall performance with respect to its intended outcomes should prove useful to demonstrate the scope and breadth of this issue.

Regulatory Requirements
Canadian and International regulatory requirements have a positive influence over LCAMS success because the consequences of not abiding can result in serious consequences. They create a sense of prioritization with respect to properly maintaining assets; Canada’s credibility on the international stage may be affected if Maritime Services doesn’t abide by international navigational guidelines; or Canada’s economy could be impacted if these international navigational guidelines aren’t respected and vessels transporting goods to and from Canada, cannot safely navigate through our waters.       

Aging Assets
Vessels are aging and this has a great impact on their availability and reliability and fixed aids to navigation are also aging, placing these at risk of not being available or reliable.  LCAMS will be challenged to achieve its intended outcomes if there are no funds to replace these assets or plans to address their replacement.  Any challenges LCAMS faces in this respect will be felt by Fleet and Maritime Services.

In short, these are important factors that influence LCAMS success which senior management should keep in mind when making decisions of a strategic nature.

Special note of Economic Action Plan Stimulus Funding

In 2009-10, LCAMS received approximately $175M in EAP stimulus funding, $112M of which was earmarked for vessel repair projects.  We found that the work is contracted out, and that 100% the funding allocated to 2009-10 will be spent by the end of the 2009-10 fiscal year. The increased reporting requirements is having an impact on LCAMS, however we found that human resources had been allocated to address this and LCAMS was managing well with respect to this activity.

3.2.2 Efficieny

Background

Efficiency is defined in the 2009 Treasury Board Policy on Evaluation (2009) in the following manner:

Efficiency: the extent to which resources are used such that a greater level of output is produced with the same level of input or, a lower level of input is used to produce the same level of output. The level of input and output could be increases or decreases in quantity, quality, or both.

It is within this conceptual framework that the efficiency of the LCAMS sub-activity was assessed in this evaluation. Over the course of the evaluation, four topics were particularly prominent with regards to efficiency, these were: staffing, planning, operations and organization design. Each of these topics will be further examined below.

Findings

Staffing

From a Fleet regional perspective, the evidence demonstrated that vessel crews are understaffed which has impacts on capacity for maintenance of vessels and indirectly on service delivery. However, from an LCAMS headquarters perspective, the lack of technical staff in Engineering Services, notably life-cycle managers, seems to be the biggest cause of inefficiencies (see Table 5).

Sector

Current FTE/ Year

Yearly FTE Required

Gap

HQ Engineering Technical Staff

28

54

-26

Table 5 FTE for HQ Engineering Services

Table 5 summarizes an analysis carried out by Engineering Services at HQ , within ITS, which averaged the volume of annual engineering requests in 2007 covering a three year period and compared it to current capacity.  The exercise found that Engineering Services currently has a little more than half of the required capacity needed to carry out this work. This lack of technical staff has spill over effects in the service delivery sector of LCAMS, especially the asset class management teams.  Due to this lack of capacity in Engineering Services, asset class management teams are forced to take on more operational day-to-day types of tasks which sub-optimizes their productivity. These responsibilities divert the asset class management teams from their essential role which is to focus on gaining strategic foresight and planning of the asset class. It should be noted that in order to have efficiency gains in terms of staff, new life-cycle managers should have sufficient knowledge of Coast Guard business, that is, avoiding engineers that have only theoretical knowledge and no understanding of Coast Guard operations. There also could be efficiency gains if concept of Life Cycle Management was fully implemented within the standard organization model in order to focus engineering efforts on specific systems and assets. .

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Planning

Planning and planning related issues were identified as a concern in terms of an organizational process than had an impact the LCAMS ability to achieve optimal efficiency.

At the forefront of planning issues was the stability of funding. This was especially important in the regions where LCAMS plans are operationalized. Guaranteed funding year over year, or the lack thereof, limited many levels of the regional LCAMS administration to carry out the most cost-effective decisions to be made with respect to asset maintenance. For example, if there is a need to secure the services of external contractors at the end of the fiscal year, and there is no approved budget that carries over year to year, LCAMS is unable to make commitments resulting in missed opportunities and in many cases increased costs.

