Federal Real Property Asset Management: Agencies Could Benefit from Additional Information on Leading Practices

The federal government is the largest real property owner in the United States and spends billions of dollars to operate and maintain these assets, which include buildings, roads, bridges, and utility systems. Federal agencies are responsible for developing asset management policies, processes, and plans. In 2014, the ISO 55000 asset management standards were issued.

GAO was asked to examine federal agencies' real property asset management practices and the applicability of ISO 55000. This report discusses: (1) key characteristics of an effective asset management framework and how selected federal agencies' frameworks reflect these characteristics, and (2) whether government-wide asset management guidance and information reflect standards and key characteristics of an effective asset management framework, among other objectives.

To conduct this work, GAO reviewed the ISO 55000 standards, relevant studies and literature, and interviewed 22 experts and 10 practitioners. GAO selected six federal agencies as case studies, including agencies with the largest real property portfolio and some agencies that were using the ISO 55000 standards. GAO reviewed documentation and interviewed officials from these six agencies, GSA, and OMB.

GAO identified six key characteristics of an effective asset management framework (see table 1) that can help federal agencies manage their assets and resources effectively. GAO identified these key characteristics through reviews of the International Organization for Standardization (ISO) 55000 standards—an international consensus standard on asset management—studies and articles on asset management practices, and interviews with experts. GAO reviewed the asset management practices of six federal agencies: the U.S. Coast Guard (Coast Guard); U.S. Army Corps of Engineers (Corps); General Services Administration (GSA); National Park Service (Park Service); National Aeronautics and Space Administration (NASA); and U.S. Forest Service (Forest Service). Each of the six federal-agency frameworks GAO reviewed included some of the key characteristics.

Source: GAO analysis of ISO 55000 standards, asset management literature, and comments from experts. | GAO-19-57

While the Office of Management and Budget (OMB) has issued guidance to inform federal agencies' real property management efforts, the existing guidance does not reflect an effective asset management framework because it does not fully align with ISO 55000 standards and the key characteristics. For example, this guidance does not direct agencies to develop a comprehensive approach to asset management that incorporates strategic planning, capital planning, and operations, or maintaining leadership support, promoting a collaborative organizational culture, or evaluating and improving asset management practices. In addition, the guidance does not reflect information on successful agency asset management practices, information that officials from three of the six agencies GAO spoke with said would be helpful to them. OMB staff said that they did not plan to update existing government-wide guidance because OMB's real property management focus has shifted to the Reduce the Footprint initiative, which emphasizes efficiently managing and using buildings and warehouse space, rather than all assets. Without a more comprehensive approach, as described above, federal agencies may not have the knowledge needed to maximize the value of their limited resources.

OMB should take steps to improve information on asset management to reflect leading practices. OMB had no comments on this recommendation.

The federal government is the largest real property owner in the United  States and spends billions of dollars annually to operate and maintain its  real property portfolio. While the General Services Administration (GSA)  provides real property asset management guidance and support to  federal agencies—such as support to reduce their space requirements  and to effectively manage their inventory and reduce costs—federal  agencies are responsible for developing asset management policies,  processes, and plans for their portfolios. Specifically, Executive Order  13327, issued in 2004, directed federal agencies to develop an asset  management planning process and plan to promote the efficient and  economical use of their real property assets. A number of standards and  leading practices exist to guide organizations in developing an effective  asset management framework, including the International Organization  for Standardization (ISO) “ISO 55000” standards  which were published  in 2014. The ISO 55000 standards are international consensus  standards that describe leading practices for implementing, maintaining,  and improving an effective asset management framework to manage all  types of assets including real property assets. While some federal  agencies have taken steps to adopt some of the practices described in  ISO 55000, it is unclear what actions have been taken across the federal  portfolio or what standards and leading practices may be the most  applicable to the federal government.

You asked us to examine federal agencies’ real property asset  management practices and the applicability of ISO 55000. This report  discusses:  key characteristics of an effective asset management framework and  how selected federal agencies’ frameworks reflect these  characteristics;  views of selected asset management experts and practitioners on  challenges and benefits to implementing an asset management  framework; and whether government-wide asset management guidance and  information reflect standards and key characteristics of an effective  asset management framework.

To address all three objectives, we collected information from and  interviewed a judgmental sample of 22 asset management experts. To  identify the potential experts, we performed a literature search and  obtained recommendations from preliminary interviews with asset  management practitioners, who included representatives from public and  private organizations knowledgeable about asset management practices.  We then selected the 22 experts using a variety of criteria including type  and depth of their experience, affiliations with asset management trade  associations, experience with federal asset management practices,  relevant published work on our topic, and recommendations from other  entities. We interviewed each of these experts using a semi-structured  format with open-ended questions and conducted a content analysis of  their responses to identify recurring themes. The information gathered  from our interviews with experts and practitioners is useful in illustrating a  range of views on asset management issues, but is not generalizable.

To identify key characteristics of an effective asset management  framework and how selected federal agencies’ reflect them, we obtained  and reviewed the ISO 55000 standards, which include leading practices,  and literature on asset management practices and analyzed our  interviews with asset management experts. We synthesized information  from these sources and identified six commonly mentioned  characteristics. To compare selected agencies’ asset management efforts  to the six key characteristics that we identified, we selected a non- generalizable sample of six bureau-level and independent federal  agencies as case studies. We used a variety of criteria to select agencies,  including selecting agencies with the largest number of real property  assets and the largest real property portfolio replacement values. We  also included in our selection some agencies that were using the ISO  55000 standards, and that were recommended by practitioners we  interviewed. We selected the following agencies (1) the U.S. Coast Guard  (Coast Guard); (2) the U.S. Army Corps of Engineers (Corps); (3) GSA;  (4) the National Park Service (Park Service); (5) the National Aeronautics  and Space Administration (NASA); and (6) the U.S. Forest Service  (Forest Service). We reviewed documents and interviewed officials from  each of the six selected agencies to learn about the agencies’ practices,  their experiences with the ISO 55000 standards, and the challenges they  have faced in conducting asset management. In addition, we analyzed  fiscal year 2017 Federal Real Property Profile (FRPP) data, as managed  by GSA, to obtain information about each agency’s portfolio, such as the  number of real property assets and total asset-replacement value, and to  obtain examples of the types of buildings and structures owned by the six  selected agencies. We conducted a data reliability assessment of the  FRPP data by interviewing GSA officials and reviewing documentation,  and concluded the data were reliable for the purposes of our reporting  objectives. We also visited four locations from our case study agencies to  discuss and view examples of how our selected case-study agencies are  conducting asset management. Agencies are not required to follow the  key characteristics we identified and we did not evaluate the extent to  which they did so. Instead, we provide this information as illustrative  examples of how the agencies’ asset management practices reflect these  characteristics.

To determine the 32 experts’ and practitioners’ views on challenges and  benefits to implementing an asset management framework, we  interviewed and synthesized information from our interviews with all 32  and analyzed the responses to identify key themes. These individuals  included the 22 experts previously mentioned and 10 practitioners from  public and private organizations we selected who were familiar with asset  management practices and the ISO 55000 standards.

To assess whether government-wide guidance and information on asset  management reflect standards and key characteristics of an effective  asset management framework, we reviewed current Office of  Management and Budget (OMB), GSA, and Federal Real Property  Council (FRPC) federal guidance and evaluated the extent to which this  guidance incorporated practices in the ISO 55000 standards and in the  key characteristics. We selected practices described in ISO 55000  because it is the international-consensus asset management standard.  We also interviewed officials from the OMB and GSA about their role in  supporting federal agencies’ asset management efforts. In addition, we  obtained information from our interviews with asset management experts  and practitioners about practices that could be applicable to the federal  government and opportunities to improve federal agencies’ approaches.  Lastly, we obtained documents and interviewed representatives from  federal, provincial, and municipal governments in Canada—a country with  over 20 years of experience in asset management—to learn about their  practices, including their use of the ISO 55000 standard. We also  conducted a site visit to Canada to discuss and view examples of assets  in these municipalities (see appendix I for more information on Canada’s  asset management practices). For more information on our scope and  methodology, see appendix II.

We conducted this performance audit from August 2017 to November  2018 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

ISO 55000 defines asset management as “the coordinated activity of an  organization to realize value from assets.” This approach includes, for  example: developing an understanding of how each of an organization’s assets  contributes to its success; managing and investing in those assets in such a way as to maximize  that success; and  fostering a culture of effective decision making through leadership  support, policy development, and staff training.

While ISO defines an asset as any item, thing, or entity that has potential  or actual value to an organization, in this report we focus on real property  assets. Asset management can help federal agencies optimize limited  funding and make decisions to better target their policy goals and  objectives. See fig. 1 for an example of an asset management framework.

