Search form


Become a Member Today Sign Up

Jan 2019 | January Issue

Key Characteristics and Benefits of an Effective Asset Management Framework
Amelia Shachoy, Government Accountability Office

The federal government is the largest real property owner in the United States and spends billions of dollars annually to operate and maintain this portfolio, which includes buildings, roads, bridges, dams, and utility systems. Federal agencies are responsible for developing asset management policies, processes, and plans. In order to review agencies’ practices, the Government Accountability Office (GAO) developed key characteristics of an asset management framework.[i] (The term framework refers to the processes, procedures, support systems, organizational roles and responsibilities, and policies used to enable asset management decisions.) The key characteristics are based on research on international standards and leading practices, studies, articles, and interviews with asset management experts. These experts represented a wide range of experience in government and public service, private companies, and academia from countries including Australia, Canada, the Netherlands, New Zealand, the United Kingdom, and the United States. 

Since the concept of asset management initially developed in the 1980s, organizations around the world have published a number of standards and leading practices to provide guidance in developing asset management practices. The International Organization for Standardization’s (ISO) ISO 55000 are international consensus-based standards that describe leading practices for implementing, maintaining, and improving an asset management framework for all types of assets. ISO 55000 defines asset management as “the coordinated activity of an organization to realize value from assets.”[ii] This approach includes: developing an understanding of how each of an organization’s assets contributes to its success; managing and investing in those assets in such a way as to maximize that success; and fostering a culture of effective decision making through leadership support, policy development, and staff training. Asset management can help government agencies, service providers, and private businesses optimize limited funding and make decisions to better target their policy goals and objectives. Effective asset management frameworks include six key characteristics: (1) establishing formal policies and plans, (2) maximizing an asset portfolio’s value, (3) maintaining leadership support, (4) using quality data, (5) promoting a collaborative organizational culture, and (6) evaluating and improving asset management practices. Below is an example of an asset management framework with a coordinated approach to maximize the value of its assets.

 

Example of an Asset Management Framework


Key Characteristics of an Asset Management Program:

 

I. Establishing Formal Policies and Plans

 

Formal policies and plans can help agencies utilize their assets to support their missions and strategic objectives. Asset management literature states that developing a formal asset management plan can help government agencies take a strategic approach in their decision-making and identify key roles and responsibilities, resources required to implement their plans, potential implementation obstacles and strategies for overcoming these obstacles. Several experts also stated that having an asset management plan that describes the overarching goals of the organization and how its assets relate to those goals is an important element of an asset management framework. Agency plans or documents can cover areas such as collecting data, prioritizing assets, and making investment decisions, along with detailing the roles and responsibilities of key officials.

II. Maximizing an Asset Portfolio’s Value

 

Prioritizing investments can help agencies better target resources toward assets that will provide the greatest value in meeting their missions and strategic objectives. Some agencies develop documentation describing a process for prioritizing asset investments. For example, agencies develop a scoring process for prioritizing projects based on specific criteria, such as the risks that failure of a particular asset pose to agency operations, asset condition, project cost, and project impact. Agency officials said that scoring projects in this manner provides an objective foundation for decision making that can lead to consistent investment decisions and improved transparency. Other agencies implement a centralized decision-making process for prioritizing high value projects and delegating approval for lower cost projects to local or regional offices.

III. Maintaining Leadership Support

 

Leadership buy-in is important to accomplish organizational initiatives, and experts said that management support is vital to implementing an asset management framework. For implementation to succeed, staff and senior management need to be in alignment. Ensuring that senior management and leadership are involved and supportive helps to build the collaborative organizational culture needed to implement asset management activities.

IV. Using Quality Data

 

Using quality information when making decisions about assets helps agencies ensure they get the most value from their assets. Experts cited data elements such as inventory information (asset age and location); condition information (how well the asset is performing); replacement value; and level of service (how the asset helps the agency meet its missions and strategic objectives) as important for maximizing an asset’s value. Agencies collect inventory and condition data on their assets and use this information to make management decisions. For example, one agency developed a policy to inventory 100 percent of its asset data over a five-year cycle including a standardized process to collect specific types of data for this inventory, such as condition data and deferred maintenance. The data tracked in the system inform several investment decisions, such as on decommissioning assets. Another agency developed a methodology for assessing condition based on visible attributes and asset performance. This method assigns a letter grade to the performance of each individual component within an asset. Agency officials said this allows them to compare the condition and performance of its assets across its portfolio.

