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1
Attributes of Well-Performing Water Utilities
including two mapping tools for utility
reforms
Capacity Building Module
2
Critical dimensions of a well run (public or private) utility
Autonomybeing independent to manage professionally without arbitrary interference by others
reporting & “listening” to clientsCustomer orientation
being answerable to another party for policy decisions, for the use of resources, and for performance
Accountability
3
Customer Orientation
What?
Degree to which utilities report and “listen” to their customers, work to better meet their needs
Customer orientation increases accountability of the service provider to its customers
How? Actively survey customers to learn
their views and preferences in order to make better decisions
Use customer information to steer decision making
Have developed billings and collection systems that best overcome specific constraints faced by various customer groups
Inform customers about service changes and interruptions
Have developed effective complaint resolution mechanisms
Customer orientation
‘pays’! (happy customers
pay for services)
4
Example: SIMAPAG (Guanajuato, Mexico)
Invested in knowing what their customer wanted: Surveys about 200 customers per month on their level of
satisfaction with provided servicesUses customer information for management decisions: Surveys feed into the Balanced Scorecard which is used
to support strategic decision-making ‘client perspective’ is the most important of a number of
‘perspectives’ by which performance is measured in the Balanced Scorecard
Information is not yet methodologically used to define corporate strategies and priorities but scorecard focuses staff’s priorities thus increasing efficiency
Invested in mechanisms to improve services: customer information through bill stuffers and the media expanded modes of billing and collection to minimize
waiting times at utility office Established tracking system for complaints frequent customer management training for staff
Results Between 1996 and 2001:
SIMAPAG’s income from customers increased by 280% from approximately $141,000 to over $400,000.
Funds have been reinvested to improve water supply services and helped to expand sewerage services
But…in 2003: the city council lowered monthly automatic tariff increase from 1.1% to 0.01% (< inflation)
5
Critical dimensions of a well run (public or private) utility
Autonomybeing independent to manage professionally without arbitrary interference by others
reporting & “listening” to clientsCustomer orientation
being answerable to another party for policy decisions, for the use of resources, and for performance
Accountability
6
Utilities with Internal Accountability & Autonomy
Hard measures Business plans Systematic reporting between
various levels Incentives (rewards and penalties)
to achieve well-defined performance targets
Standard processes, streamlined procedures
Cost accounting techniques that link resources to outputs
Outsourcing, market testing Benchmarking
Soft measures Training to improve staff skills Strong corporate culture
Moral and behavior norms that inspire staff and management to excel
Clear vision and mission statements
Shaped by top management
…have shifted from traditional hierarchical set up to flatter decision-making structures
7
Example: Public Utilities Board (Singapore)
Internal decentralization of responsibilities: Multilayered organization Departmental heads are accountable for results - expenditure approval ceilings for
various management levels Outsources 25% of the operating budget Decentralization is supported by good info: Performance indicators reported bi-monthly to the Board and published annually Standard business processes and systems (ISO-9001) Well-defined communication channels, including scheduled regular meetings
PUB performance (2002)Population served 4.19 million Service coverage – water supply 100% Service coverage – sewerage 100% Avg domestic tariff for water supply 0.68 US$/m3 Unaccounted for Water 4.8% Working Ratio 0.58 Staff per 1000 connections 2.94
Corporate culture: Clear merit-based promotion policies Grooming of staff and rotation policies Extensive training of staff (1.8% of
operational budget) Visible mission statement
8
External Autonomy and Accountability
Degree of independence from external interference in utility manager’s decision-making
Extent to which external stakeholders (governments, financiers, customers) are able to sanction the utility for results and use of resources
Autonomy Accountability
9
External autonomy: creating room to deliver
political strategic
financial
technical
Space to maneuver
political strategic
financial
technical
Space to maneuver
10
Effective autonomy is often lower than ‘paper’ autonomy
11
External accountability
A utility functions in a web of accountabilities to a variety of external actors with different functions
Actors Central governments Local governments Customers Financing institutions Regulators
Functions policy making Ownership (utility and asset) Regulation Demand for services Financing
12
Policy making
Ownership Regulation Demand for
services
Financing
customers
Local governmentCentral governmentBanks
Example: Johannesburg, South-Africa
Several external actors fulfill different functions
13
Further information
Available at:
http://siteresources.worldbank.org/INTWSS/Resources/Workingnote9.pdf
14
Tool 1Mapping internal vs external reforms
15
Sustainable utility reform and reform of the environment have to go hand-in-hand
Our goal
utilitypoor good
poor
good
Typical reform path
envi
ronm
ent
Possible combinations environment status/utility
provider status
16
How Uganda combined reform measures for the NWSC utility and its environment
Utility reform
Ref
orm
of
the
envi
ronm
ent
70s political turmoilmid 80s new government
end 80s & 90s Major rehab95 new statute
97 new Board98 new MD
98-00 service & revenue enhancement programs
00 ext & int performance contracts
02 automatic tariff indexation
03 staff performance contracts
97 corporate plan
17
…and how reforms enhanced performance of NWSC
indicator 99/00 02/03
Water supply coverage 54% 63%
Unaccounted for water 42% 39%
Staff per 1000 connections
21 11
Collection period (months)
6.2 4.7
Tariffs (Ushs/m3) 881 1015
18
Tool 2Mapping external accountabilities
19
Mapping the map ofaccountabilities of a utility
Local Government
Customers
National Government
Utility
A traditional utility: accountability skewed towards local government
20
Balancing and diversifying accountabilities
Local Government
Customers
National Government
Utility
What could be done?
Local Government
Customers
National Government
Utility
• Raise tariffs
Local Government
National Government
Bank
Customers
•Source external funding
Utility
• Raise tariffs
•Introduce regulator
Local Government
Customers
National Government
Utility
Independent regulator Bank
• Raise tariffs
•Source external funding
21
Introduction of group work
Groups of 5-10 people each. Each group appoints a chair and a rapporteur. Each group gets assigned a case. Groups get 30 minutes to discuss. Each rapporteur has 5 minutes to report back to the whole class (with
flipchart)
Questions for each group
Define the accountability framework of the utility? To which actors is the utility accountable? Which of the following functions exercises each of these actors: What is the relative ‘strength’ of each actor to hold the utility
accountable on a scale of 0-3? Based on (a), (b) and (c), draw the accountability map of the utility.
If you have time left: how could one better balance the utility’s accountabilities and create
more autonomy for the utility?