Strategic Asset Management Can Help the US Infrastructure Budget Windfall

On August 10 the US just passed the US $1 Trillion infrastructure bill and will be deliberated in Congress (Infrastructure bill, 2021). 

House Speaker Nancy Pelosi and fellow House Democrats, who hold the majority of Congress are taking steps to get this infrastructure plan approved while pushing for the US $3.5 Trillion Senate budget resolution that the Senate passed just hours after voting for the infrastructure bill.

Both the US $1 Trillion infrastructure bill and US $3.5 trillion budget resolution will be used to fix and upgrade the country’s massive infrastructure networks, social programs, and environment programs including renewable infrastructures, and a swift transition to a low-carbon economy (Pramuk & Franck, 2021).

These investments are undoubtedly long overdue to address the US aging and crumbling infrastructure and other social and environmental issues, but the sudden windfall of funds may find many smaller governments to struggle how to spend or manage the spend on infrastructure.

Local governments must consider how to use the funding for long-term impacts and not just for a two-year fix.

Applying a strategic asset management approach will assist local governments to ensure that fewer assets enter the failing “F” zones of their lifecycles in five, 10, or even 30 years according to a GCN’s article, “How to use strategic asset management to optimize an infrastructure windfall.”

“Strategic asset management is a modeling methodology that can help governments optimize how they spend their infrastructure stimulus money while ensuring future financial sustainability. By applying SAM, officials can create an agile view of assets, develop strategies to guide investments, and analyze data to model scenarios for applying infrastructure funds in the most strategic way possible.”

Applying the strategic asset management approach involves the following:

Create a future-focused, agile view of asset

Computerized maintenance management software (CMMS) systems provide digital data on the age, location, and current condition of assets, but strategic asset management will take this to a new level by analyzing thousands of competing assets and to know the investments needed in the next 30 years. The use of models can give data on various scenarios to help prioritize infrastructure spending.

Build a strategy to guide investments

“Once assets are viewed through a future-forward lens, government officials’ next step is to devise a strategy for tackling systematic infrastructure challenges. This involves mapping the available resources and predicted infrastructure windfall across assets with varying degrees of deterioration.”

“A plan built using a SAM methodology can serve as the “true north” to determine the right answers by modelling and comparing choices. To develop this plan, officials should tap internal and external experts to evaluate systems through modelling and determine when in an asset’s lifecycle to intervene. This plan should also identify the different points where investments are appropriate as well as the cost of treatment and its impact on asset condition and portfolio maintenance.”

Through capital planning, long and short-term investment needs can be balanced using a cost-benefit analysis to understand various investment scenarios.

Analyze the data for better decisions

Local governments need to have good data and the ability to model the data into the future as this is vital to long-term planning. 

“Jurisdictions that see the future spend their money differently. Small governments at the state and local levels can draw on data from CMMS systems with SAM capabilities. More mature and larger governments can conduct more advanced modeling through enterprise SAM to forecast renewals, replacements, and expenditures. No matter the maturity level, SAM will help organizations clearly model and clarify available options for investments and cost-effective results over the next 10 to 30 years. This helps communities move infrastructure into the 21^st century — not only solving short-term needs but planning for the future”.

Lastly, governments would also need to have a contingency plan for unexpected events or unplanned expenditures. The article notes that the incoming stimulus funding will be an opportunity for local governments to think differently about the infrastructure that can provide community service for many years to come.

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