Launch Slideshow

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The domino effect

The domino effect

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    The top table asks, do you expect your operations and maintenance (O&M) budget to increase, decrease, or stay the same in 2010? The bottom table asks, do you expect your capital improvement plan (ICP) budget to increase, decrease, or stay the same in 2010?

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    This table shows the most common response to our outlook survey by department budget.

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    How much will the new economic stimulus package help your operation?

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    What impact has the stimulus package had on your department?

OUR SURVEY RESULTS

Against this relatively bleak landscape we add the perspective of the government employees tasked with maintaining their community's single largest investment — infrastructure — and delivering the bulk of its services. As we have for five years, late last year we asked readers whether they expect to spend more, less, or the same on operations and maintenance (O&M) and capital improvements (CIP) this year compared to last year.

The respondent group varies from year to year, so we don't make apples-to-apples comparisons of results. But we do get a snapshot of general trends within city, county, and state infrastructure operations.

For the second consecutive year, the largest group of respondents expects to postpone or suspend new construction and capital improvements (42% and 45%, respectively). But they're managing to hang on to operations dollars, with the majority (58%) reporting they don't expect to postpone or reduce planned maintenance. (The chart on page 38 shows average percentage changes.)

However, holding the line represents a decline from 2008, when the largest percentage of respondents (30%) expected a 3% to 5% increase in maintenance resources. Heading into 2010, managers were justifiably concerned about how much longer they can postpone replacement and repairs before the asset becomes dangerous or fails.

“Continued deferred maintenance makes formerly small maintenance projects enlarge in magnitude until they become capital projects. But since they're small in comparison to competing capital projects, they don't get addressed in a timely manner,” says a respondent from EPA Region 9 (which includes California) who's facing a 6% to 9% decrease in both budgets.

“If maintenance in general has been kept up to date, the impact for one year is minimal,” says a reader in the Midwest whose operation manages streets, water and stormwater, fleets, grounds, engineering, and an airport. Though the department received more than $260,000 in stimulus funds for resurfacing, its capital budget's facing a 10% cut. “How do we plan for the long term to have funds available to meet major refurbishment expenses if they continue to backlog?”

“The stimulus has certainly been a help,” says a roads manager from EPA Region 4 whose annual budget is more than $50 million. “But we need this additional investment for each of the next several years to make a noticeable impact. Month to month works okay if you're buying desk and copy paper, but it's unacceptable when you're planning and building major infrastructure.”

Respondents fear public backlash will hinder efforts to keep elected officials and governing boards committed to long-range plans.

“Citizens are feeling taxed to death and new funding strategies, whether they make sense or not, will be fought tooth and nail,” wrote a reader from EPA Region 10 whose team oversees streets, wastewater, stormwater, and engineering.

“A lag in public-sector recovery means that while others are starting to climb, we'll still be sagging in revenue and constituents will not understand the continued budget cutting,” wrote a Region 5 reader who, despite receiving 3% to 5% increases for both maintenance and capital improvements for a wastewater treatment operation, expects to have to delay or postpone activities in both this year.




















Given this new reality, managers must rethink purchasing imperatives. “The biggest challenge is getting the very most for every dollar spent,” says one. “Consider the ramifications of contractors that may not be qualified but are lowest bid.”