 

V. Promoting a Collaborative Organizational Culture

 

Aligning staff activities toward effective asset management and communicating information across traditional agency boundaries can help ensure that agencies make effective decisions about their assets. Agency officials said that having staff embrace asset management is key to successful implementation. For example, at one agency, officials said they implemented an organizational change-management process and provided additional training to staff in areas such as data collection. They also said they tried to prevent new requirements from overwhelming staff by considering time constraints when developing elements of their asset management framework, such as their updated data collection processes. Another agency included communications strategies and organizational change management in its management plan in order to promote an asset management culture.

 

VI. Evaluating and Improving Asset Management Practices

 

Continuously evaluating the performance of an agency’s asset management framework and implementing needed changes can optimize the value the agency’s assets provide. According to literature, an asset management plan should be evaluated and improved over time to ensure that it still reflects the organization’s goals. Agency officials collect data to measure the performance of their policies, and have continuous evaluation processes laid out in their asset management plans. For example, one agency’s plan describes the data it uses to track the performance of its framework, including information on operating costs, asset condition, asset utilization, operating income, and energy. Another agency evaluates its program by conducting maturity assessments according to its program management plan. These assessments measure the maturity level of its asset management program to review and identify gaps in achieving the asset management system’s objectives while efficiently using resources.

 

VII. Challenges and Benefits to Implementing the Key Characteristics

 

Organizations naturally face challenges in implementing the key characteristics of an asset management framework—particularly related to managing organizational change and the capacity to adapt to new ways of doing business. Several experts and practitioners stated that an effective framework requires enterprise-wide policies to manage assets, and that managing change, for example, from a culture in which agency departments are used to working independently to one that promotes interdepartmental coordination and information sharing, can be challenging.

In such organizations, a key to success in implementing an asset management framework is getting officials in these different departments to agree upon and transition to a common set of goals and direction. Several mentioned obtaining the leadership and staff buy-in that is crucial for effective asset management as a potential organizational challenge. For example, an organization that had recently implemented a new asset management framework stated that it faced resistance from some of its staff. It was difficult to convince those invested in the old decision-making process to adapt to a new process.

Organizational capacity, which could include the need for different skills, management practices, asset data, and other resources, is also a challenge to implementing an effective asset management framework. Some experts and practitioners stated that implementing an effective framework might require skills and competencies beyond the organization’s current capacity. For example, organizations might not have the in-house expertise needed to implement a risk management approach. Another capacity issue is the challenge of obtaining funding to support asset management activities. For example, it can be more difficult to secure funding for improving components of an asset management framework, such as data collection processes, than it is to secure funding for tangible investments in new assets.

Notwithstanding the challenges of implementation, experts and practitioners cited a number of benefits to adopting an asset management framework that aligns with the six key characteristics with specific results, including: (1) improved data and information about assets, (2) better-informed decisions, and (3) improved financial management. Regarding the benefit of organizations collecting more detailed and quality information about assets, one expert noted that improved information provided asset managers with a better understanding of the actual cost of asset repairs in the long term, how long repairs take, and which assets are most critical to repair or replace. This, in turn, allowed asset managers to make better investment decisions.

This expert also noted that collecting detailed data about assets allowed asset managers to provide more information to the public and to decision-makers. Regarding the benefit of making better-informed asset management decisions, some stated that a framework that includes improving interdepartmental coordination, collecting more detailed data, and a strategic approach to asset management helps organizations make better decisions about how to maintain and invest in their assets. Regarding financial benefits to the organization, experts and practitioners cited cost avoidance and better management of financial resources. One practitioner stated that since implementing an asset management framework, the municipality is making better-informed decisions and has eliminated unneeded maintenance costs. One expert stated that asset management can lead to a greater understanding of budget needs and better long-term capital and lifecycle investment planning.

The key characteristics of an effective asset management framework have broad applicability to a wide range of organizations. They allow flexibility in determining which areas to prioritize and provide examples but do not prescribe how to implement them. The benefits of adopting such an approach will outweigh the anticipated implementation challenges in the long run by maximizing the value of assets and economizing limited resources.

 

[i] This article is based on research conducted from August 2017 to November 2018 for GAO-19-57. To view the full report go to: https://www.gao.gov/products/GAO-19-57

[ii]ISO, ISO 55000 Asset Management—Overview Principles and Terminology (Switzerland: 2014).

 

AMELIA SHACHOY is an Assistant Director for Physical Infrastructure at the Government Accountability Office (GAO) leading studies on federal real property. Amelia previously served as an Assistant Director in other GAO offices--Audit Policy and Quality Assurance, where she produced the agency’s annual report; and Acquisition and Sourcing Management, where she led reviews of government contracting. Amelia also spent 11 years with the City of New York and worked in the Mayor’s Office of Management and Budget (OMB). Amelia holds a Master of Public Administration degree from Columbia University and a Bachelor of Arts degree in Political Science from Boston University.

The opinions expressed in this article are the author's own and do not necessarily reflect the views of the US Government Accountability Office.