Asset management - why the Government needs it
By Rachel Scott and Jarrod Chesher
The government is tasked with a great many responsibilities, from ensuring the safety and security of the public, to maintaining a strong economy. The current economic climate is particularly challenging, with increasing national debt and inflation, frequent catastrophic weather events from climate change, disruptions to global supply chains, and workforce and skills shortages. In this article, we will discuss five ways that asset management can help the government to control the current political elements.
1. Achieving objectives
A key element of asset management is articulating and achieving objectives. In the government context, this means setting clear goals and targets, and ensuring that all asset management activities are geared towards achieving these objectives. These objectives should be monitored through service and financial performance management, with strategies changed if outcomes are not achieving the expected results.
Understanding the risk of change and applying good change management practice is key to continuous improvement in asset management, which can improve the probability of new government strategies having successful outcomes.
Learn more about setting effective objectives in our guide: How to design asset management objectives for maximum benefit.
2. Alignment and connection between people, performance and finances
One of the asset management principles is "alignment" which means understanding how different elements are interconnected and how they work together to achieve objectives. In the context of government, this means understanding the alignment between the Australian people, government services and spending. Government responsibilities are vast, with many complexities and dependencies. Asset management modelling techniques to logically connect all the complexities, and to understand the impacts when elements change, can help governments ensure that all government agencies are provided balanced budgets and resources to achieve national objectives.
3. Managing risk
Risk management is a critical part of asset management, and this is especially true for governments. Given the vast range of risks that governments face, from economic risks to national security risks, managers must have a good understanding of how to identify and mitigate risk. IEC 31010 Risk management - risk assessment techniques provides a library of techniques frequently used by asset managers in the identification, qualification, quantification and mitigation of risk. These techniques can be applied to government scenarios to support risk management within the government's risk appetite.
4. Maximising value for money
Asset management is also about maximising value for money. In the government context, this means ensuring that all government assets are used in the most efficient and effective way possible. The federal, state and local governments are responsible for transport infrastructure, healthcare assets, military capability, public housing, education assets, utilities and social spaces such as parks and recreation. Hundreds of billions every year is spent acquiring, sustaining and disposing of these assets.
For insights on maximising returns, read our article: Maximising your return on investment for complex assets.
The capture of even small efficiencies through continuous improvement and optimisation activities can have a significant impact. Governments that have asset management requirements in their policies have much more control over their asset technical and financial outcomes.
5. Improving decision making
Asset management can also help to improve decision making within government. By providing clear and concise guidance on authorities, accountabilities and responsibilities, as well as predefined decision making criteria, agencies are able to make quick, effective decisions that contribute to the achievement of the government objectives.
Conclusion
Asset management is a crucial tool for governments in today's challenging economic climate. By understanding and managing the different elements that make up the economy, integrated and applied asset management can help to ensure that the government is able to achieve the best outcomes for the Australian people.
To learn more about how asset management can benefit your operations, contact our team to discuss your specific needs and requirements.
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