Why You Need a Business Practice Evaluation

Why You Need a Business Practice Evaluation

Have you thought lately about the overall health of your business?  In today’s economy, it’s important to not only deliver your service, but to operate effectively and efficiently. An excellent way to gain insight into this is through conducting a Business Practice Evaluation (BPE). A BPE assesses the health of a utility by developing the framework for a structured approach to managing, operating, and maintaining assets in a more business-like manner. The goal would be to minimize the total cost of operating, managing and maintaining utility assets while still delivering exceptional service to customers. This is accomplished by providing more effective preventive maintenance to reduce capital investment.

The evaluation process will ultimately enable utility managers to assess the efficiency and effectiveness of their business practices in comparison to industry standards. Developing system specific plans, programmatic approaches, and realistic timelines to optimize utility programs are included in this process.

Similar to management consulting services, a BPE has potential to bring incredible value to your utility. While the list of benefits is copious, here are a few of the major advantages of conducting a Business Practice Evaluation.

business practice evaluation graphic with words and icons including innovation, process, research, development, management, teamwork, marketing, analysis, strategy and efficiency

Next Level Growth

Firstly, conducting a BPE will provide a baseline of exactly where a utility or company’s business practices currently are. Through a rating criterion, findings report, and subsequent scoresheet, the opportunities for improvement will become clear. A company can then make modifications to their business practices to reach the next level of efficiency and effectiveness.

Objectivity

As a manager, it may be hard to focus on the cause of an issue when you are immersed in it every day. Conducting a BPE will allow for an industry expert to look at a situation objectively and make the best-informed recommendations based on the BPE’s proven history of success.

Cost Reductions

A successful Business Practice Evaluation will help companies cut costs by simplifying and refocusing existing business practices. Expert BPE consultants can look at costs from a different lens and offer insights based on data and effective-practice knowledge.

piggy bank with money falling into it

Improved Communication and Relationships

In big and small companies alike, communication is key. An open line of communication is particularly critical between management and field personnel in water and wastewater utilities. Through field observations of current business practices, valuable insights in reference to efficiency and effectiveness will be provided. Management and field personnel can then identify and prioritize opportunities for improvement, as well as come to a consensus in all business practices. A successful BPE will help to eliminate the fissure between management and field staff, eliminating the ‘us versus them’ mentality.

Staff Accountability

A Business Practice Evaluation is completed through a series of interviews within a diagonal slice of utility staff. Recommendations from the BPE findings report will aid in staff accountability by identifying and implementing realistic performance measures. For example, the report may show within the Administration category that an Emergency Response Plan (ERP) is not in place. Subsequently, a Public Water Supplier could then take the necessary steps to implement an ERP and provide staff with the required ERP training.

A Way Forward

One of the most valuable pieces of information obtained from conducting a BPE is knowing where a business stands from a micro-level view. Once the scoresheet is complete, a company can determine if their primary business functions are being efficiently and effectively managed (or not). Moreover, the risks and consequences of not moving forward with proposed recommendations are identified. Having this information allows management the ability to prioritize business practices and supporting attributes, and sets the business on the right path going forward.

Improved Quality of Life

Changes resulting from the completed Business Practice Evaluation have the potential to improve quality of life and staff morale by communicating and providing a clear management plan to move forward. While improvements may not always be evident prior to the BPE, management and staff alike will be happy when positive changes are made. With more efficient and effective business practices and improved communication, the business continues to thrive.

 

Image of business people hands on top of each other symbolizing support and power

Interested in the full scope of the Business Practice Evaluation? See the step-by-step process below.

  • Review utility documents and documentation of business practices
  • Develop rating criteria to determine level of performance of business practices
  • Develop business practice categories and supporting attributes scoresheet with the assistance of your utility staff
  • Conduct kick-off, consensus, and findings workshops
  • Conduct interviews within a diagonal slice of the organization
  • Conduct field observations of current business practices (not people)
  • Develop a BPE findings report
  • Develop a BPE scoresheet from the findings report

In conclusion, it is critical to stay on top of internal functionality regardless of the type of business you operate. Keep in mind, no matter how well-oiled a machine is, there is always room for growth and improvements. Organizations that have conducted a BPE significantly improve the management, operations and maintenance efficiency of their utility.

