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ZA IWA paper

  1. 1. Using Process Benchmarking to Leverage Best Practices in the Establishment of aFunctional and Dynamic Balanced Scorecard-based Performance Measurement System:Abu Dhabi Sewerage Services Company Demonstrates How Benchmarking Can AssistOrganizational Excellence. Mr. Zillay Ahmed, Abu Dhabi Sewerage Services Company, PO 108801, Abu Dhabi, UAE: Mr. David Main, AECOM Canada Ltd., 3292 Production Way, Burnaby, BC, Canada: Ms. Kathy Davies Murphy, City of Calgary, Alberta, Canada: Ms. Linda Petelka, Region of Peel, Ontario Canada: Linda.Petelka@peelregion.caAbu Dhabi Sewerage Services Company (ADSSC) IntroductionThe Abu Dhabi Sewerage Services Company (ADSSC) was established in 2005 to takeresponsibility for the wastewater collection and treatment requirements for the Emirate of AbuDhabi (including the cities of Abu Dhabi and Al Ain). The ADSSC’s strategic plan is directlytied to the strategic plan of the Emirate of Abu Dhabi, which has set an ambitious long rangevision for the region in a plan called “Abu Dhabi 2030”. The long range plan includes theprovision for substantial growth over the next 20 years as the population more than doubles inthis timeframe. This will place a significant demand for new sewerage infrastructure.Currently ADSSC owns, operates and maintains two large Sewage Treatment Plants (STP), 24package STP, 236 pumping stations (80% in AD) and over 7400km of sewer mains (66% inAD). ADSSC is also responsible for planning and implementing system expansion required tosupport future growth. To meet these extraordinary growth demands, ADSSC has embarked ona major sewer trunk tunnel program which includes a 41 km trunk tunnel that is up to 5.5m indiameter. When completed in 2014, this gravity trunk system will enable the decommissioningof 34 existing pumping stations in a new system that will be simple to operate, energy efficient,and eliminate odours and overflow risks.Current ADSSC management challenges include: • Meeting Abu Dhabi’s projected rapid population growth • Ensuring that the infrastructure expansion and capital projects are delivered on time and to budget • Managing cost in a relatively high inflation environment • Operate and maintain the utility for the benefit of customers with an acceptable level of service • Attracting and developing a skilled workforceADSSC is also faced with the growing need to renew and replace aging infrastructure, as well asensuring that all levels of service can be maintained through the aggressive construction phases. Page 1
  2. 2. This will require that the ten divisions within ADSSC operate in close association with oneanother to ensure that all organizational objectives set out in the ADSSC Strategic Plan are met.The ADSSC is committed to continuous improvement and have participated in benchmarkingsome of their core processes with a broad range of leading utility agencies. Based on pastsuccess with benchmarking, ADSSC approached AECOM (due to AECOM’s long termexperience in designing and implementing benchmarking within the water and wastewatersector) to develop a cooperative approach to benchmark their recently implemented BalancedScorecard-based Organizational Performance Management System with a range of similarwastewater utilities for the purpose of assisting in the optimization of the performancemanagement system to its full potential.Need for a Precise and Well Documented Strategic PlanADSSC’s directives from its Executive Committee are precise and critical. Sewerageinfrastructure must be in place to support the high growth demands of Abu Dhabi, and currentoperations and maintenance must be conducted to ensure a high rate of customer service. Inaddition to this challenging environment, the ADSSC organization is relatively small withapproximately 500 staff persons. All of the capital project and O&M work is conducted by arange of consultants and contractors. In order to ensure that work proceeds as required, ADSSChas advanced a detailed and comprehensive strategic planning process as shown if Figure 1. Figure 1: ADSSC Strategic Planning Process Page 2
  3. 3. Use of Performance Indicators to Guide the Implementation of the Strategic PlanThe Strategic Plan includes two-year business plans for each of the ten divisions within ADSSC.Since the plan can only be attained if all ten divisions work together as a team, the need for aperformance management system that included meaningful key performance indicators (KPI)was defined. In 2009, ADSSC began development of a Balanced Scorecard performancemeasurement system to ensure that all vital initiatives and utility levels of service can be trackedand monitored. The performance management system aims to translate ADSSC’s strategy intooperational objectives that will drive both behavior and performance at all levels of theorganization. This will be achieved by:  Translating strategy into everyday actions  Aligning all Divisional/Departmental plans with ADSSC strategy  Integrating strategy with individual employee work  Making strategy management a continuous process.The initial Balanced Scorecard process was implemented with a suite of performance indicatorsthat were selected through a series of internal workshops. The Balanced Scorecard went live in2010 with the following high level structure: Figure 2: ADSSC Performance Management System Structure ADSSC 5 year Strategy Plan (2010 – 2014) ADSSC 2 year