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[Listen] Getting to grips with municipal asset management

June 13, 2022

[Listen] Getting to grips with municipal asset management

Synopsis
8 Minute Read

Energy and Utilities Leader Gord Chalk visited Municipal World’s MW Presents Podcast to discuss how local governments can take a more strategic approach to asset management.

Consulting Leader, Energy and Utilities

Asset management is a strategic imperative for municipalities, with big cities and small towns each facing unique mandates to ensure civil infrastructure meets the needs of residents. However, there appears to be some lingering uncertainty around what asset management entails and how to do it well.

MNP’s Gord Chalk recently visited the MW Presents Podcast to discuss the challenges, opportunities, and best practices and opportunities alongside Brian Peach, Chief Administrative Officer for the Town of Pouch Cove.

Despite their vastly different perspectives, Gord and Brian found plenty to agree on, especially when it comes to the need for prioritization, collaboration, and effective stakeholder communication. 

Listen to the conversation or read the transcript below.

MW Presents: Getting to grips with municipal asset management – Gord Chalk and Brian Peach

Listen to the podcast

This podcast is shared for information purposes only. The discussion does not reflect a direct or implied endorsement of Municipal World or its members.

Episode transcript

The following conversation has been edited for clarity and conciseness.

SM: So, I think we all know what asset management is, but can I get you to elaborate beyond the textbook definition?

BP: Asset management is everything a municipality can do to extract the maximum value from its assets. That might mean getting more out of your assets, taking care of them so they last longer, or replacing them when they are no longer serving the need.

It includes a much wider range of activities than some people think. A common perspective is asset management is just the replacement assets for the future. But it’s everything you need to do to get the most out of your assets.

GC: I think people sometimes equate asset management with maintenance. But it’s much more than that. Assets exist for a reason. They exist to provide service for a municipality, region, or area.

One question that’s helpful to ask is what is the level of service that’s required? For example, we might talk about how often a municipality would plow a road, etc. So, we have to look at the condition the assets are in, which assets are available, and their replacement schedule.

We also have to look at assets from a broader perspective: they exist to provide a service and we want to make sure we are optimizing that asset — not spending too much or too little to deliver that service for the municipalities.

SM: That’s interesting. So if we all know what these plans are, why don’t more municipalities do it? What is stopping us from actually putting these plans into action?

BP: My favourite analogy is it’s like going on a diet. Let’s say I need to lose ten pounds; I know how to exercise and how to eat healthfully — and yet I still don’t do that. That’s the problem with asset management now.

Everybody knows how to do each specific thing. The problem lies in summoning the will and the energy to do it. How do we create the culture that is necessary for a healthy asset management lifestyle, just like you would for yourself?

GC: The analogy I’ve been using is buying a new vehicle. People know how to plan for whether they need a new car, whether they can afford a new car, and what type of car they can afford.

Once they have it, they know they need to rotate tires or do oil regular changes. They also know you don’t necessarily need to follow the manufacturer’s guidelines; you might be able to stretch it out a little bit or change maintenance schedules. But it’s more difficult to apply that thinking to assets you don’t use every day or to a broader portfolio of assets.

I think people have those skills. They have the basic math. But people tend to overcomplicate things — they lose sight of the simple activities that will get them where they need to go.

BP: One of my perspectives as a small municipality is this whole asset management movement has shifted to making a master plan, then making documents and policies, then sending those plans down to the workforce and the people. It’s a very top-down approach, mainly because it’s being pushed more so by the federal and higher orders of government.

It’s being asked to do asset management practices — whereas the real problem is how to build a culture of doing what is needed most. We need far more contributions to come up from the front line and into the organization.

In one respect, it’s much easier for a small town because we are so connected to the front line. A larger town might have silos and bureaucracy. I’m right at the front with my workers and my council, so I don’t have that same issue. It’s one of the reasons why the asset management work of small towns is going to look very different than the asset management work of large towns.

GC: We’ve had that conversation, too. As you get into a city or larger municipality, it starts breaking into divisions such as roads, recreation, etc. They separate assets into functional categories. They don’t think about them the same way or have the same structures in place.

But not only that, we recently had a good discussion about how, as municipalities grow, they seem to get less input from the front-line people who know the problems, see the problems, and probably know the most effective and efficient methods to resolve those issues.

And we don’t embed; we don’t use that information and knowledge about what constitutes a good asset management program. Instead, as you’ve said, the government comes down and says, ‘I have this money and you must do this asset management plan’.

So, everyone creates an asset management plan but then the questions are: How do we execute it? Do we execute it? And is it executable? Because we haven’t spoken to the people who need to do that execution.

BP: What even constitutes getting the input from the front line? Some places think it’s sitting everyone around a table and collecting input. But the workers don’t work that way — they’re busy flushing hydrants and digging holes. You need to go to them and get their input.

That means going out and flushing hydrants with them — noticing certain issues they may be having, and asking questions. You need to be getting them actively involved in what you are doing.

I’ll give you an example of how we do this in Pouch Cove. One of my biggest focuses is creating these work order packages which include everything a worker needs to do a job: I’ll say here’s the job, the procedure, the traffic control plan, and the form they will fill out on whatever they are doing. It’s designed to accompany them on any job.

