Asset Management 101 (Part 1) – The Need For Asset Management

Bridges, roads, parks and even sewage and garbage management are things we all take for granted but greatly affect us when they are not working to the levels we have come to expect. We all rely on infrastructure assets to enjoy our quality of life regardless of whether those assets are managed at the municipal, county, state or federal levels.

There is no one-size-fits-all approach for agencies determining how to best manage their assets. Agencies vary in their level of asset management maturity, as well as funding, resources, and user demands on the infrastructure they are responsible for.

Due to tight budgets, recessions and other priorities, asset management professionals across North America are now facing some significant challenges due to aging infrastructure and lack of funding.

Asset managers in the United States are facing a crisis situation from the looming insolvency of the Highway Trust Fund—which provides most of the funding for transportation projects in the United States—with estimates that the fund will become bankrupt by summer 2014, due to declining revenues from the gas tax, unless other sources of revenue are found or mandated by Congress.

In Canada, as a result of significant investments in infrastructure in the 1950s and 1960s, many assets are now reaching the end of their maximum useful life. Much of the infrastructure is in a state of underinvestment due to funding cutbacks and has been deteriorating for some time.

Just as our quality of life has benefited from decisions made by past generations, the quality of life for future generations will be based on decisions that we make today. As the previous examples illustrate, if we continue down the path we are currently on, the quality of life for our children and grandchildren is at risk. However, if we follow the principles of Asset Management, we can change the path we are on and leave our children with a healthy infrastructure rather than a costly burden.

If there is anything that we have learned from the current state of our infrastructure and the myriad of budget and funding issue we see today, it is that we need to get better at planning for the future. This is where the discipline of Asset Management comes in.

Asset Management can be defined in a variety of ways, but at its core it is a business plan for the services that city, county, state and federal organizations provide to their communities. In other words, we need to know what we’ve got, how much it costs to run it, at what standard of service and how do we repair and maintain it in a cost effective manner going forwards for future generations? Asset Management provides the methodologies and tools to answer these questions.

In Part 2 of this article, we will cover the steps you need to take to build your own asset management plan and discuss industry best practices.

2015-10-22T10:20:02-04:00

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