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1 Getting Started The Prerequisites for Asset Management July 2009

2 Glossary Asset... means public infrastructure or a component thereof that has a tangible value, enables services to be provided and has an economic life of greater than 12 months that requires on-going maintenance and capital renewal Asset Management... Asset Valuation... means a comprehensive business strategy that employs people, information and technology to effectively and efficiently allocate available funds amongst valid and competing asset needs. Asset Management links user expectations for asset condition, performance, and availability with system management and investment strategies means the asset valuation module of Municipal DataWorks GIS... means Geographic Information System Municipal DataWorks... means the web-based data repository offered as a member service by the Ontario Good Roads Association MDW... means Municipal DataWorks 2

3 This paper will discuss the prerequisites required to implement an asset management program. The items discussed in this paper will assist with asset management program development. Implementing asset management involves deciding where you want to be at the end of the process, breaking the process down into manageable tasks, and then begin with the first task. Municipalities have been managing assets for years, albeit many of the municipality s assets have been managed in isolation of the other assets maintained and many decisions made for short term gain with no consideration for long term objectives. Current asset management philosophy is changing that focus to one of allocating scarce municipal resources over the priorities of competing assets so that these assets can be maintained in the best possible condition, for the longest period of time and doing that at the best possible price. Asset management is a comprehensive business strategy employing, people, information and technology. Asset management will assist chief financial officers in determining short and long term capital requirements for the municipality and will assist public works managers with prioritizing asset needs and make rehabilitation/renewal decisions over the lifecycle of an asset. Asset management will require that council and staff come together to set goals and objectives for each asset which are consistent with user expectations. An asset management system must consider the interdependencies of various assets and allocate resources over the priorities of these assets. In a recent National Research Council paper 1 Halfawy, Newton, Vanier state: Asset management systems typically support the management of different classes of municipal assets (e.g. roads, water, and sewer networks), with little or no consideration to their inter-dependencies. This lack of integration of asset management activities has created significant inefficiencies in maintenance coordination and asset planning. Many software programs typically use proprietary databases. The use of a proprietary database by another software vendor s program cannot be done without permission from the original vendor. Often this data must be translated for use by the original vendor at a cost to the municipality. Municipal DataWorks eradicates data silos and eliminates 1 Review of Commercial Municipal Infrastructure Asset Management Systems January

4 proprietary databases. Municipal DataWorks means municipal ownership of municipal data. Users will no longer be required to maintain data in multiple databases. Using Municipal DataWorks permits the building of relationships/interdependencies between asset types. Today s asset management philosophy will be the norm for municipal operations. OGRA believes that Municipal DataWorks has defined the standard that will be used by municipalities to achieve their asset management goals. Challenges to implementing asset management 2 Any municipality seeking to establish an asset management system has to struggle with a number of issues and challenges. For one, there are many stakeholders with varying perspectives, opinions and definitions. For another, there are many different approaches to solving problems and making decisions; whatever will be used has to be acceptable to most decision-makers and stakeholders. The success of any module of asset management depends on the ability to access all relevant information; this invokes openness of information, communicability of the information from various sources and the effectiveness of the methods chosen for storing, retrieving and analyzing information. Some of the important challenges include: 1. Clarifying what asset management means and does, its scope and role Some in the organization want the Asset Management System to be a tool for organizing, storing and retrieving pertinent information. Others want it to be an aid for decision-making. Still others may want it to be a tool for clarifying the process, authority and accountability profiles. It is important to hold focus group discussions and open forums to define and identify the roles of the asset management system being sought. 2. Developing an acceptable set of performance measures Remember asset management differs from infrastructure management in the choice of performance measures. The former focuses on performance measures acceptable to the user; the latter, on engineering and financial measures. 3. Agreeing on and developing an approach to Asset Management Model Is the organization going to develop a system for all its assets (total asset management system) or is it going to use an incremental method (one asset type at a time)? If it is the former, is the system going to be developed in one shot before deployment or is it going to be an evolving system with each phase unfolding when it is ready? If it is the latter, how to ensure communicability of all related data from different sources? 2 Not all of the challenges included in this section are discussed in depth in this paper. That discussion will be included in future papers. 4

