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Infrastructure Asset Management: Business Principles to Maximize Government Revenue Returns

This post is an excerpt from an article we published in the June 2017 issue of Borough News magazine entitled “Strategic Asset Management: Optimizing Your Borough’s Dollars.”

We hear a lot these days about the virtues of running government like a business, but what does that mean?

Any profitable business owner can tell you that success doesn’t happen by accident. Managers spend a good bit of time and money studying the environment in which they operate, identifying opportunities and threats, and planning the best ways to maximize growth while minimizing risk.

Though these efforts cost money, prudent managers know it is an investment in the company that will pay higher dividends over the long-term.

Part of a businessman’s overall strategic planning effort involves cataloguing his assets and maximizing their value. Assets can be wide-ranging: from people to trucks to buildings. The goal of asset management is to optimize the way you spend your budget dollars in order to make sure they are providing the biggest return: reducing the life cycle costs while maximizing the service each asset provides.

Who needs to optimize the way they spend their budget dollars more than cash-strapped municipalities under pressure to keep taxes low while obligations increase?

Most municipalities are grappling with aging infrastructure. Take water systems, for example: The American Society of Civil Engineers estimates that the cost to keep our water and wastewater system functioning over the long term is more than $1 trillion. While there is plenty of work to be done, there is simply not enough funding for communities to do it all at once. Therefore, ASCE recommends assessing the condition of every pipe and valve to determine the risks of failure and properly allocate funds where they are needed most. Asset management and capital improvement planning can help you target your limited budget dollars most effectively in all types of infrastructure: roadways, bridges, stormwater management systems and more.

For example, new technology is making it possible for municipalities to extend the life of their roadways through roadway management systems. Cameras and laser-scanning technology can be mounted to trucks that record the conditions of a municipality’s entire roadway system: noting cracks, pot holes, wheel rutting, and more. Doing this work manually would’ve been too labor-intensive and cost-prohibitive for communities in the past, but now, thanks to technological advancements, municipalities can collect better data at a lower cost without road closures or detours!

Once the data is collected, the municipality can work with an engineer to analyze it and prioritize a list of maintenance, repairs and reconstruction needs. A roadway management program like this emphasizes cost-effective, preventative maintenance activities to prolong the life of a roadway in good condition. By making well-timed, proactive investments, the municipality can enjoy better service from the roadway at a lower lifetime cost.

Silver Spring Township Roadway Management Program

HRG has designed a roadway management program for Silver Spring Township that is helping them save money and better position themselves for grant funding. Learn more

The same asset management and capital improvement principles can be applied to bridges, as well. Typically, this is done at the county level since they own more bridges than municipalities, but the process is similar. When Dauphin County first embarked on its bridge management program, 1/3 of its bridges were structurally deficient. They carefully catalogued the condition of each bridge and prioritized repairs and replacement contracts. Today, they have successfully eliminated all load-posted, structurally-deficient bridges in the county. The program has been so successful it’s generated a surplus of liquid fuels funding, and the county has been able to funnel that into a subsidized loan program for its municipalities to address their own infrastructure needs.

Duke Street Ribbon Cutting

Thanks to careful planning and a wise use of funds, Dauphin County recently completed the replacement of its last load-posted, structurally deficient bridge. Now they can use their Liquid Fuels money for an innovative infrastructure bank that is helping municipalities and the private sector improve local communities. Learn more

Asset management programs can be very important to municipalities looking to meet their MS4 stormwater obligations, as well – particularly if they are considering the implementation of a stormwater fee. Aging infrastructure and growing MS4 permit obligations are compelling municipalities to upgrade their stormwater systems. Though legislation allows them to charge a stormwater fee, they must be able to justify it, which means they must conduct a thorough inventory of their facilities and document the work that must be done to keep it functioning (along with cost estimates for that work). These are crucial facets of an asset management system.

Mobile GIS Development for MS4 Inspections

Municipalities will need a thorough inventory of their stormwater facilities and their condition in order to keep up with the increasing burden of MS4 permitting. Learn about a GIS application HRG created for Hampden Township to help them meet MS4 inspection and reporting requirements.

 

What is asset management?

Asset management is a systematic approach to minimizing the cost of owning, operating, and maintaining your infrastructure at acceptable levels of service.

