Peer review

Asset management and long-term planning.

Peer review is an important part of a robust asset management planning system. It can provide managers with an independent view. It can challenge or provide confidence as to whether AMPs are reasonable and provide support for service and financial planning.

In the local government sector, an independent peer review can challenge or support the justification for key decisions presented in a consultation document and LTP.

Our external audit does not replace the value that a peer review can provide. Our audit is primarily to give external stakeholders’ confidence, but it can also challenge or support asset managers.

The importance of peer review

The main aim of peer reviewing AMPs is to provide asset managers with a “second opinion” on their adequacy and to identify or confirm areas where additional work to the asset management system is required.

A peer review can cover a plan or plans, or it can consider the entire planning system.

A peer review can include an independent assessment of the “maturity” of asset management. Different levels of maturity or sophistication are appropriate to different organisations according to:

  • the value and complexity of their asset base;
  • the extent to which it supports critical services; and
  • the significance of asset related decisions on the horizon.

Peer review can include a “gap analysis” between current and ideal practice. This is helpful as it allows desirable improvements in asset management to be identified and prioritised.

Having confidence that asset management planning is at an appropriate level of sophistication is important for auditors. Peer reviews can help us get that confidence.

What we found in 2021 LTPs

Most of the local authorities we audited for the 2021-31 LTP had their AMPs peer reviewed before our visit. However, we found a significant variation in:

  • the quality of peer review; and
  • its timeliness.

When the peer review was done well, we were able to leverage the assurance provided by the peer review process and reduce the amount of audit work required. In audit terms, this is referred to as relying on the work of an expert – the peer reviewer.

In contrast, where peer review was not able to provide us with adequate audit assurance, we needed to perform a more detailed review of asset management planning ourselves before being able to conclude as to whether the information about infrastructure assets was adequate.

We noted that some peer reviews performed in conjunction with long-term planning for 2021-31 looked back to the finalised versions of AMPs from the previous LTP (2018). Although this was useful for local authorities to identify areas where asset management needed to be improved, this was a not a peer review that provided confidence in current (2021) planning. Therefore, we were unable to place reliance on the results of these types of peer review for our audits.

In other instances, peer review was not performed over the AMPs at all or was limited in scope and did not critically challenge the information contained in the 2021 AMPs. In these cases, we noted that some peer reviews were more akin to a grammar and/or sensibility check rather than a critical review of:

  • the asset management planning document(s);
  • the engineering judgements on which they were based;
  • the asset life cycle strategies that the judgements sought to implement; and
  • the asset information on which planning was based.

The purpose of peer review needs to be clear

Organisations need to be clear when commissioning a peer review:

  • Is this a backward-looking peer review to identify areas for improvement in future plans?
  • Is this a document review to help quality assure readability?
  • Is this a challenging review of current planning to provide stakeholders (and auditors) with confidence that current planning is robust?

Ways to improve the usefulness of peer review

Scope

Ensure the scope of your peer review is clearly specified at the outset so that the peer reviewer understands the expected outputs.

Consider using a structured framework such as that adopted by the New Zealand Treasury and Āpōpō (Infrastructure Asset Management Professionals) in the Asset Management Maturity Assessment.18 The framework can be used to confirm or challenge your own self-assessment, or it can be used by the peer reviewer to identify strengths and weakness. Use of a structured framework also helps facilitate effective tracking of improvements.

Timeliness

  • In local government, it can be beneficial for AMPs for mandatory activities (three waters, transportation, and flood protection) to be peer reviewed regularly, ideally for at least each LTP cycle. Local authorities may elect to have AMPs for other activities peer reviewed less frequently and potentially on a rotational basis.
  • Asset management is an ongoing process. One effective approach can be to maintain AMPs as living documents – updated as planning decisions change rather than waiting for a three-yearly rewrite. Either way, peer review should commence early enough in the planning process that it can challenge, help improve, and give confidence in current planning. For local authorities, this means well before preparation of the LTP. This enables the peer reviewer’s findings to be actioned or incorporated into asset management improvement plans.
  • To provide confidence in current planning, peer reviews should focus on the current AMPs rather than looking back to earlier versions.

Engaging a peer reviewer

  • When selecting a peer reviewer, it is important that they are independent and able to provide objective unbiased feedback. An independent peer reviewer cannot also be part of the team responsible for coordinating planning for an organisation.
  • Peer reviewers should have an appropriate knowledge of the subject matter and the environment in which the local authority is operating.

Using peer review for the long-term plan audit

Although the primary objective of peer reviewing AMPs is to provide independent feedback to asset managers about the appropriateness and adequacy of those documents, effective peer review can help make our audit more efficient by reducing the amount of testing we need to do – for example, on the underlying information used to support a local authority’s LTP.

When deciding whether we can rely on a peer review, we consider:

  • the nature, scope, and objectives of the peer reviewer’s work;
  • whether the peer reviewer is employed by the organisation or is engaged to provide other relevant services – both would limit the reviewer’s independence and, as a result, the confidence that third parties could take from the review;
  • the extent to which management can exercise control or influence over the work of the peer reviewer – to be independent and reliable, reviewers need autonomy to make their own judgements;
  • whether the peer reviewer is subject to technical performance standards or other professional or industry requirements;
  • the nature and extent of any controls over the peer reviewer’s process and reporting, to ensure it meets expected standards and covers the planned scope;
  • our knowledge and experience of the peer reviewer’s field of expertise; and
  • our previous experience of the work of that peer reviewer.

Similar considerations might be useful when choosing a peer reviewer to look at your plans.

18: This assessment tool is based on the 2020 IIMM Asset Management Maturity Framework table. It can be downloaded from https://apopo.co.nz/product/asset-management-maturity-assessment-tool-xlsx/.