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Author      Title/Abstract      

Do You Have an Asset Management Plan?
Author: V. Kenneth Harlow

This paper discusses the background for proposed federal legislation tying eligibility for federal infrastructure funding to asset management. It analyzes legislation already introduced in terms of alternative approaches to requirements associated with asset management planning and funding. The authors attempt to decipher requirements common to four proposed bills—maintenance planning, scheduling capital reinvestment needs, and planning to fund these needs. They propose that, in all three cases, a requirement for formal policies, supported by procedures and practices, rather than specific plans or schedules is far more realistic, simplifies eligibility determination and subsequent oversight, and diminishes the possibility of federal requirements hindering rather than helping utilities improve asset management. In our view, intergovernmental programs should adopt a philosophical approach that relies primarily on incentives and not on requirements to meet their objectives. However, it is prudent to expect that the fiduciary aspects of any intergovernmental financial arrangement will intrinsically attach requirements, either loosely or strictly defined. Should the requirements in the pending legislation eventually become law, the authors identify a need for people in federal and state agencies who understand asset management and can make critical judgments on the interpretation of requirements. The authors find, however, that a static understanding of asset management is not sufficient due to the continuing and rapid evolution of programs in this country. The people responsible for managing and overseeing aspects of this intergovernmental relationship must be, in effect, part of the asset management initiative. Accordingly, the paper proposes establishment of an Asset Management Institute as a partnership among government agencies, utility professional organizations, and utility management consultants. This institute would support the continued growth of asset management knowledge and expertise throughout the industry and among concerned government agencies. The opinions stated herein are those of the authors and not necessarily those of the agencies or companies they represent.

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