Asset management as a distinct concept developed in the 1980s, and  since that time, organizations around the world have published a number  of standards and leading practices. These include:

Publicly Available Specification (PAS) 55: The British Standards  Institution published this standard in its final form in 2008. This  standard focuses on the management of physical assets such as real  property and describes leading asset management practices in areas  such as life cycle planning, risk management, cost avoidance, and  collaborative decision-making. Additionally, the standard provides a  checklist for organizations to assess the maturity of their asset  management framework. Some public services, utilities, and oil and  gas sectors in the United Kingdom and other countries have adopted  this standard. The British Standards Institution formally withdrew this  standard in 2015 after the publication of ISO 55000, but it remains in  use as a reference for many organizations.

ISO 55000: This standard, published in 2014, is a series of three  documents, collectively referred to as “ISO 55000.” It is based on the  earlier PAS 55 standard but with stated applicability to all types of  assets as opposed to just the physical assets covered by PAS 55.  Committees with members from more than 30 countries identified  common asset management practices and developed this  international consensus standard that, according to ISO, applies to  the broadest possible range of assets, organizations, and cultures.  Some public and private sector organizations from around the world  including utilities, infrastructure management firms, cities, federal  agencies, and others have adopted the standard for their real property  assets. See appendix III for a summary of the key elements of the ISO  55000 standards.

International Infrastructure Management Manual: Initially  published in 2000, this manual became one of the first sets of  internationally accepted asset management leading practices. The  Institute of Public Works Engineering Australasia published the most  recent edition in 2015. The current manual complements the ISO  55000 standards and includes case studies of how organizations in  different sectors have approached asset management. It provides  detailed information on how to create and implement an effective  asset management framework, such as how to incorporate estimates  of future demand for services. Various organizations, particularly in  sectors that manage physical assets, have adopted the manual as a  reference.

In the United States, within the federal government’s executive branch,  OMB and GSA are responsible for providing leadership in managing  federal real property—one of the government’s major assets. OMB is  tasked with overseeing how federal agencies devise, implement, manage,  and evaluate programs and policies. OMB has provided direction to  federal agencies by issuing various government-wide policies, guidance,  and memorandums related to asset management. For example:

OMB’s 2017 Capital Programming Guide  outlines a capital- programming process, including how agencies should effectively and  collectively manage a portfolio of capital assets and requirements for  agencies strategic asset management plans;

OMB’s Circular A-123 directs agencies to conduct enterprise risk  management assessments to identify significant risks to agency goals  and operations;

OMB’s Memorandum 18-21 expands the responsibilities of federal  agencies’ senior real property officers in leading and directing the  agency’s real property program.

GSA’s Office of Government-wide Policy is generally responsible for  identifying, evaluating, and promoting best practices to improve the  efficiency of real property management processes. This office has  provided guidance for federal agencies and published performance  measures.

In 2004, the President issued Executive Order 13327 directing Chief  Financial Officers Act (CFO Act) agencies to designate a senior real  property officer responsible for establishing an asset management- planning process and developing a plan to carry out this process. Among  other things, this plan was to describe the agency’s process for:  identifying and categorizing all real property managed by the agency, prioritizing actions needed to improve the operational and financial  management of the agency’s real property inventory, using life-cycle cost estimations for those actions, and  identifying asset management goals and measuring progress towards  those goals. The order also required agencies to manage their real  property assets in a manner that supports the agency’s asset  management plan, goals, and strategic objectives.

In addition, Executive Order 13327 tasked GSA with providing policy  oversight and guidance to inform federal agencies’ real property  management efforts and required that OMB review agencies’ efforts in  implementing their asset management plans and completing the other  requirements specified in the executive order. The executive order also  established the Federal Real Property Council (FRPC)—chaired by OMB  and composed of senior management officials from CFO agencies—and  called for the FRPC to develop guidance, collect best practices, and help  federal agencies improve the management of real property assets. In  response to this executive order, in 2004 the FRPC developed guidance  describing guiding principles that agencies’ asset management practices  should align with, requirements for what agencies should include in their  asset management plans, and a template for agencies to follow when  compiling these plans. Specifically, the guidance stated that each real  property asset’s management plan should link the asset management  framework to the agency’s strategic goals and objectives, describe a  process for periodically evaluating assets, and describe a process for  continuously monitoring the agency’s framework.

More recent federal asset management initiatives have focused on  efficiently managing and reducing federal agencies’ real property  holdings. For example, in 2012 OMB directed the 24 CFO Act agencies to  maintain their civilian real-estate inventory at or below their then-current  levels, a policy known as Freeze the Footprint. In 2015, OMB issued its  National Strategy for the Efficient Use of Real Property and its  accompanying Reduce the Footprint policy requiring the CFO Act  agencies to set annual targets for reducing their portfolio of domestic  office and warehouse space. Subsequently, the Federal Assets Sale  and Transfer Act of 2016 established the Public Buildings Reform Board  to identify opportunities for the federal government to reduce its inventory  of civilian real property and reduce its costs. The act also requires the  head of each executive agency to provide annually to GSA information  describing the nature, use, and extent of the agency’s real property  assets. In addition, the Federal Property Management Reform Act of  2016 codified the Federal Real Property Council to, among other things,  ensure efficient and effective real-property management while reducing  costs to the federal government. The act requires executive branch  agencies to annually submit to the Federal Real Property Council a report  on all excess and underutilized real property in their inventory.

Effective Asset Management Frameworks Include Six Key Characteristics Reflected in Selected Agencies’ Practices

Based on our review of the ISO 55000 standards, asset management  literature, and interviews with experts, we identified six key characteristics  of an effective asset management framework: (1) establishing formal  policies and plans, (2) maximizing an asset portfolio’s value, (3)  maintaining leadership support, (4) using quality data, (5) promoting a  collaborative organizational culture, and (6) evaluating and improving  asset management practices (see fig. 2). See appendix II for a more  detailed explanation of how we identified these key characteristics.

Each of the six federal agencies we reviewed had a real property asset  management framework that included some of these key characteristics.  However, agencies varied in how they performed activities in these areas.  In addition, the scope and maturity level of the agencies’ asset  management frameworks varied. For example, while some agencies’  asset management policies applied to large portions of their portfolios,  other agencies’ policies applied to only certain portions of their  portfolios. In addition, two agencies—the Corps and Coast Guard—told  us they were using the ISO 55000 standards. For example, according to  Corps officials, the Corps is in the process of incorporating elements of  the ISO 55000 standards into its frameworks. Coast Guard officials told  us they were using the ISO 55000 standards as a benchmark to compare  against their existing framework. According to OMB and GSA officials,  some of the differences in agencies’ asset management frameworks can  be attributed to differences such as agency mission needs and the types  of assets that each manages. For example, the real property asset  portfolios of the six agencies we reviewed differed substantially in the  types, numbers, and total replacement values of the assets. See table 1  for more information on the agencies’ asset portfolios and fig. 3 for  examples of agency assets and their primary uses.

Below we discuss the six key characteristics of an effective asset  management framework and how the six selected agencies performed  asset management activities in these areas.

Formal policies and plans can help agencies utilize their assets to support  their missions and strategic objectives. According to literature we  reviewed, developing a formal asset management plan can help agencies  take a more strategic approach in their asset management decision  making and identify key roles and responsibilities, resources required to  implement their plans, potential implementation obstacles and strategies  for overcoming these obstacles. In addition, several experts we  interviewed stated that having an asset management plan that describes  the overarching goals of the organization and how the organization’s  assets relate to those goals is an important element of an asset  management framework. Each of the six agencies we reviewed had some  documentation such as asset management plans, investment strategies,  or technical orders that lay out how the agency conducts asset  management activities. This documentation covered important areas such  as collecting data, prioritizing assets, and making investment decisions,  along with documentation detailing the roles and responsibilities of key  officials, for example:  In 2014, the Corps published a Program Management Plan for Civil  Works Asset Management that laid out a vision, tenets, and objectives  for asset management along with the roles and responsibilities of key  officials. Corps officials told us that this document functions as a  strategic asset management plan for the Corps’ Civil Works asset  portfolio, and the plan contains foundational principles such as how  the Corps will assess risk and measure the performance of its  framework.

Since 2006, the Coast Guard Civil Engineering program has been  developing a series of manuals, process guides, and technical orders  that provide detailed procedures to support implementation of an  overarching asset management model. Coast Guard officials told us  this model will cover all of the Coast Guard’s real property assets and  reflect the agency’s mission and objectives.

In addition, each of the six agencies we reviewed had developed a formal  asset management plan in response to Executive Order 13327 from  2004. One agency had a plan that officials said reflected their current  practices. Officials from the remaining five agencies told us that the  practices contained within their original asset management plans had  been superseded by later policy documents. For example:

NASA officials told us the agency’s 2008 Real Property Asset  Management Plan no longer reflects NASA’s overarching asset  management framework. Officials said that NASA instead uses a  series of policy documents, procedural requirements, and annual data  calls to set out its framework.

Park Service officials told us the agency’s 2009 Asset Management  Plan is still in place, though some of the practices in that document  have been superseded by more recent policy documents including the  Capital Investment Strategy.

