Management of capital assets by local governments: an assessment and benchmarking survey
Abstract
There is a growing recognition of the importance of government-owned capital assets, both conceptually and in practice, in large part due to the 2008 global financial crisis. However, a sizeable gap remains between the academic and professional “universe of knowledge” surrounding government asset management, and the actual asset management practiced by governments. In particular, the majority of governments around the world are wholly uninformed when it comes to good asset management. The purpose of this paper is to reduce this gap and suggest an instrument specifically for local governments, for the evaluation of their asset management, in order to help them to identify the weakest elements of asset management and thus focus limited resources on improving these elements. The instrument consists of essentially a composite image of good asset management practices for three main asset types: buildings, land, and infrastructure. The instrument specifies each asset management practice by its key characteristics and then converts each characteristic into a survey question. Answers are scored and a total score for each asset type is calculated. The assessment instrument can be used by local governments, their advisers, and by researchers interested in comparative analysis of asset management in different jurisdictions or countries.
Keyword : government-owned property, asset management, assessment, local government, land management, infrastructure management
How to Cite
Kaganova, O., & Telgarsky, J. (2018). Management of capital assets by local governments: an assessment and benchmarking survey. International Journal of Strategic Property Management, 22(2), 143-156. https://doi.org/10.3846/ijspm.2018.445
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Kaganova, O. (2010/2011). Government property assets in the wake of the dual crisis in public finance and real estate: an opportunity to do better going forward?. Real Estate Issues, 35(3), 31-42.
Kaganova, O. (2008). Integrating public property in the realm of fiscal transparency and anti-corruption efforts. In P. Gábor (Ed.), Finding the money: public accountability and service efficiency through fiscal transparency (209–222). Budapest: Local Government and Public Service Reform Initiative/Open Society Institute.
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Kaganova, O. (2012). Valuation and pricing of government land and property: a tip of a growing iceberg. Real Estate Issues, 37(1), 9-16.
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Kaganova, O., & Nayaar-Stone, R. (2000). Municipal real property asset management: a overview of world experience, trends and financial implications. Journal of Real Estate Portfolio Management, 6(4), 307-326.
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Peterson, G. E. (2006). Municipal asset management: a balance sheet perspective. In O. Kaganova, J. McKellar (Eds.), Managing Government Property Assets: International Experiences. Washington, D.C.: The Urban Institute Press.
Peterson, G. E., & Thawakar, V. (2013). Capturing the value of public land for urban infrastructure. World Bank, Policy Research Working Paper # 6665.
Peterson, G., & Kaganova, O. (2010). Integrating land financing in subnational fiscal management. World Bank, Policy Research Working Paper # 5409.
Phelps, A. (2011). Municipal property asset management – a comparative study of UK and Russia. International Journal of Strategic Property Management, 15(4), 416-437. https://doi.org/10.3846/1648715X.2011.642537
RICS. (2013). The global infrastructure challenge: the role of PPP in a new financial and economic paradigm. Royal Institution of Chartered Surveyors (RICS).
Schulte, K.-W., & Ecke, C. (2006). Public real estate management in Germany: an empirical study. In O. Kaganova & J. McKellar (Eds.), Managing Government Property Assets: International Experiences. Washington, D.C.: The Urban Institute Press.
Shardy, A., Razak, A. A., & Pakir, A. H. K. (2011). The characteristics of real estate assets management practice in the Malaysian Federal Government. Journal of Corporate Real Estate, 13(1), 16-35. https://doi.org/10.1108/14630011111120323
Towers, F. (2013). National Executive Forum on Public Property Benchmarking Presentation. Annual General Meeting of Federal-Provincial-Territorial Deputy Heads of Public Works. Canada, August 2013.
Utter, M. A. (1989). Public asset management. Economic Development Commentary 4–11.
Vanier, D. J., & Rahman, S. (2004). Municipal infrastructure investment planning. National Research Council Canada.
Wynne, A. (2008). Accrual accounting for the public sector – a fad that has had its day?. International Journal on Governmental Financial Management, 8(2), 117-132.
Ye, L., & Wu, A. M. (2014). Urbanization, land development, and land financing: evidence from Chinese cities. Journal of Urban Affairs, 36(S1), 354-368. https://doi.org/10.1111/juaf.12105
Asian Development Bank. (2013). Water utility asset management a guide for development practitioners. Retrieved from http://www.adb.org/sites/default/files/institutional-docu-ment/42451/files/water-utility-asset-management-guide.pdf
Audier, A., Bard, S., & Robieux, L. (2014). The hidden value of government assets. The Boston Consulting Group. Retrieved from https://www.bcgperspectives.com/content/articles/public_sec-tor_cost_efficiency_asset_optimization_hidden_value_govern-ment_assets/
Audit Commission (UK). (1988). Local authority property – a management overview. Her Majesty’s Stationary Office (HMSO), London.
