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Jan 2015 | Asset Management

ADVANCING ASSET MANAGEMENT IN CANADIAN MUNICIPALITIES
ROSS HOMENIUK, KPMG

News of aging assets, growing demands for service, and the changing environment have become consistent points of discussion in governmental affairs. Faced with these new realities, Canadian municipalities are being challenged to balance current and future requirements while living within their means. Many are reexamining their approach to asset management as a means of prioritizing needed investment, and strengthening their approach to planning and decision making, as well as formalizing their requirements through the development of Asset Management Plans (AMP).  

 

As a result, uptake and usage have dwindled once subsidies or funding for implementation and data collection ceased, while initiatives never achieved their desired benefit, or in some cases, failed to even get off of the ground.
 
When effectively developed, an AMP documents an organization’s strategy for meeting defined service objectives through ongoing investments in infrastructure and business change. A ‘living’ document, it provides an ongoing platform for examining and reporting the relationships between service delivery, the existing asset base, management practices, levels of investment and a roadmap for ongoing business improvement.
 
To be effective, AMPs must ultimately integrate with and guide the investment planning process. In addition to identifying needed changes to assets, people, and processes, the document’s long-range outlook provides insight into trade-offs between investment, service and risk, and the affordability of delivering desired levels of service.
 
The current push toward municipal AMP development is being supported by the federal and provincial governments. The new Building Canada program promotes the need for improved asset management across Canada, which is being reinforced through the development of Federal-Provincial Gas Tax agreements. While the nature and structure of support for asset management development and capacity building varies from province to province, there is broad commitment to promote asset management strengthening at the municipal level and to demonstrate significant progress over the term of the current funding program.
 
This support could take on a variety of forms. Recent progress in Ontario through the establishing of AMPs as a prerequisite for provincial grant funding has caused many to take notice. It is now speculated that it is only a matter of time before other provinces follow suit. With the introduction of its Building Together Municipal Infrastructure Strategy in 2012, Ontario’s Ministry of Infrastructure moved to require municipalities to justify their need for infrastructure funding support. This was accomplished by linking grant program requests to front line service requirements through a comprehensive AMP.

I. LEARNING FROM THE PAST

 
Historically, ‘top-down’ efforts to drive municipal asset management have seen mixed results. The federally funded InfraGuide movement operated from 2001 to 2007 and successfully produced a collection of best practices and case studies supporting municipal infrastructure sustainability. While this process-driven initiative helped form a foundation for municipal asset management in Canada, the heavy technical focus, coupled with the lack of an imposed business driver, meant that uptake and adoption was slow and difficult. Ultimately the program wound down before widespread benefit was realized by adopting organizations and the industry as a whole.
 
Technology-driven initiatives such as Alberta’s MIMS (2000s), and to some extent Ontario’s Municipal Data Works (2000s to present), were relatively successful in promoting inventory and data collection. However, these initiatives failed to educate stakeholders on how to effectively leverage and use this information to inform the capital, operational planning, and budgeting processes. As a result, uptake and usage have dwindled once subsidies or funding for implementation and data collection ceased, while initiatives never achieved their desired benefit, or in some cases, failed to even get off of the ground.
 
The municipal introduction of tangible capital asset (TCA) accounting standards in the late 2000s was also viewed as a municipal asset management driver. While PS3150 did a good job of bringing infrastructure inventory and valuation into the spotlight, its focus on financial accounting resulted in a disconnect between financial and physical assets and its ultimate treatment as more of a compliance exercise than an opportunity to meet broader asset management objectives. This represents another lost opportunity for broad transformation.
 
The last decade has seen the emergence of several grass-roots movements aimed at supporting the development of municipal asset management from within. The Canadian Network of Asset Managers (CNAM) is approaching its ninth anniversary and has helped to network municipally-focused practitioners from across Canada in sharing asset management knowledge and lessons learned. Regional initiatives, led by Asset Management BC, have also done a good job of building awareness and support at the municipal level and have helped develop targeted capacity within local government organizations.
 
