Technology in Capital Planning and Management
Finance officers should take an organizational-wide approach to using technology for capital program management.
Organizations use a variety of software to assist in managing their capital programs. Systems that support capital programming commonly found in government include: enterprise resource planning (ERP), financial management, fixed asset management, budget development, geographic information systems (GIS), constituent relationship management (CRM), computerized maintenance management (CMMS), business intelligence (BI)/analytic, and a variety of spreadsheets and custom developed databases. Further, individual departments within a single organization often own and operate their own systems, resulting in information being dispersed with no single source providing complete information on the capital program.
Systems used across the entire organization for managing the capital program often support the following tasks:
- Capital Planning for multi-year capital forecasting that identifies needs of new items, replacement items, and major renovations.
- Capital Budgeting for managing the organizations 5-year capital improvement program and identifies both approved projects and funding sources.
- Project Costing for tracking the ongoing costs of capital projects including labor, requirements, supplies, and contract costs.
- Project Management to provide managers with project status reports, budget reports, and an ongoing indicator of project progress
- Asset Inventory to list all current capital assets, detailed information on asset location, features, and ownership/responsibility
- Asset Management to track usage information on the item, identify upcoming maintenance items and track history of work performed on the item.
- Work Orders to schedule and manage current work. Systems may also include a method of receiving service requests from both internal and external sources.
GFOA recommends that finance officers take an organizational-wide approach to using technology for capital program management. Use of appropriate technology that can be used by key participants in the process -- in finance, engineering, operations, overall management, and other areas can enhance collaboration and improve management of the capital program by providing timely, relevant, and complete information to all. In developing that approach, governments should consider the following:
- Systems Available in the Market - Many commercially available systems address the needs of governments for managing components of the capital program. Features differ from system to system, so that a system that is a good fit for one organization may not be for another. For example, systems may specialize in utility assets, road infrastructure, or facilities. Governments with highly specialized needs must understand the degree individual systems can meet their needs. Some functionality may have to be custom-developed. However, software firms continue to offer additional features as they develop newer and better versions of their systems. In addition, many systems develop their software around standard practices used across many organizations and it may be beneficial to adopt those practices rather than customize software to meet an organizations unique process.
- Alignment with the Organizations Information Technology (IT) Strategic Plan - To avoid the condition where a government procures many disparate and standalone systems that are not capable of sharing information, any technology used in the capital planning process should also be planned for in the governments IT strategic plan. Alignment with other organization-wide planning efforts will avoid redundant systems and will provide a greater opportunity for systems to efficiently support end-to-end business processes.
- Stakeholder Expectations for the System - In planning and procuring a new system, organizations should develop detailed requirements that identify the scope of the system and set an overall expectation for the project. Requirements and expectations should then be managed throughout the procurement and implementation project to ensure that vendor promises are delivered and expectations met.
- The Business Case for the System (Assessment of Costs and Benefits) - Organizations must analyze the projected benefits, costs, and risks in moving to a new system to determine if there is a suitable business case for moving forward. Different organizations will have different needs and while some may require complex systems, others may achieve greater returns from using simple systems that do not require significant upfront investments.
- Likely Users of the System - As part of the planning process for a system, the government should identify all stakeholders across the organization that will use the system, use information from the system, or provide data to the system. To be an effective tool, the system will need to meet the needs of all stakeholders including finance officers, accountants, analysts, engineers, project managers, policy makers, and other managers. The system will also need to work with other existing systems to exchange data through interfaces. Additionally, there may be a need for the public to interact with the system (e.g. to submit service requests or provide feedback on planning documents).
- Scope of the System - After identifying who will use the system, governments should detail specific requirements for how the system will be used to support the organizations business processes. The scope of a system could range from one aspect of the capital budgeting process to a complete planning, management and analysis of the capital program. Identifying the specific needs of each stakeholder group will assist in getting organization-wide buy-in for the system.
- Process for Collecting, Verifying, and Transferring Data - There are multiple method of getting data into the system that could include automated interfaces with other systems or manual data entry. The organization will need to determine an effective way for getting information in the system. Where possible, organizations should seek systems and process that facilitate single points of data entry so that the same data is not entered at multiple times.
- Communication of Information - Current systems provide multiple ways to communicate relevant data, including standard reports, customized reports, dashboards, or exception reports. Many of these systems also use features to provide automated notifications to stakeholders and decision makers when certain conditions arise. It is essential that the system be able to provide the necessary information to support key decisions in the capital program management process.
- Ongoing Support for the System - Maintaining the system involves both a functional and technical responsibility. The system will need to comply with the organizations technical standards and have appropriate staff assigned to maintaining the system. System maintenance will include any administrative tasks for security, such as manager user access to the system and permissions within the system, managing the automation of business process flows, and continuing to develop reports to meet new business needs. In addition, system support includes technical tasks such as database administration and network administration. Finally, an organization must develop and maintain a core group of experts to support key business processes and remain self-sufficient on the system. Relying on a vendor to provide this expertise can be costly.
Overall, technology provides the opportunity to transform the planning, budgeting, implementation, and overall management of an organizations capital program. However, to generate the expected return on investment, an organization should properly plan for such a system and detail its specific needs so that a system can be deployed that meets needs across the organization given its resource constraints for both the initial purchase and long term maintenance.
- Capital Project Planning and Evaluation, edited by Joseph P. Casey and Michael J. Mucha, 2007.
- Technologies for Government Transformation: ERP Systems and Beyond, edited by Shayne C. Kavanagh and Rowan A. Miranda, 2005.
- Board approval date: Monday, October 31, 2011