This column was initially published in the PA Times on June 24th, 2024.

Local public administrators face a significant challenge in addressing local infrastructure needs and are responsible for maintaining various assets such as roads, bridges, water systems, sanitary sewer systems, stormwater sewer systems, sidewalks, facilities and traffic signals/signs. Each of these assets is crucial for providing services to the community and enhancing residents’ quality of life, health and safety. As these assets age, they become more susceptible to failure. Therefore, an effective data-driven asset management strategy aims to monitor the condition and performance of these assets over time to increase their lifespan. This approach helps in making well-informed decisions about maintenance, repair, and replacement in a cost-effective and sustainable manner that meets the community’s needs.

What is asset management?

Asset management involves the acquisition, upkeep and replacement of assets to provide public services and ensure the well-being of the community. An effective asset management program aims to extend the lifespan of assets through preventive maintenance and regular replacement schedules. This helps maximize the community’s investments over time and extends the service life of each asset. Preventative maintenance activities can include regular inspections, routine repairs, cleaning, lubricating parts, oil changes, equipment testing and more.

Many communities have difficulty balancing reactive and proactive maintenance. This is often due to manually tracking information or relying on an online app or platform enabling residents to submit service requests to drive work planning. Prioritizing resident requests for service over preventative tasks is often viewed as providing good customer service. However, to truly serve a community, staff must strike a balance between being responsive to emergency issues and citizen requests, being good custodians of public infrastructure and working to complete preventative maintenance.

With infrastructure needs becoming more complex and citizen demands increasing, asset management should be seen as a “way of thinking” for local public administrators. Infrastructure should be considered from an asset-centered perspective rather than an operations-centered perspective. Taking a data-driven approach to asset management enables organizations to allocate resources where they are most needed, guiding both day-to-day maintenance and long-term capital investments.

Implementing a Data-Driven Approach to Asset Management

The first step in implementing a data-driven approach to asset management is to acknowledge that data is just as integral to delivering high-quality service as the physical assets themselves. With this acknowledgment as a guiding principle, cities should develop a comprehensive asset inventory and perform condition assessments. Doing so will provide a baseline understanding of asset condition and help define annual maintenance needs, which can be broken down into monthly targets and weekly work assignments.

Once the inventory and condition assessments are complete, the information should be incorporated into a centralized software program such as a computerized maintenance management system (CMMS). A CMMS is a software package that helps organizations plan, monitor and report maintenance tasks and the condition of community assets.

The initial cost of implementing a CMMS or other asset management software can vary depending on community size, the number of users and how the city customizes it to meet the unique needs of its assets. However, the long-term savings and benefits often outweigh the upfront investment.

During the implementation process, defining a data management framework will be critical to ensure that the organization works with the technology tools to achieve its mission. This involves creating policies to:

• Ensure data is available, timely, relevant and secure
• Provide connectivity between systems to enable data flow between different function areas
• Implement tools to review, assess and formulate insights from data to make informed decisions within the organization

Once implemented, a CMMS or other asset management system can help city leadership define key performance indicators (KPIs) and meaningfully track/measure progress toward the annual goals.

To ensure that the selected technology solution is used effectively, personnel with data analytics and technology expertise will be required. Investing in training programs can help bridge this gap. However, it may also necessitate the hiring of analytical support staff to:

• Assist with the implementation of technology tools
• Implement the data management framework
• Incorporate annual, monthly and work plans into the software program
• Perform data collection and analysis
• Develop KPIs

Finally, cities should regularly monitor asset performance and maintenance activities. This information will help inform future repair and replacement activities and continuously refine and improve the asset management program.

Overall, the shift towards a data-driven approach to asset management is not just a trend but a necessity for modern local government administrations. By harnessing the power of data, local governments can enhance decision-making, improve cost efficiency and promote sustainability. The long-term benefits of establishing a data-driven asset management approach make it a worthwhile investment, ultimately leading to better-managed assets and more resilient communities. As local governments continue to navigate the complexities of infrastructure management, embracing data-driven asset management will be key to building smarter, more efficient and responsive cities for the future.