Funding stability budget allocations are insufficient, with respect to E&I and the MCI areas. These budgets consist largely of O&M funds and, to a lesser extent, minor capital. The chronic lack of O&M funding and minor capital funding means that MCI and E&I rarely achieve all their necessary outputs to ensure that life-cycle management is efficient as long term planning cycle for the asset often disrupted. This lack of continuity in asset maintenance results in sub-optimal expenditure plans that keep assets at their baseline capacity. The medium and long run funding allocation will eventually become more efficient as the Resource Management Sub-Committee, which is run by the Integrated Business Management Services (IBMS) within the Coast Guard, helps to integrate investment planning for across Coast Guard. This integrated investment planning process will ultimately identify cost savings which indirectly will free up more funds for work scheduled by E&I and MCI superintendents.  These findings are consistent with the 2006 A-Base Review Report which found that a more coordinated and integrated planning approach was necessary at all levels of the organization. LCAMS is making progress towards this end.             

Operations

This section looks at the efficiency issues within the actual operations of LCAMS.  Three main issues surfaced concerning the efficiency of operations, namely; 1) Asset Management Systems, 2) procurement and contracting and 3) project management. Each of these issues will be further discussed below.

Asset Management System

There are two components of CCG’s Asset Management System (AMS): Maintelligence which is specifically designed for self-contained vessels (vessels that are not operated from a shore station), and MAXIMO which is designed for all other assets including all station based vessels.  Self-contained vessels are in the process of having their instances of Maintelligence refurbished. Currently about half of the 51 vessels slated to receive Maintelligence have received the refurbishment and the refurbishment of the remaining vessels is expected to be completed by summer 2010. The roll out has been successful for several reasons, notably that both training and business rules for the system were defined and prior to its implementation. On the other hand MAXIMO’s roll out, albeit a more complicated system, has not been so successful. The main criticism with the MAXIMO implementation was that it was done with very little client support. Users received insufficient training and the business rules are ill defined. As a consequence, MAXIMO produces very poor quality technical data. It is essential that these tools be used extensively as they are the backbone of performance measurement in LCAMS.  Presently,  for lack of better data, the financial system is being used in lieu of the AMS, but it doesn’t capture the quantity, quality and variety of work done at LCAMS.

Finally, although it was acknowledged that the implementation of a computerized Asset Management System was not well planned, there is general consensus among the upper management that these systems are key to improving the efficiency of planning in the future. The issue will be hopefully resolved as Asset Management System is fine-tuned to meet the needs of both the headquarters and the regions and computer literacy amongst ground staff increases.   

Procurement and Contracting

The procurement and contracting process at LCAMS with respect to maintenance of vessels is affecting productivity. Indeed, because Public Works and Government Services Canada (PWGSC) is involved in most contracting situations, LCAMS do not always get their products or services in a timely manner. For example, delays are caused by not having a standard technical statement of requirement template. In an effort to address this situation, LCAMS staff were in favour of having PWGSC contracting officers deployed within the Coast Guard much like it is practice with the Major Crown Projects Directorate within Coast Guard. Many superintendents were in favour of setting up standing offers which would allow to them to simplify and improve the procurement process. The fact that LCAMS has a contracting vehicle known as the Technical Investigation and Engineering Solutions (TIES) seems to be indicative that procurement processes, when used appropriately, can be streamlined.. TIES allows purchasing the right engineering services while minimizing the procedures required to acquire the services.

Project Management

LCAMS implements project management methodology which is a contributing factor towards ensuring that assets are acquired, maintained and disposed of in a timely and cost-effective manner. LCAMS is responsible for managing in-service projects and all of the non-large vessel fleet acquisition projects for Coast Guard. Project management was identified in the late 1990’s as an important vector to ensure efficient management of Coast Guard assets. Since the late 1990’s, LCAMS began work on a Project Management Methodology (PMM) for ITS in accordance with international standards for project management in early 2002, known as the Project Management Body of Knowledge (PMBOK). In 2005/06 the LCAMS implemented the finalized PMM and corresponding Quickstart on-line project management tool kit. We reviewed a sample of 5 LCAMS national projects led by its NCR operations which showed evidence of this evolution of the use of PMBOK methodologies in LCAMS during the scope of this evaluation. We found that the implementation of the PMM is showing signs of integration and that the PMM is starting to be used effectively within LCAMS. However, a weakness was found with respect to the comprehensive close-out which includes the ‘lessons learned’ section from projects. We found that Close Out reports were not always readily available for all projects. However this weakness is presently being addressed through the monitoring of quality assurance of close out reports.