 

How to Handle Increased Summer Water Demand

The summer months often go hand in hand with increased water demand and decreased supply. An influx of tourists combined with summer drought and increased outdoor water usage often leaves water systems feeling the pinch. Traditionally, water conservation has been limited to water use restrictions. However, increasing water efficiency is another way to address limited water supplies, with the added boon of providing economic and environmental benefit.

Efficiency = Conservation

Water efficiency reduces water usage that is unnecessary or wasteful. Rather than focusing on limiting the minutes per day a homeowner can water his lawn, efficiency focuses on accomplishing water objectives by utilizing only as much water as is needed. For example, we now know that flushing a toilet is just as effective with a 1.6 gallon flush as it is with a 3.5-7 gallon flush. Further, we know that water that drips out of a leaky faucet can waste up to 20 gallons per day, and that leaking municipal pipes waste exponentially more water. Increasing efficiency and reducing waste are two major ways in which we can all help to conserve water.

Municipal Efficiency

Considering that 10-30% of our nation’s clean, treated drinking water, or seven billion gallons per day, is “lost” before it ever even reaches the consumer, municipal efficiency is best accomplished by conducting routine water audits. Water audits help to identify the causes of water loss and develop strategies to reduce this loss — and recapture lost revenue. Most utilities in the U.S. conduct infrequent water audits and are likely suffering substantial losses without even knowing it. Repairing our nation’s hidden underground infrastructure will also increase water availability, lower operation and maintenance costs, reduce the need for new sources and costly treatment plants, and diminish impacts from drought and climate change. But repairing and replacing pipes is costly, so utilities require a methodology by which they can accurately pinpoint the most problematic areas in the distribution system, thus investing their limited infrastructure dollars where they are needed most. Water audits, which consider both real and apparent losses, are the most efficient, cost-effective way to accurately assess and address lost water.

Residential Efficiency

Washing vehicles on the lawn without detergent is environmentally friendly.

Residential water usage is also a key factor in water conservation. The biggest residential outdoor water guzzlers are summer activities such as lawn and garden watering, car washing, and water-based recreation, while the biggest water indoor guzzlers are, in order, toilets, washing machines, showers, sinks, and leaks. One of the keys to successful conservation is to stop thinking about limiting water usage as “going without” and to start thinking about it as doing the same — or more — but with less. Challenging ourselves to accomplish our water-based tasks with less usage will naturally lead to a more water and cost efficient household. The best part is that conservation doesn’t just ease our wallets, but also provides endless benefit to the environment and our community.

Lawns

When seeding a lawn, select a turf mix that matches your site conditions and climate, and improve the health of your lawn by regularly aerating, dethatching, and adding compost. Mow lawns to the highest mower setting so that the roots are shaded and help the soil to retain more moisture. And speaking of water, water deeply but infrequently, and only in the early morning to avoid evaporation. This will encourage drought resistance and deep, healthy plant roots.

Gardens

native-plants
Root systems of Non-Native vs. Native Mid-Atlantic Plants. Source: Alliance for the Chesapeake Bay

Choose native, drought-resistant plants and group plants with the same watering needs together, preventing over- or under-watering as well as minimizing the need for supplemental watering. Also, mulch around plants to help the soil retain moisture and to reduce evaporation. Finally, think about installing a rain barrel to be used to water non-edible plants.

Maintenance and Recreation

Clean walkways and driveways with a broom, not the hose, and inspect all outdoor water fixtures for leaks. Check pools and spas for leaks, regularly service pumps, and cover them when not in use to reduce evaporation. Finally, don’t leave the hose running when washing vehicles, or better yet, drive through a car wash. Commercial car washes use less water than washing the car at home, and are legally required to manage their gray water runoff to avoid pollution.

Indoors

Install water efficient toilets that use only 1.6 gallons per flush, and regularly check toilets for leaks. Leaky toilets are most often fixable by simply installing a new flapper. Try taking shorter showers and install water efficient showerheads. Only run the laundry or dishwasher when completely full, and consider replacing older models with newer, more water efficient ones. Repair leaking faucets and install water efficient faucet aerators to reduce water usage, and wash fruits and vegetables in a pan of water rather than running the faucet. Bonus: use the spent wash water to water house plants.

In Conclusion

Summertime is a time for family and fun, and water restrictions shouldn’t put a damper on summer activities. Conscientious residential water usage combined with consistent, well-implemented municipal water audits results in a more cost-effective and environmentally friendly water system. Water conservation and efficiency benefits both consumers and municipalities, and provides a more sustainable water system for future generations.