This column was initially published in the PA Times on March 18th, 2024.

When did your community last evaluate cost recovery goals for programs and services?

The challenges local government administrators face have evolved significantly in recent years after the COVID-19 pandemic. There have been significant shifts in demographics, which have changed community needs. Local governments have had to embrace new technology to transform service delivery. There has been an enhanced focus on environmental sustainability and green initiatives, and the volatile economy has increased the costs of goods and labor. This evolution has created budgeting challenges for public administrators and elevated the need to reevaluate cost recovery goals to avoid cutting programs or services.

Cost recovery policies establish funding support or subsidy levels for a particular program or provided service. Outside of government-run utilities, it is impractical to charge a fee on top of local taxes for some services offered to the community. Cost recovery policies, therefore, are generally user fees charged for programs or services used by a smaller community sub-section. They are grounded in the idea that since only a portion of the community benefits from the programs or services, users should contribute to their costs. Examples of programs or services that typically have cost recovery goals include:

• Youth Sports and Recreation Programs
• Pools
• Community events
• Recreation Centers
• Libraries
• Special event spaces
• Municipal golf courses

The fees can vary depending on the level of community benefit. For example, golf courses strongly benefit an individual and, therefore, may have a cost recovery goal of more than 100%, whereas community-wide events may have a minimal cost recovery goal.

Cost recovery policies help clarify service levels, identify how much programs are subsidized versus others, and establish revenue sources for a department or municipality to support program enhancements, growth or improve customer service. The reevaluation process involves engaging staff for input and conducting a community needs assessment. A community needs assessment collects information from residents and other stakeholders to:

• Understand who uses community programs
• Identify service gaps
• Determine what programs or services should be subsidized vs. those that could be fully sustained through fees

Along with the community needs assessment, benchmarking can be helpful in the evaluation process. Benchmarking gathers information from various sources to provide context and compare how other municipalities offer services to the community and operate. Understanding what other municipalities charge for the same or similar programs or services can help inform changes to current cost recovery policies.

The information gathered from the community needs assessment and benchmarking will help answer the following questions and make recommendations for existing cost recovery policies:

• What is the total cost (including overhead and facility maintenance/investments) to provide the program or service?
• Who benefits most from service, large portions of the community or an individual?
• Who generated the need and, therefore, the service’s cost?
• Do community values support subsidizing specific programs or services?
• Will the level of the fee impact the demand for the program or service?
• Are current fee schedules aligned with communities with similar demographics?

Throughout this process, it is essential to be mindful of issues of equity and access. Vulnerable populations within a community may struggle to access programs or services with fees. Therefore, each program or service may have a different cost recovery goal based on the population it serves. These targeted subsidies may mean that a service or program in one area may have a higher cost recovery goal than the same program or service in another area of the community, or fees for a program or service are different based on factors such as household income.

After making any necessary adjustments to the cost recovery policies, staff can identify grant opportunities, pursue public-private partnerships or seek out sponsors to further limit the need to use general funds to provide subsidies or help achieve the revised goals.

Finally, public administrators must develop a means to measure success against financial and community-oriented objectives. Key performance indicators (KPIs) should be established to assess the impacts of changing fee schedules. Some examples of KPIs include measuring:

• Revenue generated from fees against the cost recovery goals
• Community satisfaction levels
• Program participation levels

Measuring these and other metrics will help inform future evaluation of cost recovery policies, which should be done consistently.

Often, day-to-day operations keep public administrators from revisiting policies that are in place. However, as community needs and priorities shift and costs rise, government leaders must set aside time to reevaluate those policies to align them with the changing environment. Cost recovery is one policy often left unchanged for several years. So, given the changes that have occurred since the pandemic, I ask again: When was the last time your community evaluated cost recovery goals for programs and services?