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Asset Management 101: A Step by Step Asset Management PlanQUICKGUIDEAsset Management 101A Step by Step Asset Management Plan1For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

Asset Management 101: A Step by Step Asset Management PlanAsset Management 101A Step by Step AssetManagement PlanBridges, roads, parks and even sewage and garbage management are thingswe all take for granted but greatly affect us when they are not workingto the levels we have come to expect. We all rely on infrastructure assets toenjoy our quality of life regardless of whether those assets are managed at themunicipal, county, state or federal levels.There is no one-size-fits-all approach for agencies determining how to bestmanage their assets. Agencies vary in their level of asset managementmaturity, as well as funding, resources, and user demands on the infrastructurethey are responsible for.This guide attempts to provide a broad overview of the new discipline of AssetManagement for local, state and federal agencies. It will cover what AssetManagement is and why we need it, best practices for building your own assetmanagement plan, and includes a list of resources to help you learn more.2For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

Asset Management 101: A Step by Step Asset Management PlanThe Need for Asset ManagementDJust as our quality of life hasbenefited from decisions madeue to tight budgets, recessions and other priorities, asset managementby past generations, the qualityprofessionals across North America are now facing some significantof life for future generationschallenges due to aging infrastructure and lack of funding.will be based on decisionsthat we make today. As theAsset managers in the United States are facing a crisis situation from theprevious examples illustrate,looming insolvency of the Highway Trust Fund—which provides most of theif we continue down the pathfunding for transportation projects in the United States—with estimateswe are currently on, the qualitythat the fund will become bankrupt by summer 2014 due to decliningof life for our children andrevenues from the gas tax, unless other sources of revenue are found orgrandchildren is at risk. However,mandated by Congress1.if we follow the principles ofAsset Management, we canIn Canada, as a result of significant investments in infrastructure in thechange the path we are on and1950s and 1960s2, many assets are now reaching the end of their maximumleave our children with a healthyuseful life. Much of the infrastructure is in a state of underinvestment dueinfrastructure rather than ato funding cutbacks and has been deteriorating for some time.costly burden.3For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

Asset Management 101: A Step by Step Asset Management PlanWhat is Asset Management?If there is anything that we have learned from the current state of ourinfrastructure and the myriad of budget and funding issues we see today,it is that we need to get better at planning for the future. This is where thediscipline of Asset Management comes in.Asset Management can be defined in a variety of ways, but at its core it is abusiness plan for the services that city, county, state and federal organizationsprovide to their communities. In other words, we need to know what we’vegot, how much it costs to run it, at what standard of service and how do werepair and maintain it in a cost-effective manner going forwards for futuregenerations? Asset Management provides the methodologies and tools toanswer these questions.4For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

Asset Management 101: A Step by Step Asset Management PlanNext StepsAsset Management PlanningComponents of AssetManagementAThe International Infrastructuresset Management Planning will provide your agency with best practicesfor the operation and maintenance of assets so money can be used wiselyin the future. A good plan sets out what you’ve got, what you need to do, howyou’re going to do it, and how much it will cost.Be careful not to get too technical and detailed in your Asset Managementplan. This can bog you down and derail your plan. Instead, focus on creating ahigh level analysis that sets out where you are now, what your options are forthe future, and what you want to achieve in that future4.Management Manual outlinesseven key components of AssetManagement3: Life Cycle Approach Cost-Effective ManagementStrategies Defined Level of Service Demand Management Risk Management Sustainable Use of PhysicalResources Continuous Improvement5For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

Asset Management 101: A Step by Step Asset Management PlanStep 1Completing an Asset InventoryAn asset inventory or register is your starting point and will become thebasis of your Asset Management plan. You need to know what assetsyou have, where they are, what their value is, when they were built and howlong their predicted lifespan is. An asset registry can be kept in MicrosoftExcel, or within an Asset Management software system or other tool.You’ll also want to consider breaking down your asset register into segmentsand components for easier management. Segments group portions of anasset that would be replaced at the same time. Segments could be anythingrelevant to that asset, such as block-by-block for roads or manhole-tomanhole for a sewer. For example, a road might be separated into one blocksegments. Within that segment, there could be different components suchas road surface, curb, gutter and sidewalk. Because a road surface and asidewalk have different lifespans, it’s helpful to consider them as separatecomponents when planning renewal and repair options for the future.6For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

