The developments in asset management trend witnessed in the UK is not unique. The same experience is evident in other parts of the world too. The most notable trends have been in countries such as New Zealand, Australia and the United States of America. Trends in asset management development in these countries are highlighted in this section.
2.6.4.1 Asset Management Development in New Zealand, Australia
The development of asset management in New Zealand was prompted by the need to tackle the massive fiscal problems and an inefficient economy that was negatively affected by extensive local authority involvement in economic activities. In response, the country has since the 1980s undergone a period of far reaching structural reforms aimed at improving the internal efficiency of the economy while simultaneously bringing greater stability to the macro economy (Worley, 2000). With regard to the local authority, reform was aimed at both reducing the role of government in the provision of goods and services, and improving the efficiency of the local authority. These reform measures also influenced the development of asset management in local authorities. Worley (2000) states that there were a number of key influences on the development of improved asset management practices in local authority in New Zealand. These influences included legal reform in accounting practices, the need to curb local authority organisation spending, requirement on the part of local authorities to produce asset management plans, and technological changes. Regarding legal reform of accounting practices, statutes were introduced requiring public bodies including local authorities to adopt accrual accounting techniques as well as implementing
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transparent and prudent financial management and long-term financial planning. These changes in accounting practices contributed to asset management development as it became a statutory requirement to recognise the depreciation and replacement of assets in the accounts. The growth in local authority spending further spurred asset management development in New Zealand. According to Worley (op cit), the government pressed local authorities to reign in the growing proportion of local authority expenditure on replacement and maintenance of ageing and decaying infrastructure assets and concerns over asset failures and associated cost implications. Rather than the focus being on cost alone, local authorities had to consider changes in management practice to achieve the same asset management objective. Adoption of asset management practices was also influenced by changes in reporting in financial statements. It became a requirement to include infrastructure assets in financial statements. Similarly, the requirement for local authorities to produce and adopt an "asset management improvement plan" aided asset management development in these organisations. Changes in information technology also played a significant part in asset management development in local authority in New Zealand. In particular, advances in information systems enabled local authorities to collect and manage asset inventory information.
Australia, on the other hand, has not implemented economic reforms to the degree that New Zealand has. However, both federal and state governments have implemented strategies aimed at securing gains in efficiency and productivity (Worley, 2000). In Australia, the asset management concept was tied into local authorities by Australian Accounting Standard (AAS27) "Financial Reporting by Local authority‛ which requires infrastructure assets to be accounted for and included in financial statements (Shah, Tan, and Kumar (2004). This reporting requirement also affected property assets and contributed to asset management development in local authorities. The need to regulate prices charged by local authorities was also a factor in asset management development in local authorities in Australia. Central government passed legislation which regulated the pricing of municipal services. This has
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led to local authorities developing more robust asset management practices, and detailed asset management plans, to support pricing audits undertaken by government regulators. Accounting standards and local authority financial reporting requirements have been a key driver of asset management in New Zealand and Australia. A key success factor in New Zealand, and to a lesser extent in Australia, has been local authority led initiatives including guideline development, training, and asset management information systems development.
2.6.4.2 Asset Management Development in the USA
The growing public and consumer scepticism and demands for greater accountability from the government bodies responsible for major capital investments in infrastructure and service provision, amongst others, are considered to be behind the impetus for the emergence of asset management especially in the USA. In the USA this has led to a more asset-based approach to state financial reporting of facility condition and asset valuation. The poor state of infrastructure asset in the USA is considered to be a contributory factor towards the development of asset management. Cagle (2003) states that by early 2000s the USA infrastructure asset base was characterised by deteriorated condition requiring significant investment in excess of $900 billion to renew and annually operate and maintain the assets.
As a result of the enormous expected financial burden and the consequences of asset failure, a number of forces coalesced to create the impetus for broad asset management implementation in order to address the identified problems. The forces included legal enforcements compelling local authorities to remedy asset failures rather than be penalised financially for breaches. The enforcement remedies have included local authorities being asked to develop asset registers, asset condition assessment, repair and maintenance plans, and similar asset management solutions. In addition, government regulation enabled local authorities to design and implement best practice management systems rather than be compelled to do so. Furthermore, in the late 1990s government legislation specified some form of asset management as a precondition for receiving federal funds for infrastructure
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investment by local authorities. Further, the adoption of ‚Government Accounting Standards Board Statement (GASB) No. 34‛ in the 1990s by state and local authorities requiring the inclusion of all infrastructure assets in their statements of net assets has been another important contributory factor. Finally, industry and professional associations strongly advocated asset management to address problems associated with the decline in infrastructure quality and condition and the growing financial burden. At federal government level, the risk of asset failure of government assets was a spur to the development of asset management. According to Nielsen (2007) in the early 2000s the federal government of the USA became seriously concerned that its vast property asset base, extending to 3.7 billion square feet, was aging and in deteriorating conditions due to years of under-funded maintenance. The deteriorated state of property assets posed serious risk of failure. In order to manage these potential risks, in 2004 the president of the United States of America signed Presidential Executive Order (E.O.) 13327. The Order requires that all federal agencies develop and implement Asset Management Plans (AMPs). Through the Order federal agencies are obliged to manage their assets in the most efficient and effective manner. The results of all these efforts are that consensus is building on the meaning of asset management leading to the development of internationally accepted standard for asset management practices. The consensus has helped in the understanding that organisational management theories are the theoretical basis upon which asset management rests.