Federal Asset Management: 10 Years of Progress

Since 2004, when Executive Order 13327 instituted Federal Real Property Asset Management, federal agencies have been seeking how best to define, practice and promote optimum asset management.
By Col. Michael Hutchison, F.SAME, USAF (Ret.) and Richard H. Speir, P.E.

In February 2004, Executive Order 13327 instituted Federal Real Property Asset Management to “promote the efficient and economical use of Federal real property resources in accordance with their value as national assets and in the best interests of the Nation.” Approaching the 10-year anniversary is an opportune time to address the “state-of-the-practice.” The term “assets” refers to all real property assets, including facilities, all supporting infrastructure, and federal transportation real property assets.


Image Adapted From Pricewaterhouse Coopers

 

AM’s charter event, EO 13327, established some organizational oversight through the Federal Real Property Council (FRPC)—formed to “develop guidance for, and facilitate the success of, each agency’s AM plan.” The order also assigned responsibilities to existing agencies, such as the General Services Administration, appointed to “provide policy oversight and guidance in consultation with” FRPC. Later in 2004, FRPC published implementation document, “Guidance for Improved Asset Management,” establishing “Guiding Principles, Required Components and an AM Plan template.”

Furthering the AM momentum, the National Research Council (NRC) of the National Academies also published in 2004 “Investments in Federal Facilities—Asset Management Strategies for the 21st Century,” with the intent “to provide specific recommendations to improve decision-making and management processes so that the resources available for federal facilities investments can be allocated more effectively and the results can be measured.”

In the pre-EO 13327 environment, NRC’s Federal Facilities Council published, “Capital Asset Management: Tools and Strategies for Decision Making” in September 2000. Several years before that, transportation managers from industry, the Federal Highway Administration, and the American Association of State Highway and Transportation Officials explored “integrated” AM. The coalition’s interest in integrated AM stemmed from the Intermodal Surface Transportation Efficiency Act of 1991, which required six distinct asset/risk management systems.

NRC continues as a major contributor in the federal AM professional study and national dialogue. Collectively, the National Academies’ Federal Facilities Council and its transportation counterpart, the Transportation Research Board, have published or posted nearly 300 printed or Internet resources pertaining to AM. Well-researched NRC observations and recommendations are widely-scoped and technically deep in the art and science of real property AM.

Around the three-year point of overall federal AM development, the Association of Government Accountants (AGA) completed a detailed federal AM status research study. AGA surveyed 22 federal entities’ AM maturity. Of 14 agencies responding, 11 reported initial AM plan completion. However, federal AM progress appears to have peaked by 2008. A minority of the agencies present posted AM plans and the latest “annual” plans are from 2008. More importantly, AM performance results would be the best maturity evidence; however, current performance measures are not found on any agency, Office of Management and Budget, Government Accountability Office, or www.performance.gov Internet resource.

CURRENT STATUS

In our research scan, some notable federal agencies stand out for mature, strategic AM proficiency—including the U.S. Army Corps of Engineers (USACE) Civil Works division; the U.S. Environmental Protection Agency (EPA); and the U.S. Department of Transportation. USACE’s Civil Works AM Program has conveyed a consistent, technical and management AM maturity. EPA has also developed a mature system of AM planning and training programs to effectively export effective AM systems to their state and local counterparts. Lastly, DOT, particularly FHWA and the Federal Aviation Administration, have spearheaded multi-asset, enterprise-wide research, development, implementation and communication for nearly 20 years.

In contrast, some federal departments and agencies are still working to accurately identify and assess their enterprise inventory. NRC noted in a recent report: “With a few exceptions, agencies have not yet adopted more strategic, portfolio-based practices for linking maintenance and repair investments to their overarching missions.”

Without a single U.S. source document, a variety of organization-specific definitions have emerged. Some agencies created “AM” sections within existing divisions, implying “AM” belonged to a singular component not entirely pertinent to the entire organization. Other agencies conveyed by structure and/or by public promotion that AM pertained to real estate programs such as alternative acquisition funding or disposal initiatives. For others, “AM” is synonymous with managing operations and maintenance of a single component or aspect, such as facilities maintenance, space utilization, or energy management.

