Building an Asset Management Mindset by Charles J' Nemmers P'E' University of MissouriColumbia Sept'

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Building an Asset Management Mindset by Charles
J. Nemmers P.E. University of
MissouriColumbia Sept. 23, 2001 Madison, WI

• Sell Why Worst First Is Worst
• Answer QuestionWhy Should I Care?
• Implement Asset Management

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Why Worst First is Worst

• Comments on how to build an effective public
  works infrastructure program

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Worst First occurs because

• Deferred maintenance
• No Ribbon Cutting
• Funding / budgets tilt toward new const.
• Easy to sell - lots of roads in poor shape

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But Worst First

• Costs more - 6X more
• Drags the whole system down
• Is difficult to recover from
• Is a difficult concept to counter

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Maintenance

• Routine
• Reactive
• Preservation / Preventive

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Build

• Replace / Reconstruct (improve
  structural condition)
• Expand / New Facilities (add
  new capacity)

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Original Pavement
Prevention Trigger
Pavement Condition
Optimal Timing
RehabilitationTrigger
Time/Traffic
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Do-Nothing
Do-Nothing
Current Condition
Repair
Current Condition
Distress Point
Preventive Maintenance
Distress Point
50
50
0
0
Time
Time
0
0
Life Extended
Fix Life Design Life
Fix Life
From Michigan DOT -- Galehouse
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Current Condition
40
19
17
10
8
6
I (0-2)
III (8-12)
II (3-7)
IV (13-17)
V (18-22)
VI (23-27)
(years) Pavement Remaining Life Categories
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Ideal Condition
20
18
18
17
16
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I (0-2)
III (8-12)
II (3-7)
IV (13-17)
V (18-22)
VI (23-27)
(years) Pavement Remaining Life Categories
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Reconstruction Strategy(25 Year Fixes)
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Combined Reconstruct and Rehab Strategies(15, 20
25 Years Design Life)
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Combined Reconstruct, Rehab, andPreventive
Maintenance Strategies
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Keys to Success (from GaDOT)

• Fix pavements BEFORE they are broken (use cracks
  not ride)
• Budget fund Preventive maintenance
• Shorten the time between assessment and
  maintenance
• Build them excellent the first time

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Why Should I Care ?

• gt ASCE Report Card
• gt GASB34
• gt It makes sense

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ASCEs Report Card

• 12 infrastructure categories (roads, schools,
  dams, water systems,)
• Combined grade of D
• Needs are 1,300,000,000,000 over next five years

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GASB 34 Objective

• To make government accounting more like private
  sector accounting
• dump truck example
• Defined Infrastructure Assets
• roads
• bridges
• water and sewer systems
• drainage systems
• dams, tunnels, ...

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In a Nutshell

• Governments generally dont depreciate their
  assets and the private sector does, but now the
  rules have changed !!
• www.rutgers.edu/accounting/raw/gasb

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GASB 34 gives 2 options

• 1) Depreciate
• 2) Modified Approach

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The key to meeting GASB 34 using the
Modified Approach is having an Asset Management
System
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Asset Management

• Dont want to not do it
• Karen Miller
• Boone County Commissioner

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Asset Management Sys.

• Inventory of assets
• Condition assessment of assets
• Annual dollars needed to maintain and preserve
  the assets to the level established by the
  jurisdiction

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Definition

• Asset Management is the systematic process of
  maintaining, upgrading, and operating physical
  assets cost-effectively.
• Asset Management is a tool for decision making.
• Asset Management creates a framework for long and
  short term planning.

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Process

• Inventory Assets
• Condition Analysis
• Performance Prediction
• Scenario Generation / Mgt. Alternatives
• Decision Analysis
• Management Reporting

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Why Asset Management

• Common Vision
• Performance Measures become important
• Results linked to Performance
• Accessible at many organization levels
• Links budget and program
• OPTIMIZE SYSTEM LEVEL IMPROVEMENTS (evaluate
  trade-offs)

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Getting Started

• Inventory roads, streets, alleys, bridges,
  sidewalks, pvmt. Markings, signs, signals
• common reference system
• Condition Assessment good-fair-poor-bad
• Performance Criteria tort liability, system in
  service, customers needs, scheduled maintenance
• Management alternatives w/ Budget

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Goals

• To provide ready access to quantitative and
  qualitative data
• To facilitate decision making based on data
• To utilize principles drawn from economics,
  accounting, risk management, and customer service
  models
• To ensure efficient resource allocation and asset
  optimization

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Thank You