It is not a computer system or GIS, though these are often valuable tools employed in an asset management program for record-keeping and data analysis.

A proper asset management and capital improvement program will help a municipality identify areas where money is not being spent wisely and reallocate those funds where they can be most beneficial.

It will also help you recognize and evaluate options for keeping your assets functioning for a longer period of time, so that you don’t need to invest in expensive upgrades or replacements as frequently.

It is a circular process that never ends.

Circular Nature of Asset Management

Many things change over time: the condition of your assets, regulations and the business climate you operate in, the number of users you serve, etc.  A good asset management and capital improvement program helps you plan for these changes in advance and respond proactively before they become threats to your bottom line.

 

What are the benefits of infrastructure asset management?

As we’ve already stated, an asset management and capital improvement program helps you identify exactly what maintenance and repair work is necessary without guesswork. This approach has multiple benefits:

Minimizing Risk
Knowing which infrastructure is most likely to fail (and correcting deficiencies before it does) can save you major expenses later. Knowing which failures would be the most catastrophic helps you target money toward their prevention as a first priority.

Maximizing Returns
Asset management and capital improvement planning is all about proactively investing in measures to extend the life of your infrastructure.  These small investments can extend the life of an asset by several years.

Optimizing Service and Satisfaction
Proactively maintaining your assets ensures they function at peak performance for a longer period of time and are replaced before they fail. This means your constituents receive top quality service without disruption and are happier for it. In addition, many asset management solutions include optional customer service applications that make it easier for residents and business owners to submit service requests and track them to completion.

Justifying Your Tax Rates or Fees
Rate increases are never popular, but they are easier for people to accept when they are backed up with clear data showing exactly what improvements are needed and why.

Accessing grants and loans
Competition for funding is fierce, and government agencies are under pressure to make sure the money they invest is used wisely. As a result, they’re more likely to award funds to municipalities who have clear documentation of the project need, its benefits, and a plan for getting it built, operating it, and maintaining it at optimum levels over time.

Improving your worth
Many municipalities have been considering the option of leasing or selling their assets as a response to growing financial obligations in the public sector. A comprehensive asset management system provides documentation of the value of your assets, so you can ensure you are in a position to negotiate the best possible deal for you and your constituents.  Potential investors will be more comfortable making a significant investment if they fully understand the value and the risks they’re assuming.

But asset management can benefit your financial picture even if leasing or selling is not on the horizon.

Under GASB standards, governments can either subtract a standard portion of their infrastructure’s value each year to account for depreciation (the traditional approach), or they can regularly assess the condition of the infrastructure, invest in maintenance to keep it in good condition, and then report the amount of money they have invested in maintenance (the modified approach, which is similar in scope to a typical asset management program).  Using the modified approach, the assets don’t have to depreciate in value like they would in the traditional approach.

A recent article in Governing magazine showed how investors appear to prefer trading bonds from governments that use the modified approach:

“Governments that use the modified method trade at much narrower price ranges compared to bonds from governments that depreciate. In other words, when a government uses the modified approach, investors are much more likely to agree on how to price its bonds. For governments, this can ultimately translate into lower bond interest rates.”

(excerpted from “Selling Your Sewer’s Story – Financial statements can make the best case for public works investors”)

 

The truth is, you’re going to have to invest in maintenance and repair anyway. If you invest in an asset management program, you can take a proactive approach to determining what maintenance is needed and then plan and budget for it in advance. This means you can target your maintenance dollars where they’re needed most and make sure you have the funds available to do the work before infrastructure failure brings even greater costs to bear on your budget.

Publicly-traded companies are held accountable to their shareholders. They must demonstrate that they are making good decisions for the future health of the company and maximizing the value of the shareholders’ investments. Taxpayers are coming to demand the same sort of accountability from their government, wanting proof that their tax dollars are providing a good return, as well. Municipal managers that can prove the value of their decisions will enjoy broad support of their constituents while improving the long-term financial stability of their community.


Adrienne M. VicariAdrienne Vicari, P.E., is the financial services practice area leader at Herbert, Rowland & Grubic, Inc., a civil engineering firm that serves local governments and authorities in Pennsylvania, Ohio, and West Virginia. Ms. Vicari has assisted numerous municipalities and water and sewer authorities with the creation of asset management programs that have created increased value and lowered costs for her clients.

