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Taking stock: The importance of asset management

Managing existing infrastructure needs is critical to helping communities prepare for the future

By Andy Dalziel

One of the biggest near-future challenges facing governments across the developed world is ensuring that the existing infrastructure is managed sustainably. Dramatic increases in population over the past 50 – 60 years have put a strain on our communities’ existing infrastructure. In many instances, the associated infrastructure to sustain these communities was built by the private sector to be assumed by the local municipality for future upkeep. As these assets move into the later stages of their life cycle, we see many of our communities faced with the ever increasing need to fund the rehabilitation and replacement of these assets.

As a result, many levels of government are instating laws and regulations to ensure our communities are managing their assets properly for today and into the future. Some examples include:

  • The authorization of the MAP-21 (Moving Ahead to Progress 21st Century) funding bill for transportation infrastructure that requires all state DOTs to develop a risk-based Asset Management Plan for their assets by November 2015.
  • The Ministry of Municipal Affairs and Housing (MMAH) in Ontario releasing the “Building Together” initiative that requires all municipalities who seek provincial funding for projects to have an Asset Management Plan in place for their entire public works infrastructure.
  • The development of asset management training initiatives by Asset Management BC for the municipalities across British Columbia.
  • The government of  Canada announcing a renewed “Build Canada Plan” that includes a commitment to spend $53 billion over the next 10 years on community infrastructure. The program requires anyone requesting funding to provide evidence of asset management planning and lifecycle analysis for the projects.

As someone who helps communities develop these kinds of asset management plans, I start by helping them answer what I call the “Seven Questions of Asset Management”:

  1. What do we own? – as constructed drawings, GIS, and mapping
  2. Where is it? – GIS and mapping
  3. What condition is it in? – inspection services for roads, bridges, underground infrastructure, treatment facilities, and buildings
  4. What do we need to do it? – design and capital planning
  5. When do we need to do it? – economic analysis, risk assessment, and prioritization
  6. How much will it cost? – design
  7. How will we pay for it? – capital planning

Here’s a recent example. We had a client who needed to develop an Asset Management Plan. In helping them do so, we also took a look at their assessment of the future funding requirements, which ultimately formed the basis of a financial strategy to reach sustainable funding levels (i.e., the annual revenue required to ensure that the maintenance, rehabilitation and replacement of their infrastructure assets was covered into the future). The client has now budgeted the funding for the sewer, water, road and bridge assets at an appropriate level to ensure that they will continue to be available to the community they serve. This exercise also helped the client come to the conclusion that they will need to increase their revenues by 1.4% (plus inflation) annually for the next 15 years to close the gap between their current funding levels and what they will require to be sustainably funded.

Financial analyses like these quantify the many challenges communities are facing when it comes to keeping up with funding infrastructure. Luckily, this issue is beginning to come into focus for the politicians and citizens alike, which helps garner support for action. One thing is for certain, though: this is only the tip of the iceberg. As many of the investment profiles we have prepared suggest, there is a tsunami of needs on the horizon. However, identifying those requirements now will allow sufficient time for our communities to develop a plan to mitigate what will undoubtedly be a significant financial drain on their citizens.

As many of the investment profiles we have prepared suggest, there is a tsunami of needs on the horizon.

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