Audit Commission (UK). (2000). Hot property – getting the best from local authority assets. London: The Audit Commission.
Audit Commission (UK). (2009). Room for improvement – strategic asset management in local government. National Report. London: The Audit Commission.
Bentley, D. (2014). Performance comparison and benchmarking in local government: property and construction, an essential guide. For the Federation of Property Societies.
Berahim, N., Jaafar, M. N., & Zainudin, A. Z. (2015). An audit remark on Malaysian local authorities immovable asset management. Journal of Management Research, 7(2), 218-228. https://doi.org/10.5296/jmr.v7i2.6948
Bond, S., & Dent, P. (1998). Efficient management of public sector assets. Journal of Property Valuation and Investment, 16(4), 369-385. https://doi.org/10.1108/14635789810228169
Bova, E., Dippelsman, R., Rideout, K., & Schaechter, A. (2013). Another look at governments’ balance sheets: the role of non-financial assets. International Monetary Fund.
Canadian Infrastructure Report Card. (2012). Municipal roads and water systems. Vol. 1. Retrieved from http://www.mhca.mb.ca/canadian-infrastructure-report-card-volume-1-2012-municipal-roads-and-water-systems/
Christiaens, J. (2004). Capital assets in governmental accounting reforms: comparing Flemish technical issues with international standards. European Accounting Review, 13(4), 743-770. Retrieved from https://doi.org/10.1080/0963818042000237133
City of Portland. (2010). Citywide assets report. Retrieved from https://www.portlandoregon.gov/bps/article/352969
City of Portland. (2015). Citywide assets report. Retrieved from https://www.portlandoregon.gov/cbo/article/567961
Conway, F. (2006). Federal asset management in Australia. In O. Kaganova, J. McKellar (Eds.), Managing Government Property Assets: International Experiences. Washington, D.C.: The Urban Institute Press.
Conway, F., Kaganova, O., & McKellar, J. (2006). A “Composite Image” of central government asset management. In O. Kaganova, J. McKellar (Eds.), Managing Government Property Assets: International Experiences. Washington, D.C.: The Urban Institute Press.
Deloitte. (2011). Comparing public real estate management in European cities. Retrieved from http://www.mondaq.com/uk/x/156662/Market+Commentaries/Comparing+Public+Real+Estate+Management+In+European+Cities
Detter, D., & Folster, S. (2015). The public wealth of nations: how management of public assets can boost or bust economic growth. Palgrave Macmillan. https://doi.org/10.1057/9781137519863
Dow, P., Gilles, I., Nichols, G., & Polen, S. (2006). New Zealand: state real property asset management. In O. Kaganova, J. McKellar (Eds.), Managing Government Property Assets: International Experiences. Washington, D.C.: The Urban Institute Press.
Federation of Canadian Municipalities and National Research Council. (2006). Decision making and investment planning best practice DMIP 7 – Managing infrastructure assets.
Federation of Canadian Municipalities. (2002). A guide to sustainable asset management for Canadian municipalities.Federation of Canadian Municipalities. (2007). Danger ahead: the coming collapse of Canada’s municipal infrastructure. Retrieved from http://www.fcm.ca/Documents/reports/Danger_Ahead_The_coming_collapse_of_Canadas_municipal_infra-structure_EN.pdf
General Accountability Office. (2003). High-risk series. An update. GAO-03-119, January 2003.
General Accountability Office. (2012). Federal real property: national strategy and better data needed to improve management of excess and underutilized property. GAO-12-645, June 2012.
General Accountability Office. (2015). Federal real property: GSA needs to determine its progress toward long-term sustainability of its portfolio. GAO-15-609, July 2015.
Gibson, V. (1994). Strategic property management: how can local authorities develop a property strategy?. Property Management, 12(3), 9-14. https://doi.org/10.1108/02637479410064223
Grant, A., & Skilling, D. (2014). Beyond budgeting: capturing value from the government’s asset portfolio. McKinsey Center for Government, September 2014.
Gross, M., & Źróbek, R. (2013). Public real estate management in post-socialist countries. Real Estate Management and Valuation, 21(4), 11-16. https://doi.org/10.2478/remav-2013-0032
Hanis, M. H., Trigunarsyah, B., & Susilawati, C. (2010). Elements of public asset management framework for local governments in developing countries. Proceedings of the 8th International Conference on Construction and Real Estate Management (ICCREM 2010) (pp. 1-6), 1–3 December 2010. Brisbane, Australia.
