Saturday, July 13, 2024

Invest to save and ease financial pressure on councils

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Local governments are facing a complex financial landscape, characterised by revenue
constraints, growing expenditure pressures, and increasing demands for services.

Earlier this year, councils in Victoria, Australia, called for an independent review of the rate
capping system, after the state government announced council rates would be capped at 2.75% for the 2024-2025 financial year, down from the previous benchmark of 3.5%.

While great news in the short-term for citizens, alleviating strain on household budgets, it was a tough blow for Victorian councils, adding further financial pressure when they are already struggling with spiralling costs on multiple fronts.

Rate capping policies have presented significant challenges for local governments across
Australia and New Zealand, constraining their ability to generate additional revenue.

In addition, inflationary pressures, increased labour costs, and escalating prices of materials and services are driving up operational expenses for local governments. Balancing these rising costs with limited revenue growth poses a significant financial challenge.

To maintain or not maintain assets, that is the question

And then there’s the infrastructure backlogs. Local governments face difficult decisions
regarding asset maintenance, renewal, and investment. Assets such as roads, bridges,
drainage systems, and community facilities require substantial investment for ongoing upkeep and upgrades to ensure functionality, safety, and longevity. However, limited financial resources hinder councils’ ability to address deferred maintenance backlogs and undertake essential asset renewal projects, compromising their ability to deliver high-quality services, meet community expectations, and support economic development initiatives.

So what’s a local government to do?

The answer: invest to save.

Invest to save

Investing in assets is essential for local governments to achieve long-term financial
sustainability and operational efficiency. Neglecting infrastructure can lead to deterioration,
requiring extensive and expensive rehabilitation or replacement. By investing in proactive
regular maintenance and upgrades, councils can extend the lifespan of assets, prevent costly breakdowns and repairs, and minimise downtime, ultimately saving significant sums in maintenance costs.

This is easier said than done. To know where the money needs to be invested, both now, and in the future, councils need to have solid, good quality asset information to rely on to make these informed decisions.

Again, it comes down to local governments being willing to invest to save.

Smart tech improves cost savings over time

Investing in modern, high-quality asset management software offers local governments a
strategic advantage in asset planning for the long-term and achieving significant cost savings over time. While upfront costs may seem daunting, the long-term benefits of strategic asset management software far outweigh the initial investment.

Centralising all data related to asset inventory, maintenance schedules and project lifecycle
management creates a single source of truth, enabling local governments to assess asset
condition, performance and risk factors, as well as aiding in long-term planning and prioritisation of maintenance and renewal activities. Using one holistic view can increase asset life, reduce risk and build operational efficiency into the entire asset lifecycle.

Data-driven insights enable informed decision-making, maximising the efficiency of resource allocation and ensuring optimal use of local government funds. Asset management software facilitates predictive maintenance capabilities, allowing local governments to anticipate asset failures and schedule proactive maintenance interventions. By addressing maintenance needs before they escalate into costly breakdowns, local governments can reduce overall maintenance costs in the long run.

City of Canning in Perth, Australia, has seen great gains in utilising TechnologyOne’s Enterprise Asset Management product Strategic Asset Management to plan and allocate funds accordingly.

“Strategic Asset Management gave us a long-term outlook. We were able to understand our
assets and inform our long-term financial plan. We wanted to ensure that over a 10-year period, we were planning to put aside enough money to service those assets’ needs. That became the real focus and benefit that we got from the product,” said Kevin Gill, former Leader Asset Management, City of Canning.

“By understanding what our asset needs were, we were able to then apply them to the services that are delivered. Strategic Asset Management allows you to understand how much you need to either maintain or modify your existing levels of service,” said Mr Gill.

In the face of financial strains and evolving challenges, investing in modern asset management software is essential for local governments to achieve long-term cost savings, enhance service delivery, and ensure the sustainability of essential infrastructure.

TechnologyOne’s Enterprise Asset Management provides local governments with full visibility into the cost and performance of every asset, enabling local governments to make informed, evidence-based asset investment decisions guided by comprehensive data insights to fulfil long-term infrastructure objectives.

Optimise your local government’s asset management with a single source of truth with
Technology One’s Enterprise Asset Management solution. Transition faster than ever before
with SaaS Plus to get a streamlined and integrated asset management solution and unleash efficiency to transform the way you serve your community.

Visit www.technologyonecorp.com/products/asset-management/experience-eam to find out how.

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