A self-assessment of project management skills in Coast Guard was conducted as part of the DFO Investment Planning Working Group which will provide the necessary information to Treasury Board Secretariat (TBS) to help transition from the TBS Capital Planning Management Framework to the new policies on investment planning.  This self-assessment found that on average 70% to 90% of projects respected project management methodologies. Respondents also agreed that project management had improved operations at LCAMS. For example, project management has improved with respect to the vessel refit process,  in conjunction with a Vessel Maintenance Management Review initiative.

One weakness noted in project management was that although project management practices have been adopted and were generally followed at Headquarters, the PMM project management practices were not used as much in regional LCAMS organizations.  The oversight of HQ, through the Central Project Co-ordination Office, is seen not to exercise a LCAMS wide firm audit and monitoring role. 

Performance Measurement

Performance measurement at LCAMS is dichotomic in nature. There is a high level outcome reporting principally under the purview of headquarters and weak and fractionated regional performance measurement of activities and outcomes.   

From a headquarters perspective a performance measurement framework is difficult to develop because, although LCAMS is presently in the PAA as a sub-activity under Coast Guard, this is may not reflect its true role since this implies that LCAMS is a departmental program..  LCAMS is viewed at headquarters as an enabler, rather than a program, in the sense that LCAMS does not provide any services directly to Canadians. Therefore according to this rationale, good performance measures would be those that measure LCAMS performance as a service. According to the Treasury Board Secretariat Policy on Management, Resources and Results Structures a program is defined as follows:

Program - Is a group of related resource inputs and activities that are managed to meet specific needs and to achieve intended results, and that are treated as a budgetary unit.

In this definition there is no condition that a government activity has to deliver services to the Canadian public in order to be considered a program. Therefore, a service within a department is considered a program even though it does not provide an output or outcome directly to Canadians. As such, just like other programs included in the PAA, LCAMS is compelled by the MRRS policy to develop a performance measurement strategy which will monitor performance.   It is worth noting that LCAMS has started to develop performance indicators for reporting on their high level outcomes. Indeed, LCAMS already has indicators for their service level agreements with its clients, for the Coast Guard business plan and for the MRRS.

Performance measurement in the regions is developmental in nature and inconsistent from one region to another. ITS is challenged in doing performance measurement at the activity and output levels. There is a sense in the regions that performance measurement is in its very early stages: some regions said that performance measurement was weak, others said that is was existent but only on an informal basis and still others said that it was in a developmental stage. As well, on a regional basis, performance measurement is happening in a very piecemeal manner. For example, for aids to navigation assets, some regional staff tracked the performance of their assets on an Excel worksheet, others used SIPA and others used MAXIMO. LCAMS is planning, through the use of Asset Management Systems, to provide performance measurement at the ground level in order to accurately report quantitatively and qualitatively on their outputs.

Two undertakings would help build a more robust results chain. First, identifying performance measurement indicators that stem from LCAMS primary activities and aligning these performance indicators with service level agreements. Second, implementing a common methodology to performance measurement across all five regions of the Coast Guard and ensuring that this methodology is properly communicated to the regions. These initiatives will allow the linkage of high level outcome indicators to the indicators which will capture the operational activities and outputs of LCAMS and aid decision making. A good benchmark of a properly monitored results chain in LCAMS is the one used in conjunction with the capital expenditures.

Recommendation #5
We recommend that LCAMS develop a national performance measurement strategy which measures how well LCAMS is being delivered and which will result in monitoring the performance of its entire asset base consistently.

3.2.3 Economy

Background

The Treasury Board Secretariat defines economy in the following manner in its evaluation policy:

Economy: minimizing the use of resources.  Economy is achieved when the cost of resources used approximates the minimum amount of resources needed to achieve expected outcomes.

Findings

The resources for LCAMS could not be further minimized without having an impact on the quantity of quality of outputs. (See figure 5 below)

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Figure 5 Responses to Economy Question

Both regional and national ITS staff concurred that resources needed to undertake all the work which would enable LCAMS to optimize the life-cycle costs of assets are insufficient There are both human resource and financial issues that contribute to this situation.

