Over the past thirty years, Chinese cities have invested heavily in building public infrastructure. As the stock grows, the city government's annual investment in operation and maintenance continues to rise, and is expected to exceed the annual funding for new infrastructure in the near future. This creates an urgent need for Urban Public Infrastructure Asset Management (IAM) to maintain the service efficiency, safety performance, and sustainability of public infrastructure in an economically and financially efficient manner.

Key elements of IAM include inventory of existing assets, asset status, utilization and performance, maintenance management, performance comparison of targets, asset renewal planning, asset valuation, and prioritization. The implementation process is supported by the following pillars, including strategy, organizational structure, human and financial resources, and the introduction of external expertise.

When a city is just beginning to implement IAM, the initial strategy may not provide all specific plans and projects. Therefore, city governments should clarify which issues IAM needs to address and work hard to address these issues.

Nansha Bridge, photographed by Zhang Yonglin

Over the past thirty years, Chinese cities have invested heavily in building public infrastructure. As the stock grows, the city government's annual investment in operation and maintenance continues to rise, and is expected to exceed the annual funding for new infrastructure in the near future. This transformation urgently requires Chinese cities to have strategies and means for systematically managing infrastructure assets, maintaining the service efficiency, security performance, and sustainability of public infrastructure in an economically and financially efficient manner. Internationally, urban public infrastructure asset management methods are still evolving, with many cities adopting a series of widely common approaches commonly referred to as Infrastructure Asset Management (IAM). This article briefly introduces the definition, key elements, and implementation steps of IAM.

According to the International Infrastructure Management Handbook, IAM is a comprehensive management practice that applies knowledge from disciplines such as management, finance, economics, and engineering to provide the most cost-effective services needed for infrastructure. IAM has the following four characteristics: First, IAM is a proactive management process covering the entire asset lifecycle, rather than a passive and simplistic response to immediate issues; Second, IAM requires a comprehensive perspective and interdisciplinary skills; Third, IAM's goal is to ensure that infrastructure assets provide services and performance that satisfy users; Fourth, IAM maintains the service level and performance of infrastructure by seeking the most efficient resource utilization methods.

More and more city governments around the world are paying attention to IAM, as city governments are often the largest owners of public infrastructure within their jurisdictions. For example, they may have transportation networks, energy, water supply systems, garbage and sewage treatment systems, parks and recreational facilities, health and educational buildings, as well as many other economic and social infrastructures. Although not all city governments are responsible for managing all these facilities, they generally treat asset management of public infrastructure as a primary task.

China has undergone years of rapid urbanization, with many cities building and operating many infrastructures. Since the management responsibility for many urban infrastructure lies with local governments, the importance of infrastructure asset management is self-evident. Moreover, China has built a large amount of urban infrastructure at an unprecedented pace in an extremely short time, meaning that in the near future, huge sums will be needed to repair and upgrade these infrastructures. To prepare ahead, Chinese cities must now focus on establishing and applying the IAM system.

Internationally, asset management for many urban infrastructure is passive, such as following pre-established asset maintenance schedules without considering actual asset use and wear and tear; Passively respond to asset service interruptions or failures rather than proactively prevent them; New infrastructure construction is pushed forward under short-term political pressure, but existing infrastructure is not maintained, restored, or updated. Therefore, the key issue is not whether the city government manages the infrastructure, but how to manage it well.

The city of Edmonton, Canada, is committed to developing IAM, providing a model for other cities to learn from. In 2000, the city government established an infrastructure office to conduct a comprehensive inventory of the city's infrastructure worth 33 billion Canadian dollars, developing three IAM tools to ensure the rational and efficient use of infrastructure investment funds: a unified rating and ranking system to assess the condition of existing urban infrastructure assets; Scientific risk assessment methods to quantify the risk of asset service disruptions and apply this risk assessment to investment decisions; Conduct full lifecycle cost analysis of infrastructure to support better decision-making and long-term planning.

IAM includes many elements. Common key elements include: inventory of existing assets, asset status, utilization and performance, maintenance management, performance comparison with target completion, asset renewal planning, asset valuation, and prioritization.

