Part 3: The best of what we found

Asset management for public entities: Learning from local government examples.

Many of the councils that we audited had gone beyond the basics. This Part gives some examples of the best practice that we found, and what, in our view, makes it so good.

Professional asset managers are a scarce resource in New Zealand – the best make the most of the people they have available

With limitations on the availability of professional asset managers, it is important that organisations make the best use of the resources they do have available. The best organisations think creatively about how to do this. It can involve:

  • bringing teams together so asset managers can support each other and be supported by other staff, in some cases working jointly with other organisations;
  • effectively co-ordinating all those involved in planning;
  • making sure that asset management planning is a clear part of someone’s job, not just something to be fitted around other responsibilities; and
  • making sure that planning is fit for purpose without more than is needed.
  • Case study 3.1: Manawatu and Rangitikei District Councils – overcoming limits of organisational size
  • Case study 3.2: Wanganui District Council – structured approach to planning
  • Case study 3.3: Horizons Regional Council – deciding on common policies and procedures

Updating an asset management plan can be a huge task if left too long – the best keep their planning fresh

An asset management plan is a detailed technical document. Even if an organisation avoids some of the pitfalls we describe later, a good plan will be a sizeable document. It will take some effort to write in the first place, but, once done, it also needs to be kept up to date to continue being useful.

Our conclusion is that it is easier to make regular small improvements than it is to leave a plan for a number of years and then embark on what can turn into a complete re-write. Regular, small improvements also ensure that there is always a reasonably current plan in place.

  • Case study 3.4: Upper Hutt City Council – integrating asset management plans with business planning

The best are moving "sustainability" from being a buzz word to something meaningful at the asset level

Sustainability is an important element of asset management planning. Even leaving aside the environmental reasons for considering it, the lifespan of many assets requires that sustainability has to be considered. Asset management should determine the most costeffective solution that balances the needs of present and future customers.

Environmental, economic, social, and cultural effects are all relevant considerations when judging sustainability. The best organisations recognise this and have moved beyond making token references to the obvious "green" issues.

  • Case study 3.5: Manukau City Council – taking sustainability seriously

The best have good asset information, but they also use it well

We stated in Part 2 that good quality information is an asset management essential. Keeping "on top of it" – so that the information remains current – is equally important. Further, as contractors are often doing much of the day-to-day work on behalf of councils, working effectively with partners can help maintain data quality.

The best organisations use their information well to make better decisions on how they manage the assets. This might mean being clear about minimum standards that the assets have to meet or working with partners to maximise opportunities to add to or verify data. It might mean being clear about critical assets, and how they need to be managed differently, or taking a range of factors into account when judging the appropriate asset intervention – such as whether to maintain or replace, and so on.

  • Case study 3.6: Wellington City Council – keeping asset information current
  • Case study 3.7: Wellington City Council – assessing asset condition
  • Case study 3.8: Upper Hutt City Council – being clear about acceptable asset condition

The best at managing assets recognise that levels of service are the absolute heart of good asset management

A plan may describe some assets, provide a rationale for their maintenance, renewal, and capital development, and forecast the finances required to pay for this work. But, without first defining the desired levels of service, it cannot be an asset management plan.

However, simply defining some levels of service is not enough. The best organisations are clear that levels of service are at the heart of asset management. They express them clearly, and make sure that they provide the link between the organisation’s objectives and the assets. They set targets, and actively monitor performance indicators as part of the way they manage. They keep levels of service up to date, ensuring that they remain relevant and accurately reflect user needs.

  • Case study 3.9: Auckland City Council – putting levels of service into performance framework
  • Case study 3.10: Dunedin City Council – keeping levels of service relevant

Risk management is a structured process, but needs to be real

Risk management is a technical process, and it is best to take a systematic approach. But it is also important not to lose sight of the purpose, which is to identify those risks that are the top priorities for action. Risks need to be identified (asset managers probably already know what they are), their likelihood and effect assessed, prioritised, and appropriate action decided on. Some risks can be managed, mitigated, reduced, or avoided. Some risks have to be accepted.

The best organisations recognise that risk management should not be overly complicated if people are to devote the time and effort needed to address the risks. The best organisations have an easy-to-use risk management framework that does not intimidate its users or have them struggling to invent systems for themselves. It frees them up to think about what the risks are and how to tackle them. It also allows risks to be easily and clearly reported to decision-makers, so that asset managers can be supported by the wider organisation in their efforts to manage risks.

Optimised decision-making leads to the best solutions

The best organisations try to optimise their decisions on major capital programmes, whether these decisions are about whether to renew assets, or on developing the assets further. They choose the option that gives them the greatest benefit or value for money across a range of factors. This involves identifying a wide range of options, and assessing them against each other using a range of criteria. A formal decision-making framework, shared by (and consistent across) differing asset groups allows an organisation to optimise its decisions across service areas.

The best know the reliability of their forecasting

We have stated that it is essential for asset management to produce asset-driven financial forecasts in time for the budget. If asset managers are also clear on the reliability of their forecasts, the assumptions that underpin them, and the factors they have taken into account, decision-makers will be better informed. This in turn means that it is less likely that asset managers will be locked into unrealistic project costs too early in their planning.

A financial forecast with, say, 50% reliability, is not necessarily a poor forecast. It could simply reflect the stage of planning that a particular project is at. If decision-makers are informed that they are agreeing to a project whose costs are likely to be in a certain range, the initial decision is better informed, and future changes in cost are more likely to be understood and expected.

  • Case study 3.13: Wellington City Council – forecasting budgets for asset maintenance