Further, five of the agencies linked their asset management goals and  objectives to their agency mission and strategic objectives in their asset  management plans. For example, GSA’s 2012 plan states that it supports  GSA’s overall mission and goals, as well as the mission of the Public  Buildings Service, by organizing real property decision making and  supporting the Public Buildings Service’s objectives for owned assets.

Prioritizing investments can help agencies better target resources toward  assets that will provide the greatest value to the agency in meeting its  missions and strategic objectives. Each of the six agencies we reviewed  has documentation describing a process for prioritizing asset  investments. For example, each agency has documentation describing a  scoring process for prioritizing projects based on specific criteria, such as  the risks an asset poses to agency operations, asset condition, project  cost, and project impact. Some agency officials told us that scoring  projects in this manner provides an objective foundation for decision  making that can lead to more consistent investment decisions and  improved transparency. In addition, each of the six agencies have  implemented, or are in the process of implementing, a centralized  decision-making process for prioritizing high value projects and  delegating approval for lower cost projects to local or regional offices. The  agencies vary, however, in the types of projects for which they use  centralized decision-making and the degree to which they use the project  scores, for example:

NASA field centers are authorized to independently prioritize and  approve certain projects with total costs under $1 million. For larger  projects, however, NASA field centers develop project scores based  on a mission dependency index measuring the relative risk an asset  poses to NASA’s missions. To prioritize and approve these larger  projects, NASA headquarters staff consider projects submitted by  centers using the mission dependency scores, asset conditions, and  other factors such as flooding risk, and make funding decisions using  NASA’s available budget.

GSA categorizes each of its assets into tiers based on the asset’s  financial performance and capital investment needs. Additionally,  since 2017 GSA has been using an Asset Repositioning Tool, which  uses more detailed data analysis to rank assets within each tier.  GSA uses these designations when prioritizing asset investments. For  projects with projected costs below the prospectus level  (approximately $3.1 million in fiscal year 2018), GSA regions use  each asset’s tier and core designation to allocate funds across the  region’s asset portfolio. For larger projects, the GSA Administrator  and GSA’s Public Buildings Service Commissioner and Deputy  Commissioner are responsible for determining the priority level of  projects.

The Corps is in the process of implementing a procedure that would  base funding decisions for maintenance and repair projects on a  portfolio-wide comparison of scores, with the goal of approving the  projects that will reduce the greatest amount of risk. This differs from  the Corps’ previous system of allocating projects’ funding to local  divisions and districts based on historical amounts and staff  judgement. To prioritize projects, the Corps calculates a score for  each project based on an assessment of the asset’s condition and the  risk the asset poses to operations. For example, the Corps measures  risk for a lock and dam component such as a gate (see fig. 5) based  on the potential economic impact of failure to users (e.g., shipping  companies that use the waterway). The Corps has a plan to  implement this process by 2020, a plan that Corps officials told us  they expect to complete on schedule.

Officials from these agencies told us that more centralized decision- making processes can provide improved standardization and clarity in the  prioritization process, particularly for high value projects, and can help  ensure that mission-critical projects receive funding. As an example,  Coast Guard officials cited a project involving a permanent repair to a  failed steam heating pipe at the Coast Guard Yard near Baltimore. They  said that this failure left several key buildings, including the Coast Guard’s  primary ship-painting facility, with intermittent service and an inability to  complete certain critical tasks. According to officials, the Coast Guard’s  centralized decision-making process scored this project as a high priority  because of the importance of the facilities involved, the impact of the  failure, and the fragility of the temporary pipe that runs on the surface  amongst other equipment (see fig. 4).

Leadership buy-in is important for organizational initiatives, and experts  told us that management support is vital to implementing an asset  management framework. However, officials from two of the six agencies  told us that they have received varying levels of leadership support for  asset management, for example:

Corps officials told us that it can be a challenge to make senior  leadership understand the value that improved asset management  practices can provide to the agency, value that they said can affect  the level of support the program gets.

Forest Service officials told us that they have faced challenges  obtaining the resources they need to develop their asset management  program.

In addition, in 2015 the Coast Guard received a report it had  commissioned to examine the level of alignment between its asset  management framework and the ISO 55000 standards. This report  concluded, among other things, that the Coast Guard has faced  challenges with strategic leadership related to asset management,  including in balancing budgetary support for long-term initiatives—like  developing an asset management framework—against short-term  infrastructure investment needs and in communicating asset  management policies.

Using quality information when making decisions about assets can help  agencies ensure that they get the most value from their assets. Experts  we spoke with cited data elements such as inventory information (e.g.,  asset age and location); condition information (e.g., how well the asset is  performing); replacement value; and level of service (e.g., how the asset  helps the agency meet its missions and strategic objectives) as important  for maximizing an asset’s value. Each of the six agencies collected  inventory and condition data on their assets, and used this data to make  decisions about its assets, for example:

The Forest Service requires its units, such as national forests and  grasslands, to inventory and verify 100 percent of their asset data  over a 5-year cycle. It has developed a standardized process for units  to collect specific types of data for this inventory, such as condition  data and deferred maintenance. According to Forest Service officials,  the data tracked in the system informs several investment decisions,  such as decisions on decommissioning of assets.

GSA developed the Building Assessment Tool Survey to assess the  overall condition of its assets and what investments they need. GSA  uses the data collected from the survey, conducted every 2 years, to  calculate a Facility Condition Index, which is the asset’s current needs  divided by its replacement value.

The Corps’ 2017 policy for operational condition assessments lays out  a methodology for assessing condition based on visible attributes and  asset performance, such as the degree to which water is leaking  around a lock gate (see fig. 5 for an example of what Corps officials  described as a minor water leak). Under this policy, Corps officials  assign a letter grade to the performance of each individual component  within a Corps’ asset. Corps officials told us that there are key  differences between this system and the maintenance management  system they used previously. For example, officials said the Corps is  now able to more easily compare the condition of its assets across the  portfolio, and grade the condition of more types of asset components,  a process that Corps officials said gives them a more complete  understanding of how their assets are performing.

Some agencies told us that they faced challenges related to collecting  and maintaining asset data, for example,

The Park Service uses data on the condition of its assets to calculate  a facility condition index. Park Service officials told us that when they  developed their asset management program in the early 2000’s they  had to change many of their existing data collection processes and  train their staff to manage the new data.

NASA field centers are required to assess assets and enter key asset  data into NASA’s database, but according to NASA Headquarters  officials, they have faced challenges collecting data from some  Centers. For example, NASA Centers are required to review and  revalidate the mission dependency scores for each of their assets  every 3 years, but Headquarters officials told us not all Centers have  entered such scores on all assets.

Promoting a Collaborative Organizational Culture

Aligning staff activities toward effective asset management and  communicating information across traditional agency boundaries can  ensure that agencies make effective decisions about their assets.  Officials from three of the agencies we reviewed told us that having staff  embrace asset management is a key to successful implementation, for  example,

Park Service officials told us they implemented an organizational  change-management process and provided additional training to staff  in key asset management areas such as data collection. Finally, they  said that they tried to prevent asset management requirements from  overwhelming the other tasks staff perform by, for example,  considering staff time constraints when developing their data  collection processes. Officials told us that they continue to streamline  these processes to reduce field staff workload.

The Corps’ Program Management Plan includes chapters on  communications strategies and organizational change management to  promote an asset management culture.

While these agency officials told us that obtaining leadership and staff  buy-in is important for asset management implementation to be effective,  officials from three of our six selected federal agencies cited managing  organizational culture changes as an implementation challenge. For  example, Corps officials told us that, prior to developing their framework,  the different functional areas in the Civil Works Program were each  responsible their own assets and were not sharing asset information  across areas. As a result, the Corps struggled with getting staff to work  together and coordinate on asset management activities. To help mitigate  this issue, Corps officials told us they have assigned dedicated asset  management staff to each regional district to facilitate communication at  the local level between staff in different functional areas, and developed a  community of practice to discuss maintenance issues including asset  management.

Evaluating and Improving Asset Management practices

Continuously evaluating the performance of an agency’s asset  management framework and implementing needed changes can optimize  the value the agency’s assets provide. According to literature we  reviewed, an asset management plan should be evaluated and  continuously improved over time to ensure it still reflects the  organization’s goals. Officials from each of the six agencies told us that  they collect data to measure the performance of their asset management  policies, and two agencies have continuous evaluation processes laid out  in their asset management plans. For example:

GSA’s asset management plan describes the data GSA uses to track  the performance of its framework, including information on operating  costs, asset condition, asset utilization, operating income, and energy.

The Corps evaluates its program by conducting maturity  assessments. According to the Corps’ 2014 Program Management  Plan, these assessments measure the maturity level of its asset  management program to review and identify gaps in achieving the  asset management system’s vision and objectives while efficiently  using resources. Corps officials told us they self-assessed their own  operations at the low end of the maturity scale, and they are using the  results of the assessment to inform revisions to their Program  Management Plan.

