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What are assets?
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Assets are infrastructure and real property that serve a community and are intended to be maintained to a specified level of service by the continuing maintenance and replacement of its components. Typical assets are:
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•         Land
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•         Property and buildings used for such functions as education, health, government offices, correctional facilities and community centres
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•         Transportation networks
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•         Water utilities (water supply, wastewater and storm water systems)
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•         Flood control systems such as dykes and levees
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•         Energy supply systems (electricity transmission, generation, distribution and storage)
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•         Parks and recreation facilities
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•         Telecommunication networks
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•     Ports and port facilities such as wharves, docks, cranes, etc.
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•         Information technology and systems
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What is asset management?
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Asset management refers to systems that monitor and maintain things of value. Assets have a service value--in this case, the physical infrastructure that serves a community. They also have a financial value--assets cost money to acquire. Financial value is transient; selling physical assets will increase financial assets and investing into physical assets will reduce financial assets. When to sell or invest is one of the many questions a proper asset management strategy must address. The most basic asset management questions that need answering are:
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·       What do you have?
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·       What is it worth?
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·       What is its condition?
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·       What is its remaining service life, i.e. how long will it last?
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·       What is the cost of the deferred maintenance i.e. what haven’t you been fixing?
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·       What will you fix first?
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Asset management systems are the processes used to answer these questions so that the owner can cost-effectively develop, operate, maintain, upgrade and dispose of assets over time.
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Decisions that show the impact of good asset management include:
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·       Undertaking regularly scheduled maintenance of equipment (e.g. changing filters), buildings (e.g. painting), roads (e.g. grading), etc. to ensure that the asset lasts as intended. If it is not maintained, there will be reduced service value and it will need to be replaced, which is more expensive.
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·       Redeveloping under-used land or selling/leasing surplus land so that it can be put to use in the local economy will generate more revenue for the community and increase financial value for the community.
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Objectives of asset management
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The objective of asset management is to meet a required level of service, in the most cost-effective manner, through the management of assets for present and future customers. This objective is accomplished through lifecycle asset management and portfolio management. Lifecycle asset management encompasses all practices associated with physical infrastructure and property so that decisions are made based on the lowest long-term cost rather than short-term savings. Portfolio management involves managing groups of assets to maximize value and investment for the entire portfolio of assets rather than individual or single groups of assets.
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Asset management drivers and benefits
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The physical assets of a community, property and infrastructure such as roads, water, sanitary systems, electricity and power stations, telecommunications facilities, buildings, and parks, comprise the majority of the local government's investment and funds. Major resources are invested in the acquisition of these assets, yet often their continuing benefit and functionality are not attended to, thereby hurting level of service to the citizenry and wasting the initial investment. Implementing Asset Management best practices benefits the community and the central government in many ways:
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·       Economic sustainability is strongly enhanced by reduced cost to deliver services.
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·       Social equity and benefits are realized because the community has more resources to provide services and amenities.
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·       Environmental sustainability and reliance is stronger because resources are conserved and more attention is given to long term solutions rather than short term affordability or convenience; moreover, proper valuation of environmental assets, such as lakes, rivers and groundwater allow land and other assets to retain value.
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·       Citizens enjoy more dependable service levels without unexpected failures and indefinite interruptions.
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·       The financial viability of the local government is enhanced because future costs are anticipated and reserves set aside.
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·       The transparency of government is enhanced which leads to better communication with the public and grows citizen trust and confidence. and
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·       Communication is more effective with rate payers, elected officials, financial rating organizations and regulatory agencies because plans and results are documented and shared.
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As cities and the central government better manage their scarce resources, so the country is able to attract more global capital and investment - all because of better management of local government assets.
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