They will report all this information, and I can collect it and analyze it myself. I’m not creating an extra hurdle; this makes their lives easier.

Every time you try to do something asset management-wise that is an extra step for your front-line workers, you’re that much further away from getting their help. When I first made these work order packages they didn’t like them because they had all these extra steps.

The workers would say, ‘Well it would be good if it had this, and didn’t have that, and why do I have to make one of these traffic plans every single time? Can we just get a bunch of these printed off and I can just staple them to it?’

That’s perfect. Now our asset management plan in the maintenance section has all the forms that go with these different types of jobs. You want to make it easy and fun — make their jobs more enjoyable. That creates the culture and the energy you need for them to keep doing it.

SM: You both have great perspectives. What sort of tips would you give to a municipality that’s trying to start an asset management program, or trying to sustain one?

GC: As much as we want that front-line information and knowledge, it’s a yin and yang — black and white, negative and positive. We also have to realize that money, time, and resources are not unconstrained and unlimited.

Everybody has an idea of how everything can be done better. Unfortunately, we don’t have the money to do all of that. Brian and I talked a little bit about the top down. We need to understand how much money we have, and we need to be able to prioritize — and this becomes one of the tips that I move into.

As Brian said, we need the front-line data. It’s almost a top-down, bottom-up, middle-out kind of plan that needs to happen. So, one of the tips is to get to a middle-out asset management plan. Make sure you understand how the work gets done and the connection between safety, performance, effectiveness, and environment for the front line. But also understand how much money or how many resources you have to effectively apply them. That requires prioritization.

You need to know your assets. You need to understand how your assets are connected to your service level. What are your assets doing, and how are they doing it? You need to prioritize those assets that are directly connected, secondarily connected, or maybe even ancillary. And then understand where you can take your limited resources and apply them.

BP: Just to add a small-town perspective — you generally don’t have any capital budget to replace your assets. You’re completely dependent on funding programs and getting funding awarded. What you think is most important might not be overly relevant if there is a funding program that has priorities and specific ways applications are scored and ranked.

Having a good understanding of your funding program is almost more important than knowing your information. If there is a funding program that has five different types of projects, I just need to have one project in each category at least that I am ready to apply for in any given year. It’s probably more important than having a forecast for the next ten years. I just need to apply for the next project on each list.

GC: There is more money available for larger municipalities. But the one thing I would say is we often have councils, committees, etc., who believe an asset management plan is something that is done for them. We try to get them to understand that they’re part of it.

They’re out there committing the services and levels of services they’re going to provide to taxpayers. That is so integral to understanding asset management and how to do it with the limited resources that are available.

We have to understand that issues need to be prioritized. Decisions and trade-offs need to be made. Safety is never going to be a trade-off. Environmental performance is never going to be a trade-off. But maybe a new sports field versus a new road — that’s a trade-off we may have to make.

Those that make decisions at that highest level on a very large asset base need a way to see the whole playing field and understand how to prioritize the trade-offs that exist. 

SM: That’s interesting. So, what’s a commonly misunderstood problem or situation when an organization is looking at its asset base?

GC: I mentioned earlier that municipalities often split asset bases into different functions. Whether I’m looking at water or roads or recreation, the tendency is to stop looking at that asset base as a single holistic unit for the region or area. Yet, there is only one pool of money, and there is only one decision group that has access to that capital.

Decision groups will often divide the capital only to realize many of the necessary decisions span each of those functions. The larger you get and the more money that’s available for a larger region, the harder that becomes.

Here’s where the right frameworks can help: How do you look at those? How do you compare them? How do you make solid capital decisions understanding what services you are trying to provide and what funds you have available?

BP: I think smaller towns have several factors to consider. For context, Pouch Cove is a town of 2,061 residents — I have a public works crew, a town office, and multiple employees.

Seventy-four percent of the towns in Newfoundland and Labrador have one or fewer staff. According to the Municipalities of Newfoundland and Labrador, that means there is a part-time town clerk and everything else is done by either a contractor or volunteers. There are even volunteers that run local water plants.

For these small towns — let’s say my size and smaller — they hear the words asset management, and it sounds big and scary. They don’t realize that they are already doing a significant amount of activities that we would call asset management. Almost everything a town does is asset management.

Even the customer service a municipal representative provides over the phone can influence the level of satisfaction residents have with the water service. You can make the water better If the goal is maximizing customer satisfaction, or you can be better at talking and communicating about the issues. You might end up with residents equally as happy.

There are lots of things municipal organizations can do — things they are doing — to maximize the value of their assets and make residents happy. There are a lot of different levers to pull aside from these hardcore technical engineering finance-related requirements. It’s fair to say smaller towns are excellent at these complementary considerations.

I think there’s a misunderstanding for small towns. Almost everything they do is asset management one way or another. They just don’t know it, and they haven’t gained confidence from what they’ve achieved. The next steps can help with adding to it and building it up more. In many respects, they’re already in a much better spot than they might think.

Contact us

To learn more about how MNP can help your organization, contact Gord Chalk, MBA, CMC, Consulting Leader, Energy and Utilities.

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