Asset Management 101: A Step by Step Asset Management PlanStep 2Understanding Capital Costs vs Life Cycle CostsThe capital cost of an asset is how much it costs to purchase or build it.In the past, the capital cost of an item may have been the only cost thatAsset Life Cycle Costswas reflected in a budget. However, the initial cost of an asset typically onlymakes up 20% of its full life cycle cost, with the other 80% comprised ofInitial Cost (20%)maintenance, operating and disposal costs5.Maintenance Cost (35%)5%20%Operating Cost (40%)40%35%Disposal Cost (5%)7For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

Asset Management 101: A Step by Step Asset Management Planto them. The life cycle cost of an asset can be calculated from the time anWhen calculating lifecycle costs make sureto think about thefollowing possible costsfor each asset:asset is being considered until that asset is disposed of. Planning and design costsUsing a life cycle cost approach will give you a significantly different and moreaccurate budget than just considering the capital cost of an asset. This in turnleads to greater sustainability for the assets you are building as there are nosurprise maintenance costs down the road that don’t have funding allocatedLife cycle costs can also be thought about as what it costs to provide ormaintain a service. For example, what are the long term costs of a bridgethat allows commuters to cross from one side of a river to the other? Youwould need to consider things like how often is that bridge going to need to Capital costs Operating and maintenance costs Rehabilitation and renewal costsbe inspected for safety, how often will it need preventive maintenance and Disposal costsat what intervals over its life span, and if it will need to be expanded in the Financial management costsfuture due to increased traffic from projected population growth. Condition and performancemodeling costs Audit costs Review costs8For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

Asset Management 101: A Step by Step Asset Management PlanStep 3Setting Levels of ServiceLife cycle costs are directly tied to the levels of service that are provided byan agency. In other words, how often something is used will have an impacton how long it lasts before needing renewal or replacement. Infrastructure onlyexists to provide services so the idea is to determine what you (or your users)want and then make sure the infrastructure supports those goals.In order to assesslevels of service youneed to consider: The level of service you arecurrently providing The annual cost of thatserviceDetermining a level of service for an asset is always a balancing act betweenthe benefits that a higher level of services would provide and what that higherlevel of service costs versus what an acceptable lower level of service wouldcost. Simply put, what are you prepared to pay for the service? If the current level of serviceis expected to change If there is funding to supportchanges in expected levelsYou can use the levels of service to outline the overall quality, function,capacity and safety of the service being provided. The technical requirementsof maintaining that service will dictate the operating, maintenance, andrenewal activities that need to occur going forward.of service If the current level of serviceis meeting the expectationsof your users or community9For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

Asset Management 101: A Step by Step Asset Management PlanRisk Management and Levels of ServiceLevels of service can assume a different light when thought about inconjunction with risk management. In general, lower levels of servicemay generate higher levels of risk. In the case of a gravel road whoselow level of service means that it develops the occasional pothole,the risk might be deemed acceptable. Conversely a bridge collapse orwater treatment system failure due to low levels of service could becatastrophic. In this type of situation, a higher level of service is likely themore cost-effective alternative when compared against the enormouscosts—both in terms of money and human life—generated wheninfrastructure fails.Considering risk management can help to provide clearpriorities when an agency is deciding how to allocate its budgetand future spending.10For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

Asset Management 101: A Step by Step Asset Management PlanStep 4Applying Cost Effective Management StrategiesI“ n managing existing infrastructure, a great outcome is attained when thedesired level of service in terms of the level of safety, physical condition, andcapacity are provided reliably at the minimum life cycle cost,” explains GordonSparks, professor of civil engineering at the University of Saskatchewan.“[D}oing the right thing, at the right time, involves knowing and actually doingthe most cost-effective maintenance, repair, rehabilitation or replacementactivity at the right time throughout the entire life cycle of the asset”6.Taking this approach is to practice cost-effective management strategies.“Applying cost-effectivemanagement strategiescan provide verysignificant benefits, suchas 20% to 40% reductionsin life cycle costs”Applying cost-effective management strategies can provide very significantbenefits, such as 20% to 40% reductions in life cycle costs7.Maintenance, renewal and replacement efforts can be approached in twoways. The first way is a reactive approach or waiting until something is brokento fix it. This can be a common approach to asset management particularlywhen budgets are tight and funding is difficult to get. However, taking thisapproach may actually lead to more costs in the end.11For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