In addition, officials from five of the six agencies told us they are in the  process of developing or implementing major changes to their asset  management policies, including developing new policies for collecting  data, measuring asset criticality, and prioritizing investments, for example:

The Coast Guard has been developing its asset management model  since 2006 and, as previously mentioned, is in the process of  developing manuals, process guides, and technical orders to support  this model.

NASA officials told us that they are in the midst of developing new  policies and guidance for asset management based on a recently  completed business process assessment. Officials said that the new  process under development would involve more centralized planning  and management across NASA instead of the more center-based  asset management program they currently use, along with improved  data collection practices.

Park Service is undertaking a program focused on improving the  operation and maintenance of its real property portfolio. Officials told  us that there are two major pieces to this effort, one to improve  efficiency of their data collection process by streamlining and  consolidating systems to reduce the data collection and management  burden on staff, and another to expand the Park Service’s investment  strategies to reflect the agency's top priorities and strengthen the role  of the Developmental Advisory Board to ensure consistent application  of investment goals.

Experts and Practitioners Said Implementing an Asset Management Framework Can Be Challenging but Also Provides Benefits

Experts and Practitioners Cited Managing Organizational Culture Changes and Capacity as Challenges to Implementing an Asset Management Framework

According to our interviews with asset management experts and  practitioners whom we selected, organizations can face challenges  implementing an asset management framework. The two challenges  most frequently mentioned were managing both organizational culture  changes and capacity challenges, such as lack of skills and knowledge of  management practices.

Almost all the experts and over half of the practitioners we interviewed  stated that managing the organizational culture changes that result from  implementing a new asset management framework is a challenge. For  example, several experts and practitioners stated that an effective  framework requires enterprise-wide policies to manage assets and that  changing the organizational culture from one in which departments or  divisions are used to working independently to one that promotes  interdepartmental coordination and information sharing can be  challenging. Specifically, one expert representing a U.S. municipality told  us that a key implementation challenge it faced was in setting up policies  to promote more information sharing across the organization. This expert  stated that previously the organization’s data systems were not set up to  share information across departments, leading to data silos that hindered  coordination across the agency. Similarly, another expert stated that  asset management is by nature a multidisciplinary practice, which  crosses through many functional silos that are typically present in large  organizations. These silos are necessary to allow for the required level of  specialization, but if these silos do not communicate, inefficiencies and  errors in asset management result. He stated that in these organizations,  a key challenge in implementing an asset management framework is  getting officials in these different departments to agree upon and  transition to a common set of goals and direction for the framework.

Several experts and practitioners stated that obtaining the leadership and  staff buy-in that is critical for asset management implementation to be  effective can be a challenge. For example, one expert representing an  organization that had recently implemented a new asset management  framework stated that it faced resistance from some of its staff. These  employees had been working for the organization for a long time, had not  been updating their skills over time and were resistant to having to learn a  new process. In addition, it was difficult to convince staff previously  invested in the old decision-making process to adjust to a new process. A  study examining asset management practices of public agencies in New  Zealand found that obtaining buy-in and support from leadership and staff  was critical. According to this study, for asset management to be  successful, it has to become part of the organization’s culture, and for that  to happen, leadership needs to “buy-into” the process, the reason why it  is important, and the value of its outputs.

Over half of the experts and all of the practitioners we interviewed cited  capacity challenges to implementing an effective asset management  framework, such as lack of skills, knowledge of management practices,  asset data, and resources.

Some experts and practitioners stated that implementing an effective  framework might require skills and competencies that the organization  may not currently have. For example, one expert stated that  organizations might not have the in-house expertise needed to  implement a risk management approach. Similarly, a practitioner  representing an asset management firm that provides consulting  services to municipalities noted that lack of in-house expertise could  lead to the organization’s over-reliance on consultants; such over- reliance, in turn, can result in the organization’s not following through  with the new asset management practices once the consultants finish  their work.

Several experts and practitioners also stated that some organizations  struggle with collecting and managing data needed to conduct asset  management. For example, one expert stated that an important first  step to implementing an asset management framework is to develop  comprehensive records of the organization’s assets. However,  according to this expert, it is difficult to actually collect and use good  information about assets to deliver robust planning. The age of assets  can compound this challenge because with older assets sometimes  the original plans and specifications have been lost.

Several experts and practitioners also mentioned lack of sufficient  resources as an implementation challenge. Specifically, one expert  noted that obtaining funding to support asset management activities is  a challenge. This expert stated that it is more difficult to secure  funding for improving components of an asset management  framework, such as improving data collection processes, than it is to  secure funding for tangible investments in new assets. As we  previously discussed, some of the experts that we interviewed stated  that evaluating and continually improving asset management  practices is an important characteristic of an effective asset  management framework.

Addressing Culture Change and Capacity Challenges

Experts and practitioners we interviewed identified potential strategies for  addressing and overcoming implementation challenges, including  strategies for managing culture change and capacity challenges such as  lack of skills and resources. See table 2 for the strategies experts and  practitioners identified.

We have previously reported on practices and implementation steps that  can help agencies manage organizational change and transform their  cultures to meet current and emerging needs, maximize performance,  and ensure accountability. Several of these practices—such as  involving employees in the transformation effort, ensuring top leadership  drives the transformation effort, and establishing a communication  strategy—could address some of the potential change-management  challenges that agencies might face when implementing an asset  management framework. For example, in our prior work on organizational  change we have noted that a successful transformation must involve  employees and their representatives from the beginning to increase  employees’ understanding and acceptance of organizational goals and  objectives, help establish new networks and break down existing  organizational silos, and gain their ownership for the changes that are  occurring in the organization. Some of the experts we interviewed who  had implemented ISO 55000 stated that they involved employees in the  transformation effort. For example, one expert representing an  organization with recent success in implementing ISO 55000 stated that  the managers at person’s organization involved staff in the  implementation process, which helped foster ownership of the new asset  management program.

Experts and Practitioners Cited Improved Data and Other Benefits to Adopting an Asset Management Framework

Asset management experts and practitioners we interviewed cited a  number of potential benefits to adopting an asset management framework  that aligns with the six characteristics we identified, including: (1)  improved data and information about assets, (2) better-informed  decisions, and (3) financial benefits.

Improved Data and Information about Assets

About half of the experts and practitioners we interviewed stated that  implementing an asset management framework that aligns with the six  characteristics we identified previously and discussed can result in an  organization’s collecting more detailed and quality information about  assets. For example:

One expert representing a U.S. municipality that had recently  implemented a new asset management framework stated that it now  collects and tracks more detailed asset data, including information  about the condition and performance of its assets. According to this  expert, this more detailed information provides asset managers with a  better understanding of how much asset repairs actually cost in the  long term, how long repairs take, and which assets are most critical to  repair or replace. Additionally, they are in the process of integrating  this data into the organization’s capital-improvement project modeling,  a step that in turn has allowed the asset managers to make better  investment decisions. This expert also noted that collecting detailed  data about the municipality’s assets has enabled the asset managers  to provide more information to the public and to decision-makers.

Another expert we interviewed representing an organization that had  recently adopted a new asset management framework stated that its  data have improved as a result. According to this expert, prior to  implementing the program, the organization had a good inventory of  its assets, but it was missing dynamic information about condition and  performance. The managers made several changes to address this  situation, including investing in information technology systems and  infrastructure to collect and track condition data in real time. As a  result, the organization is now able to track trends in asset  performance failures and anticipate that over time it will predict future  performance failures with this information.

Most of the experts and all of the practitioners who responded to this  question stated that another benefit of implementing an asset  management framework is that it can help organizations make better-  informed asset management decisions. For example, some of these  experts and practitioners stated that having a framework that includes  improving interdepartmental coordination, collecting more detailed data,  and having a strategic approach to asset management helps  organizations make better-informed decisions about how to maintain and  invest in their assets. In addition, about one-half of the experts stated  such a framework can also help organizations better understand the risks  the organization faces and make informed decisions about the  organization’s assets. For example:

One expert stated that a benefit to implementing an asset  management framework that incorporates interdepartmental  coordination is that everyone within the organization is working to  achieve the same goals in both the short-term and long-term, which  results in better decisions and better customer service. This expert  worked with a foreign network operator to implement an asset  management system that would support the company’s goals for  increasing its electric grid capacity. He found that for different assets,  the company had adopted different asset strategies to deal with future  demand growth, approaches that resulted in misaligned asset  strategies. The differences in the individual asset strategies were  identified and realigned. If these differences had not been recognized,  this lack of coordination could have resulted in inefficient decision- making and the loss of time and money.

Another expert representing a U.S. municipality stated that by  implementing an asset management framework, the municipality’s  program managers are now able to make better-informed asset  management decisions and present information and proposals to the  city council and budget committee. In addition, this detailed  information has allowed managers to better assess the condition of  their assets across the portfolio and to compare it to industry  standards in the respective asset classes.

