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Getting Started
The Prerequisites for Asset Management
July 2009
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 . . .
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
Asset Valuation . . .
means the asset valuation module of Municipal
DataWorks
GIS . . .
means Geographic Information System
Municipal DataWorks . . .
MDW . . .
means the web-based data repository offered
as a member service by the Ontario Good
Roads Association
means Municipal DataWorks
Ontario Good Roads Association – February 2007
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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 paper1 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 2006
Ontario Good Roads Association – February 2007
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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 management2
“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.
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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
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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)
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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.
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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
Ontario Good Roads Association – February 2007
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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
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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 2007. An example
template for a balanced report card is shown in Figure 2.
4
Developing a Performance Measurement Program – OGRA February 2006
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Figure 1
Objective
Enabled by
Measured
by:
At the
Strategic
Level by
council
and
senior
mgmt
At the
Service
Level by
senior staff
At the
Activity
Level by
field staff
To provide a road network that provides reliable maintenance services that moves goods,
services and people quickly and comfortably.
1.
2.
3.
4.
providing maintenance services that meet level of service targets;
providing system preservation and rehabilitation strategies that meet lifecycle targets;
providing a system expansion program that reduces current congestion levels;
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).
Financial
Customer
Quality
% of total municipal
budget allocated
annually to roads
operating and capital
% of complaints
received regarding
road condition
% of arterial road
system with a ride
comfort of ≥ (x)
% annual
(increase/decrease)
in the value of
backlogged work
%(increase/decrease)
in the number of claims
due to hazards on the
road
% of collector and local
residential roads with a
ride comfort of ≥ (x)
% (increase/decrease)
in the hours per day
that arterial roads are
congested
2
Capital $/m by
rehabilitation type
Operating $ per lane
km (by service)
Manhours/tonne of
cold mix patching
% of complaints that
did not receive a
response within 5
working days
% of potholes cold mix
patched prior to the
target time to respond
Ontario Good Roads Association – February 2007
% of road system
resurfaced/rehab.
annually
% of paved system
with a PCI of (x) or
greater
% of base repairs
requiring additional
work within 1 year
% of pothole patches
intact 1 year later
Management
% of capital
rehabilitation projects
completed on time and
within budget
% of preservation/
rehabilitation strategies
that meet lifecycle
targets
% (increase/decrease)
in the number of
kilometers of road
requiring expansion to
relieve congestion
% of employee
productivity
improvement ideas
implemented annually
11
Figure 2
A BALANCED SCORE CARD
MESSAGE
EXAMPLE MEASURE
We live within our budget
•
projects completed on time and
within budget
We reach are target clients
•
user satisfaction measures
We add value
•
measures which demonstrate that
changes have improved service
delivery or facilitated savings
We are cost-effective
•
•
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.
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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 2005
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