Sydney Water Asset Management Strategy

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CHANGING OPERATIONS & MAINTENANCE PROCEDURES IN THE

WATER BOARD

By

David Hope and Daniel Lyons

March 1991

Synopsis

Over the past decade, change has had a profound effect on most facets of the Water Board's operations.

This paper outlines how the Board has tackled the challenge of managing and maintaining its $20 billion worth of service delivering assets. It is illustrated by a case study involving the reorganisation of the Board's water and sewerage maintenance forces of some 1,700 people.

8th National Maintenance Management Conference - 1991 1

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Changing Operations & Maintenance Procedures In TheWater Board

Winds of Change

Throughout history, increases in knowledge and technology have given rise to higher customer expectations.

The Water Board has been in operation since 1888 with its first major challenge being the protection of public health against cholera and other water borne maladies. Later challenges included securing the water supply against drought (building dams and distribution systems), and sewering Sydney. By and large, the Board responded fairly effectively to the challenges of the day.

By the late seventies, the Board had grown to about 18,000 employees - more than half of whom were involved in construction activities. The end of thirty years of major and sustained work on backlog sewerage, fuelled by relatively inexpensive long term borrowings, was near. The conventional wisdom of that time saw the Board moving away from the emphasis on capital works and putting more emphasis into operations and maintenance of an ageing infrastructure.

At the same time, the government and community attitudes to government services were beginning to change. The Board was urged to:

1 be less authoritarian and more responsive to customers and the community;

2 be more effective and efficient;

3 become a leaner organisation - no longer a "sink" for unemployment, and

4 reduce real costs and prices

In 1983, the NSW Government decided that the Board needed substantial changes in its structure to allow it to meet the challenges ahead. The Board and executive management were replaced, and thus began a process of change which eventually reached all parts of the organisation.

Over the past three years, the Board has seen more changes with major new commitments to environmental protection and drinking water quality


programs. These programs will have significant impacts on capital, operating and maintenance budgets until well into the future.Managing Assets

The Board's service delivery assets would cost about $20 billion to replace today with conventional technology.

The assets include:

18 major dams 260 local service reservoirs 35,000 km of water and sewer pipes 650 pumping stations 42 treatment plants, and 320 km of stormwater channels

For most of the period of the Board's existence, maintenance of existing assets has been a poor relation to the building of new assets, and somewhat taken for granted.

Electrical and mechanical assets tended to be maintained to a schedule, whilst civil assets tended to be fixed when they broke down (except dams and other major structures, where a rather more cautious view is taken!).

Why Change ?

Major drivers of change in the Water Board include:

1 Customers expect more in terms of cost, reliability and quality for the services provided

2 Governments expect better productivity, better service delivery and improved financial performance

3 The community is less inclined to accept disruptions and damage caused by watermain breaks, or pollution caused by sewerage system failures. Legislation is also becoming tighter

4 The Board is continuing to live on its "fat". Our assets are relatively young by Water Industry standards, however unmanageably high renewals/maintenance loads plus a decline in service standards will begin to become a reality unless continuing improvement is pursued

5 Management and workplace practices and skills were becoming outdated and rigid by contemporary standards by the early 80's.

In private enterprise, businesses which don't remain competitive in terms of cost, quality and product innovation simply go out of business. Governments may be voted out of office if they are perceived to be poor managers of government business enterprises.


The bottom line is that any organisation which becomes locked into the practices of the past will have only a limited future.

What To Do ?

In 1986, the Board undertook a high level review of its Asset Management practices. Twelve key issues were identified (Fig 1).

Following the review, an Asset Management Program was put in place with the aim of improving the Water Board's abilities over a broad front and in the process entrenching the idea of LIFECYCLE MANAGEMENT of assets within the organisation.

The Asset Management Program consisted of eight broad areas as follows:

1 Published Standards of Service to guide decision making on maintenance and replacement of assets and components

2 Asset data base to describe the Board's systems, their physical characteristics, condition, performance, maintenance history and financial data, as a foundation for asset management

3 Data collection/performance measurement to provide an integrated manual and automated information system enabling monitoring of performance in the field as well as assisting in maintenance planning and the formulation of maintenance strategies

4 Maintenance strategy to devise improved maintenance and resource scheduling, consider alternative maintenance schemes and develop cost control systems

5 Renewal/replacement strategy to develop and maintain a rolling three year renewals program

6 Technology/innovation strategy to help provide better services at less cost

7 Significant incident strategy to deal with emergencies affecting the Board's ability to carry out its prime function of providing water and sewerage services

8 Human resource strategy to provide an appropriately skilled workforce, motivated to meet the Board's business objectives.

