Central government assets must be managed throughout their lifecycle

The lifecycles of different central government asset categories are managed in different ways. This is because under the existing financial management regulations, central government assets must be managed throughout their lifecycle, while at the same time, there is also room for variation in the way in which the regulations are applied.

The state budget balance sheet contains more than EUR 20 billion of fixed and other tangible assets and the transport infrastructure is the most important item in this category. Other major asset items include buildings, land and water areas, as well as defence materiel. The National Audit Office has examined how different central government actors manage the benefits and costs of tangible assets throughout the asset lifecycle. The review was produced by examining the guidelines and instructions issued by different authorities and the procedures applied.

Managing central government assets throughout their lifecycle is an obligation but there is room for different applications.  Under the State Budget Act (423/1988), the operations and finances must be planned several years ahead and the assets must be used in a profitable way, taking account of their purpose. A number of sectors have more detailed provisions and guidelines for asset lifecycle management.

Under the public procurement legislation, lifecycle costs of the purchases can be taken into account when the overall economical advantageousness of the purchase is assessed. This is not an obligation, however.

In 2013, the Finnish Government issued a resolution aimed at promoting sustainable environmental and energy solutions (cleantech solutions) in public contracts. Under the resolution, lifecycle cost calculations should be a consideration in central government purchases. It is also required in the resolution that the procurement contracts should be based on calculators helping to determine how costs can be reduced and energy and material efficiency improved.

The review produced by the National Audit Office showed that most of the central government organisations included in the review have their own guidelines for the required lifecycle calculations. Some of the organisations have highly advanced templates for the calculations and they are actively used as asset lifecycle management tools. There are no shared templates or calculators for calculating the asset lifecycle costs and benefits.

Study the publication: Guidelines for asset lifecycle management