 

Could infrastructure asset management improve your municipal bond performance?

Financial Reports

If you’re a frequent reader of our newsletter and postings, you know we believe strongly in the benefits of infrastructure asset management. (This is a sampling of our prior articles about infrastructure asset management.) By regularly assessing the condition of your infrastructure and proactively planning its maintenance and replacement, you can reap many benefits. Most importantly, you will increase the useful life of your infrastructure for a lower long-term cost than the typical reactive approach many governments and authorities take.

A recent article in Governing magazine gives another good reason why investing in asset management can be beneficial: it just might lower your cost of borrowing through bonds. In this article, Justin Marlowe discusses the benefit of using the modified approach for calculating the value of infrastructure required in annual GASB reports.  Under GASB standards, governments can either subtract a standard portion of their infrastructure’s value each year to account for depreciation (the traditional approach), or they can regularly assess the condition of the infrastructure, invest in maintenance to keep it in good condition, and then report the amount of money they have invested in maintenance (the modified approach).  Using the modified approach, the assets don’t have to depreciate in value like they would in the traditional approach.

Marlowe cites research he’s conducted that shows investors appear to prefer trading bonds from governments that use the modified approach:

“Governments that use the modified method trade at much narrower price ranges compared to bonds from governments that depreciate. In other words, when a government uses the modified approach, investors are much more likely to agree on how to price its bonds. For governments, this can ultimately translate into lower bond interest rates.”

(excerpted from “Selling Your Sewer’s Story – Financial statements can make the best case for public works investors”)

 

He goes on to state that very few governments at the state and local level actually use the modified approach, so with a lower supply, the demand for such investments would likely be stronger yet.

The truth is, you’re going to have to invest in maintenance and repair anyway. At HRG, we believe that, if you invest in an asset management program, you can take a proactive approach to determining what maintenance is needed and then plan and budget for it in advance. This means you can target your maintenance dollars where they’re needed most and make sure you have the funds available to do the work before infrastructure failure brings even greater costs to bear on your budget.

Justin Marlowe’s study adds a bonus benefit to this type of approach: you can cite those proactive investments in your financial statements to make your government bonds a more attractive investment to traders.

Every client need is different, and HRG would be happy to discuss asset management planning, capital improvement planning, budgeting and/or rate making options to fit the unique needs of your community. Contact us to discuss your community’s infrastructure and financial goals today: (717) 564-1121!


Adrienne M. VicariAdrienne Vicari, P.E., is the financial services practice area leader at Herbert, Rowland & Grubic, Inc., a civil engineering firm that serves local governments and authorities in Pennsylvania, Ohio, and West Virginia. Ms. Vicari has assisted numerous municipalities and water and sewer authorities with the creation of asset management programs that have created increased value and lowered costs for her clients.

 

 

Duke Street Illustrates an Infrastructure Funding Solution


  • Dauphin County has eliminated all of its load-posted, structurally deficient bridges with an ambitious approach to infrastructure funding.
  • Now the county is using the money it’s saved to fund a new infrastructure program benefiting its municipalities and private sector.
  • The program has already funded 10 projects worth $11 million with just a $1 million investment from the county.
  • Read on to learn more about Dauphin County’s innovative infrastructure funding solution.

Duke Street Bridge Under Construction

We begin this story in its final chapter, celebrating the construction of the Duke Street Bridge in Hummelstown Borough and South Hanover Township.

It’s a story that plays out all over America every day: a local government struggling to address aging, deteriorating infrastructure.

But Dauphin County’s story is different. With HRG’s help, they’ve found a solution to the infrastructure funding problem and are turning the page to a new, brighter future: a future they have the freedom to author themselves.

How did they get here? Asset management and capital improvement planning.

Ambitious Capital Improvement Program Eliminates Structurally Deficient Bridges

In 1984, 1/3 of Dauphin County’s bridges were structurally deficient. It’s the kind of problem many local governments – under tight budget constraints – might find insurmountable.  But Dauphin County knew that solving big problems is not done in one swift motion; it’s accomplished piece-by-piece.