 

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Effective Water and Wastewater Utility Management

A water main break is a common occurrence with our nation’s failing infrastructure

As water and wastewater utilities nationwide face an increasing number of challenges, including rising costs and population, aging infrastructure, drought, increasingly stringent regulatory requirements, and a rapidly changing workforce, creative and innovative methodologies for treatment and distribution along with efficient and effective utility management have become paramount. In order to ensure a strong and viable utility for future generations, utilities must find ways to improve their products and services while increasing community support. Effective water and wastewater utility management helps utilities improve performance in critical areas while responding to current and future challenges, all with limited infrastructure dollars.

In May of 2007, six major water and wastewater associations and the U.S. Environmental Protection Agency signed an historic agreement pledging to support effective utility management collectively and individually throughout the water sector and to develop a joint strategy to identify, encourage, and recognize excellence in water and wastewater utility management. Participating organizations included the following:

  • Association of Metropolitan Water Agencies (AMWA)
  • American Public Works Association (APWA)
  • American Water Works Association (AWWA)
  • National Association of Clean Water Agencies (NACWA)
  • National Association of Water Companies (NAWC)
  • United States Environmental Protection Agency (EPA)
  • Water Environment Federation (WEF)

The result of this powerhouse collaboration was the Effective Utility Management Primer, issued in June of 2008. The Primer, designed specifically to assist water and wastewater managers in identifying and addressing their most urgent needs through a customized, incremental approach, outlines ten attributes of effectively managed utilities along with five keys to management success:

Ten Attributes of Effectively Managed Water Sector Utilities

  1. Effective Utility Management: A Primer for Water and WastewaterProduct Quality produces potable water, treated effluent, and process residuals in full compliance with regulatory and reliability requirements and consistent with customer, public health, and ecological needs.
  2. Customer Satisfaction provides reliable, responsive, and affordable services in line with explicit, customer- accepted service levels. Receives timely customer feedback to maintain responsiveness to customer needs and emergencies.
  3. Employee and Leadership Development recruits and retains a workforce that is competent, motivated, adaptive, and safe-working. Establishes a participatory, collaborative organization dedicated to continual learning and improvement. Ensures employee institutional knowledge is retained and improved upon over time. Provides a focus on and emphasizes opportunities for professional and leadership development and strives to create an integrated and well-coordinated senior leadership team.
  4. Operational Optimization ensures ongoing, timely, cost-effective, reliable, and sustainable performance improvements in all facets of its operations. Minimizes resource use, loss, and impacts from day-to-day operations. Maintains awareness of information and operational technology developments to anticipate and support timely adoption of improvements.
  5. Financial Viability understands the full life-cycle cost of the utility and establishes and maintains an effective balance between long-term debt, asset values, operations and maintenance expenditures, and operating revenues. Establishes predictable rates—consistent with community expectations and acceptability—adequate to recover costs, provide for reserves, maintain support from bond rating agencies, and plan and invest for future needs.
  6. Infrastructure Stability understands the condition of and costs associated with critical infrastructure assets. Maintains and enhances the condition of all assets over the long-term at the lowest possible life-cycle cost and acceptable risk consistent with customer, community, and regulator-supported service levels, and consistent with anticipated growth and system reliability goals. Assures asset repair, rehabilitation, and replacement efforts are coordinated within the community to minimize disruptions and other negative consequences.
  7. Operational Resiliency ensures utility leadership and staff work together to anticipate and avoid problems. Proactively identifies, assesses, establishes tolerance levels for, and effectively manages a full range of business risks (including legal, regulatory, financial, environmental, safety, security, and natural disaster-related) in a proactive way consistent with industry trends and system reliability goals.
  8. Community Sustainability is explicitly cognizant of and attentive to the impacts its decisions have on current and long-term future community and watershed health and welfare. Manages operations, infrastructure, and investments to protect, restore, and enhance the natural environment; efficiently uses water and energy resources; promotes economic vitality; and engenders overall community improvement. Explicitly considers a variety of pollution prevention, watershed, and source water protection approaches as part of an overall strategy to maintain and enhance ecological and community sustainability.
  9. Water Resource Adequacy ensures water availability consistent with current and future customer needs through long-term resource supply and demand analysis, conservation, and public education. Explicitly considers its role in water availability and manages operations to provide for long-term aquifer and surface water sustainability and replenishment.
  10. Stakeholder Understanding and Support engenders understanding and support from oversight bodies, community and watershed interests, and regulatory bodies for service levels, rate structures, operating budgets, capital improvement programs, and risk management decisions. Actively involves stakeholders in the decisions that will affect them.

