Implementing Better Asset Management Strategies in Local Government – An Interview with Scott Pepperman Part 2
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In the second of this two-part series, Jackie Luo speaks with Scott Pepperman, executive director for the National Association of State Agencies for Surplus Property (NASASP), about asset management in government agencies. In this segment, they will focus on the challenges government entities face because of the lack of established processes and rules for managing equipment in government agencies.
How would you describe the level of sophistication in managing physical assets? Are they monitoring the life cycle cost or using benchmarks to measure their effectiveness?
When you talk about the level of sophistication in managing physical assets, I always think that business and industry get it right more often than government does. The federal government comes in below business, while state and local governments are at the bottom of the sophistication scale. There seems to be more turnover at the local level than there is at the federal government level, and administrations at the local level are less likely to hire people with asset management expertise.
I’ve encountered administrations that don’t consider asset managers to be a valuable position. These administrations are more likely to hire lawyers to fill senior positions in property management or asset management, because they want legal protection in case something goes wrong. They want lawyers responsible for writing the guiding policies and procedures. In my opinion, this is a huge mistake. You don’t need a lawyer; you need a senior asset manager.
In terms of monitoring the life cycle cost, that is something that is not high on the priority list of governments. Procurement is the sexy stage of the asset life cycle, and everybody is more interested in bidding items out than they are in maintenance or disposal. Part of the problem with convincing governments to think about disposal procedures is that asset disposal is years down the road and will likely happen after their administration leaves office. Generally, asset management procedures, such as monitoring life cycle costs, are not being employed. In regards to benchmarking: I think that’s a shot in the dark as well. On the procurement side, I’m absolutely sure they are benchmarking, but on the disposal side of asset management they are not. I think they are just throwing darts at a dartboard.
I recently posted a question on the LinkedIn Group “government property managers,” asking people to share the common mistakes made in equipment management.
One comment posted was: “Three biggest: found on Installation property, LTDD, lack of internal audits. In the past almost every audit contained these three. We have such a big turnaround of people that sometimes today, they still show up. That’s part of the training issue. Also, I have a Program Management Office in a different city, which has a tendency to not notify me when there is a personnel changeover. I sometimes find out when an email gets rejected back to me. I now send out a roster to update quarterly. I am constantly writing work instructions and updating my Property Management Plan with every audit. As I stated before, no two auditors are the same. I use to be one so I know this.”
Can you share your perspective?
I think there is a lot of validity to this auditor’s statement. Personnel changeover has a significant impact, especially at the local government level, and it’s not always due to elections. It may happen because of retirement or a sudden death. When people leave their roles, their knowledge is not passed on to the person coming into that role, so procedures, policies and inventories are lost. When I worked for the state of Pennsylvania as an asset manager, this was something that we struggled with, and it got us in hot water several times. We gradually solved the problem, but it took us about 10 years. For larger governments, changeover is not always a problem, because you may have an entire department or several people working in that one area.
What do you think it would take for government agencies to focus on adopting best practices in property management?
I think it would take strong leadership and wise leadership. I have seen in my own experience when the head of a department has had an understanding of property or asset management and best practices; they let the experts do their job. The value to taxpayers and the state as a whole can be immense. Strong leadership is a big step. Also, it sometimes takes a disaster – manmade or natural – to bring about changes for the better. When Katrina and Rita hit and when 9/11 happened, a lot of government program managers took a look at their property management and made some changes. I think the changes that have been made are very good and very valuable. It’s unfortunate, but it was management by disaster.
The policies established as a result of what we learned from the Katrina disaster are still employed today. However, sometimes policy changes don’t always stick. The airport security policies that were enacted after 9/11 have changed and are a little different now. Sometimes a disaster can prompt changes that stick, and sometimes they don’t stick. But leadership may have a part to play in that.
Proper asset management could result in significant benefits for taxpayers and governments at both the local and federal levels. Currently it seems that the value of asset management is not widely understood by government officials. Lack of ownership, lack of knowledge and an abundance of politics have been getting in the way of necessary changes that could bring significant value to citizens.