Accordingly, HRG designed a long-term asset management and capital improvement planning program for them. It has several components:

  • Inspecting and assessing the condition of each county-owned bridge every two years.
  • Identifying the appropriate type and timing of maintenance, restoration or replacement measures.
  • Creating (and updating) a Bridge Improvement Plan that prioritizes these measures over a 10-year period. (Projects are ranked not just on the bridge’s structural condition but also its importance to the local transportation network [as determined by the amount of traffic it carries, whether it’s located on EMS or school bus routes, etc.])
  • Using this data to seek funding.
  • Leveraging this funding to complete projects over time, addressing the most urgent needs first and steadily whittling that list of structural deficiencies down to nothing.
Roadway Conditions Over Time Graph


 Our article on Better Roads for Less Money illustrates how proactive maintenance can maximize the usefulness of infrastructure at a lower cost than the typical reactive approach.

By taking a proactive approach like this (vs a reactive approach that addresses bridges only after they’ve failed), Dauphin County extends the life of its bridges, maximizing their usefulness while minimizing their life cycle cost.

They also position themselves well for outside funding. A good capital improvement plan includes plenty of data about how many people rely on a piece of infrastructure and how they would be impacted if it were to fail or be taken out of service.  This information is very persuasive to funding agencies, who want to make sure their investment provides the biggest possible benefit to the community.

But agencies also want to be sure the money they invest will produce results: that the project will successfully transition from concept to construction. A well-designed capital improvement plan does just that. It shows you have identified exactly what is required to get a project built (including the timelines for permits and approvals) and that you know the full scope and cost of what you want to accomplish.  It also shows you have allocated money in advance to get the job done.

This level of detail reassures funding agencies that the money they invest will be used wisely and the project will be completed successfully. (See our article on Positioning Yourself for Grant Funding for more detail.)

In fact, funding agencies are increasingly requiring data like this in their application process, so a capital improvement plan is quickly transforming from a nice-to-have item into a necessary part of your infrastructure approach. (Our article on successfully applying for Pennsylvania Act 89 transportation funding explains this in more detail.)

Many pages have been written about Dauphin County’s success with this strategy over the years. (It has been featured in Pennsylvania County News and Road and Bridges magazine among others.)  In addition, the county has won several awards for projects accomplished using this approach: two Road and Bridge Safety Awards, a National Timber Bridge Award, and a historic preservation award from the PHMC.

But the successful completion of Duke Street in 2017 is not just an ending; it’s the beginning of a whole new story for Dauphin County. With no more load-posted, structurally deficient bridges to address, their program transitions its focus from replacement to maintenance.  This has enabled the county to create a new program for funding infrastructure, using a portion of the Liquid Fuels funds it used to need for bridge replacements.

Savings Are Used to Encourage Economic Growth With a New Infrastructure Funding Program for Municipalities and the Private Sector

The Dauphin County Infrastructure Bank combines this Liquid Fuels funding with additional money from PennDOT’s Pennsylvania Infrastructure Bank to offer loans to county municipalities, businesses, and non-profits at unbeatably low interest rates (as low as 0.5%) for the construction of roads and bridges under their jurisdiction. Over the past three years, the county has turned a $1 million investment into 10 projects worth $11 million.

DCIB has funded 10 projects worth $11 million

Again, Dauphin County has its eye on the long view, using its funds to promote economic development throughout its municipalities.

As their example illustrates, the solution to funding our infrastructure is not a short story; it’s a novel with many chapters and a carefully planned arc. In fact, it’s a story that never ends – with the construction of Duke Street serving as the beginning of a new chapter: the Dauphin County Infrastructure Bank.  This program will, in turn, fund many new stories with new characters: municipalities and private developers rewriting the future of their communities one roadway or bridge at a time.

Are you ready to become the author of your  community’s future?

 

UPDATE: Dauphin County celebrated a ribbon-cutting for the completed bridge in the spring of 2017.  Learn more about the bridge in the video below

 


Do you want to make your community safer and encourage economic growth by investing in infrastructure? Download our guide:

Infrastructure Funding SolutionsCounty Infrastructure Banks:
Overcoming the Obstacles That Prevent Local Governments From Fixing Their Roads, Bridges, and Water Systems

It explains
• the benefits of a county infrastructure bank program
• how the program works (i.e. where the money comes from, how projects are selected, and how the projects are delivered)

Local governments want to improve their infrastructure but often don’t know where to come up with the money or even how to manage projects of that size and complexity. A county infrastructure bank program solves both of these problems, making infrastructure repair a feasible reality.