Asset Management 101: A Step by Step Asset Management PlanFor example, it costs twice as much toReactive Approachfix a 30-year old road that requires afull overlay than it costs to apply twosurface treatments to that same roadTotal cost ofmaintenanceafter 30 yearsis 80,000Overlay 80,000ExcellentGoodExcelleGooat the right intervals over its lifetime .FairFBoth result in the same end—an olderPoorPoVery PoorVery Po8road that is still safe and usable—butthe latter option represents a much15 yearsbetter use of funds.This approach of applyingmaintenance at the right time is aProactive Approach(Cost-Effective Management)preventive or proactive approachOverlay 80,000and, to be effective, your AssetExcellentManagement plan will need toGoodbe based on these cost-effectivemanagement principles.30 yearsSource: “Pavement Management: A Guide for Local Officials (Delaware) p. 2-16SurfaceTreatment 20,000SurfaceTreatment 20,00010 years20 yearsTotal cost ofmaintenanceafter 30 yearsis 40,000FairPoorVery Poor15 years30 yearsvement Management: A Guide for Local Officials (Delaware) p. 2-1630 yearsSource: “Pavement Management: A Guide for Local Officials (Delaware) p. 2-1612For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

Asset Management 101: A Step by Step Asset Management PlanStep 5Executing Long-Term Financial PlanningAs you build out your Asset Management plan, it will naturally translateinto long-term financial planning which will help you identify whatyour priorities are, what you can afford or can’t afford and any challengesor obstacles that you need to surmount in order to realize your desiredlevels of service. Since your plan already includes the full cost of yourassets over their lifetimes, taking this approach to financial planning can,to some extent, remove the annual budgeting process and replace it witha long-term management plan. It gives organizations a tool to ensure thattheir goals can be met, and that they themselves can remain viable andsustainable for the long term good of the community.With budget constraints likely to remain tight for the foreseeable future, along-term financial plan will help you to determine which of your objectivesare feasible, which are the most important and if you are going to be ableto maintain your priority assets over the long term.13For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

Asset Management 101: A Step by Step Asset Management PlanStep 5Moving Forward with Asset ManagementOnce you have an Asset Management plan, it will become your primarydecision-making tool. You’ll probably even wonder how you functionedwithout one.Asset Management can be a daunting but necessary process to undertake.Asset managers are facing pressure from legislation like MAP-21 and GASB34,lack of funding and resources and, perhaps most importantly, risks generatedby old and failing infrastructure. The best way to tackle and resolve thesechallenges is to apply Asset Management principles.Sources1“Crucial transportation projects could be halted if Congress fails to act.” T4America Blog. April 30, 2014. ngress-fails-to-act/2“Asset Management Getting Started Guide.” Government of Saskatchewan. MunicipalAssetMgmt/AssetMgmtGuide“International Infrastructure Management Manual 2011 Edition.” New Zealand Asset Management Support (NAMS). 2011. Asset Management Getting Started Guide.” Government of Saskatchewan. MunicipalAssetMgmt/AssetMgmtGuide5“Full Length: Municipal Asset Management and Saskatchewan.” SK Government Relations. January 23, 2012. http://youtu.be/agP0LCPL4nw6“Finding the “Sweet Spot”: Managing Public Sector Infrastructure.” Gordon Sparks. Public Sector Digest. August 22, 2007. 37Ibid.8“Asset Management Getting Started Guide.” Government of Saskatchewan. MunicipalAssetMgmt/AssetMgmtGuide14For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

