New Zealand had been doing asset management for 18 years now. Asset management and 10-year financial forward forecast for municipal (including water utilities) and road authorities became mandatory in 1996.
How the country came about practicing asset management could be traced from the extensive recession New Zealand suffered from 1987 to 1993. Unemployment reached 12 percent, first mortgage interest rates were 20 percent. That was a pretty vicious recession, with lots of unemployment and other problems abounding.
During that period, New Zealand spent nothing on infrastructure except for the minimum and routine expenditures. There were no capital works nor new funding at all, no big account investments going on, and no asset renewals going on.
At the end of the recession period, the Auditor-General had a look at what was going on. He got very concerned about the fact that New Zealand had a whole heap of un-liquid liabilities around municipal infrastructure because it had been a long time since any reasonable money was spent on infrastructure assets.
So the Auditor-General submitted the report to the government in 1995. As a result in 1996, asset management and 10-year financial forward forecast for municipal and road authorities became mandatory.
Asset management updating matches the New Zealand political cycle of three years. By way of example in the UK the cycle is 5 years to match their political cycle, and in the USA a 4 year cycle would be logical to match political cycles.
Resulting from asset management being mandatory in New Zealand, all municipalities, districts, and authorities have to do asset management.
As a first step to achieving asset management planning in the last 18 years, New Zealand municipal councils and road authorities have developed an asset inventory (or asset register).
Getting an accurate inventory took a lot of time for authorities because of poor records. Then some authorities and people assigned had very good records but it was also during the period where GIS (Geographic Information Systems) was coming into the stream. The asset information database system was coming on strong so, a lot of AM people took the opportunity to take the paper records and digitized some of the records into GIS.
With asset management, New Zealand ended up with reasonable good inventories. It enabled local municipal authorities to have a good idea of the infrastructure they have, and the management issues associated with this infrastructure.
In New Zealand we have to value our assets as part of our mandatory requirement, and these valuations are typically based on replacement costs. Generally, we are applying depreciated replacement cost valuations.
Among the many infrastructure asset management areas that NZ municipal authorities applied asset management well is on water utilities. In addition to the asset inventory, typical records gathered are records of breaks, records of repairs, and records of complaints.
As a result of the public reporting requirements for asset management plans and long term (10 year) financial plans the results of these plans have been able to be collated by the national government authorities (state / federal government equivalent). These authorities have been able to aggregate all the information and produce an overview picture of assets in the whole country.
This aggregation of information has allowed fact based discussion and debate on the issues, funding requirements and forward pathways with relation to community and government assets. This discussion and debate continues.
FEATURED IMAGE CREDIT: Auckland by Karl Hipolito