Learn how to fix your infrastructure


Brian Emberg, P.E.Brian Emberg, P.E., has more than 30 years of experience and has designed hundreds of infrastructure projects. His understanding of project management and keen sense of business practices has lead him to his current position as Senior Vice President and Chief Technical Officer at HRG. He is responsible for the management and oversight of the firm’s technical service groups, sales and marketing, client management, and the maintenance and execution of quality management plans.

Transportation Funding for Municipalities: Act 89 Multi-Modal Grants

Steelton Stretscape

In two previous articles, HRG examined how municipalities can stop speeding on local streets with traffic calming programs (See: Stop Speeding in Your Neighborhood and Reduce Speeding with Traffic Control Techniques). For many communities, lack of transportation funding may be an obstacle to getting the necessary projects built, so we’d like to highlight one funding program to help make traffic calming improvements more affordable: PennDOT’s Multi-Modal Fund Program.

What is PennDOT’s Multi-Modal Fund Grant Program?

Under the most recent authorization, federal transportation funding has placed a higher priority on improving major highways, leaving many local roads and alternative modes of transportation (like biking or transit) under-funded.  To remedy this, Pennsylvania used its Act 89 funds to create the Multi-Modal Grant Program. Under this program, money is specifically earmarked for improving transportation and access via alternative modes such as:

  • Biking and pedestrian facilities
  • Ports
  • Rail
  • Aviation
  • Transit

But Multi-Modal funds can also be used for a wide variety of local roadway and intersection improvements, as well, including paving, traffic signalization, and realignments, etc.

As PennDOT Secretary Leslie S. Richards said in a recent press release for the program, the Multi-Modal Fund “allows [PennDOT] to assist communities with needed transportation improvements that otherwise may not move forward.”

What types of projects are eligible for this transportation funding?

PennDOT lists many types of projects as eligible for Multi-Modal grants:

  • Bus stops
  • Park and ride facilities
  • Sidewalks and crosswalks
  • Bicycle lanes
  • Local roads and bridges
  • Streetscapes
  • Lighting
  • Pedestrian safety enhancements
  • Signage

Looking at the grant recipients in the previous two application cycles, we can see a wide variety of projects have been selected for grants, including:

  • Intersection reconfiguration
  • Construction of additional lanes
  • Equipment purchases for a pavement marking program
  • New roadway construction
  • Biking and pedestrian trail construction and improvement
  • Noise mitigation along railroad tracks
  • Parking structure improvements
  • New school zone signage and pedestrian tunnel construction near a public high school

With an emphasis on alternative transportation modes such as biking and walking, Multi-Modal Funds have been a great fit for communities implementing improvements geared toward traffic calming and enhanced pedestrian safety.

In the last grant cycle, PennDOT awarded more than $1 million for a project in Factoryville and La Plume, Lackawanna County, that includes improvements to pedestrian safety, traffic calming, and the streetscape.  They also provided almost $500,000 to Homer City Borough, Indiana County, for new ADA-compliant sidewalks and curb ramps, stamped concrete crosswalks, and similar improvements.  In addition, they provided more than $100,000 to Northampton Township, Bucks County, for decorative imprint asphalt crosswalks, curb ramps, and sidewalk improvements. 

What criteria is used to select grant recipients?

PennDOT lists the following as its selection criteria for awarding Multi-Modal Grants:

  • The project area’s economic conditions.
  • Consistency with planning on a local, regional, and statewide level.
  • “Benefits to safety, mobility, economic competitiveness, and transportation system integration.” (Being able to specifically cite the number and quality of jobs the project would create or preserve gives a project greater consideration.)
  • The “technical and financial feasibility of the project.”

(i.e. Does the application show the municipality has a clear plan for getting the project built [including land acquisition and permitting issues] and providing its required portion of the financing?

Municipalities that can provide more than 30% of the project’s financing are given preference, based on the degree to which they can provide additional matching funds.)

  • The regional benefits of a project.
  • “Project readiness.”
  • “Energy efficiency.”
  • “Operational sustainability over the long term.”
  • “Multi-modal nature of the project.”