While these have created local and national practitioner networks and resulted in the adoption of some common tools and practices, the largely educational focus and absence of a common regulatory driver or higher level financial incentive have limited coverage and demands for standardization. In doing so, uptake and adoption have been delayed as has the associated widespread realization of front-line outcomes.
 
In Ontario, the Building Together plan has presented an effective driver, spurring municipalities across the province to AMP development. A guide for municipal AMPs was produced to support this process and while some basic information is presented on the role of AMPs and their integration into the broader municipal business function, a lack of training or detailed examples have made these benefits difficult to realize. As a result, emphasis has been placed on content and has culminated in a view of development being a data collection and information gathering exercise.
 
While many plans have been produced, most have focused on confirming inventory and documenting major investment requirements, as opposed to improving sustainable service delivery. Continued pressure, combined with education and support for broader AMP objectives will be needed to create broader value through this exercise, both at the local and provincial level.
 
 

II. Looking to the future

 
As we continue to move towards improving asset management planning within Canadian municipalities, it is important that we learn from the accomplishments and shortcomings of past programs and initiatives. Based on this experience, it is clear that broad industry-level change will require a coordinated effort involving both a common external driver, such as provincial or federal regulation or funding and broader education, change management and procedural supports.
 
While regulatory or incentive-based drivers will generate an effective catalyst for municipal AMP development in any jurisdiction, the full benefit of this practice will only be realized if asset management is fully integrated as a core business function within these organizations. Successful integration will also require effective stakeholder education and change management. While support and guidance surrounding this work can be introduced as part of the broader initiative, every organization is different. The actual development and delivery of targeted action is something that must be undertaken at the municipal level.
 
 
 
 
Stakeholder education will largely involve ‘building the case’ for improved asset management planning within the community. While there is a clear benefit to ‘better planning and decision making’ it is important that the benefits (and costs) to the organization are well communicated and understood.
 
Once established, the AMP will form a central part of an organization’s business planning process and will guide collection management and the use of new and more types of information in the investment planning process. Ultimately, this will impact and require support from Council, the leadership team, and management and staff from across the organization. Targeted communications, focused on each of these stakeholder groups, will be important for building the necessary buy-in and support.
 
Implementation of a comprehensive asset management planning process will result in changed work practices and possibly impact roles and responsibilities within the organization. People react to change differently based on their position in the change continuum. Concerns and issues must be effectively understood and managed in order to mitigate risk and achieve the required results. A tailored, well developed change management plan, prepared by an experienced change professional, will play a key role in this process and should not be overlooked.
 
From a procedural perspective, the introduction of clear and measureable public-facing Levels of Service (LOS) will be key to successful integration. In an asset management planning context, LOS serve as the primary linkage between physical infrastructure and a community’s greater goals and objectives. Emphasizing service, as opposed to physical infrastructure (which is really a means of supporting service delivery), will establish clear ‘line-of-sight’ between corporate priorities, public-facing service outcomes, and physical infrastructure inventory and characteristics. It will also allow the benefits as well as costs of investments to be measured and weighed in evaluating trade-offs and making decisions. In addition to improving the consistency, transparency and defensibility of plans and decisions, this will allow for the clear justification of spending based on community benefits and front-line outcomes.
 
 
 
 
 
As with education and change management, to be meaningful and effective, LOS are something that should be tailored and tied to the needs of each municipality. While broader support in the form of knowledge sharing and recommended practices can be valuable in guiding the development process, it is important that service metrics and LOS targets be developed locally with the input and support of senior municipal leadership and council.
Good business coupled with federal and provincially driven programs has made AMP development a growing trend among Canadian Municipalities.
 
When done effectively, asset management planning can identify and guide the actions needed to achieve and support sustainable service delivery within these organizations. While many plans have been produced, efforts to date have largely focused on the consolidation and reporting of current information with significant improvements to investment planning and decision making yet to be realized.
 
More attention to stakeholder education, change management and procedural support is needed in order to achieve these higher-order transformative outcomes. Barring federal or provincial funding for the development and delivery of key supports, municipalities must take it upon themselves to better educate stakeholders and ensure the necessary change management and procedural supports in their AMP planning and development activities.