This is where it all comes together. How can I make better decisions? How does asset management make it easier for us as an organization to make investment decisions and plan our budgets? Formalizing asset management practices is not intended to remove decision-making from those asked to make decisions. Rather, adopting recognized asset management practices is intended to empower decision makers by providing factual information and an appreciation of both short term and long-term impacts.
First, we want to have a consistent and repeatable process that is documented and standardized in the organization. This might start off in one area of the organization then be adopted by other areas. It might not be perfect, but doing things consistently and transparently is a major step forward. We need a structured way of understanding everything that we should be acting on, projects we should be doing, and a mechanism to prioritize those projects and decide what we can, and can’t afford or are unable to do.
Developing a prioritized investment plan requires you to set criteria around what you evaluate your projects on. What is important to your organization, your community, and customers? And that’s not trivial to answer. But imagine your organization having criteria defined and agreed that would help you articulate how important Project A is in your organization compared to Project B.
Risk is a great tool for helping you to prioritize investments on your existing asset base. As per the ISO 31000 Risk Management standard, level of risk is defined as a function of likelihood (what are the chances that an event will happen) and consequence (if an event happens how bad will the effects be). What is the risk of not repairing that bridge now? What is the risk of not upgrading the storm drains? What is the risk of not replacing the arena roof?
One municipality we spoke to said it like this: “You can connect your Emergency Management Planning activities with your asset management efforts. Use your criticality assessments and flow that analysis into your asset management work to evaluate critical infrastructure.”
Asset Management Plans (AMPs) have evolved to become very useful planning and communication tools for communities. They bring together some of the components we have discussed into a story that can be understood by staff, management, elected officials and community.
Risk and Criticality are different, but often confused. High criticality assets are those with high ‘consequence’ of failure, criticality shouldn’t account for ‘likelihood’.
This video from the Federal Gas Tax Fund in Ontario showcases the value of asset management planning through the stories of fourteen municipalities in Ontario.
Furthermore, many municipalities are sharing their AMPs publicly online to help communicate the challenges with their communities. Just search online for “municipal asset management plan” and there are lots of examples you can learn from.
Once your investment needs reflect your level of service requirements for your community, you can set your capital and operating budgets based on what you need to do, and develop more accurate long term financial requirements. Simple, right? We know it’s not that easy, but it’s an important shift to move away from budgets being set based on historical values to needs-based capital and operating budgets. In the real world there are limits, but as asset managers you can acquire the information to articulate what effect that gap between your budget limit and needs-based budget will be on the services your organization provides and the community you serve.