1. 1 Attributes of Well-Performing Water Utilities including two mapping tools for utility reforms Capacity Building Module

2. 2 Critical dimensions of a well run (public or private) utility Autonomy being independent to manage professionally without arbitrary interference by others reporting & “listening” to clients Customer orientation being answerable to another party for policy decisions, for the use of resources, and for performance Accountability

3. 3 Customer Orientation What? Degree to which utilities report and “listen” to their customers, work to better meet their needs  Customer orientation increases accountability of the service provider to its customers How?  Actively survey customers to learn their views and preferences in order to make better decisions  Use customer information to steer decision making  Have developed billings and collection systems that best overcome specific constraints faced by various customer groups  Inform customers about service changes and interruptions  Have developed effective complaint resolution mechanisms Customer orientation ‘pays’! (happy customers pay for services)

4. 4 Example: SIMAPAG (Guanajuato, Mexico) Invested in knowing what their customer wanted:  Surveys about 200 customers per month on their level of satisfaction with provided services Uses customer information for management decisions:  Surveys feed into the Balanced Scorecard which is used to support strategic decision-making  ‘client perspective’ is the most important of a number of ‘perspectives’ by which performance is measured in the Balanced Scorecard  Information is not yet methodologically used to define corporate strategies and priorities but scorecard focuses staff’s priorities thus increasing efficiency Invested in mechanisms to improve services:  customer information through bill stuffers and the media  expanded modes of billing and collection to minimize waiting times at utility office  Established tracking system for complaints  frequent customer management training for staff Results  Between 1996 and 2001: SIMAPAG’s income from customers increased by 280% from approximately $141,000 to over $400,000.  Funds have been reinvested to improve water supply services and helped to expand sewerage services But…in 2003: the city council lowered monthly automatic tariff increase from 1.1% to 0.01% (< inflation)

5. 5 Critical dimensions of a well run (public or private) utility Autonomy being independent to manage professionally without arbitrary interference by others reporting & “listening” to clients Customer orientation being answerable to another party for policy decisions, for the use of resources, and for performance Accountability

6. 6 Utilities with Internal Accountability & Autonomy Hard measures  Business plans  Systematic reporting between various levels  Incentives (rewards and penalties) to achieve well-defined performance targets  Standard processes, streamlined procedures  Cost accounting techniques that link resources to outputs  Outsourcing, market testing  Benchmarking Soft measures  Training to improve staff skills  Strong corporate culture  Moral and behavior norms that inspire staff and management to excel  Clear vision and mission statements  Shaped by top management …have shifted from traditional hierarchical set up to flatter decision-making structures

7. 7 Example: Public Utilities Board (Singapore) Internal decentralization of responsibilities:  Multilayered organization  Departmental heads are accountable for results - expenditure approval ceilings for various management levels  Outsources 25% of the operating budget Decentralization is supported by good info:  Performance indicators reported bi-monthly to the Board and published annually  Standard business processes and systems (ISO-9001)  Well-defined communication channels, including scheduled regular meetings PUB performance (2002) Corporate culture:  Clear merit-based promotion policies  Grooming of staff and rotation policies  Extensive training of staff (1.8% of operational budget)  Visible mission statement

8. 8 External Autonomy and Accountability Degree of independence from external interference in utility manager’s decision- making Extent to which external stakeholders (governments, financiers, customers) are able to sanction the utility for results and use of resources Autonomy Accountability

9. 9 External autonomy: creating room to deliver political strategic financial technical Space to maneuver political strategic financial technical Space to maneuver

10. 10 Effective autonomy is often lower than ‘paper’ autonomy

11. 11 External accountability A utility functions in a web of accountabilities to a variety of external actors with different functions Actors  Central governments  Local governments  Customers  Financing institutions  Regulators Functions  policy making  Ownership (utility and asset)  Regulation  Demand for services  Financing

12. 12 Policy making OwnershipRegulationDemand for services Financing customers Local government Central government Banks Example: Johannesburg, South-Africa Several external actors fulfill different functions

13. 13 Further information Available at: http://siteresources.wo rldbank.org/INTWS S/Resources/Worki ngnote9.pdf

14. 14 Tool 1 Mapping internal vs external reforms

15. 15 Sustainable utility reform and reform of the environment have to go hand-in-hand Our goal utility poorgood poor good Typical reform path environment Possible combinations environment status/utility provider status

16. 16 How Uganda combined reform measures for the NWSC utility and its environment Utility reform Reform of the environment 70s political turmoil mid 80s new government end 80s & 90s Major rehab 95 new statute 97 new Board 98 new MD 98-00 service & revenue enhancement programs 00 ext & int performance contracts 02 automatic tariff indexation 03 staff performance contracts 97 corporate plan

17. 17 …and how reforms enhanced performance of NWSC indicator99/0002/03 Water supply coverage54%63% Unaccounted for water42%39% Staff per 1000 connections2111 Collection period (months)6.24.7 Tariffs (Ushs/m3)8811015

18. 18 Tool 2 Mapping external accountabilities

19. 19 Mapping the map ofaccountabilities of a utility Local Government Customers National Government Utility A traditional utility: accountability skewed towards local government

20. 20 Balancing and diversifying accountabilities Local Government Customers National Government Utility What could be done? Local Government Customers National Government Utility Raise tariffs Local Government National Government Bank Customers Source external funding Utility Raise tariffs Introduce regulator Local Government Customers National Government Utility Independent regulator Bank Raise tariffs Source external funding

21. 21 Introduction of group work  Groups of 5-10 people each. Each group appoints a chair and a rapporteur.  Each group gets assigned a case.  Groups get 30 minutes to discuss.  Each rapporteur has 5 minutes to report back to the whole class (with flipchart) Questions for each group Define the accountability framework of the utility?  To which actors is the utility accountable?  Which of the following functions exercises each of these actors:  What is the relative ‘strength’ of each actor to hold the utility accountable on a scale of 0-3?  Based on (a), (b) and (c), draw the accountability map of the utility. If you have time left:  how could one better balance the utility’s accountabilities and create more autonomy for the utility?