Managing Cities’ Assets

1. 2013 EAROPH Regional Conference Managing Cities’ Assets World Café 4: Managing Cities Today for Tomorrow 20th November 2013 Ms. Kerry McGovern Public Sector Governance, Financial and Asset Management Specialist

2. IS NEW INFRATRUCTURE GOOD?

3. President Jacob Zuma officially launched the Spring Grove Dam in Howick, KwaZulu Natal as part of the roll out of Government’s Infrastructure Build Programme. Pic: Elmond Jiyane, GCIS

4. Is all new infrastructure “good”? The literature supports the view that infrastructure matters but does not unequivocally argue in favour of more or less infrastructure investments. UN Habitat 2011

5. Physical indicators are still too coarse to really capture the flow of services to households and firms. Optimal stocks are unlikely to be ever identifiable at the aggregation level of regions of countries. UNHabitat 2011

6. 60 year old Woolloongabba Sewer Upgrade to serve growing population

7. The basic objective of development is to create an enabling environment in which people can enjoy long, healthy and creative lives. UNDP

8. Demonstrate the Benefit of City Assets Knowledge Management

9. New Zealand’s Long –Term Plan (LTP) The LTP’s purpose is to – Describe the council’s activities and the community outcomes it aims to achieve Provide integrated decision-making and coordination of the resources Provide a long-term focus Show accountability to the community Provide an opportunity for participation by the public in the council decision-making processes. New Zealand’s Local Government Act 2002

10. Napier City Council:, Ten Year Plan 2012/123 – 2021/22

12. Non-Financial Benefits Social support Freedom to make life choices Generosity Perceptions of Corruption Life Expectancy GDP per capita World Happiness Report 2013

13. Capability of City Administration

14. PPP and Managing Cities’ Assets “The real problem is the capability and knowledge of governments to do public-private partnerships” Jeffrey Hamilton, Head of Public Private Partnership for UN Economic Commission for Europe (UNECE)

15. Southwest corner of the apartment block damaged by the November 2005 tunnel collapse

16. Maintenance of Drainage affects homes and businesses

17. Public-Private Partnerships need careful management

18. ''world-class piece of transport infrastructure'‘, Mr. Trevor Rowe, Chairman of the Board of BrisConnections. Receivers and Managers appointed PPB Advisory have been appointed as Receivers and Managers February 2013.

19. Weaknesses in Contract Management • Contract sanctions are not being applied • Contracts are not being monitored in detail • Number of contract changes are large and costly • Contract management and learning capacity is not adequate to the need • Parliament is not being kept informed. (Court of Audit of the Netherlands, Report on Contract Management by DBFMO, 6 June 2013)

20. Incentives • One large decision easier than coordinating multiple dispersed decisions • Private sector financing easier than raising funds in public sector • Private sector fees more acceptable than public sector taxes, fees and charges adequate to cover full cost, including maintenance

21. Decision-Points • Specification • Design • Issue of the tender • Tender scrutiny • Tender negotiations • Tender approval • Contracting • Verification of works • Arbitration about points of disagreement.

22. Be aware of corrupt practices There is an association between high corruption and: • High capital investment • Low government revenue • Low operation and maintenance expenditures • Poor quality of infrastructure. (IMF, 1998. “Roads to Nowhere: How Corruption in Public Investment hurts growth)

23. What is at stake! “Cities are where the battle for sustainable development will be won or lost” UN Secretary General’s High Level Panel on post 2015 development agenda

24. Basics moving forward • Clear Guidelines • Skilled staff in both the public and private sectors and in civil society • Well managed, accurate data

25. Natural disasters

26. ISO 55000 Asset Management • Due for release early in 2014 • Guide for system of managing assets. • Principle based.

27. Conclusion • Cities are to manage the services provided by all public assets, including those provided through PPPs • Each project must respond to real needs • City’s residents to be involved in deciding projects, and be willing to pay the full cost, including ongoing maintenance • Budget for design, construction, operation, maintenance and replacement • Monitor quality of services • Information Professionals to manage data • Manage environmental assets and the happiness of residents

29. Maintenance of Assets • Addressing resource constraints • Establishing accountability and appropriate incentives • Building organizational capacity for asset management planning and implementation • Development assistance Infrastructure Maintenance in the Pacific: Challenging the Build-Neglect-Rebuild Paradigm, PIAC, 2013

31. Maintenance The problem results largely from: • a lack of awareness of the importance of maintenance and the insensitivity to this issue at the decision-making level; • unclear institutional responsibilities and the resulting lack of accountability; • a lack of trained staff, particularly at the middle-management levels; • a lack of incentives to foster good maintenance; • a lack of planning and rational budgeting; and perhaps most critically, • a lack of financial resources” (UN Habitat 1993)

32. The solution • Maintenance costs 5-7 % of GDP annually • Each sector has institutions responsible for infrastructure services – and maintenance. Ensure there is a good legislative framework. • Train maintenance staff…..and keep training them. • Good maintenance results is valued services. • Budget carefully for maintenance, and manage it being done – daily. • Allocate the resources to sustain the planet. Keep infrastructure working in partnership with the Earth.

33. Next steps