Infrastructure projects a funding black hole without asset management

By David Forman, Government Industry Leader, TechnologyOne
Tuesday, 23 April, 2024

Infrastructure projects a funding black hole without asset management

Perhaps challenging for third place is the seeming inevitability that every budget — state or federal, will feature announcements of record-breaking commitments to investment in infrastructure.

The promise of new roads, rail, bridges, and public facilities has obvious political appeal and there is also a powerful argument to be made that spending on infrastructure is the economically responsible way for governments to stimulate jobs and growth. Not only is it creating construction industry opportunities, but it is also building capacity in the economy to drive other efficiencies. But, with the upcoming budget announcement colliding with a fiscal crisis, persistent inflation and sagging growth, a couple of questions need to be asked.

Firstly, when will enough ever be enough when it comes to spending on new infrastructure?

And, are we getting value for money, or could we be compounding the fiscal problem with inefficient and poorly managed assets, at risk of creating a crushing debt burden for generations to come?

The answer to the first question has to be no.

By its nature, infrastructure needs to be rebuilt, expanded, retired and replaced. And, most importantly for information and communications technology infrastructure, it needs to be kept up-to-date. Which means spending on infrastructure will never end as economies grow and modernise.

There is no better example of that than technology infrastructure. Imagine if we had not invested in upgraded telecommunications, or alternatively, look at the struggles of government agencies trying to meet citizens’ expectations using obsolete information technology.

The answer to the second question, though, is much trickier, especially when it comes to government owned or funded assets and infrastructure. While most government infrastructure investments are subject to some cost-benefit analysis in the planning stages, there is often little visibility into whether the build project is being managed in the most efficient way.

Too often, governments have no way of accurately knowing how much recurrent cost has been added to their budgets from recent investment in infrastructure and assets, and no idea if money is being wasted. Worse, poor assets management practices can risk damage to irreplaceable assets or even create risks to the public.

Modern asset management software means organisations can resolve these issues by giving real-time information on costs and maintenance from cradle to grave.

This delivers the ability to identify and manage build processes much more effectively. This goes directly to the first problem that besets big projects — slipped timelines and blown budgets as they slid out of control.

The ongoing power of these systems is the integration of the project management with the lifelong support of assets. With most organisations managing assets on spreadsheets spread across different parts of the business, the transition to these systems can unearth a few unwelcome surprises in the first instance.

Once the single source of truth is established, it not only captures the state of the assets and all associated characteristics, but it can also directly integrate in finance systems.

In other words, the days of the information black hole are gone forever. Organisations — including governments — know exactly the on-going burden on the annual budget for every dollar spent on new assets.

Private businesses have long understood the value of investment in systems to provide detailed insights into asset management across their whole life, and many are leading the use of the next generation of these systems. Governments, with their diverse departments and agencies and annual budget pressures, have been slow to seize the opportunity.

The implementation of modern asset management systems across government will pay for themselves over time, but would likely take years to achieve, even if it began immediately. However, one way the Federal Government could speed up the process is by attaching a requirement that any asset or infrastructure project above $10 million in value is required to be supported by a modern system.

With the fiscal management challenge we are in, getting started should be a matter of urgency.

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