Over half of the experts and a third of the practitioners we interviewed  stated that effective asset management practices can result in financial  benefits to the organization, such as cost avoidance and better  management of financial resources. For example,

One expert stated that asset management can lead to a greater  understanding of budget needs and better long-term capital and  lifecycle investment planning. In addition, this expert stated overall  that asset management improves clarity in terms of where funds are  spent. This enhanced insight can then inform asset management  decision-making to produce future cost savings.

A practitioner representing a local municipality in Canada stated that  since implementing an asset management framework, the  municipality is now making better-informed decisions about  maintenance and have identified and eliminated unneeded  maintenance activities, steps that have resulted in cost savings. For  example, by analyzing condition data, the municipality identified an  optimal point in time for addressing maintenance issues on its roads  and achieved a fivefold-to-tenfold cost reduction over previous  repairs.

Government-Wide Asset Management Information Does Not Fully Reflect an Effective Asset Management Framework

Experts and Practitioners Cited ISO 55000 Standards as a Resource to Inform Agency Efforts

Experts and practitioners we interviewed most often cited the ISO 55000  standards as a useful resource that provided a solid foundation for an  asset management framework and could inform federal agencies’ asset  management efforts. Specifically, these experts and practitioners stated  that the standards are flexible and adaptable to different types of  organizations regardless of size or organization mission, applicable to  different types of assets, and internationally accepted and credible. About  half of the experts we interviewed had used the standards, and some of  these experts shared examples of how their organization’s asset  management approach improved by implementing ISO 55000. See, for  example, the experience of Pacific Gas & Electric below.

Pacific Gas and Electric’s (PG&E) experience with International Organization for  Standardization (ISO) 55001 standard:  In 2014 and 2017, PG&E, a public utility company in California, attained Publicly Available  Specification (PAS) 55 and ISO 55001 certification and recertification for its natural gas  operations. Its physical assets include gas transmission and distribution pipelines, pressure  regulator stations, gas storage facilities, and meters. According to PG&E, a key benefit from  implementing the standards is that PG&E has developed a consistent strategy for managing   its natural gas operations assets. This, according to PG&E, has enabled the utility to develop   a framework for program managers from different parts of the organization, such as finance,  operations, engineering and planning, to collaborate more effectively and work together to  wards one strategic goal rather than competing with one another for funding.  According to  PG&E, this new structure allows the program managers to prioritize investment decisions   across their asset portfolio to align with corporate objectives.

Officials from five of the six agencies we interviewed stated that they were  familiar with the ISO 55000 standards, and officials from the Corps stated  that they use selected practices from ISO 55000. Corps officials stated  that using the standard has provided several benefits to their  organization. For example, they stated that using the standard has  informed their budget process and has helped them make better-informed  decisions about critical reinvestment. In addition, it has allowed them to  develop a consistent approach to managing all of their physical assets  across different lines of business.

However, officials from four agencies raised some concerns about using  these standards. These included concerns about upfront costs and  resources needed to implement the standards and their applicability to  the federal government given the size, scope, and uniqueness of  agencies’ assets, and the diverse missions of each agency. For example,  officials from one selected agency stated that in their view, the standards  are better suited for private organizations because federal agencies have  federal requirements they need to meet, such as those for disposition of  real property, which may affect their asset management decision making.  We have previously reported on challenges federal agencies face with  disposing of assets in part due to legal requirements agencies must  follow.

Several experts and officials from one practitioner organization we  interviewed stated that they thought that federal agencies across the  government could implement the ISO 55000 standard. The experts stated  that key benefits of implementing the standard would be that it would  result in a more consistent asset management approach and help federal  agencies better manage resources. For example, one expert stated that a  key benefit of implementing the standard would be to drive federal  agencies to be better stewards of their resources by better utilizing  mission assets. In addition, some experts and practitioners also stated  that federal agencies do not need to implement the full standard or seek  certification to achieve results; agencies can decide which practices in the  standard are most relevant to their organization and implement those  practices. The ISO technical committee that produced the ISO 55000  standards is drafting a new standard on asset management in the public  sector. According to ISO, this standard, expected to be published in  December 2019, will provide guidance to any public entity at the federal,  state, or local level including more detailed information on how to  implement an asset management framework.

Government-Wide Asset Management Information Lacks Many Elements of an Effective Asset Management Framework

While OMB has issued government-wide requirements and guidance to  federal agencies related to asset management, this guidance does not  present a comprehensive approach to asset management because it  does not fully align with standards and key characteristics, nor does it  provide a clearinghouse of information on best practices for federal real  property management to agencies as required by Executive Order 13327.

As mentioned earlier, OMB has issued various government-wide policies,  guidance, and memorandums related to federal asset management. For  example, in response to Executive Order 13327 in 2004, the FRPC— chaired by OMB—developed guiding principles for agencies’ asset  management practices and for developing a real property asset  management plan. Specifically, the guidance stated that each real  property asset management plan should, among other things:  link the agency’s asset management framework to the agency’s  strategic goals and objectives, describe a process for periodically evaluating assets, and describe a process for continuously monitoring the agency’s  framework.

In addition, OMB’s Circular A-11 describes requirements for the agency  capital planning process, such as prioritizing assets to support agency  priorities and objectives, while OMB’s Circular A-123 describes risk  management requirements for agencies, and OMB’s Memorandum 18-21  describes requirements for an agency’s senior real property officers, such  as coordinating real property planning and budget formulation. Further,  the Federal Assets Sale and Transfer Act and the Federal Property  Management Reform Act—both of 2016—collectively contain provisions  related to asset management including establishing procedures for  agencies to follow when disposing of real property assets and requiring  agencies to submit data on leases to the FRPC.

Taken as a whole, the OMB guidance lacks many of the elements called  for by the ISO 55000 standards and the key characteristics we identified.  For example, the guidance:  covers several different areas of asset management but does not  direct agencies to develop a comprehensive approach to asset  management that incorporates strategic planning, capital planning,  and operations, as recommended by the ISO 55000 standards and  the key characteristics we identified. directs agencies to continuously monitor their asset management  frameworks and identify performance measures but does not direct  agencies to use the results to improve their asset management  frameworks in areas such as overall governance, decision making,  and data collection, as called for in ISO 55000 standards and the key  characteristics we identified. directs agencies to have a senior official in charge of coordinating the  real property management activities of the various parts of the  organization but does not direct agencies to demonstrate leadership  commitment to asset management or to define asset management  roles and responsibilities for each element of the agency, as called for  in ISO 55000 standards and the key characteristics we identified. directs agencies to ensure that their real property management  practices enhance their decision making, but does not direct agencies  to actively promote a culture of information sharing or ensure that the  agencies’ decisions are made on an enterprise-wide basis, as called  for in ISO 55000 standards and the key characteristics we identified. directs agencies to identify asset management goals and enhance  decision making, but does not direct agencies to establish the scope  of their asset management frameworks by, for example, determining  how the agency should group or organize the management of its  different types of assets, as called for in ISO 55000 standards.

Moreover, OMB staff told us that while the executive order’s requirements  for federal agencies to develop an asset management plan and related  processes remain in effect, OMB’s real property management focus has  shifted to the National Strategy for the Efficient Use of Real Property and  its accompanying Reduce the Footprint initiatives issued in 2015. These  initiatives emphasize efficiently managing and using space, rather than  overall asset management. OMB staff said that they view asset  management as a tactical activity, separate from broader strategic and  capital planning efforts, where agencies make operational-level policies to  support their real property portfolio. However, this approach to asset  management differs from ISO’s definition of asset management, which  encompasses both the capital-planning and asset management levels of  OMB’s policy model. Under the Reduce the Footprint initiative, federal  agencies are required to submit annual Real Property Efficiency plans  that specify their overall strategic and tactical approach to managing real  property, provide a rationale for and justify their optimum portfolio, and  direct the identification and execution of real property disposals, efficiency  improvements, and cost-savings measures. As a result, according to  OMB staff, they no longer require agencies to develop a comprehensive  asset management plan.

We recognize that reducing, and more efficiently managing government- owned and leased space are important goals. However, effective asset  management is a more comprehensive objective that seeks to best  leverage assets to meet agencies missions and strategic objectives. For  example, some agencies have high-value real property assets that are  not building space, such as those at the Corps and the Park Service. See  table 2 for examples of these types of assets at the six selected agencies  in our review. For example, the Corps has over 700 dams—the age and  criticality of which require the Corps to conduct regular maintenance and,  in some cases, major repairs to assure continued safe operation. In 2015,  the Corps estimated the cost of fixing all of its dams that need repair at  $24 billion. Similarly, in 2016, we reported that the Park Service’s  deferred maintenance for its assets averaged about $11.3 billion from  fiscal year 2009 through fiscal year 2015 and that in each of those years,  deferred maintenance for paved roads made up the largest share of the  agency’s deferred maintenance—about 44 percent. Assets classified as  paved roads in the Park Service’s database include bridges, tunnels,  paved parking areas, and paved roadways. For these and other agencies  with similar portfolios, the agencies’ Real Property Efficiency plans are  not relevant to managing the bulk of their assets, and the guidance  primarily focused on buildings and office space is of limited use. In  addition, without specific information to help all federal agencies evaluate  their current practices and develop more comprehensive asset  management approaches, federal agencies may not have the knowledge  needed to maximize the value of their limited resources.