From a human resource perspective, there is overall agreement that LCAMS is understaffed, and lacks the necessary resources to produce certain of its outputs. Regions stated that with additional human resources, which would include Fleet engineers, which are presently not included in the yearly work plan,  that more work could be undertaken, including preventative maintenance.  From a national perspective, one of the biggest challenges in minimizing resources in the long run for LCAMS as a whole is building the engineering capacity at Headquarters. They would provide the cost-effective technical solutions shared within Coast Guard rather than the current isolated and localized individual solutions which are less often disseminated throughout the rest of the organization.. It should be mentioned that this staffing shortage is being partially addressed with the creation of the National Vessel Maintenance Centre of Expertise (COE), an initiative of the Vessel Maintenance Management Review. This COE supplies much needed resources to the marine engineering area of LCAMS which is currently the most critically understaffed and under capacity area of LCAMS. The COE will investigate and resolve important and urgent technical issues that impact on vessel reliability and availability as well as monitor compliance and efficiency of established standards and best practices. This will allow staff at NCR to focus on the long term analytical and strategic function for Fleet assets.

From a financial perspective the type of funding used to fund LCAMS is crucial in determining the life cycle asset management strategy. It would appear that in the 1990’s, prior to Program Review, the asset management function relied principally on O&M funding to maintain assets. This type of funding led to a “cost-avoidance” strategy where Life Cycle Costs of assets were optimized through timely preventative maintenance.

Over the years, there is evidence of a sizable reduction in O&M funding for the maintenance of assets. Asset deterioration has led to the introduction of NCSP funding, which is designed to refurbish assets.  The aging of the asset base (lower than required investment rates), coupled with the reduction in available O&M funding has forced a ‘mortgage the future’ choice in CCG. By using available funding to perform immediately required corrective actions and not spending the money on preventive measures aimed at reducing future corrective actions, future required corrective maintenance will grow.  The impacts have already been seen and in fact the NCSP was introduced to address the problem.

Unfortunately, the breadth of an economic analysis that would a determine how much more expensive “correct and refurbish” would be compared to “preventive investment ” is beyond the scope of this evaluation. However, there is the danger that as assets age the longer term achievement of lowest cost possible might be at risk.  As well, the present capital funds might not be sufficient to allow to for a critical mass of assets to be at a baseline operational condition to ensure the outputs necessary for the delivery of services that the Coast Guard has committed to. 

A detailed examination of the impacts of the use of O&M funds versus capital funds might be necessary to determine the context in which those funds are to be used to optimize the life-cycle asset management strategy.   

3.3 Lessons Learned

The evaluation team made many observations throughout this project.  This lesson in particular stood out and is worthy of mention.  Life cycle asset management requires a holistic approach in order for assets to be available, reliable, capable and satisfied at the minimum life cycle cost. However support components that are considered essential upon delivery of a new asset, were periodically omitted in the past.  Support components include training for technologists, adequate technical documentation, supply chain management and maintenance plans uploaded into databases.  Factors that led to these omissions include the reduction to support staff during Program Review in the 1990’s, and significant variances between original estimates and higher than expected construction costs.  Historically, assets were provided to regions in what is referred to an “over the wall” manner.  In others words, assets were delivered to a region without the necessary support components to operate and maintain the asset.  This led to taking responsibility for an asset by a region without adequate support. To note, CCG was called out in its last audit for not having proper documentation, manuals and maintenance plans on board its existing vessels. This lesson learned should not be lost in the future as the Coast Guard undertakes the renewal of its vessels over the next thirty years. If assets lack the proper logistical support, asset management will suffer, inefficiencies will prevail and the lowest life cycle cost for assets will not be reached.

Recommendation #6
We recommend that support and maintainability issues for new assets be addressed during the acquisition phase.  Clear accountability for the roles and responsibilities should be clearly defined and understood with respect to the acquisition of new assets.

3.4 Conclusion

The delivery of LCMS through LCAMS is relatively new, in that technical services were formerly under the purview of Fleet and Maritime Services Directorates.  Integrated Technical Services, the Directorate responsible for delivering LCAMS, is still in the process of defining its role and responsibilities with respect to its clients, Fleet and Maritime Services.

LCAMS is a relevant program.  There is a need for LCAMS, it supports Government of Canada priorities and it is aligned with federal and CCG roles and responsibilities.