Inventory of existing assets is the cornerstone of IAM, and city governments need to systematically grasp information on their own infrastructure assets. Inventory information needs to be digitized and can be stored, classified, queried, and updated in electronic databases. With a database of existing assets, various programs can be used to perform various technical and economic analyses. Relational Database Management Systems (RDMS) and Geographic Information Systems (GIS) can be used to build databases of existing assets. Internationally, some commercial RDMS are already tailored to specific IAM performance requirements, especially for asset maintenance management. GIS can locate infrastructure assets within a city and map assets, create satellite imagery, and other representational methods (including continuous video monitoring of certain assets), and can also be used to display the actual state of assets. There are also other computer packages that can capture more complex technical and engineering parameters related to assets.

In theory, all infrastructure assets within a city should be included in inventory information, but in reality, the system development budget may be limited. This raises a question: which assets should be prioritized for inclusion in the database? The answer lies in the most important infrastructure. These infrastructures either relate to daily livelihoods, require substantial investment in construction and maintenance, or are crucial to public safety or other public interests.

Urban governments can use the stock asset database to systematically record the usage time, technical indicators, current status, maintenance history, utilization, and performance levels of various infrastructure assets. During the initiation phase, IAM can collect the above data through a "Asset Condition Assessment Survey." Future data updates should be dynamic, based on actual facility usage (rather than the interval between maintenance intervals). Trends in the fundamental condition of assets can reflect both the accumulated maintenance workload due to delays and whether maintenance management effectively addresses the delayed maintenance workload. More importantly, city governments can use data to analyze asset status, analyze the relationship between usage time and utilization rates, and enhance forecasting capabilities, enabling preventive routine maintenance measures and more accurate assessment of future maintenance budgets.

Asset usage data can be obtained through automated measurement or surveys, with the specific available methods depending on the specific asset category. While utilization is an important performance metric for some assets, for most assets, the concept of performance also includes other features that need to be defined, measured, and recorded. For example, in addition to daily traffic volume, expressway performance indicators include the proportion of large trucks in traffic volume, peak hourly speeds, and so on.

Rigorous planning and documentation of daily operations and maintenance is an important part of IAM. Engineering management requires systematically generating and recording work orders for specific assets, resource allocation (personnel, machinery, and materials), completion rate, and other data. These records provide the necessary data for the application of government maintenance project management accounting technology, used to determine unit costs for each stage of the project, thereby promoting budget preparation and effective use.

The purpose of urban infrastructure investment is to provide citizens with a certain level of public services (terminology referred to as asset operation performance). Performance standards or performance targets are crucial in IAM implementation. Different asset categories have different standards or measurement methods. Target setting can be based on citizen needs, benchmarked against good practices by other city governments, or adopted standards recommended by regulatory authorities.

Performance target metrics can include the output of asset operations (such as traffic volume), output quality (such as traffic speed), the stability and reliability of asset operations in meeting service level targets, asset availability (such as hourly or daily rates), safety status (such as accident rates), or environmental impact (such as exhaust emissions). Importantly, IAM performance targets are measured not only by physical attributes but also by economic indicators. The simplest economic indicators are the average cost per unit of output or unit of service, but IAM can use more complex economic indicators.

By comparing actual performance with performance standards or targets, you can assess the "gap" in performance. If a performance gap in an infrastructure asset persists, the underlying reasons may be maintenance arrears, poor maintenance quality, or poor departmental management. Therefore, IAM not only serves as a management method to maintain and improve cost-effectiveness, but also serves as a viable mechanism for accountability of asset managers. However, for city governments to reasonably apply IAM to promote management accountability, they should adopt performance standards that are realistic, financially affordable, and measurable, rather than overly high or unrealistic performance standards.

With proper maintenance, infrastructure assets can improve productivity throughout their lifecycle and may even extend service lifecycles. But regardless, these infrastructure assets ultimately need to be repaired, rebuilt, or replaced through a new round of capital investment. City governments can use asset databases to estimate the remaining lifecycle of various assets and develop future spending schedules for infrastructure asset renewal based on this. For each public infrastructure function, the asset renewal spending schedule shows the "peaks" and "valleys" of future asset renewal budget expenditures, aiding long-term budget planning.

From a city-wide perspective, reviewing future spending schedules for asset renewal across all sectors should be considered in conjunction with new investment schedules that meet growing demand. In this way, city governments can obtain relatively accurate and objective information on total infrastructure asset demand and, under financial constraints, choose between investing in new assets and asset renewal, as well as between updating or replacing certain assets and postponing the renewal of others.

