WSSB Capacity Enhancement Workshop 1 Session 3 Contract Management Systems

Session Overview 2 1. Performance reporting, monitoring & ongoing review 2. Management of relationships, issues, disputes, and conflict resolution 3. Corporate governance & transparency 4. Business Planning & Contingencies 5. Comments/Questions WSSB Capacity Enhancement Workshop

1.1 Performance Reporting, Monitoring & Continuous Review 3 “What is measured, can be managed” Delivering better value for money in water services requires boards to focus on achieving OUTPUTS, rather than dictating the INPUTS that must be used. Tell the Private Operator WHAT must be achieved (level of service) and not HOW to do the job (what inputs to use) WSSB Capacity Enhancement Workshop

1.2.Performance Reporting, Monitoring & Ongoing Review 4 Performance indicators of: The Model Performance Contract The Business Plan Frequency of reporting by the Private Operator to the Board Need for verification of performance data reported Continuous Monitoring: Performance drops as soon as organizations or individuals know they are not being monitored or measured.

2.1-Management of relationships, issues, disputes, and conflict resolution 5 The relationship between the owner of a water system and the operator/manager of a water system will have some inherent disagreements. Lack of investment in replacement of assets by the owner will raise the O&M costs of the operator; Inadequate maintenance by the operator will increase the investments requirements of the owner Accept that the operator will have superior information about its costs, options, intentions, etc. A manageable level of debate & disagreement over system maintenance, repairs & other issues is a good thing for the water system. WHY?… WSSB Capacity Enhancement Workshop

2.2Management of relationships, issues, disputes, and conflict resolution 6 Remember: Issues & Disagreements in small-town water systems occur within the context of Decentralization (local services perform better when local stakeholder are authorized to manage them) Therefore, problems should first be addressed by mid/lower- level managers & officials, instead of automatically getting passed-along up the chain-of-command. Encourage on-site managers & officials to recommend their own solutions first. WSSB Capacity Enhancement Workshop

2.3Conflict Resolution 7 Only if mid-level and on-site managers and officials cannot resolve an issue should it be referred to senior officials Consider agreeing to a technical review panel composed of agreed representatives of the private operator and the town council and an independent representative Arbitration should be pursued only after failure by senior officials to resolve the issue How to “encourage” senior officials to seek resolution to issues: Both senior officials must sign a letter admitting they have personally failed to resolve the issue, and must now pursue arbitration, etc. Both sides are reluctant to use arbitration as a dispute resolution mechanism because of the time and costs involved. WSSB Capacity Enhancement Workshop

3.1Corporate Governance 8 What is Corporate Governance? A system of practices by any Corporate body, (such as a Water Authority or a Private Water Services Corporation), to maximize the organizations performance, minimize risks and to protect the interests of shareholders and stakeholders Corporate Governance is a commonly-shared CONCEPT within an organization, not a specific, individual tool, procedure, or technique WSSB Capacity Enhancement Workshop

3.2-Key Characteristics of Good Corporate Governance 9 1. Discipline: Commitment by Management to adhere to behaviour that is correct & proper 2. Transparency: Management’s ability to make information available to outsiders that is candid, accurate & timely 3. Independence: Minimize conflicts of interest & dominance by a strong CEO or large shareholder 4. Accountability: Decision-makers in Institutions are accountable for their decisions (held liable to render an account of their decisions) 5. Responsibility: Management is “called to account” for its decisions & mismanagement is clearly penalized 6. Fairness: The Systems within the Institution include & balance the interests of all stakeholders 7. Social Responsibility: The Institution maintains high ethical standards, and is non-discriminatory & non-exploitative toward environmental & human rights WSSB Capacity Enhancement Workshop

3.3-Benefits of Effective Corporate Governance for Water Boards 10 Encourage new investment and growth of the system Fights against corruption Promotes competitiveness Stimulates productivity & innovation Promotes efficiency & reduces waste Fosters transparent relationship between public and private sectors Support public confidence in the sector Corporate Governance is about enabling & supporting LEADERSHIP in conducting all of the above activities WSSB Capacity Enhancement Workshop

3.4 Key Roles of the Water Board in Corporate Governance 11 Strategic Guidance for the local water system Monitoring of Management Accountability of the water system to the Local Authority and water consumers Duties of Care & Loyalty WSSB Capacity Enhancement Workshop

3.5A Code of Corporate Practices & Conduct Applies to all private & public companies, 2. Boards & Directors 3. Risk Management 4. Internal Audit 5. Integrated Sustainability Reporting 6. Accounting & Auditing 7. Relations with Shareowners 8. Communication WSSB Capacity Enhancement Workshop

4.1Business Planning & Contingencies 13 Key role of the Board is to develop and approve the Authorities Business Plan. Purpose of Business Plan: Set the strategic, long-term direction of the Authority Communicate to Management clearly WHAT must be achieved, so that management is empowered to decide HOW to best meet those goals Communicate to stakeholders and consumers the goals of the Authority WSSB Capacity Enhancement Workshop

4.2Business Planning & Contingencies 14 Effective Business Plan should include: Clear Statement of overall purpose of the Water Authority (Mission Statement) Identify clear goals for the Authority to achieve during the specific term of the Business Plan Identify clear performance indicators, linked to the Authority’s goals, that can tell if goals have been met or not Approve the general resources (financial, human & other) that will be required to meet the Plan’s goals. Allowance for contingencies: events or decisions that are beyond the control of the Authority Should allow a private operator to develop clear workplans & goals for each individual employee directly linked to the achievement of Corporate Goals WSSB Capacity Enhancement Workshop

15 WSSB Capacity Enhancement Workshop Comments/Questions