Asset management is tough for councils; you maintain 33% of Australia’s assets but collect only 3% of its revenues. No wonder ‘Worst First’ is so common. I show how to change this – and save money, delight your customers and a lot more.
$800 million in Missing Assets
Yes it’s true: ‘Councils collect just 3% of the nation’s total taxation revenue – but are responsible for 33% of Australia’s public assets’ says the Local Government Association of Queensland. This may be why you’re feeling the pain of council asset management.
Managing assets well is vital for delivery of services, and impacts on the financial sustainability of every Australian council but it’s not easy: a recent audit found that Queensland councils failed to include nearly $800 million worth of assets in public registers in the last three years. The report cited incomplete asset registers, overspending and poor internal controls as reasons.
Asset management remains a major challenge for many councils, especially peri-urban, rural and regional councils which have smaller ratepayer bases, yet much large areas of natural and linear assets to maintain. Yours might be one of them.
‘…so to hell with it’
Brianna Aris, Senior Civil Engineering Officer at the City of Albany, surveyed 132 local government professionals about the state of their organisation’s asset management. Her findings reveal that a poor asset management culture is systemic in many councils – and lack of leadership around asset management is the biggest obstacle.
‘Asset management isn’t always embraced, and I think that we take a lot of steps forward and then collapse back again,’ Aris says. ‘There has to be leadership from all directions. I can’t sit here as an asset management professional and think, “My CEO’s not interested, so to hell with it”.’ This refrain may be familiar.
Prevention is Cheaper Than Cure
Is this familiar but uncomfortable: you take your infrastructure for granted until it breaks down or community complaints can’t be ignored? This is ‘Worst First’ thinking this is how it works.
Take a simple example: a major drain gets clogged after heavy rain and causes serious flooding of houses. Repairing the damage will be far more expensive than just keeping the drain clear, not to mention fixing reputational damage with angry flooded ratepayers.
Managing Assets in this reactive way has serious financial impacts:
- Repairing breakdowns is more costly than preventing them with regular, systematic maintenance.
- The older the assets, the more frequent the breakdowns.
- More money spent on asset maintenance means less for upgrades and renewals.
Managing assets by reacting to breakdowns and community demands is hugely wasteful and perpetuates the cycle of declining asset condition. This is something that no council wants.
Data Silos & No Clarity
Many councils work with disparate systems and databases; yours may be one of them.
Ben Smith confirms this in Government News: ‘Our broader experience working with local councils across Australia shows that most councils have multiple asset registers stored in disparate systems including spreadsheets.’
This makes it difficult to gain a clear view of all your assets, their value, current condition and maintenance status. Without that view, it’s impossible to develop effective preventive maintenance schedules, or plan for upgrade or renewal of infrastructure, or get an accurate picture of your asset maintenance costs. Without this view, your asset management has to be reactive.
Hierarchy Gives Clarity
Yet, an Asset Hierarchy can help. Arranging your important assets in a hierarchical database simplifies and speeds up the search for specific assets. In an Asset Hierarchy, assets are assigned to groups, in a ‘rolled-up’ data structure that looks like a family tree.
For instance, all your bridges would go into one group, and each bridge would show its major components one level down – the structure, the railings, and the road on top, the creek below and so on. Imagine trying to develop such a hierarchy if your information is spread over multiple asset registers, each set up in different ways? It would be time-consuming and inaccurate to do and, likely, impossible to maintain.
When it comes to maintenance, the asset hierarchy shows how the various components are related. When seen in this context, it will be clear to your maintenance engineers that there’s little point in repairing the road surface if the bridge’s supports are about to collapse. This seems patently obvious yet, without an asset hierarchy, gaining such clarity is impossible and so money is wasted.
Simpler, Faster, Easier
With an asset hierarchy, tracking your assets becomes simpler and much faster, and tracking dependent and related infrastructure and equipment, too. With this view of your assets, you’ll be able to quickly identify the root causes of failures, the components that need frequent repairs, and which assets consume the lion’s share of your maintenance budget.
An asset hierarchy also makes it easier for you to schedule regular maintenance and prevent costly breakdowns. Seeing these dependencies will also avoid scheduling maintenance for plant or equipment that would disrupt the operation of other equipment.
With a consolidated relational, accurate asset register database, your maintenance team can focus on preventative maintenance and improving performance. The results will be reflected in dramatically reduced repair and maintenance costs, increased funds for upgrade and renewal and much more time for planning.
As well, your council’s executives will have accurate information on which to make correct lifecycle decisions at the right times. An Asset Hierarchy just makes good sense.
Too Daunting?
To manage assets effectively, councils need fully integrated IT systems, but many find that prospect too daunting: with no central asset register, accurate asset data isn’t available to get started and, with staff comfortable with existing systems, the change management hurdle is just too high for most councils. Many councils are also put off by the cost: a whole new system is just too hard. No wonder effective asset management keeps ending up in the ‘too hard basket’.
But it doesn’t have to be.
Cloud-based systems make the switch easier and more affordable and, if change management is part of implementation, the transition is far easier too. If you can find a system purpose-built for council asset management in councils, it will need minimal customisation, and implementation time and cost will be dramatically reduced, too. Ease of use by council business users is a handy benefit, if you can find it.
What To Look For
When looking for a new asset management solution, some key criteria stand out.
- Integrated & purpose-built for asset management in councils.
- An asset hierarchy flexible enough to meet your exact needs.
- Seamless data migration from existing systems.
- Ease of use and adaptation to change by non-IT staff.
- Analytics that show the full benefits of an asset hierarchy.
- Cloud-based so it’s economical and accessible.
- Council-specific reports for insights for decision-making.
- A vendor with deep in-council experience with asset management.
- Expert guidance to define asset hierarchies that match your organisation.
- Help with evaluating/updating your current asset hierarchy.
- Specific support for internal change management processes.
Be Better Prepared for Change
Managing your assets under known conditions is one thing; tackling the impact of climate change on them is quite another. Have you thought about the impact of higher temperatures, more frequent, severe droughts, more flooding rains and more coastal erosion on your assets? These natural events will wreak more severe damage on roads, parks, rivers, bridges and drains – and will dramatically increase your repair and maintenance costs.
If your council is regional or peri-urban, you’ve probably seen the parade of families or grey nomads in caravans or Harleys on weekends and school holidays. Being city-based, these visitors expect quality facilities but they inflict extra ‘wear and tear’ on assets, including leaving refuse behind when they leave.
All this puts more pressure on your assets yet contributes little to Council’s maintenance coffers, unless you’re lucky enough to have parking and entrance fees.
The Fastest Growing Areas
Regional and per-urban centres are also seeing an influx of new residents, driven out of cities by high house prices, overpopulation and traffic chaos. These arrivals expect the same level of services and facilities they enjoyed in the city, which puts added cost pressures on your resources, from asset acquisition to maintenance to renewal.
‘The Peri Urban region is the fastest growing rural area in Victoria,’ states the report to parliament from the Environment, Natural Resources and Regional Development Committee. ‘The region will grow by an average of 49% through to 2036 with some of the Peri Urban cities forecast to more than double and in some cases triple in population. In contrast the regional cities of Ballarat, Bendigo and Geelong have a slower rate of growth at 40%.’
Whether your council is rural, regional, peri-urban or urban, mounting pressure on your assets make smart management systems critical for your survival right now – not a wishful ‘nice to do’ maybe one day.