In each of these major areas, projects were initiated to flesh out details for implementation. This process has been ongoing, with continuing improvements and refinements made each year.


Effective maintenance and plant replacement strategies are therefore crucial to a corporation's ability to continue to operate, because of the impact of these items on costs, profitability and product quality.

Subsequently, it is important to have support for these strategies, and a desire to succeed, throughout your organisation - including the Board and senior management.

In the Water Board, high level support for top quality Asset Management is reflected in the Corporate Objective:

To manage the Board's assets so that product quality and capacity to serve are preserved by appropriate asset management plans, technological innovation and operating strategies, while costs are kept to a minimum.

A Case Study

This case study example involved a major reorganisation of the management and workforce undertaking operations and maintenance of the water and sewerage reticulation systems in Sydney. Approximately 1700 people were involved.

Research and planning for the reorganisation began in 1986 following the publication of the previously mentioned high level review of asset management practices.

Negotiations and working sessions with Unions and employees began in mid 1987.

Implementation of structural changes was completed in early 1988.

Full implementation of the workforce skills program is expected during 1991.

Developing a Strategy

Having recognised a need for change, the model to be used as in any major change program has to comprise of three parts:

1 Strategy - what business we will be in and how we will complete in these areas

2 Structure - the roles and mechanisms by which we can empower our people to perform effectively and efficiently, and

3 People (resources) - matching people, jobs, skills and behaviour to our objectives


The essential ingredient of a change program is to link all three in a sound and effective manner.

Setting the Framework

Research had shown that pressure from the customers and community was coming in the form of demands for higher quality and reliability, without real price increases. Furthermore, the community had a general view that government organisations should be more efficient and responsive.

On the technical front it showed that a point in time would be reached where ageing of the water and sewerage system would have a major impact in terms of finance, service delivery and product quality. Moreover, as the Board is forced to work its system harder to reduce capital investment, smarter ways of carrying out maintenance would be required.

Since expenditure on asset maintenance is not revenue generating, the Board had to exploit all opportunities to run its existing systems more cheaply and reduce ongoing operating costs whilst maintaining services at an acceptable level.

In order to communicate objectives to the workforce we decided to concentrate on four things:

1 Minimise interruption of supply to customer:

This could be achieved by implementing comprehensive preventive maintenance plans which optimised the use of resources through programmed work schedules supported by a flexible, quick response break-down service:

2 Minimise the cost of routine functions:

Setting up standard maintenance "cycles" can run the risk of being carried out regardless of need, unless maintenance servicing levels and forecasting is constantly reviewed. Many improvements could be made in this area using new technology, especially for monitoring, repairs and control processes:

3 Optimise output so as to provide competitive rates to customer.

Reducing overheads could be achieved by changing the present structure so that each "job" for the customer becomes a project managed by one person. This would improve relations with the customer, simplify procedures within the Board and make personnel more accountable, and

4 Plan work to achieve acceptable levels of reliability and quality:


As a maintenance program develops and inspection, monitoring and recording techniques are improved, a more accurate "picture" of system performance would be established. Improvements or adjustments of a "one off" nature could then be planned where it can be shown that these works will help achieve any of the above.

This was the basis of our Corporate strategy and in an overall sense the Board's maintenance strategy had to be driven by published Standards of Service offered to the customer.

Our thinking was that this could partially be achieved by optimising our inputs into preventive or life-enhancing maintenance and minimising breakdown maintenance through better planning and resource scheduling. However, we fundamentally recognised that work practices, industrial relations, skills development and new technology must be addressed concurrently and would be a driving force in the total implementation program.

Establishing a Structure

With an overall service strategy conceptualised, business unit goals, structures and resourcing aspects needed to be initiated to address, in particular, three key areas:

1 size of the workforce2 organisation, work practices and procedures, and3 skills

This is the first linkage mechanism - coupling structure to strategy.