5 4. Developing the modules Asset management systems are made up of a number of components that address one aspect of the decisions that need to be made. These modules relates to: a. Asset valuation How to estimate the value of the asset? PSAAB has determined the method for tangible asset valuation. Municipal DataWorks includes an asset valuation module. b. Performance prediction. Predicting future performance is a science and art. There are so many variations in how similar assets perform in the real life because there are many factors involved. However, decisions are made based on these predictions. How to come up with a method that produces meaningful, consistent and reliable predictions is not an easy matter. There are engineering equations and there are statistical averaging methods; there are average performance curves and there are custom tailoring methods. OGRA has lifecycle information available which can be modified to meet local situations. c. Life cycle costing Over its lifetime, an asset will need to be maintained, repaired, renewed and perhaps improved. All these costs, over and above the initial construction costs are relevant to the decision being made and hence need to be included. d. Trade-off analysis When you make a choice, you forfeit another choice. In another words, you are trading off something for another. If, for example, you take 407ETR, you are trading off money for speed and convenience. When you pay tax, you are trading-off money for public services. However, there comes a point where you no longer feel that way. If 407ETR charges 40 cents per km or you are taxed 70% of your income, then you may choose not to use 407ETR and to give up some privileges rather than to be overpriced or over-taxed. In trade-off analysis, one has to define what is acceptable for trading off with what and the limits of acceptance. e. Optimization Once you have evaluated your trade-off options, you would like to pick the optimal solutions that meet your objectives and still remain within the municipalities constraints. f. Improving the data base: There are many dimensions to consider: the quality of the existing data; the specificity of the data; its consistency from one source to another; its 5

6 communicability with each other; its organization and structure; and finally the appropriate information technology media to use. Using Municipal DataWorks eliminates this issue. 5. Resource mobilization Asset management system development requires resources. A municipality may want to use external consultants to do the work from concept to operational system in place. In contrast, a municipality may want to develop the system internally with its own resources. In between, there are many combinations possible. For example, a municipality may want to use a consultant to shape up the concept only; shape up the concept and prepare the plans; shape up the concept, prepare plans and overlook the development and deployment; and so on. In any of these scenarios, the agency has to mobilize resources: money, people, space, equipment, and so on. By doing so, they have to set priorities and plans for freeing resources without damaging business 3. Staff input and council leadership is important Staff often underestimates what they can do to assist in the development and continued improvement of any new systems. Council often does not fully understand their role in asset management. Here are some examples: 1. Asset Management is about managing assets to public expectations. Staff is the first line of contact with the public and knows their complaints and what they tell you they would like to see. Council needs to determine how the municipality will acquire public input or if surrogate objectives and measures are used, what should they be. 2. Asset Management is about maximizing benefits to the public Staff is in the field completing activities in the maintenance of roads, bridges and other infrastructure. Staff is well equipped to identify what improvements should be introduced to which practices. Council needs to examine the tradeoffs in light of the objectives they have set and with regard for what the public is telling them. 3. Asset Management is about getting the expected lifecycle out of the assets. Staff is in the field inspecting the work of contractors. Staff ensures quality in construction; staff therefore is helping the assets achieve their design lifecycle. Staff is also in the field monitoring and updating asset condition information. Council must ensure that the budget decisions made meet the lifecycle requirements for the asset. 3 Introduction to Asset Management Abe Mouaket, 2005 (revised with permission) 6

7 4. Asset Management is about better predictions of performance Staff keeps records of work completed and installations made. These records can be used to assist in calculating predictions of performance. Council needs to examine the reports presented by staff and if the targets used to confirm achievement are not being met, recommend program adjustments (with staff input) that will achieve the desired result. 5. Asset Management is about providing reliable information Staff will provide records on quantity and quality of work completed and materials used. This information is required for any software program. To be comfortable with the decisions they are making council must insist on quality data. How and where to start Will asset management implementation mean deployment of an asset management system for all assets all at once, or will implementation be incremental? An incremental approach to developing an asset management system may be the best choice. An incremental implementation will allow you to complete components of the asset management system over time and budget for each component in the year they are completed. An incremental implementation will allow staff to use the completed components and make adjustments to the components before the final project is built out. Which asset to implement first will depend on many variables? These variables may include: data availability, asset needs, staff needs, budget, staff limitations and so on. Municipal DataWorks permits an incremental implementation. Should all infrastructure assets be included in the asset management program? The short answer is yes. Buildings, roads, sewers, arenas were all built at different times. These various infrastructure all deteriorate at different rates and all will require preservation, rehabilitation or renewal during there useable life. The timing of major repair, rehabilitation or renewal of these various assets could coincide. Including all assets in an asset management program will allow the municipality to plan for that eventuality. Municipal DataWorks can store data for all infrastructure assets; buildings, roads, sewers and so on. Where should I start? Start by determining what you want the asset management system to do for you when finally built out. Will the asset management system perform capital investment planning; will it include a work management software program; will the municipality s accounting software be linked to the asset management system; will GIS be a component and so on. 7

