The State of Asset Management in Local Government – An Interview with Scott Pepperman Part 1
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In the first of this two-part series, Jackie Luo speaks with Scott Pepperman about the state of asset management in government. Scott Pepperman is the current executive director for the National Association of State Agencies for Surplus Property (NASASP). Previously, Scott Pepperman worked for the Pennsylvania Department of General Services and the Bureau of Supplies and Surplus Operations. Mr. Pepperman also served in the United States Air Force prior to being employed by the Commonwealth of Pennsylvania, where he now lives with his wife.
There are two major challenges faced by government agencies when it comes to asset management. The first challenge, which we will discuss in detail today, stem from a lack of a comprehensive property management strategy that occurs. Because politicians are in and out, there is a real lack of ownership and accountability that occurs in asset management, as well as a serious lack of investment in asset management tools, personnel, and maintenance.
The second challenge in asset management in government agencies, which we will discuss in more detail next week, is the lack of established processes and rules for managing equipment in government agencies. Because of this lack of process development, when people switch jobs, there is a lack of accountability and a lack of record keeping to help track equipment. Equipment malfunctions, loss of equipment, and increased costs are due to a lack of institutional procedures that maintains information independent from people.
Jackie Luo: What is the most common asset management failure among government organizations, and what is the impact of that failure?
Scott Pepperman: The most common failure is the lack of a sense of property ownership. I’ve noticed this at both the federal and state level. Government employees do not tend to feel that they own the property in any way or that they are responsible for the property. I’ve seen some information from the federal government illustrating that this mind-set is very prevalent; whether it’s related to physically handling assets, managing assets or disposing assets in different ways, there just seems to be no sense of ownership. Many government employees in the asset management business seem to have this attitude that the assets don’t belong to them, and therefore, there isn’t a lot of care given to how those assets are handled.
The impact of this mind-set is a huge waste of federal and state tax dollars. Proper management of these assets can be a great benefit to governments and ultimately to the taxpayers they serve, but mismanagement can be like a black hole in which dollars disappear.
What are the obstacles for state and local government agencies to implementing sound practices and business procedures when managing their physical assets?
I think one of the greatest obstacles is politics. Too often politics dictate asset management policies and procedures in government. Politicians are fond of saying that they want to run government like a business, but it’s very seldom done. Final decisions are always based on politics. Where we are in an election cycle can affect asset management policies. If someone is running for office, decisions are based on how voters will perceive the administration and if someone is at the end of their term; many problems are left for the next administration to solve. Again, this is an example of lack of ownership.
There is also a lack of knowledge regarding best practices and industry standards within the government. So often I meet senior managers who do not have an understanding about the value of disposal and how proper disposal could benefit the government.
What will it take for government agencies to overcome these obstacles?
The first step would be for government officials to gain a better understanding about property and asset management and how it can affect government, either beneficially or detrimentally. The government officials who have an understanding about asset management have been able to make assets work well for their agencies.
The second step would be to establish concrete policies and procedures that are followed, despite the administration in power. Whether we are governed by a Democrat or a Republican administration, those policies should be dictated and followed by industry-specific best business practices. There needs to be continuity or stability in the policies and procedures for asset management. However, this is very difficult to accomplish.
Even if you can move the responsibility of asset management from outside the administration to an appointed official, that person’s term is going to end when that governor or that president leaves office.
What is your observation about the business processes for managing equipment and properties in government agencies? Do they have established processes, and are they generally following industry best practices?
Some governments are following best practices, but they are the exception. If a government agency is following established processes, those processes are not usually designed properly. There doesn’t seem to be any investment in having government employees trained or sent to seminars or conferences where they can learn best business practices. Out-of-state travel is one of those low-hanging fruit that governments frequently cut from their budget. Even if a government is managing their assets properly when a new administration is elected, often all of those policies and procedures are scraped so that the new administration can start fresh.
As a whole, most governments are not aware of the best business practices for asset management, and they don’t make an effort to find out.
Next week, Jackie will continue her discussion with Scott, exploring further the challenges that government entities face with asset management.