Any change process can be estimated in terms of impact and style and therefore can be used most effectively during the strategy/structure process. Success of the change proposal depends on the integration of technical, political and cultural aspects. For example, freeing up of work practices can promote greater flexibility through improved transport arrangements, gradual introduction of more efficient plant, equipment and techniques and introduction of skills development programs. This links the three aspects like a rope. It then becomes management's job to make sure the rope does not unravel.

The management structure was to be based on project management principles and a commitment philosophy. It was also expected that there would be continuing reductions in numbers of people employed in the Operations and Maintenance organisation over the three year change period by approximately 20%, ie: from 1700 to 1350.

A typical structure for each of the five regions serving greater Sydney is shown in Figure 2.

The old structure had evolved slowly over a long period and was characterised by:


1 a top-heavy management and supervisory structure. It featured excessive controls on "whats" and "hows"; lack of authority to act at "doing" levels; an inward looking self preservation mentally instead of an outward looking culture striving to meet the needs of the customer and the business;

2 a workforce with heavy controls on using its initiative, deprived of opportunities to gain knowledge and acquire skills, and bent on preserving work practices, old technology and demarcations, and

3 technical and planning staff tied up in excessive bureaucracy, and not providing the planning to allow the workforce to be more productively employed.

Consequently, the restructuring process had to handle impacts of:

1 fear of change. Honest explanations, continual consultation with employees and unions to bring in change over a manageable period, and support for individuals during the change period were required;

2 removing existing rigid structure and reorganising our workforce so as to move from a control type management structure to a commitment style;

3 upgrading plant and equipment to improve efficiency of our workforce and to facilitate more flexible group sizes;

4 maximising the use of skills in the workforce by opening up opportunities for employees and having more flexible working arrangements (ie: removing demarcations and arbitrary geographical boundaries), and

5 developing and implementing a better means of planning and allocating work, costing and reporting on asset condition.

Roles and Procedures

Our total structure was to go from 14 to 7 layers of management, ie: from Managing Director to frontline workers. At the operations level this equated to moving from 6 to 3 layers, ie: Business Management, Supervisory/ Support management and working teams.

A prime objective was to reduce the number of people occupying line positions. In the process all old line positions were abolished and were replaced with new line positions. All new line positions were advertised. People from the old line structure who did not win new line positions were guaranteed positions in planning or other support roles, or were allowed to take advantage of a redundancy package.


New managers and superintendents were now required to provide leadership of change and attention to future requirements with emphasis on a commercial approach to delivery of products and services. Achieving better outcomes (higher performance, more productivity and improved quality) with less resources was now the expected situation.

The bottom line was and is more direct individual participation and continuing change in line with customers' expectations. To help meet this challenge, techniques such as functional analysis were used to identify resource requirements in each Region for operations and maintenance procedures.

Initial efforts were concentrated on the formation of small flexible semi-autonomous work teams consisting of 1-3 people, and the development of the supporting management and supervisory structure. This meant that the equation of responsibility versus authority had to be balanced.

The guidelines for restructuring to the three levels are listed below.

Business ManagementRegional Operations and Maintenance were to remain subdivided into

Water and Sewer Sections representing the major products, but with a technical unit to provide the engineering support. (Organisational arrangements for the Pumping, Services and Electrical Maintenance functions were not part of this reorganisation).

Each area would be managed by a business unit manager (ie: water or sewer manager) who would be allocated a workforce of about 150 employees plus plant and equipment from the total regional resources, based on needs and priorities.

The role of the Operations and Maintenance Manager involved leadership and motivation to provide a range of products which meet published standards of service in terms of reliability and quality at minimum cost. This role was to be phased out after an initial settling in period and devolved to the next level of management.

The Water and Sewer Managers would be responsible for the products of water distribution and sewage collection and transportation respectively for the customers in each region.

Managers had to be capable of effectively managing a diverse range of functions, but did not necessarily need to be an expert or certified in particular skills, a departure from the previous requirements for the equivalent role. This Manager would be supported by people with technical skills, system knowledge, field experience, resource management, training and clerical skills from the Projects and Planning Unit, by way of written project briefs. This arrangement was designed to prevent the insidious build-up of staff doing routine in-line functions, at the expense of longer term planning and justified projects. More emphasis was placed on aspects such as planning and evaluation and on skills development to support the Water Board's commitment workforce strategy.


This level of management was designed to be concerned with the overall effectiveness and longer-term issues.

Supervisory/Support Management (Superintendents)Individual areas would be managed by Superintendents with a small

project team in off-line support.

They have day to day responsibility for product and delivery: being operation and maintenance of the system, as allocated by the Water or Sewer Manager.

The Superintendent would control a flexible and mobile workforce of about 35-50 people formed into small work teams and will be responsible for work allocation, preparation of maintenance plans, budgets and financial control.

A prime objective of the Superintendents was to sustain investment in skills which would enable a full commitment for quality and reliability at the working team level.

Superintendents would arrange work teams and schedules to meet specific operational demands and to execute area maintenance plans.

They would be responsible for collection of all data necessary from the work teams. Data includes physical, financial and operational information.

This level of management was concerned with the short to medium term work.

Technical SupportField support was to be supplied by a Projects and Planning Unit which

constituted an engineering and planning workforce with staff from various classifications but without a supervisory role. Additional professional skills (eg: economics) will be sought as required to achieve outcomes identified by individual managers or superintendents. This unit initially was accountable to the Operations and Maintenance Manager.

Resources within this unit increase and decrease depending upon approved programs. It is envisaged that fluctuations will be accommodated by rotation between or within regions or other Branches of the Water Board, or by use of external consultants.

Some of the initial objectives for the Projects and Planning Unit were to:

1 support the role and mission of the business;2 design, establish and operate the Regional Information Program;3 establish the Regional Asset Management Plan;4 design and coordinate the operations and maintenance skills

development program;5 coordinate the expansion of Programmed Maintenance and

reduction in breakdown maintenance, and


6 enable improved line management, better supervision and greater delegation with more individual accountability.

Working TeamsBasic team size would be 1-3 persons with a working team leader.

Previously work groups of 3-8 were common because management used to provide large personnel carriers.

Teams would generally be composed of people with skills required to carry out as far as possible the full range of tasks required to complete the job, without unnecessary demarcation, and the need for other teams to come in to complete jobs.

Teams would be reformed as necessary to meet work needs and be rewarded in accordance with attained skill level. People on high skill levels would nevertheless be required to work flexibly across the full level of skills possessed.

Once allocated work, the working team would operate in a semi-autonomous manner in the executive of the tasks allocated. It would also be expected to provide data relating to the work performed.

Human Resource AspectsThe reorganisation required downsizing of the workforce and in

management and clearly could not be achieved without exhaustive negotiations with the Unions, and within the Water Board management itself.

It also required many changes in the way individuals operate at work, for employees to utilise a wider range of skills, and for greater and more focused productivity achievements. In particular, we used the diagram of Professor Ford, as published in Australia Reconstructed, Figure 4, extensively to guide us in our reorganisation strategy.

For proposals such as this to work they must be underpinned by the real business needs of the organisation and be characterised by a more strategic industrial relations approach by all parties. They should offer employees:

Access to new career paths; A chance to increase skills; More participation in decision making processes; More freedom to act and use natural talents; Equitable treatment of people; Support to individuals during transition periods, and Satisfactory arrangements for those who do not "win" in the change

process.

For our wages employees, it was decided to offer a skills development package to enable people to carry out a broad range of functions in small teams, and to give them opportunities to progress in the organisation.


The package consists of 6 levels, ranging from the novice employee to the highly skilled, hands-on team leader. Once an employee reached a particular level, that employee would be paid according to the rate applicable to that level at all times, subject t actual performance on the job of the specified range of functions relating to that level.

Skills covered included technical, leadership and management areas while also accommodating for certain specialists such as plant operators.

Skills development was considered a key to better productivity which allowed increasing deployment of resources into asset management projects, while at the same time reducing the workforce.

Skills development focused on:

(i) facilitating a commitment style of management;(ii) achieving a more flexible and adaptive workforce, capable

of competing responsibly on a commercial basis to achieve Board's objectives, and

(iii) increasing the emphasis on planning, budgeting and evaluation to allow the Board to focus on work that most needs to be done.

