Forecasting long-term financial strategy is very challenging for most organisations. Councils and local government authorities are no exception. One of the problems faced by councils is a lack of accurate financial planning to ensure sufficient budget is allocated to properly manage assets and the services they provide.
Many councils across Australia are grappling with maintaining ageing infrastructure that gets increasingly costly to repair. Assets are frequently deteriorating faster than they are being renewed, resulting in impaired community services and a growing infrastructure backlog. COVID has only added to the complexity, with asset utilisation patterns drastically changed, and many assets "lying idle" or underused due to lockdowns and social distancing measures.
The problem of underspend
A report by the Victorian Auditor General predicted that underspend on infrastructure by councils would reach $2.6 billion by 2026. Similarly, a recent inquiry into local government in NSW found that underspend on infrastructure is critical issue, noting that: "increasing backlogs may affect council’s ability to provide services and remain sustainable", concluding:
"Already too many councils face serious financial problems. Far-reaching reform is essential to make NSW local government sustainable and fit-for-purpose into the mid-21st Century. The current arrangements simply cannot and will not maintain strong and effective local government for the majority of communities and regions across the State."
As the NSW State Government outlines: "Expenditure on asset maintenance is essential to ensuring assets continue to meet their service delivery requirements. Councils are required to have asset management plans that set out annual maintenance requirements to keep assets at their existing condition."
Better data = more accurate financial planning
Part of the problem is that many councils don’t have a clear overview of what assets they actually manage, let alone what needs to be done. Asset registers are outdated, incomplete and inaccurate. Councils can’t create robust asset management plans that enable accurate financial planning without the right asset information.
Industry experts suggest this confusion is compromising the ability for a council to maintain its assets in a safe and effective working condition for the general public. They believe good asset management relies on strong governance and controls for the operating model and supporting processes, strong financial performance and sustainability that allocates sufficient budget, all supported by a suitable technology solution that establishes a single source of truth and clear asset management strategies and plans.
Good asset management has a range of benefits, as the Asset Management Council notes. It enables "more predictable and sustainable cash flows; the final outcome of the profit and loss; the value of the assets on the balance sheet; and the ability to both support an expected share price and achieve market share."
Using technology for better asset management
Using an intelligence platform such as AssetFuture, that collects, maintains and analyses asset data, rather than a standard CMMS that focusses on maintenance operations, councils can make more accurate decisions and choose which projects to finance. This is all the more important in volatile times, where the utilisation of many built assets has permanently and profoundly changed.
Cloud-based asset management platforms also enable process optimisation and automation, which frees up staff from mundane, repetitive tasks and enables them to focus on more valuable, strategic work.
At AssetFuture, we work with councils to help them compile accurate, up-to-date asset registers and generate the insights they need for better financial planning. By creating an Asset Intelligence Strategy, and capturing the right data through our innovative, easy-to-use mobile technology, it’s easier for councils to make the right decisions, plan more accurately, and manage assets more efficiently and effectively.
To find out more about AssetFuture in Local Government, click here.