CONCEPTS AND MATURITY

Although there is no single U.S. standard to guide implementation and application of AM, several excellent federal, state and municipal benchmark AM systems studies are available. NRC and DOT host a body of knowledge and practice that may prove useful to others. FHWA developed a comprehensive AM system that “is increasingly becoming the framework for agencies to make long-term strategic decisions to effectively manage transportation infrastructure assets and address public concerns about infrastructure health.”

 
"Portfolio-based facilities asset management is a systematic process of maintaining, upgrading, and operating physical assets cost effectively. It combines engineering principles with sound business practices and economic theory, and provides tools to facilitate a more organized, logical approach to decision-making. A facilities asset management approach allows for both program or network-level management and project-level management, and thereby supports both executive-level and field-level decision-making."
 
Asset Management Definition: National Research Council

 

Extensive research, including of TRB’s “Report 551—Performance Measures and Targets for Transportation Asset Management,” revealed several AM core principles:

  • Policy-Driven—Resource allocation decisions based on well-defined policy goals for system conditions, level of service, safety, environmental impact and risk to mission support.
  • Strategic perspective—Enterprise-wide, multi-sector, and long-term timeframe. Should be capable to produce credible forecasts of performance and to use forecasts in engineering and economic analyses, including life-cycle cost calculations
  • Performance-Based—Policy objectives are translated into system performance measures for both tactical and strategic management.
  • Reliant on Optimization/Analysis of Options and Tradeoffs—Resource allocation decisions within and across different assets, programs, and investment types are based on how different allocations could affect policy objectives. Funding constraints should influence options and tradeoffs considered. Supports “what-if” analyses of scenarios across a range of resource and requirements categories.
  • Decisions Based on Quality Information—Options are evaluated with credible data as an integral part of decision processes.
  • Monitored for Accountability and Feedback—Performance results are monitored and reported, which may influence agency goals and future resource allocation.
  • Implemented Across Organizational Units and Levels—Should support technical, managerial, and executive staffs for strategic, network, and tactical purposes.

Real property AM provides an integrated, agency-wide, multi-disciplinary perspective for optimal long-term resourcing of real property requirements. A credible decision support system at any organizational level hinges on quality asset information. Installation managers and maintainers at all levels, faced with decreasing maintenance man-hours and unstable budget conditions, benefit from an overarching AM framework to optimize asset portfolio resources to best meet service level standards.


Airfield at Joint Base McGuire-Dix-Lakehurst, N.J. - Photo Courtesy Applied Research
LOOKING AHEAD

AM successes, best practices collaboration, improved tools, and conveying positive results are beneficial for federal agency AM leadership communications. Applied Research Associates recently partnered in a study by the Airport Cooperative Research Program, (“Report 69 - Asset and Infrastructure Management for Airports—Primer and Guidebook”), which addressed those very issues—“why” and “how” from across the airport management community for decision-makers and managers. The study resulted in 1) a primer for executive decision makers that overviews an AM program, how to assess and improve existing AM initiatives with benefits/costs; and 2) a guidebook that provides best management practices and guidance in developing and implementing AM programs.

In many circumstances, an early success can leverage momentum for further progress. While civilian and military airfield installations continue assembling quality real property inventory and assessments, essentially every installation already possesses a current, complete pavement condition and mission dependency evaluation. This critical category of airfield pavements and infrastructure could become the single asset/mission group AM maturity prototype for most of the AM core principles previously described.

Today’s resource constraints demand resource optimization at every organizational level across every asset category possible. Airfield systems may be the ideal asset category grouping to prototype the highest maturity level of strategic AM with optimized resource advocacy and allocation decision-making.


Col. Michael W. Hutchison, F.SAME, USAF (Ret.) is Principal Program Manager, DOD Infrastructure, and Richard H. Speir, P.E., is Vice President, Transportation, Applied Research Associates Inc. They can be reached at 210-344-7644, or This email address is being protected from spambots. You need JavaScript enabled to view it. ; and 410-540-9949, or This email address is being protected from spambots. You need JavaScript enabled to view it. .

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