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SWOT analyses of infrastructure networks’ ownership and governance models

Municipalities in Finland are facing several challenges of which, curiously enough, many are self-made. These include issues such as increasing maintenance backlogs, limited asset management understanding, difficult to plan and levy fees and tariffs to match full cost recovery, problems in valuation of required maintenance and investment needs and costs, and focus on short-term management (resulting partially from the political cycles). Combined with restructuring and governance issues in the municipality infrastructures, the challenges can become even greater in the future. In various sectors of the municipal infrastructure networks (waterworks, roads, rail and ports) several ownership and governance models are utilized, and pose different types of challenges for the municipalities. This report highlights these issues by presenting the results of SWOT analyses, which represents the strengths, weaknesses, opportunities and threats of infrastructure networks’ ownership and governance models from the point of view of the owner. The analyses are based on interviews of infrastructure network, municipal and state department executives. In addition two stakeholder workshops were arranged in spring 2010. In general the most important strengths of the infrastructure networks’ ownership, governance and operation are related to the stable and secure ownership from the municipal involvement and good knowledge of day-to-day operations. Bureaucracy, lengthy decision-making and political interference are however tough to overcome weaknesses. Combined with a lack of transparency and accountability, sustainable development and maintenance of infrastructure networks, services are endangered. This can lead to deterioration of physical condition and diminished value of infrastructure. In addition, taxation differences; payment of interest without payments on the loan principal; and the maintenance backlog are the most disturbing findings in this study. Improved asset management and cost awareness are crucial issues in all the sectors. It is important to have the motivation and incentives to acquire cost knowledge and use of modern methods of asset management and pricing. In this challenging environment, good management would be a plus. In the future, changes in the concept, way of thinking, management, governance, and stewardship of the infrastructure networks are required.