Performance Benchmarking (Presentation BM Werner Brenner Indonesian Experiences)

8/6/2019 Performance Benchmarking (Presentation BM Werner Brenner Indonesian Experiences)

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INDONESIAN EXPERIENCES IN WATER

UTILITY BENCHMARKING

PERPAMSI Persatuan Perusahaan Air Minum Seluruh Indonesia

Indonesian Water Supply Association

www.perpamsi.org

South East Asia Water and Waste Water Convention

Hanoi, 7-9 June, 2005Werner BRENNER, Advisor

The views expressed in this paper are the views of the authors and do not necessarily reflect the views or policies of the

Asian Development Bank (ADB), or its Board of Directors, or the governments they represent. ADB does not guarantee

the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use.

Terminology used may not necessarily be consistent with ADB official terms.

2

Overview of Presentation

Introducing the Indonesian water

sector and the BM program

Sustainability aspects of the water utilityBM program

Water utility BM – what next?



3

Introducing PERPAMSI

- Established in 1972 by the Indonesian Government

- Since 2001: Independent water supply association Organization:

- Head quarter in Jakarta (30 employees)

- 27 PERPAMSI offices in all Indonesian provinces

Members:

- All 306 Indonesian water utilities with 40.000 employees

- Around 100 extraordinary members (suppliers, investors,…)

Services:

- Services to water utilities, governmental institutions, financing

institutions, investors, donors and other stakeholder in the sect

- Training foundation under PERPAMSI

4

Introducing the Indonesian Water Sector

Water utilities are owned by local governments andcontrolled by local parliaments (tariff setting!)

Coverage for piped water supply less than 35% for urban areas and less than 20% for all Indonesia(currently 220 mio. inhabitants; around 6 millionhousehold connections from public utilities are

installed)Water supply is provided through 306 water utilities

Utility structure: 5% of all water utilities have morethan 50,000 and 60% have less than 10.000connections.

Overall coverage for public sewerage services lessthan 1%



5

Water Utility Benchmarking in

Indonesia – A tremendous task !

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Investors:Receive reliable /

comparative information

on utility performance and

PSP opportunities.

Water Utilities:

Identify strengths / weaknesses in performance & efficiency inservice delivery, compared to other utilities.

Government:Give appropriate

guidance regarding

institutional, managerial

and financial issues.

Water Utility Benchmarking in Indonesia

- PERPAMSI implemented a World Bank supported program

(PPIAF) in 2002/2003 where 80 water utilities participated.

- Increase to 150 utilities by the end of 2007 planned.



Central Benchmarking

Team (Jakarta)

BM System operation:

Provincial

Bench -

marking

teams

Utilities Benchmarking team

Raw data

Verified data

Results & Support

Support

I n v e

s t m e n t s ,

L o a n s , P o l i c i e s

ExternalStakeholders:

Government

Donors

Investors

Results

$$$

$ $ $

$ $ $

Utilities

R e s u l t s & S

u p p o r t

8

Benchmarking – Improving byComparing

“BEST IN CLASS” -> TARGET

Performance at present ?

or is performance here?

or… here?



9

But … comparing with what?

Utilities? Consumers?

Local Government?

Central Government,Planners, . . .

City Council?

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Benchmarking Indicators used in Indonesia

1. Standard set of key performance indicators:

Primary indicators (10)

Secondary or supporting indicators (19)

2. Calculation of additional indicators possible. Upto 82 different items are collected from the utility.

Technical

Financial

Managerial

Customer orientation



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Benchmarking Results (1)

%n. a.AVERAGE AGE OF TANGIBLE ASSETSS11

%158DEBT EQUITY RATIOS10

%13RATIO OF COMMERCIAL CHARGESS9%2RATIO OF SOCIAL CHARGESS8

months4COLLECTION PERIODS7

US$ / M30,163AVERAGE WATER CHARGESS6

%20ENERGY COST RATIOS5

%44LABOUR COST RATIOS4

US$ / M30,103UNIT OPERATIONAL COSTS3

%1RETURN ON NET FIXED ASSETSS2

%70TOTAL COST RECOVERYS1

%109TARIFF REVISIONP4

%188CURRENT RATIOP3

%108DEBT SERVICE RATIOP2

%86WORKING RATIOP1

Financial Indicators:

Sample: 80 water utilities / Year: 2002

12%0,2TRAINING BUDGETS19

Staff/1000 con.8,8EMPLOYEES / 1000 CONNECTIONSS18

-n. a.EMPLOYEE SATISFACTION INDEXP10

IV Personnel Indicators:

