US Government Efficiency Solution: Promote Whole-Benefit Analysis for Investment Decision Making
Miniseries on the US Government's Failure to Efficiently Manage its Built Infrastructure Portfolio
This article emphasizes the need to return to a first principle.
Asset management is not about assets — it is about managing the value generated from and through assets.
Organizations acquire assets to serve a purpose: to generate benefits. Total benefits minus the cost to generate these benefits is a measure of the value generated by an organization. Whole-benefit analysis for asset investment decision making evaluates asset performance in terms of the value it can generate for the organization. Asset management is about coordinating the activities that make this happen.
Assets generate value by providing a place or means to work, enabling access to networks, or delivering productive capability and capacity. Assets are inputs that help produce outputs—products and services—that lead to outcomes, otherwise known as the sum of benefits realized. A portion of this value can be attributed to the assets that support its generation. This relationship forms the basis for whole-benefit analysis. Whole-benefit analysis, in the context of asset management, evaluates the impact an asset related policy, strategy, plan, or action will have on value generation.
US Federal policy requires use of whole benefit analysis in investment decision making. Policies supporting this are OMB Circulars A-11, A-94, and A-123. Real property, facilities, and built infrastructure are assets that are acquired and used by the US Government for a purpose—to generate benefits.
OMB Circular A-94 lays out the framework for evaluating investments in real property, facilities, and built infrastructure. The core idea in this policy is straightforward: for an investment to make sense, the benefits must outweigh the costs over time. This is typically assessed using discounted Net Present Value (NPV). An NPV analysis accounts for the time value of money by discounting future benefits and costs to their present value.
The decision to acquire and use an asset hinges on this calculation. If the NPV is positive—meaning the discounted benefits exceed the discounted costs—it’s considered a good investment. This approach ensures decisions prioritize assets that generate a net positive value over their lifecycle.
Whereas continued investment in assets (i.e. life cycle management) should be evaluated using a cost-effectiveness analysis. This analysis is also computed using discounted NPV or one of its derivatives. This analysis leads to selection of strategies, plans, and actions that generate benefits at the lowest cost. Doing so is likewise a good investment, but this is predicated on a positive NPV analysis for keeping the asset.
Lost in this discussion about cost-benefit and cost-effectiveness analysis is that US Government policy does not ensure whole benefit analysis for investment decision making. Instead it assumes it happens and than focuses on quantifiable, budget management metrics and measures. Cost-benefit and cost-effectiveness are useful tools, but they do not cover what whole-benefit analysis aims to achieve.
Whole-benefit analysis in the context of asset management evaluates how well a decision will achieve Organizational Objectives. These broader objectives are supported by Asset Management Objectives. Asset Management Objectives focus on asset performance, but the real value proposition is in the determination of how asset performance contributes to the achievement of Organizational Objectives.
This gap in understanding is headlined in the National Academies’ report Strategies to Renew Federal Facilities. This report details the underlying problem and characterizes it as a fiduciary failure. Despite clear guidance for Federal Agencies to submit and execute budgets that best achieve their authorized missions, the US Government Asset Management System (AMS) is designed to avoid accountability in doing so.
The Federal government’s budget development and budget execution processes detailed in OMB Circular A-11 blindly focus on resolving a list of requirements, e.g. how to reduce real property maintenance backlogs. Instead these effort should focus on value generation for Taxpayers. This management gap is reinforced through policy that narrowly focuses on budget management and not on value management.
There is no mechanism in Federal policy that systematically confirms nor reports that the budget, as submitted and executed, achieved mission objectives. These mission objectives generate the Organizational Objectives that justify the acquisition and use of real property, facilities, and built infrastructure. This fatal flaw can be rectified through enactment of laws that requires Federal Agencies to implement ISO 55000 confirming AMSs for real property, facilities, and built infrastructure portfolio management.
The figure above is derived from ISO 55000 standards. It defines the relationship of key asset management terms. It depicts that an asset portfolio is a kernel source for value generation. The means for value generation is through the organization’s AMS. By definition, the AMS is the sum of policy, objectives, and processes used to achieve these objectives.
This AMS defines how an organization generates value from and through assets. Asset Management is the decision making activities that manage assets and coordinate the management of assets with other management systems (i.e. Managing the Organization) to generate value. It is asset management activities where investment decisions are made. The culmination of this is the value generated from and through assets for the organization and its stakeholders. ISO 55000 standards comprehensively define the context and requirements for the AMS that makes this happen.
