Asset Management Plans: A Road Map to Success
While it is impossible to prevent all unexpected expenses in your utility and municipality, an asset management plan can prepare you for the expected. It is inevitable that at your assets (buildings, machines, etc) will wear down over time. An asset management plan lets you prepare for the inevitable so you’re left stranded when it happens.
Understanding Asset Management Plans
So what is an asset management plan? It is similar to a rainy day fund. Just like you put money away for when your car needs new tires or your furnace goes out or your kid needs braces, an asset management plan lets you prepare for the big things that will eventually happen but you don’t know when.
Typically, an asset management plan will prepare you for the state of your utility or municipality in 5, 10, or even 20 years. You and your team can prepare for what will need to be improved and maintained over this period of time. It also helps you prepare for possible regulatory changes over the years. All this helps you make a sound financial plan so you’re ready when it is needed.
Asset Management Plan Benefits
Asset management plans can prepare you for up to 20 years of your utility and municipalities changes. However, planning 20 years in advance is like trying to plan exactly where you’ll be living, or wearing, or driving in 20 years. Having a 20 year plan helps you prepare, but there is no guarantee your plan will stay the course. Instead, include shorter 5 year plans in your overall 20 year plan. These are more manageable and more accurate than two decades of planning.
You can use the plan to project population changes and potential changes in consumption. It can also help you plan for changes and improvements to your day to day functions, as well as long term goals. Looking to the future helps you prepare for the wear and tear on facilities, equipment, assets, and more.
But Why Do You Need an Asset Management Plan?
Just like your rainy day fund for your own personal life, your asset management plan keeps you from becoming stranded. You already have fixed costs to operate your utility or municipality, such as electricity, water, regular upkeep of properties and equipment, employee expenses, etc. What happens when a water line bursts, a road repair vehicle breaks down, or something else unexpected? These things are going to happen due to normal wear and tear, as well as when unexpected events happen. And if these things are not prepared for, you could be left struggling to return to business as usual.
With your asset management plan, you can be prepared for replacing equipment, maintaining assets, and so much more. Your plan can help you prepare as populations grow so that you can expand to meet consumer needs. There’s also the added benefit of being prepared when going before regulatory and public boards requesting additional funds. Being prepared and well organized because of your asset management plan can help smooth the way for the funds you request.
Next time: Setting up an Asset Management Plan