Asset Management 101: A Step by Step Asset Management PlanEnterprise Asset Management (EAM) SolutionAs agencies begin moving towards an Asset Management approach, they needtools to help them store, measure, manage and interpret assets and theirdata. AssetWorks EAM is a powerful Asset Management system that will help youachieve the objectives determined in your Asset Management plan.Asset ManagementTools need to be ableto help you answerthese questions: What are your assets?AssetWorks EAM handles day-to-day tasks like work order management andreal-time labor tracking for preventive maintenance of assets. The system canalso manage inspection recording and future planning—such as complete lifecycle analysis and capital budgeting. Assets can be viewed on a real-time mapand information is processed and analyzed using a combination of dashboardsand powerful reports. AssetWorks EAM offers robust functionality to helpagencies perform Asset Management work in the most efficient and costeffective manner possible.For more information on how AssetWorks EAM Solution can help youimprove Asset Mangement, click here. Where are your assets? What are your assets worth? What is the condition ofyour assets? What is the remaining lifespanof your assets? What should you renew, repairor replace first?www.assetworks.com 610.687.920215For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

Asset Management 101: A Step by Step Asset Management PlanResourcesUnited StatesAASHTO Transportation Asset Management Guide: AFocus on ImplementationTransportation Asset ManagementThis video from the U.S. Department of TransportationThis thorough executive summary is focused onFederal Highway Administration provides a good overviewtransportation asset management and includesof Asset Management and the philosophy behind it.examples of Asset Management plans and fourhttp://youtu.be/ep3j7f LuMin-depth case 7.pdfInternational Infrastructure Management ManualAsset Management and Preventive MaintenanceThis 400 page in-depth manual contains a Quick GuideThis resource page from the EPA contains severalguides—from best practices in Asset Management tohow to build an Asset Management team—all targetedfor personnel involved in managing public water ystems/managementhelp.cfmwhich explains each of the Asset Management functionsin simple terms and points readers to the appropriateplace in the complete manual for further reading. It alsofeatures case studies across a wide range of sectors andcountries, and a glossary of Asset Management m16For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

Asset Management 101: A Step by Step Asset Management PlanAn Anatomy of Asset ManagementAASHTO MAP-21 Resource CenterThis is a free, very readable ebook from the Institute ofContains summary, Q&A, and resources all relating to theAsset Management which introduces the whole disciplineimplementation and requirements of MAP-21.of Asset Management. While the US is in the process pxadopting MAP-21, the United Kingdom has followed asimilar Asset Management initiative since natomyasset-management17For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

Asset Management 101: A Step by Step Asset Management PlanResourcesCanadaAsset Management ToolkitAsset Management Getting Started GuideThis Asset Management toolkit by the Ontario MinistryA concise overview of Asset Management by theof Infrastructure includes valuable resources such as aGovernment of Saskatchewan.lifecycle Costing Primer, Self-Assessment Checklist, nt/Asset Inventory r mis/tools.aspAsset Management RoadmapAn Anatomy of Asset ManagementThis is a free, very readable ebook from the Institute ofAsset Management which introduces the whole disciplineThis roadmap was designed by Asset Management Britishof Asset Management.Columbia and details the steps required for building atomy-Asset Management brary/Asset Management/AM Roadmap/Roadmap Diagram--AMBC-Sept 23 2011.pdf18For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

Asset Management 101: A Step by Step Asset Management PlanInternational Infrastructure Management ManualThis 400 page in-depth manual contains a Quick Guidewhich explains each of the Asset Management functionsin simple terms and points readers to the appropriateplace in the full manual for further reading. It alsofeatures case studies across a wide range of sectors andcountries, and a glossary of Asset Management m19For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

Asset Management 101: A Step by Step Asset Management PlanRegulations and Standards DefinedGASB34States and local government are required to begin reporting all financial transactions, including the value ofcapital assets in their annual financial reports on an accrual accounting basis.MAP-21Each state is required to develop a risk-based asset management plan for the National Highway System (NHS)to improve or preserve the condition of the assets and the performance of the system.State of Good Repair (SGR)Designed by the Federal Transit Authority (FTA) to make sure that all aspects of the nation’s bus and railsystems are maintained properly for safety and efficiency, the SGR includes objective standards for measuringand reporting the condition of capital assets, including equipment, rolling stock, infrastructure, and facilities.ISO 55000 and PAS-55Emerging international standards are aimed to make industry more efficient as well as break down barriers tointernational trade.20For more asset management strategies, visit www.assetworks.comCopyright 2014 AssetWorks Inc. All rights reserved.

For more asset management strategies, visit wwwassetworksom pt 214 ssets ts esee sset Management Ste Ste sset Management an 5 Asset Management Planning Asset Management Planning will provide your agency with best practices for the operat