LCAMS is able to achieve its immediate and intermediate outcomes.  The vast majority of activities are being carried out by LCAMS which are leading to the production of desired outputs.  This is producing the expected immediate outcomes, as one would expect, but with a few exceptions. Though improvements can always be made, by and large, assets are available, they are reliable, they are capable, and in the context of refurbishment activities, satisfied at a minimum life-cycle cost.  In the long term, the aging of the assets coupled with the increasing corrective maintenance requirement will pose significant challenges to availability and reliability in the short to medium term.  One should seriously question whether this situation is sustainable.

LCAMS is efficient and economical.  LCAMS has improved its efficiency in the application of project management methodologies.  A national performance measurement strategy would improve monitoring of expected results and support decision making processes.  With respect to Economy, we found that resources for LCAMS could not be further minimized without having an impact on the quantity of quality of outputs.  

In short, LCAMS is achieving its outcomes, but not without facing significant challenges.  If they are recognized and addressed through some targeted management actions, the way forward should realize improvements in LCAMS’ overall performance.

3.5 Recommendations

It is recommended that the CCG:

Recommendation  1:
We recommend that LCAMS incrementally phase in over a reasonable period of time an inventory management system by asset class and region that is consistent with DFO policies on inventory management. 

Recommendation  2:
We recommend that asset class plans of a more strategic nature be developed for Maritime Services.

Recommendation  3:
We recommend that the CCG divest itself of LORAN C.

Recommendation  4:
We recommend that the CCG develop methods that can demonstrate life cycle costs at the asset class level, for vessels, and for individual assets where appropriate.

Recommendation  5:
We recommend that LCAMS develop a national performance measurement strategy which measures how well LCAMS is being delivered and which will result in monitoring the performance of its entire asset base consistently.

Recommendation  6:
We recommend that support and maintainability issues for new assets be addressed during the acquisition phase.  Clear accountability for the roles and responsibilities should be clearly defined and understood with respect to the acquisition of new assets.

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4.0 Management Action Plan

 

follow-up report update

Recommendations

Management Action Plan

Target date

Completion Date

  • We recommend that LCAMS incrementally phase in over a reasonable period of time an inventory management system by asset class and region that is consistent with DFO policies on inventory management. 

The Canadian Coast Guard (CCG) agrees with the recommendation.

CCG Strategy
CCG's strategy is to put in place an inventory management system that is consistent with both DFO and TB policies.  The resultant system will include a CCG wide set of processes and procedures and will use the existing AMS (Asset Management System) system to track, manage and value CCG inventory holdings.
The CCG is and will continue to work in close collaboration with DFO Materiel Management to ensure that Departmental Materiel Management Policies and CCG’s operational requirements are compatible and that CCG & DFO are prepared for the DFO Financial Audit in 2012.

Activities to Date:
CCG has in place computerized inventory management capacity.  CCG’s Asset Management System (AMS), which is responsible for documenting maintenance activity on its vessel and shore-based assets, will be used to track and valuate CCG’s inventory.  MAXIMO will be used for all small CCG vessels and shore-based inventory management, and on the large CCG ships Maintelligence will serve as the inventory management tool.
The CCG Regional Standard Organization has been designed with supply chain positions that have responsibility for inventory management. National Model Work Descriptions (NMWD) for CCG Regional Supply Chain positions are in final phase of development.
The Manager, Supply Chain at HQ is actively involved in the materiel & inventory management aspect of DFO’s Strengthening Financial and Materiel Control Frameworks Project launched in fall of 2007.
CCG representatives from all regions participated in a workshop focused on accounting definitions for inventory required to clarify the scope of the inventory reporting requirements in preparation for a full Financial Audit scheduled for April 01, 2012.
ITS Executive Board "Approved in Principle" the creation of a center for materiel identification to be responsible for the materiel identification process and management of item master records.

Next Steps:
CCG will continue to work in close collaboration with DFO Materiel Management in the definition of inventory management requirements and the development of required standards, processes and procedures for implementation prior to April 2012.
CCG will deploy inventory management practices and processes consistent with DFO policies for all assets except large vessels. 
CCG will deploy inventory management practices and processes consistent with DFO policies which will include the deployment of the AMS inventory module onboard large vessels.
CCG will permanently staff regional Supply Chain positions upon classification of the NMWDs.
CCG will develop the concept of operations for a CCG Centre of Expertise for Materiel Identification. 


































































Ongoing work that must be completed by March 2012


March 2012



March 2013

 


March 2012


Sept. 2010

 

  • We recommend that asset class plans of a more strategic nature be developed for Maritime Services.