8 What should I do with current data? Gather together all data from all data sources including software programs, home grown databases, spreadsheets, paper documents, as constructed plans, etc. Determine the quality of the existing data and any gaps in data that may exist between what you have and where you want to be when the asset management system is built out. If data quality issues are minor collect the data needed to improve the quality and fill the identified data gaps. If the data quality issues are significant, consider abandoning the existing data and collect all new data. Remember, at is core asset management requires good data. Do I need a workplan? A workplan will ensure that assigned tasks are completed and that implementation elements of the asset management system are not overlooked. Once you know what an asset management system will look like and the amount of work involved, decide how long it will take to implement the full asset management system (1 year, 5 years). Working backwards from the end point, develops the workplan. The workplan should identify the data gaps and/or data quality issues, how and when the gaps or data issues will be resolved (will this be done by staff or a consultant), identify the resources available (staff and budget), the tasks to be assigned, who is responsible for completing each task and the time frames for completing each task. The workplan should also include scheduled times for reporting to senior staff and council on the achievement of the workplan s milestones. Should goals/objectives be established for each asset type? Establishing asset goals/objectives will guide council and staff in the decisions they must make over the life of an asset. How should asset goals/objectives be developed? Developing asset goals/objectives is the most difficult of the tasks to be undertaken, because asset management must consider user expectations for asset condition, performance, and availability. Once the user expectations are known those expectations must be weighed against legislated requirements, staff capabilities and budget limitations. Asset management plans should include both high level strategic plans for policy development and operational plans for capital improvement and asset maintenance. This document will concentrate on the high-level planning for policy development; a discussion on operational plans will be included in a future OGRA asset management publication. A municipality may already have a strategic plan that includes some of the required goals/objectives. If the goals/objectives have not been established, council and staff will need to come together and determine the appropriate goals/objectives for each asset. In some municipalities, council may choose to set the goals/objectives. Council may be the best source of information to determine user expectations for pavement 8

9 smoothness, arena ice availability and a parks program. Councilors in small municipalities know the people who live in the community and the people know them. For other municipalities, council may not know all the wants and desires of a diverse population and may choose not to use surrogate goals/objectives. Council will therefore need to acquire user input. There are many methods for acquiring user feedback, for example: mail in questionnaires, telephone surveys, focus groups, a combination of questionnaires and focus groups or other methods. Regardless of the method used to acquire user input, staff involvement is a necessity. Staff knows the choices made when an asset was built, the expected lifecycle or expected rate of deterioration of the assets. Staff knows the preferred and most cost effective strategies for asset preservation and rehabilitation. Staff knows when those strategies must be undertaken. For the various strategies there are staffing and budget limitations that exist, plus regulatory, environmental and other requirements placed on each asset. If for example, the user wants all roads to be smooth, all parks to be pristine and ice at all arenas available 24/7. Staff can provide the preservation and rehabilitation strategies that will be required to maintain all roads in a smooth condition, the work required to keep grass in parks mowed and litter picked up, plus the cost to keep arenas operating 24/7. Staff can calculate the annual and long range budget required for all the expectations. If council determines that it cannot afford to meet all the expectations, staff should be prepared to suggest suitable tradeoffs and the limits of those trade-offs. The trade-off could a few minor bumps and depressions on arterial roads and moderate bumps and depressions on local residential. But what condition is acceptable before a road is too rough or before a user will complain. Will the trade-off and cost savings in road condition transfer into extra grass cuttings at parks per year or more service at arenas. Goals/objectives could be written at many levels. A high level goal/objective could be: To provide a transportation network... which would apply to the road plus bridges, traffic signal systems, guiderails and other transportation related assets. At a lower level the goal/ objective could be: To provide an arterial road system... council and staff would also be required to develop goals/objectives for collector roads and local roads. If the objective is not attainable today it could be written as a future goal: Within (x) years provide a road network that... An example has been included in Figure 1. Once the goals/objectives have been set by council, the user expectations for that asset are now established. The municipality must be prepared to deliver on that expectation. How do I implement the workplan? OGRA has published a third document in this series titled Implementing Asset Management Using MDW to achieve your asset management goals. This document discusses the next steps in developing the asset management system; getting your data into Municipal DataWorks. A fourth document is being developed for release in the summer of 2007 that will discuss lifecycle 9

