CONTINUOUS IMPROVEMENT – LOOKING BEYOND THE PRIVATE-PUBLIC SECTOR GAP

Increasingly, public water and wastewater utilities are engaging in some form of continuous improvement or re-engineering program as a result of being threatened by privatization of a portion or all of their water and wastewater functions. Through the assistance of companies specializing in assisting public sector utilities to become more efficient and competitive with the private sector, public sector utilities have invested significant time, effort, and money in becoming more competitive with the private sector. One method of determining public-private sector competitiveness is to calculate the competitive gap that exists between the public-private sectors. Although this “gap” is important in assisting public utilities in becoming more competitive, it does not always accurately and thoroughly explain the basis or reasons a gap exists.Spartanburg Water System (SWS), located in Spartanburg, South Carolina, has recently undergone a competitive analysis and re-engineering program. SWS hired an independent consulting firm to assist and train employees in understanding and improving each utility's competitiveness and efficiency as well as calculate a public-private competitive gap that served as a primary goal in increasing the level of competitiveness. However, after carefully examining all functions and services that the utility provides, it is quite evident that the use of a gap comparison solely does not fully or accurately depict the true “gap” between public and private sectors. It was discovered that SWS performed numerous services that typically are not found in private utility operations. These services may derive from certain political desires or issues, or may be specific to a particular system or geographic area. Moreover, certain customer bases may desire an increased level of service and may be willing to pay for such services.When public utilities engage in competitiveness and/or re-engineering programs, the use of a gap analysis as the sole basis for determining public/private competitiveness should be cautioned against. Each utility must identify all functions within the utility, determine which may be unique or specific to that individual utility, and determine the value or importance of each function.