The Canadian Coast Guard (CCG) agrees with the recommendation.

CCG Strategy
CCG's strategy is to develop long-term strategies for work and resource requirements, to enable CCG to meet its service delivery objectives efficiently and effectively, and to maintain the value of its assets.  Class Plans will document asset condition, current and emerging technical requirements, and asset management strategies for each asset group.  This will enable the CCG to make maintenance decisions in the short term and informed investment decisions in the longer term.

Activities to Date:
The CCG has prepared a master Class Plan template that will be used to provide investment strategies for CCG assets. 
In response to growing interest for integrated investment planning, CCG has begun to address asset condition from a consistent national perspective.  To date, a high level national asset condition assessment has been completed for all vessels in the Fleet.  Assessment of shore based assets in support of Aids to Navigation (AtoN) and Maritime Communication and Traffic Services (MCTS) has begun but has not yet been completed.    
CCG has put in place a computerized maintenance system (Asset Management System – AMS) which will be used to evaluate and track asset condition related information as well as maintenance histories.

Next Steps:
CCG will complete high level condition assessment of shore-based assets in support of Aids to Navigation (AtoN) and Maritime Communication and Traffic Services (MCTS).
CCG will produce Asset Class Plans for Aids to Navigation asset classes.
CCG will produce Asset Class Plans for Maritime Communication and Traffic Services asset classes.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 2011

 

Mar 2012

 

Mar 2012

 

 

  • We recommend that the CCG divest itself of LORAN C.

The Canadian Coast Guard (CCG) agrees with the intent of the recommendation.  However, the divestiture of assets decision is a shared decision with the US Coast Guard.

CCG Strategy:
CCG's strategy is to turn off the LORAN C service.  This now fits with a recent US Coast Guard decision that as of February 8, 2010 the US will discontinue all Loran-C transmission except for those which are part of separate international agreements with Russia and with Canada. Canada will turn off its signal on October 1, 2010.

Activities to Date:
The CCG has stated via Notices to Mariners that the official date for termination of Loran-C in Canada is expected to take place on or before October 1, 2010.

Next Steps:
CCG will determine the official date for termination of LORAN-C in Canada. 
CCG will determine the strategy for managing the divestiture of system assets. I.e. what will be done with equipment following the termination of the signal.  There will be bilateral discussions with the US on this issue. 
Terminate LORAN C signal.

 

 

 

 

 

 

 

 

 

 

 

 

April, 2010

Sept, 2010

 

October 1, 2010 (at latest).

 

  • We recommend that the CCG develop methods that can demonstrate life cycle costs at the asset class level, for vessels, and for individual assets where appropriate.

The Canadian Coast Guard (CCG) agrees with the recommendation.

CCG Strategy
CCG's strategy is to put in place a set of processes and tools that will allow it to demonstrate life cycle costs at the asset and class level. The chief tools used to accomplish this will be the departmental Business Intelligence (BI) tool Cognos v8.4 and the CCG’s Asset Management System (AMS).  CCG will use information generated within these tools to build cost models and cost information.

Activities to Date:
CCG has developed and implemented a project management cost tool (Oracle Projects) that allows tracking of costs against project specific work packages.
CCG/Integrated Technical Services (ITS) has been using the Cognos suite of Business Intelligence tools to increase its capability to access information from the departmental financial system to meet asset life cycle cost analysis and investment planning requirements.  Since each organization/sector developed independently their own framework to retrieve information from the financial system through the Cognos BI tool, this resulted in an impractical and unstable framework making the data in the reports sometime suspect or inaccurate.  DFO has now recognized the importance of a BI tool and has put in place an initiative to coordinate the development of a single framework that respond to the information needs of the various organizations within DFO – CCG/ITS is presently participating in this work.  The work is being done in conjunction with the upgrade of the system from the Cognos version 7 to version 8.4.  LCAMS costing requirements from Cognos v7 have been transferred into the production environment of Cognos v8.4.
An ITS Procedures for Coding Manual, relating to collecting expenditure data within the DFO line of coding, was issued in 2004 and was updated in 2008. 
CCG has staffed a full time Manager, Business Analysis to manage coding issues, monitor compliance to coding procedures and update Cognos data tables when required. 