Integral to an AMS is the development and documentation of Organizational Objectives and Asset Management Objectives. These objectives define value and how value is measured. Asset Management Objectives are established to manage assets and ensure and assure achievement of Organizational Objectives. This establishes the rightful justification for budget, which is lacking in US Government policy and management practice.
When Asset Management Objectives are implemented and applied to an Asset Portfolio, they generate requirements. It is at this point linking objectives and requirements that the US Government fails. In practice, budgets are justified using a list of requirements (i.e. projects and programs), such as here are asset life cycle requirements (e.g. Requirements-Based Budgets). Whereas, budgets should be justified based on whole-benefit analysis, that is the return-on-investment they generate for US Government stakeholders, i.e. Taxpayers.
This continued, systematic failure resists valent efforts to install business-minded investment decision making protocols. Leading this charge is the Government’s Performance and Results Act (GPRA) of 1993. This act set the ground work for OMB Circular A-11: Part 6 – Performance Management Framework. It also sets up attempted advancements such as what was tried through OMB Memorandum M-20-03 – Implementation of Agency-wide Real Property Capital Planning.
The residual, resisting inability to reconcile budget real property, facility, and built infrastructure execution needed to achieve Federal agency Asset Management Objectives needed to achieve stated Organizational Objectives represents a gap in leadership, knowledge, and/or knowhow. This gap is enabled by a the US Government’s systematic AMS failure. This gap is fully detailed in the National Academies’ report Strategies to Renew Federal Facilities.
The astonishing point is that there is sufficient standing guidance to do otherwise, but it is not enforced. Despite US Congress authorizations and Federal policy stating the need for and detailing how to be good asset managers, the US Government fails to manage assets well. Regardless of US Congress authorizations and their codification, US Congress appropriations and budget management trump good asset management practice.
As stated in Strategies to Renew Federal Facilities, the remedy is to require that Federal agencies use ISO 55000 principles and AMS requirements to guide real property, facility, and built infrastructure investment decision making. To implement this remedy US Congress will have to enact laws that require budget justification and execution be based on whole-benefit analysis. Detailed aspects for this are covered in the cited National Academies’ report recommendations.
Implementation of this remedy will set the course for rectifying the US Government’s inability to efficiently and effectively manage real property, facilities and built infrastructure that wastefully consumes more than $70B each year. This is a solvable problem, but it requires a leadership decision to solve it. This is where leadership needs to lead.
This leadership decision starts with an executive decision to introduce and support development of asset management competencies and capabilities at an organization. This will lead to the establishment of good objectives, achievement of those objectives, and showing the receipts on how or why these objectives were or were not achieved. This is Enterprise Asset Management 101. It is also a foundational element in performance management, risk management, and accountability. This journey can start with leaders in the US Government (i.e. Congress and the Executive Branch) stating their intention to introduce asset management and use whole-benefit analysis in real property, facility, and built infrastructure investment decision making.
In-depth background for the points made this article is available at:
AMS Implementation Principle: Whole Life-Cycle Cost Analysis
AMS Implementation Principle: Performance-Budget Integration
AM Framework: MAG #2 – Asset Management Objectives – Overview, Purpose, Outcomes
AM Framework: MAG #2 – Asset Management Objectives – Alignment, Scope, Outputs
Written to Jack Dempsey | February 11, 2025
AMP Newsletter #109
Copyright © 2025, Asset Management Partnership LLC. All Rights Reserved.
Preceding articles at:
US Government Efficiency Failure – Built Infrastructure Accounting
US Government Efficiency Failure – Real Property Inventory Management
US Government Efficiency Failure – Program Management Blind Spot
US Government Efficiency Failure – Understanding Enterprise Risk
US Government Efficiency Failure – Transparency and Accountability
US Government Efficiency Solution – Disciplined Asset Management
US Government Efficiency Solution – Deployment of an Asset Management Framework
US Government Efficiency Solution – Clarify Enterprise Risk Management and Management Controls
US Government Efficiency Solution – DOGE Response Plan & Asset Management
US Government Efficiency Solution – Clarify Senior Real Property Officer Fiduciary Responsibilities