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Getting Proactive about Municipal Asset Management

By Surya Pulickal and Mitchel Kolbeck | February 24, 2022

Most municipal governments know they’d benefit operationally and financially from a strategic and proactive approach to asset management. The challenge, especially in budget-constrained communities, is to move beyond reacting to the next most urgent need — “Which street or sewer is broken today?” — and take a more comprehensive, forward-looking view. To best deliver on their long-term goals, municipalities of all sizes need to take stock of their existing assets, which starts by developing a well-defined asset management framework.

What is municipal asset management?

According to the ISO 55000 definition, asset management is the “coordinated activity of an organization to realize value from assets”. For most municipalities, the assets in question fall into two categories: vertical assets such as office buildings, arenas and wastewater treatment plants; and horizontal or linear assets such as roads and sewers.

What counts as ‘value’ varies by asset type and may be different for each municipality, but it typically includes financial and functional performance as well as an asset’s ability to contribute socially, economically or culturally to the community. By looking at all aspects in an integrated way, chief administrative officers (CAOs) and city councillors can maximize asset value throughout the entire lifecycle: from design and construction to operations and maintenance and, finally, the decision to renew or dispose of the asset.

As public sector spending grows, municipalities with limited capacity or asset visibility may be challenged to take this kind of comprehensive, end-to-end view due to a lack of clarity surrounding what assets they have, data on their use, condition and performance. Without sufficient internal capacity or the right tools to collect and analyze years’ worth of asset-related data, it can be difficult to draw clear and actionable conclusions.

Why is municipal asset management important?

An asset is essentially a tool to achieve a strategic objective. Over time, any municipality’s strategic objectives are bound to change, driven by demographic and economic shifts. That requires regular re-evaluation of the kinds of assets needed to meet municipal goals.

Such evaluations must be based on a clear framework or methodology for determining if an existing asset portfolio is aligned with, and relevant to, current and future community needs — and if the assets in that portfolio warrant continued allocation of valuable budgetary resources. Having a management framework in place lets governments see farther into the future and plan out the kinds of assets they’ll need down the road. At the same time, it gives them a greater ability to monitor their existing assets, extend their lifecycles through proactive maintenance, and keep them from becoming redundant or obsolete.

The key components of an asset management framework

For municipalities of any size, establishing an asset management framework has five key steps:

1. Set long-term strategic objectives
Determine strategic goals and objectives for your municipality. What is your long-term vision? How do you see your town or city growing over next five to 10 years — and what will it take to get there? Any asset-related decisions should clearly map back to and support these objectives.

2. Collect data on your assets
Build as complete a picture of the assets you hold as possible. This includes collecting information such as:

  • Location
  • Property use category
  • Total site area
  • Built-up area
  • Rentable area
  • Age
  • Condition
  • Year of expiry
  • Annual operating and maintenance costs
  • Expected replacement costs
  • Annual revenues generated
  • Number of users

3. Conduct a needs analysis
With better visibility into your assets, a needs analysis can help determine how your assets contribute and are relevant to your municipality’s longer-term strategic objectives. If assets aren’t contributing, the analysis helps to identify the actions and investments needed to bring them into alignment — whether through renewal, divestiture or acquiring entirely new assets.

In addition, municipalities may want to consider climate change mitigation and adaptation. Communities across Canada are looking to make their infrastructure and mission-critical facilities more resilient so they can ensure operational continuity in the event of a storm or natural disaster. Integrating disaster risk management and response strategies within the asset management framework can help municipalities identify facilities or buildings that are well situated to withstand a disruptive event — for example, by being safely distanced from a flood-prone waterway. Locating mission-critical operations in such a facility could contribute to long-term resilience goals. This could also assist in post-disaster response management by pre-identifying highly resilient assets that could be repurposed to provide emergency shelter to affected citizens.

4. Establish a decision-making process flow
Identify the stakeholders who will be responsible for implementing your asset management plan and how they’ll make decisions about what to do with existing and future assets. To ensure all stakeholders are moving in the same direction, it’s important to establish clear roles for plan development, reviews and approvals, as well as how asset management policy will be translated into more detailed business plans — tasks that are likely to involve people from many different departments.

5. Formalize an ongoing, evergreen framework
With clear longer-term goals, ongoing data collection, regular needs assessments and well-defined decision making, a municipality has all the components of a practical asset management framework in hand. What remains is to operationalize it and to keep it updated. Municipal asset management planning isn’t a ‘one and done’ exercise. Your plan should be audited, validated and updated on an ongoing basis.

While it may seem daunting to think about creating a deliberate, forward-looking asset management plan when putting out today’s urgent ‘fires’ already consumes so much municipal time and resources, the effort is well worth it.

A sound framework will give any municipality, especially those that are small, rural or have limited resources, the ability to make confident, data-driven decisions about existing and future assets. CAOs and other municipal leaders will have stronger budgetary business cases to take to council for specific projects, helping them get to work to improve their communities in countless ways.