Re-Engineering and Re-Organisation of the Revenue Management Function

Project OverviewAugust 2007

Objective of Presentation

• Introduce the re-engineering and Re-organisation of Revenue Management Project

• Introduce the role of WTA Program Management Unit

Contents

• Legislative Imperatives• Other Project Drivers• Key Challenges Facing WTA• Objectives of the Re-engineering project• Approach• Work Streams• Deliverables and Timelines• Challenges• Program Management Office

Legislative Imperatives

• Approval for the establishment of a National Water Resources Infrastructure Agency (NWRIC) to perform the operations and development of water resources infrastructure (2006).

The National Water Act provides for establishment of Catchment Management Agencies (CMAs) - functions

related to water resource management.

Other Project Drivers

• Cabinet Directive for Trading and Related Accounts, decision taken to separate the Water Trading Account and the Equipment Trading Account. (SY 3/6/B dated 22 May 1995)

• DWAF started operating Main (or Exchequer) and two Trading Accounts Water Trading and Equipment Trading.

• Water Trading Account now comprises Water Trading and Equipment since 1 April 2006.

• The SAP software solution was configured and implemented in response to

the requirements above

• Auditor General Qualifications due to absence of relevant policies and procedures and inappropriate implementation of accrual accounting principles.

Challenges Facing WTA

Organisation and Governance

A relatively new entity lacking an appropriate business planLacking a finalised organisation structureDependency on other units and external stakeholdersOngoing restructuring of the Department

Process

Alignment between business processes and SAPAbsence of essential policies and proceduresAlignment between Head Office and RegionsAuditor General qualification and issues

Systems

Data integrity and interfacing issues (WARMS and PERSAL)Compliance with accrual accounting requirementsIncomplete customer data

Challenges continued

• People

Without approved structure hiring is delayedLack of capacity and skilled personnelLack of interim arrangements (during restructuring)Dependency of wider reorganisation initiatives

Legal & Commercial

Adequacy of commercial terms, conditions, tariffs and SLAs to enforce invoicing and payment compliance

Objectives of this project

• To assist the in the re-engineering of the Water Trading Account’s business processes

• To assist in introducing policies and procedures that will facilitate the implementation of a control environment that will ensure an efficient and effective utilisation of the organisation’s assets

• To establish a process culture that will unlock additional revenue potential for the Trading Account

• To assist in Keeping the current operations going through addressing the numerous day to-day issues including eesponding to issues and qualifications raised by the Auditor General

To assist in mananging and coordinating the various projects and initiatives being undertaking by WTA

Approach

Scoping and Mobilisation

Due Diligence andRoot Cause Analysis

Leading PracticeTo Be Model

Gap and OptionAnalysis

SolutionsProposals

Project Management

ImplementationPlanning

Operational Support and Continuous Improvement

Change Management

1 2 3 4 5Management Checkpoints

Programme Management Office (PMO)

Legal Review

Organisation and People

Equipment Trading Account

June July Aug Sep Oct Nov Dec Jan Feb Mar Apr May

Work Streams

Business Process of WTA

DWAF TRADING ACCOUNT

Management Accounting

Supply Chain Management

Financial Accounting

Asset Management

Payroll

Register-to-Cash (incl Tariff Determination)

Construction Maintenance

Asset Management

Cash Management

Budgeting & Reporting

Procure-to-Pay

Equipment Trading Order-to-Cash (incl Equipment Costing)

Legislation & Statutory Reporting

Water Trading

Construction & Equipment Trading

Equipment Maintenance

Construction Capital Projects (incl Costing)

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Business Process Scope Definition

The following business processes will be addressed by this project:

• Registration-to-Cash• Construction Capital Projects• Equipment Trading Process Order-to-Cash• Cash Management• Budgeting and Reporting• Statutory and Legislative Reporting• Procure-to-Pay

• Business processes set out below are not being addressed by this phase of the project. Some maybe addressed by other initiatives:

Asset ManagementPayrollEquipment MaintenanceConstruction Maintenance

Deliverables and Timelines - Business Processes

Deliverable and Timeliness - Business Process

Deliverable Due date Stattus Requisition-to-Cash 28 Sep 07 Budgeting and Reporting 31 Oct 07 Statutory & Legislative Reporting 15 Oct 07 Equipment Trading Order-to-Cash 7 Dec 07 Construction Capital Projects 28 Feb 07 Cash management 31 Mar 07 Procure-to-Pay 21 Apr 07 SAP Utilities Fit Asessment 7 Dec 07 Roll out plan 15 May 07

Deliverables and Timelines - Construction and Equipment

Deliverables and Timelines - Legal

Deliverables and Timelines - Organisation and People

Activities Deliverables Due Date Status Review competencies for interim capacity needs

Competency profiles for interim capacity needs

13 July 07 Submitted

Define roles and responsibilities within Trading Account to address water trading and equipment trading account integration

Defined and validated roles and responsibilities for water and equipment trading accounts Functional analysis report

13 August 2007 Due

Review Training on Accrual Accounting

Report on the review of accrual accounting training with recommendations on further training needs

28 September 2007

Due

Review the organisation structure and reporting lines for Trading Account Analyse current delegation of authority and business processes. Recommend new delegations of authority Draft organisation model and recommend reporting lines

Proposed Organisational Model for Trading Account

14 December 2007

Due

Deliverables and Timelines - Organisation and People

Emerging Challenges

Role and involvement of HR in the project is not clearly defined

Operational fundamentals are not in place:

No business plan, No operational plans, No annual performance plans and agreements and No performance agreements

Lack of transitional arrangements to support ringfencing and eventual the separation of the Trading Account from the Exchequer Account

No approved Organisation StructureNo placement and migration planLack of capacity (both numbers and skills)Inadequate training on accrual accounting

Deliverables and Timelines -

Organisation and People Recommendation

• Assign an HR official to be a counterpart to consultants

• Initiate a process to focus on the overall OD strategy looking at the organisation as a whole and supporting the Chief Director to put in place plans for building the entire system

• Develop and finalise a placement and migration plan

• Appoint critical skills required within Trading Account

Change Management

Program Management Unit and Continuous Improvement

Objectives

Assist in Keeping the current operations going through addressing the numerous day to-day issues including eesponding to issues and qualifications raised by the Auditor General

Assist in mananging and coordinating the various projects and initiatives being undertaking by WTA

Tool for bringing together people activities and information to achieve strategic objectives

PMU aims to ensure that the quality of the output from the various initiatives

meets the required standards through the use of appropriate technology

Program Management Unit and Continuous Improvement

A number of initiatives and projects concurrently running within the Trading Entity and Trading Account

Currently trying to establish objectives, reporting structures and deliverables of the various initiatives including establishing linkages and dependencies

Requested information on current projects and initiative. We are given to understand that the following initiatives are currently underway:

Infrastructure assets verification and valuation (EWAM), Asset Management (Kwinana)Review of the Tariff determination strategy, The establishment of the budgeting framework and The optimisation of the implementation of SAP.

Program Management Unit and Continuous Improvement

Deliverable Due Date Status Register of current projects outlining the p roject name, professional service providers, scope, deliverables, timelines and key reporting d ates. List to be signed off by the client

31 July 2007

Completed awaiting client sign off

Standard project reporting templates

21 August 2007

Collecting, analysing and reporting on progress on all projects across the Trading Account

Monthly by the last Friday of the month from end of July

Performing enterprise portfolio management (e.g. recommending cost-saving or produ ctivity-focused projects when the metrics indicate that such in itiatives should be embarked upon)

Quarterly from 30 Sept 2007

Alignment of project objectives with corporate strategy and measured achievement of strategic objectives

Quarterly from 30 Sept 2007

Program Management Unit and Continuous Improvement

Deliverable Due date Status Scoping document outline the scope of work being performed by the work stream together with deliverable

31 July 2007 Draft ready

Preliminary listing of activities that have b een identified as requiring actions

31 July 2007 Draft ready

Prioritise listing of activities identifying expected delivery dates

3 August 2007

Work plan for the year 6 August 2007 Identification of resource requirements 14 August 2007 Work plans for each month Last Thursday of eac h

month

Identification of training interventions by functional areas at Head Office

28 August 2007

Progress report for each month Last Thursday of eac h month

Project mid term report 8 December 2007 Business plan for 2008/09 31 November 2007 Project close out report 24 May 2008

Program Management Unit and Continuous Improvement

Challenges

• Need to align work being formed by various projects to the NWRI business plan

• Not all projects have clearly outlines governance and reporting structures - Difficult to manage performance

• Interventions on projects that are nearing completion• Approval of organisation structure for the WTA• Lack of clearly identified support structures especially for IT and Human

Resources• Completeness of our register of projects and initiatives