%1MAINS REHABILITATIONS16

%45OPERATING BULK METERSS15

hours / day18CONTINUITY OF SERVICEP9

-n. a.WATER QUALITY INDEXP8%35NON REVENUE WATERP7

III Operational Indicators:

%n. a.AFFORDABILITYS17

%6METERS REPLACEDS14

%48SERVICE AREA RATIOS13

%34IDLE CAPACITYS12

%52POPULATION SERVED IN SERVICE AREAP6

-n. a.CUSTOMER SATISFACTION INDEXP5

II Customer Indicators:

Benchmarking Results (2)

Sample: 80 water utilities / Year: 2002



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Introducing the Indonesian water sector

and the BM program

Sustainability aspects of the water

utility BM program


Presentation Overview

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Part of PERPAMSI mission is to

assist water utilities in improving

their performance .

Why is BM done by PERPAMSI?

One of the key strategies in PERPAMSI strategic

plan is to develop and maintain a good BMsystem, for 150 utilities.

BM can help to improve the performance of utilities

and to increase possibilities for sector development.

A strong well performing water sector strengthens

automatically the role of PERPAMSI.



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Challenges Faced in Utility BM (1)

Poor raw data quality provided from the utilities

and some information is not yet available in theappropriate form (data verification routines)

Appreciation of the BM initiative still low

(recognition of usefulness, competition for best

services, transparency versus supportive infor-

mation for the utility management for lobbying)

Managers have difficulties to transfer the results

in the day-to-day operation of the utility (external

support needed)

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Challenges Faced in Utility BM (2)

Difficulties in business target setting

Difficulties to get key stakeholders from the

government on board (every institution uses their

own, different data base)

Establishing utility internal performanceimprovement teams

Philosophy of process BM for the daily operation

of utilities not yet disseminated

Market for BM information needs to be developed

(sustainability of the BM system)



17

Annual BM budget: US$ 50.000 Costs for personnel (4 fulltime positions) and

running costs for the Jakarta office Travel costs for advisors form Jakarta to the

Province Operating costs at provincial level (PERPAMSI

part-time staff working in the province) Provincial PERPAMSI staff promotion

seminars and training Reports and national awareness seminars

Future Financing (1)

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Financial support through World Bank Institute(WBI) for three more years as part of a WBI-PERPAMSI twinning program. This includes

technical assistance (TA) for training moduledevelopment and training provision for expansionfrom 80 to 150 utilities.

Current annual contribution from participatingwater utilities around US$ 10.000 (BMmembership fee).


Short term BM budget development:



19

150 participating utilitieseach contributing 200 US$ /year (average)

40 Clients each contributing500 US$ / year for receivingup to date BM information


Long term BM budget development:

20

Presentation Overview

Introducing the Indonesian water sector

and the BM program

Sustainability aspects of the water utility

BM program




21

The way forward (1)

A permanent Water Advisory Service Centre

(WASC) in Jakarta is currently established withfinancial support from GTZ.

Involvement from PERPAMSI offices in theprovinces.

To constantly promote it to all stakeholders(utilities, financing and governmental institutions)

to join and use the BM system. To use BM results and analysis for sector policy

development, planning, and determining longterm financin and investment re uirements

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To gradually increase number of participatingPDAMs from 80 to 150 (over the next threeyears).

To continue with external support from WorldBank Institute, for at least three more years to

further develop and expand the BM system. To promote the use of BM data by external

stakeholders for a reasonable fee to recover partof future cost.

To exchange Indonesian BM data with other water utilities in the ASEAN region (SEAWUN)

The way forward (2)



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To work with PERPAMSI staff (part-time) in

the provinces and assist all parties in datacollection, verification and analysis.

To train PERPAMSI staff in the provinces onresults interpretation, to be able to use BMresults as an effective management tool.

To offer awareness seminars for local and provincial stakeholders

The way forward (3)

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The way forward (4)

Disseminate best practices to stakeholders and

other utilities and create a ‘competitive

environment’ in the sector

Give feedback to staff to understand and motivate

improved performance

Danger: Avoid BM becoming and end in itself-

only tool!



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Thank you for your attention!

PERPAMSI

Persatuan Perusahaan Air Minum Seluruh Indonesia

Indonesian Water Supply Association

www.perpamsi.org

Documents

Performance Benchmarking (Presentation BM Werner Brenner Indonesian Experiences)