Kaganova, O. (2010/2011). Government property assets in the wake of the dual crisis in public finance and real estate: an opportunity to do better going forward?. Real Estate Issues, 35(3), 31-42.
Kaganova, O. (2008). Integrating public property in the realm of fiscal transparency and anti-corruption efforts. In P. Gábor (Ed.), Finding the money: public accountability and service efficiency through fiscal transparency (209–222). Budapest: Local Government and Public Service Reform Initiative/Open Society Institute.
Kaganova, O. (2011). Guidebook on capital investing planning for local governments. World Bank (reprinted in Chinese in 2013). Retrieved from www.worldbank.org/urban/cipguidebook
Kaganova, O. (2012). Valuation and pricing of government land and property: a tip of a growing iceberg. Real Estate Issues, 37(1), 9-16.
Kaganova, O., & Kopanyi, M. (2014). Managing local assets. Municipal finances: guidebook for local governments. World Bank. https://doi.org/10.1596/978-0-8213-9830-2_ch6
Kaganova, O., & Nayaar-Stone, R. (2000). Municipal real property asset management: a overview of world experience, trends and financial implications. Journal of Real Estate Portfolio Management, 6(4), 307-326.
McGraw Hill Construction. (2013). Water infrastructure asset management: adopting best practices to enable better investment.
McIvor, G. K. (2015). Canada lands company: how Canada handles asset optimization of its’s surplus federal properties. Unpublished manuscript.
McKellar, J. (2006). The management framework for real property – government of Canada. In O. Kaganova & J. McKellar (Eds.), Managing Government Property Assets: International Experiences. Washington, D.C.: The Urban Institute Press.
Overlaet-Michiels, K., & Potoms, G. (2015). Real estate portfolio management within governments in Flanders. Unpublished manuscript of the Master Dissertation in Real Estate Management. Antwerp Management School.
Palter, R., & Shilson, S. (2014). Maximizing revenue from government-owned assets. McKinsey & Company, May 2014.
PEFA. (2016). PEFA 2016 handbook. Vol. II: PEFA assessment field-guide. PEFA Secretariat, Washington D.C. Retrieved from https://pefa.org/sites/default/files/16_08_30%20Fieldguide_8.pdf
Peterson, G. E. (2006). Municipal asset management: a balance sheet perspective. In O. Kaganova, J. McKellar (Eds.), Managing Government Property Assets: International Experiences. Washington, D.C.: The Urban Institute Press.
Peterson, G. E., & Thawakar, V. (2013). Capturing the value of public land for urban infrastructure. World Bank, Policy Research Working Paper # 6665.
Peterson, G., & Kaganova, O. (2010). Integrating land financing in subnational fiscal management. World Bank, Policy Research Working Paper # 5409.
Phelps, A. (2011). Municipal property asset management – a comparative study of UK and Russia. International Journal of Strategic Property Management, 15(4), 416-437. https://doi.org/10.3846/1648715X.2011.642537
RICS. (2013). The global infrastructure challenge: the role of PPP in a new financial and economic paradigm. Royal Institution of Chartered Surveyors (RICS).
Schulte, K.-W., & Ecke, C. (2006). Public real estate management in Germany: an empirical study. In O. Kaganova & J. McKellar (Eds.), Managing Government Property Assets: International Experiences. Washington, D.C.: The Urban Institute Press.
Shardy, A., Razak, A. A., & Pakir, A. H. K. (2011). The characteristics of real estate assets management practice in the Malaysian Federal Government. Journal of Corporate Real Estate, 13(1), 16-35. https://doi.org/10.1108/14630011111120323
Towers, F. (2013). National Executive Forum on Public Property Benchmarking Presentation. Annual General Meeting of Federal-Provincial-Territorial Deputy Heads of Public Works. Canada, August 2013.
Utter, M. A. (1989). Public asset management. Economic Development Commentary 4–11.
Vanier, D. J., & Rahman, S. (2004). Municipal infrastructure investment planning. National Research Council Canada.
Wynne, A. (2008). Accrual accounting for the public sector – a fad that has had its day?. International Journal on Governmental Financial Management, 8(2), 117-132.
Ye, L., & Wu, A. M. (2014). Urbanization, land development, and land financing: evidence from Chinese cities. Journal of Urban Affairs, 36(S1), 354-368. https://doi.org/10.1111/juaf.12105