Agency Develops Strategic Plan to Manage Short-Term Capital Assets
The Hillsborough Area Regional Transit Authority (HART) understood the importance of properly managing short-term capital assets. Even so, the organization—an independent taxing district chartered to provide public transportation for a coverage area roughly the size of Rhode Island—often found itself in reactive rather than planning mode. Frustrated with the constant need to play catch-up, the agency developed a strategic plan.
Because of federal and state grant reporting requirements, tracking assets that were directly linked to the HART’s mission (such as vehicles or streetcars) was a fairly straightforward task. Tracking other short-term assets, however, was more difficult. Many support items that were required to achieve the organization’s primary mission had never been looked at from a strategic standpoint. Information technology, for example, was often treated as an afterthought. Funding for repairs and replacement of these types of assets was made available after the primary budget development process was completed rather than being part of the process. This reactionary approach of “fix it when it breaks” was the norm; there were no replacement schedules for much of the organization’s technology.
As time passed, this approach became increasingly unsustainable. As an example, in 2012 the organization purchased 350 desktop computers without taking into account the useful life of the assets. Between 2014 and 2016, more than $1.2 million in annual software license renewals came due that hadn’t been accounted for in the annual budget, and HART was paying for licenses on software it no longer used. And the challenges did not stop there. Between 2014 and 2016, $4 million in hardware infrastructure upgrade requests were made across the organization, with no cohesive strategy for acquisition, maintenance, or replacement. Public commitments to offer amenities such as Wi-Fi on all vehicles had been made with no apparent thought about the short-term capital assets that would be needed, such as routers and related hardware. Even if the initial cost to add Wi-Fi had been planned for adequately, there would still have been increases in wireless operating costs over time to consider. Determining the true cost of the initiative would require an analysis of hardware replacement requirements for the next 3-5 years. These non-traditional or short-term capital assets often don’t receive the same level of attention and strategic scrutiny as more traditional, long-term capital assets, and the result is unexpected costs in the long run.
To address these challenges, HART completely changed its organizational paradigm for short-term capital assets. The first step was to establish a comprehensive IT asset inventory database that included all desktops, tablets, software, switches, routers, servers, phones, etc. These were cataloged by facility, vehicle, and employee. Next, the agency developed short- and long-term replacement programs for all IT assets. Finally, HART refined its budget development process, making it more inclusive by assessing user and organizational needs, and building business cases to support CIP needs for short-term capital assets. Other steps—including establishing a project management office that mandates an IT review component for all projects, developing an asset cost model where all per-unit hard and soft costs are maintained, and diversifying revenues used for IT asset funding—also helped to address the challenge. But the largest and perhaps most significant change was the organizational paradigm shift to a programmatic approach for short-term capital asset management.
Related Best Practices:
- Technology in Capital Planning and Management
- Determining the Estimated Useful Lives of Capital Assets
- Asset Maintenance and Replacement
- Role of the Finance Director in Capital Asset Management
Past Conference Presentations: