4 challenges facing Canadian municipalities

Digital transformation

Most municipalities in Canada are dealing with a so-called technical debt, which is the total cost of future work resulting from choosing an easy technological solution over the adoption of a long-term one. For municipalities, this can be outdated and inefficient technology. Some of the systems they own will lose their service windows in the near future or the technology providers will no longer offer ongoing support. 

Also, many of the systems aren’t connected to one another. As a result, it’s difficult to handle reporting or make informed decisions because a lot of manual work needs to be performed.

Before modernizing services, municipalities can conduct operational reviews and efficiency assessments to determine what areas need to be improved. Once a digital transformation begins, organizations should have a level of oversight during key stages of the project to help ensure it doesn’t go over budget or miss crucial deadlines. 

A digital transformation can include everything from implementing enterprise resource planning (ERP) systems to modernizing legacy IT. It can result in improved service delivery, an enhanced client experience, and improved allocation of resources for public programs.

Financial sustainability and risk management

Citizens and businesses are under enormous financial pressure. The cost of living for residents continues to rise and small businesses are having difficulty competing with larger, big box stores. That leaves municipalities caught between competing pressures: Maintaining essential services as public demand grows and infrastructure ages while avoiding further tax increases.

Municipalities need to explore innovative and diversified funding strategies to meet growing fiscal demands. This may include implementing or adjusting development charges for new projects, as well as leveraging programs like the Canada Housing Infrastructure Fund. The fund is designed to support projects that align with federal priorities, including climate resilience, Indigenous inclusion, and housing affordability. Municipalities that design projects which meet these criteria may unlock greater funding opportunities.

The implementation of advanced asset management systems, such as leveraging data analytics and adopting predictive maintenance strategies, can help municipalities optimize their existing infrastructure, ensuring funds are used efficiently amid rising costs.

Risk management is a critical component of financial sustainability. Municipalities should take a proactive approach to identify potential threats while also recognizing emerging opportunities for innovation and growth. Although risk is often seen as something to avoid, effective assessment and mitigation strategies enable municipalities to navigate uncertainty and strengthen their long-term fiscal resilience.

Infrastructure planning and project oversight

There are many challenges with keeping projects on time and on budget. Having the right people around the table who can support and oversee those projects is important, but it’s difficult to find them. Some smaller municipalities are also having difficulty finding companies to do the work that’s required.

To solve these problems, municipalities are increasingly open to public-private partnerships (P3s) and co-investment models, particularly where they lack skilled personnel. Exploring co-investment models and establishing conditional funding arrangements can provide municipalities with funding. Early planning as well as project governance and oversight are key to attracting such investments.

Many municipalities are also becoming more proactive in managing project risks by engaging independent experts throughout different stages of a project’s lifecycle to monitor progress, identify emerging issues early, and provide independent oversight to minimize delays, cost overruns, and disputes.

There are also opportunities to work together with other municipalities to increase their purchasing power in order to get infrastructure built, such as roads, schools, or community centres.

Cybersecurity

Canadian municipalities are very attractive targets for cyber criminals. They typically have a tight budget and don’t have the ability to make large investments in cybersecurity or hire a chief information security officer. Municipalities have to compete with larger organizations for talent, making attraction more difficult or are simply unable to afford the salary the roles command. As a result, it’s hard to drive progress.

Municipalities can take a proactive approach in evaluating their cyber risk and security posture, which means understanding those key systems and services that are essential to citizens, understanding where key data resides, ensuring adequate policies and essential technology controls are implemented, and making sure they are prepared to respond to cyber incidents by documenting and testing their response plans.