Municipalities would be wise to work with a consulting engineer who has knowledge of the program and can carefully craft the application to meet these selection criteria.  That being said, the broader the reach a project has (regional or statewide benefits versus local), the more it will improve the economy, and the more prepared a municipality is to complete it – technically and financially – the better chance a project has of receiving funds. 

How much money is awarded?

Grant amounts vary based on the size of the project, but, according to PennDOT, they would not normally exceed $3 million for any one project. (At least one project in the City of Harrisburg did in the 2014 cycle, however, topping out at $3, 191,000.)

Over the past several grant cycles, awards have been as small as $11,000 with a few in the $2-3 million range.

Grant recipients must provide a local match equal to at least 30% of the total project cost.  These local funds can come from Liquid Fuels tax and Act 13 impact fees if the project is an eligible use of those funds. 

How do you apply?

A municipality interested in applying for a Multi-Modal Program Grant should speak with an engineer who knows the program well.  Crafting a successful grant application starts in the earliest phases of project planning and design.  In addition to the application form, municipalities must submit detailed cost estimates prepared by an engineer; a color-coded map of the project area; a list of all local, state, and federal permits the project will require; and a variety of other documents related to their finances.

The PennDOT Multi-Modal Fund grant program is a great option for communities looking to reduce speeding and enhance pedestrian safety through traffic calming techniques like raised crosswalks, curb cuts, etc.  Several communities around the state have, in fact, already been awarded thousands of dollars for these types of projects.  With a focus on enhancing transportation access beyond our state highways, this fund can be useful for many other projects, too, such as local road and bridge improvements, widening, and realignment as well as pavement rehabilitation programs.

If you would like more information on how Multi-Modal grants could benefit your municipality, contact Brian Emberg, P.E., our Senior Vice President and Director of Transportation Services.

 

Better Roads for Less Money with Asset Management

Freshcorn Road
Municipal managers are under pressure every day to deliver more services in spite of shrinking budgets. With only so much money available, they must make tough choices about what investments to make in their community. Though they’ve heard the benefits of asset management many times in recent years, they still don’t feel they have the money to invest in such programs – not when that money could be spent on the construction or repair of badly needed roadways, bridges, and pipes.

Many communities see asset management programs as an additional expense, but the truth is: asset management saves you more money than it costs.


See also: Position Yourself for Funding With Asset Management & Capital Improvement Planning


Imagine a tale of two cities: both celebrating the ribbon-cutting on a brand new roadway and each taking a very different approach to caring for it.

City #1 has no asset management or capital improvement planning program. It does not assess the condition of its roadways and plan long-term investments in their upkeep. It makes repairs when the need becomes obvious.

City #1 will make moderate investments in maintenance over the next 20 years, but the condition of the roadway will steadily decline. Ten years after the ribbon-cutting celebration, the roadway condition will be fair at best. Fifteen years after, the residents who heralded its construction will be grumbling about its potholes and cracks. Twenty years after, the condition of the road will be so poor that City #1 will need to completely replace the roadway at a cost of $1.2 million per lane mile.

City #2, on the other hand, has a robust asset management and capital improvement planning program. It routinely inspects the condition of its roadways and takes proactive action to keep those roadways in top form. With investments every five years of approximately $100,000 to resurface the pavement, City #2 maintains its roadway in good condition throughout the next two decades, keeping traffic flowing smoothly, encouraging growth and development, and making residents and local businesses happy. The condition of the roadway never declines to a state where travelers complain.

Roadway Conditions Over Time Graph

Over the same 20-year-period, the residents of City #2 will ultimately have paid less money ($400,000) than City #1 ($1.2 million) but will have enjoyed better roadway conditions over the long-term.

Still think you can’t afford to invest in asset management and capital improvement planning? As these two cities show, you can’t afford not to.


For more information about how asset management and capital improvement planning can benefit your community, contact Brian Emberg, P.E., our Senior Vice President and Director of Transportation Services.

Position Yourself for Infrastructure Funding with an Asset Management/Capital Improvement Plan

By Brian D. Emberg, P.E.