In addition, while Executive Order 13327 requires the FRPC to provide a  clearinghouse of information on best practices for federal real property  management, this information is currently lacking from existing guidance  or other available sources. GSA officials and OMB staff stated they do not  currently have plans to compile this information. Because of this, existing  guidance falls short of what an effective asset management framework  might include. GSA officials told us that while certain agencies have  shared information on asset management at meetings of the FRPC, the  council does not take minutes or make this information readily available to  agencies outside of the meetings. Given OMB’s shift in focus, OMB staff  said that they did not plan to update their guidance. However, Standards  for Internal Control in the Federal Government state that communicating  information, such as leading practices, is vital for agencies to achieve  their objectives.

Further, government-wide information in some cases is not available,  such as information on practices federal agencies have successfully used  to conduct asset management. There is merit to having key information  on successful agency practices readily accessible for federal agencies to  use. For example, officials from three of the six agencies we spoke with  said information on best practices for asset management would be helpful  to them in developing their agencies asset management frameworks.  Such information could include practices that are described in ISO 55000  and that federal agencies have successfully used to improve asset  management. For example, one agency official stated that it would be  useful to have a compilation of asset management practices that federal  agencies use to determine if any of those practices might be applicable to  an agency. Similarly, an official from another agency stated that the  agency is currently evaluating opportunities to improve its asset  management program and that the agency would be interested in  learning more about asset management processes across the federal  government in order to inform the agency’s asset management efforts.  Without information such as these officials described, federal agencies  lack access to practices geared to them on how to develop an asset  management plan and other asset management practices.

Federal agencies collectively hold billions of dollars in real property  assets—ranging from buildings, warehouses, and roads to structures  including beacons, locks, and dams—and are charged with managing  these assets. The effective management of all of an agency’s real  property assets plays an important role in its ability to execute its mission  now and into the future. However, because existing federal asset  management guidance does not fully reflect standards and the key  characteristics, such as, directing agencies to develop a comprehensive  approach to asset management that incorporates strategic planning,  capital planning, and operations, federal agencies may not have the  knowledge needed to maximize the value of their limited resources. In  addition, because there is no central clearinghouse of information to  support agencies’ asset management efforts, as required by Executive  Order 13327, agencies may not know how best to implement asset  management activities, including using quality data to inform decisions  and prioritize investments. A reliable central source of information on  current effective asset management practices could support agencies in  making progress in their asset management efforts, helping them more  efficiently fulfill their missions and avoid unnecessarily expending  resources. Further, sharing experiences across the government could  assist agencies’ efforts to adopt, assess, and tailor an asset management  approach appropriate to their needs and to support efforts to more  strategically manage their real property portfolios.

We are making the following recommendation to OMB:  The Director of OMB should take steps to improve existing information on  federal asset management to reflect leading practices such as those  described in ISO 55000 and the key characteristics we identified and  make it readily available to federal agencies. These steps could include  updating asset management guidance and developing a clearinghouse of  information on asset management practices and successful agency  experiences. (Recommendation 1)

We provided a draft of this report for review to the Office of Management  and Budget, the General Services Administration, the National  Aeronautics and Space Administration, and the Departments of  Agriculture, Defense, Homeland Security, and the Interior.

The Forest Service within the Department of Agriculture agreed with our  findings and noted that GAO's key characteristics for effective asset  management will help the Forest Service manage their assets and  resources effectively. Further, the Forest Service stated that asset  management leading practices are critical in measuring efficiencies and  meeting strategic goals for its diverse and large portfolio. The Forest  Service’s written comments are reproduced in appendix IV. The  Departments of Homeland Security and the Interior, and the General  Services Administration provided technical comments, which we  incorporated as appropriate. The Office of Management and Budget, the  Department of Defense, and the National Aeronautics and Space  Administration had no comments on the draft report.

We are sending copies of this report to the appropriate congressional  committees, the Secretaries of the Departments of Agriculture, Defense,  Homeland Security, and the Interior; the Administrators of the General  Services Administration and National Aeronautics and Space  Administration; and the Director of the Office of Management and Budget.  In addition, the report is available at no charge on the GAO website at  http://www.gao.gov.

If you or your staff have any questions concerning this report, please  contact me at (202) 512-2834 or rectanusl@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. GAO staff who made key contributions to  this report are listed in appendix V.

As of 2016, public entities in Canada owned about $800 billion worth of  infrastructure assets including roads, bridges, buildings, waste and storm  water facilities, and public transportation assets. Municipalities owned  the majority of these assets, around 60 percent, with provincial and  federal entities owning around 38 percent and 2 percent respectively.

The federal government of Canada owns or leases approximately 20,000  properties containing about 37,000 buildings with about 300 million  square feet of floor space. In the fiscal year that ended in 2016, the  federal government spent around $7.5 billion on managing its real  property portfolio, of which about 80 percent went to operating  expenditures and about 20 percent went to capital investments such as  acquisitions and renovations. This portfolio is managed and controlled by  64 federal agencies, departments, and “Crown corporations” with primary  uses including post offices, military facilities, government offices,  employee housing, and navigation facilities such as lights. The Treasury  Board of Canada, supported by the Treasury Board Secretariat, provides  policy direction to agencies and departments for their real property assets  along with approving certain larger projects, acquisitions, and disposals.  The Treasury Board of Canada Secretariat is currently conducting a  portfolio-wide review of the federal government’s real property  management in order to develop a road map for the most efficient and  effective model for federal real property asset management. Treasury  Board Secretariat officials told us that they have preliminarily found that  the federal government does not have a government-wide asset  management strategy and faces challenges related to the availability of  current and consistent asset condition data.

Federal and Provincial Support for Municipal Asset Management

Municipalities own and manage most of Canada’s public infrastructure,  and in recent years, municipal governments have been leaders in  developing and implementing asset management frameworks. By the  early 2000’s several large cities including Hamilton, Calgary, and  Edmonton began developing frameworks to reduce costs and improve the  management of certain types of municipal assets such as those related to  water distribution and treatment. More recently, the federal government  and several provincial governments have promoted asset management  for municipalities in a variety of ways including by awarding grants and  attaching requirements to infrastructure funding. Some of these programs  have focused on small municipalities that make up the large majority of  the total but may face particular challenges in obtaining the resources to  develop and implement an asset management framework.

The federal government provides infrastructure funding to municipalities  through several programs, including the Federal Gas Tax Fund. This fund  provides around $1.5 billion in funding to municipalities each year for  projects such as water treatment, roads and bridges, broadband  connectivity, airports, and public transit, and does not require yearly  reauthorization. Each of Canada’s municipalities receives funding through  this program by formula, and funds are routed through the provinces,  which can attach their own requirements. In the 2014 set of agreements  between the federal government and the provinces, provinces were  required to institute asset management requirements for municipalities to  receive gas tax funds, and each of the provinces developed separate  requirements for municipalities under its jurisdiction. These requirements  took several forms. For example, Ontario required each municipality to  develop an asset management plan by the end of 2016 while Nova Scotia  has withheld a small portion of its total provincial gas tax allocation to use  toward developing a province-wide asset management framework for  municipalities to use.

The federal government also provides funding to municipalities for asset  management. Through the Municipal Asset Management Program,  administered by the Federation of Canadian Municipalities (FCM),  Infrastructure Canada made available $38 million over 5 years for  Canadian municipalities and partnering not-for-profit organizations to  improve municipal asset management practices. The maximum grant  amount for municipalities is $38,000. Eligible activities under this program  include assessing asset condition, collecting data on asset costs,  implementing asset management policies, training staff, and purchasing  software. FCM officials told us that, as of March 2018, they had received  253 grant applications and that, of the grants they had disbursed so far,  around:

25 percent of grantees used the funds for data projects,

15 percent to develop asset management plans,

4 percent for asset management system operations, and

60 percent for some combination of these purposes.

Canadian provinces have also taken several actions to improve asset  management practices at the municipal level by establishing  requirements for municipalities in their jurisdiction or by providing funding  programs. For example, in 2017, Ontario issued an asset management  planning regulation, which requires municipalities to develop a strategic  asset management policy by July 1, 2019, and then develop  progressively more detailed asset management planning documents in  later years. In addition to this regulation, in 2014, Ontario also introduced  a funding program for small and rural municipalities to provide long-term,  formula and application-based funding for these municipalities to develop  and repair their infrastructure. Under the program, municipalities are  required to have an asset management plan as a condition of receiving  funding. In addition, municipalities can use formula-based program funds  for certain asset management activities including purchasing software,  staff training, or direct staff activity related to asset management. In 2016,  Ontario announced plans to increase the funding available per year from  about $75 million to about $150 million in 2019.

