When A Better Utility Is The Best Utility: Performance-Based Benchmarking and Routine Check-ups for Continuous Improvement-Driven Utilities

In a recent performance review, HDR employed an approach that utility executives can use to develop and execute a strategic vision, to identify and fix underperforming operational and organizational areas, and to become a high-performing utility that is ready for current and future challenges.Most of the top challenges facing utility executives across the country – including operational risks, financial and regulatory pressures, succession planning and knowledge transfer, high energy and chemical costs, and change management – can be met only by a high-performing utility. To make meaningful progress utilities need to have an actionable strategic program based on a realistic assessment of performance that can be adjusted and periodically assessed to ensure continuous improvement.Many times utility executives don’t know where to start or how to find objective measures of the health of their organization and its ability to meet short and long term challenges. This paper provides straightforward tools for a utility performance benchmarking process that can be repeated annually or when determined necessary. This process is based on a recent AWWA survey of leading water providers and results in better organizational coordination over the long term and a greater cohesion around mission, goals, and milestones. Furthermore, this paper will provide straightforward tools and processes for benchmarking water and sewer operations, rates, and other performance measures. By identifying and targeting underperforming areas for improvement, executives can identify weak points to better mitigate risk, uncover areas with actual cost savings potential, and ensure that they are leading a world-class utility.Routine check-ups are essential for continuous improvement, and the best utilities have an active program of setting and managing metrics. Managers should continually monitor the financial, operations, maintenance and customer service performance of their utility. Success lies in implementing a robust framework to review Key Performance Indicators (KPIs) on a daily basis in the field and on a weekly basis in formal team meetings. This real-time evaluation allows managers to make course corrections in their operations to close performance gaps over the year. Utility staff should be highly engaged in this process as the “owners” of performance. At years end, managers can provide input about results, how performance can be improved, and what the new target will be for the following year. Critically, the inclusion of new metrics and removal of performance measures no longer required should be part of the on-going review process to help the utility manage performance effectively and without unnecessary burden (knowledge rich vs. data rich).HDR used three approaches to assess a private water company’s (Client’s) current performance, related metrics including the established KPIs, and their incorporation of metrics into utility management.First, to measure performance, an internal comparison of metric targets versus Client’s actual performance over the past four years was completed. This provided a trend analysis of performance and an independent analysis to supplement Client’s existing and detailed review of performance metrics on a daily, weekly, and monthly basis, HDR analyzed year-over-year performance for KPIs and reporting metrics with available historical performance information. The purpose of this assessment is to determine general trends in performance and to provide a longer-term perspective.Second, a benchmarking evaluation against industry standards was conducted using AWWA’s “Benchmarking Performance Indicators for Water and Wastewater: 2013 Survey Data and Analyses Report”. During the benchmarking evaluation, Client’s performance data was compared to three sets of survey data: thirty-three utilities nationwide, seven water utilities in the northeast, and fifty-three water utilities with service populations of the same size. This allowed for relative comparison to peers regionally and nationally as different utilities across the country have varying characterizations (e.g. system age, size, supply, and weather), demographics, drivers, and costs. Additionally, each performance benchmark was aligned with a EUM attribute to allow for the identification of those general areas for which metrics are lagging when compared to other utilities. The results were discussed within a report and a two-sided 11x17 quick reference chart was produced to determine past Client performance versus its peers at a glance.Third, a comparison to lists of industry standard KPIs was completed to determine if there were any gaps in performance metrics that Client was not tracking. A metrics review was completed by comparing Client’s current KPIs to AWWA’s “QualServe Tools to Improve Utility Operations” and “Key Asset Data for Water and Wastewater Utilities” lists of KPIs. These KPIs were also aligned with EUM attributes for a holistic view of data points that are being tracked throughout the utility.Recommendations were provided to improve use of the metrics and their performance over time. Gap closure recommendations were included for missing KPIs, as well as recommendations for improvements to the data collection and tracking process. Cost-savings recommendations included operations and maintenance optimization by reallocating labor to preventative maintenance activities as well as performing a root cause analysis of unplanned service interruptions were also made.Combining these tools, methods and references together provides a thorough approach to assessing the current performance management system of a utility. Repeating this process annually can help a utility strategically re-direct itself toward a continuous improvement culture. This 360-degree evaluation of the utility considered performance data related to customer service, billing, meters, construction, supply, production and distribution. Such a comprehensive review of an entire utility allows executives to obtain an objective measurement of their operations using best practices in the industry, in order to focus their improvement efforts and align staff at all levels of the organization.