Next Steps:
CCG will update the ITS’ Procedures for Coding Manual and communicate/provide training to end-users.
CCG will finalize the Asset Breakdown Structure (ABS) for all CCG asset classes.  This will ensure continuity of information across the financial system, CCG’s Asset Management System (AMS) and its project management system.
CCG will finalize CCG’s input and the upgrade of the Cognos Business Intelligence (BI) tool to version 8.4 and train end-users.
CCG will put in place a formal process for monitoring the compliance of data entry in the financial system against the ITS Coding Procedures Manual for both capital and O&M expenditures.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 2010

June 2010

 

 

July 2010

Dec. 2011

 

  • We recommend that LCAMS develop a national performance measurement strategy which measures how well LCAMS is being delivered and which will result in monitoring the performance of its entire asset base consistently.

The Canadian Coast Guard (CCG) agrees with the recommendation.

CCG Strategy
CCG's strategy is to implement a national LCAMS performance management strategy (PMS) to measure Program performance for internal management purposes.  The expected result of the PMS is to determine areas of strength and weaknesses in Program delivery and set management priorities and commitments for improvements to LCAMS service delivery.  The implementation of the PMS will respond to the new Policy on Evaluation.
While the intent of the PMS is for internal performance reporting and management, it must link to the external performance reporting process through the Management Resources and Results Structure (MRRS) and the CCG Performance Management Framework (PMF).

Activities to Date:
Currently, DFO and CCG are reviewing the Program Activity Architecture (PAA), the Management Resources and Results Structure (MRRS) and the CCG Performance Management Framework (PMF) used for external performance reporting of Programs to Parliament and Canadians as part of the Departmental Performance Report.  The implementation of the new PAA, MRRS and PMF is planned for FY 2011/12.  The PAA, MRRS and PMF are currently in their last phase of approvals.

Next Steps:
CCG will develop and approve an LCAMS performance measurement strategy (PMS) that measures how well LCAMS is being delivered.
CCG will implement the LCAMS performance management strategy and begin use of the performance information in the management of its program.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dec.  2010

 

March 2012

 

 

  • We recommend that support and maintainability issues for new assets be addressed during the acquisition phase.  Clear accountability for the roles and responsibilities should be clearly defined and understood with respect to the acquisition of new assets.

The Canadian Coast Guard (CCG) agrees with the recommendation

CCG Strategy
CCG's strategy is to put in place a process, tools and documentation that will define, formally document and promulgate information describing the support elements and maintainability considerations that must be included in the design and acquisition of new assets.
These processes, tools and documentation will be communicated effectively to asset owners and acquisition project team members.

Activities to Date:
CCG has developed and promulgated the following documents to be used in the identification of requirements:

  • Integrated Logistic Support Guide for Project Manager with Cost Estimate Workbook;
  • Contracting Template with Data Item Descriptions;
  • Standard for the development of Maintenance Plan;
  • Specification for Electronic Technical Data Deliverables; and
  • Technical Training Manual.

Within CCG, there is continuous work with Project Management Team to promote the requirement to include maintainability considerations and support requirements in their projects plans and deliverables.

Next Steps:
Develop formal agreements with Fleet and Maritime Services COEs to ensure cost associated with support elements and maintainability requirements are included in all project estimates (including MCs).  
In collaboration with Fleet and MCP directorates, develop a Responsibility and Accountability Matrix for the key and supporting processes associated with support elements and maintainability issues for delivery of the Fleet Renewal Program.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sept. 2010

 

Mar 2011

 

 

5.0 References

Canadian Coast Guard, A-Base Review Report FY2003-2004 to FY2005/2006, 29 September 2006.

Ernst & Young, Department of Fisheries and Oceans Audit Readiness Assessment- Phase One Final version, November 2007.

Office of the Auditor General of Canada, Chapter 4: Managing the Coast Guard Fleet and Marine Navigational Services- Fisheries and Oceans Canada, February 2007, ISBN: 978-0-662-44855-6


2Source: Aids Program Information System (SIPA)