Infrastructure Funding

Historically, the approach to infrastructure assets has been the proverbial, “If it ain’t broke, don’t fix it.” The result is that nationwide our infrastructure is in need of repair, and government officials at every level are talking about how to change this approach. While the legislators negotiate a funding solution, local and county officials can start preparing now to position their projects for infrastructure funding when it becomes available.  One way to do this is by implementing an asset management and capital improvement program.

A good asset management program collects data about a government’s infrastructure and its condition; identifies the appropriate type and timing of maintenance, restoration, or replacement measures; and ranks those needs based on the condition of the infrastructure and its function in the community. (i.e. How disruptive would the impact be if this infrastructure failed?)

When the asset management plan is augmented with planning-level cost estimates, the result is a good forward-looking capital improvement program.

So why are asset management and capital improvement programs so important to governments seeking state and federal funds?

Capital improvement programs give you plenty of time to pursue your funding options, (and you just might need it.)
Some state agencies plan their funding expenditures years in advance.  (For instance, PennDOT programs roadway and bridge project funding needs into its 10-year Transportation Improvement Plan.) It can sometimes take more than a decade to obtain the funds needed for an infrastructure improvement project, so local governments must have a capital improvement program in place that continually monitors the condition of their infrastructure and prioritizes projects for repair and replacement, according to need.  If a community waits until a sewer line breaks or a bridge must be closed, there may not be time to line up the assistance needed to address it.

A good capital improvement program will identify infrastructure needs years in advance and will estimate the anticipated funding requirements.  This gives local officials the time to develop funding solutions and work the appropriate channels to pursue sources of cash, grants, and subsidized loans, etc.

Capital improvement programs are a great tool for gaining support for a project, which can bring other partners to the table in seeking funding options.
A good capital improvement program demonstrates how badly an infrastructure improvement project is needed, who will benefit from the project, and how much it will cost.  Most importantly, it demonstrates why the project cannot be ignored.  Local officials can use this information to gain public support for a project and recruit community partners such as local businesses and non-profit organizations to help lobby agencies for funding.  The more voices an agency hears in support of a project, the more likely they are to consider it significant to the community (and the harder it will be to ignore.)

Capital improvement programs provide the data for strong funding applications.
With a good capital improvement program in place, local governments will have plenty of data at their fingertips about how many people rely on that infrastructure and how they would be impacted by it being taken out of service.  Including that information in your funding application is important.  If you were a funding agency official considering two applications – one that clearly outlined how many people would benefit from the project and one that didn’t – which would you choose?

Capital improvement programs help you prove that your project is a good investment.
Funding agencies must demonstrate that the money they spend gets results, so the last thing they want is to allocate their money to a project that will never be built or will languish for years with delay after delay.

A well-executed capital improvement program will determine exactly what is required to get a project completed, including the timelines for permits and approvals that could slow a project down.  A funding application that demonstrates that level of detail will reassure agencies that the money they invest will be used wisely and the project will be completed without issue.

A good example of how capital improvement plans help a local government obtain funding is the Route 743 Bridge over the Norfolk Southern Railroad in Dauphin County.

Through capital improvement planning, local officials in and around Hershey, PA identified this structurally deficient bridge’s importance to the community was significant: 12,000 vehicles per day travel across that bridge, including the trucks that deliver Hershey chocolates from its factory across the railroad to America’s eager hands.  Local officials put together a group of stakeholders to pursue funding for the project, which included local business leaders, and, after more than a decade of hard work, the group had assembled a funding package from multiple sources to make this $10 million project a reality.  One of the stakeholders in that group was Dauphin County Commissioner Jeffrey Haste, whose county has successfully used capital improvement planning for the past 25 years to replace all of its structurally deficient bridges.

“You really have to have your ducks in a row when you apply for funding,” says Haste.  “You have to show exactly why the project is needed, who it will benefit, and how it will be accomplished.”

Does your community have an asset management/capital improvement plan in place?


Brian D. Emberg, P.E. - Sr. Vice President & Chief Technical OfficerBrian D. Emberg, P.E.  has more than 30 years of experience and has designed hundreds of infrastructure projects. His understanding of project management and keen sense of business practices has lead him to his current position as Senior Vice President and Chief Technical Officer at HRG. He is responsible for the management and oversight of the firm’s technical service groups, sales and marketing, client management, and the maintenance and execution of quality management plans.