The Evolution of Infrastructure

 

Over the past fifteen years a change in infrastructure has been taking place. New ideas have been implemented for the management of the Provincial Assets. One of these concepts is called risk management. Risk management has been implemented in the Infrastructure system when dividing up the Health Authorities and in relation to the funding of the School system.

 

In Infrastructure, the Provincially funded assets, the health and schools systems work independently of the Provincial framework. This separation of the assets has filtered into a considerable amount of problems that if not address will amount to increased future funding requirements. It appears that the definition of risk management has been lost in this process.

 

The Infrastructure system does not believe that it can tell the Provincially funded assets how to manage. This type of belief appears to be from the concept of Risk Management.

 

The Provincially funded assets, as well as the Provincially owned assets require a framework of how to manage. In relation to the assets funding there must be a correlation of funding to what it is required for. If funding is allocated to an asset for roof replacement, the funding must be utilized for roof replacement and accounted back to the Province for that roof replacement. The concept of lump sum funding appears to have removed this accountability.

 

To understand the current condition of infrastructure within the Province an analysis of the history of infrastructure in the Province must take place. A framework of the history of the Provincial Infrastructure must be correlated to account for the past accomplishments and failures. This can be set for each definitive portion of the Provincial owned or funded assets.

 

In understanding where infrastructure has been, an analysis of why this has happened must be undertaken. In this analyses, no stone can be not turned over, whether it be political or a product of the system. This analysis is not intended to hold persons, parties or departments accountable, it is intended to understand why Provincial Infrastructure is in its current condition and set the path not to repeat the same mistakes of the past.

 

At the same time, an analysis of other infrastructure systems must be undertaken to take into account their accomplishments and failures. The Province does not want to follow a failing lead.

 

Once an understanding of how and why is accomplished then a practical formulation of solutions can be undertaken to improve the managing of the Provincial Infrastructure.

 

To set up a management system that is based on the needs and workable solutions, a Group for Improving the Management of the Infrastructure Systems must be set up to include all interested parties. The private sector is a key stakeholder in making a responsible change in the management solutions.

 

In the Provincial Infrastructure a Group must be formed to address these issues:

Finance Ministry

Infrastructure Ministry

Public Sector Stakeholders

            School Boards

            Health Facilities

            Government Owned

And other Funded Assets

Private Sector Stakeholders

            Architects

            Engineers

            Consultants

            Financial Institutes

            Legal

            Others

 

There are a number of factors that must be addressed to complete this process.

           

The first factor that stands out is the terminologies that are to be used for analysis of the Provincially owned and funded asset. In reviewing the current system there is no clear understanding of what some terminologies means. What one part of the Infrastructure calls maintenance is not what the Finance department calls maintenance and visa versa. There is also the big question by all parties as what is functional. The question of functionality is a cornerstone to developing a plan for Infrastructure.

 

It is necessary that all of the terms and definitions are clearly defined and understood as a standard for the Province. Simple terminology that one perceives as a meaning may differ from individual or department or Ministry.

 

The Group must determine a system to divide what is a program cost and what is an asset cost. Currently some of the assets are renovated because of a program not being functional in an asset. Is this a functional capital up-grade or a functional program up-grade? At this time if you ask for opinions within the current system there may not be the same answers. In the Private sector this would be a lease hold improvement and not be a cost of the managing of the asset.

 

To manage the assets, the Group must set a clear definition of what is being managed. 

 

A definition of what is program funding and what is asset funding is required to be established and that a separation must take place for the allocation of funds. This will help to ensure that the assets are funded so that they are maintained in good standing.

 

The Group must set a clear definition of what is an operating expense, capital upgrade expense, capital renewal expense and capital expansion expense. This definition must be set to insure that the funding is allocated through the correct fund.  

 

The Province currently has no universal maintenance program. What a maintenance department in one part of the Province is completing as regular maintenance is not what another maintenance department of the Provincial assets is completing. This non-uniform maintenance system can account for as much as 30% of the current cost of operations of the Provincial owned and funded assets. This does not take into account the future impact the current non-uniform maintenance system will have on the funding levels from deferred maintenance.

 

The Group must undertake to set up a Provincial predictive preventative maintenance system. This type of system will have a number of facets to insure that the assets are receiving a substantially higher form of maintenance and reducing the Provincial owned and funded assets operating costs. A detailed review of the four forms of maintenance must be completed and a strategy that enables the most cost effective maintenance management system to be set up Province wide. In addition to the reduction in operating costs of the assets, and based on historical data available, the assets will have a longer life cycles. This extension of the assets life cycles will help to reduce the future requirements of funding over time.

 

In the Provincially owned and funded assets a considerable amount of monies are being utilized on energy consumptions. Whether it is gas, water, power or sewage charges there are no requirements that energy audits have to be performed. The Group must review and address this issue to determine a proper implementation of an energy management plan for Provincially owned and funded assets. This can help to reduce the energy consumption of some assets by as much as 60%. 

 

The Group must assess different component based methodologies of assessing and funding of the assets to determine how to maintain the Provincially owned and funded assets at funding levels that are sufficient for the assets to be maintained in good standing.

 

The Group must review the process of reserve fund management and the allocation of funds to reserve accounts for each asset. This type of fund management can reduce future funding requirement considerably by the accruement of interest calculated of the reserve funds.

 

The Group must determine how to set up the reserve funds based on a framework of the needs of the fixed assets owned and funded by the Province.

 

The Group must review current systems that have been created within Infrastructure and Finance to assess their potential in developing a data collection system for the data management of the Provincially owned and funded fixed assets data.

 

The Group must research other system available for data collection and data management of the Provincially owned and funded fixed assets data.

 

The Group must determine if it is more cost effective to work with the data collections systems currently developed and build a system based on their use, by developing additional portion of the data system to create a software that is solely owned and managed by the Province. 

 

If it is determined that it is not cost effective to utilize the current systems the Group must determine what is the most cost effective system available. It must also be determined based on that the full rights can be purchased by the Province and modified by the Province or contractors of the Province to meet the needs of the data collection and data correlation required to manage the Provincially owned and funded assets. 

 

The current costs of software development has become affordable due to the new platform base programming systems developed in the past several years. 

 

Once a data system has been determined, the Group must determine how to set the system up for a revenue based asset that is owned by the Province. The data collected in this type of system is a marketable item to manufactures and other data collection systems. With the amount of Provincial owned and funded assets, the system can be set up to produce data on component premature failure, life cycles and other associated factors on how the components of the assets perform. This type of a system will pay for itself over time from the marketing and then sale of the information in relation to individual components and/or types of components of the assets.

 

There will be other issues that will come to light in this process. These issues will have to be reviewed by the Group and solution recommended for this system to be complete.

 

The Group must review other legislation that has passed in other jurisdiction for the same type of Infrastructure management around the world. One model is the legislation passed into law in the United States in 1996 for all Federally owned and Federally Funded Assets. The US experienced the same type of Infrastructure decay and funding problems in the late 80's.

 

Once the Group has completed these tasks a review of all issues must take place and a report must be produced in a legislative format, on how the Province can legislate these predictive preventive maintenance systems into an Act and Regulations for the Management of all Provincially Owned and Funded Assets

 

Infrastructure can then have a designed management system that can be legislated for the future management of Provincial owned and funded assets.

 

This type of legislated system can move the Provincial Infrastructure into a position that the future funding is allocated based on the actual needs of Infrastructure's fixed assets and that there is accountability back to the Province.

 

Scott MacKay

EnerMac Consultants Inc.

 

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