These factors, against a backdrop of reducing budgets and numbers in the workforce, placed different demands on the skills of people at all levels. The Board recognised that people need time to adjust and assistance to develop additional skills through increased training and job rotation opportunities.

To maximise effectiveness of our people and other resources we attempted to incorporate the following principles:

peoples contribution to the Board's effectiveness is through the work they do;

it follows that work should be arranged to fulfil the needs of people and to allow them to use all their abilities in their work;

people should be allowed to contribute more to their work than the system has allowed them to do in the past;

people should be allowed the full satisfaction of a job well done, work should be rewarding and at the same time give value for money;

people should be recognised for their good ideas and have more opportunities to implement these ideas, and

people should be recognised for the skills they already have, and in future for any further skills they get.

The workforce reorganisation was agreed to and implemented during 1988. The skills development program is in its final stages of development and negotiation. It should be implemented during 1991.


Impact of the Change ProgramThe change program set out to:

Embed serving the customer as a prime need; Keep raising standards and productivity; Reduce costs; Take better care of the service delivery assets; Unclog the organisation; Create a nucleus of leaders; Create a lean, flexible, responsive and skilled organisation, and Empower people to have a volunteer mindset and not a conscript

mindset.

The change program resulted in:

(i) major structural intervention to re-orient organisational business unit and work tea structures for improved performance;

(ii) downsizing the organisation through a combination of policies, eg: attrition and voluntary redundancy;

(iii) lateral recruitment of key managers and experienced specialists;(iv) introduction of workforce skilling programs with an emphasis on

rewarding for skills applied in meeting business outputs, and(v) improved use of computer based maintenance management

systems.

Summary

The changes described in this paper had a considerable effect on both managers and the workforce.

To make successful changes of this magnitude you must:

1 Have a clear view of your business direction and a strong commitment to succeed - vision and leadership.

In the Water Board's case tis was underpinned by the Asset Management Strategy, our Standards of Service document and a commitment to customer service.

2 Tactical plans to achieve particular objectives - a structure to carry out the tasks.

In the reorganisation case study in this paper, we were able to plan a new structure and its implementation around our business direction and strategies.


3 Resource plan to empower our people to do their jobs - align our people to corporate, customer and individual needs.

This was the final linkage in the change management process, one that helped tackle the challenge in a constructive way.


Figure 1 - Key Issues - Asset Management

KEY ISSUES

1 The data currently available indicates that renewals expenditure of double the present levels could be required now and for the foreseeable future.

2 Lack of basic appreciation that assets are the key to the efficient and ongoing delivery of customer service.

3 Severe lack of information at the corporate level on assets and a systematic framework in which to collate it.

4 Lack of data generation and capture at the field level is inhibiting effective and efficient use of field forces.

5 Lack of explicit and quantifiable standards of service are limiting an output driven budgetary process.

6 There is an absence of formal operations and maintenance plans.

7 Resources could be more efficiently managed and allocated for maintenance work according to standard of service.

8 The renewals program is continually under-expended because resources are geared to the capital works program.

9 Certain types of assets are created without sufficient consideration of operations and maintenance requirements.

10 Current Depreciation policies do not adequately provide for asset replacement costs.

11 There is much to learn from water authorities in the United Kingdom who are world leaders in the management of an ageing infrastructure.

12 All major urban water authorities have a common interest in applying new technologies to the problems posed by ageing assets.

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Figure 2

Sydney Water BoardOperations and Maintenance Reform 1988

similar structure in each of five regions

Old Structure New Structure

Operations & Maintenance Manager

Water Manager Sewer Manager Projects & Planning Manager

Provides services to Water & Sewer

Managers by project brief

Water Engineer /Technical staff Sewer Engineer / Technical staff

Chief Inspector / Assistant Chief Chief Inspector / Assistant Chief

Inspectors (4) Inspectors (4)Superintendents (4)

and Planning OfficersSuperintendents (4)

and Planning OfficersTechnical &

Planning Staff

Water Service Operators / Assistant Overseers / Leading Hand

Workforce (typically 8 –12 per gang) Workforce (typically 8 –12 per gang)Working Teams

(2 people upwards)Working Teams

(2 people upwards)

8th National Maintenance Management Conference – 1991Figure 2

Documents

Sydney Water Asset Management Strategy