Improving asset management capacity within municipalities

IMPROVING ASSET MANAGEMENT CAPACITY within municipalities

Sound asset management practices are critical for good governance, transparency and accountability to facilitate investment for sustainable service delivery. However, the process can be complex and requires an expert understanding to implement. By Stewart Russell and Dr Pieter Crous, SMEC South Africa

Dr Pieter Crous

Stewart Russell

Asset management has typically been championed within municipalities under the office of the CFO or units within finance departments. However, asset management reaches across departments and requires both financial and technical expertise to compile a compliant and appropriate asset register.

Legislation entrenched in the Integrated Development Plan (IDP), as a strategic planning mechanism for municipalities, indicates that Infrastructure Asset Management Plans (IAMPS) be developed as input for the Comprehensive Municipal Infrastructure Plan (CMIP). The CMIP presents an integrated plan across all sectors/asset portfolios. As such, an overarching legislative requirement is established for the appropriate management of public infrastructure, which is enshrined through our Constitution. From an accounting perspective, the Municipal Finance Management Act (No. 56 of 2003; MFMA) requires municipalities to comply with standards of Generally Recognised Accounting Practices (GRAP). In addition to GRAP, mSCOA (Municipal Standard Chart of Accounts) sets out to achieve an acceptable level of uniformity and quality to facilitate effective budgeting and expenditure of assets. The motivation for municipalities to adhere to the mSCOA framework includes: • data integrity and credibility • inter- and intra-municipality comparison and analysis • standardisation in the capturing of transactions, account classification, and output of data sets • standardisation in key business processes. National Treasury further defined a standard framework in the Infrastructure Development Management System (IDMS) for business processes related to infrastructure planning, procurement, project management, operation and maintenance. IDMS maps out gateways requiring specific supporting information that must be defined before proceeding to the next project stage.

This framework aims to ensure that municipalities perform multiyear planning and budgeting across all infrastructure assets and eliminate fruitless and wasteful expenditure. National Treasury also promulgated the Framework for Infrastructure Delivery and Procurement Management (FIDPM), which incorporates the IDMS and “provides the minimum requirement for effective governance of infrastructure delivery and procurement management”.

Obstacles to implementation

Challenges with the implementation and continued support of asset management

services are numerous within both local and international environments. An international study with around 1 000 participants was conducted in 2014 to investigate asset management practices, investment, and challenges (reliabilityweb.com). The results indicate that only 19% of organisations’ information management systems supported effective asset management, highlighting the fact that data management issues exist across the world within various sectors. Therefore, plans or processes to improve data management require constant and dedicated attention.

Asset management maturity scale

To perfect the process, organisations need to evolve in terms of an asset management maturity scale (as defined by the Global Forum on Maintenance & Asset Management), encompassing the following categories: • asset knowledge • current asset management practices • information management systems • planning processes • asset management plans • organisation. The levels of maturity are: • Level 0: Innocent • Level 1: Aware • Level 2: Developing • Level 3: Competent • Level 4: Optimising • Level 5: Excellent.

Climbing the maturity ladder

It is imperative that municipalities monitor their maturity levels on a regular basis and make use of specific tools or frameworks that will enable them to get perspective on where they are and where they aspire to be in time.

It is important to note that – although the expectation may be that a municipality’s maturity improves year on year – in practice, the maturity scale is more like a ladder that one can climb both up and down, depending on the dedicated effort taken to manage asset management.

Gap analysis

Gap analysis tools are essential for understanding the current asset management status quo within the municipality, together with mapping out the strategic objectives and the expected outcomes.

Gap analysis studies are typically conducted through Delphi sessions using structured questionnaires based on international best practice. Delphi sessions are held with key stakeholders responsible for the implementation of asset management within the municipality and outlining the capacity and capability of the existing systems, standard operating procedures and processes, plans and budgets, and data sets (including GIS).

The key output of the gap analysis should be a best value judgement on the condition and performance of asset management within the municipality, using both narrative reports, and visualisations mapping out the current status quo and the municipality’s objective in the short to medium term against global best practice.

Poor asset care and deteriorating infrastructure not only threatens our current way of life, it also limits our growth aspirations.” – National Treasury, 2018

Strategic management plan

Strategic asset management plans are compiled based on data outputs of the asset management processes, which include the asset register, operation and maintenance data, GIS data sets, including infrastructure, population demographics, and infrastructure condition assessment field inspections. It is critical that the municipality agree and adopt a template framework for the asset management plans such that these can be updated annually and monitored using appropriate tools to ensure that the asset lifespan is maximised.

Dedicated project management

An output of the gap analysis (health checks) will be a set of projects or initiatives that are identified to enable the municipality to climb the maturity scale. It is important that each of the project outputs or objectives are specific, measurable, achievable and timely, such that they can be monitored throughout the year.

As an example, the initiatives that may arise from the assessments may include, but are not limited to: • GIS digitisation processes • automation tools for analysis and reporting • technical support for asset management • report templates • dashboard visualisations • scoping of additional system features required for existing systems • data modelling and database design to include all asset life-cycle stages, including operational data • system integration requirements with other systems • solution architecture and development of bespoke solutions • design and implementation of electronic data capturing tools and processes • development of standard operating procedures and policies • asset-management-related business process mapping across the municipality.

Conclusions

Evidence shows that effective asset management implementation requires a dedicated focus. Critical success factors include: - The provision of skilled personnel to manage assets across the life cycle who are held accountable for the operation of the assets and the quality of data recorded in the asset registers. These roles can be supported by external service providers and key experts; however, a unified team is needed and a positive client-consultant relationship is vital. - Political will to actively manage interdepartmental cooperation to facilitate open channels of communication, which drives budgeting and planning for maintenance, asset renewal and replacement programmes that align with new infrastructure requirements. - Leadership that drives a municipal culture that motivates all levels of government to be accountable for effective service delivery, promotes accurate reporting, enables proactive escalation of issues hindering service delivery, and mitigates political interference that can derail the strategic asset management implementation process. Systems are enablers for effective asset management; however, the focus must be on the capacity and skills of the end-users who will operate the systems to achieve the desired asset management goals and objectives.

This is an edited version. The full paper, with references, is available from the authors.