Experiences with Implementing Asset Management Frameworks

Selected Federal Asset Management Experiences

Much of the federal government’s real property is managed by a federal  department known as Public Services and Procurement Canada (PSPC)  whose nationwide portfolio includes around 350 owned buildings and an  additional 1,200 building leases. PSPC uses a portfolio-wide asset  management framework, which begins with developing national portfolio  strategies and plans every 5 years. Staff in each of PSPC’s five regional  offices then use these plans to develop regional and community-based  portfolio strategies and plans, which then inform annual management  plans for each PSPC asset. To determine how to best allocate funds  across its portfolio of assets, PSPC places each of its assets into one of  four tiers based on three major criteria: (1) the asset’s strategic  importance to PSPC’s portfolio as measured by criteria such as the  asset’s location and design, (2) the asset’s operating and functional  performance such as cost per unit area, and (3) the asset’s condition  based on a metric called the Liability Condition Index, which measures  the risk an asset poses to continuing operations and occupant safety.  Using this method, PSPC designates its highest tier assets as those that  have excellent financial performance, that have non-financial attributes  that support PSPC’s objectives, and that are not expected to need major  capital investments in the next 5 years. The lowest tier assets have poor  performance and are in need of either major investments or disposal in  the next 5 to 10 years.

PSPC officials told us that they are in the midst of making major changes  to their asset management framework, including by moving to a  component-based system of accounting where they will treat each asset  as 12 components, including 11 for the building such as roofs or heating  and air conditioning systems, and 1 for tenant equipment. Additionally,  PSPC plans to move to more modern enterprise systems to eliminate  paper records and improve the quality of the data they use to make  budgeting decisions. Officials said that they consider the ISO 55000  requirements when evaluating their asset management framework, but  they also use other best practices from the private sector that they said  better suit their needs by providing more detailed information on how to  develop and implement the various elements of an asset management  framework.

Selected Municipal Asset Management Experiences

Over the past 20 years, several Canadian municipalities have developed  detailed asset management frameworks to improve management  efficiency and cost-effectiveness as well as to obtain improved levels of  service from municipal infrastructure. In the late 1990’s, the City of  Hamilton, Ontario, began developing an asset management framework  for its core municipal infrastructure assets, and in 2001, the city  established an office dedicated to asset management within its public  works department, which produced its most recent municipal asset  management plan for public works in 2014. This plan sets a strategic  vision and goals for the asset management program, which are designed  to align with the city’s overall strategic plan, capital and operating  budgets, master plan, and other business documents, and describes how  the city’s asset management activities will support the objectives laid out  in those documents. Additionally, the asset management plan provides an  overview of the current state of Hamilton’s infrastructure assets in four  categories: drinking water supply, wastewater management, storm water  management, and roads and bridges. The plan states the total value of  the assets in each category and, the condition of those assets and has an  indicator of the recent trends in the condition of those assets. The plan  also defines the levels of service Hamilton aims to provide in each of the  four main asset categories and sets goals for each category such as  safety, reliability, regulatory compliance, and customer service. Next, the  plan defines an asset management strategy for the city, which includes  taking an inventory of assets, measuring asset condition, assessing risk,  measuring the performance of the asset management framework, making  coordinated citywide decisions, and planning for capital investments.  Finally, the document contains a plan for managing each of the four main  asset categories over their entire life cycles.

Hamilton officials stressed the importance of collecting and using quality  data when deciding where and when to allocate resources. They told us  that the data they have collected under their asset management  framework have allowed them to make better-informed investment  decisions, and have provided them with the information necessary to  make business cases for investment and to better defend their decisions  when they solicit funding from the City Council. For example, officials  described how the city assesses the condition of its road network and  uses the results to prioritize investment in its assets. To assess the  condition of each road, the city uses a 100-point scale where, for  example, above 60 indicates the road is only in need of preventative  maintenance and 20 or less indicates the road is in need of total  reconstruction. Officials said that a total reconstruction could cost ten  times as much as a minor rehabilitation and that the window of time  between when a road needs only a minor rehabilitation and a full  reconstruction is only around 10 years. Because of this, Hamilton officials  said that it is important to conduct rehabilitation on roads and other  infrastructure assets before they deteriorate to the point where they either  fail or are in need of a full rehabilitation. For example, Hamilton undertook  a major re-lining project for a storm sewer that was in danger of complete  collapse, as shown in fig. 6. Officials told us this project would preserve  storm sewer service at significantly lower cost than waiting for the  structure to fail or completely rebuilding it, either of which would have  been cost prohibitive. Additionally, Hamilton officials noted that they do  not need all of their assets to be at a 100 rating and that their asset  management framework directs them to allow some assets to deteriorate  to a certain extent while rehabilitating others by making investment  decisions on a system-wide service basis, as opposed to an individual  project basis.

The City of Calgary, Alberta, began developing its asset management  framework in the early 2000’s, first focusing on the Calgary’s municipal  water-management assets because they are expensive to maintain and  are only funded from water utility customer bills, as opposed to tax  revenue. City officials told us that the primary impetus for initially  exploring asset management was to be able to maintain levels of service  as the city rapidly expanded in both population and physical size; this  expansion forced Calgary to make major investments in the water  system. Since that time, Calgary has expanded its asset management  framework to include nearly all of its assets, including its software,  bridges, public recreation facilities, and even its trees. Between 2008 and  2010, the Calgary took steps to align its asset management to its  business processes, steps that culminated with the development of the  city’s first citywide asset management policy in 2010.

Calgary officials told us that between 2004 and 2008 they worked to align  their initial asset management framework with the British Standards  Institution Publicly Available Specification 55 (PAS 55). After this  experience, officials from Calgary participated in the development of the  ISO 55000 standards and provided the Standards Committee information  about tactics for asset management such as policy development and  business strategy. When the ISO 55000 standards were officially  published in 2014, the city began working on aligning their asset  management framework with the new standards, a process that led to a  new framework including a strategic asset management plan, which city  officials published in 2016. Calgary officials said that aligning their asset  management framework with the ISO 55000 standards has given them  support from the city’s top management and has improved their  relationship with the various bodies that audit the city’s operations  because it gives them a common language to use when describing  management processes. Calgary officials told us that the ISO 55000  standards are credible internationally recognized best practices and that  in practice they are a good guide for developing an asset management  framework. However, Calgary is not planning on certifying its operations  to the ISO 55000 standard because officials told us that they are not  required to be certified; certification is expensive and needs to be  repeated; and they are unsure of what additional value certification to the  standards would provide.

The City of Ottawa, Ontario, began developing its asset management  framework in 2001. Since that time, the city’s asset management  framework has gone through several versions, the most recent of which it  developed beginning in 2012 based on PAS 55. Ottawa officials told us  that implementing their asset management framework has allowed them  to collect better information about their assets and improve their long-term  financial-infrastructure-planning process. While Ottawa officials  developed and implemented an asset management framework, they have  a number of ongoing initiatives to further develop some areas of the  framework. For example, officials said that they consider determining the  levels of service to be provided by each asset class the most difficult  aspect of asset management, especially for those assets that do not  necessarily provide a measureable service. Ottawa officials are working  on ways to better measure the services each of their assets provides and  the levels of risk that each asset poses to these service levels. Officials  said that accurately measuring service and risk levels is critical for their  financial planning and will allow them to improve how they prioritize  funding and ensure that funds are spent on priority assets. See fig. 7 for  an example of an asset officials said was intended to improve levels of  service for Ottawa’s pedestrian multi-use pathways. Another ongoing  initiative is an updated report card for the condition of the city’s assets,  which officials said they use to transparently communicate to  stakeholders the current state of their infrastructure.

Appendix II: Objectives, Scope, and Methodology

This report discusses: (1) key characteristics of an effective asset  management framework, and how selected federal agencies’ frameworks  reflect these characteristics; (2) views of selected asset management  experts and practitioners on challenges and benefits to implementing an  asset management framework; and (3) whether government-wide asset  management guidance and information reflect standards and key  characteristics of an effective asset management framework.

To obtain information for all three objectives, we reviewed relevant  literature, including academic and industry literature on asset  management, publications describing asset management leading  practices, and the ISO 55000 and related standards. We selected the ISO  55000 standards because they are international consensus standards on  asset management practices. We also reviewed laws governing federal  real-property asset management, Office of Management and Budget’s  (OMB) guidance and prior GAO reports describing agencies’ real-property  management and efforts to more efficiently manage their real property  portfolios.