Business Plan (2010 – 2011 ) KPI’s in 2 year plan used for Internal & External Reporting Customer Services Division Business Support Division Each ADSSC Divisional Scorecard includes both of : Asset Management Division Finance Division Mandatory Objectives and KPIs ( Assigned by ADSSC Executive Council ) Human Resources Division Operations and Maintenance Division Divisionally Owned and Selected KPIs ( Selected to measure attainment of Projects Division current year divisional initiatives and day- to-day activities.) Project Mgmt Division Regulation office formed in late 2010, not Supply Services Division reflected herePerformance indicators were selected for use for each departmental objective. At least oneperformance measure for each objective is required, but complex objectives would likely requirea range of indicators. There are two important types of objectives: 1. Mandatory Executive Driven Performance Indicators: Some organizational objectives are mandated by the ADSSC Executive Committee. Each of these objectives ally to all divisions and have mandatory performance indicators. These indicators report on and Page 3
  4. 4. track key governmental obligations, such as budget and schedule conformance, targeted hiring, safety, etc. 2. Divisionally Owned KPIs: These are developed and selected to monitor and track initiatives and levels of service within the respective division. They differ from division to division and reflect the specific nature of each divisional business plan.As of late 2010, ADSSC was tracking about 150 KPIs through its computerized ARP BalancedScorecard system. Each measure is updated quarterly by staff within each division, with variouslevels of management and executive reporting. Success with the system will be based on manyfactors, but the following attributes will be important if the system is to meets its objectives:  The KPIs result in a meaningful measure of progress in Business Plan attainment  KPI results (especially where an unexpected variance occurs) trigger specific and timely action  ADSSC Staff use the KPI reports as useful information to prioritize their work in the coming period  ADSSC Management and Executive are confident that KPIs results are accurate and reflect the complete picture of progress on the ASDDC Strategic Plan  The Scorecard enhances ADSSC staff work satisfaction as opposed to being used as a tool to offer negative reinforcement.Purpose of Process BenchmarkingSince ADSSC did not have long term experience with wastewater utility based performanceindicators, ADSSC commenced a program to process benchmark the implementation of theBalanced Scorecard performance management system with two leading utilities from the wellestablished Canadian National Water and Wastewater Benchmarking Initiative (CNWWBI).The CNWWBI has been successfully benchmarking water and wastewater utilities for over 10years and has unmatched experience in the productive use of performance indicators1. Both theCity of Calgary and the Region of Peel have been using performance management systems suchas Balanced Scorecard during part of this time as well.The City of Calgary and the Region of Peel represent leading Canadian wastewater utilities thatexhibit many similar attributes as ADSSC including high rates of urban growth, growinginventories of aging infrastructure, and a strong commitment to the environment and customerservice. Both of these municipal wastewater utilities are extremely conversant in the use of PIs,having engaged in extensive benchmarking for over 10 years. Interestingly, while Calgary andPeel both operate at a very high level of service, there is a gap regarding useful performanceindicators to guide key priority strategies. In some cases, tactical PIs are being used out ofcontext. By benchmarking the use of PIs and performance measurement dashboards such as theBalanced Scorecard for the purpose of achieving strategic goals, a range of implementation BestPractices have now been identified and documented to aid each of the subject utilities inenhancing their corporate level performance management systems.It is interesting to note that even though the Canadian wastewater utilities operate in vastlydifferent geographies and climates, the basic goals of a utility remains similar. With a generally1 Main et al; “The Canadian National Water and Wastewater Benchmarking Initiative: Using Process to DriveImprovement”, Performance Assessment of Urban Infrastructure, IWA, 2008 (pg 243) Page 4
  5. 5. common set of goals and objectives, good management practices in an arid and hot climate areequally effective in a temperate climate where wet weather is a significant local factor, and thatbenchmarking is an effective way to agree on, and share Best Practices. At the tactical level of autility, many of the same PIs can be used, but at the utility’s strategic level, PIs must be carefullyconsidered and developed to reflect the overall attainment of key strategic priorities.This process benchmarking exercise was not meant as a replacement methodology for currentutility performance management efforts but rather to learn from the experiences of a range ofleading wastewater utilities as to how to deal with unanticipated issues and challenges associatedwith implementing a complex process for monitoring and managing continuous improvement.Process Benchmarking ProcedureThe general methodology for the process benchmarking exercise is presented below:Part 1: Understand System Design and Implementation 1. Compare and contrast each utility’s objectives for their performance management system: Were these systems developed for the same or similar purposes? 