10 considerations and the setting of priorities. Monitoring achievement of the programs goals and objectives Monitoring achievement of an asset management plans goals and objectives are not a prerequisite, but it is something that should be considered sooner rather than later in the program s development. Asset management relates to user expectations, therefore the performance measures selected for monitoring achievement must include the measurement of those expectations. In the OGRA document Developing a Performance Measurement Program February 2006 the steps to implementing a performance measurement program are outlined. Figure 1 is an example of the measures that could be used to monitor achievement of the asset management programs goals/objectives as set by policy. Properly implemented a performance measurement program will include measures at the activity level measured by staff in the field, at the service level measured by middle management and at the strategic level measured by senior management and council. The Figure 1 example is specific to roads. Most managers and staff are responsible for more than just roads; therefore the number of measures used for each asset type may be less than this example. In order that you do not become overwhelmed with performance measurement, start by using few measures and build the program over time. The key thought to avoiding measuring everything, is to begin by measuring what matters in your municipality 4. Reporting Results Here again, reporting results are not necessarily a prerequisite but should be considered early in the development of the asset management program. Doing so ensures that the information necessary for the report is collected. Municipal public works managers are, in many cases, very proficient at reporting in detail the needs of the assets they are responsible for, but all too often fail to report what the department accomplished. A manager should craft some high level key messages that relate to the municipality s strategic goals and objectives. The message should be written in plan language devoid of technical jargon. The report should focus on outcomes instead of inputs and outputs. For example: The 2007 capital road resurfacing/rehabilitation program improved the percent of roads rated as good from (x)% in 2006 to (x)% in An example template for a balanced report card is shown in Figure 2. 4 Developing a Performance Measurement Program OGRA February

11 Figure 1 Objective To provide a road network that provides reliable maintenance services that moves goods, services and people quickly and comfortably. Enabled by 1. providing maintenance services that meet level of service targets; 2. providing system preservation and rehabilitation strategies that meet lifecycle targets; 3. providing a system expansion program that reduces current congestion levels; 4. provides a road network where all arterial roads are maintained at a ride comfort rating of (x) and all collector and local residential roads are maintained at a ride comfort rating of (x). Measured by: Financial Customer Quality Management At the Strategic Level by council and senior mgmt % of total municipal budget allocated annually to roads operating and capital % annual (increase/decrease) in the value of backlogged work % of complaints received regarding road condition %(increase/decrease) in the number of claims due to hazards on the road % (increase/decrease) in the hours per day that arterial roads are congested % of arterial road system with a ride comfort of (x) % of collector and local residential roads with a ride comfort of (x) % of road system resurfaced/rehab. annually % of capital rehabilitation projects completed on time and within budget % of preservation/ rehabilitation strategies that meet lifecycle targets At the Service Level by senior staff Capital $/m 2 by rehabilitation type Operating $ per lane km (by service) % of complaints that did not receive a response within 5 working days % of paved system with a PCI of (x) or greater % of base repairs requiring additional work within 1 year % (increase/decrease) in the number of kilometers of road requiring expansion to relieve congestion At the Activity Level by field staff Manhours/tonne of cold mix patching % of potholes cold mix patched prior to the target time to respond % of pothole patches intact 1 year later % of employee productivity improvement ideas implemented annually 11

12 Figure 2 A BALANCED SCORE CARD MESSAGE We live within our budget We reach are target clients We add value We are cost-effective EXAMPLE MEASURE projects completed on time and within budget user satisfaction measures measures which demonstrate that changes have improved service delivery or facilitated savings best practices achieved outcome achieved per $ spent Conclusion Asset management provides a rational for cost effective management of municipal assets. Properly implemented asset management will assist decision makers in allocating scarce resources ($) or the priorities of valid and competing asset needs. To accomplish this task the decision maker must know the preservation, rehabilitation and renewal, priorities, strategies and costs that will be required for each asset maintained. These discussions are reserved for the fourth paper in this series. With the decisions made as to what the final asset management system will include, the goals /objectives established for each asset included in the program and a workplan in hand a municipality can now begin implementing their asset management program. Implementation will begin, for most, with staff going into the field to collect data to resolve data quality issues or fill gaps in the data required for the asset management system to work as envisioned. 12

13 References National Guide to Sustainable Municipal Infrastructure Municipal Infrastructure Asset Management November 2003 Cowe Falls, Hass, Tighe - A Comparison of Asset Valuation Methods For Civil Infrastructure October 2004 National Research Council A Primer on Municipal Infrastructure Asset Management May 2004 US Department of Transportation Asset Management Primer December 1999 New Zealand, National Asset Management Steering Group and the Institute of Public Works Engineers of Australia International Infrastructure Management Manual 2000 Halfawy, Newton, Vanier Review of Commercial Municipal Infrastructure Asset Management Systems January 2006 Mouaket Introduction to Asset Management May

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