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How Strategic Asset Management Secures Stimulus Funds

Ashay Prabhu
  • Jun 18, 2021
  • 5 minutes

SAM and stimulus

What is strategic asset management (SAM), and how does it empower you to stand out and win stimulus? 

This approach empowers you with what-if options over the next 20 years to prove your capital and maintenance plans will deliver a better American Society of Civil Engineers (ASCE) scorecard than the past. It offers proof that your organization can be fit for the future and helps justify exactly how stimulus funding will be deployed. It optimizes every dollar spent to maximize impact and secure you that funding – perhaps even above the average allocation.

Others have done it, and they used SAM to win the financier’s trust.

Want to hear how? Read on.

Traditional -> evidence-based -> futuristic

Traditionally, funding is allocated according to set formulas. For example, schools in the US are eligible for funding based on Federal Title I formula where districts are assessed according to four criteria, with concentrated poverty a key factor and funds allocated to help ensure at-risk groups are not disadvantaged. 

However, various technological, legislative and social shifts have cemented the trend toward evidence-based funding applications. And as part of the Biden administration’s $4 trillion economic plan, the public sector is receiving a major stimulus windfall. The ability to attract these infrastructure reserves is enhanced multi-fold with a solid data story to demonstrate where these funds will be spent, and what the impact will be on the 10+ year horizon.

And what’s next? A futuristic approach centers on governance and accountability – a true demonstration of where funds will be spent to benefit our communities for generations to come. There are governments doing this today – presenting needs-based budgeting backed by comparing scenarios as evidence – and are financiers awarding them even more than the expected stimulus amounts?

Yes, and it’s more achievable than you may realize. 

SAM is the answer

Strategic asset management is a proven methodology that gives guardians of infrastructure the ability to stretch limited capital budgets further – to extend asset lifecycles and provide acceptable service to their communities, without added spending. 

It’s all about optimization. Rather than presenting applications that effectively say, “give me stimulus money so I can keep fixing failed assets (post failure),” with SAM, your story becomes, “give me smart money so I can stop more and more assets from failing in the first place.”

Once an asset – be that a building, a road or a pipe – reaches a certain point in its lifecycle, the cost to maintain or repair it increases and its service level to users decreases. According to ASCE, when assets reach the “D” grade or lower, things get dire. Particularly when a bulk of bridges, facilities or pavements reach this point at the same time, which is the situation we have in the US right now. While in 2021, ASCE awarded a marginal improvement to C- for the first time, there is still much work to do. 

Asset degradation

Figure X – As assets enter the ”red” zone of grades E and F, cost to renew increases 

Assets do not exist for their own sake; they exist purely to provide the required service to users.

When we understand the state of our assets and the service our communities need from them, we can make better decisions about which asset to treat, in what way, at what point in their lifecycle.

Every dollar is spent wisely as we’re mindful of how today’s decisions affect these assets into the 20+ year horizon.

This is SAM, and it does two things:

  1. Gets you stimulus ready with data-driven stories 
  2. Ensures your stimulus spend makes the biggest impact possible

The SAM-stimulus story 

Let’s pause for a moment to reflect on how COVID-19 continues impacting teams who manage our critical community infrastructure – schools must adapt to ever-changing requirements, road operators grapple with massive reductions in commuter traffic, municipalities support countless small businesses to operate safely. 

And it’s likely that longer-term changes in community behavior (like more people working from home) will limit asset income for years to come. Stimulus funding or no stimulus funding, it’s essential every dollar is spent for the greatest benefit.

Infrastructure projects are incredibly impactful when we need to re-employ. Re-build. Re-inspire. Stimulus funding must not just address the existing asset backlog, but also forecast tomorrow’s complex needs. 

These decisions have arguably never been more interlinked, or more important. The US Department of the Treasury – rightly – requires proof that the funds will deliver what communities so desperately require from them. This is why the Government Finance Officers Association (GFOA) and Canadian Network of Asset Managers (CNAM) are calling for prudent financial planning of infrastructure, and why we are seeing increased regulatory scrutiny in countries like Australia, Canada and New Zealand.

SAM provides the story needed to convince government officials that your organization can be fit for the future and deserves stimulus funding. It presents powerful “what-if” scenarios over 20 future years which optimize every dollar and prove your capital and maintenance plans will deliver a better scorecard than the past.

In education, funding awarded under traditional formula-based approaches to schools’ funding as an example can increase from $3,300 per student to in excess of $6,600 per student with evidence-based stories. 

Platforms to empower 

SAM is a journey. Regardless of where you are on your strategic asset management roadmap, this is a journey that can start today. 

Smaller organizations can draw on condition data at system level from their CMMS to start. More mature organizations can begin modeling at component level with a subsection of available data, get results into the hands of stakeholders, use these outputs to inform a strategic data improvement process and iterate from there. 

The point is to begin. Now. Before available stimulus funding is snapped up by those who have already begun. Partner with an organization with the platforms and knowledge to accelerate your journey, who’ve done this before for countless governments. These purpose-built platforms can cost a fraction of your portfolio value, increase funding allocation and save millions in inefficient asset repair. For example, take a portfolio value of $1 billion consuming at $25 million per year: unlocking even 10% of that consumption by extending lifecycles is a very powerful story.

The road to recovery after COVID-19 will likely be long and difficult, even with the proposed $4 trillion infrastructure plan. But with challenge comes opportunity; an opportunity to reimagine, create a more resilient and efficient future, and define our country’s infrastructure for the next generation.

Take the next step on your SAM journey. See how Capital Predictor can help.

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