2. Compare and contrast each utility’s general implementation approach 3. Document issues and challenges that arose during implementation and the strategies used to deal with overcoming issues and challenges.Part 2: Understand the Physical Nature of the Current Systems 1. Comparison of the physical nature of the Balanced Scorecard 2. Use of metrics within the dashboard 3. Collecting, storing and managing KPI data assist decision makingPart 3: Attainment of the Desired Objectives: To what extent have the performance managementsystems met the anticipated objectives?Part 4: Proposed Program Evolution/Enhancements for System: Recognizing that the systems arestill in the early stages, what are the recommended steps to further the overall implementation ofthe Balanced Scorecard system?Part 5: Utility Best Practice Identification: Examine individual Best Practices that are resulting insuperior results within each utility and breaking down these practices into components forevaluation. Highlight Best Practices that are exportable to ADSSC for consideration.The benchmarking methodology involved a detailed review of each utility’s performancemeasurement program by the AECOM facilitator, including the systems and efforts that arerequired to operate the program and an assessment of each program in terms of it meeting itsdesired objectives. Following the review of the individual performance management programs, aseries of workshops were convened as a forum to have an open discussion and to facilitateinformation sharing. In all cases, each workshop featured a range of presentations anddiscussions that included a diverse range of managers and staff who are responsible forconducting individual utility functional processes. Page 5
  6. 6. As a process benchmarking exercise, it is not the intention or objective to rank or grade each ofthe performance management programs, but rather to create an environment whereby each utilitycan learn from one another. As individual Best Practices or successful outcomes are observed,utilities have an opportunity to share the practice to everyone’s benefit.Observations from the Process Benchmarking ExerciseThe ability to match performance measures with the process for conducting the utility function,and then examine the detailed elements of the function was a powerful tool set to not onlyevaluate performance indicators, but also to conduct assessments into Best Practices. All of theparticipants agreed that this methodology enabled a very thorough analysis of a large range ofeffective utility processes. Figure 3 shows the PI to function relationship that was effective inthis exercise. Figure 3: Performance Indicators and the Link to Utility Functions Performance Indicator Function that is being measured Implementation details regarding the functionThe relationship of the Strategic Plan to utility actions was of particular interest in this exercise,and was the focus of considerable analysis. It was quickly observed through the workshopsessions that ADSSC’s strong and well articulated strategic planning process has made thephysical implementation of the Balanced Scorecard mechanisms possible in a fairly short period.The Process Benchmarking project team (made up of participants from each of the threecooperating utilities and the AECOM facilitator) agreed that an ambiguous strategic planningprocess would make organizational performance management very difficult, and a BalancedScorecard based program would become a frustrating experience due to lack of strategicplanning clarity. It was agreed that organizational goals and objectives need to be actionable andtangible to support true measurement.ADSSC has successfully incorporated most of its non-wastewateter utility specific successfactors into its Balanced Scorecard. These factors were documented through the fairlysignificant number of Executive Committee Mandatory KPIs that measured broad organizationalobjectives such as:  To ensure the prudent management of the ADSSC by eliminating unnecessary costs and following policies and procedures  To continuously develop and improve the skills and capabilities of all staff, thereby ensuring that ADSSC is an attractive place to work  To improve ADSSC’s internal and external communication capabilities (e.g. via regular meetings/newsletters/emails, etc.)  Achieve organizational excellence via the introduction of Best Practices within ADSSC Page 6
  7. 7. Since both the City of Calgary and the Region of Peel wastewater utilities were subsets of theirlarger municipal operations, these objectives while vital to overall utility success, were managedand tracked by teams outside of the direct utility functions. There is a separation betweenwastewater utility performance indicators that are used for utility benchmarking and indicatorsthat could be used to measure the efficiency of support service functions.Both the City of Calgary and the Region of Peel featured extremely detailed management andtracking of performance indicators and conducted annual comparative benchmarking withinutility functions, most particularly within the operations and maintenance functions. Bothutilities tracked and managed performance measures around a common utility management goalmodel that includes seven