Building the Asset Management Plan

Photo Credit: John Wollwerth

Click here to see a list of all editions of the Finance Officer’s Desk column.

We are into the final episode of our series on Capital Improvement Planning. This CIP series is highlighting some best and promising practices for each of the following phases of capital budgeting:

And now we turn to Asset Management tips.

An Asset Management Plan (AMP) is a strategic document that states how each group of the entity’s assets are to be managed over a period of time. The AMP describes the characteristics and condition of infrastructure assets, the levels of service expected from them, planned actions to ensure that the assets provide the expected level of service, and financing strategies to implement the planned actions.

An AMP should be developed to answer the following questions:

  • What we own? (Inventory)
  • What is it worth? (Valuation)
  • Where is it? (Geographical Information System)
  • How do we operate? (Service Level)
  • What is its condition? (Risk of Failure / Consequence of Failure)
  • What do we need to do? (Construct, Maintain, or Replace)
  • How much will it cost and how will it be funded? (Financial Plan)

The difference between an AMP and a Capital Improvement Plan (CIP) is the comprehensiveness of its scope, and the duration of time the AMP covers. Typically, the CIP is a 5 to 10-year snapshot of upcoming infrastructure needs. Here are two tips for developing the AMP:

1. Develop an asset management strategy that enables assets to provide desired levels of service in a sustainable way, while managing risk, at the lowest lifecycle cost (e.g., through preventative action). A good AMP details the set of planned actions that will provide:

  • Non-infrastructure solutions – actions or policies that can lower costs or extend asset life (better-integrated infrastructure planning and land use planning, demand management, insurance, process optimization, managed failures, etc.).
  • Acquisition activities associated with necessary assets that are not yet owned by the City.
  • Maintenance activities, including regularly scheduled inspection and maintenance, or more significant repair and activities associated with unexpected events.
  • Renewal/rehabilitation activities – significant repairs designed to extend the life of the asset.
  • Replacement activities – activities expected to occur once an asset has reached the end of its useful life and renewal/rehabilitation is no longer an option.
  • Divestiture activities – the activities associated with divesting an asset once it has reached the end of its useful life, or is otherwise no longer needed by the City.
  • Expansion activities (if necessary) – planned activities required to extend services to previously un-serviced areas – or expand services to meet growth demands.

2. Add transparency visual dashboards into the AMP that measure the required vs actual maintenance costs and forecast the impacts of deferred maintenance on future capital costs. Appointed and elected officials often publicly acknowledge that deferred maintenance results in increased future capital costs, but they will continue to do so because they do not fully grasp the impact on future capital costs. The penalty for deferred maintenance is significantly more than deciding authorities believe. Transparency visualizations will result in better competition for resources that will help elected officials realize the full impact deferred maintenance has on future costs – helping to preserve critical infrastructure.



Charlie Francis is a municipal finance expert. He has more than forty years of local government financial management experience in both the public and private sector, including twenty years of experience as a Chief Financial Officer. Most recently, he served as the Director of Administrative Services and Treasurer for the City of Sausalito where he earned the unofficial title of “OpenGov super user”. He has also served as a finance manager for the Town of Colma, CA and as CFO and acting City Manager for the Cities of Indian Wells, CA and Tracy, CA.

Questions or comments? Email Charlie at .


Category: Government Finance

Related Posts

Government Finance
Rescue Plan Recognizes Need for ‘Resilient Infrastructure’ for Local Governments
Government Finance
Modern Fund Accounting Software And How It Makes Life Easier for Government Accountants
Government Finance
3 Tips from Leaders Adapting to The ‘New Normal’ for Government Budgeting