Five Keys to Management Success

  1. water_utility_leadershipLeadership
    Leadership is critical to effective utility management, particularly in the context of driving and inspiring change within an organization. Leadership refers both to individuals who can be effective champions for improvement, and to teams that provide resilient, day-to-day management continuity and direction. Effective leadership ensures that the utility’s direction is understood, embraced, and followed on an ongoing basis throughout the management cycle.
  2. Strategic Business Planning
    Strategic business planning is an important tool for achieving balance and cohesion across the Attributes. A strategic plan provides a framework for decision making by assessing current conditions, strengths and weaknesses; assessing underlying causes and effects; and establishing vision, objectives, and strategies. It establishes specific implementation steps that will move a utility from its current level of performance to achieving its vision.
  3. Organizational Approaches
    There are a variety of organizational approaches that contribute to overall effective utility management and that are critical to the success of management improvement efforts, including actively engaging employees in improvement efforts; deploying an explicit change management process that anticipates and plans for change and encourages staff at all levels to embrace change; and utilizing implementation strategies that seek, identify, and celebrate victories.
  4. Measurement
    Measurement is critical to management improvement efforts and is the backbone of successful continual improvement management and strategic business planning. A measurement system serves many vital purposes, including focusing attention on key issues, clarifying expectations, facilitating decision making, and, most importantly, learning and improving.
  5. Continual Improvement Management Framework
    A continual improvement management framework can help utilities understand improvement opportunities and establish explicit service levels, guide investment and operational decisions, form the basis for ongoing measurement, and provide the ability to communicate clearly with customers and key stakeholders. This framework plays a central role in effective utility management and is critical to making progress.

OK – Now What?

business_overwhelmedSo how does a utility assess, address, and implement these changes? The primer further recommended an assessment tool with five steps, for which the instructions comprise the latter 35 pages of the Effective Utility Management Primer. Admittedly, the entire process requires dedicated time and personnel commitment from the utility. While some utility managers have had success in applying the assessment to their utility, many have found the process to require resources simply unavailable to them. Tata & Howard has developed two proprietary innovations that assist water and wastewater utilities in the identification of their most urgent needs as well as effective and efficient utility management.

Business Practice Evaluations

Business Practice Evaluations (BPEs) assess the health of a utility’s work practices by implementing a framework for a structured approach to managing, operating, and maintaining in a more business-like manner. This assessment provides the information and planning required by the Primer, specifically in the Five Keys to Management Success. A BPE’s primary focus is on effective management.

The overall goal of the assessment process is more efficient and effective work practices, and the assessment process and tools developed enable utility managers to assess the efficiency and effectiveness of the utility in comparison to generally accepted industry standards. The assessment includes documentation of current business practices, identification of opportunities for improvement, conducting interviews including a diagonal slice of the organization, and observation of work practices in the field. From this assessment we make recommendations to improve system performance, and the structured approach is fully customized and includes all functions of the utility — from administration and technical to operations and maintenance. The assessment process allows utility executives to proactively develop system specific plans, programs, and timelines to optimize the overall utility system programs.

Capital Efficiency Plans™

capitalWhere BPEs focus on management, Capital Efficiency Plans™ (CEPs) address the utility itself, combining the concepts of hydraulic modeling, system criticality, and asset management into a single comprehensive report. Each report is customized to the individual utility system and provides utilities with a database and Geographic Information System (GIS) representation for each pipe segment within their underground piping system. The CEP report also prioritizes system piping improvements and provides estimated costs for replacement and rehabilitation.

Each water and wastewater system has unique characteristics and challenges that are discussed at our CEP workshop held with knowledgeable field staff and managers for each project. The workshops provide significant value by filling in data gaps, correcting incorrect records, and identifying specific issues and critical components that are custom to the system. Our completed studies have been well received by many utilities who have found our methodology not only practical and understandable, but also defendable when justifying projects and procuring funding.

In Conclusion

Water and wastewater utilities today are finding themselves increasingly burdened with decreased revenue, excessive demand, and crumbling infrastrucure. Strict new regulations and a changing workforce have also added to the challenge, and it is imperative that water and wastewater utilities find ways to efficiently and effectively improve systems while implementing successful management strategies. Targeted assessments, strategic planning, and identification and implementation of best practices will be the foundation of all successful utilities in the future.

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