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

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managing cities assets

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


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

is all new infrastructure good
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

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

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


new zealand s long term plan ltp
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

non financial benefits
Non-Financial Benefits

Social support

Freedom to make life choices


Perceptions of Corruption

Life Expectancy

GDP per capita

World Happiness Report 2013

ppp and managing cities assets
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)


Maintenance of

Drainage affects homes and businesses


''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.

weaknesses in contract management
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)

  • 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
decision points
  • Specification
  • Design
  • Issue of the tender
  • Tender scrutiny
  • Tender negotiations
  • Tender approval
  • Contracting
  • Verification of works
  • Arbitration about points of disagreement.
be aware of corrupt practices
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)

what is at stake
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

basics moving forward
Basics moving forward
  • Clear Guidelines
  • Skilled staff in both the public and private sectors and in civil society
  • Well managed, accurate data
iso 55000 asset management
ISO 55000 Asset Management
  • Due for release early in 2014
  • Guide for system of managing assets.
  • Principle based.
  • 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
maintenance of assets
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


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)

the solution
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.