core utility goals:1. Provide Service Reliability2. Provide Sufficient Service Capacity3. Meet Service Requirements with Economic Efficiency4. Protect Public Health and Safety5. Provide a Safe and Productive Workplace6. Have Satisfied and Informed Customers7. Protect the Environment (Water, Land, and Air)Calgary and Peel track and manage about 70 performance indicators on an annual basis thatdirectly connect to the above seven goals to measure the attainment of overall utility success andconformance to stated levels of service. These measures were also enabling a broad range ofdetailed process benchmarking within the utility.In contract, ADSSC is presently tracking a mix of KPIs that pertain directly to the wastewaterutility services, financial and customer outcomes. The current suite limits the information thatO&M staff has access to for the purposes of optimizing O&M services, though some high leveltracking of overall customer service can be successfully tracked over time. % Operational budget variance % Plans expenditure variance % Plans executed on time Quality of treated wastewater Average response time for Emergency incidents Number of public network blockages Number of odour complaints % Completion of planned preventive maintenance tasks # of public complaints resolved # of non-public (private) complaints resolved Page 7
  8. 8. % Compliance in O&M HSE inspection reports # of Top leadership communication sessionsChallenges Common to Each Participant: Tactical vs Strategic Performance IndicatorsNot surprisingly, ADSSC, Calgary and Peel all have greater comfort with tactical performancemeasures as opposed to strategic indicators. Tactical performance indicators are those thatmeasure a focused and narrow aspect of a program, project, or function. They are associatedwith measuring a tactic within a strategy. For example; the number of sewer blockages is atactical measure within the strategic goal of providing a reliable service. Since blockages areonly one cause of service interruptions, we need of other tactical measures to determine if theoverall service is truly reliable. If we do not fully understand the tactics required to provideservice reliability, we are at risk of measuring the strategy incorrectly or inaccurately. Figure 5illustrates this example. Figure 5: Relationship Tactics to a Goal Goal: Provide Reliable Sewer Service Requirement: Sewers are unimpeded with dirt, roots or grease Requirement: Connections are clean Requirement: Sewers are in good physical condition Requirement: Sewer can handle flow levelsIndustry wide, almost all of the individual performance indicators that are commonly used withinwater and wastewater benchmarking activities are tactical measures. This includes indicators inuse with AWWA QualServe, the IWA Performance Indicators for Water Supply ServicesHandbook, and the CNWWBI. Attempting to use an individual tactical measure to assess theprogress of a strategy is at risk of being incomplete or incorrect. Since a range of tactics are usedto achieve a strategy, strategic measurement is a more complicated process.The Challenge of Measuring Attainment of StrategiesAdvanced wastewater utilities such as ADSSC, Calgary and Peel are all facing strategicenvironmental, financial and organizational challenges as well as routine technical challenges inthe provision of wastewater services. For example, a common strategic need in each utilityconcerns the attraction and retention of skilled staff. Without dedicated and skilled staff, utilitieshave no chance at success. This is a good example of where a more rigorous approach todeveloping strategic KPIs is required. Figure 6 below illustrates some of the possible tacticalrequirements that might be required to ensure that the strategic goal of attracting and retainingskilled employees can be achieved. Page 8
  9. 9. Figure 6: Example Tactics Regarding a Strategic Goal Goal: Attract and Retain Skilled Employees Requirement: Competitive remuneration Requirement: Manage work life balance Requirement: Oppotunities for professional growth Requirement: Commitment to training and education Requirement: Respectful workplace and value diversityIt is simply not possible to isolate a single KPI to measure this strategy. The final measure ofthis strategy would include multiple tactical measures in association with subjectivecommentary.Conclusion and Final ObservationsADSSC’s strong vision and the strategic plan around this vision has enabled the utility to begin aBalanced Scorecard based performance measurement system that is well positioned to succeed.Through this process benchmarking project, ADSSC has now identified a range of Best Practicesthat can be implemented to enhance its Balanced Scorecard implementation in a gradual andsustained manner. Beyond a plan for continued enhancements to the Balanced Scorecard processhowever, ADSSC has successfully identified a selection of utility management and operationalBest Practices that are currently in use within Calgary and/or Peel that can be exported toADSSC. These practices include:  Integrating GIS into risk based asset management  Employee recognition programs  Implementing sewerage tariffs  Customer care management  Operations and maintenance performance management and benchmarkingAs the Balanced Scorecard program begins generating reports, actions can be prioritized andimplemented to further advance ADSSC in its mission of organizational excellence. Page 9