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

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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

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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

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…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

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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?