Importance of Asset Registers in Asset Management Practice in South Africa

An article from Engineering News discusses the importance of asset registers as the foundations of infrastructure asset management in South Africa’s municipalities.

In other countries, they call it asset inventories.

The article chronicles the discussions during a seminar on the foundations of infrastructure asset management and the differences between the engineering and financial asset registers that Pragma, an asset management company based in South Africa, hosted.

The organizers designed the seminar to help the SA public sectors with their asset registers compliance with government regulations.

The seminar panelists consisted of an SA government representative, Dr. Emmanuel NgCobo, Chairperson for the Centre for Municipal Asset Management, and consultants from Pragma.

According to NgCobo, SA municipalities have two kinds of asset registers, one with the engineering department and the other within the finance department, with the latter focusing on asset register compliance.

From an asset management perspective, asset registers fulfill more than a compliance role. Still, it has a critical operational function such as “proper record-keeping, managing physical assets, and validating spend on assets to track the return on investment,” the article says.

There also needs to be an alignment between the two departments to get the basics regarding asset register compliance.

To achieve this will require some education on some members from both departments to understand precisely how to develop an asset register. The article says:

The ISO 55010, the standard for managing assets, nicely summarizes the difference between the engineering and finance views on infrastructure assets. “Finance and asset management defines assets and their material differently. Finance has the responsibility to account for it, while engineering has to look after it, deploy it, and take care of it. Finance is concerned about its cost, while engineering wants to say what services you need me to bring”.

Furthermore, from a finance perspective, asset registers are usually the starting point showing their assets, location, and value. While the engineering asset registers build on the financial register by providing the “DNA of an asset,” prescribing the functional care and maintenance strategies required. It also provides the performance history of an asset and all the interventions taken to ensure that assets continue to provide the best possible performance.

According to Andre Jordaan, a Pragma Partner Consultant, the lack of understanding of maintaining infrastructure is a big problem in South Africa. South African municipalities also have varying levels of maturity, which can affect their service levels.

He explains:

“You cannot use infrastructure assets until they fall apart and then decide to replace them. No. You must maintain them and ensure that you get value out of them for the longest term. Something like a light bulb is switched on and never maintained. It runs to failure, and you replace it. But roads, buildings, water networks and alike must be maintained so that you get proper service and value from it. If you don’t, it ultimately results in financial waste.”

The article says that the engineering and finance departments must work together to ensure efficient service delivery by commissioning the right assets and maintaining them to avoid irresponsible and wasteful expenditure.

The article also highlights the importance of sharing the best practices of better performing SA local governments and experiences from private sectors to municipalities struggling to improve their service deliveries.

All SA municipalities share the challenges – growing population, increasing energy prices, labor issues, droughts, and others.   “They need proper systems and procedures to manage better the assets that play a critical part in service delivery.”

South Africa’s experience, lessons learned, and challenges in implementing an asset management plan could serve as an example for other countries in the initial stages or are looking at starting an asset management plan.  

Source Citation:

The foundations of infrastructure asset management. Considering financial and engineering asset registers. (2021, July 19). Engineering News. Retrieved from https://www.engineeringnews.co.za/article/the-foundations-of-infrastructure-asset-management-considering-financial-and-engineering-asset-registers-2021-07-19/rep_id:4136