However, city government decisions are not always passive. Once the city's finance department has a timeline for future expenditures on asset renewal, it can reserve fiscal reserves in the city's financial balance sheet by establishing special purpose renewal funds (including so-called "sinking funds"). These funds should be prudently dedicated to asset renewal rather than being placed in general, multi-purpose financial reserves. If these funds are dedicated to asset renewal, cities can provide sufficient funding for the renewal of existing assets, thereby avoiding the common global problem of prioritizing new investments in politically significant assets at the expense of the condition and performance of existing assets.

An integrated IAM system serves multiple purposes, one of which is estimating the monetary value of city assets for financial accounting and management purposes. Valuing public infrastructure assets is highly complex for various reasons, such as many municipal infrastructure assets being located in fixed locations and not being used for other purposes, and some services being difficult to price. Depending on different valuation purposes, there are various methods to estimate the value of infrastructure assets (such as for financial accounting supervision, recording taxable information, pricing infrastructure, or planning future spending schedules). Valuation results vary depending on the method, but there is no single completely correct method.

It is especially important to emphasize that asset valuations using financial and tax accounting methods are usually related to historical costs incurred and therefore do not apply to IAM's non-accounting purposes. IAM uses asset valuation either to assess the appropriate price of infrastructure or to develop long-term asset renewal plans. However, regardless of the purpose, as long as the expectation of asset replacement remains, the replacement cost remains a relatively important factor in valuation.

IAM's systematic framework and data help urban planners and engineers use relevant economic evaluation methods to prioritize public spending projects. There are many assessment methods available, but basically there are four categories:

Thus, adopting IAM can at least help cities generate most of the necessary information for various analyses. A comprehensive IAM should include all necessary decision-making tools and their user manuals to help city governments prioritize fiscal expenditures.

IAM may seem simple, but it simply involves selecting the appropriate approach from existing management decision-making methods to put into practice, but the actual operation is quite different. For a city to implement IAM, it must first establish an effective implementation platform, supported by four main pillars: strategy, organizational structure, human and financial resources, and the introduction of external expertise.

Typically, individual ideas emerge from within the organization from the bottom up. But international experience shows that major systemic changes within city government agencies often require endorsement and support from leadership at the strategic level.

The International Infrastructure Management Handbook defines an IAM strategy as: "An asset management strategy that includes planning and implementing projects related to asset construction, operation, maintenance, renewal, replacement, processing, and performance monitoring, to ensure the necessary service levels and other operational objectives are achieved at optimal cost." But in practice, this strategic definition is somewhat harsh. When a city is just beginning to implement IAM, the initial strategy may not provide all specific plans and projects. Therefore, city governments should clarify which issues IAM needs to address and work hard to address these issues. At the initial stage, city governments should gradually enhance their capabilities, establish systems, and accumulate experience, focusing more on long-term processes rather than the details of strategic outcomes. Key objectives and principles of IAM should be introduced to define institutional responsibilities, set priorities, and provide necessary resources for the gradual implementation of IAM.

IAM implementation requires a supporting organizational structure and empowers technical management to carry out strategic tasks through internal division of responsibilities. Prioritizing each infrastructure sector or asset type provides a starting point for implementing the IAM strategy. Since each city is different, each adopts different organizational structures and timelines, but the common success factors for these cities may include:

When a city establishes an IAM platform, it needs to allocate dedicated resources to the departments and management teams implementing IAM, with initial resource use focusing on supporting departments in areas such as information technology, training, and finance. IAM requires significant resources and capital investment in its early stages, especially during activities such as building asset databases, investigating asset status, and establishing performance benchmarks.

When information, tools, and processes are all in place, the time and financial investment of experts will continue to pay off. Expert time and capital investment should be regarded as part of managing infrastructure investment, with importance equal to investment in physical infrastructure. Therefore, in the initial stage, IAM, like other large projects, requires a dedicated budget. Departments responsible for leading IAM implementation after screening should not squeeze a small portion of their existing operating budgets to advance IAM. This situation not only hinders potential progress but also weakens the sector's motivation and drive to advance IAM.

Investment planning for urban public infrastructure in China is often poorly aligned with city fiscal budgets, which rarely consider the value of infrastructure asset wear and tear and the costs required for maintenance and renewal. As the stock of urban public infrastructure increases, its daily maintenance and management expenses also rise. Therefore, institutional preparation should be made early, scientifically estimating the maintenance and management expenses of urban public infrastructure assets in the urban fiscal budget to avoid premature damage and aging caused by inadequate maintenance. At the same time, a new management concept must be established: the scale of new infrastructure investments must be considered and determined only after public infrastructure asset management is in place.