Lloyd Arnott, Business & Infrastructure Advisory Leader, Aurecon, shares his thoughts on why a whole-of-life approach to asset management is crucial for both local government and private consultants alike.
What are the challenges that public works asset managers have to deal with on a regular basis?
There is a lack of understanding at the corporate level as to the benefits of whole-of-life investments. They are driven by ribbon-cutting projects, which is exacerbating the problem. It is generating more capital that must be maintained with less money.
There is a lack of information out there in the industry that gives a credible cost/benefit equation to prove that asset management works. The whole-of-life approach and maintaining your assets in good working condition with a planned investment strategy actually works. But there are simply not enough examples where local governments have actually said that this is the only way to go and are prepared to fund replacements and periodic maintenance accordingly. The ‘real-life’ success stories are critical to convincing politicians and non-engineering executives that sweating assets is irresponsible management.
As a consultant, what does this mean for your business?
We don’t have an informed client base. There are individual specialists out there in the client base who know what they want to achieve but they are not given the funds to put in place the systems and procedures to be able to competently manage assets.
They are continuously running on limited resources and do more with less, but deteriorating conditions of assets are really starting to bite.
Why do you think this ribbon-cutting mentality is so strong?
They run on a three or four year election cycle and there are no votes in maintaining assets, only providing new or better services. There are no votes in patching potholes; the community sees that as a run-of-the-mill function that mysteriously happens with no budget increases.
What needs to happen to make this a more important issue across the entire organisation?
Every state is now requiring its councils to have asset management planning in place. But a lot of them are not proper plans; they are simply fulfilling the legislative requirements and leaving it. If we help put an asset management plan in place, often we are called back three years later to re-evaluate the plan and then nothing more is done.
The skill set within local government is improving, through NAMS and the IPWEA. The skills set of the executives and directors within local government needs to substantially shift forward so they understand the value of whole of life. Local government needs to look at different ways to deliver its maintenance programs. The old way of having day labour maintaining assets, whether they are building or civil assets needs to be reconsidered. They must look at value for money solutions: can joint ventures between the private sector and local government to the best outcomes?
I have some proof that it can. There are enough maintenance public/private partnerships around that show savings of up to 20 per cent in their first year, with no deterioration in service levels. This is the sort of message we have to get out to local government. Currently, most want to keep it in house and keep people employed, but there are ways to keep your people in work, but still benefit from private rigour.
The fact is, you can do 20 to 30 per cent more with the funds if you look at a different way of delivering your services.
There is a trend where local government asset managers see a solution in the systems, rather than the philosophy. I spent 30 years in local government, so I’ve seen it time and time again. The council decides to get serious about asset management, so they go and buy some software and collect lots of data for strategic decisions. But, in the next year, they get their budget cut and they don’t have the people to maintain the data. All of the sudden it is a year or two out of date and you may as well throw it away.
Working up the reports so you are not just pulling numbers out of a hat is critical to how asset management works in local government.
Do you think this philosophy can be ingrained in asset managers?
Yes it can. The IPWEA has done an enormous amount in the past 20 years. There are now university courses and degrees in asset management. None of those were there five years ago.
Asset management must be seen as a profession in its own right and not just something that engineers or accountants do. It costs you a million dollars to build a piece of infrastructure, but it will cost you four times that amount to maintain it over its life – more in some cases. The penny is starting to drop that maintaining the asset is more important than building it in the first place.
From our perspective, we’ve just put in place a framework across our company called ‘whole-of-life asset and infrastructure management’ (WOLAIM). This is going to change the way we provide services to clients and not just in local government. The consultancy industry is seeing the light as well. Our business is asking: what are we doing to help our clients maintain their assets?
How long do you think it will be before best practice is adopted across the whole local government sector?
It’s been going for 20 years and I honestly believe we have another 10 years to go. It takes a generation for change to happen. We’ve covered an enormous amount of territory in 20 years but there is more to go before we can achieve what you would call competent lifecycle asset management.