In addition, to address all three objectives, we collected information from  and interviewed a judgmental sample of 22 experts to obtain their  perspectives on various asset management issues. To identify possible  experts to interview, we first worked to identify relevant literature  published in the topic area. Specifically we searched in October 2017 for  scholarly and industry trade articles and other publications that examined  effective asset management practices. We limited our search to studies  and articles published from January 2014 through January 2017. From  this search, we screened and identified studies and articles for relevance  to our report and selected those that discussed asset management  practices and the ISO 55000 standards. In addition, we conducted  preliminary interviews with selected asset management practitioners, who  included representatives from public and private organizations  knowledgeable about asset management practices, to learn about key  asset management issues and obtain recommendations about experts in  this field. Through these methods, we identified a total of 82 possible  candidates to interview.

To ensure a diversity of perspectives, we used the following criteria to  assess and select a sample from this group: type and depth of an expert’s  experience, affiliations with asset management trade associations,  experience with government asset management practices, relevance of  published work to our topic, and recommendations from other entities.   We selected a total of 22 experts representing academia, private  industries, foreign private and public entities, and entities that have  implemented ISO 55000. See table 3 for a list of experts whom we  interviewed. Their views on asset management practices are not  generalizable to those of all experts; however, we were able to secure the  participation of a diverse, highly qualified group of experts and believe  their views provide a balanced and informed perspective on the topics  discussed.

We interviewed the selected 22 experts between January 2018 and  February 2018 and used a semi-structured interview format with open- ended questions for those interviews. We identified the topics that each of  the experts would be able to respond to, based on the individual’s area of  expertise and each responded to questions in the semi-structured  interview guide in the areas in which they had specific knowledge. During  these interviews, we asked for experts’ views on key characteristics of an  effective asset management system, opportunities for improving federal  agencies’ asset management approaches, experiences with using ISO  55000, and their views on the applicability of ISO 55000 to the federal  government. After conducting these semi-structured interviews, we  conducted a content analysis of the interview data. To conduct this  analysis, we organized the responses by interview question, and then one  GAO analyst reviewed all of the interview responses to questions and  identified recurring themes. Using the identified themes, the analyst then  developed categories for coding the interview responses and  independently coded the responses for each question. To ensure the  accuracy of our content analysis, a second GAO analyst reviewed the first  analyst’s coding of the interview responses, and then the two analysts  reconciled any discrepancies.

To identify key characteristics of an effective asset management  framework and how selected federal agencies’ frameworks reflect these  characteristics, we obtained and analyzed the ISO 55000 standards,  which include leading practices, and asset management literature, and  we analyzed information collected from our interviews with experts. We  synthesized information from these sources to identify six commonly  mentioned characteristics. We then selected six bureau-level and  independent agencies as case studies and compared these agencies’  asset management frameworks to the six key characteristics that we  identified. Because the agencies are not required to follow the key  characteristics we identified, we did not evaluate the extent to which  agencies’ efforts met these characteristics. Instead, we provide this  information as illustrative examples of how the agencies’ asset  management practices reflect these characteristics.

We used a variety of criteria to select these agencies, such as: whether  the agency was among the agencies that had the largest real property  portfolio; replacement value and total square footage of the portfolio;  extent to which the bureau or independent agency had a notable asset  management program as described by recommendations from  practitioners we interviewed; and whether the agency was implementing  the ISO 55000 standards. In order to ensure that we had a diversity of  experiences and expertise from across the federal government, we  limited our selection to independent agencies and one bureau-level entity  from each cabinet department. Based on these factors, we selected: (1)  U.S. Coast Guard (Coast Guard); (2) U.S. Army Corps of Engineers  (Corps); (3) General Service Administration (GSA); (4) National  Aeronautics and Space Administration (NASA); (5) National Parks  Service (Park Service); and (6) United States Forest Service (Forest  Service). While our case-study agencies are not generalizable to all Chief  Financial Officers Act (CFO) agencies, they provide a range of examples  of agencies’ experiences with implementing asset management  practices.

We reviewed documents and interviewed officials from each of the six  selected agencies to learn about the agency’s practices, its experiences  with the ISO 55000 standards, and challenges it has faced in conducting  asset management. In addition, we analyzed fiscal year 2017 Federal  Real Property Profile (FRPP) data, as managed by GSA, to obtain  information about each agency’s portfolio, such as the number of real  property assets and total asset-replacement value, and to obtain  examples of the types of buildings and structures owned by the six  selected agencies. The Corps and Coast Guard noted small differences  between our analysis of the FRPP data and the data from their reporting  systems. For example, the Corps reported having 139,744 real property  assets as of August 2018 with an estimated asset replacement value  $273.4 billion as of September 2017. In addition, the Coast Guard  reported 44,226 real property assets with an estimated asset replacement  value of $17.6 billion as of September 2017. To ensure consistency, and  because these differences were small, we relied on FRPP data rather  than data from these agencies’ reporting systems.

We conducted a data reliability assessment of the FRPP data by  reviewing documentation, interviewing GSA officials, and verifying data  with officials from our selected agencies, and concluded the data were  reliable for the purposes of our reporting objectives. We also visited four  locations from our case study agencies to discuss and view examples of  how our selected case-study agencies are conducting asset  management. Specifically, we visited the Park Service’s Santa Monica,  CA, Mountains National Recreation Area; the Coast Guard’s Baltimore  Shipyard in Curtis Bay, MD; the Corps’ Washington Aqueduct in  Washington, D.C.; and the Brandon Road Lock and Dam in Joliet, IL. We  selected these locations based on several factors including geographic  and agency diversity, costs to travel to location, recommendations from  officials at our case study agencies, and extent to which the location  provided illustrative examples of how federal agencies are managing their  assets.

To determine the 32 experts’ and practitioners’ views on challenges and  benefits to implementing an asset management framework, we analyzed  information collected from our interviews with the 22 experts previously  mentioned. We also reviewed documents from and interviewed asset  management practitioners from 10 additional organizations familiar with  asset management practices and the ISO 55000 standards. The 10  organizations included representatives from private industry, one federal  agency and local municipalities in Canada. We selected these additional  10 organizations by reviewing published materials related to asset  management and referrals from our preliminary interviews. We  interviewed the 32 experts and practitioners about their views on  challenges and benefits to conducting asset management, ISO 55000,  and illustrative examples of practices in other countries. The information  gathered from our interviews with experts and practitioners is not  generalizable but is useful in illustrating a range of views on asset  management issues. See table 4 for a list of organizations we  interviewed.

To assess whether government-wide guidance and information on asset  management reflect standards and key characteristics of an effective  asset management framework, we reviewed current federal guidance and  evaluated the extent to which this guidance incorporates practices  described in the ISO 55000 standards and the six key characteristics of  an effective asset management framework that we identified. Specifically,  we reviewed the Federal Real Property Council’s (FRPC’s) 2004  Guidance for Improved Asset Management, OMB’s, National Strategy for  the Efficient Use of Real Property 2015-2020: Reducing the Federal  Portfolio through Improved Space Utilization, Consolidation, and Disposal  and OMB’s Implementation of OMB Memorandum M-12-12 Section 3:  Reduce the Footprint, Management Procedures Memorandum No. 2015- 01. We also reviewed other OMB guidance, such as OMB’s 2017 Capital Programming Guide, OMB’s Circular A-123, OMB’s Memorandum 18- 21 and other guidance. In addition, we reviewed asset management requirements in the Federal Real Property Management Act of 2016 and in the Federal Assets Sale Transfer Act of 2016. We interviewed OMB and GSA officials about their role in supporting federal agencies’ asset  management efforts. In addition, we obtained information from our  interviews with the 32 asset management experts and practitioners about  practices that could be applicable to the federal government and  opportunities to improve federal agencies’ asset management  approaches.

Lastly, we obtained documents and, as previously discussed, interviewed  representatives from private organizations, federal agencies, and local  municipalities in Canada—a country with over 20 years of experience in  conducting asset management—to learn about their asset management  practices, including their use of the ISO 55000 standard. We also  conducted a site visit to Canada to learn more about their practices and to  view examples of assets in local municipalities. See appendix I for more  information on Canada’s asset management practices.

We conducted this performance audit from August 2017 to November  2018 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

Appendix III: Key Elements of the International Organization for Standardization (ISO) 55000 Standards

Appendix IV: Comments from the Department of Agriculture

Appendix V: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Amelia Shachoy, Assistant  Director; Maria Mercado, Analyst-in-Charge; Sarah Arnett; Melissa  Bodeau; Leia Dickerson; Alex Fedell; Geoffrey Hamilton; Terence Lam;  Malika Rice; Kelly Rubin; and Tasha Straszewski made key contributions  to this report.

The federal government spends billions of dollars to operate and maintain its real property assets, which include buildings, roads, and bridges. Agencies are responsible for managing these assets efficiently and cost-effectively.

We identified 6 key characteristics of effective asset management. For example, we found that leadership support—with leaders clearly articulating their support and providing resources—can help.

The federal information available to help agencies maximize the value of their assets wasn't consistent with leading practices and didn't reflect the key characteristics we identified, so we recommended improving it.